[VANTAGE INVESTMENT ADVISORS]
Lincoln National
Growth and Income Fund, Inc.
Annual Report
December 31, 1999
<PAGE>
Lincoln National Growth and Income Fund, Inc.
Index
Commentary
Statement of Net Assets
Statement of Operations
Statements of Changes in Net Assets
Financial Highlights
Notes to Financial Statements
Report of Ernst & Young LLP, Independent Auditors
<PAGE>
Lincoln National
Growth and Income Fund, Inc.
Managed by: [VANTAGE INVESTMENT ADVISORS]
Fear of Y2K did not seem to put a damper on investor enthusiasm in 1999 as
stocks were higher across the board. The NASDAQ led the way delivering an
astonishing 86% for the year. While there was some breadth in the market as
large and small stocks delivered roughly equal returns, the market continues to
heavily favor growth stocks as opposed to those with more attractive current
valuations.
The Growth and Income Fund performed well versus other growth & income funds,
delivering 17.6% for the year, in a consistent, risk-controlled, core equity
exposure. The disparity between growth companies and value companies was wider
in 1999 than in any previous year. Given the market's concentration on
high-flying, growth companies, the Fund trailed the S&P 500's* return of 21.1%
for the year, as the fund's more conservative value oriented approach did not
keep pace. As the market returns to reward fundamentally attractive companies,
the Fund should perform well.
Enrique Chang Christopher Harvey
Growth of $10,000 invested 1/1/90 through 12/31/99
1/1/90 12/31/99
Growth and Income Fund $10,000 $46,985
S&P 500 Index $10,000 $70,087
This chart illustrates, hypothetically, that $10,000 was invested in the Growth
and Income Fund on 1/1/90. As the chart shows, by December 31, 1999, the value
of the investment at net asset value, with any dividends and capital gains
reinvested, would have grown to $46,985. For comparison, look at how the S&P 500
Index did over the same period. With dividends and capital gains, if any,
reinvested, the same $10,000 investment would have grown to $70,087. Past
performance is not indicative of future performance. Remember, an investor
cannot invest directly in an index.
Average annual return Ended
on investments 12/31/99
- ---------------------------------------------
One Year +17.55%
- ---------------------------------------------
Five Years +25.01%
- ---------------------------------------------
Ten Years +16.73%
- ---------------------------------------------
* Standard & Poor's 500 Index - Broad based measurement of changes in stock
market conditions based on average performance of 500 widely held common
stocks. An investor cannot invest directly in the above index/indexes, which
is/are unmanaged.
Growth and Income Fund 1
<PAGE>
Lincoln National
Growth and Income Fund, Inc.
Statement of Net Assets
December 31, 1999
Investments:
Number Market
Common Stock: of Shares Value
- -----------------------------------------------------------------------------
Aerospace & Defense: 2.4%
- -----------------------------------------------------------------------------
General Dynamics 703,300 $37,099,075
Honeywell International 475,687 27,441,194
United Technologies 757,000 49,205,000
- -----------------------------------------------------------------------------
113,745,269
Automobiles & Auto Parts: 1.8%
- -----------------------------------------------------------------------------
Autonation* 727,800 6,732,150
Ford Motor 831,800 44,449,313
Hertz Class A 95,100 4,766,888
Navistar International* 592,900 28,088,638
- -----------------------------------------------------------------------------
84,036,989
Banking, Finance & Insurance: 12.7%
- -----------------------------------------------------------------------------
Allstate 689,058 16,537,392
Ambac Financial Group 155,500 8,115,156
American International Group 488,125 52,778,516
Associates First Capital Class A 442,202 12,132,917
Astoria Financial 67,700 2,066,966
Bank of America 548,900 27,547,919
Bank One 914,627 29,325,228
Chase Manhattan 716,300 55,647,556
Citigroup 1,542,098 85,682,820
Comerica 425,050 19,844,522
Conseco 1,259,200 22,508,200
Dime Bancorp 681,800 10,312,225
Donaldson Lufkin & Jenrette 224,200 10,845,675
Federal Home Loan Bank 145,400 6,842,888
Federal National Mortgage Association 60,000 3,746,250
Firstar 188,000 3,971,500
Fleet Boston Financial 993,830 34,597,707
Goldman Sachs Group 73,700 6,941,619
Lehman Brothers Holdings 181,300 15,353,844
Marsh & McLennan 495,900 47,451,431
MBIA 236,400 12,484,875
Metris 142,238 5,076,119
Morgan (J.P.) 232,900 29,490,963
Paine Webber Group 735,850 28,560,178
SLM Holding 609,650 25,757,713
UnionBanCal 239,000 9,425,563
Washington Mutual 742,560 19,306,560
