ACACIA NATIONAL VARIABLE ANNUITY SEPARATE ACCOUNT II, 485BPOS, 2000-04-28

ACACIA NATIONAL VARIABLE ANNUITY SEPARATE ACCOUNT II
485BPOS, 2000-04-28

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<PAGE> 1

As filed with the Securities and Exchange Commission on
April 28, 2000

Registration No. 333-03963

================================================================================

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]

Pre-Effective Amendment No.____ [ ]

Post Effective Amendment No. 6 [X]

REGISTRATION STATEMENT UNDER THE INVESTMENT ACT OF 1940

Amendment No. 6 [X]

ACACIA NATIONAL VARIABLE ANNUITY SEPARATE ACCOUNT II
(Exact Name of Registrant)

ACACIA NATIONAL LIFE INSURANCE COMPANY
(Name of Depositor)
7315 Wisconsin Avenue
Bethesda, Maryland 20814
(Address of Depositor's Principal Executive Office)
Depositor's Telephone Number: (301) 280-1000

Robert-John H. Sands
Senior Vice President and General Counsel
Acacia National Life Insurance Company
7315 Wisconsin Avenue
Bethesda, Maryland 20814
(Name and Address of Agent for Service)

Approximate Date of Proposed Public Offering: As soon as practicable after
effective date.

It is proposed that this filing will become effective:

[ ] immediately upon filing pursuant to paragraph b
[ ] on __________ pursuant to paragraph a of Rule 485

[X] on May 1, 2000 pursuant to paragraph b of Rule 485 If
appropriate, check the following box:

[ ] this post-effective amendment designates a new effective
date for a previously filed post-effective amendment.

Title of Securities Being Registered: Securities of Unit Investment Trust
Omit from the facing sheet reference to the other Act if the Registration
Statement or amendment is filed under only one of the Acts. Include the
"Approximate Date of Proposed Public Offering" and "Title of Securities Being
Registered" only where securities are being registered under the Securities Act
of 1933.

<PAGE> 2

ALLOCATOR ANNUITY 2000
CROSS REFERENCE TO ITEMS REQUIRED BY FORM N-4

HEADING IN STATEMENT OF
FORM N-4 ITEM HEADING IN PROSPECTUS ADDITIONAL INFORMATION

PART A: INFORMATION REQUIRED IN A PROSPECTUS

<TABLE>

<S> <C> <C>
2. Cover Page Cover page
3. Definitions Glossary of Defined Terms
4. Synopsis Questions and Answers About
Your Policy
5. Financial Condensed Financial
Information Information
6. General Description of ANLIC and the Variable
Registrant, Depositor and Account;
Portfolio Companies The Portfolios; Voting Rights;
Administration
7. Deductions Summary; Charges and Surrender Charge
Deductions; Calculation
The Portfolios
8. General Description of Summary; The Policy; Annuity General
Variable Annuity Contracts Payments; Voting Rights; Provisions;
Additional Information Fixed Account
9. Annuity Period Annuity Payments
10. Death Benefit The Policy -- Death Benefit
11. Purchases and Contract Value ANLIC and the Variable
Account;
The Policy
12. Redemptions The Policy -- Surrender and
Partial Withdrawals; The
Policy-- Free Look Period
13. Taxes Federal Tax Matters Federal Tax Matters
14. Legal Proceedings Legal Proceedings
15. Table of Contents of the Statement of Additional Table of Contents
Statement of Additional Information
Information

PART B: INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION

16. Cover Page Cover Page
17. Table of Contents Table of Contents

18. General Information and N/A
History

2. Services Administration Experts;
Distribution of the
Policies; Records
and Reports
3. Purchase of Securities Being Summary; The Policy General Provisions;
Offered Distribution of the Policies
4. Underwriters ANLIC and the Variable
Account Distribution of the Policies
5. Calculation of Performance Data Performance Data
Performance Data Calculations; Performance
Figures
6. Annuity Payments Annuity Payments General Provisions
7. Financial Statements Financial Statements

</TABLE>

<PAGE> 3

PROSPECTUS
[THE ACACIA GROUP LOGO]
Acacia National Life
Insurance Company
7315 Wisconsin Avenue

Allocator 2000 Annuity -- Individual Flexible Premium Deferred Bethesda,
Maryland 20814

Variable Annuity Policy Issued By Telephone: (301) 280-1000
- --------------------------------------------------------------------------------

This Prospectus describes information you should know before you purchase
the Allocator 2000 variable annuity. Please read it carefully.

The Allocator 2000 variable annuity is a contract between you and Acacia
National Life Insurance Company (ANLIC) where you agree to make payments to us
and we agree to make a series of payments to you at a later date. The Allocator
2000 is a flexible premium, tax-deferred, variable annuity offered to
individuals. It is:

- - Flexible, because you may add payments at any time.

- - Tax-deferred, which means you don't pay taxes until you take payments out or
until we start to make payments to you.

- - Variable, because the value of your annuity will fluctuate with the
performance of the underlying investments.

After purchase, you allocate your payments to "Sub-accounts" or
subdivisions of our Variable Account, an account that keeps your annuity assets
separate from our company assets. These Sub-accounts then purchase shares of
mutual funds set up exclusively for variable annuity or variable life insurance
products. These mutual funds are not the same mutual funds that you buy through
your stockbroker or through a retail mutual fund, but they have similar
investment strategies and the same portfolio managers as retail mutual funds.
This annuity offers you funds with investment strategies ranging from
conservative to aggressive and you may pick those funds that meet your
investment style. The Sub-accounts and the funds are listed below:

- - Large Cap Sub-account which purchases shares of Alger American Growth
Portfolio

- - Mid Cap Sub-account which purchases shares of Alger American MidCap Growth
Portfolio

- - Small Cap Sub-account which purchases shares of Alger American Small
Capitalization Portfolio

- - Social Money Market Account Sub-account which purchases shares of Calvert
Social Money Market Portfolio

- - Social Strategic Growth Sub-account which purchases shares of Calvert Social
Small Cap Growth Portfolio

- - Social Managed Growth Sub-account which purchases shares of Calvert Social Mid
Cap Growth Portfolio

- - Social Global Sub-account which purchases shares of Calvert Social
International Equity Portfolio

- - Social Balanced Sub-account which purchases shares of Calvert Social Balanced
Portfolio

- - Equity 500 Index Sub-account which purchases shares of Deutsche VIT Equity 500
Index Fund

- - Small Cap Index Sub-account which purchases shares of Deutsche VIT Small Cap
Index Fund

- - EAFE(R) Equity Index Sub-account which purchases shares of Deutsche VIT
EAFE(R) Equity Index Fund

- - Equity-Income Sub-account which purchases shares of Fidelity VIP
Equity-Income: Service Class 2

- - High Income Sub-account which purchases shares of Fidelity VIP High Income:
Service Class 2

(Continued on next page.)

ALLOCATOR 2000 ANNUITY
I
<PAGE> 4

- - Contrafund Sub-account which purchases shares of Fidelity VIP II
Contrafund(R): Service Class 2

- - Asset Strategy Sub-account which purchases shares of Templeton Asset Strategy
Fund -- Class 2

- - International Securities Sub-account which purchases shares of Templeton
International Securities Fund -- Class 2

- - Income Sub-account which purchases shares of Neuberger Berman Advisers
Management Trust ("Neuberger Berman AMT") Limited Maturity Bond Portfolio

- - Growth Sub-account which purchases shares of Neuberger Berman AMT Growth
Portfolio

- - Partners Sub-account which purchases shares of Neuberger Berman AMT Partners
Portfolio

- - Aggressive Growth Sub-account which purchases shares of Oppenheimer Aggressive
Growth Fund/VA

- - Large Cap Growth Sub-account which purchases shares of Oppenheimer Capital
Appreciation Fund/ VA

- - Balanced Sub-account which purchases shares of Oppenheimer Main Street Growth
& Income Fund/ VA

- - High Income Sub-account which purchases shares of Oppenheimer High Income
Fund/VA

- - Managed Income Sub-account which purchases shares of Oppenheimer Strategic
Bond Fund/VA

- - Hard Assets/Metals Sub-account which purchases shares of Van Eck Worldwide
Hard Assets Fund

You also may allocate some or all of your payments to the "Fixed Account",
which pays an interest rate guaranteed for at least one year from the time the
payment is made. Payments put in the Fixed Account are not separated from our
assets like the assets of the Variable Account.

You may not purchase a Policy if either you or the annuitant are 85 years
old or older before we receive your application. We will not accept additional
premium payments once the annuitant reaches age 75.

If you decide to buy this annuity, you should keep this prospectus for your
records. You may call us at 1-800-369-9407 to get a Statement of Additional
Information, free of charge. The Statement of Additional Information contains
more information about this annuity and, like this prospectus, is filed with the
Securities and Exchange Commission. You should read the Statement of Additional
Information because you are bound by the Terms contained in it. We have included
the Table of Contents for the Statement of Additional Information in this
prospectus. (See the section on Statement of Additional Information.)

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR DETERMINED IF THE INFORMATION IS TRUTHFUL OR COMPLETE.
ANYONE WHO REPRESENTS THAT THE SECURITIES AND EXCHANGE COMMISSION DOES THESE
THINGS MAY BE GUILTY OF A CRIMINAL OFFENSE.

This Prospectus and Statement of Additional Information can also be
obtained from the Securities and Exchange Commission's website
(HTTP://WWW.SEC.GOV).

This annuity is not:

* a bank deposit

* federally insured

* endorsed by any bank or governmental agency

* available for sale in all states

Prospectus Dated: May 1, 2000 Statement of Additional Information Dated: May 1,
2000

ALLOCATOR 2000 ANNUITY
II
<PAGE> 5

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
GLOSSARY OF DEFINED TERMS................................... iv
QUESTIONS AND ANSWERS ABOUT YOUR POLICY..................... 1
SUMMARY OF FEES AND CHARGES................................. 4
PORTFOLIO ANNUAL EXPENSES................................... 5
CONDENSED FINANCIAL INFORMATION............................. 10
ANLIC AND THE VARIABLE ACCOUNT.............................. 12
Acacia National Life Insurance Company................ 12
The Variable Account.................................. 12
THE PORTFOLIOS.............................................. 12
The Alger American Fund............................... 13
Calvert Variable Series, Inc.......................... 13
Deutsche Asset Management VIT Funds................... 15
Fidelity Variable Insurance Products Fund, Fidelity
Variable Insurance Products Fund II.................. 15
Neuberger Berman Advisers Management Trust............ 15
Oppenheimer Variable Account Funds.................... 16
Franklin Templeton Variable Insurance Products
Trust................................................ 17
Van Eck Worldwide Insurance Trust..................... 18
Risks Attendant to Investments in Junk Bonds.......... 18
Risks Attendant to Investments in Foreign
Securities........................................... 18
Resolving Material Conflicts.......................... 18
THE FIXED ACCOUNT........................................... 19
THE POLICY.................................................. 19
Issuance of a Policy.................................. 19
Telephone Requests.................................... 19
Free Look Period...................................... 19
Premium Payments...................................... 20
Allocation of Premium Payments........................ 20
Policy Account Value.................................. 20
Surrender and Partial Withdrawals..................... 21
Transfers............................................. 22
Automatic Rebalancing, Dollar Cost Averaging, and
Interest Sweep Programs.............................. 22
Death Benefit......................................... 23
Required Distributions................................ 23
CHARGES AND DEDUCTIONS...................................... 24
Annual Policy Fee..................................... 24
Administrative Expense Charge......................... 24
Mortality and Expense Risk Charge..................... 24
Surrender Charge...................................... 25
Premium Taxes......................................... 26
Federal Taxes......................................... 26
Fund Expenses......................................... 26
Reduction In Charges For Certain Groups............... 26
ANNUITY PAYMENTS............................................ 26
Election of an Annuity Payment Option................. 26
Maturity Date......................................... 26
Available Options..................................... 27
Annuity Payment Options............................... 27
FEDERAL TAX MATTERS......................................... 27
Introduction.......................................... 27
Taxation of Annuities in General...................... 27
ANNUITY OWNERS THAT ARE NONRESIDENT ALIENS OR FOREIGN
CORPORATIONS.............................................. 30
VOTING RIGHTS............................................... 30
PERFORMANCE DATA............................................ 30
PUBLISHED RATINGS........................................... 31
LEGAL PROCEEDINGS........................................... 31
FINANCIAL STATEMENTS........................................ 31
ADMINISTRATION.............................................. 31
THE YEAR 2000............................................... 32
POLICY REPORTS.............................................. 32
STATE REGULATION............................................ 32
EXPERTS..................................................... 32
LEGAL MATTERS............................................... 33
ADDITIONAL INFORMATION...................................... 33
STATEMENT OF ADDITIONAL INFORMATION......................... 33
APPENDICES.................................................. A-1
</TABLE>

ALLOCATOR 2000 ANNUITY
III
<PAGE> 6

Throughout this Prospectus, the words "us", "we", "our", and "ANLIC" refer to
Acacia National Life Insurance Company, and the words "you", "your", and "Owner"
refer to the policy owner.

GLOSSARY OF DEFINED TERMS

ACCUMULATION PERIOD - The period between the Policy Date and the Maturity Date
and during the lifetime of the Owner.

ACCUMULATION UNIT - Unit of measure that is used to calculate the value of the
Policy prior to the Maturity Date.

ACCUMULATION UNIT VALUE - The value of each Accumulation Unit is calculated on
each Valuation Date.

AGE - Age at last birthday.

ANLIC - Acacia National Life Insurance Company.

ANNUITANT - The person(s) whose life is used to determine the duration of
Annuity Payments involving life contingencies. The Annuitant must be a natural
person.

ANNUITY PAYMENT OPTIONS - The options that are available for payment of the
Surrender Value of the Policy commencing upon the Maturity Date.

BENEFICIARY - The person(s) or legal entity that you designate in the
Application or thereafter in writing to our Service Office to receive payments
at the death of the owner.

DUE PROOF OF DEATH - A certified copy of a death certificate, a certified copy
of a decree of a court of competent jurisdiction as to the finding of death, a
written statement by the attending physician, or any other proof satisfactory to
us.

FIXED ACCOUNT - The account via which you may allocate or transfer Net Premium
Payments to our General Account. An initial allocation or transfer into the
Fixed Account does not entitle you to share in the investment experience of the
General Account. Instead, we guarantee that any Policy Account Value in the
Fixed Account will accrue interest at an annual rate of at least the Guaranteed
Interest Rate. The Fixed Account is not available as an investment option for
policies sold in the states of Oregon and Washington.

FREE WITHDRAWAL AMOUNT - That portion of any partial withdrawal or surrender
that is not subject to a Surrender Charge under the terms of the Policy.

FUND - A registered, open-end management investment company (commonly called a
"mutual fund"). Each Sub-account invests exclusively in shares of a single
Portfolio of a Fund.

GENERAL ACCOUNT - The assets of ANLIC other than those in the Variable Account
or any other separate account.

INVESTMENT OPTIONS - The Fixed Account and the Sub-accounts which invest in
Portfolios described in the Fund prospectuses.

IRREVOCABLE BENEFICIARY - A Beneficiary or Beneficiaries whose interest cannot
be changed without his, her, or their consent or as required by law.

MATURITY DATE - The date upon which Annuity Payments begin. You may choose a
Maturity Date no later than the first day of the calendar month after the
Annuitant's 90th birthday.

NET PREMIUM PAYMENT - The Premium Payment less any applicable tax charges.

OWNER - The person named on the Application as Owner or the persons named on the
Application as Joint Owners. Any reference to Owner in this Prospectus or in the
Policy will include both Owners, if there are Joint Owners. The Owner is
entitled to all of the ownership rights under the Policy. The Owner has the
legal right to make all changes in the policy designations where permitted
specifically by the terms of the Policy. The Owner is as specified in the
Application, unless changed. "You" and "your" are also used throughout this
Prospectus and the Policy to refer to the Owner.

ALLOCATOR 2000 ANNUITY
IV
<PAGE> 7

POLICY - The flexible premium variable annuity offered by ANLIC and described in
this prospectus.

POLICY ACCOUNT VALUE - The sum of the Variable Account Value and the Fixed
Account Value.

POLICY ANNIVERSARY - Each anniversary of the Policy Date.

POLICY DATE - The date set forth in the Policy that is used to determine Policy
years and months. Policy Anniversaries are measured from the Policy Date.

PORTFOLIO - A separate investment portfolio of the Funds, a mutual fund in which
the Variable Account invests. Portfolio also will be used to refer to the
Sub-account that invests in the corresponding Portfolio.

PREMIUM PAYMENT - An amount paid to ANLIC in accordance with the provisions of
the Policy.

SUB-ACCOUNT - A subdivision of the Variable Account. Each Sub-account is
invested in shares of a specified Portfolio of the Funds.

SURRENDER CHARGE - A charge measured as a percent of premium and based upon
Policy Anniversaries, which may be imposed upon a partial withdrawal, surrender
or distribution of the proceeds.

SURRENDER VALUE - The Policy Account Value as of any Valuation Date, reduced by
applicable Surrender Charges, the Annual Policy Fee, and any premium or other
taxes.

SYSTEMATIC PARTIAL WITHDRAWAL - Owners choosing this option will withdraw a
level dollar amount of Policy Account Value on a periodic basis. Systematic
Partial Withdrawals are subject to the same Surrender Charges as partial
withdrawals, as set forth on the Specifications Page of the Policy.

VALUATION DATE - Each day the New York Stock Exchange is open for business,
excluding holidays and any other day in which there is insufficient trading in
the Portfolio securities to materially affect the value of the assets in the
Variable Account.

VALUATION PERIOD - The period between two successive Valuation Dates, commencing
at the close of business of a Valuation Date and ending at the close of business
for the next succeeding Valuation Date.

VARIABLE ACCOUNT (OR "SEPARATE ACCOUNT II") - Acacia National Variable Annuity
Separate Account II, a separate investment account that has been established by
ANLIC to receive and invest the Net Premium Payments paid under the Policy.

VARIABLE ACCOUNT VALUE - The sum of the values held on your behalf in all the
Sub-accounts of the Variable Account.

ALLOCATOR 2000 ANNUITY
V
<PAGE> 8

QUESTIONS AND ANSWERS ABOUT YOUR POLICY

The following summary is intended to highlight the most important features
of an Allocator 2000 Annuity that you, should consider. You will find more
detailed information in the main portion of the prospectus. As you review this
Summary, take note that the capitalized terms are defined in the Glossary of
Defined Terms that begins on page iv of this prospectus. This summary and all
other parts of this prospectus are qualified in their entirety by the terms of
the Allocator 2000 Annuity Policy, which is available upon request from ANLIC.

WHO IS THE ISSUER OF AN ALLOCATOR 2000 ANNUITY?
ANLIC is the issuer of each Allocator 2000 Annuity. ANLIC enjoys a rating
of A (Excellent) from A.M. Best Company, a firm that analyzes insurance
carriers. A stock life insurance company organized in Virginia, ANLIC is a
wholly owned subsidiary of Acacia Life Insurance Company which is, in turn, a
second tier subsidiary of Ameritas Acacia Mutual Holding Company. (See the
section on Acacia National Life Insurance Company.)

HOW DO I PURCHASE THE ALLOCATOR 2000 ANNUITY?
You must complete our application form and submit it to us for approval
with your first Premium Payment. Acceptance is subject to our rules, and we
reserve the right to reject any application or Premium Payment. The Policy can
be purchased with a minimum Premium Payment of $300 the first year. Additional
Premium Payments must be at least $30.00. If you wish to make automatic monthly
payments into your annuity, you may enroll in our pre-authorized checking
account program (CAM). Under this program, monthly Premium Payments will be
deducted from your checking account.

After you've purchased the Policy, you have a right to a "free look" which
gives you 10 days to change your mind without the imposition of a Surrender
Charge. If you decide you don't want the policy, we will void the policy and
refund the Policy Account Value (or the Premium Payments made to that point
where required by state law).

WHAT IS AN INDIVIDUAL FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY POLICY?
The Policy is an individual flexible premium deferred variable annuity. It
is designed for tax-deferred retirement investing by individuals. The Policy is
available for both qualified and non-qualified retirement plans. As a deferred
annuity it has two time periods, the Accumulation Period and the time period
after the Maturity Date. During the Accumulation Period earnings accumulate on a
tax-deferred basis and are taxed as income when withdrawn. During the time
period after the Maturity Date and during the lifetime of the Annuitant, you
receive payments under the Annuity Payment Option selected.

Your Policy is "variable" because the Policy Account Value is not
guaranteed. The Policy Account Value will vary with your investment experience.
The Policy Account Value on the Maturity Date along with the payment option
chosen will be used to determine the amount of your annuity payments.

HOW WILL MY POLICY ACCOUNT VALUE BE DETERMINED?
Your Premium Payments are invested in one or more of the Sub-accounts of
the Variable Account or allocated to the Fixed Account, as you instruct us. Your
Policy Account Value is the sum of the values of your interests in the
Sub-accounts of the Variable Account, plus the value in the Fixed Account. Your
Policy Account Value will depend on the investment performance of the
Sub-accounts, and the amount of interest we credit to the Fixed Account, as well
as the Net Premium Payments, partial withdrawals, and charges assessed. Each
Sub-account will invest in a single investment portfolio of a mutual fund. These
Portfolios offer a wide range of investment options from conservative to
aggressive and from Government Bond to international. You bear the entire
investment risk on your Variable Account Value. The investment strategies and
risks of each Portfolio are described in the accompanying prospectuses for the
Portfolios.

ALLOCATOR 2000 ANNUITY
1
<PAGE> 9

WHAT ANNUITY PAYMENT OPTIONS DOES THE CONTRACT OFFER?
You have the right to elect or change any of the Annuity Payment Options
listed below, any time before the Maturity Date, or elect to receive a lump sum:

INTEREST FOR LIFE. We will pay interest on the amount retained for the
lifetime of the Annuitant. At the Annuitant's death, we will pay the
principal amount to the Beneficiary or as otherwise agreed.

INTEREST FOR A FIXED PERIOD. We will pay interest on the retained amount
for a fixed period of not more than 30 years. At the end of the period we
will pay the principal amount to you or as otherwise agreed.

PAYMENTS FOR A FIXED PERIOD. We will pay the amount retained, with
interest, in equal monthly payments for a period of not more than 30 years.
The amount of each payment will be based on a payment schedule set forth in
the Policy.

PAYMENTS OF A FIXED AMOUNT. We will pay the amount retained, with interest,
in equal payments, until the amount retained has been paid in full. The
total payments in any year must be at least 5% of the amount retained.

LIFE INCOME. We will pay the amount retained in monthly installments,
adjusted to reflect the crediting of interest as set forth in the Policy,
for the guaranteed period elected and continuing during the lifetime of a
person you designate. You may elect to have no guaranteed period or a
guaranteed period of 5, 10, or 25 years, or the period in which the total
payments would equal the amount retained (an installment refund). If no
guaranteed period is elected, only one payment will be made if the
Annuitant dies before the second payment is made, only two payments will be
made if the Annuitant dies before the third payment is made, and so on.

You may select the date to annuitize the Policy. A Maturity Date may be the
first day of any calender month. However, you must begin to take payments by the
first full calendar month after the Annuitant's 90th birthday. If you fail to
give us a Maturity Date, we will assume a Maturity Date of the first day of the
calendar month of the Annuitant's 90th birthday.

WHAT ARE MY CHARGES AND DEDUCTIONS UNDER THE POLICY?
ANNUAL POLICY FEE. On each Policy Anniversary, we will deduct an annual
Policy Fee of $42.00 which partially compensates us for the costs of maintaining
the Policy. This charge is waived if the Policy Account Value exceeds $50,000 at
the time the Annual Policy Fee would be imposed. (See the section on Annual
Policy Fee.)

ANLIC will deduct a daily Administrative Expense Charge from the value of
the net assets of the Variable Account. This charge will not exceed 0.10%
annually. No Administrative Expense Charge is deducted from the amount in the
Fixed Account. (See the section on Administrative Expense Charge.)

MORTALITY AND EXPENSE RISK CHARGE. ANLIC will deduct a daily Mortality and
Expense Risk Charge from the value of the net assets of the Variable Account.
For the first 15 years of your Policy, this charge is at the rate of 1.25%
annually. Beginning in the 16th Policy year, this charge is reduced by 0.05%
annually until it reaches 0.50% annually in Policy year 30; the rate remains
level thereafter. No Mortality and Expense Risk Charge will be deducted from the
amount in the Fixed Account.

SURRENDER CHARGE. The Surrender Charges will vary depending upon the number
of Policy Anniversaries that have passed since the Receipt of Premium Payments.
(See the section on Surrender Charge.)

<TABLE>
<CAPTION>
POLICY ANNIVERSARIES SINCE RECEIPT SURRENDER CHARGE
OF PREMIUM PAYMENT RATE
---------------------------------- ----------------
<S> <C>
0 8%
1 8%
2 8%
3 6%
4 4%
5 or more None
</TABLE>

ALLOCATOR 2000 ANNUITY
2
<PAGE> 10

PREMIUM TAXES. We will deduct a charge for premium taxes, if any, when
incurred. Depending on state and local law, premium taxes can be incurred when a
Premium Payment is accepted, when Policy Account Value is withdrawn or
surrendered or when annuity payments start.

INVESTMENT ADVISORY FEE. Policy Owners who choose to allocate Net Premiums
to one or more of the Sub-accounts will also bear a pro rata share of the
Investment advisory fee paid by each of the investment portfolios in which the
various Sub-accounts invest. No such fees are assessed against amounts in the
Fixed Account. (See the section on Fund Expenses.)

HOW DOES THE INVESTMENT COMPONENT OF MY ALLOCATOR 2000 POLICY WORK?

ANLIC has established the Variable Account, which is separate from all
other assets of ANLIC, as a vehicle to receive and invest premiums received from
Allocator 2000. The Variable Account is divided into separate Sub-accounts. Each
Sub-account invests exclusively in shares of one of the investment portfolios
available through Allocator 2000. In the initial application Each Policy Owner
may allocate Net Premiums to one or more Investment Options. These allocations
may be changed, without charge, by notifying ANLIC's Service Office. The
aggregate value of your interests in the Sub-accounts and the Fixed Account will
represent the Policy Account Value of your Allocator 2000 Policy. (See the
section on Policy Account Value.)

WHAT INVESTMENT OPTIONS ARE AVAILABLE THROUGH THE ALLOCATOR 2000 POLICY?

The Investment Options available through Allocator 2000 include 25
investment portfolios, each of which is a separate series of a mutual fund from:
The Alger American Fund; Calvert Variable Series, Inc.; Deutsche Asset
Management VIT Funds; Variable Insurance Products Fund and Variable Insurance
Products Fund II, both of which are Fidelity Portfolios; Franklin Templeton
Variable Insurance Products Trust; Neuberger Berman Advisers Management Trust;
Oppenheimer Variable Account Funds; and Van Eck Worldwide Insurance Trust. These
Portfolios are:

Alger American Growth Portfolio
Alger American MidCap Growth Portfolio
Alger American Small Capitalization Portfolio
Calvert Social Money Market Portfolio
Calvert Social Small Cap Growth Portfolio
Calvert Social Mid Cap Growth Portfolio
Calvert Social International Equity Portfolio
Calvert Social Balanced Portfolio

Deutsche VIT Equity 500 Index Fund

Deutsche VIT Small Cap Index Fund

Deutsche VIT EAFE Equity Index Fund

Fidelity VIP Equity-Income: Service Class 2
Fidelity VIP High Income: Service Class 2
Fidelity VIP II Contrafund: Service Class 2
Templeton Asset Strategy Fund -- Class 2
Templeton International Securities Fund -- Class 2
Neuberger Berman Advisers Management Trust Limited Maturity Bond Portfolio
Neuberger Berman Advisers Management Trust Growth Portfolio
Neuberger Berman Advisers Management Trust Partners Portfolio
Oppenheimer Aggressive Growth Fund/VA
Oppenheimer Capital Appreciation Fund/VA
Oppenheimer Main Street Growth & Income Fund/VA
Oppenheimer High Income Fund/VA

Oppenheimer Strategic Bond Fund/VA

Van Eck Worldwide Hard Assets Fund

Details about the investment objectives and policies of each of the
available investment Portfolios, including management fees and expenses, are
found in The Portfolios section of this prospectus. You may also elect to
allocate Net Premium Payments to ANLIC's Fixed Account.

ALLOCATOR 2000 ANNUITY
3
<PAGE> 11

ARE THERE ANY RISKS INVOLVED IN OWNING AN ALLOCATOR 2000 POLICY?
Yes. Over the life of your Allocator 2000 Policy, the Sub-accounts to which
you allocate your premiums will fluctuate with changes in the stock market and
overall economic factors. These fluctuations will be reflected in the Variable
Account Value of your Allocator 2000 Policy and may result in loss of principal.
For this reason, the purchase of an Allocator 2000 Policy may not be suitable
for all individuals. It may not be advantageous to purchase an Allocator 2000
Policy for retirement or other long-term capital accumulation purposes.

WHAT IS THE DEATH BENEFIT UNDER THE POLICY ?

The Policy provides a Death Benefit if you (Owner) or a Joint Owner dies
before the Maturity Date while the Policy is in force. The Death Benefit is
guaranteed not to be less than the greater of the Policy Account Value or the
cumulative premium payments you have made less the cumulative withdrawals you
have taken. In addition, for Owners up to Issue Age 75 we guarantee that the
Death Benefit will not be less than the Minimum Guaranteed Death Benefit which
is described later in this prospectus. (See the section on Death Benefit.)

WHO CAN I CONTACT FOR MORE INFORMATION CONCERNING THE ALLOCATOR 2000 ANNUITY?
You can contact your Registered Representative or you can write to us at
our Administrative Office, Acacia National Life Insurance Company, 5900 "O"
Street, P.O. Box 81889, Lincoln, Nebraska 68501. ANLIC's telephone number is
888-837-6791 and its website address is www.acaciagroup.com.

SUMMARY OF FEES AND CHARGES

The following information summarizes the fees and charges payable by the
Owner of a Policy:

Owner transaction expenses:

<TABLE>
<CAPTION>
Surrender Charge -- on premiums paid only Maximum 8.00%
YEAR %
---- -
<S> <C>
1 8%
2 8%
3 8%
4 6%
5 4%
6 0%
Transfer fee $ 0.00
Annual Policy Fee $42.00
</TABLE>

Variable Account annual expenses (as a percentage of average Variable
Account Value)

<TABLE>
<S> <C>
Maximum Mortality and Expense Risk Charge 1.25%
Administrative Expense Charge 0.10%
Total Variable Account Annual Expenses: 1.35%
</TABLE>

ALLOCATOR 2000 ANNUITY
4
<PAGE> 12

PORTFOLIO ANNUAL EXPENSES
(EXPRESSED AS A PERCENTAGE OF NET ASSETS OF EACH PORTFOLIO)

<TABLE>
<CAPTION>
TOTAL
(Reflecting
INVESTMENT WAIVERS WAIVERS AND/OR
ADVISORY & 12B-1 OTHER AND/OR REIMBURSEMENTS,
PORTFOLIO MANAGEMENT EXPENSE EXPENSES TOTAL REIMBURSEMENTS IF ANY)
--------- ---------- ------- -------- ----- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
ALGER AMERICAN(1)
Alger American Growth 0.75% -- 0.04% 0.79% -- 0.79%
Alger American MidCap Growth 0.80% -- 0.05% 0.85% -- 0.85%
Alger American Small
Capitalization 0.85% -- 0.05% 0.90% -- 0.90%
CALVERT SOCIAL(2)
Calvert Social Money Market 0.50% -- 0.17%(3) 0.67% -- 0.67%
Calvert Social Small Cap
Growth 1.00% -- 0.58%(3) 1.58% -- 1.58%
Calvert Social Mid Cap Growth 0.90% -- 0.21%(3) 1.11% -- 1.11%
Calvert Social International
Equity 1.10% -- 0.50%(3) 1.60%(4) -- 1.60%
Calvert Social Balanced 0.70% -- 0.19%(3) 0.89% -- 0.89%
DEUTSCHE VIT(5)
Deutsche VIT Equity 500 Index 0.20% -- 0.23% 0.43% 0.13% 0.30%
Deutsche VIT Small Cap Index 0.35% -- 0.83% 1.18% 0.73% 0.45%
Deutsche VIT EAFE Equity
Index 0.45% -- 0.69% 1.15% 0.50% 0.65%
FIDELITY PORTFOLIOS(6)
VIP Equity-Income: Service
Class 2 0.48% 0.25% 0.10% 0.83% -- 0.83%(7)
VIP High Income: Service
Class 2 0.58% 0.25% 0.12% 0.95% -- 0.95%
VIP II Contrafund: Service
Class 2 0.58% 0.25% 0.12% 0.95% -- 0.95%(7)
FTVIP(8)
Templeton Asset Strategy
Fund(9) -- Class 2 0.60% 0.25%(10) 0.18% 1.03% -- 1.03%
Templeton International
Securities
Fund(11) -- Class 2 0.69% 0.25%(10) 0.19% 1.13% -- 1.13%
NEUBERGER BERMAN AMT(12)
Neuberger Berman AMT
Limited Maturity Bond 0.65% -- 0.11% 0.76% -- 0.76%
Neuberger Berman AMT Growth 0.84% -- 0.08% 0.92% -- 0.92%
Neuberger Berman AMT Partners 0.80% -- 0.07% 0.87% -- 0.87%
OPPENHEIMER VARIABLE ACCOUNT
FUNDS(13)
Oppenheimer Aggressive Growth
Fund/VA 0.66% -- 0.01% 0.67% -- 0.67%
Oppenheimer Capital
Appreciation Fund/VA 0.68% -- 0.02% 0.70% -- 0.70%
</TABLE>

ALLOCATOR 2000 ANNUITY
5
<PAGE> 13

- -------------------------

(1) Fred Alger Management, Inc. is manager to the Alger American portfolios.

(2) Calvert Asset Management Company, Inc., an affiliate of ANLIC, is
investment advisor of the Calvert Social Portfolios.

(3) "Other Expenses" reflect an indirect fee. Net fund operating expenses after
reductions for fees paid indirectly would be as follows:

<TABLE>
<S> <C>
Calvert Social Money Market 0.64%
Calvert Social Small Cap Growth 1.15%
Calvert Social Mid Cap Growth 1.02%
Calvert Social International Equity 1.50%
Calvert Social Balanced 0.86%
</TABLE>

(4) Total expenses have been restated to reflect expenses expected to be
incurred in 2000, resulting from a change in 1999 to the administrative
agreement, as approved by the shareholders.

(5) Bankers Trust Company is the investment advisor to Deutsche VIT. For its
services, the investment advisor receives a fee that is a percentage of
each fund's average daily net assets. The investment advisor has entered
into agreements to waive and/or reimburse operating expenses, including its
fees, that exceed certain percentages of the funds' aggregate average daily
net assets. Any differences in amounts are due to rounding.

(6) Fidelity Management & Research Company is manager of VIP and VIP II
(Fidelity Portfolios). Service Class 2 expenses are based on estimated
expenses for the first year.

(7) A portion of the brokerage commissions certain portfolios pay was used to
reduce portfolio expenses. In addition, through arrangements with the
portfolios' custodian, credits realized as a result of uninvested cash
balances were used to reduce a portion of the portfolios's expenses. After
these reductions, the total operating expenses presented in the table for
these portfolios would have been as follows:

<TABLE>
<S> <C>
VIP Equity Income: Service Class 2 0.82%
VIP II Contrafund: Service Class 2 0.92%
</TABLE>

(8) Templeton Investment Counsel, Inc. is investment adviser to the FTVIP
funds.

(9) (Previously the Templeton Asset Allocation Fund) On 2/8/00, shareholders
approved a merger and reorganization that combined the fund with the
Templeton Global Asset Allocation Fund, effective 5/1/00. The shareholders
of that fund had approved new management fees, which apply to the combined
fund effective 5/1/00. The table shows restated total expenses based on the
new fees and the assets of the fund as of 12/31/99, and not the assets of
the combined fund. However, if the table reflected both the new fees and
the combined assets, the fund's expenses after 5/1/00 would be estimated
as: Management Fees 0.60%, Distribution and Service Fees 0.25% Other
Expenses 0.14%, and Total Fund Operating Expenses 0.99%.

(10) The fund's class 2 distribution plan or "rule 12b-1 plan" is described in
the fund's prospectus. While the maximum amount payable under the fund's
12b-1 plan is 0.35% per year of the fund's average daily net assets, the
Board of Trustees of FTVIP has set the current rate at 0.25% per year.

ALLOCATOR 2000 ANNUITY
6
<PAGE> 14

(11) (Previously the Templeton International Fund) On 2/8/00, shareholders
approved a merger and reorganization that combined the fund with the
Templeton International Equity Fund, effective 5/1/00. The shareholders of
that fund had approved new management fees, which apply to the combined
fund effective 5/1/00. The table shows restated total expenses based on the
new fees and the assets of the fund as of 12/31/99, and not the assets of
the combined fund. However, if the table reflected both the new fees and
the combined assets, the fund's expenses after 5/1/00 would be estimated
as: Management Fees 0.65%, Distribution and Service Fees 0.25% Other
Expenses 0.20%, and Total Fund Operating Expenses 1.10%.

(12) Neuberger Berman Management Inc. ("NBMI") provides investment management
services to each Neuberger Berman AMT portfolio that include, among other
things, making and implementing investment decisions and providing
facilities and personnel necessary to operate the portfolio. NBMI provides
administrative services to each portfolio that include furnishing similar
facilities and personnel to the portfolio. With the portfolio's consent,
NBMI is authorized to subcontract some of its responsibilities under its
administration agreement with the portfolio to third parties. Each
portfolio bears all expenses of its operations other than those borne by
NBMI as administrator of the portfolio and as distributor of its shares.
Each portfolio bears all expenses of its operations other than those borne
by NBMI as investment manager of the series. These expenses include, but
are not limited to, for the portfolios and the series, legal and accounting
fees and compensation for trustees who are not affiliated with NBMI; for
the portfolios, transfer agent fees and the cost of printing and sending
reports and proxy materials to shareholders; and for the series, custodial
fees for securities. Any expenses which are not directly attributable to a
specific series are allocated on the basis of the net assets of the
respective series.

(13) OppenheimerFunds, Inc. serves as manager to the Oppenheimer portfolios.

(14) Van Eck Associates Corporation serves as investment adviser to the Van Eck
Worldwide Hard Assets Fund.

ALLOCATOR 2000 ANNUITY
7
<PAGE> 15

The purpose of the following tables is to assist you in understanding the
various costs and expenses that you will bear directly and indirectly. The
tables reflect charges and expenses of the Variable Account and charges and
expenses of the Portfolios for the year ended December 31, 1999; the Portfolios'
charges and expenses for future years may be higher or lower. For more
information on the charges summarized in these tables, see "Charges and
Deductions," and the prospectuses for the Funds. In addition, premium taxes may
be applicable.

EXAMPLE. If you surrender or annuitize your Policy at the end of the
applicable time period, you would pay the following expenses on a hypothetical
$1,000 allocation to each Portfolio, assuming a 5% annual return on assets. The
example reflects expenses of Separate Account II and the Portfolio, but does not
reflect premium taxes which may apply.

