[LOGO OF VANTAGE INVESTMENT ADVISORS]
Lincoln National
Social Awareness Fund, Inc.
Annual Report
December 31, 1999
<PAGE>
Lincoln National Social Awareness Fund, Inc.
Index
Commentary
Statement of Net Assets
Statement of Operations
Statements of Changes in Net Assets
Financial Highlights
Notes to Financial Statements
Report of Ernst & Young LLP, Independent Auditors
<PAGE>
Lincoln National
Social Awareness Fund, Inc.
Managed by: [LOGO OF VANTAGE INVESTMENT ADVISORS]
Stocks continued their bull run in 1999 with major stock indices performing
well, led by the technology-heavy NASDAQ. During the year, investors clearly
rewarded companies with growth prospects, regardless of their current price with
respect to earnings, or other fundamental measures of value. The Social
Awareness Fund seeks out attractively priced companies with above average
earnings growth that meet the Fund's standards for social responsibility. The
market's focus on growth at any price rather than growth at a reasonable price
created a challenge for the Fund, which returned 15.4% for the year, lagging the
S&P 500's* gain of 21.1%.
There are certain industry exposures created by the social screens that had a
mixed effect on portfolio returns. On the one hand, the Fund has a significant
exposure to technology stocks, which helped returns. On the other hand, the Fund
is heavily invested in financial companies that have been struggling in the face
of rising interest rates. Over the long-term, the Fund has delivered superior
returns, and is well positioned to help investors achieve their financial
objectives in a manner consistent with social principles.
Enrique Chang Christopher Harvey
Growth of $10,000 invested 1/1/90 through 12/31/99
1/1/90 12/31/99
Social Awareness Fund $10,000 $54,260
S&P 500 Index $10,000 $70,078
This chart illustrates, hypothetically, that $10,000 was invested in the Social
Awareness Fund on 1/1/90. As the chart shows, by December 31, 1999, the value of
the investment at net asset value, with any dividends and capital gains
reinvested, would have grown to $54,260. For comparison, look at how the S&P 500
Index did over the same period. With dividends and capital gains, if any,
reinvested, the same $10,000 investment would have grown to $70,087. Past
performance is not indicative of future performance. Remember, an investor
cannot invest directly in an index.
Average annual return Ended
on investments 12/31/99
- ------------------------------------------
One Year +15.44%
- ------------------------------------------
Five Years +28.51%
- ------------------------------------------
Ten Years +18.43%
- ------------------------------------------
* Standard & Poor's 500 Index - Broad based measurement of changes in stock
market conditions based on average performance of 500 widely held common
stocks. An investor cannot invest directly in the above index/indexes, which
is/are unmanaged.
Social Awareness Fund 1
<PAGE>
Lincoln National
Social Awareness Fund, Inc.
Statement of Net Assets
December 31, 1999
Investments:
Number Market
Common Stock: of Shares Value
- ------------------------------------------------------------------------------
Automobiles & Auto Parts: 0.1%
- ------------------------------------------------------------------------------
PACCAR 51,200 $2,267,200
- ------------------------------------------------------------------------------
Banking, Finance & Insurance: 19.8%
- ------------------------------------------------------------------------------
Allmerica Financial 52,500 2,920,313
Allstate 417,868 10,028,832
Ambac Financial Group 109,500 5,714,531
American Express * 81,600 13,566,000
American International Group 296,875 32,099,609
AmSouth Bancorporation 835,287 16,131,480
Bank One 173,843 5,573,841
BB&T 222,100 6,079,988
Chase Manhattan 349,500 27,151,781
Cigna 61,800 4,978,763
Citigroup 664,898 36,943,395
City National 329,500 10,852,906
Comerica 272,700 12,731,681
Conseco 388,200 6,939,075
Edwards (A.G.) 420,250 13,474,266
Federal National Mortgage 276,500 17,263,969
FIRSTPLUS Financial Group * 661,600 46,312
First Union 474,100 15,556,406
Marsh & McLennan 215,950 20,663,716
Mellon Financial 136,200 4,639,313
Merrill Lynch & Company 53,200 4,442,200
Metris 147,714 5,271,543
MGIC Investment 65,600 3,948,300
Morgan (J.P.) 67,400 8,534,525
Morgan Stanley Dean Witter 207,500 29,620,625
National City 486,120 11,514,968
Paine Webber Group 428,750 16,640,859
PMI Group 147,600 7,204,725
PNC Financial Group 83,800 3,729,100
SLM Holding 254,100 10,735,725
SouthTrust 99,100 3,744,122
St. Paul 59,000 1,987,563
T. Rowe Price Associates 240,000 8,850,000
Washington Mutual 202,440 5,263,440
- ------------------------------------------------------------------------------
384,843,872
Buildings & Materials: 1.4%
- ------------------------------------------------------------------------------
