As filed with the Securities and Exchange Commission on April 28, 2015

1933 Act Registration No. 333-193272

1940 Act Registration No. 811-08517

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-4

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

POST-EFFECTIVE AMENDMENT NO. 1 /X/

and

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940

AMENDMENT NO. 439 /X/

Lincoln Life Variable Annuity Account N
(Exact Name of Registrant)

Lincoln Investor Advantage^®

THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
(Name of Depositor)

1300 South Clinton Street
Post Office Box 1110

Fort Wayne, Indiana 46801

(Address of Depositor’s Principal Executive Offices)

Depositor’s Telephone Number, Including Area Code: (260) 455-2000

Adam C. Ciongoli, Esquire

The Lincoln National Life Insurance Company
1300 South Clinton Street
Post Office Box 1110

Fort Wayne, IN 46801

(Name and Address of Agent for Service)

Copy to:

Scott C. Durocher, Esquire

The Lincoln National Life Insurance Company
350 Church Street

Hartford, Connecticut 06103

Approximate Date of Proposed Public Offering: Continuous

It is proposed that this filing will become effective:

/ / immediately upon filing pursuant to paragraph (b) of Rule 485

/x/ on May 1, 2015, pursuant to paragraph (b) of Rule 485

/ / 60 days after filing pursuant to paragraph (a)(1) of Rule 485

/ / on __________, pursuant to paragraph (a)(1) of Rule 485

Title of Securities being registered:

Interests in a separate account under individual flexible
payment deferred variable annuity contracts.

Lincoln Investor Advantage^® Individual Variable Annuity Contracts
Lincoln Life Variable Annuity Account N  

May 1, 2015

Home Office:
The Lincoln National Life Insurance Company
1300 South Clinton Street
Fort Wayne, IN 46802
www.LincolnFinancial.com
1-888-868-2583

This prospectus describes individual flexible premium deferred variable annuity contracts that are issued by The Lincoln National Life Insurance Company (Lincoln Life or Company). Two separate contracts are offered in this prospectus, each of which has different features and charges. You must choose from one of the following contracts:

• Lincoln Investor Advantage^® B-Share

• Lincoln Investor Advantage^® C-Share

In deciding which contract to purchase, you should consider which features are important to you, and the amount of separate account and surrender charges you are willing to bear relative to your needs. In deciding whether to purchase any of the optional benefits, you should consider the desirability of the benefit relative to its additional cost and to your needs.

These contracts can be purchased as either nonqualified annuities or qualified retirement annuities under Sections 408 (IRAs) and 408A (Roth IRAs) of the tax code. Generally, you do not pay federal income tax on the contract's growth until it is paid out. You will receive tax deferral for an IRA whether or not the funds are invested in an annuity contract. Further, if your contract is a Roth IRA, you generally will not pay income tax on a distribution, provided certain conditions are met. Therefore, there should be reasons other than tax deferral for acquiring a qualified contract. The contract is designed to accumulate Contract Value and to provide retirement income over a certain period of time or for life subject to certain conditions.

The benefits offered under this contract may be a variable or fixed amount, if available, or a combination of both. This contract also offers a Death Benefit payable upon the death of the Contractowner or Annuitant. This prospectus is used by both new purchasers and current Contractowners.

The state in which your contract is issued will govern whether or not certain features, riders, restrictions, limitations, charges and fees will apply to your contract. All material state variations are discussed in this prospectus, however, non-material variations may not be discussed. You should refer to your contract regarding state-specific features. Please check with your registered representative regarding their availability.

The minimum initial Purchase Payment for the contract is $10,000. The minimum initial Purchase Payment for C-Share nonqualified contracts where i4LIFE^® Advantage is elected, and where the Contractowner, joint owner and/or Annuitant are ages 86 to 90 (subject to additional terms and limitations, and Home Office approval) is $50,000. Additional Purchase Payments may be made to the contract, subject to certain restrictions, and must be at least $100 per payment ($25 if transmitted electronically), and at least $300 annually.

Except as noted below, you choose whether your Contract Value accumulates on a variable or a fixed (guaranteed) basis or both. Your contract may not offer a fixed account or if permitted by your contract, we may discontinue accepting Purchase Payments or transfers into the fixed side of the contract at any time. If any portion of your Contract Value is in the fixed account, we promise to pay you your principal and a minimum interest rate. For the life of your contract or during certain periods, we may impose restrictions on the fixed account.

We offer variable annuity contracts that may offer different investment options, features, and optional benefits. You should carefully consider whether or not this contract is the best product for you.

All Purchase Payments for benefits on a variable basis will be placed in Lincoln Life Variable Annuity Account N (Variable Annuity Account [VAA]). The VAA is a segregated investment account of Lincoln Life. You take all the investment risk on the Contract Value and the retirement income for amounts placed into one or more of the contract’s variable options. If the Subaccounts you select make money, your Contract Value goes up; if they lose money, it goes down. How much it goes up or down depends on the performance of the Subaccounts you select. We do not guarantee how any of the variable options or their funds will perform. Also, neither the U.S. Government nor any federal agency insures or guarantees your investment in the contract. The contracts are not bank deposits and are not endorsed by any bank or government agency.

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The available funds are listed below:

AIM Variable Insurance Funds (Invesco Variable Insurance Funds)

Invesco V.I. Balanced-Risk Allocation Fund

Invesco V.I. Comstock Fund

Invesco V.I. Diversified Dividend Fund

Invesco V.I. Equally-Weighted S&P 500 Fund**

Invesco V.I. Equity and Income Fund

Invesco V.I. International Growth Fund

AllianceBernstein Variable Products Series Fund

AB VPS Small/Mid Cap Value Portfolio
(formerly AllianceBernstein VPS Small/Mid Cap Value Portfolio)

ALPS Variable Investment Trust

ALPS/Alerian Energy Infrastructure Portfolio

ALPS/Red Rocks Listed Private Equity Portfolio*

ALPS/Stadion Tactical Defensive Portfolio

ALPS/Stadion Tactical Growth Portfolio*

American Funds Insurance Series^®

American Funds Asset Allocation Fund

American Funds Blue Chip Income and Growth Fund

American Funds Capital Income Builder^®

American Funds Global Growth Fund

American Funds Global Small Capitalization Fund

American Funds Growth Fund

American Funds Growth-Income Fund

American Funds International Fund

American Funds Mortgage Fund^SM

American Funds New World Fund^®

BlackRock Variable Series Funds, Inc.

BlackRock Global Allocation V.I. Fund

BlackRock iShares^® Alternative Strategies V.I. Fund*

Delaware VIP^® Trust

Delaware VIP^® Diversified Income Series

Delaware VIP^® Emerging Markets Series

Delaware VIP^® REIT Series

Delaware VIP^® Small Cap Value Series

Delaware VIP^® Smid Cap Growth Series

Delaware VIP^® U.S. Growth Series

Delaware VIP^® Value Series

Deutsche Variable Series II

Deutsche Alternative Asset Allocation VIP Portfolio

Eaton Vance Variable Trust

Eaton Vance VT Floating-Rate Income Fund

Fidelity^® Variable Insurance Products

Fidelity^® VIP Contrafund^® Portfolio

Fidelity^® VIP Growth Portfolio

Fidelity^® VIP Mid Cap Portfolio

Fidelity^® VIP Strategic Income Portfolio*

First Trust Variable Insurance Trust

First Trust Multi Income Allocation Portfolio

First Trust/Dow Jones Dividend & Income Allocation Portfolio***

Franklin Templeton Variable Insurance Products Trust

Franklin Founding Funds Allocation VIP Fund

Franklin Income VIP Fund

Franklin Mutual Shares VIP Fund

Franklin Rising Dividends VIP Fund

Franklin Small Cap Value VIP Fund

Franklin Small-Mid Cap Growth VIP Fund

Templeton Foreign VIP Fund

Templeton Global Bond VIP Fund

Goldman Sachs Variable Insurance Trust

Goldman Sachs VIT Money Market Fund

Goldman Sachs VIT Multi-Strategy Alternatives Portfolio

Goldman Sachs VIT Strategic Income Fund

Hartford Series Fund, Inc.

Hartford Capital Appreciation HLS Fund

Ivy Funds Variable Insurance Portfolios

Ivy Funds VIP Asset Strategy Portfolio

Ivy Funds VIP Energy Portfolio

Ivy Funds VIP High Income Portfolio

Ivy Funds VIP Micro Cap Growth Portfolio

Ivy Funds VIP Mid Cap Growth Portfolio

Ivy Funds VIP Science and Technology Portfolio

JPMorgan Insurance Trust

JPMorgan Insurance Trust Global Allocation Portfolio*

JPMorgan Insurance Trust Income Builder Portfolio*

JPMorgan Insurance Trust Intrepid Mid Cap Portfolio

Legg Mason Partners Variable Equity Trust

ClearBridge Variable Aggressive Growth Portfolio

ClearBridge Variable Mid Cap Core Portfolio

Lincoln Variable Insurance Products Trust

LVIP American Balanced Allocation Fund

LVIP American Growth Allocation Fund

LVIP American Preservation Fund

LVIP AQR Enhanced Global Strategies Fund

LVIP Baron Growth Opportunities Fund

LVIP BlackRock Emerging Markets Managed Volatility Fund
(formerly LVIP BlackRock Emerging Markets RPM Fund)

LVIP BlackRock Equity Dividend Managed Volatility Fund
(formerly LVIP BlackRock Equity Dividend RPM Fund)

LVIP BlackRock Inflation Protected Bond Fund

LVIP BlackRock Multi-Asset Income Fund

LVIP Clarion Global Real Estate Fund

LVIP Delaware Bond Fund

LVIP Delaware Diversified Floating Rate Fund

LVIP Delaware Social Awareness Fund

LVIP Dimensional International Core Equity Fund*

LVIP Dimensional International Core Equity Managed Volatility Fund
(formerly LVIP Dimensional Non-U.S. Equity RPM Fund)

LVIP Dimensional U.S. Core Equity 1 Fund*

LVIP Dimensional U.S. Core Equity 2 Fund*

LVIP Dimensional U.S. Core Equity 2 Managed Volatility Fund
(formerly LVIP Dimensional U.S. Equity RPM Fund)

LVIP Dimensional/Vanguard Total Bond Fund

LVIP Franklin Templeton Multi-Asset Opportunities Fund

LVIP Global Growth Allocation Managed Risk Fund
(formerly LVIP Managed Risk Profile Growth Fund)

LVIP Global Income Fund

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LVIP Global Moderate Allocation Managed Risk Fund
(formerly LVIP Managed Risk Profile Moderate Fund)

LVIP Goldman Sachs Income Builder Fund

LVIP JPMorgan High Yield Fund

LVIP JPMorgan Mid Cap Value Managed Volatility Fund
(formerly LVIP JPMorgan Mid Cap Value RPM Fund)

LVIP MFS International Growth Fund

LVIP MFS Value Fund

LVIP Mondrian International Value Fund

LVIP Multi-Manager Global Equity Managed Volatility Fund
(formerly LVIP Multi-Manager Global Equity RPM Fund)

LVIP PIMCO Low Duration Bond Fund

LVIP SSgA Bond Index Fund

LVIP SSgA Conservative Structured Allocation Fund

LVIP SSgA Developed International 150 Fund

LVIP SSgA Emerging Markets 100 Fund

LVIP SSgA Global Tactical Allocation Managed Volatility Fund
(formerly LVIP SSgA Global Tactical Allocation RPM Fund)

LVIP SSgA International Index Fund

LVIP SSgA Large Cap 100 Fund

LVIP SSgA Moderate Structured Allocation Fund

LVIP SSgA Moderately Aggressive Structured Allocation Fund

LVIP SSgA S&P 500 Index Fund**

LVIP SSgA Small-Cap Index Fund

LVIP SSgA Small-Mid Cap 200 Fund

LVIP T. Rowe Price Growth Stock Fund

LVIP T. Rowe Price Structured Mid-Cap Growth Fund

LVIP Templeton Growth Managed Volatility Fund
(formerly LVIP Templeton Growth RPM Fund)

LVIP Vanguard Domestic Equity ETF Fund

LVIP Vanguard International Equity ETF Fund

LVIP Wellington Capital Growth Fund
(formerly LVIP Capital Growth Fund)

LVIP Wellington Mid-Cap Value Fund
(formerly LVIP Mid-Cap Value Fund)

Lord Abbett Series Fund, Inc.

Lord Abbett Series Fund Bond Debenture Portfolio

Lord Abbett Series Fund Developing Growth Portfolio

Lord Abbett Series Fund Short Duration Income Portfolio

MFS^® Variable Insurance Trust

MFS^® VIT Growth Series

MFS^® VIT International Value Series

MFS^® VIT Utilities Series

Oppenheimer Variable Account Funds

Oppenheimer International Growth Fund/VA

Oppenheimer Main Street Small Cap Fund^®/VA

PIMCO Variable Insurance Trust

PIMCO VIT All Asset All Authority Portfolio

PIMCO VIT CommodityRealReturn^® Strategy Portfolio

PIMCO VIT Emerging Markets Bond Portfolio

PIMCO VIT Unconstrained Bond Portfolio

Putnam Variable Trust

Putnam VT Absolute Return 500 Fund

Putnam VT Global Health Care Fund*

Putnam VT Income Fund*

Rydex Variable Trust

Guggenheim VT Long Short Equity

Guggenheim VT Multi-Hedge Strategies

SEI Insurance Products Trust

SEI VP Market Growth Strategy Fund

SEI VP Market Plus Strategy Fund

Transparent Value Trust

Transparent Value Directional Allocation VI Portfolio

The Universal Institutional Funds, Inc.

UIF Global Infrastructure Portfolio

Van Eck VIP Trust

Van Eck VIP Global Hard Assets Fund

Virtus Variable Insurance Trust

Virtus Multi-Sector Fixed Income Series

Virtus Premium AlphaSector^® Series

* Not all funds are available in all contracts. Refer to the Description of the Funds section of this prospectus for specific information regarding availability of funds.

** The Index this portfolio is managed to (the “Index”) is a product of S&P Dow Jones Indices LLC (“SPDJI”) and has been licensed for use by one or more of the portfolio’s service providers (“Licensee”). Standard & Poor’s^® and S&P^® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”); Dow Jones^® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”); and these trademarks have been licensed for use by SPDJI. S&P^®, S&P GSCI^® and the Index are trademarks of S&P and have been licensed for use by SPDJI and its affiliates and sublicensed for certain purposes by Licensee. The Index is not owned, endorsed, or approved by or associated with any additional third party. Licensee’s product(s) is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates, or their third party licensors and none of SPDJI, Dow Jones, S&P nor their respective affiliates or third party licensors make any representation regarding the advisability of investing in such product(s).

***Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). The trademark has been licensed to S&P Dow Jones Indices LLC and have been sublicensed for use for certain purposes by First Trust Advisors L.P. 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.

Refer to the Description of the Funds section of this prospectus for specific information regarding availability of funds.

This prospectus gives you information about the contract that you should know before you decide to buy a contract and make Purchase Payments. You should also review the prospectuses for the funds and keep all prospectuses for future reference.

Neither the SEC nor any state securities commission has approved this contract or determined that this prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

More information about the contract is in the current Statement of Additional Information (SAI), dated the same date as this prospectus. The SAI is incorporated by reference into this prospectus and is legally part of this prospectus. For a free copy of the SAI, write:

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The Lincoln National Life Insurance Company, PO Box 2348, Fort Wayne, IN 46801-2348, or call 1-888-868-2583. The SAI and other information about Lincoln Life and the VAA are also available on the SEC's website (http://www.sec.gov). There is a table of contents for the SAI on the last page of this prospectus.

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Table of Contents

Item	Page
Special Terms	6
Expense Tables	8
Summary of Common Questions	17
The Lincoln National Life Insurance Company	19
Variable Annuity Account (VAA)	20
Investments of the Variable Annuity Account	20
Charges and Other Deductions	28
The Contracts	31
Contracts Offered in this Prospectus	31
Purchase Payments	32
Large Account Credit	33
Transfers On or Before the Annuity Commencement Date	34
Surrenders and Withdrawals	37
Death Benefit	38
i4LIFE® Advantage	40
Annuity Payouts	43
Fixed Side of the Contract	45
Distribution of the Contracts	46
Federal Tax Matters	47
Additional Information	53
Voting Rights	53
Return Privilege	53
Other Information	54
Legal Proceedings	54
Contents of the Statement of Additional Information (SAI) for Lincoln Life Variable Annuity Account N	56
Appendix A—Condensed Financial Information	A-1
B-Share	A-1
C-Share	A-6

5

Special Terms

In this prospectus, the following terms have the indicated meanings:

Access Period—Under i4LIFE^® Advantage, a defined period of time during which we make Regular Income Payments to you while you still have access to your Account Value. This means that you may make withdrawals, surrender the contract, and have a Death Benefit.

Account or Variable Annuity Account (VAA)—The segregated investment account, Account N, into which we set aside and invest the assets for the variable side of the contract offered in this prospectus.

Account Value—Under i4LIFE^®Advantage, the initial Account Value is the Contract Value on the Valuation Date that i4LIFE^® Advantage is effective (or initial Purchase Payment if i4LIFE^®Advantage is purchased at contract issue), less any applicable premium taxes. During the Access Period, the Account Value on a Valuation Date equals the total value of all of the Contractowner's Accumulation Units plus the Contractowner's value in the fixed account, reduced by Regular Income Payments and withdrawals.

Account Value Death Benefit—provides a Death Benefit equal to the Contract Value on the Valuation Date the Death Benefit is approved by us for payment.

Accumulation Unit—A measure used to calculate Contract Value for the variable side of the contract before the Annuity Commencement Date and to calculate the i4LIFE^® Advantage Account Value during the Access Period.

Annuitant—The person upon whose life the annuity benefit payments are based, and upon whose death a Death Benefit may be paid.

Annuity Commencement Date—The Valuation Date when funds are withdrawn or converted into Annuity Units or fixed dollar payout for payment of retirement income benefits under the Annuity Payout option you select (other than i4LIFE^® Advantage).

Annuity Payout—A regularly scheduled payment (under any of the available annuity options) that occurs after the Annuity Commencement Date (or Periodic Income Commencement Date if i4LIFE^® Advantage has been elected). Payments may be variable or fixed, or a combination of both.

Annuity Unit—A measure used to calculate the amount of Annuity Payouts for the variable side of the contract after the Annuity Commencement Date. See Annuity Payouts.

Beneficiary—The person you choose to receive any Death Benefit paid if you die before the Annuity Commencement Date.

Contractowner (you, your, owner)—The person who can exercise the rights within the contract (decides on investment allocations, transfers, payout option, designates the Beneficiary, etc.). Usually, but not always, the Contractowner is the Annuitant.

Contract Value (may be referred to as Account Value in marketing materials)—At any given time before the Annuity Commencement Date, the total value of all Accumulation Units of a contract plus the value of the fixed side of the contract, if any.

Contract Year—Each 12-month period starting with the effective date of the contract and starting with each contract anniversary after that.

Death Benefit—Before the Annuity Commencement Date, the amount payable to your designated Beneficiary if the Contractowner dies. As an alternative, the Contractowner may receive a Death Benefit on the death of the Annuitant prior to the Annuity Commencement Date.

Good Order—The actual receipt at our Home Office of the requested transaction in writing or by other means we accept, along with all information and supporting legal documentation necessary to effect the transaction. The forms we provide will identify the necessary documentation. We may, in our sole discretion, determine whether any particular transaction request is in Good Order, and we reserve the right to change or waive any Good Order requirements at any time.

Large Account Credit–The additional amount credited to the contract if a threshold of $1 million of value in your Subaccounts is met.

Lifetime Income Period—Under i4LIFE^® Advantage, the period of time following the Access Period during which we make Regular Income Payments to you (and Secondary Life, if applicable) for the rest of your life. During the Lifetime Income Period, you will no longer have access to your Account Value or receive a Death Benefit.

Lincoln Life (we, us, our, Company)—The Lincoln National Life Insurance Company.

Periodic Income Commencement Date—The Valuation Date on which the amount of i4LIFE^® Advantage Regular Income Payments are determined.

Purchase Payments—Amounts paid into the contract other than Large Account Credits.

Regular Income Payments—The variable, periodic income payments paid under i4LIFE^® Advantage.

Secondary Life—Under i4LIFE^® Advantage, the person designated by the Contractowner upon whose life the annuity payments will also be contingent.

Selling Group Individuals—For the B-Share contract, a Contractowner who meets one of the following criteria at the time of the contract purchase and who purchases the contract without the assistance of a registered representative under contract with us:

• Employees and registered representatives of any member

6

	of the selling group (broker-dealers who have selling agreements with us for the products described in this prospectus) and their spouses and minor children.
•	Officers, directors, trustees or bona-fide full-time employees and their spouses and minor children of Lincoln Financial Group or any of the investment advisers of the funds currently being offered, or their affiliated or managed companies.

Subaccount—Each portion of the VAA that reflects investments in Accumulation and Annuity Units of a class of a particular

fund available under the contracts. There is a separate Subaccount which corresponds to each class of a fund.

Valuation Date—Each day the New York Stock Exchange (NYSE) is open for trading.

Valuation Period—The period starting at the close of trading (normally 4:00 p.m. New York time) on each day that the NYSE is open for trading (Valuation Date) and ending at the close of such trading on the next Valuation Date.

7

Expense Tables

The following tables describe the fees and expenses that you will pay when buying, owning, and surrendering the contract.

The first table describes the fees and expenses that you will pay at the time that you buy the contract, surrender the contract, or transfer Contract Value between investment options, and/or (if available) the fixed account. State premium taxes may also be deducted. The premium tax rates range from zero to 5%.

CONTRACTOWNER TRANSACTION EXPENSES

Accumulation Phase:
	B-Share	C-Share
Surrender charge (as a percentage of Purchase Payments surrendered/withdrawn):1	7.0%	N/A

¹ The surrender charge percentage is reduced over a 5-year period at the following rates: 7%, 6%, 5%, 4%, 3%. We may reduce or waive this charge in certain situations. There is no surrender charge for C-Share. See Charges and Other Deductions - Surrender Charge.

The following tables describe the fees and expenses that you will pay periodically during the time that you own the contract, not including fund fees and expenses. Only one table will apply to a given Contractowner. The tables differ based on whether the Contractowner has purchased the i4LIFE^® Advantage rider.

• Table A reflects the expenses for a contract that has not elected i4LIFE^® Advantage (Base contract).

• Table B reflects the expenses for a contract that has elected i4LIFE^® Advantage.

TABLE A

	B-Share	C-Share
Annual Account Fee:1	$35	$35
Separate Account Annual Expenses (as a percentage of average daily net assets in the Subaccounts):2
Account Value Death Benefit
Mortality and Expense Risk Charge	1.00%	1.15%
Administrative Charge	0.10%	0.10%
Total Separate Account Expenses	1.10%	1.25%

1	The account fee will be waived if your Contract Value is $100,000 or more at the end of any particular Contract Year. This account fee will be waived after the fifteenth Contract Year. The account fee will also be deducted upon full surrender of the contract if the Contract Value is less than $100,000. We do not assess the account fee on contracts issued to Selling Group Individuals.
2	The mortality and expense risk charge and administrative charge together are 1.10% on and after the Annuity Commencement Date for all contracts. If your Contract Value had reached the $1 million threshold immediately prior to the Annuity Commencement Date, this charge will be reduced by 0.15%.

TABLE B

	B-Share	C-Share
Annual Account Fee:1	$35	$35
i4LIFE® Advantage:2
Account Value Death Benefit	1.50%	1.65%

1	The account fee will be waived if your Contract Value is $100,000 or more at the end of any particular Contract Year. This account fee will be waived after the fifteenth Contract Year. The account fee will also be deducted upon full surrender of the contract if the Contract Value is less than $100,000. We do not assess the account fee on contracts issued to Selling Group Individuals.
2	As an annualized percentage of average Account Value, computed daily. This charge is assessed only on and after the effective date of i4LIFE® Advantage. See Charges and Other Deductions – i4LIFE® Advantage Rider Charge for further information. This charge continues during the Access Period. The i4LIFE® Advantage

8

charge is reduced to 1.50% during the Lifetime Income Period. If your Contract Value had reached the $1 million threshold immediately prior to the beginning of the Lifetime Income Period under i4LIFE^® Advantage, this charge will be reduced by 0.15%.

The next item shows the minimum and maximum total annual operating expenses charged by the funds that you may pay
periodically during the time that you own the contract. The expenses are for the year ended December 31, 2014. More detail concerning each fund's fees and expenses is contained in the prospectus for each fund.

	Minimum	Maximum
Total Annual Fund Operating Expenses (expenses that are deducted from fund assets, including management fees, distribution and/or service (12b-1) fees, and other expenses)	0.46%	16.60%
Total Annual Fund Operating Expenses (after contractual waivers/reimbursements*)	0.24%	2.53%

* Some of the funds have entered into contractual waiver or reimbursement arrangements that may reduce fund management and other fees and/or expenses during the period of the arrangement. These arrangements vary in length, but no arrangement will terminate before April 30, 2016.

The following table shows the expenses charged by each fund for the year ended December 31, 2014:
(as a percentage of each fund’s average net assets):

	Management Fees (before any waivers/ reimburse- ments)	+	12b-1 Fees (before any waivers/ reimburse- ments)	+	Other Expenses (before any waivers/ reimburse- ments)	+	Acquired Fund Fees and Expenses	=	Total Expenses (before any waivers/ reimburse- ments)	Total Contractual waivers/ reimburse- ments (if any)	Total Expenses (after Contractual waivers/ reimburse- ments)
AB VPS Small/Mid Cap Value Portfolio - Class B	0.75%		0.25%		0.07%		0.00%		1.07%	0.00%	1.07%
ALPS/Alerian Energy Infrastructure Portfolio - Class III(1)	0.70%		0.25%		0.47%		0.00%		1.42%	-0.12%	1.30%
ALPS/Red Rocks Listed Private Equity Portfolio - Class III(2)	0.90%		0.25%		0.45%		0.70%		2.30%	-0.15%	2.15%
ALPS/Stadion Tactical Defensive Portfolio - Class III(2)	0.75%		0.25%		8.63%		0.28%		9.91%	-8.33%	1.58%
ALPS/Stadion Tactical Growth Portfolio - Class III(3)	0.75%		0.25%		0.59%		0.25%		1.84%	-0.29%	1.55%
American Funds Asset Allocation Fund - Class 4	0.28%		0.25%		0.27%		0.00%		0.80%	0.00%	0.80%
American Funds Blue Chip Income and Growth Fund - Class 4	0.40%		0.25%		0.27%		0.00%		0.92%	0.00%	0.92%
American Funds Capital Income Builder® - Class 4	0.50%		0.25%		0.28%		0.00%		1.03%	0.00%	1.03%
American Funds Global Growth Fund - Class 4	0.52%		0.25%		0.28%		0.00%		1.05%	0.00%	1.05%
American Funds Global Small Capitalization Fund - Class 4	0.70%		0.25%		0.29%		0.00%		1.24%	0.00%	1.24%
American Funds Growth Fund - Class 4	0.33%		0.25%		0.27%		0.00%		0.85%	0.00%	0.85%
American Funds Growth-Income Fund - Class 4	0.27%		0.25%		0.27%		0.00%		0.79%	0.00%	0.79%
American Funds International Fund - Class 4	0.50%		0.25%		0.29%		0.00%		1.04%	0.00%	1.04%
American Funds Mortgage FundSM - Class 4	0.42%		0.25%		0.28%		0.00%		0.95%	0.00%	0.95%
American Funds New World Fund® - Class 4	0.72%		0.25%		0.31%		0.00%		1.28%	0.00%	1.28%
BlackRock Global Allocation V.I. Fund - Class III (4)	0.62%		0.25%		0.24%		0.00%		1.11%	-0.13%	0.98%
BlackRock iShares® Alternative Strategies V.I. Fund - Class III(5)	0.25%		0.25%		5.05%		0.41%		5.96%	-4.55%	1.41%
ClearBridge Variable Aggressive Growth Portfolio - Class II	0.75%		0.25%		0.05%		0.00%		1.05%	0.00%	1.05%
ClearBridge Variable Mid Cap Core Portfolio - Class II	0.75%		0.25%		0.10%		0.00%		1.10%	0.00%	1.10%
Delaware VIP® Diversified Income Series - Service Class(6)	0.58%		0.30%		0.09%		0.00%		0.97%	-0.05%	0.92%
Delaware VIP® Emerging Markets Series - Service Class(6)	1.24%		0.30%		0.14%		0.00%		1.68%	-0.05%	1.63%
Delaware VIP® REIT Series - Service Class(6)	0.75%		0.30%		0.09%		0.00%		1.14%	-0.05%	1.09%
Delaware VIP® Small Cap Value Series - Service Class(6)	0.72%		0.30%		0.08%		0.00%		1.10%	-0.05%	1.05%
Delaware VIP® Smid Cap Growth Series - Service Class	0.74%		0.30%		0.09%		0.00%		1.13%	-0.05%	1.08%
Delaware VIP® U.S. Growth Series - Service Class(6)	0.65%		0.30%		0.09%		0.00%		1.04%	-0.05%	0.99%
Delaware VIP® Value Series - Service Class (6)	0.63%		0.30%		0.08%		0.00%		1.01%	-0.05%	0.96%
Deutsche Alternative Asset Allocation VIP Portfolio - Class B(8)	0.34%		0.25%		0.27%		1.17%		2.03%	-0.15%	1.88%
Eaton Vance VT Floating-Rate Income Fund - Initial Class	0.58%		0.25%		0.33%		0.00%		1.16%	0.00%	1.16%
Fidelity® VIP Contrafund® Portfolio - Service Class 2	0.55%		0.25%		0.08%		0.00%		0.88%	0.00%	0.88%

9

	Management Fees (before any waivers/ reimburse- ments)	+	12b-1 Fees (before any waivers/ reimburse- ments)	+	Other Expenses (before any waivers/ reimburse- ments)	+	Acquired Fund Fees and Expenses	=	Total Expenses (before any waivers/ reimburse- ments)	Total Contractual waivers/ reimburse- ments (if any)	Total Expenses (after Contractual waivers/ reimburse- ments)
Fidelity® VIP Growth Portfolio - Service Class 2	0.55%		0.25%		0.10%		0.00%		0.90%	0.00%	0.90%
Fidelity® VIP Mid Cap Portfolio - Service Class 2	0.55%		0.25%		0.08%		0.00%		0.88%	0.00%	0.88%
Fidelity® VIP Strategic Income Portfolio - Service Class 2	0.56%		0.25%		0.12%		0.00%		0.93%	0.00%	0.93%
First Trust Multi Income Allocation Portfolio - Class I(9)	0.60%		0.25%		5.15%		0.37%		6.37%	-5.17%	1.20%
First Trust/Dow Jones Dividend & Income Allocation Portfolio - Class I(10)	0.60%		0.25%		0.58%		0.00%		1.43%	-0.23%	1.20%
Franklin Founding Funds Allocation VIP Fund - Class 4(11)	0.00%		0.35%		0.11%		0.66%		1.12%	-0.01%	1.11%
Franklin Income VIP Fund - Class 4(12)	0.45%		0.35%		0.02%		0.00%		0.82%	0.00%	0.82%
Franklin Mutual Shares VIP Fund - Class 4(13)	0.68%		0.35%		0.05%		0.00%		1.08%	0.00%	1.08%
Franklin Rising Dividends VIP Fund - Class 4(12)	0.60%		0.35%		0.02%		0.00%		0.97%	0.00%	0.97%
Franklin Small Cap Value VIP Fund - Class 4(13)	0.60%		0.35%		0.03%		0.00%		0.98%	0.00%	0.98%
Franklin Small-Mid Cap Growth VIP Fund - Class 4(12)	0.77%		0.35%		0.03%		0.00%		1.15%	0.00%	1.15%
Goldman Sachs VIT Money Market Fund - Service Shares(14)	0.21%		0.25%		0.10%		0.00%		0.56%	-0.32%	0.24%
Goldman Sachs VIT Multi-Strategy Alternatives Portfolio - Advisor Shares(15)	0.15%		0.40%		15.61%		0.44%		16.60%	-15.54%	1.06%
Goldman Sachs VIT Strategic Income Fund - Advisor Shares(16)	0.60%		0.40%		1.64%		0.00%		2.64%	-1.38%	1.26%
Guggenheim VT Long Short Equity	0.90%		0.00%		1.22%		0.03%		2.15%	0.00%	2.15%
Guggenheim VT Multi-Hedge Strategies(17)	1.20%		0.00%		1.30%		0.08%		2.58%	-0.05%	2.53%
Hartford Capital Appreciation HLS Fund - Class IC	0.63%		0.25%		0.28%		0.00%		1.16%	0.00%	1.16%
Invesco V.I. Balanced-Risk Allocation Fund - Series II Shares(18)	0.91%		0.25%		0.20%		0.09%		1.45%	-0.40%	1.05%
Invesco V.I. Comstock Fund - Series II Shares(19)	0.56%		0.25%		0.27%		0.00%		1.08%	-0.05%	1.03%
Invesco V.I. Diversified Dividend Fund - Series II Shares(20)	0.49%		0.25%		0.24%		0.01%		0.99%	-0.01%	0.98%
Invesco V.I. Equally-Weighted S&P 500 Fund - Series II Shares	0.12%		0.25%		0.47%		0.00%		0.84%	0.00%	0.84%
Invesco V.I. Equity and Income Fund - Series II Shares(20)	0.38%		0.25%		0.29%		0.01%		0.93%	-0.01%	0.92%
Invesco V.I. International Growth Fund - Series II Shares(20)	0.71%		0.25%		0.31%		0.01%		1.28%	-0.01%	1.27%
Ivy Funds VIP Asset Strategy Portfolio	0.68%		0.25%		0.05%		0.00%		0.98%	0.00%	0.98%
Ivy Funds VIP Energy Portfolio	0.85%		0.25%		0.08%		0.00%		1.18%	0.00%	1.18%
Ivy Funds VIP High Income Portfolio	0.62%		0.25%		0.04%		0.00%		0.91%	0.00%	0.91%
Ivy Funds VIP Micro Cap Growth Portfolio	0.95%		0.25%		0.12%		0.00%		1.32%	0.00%	1.32%
Ivy Funds VIP Mid Cap Growth Portfolio	0.85%		0.25%		0.05%		0.00%		1.15%	0.00%	1.15%
Ivy Funds VIP Science and Technology Portfolio	0.85%		0.25%		0.05%		0.00%		1.15%	0.00%	1.15%
JPMorgan Insurance Trust Global Allocation Portfolio - Class 2(21)	0.60%		0.25%		1.07%		0.21%		2.13%	-0.89%	1.24%
JPMorgan Insurance Trust Income Builder Portfolio - Class 2(22)	0.45%		0.25%		1.07%		0.08%		1.85%	-0.92%	0.93%
JPMorgan Insurance Trust Intrepid Mid Cap Portfolio - Class 2(23)	0.65%		0.25%		0.38%		0.02%		1.30%	-0.13%	1.17%
Lord Abbett Series Fund Bond Debenture Portfolio - Class VC(24)	0.50%		0.00%		0.43%		0.00%		0.93%	-0.03%	0.90%
Lord Abbett Series Fund Developing Growth Portfolio - Class VC(24)	0.75%		0.00%		1.27%		0.00%		2.02%	-1.12%	0.90%
Lord Abbett Series Fund Short Duration Income Portfolio - Class VC(25)	0.35%		0.00%		1.67%		0.00%		2.02%	-1.22%	0.80%
LVIP American Balanced Allocation Fund - Service Class(26)	0.25%		0.35%		0.02%		0.41%		1.03%	-0.05%	0.98%
LVIP American Growth Allocation Fund - Service Class(26)	0.25%		0.35%		0.02%		0.43%		1.05%	-0.05%	1.00%
LVIP American Preservation Fund - Service Class (27)	0.25%		0.35%		0.04%		0.34%		0.98%	-0.10%	0.88%
LVIP AQR Enhanced Global Strategies Fund Service Class(28)	0.69%		0.25%		1.20%		0.15%		2.29%	-1.19%	1.10%
LVIP Baron Growth Opportunities Fund - Service Class(29)	1.00%		0.25%		0.05%		0.00%		1.30%	-0.04%	1.26%
LVIP BlackRock Emerging Markets Managed Volatility Fund - Service Class(30)	0.55%		0.25%		0.21%		0.05%		1.06%	-0.05%	1.01%
LVIP BlackRock Equity Dividend Managed Volatility Fund - Service Class(31)	0.73%		0.25%		0.08%		0.00%		1.06%	-0.09%	0.97%