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
ALGER AMERICAN
Alger American Growth $ 97 $149 $161 $259
Alger American Small Cap $ 98 $151 $164 $265
Alger American MidCap Growth $ 98 $152 $167 $270
CALVERT SOCIAL
Calvert Social Money Market $ 96 $145 $154 $243
Calvert Social Small Cap $100 $159 $179 $295
Calvert Social Mid Cap $ 99 $155 $173 $282
Calvert Social International Equity $104 $169 $196 $329
Calvert Social Balanced $ 98 $151 $165 $266
DEUTSCHE VIT
Deutsche Equity 500 Index $ 92 $135 $136 $208
Deutsche Small Cap Index $ 94 $139 $144 $224
Deutsche EAFE Equity Index $ 96 $145 $154 $244
FIDELITY PORTFOLIOS
VIP Equity-Income: Service Class 2 $ 97 $150 $163 $263
VIP High Income: Service Class 2 $ 99 $153 $169 $275
VIP II Contrafund: Service Class 2 $ 99 $153 $169 $275
FTVIP
Templeton Asset Strategy Fund -- Class 2 $ 99 $156 $173 $283
Templeton International Securities Fund -- Class 2 $100 $158 $178 $293
NEUBERGER BERMAN AMT
Neuberger Berman Limited Maturity Bond $ 97 $148 $160 $256
Neuberger Berman Growth $ 98 $153 $168 $272
Neuberger Berman Partners $ 98 $151 $165 $267
OPPENHEIMER VARIABLE ACCOUNT FUNDS
Oppenheimer High Income Fund/VA $ 97 $148 $159 $255
Oppenheimer Strategic Bond Fund/Va $ 97 $149 $161 $258
Oppenheimer Aggressive Growth Fund/VA $ 96 $146 $155 $247
Oppenheimer Capital Appreciation Fund/VA $ 96 $146 $157 $250
Oppenheimer Main Street Growth & Income Fund/V $ 97 $149 $161 $258
VAN ECK
Worldwide Hard Assets Fund $101 $162 $184 $306
</TABLE>

ALLOCATOR 2000 ANNUITY
8
<PAGE> 16

EXAMPLE. If you do not surrender or annuitize your Policy, you would pay
the following expenses on a hypothetical $1,000 allocation to each Portfolio,
assuming a 5% annual return on assets. The example reflects expenses of Separate
Account II and the Portfolio, but does not reflect premium taxes which may
apply.

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
ALGER AMERICAN
Alger American Growth $23 $71 $121 $259
Alger American Small-Cap $24 $73 $124 $265
Alger American MidCap Growth $24 $74 $127 $270
CALVERT SOCIAL
Calvert Social $22 $66 $114 $243
Calvert Social Small Cap $27 $82 $139 $295
Calvert Social Mid Cap $25 $78 $133 $282
Calvert Social International Equity $30 $92 $157 $329
Calvert Social Balanced $24 $73 $125 $266
DEUTSCHE VIT
Deutsche Equity 500 Index $18 $56 $ 96 $208
Deutsche Small Cap Index $20 $61 $104 $224
Deutsche EAFE Equity Index $22 $67 $114 $244
FIDELITY PORTFOLIOS
VIP Equity-Income: Service Class 2 $23 $72 $123 $263
VIP High Income: Service Class 2 $25 $76 $129 $275
VIP II Contrafund: Service Class 2 $25 $76 $129 $275
FTVIP
Templeton Asset Strategy Fund -- Class 2 $25 $78 $133 $283
Templeton International Securities Fund -- Class 2 $26 $81 $138 $293
NEUBERGER BERMAN AMT
Neuberger Berman Limited Maturity Bond $23 $70 $120 $256
Neuberger Berman Growth $24 $75 $128 $272
Neuberger Berman Partners $24 $73 $125 $267
OPPENHEIMER VARIABLE ACCOUNT FUNDS
Oppenheimer High Income Fund/VA $23 $70 $119 $255
Oppenheimer Strategic Bond Fund/VA $23 $71 $121 $258
Oppenheimer Aggressive Growth Fund/VA $22 $67 $115 $247
Oppenheimer Capital Appreciation Fund/VA $22 $68 $117 $250
Oppenheimer Main Street Growth & Income Fund/VA $23 $71 $121 $258
VAN ECK
Worldwide Hard Assets Fund $28 $85 $145 $306
</TABLE>

The examples assume an average $25,000 annuity investment. These examples
should not be considered a representation of past or future expenses,
performance or return. Actual expenses and/or returns may be greater or less
than those shown. Please refer to the Funds' prospectuses for more information.

ALLOCATOR 2000 ANNUITY
9
<PAGE> 17

CONDENSED FINANCIAL INFORMATION

The Accumulation Unit Value as of the start date for each Sub-Account (when
the Sub-account was first available for Policies offered by this prospectus) and
the Accumulation Unit Values and the number of accumulation units outstanding on
December 31, 1999, 1998, and 1997 are as follows (Units are shown in
thousands.):

<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION
AS OF AS OF UNITS AS OF
SUBACCOUNT START DATE* DECEMBER 31 DECEMBER 31 YEAR
---------- ------------ ------------ ------------ ----
<S> <C> <C> <C> <C>
Alger American Growth Portfolio 26.92 414,435 1999
20.31 215,879 1998
13.71 132,282 1997
10.00 10.91 26,933 1996
Alger American MidCap Growth Portfolio 21.10 171,169 1999
16.14 102,971 1998
12.39 64,878 1997
10.00 10.77 12,949 1996
Alger American Small Capitalization Portfolio 18.85 338,805 1999
13.26 243,767 1998
11.48 132,551 1997
10.00 10.30 27,028 1996
Calvert Social Money Market Portfolio 1.17 3,623,527 1999
1.12 1,704,121 1998
1.07 1,140,175 1997
1.00 1.02 137,527 1996
Calvert Social Small Cap Growth Portfolio 10.84 70,302 1999
9.16 39,943 1998
9.76 31,049 1997
10.00 10.84 5,157 1996
Calvert Social Mid Cap Growth Portfolio 17.13 79,336 1999
16.15 59,588 1998
10.00 12.44 7,302 1997
Calvert Social International Equity Portfolio 17.19 126,303 1999
13.06 63,614 1998
10.00 11.02 7,669 1997
Calvert Social Balanced Portfolio 16.85 125,510 1999
5.15 71,077 1998
13.03 39,756 1997
10.00 10.85 646 1996
Deutsche VIT Equity 500 Index Fund -- -- -- 1999
Deutsche VIT Small Cap Index Fund -- -- -- 1999
Deutsche VIT EAFE(R)Equity Index Fund -- -- -- 1999
Fidelity VIP Equity-Income: Service Class 2 -- -- -- 1999
Fidelity VIP High Income: Service Class 2 -- -- -- 1999
Fidelity VIP II Contrafund(R): Service Class 2 -- -- -- 1999
Templeton Asset Strategy Fund -- Class 2 -- -- -- 1999
Templeton International Securities Fund -- Class 2 -- -- -- 1999
</TABLE>

ALLOCATOR 2000 ANNUITY
10
<PAGE> 18

<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION
AS OF AS OF UNITS AS OF
SUBACCOUNT START DATE* DECEMBER 31 DECEMBER 31 YEAR
---------- ------------ ------------ ------------ ----
<S> <C> <C> <C> <C>
Neuberger Berman Advisers Management 11.56 622,801 1999
Trust Limited Maturity Bond Portfolio 11.49 447,966 1998
11.01 240,629 1997
10.00 10.32 33,612 1996
Neuberger Berman Advisers Management 24.35 183,748 1999
Trust Growth Portfolio 16.33 169,192 1998
14.13 100,057 1997
10.00 10.96 24,534 1996
Neuberger Berman Advisers Management Trust Partners
Portfolio -- -- -- 1999
Oppenheimer Aggressive Growth Fund/VA 25.64 167,349 1999
14.08 142,725 1998
10.00 12.53 60,337 1997
Oppenheimer Capital Appreciation Fund/VA 21.07 358,965 1999
15.00 264,865 1998
10.00 12.10 120,465 1997
Oppenheimer Main Street Growth & Income Fund/VA 16.22 261,678 1999
13.44 171,939 1998
10.00 12.84 38,357 1997
Oppenheimer High Income Fund/VA 11.53 189,447 1999
11.15 121,519 1998
10.00 11.12 46,452 1997
Oppenheimer Strategic Bond Fund/VA 11.29 110,661 1999
11.08 57,232 1998
10.00 10.77 6,641 1997
Van Eck Worldwide Hard Assets Fund 8.56 165,933 1999
7.14 133,906 1998
10.34 53,425 1997
10.00 10.52 10,740 1996
</TABLE>

- ---------------

* Date of commencement of operations of the Alger American Growth Portfolio, the
Alger American MidCap Growth Portfolio, the Alger American Small
Capitalization Portfolio, the Calvert Social Money Market Portfolio, the
Calvert Social Small Cap Growth Portfolio, the Calvert Social Balanced
Portfolio, the Neuberger Berman Advisers Management Trust Limited Maturity
Bond Portfolio, the Neuberger Berman Advisers Management Trust Growth
Portfolio, and the Van Eck Worldwide Hard Assets Fund is 8/26/96. Date of
commencement of operations of the Calvert Social Mid Cap Growth Portfolio, the
Calvert Social International Equity Portfolio, the Oppenheimer Aggressive
Growth Fund, the Oppenheimer Growth Fund, the Oppenheimer Main Street Growth &
Income Fund, the Oppenheimer High Income Fund, and the Oppenheimer Strategic
Bond Fund is 5/1/97. The start date for Deutsche VIT Equity 500 Index Fund,
Deutsche VIT Small Cap Index Fund, Deutsche VIT EAFE Equity Index Fund,
Fidelity VIP Equity-Income: Service Class 2, Fidelity VIP High Income: Service
Class 2, Fidelity VIP II Contrafund: Service Class 2, Neuberger Berman
Advisers Management Trust Partners Portfolio, Templeton Asset Strategy
Fund -- Class 2, and Templeton International Securities Fund -- Class 2 is
5/1/2000.

ALLOCATOR 2000 ANNUITY
11
<PAGE> 19

ANLIC AND THE VARIABLE ACCOUNT

ACACIA NATIONAL LIFE INSURANCE COMPANY
Acacia National Life Insurance Company ("ANLIC") is a stock life insurance
company organized in the Commonwealth of Virginia. ANLIC was incorporated on
December 9, 1974. ANLIC is principally engaged in offering life insurance
policies and annuity contracts. ANLIC is admitted to do business in 46 states
and the District of Columbia.

ANLIC is a wholly owned subsidiary of Acacia Life Insurance Company
("Acacia"), a District of Columbia stock company. Acacia is wholly owned by
Ameritas Holding Company, a subsidiary of Ameritas Acacia Mutual Holding
Company, a Nebraska mutual insurance holding company. The Administrative Offices
of both ANLIC and Acacia are at 5900 "O" Street, P.O. Box 81889, Lincoln,
Nebraska 68501. ANLIC's telephone number is 888-837-6791 and its website address
is www.acaciagroup.com.

Acacia also owns all of the outstanding stock of the Acacia Financial
Corporation, a holding company, which owns all of the stock of The Advisors
Group, Inc. and the Calvert Group, Ltd. ("Calvert"), which in turn owns Calvert
Asset Management Company, Inc., the investment adviser of Calvert Variable
Series, Inc., a series of Funds available under the Policies. The Advisors
Group, Inc. is the principal underwriter for the Policies described in this
Prospectus. The Advisors Group, Inc. sells shares of other mutual funds and
other securities, and may also sell variable annuity or variable life policies
of other issuers.

On January 1, 1999, Ameritas Mutual Insurance Holding Company, a Nebraska
mutual insurance holding company and Acacia Mutual Holding Corporation, a
District of Columbia mutual holding corporation merged and became Ameritas
Acacia Mutual Holding Company ("Ameritas Acacia") a Nebraska mutual insurance
holding company. Both Ameritas Acacia and Ameritas Holding Company, an
intermediate holding company, are organized under the Nebraska Mutual Insurance
Holding Company Act. Ameritas Acacia and its subsidiaries had total statutory
assets at December 31, 1999 of over $6.3 billion and Acacia and its subsidiaries
had total assets as of December 31, 1999 of $1.7 billion.

THE VARIABLE ACCOUNT

Acacia National Variable Annuity Separate Account II (the "Variable
Account") was established by ANLIC as a separate account on November 30, 1995.
The Variable Account will receive and invest the Net Premium Payments paid under
this Policy.

Although the assets of the Variable Account are the property of ANLIC, the
Code of Virginia under which the Variable Account was established provides that
the assets in the Variable Account attributable to the Policies are generally
not chargeable with liabilities arising out of any other business which ANLIC
may conduct.

The Variable Account is currently divided into 25 Sub-accounts. Each
Sub-account invests exclusively in shares of a single Portfolio of a registered,
open end investment management company (a "Fund" or the "Funds" collectively).
Income and both realized and unrealized gains or losses from the assets of each
Sub-account of the Variable Account are credited to or charged against that
Sub-account without regard to income, gains or losses from any other Sub-account
of the Variable Account or arising out of any other business ANLIC may conduct.
Each Sub-account reinvests all dividends and income and capital gain
distributions declared by the Portfolio.

The Variable Account is registered as a unit investment trust under the
Investment Company Act of 1940, as amended (the "1940 Act"). Registration with
the SEC does not involve supervision of the management or investment practices
or policies of the Variable Account or ANLIC by the SEC.

THE PORTFOLIOS

The investment objectives of each of the Portfolios are summarized below.
There is no assurance that any Portfolio will achieve its stated objective. More
detailed information about the Portfolios, including a description of the risks,
may be found in the prospectus for each of the Portfolios which must accompany
or precede this prospectus. In addition, the Variable Account purchases shares
of each Portfolio subject to

ALLOCATOR 2000 ANNUITY
12
<PAGE> 20

the terms of the participation agreements between ANLIC and the Funds. Copies of
those agreements have been filed as exhibits to the registration statement for
the Variable Account. Each of the Funds has or may have additional portfolios
that are not available to the Variable Account.

THE ALGER AMERICAN FUND
The Variable Account has three Sub-accounts that invest exclusively in
shares of the Alger American Fund. The LargeCap Growth Sub-account, the MidCap
Growth Sub-account and the SmallCap Growth Sub-account invest in the Alger
American Growth Portfolio, the Alger American MidCap Growth Portfolio, and the
Alger American Small Capitalization Portfolio, respectively, of the Alger
American Fund.

The Alger American Growth Portfolio seeks to provide long-term capital
appreciation. It invests in equity securities, such as common or preferred
stocks, or securities convertible into or exchangeable for equity securities,
including warrants and rights, primarily of companies with total market
capitalization of $1 billion or greater.

The Alger American MidCap Growth Portfolio seeks to provide long-term
capital appreciation. It invests in equity securities, such as common or
preferred stocks, or securities convertible into or exchangeable for equity
securities, including warrants and rights. Except during temporary defensive
periods, the Portfolio invests at least 65% of its total assets in equity
securities, of companies that, at the time of purchase of the securities, have
total market capitalization within the range of companies included in the S & P
MidCap 400 index.

The Alger American Small Capitalization Portfolio seeks to provide
long-term capital appreciation. It invests in equity securities, such as common
or preferred stocks, or securities convertible into or exchangeable for equity
securities, including warrants and rights. Except during temporary defensive
period, the Portfolio invests at least 65% of its total assets in equity
securities, of companies that, at the time of purchase of the securities, have
total market capitalization within the range of companies included in the
Russell 2000 Growth Index.

Fred Alger Management, Inc. serves as investment manager to the Alger
American Fund.

CALVERT VARIABLE SERIES, INC.

The Variable Account has five Sub-accounts that invest exclusively in
shares of Calvert Variable Series, Inc.. The Social Money Market, Social
Strategic Growth, Social Managed Growth, Social Global and Social Balanced
Sub-accounts of the Variable Account invest in shares of the Calvert Social
Money Market Portfolio, the Calvert Social Small Cap Growth Portfolio, the
Calvert Social Mid Cap Growth Portfolio, the Calvert Social International Equity
Portfolio, and the Calvert Social Balanced Portfolio, respectively, of Calvert
Variable Series, Inc. Calvert Variable Series, Inc. is one of eight registered
investment companies in the Calvert Group, Ltd. Funds ("Calvert"). Calvert is a
second tier wholly-owned subsidiary of Acacia Life. Calvert is the sponsor of
the Fund.

These Portfolios seek to achieve competitive returns while encouraging
responsible corporate conduct. The Portfolios look for enterprises that make a
significant contribution to society through their products and the way they do
business. Each proposed portfolio investment that is deemed financially viable
is then screened according to the stated social criteria of the particular
Portfolio. Investments must, in the judgment of the investment adviser, be
consistent with these criteria. It should be noted that the Portfolios' social
criteria tend to limit the availability of investment opportunities more than is
customary with other investment portfolios. (See the individual Portfolio
Prospectuses for a complete description of each social screen).

The Calvert Social Money Market Portfolio ("CS Money Market") seeks to
provide the highest level of current income, consistent with liquidity, safety
and security of capital, by investing in money market instruments, including
repurchase agreements with recognized securities dealers and banks secured by
such instruments, selected in accordance with the Portfolios' investment and
social criteria. CS Money Market attempts to maintain a constant net asset value
of $1.00 per share. There can be no assurance that the Portfolio will maintain a
constant net asset value of $1.00 per share. An investment in the Portfolio is
neither insured nor guaranteed by the United States government.

ALLOCATOR 2000 ANNUITY
13
<PAGE> 21

Calvert Social Small Cap Growth ("CS Small Cap") seeks, with a concern for
social impact to achieve long-term capital appreciation by investing primarily
in the equity securities of small companies publicly traded in the United
States. In seeking capital appreciation, the Portfolio invests primarily in
equity securities of small capitalized growth companies that have historically
exhibited exceptional growth characteristics and that in the advisor's opinion,
have strong earnings potential relative to the U.S. market as a whole.

CS Small Cap may invest up to 35% of its assets in debt securities,
excluding money market instruments. These debt securities may consist of
investment-grade obligations and junk bonds. (See "The Portfolios Risks
Attendant to Investments in Junk Bonds.")

Calvert Social Mid Cap Growth ("CS Mid Cap") seeks to provide long-term
capital appreciation by investing primarily in a nondiversified portfolio of the
equity securities of small- to mid-sized companies that are undervalued but
demonstrate a potential for growth.

CS Mid Cap may also invest in debt securities and may invest up to 5% of
its assets in non-investment grade securities (See "The Portfolios -- Risks
Attendant to Investments in Junk Bonds.") and up to 25% of its assets in foreign
securities. (See "The Portfolios -- Risks Attendant to Investments in Foreign
Securities.").

Calvert Social International Equity Portfolio ("CS International") seeks to
provide a high return consistent with reasonable risk by investing primarily in
a globally diversified portfolio of equity securities. The Portfolio seeks total
return through a globally diversified investment portfolio.

Under normal circumstances, CS International will invest at least 65% of
its assets in the securities of issuers in no less than three countries, other
than the United States (See "The Portfolios -- Risks Attendant to Investments in
Foreign Securities.") As an operating policy, the portfolio will limit its
investment in securities of U.S. issuers to 5% of its net assets. CS
International may also purchase unrated debt securities and may invest up to 5%
of its assets in non-investment grade bonds. (See "The Portfolios Risks
Attendant to Investments in Junk Bonds.")

Calvert Social Balanced Portfolio ("CS Balanced") seeks to achieve a total
return above the rate of inflation through an actively managed portfolio of
stocks, bonds and money market instruments (including repurchase agreements
secured by such instruments) selected with a concern for the investment and
social impact of each investment.

CS Balanced may invest up to 20% of its assets in non-investment grade debt
obligations ("junk bonds"). (See "The Portfolios -- Risks Attendant to
Investments in Junk Bonds.")

Calvert Asset Management Company, Inc. ("CAM") is the investment adviser to
all the Portfolios of Calvert Variable Series, Inc. CAM is a wholly owned
subsidiary of Calvert which is in turn a second tier wholly owned subsidiary of
Acacia Life. Pursuant to its investment advisory agreement, CAM manages the
investment and reinvestment of the assets of each Portfolio and is responsible
for the overall business affairs of each Portfolio. Calvert Administrative
Services, an affiliate of CAM, provides administrative services to each
Portfolio and is paid a fee by CAM of a percentage of net assets per year.

On behalf of CS International, CAM has entered into a subadvisory agreement
with Murray Johnstone International, Ltd. ("Murray Johnstone") of Glasgow,
Scotland, which has its principal U.S. office in Chicago, Illinois, and is a
wholly-owned subsidiary of United Asset Management Company. Murray Johnstone
manages the investment and reinvestment of assets of CS International, although
CAM may manage part of CS International's cash reserves required for liquidity
purposes.

On behalf of CS Balanced, CAM has entered into a subadvisory agreement with
United States Trust Company of Boston, a Massachusetts chartered commercial bank
with full trust powers. On behalf of CS Small Cap, CAM has entered into a
subadvisory agreement with Awad & Associates of New York. The subadvisers manage
the investment and reinvestment of the assets of the Portfolio, although CAM may
screen potential investments for compatibility with the Portfolio's social
criteria. CAM continuously monitors and evaluates the performance of the
subadvisers.

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DEUTSCHE ASSET MANAGEMENT VIT FUNDS

The Variable Account has three Sub-accounts that invest exclusively in
shares of Portfolios of Deutsche Asset Management VIT Funds. The Equity 500
Index Sub-account, Small Cap Index Sub-account, and EAFE Equity Index
Sub-account invest in shares of the Equity 500 Index Fund, Small Cap Index Fund,
and EAFE Equity Index Fund, respectively, of Deutsche.

The Equity 500 Index Fund seeks to match, before expenses, the risk and
return characteristics of the Standard and Poor's 500 Composite Stock Price
("S&P 500 Index"). The Fund will invest primarily in common stocks of companies
that comprise the S&P 500 Index, which emphasizes stocks of large U.S.
companies. The Fund may also use stock index futures and options.

The Small Cap Index Fund seeks to match, before expenses, the risk and
return characteristics of the Russell 2000 Small Stock Index ("Russell 2000
Index"). The Fund will invest primarily in common stocks of companies that
comprise the Russell 2000 Index, which emphasizes stocks of small U.S.
companies. The Fund may also use stock index futures and options.

The EAFE Equity Index Fund seeks to match, before expenses, the risk and
return characteristics of the Morgan Stanley Capital International EAFE Index
("EAFE Index"). The Fund will invest primarily in common stocks of companies
that comprise the EAFE Index, which emphasizes stocks of companies in major
markets in Europe, Australia and the Far East. The Fund may also use stock index
futures and options.

Bankers Trust Company serves as investment adviser to the Deutsche Asset
Management VIT Funds.

FIDELITY VARIABLE INSURANCE PRODUCTS FUND
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
The Variable Account has two Sub-accounts that invest exclusively in shares
of Portfolios of the Variable Insurance Products Fund ("VIP") and one
Sub-Account that invests exclusively in shares of a Portfolio of the Variable
Insurance Products Fund II ("VIP II"). Equity-Income: Service Class 2
("Equity-Income") and High Income: Service Class 2 ("High-Income") invest in
shares of the VIP Equity-Income: Service Class 2 and VIP High Income: Service
Class 2 Portfolios, respectively. Contrafund: Service Class 2 ("Contrafund")
invests in shares of the VIP 2 Contrafund: Service Class 2 Portfolio of VIP II.

Equity-Income seeks reasonable income. Will also consider the potential for
capital appreciation. Seeks a yield which exceeds the composite yield on the
securities comprising the Standard & Poor's 500 by investing at least 65% in
income-producing equity securities, which tends to lead to investments in large
cap "value" stocks.

High Income seeks a high level of current income while also considering
growth of capital by investing at least 65% in income-producing debt securities,
preferred stocks and convertible securities, with an emphasis on lower quality
debt securities.

Contrafund seeks long-term capital appreciation by investing primarily in
common stocks and investing in securities of companies whose value it believes
is not fully recognized by the public.

Fidelity Management & Research Company serves as investment adviser to VIP
and VIP II.

NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST

The Variable Account has three Sub-Accounts that invest exclusively in
shares of Portfolios of the Neuberger Berman Advisers Management Trust ("AMT").
The Limited Maturity Bond, Growth, and Partners Sub-accounts of the Variable
Account invest in shares of the Limited Maturity Bond Portfolio, Growth
Portfolio, and Partners Portfolio, respectively, of AMT.

The Neuberger Berman Limited Maturity Bond Portfolio seeks to provide the
highest current income consistent with low risk to principal and liquidity; and
secondarily, total return. Neuberger Berman Limited Maturity Bond invests in a
diversified portfolio of fixed and variable rate debt securities and seeks to
increase income and preserve or enhance total return by actively managing
average portfolio maturity in light of market conditions and trends.

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The Neuberger Berman Limited Maturity Bond Portfolio invests in a
diversified portfolio of short-to-intermediate-term U.S. Government and Agency
securities and debt securities issued by financial institutions, corporations,
and others, of at least investment grade. These securities include mortgage-
backed and asset-backed securities, repurchase agreements with respect to U.S.
Government and Agency securities, and foreign investments. The Neuberger Berman
Limited Maturity Bond Portfolio may invest up to 5% of its net assets in
municipal securities when the portfolio manager believes such securities may
outperform other available issues. The Portfolio may purchase and sell covered
call and put options, interest-rate futures contracts, and options on those
futures contracts, and may engage in lending portfolio securities. The
Portfolio's dollar-weighted average portfolio maturity may range up to five
years.

The Neuberger Berman Growth Portfolio seeks capital appreciation, without
regard to income. The Neuberger Berman Growth Portfolio invests in securities
believed to have the maximum potential for long-term capital appreciation. It
does not seek to invest in securities that pay dividends or interest, and any
such income is incidental. The Portfolio expects to be almost fully invested in
common stocks, often of companies that may be temporarily out of favor in the
market. The Portfolios' aggressive growth investment program involves greater
risks and share price volatility than programs that invest in more conservative
securities. Moreover, the Portfolio does not follow a policy of active trading
for short-term profits. Accordingly, the Portfolio may be more appropriate for
investors with a longer-range perspective. While the Portfolio uses the AMT
value-oriented investment approach, when the portfolio manager believes that
particular securities have greater potential for long-term capital appreciation,
the Portfolio may purchase such securities at prices with higher multiples to
measures of economic value (such as earnings). In addition, the Portfolio
focuses on companies with strong balance sheets and reasonable valuations
relative to their growth rates. It also diversifies its investments into many
companies and industries.

The Neuberger Berman Partners Portfolio seeks capital growth. Principal
series investments are common stocks of mid- to large-cap companies.

The investment adviser for the Limited Maturity Bond, Growth and Partners
Portfolios of AMT is Neuberger Berman Management Inc. ("NBMI"). NBMI retains
Neuberger Berman, L.P., without cost to AMT, as subadviser to furnish it with
investment recommendations and research information. NBMI provides investment
management services to each Portfolio that include, among other things, making
and implementing investment decisions and providing facilities and personnel
necessary to operate the Portfolio. NBMI provides administrative services to
each Portfolio that include furnishing similar facilities and personnel for the
Portfolio. With the Portfolio's consent, NBMI is authorized to subcontract some
of its responsibilities under its administration agreement with the Portfolio to
third parties.

OPPENHEIMER VARIABLE ACCOUNT FUNDS
The Variable Account has five Sub-accounts that invest exclusively in
shares of Portfolios of the Oppenheimer Variable Account Funds (the "Oppenheimer
Funds"). The Aggressive Growth, Capital Appreciation, Growth & Income, High
Income, and Strategic Bond Income Sub-Accounts of the Variable Account invest in
shares of the Aggressive Growth Fund/VA, Capital Appreciation Fund/VA, Main
Street Growth & Income Fund/VA, High Income Fund/VA and Strategic Bond Fund/VA
respectively, of the Oppenheimer Funds.

The Oppenheimer Funds are managed by Oppenheimer Funds, Inc. ("the
Manager"), which is responsible for selecting the Oppenheimer Funds' investments
and handles its day-to-day business. The Manager carries out its duties, subject
to the policies established by the Board of Trustees, under investment advisory
agreements for each Oppenheimer Fund which state the Manager's responsibilities.

Oppenheimer Aggressive Growth Fund/VA ("Aggressive Growth Fund") seeks to
achieve capital appreciation by investing in "growth-type" companies. Such
companies are believed to have relatively favorable long-term prospects for
increasing demand for their goods or services, or to be developing new products,
services or markets, and normally retain a relatively larger portion of their
earnings for research, development and investment in capital assets.

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Oppenheimer Capital Appreciation Fund/VA ("Capital Appreciation Fund")
seeks to achieve capital appreciation by investing insecurities of well-known
established companies. Such securities generally have a history of earnings and
dividends and are issued by seasoned companies.

Oppenheimer Main Street Growth & Income Fund/VA ("Growth & Income Fund")
seeks a high total return (which includes growth in the value of its shares as
well as current income) from equity and debt securities. Its equity investments
will include common stocks, preferred stocks, convertible securities and
warrants. Its debt securities will include bonds, participation interests,
asset-backed securities, private-label mortgage-backed securities and
collateralized mortgage obligations, zero coupon securities and U.S.
obligations. From time to time Growth & Income Fund may focus on small to medium
capitalization issuers, the securities of which may be subject to greater price
volatility than those of larger capitalized issuers.

The composition of Growth & Income Fund's Portfolio among equity and
fixed-income investments will vary from time to time based upon the Manager's
evaluation of economic and market trends and perceived relative total
anticipated return from such types of investments. Accordingly, there is neither
a minimum nor a maximum percentage of Growth & Income Fund's Assets that may, at
any given time, be invested in either type of investment.

Oppenheimer High Income Fund/VA ("High Income Fund") seeks a high level of
current income from investment in high yield fixed-income securities (including
long-term debt and preferred stock issues, including convertible securities).
High Income Fund's investment policy is to assume certain risks in seeking high
yield including securities in the lower rating categories, commonly known as
"junk bonds", which are subject to a greater risk of loss of principal and
nonpayment of interest than higher rated securities. These securities may be
considered to be speculative. (See "The Portfolios -- Risks Attendant to
Investments in Junk Bonds.")

Oppenheimer Strategic Bond Fund ("Strategic Bond Fund") seeks a high level
of current income by investing primarily in a diversified portfolio of high
yield fixed-income securities. Such income is principally derived from interest
on debt securities and the Fund seeks to enhance such income by writing covered
call options on debt securities. The Fund intends to invest principally in (i)
foreign government and corporate debt securities (ii) U.S. Government
securities, and (iii) lower-rated high yield domestic debt securities, commonly
known as "junk bonds", which are subject to a greater risk of loss of principal
and nonpayment of interest than higher-rated securities. These securities may be
considered to be speculative. (See "The Portfolios -- Risks Attendant to
Investments in Junk Bonds.") Under normal circumstances, the Fund's assets will
be invested in each of these three sectors. However, Strategic Bond Fund may
from time to time invest up to 100% of its total assets in any one sector if, in
the judgment of the Manager, the Fund has the opportunity of seeking a high
level of current income without undue risk to principal.

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST
The Variable Account has two Sub-accounts that invest exclusively in shares
of Portfolios of the Franklin Templeton Variable Insurance Products Trust
("FTVIP" or "Templeton Portfolios"). The Asset Strategy and International
Securities Sub-accounts invest in shares of the Templeton Asset Strategy
Fund -- Class 2 and Templeton International Securities Fund -- Class 2
Portfolios, respectively, of FTVIP.

Templeton Asset Strategy -- Class 2 has the investment objective of high
total return. The fund will invest in equity securities of companies of any
nation, debt securities of companies and governments of any nation, and in money
market instruments.

Templeton International Securities -- Class 2 has the investment objective
of long-term capital growth. The fund will invest in the equity securities of
companies located outside the U. S., including emerging markets.

The investment adviser for the Templeton Portfolios is Templeton Investment
Counsel, Inc..

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VAN ECK WORLDWIDE INSURANCE TRUST
The Hard Assets Sub-account of the Variable Account invests exclusively in
shares of the Van Eck Worldwide Hard Assets Fund.

Van Eck Worldwide Hard Assets Fund seeks long-term capital appreciation by
investing globally, primarily in "hard asset" securities. Income is a secondary
consideration. The Worldwide Hard Assets Fund will invest at least 65% of its
assets in "hard asset securities," defined as securities of companies that
derive at least 50% of gross revenue or profit from exploration, development,
production or distribution of precious metals, natural resources, real estate or
commodities. The Fund may concentrate as much as 50% of its assets in any single
"hard asset" sector.

The production and marketing of hard assets may be affected by actions and
changes in government. In addition, hard assets and securities of hard assets
companies may be cyclical in nature. During periods of economic or financial
instability, the securities of some hard assets companies may be subject to
broad price fluctuations, reflecting volatility of energy and basic materials
prices and possible instability of supply of various hard assets. In addition,
some hard assets companies may also be subject to the risks generally associated
with extraction of natural resources, such as the risks of mining and oil
drilling, and the risks of hazards associated with natural resources, such as
fire, drought, increased regulatory and environmental costs, and others.
Securities of hard assets companies may also experience greater price
fluctuations than the relevant hard assets. In periods of rising hard assets
prices, such securities may rise at a faster rate, and conversely, in times of
falling hard assets prices, such securities may suffer a greater price decline.
(See "The Portfolios -- Risks Attendant to Investments in Foreign Securities.")

The investment adviser for the Van Eck Worldwide Hard Assets Fund is Van
Eck Associates Corporation.

RISKS ATTENDANT TO INVESTMENTS IN JUNK BONDS
Investments in non-investment grade debt securities, commonly referred to
as "junk bonds", involve special risks in addition to the risks associated with
investments in higher rated debt securities. In general, non-investment grade
securities are regarded as predominately speculative with respect to the
capacity of the issuer to pay interest and repay principal.

Calvert Social Balanced, Calvert Social Small Cap, Oppenheimer High Income
Fund, and Oppenheimer Strategic Bond Fund each may invest in junk bonds. These
Portfolios each describe the risks attendant to these investments in its
prospectus. You should review these prospectuses carefully and consider the
risks associated with junk bonds before investing in Sub-accounts corresponding
to these Portfolios.

RISKS ATTENDANT TO INVESTMENTS IN FOREIGN SECURITIES

Investments in foreign securities involve substantial and different risks.
You should consider these risks carefully. Calvert Social International,
Oppenheimer Strategic Bond Fund, and Van Eck Worldwide Hard Assets Fund may each
invest in foreign securities. For example there is generally less publicly
available information about foreign companies than is available about companies
in the U.S. Foreign Companies are generally not subject to uniform audit and
financial reporting standards, practices and requirements comparable to those in
the U.S. These Portfolios each describe the risks attendant to these investments
in its prospectus. You should review these prospectuses carefully and consider
the risks associated with foreign securities before investing in Sub-accounts
corresponding to these Portfolios.

RESOLVING MATERIAL CONFLICTS

In addition to variable annuity and variable life insurance policies issued
by ANLIC, the Funds are also available to registered separate accounts of
insurance companies other than ANLIC. As a result, there is a possibility that a
material conflict may arise between your interests and the owners of life
insurance policies and variable annuities issued by other companies whose values
are allocated to one or more other separate accounts investing in any one of the
Portfolios.

In addition, one or more of the Portfolios may sell shares to certain
retirement plans qualifying under Section 401 of the Internal Revenue Code of
1986, as amended (the "Code") (including cash or deferred

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arrangements under Section 401(k) of the Code) or other sections of the Code. As
a result, there is a possibility that a material conflict may arise between your
interests generally and such retirement plans or participants in such retirement
plans.

In the event of a material conflict, ANLIC will take any necessary steps,
including removing the Variable Account from that Portfolio, to resolve the
matter. The Board of Directors or Trustees of the Portfolios intend to monitor
events in order to identify any material conflicts that may possibly arise and
to determine what action, if any, should be taken in response to those events or
conflicts. (See, the individual Fund prospectuses for more information.)

THE FIXED ACCOUNT

You may allocate all or a part of your Premium Payments to the Fixed
Account in states where it is available. The Fixed Account is part of the
General Account of ANLIC. The General Account consists of all of ANLIC's assets
other than those in any separate account. We guarantee that we will credit the
Fixed Account with interest at a rate of not less than 4% per year ("Guaranteed
Interest Rate"). We may credit interest at a rate in excess of the Guaranteed
Interest Rate in our sole discretion. You assume the risk that interest credited
to the Fixed Account allocations may not exceed the Guaranteed Interest Rate.
Transfers out of the Fixed Account are subject to certain limitations. (See,
"The Policy -- Transfers").

THE POLICY

The Policy is a flexible premium deferred variable annuity. The rights and
benefits of the Policy are described below and in the Policy. The obligations
under the Policy are obligations of ANLIC. However, we reserve the right to make
any modification to conform the Policy to, or to give you or other Owners the
benefit of, any Federal or state statute or rule or regulation.

The Policy may be purchased on a non-qualified tax basis ("Nonqualified
Policy"). The Policy may also be purchased and used in connection with plans
qualifying for favorable Federal income tax treatment ("Qualified Policy").

ISSUANCE OF A POLICY
Individuals wishing to purchase a Policy must complete an application and
send it to our Service Office. Acceptance is subject to our rules, and we
reserve the right to reject any application or Premium Payment. If your
application can be accepted in the form received, your initial Premium Payment
will be applied within two business days after its receipt at our Service
Office. If your initial Premium Payment cannot be applied after receipt because
of deficiencies in the application or other issuing requirements, you will be
contacted within five business days and given an explanation for the delay. The
initial Premium Payment will be returned to you at that time unless you consent
to our retention of it and our crediting of it as soon as the necessary
requirements are fulfilled. If the Annuitant is between the ages of 75 and 85
when you purchase a Policy, you can only make a single Premium Payment. You
cannot purchase a Policy if either you or the Annuitant is 85 years old or
older.

TELEPHONE REQUESTS
At the time an application for a Policy is completed, or at any subsequent
time, you may request a telephone transfer authorization form. If the form is
properly completed and on file with us, transfers may be made pursuant to
telephone instructions, subject to the above terms and the terms of the
authorization form. Otherwise, transfer requests must be in writing in a form
acceptable to us. Transfer requests made by telephone are processed upon the
date of receipt, if received prior to 4:00 p.m. Eastern time. We may, at any
time, revoke or modify the transfer privilege.

FREE LOOK PERIOD
If for any reason you are not satisfied with the Policy, you may return it
to us within 10 days after you receive it. If you cancel the Policy within this
10-day Free Look Period, we will refund the Policy Account Value at the end of
the Valuation Period during which the Policy was received by us (or, where
required by state law, the greater of the Policy Account Value or the Premium
Payments that were paid), and the Policy will be void from the Policy Date. (See
"The Policy -- Allocation of Premium Payments.")

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To cancel the Policy, you must mail or deliver it to either our Service Office
or the registered agent who sold it to you within 10 days after you receive it.
The Free Look Period may be longer or otherwise vary where required by state
law.

Certain states require us to refund the greater of Premium Payments made or
the Policy Account Value at the end of the Free Look Period. Under Policies
issued in these states, we reserve the right to allocate the initial Premium
Payment and any additional Premium Payments received during the Free Look Period
in their entirety to the Money Market Sub-account until the end of the Free Look
Period. For administrative reasons, the Free Look Period is assumed to be
fifteen days for this purpose.

PREMIUM PAYMENTS
The total Premium Payments during the first Policy year must be at least
$300. Premium Payments may be made in amounts of $30 or more.

If, after the first five Policy anniversaries, you have made no Premium
Payments during a 24-month period and your then-current Policy Account Value
totals less than $2,000, we have the right to pay you the total value of your
account in a lump sum and cancel the Policy.

ALLOCATION OF PREMIUM PAYMENTS

You determine in the application how the initial Net Premium Payment will
be allocated among the Sub-accounts and the Fixed Account. You may allocate any
whole percentage of Net Premium Payments, from 5% to 100%. Additional Net
Premium Payments will be allocated to the Sub-accounts and the Fixed Account
according to the allocation percentage specified in your application, unless
subsequently changed.