- -----------------------------------------------------------------------------
602,352,302
Building & Materials: 0.4%
- -----------------------------------------------------------------------------
American Standard* 116,800 5,358,200
USG 249,300 11,748,263
Vulcan Materials 39,900 1,593,506
- -----------------------------------------------------------------------------
18,699,969
Cable, Media & Publishing: 3.7%
- -----------------------------------------------------------------------------
CBS* 194,300 12,423,056
Donnelley & Sons 417,400 10,356,738
Gannett 499,500 40,740,469
Knight-Ridder 453,500 26,983,250
McGraw-Hill 335,500 20,675,188
New York Times 643,600 31,616,850
Omnicom Group 124,800 12,480,000
Reynolds & Reynolds Class A 433,200 9,747,000
R.H. Donnelley* 106,080 2,002,260
Valassis Communications* 126,150 5,329,838
- -----------------------------------------------------------------------------
172,354,649
Chemicals: 1.4%
- -----------------------------------------------------------------------------
Arch Chemicals 82,350 1,724,203
Cytec Industries* 169,100 3,910,438
Dow Chemical 362,000 48,372,250
FMC* 90,000 5,158,125
Lubrizol 218,700 6,752,363
- -----------------------------------------------------------------------------
65,917,379
Number Market
Computers & Technology: 20.7% of Shares Value
- -----------------------------------------------------------------------------
Adaptec* 226,300 $ 11,279,641
American Power Conversion* 532,400 14,025,413
Apple Computer* 512,700 52,695,947
BMC Software* 252,800 20,200,300
Cisco Systems* 1,246,400 133,481,650
Computer Associates International 635,400 44,438,288
Compuware* 404,900 15,069,872
Dell Computer* 1,153,940 58,814,879
Deluxe 145,900 4,003,131
Electronics Arts* 106,800 8,977,875
International Business Machines 656,800 70,934,400
Lexmark International Group Class A* 599,200 54,227,600
Mercury Interactive* 150,900 16,292,484
Microsoft* 2,117,100 247,105,266
Oracle* 910,950 102,054,867
Siebel Systems* 100,200 8,429,325
Sun Microsystems* 1,057,600 81,864,850
Symantec* 415,200 24,380,025
Unisys* 131,600 4,202,975
Whittman-Hart* 89,000 4,775,406
- -----------------------------------------------------------------------------
977,254,194
Consumer Products: 2.7%
- -----------------------------------------------------------------------------
Avon Products 169,600 5,596,800
Clorox 828,600 41,740,725
Fortune Brands 126,100 4,169,181
Kimberly-Clark 267,800 17,473,950
Minnesota Mining & Manufacturing 70,300 6,880,613
Procter & Gamble 462,300 50,650,744
Tupperware 94,600 1,602,288
- -----------------------------------------------------------------------------
128,114,301
Electronics & Electrical Equipment: 6.8%
- -----------------------------------------------------------------------------
Applied Materials* 60,400 7,650,038
General Electric 1,189,000 183,997,750
Intel 1,186,000 97,585,563
Johnson Controls 81,400 4,629,625
Motorola 148,800 21,910,800
Texas Instruments 64,400 6,238,750
- -----------------------------------------------------------------------------
322,012,526
Energy: 6.7%
- -----------------------------------------------------------------------------
Apache 67,800 2,504,363
Ashland 85,700 2,822,744
Atlantic Richfield 238,500 20,630,250
Coastal 344,600 12,211,763
Conoco Class A 316,800 7,840,800
Enron 328,000 14,555,000
Exxon Mobil 1,283,500 103,401,969
Kerr-McGee 193,516 11,997,992
Occidental Petroleum 1,327,400 28,705,025
Phillips Petroleum 239,400 11,251,800
Royal Dutch Petroleum 680,400 41,121,675
Texaco 644,400 34,998,975
USX-Marathon Group 904,900 22,339,719
- -----------------------------------------------------------------------------
314,382,075
Food, Beverage & Tobacco: 4.4%
- -----------------------------------------------------------------------------
CKE Restaurants 888,570 5,220,349
Coca Cola 741,000 43,163,250
ConAgra 309,600 6,985,350
General Mills 913,600 32,661,200
Heinz (H.J.) 723,550 28,806,334
IBP 102,000 1,836,000
Philip Morris 1,599,900 37,097,681
Quaker Oats 654,400 42,945,000
R.J. Reynolds Tobacco Holdings 161,500 2,846,438
Universal Foods 285,200 5,810,950
- -----------------------------------------------------------------------------
207,372,552
Healthcare & Pharmaceuticals: 10.8%
- -----------------------------------------------------------------------------
Allergan 128,200 6,377,950
Amgen* 1,359,400 81,606,481
Baxter International 164,200 10,313,813
Boston Scientific* 208,900 4,569,688
Bristol-Myers Squibb 846,800 54,353,975
Genzyme* 68,400 3,073,725
Johnson & Johnson 383,200 35,685,500
Lilly (Eli) 353,500 23,507,750
Growth and Income Fund 2
<PAGE>
Number Market
of Shares Value
