program Lincoln Director SM FOR RETIREMENT Investment Options Overview

Transcription

1 FOR RETIREMENT Lincoln Director SM Investment Options Overview program Insurance products issued by: The Lincoln National Life Insurance Company Lincoln Life & Annuity Company of New York Not a deposit Not FDIC-insured May go down in value Not insured by any federal government agency Not guaranteed by any bank or savings association

2 Working together, sharing a goal The success of any endeavor whether raising a barn or putting on a play depends upon how well everyone works together to achieve a shared goal. Likewise, you can rely on Lincoln to bring this same spirit of collaboration to our partnership with you as we work to realize our common objective providing a retirement plan that can help your employees achieve their financial goals. Lincoln has assembled a customized lineup of over 90 investment options that you can choose from and also count on to work well together. Because the Lincoln Director SM diversified platform includes many of the best-known and most highly respected asset management firms, you and your employees can build a retirement plan compatible with your level of risk and investment philosophy. The Lincoln Funds Management team conducts rigorous research on investment options and investment managers to assist Lincoln in offering a robust selection of investment options in the Lincoln Director SM lineup. But, it doesn t end there. All of the investment options in the platform are monitored and evaluated on a regular basis to ensure that they continue to meet the highest standards.

3 Investment through diversification This basic investment principle has been summed up by the phrase, Don t put all of your eggs in one basket. True to this advice, the range of investment options available through the Lincoln Director SM platform provides the diversification you are looking to offer. From the security of the Guaranteed Stable Value Account 1 to the potentially high returns of the more aggressive options or the simplicity of the risk- or time-based asset allocation models Lincoln Director SM program provides a variety of ways for your employees to allocate their money. Although it is impossible to completely eliminate risk, you can offer your employees a lineup that allows for investment diversification, which can reduce the overall volatility of their portfolios. The style boxes Creating the right investment mix to help meet retirement goals takes careful planning. Fortunately, Lincoln can help. The style box icons accompanying the investment option descriptions on the following pages can help your employees create and maintain diversified portfolios. Each equity investment option is assigned a specific category in the style box based on its investment focus and portfolio composition. An option s portfolio may not always reflect the characteristics of its category, but by showing its ideal profile, you and your employees will get a better sense of its objectives for the long term. Investments 1 Guarantees are backed by the claims-paying ability of the issuing company. May not be available in all states. 3

4 Lincoln Director SM investment options U.S. Stock Value Blend Growth Large-cap Mid-cap Small-cap International Stock American Funds American Mutual SM (SA1D) American Funds Washington Mutual Investors Fund (SA1U) BlackRock Equity Dividend (SALF) BlackRock Large Cap Value (SA80) Delaware VIP Value (SA61) FTVIPT Mutual Shares Securities (SA2J) Invesco Van Kampen Growth and Income Fund (SA28) MFS VIT Utilities (SA67) SSgA Russell Large Cap Value Index Non-Lending Series (SAL8) AllianceBernstein VPS Small/Mid Cap Value (SA39) BlackRock Mid-Cap Value Equity* (SA83) LVIP Delaware Special Opportunities (SAL7) LVIP Mid-Cap Value (SA38) Delaware VIP Small Cap Value (SA56) SSgA Russell Small Cap Value Index Non-Lending Series (SALB) American Funds Fundamental Investors SM (SA1J) American Funds Investment Company of America SM (SA1N) LVIP Delaware Growth and Income Fund (SA11) Fidelity VIP Contrafund (SA35) LVIP Delaware Social Awareness (SA33) LVIP Dimensional U.S. Equity Fund (SA57) LVIP SSgA S&P 500 Index (SA27) LVIP Vanguard Domestic Equity ETF (SA19) SSgA Russell All Cap Index Non-Lending Series (SA23) Fidelity VIP Mid Cap (SA84) SSgA Russell Small/Mid Cap Index Non-Lending Series (SA24) SSgA S&P MidCap Index Non-Lending Series (SALA) Delaware Small Cap Core (SA2C) LVIP SSgA Small-Cap Index (SA36) American Funds AMCAP Fund (SA1A) American Funds Growth Fund of America (SA1K) American Funds New Economy Fund (SA1P) BlackRock Capital Appreciation (SA81) BlackRock Large Cap Growth (SALG) Janus Aspen Series Janus (SA70) LVIP T. Rowe Price Growth Stock (SA29) MFS VIT Growth (SA65) SSgA Russell Large Cap Growth Index Non-Lending Series (SAL9) Franklin Growth Fund (SA58) Columbia SM Acorn Fund (SA17) Janus Aspen Series Enterprise (SA64) Wells Fargo Advantage Discovery (SA63) Invesco Van Kampen Small Cap Growth Fund (SA76) LVIP Baron Growth Opportunities (SA1X) SSgA Russell Small Cap Growth Index Non-Lending Series (SALC) Value Blend Growth Large-cap Small/ Mid-cap Bond LVIP Mondrian International Value Fund (SA22) LVIP Templeton Growth (SA62) BlackRock Energy & Resources (SA77) American Funds Capital World Growth and Income Fund (SA1H) American Funds EuroPacific Growth Fund (SA1I) LVIP SSgA International Index Fund (SAL5) LVIP Vanguard International Equity ETF (SA59) LVIP Cohen & Steers Global Real Estate (SA55) Oppenheimer Developing Markets Fund (SA94) Short Medium Long American Funds Intermediate Bond Fund of America (SA1M) Delaware VIP Limited-Term Diversified Income (SA87) Federated Government Ultrashort Duration Fund (SA14) American Funds American High-Income Trust SM (SA1C) American Funds Bond Fund of America SM (SA1E) American Funds Capital World Bond Fund (SA1G) American Funds U.S. Government Securities Fund (SA1T) Delaware VIP Diversified Income (SA93) Franklin High Income Fund (SA20) FTVIPT Templeton Global Bond Securities (SA86) LVIP Delaware Bond Fund (SA12) LVIP SSgA Bond Index (SAL6) PIMCO Total Return (SALM) AllianceBernstein VPS Global Thematic Growth (SA31) American Funds New Perspective Fund (SA1Q) American Funds New World Fund (SA1R) American Funds SMALLCAP World Fund (SA1S) LVIP BlackRock Inflation Protected Bond Fund (SA92) 4

