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Next: LINCOLN NATIONAL VARIABLE ANNUITY ACCOUNT C, 485BPOS, 2000-04-20 |
As filed with the Securities and Exchange Commission on April 20, 2000
Registration No. 333-50817
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 5
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 34
LINCOLN NATIONAL VARIABLE ANNUITY
ACCOUNT C (eAnnuity)
(Exact Name of Registrant)
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
(Name of Depositor)
1300 South Clinton Street
Fort Wayne, Indiana 46802
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code: (219)455-2000
Elizabeth A. Frederick, Esquire
The Lincoln National Life Insurance Company
1300 S. Clinton Street
Post Office Box 1110
Fort Wayne, Indiana 46802
Telephone No. (219)455-2000
(Name and Address of Agent for Service)
Copies of all communications to:
Brian M. Burke, Esquire
The Lincoln National Life Insurance Company
1300 S. Clinton Street
Post Office Box 1110
Fort Wayne, Indiana 46802
It is proposed that this filing will become effective on May 1, 2000 pursuant to paragraph (b) of Rule 485.
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eAnnuity Lincoln National Variable Annuity Account C Individual Variable Annuity Contracts |
p r o s p e c t u s
eAnnuity
Lincoln National Variable Annuity Account C
individual variable annuity contracts
issued by:
Lincoln National Life Insurance Co.
1300 South Clinton Street
Fort Wayne, Indiana 46802
www.lincolnlife.com
Servicing Office:
Lincoln Financial Direct
P.O. Box 691
Leesburg, VA 20178
This prospectus describes an individual flexible premium deferred variable annuity contract (Contract) issued by The Lincoln National Life Insurance Company (Lincoln Life). This Contract may be sold under different names. Most transactions involving this Contract may be performed through Lincoln Life's Internet Service Center.
The Contract described in this prospectus is offered for both traditional and Roth individual retirement annuities (IRAs) and as a nonqualified Contract. A nonqualified Contract can be owned jointly only by spouses and is purchased with after-tax money.
The Contract offers you the accumulation of Contract Value and payment of periodic annuity benefits. These benefits are paid on a variable basis. Annuity benefits start at the Annuity Commencement Date which you select. If the Contractowner dies before the Annuity Commencement Date, the Contract Value will be paid to the Beneficiary. (See DEATH BENEFIT BEFORE THE ANNUITY COMMENCEMENT DATE.)
The minimum initial Purchase Payment for the Contract is $1,000. The minimum payment to the Contract, after the initial Purchase Payment, is $100 per payment. Lincoln Life reserves the right to limit the sum of Purchase Payments made under this Contract to $5,000,000.
All Purchase Payments will be placed in Lincoln National Variable Annuity Account C (Variable Annuity Account [VAA]). The VAA is a segregated investment account of Lincoln Life, which is the depositor. Based upon your instructions, the VAA invests Purchase Payments (at net asset value) in specified funds. Both the value of a Contract before the Annuity Commencement Date and the amount of payouts afterward will depend upon the investment performance of the fund(s) you selected. Investments in these funds are neither insured nor guaranteed by the U.S. Government or by any other person or entity.
This prospectus details the information regarding the VAA that you should know before investing. You should read it carefully and it will remain available through Lincoln Life's Internet Service Center. We have also attached current prospectuses for each of the funds available through the Contract as follows:
American Century Variable Portfolios, Inc.
VP International
Baron Capital Asset Fund Trust (Insurance Class)
Delaware Group Premium Fund
Delaware PremiumGlobal Bond Series Standard Class
Delaware PremiumGrowth and Income Series Standard Class
Delaware PremiumTrend Series Standard Class
Deutsche Asset Management VIT Funds, formerly BT Insurance Funds Trust
Equity 500 Index Fund
Small Cap Index Fund
Janus Aspen Series, Worldwide Growth Portfolio (Institutional shares)
Lincoln National Bond Fund, Inc.
Lincoln National Capital Appreciation Fund, Inc.
Lincoln National Equity-Income 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.
Neuberger Berman Advisers Management Trust Portfolios
AMT Partners Portfolio
AMT MidCap Growth Portfolio
You should read each of these prospectuses carefully before purchasing a Contract and save them for future reference.
A Statement of Additional Information (SAI), dated the same date as this prospectus, concerning the VAA has been filed with the SEC and is incorporated by reference into this prospectus. A table of contents for the SAI appears on the last page of this prospectus. A free copy of the SAI is available upon e-mail request through our Internet Service Center ([email protected]). The SAI is also available through the SEC website (http://www.sec.gov). In addition, the material incorporated by reference and other information regarding registrants who file electronically with the SEC is available through the SEC website.
These securities have not been approved or disapproved by the Securities and Exchange Commission (SEC) nor has the SEC passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.
May 1, 2000.
Table of contents
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Page |
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Special terms | 2 | |
Expense tables | 3 | |
Summary | 6 | |
Condensed financial information | 8 | |
Investment results | 11 | |
Financial statements | 11 | |
Lincoln National Life Insurance Co. | 11 | |
Variable annuity account (VAA) | 11 | |
Investments of the variable annuity account | 11 | |
Charges and other deductions | 14 | |
The Contract | 15 | |
Annuity payouts | 18 | |
Federal tax matters | 19 | |
Voting rights | 22 | |
Distribution of the Contracts | 23 | |
Return privilege | 23 | |
State regulation | 23 | |
Records and reports | 23 | |
Other information | 23 | |
Advertisements/sales literature | 24 | |
Legal proceedings | 24 | |
Special Terms
Account or Variable Annuity Account (VAA) The segregated investment account, Account C, into which Lincoln Life sets aside and invests the assets for the Contract offered in this prospectus.
Accumulation Unit A measure used to calculate Contract Value before the Annuity Commencement Date.
Annuitant The person upon whose life the annuity benefit payments made after the Annuity Commencement Date will be based.
Annuity Commencement Date The Valuation Date when the funds are withdrawn or converted into Annuity Units for payment of annuity benefits under the Annuity Payout Option selected. For purposes of determining whether an event occurs before or after the Annuity Commencement Date, the Annuity Commencement Date is deemed to begin at close of business on the Valuation Date.
Annuity Payout Option An optional form of payout of the annuity available under the Contract.
Annuity Payout An amount paid at regular intervals after the Annuity Commencement Date under one of several options available to the Annuitant and/or any other payee. The amount paid may vary.
Annuity Unit A measure used to calculate the amount of Annuity Payouts after the Annuity Commencement Date.
Beneficiary The person whom you designate to receive the Death Benefit, if any, in case of the Contractowner's death.
Contract (variable annuity contract) The agreement between you and us providing a variable annuity.
Contractowner (you, your, owner) The person who has the ability to exercise the rights under the Contract (decides on investment allocations, transfers, payout option, designates the Beneficiary, etc.). Usually, but not always, the owner is also the Annuitant.
Contract Value At a given time before the Annuity Commencement Date, the total value of all Accumulation Units for a Contract.
Contract Year Each one-year period starting with the effective date of the Contract and starting with each Contract anniversary after that.
Death Benefit The amount payable to the Owner's designated Beneficiary if the Owner dies before the Annuity Commencement Date.
Internet Service Center The Internet site that Lincoln Life maintains to provide variable annuity contract documents and information to current and prospective annuity Contractowners and through which various transactions may be performed. Certain of these transactions may require faxed or mailed signatures.
Lincoln Life (we, us, our) The Lincoln National Life Insurance Co.
Purchase Payments Amounts paid into the Contract.
Subaccount That portion of the VAA that reflects investments in Accumulation and Annuity Units of a class of a particular fund. A Subaccount corresponds to each fund.
Surrender Charge Also known as a contingent deferred sales charge, this charge may be assessed upon premature withdrawals or surrender of the Contract and is calculated according to the provisions of the Contract.
Valuation Date Each day the New York Stock Exchange (NYSE) is open for trading.
Valuation Period The period commencing at the close of trading (currently normally 4:00 p.m. EST) on each day that the NYSE is open for trading (in other words, the Valuation Date) and ending at the close of such trading on the next succeeding Valuation Date.
2
Expense Tables
Contractowner transaction expenses:
Currently, there is no charge for transfers between funds. However, we reserve the right to impose such charges in the future.
The Surrender Charge percentage is reduced to zero after three years according to the following schedule:
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Contract year |
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1 | 2 | 3 | 4 or more | ||
Surrender Charge as % of Contract Value Withdrawn | 3% | 2% | 1% | 0% | |
This charge may be waived in certain cases. See CHARGES AND OTHER DEDUCTIONS.
VAA annual expenses for Subaccounts:
(as a percentage of average account value for each Subaccount):
Annuity Asset Charge (Mortality and expense risk fees and Administrative expense fees): |
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0.55% |
Annual expenses of the Funds, Series and Portfolios for the year ended 1999
(as a percentage of each funds' average net assets and, where indicated, after expense reimbursements):
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Management fees |
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12b-1 fees |
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+ |
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Other expenses |
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= |
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Total expenses |
1. | American Century VP International | 1.34% | 0.00% | 0.00% | 1.34% | |||||||||
2. | Baron Capital Asset (Insurance class)6* | 0.62 | 0.25 | 0.63 | 1.50 | |||||||||
3. | Delaware Premium Global Bond (Standard class)1 | 0.75 | 0.00 | 0.10 | 0.85 | |||||||||
4. | Delaware Premium Growth & Income (Standard class)2 | 0.60 | 0.00 | 0.11 | 0.71 | |||||||||
5. | Delaware Premium Trend (Standard class)3 | 0.75 | 0.00 | 0.07 | 0.82 | |||||||||
6. | Deutsche Asset Management VIT (formerly BT IFT) Equity 500 Index4* | 0.14 | 0.00 | 0.16 | 0.30 | |||||||||
7. | Deutsche Asset Management VIT (formerly BT IFT) Small Cap Index4* | 0.13 | 0.00 | 0.32 | 0.45 | |||||||||
8. | Janus Aspen Worldwide Growth (Institutional shares) | 0.65 | 0.00 | 0.05 | 0.70 | |||||||||
9. | Lincoln National Bond | 0.45 | 0.00 | 0.08 | 0.53 | |||||||||
10. | Lincoln National Capital Appreciation | 0.72 | 0.00 | 0.06 | 0.78 | |||||||||
11. | Lincoln National Equity-Income | 0.72 | 0.00 | 0.07 | 0.79 | |||||||||
12. | Lincoln National Growth and Income | 0.31 | 0.00 | 0.05 | 0.36 | |||||||||
13. | Lincoln National International | 0.77 | 0.00 | 0.15 | 0.92 | |||||||||
14. | Lincoln National Managed | 0.36 | 0.00 | 0.06 | 0.42 | |||||||||
15. | Lincoln National Money Market | 0.48 | 0.00 | 0.11 | 0.59 | |||||||||
16. | Lincoln National Social Awareness | 0.33 | 0.00 | 0.05 | 0.38 | |||||||||
17. | Lincoln National Special Opportunities | 0.37 | 0.00 | 0.07 | 0.44 | |||||||||
18. | Neuberger Berman AMT Mid-Cap Growth5* | 0.85 | 0.00 | 0.15 | 1.00 | |||||||||
19. | Neuberger Berman AMT Partners | 0.80 | 0.00 | 0.07 | 0.87 | |||||||||
3
Voluntary fee reimbursements:
The following funds voluntarily waive expenses to the extent necessary to maintain a maximum total expense ratio.
Contractual fee reimbursements:
The following Funds contractually waive the management fee to the extent necessary to maintain a maximum total expense ratio.
4
Examples
(reflecting expenses of the VAA and of the funds)
If you surrender your Contract at the end of the applicable time period, you would pay the following expenses on a $1,000 investment, assuming a 5% annual return:
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1 year |
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3 years |
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5 years |
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10 years |
American Century VP International | $ | 50 | $ | 70 | $ | 102 | $ | 221 | ||||
Baron Capital Asset | 52 | 75 | 110 | 238 | ||||||||
Delaware Premium Global Bond | 45 | 55 | 77 | 168 | ||||||||
Delaware Premium Growth & Income | 44 | 51 | 69 | 152 | ||||||||
Delaware Premium Trend Series | 45 | 55 | 75 | 165 | ||||||||
Deutsche/BT Equity 500 Index | 40 | 38 | 47 | 105 | ||||||||
Deutsche/BT Small Cap Index | 41 | 43 | 55 | 122 | ||||||||
Janus Aspen Worldwide Growth | 44 | 51 | 69 | 151 | ||||||||
Lincoln National Bond | 42 | 46 | 60 | 132 | ||||||||
Lincoln National Capital Appreciation | 45 | 53 | 73 | 160 | ||||||||
Lincoln National Equity Income | 45 | 54 | 73 | 161 | ||||||||
Lincoln National Growth & Income | 41 | 40 | 50 | 112 | ||||||||
Lincoln National International | 46 | 58 | 80 | 176 | ||||||||
Lincoln National Managed | 41 | 42 | 54 | 119 | ||||||||
Lincoln National Money Market | 43 | 47 | 63 | 139 | ||||||||
Lincoln National Social Awareness | 41 | 41 | 51 | 114 | ||||||||
Lincoln National Special Opportunities | 41 | 43 | 55 | 121 | ||||||||
Neuberger Berman AMT Mid-Cap Growth | 47 | 60 | 84 | 185 | ||||||||
Neuberger Berman AMT Partners | 46 | 56 | 78 | 170 | ||||||||
5
If you do not surrender your Contract, or if you annuitize, you would pay the following expenses on a $1,000 investment, assuming a 5% annual return:
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1 year |
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3 years |
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5 years |
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10 years |
American Century VP International | $ | 19 | $ | 59 | $ | 102 | $ | 221 | ||||
Baron Capital Asset | 21 | 64 | 110 | 238 | ||||||||
Delaware Premium Global Bond | 14 | 44 | 77 | 168 | ||||||||
Delaware Premium Growth & Income | 13 | 40 | 69 | 152 | ||||||||
Delaware Premium Trend Series | 14 | 43 | 75 | 165 | ||||||||
Deutsche/BT Equity 500 Index | 9 | 27 | 47 | 105 | ||||||||
Deutsche/BT Small Cap Index | 10 | 32 | 55 | 122 | ||||||||
Janus Aspen Worldwide Growth | 13 | 40 | 69 | 151 | ||||||||
Lincoln National Bond | 11 | 34 | 60 | 132 | ||||||||
Lincoln National Capital Appreciation | 14 | 42 | 73 | 160 | ||||||||
Lincoln National Equity Income | 14 | 42 | 73 | 161 | ||||||||
Lincoln National Growth & Income | 9 | 29 | 50 | 112 | ||||||||
Lincoln National International | 15 | 46 | 80 | 176 | ||||||||
Lincoln National Managed | 10 | 31 | 54 | 119 | ||||||||
Lincoln National Money Market | 12 | 36 | 63 | 139 | ||||||||
Lincoln National Social Awareness | 9 | 30 | 51 | 114 | ||||||||
Lincoln National Special Opportunities | 10 | 32 | 55 | 121 | ||||||||
Neuberger Berman AMT Mid-Cap Growth | 16 | 49 | 84 | 185 | ||||||||
Neuberger Berman AMT Partners | 14 | 45 | 78 | 170 | ||||||||
This table is provided to assist you in understanding the various costs and expenses that you will bear directly or indirectly. The table reflects expenses of the VAA, the funds for the year ended December 31, 1999, although the expenses have been restated to reflect the current fees for Capital Appreciation and Equity-Income. For more complete descriptions of the various costs and expenses involved, see CHARGES AND OTHER DEDUCTIONS in this prospectus, and MANAGEMENT OF THE FUNDS in the Appendix to the funds' and series' prospectuses. In addition, premium taxes may be applicable, although they do not appear in the table. Also, we reserve the right to impose a charge on transfers between Subaccounts, although we do not currently do so. The examples should not be considered a representation of past or future expenses. Actual expenses may be more or less than those shown.
Summary
WHAT TYPE OF CONTRACT AM I BUYING? It is an individual deferred variable annuity contract issued by Lincoln Life. See THE CONTRACT.
WHAT IS THE VARIABLE ANNUITY ACCOUNT (VAA)? It is a separate account established under Indiana insurance law, and registered with the SEC as a unit investment trust. The assets of the VAA are allocated to one or more Subaccounts, according to your investment choice. Those assets are not chargeable with liabilities arising out of any other business which Lincoln Life may conduct. See VARIABLE ANNUITY ACCOUNT.
WHAT ARE MY INVESTMENT CHOICES? Through its various Subaccounts, the VAA uses your Purchase Payments to purchase shares, at your direction, in one or more of the funds. In turn, each fund holds a portfolio of securities consistent with its own particular investment policy. See INVESTMENTS OF THE VARIABLE ANNUITY ACCOUNT.
HOW DOES THE CONTRACT WORK? During the accumulation period, while you are paying in, your Purchase Payments will buy Accumulation Units under the Contract. Should you decide to annuitize (that is, change your Contract to a payout mode rather than an accumulation mode), your Accumulation Units will be converted to Annuity Units. Your periodic Annuity Payout will be based upon the number of Annuity Units to which you became entitled at the time you decided to annuitize and the value of each unit on the Valuation Date. See THE CONTRACTS.
WHAT CAN I DO THROUGH THE INTERNET SERVICE CENTER? Almost every transaction can be accomplished through the Internet Service Center. Only
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in very rare cases will transactions bypass the Internet Service Center. Documents can be received, accounts can be monitored, funds moved from one Subaccount to another, addresses changed, Beneficiaries changed, funds withdrawn from the Contract, etc. As technology matures, the ease with which transactions can be performed through the Internet Service Center will improve. For security reasons, you may be issued a PIN or password. Also, for legal reasons, certain transactions, such as change of Beneficiary or withdrawal of funds from the Contract, will require the Contractowner to print or write a document, sign it, and mail or fax it to us.
WHAT CHARGES ARE ASSOCIATED WITH THIS CONTRACT? If you decide to withdraw Contract Value before your initial Purchase Payment has been in your Contract for a period of three years, you pay a surrender charge of anywhere from 1% to 3% of Contract Value, depending on how many Contract Years have elapsed. We waive the surrender charge in certain situations. See SURRENDER CHARGES.
If your state assesses a premium tax with respect to your Contract, we will deduct those amounts from Purchase Payments or Contract Value at the time the tax is incurred (or at another time we choose).
Further, we apply an annual charge totaling .55% to the daily net asset value of the VAA. See CHARGES AND OTHER DEDUCTIONS.
Finally, each fund pays a management fee to its investment advisors based upon its average daily net asset value. Each fund also has additional operating expenses associated with the daily operation of the funds. See the EXPENSE TABLES. These fees and expenses are more fully described in the prospectuses for the funds.
HOW MUCH MUST I PAY, AND HOW OFTEN? In general, Purchase Payments are flexible, although some limitations on the amounts may apply. See THE CONTRACTPURCHASE PAYMENTS.
HOW WILL MY ANNUITY PAYOUTS BE CALCULATED? If you decide to annuitize, you elect an Annuity Payout Option. Once you have done so, your periodic payout will be based upon a number of factors. One factor will be the changing values of the funds in which you have invested. Another factor will be your age at the Annuity Commencement Date. See ANNUITY PAYOUTS. REMEMBER THAT PARTICIPANTS IN THE VAA BENEFIT FROM ANY GAIN, AND TAKE A RISK OF ANY DROP, IN THE VALUE OF THE SECURITIES IN THE FUNDS, SERIES OR PORTFOLIOS.
WHAT HAPPENS IF I DIE BEFORE I ANNUITIZE? We will pay the Contract Value to your designated Beneficiary. Your Beneficiary will have certain options for how the money is to be paid out. See DEATH BENEFIT BEFORE THE ANNUITY COMMENCEMENT DATE.
MAY I TRANSFER CONTRACT VALUE BETWEEN FUNDS, SERIES AND PORTFOLIOS? Yes. Currently, an unlimited number of transfers are generally allowed before the Annuity Commencement Date. Transfers are limited to three times annually after the Annuity Commencement Date. See THE CONTRACTSTRANSFERS BETWEEN SUBACCOUNTS ON OR BEFORE THE ANNUITY COMMENCEMENT DATE and TRANSFERS AFTER THE ANNUITY COMMENCEMENT DATE.
MAY I SURRENDER THE CONTRACT OR MAKE A WITHDRAWAL? Yes, subject to Contract requirements. See SURRENDERS AND WITHDRAWALS.
If you surrender the Contract or make a withdrawal, certain charges may be assessed, as discussed above and under CHARGES AND OTHER DEDUCTIONS. In addition, if you take a distribution before age 591/2 the Internal Revenue Service (IRS) may assess a 10% premature withdrawal penalty tax. A surrender or a withdrawal may be subject to 10% withholding. See FEDERAL TAX STATUSFEDERAL INCOME TAX WITHHOLDING.
DO I GET A FREE LOOK AT THIS CONTRACT? Yes. If within ten days (or a longer period if required by law) of the date you receive the signed Contract through the Internet Service Center, you cancel the Contract through the Internet Service Center or return it, postage prepaid to the servicing office of Lincoln Life, it will be canceled. During this period, your Purchase Payments will be invested in the Money Market Fund. See RETURN PRIVILEGE.