- -----------------------------------------------------------------------------
Lincare Holdings* 681,600 $ 23,664,300
Medtronic 1,142,434 41,627,439
Merck & Company 1,016,600 68,175,738
Oxford Health Plans* 83,900 1,067,103
Pfizer 1,256,100 40,744,744
Schering-Plough 1,389,800 58,632,188
Tyco International 1,366,800 53,134,350
- -----------------------------------------------------------------------------
506,534,744
Industrial Machinery: 0.5%
- -----------------------------------------------------------------------------
Ingersoll-Rand 459,800 25,317,738
- -----------------------------------------------------------------------------
Leisure, Lodging & Entertainment: 0.7%
- -----------------------------------------------------------------------------
Carnival Cruise Lines 440,200 21,047,063
Eastman Kodak 163,800 10,851,750
- -----------------------------------------------------------------------------
31,898,813
Paper & Forest Products: 0.8%
- -----------------------------------------------------------------------------
Avery Dennison 66,900 4,875,338
Georgia-Pacific 93,800 4,760,350
Temple-Inland 64,200 4,233,188
Weyerhaeuser 331,900 23,834,569
- -----------------------------------------------------------------------------
37,703,445
Retail: 6.0%
- -----------------------------------------------------------------------------
American Eagle Outfitters* 54,000 2,430,000
Best Buy* 295,100 14,810,331
CDW Computer Centers* 29,600 2,326,375
Federated Department Stores* 53,400 2,700,038
Gap 848,305 39,022,030
Home Depot 238,950 16,383,009
Jostens 57,100 1,388,243
Lowe's Companies 243,000 14,519,250
Ross Stores 1,335,600 24,124,274
Safeway* 798,200 28,385,987
Sherwin-Williams 140,400 2,948,400
Staples* 1,089,225 22,533,341
TJX 1,206,100 24,649,668
Wal-Mart Stores 1,180,000 81,567,500
Williams-Sonoma* 82,400 3,790,400
- -----------------------------------------------------------------------------
281,578,846
Telecommunications: 13.2%
- -----------------------------------------------------------------------------
AT & T 1,372,950 69,677,212
Bell Atlantic 933,312 57,457,020
BellSouth 1,147,200 53,703,300
Corning 232,100 29,926,393
General Instrument* 814,500 69,232,500
GTE 788,700 55,652,643
Lucent Technologies 1,239,700 92,745,055
MCI Worldcom* 180,150 9,553,580
SBC Communications 1,548,723 75,500,245
Tellabs* 834,500 53,538,390
U.S. West 781,300 56,253,600
- -----------------------------------------------------------------------------
623,239,938
Textiles, Apparel & Furniture: 0.7%
- -----------------------------------------------------------------------------
Miller (Herman) 375,200 8,617,874
Tommy Hilfiger* 962,800 22,445,274
- -----------------------------------------------------------------------------
31,063,148
Transportation & Shipping: 0.8%
- -----------------------------------------------------------------------------
Alaska Air Group* 272,000 9,554,000
Canadian National Railway 700,000 18,418,750
Continental Airlines Class B* 220,700 9,793,562
- -----------------------------------------------------------------------------
37,766,312
Utilities: 1.8%
- -----------------------------------------------------------------------------
Energy East 1,050,800 21,869,774
General Public Utilities 657,150 19,673,427
Public Service Enterprise Group 227,000 7,902,437
Texas Utilities 569,700 20,259,955
Unicom 412,800 13,828,800
- -----------------------------------------------------------------------------
83,534,393
Total Common Stock: 99.0%
(Cost $2,656,425,677) 4,664,879,582
- -----------------------------------------------------------------------------
Par Market
Money Market Instruments: Amount Value
- -----------------------------------------------------------------------------
American Honda Finance
5.94%, 1/24/00 $6,400,000 $ 6,400,000
Associates Corp North America
4.00%, 1/3/00 6,600,000 6,600,000
Corporate Asset Funding
6.06%, 1/27/00 6,700,000 6,670,967
Moat Funding
6.36%, 1/14/00 4,000,000 3,990,871
6.77%, 1/12/00 11,000,000 10,977,380
Salomon Smith Barney Holdings
6.03%, 1/19/00 6,000,000 5,982,060
- -----------------------------------------------------------------------------
Total Money Market Instruments: 0.9%
(Cost $40,621,278) 40,621,278
- -----------------------------------------------------------------------------
Total Investments: 99.9%
(Cost $2,697,046,955) 4,705,500,860
- -----------------------------------------------------------------------------
Other Assets Over Liabilities: 0.1% 4,185,970
- -----------------------------------------------------------------------------
Net Assets: 100.0%
(Equivalent to $51.710 per share
based on 91,079,006 shares
issued and outstanding) $4,709,686,830