5 Allocation Balanced Risk-based Target Date American Funds American Balanced Fund (SA1B) LVIP Delaware Foundation Aggressive Allocation (SA97) American Funds Capital Income Builder (SA1F) LVIP Delaware Foundation Conservative Allocation (SA95) American Funds Income Fund of America (SA1L) LVIP Delaware Foundation Moderate Allocation (SA96) BlackRock Global Allocation (SALE) Vanguard LifeStrategy Conservative Growth Fund (SA30) Franklin Balanced (SA2R) Vanguard LifeStrategy Growth Fund (SA32) FTVIPT Franklin Income Securities (SA2I) Vanguard LifeStrategy Moderate Growth Fund (SA21) SSgA Real Asset Non-Lending Series (SALD) Cash/Stable Value Guaranteed Account/Guaranteed Stable Value Account LVIP Protected Profile 2010 (SAL1) LVIP Protected Profile 2020 (SAL2) LVIP Protected Profile 2030 (SAL3) LVIP Protected Profile 2040 (SAL4) LVIP Protected Profile 2050 (SALL) *Effective July 31, 2012, the BlackRock Mid-Cap Value Equity Fund name will change to BlackRock Flexible Equity Fund. Standard & Poor s, S&P, S&P 500, Standard & Poor s 500 and 500 are trademarks of Standard & Poor s Financial Services LLC, a subsidiary of The McGraw-Hill Companies, Inc. and have been licensed for use by Lincoln Variable Insurance Products Trust and its affiliates. The Product is not sponsored, endorsed, sold or promoted by Standard & Poor s and Standard & Poor s makes no representation regarding the advisability of purchasing the Product. Certain group variable annuity separate accounts are funded with mutual funds. The Lincoln National Life Insurance Company ( Lincoln ), Fort Wayne, IN, may receive certain fees, pursuant to either a written plan filed with the Securities and Exchange Commission Rule 12b-1, 17 C.F.R b-1 (a 12b-1 Plan ) or an administrative services agreement with some, but not necessarily all, of the managers of these mutual funds, which are investment options in the annuity contracts. These fees reimburse some of Lincoln s acquisition expenses, printing and mailing expenses, distribution expenses, transfer agency fees, contractowner services expenses, marketing and advertising expenses, and other administrative expenses related to the maintenance of the mutual funds. The amount of the fees will vary from fund to fund, and are generally described as a percentage of assets under management with the fund. These fees are included in the total underlying fund expenses.

