LINCOLN NATIONAL MONEY MARKET FUND INC, PRES14A, 1998-02-13

LINCOLN NATIONAL MONEY MARKET FUND INC
PRES14A, 1998-02-13

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SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934

Filed by the Registrant [X]

Filed by a Party other than the Registrant [_]

Check the appropriate box:

[X] Preliminary Proxy Statement

[_] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(c)(2))

[_] Definitive Proxy Statement

[_] Definitive Additional Materials

[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12

Lincoln National Aggressive Growth Fund, Inc.

Lincoln National Bond Fund, Inc.

Lincoln National Capital Appreciation Fund, Inc.

Lincoln National Equity-Income Fund, Inc.

Lincoln National Global Asset Allocation Fund, Inc.

Lincoln National Growth and Income Fund, Inc.

Lincoln National International Fund, Inc.

Lincoln National Managed Fund, Inc.

Lincoln National Money Market Fund, Inc.

Lincoln National Social Awareness Fund, Inc.

Lincoln National Special Opportunities Fund, Inc.

................................................................................
(Name of Registrants as Specified in Their Charters)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and O-11.

1) Title of each class of securities to which transaction applies:
N/A
.......................................................................
2) Aggregate number of securities to which transaction applies:
N/A
.......................................................................
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
N/A
.......................................................................
4) Proposed maximum aggregate value of transaction:
N/A
.......................................................................
5) Total fee paid:
N/A
.......................................................................
[_] Fee paid previously with preliminary materials.

[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing. N/A

1) Amount Previously Paid:________________________________________________
2) Form Schedule or Registration Statement No.:___________________________
3) Filing Party:__________________________________________________________
4) Date Filed:____________________________________________________________

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THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
P.O. BOX 1110
1300 SOUTH CLINTON STREET
FORT WAYNE, INDIANA 46801
TELEPHONE: 800-4-LINCOLN
(800-454-6265)

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

MARCH 9, 1998

Dear Multi Fund(R) contractowner:

As stated in the Prospectus you received in connection with the purchase of
your contract, the net purchase payments you make under your contract with The
Lincoln National Life Insurance Company (Lincoln Life) are allocated as
follows: 1) purchase payments under an individual variable annuity contract are
allocated to Lincoln National Variable Annuity Account C ("Account C"), which
is a Lincoln Life segregated investment account or 2) purchase payments under
an individual flexible premium variable life insurance policy are allocated in
whole or in part, as applicable, to Lincoln National Flexible Premium Variable
Life Accounts D, G or K, which are also Lincoln Life segregated investment
accounts. As directed by you, the contractowner, the assets of Accounts C, D
and K, and a portion of the assets of Account G, are invested by Lincoln Life,
as applicable, in shares of one or more of the underlying mutual funds ("Fund"
or "Funds") listed below. (Note, however, that Accounts D and G do not utilize
all 11 Funds. See below.)

The Special Meeting of the Stockholder of these Funds will be held at the
office of the Funds' investment adviser, Lincoln Investment Management Inc. at
200 East Berry Street, Fort Wayne, Indiana, on April 13, 1998 at 9:30 A.M.
local time. The attached "Statement Regarding the Special Meetings of the
Stockholder of Lincoln National Aggressive Growth Fund, Inc., Lincoln National
Bond Fund, Inc., Lincoln National Capital Appreciation Fund, Inc., Lincoln
National Equity-Income Fund, Inc., Lincoln National Global Asset Allocation
Fund, Inc., Lincoln National Growth and Income Fund, Inc., Lincoln National
International Fund, Inc., Lincoln National Managed Fund, Inc., Lincoln National
Money Market Fund, Inc., Lincoln National Social Awareness Fund, Inc., and
Lincoln National Special Opportunities Fund, Inc.," describes in detail the
proposed actions for these Meetings.

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Through Accounts C, D, G and K, Lincoln Life is the sole stockholder in each of
the 11 Funds. (Account C and Account K contractowners may participate in all 11
Eligible Funds. Account D contractowners may participate in the Bond, Growth
and Income, Managed, Money Market, and Special Opportunities Funds. Account G
contractowners may participate in the Growth and Income and Special
Opportunities Funds.) By way of the enclosed materials, Lincoln Life is
soliciting instructions on how to vote its shares regarding the proposed
actions to be taken at these Special Meetings of the Funds.

Each contractowner who had purchase payments allocated to a Variable Fund on
February 20, 1998, is receiving by mail a Statement Regarding the Special
Meetings of the Stockholder of the Funds. Each person entitled to receive this
initial Proxy Statement is invited to attend the meetings in person and give
instructions instead of giving his or her proxy.

As you will see from the Proxy Statement, there are many issues for which we
need your instructions. For that reason, if you do not expect to attend the
meetings, I urge you to fill in, sign, date, and return the enclosed proxy
instruction form. Please use the self-addressed, postage-paid envelope
provided. The number of shares of the appropriate Fund will be voted in
accordance with the directions you give on the instruction form provided.

THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
LOGO
- ------------------------------------------
Kelly D. Clevenger
Vice President

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<PAGE>

THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
P.O. BOX 1110
1300 SOUTH CLINTON STREET
FORT WAYNE, INDIANA 46801

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STATEMENT REGARDING THE SPECIAL MEETINGS OF THE STOCKHOLDER OF
LINCOLN NATIONAL AGGRESSIVE GROWTH FUND, INC.,
LINCOLN NATIONAL BOND FUND, INC.,
LINCOLN NATIONAL CAPITAL APPRECIATION FUND, INC.,
LINCOLN NATIONAL EQUITY-INCOME FUND, INC.,
LINCOLN NATIONAL GLOBAL ASSET ALLOCATION FUND, INC.,
LINCOLN NATIONAL GROWTH AND INCOME FUND, INC.,
LINCOLN NATIONAL INTERNATIONAL FUND, INC.,
LINCOLN NATIONAL MANAGED FUND, INC.,
LINCOLN NATIONAL MONEY MARKET FUND, INC.,
LINCOLN NATIONAL SOCIAL AWARENESS FUND, INC.,
LINCOLN NATIONAL SPECIAL OPPORTUNITIES FUND, INC.

MARCH 9, 1998

This Statement is submitted in connection with the solicitation by The Lincoln
National Life Insurance Company (Lincoln Life) of instructions for voting at
the Special Meetings of the Stockholder of Lincoln National Aggressive Growth
Fund, Inc., Lincoln National Bond Fund, Inc., Lincoln National Capital
Appreciation Fund, Inc., Lincoln National Equity-Income Fund, Inc., Lincoln
National Global Asset Allocation Fund, Inc., Lincoln National Growth and Income
Fund, Inc., Lincoln National International Fund, Inc., Lincoln National Managed
Fund, Inc., Lincoln National Money Market Fund, Inc., Lincoln National Social
Awareness Fund, Inc., and Lincoln National Special Opportunities Fund, Inc.
(the "Funds"). This Proxy Statement and the accompanying instruction card were
mailed to Contract Owners on or about March 9, 1998.

These instructions are solicited from owners of: 1) individual variable annuity
contracts issued by Lincoln Life, under the terms of which purchase payments
are allocated in whole or in part to Lincoln National Variable Annuity Account
C ("Account C"), a segregated investment account of Lincoln Life; and 2)
individual flexible premium variable life insurance policies issued by Lincoln
Life, under the terms of which purchase payments are allocated in whole or in
part to Lincoln National

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Flexible Premium Variable Life Accounts D, G and K ("Accounts D, G, and K"),
also segregated investment accounts of Lincoln Life. Accounts C, D, G and K
invest these amounts in shares of one or more of the Funds, as directed by the
Contract Owner.

The Special Meeting of the Stockholder for each of these Funds will be held at
the office of the Funds' investment advisor, Lincoln Investment Management,
Inc., at 200 East Berry Street, Fort Wayne, Indiana, on April 13, 1998, at 9:30
A.M., local time. The purpose of the Special Meeting is to consider and act on
the following proposals:

. (All Funds) To elect the Board of Directors of the Fund;

. (Equity-Income Fund) To approve or reject amendments to the investment
advisory and sub-advisory agreements between the Fund and Lincoln Investment
Management, Inc., and Lincoln Investment Management, Inc. and Fidelity
Management Trust Company, respectively, which reduce the amount of the
advisory and sub-advisory fees paid thereunder.

. (International Fund only) To approve or reject replacing Clay Finlay, Inc.
with Delaware International Advisers Limited (DIAL) as sub-advisor as well as
approve or reject the investment sub-advisory agreement between Lincoln
Investment Management, Inc., and DIAL.

. (Money Market Fund; Short-term asset class of the Managed Fund; Incidental
cash accounts of the Bond, Growth and Income, Social Awareness and Special
Opportunities Funds.) To approve or reject the modification of Fundamental
Investment Restriction to permit trading in certain types of loan
participation certificates (LPC's) as money market securities.

. (All Funds, except Aggressive Growth, Capital Appreciation and Equity-Income
Funds) To approve or reject elimination of certain fundamental investment
policies.

. (All Funds) To approve or reject the engagement of Ernst & Young LLP as the
independent auditors.

. (All Funds) To transact any other business which may properly come before the
meeting.

In addition to the solicitation of proxies by mail, officers and employees of
the Funds, without additional compensation, may solicit proxies in person

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or by telephone. The cost associated with such solicitation and the Meeting
will be borne by the Funds.

Adoption of each Proposal in this proxy statement requires the approval of a
majority of the Fund's outstanding voting securities. Under the Investment
Company Act of 1940, a "majority of the Fund's outstanding voting securities"
is defined as the lesser of (i) 67% of the outstanding voting securities
represented at a meeting at which more than 50% of the outstanding voting
securities are present or represented by proxy or (ii) more than 50% of the
Fund's outstanding voting securities.

If you would like a copy of the Funds' 1997 Annual Report, call us a 1-800-
4LINCOLN and we will mail you one free of charge.

The principal office address of each of the Funds is 1300 South Clinton Street,
Fort Wayne, Indiana 46802. The Investment Advisor is Lincoln Investment
Management, Inc., located at 200 East Berry Street, Fort Wayne, Indiana 46802.
The Administrator (Accounting/Financial Reporting) is Delaware Management
Company, located 2005 Market Street, Philadelphia, Pennsylvania 19203.