American Standard * 77,900 3,573,663
Centex 155,800 3,846,313
D.R. Horton 211,000 2,914,438
Kaufman & Broad Home 370,700 8,966,306
Martin Marietta Materials 143,800 5,895,800
York International 85,600 2,348,650
- ------------------------------------------------------------------------------
27,545,170
Business Services: 0.6%
- ------------------------------------------------------------------------------
Deluxe 218,300 5,989,606
Ennis Business Forms 176,800 1,370,200
PAYCHEX 129,600 5,179,950
- ------------------------------------------------------------------------------
12,539,756
Cable, Media & Publishing: 6.6%
- ------------------------------------------------------------------------------
Dun & Bradstreet 474,700 14,003,650
Gannett 276,100 22,519,406
Knight-Ridder * 222,900 13,262,550
McGraw-Hill 326,100 20,095,913
New York Times 408,150 20,050,369
Omnicom Group 237,700 23,770,000
R.H.Donnelley 94,940 1,791,993
Time Warner 100,400 7,272,725
Valassis Communications * 131,850 5,570,663
- ------------------------------------------------------------------------------
128,337,269
Number Market
of Shares Value
- ------------------------------------------------------------------------------
Chemicals: 0.7%
- ------------------------------------------------------------------------------
Avery Dennison 146,700 $ 10,690,763
Lubrizol 115,300 3,559,888
- ------------------------------------------------------------------------------
14,250,651
Computers & Technology: 23.7%
- ------------------------------------------------------------------------------
Adaptec * 181,800 9,061,594
Adobe Systems 298,200 20,053,950
American Power Conversion * 547,100 14,412,666
Apple Computer * 227,700 23,403,291
BMC Software * 319,100 25,498,084
Cisco Systems * 601,300 64,395,472
Compaq Computer 276,600 7,485,488
Computer Associates International 277,300 19,393,669
Compuware * 502,000 18,683,813
Comverse Technology* 173,500 25,108,703
Dell Computer * 558,500 28,466,047
Electronics Arts * 180,400 15,164,875
EMC * 360,000 39,330,000
Gateway * 213,200 15,363,725
Lexmark International Group A * 257,800 23,330,900
Microsoft * 925,700 108,046,547
Tech Data * 169,000 4,589,406
- ------------------------------------------------------------------------------
461,788,230
Consumer Products: 1.3%
- ------------------------------------------------------------------------------
Avon Products * 312,200 10,302,600
Clorox 202,600 10,205,975
Gillete 81,800 3,369,138
United Stationers * 77,600 2,223,725
- ------------------------------------------------------------------------------
26,101,438
Electronics & Electrical Equipment: 3.0%
- ------------------------------------------------------------------------------
Altera * 245,500 12,167,594
Microchip Technology * 163,100 11,187,641
Sanmina * 184,100 18,340,963
Waters * 308,200 16,334,600
- ------------------------------------------------------------------------------
58,030,798
Energy: 2.1%
- ------------------------------------------------------------------------------
Apache 164,700 6,083,606
Barrett Resources * 102,100 3,005,569
Enron 581,400 25,799,625
Equitable Resources 101,900 3,400,913
Questar 161,200 2,418,000
- ------------------------------------------------------------------------------
40,707,713
Food, Beverage & Tobacco: 3.3%
- ------------------------------------------------------------------------------
Agribrands International * 7,260 333,960
Flowers Industries 315,000 5,020,313
General Mills 279,200 9,981,400
Interstate Bakeries 368,300 6,675,438
McCormick & Company 316,400 9,412,900
Quaker Oats 282,600 18,545,625
Ralston-Purina Group 217,800 6,071,175
Suiza Foods * 186,200 7,378,175
- ------------------------------------------------------------------------------
63,418,986
Healthcare & Pharmaceuticals: 8.1%
- ------------------------------------------------------------------------------
Amgen * 589,900 35,412,434
Bergen Brunswig Class A 612,404 5,090,608
Boston Scientific * 163,000 3,565,625
Cardinal Health 228,005 10,915,739
C.R.Bard 329,400 17,458,200
Health Management Associates Class A * 622,950 8,331,956
IVAX * 117,800 3,033,350
Lilly (Eli) 125,400 8,339,100
Lincare Holdings A * 268,200 9,311,569
McKesson HBOC 519,408 11,719,143
Medtronic 708,364 25,811,014
Mylan Laboratories 698,300 17,588,431
Pacificare Health Systems * 3,000 159,094
- ------------------------------------------------------------------------------
156,736,263
Industrial Machinery: 1.2%
- ------------------------------------------------------------------------------
Illinois Tool Works 124,609 8,418,897
Ingersoll-Rand 272,700 15,015,544
- ------------------------------------------------------------------------------
23,434,441
Social Awareness Fund 2
<PAGE>
Number Market
of Shares Value