6 Lincoln Director SM investment fees As of 6/15/2012 Category/name Separate Account (SA) Investment advisor Investment style Invest. mgt. fee (%) Underlying mutual fund fee (%) Total SA fee (%) U.S. Stock AllianceBernstein VPS Small/Mid Cap Value 39 AllianceBernstein L.P. Small/Mid Cap Value American Funds AMCAP Fund 3 1A Capital Research and Management Company Large Cap Growth American Funds American Mutual Fund 3 1D Capital Research and Management Company Large Cap Value American Funds Fundamental Investors SM 3 1J Capital Research and Management Company Large Cap Blend American Funds Growth Fund of America 3 1K Capital Research and Management Company Large Cap Growth American Funds Investment Company of America 3 1N Capital Research and Management Company Large Cap Blend American Funds New Economy Fund 3 1P Capital Research and Management Company Large Cap Growth American Funds Washington Mutual Investors Fund 3 1U Capital Research and Management Company Large Cap Value BlackRock Capital Appreciation 81 BlackRock Inc. Large Cap Growth BlackRock Equity Dividend 3 LF BlackRock Inc. Large Cap Value BlackRock Large Cap Growth 3 LG BlackRock Inc. Large Cap Growth BlackRock Large Cap Value 80 BlackRock Inc Large Cap Value BlackRock Mid-Cap Value Equity 4 83 BlackRock Inc. Mid Cap Value Columbia SM Acorn Fund 17 Columbia Wanger Asset Management Mid Cap Growth Delaware Small Cap Core 3 2C Delaware Management Company Small Cap Blend Delaware VIP Small Cap Value 56 Delaware Management Company Small Cap Value Delaware VIP Value 61 Delaware Management Company Large Cap Value Fidelity VIP Contrafund 35 Fidelity Management & Research Company Large Cap Blend Fidelity VIP Mid Cap 84 Fidelity Management & Research Company Mid Cap Blend Franklin Growth Fund 58 Franklin Advisors, Inc. Mid Cap Growth FTVIPT Mutual Shares Securities 3 2J Franklin Mutual Advisors, LLC Large Cap Value Invesco Van Kampen Growth and Income Fund 28 Invesco Advisers, Inc. Large Cap Value Invesco Van Kampen Small Cap Growth Fund 76 Invesco Advisors, Inc. Small Cap Growth Janus Aspen Series Enterprise 3 64 Janus Capital Management, LLC Mid Cap Growth Janus Aspen Series Janus 70 Janus Capital Management, LLC Large Cap Growth LVIP Baron Growth Opportunities 3 1X LIAC/BAMCO Inc. Small Cap Growth LVIP Delaware Growth and Income Fund 11 LIAC/Delaware Management Company Large Cap Blend LVIP Delaware Social Awareness 33 LIAC/Delaware Management Company Large Cap Blend LVIP Delaware Special Opportunities L7 LIAC/Delaware Management Company Mid Cap Value LVIP Dimensional U.S. Equity Fund 57 Lincoln Investment Advisors Corporation Large Cap Blend LVIP Mid-Cap Value 38 LIAC/Wellington Management Company, LLP Mid Cap Value LVIP SSgA S&P 500 Index 27 LIAC/State Street Global Advisors Funds Management Large Cap Blend LVIP SSgA Small-Cap Index 36 LIAC/State Street Global Advisors Funds Management Small Cap Blend LVIP T. Rowe Price Growth Stock 29 LIAC/T. Rowe Price Associates, Inc. Large Cap Growth LVIP Vanguard Domestic Equity ETF 19 LIAC/Vanguard Large Cap Blend MFS VIT Growth 65 Massachusetts Financial Services Company Large Cap Growth MFS VIT Utilities 67 Massachusetts Financial Services Company Large Cap Value SSgA Russell All Cap Index Non-Lending Series* 23 State Street Global Advisors Funds Management Large Cap Blend * SSgA Russell Large Cap Growth Index Non-Lending Series 3 L9 State Street Global Advisors Funds Management Large Cap Growth SSgA Russell Large Cap Value Index Non-Lending Series 3 L8 State Street Global Advisors Funds Management Large Cap Value SSgA Russell Small Cap Growth Index Non-Lending Series 3 LC State Street Global Advisors Funds Management Small Cap Growth SSgA Russell Small Cap Value Index Non-Lending Series 3 LB State Street Global Advisors Funds Management Small Cap Value SSgA Russell Small/Mid Cap Index Non-Lending Series 24 State Street Global Advisors Funds Management Mid Cap Blend SSgA S&P MidCap Index Non-Lending Series 3 LA State Street Global Advisors Funds Management Mid Cap Blend Wells Fargo Advantage Discovery Fund 63 Wells Capital Management Small/Mid Cap Growth * The Investment Management Fee for SA23 is 0.30% and the Total SA fee is 0.36% for contracts established in the state of New York. 1 Subject to the plan fiduciary s decision, Lincoln believes that the identified investment options meet the criteria to be selected as a Qualified Default Investment Alternative. 2 The Guaranteed Stable Value Account is based on the ability of the issuing company to meet its financial obligations. Unlike the other separate accounts, the Guaranteed Stable Value Account does not have a stated expense ratio and is therefore excluded from the weighted average expense. 3 These investments are subaccounts of Separate Account 4K. 4 Effective July 31, 2012, the BlackRock Mid-Cap Value Equity Fund name will change to BlackRock Flexible Equity Fund. 6