SUMMARY OF PROPOSALS REQUIRING A VOTE

<TABLE>
<CAPTION>
AG BF CA EI GAA GF IN MF MM SA SO
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Elect Directors X X X X X X X X X X X
Reduce advisor and sub-advisory
fees X
Approve new sub-advisor Agreement X
Invest in Loan Participation
Certificates X X X X X X
ELIMINATE FUNDAMENTAL RESTRICTIONS
AGAINST INVESTMENT IN:
Direct Oil & Gas Arrangements X X X X X X X X
Companies Less Than 3 years Old X X X X X X
Companies with high
officer/director ownership X X X X X X X X
Appoint/Ratify Ernst & Young LLP
for 1995-1998 X X X X X X X X X X X
</TABLE>

(Key AG=Lincoln National Aggressive Growth Fund, Inc.; BF=Lincoln National Bond
Fund, Inc.; CA=Lincoln National Capital Appreciation Fund, Inc.; EI=Lincoln
National Equity-Income Fund, Inc.; GAA=Lincoln National Global Asset
Allocation Fund, Inc.; GF=Lincoln National Growth and Income Fund, Inc.;
IN=Lincoln National International Fund, Inc.; MF=Lincoln National Managed
Fund, Inc.; MM=Lincoln National Money Market Fund, Inc.; SA=Lincoln
National Social Awareness Fund, Inc.; SO=Lincoln National Special
Opportunities Fund, Inc.)

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SECURITIES OWNERSHIP AND VOTING PROCEDURES

At the Special Meetings of the Stockholder, Lincoln Life will vote each Fund's
shares held in Accounts C, D, G and K, as applicable, in accordance with the
instructions received from Contract Owners whose purchase payments, as of the
Record Date of February 20, 1998, were invested in that particular Fund by
Accounts C, D, G and K.

The number of votes which an Account C Contract Owner may cast when instructing
Lincoln Life how to vote is determined by applying the Contract Owner's
percentage interest in the Fund to the total number of votes attributable to
that Fund. In determining the number of votes, fractional shares will be
recognized.

The number of votes which an Account D, G or K Contract Owner may cast when
instructing Lincoln Life how to vote is determined as one vote for each $100 of
cash value in each applicable sub-account. Fractional shares will be allocated
for amounts less than $100.

Fund shares held for Accounts C, D, G and K as to which no timely instructions
are received will be voted by Lincoln Life in proportion to the voting
instructions which are received with respect to that Fund. If voting
instructions are received in a timely manner but contain no voting directions,
the votes will be cast FOR the proposals considered at the meeting.
Instructions may also be given Lincoln Life by personal attendance at the
meeting. Voting instructions to abstain on any item to be voted upon will be
applied on a pro rata basis to reduce the number of votes eligible to be cast
by Accounts C, D, G and K, as applicable.

The Contract Owner may revoke his instructions by filing with the Secretary of
the Funds, prior to the meeting, either a duly executed instrument of
revocation or a duly executed instruction form bearing a later date. In
addition, an instruction form may be revoked by personal attendance at the
meeting and changing the instructions given Lincoln Life.

AS OF FEBRUARY 20, 1998, EACH FUND HAD THE FOLLOWING NUMBER OF SHARES ENTITLING
THE APPLICABLE ACCOUNT C, D, G AND K CONTRACT OWNERS TO INSTRUCT LINCOLN LIFE
ON THE MANNER IN WHICH TO VOTE THOSE SHARES AT THAT FUND'S MEETING:

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<TABLE>
<CAPTION>
TOTAL NO. OF SHARES TOTAL NO. OF SHARES
TOTAL NUMBER ENTITLED TO BE VOTED BY ENTITLED TO BE VOTED BY
FUND OF SHARES LINCOLN LIFE FOR LINCOLN LIFE FOR
NAME OUTSTANDING ACCOUNT C ACCOUNTS D, G & K
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
AG
BF
CA
EI
GAA
GF
IF
MF
MM
SA
SO
</TABLE>

(Key AG=Lincoln National Aggressive Growth Fund, Inc.; BF=Lincoln National
Bond Fund, Inc.; CA=Lincoln National Capital Appreciation Fund, Inc.;
EI=Lincoln National Equity-Income Fund, Inc.; GAA=Lincoln National Global
Asset Allocation Fund, Inc.; GF=Lincoln National Growth and Income Fund,
Inc.: IF=Lincoln National International Fund, Inc.; MF=Lincoln National
Managed Fund, Inc.; MM=Lincoln National Money Market Fund, Inc.;
SA=Lincoln National Social Awareness Fund, Inc.; SO=Lincoln National
Special Opportunities Fund, Inc.)

Lincoln Life is the sole stockholder for all Funds. No other person
beneficially owns more than 5% of any Fund's outstanding shares, and no
director or executive officer of the Funds owns any separate account units
attributable to more than one-half of one percent of the assets of any Fund.

MATTERS TO BE ACTED UPON

PROPOSAL NO. 1. ELECTION OF DIRECTORS (ALL FUNDS)

The Bylaws of each Fund provide that the Board of Directors of the Fund shall
be elected annually unless the Board dispenses with the Annual Meeting. If the
latter occurs, then the Directors continue in office until the next Annual or
Special Meeting is held, at which time an election of Directors is held. The
Board shall consist of no fewer than three (3) nor more than ten (10) persons,
and currently a five-member Board is authorized. Presently, five persons are
serving as Directors for each Fund. One Director, Kenneth G. Stella, was
elected by the Board to fill the vacancy created by the resignation of Stanley
R. Nelson; he has not yet been elected by the Shareholders.

All five persons now serving as Directors for each Fund are also nominees for
election as Directors for each Fund. If elected, each nominee has

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agreed to serve. Since the Funds typically dispense with Annual Meetings,
Directors, once elected, remain in office unless they resign, are removed or
fail to win reelection at any subsequently scheduled meetings. Except to the
extent instructed by Contract Owners to the contrary, Lincoln Life intends to
vote all of each Fund's shares held in Accounts C, D, G and K for the election
of the nominees listed below:

<TABLE>
<CAPTION>
YEAR FIRST
NAME, POSITION(S) WITH FUNDS, PRINCIPAL OCCUPATION AGE BECAME DIRECTOR**
<S> <C> <C>
John B. Borsch, Jr. 64 1981
Director
Retired; formerly Associate Vice President, Investments,
Northwestern University, Evanston, Illinois (Educational
Institution)
*Kelly D. Clevenger 45 1994
Chairman, President and Director
Vice President, Lincoln National Life Insurance Company,
Fort Wayne, Indiana (Life Insurer-Parent of Funds)
*Barbara S. Kowalczyk 46 1993
Director
Senior Vice President, Lincoln National Corporation, Fort
Wayne, Indiana (Insurance Holding Company-Ultimate Parent
of Funds)
Nancy L. Frisby, CPA 56 1992
Director
Vice President-Chief Financial Officer, St. Joseph
Medical Center. Fort Wayne, Indiana (Hospital)
Kenneth G. Stella 54 ____
Director
President, Indiana Hospital and Health Association,
Indianapolis, Indiana (Hospital)
</TABLE>
- ------------------------

* Kelly D. Clevenger, currently Chairman and President of the Funds, is an
"interested person of the Funds" as that term is defined by Section-251(19)
of the Investment company Act of

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1940 (the "1940 Act") by reason of his being Chairman and President of the
Funds and an officer of the Funds' principal underwriter, Lincoln Life.
Barbara S. Kowalczyk, Director of each of the Funds, is an "interested
person" by reason of her being a Senior Vice President of Lincoln National
Corporation.
** The following people became directors of the various Eligible Funds in the
years indicated in the table below:

<TABLE>
<CAPTION>
FUND BORSCH CLEVENGER FRISBY KOWALCZYK STELLA*
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AG 1993 1994 1993 1993 1998
BF 1981 1994 1992 1993 1998
CA 1993 1994 1993 1993 1998
EI 1993 1994 1993 1993 1998
GAA 1987 1994 1992 1993 1998
GF 1981 1994 1992 1993 1998
IN 1990 1994 1992 1993 1998
MF 1983 1994 1992 1993 1998
MM 1981 1994 1992 1993 1998
SA 1986 1994 1992 1993 1998
SO 1981 1994 1992 1993 1998
</TABLE>

(Key: AG=Lincoln National Aggressive Growth Fund, Inc.; BF-Lincoln National
Bond Fund, Inc.; CA=Lincoln National Capital Appreciation Fund, Inc.;
EI=Lincoln National Equity-Income Fund, Inc.; GAA=Lincoln National
Global Asset Allocation Fund, Inc.; GF=Lincoln National Growth and
Income Fund, Inc.; IN=Lincoln National International Fund, Inc.;
MF=Lincoln National Managed Fund, Inc.; MM=Lincoln National Money Market
Fund, Inc.; SA=Lincoln National Social Awareness Fund, Inc.; SO=Lincoln
National Special Opportunities Fund, Inc.)

*Mr. Stella has not been the subject of a prior Shareholder vote. At the
February 10, 1998 Board of Director's meeting he was appointed to fill the
vacancy left by the retirement of Stanley R. Nelson.

The following information may assist you in your decision:

KENNETH G. STELLA. Mr. Stella, seeking shareholder election to the Boards for
the first time, succeeds Stanley R. Nelson, who retired in 1997. Mr. Stella is
currently President of Indiana Hospital & Health Association, Indianapolis,
Indiana, having served that institution since 1984. Among his responsibilities
for the Association he serves as the chief executive officer and is
responsible for implementation of all Board of Directors' policies and
directives. He provides executive management and leadership of all Association
programs and services. The Association comprises 157 hospitals and health
organizations, and it provides advocacy, data, education, communication, and
general legal information services to its members. Mr. Stella holds both a
Bachelor of Science Degree and a Master's Degree in Health Administration from
Indiana University. Among

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other affiliations, he is a Fellow of the American College of Healthcare
Executives, a Member of the Board of Visitors of the Indiana University School
of Nursing, a Board member of Visitors, Indiana University School of Public &
Environmental Affairs and a Board Member of the First National Bank of Kokomo.

BARBARA S. KOWALCZYK. Ms. Kowalczyk, who became a Director in 1993, is an
experienced investment executive. She joined Lincoln Investment Management Inc.
in 1977 as an Investment Analyst, and served that organization until 1994,
ultimately as Senior Vice President. Ms. Kowalczyk is currently Senior Vice
President of Lincoln National Corporation, in charge of strategic planning,
mergers and acquisitions for Lincoln National Corporation. Ms. Kowalczyk holds
both a Bachelor of Science Degree in Marketing and a Masters in Business
Administration (Finance) from Indiana University. She is a Chartered Financial
Analyst and a Member of the Investment Analysts Society of Chicago, Inc.

