<PAGE>
PREFACE TO THE LINCOLN NATIONAL FUNDS PROSPECTUSES
THE PREFACE AND DIRECTORY ARE PART OF THE PROSPECTUS FOR EACH OF THE FOLLOWING
FUNDS:
Lincoln National Aggressive Growth Fund, Inc. (Aggressive Growth)
Lincoln National Social Awareness Fund, Inc. (Social Awareness)
Each fund has its own Prospectus that describes the fund and its investment
objective. We refer to each of the funds as a fund and to all of the funds
together as the funds.
Each fund sells its shares only to Lincoln National Life Insurance Co. and its
affiliates (Lincoln Life). Lincoln Life holds the shares in its separate
accounts to support variable annuity contracts and variable life insurance
contracts (contracts). We refer to a separate account as a variable account.
Each variable account has its own prospectus that describes the account and the
contracts it supports. You choose the fund or funds in which a variable account
invests your contract assets. In effect, you invest indirectly in the fund(s)
that you choose under your contract.
Each fund Prospectus discusses the information about the fund that you ought to
know before choosing to invest your contract assets in one or more of the funds.
You can find information unique to each fund in that fund's Prospectus. You can
find information common to all funds in the General Prospectus Disclosure
following the individual fund Prospectuses.
The Securities and Exchange Commission (SEC) has not approved or disapproved
these securities or determined if these prospectuses are truthful or complete.
Any representation to the contrary is a criminal offense.
We have not authorized any dealer, salesperson, or any other person to give any
information, or to make any representation, other than what these Prospectuses
state. These Prospectuses do not offer to sell fund shares, or seek offers to
buy fund shares, where it would be unlawful.
Prospectuses dated May 1, 1999
P/D-1
<PAGE>
DIRECTORY FOR THE FUND PROSPECTUS
<TABLE>
<CAPTION>
SUBJECT PAGE
<S> <C>
- ----------------------------------------------------
PREFACE
SUMMARY DESCRIPTION OF THE FUND
Aggressive Growth AG-1
Social Awareness SA-1
- ----------------------------------------------------
FEE TABLE
Aggressive Growth GPD-2
Social Awareness GPD-2
- ----------------------------------------------------
INVESTMENT STRATEGIES
Aggressive Growth AG-2
Social Awareness SA-2
- ----------------------------------------------------
RISKS OF INVESTMENT STRATEGIES
Aggressive Growth AG-2
Social Awareness SA-3
<CAPTION>
SUBJECT PAGE
- ----------------------------------------------------
<S> <C>
INVESTMENT ADVISER AND PORTFOLIO MANAGER
Aggressive Growth AG-3
Social Awareness SA-3
- ----------------------------------------------------
GENERAL PROSPECTUS DISCLOSURE --
IMPORTANT ADDITIONAL INFORMATION
Net asset value GPD-1
Management of the funds GPD-1
Purchase and redemption of fund shares GPD-2
Distributions and federal income tax
considerations GPD-3
Management discussion of fund performance GPD-3
Financial highlights GPD-4
General Information GPD-5
Preparing for year 2000 GPD-5
</TABLE>
P/D-2
<PAGE>
LINCOLN NATIONAL
AGGRESSIVE GROWTH FUND, INC.
SUMMARY DESCRIPTION OF THE FUND
The investment objective of the Aggressive Growth Fund (fund) is to maximize the
value of your shares (capital appreciation). The fund pursues this objective by
buying and holding (investing in) a diversified group of domestic equity
securities (stocks) of small and medium-sized companies: companies traded on
U.S. securities markets with market capitalizations, at the time of purchase,
equivalent to those of companies included in the Russell Midcap Growth Index. As
of December 31, 1998, this index included companies with market capitalizations
between $100 million and $28 billion. However, the fund primarily will purchase
companies with market capitalizations between $1 billion and $10 billion.
The fund's main investment strategy is to invest in stocks of companies believed
either:
- - to have earnings expected to grow faster than similar-sized companies or
- - to be undervalued in the market relative to other companies in an industry.
This investment strategy places little importance on dividend income.
The main investment risks of choosing to invest your contract assets in the fund
are as follows:
- - the value of the fund's shares will fluctuate, and you could lose money;
- - the value of the fund's stock investments -- and, therefore, the value of the
fund's shares -- will fluctuate independently of large company stock prices
and the broad stock market indices, such as the Standard & Poor's 500
Composite Stock Index (S&P 500); and
- - investing in the stocks of small and medium-sized, less mature, lesser-known
companies involves greater risks than those normally associated with investing
in the stocks of larger, more mature, well-known companies, including greater
and more rapid fluctuations in the value of these stocks, and, therefore, the
fund's shares.
The following information provides some indication of the risks of choosing to
invest your contract assets in the fund. The information shows:
- - changes in the fund's performance from year to year and
- - how the fund's average annual returns for one year and the fund's lifetime
compare with those of a broad measure of market performance.
Please note that the past performance of the fund is not necessarily an
indication of how the fund will perform in the future. Further, the returns
shown do not reflect variable contract expenses. If reflected the returns shown
would be lower.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ANNUAL TOTAL RETURNS
<S> <C>
Year Annual Total Return
1994 -9.37%
1995 34.15%
1996 17.02%
1997 23.09%
1998 -6.20%
</TABLE>
During the periods shown in the above chart, the fund's highest return for a
quarter occurred in the third quarter of 1997 at: 19.49%
The fund's lowest return for a quarter occurred in the third quarter of 1998 at:
(-25.90)%
AVERAGE ANNUAL TOTAL RETURN
(FOR PERIODS ENDED 12/31/98)
<TABLE>
<CAPTION>
PERIOD BACK AGG. GROWTH S&P 400*
<S> <C> <C>
- -------------------------------------------------------------------
1 year (-6.2)% 19.1%
5 year N/A N/A
10 year N/A N/A
Lifetime** 10.44% 18.84%
</TABLE>
* The S&P Midcap 400 is the Standard & Poor's Composite Index of 400 stocks, a
widely recognized unmanaged index of common stock prices of medium-sized
companies.
** The fund's lifetime began January 3, 1994. Lifetime index performance,
however, began January 1, 1994.
AG-1
<PAGE>
INVESTMENT STRATEGIES
The investment objective of the fund is to maximize capital appreciation (as
measured by the change in the value of the fund's shares over time).
The fund pursues its objective by investing in a diversified group of domestic
stocks primarily of small and medium-sized companies: companies traded on U.S.
securities markets with market capitalizations, at the time of purchase,
equivalent to those of companies included in the Russell Midcap Growth Index.