Notwithstanding the foregoing, all Premium Payments made on Policies in
certain states may be allocated to the Money Market Sub-account during the Free
Look Period. (See "The Policy -- Free Look Period.")

The Policy Account Value will vary with the investment performance of the
Sub-accounts you select, and you bear the entire risk for amounts allocated to
the Variable Account. You should periodically review your allocations of Policy
Account Value in light of all relevant factors, including market conditions and
your overall financial planning requirements.

POLICY ACCOUNT VALUE
The Policy Account Value prior to the Maturity Date is equal to the
Variable Account Value plus the amount in the Fixed Account.

Variable Account Value. On each Valuation Date, the Variable Account Value
is determined by multiplying the number of Accumulation Units of each
Sub-account by the current Accumulation Unit Value for the Sub-account, and
adding together all these amounts. When a Net Premium Payment or transfer is
allocated to a Sub-account, a certain number of Accumulation Units are credited
to your Policy. The number of Accumulation Units is determined by dividing the
dollar amount allocated to the Portfolio by the Accumulation Unit Value for that
Portfolio as of the end of the Valuation Period in which the allocation is made.

Each Sub-account's Accumulation Unit Value for any Valuation Period is
determined by multiplying its Accumulation Unit Value for the immediately
preceding Valuation Period by the "net investment factor" for the Valuation
Period for which the value is being determined. The net investment factor is an
index that measures the investment performance of a Sub-account from one
Valuation Period to the next. For a complete description on how the net
investment factor is calculated, see "Net Investment Factor" in the Statement of
Additional Information.

Fixed Account Value. At the end of any Valuation Period, the Fixed Account
Value is equal to: (1) the sum of your Net Premium Payments allocated to the
Fixed Account; plus (2) any amounts that you transferred from the Variable
Account to the Fixed Account; plus (3) the total interest credited to your
Policy Account Value in the Fixed Account; less (4) any amounts that you
transferred from the Fixed Account to the Variable Account; less (5) the portion
of any withdrawals and Surrender Charges

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allocated to your Policy Account Value in the Fixed Account; less (6) the
portion of the Annual Policy Fee which is allocated to your Policy Account Value
in the Fixed Account.

SURRENDER AND PARTIAL WITHDRAWALS
SURRENDER. You may, prior to the earlier of the Maturity Date or the date
of your death, withdraw all or a portion of your then-current Surrender Value,
upon written request to our Service Office. There is a $100 minimum on all
withdrawals. If there are Joint Owners, both of you must agree to the
withdrawal. We may defer payment of your Surrender Value allocated to the Fixed
Account for a period not longer than six months after you request its
withdrawal. Payment of amounts from the Variable Account will normally be made
within seven days, but may be delayed in certain circumstances. (See "Delay or
Suspension of Payments" in the Statement of Additional Information.)

You may, prior to the earlier of the Maturity Date or your death, withdraw
100% of earnings (since the last Policy Anniversary) in all Sub-accounts and the
Fixed Account free of Surrender Charges. Additionally, up to 10% of the Policy
Account Value (as of the last Policy Anniversary); plus 10% of:

(1) Deposits since the last Policy Anniversary; minus

(2) Withdrawals since the last Policy Anniversary may also be withdrawn
free of Surrender Charges.

Upon a partial withdrawal, surrender, or annuitization we will apply the
Surrender Charge percentage shown on the Policy specification page to those
Premium Payments received within five years of the partial withdrawal,
surrender, or annuitization date. After the free amounts are determined, the
calculation will be on a first-in, first-out basis.

Full surrenders and partial withdrawals may be subject to the 10% Federal
tax penalty on early withdrawals and to income tax. (See "Federal Tax Matters.")

SURRENDER VALUE. The Surrender Value is equal to the Policy Account Value
less any applicable Surrender Charges, the Annual Policy Fee, and any premium or
other taxes. (See "Charges and Deductions.")

PARTIAL WITHDRAWAL. You may request to make a Partial Withdrawal, and may
direct us to allocate the withdrawal amount among the Fixed Account and the
Sub-accounts in a particular manner. If no allocation is specified, the partial
withdrawal will be pro-rated among the Fixed Account and the Sub-accounts based
upon your current Policy Account Value allocated to each account.

RESTRICTIONS UNDER THE TEXAS OPTIONAL RETIREMENT PROGRAM AND SECTION 403(B)
PLANS. The Texas Educational Code permits participants in the Texas Optional
Retirement Program ("ORP") to withdraw or surrender their interest in a variable
annuity contract issued under the ORP only upon (1) termination of employment in
the Texas public institutions of higher education, (2) retirement, or (3) death.
Accordingly, a participant in the ORP (or the participant's estate if the
participant has died) will be required to obtain a certificate of termination
from the employer or a certificate of death before the account can be redeemed.

Similar restrictions apply to variable annuity contracts used as funding
vehicles for retirement plans qualifying under Section 403(b) of the Internal
Revenue Code of 1986, as amended (the "Code"). Section 403(b) provides for
tax-deferred retirement savings plans for employees of certain non-profit and
educational organizations. In accordance with the requirements of Section
403(b), any Policy used for a Section 403(b) plan will prohibit distributions of
(i) elective contributions made in years beginning after December 31, 1988, and
(ii) earnings on those contributions and (iii) earnings on amounts attributable
to elective contributions held as of the end of the last year beginning before
January 1, 1989. However, distributions of such amounts will be allowed upon
death of the employee, attainment of age 59 1/2, separation from service,
disability, or financial hardship, except that income attributable to elective
contributions may not be distributed in the case of hardship.

RESTRICTIONS UNDER OTHER QUALIFIED POLICIES. Other restrictions on
surrenders or with respect to the election, commencement, or distributions of
benefits may apply under Qualified Policies or under the terms of the plans in
respect of which Qualified Policies are issued.

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TRANSFERS
You may transfer all or part of the value of a Sub-account of the Variable
Account to one or more of the other Sub-accounts or the Fixed Account at any
time prior to the Maturity Date, free of charge. The minimum for each transfer
is $50. The transfer will be made as of the date we receive the written request
for such transfer at our Service Office.

The maximum amount allowed to be transferred out of the Fixed Account
during one Policy Year is 100% of Fixed Account interest accrued since the last
Policy Anniversary; plus 10% of:

(1) Account Value of the Fixed Account as of the last Policy Anniversary;
plus

(2) Deposits and transfers made into the Fixed Account since the last
Policy Anniversary; minus

(3) All partial withdrawals from the Fixed Account since the last Policy
Anniversary.

You may also elect to systematically reallocate all interest generated from the
Fixed Account into the Sub-accounts of the Variable Account on an interest only
basis according to your allocation election. (See, "Interest Sweep Program.")

Transfers may be made by a written request or by calling our Service Office
if a written authorization for telephone transfers is on file. We may honor any
telephone transfer request believed to be authentic. We employ reasonable
procedures to confirm that instructions communicated by telephone are genuine.
For example, a personal identification number is required in order to initiate a
transfer. We will not be liable for the consequences of a fraudulent telephone
transfer request that we believe to be authentic when those procedures have been
followed. As a result, you bear the risk of loss arising from such a fraudulent
request if you authorize telephone transfers.

When available, procedures for making transfers through our website can be
accessed at the Internet address stated in the Acacia National Life Insurance
Company section of this prospectus.

Each transfer will be made, without the imposition of any fee or charge, at
the end of the Valuation Period during which we receive a valid, complete
transfer request at our Service Office. We may suspend or modify this transfer
privilege at any time, and we may postpone transfers under certain
circumstances. (See, "Delay or Suspension of Payments" in the Statement of
Additional Information.)

AUTOMATIC REBALANCING, DOLLAR COST AVERAGING, AND INTEREST SWEEP PROGRAMS

The Automatic Rebalancing, Dollar Cost Averaging, and Interest Sweep
Programs are systematic programs available to you under the Policy. You may
elect to participate in one or more of these programs by filing a written
authorization with us. We reserve the right to alter, assess a charge, or
terminate these programs upon thirty days advance written notice.

Under the Automatic Rebalancing Program, you may have automatic transfers
made on a monthly, quarterly, semi-annual or annual basis to adjust the values
among the Sub-accounts and the Fixed Account to meet your designated investment
allocation percentages. The allocations are subject to a minimum of 5% per
Sub-account.

The Dollar Cost Averaging Program is an option under which you may "dollar
cost average" your allocations to the Variable Account by authorizing us to make
periodic transfers of specific dollar amounts from the Money Market Sub-account
to one or more other designated Sub-accounts, on a monthly, quarterly,
semi-annual, or annual basis. Each transfer is subject to the $50 minimum
transfer amount with a minimum 5% per Sub-account. Dollar cost averaging does
not guarantee profits, nor does it assure that you will not lose principal.

The Interest Sweep Program allows you to systematically reallocate interest
earnings from the Fixed Account to one or more of the Sub-accounts on a monthly,
quarterly, semi-annual, or annual basis to meet your Investment Allocation
percentages.

If a periodic transfer would reduce the value in the Money Market
Sub-account below the minimum dollar amount, we reserve the right to transfer
the entire remaining Policy Account Value allocated to the Money Market
Sub-account. We also reserve the right to establish a minimum Money Market Sub-
account balance before allowing you to participate in the Dollar Cost Averaging
Program.

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Transfers and adjustments pursuant to these programs will occur on the same
date of the month as the Policy Date, or the next Valuation Date if that date is
not a Valuation Date. For more information on asset allocations programs, see
Appendix B.

DEATH BENEFIT
The Policy pays a Death Benefit to a beneficiary you designate (the
"Beneficiary") if any Owner or any Joint Owner dies prior to the Maturity Date
while the Policy is in force (unless the Beneficiary is the decedent's spouse,
in which case the spouse may elect to continue the Policy in force).

During the first five years of the Policy, the Death Benefit will be equal
to the greater of the Policy Account Value or the value of the cumulative
Premium Payments made less cumulative withdrawals. On the fifth Policy
Anniversary a "Minimum Guaranteed Death Benefit" is calculated as the greater of
these values. Every five years thereafter through the Maturity Date, a new
Minimum Guaranteed Death Benefit is calculated as the greater of the current
Minimum Guaranteed Death Benefit or the then-current Policy Account Value.

For Owners up to issue age 75, the Death Benefit will be the highest of:

(1) the Minimum Guaranteed Death Benefit (increased for Premium Payments
and decreased for cumulative withdrawals since the most recent fifth Policy
Anniversary);

(2) the Policy Account Value (as of the date of payment); or

(3) the cumulative Premium Payments less cumulative withdrawals (including
Surrender Charges).

For Owners over issue age 75, the Death Benefit is the greater of:

(1) the Policy Account Value (as of the date of payment); or

(2) the cumulative Premium Payments made less cumulative withdrawals
(including Surrender Charges).

ANLIC will pay the Death Benefit proceeds to the Beneficiary upon receiving
due proof of death. The Death Benefit will be paid in a lump sum or under one of
the Annuity Payment Options. (See "Annuity Payments.") If you or the Annuitant
dies after the Maturity Date, the amount payable, if any, will be as provided in
the Annuity Payment Option then in effect.

If the death of the Annuitant occurs prior to the Maturity Date and the
Annuitant is also an Owner or Joint Owner of the Policy, the rules governing
distribution of death benefit proceeds in the event of the death of the Owner
shall apply. (See "Required Distributions," below.) If there is a surviving
Joint Owner at the Annuitant's death, the surviving Joint Owner is the
Beneficiary. If, upon your death your spouse, as designated Beneficiary, elects
to continue the Policy in accordance with the required distributions rules, the
named Beneficiary does not have a right to receive the death benefit proceeds.
If the death of the Annuitant occurs prior to the Maturity Date and the
Annuitant is not the Owner, the Owner may name a new Annuitant.

If both Joint Owners die simultaneously, the Death Benefit will be paid to
the named Beneficiary.

If the Owner is a corporation or other entity, the Annuitant will be
treated as an Owner for purposes of the timing or the amount of any payout under
the Policy.

As far as permitted by law, the proceeds under the Policy will not be
subject to any claim of the Beneficiary's creditors.

REQUIRED DISTRIBUTIONS
In order to be treated as an annuity contract for Federal income tax
purposes, Section 72(s) of the Code requires any Nonqualified Policy to provide
that (a) if any Owner dies on or after the annuity starting date but prior to
the time the entire interest in the Policy has been distributed, the remaining
portion of such interest will be distributed at least as rapidly as under the
method of distribution being used as of the date of that Owner's death; and (b)
if any Owner dies prior to the annuity starting date, the entire interest in the
Policy will be distributed within five years after the date of that Owner's
death.

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These requirements will be considered satisfied as to any portion of the
Owner's interest that is payable as annuity payments which will begin within one
year of that Owner's death and which will be made over the life of the Owner's
Designated Beneficiary or over a period not extending beyond his life
expectancy.

If the designated Beneficiary is your surviving spouse, the Policy may be
continued with the surviving spouse as the new Owner and no distributions will
be required.

If any Owner or Joint Owner dies prior to the Maturity Date, and if the
designated Beneficiary does not elect to receive the Death Benefit in a lump sum
at that time, then we will increase the Policy Account Value so that it equals
the Death Benefit amount, if that amount is higher than the Policy Account
Value. This would occur if the Owner's designated Beneficiary elects to delay
receipt of the proceeds for up to five years, or is the deceased Owner's spouse
and elects to continue the Policy, or elects to receive the proceeds as Annuity
Payments. Any such increase in the Policy Account Value would be paid by us, and
allocated to the Sub-accounts in proportion to the pre-existing Policy Account
Value unless we are instructed otherwise. Other rules may apply to Qualified
Policies.

CHARGES AND DEDUCTIONS

We do not impose any charge or deduction against a Premium Payment prior to
its allocation to the Variable Account or the Fixed Account (except for a
charge, in some states, for any premium taxes incurred when the Premium Payment
is accepted). However, certain charges (explained below) will be deducted in
connection with the Policy to compensate us for administering and distributing
the Policy, for providing the insurance benefits set forth in the Policy, for
assuming certain risks in connection with the Policy, and for any applicable
taxes.

ANNUAL POLICY FEE
An annual charge of $42, which meets the "at cost" standards of Rule 26a-1
under the 1940 Act, is deducted to partially compensate us for expenses incurred
in administering the Policy. These expenses include costs of maintaining
records, processing Death Benefit claims, surrenders, transfers and Policy
changes, providing reports to Owners, and overhead costs. This charge is
guaranteed not to increase during the life of the Policy. This deduction will be
made from the Investment Options in the same proportion that the values in the
Investment Options bear to the Policy Account Value. This charge is deducted on
each Policy Anniversary, the Maturity Date, and a full surrender.

The Annual Policy Fee is waived if the Policy Account Value exceeds $50,000
at the time the Annual Policy Fee would be imposed.

ADMINISTRATIVE EXPENSE CHARGE
As compensation for administrative expenses incurred in connection with the
policy, ANLIC will deduct a daily Administrative Expense Charge from the value
of the net assets of the Variable Account. This charge will not exceed 0.10%
annually. No Administrative Expense Charge is deducted from the amount in the
Fixed Account.

ANLIC does not expect to make a profit from the administrative expense
charge.

MORTALITY AND EXPENSE RISK CHARGE
As compensation for mortality and expense risks assumed in connection with
the Policy, ANLIC will deduct a daily mortality and expense risk charge from the
value of the net assets of the Variable Account. For the first 15 years of your
Policy, this charge is at the rate of 1.25% annually. Beginning in the 16th
Policy year, this charge is reduced by 0.05% annually until it reaches 0.50%
annually in Policy year 30; the rate remains level thereafter. No mortality and
expense risk charge will be deducted from the amount in the Fixed Account.

The mortality risk we bear arises in part from our obligation to make
monthly Annuity Payments (determined in accordance with the annuity tables and
other provisions contained in the Policy), regardless of how long all Annuitants
may live. This undertaking assures that neither an Annuitant's own longevity,
nor an improvement in general life expectancy greater than expected, will have
any adverse effect on the

ALLOCATOR 2000 ANNUITY
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<PAGE> 32

monthly Annuity Payments the Annuitant will receive under the Policy. It
therefore relieves the Annuitant from the risk that he or she will outlive the
funds accumulated for retirement. The mortality risk also arises in part because
of the risk that the Death Benefit may be greater than the Policy Account Value.
We also assume the risk that the other expense charges may be insufficient to
cover the actual expenses incurred in connection with the Policy.

SURRENDER CHARGE
If you make partial withdrawals under the Policy, surrender the Policy, or
annuitize the Policy, then a Surrender Charge may be imposed, measured as a
percent of the Premium Payments included in the withdrawal (in the case of a
partial withdrawal) or the amount of the total Premium Payments (in the case of
a surrender or annuitizing) as specified in the following table of Surrender
Charges:

<TABLE>
<CAPTION>
POLICY ANNIVERSARIES
SINCE RECEIPT OF SURRENDER
PREMIUM PAYMENT CHARGE RATE
- -------------------- -----------
<S> <C>
0 8%
1 8%
2 8%
3 6%
4 4%
5 or more None
</TABLE>

Free Withdrawal Amount. You may, prior to the earlier of the Maturity Date
or your death, withdraw 100% of earnings (since the last Policy Anniversary) in
the Variable Account and the Fixed Account free of Surrender Charges.
Additionally, up to 10% of the Policy Account Value (as of the last Policy
Anniversary); plus 10% of:

(1) Deposits since the last Policy Anniversary; minus

(2) Withdrawals since the last Policy Anniversary may be withdrawn free of
Surrender Charges. However, income taxes and a tax penalty may apply.

Amounts withdrawn in addition to the Free Withdrawal Amount may be subject
to a Surrender Charge. The Surrender Charge is determined by multiplying each
Premium Payment included in the withdrawal by the Surrender Charge rate
applicable to the year in which the Premium Payment was received.

For purposes of calculating the Surrender Charge, (1) the oldest Premium
Payments will be treated as the first withdrawn; (2) amounts withdrawn up to the
Free Withdrawal Amount will not be considered a withdrawal of Premium Payments;
and (3) if the Surrender Value is withdrawn or applied under an Annuity Payment
Option, the Surrender Charge will apply to all Premium Payments not previously
assessed with a Surrender Charge. Thus, the Surrender Charges are applied to
Premium Payments on a first-in, first-out basis.

As shown above, the Surrender Charge percentage varies, depending on the
Policy Year in which the Premium Payment included in the withdrawal was made. A
Surrender Charge rate of 8% applies to Premium Payments withdrawn that are less
than three years old. Thereafter the Surrender Charge rate decreases to 6% in
the fourth year and 4% in the fifth year. Amounts representing Premium Payments
five years old or older may be withdrawn without charge.

The Surrender Charge will be deducted from the remaining Policy Account
Value, or from the amount paid if the remaining value is insufficient. The
Surrender Charge partially compensates us for sales expenses with regard to the
Policy, including agent sales commissions, the cost of printing prospectuses and
sales literature, advertising, and other marketing and sales promotional
activities.

The amounts we receive from the Surrender Charge may not be sufficient to
cover sales expenses. We expect to recover any deficiency from our general
assets (which include amounts derived from the Mortality and Expense Risk
Charge). We believe that this distribution Financing arrangement will benefit
you, the Variable Account, and all other Owners.

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ANLIC may waive the Surrender Charge described above provided that certain
conditions described in the Policy are met, including: (a) you are confined to a
"hospital", "nursing home", or a "Long Term Care Facility" (as defined in the
Policy) for at least 30 days; (b) written notice and satisfactory proof of
confinement are received no later than 91 days after confinement ends; and (c)
confinement was recommended by a physician for medically necessary reasons. We
will not accept any additional Premium Payments on a Policy after this waiver
has been exercised under that Policy. This waiver is not available if you were
confined to a nursing home, hospital, or Long Term Care Facility on the Policy
Date.

PREMIUM TAXES
We will deduct a charge for premium taxes, if any, when incurred. Depending
on state and local law, premium taxes can be incurred when a Premium Payment is
accepted, when Policy Account Value is withdrawn or surrendered, or when annuity
payments start.

FEDERAL TAXES
Currently no charge is made to the Variable Account for Federal income
taxes that may be attributable to the Variable Account. We may, however, make
such a charge in the future. Charges for other taxes, if any, attributable to
the Variable Account also may be made. (See "Federal Tax Matters.")

FUND EXPENSES
The value of the assets of the Variable Account will reflect the investment
management fee and other expenses incurred by the Portfolios. See the Fund
prospectuses for complete information on these fees and expenses.

REDUCTION IN CHARGES FOR CERTAIN GROUPS
We may reduce or eliminate the Annual Policy Fee, Administrative Expense
Charge, or Surrender Charge on policies that have been sold to (1) employees and
sales representatives of ANLIC or its affiliates; (2) customers of ANLIC or
distributors of the Policies who are transferring existing policy values to a
Policy; (3) individuals or groups of individuals when sales of the Policy result
in savings of sales or administrative expenses; or (4)individuals or groups of
individuals where Premium Payments are to be made through an approved group
payment method and where the size and type of the group results in savings of
administrative expenses.

In no event will reduction or elimination of any fees or charges be
permitted where such reduction or elimination will be unfairly discriminatory to
any person. The Reduction of Charges for certain groups does not apply to
policies sold in the State of New Jersey.

ANNUITY PAYMENTS

ELECTION OF AN ANNUITY PAYMENT OPTION
You have the sole right to elect or change one of the Annuity Payment
Options listed below during the lifetime of the Annuitant and prior to the
Maturity Date, either in the application or by written request to our Service
Office any time at least 30 days before the Maturity Date. We may require the
exchange of the Policy for a contract covering the option selected.

MATURITY DATE
The first annuity payment will be made as of the Maturity Date. We will
assume a Maturity Date of the first day of the calendar month of the Annuitant's
90th birthday unless you tell us otherwise. You may change the Maturity Date at
any time by giving us written notice of the change at least 30 days prior to the
new Maturity Date. A Maturity Date may be the first day of any calendar month
commencing no later than the first day of the calendar month after the
Annuitant's 90th birthday. If the Maturity Date occurs during the first five
Policy Years after receipt of a Premium Payment, a Surrender Charge will apply.
(See "Charges and Deductions -- Surrender Charge.") If the net amount to be
applied to an option is less than $2,000 or if payments under any option would
be less than $20, we have the right to pay the net amount to be applied to the
option to you or the Annuitant in one sum.

ALLOCATOR 2000 ANNUITY
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AVAILABLE OPTIONS
On the Maturity Date, the Surrender Value will be applied to make fixed
annuity payments. Fixed annuity payments provide guaranteed annuity payments
which remain fixed in amount throughout the payment period. Fixed annuity
payments do not vary with the investment experience of the Sub-accounts.

The amount and duration of Annuity Payments will depend on the Annuity
Payment Option that you select. Once an Annuity Payment Option is selected, the
Surrender Value for the Valuation Period which ends immediately before the
Maturity Date will be transferred to our General Account and the Annuity
Payments will be fixed in amount by the Annuity Payment Option selected and the
age and sex (if sex distinction is allowed under state law) of the Annuitant.

ANNUITY PAYMENT OPTIONS
The Annuity Payment Options currently available are:

INTEREST FOR LIFE. We will pay interest on the amount retained for the
lifetime of the Annuitant. At the Annuitant's death, we will pay the
principal amount to the Beneficiary or as otherwise agreed.

PAYMENTS FOR A FIXED PERIOD. We will pay the amount retained, with
interest, in equal monthly payments, for a period of not more than 30
years. The amount of each payment will be based on a payment schedule set
forth in the Policy.

PAYMENTS OF A FIXED AMOUNT. We will pay the amount retained, with interest,
in equal payments until the amount retained has been paid in full. The
total payments in any year must be at least 5% of the amount retained.

LIFE INCOME. We will pay the amount retained in monthly installments,
adjusted to reflect the crediting of interest as set forth in the Policy,
for the guaranteed period elected and continuing during the lifetime of a
person that you designate. You may elect to have no guaranteed period or a
guaranteed period of 5, 10, or 15 years, or the period in which the total
payments would equal the amount retained (an installment refund). If no
guaranteed period is elected, only one payment will be made if the
Annuitant dies before the second payment is made, only two payments will be
made if the Annuitant dies before the third payment is made, and so on.

FEDERAL TAX MATTERS

INTRODUCTION
The following discussion is general in nature and is not intended as tax
advice. It is not intended to address the tax consequences resulting from all of
the situations in which a person may be entitled to or may receive a
distribution under a contract. If you are concerned about any of the tax
implications discussed, you should consult a competent tax adviser before
purchasing a Policy. This discussion is based upon ANLIC's understanding of the
present federal income tax laws as they are currently interpreted by the
Internal Revenue Service. No representation is made as to the likelihood of the
continuation of the present federal income tax laws or of the current
interpretation by the Internal Revenue Service. Moreover, no attempt has been
made to consider any applicable state or other tax laws, other than premium
taxes. (See the section on Tax Charges.)

TAXATION OF ANNUITIES IN GENERAL
NONQUALIFIED POLICIES. The following discussion assumes that the Policy
will qualify as an annuity policy for federal income tax purposes. The Statement
of Additional Information discusses such qualifications.

Section 72 of the Internal Revenue Code (the Code) governs taxation of
annuities. In general, the owner is not taxed on increases in the value of a
policy until some form of distribution is made under the policy. The exception
to this rule is the treatment generally applied to owners that are not natural
persons. Generally, an owner that is not a natural person must include in income
any increase in excess of the

ALLOCATOR 2000 ANNUITY
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owner's cash value over the owner's "investment in the policy" during the
taxable year, even if no distribution occurs. There are, however, exceptions to
this rule which you may wish to discuss with your tax counsel. The following
discussion applies to Policies owned by natural persons.

The taxable portion of a distribution (in the form of an annuity or lump
sum payment) is taxed as ordinary income, subject to any income averaging rules
applicable to taxpayers generally. For this purpose, the assignment, pledge, or
agreement to assign or pledge any portion of the Accumulation Value generally
will be treated as a distribution. A transfer of ownership of the policy without
full and adequate consideration will also be treated as a distribution under the
Internal Revenue Code, unless the transfer falls within an exception for
transfers between spouses. Generally, in the case of a withdrawal under a
nonqualified policy, amounts received which are allocable to "investment in the
policy" made after August 13, 1982 are first treated as taxable income to the
extent that the accumulation value immediately before the withdrawal exceeds the
"investment in the policy" at that time. Any additional amount is not taxable.
If a withdrawal is allocable to "investment in the policy" made prior to August
14, 1982, it is taxed under the "cost recovery rule" so that withdrawals are
treated as a recovery of "investment in the policy" until such investment has
been fully recovered. Thereafter, withdrawals are fully taxable as ordinary
income. Where a policy contains "investment in the policy" both before and after
the above referenced dates, special ordering rules apply.

Tax treatment of amounts received as an annuity under the Policy, is
different from taxation of distributions or withdrawals that are not in annuity
form. Although the tax consequences may vary depending on the Annuity Income
Option elected under the Policy, in general, only the portion of an annuity
payment that represents the amount of the payment which exceeds the payment's
proportionate share of "investment in the policy" will be taxed. For fixed
annuity payments, in general, there is no tax on the amount of each payment
which represents the same ratio that the "investment in the policy" bears to the
total expected value of the annuity payment for the term of the payment;
however, the remainder of each annuity payment is taxable. Any distribution
received subsequent to the investment in the policy being recovered will be
fully taxable.

A federal penalty equal to 10% of the amount treated as taxable income may
also be imposed on distributions from non-qualified annuity policies. In
general, however, there is no penalty tax on distributions: (1) made on or after
the date on which the owner is actual age 59 1/2, (2) made on or after the death
of the owner, (3) attributable to the taxpayer's becoming disabled within the
meaning of Internal Revenue Code Section 72(m)(7), (4) received in substantially
equal payments (not less frequently than annually) made for the life or life
expectancy of the taxpayer or the joint lives (or joint life expectancies) of
the taxpayer and his or her designated beneficiary, subject to Internal Revenue
Service requirements, including special "recapture" rules, or (5) which are
allocable to "investment in the policy" made prior to August 14, 1982.

All Nonqualified deferred annuities entered into after October 21, 1988,
that are issued by ANLIC (or its affiliates) to the same owner during any
calendar year are treated as one annuity contract for purposes of determining
the amount includable in gross income under Section 72(e) of the Code. In
addition, there may be other situations in which the Treasury Department may
(under its authority to issue regulations or otherwise) conclude that it would
be appropriate to aggregate two or more annuity contracts purchased by the same
owner. Accordingly, a Policy Owner should consult a competent tax adviser before
purchasing more than one annuity contract.

Distributions from non-qualified annuity policies are generally subject to
federal income tax. ANLIC will withhold taxes as required by the Code from the
distributions unless the taxpayer requests otherwise. Withholding cannot be
waived if the distribution is subject to mandatory back-up withholding (if no
mandatory taxpayer identification number is given or if ANLIC is notified that
mandatory back-up holding is required). Mandatory back-up withholding rates are
31% of income that is distributed. Distributions to non-resident aliens may be
subject to mandatory withholding at 30% of the income distributed.

QUALIFIED POLICIES. Qualified policies are used by individuals in
connection with retirement plans which are intended to qualify as plans that
receive special income tax treatment under Sections 401, 403(a), 408 or 457 of
the Internal Revenue Code (the "Code"). The ultimate effect of federal income
taxes on the contributions, on the accumulation value, on annuity payments and
on the economic benefit

ALLOCATOR 2000 ANNUITY
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to the owner, the annuitant or the beneficiary depends on the type of retirement
plan, on the tax and employment status of the individual concerned and on
ANLIC's tax status. In addition, certain requirements must be satisfied in
purchasing a qualified policy in connection with a tax qualified plan in order
to receive favorable tax treatment. With respect to qualified policies an
endorsement of the policy and/or limitations or penalties imposed by the Code
may impose limits on premiums, withdrawals, distributions or benefits, or on
other provisions of the policies. Therefore, purchasers of Qualified Policies
should seek competent legal and tax advice regarding the suitability of the
Policy for their situation, the applicable requirements and the tax treatment of
the rights and benefits of a Policy. Section 403(b)(11) of the Code requires
that no distribution attributable to salary deferred contributions may be made
from a plan under Section 403(b) except after age 59 1/2, separation from
service, death or disability, or in the case of hardship, except in a tax free
exchange to another qualified contract. The following discussion assumes that
qualified policies are purchased in connection with retirement plans that
qualify for the special federal income tax treatment described above.

The rules governing the tax treatment of distributions under qualified
plans vary according to the type of plan and the terms and conditions of the
plan itself. Generally, in the case of a distribution to a participant or
beneficiary under a policy purchased in connection with these plans, only the
portion of the payment in excess of the "investment in the policy" allocated to
that payment is subject to tax. The "investment in the policy" equals the
portion of plan contributions invested in the policy that was not excluded from
the participant's gross income (reduced by any amounts previously received under
the policy which were excluded from gross income), and may be zero. In general,
for allowed withdrawals prior to the annuity starting date from qualified
policies other than Roth IRAs, a ratable portion of the amount received is
taxable, based on the ratio of the investment in the policy to the total policy
value. The amount excluded from a taxpayer's income will be limited to an
aggregate cap equal to the investment in the policy. The taxable portion of
annuity payments with annuity starting dates on or before November 18, 1996 and
for IRAs, is generally determined under rules similar to those applicable to
annuity distributions from nonqualified policies. However, for annuity payments
from plans qualified under Code Sections 401 and 403 with annuity starting dates
after November 18, 1996, annuitants must use a simplified method for determining
the tax-free portion of annuity payments by dividing "investment in the policy"
by the number of annuity payments set by tables in the Internal Revenue Code
based on the age of the primary annuitant. This method does not apply if the
annuitant is over age 75 and there are 5 or more years of guaranteed payments.
Also, for annuity payments based on the lives of more than one individual and
that have annuity starting dates after December 31, 1997, annuitants must use
the simplified method based on the combined ages of both individuals when
calculating the excludable portion of annuities based on the separate tables set
forth in the Code for that purpose. In the case of an annuity that does not
depend in whole or in part on the life expectancy of one or more individuals,
the expected number of payments is the number of monthly annuity payments under
the policy. Special favorable tax treatment may be available for certain
distributions (including lump sum distributions from plans other than IRAs made
in tax years beginning before January 1, 2000). Adverse tax consequences may
result from excess contributions, distributions made prior to age 59 1/2
(subject to certain exceptions), distributions that do not conform to specified
commencement and minimum distribution rules, and in certain other circumstances.

Roth IRA contributions are not deductible and may be limited or unavailable
depending on your adjusted gross income. Withdrawals of earnings from Roth IRAs
may be tax free if certain requirements are met. If withdrawals do not meet
those requirements, they will be considered to be made first from contributions
then from "conversion" amounts (on a first-in, first-out basis) and then from
earnings. The earnings will be subject to income tax and an additional 10%
penalty tax may apply to distributions made prior to age 59 1/2. Conversions
from existing IRAs to Roth IRAs are permitted if certain requirements are met,
however, converted amounts not previously taxed will be subject to income tax in
the year of conversion (for 1998 only, taxpayers could elect to include the full
taxable conversion amount in income for 1998 or to have the tax spread over 4
years on a pro rata basis, beginning in 1998). Conversion amounts will not
generally be subject to the 10% penalty tax that applies to premature
distributions, unless a distribution of the conversion amount from the Roth IRA
occurs within the 5 taxable year period beginning with the year of conversion.
Also, income inclusion may be accelerated if a distribution is made of 1998
conversion amounts which are subject to the 4 year spread rule.

ALLOCATOR 2000 ANNUITY
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Distributions from qualified plans are subject to specific tax withholding
rules. "Eligible rollover distributions" from a qualified plan (other than IRAs
of any type and Section 457 plans) are subject to income tax withholding at a
rate of 20% unless the Owner elects to have the distribution paid directly by
ANLIC to an eligible retirement plan (another plan of the same type or an IRA)
in a direct rollover. If the distribution is not an "eligible rollover
distribution," it is generally subject to the same withholding rules as
distributions from nonqualified policies. However, Section 457 nonqualified
deferred compensation plan distributions are generally subject to withholding as
wages and are not eligible for rollover to an IRA.

ANNUITY OWNERS THAT ARE NONRESIDENT ALIENS OR FOREIGN CORPORATIONS

The discussion above provides general information regarding U.S. Federal
income tax consequences to Annuity Owners that are U.S. citizens or residents.
Purchasers that are not U.S. citizens or residents will generally be subject to
U.S. Federal income tax and withholding on annuity distributions at a 30% rate,
unless a lower treaty rate applies and any required tax forms are submitted to
ANLIC. In addition, purchasers may be subject to state premium tax, other state
and/or municipal taxes, and taxes that may be imposed by the purchaser's country
of citizenship or residence. Prospective purchasers are advised to consult with
a qualified tax adviser regarding U.S., state, and foreign taxation with respect
to the purchase of a Policy.

VOTING RIGHTS

To the extent deemed to be required by law, we will vote the Portfolios'
shares held in the Variable Account at regular and special shareholder meetings
of the Funds in accordance with instructions received from persons having voting
interests in the corresponding Sub-accounts. If, however, the 1940 Act or any
regulation thereunder should be amended or if the present interpretation thereof
should change, or if we determine that it is allowed to vote the Portfolio
shares in its own right, we may elect to do so.

The number of votes which are available to you will be calculated
separately for each Sub-account. That number will be determined by applying your
percentage interest, if any, in a particular Sub-account to the total number of
votes attributable to that Sub-account. Prior to the Maturity Date, you hold a
voting interest in each Sub-account to which your Policy Account Value is
allocated. After the Maturity Date, the person receiving variable annuity
payments has the voting interest. The number of votes prior to the Maturity Date
will be determined by dividing the value of the Policy allocated to the
Sub-account by the net asset value per share of the corresponding Portfolio.
After the Maturity Date, you have no voting rights.

The number of votes of a Portfolio which are available will be determined
as of the date coincident with the date established by that Portfolio for
determining shareholders eligible to vote at the meeting of the Fund. Voting
instructions will be solicited by written communication prior to such meeting in
accordance with procedures established by the Fund.

Portfolio shares attributable to the Policies as to which no timely
instructions are received will be voted in proportion to the voting instructions
which are received with respect to all Policies participating in the
Sub-account. Voting instructions to abstain on any item to be voted upon will be
applied on a pro rata basis to reduce the votes eligible to be cast.

Each person having a voting interest in an Sub-account will receive proxy
material, reports and other materials relating to the appropriate Portfolio.

PERFORMANCE DATA

We may advertise yields and total returns for the Sub-accounts. In
addition, we may advertise the effective yield of the Money Market Sub-account.
These figures will be based on historical earnings and are not intended to
indicate future performance.

The yield of the Money Market Sub-account refers to the annualized income
generated by an investment in the Sub-account over a specified seven-day period.
The yield is calculated by assuming that the income generated for that seven-day
period is generated each seven-day period over a 52-week period and is shown as
a percentage of the investment. The effective yield is calculated similarly but,
when

ALLOCATOR 2000 ANNUITY
30
<PAGE> 38

annualized, the income earned by an investment in the Sub-account is assumed to
be reinvested. The effective yield will be slightly higher than the yield
because of the compounding effect of this assumed reinvestment.

The total return calculation of a Sub-account other than the Money Market
Sub-account assumes an investment has been held in the Sub-account for various
periods of time including: (a) one year; (b) five years; (c) ten years; and (d)
a period measured from the date the Sub-account commenced operations. The total
return will represent the average annual compounded rates of return that would
equate an initial investment of $1,000 to the redeemable value of that
investment as of the last day of each of the periods referenced above. Total
return figures in non-standard formats for the Sub-accounts other than the Money
Market Sub-account may also be disclosed from time to time. The non-standard
total return will assume that no surrender occurs at the end of the applicable
period. All non-standard performance data disclosed will be accompanied by
standard performance data for the same period.

ANLIC may also advertise performance figures for the Sub-accounts based on
the performance of a Portfolio prior to the time the corresponding Sub-account
commenced operations.

Performance data calculations are discussed in further detail in the
Statement of Additional Information.

PUBLISHED RATINGS

We may publish in advertisements, sales literature, and reports to Owners,
the ratings and other information assigned to ANLIC by one or more independent
insurance industry analyst or rating organizations such as A. M. Best Company,
Standard & Poor's Ratings Group, and Weiss Research, Inc. These ratings reflect
the current opinion of an insurance company's financial strength and operating
performance in comparison to the norms for the insurance industry; they do not
reflect the strength, performance, or safety (or lack thereof) of the Variable
Account. The claims-paying ability rating as measured by Standard & Poor's is an
opinion of an operating insurance company's financial capacity to meet the
obligations of its insurance and annuity policies in accordance with their
terms. These ratings should not be considered as bearing on the investment
performance of the assets held in the Variable Account or the degree of risk
associated with an investment in the Variable Account.

LEGAL PROCEEDINGS

There are no legal proceedings to which the Variable Account is a party to
or to which the assets of the Variable Account are subject. We are not involved
in any litigation that is of material importance in relation to its total assets
or that relates to the Variable Account.

FINANCIAL STATEMENTS

The financial statements for ANLIC and the Variable Account (as well as the
Auditors' Reports thereon) are in the Statement of Additional Information.

ADMINISTRATION

ANLIC has contracted with Ameritas Life Insurance Corp. ("Ameritas"),
having its principal place of business at 5900 "O" Street, Lincoln, Nebraska
68501 for it to provide ANLIC with certain administrative services for the
flexible premium variable annuity policies. Ameritas is an affiliate of ANLIC
and a member of the Ameritas Acacia family of companies. Pursuant to the terms
of a Service Agreement, Ameritas will act as record keeping Service Agent for
the policies and riders for an initial term of three years and any subsequent
renewals thereof. Ameritas, under the direction of ANLIC, will perform
Administrative functions including issuance of policies for reinstatement, term
conversion, plan changes and guaranteed insurability options, generation of
billing and posting of premium, computation of valuations, calculation of
benefits payable, maintenance of administrative controls over all activities,
correspondence, and data, and providing management reports to ANLIC.