10

	Management Fees (before any waivers/ reimburse- ments)	+	12b-1 Fees (before any waivers/ reimburse- ments)	+	Other Expenses (before any waivers/ reimburse- ments)	+	Acquired Fund Fees and Expenses	=	Total Expenses (before any waivers/ reimburse- ments)	Total Contractual waivers/ reimburse- ments (if any)	Total Expenses (after Contractual waivers/ reimburse- ments)
LVIP BlackRock Inflation Protected Bond Fund - Service Class(32)	0.42%		0.25%		0.04%		0.01%		0.72%	0.00%	0.72%
LVIP BlackRock Multi-Asset Income Fund - Service Class(33)	0.68%		0.25%		0.64%		0.39%		1.96%	-0.96%	1.00%
LVIP Clarion Global Real Estate Fund - Service Class(34)	0.68%		0.25%		0.05%		0.00%		0.98%	0.00%	0.98%
LVIP Delaware Bond Fund - Service Class	0.31%		0.35%		0.04%		0.00%		0.70%	0.00%	0.70%
LVIP Delaware Diversified Floating Rate Fund - Service Class	0.57%		0.25%		0.05%		0.00%		0.87%	0.00%	0.87%
LVIP Delaware Social Awareness Fund - Service Class	0.37%		0.35%		0.05%		0.00%		0.77%	0.00%	0.77%
LVIP Dimensional International Core Equity Fund - Service Class(35)	0.75%		0.25%		0.07%		0.00%		1.07%	-0.17%	0.90%
LVIP Dimensional International Core Equity Managed Volatility Fund - Service Class(36)	0.25%		0.25%		0.08%		0.65%		1.23%	-0.20%	1.03%
LVIP Dimensional U.S. Core Equity 1 Fund - Service Class	0.34%		0.35%		0.04%		0.00%		0.73%	0.00%	0.73%
LVIP Dimensional U.S. Core Equity 2 Fund - Service Class(37)	0.72%		0.25%		0.04%		0.00%		1.01%	-0.29%	0.72%
LVIP Dimensional U.S. Core Equity 2 Managed Volatility Fund - Service Class(38)	0.25%		0.25%		0.06%		0.47%		1.03%	-0.20%	0.83%
LVIP Dimensional/Vanguard Total Bond Fund - Service Class(39)	0.25%		0.25%		0.04%		0.16%		0.70%	-0.05%	0.65%
LVIP Franklin Templeton Multi-Asset Opportunities Fund - Service Class(40)	0.75%		0.25%		0.58%		0.39%		1.97%	-0.76%	1.21%
LVIP Global Growth Allocation Managed Risk Fund - Service Class(41)	0.25%		0.25%		0.01%		0.40%		0.91%	0.00%	0.91%
LVIP Global Income Fund - Service Class(42)	0.65%		0.25%		0.06%		0.00%		0.96%	-0.07%	0.89%
LVIP Global Moderate Allocation Managed Risk Fund - Service Class(43)	0.25%		0.25%		0.02%		0.42%		0.94%	0.00%	0.94%
LVIP Goldman Sachs Income Builder Fund - Service Class(44)	0.65%		0.25%		0.87%		0.00%		1.77%	-0.77%	1.00%
LVIP JPMorgan High Yield Fund - Service Class(45)	0.64%		0.25%		0.06%		0.00%		0.95%	-0.03%	0.92%
LVIP JPMorgan Mid Cap Value Managed Volatility Fund - Service Class(46)	0.76%		0.25%		0.08%		0.01%		1.10%	-0.03%	1.07%
LVIP MFS International Growth Fund - Service Class(47)	0.83%		0.25%		0.06%		0.00%		1.14%	-0.10%	1.04%
LVIP MFS Value Fund - Service Class(34)	0.61%		0.25%		0.04%		0.00%		0.90%	0.00%	0.90%
LVIP Mondrian International Value Fund - Service Class	0.67%		0.25%		0.06%		0.00%		0.98%	0.00%	0.98%
LVIP Multi-Manager Global Equity Managed Volatility Fund - Service Class(48)	0.25%		0.35%		0.43%		0.51%		1.54%	-0.33%	1.21%
LVIP PIMCO Low Duration Bond Fund - Service Class	0.50%		0.25%		0.07%		0.00%		0.82%	0.00%	0.82%
LVIP SSgA Bond Index Fund - Service Class(49)	0.40%		0.25%		0.05%		0.00%		0.70%	-0.12%	0.58%
LVIP SSgA Conservative Structured Allocation Fund - Service Class(50)	0.25%		0.25%		0.04%		0.32%		0.86%	-0.10%	0.76%
LVIP SSgA Developed International 150 Fund - Service Class(34)	0.33%		0.25%		0.05%		0.00%		0.63%	0.00%	0.63%
LVIP SSgA Emerging Markets 100 Fund - Service Class(34)	0.34%		0.25%		0.10%		0.00%		0.69%	0.00%	0.69%
LVIP SSgA Global Tactical Allocation Managed Volatility Fund - Service Class(51)	0.40%		0.25%		0.04%		0.29%		0.98%	-0.10%	0.88%
LVIP SSgA International Index Fund - Service Class(52)	0.40%		0.25%		0.08%		0.00%		0.73%	-0.07%	0.66%
LVIP SSgA Large Cap 100 Fund - Service Class(34)	0.31%		0.25%		0.03%		0.00%		0.59%	0.00%	0.59%
LVIP SSgA Moderate Structured Allocation Fund - Service Class(53)	0.25%		0.25%		0.02%		0.33%		0.85%	-0.10%	0.75%
LVIP SSgA Moderately Aggressive Structured Allocation Fund - Service Class(53)	0.25%		0.25%		0.03%		0.34%		0.87%	-0.10%	0.77%
LVIP SSgA S&P 500 Index Fund - Service Class	0.17%		0.25%		0.04%		0.00%		0.46%	0.00%	0.46%
LVIP SSgA Small-Cap Index Fund - Service Class	0.32%		0.25%		0.05%		0.00%		0.62%	0.00%	0.62%
LVIP SSgA Small-Mid Cap 200 Fund - Service Class(34)	0.35%		0.25%		0.06%		0.00%		0.66%	0.00%	0.66%
LVIP T. Rowe Price Growth Stock Fund - Service Class	0.70%		0.25%		0.06%		0.00%		1.01%	0.00%	1.01%
LVIP T. Rowe Price Structured Mid-Cap Growth Fund - Service Class	0.71%		0.25%		0.05%		0.00%		1.01%	0.00%	1.01%
LVIP Templeton Growth Managed Volatility Fund - Service Class(54)	0.67%		0.25%		0.08%		0.01%		1.01%	0.00%	1.01%
LVIP Vanguard Domestic Equity ETF Fund - Service Class(55)	0.25%		0.25%		0.05%		0.10%		0.65%	-0.05%	0.60%

11

	Management Fees (before any waivers/ reimburse- ments)	+	12b-1 Fees (before any waivers/ reimburse- ments)	+	Other Expenses (before any waivers/ reimburse- ments)	+	Acquired Fund Fees and Expenses	=	Total Expenses (before any waivers/ reimburse- ments)	Total Contractual waivers/ reimburse- ments (if any)	Total Expenses (after Contractual waivers/ reimburse- ments)
LVIP Vanguard International Equity ETF Fund - Service Class(55)	0.25%		0.25%		0.08%		0.17%		0.75%	-0.05%	0.70%
LVIP Wellington Capital Growth Fund - Service Class	0.69%		0.25%		0.05%		0.00%		0.99%	0.00%	0.99%
LVIP Wellington Mid-Cap Value Fund - Service Class(56)	0.87%		0.25%		0.08%		0.00%		1.20%	-0.01%	1.19%
MFS® VIT Growth Series - Service Class	0.72%		0.25%		0.05%		0.00%		1.02%	0.00%	1.02%
MFS® VIT International Value Series - Service Class	0.89%		0.25%		0.06%		0.00%		1.20%	0.00%	1.20%
MFS® VIT Utilities Series - Service Class	0.73%		0.25%		0.06%		0.00%		1.04%	0.00%	1.04%
Oppenheimer International Growth Fund/VA Service Shares(57)	0.94%		0.25%		0.13%		0.00%		1.32%	-0.07%	1.25%
Oppenheimer Main Street Small Cap Fund®/VA Service Shares(58)	0.67%		0.25%		0.13%		0.00%		1.05%	0.00%	1.05%
PIMCO VIT All Asset All Authority Portfolio - Advisor Class(59)	0.45%		0.25%		0.44%		1.07%		2.21%	-0.10%	2.11%
PIMCO VIT CommodityRealReturn® Strategy Portfolio - Advisor Class(60)	0.74%		0.25%		0.04%		0.13%		1.16%	-0.13%	1.03%
PIMCO VIT Emerging Markets Bond Portfolio - Advisor Class	0.85%		0.25%		0.00%		0.00%		1.10%	0.00%	1.10%
PIMCO VIT Unconstrained Bond Portfolio - Advisor Class	0.90%		0.25%		0.00%		0.00%		1.15%	0.00%	1.15%
Putnam VT Absolute Return 500 Fund - Class IB(61)	0.72%		0.25%		0.66%		0.00%		1.63%	-0.47%	1.16%
Putnam VT Global Health Care Fund - Class IB	0.62%		0.25%		0.14%		0.00%		1.01%	0.00%	1.01%
Putnam VT Income Fund - Class IB	0.39%		0.25%		0.16%		0.00%		0.80%	0.00%	0.80%
SEI VP Market Growth Strategy Fund - Class III(62)	0.10%		0.30%		2.58%		0.80%		3.78%	-2.13%	1.65%
SEI VP Market Plus Strategy Fund - Class III(63)	0.10%		0.30%		4.22%		0.86%		5.48%	-3.77%	1.71%
Templeton Foreign VIP Fund - Class 4(64)	0.74%		0.35%		0.03%		0.00%		1.12%	0.00%	1.12%
Templeton Global Bond VIP Fund - Class 4 (12)	0.46%		0.35%		0.05%		0.00%		0.86%	0.00%	0.86%
Transparent Value Directional Allocation VI Portfolio - Class II(65)	0.95%		0.25%		6.76%		0.00%		7.96%	-6.33%	1.63%
UIF Global Infrastructure Portfolio - Class II(66)	0.85%		0.25%		0.52%		0.00%		1.62%	-0.50%	1.12%
Van Eck VIP Global Hard Assets Fund - Class S Shares(67)	1.00%		0.25%		0.07%		0.00%		1.32%	0.00%	1.32%
Virtus Multi-Sector Fixed Income Series - Class A Shares(68)	0.50%		0.25%		0.26%		0.00%		1.01%	-0.07%	0.94%
Virtus Premium AlphaSector® Series - Class A Shares(69)	1.10%		0.25%		0.30%		0.17%		1.82%	0.05%	1.87%

(1)	ALPS Advisors, Inc (“the Adviser”) has contractually agreed to waive its management fee and/or reimburse expenses so that Total Annual Fund Operating Expenses After Fee Waiver/Expense Reimbursements (not including Distribution and/or Service (12b-1) Fees, Shareholder Service Fees, acquired fund fees and expenses, taxes, brokerage commissions and extraordinary expenses) do not exceed a maximum of 0.80% of either Class I or Class III shares average daily net assets through April 29, 2016. This agreement may only be terminated during the period by the Board of Trustees of ALPS Variable Investment Trust.
(2)	Other Portfolio Expenses and “”Acquired Fund Fees and Expenses“” are based on estimated amounts for the Portfolio's initial fiscal year. The operating expenses in this fee table will not correlate to the expense ratio in the Portfolio’s financial statements (or the financial highlights in its prospectus) because the financial statements include only the direct operating expenses incurred by the Portfolio, not the indirect costs of investing in the acquired funds. ALPS Advisors, Inc. (the “Adviser”) has contractually agreed to waive its management fee and/or reimburse expenses so that Total Annual Fund Operating Expenses After Fee Waiver/Expense Reimbursements (not including distribution and/or service (12b‐1) fees, shareholder service fees, acquired fund fees and expenses, taxes, brokerage commissions and extraordinary expenses) do not exceed a maximum of 0.95% of the Portfolio’s Class I or Class III shares average daily net assets through April 29, 2016. The Adviser will be permitted to recover, on a class‐by‐class basis, expenses it has borne through the agreement described above to the extent that the Portfolio’s expenses in later periods fall below the annual rates set forth in the relevant agreement. The Portfolio will not be obligated to pay any such fees and expenses more than three years after the end of the fiscal year in which the fee and expense was waived or reimbursed. This agreement may only be terminated during the period by the Board of Trustees of ALPS Variable Investment Trust.
(3)	Other Portfolio Expenses and “Acquired Fund Fees and Expenses” are based on estimated amounts for the Portfolio’s initial fiscal year. The operating expenses in this fee table will not correlate to the expense ratio in the Portfolio’s financial statements (or the financial highlights in its prospectus) because the financial statements include only the direct operating expenses incurred by the Portfolio, not the indirect costs of investing in the Underlying ETFs and other investment companies. ALPS Advisors, Inc. (the “Adviser”) and Stadion Money Management, LLC (the “Sub-Adviser”) have contractually agreed to jointly waive its management fee and subadvisory fee, respectively, and/or reimburse expenses so that Total Annual Fund Operating Expenses After Fee Waiver/Expense Reimbursements (not including distribution and/or service (12b-1) fees, shareholder service fees, acquired fund fees and expenses, taxes, brokerage commissions and extraordinary expenses) do not exceed a maximum of 0.80% of the Portfolio’s Class I or Class III shares average daily net assets through April 29, 2016. The Adviser and Sub-Adviser will be permitted to recover, on a class-by-class basis, expenses each has borne through the agreement described above to the extent that the Portfolio’s expenses in later periods fall below the annual rates set forth in the relevant agreement. The Portfolio will not be obligated to pay any such fees and expenses more than three years after the end of the fiscal year in which the fee and expense was waived or reimbursed. This agreement may only be terminated during the period by the Board of Trustees of ALPS Variable Investment Trust.

⁽⁴⁾ As described in the “Management of the Funds” section of the Fund's prospectus, Blackrock has contractually agreed to waive and/or reimburse fees or expenses in order to limit Total Annual Fund Operating Expenses After Fee Waivers and/or Expense Reimbursements (excluding Dividend Expense, Interest Expense, Acquired Fund Fees and Expenses and certain other Fund expenses) to 1.50% of average daily net assets until May 1, 2016. Blackrock has also contractually

12

	agreed to reimburse fees in order to limit certain operational and recordkeeping fees to .07% of average daily net assets until May 1, 2016. Each of these contractual agreements may be terminated upon 90 days notice by a majority of the non-interested directors of the Fund or by a vote of a majority of the outstanding voting securities of the Fund.
(5)	As described in the “Management of the Funds” section of the Fund's prospectus, Blackrock has contractually agreed to waive and/or reimburse fees or expenses in order to limit Total Annual Fund Operating Expenses After Fee Waivers and/or Expense Reimbursements (excluding Dividend Expense, Interest Expense, Acquired Fund Fees and Expenses and certain other Fund expenses) to 1.00% of average daily net assets until May 1, 2016. Blackrock has also contractually agreed to reimburse fees in order to limit certain operational and recordkeeping fees to 0% of average daily net assets until May 1, 2016. Each of these contractual agreements may be terminated upon 90 days notice by a majority of the non-interested directors of the Fund or by a vote of a majority of the outstanding voting securities of the Fund.
(6)	Service Class shares are subject to a 12b-1 fee of 0.30% of average daily net assets. The Series' distributor, Delaware Distributors, L.P., has contracted to limit the 12b-1 fees to no more than 0.25% of average daily net assets from April 29, 2015 to April 29, 2016.
(7)	Service Class shares are subject to a 12b-1 fee of 0.30% of average daily net assets. The Series’ distributor, Delaware Distributors, L.P. (Distributor), has contracted to limit the 12b-1 fees to no more than 0.25% of average daily net assets from April 29, 2015 through April 29, 2016 or, if longer, until the Series is offered under new participation agreements or under new contracts with existing companies (other than the update and modification of existing contracts in the normal course of business that may require registration or re-registration under state insurance laws as a new insurance contract, provided the new insurance contract effectively replaces the current insurance contract). These waivers and reimbursements may be terminated only by agreement of the Distributor and the Series
(8)	Through April 30, 2016, the Advisor has contractually agreed to waive all or a portion of its management fee and reimburse or pay certain operating expenses of the portfolio to the extent necessary to maintain the portfolio's total annual operating expenses at ratios no higher than 0.71% for Class B shares, excluding certain expenses such as extraordinary expenses, taxes, brokerage, interest expense and acquired funds (underlying funds) fees and expenses (estimated at 1.17%). The agreement may be terminated with the consent of the fund's Board.
(9)	The Fund’s investment advisor has agreed to waive fees and/or pay the Fund’s expenses to the extent necessary to prevent the operating expenses of the Fund (excluding interest expense, brokerage commissions and other trading expenses, taxes, and extraordinary expenses) from exceeding 1.20% of its average daily net assets per year until at least May 1, 2016. Expenses borne by the Fund’s investment advisor are subject to reimbursement by the Fund for up to three years from the date the fee or expense was incurred, but no reimbursement payment will be made by the Fund at any time if it would result in the Fund's expenses (excluding interest expense, brokerage commissions and other trading expenses, taxes, and extraordinary expenses) exceeding 1.20% of its average daily net assets per year for Class I shares. The agreement may be terminated by the First Trust Variable Insurance Trust on behalf of the Fund at any time and by the advisor only after May 1, 2016 upon 60 days' written notice. In addition, pursuant to a contractual agreement between the Trust, on behalf of the Fund, and the Fund’s investment advisor, the Fund’s investment advisor will waive and/or reimburse the acquired fund fees and expenses of the shares of the investment companies held by the Fund so that the Fund would not bear the indirect costs of holding them. This contractual agreement shall continue until the earlier of (i) its termination at the direction of the Trust’s Board of Trustees or (ii) upon the termination of the Fund’s management agreement with the Fund’s investment advisor, however, it is expected to remain in place for no less than one year from the date of this prospectus.
(10)	The Fund’s investment advisor has agreed to waive fees and/or pay the Fund’s expenses to the extent necessary to prevent the operating expenses of the Fund (excluding interest expense, brokerage commissions and other trading expenses, taxes, acquired fund fees and expenses and extraordinary expenses) from exceeding 1.20% of its average daily net assets per year until at least May 1, 2016. Expenses borne by the Fund’s investment advisor are subject to reimbursement by the Fund for up to three years from the date the fee or expense was incurred, but no reimbursement payment will be made by the Fund at any time if it would result in the Fund's expenses (excluding interest expense, brokerage commissions and other trading expenses, taxes, acquired fund fees and expenses and extraordinary expenses) exceeding 1.20% of its average daily net assets per year for Class I shares. The agreement may be terminated by the First Trust Variable Insurance Trust on behalf of the Fund at any time and by the advisor only after May 1, 2016 upon 60 days' written notice.

(11)	The fund's administrator has contractually agreed to waive or assume certain expenses of the fund so that common expenses (excluding Rule 12b-1 fees, acquired fund fees, and certain non-routine expenses) do not exceed .10% until at least April 30, 2016. The fund does not pay management fees but will indirectly bear its proportionate share of any management fees and other expenses paid by the underlying funds (or “acquired funds”) in which it invests. Acquired funds' estimated fees and expenses are based on the acquired funds' annualized expenses. Contractual fee waiver and/or expense reimbursement agreements may not be terminated during the terms set forth above.
(12)	The Fund administration fee is paid indirectly through the management fee.
(13)	The Fund administration fee is paid indirectly through the management fee. Management fees and other expenses have been restated to reflect current fiscal year fees and expenses as a result of the bundling of the fund's investment management agreement with its fund administration agreement effective May 1, 2014. Such combined investment management fees are described further under “Management” in the fund's prospectus. Total annual fund operating expenses are not affected by such bundling.
(14)	The Investment Adviser has agreed to reduce or limit “Other Expenses” (excluding acquired fund fees and expenses, transfer agency fees and expenses, taxes, interest, brokerage fees and expenses, shareholder meeting, litigation, indemnification, and extraordinary expenses) equal on an annualized basis to 0.004% of the Fund's average daily net assets through at least April 30, 2016, and prior to such date the Investment Adviser man not terminate the arrangement without the approval of the Board of Trustees.
(15)	The Investment Adviser has agreed to (i) waive all of its Management Fees, and (ii) reduce or limit “Other Expenses” (excluding acquired fund fees and expenses, transfer agency fees and expenses, taxes, interest, brokerage fees, shareholder meeting, litigation, indemnification and extraordinary expenses) to 0.204% of the Portfolio’s average daily net assets. Each arrangement will remain in effect through at least April 30, 2016, and prior to such date the Investment Adviser may not terminate the arrangement without the approval of the Board of Trustees.

⁽¹⁶⁾ The Investment Adviser has agreed to reduce or limit “Other Expenses” (excluding acquired fund fees and expenses, transfer agency fees and expenses, taxes, interest, brokerage fees, shareholder meeting, litigation, indemnification and extraordinary expenses) to 0.254% of the Fund’s average daily net assets through at least April 30, 2016, and prior to such date, the Investment Adviser may not terminate the arrangement without the approval of the Board of Trustees.

⁽¹⁷⁾ Other Expenses include Short Dividend Interest (1.28%) and Controlled Foreign Corporation or CFC expenses, however the advisor has contractually agreed to waive the management fee (.05%) it receives from the fund in an amount equal to the management fee paid to the advisor by the subsidiary in which the fund invests.

⁽¹⁸⁾ Invesco has contractually agreed to waive advisory fees and/or reimburse expenses of Series II shares to the extent necessary to limit Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement (excluding certain items discussed below) of Series II shares to 1.03% of the Fund’s average daily nets assets. In determining the Adviser's obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into

13

	account, and could cause the Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement to exceed the numbers reflected above: (i) interest; (ii) taxes; (iii) dividend expense on short sales; (iv) extraordinary or non-routine items, including litigation expenses; (v) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Acquired Fund Fees and Expenses are excluded in determining such obligation. Invesco has also contractually agreed to waive a portion of the Fund’s management fee in an amount equal to the net management fee that Invesco earns on the Fund’s investments in certain affiliated funds. This waiver will have the effect of reducing Acquired Fund Fees and Expenses that are indirectly borne by the Fund. Unless Invesco continues the fee waiver agreements, they will terminate on April 30, 2016 and June 30, 2016, respectively. The fee waiver agreements cannot be terminated during their terms.
(19)	Invesco has contractually agreed to waive advisory fees and/or reimburse expenses of Series II shares to the extent necessary to limit Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement (subject to the same exclusions discussed above in Note 2) of Series II shares to 1.03% of the Fund’s average daily net assets. Unless Invesco continues the fee waiver agreement, it will terminate on April 30, 2016. The fee waiver agreement cannot be terminated during its term.
(20)	Invesco Advisers, Inc. (“Invesco or the Adviser”) has contractually agreed to waive a portion of the Fund's management fee in an amount equal to the net management fee that Invesco earns on the Fund's investments in certain affiliated funds. This waiver will have the effect of reducing Acquired Fund Fees and Expenses that are indirectly borne by the Fund. Unless Invesco continues the fee waiver agreement, it will terminate on June 30, 2016. The fee waiver agreement cannot be terminated during its term.
(21)	“Other Expenses” and “Acquired Fund Fees and Expenses” are based on estimated amounts for the current fiscal year.The Portfolio's adviser, distributor and administrator (the Service Providers) have contractually agreed to waive fees and/or reimburse expenses to the extent Total Annual Fund Operating Expenses, dividend expenses related to short sales, interest, taxes, expenses related to litigation and potential litigation, extraordinary expenses and expenses related to the Board of Trustees' deferred compensation plan) exceed 1.03% of their average daily net assets. This contract cannot be terminated prior to 5/1/16, at which time the Service Providers will determine whether or not to renew or revise it.
(22)	“Other Expenses” and “Acquired Fund Fees and Expenses” are based on estimated amounts for the current fiscal year. The Portfolio's adviser, distributor and administrator (the Service Providers) have contractually agreed to waive fees and/or reimburse expenses to the extent Total Annual Fund Operating Expenses, dividend expenses related to short sales, interest, taxes, expenses related to litigation and potential litigation, extraordinary expenses and expenses related to the Board of Trustees' deferred compensation plan) exceed 0.85% of their average daily net assets. This contract cannot be terminated prior to 5/1/16, at which time the Service Providers will determine whether or not to renew or revise it.
(23)	The Portfolio's adviser and administrator (the Service Providers) have contractually agreed to waive fees and/or reimburse expenses to the extent Total Annual Fund Operating Expenses of Class 2 Shares (excluding acquired fund fees and expenses, dividend expenses related to short sales, interest, taxes, expenses related to litigation and potential litigation, extraordinary expenses and expenses related to the Board of Trustees deferred compensation plan) exceed 1.15% of their average daily net assets. This contract cannot be terminated prior to 5/1/16, at which time the Service Providers will determine whether or not to renew or revise it.
(24)	For the period May 1, 2015 through April 30, 2016, Lord Abbett has contractually agreed to waive its fees and to reimburse expenses to the extent necessary to limit total net annual operating expenses to an annual rate of 0.90%. This agreement may be terminated only upon the approval of the Fund's Board of Directors.
(25)	For the period from May 1, 2015 through April 30, 2016, Lord, Abbett & Co. LLC has contractually agreed to waive its fees and reimburse expenses to the extent necessary to limit total annual operating expenses to an annual rate of 0.80%. This agreement may be terminated only by the approval of the Fund's Board of Directors.
(26)	The Total Annual Fund Operating Expenses do not correlate to the ratio of expenses to the average net assets appearing in the Financial Highlights table which reflects only the operating expenses of the Fund and does not include AFFE. Lincoln Investment Advisors Corporation (the “adviser”) has contractually agreed to waive the following portion of its advisory fee: 0.05% of the Fund’s average daily net assets. The agreement will continue at least through April 30, 2016 and cannot be terminated before that date without the mutual agreement of the Fund’s board of trustees and the adviser.
(27)	The Total Annual Fund Operating Expenses do not correlate to the ratio of expenses to the average net assets appearing in the Financial Highlights table which reflects only the operating expenses of the Fund and does not include AFFE. Lincoln Investment Advisors Corporation (the “adviser”) has contractually agreed to waive the following portion of its advisory fee: 0.10% of the Fund’s average daily net assets. The agreement will continue at least through April 30, 2016 and cannot be terminated before that date without the mutual agreement of the Fund’s board of trustees and the adviser.
(28)	Lincoln Investment Advisors Corporation (the “adviser”) has contractually agreed to waive the following portion of its advisory fee: 0.09% of the Fund’s average daily net assets. The adviser has also contractually agreed to reimburse the Fund to the extent that the Total Annual Fund Operating Expenses (excluding AFFE) exceed 0.95% of the Fund’s average daily net assets for the Service Class. Both agreements will continue at least through April 30, 2016 and cannot be terminated before that date without the mutual agreement of the Fund’s board of trustees and the adviser. The Total Annual Fund Operating Expenses do not correlate to the ratio of expenses to the average net assets appearing in the Financial Highlights table which reflects only the operating expenses of the Fund and does not include AFFE. Annualized.
(29)	Lincoln Investment Advisors Corporation (the “adviser”) has contractually agreed to waive the following portion of its advisory fee: 0.00% on the first $250 million of the Fund's average daily net assets; 0.05% on the next $250 million of the Fund's average daily net assets; 0.10% on the next $250 million of the Fund's average daily net assets; and 0.15% in excess of $750 million of the Fund's average daily net assets. The agreement will continue at least through April 30, 2016 and cannot be terminated before that date without the mutual agreement of the Fund’s board of trustees and the adviser.
(30)	The Total Annual Fund Operating Expenses do not correlate to the ratio of expenses to the average net assets appearing in the Financial Highlights table which reflects only the operating expenses of the Fund and does not include AFFE. Lincoln Investment Advisors Corporation (the “adviser”) has contractually agreed to waive the following portion of its advisory fee: 0.05% of the Fund’s average daily net assets. The agreement will continue at least through April 30, 2016 and cannot be terminated before that date without the mutual agreement of the Fund’s board of trustees and the adviser.
(31)	Lincoln Investment Advisors Corporation (the “adviser”) has contractually agreed to waive the following portion of its advisory fee: 0.05% on the first $250 million of the Fund’s average daily net assets; 0.10% on the next $500 million of the Fund’s average daily net assets; 0.13% on the next $250 million of the Fund’s average daily net assets; and 0.155% of the Fund’s average daily net assets in excess of $1 billion. The agreement will continue at least through April 30, 2016 and cannot be terminated before that date without the mutual agreement of the Fund’s board of trustees and the adviser.

(32)

The Total Annual Fund Operating Expenses do not correlate to the ratio of expenses to the average net assets appearing in the Financial Highlights table which reflects only the operating expenses of the Fund and does not include AFFE.

(33)

Lincoln Investment Advisors Corporation (the “adviser”) has contractually agreed to waive the following portion of its advisory fee: 0.42% of the Fund’s average daily net assets. The adviser has also contractually agreed to reimburse the Fund to the extent that the Total Annual Fund Operating Expenses (excluding AFFE) exceed 0.61% of the Fund’s average daily net assets for the Service Class. Both agreements will continue at least through April 30, 2016 and cannot be terminated

14

	before that date without the mutual agreement of the Fund’s board of trustees and the adviser. The Total Annual Fund Operating Expenses do not correlate to the ratio of expenses to the average net assets appearing in the Financial Highlights table which reflects only the operating expenses of the Fund and does not include AFFE. Annualized.
(34)	The Management Fee was restated to reflect the current fee of the Fund.
(35)	Other expenses are based on estimates for the current fiscal year. Lincoln Investment Advisors Corporation (the “adviser”) has contractually agreed to waive the following portion of its advisory fee: 0.17% of the Fund's average daily net assets. The agreement will continue at least through April 30, 2016 and cannot be terminated before that date without the mutual agreement of the Fund's board of trustees and the adviser.
(36)	AFFE is based on estimated amounts for the current fiscal year. The Total Annual Fund Operating Expenses do not correlate to the ratio of expenses to the average net assets appearing in the Financial Highlights table which reflects only the operating expenses of the Fund and does not include AFFE. Lincoln Investment Advisors Corporation (the “adviser”) has contractually agreed to waive the following portion of its advisory fee: 0.20% of the Fund’s average daily net assets. The agreement will continue at least through April 30, 2016 and cannot be terminated before that date without the mutual agreement of the Fund’s board of trustees and the adviser.
(37)	Other expenses are based on estimates for the current fiscal year. Lincoln Investment Advisors Corporation (the “adviser”) has contractually agreed to waive the following portion of its advisory fee: 0.29% of the Fund's average daily net assets. The agreement will continue at least through April 30, 2016 and cannot be terminated before that date without the mutual agreement of the Fund's board of trustees and the adviser.

⁽³⁸⁾ AFFE is based on estimated amounts for the current fiscal year. Lincoln Investment Advisors Corporation (the “adviser”) has contractually agreed to waive the following portion of its advisory fee: 0.20% of the Fund’s average daily net assets. The agreement will continue at least through April 30, 2016 and cannot be terminated before that date without the mutual agreement of the Fund’s board of trustees and the adviser. The Total Annual Fund Operating Expenses do not correlate to the ratio of expenses to the average net assets appearing in the Financial Highlights table which reflects only the operating expenses of the Fund and does not include AFFE.