(This index is an unmanaged index of common stock prices of companies with
greater-than-average growth orientation. Of the 1,000 largest U.S. companies,
this index includes only the 800 smallest companies.) As of December 31, 1998,
this index included companies with market capitalizations between $100 million
and $28 billion. However, the fund will primarily purchase companies with market
capitalizations between $1 billion and $10 billion. (A company's market
capitalization is calculated by multiplying the total number of shares of its
common stock outstanding by the market price of the stock. As a point of
reference, as of December 31, 1998, the average market capitalization of the S&P
500, a broad based market index representative of larger, typically more
financially stable companies, was $87 billion.)
The fund seeks to invest in companies believed either:
- - to have earnings expected to grow faster than similar-sized companies, or
- - to be undervalued in the market relative to the companies' industry peers.
The companies sought typically have:
- - high quality management,
- - a leading or dominant position in a product, and/or
- - a relatively high rate of return on invested capital.
When selecting investments, the fund places little importance on the expected
dividend income. The fund will consider stock investments to be possible sell
candidates when the fundamental reason for a company's expected acceleration of
earnings fails to materialize.
The fund expects its annual portfolio turnover rate to be between 85% and 135%
in any year. (For example, the fund would have a rate of portfolio turnover of
100%, if the fund replaced all of its investments in one year.) Market
conditions could result in a greater degree of market activity and a portfolio
turnover rate as high as 160%. High turnover could result in additional
brokerage commissions to be paid by the fund. This would increase fund expenses.
The fund's portfolio turnover was 102.33% in 1998 and 105.07% in 1997.
Effective May 1, 1999, Putnam Investment Management, Inc. became the new
sub-advisor to the fund. Putnam expects to restructure the fund's portfolio by
replacing approximately 77% of the securities held by the fund. As a result, the
fund's portfolio turnover rate for 1999 is expected to be higher than the normal
range. Accordingly, this restructuring could negatively impact the fund's
performance as a result of increased fund brokerage commissions as well as other
transaction costs and losses associated with liquidating certain securities.
OTHER STRATEGIES
The fund may invest 100% of its assets in money market instruments and hold a
portion of its assets in cash for liquidity purposes, as a temporary defensive
strategy. The fund may use this temporary defensive strategy when market
conditions limit the fund's ability to use its other investment strategies to
identify and obtain suitable investments. The fund, in doing so, would not be
pursuing its investment objective. The fund also may hold cash or money market
instruments while seeking appropriate investments.
The fund also uses other investment strategies, to a lesser degree, to pursue
its investment objective. These other strategies include investing in foreign
stocks that are publicly traded in the U.S. markets. The fund's SAI describes
these other investment strategies and the risks they involve.
RISKS OF INVESTMENT STRATEGIES
Investing in stocks involves the risk that the value of the stocks purchased
will fluctuate. These fluctuations could occur for a single company, an
industry, a sector of the economy, or the stock market as a whole. These
fluctuations could cause the value of the fund's stock investments -- and,
therefore, the value of the fund's shares held under your contract -- to
fluctuate in value, and you could lose money.
Investing in stocks of smaller and medium-sized, less mature, lesser-known
companies involves greater risks than those normally associated with larger,
more mature, well-known companies. The fund runs a risk of increased and more
rapid fluctuations in the value of its stock investments. This is due to the
greater business risks of small size and limited product lines, markets,
distribution channels, and financial and managerial resources. Historically, the
price of small and medium capitalization stocks and stocks of recently organized
companies have fluctuated more than the larger capitalization stocks included in
the S&P 500. One reason is
AG-2
<PAGE>
that smaller and medium-sized companies have less certain prospects for growth,
a lower degree of liquidity in the markets for their stocks, and greater
sensitivity to changing economic conditions.
Additionally, the prices of small and medium-sized company stocks may fluctuate
independently of larger company stock prices. Small and medium-sized company
stocks may decline in price as large company stock prices rise, or rise in price
as large company stock prices decline. Many independent factors lead to this
result, such as the current and anticipated global economic environment and
current and anticipated direction of interest rates in the United States, for
example. Slower economic conditions or increasing interest rates may have been
reasons historically for declining values in small and medium capitalization
companies. The stock of companies with small and medium stock market
capitalizations may trade less frequently and in limited volume. Therefore, you
should expect that the net asset value of the fund's shares may fluctuate more
than broad stock market indices such as the S&P 500, and may fluctuate
independently from those indices.
You may consider choosing the fund for investing some portion of your overall
contract assets (1) if you are seeking the possibility of maximum capital
appreciation without regard for dividend income and (2) as long as you are
comfortable with the additional risks of investing in securities of smaller and
medium-sized, less mature, lesser-known companies.
INVESTMENT ADVISER AND PORTFOLIO MANAGER
The fund's investment adviser is Lincoln Investment Management, Inc. (Lincoln
Investment). You can find information about Lincoln Investment in the General
Prospectus Disclosure under "Management of the funds -- Investment adviser."
Lincoln Investment is responsible for overall management of the fund's
securities investments. This includes monitoring the fund's sub-advisor, Putnam
Investment Management, Inc. (Putnam). Putnam's address is One Post Office
Square, Boston, MA 02109.
Putnam is responsible for the day-to-day management of the fund's securities
investments. Putnam, founded in 1937, manages in excess of $300 billion on
behalf of institutions and individuals through separately-managed accounts,
pooled funds, and mutual funds. Putnam manages the fund on a team basis. This
mid-cap management team is headed by Eric M. Wetlaufer, CFA, Managing Director
and Chief Investment Officer of Putnam's MidCap Growth Equity Group. Mr.
Wetlaufer has been with Putnam since 1997 and has 14 years of investment
experience. He is a graduate of Wesleyan University.
Putnam assumed portfolio management responsibility for the fund on May 1, 1999
by replacing the fund's previous sub-advisor. The switch to Putnam will not
result in any material change to the fund's investment policies and techniques.
AG-3
<PAGE>
THIS PAGE WAS INTENTIONALLY LEFT BLANK.
AG-4
<PAGE>
LINCOLN NATIONAL
SOCIAL AWARENESS FUND, INC.
SUMMARY DESCRIPTION
OF THE FUND
The investment objective of the Social Awareness Fund (fund) is to maximize
long-term capital appreciation (as measured by the change in the value of fund
shares over a period of three years or longer). The fund pursues this objective
primarily by buying and holding (investing in) a diverse group of equity
securities (stocks) of large-sized U.S. companies that meet the fund's social
standards: companies with market capitalizations of more than $5 billion. The
fund also holds some investments in medium-sized U.S. companies, which have
market capitalizations greater than $1 billion but less than $5 billion.
The fund's investment strategy is to invest in stocks of established companies
believed to:
- - be undervalued in the market relative to other companies in an industry, and
- - show growth potential significantly greater than the average expected growth
rate of companies in the same industry.