7
Condensed financial information for the VAA
Accumulation unit values
The following information relating to accumulation unit values and number of accumulation units for each of the 10 years in the period ended December 31, 1999 comes from the VAA's financial statements. It should be read in conjunction with the VAA's financial statements and notes which are all included in the SAI. The Contract was first available for sale on August 20, 1998.
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1999 |
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1998 |
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Amer Century VP Intl subaccount | ||||||||||||
Accumulation unit value | ||||||||||||
Beginning of period | $ | 1.000 | * | |||||||||
End of period | $ | 1.551 | * | trading began in 1999. | ||||||||
Number of accumulation units | ||||||||||||
End of period (000's omitted) | 2 | |||||||||||
Baron Capital Asset subaccount | ||||||||||||
Accumulation unit value | ||||||||||||
Beginning of period | $ | 1.000 | * | |||||||||
End of period | $ | 1.328 | * | trading began in 1999. | ||||||||
Number of accumulation units | ||||||||||||
End of period (000's omitted) | 29 | |||||||||||
Delaware Prem Global Bond subaccount | ||||||||||||
Accumulation unit value | ||||||||||||
Beginning of period | $ | 1.186 | $ | 1.098 | * | |||||||
End of period | $ | 1.137 | $ | 1.186 | * | trading began in 1998. | ||||||
Number of accumulation units | ||||||||||||
End of period (000's omitted) | 2 | 2 | ||||||||||
Delaware Prem Growth & Income subaccount | ||||||||||||
Accumulation unit value | ||||||||||||
Beginning of period | $ | 1.613 | $ | 1.501 | * | |||||||
End of period | $ | 1.556 | $ | 1.613 | * | trading began in 1998. | ||||||
Number of accumulation units | ||||||||||||
End of period (000's omitted) | 6 | 4 | ||||||||||
Delaware Prem Trend subaccount | ||||||||||||
Accumulation unit value | ||||||||||||
Beginning of period | $ | 1.371 | $ | 1.251 | * | |||||||
End of period | $ | 2.323 | $ | 1.371 | * | trading began in 1998. | ||||||
Number of accumulation units | ||||||||||||
End of period (000's omitted) | 28 | 3 | ||||||||||
Deutsche/BT Equity 500 Index subaccount | ||||||||||||
Accumulation unit value | ||||||||||||
Beginning of period | $ | 1.000 | * | |||||||||
End of period | $ | 1.152 | * | trading began in 1999. | ||||||||
Number of accumulation units | ||||||||||||
End of period (000's omitted) | 106 | |||||||||||
Deutsche/BT Small Cap Index subaccount | ||||||||||||
Accumulation unit value | ||||||||||||
Beginning of period | $ | 1.000 | * | |||||||||
End of period | $ | 1.184 | * | trading began in 1999. | ||||||||
Number of accumulation units | ||||||||||||
End of period (000's omitted) | 285 | |||||||||||
8
Janus Aspen Worldwide Growth subaccount | ||||||||||||
Accumulation unit value | ||||||||||||
Beginning of period | $ | 1.000 | * | |||||||||
End of period | $ | 1.540 | * | trading began in 1999. | ||||||||
Number of accumulation units | ||||||||||||
End of period (000's omitted) | 240 | |||||||||||
Lincoln National Aggressive Growth subaccount** | ||||||||||||
Accumulation unit value | ||||||||||||
Beginning of period | $ | 1.569 | $ | 1.559 | * | |||||||
End of period | $ | 2.223 | $ | 1.569 | * | trading began in 1998. | ||||||
Number of accumulation units | ||||||||||||
End of period (000's omitted) | 30 | 4 | ||||||||||
Lincoln National Bond subaccount | ||||||||||||
Accumulation unit value | ||||||||||||
Beginning of period | $ | 5.034 | $ | 4.845 | * | |||||||
End of period | $ | 4.843 | $ | 5.034 | * | trading began in 1998. | ||||||
Number of accumulation units | ||||||||||||
End of period (000's omitted) | 4 | 1 | ||||||||||
Lincoln National Capital Appreciation subaccount | ||||||||||||
Accumulation unit value | ||||||||||||
Beginning of period | $ | 2.578 | $ | 2.171 | * | |||||||
End of period | $ | 3.729 | $ | 2.578 | * | trading began in 1998. | ||||||
Number of accumulation units | ||||||||||||
End of period (000's ommitted) | 98 | 4 | ||||||||||
Lincoln National Equity-Income subaccount | ||||||||||||
Accumulation unit value | ||||||||||||
Beginning of period | $ | 2.403 | $ | 2.224 | * | |||||||
End of period | $ | 2.540 | $ | 2.403 | * | trading began in 1998. | ||||||
Number of accumulation units | ||||||||||||
End of period (000's omitted) | 4 | 1 | ||||||||||
Lincoln National Global Asset Allocation subaccount** | ||||||||||||
Accumulation unit value | ||||||||||||
Beginning of period | $ | 3.061 | $ | 2.898 | * | |||||||
End of period | $ | 3.389 | $ | 3.061 | * | trading began in 1998. | ||||||
Number of accumulation units | ||||||||||||
End of period (000's omitted) | 31 | 1 | ||||||||||
Lincoln National Growth and Income subaccount | ||||||||||||
Accumulation unit value | ||||||||||||
Beginning of period | $ | 11.512 | $ | 10.320 | * | |||||||
End of period | $ | 13.456 | $ | 11.512 | * | trading began in 1998. | ||||||
Number of accumulation units | ||||||||||||
End of period | 3 | 1 | ||||||||||
Lincoln National International subaccount | ||||||||||||
Accumulation unit value | ||||||||||||
Beginning of period | $ | 1.776 | $ | 1.699 | * | |||||||
End of period | $ | 2.070 | $ | 1.776 | * | trading began in 1998. | ||||||
Number of accumulation units | ||||||||||||
End of period (000's omitted) | 8 | 2 | ||||||||||
Lincoln National Managed subaccount | ||||||||||||
Accumulation unit value | ||||||||||||
Beginning of period | $ | 5.268 | $ | 4.921 | * | |||||||
End of period | $ | 5.645 | $ | 5.268 | * | trading began in 1998. | ||||||
Number of accumulation units | ||||||||||||
End of period (000's omitted) | 5 | 1 | ||||||||||
9
Lincoln National Money Market subaccount | ||||||||||||
Accumulation unit value | ||||||||||||
Beginning of period | $ | 2.521 | $ | 2.482 | * | |||||||
End of period | $ | 2.626 | $ | 2.521 | * | trading began in 1998. | ||||||
Number of accumulation units | ||||||||||||
End of period (000's omitted) | 75 | 131 | ||||||||||
Lincoln National Social Awareness subaccount | ||||||||||||
Accumulation unit value | ||||||||||||
Beginning of period | $ | 5.885 | $ | 5.407 | * | |||||||
End of period | $ | 6.756 | $ | 5.885 | * | trading began in 1998. | ||||||
Number of accumulation units | ||||||||||||
End of period (000's omitted) | 8 | 2 | ||||||||||
Lincoln National Special Opportunities subaccount | ||||||||||||
Accumulation unit value | ||||||||||||
Beginning of period | $ | 8.736 | $ | 8.224 | * | |||||||
End of period | $ | 8.298 | $ | 8.736 | * | trading began in 1998. | ||||||
Number of accumulation units | ||||||||||||
End of period (000's omitted) | 1 | 1 | ||||||||||
Neuberger Berman AMT Mid-Cap Growth subaccount | ||||||||||||
Accumulation unit value | ||||||||||||
Beginning of period | $ | 1.000 | * | |||||||||
End of period | $ | 1.516 | trading began in 1999. | |||||||||
Number of accumulation units | ||||||||||||
End of period (000's omitted) | 15 | |||||||||||
Neuberger Berman AMT Partners subaccount | ||||||||||||
Accumulation unit value | ||||||||||||
Beginning of period | $ | 1.000 | * | |||||||||
End of period | $ | 1.048 | * | trading began in 1999. | ||||||||
Number of accumulation units | ||||||||||||
End of period (000's omitted) | 3 | |||||||||||
* | These values do not reflect a full year's experience because they are calculated for the period from the beginning of investment activity of the subaccounts, through December 31. These values reflect actual numbers for the eAnnuity only. | |
** | Substitutions for these subaccounts are anticipated to take place on or about May 1, 2000. At that time, these subaccounts are no longer available for investment. |
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Investment results
At times, the VAA may compare its investment results to various unmanaged indices or other variable annuities in reports to shareholders, sales literature and advertisements. The results will be calculated on a total return basis for various periods, with or without surrender charges. Results calculated without surrender charges will be higher. Total returns include the reinvestment of all distributions, which are reflected in changes in Accumulation Unit value.
The money market subaccount's yield is based upon investment performance over a 7-day period, which is then annualized.
The money market yield figure and annual performance of the subaccounts are based on past performance and do not indicate or represent future performance.
For additional information about performance calculations, please refer to the SAI.
Financial statements
The financial statements of the VAA and the statutory-basis financial statements of Lincoln Life are located in the SAI. You can request a free copy of the SAI through our Internet Service Center or by a written request to our servicing office.
Lincoln National Life Insurance Co.
Lincoln Life was founded in 1905 and is organized under Indiana law. We are one of the largest stock life insurance companies in the United States. We are owned by Lincoln National Corp. (LNC) which is also organized under Indiana law. LNC's primary businesses are insurance and financial services. Lincoln Life is the issuer of the variable annuity contracts. We also serve as principal underwriter for the Contracts.
Variable annuity account (VAA)
On June 3, 1981, Lincoln Life established the VAA as an insurance company separate account under Indiana law. The VAA is registered with the SEC as a unit investment trust under the provisions of the Investment Company Act of 1940 (1940 Act), but the SEC does not supervise the VAA or Lincoln Life.
The VAA is a segregated investment account. This means that by law its assets cannot be charged with liabilities resulting from any other business that we may conduct. All income, gains and losses, realized or not, from assets allocated to the VAA are credited to or charged against the VAA. They are credited or charged without regard to any other income, gains or losses of Lincoln Life.
We do not guarantee the investment performance of the VAA. Any investment gain or loss depends on the investment performance of the funds. You assume the full investment risk for all amounts placed in the VAA.
The VAA is used to support other annuity contracts offered by Lincoln Life in addition to the contract described in this prospectus.
Investments of the variable annuity account
The VAA consists of several Subaccounts. A separate Subaccount corresponds to each fund. You decide the Subaccount(s) to which you allocate Purchase Payments. Shares of the funds will be sold at net asset value to the VAA in order to fund the Contract. Any transaction you make will take place at the next net asset values determined after the receipt of your transaction request. The funds are required to redeem their shares at net asset value upon our request.
A fund's prospectus explains how the net asset value for that fund is calculated. You should read the funds' prospectuses carefully before you invest in this Contract. We reserve the right to add, delete or substitute funds, subject to regulatory approval. All funds may not be available in all states.
Investment advisor
Lincoln Investment Management, Inc. (LIM) is the investment advisor for each of the Lincoln National funds and is primarily responsible for the investment decisions affecting these funds. The services it provides are explained in the prospectuses of the funds. Under an advisory agreement with each fund, LIM provides portfolio management and investment advice to that fund, subject to the supervision of the fund's Board of Directors. LIM is owned by LNC.
Additionally, LIM currently has sub-advisory agreements in which the sub-advisor may perform some or substantially all the investment advisory services required by those respective funds.
LIM has informed the funds to which it provides advisory services that it intends to merge into a newly created series of its affiliate, Delaware Management Business Trust, during the second or third quarter of 2000. LIM does not expect the merger to result in any change in the level of advisory services that it currently provides to these funds, although there may be some changes in, and additions to, personnel. See the prospectuses for these funds for more information.
No additional compensation from the assets of those funds will be assessed as a result of the sub-advisory agreements.
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Following is a chart that shows the Lincoln National fund names and the five sub-advisors under Lincoln Investment:
Sub-advisor | Fund | |
Delaware International Advisers, Ltd. | International | |
Fidelity Management Trust Co. | Equity-Income | |
Janus Capital Corp. | Capital Appreciation | |
Vantage Investment Advisors | Growth and Income; Managed (for stock portfolio); Social Awareness; and Special Opportunities | |
The Bond and Money Market Funds do not have sub-advisors.
Delaware Management Company. (Delaware Management) is the advisor for the Trend Series and the Growth & Income Series and is primarily responsible for the investment decisions affecting the funds. Delaware International Advisers Ltd. (Delaware International), an affiliate of Delaware Management, furnishes investment management services to the Global Bond Series. Delaware Management is an indirect subsidiary of LNC.
Bankers Trust Company is the investment advisor for the Equity 500 Index Fund and the Small Cap Index Fund, and is primarily responsible for the investment decisions affecting these funds.
American Century Variable Portfolios, Inc. is a part of American Century Investments, a family of 70 no-load mutual funds, and is the advisor for the VP International fund and is primarily responsible for investment decisions affecting this fund.
BAMCO, Inc. is the investment advisor for the Baron Capital Asset Fund. BAMCO, Inc., is a wholly owned subsidiary of Baron Capital Group, Inc.
NB Management is the investment advisor and Neuberger Bergman, LLC, is the sub-advisor for the AMT Partners Portfolio and the AMT MidCap Growth Portfolio, and are primarily responsible for the investment decisions affecting these funds.
Janus Capital Corporation is the investment advisor for the Janus Aspen Series: Worldwide Growth Portfolio. Janus Capital Corporation is primarily responsible for the investment decisions affecting this fund.
Additional information regarding the investment advisors to each of the funds may be found in the Prospectuses for the funds and series.
As compensation for their services to the fund, the investment advisors receive a fee from the fund, which is accrued daily and paid monthly. This fee is based on the net assets of each fund, as defined under the Purchase and Redemption of Shares, in the Prospectus for the fund.
With respect to a fund, the advisor and/or distributor, or an affiliate thereof, may compensate Lincoln Life (or an affiliate) for administrative, distribution, or other services. Some funds may compensate us more than other funds. Some funds may compensate us more than other funds. It is anticipated that such compensation will be based on assets of the particular fund attributable to the contracts along with certain other variable contracts issued or administered by Lincoln Life (or an affiliate). As of the date of this Prospectus, we were receiving compensation from each fund company except DMC.
Descriptions of the Funds and Series
Certain funds offered as part of this contract have similar investment objectives and policies to other portfolios managed by the advisor. The investment results of the funds, however, may be higher or lower than the other portfolios that are managed by the advisor. There can be no assurance, and no representation is made, that the investment results of any of the funds will be comparable to the investment results of any other portfolio managed by the advisor.
Following are brief summaries of the investment objectives and policies of the funds and series. There is more detailed information in the current prospectuses for the funds.
All of the funds, with the exception of the Lincoln National Special Opportunities Fund, are diversified, open-end management investment companies. Diversified funds do not own too large a percentage of the securities of any one company. An open-end company is one which, in this case, permits Lincoln Life to sell its shares back to the fund when you make a withdrawal, surrender the Contract or transfer from one fund to another. Management investment company is the legal term for a mutual fund.
The Special Opportunities Fund is open-end, but is non-diversified. Non-diversified means the fund may own a larger percentage of the securities of particular companies than will a diversified company.
These
definitions are very general. The precise legal definitions for these terms are contained in the Investment Company Act of 1940. Please be advised that there is no
assurance that any of the funds will achieve its stated objectives.
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preservation
of principal by investing primarily in fixed income securities that may also provide the potential for capital appreciation. At least 65% of the fund's assets will be invested in fixed
income securities of issuers organized or having a majority of their assets in or deriving a majority of their operating income in at least three different countries, one of which may be the United
States.
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Shares of the funds and series may be sold to Lincoln Life, its affiliates, and separate accounts of life insurance companies other than Lincoln Life to fund variable annuity contracts and/or variable life insurance policies. See Other information. Shares of the funds and series are not sold directly to the general public.
The shares of the funds and series are issued and redeemed only in connection with variable annuity contracts and variable life insurance policies (mixed funding) issued through separate accounts of Lincoln Life and other life insurance companies (shared funding). The funds and series do not foresee any disadvantage to contractowners arising out of mixed or shared funding. Nevertheless, the Boards intend to monitor events in order to identify any material irreconcilable conflicts which may possibly arise and to determine what action, if any, should be taken in response thereto. If such a conflict were to occur, one of the separate accounts might withdraw its investment in a fund or series. This might force a fund to sell portfolio securities at disadvantageous prices.
We will purchase shares of each of the funds at net asset value and direct them to the appropriate Subaccounts of the VAA. We will redeem sufficient shares of the appropriate funds to pay Annuity Payouts, Death Benefits, surrender/ withdrawal proceeds, or for purposes described in the Contract. If you desire to transfer all or part of your investment from one Subaccount to another, we may redeem shares held in that Subaccount and purchase shares for the other Subaccount. The shares are retired, but they may be reissued later.
Investment objectives, policies and restrictions
All of the investment objectives of the funds are fundamental, which means that no changes may be made without the affirmative vote of a majority of the outstanding voting securities of each respective fund. The extent to which the particular investment policies, practices or restrictions for each fund are fundamental or non-fundamental depends on the particular fund. If they are non-fundamental, they may be changed by the Board of Directors of the funds without shareholder approval.
You are urged to consult the prospectus and SAI for each individual fund for additional information regarding the fundamental and non-fundamental policies, practices and restrictions of each of the funds.
Reinvestment of dividends and capital gain distributions
All dividend and capital gain distributions of the funds are automatically reinvested in shares of the distributing funds at their net asset value on the date of distribution. Dividends are not paid out to Contractowners as additional Accumulation Units or Annuity Units, but are reflected in changes in unit values.
Addition, deletion or substitution of investments
We reserve the right, within the law, to make additions, deletions and substitutions for the funds held by the VAA. (We may substitute shares of other funds for shares already purchased, or to be purchased in the future, under the Contract. This substitution might occur if shares of a fund should no longer be available, or if investment in any fund's shares should no longer be available, or if investment in any fund's share should become inappropriate, in the judgement of our management, for the purposes for the Contract.) We cannot substitute shares of one fund for another without approval by the SEC.
In this event we will inform you by placing a notice in your personal folder at the Internet Service Center. This notice will also be sent to your last known e-mail address.
Charges and Other Deductions
We will deduct the charges described below to cover our costs and expenses of providing administrative and distribution services and for assuming certain risks under the Contract. The amount of a charge may not necessarily correspond to the costs associated with providing the services or benefits indicated by the designation of the charge. For example, the Surrender Charge collected may not fully cover all of the sales and distribution expenses actually incurred by us.
We may pay commissions to broker-dealers as a percentage of Purchase Payments. Commission payments will not result in increased charges and other expenses, and thus will not affect your Contract Value.
Deductions from the VAA
We deduct from the VAA an amount, computed daily, which is equal to an annual rate of 0.55% of the daily net asset value. This is our annuity asset charge. The charge compensates us for administrative expenses we incur and for mortality and expense risks we assume. Our administrative expenses include, but are not limited to, bookkeeping costs, the cost of maintaining our Internet Service Center, and the costs associated with sales of the VAA. We assume the risk that annuitants as a class may live longer than expected (mortality risk), and that expenses may be higher than the deductions for those expenses (expense risk). In either case, the loss will fall on us. Conversely, if such deductions exceed our actual expenses, the excess will be profit to us.
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Surrender charge
The Surrender Charge percentage applies (except as described below) to surrenders or withdrawals according to the following schedule:
|
|
Contract Year |
||||||
1 | 2 | 3 | 4 or more | |||||
Surrender Charge as % of Contract Value Withdrawn | 3% | 2% | 1% | 0% |
In the case of a withdrawal, the Surrender Charge will be deducted from the remaining Contract Value and will itself be subject to a Surrender Charge.
A Surrender Charge does not apply to:
If a non-natural person (for example, a corporation) is the Contractowner, the Annuitant will be considered the Contractowner for purposes of (3) above.
Deductions for premium taxes
Any premium tax or other tax levied by any governmental entity as a result of the existence of the Contracts or the VAA will be deducted from the Contract Value when incurred, or at another time of our choosing.
The applicable premium tax rates that states and other governmental entities impose on the purchase of an annuity are subject to change by legislation, by administrative interpretation or by judicial action. These premium taxes will vary, depending upon the law of your state of residence. In those states which tax these premiums, the tax generally ranges from 0.5% to 5.0%.
Other charges and deductions
There are deductions from and expenses paid out of the assets of the underlying funds that are more fully described in the prospectuses for the funds.
Additional information
The Surrender Charges described previously may be reduced or eliminated for any particular Contract. However, these charges will be reduced only to the extent that we anticipate lower distribution and/or administrative expenses, or that we perform fewer sales or administrative services than those originally contemplated in establishing the level of those charges. Lower distribution and administrative expenses may be the result of economies associated with: (1) the Internet Service Center; (2) the use of mass enrollment procedures; (3) the performance of administrative or sales functions by the employer; (4) the use by an employer of automated techniques in submitting deposits or information related to deposits on behalf of its employees; or (5) any other circumstances which reduce distribution or administrative expenses. The exact amount of Surrender Charges applicable to a particular Contract will be stated in that Contract.