- -----------------------------------------------------------------------------
Components of Net Assets at December 31, 1999:
Common Stock, par value $.01 per share,
150,000,000 authorized shares $910,790
Paid in capital in excess of par value
of shares issued 2,376,749,908
Undistributed net investment income 6,497,415
Accumulated net realized gain on investments 317,074,812
Net unrealized appreciation of investments 2,008,453,905
- -----------------------------------------------------------------------------
Total Net Assets $4,709,686,830
- -----------------------------------------------------------------------------
* Non-income producing security. See accompanying notes to financial statements.
Growth and Income Fund 3
<PAGE>
Lincoln National Growth and Income Fund, Inc.
Statement of Operations
Year ended December 31, 1999
Investment income:
Dividends $ 59,401,539
- ------------------------------------------------------------------------------
Interest 3,166,385
- ------------------------------------------------------------------------------
Total investment income 62,567,924
- ------------------------------------------------------------------------------
Expenses:
Management fees 13,910,486
- ------------------------------------------------------------------------------
Accounting fees 1,407,732
- ------------------------------------------------------------------------------
Printing and postage 270,464
- ------------------------------------------------------------------------------
Legal fees 88,579
- ------------------------------------------------------------------------------
Custody fees 30,515
- ------------------------------------------------------------------------------
Directors fees 4,200
- ------------------------------------------------------------------------------
Other 108,492
- ------------------------------------------------------------------------------
15,820,468
- ------------------------------------------------------------------------------
Less expenses paid indirectly (7,080)
- ------------------------------------------------------------------------------
Total expenses 15,813,388
- ------------------------------------------------------------------------------
Net investment income 46,754,536
- ------------------------------------------------------------------------------
Net realized and unrealized gain on investments:
Net realized gain on investment transactions 273,402,762
- ------------------------------------------------------------------------------
Net change in unrealized
appreciation/depreciation of investments 403,783,094
- ------------------------------------------------------------------------------
Net realized and unrealized gain on investments 677,185,856
- ------------------------------------------------------------------------------
Net increase in net assets resulting from operations $723,940,392
- ------------------------------------------------------------------------------
Statements of Changes in Net Assets
Year ended Year ended
12/31/99 12/31/98
-------------------------------
Changes from operations:
Net investment income $ 46,754,536 $ 55,631,441
- --------------------------------------------------------------------------------
Net realized gain on investment transactions 273,402,762 223,707,077
- --------------------------------------------------------------------------------
Net change in unrealized appreciation/
depreciation of investments 403,783,094 434,405,732
- --------------------------------------------------------------------------------
Net increase in net assets
resulting from operations 723,940,392 713,744,250
- --------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income (45,733,824) (101,986,260)
- --------------------------------------------------------------------------------
Net realized gain on investment transactions (177,205,883) (209,728,724)
- --------------------------------------------------------------------------------
Total distributions to shareholders (222,939,707) (311,714,984)
- --------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from capital share transactions (54,871,056) 320,665,790
- --------------------------------------------------------------------------------
Total increase in net assets 446,129,629 722,695,056
- --------------------------------------------------------------------------------
Net Assets, at beginning of year 4,263,557,201 3,540,862,145
- --------------------------------------------------------------------------------
Net Assets, at end of year $4,709,686,830 $4,263,557,201
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
Growth and Income Fund 4
<PAGE>
Lincoln National Growth and Income Fund, Inc.
