<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
LINCOLN ADVISOR FUNDS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/X/ Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
LINCOLN ADVISOR FUNDS, INC.
200 EAST BERRY STREET, FORT WAYNE, INDIANA 46802
PROXY STATEMENT AND NOTICE OF SPECIAL MEETING
OF SHAREHOLDERS
TO BE HELD ON MAY 3, 1996
TO THE SHAREHOLDERS OF LINCOLN ADVISOR FUNDS, INC.:
This is your official notice that the Special Meeting of Shareholders (the
"Meeting") of Lincoln Advisor Funds, Inc. (the "Fund") will be held at 200 East
Berry Street, Fort Wayne, Indiana 46802 on May 3, 1996 at 9:00 a.m., Fort Wayne,
Indiana time, in accordance with the Fund's By-Laws. This Proxy Statement and
the enclosed form of proxy are expected to be mailed to shareholders on or about
April 4, 1996.
You are cordially invited, and urged, to attend the Meeting. Whether or not you
will be able to attend the Meeting, you are urged to complete, sign and return
the accompanying form of proxy.
The purposes of the Meeting or any adjournments thereof are as follows:
The following item is to be voted on ONLY by shareholders of record of the
Lincoln Enterprise Portfolio, Lincoln U.S. Growth Portfolio, Lincoln World
Growth Portfolio, Lincoln New Pacific Portfolio, Lincoln Government Income
Portfolio and Lincoln Corporate Income Portfolio:
1. To elect six directors of the Fund.
The following item is to be voted on by all shareholders of the Fund:
2. To ratify or reject the selection of Coopers & Lybrand L.L.P. as
independent auditors for the Fund.
The following item is to be voted on separately ONLY by shareholders of
record of each of the Lincoln Enterprise Portfolio, Lincoln U.S. Growth
Portfolio, Lincoln World Growth Portfolio, Lincoln New Pacific Portfolio,
Lincoln Government Income Portfolio and Lincoln Corporate Income Portfolio:
3. To approve or disapprove a new Investment Management Agreement and a
new Sub-Advisory Agreement for each Portfolio.
The following item is to be voted on by all shareholders of the Fund:
4. To transact such other business as may properly come before the
Meeting or any adjournments thereof.
PROXIES THAT ARE PROPERLY EXECUTED BUT NOT OTHERWISE MARKED WILL BE VOTED "FOR"
THE ELECTION OF THE PROPOSED DIRECTORS AND "FOR" EACH OF THE OTHER PROPOSALS.
(i)
<PAGE> 3
The Board of Directors has designated March 15, 1996 as the record date for
shareholders entitled to vote at this Meeting. You may cast one vote for each
full share and a fractional vote for each fractional share that you held at the
close of business on that date.
Your Fund will not bear any costs in connection with the Meeting. Such costs
will be borne by Lincoln Investment Management, Inc.
Your proxy is revocable by you at any time by notifying the Fund in writing or
by signing another proxy. Signing a proxy will not affect your right either to
attend the Meeting or vote your shares in person or to give a later proxy.
PRISCILLA S. BROWN
President
April 3, 1996
(ii)
<PAGE> 4
LINCOLN ADVISOR FUNDS, INC.
PROXY STATEMENT
THE BOARD OF DIRECTORS OF LINCOLN ADVISOR FUNDS, INC. (THE "FUND") IS SOLICITING
YOUR PROXY TO BE VOTED AT THE SPECIAL MEETING OF SHAREHOLDERS (THE "MEETING") TO
BE HELD AT 200 EAST BERRY STREET, FORT WAYNE, INDIANA ON MAY 3, 1996 AT 9:00
A.M. AND AT ANY ADJOURNMENTS THEREOF. WHETHER OR NOT YOU INTEND TO BE PRESENT AT
THE MEETING, THE BOARD OF DIRECTORS URGES YOU TO COMPLETE, SIGN AND RETURN THE
PROXY FORM WHICH ACCOMPANIES THIS PROXY STATEMENT.
Signing a proxy form does not affect your right to attend the Meeting and
vote your shares in person, or your right to revoke the proxy or to sign a later
proxy. Your proxy will help assure the presence of a quorum, however, and may
help avoid the additional expense of a further proxy solicitation. Proxies will
be voted in accordance with the instructions thereon, if any, and if no
direction is made, proxies that are properly executed will be voted "FOR" each
of the nominees for election as director (hereinafter "director") and "FOR" each
other proposal. The proxies are authorized to vote in their discretion on any
other matters which may properly be acted upon at this Meeting or any
adjournment thereof. Under Maryland law and the Fund's constituent documents,
abstentions and broker non-votes would likely be included for purposes of
determining whether a quorum is present at the Meeting, but would likely be
treated as votes not cast and, therefore, would not be counted for purposes of
determining whether matters to be voted upon at the Meeting have been approved.
This solicitation is being made largely by mail, but may also be made by
officers or employees of the Fund or the Fund's investment manager or their
affiliates, and may include, without cost to the Fund, telephonic, telegraphic,
facsimile or oral communications.
Lincoln Investment Management, Inc. ("LIM") (formerly, Lincoln National
Investment Management Company), the investment manager of each series of the
Fund (each a "Portfolio" and together the "Portfolios"), will reimburse banks,
brokers or dealers for their reasonable expenses in forwarding soliciting
materials to beneficial owners of the Fund's shares. This Proxy Statement and
the accompanying proxy card(s) are expected to be mailed to shareholders on or
about April 4, 1996.
Your proxy is revocable by you at any time by notifying the Fund in writing
at its principal executive office at 200 East Berry Street, Fort Wayne, Indiana
46802. Shareholders retain the right to attend this Meeting and to vote their
shares in person. Shareholders of record at the close of business on March 15,
1996 will be entitled to cast one vote for each full share and a fractional vote
for each fractional share then held. As of that date, each Portfolio of the Fund
had outstanding the number of shares set forth on Exhibit A to this Proxy
Statement.
1
<PAGE> 5
TABLE OF CONTENTS
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PAGE
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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS....................................... (i)
PROXY STATEMENT................................................................. 1
Introduction.................................................................. 3
Proposal 1 -- Election of Directors......................................... 4
Proposal 2 -- Ratification of Selection of Independent Auditors............. 8
Proposal 3 -- Approval or Disapproval of New Investment Management and Sub-
Advisory Agreements........................................... 9
EXHIBITS
Exhibit A -- Outstanding Shares as of March 15, 1996....................... A-1
Exhibit B -- Executive Officers of the Fund................................ B-1
Exhibit C -- Information Relating to Investment Management and Sub-Advisory
Agreements.................................................... C-1
Exhibit D -- Form of Investment Management Agreement with Delaware
Management Company, Inc. ..................................... D-1
Exhibit E -- Form of Sub-Advisory Agreement................................ E-1
Exhibit F -- Information Relating to Other Investment Management and Sub-
Advisory Arrangements......................................... F-1
Exhibit G -- Payments Made by the Fund Pursuant to Rule 12b-1 Plans........ G-1
Exhibit H -- Fees Paid to Delaware Service Company, Inc. for Dividend
Disbursing, Shareholder Servicing and Transfer Agent
Services...................................................... H-1
Exhibit I -- Fund Shareholdings by Shareholders Owning 5% or More of Each
Class of Securities as of February 1, 1996.................... I-1
</TABLE>
2
<PAGE> 6
INTRODUCTION
RESTRUCTURING OF THE FUND
On April 3, 1995, Delaware Management Company, Inc. ("DMC") became an
indirect, wholly-owned subsidiary of Lincoln National Corporation ("LNC")
pursuant to a merger agreement ("Merger Agreement") by and between LNC, a
wholly-owned subsidiary of LNC, and Delaware Management Holdings, Inc. ("DMH"),
the indirect parent of DMC. LIM, the investment manager to all of the Portfolios
of the Fund, is also a wholly-owned subsidiary of LNC. DMC is an investment
adviser registered under the Investment Advisers Act of 1940 ("Advisers Act").
DMC and its predecessors have been providing investment management and related
services to the investment companies known as the Delaware Group of Funds (the
"Delaware Group") since 1938. On December 31, 1995, DMC and its affiliates were
managing approximately $28 billion, of which approximately $10.5 billion were
registered investment company assets.
As a result of the merger, through its subsidiaries, LNC currently operates
two mutual fund complexes offering shares directly to the public, the Fund and
the Delaware Group. LNC concluded that it would be appropriate to consolidate
the management of the Fund's assets with those of DMC in order to eliminate
duplication in providing investment advisory services and competition for the
management of investment company assets. Consequently, management of LIM and LNC
concluded that DMC, with its extensive experience and resources, should be
responsible for the investment management of each Portfolio of the Fund.
LIM initially proposed the possible restructuring of the Fund, including
various changes to the Portfolios, to the Board of Directors on October 20,
1995. Various restructuring alternatives were discussed informally at subsequent
Board meetings. In December, 1995, the Fund's directors who are not affiliated
with LNC or DMH ("Independent Directors") retained the law firm of Sidley &
Austin, Chicago, Illinois, to act as counsel to the Independent Directors and
that firm advised these Directors with respect to their duties and
responsibilities under the Investment Company Act of 1940 (the "1940 Act") and
certain other legal matters. On January 4, 1996, the Board held a meeting at
which LIM and management of DMH outlined the restructurings to be proposed with
respect to the Portfolios generally. No specific proposals were recommended at
that meeting and the Board took no formal action, although the Independent
Directors requested LIM management to review further certain aspects of the
restructurings. On February 13, 1996, LIM and DMH management provided the
Independent Directors and their counsel with written information detailing the
proposed transactions and on February 23, 1996, the Board met to consider those
proposals.
NEW INVESTMENT MANAGEMENT AND SUB-ADVISORY AGREEMENT
After careful deliberations, and for the reasons described in this Proxy
Statement in Proposal 3, the Board recommends that the shareholders of Lincoln
Enterprise, Lincoln U.S. Growth, Lincoln World Growth, Lincoln New Pacific,
Lincoln Government Income and Lincoln Corporate Income Portfolios of the Fund
vote to approve new investment management agreements with DMC and new
sub-advisory agreements for each Portfolio with various sub-advisers to replace
the current investment management agreements and any sub-advisory agreements.
The differences between the current agreements and proposed agreements are
described in Proposal 3.
3
<PAGE> 7
ELIMINATION OF CERTAIN PORTFOLIOS
With respect to Lincoln Growth and Income, Lincoln Tax-Free Income and
Lincoln Cashfund Portfolios, the Board determined that each Portfolio had
limited assets and the prospects for substantial cash inflows in the future
appeared limited. Consequently, the Board of Directors determined that it would
be appropriate to cease actively marketing shares of these Portfolios and to
liquidate their respective investment portfolios pursuant to separate Plans of
Liquidation. The Board of Directors determined that the elimination of these
three Portfolios was in the best interests of the Fund and its shareholders
since, among other things, the normal operating expenses of the respective
Portfolios, at their size, represented a higher burden on shareholders than the
Board felt was appropriate. In connection with the liquidation, LIM has advised
the Board that effective February 23, 1996, it would waive its management fee by
.30% until completion of the liquidation, which would be accomplished by
increasing the amount that it reimburses each of these Portfolios for expenses
by .30% until completion of the liquidation.
PROPOSAL 1
ELECTION OF DIRECTORS
Upon recommendation of the Board's Nominating Committee, six directors have
been nominated for election to the Board as the entire Board of Directors to
hold office until the next Annual Meeting of Shareholders and until their
successors shall have been elected and shall have qualified. The nominees are:
Wayne A. Stork, Walter P. Babich, Anthony D. Knerr, Ann R. Leven, W. Thacher
Longstreth and Charles E. Peck. These nominees are not present members of the
Board of Directors of the Fund. Each nominee serves as a director of each of the
investment companies in the Delaware Group. It is not expected that any such
nominee will withdraw or become unavailable for election but, in case this
should happen, the power given in the proxy may be used to vote for a substitute
nominee or nominees as recommended by the existing Board of Directors. The
following lists the nominees for election as directors, their ages and their
business backgrounds.
SELECTED INFORMATION CONCERNING THE NOMINEES FOR ELECTION TO THE BOARD OF
DIRECTORS
NOMINEES
NAME/AGE/PRINCIPAL OCCUPATION
*WAYNE A. STORK (58) Chairman, President, Chief Executive Officer, Director
and/or Trustee of 16 registered investment companies in the Delaware Group
(which excludes Delaware Pooled Trust, Inc.), Delaware Management Holdings,
Inc., DMH Corp., Delaware International Holdings Ltd. and Founders Holdings,
Inc.; Chairman and Director of Delaware Pooled Trust, Inc., Delaware Investment
Counselors, Inc. and Delaware Investment & Retirement Services, Inc.; Chairman,
President, Chief Executive Officer, Chief Investment Officer and Director of
Delaware Management Company, Inc.; Chairman, Chief Executive Officer and
Director of Delaware International Advisers Ltd.; Director of Delaware
Distributors, Inc. and Delaware Service Company, Inc. During the past five
years, Mr. Stork has served in various executive capacities at different times
within the Delaware organization.
- ---------------
*Director affiliated with LNC, DMC and the Distributor of the Fund and,
therefore, considered an "interested person" of the Fund as defined in the 1940
Act.
4
<PAGE> 8
WALTER P. BABICH (68) Director and/or Trustee of the 17 registered
investment companies in the Delaware Group; Board Chairman, Citadel
Constructors, Inc., 1988 to present; Partner, I&L Investors, 1988-1991; Partner,
Irwin & Leighton Partnership (building construction), 1986-1988.
ANTHONY D. KNERR (57) Director and/or Trustee of the 17 registered
investment companies in the Delaware Group; Founder and Managing Director,
Anthony Knerr & Associates (strategic consultants), 1991 to present; Chairman,
The Publishing Group, Inc., 1988-1990; Executive Vice President/Finance and
Treasurer, Columbia University, 1982-1988; Lecturer for English, Columbia
University, 1987-1989.
ANN R. LEVEN (55) Director and/or Trustee of the 17 registered investment
companies in the Delaware Group; Treasurer, National Gallery of Art, 1994 to
present; Deputy Treasurer, National Gallery of Art, 1992-1994; Adjunct
Professor, Columbia Business School, 1975-1992; Treasurer and Chief Fiscal
Officer, Smithsonian Institution, 1984-1990; Director of various funds sponsored
by Aquila Management Corporation, 1985 to present.
W. THACHER LONGSTRETH (75) Director and/or Trustee of the 17 registered
investment companies in the Delaware Group; Philadelphia City Councilman, 1984
to present; Consultant, Packard Press, 1988 to present; President, MLW,
Associates, 1983 to present; Director Emeritus, Tasty Baking Company, 1991 to
present; Director, Tasty Baking Company, 1968 to 1991; Director, Healthcare
Services Group, 1983 to present; Vice Chairman, The Winchell Company, 1983-1988.
CHARLES E. PECK (70) Director and/or Trustee of the 17 registered
investment companies in the Delaware Group; Secretary/Treasurer, Enterprise
Homes of Fredericksburg, VA, 1992 to present; Chairman and Chief Executive
Officer, The Ryland Group, Inc., 1981-1990.
SELECTED INFORMATION CONCERNING THE CURRENT BOARD OF DIRECTORS
The following is a list of the current directors of the Fund, along with
their ages and business backgrounds. These persons will continue to serve on the
Board of Directors during the period prior to the Meeting.
Name/Age/Positions with Fund and LIM/Principal Occupation
**Priscilla S. Brown (38) President (June, 1994 to present) (formerly Vice
President, September, 1993 to June, 1994) and Director (August, 1993 to present)
of the Fund; President and Director of LNC Equity Sales Corporation (June, 1994
to present); Vice President of the Lincoln National Investment Management
Company (March, 1991 to June, 1994); Director of Marketing of the Equitable
Financial Company (1988 to 1991).
Richard M. Burridge (66) Director of the Fund (September, 1993 to present);
Director (1972 to present) and President (March, 1986 to present) of The
Burridge Group, Inc. (investment management); Director of Computer Access
International, Inc., Cincinnati Financial Corporation, Lincoln National
Convertible Securities Fund, Inc. (since 1986), Lincoln National Income Fund,
Inc. (since 1972) and St. Joseph Light and Power Company; Chairman of the Board
of Fort Dearborn Income Securities, Inc.
- ---------------
**Director affiliated with LNC, LIM and the Distributor of the Fund and,
therefore, considered an "interested person" of the Fund as defined in the
1940 Act.
5
<PAGE> 9
Jorge G. Castro (36) Director of the Fund (September, 1993 to present);
Principal of CIC Asset Management, Inc. (investment management) (1990 to
present); Trustee of Milton Academy (1993 to present); Vice President and
Product Manager, Fixed Income Division of Goldman Sachs & Co. (1985 to 1990).
Adela Cepeda (37) Director of the Fund (September, 1993 to present);
President, A.C. Advisory, Inc. (May, 1995 to present); Co-Founder and Managing
Director of Abacus Financial Group, Inc. (July, 1991 to May, 1995); Vice
President, Corporate Finance Department of Smith Barney, Harris Upham & Co.
Incorporated (1980 to 1991); Director and Vice President of Harvard Club of
Chicago (since 1986); Commissioner of Chicago Public Building Commission (since
March, 1992); Director of the Lincoln National Convertible Securities Fund, Inc.
(since 1992) and the Lincoln National Income Fund, Inc. (since 1992).
Roger J. Deshaies (46) Director of the Fund (September, 1993 to present);
Senior Vice President, Finance (1990 to present) of Parkview Memorial Hospital,
Fort Wayne, Indiana; Director of Hospital Laundry Services, Inc. (1995 to
present); President and Chairman of Hospital Laundry Services, Inc. (February,
1993 to February, 1995); Director of Signature Care, Inc. (since 1992); Director
and Treasurer of Pine Valley Country Club (since 1993); Director of the Lincoln
National Convertible Securities Fund, Inc. (since 1992) and the Lincoln National
Income Fund, Inc. (since 1992).
Charles G. Freund (72) Director of the Fund (September, 1993 to present);
Chairman Emeritus of the Board of Directors, Success National Bank at
Lincolnshire (since 1991) (formerly Chairman of the Board (1978 to 1991));
Director of the Lincoln National Convertible Securities Fund, Inc. (since 1986),
the Lincoln National Income Fund, Inc. (since 1972) and Mathers Fund, Inc.
**Philip L. Holstein (40) Director of the Fund (September, 1993 to
present); President of The Holstein Company, Inc. (financial services) (1982 to
present); Vice President of The Morgan Financial Group, Inc. (1992 to present);
Registered Principal/Investment Sales Coordinator of LNC Equity Sales
Corporation (1985 to present); Agent of the Lincoln National Life Insurance
Company (1982 to present).
**H. Thomas McMeekin (42) Director of the Fund (June, 1994 to present);
President (May, 1994 to present) and Director (May, 1991 to present) (formerly
Executive Vice President (February, 1992 to November, 1992) and Senior Vice
President (November, 1987 to February, 1992)) of Lincoln Investment Management,
Inc.; Executive Vice President and Chief Investment Officer (May, 1994 to
present) (formerly Senior Vice President (November, 1992 to May, 1994)) of the
Lincoln National Corporation; President and Director (June, 1995 to present) of
Lincoln National Investment Companies, Inc. (a holding company established in
1995); President (May, 1994 to present) and Director (May, 1990 to present) of
the Lincoln National Convertible Securities Fund, Inc. and the Lincoln National
Income Fund, Inc.; President and Chief Executive Officer (June, 1994 to present)
and Director (June, 1992 to present) of Lincoln National Mezzanine Corporation;
Vice President (January, 1990 to November, 1992) and Director (November, 1994 to
present) of The Lincoln National Life Insurance Company; Director of Delaware
Management Holdings, Inc., Lynch & Mayer, Inc. and Vantage Global Advisors, Inc.
Barbara A. Peck (47) Director of the Fund (September, 1993 to present);
Lecturer, Accounting Department of the College of Business Administration at the
University of Illinois at Chicago ("UIC") (August, 1991 to present); Assistant
Dean of Academic Administration for the College of Business
- ---------------
**Director affiliated with LNC, LIM and the Distributor of the Fund and,
therefore, considered an "interested person" of the Fund as defined in the
1940 Act.
6
<PAGE> 10
Administration at UIC (May, 1993 to September, 1995); Accounting Lecturer at
Northwestern University's University College (June, 1990 to December, 1993);
Certified Public Accountant.