7 Category/name Separate Account (SA) Investment advisor Investment style Invest. mgt. fee (%) Underlying mutual fund fee (%) Total SA fee (%) International Stock AllianceBernstein VPS Global Thematic Growth 31 AllianceBernstein L.P. Large Cap Growth American Funds Capital World Growth and Income Fund 3 1H Capital Research and Management Company Large Cap Blend American Funds EuroPacific Growth Fund 3 1I Capital Research and Management Company Large Cap Blend American Funds New Perspective Fund 3 1Q Capital Research and Management Company Large Cap Growth American Funds New World Fund 3 1R Capital Research and Management Company Large Cap Growth American Funds SMALLCAP World Fund 3 1S Capital Research and Management Company Mid Cap Growth BlackRock Energy & Resources 77 BlackRock Inc. Small Cap Value LVIP Cohen & Steers Global Real Estate Fund 55 LIAC/Cohen & Steers Capital Management Inc. Mid Cap Blend LVIP Mondrian International Value Fund 22 LIAC/Mondrian Investment Partners Limited Large Cap Value LVIP SSgA International Index Fund L5 LIAC/State Street Global Advisors Funds Management Large Cap Blend LVIP Templeton Growth 62 LIAC/Templeton Investment Counsel, LLC Large Cap Value LVIP Vanguard International Equity ETF 59 LIAC/Vanguard Large Cap Blend Oppenheimer Developing Markets Fund 94 OppenheimerFunds, Inc. Mid Cap Blend Bond American Funds American High-Income Trust SM 3 1C Capital Research and Management Company American Funds Bond Fund of America SM 3 1E Capital Research and Management Company American Funds Capital World Bond Fund 3 1G Capital Research and Management Company American Funds Intermediate Bond Fund of America 3 1M Capital Research and Management Company American Funds U.S. Government Securities Fund 3 1T Capital Research and Management Company Delaware VIP Diversified Income 93 Delaware Management Company Delaware VIP Limited-Term Diversified Income 87 Delaware Management Company Federated Government Ultrashort Duration Fund 14 Federated Investment Management Company Franklin High Income Fund 20 Franklin Advisers, Inc FTVIPT Templeton Global Bond Securities 86 Franklin Advisers, Inc LVIP BlackRock Inflation Protected Bond Fund 92 LIAC/BlackRock Inc LVIP Delaware Bond Fund 12 LIAC/Delaware Management Company LVIP SSgA Bond Index L6 LIAC/State Street Global Advisors Funds Management PIMCO Total Return LM Pacific Investment Management Company, LLC Allocation American Funds American Balanced Fund 1,3 1B Capital Research and Management Company Balanced American Funds Capital Income Builder 1,3 1F Capital Research and Management Company Balanced American Funds Income Fund of America 1,3 1L Capital Research and Management Company Balanced BlackRock Global Allocation 1,3 LE BlackRock Inc. Balanced Franklin Balanced 1,3 2R Franklin Advisers, Inc. Balanced FTVIPT Franklin Income Securities 1,3 2I Franklin Advisers, Inc. Balanced LVIP Delaware Foundation Aggressive Allocation 1 97 LIAC/Delaware Management Company Risk-based LVIP Delaware Foundation Conservative Allocation 1 95 LIAC/Delaware Management Company Risk-based LVIP Delaware Foundation Moderate Allocation 1 96 LIAC/Delaware Management Company Risk-based LVIP Protected Profile 2010 Fund 1 L1 Lincoln Investment Advisors Corporation Target Date LVIP Protected Profile 2020 Fund 1 L2 Lincoln Investment Advisors Corporation Target Date LVIP Protected Profile 2030 Fund 1 L3 Lincoln Investment Advisors Corporation Target Date LVIP Protected Profile 2040 Fund 1 L4 Lincoln Investment Advisors Corporation Target Date LVIP Protected Profile 2050 Fund 1 LL Lincoln Investment Advisors Corporation Target Date SSgA Real Asset Non-Lending Series 3 LD State Street Global Advisors Funds Management Balanced Vanguard LifeStrategy Conservative Growth Fund 30 Vanguard Risk-based Vanguard LifeStrategy Growth Fund 32 Vanguard Risk-based Vanguard LifeStrategy Moderate Growth Fund 21 Vanguard Risk-based Cash/Stable Value Guaranteed Account/Guaranteed Stable Value Account 2 Delaware Investment Advisers Total fees average

8 Overview of the investment options in the Lincoln Director SM program U.S. Stock Large-cap American Funds AMCAP Fund, SA1A Seeks to provide long-term growth of capital. It seeks to make your investment grow over time by investing primarily in stocks of U.S. companies with a record of above-average long-term growth. It may also invest in non-u.s. securities to a limited extent. American Funds American Mutual SM, SA1D Seeks to provide for the balanced accomplishment of three objectives current income, capital growth, and conservation of principal. It seeks to invest primarily in common stocks of companies that are likely to participate in the growth of the American economy and whose dividends are well protected. American Funds Fundamental Investors SM, SA1J Seeks to provide long-term growth of capital and income primarily through investments in common stocks of large, established companies that offer growth potential at reasonable prices. The Fund may also invest significantly in non-u.s. securities. American Funds Growth Fund of America, SA1K Seeks to provide long-term growth of capital through a diversified portfolio of common stocks. American Funds Investment Company of America SM, SA1N Seeks to provide long-term growth of capital and income, placing greater emphasis on future dividends than on current income. American Funds New Economy Fund, SA1P Seeks to provide long-term growth of capital through investments in services and information industries in the United States and around the world. American Funds Washington Mutual Investors Funds, SA1U Seeks to provide current income and the opportunity for growth of principal consistent with sound common stock investing. It invests primarily in common stocks of larger, more established companies that are listed on, or meet the financial listing requirements of, the New York Stock Exchange and have a strong record of earnings and dividends. BlackRock Capital Appreciation, SA81 Seeks to provide long-term growth of capital by investing in fundamentally sound companies with strong management, superior earnings growth prospects, and attractive relative valuations. BlackRock Equity Dividend, SALF The Fund seeks its investment objective of long-term total return and current income by investing primarily in investments that fund management believes will increase in value over the long term as well as provide current income. BlackRock Large Cap Growth, SALG Seeks long-term capital growth by investing primarily in a diversified portfolio of equity securities of large-cap companies located in the United States that fund management believes have good prospects for earnings growth. BlackRock Large Cap Value, SA80 Seeks to invest primarily in a diversified portfolio of equity securities of large-cap companies located in the U.S. that fund management believes are undervalued. Delaware VIP Value, SA61 Seeks long-term capital appreciation through investments in large-capitalization companies following a value-oriented research-based approach. Fidelity VIP Contrafund, SA35 Seeks long-term capital appreciation. FTVIPT Mutual Shares Securities, SA2J Seeks capital appreciation with income as a secondary goal. The Fund normally invests primarily in U.S. and foreign equity securities that the manager believes are undervalued. The Fund also invests, to a lesser extent, in risk arbitrage securities and distressed companies. Invesco Van Kampen Growth and Income Fund, SA28 Seeks income and long-term growth of capital. Janus Aspen Series Janus, SA70 Seeks long-term growth of capital in a manner consistent with the preservation of capital. Invests primarily in common stocks selected for their growth potential. Although it can invest in companies of any size, it generally invests in larger, more established issuers. 8