Financial Highlights
(Selected data for each capital share outstanding throughout the year)
<TABLE>
<CAPTION>
Year ended December 31,
1999 1998 1997 1996 1995
--------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $46.288 $41.949 $33.110 $29.756 $23.297
Income from investment operations:
Net investment income 0.509 0.607 0.649 0.683 0.701
Net realized and unrealized gain
on investments 7.356 7.371 9.331 4.943 7.680
--------------------------------------------------------
Total from investment operations 7.865 7.978 9.980 5.626 8.381
--------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income (0.497) (1.164) - (0.683) (0.701)
Distributions from net realized gain on
investment transactions (1.946) (2.475) (1.141) (1.589) (1.221)
--------------------------------------------------------
Total dividends and distributions (2.443) (3.639) (1.141) (2.272) (1.922)
--------------------------------------------------------
Net asset value, end of year $51.710 $46.288 $41.949 $33.110 $29.756
--------------------------------------------------------
Total Return(1) 17.55% 20.33% 30.93% 18.76% 38.81%
Ratios and supplemental data:
Ratio of expenses to average net assets 0.36% 0.35% 0.35% 0.36% 0.35%
Ratio of net investment income
to average net assets 1.05% 1.44% 1.79% 2.23% 2.64%
Portfolio Turnover 15.91% 33.55% 32.09% 46.70% 51.76%
Net assets, end of year (000 omitted) $4,709,687 $4,263,557 $3,540,862 $2,465,224 $1,833,450
</TABLE>
(1) Total return percentages in this table are calculated on the basis
prescribed by the Securities and Exchange Commission. These percentages are
based on the underlying mutual fund shares. The total return percentages in
the table are NOT calculated on the same basis as the performance
percentages in the letter at the front of this booklet (those percentages
are based upon the change in unit value).
See accompanying notes to financial statements.
Growth and Income Fund 5
<PAGE>
Lincoln National Growth and Income Fund, Inc.
Notes to Financial Statements
December 31, 1999
The Fund: Lincoln National Growth and Income Fund, Inc. (the "Fund") is
registered as an open-end, diversified management investment company under the
Investment Company Act of 1940, as amended. The Fund's shares are sold only to
The Lincoln National Life Insurance Company and Lincoln Life & Annuity Company
of New York (the "Companies") for allocation to their variable annuity products
and variable universal life products.
The Fund's investment objective is to maximize long-term capital appreciation.
The Fund buys stocks of established companies.
1. Significant Accounting Policies
Security Valuation: All equity securities are valued at the last quoted sales
price as of the close of the New York Stock Exchange (NYSE) on valuation date.
If on a particular day an equity security does not trade, then the mean between
the bid and asked prices will be used. Other securities and assets for which
market quotations are not readily available are valued at fair value as
determined in good faith by or under the direction of the Fund's Board of
Directors. Money market instruments having less than 60 days to maturity are
stated at amortized cost, which approximates market value.
Investment Transactions and Investment Income: Investment transactions are
accounted for on the trade date. Dividend income is recorded on the ex-dividend
date and interest income is recorded on the accrual basis and includes
amortization of any premium and discount. Realized gains or losses from
investment transactions are reported on an identified cost basis.
Use of Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of increases and decreases in net assets
from operations during the reporting period. Actual results could differ from
those estimates.