The Board of Directors had five meetings during the Fund's most recently
completed fiscal year. All of the present directors attended at least 75% of the
Board and committee meetings held during such fiscal year.
With respect to each Portfolio of the Fund, as of March 15, 1996, the
percentage of each class of shares beneficially owned by each director and
nominee for director, as well as by all directors and executive officers of the
Fund as a group, was less than one percent.
STANDING COMMITTEES
The Board has an Audit Committee for the purpose of meeting, at least
annually, with the Fund's independent accountants and officers to review
distribution activities and Rule 12b-1 Plan expenditures, accounting principles
used by each Portfolio and the adequacy of each Portfolio's internal controls,
and for such other purposes as the Board of Directors may from time to time
direct. The Audit Committee held one meeting during the Fund's last fiscal year.
The Board also has an Investment/Pricing Committee which performs interim
functions for the Board of Directors including dividend declaration and
portfolio pricing matters. The Investment/Pricing Committee held no meetings
during the last fiscal year.
The Board also has a Nominating Committee for the purpose of recommending a
slate of directors; preparing for and recommending replacements for any
vacancies in directors' positions; and initial review of policy issues regarding
the size, composition and compensation of the Board. The Nominating Committee
did not hold any meetings during the last fiscal year. The Nominating Committee
recommended the nominees for election to the Board of Directors.
The members of each of the Audit, Investment/Pricing and Nominating
Committees are Mmes. Cepeda and Peck and Messrs. Burridge, Castro, Deshaies and
Freund, all of whom are considered not to be "interested persons" of the Fund as
defined in the 1940 Act. Mr. Freund is the Chairperson of the Audit Committee,
Mr. Burridge is the Chairperson of the Investment/Pricing Committee and Ms.
Cepeda is the Chairperson of the Nominating Committee.
OFFICERS
The following individuals are executive officers of the Fund: Priscilla S.
Brown, President; JoAnn E. Becker, Vice President; David A. Berry, Vice
President; Dennis A. Blume, Vice President; Steven K. Brody, Vice President,
Treasurer and Chief Financial Officer; Ann L. Warner, Vice President; and David
G. Humes, Assistant Vice President and Chief Accounting Officer. The Board of
Directors of the Fund appoints officers each year and from time to time as
necessary.
REMUNERATION OF DIRECTORS
Set forth below is a compensation table, listing for each director entitled
to receive compensation, the aggregate compensation received from the Fund for
its last fiscal year, and the total compensation received from the Fund and the
two other investment companies for which LIM or an affiliate of LIM serves as
investment manager (the "Fund Complex") for the calendar year ended December 31,
1995. No compensation is paid to directors who are affiliated with LNC.
7
<PAGE> 11
COMPENSATION TABLE
<TABLE>
<CAPTION>
PENSION OR
RETIREMENT ESTIMATED TOTAL
AGGREGATE BENEFITS ACCRUED ANNUAL COMPENSATION
COMPENSATION AS PART OF FUND BENEFITS UPON FROM FUND AND
DIRECTOR FROM FUND EXPENSES RETIREMENT FUND COMPLEX
- ----------------------------------- ------------ ---------------- ------------- -------------
<S> <C> <C> <C> <C>
Richard M. Burridge................ $11,000 None None $31,000
Jorge G. Castro.................... $11,000 None None $11,000
Adela Cepeda....................... $ 9,000 None None $29,000
Roger J. Deshaies.................. $11,000 None None $32,000
Charles G. Freund.................. $11,000 None None $32,000
Barbara A. Peck.................... $11,000 None None $11,000
</TABLE>
REQUIRED VOTE
As to each director of the Fund, a plurality of all votes cast by
shareholders, regardless of series or class, shall be required to elect such
director. This means that the six nominees receiving the largest number of votes
will be elected. In light of the anticipated liquidation of Lincoln Growth and
Income, Lincoln Tax-Free Income and Lincoln Cashfund Portfolios prior to the
date of the Meeting, the Board has determined that shareholders of these
Portfolios will not be affected by such vote and, pursuant to the Fund's
Articles of Incorporation, will not be entitled to vote with respect to the
election of directors. Accordingly, a plurality of all votes cast by
shareholders of the Lincoln Enterprise, Lincoln U.S. Growth, Lincoln World
Growth, Lincoln New Pacific, Lincoln Government Income and Lincoln Corporate
Income Portfolios, regardless of series or class, shall be required to elect
each director.
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
At its meeting on January 26, 1996, upon the recommendation of the Audit
Committee, the Board of Directors selected Coopers & Lybrand L.L.P. ("C&L") as
independent auditors of the Fund for the current fiscal year and shareholders
are asked to ratify this selection. It is not anticipated that a representative
of C&L will be present at the Meeting.
REQUIRED VOTE
The affirmative vote of a majority of all of the Fund's shares represented
at the Meeting is required to ratify the selection of C&L as independent
auditors of the Fund, including shares of the Lincoln Growth and Income, Lincoln
Tax-Free Income and Lincoln Cashfund Portfolios, which are expected to be
liquidated. In addition, because of the continuing obligations of C&L to the
Lincoln Enterprise, Lincoln U.S. Growth, Lincoln World Growth, Lincoln New
Pacific, Lincoln Government Income and Lincoln Corporate Income Portfolios,
which will remain in existence, the affirmative vote of a majority of all of the
shares of these six Portfolios represented at the Meeting shall be required to
ratify the selection of C&L.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors unanimously recommends that the shareholders of the
Fund ratify the selection of C&L as independent auditors for the Fund for the
current fiscal year.
8
<PAGE> 12
PROPOSAL 3
APPROVAL OR DISAPPROVAL OF NEW INVESTMENT MANAGEMENT AND SUB-ADVISORY AGREEMENTS
The third proposal involves the consideration of new investment management
and sub-advisory agreements for Lincoln U.S. Growth Portfolio, Lincoln World
Growth Portfolio, Lincoln New Pacific Portfolio, Lincoln Enterprise Portfolio,
Lincoln Corporate Income Portfolio and Lincoln Government Income Portfolio
(which together are referred to as the "Proposed Agreements") to replace the
existing investment management and sub-advisory agreements (which together are
referred to as the "Current Agreements"). Shareholders are being asked to
approve the Proposed Agreements as part of the overall consolidation of the
management of LNC's mutual fund operations, which will result in a change of the
investment manager for each of these Portfolios of the Fund from LIM to DMC, a
change in sub-adviser for the Lincoln U.S. Growth Portfolio from Provident
Investment Counsel ("Provident") to Lynch & Mayer, Inc. ("Lynch & Mayer") and,
in the case of the Lincoln Corporate Income Portfolio and the Lincoln Government
Portfolio, the use of LIM as sub-adviser to DMC. As described in further detail
below, the Board of Directors has determined that the Proposed Agreements will
benefit each Portfolio of the Fund and its respective shareholders by offering
the potential for improved, more cost-effective investment management,
sub-advisory, administrative and related services.
THE PROPOSED AGREEMENTS DO NOT REFLECT ANY INCREASES IN THE RATE OF
INVESTMENT MANAGEMENT OR SUB-ADVISORY FEES TO BE BORNE, DIRECTLY OR INDIRECTLY,
BY THE PORTFOLIOS OR THEIR SHAREHOLDERS. THE TERMS AND CONDITIONS OF THE CURRENT
AND PROPOSED AGREEMENTS ARE SUBSTANTIALLY SIMILAR IN ALL MATERIAL RESPECTS, WITH
THE EXCEPTION OF CERTAIN DIFFERENCES HIGHLIGHTED BELOW IN "DIFFERENCES BETWEEN
AGREEMENTS."
At the Meeting, shareholders of the respective Portfolios will be asked to
take the following actions with respect to the Proposed Agreements:
(a) To consider and vote on approval of a new investment management
agreement between the Fund, on behalf of each respective Portfolio, and
DMC;
(b) To consider and vote on approval of a new sub-advisory agreement
between DMC, with respect to Lincoln U.S. Growth Portfolio, and Lynch &
Mayer;
(c) To consider and vote on approval of a new sub-advisory agreement
between DMC, with respect to Lincoln World Growth Portfolio, and Walter
Scott & Partners Limited ("Walter Scott");
(d) To consider and vote on approval of a new sub-advisory agreement
between DMC, with respect to Lincoln New Pacific Portfolio, and John
Govett & Co. Limited ("John Govett");
(e) To consider and vote on approval of a new sub-advisory agreement
between DMC, with respect to Lincoln Enterprise Portfolio, and Lynch &
Mayer;
(f) To consider and vote on approval of a new sub-advisory agreement
between DMC, with respect to Lincoln Corporate Income Portfolio, and
LIM; and
(g) To consider and vote on approval of a new sub-advisory agreement
between DMC, with respect to Lincoln Government Income Portfolio, and
LIM.
9
<PAGE> 13
To facilitate shareholders' evaluation of this third proposal, the
following chart sets forth the names of each Portfolio of the Fund and indicates
the entities that presently provide investment management or sub-advisory
services to the Portfolios under the Current Agreements, as well as the entities
that would provide investment management or sub-advisory services under the
Proposed Agreements.
<TABLE>
<CAPTION>
CURRENT PROPOSED
INVESTMENT INVESTMENT CURRENT PROPOSED
PORTFOLIO MANAGER MANAGER SUB-ADVISER SUB-ADVISER
- ------------------------------- ---------- ---------- -------------- --------------
<S> <C> <C> <C> <C>
Lincoln U.S. Growth
Portfolio.................... LIM DMC Provident Lynch & Mayer
Lincoln World Growth
Portfolio.................... LIM DMC Walter Scott Walter Scott
Lincoln New Pacific
Portfolio.................... LIM DMC John Govett John Govett
Lincoln Enterprise Portfolio... LIM DMC Lynch & Mayer Lynch & Mayer
Lincoln Corporate Income
Portfolio.................... LIM DMC None LIM
Lincoln Government Income
Portfolio.................... LIM DMC None LIM
</TABLE>
In connection with the change in investment manager from LIM to DMC,
shareholders of each respective Portfolio are being asked to approve a new
sub-advisory agreement between DMC and a sub-adviser for that Portfolio. In the
case of Lincoln World Growth Portfolio, Lincoln New Pacific Portfolio and
Lincoln Enterprise Portfolio, the current sub-advisers would remain the same.
For Lincoln U.S. Growth Portfolio, the sub-adviser is proposed to be changed
from Provident to Lynch & Mayer, which is an affiliate of both DMC and LIM, and
which is also the current (and proposed) sub-adviser to the Lincoln Enterprise
Portfolio.
LIM currently manages Lincoln Corporate Income Portfolio and Lincoln
Government Income Portfolio without assistance from a sub-adviser. Under the
proposed arrangement, DMC would serve as the investment manager and would enter
into a sub-advisory agreement with LIM under which LIM would serve as the
sub-adviser with respect to these two Portfolios. The investment management fees
payable by each of these Portfolios would remain the same. LIM and its personnel
would remain primarily responsible for management of the assets of each of these
Portfolios on a daily basis, subject to the supervision of DMC.
At the meeting held on February 23, 1996, the Board of Directors of the
Fund, including the directors who are not parties to the Current or Proposed
Agreements, and who are not "interested persons" (as defined in the 1940 Act) of
LIM, DMC or any current or proposed sub-adviser (the "Independent Directors"),
unanimously approved the Proposed Agreements, subject to shareholder approval as
described herein. A further discussion of the factors considered by the Board in
making its determination is indicated below under "EVALUATION OF THE PROPOSED
AGREEMENTS BY THE BOARD OF DIRECTORS."
The following summary provides information about the terms and conditions
of the Current and Proposed Agreements and the Portfolios' current and proposed
investment managers and sub-advisers. In the following discussion, the proposed
investment management agreements and the proposed sub-advisory agreements are
referred to collectively as the "Proposed Management Agreements" and the
"Proposed Sub-Advisory Agreements," respectively. Similarly, the current
investment management agreements and the current sub-advisory agreements are
referred to collectively as the "Current Management Agreements" and the "Current
Sub-Advisory Agreements," respectively.
10
<PAGE> 14
TERMS AND CONDITIONS OF THE CURRENT AND PROPOSED MANAGEMENT AGREEMENTS
LIM currently serves as the investment manager to each of the Portfolios
under the Current Management Agreements with the Fund. The Current Management
Agreements were approved by the Board of Directors as well as the shareholders
of the respective Portfolios, and will continue in the event that shareholder
approval of the Proposed Management Agreements is not obtained. Attached to this
Proxy Statement as Exhibit C is a list of the Current Management Agreements,
their respective dates of execution and the dates that such agreements were last
approved by shareholders. Shareholders are not being asked to approve the
continuation of the Current Management Agreements. Only the Proposed Management
Agreements are being submitted for shareholder approval.
THE OPERATIVE PROVISIONS OF THE PROPOSED MANAGEMENT AGREEMENTS ARE
SUBSTANTIALLY SIMILAR IN ALL MATERIAL RESPECTS TO THE PROVISIONS OF THE
CORRESPONDING CURRENT MANAGEMENT AGREEMENTS, WITH THE EXCEPTION OF CERTAIN
DIFFERENCES HIGHLIGHTED BELOW UNDER "DIFFERENCES BETWEEN AGREEMENTS." THE
INVESTMENT MANAGEMENT FEES PAYABLE BY THE FUND TO DMC ON BEHALF OF THE
PORTFOLIOS UNDER THE PROPOSED MANAGEMENT AGREEMENTS (WHICH INCLUDE AMOUNTS DMC
MAY PAY TO SUB-ADVISERS) ARE IDENTICAL TO THE FEES CURRENTLY BEING CHARGED BY
LIM UNDER THE CORRESPONDING CURRENT MANAGEMENT AGREEMENTS, EXCEPT THAT THE
PROPOSED INVESTMENT MANAGEMENT FEE PAYABLE WITH RESPECT TO LINCOLN NEW PACIFIC
PORTFOLIO WILL BE REDUCED TO 0.80% OF THE PORTFOLIO'S AVERAGE DAILY NET ASSETS
ON AN ANNUALIZED BASIS, FROM THE CURRENT FEE RATE OF 1.10%.
As further described below, the Board of Directors anticipates that the
Portfolios may experience certain reductions in the costs of operating the
Portfolios by virtue of reductions in administrative costs resulting from the
selection of DMC as investment manager, and the Fund's use of DMC personnel to
perform certain administrative functions. For purposes of this discussion of the
Current and Proposed Management Agreements, LIM and DMC, as relevant, may
collectively be referred to as the "Manager."
Each Current and Proposed Management Agreement has an initial term of two
years and provides that it will thereafter continue in effect from year to year
only if such continuation is specifically approved at least annually with
respect to each Portfolio by (i) a vote of a majority of the Board of Directors
of the Fund, or (ii) a vote of a majority of the outstanding voting securities
of the Portfolio, and (iii) in either case, separately by a majority of the
Fund's Independent Directors. Each Current and Proposed Management Agreement may
be terminated by the Board of Directors, or by a vote of a majority of the
outstanding voting securities of the relevant Portfolio, or by the Manager at
any time without penalty provided the Manager gives proper written notice. The
Current Management Agreements require that the Manager give at least 30, but not
more than 60 days' written notice, while the Proposed Management Agreements
simply require 60 days' prior written notice of termination. The Current and
Proposed Management Agreements each terminate automatically upon their
assignment (as that term is defined in the 1940 Act).
Under the Current and Proposed Management Agreements, the Manager is
obligated to manage the investment and reinvestment of the assets of the
Portfolios, subject to the direction of the Board of Directors and officers of
the Fund. Pursuant to the terms of the Current and Proposed Management
Agreements, the Manager regularly makes decisions concerning what securities and
other instruments to purchase or sell on behalf of a Portfolio and effects the
purchase and sale of such securities and other instruments. Further, the Manager
is obligated to furnish the Board of Directors with such information
11
<PAGE> 15
and reports regarding the Fund's investments as it deems appropriate or as the
Board of Directors requests.
The Current and Proposed Management Agreements authorize the Manager, at
its own expense, to select and contract with one or more sub-advisers to perform
some or all of the services for the Portfolios for which the Manager is
ultimately responsible. The sub-advisers are subject to the direction of the
Manager, as well as the ultimate supervision of the officers and Board of
Directors of the Fund. Under the Current and Proposed Management Agreements, the
Manager remains responsible for the actions of any such sub-adviser and may, in
its sole discretion, terminate any such arrangement as it determines to be
appropriate. It is therefore contemplated that DMC would regularly supervise and
monitor the activities of the sub-advisers consistent with these obligations.
Under each of the Current and Proposed Management Agreements, the Manager
is authorized to place orders for the purchase or sale of securities or other
instruments for the Portfolios. The primary objective when entering into
portfolio transactions under each agreement is to obtain the best available
price and most favorable execution for portfolio transactions. As provided in
the Securities Exchange Act of 1934 (the "1934 Act") and the Current and
Proposed Management Agreements, under certain circumstances higher commissions
are permitted to be paid to brokers or dealers who provide brokerage and
research services than to brokers or dealers who do not provide such services if
such higher commissions are deemed reasonable in relation to the value of the
brokerage and research services provided.
Each Current and Proposed Management Agreement provides that, in the
absence of willful misfeasance, bad faith, gross negligence or a reckless
disregard of the performance of its duties to the Fund, the Manager shall not be
liable to the Fund or any shareholder of the Fund for any action or omission in
the course of, or in connection with, rendering services under the Current or
Proposed Management Agreements or for any losses that may be sustained in the
purchase, holding or sale of any security or otherwise.
Attached to this Proxy Statement as Exhibit D is the form of Proposed
Management Agreement between the Fund and DMC on behalf of each Portfolio.
Except for the differences described below, the Current and Proposed Management
Agreements are substantially similar in all material respects.
DIFFERENCES BETWEEN AGREEMENTS
Each Current Management Agreement sets forth the rate of management fees
for the Portfolio to which it relates. Exhibit C to this Proxy Statement
contains a compilation of the rates of management fees under the Current
Management Agreements, as well as a listing of the fees paid by the Fund on
behalf of each Portfolio to, and the expenses as a percentage of net assets
reimbursed by, the Manager for the Fund's most recently completed fiscal year.
As noted above, the rate of management fees under the Proposed Management
Agreements is identical to the rate under the corresponding Current Management
Agreements, with the exception of a fee reduction in the case of Lincoln New
Pacific Portfolio.
1. FUND ADMINISTRATION
One of the significant differences between the Current and Proposed
Management Agreements relates to the administrative responsibilities of the Fund
in performing its day-to-day operations. These responsibilities, common to all
mutual funds, typically include corporate administration, clerical services,
12
<PAGE> 16
recordkeeping and bookkeeping. Another area of responsibility involves fund
accounting, which includes the daily pricing of each Portfolio's portfolio of
investments and the preparation of financial reports.
Under the Current Management Agreements, LIM's responsibilities are limited
to the provision of investment management-related services, and the Fund
contracts separately with Investors Bank & Trust Company ("IBT") for the
provision of administrative and fund accounting services. Under an
administration agreement with IBT dated November 1, 1993, the Fund is obligated
to pay monthly administrative fees based on the following annualized percentages
of the combined average daily net assets of each Portfolio of the Fund: 0.05% of
the first $500 million; 0.03% from $500 million to $800 million; 0.02% from $800
million to $1 billion; and 0.01% above $1 billion. For fiscal year 1995, the
Fund paid IBT $274,166 (or approximately .24% of average net assets) which,
pursuant to the agreement, was the minimum annual fee payable by the Fund
regardless of the amount of its assets. Fund accounting services are provided by
IBT as part of a custodian agreement between the Fund and IBT dated November 1,
1993. The Fund is obligated to pay monthly fees under the custodian agreement
(which include fees for fund accounting) at an annual rate of 0.03% of the
amount of domesticly held assets of the Fund, subject to certain minimums per
Portfolio. For fiscal year 1995, the Fund paid IBT $392,500 (or approximately
.34% of average net assets) under the custodian agreement which was the minimum
annual fee payable by the Fund under the custodian agreement regardless of the
amount of its assets. The administration fees and custody fees (which included
fees for fund accounting services) in aggregate represented approximately .58%
of the Fund's average net assets, due to the minimum fees provided for in the
agreements with IBT. This ratio of fees to net assets would decrease if the
amount of assets in the Portfolios were to increase.
