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SUPPLEMENT
ACACIA NATIONAL "ALLOCATOR 2000"
FLEXIBLE PREMIUMVARIABLE LIFE INSURANCE PROSPECTUS
September 24, 1996
This Supplement to the Acacia National Variable Life Insurance
Prospectus dated May 1, 1996 is for the purpose of adding to that Prospectus
the Acacia National Variable Life Insurance Separate Account I Financial
Statements dated December 31, 1995.
Also, the Van Eck prospectus, as contained in the May 1, 1996
Prospectus, has been superseded and should be disregarded; and in lieu thereof
please refer to the attached Van Eck prospectus dated September 3, 1996.
Additionally, the Strong Discovery Fund II is currently not
available for sale to California residents.
Acacia National Variable Life Insurance
Separate Account I
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AUDITED FINANCIAL STATEMENTS
ACACIA NATIONAL VARIABLE LIFE INSURANCE SEPARATE ACCOUNT I
DECEMBER 31, 1995
<TABLE>
<S> <C>
Report of Independent Accountants . . . . . . . . . . . . . . . . . . . . . 1
Statement of Assets and Liabilities . . . . . . . . . . . . . . . . . . . . 2
Statement of Operations and Changes in Net Assets . . . . . . . . . . . . . 3
Notes to the Financial Statements . . . . . . . . . . . . . . . . . . . . . 4-6
</TABLE>
<PAGE> 3
[COOPERS & LYBRAND LETTERHEAD]
REPORT OF INDEPENDENT ACCOUNTANTS
Contract Owners and Board of Directors
Acacia National Life Insurance Company
We have audited the accompanying statement of assets and liabilities of the
following subaccounts of the Acacia National Variable Life Insurance Separate
Account I: The Calvert Responsibly Invested Money Market Fund, Calvert
Responsibly Invested Strategic Growth, The Alger American Mid Cap Growth
Portfolio, Dreyfus Stock Index Portfolio, Neuberger & Bergman Growth Portfolio,
Strong International Stock Fund, Strong Discovery Fund II and Van Eck Gold
Natural Resources Portfolio as of December 31, 1995, and the related statement
of operations and changes in net assets for the period December 1, 1995
(inception) to December 31, 1995. These financial statements are the
responsibility of the Account's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audits 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 as of December 31, 1995.
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.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the following subaccounts of
the Acacia National Variable Life Insurance Separate Account I: The Calvert
Responsibly Invested Money Market Fund, Calvert Responsibly Invested Strategic
Growth, The Alger American Mid Cap Growth Portfolio, Dreyfus Stock Index
Portfolio, Neuberger & Bergman Growth Portfolio, Strong International Stock
Fund, Strong Discovery Fund II and Van Eck Gold Natural Resources Portfolio as
of December 31, 1995, and results of their operations and changes in net assets
for the period December 1, 1995 (inception) to December 31, 1995, in conformity
with generally accepted accounting principles.
/s/ COOPERS & LYBRAND LLP
Washington, D.C.
April 1, 1996
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ACACIA NATIONAL VARIABLE LIFE INSURANCE SEPARATE ACCOUNT I
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
DECEMBER 31, 1995
----------------------------------------------------------------------------------------------------
CALVERT NEUBERGER STRONG
CALVERT STRATEGIC ALGER DREYFUS & BERMAN INTERNATIONAL STRONG VAN ECK
MONEY MARKET GROWTH MID CAP STOCK INDEX GROWTH STOCK DISCOVERY GOLD
-------------- ----------- --------- ------------- ---------- ------------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments, at market --- $18 $17 $1,814 $17 $23 $11 $918
-------------- ----------- --------- ------------- ---------- ------------- --------- ---------
Number of shares --- 1.614 0.902 105.478 0.672 2.235 0.847 63.660
-------------- ----------- --------- ------------- ---------- ------------- --------- ---------
Net Assets --- $18 $17 $1,814 $17 $23 $11 $918
-------------- ----------- --------- ------------- ---------- ------------- --------- ---------
ACCUMULATION UNITS
NUMBER OF UNITS --- 1.708 1.743 182.389 1.781 2.280 1.166 93.138
-------------- ----------- --------- ------------- ---------- ------------- --------- ---------
NET ASSET VALUE PER
ACCUMULATION UNIT
DECEMBER 31, 1995 --- $10.29 $10.03 $9.95 $9.77 $10.10 $9.90 $9.86
-------------- ----------- --------- ------------- ---------- ------------- --------- ---------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
2
<PAGE> 5
ACACIA NATIONAL VARIABLE LIFE INSURANCE SEPARATE ACCOUNT I
STATEMENT OF OPERATIONS AND CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE PERIOD DECEMBER 1, 1995 (INCEPTION) TO DECEMBER 31, 1995
----------------------------------------------------------------------------
NEUBERGER
CALVERT CALVERT ALGER DREYFUS & BERMAN
OPERATIONS: MONEY MARKET STRATEGIC GROWTH MID CAP STOCK INDEX GROWTH
------------ ----------------- ------- ----------- --------
<S> <C> <C> <C> <C> <C>
Investment Income
Dividends $3 --- --- $23 ---
Mortality and expense charge --- --- --- (1) ---
------------ ---------------- ------- ----------- --------