9 LVIP Delaware Growth and Income Fund, SA11 Seeks to maximize long-term capital appreciation. LVIP Delaware Social Awareness Fund, SA33 Seeks to maximize long-term capital appreciation (as measured by the change in the value of Fund shares over a period of three years or longer). This Fund invests in stocks of large-size companies that adhere to certain specific social criteria. LVIP Dimensional U.S. Equity Fund, SA57 Seeks long-term capital appreciation. LVIP SSgA S&P 500 Index Fund, SA27 Seeks to approximate as closely as practicable, before fees and expenses, the total rate of return of common stocks publicly traded in the United States, as represented by the S&P 500 Index. LVIP T. Rowe Price Growth Stock Fund, SA29 Seeks long-term growth of capital. LVIP Vanguard Domestic Equity ETF Fund, SA19 Seeks long-term capital appreciation. The Fund invests primarily in exchange-traded funds that invest in U.S. equity securities. MFS VIT Growth, SA65 The Series Seeks to provide long-term growth of capital by investing in companies that are expected to show earnings growth over time well above the growth rate of the overall economy and inflation; and have the products, technologies, management, market, and other characteristics usually necessary to become more widely recognized as growth companies. MFS VIT Utilities, SA67 Seeks capital growth and current income (income above that available from a portfolio invested entirely in equity securities). SSgA Russell All Cap Index Non-Lending Series, SA23 Seeks to replicate before expenses the Russell 3000 Index. SSgA Russell Large Cap Growth Index Non-Lending Series, SAL9 Seeks to gain exposure to medium U.S. companies by closely replicating the returns and characteristics of the Russell 1000 Growth Index, which is an unmanaged index composed of large-cap securities from the broad U.S. equity market. SSgA Russell Large Cap Value Index Non-Lending Series, SAL8 Seeks to gain exposure to medium U.S. companies by closely replicating the returns and characteristics of the Russell 1000 Value Index, which is an unmanaged index composed of largecap securities from the broad U.S. equity market. Mid-cap BlackRock Mid-Cap Value Equity, SA83 The fund manager is seeking mid-capitalization stocks that he believes are worth more than is indicated by current market price. Columbia SM Acorn Fund, SA17 Seeks long-term capital appreciation. Franklin Growth Fund, SA58 Seeks capital appreciation. Fidelity VIP Mid Cap, SA84 Seeks long-term growth of capital by investing primarily in common stocks. Janus Aspen Series Enterprise, SA64 Seeks long-term growth of capital. LVIP Delaware Special Opportunities Fund, SAL7 Seeks to maximize long-term capital appreciation (as measured by the change in the value of Fund shares over a period of three years or longer). This Fund invests in medium-sized companies deemed undervalued by management at the time of purchase. LVIP Mid-Cap Value Fund, SA38 Seeks to provide long-term capital appreciation. SSgA Russell Small/Mid Cap Index Non-Lending Series, SA24 Seeks to replicate the Russell Small Cap Completeness Index before expenses. SSgA S&P MidCap Index Non-Lending Series, SALA Seeks to gain exposure to medium U.S. companies by closely replicating the returns and characteristics of the S&P MidCap 400 Index, which is an unmanaged index composed of mid-cap securities from the broad U.S. equity market. 9

10 Overview of the investment options in the Lincoln Director SM program, cont d. Small/Mid-cap AllianceBernstein VPS Small/Mid Cap Value, SA39 Seeks long-term growth of capital. It invests primarily in a diversified portfolio of equity securities of small- to midcapitalization U.S. companies. For purposes of this policy, small- to mid-capitalization companies are those that, at the time of investment, fall within the capitalization range between the smallest company in the Russell 2500 TM Value Index, and the greater of $5 billion or the market capitalization of the largest company in the Russell 2500 Value Index. Russell 2500 Value Index: Measures the performance of those Russell 2500 companies with lower price-to-book ratios and lower forecasted growth values. Wells Fargo Advantage Discovery, SA63 Seeks to invest at least 80% of its net assets in investments of small-capitalization and mid-capitalization companies and normally invests predominantly in equity securities. SSgA Russell Small Cap Growth Index Non-Lending Series, SALC Seeks to gain exposure to small, growth-oriented U.S. companies by closely replicating the returns and characteristics of the Russell 2000 Growth Index, which is an unmanaged index composed of small-cap growth securities from the broad U.S. equity market. SSgA Russell Small Cap Value Index Non-Lending Series, SALB Seeks to gain exposure to small, value-oriented U.S. companies by closely replicating the returns and characteristics of the Russell 2000 Value Index, which is an unmanaged index composed of small-cap value securities from the broad U.S. equity market. Small-cap Delaware Small Cap Core, SA2C Seeks long-term capital appreciation. It invests primarily in stocks of small companies that the management believes have a combination of attractive valuations, growth prospects, and strong cash flows. Under normal conditions, at least 80% of the assets will be invested in small-cap companies. Delaware VIP Small Cap Value, SA56 Seeks capital appreciation by investing primarily in stocks of small-cap companies whose market values appear low relative to underlying value, or future earnings and growth potential. Invesco Van Kampen Small Cap Growth Fund, SA76 Seeks capital appreciation. LVIP Baron Growth Opportunities Fund, SA1X Seeks capital appreciation through long-term investments in securities of small- and medium-size companies with undervalued assets or favorable growth prospects. LVIP SSgA Small-Cap Index Fund, SA36 Seeks to approximate as closely as practicable, before fees and expenses, the performance of the Russell 2000 Index, which emphasizes stocks of small U.S. companies. 10