Under the Proposed Management Agreements, DMC is responsible for
administering the affairs of the Fund, and provides some of the administrative
services described above for no additional fee. As in the case of the other
funds in the Delaware Group for which DMC acts as investment manager, the
administrative services provided by DMC would include all those services
currently provided by IBT to the Fund, except for the fund accounting services
described above. Fund accounting services would be provided by Fund employees
who are also employees of DMC as well as employees of the other funds in the
Delaware Group. The expenses of those services will be borne by the Fund
directly, outside the operation of the Proposed Management Agreements. The Fund
would be charged its pro rata share of the complex-wide cost of those services
(including employee salaries) based on its relative net assets. The Board of
Directors and officers of the Fund anticipate that the Fund will benefit from
savings resulting from increased efficiencies and economies of scale as a result
of this proposed arrangement because these costs are spread among all of the
funds in the Delaware Group. However, there is no assurance that such savings
will result.
2. ABSENCE OF CONTRACTUAL FEE WAIVER
Each Current Management Agreement includes a provision under which LIM
agrees to a reduction of its management fees in the event that the expenses of
the Portfolio for any fiscal year (including the advisory and administrative
fees payable by the Fund but excluding interest, taxes, organization expenses,
brokerage commissions, distribution fees and litigation and indemnification
expenses and other extraordinary expenses not incurred in the ordinary course of
the Fund's business) exceed the lowest applicable annual expense limitation
established by jurisdictions in which the Portfolio's shares are offered for
sale. Any such reductions to LIM's compensation are subject to readjustment
during any fiscal year of the Fund.
13
<PAGE> 17
The Proposed Management Agreements do not contain specific contractual
provisions regarding fee waivers or expense reimbursements. As a practical
matter, however, this difference may not be meaningful. The Fund's distributor,
Delaware Distributors, L.P. ("DDLP"), intends to distribute the Fund's shares in
all 50 states. In order for the Fund's shares to continue to be registered in
California, the state with the most stringent expense limitation, DMC must agree
to waive its fees or reimburse expenses to meet the expense limitation. While
DMC's waivers and reimbursements are voluntary and it is DMC's practice to
review these voluntary commitments every six months, it is unlikely that DMC
would remove such waivers or reimbursements to preclude sales of the Fund's
shares in certain states, including California.
Currently, LIM is voluntarily reimbursing the Fund for the Portfolios'
expenses in excess of the amounts necessary to meet the most stringent
state-imposed annual expense limitation. The amount of each Portfolio's
expenses, expressed as a percentage of each Portfolio's assets, that were
reimbursed by LIM during the Fund's most recently completed fiscal year is shown
in Exhibit C to this Proxy Statement. DMC has voluntarily committed to the Board
of Directors to waive its fees or reimburse expenses for the first six months
that it serves as investment manager for each Portfolio in amounts sufficient to
meet the expense reimbursements currently being maintained by LIM. Thereafter,
DMC will review its voluntary commitments with respect to waivers and
reimbursements in accordance with its general practice.
3. BROKERAGE ISSUES
Under the Proposed and Current Management Agreements, the Manager is
authorized, consistent with the requirements of the 1934 Act, to pay higher
commissions to brokers or dealers who provide certain brokerage and research
services to the Fund, compared to the commissions that another broker or dealer
would have charged for a similar transaction, if such higher commissions are
deemed reasonable in relation to the value of the brokerage and research
services provided. Under the Current Management Agreements, the decision whether
to "pay up" for brokerage is left to the discretion of LIM and the agreements
recognize that LIM may use such brokerage and research services in connection
with its services to other clients. Under the Proposed Management Agreements,
DMC is required to request approval from the Fund's Board of Directors or
officers to "pay up" for such services. The Proposed Management Agreements also
provide that, to the extent consistent with the requirements of the rules of the
Securities and Exchange Commission and the National Association of Securities
Dealers, Inc., these orders may be placed with brokers who sell shares of funds
for which the Manager provides investment advisory services.
TERMS AND CONDITIONS OF THE CURRENT AND PROPOSED SUB-ADVISORY AGREEMENTS
Pursuant to the Current Sub-Advisory Agreements, the following investment
advisers, which are each registered under the Advisers Act, have agreed to
provide sub-advisory services to LIM with respect to certain Portfolios.
Provident serves as sub-adviser to Lincoln U.S. Growth Portfolio; Walter Scott
serves as sub-adviser to Lincoln World Growth Portfolio; and Lynch & Mayer
serves as sub-adviser to Lincoln Enterprise Portfolio. In addition, until
December 29, 1995, John Govett served as sub-adviser to LIM with respect to the
Lincoln New Pacific Portfolio. On that date, Allied Irish Banks, Ltd. acquired
control of John Govett and the sub-advisory agreement between LIM and John
Govett terminated by operation of law. John Govett has agreed with the Fund and
LIM to continue to provide sub-advisory services with respect to the Lincoln New
Pacific Portfolio in a manner consistent with the
14
<PAGE> 18
terminated sub-advisory agreement during the period from December 29, 1995 until
a new sub-advisory agreement with John Govett is executed, except that John
Govett will not receive compensation for such services during that time.
Each Current Sub-Advisory Agreement was approved by the Board of Directors
and the applicable Portfolio's shareholders. Attached to this Proxy Statement as
Exhibit C is a list of the Current Sub-Advisory Agreements, their respective
dates of execution and the dates that such agreements were last submitted to
shareholders. Shareholders are not being asked to approve the continuation of
the Current Sub-Advisory Agreements. Only the Proposed Sub-Advisory Agreements
are being submitted for shareholder approval.
Under the proposed consolidation of LNC's mutual fund operations, Lynch &
Mayer would replace Provident as sub-adviser for Lincoln U.S. Growth Portfolio.
The Board of Directors believes that the Portfolio will benefit from Lynch &
Mayer's services, as well as the ability of DMC, as manager and an affiliate of
Lynch & Mayer, to monitor and supervise the investment activities on behalf of
the Portfolio. For Lincoln Corporate Income Portfolio and Lincoln Government
Income Portfolio, LIM, the current investment manager, is proposed as the
sub-adviser. The sub-advisers currently in place for Lincoln World Growth
Portfolio, Lincoln New Pacific Portfolio and Lincoln Enterprise Portfolio would
not change.
Attached to this Proxy Statement as Exhibit E is the form of Proposed
Sub-Advisory Agreement between DMC with respect to each Portfolio and the
various sub-advisers. Except for the reduction of the sub-advisory fees payable
to John Govett with respect to the Lincoln New Pacific Portfolio described
below, the Proposed Sub-Advisory Agreements are, as to all material terms,
substantially similar to the Current Sub-Advisory Agreements between LIM and the
sub-advisers. The Proposed Sub-Advisory Agreements are substantially the same as
the form of Proposed Management Agreement described and discussed above, except
that the activities of the sub-advisers would be subject to the supervision and
control of DMC as well as the Board of Directors, and the sub-advisers would not
be responsible for the provision of administrative services to the Fund. One
difference between the Current and Proposed Sub-Advisory Agreements is that the
sub-advisers will not be authorized to pay higher brokerage commissions in
respect of brokerage or research services provided by brokers or dealers,
without the approval of the Fund's officers or Board of Directors. The Board of
Directors and officers of the Fund believe that any differences between the
Current and Proposed Sub-Advisory Agreements are not material and that the scope
and quality of the respective sub-advisers' services will, under the Proposed
Sub-Advisory Agreements, be at least equivalent to the scope and quality of the
services previously provided.
The fees payable under the Current and Proposed Sub-Advisory Agreements are
the sole responsibility of the Manager and are payable by the Manager
irrespective of its entitlement to fees or any of its commitments to waive fees
or provide for reimbursement of expenses. Exhibit C of this Proxy Statement
contains a compilation of the rates of sub-advisory fees payable by LIM under
the Current Sub-Advisory Agreements, as well as a listing of the amount of such
fees paid by LIM to the sub-advisers during the Fund's most recently completed
fiscal year.
The annual sub-advisory fees described in Exhibit C for the Lincoln
Enterprise Portfolio, the Lincoln U.S. Growth Portfolio and the Lincoln World
Growth Portfolio are the same as the sub-advisory fees to be paid by DMC under
the Proposed Sub-Advisory Agreements. The annual sub-advisory fee to be paid by
DMC to John Govett with respect to the Lincoln New Pacific Portfolio represents
a fee reduction from 0.80% to 0.50% of average daily net assets, which
corresponds to the overall annual
15
<PAGE> 19
management fee reduction under the Proposed Management Agreement for that
Portfolio from 1.10% to 0.80% of average daily net assets. The rate of fees
payable by DMC to LIM as sub-adviser to Lincoln Corporate Income Portfolio and
Lincoln Government Income Portfolio under the Proposed Sub-Advisory Agreements
for those two Portfolios is the same as the investment management fee rate that
is payable to LIM under the Current Management Agreements relating to those
Portfolios during the Fund's most recently completed fiscal year, and therefore,
represents no change in the rate of fees that will be payable by each of those
Portfolios.
INFORMATION ABOUT DMC
The present directors and principal executive officers of DMC, and their
principal occupations, which are their positions with DMC, are as follows: Wayne
A. Stork, Chairman, President, Chief Executive Officer and Chief Investment
Officer; Richard G. Unruh, Jr., Executive Vice President; Winthrop S. Jessup,
Executive Vice President; Paul E. Suckow, Executive Vice President/Chief
Investment Officer, Fixed Income and George M. Chamberlain, Jr., Senior Vice
President and Secretary. All of the directors and officers of DMC may be
contacted at One Commerce Square, Philadelphia, Pennsylvania 19103.
DMH, through its wholly-owned subsidiary DMH Corp., owns 100% of the voting
securities of DMC. Lincoln National Corporation, through its wholly-owned
subsidiary, Lincoln National Investment Companies, Inc., owns 100% of the
outstanding shares of common stock of DMH, and may be deemed to control DMH. The
address of DMH is One Commerce Square, Philadelphia, Pennsylvania 19103. The
address of DMH Corp. is Foulkstone Plaza, 1403 Foulk Road, Suite 102,
Wilmington, Delaware 19803. The address of Lincoln National Corporation and
Lincoln National Investment Companies, Inc. is 200 East Berry Street, Fort
Wayne, Indiana 46802.
Attached to this Proxy Statement as Exhibit F is a chart identifying other
investment companies with investment objectives similar to those of the
Portfolios for which DMC serves as investment manager, the fees charged by DMC
and the size of each such investment company.
In connection with the merger of DMH and LNC whereby DMH became an
indirect, wholly-owned subsidiary of LNC, cash consideration of $301 million was
paid to the holders of DMH common stock, options, warrants, phantom stock and
phantom stock equivalents ("DMH Equity"). The cash consideration was allocated
to holders of DMH Equity so that each such holder received the same amount per
share (on a fully-diluted basis) after deducting from the amounts payable to the
holders of DMH options and warrants the exercise price of the options or
warrants.
Most of the cash consideration was paid to the holders of DMH Equity at the
closing of the merger; however, a portion of the cash consideration was paid
after closing to holders of options that did not vest as of the closing date of
the merger and holders of phantom stock that could not have been "put" to DMH,
as a result of the merger, under the terms of the relevant phantom stock
agreement.
In addition to the $301 million of cash consideration, the holders of DMH
Equity are entitled to receive, subject to the satisfaction of certain
conditions, a contingent payment of up to a maximum of $22.5 million on June 1,
1997. The amount of this contingent payment will depend upon the cumulative
management revenues (i.e., investment management and advisory or sub-advisory
fees) of DMH during the period April 1, 1995 through March 31, 1997 (the
"Measurement Period"). If the cumulative management revenues during the
Measurement Period do not exceed $245.6 million, no contingent payment will be
made. If cumulative management revenues exceed that amount, then a contingent
16
<PAGE> 20
payment will be made by LNC in an amount determined by multiplying $22.5 million
by a fraction, the numerator of which will be the amount by which cumulative
management revenues during the Measurement Period exceed $245.6 million, and the
denominator of which is $26.9 million.
Wayne A. Stork, a nominee for director of the Fund, received approximately
3.90% of the consideration described above as a holder of DMH Equity. A certain
portion of this amount will be paid in the future, based upon vesting schedules,
not later than August 1, 1996. Such percentage may vary due to additional grants
or forfeitures, if any, of options and phantom stock. The percentage set forth
in this paragraph assumes that Mr. Stork remains employed by DMH long enough to
receive all consideration payable in connection with the merger to which he is
entitled.
In connection with the merger, Wayne A. Stork, a nominee for director and
Chairman, President, Chief Executive Officer and Director of DMH; Chairman,
President, Chief Executive Officer, Chief Investment Officer and Director of
DMC; Chairman, Chief Executive Officer and Director of Delaware International
Advisers Ltd.; Chairman and Director of Delaware Pooled Trust, Inc.; and
Chairman, President, Chief Executive Officer and Director and/or Trustee of 16
of the funds in the Delaware Group executed an employment agreement with DMH and
LNC, providing that he will continue in the employ of DMH for a period of
approximately four years from the date of the merger.
INFORMATION ABOUT THE SUB-ADVISERS
The following portion of this Proxy Statement contains information
regarding the entities who are proposed as sub-advisers to DMC under the
Proposed Sub-Advisory Agreements, including their ownership and key personnel.
Also included is information regarding Provident, which will be replaced by
Lynch & Mayer as sub-adviser to the Lincoln U.S. Growth Portfolio under the
proposed arrangement. As described above with respect to DMC, Exhibit F of this
Proxy Statement contains a chart identifying other investment companies, if any,
for which the sub-advisers serve as investment manager or sub-adviser with
investment objectives similar to those of the Portfolios, the fees charged by
the sub-advisers for providing services to such companies and the size of each
such investment company. All of the information relating to the current and
proposed sub-advisers was provided by the sub-advisers and has not been
independently verified by the Fund.
LYNCH & MAYER, INC.
Lynch & Mayer is an investment adviser registered under the Advisers Act,
and is the current and proposed sub-adviser to LIM with respect to Lincoln
Enterprise Portfolio, and the proposed sub-adviser with respect to Lincoln U.S.
Growth Portfolio. Lynch & Mayer, which is located at 520 Madison Avenue, New
York, New York 10022, provides investment advice to pension funds, foundations,
endowments, trusts and high net worth individuals and families, and had assets
under management, as of December 31, 1995, in excess of $6.6 billion.
17
<PAGE> 21
The directors and principal executive officers of Lynch & Mayer, along with
their principal occupations, which are their positions with Lynch & Mayer (with
the exception of Dennis A. Blume, whose principal occupation is Senior Vice
President and Director of LIM, and H. Thomas McMeekin, whose principal
occupation is President and Director of LIM), are as follows:
<TABLE>
<CAPTION>
NAME POSITION WITH LYNCH & MAYER
- ------------------------------ ------------------------------------------
<S> <C>
Dennis P. Lynch............... Chairman, Director
Eldon C. Mayer, Jr. .......... Vice Chairman, Director
Edward J. Petner.............. President, Director
Dennis A. Blume............... Director
H. Thomas McMeekin............ Director
Laurence E. Ach............... Senior Vice President
Dallas L. Corser.............. Senior Vice President
Francis J. Houghton, Jr. ..... Senior Vice President
Robert A. Jordan, Jr. ........ Senior Vice President
Howard M. Kaufman............. Senior Vice President, Treasurer &
Secretary
William A. Kissell............ Senior Vice President
John C. Levinson.............. Senior Vice President
Bradley A. Roberts............ Senior Vice President
Michael F. Sassi.............. Senior Vice President
Anthony A. Segalas............ Senior Vice President
W. Denman Zirkle.............. Senior Vice President
</TABLE>
The business address of these persons is 520 Madison Avenue, New York, New
York 10022, with the exception of Messrs. Blume and McMeekin, whose business
address is 200 East Berry Street, Fort Wayne, Indiana 46802.
Lincoln National Corporation, through its wholly-owned subsidiary, Lincoln
National Investment Companies, Inc., owns 100% of the outstanding shares of
common stock of Lynch & Mayer, and controls Lynch & Mayer. The address of
Lincoln National Corporation and Lincoln National Investment Companies, Inc. is
200 East Berry Street, Fort Wayne, Indiana 46802.
PROVIDENT INVESTMENT COUNSEL
Provident is an investment adviser registered under the Advisers Act, and
is the current sub-adviser to LIM with respect to Lincoln U.S. Growth Portfolio.
In connection with the consolidation of LNC's mutual fund operations, it is
proposed that Provident be replaced by Lynch & Mayer as sub-adviser to Lincoln
U.S. Growth Portfolio. Provident is located at 300 North Lake Avenue, Penthouse
Suite, Pasadena, California 91101-4106 and provides investment advice to pension
funds, foundations, endowments and mutual funds and had assets under management,
as of December 31, 1995, of $17 billion.
The directors and principal executive officer of Provident along with their
principal occupations, which are their positions with Provident, are as follows:
Robert M. Kommerstad, Chief Executive Officer and Chairman of the Board; Jeffrey
J. Miller, Managing Director and Secretary; Thomas J. Condon, Managing Director;
George E. Handtmann, III, Managing Director; and Larry D. Tashjian, Managing
Director. The business address of these persons is 300 North Lake Avenue,
Penthouse Suite, Pasadena, California 91101-4106.
18
<PAGE> 22
Provident is an indirect, wholly-owned subsidiary of United Asset
Management Corporation ("UAM"), through UAM's wholly-owned subsidiary United
Asset Management Holdings, Inc. ("UAM Holdings"), which owns 100% of the
outstanding shares of common stock of Provident. UAM is located at One
International Place, Boston, Massachusetts 02110, and UAM Holdings is located at
103 Springer Building, 3411 Silverside Road, Wilmington, Delaware 19810.
WALTER SCOTT & PARTNERS LIMITED
Walter Scott is an investment adviser registered under the Advisers Act,
and is the current and proposed sub-adviser to LIM with respect to Lincoln World
Growth Portfolio. Walter Scott, which is located at Millburn Tower, Gogar,
Edinburgh, Scotland EH12 9BS, provides investment advice to pension funds and
foundations and had assets under management, as of December 31, 1995, in excess
of U.S. $2 billion.
The directors and principal executive officers of Walter Scott, along with
their principal occupations, which are their positions with Walter Scott, are as
follows: Dr. Walter Grant Scott, Chairman and Managing Director; John Clark,
Director; Marilyn R. Harrison, Finance Director and Company Secretary; Dr.
Kenneth J. Lyall, Director; William D.S. Murray, Director; and James D. Smith,
Director. The business address of these persons is Millburn Tower, Gogar,
Edinburgh, Scotland EH12 9BS.
JOHN GOVETT & CO. LIMITED
John Govett is an investment adviser registered under the Advisers Act, and
is the current and proposed sub-adviser with respect to Lincoln New Pacific
Portfolio. John Govett, which is located at Shackleton House, 4 Battle Bridge
Lane, London, U.K. SE1 2HR, provides investment advice to investment trusts,
investment companies, mutual funds and pension funds, and had assets under
management, as of December 31, 1995, of approximately U.S. $5.1 billion.
The directors and principal executive officers of John Govett, along with
their principal occupations, which are their positions with John Govett, are as
follows: Kevin J.T. Pakenham, Co-Chairman, Chief Executive Officer and Director;
Charles A. Fowler, Co-Chairman and Director; Peter S.L. Pejacsevich, Chief
Investment Officer and Director; and Brian M. Lee, Managing Director of
Operations and Director. The business address of these persons is Shackleton
House, 4 Battle Bridge Lane, London, U.K. SE1 2HR.