Expenses: The custodian bank of the Fund has agreed to waive custodial fees when
the Fund maintains a prescribed amount of cash on deposit in certain
non-interest bearing accounts. For the year ended December 31, 1999, the
custodial fees offset arrangements amounted to $7,080.
Taxes: The Fund has complied with the special provisions of the Internal Revenue
Code for regulated investment companies. As such, the Fund is not subject to
U.S. federal income taxes to the extent that it distributes all of its taxable
income for its fiscal year.
2. Management Fees and Other Transactions With Affiliates
Lincoln Investment Management Company (the "Advisor") and its affiliates manage
the Fund's investment portfolio and maintain its accounts and records. For these
services, the Advisor receives a management fee at an annual rate of .48% of the
first $200,000,000 of the average daily net assets of the Fund, .40% of the next
$200,000,000, and .30% of the average daily net assets of the Fund in excess of
$400,000,000. The sub-advisor, Vantage Investment Advisors, an affiliate of the
Advisor, is paid directly by the Advisor.
Delaware Service Company ("Delaware"), an affiliate of the Advisor, provides
accounting services and other administration support to the Fund. For these
services, the Fund pays Delaware a monthly fee based on average net assets,
subject to certain minimums.
If the aggregate annual expenses of the Fund, including the management fee, but
excluding taxes, interest, brokerage commissions relating to the purchase or
sale of portfolio securities and extraordinary non-recurring expenses, exceed
1.50% of the average daily net assets of the Fund, the Advisor will reimburse
the Fund in the amount of such excess. No reimbursement was due for the year
ended December 31 1999.
Certain officers and directors of the Fund are also officers or directors of the
Companies and receive no compensation from the Fund. The compensation of
unaffiliated directors of the Fund is borne by the Fund.
Growth and Income Fund 6
<PAGE>
Notes to Financial Statements - (Continued)
3. Investments
The cost of investments for federal income tax purposes approximates cost for
book purposes. The aggregate cost of investments purchased and the aggregate
proceeds from investments sold for the year ended December 31, 1999 and the
aggregate gross unrealized appreciation, the aggregate gross unrealized
depreciation and the net unrealized appreciation at December 31, 1999 are as
follows:
Aggregate Aggregate Gross Gross Net
Cost of Proceeds Unrealized Unrealized Unrealized
Purchases From Sales Appreciation Depreciation Appreciation
- -------------------------------------------------------------------------------
$696,137,899 $899,686,124 $2,162,603,613 $(154,149,708) $2,008,453,905
4. Summary of Changes From Capital Share Transactions
<TABLE>
<CAPTION>
Shares Issued Upon Net Increase (Decrease)
Capital Reinvestment of Capital Shares Resulting From Capital
Shares Sold Dividends Redeemed Share Transactions
---------------------------------------------------------------------------------------------------------
Shares Amount Shares Amount Shares Amount Shares Amount
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Year ended
December 31, 1999: 1,183,242 $ 56,313,347 4,726,164 $222,939,708 (6,939,216) $(334,124,111) (1,029,810) $(54,871,056)
Year ended
December 31, 1998: 4,341,760 183,305,236 7,672,147 311,714,984 (4,314,813) (174,354,430) 7,699,094 320,665,790
</TABLE>
5. Distributions to Shareholders
The Fund declares and distributes dividends from net investment income, if any,
semi-annually. Distributions of net realized gains, if any, are declared and
distributed annually.
Growth and Income Fund 7
<PAGE>
Lincoln National Growth and Income Fund, Inc.
Report of Ernst & Young LLP, Independent Auditors
To the Shareholders and Board of Directors
Lincoln National Growth and Income Fund, Inc.
We have audited the accompanying statement of net assets of Lincoln National
Growth and Income Fund, Inc. (the "Fund") as of December 31, 1999, and the
related statement of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the five years in the period then ended.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of December 31, 1999, by correspondence with
the Fund's custodian and brokers. 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
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Lincoln National Growth and Income Fund, Inc. at December 31, 1999, the results
of its operations for the year then ended, the changes in its net assets for
each of the two years in the period then ended, and its financial highlights for
each of the five years in the period then ended, in conformity with accounting
principles generally accepted in the United States.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
February 4, 2000
Growth and Income Fund 8