(39)	The Total Annual Fund Operating Expenses do not correlate to the ratio of expenses to the average net assets appearing in the Financial Highlights table which reflects only the operating expenses of the Fund and does not include AFFE. Lincoln Investment Advisors Corporation (the “adviser”) has contractually agreed to waive the following portion of its advisory fee: 0.05% of the Fund’s average daily net assets. The agreement will continue at least through April 30, 2016 and cannot be terminated before that date without the mutual agreement of the Fund’s board of trustees and the adviser.
(40)	Lincoln Investment Advisors Corporation (the “adviser”) has contractually agreed to waive the following portion of its advisory fee: 0.28% of the Fund’s average daily net assets. The adviser has also contractually agreed to reimburse the Fund to the extent that the Total Annual Fund Operating Expenses (excluding AFFE) exceed 0.82% of the Fund’s average daily net assets for the Service Class. Both agreements will continue at least through April 30, 2016 and cannot be terminated before that date without the mutual agreement of the Fund’s board of trustees and the adviser. The Total Annual Fund Operating Expenses do not correlate to the ratio of expenses to the average net assets appearing in the Financial Highlights table which reflects only the operating expenses of the Fund and does not include AFFE. Annualized.
(41)	The Total Annual Fund Operating Expenses do not correlate to the ratio of expenses to the average net assets appearing in the Financial Highlights table which reflects only the operating expenses of the Fund and does not include AFFE.
(42)	Lincoln Investment Advisors Corporation (the “adviser”) has contractually agreed to waive the following portion of its advisory fee: 0.07% of the Fund’s average daily net assets. The agreement will continue at least through April 30, 2016 and cannot be terminated before that date without the mutual agreement of the Fund’s board of trustees and the adviser.
(43)	The Total Annual Fund Operating Expenses do not correlate to the ratio of expenses to the average net assets appearing in the Financial Highlights table which reflects only the operating expenses of the Fund and does not include AFFE.
(44)	Lincoln Investment Advisors Corporation (the “adviser”) has contractually agreed to reimburse the Fund to the extent that the Total Annual Fund Operating Expenses (excluding AFFE) exceed 1.00% of the Fund’s average daily net assets for the Service Class. The agreement will continue at least through April 30, 2016 and cannot be terminated before that date without the mutual agreement of the Fund’s board of trustees and the adviser.
(45)	Lincoln Investment Advisors Corporation (the “adviser”) has contractually agreed to waive the following portion of its advisory fee: 0.05% of the Fund’s average daily net assets in excess of $250 million. The agreement will continue at least through April 30, 2016 and cannot be terminated before that date without the mutual agreement of the Fund’s board of trustees and the adviser.
(46)	Lincoln Investment Advisors Corporation (the “adviser”) has contractually agreed to waive the following portion of its advisory fee: 0.12% of the first $60 million of the Fund’s average daily net assets. The agreement will continue at least through April 30, 2016 and cannot be terminated before that date without the mutual agreement of the Fund’s board of trustees and the adviser. The Total Annual Fund Operating Expenses do not correlate to the ratio of expenses to the average net assets appearing in the Financial Highlights table which reflects only the operating expenses of the Fund and does not include AFFE.
(47)	Lincoln Investment Advisors Corporation (the “adviser”) has contractually agreed to waive the following portion of its advisory fee: 0.10% of the Fund’s average daily net assets. The agreement will continue at least through April 30, 2016 and cannot be terminated before that date without the mutual agreement of the Fund’s board of trustees and the adviser.
(48)	Annualized. The Total Annual Fund Operating Expenses do not correlate to the ratio of expenses to the average net assets appearing in the Financial Highlights table which reflects only the operating expenses of the Fund and does not include AFFE. Lincoln Investment Advisors Corporation (the “adviser”) has contractually agreed to reimburse the Fund to the extent that the Total Annual Fund Operating Expenses (excluding AFFE) exceed 0.70% of the Fund’s average daily net assets for the Service Class. The agreement will continue at least through April 30, 2016 and cannot be terminated before that date without the mutual agreement of the Fund’s board of trustees and the adviser.
(49)	Lincoln Investment Advisors Corporation (the “adviser”) has contractually agreed to waive the following portion of its advisory fee: 0.07% of the first $500 million of the Fund's average daily net assets; 0.12% on the next $1.5 billion of the Fund's average daily net assets and 0.15% of the Fund’s average daily net assets in excess of $2 billion. The agreement will continue at least through April 30, 2016 and cannot be terminated before that date without the mutual agreement of the Fund’s board of trustees and the adviser.
(50)	The Total Annual Fund Operating Expenses do not correlate to the ratio of expenses to the average net assets appearing in the Financial Highlights table which reflects only the operating expenses of the Fund and does not include AFFE. Lincoln Investment Advisors Corporation (the “adviser”) has contractually agreed to waive the following portion of its advisory fee: 0.10% of the Fund’s average daily net assets. The agreement will continue at least through April 30, 2016 and cannot be terminated before that date without the mutual agreement of the Fund’s board of trustees and the adviser.
(51)	The Total Annual Fund Operating Expenses do not correlate to the ratio of expenses to the average net assets appearing in the Financial Highlights table which reflects only the operating expenses of the Fund and does not include AFFE. Lincoln Investment Advisors Corporation (the “adviser”) has contractually agreed to

15

	waive the following portion of its advisory fee: 0.10% of the Fund’s average daily net assets. The agreement will continue at least through April 30, 2016 and cannot be terminated before that date without the mutual agreement of the Fund’s board of trustees and the adviser.
(52)	The Fee Waiver was restated to reflect the current fee waiver of the Fund. Lincoln Investment Advisors Corporation (the “adviser”) has contractually agreed to waive the following portion of its advisory fee: 0.03% on the first $500 million of the Fund’s average daily net assets; 0.05% on the next $500 million of the Fund’s average daily net assets; and 0.10% of the Fund’s average daily net assets in excess of $1 billion. The agreement will continue at least through April 30, 2016 and cannot be terminated before that date without the mutual agreement of the Fund’s board of trustees and the adviser.
(53)	The Total Annual Fund Operating Expenses do not correlate to the ratio of expenses to the average net assets appearing in the Financial Highlights table which reflects only the operating expenses of the Fund and does not include AFFE. Lincoln Investment Advisors Corporation (the “adviser”) has contractually agreed to waive the following portion of its advisory fee: 0.10% of the Fund’s average daily net assets. The agreement will continue at least through April 30, 2016 and cannot be terminated before that date without the mutual agreement of the Fund’s board of trustees and the adviser.
(54)	The Total Annual Fund Operating Expenses do not correlate to the ratio of expenses to the average net assets appearing in the Financial Highlights table which reflects only the operating expenses of the Fund and does not include AFFE.
(55)	The Total Annual Fund Operating Expenses do not correlate to the ratio of expenses to the average net assets appearing in the Financial Highlights table which reflects only the operating expenses of the Fund and does not include AFFE. Lincoln Investment Advisors Corporation (the “adviser”) has contractually agreed to waive the following portion of its advisory fee: 0.05% of the Fund’s average daily net assets. The agreement will continue at least through April 30, 2016 and cannot be terminated before that date without the mutual agreement of the Fund’s board of trustees and the adviser.
(56)	Lincoln Investment Advisors Corporation (the “adviser”) has contractually agreed to waive the following portion of its advisory fee: 0.05% of the first $25 million of the Fund’s average daily net assets. The agreement will continue at least through April 30, 2016 and cannot be terminated before that date without the mutual agreement of the Fund’s board of trustees and the adviser.
(57)	After discussions with the Fund's Board, the Manager has contractually agreed to waive fees and/or reimburse the Fund for certain expenses in order to limit “Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement” (excluding any applicable dividend expense, taxes, interest and fees from borrowing, any subsidiary expense, Acquired Fund Fees and Expenses, brokerage commissions, extraordinary expenses and certain other Fund expenses) to annual rates of 1.25% for Service Shares as calculated on the daily net assets of the Fund. This fee waiver and/or expense reimbursement may not be amended or withdrawn for one year from the date of this prospectus, unless approved by the board.
(58)	After discussions with the Fund's Board, the Manager has voluntarily agreed to waive fees and/or reimburse the Fund for certain expenses in order to limit “Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement” (excluding any applicable dividend expense, taxes, interest and fees from borrowing, any subsidiary expense, Acquired Fund Fees and Expenses, brokerage commissions, extraordinary expenses and certain other Fund expenses) to annual rates of 1.05% for Service Shares as calculated on the daily net assets of the Fund. The Manager has also contractually agreed to waive fees and/or reimburse Fund expenses in an amount equal to the indirect management fees incurred through the Fund's investments managed by the Manager or its affiliates. Each of these fee waiver and/or expense reimbursement may not be amended or withdrawn for one year from the date of this prospectus, unless approved by the board.
(59)	PIMCO has contractually agreed, through May 1, 2016, to reduce its advisory fee to the extent that the Underlying PIMCO Fund Expenses attributable to advisory and supervisory and administrative fees exceed 0.69% of the total assets invested in Underlying PIMCO Funds. PIMCO may recoup these waivers in future periods, not exceeding three years, provided total expenses, including such recoupment, do not exceed the annual expense limit. The fee reduction is implemented based on a calculation of Underlying PIMCO Fund Expenses attributable to advisory and supervisory and administrative fees that is different from the calculation of Acquired Fund Fees and Expenses.
(60)	PIMCO has contractually agreed to waive the Portfolio's advisory fee and the supervisory and administrative fee in an amount equal to the management fee and administration services fee, respectively, paid by the PIMCO Cayman Commodity Portfolio I Ltd. (the “Subsidiary”) to PIMCO. The Subsidiary pays PIMCO a management fee and an administrative services fee at the annual rates of 0.49% and 0.20%, respectively, of its net assets. This waiver may not be terminated by PIMCO and will remain in effect as long as PIMCO's contract with the Subsidiary is in place.
(61)	Reflects Putnam Management's contractual obligation to limit certain fund expenses through April 30, 2016. This obligation may be modified or discontinued only with the approval of the Board of Trustees.
(62)	AFFE has been restated to reflect estimated AFFE for the upcoming fiscal year. The Fund incurred AFFE during the most recent fiscal year, and therefore the operating expenses in this fee table will not correlate to the expense ratio in the Fund’s financial statements (or the “Financial Highlights” section in the prospectus). The financial statements include only the direct operating expenses incurred by the Fund, not the indirect costs of investing in other investment companies. Effective April 30, 2015, the Fund’s administrator and/or its affiliates have contractually agreed to waive fees and reimburse expenses for a period of one year in order to keep total direct operating expenses (exclusive of interest from borrowings, brokerage commissions, taxes, AFFE and other extraordinary expenses not incurred in the ordinary course of the Fund’s business) from exceeding 0.85%. This fee waiver and reimbursement agreement shall remain in effect until April 30, 2016, unless earlier terminated. The agreement may be amended or terminated only with the consent of the Board of Trustees.
(63)	AFFE has been restated to reflect estimated AFFE for the upcoming fiscal year. The Fund incurred AFFE during the most recent fiscal year, and therefore the operating expenses in this fee table will not correlate to the expense ratio in the Fund’s financial statements (or the “Financial Highlights” section in the prospectus). The financial statements include only the direct operating expenses incurred by the Fund, not the indirect costs of investing in other investment companies. Effective April 30, 2015, the Fund’s administrator and/or its affiliates have contractually agreed to waive fees and reimburse expenses for a period of one year in order to keep total direct operating expenses (exclusive of interest from borrowings, brokerage commissions, taxes, AFFE and other extraordinary expenses not incurred in the ordinary course of the Fund’s business) from exceeding 0.85%. This fee waiver and reimbursement agreement shall remain in effect until April 30, 2016, unless earlier terminated. The agreement may be amended or terminated only with the consent of the Board of Trustees.

(64)

The Fund administration fee is paid indirectly through the management fee. Management fees and other expenses have been restated to reflect current fiscal year fees and expenses as a result of the bundling of the fund's investment management agreement with its fund administration agreement effective May 1, 2014. Such combined investment management fees are described further under “Management” in the fund's prospectus. Total annual fund operating expenses are not affected by such bundling.

(65)

Because the Portfolio is new, Other Expenses are based on estimated amounts for the current fiscal year. Guggenheim Partners Investment Management, LLC (“Guggenheim” or the “Adviser”) has contractually agreed to reduce fees and reimburse expenses to the extent necessary to keep Net Expenses (excluding interest expense, taxes, acquired fund fees and expenses, brokerage commissions and extraordinary expenses (“Excluded Expenses”)) from exceeding 1.60%, of the Portfolio’s average daily net assets of the Class II Shares, respectively, until April 30, 2016 (the “Agreement”). This Agreement may be terminated by the Board, for any reason at any time. If, at any point, Total Annual Portfolio Operating Expenses (not including Excluded Expenses) are below the contractual caps, the Adviser is entitled to be reimbursed by the Portfolio in an amount equal to the difference between the Portfolio’s Total Annual Portfolio Operating Expenses

16

(not including Excluded Expenses) and the contractual caps to recapture all or a portion of its prior fee reductions or expense reimbursements made during the preceding three-year period during which this Agreement was in place.

(66)	The Portfolio's “Adviser,” Morgan Stanley Investment Management Inc., has agreed to reduce its advisory fee and/or reimburse the Portfolio so that Total Annual Portfolio Operating Expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 1.12%. The fee waivers and/or expense reimbursements will continue for at least one year or until such time as the Board of Directors of The Universal Institutional Funds, Inc. (the “Fund”) acts to discontinue all or a portion of such waivers and/or reimbursements when it deems such action is appropriate.
(67)	The Advisor has agreed to waive fees and/or pay Fund expenses to the extent necessary to prevent the operating expenses of the Fund (excluding acquired fund fees and expenses, interest expense, trading expenses, dividends and interest payments on securities sold short, taxes and extraordinary expenses) from exceeding 1.45% of the Fund's average daily net assets per year until May 1, 2016. During such time, the expense limitation is expected to continue until the Board of Trustees acts to discontinue all or a portion of such expense limitation.
(68)	The Trust has entered into an expense limitations agreement (contractual) with VIA whereby VIA has agreed to reimburse the Series for expenses necessary or appropriate for the operation of the Series (excluding interest, taxes, extraordinary expenses, and acquired fund fees and expenses, if any) to the extent that such expenses exceed 0.94% of the Series' Class A Shares average net assets. This expense limitation agreement is in place through April 30, 2016. After April 30, 2016, VIA may discontinue this expense reimbursement arrangement at any time. Under certain conditions, VIA may recapture operating expenses reimbursed under an expense reimbursement arrangement for a period of three years following the fiscal year in which such reimbursement occurred.
(69)	The Series' investment adviser has contractually agreed to limit the Series' total annual operating expenses (excluding interest, taxes, extraordinary expenses, and acquired fund fees and expenses, if any) so that such expenses do not exceed 1.70% for Class A Shares, through April 30, 2016. After April 30, 2016, the adviser may discontinue these expense reimbursement arrangements at any time. Under certain conditions, the adviser may recapture operating expenses reimbursed under these arrangements for a period of three years following the fiscal year in which such reimbursement occurred. Net Other Expenses include a recapture of previously waived expenses of 0.05%.

EXAMPLES

The following Examples are intended to help you compare the cost of investing in the contract with the cost of investing in other variable annuity contracts. These costs include Contractowner transaction expenses, contract fees, separate account annual expenses, and fund fees and expenses. The Examples have been calculated using the fees and expenses of the funds prior to the application of any contractual waivers and/or reimbursements.

The first Example assumes that you invest $10,000 in the contract for the time periods indicated. The Example also assumes that your investment has a 5% return each year, the maximum fees and expenses of any of the funds and that the i4LIFE^® Advantage is in effect. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:

1) If you surrender your contract at the end of the applicable time period:

	1 year	3 years	5 years	10 years
B-Share	$2,392	$4,939	$6,811	$9,730
C-Share	$1,705	$4,465	$6,540	$9,745

2) If you annuitize or do not surrender your contract at the end of the applicable time period:

	1 year	3 years	5 years	10 years
B-Share	$1,692	$4,439	$6,511	$9,730
C-Share	$1,705	$4,465	$6,540	$9,745

For more information, see Charges and Other Deductions in this prospectus, and the prospectus for the funds. Premium taxes may also apply, although they do not appear in the examples. The examples do not reflect Large Account Credits. Different fees and expenses not reflected in the examples may be imposed during a period in which Annuity Payouts are made. See The Contracts – Annuity Payouts. These examples should not be considered a representation of past or future expenses. Actual expenses may be more or less than those shown.

Summary of Common Questions

What kind of contract am I buying? It is an individual variable annuity contract between you and Lincoln Life. This prospectus primarily describes the variable side of the contract. You may purchase either of the contracts offered in this prospectus: Lincoln Investor Advantage^® B-Share or Lincoln Investor Advantage^® C-Share. The B-Share contract provides for lower mortality and expense risk charges and has a five-year surrender charge period. The C-Share contract provides for higher mortality and expense risk charges and has no surrender charges. See The Contracts – Contracts Offered in this Prospectus.

This contract and certain riders, benefits, service features and enhancements may not be available in all states, and the charges may vary in certain states. You should refer to your contract for any state-specific provisions as not all state variations are discussed in this prospectus. Please check with your registered representative regarding their availability.

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What is the Variable Annuity Account (VAA)? It is a separate account we established under Indiana insurance law, and registered with the SEC as a unit investment trust. VAA assets are allocated to one or more Subaccounts, according to your investment choices. VAA assets are not chargeable with liabilities arising out of any other business which we may conduct. See Variable Annuity Account.

What are Sample Portfolios? Sample portfolios are designed to assist you in deciding how to allocate your initial Purchase Payment among the various Subaccounts. Each sample portfolio consists of several Subaccounts that invest in underlying funds, each of which represents a specified percentage of your Purchase Payment. See The Contracts – Sample Portfolios.

What are my investment choices? You may allocate your Purchase Payments to the VAA or to the fixed account, if available. Based upon your instruction for Purchase Payments, the VAA applies your Purchase Payments to one or more of the Subaccounts, which, in turn, invest in a corresponding underlying fund. Each fund holds a portfolio of securities consistent with its investment policy. See Investments of the Variable Annuity Account – Description of the Funds.

Who invests my money? Several different investment advisers manage the investment options. See Investments of the Variable Annuity Account – Description of the Funds.

How does the contract work? If we approve your application, we will send you a contract. When you make Purchase Payments during the accumulation phase, you buy Accumulation Units. If you decide to receive an Annuity Payout, your Accumulation Units are converted to Annuity Units. Your Annuity Payouts will be based on the number of Annuity Units you receive and the value of each Annuity Unit on payout days. See The Contracts.

What charges do I pay under the contract? We apply a charge to the daily net asset value of the VAA that consists of a mortality and expense risk charge. There is an administrative charge in addition to the mortality and expense risk charge. See Charges and Other Deductions.

If you withdraw Purchase Payments, you may pay a surrender charge of a certain percentage of the surrendered or withdrawn Purchase Payment, depending upon which contract you have purchased, and how long those payments have been invested in the contract. For purposes of calculating surrender charges, we assume that all withdrawals prior to the fifth anniversary of the B-Share contract come first from Purchase Payments. We may waive surrender charges in certain situations. The C-Share contract does not have a surrender charge. See Charges and Other Deductions – Surrender Charge.

We will deduct any applicable premium tax from Purchase Payments or Contract Value, unless the governmental entity dictates otherwise, at the time the tax is incurred or at another time we choose.

See Expense Tables and Charges and Other Deductions for additional fees and expenses in these contracts.

The funds' investment management fees, expenses and expense limitations, if applicable, are more fully described in the prospectuses for the funds.

Charges may also be imposed during the regular income or Annuity Payout period, including i4LIFE^® Advantage, if elected. See The Contracts and Annuity Payouts.

For information about the compensation we pay for sales of contracts, see The Contracts – Distribution of the Contracts.

What Purchase Payments do I make, and how often? Your Purchase Payments are completely flexible, subject to minimum and maximum Purchase Payment amounts. For more information, see The Contracts – Purchase Payments.

Am I limited in the amount of Purchase Payments I can make into the contract? Yes, Purchase Payments totaling $5 million or more are subject to Home Office approval. This amount takes into consideration the total Purchase Payments for all existingLincoln Investor Advantage^® contracts for the same Contractowner, joint owner, and/or Annuitant. Upon advance written notice, we reserve the right to further limit, restrict, or suspend Purchase Payments made to the contract.

What is the Large Account Credit? The Large Account Credit is a credit you will receive on a quarterly basis when your Contract Value reaches a threshold of $1 million. The amount of the Large Account Credit is calculated as a percentage of the value of the variable Subaccounts on the quarterly Valuation Date. Large Account Credits are not considered Purchase Payments.

How will my Annuity Payouts be calculated? If you decide to annuitize, you may select an annuity option and start receiving Annuity Payouts from your contract as a fixed option or variable option or a combination of both. See Annuity Payouts - Annuity Options. Remember that participants in the VAA benefit from any gain, and take a risk of any loss, in the value of the securities in the funds' portfolios, which would decrease the amount applied to any payout option and the related payments.

What happens if I die before I annuitize? The Death Benefit may be paid upon the death of either the Contractowner or the Annuitant. Upon the death of the Contractowner, your Beneficiary will receive Death Benefit proceeds. Your Beneficiary has options as to how the Death Benefit is paid. In the alternative, the Contractowner may choose to receive a Death Benefit on the death of the Annuitant. See The Contracts – Death Benefit.

What happens if I die on or after the Annuity Commencement Date? Once you reach the Annuity Commencement Date, any applicable Death Benefit will terminate.

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May I transfer Contract Value between variable options and between the variable and fixed sides of the contract? Yes, subject to certain restrictions. Generally, transfers made before the Annuity Commencement Date are restricted to no more than twelve (12) per Contract Year. The minimum amount that can be transferred to the fixed account is $2,000 (unless the total amount in the Subaccounts is less than $2,000). If transferring funds from the fixed account to a Subaccount, you may only transfer up to 25% of the total value invested in the fixed account in any 12-month period. The minimum amount that may be transferred is $300. If permitted by your contract, we may discontinue accepting transfers into the fixed side of the contract at any time. See The Contracts – Transfers On or Before the Annuity Commencement Date and Transfers After the Annuity Commencement Date. For further information, see also the Fixed Side of the Contract.

What is i4LIFE^® Advantage?i4LIFE^® Advantage is an Annuity Payout option, available for purchase at an additional charge, that provides periodic variable lifetime income payments. A Death Benefit and the ability to make withdrawals are available during a defined period of time (Access Period). We assess a charge, which is imposed only during the i4LIFE^® Advantage payout phase.

May I surrender the contract or make a withdrawal? Yes, subject to contract requirements and to the restrictions of any qualified retirement plan for which the contract was purchased. See The Contracts – Surrenders and Withdrawals. If you surrender the contract or make a withdrawal, certain charges may apply. See Charges and Other Deductions. A portion of surrender or withdrawal proceeds may be taxable. In addition, if you decide to take a distribution before age 59½, a 10% Internal Revenue Service (IRS) tax penalty may apply. A surrender or a withdrawal also may be subject to 20% withholding. See Federal Tax Matters.

Do I get a free look at this contract? Yes. You can cancel the contract within ten days (in some states longer) of the date you first receive the contract. You need to return the contract, postage prepaid, to our Home Office. In most states you assume the risk of any market drop on Purchase Payments you allocate to the variable side of the contract. See Return Privilege.

Where may I find more information about Accumulation Unit values? Appendix A to this prospectus provides more information about Accumulation Unit values.

Investment Results

At times, the VAA may compare its investment results to various unmanaged indices or other variable annuities in reports to shareholders, sales literature and advertisements. The results will be calculated on a total return basis for various periods, with or without surrender charges. Results calculated without surrender charges will be higher. Total returns include the reinvestment of all distributions, which are reflected in changes in unit value.

Note that there can be no assurance that any money market fund will be able to maintain a stable net asset value per share. During extended periods of low interest rates and due in part to the contract fees and expenses, the yields of any Subaccount investing in a money market fund may also become extremely low and possibly negative.

The annual performance of the Subaccounts is based on past performance and does not indicate or represent future performance.

The Lincoln National Life Insurance Company

The Lincoln National Life Insurance Company (Lincoln Life or Company), organized in 1905, is an Indiana-domiciled insurance company, engaged primarily in the direct issuance of life insurance contracts and annuities. Lincoln Life is wholly owned by Lincoln National Corporation (LNC), a publicly held insurance and financial services holding company incorporated in Indiana. Lincoln Life is obligated to pay all amounts promised to Contractowners under the contracts.

Depending on when you purchased your contract, you may be permitted to make allocations to the fixed account, which is part of our general account. See The Fixed Side of the Contract. Therefore, any amounts that we may pay under the contract in excess of Contract Value are subject to our financial strength and claims-paying ability and our long-term ability to make such payments. With respect to the issuance of the contracts, Lincoln Life does not file periodic financial reports with the SEC pursuant to the exemption for life insurance companies provided under Rule 12h-7 of the Securities Exchange Act of 1934.

We issue other types of insurance policies and financial products as well, and we also pay our obligations under these products from our assets in the general account. Moreover, unlike assets held in the VAA, the assets of the general account are subject to the general liabilities of the Company and, therefore, to the Company’s general creditors. In the event of an insolvency or receivership, payments we make from our general account to satisfy claims under the contract would generally receive the same priority as our other Contractowner obligations.

The general account is not segregated or insulated from the claims of the insurance company’s creditors. Investors look to the financial strength of the insurance companies for these insurance guarantees. Therefore, guarantees provided by the insurance company as to benefits promised in the prospectus are subject to the claims paying ability of the insurance company and are subject to the risk that the insurance company may not be able to cover or may default on its obligations under those guarantees.

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Our Financial Condition.  Among the laws and regulations applicable to us as an insurance company are those which regulate the investments we can make with assets held in our general account. In general, those laws and regulations determine the amount and type of investments which we can make with general account assets.

In addition, state insurance regulations require that insurance companies calculate and establish on their financial statements, a specified amount of reserves in order to meet the contractual obligations to pay the claims of our Contractowners. In order to meet our claims-paying obligations, we regularly monitor our reserves to ensure we hold sufficient amounts to cover actual or expected contract and claims payments. However, it is important to note that there is no guarantee that we will always be able to meet our claims paying obligations, and that there are risks to purchasing any insurance product.

State insurance regulators also require insurance companies to maintain a minimum amount of capital in excess of liabilities, which acts as a cushion in the event that the insurer suffers a financial impairment, based on the inherent risks in the insurer’s operations. These risks include those associated with losses that we may incur as the result of defaults on the payment of interest or principal on assets held in our general account, which include bonds, mortgages, general real estate investments, and stocks, as well as the loss in value of these investments resulting from a loss in their market value.

How to Obtain More Information.  We encourage both existing and prospective Contractowners to read and understand our financial statements. We prepare our financial statements on both a statutory basis and according to Generally Accepted Accounting Principles (GAAP). Our audited GAAP financial statements, as well as the financial statements of the VAA, are located in the SAI. If you would like a free copy of the SAI, please write to us at: PO Box 2348, Fort Wayne, IN 46801-2348, or call 1-888-868-2583. In addition, the Statement of Additional Information is available on the SEC’s website at http://www.sec.gov. You may obtain our audited statutory financial statements and any unaudited statutory financial statements that may be available by visiting our website at www.LincolnFinancial.com.

You also will find on our website information on ratings assigned to us by one or more independent rating organizations. These ratings are opinions of an operating insurance company’s financial capacity to meet the obligations of its insurance and annuity contracts based on its financial strength and/or claims-paying ability. Additional information about rating agencies is included in the Statement of Additional Information.

Lincoln Financial Group is the marketing name for Lincoln National Corporation (NYSE:LNC) and its affiliates. Through its affiliates, Lincoln Financial Group offers annuities, life, group life and disability insurance, 401(k) and 403(b) plans, and comprehensive financial planning and advisory services.

Variable Annuity Account (VAA)

On November 3, 1997, the VAA was established as an insurance company separate account under Indiana law. It is registered with the SEC as a unit investment trust under the provisions of the Investment Company Act of 1940 (1940 Act). The VAA is a segregated investment account, meaning that its assets may not be charged with liabilities resulting from any other business that we may conduct. Income, gains and losses, whether realized or not, from assets allocated to the VAA are, in accordance with the applicable annuity contracts, credited to or charged against the VAA. They are credited or charged without regard to any other income, gains or losses of Lincoln Life. We are the issuer of the contracts and the obligations set forth in the contract, other than those of the Contractowner, are ours. The VAA satisfies the definition of a separate account under the federal securities laws. We do not guarantee the investment performance of the VAA. Any investment gain or loss depends on the investment performance of the funds. You assume the full investment risk for all amounts placed in the VAA.

The VAA is used to support other annuity contracts offered by us in addition to the contracts described in this prospectus. The other annuity contracts supported by the VAA generally invest in the same funds as the contracts described in this prospectus. These other annuity contracts may have different charges that could affect the performance of their Subaccounts, and they offer different benefits.

Financial Statements

The December 31, 2014 financial statements of the VAA and the December 31, 2014 consolidated financial statements of Lincoln Life are located in the SAI. If you would like a free copy of the SAI, complete and mail the request on the last page of this prospectus, or call 1-888-868-2583.

Investments of the Variable Annuity Account

You decide the Subaccount(s) to which you allocate Purchase Payments. There is a separate Subaccount which corresponds to each class of each fund. You may change your allocation without penalty or charges. Shares of the funds will be sold at net asset value with no initial sales charge to the VAA in order to fund the contracts. The funds are required to redeem fund shares at net asset value upon our request.

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Investment Advisers

As compensation for its services to the funds, each investment adviser for each fund receives a fee from the funds which is accrued daily and paid monthly. This fee is based on the net assets of each fund, as defined in the prospectuses for the funds.

Certain Payments We Receive with Regard to the Funds

We (or our affiliates) incur expenses in promoting, marketing, and administering the contracts and the underlying funds. With respect to a fund, including affiliated funds, the adviser and/or distributor, or an affiliate thereof, may make payments to us (or an affiliate) for certain services we provide on behalf of the funds. Such services include, but are not limited to, recordkeeping; aggregating and processing purchase and redemption orders; providing Contractowners with statements showing their interests within the funds; processing dividend payments; providing subaccounting services; and forwarding shareholder communications, such as proxies, shareholder reports, tax notices, and printing and delivering prospectuses and updates to Contractowners. It is anticipated that such payments will be based on a percentage of assets of the particular fund attributable to the contracts along with certain other variable contracts issued or administered by us (or an affiliate). These percentages are negotiated and vary with each fund. Some advisers and/or distributors may pay us significantly more than other advisors and/or distributors and the amount we receive may be substantial. These percentages currently range up to 0.46%, and as of the date of this prospectus, we were receiving payments from each fund family. We (or our affiliates) may profit from these payments. These payments may be derived, in whole or in part, from the investment advisory fee deducted from fund assets. Contractowners, through their indirect investment in the funds, bear the costs of these investment advisory fees (see the funds' prospectuses for more information). Additionally, a fund's adviser and/or distributor or its affiliates may provide us with certain services that assist us in the distribution of the contracts and may pay us and/or certain affiliates amounts for marketing programs and sales support, as well as amounts to participate in training and sales meetings.

In addition to the payments described above, most of the funds offered as part of this contract make payments to us under their distribution plans (12b-1 plans) for the marketing and distribution of fund shares. The payment rates range up to 0.40% based on the amount of assets invested in those funds. Payments made out of the assets of the fund will reduce the amount of assets that otherwise would be available for investment, and will reduce the fund's investment return. The dollar amount of future asset-based fees is not predictable because these fees are a percentage of the fund's average net assets, which can fluctuate over time. If, however, the value of the fund goes up, then so would the payment to us (or our affiliates). Conversely, if the value of the funds goes down, payments to us or our affiliates would decrease.

Description of the Funds

Each of the Subaccounts of the VAA is invested solely in shares of one of the funds available under the contract. Each fund may be subject to certain investment policies and restrictions which may not be changed without a majority vote of shareholders of that fund.

We select the funds offered through the contract based on several factors, including, without limitation, asset class coverage, the strength of the manager's reputation and tenure, brand recognition, performance, and the capability and qualification of each sponsoring investment firm. Another factor we consider during the initial selection process is whether the fund or an affiliate of the fund will make payments to us or our affiliates. We review each fund periodically after it is selected. We reserve the right to remove a fund or restrict allocation of additional Purchase Payments to a fund if we determine the fund no longer meets one or more of the factors and/or if the fund has not attracted significant Contractowner assets. Finally, when we develop a variable annuity product in cooperation with a fund family or distributor (e.g., a “private label” product), we generally will include funds based on recommendations made by the fund family or distributor, whose selection criteria may differ from our selection criteria.

Certain funds offered as part of this contract have similar investment objectives and policies to other portfolios managed by the adviser. The investment results of the funds, however, may be higher or lower than the other portfolios that are managed by the adviser or sub-adviser. There can be no assurance, and no representation is made, that the investment results of any of the funds will be comparable to the investment results of any other portfolio managed by the adviser or sub-adviser, if applicable.

Certain funds invest their assets in other funds. As a result, you will pay fees and expenses at both fund levels. This will reduce your investment return. These arrangements are referred to as funds of funds or master-feeder funds. Funds of funds or master-feeder structures may have higher expenses than funds that invest directly in debt or equity securities. An advisor affiliated with us manages some of the available funds of funds. Our affiliates may promote the benefits of such funds to Contractowners and/or suggest that Contractowners consider whether allocating some or all of their Contract Value to such portfolios is consistent with their desired investment objectives. In doing so, we may be subject to conflicts of interest insofar as we may derive greater revenues from the affiliated fund of funds than certain other funds available to you under your contract.

Certain funds (sometimes called “alternative funds”) expect to invest in (or may invest in some) positions that emphasize alternative investment strategies and/or non-traditional asset classes and, as a result, are subject to the risk factors of those asset classes and/or investment strategies. Some of those risks may include, but are not limited to, general economic risk, geopolitical risk, commodity-price volatility, counterparty and settlement risk, currency risk, derivatives risk, emerging markets risk, foreign securities risk, high yield bond exposure, index investing risk, exchange traded notes risk, industry concentration risk, leveraging risk, real estate investment risk, master limited partnership risk, master limited partnership tax risk, energy infrastructure companies risk, sector risk, short

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sales risk, direct investments risk, hard assets sectors risk, active trading and “overlay” risks, event driven investing risk, global macro strategies risk, temporary defensive positions and large cash positions. If you are considering investing in alternative investment funds, you should ensure that you understand the complex investment strategies sometimes employed, and be prepared to tolerate the risk of such asset classes. For a complete list of risks, as well as a discussion of risk and investment strategies, please refer to the funds' prospectuses.

Certain of the underlying funds, including funds managed by an adviser affiliated with us, employ risk management strategies that are intended to control the funds’ overall volatility, and for some funds, to also reduce the downside exposure of the funds during significant market downturns. These risk management strategies could limit the upside participation of the fund in rising equity markets relative to other funds. For more information about the funds and the investment strategies they employ, please refer to the funds’ current prospectuses. Fund prospectuses are available by contacting us.

Following are brief summaries of the fund descriptions. More detailed information may be obtained from the current prospectus for each fund. You should read each fund prospectus carefully before investing. Prospectuses for each fund are available by contacting us. In addition, if you receive a summary prospectus for a fund, you may obtain a full statutory prospectus by referring to the contact information for the fund company on the cover page of the summary prospectus. Please be advised that there is no assurance that any of the funds will achieve their stated objectives.

AIM Variable Insurance Funds (Invesco Variable Insurance Funds), advised by Invesco Advisers, Inc.

• Invesco V.I. Balanced-Risk Allocation Fund (Series II Shares): To seek total return with a low to moderate correlation to traditional financial market indices.

• Invesco V.I. Comstock Fund (Series II Shares): To seek capital growth and income through investments in equity securities, including common stocks, preferred stocks and securities convertible into common and preferred stocks.

• Invesco V.I. Diversified Dividend Fund (Series II Shares): To seek to provide reasonable current income and long-term growth of income and capital.

• Invesco V.I. Equally-Weighted S&P 500 Fund (Series II Shares)¹: To seek to achieve a high level of total return on its assets through a combination of capital appreciation and current income.