On December 29, 1995, John Govett became an indirect subsidiary of Allied
Irish Banks, p.l.c. ("AIB") pursuant to a sale and purchase agreement (the "Sale
Agreement"). Under the 1940 Act, such a change in the ownership and control of
John Govett resulted in an "assignment" of the sub-advisory agreement with LIM
with respect to Lincoln New Pacific Portfolio, and the automatic termination of
such agreement. Since that time, John Govett has continued to provide
sub-advisory services with respect to Lincoln New Pacific Portfolio under the
terms and conditions of the Current Sub-Advisory Agreement but without receiving
compensation, pending approval by shareholders of Lincoln New Pacific Portfolio
of a new sub-advisory agreement. In view of this change in control, it is
necessary for shareholders of Lincoln New Pacific Portfolio to approve a new
investment sub-advisory agreement independent of the proposed consolidation of
LNC's mutual fund operations.
Pursuant to the Sale Agreement, John Govett Holdings Limited, an indirect,
newly-formed, majority-owned subsidiary of AIB, acquired all of the outstanding
capital shares of John Govett from its
19
<PAGE> 23
former parent London Pacific Holdings Limited, for L50 million. John Govett
Holdings Limited has represented that it does not intend to make any significant
changes in the way John Govett conducts its business. The sub-advisory services
that John Govett currently provides with respect to Lincoln New Pacific
Portfolio are expected to continue essentially unchanged. To facilitate this
continuity, John Govett Holdings Limited has entered into employment contracts
with each of Messrs. Kevin J.T. Pakenham, Peter S.L. Pejacsevich, Charles A.
Fowler and Brian M. Lee, who, as noted above, are all officers and directors of
John Govett.
John Govett intends to adhere to the provisions of Section 15(f) of the
1940 Act. Section 15(f) of the 1940 Act provides that when a change in control
of an investment adviser occurs, the investment adviser or any of its affiliated
persons may receive any amount or benefit in connection therewith as long as two
conditions are satisfied. First, no "unfair burden" may be imposed on the
investment company as a result of the transaction relating to the change of
control, or any express or implied terms, conditions or understandings
applicable thereto. The term "unfair burden," as defined in the 1940 Act,
includes any arrangement during the two-year period after the change in control
whereby the investment adviser (or predecessor or successor adviser), or any
interested person of any such adviser, receives or is entitled to receive any
compensation, directly or indirectly, from the investment company or its
security holders (other than fees for bona fide investment advisory or other
services) or from any person in connection with the purchase or sale of
securities or other property to, from, or on behalf of the investment company
(other than fees for bona fide principal underwriting services). No such
compensation arrangements are contemplated with respect to the change in
control.
The second condition is that during the three-year period immediately
following consummation of the transaction, at least 75% of the investment
company's board of directors must not be "interested persons" of the investment
adviser or predecessor investment adviser within the meaning of the 1940 Act.
The current nominees for election to the Board of Directors of the Fund, as
described above under Proposal 1 of this Proxy Statement, satisfy this
condition.
LINCOLN INVESTMENT MANAGEMENT, INC.
LIM, an investment adviser registered under the Advisers Act, is currently
the investment manager to each Portfolio of the Fund, and is proposed to be the
sub-adviser to DMC with respect to Lincoln Corporate Income Portfolio and
Lincoln Government Income Portfolio (Portfolios for which there currently is no
sub-adviser). LIM provides investment services to LNC and its principal
subsidiaries and acts as investment adviser to other clients in addition to the
Fund. As of December 31, 1995, LIM had total assets under management of $37.7
billion.
LNC, through its wholly-owned subsidiary, Lincoln National Investment
Companies, Inc., owns 100% of the outstanding shares of common stock of LIM, and
may be deemed to control LIM. The address of LNC and Lincoln National Investment
Companies, Inc. is 200 East Berry Street, Fort Wayne, Indiana 46802, the same
address as LIM. The directors and principal executive officers of LIM, along
with their principal occupations, which are their positions with LIM (with the
exception of Jon A. Boscia, whose principal occupation is President, Chief
Operating Officer and Director of Lincoln
20
<PAGE> 24
National Life Insurance Company, and Janet C. Whitney, whose principal
occupation is Vice President and Treasurer of LNC), are as follows:
<TABLE>
<CAPTION>
NAME POSITION WITH LIM
- ------------------------------ ------------------------------------------
<S> <C>
H. Thomas McMeekin............ President and Director
Bruce Barton.................. Senior Vice President
Dennis A. Blume............... Senior Vice President and Director
Jon A. Boscia................. Director
Steven R. Brody............... Senior Vice President, Assistant Treasurer
and Director
Ann L. Warner................. Senior Vice President
JoAnn E. Becker............... Vice President
David A. Berry................ Vice President
Anne E. Bookwalter............ Vice President
Philip C. Byrde............... Vice President
Patrick R. Chasey............. Vice President
Garrett W. Cooper............. Vice President
David C. Fischer.............. Vice President
Luc N. Girard................. Vice President
Donald P. Groover............. Vice President
William N. Holm, Jr. ......... Vice President
Jennifer C. Hom............... Vice President
John A. Kellogg............... Vice President
Timothy H. Kilfoil............ Vice President
Lawrence T. Kissko............ Vice President
Walter M. Korinke............. Vice President
Lawrence M. Lee............... Vice President
Thomas A. McAvity, Jr. ....... Vice President
Harold F. McElraft............ Vice President
Marybeth Montgomery........... Vice President
John David Moore.............. Vice President
Oliver H. G. Nichols.......... Vice President
David C. Patch................ Vice President
Joseph T. Pusateri............ Vice President
Gregory E. Reed............... Vice President
Bill L. Sanders............... Vice President
Milton W. Shuey............... Vice President
Gerald M. Weiss............... Vice President
Janet C. Whitney.............. Vice President and Treasurer
</TABLE>
The business address of these persons is 200 East Berry Street, Fort Wayne,
Indiana 46802.
EVALUATION OF THE PROPOSED AGREEMENTS BY THE BOARD OF DIRECTORS
The Fund's current Board of Directors believes that the terms and
conditions of the Proposed Agreements are fair to, and in the best interests of,
the Fund, the Portfolios and the Fund's shareholders. The Board of Directors,
including the Independent Directors, has approved the Proposed Agreements
21
<PAGE> 25
and unanimously recommends shareholder approval. In evaluating the Proposed
Agreements and making their recommendation, the Board reviewed and contrasted
the operations of the Fund with the operations of the funds in the Delaware
Group. The Independent Directors also separately retained the law firm of Sidley
& Austin, Chicago, Illinois, to assist them in their deliberations concerning
approval of the Proposed Agreements.
The Board considered the experience, practices and overall investment
management capabilities of DMC and its key personnel. Similarly, the Board
reviewed and evaluated the experience of each proposed sub-adviser and its key
personnel, as well as the performance of the Portfolio for which certain
sub-advisers would continue to serve. With respect to John Govett, the Board,
including the Independent Directors, specifically considered the fact that the
new parent company of John Govett had entered into employment agreements with
all key personnel of John Govett who are involved with the management of Lincoln
New Pacific Portfolio, and that John Govett would continue to be operated in a
manner that is similar to the manner in which it was operated prior to the
change in control.
The Board, including the Independent Directors, also considered the fact
that the investment management and sub-advisory fees payable under the Proposed
Agreements will remain the same as those under the Current Agreements (or be
reduced for the Lincoln New Pacific Portfolio), and that the Fund would benefit
from the possibility of potential savings on administrative fees resulting from
the use of employees of the Delaware Group to provide certain administrative
services. The Board also considered DMC's commitment to the Board that DMC would
continue the fee waivers or expense reimbursements currently provided by LIM to
reduce the expenses of the Portfolios.
The Board, including the Independent Directors, also considered other
factors deemed to be relevant to the approval of the Proposed Agreements
including, but not limited to: (1) the fees and expense ratios of comparable
mutual funds; (2) the past performance of the Portfolios and other investment
companies managed by DMC and the sub-advisers; (3) the nature and quality of the
services expected to be rendered to the Fund by DMC and the sub-advisers; (4)
the similarities and differences between the Current and Proposed Management and
Sub-Advisory Agreements; (5) the increased ability of the Delaware Group to
market the shares of the Portfolios through its distribution system after the
consolidation and (6) other factors deemed relevant.
OTHER AGREEMENTS WITH THE FUND
The Fund is currently a party to distribution agreements relating to each
Portfolio with DDLP, whose principal address is 1818 Market Street,
Philadelphia, Pennsylvania 19103. DDLP is an affiliate of DMC, and also became
affiliated with LIM as a result of LNC's acquisition of DMH on April 3, 1995.
Pursuant to such distribution agreements, which were approved by the Fund's
Board of Directors on July 21, 1995, and took effect on September 25, 1995, DDLP
provides underwriting, distribution and marketing services to the Portfolios,
and may be compensated by the receipt of payments under Rule 12b-1 Plans adopted
by the Fund. The payments received by DDLP in 12b-1 Plan fees for services
rendered to each Portfolio of the Fund during the period from September 25, 1995
through the end of the Fund's most recently completed fiscal year on October 31,
1995 are set forth in Exhibit G.
Prior to September 25, 1995, the Fund was a party to a distribution
agreement with LNC Equity Sales Corporation ("LNC Equity") under which LNC
Equity acted as the principal underwriter and national distributor of the
Portfolios' shares. LNC Equity is an affiliate of LIM, and also became
affiliated with DMC as a result of LNC's acquisition of DMH on April 3, 1995.
The payments received
22
<PAGE> 26
by LNC Equity in 12b-1 Plan fees for services rendered to each Portfolio of the
Fund from the beginning of the Fund's most recently completed fiscal year
through September 25, 1995, when DDLP took over the distribution of the Fund's
shares, are set forth in Exhibit G.
No portfolio transactions were placed through any LIM affiliate during the
Fund's last fiscal year, hence no brokerage was paid by the Fund to any LIM
affiliates.
The Fund is also currently a party to shareholder servicing agreements
relating to each Portfolio with Delaware Service Company, Inc. ("DSC") pursuant
to which DSC provides shareholder servicing, dividend disbursing and transfer
agency services on behalf of the Portfolios. DSC is an affiliate of DMC, and
also became affiliated with LIM as a result of LNC's acquisition of DMH on April
3, 1995. These agreements will continue in effect, whether or not the Current
and Proposed Agreements are approved by shareholders. The payments received by
DSC under the shareholder servicing agreements for the period from September 25,
1995 through October 31, 1995 are set forth in Exhibit H.
APPROVAL OF PROPOSED AGREEMENTS
If approved by shareholders, the Proposed Agreements will become effective
at the close of business on or about May 3, 1996. The Proposed Agreements will
be effective for a period of two years and, thereafter, may be extended from
year to year with approval by the Board of Directors or by vote of a majority of
the outstanding voting securities of a Portfolio and, in either case, separately
by a majority of the Independent Directors.
With respect to a Portfolio, if a Proposed Agreement is not approved by the
shareholders of such given Portfolio, the Current Agreement for that Portfolio
will continue in effect under its present terms and, thereafter, so long as it
is renewed annually by the Independent Directors, with the exception of the
sub-advisory agreement between LIM and John Govett which has terminated. If
shareholder approval of the Proposed Sub-Advisory Agreement between DMC and John
Govett is not obtained, the Board of Directors of the Fund will promptly
consider the appropriate action to take in this regard.
REQUIRED VOTE
Approval of a Proposed Agreement for a Portfolio requires the favorable
vote of the holders of a majority of the outstanding shares of that Portfolio,
as defined in the 1940 Act, which means the vote of (i) a majority of the
outstanding shares of the Portfolio, or (ii) 67 percent of the shares
represented at a meeting of shareholders at which the holders of more than 50
percent of the outstanding shares are represented, whichever is less.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors of the Fund unanimously recommends that the
shareholders of each Portfolio of the Fund vote to approve the Proposed
Agreements applicable to each such Portfolio.
OTHER INFORMATION
CHANGE IN NAME OF THE FUND AND THE PORTFOLIOS
In connection with the proposals outlined herein, the Board of Directors
has also approved a change in name of the Fund to Delaware Group Adviser Funds,
Inc. The Board has also approved a change in
23
<PAGE> 27
name of each Portfolio, as set forth below. In each case, the name changes will
become effective on or about May 3, 1996, subject to the approval of the
Proposed Management Agreements.
<TABLE>
<CAPTION>
CURRENT NAME NEW NAME
-------------------------------------------------------- ----------------------
<S> <C>
Lincoln Enterprise Portfolio............................ Enterprise Fund
Lincoln U.S. Growth Portfolio........................... U.S. Growth Fund
Lincoln World Growth Portfolio.......................... World Growth Fund
Lincoln New Pacific Portfolio........................... New Pacific Fund
Lincoln Corporate Income Portfolio...................... Corporate Income Fund
Lincoln Government Income Portfolio..................... Federal Bond Fund
</TABLE>
SHAREHOLDER PROPOSALS
The Fund does not hold regular annual meetings of shareholders. Any
shareholder who wishes to submit a proposal for consideration at the next
meeting of shareholders, when and if such a meeting is held, should submit such
proposal to the Fund, directed to the attention of its Secretary, at its
principal executive office. In order for such a proposal to be presented to
shareholders at such a meeting, the proposal must be received by the Fund a
reasonable period of time before any proxy materials are mailed to shareholders
in connection with such a meeting.
THE FUND'S MOST RECENT ANNUAL REPORT IS AVAILABLE AT NO COST TO FUND
SHAREHOLDERS, UPON WRITTEN OR ORAL REQUEST BY CONTACTING THE FUND AT 1818 MARKET
STREET, PHILADELPHIA, PA 19103 OR BY CALLING 1-800-9ADVISOR.
Exhibit I lists all shareholders owning more than 5% of any class of any
Portfolio of the Fund as of February 1, 1996.
PRISCILLA S. BROWN
President
April 3, 1996
24
<PAGE> 28
EXHIBIT A
OUTSTANDING SHARES AS OF MARCH 15, 1996
<TABLE>
<CAPTION>
PORTFOLIO SHARES
- ------------------------------------------------------------------------ --------------
<S> <C>
LINCOLN GROWTH AND INCOME PORTFOLIO
Class A............................................................ 1,256,548.103
Class B............................................................ 102,670.927
Class C............................................................ 6,003.505
Class D............................................................ 631,336.563
LINCOLN ENTERPRISE PORTFOLIO
Class A............................................................ 1,342,685.000
Class B............................................................ 172,622.377
Class C............................................................ 4,866.364
Class D............................................................ 528,061.076
LINCOLN U.S. GROWTH PORTFOLIO
Class A............................................................ 1,110,502.790
Class B............................................................ 60,199.502
Class C............................................................ 3,113.227
Class D............................................................ 453,552.122
LINCOLN WORLD GROWTH PORTFOLIO
Class A............................................................ 1,158,718.774
Class B............................................................ 98,611.834
Class C............................................................ 4,100.072
Class D............................................................ 440.241
LINCOLN NEW PACIFIC PORTFOLIO
Class A............................................................ 1,230,580.258
Class B............................................................ 55,563.140
Class C............................................................ 1,791.120
Class D............................................................ 559.204
LINCOLN GOVERNMENT INCOME PORTFOLIO
Class A............................................................ 1,142,840.129
Class B............................................................ 31,985.661
Class C............................................................ 1,765.317
Class D............................................................ 520.790
LINCOLN CORPORATE INCOME PORTFOLIO
Class A............................................................ 1,204,020.779
Class B............................................................ 37,023.203
Class C............................................................ 423.341
Class D............................................................ 360,815.773
</TABLE>
A-1
<PAGE> 29
<TABLE>
<CAPTION>
PORTFOLIO SHARES
- ------------------------------------------------------------------------ --------------
<S> <C>
LINCOLN TAX-FREE INCOME PORTFOLIO
Class A............................................................ 1,123,091.854
Class B............................................................ 24,582.654
Class C............................................................ 2,870.013
Class D............................................................ 0.000
LINCOLN CASHFUND PORTFOLIO
Class A............................................................ 11,403,213.181
Class B............................................................ 0.000
</TABLE>
A-2
<PAGE> 30
EXHIBIT B
EXECUTIVE OFFICERS OF THE FUND
The following individuals are executive officers of the Fund:
<TABLE>
<CAPTION>
BUSINESS EXPERIENCE
OFFICER/TITLE AGE DURING PAST FIVE YEARS
- ------------------------------------ --- ---------------------------------------------
<S> <C> <C>
Priscilla S. Brown, President....... 38 President and Chief Executive Officer (June,
1994 to present) of LNC Equity Sales
Corporation ("LNC Equity"); Vice President
(March, 1991 to present) of Lincoln
Investment Management, Inc. ("LIM").
JoAnn E. Becker, Vice President..... 47 Vice President (June, 1994 to present) of
LIM; Vice President (August, 1973 to present)
of The Lincoln National Life Insurance
Company; Director (July, 1993 to present) of
LNC Equity; formerly, President, Chief
Executive Officer and Director (April, 1993
to May, 1994) of Professional Planning, Inc.
(investment adviser) and President, Chief
Executive Officer and Director (June, 1991 to
August, 1993) of The Richard Leahy
Corporation (agency).
David A. Berry, Vice President...... 50 Vice President (January, 1981 to present) of
LIM.
Dennis A. Blume, Vice President..... 46 Senior Vice President and Director (January,
1982 to present) of LIM.
Steven K. Brody, Vice President,
Treasurer and Chief Financial
Officer........................... 46 Senior Vice President and Director (July,
1987 to present) of LIM; Assistant Treasurer
(June, 1994 to present) of The Lincoln
National Life Insurance Company.
Ann L. Warner, Vice President....... 44 Senior Vice President (March, 1976 to
present) of LIM.
David G. Humes, Assistant Vice
President and Chief Accounting
Officer........................... 39 Director, Regulated Investment Companies
(August, 1993 to present) of LIM; formerly,
Director of Savings Planning and Auditing
(December, 1986 to August, 1993) of LIM.
</TABLE>
B-1
<PAGE> 31
EXHIBIT C
INFORMATION RELATING TO INVESTMENT MANAGEMENT AND SUB-ADVISORY
AGREEMENTS FOR THE PORTFOLIOS OF LINCOLN ADVISOR FUNDS, INC.
<TABLE>
<CAPTION>
DATE AND REASON
ASSET AGREEMENT LAST SUB-ADVISORY
SIZE SUBMITTED TO FEE RATE*
AS OF INVESTMENT DATE OF SHAREHOLDERS MANAGEMENT (PAID BY
PORTFOLIO 10/31/95 MANAGER SUB-ADVISER AGREEMENT FOR APPROVAL FEE RATE* MANAGER)
- ----------------------- -------- ---------- -------------- --------- ------------------- ---------- ------------
(000)
<S> <C> <C> <C> <C> <C> <C> <C>
Lincoln U.S. Growth
Portfolio............. $ 20,043 LIM 10/25/93 9/23/93 0.70%
Approved by Initial
Shareholder
Provident 1/26/95 1/26/95 0.40%
Investment Approved by
Counsel Shareholders after
change in control
of Sub-Adviser
Lincoln World Growth
Portfolio............. $ 18,987 LIM 10/25/93 9/23/93 1.10%
Approved by Initial
Shareholder
Walter Scott & 11/29/93 9/23/93 0.80%
Partners Approved by Initial
Limited Shareholder
Lincoln New Pacific
Portfolio............. $ 14,404 LIM 10/25/93 9/23/93 1.10%
Approved by Initial
Shareholder
John Govett & 11/29/93 9/23/93 0.80%
Co. Limited Approved by Initial
Shareholder
Lincoln Enterprise
Portfolio............. $ 11,006 LIM 10/25/93 9/23/93 0.80%
Approved by Initial
Shareholder
Lynch & Mayer, 11/29/93 9/23/93 0.50%
Inc. Approved by Initial
Shareholder
Lincoln Corporate
Income Portfolio...... $ 12,355 LIM None 10/25/93 9/23/93 0.30% N/A
Approved by Initial
Shareholder
Lincoln Government
Income Portfolio...... $ 15,588 LIM None 10/25/93 9/23/93 0.30% N/A
Approved by Initial
Shareholder
<CAPTION>
SUB-ADVISORY EXPENSES AS A
MANAGEMENT FEES PAID BY PERCENTAGE OF
FEES PAID MANAGER NET ASSETS
(FISCAL YEAR (FISCAL YEAR REIMBURSED
PORTFOLIO ENDED 10/31/95) ENDED 10/31/95) BY MANAGER
- ----------------------- --------------- --------------- -------------
<S> <C> <C> <C>
Lincoln U.S. Growth
Portfolio............. $ 105,965 .33%
$ 60,552
Lincoln World Growth
Portfolio............. $ 142,529 1.11%
$ 103,658
Lincoln New Pacific
Portfolio............. $ 119,820 1.88%
$ 87,144
Lincoln Enterprise
Portfolio............. $ 116,353 .57%
$ 72,723
Lincoln Corporate
Income Portfolio...... $ 40,247 N/A .62%
Lincoln Government
Income Portfolio...... $ 33,749 N/A .81%
</TABLE>
- ---------------
* Based on average daily net assets.