The fund's secondary investment strategy places some emphasis on providing
income (dividends and interest).
All companies must meet the fund's social standards. The companies may not:
- - damage the natural environment;
- - have significant involvement with nuclear power, military weapons, liquor,
tobacco or gambling; or
- - use animal testing to develop new cosmetic or personal care products.
The main investment risks of choosing to invest your contract assets in the fund
are as follows:
- - the value of the fund's shares will fluctuate, and you could lose money;
- - the value of the fund's stock investments -- and, therefore, the value of the
fund's shares -- will fluctuate over the long-term (3 years or more) in line
with broad stock market indices, such as the Standard & Poor's 500 Composite
Stock Index (S&P 500); and
- - the fund's social standards strategy can cause the value of the fund's shares
to fluctuate independently of broad stock market indices over short-term
periods (1-3 years), and cause the fund to miss opportunities to invest in
companies, industries or segments of the U.S. economy providing superior
performance.
The following information provides some indication of the risks of choosing to
invest your contract assets in the fund. The information shows:
- - changes in the fund's performance from year to year and
- - how the fund's average annual returns for one, five and ten year periods
compare with those of a broad measure of market performance.
Please note that the past performance of the fund is not necessarily an
indication of how the fund will perform in the future. Further, the returns
shown do not reflect variable contract expenses. If reflected the returns shown
would be lower.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ANNUAL TOTAL RETURNS
<S> <C>
Year Annual Total Return
1989 31.18%
1990 -4.30%
1991 37.22%
1992 3.60%
1993 13.56%
1994 0.19%
1995 42.83%
1996 28.94%
1997 37.53%
1998 19.89%
</TABLE>
During the periods shown in the above chart, the fund's highest return for a
quarter occurred in the fourth quarter of 1998 at: 23.42%.
The fund's lowest return for a quarter occurred in the third quarter of 1990 at:
(-17.85)%.
AVERAGE ANNUAL TOTAL RETURN
(FOR PERIODS ENDED 12/31/98)
<TABLE>
<CAPTION>
PERIOD BACK SOCIAL AWARENESS S&P 500*
<S> <C> <C>
- --------------------------------------------------------------------
1 year 19.89% 28.76%
5 year 24.92% 24.15%
10 year 19.95% 19.22%
</TABLE>
* The S&P 500 is the Standard & Poor's Composite Index of 500 stocks, a widely
recognized unmanaged index of common stock prices.
SA-1
<PAGE>
INVESTMENT STRATEGIES
The investment objective of the fund is long-term capital appreciation.
The fund pursues this objective by investing in a diversified portfolio of
stocks primarily of large-sized U.S. companies (market capitalizations greater
than $5 billion), with some emphasis on medium-sized companies (market
capitalizations between $1 billion and $5 billion). (A company's market
capitalization is calculated by multiplying the total number of shares of its
common stock outstanding by the market price of the stock. As a point of
reference, as of December 31, 1998, the average market capitalization of the S&P
500, a broad based market index representative of larger, typically more
financially stable companies, was $87 billion.)
The fund, however, only invests in companies that meet the fund's social
standards described below.
The fund's management style focuses on seeking growth companies at a reasonable
price by blending:
- - a "growth" oriented management style, which seeks companies with earnings
and/or revenues that are growing faster than the industry average, and
- - a "value" oriented management style, which seeks companies within an industry
with current stock prices that do not reflect the stocks' perceived true
worth.
More specifically, the fund seeks to invest in companies believed to:
- - show growth potential that significantly exceeds the average expected growth
rate of companies in the same industry; and
- - be undervalued in the market relative to the companies' industry peers.
The companies sought typically have:
- - a long history of profit growth and dividend payment, and
- - a reputation for quality management, products and service.
The fund's selection of industries and the size of investments in each industry
will be similar to those of the S&P 500, after considering the fund's social
standards. The fund uses the following fundamental criteria for measuring
individual stock selection: price to earnings ratio, growth of historical and
forecasted earnings, and current yield. The fund seeks to own the most
attractive stocks in each industry. The fund compares its current investments to
possible new investments on an on-going basis. The fund replaces a current
investment, if a possible new investment appears significantly more attractive
under the fund's investment criteria.
SOCIAL STANDARDS
The fund will not knowingly buy or hold stocks of companies that engage in:
- - activities that result, or are likely to result, in damage to the natural
environment;
- - production of nuclear power, design or construction of nuclear power plants,
or manufacture of equipment for the production of nuclear power;
- - manufacture of, or contracting for, military weapons;
- - liquor, tobacco or gambling businesses; and/or
- - the use of animals for testing when developing new cosmetics and personal care
products.
The fund may modify these standards at any time, without prior shareholder
approval or notice.
The fund, its advisor and sub-advisor will not determine which stocks meet the
fund's social standards. Instead, the fund will rely on the Social Investment
Research provided by Kinder, Lydenberg, Domini & Co., Inc. (KLD), located in
Cambridge, Massachusetts.
KLD specializes in providing the financial community with social standards
research on publicly-traded U.S. corporations. KLD determines if and when a
company's activities are significant enough to merit a "concern" or "major
concern" under the fund's social standards. KLD may determine the significance
of a company's activities based on (1) their size or (2) other factors selected
by KLD. KLD continually refines and modifies its social standards screening
process.
The fund will not buy any stock where KLD indicates a "concern" or "major
concern" relating to one or more of the fund's social standards. Because of this
strategy, the fund may not invest in certain types of companies, industries and
segments of the U.S. economy.
PERIOD OF DISINVESTMENT
At times, the fund may hold stocks that do not meet the fund's social standards,
because either (1) the stocks ceased meeting the social standards after the fund
bought them or (2) the fund bought the stocks without realizing that they did
not meet the social standards. The fund will seek to sell these stocks in an
orderly manner to minimize any adverse effect on the value of the fund's
investments. Ordinarily, the fund will sell the stocks within 90 days of
determining that the stocks do not meet the social standards. However, the fund
will sell the stocks within a longer period, if the advisor or sub-advisor
believes that it would avoid a significant loss to the overall value of the
fund's investments.
SA-2
<PAGE>
OTHER STRATEGIES
The fund may invest in money market instruments and hold a portion of its assets
in cash for liquidity purposes, as a temporary defensive strategy. The fund may
use this temporary defensive strategy when market conditions limit the fund's
ability to use its other investment strategies to identify and obtain suitable
investments. The fund, in doing so, would not be pursuing its investment
objective. The fund also may hold cash or money market instruments while seeking
appropriate investments.
The fund also uses other investment strategies, to a lesser degree, to pursue
its investment objective. The fund's SAI describes these other investment
strategies and the risks they involve.