KELLY D. CLEVENGER. Mr. Clevenger, who became a Director in 1994, is a senior
actuary with over two decades of experience in life insurance, annuities and
investments with Lincoln Life. Currently he is Vice President of Lincoln
National Life Insurance Company and President of the Funds. He was elected Vice
President of the Funds in 1988, and directed their day-to-day operation until
1994; he became President of the Funds in 1994, and continues to serve in that
capacity. His responsibilities with Lincoln National Life have included, among
other things, development and design of life insurance, variable annuity and
reinsurance products. Mr. Clevenger holds both a Bachelor of Science Degree and
a Masters in Actuarial Science from the University of Michigan. He is a Fellow
of the Society of Actuaries and a member of the American Academy of Actuaries.

NANCY L. FRISBY. Ms. Frisby joined the staff of St. Joseph Medical Center in
Fort Wayne in 1974 as Director of Financial Services. She has assumed
increasing financial and controller responsibilities for the Center, and is
currently Vice President and Chief Financial Officer for the Medical Center.
Ms. Frisby holds a Bachelor of Science Degree in accounting from Indiana
University/Purdue University of Fort Wayne, and an MBA in Finance from Notre
Dame. She is an Advanced Member of the Healthcare Financial Management
Association, the Financial Executives Institute, and the American Institute of
Certified Public Accountants.

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JOHN B. BORSCH, JR. Mr. Borsch has been a Director of the Funds since their
inception in 1981. A career financial analyst, he managed the investment
portfolio of Northwestern University, ultimately as their Associate Vice
President--Investments. Mr. Borsch holds both a Bachelor of Science Degree in
Investment Management and an MBA in Finance from Northwestern. Although retired
from Northwestern, he remains active in investment circles as a Member of the
Investment Analysts Society of Chicago, Inc.; the association of investment
management research; and the Institute of Chartered Financial Analysts.

Ms. Kowalczyk, Ms. Frisby and Messrs. Borsch and Clevenger are also Members of
the Board of Managers of Lincoln National Variable Annuity Fund A, an
investment company which is registered with the Securities and Exchange
Commission under the Investment Company Act of 1940 and is a separate account
of Lincoln Life. On February 10, 1998, Mr. Stella was appointed by the Managers
to fill a vacancy on that Board. He intends to seek election to the Board at
its next annual or Special Meeting of the Shareholders.

As interested persons who serve as Directors of the Funds and are salaried
officers of Lincoln Life and of Lincoln National Corporation, respectively. Mr
Clevenger and Ms. Kowalczyk receive no additional remuneration for their
services to the Funds. Pursuant to their respective Advisory Agreements, the
Funds pay the compensation and expenses of Directors who are not "interested
persons" of the Funds.

CASH REMUNERATION--DIRECTORS FEES FROM EACH FUND

The amount of remuneration paid in total by the eleven Funds to the two
current outside directors during fiscal year 1997 was $22,000. Since each Fund
held four meetings in 1997, each Fund paid each of these directors $1,000 for
the year. The total paid to each of these two outside directors was $11,000.

Each Fund has an Audit Committee, that recommends to the Boards of Directors
the hiring of the Funds' independent auditors and reviews the independent
auditors' reports. During 1997 the Audit Committees composed of Messrs. Borsch
and Nelson and Ms. Frisby for each Fund, met once. None of the members of the
Audit Committees is an "interested person" as defined in Section 2(a)(19) of
the 1940 Act. The Funds have no nominating or compensation committees.

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PROPOSAL NO. 2 (EQUITY-INCOME FUND ONLY) TO APPROVE OR REJECT AMENDMENT TO THE
INVESTMENT ADVISORY AND SUB-ADVISORY AGREEMENTS BETWEEN THE FUND AND LINCOLN
INVESTMENT MANAGEMENT, INC., AND LINCOLN INVESTMENT MANAGEMENT INC. AND
FIDELITY MANAGEMENT TRUST COMPANY, RESPECTIVELY, WHICH REDUCES THE AMOUNT OF
THE ADVISORY AND SUB-ADVISORY FEES PAID THEREUNDER.

At its February 10, 1998 meeting, the Board unanimously approved, and voted to
recommend that the shareholders of the Equity-Income Fund approve, an amendment
to both (1) the Investment Advisory Agreement (the "E-I Advisory Agreement")
between the Fund and the Fund's investment adviser, Lincoln Investment
Management, Inc. ("LIM") and (2) the Investment Sub-Advisory Agreement (the "E-
I Sub-Advisory Agreement") between LIM and Fidelity Management Trust Co.
("Fidelity"), the Fund's sub-adviser. The purpose of each amendment is to lower
the fees paid to LIM and Fidelity for providing investment advisory and sub-
advisory services, respectively. The net result for you, the contract owner, is
that the annual advisory fee rate paid by the Fund will decline by over 20%,
with no reduction in the quality or quantity of advisory or sub-advisory
services to be provided.

Except for the amendment to reduce the fees paid, the E-I Advisory Agreement
and E-I Sub-Advisory Agreement each will remain unchanged from its current
form. Additionally, terms of each agreement are summarized later in this
Statement under "Investment Management Services." The full text of each
amendment is attached hereto as Exhibits A and B. Approval by a majority of the
Fund's shareholders, as that term is defined herein, is required to approve
each amendment.

Under the terms of the E-I Advisory Agreement, LIM, subject to the supervision
of the Fund's Board, is responsible for providing the Equity-Income Fund with
certain investment management and administrative services, although LIM may
contract with other entities to assist in providing the required services to
the Fund. In this event, however, LIM remains contractually bound to the Fund
with respect to all of the duties and obligations required to be performed
pursuant to the E-I Advisory Agreement. In accordance with these provisions,
LIM and Fidelity entered into the E-I Sub-Advisory Agreement, which also was
agreed to and approved by the Fund.

Under the terms of the E-I Sub-Advisory Agreement, Fidelity, subject to the
control of the Fund's Board, is responsible for providing most, but not

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<PAGE>

all, of the services LIM is obligated to provide to the Fund under the terms of
the E-I Advisory Agreement. Fidelity provides a continuous investment program
for the Fund's portfolio, maintains the books and records of the Fund with
respect to its securities transactions, and furnishes the Fund with the office
space, facilities, equipment and personnel necessary for managing the Fund's
investments.

As required by the E-I Advisory Agreement, however, LIM remains responsible for
providing all investment advisory and other services to the Fund, and bears the
risk of ultimate accountability to the Fund and its shareholders for Fidelity's
actions. Accordingly, LIM monitors Fidelity's activities and investment
performance on behalf of the Fund (1) for compliance with applicable federal
securities and tax regulations; (2) to ensure compliance with the Fund's
investment objective, policies, techniques, and restrictions and (3) to assess
the need to recommend to the Fund's management replacement of Fidelity as sub-
advisor, as necessary. Additionally, LIM also remains responsible for
responding to Board requests for periodic and special reports and for
administering the Fund's corporate affairs.

Under the terms of the E-I Advisory Agreement, LIM is paid a monthly fee at the
annual rate of .95 of 1% of the average daily net asset value of the fund
during the fiscal year. Under the terms of the E-I Sub-Advisory Agreement,
however, LIM, not the Fund, pays all sub-advisory fees owed to Fidelity.
Pursuant to that agreement, LIM is obligated to pay Fidelity a monthly fee at
the annual rate of .75 of 1% of the average daily net asset value of the Fund
during the fiscal year. During 1997, LIM paid a total of $4,781,931 for the
services Fidelity provided.

In providing sub-advisory services to the Fund, Fidelity incurs both fixed and
variable costs. Considering the current size of the Fund and the current cost
of providing sub-advisory services to the Fund, Fidelity agreed that, effective
January 1, 1998, its sub-advisory fees be reduced to an annual rate of .48 of
1% of the average daily net asset value of the Fund.

Fidelity has advised LIM that the fee reduction would have no impact on the
quality or quantity of the sub-advisory services to be provided by Fidelity,
nor affect Fidelity's ability to provide such services in the future.
Accordingly, LIM agreed to the amendment of the E-I Sub-Advisory Agreement to
reduce the fees paid, pending approval of such reduction by the Board and the
Fund's shareholder. If the amendment to the E-I Sub-Advisory Agreement had been
in place during 1997, LIM would have paid Fidelity a total of $3,056,609, which
represents a reduction in sub-advisory fees of 36%.

11
<PAGE>

When considering Fidelity's fee reduction, LIM also analyzed the extent to
which it could reduce its advisory fees based on the reduction of the sub-
advisory fee it pays to Fidelity. LIM considered the costs and risks LIM incurs
to provide the advisory and other services described above, as well as the
level of fees it receives for providing similar services to other funds. As a
result of this analysis, LIM concluded that if it reduced the amount of its
advisory fees by the full amount of the sub-advisory fee reduction, LIM would
be receiving less in advisory fees than it receives when providing similar
services to other funds, and it would not be able to adequately cover the
expenses and risks it incurs in providing such services to the Fund.

Accordingly, LIM has proposed to amend the E-I Advisory Agreement to reduce the
advisory fee paid by the Fund to give effect to most, but not all, of the
Fidelity fee reduction. Under the amendment, the new fee will be at an annual
rate of .75 of 1% for the first $500 million of the average daily net asset
value of the Fund, and .70 of 1% for all amounts in excess of $500 million. The
amendment, however, only relates to the amount of the advisory fee paid, and
there will be no change in the quality or quantity of the advisory services to
be provided.

The net result of the amendment to the E-I Advisory Agreement is that Fund
shareholders will pay less money but receive the same advisory services. During
1997, the Fund paid LIM a total of $6,053,404 for the services provided. If the
amendment to the E-I Advisory Agreement had been in place, the Fund would have
paid LIM a total of $4,707,555, which represents a reduction in fees of 23%.

BOARD RECOMMENDATION

The full Board met in person, on February 10, 1998 to evaluate and consider
each amendment. The Board considered principally the following factors in
reaching their decision: (a) LIM and Fidelity have performed their duties and
obligations in a satisfactory fashion; (b) the quality and quantity of the
services to be provided by LIM and Fidelity would remain unchanged if the
amendments were approved; (c) the new lower level of fees are expected to
provide adequate resources to LIM and Fidelity to insure that each would be
able to continue to provide the quality and quantity of services currently
provided, and yet still allow each to cover its expenses and risks on a
profitable basis, so that the respective agreements remained in the best long-
term financial interest of all parties

12
<PAGE>

involved; and (d) Equity-Income Fund shareholders would benefit by paying lower
fees for the same services. Based on all of these factors, the Board (including
a majority of the independent Directors who are not "interested persons" of the
Fund) approved the amendment to the E-I Advisory Agreement and to the E-I Sub-
Advisory Agreement.