C-1
<PAGE> 32
EXHIBIT D
DELAWARE GROUP ADVISER FUNDS, INC.
FUND
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT, made by and between DELAWARE GROUP ADVISER FUNDS, INC., Maryland
corporation ("Fund") on behalf of the FUND, (Portfolio") and
DELAWARE MANAGEMENT COMPANY, INC., a Delaware corporation ("Investment
Manager").
WITNESSETH:
WHEREAS, the Fund has been organized and operates as an investment company
registered under the Investment Company Act of 1940 and is comprised of six
portfolios, including the Portfolio; as a separate series of the Fund, each
portfolio engages in the business of investing and reinvesting its assets in
securities, and further
WHEREAS, the Investment Manager is a registered Investment Adviser under
the Investment Advisers Act of 1940 and engages in the business of providing
investment management services; and further
WHEREAS, the Board of Directors approved a restructuring ("Restructuring")
of the Fund and each of its portfolios for the purpose of integrating the Fund
into the Delaware Group of Funds; and further
WHEREAS, as part of the Restructuring, the names of the Fund and the
Portfolio were changed from the Lincoln Advisor Funds, Inc. and Lincoln
Portfolio to, respectively, Delaware Group Adviser Funds, Inc.
and Fund; and the Investment Manager was selected to replace
Lincoln Investment Management, Inc. (formerly Lincoln National Investment
Management Company), which served as investment manager for the Portfolio under
an Investment Advisory Agreement dated as of the 25th of October, 1993; and
further
WHEREAS, in connection with the changes in investment manager, the Fund and
the Investment Manager desire to enter into this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and each of the parties hereto intending to be legally bound, it is agreed as
follows:
1. The Fund hereby employs the Investment Manager to manage the investment
and reinvestment of the Portfolio's assets and to administer its affairs,
subject to the direction of the Fund's Board of Directors and officers of the
Fund for the period and on the terms hereinafter set forth. The Investment
Manager hereby accepts such employment and agrees during such period to render
the services and assume the obligations herein set forth for the compensation
herein provided. The Investment Manager shall for all purposes herein, be deemed
to be an independent contractor, and shall, unless otherwise expressly provided
and authorized, have no authority to act for or represent the Fund in any way,
or in any way be deemed an agent of the Fund. The Investment Manager shall
regularly make decisions as to
D-1
<PAGE> 33
what securities and other instruments to purchase and sell on behalf of the
Portfolio and shall effect the purchase and sale of such investments in
furtherance of the Portfolio's objectives and policies and shall furnish the
Board of Directors of the Fund with such information and reports regarding the
Portfolio's investments as the Investment Manager deems appropriate or as the
Directors of the Fund may reasonably request.
2. The Fund shall conduct its own business and affairs and shall bear the
expenses and salaries necessary and incidental thereto including, but not in
limitation of the foregoing, the costs incurred in: the maintenance of its
corporate existence; the maintenance of its own books, records and procedures;
dealing with its own shareholders; the payment of dividends; transfer of stock,
including issuance, redemption and repurchase of shares; preparation of share
certificates; reports and notices to shareholders; calling and holding of
shareholders' meetings; miscellaneous office expenses; brokerage commissions;
custodian fees; legal and accounting fees; taxes; and federal and state
registration fees. Directors, officers and employees of the Investment Manager
may be directors, officers and employees of any of the funds (including the
Fund) of which Delaware Management Company, Inc. is investment manager.
Directors, officers and employees of the Investment Manager who are directors,
officers and/or employees of these funds shall not receive any compensation from
the funds for acting in such dual capacity.
In the conduct of the respective businesses of the parties hereto and in
the performance of this Agreement, the Fund and Investment Manager may share
facilities common to each, with appropriate proration of expenses between them.
3. (a) Subject to the primary objective of obtaining the best available
prices and execution, the Investment Manager will place orders for the purchase
and sale of portfolio securities and other instruments with such broker/dealers
selected who provide statistical, factual and financial information and services
to the Fund, to the Investment Manager, to any Sub-Adviser, as defined in
Paragraph 5 hereof, or to any other fund for which the Investment Manager or any
such Sub-Adviser provides investment advisory services and/or with
broker/dealers who sell shares of the Fund or who sell shares of any other fund
for which the Investment Manager or any such Sub-Adviser provides investment
advisory services. Broker/dealers who sell shares of the funds of which Delaware
Management Company, Inc. is investment manager, shall only receive orders for
the purchase or sale of portfolio securities to the extent that the placing of
such orders is in compliance with the Rules of the Securities and Exchange
Commission and the National Association of Securities Dealers, Inc.
(b) Notwithstanding the provisions of subparagraph (a) above and subject to
such policies and procedures as may be adopted by the Board of Directors and
officers of the Fund, the Investment Manager may ask the Fund and the Fund may
agree to pay a member of an exchange, broker or dealer an amount of commission
for effecting a securities transaction in excess of the amount of commission
another member of an exchange, broker or dealer would have charged for effecting
that transaction, in such instances where the Fund and the Investment Manager
have determined in good faith that such amount of commission was reasonable in
relation to the value of the brokerage and research services provided by such
member, broker or dealer, viewed in terms of either that particular transaction
or the Investment Manager's overall responsibilities with respect to the Fund
and to other funds and other advisory accounts for which the Investment Manager
or any Sub-Adviser, as defined in Paragraph 5 hereof, exercises investment
discretion.
D-2
<PAGE> 34
4. As compensation for the services to be rendered to the Fund by the
Investment Manager under the provisions of this Agreement, the Fund shall pay to
the Investment Manager monthly from the Portfolio's assets, a fee (at an annual
rate) equal to % of the average daily net assets of the Portfolio during the
month.
If this Agreement is terminated prior to the end of any calendar month, the
management fee shall be prorated for the portion of any month in which this
Agreement is in effect according to the proportion which the number of calendar
days, during which the Agreement is in effect, bears to the number of calendar
days in the month, and shall be payable within 10 days after the date of
termination.
5. The Investment Manager may, at its expense, select and contract with one
or more investment advisers registered under the Investment Advisers Act of 1940
(the "Sub-Adviser") to perform some or all of the services for the Portfolio for
which it is responsible under this Agreement. The Investment Manager will
compensate any Sub-Adviser for its services to the Portfolio. The Investment
Manager may terminate the services of any Sub-Adviser at any time in its sole
discretion, and shall at such time assume the responsibilities of such
Sub-Adviser unless and until a successor Sub-Adviser is selected and the
requisite approval of the Portfolio's shareholders is obtained. The Investment
Manager will continue to have responsibility for all advisory services furnished
by any Sub-Adviser.
6. The services to be rendered by the Investment Manager to the Fund under
the provisions of this Agreement are not to be deemed to be exclusive, and the
Investment Manager shall be free to render similar or different services to
others so long as its ability to render the services provided for in this
Agreement shall not be impaired thereby.
7. The Investment Manager, its directors, officers, employees, agents and
shareholders may engage in other businesses, may render investment advisory
services to other investment companies, or to any other corporation,
association, firm or individual, and may render underwriting services to the
Fund or to any other investment company, corporation, association, firm or
individual.
8. In the absence of willful misfeasance, bad faith, gross negligence, or a
reckless disregard of the performance of its duties as the Investment Manager to
the Fund, the Investment Manager shall not be subject to liability to the Fund
or to any shareholder of the Fund for any action or omission in the course of,
or connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security, or otherwise.
9. This Agreement shall be executed and become effective as of the date
written below if approved by the vote of a majority of the outstanding voting
securities of the Portfolio. It shall continue in effect for a period of two
years and may be renewed thereafter only so long as such renewal and continuance
is specifically approved at least annually by the Board of Directors or by the
vote of a majority of the outstanding voting securities of the Portfolio and
only if the terms and the renewal hereof have been approved by the vote of a
majority of the Directors of the Fund who are not parties hereto or interested
persons of any such party, cast in person at a meeting called for the purpose of
voting on such approval. Notwithstanding the foregoing, this Agreement may be
terminated by the Fund at any time, without the payment of a penalty, on sixty
days' written notice to the Investment Manager of the Fund's intention to do so,
pursuant to action by the Board of Directors of the Fund or pursuant to the vote
of a majority of the outstanding voting securities of the Portfolio. The
Investment Manager may terminate this Agreement at any time, without the payment
of a penalty on sixty days' written notice to the Fund of its intention to do
so. Upon termination of this Agreement, the obligations of all the parties
hereunder shall cease and terminate as of the date of such termination, except
for any obligation to respond for a breach
D-3
<PAGE> 35
of this Agreement committed prior to such termination, and except for the
obligation of the Fund to pay to the Investment Manager the fee provided in
Paragraph 4 hereof, prorated to the date of termination. This Agreement shall
automatically terminate in the event of its assignment.
10. This Agreement shall extend to and bind the heirs, executors,
administrators and successors of the parties hereto.
11. For the purposes of this Agreement, the terms "vote of a majority of
the outstanding voting securities"; "interested persons"; and "assignment" shall
have the meaning defined in the Investment Company Act of 1940.
IN WITNESS WHEREOF, the parties hereto have caused their corporate seals to
be affixed and duly attested and their presents to be signed by their duly
authorized officers the day of , 1996.
<TABLE>
<S> <C>
DELAWARE GROUP ADVISER FUNDS, INC. FOR
Attest: FUND
By:
- ------------------------- ------------------------------------------------
Attest: DELAWARE MANAGEMENT COMPANY, INC.
By:
- ------------------------- ------------------------------------------------
</TABLE>
D-4
<PAGE> 36
EXHIBIT E
DELAWARE GROUP ADVISER FUNDS, INC.
SUB-ADVISORY AGREEMENT
AGREEMENT, made by and between DELAWARE MANAGEMENT COMPANY, INC., a
Delaware corporation ("Investment Manager"), and [ ]., an
corporation ("Sub-Adviser").
WITNESSETH:
WHEREAS, DELAWARE GROUP ADVISER FUNDS, INC., a Maryland corporation
("Fund"), on behalf of the Fund ("Portfolio"), has been
organized and operates as an investment company registered under the Investment
Company Act of 1940 ("1940 Act") and engages in the business of investing and
reinvesting its assets in securities, and
WHEREAS, the Investment Manager and the Fund have entered into an agreement
of even date herewith ("Investment Management Agreement") whereby the Investment
Manager will provide investment advisory services to the Fund on behalf of the
Portfolio; and
WHEREAS, the Investment Management Agreement permits the Investment Manager
to hire one or more sub-advisers to assist the Investment Manager in providing
investment advisory services to the Fund on behalf of the Portfolio; and
WHEREAS, the Investment Manager and the Sub-Adviser are registered
investment advisers under the Investment Advisers Act of 1940 and engage in the
business of providing investment management services.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and each of the parties hereto intending to be legally bound, it is agreed as
follows:
1. The Investment Manager hereby employs the Sub-Adviser to manage the
investment and reinvestment of the Portfolio's assets, subject to the direction
of the Fund's Board of Directors and officers of the Fund for the period and on
the terms hereinafter set forth. The Sub-Adviser hereby accepts such employment
and agrees during such period to render the services and assume the obligations
herein set forth for the compensation herein provided. The Sub-Adviser shall for
all purposes herein be deemed to be an independent contractor, and shall, unless
otherwise expressly provided and authorized, have no authority to act for or
represent the Fund in any way, or in any way be deemed an agent of the Fund. The
Sub-Adviser shall regularly make decisions as to what securities and other
instruments to purchase and sell on behalf of the Portfolio, shall effect the
purchase and sale of such investments in furtherance of the Portfolio's
objectives and policies and shall furnish the Board of Directors of the Fund
with such information and reports regarding its activities as the Investment
Manager deems appropriate or as the Directors of the Fund may reasonably request
consistent with the provisions of Section 15(c) of the 1940 Act.
In the performance of its duties and obligations under this Agreement, the
Sub-Adviser shall act in conformity with the Articles of Incorporation, By-Laws
and Prospectus of the Fund and with the instructions and directions of the
Investment Manager and of the Board of Directors of the Fund and
E-1
<PAGE> 37
will conform to and comply with the requirements of the 1940 Act, the Internal
Revenue Code of 1986 and all other applicable federal and state laws and
regulations.
2. Under the terms of the Investment Management Agreement, the Fund shall
conduct its own business and affairs and shall bear the expenses and salaries
necessary and incidental thereto including, but not in limitation of the
foregoing, the costs incurred in: the maintenance of its corporate existence;
the maintenance of its own books, records and procedures; dealing with its own
shareholders; the payment of dividends; transfer of stock, including issuance
and repurchase of shares; preparation of share certificates; reports and notices
to shareholders; calling and holding of shareholders' meetings; miscellaneous
office expenses; brokerage commissions; custodian fees; legal and accounting
fees; taxes; and federal and state registration fees.
Directors, officers and employees of the Sub-Adviser may be directors,
officers and employees of other funds which have employed the Sub-Adviser as
sub-adviser or investment manager.
In the conduct of the respective business of the parties hereto and in the
performance of this Agreement, the Fund, the Investment Manager and the
Sub-Adviser may share facilities common to each, with appropriate proration of
expenses between and among them.
3. (a) Subject to the primary objective of obtaining the best available
prices and execution, the Sub-Adviser will place orders for the purchase and
sale of portfolio securities and other instruments with such broker/dealers who
provide statistical, factual and financial information and services to the Fund,
to the Investment Manager, to the Sub-Adviser or to any other Fund for which the
Investment Manager or Sub-Adviser provides investment advisory services and/or
with broker/dealers who sell shares of the Fund or who sell shares of any other
fund for which the Investment Manager or Sub-Adviser provides investment
advisory services. Broker/dealers who sell shares of the Funds for which the
Investment Manager or Sub-Adviser provides advisory services shall only receive
orders for the purchase or sale of portfolio securities to the extent that the
placing of such orders is in compliance with the Rules of the Securities and
Exchange Commission and the National Association of Securities Dealers, Inc.
(b) Notwithstanding the provisions of subparagraph (a) above and subject
to the policies and procedures as may be adopted by the Board of Directors and
officers of the Fund, the Sub-Adviser may ask the Fund and the Fund may agree to
pay a member of an exchange, broker or dealer an amount of commission for
effecting a securities transaction in excess of the amount of commission another
member of an exchange, broker or dealer would have charged for effecting that
transaction, in such instances where it and the Sub-Adviser have determined in
good faith that such amount of commission was reasonable in relation to the
value of the brokerage and research services provided by such member, broker or
dealer, viewed in terms of either that particular transaction or the
Sub-Adviser's overall responsibilities with respect to the Fund and to other
funds and other advisory accounts for which the Investment Manager or the
Sub-Adviser exercises investment discretion.
4. The Sub-Adviser shall maintain all books and records with respect to the
Portfolio's portfolio transactions required by subparagraphs (b) (5), (6), (7),
(9), (10) and (11) and paragraph (f) of Rule 31a-1 under the 1940 Act and shall
render to the Fund's Board of Directors such periodic and special reports as the
Board may reasonably request.
The Sub-Adviser shall keep the Portfolio's books and records required to be
maintained by the Sub-Adviser pursuant to this Paragraph 4 and shall timely
furnish to the Investment Manager all information relating to the Sub-Adviser's
services hereunder needed by the Investment Manager to keep the other
E-2
<PAGE> 38
books and records of the Portfolio required by Rule 31a-1 under the 1940 Act.
The Sub-Adviser agrees that all records which it maintains for the Portfolio are
the property of the Fund and the Sub-Adviser will surrender promptly to the Fund
any of such records upon the Fund's request, provided however that the
Sub-Adviser may retain a copy of such records. The Sub-Adviser further agrees to
preserve for the periods prescribed by Rule 31a-2 of the Securities and Exchange
Commission under the 1940 Act any such records as are required to be maintained
by it pursuant to this Paragraph 4.
5. As compensation for the services to be rendered to the Fund for the
benefit of the Portfolio by the Sub-Adviser under the provisions of this
Agreement, the Investment Manager shall pay to the Sub-Adviser an annual fee
equal to . % of the average daily net assets of the Portfolio. The fee shall be
computed daily and will be paid to the Sub-Adviser, quarterly, in arrears.
If this Agreement is terminated prior to the end of any calendar month, the
Sub-Advisory fee shall be prorated for the portion of any month in which this
Agreement is in effect according to the proportion which the number of calendar
days, during which the Agreement is in effect, bears to the number of calendar
days in the month, and shall be payable within 10 days after the date of
termination.
6. The services to be rendered by the Sub-Adviser to the Fund for the
benefit of the Portfolio under the provisions of this Agreement are not to be
deemed to be exclusive, and the Sub-Adviser shall be free to render similar or
different services to others so long as its ability to render the services
provided for in this Agreement shall not be impaired thereby; provided, however,
during the term of this Agreement, the Sub-Adviser, will not, without the
written consent of the Investment Manager, render investment management (or
similar services) to another registered investment company (or portfolio
thereof) which has investment policies similar to that of the Portfolio.
7. The Investment Manager agrees that it shall not use the Sub-Adviser's
name or otherwise refer to the Sub-Adviser in any materials distributed to third
parties, including the Portfolio's shareholders, without the prior written
consent of the Sub-Adviser.
8. In the absence of willful misfeasance, bad faith, gross negligence, or a
reckless disregard of the performance of its duties as Sub-Adviser to the Fund,
the Sub-Adviser shall not be subject to liability to the Fund, to the Investment
Manager or to any shareholder of the Fund for any action or omission in the
course of, or connected with, rendering services hereunder or for any losses
that may be sustained in the purchase, holding or sale of any security, or
otherwise.
9. This Agreement shall be executed and become effective as of the date
written below if approved by the vote of a majority of the outstanding voting
securities of the Portfolio. It shall continue in effect for a period of two
years and may be renewed thereafter only so long as such renewal and continuance
is specifically approved at least annually by the Board of Directors or by the
vote of a majority of the outstanding voting securities of the Portfolio and
only if the terms and the renewal hereof have been approved by the vote of a
majority of the Directors of the Fund who are not parties hereto or interested
persons of any such party, cast in person at a meeting called for the purpose of
voting on such approval. Notwithstanding the foregoing, this Agreement may be
terminated by the Investment Manager or the Fund at any time, without the
payment of a penalty, on sixty days' written notice to the Sub-Adviser, of the
Investment Manager's or the Fund's intention to do so, in the case of the Fund
pursuant to action by the Board of Directors of the Fund or pursuant to the vote
of a majority of the outstanding voting securities of the Portfolio. The
Sub-Adviser may terminate this Agreement at any time, without the payment of a
penalty on sixty days' written notice to the Investment Manager and the Fund of
its intention to do so. Upon termination of this Agreement, the obligations of
all the parties hereunder shall
E-3
<PAGE> 39
cease and terminate as of the date of such termination, except for any
obligation to respond for a breach of this Agreement committed prior to such
termination, and except for the obligation of the Investment Manager to pay to
the Sub-Adviser the fee provided in Paragraph 5 hereof, prorated to the date of
termination. This Agreement shall automatically terminate in the event of its
assignment. This Agreement shall automatically terminate upon the termination of
the Investment Management Agreement.
10. This Agreement shall extend to and bind the successors of the parties
hereto.