RISKS OF INVESTMENT STRATEGIES
Investing in stocks involves the risk that the value of the stocks purchased
will fluctuate. These fluctuations could occur for a single company, an
industry, a sector of the economy, or the stock market as a whole. These
fluctuations could cause the value of the fund's stock investments -- and,
therefore, the value of the fund's shares held under your contract -- to
fluctuate, and you could lose money.
Moreover, the fund invests in medium-sized as well as large-sized companies, and
the fund's performance may be affected if stocks in one of these two groups of
companies do not perform as well as stocks in the other group. Further,
medium-sized companies, which are not as well-established as large-sized
companies, may (1) react more severely to market conditions and (2) suffer more
from economic, political and regulatory developments.
The fund's social standards strategy prohibits the fund from investing in
certain types of companies, industries and segments of the U.S. economy.
Consequently, the value of the fund's shares will fluctuate independently of
broad stock market indices over short-term periods (1-3 years). Moreover, the
fund may (1) miss opportunities to invest in companies, industries or segments
of the U.S. economy that are providing superior performance relative to the
market as a whole and (2) become invested in companies, industries and segments
of the U.S. economy that are providing inferior performance relative to the
market as a whole. These consequences may at times adversely affect fund
performance when compared to broad market indices or to similar funds managed
without the social standards strategy.
You may consider choosing the fund for investing some portion of your contract
assets (1) if you are seeking the possibility of long-term capital appreciation,
with some emphasis on providing income, and (2) so long as you are comfortable
with the additional risks of the fund's using social standards to select
investments.
INVESTMENT ADVISOR AND PORTFOLIO MANAGER
The fund's investment advisor is Lincoln Investment Management, Inc. (Lincoln
Investment). You can find information about Lincoln Investment in the General
Prospectus Disclosure under "Management of the funds -- Investment advisor."
Lincoln Investment is responsible for overall management of the fund's
securities investments. This includes monitoring the fund's sub-advisor, Vantage
Investment Advisors, Inc. (Vantage). Vantage's address is 630 5th Avenue, New
York, New York 10111.
Vantage is responsible for the day-to-day management of the fund's securities
investments. Vantage, founded in 1979, is a U.S. domestic equity manager with
over $9 billion in assets under management. Vantage began managing the fund in
1988. Enrique Chang, Vantage's Chief Investment Officer, and Christopher Harvey,
a Vice-President of Vantage, manage the fund.
Mr. Chang oversees the management of all of Vantage's equity portfolios and
directs Vantage's quantitative research efforts. Prior to joining Vantage, Mr.
Chang was an actuary with Prudential, Director of Quantitative Analysis and
Strategy with General Reinsurance Corporation, and Senior Vice President and
Director of Quantitative Analysis with J&W Seligman. He graduated from Fairleigh
Dickinson University, and received an MBA in finance and quantitative analysis
and an MS in statistics and operations research from New York University.
Mr. Harvey manages portfolios, conducts investment research and assists in
equity trading for Vantage. Prior to joining Vantage, Mr. Harvey was a financial
analyst with Merrill Lynch. He graduated Bucknell University and received an MBA
from New York University.
SA-3
<PAGE>
THIS PAGE WAS INTENTIONALLY LEFT BLANK.
SA-4
<PAGE>
GENERAL PROSPECTUS DISCLOSURE -- IMPORTANT ADDITIONAL INFORMATION
This General Prospectus Disclosure is part of the Prospectus of:
Lincoln National Aggressive Growth Fund, Inc.
(Aggressive Growth)
Lincoln National Bond Fund, Inc. (Bond)
Lincoln National Capital Appreciation Fund, Inc.
(Capital Appreciation)
Lincoln National Equity-Income Fund, Inc.
(Equity-Income)
Lincoln National Global Asset Allocation Fund, Inc. (Global Asset Allocation)
Lincoln National Growth and Income Fund, Inc. (Growth and Income)
Lincoln National International Fund, Inc. (International)
Lincoln National Managed Fund, Inc. (Managed)
Lincoln National Money Market Fund, Inc.
(Money Market)
Lincoln National Social Awareness Fund, Inc.
(Social Awareness)
Lincoln National Special Opportunities Fund, Inc.
(Special Opportunities)
The following information applies to each fund, unless otherwise indicated.
NET ASSET VALUE
Each fund determines its net asset value per share (NAV) as of close of business
(currently 4:00 p.m., New York time) on the New York Stock Exchange (NYSE) on
each day the NYSE is open for trading. Each fund, except the Money Market Fund,
determines its nav by:
- - adding the values of all securities investments and other assets,
- - subtracting liabilities (including dividends payable), and
- - dividing by the number of shares outstanding.
NYSE's most recent announcement states that, as of the date of this prospectus,
the NYSE will be closed on New Year's Day, Martin Luther King Day, President's
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day,
and Christmas Day. NYSE may also be closed on other days. The NYSE may modify
its holiday schedule at any time.
A fund's securities may be traded in other markets on days when the NYSE is
closed. Therefore, the fund's NAV may fluctuate on days when you do not have
access to the fund to purchase or redeem shares.
Each fund (other than for the Money Market Fund) values its securities
investments as follows:
- - equity securities, at their last sale prices on national securities exchanges
or over-the-counter, or, in the absence of recorded sales, at the average of
readily available closing bid and asked prices on exchanges or
over-the-counter;
- - debt securities, at the price established by an independent pricing service,
which is believed to reflect the fair value of these securities; and
- - equity securities, debt securities and other assets for which market
quotations are not readily available, fair value as determined in good faith
under the authority of each fund's Board of Directors.
MONEY MARKET FUND. The Money Market Fund determines its NAV by the amortized
cost method of valuation provided by SEC Rule 2a-7 under the Investment Company
Act of 1940. Under the Rule, the fund's nav must fairly reflect market value.
See the General SAI Disclosure for the methodology that a fund (other than for
the Money Market Fund) uses to value short-term investments, options, futures
and options on futures, and foreign securities.
MANAGEMENT OF THE FUNDS
Each fund's business and affairs are managed under the direction of its Board of
Directors. The Board has the power to amend the bylaws of each fund, to declare
and pay dividends, and to exercise all the powers of the fund except those
granted to the shareholders.
INVESTMENT ADVISOR. Lincoln Investment Management, Inc. (Lincoln Investment or
advisor) is the investment advisor to each fund. Its headquarters are at 200
East Berry Street, Fort Wayne, Indiana 46802.