• Invesco V.I. Equity and Income Fund (Series II Shares): Both capital appreciation and current income.

• Invesco V.I. International Growth Fund (Series II Shares): Long-term growth of capital.

AllianceBernstein Variable Products Series Fund, advised by AllianceBernstein, L.P.

• AB VPS Small/Mid Cap Value Portfolio (Class B): Long-term growth of capital.
(formerly AllianceBernstein VPS Small/Mid Cap Value Portfolio)

ALPS Variable Investment Trust, advised by ALPS Advisors, Inc.

• ALPS/Alerian Energy Infrastructure Portfolio (Class III): Seeks investment results that correspond (before fees and expenses) generally to the price and yield performance of its underlying index, the Alerian Energy Infrastructure Index; a master-feeder fund.

• ALPS/Red Rocks Listed Private Equity Portfolio (Class III): Maximize total return.
This fund will be available on or about May 18, 2015. Consult your financial advisor.

• ALPS/Stadion Tactical Defensive Portfolio (Class III): Capital appreciation; a fund of funds.

• ALPS/Stadion Tactical Growth Portfolio (Class III): Long-term capital appreciation; a fund of funds.
This fund will be available on or about May 18, 2015. Consult your financial advisor.

American Funds Insurance Series^®, advised by Capital Research and Management Company

• Asset Allocation Fund (Class 4): High total return (including income and capital gains) consistent with preservation of capital over the long term.

• Blue Chip Income and Growth Fund (Class 4): To produce income exceeding the average yield on U.S. stocks generally and to provide an opportunity for growth of principal consistent with sound common stock investing.

• Capital Income Builder^® (Class 4): Seeks to provide a level of current income that exceeds the average yield on U.S. stocks generally and to provide a growing stream of income over the years.

• Global Growth Fund (Class 4): Long-term growth of capital.

• Global Small Capitalization Fund (Class 4): Long-term growth of capital.

• Growth Fund (Class 4): Capital growth.

• Growth-Income Fund (Class 4): Long-term growth of capital and income.

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• International Fund (Class 4): Long-term growth of capital.

• Mortgage Fund^SM (Class 4): To provide current income and preservation of capital.

• New World Fund^® (Class 4): Long-term capital appreciation.

BlackRock Variable Series Funds, Inc., advised by BlackRock Advisors, LLC

• BlackRock Global Allocation V.I. Fund (Class III): High total investment return.

• BlackRock iShares^® Alternative Strategies V.I. Fund (Class III): Long term growth of capital and risk adjusted returns; a fund of funds.
This fund will be available on or about May 18, 2015. Consult your financial advisor.

Delaware VIP^® Trust, advised by Delaware Management Company²

• Diversified Income Series (Service Class): Maximum long-term total return consistent with reasonable risk.

• Emerging Markets Series (Service Class): Long-term capital appreciation.

• REIT Series (Service Class): Maximum long-term total return, with capital appreciation as a secondary objective.

• Small Cap Value Series (Service Class): Capital appreciation.

• Smid Cap Growth Series (Service Class): Long-term capital appreciation.

• U.S. Growth Series (Service Class): Long-term capital appreciation.

• Value Series (Service Class): Long-term capital appreciation.

Deutsche Variable Series II, advised by Deutsche Investment Management Americas, Inc.

• Deutsche Alternative Asset Allocation VIP Portfolio (Class B): Capital appreciation; a fund of funds.

Eaton Vance Variable Trust, advised by Eaton Vance Management.

• Eaton Vance VT Floating-Rate Income Fund (Initial Class): To provide a high level of current income.

Fidelity^® Variable Insurance Products, advised by Fidelity Management and Research Company

• Fidelity^® VIP Contrafund^® Portfolio (Service Class 2): Long-term capital appreciation.

• Fidelity^® VIP Growth Portfolio (Service Class 2): To achieve capital appreciation.

• Fidelity^® VIP Mid Cap Portfolio (Service Class 2): Long-term growth of capital.

• Fidelity^® VIP Strategic Income Portfolio (Service Class 2): High level of current income.
This fund will be available on or about May 18, 2015. Consult your financial advisor.

First Trust Variable Insurance Trust, advised by First Trust Advisors L.P.

• First Trust Multi Income Allocation Portfolio (Class I): Seeks to provide a high level of current income, with a secondary objective of capital appreciation.

• First Trust/Dow Jones Dividend & Income Allocation Portfolio (Class I)³: Seeks to provide total return by allocating among dividend-paying stocks and investment grade bonds.

Franklin Templeton Variable Insurance Products Trust, advised by Franklin Advisers, Inc. for the Franklin Income VIP Fund and by Franklin Mutual Advisers, LLC for the Franklin Mutual Shares VIP Fund.

• Franklin Founding Funds Allocation VIP Fund (Class 4): Capital appreciation, with income as a secondary goal.

• Franklin Income VIP Fund (Class 4): To maximize income while maintaining prospects for capital appreciation.

• Franklin Mutual Shares VIP Fund (Class 4): Capital appreciation; income is a secondary consideration.

• Franklin Rising Dividends VIP Fund (Class 4): Long-term capital appreciation; preservation of capital is also an important consideration.

• Franklin Small Cap Value VIP Fund (Class 4): Long-term total return.

• Franklin Small-Mid Cap Growth VIP Fund (Class 4): Long-term capital growth.

• Templeton Foreign VIP Fund (Class 4): Long-term capital growth.

• Templeton Global Bond VIP Fund (Class 4): High current income consistent with preservation of capital; capital appreciation is a secondary objective.

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Goldman Sachs Variable Insurance Trust, advised by Goldman Sachs Asset Management, L.P.

• Goldman Sachs VIT Money Market Fund (Service Shares): Seeks maximum current income through investment in U.S. short-term debt obligations.

• Goldman Sachs VIT Multi-Strategy Alternatives Portfolio (Advisor Shares): Long-term growth of capital; a fund of funds.

• Goldman Sachs VIT Strategic Income Fund (Advisor Shares): To seek total return comprised of income and capital appreciation.

Hartford Series Fund, Inc., advised by Hartford Funds Management Company, LLC.

• Hartford Capital Appreciation HLS Fund (Class IC): Growth of capital.

Ivy Funds Variable Insurance Portfolios, advised by Waddell & Reed Investment Management Company.

• Ivy Funds VIP Asset Strategy Portfolio: Total return.

• Ivy Funds VIP Energy Portfolio: Capital growth and appreciation.

• Ivy Funds VIP High Income Portfolio: To seek to provide total return through a combination of high current income and capital appreciation.

• Ivy Funds VIP Micro Cap Growth Portfolio: Growth of capital.

• Ivy Funds VIP Mid Cap Growth Portfolio: Growth of capital.

• Ivy Funds VIP Science and Technology Portfolio: Growth of capital.

JPMorgan Insurance Trust, advised by J.P. Morgan Investment Management Inc.

• JPMorgan Insurance Trust Global Allocation Portfolio (Class 2): Maximize long-term total return.
This fund will be available on or about May 18, 2015. Consult your financial advisor.

• JPMorgan Insurance Trust Income Builder Portfolio (Class 2): Maximize income while maintaining prospects for capital appreciation.
This fund will be available on or about May 18, 2015. Consult your financial advisor.

• JPMorgan Insurance Trust Intrepid Mid Cap Portfolio (Class 2): To seek long-term capital growth by investing primarily in equity securities of companies with intermediate capitalizations.

Legg Mason Partners Variable Equity Trust, advised by Legg Mason Partners Fund Advisor, LLC

• ClearBridge Variable Aggressive Growth Portfolio (Class II): Capital appreciation.

• ClearBridge Variable Mid Cap Core Portfolio (Class II): Long-term growth of capital.

Lincoln Variable Insurance Products Trust, advised by Lincoln Investment Advisors Corporation.

• LVIP American Balanced Allocation Fund (Service Class): A balance between a high level of current income and growth of capital, with an emphasis on growth of capital; a fund of funds.

• LVIP American Growth Allocation Fund (Service Class): A balance between a high level of current income and growth of capital, with a greater emphasis on growth of capital; a fund of funds.

• LVIP American Preservation Fund (Service Class): Current income, consistent with the preservation of capital; a fund of funds.

• LVIP AQR Enhanced Global Strategies Fund (Service Class): Long-term growth of capital.

• LVIP Baron Growth Opportunities Fund (Service Class): Capital appreciation.

• LVIP BlackRock Emerging Markets Managed Volatility Fund (Service Class): To invest primarily in securities included in a broad-based emerging markets index and to seek to approximate as closely as possible, before fees and expenses, the performance of that index while seeking to control the level of portfolio volatility.⁵
(formerly LVIP BlackRock Emerging Markets RPM Fund)

• LVIP BlackRock Equity Dividend Managed Volatility Fund (Service Class): Reasonable income by investing primarily in income-producing equity securities.⁵
(formerly LVIP BlackRock Equity Dividend RPM Fund)

• LVIP BlackRock Inflation Protected Bond Fund (Service Class): To maximize real return, consistent with preservation of real capital and prudent investment management.

• LVIP BlackRock Multi-Asset Income Fund (Service Class): To maximize current income; capital appreciation is a secondary objective; a fund of funds.

24

• LVIP Clarion Global Real Estate Fund (Service Class): Total return through a combination of current income and long-term capital appreciation.

• LVIP Delaware Bond Fund (Service Class)²: Maximum current income (yield) consistent with a prudent investment strategy.

• LVIP Delaware Diversified Floating Rate Fund (Service Class)²: Total return.

• LVIP Delaware Social Awareness Fund (Service Class)²: To maximize long-term capital appreciation.

• LVIP Dimensional International Core Equity Fund (Service Class): Long-term capital appreciation.
This fund will be available on or about May 18, 2015. Consult your financial advisor.

• LVIP Dimensional International Core Equity Managed Volatility Fund (Service Class): Long-term capital appreciation; a fund of funds.⁵
(formerly LVIP Dimensional Non-U.S. Equity RPM Fund)

• LVIP Dimensional U.S. Core Equity 1 Fund (Service Class): Long-term capital appreciation.
This fund will be available on or about May 18, 2015. Consult your financial advisor.

• LVIP Dimensional U.S. Core Equity 2 Fund (Service Class): Long-term capital appreciation.
This fund will be available on or about May 18, 2015. Consult your financial advisor.

• LVIP Dimensional U.S. Core Equity 2 Managed Volatility Fund (Service Class): Long-term capital appreciation; a fund of funds.⁵
(formerly LVIP Dimensional U.S. Equity RPM Fund)

• LVIP Dimensional/Vanguard Total Bond Fund (Service Class): Total return consistent with the preservation of capital; a fund of funds.

• LVIP Franklin Templeton Multi-Asset Opportunities Fund (Service Class): Long-term growth of capital.

• LVIP Global Growth Allocation Managed Risk Fund (Service Class): A balance between a high level of current income and growth of capital, with a greater emphasis on growth of capital; a fund of funds.⁴
(formerly LVIP Managed Risk Profile Growth Fund)

• LVIP Global Income Fund (Service Class): Current income consistent with preservation of capital.

• LVIP Global Moderate Allocation Managed Risk Fund (Service Class): A balance between a high level of current income and growth of capital, with an emphasis on growth of capital; a fund of funds.⁴
(formerly LVIP Managed Risk Profile Moderate Fund)

• LVIP Goldman Sachs Income Builder Fund (Service Class): To seek a balance of current income and capital appreciation.

• LVIP JPMorgan High Yield Fund (Service Class): A high level of current income; capital appreciation is the secondary objective.

• LVIP JPMorgan Mid Cap Value Managed Volatility Fund (Service Class): Long-term capital appreciation.⁵
(formerly LVIP JPMorgan Mid Cap Value RPM Fund)

• LVIP MFS International Growth Fund (Service Class): Long-term capital appreciation.

• LVIP MFS Value Fund (Service Class): Capital appreciation.

• LVIP Mondrian International Value Fund (Service Class): Long-term capital appreciation as measured by the change in the value of fund shares over a period of three years or longer.

• LVIP Multi-Manager Global Equity Managed Volatility Fund (Service Class): Long-term growth of capital; a fund of funds.⁵
(formerly LVIP Multi-Manager Global Equity RPM Fund)

• LVIP PIMCO Low Duration Bond Fund (Service Class): To seek a high level of current income consistent with preservation of capital.

• LVIP SSgA Bond Index Fund (Service Class): To match as closely as practicable, before fees and expenses, the performance of the Barclays Capital U.S. Aggregate Index.

• LVIP SSgA Conservative Structured Allocation Fund (Service Class): A high level of current income, with some consideration given to growth of capital; a fund of funds.

• LVIP SSgA Developed International 150 Fund (Service Class): To maximize long-term capital appreciation.

• LVIP SSgA Emerging Markets 100 Fund (Service Class): To maximize long-term capital appreciation.

• LVIP SSgA Global Tactical Allocation Managed Volatility Fund (Service Class): Long-term growth of capital; a fund of funds.⁵
LVIP SSgA Global Tactical Allocation RPM Fund)

• LVIP SSgA International Index Fund (Service Class): To approximate as closely as practicable, before fees and expenses, the performance of a broad market index of non-U.S. foreign securities.

• LVIP SSgA Large Cap 100 Fund (Service Class): To maximize long-term capital appreciation.

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• LVIP SSgA Moderate Structured Allocation Fund (Service Class): A balance between a high level of current income and growth of capital, with an emphasis on growth of capital; a fund of funds.

• LVIP SSgA Moderately Aggressive Structured Allocation Fund (Service Class): A balance between high level of current income and growth of capital, with a greater emphasis on growth of capital; a fund of funds.

• LVIP SSgA S&P 500 Index Fund (Service Class): 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.¹

• LVIP SSgA Small-Cap Index Fund (Service Class): 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.

• LVIP SSgA Small-Mid Cap 200 Fund (Service Class): To maximize long-term capital appreciation.

• LVIP T. Rowe Price Growth Stock Fund (Service Class): Long-term capital growth.

• LVIP T. Rowe Price Structured Mid-Cap Growth Fund (Service Class): To maximize capital appreciation.

• LVIP Templeton Growth Managed Volatility Fund (Service Class): Long-term capital growth.⁵
(formerly LVIP Templeton Growth RPM Fund)

• LVIP Vanguard Domestic Equity ETF Fund (Service Class): Long-term capital appreciation; a fund of funds.

• LVIP Vanguard International Equity ETF Fund (Service Class): Long-term capital appreciation; a fund of funds.

• LVIP Wellington Capital Growth Fund (Service Class): Capital growth.
(formerly LVIP Capital Growth Fund)

• LVIP Wellington Mid-Cap Value Fund (Service Class): Long-term capital appreciation.
(formerly LVIP Mid-Cap Value Fund)

Lord Abbett Series Fund, Inc., advised by Lord, Abbett & Co. LLC

• Lord Abbett Series Fund Bond Debenture Portfolio (Class VC): To seek high current income and the opportunity for capital appreciation to produce a high total return.

• Lord Abbett Series Fund Developing Growth Portfolio (Class VC): Long-term growth of capital.

• Lord Abbett Series Fund Short Duration Income Portfolio (Class VC): To seek high level of income consistent with preservation of capital.

MFS^® Variable Insurance Trust, advised by Massachusetts Financial Services Company

• Growth Series (Service Class): Capital appreciation.

• International Value Series (Service Class): Capital appreciation.

• Utilities Series (Service Class): Total return.

Oppenheimer Variable Account Funds, advised by Oppenheimer Funds, Inc.

• Oppenheimer International Growth Fund/VA (Service Shares): Capital appreciation.

• Oppenheimer Main Street Small Cap Fund^®/VA (Service Shares): Capital appreciation.

PIMCO Variable Insurance Trust, advised by PIMCO

• PIMCO VIT All Asset All Authority Portfolio (Advisor Class): To seek maximum real return, consistent with preservation of real capital and prudent investment management; a fund of funds.

• PIMCO VIT CommodityRealReturn^® Strategy Portfolio (Advisor Class): Maximum real return.

• PIMCO VIT Emerging Markets Bond Portfolio (Advisor Class): To seek maximum total return, consistent with preservation of capital and prudent investment management.

• PIMCO VIT Unconstrained Bond Portfolio (Advisor Class): To seek maximum long-term return, consistent with preservation of capital and prudent investment management.

Putnam Variable Trust, advised by Putnam Investment Management, LLC

• Putnam VT Absolute Return 500 Fund (Class IB): To seek to earn a positive total return that exceeds the rate of inflation by 500 basis points (or 5.00%) on an annualized basis over a reasonable period of time (generally at least three years) regardless of market conditions.

• Putnam VT Global Health Care Fund (Class IB): Capital appreciation.
This fund will be available on or about May 18, 2015. Consult your financial advisor.

26

• Putnam VT Income Fund (Class IB): High current income with preservation of capital as its secondary objective.
This fund will be available on or about May 18, 2015. Consult your financial advisor.

Rydex Variable Trust, advised by Security Investors, LLC.

• Guggenheim VT Long Short Equity: Long-term capital appreciation.

• Guggenheim VT Multi-Hedge Strategies: To seek long-term capital appreciation with less risk than traditional equity funds.

SEI Insurance Products Trust, advised by SEI Investments Management Corporation.

• SEI VP Market Growth Strategy Fund (Class III): To seek capital appreciation; a fund of funds.

• SEI VP Market Plus Strategy Fund (Class III): Long-term capital appreciation; a fund of funds.

Transparent Value Trust, advised by Guggenheim Partners Investment Management, LLC.

• Transparent Value Directional Allocation VI Portfolio (Class II): To provide investment results that, before fees and expenses, correspond generally to the performance for the Transparent Value Directional Index(SM).

The Universal Institutional Funds, Inc., advised by Morgan Stanley Investment Management, Inc.

• UIF Global Infrastructure Portfolio (Class II): To seek both capital appreciation and current income.

Van Eck VIP Trust, advised by Van Eck Associates Corporation.

• Van Eck VIP Global Hard Assets Fund (Class S Shares): Long-term capital appreciation by investing primarily in hard asset securities; a fund of funds.

Virtus Variable Insurance Trust, advised by Virtus Investment Advisers, Inc.

• Virtus Multi-Sector Fixed Income Series (Class A Shares): Long-term total return.

• Virtus Premium AlphaSector^® Series (Class A Shares): Long-term capital appreciation; a fund of funds.

1 The Index this portfolio is managed to (the “Index”) is a product of S&P Dow Jones Indices LLC (“SPDJI”) and has been licensed for use by one or more of the portfolio’s service providers (“Licensee”). Standard & Poor’s^® and S&P^® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”); Dow Jones^® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”); and these trademarks have been licensed for use by SPDJI. S&P^®, S&P GSCI^® and the Index are trademarks of S&P and have been licensed for use by SPDJI and its affiliates and sublicensed for certain purposes by Licensee. The Index is not owned, endorsed, or approved by or associated with any additional third party. Licensee’s product(s) is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates, or their third party licensors and none of SPDJI, Dow Jones, S&P nor their respective affiliates or third party licensors make any representation regarding the advisability of investing in such product(s).

2

Investments in Delaware Investments VIP Series, Delaware Funds, LVIP Delaware Funds or Lincoln Life accounts managed by Delaware Investment Advisors, a series of Delaware Management Business Trust, are not and will not be deposits with or liabilities of Macquarie Bank Limited ABN 46008 583 542 and its holding companies, including their subsidiaries or related companies, and are subject to investment risk, including possible delays in prepayment and loss of income and capital invested. No Macquarie Group company guarantees or will guarantee the performance of the Series or Funds or accounts, the repayment of capital from the Series or Funds or account, or any particular rate of return.

3

Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). The trademark has been licensed to S&P Dow Jones Indices LLC and have been sublicensed for use for certain purposes by First Trust Advisors L.P. 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.

4 The fund employs hedging strategies designed to provide for downside protection during sharp downward movements in equity markets.

5 The fund employs hedging strategies designed to reduce overall portfolio volatility.

Fund Shares

We will purchase shares of the funds at net asset value and direct them to the appropriate Subaccounts of the VAA. We will redeem sufficient shares of the appropriate funds to pay Annuity Payouts, Death Benefits, surrender/withdrawal proceeds or for other purposes described in the contract. If you want to transfer all or part of your investment from one Subaccount to another, we may redeem shares held in the first Subaccount and purchase shares of the other. Redeemed shares are retired, but they may be reissued later.

Shares of the funds are not sold directly to the general public. They are sold to us, and may be sold to other insurance companies, for investment of the assets of the Subaccounts established by those insurance companies to fund variable annuity and variable life insurance contracts.

When a fund sells any of its shares both to variable annuity and to variable life insurance separate accounts, it is said to engage in mixed funding. When a fund sells any of its shares to separate accounts of unaffiliated life insurance companies, it is said to engage in shared funding.

The funds currently engage in mixed and shared funding. Therefore, due to differences in redemption rates or tax treatment, or other considerations, the interest of various Contractowners participating in a fund could conflict. Each of the fund’s Board of Directors will

27

monitor for the existence of any material conflicts, and determine what action, if any, should be taken. The funds do not foresee any disadvantage to Contractowners arising out of mixed or shared funding. If such a conflict were to occur, one of the separate accounts might withdraw its investment in a fund. This might force a fund to sell portfolio securities at disadvantageous prices. See the prospectuses for the funds.

Reinvestment of Dividends and Capital Gain Distributions

All dividends and capital gain distributions of the funds are automatically reinvested in shares of the distributing funds at their net asset value on the date of distribution. Dividends are not paid out to Contractowners as additional units, but are reflected as changes in unit values.

Addition, Deletion or Substitution of Investments

We reserve the right, within the law, to make certain changes to the structure and operation of the VAA at our discretion and without your consent. We may add, delete, or substitute funds for all Contractowners or only for certain classes of Contractowners. New or substitute funds may have different fees and expenses, and may only be offered to certain classes of Contractowners.

Substitutions may be made with respect to existing investments or the investment of future Purchase Payments, or both. We may close Subaccounts to allocations of Purchase Payments or Contract Value, or both, at any time in our sole discretion. The funds, which sell their shares to the Subaccounts pursuant to participation agreements, also may terminate these agreements and discontinue offering their shares to the Subaccounts. Substitutions might also occur if shares of a fund should no longer be available, or if investment in any fund’s shares should become inappropriate, in the judgment of our management, for the purposes of the contract, or for any other reason in our sole discretion and, if required, after approval from the SEC.

We may also:

• remove, combine, or add Subaccounts and make the new Subaccounts available to you at our discretion;

• transfer assets supporting the contracts from one Subaccount to another or from the VAA to another separate account;

• combine the VAA with other separate accounts and/or create new separate accounts;

• deregister the VAA under the 1940 Act; and

• operate the VAA as a management investment company under the 1940 Act or as any other form permitted by law.

We may modify the provisions of the contracts to reflect changes to the Subaccounts and the VAA and to comply with applicable law. We will not make any changes without any necessary approval by the SEC. We will also provide you written notice.

Charges and Other Deductions

We will deduct the charges described below to cover our costs and expenses, services provided and risks assumed under the contracts. We incur certain costs and expenses for the distribution and administration of the contracts and for providing the benefits payable thereunder.

Our administrative services include:

• processing applications for and issuing the contracts;

• processing purchases and redemptions of fund shares as required (including dollar cost averaging, portfolio rebalancing, and automatic withdrawal services – See Additional Services and the SAI for more information on these programs);

• maintaining records;

• administering Annuity Payouts;

• furnishing accounting and valuation services (including the calculation and monitoring of daily Subaccount values);

• reconciling and depositing cash receipts;

• providing contract confirmations;

• providing toll-free inquiry services; and

• furnishing telephone and other electronic surrenders, withdrawals and fund transfer services.

The risks we assume include:

• the risk that Annuitants receiving Annuity Payouts live longer than we assumed when we calculated our guaranteed rates (these rates are incorporated in the contract and cannot be changed);

• the risk that more Contractowners than expected will qualify for waivers of the surrender charge;

• the risk that our costs in providing the services will exceed our revenues from contract charges (which we cannot change).

The amount of a charge may not necessarily correspond to the costs associated with providing the services or benefits indicated by the description of the charge. For example, the surrender charge collected (if applicable) may not fully cover all of the sales and distribution expenses actually incurred by us. Any remaining expenses will be paid from our general account which may consist, among

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other things, of proceeds derived from mortality and expense risk charges deducted from the account. We may profit from one or more of the fees and charges deducted under the contract. We may use these profits for any corporate purpose, including financing the distribution of the contracts.

Deductions from the VAA

For the base contract, we apply a charge to the average daily net asset value of the Subaccounts based on which contract you choose. Those charges are equal to an annual rate of:

	Account Value Death Benefit
B-Share:
Mortality and expense risk charge	1.00%
Administrative charge	0.10%
Total annual charge for each Subaccount	1.10%
C-Share:
Mortality and expense risk charge	1.15%
Administrative charge	0.10%
Total annual charge for each Subaccount	1.25%

Surrender Charge

For B-Share contracts only, a surrender charge applies (except as described below) to surrenders and withdrawals of Purchase Payments that have been invested for the periods indicated below. The surrender charge is calculated separately for each Purchase Payment. The contract anniversary is the annually occurring date beginning with the effective date of the contract. For example, if the effective date of your contract is January 1^st, your contract anniversary would be on January 1^st of each subsequent year.

	Number of contract anniversaries since Purchase Payment was invested
	0	1	2	3	4	5
Surrender charge as a percentage of the surrendered or withdrawn Purchase Payments	7 %	6 %	5 %	4 %	3 %	0 %

A surrender charge does not apply to:

• A surrender or withdrawal of a Purchase Payment beyond the fifth anniversary since the Purchase Payment was invested;

• Withdrawals of Contract Value during a Contract Year to the extent that the total Contract Value withdrawn during the current Contract Year does not exceed the free amount. The free amount is equal to the greater of 10% of the current Contract Value or 10% of the total Purchase Payments (this does not apply upon surrender of the contract);

• Purchase Payments used in the calculation of the initial benefit payment to be made under an Annuity Payout option, other than the i4LIFE^® Advantage option;

• A surrender or withdrawal of any Purchase Payments, as a result of permanent and total disability of the Contractowner as defined in Section 22(e)(3) of the tax code, if the disability occurred after the effective date of the contract and before the 65^th birthday of the Contractowner. For contracts issued in the State of New Jersey, a different definition of permanent and total disability applies;

• A surviving spouse, at the time he or she assumes ownership of the contract as a result of the death of the original owner (however, the surrender charge schedule of the original contract will continue to apply to the spouse's contract);

• A surrender or withdrawal of any Purchase Payments, as a result of the admittance of the Contractowner to an accredited nursing home or equivalent health care facility, where the admittance into the facility occurs after the effective date of the contract and the owner has been confined for at least 90 consecutive days;

• A surrender or withdrawal of any Purchase Payments as a result of the diagnosis of a terminal illness of the Contractowner. Diagnosis of a terminal illness must be after the effective date of the contract and results in a life expectancy of less than one year as determined by a qualified professional medical practitioner;

• A surrender of the contract as a result of the death of the Contractowner or Annuitant;

• Purchase Payments when used in the calculation of the initial Account Value under the i4LIFE^® Advantage option;

• Regular Income Payments made under i4LIFE^® Advantage or periodic payments made under any Annuity Payout option made available by us;

• A surrender of a contract or withdrawal of a Contract Value from contracts issued to Selling Group Individuals.

For purposes of calculating the surrender charge on withdrawals, we assume that:

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1.	The free amount will be withdrawn from Purchase Payments on a first in-first out (“FIFO”) basis.
2.	Prior to the fifth anniversary, any amount withdrawn above the free amount during a Contract Year will be withdrawn in the following order:

• from Purchase Payments (on a FIFO basis) until exhausted; then

• from earnings until exhausted.

3. On or after the fifth anniversary, any amount withdrawn above the free amount during a Contract Year will be withdrawn in the following order:

• from Purchase Payments (on a FIFO basis) to which a surrender charge no longer applies until exhausted; then

• from earnings and Large Account Credits, if any, until exhausted; then

• from Purchase Payments (on a FIFO basis) to which a surrender charge still applies until exhausted.

We apply the surrender charge as a percentage of Purchase Payments, which means that you would pay the same surrender charge at the time of surrender regardless of whether your Contract Value has increased or decreased. The surrender charge is calculated separately for each Purchase Payment. The surrender charges associated with surrender or withdrawal are paid to us to compensate us for the loss we experience on contract distribution costs when Contractowners surrender or withdraw before distribution costs have been recovered.

If the Contractowner is a corporation or other non-individual (non-natural person), the Annuitant or joint Annuitant will be considered the Contractowner or joint owner for purposes of determining when a surrender charge does not apply.

Account Fee

During the accumulation period, we will deduct an account fee of $35 from the Contract Value on each contract anniversary to compensate us for the administrative services provided to you; this $35 account fee will also be deducted from the Contract Value upon surrender. This fee will be waived after the fifteenth Contract Year. The account fee will be waived for any contract with a Contract Value that is equal to or greater than $100,000 on the contract anniversary. There is no account fee on contracts issued to Selling Group Individuals (applicable to B-Share contracts only).

Rider Charge

i4LIFE^® Advantage Charge. While this rider is in effect, there is a daily charge for i4LIFE^® Advantage that is based on your Account Value. The initial Account Value is your Contract Value on the Valuation Date i4LIFE^® Advantage becomes effective (or your initial Purchase Payment if i4LIFE^® Advantage is purchased at contract issue), less any applicable premium taxes. During the Access Period, your Account Value equals the total value of all of the Contractowner's Accumulation Units plus the Contractowner's value in the fixed account, and will be reduced by Regular Income Payments made as well as any withdrawals.

The annual rate of the i4LIFE^® Advantage charge is:

	B-Share	C-Share
Account Value Death Benefit	1.50%	1.65%

During the Lifetime Income Period, the charge for all contracts is 1.50%. This charge consists of a mortality and expense risk and administrative charge. These charges replace the Separate Account Annual Expenses for the base contract. If your Contract Value had reached $1 million threshold immediately prior to the beginning of the Lifetime Income Period under i4LIFE^® Advantage, this charge will be reduced by 0.15% during the Lifetime Income Period. If i4LIFE^® Advantage is elected at issue of the contract, i4LIFE^® Advantage and the charge will begin on the contract’s effective date. Otherwise, i4LIFE^® Advantage and the charge will begin on the Periodic Income Commencement Date which is the Valuation Date on which the Regular Income Payment is determined and the beginning of the Access Period. Refer to the i4LIFE^®Advantage section for explanations of the Access Period, Lifetime Income Period, Account Value and Periodic Income Commencement Date.

Deductions for Premium Taxes

Any premium tax or other tax levied by any governmental entity as a result of the existence of the contracts or the VAA will be deducted from the Contract Value, unless the governmental entity dictates otherwise, when incurred, or at another time of our choosing.

The applicable premium tax rates that states and other governmental entities impose on the purchase of an annuity are subject to change by legislation, by administrative interpretation or by judicial action. These premium tax rates generally depend upon the law of your state of residence. The tax rates range from zero to 5%.

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Other Charges and Deductions

The mortality and expense risk and administrative charge of 1.10% for all contracts of the value in the VAA will be assessed on all variable Annuity Payouts (except for i4LIFE^® Advantage, which has a different charge), including options that may be offered that do not have a life contingency and therefore no mortality risk. This charge covers the expense risk and administrative services listed previously in this prospectus. The expense risk is the risk that our costs in providing the services will exceed our revenues from contract charges. If your Contract Value had reached the $1 million threshold immediately prior to the Annuity Commencement Date, this charge will be reduced by 0.15%.

There are additional deductions from and expenses paid out of the assets of the underlying funds that are more fully described in the prospectuses for the funds. Among these deductions and expenses are 12b-1 fees which reimburse us or an affiliate for certain expenses incurred in connection with certain administrative and distribution support services provided to the funds.

Additional Information

The charges described previously may be reduced or eliminated for any particular contract. However, these reductions may be available only to the extent that we anticipate lower distribution and/or administrative expenses, or that we perform fewer sales or administrative services than those originally contemplated in establishing the level of those charges, or when required by law. Lower distribution and administrative expenses may be the result of economies associated with:

• the use of mass enrollment procedures,

• the performance of administrative or sales functions by the employer,

• the use by an employer of automated techniques in submitting deposits or information related to deposits on behalf of its employees,

• for B-Share contracts only, the issue of a new Lincoln Investor Advantage^® contract upon the surrender of an existing Lincoln individual variable annuity contract, if available in your state; or

• any other circumstances which reduce distribution or administrative expenses.

The exact amount of charges and fees applicable to a particular contract will be stated in that contract.

The Contracts

Contracts Offered in this Prospectus

This prospectus describes two separate annuity contracts:

• Lincoln Investor Advantage^® B-Share

• Lincoln Investor Advantage^® C-Share

Each contract offers you the Account Value Death Benefit, i4LIFE^® Advantage and any of the payout options described in this prospectus. Each contract has its own mortality and expense risk charge and if applicable, surrender charge. In deciding what contract to purchase, you should consider the amount of mortality and expense risk and surrender charges you are willing to bear relative to your needs. In deciding whether to purchase an optional benefit, you should consider the desirability of the benefit relative to its additional cost and to your needs.

Optional benefits are described later in this prospectus. You should check with your registered representative regarding availability.

Lincoln Investor Advantage^® B-Share

The B-Share annuity contract has a total mortality and risk expense and administrative charge of 1.10%. It has a declining five-year surrender charge on each Purchase Payment. i4LIFE^® Advantage is available for an additional charge.

Lincoln Investor Advantage^® C-Share

The C-Share annuity contract has a total mortality and risk expense and administrative charge of 1.25%. The surrender charge does not apply to the C-Share contract. The DCA fixed account is not available on the C-Share contract. i4LIFE^® Advantage is available for an additional charge.

Since the B-Share contract has a surrender charge period, it offers less liquidity than the C-Share contract. The C-Share contract has no surrender charge, and offers greater liquidity than the B-Share contract, but has higher total separate account annual expenses. The B-Share contract may be more appropriate for someone with a longer investment time horizon, who does not intend to withdraw Contract Value in excess of the free withdrawal amount during the surrender charge period, and who seeks a lower cost contract. The C-Share contract may be more appropriate for someone who may want to withdraw Contract Value in excess of the free withdrawal amount soon after purchasing the contract, and is willing to pay a higher mortality and expense risk charge.

31

Determination of the appropriate balance between accessing your Contract Value and the impact of the mortality and expense risk charge on your Contract Value are important factors to consider. You should consider discussing the benefits and costs of the different share classes with your registered representative.

Purchase of Contracts

If you wish to purchase a contract, you must apply for it through a registered representative authorized by us. The completed application is sent to us and we decide whether to accept or reject it. If the application is accepted, a contract is prepared and executed by our legally authorized officers. The contract is then sent to you either directly or through your registered representative. See Distribution of the Contracts. The purchase of multiple contracts with identical Contractowners, Annuitants and Beneficiaries will be allowed only upon Home Office approval.