11. For the purposes of this Agreement, the terms "vote of a majority of
the outstanding voting securities", "interested person", and "assignment" shall
have the meaning defined in the 1940 Act.
IN WITNESS WHEREOF, the parties hereto have caused their corporate seals to
be affixed and duly attested and their presents to be signed by their duly
authorized officers as of the day of , 1996.
DELAWARE MANAGEMENT COMPANY, INC.
By:
---------------------------------------
Attest:
---------------------------------------
[NAME OF SUB-ADVISER]
By:
---------------------------------------
Attest:
---------------------------------------
Agreed to and accepted as of the
day and year first above written:
DELAWARE GROUP ADVISER FUNDS, INC.
on behalf of the Fund
By:
- -------------------------------------------------
Attest:
- ---------------------------------------------
E-4
<PAGE> 40
EXHIBIT F
INFORMATION RELATING TO OTHER INVESTMENT MANAGEMENT
AND SUB-ADVISORY ARRANGEMENTS
<TABLE>
<CAPTION>
MANAGEMENT
FEES
RECEIVED
AND/OR
WAIVED FOR
ASSET SIZE MANAGEMENT FEE RATE LAST
AS OF BASED ON AVERAGE FISCAL FISCAL
INVESTMENT MANAGER FUND NAME 12/31/95 DAILY NET ASSETS YEAR END YEAR
- -------------------- ------------------------------- ---------- -------------------------- -------- ----------
(000)
<S> <C> <C> <C> <C> <C>
DELAWARE MANAGEMENT Delaware Group Government Fund, $ 214,156 .60% per annum(1) July 31 $1,338,755
COMPANY, INC Inc. -- Government Income Series received
("DMC")
DMC Delaware Group Premium Fund, $ 11,929 .75% per annum(2)(3) Dec. 31 $ 51,016
Inc. received
-- Value Series $ 14,512
waived
DMC Delaware Group Value Fund, Inc. $ 194,417 .75% per annum(1) Nov. 30 $1,371,155
received
DMC Delaware Group DelCap Fund, $1,001,481 .75% per annum(1) Sept. 30 $7,128,192
Inc. -- Concept I Series received
DMC Delaware Group Premium Fund, $ 58,123 .75% per annum(1)(3) Dec. 31 $ 336,345
Inc. -- Growth Series received
$ 21,585
waived
DMC Delaware Group Trend Fund, Inc. $ 496,771 .75% per annum(1) June 30 $2,300,627
received
DMC Delaware Group Premium Fund, $ 20,510 .75% per annum(2)(3) Dec. 31 $ 72,359
Inc. -- Emerging Growth Series received
$ 20,626
waived
JOHN GOVETT & CO. INC. Govett Funds, Inc. Dec. 31
("GOVETT")
-- Global Income $ 41,013 .75% per annum $ 258,023
received
$ 80,573
waived
-- International Equity $ 28,483 1.00% per annum $ 226,512
received
$ 76,145
waived
-- Emerging Markets $ 75,662 1.00% per annum $ 537,789
received
$ 207,496
waived
-- Smaller Companies $ 518,766 1.00% per annum $2,614,150
received
$ 559,632
waived
</TABLE>
F-1
<PAGE> 41
<TABLE>
<CAPTION>
MANAGEMENT
FEES
RECEIVED
AND/OR
WAIVED FOR
ASSET SIZE MANAGEMENT FEE RATE LAST
AS OF BASED ON AVERAGE FISCAL FISCAL
INVESTMENT MANAGER FUND NAME 12/31/95 DAILY NET ASSETS YEAR END YEAR
- ---------------------- -------------------------------- ---------- ------------------------ -------- ----------
(000)
<C> <S> <C> <C> <C> <C>
-- Pacific Strategy $ 12,527 1.00% per annum $ 118,565
waived
plus
$ 14,475
subsidized
-- Latin America $ 4,784 1.00% per annum $ 47,489
waived
plus
$ 103,445
subsidized
Govett Van Kampen American Capital
Funds
-- Global Equity $ 151,725 .50% per annum May 31 $ 600,418
-- Global Government Securities $ 167,930 .50% per annum May 31 $ 784,051
-- Global Managed Assets $ 25,018 .50% per annum Dec. 31 $ 13,536
received
$ 102,635
waived
Govett Van Kampen Life Investment Trust
-- Global Equity Portfolio $ 2,342 .50% per annum Dec. 31 $ 5,492
waived
plus
$ 21,516
subsidized
Govett The Consulting Group Capital
Markets
-- Emerging Markets Equity $ 63,391 .60% per annum Aug. 31 $ 253,873
Investments Portfolio received
$ 43,313
waived
LINCOLN INVESTMENT Lincoln National Bond Fund, Inc. $ 250,816 .48% on first $200 million Dec. 31 $1,061,701
MANAGEMENT, INC. .40% on next $200 million received
("LIM") .30% on excess of
$400 million
LIM Lincoln National Managed Fund, $ 266,783 .48% on first $200 million Dec. 31 $1,227,132
Inc. (bond portion) .40% on next $200 million received
.30% on excess of on bond
$400 million portion
PROVIDENT INVESTMENT PIC Growth Portfolio $ 118,472 .80% per annum Oct. 31 $1,490,676
COUNSEL ("PIC") -- PIC Institutional received
Growth Fund
PIC Allmerica Investment Trust $ 143,141 .50% on 1st $50 million Dec. 31 $ 396,323
-- Select Growth Fund .45% on next $100 million received
.35% on next $100 million
.30% on next $100 million
.25% on balance
</TABLE>
F-2
<PAGE> 42
<TABLE>
<CAPTION>
MANAGEMENT
FEES
RECEIVED
AND/OR
WAIVED FOR
ASSET SIZE MANAGEMENT FEE RATE LAST
AS OF BASED ON AVERAGE FISCAL FISCAL
INVESTMENT MANAGER FUND NAME 12/31/95 DAILY NET ASSETS YEAR END YEAR
- --------------------- ----------------------------- ---------- -------------------------- -------- ----------
(000)
<S> <C> <C> <C> <C> <C>
PIC Blanchard Fund $ 9,806 .50% on 1st $150 million Apr. 30 $ 50,143
-- Blanchard American .45% on next $100 million received
Equity Fund .40% on next $150 million
.35% on balance
PIC Enterprise Group of Funds $ 124,266 .75% per annum Dec. 31 $ 468,567
-- Aggressive Growth received
Portfolio
PIC Liberty All-Star Equity Fund $ 172,293 .40% per annum Dec. 31 $ 534,583
received
PIC Charles Allmon Trust, Inc. $ 41,826 .40% on 1st $125 million Dec. 31 $ 26,090
.30% on next $125 million received
.20% on balance
PIC Sun American Series Trust $ 111,935 .50% on 1st $50 million Nov. 30 $ 406,490
-- Provident Growth .45% on next $100 million received
Portfolio .35% on next $100 million
.30% on next $100 million
.25% on balance
</TABLE>
- ---------------
(1) All fees are reduced by fees paid to directors or trustees of the Fund,
unless otherwise indicated.
(2) No deduction for fees paid to directors by the Fund.
(3) DMC elected voluntarily to waive that portion, if any, of the annual
management fee payable by the series and to reimburse the series to limit
certain expenses of the series to .80% (exclusive of taxes, interest,
brokerage commissions and extraordinary expenses) through June 30, 1996.
F-3
<PAGE> 43
EXHIBIT G
PAYMENTS MADE BY THE FUND TO AFFILIATED
DISTRIBUTORS PURSUANT TO RULE 12B-1 PLANS
<TABLE>
<CAPTION>
PERIOD DURING
FISCAL YEAR
ENDED 12B-1 PLAN
PORTFOLIO DISTRIBUTOR 10/31/95 FEES PAID
- ------------------------------------ ------------------------------ ------------- ------------------
<S> <C> <C> <C>
Lincoln U.S. Growth Portfolio....... LNC Equity Sales Corporation 11/1/94 Class A $35,462.95
("LNC Equity") through Class B $ 3,385.96
9/24/95 Class C $ 104.64
Delaware 9/25/95 Class A $ 5,046.05
Distributors, L.P. through Class B $ 597.04
("DDLP") 10/31/95 Class C $ 22.36
Lincoln World Growth Portfolio...... LNC Equity 11/1/94 Class A $36,900.20
through Class B $ 7,207.56
9/24/95 Class C $ 363.95
DDLP 9/25/95 Class A $ 4,965.80
through Class B $ 1,261.44
10/31/95 Class C $ 44.05
Lincoln New Pacific Portfolio....... LNC Equity 11/1/94 Class A $32,014.26
through Class B $ 4,750.74
9/24/95 Class C $ 139.94
DDLP 9/25/95 Class A $ 3,967.74
through Class B $ 623.26
10/31/95 Class C $ 19.06
Lincoln Enterprise Portfolio........ LNC Equity 11/1/94 Class A $37,461.82
through Class B $10,600.92
9/24/95 Class C $ 423.64
DDLP 9/25/95 Class A $ 5,421.18
through Class B $ 1,873.08
10/31/95 Class C $ 62.36
Lincoln Corporate Income
Portfolio......................... LNC Equity 11/1/94 Class A $32,610.14
through Class B $ 2,607.22
9/24/95 Class C $ 48.07
DDLP 9/25/95 Class A $ 4,269.86
through Class B $ 383.78
10/31/95 Class C $ 4.93
Lincoln Government Income
Portfolio......................... LNC Equity 11/1/94 Class A $32,056.50
through Class B $ 2,330.93
9/24/95 Class C $ 58.50
DDLP 9/25/95 Class A $ 4,104.50
through Class B $ 319.07
10/31/95 Class C $ 15.50
</TABLE>
G-1
<PAGE> 44
EXHIBIT H
FEES PAID BY THE FUND TO
DELAWARE SERVICE COMPANY, INC.
FOR DIVIDEND DISBURSING, SHAREHOLDER
SERVICING AND TRANSFER AGENT SERVICES
<TABLE>
<CAPTION>
FEES AND EXPENSES PAID FROM
9/25/95 THROUGH 10/31/95 TO
PORTFOLIO DELAWARE SERVICE COMPANY, INC.
- --------------------------------------------------------------- ------------------------------
<S> <C>
Lincoln U.S. Growth Portfolio.................................. $ 2,938.49
Lincoln World Growth Portfolio................................. $ 4,062.23
Lincoln New Pacific Portfolio.................................. $ 2,724.25
Lincoln Enterprise Portfolio................................... $ 5,442.52
Lincoln Corporate Income Portfolio............................. $ 2,175.90
Lincoln Government Income Portfolio............................ $ 827.69
</TABLE>
H-1
<PAGE> 45
EXHIBIT I
FUND SHAREHOLDINGS BY SHAREHOLDERS OWNING 5% OR MORE OF
EACH CLASS OF SECURITIES AS OF FEBRUARY 1, 1996
<TABLE>
<CAPTION>
NUMBER OF PERCENT PERCENT OF
PORTFOLIO NAME AND ADDRESS OF SHAREHOLDER SHARES OF CLASS PORTFOLIO
- -------------------------- -------------------------------- ------------- -------- ----------
<S> <C> <C> <C> <C>
Lincoln Enterprise American States Insurance Co. 1,000,598.902 73.41 48.51
Portfolio (Class A) Attn: Corporate Accounting P/C
David Rogers
500 North Meridian St.
Indianapolis, IN 46207
Lincoln Enterprise Marlin and Jeanne Drake 28,915.561 17.36 1.40
Portfolio (Class B) 11595 N. Meridian St. Suite 250
Carmel, IN 46032
NFSC FBO, NFSC/FMTC IRA 12,342.414 7.41 .60
FBO Lawrence B. Silver, MD
1800 Linglestown Road, Suite 404
Harrisburg, PA 17110
Lincoln Enterprise John Robertson Plumbing Inc. 700.099 14.54 .03
Portfolio (Class C) PO Box 118
Burlington, KY 41005
Marlin and Jeanne Drake 707.803 14.70 .03
11595 N. Meridian St. Suite 250
Carmel, IN 46032
NFSC 503.648 10.46 .02
FBO Garold A. Nest
105-B Westwall Street
Harrisonville, MO 64701
Paul E. Moberg 302.381 6.28 .01
62 Hall Rd.
Hampton, VA 23664
Lincoln Enterprise NBD Bank 528,061.076 100.00 25.60
Portfolio (Class D) Trst Motor Wheel Corp.
Box 771072
Detroit, MI 48277-1072
Lincoln U.S. Growth American States Insurance Co. 1,001,088.511 89.62 62.80
Portfolio (Class A) Attn: Corporate Accounting P/C
David Rogers
500 North Meridian St.
Indianapolis, IN 46207
</TABLE>
I-1
<PAGE> 46
<TABLE>
<CAPTION>
NUMBER OF PERCENT PERCENT OF
PORTFOLIO NAME AND ADDRESS OF SHAREHOLDER SHARES OF CLASS PORTFOLIO
- -------------------------- -------------------------------- ------------- -------- ----------
<S> <C> <C> <C> <C>
Lincoln U.S. Growth NFSC/FMTC IRA Rollover 11,486.608 19.71 .72
Portfolio (Class B) FBO Lawrence B. Silver, MD
1800 Linglestown Road, Suite 404
Harrisburg, PA 17109
Marlin and Jeanne Drake 10,140.385 17.40 .64
11595 N. Meridian St. Suite 250
Carmel, IN 46032
Marlene M. Clark 4,953.636 8.50 .31
1536 Kensington L
Lancaster, OH 43130
LR Brown 3,397.612 5.83 .21
1201 Winner Ave.
Huntsville, AL 35805
Lincoln U.S. Growth NFSC 380.733 14.12 .02
Portfolio (Class C) FBO Garold A. Nest
105-B Westwall Street
Harrisonville, MO 64701
NFSC FBO 339.747 12.60 .02
Lionel R. & Anne L. Felteau
1578 Greyson Ridge
Marietta, GA 30062
Senan S. Santos 300.110 11.13 .02
Cust. Imelda May Cardona
2109 Charlemagne Ave.
Long Beach, CA 90615
Paul E. Moberg 290.942 10.79 .02
62 Hall Rd.
Hampton, VA 23664
Susan W. Horne 232.970 8.64 .01
2412 Catherine Drive
Burlington, NC 27215
Marlin and Jeanne Drake 173.379 6.43 .01
11595 N. Meridian St. Suite 250
Carmel, IN 46032
Lincoln U.S. Growth Federated Life Insurance Co. 416,150.691 100.00 26.10
Portfolio (Class D) Attn: Tom Koch
121 E. Park Sq.
Owatonna, MN 55060
Lincoln World Growth Lincoln National Life Insurance 993,667.523 85.63 78.67
Co.
Portfolio (Class A) 1300 South Clinton St.
Fort Wayne, IN 46801
</TABLE>
I-2
<PAGE> 47
<TABLE>
<CAPTION>
NUMBER OF PERCENT PERCENT OF
PORTFOLIO NAME AND ADDRESS OF SHAREHOLDER SHARES OF CLASS PORTFOLIO
- -------------------------- -------------------------------- ------------- -------- ----------
<S> <C> <C> <C> <C>
Lincoln World Growth NFSC FBO, NFSC/FMTC IRA 12,041.818 12.27 .95
Portfolio (Class B) FBO Lawrence B. Silver, MD
1800 Linglestown Road, Suite 404
Harrisburg, PA 17110
Carl W. Niederwimmer 6,791.311 6.92 .54
201 NW 73rd Terrace
Gladstone, MD 64118
NFSC FBO 4,985.529 5.08 .39
Joan Miller
4917 Waterfowl Way
Rockville, MD 20853
Lincoln World Growth NFSC FBO 1,004.173 24.72 .08
Portfolio (Class C) John Robertston
Trst John Robertson Plumbing
Inc.
P.O. Box 118
Burlington, KY 41005
NFSC FBO 953.396 23.47 .08
Chester M. Boltwood
Karen A. Boltwood
828 Cobblestone Circle
Modesto, CA 95355
NFSC 419.624 10.33 .03
FBO Garold A. Nest
105-B Westwall Street
Harrisonville, MO 64701
Paul E. Moberg 320.913 7.90 .03
62 Hall Rd.
Hampton, VA 23664
Susan W. Horne 273.385 6.73 .02
2412 Catherine Drive
Burlington, NC 27215
Eileen Shiman 243.731 6.00 .02
3625 Yale Drive
Santa Rosa, CA 95405
Lincoln World Growth Lincoln Investment Management, 439.367 100.00 .03
Inc.
Portfolio (Class D) 1300 South Clinton St.
Fort Wayne, IN 46801
Lincoln New Pacific Lincoln National Life Insurance 1,021,472.723 84.26 80.46
Co.
Portfolio (Class A) 1300 South Clinton St.
Fort Wayne, IN 46801
</TABLE>
I-3
<PAGE> 48
<TABLE>
<CAPTION>
NUMBER OF PERCENT PERCENT OF
PORTFOLIO NAME AND ADDRESS OF SHAREHOLDER SHARES OF CLASS PORTFOLIO
- -------------------------- -------------------------------- ------------- -------- ----------
<S> <C> <C> <C> <C>
Lincoln New Pacific NFSC 12,592.799 22.88 .99
Portfolio (Class B) FBO Lawrence B. Silver, MD
1800 Linglestown Road, Suite 404
Harrisburg, PA 171109
Kenneth D. Willis, MD 4,832.377 8.78 .38
1506 Olive Drive
Huntsville, AL 35801
Lincoln New Pacific NFSC FBO 472.138 27.73 .04
Portfolio (Class C) Chester M. Boltwood
Karen A. Boltwood
828 Cobblestone Circle
Modesto, CA 95355
NFSC 351.763 20.66 .03
FBO Garold A. Nest
105-B Westwall Street
Harrisonville, MO 64701
Paul E. Moberg 350.741 20.60 .03
62 Hall Rd.
Hampton, VA 23664
Charles H. Stevens 114.587 6.73 .01
2413 Jenan Road
Virginia Beach, VA 23454
Edward K. Robinson 90.920 5.34 .01
Dianne McKenzie
11999 W. Florida
Boise, ID 83709
Lincoln New Pacific Lincoln Investment Management, 558.659 100.00 .04
Inc.
Portfolio (Class D) 1300 South Clinton St.
Fort Wayne, IN 46801
Lincoln Government Income Lincoln National Life Insurance 1,116,642.723 98.28 95.57
Co.
Portfolio (Class A) 1300 South Clinton St.
Fort Wayne, IN 46801
Lincoln Government Income NFSC/FMTC IRA Rollover 21,818.432 72.81 1.87
Portfolio (Class B) FBO Lawrence B. Silver, MD
1800 Linglestown Road, Suite 404
Harrisburg, PA 17110
Irene E. Hall 2,475.213 8.26 .21
5503 Monticello Ave.
Dallas, TX 75206
</TABLE>
I-4
<PAGE> 49
<TABLE>
<CAPTION>
NUMBER OF PERCENT PERCENT OF
PORTFOLIO NAME AND ADDRESS OF SHAREHOLDER SHARES OF CLASS PORTFOLIO
- -------------------------- -------------------------------- ------------- -------- ----------
<S> <C> <C> <C> <C>
NFSC FBO 1,540.266 5.14 .13
Geraldine W. Nixon
1577 Galor Circle
Smyrna, GA 30080
Lincoln Government Income Willard Shivley 1,191.018 68.26 .10
Portfolio (Class C) Carolyn Shively
6649 E. 150 North St.
Columbia City, IN 46725
William H. Lambert 290.164 16.63 .02
7775 Chaple Ridge
Memphis, TN 38018
Eileen Shiman 261.549 14.99 .02
3625 Yale Drive
Santa Rosa, CA 95405
Lincoln Government Income Lincoln Investment Management, 516.233 100.00 .04
Inc.
Portfolio (Class D) 1300 South Clinton St.
Fort Wayne, IN 46801
Lincoln Corporate Income Lincoln National Life Insurance 1,132,860.639 94.88 72.52
Co.
Portfolio (Class A) 1300 South Clinton St.