ALLOCATOR 2000 ANNUITY
31
<PAGE> 39

THE YEAR 2000

Like other insurance companies and their separate accounts, ANLIC and
Separate Account II could be adversely affected if the computers they rely upon
do not properly process date-related information and data involving the years
2000 and after.

This issue arose because both mainframe and PC-based computer hardware and
software have traditionally used two digits to identify the year. For example,
the year 1999 is input, stored and calculated as "99." Similarly, the year 2000
would be input, stored and calculated as "00." If computers assume this means
1900, it could cause errors in calculations, comparisons, and other computing
functions. Like all insurance companies, ANLIC makes extensive use of dates and
date calculations. We began a corporate-wide Year 2000(Y2K) project in mid-1997.
Our goal is to ensure that our computer systems continue to operate smoothly
with no service disruptions before, during or after the year 2000.

As of April 15, 2000, ANLIC has experienced no known Y2K problems. All of
our computer application and operating systems had been updated for the year
2000 by July 31, 1999. Continuous testing and monitoring throughout the
remainder of 1999 helped ANLIC continue to meet our contractual and service
obligations to our customers. In addition to our internal efforts, ANLIC is
working closely with vendors and other business partners to confirm that they
too are addressing Y2K issues on a timely basis. In the event we or our service
providers, vendors, financial institutions or others with which we conduct
business, fail to be Y2K -- compliant, there would be a materially adverse
effect on us.

Certain vendors and/or business partners, due to their exposure to foreign
markets, may face additional Y2K issues. Please see the Funds' prospectuses for
information on the Funds' preparedness for Y2K.

POLICY REPORTS

At least once each Policy Year a statement will be sent to you describing
the status of the Policy, including setting forth the current Death Benefit, the
current Policy Account Value, the value in the Fixed Account, the value in each
Sub-account, Premium Payments paid since the last report, charges deducted since
the last report, any partial surrenders since the last report, and the current
Surrender Value. In addition, a statement will be sent to you showing the status
of the Policy following the transfer of amounts from one Sub-account to another,
a partial surrender and the payment of any Premium Payments (excluding those
paid by bank draft). You may request that a similar report be prepared at other
times. We may charge a reasonable fee for such requested reports and may limit
the scope and frequency of such requested reports.

You will be sent a semi-annual report containing the financial statements
of the Funds as required by the 1940 Act.

STATE REGULATION

We are subject to regulation and supervision by the Bureau of Insurance,
State Corporation Commission of the Commonwealth of Virginia which periodically
examines our affairs. We are also subject to the insurance laws and regulations
of all jurisdictions where we are authorized to do business. A copy of the
Policy form has been filed with and, where required, approved by insurance
officials in each jurisdiction where the Policies are sold. We are required to
submit annual statements of our operations, including financial statements, to
the insurance departments of the various jurisdictions in which we do business
for the purposes of determining solvency and compliance with local insurance
laws and regulations.

EXPERTS

ALLOCATOR 2000 ANNUITY
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<PAGE> 40

included in reliance upon the reports of such firm given upon their authority as
experts in accounting and auditing.

The statutory basis financial statements of ANLIC as of December 31, 1998
and for the year then ended, and the financial statements of the subaccounts of
Separate Account II for the year ended December 31, 1998, included in the
Statement of Additional Information have been audited by PricewaterhouseCoopers
LLP, independent accountants, as stated in their reports appearing therein, and
are included in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.

LEGAL MATTERS

Matters of the Commonwealth of Virginia law pertaining to the Policies,
including ANLIC's right to issue the Policies and its qualification to do so
under applicable laws and regulations issued thereunder, have been passed upon
by Robert-John H. Sands, Senior Vice President and General Counsel.

ADDITIONAL INFORMATION

A registration statement has been filed with the SEC, under the Securities
Act of 1933 with respect to the Policy offered hereby. This prospectus does not
contain all the information set forth in the registration statement and the
amendments and exhibits to the registration statement, to all of which reference
is made for further information concerning the Variable Account, ANLIC and the
Policy offered hereby. Statements contained in this prospectus as to the
contents of the Policy and other legal instruments are summaries. For a complete
statement of the terms thereof, reference is made to such instruments as filed.

STATEMENT OF ADDITIONAL INFORMATION

A Statement of Additional Information is available which contains more
details concerning the subjects discussed in this Prospectus. The following is
the Table of Contents for that Statement:

<TABLE>
<S> <C>
GENERAL PROVISIONS.......................................... 3
ACCUMULATION UNITS.......................................... 4
FIXED ACCOUNT............................................... 5
SURRENDER CHARGE CALCULATION................................ 6
PERFORMANCE DATA CALCULATIONS............................... 6
PERFORMANCE FIGURES......................................... 9
FEDERAL TAX MATTERS......................................... 12
ADDITION, DELETION OR SUBSTITUTION OF INVESTMENTS........... 13
DISTRIBUTION OF THE POLICIES................................ 14
STATE REGULATION............................................ 14
RECORDS AND REPORTS......................................... 14
LEGAL MATTERS............................................... 15
EXPERTS..................................................... 15
OTHER INFORMATION........................................... 15
FINANCIAL STATEMENTS........................................ 15
</TABLE>

ALLOCATOR 2000 ANNUITY
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<PAGE> 41

APPENDIX A

QUALIFIED DISCLOSURES

* Information Statement For:
408(b) IRA Plans
408(k) SEP IRA Plans
408(p) SIMPLE IRA Plans
408A Roth IRA Plans (when available)

* Information Statement For:
401(a) Pension/Profit Sharing Plans
403(b) ERISA Plans

If this annuity is being purchased as a qualified plan as defined under
specified sections of the Internal Revenue Code, as purchaser (owner) or
fiduciary of an Employee Benefit Plan purchasing the annuity, you should
carefully review the Information Statement for your specific type of plan.

Depending on the type of plan, we are required to provide this disclosure to you
to meet the requirements of the Internal Revenue Code ("Code") and/or the
Employee Retirement Income Security Act of 1974 (ERISA).

Acknowledgment of your receipt of the required disclosure is included within the
application language above your signature.

TABLE OF CONTENTS

<TABLE>
<S> <C>
Information Statement
408(b) Individual Retirement Annuity (IRA) Plans
408(k) Simplified Employee Pension (SEP IRA) Plans
408(p) Savings Incentive Match (SIMPLE IRA) Plans
408A Roth IRA Plans QD-1
Information Statement
401(a) Pension/Profit Sharing Plans
403(b) ERISA Plans QD-12
</TABLE>

[THE ACACIA GROUP LOGO]

<PAGE> 42

[ACACIA NATIONAL LIFE INSURANCE COMPANY LOGO]

ACACIA NATIONAL LIFE INSURANCE COMPANY

INFORMATION STATEMENT
408(B) INDIVIDUAL RETIREMENT ANNUITY (IRA) PLANS
408(K) SIMPLIFIED EMPLOYEE PENSION (SEP IRA) PLANS
408(P) SAVINGS INCENTIVE MATCH (SIMPLE IRA)
408A ROTH IRA
- --------------------------------------------------------------------------------

For purchasers of a 408(b) Individual Retirement Annuity (IRA) Plan, 408(k)
Simplified Employee Pension (SEP IRA) Plan, 408(p) Savings Incentive Match
(SIMPLE IRA) Plan or a 408A Roth IRA (if available), please review the
following:

PART 1. PROCEDURE FOR REVOKING THE IRA PLAN:

After you establish an IRA Plan with Acacia National Life Insurance Company
(ANLIC), you are able to revoke your IRA within a limited time and receive a
full refund of the initial premium paid, if any. The period for revocation will
not be less than the legal minimum of seven (7) days following the date your IRA
is established with ANLIC.

To revoke your IRA, you should send a signed and dated written notice to: Acacia
National Life Service Center, P.O. Box 82529, Lincoln, NE 68501-2579.

If your IRA contract was delivered to you, the contract should accompany your
notice of revocation. Your notice of revocation will be considered mailed on the
date of the postmark (or certification or registration, if applicable), if sent
by United States mail, properly addressed and by first class postage prepaid.

To obtain further information about the revocation procedure, contact your ANLIC
Representative or call 1-800-745-1112.

PART II. PROVISIONS OF THE IRA LAW:

ANLIC's Allocator 2000 Annuity (Form 850-000 3-96), can be used for a Regular
IRA, a Rollover IRA, a Spousal IRA Arrangement, a Simplified Employee Pension
Plan (SEP IRA), or a salary reduction Simplified Employee Pension Plan (SARSEP)
or a SIMPLE IRA or a Roth IRA. A separate policy must be purchased for each
individual under each plan. State income tax treatment of IRAs varies, so this
disclosure only discusses the federal tax treatment of IRAs. Please discuss
state income tax treatment of an IRA with your tax advisor.

While provisions of the IRA law are similar for all such plans, any major
differences are set forth under the appropriate topics below.

A. ELIGIBILITY:

REGULAR IRA PLAN: Any individual under age 70 1/2 and earning income from
personal services, is eligible to establish an IRA Plan, although
deductibility of the contributions is determined by adjusted gross income
("AGI") and whether the individual(or the individual's spouse) is an "active
participant" in an employer sponsored retirement plan.

ROLLOVER IRA: This is an IRA plan purchased with your distributions from
another IRA (including a SEP IRA, SARSEP or SIMPLE IRA), a Section 401(a)
Qualified Retirement Plan, or a Section 403(b) Tax Sheltered Annuity (TSA).

Amounts transferred as Rollover Contributions are not taxable in the year of
distribution (provided the rules for Rollover treatment are satisfied) and may
or may not be subject to withholding. Rollover Contributions are not
deductible.

SPOUSAL IRA ARRANGEMENT: A Spousal IRA, consisting of a separate contract for
each spouse, may be set up provided a joint return is filed, the "nonworking
spouse" has less taxable compensation, if any, for the tax year than the
working spouse, and is under age 70 1/2 at the end of the tax year.

Divorced spouses can continue a spousal IRA or start a Regular IRA based on
the standard IRA eligibility rules. All taxable alimony received by a divorced
spouse under a decree of divorce or separate maintenance is treated as
compensation for purposes of the IRA deduction limit.

ROTH IRAS: A Roth IRA must be designated as such when it is established.
Eligibility to contribute or convert to a Roth IRA is subject to income and
other limits. Unlike deductible IRAs, if eligible, you may contribute to a
Roth IRA even after age 70 1/2.

1. A REGULAR ROTH IRA is a Roth IRA established to receive annual
contributions and/or qualified rollover contributions (including IRA
conversion contributions) from other Roth IRAs or from other IRAs if
permitted by the policy and endorsement.

Roth IRAs are available beginning in 1998. Unlike Regular IRAs,
contributions to a Roth IRA are not deductible for tax purposes. However,
any gain accumulated in a Roth IRA may be nontaxable, depending upon how
and when withdrawals are made.

2. A ROTH CONVERSION IRA is a Roth IRA established to receive only rollovers
or conversions from non-Roth IRAs made in the same tax year and is limited
to such contributions.

3. SPOUSAL ROTH IRA ARRANGEMENT: Beginning in 1998, a Spousal Roth IRA may be
set up for a "non-working" spouse who has less taxable compensation, if
any, for the tax year than the "working" spouse, regardless of age,
provided the spouses file a joint tax return and subject to the adjusted
gross income ("AGI") limits described in Part II, Maximum Contributions
-- Spousal Roth IRA Arrangement. Divorced spouses can continue a Spousal
Roth IRA or start a regular Roth IRA based on standard Roth IRA
eligibility rules. Taxable alimony

QD- 1
IRA/SEP/SIMPLE/ROTH
ALLOCATOR 2000 ANNUITY: 2/2000
<PAGE> 43

received by the divorced spouse under a decree of divorce or separate
maintenance is treated as compensation for purposes of Roth IRA
eligibility limits.

SIMPLIFIED EMPLOYEE PENSION PLAN (SEP IRA): An employee is eligible to
participate in a SEP IRA Plan based on eligibility requirements set forth
in form 5305-SEP or other plan document provided by the employer.

SALARY REDUCTION SIMPLIFIED EMPLOYEE PENSION PLAN (SARSEP): An employee is
eligible to participate in a SARSEP plan based on eligibility requirements
set forth in form 5305A-SEP or the plan document provided by the employer.
New SARSEP plans may not be established after December 31, 1996. SARSEPs
established prior to January 1, 1997, may continue to receive contributions
after 1996, and new employees hired after 1996 are also permitted to
participate in such plans.

SAVINGS INCENTIVE MATCH PLAN FOR EMPLOYEES OF SMALL EMPLOYERS (SIMPLE
IRA): An employee is eligible to participate in a SIMPLE IRA Plan based on
eligibility requirements set forth in Form 5304-SIMPLE or other plan
document provided by the employer. A SIMPLE IRA must be established as
such, thus some policies may not be available for use with a SIMPLE IRA
Plan.

B. NONTRANSFERABILITY: You may not transfer, assign or sell your IRA Plan
(including a SIMPLE IRA, SEP IRA, SARSEP or Roth IRA) to anyone (except in
the case of transfer incident to divorce).

C. NONFORFEITABILITY: The value of your IRA Plan (all types included) belongs to
you at all times, without risk of forfeiture.

D. PREMIUM: The annual premium (if applicable) of your IRA Plan or Roth IRA may
not exceed the lesser of $2,000, or 100% of compensation for the year (or for
Spousal IRAs, or Spousal Roth IRAs, the combined compensation of the spouses
reduced by any Roth IRA or deductible IRA contribution made by the "working"
spouse). Any premium in excess of or in addition to $2,000 will be permitted
only as a "Rollover Contribution" (or "Conversion" contribution to a Roth
IRA). Your contribution must be made in cash. For IRAs established under SEP
Plans (SEP IRAs), premiums are limited to the lesser of $30,000 or 15% of the
first $150,000 of compensation (adjusted for cost of living increases). In
addition, if the IRA is under a SARSEP Plan established prior to January 1,
1997, annual premiums made by salary reduction are limited to $7,000
(adjusted for cost of living increases). Premiums under a SIMPLE IRA are
limited to permissible levels of annual employee elective contributions (up
to $6,000 adjusted for cost of living increases) plus the applicable
percentage of employer matching contributions (up to 3% of compensation but
not in excess of $6,000, as adjusted) or of employer non-elective
contributions (2% of compensation (subject to the cap under Code Section
401(a)(17) as indexed) for each eligible employee).

E. MAXIMUM CONTRIBUTIONS:

REGULAR IRA PLAN: In any year that your annuity is maintained under the
rules for a Regular IRA Plan, your maximum contribution is limited to 100%
of your compensation or $2,000, whichever is less. Further, this is the
maximum amount you may contribute to ALL IRAs in a year (including Roth
IRAs, but not Education IRAs or employer contributions or salary deferrals
made to SEP or SIMPLE IRAs). The amount of permissible contributions to
your Regular IRA may or may not be deductible. Whether IRA contributions
(other than Rollovers) are deductible depends on whether you (or your
spouse, if married) are an active participant in an employer-sponsored
retirement plan and whether your adjusted gross income ("AGI") is above the
"phase-out level." Beginning for tax years after 1997, you will only be
deemed to be an active participant and your deductions for contributions
subject to phase-out because of your spouse's participation in an employer-
sponsored retirement plan, if your combined adjusted gross income exceeds
$150,000. SEE PART III. C., DEDUCTIBLE IRA CONTRIBUTIONS.

ROLLOVER IRA: A Plan to Plan Rollover is a method for accomplishing
continued tax deferral on otherwise taxable distributions from certain
plans. Rollover contributions are not subject to the contribution limits on
Regular IRA contributions, but also are not tax deductible.

There are two ways to make a rollover to an IRA:

(1) PARTICIPANT ROLLOVERS are available to participants, surviving spouses or
former spouses who receive eligible rollover distributions from 401(a)
Qualified Retirement Plans, TSAs or IRAs (including SEPs, SARSEPs, and
SIMPLE IRAs). Participant Rollovers are accomplished by contributing part
or all of the eligible amounts (which includes amounts withheld for
federal income tax purposes) to your new IRA within 60 days following
receipt of the distribution. IRA to IRA Rollovers are limited to one per
distributing plan per 12 month period, while direct IRA to IRA transfers
(where you do not directly receive a distribution) are not subject to
this limitation. Distributions from a SIMPLE IRA may not be rolled over
or transferred to an IRA (which isn't a SIMPLE IRA) during the 2 year
period following the date you first participate in any SIMPLE Plan
maintained by your employer.

(2) DIRECT ROLLOVERS are available to participants, surviving spouses and
former spouses who receive eligible rollover distributions from 401(a)
Qualified Retirement Plans or TSAs. Direct Rollovers are made by
instructing the plan trustee, custodian or issuer to pay the eligible
portion of your distribution directly to the trustee, custodian or issuer
of the receiving IRA. Direct Rollover amounts are not subject to
mandatory federal income tax withholding.

FOR RULES APPLICABLE TO ROLLOVERS OR TRANSFERS TO ROTH IRAS, SEE THE PARAGRAPHS
ON ROTH AND ROTH CONVERSION IRAS, BELOW.

Certain distributions are not considered to be eligible for Rollover and
include: (1) distributions which are part of a series of substantially equal
periodic payments (made at least annually) for 10 years or more; (2)
distributions attributable to after-tax employee contributions to a 401(a)
Qualified Retirement Plan or TSA; (3) required minimum distributions made during
or after the year you reach age 70 1/2 or, if later and applicable, the year in
which you retire; and (4) amounts in excess of the cash (except for certain loan
offset amounts) or in excess of the proceeds from the sale of property
distributed. Also, hardship distributions made from 401(k) or 403(b) plans on or
after January 1, 1999, will no longer be considered eligible rollover
distributions, except as otherwise permitted by the Internal Revenue Service.
The Service announced transition relief from this rule for 1999.

At the time of a Rollover, you must irrevocably designate in writing that the
transfer is to be treated as a Rollover Contribution. Eligible amounts which are
not rolled over are normally taxed as ordinary income in the year of
distribution. If a Rollover Contribution is made to an IRA from a

QD- 2
IRA/SEP/SIMPLE/ROTH
ALLOCATOR 2000 ANNUITY: 2/2000
<PAGE> 44

Qualified Retirement Plan, you may later be able to roll the value of the IRA
into a new employer's plan PROVIDED YOU MAKE NO CONTRIBUTIONS TO THE IRA OTHER
THAN FROM THE FIRST EMPLOYER'S PLAN. THIS IS KNOWN AS "CONDUIT IRA," AND YOU
SHOULD DESIGNATE YOUR ANNUITY AS SUCH WHEN YOU COMPLETE YOUR APPLICATION.

SPOUSAL IRA ARRANGEMENT: In any year that your annuity is maintained under the
rules for a Spousal IRA, the maximum combined contribution to the Spousal IRA
and the "working" spouse's IRA for tax years after 1996, is the lesser of 100%
of the combined compensation of both spouses which is includable in gross income
(reduced by the amount of any contributions to a Roth IRA or the amount allowed
as a deduction to the "working" spouse for contribution to his or her own IRA)
or $4,000. No more than $2,000 may be contributed to either spouse's IRA.
Whether the contribution is deductible or non-deductible depends on whether
either spouse is an "active participant" in an employer-sponsored retirement
plan for the year, and whether the adjusted gross income of the couple is above
the applicable phase-out level. (SEE PART III. C., DEDUCTIBLE IRA
CONTRIBUTIONS).

The contribution limit for divorced spouses is the lesser of $2,000 or the total
of the taxpayer's taxable compensation and alimony received for the year.
(Married individuals who live apart for the entire year and who file separate
tax returns are treated as if they are single when determining the maximum
deductible contribution limits).

ROTH IRA: The maximum total annual contribution an individual can make to all
IRAs (including Roth IRAs, but not Education, SARSEP or SIMPLE IRAs) is the
lesser of $2,000 or 100% of compensation. (This limit does not apply to rollover
contributions, which includes amounts converted from a Regular IRA to a Roth
IRA). If an individual contributes to both a Regular IRA and Roth IRA for the
same tax year, contributions are treated as first made to the Regular IRA. For
Roth IRAs (which are available beginning in the 1998 tax year) this $2,000
limitation is phased out for adjusted gross incomes between $150,000 and
$160,000 for joint filers; between $95,000 and $110,000 for single taxpayers;
and between $0 and $10,000 for married individuals who file separate tax
returns. AGI for this purpose includes any deductible contribution to a Regular
IRA, (i.e., the deduction is disregarded) but does not include any amount
included in income as a result of a rollover or conversion from a non-Roth IRA
to a Roth IRA.

Rollovers and transfers may also be made from one Regular Roth IRA to another.
Such rollovers or transfers are generally subject to the same timing and
frequency rules as apply to Participant Rollovers and transfers from one Regular
or Rollover IRA to another. (SEE PART II, MAXIMUM CONTRIBUTIONS: ROLLOVER IRA,
ABOVE).

Also, beginning in the 1998 tax year, rollovers or conversions may be made from
non-Roth IRAs to a Roth IRA. These contributions may be commingled with regular
Roth contributions if your contract permits. To be eligible to make such a
conversion or rollover from a non-Roth IRA, the taxpayer's adjusted gross income
("AGI") for the taxable year cannot exceed $100,000 (joint or individual) and he
or she must not be married filing a separate tax return (unless the taxpayer
lives apart from his of her spouse at all times during the year). A rollover
from a non-Roth IRA to a Roth IRA does not count toward the limit of one
rollover per IRA in any 12-month period under the normal IRA rollover rules.
Also, eligible rollover distributions received by you or your spouse from a
qualified plan other than an IRA, may not be directly rolled over to a Roth IRA.
However, you may be able to roll such a distribution over to a non-Roth IRA,
then convert that IRA to a Roth IRA. Also if you are eligible to make a
conversion, you may transfer amounts from most non-Roth IRAs (other than
Education IRAs). Conversion of an individual's SIMPLE IRA is only permitted
after expiration of the 2-year period which begins on the date the individual
first participated in any SIMPLE IRA Plan of the employer. Once an amount in a
SIMPLE IRA or SEP has been converted to a Roth IRA, it is treated as a Roth IRA
contribution for all purposes. Future contributions under the SEP or SIMPLE Plan
may not be made to the Roth IRA. AGI for the purpose of determining eligibility
to convert to a Roth IRA does not include any amount included in income as a
result of a rollover or conversion from a non-Roth IRA to a Roth IRA, but does
include the amount of any deductible contribution made to a Regular IRA for the
tax year. In addition, for tax years beginning before January 1, 2005, required
minimum distributions from an IRA are included in AGI for purposes of
determining eligibility for conversion to a Roth IRA. However, for tax years
beginning after December 31, 2004, required minimum distributions from an IRA
will not be included in AGI (solely for purposes of determining the $100,000 AGI
limit on conversions).

ROTH CONVERSION IRA: A Roth Conversion IRA is a Roth IRA that only accepts IRA
conversion contributions made during the same tax year. YOU SHOULD NOT DESIGNATE
YOUR POLICY AS A ROTH CONVERSION IRA IF YOU WISH TO MAKE BOTH REGULAR ROTH AND
CONVERSION CONTRIBUTIONS TO THE POLICY.

SPOUSAL ROTH IRA ARRANGEMENT: Beginning in the 1998 tax year, if the
"non-working" spouse's compensation is less than $2,000, the spouses file a
joint tax return, and their combined AGI (unreduced by any deductible IRA
contribution made for the year, but not including any amounts includable in
income as a result of a conversion to a Roth IRA) is $150,000 or below, a
contribution of up to $2,000 may be made to a separate Spousal Roth IRA in the
name of the "non-working" spouse. The $2,000 limit is phased out proportionately
between $150,000 and $160,000 of AGI (modified as described above). Spouses are
not required to make equal contributions to both Roth IRAs; however no more than
$2,000 may be contributed to the "working" or "non-working" spouse's Roth IRA
for any year, and the total amount contributed annually to all IRAs (including
both Roth and Regular IRAs, but not Education IRAs) for both spouses cannot
exceed $4,000. If the combined compensation of both spouses (reduced by any
deductible IRA or non-deductible Roth contributions made for the "working"
spouse) is less than $4,000, the total contribution for all IRAs is limited to
the total amount of the spouses' combined compensation. These limits do not
apply to rollover contributions.

For divorced spouses, the contribution limit to a Roth IRA is the lesser of
$2,000 or the total of the taxpayer's compensation and alimony received for the
year, subject to the applicable phase-out limits for eligibility to make
contributions to a Roth IRA. (Married individuals who live apart for the entire
year and who file separate tax returns are treated as if they are single when
determining the maximum contribution they are eligible to make in a Roth IRA).

SEP IRA PLAN: In any year that your annuity is maintained under the rules for a
SEP Plan, the employer's maximum contribution is the lesser of $30,000 or 15% of
your first $150,000 of compensation (adjusted for cost-of-living increases) or
as changed under Section 415 of the Code. You may also be able to make
contributions to your SEP IRA the same as you do to a Regular IRA; however, you
will be considered an "active participant" for purposes of determining your
deduction limit. In addition to the above limits, if your annuity is maintained
under the rules for a

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SARSEP, the maximum amount of employee pre-tax contributions which can be made
is $7,000 (adjusted for cost of living increases). After December 31, 1996, new
SARSEP plans may not be established. Employees may, however, continue to make
salary reductions to a SARSEP plan established prior to January 1, 1997. In
addition, employees hired after December 31, 1996 may participate in SARSEP
plans established by their employers prior to 1997.

SIMPLE IRA: Contributions to a SIMPLE IRA may not exceed the permissible amounts
of employee elective contributions and required employer matching contributions
or non-elective contributions. Annual employee elective contributions must be
expressed as a percentage of compensation and may not exceed $6,000 (adjusted
for cost of living increases). If an employer elects a matching contribution
formula, it is generally required to match employee contributions dollar for
dollar up to 3% of the employee's compensation for the year (but not in excess
of $6,000 as adjusted for cost-of-living adjustments). An employer may elect a
lower percentage match (but not below 1%) for a year, provided certain notice
requirements are satisfied and the employer's election will not result in the
matching percentage being lower than 3% in more than 2 of the 5 years in the
5-year period ending with that calendar year. Alternatively, an employer may
elect to make non-elective contributions of 2% of compensation for all employees
eligible to participate in the plan who have at least $5,000 in compensation for
the year. The employer must notify employees of this election within specified
timeframes in advance of the plan year or election period. "Compensation" for
purposes of the 2% non-elective contribution option may not exceed the limit on
compensation under Code Section 401(a)(17) ($150,000, adjusted for cost of
living increases).

F. DISTRIBUTIONS:

1. NON-ROTH IRA MINIMUM DISTRIBUTION REQUIREMENTS:

Payments to you from your IRA Plan (other than a Roth IRA) must begin no
later than the April 1 following the close of the calendar year in which
you attain age 70 1/2, the Required Beginning Date (RBD). If you have not
already withdrawn your entire balance by this date, you may elect to
receive the entire value of your IRA Plan on or before the RBD in one lump
sum; or arrange for an income to be paid over your lifetime, your expected
lifetime, or over the lifetimes or expected lifetimes of you and your
designated beneficiary. UNDER A ROTH IRA, YOU ARE NOT REQUIRED TO TAKE
DISTRIBUTIONS WHILE YOU ARE LIVING, EVEN AFTER YOU REACH AGE 70 1/2.

RATE OF DISTRIBUTION: If you arrange for the value of your IRA Plan (other
than a Roth IRA) to be paid to you as retirement income rather than as one
lump sum, then you must abide by IRS rules governing how quickly the value
of your IRA plan must be paid out to you. Generally, it is acceptable to
have an insurance company annuity pay income to you for as long as you
live, or for as long as you and your beneficiary live.

Once you reach your RBD, you must withdraw a minimum amount each year or
be subject to a 50% non-deductible excise tax on the difference between
the minimum required distribution and the amount distributed. To determine
the required minimum distribution for your first "required distribution
year" (assuming an annuity payout has not been elected) divide your entire
interest (subject to certain adjustments) in your IRA (generally as of
December 31 of the calendar year immediately preceding your age 70 1/2
year) by your life expectancy or the joint life expectancies of you and
your designated beneficiary. For subsequent required distribution calendar
years, the applicable life expectancy(ies) will be applied to your IRA
account balance as of December 31 of the calendar year immediately
preceding the distribution calendar year (subject to adjustments). Your
single or joint life expectancy is determined by using IRS life expectancy
tables. See IRS Publications 575 and 590.

Your life expectancy (and that of your spousal beneficiary, if applicable)
will be recalculated annually, unless you irrevocably elect otherwise by
the time distributions are required to begin. With the recalculation
method, if a person whose life expectancy is being recalculated dies, his
or her life expectancy will be zero in all subsequent years. The life
expectancy of a non-spouse beneficiary cannot be recalculated. Where life
expectancy is not recalculated, it is reduced by one year for each year
after your 70 1/2 year to determine the applicable remaining life
expectancy. Also, if your benefit is payable in the form of a joint and
survivor annuity, a larger minimum distribution amount may be required
during your lifetime under IRS regulations, unless your spouse is the
designated beneficiary. If your designated beneficiary is not your spouse,
the designated beneficiary's age will be deemed to be no more than ten
(10) years younger than you when determining life expectancy for required
payouts. However, under current I.R.S. proposed regulations, this rule
only applies while you are living and life expectancy of your beneficiary
after your death can be determined without regard to this rule.

NON-ROTH IRA MINIMUM DISTRIBUTION REQUIREMENTS AFTER DEATH. If you die
after the RBD, amounts undistributed at your death must be distributed at
least as rapidly as under the method being used to determine distributions
at the time of your death. If you die before the RBD, your entire interest
must generally be distributed by the end of the calendar year which
contains the fifth anniversary of your death (the "five year payout
rule"). However, if a beneficiary is designated, the beneficiary may elect
to receive distributions over his or her life expectancy if the
beneficiary so elects by December 31 of the year following the year of
your death. If the beneficiary fails to make an election, the entire
benefit will be paid to the beneficiary under the "five year payout rule".
Also, if the designated beneficiary is your spouse, the life annuity
distribution must begin by the later of December 31 of the calendar year
following the calendar year of your death or December 31 of the year in
which you would have attained age 70 1/2. If your designated beneficiary
is not your spouse, life annuity distributions must begin by December 31
of the year following your death. A surviving spouse may in the
alternative elect to treat the policy as his or her own IRA. This election
may be expressly made or will be deemed made if the spouse makes a regular
IRA contribution to the policy, makes a rollover to or from the IRA, or
fails to elect minimum distributions as described above.

2. ROTH IRA DISTRIBUTION REQUIREMENTS:

ROTH IRA MINIMUM DISTRIBUTION REQUIREMENTS WHILE YOU ARE LIVING. As long
as you are alive, you are not required to take distributions from a Roth
IRA, even after you reach age 70 1/2.

ROTH IRA MINIMUM DISTRIBUTION REQUIREMENTS AFTER YOUR DEATH. Minimum
distribution requirements apply to Roth IRAs only after you die. If you
die after you have reached your Annuity Date, and have begun to receive
distributions under an annuity option (not including an

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interest only option), the remaining portion of your policy interests will
continue to be distributed to your designated beneficiary according to the
terms of the elected options, (provided that method satisfies the
requirements of Code Section 408(b)(3), as modified by Code Section
408A(c)(5)).

If you die before you have elected an annuity option or before
distribution of your entire interest in the policy has been made or begun,
your entire interest in your Roth IRA generally must be distributed by the
end of the calendar year which contains the fifth anniversary of your
death (the "five year payout rule"). However, if there is a designated
beneficiary, he or she may elect to receive distributions over a period
not longer than his or her life expectancy provided the election is made
and distributions commence by December 31 of the calendar year following
the calendar year of your death. If the beneficiary does not make this
election, the entire benefit will be paid to him or her under the "five
year payout rule". If your designated beneficiary is your surviving
spouse, he or she may elect to delay distributions until the later of the
end of the calendar year following the year in which you died or the end
of the year in which you would have reach age 70 1/2. If your sole
designated beneficiary is your surviving spouse, he or she may elect to
treat the policy as his or her own Roth IRA by making an express election
to do so, by making a regular Roth IRA contribution or rollover
contribution (as applicable or as permissible) to the policy, or by
failing to elect minimum distributions under the "five year payout rule"
or the life annuity options discussed above.

Life expectancies will be determined by using IRS life expectancy tables.
A surviving spouse's life expectancy will be recalculated annually, unless
he or she irrevocably elects otherwise. Non-spousal beneficiary life
expectancies will be determined using the beneficiary's attained age in
the calendar year distributions are required to begin and reducing life
expectancy by one for each year thereafter.

3. TAKING REQUIRED MINIMUM DISTRIBUTIONS FROM ONE IRA:

AGGREGATING MINIMUM DISTRIBUTIONS: If you are required to take minimum
distributions from more than one IRA (either as owner of one or more
Regular IRAs and/or as a beneficiary of one or more decedent's Roth IRAs
or Regular IRAs), you may not have to take a minimum distribution from
each IRA. (Regular and Roth IRAs are treated as different types of IRAs,
so minimum distributions from a Roth IRA will not satisfy the minimum
distributions required from a Regular IRA). Instead, you may be able to
calculate the minimum distribution amount required for each IRA
(considered to be of the same type) separately, add the relevant amounts
and take the total required amount from one IRA or Roth IRA (as
applicable). However, an individual required to receive minimum
distributions as a beneficiary under a Roth IRA can only satisfy the
minimum distributions for one Roth IRA by receiving distributions from
another Roth IRA if the Roth IRAs were inherited from the same decedent.
Because of these requirements, ANLIC cannot monitor the required
distribution amounts from ANLIC IRAs. Please check with your tax advisor
to verify that you are receiving the proper amount from all of your IRAs.

PART III. RESTRICTIONS AND TAX CONSIDERATIONS:

A. TIMING OF CONTRIBUTIONS: Once you establish an IRA, (including a Roth or
Spousal Roth IRA) contributions must be made by the due date, not including
extensions, for filing your tax return. (Participant Rollovers must be made
within 60 days of your receipt of the distribution.) A CONTRIBUTION MADE
BETWEEN JANUARY 1 AND THE FILING DUE DATE FOR YOUR RETURN, MUST BE SUBMITTED
WITH WRITTEN DIRECTION THAT IT IS BEING MADE FOR THE PRIOR TAX YEAR OR IT
WILL BE TREATED AS MADE FOR THE CURRENT TAX YEAR. SEP IRA contributions must
be made by the due date of the Employer's tax return (including extensions).
SIMPLE

IRA contributions, if permitted, must be made by the tax return due date for
the employer (including extensions) for the year for which the contribution
is made. Note, an employer is required to make SIMPLE plan contributions
attributable to employee elective contributions as soon as it is
administratively feasible to segregate these contributions from the
employer's general assets, but in no event later than the 30th day of the
month following the month in which the amounts would have otherwise been
payable to the employee in cash.

B. TIMING OF ROTH IRA CONVERSIONS: Conversions from a non-Roth IRA to a Roth IRA
for a tax year, MUST BE INITIATED SO THAT THE DISTRIBUTION OR TRANSFER FROM
THE NON-ROTH IRA IS MADE BY DECEMBER 31 OF THAT YEAR. YOU DO NOT HAVE UNTIL
THE DUE DATE OF YOUR TAX RETURN FOR A YEAR TO CONVERT A REGULAR IRA TO A ROTH
IRA FOR THAT TAX YEAR. For example, if you wish to convert a Regular IRA to a
Roth IRA in 1998, the conversion and transfer must be made by December 31,
1998, even though your tax return for 1998 may not be due until April 15,
1999.

C. DEDUCTIBLE IRA CONTRIBUTIONS: The amount of permissible contributions to your
Regular IRA may or may not be deductible. If you or your spouse are not
active participants in an employer sponsored retirement plan, any permissible
contribution you make to your IRA will be deductible. If you or your spouse
are an active participant in an employer-sponsored retirement plan, the size
of your deduction if any, will depend on your combined adjusted gross income
(AGI).

If you are not an active participant in an employer sponsored plan, but your
spouse is an active participant, you may take a full deduction for your IRA
contribution (other than to a Roth IRA) if your AGI is below $150,000; if you
are not an active participant but your spouse is, the maximum deductible
contribution for you is phased out at AGIs between $150,000 and $160,000.

If you are an active participant in an employer sponsored requirement plan you
may make deductible contributions if your AGI is below a threshold level of
income. For single taxpayers and married taxpayers (who are filing jointly and
are both active participants) the available deduction is reduced
proportionately over a phaseout range. If you are married and an active
participant in an employer retirement plan, but file a separate tax return
from your spouse, your deduction is phased out between $0 and $10,000 of AGI.

If your AGI is not above the maximum applicable phase out level, a minimum
contribution of $200 is permitted regardless of whether the phase out rules
provide for a lesser amount.

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Active participants with income above the phaseout range are not entitled to
an IRA deduction. Due to changes made by the Taxpayer Relief Act of 1997, the
phaseout limits are scheduled to increase as follows:

<TABLE>
<CAPTION>
YEAR MARRIED FILING JOINTLY SINGLE/HEAD OF HOUSEHOLD
---- AGI AGI
<S> <C> <C>
1998............................... $50,000 - $ 60,000................. $30,000 - $40,000
1999............................... $51,000 - $ 61,000................. $31,000 - $41,000
2000............................... $52,000 - $ 62,000................. $32,000 - $42,000
2001............................... $53,000 - $ 63,000................. $33,000 - $43,000
2002............................... $54,000 - $ 64,000................. $34,000 - $44,000
2003............................... $60,000 - $ 70,000................. $40,000 - $50,000
2004............................... $65,000 - $ 75,000................. $45,000 - $55,000
2005............................... $70,000 - $ 80,000................. $50,000 - $60,000
2006............................... $75,000 - $ 85,000................. $50,000 - $60,000
2007 and thereafter................ $80,000 - $100,000................. $50,000 - $60,000
</TABLE>

You can elect to treat deductible contributions as non-deductible. SEP IRA,
SARSEP, SIMPLE IRA and Roth IRA contributions are not deductible by you.

Remember, except for rollovers, conversions or transfers, the maximum amount
you may contribute to all IRAs (including Roth and Regular IRAs, but not
Education IRAs) for a calendar year is $2,000 or 100% of compensation,
whichever is less.

D. NON-DEDUCTIBLE REGULAR IRA CONTRIBUTIONS: It is possible for you to make
non-deductible contributions to your Regular IRA (not including SIMPLE IRAs)
even if you are not eligible to make deductible contributions to a Regular
IRA or non-deductible contributions to a Roth IRA for the year. The amount of
non-deductible contributions you can make depends on the amount of deductible
contributions you make. The sum of your non-deductible and deductible
contributions for a year may not exceed the lesser of (1) $2,000 ($4,000
combined when a Spousal IRA is also involved), or (2) 100% of your
compensation (or, if a Spousal IRA is involved, 100% of you and your spouse's
combined compensation, reduced by the amount of any deductible IRA
contribution and non-deductible Roth IRA contribution made by the "working"
spouse). For plan years beginning on or after January 1, 1998, the sum of
your annual non-deductible (including Roth IRA) and deductible contributions,
other than when combined with a Spousal IRA or Spousal Roth IRA, may not
exceed $2,000. IF YOU WISH TO MAKE A NON-DEDUCTIBLE CONTRIBUTION, YOU MUST
REPORT THIS ON YOUR TAX RETURN BY FILING FORM 8606 (NON-DEDUCTIBLE IRA).
REMEMBER, YOU ARE REQUIRED TO KEEP TRACK OF YOUR NON-DEDUCTIBLE CONTRIBUTIONS
AS ANLIC DOES NOT KEEP A RECORD OF THESE FOR YOU. THIS INFORMATION WILL BE
NECESSARY TO DOCUMENT THAT THE CONTRIBUTIONS WERE MADE ON A NON-DEDUCTIBLE
BASIS AND THEREFORE, ARE NOT TAXABLE UPON DISTRIBUTION.