The advisor has registered with the SEC as an investment advisor and acted as an
investment advisor to mutual Funds for over 40 years. The advisor also acts as
(1) investment advisor to Lincoln National Convertible Securities Fund, Inc. and
Lincoln National Income Fund, Inc., closed-end investment companies, and (2)
sub-adviser to two of the series of Delaware Group Adviser Funds, Inc., an
open-end series investment company.
The advisor is a wholly-owned subsidiary of Lincoln National Corp. (LNC), a
publicly-held insurance holding
GPD-1
<PAGE>
company organized under Indiana law. LNC, through its subsidiaries, provides
life insurance and annuities, property-casualty insurance, reinsurance and
financial services.
Directors, officers and employees of the advisor and each fund may engage in
personal securities transactions, subject to restrictions and procedures of the
Code of Ethics adopted by the advisor and each fund. The restrictions and
procedures include substantially all of the recommendations of the Advisory
Group of the Investment Company Institute and comply with SEC rules and
regulations.
The advisor, either directly or through a sub-advisor, provides portfolio
management and investment advice to each fund and administers each fund's other
affairs, subject to the supervision of each fund's Board of Directors.
Some of the funds using sub-advisors have names, investment objectives and
investment policies that are very similar to certain publicly available mutual
funds that are managed by these same sub-advisors. These funds will not have the
same performance as those publicly available mutual funds. Different performance
will result from many factors, including, but not limited to, different cash
flows into and out of the funds, different fees, and different sizes.
Each fund pays the advisor a monthly fee for the advisor's services. The annual
rate of the fee is based on the average daily net asset value of each fund, as
shown in the following chart:
<TABLE>
<CAPTION>
FUND ...OF AVERAGE DAILY NET ASSET VALUE
- ----------------------------------------------------------------------------------------------------------
<S> <C>
Aggressive Growth .75 of 1% of the first $200 million; .70 of 1% of the next $200
million; .65 of 1% of the excess over $400 million
Capital Appreciation .75 of 1% of the first $500 million; .70 of 1% of the excess over
$500 million
Equity-Income .75 of 1% of the first $500 million; .70 of 1% of the excess over
$500 million
Global Asset Allocation .75 of 1% of the first $200 million; .70 of 1% of the next $200
million; and .68 of 1% of the excess over $400 million
International .90 of 1% of the first $200 million; .75 of 1% of the next $200
million; and .60 of 1% in excess over $400 million
All other funds .48 of 1% of the first $200 million; .40 of 1% of the next $200
million; and .30 of 1% in excess over $400 million
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 ADVISORY FEES
FUND 1998 RATIO OF THE ADVISOR'S COMPENSATION TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------------------------------------------
<S> <C>
Aggressive Growth .73%
Bond .44
Capital Appreciation .75
Equity-Income .72
Global Asset Allocation .72
Growth & Income .31
International .79
Managed .36
Money Market .48
Social Awareness .34
Special Opportunities .36
</TABLE>
- --------------------------------------------------------------------------------
PURCHASE AND REDEMPTION OF FUND SHARES
Each fund sells its shares of common stock only to Lincoln Life. Lincoln Life
holds the fund shares in separate accounts (variable accounts) that support
various Lincoln Life variable annuity contracts and variable life insurance
contracts.
Each fund sells and redeems its shares, without charge, at their nav next
determined after Lincoln Life receives a purchase or redemption request.
However, each fund redeems its shares held by Lincoln Life for its own account
at the nav next determined after the fund receives the redemption request. The
value of shares redeemed may be more or less than original cost, depending on
the market value of a fund's securities investments at the time of redemption.
The fund normally pays for shares redeemed within seven days after Lincoln Life
receives the redemption request. However, a fund may suspend redemption or
postpone payment for any period when:
- - the NYSE closes for other than weekends and holidays;
GPD-2
<PAGE>
- - the SEC restricts trading on the NYSE;
- - the SEC determines that an emergency exists, so that a fund's (1) disposal of
investment securities, or (2) determination of net asset value, is not
reasonably practicable; or
- - The SEC permits, by order, for the protection of fund shareholders.
DISTRIBUTIONS AND FEDERAL INCOME TAX CONSIDERATIONS
Each fund's policy is to distribute substantially all of its net investment
income and net realized capital gains each year. A fund may distribute net
realized capital gains only once a year. Each fund pays these distributions to
Lincoln Life for the variable accounts. The variable accounts automatically
reinvest the distributions in additional fund shares at no charge.
Each fund has elected to be taxed as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended (the Code). The
Code relieves a regulated investment company from certain Federal income tax and
excise tax, if the company distributes substantially all of its net investment
income and net realized capital gains. See the SAI for a more complete
discussion.
Each fund must meet asset diversification requirements under Section 817(h) of
the Code and the related regulation of the United States Treasury Department.
Each fund intends to comply with these diversification requirements.
The sole shareholder of the funds is Lincoln Life. Consequently, this Appendix
does not discuss the federal income tax consequences at the shareholder level.
For information concerning the federal income tax consequences to owners of
variable annuity contracts or variable life insurance contracts (contract
owners), including the failure of a fund to meet the diversification
requirements discussed above, see the Prospectus for the variable account.
MANAGEMENT DISCUSSION OF FUND PERFORMANCE
Each fund's Annual Report includes the portfolio manager's discussion of the
fund's performance for the previous fiscal year and the factors affecting the
performance. Each fund will send you a free copy of its Annual Report on
request.
GPD-3
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the financial
performance of the funds for the past 5 years, or, if shorter, the period of the
fund's operations. Certain information reflects financial results for a single
fund share. The total returns in the table represent the rate that an investor
would have earned or lost on an investment in the fund (assuming reinvestment of
all dividends and distributions). This information has been audited by Ernst &
Young LLP, independent auditors, whose report, along with each fund's financial
statements, are included in the annual report, which is available upon request.
<TABLE>
<CAPTION>
INCOME (LOSS) FROM LESS DIVIDENDS
INVESTMENT OPERATIONS FROM:
RATIO
NET OF
REALIZED RATIO NET
NET AND OF INVESTMENT NET
ASSET UNREALIZED NET EXPENSES INCOME ASSETS
VALUE NET GAIN TOTAL NET ASSET TO TO AT END
BEGINNING INVESTMENT (LOSS) FROM NET REALIZED VALUE AVERAGE AVERAGE PORTFOLIO OF
PERIOD OF INCOME ON INVESTMENT INVESTMENT GAIN ON TOTAL END OF TOTAL NET NET TURNOVER PERIOD
ENDED PERIOD (LOSS)(2) INVESTMENTS OPERATIONS INCOME INVESTMENTS DIVIDENDS PERIOD RETURN(3) ASSETS ASSETS RATE (000'S)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Lincoln National Aggressive Growth Fund, Inc.