The Contract
Purchase of contract
If you wish to purchase the Contract, you must apply for it through the Internet Service Center. When we receive the completed application, we decide whether to accept or reject it. If the application is accepted, the Contract is prepared and executed by our legally authorized officers. The Contract is then sent to you through the Internet Service Center. See DISTRIBUTION OF THE CONTRACTS.
Once a completed application and all other information necessary for processing a purchase order are received, the initial Purchase Payment will be invested in the VAA no later than two business days after we receive the order. While attempting to finish an incomplete application, we may hold the initial Purchase Payment for no more than five business days. If an incomplete application cannot be completed within those five days, you will be informed of the reasons, and the Purchase Payment will be returned immediately (unless you specifically authorize us to keep it until the application is complete). Once the application is complete, the initial Purchase Payment must be invested in the VAA within two business days.
Purchase Payments can be mailed to: Lincoln National Life Insurance Company, P.O. Box 62120, Baltimore, MD 21264-2120.
Who can invest
To apply for the Contract, you must be of legal agebut no older than age 85in a state where the Contracts may be lawfully sold and also be eligible to participate in any of the qualified or nonqualified plans for which the Contracts are designed.
Purchase payments
The minimum initial Purchase Payment is $1,000. Subsequent Purchase payments to the Contract must be at
15
least $100. Lincoln Life reserves the right to limit the sum of Purchase Payments made under this Contract to $5,000,000. Payments may be made or, if stopped, resumed at any time until the Annuity Commencement Date, the surrender of the Contract, the maturity date or the death of the Contractowner (or joint Contractowner, if applicable), whichever comes first.
Valuation date
Accumulation Units and Annuity Units will be valued once daily at the close of trading (currently, normally, 4:00 p.m. New York time) on each day the New York Stock Exchange is open (Valuation Date). On any date other than a Valuation Date, the Accumulation Unit value and the Annuity Unit value will not change.
Allocation of purchase payments
Purchase Payments are placed into the VAA's Subaccounts. Following your allocation instructions, each VAA Subaccount invests in shares of the corresponding funds.
Upon allocation to the appropriate Subaccount, Purchase Payments are converted into Accumulation Units. The number of Accumulation Units credited is determined by dividing the amount allocated to each Subaccount by the value of an Accumulation Unit for that Subaccount on the Valuation Date on which the Purchase Payment is received at our servicing office, if received before 4:00 p.m. New York time. If the Purchase Payment is received at or after 4:00 p.m. New York time, we will use the Accumulation Unit value computed on the next Valuation Date. The number of Accumulation Units determined in this way is not changed by any subsequent change in the value of an Accumulation Unit. However, the dollar value of an Accumulation Unit will vary depending not only upon how well the underlying fund's investments perform, but also upon the expenses of the VAA and the underlying funds.
Valuation of accumulation units
The Contract Value at any time prior to the Annuity Commencement Date equals the sum of the values of the Accumulation Units credited in the Subaccounts under the Contract.
The value of a Subaccount on any Valuation Date is the number of Accumulation Units in the Subaccount multiplied by the value of an Accumulation Unit in the Subaccount at the end of the Valuation Period.
Accumulation Units for each Subaccount are valued separately. Initially, the value of an Accumulation Unit was arbitrarily established at the inception of the Subaccount. It may increase or decrease from Valuation Period to Valuation Period. The Accumulation Unit value for a Subaccount for any later Valuation Period is determined as follows:
The daily charges imposed on a Subaccount for any Valuation Period represent the annuity asset charge adjusted for the number of calendar days in the Valuation Period. On an annual basis the annuity asset charge will not exceed 0.55%. The Accumulation Unit value and Annuity Unit value may increase or decrease the dollar value of benefits under the Contract. The dollar value of benefits will not be adversely affected by expenses incurred by Lincoln Life.
Transfers between subaccounts on or before the annuity commencement date
You may transfer all or a portion of your investment from one Subaccount to another. A transfer involves the surrender of Accumulation Units in one Subaccount and the purchase of Accumulation Units in another Subaccount. A transfer will be done using the respective Accumulation Unit values determined at the end of the Valuation Date on which the transfer request is received. Currently, there is no charge for a transfer. However, we reserve the right to impose a charge in the future for transfers.
A transfer may be made through our Internet Service Center or by writing to our servicing office. In order to prevent unauthorized or fraudulent Internet transfers, we may require Contractowners to provide certain identifying information before we will act upon their instructions. We may also assign the Contractowner a password to serve as identification. We will not be liable for following instructions we reasonably believe are genuine. Confirmation of all transfer requests will be mailed electronically to the Contractowner on the next Valuation Date. Internet transfers will be processed on the Valuation Date that they are received when they are received at our Internet Service Center before 4 p.m. EST.
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We reserve the right to refuse a transfer if, in the investment advisor's judgement, we would be unable to invest effectively according to the Fund's or Series' investment objectives as a result of such a transfer. We reserve the right to revise the transfer privilege at any time.
When thinking about a transfer of Contract Value, you should consider the inherent risk involved. Frequent transfers based on short-term expectations may increase the risk that a transfer will be made at an inopportune time.
Transfers after the annuity commencement date
You may transfer all or a portion of your investment in one Subaccount to another Subaccount. Those transfers will be limited to three times per Contract Year. Currently, there is no charge for these transfers. However, we reserve the right to impose a charge in the future for transfers.
Death benefit before the annuity commencement date
You may designate a Beneficiary during your lifetime and, unless prohibited by a previous designation, change the Beneficiary by filing a written request with our servicing office, or through our Internet Service Center. Each change of Beneficiary revokes any previous designation.
If there is a single Contractowner and the Contractowner dies before the Annuity Commencement Date, the Death Benefit paid to the designated Beneficiary will be the Contract Value as of the day on which Lincoln Life approves the payment of the claim.
The value of the Death Benefit will be determined as of the date on which the death claim is approved for payment. This approval will be granted upon receipt of: (1) proof, satisfactory to us, of the death of the owner; (2) written authorization for payment; and (3) our receipt of all required claim forms, fully completed.
If a lump sum settlement is requested, the proceeds will be paid within seven days of receipt of satisfactory claim documentation as discussed previously. Contract proceeds from the VAA will be paid within seven days as stated previously, except (i) when the NYSE is closed (except weekends and holidays); (ii) at times when market trading is restricted or the SEC declares an emergency, and we cannot value units or the funds cannot redeem shares; or (iii) when the SEC so orders to protect contract owners. This payment may be postponed as permitted by the 1940 Act.
Payment will be made in accordance with applicable laws and regulations governing payment of Death Benefits. All payments must satisfy the requirements of Internal Revenue Code of 1986, as amended, (Code) section 72(s) or 401(a)(9) as applicable, as amended from time to time. Death benefits are taxable. See Federal tax mattersTaxation of Death Benefits.
Unless otherwise provided in the Beneficiary designation, one of the following procedures will take place on the death of a Beneficiary:
The Death Benefit payable to the Beneficiary must be distributed within five years of the Contractowner's date of death unless the Beneficiary begins receiving within one year of the Contractowner's death substantially equal installments over a period not extending beyond the Beneficiary's life expectancy.
If the Beneficiary is the spouse of the Contractowner, then the spouse may elect to continue the Contract as Contractowner. If the Contractowner is a corporation or other non-individual (non-natural person), the death of the Annuitant will be treated as death of the Contractowner and the above distribution rules apply.
If there are joint Contractowners, upon the death of the first joint Contractowner, the surviving joint Contractowner will receive the Death Benefit. The surviving joint Contractowner will be treated as the primary, designated Beneficiary. Any other Beneficiary designation on record at the time of death will be treated as a contingent Beneficiary.
If the surviving joint Contractowner, as spouse of the deceased joint Contractowner, continues the Contract as the sole owner in lieu of receiving the Death Benefit, then the designated Beneficiary(s) will receive the Death Benefit upon the death of the surviving spouse.
Joint ownership
If a joint Contractowner is named in the application, the joint Contractowners shall be treated as having equal undivided interests in the Contract. Either Contractowner, independently of the other, may exercise any ownership rights in this Contract. Only spouses may be joint Contractowners.
Death of annuitant
If the Annuitant is also the Contractowner or a joint Contractowner, then the Death Benefit will be subject to the provisions of this Contract regarding death of the Contractowner. If the surviving spouse assumes the Contract, the contingent Annuitant becomes the Annuitant. If no contingent Annuitant is named, the surviving spouse becomes the Annuitant.
If an Annuitant who is not the Contractowner or joint Contractowner dies, then the contingent Annuitant, if any, becomes the Annuitant. If no contingent Annuitant
17
is named, the Contractowner (or joint owner if younger) becomes the Annuitant.
Surrenders and withdrawals
Before the Annuity Commencement Date, we will allow the surrender of the Contract or a withdrawal of the Contract Value upon your written request or through our Internet Service Center, subject to the rules discussed below. None of the current annuitization options allow surrender or withdrawal rights after the Annuity Commencement Date.
The Contract Value available upon surrender/withdrawal is the cash surrender value (Contract Value less any applicable Surrender Charge) at the end of the Valuation Period during which the request for surrender/withdrawal is received at the servicing office or Internet Service Center. Unless a request for withdrawal specifies otherwise, withdrawals will be made from all Subaccounts within the VAA in the same proportion that the amount of withdrawal bears to the total Contract Value. The minimum amount which can be withdrawn is $300, and the remaining Contract Value must be at least $1000. Unless prohibited, surrender/withdrawal payments will be mailed or electronically transferred within seven days after we receive a valid request at the servicing office or through the Internet Service Center. The payment may be postponed as permitted by the Investment Company Act of 1940.
There may be charges associated with surrender of the Contract or withdrawal of Contract Value. These charges are deducted from the amount you request to be withdrawn. See CHARGES AND OTHER DEDUCTIONS.
The tax consequences of a surrender or withdrawal are discussed in the section FEDERAL TAX STATUS of this prospectus.
We reserve the right to terminate the Contract, if your Contract fails to meet minimum Contract Value or payment frequencies as set forth in your state's nonforfeiture law for individual deferred annuities.
Amendment of contract
We reserve the right to amend the Contract to meet the requirements of the 1940 Act or other applicable federal or state laws or regulations. You will be notified of any changes, modifications or waivers.
Ownership
As Contractowner, you have all rights under the Contract. According to Indiana law, the assets of the VAA are held for the exclusive benefit of all Contractowners and their designated Beneficiaries. The assets of the VAA are not chargeable with liabilities arising from any other business that we may conduct. IRAs may not be assigned or transferred except as permitted by a domestic relations order and upon written notification to us. We assume no responsibility for the validity or effect of any assignment. Consult your tax advisor about the tax consequences of an assignment.
Contractowner questions
The obligations to purchasers under the Contracts are those of Lincoln Life. Questions about your Contract should be directed to us by e-mail to our Internet Service Center or in writing to our servicing office.
Annuity payouts
You may select any Annuity Commencement Date permitted by law provided that the Annuity Commencement Date occurs before the Annuitant's (or the elder of the joint Annuitants') 85th birthday. You may select one of the forms of payout of annuities available under the Contract (described below). Annuity payments to you under any of the Annuity Payout Options are made on a monthly basis and may vary in amount.
Annuity options
Life annuity. This option offers a periodic payout during the lifetime of the Annuitant and ends with the last payout before the death of the Annuitant. This option offers the highest periodic payout since there is no guarantee of a minimum number of payouts or provision for a Death Benefit for Beneficiaries. HOWEVER, THERE IS THE RISK UNDER THIS OPTION THAT THE RECIPIENT WOULD RECEIVE NO PAYOUTS IF THE ANNUITANT DIES BEFORE THE DATE SET FOR THE FIRST PAYOUT; ONLY ONE PAYOUT IF DEATH OCCURS BEFORE THE SECOND SCHEDULED PAYOUT, AND SO ON.
Life Income with Payouts Guaranteed for Designated Period. This option guarantees periodic payouts during a designated period, usually 10 or 20 years, and then continues throughout the lifetime of the Annuitant. The designated period is selected by the Contractowner.
Joint Life Annuity. This option offers a periodic payout during the joint lifetime of the Annuitant and a designated joint Annuitant. The payouts continue during the lifetime of the survivor.
Joint Life Annuity with Guaranteed Period. This option guarantees periodic payouts during a designated period, usually 10 or 20 years, and continues during the joint lifetime of the Annuitant and a designated joint Annuitant. The payouts continue during the lifetime of the survivor. The designated period is selected by the Contractowner.
General information
None of the options listed above currently provide withdrawal features permitting the Contractowner to withdraw commuted values as a lump sum payment. We
18
may make available other options, with or without withdrawal features. Options are only available to the extent they are consistent with the requirements of the Contract as well as Sections 72(s) and 401(a)(9) of the Code, if applicable. The annuity asset charge will be assessed on all variable Annuity Payouts, including options that may be offered that do not have a life contingency and therefore no mortality risk.
The Annuity Commencement Date is usually on or before the Annuitant's 85th birthday. You may change the Annuity Commencement Date or change the Annuity Payout Option up to the scheduled Annuity Commencement Date, through our Internet Service Center or by written notice to the servicing office. You must give us at least 14 days notice before the date on which you want payouts to begin. If proceeds become available to a Beneficiary in a lump sum, the Beneficiary may choose any Annuity Payout Option.
Unless you select another option, the Contract automatically provides for a life annuity with Annuity Payouts guaranteed for 10 years (on a variable basis, in proportion to the Subaccount allocations at the time of annuitization) except when a joint life payout is required by law. Under any option providing for payouts for a guaranteed period, the number of payouts which remain unpaid at the date of the Annuitant's death (or surviving Annuitant's death in case of joint life annuity) will be paid to the Contractowner if living, otherwise to your Beneficiary as payouts become due.
Variable annuity payouts
Variable Annuity Payouts will be determined using:
We determine the amount of Annuity Payouts by:
We assume an investment return of 5% per year, as applied to the applicable mortality table. The amount of each payout after the initial payout will depend upon how the underlying funds perform, relative to the 5% assumed rate. The SAI contains a more complete explanation of this calculation.
Federal tax matters
Introduction
The Federal income tax treatment of the Contract is complex and sometimes uncertain. The Federal income tax rules may vary with your particular circumstances. This discussion does not include all the Federal income tax rules that may affect you and the Contract. This discussion also does not address other Federal tax consequences, or state or local tax consequences, associated with the Contract. As a result, you should always consult a tax advisor about the application of tax rules to your individual situation.
Taxation of nonqualified annuities
This part of the discussion describes some of the Federal income tax rules applicable to nonqualified annuities. A nonqualified annuity is a Contract not issued in connection with a qualified retirement plan receiving special tax treatment under the Code, such as an IRA or a section 403(b) plan.
Tax Deferral on Earnings
The Federal income tax law generally does not tax any increase in the Contract Value until you receive a Contract distribution. However, for this general rule to apply, certain requirements must be satisfied:
Contracts not owned by an individual
If the Contract is owned by an entity (rather than an individual) the Code generally does not treat it as an annuity contract for Federal income tax purposes. This means that the entity owning the Contract pays tax currently on the excess of the Contract Value over the Purchase Payments for the Contract. Examples of contracts where the owner pays current tax on the Contract's earnings are contracts issued to a corporation or a trust. Exceptions to this rule exist. For example, the Code treats a contract as owned by an individual if the named owner is a trust or other entity that holds the contract as an agent for an individual. However, this exception does not apply in the case of any employer that owns a contract to provide deferred compensation for its employees.
Investments in the VAA must be diversified
For the Contract to be treated as an annuity for Federal income tax purposes, the investments of the VAA must
19
be "adequately diversified." IRS regulations define standards for determining whether the investments of the VAA are adequately diversified. If the VAA fails to comply with these diversification standards, you could be required to pay tax currently on the excess of the Contract Value over the total amount paid into the Contract. Although we do not control the investments of the underlying investment options, we expect that the underlying investment options will comply with the IRS regulations so that the VAA will be considered "adequately diversified."
Restrictions on Investment Options
Federal income tax law limits your rights to choose particular options offered through the Contract. Because the Internal Revenue Service has not issued guidance specifying those limits, the limits are uncertain and your right to allocate contract values among the Subaccounts may exceed those limits. If so, the Contractowner would be treated as the owner of the assets of the VAA and thus subject to current taxation on the income and gains from those assets. We do not know what limits may be set by the Internal Revenue Service in any guidance that it may issue and whether any such limits will apply to existing contracts. We reserve the right to modify the Contract without Contractowner's consent to try to prevent the tax law from considering them as the owner of the assets of the VAA.
Age at which Annuity Payouts begin
Federal income tax rules do not expressly identify a particular age by which Annuity Payouts must begin. However, those rules do require that an annuity contract provide for amortization, through Annuity Payouts, of the Contract's Purchase Payments and earnings. If Annuity Payouts under the Contract begin or are scheduled to begin on a date past the Annuitant's 85th birthday, it is possible that the tax law will not treat the Contract as an annuity for Federal income tax purposes. In that event, Contractowner would be currently taxable on the excess of the Contract Value over the amounts paid into the Contract.
Tax Treatment of Payments
We make no guarantees regarding the tax treatment of any contract or of any transaction involving a contract. However, the rest of this discussion assumes that the Contract will be treated as an annuity for Federal income tax purposes and that the tax law will not tax any increase in the Contract Value until there is a distribution from the Contract.
Taxation of Withdrawals and Surrenders
You will pay tax on withdrawals to the extent their Contract Value exceeds Purchase Payments in the Contract. This income (and all other income from the Contract) is considered ordinary income. A higher rate of tax is paid on ordinary income than on capital gains. A Contractowner will pay tax on a surrender to the extent the amount received exceeds Purchase Payments. In certain circumstances Purchase Payments are reduced by amounts received from the Contract that were not included in income.
Taxation of Annuity Payouts
The Code imposes tax on a portion of each Annuity Payout (at ordinary income tax rates) and treats a portion as a nontaxable return of Purchase Payments in the Contract. We will notify you annually of the taxable amount of your Annuity Payout. Once you have recovered the total amount of the Purchase Payment in the Contract, you will pay tax on the full amount of your Annuity Payouts. If Annuity Payouts end because of the Annuitant's death and before the total amount of the Purchase Payments in the Contract has been received, the amount not received generally will be deductible.
Taxation of Death Benefits
We may distribute amounts from the Contract because of the death of a Contractowner. The tax treatment of these amounts depends on whether the Contractowner or the Annuitant dies before or after the Annuity Commencement Date.
20
Penalty Taxes payable on Withdrawals, Surrenders, or Annuity Payouts
The Code may impose a 10% penalty tax on any distribution from the Contract which Contractowner must include in gross income. The 10% penalty tax does not apply if one of several exceptions exists. These exceptions include withdrawals, surrenders, or Annuity Payouts that:
Special Rules if you own more than one Annuity Contract
In certain circumstances, we must combine some or all of the nonqualified annuity contracts you own in order to determine the amount of an Annuity Payout, a surrender, or a withdrawal that you must include in income. For example, if you purchase two or more deferred annuity contracts from the same life insurance company (or its affiliates) during any calendar year, the Code treats all such contracts as one Contract. Treating two or more contracts as one Contract could affect the amount of a surrender, a withdrawal or an Annuity Payout that you must include in income and the amount that might be subject to the penalty tax described above.
Loans and Assignments
Except for certain qualified contracts, the tax code treats any amount received as a loan under a contract, and any assignment or pledge (or agreement to assign or pledge) any portion of your contract value, as a withdrawal of such amount or portion.
Gifting a Contract
If you transfer ownership of the Contract to a person other than the your spouse, and receive a payment less than the Contract Value, you will pay tax on the Contract Value to the extent it exceeds your Purchase Payments not previously received. The new owner's Purchase Payments in the Contract would then be increased to reflect the amount included in your income.
Loss of Interest Deduction
After June 8, 1997, if the Contract is issued to a taxpayer that is not an individual, or if the Contract is held for the benefit of an entity, the entity will lose a portion of its deduction for otherwise deductible interest expenses. This disallowance does not apply if you pay tax on the annual increase in the Contract Value. Entities that are considering purchasing the Contract, or entities that will benefit from someone else's ownership of the Contract, should consult a tax advisor.
Qualified retirement plans
We also designed the Contracts for use in connection with certain types of retirement plans that receive favorable treatment under the Code. Contracts issued to or in connection with a qualified retirement plan are called "qualified contracts." We issue contracts for use with different types of qualified plans. The Federal income tax rules applicable to those plans are complex and varied. As a result, this Prospectus does not attempt to provide more than general information about use of the Contract with the various types of qualified plans. Persons planning to use the Contract in connection with a qualified plan should obtain advice from a competent tax advisor.
Types of Qualified Contracts and Terms of Contracts
Currently, we issue contracts in connection with the following types of qualified plans:
We may issue the Contract for use with other types of qualified plans in the future.
We will amend contracts to be used with a qualified plan as generally necessary to conform to tax law requirements for the type of plan. However, the rights of a person to any qualified plan benefits may be subject to the plan's terms and conditions, regardless of the Contract's terms and conditions. In addition, we are not bound by the terms and conditions of qualified plans to the extent such terms and conditions contradict the Contract, unless we consent.