E. EFFECTS OF CONVERSION OF REGULAR IRA TO ROTH IRA: If you convert all or part
of a non-Roth IRA to a Roth IRA, the amount converted from the non-Roth IRA
will be taxable as if it had been distributed to you in the year of
distribution or transfer from the non-Roth IRA. If you made non-deductible
contributions to any Regular IRA, part of the amount taken out of a Regular
IRA for conversion will be taxable and part will be non-taxable. (Use IRS
Form 8606 to determine how much of the withdrawal from your Regular IRA is
taxable and how much is non-taxable). The taxable portion of the amount
converted is includable in your income for the year of conversion. However,
if the conversion takes place in 1998, or if the conversion amount is
distributed in 1998 and contributed to a Roth IRA within 60 days, one quarter
of the taxable amount will be includable in your income in 1998 and in each
of the next three tax years. However, an individual who makes a conversion
prior to January 1, 1999, can elect to include the full taxable conversion
amount in income for 1998. This election is made on IRS Form 8606 by the
individual and cannot be made or changed after the due date (including
extensions) for filing the 1998 Federal income tax return. If a taxpayer dies
before the end of the 4-year spread, the taxable portion of the conversion
amount which has not been included in income will generally be taxable in the
year of the taxpayer's death. However, if the sole beneficiary of the Roth
IRA is the surviving spouse, he or she can elect to continue the 4-year
spread. In addition, if the 4-year spread rule is utilized for 1998
conversions, any distributions of amounts subject to the 4-year spread
occurring before 2001, will require acceleration of income inclusion as
explained in the section which follows on TAXABILITY OF ROTH IRA
DISTRIBUTIONS. (SEE PART III. J.)

Amounts properly converted from a non-Roth IRA to a Roth IRA are generally not
subject to the 10% early withdrawal penalty. However, if you make a conversion
to a Roth IRA, but keep part of the money for any reason, that amount will be
taxable in the year distributed from the non-Roth IRA and the taxable portion
may be subject to the 10% early withdrawal penalty. In addition, under 1998
technical corrections, if an amount allocable to a conversion contribution is
distributed from the Roth IRA during the 5-year period (beginning with the
first day of the individual's taxable year in which the conversion
contribution was made), it will be subject to a 10-percent premature
distribution penalty tax (but only to the extent the conversion amount
distributed was includable in gross income as a result of the conversion).

You should consult with your tax advisor to ensure that you receive the tax
benefits you desire before you contribute to a Roth IRA, convert to a Roth IRA
or take distributions from a Roth IRA. IT WILL ALSO BE IMPORTANT FOR YOU TO
KEEP TRACK OF AND REPORT ANY REGULAR OR CONVERSION CONTRIBUTIONS YOU MAKE TO
YOUR ROTH IRAS AS REQUIRED BY THE IRS.

F. RECHARACTERIZATION OF IRA AND ROTH IRA CONTRIBUTIONS: IRA owners are
permitted, beginning in 1998, to treat a contribution made to one type of IRA
as made to a different type of IRA for a taxable year in a process known as
"recharacterization". A recharacterization is accomplished by an individual
who has made a contribution to an IRA of one type for a taxable year,
electing to treat the contribution as having been made to a second IRA of a
different type for the taxable year. To accomplish the recharacterization, a
trustee-to-trustee transfer from the first IRA to the second IRA must be made
on or before the due date (including extensions) for filing the individual's
Federal income tax return for the taxable year for which the contribution was
made to the first IRA. HOWEVER, IN ANNOUNCEMENT 99-57, THE IRS HAS INDICATED
THAT A CALENDAR YEAR TAXPAYER THAT HAS TIMELY FILED HIS 1998 FEDERAL INCOME
TAX RETURN, CAN ELECT TO RECHARACTERIZE A 1998 IRA CONTRIBUTION, INCLUDING A
ROTH IRA CONVERSION, PROVIDED APPROPRIATE CORRECTIVE ACTION IS TAKEN BY
OCTOBER 15, 1999. APPROPRIATE CORRECTIVE ACTION MAY INCLUDE NOTIFYING THE
TRUSTEE OR ISSUER; HAVING THE TRUSTEE OR ISSUER ACTUALLY MAKING THE TRANSFER
OR ACCOUNT PREDESIGNATION; AND FILING AN

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AMENDED 1998 FEDERAL INCOME TAX RETURN TO REFLECT THE RECHARACTERIZATION. Any
net income attributable to a recharacterized contribution must also be
transferred to the second IRA. Once the transfer is made, the election is
irrevocable. The effect of recharacterizing a contribution is that it is
treated as having been originally contributed to the second IRA on the same
date and (in the case of a regular contribution) for the same taxable year
that the contribution was made to the first IRA. If you elect to
recharacterize a contribution, you must report the recharacterization and
treat the contribution as having been made to the second IRA, instead of the
first, on your Federal income tax return.

Examples of where a recharacterization election might be useful or desired
include: where an individual discovers he was ineligible to convert a regular
IRA to a Roth IRA because his adjusted gross income exceeded $100,000; amounts
were erroneously rolled over from a traditional IRA to a SIMPLE IRA; or an
individual decides after he has made a contribution to a regular IRA for a tax
year that he is eligible for and prefers to contribute to a Roth IRA, or vice
versa. Recharacterizations are not permitted where a deduction has been taken
for the contribution to the first IRA; the contribution to the first IRA was
the result of a tax-free transfer or; the original contribution was an
employer contribution to a SIMPLE or SEP IRA.

Also, the IRS has issued interim guidance that indicates amounts
recharacterized from a conversion Roth IRA to a Regular IRA, may be
"reconverted" to a Roth IRA one time in 1998 after November 1, 1998; and one
time in 1999. RECONVERSIONS ARE PERMITTED UNDER INTERIM GUIDANCE FROM THE IRS
IN EFFECT IN DECEMBER OF 1998, AND THESE RULES MAY CHANGE IN THE FUTURE ON A
PROSPECTIVE BASIS. CONSULT WITH YOUR TAX ADVISOR BEFORE ATTEMPTING A
"RECONVERSION".

G. EXCESS CONTRIBUTIONS: There is a 6% IRS penalty tax on IRA contributions made
in excess of permissible contribution limits. However, excess contributions
made in one year may be applied against the contribution limits in a later
year if the contributions in the later year are less than the limit. This
penalty tax can be avoided if the excess amount, together with any earnings
on it, is returned to you before the due date of your tax return for the year
for which the excess amount was contributed. Any earnings so distributed will
be taxable in the year for which the contribution was made and may be subject
to the 10% premature distribution penalty tax (SEE PART III, PREMATURE IRA
DISTRIBUTIONS). The 6% excess contribution penalty tax will apply to each
year the excess amount remains in the IRA Plan, until it is removed either by
having it returned to you or by making a reduced contribution in a subsequent
year. To the extent an excess contribution is absorbed in a subsequent year
by contributing less than the maximum deduction allowable for that year, the
amount absorbed will be deductible in the year applied (provided you are
eligible to take a deduction). If a taxpayer transfers amounts contributed
for a tax year to a Regular IRA (and any earnings allocated to such amounts)
to a Roth IRA by the due date for filing the return for such tax year
(including extensions), the amounts are not included in the taxpayer's gross
income to the extent that no deduction was allowed for the contribution (SEE
PART III. F. RECHARACTERIZATION OF IRA AND ROTH IRA CONTRIBUTIONS ABOVE).

EXCESS CONTRIBUTIONS TO A ROTH IRA: If you are ineligible and convert a
Regular IRA to a Roth IRA, all or a part of the amount you convert may be an
excess contribution. (Examples may include conversions made when your Roth AGI
exceeds $100,000 or because you fail to timely make the rollover contribution
from the Regular IRA to the Roth IRA). In tax years after 1999, you may also
have an excess contribution if your conversion is a "failed conversion" that
is not timely corrected. You will have an excess contribution if the
ineligible amounts you convert and the contributions you make to all your IRAs
for the tax year exceed your IRA contribution limits for the year. To avoid
the 6% excise tax on excess contributions, you must withdraw the excess
contributions plus earnings before the due date of your tax return (plus
extensions) or recharacterize the contribution, if permitted (SEE PART III. F.
RECHARACTERIZATION OF IRA AND ROTH IRA CONTRIBUTIONS ABOVE).

H. LOANS AND PROHIBITED TRANSACTIONS: You may not borrow from your IRA Plan
(including Roth IRAs) or pledge it as security for a loan. A loan would
disqualify your entire IRA Plan, and its full value(or taxable portions of
your Roth IRA or non-deductible Regular IRA) would be includable in your
taxable income in the year of violation. This amount would also be subject to
the 10% penalty tax on premature distributions. Your IRA Plan will similarly
be disqualified if you or your beneficiary engage in any transaction
prohibited by Section 4975 of the Internal Revenue Code. A pledge of your IRA
as security for a loan will cause a constructive distribution of the portion
pledged and also be subject to the 10% penalty tax.

I. TAXABILITY OF REGULAR IRA DISTRIBUTIONS: Any cash distribution from your IRA
Plan, other than a Roth IRA, is normally taxable as ordinary income. All IRAs
of an individual are treated as one contract. All distributions during a
taxable year are treated as one distribution; and the value of the contract,
income on the contract, and investment in the contract is computed as of the
close of the calendar year with or within which the taxable year ends. If an
individual withdraws an amount from an IRA during a taxable year and the
individual has previously made both deductible and non-deductible IRA
contributions, the amount excludable from income for the taxable year is the
portion of the amount withdrawn which bears the same ratio to the amount
withdrawn for the taxable year as the individual's aggregate non-deductible
IRA contributions bear to the balance of all IRAs of the individual.

J. TAXABILITY OF ROTH IRA DISTRIBUTIONS: "Qualified distributions" from a Roth
IRA are not included in the taxpayer's gross income and are not subject to
the additional ten percent (10%) early withdrawal penalty tax. To be a
"qualified distribution," the distribution must satisfy a five-year holding
period and meet one of the following four requirements: (1) be made on or
after the date on which the individual attains age 591/2; (2) be made to a
beneficiary or the individual's estate on or after the individual's death;
(3) be attributable to the individual being disabled; or (4) be a
distribution to pay for a "qualified" first-time home purchase (up to a
lifetime limit of $10,000). The five-year holding period for escaping
inclusion in income begins with the first day of the tax year in which any
contribution (including a conversion from a Regular IRA) is made to a Roth
IRA of the taxpayer. If the Roth IRA owner dies, this 5-taxable-year period
is not redetermined for the Roth IRA while it is held in the name of a
beneficiary or a surviving spouse who treats the decedent's Roth IRA as his
or her own. However, a surviving spouse who treats the Roth IRA as his or her
own, must receive any distributions as coming from the surviving spouse's own
Roth IRA, thus it cannot be treated as being received by a beneficiary on or
after the owner's death for purposes of determining whether the distribution
is a "qualified distribution".

If a distribution from a Roth IRA is not a "qualified distribution" and it
includes earnings, the earnings distributed are includable in taxable income
and may be subject to the 10% premature distribution penalty if the taxpayer
is under age 59 1/2. Also, the 10% premature distribution penalty tax may
apply to conversion amounts distributed even though they are not includable in
income, if the distribution is made within the

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5-taxable-year period beginning on the first day of the individual's taxable
year in which the conversion contribution was made. Only the portion of the
conversion includable in income as a result of the conversion would be subject
to the penalty tax under this rule. The 5-taxable-year period for this purpose
is determined separately for each conversion contribution and may not be the
same as the 5-taxable-year period used to determine whether a distribution
from a Roth IRA is a "qualified distribution" or not. FOR THIS REASON, IT IS
IMPORTANT THAT YOU KEEP TRACK OF WHEN YOUR CONVERSION CONTRIBUTIONS ARE MADE
TO YOUR ROTH IRA. (SEE PART III. L., PREMATURE IRA DISTRIBUTIONS).

Unlike Regular IRAs, distributions from Roth IRAs come first from regular
contributions, then converted amounts on a first-in first-out basis, and last
from earnings. Any distributions made before 2001 which are attributable to
1998 conversion contributions for which the 4-year income-tax spread is being
utilized, will result in an acceleration of taxable income in the year of
distribution up to the amount of the distribution allocable to the 1998
conversion. This amount is in addition to the amount otherwise includable in
gross income for that taxable year as a result of the conversion, but not in
excess of the amount required to be included over the 4-year period. This tax
treatment would likewise apply in the case of distributions made by a
surviving spouse who elects to continue the 4-year spread on death of the
original owner of the Roth IRA.

Generally, all Roth IRAs (both regular Roth IRAs and Roth Conversion IRAs)
must be treated as one for purposes of determining the taxation of
distributions. However, if a Roth IRA is held by an individual as beneficiary
of a deceased Roth IRA owner, the 5-taxable-year period used to determine
whether distributions are qualified or not is determined independently of the
5-year-taxable period for the beneficiary's own Roth IRAs. However, if a
surviving spouse elects to treat the Roth IRA as his or her own, the
5-year-taxable period for all of the surviving spouse's Roth IRAs is the
earlier of the end of either the 5-taxable-year period for the decedent or
that applicable to the surviving spouse's own Roth IRAs.

THE RULES FOR TAXING NON-QUALIFIED DISTRIBUTIONS AND PREMATURE DISTRIBUTIONS
OF CONVERSION AMOUNTS FROM A ROTH IRA ARE COMPLEX. TO ENSURE THAT YOU RECEIVE
THE TAX RESULT YOU DESIRE, YOU SHOULD CONSULT WITH YOUR TAX ADVISOR BEFORE
TAKING A DISTRIBUTION FROM A ROTH IRA.

K. LUMP SUM DISTRIBUTION: If you decide to receive the entire value of your IRA
Plan in one lump sum, the full amount is taxable when received (except as to
non-deductible contributions to a Regular IRA or to a Roth IRA, or "qualified
distributions" from a Roth IRA), and is not eligible for the special 5 or 10
year averaging tax rules under Code Section 402 on lump sum distributions
which are used with other types of Qualified Retirement Plans.

L. PREMATURE IRA DISTRIBUTIONS: There is a 10% penalty tax on taxable amounts
distributed from your IRA (including the taxable portion of any non-qualified
distributions from a Roth IRA, or if you receive a distribution of conversion
amounts within the five-year period beginning with the year of the
conversion, any amounts distributed that were originally taxable as a result
of the conversion) prior to the attainment of age 591/2, except for: (1)
distributions made to a beneficiary on or after the owner's death; (2)
distributions attributable to the owner's being disabled as defined in Code
Section 72(m)(7); (3) distributions that are part of a series of
substantially equal periodic payments (made at least annually) for the life
of the annuitant or the joint lives of the annuitant and his or her
beneficiary; (4) distributions made on or after January 1, 1997 for medical
expenses which exceed 7.5% of the annuitant's adjusted gross income; (5)
distributions made on or after January 1, 1997, to purchase health insurance
for the individual and/or his or her spouse and dependents if he or she: (a)
has received unemployment compensation for 12 consecutive weeks or more; (b)
the distributions are made during the tax year that the unemployment
compensation is paid or the following tax year; and (c) the individual has
not been re-employed for 60 days or more; (6) distributions made on or after
January 1, 1998 for certain qualified higher education expenses of the
taxpayer, the taxpayer's spouse, or any child or grandchild of the taxpayer
or the taxpayer's spouse; or (7) qualified first-time home buyer
distributions made on or after January 1, 1998 (up to a lifetime maximum of
$10,000) used within 120 days of withdrawal to buy, build or rebuild a first
home that is the principal residence of the individual, his or her spouse, or
any child, grandchild, or ancestor of the individual or spouse. Generally,
the part of a distribution attributable to non-deductible contributions is
not includable in income and is not subject to the 10% penalty. (BUT SEE ROTH
IRA EXCEPTIONS BELOW). Also, beginning January 1, 2000, distributions to
satisfy a levy issued by the IRS will also be exempt from the 10% penalty
tax.

Distributions from a SIMPLE Plan during the two-year period beginning on the
date the employee first participated in the employer's SIMPLE Plan will be
subject to a 25% (rather than 10%) premature distribution penalty tax.

Distributions from a Roth IRA made before the expiration of the applicable 5
year holding period (see Taxability of Roth IRA Distributions) are not treated
as qualified distributions and are subject to the 10% penalty tax to the
extent they are includable in taxable income. In addition, any conversion
amounts distributed within the five-year period beginning with the year in
which the conversion occurred, are subject to the 10% penalty tax even if the
distribution is not currently taxable as income, unless one of the above
mentioned exceptions to the penalty tax applies. The penalty tax will only
apply to the amount of the conversion that was includable in income as a
result of the conversion (i.e., it will not apply to non-deductible
contributions that were converted from the Regular IRA).

M. MINIMUM REQUIRED DISTRIBUTIONS: SEE PART II. F.1. AND F.2., NON-ROTH IRA
MINIMUM DISTRIBUTION REQUIREMENTS AND ROTH IRA MINIMUM DISTRIBUTION
REQUIREMENTS. If a minimum distribution is not made from your IRA (including
a Roth IRA) for a tax year in which it is required, the excess, in any
taxable year, of the amount that should have been distributed over the amount
that was actually distributed is subject to an excise tax of 50%.

N. GIFT AND ESTATE TAX CONSEQUENCES: The designation of a beneficiary to receive
funds from a Regular or a Roth IRA is not considered a transfer subject to
federal gift taxes. However, funds remaining in your IRA (Regular or Roth) at
the time of your death are includable in your federal gross estate for tax
purposes. In addition, if the owner of an IRA or Roth IRA transfers his or
her IRA or Roth IRA to another individual by gift, the gift will be
considered an assignment and cause the assets of the IRA or Roth IRA to be
deemed distributed to the owner, and will no longer be treated as held in the
IRA. The IRS has indicated that for gifts of a Roth IRA made prior to October
1, 1998, if the entire interest in the Roth IRA is reconveyed to the original
Roth IRA owner prior to January 1, 1999, the IRS will disregard the gift and
reconveyance for most tax purposes.

QD- 8
IRA/SEP/SIMPLE/ROTH
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<PAGE> 50

O. MAXIMUM DISTRIBUTIONS: The Taxpayer Relief Act of 1997 repealed both the 15%
excess accumulation estate tax and excess distribution excise tax which
previously applied to excess retirement plan accumulations at death and
excess lifetime retirement plan distributions. These rules are repealed for
plan distributions made and decedents who die after December 31, 1996.

P. TAX FILING-REGULAR IRAS: You are not required to file a special IRA tax form
for any taxable year (1) for which no penalty tax is imposed with respect to
the IRA Plan, and (2) in which the only activities engaged in, with respect
to the IRA Plan, are making deductible contributions and receiving
permissible distributions. Information regarding such contributions or
distributions will be included on your regular Form 1040. In some years, you
may be required to file Form 5329 and/or Form 8606 in connection with your
Regular IRA. Form 5329 is filed as an attachment to Form 1040 or 1040A for
any tax year that special penalty taxes apply to your IRA. If you make
non-deductible contributions to a regular IRA, you must designate those
contributions as non-deductible on Form 8606 and attach it to your Form 1040
or 1040A. There is a $100 penalty each time you overstate the amount of your
non-deductible contributions unless you can prove the overstatement was due
to reasonable cause. Additional information is required on Form 8606 in years
you receive a distribution from a Regular IRA. There is a $50 penalty for
each failure to file a required Form 8606 unless you can prove the failure
was due to reasonable cause. For further information, consult the
instructions for Form 5329 (Additional Taxes Attributable to Qualified
Retirement Plans (including IRAs), Annuities, and Modified Endowment
Contracts), Form 8606 and IRS Publication 590.

Q. TAX FILING-ROTH IRA: It is your responsibility to keep records of your
regular and conversion contributions to a Roth IRA and to file any income tax
forms the Internal Revenue Service may require of you as a Roth IRA owner.
You will need this information to calculate your taxable income if any, when
distributions from the Roth IRA begin. For example, conversion contributions
must be reported to the Service on Form 8606. Form 5329 is required to be
filed to the Service by you to report and remit any penalty or excise taxes.
Consult the instructions to your tax return or your tax advisor for
additional reporting requirements that may apply.

R. TAX ADVICE: ANLIC is providing this general information as required by
regulations issued under the Internal Revenue Code and assumes no
responsibility for its application to your particular tax situation. Please
consult with your personal tax advisor regarding specific questions you may
have.

With respect to ROTH IRAS, you should be aware that Congress has recently
enacted legislation that substantially revises the rules relating to
distributions from and conversions to Roth IRAs which applies retroactive to
January 1, 1998. Because of this, and because guidance regarding these changes
has just recently been finalized by the Internal Revenue Service, you should
consult with a tax advisor prior to establishing, making contributions to, or
taking distributions from a Roth IRA, to ensure that you receive the tax
result you anticipate.

S. ADDITIONAL INFORMATION: You may obtain more information about IRA Plans from
any district office of the IRS and IRS Publication 590.

PART IV. STATUS OF ANLIC IRA PLAN:

INTERNAL REVENUE SERVICE APPROVAL LETTER: ANLIC has received approval from the
Internal Revenue Service as to the form of Allocator 2000 Annuity (Form 850-000
3-96), for use in funding Regular IRA plans. It has also been approved as to
form for use in funding a SIMPLE IRA. It has not, however, been submitted to the
IRS for approval of its use as a Roth IRA, but it is expected that it will be in
due course. You may be required to accept a revised Roth IRA endorsement if the
IRS requires changes to your issued Roth IRA endorsement during the IRS approval
process. Such approval, when received, is a determination only as to the form of
the Annuity Contract, and does not represent a determination of the merits of
the annuity.

PART V. FINANCIAL DISCLOSURE:

The following is a general description and required financial disclosure
information for the variable annuity product, Allocator 2000 Annuity (Form
850-000 3-96) offered by ANLIC, hereafter referred to as the policy.

In order for you to achieve your retirement objectives, you should be prepared
to make your IRA Plan a long term savings program. An IRA is not suited to
short-term savings, nor was it intended to be by Congress, as indicated by the
general rule that penalties apply to withdrawals before age 59 1/2, subject to
certain exceptions (see PART III; PREMATURE IRA DISTRIBUTIONS). However, you
should be aware of the values in your IRA Plan during the early years as well as
at retirement.

Prior to the annuity date, the policy allows you to accumulate funds based on
the investment experience of the assets underlying the policy in the Variable
Account or the Fixed Account. Currently, the assets which underlie the Variable
Account are invested exclusively in shares of mutual funds, the "Funds", managed
or administered by several fund managers. Each of the Subaccounts of the
Variable Account invest solely in the corresponding portfolio of the Funds. The
assets of each portfolio are held separately from the other portfolios and each
has distinct investment objectives which are described in the accompanying
prospectus for the Funds which you would have received when making the purchase
of your annuity. The accumulation value of your IRA Plan allocated to the
Variable Account will vary in accordance with the investment performance of the
Subaccounts you selected. Therefore, for assets in the Variable Account, you
bear the entire investment risk prior to the annuity date.

Premium payments and subsequent allocations to the Fixed Account are placed in
the general account of ANLIC which supports insurance and annuity obligations.
Policyowners are paid interest on the amounts placed in the Fixed Account at
guaranteed rates (4.0%) or at higher rates declared by ANLIC.

ACCUMULATION VALUE: On the effective date, the accumulation value of the policy
is equal to the premium received, reduced by any applicable premium taxes.
Thereafter, the accumulation value of the policy is determined as of the close
of trading on the New York Stock Exchange on each valuation date by multiplying
the number of accumulation units for each Subaccount credited to the policy by
the current value of an accumulation unit for each Subaccount, and by adding the
amount deposited in the Fixed Account, plus interest. The current value of an
accumulation unit reflects the increase or decrease in value due to investment
results of the Subaccount and certain charges, as described below. The number of

QD- 9
IRA/SEP/SIMPLE/ROTH
ALLOCATOR 2000 ANNUITY: 2/2000
<PAGE> 51

accumulation units credited to the policy is decreased by any annual policy fee,
any withdrawals and any charges upon withdrawal and, upon annuitization, any
applicable premium taxes and charges.

A valuation period is the period between successive valuation dates. It begins
at the close of trading on the New York Stock Exchange on each valuation date
and ends at the close of trading on the next succeeding valuation date. A
valuation date is each day that the New York Stock Exchange is open for
business.

The accumulation value is expected to change from valuation period to valuation
period, reflecting the net investment experience of the selected portfolios of
the Funds, interest earned in the Fixed Account, additional premium payments,
partial withdrawals, as well as the deduction of any applicable charges under
the policy. GROWTH IN THE ACCUMULATION VALUE BASED ON INVESTMENTS IN THE
VARIABLE ACCOUNT IS NEITHER GUARANTEED NOR PROJECTED.

VALUE OF ACCUMULATION UNITS: The accumulation units of each Subaccount are
valued separately. The value of an accumulation unit may change each valuation
period according to the net investment performance of the shares purchased by
each Subaccount and the daily charge under the policy for mortality and expense
risks, any daily administrative fee, and if applicable, any federal and state
income tax charges.

CASH SURRENDER VALUE: The amount available for full or partial withdrawal, which
is the accumulation value less any contingent deferred sales charge, any
applicable premium taxes, and, in the case of a full withdrawal, the annual
policy fee.

ANNUAL POLICY FEE: An annual policy fee of $42 is deducted from the accumulation
value on the last valuation date of each policy year and on a full withdrawal if
between policy anniversaries. This charge reimburses ANLIC for the
administrative costs of maintaining the policy on ANLIC's system. ANLIC
currently waives this fee if the policy account value exceeds $50,000 at the
time the fee would be imposed.

DAILY ADMINISTRATIVE EXPENSE CHARGE: A daily charge at an annual rate of 0.10%
of the accumulation value. This charge is subtracted when determining the daily
accumulation unit value. This charge, which is guaranteed not to be increased,
is designed to reimburse ANLIC for administrative expenses incurred in
connection with issuing the policy and ongoing administrative expenses incurred
in connection with servicing and maintaining the policies. These expenses
include the cost of processing the application and premium payment, establishing
policy records, processing and servicing owner transactions and policy changes,
recordkeeping, preparing and mailing reports, processing death benefit claims,
and overhead costs. No administrative expense charge is deducted from the amount
in the Fixed Account.

MORTALITY AND EXPENSE RISK CHARGE: ANLIC imposes a charge to compensate it for
bearing certain mortality and expense risks under the policies. For assuming
these risks, ANLIC makes a daily charge equal to an annual rate of 1.25% of the
value of the average daily net assets of the Account during the first 15 years
of the policy. Beginning in the 16th policy year, this charge is reduced by
0.05% annually until it reaches 0.50% annually in policy year 30. The rate
remains level thereafter. This charge is subtracted when determining the daily
accumulation unit value. ANLIC guarantees that this charge will never increase.
If this charge is insufficient to cover assumed risks, the loss will fall on
ANLIC. Conversely, if the charge proves more than sufficient, any excess will be
added to ANLIC's surplus. No mortality and expense risk charge is imposed on the
Fixed Account.

TAXES: ANLIC will, where such taxes are imposed by state law upon the receipt of
a premium payment, deduct premium taxes. If premium taxes are imposed upon
annuitization, ANLIC will deduct applicable premium taxes at that time.
Applicable premium tax rates depend upon such factors as the policyowner's
current state of residency, and the insurance laws and the status of ANLIC in
states where premium taxes are incurred. Applicable premium tax rates are
subject to change by legislation, administrative interpretations, or judicial
acts. The owner will be notified of any applicable premium taxes.

PARTIAL AND FULL WITHDRAWALS: The owner may make a partial or a full withdrawal
of the policy to receive part or all of the accumulation value (less any
applicable charges), at any time before the annuity date and while the annuitant
is living, by sending a written request to ANLIC. Partial withdrawals may be
either systematic or elective. Systematic withdrawals provide for an automatic
withdrawal, whereas, each elective withdrawal must be elected by the owner.
Systematic partial withdrawals are available on a monthly, quarterly,
semi-annual or annual mode. This withdrawal right may be restricted by Section
403(b)(11) of the Internal Revenue Code if the annuity is used in connection
with a Section 403(b) retirement plan. No partial or full withdrawals may be
made after the annuity date except as permitted under the particular annuity
option. The amount available for a full or partial withdrawal (cash surrender
value) is the accumulation value at the end of the valuation period during which
the written request for withdrawal is received, less any contingent deferred
sales charge, any applicable premium taxes, and in the case of a full
withdrawal, less the annual policy fee that would be due on the last valuation
date of the policy year. The cash surrender value may be paid in a lump sum to
the owner, or, if elected, all or any part may be paid out under an annuity
income option.

SURRENDER CHARGE: Since no deduction for a sales charge is made from the premium
payment, a surrender charge is imposed on certain partial and full withdrawals,
and upon certain annuitizations to cover certain expenses relating to the
distribution of the policies, including commissions to registered
representatives and other promotional expenses.

The charge will be a percentage of the premium payments withdrawn or annuitized.

<TABLE>
<CAPTION>
POLICY ANNIVERSARIES SINCE RECEIPT SURRENDER CHARGE
OF PREMIUM PAYMENT RATE
- ---------------------------------- ----------------
<S> <C>
0 8%
1 8%
2 8%
3 6%
4 4%
5 or more None
</TABLE>

QD- 10
IRA/SEP/SIMPLE/ROTH
ALLOCATOR 2000 ANNUITY: 2/2000
<PAGE> 52

You may withdraw, in a policy year, 100% of the earnings since the last policy
anniversary plus 10% of the policy account value at the time of the withdrawal,
free of a surrender charges. In addition, you may withdraw 10% of deposits minus
withdrawals made in a policy year without surrender charges. Surrender charges
are assessed only on premiums paid based upon the number of years since the
policy year in which the premiums withdrawn were paid, on a first-paid,
first-withdrawn basis.

In the case of a partial withdrawal or annuitization, the surrender charge will
be deducted from the amounts remaining under the policy. The charge will be
allocated pro rata among the Subaccounts or the Fixed Account based on the
accumulation value in each prior to the withdrawal or annuitization unless an
owner requests a partial withdrawal or annuitization from particular Subaccounts
or the Fixed Account, in which case the charge will be allocated among those
Subaccounts or the Fixed Account in the same manner as the withdrawal. In the
case of a full withdrawal or annuitization, the surrender charge is deducted
from the amount paid to the owner. ANLIC may waive surrender charges under
certain conditions.

SALES COMMISSIONS: No deductions are made from the premium payments for sales
charges. To offset the costs of compensation and distribution expenses, a
surrender charge as described above is imposed on certain partial and full
withdrawals.

QD- 11
IRA/SEP/SIMPLE/ROTH
ALLOCATOR 2000 ANNUITY: 2/2000
<PAGE> 53

[ACACIA NATIONAL LIFE INSURANCE COMPANY LOGO]

ACACIA NATIONAL LIFE INSURANCE COMPANY

EMPLOYEE BENEFIT PLAN
INFORMATION STATEMENT
401(A) PENSION/PROFIT SHARING PLANS
403(B) ERISA PLANS
- --------------------------------------------------------------------------------

For purchasers of a 401(a) Pension/Profit Sharing Plan, or 403(b) ERISA Plan,
the purpose of this statement is to inform you as an independent Fiduciary of
the Employee Benefit Plan, of the Sales Representative's relationship to and
compensation from Acacia National Life Insurance Company (ANLIC), as well as to
describe certain fees and charges under the Allocator 2000 Annuity (Form 850-000
3-96) being purchased from the Sales Representative.

The Sales Representative is appointed with ANLIC as its Sales Representative and
is a Securities Registered Representative. In this position, the Sales
Representative is employed to procure and submit to ANLIC applications for
contracts, including applications for the Allocator 2000 Annuity.

COMMISSIONS, FEES AND CHARGES

The following commissions, fees and charges apply to the Allocator 2000 Annuity
(policy):

SALES COMMISSION: No deductions are made from the premium payments for sales
charges. Commissions paid by the Company to broker-dealers may vary, but are not
expected to exceed 1% of premiums paid. Broker-dealers may also receive asset
based administrative compensation of up to 1% (annualized). From time to time,
additional sales incentives may be provided to broker-dealers.

DAILY ADMINISTRATIVE FEE: The daily administrative fee is a daily charge at an
annual rate of 0.10% of the accumulation value. This charge is guaranteed not to
increase and is designed to reimburse ANLIC for administrative expenses of
issuing, servicing and maintaining the policies. ANLIC does not expect to make a
profit on this fee.

PARTIAL AND FULL WITHDRAWALS: The policyowner may make a partial or a full
withdrawal of the policy to receive part or all of the accumulation value (less
any applicable charges), at any time before the annuity date and while the
annuitant is living by sending a written request to ANLIC. Partial withdrawals
may be either systematic or elective. Systematic withdrawals provide for an
automatic withdrawal, whereas, each elective withdrawal must be elected by the
owner. Systematic partial withdrawals are available only on an annual mode. No
partial or full withdrawals may be made after the annuity date except as
permitted under the particular annuity option or as may be permitted under the
Plan and the Internal Revenue Code and applicable regulations. The amount
available for partial or full withdrawal (cash surrender value) is the
accumulation value at the end of the valuation period during which the written
request for withdrawal is received, less any contingent deferred sales charge,
any applicable premium taxes, and in the case of a full withdrawal, the annual
policy fee that would be due on the last valuation date of the policy year. The
cash surrender value may be paid in a lump sum to the owner, or if elected, all
or any part may be paid out under an annuity income option.

The charge will be a percentage of the premium payments withdrawn or annuitized.

PENSION
QD- 12
<PAGE> 54

charges. Surrender charges are assessed only on premiums paid based upon the
number of years since the policy year in which the premiums withdrawn were paid,
on a first-paid, first-withdrawn basis.

TAXES: ANLIC will deduct premium taxes upon receipt of a premium payment or upon
annuitization depending upon the requirements of the law of the state of the
policyowner's residence. Premium taxes are subject to change by legislation,
administrative interpretations, or judicial act.

FUND INVESTMENT ADVISORY FEES AND EXPENSES: At the direction of the policyowner,
the Variable Account purchases shares of Funds which are available for
investment under this policy. The net assets of the Variable Account will
reflect the value of the Fund shares and therefore, investment advisory fees and
other expenses of the Funds. A complete description of these fees and expenses
is contained in the Funds' Prospectuses.

PENSION
QD- 13
<PAGE> 55

APPENDIX B

AUTOMATIC REBALANCING, MODEL ASSET ALLOCATION, DOLLAR COST AVERAGING AND
INTEREST SWEEP PROGRAMS

To assist the Owner in making a premium allocation decision among
Sub-accounts, ANLIC offers automatic transfer programs. These programs are
designed to meet individual needs of the Owner and are not guaranteed to improve
performance of the Policy.

The Owner may elect the Automatic Rebalancing Program which will adjust
values in the Sub-accounts to align with a specific percentage of total value in
the Variable Account. By placing a written allocation election form on file with
ANLIC, the Owner may have amounts automatically transferred from the
Sub-accounts on either a quarterly, semi-annual or annual basis. The Owner
chooses the percentages to be used under the Automatic Rebalancing Program.

Model Asset Allocation is offered through The Advisors Group, Inc. (TAG) in
conjunction with the services of Ibbotson Associates who were among the first to
develop the modern science of asset allocation. TAG representatives offer a
service created by Ibbotson Associates to match the Owner's risk tolerance and
investment objectives with a model Sub-account percentage allocation formula. To
use this service, the Owner first completes a questionnaire about risk tolerance
and Policy performance objectives. The TAG representative uses the completed
responses to match the Owner's needs to one of ten different model percentage
allocation formulas designed by Ibbotson. The Owner may then elect to follow the
recommended percentage allocation formula, or select a different formula.

Ibbotson Associates provides a valuable service to an Owner who seeks to
follow the science of asset allocation. Some research studies have shown that
the asset allocation decision is the single largest determinant of Portfolio
performance. Asset allocation combines the concepts of asset-liability
management, mean-variance optimization, simulation and economic forecasting. Its
objectives are to match asset classes and strategies to achieve better returns,
to reduce volatility and to attain specific goals such as avoidance of interest
rate or market risk.

As an alternative, ANLIC also offers the Owner the option to elect the
Dollar Cost Averaging Program. Dollar cost averaging is a long term investment
method that uses periodic premium allocations from the Money Market Sub-account
to other Sub-accounts. Under the theory of dollar cost averaging, the Owner may
pursue a strategy of regular and systematic purchases to take advantage of
market value fluctuations. More Sub-account accumulation units will be purchased
when Sub-account unit values are low and fewer units will be purchased when unit
values are high. There is no guarantee that the Dollar Cost Averaging Program
will protect against market loss or improve performance of the Policy.

The Dollar Cost Averaging Program provides a valuable service to an Owner
who is able to sustain a long term transfer schedule and who seeks to avoid the
volatility often associated with equity investments.

The Interest Sweep Program allows an Owner to systematically reallocate
interest earnings from the Fixed Account to one or more of the Sub-accounts on a
monthly, quarterly, semi-annual, or annual basis to meet your investment
allocation percentages.

ALLOCATOR 2000 ANNUITY

B- 1
<PAGE> 56

<TABLE>
<S> <C>
ACACIA NATIONAL LIFE
INSURANCE COMPANY
SERVICE CENTER
P.O. BOX 82579
LINCOLN, NEBRASKA 68501
</TABLE>

<TABLE>
<S> <C>
Place
STAMP
Here
</TABLE>
<PAGE> 57

ALLOCATOR 2000 ANNUITY(R)
[ ] I WISH TO RECEIVE THE STATEMENT OF ADDITIONAL INFORMATION.
SEND TO:
NAME:
ADDRESS:
------------------------------------------------------------------
------------------------------------------------------------------
<PAGE> 58

STATEMENT OF ADDITIONAL INFORMATION
FOR THE
ALLOCATOR 2000 FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY POLICY

Offered by

ACACIA NATIONAL LIFE INSURANCE COMPANY

This Statement of Additional Information expands upon subjects discussed in the
Prospectus for the Allocator 2000 Flexible Premium Deferred Variable Annuity
Policy ("Policy") offered by Acacia National Life Insurance Company ("ANLIC")
and funded by Acacia National Variable Annuity Separate Account II ("Variable
Account"). You may obtain a copy of the Prospectus dated May 1, 2000, by writing
to ANLIC's Service Office, P.O. Box 82579, Lincoln, Nebraska 68501 or by
telephoning 1-800-369-9407. The Prospectus is available in both printed and
digital formats. Terms used in the Prospectus are incorporated into this
Statement of Additional Information.

THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND SHOULD BE READ
ONLY IN CONJUNCTION WITH THE PROSPECTUS FOR THE POLICY.