NET INVESTMENT INCOME (LOSS) 3 --- --- 22 ---
Net change in unrealized appreciation
of investments --- 1 --- 4 ---
------------ ---------------- ------- ----------- --------
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING FROM
OPERATIONS 3 1 --- 26 ---
CAPITAL TRANSACTIONS:
Transfer of net premium 2,744 29 29 39 29
Policy account value charges (74) (12) (12) (15) (12)
Sub-account transfers (2,673) --- --- 1,764 ---
------------ ---------------- ------- ----------- --------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
CAPITAL TRANSACTIONS (3) 17 17 1,788 17
------------ ---------------- ------- ----------- --------
TOTAL INCREASE IN NET ASSETS --- 18 17 1,814 17
NET ASSETS, AT INCEPTION --- --- --- --- ---
------------ ---------------- ------- ----------- --------
NET ASSETS, AT END OF THE YEAR --- $18 $17 $1,814 $17
------------ ---------------- ------- ----------- --------
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD DECEMBER 1, 1995 (INCEPTION) TO DECEMBER 31, 1995
----------------------------------------------------------------
STRONG
INTERNATIONAL STRONG VAN ECK
OPERATIONS: STOCK DISCOVERY GOLD
------------- ---------- ----------
<S> <C> <C> <C>
Investment Income
Dividends --- --- ---
Mortality and expense charge --- --- (1)
------------- ---------- ----------
NET INVESTMENT INCOME (LOSS) --- --- (1)
Net change in unrealized appreciation
of investments --- --- 3
------------- ---------- ----------
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING FROM
OPERATIONS --- --- 2
CAPITAL TRANSACTIONS:
Transfer of net premium 39 19 10
Policy account value charges (16) (8) (3)
Sub-account transfers --- --- 909
------------- ---------- ----------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
CAPITAL TRANSACTIONS 23 11 916
------------- ---------- ----------
TOTAL INCREASE IN NET ASSETS 23 11 918
NET ASSETS, AT INCEPTION --- --- ---
------------- ---------- ----------
NET ASSETS, AT END OF THE YEAR $23 $11 $918
------------- ---------- ----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
3
<PAGE> 6
ACACIA NATIONAL VARIABLE LIFE INSURANCE SEPARATE ACCOUNT I
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
1. NATURE OF OPERATIONS
The Acacia National Variable Life Insurance Separate Account I (the Account)
began operations on December 1, 1995 as a separate investment account within
Acacia National Life Insurance Company (the Company) to receive and invest net
premiums paid under a flexible premium variable life insurance policy (the
Policy). The Policy allows for a flexible premium schedule, as payments may be
made with varying amounts and frequency within stated limitations. The primary
purpose of the policy is to provide life insurance protection in the event of
the insured's death.
The Company is a member of the Acacia Group which includes Acacia Mutual Life
Insurance Company and its other wholly-owned subsidiaries: Acacia Financial
Corporation and its subsidiaries, Acacia Federal Savings Bank F.S.B., Calvert
Group, Ltd. and The Advisors Group, Inc.
Assets of the Account are the property of the Company. However, those assets
attributable to the policies are not chargeable with liabilities arising out of
any other business which the Company may conduct. The Account operates and is
registered as a unit investment trust under the Investment Company Act of 1940.
The net assets maintained in the Account attributable to the policies provide
the base for the periodic determination of the increased or decreased benefits
under the policies.
The preparation of the 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.
2. SEPARATE ACCOUNT ASSETS
The Account has fourteen separate sub-accounts which are invested as directed
by the contract owner. The fourteen sub-accounts of the Account are: The Alger
American Growth Portfolio, The Alger American Mid Cap Growth Portfolio, The
Alger American Small Capitalization Portfolio, The Calvert Responsibly Invested
Money Market Portfolio, Calvert Responsibly Invested Balanced Growth Portfolio,
Calvert Responsibly Invested Strategic Growth, Dreyfus Stock Index Portfolio,
The Neuberger & Berman Limited Maturity Bond Portfolio, The Neuberger & Berman
Growth Portfolio, Strong Advantage Fund II, Strong Assets Fund II, Strong
International Stock Fund II, Strong Discovery Fund II and Van Eck Gold and
Natural Resources Portfolio. The Account purchases shares of each of the
sub-accounts subject to the terms of the Participation Agreements between the
Company and the sub-accounts. Each sub-account has investment objectives and
policies and assets held separately. Shares of each sub-account are offered
at a price equal to their respective net asset values per share, without sales
charge, which represents their fair value. Calvert Asset Management Company,
Inc., an indirectly wholly owned subsidiary of Acacia Financial Corporation,
serves as an
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investment advisor to The Calvert Responsibly Invested Money Market Portfolio,
Calvert Responsibly Invested Balanced Growth Portfolio and Calvert Strategic
Growth mutual funds.