When a completed application and all other information necessary for processing a purchase order is received in Good Order at our Home Office, an initial Purchase Payment will be priced no later than two business days after we receive the order. If you submit your application and/or initial Purchase Payment to your registered representative, we will not begin processing your purchase order until we receive the application and initial Purchase Payment from your registered representative’s broker-dealer. While attempting to finish an incomplete application, we may hold the initial Purchase Payment for no more than five business days unless we receive your consent to our retaining the payment until the application is completed. If the incomplete application cannot be completed within those five days and we have not received your consent, you will be informed of the reasons, and the Purchase Payment will be returned immediately. Once the application is complete, we will allocate your initial Purchase Payment within two business days.

Who Can Invest

To apply for a contract, you must be of legal age in a state where the contracts may be lawfully sold and also be eligible to participate in any of the qualified or nonqualified plans for which the contracts are designed. At the time of issue, the Contractowner, joint owner and Annuitant must be under age 86 (or for C-Share nonqualified contracts only, under age 91, if i4LIFE^® Advantage is elected, subject to additional terms and limitations and Home Office approval). To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. When you open an account, we will ask for your name, address, date of birth, and other information that will allow us to identify you. We may also ask to see your driver's license, photo i.d. or other identifying documents.

In accordance with money laundering laws and federal economic sanction policy, the Company may be required in a given instance to reject a Purchase Payment and/or freeze a Contractowner’s account. This means we could refuse to honor requests for transfers, withdrawals, surrenders or Death Benefits. Once frozen, monies would be moved from the VAA to a segregated interest-bearing account maintained for the Contractowner, and held in that account until instructions are received from the appropriate regulator.

Do not purchase this contract if you plan to use it, or any of its riders, for speculation, arbitrage, viatical arrangement, or other similar investment scheme. The contract may not be resold, traded on any stock exchange, or sold on any secondary market.

If you are purchasing the contract through a tax-favored arrangement, including traditional IRAs and Roth IRAs, you should consider carefully the costs and benefits of the contract (including annuity income benefits) before purchasing the contract, since the tax-favored arrangement itself provides tax-deferred growth.

Replacement of Existing Insurance

Careful consideration should be given prior to surrendering or withdrawing money from an existing insurance contract to purchase the contract described in this prospectus. Surrender charges may be imposed on your existing contract and/or a new surrender charge period may be imposed with the purchase of, or transfer into, this contract. A registered representative or tax adviser should be consulted prior to making an exchange. Cash surrenders from an existing contract may be subject to tax and tax penalties.

Purchase Payments

You may make Purchase Payments to the contract at any time, prior to the Annuity Commencement Date, subject to certain conditions. You are not required to make any additional Purchase Payments after the initial Purchase Payment. The minimum initial Purchase Payment is $10,000. The minimum for Selling Group Individuals is $1,500 (applicable to B-Share contracts only). The minimum initial Purchase Payment for nonqualified C-Share contracts where i4LIFE^® Advantage is elected, and where the Contractowner, joint owner and/or Annuitant are ages 86 to 90 (subject to additional terms and limitations and Home Office approval) is $50,000. The minimum annual amount for additional Purchase Payments is $300. Please check with your registered representative about making additional Purchase Payments since the requirements of your state may vary. The minimum payment to the contract at any one time must be at least $100 ($25 if transmitted electronically). If a Purchase Payment is submitted that does not meet the minimum amount, we will contact you to ask whether additional money will be sent, or whether we should return the Purchase Payment to you.

Purchase Payments totaling $5 million or more are subject to Home Office approval. This amount takes into consideration the total Purchase Payments for all existing Lincoln Investor Advantage^® contracts for the same Contractowner, joint owner, and/or Annuitant. If you stop making Purchase Payments, the contract will remain in force, however, we may terminate the contract as allowed by your

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state's non-forfeiture law for individual deferred annuities. Purchase Payments may be made or, if stopped, resumed at any time until the Annuity Commencement Date, the surrender of the contract, or the death of the Contractowner, whichever comes first. Upon advance written notice, we reserve the right to further limit, restrict, or suspend Purchase Payments made to the contract.

These restrictions and limitations mean that you will be limited in your ability to increase your Contract Value (or Account Value under i4LIFE^® Advantage) by making additional Purchase Payments to the contract. You should carefully consider these limitations and restrictions, and any other limitations and restrictions of the contract, and how they may impact your long-term investment plans, especially if you intend to increase Contract Value (or Account Value under i4LIFE^® Advantage) by making additional Purchase Payments over a long period of time.

Large Account Credit

Contractowners will receive a Large Account Credit when your Contract Value reaches a threshold of $1 million. During the first Contract Year, the Large Account Credit will apply if either the cumulative Purchase Payments (decreased by withdrawals taken since the contract effective date or Regular Income Payments under i4LIFE^® Advantage) or the Contract Value (or Account Value under i4LIFE^® Advantage) is equal to or greater than $1 million on the quarterly Valuation Date. The amount of the Large Account Credit during the first Contract Year will be calculated by multiplying the greater of: 1) the amount of cumulative Purchase Payments (less any withdrawals since the contract effective date or Regular Income Payments under i4LIFE^® Advantage); or 2) the value of the variable Subaccounts at the time of the credit, by 0.15% (0.0375% quarterly).

After the first Contract Year anniversary, the Large Account Credit will apply if the Contract Value (or Account Value under i4LIFE^® Advantage) equals or exceeds $1 million on the quarterly Valuation Date. The amount of the Large Account Credit will be calculated by multiplying the value of the variable Subaccounts at the time of the credit by 0.15% (0.0375% quarterly).

The Large Account Credit will be allocated to the variable Subaccounts in proportion to the Contract Value in each variable Subaccount on the quarterly Valuation Date. There is no additional charge to receive this Large Account Credit, and in no case will the Large Account Credit be less than zero. The amount of any Large Account Credit received will be noted on your quarterly statement. Confirmation statements for each individual transaction will not be issued. Large Account Credits are not considered Purchase Payments.

The Large Account Credit will end on the Annuity Commencement Date or when the Lifetime Income Period begins under i4LIFE^® Advantage.

Valuation Date

Accumulation and Annuity Units will be valued once daily at the close of trading (normally, 4:00 p.m., New York time) on each day the New York Stock Exchange is open (Valuation Date). On any date other than a Valuation Date, the Accumulation Unit value and the Annuity Unit value will not change.

Allocation of Purchase Payments

Purchase Payments allocated to the variable account are placed into the VAA’s Subaccounts, according to your instructions. You may also allocate Purchase Payments in the fixed account, if available.

The minimum amount of any Purchase Payment which can be put into any one Subaccount is $20.

If we receive your Purchase Payment from you or your broker-dealer in Good Order at our Home Office prior to the close of the New York Stock Exchange (normally 4:00 p.m., New York time) we will use the Accumulation Unit value computed on that Valuation Date when processing your Purchase Payment. If we receive your Purchase Payment in Good Order at or after market close we will use the Accumulation Unit value computed on the next Valuation Date. If you submit your Purchase Payment to your registered representative, we will generally not begin processing the Purchase Payment until we receive it from your representative’s broker-dealer. If your broker-dealer submits your Purchase Payment to us through the Depository Trust and Clearing Corporation (DTCC) or, pursuant to terms agreeable to us, uses a proprietary order placement system to submit your Purchase Payment to us, and your Purchase Payment was placed with your broker-dealer prior to market close then we will use the Accumulation Unit value computed on that Valuation Date when processing your Purchase Payment. If your Purchase Payment was placed with your broker-dealer at or after market close then we will use the Accumulation Unit value computed on the next Valuation Date. There may be circumstances under which the New York Stock Exchange may close early (prior to 4:00 p.m., New York time). In such instances Purchase Payments received after such early market close will be processed using the Accumulation Unit value computed the next Valuation Date.

The number of Accumulation Units determined in this way is not impacted by any subsequent change in the value of an Accumulation Unit. However, the dollar value of an Accumulation Unit will vary depending not only upon how well the underlying fund’s investments perform, but also upon the expenses of the VAA and the underlying funds.

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Valuation of Accumulation Units

Purchase Payments allocated to the VAA are converted into Accumulation Units. This is done by dividing the amount allocated by the value of an Accumulation Unit for the Valuation Period during which the Purchase Payments are allocated to the VAA. The Accumulation Unit value for each Subaccount was or will be established at the inception of the Subaccount. It may increase or decrease from Valuation Period to Valuation Period. Accumulation Unit values are affected by investment performance of the funds, fund expenses, and the contract charges. The Accumulation Unit value for a Subaccount for a later Valuation Period is determined as follows:

1.	The total value of the fund shares held in the Subaccount is calculated by multiplying the number of fund shares owned by the Subaccount at the beginning of the Valuation Period by the net asset value per share of the fund at the end of the Valuation Period, and adding any dividend or other distribution of the fund if an ex-dividend date occurs during the Valuation Period; minus
2.	The liabilities of the Subaccount at the end of the Valuation Period; these liabilities include daily charges imposed on the Subaccount, and may include a charge or credit with respect to any taxes paid or reserved for by us that we determine result from the operations of the VAA; and
3.	The result is divided by the number of Subaccount units outstanding at the beginning of the Valuation Period.

The daily charges imposed on a Subaccount for any Valuation Period are equal to the daily mortality and expense risk charge and the daily administrative charge multiplied by the number of calendar days in the Valuation Period. Contracts with different features have different daily charges, and therefore, will have different corresponding Accumulation Unit values on any given day. In certain circumstances (for example, when separate account assets are less than $1,000), and when permitted by law, it may be prudent for us to use a different standard industry method for this calculation, called the Net Investment Factor method. We will achieve substantially the same result using either method.

Transfers On or Before the Annuity Commencement Date

After the first 30 days from the effective date of your contract, you may transfer all or a portion of your investment from one Subaccount to another. A transfer involves the surrender of Accumulation Units in one Subaccount and the purchase of Accumulation Units in the other Subaccount. A transfer will be done using the respective Accumulation Unit values determined at the end of the Valuation Date on which the transfer request is received.

Transfers (among the variable Subaccounts and as permitted between the variable and fixed accounts) are limited to twelve (12) per Contract Year unless otherwise authorized by us. This limit does not apply to transfers made under the automatic transfer programs of dollar cost averaging or portfolio rebalancing programs elected on forms available from us. (See Additional Services and the SAI for more information on these programs.) These transfer rights and restrictions also apply during the i4LIFE^® Advantage Access Period (the time period during which you may make withdrawals from the i4LIFE^® Advantage Account Value). See i4LIFE^® Advantage.

The minimum amount which may be transferred between Subaccounts is $300 (or the entire amount in the Subaccount, if less than $300). If the transfer from a Subaccount would leave you with less than $300 in the Subaccount, we may transfer the total balance of the Subaccount.

A transfer request may be made to our Home Office in writing, or by fax or other electronic means. A transfer request may also be made by telephone provided the appropriate authorization is on file with us. Our address, telephone number, and Internet address are on the first page of this prospectus. Requests for transfers will be processed on the Valuation Date that they are received when they are received in Good Order at our Home Office before the close of the New York Stock Exchange (normally 4:00 p.m. New York time). If we receive a transfer request in Good Order after market close we will process the request using the Accumulation Unit value computed on the next Valuation Date.

There may be circumstances under which the New York Stock Exchange may close early (prior to 4:00 p.m., New York time). In such instances, transfers received after such early market close will be processed using the Accumulation Unit value computed on the next Valuation Date.

After the first thirty days from the effective date of your contract, if your contract offers a fixed account, you may also transfer all or any part of the Contract Value from the Subaccount(s) to the fixed side of the contract, except during periods when (if permitted by your contract) we have discontinued accepting transfers into the fixed side of the contract. The minimum amount which can be transferred to a fixed account is $2,000 or the total amount in the Subaccount if less than $2,000. However, if a transfer from a Subaccount would leave you with less than $300 in the Subaccount, we may transfer the total amount to the fixed side of the contract.

You may also transfer part of the Contract Value from a fixed account to the variable Subaccount(s) subject to the following restrictions:

• total fixed account transfers are limited to 25% of the value of that fixed account in any 12-month period; and

• the minimum amount that can be transferred is $300 or, if less, the amount in the fixed account.

Because of these restrictions, it may take several years to transfer all of the Contract Value in the fixed accounts to the variable Subaccounts. You should carefully consider whether the fixed account meets your investment criteria.

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Transfers may be delayed as permitted by the 1940 Act. See Delay of Payments.

Telephone and Electronic Transactions

A surrender, withdrawal, or transfer request may be made to our Home Office using a fax or other electronic means. In addition, withdrawal and transfer requests may be made by telephone, subject to certain restrictions. In order to prevent unauthorized or fraudulent transfers, we may require certain identifying information before we will act upon instructions. We may also assign the Contractowner a Personal Identification Number (PIN) to serve as identification. We will not be liable for following instructions we reasonably believe are genuine. Telephone and other electronic requests will be recorded and written confirmation of all transactions will be mailed to the Contractowner on the next Valuation Date.

Please note that the telephone and/or electronic devices may not always be available. Any telephone, fax machine or other electronic device, whether it is yours, your service provider’s, or your agent’s, can experience outages or slowdowns for a variety of reasons. These outages or slowdowns may delay or prevent our processing of your request. Although we have taken precautions to limit these problems, we cannot promise complete reliability under all circumstances. If you are experiencing problems, you should make your request by writing to our Home Office.

Market Timing

Frequent, large, or short-term transfers among Subaccounts and the fixed account, such as those associated with “market timing” transactions, can affect the funds and their investment returns. Such transfers may dilute the value of the fund shares, interfere with the efficient management of the fund's portfolio, and increase brokerage and administrative costs of the funds. As an effort to protect our Contractowners and the funds from potentially harmful trading activity, we utilize certain market timing policies and procedures (the “Market Timing Procedures”). Our Market Timing Procedures are designed to detect and prevent such transfer activity among the Subaccounts and the fixed account that may affect other Contractowners or fund shareholders.

In addition, the funds may have adopted their own policies and procedures with respect to frequent purchases and redemptions of their respective shares. The prospectuses for the funds describe any such policies and procedures, which may be more or less restrictive than the frequent trading policies and procedures of other funds and the Market Timing Procedures we have adopted to discourage frequent transfers among Subaccounts. While we reserve the right to enforce these policies and procedures, Contractowners and other persons with interests under the contracts should be aware that we may not have the contractual authority or the operational capacity to apply the frequent trading policies and procedures of the funds. However, under SEC rules, we are required to: (1) enter into a written agreement with each fund or its principal underwriter that obligates us to provide to the fund promptly upon request certain information about the trading activity of individual Contractowners, and (2) execute instructions from the fund to restrict or prohibit further purchases or transfers by specific Contractowners who violate the excessive trading policies established by the fund.

You should be aware that the purchase and redemption orders received by the funds generally are “omnibus” orders from intermediaries such as retirement plans or separate accounts funding variable insurance contracts. The omnibus orders reflect the aggregation and netting of multiple orders from individual retirement plan participants and/or individual owners of variable insurance contracts. The omnibus nature of these orders may limit the funds’ ability to apply their respective disruptive trading policies and procedures. We cannot guarantee that the funds (and thus our Contractowners) will not be harmed by transfer activity relating to the retirement plans and/or other insurance companies that may invest in the funds. In addition, if a fund believes that an omnibus order we submit may reflect one or more transfer requests from Contractowners engaged in disruptive trading activity, the fund may reject the entire omnibus order.

Our Market Timing Procedures detect potential “market timers” by examining the number of transfers made by Contractowners within given periods of time. In addition, managers of the funds might contact us if they believe or suspect that there is market timing. If requested by a fund company, we may vary our Market Timing Procedures from Subaccount to Subaccount to comply with specific fund policies and procedures.

We may increase our monitoring of Contractowners who we have previously identified as market timers. When applying the parameters used to detect market timers, we will consider multiple contracts owned by the same Contractowner if that Contractowner has been identified as a market timer. For each Contractowner, we will investigate the transfer patterns that meet the parameters being used to detect potential market timers. We will also investigate any patterns of trading behavior identified by the funds that may not have been captured by our Market Timing Procedures.

Once a Contractowner has been identified as a “market timer” under our Market Timing Procedures, we will notify the Contractowner in writing that future transfers (among the Subaccounts and/or the fixed account) will be temporarily permitted to be made only by original signature sent to us by U.S. mail, first-class delivery for the remainder of the Contract Year (or calendar year if the contract is an individual contract that was sold in connection with an employer sponsored plan). Overnight delivery or electronic instructions

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(which may include telephone, facsimile, or Internet instructions) submitted during this period will not be accepted. If overnight delivery or electronic instructions are inadvertently accepted from a Contractowner that has been identified as a market timer, upon discovery, we will reverse the transaction within 1 or 2 business days. We will impose this “original signature” restriction on that Contractowner even if we cannot identify, in the particular circumstances, any harmful effect from that Contractowner's particular transfers.

Contractowners seeking to engage in frequent, large, or short-term transfer activity may deploy a variety of strategies to avoid detection. Our ability to detect such transfer activity may be limited by operational systems and technological limitations. The identification of Contractowners determined to be engaged in such transfer activity that may adversely affect other Contractowners or fund shareholders involves judgments that are inherently subjective. We cannot guarantee that our Market Timing Procedures will detect every potential market timer. If we are unable to detect market timers, you may experience dilution in the value of your fund shares and increased brokerage and administrative costs in the funds. This may result in lower long-term returns for your investments.

Our Market Timing Procedures are applied consistently to all Contractowners. An exception for any Contractowner will be made only in the event we are required to do so by a court of law. In addition, certain funds available as investment options in your contract may also be available as investment options for owners of other, older life insurance policies issued by us. Some of these older life insurance policies do not provide a contractual basis for us to restrict or refuse transfers which are suspected to be market timing activity. In addition, because other insurance companies and/or retirement plans may invest in the funds, we cannot guarantee that the funds will not suffer harm from frequent, large, or short-term transfer activity among Subaccounts and the fixed accounts of variable contracts issued by other insurance companies or among investment options available to retirement plan participants.

In our sole discretion, we may revise our Market Timing Procedures at any time without prior notice as necessary to better detect and deter frequent, large, or short-term transfer activity to comply with state or federal regulatory requirements, and/or to impose additional or alternate restrictions on market timers (such as dollar or percentage limits on transfers). If we modify our Market Timing Procedures, they will be applied uniformly to all Contractowners or as applicable to all Contractowners investing in underlying funds.

Some of the funds have reserved the right to temporarily or permanently refuse payments or transfer requests from us if, in the judgment of the fund’s investment adviser, the fund would be unable to invest effectively in accordance with its investment objective or policies, or would otherwise potentially be adversely affected. To the extent permitted by applicable law, we reserve the right to defer or reject a transfer request at any time that we are unable to purchase or redeem shares of any of the funds available through the VAA, including any refusal or restriction on purchases or redemptions of the fund shares as a result of the funds' own policies and procedures on market timing activities. If a fund refuses to accept a transfer request we have already processed, we will reverse the transaction within 1 or 2 business days. We will notify you in writing if we have reversed, restricted or refused any of your transfer requests. Some funds also may impose redemption fees on short-term trading (i.e., redemptions of mutual fund shares within a certain number of business days after purchase). We reserve the right to administer and collect any such redemption fees on behalf of the funds. You should read the prospectuses of the funds for more details on their redemption fees and their ability to refuse or restrict purchases or redemptions of their shares.

Transfers After the Annuity Commencement Date

You may transfer all or a portion of your investment in one Subaccount to another Subaccount or to the fixed side of the contract, as permitted under your contract. Those transfers will be limited to three times per Contract Year. You may also transfer from a variable annuity payment to a fixed annuity payment. You may not transfer from a fixed annuity payment to a variable annuity payment. Once elected, the fixed annuity payment is irrevocable.

These provisions also apply during the i4LIFE^® Advantage Lifetime Income Period. See i4LIFE^® Advantage.

Ownership

The owner on the date of issue will be the person or entity designated in the contract specifications. The owner of a nonqualified contract may name a joint owner.

As Contractowner, you have all rights under the contract. According to Indiana law, the assets of the VAA are held for the exclusive benefit of all Contractowners and their designated Beneficiaries; and the assets of the VAA are not chargeable with liabilities arising from any other business that we may conduct. We reserve the right to approve all ownership and Annuitant changes. Nonqualified contracts may not be sold, discounted, or pledged as collateral for a loan or for any other purpose. Qualified contracts are not transferable unless allowed under applicable law. Nonqualified contracts may not be collaterally assigned. Assignments may have an adverse impact on your Death Benefits and may be prohibited under the terms of a particular feature. We assume no responsibility for the validity or effect of any assignment. Consult your tax adviser about the tax consequences of an assignment.

Joint Ownership

If a contract has joint owners, the joint owners shall be treated as having equal undivided interests in the contract. Either owner, independently of the other, may exercise any ownership rights in this contract. Not more than two owners (an owner and joint owner) may be named and contingent owners are not permitted.

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Annuitant

The following rules apply prior to the Annuity Commencement Date. You may name only one Annuitant (unless you are a tax-exempt entity, then you can name two joint Annuitants). You (if the Contractowner is a natural person) have the right to change the Annuitant at any time by notifying us in writing of the change. However, we reserve the right to approve all Annuitant changes. This may not be allowed if certain riders are in effect. The new Annuitant must be under age 86 (or for C-Share nonqualified contracts only, under age 91, subject to additional terms and limitations and Home Office approval) as of the effective date of the change. A contingent Annuitant may be named or changed by notifying us in writing. Contingent Annuitants are not allowed on contracts owned by non-natural owners. On or after the Annuity Commencement Date, the Annuitant or joint Annuitants may not be changed and contingent Annuitant designations are no longer applicable.

Surrenders and Withdrawals

Before the Annuity Commencement Date, we will allow the surrender of the contract or a withdrawal of the Contract Value upon your written request on an approved Lincoln distribution request form (available from the Home Office), fax, or other electronic means. Withdrawal requests may be made by telephone, subject to certain restrictions. All surrenders and withdrawals may be made in accordance with the rules discussed below. Surrender or withdrawal rights after the Annuity Commencement Date depend on the Annuity Payout option selected.

The amount available upon surrender/withdrawal is the Contract Value less any applicable charges, fees, and taxes at the end of the Valuation Period during which the written request for surrender/withdrawal is received in Good Order at the Home Office. If we receive a surrender or withdrawal request in Good Order at our Home Office before the close of the NYSE (normally 4:00 p.m., New York time), we will process the request using the Accumulation Unit value computed on that Valuation Date. If we receive a surrender or withdrawal request in Good Order at our Home Office after market close, we will process the request using the Accumulation Unit value computed on the next Valuation Date. There may be circumstances under which the NYSE may close early (prior to 4:00 p.m., New York time). In such instances, surrender or withdrawal requests received after such early market close will be processed using the Accumulation Unit value computed on the next Valuation Date. The minimum amount which can be withdrawn is $300. Unless a request for withdrawal specifies otherwise, withdrawals will be made from all Subaccounts within the VAA and from the fixed account in the same proportion that the amount of withdrawal bears to the total Contract Value. Unless prohibited, surrender/withdrawal payments will be mailed within seven days after we receive a valid written request at the Home Office. The payment may be postponed as permitted by the 1940 Act.

There may be charges associated with surrender of a contract or withdrawal of Contract Value. You may specify whether these charges are deducted from the amount you request to be withdrawn or from the remaining Contract Value. If the charges are deducted from the remaining Contract Value, the amount of the total withdrawal will increase according to the impact of the applicable surrender charge percentage; consequently, the dollar amount of the surrender charge associated with the withdrawal will also increase. In other words, the dollar amount deducted to cover the surrender charge is also subject to a surrender charge.

The tax consequences of a surrender/withdrawal are discussed later in this prospectus. See Federal Tax Matters – Taxation of Withdrawals and Surrenders.

Additional Services

These are the additional services available to you under your contract: dollar-cost averaging (DCA), automatic withdrawal service (AWS) and portfolio rebalancing. Currently, there is no charge for these services. However, we reserve the right to impose one after appropriate notice to Contractowners. In order to take advantage of one of these services, you will need to complete the appropriate election form that is available from our Home Office. For further detailed information on these services, please see Additional Services in the SAI.

Dollar-cost averaging allows you to transfer amounts from the DCA fixed account, if available, or certain variable Subaccounts into the variable Subaccounts on a monthly basis or in accordance with other terms we make available.

You may elect to participate in the DCA program at the time of application or at anytime before the Annuity Commencement Date by completing an election form available from us. The minimum amount to be dollar cost averaged (DCA'd) is $1,500 over any period between six and 60 months. Once elected, the program will remain in effect until the earlier of:

• the Annuity Commencement Date;

• the value of the amount being DCA'd is depleted; or

• you cancel the program by written request or by telephone if we have your telephone authorization on file.

We reserve the right to restrict access to this program at any time.

A transfer made as part of this program is not considered a transfer for purposes of limiting the number of transfers that may be made, or assessing any charges which may apply to transfers. Upon receipt of an additional Purchase Payment allocated to the DCA fixed account, the existing program duration will be extended to reflect the end date of the new DCA program. However, the existing interest crediting rate will not be extended. The existing interest crediting rate will expire at its originally scheduled expiration date and

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the value remaining in the DCA account from the original amount as well as any additional Purchase Payments will be credited with interest at the standard DCA rate at the time. If you cancel the DCA program, your remaining Contract Value in the DCA program will be allocated to the variable Subaccounts according to your allocation instructions. We reserve the right to discontinue or modify this program at any time. If you have chosen DCA from one of the variable subaccounts, only the amount allocated to be DCA’d will be transferred. Investment gain, if any, will remain in that Subaccount unless you reallocate it to one of the other variable Subaccounts. DCA does not assure a profit or protect against loss.

The automatic withdrawal service (AWS) provides for an automatic periodic withdrawal of your Contract Value. Withdrawals under AWS are subject to applicable surrender charges. See Charges and Other Deductions – Surrender Charge. Withdrawals under AWS will be noted on your quarterly statement. Confirmation statements for each individual withdrawal will not be issued. AWS is available for amounts allocated to the fixed account.

Portfolio rebalancing is an option that restores to a pre-determined level the percentage of Contract Value allocated to each variable account Subaccount. The rebalancing may take place monthly, quarterly, semi-annually or annually. Rebalancing events will be noted on your quarterly statement. Confirmation statements for each individual rebalancing event will not be issued. The fixed account is not available for portfolio rebalancing.

Only one of the two additional services (DCA and portfolio rebalancing) may be used at one time. For example, you cannot have DCA and portfolio rebalancing running simultaneously. We reserve the right to discontinue any or all of these administrative services at any time.

Sample Portfolios

You may allocate your initial Purchase Payment among a group of Subaccounts that invest in underlying funds within a sample portfolio. Each sample portfolio consists of several Subaccounts investing in underlying funds, each of which represents a specified percentage of your Purchase Payment. If you choose to select a sample portfolio, you must allocate 100% of your initial Purchase Payment to that portfolio, and we will invest your initial Purchase Payment among the Subaccounts within the portfolio according to the percentage allocations. These allocations will remain in place unless you tell us otherwise. Any subsequent Purchase Payments will be invested according to your allocation instructions at the time of the subsequent Purchase Payment. You may de-select the sample portfolio at any time. The sample portfolio is available only at contract value.

Your portfolio will not be automatically rebalanced. In order to maintain the portfolio’s specified Subaccount allocation percentages, you must enroll in and maintain the portfolio rebalancing option under your contract, thereby authorizing us to automatically rebalance your Contract Value.

Your registered representative may discuss the portfolios with you to assist you in deciding how to allocate your initial Purchase Payment amongst the various investment options available under your contract. The portfolios were designed and prepared by Lincoln Investment Advisors Corporation (in consultation with Wilshire Associates) for use by Lincoln Financial Distributors, Inc. (LFD). LFD provides these portfolios to broker-dealers who may provide them to their clients. These portfolios do not constitute investment advice, and you should consult your registered representative to determine whether you should utilize a portfolio or whether it is suitable for you based upon your goals, risk tolerance and time horizon. You bear the risk that, over time, a portfolio may not reflect the risk tolerance or return that was expected.

Death Benefit

The chart below provides a brief overview of how the Death Benefit proceeds will be distributed if death occurs prior to i4LIFE^® Advantage elections or prior to the Annuity Commencement Date. Refer to your contract for the specific provisions applicable upon death.

upon death of:	and...	and...	Death Benefit proceeds pass to:
Contractowner	There is a surviving joint owner	The Annuitant is living or deceased	joint owner
Contractowner	There is no surviving joint owner	The Annuitant is living or deceased	designated Beneficiary
Contractowner	There is no surviving joint owner and the Beneficiary predeceases the Contractowner	The Annuitant is living or deceased	Contractowner's estate
Annuitant	The Contractowner is living	There is no contingent Annuitant	The youngest Contractowner becomes the contingent Annuitant and the contract continues. The Contractowner may waive* this continuation and receive the Death Benefit proceeds.

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upon death of:	and...	and...	Death Benefit proceeds pass to:
Annuitant	The Contractowner is living	The contingent Annuitant is living	contingent Annuitant becomes the Annuitant and the contract continues
Annuitant**	The Contractowner is a trust or other non-natural person	No contingent Annuitant allowed with non-natural Contractowner	designated Beneficiary

* Notification from the Contractowner to receive the Death Benefit proceeds must be received within 75 days of the death of the Annuitant.

** Death of Annuitant is treated like death of the Contractowner.

If the Contractowner (or a joint owner) or Annuitant dies prior to the Annuity Commencement Date, a Death Benefit may be payable. This Death Benefit terminates if you elect i4LIFE^® Advantage or elect any other annuitization option. At this time, the only Death Benefit offered under the contract is the Account Value Death Benefit, which is described below.

You should consider the following provisions carefully when designating the Beneficiary, Annuitant, any contingent Annuitant and any joint owner, as well as before changing any of these parties. The identity of these parties under the contract may significantly affect the amount and timing of the Death Benefit or other amount paid upon a Contractowner's or Annuitant's death.

You may designate a Beneficiary during your lifetime and change the Beneficiary by filing a written request with our Home Office. Each change of Beneficiary revokes any previous designation. We reserve the right to request that you send us the contract for endorsement of a change of Beneficiary.

Upon the death of the Contractowner, a Death Benefit will be paid to the Beneficiary. Upon the death of a joint owner, the Death Benefit will be paid to the surviving joint owner. If the Contractowner is a corporation or other non-individual (non-natural person), the death of the Annuitant will be treated as death of the Contractowner.

If an Annuitant who is not the Contractowner or joint owner dies, then the contingent Annuitant, if named, becomes the Annuitant and no Death Benefit is payable on the death of the Annuitant. If no contingent Annuitant is named, the Contractowner (or younger of joint owners) becomes the Annuitant. Alternatively, a Death Benefit may be paid to the Contractowner (and joint owner, if applicable, in equal shares). Notification of the election of this Death Benefit must be received by us within 75 days of the death of the Annuitant. The contract terminates when any Death Benefit is paid due to the death of the Annuitant.

Only the Contract Value as of the Valuation Date we approve the payment of the death claim is available as a Death Benefit. If your Contract Value equals zero, no Death Benefit will be paid.

Account Value Death Benefit. The Account Value Death Benefit provides a Death Benefit equal to the Contract Value on the Valuation Date the Death Benefit is approved by us for payment. No additional Death Benefit is provided. (Your contract may refer to this benefit as the Contract Value Death Benefit.)

General Death Benefit Information

Your Death Benefit terminates on and after the Annuity Commencement Date, or if you elect i4LIFE^® Advantage. i4LIFE^® Advantage only provides Death Benefit options during the Access Period. There are no Death Benefits during the Lifetime Income Period. Please see the i4LIFE^® Advantage – i4LIFE^® Advantage Death Benefit section of this prospectus for more information.

If there are joint owners, upon the death of the first Contractowner, we will pay a Death Benefit to the surviving joint owner. The surviving joint owner will be treated as the primary, designated Beneficiary. Any other Beneficiary designation on record at the time of death will be treated as a contingent Beneficiary. If the surviving joint owner is the spouse of the deceased joint owner, he/she may continue the contract as sole Contractowner. Upon the death of the spouse who continues the contract, we will pay a Death Benefit to the designated Beneficiary(s).

If the Beneficiary is the spouse of the Contractowner, then the spouse may elect to continue the contract as the new Contractowner. Same-sex spouses should carefully consider whether to purchase annuity products that provide benefits based upon status as a spouse, and whether to exercise any spousal rights under the contract. The U.S. Supreme Court recently held that same-sex spouses who have been married under state law will now be treated as spouses for purposes of federal law. You are strongly encouraged to consult a tax advisor before electing spousal rights under the contract.

The value of the Death Benefit will be determined as of the Valuation Date we approve the payment of the claim. Approval of payment will occur upon our receipt of a claim submitted in Good Order. To be in Good Order, we require all the following:

1.	proof (e.g. an original certified death certificate), or any other proof of death satisfactory to us; and
2.	written authorization for payment; and
3.	all required claim forms, fully completed (including selection of a settlement option).

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Notwithstanding any provision of this contract to the contrary, the payment of Death Benefits provided under this contract must be made in compliance with Code Section 72(s) or 401(a)(9) as applicable, as amended from time to time. Death Benefits may be taxable. See Federal Tax Matters.

Unless otherwise provided in the Beneficiary designation, one of the following procedures will take place on the death of a Beneficiary:

• If any Beneficiary dies before the Contractowner, that Beneficiary’s interest will go to any other Beneficiaries named, according to their respective interests; and/or

• If no Beneficiary survives the Contractowner, the proceeds will be paid to the Contractowner’s estate.

If the Beneficiary is a minor, court documents appointing the guardian/custodian may be required.

Unless the Contractowner has already selected a settlement option, the Beneficiary may choose the method of payment of the Death Benefit. The Death Benefit payable to the Beneficiary or joint owner must be distributed within five years of the Contractowner’s date of death unless the Beneficiary begins receiving within one year of the Contractowner’s death the distribution in the form of a life annuity or an annuity for a designated period not extending beyond the Beneficiary’s life expectancy.

Upon the death of the Annuitant, Federal tax law requires that an annuity election be made no later than 60 days after we have approved the death claim for payment.

If the Death Benefit becomes payable, the recipient may elect to receive payment either in the form of a lump sum settlement or an Annuity Payout. If a lump sum settlement is elected, the proceeds will be mailed within seven days of approval by us of the claim subject to the laws, regulations and tax code governing payment of Death Benefits. This payment may be postponed as permitted by the Investment Company Act of 1940.