- ------------------------------------------------------------------------------
Leisure, Lodging & Entertainment: 1.3%
- ------------------------------------------------------------------------------
Brinker International * 483,200 $11,596,800
McDonald's 236,600 9,537,938
Walt Disney * 131,000 3,831,750
- ------------------------------------------------------------------------------
24,966,488
Metals & Mining: 0.1%
- ------------------------------------------------------------------------------
Cleveland Cliffs Iron 20,600 641,175
Worthington Industries 114,000 1,884,563
- ------------------------------------------------------------------------------
2,525,738
Packaging & Containers: 0.1%
- ------------------------------------------------------------------------------
Sealed Air * 47,000 2,435,188
- ------------------------------------------------------------------------------
Retail: 9.8%
- ------------------------------------------------------------------------------
Dollar Tree Stores * 344,500 16,675,953
Federated Department Stores * 347,800 17,585,638
Gap 475,375 21,867,250
Home Depot 441,750 30,287,484
Jostens 83,300 2,025,231
Ross Stores 689,750 12,458,609
Safeway * 337,624 12,006,754
Staples * 397,800 8,229,488
Tiffany 121,800 10,870,650
TJX 608,500 12,436,219
Tupperware 144,400 2,445,775
Wal-Mart Stores 593,400 41,018,775
Zale * 70,400 3,405,600
- ------------------------------------------------------------------------------
191,313,426
Telecommunications: 11.9%
- ------------------------------------------------------------------------------
ALLTEL 288,700 23,871,881
A T & T * 680,350 34,527,763
BellSouth * 714,300 33,438,169
CenturyTel 121,000 5,732,375
Corning 245,300 31,628,369
MCI Worldcom * 285,450 15,137,770
SBC Communications 798,021 38,903,524
Tellabs * 349,600 22,429,025
U.S.West 366,300 26,373,600
- ------------------------------------------------------------------------------
232,042,476
Textiles, Apparel & Furniture: 0.6%
- ------------------------------------------------------------------------------
Tommy Hilfiger * 462,400 10,779,700
- ------------------------------------------------------------------------------
Transportation & Shipping: 1.5%
- ------------------------------------------------------------------------------
Alaska Air Group * 154,600 5,430,325
Delta Air Lines 143,000 7,123,188
Tidewater 161,100 5,799,600
UAL * 129,200 10,021,075
- ------------------------------------------------------------------------------
28,374,188
Utilities: 0.9%
- ------------------------------------------------------------------------------
DPL 246,100 4,260,606
LG & E Energy 60,000 1,046,250
OGE Energy 446,100 8,475,900
Utilicorp United 154,900 3,010,856
- ------------------------------------------------------------------------------
16,793,612
Total Common Stock: 98.1%
(Cost $1,257,978,622) 1,909,232,603
- ------------------------------------------------------------------------------
Par Market
Money Market Instruments: Amount Value
- ------------------------------------------------------------------------------
Associates Corporation North America
4.00% 1/3/00 $ 6,100,000 $ 6,100,000
Corporate Asset Funding
6.06% 1/27/00 3,300,000 3,285,700
Merrill Lynch
5.87% 1/18/00 8,400,000 8,376,716
5.77% 1/19/00 9,000,000 8,974,125
Suntrust Bank
6.52% 1/10/00 10,000,000 9,983,750
US Treasury Bill (+)
5.06% 2/17/00 384,000 381,463
- ------------------------------------------------------------------------------
Total Money Market Instruments: 1.9%
(Cost $37,101,754) $ 37,101,754
- ------------------------------------------------------------------------------
Total Investments: 100.0%
(Cost $1,295,080,376) 1,946,334,357
- ------------------------------------------------------------------------------
Other Assets Under Liabilities: (0.0%) (155,756)
- ------------------------------------------------------------------------------
Net Assets: 100.0%
(Equivalent to $44.292 per share
based on 43,939,948 shares
issued and outstanding) $1,946,178,601
- ------------------------------------------------------------------------------
Components of Net Assets at December 31, 1999:
- ------------------------------------------------------------------------------
Common Stock, par value $.01 per share,
100,000,000 authorized shares $ 439,399
Paid in capital in excess of par value of shares issued 1,147,815,431
Undistributed net investment income 1,414,566
Accumulated net realized gain on
investments and futures contracts 144,785,586
Net unrealized appreciation of
investments and futures contracts 651,723,619
- ------------------------------------------------------------------------------
Total Net Assets $1,946,178,601
- ------------------------------------------------------------------------------
+ Fully or partially pledged as collateral for open futures contracts.