Dated: May 1, 2000

<PAGE> 59

TABLE OF CONTENTS
Page
<S> <C>
GENERAL PROVISIONS....................................................................................3
The Policy.......................................................................................3
Misstatement of Age or Sex.......................................................................3
Nonparticipating.................................................................................3
Periodic Reports.................................................................................3
Policy Date......................................................................................3
Termination......................................................................................3
Owner and Joint Owner............................................................................3
Beneficiary Change...............................................................................4
Assignment.......................................................................................4
Delay or Suspension of Payments..................................................................4
ACCUMULATION UNITS....................................................................................4
Accumulation Units...............................................................................4
Net Investment Factor............................................................................5
FIXED ACCOUNT.........................................................................................5
General Description..............................................................................5
Transfer Limitation..............................................................................6
Fixed Account Value..............................................................................6
SURRENDER CHARGE CALCULATIONS.........................................................................6
PERFORMANCE DATA CALCULATIONS.........................................................................8
Money Market Sub-account's Yield Calculation.....................................................8
Other Sub-accounts' Yield Calculations...........................................................8
Standardized Average Annual Total Return Calculations............................................9
Non-Standardized Return Calculations.............................................................9
Cumulative Total Return Calculations.............................................................9
PERFORMANCE FIGURES...................................................................................9
FEDERAL TAX MATTERS..................................................................................12
Taxation of ANLIC...............................................................................12
Tax Status of the Policies......................................................................12
Withholding.....................................................................................12
ADDITION, DELETION OR SUBSTITUTION OF INVESTMENTS....................................................13
DISTRIBUTION OF THE POLICIES.........................................................................14
STATE REGULATION.....................................................................................14
RECORDS AND REPORTS..................................................................................14
LEGAL MATTERS........................................................................................15
EXPERTS..............................................................................................15
OTHER INFORMATION....................................................................................15
FINANCIAL STATEMENTS.................................................................................15
</TABLE>

<PAGE> 60

Throughout this Statement of Additional Information, the words "us",
"we", "our", and "ANLIC" refer to Acacia National Life Insurance Company, and
the words "you", "your", and "Owner" refer to the policy owner.

GENERAL PROVISIONS

THE POLICY
The Policy is a flexible premium deferred variable annuity policy.
(a) The Policy may be purchased on a non-tax qualified basis ("Nonqualified
Policy"). The Policy also may be purchased and used in connection with
retirement plans or individual retirement accounts that qualify for
favorable federal income tax treatment ("Qualified Policy").

(2) Before we will issue a Policy, we must receive a completed
application. A minimum Premium Payment of $300 during the first Policy
year is required.

(3) The Policy, the application and any applicable riders are the entire
contract. Only our Elected Officers can agree to change or waive any
provisions of the Policy. Any change or waiver must be in writing and
signed by such Elected Officers.

MISSTATEMENT OF AGE OR SEX
If the age or sex of the Annuitant has been misstated, the benefits payable
under the Policy will be equal to the benefits which the Premium Payments would
have provided for the correct age or sex (if such distinction based upon sex is
allowed by law).

We may require proof of the age of the Annuitant before making any Annuity
Payments under the Policy.

If a misstatement of age or sex results in monthly income payments that are
too large, the overpayments will be deducted from future payments. If we have
made payments that are too small, the underpayment will be added to the next
payment. Adjustments for overpayments or underpayment will include the compound
interest rate used to determine the Annuity Payments.

NONPARTICIPATING
No dividends will be paid. Neither you nor the Beneficiary will have the
right to share in our surplus earnings or profits.

PERIODIC REPORTS
At least once each Policy year, we will send you a statement showing your
Policy Account Value as of a date not more than two months prior to the date of
mailing. We also will send such statements as may be required by applicable
state and federal laws, rules, and regulations.

POLICY DATE
Policy months, years and Policy Anniversaries are measured from the Policy
Date shown on the Policy.

TERMINATION
The Policy will remain in force until surrendered for its Surrender Value,
Annuity Payments begin, or the Death Benefit has been paid.

OWNER AND JOINT OWNER
The Owner is the individual named as such in the application or in any
later change shown in ANLIC's records. Only the Owner may exercise the rights
under this Policy. There may be Joint Owners. If there are Joint Owners, the
signatures of both Owners are needed to exercise rights under the Policy. Joint
Owners are not permitted for Policies issued in connection with Qualified Plans.

ALLOCATOR 2000 ANNUITY
SAI 3

<PAGE> 61

If the Annuitant is not an Owner and the Annuitant dies before the Maturity
Date, the Owner may name a new Annuitant. If the Owner doesn't name a new
Annuitant, the Owner will become the Annuitant. If one of the Joint Annuitants
dies prior to the Maturity Date, the survivor shall become the sole Annuitant.

BENEFICIARY CHANGE
Unless the Beneficiary is irrevocable, you may change the named Beneficiary
by sending a written request in a form acceptable to us to our Service Office.
If the named Beneficiary is irrevocable, you may change the named Beneficiary
only by joint written request from you and such named Beneficiary.

You need not send us the Policy unless we request it. When recorded and
acknowledged by us, the change will be effective as of the date you signed the
request. The change will not apply to any payments made or other action taken by
us before we recorded and acknowledged the request.

ASSIGNMENT
You may assign the Policy as collateral, unless prohibited elsewhere in the
Prospectus or in the Policy itself. We will not be bound by the Assignment until
a copy is filed with us. We assume no responsibility for determining whether an
Assignment is valid or the extent of the assignee's interest.

No Beneficiary may assign any benefits under the Policy until they are due
and, to the extent permitted by law, payments are not subject to the debts of
any Beneficiary nor to any judicial process for payment of the Beneficiary's
debts.

DELAY OR SUSPENSION OF PAYMENTS
We will normally pay a surrender or withdrawal within seven days after we
receive your written request in our Service Office. However, transfers and
payment of any amount from the Sub-accounts may be delayed or suspended
whenever:

(a) the New York Stock Exchange is closed other than customary weekend and
holiday closing, or trading on the New York Stock Exchange is
restricted as determined by the Securities and Exchange Commission
("SEC");

(b) the SEC by order permits postponement for the protection of Owners; or

(c) an emergency exists, as determined by the SEC, as a result of which
disposal of the securities held in the Sub-accounts is not reasonably
practicable or it is not reasonably practicable to determine the value
of the Variable Account's net assets.

Payment of any amounts from the Fixed Account may be deferred for up to six
months from the date of the request to surrender. If payment is deferred for
more than 30 days, we will pay interest on the amount deferred at a rate not
less the Guaranteed Minimum Interest Rate.

Payments under the Policy of any amounts derived from Premium Payments paid
by check may be delayed until such time as the check has cleared your bank.

ACCUMULATION UNITS

ACCUMULATION UNITS
An Accumulation Unit is an accounting unit of measure used to calculate the
value of your interest in the Sub-accounts. When a Net Premium Payment or
transfer is allocated to a Sub-account, a certain number of Accumulation Units
are credited to your Policy. The number of Accumulation Units is determined by
dividing the dollar amount allocated to the Sub-account by the Accumulation Unit
Value for that Sub-account as of the end of the Valuation Period in which the
allocation is made.

The Accumulation Unit Value for each Sub-account was arbitrarily set at ten
dollars ($10) when the first investments were bought, except for the Social
Money Market Sub-account which was set at one dollar ($1). The value for any
later Valuation Period is determined by multiplying the Accumulation Unit Value
for a Sub-account for the last prior Valuation Period by such Sub-account's "net
investment factor" for the following Valuation Period.

ALLOCATOR 2000 ANNUITY
SAI 4

<PAGE> 62

Like the Policy Account Value, the Accumulation Unit Value may increase or
decrease from one Valuation Period to the next.

NET INVESTMENT FACTOR
The "net investment factor" measures the investment performance of a
Sub-account from one Valuation Period to the next. The net investment factor may
be greater or less than one, so the value of a Sub-account may increase or
decrease.

The net investment factor for each Sub-account for any Valuation Period is
determined by dividing (a) by (b), where:
(a) is the net result of:
(1) the net asset value per share of the
Portfolio shares held in the Sub-account determined as of the end
of the current Valuation Period; plus
(2) the per share amount of any dividend or capital gain distributions
made by the Portfolio on shares held in the Sub-account, if the
"ex-dividend" date occurs during the current Valuation Period;
minus
(3) an adjustment for the mortality and expense risk charge and the
administrative expense charge; plus or minus
(4) a per unit charge or credit for any taxes incurred by or reserved
for in the Sub-account, which is determined by ANLIC to have
resulted from the maintenance of the Sub-account; and
(b) is the net result of:
(1) the net asset value per share of the Portfolio shares held in the
Sub-account, determined as of the end of the immediately
preceding Valuation Period; plus or minus
(2) the per unit charge or credit for any taxes reserved for the
immediately preceding Valuation Period.

FIXED ACCOUNT

The Prospectus and this Statement of Additional Information are generally
intended to serve as a disclosure document only for the Policy and the Variable
Account. For complete details regarding the Fixed Account, see the Policy
itself.

Premium Payments allocated and amounts transferred to the Fixed Account
become part of the General Account assets of ANLIC. Interests in the General
Account have not been registered under the Securities Act of 1933, as amended
(the "1933 Act"), nor is the General Account registered as an investment company
under the Investment Company Act of 1940 Act, as amended (the "1940 Act").
Accordingly, neither the General Account nor any interests therein are generally
subject to the provisions of the 1933 or 1940 Acts, and ANLIC has been advised
that the staff of the SEC has not reviewed the disclosures in the Prospectus
which relate to the Fixed Account.

GENERAL DESCRIPTION
The General Account consists of all assets owned by ANLIC other than those
in the Variable Account and other separate accounts. Subject to applicable law,
ANLIC has sole discretion over the investment of the assets in the General
Account.

The General Account is supported by ANLIC's assets that are held in the
General Account. Premium Payments applied and any amounts transferred to the
General Account are credited with a fixed rate of interest for a specified
period. This is the account known as the "Fixed Account".

The allocation of Premium Payments and/or transfer of Policy Account Value
to the Fixed Account does not entitle an Owner to share in the investment
experience of the General Account. Instead, ANLIC guarantees that value in the
Fixed Account will accrue interest at an effective annual rate of at least 4%,
independent of the actual investment experience of the General Account. Interest
rates will be determined on no less than an annual basis.

Prior to the Maturity Date, you may elect to allocate Net Premium Payments
to the Fixed Account or to transfer Policy Account Value to or from the Fixed
Account (subject to certain restrictions upon transfers from the Fixed Account,
as discussed, below).

ALLOCATOR 2000 ANNUITY
SAI 5

<PAGE> 63

TRANSFER LIMITATION
The maximum amount allowed to be transferred out of the Fixed Account
during one Policy Year is 100% of Fixed Account interest accrued since the last
Policy Anniversary, plus 10% of:

(1) Account Value of the Fixed Account as of the last Policy Anniversary;
plus
(2) Deposits and transfers made into the Fixed Account since the last
Policy Anniversary; minus
(3) All partial withdrawals from the Fixed Account since the last Policy
Anniversary.

FIXED ACCOUNT VALUE

We will credit all Net Premium Payments allocated to the Fixed Account to
your Fixed Account Value. The Fixed Account Value at any time equals:

(1) The Net Premium Payments allocated to the Fixed Account; plus

(2) The total of all amounts transferred to the Fixed Account from the
Variable Account; minus
(3) The total of all amounts transferred from the Fixed Account to the
Variable Account, minus
(4) The total of all Policy fees attributable to the Fixed Account; minus
(5) The total of all partial withdrawals from the Fixed Account (including
any Surrender Charges); plus
(6) Interest.

ANLIC'S MANAGEMENT HAS COMPLETE AND SOLE DISCRETION TO DETERMINE THE
CURRENT INTEREST RATES. ANLIC CANNOT PREDICT OR GUARANTEE THE LEVEL OF FUTURE
CURRENT INTEREST RATES, EXCEPT THAT ANLIC GUARANTEES THAT FUTURE CURRENT
INTEREST RATES WILL NOT BE BELOW AN EFFECTIVE RATE OF 4% PER YEAR COMPOUNDED
ANNUALLY. THE OWNER BEARS THE RISK THAT CURRENT INTEREST RATES WILL NOT EXCEED
AN EFFECTIVE RATE OF 4% PER YEAR.

SURRENDER CHARGE CALCULATIONS

Owners may, prior to the earlier of the Maturity Date or death, withdraw
100% of earnings since the last Policy Anniversary in all Sub-accounts and the
Fixed Account free of Surrender Charges. Additionally, Owners may also withdraw
free of Surrender Charges up to 10% of the Policy Account Value as of the last
Policy Anniversary, plus 10% of
(1) deposits since the last Policy Anniversary minus
(2) withdrawals since the last Policy Anniversary.

Surrender Charges are assessed on Premium Payments made within five years
of a surrender or partial withdrawal. To determine the Surrender Charge for a
particular Premium Payment, the Surrender Charge percentage is multiplied by the
Premium Payment less any withdrawals previously allocated to the Premium
Payment. The total Surrender Charge is then determined by summing the previous
result over all Premium Payments used in the calculation. The Surrender Charge
will be based on the excess of the surrender amount over the Free Withdrawal
Amounts. This excess is distributed over the Premium Payments on a first-in,
first-out basis until the excess is exhausted. Partial withdrawals will be
charged based on the above method.

There are no Surrender Charges assessed on distributions made upon the
death of the Owner. The Surrender Charge percentages are as follows:

<TABLE>

<S> <C>
Years 1-3 8%
Year 4 6%
Year 5 4%
Year 6 0%
</TABLE>

<TABLE>
<CAPTION>
Example:
Premium Payments:

ALLOCATOR 2000 ANNUITY
SAI 6
<PAGE> 64
<TABLE>
<S> <C> <C>
WITHDRAWAL ONE - 05/12/92
Requested Withdrawal Amount (not including the Surrender Charge) $3,000.00
Policy Account Value (before withdrawal) $7,114.45
Policy Year Gain (free of charge) $109.22
Gross Premium Payments $6,500.00
10% Free Withdrawal Amount 6,500 X 0.10 = $650.00
Total Free Amount 109.22 + 650 = 759.22
Non-Free Amount 3,000 - 759.22 = 2,240.78
</TABLE>

Surrender Surrender
Premium Payment Charge % Charge
------------ ------------
<S> <C> <C>
$4,000 x .08 = 320.00
$1,000 x .08 = 80.00
$1,500 x .08 = 120.00
Total Surrender Charge 520.00
Partial Surrender Charge(2,240.78/.92) x .08 = 194.85
Total Withdrawal 3,194.85
Policy Account Value (after withdrawal) 3,919.60
</TABLE>

Only those Premium Payments made before May 12, 1992 will be used to
determine the Surrender Charge. The $3,000 withdrawal is less than the first
Premium Payment, therefore, we will use the Surrender Charge percentage on that
Premium Payment. However, it seems that we are applying one surrender Charge
percentage for all premiums. The reason is that the Surrender Charge for the
first three years is 8%.

Assume that your Policy Account Value is split among four Sub-accounts in
the following proportions:

<TABLE>
<S> <C> <C>
Sub-account 1 $ 784.02 .1102%
Sub-account 2 3,111.15 .4373%
Sub-account 3 1,730.23 .2432%
Sub-account 4 1,489.05 .2093%
$ 7,114.45 1.000%
</TABLE>

The process for allocating the Surrender Charge among the Sub-accounts is
as follows:

<TABLE>
<S> <C> <C> <C> <C>
.1102 Sub-account 1 $ 784.01 - 12.04 = $ 771.97
.4373 Sub-account 2 3,111.15 - 47.76 = 3,063.39
.2432 Sub-account 3 1,730.23 - 26.56 = 1,703.67
.2093 Sub-account 4 1,489.05 - 22.86 = 1,466.19
.1102 Sub-account 1 771.97 - 71.63 = 700.34
.4373 Sub-account 2 3,063.39 - 284.25 = 2,779.14
.2432 Sub-account 3 1,703.67 - 158.08 = 1,545.59
.2093 Sub-account 4 1,466.19 - 136.04 = 1,330.15
.1102 Sub-account 1 700.34 - 268.41 = 431.93
.4373 Sub-account 2 2,779.14 - 1,065.10 = 1,714.04
.2432 Sub-account 3 1,545.59 - 592.35 = 953.25
.2093 Sub-account 4 1,330.15 - 509.78 = 820.38
---------
$3,919.60
</TABLE>

ALLOCATOR 2000 ANNUITY
SAI 7

<PAGE> 65

PERFORMANCE DATA CALCULATIONS

We may advertise the yield and effective yield of the Money Market
Sub-account. In addition, we may advertise yield and total returns for other
Sub-accounts. All performance data calculations for the Sub-accounts will be in
accordance with SEC rules and regulations.

MONEY MARKET SUB-ACCOUNT'S YIELD CALCULATION
In accordance with regulations adopted by the SEC, if we disclose the
annualized yield of the Calvert Social Money Market Sub-account for a seven-day
period, it is required to be in a manner which does not take into consideration
any realized or unrealized gains or losses of the Calvert Social Money Market
Portfolio or on its portfolio securities. The annualized yield is computed by
determining the net change (exclusive of realized gains and losses on the sale
of securities and unrealized appreciation and depreciation) in the value of a
hypothetical account having a balance of one Accumulation Unit of the Calvert
Social Money Market Sub-account at the beginning of the seven-day period,
dividing the net change in the value of the Sub-account by the value of the
account at the beginning of the period to determine the base period return, and
annualizing this quotient on a 365-day basis. The net change in Sub-account
Value reflects the deduction for the Mortality and Expense Risk Charge and the
Administrative Expense Charge as well as income and expenses accrued during the
period. Because of these deductions, the yield for the Calvert Social Money
Market Sub-account will be lower than the yield for the Calvert Social Money
Market Portfolio.

The SEC also permits us to disclose the effective yield of the Money Market
Sub-account for the same seven-day period, determined on a weekly-compounded
basis. The effective yield is calculated by compounding the base period return
by adding one to the base period return, raising the sum to a power equal to 365
divided by 7, and subtracting one from the result according to the following
formula:

Effective Yield = [(Base period return + 1) 365/7 ] - 1

The actual yield of the Social Money Market Sub-account is affected by: (1)
changes in interest rates on money market securities; (2) the average portfolio
maturity of the Calvert Social Money Market Portfolio; (3) the types and quality
of securities held by the Calvert Social Money Market Portfolio; and (4) its
operating expenses. The yield on amounts held in the Money Market Sub-account
normally will fluctuate on a daily basis. Therefore, the disclosed yields for
any given past period is not an indication or representation of future yields or
rates of return.

OTHER SUB-ACCOUNTS' YIELD CALCULATIONS
We may from time to time advertise or disclose the annualized yield for
each Sub-account other than the Money Market Sub-account for 30-day (or
one-month) periods. Calculation of the yield of a Sub-account begins with the
income generated by an investment in the Sub-account over a specific 30-day (or
one-month) period. This income is then annualized. That is, the amount of income
generated by the investment during that 30-day (or one-month) period is assumed
to be generated during, and reinvested at the end of, each such period over a
360-day (or twelve-month) year. The 30-day (or one-month) yield is calculated
according to the following formula:

Yield = 2[(((a-b)/cd) + 1)(6) - 1]
where
a = net investment income earned during the period by the Portfolio
attributable to shares owned by the Sub-account;
b = expenses accrued for the period (net of reimbursements);
c = the average daily number of Accumulation Units outstanding
during the period; and
d = the maximum offering price per Accumulation Unit (i.e., net asset
value per Accumulation Unit) on the last day in the period.

Because of the charges and deductions imposed by the Variable Account, the
yield for a Sub-account will be lower than the yield for its corresponding
Portfolio. The yield calculations do not reflect the effect of any premium taxes
or Surrender Charge that may be applicable to a particular Policy. The yield on
amounts held in the Sub-accounts normally will fluctuate over time. Therefore,
the disclosed yield for any given past period is not an

ALLOCATOR 2000 ANNUITY
SAI 8

<PAGE> 66

indication or representation of future yields or rates of return. A
Sub-account's actual yield is affected by the types and quality of the
Portfolio's investments and the Portfolio's operating expenses.

STANDARDIZED AVERAGE ANNUAL TOTAL RETURN CALCULATIONS
For each Sub-account, we may advertise standardized average annual total
return calculated as prescribed by the rules of the SEC. The calculation assumes
a single $1,000 Premium Payment made at the beginning of the stated period and a
surrender at the end of the period. The ending redeemable value (i.e., the
Surrender Value) reflects all recurring fees that are charged to Owner accounts,
including the Annual Policy Fee, Administrative Expense Charge and Mortality and
Expense Risk Charge, and any applicable Surrender Charge.

Quotations of average annual total return are computed by finding the
average annual compounded rates of return over a period of one, three, five, and
ten years (or, if less, up to the life of the Portfolio), and up to the life of
the Sub-Account that would equate the initial amount invested to the ending
redeemable value, according to the following formula:

P(1 + T)n= ERV
where
P = a hypothetical initial Premium Payment of $1,000;
T = average annual total return;
n = number of years in the period; and
ERV = ending redeemable value of a hypothetical $1,000 Premium Payment
made at the beginning of the period (or fractional portion thereof).

NON-STANDARDIZED RETURN CALCULATIONS
In addition to the standardized calculation described above, we may
disclose non-standardized total returns and non-standardized average annual
total returns for each Sub-account. Like the standardized calculation,
non-standardized calculations assume a single $1,000 Premium Payment made at the
beginning of the stated period. However, non-standardized calculations do not
assume a surrender at the end of the period or reflect recurring separate
account charges. Non-standardized total returns represent the percentage change
in Accumulation Unit Value with respect to periods of one year or less.
Non-standardized average annual total returns represent the average annual
change in Accumulation Unit Value over the stated period. For periods of one
year or less, the two non-standardized rates of return are equal. For periods
greater than one year, the non-standardized average annual total return is the
effective annual compounded rate of return.

CUMULATIVE TOTAL RETURN CALCULATIONS
We may also disclose cumulative total return for each Sub-account.
Cumulative total return is non-standardized and unaveraged. It reflects the
simple percentage change in value of a hypothetical investment in a Sub-account
over the stated period. Cumulative total return is calculated using the
following formula:

CTR = (ERV / P) - 1
where
CTR = the cumulative total return net of Sub-account recurring charges for
the period;
ERV = ending redeemable value of a hypothetical $1,000 Premium Payment made
at the beginning of the period (or fractional portion thereof); and
P = a hypothetical initial Premium Payment of $1,000.

PERFORMANCE FIGURES

The performance information provided in the tables below is as of December
31, 1999, and reflects only the performance of a Policy's allocation to the
Sub-accounts during the time period on which the calculations are based. For
periods prior to the inception date of a Sub-account, performance information
represents hypothetical returns based on the performance of the corresponding
Portfolio and the assumption that the Sub-account had been in existence for the
period indicated. All returns for periods greater than one year are annualized.
Performance information provided for any given past period is not an indication
or representation of future rates of return.

ALLOCATOR 2000 ANNUITY
SAI 9

<PAGE> 67

The yield for the Money Market Sub-account for the seven-day period ending
December 31, 1999 on an annualized basis, was 4.71%. The effective yield for the
Money Market Sub-account for the seven-day period ending December 31, 1999, on
an annualized basis, was 4.82%.

Standardized Average Annual Total Return - reflects historical investment
results based on a $1,000 hypothetical investment over the period indicated,
less separate account and underlying charges. The separate account charges
include an annual policy fee, an administrative expense charge, a mortality and
expense risk charge, and any surrender charge applicable if an owner surrendered
the policy at the end of the period indicated. The underlying portfolio charges
include management fees and other operating expenses.

SUBACCOUNT 10 YEAR OR SINCE
INCEPTION 1 YEAR 3 YEAR 5 YEAR SUB-ACCOUNT
DATE INCEPTION
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
THE ALGER AMERICAN FUND
Growth 8/26/96 23.83% 32.09% N/A 31.60%
MidCap Growth 8/26/96 21.97% 21.92% N/A 18.59%
Small Cap Growth 8/26/96 33.37% 19.05% N/A
CALVERT VARIABLE SERIES INC.
Calvert Social Money Market 8/26/96 -4.65% 1.01% N/A .26%
Calvert Social Small Cap Growth 8/26/96 9.67% 13.94% N/A -8.94%
Calvert Social Mid Cap Growth 5/01/97 -2.56% 16.06% N/A 16.06%
Calvert Social International Equity 5/01/97 22.88% 17.46% N/A 17.46%
Calvert Social Balanced Portfolio 8/26/96 2.63% 12.42% N/A 15.17%

DEUTSCHE ASSET MANAGEMENT VIT FUNDS

Equity 500 Index 5/01/00 N/A N/A N/A N/A
Small Cap Index 5/01/00 N/A N/A N/A N/A
EAFE Equity Index 5/01/00 N/A N/A N/A N/A
VARIABLE INSURANCE PRODUCTS FUND
Equity-Income: Service Class 2 5/01/00 N/A N/A N/A N/A
High Income: Service Class 2 5/01/00 N/A N/A N/A N/A
VARIABLE INSURANCE PRODUCTS FUND II
Contrafund: Service Class 2 5/01/00 N/A N/A N/A N/A
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST
Limited Maturity Bond 8/26/96 -7.97% 0.10% N/A 1.37%
Growth 8/26/96 40.25% 27.38% N/A 19.20%
Partners 5/01/00 N/A N/A N/A N/A
OPPENHEIMER VARIABLE ACCOUNT FUNDS
Aggressive Growth 5/01/97 72.98% 28.59% N/A 28.59%
Capital Appreciation 5/01/97 31.64% 27.05% N/A 27.05%
Main Street Growth & Income 5/01/97 11.97% 15.40% N/A 15.40%
Strategic Bond 5/01/97 -6.64% 0.71% N/A 0.71%
High Income 5/01/97 -5.20% 1.46% N/A 1.46%
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST
Templeton Asset Strategy - Class 2 5/01/00 N/A N/A N/A N/A
Templeton International Securities -
Class 2 5/01/00 N/A N/A N/A N/A
VAN ECK WORLDWIDE INSURANCE TRUST
Worldwide Hard Assets Fund 8/26/96 11.27% -10.91% N/A -19.26%
</TABLE>

ALLOCATOR 2000 ANNUITY
SAI 10

<PAGE> 68

Non-Standardized Average Annual Total Return - reflects historical
investment results based on a $1000 hypothetical investment over the period
indicated, less the underlying portfolio charges consisting of management fees
and other operating expenses. The returns do not reflect recurring separate
account charges or the maximum Surrender Charge that would apply for the period
indicated. If reflected, those deductions would reduce the performance quoted.

<TABLE>
<CAPTION>
PORTFOLIO 10 YEAR OR SINCE
INCEPTION 1 YEAR 5 YEAR PORTFOLIO
DATE INCEPTION
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
THE ALGER AMERICAN FUND
Growth 1/09/89 33.74% 30.94% 22.89%
MidCap Growth 5/03/93 31.85% 26.14% 24.72%
Small Cap Growth 9/21/88 43.42% 22.64% 18.22%
CALVERT VARIABLE SERIES INC.
Calvert Social Money Market 6/30/92 4.85% 5.10% 4.46%
Calvert Social Small Cap Growth 3/15/95 19.38% N/A 8.60%
Calvert Social Mid Cap Growth 7/16/91 6.97% 20.80% 14.06%
Calvert Social International Equity 6/30/92 32.78% 18.06% 14.72%
Calvert Social Balanced 9/02/86 12.23% 18.02% 12.05%
DEUTSCHE ASSET MANAGEMENT VIT FUNDS
Equity 500 Index 10/01/97 N/A N/A N/A
Small Cap Index 8/25/97 N/A N/A N/A
EAFE Equity Index 8/22/97 N/A N/A N/A
VARIABLE INSURANCE PRODUCTS FUND
Equity-Income: Service Class 2 10/09/86 N/A N/A N/A
High Income: Service Class 2 9/19/85 N/A N/A N/A
VARIABLE INSURANCE PRODUCTS FUND II
Contrafund: Service Class 2 1/03/95 N/A N/A N/A
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST
Limited Maturity Bond Portfolio 9/10/84 1.48% 5.52% 5.86%
Growth Portfolio 9/10/84 50.40% 26.37% 15.61%
OPPENHEIMER VARIABLE ACCOUNT FUNDS
Aggressive Growth 8/15/86 83.60% 29.70% 20.43%
Capital Appreciation 4/03/85 41.66% 30.65% 18.46%
Main Street Growth & Income 7/05/95 21.71% N/A 25.80%
Strategic Bond 5/03/93 2.83% 8.25% 6.18%
High Income 4/30/86 4.29% 10.24% 12.65%
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST
Templeton Asset Strategy - Class 2 11/28/88 N/A N/A N/A
Templeton International Securities -
Class 2 5/01/92 N/A N/A N/A
VAN ECK WORLDWIDE INSURANCE TRUST
Worldwide Hard Assets Fund 9/1/89 21.00% 1.49% 3.06%
</TABLE>

ALLOCATOR 2000 ANNUITY
SAI 11

<PAGE> 69

FEDERAL TAX MATTERS

TAXATION OF ANLIC
ANLIC is taxed as a life insurance company under Part 1 of Subchapter L of
the Internal Revenue Code of 1986, as amended (the "Code"). Since the Variable
Account is not an entity separate from ANLIC and its operations form a part of
ANLIC, it will not be taxed separately as a "regulated investment company" under
Subchapter M of the Code. Investment income and realized net capital gains on
the assets of the Variable Account are reinvested and taken into account in
determining the Policy Account Value. As a result, such investment income and
realized net capital gains are automatically retained as part of the reserves
under the Policy. Under existing federal income tax law, we believe that
Variable Account investment income and realized net capital gains should not be
taxed to the extent that such income and gains are retained as part of the
reserves under the Policy.

TAX STATUS OF THE POLICIES
Section 817(h) of the Code provides that the investments of the Variable
Account must be "adequately diversified" in accordance with Treasury regulations
in order for the Policies to qualify as annuity contracts under Section 72 of
the Code. The Variable Account, through each Portfolio, intends to comply with
the diversification requirements prescribed by the Treasury Department in Treas.
Reg. Section 1.817-5, which affect how the Portfolios' assets may be invested.
We do not control any of the Funds or their Portfolios' investments. However, we
have entered into an agreement regarding participation in each Fund, which
requires each participating Portfolio to be operated in compliance with the
diversification requirements prescribed by the Treasury.

In certain circumstances, owners of variable annuity contracts may be
considered the owners, for federal income tax purposes, of the assets of the
separate account used to support their policies. In those circumstances, income
and gains from the separate account assets would be includable in the variable
policy owner's gross income. The IRS has stated in published rulings that a
variable policy owner will be considered the owner of separate account assets if
the policy owner possesses incidents of ownership in those assets, such as the
ability to exercise investment control over the assets. The Treasury Department
also announced, in connection with the issuance of regulations concerning
diversification, that those regulations "do not provide guidance concerning the
circumstances in which investor control of the investments of a segregated asset
account may cause the investor (i.e., the policyholder), rather than the
insurance company, to be treated as the owner of the assets in the account."
This announcement also stated that guidance would be issued by way of
regulations or rulings on the "extent to which policyholders may direct their
investments to particular subaccounts without being treated as owners of the
underlying assets."

The ownership rights under the Policy are similar to, but different in
certain respects from, those described by the IRS in rulings in which it was
determined that policy owners were not owners of separate account assets. For
example, the Owner has additional flexibility in allocating premium payments and
Policy Account Values. These differences could result in an Owner being treated
as the owner of a pro rata portion of the assets of the Variable Account. In
addition, we do not know what standards will be set forth, if any, in the
regulations or rulings which the Treasury Department has stated it expects to
issue. We therefore reserve the right to modify the Policy as necessary to
attempt to prevent an Owner from being considered the owner of a pro rata share
of the assets of the Variable Account.

QUALIFIED POLICIES
The Policies are designed for use with several types of qualified plans.
The following are brief descriptions of qualified plans with which the policies
may be used:

a. H.R. 10 Plans--Section 401 of the Code permits self-employed
individuals to establish qualified plans for themselves and their
employees. Such plans commonly are referred to as "H.R. 10" or "Keogh"
plans. Taxation of plan participants depends on the specified plan.

The Code governs such plans with respect to maximum contributions,
distribution dates, non-forfeitability of interests, and tax rates
applicable to distributions. In order to establish such a plan, a plan
document,

ALLOCATOR 2000 ANNUITY
SAI 12

<PAGE> 70

usually in prototype form preapproved by the Internal Revenue
Service, is adopted and implemented by the employer. When issued in
connection with H.R. 10 plans, a Policy may be subject to special
requirements to conform to the requirements under such plans.
Purchasers of a Policy for such purposes will be provided with
supplemental information required by the Internal Revenue Service or
other appropriate agency.

b. Individual Retirement Annuities--Section 408 of the Code permits
certain individuals to contribute to an individual retirement program
known as an "Individual Retirement Annuity" or an "IRA." IRA's are
subject to limitations on eligibility, maximum contributions, and time
of distribution. Distributions from certain other types of qualified
plans may be "rolled over" on a tax-deferred basis into an IRA. Sales
of a Policy for use with an IRA may be subject to special requirements
of the Internal Revenue Service. Purchasers of a Policy for such
purposes will be provided with supplemental information required by the
Internal Revenue Service or other appropriate agency.

c. Roth IRAs--Section 408A of the Code permits certain individuals to
establish an individual retirement program known as a "Roth Individual
Retirement Annuity" or a "Roth IRA." Roth IRAs are subject to limits on
eligibility and maximum contributions. Unlike regular IRAs, Roth IRAs
are not subject to minimum distribution requirements at age 70 1/2. In
addition, certain qualified distributions from a Roth IRA may not be
subject to federal income tax on withdrawal. Distributions from other
types of qualified plans may not, as a general rule, be rolled over to
a Roth IRA. However, a regular IRA can be converted to a Roth IRA in
certain circumstances. Sales of a Policy for use as a Roth IRA may be
subject to special requirements of the Internal Revenue Service.
Purchasers of a Roth IRA Policy will be provided with supplemental
information required by the Internal Revenue Service or other
appropriate agency.

d. SIMPLE IRAs--Section 408(p) of the Code permits certain small employers
to establish a "SIMPLE Individual Annuity" or "SIMPLE IRA" plan for the
benefit of its eligible employees. Employers who maintain SIMPLE IRA
plans make a specified amount of either matching or non-elective
contributions to SIMPLE IRAs of eligible employees. Employees may also
make salary deferred contributions to their SIMPLE IRAs. The Code
specifies limits on eligibility, contributions, and the timing of
distributions, among other things. Sales of SIMPLE IRAs may be subject
to special requirements of the Internal Revenue Service. Purchasers of
a SIMPLE IRA Policy will be provided with supplemental information
required by the Internal Revenue Service or other appropriate agency.

e. Corporation Pension and Profit Sharing Plans--Sections 401(a) and
403(a) of the Code permit corporate employers to establish various
types of retirement plans for employees. Such retirement plans may
permit the purchase of Policies in order to provide benefits under the
plans.

Generally, where the Policy is purchased by a qualified plan, the
tax-deferral feature is provided through the qualified plan and the tax-deferral
feature of the Policy is not necessary and does not provide any additional tax
deferred treatment of earnings.

The Policy does provide features unavailable in other products, such as
lifetime income payments, family protection through the Death Benefit, and
certain guarantees of fees and expenses. Fees imposed by the Policy may be
higher than alternative investments, such as mutual funds, as a result of
offering these features.

ADDITION, DELETION OR SUBSTITUTION OF INVESTMENTS

We cannot guarantee that shares of the Portfolios currently being offered
will be available in the future for investment of Premium Payments or for
transfers. We reserve the right, subject to compliance with applicable law, to
make additions to, deletions from, or substitutions for, the shares of the Funds
that are held by the Variable Account (or any Sub-account) that the Variable
Account (or any Sub-account) may purchase. We reserve the right to eliminate the
shares of any of the Portfolios and to substitute shares of another Portfolio or
any other investment vehicle or of another open-end, registered investment
company if laws or regulations are changed, if the shares of any of the Funds or
a Portfolio are no longer available for investment, or if in our judgment
further investment in

ALLOCATOR 2000 ANNUITY
SAI 13

<PAGE> 71

any Portfolio should become inappropriate in view of the objectives and policies
of the Sub-account. We will not substitute any shares attributable to an Owner's
interest in a Sub-account without notice and prior approval of the SEC and the
insurance regulator of the state where the Policy was delivered, where required.
Nothing contained herein shall prevent the Variable Account from purchasing
other securities for other series or classes of policies, or from permitting a
conversion between series or classes of policies on the basis of requests made
by Owners.

We also reserve the right to establish additional Sub-accounts of the
Variable Account, each of which would invest in a new Portfolio of one of the
Funds, or in shares of another investment company or suitable investment, with a
specified investment objective. New Sub-accounts may be established when, in our
sole discretion, marketing needs or investment conditions warrant, and any new
Sub-accounts will be made available to existing Owners on a basis to be
determined by us. We may also eliminate one or more Sub-accounts if, in its sole
discretion, marketing, tax, or investment conditions warrant.

In the event of any such substitution or change, we may, by appropriate
endorsement, make such changes in the Policies as may be necessary or
appropriate to reflect such substitution or change. If deemed by us to be in the
best interests of persons having voting rights under the Policies, the Variable
Account may be operated as a management company under the 1940 Act, it may be
deregistered under that Act in the event such registration is no longer
required, or it may be combined with other ANLIC separate accounts.

DISTRIBUTION OF THE POLICIES

Applications for the Policies are solicited by agents who are licensed by
state insurance authorities to sell our variable annuity insurance policies, and
who are also registered representatives of The Advisors Group, Inc. ("TAG") or
registered representatives of broker/dealers who have selling agreements with
TAG or registered representatives of broker/dealers who have selling agreements
with such broker/dealers. TAG, whose address is 7315 Wisconsin Avenue, Bethesda,
Maryland 20814, is a registered broker/dealer under the Securities Exchange Act
of 1934 ("1934 Act") and a member of the National Association of Securities
Dealers, Inc. ("NASD"). TAG is a second tier wholly-owned subsidiary of Acacia
Life Insurance Company of Washington, D.C. TAG acts as the principal
underwriter, as defined in the 1940 Act, of the Policies (as well as of other
variable life policies) pursuant to an underwriting agreement with ANLIC. The
Policies are offered and sold only in those states where their sale is lawful.

We will refund any Premium Payments paid if a Policy ultimately is not
issued or will refund the applicable amount if the Policy is canceled during the
Free Look Period.

Agents are compensated for sales of the Policies on a commission and
service fee basis and with other forms of compensation. Agent commissions will
vary, but in any event will not exceed 5% of Premium Payments made.

STATE REGULATION

We are subject to the insurance laws and regulations of states within which
we are licensed or may become licensed to operate. Generally, the insurance
department of a state applies the laws of the state of the insurance company's
domicile in determining permissible investments by that insurance company. A
Policy is governed by the law of the state in which it is delivered. The values
and benefits of each Policy are at least equal to those required by the state in
which it is delivered.

RECORDS AND REPORTS

All records and accounts relating to the Variable Account will be
maintained by ANLIC. As presently required by the 1940 Act and regulations
promulgated thereunder, reports containing such information as may be required
under that Act or by any other applicable law or regulation will be sent to
Owners at their last known address of record.

ALLOCATOR 2000 ANNUITY
SAI 14
<PAGE> 72

LEGAL MATTERS

Matters of the Commonwealth of Virginia law pertaining to the Policies,
including ANLIC's right to issue the Policies and its qualification to do so
under applicable laws and regulations thereunder, have been passed upon by
Robert-John H. Sands, Senior Vice President and General Counsel.

EXPERTS

The statutory basis financial statements of ANLIC as of December 31,
1999 and for the year then ended, and the financial statements of the
subaccounts of Separate Account II as of December 31, 1999 and for the year then
ended, included in this Statement of Additional Information have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their reports
appearing herein, and are included in reliance upon the reports of such firm
given upon their authority as experts in accounting and auditing.
The statutory basis financial statements of ANLIC as of December 31,
1998 and for the year then ended, and the financial statements of the
subaccounts of Separate Account II for the year ended December 31, 1998,
included in this Statement of Additional Information have been audited by
PricewaterhouseCoopers LLP, independent accountants, as stated in their reports
appearing herein, and are included in reliance upon the reports of such firm
given upon their authority as experts in accounting and auditing.