Abandoned Property. Every state has unclaimed property laws which generally declare annuity contracts to be abandoned after a period of inactivity of three to five years from the date a benefit is due and payable. For example, if the payment of a Death Benefit has been triggered, but, if after a thorough search, we are still unable to locate the Beneficiary of the Death Benefit, or the Beneficiary does not come forward to claim the Death Benefit in a timely manner, the Death Benefit will be “escheated”. This means that the Death Benefit will be paid to the abandoned property division or unclaimed property office of the state in which the Beneficiary or the Contractowner last resided, as shown on our books and records, or to our state of domicile. This escheatment is revocable and the state is obligated to pay the Death Benefit (without interest) if your Beneficiary steps forward to claim it with the proper documentation.

To prevent such escheatment, it is important that you update your Beneficiary designations, including addresses, if and as they change. You may update your Beneficiary designations by submitting a Beneficiary change form to our Home Office.

i4LIFE^® Advantage

i4LIFE^® Advantage (the Variable Annuity Payout Option rider in your contract) is an optional Annuity Payout rider you may purchase at an additional cost and is separate and distinct from other Annuity Payout options offered under your contract and described later in this prospectus. See Charges and Other Deductions – i4LIFE^® Advantage Charge.

i4LIFE^® Advantage is an Annuity Payout option that provides you with variable, periodic Regular Income Payments for life subject to certain conditions. These payouts are made during two time periods: an Access Period and a Lifetime Income Period. During the Access Period, you have access to your Account Value, which means you may surrender the contract, make withdrawals, and have a Death Benefit. During the Lifetime Income Period, you no longer have access to your Account Value. You choose the length of the Access Period when you select i4LIFE^® Advantage; the Lifetime Income Period begins immediately after the Access Period ends and continues until your death (or the death of a Secondary Life, if later). i4LIFE^® Advantage is different from other Annuity Payout options provided by Lincoln because with i4LIFE^® Advantage, you have the ability to make additional withdrawals or surrender the contract during the Access Period. You choose when you want to receive your first Regular Income Payment and the frequency with which you will receive Regular Income Payments. The initial Regular Income Payment is calculated from the Account Value on a date no more than 14 days prior to the date you select to begin receiving the Regular Income Payments. This calculation date is called the Periodic Income Commencement Date, and is the same date the Access Period begins. Regular Income Payments must begin within one year of the date you elect i4LIFE^® Advantage. Once they begin, Regular Income Payments will continue until the death of the Annuitant or Secondary Life, if applicable. This option is available on nonqualified annuities, IRAs and Roth IRAs (check with your registered representative regarding availability with SEP market). This option is subject to a charge while the i4LIFE^® Advantage is in effect computed daily on the Account Value. See Charges and Other Deductions – i4LIFE^® Advantage Charge.

i4LIFE^® Advantage is available for contracts with a Contract Value of at least $50,000 and may be elected at the time of application or at any time before any other Annuity Payout option under this contract is elected by sending a written request to our Home Office. When you elect i4LIFE^® Advantage, you must choose the Annuitant, Secondary Life, if applicable, and make several choices about your Regular Income Payments. The Annuitant and Secondary Life may not be changed after i4LIFE^® Advantage is elected. For qualified contracts, the Secondary Life must be the spouse. See i4LIFE^® Advantage Death Benefit regarding the impact of a change to the Annuitant prior to the i4LIFE^® Advantage election.

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i4LIFE^® Advantage for IRA contracts is only available if the Annuitant and Secondary Life are age 59½ or older at the time the option is elected. Additional limitations on issue ages and features may be necessary to comply with the IRC provisions for required minimum distributions. Additional Purchase Payments may be made during the Access Period for an IRA annuity contract. Additional Purchase Payments will not be accepted after the Periodic Income Commencement Date for a nonqualified annuity contract.

If i4LIFE^® Advantage is selected, the applicable transfer provisions among Subaccounts and the fixed account will continue to be those specified in your annuity contract for transfers on or before the Annuity Commencement Date. However, once i4LIFE^® Advantage begins, any automatic withdrawal service will terminate. See The Contracts – Transfers on or Before the Annuity Commencement Date.

When you elect i4LIFE^® Advantage, you will receive the i4LIFE^® Advantage Account Value Death. The amount paid under the new Death Benefit may be less than the amount that would have been paid under the Death Benefit provided before i4LIFE^® Advantage began (if premium taxes have been deducted from the Contract Value). See The Contracts – i4LIFE^® Advantage Death Benefit.

Access Period. At the time you elect i4LIFE^® Advantage, you also select the Access Period, which begins on the Periodic Income Commencement Date. The Access Period is a defined period of time during which we pay variable, periodic Regular Income Payments and provide a Death Benefit, and during which you may surrender the contract and make withdrawals from your Account Value (defined below). At the end of the Access Period, the remaining Account Value is used to make Regular Income Payments for the rest of your life (or the Secondary Life if applicable). This is called the Lifetime Income Period. During the Lifetime Income Period, you will no longer be able to make withdrawals or surrenders or receive a Death Benefit. If your Account Value is reduced to zero because of withdrawals or market loss, your Access Period ends.

We will establish the minimum (currently 5 years) and maximum (currently the length of time between your current age and age 115 for non-qualified contracts or to age 100 for qualified contracts) Access Periods at the time you elect i4LIFE^® Advantage. Generally, shorter Access Periods will produce a higher initial Regular Income Payment than longer Access Periods. At any time during the Access Period, you may extend or shorten the length of the Access Period subject to Home Office approval. Additional restrictions may apply if you are under age 59½ when you request a change to the Access Period. Currently, if you extend the Access Period, it must be extended at least 5 years. If you change the Access Period, subsequent Regular Income Payments will be adjusted accordingly, and the Account Value remaining at the end of the new Access Period will be applied to continue Regular Income Payments for your life. Additional limitations on issue ages and features may be necessary to comply with the IRC provisions for required minimum distributions. We may reduce or terminate the Access Period for IRA i4LIFE^® Advantage contracts in order to keep the Regular Income Payments in compliance with IRC provisions for required minimum distributions.

Account Value. The initial Account Value is the Contract Value on the Valuation Date i4LIFE^® Advantage is effective (or your initial Purchase Payment if i4LIFE^® Advantage is purchased at contract issue), less any applicable premium taxes. During the Access Period, the Account Value on a Valuation Date will equal the total value of all of the Contractowner's Accumulation Units plus the Contractowner's value in the fixed account, and will be reduced by Regular Income Payments made as well as any withdrawals taken. After the Access Period ends, the remaining Account Value will be applied to continue Regular Income Payments for your life and the Account Value will be reduced to zero.

Regular Income Payments during the Access Period.i4LIFE^® Advantage provides for variable, periodic Regular Income Payments for as long as an Annuitant (or Secondary Life, if applicable) is living and access to your Account Value during the Access Period. When you elect i4LIFE^® Advantage, you will have to choose the date you will receive the initial Regular Income Payment. Once they begin, Regular Income Payments will continue until the death of the Annuitant or Secondary Life, if applicable. Regular Income Payments must begin within one year of the date you elect i4LIFE^® Advantage. You also select when the Access Period ends and when the Lifetime Income Period begins. You must also select the frequency of the payments (monthly, quarterly, semi-annually or annually), how often the payment is recalculated, the length of the Access Period and the assumed investment return. These choices will influence the amount of your Regular Income Payments.

If you do not choose a payment frequency, the default is a monthly frequency. In most states, you may also elect to have Regular Income Payments from nonqualified contracts recalculated only once each year rather than recalculated at the time of each payment. This results in level Regular Income Payments between recalculation dates. Qualified contracts are only recalculated once per year, at the beginning of each calendar year. You also choose the assumed investment return. Return rates of 3%, 4%, 5%, or 6% may be available. The higher the assumed investment return you choose, the higher your initial Regular Income Payment will be and the higher the return must be to increase subsequent Regular Income Payments. You also choose the length of the Access Period. At this time, changes to the Access Period can only be made on Periodic Income Commencement Date anniversaries.

Regular Income Payments are not subject to any applicable surrender charges. See Charges and Other Deductions. For information regarding income tax consequences of Regular Income Payments, see Federal Tax Matters.

The amount of the initial Regular Income Payment is determined on the Periodic Income Commencement Date by dividing the Contract Value (or Purchase Payment if elected at contract issue), less applicable premium taxes by 1000 and multiplying the result by an annuity factor. The annuity factor is based upon:

• the age and sex of the Annuitant and Secondary Life, if applicable;

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• the length of the Access Period selected;

• the frequency of the Regular Income Payments;

• the assumed investment return you selected; and

• the Individual Annuity Mortality table specified in your contract.

The annuity factor used to determine the Regular Income Payments reflects the fact that, during the Access Period, you have the ability to withdraw the entire Account Value and that a Death Benefit of the entire Account Value will be paid to your Beneficiary upon your death. These benefits during the Access Period result in a slightly lower Regular Income Payment, during both the Access Period and the Lifetime Income Period, than would be payable if this access was not permitted and no lump-sum Death Benefit of the full Account Value was payable. (The Contractowner must elect an Access Period of no less than the minimum Access Period which is currently set at 5 years.) The annuity factor also reflects the requirement that there be sufficient Account Value at the end of the Access Period to continue your Regular Income Payments for the remainder of your life (and/or the Secondary Life if applicable), during the Lifetime Income Period, with no further access or Death Benefit.

The Account Value will vary with the actual net investment return of the Subaccounts selected and the interest credited on the fixed account, which then determines the subsequent Regular Income Payments during the Access Period. Each subsequent Regular Income Payment (unless the levelized option is selected) is determined by dividing the Account Value on the applicable Valuation Date by 1000 and multiplying this result by an annuity factor revised to reflect the declining length of the Access Period. As a result of this calculation, the actual net returns in the Account Value are measured against the assumed investment return to determine subsequent Regular Income Payments. If the actual net investment return (annualized) for the contract exceeds the assumed investment return, the Regular Income Payment will increase at a rate approximately equal to the amount of such excess. Conversely, if the actual net investment return for the contract is less than the assumed investment return, the Regular Income Payment will decrease. For example, if net investment return is 3% higher (annualized) than the assumed investment return, the Regular Income Payment for the next year will increase by approximately 3%. Conversely, if actual net investment return is 3% lower than the assumed investment return, the Regular Income Payment will decrease by approximately 3%.

Withdrawals made during the Access Period will also reduce the Account Value that is available for Regular Income Payments, and subsequent Regular Income Payments will be recalculated and could be increased or reduced, based on the Account Value following the withdrawal.

For a joint life option, if either the Annuitant or Secondary Life dies during the Access Period, Regular Income Payments will be recalculated using a revised annuity factor based on the single surviving life, if doing so provides a higher Regular Income Payment. On a joint life option, the Secondary Life spouse must be either the primary Beneficiary or joint owner in order to receive the remaining payments after the first spouse’s death.

For nonqualified contracts, if the Annuitant and Secondary Life, if applicable, both die during the Access Period, the annuity factor will be revised for a non-life contingent Regular Income Payment and Regular Income Payments will continue until the Account Value is fully paid out and the Access Period ends. For qualified contracts, if the Annuitant and Secondary Life, if applicable, both die during the Access Period, i4LIFE^® Advantage will terminate.

Regular Income Payments during the Lifetime Income Period. The Lifetime Income Period begins at the end of the Access Period if either the Annuitant or Secondary Life is living. Your earlier elections regarding the frequency of Regular Income Payments, assumed investment return and the frequency of the recalculation do not change. The initial Regular Income Payment during the Lifetime Income Period is determined by dividing the Account Value on the last Valuation Date of the Access Period by 1000 and multiplying the result by an annuity factor revised to reflect that the Access Period has ended. The annuity factor is based upon:

• the age and sex of the Annuitant and Secondary Life (if living);

• the frequency of the Regular Income Payments;

• the assumed investment return you selected; and

• the Individual Annuity Mortality table specified in your contract.

The impact of the length of the Access Period and any withdrawals made during the Access Period will continue to be reflected in the Regular Income Payments during the Lifetime Income Period. To determine subsequent Regular Income Payments, the contract is credited with a fixed number of Annuity Units equal to the initial Regular Income Payment (during the Lifetime Income Period) divided by the Annuity Unit value (by Subaccount). Subsequent Regular Income Payments are determined by multiplying the number of Annuity Units per Subaccount by the Annuity Unit value. Your Regular Income Payments will vary based on the value of your Annuity Units. If your Regular Income Payments are adjusted on an annual basis, the total of the annual payment is transferred to Lincoln Life's general account to be paid out based on the payment mode you selected. Your payment(s) will not be affected by market performance during that year. Your Regular Income Payment(s) for the following year will be recalculated at the beginning of the following year based on the current value of the Annuity Units.

Regular Income Payments will continue for as long as the Annuitant or Secondary Life, if applicable, is living, and will continue to be adjusted for investment performance of the Subaccounts your Annuity Units are invested in (and the fixed account if applicable). Regular Income Payments vary with investment performance.

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During the Lifetime Income Period, there is no longer an Account Value; therefore, no withdrawals are available and no Death Benefit is payable. In addition, transfers are not allowed from a fixed annuity payment to a variable annuity payment.

i4LIFE^® Advantage Death Benefit

i4LIFE^® Advantage Account Value Death Benefit. The i4LIFE^® Advantage Account Value Death Benefit is available during the Access Period. This Death Benefit is equal to the Account Value as of the Valuation Date on which we approve the payment of the death claim.

General Death Benefit Provisions. Following the Access Period, there is no Death Benefit. The Death Benefit also terminates when the Account Value equals zero, because the Access Period terminates.

On a joint life option, the Secondary Life spouse must be either the primary Beneficiary or joint owner in order to receive the remaining payments after the first spouse’s death.

For non-qualified contracts, upon the death of the Contractowner, joint owner or Annuitant, the Contractowner (or Beneficiary) may elect to terminate the contract and receive full payment of the Death Benefit or may elect to continue the contract and receive Regular Income Payments. Upon the death of the Secondary Life, who is not also an owner, only the surrender value is paid.

If you are the owner of an IRA annuity contract, and there is no Secondary Life, and you die during the Access Period, the i4LIFE^® Advantage will terminate. A spouse Beneficiary may start a new i4LIFE^® Advantage program.

If a death occurs during the Access Period, the value of the Death Benefit will be determined as of the Valuation Date we approve the payment of the claim. Approval of payment will occur upon our receipt of all the following:

1.	proof (e.g. an original certified death certificate), or any other proof of death satisfactory to us; and
2.	written authorization for payment; and
3.	all required claim forms, fully completed (including selection of a settlement option).

Notwithstanding any provision of this contract to the contrary, the payment of Death Benefits provided under this contract must be made in compliance with Code Section 72(s) or 401(a)(9) as applicable, as amended from time to time. Death Benefits may be taxable. See Federal Tax Matters.

Upon notification to us of the death, Regular Income Payments may be suspended until the death claim is approved. Upon approval, a lump sum payment for the value of any suspended payments will be made as of the date the death claim is approved, and Regular Income Payments will continue, if applicable.

If a lump sum settlement is elected, the proceeds will be mailed within seven days of approval by us of the claim subject to the laws, regulations and tax code governing payment of Death Benefits. This payment may be postponed as permitted by the Investment Company Act of 1940.

Withdrawals. You may request a withdrawal at any time prior to or during the Access Period. We reduce the Account Value by the amount of the withdrawal, and all subsequent Regular Income Payments will be recalculated. Withdrawals may have tax consequences. See Federal Tax Matters. Withdrawals are subject to any applicable surrender charges except when amounts may be withdrawn free of surrender charges. See Charges and Other Deductions.

Surrender. At any time prior to or during the Access Period, you may surrender the contract by withdrawing the surrender value. If the contract is surrendered, the contract terminates and no further Regular Income Payments will be made. Withdrawals are subject to any applicable surrender charges except when amounts may be withdrawn free of surrender charges. See Charges and Other Deductions.

Termination. For IRA annuity contracts, you may terminate i4LIFE^® Advantage prior to the end of the Access Period by notifying us in writing. The termination will be effective on the next Valuation Date after we receive the notice and your contract will return to the accumulation phase. Your i4LIFE^® Advantage Death Benefit will terminate and you will default to the Account Value Death Benefit. Upon termination, we will stop assessing the charge for i4LIFE^® Advantage and begin assessing the mortality and expense risk charge and administrative charge associated with the new Death Benefit option. Your Contract Value upon termination will be equal to the Account Value on the Valuation Date we terminate i4LIFE^® Advantage.

For nonqualified contracts, you may not terminate i4LIFE^® Advantage once you have elected it.

Annuity Payouts

When you apply for a contract, you may select any Annuity Commencement Date permitted by law, which is usually on or before the Annuitant's 99^th birthday. Your broker-dealer may recommend that you annuitize at an earlier age.

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The contract provides optional forms of payouts of annuities (annuity options), each of which is payable on a variable basis, a fixed basis or a combination of both as you specify. The contract provides that all or part of the Contract Value may be used to purchase an Annuity Payout option.

You may elect Annuity Payouts in monthly, quarterly, semiannual or annual installments. If the payouts from any Subaccount would be or become less than $50, we have the right to reduce their frequency until the payouts are at least $50 each. Following are explanations of the annuity options available.

Annuity Options

The annuity options outlined below do not apply to Contractowners who have elected i4LIFE^®Advantage.

Life Annuity. This option offers a periodic payout during the lifetime of the Annuitant and ends with the last payout before the death of the Annuitant. This option offers the highest periodic payout since there is no guarantee of a minimum number of payouts or provision for a Death Benefit for Beneficiaries. However, there is the risk under this option that the recipient would receive no payouts if the Annuitant dies before the date set for the first payout; only one payout if death occurs before the second scheduled payout, and so on.

Life Annuity with Payouts Guaranteed for Designated Period. This option guarantees periodic payouts during a designated period, usually 10 or 20 years, and then continues throughout the lifetime of the Annuitant. The designated period is selected by the Contractowner.

Joint Life Annuity. This option offers a periodic payout during the joint lifetime of the Annuitant and a designated joint Annuitant. The payouts continue during the lifetime of the survivor. However, under a joint life annuity, if both Annuitants die before the date set for the first payout, no payouts will be made. Only one payment would be made if both deaths occur before the second scheduled payout, and so on.

Joint Life Annuity with Guaranteed Period. This option guarantees periodic payouts during a designated period, usually 10 or 20 years, and continues during the joint lifetime of the Annuitant and a designated joint Annuitant. The payouts continue during the lifetime of the survivor. The designated period is selected by the Contractowner.

Joint Life and Two Thirds to Survivor Annuity. This option provides a periodic payout during the joint lifetime of the Annuitant and a designated joint Annuitant. When one of the joint Annuitants dies, the survivor receives two thirds of the periodic payout made when both were alive.

Joint Life and Two-Thirds Survivor Annuity with Guaranteed Period. This option provides a periodic payout during the joint lifetime of the Annuitant and a joint Annuitant. When one of the joint Annuitants dies, the survivor receives two-thirds of the periodic payout made when both were alive. This option further provides that should one or both of the Annuitants die during the elected guaranteed period, usually 10 or 20 years, full benefit payment will continue for the rest of the guaranteed period.

Unit Refund Life Annuity. This option offers a periodic payout during the lifetime of the Annuitant with the guarantee that upon death a payout will be made of the value of the number of Annuity Units (see Variable Annuity Payouts) equal to the excess, if any, of:

• the total amount applied under this option divided by the Annuity Unit value for the date payouts begin, minus

• the Annuity Units represented by each payout to the Annuitant multiplied by the number of payouts paid before death.

The value of the number of Annuity Units is computed on the date the death claim is approved for payment by the Home Office.

Life Annuity with Cash Refund. Fixed annuity benefit payments that will be made for the lifetime of the Annuitant with the guarantee that upon death, should (a) the total dollar amount applied to purchase this option be greater than (b) the fixed annuity benefit payment multiplied by the number of annuity benefit payments paid prior to death, then a refund payment equal to the dollar amount of (a) minus (b) will be made.

Under the annuity options listed above, you may not make withdrawals. Other options, with or without withdrawal features, may be made available by us. You may pre-select an Annuity Payout option as a method of paying the Death Benefit to a Beneficiary. If you do, the Beneficiary cannot change this payout option. You may change or revoke in writing to our Home Office, any such selection, unless such selection was made irrevocable. If you have not already chosen an Annuity Payout option, the Beneficiary may choose any Annuity Payout option. At death, options are only available to the extent they are consistent with the requirements of the contract as well as Sections 72(s) and 401(a)(9) of the tax code, if applicable.

General Information

Any previously selected Death Benefit in effect before the Annuity Commencement Date will no longer be available on and after the Annuity Commencement Date. You may change the Annuity Commencement Date, change the annuity option or change the allocation of the investment among Subaccounts up to 30 days before the scheduled Annuity Commencement Date, upon written notice to the Home Office. You must give us at least 30 days’ notice before the date on which you want payouts to begin. We may require proof of age, sex, or survival of any payee upon whose age, sex, or survival payments depend.

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Unless you select another option, the contract automatically provides for a life annuity with Annuity Payouts guaranteed for 10 years (on a fixed, variable or combination fixed and variable basis, in proportion to the account allocations at the time of annuitization) except when a joint life payout is required by law. Under any option providing for guaranteed period payouts, the number of payouts which remain unpaid at the date of the Annuitant’s death (or surviving Annuitant’s death in case of joint life Annuity) will be paid to you or your Beneficiary as payouts become due after we are in receipt of:

• proof, satisfactory to us, of the death;

• written authorization for payment; and

• all claim forms, fully completed.

Variable Annuity Payouts

Variable Annuity Payouts will be determined using:

• The Contract Value on the Annuity Commencement Date, less any applicable premium taxes;

• The annuity tables contained in the contract;

• The annuity option selected; and

• The investment performance of the fund(s) selected.

To determine the amount of payouts, we make this calculation:

1.	Determine the dollar amount of the first periodic payout; then
2.	Credit the contract with a fixed number of Annuity Units equal to the first periodic payout divided by the Annuity Unit value; and
3.	Calculate the value of the Annuity Units each period thereafter.

Annuity Payouts assume an investment return of 3%, 4%, 5% or 6% per year, as applied to the applicable mortality table. Some of these assumed interest rates may not be available in your state; therefore, please check with your registered representative. You may choose your assumed interest rate at the time you elect a variable Annuity Payout on the administrative form provided by us. The higher the assumed interest rate you choose, the higher your initial annuity payment will be. The amount of each payout after the initial payout will depend upon how the underlying fund(s) perform, relative to the assumed rate. If the actual net investment rate (annualized) exceeds the assumed rate, the payment will increase at a rate proportional to the amount of such excess. Conversely, if the actual rate is less than the assumed rate, annuity payments will decrease. The higher the assumed interest rate, the less likely future annuity payments are to increase, or the payments will increase more slowly than if a lower assumed rate was used. There is a more complete explanation of this calculation in the SAI.

Fixed Side of the Contract

Purchase Payments and Contract Value allocated to the fixed side of the contract become part of our general account, and do not participate in the investment experience of the VAA. The general account is subject to regulation and supervision by the Indiana Department of Insurance as well as the insurance laws and regulations of the jurisdictions in which the contracts are distributed.

In reliance on certain exemptions, exclusions and rules, we have not registered interests in the general account as a security under the Securities Act of 1933 and have not registered the general account as an investment company under the 1940 Act. Accordingly, neither the general account nor any interests in it are regulated under the 1933 Act or the 1940 Act. We have been advised that the staff of the SEC has not made a review of the disclosures which are included in this prospectus which relate to our general account and to the fixed account under the contract. These disclosures, however, may be subject to certain provisions of the federal securities laws relating to the accuracy and completeness of statements made in prospectuses. This prospectus is generally intended to serve as a disclosure document only for aspects of the contract involving the VAA, and therefore contains only selected information regarding the fixed side of the contract. Complete details regarding the fixed side of the contract are in the contract.

We guarantee an annual effective interest rate of not less than 1.50% per year on amounts held in a fixed account.

ANY INTEREST IN EXCESS OF 1.50% (OR THE GUARANTEED MINIMUM INTEREST RATE STATED IN YOUR CONTRACT) WILL BE DECLARED IN ADVANCE AT OUR SOLE DISCRETION. CONTRACTOWNERS BEAR THE RISK THAT NO INTEREST IN EXCESS OF THE MINIMUM INTEREST RATE WILL BE DECLARED.

Your contract may not offer a fixed account or if permitted by your contract, we may discontinue accepting Purchase Payments or transfers into the fixed side of the contract at any time. At this time, the fixed account is available for dollar cost averaging only. Please contact your registered representative for further information.

Small Contract Surrenders

We may surrender your contract, in accordance with the laws of your state if:

• your Contract Value drops below certain state specified minimum amounts ($1,000 or less) for any reason, including if your Contract Value decreases due to the performance of the Subaccounts you selected;

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• no Purchase Payments have been received for two (2) full, consecutive Contract Years; and

• the annuity benefit at the Annuity Commencement Date would be less than $20.00 per month (these requirements may differ in some states).

At least 60 days before we surrender your contract, we will send you a letter at your last address we have on file, to inform you that your contract will be surrendered. You will have the opportunity to make additional Purchase Payments to bring your Contract Value above the minimum level to avoid surrender. If we surrender your contract, we will not assess any surrender charge.

Delay of Payments

Contract proceeds from the VAA will be paid within seven days, except:

• when the NYSE is closed (other than weekends and holidays);

• times when market trading is restricted or the SEC declares an emergency, and we cannot value units or the funds cannot redeem shares; or

• when the SEC so orders to protect Contractowners.

If, pursuant to SEC rules, an underlying money market fund suspends payment of redemption proceeds in connection with a liquidation of the fund, we will delay payment of any transfer, partial withdrawal, surrender, loan, or Death Benefit from the money market sub-account until the fund is liquidated. Payment of contract proceeds from the fixed account may be delayed for up to six months.

Due to federal laws designed to counter terrorism and prevent money laundering by criminals, we may be required to reject a Purchase Payment and/or deny payment of a request for transfers, withdrawals, surrenders, or Death Benefits, until instructions are received from the appropriate regulator. We also may be required to provide additional information about a Contractowner's account to government regulators.

Reinvestment Privilege

You may elect to make a reinvestment purchase with any part of the proceeds of a surrender/withdrawal, and we will recredit that portion of the surrender/withdrawal charges attributable to the amount returned.

This election must be made by your written authorization to us on an approved Lincoln reinvestment form and received in our Home Office within 30 days of the date of the surrender/withdrawal, and the repurchase must be of a contract covered by this prospectus. In the case of a qualified retirement plan, a representation must be made that the proceeds being used to make the purchase have retained their tax-favored status under an arrangement for which the contracts offered by this prospectus are designed. The number of Accumulation Units which will be credited when the proceeds are reinvested will be based on the value of the Accumulation Unit(s) on the next Valuation Date. This computation will occur following receipt of the proceeds and request for reinvestment at the Home Office. You may utilize the reinvestment privilege only once. For tax reporting purposes, we will treat a surrender/withdrawal and a subsequent reinvestment purchase as separate transactions (and a Form 1099 may be issued, if applicable). Any taxable distribution that is reinvested may still be reported as taxable. You should consult a tax adviser before you request a surrender/withdrawal or subsequent reinvestment purchase.

Amendment of Contract

We reserve the right to amend the contract to meet the requirements of the 1940 Act or other applicable federal or state laws or regulations. You will be notified in writing of any changes, modifications or waivers. Any changes are subject to prior approval of your state’s insurance department (if required).

Distribution of the Contracts

Lincoln Financial Distributors, Inc. (“LFD”) serves as Principal Underwriter of this contract. LFD is affiliated with Lincoln Life and is registered as a broker-dealer with the SEC under the Securities Exchange Act of 1934 and is a member of FINRA. The Principal Underwriter has entered into selling agreements with Lincoln Financial Advisors Corporation and/or Lincoln Financial Securities Corporation (collectively “LFN”), also affiliates of ours. The Principal Underwriter has also entered into selling agreements with broker-dealers that are unaffiliated with us (“Selling Firms”). While the Principal Underwriter has the legal authority to make payments to broker-dealers which have entered into selling agreements, we will make such payments on behalf of the Principal Underwriter in compliance with appropriate regulations. We also pay on behalf of LFD certain of its operating expenses related to the distribution of this and other of our contracts. The Principal Underwriter may also offer “non-cash compensation”, as defined under FINRA’s rules, which includes among other things, merchandise, gifts, marketing support, sponsorships, seminars, entertainment and travel expenses. You may ask your registered representative how he/she will personally be compensated, in whole or in part, for the sale of the contract to you or for any alternative proposal that may have been presented to you. You may wish to take such compensation payments into account when considering and evaluating any recommendation made to you in connection with the purchase of a contract. The following paragraphs describe how payments are made by us and the Principal Underwriter to various parties.

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Compensation Paid to LFN. The maximum commission the Principal Underwriter pays to LFN is 6.25% of Purchase Payments. LFN may elect to receive a lower commission when a Purchase Payment is made along with an earlier quarterly payment based on Contract Value for so long as the contract remains in effect. Upon annuitization, the maximum commission the Principal Underwriter pays to LFN is 6.25% of annuitized value and/or ongoing annual compensation of up to 1.00% of annuity value or statutory reserves.

Lincoln Life also pays for the operating and other expenses of LFN, including the following sales expenses: registered representative training allowances; compensation and bonuses for LFN's management team; advertising expenses; and all other expenses of distributing the contracts. LFN pays its registered representatives a portion of the commissions received for their sales of contracts. LFN registered representatives and their managers are also eligible for various cash benefits, such as bonuses, insurance benefits and financing arrangements. In addition, LFN registered representatives who meet certain productivity, persistency and length of service standards and/or their managers may be eligible for additional compensation. Sales of the contracts may help LFN registered representatives and/or their managers qualify for such benefits. LFN registered representatives and their managers may receive other payments from us for services that do not directly involve the sale of the contracts, including payments made for the recruitment and training of personnel, production of promotional literature and similar services.

Compensation Paid to Unaffiliated Selling Firms. The Principal Underwriter pays commissions to all Selling Firms. The maximum commission the Principal Underwriter pays to Selling Firms, other than LFN, is 6.25% of Purchase Payments. Some Selling Firms may elect to receive a lower commission when a Purchase Payment is made along with an earlier quarterly payment based on Contract Value for so long as the contract remains in effect. Upon annuitization, the maximum commission the Principal Underwriter pays to Selling Firms is 6.25% of annuitized value and/or ongoing annual compensation of up to 1.15% of annuity value or statutory reserves. LFD also acts as wholesaler of the contracts and performs certain marketing and other functions in support of the distribution and servicing of the contracts.

LFD may pay certain Selling Firms or their affiliates additional amounts for, among other things: (1) “preferred product” treatment of the contracts in their marketing programs, which may include marketing services and increased access to registered representatives; (2) sales promotions relating to the contracts; (3) costs associated with sales conferences and educational seminars for their registered representatives; (4) other sales expenses incurred by them; and (5) inclusion in the financial products the Selling Firm offers.

Lincoln Life may provide loans to broker-dealers or their affiliates to help finance marketing and distribution of the contracts, and those loans may be forgiven if aggregate sales goals are met. In addition, we may provide staffing or other administrative support and services to broker-dealers who distribute the contracts. LFD, as wholesaler, may make bonus payments to certain Selling Firms based on aggregate sales of our variable insurance contracts (including the contracts) or persistency standards.

These additional types of compensation are not offered to all Selling Firms. The terms of any particular agreement governing compensation may vary among Selling Firms and the amounts may be significant. The prospect of receiving, or the receipt of, additional compensation may provide Selling Firms and/or their registered representatives with an incentive to favor sales of the contracts over other variable annuity contracts (or other investments) with respect to which a Selling Firm does not receive additional compensation, or lower levels of additional compensation. You may wish to take such payment arrangements into account when considering and evaluating any recommendation relating to the contracts. Additional information relating to compensation paid in 2014 is contained in the SAI.

Compensation Paid to Other Parties. Depending on the particular selling arrangements, there may be others whom LFD compensates for the distribution activities. For example, LFD may compensate certain “wholesalers”, who control access to certain selling offices, for access to those offices or for referrals, and that compensation may be separate from the compensation paid for sales of the contracts. LFD may compensate marketing organizations, associations, brokers or consultants which provide marketing assistance and other services to broker-dealers who distribute the contracts, and which may be affiliated with those broker-dealers. Commissions and other incentives or payments described above are not charged directly to Contractowners or the VAA. All compensation is paid from our resources, which include fees and charges imposed on your contract.

Contractowner Questions

The obligations to purchasers under the contracts are those of Lincoln Life. This prospectus provides a general description of the material features of the contract. Contracts, endorsements and riders may vary as required by state law. Questions about your contract should be directed to us at 1-888-868-2583.

Federal Tax Matters

Introduction

The Federal income tax treatment of the contract is complex and sometimes uncertain. The Federal income tax rules may vary with your particular circumstances. This discussion does not include all the Federal income tax rules that may affect you and your contract.

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This discussion also does not address other Federal tax consequences (including consequences of sales to foreign individuals or entities), or state or local tax consequences, associated with the contract. As a result, you should always consult a tax adviser about the application of tax rules found in the Internal Revenue Code (“Code”), Treasury Regulations and applicable IRS guidance to your individual situation.

Nonqualified Annuities

This part of the discussion describes some of the Federal income tax rules applicable to nonqualified annuities. A nonqualified annuity is a contract not issued in connection with a qualified retirement plan, such as an IRA or a section 403(b) plan, receiving special tax treatment under the Code. We may not offer nonqualified annuities for all of our annuity products.

Tax Deferral On Earnings

Under the Code, you are generally not subject to tax on any increase in your Contract Value until you receive a contract distribution. However, for this general rule to apply, certain requirements must be satisfied:

• An individual must own the contract (or the Code must treat the contract as owned by an individual).

• The investments of the VAA must be “adequately diversified” in accordance with Treasury regulations.

• Your right to choose particular investments for a contract must be limited.

• The Annuity Commencement Date must not occur near the end of the Annuitant’s life expectancy.

Contracts Not Owned By An Individual

If a contract is owned by an entity (rather than an individual) the Code generally does not treat it as an annuity contract for Federal income tax purposes. This means that the entity owning the contract pays tax currently on the excess of the Contract Value over the Purchase Payments for the contract. Examples of contracts where the owner pays current tax on the contract’s earnings, Large Account Credits if applicable, are contracts issued to a corporation or a trust. Some exceptions to the rule are:

• Contracts in which the named owner is a trust or other entity that holds the contract as an agent for an individual; however, this exception does not apply in the case of any employer that owns a contract to provide deferred compensation for its employees;

• Immediate annuity contracts, purchased with a single premium, when the annuity starting date is no later than a year from purchase and substantially equal periodic payments are made, not less frequently than annually, during the Annuity Payout period;

• Contracts acquired by an estate of a decedent;

• Certain qualified contracts;

• Contracts purchased by employers upon the termination of certain qualified plans; and

• Certain contracts used in connection with structured settlement agreements.