* Non-income producing security.
See accompanying notes to financial statements.
Social Awareness Fund 3
<PAGE>
Lincoln National Social Awareness Fund, Inc.
Statement of Operations
Year ended December 31, 1999
Investment income:
Dividends $19,694,616
- ------------------------------------------------------------------------------
Interest 2,220,406
- ------------------------------------------------------------------------------
Total investment income 21,915,022
- ------------------------------------------------------------------------------
Expenses:
Management fees 6,167,750
- ------------------------------------------------------------------------------
Accounting fees 652,021
- ------------------------------------------------------------------------------
Printing and postage 134,502
- ------------------------------------------------------------------------------
Legal fees 54,279
- ------------------------------------------------------------------------------
Custody fees 35,537
- ------------------------------------------------------------------------------
Directors fees 4,200
- ------------------------------------------------------------------------------
Other 115,344
- ------------------------------------------------------------------------------
7,163,633
- ------------------------------------------------------------------------------
Less expenses paid indirectly (12,747)
- ------------------------------------------------------------------------------
Total expenses 7,150,886
- ------------------------------------------------------------------------------
Net investment income 14,764,136
- ------------------------------------------------------------------------------
Net realized and unrealized gain on investments and
futures contracts:
- ------------------------------------------------------------------------------
Net realized gain on investment transactions 144,028,921
- ------------------------------------------------------------------------------
Net realized gain on future contracts 1,387,465
- ------------------------------------------------------------------------------
Net change in unrealized appreciation/depreciation
of investments and futures contracts 108,381,735
- ------------------------------------------------------------------------------
Net realized and unrealized gain on investments and
futures contracts 253,798,121
- ------------------------------------------------------------------------------
Net increase in net assets resulting from operations $268,562,257
- ------------------------------------------------------------------------------
Statements of Changes in Net Assets
Year ended Year ended
12/31/99 12/31/98
-----------------------------
Changes from operations:
Net investment income $ 14,764,136 $ 17,415,758
- --------------------------------------------------------------------------------
Net realized gain on investment transactions
and futures contracts 145,416,386 75,145,967
- --------------------------------------------------------------------------------
Net change in unrealized appreciation/depreciation
of investments and futures contracts 108,381,735 185,333,835
- --------------------------------------------------------------------------------
Net increase in net assets
resulting from operations 268,562,257 277,895,560
- --------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income (13,349,570) (27,514,961)
- --------------------------------------------------------------------------------
Net realized gain on investment transactions (75,921,751) (54,631,990)
- --------------------------------------------------------------------------------
Total distributions to shareholders (89,271,321) (82,146,951)
- --------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from capital share transactions (101,343,266) 416,987,975
- --------------------------------------------------------------------------------
Total increase in net assets 77,947,670 612,736,584
- --------------------------------------------------------------------------------
Net Assets, beginning of year 1,868,230,931 1,255,494,347
- --------------------------------------------------------------------------------
Net Assets, end of year $1,946,178,601 $1,868,230,931
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
Social Awareness Fund 4
<PAGE>
Lincoln National Social Awareness Fund, Inc.