OTHER INFORMATION

A Registration Statement has been filed with the SEC under the 1933 Act
with respect to the Policies discussed in this Statement of Additional
Information. Not all of the information set forth in the Registration Statement,
amendments and exhibits thereto has been included in this Statement of
Additional Information. Statements contained in this Statement of Additional
Information concerning the content of the Policy and other legal instruments are
intended to be summaries. For a complete statement of the terms of these
documents, reference should be made to the instruments filed with the SEC.

FINANCIAL STATEMENTS

We have included financial statements of ANLIC and of the Variable Account
in this Statement of Additional Information. The financial statements of ANLIC
should be considered only as bearing on ANLIC's ability to meet its obligations
under the Policy. They should not be considered as bearing on the investment
performance of the assets held in the Variable Account.

ALLOCATOR 2000 ANNUITY
SAI 15

<PAGE> 73

INDEPENDENT AUDITORS' REPORT

Board of Directors
Acacia National Life Insurance Company
Bethesda, Maryland

We have audited the accompanying statement of net assets of each of the
subaccounts of Acacia National Variable Annuity Separate Account II (comprising,
respectively, the Social Money Market Portfolio, Social Balanced Portfolio,
Social Small Cap Growth Portfolio, Social Mid Cap Growth Portfolio, and Social
International Equity Portfolio of the Calvert Variable Series, Inc.; the Growth
Portfolio, MidCap Growth Portfolio, and Small Capitalization Portfolio of the
Alger American Fund; the Stock Index Portfolio of the Dreyfus Stock Index Fund;
the Limited Maturity Bond Portfolio, and the Growth Portfolio of the Neuberger &
Berman Advisers Management Trust; the International Stock Fund II Portfolio, and
Discovery Fund II Portfolio of the Strong Variable Insurance Funds, Inc.; the
Worldwide Hard Assets Portfolio of the Van Eck Worldwide Insurance Trust; and
the Capital Appreciation Portfolio, Aggressive Growth Portfolio, Growth and
Income Portfolio, High Income Portfolio, and Strategic Bond Portfolio of the
Oppenheimer Variable Accounts Fund) as of December 31, 1999, and the related
statements of operations and changes in net assets for the year then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned at December 31, 1999. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe our audit provides a reasonable basis for our opinion.

In our opinion, such 1999 financial statements present fairly, in all material
respects, the financial position of each of the subaccounts constituting Acacia
National Variable Annuity Separate Account II as of December 31, 1999, and the
results of its operations and changes in net assets for the year then ended, in
conformity with generally accepted accounting principles.

/s/ Deloitte & Touche LLP

Lincoln, Nebraska
April 7, 2000

F-I- 1
<PAGE> 74

[PRICEWATERHOUSECOOPERS LOGO]

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors of Acacia National Life Insurance Company and
Contract Owners of Acacia National Variable Annuity Separate Account II

In our opinion, the accompanying statements of operations and changes in net
assets present fairly, in all material respects, the results of their operations
and changes in their net assets of each of the following sub-accounts comprising
the Acacia National Variable Annuity Separate Account II (the Account): the
Social Money Market Portfolio, Social Balanced Portfolio, Social Small Cap
Growth Portfolio, Social Mid Cap Growth Portfolio, and Social International
Equity Portfolio of the Calvert Variable Series, Inc.; the Growth Portfolio,
MidCap Growth Portfolio, and Small Capitalization Portfolio of The Alger
American Fund; the Stock Index Portfolio of the Dreyfus Stock Index Fund; the
Limited Maturity Bond Portfolio, and Growth Portfolio of the Neuberger & Berman
Advisers Management Trust; the International Stock Fund II Portfolio, and
Discovery Fund II Portfolio of the Strong Variable Insurance Funds, Inc.; the
Worldwide Hard Assets Portfolio of the Van Eck Worldwide Insurance Trust; and
the Capital Appreciation Portfolio, Aggressive Growth Portfolio, Growth and
Income Portfolio, High Income Portfolio, and Strategic Bond Portfolio of the
Oppenheimer Variable Accounts Fund for the period presented in the year ended
December 31, 1998, in conformity with accounting principles generally accepted
in the United States. The financial statements are the responsibility of the
Account's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with auditing standards generally accepted in
the United States which require that we plan and perform the audit to obtain
reasonable assurance about whether financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.

[/s/ PRICEWATERHOUSECOOPERS LLP]

Washington, D.C.
April 30, 1999

F-I- 2
<PAGE> 75

ACACIA NATIONAL VARIABLE ANNUITY

SEPARATE ACCOUNT II
STATEMENT OF NET ASSETS
DECEMBER 31, 1999

<TABLE>
<CAPTION>
INVESTMENT DUE (TO)/FROM
AT NET ASSET GENERAL
VALUE ACCOUNT TOTAL
------------ ------------- -----------
<S> <C> <C> <C>
ASSETS
CALVERT VARIABLE SERIES, INC.
Social Money Market Portfolio -- 4,226,091.270 shares
at $1.00 per share (cost $4,226,091)................. $4,226,091 $ 6,939 $ 4,233,030
Social Balanced Portfolio -- 975,070.225 shares at
$2.169 per share (cost $2,100,498)................... 2,114,928 (36) 2,114,892
Social Small Cap Growth Portfolio -- 57,449.134 shares
at $13.27 per share (cost $609,956).................. 762,349 (9) 762,340
Social Mid Cap Growth Portfolio -- 45,244.678 shares at
$30.03 per share (cost $1,479,587)................... 1,358,698 3,008 1,361,706
Social International Equity Portfolio -- 84,610.179
shares at $25.66 per share (cost $1,812,959)......... 2,171,098 747 2,171,845
THE ALGER AMERICAN FUND:
Growth Portfolio -- 173,314.032 shares at $64.38 per
share (cost $8,581,219).............................. 11,157,958 13,350 11,171,308
Midcap Growth Portfolio -- 112,063.075 shares at $32.23
per share (cost $3,133,338).......................... 3,611,792 804 3,612,596
Small Capitalization Portfolio -- 115,815.126 shares at
$55.15 per share (cost $4,575,370)................... 6,387,205 13,266 6,400,471
DREYFUS STOCK INDEX FUND:
Stock Index Portfolio -- 526,407.158 shares at $38.45
per share (cost $15,357,246)......................... 20,240,355 117,487 20,357,842
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST:
Limited Maturity Bond Portfolio -- 543,932.893 shares
at $13.24 per share (cost $7,388,035)................ 7,201,672 87,226 7,288,898
Growth Portfolio -- 120,040.319 shares at $37.27 per
share (cost $2,979,761).............................. 4,473,902 68,518 4,542,420
STRONG VARIABLE INSURANCE FUNDS, INC.:
International Stock Fund II Portfolio -- 314,664.927
shares at $16.37 per share (cost $3,137,187)......... 5,151,065 4,763 5,155,828
Discovery Fund II Portfolio -- 14,549.140 shares at
$11.38 per share (cost $197,520)..................... 165,569 -- 165,569
VAN ECK WORLDWIDE INSURANCE TRUST:
Worldwide Hard Assets Portfolio -- 129,608.198 shares
at $10.96 per share (cost $1,510,168)................ 1,420,506 21,427 1,441,933
OPPENHEIMER VARIABLE ACCOUNTS FUND
Capital Appreciation Portfolio -- 151,768.173 shares at
$49.84 per share (cost $5,216,525)................... 7,564,126 102,432 7,666,558
Aggressive Growth Portfolio -- 52,128.516 shares at
$82.31 per share (cost $2,267,517)................... 4,290,698 80,725 4,371,423
Growth and Income Portfolio -- 172,300.979 shares at
$24.63 per share (cost $3,617,016)................... 4,243,773 22,322 4,266,095
High Income Portfolio -- 203,690.254 shares at $10.72
per share (cost $2,246,933).......................... 2,183,560 878 2,184,438
Strategic Bond Portfolio -- 251,470.322 shares at $4.97
per share (cost $1,257,719).......................... 1,249,808 -- 1,249,808
-----------
NET ASSETS REPRESENTING EQUITY OF POLICYOWNERS......... $90,519,000
===========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-I- 3
<PAGE> 76

ACACIA NATIONAL VARIABLE ANNUITY

SEPARATE ACCOUNT II
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

CALVERT VARIABLE SERIES, INC.
--------------------------------------------
SOCIAL
SOCIAL SOCIAL SMALL CAP
MONEY MARKET BALANCED GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO
------------ --------- ---------
<S> <C> <C> <C>
1999
INVESTMENT INCOME:
Dividend distributions received..................... $138,880 $ 45,695 $ 280
Mortality and expense risk charge................... 40,289 18,935 5,648
-------- -------- --------
NET INVESTMENT INCOME (LOSS).......................... 98,591 26,760 (5,368)
-------- -------- --------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain distributions..................... -- 156,551 --
Net change in unrealized appreciation
(depreciation)................................... 5,936 16,325 169,436
-------- -------- --------
NET GAIN (LOSS) ON INVESTMENTS........................ 5,936 172,876 169,436
-------- -------- --------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS.......................................... $104,527 $199,636 $164,068
======== ======== ========
1998
INVESTMENT INCOME:
Dividend and capital distributions received......... $ 99,957 $ 77,846 $ 4,815
Mortality and expense risk charge................... 31,303 9,942 4,864
-------- -------- --------
NET INVESTMENT INCOME (LOSS).......................... 68,654 67,904 (49)
-------- -------- --------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from redemption of fund
shares........................................... -- 16,551 (42,746)
Net change in unrealized appreciation
(depreciation)................................... -- 13,903 (5,564)
-------- -------- --------
NET GAIN (LOSS) ON INVESTMENTS........................ -- 30,454 (48,310)
-------- -------- --------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS.......................................... $ 68,654 $ 98,358 $(48,359)
======== ======== ========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-I- 4
<PAGE> 77

<TABLE>
<CAPTION>
DREYFUS
STOCK
CALVERT VARIABLE SERIES, INC. THE ALGER AMERICAN FUND INDEX FUND
------------------------------ --------------------------------------- -----------
SOCIAL
SOCIAL INTERNATIONAL MID CAP SMALL
MID CAP GROWTH EQUITY GROWTH GROWTH CAPITALIZATION STOCK INDEX
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
-------------- ------------- ---------- --------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
$ -- $ 1,104 $ 8,290 $ -- $ -- $ 176,826
14,833 16,059 87,337 28,346 51,505 183,488
--------- -------- ---------- -------- ---------- ----------
(14,833) (14,955) (79,047) (28,346) (51,505) (6,662)
--------- -------- ---------- -------- ---------- ----------
104,939 152,903 566,013 319,747 491,028 153,602
(105,660) 387,042 1,793,655 487,608 1,377,278 2,703,310
--------- -------- ---------- -------- ---------- ----------
(721) 539,945 2,359,668 807,355 1,868,306 2,856,912
--------- -------- ---------- -------- ---------- ----------
(15,554)
$ $524,990 $2,280,621 $779,009 $1,816,801 $2,850,250
========= ======== ========== ======== ========== ==========
$ 113,069 $ 63,989 $ 405,331 $ 88,825 $ 269,251 $ 320,587
5,540 5,262 39,319 15,029 30,197 112,282
--------- -------- ---------- -------- ---------- ----------
107,529 58,727 366,012 73,796 239,054 208,305
--------- -------- ---------- -------- ---------- ----------
2,888 2,838 155,749 103,565 53,800 302,629
(4,743) (20,653) 614,806 (92,375) 306,780 1,557,275
--------- -------- ---------- -------- ---------- ----------
(1,855) (17,815) 770,555 11,190 360,580 1,859,904
--------- -------- ---------- -------- ---------- ----------
105,674
$ $ 40,912 $1,136,567 $ 84,986 $ 599,634 $2,068,209
========= ======== ========== ======== ========== ==========
</TABLE>

F-I- 5
<PAGE> 78

ACACIA NATIONAL VARIABLE ANNUITY
SEPARATE ACCOUNT II
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999 AND 1998

<TABLE>
<CAPTION>
NEUBERGER & BERMAN STRONG VARIABLE
ADVISERS MANAGEMENT TRUST INSURANCE FUNDS, INC.
------------------------- --------------------------
LIMITED
MATURITY INTERNATIONAL DISCOVERY
BOND GROWTH STOCK FUND II FUND II
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------- ----------- ------------- ---------
<S> <C> <C> <C> <C>
1999
INVESTMENT INCOME:
Dividend distributions received.............. $ 313,904 $ -- $ 12,800 $ --
Mortality and expense risk charge............ 74,860 38,204 29,178 2,532
--------- ---------- ---------- --------
NET INVESTMENT INCOME (LOSS)................... 239,044 (38,204) (16,378) (2,532)
--------- ---------- ---------- --------
REALIZED AND UNREALIZED GAIN(LOSS) ON
INVESTMENTS:
Net realized gain distributions.............. -- 150,594 -- 34,121
Net change in unrealized appreciation
(depreciation)............................ (216,540) 1,403,550 2,510,546 (40,890)
--------- ---------- ---------- --------
NET GAIN (LOSS) ON INVESTMENTS................. (216,540) 1,554,144 2,510,546 (6,769)
--------- ---------- ---------- --------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS.............................. $ 22,504 $1,515,940 $2,494,168 $ (9,301)
========= ========== ========== ========
1998
INVESTMENT INCOME:
Dividend and capital gains distributions
received.................................. $ 184,703 $ 417,995 $ 78,354 $ 2,440
Mortality and expense risk charge............ 52,410 26,566 36,712 2,739
--------- ---------- ---------- --------
NET INVESTMENT INCOME (LOSS)................... 132,293 391,429 41,642 (299)
--------- ---------- ---------- --------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain (loss) from redemption of
fund shares............................... (1,905) (19,136) (191,046) 13,684
Net change in unrealized appreciation
(depreciation)............................ (24,125) (63,935) (39,660) (5,619)
--------- ---------- ---------- --------
NET GAIN (LOSS) ON INVESTMENTS................. (26,030) (83,071) (230,706) 8,065
--------- ---------- ---------- --------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS.............................. $ 106,263 $ 308,358 $ (189,064) $ 7,766
========= ========== ========== ========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-I- 6
<PAGE> 79

<TABLE>
<CAPTION>
VAN ECK
WORLDWIDE
INSURANCE TRUST OPPENHEIMER VARIABLE ACCOUNTS FUND
--------------- ----------------------------------------------------------------
WORLDWIDE CAPITAL AGGRESSIVE GROWTH AND STRATEGIC
HARD ASSETS APPRECIATION GROWTH INCOME HIGH INCOME BOND
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------------- ------------ ---------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
$ 15,597 $ 14,987 $ -- $ 11,448 $111,232 $ 49,315
14,014 63,197 32,487 37,359 21,312 12,122
--------- ---------- ---------- -------- -------- --------
1,583 (48,210) (32,487) (25,911) 89,920 37,193
--------- ---------- ---------- -------- -------- --------
-- 164,627 -- 19,287 -- --
211,871 1,959,208 1,890,645 620,318 (23,928) (12,580)
--------- ---------- ---------- -------- -------- --------
211,871 2,123,835 1,890,645 639,605 (23,928) (12,580)
--------- ---------- ---------- -------- -------- --------
$ 213,454 $2,075,625 $1,858,158 $613,694 $ 65,992 $ 24,613
========= ========== ========== ======== ======== ========
$ 88,463 $ 188,491 $ 25,650 $ 49,612 $ 34,016 $ 5,473
10,287 35,729 17,021 18,232 12,214 4,594
--------- ---------- ---------- -------- -------- --------
78,176 152,762 8,629 31,380 21,802 879
--------- ---------- ---------- -------- -------- --------
(88,651) 30,966 27,104 15,370 (6,596) (1,033)
(282,297) 375,574 141,899 (10,583) (40,830) 4,888
--------- ---------- ---------- -------- -------- --------
(370,948) 406,540 169,003 4,787 (47,426) 3,855
--------- ---------- ---------- -------- -------- --------
$(292,772) $ 559,302 $ 177,632 $ 36,167 $(25,624) $ 4,734
========= ========== ========== ======== ======== ========
</TABLE>

F-I- 7
<PAGE> 80

ACACIA NATIONAL VARIABLE ANNUITY

SEPARATE ACCOUNT II
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

<TABLE>
<CAPTION>
CALVERT VARIABLE SERIES, INC.
---------------------------------------
SOCIAL
SOCIAL SOCIAL SMALL CAP
MONEY MARKET BALANCED GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO
------------ ---------- ---------
<S> <C> <C> <C>
1999
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net Investment income (loss)............................ $ 98,591 $ 26,760 $ (5,368)
Net realized gain distributions......................... -- 156,551 --
Net change in unrealized appreciation (depreciation).... 5,936 16,325 169,436
---------- ---------- --------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS.............................................. 104,527 199,636 164,068
NET INCREASE (DECREASE) FROM POLICYOWNER TRANSACTIONS..... 2,215,629 838,757 232,318
---------- ---------- --------
TOTAL INCREASE (DECREASE) IN NET ASSETS................... 2,320,156 1,038,393 396,386
---------- ---------- --------
NET ASSETS AT JANUARY 1, 1999............................. 1,912,874 1,076,499 365,954
---------- ---------- --------
NET ASSETS AT DECEMBER 31, 1999........................... $4,233,030 $2,114,892 $762,340
========== ========== ========
1998
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net Investment income (loss)............................ $ 68,654 $ 67,904 $ (49)
Net realized gain (loss) from redemption of fund
shares............................................... -- 16,551 (42,746)
Net change in unrealized appreciation (depreciation).... -- 13,903 (5,564)
---------- ---------- --------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS.............................................. 68,654 98,358 (48,359)
NET INCREASE (DECREASE) FROM POLICYOWNER TRANSACTIONS..... 624,232 460,107 111,279
---------- ---------- --------
TOTAL INCREASE (DECREASE) IN NET ASSETS................... 692,886 558,465 62,920
---------- ---------- --------
NET ASSETS AT JANUARY 1, 1998............................. 1,219,988 518,034 303,034
---------- ---------- --------
NET ASSETS AT DECEMBER 31, 1998........................... $1,912,874 $1,076,499 $365,954
========== ========== ========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-I- 8
<PAGE> 81

<TABLE>
<CAPTION>
DREYFUS STOCK
CALVERT VARIABLE SERIES, INC. THE ALGER AMERICAN FUND INDEX FUND
------------------------------ ----------------------------------------- -------------
SOCIAL
SOCIAL INTERNATIONAL MIDCAP SMALL
MID-CAP GROWTH EQUITY GROWTH GROWTH CAPITALIZATION STOCK INDEX
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
-------------- ------------- ----------- ---------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
$ (14,833) $ (14,955) $ (79,047) $ (28,346) $ (51,505) $ (6,662)
104,939 152,903 566,013 319,747 491,028 153,602
(105,660) 387,042 1,793,655 487,608 1,377,278 2,703,310
---------- ---------- ----------- ---------- ---------- -----------
(15,554) 524,990 2,280,621 779,009 1,816,801 2,850,250
414,907 816,195 4,507,185 1,171,425 1,350,994 5,868,099
---------- ---------- ----------- ---------- ---------- -----------
399,353 1,341,185 6,787,806 1,950,434 3,167,795 8,718,349
---------- ---------- ----------- ---------- ---------- -----------
962,353 830,660 4,383,502 1,662,162 3,232,676 11,639,493
---------- ---------- ----------- ---------- ---------- -----------
$1,361,706 $2,171,845 $11,171,308 $3,612,596 $6,400,471 $20,357,842
========== ========== =========== ========== ========== ===========
$ 107,529 $ 58,727 $ 366,012 $ 73,796 $ 239,054 $ 208,305
2,888 2,838 155,749 103,565 53,800 302,629
(4,743) (20,653) 614,806 (92,375) 306,780 1,557,275
---------- ---------- ----------- ---------- ---------- -----------
105,674 40,912 1,136,567 84,986 599,634 2,068,209
765,831 705,239 1,433,357 773,342 1,111,356 4,108,610
---------- ---------- ----------- ---------- ---------- -----------
871,505 746,151 2,569,924 858,328 1,710,990 6,176,819
---------- ---------- ----------- ---------- ---------- -----------
90,848 84,509 1,813,578 803,834 1,521,686 5,462,674
---------- ---------- ----------- ---------- ---------- -----------
$ 962,353 $ 830,660 $ 4,383,502 $1,662,162 $3,232,676 $11,639,493
========== ========== =========== ========== ========== ===========
</TABLE>

F-I- 9
<PAGE> 82

ACACIA NATIONAL VARIABLE ANNUITY

SEPARATE ACCOUNT II
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

<TABLE>
<CAPTION>
NEUBERGER & BERMAN STRONG VARIABLE
ADVISERS MANAGEMENT TRUST INSURANCE FUNDS, INC.
-------------------------- --------------------------
LIMITED
MATURITY INTERNATIONAL DISCOVERY
BOND GROWTH STOCK FUND II FUND II
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ----------- ------------- ---------
<S> <C> <C> <C> <C>
1999
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
Net Investment income (loss)................. $ 239,044 $ (38,204) $ (16,378) $ (2,532)
Net realized gain distributions.............. -- 150,594 -- 34,121
Net change in unrealized appreciation
(depreciation)............................ (216,540) 1,403,550 2,510,546 (40,890)
---------- ---------- ---------- --------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS.............................. 22,504 1,515,940 2,494,168 (9,301)
NET INCREASE (DECREASE) FROM POLICYOWNER
TRANSACTIONS................................. 2,117,203 263,822 (283,730) (71,246)
---------- ---------- ---------- --------
TOTAL INCREASE (DECREASE) IN NET ASSETS........ 2,139,707 1,779,762 2,210,438 (80,547)
---------- ---------- ---------- --------
NET ASSETS AT JANUARY 1, 1999.................. 5,149,191 2,762,658 2,945,390 246,116
---------- ---------- ---------- --------
NET ASSETS AT DECEMBER 31, 1999................ $7,288,898 $4,542,420 $5,155,828 $165,569
========== ========== ========== ========
1998
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
Net Investment income (loss)................. $ 132,293 $ 391,429 $ 41,642 $ (299)
Net realized gain (loss) from redemption of
fund shares............................... (1,905) (19,136) (191,046) 13,684
Net change in unrealized appreciation
(depreciation)............................ (24,125) (63,935) (39,660) (5,619)
---------- ---------- ---------- --------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS.............................. 106,263 308,358 (189,064) 7,766
NET INCREASE (DECREASE) FROM POLICYOWNER
TRANSACTIONS................................. 2,393,605 1,040,485 682,529 110,203
---------- ---------- ---------- --------
TOTAL INCREASE (DECREASE) IN NET ASSETS........ 2,499,868 1,348,843 493,465 117,969
---------- ---------- ---------- --------
NET ASSETS AT JANUARY 1, 1998.................. 2,649,323 1,413,815 2,451,925 128,147
---------- ---------- ---------- --------
NET ASSETS AT DECEMBER 31, 1998................ $5,149,191 $2,762,658 $2,945,390 $246,116
========== ========== ========== ========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-I- 10
<PAGE> 83

<TABLE>
<CAPTION>
VAN ECK
WORLDWIDE
INSURANCE TRUST OPPENHEIMER VARIABLE ACCOUNTS FUND
--------------- -----------------------------------------------------------------
WORLDWIDE CAPITAL AGGRESSIVE GROWTH AND STRATEGIC
HARD ASSETS APPRECIATION GROWTH INCOME HIGH INCOME BOND
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------------- ------------ ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
$ 1,583 $ (48,210) $ (32,487) $ (25,911) $ 89,920 $ 37,193
-- 164,627 -- 19,287 -- --
211,871 1,959,208 1,890,645 620,318 (23,928) (12,580)
---------- ---------- ---------- ---------- ---------- ----------
213,454 2,075,625 1,858,158 613,694 65,992 24,613
272,734 1,616,923 503,294 1,341,340 763,647 591,093
---------- ---------- ---------- ---------- ---------- ----------
486,188 3,692,548 2,361,452 1,955,034 829,639 615,706
---------- ---------- ---------- ---------- ---------- ----------
955,745 3,974,010 2,009,971 2,311,061 1,354,799 634,102
---------- ---------- ---------- ---------- ---------- ----------
$1,441,933 $7,666,558 $4,371,423 $4,266,095 $2,184,438 $1,249,808
========== ========== ========== ========== ========== ==========
$ 78,176 $ 152,762 $ 8,629 $ 31,380 $ 21,802 $ 879
(88,651) 30,966 27,104 15,370 (6,596) (1,033)
)
(282,297 375,574 141,899 (10,583) (40,830) 4,888
---------- ---------- ---------- ---------- ---------- ----------
)
(292,772 559,302 177,632 36,167 (25,624) 4,734
696,101 1,957,089 1,076,323 1,782,394 863,882 557,842
---------- ---------- ---------- ---------- ---------- ----------
403,329 2,516,391 1,253,955 1,818,561 838,258 562,576
---------- ---------- ---------- ---------- ---------- ----------
552,416 1,457,619 756,016 492,500 516,541 71,526
---------- ---------- ---------- ---------- ---------- ----------
$ 955,745 $3,974,010 $2,009,971 $2,311,061 $1,354,799 $ 634,102
========== ========== ========== ========== ========== ==========
</TABLE>

F-I- 11
<PAGE> 84

ACACIA NATIONAL VARIABLE ANNUITY

SEPARATE ACCOUNT II
NOTES TO FINANCIAL STATEMENTS

NOTE 1 -- ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

The Acacia National Variable Annuity Separate Account II (the Account) began
operations on September 9, 1996 as a separate investment account within Acacia
National Life Insurance Company (the Company), a wholly owned subsidiary of
Acacia Life Insurance Company. The assets of the Account are held by the Company
and are segregated from all of the Company's other assets.

The Account is registered under the Investment Company Act of 1940, as amended,
as a unit investment trust. At December 31, 1999 there are nineteen subaccounts
within the Account. Five of the subaccounts invest only in a corresponding
Portfolio of the Calvert Variable Series, Inc. which is a diversified open-end
management investment company managed by the Calvert Asset Management Company,
Inc. (see note 3) Three of the subaccounts invest only in a corresponding
Portfolio of The Alger American Fund which is a diversified open-end management
investment company managed by Fred Alger Management, Inc. (Alger Management).
One subaccount invests only in a corresponding Portfolio of Dreyfus Stock Index
Fund which is a non-diversified open-end management investment company managed
by Dreyfus Service Corporation. Two of the subaccounts invest only in a
corresponding Portfolio of the Neuberger & Berman Advisers Management Trust
which is a diversified open-end management investment company managed by
Neuberger & Berman Management Incorporated. Two of the subaccounts invest only
in a corresponding Portfolio of the Strong Variable Insurance Fund, Inc. which
is a diversified open-end management investment company managed by Strong
Capital Management, Inc. One of the subaccounts invest only in a corresponding
Portfolio of the Van Eck Worldwide Insurance Trust which is a non-diversified
open-end management investment company managed by Van Eck Associates
Corporation. Five of the subaccounts invest only in a corresponding Portfolio of
the Oppenheimer Variable Accounts Fund which is a diversified open-end
management investment company managed by Oppenheimer Funds, Inc. Each Portfolio
pays the manager a monthly fee for managing its investments and business
affairs.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

CONSISTENCY

Due to changes in the processing environment during 1999, certain information is
presented differently between years. In 1999, net realized gains/losses on
redemption of fund shares is included in net change in unrealized
appreciation/depreciation. Capital gain distributions received are reflected in
net realized gain distributions.

In 1998, net realized gains and losses on redemption of fund shares are
separately presented. Capital gain distributions received from funds are
included in dividend distributions received.

VALUATION OF INVESTMENTS

The assets of the account are carried at the net asset value of the underlying
Portfolios. The value of the policyowners' units corresponds to the Account's
investment in the underlying subaccounts. The availability of investment
portfolio and subaccount options may vary between products. Share transactions
and security transactions are accounted for on a trade date basis. However,
dividends of $82,499 for the Stock Index Portfolio and $40,186 for the
International Stock Fund II Portfolio were received in 1997 and recorded in
1998. All affected policyholder accounts were adjusted.

F-I- 12
<PAGE> 85
ACACIA NATIONAL VARIABLE ANNUITY

SEPARATE ACCOUNT II
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 1 -- ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
FEDERAL AND STATE TAXES

The operations of the Account are included in the federal income tax return of
the Company, which is taxed as a life insurance company under the Internal
Revenue Code. The Company has the right to charge the Account any federal income
taxes, or provision for federal income taxes, attributable to the operations of
the Account or to the policies funded in the Account. Currently, the Company
does not make a charge for income or other taxes. Charges for state and local
taxes, if any, attributable to the Account may also be made.

2. POLICYOWNER CHARGES

The Company charges the Account for mortality and expense risks assumed. A daily
charge is made on the average daily value of the net assets representing equity
of policyowners held in each subaccount per each product's current policy
provisions. Additional charges are made at intervals and in amounts per each
product's current policy provisions. These charges are prorated against the
balance in each investment option of the policyowner, including the Fixed
Account option which is not reflected in this separate account.

3. RELATED PARTIES

Calvert Asset Management Company, Inc., an affiliate of the Company, serves as
an investment advisor to the Calvert Variable Series, Inc. Social Money Market,
Social Balanced, Social Small Cap Growth, Social Mid Cap Growth and Social
International Equity Portfolios. The Advisors Group, Inc., an affiliate of the
Company, acts as a principal underwriter of the policies pursuant to an
underwriting agreement with the Company.

F-I- 13
<PAGE> 86
ACACIA NATIONAL VARIABLE ANNUITY

SEPARATE ACCOUNT II
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

4. UNITS OWNED

Units owned in the Account are as follows:

CALVERT VARIABLE SERIES, INC.
--------------------------------------------------------------------
SOCIAL SOCIAL SOCIAL
SOCIAL SOCIAL SMALL CAP MID CAP INTERNATIONAL
MONEY MARKET BALANCED GROWTH GROWTH EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ --------- --------- --------- -------------
<S> <C> <C> <C> <C> <C>
Units owned at January 1, 1999.......... 1,704,121 71,077 39,943 59,588 63,614
Units acquired.......................... 23,767,307 73,230 53,113 28,269 82,433
Units disposed.......................... 21,847,901 18,797 22,755 8,521 19,743
---------- ------- ------ ------ -------
Units owned at December 31, 1999........ 3,623,527 125,510 70,302 79,336 126,303
========== ======= ====== ====== =======

Units owned at January 1, 1998.......... 1,140,175 39,756 31,049 7,302 7,669
Units acquired.......................... 9,603,132 62,551 40,105 63,376 66,292
Units disposed.......................... 9,039,186 31,230 31,211 11,090 10,347
---------- ------- ------ ------ -------
Units owned at December 31, 1998........ 1,704,121 71,077 39,943 59,588 63,614
========== ======= ====== ====== =======
</TABLE>

F-I- 14
<PAGE> 87

<TABLE>
<CAPTION>
NEUBERGER & BERMAN
DREYFUS STOCK ADVISERS STRONG VARIABLE
THE ALGER AMERICAN FUND INDEX FUND MANAGEMENT TRUST INSURANCE FUNDS, INC.
-------------------------------------- ------------- --------------------- -------------------------
LIMITED
MIDCAP SMALL MATURITY INTERNATIONAL DISCOVERY
GROWTH GROWTH CAPITALIZATION STOCK INDEX BOND GROWTH STOCK FUND II FUND II
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- -------------- ------------- --------- --------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
215,879 102,971 243,767 608,764 447,966 169,192 347,949 19,136
274,418 86,932 146,604 410,695 310,368 58,244 195,392 12,105
75,862 18,733 51,566 134,035 135,533 43,687 215,620 18,885
------- ------- ------- ------- ------- ------- ------- -------
414,435 171,169 338,805 885,424 622,801 183,748 327,721 12,356
======= ======= ======= ======= ======= ======= ======= =======

132,282 64,878 132,551 366,377 240,629 100,057 284,776 10,687
122,602 78,824 156,870 297,954 277,354 97,054 144,493 13,673
39,005 40,731 45,654 55,567 70,017 27,919 81,320 5,224
------- ------- ------- ------- ------- ------- ------- -------
215,879 102,971 243,767 608,764 447,966 169,192 347,949 19,136
======= ======= ======= ======= ======= ======= ======= =======
</TABLE>

F-I- 15
<PAGE> 88

ACACIA NATIONAL VARIABLE ANNUITY

SEPARATE ACCOUNT II
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

4. UNITS OWNED -- (CONTINUED)

Units owned in the Account are as follows:

Units owned at January 1,
1998..................... 53,425 120,465 60,337 38,357 46,452 6,641
Units acquired............. 102,123 183,763 105,637 156,253 97,833 55,082
Units disposed............. 21,642 39,363 23,249 22,671 22,766 4,491
------- ------- ------- ------- ------- -------
Units owned at December 31,
1998..................... 133,906 264,865 142,725 171,939 121,519 57,232
======= ======= ======= ======= ======= =======
</TABLE>

F-I- 16
<PAGE> 89

INDEPENDENT AUDITORS' REPORT

Board of Directors
Acacia National Life Insurance Company
Bethesda, Maryland

We have audited the accompanying statement of admitted assets, liabilities, and
surplus -- statutory basis of Acacia National Life Insurance Company (a wholly
owned subsidiary of Acacia Life Insurance Company) as of December 31, 1999, and
the related statements of operations -- statutory basis, changes in
surplus -- statutory basis, and cash flows -- statutory basis for the year then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

As described more fully in Note 1 to the financial statements, the Company
prepared these financial statements using accounting practices prescribed or
permitted by the Bureau of Insurance, State Corporation Commission of the
Commonwealth of Virginia, which practices differ from generally accepted
accounting principles. The effects on the financial statements of the variances
between the statutory basis of accounting and generally accepted accounting
principles, although not reasonably determinable, are presumed to be material.

In our opinion, because of the effects of the matter discussed in the preceding
paragraph, the 1999 financial statements referred to above do not present
fairly, in conformity with generally accepted accounting principles, the
financial position of Acacia National Life Insurance Company as of December 31,
1999, or the results of its operations or its cash flows for the year then
ended.

In our opinion, the 1999 financial statements referred to above present fairly,
in all material respects, the admitted assets, liabilities, and surplus of
Acacia National Life Insurance Company as of December 31, 1999, and the results
of its operations and its cash flows for the year then ended, on the basis of
accounting described in Note 1.

/s/ DELOITTE & TOUCHE LLP

Lincoln, Nebraska
April 7, 2000

F-II- 1
<PAGE> 90

[PRICEWATERHOUSECOOPERS LOGO]

INDEPENDENT AUDITORS' REPORT

Board of Directors
Acacia National Life Insurance Company

We have audited the accompanying statement of admitted assets, liabilities, and
surplus -- statutory basis of Acacia National Life Insurance Company (the
Company) as of December 31, 1998, and the related statutory statements of
operations and changes in surplus, and cash flow, for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provide a reasonable basis for our
opinion.

As described more fully in Note 1 to the financial statements, these financial
statements were prepared in conformity with accounting practices prescribed or
permitted by the Bureau of Insurance, State Corporation Commission of the
Commonwealth of Virginia, which practices differ from accounting principles
generally accepted in the United states. The effects on the financial statements
of the variances between the statutory basis of accounting and accounting
principles generally accepted in the United States are material.

In our opinion, because of the effects of the matter discussed in the preceding
paragraph, the financial statements referred to above do not present fairly, in
conformity with accounting principles generally accepted in the United States,
the financial position of the Company as of December 31, 1998 or the results of
its operations or its cash flow for the years then ended.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the admitted assets, liabilities, and surplus of the
Company as of December 31, 1998, and the results of its operations and its cash
flow for the year then ended, on the basis of accounting described in Note 1.

/s/ PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP

Washington, D.C.
March 31, 1999

F-II- 2
<PAGE> 91

ACACIA NATIONAL LIFE INSURANCE COMPANY

STATEMENTS OF ADMITTED ASSETS, LIABILITIES AND SURPLUS -- STATUTORY BASIS
(COLUMNAR AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1999 1998
-------- --------
<S> <C> <C>
ADMITTED ASSETS
Investments
Bonds..................................................... $522,328 $556,127
Mortgage loans............................................ 894 --
Preferred stocks.......................................... 70 546
Common stocks............................................. 385 1,778
Short-term investments.................................... 5,685 13,614
Other investments......................................... 495 682
Loans on insurance policies............................... 7,955 7,579
-------- --------
Total investments...................................... 537,812 580,326
Cash........................................................ 5,195 64
Accrued investment income................................... 9,157 9,775
Reinsurance recoverable -- affiliate........................ 1,162 --
Income taxes receivable -- affiliate........................ 1,203 400
Other assets................................................ 370 2,169
Separate accounts........................................... 140,638 73,334
-------- --------
$695,537 $666,068
======== ========
LIABILITIES AND SURPLUS
LIABILITIES
Life and annuity reserves................................. $464,615 $483,126
Funds left on deposit..................................... 65,002 62,065
Reserve for unpaid claims................................. 1,461 2,113
Interest maintenance reserve.............................. 1,684 3,202
Accrued separate account transfers........................ (7,702) (6,297)
Accounts payable -- affiliates............................ 999 7,586
Other liabilities......................................... 2,927 3,736
Asset valuation reserve................................... 1,805 5,513
Separate accounts......................................... 140,638 73,334
-------- --------
671,429 634,378
-------- --------
SURPLUS
Preferred stock, 8% non-voting, non-cumulative, $1,000 par
value, 10,000 shares authorized; 6,000 shares issued
and outstanding........................................ 6,000 6,000
Common stock, $170 par value; 15,000 shares authorized,
issued and outstanding................................. 2,550 2,550
Additional paid-in capital................................ 13,450 13,450
Retained earnings......................................... 2,108 9,690
-------- --------
24,108 31,690
-------- --------
$695,537 $666,068
======== ========
</TABLE>

The accompanying notes are an integral part of these statutory basis financial
statements.

F-II- 3
<PAGE> 92

ACACIA NATIONAL LIFE INSURANCE COMPANY

STATEMENTS OF OPERATIONS -- STATUTORY BASIS
(IN THOUSANDS)

<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
--------------------
1999 1998
-------- --------
<S> <C> <C>
INCOME
Premium income............................................ $ 79,057 $ 67,919
Less net reinsurance:
Yearly renewable term.................................. (5,318) (4,601)
-------- --------
Net premium income................................... 73,739 63,318
Funds left on deposit..................................... 8,257 8,292
Net investment income..................................... 41,553 46,305
Miscellaneous insurance income............................ 1,481 25
-------- --------
125,030 117,940
-------- --------
EXPENSES
Benefits to policyowners.................................. 86,472 83,190
Decrease in reserves...................................... (15,569) (18,937)
Commissions............................................... 7,256 7,353
General insurance expenses................................ 13,562 16,377
Taxes, licenses and fees.................................. 2,154 1,167
Amortization of goodwill.................................. 382 684
Net premium transferred to separate accounts.............. 34,764 30,725
-------- --------
129,021 120,559
-------- --------
Loss before federal income taxes and realized capital
losses................................................. (3,991) (2,619)
Income taxes (benefit).................................... (439) (1,822)
-------- --------
Loss before realized capital losses....................... (3,552) (797)
Realized capital losses (net of tax of ($972) and $760 and
transfers to interest maintenance reserve of ($1,111)
and $965 for 1999 and 1998, respectively).............. (6,244) (209)
-------- --------
Net loss.................................................. $ (9,796) $ (1,006)
======== ========
</TABLE>

The accompanying notes are an integral part of these statutory basis financial
statements.