12/31/98 $16.385 0.001 (0.810) (0.809) (0.023) (2.186) (2.209) $13.367 (6.20%) 0.81% 0.01% 102.33% $335,366
12/31/97 $13.980 0.023 3.055 3.078 -- (0.673) (0.673) $16.385 23.09% 0.81% 0.16% 105.07% $342,763
12/31/96 $12.183 0.004 1.989 1.993 (0.004) (0.192) (0.196) $13.980 17.02% 0.82% 0.03% 77.51% $242,609
12/31/95 $ 9.048 0.007 3.135 3.142 (0.007) -- (0.007) $12.183 34.15% 0.94% 0.06% 85.82% $138,471
12/31/94(1) $10.000 0.019 (0.952) (0.933) (0.019) -- (0.019) $ 9.048 (9.37%) 1.11% 0.21% 100.31% $60,697
Lincoln National Bond Fund, Inc.
12/31/98 $12.861 0.662 0.494 1.156 (1.328) -- (1.328) $12.689 9.56% 0.52% 5.90% 51.33% $363,808
12/31/97 $11.766 0.785 0.310 1.095 -- -- -- $12.861 9.30% 0.53% 6.45% 56.16% $280,383
12/31/96 $12.247 0.767 (0.481) 0.286 (0.767) -- (0.767) $11.766 2.31% 0.51% 6.56% 142.19% $253,328
12/31/95 $10.941 0.803 1.306 2.109 (0.803) -- (0.803) $12.247 18.95% 0.49% 6.90% 139.61% $250,816
12/31/94 $12.693 0.741 (1.233) (0.492) (0.741) (0.519) (1.260) $10.941 (4.18%) 0.50% 6.40% 213.26% $195,010
Lincoln National Capital Appreciation Fund, Inc.
12/31/98 $17.530 (0.003) 6.127 6.124 (0.050) (1.832) (1.882) $21.772 37.96% 0.83% (0.01%) 77.99% $770,736
12/31/97 $14.504 0.050 3.510 3.560 -- (0.534) (0.534) $17.530 25.29% 0.89% 0.35% 137.07% $451,036
12/31/96 $12.916 0.135 2.051 2.186 (0.135) (0.463) (0.598) $14.504 18.02% 0.93% 0.99% 92.73% $267,242
12/31/95 $10.152 0.116 2.764 2.880 (0.116) -- (0.116) $12.916 28.69% 1.07% 1.00% 195.63% $127,936
12/31/94(1) $10.000 0.134 0.152 0.286 (0.134) -- (0.134) $10.152 2.71% 1.18% 1.33% 185.28% $52,904
Lincoln National Equity-Income Fund, Inc.
12/31/98 $20.118 0.282 2.204 2.486 (0.460) (0.429) (0.889) $21.715 12.73% 0.79% 1.40% 29.04% $991,977
12/31/97 $15.780 0.229 4.511 4.740 -- (0.402) (0.402) $20.118 30.67% 1.02% 1.46% 17.81% $811,070
12/31/96 $13.507 0.288 2.451 2.739 (0.288) (0.178) (0.466) $15.780 19.81% 1.08% 1.99% 22.17% $457,153
12/31/95 $10.335 0.275 3.218 3.493 (0.275) (0.046) (0.321) $13.507 34.74% 1.15% 2.27% 27.81% $238,771
12/31/94(1) $10.000 0.258 0.335 0.593 (0.258) -- (0.258) $10.335 5.65% 1.26% 2.48% 33.40% $78,861
Lincoln National Global Asset Allocation Fund, Inc.
12/31/98 $15.628 0.357 1.585 1.942 (0.589) (1.222) (1.811) $15.759 13.50% 0.91% 2.36% 133.84% $490,154
12/31/97 $14.226 0.383 2.205 2.588 -- (1.186) (1.186) $15.628 19.47% 0.89% 2.77% 178.40% $438,090
12/31/96 $13.391 0.392 1.522 1.914 (0.392) (0.687) (1.079) $14.226 15.04% 1.00% 2.93% 167.33% $316,051
12/31/95 $11.144 0.412 2.247 2.659 (0.412) -- (0.412) $13.391 23.95% 0.92% 3.36% 146.49% $248,772
12/31/94 $12.502 0.349 (0.702) (0.353) (0.349) (0.656) (1.005) $11.144 (1.82%) 1.06% 3.07% 134.33% $195,697
Lincoln National Growth and Income Fund, Inc.
12/31/98 $41.949 0.607 7.371 7.978 (1.164) (2.475) (3.639) $46.288 20.33% 0.35% 1.44% 33.55% $4,263,557
12/31/97 $33.110 0.649 9.331 9.980 -- (1.141) (1.141) $41.949 30.93% 0.35% 1.79% 32.09% $3,540,862
12/31/96 $29.756 0.683 4.943 5.626 (0.683) (1.589) (2.272) $33.110 18.76% 0.36% 2.23% 46.70% $2,465,224
12/31/95 $23.297 0.701 7.680 8.381 (0.701) (1.221) (1.922) $29.756 38.81% 0.35% 2.64% 51.76% $1,833,450
12/31/94 $24.693 0.668 (0.428) 0.240 (0.668) (0.968) (1.636) $23.297 1.32% 0.37% 2.85% 76.34% $1,161,324
Lincoln National International Fund, Inc.
12/31/98 $14.673 0.253 1.838 2.091 (0.189) (0.593) (0.782) $15.982 14.65% 0.93% 1.63% 123.11% $501,654
12/31/97 $14.556 0.066 0.771 0.837 -- (0.720) (0.720) $14.673 6.00% 0.93% 0.44% 77.58% $466,229
12/31/96 $13.398 0.071 1.244 1.315 (0.071) (0.086) (0.157) $14.556 9.52% 1.19% 0.51% 68.67% $440,375
12/31/95 $13.027 0.069 0.892 0.961 (0.069) (0.521) (0.590) $13.398 8.89% 1.27% 0.59% 63.15% $358,391
12/31/94 $12.642 0.033 0.385 0.418 (0.033) -- (0.033) $13.027 3.28% 1.24% 0.25% 52.78% $316,350
</TABLE>
GPD-4
<PAGE>
<TABLE>
<CAPTION>
INCOME (LOSS) FROM LESS DIVIDENDS
INVESTMENT OPERATIONS FROM:
RATIO
NET OF
REALIZED RATIO NET
NET AND OF INVESTMENT NET
ASSET UNREALIZED NET EXPENSES INCOME ASSETS
VALUE NET GAIN TOTAL NET ASSET TO TO AT END
BEGINNING INVESTMENT (LOSS) FROM NET REALIZED VALUE AVERAGE AVERAGE PORTFOLIO OF
PERIOD OF INCOME ON INVESTMENT INVESTMENT GAIN ON TOTAL END OF TOTAL NET NET TURNOVER PERIOD
ENDED PERIOD (LOSS)(2) INVESTMENTS OPERATIONS INCOME INVESTMENTS DIVIDENDS PERIOD RETURN(3) ASSETS ASSETS RATE (000'S)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Lincoln National Managed Fund, Inc.