Tax Treatment of Qualified Contracts
The Federal income tax rules applicable to qualified plans and qualified contracts vary with the type of plan and contract. For example,
21
Tax Treatment of Payments
Federal income tax rules generally include distributions from a qualified contract in your income as ordinary income. These taxable distributions will include Purchase Payments that were deductible or excludible from income. Thus, under many qualified contracts the total amount received is included in income since a deduction or exclusion from income was taken for Purchase Payments. There are exceptions. For example, you do not include amounts received from a Roth IRA in income if certain conditions are satisfied.
Failure to comply with the minimum distribution rules applicable to certain qualified plans, such as Traditional IRAs, will result in the imposition of an excise tax. This excise tax generally equals 50% of the amount by which a minimum required distribution exceeds the actual distribution from the qualified plan.
Federal Penalty Taxes payable on Distributions
The Code may impose a 10% penalty tax on the amount received from the qualified contract that must be included in income. The Code does not impose the penalty tax if one of several exceptions applies. The exceptions vary depending on the type of qualified contract purchased. For example, in the case of an IRA, exceptions provide that the penalty tax does not apply to a withdrawal, surrender, or Annuity Payout:
These exceptions, as well as certain others not described here, generally apply to taxable distributions from other qualified plans. However, the specific requirements of the exception may vary.
Transfers and Direct Rollovers
In many circumstances, money may be moved between qualified contracts and qualified plans by means of a rollover or a transfer. Special rules apply to such rollovers and transfers. If the applicable rules are not followed, you may suffer adverse Federal income tax consequences, including paying taxes you might not otherwise have had to be pay. A qualified advisor should always be consulted before you move or attempt to move funds between any qualified plan or contract and another qualified plan or contract.
The direct rollover rules apply to certain payments (called "eligible rollover distributions") from section 401(a) plans, section 403(a) or (b) plans, HR 10 plans, and contracts used in connection with these types of plans. (The direct rollover rules do not apply to distributions from IRAs or section 457 plans.) The direct rollover rules require that we withhold Federal income tax equal to 20% of the eligible rollover distribution from the distribution amount, unless you elect to have the amount directly transferred to certain qualified plans or contracts. Before we send a rollover distribution, we will provide you with a notice explaining these requirements and how the 20% withholding can be avoided by electing a direct rollover.
Federal income tax withholding
We will withhold and remit to the IRS a part of the taxable portion of each distribution made under the Contract unless the Contractowner notifies us at or before the time of the distribution that tax is not to be withheld. In certain circumstances, Federal income tax rules may require us to withhold tax. At the time a withdrawal, surrender, or Annuity Payout is requested, we will give you an explanation of the withholding requirements.
Tax status of Lincoln Life
Under existing Federal income tax laws, Lincoln Life does not pay tax on investment income and realized capital gains of the VAA. Lincoln Life does not expect that it will incur any Federal income tax liability on the income and gains earned by the VAA. We, therefore, do not impose a charge for Federal income taxes. If Federal income tax law changes and we must pay tax on some or all of the income and gains earned by the VAA, we may impose a charge against the VAA to pay the taxes.
Changes in the law
The above discussion is based on the Code, IRS regulations, and interpretations existing on the date of this Prospectus. However, Congress, the IRS, and the courts may modify these authorities, sometimes retroactively.
Voting Rights
As required by law, we will vote the funds shares held in the VAA at meetings of the shareholders of the various funds. The voting will be done according to the
22
instructions of Contractowners who have interests in any Subaccounts which invest in the funds. If the Investment Company Act of 1940 or any regulation under it should be amended or if present interpretations should change, and if as a result we determine that we are permitted to vote the funds shares in our own right, we may elect to do so.
The number of votes which you have the right to cast will be determined by applying your percentage interest in a Subaccount to the total number of votes attributable to the Subaccount. In determining the number of votes, fractional shares will be recognized. After the Annuity Commencement Date, the votes attributable to a Contract will decrease.
With regard to the Lincoln National funds, Equity 500 Index Fund, Small Cap Index Fund, VP International, Baron Capital Asset Fund, AMT Partners Portfolio, AMT MidCap Growth Portfolio and Worldwide Growth Portfolio: those shares held in a Subaccount for which no timely instructions are received will be voted by us in proportion to the voting instructions which are received for all Contracts participating in that Subaccount. Voting instructions to abstain on any item to be voted on will be applied on a pro-rata basis to reduce the number of votes eligible to be cast. Since all the funds except the Lincoln National funds engage in shared funding, other persons or entities besides Lincoln Life may vote these shares.
Whenever a shareholders meeting is called, each person having a voting interest in a Subaccount will be sent proxy voting material, reports and other materials relating to the Delaware Group Premium Fund Growth & Income Series, Global Bond Series and Trend Series (Delaware funds). Since the Delaware funds engages in shared funding, other persons or entities besides Lincoln Life may vote funds shares.
Distribution of the Contracts
We are the distributors of the Contracts. They will be sold through the Internet Service Center we maintain for this purpose. We are registered with the SEC under the Securities Exchange Act of 1934 as a broker-dealer and are a member of the National Association of Securities Dealers (NASD).
Return privilege
Within the free-look period after you receive the Contract, you may cancel it for any reason through our Internet Service Center or by delivering or mailing it, postage prepaid, to Lincoln Financial Direct at P.O. Box 691, Leesburg, VA 20178. A Contract canceled under this provision will be void and your Contract Value will be returned. No Surrender Charge will be assessed.
The Purchase Payments will be invested in the Lincoln National Money Market Fund during the free-look period.
State regulation
As a life insurance company organized and operated under Indiana law, we are subject to provisions governing life insurers and to regulation by the Indiana Commissioner of Insurance.
Our books and accounts are subject to review and examination by the Indiana Insurance Department at all times. That Department conducts a full examination of our operations at least every five years.
Records and reports
As presently required by the 1940 Act and applicable regulations, we are responsible for maintaining all records and accounts relating to the VAA. We have entered into an agreement with the Delaware Service Company, 2005 Market Street, Philadelphia, PA 19203, to provide accounting services to the VAA. We will electronically mail to you, at your last known e-mail address, at least semiannually after the first Contract Year, reports containing information required by the 1940 Act or any other applicable law or regulation.
Other information
A registration statement has been filed with the SEC, under the Securities Act of 1933 as amended, for the Contracts being offered here. This prospectus is only a part of that registration statement and, therefore, does not contain all the information in the registration statement, its amendments and exhibits. Please refer to the complete registration statement for further information about the VAA, Lincoln Life and the Contracts offered. Statements in this prospectus about the content of Contracts and other legal instruments are summaries. For the complete text of those Contracts and instruments, please refer to those documents as filed with the SEC.
Lincoln National Flexible Premium Variable Life Accounts D, G, K, M, R and S (all registered as investment companies under the 1940 Act, the "variable life accounts") are authorized to invest assets in the following Lincoln National and Delaware funds: Bond, Growth and Income, Managed, Money Market and Special Opportunities (for Account D); Growth and Income and Special Opportunities (for Account G); Bond, Global
23
Asset Allocation, Money Market and Social Awareness Funds (for Accounts M, R and S); and all Lincoln National and Delaware funds for Account K.
Through the VAA and the Variable Life Accounts, Lincoln Life is the sole shareholder in the Lincoln National funds. However, Lincoln Life is not the sole shareholder of the other funds. Collectively, the VAA and the Variable Life Accounts may be referred to in the prospectus and in the SAI as the "variable accounts".
Due to differences in redemption rates, tax treatment or other considerations, the interests of Contractowners under the Variable Life Accounts could conflict with those of Contractowners under the VAA. In those cases where assets from variable life and variable annuity separate accounts are invested in the same fund (in other words, where mixed funding occurs), the Boards of Directors of the funds involved will monitor for any material conflicts and determine what action, if any, should be taken. If it becomes necessary for any separate account to replace shares of any fund with another investment, that fund may have to liquidate securities on a disadvantageous basis. Refer to the prospectus for each fund for more information about mixed funding. In the future, we may purchase shares in the funds for one or more unregistered segregated investment accounts.
Advertisements/sales literature
In marketing the variable annuity Contracts, we may refer to certain ratings assigned to us under the Rating System of the A.M. Best Co., Oldwick, New Jersey. The objective of Best's Rating System is to evaluate the various factors affecting the overall performance of an insurance company in order to provide Best's opinion about that company's relative financial strength and ability to meet its contractual obligations. The procedure includes both a quantitative and qualitative review of the insurance company. In marketing the Contracts and the underlying funds, we may at times use data published by other nationally-known independent statistical services. These service organizations provide relative measures of such factors as an insurer's claims paying ability, the features of particular Contracts, and the comparative investment performance of the funds with other portfolios having similar objectives. A few such services are: Duff & Phelps, the Lipper Group, Moody's, Morningstar, Standard and Poor's and VARDS. There is more information about each of these services under ADVERTISING AND SALES LITERATURE in the SAI. Marketing materials may employ illustrations of compound interest and dollar-cost averaging, discuss automatic withdrawal services, and describe our customer base, assets, and our relative size in the industry. They may also discuss other features of Lincoln Life, the VAA, the funds and their investment management.
Legal proceedings
Lincoln Life is involved in various pending or threatened legal proceedings arising from the conduct of its business. Most of these proceedings are routine and in the ordinary course of business. In some instances they include claims for unspecified or substantial punitive damages and similar types of relief in addition to amounts for equitable relief. After consultation with legal counsel and a review of available facts, it is management's opinion that the ultimate liability, if any, under these suits will not have a material adverse effect on the financial position of Lincoln Life.
Lincoln Life is presently defending several lawsuits in which Plaintiffs seek to represent national classes of policyholders in connection with alleged fraud, breach of contract and other claims relating to the sale of interest-sensitive universal and participating whole life insurance policies. As of the date of this prospectus, the courts have not certified a class in any of the suits. Plaintiffs seek unspecified damages and penalties for themselves and on behalf of the putative class. Although the relief sought in these cases is substantial, the cases are in the preliminary stages of litigation, and it is premature to make assessments about potential loss, if any. Management is defending these suits vigorously. The amount of liability, if any, which may ultimately arise as a result of these suits cannot be reasonably determined at this time.
24
Statement of Additional
Information table of
contents for the VAA
Item
General information and history of Lincoln Life
Special terms
Services
Purchase of securities being offered
Calculation of investment results
Annuity payouts
Determination of accumulation and annuity unit value
Advertising and sales literature
Financial statements
For a free copy of the SAI please see page one of this prospectus.
25
eAnnuity
Lincoln National
Variable Annuity Account C (VAA) (Registrant)
Lincoln National
Life Insurance Company (Depositor)
Statement of Additional Information (SAI)
This SAI should be read in conjunction with the eAnnuity prospectus of the VAA dated May 1, 2000.
You may request a free copy of the eAnnuity VAA Prospectus from [email protected] or you may write Lincoln Financial Direct, P.O. Box 691, Leesburg, VA 20178.
Table of contents
|
Page |
|
---|---|---|
General information and history | ||
of Lincoln Life | B-2 | |
Special terms | B-2 | |
Services | B-2 | |
Purchase of securities being offered | B-2 | |
Calculation of investment results | B-2 | |
Annuity payouts | B-5 | |
Determination of accumulation and | ||
annuity unit value | B-5 | |
Advertising and sales | ||
literature | B-6 | |
Financial statements | B-7 | |
This SAI is not a Prospectus.
The date of this SAI is May 1, 2000.
B-1
General information
and history of
Lincoln National Life
Insurance Co. (Lincoln Life)
The prior depositor of the account, Lincoln National Pension Insurance Co., was merged into Lincoln Life, effective January 1, 1989. Lincoln Life, organized in 1905, is an Indiana stock insurance corporation, engaged primarily in insurance and financial services. Lincoln Life is owned by Lincoln National Corp., a publicly held insurance holding company domiciled in Indiana.
Special terms
The special terms used in this SAI are the ones defined in the prospectus. They are capitalized to make this document more understandable.
Services
Independent auditors
The financial statements of the VAA and the statutory-basis financial statements of Lincoln Life appearing in this SAI and Registration Statement have been audited by Ernst & Young LLP, independent auditors, as set forth in their reports which also appear elsewhere in this document and in the registration statement. The financial statements audited by Ernst & Young LLP have been included in this document in reliance on their reports given on their authority as experts in accounting and auditing.
Keeper of records
All accounts, books, records and other documents which are required to be maintained for the VAA are maintained by Lincoln Life. No separate charge against the assets of the VAA is made by Lincoln Life for this service. We have entered into an agreement with Delaware Service Co., 2005 Market Street, Philadelphia, PA 19203, to provide accounting services to the VAA.
Underwriter
Lincoln Life is the principal underwriter for the variable annuity contract. We may not offer a Contract continuously or in every state. Lincoln Life retains no underwriting commission from the sale of the Variable Annuity Contracts.
Purchase of securities being offered
The variable annuity contract is offered to the public through Lincoln Life's Internet Service Center. There are no special purchase plans for any class of prospective buyers. However, under certain limited circumstances described in the prospectus, the Surrender Charges may be waived.
There are exchange privileges between Subaccounts. (See The Contract in the Prospectus.) No exchanges are permitted between the VAA and other separate accounts.
Calculation of investment results
Money Market Fund subaccounts:
At times the VAA may advertise the Money Market subaccount's yield. The yield refers to the income generated by an investment in the subaccount over a seven-day period. This income is then annualized. The process of annualizing, results when the amount of income generated by the investment during that week, is assumed to be generated each week over a 52-week period and is shown as a percentage of the investment. The yield figure is based on historical earnings and is not intended to indicate future performance.
The 7-day Money Market yield reported is determined by calculating the change in unit value for the base period (the 7-day period ended December 31, 1999); then dividing this figure by the account value at the beginning of the period; then annualizing. This yield includes all deductions charged to the contractowner's account, and excludes any realized gains and losses from the sale of securities. The 7-day Money Market yield as of December 31, 1999 was 4.71%.
Standard investment results:
Standard performance is based on a formula to calculate performance that is prescribed by the SEC. Under rules issued by the SEC, standard performance must be included in any marketing material that discusses the performance of the VAA and the subaccounts. This information represents past performance and does not indicate or represent future performance.
Average annual return for each period is determined by finding the average annual compounded rate of return over each period that would equate the initial amount
B-2
invested to the ending redeemable value for that period, according to the following formula:
|
n |
|
P (1 + T) | = ERV |
Where: P = a hypothetical initial purchase payment of $1,000
T
= average annual total return for the period in question
n = number of years
ERV = ending redeemable value (as of the end of the period in question) of a hypothetical $1,000 purchase payment made at the beginning of the 1-year,
5-year, or 10-year period in question (or fractional portion thereof)
The formula assumes that: (1) all recurring fees have been charged to the contractowner accounts; (2) all applicable non-recurring charges (including any surrender charges) are deducted
at the end of the period in question; and (3) there will be a complete redemption upon the anniversary of the 1-year, 5-year, or 10-year period in question.
In accordance with SEC guidelines, we will report standard performance back to the first date that the Fund became available in the VAA. Because standard performance reporting periods of less than one year could be misleading, we may report "N/A's" for standard performance until one year after the option became available in the Separate Account.
Standard performance data As of December 31, 1999
(Adjusted for Contract Expense Charges):
Subaccounts |
1-year |
5-year |
10-year/ Since Inception |
Commenced |
||||
American Century VP Intl | 50.46 | %* | N/A | N/A | 01/29/99 | |||
Baron Capital Asset | 28.84 | * | N/A | N/A | 01/29/99 | |||
Delaware Premium Global Bond | -6.04 | 3.86 | * | N/A | 05/01/96 | |||
Delaware Premium Growth & Income | -5.45 | 13.13 | * | N/A | 05/01/96 | |||
Delaware Premium Trend Series | 66.12 | 26.19 | * | N/A | 05/01/96 | |||
Deutsche/BT Equity 500 Index | 11.73 | * | N/A | N/A | 01/29/99 | |||
Deutsche/BT Small Cap Index | 14.84 | * | N/A | N/A | 01/29/99 | |||
Janus Aspen Worldwide Growth | 49.36 | * | N/A | N/A | 01/29/99 | |||
Lincoln National Aggressive Growth** | 38.82 | 20.32 | 14.33 | * | 01/03/94 | |||
Lincoln National Bond | -5.72 | 6.55 | 6.87 | 12/21/81 | ||||
Lincoln National Capital Appreciation | 41.77 | 30.10 | 24.98 | * | 01/03/94 | |||
Lincoln National Equity-Income | 3.58 | 19.79 | 16.95 | * | 01/03/94 | |||
Lincoln National Global Asset Allocation** | 8.51 | 15.98 | 11.62 | 08/03/87 | ||||
Lincoln National Growth and Income | 14.54 | 24.39 | 16.17 | 12/21/81 | ||||
Lincoln National International | 14.22 | 10.60 | 9.16 | * | 05/01/91 | |||
Lincoln National Managed | 5.00 | 15.87 | 11.29 | 04/29/83 | ||||
Lincoln National Money Market | 2.09 | 4.55 | 4.36 | 01/07/82 | ||||
Lincoln National Social Awareness | 12.51 | 27.93 | 17.87 | 05/02/88 | ||||
Lincoln National Special Opportunities | -6.92 | 14.41 | 12.28 | 12/21/81 | ||||
NeubergerBerman AMT Mid-Cap Growth | 47.07 | * | N/A | N/A | 01/29/99 | |||
NeubergerBerman MT Partners | 1.68 | * | N/A | N/A | 01/29/99 | |||
* The lifetime of the subaccount is less than the complete time period indicated.
** Substitutions for these subaccounts are anticipated to take place on or about May 1, 2000. At that time, these subaccounts are no longer available for investment.
Non-standard investment results:
The VAA may report its results over various periodsdaily, monthly, three-month, six-month, year-to-date, yearly (fiscal year), three, five, ten years or more and lifetimeand compare its results to indices and other
B-3
variable annuities in sales materials including advertisements, brochures and reports. Performance information for the periods prior to the date that a Fund became available in the VAA will be calculated based on (1) the performance of the Fund adjusted for Contract charges (ie: mortality and expense risk fees, any applicable administrative charges, and the management and other expenses of the fund) and (2) the assumption that the subaccounts were in existence for the same periods as indicated for the Fund. It may or may not reflect charges for any Riders (ie: EGMDB) that were in effect during the time periods shown. This performance is referred to as non-standardized performance data. Such results may be computed on a cumulative and/or annualized basis. We may also report performance assuming that you deposited $10,000 into a subaccount at inception of the underlying fund or 10 years ago (whichever is less). This non-standard performance may be shown as a graph illustrating how that deposit would have increased or decreased in value over time based on the performance of the underlying fund adjusted for Contract charges. This information represents past performance and does not indicate or represent future performance. The investment return and value of a Contract will fluctuate so that contractowner's investment may be worth more or less than the original investment.
Cumulative quotations are arrived at by calculating the change in Accumulation Unit Value between the first and last day of the base period being measured, and expressing the difference as a percentage of the unit value at the beginning of the base period. Annualized quotations are arrived at by applying a formula which reflects the level rate of return, which if earned over the entire base period, would produce the cumulative return.
Non-standard performance data as of December 31, 1999 (Adjusted for Contract Expense Charges):
eAnnuity Subaccounts |
YTD |
1-year |
3-year |
5-year |
10-year/ Since Inception |
As if Commenced |
||||||
American Century VP Intl | 63.19 | % | 63.19% | 31.50 | % | 23.62 | % | 19.40 | %* | 5/1/94 | ||
Baron Capital Asset | 35.17 | 35.17 | 59.26 | * | N/A | N/A | 10/1/98 | |||||
Delaware Premium Global Bond | -4.12 | -4.12 | 1.04 | 3.86 | * | N/A | 5/1/96 | |||||
Delaware Premium Growth & Income | -3.52 | -3.52 | 11.65 | 17.80 | 11.37 | 7/28/88 | ||||||
Delaware Premium Trend Series | 69.51 | 69.51 | 33.16 | 29.29 | 24.02 | * | 12/27/93 | |||||
Deutsche/BT Equity 500 Index | 19.82 | 19.82 | 21.88 | * | N/A | N/A | 10/1/97 | |||||
Deutsche/BT Small Cap Index | 19.51 | 19.51 | 8.67 | * | N/A | N/A | 8/25/97 | |||||
Janus Aspen Worldwide Growth | 63.53 | 63.53 | 36.57 | 32.86 | 28.98 | * | 9/13/93 | |||||
Lincoln National Aggressive Growth** | 41.65 | 41.65 | 17.39 | 20.32 | 14.33 | 2/3/94 | ||||||
Lincoln National Bond | -3.79 | -3.79 | 4.44 | 6.55 | 6.87 | 12/28/81 | ||||||
Lincoln National Capital Appreciation | 44.66 | 44.66 | 35.21 | 30.10 | 24.98 | * | 2/3/94 | |||||
Lincoln National Equity-Income | 5.70 | 5.70 | 15.45 | 19.79 | 16.95 | * | 2/3/94 | |||||
Lincoln National Global Asset Allocation** | 10.72 | 10.72 | 14.05 | 15.98 | 11.62 | 8/3/87 | ||||||
Lincoln National Growth and Income | 16.88 | 16.88 | 22.06 | 24.39 | 16.17 | 12/28/81 | ||||||
Lincoln National International | 16.55 | 16.55 | 11.89 | 10.6 | 9.16 | * | 5/1/91 | |||||
Lincoln National Managed | 7.14 | 7.14 | 13.27 | 15.87 | 11.29 | 4/27/83 | ||||||
Lincoln National Money Market | 4.17 | 4.17 | 4.41 | 4.55 | 4.36 | 1/7/82 | ||||||
Lincoln National Social Awareness | 14.81 | 14.81 | 23.22 | 27.93 | 17.87 | 5/2/88 | ||||||
Lincoln National Special Opportunities | -5.02 | -5.02 | 8.72 | 14.41 | 12.28 | 12/28/81 | ||||||
NeubergerBerman AMT Mid-Cap Growth | 53.05 | 53.05 | 52.37 | * | N/A | N/A | 11/3/97 | |||||
NeubergerBerman MT Partners | 6.77 | 6.77 | 13.03 | 20.36 | 16.82 | * | 3/22/94 | |||||
* The lifetime of this subaccount is less than the complete period indicated.