In addition to the fourteen separate sub-accounts, a contract owner may also
allocate net premiums to the General Account, which is part of the Company.
Because of exclusionary provisions, interests in the General Account have not
been registered as securities under the Securities Act of 1933 and the General
Account has not been registered as an investment company under the Investment
Company Act of 1940.
3. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Account in the preparation of the financial statements in
conformity with generally accepted accounting principles.
ADMINISTRATION
The Company has contracted with Financial Administrative Services, Inc. (FAS)
to provide the Company with certain administrative services for the Flexible
Premium Variable Life Policies. FAS will act as Recordkeeping Service Agent
for the policies and riders for an initial term of three years. FAS provides
administrative functions including: issuance of policies for reinstatement,
term conversions, 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 provide management reporting to the Company.
INVESTMENTS VALUATION
Investments are stated at market value which is the net asset value of each of
the respective funds.
ACCOUNTING FOR INVESTMENTS
Investment transactions are accounted for on the trade date. Dividend income is
recorded on the ex-dividend date. Average cost is the basis followed in
determining the cost of investments sold for financial statement purposes.
FEDERAL INCOME TAXES
The Company is taxed under federal law as a life insurance company under the
provisions of the 1986 Internal Revenue Code, as amended. The Account is a part
of the Company's total operations and is not taxed separately. Under existing
law, no taxes are payable on investment income or realized capital gains of the
Account credited to the policies. Accordingly, the Company does not intend to
make any charge to the Account for company income taxes. If such taxes are
incurred by the Company in the future, a charge to the Account may be assessed.
5
<PAGE> 8
4. POLICY CHARGES
The following charges are deducted by the Company from the Account's net assets
attributed to each policy:
Premium Expense Charge: Premiums are reduced by a charge equal to
2.25% of each premium to compensate the Company for expenses
associated with state premium taxes of the policy.
Policy Account Value Charges: The policy account value will be
reduced by a monthly deduction equal to the sum of the cost of
insurance charge, the cost of any optional insurance benefits added by
a rider and a monthly administrative charge equal to $27 per month for
the first policy year and $8 each month thereafter. The cost of
insurance will vary based upon a number of factors including the face
amount of the policy, issue age, attained age and rate class of the
insured.
Surrender Charges: A surrender charge will be assessed at 30% of
premiums received up to target premium, as defined in the prospectus,
for years 1-7 decreasing to 10% per year until reaching zero in year
10.
Partial Surrender Charges: During the surrender charge period for the
policy, there will be a charge for a partial surrender equal to 8% of
the amount withdrawn or $25, whichever is greater.
Mortality and Expense Charge: A charge not to exceed an annual rate
of .90% for years 1-15, decreasing .05% per year for years 16 and
thereafter until the annual rate reaches .45%, of the average daily
net asset value of the Account applicable to policies issued when each
rate was in effect. These charges are deducted by the Company in
return for its assumption of expenses arising from adverse mortality
experience and excess administrative expenses in connection with the
policies issued.
5. PURCHASES AND SALES
The following table shows the cost of purchases and proceeds from sales for the
period December 1, 1995 (inception) to December 31, 1995 for the sub-accounts.
<TABLE>
<CAPTION>
COST OF PROCEEDS
PURCHASES FROM SALES
--------- ----------
<S> <C> <C>
The Alger American Mid Cap Growth Portfolio . . . . . . . . . . $ 17 ---
Calvert Responsibly Invested Money Market . . . . . . . . . . . 2,673 $2,673
Calvert Responsibly Invested Strategic Growth . . . . . . . . . 17 ---
Dreyfus Stock Index Fund . . . . . . . . . . . . . . . . . . . 1,810 ---
Neuberger & Berman Growth Portfolio . . . . . . . . . . . . . . 17 ---
Strong International Stock Fund II . . . . . . . . . . . . . . 23 ---
Strong Discovery Fund II . . . . . . . . . . . . . . . . . . . 11 ---
Van Eck Gold . . . . . . . . . . . . . . . . . . . . . . . . . 915 ---
</TABLE>
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