12/31/98 $19.304 0.599 1.632 2.231 (1.162) (1.402) (2.564) $18.971 12.72% 0.42% 3.31% 57.36% $965,486
12/31/97 $16.266 0.661 2.811 3.472 -- (0.434) (0.434) $19.304 21.82% 0.42% 3.77% 53.40% $850,646
12/31/96 $15.895 0.628 1.291 1.919 (0.628) (0.920) (1.548) $16.266 12.05% 0.43% 4.05% 108.86% $675,740
12/31/95 $12.783 0.623 3.132 3.755 (0.623) (0.020) (0.643) $15.895 29.29% 0.43% 4.37% 112.52% $589,165
12/31/94 $14.152 0.628 (0.814) (0.186) (0.628) (0.555) (1.183) $12.783 (1.84%) 0.44% 4.45% 160.79% $442,140
</TABLE>
GPD-5
<PAGE>
<TABLE>
<CAPTION>
INCOME (LOSS) FROM RATIO
NET OF
REALIZED RATIO NET
NET AND OF INVESTMENT NET
ASSET INVESTMENT OPERATIONS UNREALIZED LESS DIVIDENDS NET EXPENSES INCOME ASSETS
VALUE NET GAIN TOTAL FROM: NET ASSET TO TO AT END
BEGINNING INVESTMENT (LOSS) FROM NET REALIZED VALUE AVERAGE AVERAGE PORTFOLIO OF
PERIOD OF INCOME ON INVESTMENT INVESTMENT GAIN ON TOTAL END OF TOTAL NET NET TURNOVER PERIOD
ENDED PERIOD (LOSS)(2) INVESTMENTS OPERATIONS INCOME INVESTMENTS DIVIDENDS PERIOD RETURN(3) ASSETS ASSETS RATE (000'S)
- --------------------------------------------------------------------------------------------------------------------------------
Lincoln National Money Market Fund, Inc.
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/98 $10.000 0.497 N/A 0.497 (0.497 ) N/A (0.497) $10.000 5.10 % 0.58 % 4.97 % N/A $137,062
12/31/97 $10.000 0.501 N/A 0.501 (0.501) N/A (0.501) $10.000 5.13% 0.59% 5.01% N/A $89,227
12/31/96 $10.000 0.505 N/A 0.505 (0.505) N/A (0.505) $10.000 5.07% 0.57% 5.07% N/A $90,358
12/31/95 $10.000 0.570 N/A 0.570 (0.570) N/A (0.570) $10.000 5.67% 0.52% 5.67% N/A $75,319
12/31/94 $10.000 0.381 N/A 0.381 (0.381) N/A (0.381) $10.000 3.82% 0.52% 3.82% N/A $77,177
Lincoln National Social Awareness Fund, Inc.
12/31/98 $35.657 0.367 6.414 6.781 (0.672) (1.483) (2.155) $40.283 19.89% 0.38% 1.10% 37.55% $1,868,231
12/31/97 $27.316 0.364 9.447 9.811 -- (1.470) (1.470) $35.657 37.53% 0.41% 1.37% 34.84% $1,255,494
12/31/96 $22.590 0.389 5.748 6.137 (0.389) (1.022) (1.411) $27.316 28.94% 0.46% 1.58% 45.90% $636,595
12/31/95 $16.642 0.432 6.491 6.923 (0.432) (0.543) (0.975) $22.590 42.83% 0.50% 2.21% 54.02% $297,983
12/31/94 $17.915 0.377 (0.461) (0.084) (0.377) (0.812) (1.189) $16.642 0.19% 0.53% 2.22% 64.97% $163,514
Lincoln National Special Opportunities Fund, Inc.
12/31/98 $35.056 0.470 1.795 2.265 (0.862) (3.043) (3.905) $33.416 6.79% 0.42% 1.44% 76.27% $917,796
12/31/97 $29.423 0.477 7.293 7.770 -- (2.137) (2.137) $35.056 28.15% 0.42% 1.57% 73.74% $872,822
12/31/96 $27.383 0.548 3.867 4.415 (0.548) (1.827) (2.375) $29.423 16.51% 0.44% 2.00% 88.17% $648,592
12/31/95 $22.164 0.616 6.131 6.747 (0.616) (0.912) (1.528) $27.383 31.86% 0.45% 2.39% 90.12% $505,755
12/31/94 $24.478 0.565 (0.942) (0.377) (0.565) (1.372) (1.937) $22.164 (1.00%) 0.48% 2.49% 74.63% $318,417
</TABLE>
(1) The per share data, total return, ratios and portfolio turnover are
calculated for the period from commencement of investment activity on
January 3, 1994 through December 31, 1994. Accordingly, the total return,
ratios, and portfolio turnover have NOT been calculated on an annualized
basis.
(2) Per share information for the Capital Appreciation, Equity-Income, Global
Asset Allocation, and International funds for the year ended December 31,
1998 was based on the average shares outstanding method.
(3) Total return percentages in this table are calculated on the basis
prescribed by the Securities and Exchange Commission. These percentages are
based on the underlying mutual fund shares.
GENERAL INFORMATION
You should direct any inquiry to Lincoln National Life Insurance Co., at P.O.
Box 2340, Fort Wayne, Indiana 46801, or, call 1-800-4LINCOLN (454-6265).
Each fund will issue:
- - unaudited semiannual reports showing current investments and other
information; and
- - annual financial statements audited by the fund's independent auditors.
These Prospectuses do not contain all the information included in the
Registration Statements that the funds have filed with the SEC. You may examine
the Registration Statements, including exhibits, at the SEC in Washington, D.C.
Statements made in the Prospectuses about any variable annuity contract,
variable life insurance contract, or other document referred to in a contract,
are not necessarily complete. In each instance, we refer you to the copy of that
CONTRACT or other document filed as an exhibit to the related Registration
Statement. We qualify each statement in all respects by that reference.
The use of a fund by both annuity and life insurance variable accounts is called
mixed funding. Due to differences in redemption rates, tax treatment, or other
considerations, the interests of contract owners under the variable life
accounts may conflict with those of contract owners under the variable annuity
accounts. Violation of the federal tax laws by one variable account investing in
a fund could cause the contracts funded through another variable account to lose
their tax-deferred status, unless remedial action were taken. The Board of
Directors of each fund will monitor for any material conflicts and determine
what action, if any, the fund or a variable account should take.