In anticipation of the approval of the amendment, effective January 1, 1998, to
the E-I Advisory and Sub-Advisory Agreements by the Equity-Income Fund
stockholder, LIM and Fidelity have implemented the following arrangement: LIM
continues to collect from the Fund its current fee of 0.95%, and it is paying
Fidelity its projected new rate of 0.48%. The remaining 0.27% that would also
have been paid to Fidelity under the current sub-advisory contract is being
paid into an escrow account monthly until the amendments are approved by the
Stockholder. If they are approved the money in escrow will be released; the
additional portion due LIM will be paid to it; and the remainder will be re-
deposited into the Fund. If the amendments are rejected, the total amount in
escrow will be paid to Fidelity, and the advisory fee will remain at 0.95%.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE CONTRACT OWNERS OF THE EQUITY-INCOME
FUND GIVE INSTRUCTIONS TO APPROVE THE AMENDMENT TO THE E-I ADVISORY AGREEMENT
AND TO THE E-I SUB-ADVISORY AGREEMENT THAT REDUCES THE ADVISORY AND SUB-
ADVISORY FEE, RESPECTIVELY, PAID THEREUNDER

PROPOSAL NO. 3 (INTERNATIONAL FUND ONLY).
TO APPROVE OR REJECT REPLACING CLAY FINLAY, INC.
WITH DELAWARE INTERNATIONAL ADVISERS LIMITED (DIAL)
AS SUB-ADVISOR AS WELL AS APPROVE OR REJECT
THE INVESTMENT SUB-ADVISORY AGREEMENT BETWEEN
LINCOLN INVESTMENT MANAGEMENT, INC. AND DIAL

At its February 10, 1998 meeting, the Board unanimously approved, and voted to
recommend that the shareholder of the Fund approve, a sub-advisory agreement
between Delaware International Advisers, Ltd. (DIAL), the proposed new sub-
advisor for the Fund, and the Fund's investment adviser, Lincoln Investment
Management, Inc. ("LIM"). The terms of the proposed sub-advisory agreement are
substantially similar to the terms of the Fund's current sub-advisory
agreement. If the sub-advisory agreement is approved, DIAL will replace Clay
Finlay Inc. (CFI) as sub-adviser to the Fund.

13
<PAGE>

The text of the proposed agreement with DIAL is set forth in Exhibit C,
attached hereto, and its terms are summarized later in this Statement under
"Investment Management Services." Approval by a majority of the Fund's
shareholders, as that term is defined herein, is required to approve the
proposed agreement.

Since the Fund began operations in 1990, its investment program has been
managed by CFI, through its U.S. headquarters in New York City. Originally
owned by United Kingdom interests, CFI was acquired by United Asset Management,
Boston, Massachusetts, in 1996. Under the terms of the current sub-advisory
agreement, although CFI manages the Fund's investment program, LIM remains
responsible for providing all investment advisory and other services to the
Fund, and LIM bears the risk of ultimate accountability to the Fund and its
shareholders for CFI's actions. Consistent with its obligations to the Fund,
LIM monitors CFI's activities and investment performance.

In 1997, LIM hired an independent consultant ("Consultant") to, among other
things, assess the performance of all sub-advisers hired by, and providing
services to, LIM, and to make recommendations concerning which sub-advisers, if
any, should be replaced, and if so, by whom. The Consultant analyzed each sub-
adviser's performance, investment philosophy, processes and personnel on behalf
of the Fund. Based on these criteria, the Consultant recommended that CFI be
replaced. Among other factors considered, the Consultants specifically cited to
CFI's performance, which was out of line with that of others in CFI's peer
group, and, on a comparative basis, exposed the Fund to greater risk.

According to data produced by Morningstar, out of more than 250 international
equity funds serving as investment options for variable insurance products,
CFI's investment performance on behalf of the Fund (as measured by net annual
returns) ranked in the last quartile and third quartile of all funds,
respectively, for the three- and five-year periods ended December 31, 1997.

The Consultant also provided a list of recommended replacements for CFI, again
based on the same criteria cited above. Among those recommended was DIAL, an
affiliate of LIM. Among other things, the Consultant determined that, all
factors considered, DIAL provided a more consistent investment performance than
CFI, while exposing the Fund to less risk. Specifically, the Consultant found
that while [over the past few years] DIAL and CFI performed about the same in
rising markets, DIAL performed better in declining markets.

14
<PAGE>

Based on the same Morningstar data cited above, DIAL's investment performance
on behalf of the international equity fund it advises (as measured by net
annual returns) ranked in the top third of all funds for the three-year period
ended December 31, 1997.

After extended consultation with this Board and with LIM, Fund management
decided to approach DIAL to act as sub-adviser, in lieu of CFI. DIAL agreed to
do so, pending Fund shareholder approval, and has accepted the terms of the
proposed sub-advisory agreement.

The only difference between the proposed agreement with DIAL and the current
agreement with CFI is the fee schedule. Pursuant to the current agreement, LIM
is obligated to pay CFI a monthly fee at the annual rate of .665 of 1% of the
average daily net asset value of the Fund up to $50 million, .475 of 1% of the
next $50 million, and .250 of 1% of any excess over $100 million. During 1997,
LIM paid a total of $1,503,294 for the services CFI provided. Under the
proposed agreement with DIAL, LIM is obligated to pay DIAL a monthly fee at the
annual rate of .500 of 1% of the average daily net asset value of the fund, up
to $200 million; .400 of 1% of the next $200 million; and .350 of 1% of the
excess over $400 million. Had this agreement had been in place during 1997, LIM
would have paid DIAL a total of $2,056,611. This proposed arrangement does not
increase fees to the contract owner, only to LIM.

It is not unusual to have a significant amount of turnover for a fund when one
manager replaces another. If DIAL assumes the sub-advisory responsibilities
DIAL has estimated that in their first year as sub-advisor they would replace
about 90% of the securities held by the Fund. This restructuring may negatively
impact performance of the Fund by 1-2% due to the commission and taxes paid on
the transaction as well as the difference in the ask and bid prices of the
individual securities sold and bought. The 1-2% is an estimate only, and is a
one-time cost associated with the management change.

DIAL also provides similar services to other registered investment companies
having a substantially similar investment objective as the Fund. There are no
funds with substantially similar investment objectives as the LN International
Fund for which DIAL acts as sub-advisor. However, DIAL does act as primary
advisor for the Delaware Group Global and International Funds Inc.
International Equity Series. The net assets of this fund are currently $233m
and the fee is 0.75% on all assets.

15
<PAGE>

DIAL is a wholly-owned subsidiary of Delaware Holdings, Ltd., which, in turn,
is wholly-owned by Lincoln National Corporation, as is LIM. DIAL, registered as
an investment adviser under the Investment Advisors Act of 1940, is
headquartered in 80 Cheapside, Third Floor, London, EC2V 6EE. As of December
31, 1997, it had $7.75 billion of assets under management. The following is a
list of DIAL's officers and Directors:

<TABLE>
<CAPTION>
DELAWARE
INTERNATIONAL
ADVISERS LTD. OFFICERS
- -------------------------------------------------------------------------------
<C> <S>
Wayne A. Stork Chairman & Chief Executive Officer
G. Roger H. Kitson Vice Chairman
David G. Tilles Managing Director and Chief Investment Officer
Ian G. Sims Deputy Managing Director/Chief Investment Officer--Global
Fixed Income
Clive A. Gillmore Senior Portfolio Manager/Director U.S. Mutual Fund
Liaison
Harnish O. Parker Senior Portfolio Manager/Director U.S. Marketing Liaison
Timothy W. Sanderson Chief Investment Officer--Equity/Deputy Compliance
Officer/Director
Elizabeth A. Desmond Senior Portfolio Manager/Director of Pacific Basic Group
Nigel G. May Senior Portfolio Manager/Director of European Group
John Emberson Secretary, Compliance Officer and Finance Director
Robert Akester Senior Portfolio Manager
Gavin A. Hall Senior Portfolio Manager
Hywel Morgan Senior Portfolio Manager
Christopher Moth Senior Portfolio Manager
Joanna Bates Senior Portfolio Manager
James S. Beveridge Trading Manager
Fiona A. Barwick Portfolio Manager
Richard J. Ginty Portfolio Manager
Joshua H. Brooks Portfolio Manager
</TABLE>

16
<PAGE>

DIRECTORS OF DELAWARE INTERNATIONAL ADVISERS LTD

Wayne A. Stork Harnish O. Parker
G. Roger H. Kitson Timothy W. Sanderson
Richard G. Unruh Clive A. Gillmore
David G. Tilles Ian G. Sims
David K. Downes George E. Deming
George M. Chamberlain, Jr. John Emberson
John C.E. Campbell Nigel G. May
Richard J. Flannery Elizabeth A. Desmond

BOARD RECOMMENDATION

The full Board met in person, on February 10, 1998 to evaluate and consider the
proposed sub-advisory agreement between the LIM and DIAL. The Board considered
principally the following factors in reaching their decision: (a) the
Consultant's analysis and recommendation, including the Consultant's assessment
of the DIAL's recent investment performance, both in absolute terms and as
compared to that of CFI's and (b) the nature, extent and quality of the
services to be provided by DIAL. Based on these factors, the Board (including a
majority of the independent Directors who are not "Interested persons" of the
Fund) approved a new subsidiary agreement between DIAL and LIM on behalf of the
Fund.

If the proposed sub-advisory agreement with DIAL is approved by Fund
shareholders, the agreement will become effective on or about August 1, 1998.
Should Fund shareholders vote to disapprove this Proposal No. 3, the current
sub-advisory agreement with CFI will continue in effect. In this event, the
Board will consider such further action as may be in the best interest of Fund
shareholders.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS OF THE INTERNATIONAL
FUND GIVE INSTRUCTIONS TO APPROVE THE SUB-ADVISORY AGREEMENT BETWEEN LIM AND
DIAL, WHICH WILL REPLACE THE AGREEMENT BETWEEN LIM AND CLAY FINLAY, INC.

PROPOSAL NO. 4

(GROWTH AND INCOME FUND, MANAGED FUND, MONEY MARKET FUND, SOCIAL AWARENESS FUND
AND SPECIAL OPPORTUNITIES FUND.)