** Substitutions for these subaccounts are anticipated to take place on or about May 1, 2000. At that time, these subaccounts are no longer available for investment.
B-4
Annuity payouts
Variable Annuity Payouts
Variable Annuity Payouts will be determined on the basis of: (1) the value of the Contract on the Annuity Commencement Date; (2) the annuity tables contained in the Contract; (3) the type of annuity option selected; and (4) the investment performance of the eligible Fund(s) selected. In order to determine the amount of variable Annuity Payouts, Lincoln Life makes the following calculation: first, it determines the dollar amount of the first payout; second, it credits the Annuitant with a fixed number of Annuity Units based on the amount of the first payout; and third, it calculates the value of the Annuity Units each period thereafter. These steps are explained below.
The dollar amount of the first variable Annuity Payout is determined by applying the total value of the Accumulation Units credited under the Contract valued as of the Annuity Commencement Date (less any premium taxes) to the annuity tables contained in the Contract. The first variable Annuity Payout will be paid within 14 days after the Annuity Commencement Date. The monthly anniversary of the Annuity Commencement Date will become the date on which all future Annuity Payouts will be calculated. Amounts shown in the tables are based on the 1983(a) Individual Mortality Table modified, with an assumed investment return at the rate of 5% per annum. The first Annuity Payout is determined by multiplying the benefit per $1,000 of value shown in the Contract tables by the number of thousands of dollars of Contract Value under the Contract. These annuity tables vary according to the form of annuity selected and the age of the Annuitant at the Annuity Commencement Date. The 5% interest rate stated above is the measuring point for subsequent Annuity Payouts. If the actual net investment rate (annualized) exceeds 5%, the payment will increase at a rate equal to the amount of such excess. Conversely, if the actual rate is less than 5%, Annuity Payouts will decrease. If the assumed rate of interest were to be increased, Annuity Payouts would start at a higher level but would decrease more rapidly or increase more slowly.
Lincoln Life may use sex distinct annuity tables in Contracts where not prohibited by law.
At an Annuity Commencement Date, the Annuitant is credited with Annuity Units for each Subaccount on which variable Annuity Payouts are based. The number of Annuity Units to be credited is determined by dividing the amount of the first payout by the value of an Annuity Unit in each Subaccount selected. Although the number of Annuity Units is fixed by this process, the value of such units will vary with the value of the underlying eligible Funds. The amount of the second and subsequent annuity payouts is determined by multiplying the Contractowner's fixed number of Annuity Units in each Subaccount by the appropriate Annuity Unit value for the Valuation Date ending on the monthly anniversary of the annuity commencement date.
The value of each Subaccount Annuity Unit was arbitrarily established. The Annuity Unit value for each Subaccount at the end of any Valuation Date is determined as follows:
The value of the Annuity Units is determined as of the monthly anniversary of the Annuity Commencement Date to permit calculation of amounts of Annuity Payouts and mailing of checks in advance of their due dates. Such checks will normally be issued and mailed at least three days before the due date.
Proof of age, sex and survival
Lincoln Life may require proof of age, sex or survival of any payee upon whose age, sex or survival payouts depend.
Determination of
accumulation and
annuity unit value
A description of the days on which Accumulation and Annuity Units will be valued is given in the prospectus. The New York Stock Exchange's (NYSE) most recent announcement (which is subject to change) states that it will be closed on New Year's Day, Martin Luther King Day, Washington's Birthday, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day. It may also be closed on other days.
Since the portfolios of some of the Funds and Series will consist of securities primarily listed on foreign exchanges or otherwise traded outside the United States, those securities may be traded (and the net asset value of those Funds and Series and of the variable account could therefore be significantly affected) on
B-5
days when the investor has no access to those Funds and Series.
Advertising and sales literature
As set forth in the prospectus, Lincoln Life may refer to the following organizations (and others) in its marketing materials:
A.M. BEST'S RATING SYSTEM evaluates the various factors affecting the overall performance of an insurance company in order to provide an opinion as to an insurance company's relative financial strength and ability to meet its contractual obligations. The procedure includes both a quantitative and qualitative review of each company.
DUFF & PHELPS insurance company claims paying ability (CPA) service provides purchasers of insurance company policies and Contracts with analytical and statistical information on the solvency and liquidity of major U.S licensed insurance companies, both mutual and stock.
EAFE Index is prepared by Morgan Stanley Capital International (MSCI). It measures performance of securities in Europe, Australia and the Far East. The index reflects the movements of world stock markets by representing the evolution of an unmanaged portfolio. The EAFE Index offers international diversification with over 1000 companies across 20 different countries.
LIPPER VARIABLE INSURANCE PRODUCTS PERFORMANCE ANALYSIS SERVICE is a publisher of statistical data covering the investment company industry in the United States and overseas. Lipper is recognized as the leading source of data on open-end and closed-end funds. Lipper currently tracks the performance of over 5,000 investment companies and publishes numerous specialized reports, including reports on performance and portfolio analysis, fee and expense analysis.
MOODY'S insurance claims-paying rating is a system of rating insurance company's financial strength, market leadership and ability to meet financial obligations. The purpose of Moody's ratings is to provide investors with a simple system of gradation by which the relative quality of insurance companies may be noted.
MORNINGSTAR is an independent financial publisher offering comprehensive statistical and analytical coverage of open-end and closed-end funds and variable annuity contracts.
STANDARD & POOR's CORP. insurance claims-paying ability rating is an assessment of an operating insurance company's financial capacity to meet obligations under an insurance policy in accordance with the terms. The likelihood of a timely flow of funds from the insurer to the trustee for the bondholders is a key element in the rating determination for such debt issues.
VARDS (Variable Annuity Research Data Service) provides a comprehensive guide to variable annuity contract features and historical fund performance. The service also provides a readily understandable analysis of the comparative characteristics and market performance of funds inclusive in variable contracts.
STANDARD & POOR'S 500 INDEX (S&P 500) broad-based measurement of changes in stock-market conditions based on the average performance of 500 widely held common stocks; commonly known as the S&P 500. The selection of stocks, their relative weightings to reflect differences in the number of outstanding shares and publication of the index itself are services of Standard & Poor's Corp., a financial advisory, securities rating and publishing firm.
NASDAQ-OTC Price Index this index is based on the National Association of Securities Dealers Automated Quotations (NASDAQ) and represents all domestic over-the-counter stocks except those traded on exchanges and those having only one market maker, a total of some 3,500 stocks. It is market value-weighted and was introduced with a base of 100.00 on February 5, 1971.
DOW JONES INDUSTRIAL AVERAGE (DJIA) price-weighted average of 30 actively traded blue chip stocks, primarily industrials but including American Express Co. and American Telephone and Telegraph Co. Prepared and published by Dow Jones & Co., it is the oldest and most widely quoted of all the market indicators. The average is quoted in points, not dollars.
In its advertisements and other sales literature for the VAA and the eligible Funds, Lincoln Life intends to illustrate the advantages of the Contracts in a number of ways:
Dollar-cost averaging illustrations. These illustrations will generally discuss the price-leveling effect of making regular purchases in the same subaccounts over a period of time, to take advantage of the trends in market prices of the portfolio securities purchased for those Subaccounts.
Automatic withdrawal service. A service provided by Lincoln Life, through which a Contractowner may take any distribution allowed by Code Section 401(a)(9) in the case of qualified contracts, or permitted under Code Section 72 in the case of nonqualified contracts, by way of an automatically generated payment.
Lincoln Financial Group. Lincoln Financial Group is the marketing name for Lincoln National Corporation (NYSE:LNC) and its affiliates. With headquarters in Philadelphia, Lincoln Financial Group has consolidated assets of over $103 billion and annual consolidated revenues of $6.8 billion. Through its wealth accumulation
B-6
and protection businesses, the company provides annuities, life insurance, 401(k) plans, life-health reinsurance, mutual funds, institutional investment management and financial planning and advisory services.
Lincoln Life's customers. Sales literature for the VAA, the Funds and Series may refer to the number of employers and the number of individual annuity clients which Lincoln Life serves. As of the date of this Prospectus, Lincoln Life was serving over 15,000 organizations and more than 1.5 million individuals.
Lincoln Life's assets, size. Lincoln Life may discuss its general financial condition (see, for example, the reference to A.M. Best Co., above); it may refer to its assets; it may also discuss its relative size and/or ranking among companies in the industry or among any subclassification of those companies, based upon recognized evaluation criteria. For example, Lincoln Life is the 12th largest U.S. life insurer based upon overall assets. As of December 31, 1999, Lincoln Life had statutory admitted assets of over $79 billion.
Sales literature and advertisements may reference these and other similar reports from Best's or other similar publications which report on the insurance and financial services industries.
We may quote the historical performance of the funds, predating their inclusion in the VAA, provided that the policies and objectives of a fund have remained substantially the same.
Financial statements
Financial statements of the VAA and the statutory-basis financial statements of Lincoln Life appear on the following pages.
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C-1
Lincoln National Variable Annuity Account C
Statement of assets and liability
December 31, 1999
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Combined |
Lincoln National Aggressive Growth Subaccount |
Lincoln National Bond Subaccount |
Lincoln National Capital Appreciation Subaccount |
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Assets: | |||||||||||||
Investments at Market Affiliated (cost $8,663,921,685) | $ | 13,084,273,208 | $ | 391,899,766 | $ | 299,941,713 | $ | 1,840,135,585 | |||||
Investments at Market Unaffiliated (cost $272,049,768) | 320,760,186 | | | | |||||||||
Total Assets | 13,405,033,394 | 391,899,766 | 299,941,713 | 1,840,135,585 | |||||||||
Liability Payable to The Lincoln National Life Insurance Company | 368,100 | 10,640 | 8,299 | 50,555 | |||||||||
Net Assets | $ | 13,404,665,294 | $ | 391,889,126 | $ | 299,933,414 | $ | 1,840,085,030 | |||||
Percentage of net assets | 100.00 | % | 2.92 | % | 2.24 | % | 13.73 | % | |||||
Net assets are represented by: | |||||||||||||
Multifund without GMDB Rider | |||||||||||||
Units in accumulation period | 175,375,232 | 61,153,697 | 486,392,137 | ||||||||||
Annuity reserves units | 330,037 | 160,260 | 1,553,958 | ||||||||||
Unit value | $ | 2.21 | $ | 4.81 | $ | 3.71 | |||||||
Value in accumulation period | 387,458,903 | 294,262,077 | 1,802,604,486 | ||||||||||
Annuity reserves | 729,155 | 771,148 | 5,759,079 | ||||||||||
Multifund with GMDB Rider | |||||||||||||
Units in accumulation period | 1,657,816 | 1,022,335 | 8,524,638 | ||||||||||
Unit value | $ | 2.19 | $ | 4.78 | $ | 3.68 | |||||||
Value in accumulation period | 3,635,002 | 4,882,266 | 31,355,023 | ||||||||||
eAnnuity | |||||||||||||
Units in accumulation period | 29,720 | 3,701 | 98,271 | ||||||||||
Annuity reserves units | | | | ||||||||||
Unit value | $ | 2.22 | $ | 4.84 | $ | 3.73 | |||||||
Value in accumulation period | 66,066 | 17,923 | 366,442 | ||||||||||
Annuity reserves | | | | ||||||||||
Net Assets | $ | 391,889,126 | $ | 299,933,414 | $ | 1,840,085,030 | |||||||
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Lincoln National Money Market Subaccount |
Lincoln National Social Awareness Subaccount |
Lincoln National Special Opportunities Subaccount |
American Century VP International Subaccount |
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Assets: | |||||||||||||
Investments at Market Affiliated (cost $8,663,921,685) | $ | 178,274,136 | $ | 1,868,238,589 | $ | 627,247,954 | $ | | |||||
Investments at Market Unaffiliated (cost $272,049,768) | | | | 3,613 | |||||||||
Total Assets | 178,274,136 | 1,868,238,589 | 627,247,954 | 3,613 | |||||||||
Liability Payable to The Lincoln National Life Insurance Company | 4,937 | 51,386 | 17,139 | ||||||||||
Net Assets | $ | 178,269,199 | $ | 1,868,187,203 | $ | 627,230,815 | $ | 3,613 | |||||
Percentage of net assets | 1.33 | % | 13.93 | % | 4.68 | % | 0.00 | % | |||||
Net assets are represented by: | |||||||||||||
Multifund without GMDB Rider | |||||||||||||
Units in accumulation period | 66,318,967 | 272,682,501 | 75,094,275 | | |||||||||
Annuity reserves units | 85,154 | 879,570 | 143,255 | | |||||||||
Unit value | $ | 2.61 | $ | 6.71 | $ | 8.25 | | ||||||
Value in accumulation period | 173,091,643 | 1,830,926,133 | 619,340,778 | | |||||||||
Annuity reserves | 222,250 | 5,905,868 | 1,181,500 | | |||||||||
Multifund with GMDB Rider | |||||||||||||
Units in accumulation period | 1,836,508 | 4,696,813 | 818,870 | | |||||||||
Unit value | $ | 2.59 | $ | 6.66 | $ | 8.19 | | ||||||
Value in accumulation period | 4,757,090 | 31,298,463 | 6,702,697 | | |||||||||
eAnnuity | |||||||||||||
Units in accumulation period | 75,481 | 8,398 | 704 | 2,329 | |||||||||
Annuity reserves units | | | | | |||||||||
Unit value | $ | 2.63 | $ | 6.76 | $ | 8.30 | $ | 1.55 | |||||
Value in accumulation period | 198,216 | 56,739 | 5,840 | 3,613 | |||||||||
Annuity reserves | | | | | |||||||||
Net Assets | $ | 178,269,199 | $ | 1,868,187,203 | $ | 627,230,815 | $ | 3,613 | |||||
See accompanying notes.
C-2
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Delaware Trend Subaccount |
Delaware Growth and Income Subaccount |
Delaware Global Bond Subaccount |
Lincoln National Equity- Income Subaccount |
Lincoln National Global Asset Allocation Subaccount |
Lincoln National Growth and Income Subaccount |
Lincoln National International Subaccount |
Lincoln National Managed Subaccount |
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Assets: | ||||||||||||||||||||||||
Investments at Market Affiliated (cost $8,663,921,685) | $ | 325,657,104 | $ | 117,748,834 | $ | 14,380,526 | $ | 956,997,134 | $ | 480,902,873 | $ | 4,555,742,279 | $ | 515,801,508 | $ | 911,303,158 | ||||||||
Investments at Market Unaffiliated (cost $272,049,768) | | | | | | | | | ||||||||||||||||
Total Assets | 325,657,104 | 117,748,834 | 14,380,526 | 956,997,134 | 480,902,873 | 4,555,742,279 | 515,801,508 | 911,303,158 | ||||||||||||||||
Liability Payable to The Lincoln National Life Insurance Company | 8,790 | 3,255 | 399 | 26,231 | 13,207 | 125,262 | 14,178 | 25,070 | ||||||||||||||||
Net Assets | $ | 325,648,314 | $ | 117,745,579 | $ | 14,380,127 | $ | 956,970,903 | $ | 480,889,666 | $ | 4,555,617,017 | $ | 515,787,330 | $ | 911,278,088 | ||||||||
Percentage of net assets | 2.43 | % | 0.88 | % | 0.11 | % | 7.14 | % | 3.59 | % | 33.98 | % | 3.85 | % | 6.80 | % | ||||||||
Net assets are represented by: | ||||||||||||||||||||||||
Multifund without GMDB Rider | ||||||||||||||||||||||||
Units in accumulation period | 138,130,035 | 72,068,626 | 12,254,866 | 371,756,833 | 140,172,654 | 333,803,071 | 247,685,485 | 160,214,813 | ||||||||||||||||
Annuity reserves units | 151,852 | 712,597 | 66,439 | 1,624,078 | 860,132 | 4,204,627 | 464,213 | 570,359 | ||||||||||||||||
Unit value | $ | 2.31 | $ | 1.55 | $ | 1.13 | $ | 2.52 | $ | 3.37 | $ | 13.38 | $ | 2.06 | $ | 5.61 | ||||||||
Value in accumulation period | 319,057,588 | 111,489,353 | 13,847,956 | 938,303,117 | 472,214,876 | 4,466,001,825 | 509,530,537 | 898,850,367 | ||||||||||||||||
Annuity reserves | 350,753 | 1,102,380 | 75,075 | 4,099,123 | 2,897,621 | 56,254,343 | 954,965 | 3,199,874 | ||||||||||||||||
Multifund with GMDB Rider | ||||||||||||||||||||||||
Units in accumulation period | 2,693,313 | 3,351,154 | 405,781 | 5,811,748 | 1,696,586 | 2,509,728 | 2,589,188 | 1,652,446 | ||||||||||||||||
Unit value | $ | 2.29 | $ | 1.54 | $ | 1.12 | $ | 2.50 | $ | 3.34 | $ | 13.28 | $ | 2.04 | $ | 5.57 | ||||||||
Value in accumulation period | 6,175,116 | 5,145,087 | 455,071 | 14,558,081 | 5,672,387 | 33,323,736 | 5,286,276 | 9,200,663 | ||||||||||||||||
eAnnuity | ||||||||||||||||||||||||
Units in accumulation period | 27,917 | 5,628 | 1,781 | 4,167 | 1,338 | 2,758 | 7,514 | 4,816 | ||||||||||||||||
Annuity reserves units | | | | | 29,576 | | | | ||||||||||||||||
Unit value | $ | 2.32 | $ | 1.56 | $ | 1.14 | $ | 2.54 | $ | 3.39 | $ | 13.46 | $ | 2.07 | $ | 5.64 | ||||||||
Value in accumulation period | 64,857 | 8,759 | 2,025 | 10,582 | 4,535 | 37,113 | 15,552 | 27,184 | ||||||||||||||||
Annuity reserves | | | | | 100,247 | | | | ||||||||||||||||
Net Assets | $ | 325,648,314 | $ | 117,745,579 | $ | 14,380,127 | $ | 956,970,903 | $ | 480,889,666 | $ | 4,555,617,017 | $ | 515,787,330 | $ | 911,278,088 | ||||||||
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Delaware Small Cap Value Subaccount |
BT Equity 500 Index Subaccount |
BT Small Cap Index Subaccount |
Baron Capital Asset Subaccount |
Fidelity VIP Growth Subaccount |
Fidelity VIP II Contrafund Subaccount |
Janus Aspen Worldwide Growth Subaccount |
AMT Partners Subaccount |
AMT Mid-Cap Growth Subaccount |
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Assets: | |||||||||||||||||||||||||||
Investments at Market Affiliated (cost $8,663,921,685) | $ | 2,049 | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | |||||||||
Investments at Market Unaffiliated (cost $272,049,768) | | 52,900,929 | 4,102,164 | 9,553,520 | 55,157,100 | 26,189,792 | 146,931,530 | 3,128,730 | 22,792,808 | ||||||||||||||||||
Total Assets | 2,049 | 52,900,929 | 4,102,164 | 9,553,520 | 55,157,100 | 26,189,792 | 146,931,530 | 3,128,730 | 22,792,808 | ||||||||||||||||||
Liability Payable to The Lincoln National Life Insurance Company | 1,447 | 108 | 266 | 1,520 | 725 | 3,984 | 89 | 613 | |||||||||||||||||||
Net Assets | $ | 2,049 | $ | 52,899,482 | $ | 4,102,056 | $ | 9,553,254 | $ | 55,155,580 | $ | 26,189,067 | $ | 146,927,546 | $ | 3,128,641 | $ | 22,792,195 | |||||||||
Percentage of net assets | 0.00 | % | 0.39 | % | 0.03 | % | 0.07 | % | 0.41 | % | 0.20 | % | 1.10 | % | 0.02 | % | 0.17 | % | |||||||||
Net assets are represented by: | |||||||||||||||||||||||||||
Multifund without GMDB Rider | |||||||||||||||||||||||||||
Units in accumulation period | | 46,984,052 | 3,065,895 | 7,228,569 | 44,655,728 | 21,303,355 | 99,942,030 | 2,629,473 | 15,335,744 | ||||||||||||||||||
Annuity reserves units | | 151,082 | 27,063 | 0 | 107,432 | 89,289 | 214,122 | 12,084 | 0 | ||||||||||||||||||
Unit value | | $ | 1.09 | $ | 1.16 | $ | 1.21 | $ | 1.19 | $ | 1.15 | $ | 1.44 | $ | 1.01 | $ | 1.46 | ||||||||||
Value in accumulation period | | 51,176,298 | 3,568,586 | 8,720,950 | 53,085,113 | 24,399,100 | 143,507,545 | 2,659,658 | 22,453,334 | ||||||||||||||||||
Annuity reserves | | 164,563 | 31,500 | | 127,711 | 102,264 | 307,460 | 12,222 | | ||||||||||||||||||
Multifund with GMDB Rider | |||||||||||||||||||||||||||
Units in accumulation period | | 1,319,893 | 141,266 | 658,684 | 1,635,955 | 1,475,097 | 1,912,083 | 448,914 | 216,008 | ||||||||||||||||||
Unit value | | $ | 1.09 | $ | 1.16 | $ | 1.21 | $ | 1.19 | $ | 1.14 | $ | 1.43 | $ | 1.01 | $ | 1.46 | ||||||||||
Value in accumulation period | | 1,436,290 | 164,256 | 793,850 | 1,942,756 | 1,687,703 | 2,742,730 | 453,596 | 315,934 | ||||||||||||||||||
eAnnuity | |||||||||||||||||||||||||||
Units in accumulation period | 2,080 | 15,090 | 154,689 | 28,950 | | | 240,176 | 3,020 | 15,122 | ||||||||||||||||||
Annuity reserves units | | 91,113 | 130,559 | | | | | | | ||||||||||||||||||
Unit value | $ | 0.98 | $ | 1.15 | $ | 1.18 | $ | 1.33 | | | $ | 1.54 | $ | 1.05 | $ | 1.52 | |||||||||||
Value in accumulation period | 2,049 | 17,383 | 183,150 | 38,454 | | | 369,811 | 3,165 | 22,927 | ||||||||||||||||||
Annuity reserves | | 104,948 | 154,564 | | | | | | | ||||||||||||||||||
Net Assets | $ | 2,049 | $ | 52,899,482 | $ | 4,102,056 | $ | 9,553,254 | $ | 55,155,580 | $ | 26,189,067 | $ | 146,927,546 | $ | 3,128,641 | $ | 22,792,195 | |||||||||
See accompanying notes.