Financial Highlights
(Selected data for each capital share outstanding throughout the year)
<TABLE>
<CAPTION>
Year ended December 31,
1999 1998 1997 1996 1995
-------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 40.283 $ 35.657 $ 27.316 $ 22.590 $ 16.642
Income from investment operations:
Net investment income(2) 0.319 0.367 0.364 0.389 0.432
Net realized and unrealized gain
on investments and futures contracts 5.649 6.414 9.447 5.748 6.491
-------------------------------------------------------
Total from investment operations 5.968 6.781 9.811 6.137 6.923
-------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income (0.296) (0.672) - (0.389) (0.432)
Distributions from net realized gain on
investment transactions (1.663) (1.483) (1.470) (1.022) (0.543)
-------------------------------------------------------
Total dividends and distributions (1.959) (2.155) (1.470) (1.411) (0.975)
-------------------------------------------------------
Net asset value, end of year $ 44.292 $ 40.283 $ 35.657 $ 27.316 $ 22.590
-------------------------------------------------------
Total Return(1) 15.44% 19.89% 37.53% 28.94% 42.83%
Ratios and supplemental data:
Ratio of expenses to average net assets 0.38% 0.38% 0.41% 0.46% 0.50%
Ratio of net investment income
to average net assets 0.79% 1.10% 1.37% 1.58% 2.21%
Portfolio Turnover 23.77% 37.55% 34.84% 45.90% 54.02%
Net assets, end of year (000 omitted) $1,946,179 $1,868,231 $1,255,494 $636,595 $297,983
</TABLE>
(1) Total return percentages in this table are calculated on the basis
prescribed by the Securities and Exchange Commission. These percentages are
based on the underlying mutual fund shares. The total return percentages in
the table are NOT calculated on the same basis as the performance in the
letter at the front of this booklet (those percentages are based upon the
change in unit value).
(2) Per share information for the years ended December 31, 1999 & 1998 were
based on the average shares outstanding method.
See accompanying notes to financial statements.
Social Awareness Fund 5
<PAGE>
Lincoln National Social Awareness Fund, Inc.
Notes to Financial Statements
December 31, 1999
The Fund: Lincoln National Social Awareness Fund, Inc. (the "Fund") is
registered as an open-end, diversified management investment company under the
Investment Company Act of 1940, as amended. The Fund's shares are sold only to
The Lincoln National Life Insurance Company and Lincoln Life & Annuity Company
of New York (the "Companies") for allocation to their variable annuity products
and variable universal life products.
The Fund's investment objective is to maximize long-term capital appreciation.
The Fund buys stocks of established companies, which adhere to certain specific
social criteria.
1. Significant Accounting Policies
Security Valuation: All equity securities are valued at the last quoted sales
price as of the close of the New York Stock Exchange (NYSE) on the valuation
date. If on a particular day an equity security does not trade, then the mean
between the bid and asked prices will be used. Financial futures are valued at
the settlement price established each day by the board of trade or exchange on
which they are traded. Other securities and assets for which market quotations
are not readily available are valued at fair value as determined in good faith
by or under the direction of the Fund's Board of Directors. Money market
instruments having less than 60 days to maturity are stated at amortized cost,
which approximates market value.
Investment Transactions and Investment Income: Investment transactions are
accounted for on the trade date. Dividend income is recorded on the ex-dividend
date and interest income is recorded on the accrual basis and includes
amortization of any premium and discount. Realized gains or losses from
investment transactions are reported on an identified cost basis.
Use of Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of increases and decreases in net assets
from operations during the reporting period. Actual results could differ from
those estimates.
Expenses: The custodian bank of the Fund has agreed to waive its custodial fees
when the Fund maintains a prescribed amount of cash on deposit in certain
non-interest bearing accounts. For the year ended December 31, 1999, the
custodial fees offset arrangements amounted to $12,747.
Taxes: The Fund has complied with the special provisions of the Internal Revenue
Code for regulated investment companies. As such, the Fund is not subject to
U.S. federal income taxes to the extent that it distributes all of its taxable
income for its fiscal year.
2. Management Fees and Other Transactions With Affiliates
Lincoln Investment Management Company (the "Advisor") and its affiliates manage
the Fund's investment portfolio and maintain its accounts and records. For these
services, the Advisor receives a management fee at an annual rate of .48% of the
first $200,000,000 of the average daily net assets of the Fund, .40% of the next
$200,000,000, and .30% of the average daily net assets of the Fund in excess of
$400,000,000. The sub-advisor, Vantage Investment Advisors, an affiliate of the
Advisor, is paid directly by the Advisor.