MODIFICATION OF FUNDAMENTAL INVESTMENT RESTRICTION TO PERMIT INVESTMENTS IN
CERTAIN TYPES OF LOAN PARTICIPATION CERTIFICATES (LPCS) AS MONEY MARKET
SECURITIES

17
<PAGE>

Lincoln Investment Management, Inc. (LIM) is investment advisor to the eleven
Multi Funds and money market manager for six of them. LIM provides a short-term
money market investment program both for the Money Market Fund and for the
money market segment of the Managed Fund. It also invests incidental short-term
cash for the Bond, Growth and Income, Social Awareness and Special
Opportunities Funds. Portfolio investments for these funds, of course, are
subject to the investment policies set forth in their respective Prospectuses
and Statements of Additional Information.

In this proposal LIM requests your permission to add certain "Loan
Participation Certificates" (LPCs) to the list of short-term investments which
it is permitted to buy for the six Funds. LIM advises that these Certificates
are somewhat less liquid than commercial paper. However, this increased risk
produces a higher yield than does commercial paper, with which they are
frequently compared.

How do LPCs work? Companies which need to borrow money sometimes prefer to take
a commercial bank loan instead of asking an investment bank to sell the
company's bonds. The bank, in turn, may sell pieces of this loan to investors,
in the form of "participations" in the loan. Once this is done, the investment
risk for the loan is no longer the responsibility of the bank. The Fund must
look to the maker of the loan for repayment.

When comparing LPCs to commercial paper, however, one must consider credit risk
as well as liquidity risk. There is a nominal increase in credit risk for LPCs
because the buyer is now exposed both to the possibility that the borrower will
not repay and to the possibility that the bank will not transmit the payment to
the buyer. There is increased liquidity risk because the LPCs contain a
restriction that they can only be sold back to the bank which issued them. In
other words, there is no secondary market for LPCs--unlike for commercial
paper. The increased yield offered on LPCs is designed to reflect both these
risks.

There are many types of Loan Participations, with varying degrees of risk and
liquidity. The ones which LIM would like to purchase are among the most common,
and have experienced very little default activity. For that reason, even in
light of the increased credit and liquidity risks discussed above, in the
opinion of LIM the kinds of LPCs which it seeks to purchase are well within the
range of appropriate instruments for a money market portfolio.

There is no present intention to give LPCs any extraordinary portfolio
emphasis. However, in recent years some kinds of LPCs have evolved as

18
<PAGE>

attractive short-term portfolio investments. LIM wants the authority to
purchase high-quality LPCs as part of their normal strategy of enhancing short-
term yield while preserving capital. LIM will limit its investment in these
LPCs to not more than 25% of the assets of each of the six listed Funds.
Furthermore, LIM will not purchase an LPC unless it is rated in the top rating
category by at least one of the nationally recognized statistical rating
organizations. Finally, LIM will refrain from buying an LPC with a remaining
maturity of more than 90 days.

In order to include these LPCs as permitted investments for these funds, it
will be necessary to modify one of the fundamental investment restrictions in
each fund. THE SPECIFIC CHANGE TO THE RESTRICTION FOR EACH FUND IS SET FORTH IN
EXHIBIT D TO THIS PROXY STATEMENT.

Type of LPC Which LIM Wants to Buy. LIM would propose to buy LPCs issued by
individual banks on loans taken out by their corporate customers. Typically the
bank, even after issuing the LPCs, remains in the picture to service the loans
and provide support to the purchasers, although the Funds' recourse is now
against the borrower. LIM would carefully monitor the creditworthiness of both
the issuing banks and their borrowers. If, as occasionally happens, the
original short-term loan is not rated by a national rating organization, LIM
will look to the long-term debt rating of the borrower in examining
creditworthiness. Normally LIM would not expect to purchase LPCs if the both
the bank's and the borrower's long-term debt securities were not rated in the
top category of at least one of the nationally recognized statistical rating
organizations.

Just as with other money market instruments, the purchase of LPCs by the Money
Market Fund will be subject to Rule 2a-7 under the Investment Company Act of
1940, which generally requires that: (A) the security be rated in one of the
two top credit rating categories for short-term debt obligations; (B) it have a
remaining maturity, at time of purchase, of 397 days or less; and (C) at least
95% of the Fund's assets be invested in the highest credit rating category, as
defined by the Rule. (Rule 2a-7 imposes numerous other requirements on the
Money Market Fund. See Investment restrictions, in the Prospectus.)

LPCs are not purchased with an expectation of resale. Rather, they are usually
held to maturity to take advantage of the increased yield which was the reason
for purchasing them in the first place. However, for creditworthy borrowers LIM
believes that there is, in most cases, an opportunity to sell the LPC back to
the lending bank. At time of purchase LIM will assess the liquidity of the LPC
in question. Certificates deemed illiquid would, of course, be subject to each
Fund's respective investment limit for illiquid assets, as set forth in its
Prospectus. The Loan Participation market currently has a yearly volume
exceeding $500 billion.

19
<PAGE>

THE BOARD OF DIRECTORS OF EACH OF THE ABOVE FUNDS, AS APPLICABLE, RECOMMENDS
THAT THE CONTRACTOWNERS OF EACH SUCH FUND GIVE INSTRUCTIONS TO APPROVE THE
MODIFICATION OF THE FUNDAMENTAL INVESTMENT RESTRICTION TO PERMIT TRADING IN
CERTAIN TYPES OF LOAN PARTICIPATION CERTIFICATE (LPCS) AS MONEY MARKET
SECURITIES.

PROPOSAL NO. 5 (ALL FUNDS EXCEPT AGGRESSIVE GROWTH, CAPITAL APPRECIATION AND
EQUITY-INCOME FUNDS) TO APPROVE OR REJECT ELIMINATION OF CERTAIN FUNDAMENTAL
INVESTMENT POLICIES

Each of the Funds maintains specific investment policies that guide the pursuit
of the Fund's investment objectives. If the investment policy is one that can
be changed or eliminated only by a majority vote of the Fund's shareholders,
that policy is often referred to as a "fundamental" policy. For each of the
Funds, except the Aggressive Growth, Capital Appreciation and Equity-Income
Funds, certain of the fundamental policies that have been adopted in the past
reflect regulatory requirements imposed by state securities laws that no longer
apply. Accordingly, the Board is recommending that the shareholder of each of
these Funds approve the elimination of such policies.

The Board of each Fund has received representations from the adviser and sub-
adviser, as applicable, that the changes proposed will not materially alter (1)
the investment strategy that the Fund's adviser or sub-adviser implements when
pursuing the Fund's investment objectives or (2) the types, or relative
proportions of particular types, of securities purchased or sold on behalf of
the Fund. Moreover, the adviser and sub-adviser for each Fund have also
provided representations that as a matter of practice they do not anticipate
engaging in any of the activities currently prohibited by any or all such
policies that are to be eliminated, notwithstanding shareholder approval of
their elimination.

Accordingly, the elimination of any or all these investment policies with
respect to any Fund is not expected to have any significant impact on the
manner in which that Fund's assets are managed. What will change, however, is
that if the Board of a Fund determines that the Fund should engage in the type
of conduct not currently permitted under one of these investment policies, the
Fund can do so without obtaining further approval of that Fund's shareholders.
By reducing to a minimum those policies that can be changed only by a
shareholder vote, each Fund should be able to

20
<PAGE>

avoid the costs and delay associated with holding shareholder meetings to
eliminate these policies individually, on a Fund-by-Fund basis, as needed in
the future. In addition, the ability to manage a Fund's portfolio more
effectively in a changing regulatory or investment environment will be
enhanced.

The fundamental investment policies to be eliminated are discussed in detail
below. Shareholders of particular Funds will be able to provide instructions to
vote for or against or abstain from voting with respect to each of the
investment policies applicable to that Fund. Generally, the Funds do not have
precisely the same set of investment policies. The Funds often have specific
policies that are substantially similar but not necessarily identical. Please
refer to Exhibit E, attached hereto, which, for each Fund, includes the current
text of each fundamental investment policy that is proposed by the Board to be
eliminated. The percentage limitations contained in the policies described
herein apply at the time of purchases of portfolio securities.

If the elimination of the investment policies are approved for a Fund, that
Fund's Prospectus and Statement of Additional Information will be amended as
needed in order to reflect the elimination of the investment policies. You will
be notified by the Fund of any future changes with respect to the eliminated
policies either in the Fund's Prospectus or Statement of Additional
Information, which are updated at least annually, or in other Fund
communications.

A. (BOND FUND, GLOBAL ASSSET ALLOCATION FUND, GROWTH AND INCOME FUND,
INTERNATIONAL FUND, MANAGED FUND, MONEY MARKET FUND, SOCIAL AWARENESS FUND, AND
SPECIAL OPPORTUNITIES FUND)

ELIMINATION OF EACH FUND'S FUNDAMENTAL POLICY REGARDING THE PURCHASE OF
SECURITIES OF AN ISSUER WHEN THE BOARD MEMBERS AND OFFICERS OF THE FUND OR OF
THE ADVISER HOLD MORE THAN OF 1% AND/OR TOGETHER THEY OWN MORE THAN 5% OF THE
SECURITIES OF THE ISSUER

These Funds' fundamental policies currently include a policy that prohibits the
Funds from purchasing or retaining the securities of any issuer if any officer
or Board member of the Fund or of the Fund's investment adviser individually
owns more than of 1/2 of 1% of the securities of that issuer and/or together
they own more than 5% of such securities. This

21
<PAGE>

investment policy was originally adopted to address requirements no longer
applicable to the Funds under state securities laws in connection with the
registration of shares of the Funds for sale in certain states. Neither the
Funds nor their management is aware of any past violations of this policy. The
ability of a Fund to invest in companies in which its directors and officers,
or its affiliates and their directors and officers, hold interests would
continue to be restricted by the 1940 Act and, in possibly egregious
circumstances, likely would be in conflict with the fiduciary duties owed by
the involved parties to the Fund, whether or not the current fundamental
investment policy is eliminated. As discussed above, the elimination of this
fundamental policy is not expected to involve any change in the manner in which
a Fund's assets are currently invested.