Fort Wayne, IN 46801
Lincoln Corporate Income NFSC/FMTC IRA Rollover 22,234.646 61.50 1.42
Portfolio (Class B) FBO Lawrence B. Silver, MD
1800 Linglestown Road, Suite 404
Harrisburg, PA 171109
Lincoln Corporate Income Willard Shivley 397.553 94.99 .03
Portfolio (Class C) Carolyn Shivley
6649 E. 150 North St.
Columbia City, IN 46725
Lincoln Corporate Income Federated Life Insurance Co. 331,650.134 100.00 21.23
Portfolio (Class D) Attn: Tom Koch
121 E. Park Square
Owatonna, MN 55060
</TABLE>
I-5
<PAGE> 50
BY SIGNING AND DATING THE LOWER PORTION OF THIS CARD, YOU AUTHORIZE THE PROXIES
TO VOTE EACH PROPOSAL AS MARKED, OR IF NOT MARKED TO VOTE "FOR" EACH PROPOSAL,
AND TO USE THEIR DISCRETION TO VOTE ANY OTHER MATTER AS MAY PROPERLY COME BEFORE
THE MEETING. IF YOU DO NOT INTEND TO PERSONALLY ATTEND THE MEETING, PLEASE
COMPLETE AND MAIL THIS CARD AT ONCE IN THE ENCLOSED ENVELOPE.
LINCOLN ADVISOR FUNDS, INC. -
LINCOLN U.S. GROWTH PORTFOLIO
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
THE UNDERSIGNED HEREBY APPOINTS PRISCILLA S. BROWN, H. THOMAS MCMEEKIN AND JOHN
L. STEINKAMP, OR ANY OF THEM, WITH THE RIGHT OF SUBSTITUTION, PROXIES OF THE
UNDERSIGNED AT THE SPECIAL MEETING OF SHAREHOLDERS OF LINCOLN ADVISOR FUNDS,
INC. TO BE HELD AT 200 EAST BERRY STREET, FORT WAYNE, INDIANA 46802, ON FRIDAY,
MAY 3, 1996 AT 9:00 A.M., OR AT ANY POSTPONEMENT OR ADJOURNMENTS THEREOF, WITH
ALL THE POWERS WHICH THE UNDERSIGNED WOULD POSSESS, IF PERSONALLY PRESENT, AND
INSTRUCTS THEM TO VOTE UPON ANY MATTERS WHICH MAY PROPERLY BE ACTED UPON AT THIS
MEETING, AND SPECIFICALLY AS INDICATED ON THE LOWER PORTION OF THIS FORM.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE SHAREHOLDER WHOSE SIGNATURE APPEARS BELOW. IF PROPERLY EXECUTED BUT NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" EACH OF THE NOMINEES FOR
ELECTION AS DIRECTOR AND "FOR" EACH OTHER PROPOSAL.
PLEASE REFER TO THE PROXY STATEMENT DISCUSSION OF EACH OF THESE MATTERS.
IN THEIR DISCRETION THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS
AS MAY PROPERLY COME BEFORE THE MEETING OR ANY POSTPONEMENT OR ADJOURNMENT
THEREOF.
TO VOTE MARK AN /X/ IN BLUE OR BLACK INK BELOW PLEASE FOLD HERE
- ------------------------------------------------------------------------------
<TABLE>
<S><C>
- ------------------------------------
VOTE ON DIRECTORS 1. TO ELECT THE FOLLOWING SIX NOMINEES AS DIRECTORS:
- ------------------------------------ WALTER P. BABICH W. THACHER LONGSTRETH
FOR OR WITH- OR FOR ANTHONY D. KNERR CHARLES E. PECK
ALL HOLD ALL ANN R. LEVEN WAYNE A. STORK
ALL EXCEPT
/ / / / / / TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE OR
NOMINEES, PRINT THE NAME(S) ON THE LINE BELOW.
--------------------------------------------------------------------------
USE ONLY TO WITHHOLD AUTHORITY TO VOTE ON INDIVIDUAL NOMINEES
FOR AGAINST ABSTAIN 2. TO RATIFY THE SELECTION OF COOPERS & LYBRAND L.L.P. AS INDEPENDENT
/ / / / / / AUDITORS.
FOR AGAINST ABSTAIN 3. a. TO APPROVE A NEW INVESTMENT MANAGEMENT AGREEMENT BETWEEN LINCOLN
/ / / / / / ADVISOR FUNDS, INC., ON BEHALF OF THE LINCOLN U.S. GROWTH PORTFOLIO, AND
DELAWARE MANAGEMENT COMPANY, INC.
FOR AGAINST ABSTAIN b. TO APPROVE A NEW SUB-ADVISORY AGREEMENT BETWEEN DELAWARE MANAGEMENT
/ / / / / / COMPANY, INC., WITH RESPECT TO THE LINCOLN U.S. GROWTH PORTFOLIO, AND
LYNCH & MAYER, INC.
FOR AGAINST ABSTAIN 4. TO APPROVE SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING
/ / / / / / OR ANY POSTPONEMENT OR ADJOURNMENT THEREOF.
------------------------------ ------------------------------ ---------------
SIGNATURE SIGNATURE (JOINT OWNERS) DATE
PLEASE DATE AND SIGN NAME OR NAMES AS PRINTED ABOVE TO AUTHORIZE THE VOTING OF YOUR SHARES AS
INDICATED ABOVE. WHERE SHARES ARE REGISTERED WITH JOINT OWNERS, ALL JOINT OWNERS SHOULD SIGN.
PERSONS SIGNING AS AN EXECUTOR, ADMINISTRATOR, TRUSTEE OR OTHER REPRESENTATIVE SHOULD GIVE FULL
TITLE AS SUCH.
</TABLE>
<PAGE> 51
BY SIGNING AND DATING THE LOWER PORTION OF THIS CARD, YOU AUTHORIZE THE PROXIES
TO VOTE EACH PROPOSAL AS MARKED, OR IF NOT MARKED TO VOTE "FOR" EACH PROPOSAL,
AND TO USE THEIR DISCRETION TO VOTE ANY OTHER MATTER AS MAY PROPERLY COME
BEFORE THE MEETING. IF YOU DO NOT INTEND TO PERSONALLY ATTEND THE MEETING,
PLEASE COMPLETE AND MAIL THIS CARD AT ONCE IN THE ENCLOSED ENVELOPE.
LINCOLN ADVISOR FUNDS, INC. -
LINCOLN NEW PACIFIC PORTFOLIO
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
THE UNDERSIGNED HEREBY APPOINTS PRISCILLA S. BROWN, H. THOMAS MCMEEKIN AND JOHN
L. STEINKEMP, OR ANY OF THEM, WITH THE RIGHT OF SUBSTITUTION, PROXIES OF THE
UNDERSIGNED AT THE SPECIAL MEETING OF SHAREHOLDERS OF LINCOLN ADVISOR FUNDS,
INC. TO BE HELD AT 200 EAST BERRY STREET, FORT WAYNE, INDIANA 46802, ON FRIDAY,
MAY 3, 1996 AT 9:00 A.M., OR AT ANY POSTPONEMENT OR ADJOURNMENTS THEREOF, WITH
ALL THE POWERS WHICH THE UNDERSIGNED WOULD POSSESS, IF PERSONALLY PRESENT, AND
INSTRUCTS THEM TO VOTE UPON ANY MATTERS WHICH MAY PROPERLY BE ACTED UPON AT THIS
MEETING, AND SPECIFICALLY AS INDICATED ON THE LOWER PORTION OF THIS FORM.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE SHAREHOLDER WHOSE SIGNATURE APPEARS BELOW. IF PROPERLY EXECUTED BUT NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" EACH OF THE NOMINEES FOR
ELECTION AS DIRECTOR AND "FOR" EACH OTHER PROPOSAL.
PLEASE REFER TO THE PROXY STATEMENT DISCUSSION OF EACH OF THESE MATTERS.
IN THEIR DISCRETION THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS
AS MAY PROPERLY COME BEFORE THE MEETING OR ANY POSTPONEMENT OR ADJOURNMENT
THEREOF.
TO VOTE MARK AN /X/ IN BLUE OR BLACK INK BELOW PLEASE FOLD HERE
- ------------------------------------------------------------------------------
<TABLE>
<S><C>
- ------------------------------------
VOTE ON DIRECTORS 1. TO ELECT THE FOLLOWING SIX NOMINEES AS DIRECTORS:
- ------------------------------------ WALTER P. BABICH W. THACHER LONGSTRETH
FOR OR WITH- OR FOR ANTHONY D. KNERR CHARLES E. PECK
ALL HOLD ALL ANN R. LEVEN WAYNE A. STORK
ALL EXCEPT
/ / / / / / TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE OR
NOMINEES, PRINT THE NAME(S) ON THE LINE BELOW.
--------------------------------------------------------------------------
USE ONLY TO WITHHOLD AUTHORITY TO VOTE ON INDIVIDUAL NOMINEES
FOR AGAINST ABSTAIN 2. TO RATIFY THE SELECTION OF COOPERS & LYBRAND L.L.P. AS INDEPENDENT
/ / / / / / AUDITORS.
FOR AGAINST ABSTAIN 3. a. TO APPROVE A NEW INVESTMENT MANAGEMENT AGREEMENT BETWEEN LINCOLN
/ / / / / / ADVISOR FUNDS, INC., ON BEHALF OF THE LINCOLN NEW PACIFIC PORTFOLIO, AND
DELAWARE MANAGEMENT COMPANY, INC.
FOR AGAINST ABSTAIN b. TO APPROVE A NEW SUB-ADVISORY AGREEMENT BETWEEN DELAWARE MANAGEMENT
/ / / / / / COMPANY, INC., WITH RESPECT TO THE LINCOLN NEW PACIFIC PORTFOLIO, AND
JOHN GOVETT & CO. LIMITED.
FOR AGAINST ABSTAIN 4. TO APPROVE SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING
/ / / / / / OR ANY POSTPONEMENT OR ADJOURNMENT THEREOF.
------------------------------ ------------------------------ ---------------
SIGNATURE SIGNATURE (JOINT OWNERS) DATE
PLEASE DATE AND SIGN NAME OR NAMES AS PRINTED ABOVE TO AUTHORIZE THE VOTING OF YOUR SHARES AS
INDICATED ABOVE. WHERE SHARES ARE REGISTERED WITH JOINT OWNERS, ALL JOINT OWNERS SHOULD SIGN.
PERSONS SIGNING AS AN EXECUTOR, ADMINISTRATOR, TRUSTEE OR OTHER REPRESENTATIVE SHOULD GIVE FULL
TITLE AS SUCH.
</TABLE>
<PAGE> 52
BY SIGNING AND DATING THE LOWER PORTION OF THIS CARD, YOU AUTHORIZE THE PROXIES
TO VOTE EACH PROPOSAL AS MARKED, OR IF NOT MARKED TO VOTE "FOR" EACH PROPOSAL,
AND TO USE THEIR DISCRETION TO VOTE ANY OTHER MATTER AS MAY PROPERLY COME
BEFORE THE MEETING. IF YOU DO NOT INTEND TO PERSONALLY ATTEND THE MEETING,
PLEASE COMPLETE AND MAIL THIS CARD AT ONCE IN THE ENCLOSED ENVELOPE.
LINCOLN ADVISOR FUNDS, INC. -
LINCOLN ENTERPRISE PORTFOLIO
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
THE UNDERSIGNED HEREBY APPOINTS PRISCILLA S. BROWN, H. THOMAS MCMEEKIN AND JOHN
L. STEINKAMP, OR ANY OF THEM, WITH THE RIGHT OF SUBSTITUTION, PROXIES OF THE
UNDERSIGNED AT THE ANNUAL MEETING OF SHAREHOLDERS OF LINCOLN ADVISOR FUNDS, INC.
TO BE HELD AT 200 EAST BERRY STREET, FORT WAYNE, INDIANA 46802, ON FRIDAY, MAY
3, 1996 AT 9:00 A.M., OR AT ANY POSTPONEMENT OR ADJOURNMENTS THEREOF, WITH ALL
THE POWERS WHICH THE UNDERSIGNED WOULD POSSESS, IF PERSONALLY PRESENT, AND
INSTRUCTS THEM TO VOTE UPON ANY MATTERS WHICH MAY PROPERLY BE ACTED UPON AT THIS
MEETING, AND SPECIFICALLY AS INDICATED ON THE LOWER PORTION OF THIS FORM.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE SHAREHOLDER WHOSE SIGNATURE APPEARS BELOW. IF PROPERLY EXECUTED BUT NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" EACH OF THE NOMINEES FOR
ELECTION AS DIRECTOR AND "FOR" EACH OTHER PROPOSAL.
PLEASE REFER TO THE PROXY STATEMENT DISCUSSION OF EACH OF THESE MATTERS.
IN THEIR DISCRETION THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS
AS MAY PROPERLY COME BEFORE THE MEETING OR ANY POSTPONEMENT OR ADJOURNMENT
THEREOF.
TO VOTE MARK AN /X/ IN BLUE OR BLACK INK BELOW PLEASE FOLD HERE
- ------------------------------------------------------------------------------
<TABLE>
<S><C>
- ------------------------------------
VOTE ON DIRECTORS 1. TO ELECT THE FOLLOWING SIX NOMINEES AS DIRECTORS:
- ------------------------------------ WALTER P. BABICH W. THACHER LONGSTRETH
FOR OR WITH- OR FOR ANTHONY D. KNERR CHARLES E. PECK
ALL HOLD ALL ANN R. LEVEN WAYNE A. STORK
ALL EXCEPT
/ / / / / / TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE OR
NOMINEES, PRINT THE NAME(S) ON THE LINE BELOW.
--------------------------------------------------------------------------
USE ONLY TO WITHHOLD AUTHORITY TO VOTE ON INDIVIDUAL NOMINEES
FOR AGAINST ABSTAIN 2. TO RATIFY THE SELECTION OF COOPERS & LYBRAND L.L.P. AS INDEPENDENT
/ / / / / / AUDITORS.
FOR AGAINST ABSTAIN 3. a. TO APPROVE A NEW INVESTMENT MANAGEMENT AGREEMENT BETWEEN LINCOLN
/ / / / / / ADVISOR FUNDS, INC., ON BEHALF OF THE LINCOLN ENTERPRISE PORTFOLIO, AND
DELAWARE MANAGEMENT COMPANY, INC.
FOR AGAINST ABSTAIN b. TO APPROVE A NEW SUB-ADVISORY AGREEMENT BETWEEN DELAWARE MANAGEMENT
/ / / / / / COMPANY, INC., WITH RESPECT TO THE LINCOLN ENTERPRISE PORTFOLIO, AND
LYNCH & MAYER, INC.
FOR AGAINST ABSTAIN 4. TO APPROVE SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING
/ / / / / / OR ANY POSTPONEMENT OR ADJOURNMENT THEREOF.
------------------------------ ------------------------------ ---------------
SIGNATURE SIGNATURE (JOINT OWNERS) DATE
PLEASE DATE AND SIGN NAME OR NAMES AS PRINTED ABOVE TO AUTHORIZE THE VOTING OF YOUR SHARES AS
INDICATED ABOVE. WHERE SHARES ARE REGISTERED WITH JOINT OWNERS, ALL JOINT OWNERS SHOULD SIGN.
PERSONS SIGNING AS AN EXECUTOR, ADMINISTRATOR, TRUSTEE OR OTHER REPRESENTATIVE SHOULD GIVE FULL
TITLE AS SUCH.
</TABLE>
<PAGE> 53
BY SIGNING AND DATING THE LOWER PORTION OF THIS CARD, YOU AUTHORIZE THE PROXIES
TO VOTE EACH PROPOSAL AS MARKED, OR IF NOT MARKED TO VOTE "FOR" EACH PROPOSAL,
AND TO USE THEIR DISCRETION TO VOTE ANY OTHER MATTER AS MAY PROPERLY COME
BEFORE THE MEETING. IF YOU DO NOT INTEND TO PERSONALLY ATTEND THE MEETING,
PLEASE COMPLETE AND MAIL THIS CARD AT ONCE IN THE ENCLOSED ENVELOPE.
LINCOLN ADVISOR FUNDS, INC. -
LINCOLN CORPORATE INCOME PORTFOLIO
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
THE UNDERSIGNED HEREBY APPOINTS PRISCILLA S. BROWN, H. THOMAS MCMEEKIN AND JOHN
L. STEINKAMP, OR ANY OF THEM, WITH THE RIGHT OF SUBSTITUTION, PROXIES OF THE
UNDERSIGNED AT THE ANNUAL MEETING OF SHAREHOLDERS OF LINCOLN ADVISOR FUNDS, INC.
TO BE HELD AT 200 EAST BERRY STREET, FORT WAYNE, INDIANA 46802, ON FRIDAY, MAY
3, 1996 AT 9:00 A.M., OR AT ANY POSTPONEMENT OR ADJOURNMENTS THEREOF, WITH ALL
THE POWERS WHICH THE UNDERSIGNED WOULD POSSESS, IF PERSONALLY PRESENT, AND
INSTRUCTS THEM TO VOTE UPON ANY MATTERS WHICH MAY PROPERLY BE ACTED UPON AT THIS
MEETING, AND SPECIFICALLY AS INDICATED ON THE LOWER PORTION OF THIS FORM.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE SHAREHOLDER WHOSE SIGNATURE APPEARS BELOW. IF PROPERLY EXECUTED BUT NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" EACH OF THE NOMINEES FOR
ELECTION AS DIRECTOR AND "FOR" EACH OTHER PROPOSAL.
PLEASE REFER TO THE PROXY STATEMENT DISCUSSION OF EACH OF THESE MATTERS.
IN THEIR DISCRETION THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS
AS MAY PROPERLY COME BEFORE THE MEETING OR ANY POSTPONEMENT OR ADJOURNMENT
THEREOF.
TO VOTE MARK AN /X/ IN BLUE OR BLACK INK BELOW PLEASE FOLD HERE
- ------------------------------------------------------------------------------
<TABLE>
<S><C>
- ------------------------------------
VOTE ON DIRECTORS 1. TO ELECT THE FOLLOWING SIX NOMINEES AS DIRECTORS:
- ------------------------------------ WALTER P. BABICH W. THACHER LONGSTRETH
FOR OR WITH- OR FOR ANTHONY D. KNERR CHARLES E. PECK
ALL HOLD ALL ANN R. LEVEN WAYNE A. STORK
ALL EXCEPT
/ / / / / / TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE OR
NOMINEES, PRINT THE NAME(S) ON THE LINE BELOW.
--------------------------------------------------------------------------
USE ONLY TO WITHHOLD AUTHORITY TO VOTE ON INDIVIDUAL NOMINEES
FOR AGAINST ABSTAIN 2. TO RATIFY THE SELECTION OF COOPERS & LYBRAND L.L.P. AS INDEPENDENT
/ / / / / / AUDITORS.
FOR AGAINST ABSTAIN 3. a. TO APPROVE A NEW INVESTMENT MANAGEMENT AGREEMENT BETWEEN LINCOLN
/ / / / / / ADVISOR FUNDS, INC., ON BEHALF OF THE LINCOLN CORPORATE INCOME PORTFOLIO,
AND DELAWARE MANAGEMENT COMPANY, INC.
FOR AGAINST ABSTAIN b. TO APPROVE A NEW SUB-ADVISORY AGREEMENT BETWEEN DELAWARE MANAGEMENT
/ / / / / / COMPANY, INC., WITH RESPECT TO THE LINCOLN CORPORATE INCOME PORTFOLIO, AND
LINCOLN INVESTMENT MANAGEMENT, INC.
FOR AGAINST ABSTAIN 4. TO APPROVE SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING
/ / / / / / OR ANY POSTPONEMENT OR ADJOURNMENT THEREOF.
------------------------------ ------------------------------ ---------------
SIGNATURE SIGNATURE (JOINT OWNERS) DATE
PLEASE DATE AND SIGN NAME OR NAMES AS PRINTED ABOVE TO AUTHORIZE THE VOTING OF YOUR SHARES AS
INDICATED ABOVE. WHERE SHARES ARE REGISTERED WITH JOINT OWNERS, ALL JOINT OWNERS SHOULD SIGN.
PERSONS SIGNING AS AN EXECUTOR, ADMINISTRATOR, TRUSTEE OR OTHER REPRESENTATIVE SHOULD GIVE FULL
TITLE AS SUCH.