C-3
Lincoln National Variable Annuity Account C
Statement of operations
Year Ended December 31, 1999
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Combined |
Lincoln National Aggressive Growth Subaccount |
Lincoln National Bond Subaccount |
Lincoln National Capital Appreciation Subaccount |
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Net Investment Income (Loss): | |||||||||||||
Dividends from investment income | $ | 158,354,665 | $ | 28,785 | $ | 21,956,116 | $ | | |||||
Dividends from net realized gains on investments | 550,190,641 | | | 7,140,107 | |||||||||
Mortality and expense guarantees: | |||||||||||||
Multifund without GMDB Rider | (119,875,865 | ) | (3,044,251 | ) | (3,297,140 | ) | (11,989,055 | ) | |||||
Multifund with GMDB Rider | (1,929,152 | ) | (37,081 | ) | (73,092 | ) | (258,335 | ) | |||||
eAnnuity | (6,278 | ) | (96 | ) | (73 | ) | (985 | ) | |||||
Net investment income (loss) | 586,734,011 | (3,052,643 | ) | 18,585,811 | (5,108,268 | ) | |||||||
Net Realized and Unrealized Gain (Loss) on Investments: | |||||||||||||
Net realized gain (loss) on investments | 324,489,276 | 5,423,560 | 498,828 | 1,715,312 | |||||||||
Net change in unrealized appreciation or depreciation on investments | 905,837,058 | 111,770,714 | (33,717,275 | ) | 492,291,917 | ||||||||
Net realized and unrealized gain (loss) on investments | 1,230,326,334 | 117,194,274 | (33,218,447 | ) | 494,007,229 | ||||||||
Net increase (decrease) in net assets resulting from operations | $ | 1,817,060,345 | $ | 114,141,631 | $ | (14,632,636 | ) | $ | 488,898,961 | ||||
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Lincoln National Money Market Subaccount |
Lincoln National Social Awareness Subaccount |
Lincoln National Special Opportunities Subaccount |
American Century VP International Subaccount |
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Net Investment Income (Loss): | |||||||||||||
Dividends from investment income | $ | 7,045,729 | $ | 12,864,130 | $ | 8,511,316 | $ | | |||||
Dividends from net realized gains on investments | | 73,867,336 | 81,519,258 | | |||||||||
Mortality and expense guarantees: | |||||||||||||
Multifund without GMDB Rider | (1,483,713 | ) | (17,827,206 | ) | (7,212,380 | ) | | ||||||
Multifund with GMDB Rider | (38,170 | ) | (414,938 | ) | (94,828 | ) | | ||||||
eAnnuity | (1,414 | ) | (339 | ) | (25 | ) | (11 | ) | |||||
Net investment income (loss) | 5,522,432 | 68,488,983 | 82,723,341 | (11 | ) | ||||||||
Net Realized and Unrealized Gain (Loss) on Investments: | |||||||||||||
Net realized gain (loss) on investments | | 85,211,142 | 26,077,310 | | |||||||||
Net change in unrealized appreciation or depreciation on investments | | 86,292,911 | (155,496,460 | ) | 1,230 | ||||||||
Net realized and unrealized gain (loss) on investments | | 171,504,053 | (129,419,150 | ) | 1,230 | ||||||||
Net increase (decrease) in net assets resulting from operations | $ | 5,522,432 | $ | 239,993,036 | $ | (46,695,809 | ) | $ | 1,219 | ||||
See accompanying notes.
C-4
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Delaware Trend Subaccount |
Delaware Growth and Income Subaccount |
Delaware Global Bond Subaccount |
Lincoln National Equity- Income Subaccount |
Lincoln National Global Asset Allocation Subaccount |
Lincoln National Growth and Income Subaccount |
Lincoln National International Subaccount |
Lincoln National Managed Subaccount |
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---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Net Investment Income (Loss): | ||||||||||||||||||||||||
Dividends from investment income | $ | 9,249 | $ | 2,775,895 | $ | 775,728 | $ | 7,657,878 | $ | 7,939,089 | $ | 44,283,310 | $ | 17,391,602 | $ | 26,746,892 | ||||||||
Dividends from net realized gains on investments | | 11,760,427 | 92,847 | 39,187,617 | 13,076,502 | 171,825,386 | 107,582,975 | 43,870,798 | ||||||||||||||||
Mortality and expense guarantees: | ||||||||||||||||||||||||
Multifund without GMDB Rider | (1,440,489 | ) | (1,376,835 | ) | (150,399 | ) | (9,780,222 | ) | (4,732,441 | ) | (42,911,795 | ) | (5,030,733 | ) | (9,165,136 | ) | ||||||||
Multifund with GMDB Rider | (38,913 | ) | (88,259 | ) | (6,237 | ) | (206,017 | ) | (76,982 | ) | (388,236 | ) | (62,418 | ) | (126,280 | ) | ||||||||
eAnnuity | (130 | ) | (43 | ) | (11 | ) | (34 | ) | (518 | ) | (94 | ) | (58 | ) | (59 | ) | ||||||||
Net investment income (loss) | (1,470,283 | ) | 13,071,185 | 711,928 | 36,859,222 | 16,205,650 | 172,808,571 | 119,881,368 | 61,326,215 | |||||||||||||||
Net Realized and Unrealized Gain (Loss) on Investments: | ||||||||||||||||||||||||
Net realized gain (loss) on investments | 1,068,429 | 166,488 | (96,041 | ) | 26,424,234 | 11,688,807 | 132,079,312 | 9,385,470 | 24,756,791 | |||||||||||||||
Net change in unrealized appreciation or depreciation on investments | 102,528,148 | (18,455,277 | ) | (1,337,031 | ) | (16,625,475 | ) | 18,169,135 | 353,017,078 | (54,003,384 | ) | (27,308,300 | ) | |||||||||||
Net realized and unrealized gain (loss) on investments | 103,596,577 | (18,288,789 | ) | (1,433,072 | ) | 9,798,759 | 29,857,942 | 485,096,390 | (44,617,914 | ) | (2,551,509 | ) | ||||||||||||
Net increase (decrease) in net assets resulting from operations | $ | 102,126,294 | $ | (5,217,604 | ) | $ | (721,144 | ) | $ | 46,657,981 | $ | 46,063,592 | $ | 657,904,961 | $ | 75,263,454 | $ | 58,774,706 | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Delaware Small Cap Value Subaccount |
BT Equity 500 Index Subaccount |
BT Small Cap Index Subaccount |
Baron Capital Asset Subaccount |
Fidelity VIP Growth Subaccount |
Fidelity VIP II Contrafund Subaccount |
Janus Aspen Worldwide Growth Subaccount |
AMT Partners Subaccount |
AMT Mid-Cap Growth Subaccount |
||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Net Investment Income (Loss): | |||||||||||||||||||||||||||
Dividends from investment income | $ | 26 | $ | 329,405 | $ | 39,076 | $ | 14 | $ | | $ | | $ | 402 | $ | 23 | $ | | |||||||||
Dividends from net realized gains on investments | 10 | 154,904 | 111,864 | 523 | | | | 40 | 47 | ||||||||||||||||||
Mortality and expense guarantees: | |||||||||||||||||||||||||||
Multifund without GMDB Rider | | (94,411 | ) | (5,689 | ) | (13,819 | ) | (75,334 | ) | (37,716 | ) | (177,319 | ) | (5,112 | ) | (24,670 | ) | ||||||||||
Multifund with GMDB Rider | | (2,642 | ) | (267 | ) | (2,491 | ) | (3,816 | ) | (3,781 | ) | (4,092 | ) | (1,804 | ) | (473 | ) | ||||||||||
eAnnuity | (10 | ) | (370 | ) | (1,000 | ) | (116 | ) | | | (836 | ) | (12 | ) | (44 | ) | |||||||||||
Net investment income (loss) | 26 | 386,886 | 143,984 | (15,889 | ) | (79,150 | ) | (41,497 | ) | (181,845 | ) | (6,865 | ) | (25,140 | ) | ||||||||||||
Net Realized and Unrealized Gain (Loss) on Investments: | |||||||||||||||||||||||||||
Net realized gain (loss) on investments | | 3,155 | 5,374 | 7,131 | 344 | 130 | 9,846 | 35,446 | 28,208 | ||||||||||||||||||
Net change in unrealized appreciation or depreciation on investments | (61 | ) | 4,076,999 | 350,000 | 1,440,979 | 6,950,425 | 2,861,396 | 28,562,462 | 175,774 | 4,291,153 | |||||||||||||||||
Net realized and unrealized gain (loss) on investments | (61 | ) | 4,080,154 | 355,374 | 1,448,110 | 6,950,769 | 2,861,526 | 28,572,308 | 211,220 | 4,319,361 | |||||||||||||||||
Net increase (decrease) in net assets resulting from operations | $ | (35 | ) | $ | 4,467,040 | $ | 499,358 | $ | 1,432,221 | $ | 6,871,619 | $ | 2,820,029 | $ | 28,390,463 | $ | 204,355 | $ | 4,294,221 | ||||||||
See accompanying notes.
C-5
Lincoln National Variable Annuity Account C
Statement of changes in net assets
Years Ended December 31, 1998 and 1999
|
Combined |
Lincoln National Aggressive Growth Subaccount |
Lincoln National Bond Subaccount |
Lincoln National Capital Appreciation Subaccount |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Net Assets January 1, 1998 | $ | 9,426,807,141 | $ | 336,529,141 | $ | 278,721,201 | $ | 442,449,775 | |||||
Changes From Operations: | |||||||||||||
Net investment income | 744,104,140 | 41,935,398 | 28,916,577 | 42,397,629 | |||||||||
Net realized gain (loss) on investments | 120,104,936 | 1,928,124 | 1,075,607 | 1,916,291 | |||||||||
Net change in unrealized appreciation or depreciation on investments | 613,207,528 | (69,642,626 | ) | (4,990,556 | ) | 139,176,089 | |||||||
Net increase (decrease) in net assets resulting from operations | 1,477,416,604 | (25,779,104 | ) | 25,001,628 | 183,490,009 | ||||||||
Change From Unit Transactions: Accumulation Units: |
|||||||||||||
Contract purchases | 3,097,926,661 | 105,566,490 | 173,651,601 | 239,073,049 | |||||||||
Terminated contracts & transfers to annuity reserves | (2,472,732,748 | ) | (92,755,811 | ) | (118,474,365 | ) | (118,928,687 | ) | |||||
625,193,913 | 12,810,679 | 55,177,236 | 120,144,362 | ||||||||||
Annuity Reserves: | |||||||||||||
Transfer from accumulation units & between accounts | 12,803,225 | 350,018 | 295,541 | 1,011,628 | |||||||||
Annuity Payments | (6,362,862 | ) | (111,570 | ) | (66,581 | ) | (215,049 | ) | |||||
Receipt (reimbursement) of mortality guarantee adjustment | (49,352 | ) | (74 | ) | 1,828 | (3,187 | ) | ||||||
6,391,011 | 238,374 | 230,788 | 793,392 | ||||||||||
Net increase (decrease) in net assets resulting from unit transactions | 631,584,924 | 13,049,053 | 55,408,024 | 120,937,754 | |||||||||
Total increase in net assets | 2,109,001,528 | (12,730,051 | ) | 80,409,652 | 304,427,763 | ||||||||
Net assets at December 31, 1998 | 11,535,808,669 | 323,799,090 | 359,130,853 | 746,877,538 | |||||||||
Changes From Operations: | |||||||||||||
Net investment income (loss) | 586,734,011 | (3,052,643 | ) | 18,585,811 | (5,108,268 | ) | |||||||
Net realized gain (loss) on investments | 324,489,276 | 5,423,560 | 498,828 | 1,715,312 | |||||||||
Net change in unrealized appreciation or depreciation on investments | 905,837,058 | 111,770,714 | (33,717,275 | ) | 492,291,917 | ||||||||
Net increase (decrease) in net assets resulting from operations | 1,817,060,345 | 114,141,631 | (14,632,636 | ) | 488,898,961 | ||||||||
Change From Unit Transactions: Accumulation Units: |
|||||||||||||
Contract purchases | 4,031,602,338 | 79,369,638 | 103,853,425 | 1,006,577,563 | |||||||||
Terminated contracts & transfers to annuity reserves | (3,984,899,955 | ) | (125,302,224 | ) | (148,509,116 | ) | (404,300,360 | ) | |||||
46,702,383 | (45,932,586 | ) | (44,655,691 | ) | 602,277,203 | ||||||||
Annuity Reserves: | |||||||||||||
Transfer from accumulation units & between accounts | 13,695,335 | 5,211 | 180,951 | 2,609,328 | |||||||||
Annuity Payments | (8,452,725 | ) | (124,675 | ) | (91,107 | ) | (567,970 | ) | |||||
Receipt (reimbursement) of mortality guarantee adjustment | (148,713 | ) | 455 | 1,044 | (10,030 | ) | |||||||
5,093,897 | (119,009 | ) | 90,888 | 2,031,328 | |||||||||
Net increase (decrease) in net assets resulting from unit transactions | 51,796,280 | (46,051,595 | ) | (44,564,803 | ) | 604,308,531 | |||||||
Total increase (decrease) in net assets | 1,868,856,625 | 68,090,036 | (59,197,439 | ) | 1,093,207,492 | ||||||||
Net assets at December 31, 1999 | $ | 13,404,665,294 | $ | 391,889,126 | $ | 299,933,414 | $ | 1,840,085,030 | |||||
See accompanying notes.
C-6
|
Delaware Trend Subaccount |
Delaware Growth and Income Subaccount |
Delaware Global Bond Subaccount |
Lincoln National Equity- Income Subaccount |
Lincoln National Global Asset Allocation Subaccount |
Lincoln National Growth and Income Subaccount |
Lincoln National International Subaccount |
Lincoln National Managed Subaccount |
||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Net Assets January 1, 1998 | $ | 55,454,713 | $ | 94,235,368 | $ | 12,405,258 | $ | 800,317,384 | $ | 435,490,107 | $ | 3,491,513,034 | $ | 461,096,276 | $ | 847,194,482 | ||||||||
Changes From Operations: | ||||||||||||||||||||||||
Net investment income | 489,960 | 6,640,801 | 645,968 | 27,749,902 | 45,633,831 | 268,901,661 | 18,736,768 | 106,628,928 | ||||||||||||||||
Net realized gain (loss) on investments | 741,866 | 60,877 | (7,472 | ) | 8,109,113 | 4,771,427 | 55,304,330 | 13,148,742 | 6,891,535 | |||||||||||||||
Net change in unrealized appreciation or depreciation on investments | 9,589,306 | 4,477,834 | 295,306 | 58,105,437 | 1,778,860 | 334,917,754 | 26,816,729 | (15,219,767 | ) | |||||||||||||||
Net increase (decrease) in net assets resulting from operations | 10,821,132 | 11,179,512 | 933,802 | 93,964,452 | 52,184,118 | 659,123,745 | 58,702,239 | 98,300,696 | ||||||||||||||||
Change From Unit Transactions: Accumulation Units: |
||||||||||||||||||||||||
Contract purchases | 55,720,878 | 90,243,467 | 8,321,486 | 256,506,361 | 89,524,793 | 696,928,591 | 159,551,094 | 162,637,864 | ||||||||||||||||
Terminated contracts & transfers to annuity reserves | (33,204,931 | ) | (41,860,904 | ) | (5,970,687 | ) | (184,405,391 | ) | (95,521,824 | ) | (709,130,485 | ) | (185,524,256 | ) | (155,726,195 | ) | ||||||||
22,515,947 | 48,382,563 | 2,350,799 | 72,100,970 | (5,997,031 | ) | (12,201,894 | ) | (25,973,162 | ) | 6,911,669 | ||||||||||||||
Annuity Reserves: | ||||||||||||||||||||||||
Transfer from accumulation units & between accounts | 48,418 | 506,606 | 31,917 | 686,673 | 490,958 | 6,311,160 | 160,319 | 605,334 | ||||||||||||||||
Annuity Payments | (7,936 | ) | (108,990 | ) | (7,766 | ) | (479,908 | ) | (179,454 | ) | (3,840,740 | ) | (133,802 | ) | (408,409 | ) | ||||||||
Receipt (reimbursement) of mortality guarantee adjustment | | (448 | ) | 78 | 3,201 | (14,716 | ) | 55,053 | (14,795 | ) | (25,649 | ) | ||||||||||||
40,482 | 397,168 | 24,229 | 209,966 | 296,788 | 2,525,473 | 11,722 | 171,276 | |||||||||||||||||
Net increase (decrease) in net assets resulting from unit transactions | 22,556,429 | 48,779,731 | 2,375,028 | 72,310,936 | (5,700,243 | ) | (9,676,421 | ) | (25,961,440 | ) | 7,082,945 | |||||||||||||
Total increase in net assets | 33,377,561 | 59,959,243 | 3,308,830 | 166,275,388 | 46,483,875 | 649,447,324 | 32,740,799 | 105,383,641 | ||||||||||||||||
Net assets at December 31, 1998 | 88,832,274 | 154,194,611 | 15,714,088 | 966,592,772 | 481,973,982 | 4,140,960,358 | 493,837,075 | 952,578,123 | ||||||||||||||||
Changes From Operations: | ||||||||||||||||||||||||
Net investment income (loss) | (1,470,283 | ) | 13,071,185 | 711,928 | 36,859,222 | 16,205,650 | 172,808,571 | 119,881,368 | 61,326,215 | |||||||||||||||
Net realized gain (loss) on investments | 1,068,429 | 166,488 | (96,041 | ) | 26,424,234 | 11,688,807 | 132,079,312 | 9,385,470 | 24,756,791 | |||||||||||||||
Net change in unrealized appreciation or depreciation on investments | 102,528,148 | (18,455,277 | ) | (1,337,031 | ) | (16,625,475 | ) | 18,169,135 | 353,017,078 | (54,003,384 | ) | (27,308,300 | ) | |||||||||||
Net increase (decrease) in net assets resulting from operations | 102,126,294 | (5,217,604 | ) | (721,144 | ) | 46,657,981 | 46,063,592 | 657,904,961 | 75,263,454 | 58,774,706 | ||||||||||||||
Change From Unit Transactions: Accumulation Units: |
||||||||||||||||||||||||
Contract purchases | 215,228,368 | 40,264,328 | 5,375,055 | 229,184,806 | 75,016,170 | 746,492,736 | 206,951,775 | 118,914,778 | ||||||||||||||||
Terminated contracts & transfers to annuity reserves | (80,756,572 | ) | (71,511,116 | ) | (6,031,258 | ) | (286,133,549 | ) | (122,893,414 | ) | (989,819,625 | ) | (260,185,570 | ) | (219,107,295 | ) | ||||||||
134,471,796 | (31,246,788 | ) | (656,203 | ) | (56,948,743 | ) | (47,877,244 | ) | (243,326,889 | ) | (53,233,795 | ) | (100,192,517 | ) | ||||||||||
Annuity Reserves: | ||||||||||||||||||||||||
Transfer from accumulation units & between accounts | 235,417 | 178,082 | 55,542 | 1,327,758 | 1,095,474 | 5,170,679 | 51,788 | 535,385 | ||||||||||||||||
Annuity Payments | (16,883 | ) | (162,863 | ) | (12,232 | ) | (657,877 | ) | (299,258 | ) | (4,945,413 | ) | (150,827 | ) | (433,896 | ) | ||||||||
Receipt (reimbursement) of mortality guarantee adjustment | (584 | ) | 141 | 76 | (988 | ) | (66,880 | ) | (146,679 | ) | 19,635 | 16,287 | ||||||||||||
217,950 | 15,360 | 43,386 | 668,893 | 729,336 | 78,587 | (79,404 | ) | 117,776 | ||||||||||||||||
Net increase (decrease) in net assets resulting from unit transactions | 134,689,746 | (31,231,428 | ) | (612,817 | ) | (56,279,850 | ) | (47,147,908 | ) | (243,248,302 | ) | (53,313,199 | ) | (100,074,741 | ) | |||||||||
Total increase (decrease) in net assets | 236,816,040 | (36,449,032 | ) | (1,333,961 | ) | (9,621,869 | ) | (1,084,316 | ) | 414,656,659 | 21,950,255 | (41,300,035 | ) | |||||||||||
Net assets at December 31, 1999 | $ | 325,648,314 | $ | 117,745,579 | $ | 14,380,127 | $ | 956,970,903 | $ | 480,889,666 | $ | 4,555,617,017 | $ | 515,787,330 | $ | 911,278,088 | ||||||||
See accompanying notes.