B. (BOND FUND, GLOBAL ASSSET ALLOCATION FUND, GROWTH AND INCOME FUND,
INTERNATIONAL FUND, MANAGED FUND, MONEY MARKET FUND, SOCIAL AWARENESS FUND,
SPECIAL OPPORTUNITIES FUND)

ELIMINATION OF EACH FUND'S FUNDAMENTAL POLICY REGARDING THE FUND'S INVESTMENTS
IN OIL, GAS OR OTHER MINERAL EXPLORATION OR DEVELOPMENT PROGRAMS

Each of these Funds has a fundamental policy prohibiting investment in any oil,
gas or other mineral exploration or development program, with certain
exceptions. This investment policy was adopted to address requirements under
certain state securities laws that are no longer applicable. Each Board
believes that this investment policy should be eliminated to respond to
regulatory developments. As discussed above, the elimination of this
fundamental policy is not expected to involve any change in the manner in which
a Fund's assets are currently invested.

C. (BOND FUND, GROWTH AND INCOME FUND, INTERNATIONAL FUND, MANAGED FUND, MONEY
MARKET FUND, AND SOCIAL AWARENESS FUND)

ELIMINATION OF EACH FUND'S FUNDAMENTAL POLICY REGARDING THE FUND'S INVESTMENTS
IN SECURITIES OF COMPANIES LESS THAN THREE YEARS OLD

Each of these Funds has a fundamental policy prohibiting investment of more
than 5% of the Fund's total assets in securities of issuers which (together
with predecessors) have been in operation for less than three

22
<PAGE>

years, with certain caveats. (The limit is 10% for the International Fund, but
with no caveats.) This investment policy was adopted to address requirements
under certain state securities laws that are no longer applicable. Each Board
believes that this investment policy should be eliminated to respond to
regulatory developments. As discussed above, the elimination of this policy is
not expected to involve any change in the manner in which a Fund's assets are
currently invested.

THE BOARD OF DIRECTORS OF EACH OF THE ABOVE FUNDS, AS APPLICABLE, RECOMMENDS
THAT THE SHAREHOLDERS OF EACH SUCH FUND GIVE INSTRUCTIONS TO APPROVE THE
ELIMINATION OF CERTAIN OF THE FUND'S FUNDAMENTAL INVESTMENT POLICIES DISCUSSED
ABOVE

PROPOSAL NO. 6 (ALL FUNDS)
APPROVAL OF ENGAGEMENT OF INDEPENDENT AUDITORS
FOR FISCAL YEARS 1995 THROUGH 1998.

On February 10, 1998, the Boards of Directors of the Funds selected Ernst &
Young LLP to act as independent auditors for the Funds for the 1998 fiscal
year. Unless instructed to the contrary, Lincoln Life intends to vote each
Fund's shares held in Accounts C, D, G and K, respectively, in favor of the
ratification of the engagement of Ernst & Young LLP as independent auditors for
each Fund.

The Funds had previously selected Ernst & Young LLP as their independent
auditors for 1995, 1996 and 1997--years in which no Annual Meeting was held.
All services performed by Ernst & Young LLP are considered to be audit services
and include: examination of annual financial statements; review and
consultation connected with filings of annual reports to stockholders and with
the Securities and Exchange Commission; and consultation about financial
accounting and reporting matters. The selection of Ernst & Young LLP as
independent auditors for the Funds constituted approval by the Boards of
Directors of each of the foregoing audit services, and the Boards of Directors
believe they have no effect on audit independence.

There will not be an Ernst & Young LLP representative at the meeting.

Because of the elimination since 1988 of annual meetings of the Stockholder of
the Funds, stockholder approval of the selection of Ernst &

23
<PAGE>

Young LLP as the Funds' independent auditors was last obtained in April, 1994.
THEREFORE, YOUR RATIFICATION OF ERNST & YOUNG LLP FOR THE 1998 FISCAL YEAR WILL
ALSO CONSTITUTE RATIFICATION OF THEIR SELECTION FOR FISCAL YEARS 1995, 1996 and
1997.

Ernst & Young LLP is also the independent auditor for Lincoln Life. The firm
has no direct or indirect financial interest in the Funds or in Lincoln Life,
nor any connection with the Funds or Lincoln Life in the capacity of promoter,
underwriter, voting trustee, director, officer, or employee.

The Board of Directors recommends that the Shareholders of all the funds give
instructions to approve Ernst & Young LLP as independent auditors for fiscal
years for 1997 and 1998.

OTHER BUSINESS

To the knowledge of the Board of Directors for each Fund, there is no other
business to be brought before the Special Meeting of the Stockholders for each
Fund. However, if other matters do properly come before the meeting, it is the
intention of Lincoln Life to vote each Fund's Account C, D, G and K shares in
accordance with the judgment of the Board of Directors on such matters.

EXECUTIVE OFFICERS OF THE FUNDS

<TABLE>
<CAPTION>
NAME POSITION(S) YEAR FIRST
WITH FUNDS, HELD
PRINCIPAL OCCUPATION AGE POSITION**
- ---------------------------------------------------------------------------------------
<S> <C> <C>
*Kelly D. Clevenger 45 1994
Chairman of the Board,
President and Director
Vice President,
The Lincoln National Life Insurance Company
*Janet C. Whitney 49 1995
Vice President and Treasurer,
Vice President and Treasurer
The Lincoln National Life Insurance Company
*Cynthia A. Rose 43 1995
Secretary
Assistant Secretary,
The Lincoln National Life Insurance Company
</TABLE>

24
<PAGE>

All of the executive officers of the Funds are "interested persons" of the
Funds, as that term is defined by Section 2(a)(19) of the Investment Company
Act of 1940, by reason of their being officers of the Funds and/or the Funds'
principal underwriter.

**DATE ON WHICH INDIVIDUALS BECAME OFFICERS OF THE FUNDS

<TABLE>
<CAPTION>
MR. MS. MS.
FUND CLEVENGER ROSE WHITNEY
<S> <C> <C> <C>
AG 1994 1995 1995
BF 1994 1995 1995
CA 1994 1995 1995
EI 1994 1995 1995
GF 1994 1995 1995
IN 1994 1995 1995
MF 1994 1995 1995
MM 1994 1995 1995
PM 1994 1995 1995
SA 1994 1995 1995
SO 1994 1995 1995
</TABLE>

As officers of Lincoln Life or an affiliate, the executive officers receive no
additional remuneration for their services rendered to the Funds. The
executive officers are elected by the Boards of Directors to serve until their
respective successors are chosen.

INVESTMENT MANAGEMENT SERVICES

The Funds' Investment Advisor is Lincoln Investment Management, Inc. (LIM), a
wholly-owned subsidiary of Lincoln National Corporation. The address for both
companies is 200 E Berry Street, Fort Wayne, Indiana 46802.

The investment management services are rendered pursuant to Advisory
Agreements (the "Agreements"). The agreement for the International Fund, as
amended, dated November 16, 1990, was first submitted to Contract Owners on
April 15, 1992, and was approved. The agreement for the Equity-Income Fund was
submitted to a vote of Contract Owners for the first and only time, on
November 13, 1994.

In its role as Investment Advisor to the Funds, LIM provides investment
management services to the Funds, and continuously provides the Boards of
Directors of the Funds with investment programs for their approval or
rejection. Upon approval of such investment programs by the Boards of

25
<PAGE>

Directors, LIM executes the programs by placing orders for the purchase or sale
of assets of the Funds.

Continuation of the Agreements was last approved in for the Equity-Income and
the International Fund August, 1997 by a vote of each Fund's respective Board
of Directors, including a vote of a majority of Directors who are not parties
to the Agreement, or "interested persons" (as defined in the Investment Company
Act of 1940) of any such party. Each Agreement:

(a) Shall continue in effect from year to year only so long as such
continuance is specifically approved at least annually (1) by the Board
of Directors, or (2) by the affirmative vote of the majority of the
votes which may be cast by all Contract Owners. In addition, the terms
of each agreement and any renewal thereof must be approved by a vote of
a majority of the Directors who are not parties to the Agreement or
interested persons of any such party, cast in person at a meeting called
for the purpose of voting on such approval.

(b) Shall immediately terminate in the event of its assignment. In addition,
it may be terminated by the Fund at any time, on not less than 60 days'
written notice to Lincoln Life without payment of any penalty, by a vote
of the majority of all the Directors, or by Contract Owners casting a
majority of the votes which may be cast by all Contract Owners for that
Fund.

For the International Fund, LIM has plans to execute a sub-advisory agreement
between LIM and Delaware International Advisers Limited. This agreement is
subject to approval by Contract Owners at this meeting.

For the Equity-Income Fund, Inc. there are plans to amend the advisory and sub-
advisory agreements with LIM and Fidelity Management Trust Company ("FMTC").

Under these sub-advisory agreements the respective sub-advisors agree to
perform some or substantially all of the investment management services
required to be performed by LIM. LIM remains primarily responsible to those
Funds for the performance of its duties under the Agreements, and any costs
associated with the sub-advisers' services will be reimbursed by LIM.

26
<PAGE>

DIRECTORS AND PRINCIPAL EXECUTIVE OFFICER OF
LINCOLN INVESTMENT MANAGEMENT, INC.

<TABLE>
<CAPTION>
DIRECTORS' NAMES PRINCIPAL OCCUPATION
- ------------------------------------------------------------------------------
<S> <C>
Dennis A. Blume Vice President
(LIM)
H. Thomas McMeekin President
(LIM)
Janet C. Whitney Vice President and Treasurer
(LNC)
<CAPTION>
PRINCIPAL EXECUTIVE OFFICER
- ---------------------------
<S> <C>
H. Thomas McMeekin President
(LIM)
</TABLE>

The address of each of the above is: 200 East Berry Street, Fort Wayne, Indiana
46802.

STOCKHOLDER PROPOSALS

The Funds' Annual Meetings of the Stockholder for 1995-1997 were eliminated
pursuant to applicable law and the Bylaws of the Funds.

Under authority granted the Directors by the Bylaws of the Funds, and pursuant
to applicable law, Special Meetings are called as required.

Contract Owners desiring to hold their own proxy solicitations in order to
submit proposals in years in which the Annual Meeting has been eliminated may
require that a Special Meeting be called if they can obtain the written request
of Contract Owners indirectly representing certain stipulated percentages of
the outstanding voting securities of the Fund for which solicitation is
desired. More detailed information on these procedures may be obtained from
Fund Management.

THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
LOGO
- ------------------------------------------
Kelly D. Clevenger
Vice President

27
<PAGE>

EXHIBIT A

AMENDMENT
(EFFECTIVE JANUARY 1, 1998)
TO THE
ADVISORY AGREEMENT
(EFFECTIVE DATE SEPTEMBER 23, 1993)
BETWEEN
LINCOLN INVESTMENT MANAGEMENT, INC.
(FORMERLY: LINCOLN NATIONAL
INVESTMENT MANAGEMENT COMPANY)
AND
LINCOLN NATIONAL EQUITY-INCOME FUND, INC.