11 International Stock Large-cap AllianceBernstein VPS Global Thematic Growth, SA31 Seeks long-term growth of capital. The Portfolio pursues opportunistic growth by investing in a global universe of companies in multiple industries that may benefit from innovation. American Funds Capital World Growth and Income Fund, SA1H Seeks to provide long-term growth of capital with current income by investing in established, growing companies all over the world, including the United States. American Funds EuroPacific Growth Fund, SA1I Seeks to provide long-term growth of capital by investing in companies based outside the United States. American Funds New Perspective Fund, SA1Q Seeks to provide long-term growth of capital through investments all over the world, including the United States. American Funds New World Fund, SA1R Seeks long-term growth of capital by investing in stocks and bonds with significant exposure to countries that have developing economies and/or markets. Mid-cap American Funds SMALLCAP World Fund, SA1S Seeks to provide long-term growth of capital by investing in the stocks of smaller companies in the United States and around the world. LVIP Cohen & Steers Global Real Estate Fund, SA55 Seeks total return through a combination of current income and long-term capital appreciation. This Fund invests primarily in equity securities of companies in the real estate industry located throughout the world, including Real Estate Investment Trusts (REITs) and other publicly traded real estate companies. Oppenheimer Developing Markets Fund, SA94 Seeks aggressive, capital appreciation. Small-cap BlackRock Energy & Resources, SA77 Seeks to invest primarily in U.S. and international companies engaged in the exploration, production, refinement and distribution of energy and natural resources. LVIP Mondrian International Value Fund, SA22 Seeks long-term capital appreciation (as measured by the change in value of Fund shares over a period of three years or longer). LVIP SSgA International Index Fund, SAL5 Seeks to approximate, as closely as practicable before fees and expenses, the performance of a broad market index of non-u.s. foreign securities. LVIP Templeton Growth Fund, SA62 Seeks long-term capital growth through a flexible pricing policy of investing primarily in stocks of companies organized in the United States or in any foreign nation. LVIP Vanguard International Equity ETF Fund, SA59 Seeks long-term capital appreciation. 11

12 Overview of the investment options in the Lincoln Director SM program, cont d. Bond American Funds American High-Income Trust SM, SA1C Seeks to provide a high level of current income and, secondarily, capital appreciation by investing primarily in a broad range of higheryielding and generally lower-quality debt securities that also provide an opportunity to increase in value. American Funds Bond Fund of America SM, SA1E Seeks to maximize your level of current income and preserve your capital by investing primarily in bonds. Normally, it invests at least 80% of its assets in bonds and other debt securities. It invests a majority of its assets in debt securities rated A and above, including securities issued and guaranteed by the U.S. and other governments, and securities backed by mortgages and other assets. American Funds Capital World Bond Fund, SA1G Seeks to provide high, long-term total return consistent with prudent management by investing in quality fixed income securities issued by major world governments, and corporations around the world and in the United States. American Funds Intermediate Bond Fund of America, SA1M Seeks to provide current income and preservation of capital through a bond portfolio with an average effective maturity no greater than five years. American Funds U.S. Government Securities Fund, SA1T Seeks to provide a high level of current income and preservation of capital by investing primarily in securities that are guaranteed by the U.S. government. Normally, the Fund will invest its assets in securities guaranteed or sponsored by the U.S. government, and in cash and cash equivalents. At least 65% of the Fund s assets will be invested in securities that are guaranteed by the full faith and credit pledge of the U.S. government. Delaware VIP Diversified Income, SA93 Seeks maximum long-term total return, consistent with reasonable risk. Through rigorous research, seeks to uphold stringent risk control, including continuous assessments of change: geopolitical considerations, governmental policies, currency valuations, business cycles, and interest rates. Federated Government Ultrashort Duration Fund, SA14 The fund seeks to provide current income. To pursue its objective, the fund invests in short-term U.S. government securities. The fund invests in U.S. government and government agency securities, including mortgage-backed securities. Emphasizes short-term government securities with an overall dollar-weighted average duration of one year or less. Franklin High Income Fund, SA20 Seeks high level of current income. FTVIPT Templeton Global Bond Securities, SA86 The Fund normally invests at least 80% of its net assets in bonds, which include debt securities of any maturity, such as bonds, notes, bills, and debentures. The Fund normally invests at least 40% of its net assets in foreign securities, may invest a portion of its total assets in bonds rated below investment grade, and places a significant portion of its assets in emerging markets. LVIP BlackRock Inflation Protected Bond Fund, SA92 The fund seeks to maximize real return consistent with preservation of real capital and prudent investment management. To pursue its objective, the fund invests in inflation-indexed bonds of varying maturities. LVIP Delaware Bond Fund, SA12 The fund seeks to provide maximum current income consistent with a prudent investment strategy. To pursue its objective, the fund invests in a diverse group of fixed-income securities. LVIP SSgA Bond Index, SAL6 Seeks to match, as closely as practicable before fees and expenses, the performance of the Barclays Capital Aggregate Bond Index, which is an unmanaged index composed of securities from the Barclays Capital Government/Corporate Bond Index, Mortgage- Backed Securities Index, and the Asset-Backed Securities Index including securities that are of investment-grade quality or better, and have at least one year to maturity. PIMCO Total Return, SALM The Fund seeks maximum total return, consistent with preservation of capital and prudent investment management. Delaware VIP Limited-Term Diversified Income, SA87 Seeks a high, stable level of current income while attempting to minimize fluctuations in principal and provide maximum liquidity. 12