Investments In The VAA Must Be Diversified

For a contract to be treated as an annuity for Federal income tax purposes, the investments of the VAA must be “adequately diversified.” Treasury regulations define standards for determining whether the investments of the VAA are adequately diversified. If the VAA fails to comply with these diversification standards, you could be required to pay tax currently on the excess of the Contract Value over the contract Purchase Payments. Although we do not control the investments of the underlying investment options, we expect that the underlying investment options will comply with the Treasury regulations so that the VAA will be considered “adequately diversified.”

Restrictions

The Code limits your right to choose particular investments for the contract. Because the IRS has issued little guidance specifying those limits, the limits are uncertain and your right to allocate Contract Values among the Subaccounts may exceed those limits. If so, you would be treated as the owner of the assets of the VAA and thus subject to current taxation on the income, Large Account Credits and gains, if applicable, from those assets. We do not know what limits may be set by the IRS in any guidance that it may issue and whether any such limits will apply to existing contracts. We reserve the right to modify the contract without your consent in an attempt to prevent you from being considered as the owner of the assets of the VAA for purposes of the Code.

Loss Of Interest Deduction

After June 8, 1997, if a contract is issued to a taxpayer that is not an individual, or if a contract is held for the benefit of an entity, the entity may lose a portion of its deduction for otherwise deductible interest expenses. However, this rule does not apply to a contract owned by an entity engaged in a trade or business that covers the life of one individual who is either (i) a 20% Owner of the entity, or (ii) an officer, director, or employee of the trade or business, at the time first covered by the contract. This rule also does not apply to a contract owned by an entity engaged in a trade or business that covers the joint lives of the 20% Owner or the entity and the Owner’s spouse at the time first covered by the contract.

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Age At Which Annuity Payouts Begin

The Code does not expressly identify a particular age by which Annuity Payouts must begin. However, those rules do require that an annuity contract provide for amortization, through Annuity Payouts, of the contract’s Purchase Payments , Large Account Credits and earnings. As long as annuity payments begin or are scheduled to begin on a date on which the Annuitant’s remaining life expectancy is enough to allow for a sufficient Annuity Payout period, the contract should be treated as an annuity. If the annuity contract is not treated as an annuity, you would be currently taxed on the excess of the Contract Value over the Purchase Payments of the contract.

Tax Treatment Of Payments

We make no guarantees regarding the tax treatment of any contract or of any transaction involving a contract. However, the rest of this discussion assumes that your contract will be treated as an annuity under the Code and that any increase in your Contract Value will not be taxed until there is a distribution from your contract.

Taxation Of Withdrawals And Surrenders

You will pay tax on withdrawals to the extent your Contract Value exceeds your Purchase Payments in the contract. This income (and all other income from your contract) is considered ordinary income (and does not receive capital gains treatment and is not qualified dividend income). A higher rate of tax is paid on ordinary income than on capital gains. You will pay tax on a surrender to the extent the amount you receive exceeds your Purchase Payments. In certain circumstances, your Purchase Payments are reduced by amounts received from your contract that were not included in income. Surrender and reinstatement of your contract will generally be taxed as a withdrawal.

Taxation Of Annuity Payouts, Including Regular Income Payments

The Code imposes tax on a portion of each Annuity Payout (at ordinary income tax rates) and treats a portion as a nontaxable return of your Purchase Payments in the contract. We will notify you annually of the taxable amount of your Annuity Payout. Once you have recovered the total amount of the Purchase Payment in the contract, you will pay tax on the full amount of your Annuity Payouts. If Annuity Payouts end because of the Annuitant’s death and before the total amount in the contract has been distributed, the amount not received will generally be deductible. If withdrawals, other than Regular Income Payments, are taken from i4LIFE^®Advantage during the Access Period, they are taxed subject to an exclusion ratio that is determined based on the amount of the payment.

Taxation Of Death Benefits

We may distribute amounts from your contract because of the death of a Contractowner or an Annuitant. The tax treatment of these amounts depends on whether the Contractowner or the Annuitant dies before or after the Annuity Commencement Date.

Death prior to the Annuity Commencement Date:

• If the Beneficiary receives Death Benefits under an Annuity Payout option, they are taxed in the same manner as Annuity Payouts.

• If the Beneficiary does not receive Death Benefits under an Annuity Payout option, they are taxed in the same manner as a withdrawal.

Death after the Annuity Commencement Date:

• If Death Benefits are received in accordance with the existing Annuity Payout option following the death of a Contractowner who is not the Annuitant, they are excludible from income in the same manner as the Annuity Payout prior to the death of the Contractowner.

• If Death Benefits are received in accordance with the existing Annuity Payout option following the death of the Annuitant (whether or not the Annuitant is also the Contractowner), the Death Benefits are excludible from income if they do not exceed the Purchase Payments not yet distributed from the contract. All Annuity Payouts in excess of the Purchase Payments not previously received are includible in income.

• If Death Benefits are received in a lump sum, the Code imposes tax on the amount of Death Benefits which exceeds the amount of Purchase Payments not previously received.

Penalty Taxes Payable On Withdrawals, Surrenders, Or Annuity Payouts

The Code may impose a 10% penalty tax on any distribution from your contract which you must include in your gross income. The 10% penalty tax does not apply if one of several exceptions exists. These exceptions include withdrawals, surrenders, or Annuity Payouts that:

• you receive on or after you reach 59½,

• you receive because you became disabled (as defined in the Code),

• you receive from an immediate annuity,

• a Beneficiary receives on or after your death, or

• you receive as a series of substantially equal periodic payments based on your life or life expectancy (non-natural owners holding as agent for an individual do not qualify).

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Unearned Income Medicare Contribution

Congress enacted the “Unearned Income Medicare Contribution” as a part of the Health Care and Education Reconciliation Act of 2010. This new tax, which affects individuals whose modified adjusted gross income exceeds certain thresholds, is a 3.8% tax on the lesser of (i) the individual's “unearned income”, or (ii) the dollar amount by which the individual's modified adjusted gross income exceeds the applicable threshold. Unearned income includes the taxable portion of distributions that you take from your annuity contract. The tax is effective for tax years after December 31, 2012. If you take a distribution from your contract that may be subject to the tax, we will include a Distribution Code “D” in Box 7 of the Form 1099-R issued to report the distribution. Please consult your tax advisor to determine whether your annuity distributions are subject to this tax.

Special Rules If You Own More Than One Annuity Contract

In certain circumstances, you must combine some or all of the nonqualified annuity contracts you own in order to determine the amount of an Annuity Payout, a surrender, or a withdrawal that you must include in income. For example, if you purchase two or more deferred annuity contracts from the same life insurance company (or its affiliates) during any calendar year, the Code treats all such contracts as one contract. Treating two or more contracts as one contract could affect the amount of a surrender, a withdrawal or an Annuity Payout that you must include in income and the amount that might be subject to the penalty tax described previously.

Loans and Assignments

Except for certain qualified contracts, the Code treats any amount received as a loan under your contract, and any assignment or pledge (or agreement to assign or pledge) of any portion of your Contract Value, as a withdrawal of such amount or portion.

Gifting A Contract

If you transfer ownership of your contract to a person other than to your spouse (or to your former spouse incident to divorce), and receive a payment less than your contract’s value, you will pay tax on your Contract Value to the extent it exceeds your Purchase Payments not previously received. The new owner’s Purchase Payments in the contract would then be increased to reflect the amount included in income.

Charges for Additional Benefits

Your contract automatically includes a basic Death Benefit and may include other optional riders. Certain enhancements to the basic Death Benefit may also be available to you. The cost of the basic Death Benefit and any additional benefit are deducted from your contract. It is possible that the tax law may treat all or a portion of the Death Benefit and other optional rider charges, if any, as a contract withdrawal.

Special Considerations for Same-Sex Spouses

The U.S. Supreme Court recently held same-sex spouses who have been married under state law will now be treated as spouses for purposes of federal law. You are strongly encouraged to consult a tax advisor before electing spousal rights under the contract.

Qualified Retirement Plans

We have designed the contracts for use in connection with certain types of retirement plans that receive favorable treatment under the Code. Contracts issued to or in connection with a qualified retirement plan are called “qualified contracts.” We issue contracts for use with various types of qualified retirement plans. The Federal income tax rules applicable to those plans are complex and varied. As a result, this prospectus does not attempt to provide more than general information about the use of the contract with the various types of qualified retirement plans. Persons planning to use the contract in connection with a qualified retirement plan should obtain advice from a competent tax adviser.

Types of Qualified Contracts and Terms of Contracts

Qualified retirement plans may include the following:

• Individual Retirement Accounts and Annuities (“Traditional IRAs”)

• Roth IRAs

• Traditional IRA that is part of a Simplified Employee Pension Plan (“SEP”)

• SIMPLE 401(k) plans (Savings Incentive Matched Plan for Employees)

• 401(a) / (k) plans (qualified corporate employee pension and profit-sharing plans)

• 403(a) plans (qualified annuity plans)

• 403(b) plans (public school system and tax-exempt organization annuity plans)

• H.R. 10 or Keogh Plans (self-employed individual plans)

• 457(b) plans (deferred compensation plans for state and local governments and tax-exempt organizations)

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Our individual variable annuity products are not available for use with any of the foregoing qualified retirement plan accounts, with the exception of Traditional IRA, SEP IRA, and Roth IRA arrangements. We will amend contracts to be used with a qualified retirement plan as generally necessary to conform to the Code’s requirements for the type of plan. However, the rights of a person to any qualified retirement plan benefits may be subject to the plan’s terms and conditions, regardless of the contract’s terms and conditions. In addition, we are not bound by the terms and conditions of qualified retirement plans to the extent such terms and conditions contradict the contract, unless we consent.

Tax Treatment of Qualified Contracts

The Federal income tax rules applicable to qualified retirement plans and qualified contracts vary with the type of plan and contract. For example:

• Federal tax rules limit the amount of Purchase Payments that can be made, and the tax deduction or exclusion that may be allowed for the Purchase Payments. These limits vary depending on the type of qualified retirement plan and the participant’s specific circumstances (e.g., the participant’s compensation).

• Minimum annual distributions are required under some qualified retirement plans once you reach age 70½ or retire, if later as described below.

• Loans are allowed under certain types of qualified retirement plans, but Federal income tax rules prohibit loans under other types of qualified retirement plans. For example, Federal income tax rules permit loans under some section 403(b) plans, but prohibit loans under Traditional and Roth IRAs. If allowed, loans are subject to a variety of limitations, including restrictions as to the loan amount, the loan’s duration, the rate of interest, and the manner of repayment. Your contract or plan may not permit loans.

Please note that qualified retirement plans such as 403(b) plans, 401(k) plans and IRAs generally defer taxation of contributions and earnings until distribution. As such, an annuity does not provide any additional tax deferral benefit beyond the qualified retirement plan itself.

Tax Treatment of Payments

The Federal income tax rules generally include distributions from a qualified contract in the participant’s income as ordinary income. These taxable distributions will include Purchase Payments that were deductible or excludible from income. Thus, under many qualified contracts, the total amount received is included in income since a deduction or exclusion from income was taken for Purchase Payments. There are exceptions. For example, you do not include amounts received from a Roth IRA in income if certain conditions are satisfied.

Required Minimum Distributions

Under most qualified plans, you must begin receiving payments from the contract in certain minimum amounts by April 1 of the year following the year you attain age 70½ or retire, if later. You are required to take distributions from your traditional IRAs by April 1 of the year following the year you reach age 70½. If you own a Roth IRA, you are not required to receive minimum distributions from your Roth IRA during your life.

Failure to comply with the minimum distribution rules applicable to certain qualified plans, such as Traditional IRAs, will result in the imposition of an excise tax. This excise tax equals 50% of the amount by which a minimum required distribution exceeds the actual distribution from the qualified plan.

Treasury regulations applicable to required minimum distributions include a rule that may impact the distribution method you have chosen and the amount of your distributions. Under these regulations, the presence of an enhanced Death Benefit, or other benefit which could provide additional value to your contract, may require you to take additional distributions. An enhanced Death Benefit is any Death Benefit that has the potential to pay more than the Contract Value or a return of Purchase Payments. Annuity contracts inside Custodial or Trusteed IRAs will also be subject to these regulations. Please contact your tax adviser regarding any tax ramifications.

Federal Penalty Tax on Early Distributions from Qualified Retirement Plans

The Code may impose a 10% penalty tax on an early distribution from a qualified contract that must be included in income. The Code does not impose the penalty tax if one of several exceptions applies. The exceptions vary depending on the type of qualified contract you purchase. For example, in the case of an IRA, the 10% penalty tax will not apply to any of the following withdrawals, surrenders, or Annuity Payouts:

• Distribution received on or after the Annuitant reaches 59½

• Distribution received on or after the Annuitant’s death or because of the Annuitant’s disability (as defined in the Code)

• Distribution received as a series of substantially equal periodic payments based on the Annuitant’s life (or life expectancy), or

• Distribution received as reimbursement for certain amounts paid for medical care.

These exceptions, as well as certain others not described here, generally apply to taxable distributions from other qualified retirement plans. However, the specific requirements of the exception may vary.

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Unearned Income Medicare Contribution

Congress enacted the “Unearned Income Medicare Contribution” as a part of the Health Care and Education Reconciliation Act of 2010. This new tax, which affects individuals whose modified adjusted gross income exceeds certain thresholds, is a 3.8% tax on the lesser of (i) the individual’s “unearned income”, or (ii) the dollar amount by which the individual’s modified adjusted gross income exceeds the applicable threshold. Distributions that you take from your contract are not included in the calculation of unearned income because your contract is a qualified plan contract. However, the amount of any such distribution is included in determining whether you exceed the modified adjusted gross income threshold. The tax is effective for tax years after December 31, 2012. Please consult your tax advisor to determine whether your annuity distributions are subject to this tax.

Transfers and Direct Rollovers

As a result of Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), you may be able to move funds between different types of qualified plans, such as 403(b) and 457(b) governmental plans, by means of a rollover or transfer. You may be able to rollover or transfer amounts between qualified plans and traditional IRAs. These rules do not apply to Roth IRAs and 457(b) non-governmental tax-exempt plans. The Pension Protection Act of 2006 (PPA) permits direct conversions from certain qualified, 403(b) or 457(b) plans to Roth IRAs (effective for distributions after 2007). There are special rules that apply to rollovers, direct rollovers and transfers (including rollovers or transfers of after-tax amounts). If the applicable rules are not followed, you may incur adverse Federal income tax consequences, including paying taxes which you might not otherwise have had to pay. Before we send a rollover distribution, we will provide a notice explaining tax withholding requirements (see Federal Income Tax Withholding). We are not required to send you such notice for your IRA. You should always consult your tax adviser before you move or attempt to move any funds.

The IRS issued Announcement 2014-32 confirming its intent to apply the one-rollover-per-year limitation of 408(d)(3)(B) on an aggregate basis to all IRAs that an individual owns. This means that an individual cannot make a tax-free IRA-to-IRA rollover if he or she has made such a rollover involving any of the individual’s IRAs in the current tax year. If an intended rollover does not qualify for tax-free rollover treatment, contributions to your IRA may constitute excess contributions that may exceed contribution limits. This one-rollover-per-year limitation does not apply to direct trustee-to-trustee transfers.

Death Benefit and IRAs

Pursuant to IRS regulations, IRAs may not invest in life insurance contracts. We do not believe that these regulations prohibit the Death Benefit from being provided under the contract when we issue the contract as a Traditional or Roth IRA. However, the law is unclear and it is possible that the presence of the Death Benefit under a contract issued as a Traditional or Roth IRA could result in increased taxes to you. Certain Death Benefit options may not be available for all of our products.

Federal Income Tax Withholding

We will withhold and remit to the IRS a part of the taxable portion of each distribution made under a contract unless you notify us prior to the distribution that tax is not to be withheld. In certain circumstances, Federal income tax rules may require us to withhold tax. At the time a withdrawal, surrender, or Annuity Payout is requested, we will give you an explanation of the withholding requirements.

Certain payments from your contract may be considered eligible rollover distributions (even if such payments are not being rolled over). Such distributions may be subject to special tax withholding requirements. The Federal income tax withholding rules require that we withhold 20% of the eligible rollover distribution from the payment amount, unless you elect to have the amount directly transferred to certain qualified plans or contracts. The IRS requires that tax be withheld, even if you have requested otherwise. Such tax withholding requirements are generally applicable to 401(a), 403(a) or (b), HR 10, and 457(b) governmental plans and contracts used in connection with these types of plans.

Our Tax Status

Under the Code, we are not required to pay tax on investment income and realized capital gains of the VAA. We do not expect that we will incur any Federal income tax liability on the income and gains earned by the VAA. However, the Company does expect, to the extent permitted under the Code, to claim the benefit of the foreign tax credit as the owner of the assets of the VAA. Therefore, we do not impose a charge for Federal income taxes. If there are any changes in the Code that require us to pay tax on some or all of the income and gains earned by the VAA, we may impose a charge against the VAA to pay the taxes.

Changes in the Law

The above discussion is based on the Code, IRS regulations, and interpretations existing on the date of this prospectus. However, Congress, the IRS, and the courts may modify these authorities, sometimes retroactively.

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Additional Information

Voting Rights

As required by law, we will vote the fund shares held in the VAA at meetings of the shareholders of the funds. The voting will be done according to the instructions of Contractowners who have interests in any Subaccounts which invest in classes of the funds. If the 1940 Act or any regulation under it should be amended or if present interpretations should change, and if as a result we determine that we are permitted to vote the fund shares in our own right, we may elect to do so.

The number of votes which you have the right to cast will be determined by applying your percentage interest in a Subaccount to the total number of votes attributable to the Subaccount. In determining the number of votes, fractional shares will be recognized.

Each underlying fund is subject to the laws of the state in which it is organized concerning, among other things, the matters which are subject to a shareholder vote, the number of shares which must be present in person or by proxy at a meeting of shareholders (a “quorum”), and the percentage of such shares present in person or by proxy which must vote in favor of matters presented. Because shares of the underlying fund held in the VAA are owned by us, and because under the 1940 Act we will vote all such shares in the same proportion as the voting instruction which we receive, it is important that each Contractowner provide their voting instructions to us. Even though Contractowners may choose not to provide voting instruction, the shares of a fund to which such Contractowners would have been entitled to provide voting instruction will, subject to fair representation requirements, be voted by us in the same proportion as the voting instruction which we actually receive. As a result, the instruction of a small number of Contractowners could determine the outcome of matters subject to shareholder vote. All shares voted by us will be counted when the underlying fund determines whether any requirement for a minimum number of shares be present at such a meeting to satisfy a quorum requirement has been met. Voting instructions to abstain on any item to be voted on will be applied proportionately to reduce the number of votes eligible to be cast.

Whenever a shareholders meeting is called, we will provide or make available to each person having a voting interest in a Subaccount proxy voting material, reports and other materials relating to the funds. Since the funds engage in shared funding, other persons or entities besides Lincoln Life may vote fund shares. See Investments of the Variable Annuity Account – Fund Shares.

Return Privilege

Within the free-look period after you receive the contract, you may cancel it for any reason by delivering or mailing it postage prepaid, to The Lincoln National Life Insurance Company at PO Box 2348, Fort Wayne, IN 46801-2348. A contract canceled under this provision will be void. Except as explained in the following paragraph, we will return the Contract Value as of the Valuation Date on which we receive the cancellation request, plus any premium taxes which had been deducted. No applicable surrender charges will apply. A purchaser who participates in the VAA is subject to the risk of a market loss on the Contract Value during the free-look period.

For contracts written in those states whose laws require that we assume this market risk during the free-look period, a contract may be canceled, subject to the conditions explained before, except that we will return the greater of the Purchase Payment(s) or Contract Value as of the Valuation Date we receive the cancellation request, plus any premium taxes that had been deducted. IRA purchasers will also receive the greater of Purchase Payments or Contract Value as of the Valuation Date on which we receive the cancellation request.

State Regulation

As a life insurance company organized and operated under Indiana law, we are subject to provisions governing life insurers and to regulation by the Indiana Commissioner of Insurance. Our books and accounts are subject to review and examination by the Indiana Department of Insurance at all times. A full examination of our operations is conducted by that Department at least every five years.

Records and Reports

As presently required by the 1940 Act and applicable regulations, we are responsible for maintaining all records and accounts relating to the VAA. We have entered into an agreement with The Bank of New York Mellon, One Mellon Bank Center, 500 Grant Street, Pittsburgh, Pennsylvania, 15258, to provide accounting services to the VAA. We will mail to you, at your last known address of record at the Home Office, at least semi-annually after the first Contract Year, reports containing information required by that Act or any other applicable law or regulation.

A written confirmation of each transaction will be mailed to you on the next Valuation Date, except for the following transactions, which are mailed quarterly:

• deduction of any account fee or rider charges;

• crediting of Large Account Credits, if applicable;

• any rebalancing event under the portfolio rebalancing service; and

• any transfer or withdrawal under any applicable additional service: dollar cost averaging, AWS, or the cross-reinvestment service.

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Cyber Security

Our business is highly dependent upon the effective operation of our computer systems and those of our business partners, so our business is potentially susceptible to operational and information security risks resulting from a cyber-attack. These risks include, among other things, the theft, misuse, corruption and destruction of data maintained online or digitally, denial of service attacks on websites and other operational disruption and unauthorized release of confidential customer information. Cyber-attacks affecting us, any third-party administrator, the underlying funds, intermediaries and other affiliated or third-party service providers may adversely affect us and your Contract Value. For instance, cyber-attacks may interfere with our processing of contract transactions, including the processing of orders from our website or with the underlying funds, impact our ability to calculate Accumulation Unit values, cause the release and possible destruction of confidential customer or business information, subject us and/or our service providers and intermediaries to regulatory fines and financial losses and/or cause reputational damage. Cyber security risks may also impact the issuers of securities in which the underlying funds invest, which may cause the funds underlying your contract to lose value. There can be no assurance that we or the underlying funds or our service providers will avoid losses affecting your contract due to cyber-attacks or information security breaches in the future.

Other Information

You may elect to receive your prospectus, prospectus supplements, quarterly statements, and annual and semiannual reports electronically over the Internet, if you have an e-mail account and access to an Internet browser. Once you select eDelivery, via the Internet Service Center, all documents available in electronic format will no longer be sent to you in hard copy. You will receive an e-mail notification when the documents become available online. It is your responsibility to provide us with your current e-mail address. You can resume paper mailings at any time without cost, by updating your profile at the Internet Service Center, or contacting us. To learn more about this service, please log on to www.LincolnFinancial.com, select service centers and continue on through the Internet Service Center.

Legal Proceedings

In the ordinary course of its business and otherwise, the Company and its subsidiaries or its separate accounts and Principal Underwriter may become or are involved in various pending or threatened legal proceedings, including purported class actions, arising from the conduct of its business. In some instances, the proceedings include claims for unspecified or substantial punitive damages and similar types of relief in addition to amounts for alleged contractual liability or requests for equitable relief.

After consultation with legal counsel and a review of available facts, it is management’s opinion that the proceedings, after consideration of any reserves and rights to indemnification, ultimately will be resolved without materially affecting the consolidated financial position of the Company and its subsidiaries, or the financial position of its separate accounts or Principal Underwriter. However, given the large and indeterminate amounts sought in certain of these proceedings and the inherent difficulty in predicting the outcome of such legal proceedings, it is possible that an adverse outcome in certain matters could be material to the Company's operating results for any particular reporting period. Please refer to the Statement of Additional Information for possible additional information regarding legal proceedings.

54

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55

Contents of the Statement of Additional Information (SAI)
for Lincoln Life Variable Annuity Account N

Item

Special Terms

Services

Principal Underwriter

Purchase of Securities Being Offered

Annuity Payouts

Examples of Regular Income Payment Calculations

Determination of Accumulation and Annuity Unit Value

Capital Markets

Advertising & Ratings

About the S&P Index

Unclaimed Property

Additional Services

Other Information

Financial Statements

For a free copy of the SAI complete the form below:

Statement of Additional Information Request Card
Lincoln Investor Advantage^®

Lincoln Life Variable Annuity Account N

Please send me a free copy of the current Statement of Additional Information for Lincoln Life Variable Annuity Account N Lincoln Investor Advantage^®.

(Please Print)

Name: 

Address: 

City 

State 

Zip 

Mail to The Lincoln National Life Insurance Company, PO Box 2348, Fort Wayne, IN 46801-2348.

56

Appendix A—Condensed Financial Information

Accumulation Unit Values

The following information relates to Accumulation Unit values and Accumulation Units for funds in the periods ended December 31. It should be read along with the VAA’s financial statement and notes which are included in the SAI.

B-Share

	Acct Value DB
	Accumulation unit value		Number of accumulation units
	Beginning of period	End of period
	(Accumulation unit value in dollars and Number of accumulation units in thousands)
ABVPSF Small/Mid Cap Value
2014	19.082	19.250	20
ALPS/Alerian Energy Infrastructure
2014	10.738	10.270	104
ALPS/Stadion Tactical Defensive
2014	10.268	10.515	42
American Funds Asset Allocation
2014	10.224	10.314	318
American Funds Blue Chip Income and Growth
2014	10.353	10.916	136
American Funds Capital Income Builder®
2014	10.066	9.869	158
American Funds Global Growth
2014	10.504	10.284	106
American Funds Global Small Capitalization
2014	10.413	10.089	67
American Funds Growth
2014	10.461	10.721	297
American Funds Growth-Income
2014	10.421	10.658	147
American Funds International
2014	10.100	9.523	142
American Funds Mortgage(SM)
2014	10.044	10.138	5
American Funds New World®
2014	10.406	9.079	135
BlackRock Global Allocation V.I.
2014	15.179	14.904	193
ClearBridge Variable Aggressive Growth
2014	10.795	11.147	324
ClearBridge Variable Mid Cap Core
2014	10.308	10.577	52
Delaware VIP® Diversified Income
2014	15.555	15.534	109
Delaware VIP® Emerging Markets
2014	12.090	10.414	59
Delaware VIP® REIT
2014	14.012	15.379	73
Delaware VIP® Small Cap Value
2014	17.621	17.624	53
Delaware VIP® Smid Cap Growth
2014	20.338	21.991	13
Delaware VIP® U.S. Growth
2014	18.536	19.604	15

A-1

	Acct Value DB
	Accumulation unit value		Number of accumulation units
	Beginning of period	End of period
	(Accumulation unit value in dollars and Number of accumulation units in thousands)
Delaware VIP® Value
2014	16.508	16.954	118
Deutsche Alternative Asset Allocation VIP
2014	13.850	13.478	18
Eaton Vance VT Floating-Rate Income
2014	10.045	9.910	72
Fidelity® VIP Contrafund®
2014	16.524	17.250	82
Fidelity® VIP Growth
2014	17.471	17.769	68
Fidelity® VIP Mid Cap
2014	17.584	17.783	71
First Trust Multi-Income Allocation
2014	10.228	10.332	27
First Trust/Dow Jones Dividend and Income Allocation
2014	10.108	10.609	49
Franklin Founding Funds Allocation VIP
2014	10.245	9.726	80
Franklin Income VIP
2014	10.256	9.747	446
Franklin Mutual Shares VIP
2014	10.370	10.162	44
Franklin Rising Dividends VIP
2014	10.155	10.554	121
Franklin Small Cap Value VIP
2014	10.301	9.848	57
Franklin Small-Mid Cap Growth VIP
2014	10.380	10.718	27
Goldman Sachs VIT Money Market
2014	9.982	9.930	394
Goldman Sachs VIT Multi-Strategy Alternatives
2014	10.085	9.756	45
Goldman Sachs VIT Strategic Income
2014	9.968	9.822	37
Guggenheim VT Long Short Equity
2014	10.114	10.509	13
Guggenheim VT Multi-Hedge Strategies
2014	10.062	10.370	31
Hartford Capital Appreciation HLS
2014	10.378	10.435	84
Invesco V.I. Balanced-Risk Allocation
2014	10.259	10.180	48
Invesco V.I. Comstock
2014	10.331	10.530	83
Invesco V.I. Diversified Dividend
2014	9.809	10.567	52
Invesco V.I. Equally-Weighted S&P 500
2014	10.406	10.839	72
Invesco V.I. Equity and Income
2014	10.285	10.506	91
Invesco V.I. International Growth
2014	10.188	9.643	71

A-2

	Acct Value DB
	Accumulation unit value		Number of accumulation units
	Beginning of period	End of period
	(Accumulation unit value in dollars and Number of accumulation units in thousands)
Ivy Funds VIP Asset Strategy
2014	10.216	9.746	245
Ivy Funds VIP Energy
2014	10.847	8.111	66
Ivy Funds VIP High Income
2014	10.097	9.746	102
Ivy Funds VIP Micro Cap Growth
2014	10.069	10.614	26
Ivy Funds VIP Mid Cap Growth
2014	10.130	10.683	25
Ivy Funds VIP Science and Technology
2014	10.799	10.492	96
JPMorgan Insurance Trust Intrepid Mid Cap
2014	10.439	11.058	129
Lord Abbett Series Fund Bond Debenture
2014	10.137	10.004	50
Lord Abbett Series Fund Developing Growth
2014	10.335	10.978	50
Lord Abbett Series Fund Short Duration
2014	10.021	9.932	117
LVIP American Balanced Allocation
2014	10.198	10.179	166
LVIP American Growth Allocation
2014	10.237	10.182	112
LVIP American Preservation
2014	9.828	9.815	12
LVIP AQR Enhanced Global Strategies
2014	10.219	10.315	26
LVIP Baron Growth Opportunities
2014	18.929	20.470	16
LVIP BlackRock Emerging Markets RPM
2014	10.600	9.371	34
LVIP BlackRock Equity Dividend RPM
2014	12.604	12.541	32
LVIP BlackRock Inflation Protected Bond
2014	10.155	9.901	69
LVIP BlackRock Multi-Asset Income
2014	10.034	9.830	53
LVIP Capital Growth
2014	14.188	15.023	22
LVIP Clarion Global Real Estate
2014	9.331	9.473	57
LVIP Delaware Bond
2014	14.233	14.337	184
LVIP Delaware Diversified Floating Rate
2014	10.179	10.058	28
LVIP Delaware Social Awareness
2014	16.496	17.256	7
LVIP Dimensional Non-U.S. Equity RPM
2014	11.051	10.113	36
LVIP Dimensional U.S. Equity RPM
2014	13.931	14.311	52

A-3

	Acct Value DB
	Accumulation unit value		Number of accumulation units
	Beginning of period	End of period
	(Accumulation unit value in dollars and Number of accumulation units in thousands)
LVIP Dimensional/Vanguard Total Bond
2014	10.462	10.519	69
LVIP Franklin Templeton Multi-Asset Opportunities
2014	9.947	9.983	35
LVIP Global Income
2014	12.020	11.840	28
LVIP Goldman Sachs Income Builder
2014	10.119	9.961	30
LVIP JPMorgan High Yield
2014	13.614	13.294	49
LVIP JPMorgan Mid Cap Value RPM
2014	12.390	13.160	12
LVIP Managed Risk Profile Growth
2014	13.671	13.375	256
LVIP Managed Risk Profile Moderate
2014	14.598	14.337	178
LVIP MFS International Growth
2014	9.851	9.266	20
LVIP MFS Value
2014	13.582	14.142	75
LVIP Mid-Cap Value
2014	13.535	13.489	35
LVIP Mondrian International Value
2014	10.185	9.029	37
LVIP Multi-Manager Global Equity RPM
2014	10.315	9.835	2
LVIP PIMCO Low Duration Bond
2014	9.989	9.931	356
LVIP SSgA Bond Index
2014	12.124	12.310	87
LVIP SSgA Conservative Structured Allocation
2014	12.372	12.421	119
LVIP SSgA Developed International 150
2014	11.897	10.890	22
LVIP SSgA Emerging Markets 100
2014	13.430	12.219	20
LVIP SSgA Global Tactical Allocation RPM
2014	12.190	11.907	27
LVIP SSgA International Index
2014	10.547	9.544	27
LVIP SSgA Large Cap 100
2014	17.855	18.930	28
LVIP SSgA Moderate Structured Allocation
2014	13.326	13.230	73
LVIP SSgA Moderately Aggressive Structured Allocation
2014	13.852	13.669	202
LVIP SSgA S&P 500 Index
2014	15.061	15.746	136
LVIP SSgA Small-Cap Index
2014	13.511	13.995	31
LVIP SSgA Small-Mid Cap 200
2014	19.994	20.207	5

A-4

	Acct Value DB
	Accumulation unit value		Number of accumulation units
	Beginning of period	End of period
	(Accumulation unit value in dollars and Number of accumulation units in thousands)
LVIP T. Rowe Price Growth Stock
2014	14.784	15.474	57
LVIP T. Rowe Price Structured Mid-Cap Growth
2014	18.729	20.115	30
LVIP Templeton Growth RPM
2014	11.376	10.492	22
LVIP Vanguard Domestic Equity ETF
2014	14.436	15.193	45
LVIP Vanguard International Equity ETF
2014	11.581	10.493	83
MFS® VIT Growth
2014	15.452	16.188	7
MFS® VIT International Value
2014	10.094	9.723	111
MFS® VIT Utilities
2014	20.907	20.464	39
Oppenheimer International Growth Fund/VA
2014	10.011	9.016	97
Oppenheimer Main Street Small Cap Fund®/VA
2014	10.175	11.051	37
PIMCO VIT All Asset All Authority
2014	10.149	9.284	34
PIMCO VIT CommodityRealReturn® Strategy
2014	12.973	9.949	28
PIMCO VIT Emerging Markets Bond
2014	10.311	9.564	45
PIMCO VIT Unconstrained Bond
2014	10.025	10.025	24
Putnam VT Absolute Return 500
2014	10.009	10.217	48
SEI VP Market Growth Strategy
2014	10.245	10.050	24
SEI VP Market Plus Strategy
2014	10.224	10.128	10
Templeton Foreign VIP
2014	9.957	8.642	63
Templeton Global Bond VIP
2014	10.106	9.915	187
Transparent Value Directional Allocation VI
2014	10.272	9.920	803
UIF Global Infrastructure
2014	10.581	10.556	88
Van Eck VIP Global Hard Assets
2014	10.575	7.531	45
Virtus Multi-Sector Fixed Income Series
2014	10.043	9.721	55
Virtus Premium AlphaSector®
2014	10.295	9.841	104

* The numbers of accumulation units less than 500 were rounded up to one.