Paragraph 6 of the Agreement relating to investment management for Lincoln
National Equity-Income Fund, Inc. is hereby amended to substitute the
following sentence for the first sentence of the paragraph:

"The Fund shall pay the Adviser, as full compensation for all services
rendered and all facilities and personnel furnished hereunder, a monthly
fee at the annual rate of .75 of 1% on the first $500 million of the
average daily net asset value of the Fund in each fiscal year, and .70 of
1% for all amounts in excess of $500 million during that fiscal year,
computed in the manner used for the determination of the offering price of
shares of the Fund."

Lincoln Investment Management Company

By: ______________________________________
H. Thomas McMeekin

Lincoln National Equity-Income Fund, Inc.

By: ______________________________________
Kelly D. Clevenger

28
<PAGE>

EXHIBIT B

AMENDMENT
(EFFECTIVE JANUARY 1, 1998)
TO THE
SUB-ADVISORY AGREEMENT
(EFFECTIVE DATE DECEMBER 20, 1993)
BETWEEN
LINCOLN INVESTMENT MANAGEMENT, INC.
(FORMERLY: LINCOLN NATIONAL
INVESTMENT MANAGEMENT COMPANY)
AND
FIDELITY MANAGEMENT TRUST COMPANY

Paragraph 3 of the Agreement relating to Compensation to be paid by The
Advisor to the Sub-Adviser is hereby amended to substitute the following
sentence for the first sentence of the paragraph:

"The Adviser will pay to the Sub-Adviser as compensation for the Sub-
Adviser services rendered and for the expenses borne by the Sub-Adviser
pursuant to Section 1, a fee, computed and paid at the annual rate of: .48
of 1% of the average daily net assets of the Fund."

Lincoln Investment Management
Company

By: ______________________________________
H. Thomas McMeekin

Fidelity Management Trust Company

By: ______________________________________
John P. O'Reilly, Jr.

29
<PAGE>

EXHIBIT C

FORM OF
SUB-ADVISORY AGREEMENT

Sub-Advisory Agreement executed as of , between LINCOLN INVESTMENT
MANAGEMENT, INC., an Illinois corporation (the "Adviser"), and DELAWARE
INTERNATIONAL ADVISERS LIMITED, a company formed under the laws of England
(the "Sub-Adviser").

Witnesseth:

That in consideration of the mutual covenants herein contained, it is agreed
as follows:

1. SERVICES TO BE RENDERED BY SUB-ADVISER TO THE FUND.

(a) Subject always to the control of the Directors of Lincoln National
International Fund, Inc. (the "Fund"), a Maryland corporation, which is an
eligible investment fund for Lincoln National Variable Annuity Account C
and one or more other separate accounts of The Lincoln National Life
Insurance Company (the "Separate Accounts"), the Sub-Adviser, at its
expense, will furnish continuously an investment program for the Fund
which shall at all times meet the diversification requirements of Section
817(h) of the Internal Revenue Code of 1986, as amended (the "Code"). The
Sub-Adviser will make investment decisions on behalf of the Fund and place
all orders for the purchase and sale of portfolio securities. In the
performance of its duties, the Sub-Adviser will comply with the provisions
of the organizational documents and Bylaws of the Fund and the stated
investment objective, policies and restrictions of the Fund, and will use
its best efforts to safeguard and promote the welfare of the Fund, and to
comply with other policies which the Directors or the Adviser, as the case
may be, may from time to time determine. The Sub-Adviser shall make its
officers and employees available to the Adviser from time to time at such
reasonable times as the parties may agree to review investment policies of
the Fund and to consult with the Adviser regarding the investment affairs
of the Fund.

(b) The Sub-Adviser, at its expense, will furnish (i) all necessary investment
and management facilities, including salaries of personnel,

30
<PAGE>

required for it to execute its duties faithfully and (ii) administrative
facilities, including bookkeeping, clerical personnel and equipment
necessary for the efficient conduct of the investment affairs of the Fund
(excluding determination of net asset value per share and shareholder
accounting services).

(c) In the selection of brokers and dealers and the placing of orders for the
purchase and sale of portfolio investments for the Fund, the Sub-Adviser
shall use its best efforts to obtain for the Fund the most favorable price
and execution available, except to the extent it may be permitted to pay
higher brokerage commissions for brokerage and research services as
described below. In using its best efforts to obtain for the Fund the best
execution available, the Sub-Adviser, bearing in mind the Fund's best
interests at all times, shall consider all factors it deems relevant,
including by way of illustration: price; the size of the transaction; the
nature of the market for the security; the amount of the commission; the
timing of the transaction taking into account market prices and trends; the
reputation, experience and financial stability of the broker or dealer
involved; and the quality of service rendered by the broker or dealer in
other transactions. Subject to such policies as the Directors of the Fund
may determine, the Sub-Adviser shall not be deemed to have acted unlawfully
or to have breached any duty created by this Agreement or otherwise solely
by reason of its having caused the Fund to pay a broker or dealer that
provides brokerage and research services to the Sub-Adviser an amount of
commission for effecting a portfolio investment transaction in excess of
the amount of commission another broker or dealer would have charged for
effecting that transaction, if the Sub-Adviser determines in good faith
that such amount of commission was reasonable in relation to the value of
the brokerage and research services provided by such broker or dealer,
viewed in terms of either that particular transaction or the Sub-Adviser's
over-all responsibilities with respect to the Fund and to other clients of
the Sub-Adviser as to which the Sub-Adviser exercises investment
discretion.

(d) The Sub-Adviser shall not be obligated to pay any expenses of or for the
Fund not expressly assumed by the Sub-Adviser pursuant to this Section 1
other than as provided in Section 3.

31
<PAGE>

2. OTHER AGREEMENTS, ETC.

It is understood that any of the shareholders, Directors, officers and
employees of the Fund may be a shareholder, director, officer or employee of,
or be otherwise interested in, the Sub-Adviser, and in any person controlled by
or under common control with the Sub-Adviser; and that the Sub-Adviser and any
person controlled by or under common control with the Sub-Adviser may have an
interest in the Fund or one or more Separate Accounts, or any other investment
vehicle for which the Fund is an eligible investment fund.

3. COMPENSATION TO BE PAID BY THE ADVISER TO THE SUB-ADVISER.

The Adviser will pay to the Sub-Adviser as compensation for the Sub-Adviser's
services rendered and for the expenses borne by the Sub-Adviser pursuant to
Section 1, a fee, computed and paid at the annual rate of 0.50 of 1% of the
first $200 million of average net assets of the Fund, 0.40 of 1% of the next
$200 million of average net assets, and 0.35 of 1% of any excess over $400
million. Such fee shall be paid by the Adviser, and not by the Fund, and
without regard to any reduction in the fees paid by the Fund to the Adviser
under its management contract as a result of any statutory or regulatory
limitation on investment company expenses or voluntary fee reduction assumed by
the Adviser. Such fee shall be payable for each month within 10 business days
after the end of such month.

If the Sub-Adviser shall serve for less than the whole of a month, the
foregoing compensation shall be prorated.

4. ASSIGNMENT TERMINATES THIS AGREEMENT; AMENDMENTS OF THIS AGREEMENT.

This Agreement shall automatically terminate, without the payment of any
penalty, in the event of its assignment or in the event that the investment
advisory contract between the Adviser and the Fund shall have terminated for
any reason; and this Agreement shall not be amended unless such amendment be
approved at a meeting by the affirmative vote of a majority of the outstanding
shares of the Fund and by the vote, cast in person at a meeting called for the
purpose of voting on such approval, of a majority of the Directors of the Fund
who are not interested persons of the Fund or of the Adviser or of the Sub-
Adviser.

32
<PAGE>

5. EFFECTIVE PERIOD AND TERMINATION OF THIS AGREEMENT.

This Agreement shall become effective upon its execution, and shall remain in
full force and effect continuously thereafter (unless terminated automatically
as set forth in Section 4) until terminated as follows:

(a) The Fund may at any time terminate this Agreement by not more than
sixty days' written notice delivered or mailed by registered mail,
postage prepaid, to the Adviser and the Sub-Adviser; or

(b) If (i) the Directors of the Fund or the shareholders by the
affirmative vote of a majority of the outstanding shares of the Fund
and (ii) a majority of the Directors who are not interested persons of
the Fund or of the the Adviser or of the Sub-Adviser, by vote cast in
person at a meeting called for the purpose of voting on such approval,
do not specifically approve at least annually the continuance of this
Agreement, then this Agreement shall automatically terminate at the
close of business on the second anniversary of its execution, or upon
the expiration of one year from the effective date of the last such
continuance, whichever is later; provided, however, that if the
continuance of this Agreement is submitted to the shareholders of the
Fund for their approval and such shareholders fail to approve such
continuance of this Agreement as provided herein, the Sub-Adviser may
continue to serve hereunder in a manner consistent with the Investment
Company Act of 1940 and the Rules and Regulations thereunder; or

(c) The Adviser may at any time terminate this Agreement by not less than
ninety days' written notice delivered or mailed by registered mail,
postage prepaid, to the Sub-Adviser, and the Sub-Adviser may at any
time terminate this Agreement by not less than 90 days' written notice
delivered or mailed by registered mail, postage prepaid, to the
Adviser.

Action by the Fund under (a) above may be taken either (i) by vote of a
majority of its Directors, or (ii) by the affirmative vote of a majority of the
outstanding shares of the Fund.

Termination of this Agreement pursuant to this Section 5 shall be without the
payment of any penalty.

33
<PAGE>

6. CERTAIN INFORMATION.

The Sub-Adviser shall promptly notify the Adviser in writing of the occurrence
of any of the following events:

(a) the Sub-Adviser shall fail to be registered as an investment adviser
under the Investment Advisers Act of 1940, as amended from time to
time, and under the laws of any jurisdiction in which the Sub-Adviser
is required to be registered as an investment adviser in order to
perform its obligations under this Agreement;

(b) the Sub-Adviser shall have been served or otherwise have notice of any
action, suit, proceeding, inquiry or investigation, at law or in
equity, before or by any court, public board or body, involving the
affairs of the Fund;

(c) the ownership of more than 51% of the common stock of the Sub-Adviser
issued and outstanding as of the effective date of this Agreement will
be transferred; and

(d) the Chairman of the Board of Directors or the President of the Sub-
Adviser, or any of the Sub-Adviser's portfolio managers for the Fund
shall have changed.