Delaware Service Company ("Delaware"), an affiliate of the Advisor, provides
accounting services and other administration support to the Fund. For these
services, the Fund pays Delaware a monthly fee based on average net assets,
subject to certain minimums.
If the aggregate annual expenses of the Fund, including the management fee, but
excluding taxes, interest, brokerage commissions relating to the purchase or
sale of portfolio securities and extraordinary non-recurring expenses, exceed
1.50% of the average daily net assets of the Fund, the Advisor will reimburse
the Fund in the amount of such excess. No reimbursement was due for the year
ended December 31, 1999.
Certain officers and directors of the Fund are also officers or directors of the
Companies and receive no compensation from the Fund. The compensation of
unaffiliated directors of the Fund is borne by the Fund.
Social Awareness Fund 6
<PAGE>
Notes to Financial Statements - (Continued)
3. Investments
The cost of investments for federal income tax purposes approximates cost for
book purposes. The aggregate cost of investments purchased and the aggregate
proceeds from investments sold for the year ended December 31, 1999 and the
aggregate gross unrealized appreciation, the aggregate gross unrealized
depreciation and the net unrealized appreciation at December 31, 1999 are as
follows:
Aggregate Aggregate Gross Gross Net
Cost of Proceeds Unrealized Unrealized Unrealized
Purchases From Sales Appreciation Depreciation Appreciation
---------------------------------------------------------------------
$433,953,261 $576,325,800 $772,176,720 $(120,922,739) $651,253,981
4. Supplemental Financial Instrument Information
Financial Futures Contracts: The Fund may purchase or sell financial futures
contracts, which are exchanged traded. The Fund bears the market risk that arise
from changes in the value of these financial instruments. The Fund deposits with
its custodian a specified amount of cash or eligible securities called "initial
margin" or "variation margin." The market value of investments pledged to cover
margin requirements for open positions at December 31, 1999 was $381,463. The
unrealized gain or loss on the contracts is reflected in the accompanying
financial statements. The Fund is subject to the market risks of unexpected
changes in the underlying markets and interest rates; however, such changes in
the value generally are offset by changes in the value of the items being hedged
by such contracts. Financial futures contracts open at December 31, 1999 were as
follows:
Notional Expiration Unrealized
Contracts Cost Amount Date Gain
---------------------------------------------------------------------
18 Russell 1000 Index Contracts $13,489,362 March 2000 $469,638
5. Summary of Changes From Capital Share Transactions
<TABLE>
<CAPTION>
Shares Issued Upon Net Increase (Decrease)
Capital Reinvestment of Capital Shares Resulting From Capital
Shares Sold Dividends Redeemed Share Transactions
----------------------------------------------------------------------------------------------------------------------
Shares Amount Shares Amount Shares Amount Shares Amount
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Year ended
December 31, 1999: 2,357,528 $ 95,474,682 2,261,344 $89,271,321 (7,056,003) $(286,089,269) (2,437,131) $(101,343,266)
Year ended
December 31, 1998: 10,472,068 390,645,188 2,315,866 82,146,951 (1,621,323) (55,804,164) 11,166,611 416,987,975
</TABLE>
6. Distributions to Shareholders
The Fund declares and distributes dividends from net investment income, if any,
semi-annually. Distributions of net realized gains, if any, are declared and
distributed annually.
Social Awareness Fund 7
<PAGE>
Lincoln National Social Awareness Fund, Inc.
Report of Ernst & Young LLP, Independent Auditors
To the Shareholders and Board of Directors
Lincoln National Social Awareness Fund, Inc.
We have audited the accompanying statement of net assets of Lincoln National
Social Awareness Fund, Inc. (the "Fund") as of December 31, 1999, and the
related statement of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the five years in the period then ended.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of December 31, 1999, by correspondence with
the Fund's custodian and brokers. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Lincoln National Social Awareness Fund, Inc. at December 31, 1999, the results
of its operations for the year then ended, the changes in its net assets for
each of the two years in the period then ended, and its financial highlights for
each of the five years in the period then ended, in conformity with accounting
principles generally accepted in the United States.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
February 4, 2000
Social Awareness Fund 8