</TABLE>
<PAGE> 54
BY SIGNING AND DATING THE LOWER PORTION OF THIS CARD, YOU AUTHORIZE THE PROXIES
TO VOTE EACH PROPOSAL AS MARKED, OR IF NOT MARKED TO VOTE "FOR" EACH PROPOSAL,
AND TO USE THEIR DISCRETION TO VOTE ANY OTHER MATTER AS MAY PROPERLY COME
BEFORE THE MEETING. IF YOU DO NOT INTEND TO PERSONALLY ATTEND THE MEETING,
PLEASE COMPLETE AND MAIL THIS CARD AT ONCE IN THE ENCLOSED ENVELOPE.
LINCOLN ADVISOR FUNDS, INC. -
LINCOLN GOVERNMENT INCOME PORTFOLIO
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
THE UNDERSIGNED HEREBY APPOINTS PRISCILLA S. BROWN, H. THOMAS MCMEEKIN AND JOHN
L. STEINKAMP, OR ANY OF THEM, WITH THE RIGHT OF SUBSTITUTION, PROXIES OF THE
UNDERSIGNED AT THE SPECIAL MEETING OF SHAREHOLDERS OF LINCOLN ADVISOR FUNDS,
INC. TO BE HELD AT 200 EAST BERRY STREET, FORT WAYNE, INDIANA 46802, ON FRIDAY,
MAY 3, 1996 AT 9:00 A.M., OR AT ANY POSTPONEMENT OR ADJOURNMENTS THEREOF, WITH
ALL THE POWERS WHICH THE UNDERSIGNED WOULD POSSESS, IF PERSONALLY PRESENT, AND
INSTRUCTS THEM TO VOTE UPON ANY MATTERS WHICH MAY PROPERLY BE ACTED UPON AT THIS
MEETING, AND SPECIFICALLY AS INDICATED ON THE LOWER PORTION OF THIS FORM.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE SHAREHOLDER WHOSE SIGNATURE APPEARS BELOW. IF PROPERLY EXECUTED BUT NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" EACH OF THE NOMINEES FOR
ELECTION AS DIRECTOR AND "FOR" EACH OTHER PROPOSAL.
PLEASE REFER TO THE PROXY STATEMENT DISCUSSION OF EACH OF THESE MATTERS.
IN THEIR DISCRETION THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS
AS MAY PROPERLY COME BEFORE THE MEETING OR ANY POSTPONEMENT OR ADJOURNMENT
THEREOF.
TO VOTE MARK AN /X/ IN BLUE OR BLACK INK BELOW PLEASE FOLD HERE
- ------------------------------------------------------------------------------
<TABLE>
<S><C>
- ------------------------------------
VOTE ON DIRECTORS 1. TO ELECT THE FOLLOWING SIX NOMINEES AS DIRECTORS:
- ------------------------------------ WALTER P. BABICH W. THACHER LONGSTRETH
FOR OR WITH- OR FOR ANTHONY D. KNERR CHARLES E. PECK
ALL HOLD ALL ANN R. LEVEN WAYNE A. STORK
ALL EXCEPT
/ / / / / / TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE OR
NOMINEES, PRINT THE NAME(S) ON THE LINE BELOW.
--------------------------------------------------------------------------
USE ONLY TO WITHHOLD AUTHORITY TO VOTE ON INDIVIDUAL NOMINEES
FOR AGAINST ABSTAIN 2. TO RATIFY THE SELECTION OF COOPERS & LYBRAND L.L.P. AS INDEPENDENT
/ / / / / / AUDITORS.
FOR AGAINST ABSTAIN 3. a. TO APPROVE A NEW INVESTMENT MANAGEMENT AGREEMENT BETWEEN LINCOLN
/ / / / / / ADVISOR FUNDS, INC., ON BEHALF OF THE LINCOLN GOVERNMENT INCOME PORTFOLIO,
AND DELAWARE MANAGEMENT COMPANY, INC.
FOR AGAINST ABSTAIN b. TO APPROVE A NEW SUB-ADVISORY AGREEMENT BETWEEN DELAWARE MANAGEMENT
/ / / / / / COMPANY, INC., WITH RESPECT TO THE LINCOLN GOVERNMENT INCOME PORTFOLIO, AND
LINCOLN INVESTMENT MANAGEMENT, INC.
FOR AGAINST ABSTAIN 4. TO APPROVE SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING
/ / / / / / OR ANY POSTPONEMENT OR ADJOURNMENT THEREOF.
------------------------------ ------------------------------ ---------------
SIGNATURE SIGNATURE (JOINT OWNERS) DATE
PLEASE DATE AND SIGN NAME OR NAMES AS PRINTED ABOVE TO AUTHORIZE THE VOTING OF YOUR SHARES AS
INDICATED ABOVE. WHERE SHARES ARE REGISTERED WITH JOINT OWNERS, ALL JOINT OWNERS SHOULD SIGN.
PERSONS SIGNING AS AN EXECUTOR, ADMINISTRATOR, TRUSTEE OR OTHER REPRESENTATIVE SHOULD GIVE FULL
TITLE AS SUCH.
</TABLE>
<PAGE> 55
BY SIGNING AND DATING THE LOWER PORTION OF THIS CARD, YOU AUTHORIZE THE PROXIES
TO VOTE EACH PROPOSAL AS MARKED, OR IF NOT MARKED TO VOTE "FOR" EACH PROPOSAL,
AND TO USE THEIR DISCRETION TO VOTE ANY OTHER MATTER AS MAY PROPERLY COME
BEFORE THE MEETING. IF YOU DO NOT INTEND TO PERSONALLY ATTEND THE MEETING,
PLEASE COMPLETE AND MAIL THIS CARD AT ONCE IN THE ENCLOSED ENVELOPE.
LINCOLN ADVISOR FUNDS, INC. -
LINCOLN GROWTH AND INCOME PORTFOLIO
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
THE UNDERSIGNED HEREBY APPOINTS PRISCILLA S. BROWN, H. THOMAS MCMEEKIN
AND JOHN L. STEINKAMP, OR ANY OF THEM, WITH THE RIGHT OF SUBSTITUTION, PROXIES
OF THE UNDERSIGNED AT THE SPECIAL MEETING OF SHAREHOLDERS OF LINCOLN ADVISOR
FUNDS, INC. TO BE HELD AT 200 EAST BERRY STREET, FORT WAYNE, INDIANA 46802, ON
FRIDAY, MAY 3, 1996 AT 9:00 A.M., OR AT ANY POSTPONEMENT OR ADJOURNMENTS
THEREOF, WITH ALL THE POWERS WHICH THE UNDERSIGNED WOULD POSSESS, IF PERSONALLY
PRESENT, AND INSTRUCTS THEM TO VOTE UPON ANY MATTERS WHICH MAY PROPERLY BE
ACTED UPON AT THIS MEETING, AND SPECIFICALLY AS INDICATED ON THE LOWER PORTION
OF THIS FORM. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE SHAREHOLDER WHOSE SIGNATURE APPEARS BELOW. IF PROPERLY
EXECUTED BUT NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" EACH
PROPOSAL. PLEASE REFER TO THE PROXY STATEMENT DISCUSSION OF EACH OF THESE
MATTERS. IN THEIR DISCRETION THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY POSTPONEMENT OR
ADJOURNMENT THEREOF.
TO VOTE MARK AN /X/ IN BLUE OR BLACK INK BELOW PLEASE FOLD HERE
- ------------------------------------------------------------------------------
<TABLE>
<S><C>
FOR AGAINST ABSTAIN 2. TO RATIFY THE SELECTION OF COOPERS & LYBRAND L.L.P. AS INDEPENDENT
/ / / / / / AUDITORS.
FOR AGAINST ABSTAIN 4. TO APPROVE SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING
/ / / / / / OR ANY POSTPONEMENT OR ADJOURNMENT THEREOF.
------------------------------ ------------------------------ ---------------
SIGNATURE SIGNATURE (JOINT OWNERS) DATE
PLEASE DATE AND SIGN NAME OR NAMES AS PRINTED ABOVE TO AUTHORIZE THE VOTING OF YOUR SHARES AS
INDICATED ABOVE. WHERE SHARES ARE REGISTERED WITH JOINT OWNERS, ALL JOINT OWNERS SHOULD SIGN.
PERSONS SIGNING AS AN EXECUTOR, ADMINISTRATOR, TRUSTEE OR OTHER REPRESENTATIVE SHOULD GIVE FULL
TITLE AS SUCH.
</TABLE>
<PAGE> 56
BY SIGNING AND DATING THE LOWER PORTION OF THIS CARD, YOU AUTHORIZE THE PROXIES
TO VOTE EACH PROPOSAL AS MARKED, OR IF NOT MARKED TO VOTE "FOR" EACH PROPOSAL,
AND TO USE THEIR DISCRETION TO VOTE ANY OTHER MATTER AS MAY PROPERLY COME
BEFORE THE MEETING. IF YOU DO NOT INTEND TO PERSONALLY ATTEND THE MEETING,
PLEASE COMPLETE AND MAIL THIS CARD AT ONCE IN THE ENCLOSED ENVELOPE.
LINCOLN ADVISOR FUNDS, INC. -
LINCOLN TAX-FREE INCOME PORTFOLIO
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
THE UNDERSIGNED HEREBY APPOINTS PRISCILLA S. BROWN, H. THOMAS MCMEEKIN
AND JOHN L. STEINKAMP, OR ANY OF THEM, WITH THE RIGHT OF SUBSTITUTION, PROXIES
OF THE UNDERSIGNED AT THE SPECIAL MEETING OF SHAREHOLDERS OF LINCOLN ADVISOR
FUNDS, INC. TO BE HELD AT 200 EAST BERRY STREET, FORT WAYNE, INDIANA 46802, ON
FRIDAY, MAY 3, 1996 AT 9:00 A.M., OR AT ANY POSTPONEMENT OR ADJOURNMENTS
THEREOF, WITH ALL THE POWERS WHICH THE UNDERSIGNED WOULD POSSESS, IF PERSONALLY
PRESENT, AND INSTRUCTS THEM TO VOTE UPON ANY MATTERS WHICH MAY PROPERLY BE
ACTED UPON AT THIS MEETING, AND SPECIFICALLY AS INDICATED ON THE LOWER PORTION
OF THIS FORM. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE SHAREHOLDER WHOSE SIGNATURE APPEARS BELOW. IF PROPERLY
EXECUTED BUT NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" EACH
PROPOSAL. PLEASE REFER TO THE PROXY STATEMENT DISCUSSION OF EACH OF THESE
MATTERS. IN THEIR DISCRETION THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY POSTPONEMENT OR
ADJOURNMENT THEREOF.
TO VOTE MARK AN /X/ IN BLUE OR BLACK INK BELOW PLEASE FOLD HERE
- ------------------------------------------------------------------------------
<TABLE>
<S><C>
FOR AGAINST ABSTAIN 2. TO RATIFY THE SELECTION OF COOPERS & LYBRAND L.L.P. AS INDEPENDENT
/ / / / / / AUDITORS.
FOR AGAINST ABSTAIN 4. TO APPROVE SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING
/ / / / / / OR ANY POSTPONEMENT OR ADJOURNMENT THEREOF.
------------------------------ ------------------------------ ---------------
SIGNATURE SIGNATURE (JOINT OWNERS) DATE
PLEASE DATE AND SIGN NAME OR NAMES AS PRINTED ABOVE TO AUTHORIZE THE VOTING OF YOUR SHARES AS
INDICATED ABOVE. WHERE SHARES ARE REGISTERED WITH JOINT OWNERS, ALL JOINT OWNERS SHOULD SIGN.
PERSONS SIGNING AS AN EXECUTOR, ADMINISTRATOR, TRUSTEE OR OTHER REPRESENTATIVE SHOULD GIVE FULL
TITLE AS SUCH.
</TABLE>
<PAGE> 57
BY SIGNING AND DATING THE LOWER PORTION OF THIS CARD, YOU AUTHORIZE THE PROXIES
TO VOTE EACH PROPOSAL AS MARKED, OR IF NOT MARKED TO VOTE "FOR" EACH PROPOSAL,
AND TO USE THEIR DISCRETION TO VOTE ANY OTHER MATTER AS MAY PROPERLY COME
BEFORE THE MEETING. IF YOU DO NOT INTEND TO PERSONALLY ATTEND THE MEETING,
PLEASE COMPLETE AND MAIL THIS CARD AT ONCE IN THE ENCLOSED ENVELOPE.
LINCOLN ADVISOR FUNDS, INC. -
LINCOLN CASHFUND PORTFOLIO
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
THE UNDERSIGNED HEREBY APPOINTS PRISCILLA S. BROWN, H. THOMAS MCMEEKIN
AND JOHN L. STEINKAMP, OR ANY OF THEM, WITH THE RIGHT OF SUBSTITUTION, PROXIES
OF THE UNDERSIGNED AT THE SPECIAL MEETING OF SHAREHOLDERS OF LINCOLN ADVISOR
FUNDS, INC. TO BE HELD AT 200 EAST BERRY STREET, FORT WAYNE, INDIANA 46802, ON
FRIDAY, MAY 3, 1996 AT 9:00 A.M., OR AT ANY POSTPONEMENT OR ADJOURNMENTS
THEREOF, WITH ALL THE POWERS WHICH THE UNDERSIGNED WOULD POSSESS, IF PERSONALLY
PRESENT, AND INSTRUCTS THEM TO VOTE UPON ANY MATTERS WHICH MAY PROPERLY BE
ACTED UPON AT THIS MEETING, AND SPECIFICALLY AS INDICATED ON THE LOWER PORTION
OF THIS FORM. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE SHAREHOLDER WHOSE SIGNATURE APPEARS BELOW. IF PROPERLY
EXECUTED BUT NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" EACH
PROPOSAL. PLEASE REFER TO THE PROXY STATEMENT DISCUSSION OF EACH OF THESE
MATTERS. IN THEIR DISCRETION THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY POSTPONEMENT OR
ADJOURNMENT THEREOF.
TO VOTE MARK AN /X/ IN BLUE OR BLACK INK BELOW PLEASE FOLD HERE
- ------------------------------------------------------------------------------
<TABLE>
<S><C>
FOR AGAINST ABSTAIN 2. TO RATIFY THE SELECTION OF COOPERS & LYBRAND L.L.P. AS INDEPENDENT
/ / / / / / AUDITORS.
FOR AGAINST ABSTAIN 4. TO APPROVE SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING
/ / / / / / OR ANY POSTPONEMENT OR ADJOURNMENT THEREOF.
------------------------------ ------------------------------ ---------------
SIGNATURE SIGNATURE (JOINT OWNERS) DATE
PLEASE DATE AND SIGN NAME OR NAMES AS PRINTED ABOVE TO AUTHORIZE THE VOTING OF YOUR SHARES AS
INDICATED ABOVE. WHERE SHARES ARE REGISTERED WITH JOINT OWNERS, ALL JOINT OWNERS SHOULD SIGN.
PERSONS SIGNING AS AN EXECUTOR, ADMINISTRATOR, TRUSTEE OR OTHER REPRESENTATIVE SHOULD GIVE FULL
TITLE AS SUCH.
</TABLE>
<PAGE> 58
BY SIGNING AND DATING THE LOWER PORTION OF THIS CARD, YOU AUTHORIZE THE PROXIES
TO VOTE EACH PROPOSAL AS MARKED, OR IF NOT MARKED TO VOTE "FOR" EACH PROPOSAL,
AND TO USE THEIR DISCRETION TO VOTE ANY OTHER MATTER AS MAY PROPERLY COME BEFORE
THE MEETING. IF YOU DO NOT INTEND TO PERSONALLY ATTEND THE MEETING, PLEASE
COMPLETE AND MAIL THIS CARD AT ONCE IN THE ENCLOSED ENVELOPE.
LINCOLN ADVISOR FUNDS, INC. -
LINCOLN WORLD GROWTH PORTFOLIO
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
THE UNDERSIGNED HEREBY APPOINTS PRISCILLA S. BROWN, H. THOMAS MCMEEKIN AND JOHN
L. STEINKAMP, OR ANY OF THEM, WITH THE RIGHT OF SUBSTITUTION, PROXIES OF THE
UNDERSIGNED AT THE SPECIAL MEETING OF SHAREHOLDERS OF LINCOLN ADVISOR FUNDS,
INC. TO BE HELD AT 200 EAST BERRY STREET, FORT WAYNE, INDIANA 46802, ON FRIDAY,
MAY 3, 1996 AT 9:00 A.M., OR AT ANY POSTPONEMENT OR ADJOURNMENTS THEREOF, WITH
ALL THE POWERS WHICH THE UNDERSIGNED WOULD POSSESS, IF PERSONALLY PRESENT, AND
INSTRUCTS THEM TO VOTE UPON ANY MATTERS WHICH MAY PROPERLY BE ACTED UPON AT THIS
MEETING, AND SPECIFICALLY AS INDICATED ON THE LOWER PORTION OF THIS FORM.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE SHAREHOLDER WHOSE SIGNATURE APPEARS BELOW. IF PROPERLY EXECUTED BUT NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" EACH OF THE NOMINEES FOR
ELECTION AS DIRECTOR AND "FOR" EACH OTHER PROPOSAL.
PLEASE REFER TO THE PROXY STATEMENT DISCUSSION OF EACH OF THESE MATTERS.
IN THEIR DISCRETION THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS
AS MAY PROPERLY COME BEFORE THE MEETING OR ANY POSTPONEMENT OR ADJOURNMENT
THEREOF.
TO VOTE MARK AN /X/ IN BLUE OR BLACK INK BELOW PLEASE FOLD HERE
- ------------------------------------------------------------------------------
<TABLE>
<S><C>
- ------------------------------------
VOTE ON DIRECTORS 1. TO ELECT THE FOLLOWING SIX NOMINEES AS DIRECTORS:
- ------------------------------------ WALTER P. BABICH W. THACHER LONGSTRETH
FOR OR WITH OR FOR ANTHONY D. KNERR CHARLES E. PECK
ALL HOLD ALL ANN R. LEVEN WAYNE A. STORK
ALL EXCEPT
/ / / / / / TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE OR
NOMINEES, PRINT THE NAME(S) ON THE LINE BELOW.
--------------------------------------------------------------------------
USE ONLY TO WITHHOLD AUTHORITY TO VOTE ON INDIVIDUAL NOMINEES
FOR AGAINST ABSTAIN 2. TO RATIFY THE SELECTION OF COOPERS & LYBRAND L.L.P. AS INDEPENDENT
/ / / / / / AUDITORS.
FOR AGAINST ABSTAIN 3. a. TO APPROVE A NEW INVESTMENT MANAGEMENT AGREEMENT BETWEEN LINCOLN
/ / / / / / ADVISOR FUNDS, INC., ON BEHALF OF THE LINCOLN WORLD GROWTH PORTFOLIO, AND
DELAWARE MANAGEMENT COMPANY, INC.
FOR AGAINST ABSTAIN b. TO APPROVE A NEW SUB-ADVISORY AGREEMENT BETWEEN DELAWARE MANAGEMENT
/ / / / / / COMPANY, INC., WITH RESPECT TO THE LINCOLN WORLD GROWTH PORTFOLIO, AND
WALTER SCOTT & PARTNERS, LIMITED.
FOR AGAINST ABSTAIN 4. TO APPROVE SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING
/ / / / / / OR ANY POSTPONEMENT OR ADJOURNMENT THEREOF.
------------------------------ ------------------------------ ---------------
SIGNATURE SIGNATURE (JOINT OWNERS) DATE
PLEASE DATE AND SIGN NAME OR NAMES AS PRINTED ABOVE TO AUTHORIZE THE VOTING OF YOUR SHARES AS
INDICATED ABOVE. WHERE SHARES ARE REGISTERED WITH JOINT OWNERS, ALL JOINT OWNERS SHOULD SIGN.
PERSONS SIGNING AS AN EXECUTOR, ADMINISTRATOR, TRUSTEE OR OTHER REPRESENTATIVE SHOULD GIVE FULL
TITLE AS SUCH.
</TABLE>