C-7
|
Lincoln National Money Market Subaccount |
Lincoln National Social Awareness Subaccount |
Lincoln National Special Opportunities Subaccount |
American Century VP International Subaccount |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Net Assets January 1, 1998 | $ | 87,465,884 | $ | 1,245,772,271 | $ | 838,162,247 | $ | | |||||
Changes From Operations: | |||||||||||||
Net investment income | 4,102,249 | 65,719,879 | 85,604,589 | | |||||||||
Net realized gain (loss) on investments | | 11,779,014 | 14,385,482 | | |||||||||
Net change in unrealized appreciation or depreciation on investments | | 179,689,808 | (51,786,646 | ) | | ||||||||
Net increase (decrease) in net assets resulting from operations | 4,102,249 | 257,188,701 | 48,203,425 | | |||||||||
Change From Unit Transactions: Accumulation Units: |
|||||||||||||
Contract purchases | 204,102,322 | 669,312,601 | 186,786,064 | | |||||||||
Terminated contracts & transfers to annuity reserves | (176,371,981 | ) | (351,797,764 | ) | (203,059,467 | ) | | ||||||
27,730,341 | 317,514,837 | (16,273,403 | ) | | |||||||||
Annuity Reserves: | |||||||||||||
Transfer from accumulation units & between accounts | 62,528 | 1,857,256 | 384,869 | | |||||||||
Annuity Payments | (50,178 | ) | (558,894 | ) | (193,585 | ) | | ||||||
Receipt (reimbursement) of mortality guarantee adjustment | 1,044 | (25,388 | ) | (26,299 | ) | | |||||||
13,394 | 1,272,974 | 164,985 | | ||||||||||
Net increase (decrease) in net assets resulting from unit transactions | 27,743,735 | 318,787,811 | (16,108,418 | ) | | ||||||||
Total increase in net assets | 31,845,984 | 575,976,512 | 32,095,007 | | |||||||||
Net assets at December 31, 1998 | 119,311,868 | 1,821,748,783 | 870,257,254 | | |||||||||
Changes From Operations: | |||||||||||||
Net investment income (loss) | 5,522,432 | 68,488,983 | 82,723,341 | (11 | ) | ||||||||
Net realized gain (loss) on investments | | 85,211,142 | 26,077,310 | | |||||||||
Net change in unrealized appreciation or depreciation on investments | | 86,292,911 | (155,496,460 | ) | 1,230 | ||||||||
Net increase (decrease) in net assets resulting from operations | 5,522,432 | 239,993,036 | (46,695,809 | ) | 1,219 | ||||||||
Change From Unit Transactions: Accumulation Units: |
|||||||||||||
Contract purchases | 302,648,002 | 447,789,509 | 139,945,983 | 2,394 | |||||||||
Terminated contracts & transfers to annuity reserves | (249,268,452 | ) | (642,066,963 | ) | (336,167,020 | ) | | ||||||
53,379,550 | (194,277,454 | ) | (196,221,037 | ) | 2,394 | ||||||||
Annuity Reserves: | |||||||||||||
Transfer from accumulation units & between accounts | 89,561 | 1,392,420 | 114,215 | | |||||||||
Annuity Payments | (58,064 | ) | (679,764 | ) | (227,230 | ) | | ||||||
Receipt (reimbursement) of mortality guarantee adjustment | 23,852 | 10,182 | 3,422 | | |||||||||
55,349 | 722,838 | (109,593 | ) | | |||||||||
Net increase (decrease) in net assets resulting from unit transactions | 53,434,899 | (193,554,616 | ) | (196,330,630 | ) | 2,394 | |||||||
Total increase (decrease) in net assets | 58,957,331 | 46,438,420 | (243,026,439 | ) | 3,613 | ||||||||
Net assets at December 31, 1999 | $ | 178,269,199 | $ | 1,868,187,203 | $ | 627,230,815 | $ | 3,613 | |||||
See accompanying notes.
C-8
|
Delaware Small Cap Value Subaccount |
BT Equity 500 Index Subaccount |
BT Small Cap Index Subaccount |
Baron Capital Asset Subaccount |
Fidelity VIP Growth Subaccount |
Fidelity VIP II Contrafund Subaccount |
Janus Aspen Worldwide Growth Subaccount |
AMT Partners Subaccount |
AMT Mid-Cap Growth Subaccount |
||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Net Assets January 1, 1998 | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | |||||||||
Changes From Operations: | |||||||||||||||||||||||||||
Net investment income | | | | | | | | | | ||||||||||||||||||
Net realized gain (loss) on investments | | | | | | | | | | ||||||||||||||||||
Net change in unrealized appreciation or depreciation on investments | | | | | | | | | | ||||||||||||||||||
Net increase (decrease) in net assets resulting from operations | | | | | | | | | | ||||||||||||||||||
Change From Unit Transactions: Accumulation Units: |
|||||||||||||||||||||||||||
Contract purchases | | | | | | | | | | ||||||||||||||||||
Terminated contracts & transfers to annuity reserves | | | | | | | | | | ||||||||||||||||||
| | | | | | | | | |||||||||||||||||||
Annuity Reserves: | |||||||||||||||||||||||||||
Transfer from accumulation units & between accounts | | | | | | | | | | ||||||||||||||||||
Annuity Payments | | | | | | | | | | ||||||||||||||||||
Receipt (reimbursement) of mortality guarantee adjustment | | | | | | | | | | ||||||||||||||||||
| | | | | | | | | |||||||||||||||||||
Net increase (decrease) in net assets resulting from unit transactions | | | | | | | | | | ||||||||||||||||||
Total increase in net assets | | | | | | | | | | ||||||||||||||||||
Net assets at December 31, 1998 | | | | | | | | | | ||||||||||||||||||
Changes From Operations: | |||||||||||||||||||||||||||
Net investment income (loss) | 26 | 386,886 | 143,984 | (15,889 | ) | (79,150 | ) | (41,497 | ) | (181,845 | ) | (6,865 | ) | (25,140 | ) | ||||||||||||
Net realized gain (loss) on investments | | 3,155 | 5,374 | 7,131 | 344 | 130 | 9,846 | 35,446 | 28,208 | ||||||||||||||||||
Net change in unrealized appreciation or depreciation on investments | (61 | ) | 4,076,999 | 350,000 | 1,440,979 | 6,950,425 | 2,861,396 | 28,562,462 | 175,774 | 4,291,153 | |||||||||||||||||
Net increase (decrease) in net assets resulting from operations | (35 | ) | 4,467,040 | 499,358 | 1,432,221 | 6,871,619 | 2,820,029 | 28,390,463 | 204,355 | 4,294,221 | |||||||||||||||||
Change From Unit Transactions: Accumulation Units: |
|||||||||||||||||||||||||||
Contract purchases | 2,084 | 55,129,061 | 4,350,077 | 9,772,806 | 55,106,803 | 26,650,738 | 136,061,158 | 4,070,627 | 22,844,454 | ||||||||||||||||||
Terminated contracts & transfers to annuity reserves | | (6,850,603 | ) | (776,038 | ) | (1,651,773 | ) | (6,935,056 | ) | (3,372,134 | ) | (17,756,939 | ) | (1,158,398 | ) | (4,346,480 | ) | ||||||||||
2,084 | 48,278,458 | 3,574,039 | 8,121,033 | 48,171,747 | 23,278,604 | 118,304,219 | 2,912,229 | 18,497,974 | |||||||||||||||||||
Annuity Reserves: | |||||||||||||||||||||||||||
Transfer from accumulation units & between accounts | | 157,204 | 28,959 | | 114,909 | 92,347 | 247,986 | 12,119 | | ||||||||||||||||||
Annuity Payments | | (3,940 | ) | (685 | ) | | (2,272 | ) | (2,010 | ) | (15,697 | ) | (62 | ) | | ||||||||||||
Receipt (reimbursement) of mortality guarantee adjustment | | 720 | 385 | | (423 | ) | 97 | 575 | | | |||||||||||||||||
| 153,984 | 28,659 | | 112,214 | 90,434 | 232,864 | 12,057 | | |||||||||||||||||||
Net increase (decrease) in net assets resulting from unit transactions | 2,084 | 48,432,442 | 3,602,698 | 8,121,033 | 48,283,961 | 23,369,038 | 118,537,083 | 2,924,286 | 18,497,974 | ||||||||||||||||||
Total increase (decrease) in net assets | 2,049 | 52,899,482 | 4,102,056 | 9,553,254 | 55,155,580 | 26,189,067 | 146,927,546 | 3,128,641 | 22,792,195 | ||||||||||||||||||
Net assets at December 31, 1999 | $ | 2,049 | $ | 52,899,482 | $ | 4,102,056 | $ | 9,553,254 | $ | 55,155,580 | $ | 26,189,067 | $ | 146,927,546 | $ | 3,128,641 | $ | 22,792,195 | |||||||||
See accompanying notes.
C-9
Lincoln National Variable Annuity Account C
Notes to financial statements
1. Accounting policies & account information
The Variable Account: Lincoln National Variable Annuity Account C (Variable Account) is a segregated investment account of the Lincoln National Life Insurance Company (the Company) and is registered with the Securities and Exchange Commission under the Investment Company Act of 1940, as amended, as a unit investment trust. The Variable Account consists of two products, Multifund and eAnnuity. The Multifund product is an annuity contract offering a guaranteed minimum death benefit (GMBD) rider option. Effective August 20, 1998, the eAnnuity product became available to clients of the Company. The eAnnuity product is an annuity contract that is sold through the internet.
The assets of the Variable Account are owned by the Company. The portion of the Variable Account's assets supporting the annuity contracts may not be used to satisfy liabilities arising from any other business of the Company.
Basis of Presentation: The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States for unit investment trusts.
Investments: The assets of the Variable Accounts are divided into variable sub-accounts each of which is invested in shares of twenty four portfolios (the Funds) of nine diviersified open-end management investment companies, each portfolio with its own investment objective. The Funds are:
Lincoln
National
Lincoln National Aggressive Growth Fund
Lincoln National Bond Fund
Lincoln National Capital Appreciation Fund
Lincoln National Equity-Income Fund
Lincoln National Global Asset Allocation Fund
Lincoln National Growth and Income Fund
Lincoln National International Fund
Lincoln National Managed Fund
Lincoln National Money Market Fund
Lincoln National Social Awareness Fund
Lincoln National Special Opportunities Fund
Delaware
Group Premium Fund, Inc.
Global Bond Series
Growth and Income Series
Trend Series
Small Cap Value Series
American
Century Variable Portfolios, Inc.
VP International
BT
Insurance Funds Trust
Equity 500 Index Fund
Small Cap Index Fund
Baron Capital Asset Fund Trust
Fidelity
Variable Insurance Product Fund Service Class
Growth Portfolio
Fidelity
Variable Insurance Product Fund II Service
Class
Contrafund Portfolio
Janus Aspen Series, Worldwide Growth Fund
Neuberger
Berman Advisors Management Trust (AMT)
AMT Partners Fund
AMT Mid-Cap Growth Fund
Investments in the Funds are stated at the closing net asset value per share on December 31, 1999, which approximates fair value. The difference between cost and fair value is reflected as unrealized appreciation and depreciation of investments.
Investment transactions are accounted for on a trade date basis. The cost of investments sold is determined by the average cost method.
Dividends: Dividends paid to the Variable Account are automatically reinvested in shares of the Funds on the payable date. Dividend income is recorded on the ex-dividend date.
Federal Income Taxes: Operations of the Variable Account form a part of and are taxed with operations of the Company, which is taxed as a "life insurance company" under the Internal Revenue Code. The Variable Account will not be taxed as a regulated investment company under Subchapter M of the Internal Revenue Code. Using current federal income tax law, no federal income taxes are payable with respect to the Variable Account's net investment income and the net realized gain on investments.
Annuity Reserves: Reserves on contracts not involving life contingencies are calculated using an assumed investment rate of 5%. Reserves on contracts involving life contingencies are calculated using a modification of the 1971 Individual Annuitant Mortality Table and an assumed investment rate of 5%.
2. Mortality and expense guarantees & other transactions with affiliate
Amounts are paid to the Company for mortality and expense guarantees at a percentage of the current value of the Variable Account each day. The rates are as follows for the two contract types and the corresponding rider options within the Variable Account:
C-10
Multifund at a daily rate of .00274525% (1.002% on an annual basis).
Multifund with GMDB rider at a daily rate of .00356712328% (1.302% on an annual basis).
eAnnuity at a daily rate of .001506849% (.55% on an annual basis).
In addition, amounts retained by the Company from the proceeds of the sales of annuity contracts for contract charges and surrender charges were as follows during 1999:
Lincoln National Aggressive Growth Subaccount | $ | 116,828 | |
Lincoln National Bond Subaccount | 1,593,037 | ||
Lincoln National Capital Appreciation Subaccount | 500,263 | ||
Delaware Trend Subaccount | 54,577 | ||
Delaware Growth and Income Subaccount | 81,940 | ||
Delaware Global Bond Subaccount | 5,049 | ||
Lincoln National Equity-Income Subaccount | 462,699 | ||
Lincoln National Global Asset Allocation Subaccount | 639,027 | ||
Lincoln National Growth and Income Subaccount | 5,623,955 | ||
Lincoln National International Subaccount | 705,420 | ||
Lincoln National Managed Subaccount | 1,189,797 | ||
Lincoln National Money Market Subaccount | 1,358,215 | ||
Lincoln National Social Awareness Subaccount | 2,743,498 | ||
Lincoln National Special Opportunities Subaccount | 1,132,653 | ||
American Century VP International Subaccount | | ||
Delaware Small Cap Value Subaccount | | ||
BT Equity 500 Index Subaccount | 1,193 | ||
BT Small Cap Index Subaccount | 26 | ||
Baron Capital Asset Subaccount | 46 | ||
Fidelity VIP Growth Subaccount | 870 | ||
Fidelity VIP II Contrafund Subaccount | 160 | ||
Janus Aspen Worldwide Growth Subaccount | 3,740 | ||
AMT Partners Subaccount | 8 | ||
AMT Mid-Cap Growth Subaccount | 73 | ||
$ | 16,213,074 | ||
Accordingly, the Company is responsible for all sales, general and administrative expenses applicable to the Variable Account.
C-11
3. Net Assets
The following is a summary of net assets owned at December 31, 1999.
|
Combined |
Lincoln National Aggressive Growth Subaccount |
Lincoln National Bond Subaccount |
Lincoln National Capital Appreciation Subaccount |
||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Unit Transactions: | ||||||||||||
Accumulation units | $ | 5,715,479,238 | $ | 194,780,574 | $ | 149,041,322 | $ | 1,039,817,677 | ||||
Annuity Reserves | 36,082,815 | 407,421 | 626,395 | 3,474,851 | ||||||||
5,751,562,053 | 195,187,995 | 149,667,717 | 1,043,292,528 | |||||||||
Accumulated net investment income (loss) | 2,637,154,895 | 47,549,811 | 165,644,358 | 50,311,547 | ||||||||
Accumulated net realized gain (loss) on investments | 546,886,405 | 10,806,107 | 1,331,899 | 4,896,762 | ||||||||
Net unrealized appreciation or depreciation on investments | 4,469,061,941 | 138,345,213 | (16,710,560 | ) | 741,584,193 | |||||||
$ | 13,404,665,294 | $ | 391,889,126 | $ | 299,933,414 | $ | 1,840,085,030 | |||||
|
|
|
|
|
|
|
|
|
|
Lincoln National Money Market Subaccount |
Lincoln National Social Awareness Subaccount |
Lincoln National Special Opportunities Subaccount |
American Century VP International Subaccount |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Unit Transactions: | |||||||||||||
Accumulation units | $ | 113,146,268 | $ | 871,634,600 | $ | 170,516,407 | $ | 2,394 | |||||
Annuity Reserves | 170,949 | 3,739,360 | 664,867 | | |||||||||
113,317,217 | 875,373,960 | 171,181,274 | 2,394 | ||||||||||
Accumulated net investment income (loss) | 64,951,982 | 206,496,251 | 349,004,215 | (11 | ) | ||||||||
Accumulated net realized gain (loss) on investments | | 101,467,641 | 78,460,450 | | |||||||||
Net unrealized appreciation or depreciation on investments | | 684,849,351 | 28,584,876 | 1,230 | |||||||||
$ | 178,269,199 | $ | 1,868,187,203 | $ | 627,230,815 | $ | 3,613 | ||||||
C-12
|
Delaware Trend Subaccount |
Delaware Growth and Income Subaccount |
Delaware Global Bond Subaccount |
Lincoln National Equity- Income Subaccount |
Lincoln National Global Asset Allocation Subaccount |
Lincoln National Growth and Income Subaccount |
Lincoln National International Subaccount |
Lincoln National Managed Subaccount |
|||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Unit Transactions: | |||||||||||||||||||||||
Accumulation units | $ | 205,902,218 | $ | 99,862,464 | $ | 13,460,514 | $ | 551,099,047 | $ | 197,997,456 | $ | 1,296,479,207 | $ | 275,027,477 | $ | 265,571,226 | |||||||
Annuity Reserves | 258,432 | 988,451 | 76,165 | 2,545,529 | 1,865,171 | 18,553,024 | 524,126 | 1,557,862 | |||||||||||||||
206,160,650 | 100,850,915 | 13,536,679 | 553,644,576 | 199,862,627 | 1,315,032,231 | 275,551,603 | 267,129,088 | ||||||||||||||||
Accumulated net investment income (loss) | (1,048,083 | ) | 21,573,274 | 1,886,111 | 80,901,144 | 142,907,158 | 946,181,079 | 166,245,199 | 394,370,350 | ||||||||||||||
Accumulated net realized gain (loss) on investments | 2,143,442 | 349,294 | (16,761 | ) | 35,771,977 | 19,507,108 | 214,260,030 | 34,745,155 | 43,073,667 | ||||||||||||||
Net unrealized appreciation or depreciation on investments | 118,392,305 | (5,027,904 | ) | (1,025,902 | ) | 286,653,206 | 118,612,773 | 2,080,143,677 | 39,245,373 | 206,704,983 | |||||||||||||
$ | 325,648,314 | $ | 117,745,579 | $ | 14,380,127 | $ | 956,970,903 | $ | 480,889,666 | $ | 4,555,617,017 | $ | 515,787,330 | $ | 911,278,088 | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Delaware Small Cap Value Subaccount |
BT Equity 500 Index Subaccount |
BT Small Cap Index Subaccount |
Baron Capital Asset Subaccount |
Fidelity VIP Growth Subaccount |
Fidelity VIP II Contrafund Subaccount |
Janus Aspen Worldwide Growth Subaccount |
AMT Partners Subaccount |
AMT Mid-Cap Growth Subaccount |
||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Unit Transactions: | |||||||||||||||||||||||||||
Accumulation units | $ | 2,084 | $ | 48,278,458 | $ | 3,574,039 | $ | 8,121,033 | $ | 48,171,747 | $ | 23,278,604 | $ | 118,304,219 | $ | 2,912,229 | $ | 18,497,974 | |||||||||
Annuity Reserves | | 153,984 | 28,659 | | 112,214 | 90,434 | 232,864 | 12,057 | | ||||||||||||||||||
2,084 | 48,432,442 | 3,602,698 | 8,121,033 | 48,283,961 | 23,369,038 | 118,537,083 | 2,924,286 | 18,497,974 | |||||||||||||||||||
Accumulated net investment income (loss) | 26 | 386,886 | 143,984 | (15,889 | ) | (79,150 | ) | (41,497 | ) | (181,845 | ) | (6,865 | ) | (25,140 | ) | ||||||||||||
Accumulated net realized gain (loss) on investments | | 3,155 | 5,374 | 7,131 | 344 | 130 | 9,846 | 35,446 | 28,208 | ||||||||||||||||||
Net unrealized appreciation or depreciation on investments | (61 | ) | 4,076,999 | 350,000 | 1,440,979 | 6,950,425 | 2,861,396 | 28,562,462 | 175,774 | 4,291,153 | |||||||||||||||||
$ | 2,049 | $ | 52,899,482 | $ | 4,102,056 | $ | 9,553,254 | $ | 55,155,580 | $ | 26,189,067 | $ | 146,927,546 | $ | 3,128,641 | $ | 22,792,195 | ||||||||||
C-13
4. Purchases and sales of investments
The aggregate cost of investments purchased and the aggregate proceeds from investments sold were as follows for 1999.