13 Allocation American Funds American Balanced Fund, SA1B Seeks to provide conservation of capital, current income, and longterm growth of capital and income by investing in stocks, bonds, and other fixed income securities. The Fund also invests in securities issued and guaranteed by the U.S. government. Normally, the Fund will maintain at least 50% of the value of its assets in common stocks and at least 25% of the value of its assets in debt securities, including money market securities. American Funds Capital Income Builder, SA1F Seeks to provide above-average current income, a growing stream of income, and growth of capital. Secondarily, it strives to make your investment grow over time. It invests primarily in a broad range of income-producing securities, including stocks with a history of, or potential for, increasing dividends. It may also invest significantly in non-u.s. securities. American Funds Income Fund of America, SA1L Seeks to provide current income and, secondarily, growth of capital through a flexible mix of equity and debt instruments. BlackRock Global Allocation, SALE The fund seeks to provide current income. To pursue its objective, the fund invests in short-term U.S. government securities. The fund invests in U.S. government and government agency securities, including mortgage-backed securities. Emphasizes short-term government securities with an overall dollar-weighted average duration of one year or less. Franklin Balanced, SA2R Seeks to provide above-average income consistent with the prudent employment of capital (compared with a portfolio entirely invested in equity securities). Its secondary objective is to provide reasonable opportunity for growth of capital and income. FTVIPT Franklin Income Securities, SA2I Seeks to maximize income while maintaining prospects for capital appreciation. The Fund normally invests in both equity and debt securities. The Fund seeks income by investing in corporate, foreign, and U.S. Treasury bonds, as well as stocks with dividend yields the manager believes are attractive. LVIP Delaware Foundation Aggressive Allocation, SA97 Seeks long-term capital growth. LVIP Delaware Foundation Conservative Allocation, SA95 Seeks a combination of current income and preservation of capital with capital appreciation. LVIP Delaware Foundation Moderate Allocation, SA96 Seeks capital appreciation with current income as a secondary objective. LVIP Protected Profile 2010 Fund, SAL1 This Protected Profile Fund seeks the highest total return over time with an increased emphasis on capital preservation as the target date approaches. Thereafter, an emphasis will be placed on high current income with a secondary focus on capital appreciation. Invests in an asset allocation between stocks and bonds, and also employs an actively managed risk-management overlay ( protection substrategy ) that will invest in exchange-traded futures to seek to control overall fund volatility and hedge downside equity market risk. 13

14 Overview of the investment options in the Lincoln Director SM program (cont d.) LVIP Protected Profile 2020 Fund, SAL2 This Protected Profile Fund seeks the highest total return over time with an increased emphasis on capital preservation as the target date approaches. Thereafter, an emphasis will be placed on high current income with a secondary focus on capital appreciation. Invests in an asset allocation between stocks and bonds, and also employs an actively managed risk-management overlay ( protection substrategy ) that will invest in exchange-traded futures to seek to control overall fund volatility and hedge downside equity market risk. LVIP Protected Profile 2030 Fund, SAL3 This Protected Profile Fund seeks the highest total return over time with an increased emphasis on capital preservation as the target date approaches. Thereafter, an emphasis will be placed on high current income with a secondary focus on capital appreciation. Invests in an asset allocation between stocks and bonds, and also employs an actively managed risk-management overlay ( protection substrategy ) that will invest in exchange-traded futures to seek to control overall fund volatility and hedge downside equity market risk. LVIP Protected Profile 2040 Fund, SAL4 This Protected Profile Fund seeks the highest total return over time with an increased emphasis on capital preservation as the target date approaches. Thereafter, an emphasis will be placed on high current income with a secondary focus on capital appreciation. Invests in an asset allocation between stocks and bonds, and also employs an actively managed risk-management overlay ( protection substrategy ) that will invest in exchange-traded futures to seek to control overall fund volatility and hedge downside equity market risk. SSgA Real Asset Non-Lending Series, SALD Seeks to match the returns of a composite benchmark of the REIT Index (30%), S&P GSCI Index (25%), capitalization-weighted MSCI World Natural Resources Stocks Index (25%), and Barclays Capital Inflation Notes Index (20%). Vanguard LifeStrategy Conservative Growth Fund, SA30 Seeks current income and low to moderate capita appreciation. Vanguard LifeStrategy Growth Fund, SA32 Seeks capital appreciation and some current income. Vanguard LifeStrategy Moderate Growth Fund, SA21 Seeks capital appreciation and a low to moderate level of current income. Cash/Stable Value Guaranteed Account/Guaranteed Stable Value Account This is a conservative account because of its minimum interest guarantee. The principal is also guaranteed. Guarantees are backed by the ability of the issuing company to meet its financial obligations. LVIP Protected Profile 2050 Fund, SALL This Protected Profile Fund seeks the highest total return over time with an increased emphasis on capital preservation as the target date approaches. Thereafter, an emphasis will be placed on high current income with a secondary focus on capital appreciation. Invests in an asset allocation primarily between domestic and foreign stocks, and also employs an actively managed risk-management overlay ( protection substrategy ) that will invest in exchange-traded futures to seek to control overall fund volatility and hedge downside equity market risk. 14