A conflict could arise that requires a variable account to redeem a substantial
amount of assets from any of the funds. The redemption could disrupt orderly
portfolio management to the detriment of those contract owners still investing
in that fund. Also, that fund could determine that it has become so large that
its size materially impairs investment performance. The fund would then examine
its options.
Lincoln Life performs the dividend and transfer functions for each fund.
PREPARING FOR YEAR 2000
Many existing computer programs use only two digits in the date field to
identify the year. If left uncorrected these programs, which were designed and
developed without considering the impact of the upcoming change in the century,
could fail to operate or could produce
GPD-6
<PAGE>
erroneous results when processing dates after December 31, 1999. For example,
for a bond with a stated maturity date of July 1, 2000, a computer program could
read and store the maturity date as July 1, 1900. This problem is known by many
names, such as the "Year 2000 Problem", "Y2K", and the "Millenium Bug".
The Year 2000 Problem affects virtually all computer programs worldwide. It can
cause a computer system to suddenly stop operating. It can also result in a
computer corrupting vital company records, and the problem could go undetected
for a long time. The updating of fund-related computer systems is the
responsibility of Lincoln Life as part of its own year 2000 updating process.
Delaware Service Company Inc. (Delaware), which provides substantially all of
the accounting and valuation services for the funds, is responsible for updating
all its computer systems (including those which serve the funds) to accommodate
the year 2000. If Y2K problems with computer programs affecting the funds are
left unchecked they can cause such problems as share transfer errors; accounting
errors; improper instructions to the securities custodian of a fund; and
erroneous net asset values. In a worst-case scenario, this could result in a
material disruption of the operations of the funds, Lincoln Life and/or
Delaware.
However, these companies are wholly owned by Lincoln National Corporation (LNC),
which has had Year 2000 processes in place since 1996. LNC projects aggregate
expenditures in excess of $92 million for its Y2K efforts through the year 2000.
Both Lincoln Life and Delaware have dedicated Year 2000 teams and steering
committees that are answerable to their counterparts in LNC.
In light of the potential problems discussed above, Lincoln Life, as part of its
Year 2000 updating process, has assumed responsibility for correcting all
high-priority Information Technology (IT) systems which service the funds.
Delaware for its part is responsible for updating all its high-priority IT
systems to support these vital services. The Year 2000 effort, for both IT and
non-IT systems, is organized into four phases:
- - awareness-raising and inventory of all assets (including third-party agent and
vendor relationships)
- - assessment and high-level planning and strategy
- - remediation of affected systems and equipment; and
- - testing to verify Year 2000 readiness.
Both companies are currently on schedule to have their high-priority IT systems
(including those which support the funds) remediated and tested to demonstrate
readiness by June 30, 1999. During the third and fourth quarters of 1999,
additional testing of the environment will continue. Both companies are
currently on schedule to have their high-priority non-IT systems (elevators,
heating and ventilation, security systems, etc.) remediated and tested by
October 31, 1999.
The work on Year 2000 issues has not suffered significant delays; however, some
uncertainty remains. Specific factors that give rise to this uncertainty include
(but are certainly not limited to) a possible loss of technical resources to
perform the work; failure to identify all susceptible systems; and
non-compliance by third parties whose systems and operations impact Lincoln
Life. In a report dated February 26, 1999, entitled, INVESTIGATING THE IMPACT OF
THE YEAR 2000 TECHNOLOGY PROBLEM, S. Prt 106-10, the U.S. Senate Special
Committee on the Year 2000 Technology Problem expressed its concern that
"Financial services firms...are particularly vulnerable to...the risk that a
material customer or business partner will fail, as a result of the computer
problems, to meet its obligations".
One important source of uncertainty is the extent to which the key trading
partners of Lincoln Life and of Delaware will be successful in their own
remediation and testing efforts. Lincoln Life and Delaware have been monitoring
the progress of their trading partners; however, the efforts of these partners
are beyond our control.
Lincoln Life and Delaware expect to have completed their necessary remediation
and testing efforts prior to December 31, 1999. However, given the nature and
complexity of the problem, there can be no guarantee by either company that
there will not be significant computer problems after December 31, 1999.
GPD-7
<PAGE>
THIS PAGE WAS INTENTIONALLY LEFT BLANK.
GPD-8
<PAGE>
You can find additional information in each fund's Statement of Additional
Information (SAI), which is on file with the SEC. Each fund incorporates its
SAI, dated May 1, 1999, into its Prospectus. Each fund will provide a free copy
of its SAI on request.
You can find still further information about each fund's investments in the
fund's annual and semi-annual reports to shareholders. The Annual Report
discusses the market conditions and investment strategies that significantly
affected that fund's performance (except the Money Market Fund) during its last
fiscal year. Each fund will provide a free copy of its Annual and Semi-Annual
Report on request.
For an SAI or Report, either write Lincoln National Life Insurance Co., P.O. Box
2340, Fort Wayne, Indiana 46801, or call 1-800-4LINCOLN (454-6265). Also call
this number to request other information about a fund, or to make inquiries.
You can review and copy information about the funds (including the SAIs) at the
SEC's Public Reference Room in Washington, D.C. You can get information on the
operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. You
can also get reports and other information about the funds on the SEC's Internet
site at http:// www.sec.gov. You can get copies of this information by writing
the SEC Public Reference Section, Washington, D.C. 20549-6009, and paying a
duplicating fee.
Fund Investment Company Act File Numbers:
<TABLE>
<S> <C> <C>
LINCOLN NATIONAL AGGRESSIVE GROWTH FUND, INC.: 33-70742; 811-8090
LINCOLN NATIONAL BOND FUND, INC.: 2-80746; 811-3210
LINCOLN NATIONAL CAPITAL APPRECIATION FUND, INC.: 33-70272; 811-8074
LINCOLN NATIONAL EQUITY-INCOME FUND, INC.: 33-71158; 811-8126
LINCOLN NATIONAL GLOBAL ASSET ALLOCATION FUND, INC.: 33-13530; 811-5115
LINCOLN NATIONAL GROWTH AND INCOME FUND, INC.: 2-80741; 811-3211
LINCOLN NATIONAL INTERNATIONAL FUND, INC.: 33-38335; 811-6233
LINCOLN NATIONAL MANAGED FUND, INC.: 2-82276; 811-3683
LINCOLN NATIONAL MONEY MARKET FUND, INC.: 2-80743; 811-3212
LINCOLN NATIONAL SOCIAL AWARENESS FUND, INC.: 33-19896; 811-5464
LINCOLN NATIONAL SPECIAL OPPORTUNITIES FUND, INC.: 2-80731; 811-3291
</TABLE>
GPD-9