|
|
Aggregate Cost of Purchases |
|
Aggregate Proceeds from Sales |
||
---|---|---|---|---|---|---|
Lincoln National Aggressive Growth Fund | $ | 6,028,519 | $ | 55,130,756 | ||
Lincoln National Bond Fund | 38,500,775 | 64,481,373 | ||||
Lincoln National Capital Appreciation Fund | 604,186,996 | 4,956,478 | ||||
Delaware Trend Fund | 138,128,850 | 4,903,001 | ||||
Delaware Growth and Income Fund | 20,360,413 | 38,521,681 | ||||
Delaware Global Bond Fund | 3,576,548 | 3,477,470 | ||||
Lincoln National Equity-Income Fund | 72,996,722 | 92,417,669 | ||||
Lincoln National Global Asset Allocation Fund | 27,030,783 | 57,973,067 | ||||
Lincoln National Growth and Income Fund | 241,550,485 | 311,978,507 | ||||
Lincoln National International Fund | 195,449,997 | 128,881,216 | ||||
Lincoln National Managed Fund | 73,874,151 | 112,623,748 | ||||
Lincoln National Money Market Fund | 130,925,728 | 71,966,965 | ||||
Lincoln National Social Awareness Fund | 144,863,310 | 269,927,268 | ||||
Lincoln National Special Opportunities Fund | 121,061,001 | 234,674,606 | ||||
American Century VP International Fund | 2,388 | 5 | ||||
Delaware Small Cap Value Fund | 2,116 | 6 | ||||
BT Equity 500 Index Fund | 48,872,301 | 51,526 | ||||
BT Small Cap Index Fund | 3,842,907 | 96,117 | ||||
Baron Capital Asset Fund | 8,202,972 | 97,562 | ||||
Fidelity VIP Growth Fund | 48,208,799 | 2,468 | ||||
Fidelity VIP II Contrafund Fund | 23,329,429 | 1,163 | ||||
Janus Aspen Worldwide Growth Fund | 118,404,561 | 45,339 | ||||
AMT Partners Fund | 3,510,852 | 593,342 | ||||
AMT Mid-Cap Growth Fund | 18,770,338 | 296,891 | ||||
$ | 2,091,680,941 | $ | 1,453,098,224 | |||
C-14
5. Investments
The following is a summary of investments owned at December 31, 1999.
|
|
Shares Outstanding |
|
Net Asset Value |
|
Value of Shares |
|
Cost of Shares |
|||
---|---|---|---|---|---|---|---|---|---|---|---|
Lincoln National Aggressive Growth Fund | 20,584,360 | $ | 19.04 | $ | 391,899,766 | $ | 253,554,553 | ||||
Lincoln National Bond Fund | 26,228,769 | 11.44 | 299,941,713 | 316,652,273 | |||||||
Lincoln National Capital Appreciation Fund | 58,481,206 | 31.47 | 1,840,135,585 | 1,098,551,392 | |||||||
Delaware Trend Fund | 9,674,899 | 33.66 | 325,657,104 | 207,264,799 | |||||||
Delaware Growth and Income Fund | 6,918,263 | 17.02 | 117,748,834 | 122,776,738 | |||||||
Delaware Global Bond Fund | 1,477,956 | 9.73 | 14,380,526 | 15,406,428 | |||||||
Lincoln National Equity-Income Fund | 43,408,197 | 22.05 | 956,997,134 | 670,343,928 | |||||||
Lincoln National Global Asset Allocation Fund | 28,636,521 | 16.79 | 480,902,873 | 362,290,100 | |||||||
Lincoln National Growth and Income Fund | 88,101,926 | 51.71 | 4,555,742,279 | 2,475,598,602 | |||||||
Lincoln National International Fund | 35,882,754 | 14.37 | 515,801,508 | 476,556,135 | |||||||
Lincoln National Managed Fund | 48,192,378 | 18.91 | 911,303,158 | 704,598,175 | |||||||
Lincoln National Money Market Fund | 17,827,413 | 10.00 | 178,274,136 | 178,274,136 | |||||||
Lincoln National Social Awareness Fund | 42,180,254 | 44.29 | 1,868,238,589 | 1,183,389,238 | |||||||
Lincoln National Special Opportunities Fund | 22,223,274 | 28.22 | 627,247,954 | 598,663,078 | |||||||
American Century VP International Fund | 289 | 12.50 | 3,613 | 2,383 | |||||||
Delaware Small Cap Value Fund | 133 | 15.36 | 2,049 | 2,110 | |||||||
BT Equity 500 Index Fund | 3,484,910 | 15.18 | 52,900,929 | 48,823,930 | |||||||
BT Small Cap Index Fund | 353,331 | 11.61 | 4,102,164 | 3,752,164 | |||||||
Baron Capital Asset Fund | 537,621 | 17.77 | 9,553,520 | 8,112,541 | |||||||
Fidelity VIP Growth Fund | 1,006,516 | 54.80 | 55,157,100 | 48,206,675 | |||||||
Fidelity VIP II Contrafund Fund | 899,993 | 29.10 | 26,189,792 | 23,328,396 | |||||||
Janus Aspen Worldwide Growth Fund | 3,077,100 | 47.75 | 146,931,530 | 118,369,068 | |||||||
AMT Partners Fund | 159,305 | 19.64 | 3,128,730 | 2,952,956 | |||||||
AMT Mid-Cap Growth Fund | 937,975 | 24.30 | 22,792,808 | 18,501,655 | |||||||
$ | 13,405,033,394 | $ | 8,935,971,453 | ||||||||
6. New investment funds and fund name changes
During 1999, the Delaware Small Cap Value Series, American Century VP International, BT Equity 500 Index Fund, BT Small Cap Index Fund, Baron Capital Asset Fund, Fidelity VIP Growth Portfolio, Fidelity VIP II Contrafund Portfolio, Janus Aspen Worldwide Growth Fund, AMT Partners Fund and AMT Mid-Cap Growth Fund became available as investment options for Variable Account contract owners. During 1999 the Delaware Decatur Total Return Series changed its name to the Delaware Growth and Income Series.
C-15
Report of Ernst & Young LLP,
Independent Auditors
Board
of Directors of The Lincoln National Life Insurance Company
and
Contract Owners of Lincoln National Variable Annuity Account C
We have audited the accompanying statement of assets and liability of Lincoln National Variable Annuity Account C ("Variable Account") (comprised of the Lincoln National Aggressive Growth, Lincoln National Bond, Lincoln National Capital Appreciation, Delaware Trend, Delaware Growth and Income, Delaware Global Bond, Lincoln National Equity-Income, Lincoln National Global Asset Allocation, Lincoln National Growth and Income, Lincoln National International, Lincoln National Managed, Lincoln National Money Market, Lincoln National Social Awareness, Lincoln National Special Opportunities, American Century VP International, Delaware Small Cap Value, Banker's Trust Equity 500 Index, Banker's Trust Small Cap Index, Baron Capital Asset, Fidelity VIP Growth, Fidelity VIP II Contrafund, Janus Aspen Worldwide Growth, Nueberger Berman Advisers Management Trust (AMT) Partners, and Nueberger Berman Advisers Management Trust (AMT) Mid-Cap Growth subaccounts), as of December 31, 1999, and the related statement of operations for the year then ended and the statements of changes in net assets for each of the two years in the period then ended. These financial statements are the responsibility of the Variable Account's management. Our responsibility is to express an opinion on these financial statements 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 are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of investments owned as of December 31, 1999, by correspondence with the custodian. 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 referred to above present fairly, in all material respects, the financial position of each of the respective subaccounts constituting the Lincoln National Variable Annuity Account C at December 31, 1999, the results of their operations for the year then ended, and changes in their net assets for each of the two years in the period then ended in conformity with accounting principles generally accepted in the United States.
[/S/ ERNST & YOUNG LLP]
Fort
Wayne, Indiana
March 24, 2000
C-16
Item 24.
(1) | Part A | The Table of Condensed Financial Information is included in Part A of this Registration Statement. | ||
(2) |
|
Part B |
|
The following financial statements for the Variable Account are included in Part B of this Registration Statement: |
|
|
|
|
Statement of Assets and LiabilityDecember 31, 1999 |
Statement of OperationsYear ended December 31, 1999 | ||||
Statements of Changes in Net AssetsYears ended December 31, 1999 and 1998 | ||||
Notes to Financial StatementsDecember 31, 1999 | ||||
Report of Ernst & Young LLP, Independent Auditors | ||||
(3) |
|
Part B |
|
The following statutory-basis financial statements of the Lincoln National Life Insurance Company are included in Part B of this Registration Statement: |
|
|
|
|
Balance SheetsStatutory-basisDecember 31, 1999 and 1998 |
Statements of OperationsStatutory-basisYears ended December 31, 1999, 1998, and 1997 | ||||
Statements of Changes in Capital and SurplusStatutory-basisYears ended December 31, 1999, 1998, and 1997 | ||||
Statements of Cash FlowsStatutory-basisYears ended December 31, 1999, 1998, and 1997 | ||||
Notes to Statutory-basis Financial StatementsDecember 31, 1999 | ||||
Report of Ernst & Young LLP, Independent Auditors |
24 (b) LIST OF EXHIBITS
(1) | Resolution of the Board of Directors of the Lincoln National Life Insurance Company establishing Separate Account C is incorporated herein by reference to the Registration Statement on Form N-4 (File No. 33-25990) filed on April 22, 1998. | |||
(2) |
|
None. |
||
(3) |
|
Selling Group Agreement between the Lincoln National Life Insurance Company and Sagemark Consulting, Inc. is incorporated herein by reference to the Registration Statement on Form N-4 (333-50817) filed on October 8, 1999. |
||
(4) |
|
variable annuity contract. |
||
(5) |
|
variable annuity application. |
||
(6) |
|
(a) |
|
Articles of Incorporation of Lincoln National Life Insurance Company are hereby incorporated by reference to the Registration Statement on Form S-6 (333-40745) filed November 21, 1997. |
|
|
(b) |
|
Bylaws of Lincoln National Life Insurance Company are hereby incorporated by reference to Post-Effective Amendment No. 1 to the Registration Statement on Form N-4 (333-40937) filed on November 9, 1998. |
(7) |
|
None. |
||
(8) |
|
(a) |
|
Services Agreement between Delaware Management Holdings, Inc., Delaware Service Company, Inc. and Lincoln National Life Insurance Company is incorporated herein by reference to the Registration Statement on Form N-1A (2-80741), Amendment No. 21 filed on April 10, 2000. |
|
|
(b) |
|
Fund Participation Agreement/Amendments for Lincoln National Bond Fund, Inc. |
|
|
(c) |
|
Fund Participation Agreement/Amendments for Lincoln National Capital Appreciation Fund, Inc. |
|
|
(d) |
|
Fund Participation Agreement/Amendments for Lincoln National Equity-Income Fund, Inc. |
|
|
(e) |
|
Fund Participation Agreement/Amendments for Lincoln National Growth and Income Fund, Inc. |
|
|
(f) |
|
Fund Participation Agreement/Amendments for Lincoln National International Fund, Inc. |
|
|
(g) |
|
Fund Participation Agreement/Amendments for Lincoln National Managed Fund, Inc. |
|
|
(h) |
|
Fund Participation Agreement/Amendments for Lincoln National Money Market Fund, Inc. |
|
|
(i) |
|
Fund Participation Agreement/Amendments for Lincoln National Social Awareness Fund, Inc. |
|
|
(j) |
|
Fund Participation Agreement/Amendments for Lincoln National Special Opportunities Fund, Inc. |
|
|
(k) |
|
Fund Participation Agreement/Amendments for Delaware Group Premium Fund |
|
|
(l) |
|
Fund Participation Agreement/Amendments for Twentieth Century Securities, Inc. |
|
|
(m) |
|
Fund Participation Agreement/Amendments for Bankers Trust (BT) |
|
|
(n) |
|
Fund Participation Agreement/Amendments for Janus |
|
|
(o) |
|
Fund Participation Agreement/Amendments for Neuberger Berman |
|
|
(p) |
|
Fund participation agreement/Amendments for Baron Capital |
(9) |
|
Opinion and Consent of Mary Jo Ardington, Counsel, is incorporated herein by reference to the Registration Statement filed on Form N-4 (File Number 333-50817) on July 17, 1998. |
||
(10) |
|
Consent of Ernst & Young LLP, Independent Auditors. |
||
(11) |
|
Not applicable. |
||
(12) |
|
Not applicable. |
||
(13) |
|
Schedule of Computation is incorporated herein by reference to the Registration Statement filed on Form N-4 (File Number 333-50817) on July 17, 1998. |
||
(14) |
|
Not applicable. |
||
(15) |
|
(a) |
|
Organizational Chart of Lincoln National Life Insurance Holding Company System |
(b) | Memorandum Concerning Books and Records | |||
(16) | Power of Attorney | |||
(a) | Todd Stephenson | |||
(b) | Lawrence T. Rowland(1) | |||
(c) | Keith J. Ryan | |||
(d) | H. Thomas McMeekin(1) | |||
(e) | Richard C. Vaughan(1) | |||
(f) | Jon A. Boscia |
Item 25.
DIRECTORS AND OFFICERS OF THE DEPOSITOR
Name |
Positions and Offices |
|
---|---|---|
Jon A. Boscia ** | President and Director | |
John H. Gotta **** | Chief Executive Officer of Life Insurance, Senior Vice President, and Director | |
Stephen H. Lewis * | Interim Chief Executive Officer of Annuities, Senior Vice President, and Director | |
H. Thomas McMeekin ***** | Director | |
Cynthia A. Rose * | Secretary and Assistant Vice President | |
Lawrence T. Rowland *** | Executive Vice President and Director | |
Keith J. Ryan * | Vice President, Controller and Chief Accounting Officer | |
Todd R. Stephenson * | Senior Vice President, Chief Financial Officer and Assistant Treasurer | |
Eldon J. Summers * | Second Vice President and Treasurer | |
Richard C. Vaughan ** | Director | |
Roy V. Washington * | Vice President and Chief Compliance Officer |
* | Principal business address is 1300 South Clinton Street, Fort Wayne, IN 46802-3506 | |
** | Principal business address is Center Square West Tower, 1500 Market Street Suite 3900, Philadelphia, PA 19102-2112 | |
*** | Principal business address is One Reinsurance Place,1700 Magnavox Way, Fort Wayne, IN 46804-1538 | |
**** | Principal business address is 350 Church Street, Hartford, CT 06103 | |
***** | Principal business address is One Commerce Square, 2005 Market Street 39th floor, Philadelphia, PA 19103 |
Item 26.
PERSONS CONTROLLED BY OR UNDER COMMON
CONTROL WITH THE DEPOSITOR OR REGISTRANT
See Exhibit 15(a): The Organizational Chart of The Lincoln National Insurance Holding Company System.
Item 27.
As of February 29, 2000 there were 538,217 Contract Owners under Account C.
Item 28.
(a) | Brief description of indemnification provisions. | |
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In general, Article VII of the By-Laws of The Lincoln National Life Insurance Company (Lincoln Life) provides that Lincoln Life will indemnify certain persons against expenses, judgments and certain other specified costs incurred by any such person if he/she is made a party or is threatened to be made a party to a suit or proceeding because he/she was a director, officer, or employee of LNL, as long as he/she acted in good faith and in a manner he/she reasonably believed to be in the best interests of, or not opposed to the best interests of, Lincoln Life. Certain additional conditions apply to indemnification in criminal proceedings. |
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In particular, separate conditions govern indemnification of directors, officers, and employees of Lincoln Life in connection with suits by, or in the rights of, Lincoln Life. |
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Please refer to Article VII of the By-Laws of Lincoln Life (Exhibit No. 6(b) hereto) for the full text of the indemnification provisions. Indemnification is permitted by, and is subject to the requirements of, Indiana law. |
(b) |
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Undertaking pursuant to Rule 484 of Regulation C under the Securities Act of 1933: |
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Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the provisions described in Item 28(a) above or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer, or controlling person of the Registrant in the successful defense of any such action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. |
Item 29.
(a) | Lincoln National Variable Annuity Fund A (Group); Lincoln National Variable Annuity Fund A (Individual); Lincoln Life Flexible Premium Variable Life Account D; Lincoln Life Flexible Premium Variable Life Account F; Lincoln Life Flexible Premium Variable Life Account J; Lincoln Life Flexible Premium Variable Life Account K; Lincoln Life Flexible Premium Variable Life Account M, Lincoln Life Variable Annuity Account N; Lincoln Life Variable Annuity Account Q; Lincoln Life Flexible Premium Variable Life Account R; and Lincoln Life Flexible Premium Variable Life Account S; Lincoln National Variable Annuity Accounts 53 | |
(b) |
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See Item 25. |
(c) |
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Commissions and Other Compensation Received by Lincoln National Life Insurance Company from Lincoln National Variable Annuity Account C during the fiscal year which ended December 31, 1999: |
(1) |
(2) |
(3) |
(4) |
(5) |
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Name of Principal Underwriter |
Net Underwriting Discounts and Commissions |
Compensation on Redemption |
Brokerage Commissions |
Compensation |
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The Lincoln National Life Insurance Company | None | 16,213,074 | (a) | None | 121,811,295 | (b) |
Notes:
Item 30.
LOCATION OF ACCOUNTS AND RECORDS
Exhibit 15(b) is hereby expressly incorporated herein by this reference.
Item 31.
Not applicable.
Item 32. Undertakings
(a) | Registrant undertakes that it will file a post-effective amendment to this registration statement as frequently as necessary to ensure that the audited financial statements in the registration statement are never more than 16 months old for so long as payments under the variable annuity contracts may be accepted. | |
(b) |
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Registrant undertakes that it will include either (1) as part of any application to purchase a Certificate or an Individual Contract offered by the Prospectus, a space that an applicant can check to request a Statement of Additional Information, or (2) a post cared or similar written communication affixed to or included in the Prospectus that the applicant can remove to send for a Statement of Additional Information. |
(c) |
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Registrant undertakes to deliver any Statement of Additional Information and any financial statement required to be made available under this Form promptly upon request to Lincoln Life at the address or website listed in the Prospectus. |
(d) |
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The Lincoln National Life Insurance company hereby represents that the fees and charges deducted under the contract, in the aggregate, are reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed by The Lincoln National Life Insurance Company. |
(a) As required by the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets the requirements of Securities Act Rule 485(b) for effectiveness of this Amendment and has caused this Amendment to the Registration Statement to be signed on its behalf, in the City of Fort Wayne and the State of Indiana on this 20th day of April, 2000.
LINCOLN NATIONAL VARIABLE ANNUITY Account C(eAnnuity) (Registrant) |
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By: |
/s/ Jeffrey K. Dellinger Jeffrey K. Dellinger Vice President, LNL |
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By: |
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY (Depositor) |
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By: |
/s/ Stephen H. Lewis Stephen H. Lewis (SignatureOfficer of Depositor) Interim Chief Executive Officer & Senior Vice President, LNL (Title) |
(b) As required by the Securities Act of 1933, this Amendment to the Registration Statement has been signed for the Depositors by the following persons in the capacities and on the dates indicated.
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Date |
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** Jon A. Boscia |
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President and Director (Principal Executive Officer) |
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April 20, 2000 |
* Lawrence T. Rowland |
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Executive Vice President and Director |
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April 20, 2000 |
** Keith J. Ryan |
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Vice President, and Controller (Principal Accounting Officer) |
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April 20, 2000 |
** Todd R. Stephenson |
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Senior Vice President, Chief Financial Officer and Assistant Treasurer (Principal Financial Officer) |
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April 20, 2000 |
John H. Gotta |
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Chief Executive Officer of Life Insurance, Senior Vice President and Director |
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April , 2000 |
/s/ Stephen H. Lewis Stephen H. Lewis |
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Interim Chief Executive Officer of Annuities, Senior Vice President and Director |
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April 20, 2000 |
* H. Thomas McMeekin |
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Director |
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April 20, 2000 |
* Richard C. Vaughan |
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Director |
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April 20, 2000 |
*By | /s/ Steven M. Kluever Steven M. Kluever |
Pursuant to a Power of Attorney filed with Post-Effective Amendment No. 3 to this Registration Statement | ||||
**By |
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/s/ Steven M. Kluever Steven M. Kluever |
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Pursuant to a Power of Attorney filed with this Registration Statement |
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