15 Investing internationally involves risks not associated with investing solely in the United States, such as currency fluctuation, political risk, differences in accounting, and the limited availability of information. Funds that invest in small- and/or mid-size company stocks typically involve greater risk, particularly in the short term, than those investing in larger, more established companies. An index is unmanaged, and one cannot invest directly in an index. Funds that concentrate investments in one region or industry may carry greater risk than more broadly diversified funds. The return of principal in bond portfolios is not guaranteed. Bond portfolios have the same interest rate, inflation, credit, prepayment and market risks that are associated with the underlying bonds owned by the fund (or account). Asset allocation does not ensure a profit, nor protect against loss in a declining market. High yield portfolios may invest in high-yield or lower-rated fixed income securities (junk bonds), which may experience higher volatility and increased risk of nonpayment or default. REITs involve risks such as refinancing, economic conditions in the real estate industry, changes in property values, dependency on real estate management, and other risks associated with a portfolio that concentrates its investments in one sector or geographic region. Investing in emerging markets can be riskier than investing in well-established foreign markets. International investing involves special risks not found in domestic investing, including increased political, social, and economic instability. THE LVIP PROTECTED PROFILE FUNDS ARE NOT GUARANTEED OR INSURED BY LINCOLN, NOR BY ANY OTHER INSURANCE COMPANY OR ENTITY. THE PROTECTION STRATEGY USED BY THESE FUNDS IS SEPARATE AND DISTINCT FROM ANY ANNUITY OR INSURANCE CONTRACT RIDERS OR FEATURES. Each profile fund is operated as a fund of funds, which invests primarily in other funds rather than in individual securities. Funds of this nature may be more expensive other investment options. An investment in a separate account is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. Although the separate account seeks to preserve capital, it is possible to lose money by investing in this separate account. When interest rates rise, the value of the fixed-income securities generally decline. Likewise, when interest rates fall, the value of fixed-income securities generally increase. There is no assurance that private guarantors or insurers will meet their obligations. Collective trusts are non-deposit investment products, which are not bank deposits or obligations, are not guaranteed by any bank, and are not insured or guaranteed by the FDIC, the Federal Reserve Board, or any other government agency. Exchange-traded funds (ETFs) in this lineup are available through collective trusts or mutual funds. Investors cannot invest directly in an ETF. The target date is the approximate date when investors plan to retire or start withdrawing their money. Some target date funds make no changes in asset allocations after the target date is reached; other target-date funds continue to make asset allocation changes following the target date (see prospectus for the fund s allocation strategy). The principal value is not guaranteed at any time, including at the target date.

16 HELPING PEOPLE FACE THE FUTURE WITH CONFIDENCE At Lincoln Financial Group, we ve spent more than 100 years living up to the character of our namesake: integrity, honesty, and the belief in a better tomorrow. We provide advice and solutions to help people save for tomorrow, secure and maximize their income, protect themselves and their loved ones, and prepare for the unexpected. INCOME LIFE RETIREMENT GROUP BENEFITS Not a deposit Not FDIC-insured Not insured by any federal government agency Not guaranteed by any bank or savings association May go down in value 2012 Lincoln National Corporation Lincoln Financial Group 150 N. Radnor-Chester Road Radnor, PA LincolnFinancial.com Login: Employer Retirement Plans Lincoln Financial Group is the marketing name for Lincoln National Corporation and its affiliates. Affiliates are separately responsible for their own financial and contractual obligations. LCN POD 6/12 Z12 Order code: DIR-INV-BRC007 This material was prepared to support the promotion and marketing of investment and insurance products. Lincoln Financial Group affiliates, their distributors, and their respective employees, representatives, and/ or insurance agents do not provide tax, accounting, or legal advice. Any tax statements contained herein were not intended or written to be used, and cannot be used, for the purpose of avoiding U.S. federal, state, or local tax penalties. Please consult your own independent advisor as to any tax, accounting, or legal statements made herein. A group variable annuity is a long-term investment product designed particularly for retirement purposes. Group annuities contain both investment and insurance components and have fees and expenses, including administrative and advisory fees. Optional features may be available for an additional charge. The annuity s value fluctuates with the market value of the underlying investment options, and all assets accumulate tax-deferred. Withdrawals may carry tax consequences, including possible tax penalties. Lincoln Director SM group variable annuity (contract form and state variations) is issued by The Lincoln National Life Insurance Company, Fort Wayne, IN, and distributed by Lincoln Financial Distributors, Inc., a broker/dealer. The Lincoln National Life Insurance Company does not solicit business in the state of New York, nor is it authorized to do so. Contractual obligations are backed by the claims-paying ability of The Lincoln National Life Insurance Company. Contracts sold in New York (contract form 19476NY-A 7/04) are issued by Lincoln Life & Annuity Company of New York, Syracuse, NY, and distributed by Lincoln Financial Distributors, Inc., a broker/dealer. Contractual obligations are backed by the claims-paying ability of Lincoln Life & Annuity Company of New York. Products and features are subject to state availability. There is no additional tax-deferred benefit from an annuity contract purchased in an IRA or other tax-qualified plan.