7. CERTAIN DEFINITIONS.

For the purposes of this Agreement, the "affirmative vote of a majority of the
outstanding shares" means the affirmative vote, at a duly called and held
meeting of shareholders, (a) of the holders of 67% or more of the shares of the
Fund present (in person or by proxy) and entitled to vote at such meeting, if
the holders of more than 50% of the outstanding shares of the Fund entitled to
vote at such meeting are present in person or by proxy, or (b) of the holders
of more than 50% of the outstanding shares of the Fund entitled to vote at such
meeting, whichever is less.

For the purposes of this Agreement, the terms "affiliated person," "control,"
"interested person" and "assignment" shall have their respective meanings
defined in the Investment Company Act of 1940 and the Rules and Regulations
thereunder, subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission under said Act; the term "specifically
approve at least annually" shall be construed in a manner consistent with the
Investment Company Act of 1940 and the Rules and Regulations thereunder; and
the term "brokerage and research services" shall have the meaning given in the
Securities Exchange Act of 1934 and the Rules and Regulations thereunder.

34
<PAGE>

8. NONLIABILITY OF SUB-ADVISER.

In the absence of willful misfeasance, bad faith or gross negligence on the
part of the Sub-Adviser, or reckless disregard of its obligations and duties
hereunder, the Sub-Adviser shall not be subject to any liability to the Fund or
to any shareholder of the Fund, for any act or omission in the course of, or
connected with, the rendering of services hereunder.

Sub-Adviser agrees to indemnify the Adviser, the Separate Accounts and the
Depositor of the Separate Accounts for, and hold them harmless against, any and
all losses, claims, damages, liabilities (including amounts paid in settlement
with the written consent of the Sub-Adviser) or litigation (including legal and
other expenses) to which the Adviser, the Separate Accounts or the Depositor of
the Separate Accounts may become subject under any statute, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements arise as a result of any failure by
the Sub-Adviser, whether unintentional or in good faith or otherwise, to
adequately diversify the investment program of the Fund, pursuant to the
requirements of Section 817(h) of the Code, and the regulations issued
thereunder (including, but not by way of limitation, Reg. Sec. 1.817-5, March
2, 1989, 54 F.R. 8730), relating to the diversification requirements for
separate accounts, endowment, and life insurance contracts.

35
<PAGE>

IN WITNESS WHEREOF, LINCOLN INVESTMENT MANAGEMENT, INC. and DELAWARE
INTERNATIONAL ADVISERS LIMITED have each caused this Instrument to be signed in
duplicate on its behalf by its duly authorized representative, all as of the
day and year first above written.

Lincoln Investment Management, Inc.

By: ______________________________________
Printed Name: ____________________________
Title: ___________________________________

Delaware International Advisers Limited

By: ______________________________________
Printed Name: ____________________________
Title: ___________________________________

Accepted and agreed to as of the day
and year first above written:

Lincoln National International Fund,
Inc.

By: _________________________________
Printed Name: _______________________
Title: ______________________________

36
<PAGE>

EXHIBIT D

Modification of An Investment Restriction in Each of Six Multi Funds to Permit
Purchase of Certain Loan Participation Certificates As Money Market Items

For each Fund listed below, if you approve the change to these restrictions,
this is how they will read (WITH THE BOLDFACE PORTION ADDED). If you do not
approve the change, they will read as is, without the boldface material.

Lincoln National Bond Fund, Inc.: Statement of Additional Information, Page BF-
3:

"The fund may not:
4. Make loans except that it may lend its portfolio securities if such
loans are fully collateralized and such loans of securities do not
exceed 15% of its total assets at any one time. See Investment
policies and techniques in the Prospectus. The purchase of debt
securities (INCLUDING LOAN PARTICIPATION CERTIFICATES) and the entry
into repurchase agreements are not considered the making of loans."

Lincoln National Growth and Income Fund, Inc.: Statement of Additional
Information, Page GF-3:

"The fund may not:
4. Make loans except that it may lend its portfolio securities if such
loans are fully collateralized and such loans of securities do not
exceed one-third of its total assets at any one time. See Investment
policies and techniques in the Prospectus. The purchase of debt
securities (INCLUDING LOAN PARTICIPATION CERTIFICATES) and the entry
into repurchase agreements are not considered the making of loans."

Lincoln National Managed Fund, Inc.: Statement of Additional Information, Page
MF-3:

"The fund may not:

4. Make loans except that it may lend its portfolio securities if such
loans are fully collateralized and such loans of securities do not

37
<PAGE>

exceed 15% of its total assets at any one time. See Investment
policies. The purchase of debt securities (INCLUDING LOAN
PARTICIPATION CERTIFICATES) and the entry into repurchase agreements
are not considered the making of loans."

Lincoln National Money Market Fund, Inc.: Statement of Additional Information,
Page MM-3:

"The fund may not:

3. Make loans except that it may lend its portfolio securities if such
loans are fully collateralized and such loans of securities do not
exceed one-third of its total assets at any one time. See Investment
policies and techniques. The purchase of debt securities (INCLUDING
LOAN PARTICIPATION CERTIFICATES) and the entry into repurchase
agreements are not considered the making of loans."

Lincoln National Social Awareness Fund, Inc.: Statement of Additional
Information, Page SA-3:

"The fund may not:

4. Make loans except that it may lend its portfolio securities if such
loans are fully collateralized and such loans of securities do not
exceed one-third of its total assets at any one time. See Investment
policies and techniques. The purchase of debt securities (INCLUDING
LOAN PARTICIPATION CERTIFICATES) and the entry into repurchase
agreements are not considered the making of loans."

Lincoln National Special Opportunities Fund, Statement of Additional
Information, Page SO-3:

"The fund may not:

3. Make loans except that it may lend its portfolio securities if such loans
are fully collateralized and such loans of securities do not exceed one-
third of its total assets at any one time. See Investment policies and
techniques. The purchase of debt securities (INCLUDING LOAN PARTICIPATION
CERTIFICATES) and the entry into repurchase agreements are not considered
the making of loans."

38
<PAGE>

EXHIBIT E

CURRENT TEXT OF THE FUNDAMENTAL POLICIES THAT IS PROPOSED BY THE BOARD TO BE
ELIMINATED FOR EACH FUND:

Lincoln National Bond Fund--

Invest more than 5% of its total assets in securities of issues which
(together with predecessors) have been in operation for less than
three years. This restriction shall not apply to obligations issued
or guaranteed by the U.S. Government, it's agencies or
instrumentalities.

Invest in interests in oil, gas and other mineral exploration or
development programs, except that the fund may invest in the
securities of companies which invest in or sponsor such programs.

Invest in securities of any issuer if, to the knowledge of the fund,
officers or directors of the fund or its advisor, who individually
own beneficially 0.5% or more of the securities of such issuer,
collectively own beneficially more than 5% of the securities of such
issuer.

Lincoln National Global Asset Allocation Fund--

Invest in securities of any issuer, if, to the knowledge of the fund,
officers and directors of the fund and officers and directors of the
advisor or the sub-advisor who beneficially own more than 0.5% of the
shares of securities of that issuer together own more than 5%.

Buy or sell oil, gas or other mineral leases, rights or royalty
contracts.

Lincoln National Growth and Income Fund--

Invest more than 5% of its total assets in securities of issuers
which, together with predecessors, have been in operation for less
than three years. This restriction shall not apply to obligations
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities.

Invest in interests in oil, gas and other mineral exploration or
development programs, except that the fund may invest in the
securities of companies which invest in or sponsor such programs.

39
<PAGE>

Invest in securities of any issuer if, to the knowledge of the fund,
officers or directors of the fund or its advisor, who individually
beneficially own 1/2 of 1% or more of the securities of that issuer,
collectively beneficially own more than 5% of the securities of that
issuer.

Lincoln National International Fund--

Invest in interests in oil, gas and other mineral exploration or
development programs, except that the fund may invest in the
securities of companies which invest in or sponsor such programs.

Invest more than 10% of its total assets in issues of companies which
have been in operation for less than three years.

Lincoln National Managed Fund--

Invest more than 5% of its total assets in securities of issuers
which (together with predecessors) have been in operation for less
than three years. This restriction shall not apply to obligations
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities.

Invest in interests in oil, gas and other mineral exploration or
development programs, except that the fund may invest in the
securities of companies which invest in or sponsor such programs.

Lincoln National Money Market Fund--

Invest more than 5% of its total assets in securities of issuers
which, together with their predecessors, have been in operation for
less than three years. This restriction shall not apply to

40
<PAGE>

obligations issued or guaranteed by the U.S. Government, its agencies
or instrumentalities.

Invest in interests in oil, gas and other mineral exploration or
development programs, except that the fund may invest in the
securities of companies which invest in or sponsor such programs.

Invest in securities of any issuer if, to the knowledge of the fund,
officers or directors of the fund or its investment advisor, who
individually own beneficially 0.5% or more of the securities of such
issuer, collectively own beneficially more than 5% of the securities
of such issuer.

Lincoln National Social Awareness Fund--

Invest in interests in oil, gas and other mineral exploration or
development programs, except that the fund may invest in the
securities of companies which invest in or sponsor such programs.

Lincoln National Special Opportunities Fund--

Invest in interests in oil, gas and other mineral exploration or
development programs, except that the fund may invest in the
securities of companies which invest in or sponsor such programs.

41
<PAGE>

THESE INSTRUCTIONS ARE SOLICITED ON BEHALF OF THE LINCOLN NATIONAL LIFE
INSURANCE COMPANY (THE "COMPANY")

I, the undersigned, hereby direct the Company to cast, as designated below, all
the votes attributable to the Company's variable annuity contract which I own,
at the Special Meetings of the Stockholders of Lincoln National Aggressive
Growth Fund, Inc., Lincoln National Bond Fund, Inc., Lincoln National Capital
Appreciation Fund, Inc., Lincoln National Equity-Income Fund, Inc., Lincoln
National Global Asset Allocation Fund, Inc., Lincoln National Growth and Income
Fund, Inc., Lincoln National International Fund, Inc., Lincoln National Managed
Fund, Inc., Lincoln National Money Market Fund, Inc., Lincoln National Social
Awareness Fund, Inc., and Lincoln National Special Opportunities Fund, Inc., to
be held on April 13, 1998 or any adjournment thereof:

1. Election of Directors:
FOR ALL EXCEPT
AGGRESSIVE GROWTH FUND: FOR ALL AS MARKED BELOW WITHHOLD ALL
[ ] [ ] [ ]