F-II- 4
<PAGE> 93

ACACIA NATIONAL LIFE INSURANCE COMPANY

STATEMENTS OF CHANGES IN SURPLUS -- STATUTORY BASIS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
(IN THOUSANDS, EXCEPT SHARES)

<TABLE>
<CAPTION>
PREFERRED STOCK COMMON STOCK ADDITIONAL
---------------- ---------------- PAID-IN RETAINED
SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS TOTAL
------ ------ ------ ------ ---------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, January 1, 1998............... 6,000 $6,000 15,000 $2,550 $13,450 $10,506 $32,506
Change in non-admitted assets........ -- -- -- -- -- 684 684
Change in net unrealized capital
gains.............................. -- -- -- -- -- (49) (49)
Change in valuation basis of
reserves........................... -- -- -- -- -- (120) (120)
Transfer to asset valuation
reserve............................ -- -- -- -- -- (325) (325)
Net loss............................. -- -- -- -- -- (1,006) (1,006)
----- ------ ------ ------ ------- ------- -------
BALANCE, December 31, 1998............. 6,000 6,000 15,000 2,550 13,450 9,690 31,690
Change in non-admitted assets........ -- -- -- -- -- (3) (3)
Change in net unrealized capital
gains.............................. -- -- -- -- -- (1,491) (1,491)
Transfer from asset valuation
reserve............................ -- -- -- -- -- 3,708 3,708
Net loss............................. -- -- -- -- -- (9,796) (9,796)
----- ------ ------ ------ ------- ------- -------
BALANCE, December 31, 1999............. 6,000 $6,000 15,000 $2,550 $13,450 $ 2,108 $24,108
===== ====== ====== ====== ======= ======= =======
</TABLE>

The accompanying notes are an integral part of these statutory basis financial
statements.

F-II- 5
<PAGE> 94

ACACIA NATIONAL LIFE INSURANCE COMPANY

STATEMENTS OF CASH FLOWS -- STATUTORY BASIS
(IN THOUSANDS)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
1999 1998
---------- ----------
<S> <C> <C>
OPERATING ACTIVITIES:
Net premium income received............................... $ 74,462 $ 63,318
Miscellaneous insurance income............................ 8,904 8,176
Net investment income received............................ 43,690 44,953
Net premium transferred to separate accounts.............. (37,511) (34,192)
Benefits paid to policyowners............................. (89,096) (84,359)
Commissions, expenses and taxes, other than federal income
tax.................................................... (21,394) (23,804)
Federal income tax received............................... 608 2,596
Other operating income and disbursements.................. (7,174) 8,488
--------- ---------
Net cash used in operating activities..................... (27,511) (14,824)
--------- ---------
INVESTING ACTIVITIES:
Proceeds from investments sold, matured or repaid......... 337,366 182,412
Purchase of investments................................... (312,277) (161,169)
Net decrease (increase) in loans on insurance policies.... (376) 522
--------- ---------
Net cash provided by investing activities................. 24,713 21,765
--------- ---------
NET INCREASE (DECREASE) IN CASH AND SHORT-TERM
INVESTMENTS............................................... (2,798) 6,941
CASH AND SHORT-TERM INVESTMENTS -- BEGINNING OF PERIOD...... 13,678 6,737
--------- ---------
CASH AND SHORT-TERM INVESTMENTS -- END OF PERIOD............ $ 10,880 $ 13,678
========= =========
</TABLE>

The accompanying notes are an integral part of these statutory basis financial
statements.

F-II- 6
<PAGE> 95

ACACIA NATIONAL LIFE INSURANCE COMPANY

NOTES TO STATUTORY BASIS FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
(IN THOUSANDS)

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND NATURE OF OPERATIONS
Acacia National Life Insurance Company (the Company) is a wholly owned
subsidiary of Acacia Life Insurance Company (Acacia Life). Acacia Life is a
wholly owned subsidiary of Ameritas Holding Company (AHC) which is a wholly
owned subsidiary of Ameritas Acacia Mutual Holding Company (AAMHC).

The Board of Directors of Ameritas Mutual Insurance Holding Company (AMIHC) and
Acacia Mutual Holding Corporation (AMHC) approved and adopted a plan of merger
under which the two would merge to form AAMHC. In addition their two wholly
owned subsidiaries, AHC and Acacia Financial Group, Ltd. (AFG), would merge to
form Ameritas Holding Company. Public informational hearings on the proposed
merger were held on November 20, 1998 with the Nebraska Insurance Director and
on December 17, 1998 with the D.C. Insurance Commissioner. Following the
commissioner's approval a special meeting with the eligible members of AMHC was
held on December 22, 1998 and with the members of AMIHC on December 29, 1998.
With the members approval the merger became effective January 1, 1999. The
business combination was accounted for as a pooling of interests.

AMHC was formed in 1997 in conjunction with a plan of reorganization
(Reorganization) of the former Acacia Life, Acacia Mutual Life Insurance Company
(Acacia). Pursuant to the Reorganization which was approved by the Department of
Insurance and Securities Regulation of the District of Columbia and the eligible
members of Acacia and became effective June 30, 1997, Acacia was converted to a
mutual insurance holding company structure whereby AMHC and AFG were formed and
Acacia was converted to a stock life insurance company wholly owned by AFG. As
of the effective date of the reorganization, the membership interests and the
contractual rights of the policyowners of Acacia were separated -- the
membership interests automatically became, by operation of law, membership
interests in AMHC and the contractual rights remained in Acacia. Each person who
becomes the owner of a designated policy issued by Acacia after the effective
date of the Reorganization became a member of AMHC, now AAMHC.

The Company, domiciled in Virginia, underwrites and markets deferred and
immediate annuities and life insurance products within the United States and is
licensed to operate in 46 states and the District of Columbia. On December 1,
1995 and September 9, 1996, respectively, operations began for the Acacia
National Variable Life Insurance Separate Account I and Acacia National Variable
Annuity Separate Account II which are separate investment accounts within the
Company.

Non-insurance products and services are offered by an affiliate of the Company,
Acacia Financial Corporation (AFC), a wholly owned subsidiary of Acacia Life,
which is a holding company of several financial service companies. Principal
subsidiaries include: Calvert Group Ltd. (Calvert), a provider of investment
advisory, management and administrative services to The Calvert Group of mutual
funds; Acacia Federal Savings Bank (AFSB), a federally chartered savings bank;
and The Advisors Group, Inc., a broker/dealer.

BASIS OF PRESENTATION

The accompanying financial statements have been prepared, except as to form, on
the basis of accounting practices prescribed or permitted by the Bureau of
Insurance, State Corporate Commission of the Commonwealth of Virginia (statutory
basis or SAP), which are designed primarily to demonstrate ability to meet
claims of policyowners. These practices differ in certain respects, which in
some cases may be material, from generally accepted accounting principles (GAAP)
applied in the presentation of financial condition and results of operations on
the "going concern" basis commonly followed by other types of enterprises.

In March of 1998, the National Association of Insurance Commissioners adopted
the Codification of Statutory Accounting Principles (Codification). The
Codification, which is intended to standardize

F-II- 7
<PAGE> 96
ACACIA NATIONAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY BASIS FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998 -- (CONTINUED)
(IN THOUSANDS)

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES -- (CONTINUED)

BASIS OF PRESENTATION -- (CONTINUED)

regulatory accounting and reporting for the insurance industry, is proposed to
be effective January 1, 2001. However, statutory accounting principles will
continue to be established by individual state laws and permitted practices and
it is uncertain when, or if, the state of Virginia will require adoption of
Codification for the preparation of statutory financial statements. The Company
has not finalized the quantification of the effects of Codification on its
statutory financial statements.

The accompanying statutory financial statements vary in some respects from
generally accepted accounting principles. The most significant differences
include: (a) bonds are generally carried at amortized cost rather than being
valued at either amortized cost or fair value based on their classification
according to the Company's ability and intent to hold or trade the securities;
(b) costs related to acquiring new business are charged to operations as
incurred and not deferred, whereas premiums are taken into income on a pro rata
basis over the respective term of the policies; (c) policy reserves are carried
at amounts which approximate surrender values rather than accumulation values
and statutory investment reserves are established; (d) a provision has not been
made for federal income taxes resulting from all of the cumulative differences
in assets and liabilities determined on a tax return and financial statement
basis; and (e) changes in certain assets designated as "non-admitted" assets
have been charged to surplus.

In 1998, the Company's financial information was included in the determination
of consolidated GAAP amounts for Acacia Mutual Holding Corporation. The Acacia
National Life Insurance Company GAAP amounts were derived from this consolidated
financial information. The Company does not prepare separate financial
statements on a GAAP basis.

The impact of the estimated differences between SAP and GAAP in 1998 were as
follows:

<TABLE>
<CAPTION>
CAPITAL
NET LOSS AND SURPLUS
-------- -----------
<S> <C> <C>
AS REPORTED UNDER SAP....................................... $(1,006) $ 31,690
Adjustments:
Deferred policy acquisition costs......................... 2,874 58,017
AVR and IMR............................................... 615 8,715
Deferred Federal income tax............................... (732) (20,077)
Net policyholder liabilities.............................. (1,601) (11,291)
Investments............................................... (59) 20,013
Other..................................................... (500) (946)
------- --------
AMOUNTS UNDER GAAP.......................................... $ (409) $ 86,121
======= ========
</TABLE>

For 1999, it is not practicable to determine the above information.

USE OF ESTIMATES
The preparation of financial statements in conformity with statutory accounting
practices requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from those estimates.

F-II- 8
<PAGE> 97
ACACIA NATIONAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY BASIS FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998 -- (CONTINUED)
(IN THOUSANDS)

USE OF ESTIMATES -- (CONTINUED)
The principal accounting and reporting practices followed are:

INVESTMENTS
Investments are reported according to valuation procedures prescribed by the
National Association of Insurance Commissioners (NAIC), and generally: bonds and
mortgage loans are valued at amortized cost; preferred stock at cost; common
stock at fair value; other investments on the equity method; and separate
account assets are carried at fair value.

Realized capital gains and losses, including valuation allowances on specific
investments, are recorded in the Statement of Operations and unrealized gains
and losses are credited or charged to retained earnings.

SEPARATE ACCOUNTS
The Company operates separate accounts on which the earnings or losses accrue
exclusively to contract holders. The assets (mutual fund investments) and
liabilities of each account are clearly identifiable and distinguishable from
other assets and liabilities of the Company. Amounts are reported at fair value.

NON-ADMITTED ASSETS
Certain assets (primarily goodwill) are designated as "non-admitted" under
statutory accounting requirements. These assets are excluded from the statements
of admitted assets, liabilities and surplus by adjustments to retained earnings.
Total "non-admitted assets" were $2,981 and $2,978 in 1999 and 1998,
respectively.

RESERVES
Life policy reserves are computed by using the Commissioners Reserve Valuation
Method (CRVM) and the Commissioners Standard Ordinary Mortality table. Annuity
reserves are calculated using the Commissioners Annuity Reserve Valuation Method
(CARVM) and the maximum valuation interest rate; for annuities with life
contingencies, the prescribed valuation mortality table is used. Reserves for
unpaid claims include claims reported and unpaid and claims not yet reported,
the latter estimated on the basis of historical experience. As such amounts are
necessarily estimates, the ultimate liability will differ from the amount
recorded and will be reflected in operations when additional information becomes
known.

Accrued separate account transfers primarily consists of the amount of
policyholder account values over modified reserves used in the separate account,
such as the use of CARVM and CRVM.

The interest maintenance reserve (IMR) is calculated based on the prescribed
methods developed by the NAIC. Realized gains and losses, net of tax, resulting
from interest rate changes on fixed income investments are deferred and credited
to this reserve. These gains and losses are then amortized into investment
income over what would have been the remaining years to maturity of the
underlying investment. Amortization included in net investment income was $407
and $350 for 1999 and 1998, respectively.

The asset valuation reserve (AVR) is a required appropriation of surplus to
provide for possible losses that may occur on certain investments held by the
Company. The reserve is computed based on holdings of bonds, stocks, and
short-term investments and realized and unrealized gains and losses, other than
those resulting from interest rate changes. Changes in the reserve are charged
or credited to retained earnings.

INCOME TAXES
The Company, beginning in 1999, will file a consolidated tax return with Acacia
Life Insurance Company. Prior to 1999, Acacia National filed a consolidated
return with Acacia Mutual Holding Corporation and its

F-II- 9
<PAGE> 98
ACACIA NATIONAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY BASIS FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998 -- (CONTINUED)
(IN THOUSANDS)

USE OF ESTIMATES -- (CONTINUED)
INCOME TAXES -- (CONTINUED)
subsidiaries. An agreement among the members of the consolidated group,
generally, provides for distribution of consolidated tax results as if filed on
a separate return basis.

The Company's federal income tax returns have been examined by and settled with
the Internal Revenue Service through 1995.

Under statutory accounting practices, no provision is made for deferred federal
income taxes related to temporary differences between statutory and taxable
income. Such temporary differences arise primarily from capitalization and
amortization of deferred policy acquisition costs, certain reserve calculations
and recognition of realized gains or losses on sales of bonds.

Federal income tax regulations allowed certain special deductions for 1983 and
prior years which are accumulated in a memorandum tax account designated as
"policyholders' surplus". Generally, this policyholders' surplus account (PSA)
will become subject to tax at the then current rates only if the accumulated PSA
exceeds certain maximum limitations or if certain cash distributions are deemed
to be paid out of the account. At December 31, 1999 and 1998, the Company has
$6.6 million in their policyholders' surplus accounts which is not reflected in
the financial statements.

RECOGNITION OF PREMIUM INCOME AND RELATED EXPENSES
Premiums are reported as income when collected over the premium paying periods
of the policies. Annuity and fund deposits are included as income when received.
Policy acquisition costs, such as commissions and other marketing and issuance
expenses incurred in connection with acquiring new business, are charged to
operations as incurred. Premium income consists of:

<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31
------------------
1999 1998
------- -------
<S> <C> <C>
Life........................................................ $27,747 $23,552
Annuity..................................................... 51,310 44,367
------- -------
$79,057 $67,919
======= =======
</TABLE>

RECLASSIFICATIONS
Certain items on the prior year financial statements have been reclassified to
conform to current year presentation.

2. FINANCIAL INSTRUMENTS

The following methods and assumptions were used to estimate the fair value of
each class of financial instrument for which it is practicable to estimate a
value:

BONDS -- For publicly traded securities, fair value is determined
using an independent pricing source. For securities without a readily
ascertainable fair value, fair value has been determined using an interest
rate spread matrix based upon quality, weighted average maturity and
Treasury yields.

MORTGAGE LOANS -- Mortgage loans in good standing are valued on the
basis of discounted cash flow. The interest rate that is assumed is based
upon the weighted average term of the mortgage and appropriate spread over
Treasuries. There were no mortgage loans in default at December 31, 1999.

PREFERRED STOCKS -- For publicly traded securities, fair value is
determined using an independent pricing source.

F-II- 10
<PAGE> 99
ACACIA NATIONAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY BASIS FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998 -- (CONTINUED)
(IN THOUSANDS)

2. FINANCIAL INSTRUMENTS -- (CONTINUED)
COMMON STOCKS -- For publicly traded securities, fair value is
determined using an independent pricing source.

SHORT-TERM INVESTMENTS -- The carrying amount approximates fair value
because of the short maturity of these instruments.

OTHER INVESTMENTS -- Fair value for venture capital partnerships is
estimated based on values as last reported by the partnership and
discounted for their lack of marketability.

LOANS ON INSURANCE POLICIES -- Fair values for loans on insurance
policies are estimated using a discounted cash flow analysis at interest
rates currently offered for similar loans. Loans on insurance policies with
similar characteristics are aggregated for purposes of the calculations.

CASH -- The carrying amount equals fair value.

ACCRUED INVESTMENT INCOME -- Fair value of accrued investment income
equals book value.

INVESTMENT-TYPE CONTRACTS -- Reserves held on investment-type
insurance contracts, i.e. contracts which do not contain significant
morbidity risks, are carried at amounts which approximate fair value.

FUNDS LEFT ON DEPOSIT -- Funds on deposit which do not have fixed
maturities are carried at the amount payable on demand at the reporting
date.

The estimated fair values of the Company's financial instruments are as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------------
1999 1998
-------------------- --------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Financial assets:
Bonds............................................. $522,328 $517,993 $556,127 $591,776
Preferred stocks.................................. 70 106 546 798
Common stocks..................................... 385 385 1,778 1,778
Mortgage loans.................................... 894 861 -- --
Short-term investments............................ 5,685 5,685 13,614 13,614
Other investments................................. 495 495 682 682
Loans on insurance policies....................... 7,955 6,816 7,579 6,996
Cash.............................................. 5,195 5,195 64 64
Accrued investment income......................... 9,157 9,157 9,775 9,775
Financial Liabilities:
Investment-type contracts......................... $357,515 $357,515 $380,641 $380,641
Funds left on deposit............................. 65,002 65,002 62,065 62,065
</TABLE>

These values do not necessarily represent the value for which the financial
instrument could be sold.

F-II- 11
<PAGE> 100
ACACIA NATIONAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY BASIS FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998 -- (CONTINUED)
(IN THOUSANDS)

3. INVESTMENTS

The table below provides additional information relating to bonds and stocks
held by the Company as of December 31, 1999:

<TABLE>
<CAPTION>
DECEMBER 31, 1999
----------------------------------------------------
GROSS UNREALIZED
AMORTIZED --------------------- FAIR
COST GAINS LOSSES VALUE
--------- ------- ------- --------
<S> <C> <C> <C> <C>
U.S. Corporate................................. $292,892 $ 6,818 $ 8,603 $291,107
Mortgage-backed................................ 102,157 803 2,465 100,495
U.S. Treasury securities and obligations of
U.S. government agencies..................... 68,397 3,284 314 71,367
Foreign........................................ 15,237 15 603 14,649
Asset backed................................... 43,645 9 3,279 40,375
-------- ------- ------- --------
Total bonds.................................. $522,328 $10,929 $15,264 $517,993
-------- ------- ------- --------
Preferred stocks............................... $ 70 $ 36 $ -- $ 106
-------- ------- ------- --------
Common stocks.................................. $ 1,137 $ -- $ 752 $ 385
-------- ------- ------- --------
</TABLE>

The comparative data as of December 31, 1998 is summarized as follows:

<TABLE>
<CAPTION>
DECEMBER 31, 1998
----------------------------------------------------
GROSS UNREALIZED
AMORTIZED --------------------- FAIR
COST GAINS LOSSES VALUE
--------- ------- ------ --------
<S> <C> <C> <C> <C>
U.S. Corporate................................. $294,538 $24,557 $2,729 $316,366
Mortgage-backed................................ 166,042 4,928 708 170,262
U.S. Treasury securities and obligations of
U.S. government agencies..................... 72,543 9,705 -- 82,248
Foreign........................................ 23,004 624 728 22,900
-------- ------- ------ --------
Total bonds.................................. $556,127 $39,814 $4,165 $591,776
-------- ------- ------ --------
Preferred stocks............................... $ 546 $ 252 $ -- $ 798
-------- ------- ------ --------
Common stocks.................................. $ 1,870 $ 118 $ 210 $ 1,778
-------- ------- ------ --------
</TABLE>

The amortized cost and fair value of bonds at December 31, 1999 are shown below.
Expected maturities may differ from contractual maturities because borrowers may
have the right to call or prepay obligations with or without call or prepayment
penalties.

<TABLE>
<CAPTION>
AMORTIZED FAIR
COST VALUE
--------- --------
<S> <C> <C>
Due in one year or less..................................... $ 18,671 $ 18,764
Due after one year through five years....................... 148,661 149,293
Due after five years through ten years...................... 106,308 105,839
Due after ten years......................................... 102,886 103,227
Mortgage-backed securities.................................. 102,157 100,495
Asset backed................................................ 43,645 40,375
-------- --------
Total..................................................... $522,328 $517,993
======== ========
</TABLE>

At December 31, 1999, the Company had bonds with a book value of $6,870 and a
fair value of $7,818 on deposit with various State Insurance Departments.

F-II- 12
<PAGE> 101
ACACIA NATIONAL LIFE INSURANCE COMPANY
NOTES TO STATUTORY BASIS FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998 -- (CONTINUED)
(IN THOUSANDS)

3. INVESTMENTS -- (CONTINUED)
Sales of bond investments in 1999 and 1998 resulted in proceeds of $294,291 and
$112,603, respectively. Gains of $1,489 and $505 and losses of $3,316 and $50
were realized on those sales in 1999 and 1998, respectively.

The Company's bond investment portfolio is predominantly comprised of investment
grade securities. At December 31, 1999 and 1998, approximately $16,276 and
$8,865, respectively, in bonds (3.1% and 1.6%, respectively, of the total bond
portfolio) are considered "below investment grade". Securities are classified as
"below investment grade" by utilizing rating criteria established by the NAIC.
During 1999, the Company took other than temporary write downs on bonds of
$6,759.

4. RELATED PARTY TRANSACTIONS

The Company has no employees, affiliates (primarily Acacia Life and Ameritas
entities) provide technical, financial, legal, marketing and investment advisory
support to the Company under various administrative service agreements. The cost
of these services to the Company for years ended December 31, 1999 and 1998 was
$15,929 and $17,695, respectively.

The Company entered into reinsurance agreements (yearly renewable term) with
affiliates. Under these agreements, these affiliates assume life insurance risk
in excess of the Company's retention limit. These reinsurance contracts do not
relieve the Company of its obligations to its policyowners, (see footnote 5).

The assets of the defined contribution plan under Internal Revenue Code Section
401(k) for the employees of Acacia Life include an investment in a deposit
administration contract with the Company of $18,305 and $18,665 at December 31,
1999 and 1998, respectively.

5. REINSURANCE

The Company reinsures all life insurance risks over its retention limit of ten
thousand per policy under yearly renewable term insurance agreements with Acacia
Life and several other non-affiliated companies. The Company remains obligated
for amounts ceded in the event that reinsurers do not meet their obligations.
Since the reinsurance treaties are of such a nature as to pass economic risk to
the reinsurer, appropriate reductions are made from income, claims, expense and
liability items in accounting for the reinsurance ceded.

Premiums and benefits have been reduced by amounts reinsured as follows:

<TABLE>
<CAPTION>
1999 1998
------ ------
<S> <C> <C>
Premiums ceded:
Acacia Life............................................... $4,634 $3,971
Others.................................................... 684 630
------ ------
Total premium ceded......................................... $5,318 $4,601
====== ======
Death benefits reimbursed:
Acacia Life............................................... $3,186 $3,610
Others.................................................... 1,082 233
------ ------
Total benefits reimbursed................................... $4,268 $3,843
====== ======
Life and annuity reserves ceded:
Acacia Life............................................... $2,501 $2,108
Others.................................................... 497 392
------ ------
Total life and annuity reserves ceded....................... $2,998 $2,500
====== ======
</TABLE>

F-II- 13
<PAGE> 102

PART C

OTHER INFORMATION

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS

(a) Financial Statements.
Part A: None.
Part B: Audited Financial Statements of the Registrant for the fiscal years
ended December 31, 1999 and 1998.
Audited Financial Statements of Acacia National Life Insurance Company for
the fiscal years ended December 31, 1999 and 1998.

Part C: None.

(b) Exhibits
(1) Resolution of the Board of Directors of Acacia National Life Insurance
Company ("ANLIC") authorizing establishment of the Acacia National Variable
Annuity Separate Account II. 1/
(2) N/A
(3) (A) Principal Underwriting Agreement.1/
(B) Form of Broker-Dealer Sales Agreement. 1/
(C) Commission Schedule. 1/
(4) Form of Annuity Policy. 1/
(5) Form of Application. 4/
(6) (A) Restated Articles of Incorporation of ANLIC. 2/
(B) By-Laws of ANLIC. 2/
(7) N/A
(8) (A) Participation Agreements. 1/
Oppenheimer 2/
Variable Insurance Products Fund - 6/
Variable Insurance Products Fund II - 6/
BT Insurance Trust 5/
Franklin Templeton Variable Insurance Products Trust 5/
(B) Form of Administration Agreement. 1/
Amendment dated May 30, 1996 3/
(9) Opinion and Consent of Robert-John H. Sands
(10) (A) Consent of Deloitte & Touche LLP
(10) (B) Consent of PricewaterhouseCoopers LLP
(11) N/A
(12) N/A
(13) Schedule of Computation and Performance Quotations 7/

1/ Incorporated by reference to the initial filing of the Registration
Statement on Form N-4 (File No. 333-03963) filed on May 16, 1996.
2/ Incorporated by reference to the Post-Effective Amendment No. 3 to the
Registration Statement on Form S-6 (File No. 33-90208) filed on May 1,
1997.
3/ Incorporated by reference to the Post-Effective Amendment No. 1 to the
Registration Statement on Form N-4 (File No. 333-03963) filed on May
1,1997.
4/ Incorporated by reference to the Post-Effective Amendment No. 3 to the
Registration Statement on Form N-4 (File No. 333-03963) filed on March 1,
1999.
5/ Incorporated by reference to the Post-Effective Amendment No. 1 to the
Registration Statement on Form S-6 (File No. 333-81057) filed on February
25, 2000.
6/ Incorporated by reference to the Pre-Effective Amendment No. 1 to the
Registration Statement on Form S-6 (File No. 333-95593) filed on April 27,
2000.
7/ Incorporated by reference to the Post-Effective Amendment No. 5 to the
Registration Statement on Form N-4 (File No. 333-03963) filed on February
25, 2000.

<PAGE> 103

ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR

EXECUTIVE OFFICERS AND DIRECTORS OF ANLIC

Charles T. Nason, Chairman of the Board and Chief Executive Officer*
Robert W. Clyde, President and Chief Operating Officer*
Haluk Ariturk, Senior Vice President, Product Management and Administration**
JoAnn M. Martin, Senior Vice President and Chief Financial Officer, Director**
Brian J. Owens, Senior Vice President, Career Distribution*
Barry C. Ritter, Senior Vice President and Chief Information Officer**
Robert-John H. Sands, Senior Vice President, General Counsel and Corporate
Secretary*
Janet L. Schmidt, Senior Vice President, Human Resources*
Richard W. Vautravers, Senior Vice President and Corporate Actuary**
William W. Lester, Vice President and Treasurer**
Reno J. Martini, Director***

* The principal business address of each person is Acacia National Life
Insurance Company, 7315 Wisconsin Avenue, Bethesda, Maryland 20814.
**The principal business address of each person is Ameritas Life Insurance
Corp., 5900 "O" Street, Lincoln, Nebraska 68510.
*** The principal business address of each person is Calvert Group, Ltd., 4550
Montgomery Avenue, Bethesda, Maryland 20814.

ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT

The depositor, Acacia National Life Insurance Company, is wholly owned by
Acacia Life Insurance Company. The Registrant is segregated asset account of
Acacia National Life Insurance Company.

The following chart indicates the persons controlled by or under common control
with Acacia National Life Insurance Company:

(Omitted chart shows Ameritas Acacia organization. Ameritas Acacia Mutual
Holding Company is at the uppermost tier. Ameritas Holding Company is at
the second tier. Third tier entities are: Ameritas Life Insurance Corp. and
Acacia Life Insurance Company. Fourth tier companies under Ameritas Life
Insurance Corp. are: Ameritas Investment Advisors, Inc., Ameritas Managed
Dental Plan, Inc., First Ameritas Life Insurance Corp. of New York, AMAL
Corporation, Veritas Corp., and Pathmark Assurance Company. Fourth tier
companies under Acacia Life Insurance Company are: Acacia National Life
Insurance Company and Acacia Financial Corp. Fifth tier companies which are
owned by AMAL Corporation are Ameritas Investment Corp. and Ameritas Variable
Life Insurance Company. Fifth tier companies owned by Acacia Financial Corp.
are Acacia Federal Savings Bank, Calvert Group, Ltd. and its investment
companies, and The Advisors Group, Inc.)

Acacia Life Insurance Company is regulated by the District of Columbia. Acacia
National Life Insurance Company and Acacia Financial Corp. are Virginia
entities. Acacia Federal Savings Bank is regulated by the U. S. Government.
Calvert Group Ltd. ("Calvert") and The Advisors Group, Inc. ("TAG") are Delaware
entities. All Ameritas entries are Nebraska entities, except First Ameritas Life
Insurance Corp. of New York, which is a New York entity, and Ameritas Managed
Dental Plan, Inc., which is a California entity.

Calvert entities are investment advisor to the following funds:
1) First Variable Rate Fund for Government Income
2) Calvert Tax-Free Reserves
3) Calvert Social Investment Fund
4) Calvert Cash Reserves (d/b/a Money Management Plus)

<PAGE> 104

5) The Calvert Fund
6) Calvert Municipal Fund, Inc.
7) Calvert World Values Fund, Inc.
8) Calvert Variable Series, Inc.
9) Calvert New World Fund
TAG controls The Advisors Group Insurance Agency of Ohio, Inc. through a Voting
Trust Agreement with shareholders

All entities are wholly owned by the person immediately controlling it, except
AMAL Corporation, a holding company, which is jointly owned by Ameritas Life
Insurance Corp., which owns a majority interest in AMAL Corporation, and AmerUs
Life Insurance company, which owns a minority interest in AMAL Corporation.

AMAL Corporation and Acacia Financial Corp. are holding companies. Veritas Corp.
is a marketing agency. Pathmark Assurance Company is an insurance company.

ITEM 27. NUMBER OF POLICY OWNERS

As of December 31, 1999 there were 492 holders of Policies offered by the
Registrant.

ITEM 28. INDEMNIFICATION

Article VII of ANLIC's By-Laws provides, in part:

Section 2 Indemnification. In the event any action, suit or proceeding is
brought against a present or former Director, elected officer, appointed officer
or other employee because of any action taken by such person as a Director,
officer or employee of the Company, the Company shall reimburse or indemnify him
for all loss reasonably incurred by him in connection with such action to the
fullest extent permitted by Section 13.1-3.1 of the Code of Virginia, as is now
or hereafter amended, except in relation to matters as to which such person
shall have been finally adjudged to be liable by reason of having been guilty of
gross negligence or willful misconduct in the performance of duties as such
director, officer or employee. In case any such suit, action or proceeding shall
result in a settlement prior to final judgment and if, in the judgment of the
Board of Directors, such person in taking the action or failing to take the
action complained of was not grossly negligent or guilty of wilful misconduct in
the performance of his duty, the Company shall reimburse or indemnify him for
the amount of such settlement and for all expenses reasonably incurred in
connection with such action and its settlement. This right of indemnification
shall not be exclusive of any other rights to which any such person may be
entitled.

Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to Directors, officers and controlling persons, or
otherwise, the Registrant has been advised that in the opinion of the SEC such
indemnification may be against public policy as expressed in the Act and may be,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a Director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
Director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

ANLIC Officers and Directors are covered under a Fidelity Bond issued by Chubb
Group of Insurance Companies with an aggregate limit of $8,000,000, a single
loss limit of $4,000,000, and a deductible of $50,000.

<PAGE> 105

ITEM 29. PRINCIPAL UNDERWRITERS

(a) The Advisors Group, Inc., an affiliate of ANLIC, is the principal
underwriter of the Policies as defined in the Investment Company Act of 1940,
and is also the principal underwriter for Acacia National Life Insurance Company
Separate Account I variable life insurance policies.

(b) The following table sets forth certain information regarding directors and
officers of The Advisors Group:

Name and Principal Positions and Offices
Business Address* With Underwriter
----------------- ----------------
<S> <C>
Charles T. Nason Chairman of the Board
Robert W. Clyde Director, Executive Vice President
Robert-John H. Sands Director
Salene Hitchcock Gear President and Chief Executive Officer
Brian J. Owens Director, Senior Vice President
James E. Harvey Director, Vice President
Scott A. Grebenstein Vice President - Product Development
David A. Glazer Regional Vice President
</TABLE>

* The principal business address of each person listed is:
The Advisors Group, Inc.
7315 Wisconsin Avenue
Bethesda, Maryland 20814

Net Underwriting Compensation
Name of Principal Discounts and on Brokerage
Underwriter Commissions Redemption Commissions Compensation
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
The Advisors Group, Inc. $921,734 $ 0 $7,200 $ 0
</TABLE>

ITEM 30. LOCATION OF ACCOUNTS AND RECORDS

All accounts and records required to be maintained by Section 31(a) of the 1940
Act and the rules under it are maintained by ANLIC at its Administrative
Offices, P.O. Box 81889, Lincoln, NE 68501-1889 and at its Principal Offices,
7315 Wisconsin Avenue, Bethesda, Maryland 20814.

ITEM 31. MANAGEMENT SERVICES

All management contracts are discussed in Part A or Part B.

ITEM 32. UNDERTAKINGS

(a) Registrant undertakes that it will file a Post-Effective Amendment to this
Registration Statement as frequently as necessary to ensure that the
audited financial statements in the Registration Statement are never more
than 16 months old for so long as payments under the variable annuity
contracts may be accepted.

(b) Registrant undertakes that it will include either (1) as part of any
application to purchase a contract offered by the Prospectus, a space that
an applicant can check to request a Statement of Additional
<PAGE> 106

Information, or (2) a post card or similar written communication affixed
to or included in the Prospectus that the applicant can remove to send for
a Statement of Additional Information.

(c) Registrant undertakes to deliver any Statement of Additional Information
and any financial statements required to be made available under this Form
promptly upon written or oral request to ANLIC at the address or phone
number listed in the Prospectus.

STATEMENT PURSUANT TO RULE 6C-7

ANLIC and the Variable Account rely on 17 C.F.R. Sections 270.6c-7 and represent
that the provisions of that Rule have been or will be complied with.
Accordingly, ANLIC and the Variable Account are exempt from the provisions of
Sections 22(e), 27(c)(1) and 27(d) of the Investment Company Act of 1940 with
respect to any variable annuity contract participating in such account to the
extent necessary to permit compliance with the Texas Optional Retirement
Program.

SECTION 403(B) REPRESENTATIONS

ANLIC represents that it is relying on a no-action letter dated November 28,
1988, to the American Council of Life Insurance (Ref. No. IP-6-88) regarding
Sections 22(e), 27(c)(1), and 27(d) of the Investment Company Act of 1940, in
connection with redeemability restrictions on Section 403(b) policies, and that
paragraphs numbered (1) through (4) of that letter will be complied with.

SECTION 26(E)(2)(A) REPRESENTATIONS

Pursuant to Section 26 (e)(2)(A) of the Investment Company Act of 1940, as
amended, ANLIC represents that the fees and charges deducted under the Policy,
in the aggregate, are reasonable in relation to the services rendered, the
expenses expected to be incurred and the risks assumed by ANLIC.

<PAGE> 107

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Acacia National Variable Annuity Separate Account II, certifies that it meets
all the requirements for effectiveness of this Post-Effective Amendment No. 6 to
the Registration Statement pursuant to Rule 485(b) under the Securities Act of
1933 and has caused this Amendment to the Registration Statement to be signed on
its behalf by the undersigned thereunto duly authorized in the City of Bethesda,
County of Montgomery, State of Maryland on this 26th day of April, 2000.

ACACIA NATIONAL VARIABLE ANNUITY SEPARATE ACCOUNT II, Registrant
ACACIA NATIONAL LIFE INSURANCE COMPANY, Depositor

Attest: /s/ Robert-John H. Sands By: /s/ Charles T. Nason
------------------------ --------------------
Secretary Chairman of the Board

Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the Directors and Principal Officers of Acacia
National Life Insurance Company on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Charles T. Nason Chairman of the Board April 26, 2000
- ------------------------------- and Chief Executive Officer
Charles T. Nason and Director

/s/ Robert W. Clyde President and Chief April 26, 2000
- ------------------------------- Operating Officer and
Robert W. Clyde Director

/s/ Robert-John H. Sands Senior Vice President, April 26, 2000
- ------------------------------- General Counsel, Corporate
Robert-John H. Sands Secretary and Director

/s/ Haluk Ariturk Senior Vice President, April 26, 2000
- ------------------------------- Product Management and
Haluk Ariturk Administration and Director

/s/ JoAnn M. Martin Senior Vice President, April 26, 2000
- ------------------------------- Chief Financial Officer
JoAnn M. Martin and Director

/s/ Reno J. Martini Director April 26, 2000
- -------------------------------
Reno J. Martini
</TABLE>

<PAGE> 108

<TABLE>
<S> <C> <C>
/s/ Brian J. Owens Senior Vice President, April 26, 2000
- -------------------------------- Career Distribution
Brian J. Owens

/s/ Janet L. Schmidt Senior Vice President April 26, 2000
- -------------------------------- Human Resources
Janet L. Schmidt

/s/ Barry C. Ritter Senior Vice President April 26, 2000
- -------------------------------- and Chief Information Officer
Barry C. Ritter

/s/ Richard W. Vautravers Senior Vice President April 26, 2000
- -------------------------------- and Corporate Actuary
Richard W. Vautravers
</TABLE>

<PAGE> 109

EXHIBIT INDEX

EXHIBIT
NUMBER DESCRIPTION

(9) Opinion and Consent of Robert-John H. Sands

(10) (A) Consent of Deloitte & Touche LLP

(10) (B) Consent of PricewaterhouseCoopers LLP

<PAGE> 1

EXHIBIT (9)

Opinion and Consent of Robert-John H. Sands

April 27, 2000

Acacia National Life Insurance Company
7315 Wisconsin Avenue
Bethesda, Maryland 20814

Gentlemen:

With reference to Post-Effective Amendment No. 6 to the Registration Statement
on Form N-4, filed by Acacia National Life Insurance Company and Acacia National
Variable Annuity Separate Account II with the Securities and Exchange Commission
covering flexible premium annuity policies, I have examined such documents and
such laws as I considered necessary and appropriate, and on the basis of such
examination, it is my opinion that:

1. Acacia National Life Insurance Company is duly organized and
validly existing under the laws of the Commonwealth of
Virginia and has been duly authorized by the Bureau of
Insurance, State Corporation Commission of the Commonwealth
of Virginia to issue variable annuity policies.

2. Acacia National Variable Annuity Separate Account II is a
duly authorized and existing separate account established
pursuant to the provisions of Virginia, ss.38.2-3113.

3. The flexible premium variable annuity policies, when issued
as contemplated by said Form N-4 Registration Statement,
will constitute legal, validly issued and binding
obligations of Acacia National Life Insurance Company.

I hereby consent to the filing of this opinion as an exhibit to said
Post-Effective Amendment No. 6 to the Registration Statement on Form N-4 and to
the use of my name under the caption "Legal Matters" in the Prospectus contained
in the Registration Statement.

Sincerely,

/s/ Robert-John H. Sands
- ------------------------
Robert-John H. Sands
Senior Vice President, Corporate Secretary and General Counsel

<PAGE> 1
INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Post-Effective Amendment No. 6 to Registration
Statement No. 333-03963 of Acacia National Variable Annuity Separate Account II
of our reports dated April 7, 2000, on the statutory basis financial statements
of Acacia National Life Insurance Company and the financial statements of the
subaccounts of Acacia National Variable Annuity Separate Account II appearing
in the Statement of Additional Information, which is a part of such
Registration Statement, and to the reference to us under the heading "Experts"
in such Statement of Additional Information.

/s/ Deloitte & Touche LLP

Lincoln, Nebraska
April 21, 2000

<PAGE> 1
[PRICEWATERHOUSECOOPERS LOGO]

We hereby consent to the use in this Registration Statement on Form N-4
(Registration No. 333-03963) of our report dated March 31, 1999, on the
financial statements (statutory basis) of Acacia National Life Insurance Company
and our report dated April 30, 1999 on the financial statements of Acacia
National Variable Annuity Separate Account II, which appear in the Registration
Statement. We also consent to the reference to us under the caption "Experts".

/s/ PricewaterhouseCoopers LLP
Washington, D.C. PricewaterhouseCoopers LLP
April 21, 2000