A-5

C-Share

	Acct Value DB
	Accumulation unit value		Number of accumulation units
	Beginning of period	End of period
	(Accumulation unit value in dollars and Number of accumulation units in thousands)
ABVPSF Small/Mid Cap Value
2014	19.911	20.795	12
ALPS/Alerian Energy Infrastructure
2014	10.860	10.260	56
ALPS/Stadion Tactical Defensive
2014	10.332	10.490	20
American Funds Asset Allocation
2014	10.229	10.304	82
American Funds Blue Chip Income and Growth
2014	10.282	10.906	42
American Funds Capital Income Builder®
2014	10.145	9.860	61
American Funds Global Growth
2014	10.339	10.272	28
American Funds Global Small Capitalization
2014	10.352	10.080	13
American Funds Growth
2014	10.468	10.711	65
American Funds Growth-Income
2014	10.411	10.648	94
American Funds International
2014	9.955	9.514	79
American Funds Mortgage (SM)
2014	N/A	N/A	N/A
American Funds New World®
2014	10.513	9.070	52
BlackRock Global Allocation V.I.
2014	15.072	14.779	147
ClearBridge Variable Aggressive Growth
2014	10.790	11.136	55
ClearBridge Variable Mid Cap Core
2014	10.295	10.566	16
Delaware VIP® Diversified Income
2014	15.562	15.504	33
Delaware VIP® Emerging Markets (4)
2014	20.325	17.685	19
Delaware VIP® REIT
2014	16.681	18.142	35
Delaware VIP® Small Cap Value
2014	20.153	19.875	16
Delaware VIP® Smid Cap Growth
2014	21.590	23.180	4
Delaware VIP® U.S. Growth
2014	18.584	18.679	3
Delaware VIP® Value
2014	18.431	19.032	15
Deutsche Alternative Asset Allocation VIP
2014	13.778	13.365	7
Eaton Vance VT Floating-Rate Income
2014	10.042	9.900	52

A-6

	Acct Value DB
	Accumulation unit value		Number of accumulation units
	Beginning of period	End of period
	(Accumulation unit value in dollars and Number of accumulation units in thousands)
Fidelity® VIP Contrafund®
2014	18.457	19.704	23
Fidelity® VIP Growth
2014	17.853	18.511	28
Fidelity® VIP Mid Cap
2014	21.333	21.441	18
First Trust Multi-Income Allocation
2014	10.228	10.322	7
First Trust/Dow Jones Dividend and Income Allocation
2014	10.123	10.599	6
Franklin Founding Funds Allocation VIP
2014	10.122	9.716	562
Franklin Income VIP
2014	10.268	9.738	144
Franklin Mutual Shares VIP
2014	10.301	10.152	23
Franklin Rising Dividends VIP
2014	10.067	10.544	40
Franklin Small Cap Value VIP
2014	9.578	9.839	7
Franklin Small-Mid Cap Growth VIP
2014	10.527	10.708	14
Goldman Sachs VIT Money Market
2014	9.983	9.921	270
Goldman Sachs VIT Multi-Strategy Alternatives
2014	10.093	9.746	24
Goldman Sachs VIT Strategic Income
2014	9.980	9.813	12
Guggenheim VT Long Short Equity
2014	10.054	10.499	10
Guggenheim VT Multi-Hedge Strategies
2014	10.043	10.360	14
Hartford Capital Appreciation HLS
2014	10.219	10.425	9
Invesco V.I. Balanced-Risk Allocation
2014	10.293	10.170	32
Invesco V.I. Comstock
2014	10.319	10.520	12
Invesco V.I. Diversified Dividend
2014	10.134	10.556	11
Invesco V.I. Equally-Weighted S&P 500
2014	10.353	10.829	49
Invesco V.I. Equity and Income
2014	10.278	10.496	11
Invesco V.I. International Growth
2014	10.259	9.634	5
Ivy Funds VIP Asset Strategy
2014	10.213	9.737	66
Ivy Funds VIP Energy
2014	10.748	8.103	32
Ivy Funds VIP High Income
2014	10.095	9.737	46

A-7

	Acct Value DB
	Accumulation unit value		Number of accumulation units
	Beginning of period	End of period
	(Accumulation unit value in dollars and Number of accumulation units in thousands)
Ivy Funds VIP Micro Cap Growth
2014	10.041	10.604	4
Ivy Funds VIP Mid Cap Growth
2014	10.176	10.673	3
Ivy Funds VIP Science and Technology
2014	10.606	10.482	47
JPMorgan Insurance Trust Intrepid Mid Cap
2014	10.261	11.047	6
Lord Abbett Series Fund Bond Debenture
2014	10.144	9.995	14
Lord Abbett Series Fund Developing Growth
2014	10.367	10.967	6
Lord Abbett Series Fund Short Duration
2014	10.026	9.923	34
LVIP American Balanced Allocation
2014	10.000	10.170	41
LVIP American Growth Allocation
2014	10.242	10.172	154
LVIP American Preservation
2014	9.839	9.781	3
LVIP AQR Enhanced Global Strategies
2014	9.980	10.305	98
LVIP Baron Growth Opportunities
2014	18.008	19.142	6
LVIP BlackRock Emerging Markets RPM
2014	10.145	9.338	2
LVIP BlackRock Equity Dividend RPM
2014	12.958	13.315	44
LVIP BlackRock Inflation Protected Bond
2014	10.211	9.892	10
LVIP BlackRock Multi-Asset Income
2014	10.103	9.820	38
LVIP Capital Growth
2014	N/A	N/A	N/A
LVIP Clarion Global Real Estate
2014	9.253	9.365	44
LVIP Delaware Bond
2014	14.016	14.113	272
LVIP Delaware Diversified Floating Rate
2014	10.056	9.988	15
LVIP Delaware Social Awareness
2014	17.984	18.678	2
LVIP Dimensional Non-U.S. Equity RPM
2014	11.001	10.057	1*
LVIP Dimensional U.S. Equity RPM
2014	14.299	14.233	12
LVIP Dimensional/Vanguard Total Bond
2014	10.396	10.462	21
LVIP Franklin Templeton Multi-Asset Opportunities
2014	10.070	9.982	18
LVIP Global Income
2014	11.908	11.740	3

A-8

	Acct Value DB
	Accumulation unit value		Number of accumulation units
	Beginning of period	End of period
	(Accumulation unit value in dollars and Number of accumulation units in thousands)
LVIP Goldman Sachs Income Builder
2014	10.183	9.952	17
LVIP JPMorgan High Yield
2014	13.528	13.203	108
LVIP JPMorgan Mid Cap Value RPM
2014	12.633	13.012	1*
LVIP Managed Risk Profile Growth
2014	14.952	14.510	25
LVIP Managed Risk Profile Moderate
2014	15.395	15.251	29
LVIP MFS International Growth
2014	8.843	9.161	3
LVIP MFS Value
2014	13.114	13.982	25
LVIP Mid-Cap Value
2014	12.751	13.337	2
LVIP Mondrian International Value
2014	10.057	9.020	25
LVIP Multi-Manager Global Equity RPM
2014	9.978	9.825	2
LVIP PIMCO Low Duration Bond
2014	9.966	9.932	238
LVIP SSgA Bond Index
2014	12.014	12.190	12
LVIP SSgA Conservative Structured Allocation
2014	12.440	12.339	43
LVIP SSgA Developed International 150
2014	11.950	10.784	15
LVIP SSgA Emerging Markets 100
2014	13.141	12.100	6
LVIP SSgA Global Tactical Allocation RPM
2014	13.507	13.277	22
LVIP SSgA International Index
2014	9.581	9.451	2
LVIP SSgA Large Cap 100
2014	18.047	18.746	35
LVIP SSgA Moderate Structured Allocation
2014	13.236	13.142	21
LVIP SSgA Moderately Aggressive Structured Allocation
2014	13.878	13.579	12
LVIP SSgA S&P 500 Index
2014	15.655	16.504	21
LVIP SSgA Small-Cap Index
2014	13.367	13.836	6
LVIP SSgA Small-Mid Cap 200
2014	19.084	20.010	1*
LVIP T. Rowe Price Growth Stock
2014	14.975	15.298	32
LVIP T. Rowe Price Structured Mid-Cap Growth
2014	20.085	21.570	7
LVIP Templeton Growth RPM
2014	10.891	10.373	4

A-9

	Acct Value DB
	Accumulation unit value		Number of accumulation units
	Beginning of period	End of period
	(Accumulation unit value in dollars and Number of accumulation units in thousands)
LVIP Vanguard Domestic Equity ETF
2014	14.123	15.110	33
LVIP Vanguard International Equity ETF
2014	11.477	10.437	13
MFS® VIT Growth
2014	15.132	16.030	1*
MFS® VIT International Value
2014	10.159	9.713	31
MFS® VIT Utilities
2014	26.368	25.295	22
Oppenheimer International Growth Fund/VA
2014	9.653	9.008	11
Oppenheimer Main Street Small Cap Fund®/VA
2014	10.375	11.041	8
PIMCO VIT All Asset All Authority
2014	10.058	9.275	17
PIMCO VIT CommodityRealReturn® Strategy
2014	12.976	9.866	8
PIMCO VIT Emerging Markets Bond
2014	10.255	9.555	35
PIMCO VIT Unconstrained Bond
2014	10.043	10.016	14
Putnam VT Absolute Return 500
2014	9.977	10.208	23
SEI VP Market Growth Strategy
2014	10.126	10.040	1*
SEI VP Market Plus Strategy
2014	10.356	10.118	99
Templeton Foreign VIP
2014	9.922	8.633	9
Templeton Global Bond VIP
2014	10.118	9.906	78
Transparent Value Directional Allocation VI
2014	10.264	9.911	297
UIF Global Infrastructure
2014	10.540	10.546	54
Van Eck VIP Global Hard Assets
2014	10.568	7.523	18
Virtus Multi-Sector Fixed Income Series
2014	10.133	9.712	49
Virtus Premium AlphaSector®
2014	10.250	9.831	124

* The numbers of accumulation units less than 500 were rounded up to one.

A-10

Lincoln Investor Advantage^®
Lincoln Life Variable Annuity Account N  (Registrant)

The Lincoln National Life Insurance Company  (Depositor)

Statement of Additional Information (SAI)

This SAI should be read in conjunction with the Lincoln Investor Advantage^® prospectus of Lincoln Life Variable Annuity Account N dated May 1, 2015. You may obtain a copy of the Lincoln Investor Advantage^® prospectus on request and without charge. Please write Lincoln Life Customer Service, The Lincoln National Life Insurance Company, PO Box 2348, Fort Wayne, IN 46802, or call 1-888-868-2583.

Table of Contents

Item	Page
Special Terms	B-2
Services	B-2
Principal Underwriter	B-2
Purchase of Securities Being Offered	B-2
Annuity Payouts	B-2
Examples of Regular Income Payment Calculations	B-3
Determination of Accumulation and Annuity Unit Value	B-4

Item	Page
Capital Markets	B-4
Advertising & Ratings	B-4
About the S&P 500 Index	B-4
Unclaimed Property	B-5
Additional Services	B-5
Other Information	B-6
Financial Statements	B-6

This SAI is not a prospectus.
The date of this SAI is May 1, 2015.

Special Terms

The special terms used in this SAI are the ones defined in the prospectus.

Services

Independent Registered Public Accounting Firm

Ernst & Young LLP, independent registered public accounting firm, One Commerce Square, 2005 Market Street, Suite 700, Philadelphia, Pennsylvania, 19103, has audited a) our financial statements of the Lincoln Life Variable Annuity Account N as of December 31, 2014 and for the year then ended and the statement of changes in net assets for each of the years in the two year period ended December 31, 2014; and b) our consolidated financial statements of The Lincoln National Life Insurance Company as of December 31, 2014 and 2013 and for each of the three years in the period ended December 31, 2014, which are included in this SAI and Registration Statement. The aforementioned financial statements are included herein in reliance on Ernst & Young LLP's reports, given on their authority as experts in accounting and auditing.

Keeper of Records

All accounts, books, records and other documents which are required to be maintained for the VAA are maintained by us or by third parties responsible to Lincoln Life. We have entered into an agreement with The Bank of New York Mellon, One Mellon Bank Center, 500 Grant Street, Pittsburgh, Pennsylvania, 15258, to provide accounting services to the VAA. No separate charge against the assets of the VAA is made by us for this service.

Principal Underwriter

Lincoln Financial Distributors, Inc. (“LFD”), an affiliate of Lincoln Life, serves as principal underwriter (the “Principal Underwriter”) for the contracts, as described in the prospectus. The Principal Underwriter offers the contracts to the public on a continuous basis and anticipates continuing to offer the contracts, but reserves the right to discontinue the offering. The Principal Underwriter offers the contracts through sales representatives, who are associated with Lincoln Financial Advisors Corporation and/or Lincoln Financial Securities Corporation (collectively, “LFN”), our affiliates. The Principal Underwriter also may enter into selling agreements with other broker-dealers (“Selling Firms”) for the sale of the contracts. Sales representatives of Selling Firms are appointed as our insurance agents. LFD, acting as Principal Underwriter, paid $437,205,763, $619,961,766 and $606,129,776
to LFN and Selling Firms in 2012, 2013 and 2014 respectively, as sales compensation with respect to all the contracts offered under the VAA. The Principal Underwriter retained no underwriting commissions for the sale of the contracts.

Purchase of Securities Being Offered

The variable annuity contracts are offered to the public through licensed insurance agents who specialize in selling our products; through independent insurance brokers; and through certain securities brokers/dealers selected by us whose personnel are legally authorized to sell annuity products. There are no special purchase plans for any class of prospective buyers. However, under certain limited circumstances described in the prospectus under the section Charges and Other Deductions, any applicable account fee and/or surrender charge may be reduced or waived.

Both before and after the Annuity Commencement Date, there are exchange privileges between Subaccounts, and from the VAA to the general account (if available) subject to restrictions set out in the prospectus. See The Contracts, in the prospectus. No exchanges are permitted between the VAA and other separate accounts.

The offering of the contracts is continuous.

Annuity Payouts

Variable Annuity Payouts

Variable Annuity Payouts will be determined on the basis of:

• the dollar value of the contract on the Annuity Commencement Date less any applicable premium tax (and less any surrender charges on purchase payments in the contract for less than 12 months if bonus credits applied to the purchase payments);

• the annuity tables contained in the contract;

• the type of annuity option selected; and

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• the investment results of the fund(s) selected.

In order to determine the amount of variable Annuity Payouts, we make the following calculation:

• first, we determine the dollar amount of the first payout;

• second, we credit the contract with a fixed number of Annuity Units based on the amount of the first payout; and

• third, we calculate the value of the Annuity Units each period thereafter.

These steps are explained below.

The dollar amount of the first periodic variable Annuity Payout is determined by applying the total value of the Accumulation Units credited under the contract valued as of the Annuity Commencement Date (less any premium taxes) to the annuity tables contained in the contract. The first variable Annuity Payout will be paid 14 days after the Annuity Commencement Date. This day of the month will become the day on which all future Annuity Payouts will be paid. Amounts shown in the tables are based on the 1983 Table “a” Individual Annuity Mortality Tables, modified, with an assumed investment return at the rate of 3%, 4%, 5% or 6% per annum, depending on the terms of your contract. The first Annuity Payout is determined by multiplying the benefit per $1,000 of value shown in the contract tables by the number of thousands of dollars of value accumulated under the contract. These annuity tables vary according to the form of annuity selected and the age of the Annuitant at the Annuity Commencement Date. The assumed interest rate is the measuring point for subsequent Annuity Payouts. If the actual net investment rate (annualized) exceeds the assumed interest rate, the payout will increase at a rate equal to the amount of such excess.

Conversely, if the actual rate is less than the assumed interest rate, Annuity Payouts will decrease. If the assumed rate of interest were to be increased, Annuity Payouts would start at a higher level but would decrease more rapidly or increase more slowly.

We may use sex-distinct annuity tables in contracts that are not associated with employer sponsored plans and where not prohibited by law.

At an Annuity Commencement Date, the contract is credited with Annuity Units for each Subaccount on which variable Annuity Payouts are based. The number of Annuity Units to be credited is determined by dividing the amount of the first periodic payout by the value of an Annuity Unit in each Subaccount selected. Although the number of Annuity Units is fixed by this process, the value of such units will vary with the value of the underlying fund. The amount of the second and subsequent periodic payouts is determined by multiplying the Contractowner’s fixed number of Annuity Units in each Subaccount by the appropriate Annuity Unit value for the Valuation Date ending 14 days prior to the date that payout is due.

The value of each Subaccount’s Annuity Unit will be set initially at $1.00. The Annuity Unit value for each Subaccount at the end of any Valuation Date is determined by multiplying the Subaccount Annuity Unit value for the immediately preceding Valuation Date by the product of:

• The net investment factor of the Subaccount for the Valuation Period for which the Annuity Unit value is being determined, and

• A factor to neutralize the assumed investment return in the annuity table.

The value of the Annuity Units is determined as of a Valuation Date 14 days prior to the payment date in order to permit calculation of amounts of Annuity Payouts and mailing of checks in advance of their due dates. Such checks will normally be issued and mailed at least three days before the due date.

Examples of Regular Income Payment Calculations

These examples will illustrate the impact of the length of the access period and the impact of a withdrawal on the Regular Income Payments. These examples assume that the investment return is the same as the assumed investment return (AIR) to make the Regular Income Payment calculations simpler to understand. The Regular Income Payments will vary based on the investment performance of the underlying funds.

Annuitant	Male, Age 65
Secondary Life	Female, Age 63
Purchase Payment	$200,000.00
Regular Income Payment Frequency	Annual
AIR	4.0%
Hypothetical Investment Return	4.0%
	20-year Access Period	30-Year Access Period
Regular Income Payment	$10,600.94	$10,004.94

A 10% withdrawal from the Account Value will reduce the Regular Income Payments by 10% to $9,540.85 with the 20-year access period and $9,004.45 with the 30-year access period.

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At the end of the 20-year access period, the remaining Account Value of $109,921.94 (assuming no withdrawals) will be used to continue the $10,600.94 Regular Income Payment during the lifetime income period for the lives of the Annuitant and Secondary Life. At the end of the 30-year access period, the remaining Account Value of $65,108.01 (assuming no withdrawals) will be used to continue the $10,004.94 Regular Income Payment during the lifetime income period for the lives of the Annuitant and Secondary Life. (Note: the Regular Income Payments during the lifetime income period will vary with the investment performance of the underlying funds).

Determination of Accumulation and Annuity Unit Value

A description of the days on which Accumulation and Annuity Units will be valued is given in the prospectus. The New York Stock Exchange's (NYSE) most recent announcement (which is subject to change) states that it will be closed on weekends and on these holidays: New Year's Day, Martin Luther King Day, President's Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day. If any of these holidays occurs on a weekend day, the Exchange may also be closed on the business day occurring just before or just after the holiday. It may also be closed on other days.

Since the portfolios of some of the fund and series will consist of securities primarily listed on foreign exchanges or otherwise traded outside the United States, those securities may be traded (and the net asset value of those fund and series and of the variable account could therefore be significantly affected) on days when the investor has no access to those funds and series.

Capital Markets

In any particular year, our capital may increase or decrease depending on a variety of factors — the amount of our statutory income or losses (which is sensitive to equity market and credit market conditions), the amount of additional capital we must hold to support business growth, changes in reserving requirements, our inability to secure capital market solutions to provide reserve relief, such as issuing letters of credit to support captive reinsurance structures, changes in equity market levels, the value of certain fixed-income and equity securities in our investment portfolio and changes in interest rates.

Advertising & Ratings

We may include in certain advertisements, endorsements in the form of a list of organizations, individuals or other parties which recommend Lincoln Life or the policies. Furthermore, we may occasionally include in advertisements comparisons of currently taxable and tax deferred investment programs, based on selected tax brackets, or discussions of alternative investment vehicles and general economic conditions.

Our financial strength is ranked and rated by nationally recognized independent rating agencies. The ratings do not imply approval of the product and do not refer to the performance of the product, or any separate account, including the underlying investment options. Ratings are not recommendations to buy our products. Each of the rating agencies reviews its ratings periodically. Accordingly, all ratings are subject to revision or withdrawal at any time by the rating agencies, and therefore, no assurance can be given that these ratings will be maintained. The current outlook for the insurance subsidiaries is stable for Moody’s, A.M. Best, Fitch, and Standard & Poor’s. Our financial strength ratings, which are intended to measure our ability to meet contract holder obligations, are an important factor affecting public confidence in most of our products and, as a result, our competitiveness. A downgrade of our financial strength rating could affect our competitive position in the insurance industry by making it more difficult for us to market our products as potential customers may select companies with higher financial strength ratings and by leading to increased withdrawals by current customers seeking companies with higher financial strength ratings. For more information on ratings, including outlooks, see www.LincolnFinancial.com/investor.

About the S&P 500 Index

The S&P 500 Index (hereinafter “Index”) is a product of S&P Dow Jones Indices LLC or its affiliates (“SPDJI”), and has been licensed for use by Lincoln Variable Insurance Products Trust and its affiliates (hereinafter “Licensee”). Standard & Poor’s^® and S&P^® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”) and Dow Jones^® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). The fund(s) are not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, or any of their respective affiliates (collectively, “S&P Dow Jones Indices”). S&P Dow Jones Indices do not make any representation or warranty, express or implied, to the owners of the funds or any member of the public regarding the advisability of investing in securities generally or in the funds particularly or the ability of the Index to track general market performance. S&P Dow Jones Indices only relationship to Licensee with respect to the Index is the licensing of the Index and certain trademarks, service marks and/or trade names of S&P Dow Jones Indices and/or its licensors. The Index is determined, composed and calculated by S&P Dow Jones Indices without regard to Licensee or the funds. S&P Dow Jones Indices have no obligation to take the needs of Licensee or the owners of the funds into consideration in determining, composing or calculating the Index. S&P Dow Jones Indices are not responsible for and have

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not participated in the determination of the prices, and amount of the funds or the timing of the issuance or sale of the funds or in the determination or calculation of the equation by which the funds are to be converted into cash, surrendered or redeemed, as the case may be. S&P Dow Jones Indices have no obligation or liability in connection with the administration, marketing or trading of the funds. There is no assurance that investment products based on the Index will accurately track index performance or provide positive investment returns. S&P Dow Jones Indices LLC is not an investment advisor. Inclusion of a security within an index is not a recommendation by S&P Dow Jones Indices to buy, sell, or hold such security, nor is it considered to be investment advice.

S&P DOW JONES INDICES DO NOT GUARANTEE THE ADEQUACY, ACCURACY, TIMELINESS AND/OR THE COMPLETENESS OF THE INDEX OR ANY DATA RELATED THERETO OR ANY COMMUNICATION, INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNICATION (INCLUDING ELECTRONIC COMMUNICATIONS) WITH RESPECT THERETO. S&P DOW JONES INDICES SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS, OMISSIONS, OR DELAYS THEREIN. S&P DOW JONES INDICES MAKE NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES, OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE OR AS TO RESULTS TO BE OBTAINED BY LICENSEE, OWNERS OF THE FUNDS, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE INDEX OR WITH RESPECT TO ANY DATA RELATED THERETO. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER SHALL S&P DOW JONES INDICES BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS, TRADING LOSSES, LOST TIME OR GOODWILL, EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE. THERE ARE NO THIRD PARTY BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN S&P DOW JONES INDICES AND LICENSEE, OTHER THAN THE LICENSORS OF S&P DOW JONES INDICES.

Unclaimed Property

We have entered into a Global Resolution Agreement with a third party auditor representing multiple states and jurisdictions. Under the terms of the Global Resolution Agreement, the third party auditor has compared expanded matching criteria to the Social Security Master Death File (“SSMDF”) to identify deceased insureds and policy or contract holders where a valid claim has not been made. We have also entered into a Regulatory Settlement Agreement with multiple states and jurisdictions. The Regulatory Settlement Agreement applies prospectively and requires us to adopt and implement additional procedures comparing our records to the SSMDF to identify unclaimed death benefits and prescribes procedures for identifying and locating beneficiaries once deaths are identified. Other jurisdictions that are not signatories to the Regulatory Settlement Agreement are conducting examinations and audits of our compliance with unclaimed property laws and considering proposals that would apply prospectively and require life insurance companies to take additional steps to identify unreported deceased policy and contract holders. These prospective changes and any escheatable property identified as a result of the audits and inquiries could result in: (1) additional payments of previously unclaimed death benefits; (2) the payment of abandoned funds to U.S. jurisdictions; and (3) changes in our practices and procedures for the identification of escheatable funds and beneficiaries, which would impact claim payments and reserves, among other consequences.

Additional Services

Dollar Cost Averaging (DCA)—You may systematically transfer, on a monthly basis or in accordance with other terms we make available, amounts from certain Subaccounts, or the fixed side (if available) of the contract into the Subaccounts or in accordance with other terms we make available. You may elect to participate in the DCA program at the time of application or at any time before the Annuity Commencement Date by completing an election form available from us. The minimum amount to be dollar cost averaged is $1,500 over any period between six and 60 months. Once elected, the program will remain in effect until the earlier of:

• the Annuity Commencement Date;

• the value of the amount being DCA'd is depleted; or

• you cancel the program by written request or by telephone if we have your telephone authorization on file.

We reserve the right to restrict access to this program at any time.

A transfer made as part of this program is not considered a transfer for purposes of limiting the number of transfers that may be made, or assessing any charges or Interest Adjustment which may apply to transfers. Upon receipt of an additional Purchase Payment allocated to the DCA fixed account, the existing program duration will be extended to reflect the end date of the new DCA program. However, the existing interest crediting rate will not be extended. The existing interest crediting rate will expire at its originally scheduled expiration date and the value remaining in the DCA account from the original amount as well as any additional Purchase Payments will be credited with interest at the standard DCA rate at the time. We reserve the right to discontinue this program at any time. DCA does not assure a profit or protect against loss.

Automatic Withdrawal Service (AWS)—AWS provides an automatic, periodic withdrawal of Contract Value to you. AWS may take place on either a monthly, quarterly, semi-annual or annual basis, as selected by the Contractowner. You may elect to participate in

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AWS at the time of application or at any time before the Annuity Commencement Date by sending a written request to us. The minimum Contract Value required to establish AWS is $10,000. You may cancel or make changes to your AWS program at any time by sending a written request to us. If telephone authorization has been elected, certain changes may be made by telephone. Notwithstanding the requirements of the program, any withdrawal must be permitted under Section 401(a)(9) of the IRC for qualified plans or permitted under Section 72 of the IRC for non-qualified contracts. To the extent that withdrawals under AWS do not qualify for an exemption from the contingent deferred sales charge, we will assess any applicable surrender charges on those withdrawals. See Surrender Charge.

Portfolio Rebalancing — Portfolio rebalancing is an option, which, if elected by the Contractowner, restores to a pre-determined level the percentage of the Contract Value, allocated to each variable Subaccount. This pre-determined level will be the allocation initially selected when the contract was purchased, unless subsequently changed. The portfolio rebalancing allocation may be changed at any time by submitting a written request to us. If portfolio rebalancing is elected, all Purchase Payments allocated to the variable Subaccounts must be subject to portfolio rebalancing. Portfolio rebalancing may take place on either a monthly, quarterly, semi-annual or annual basis, as selected by the Contractowner. The Contractowner may terminate the portfolio rebalancing program or re-enroll at any time by sending a written request to us. If telephone authorization has been elected, the Contractowner may make these elections by phone. The portfolio rebalancing program is not available following the Annuity Commencement Date.

Other Information

Due to differences in redemption rates, tax treatment or other considerations, the interests of policyholders under the variable life accounts could conflict with those of Contractowners under the VAA. In those cases, where assets from variable life and variable annuity separate accounts are invested in the same fund(s) (i.e., where mixed funding occurs), the Boards of Directors of the fund involved will monitor for any material conflicts and determine what action, if any, should be taken. If it becomes necessary for any separate account to replace shares of any fund with another investment, that fund may have to liquidate securities on a disadvantageous basis. Refer to the prospectus for each fund for more information about mixed funding.

Financial Statements

The December 31, 2014 financial statements of the VAA and the December 31, 2014 consolidated financial statements of Lincoln Life appear on the following pages.

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The Lincoln National Life Insurance Company

The Lincoln National Life Insurance Company

Consolidated Financial Statements

December 31, 2014 and 2013

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Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholder of

The Lincoln National Life Insurance Company

We have audited the accompanying consolidated balance sheets of The Lincoln National Life Insurance Company as of December 31, 2014 and 2013, and the related consolidated statements of comprehensive income (loss), stockholder’s equity, and cash flows for each of the three years in the period ended December 31, 2014.  These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  We were not engaged to perform an audit of the Company’s internal control over financial reporting.  Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.  Accordingly, we express no such opinion.  An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of The Lincoln National Life Insurance Company at December 31, 2014 and 2013, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2014, in conformity with U.S. generally accepted accounting principles.

/s/ Ernst & Young LLP

Philadelphia, Pennsylvania

April 1, 2015

See accompanying Notes to Consolidated Financial Statements

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THE LINCOLN NATIONAL LIFE INSURANCE COMPANY

CONSOLIDATED BALANCE SHEETS

(in millions, except share data)

	As of December 31,
	2014		2013
ASSETS
Investments:
Available-for-sale securities, at fair value:
Fixed maturity securities (amortized cost:  2014 – $78,039; 2013 – $75,585)	$	85,421	$	79,178
Variable interest entities’ fixed maturity securities (amortized cost:  2014 – $587; 2013 – $682)		598		697
Equity securities (cost:  2014 – $216; 2013 – $182)		231		201
Trading securities		1,966		2,190
Mortgage loans on real estate		7,387		7,029
Real estate		14		26
Policy loans		2,645		2,651
Derivative investments		1,763		617
Other investments		1,551		1,208
Total investments		101,576		93,797
Cash and invested cash		3,224		630
Deferred acquisition costs and value of business acquired		8,155		8,859
Premiums and fees receivable		480		424
Accrued investment income		1,016		1,002
Reinsurance recoverables		6,926		7,075
Reinsurance related embedded derivatives		-		159
Funds withheld reinsurance assets		655		781
Goodwill		2,273		2,273
Other assets		3,940		5,373
Separate account assets		125,265		117,135
Total assets	$	253,510	$	237,508
LIABILITIES AND STOCKHOLDER’S EQUITY
Liabilities
Future contract benefits	$	19,225	$	17,627
Other contract holder funds		74,561		73,530
Short-term debt		2		51
Long-term debt		2,662		2,600
Reinsurance related embedded derivatives		109		-
Funds withheld reinsurance liabilities		4,441		3,111
Deferred gain on business sold through reinsurance		220		297
Payables for collateral on investments		4,311		2,865
Variable interest entities’ liabilities		13		27
Other liabilities		5,804		5,421
Separate account liabilities		125,265		117,135
Total liabilities		236,613		222,664
Contingencies and Commitments (See Note 14)
Stockholder’s Equity
Common stock – 10,000,000 shares authorized, issued and outstanding		10,652		10,636
Retained earnings		3,066		2,778
Accumulated other comprehensive income (loss)		3,179		1,430
Total stockholder’s equity		16,897		14,844
Total liabilities and stockholder’s equity	$	253,510	$	237,508

See accompanying Notes to Consolidated Financial Statements

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THE LINCOLN NATIONAL LIFE INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in millions)

	For the Years Ended December 31,
	2014			2013			2012
Revenues
Insurance premiums	$	2,371		$	2,339		$	2,290
Fee income		4,608			4,008			3,626
Net investment income		4,648			4,561			4,551
Realized gain (loss):
Total other-than-temporary impairment losses on securities		(25	)		(75	)		(242	)
Portion of loss recognized in other comprehensive income		10			10			103
Net other-than-temporary impairment losses on securities recognized in earnings		(15	)		(65	)		(139	)
Realized gain (loss), excluding other-than-temporary impairment losses on securities		(509	)		122			16
Total realized gain (loss)		(524	)		57			(123	)
Amortization of deferred gain on business sold through reinsurance		69			69			77
Other revenues		867			426			396
Total revenues		12,039			11,460			10,817
Expenses
Interest credited		2,492			2,468			2,424
Benefits		4,354			3,613			2,939
Commissions and other expenses		3,876			3,526			3,838
Interest and debt expense		103			93			110
Total expenses		10,825			9,700			9,311
Income (loss) before taxes		1,214			1,760			1,506
Federal income tax expense (benefit)		220			431			344
Net income (loss)		994			1,329			1,162
Other comprehensive income (loss), net of tax:
Unrealized gain (loss) on available-for-sale securities		1,610			(2,355	)		1,071
Unrealized other-than-temporary impairment on available-for-sale securities		20			27			(2	)
Unrealized gain (loss) on derivative instruments		122			(96	)		(31	)
Funded status of employee benefit plans		(3	)		(6	)		2
Total other comprehensive income (loss), net of tax		1,749			(2,430	)		1,040
Comprehensive income (loss)	$	2,743		$	(1,101	)	$	2,202

See accompanying Notes to Consolidated Financial Statements

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THE LINCOLN NATIONAL LIFE INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY

(in millions)

	For the Years Ended December 31,
	2014			2013			2012
Common Stock
Balance as of beginning-of-year	$	10,636		$	10,620		$	10,605
Stock compensation/issued for benefit plans		16			16			15
Balance as of end-of-year		10,652			10,636			10,620
Retained Earnings
Balance as of beginning-of-year		2,778			2,089			1,532
Net income (loss)		994			1,329			1,162
Dividends declared		(706	)		(640	)		(605	)
Balance as of end-of-year		3,066			2,778			2,089
Accumulated Other Comprehensive Income (Loss)
Balance as of beginning-of-year		1,430			3,860			2,820
Other comprehensive income (loss), net of tax		1,749			(2,430	)		1,040
Balance as of end-of-year		3,179			1,430			3,860
Total stockholder’s equity as of end-of-year	$	16,897		$	14,844		$	16,569

See accompanying Notes to Consolidated Financial Statements

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THE LINCOLN NATIONAL LIFE INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

	For the Years Ended December 31,
	2014			2013			2012
Cash Flows from Operating Activities
Net income (loss)	$	994		$	1,329		$	1,162
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Deferred acquisition costs, value of business acquired, deferred sales inducements
and deferred front-end loads deferrals and interest, net of amortization		(535	)		(539	)		(283	)
Trading securities purchases, sales and maturities, net		310			131			202
Change in premiums and fees receivable		(56	)		(42	)		27
Change in accrued investment income		(14	)		(16	)		(37	)
Change in future contract benefits and other contract holder funds		1,407			(232	)		(1,277	)
Change in reinsurance related assets and liabilities		(960	)		68			1,438
Change in federal income tax accruals		48			437			208
Realized (gain) loss		524			(57	)		123
Amortization of deferred gain on business sold through reinsurance		(69	)		(69	)		(77	)
Proceeds from reinsurance recapture		422			-			-
Change in cash management agreement investment		329			(29	)		(359	)
Other		249			(85	)		(72	)
Net cash provided by (used in) operating activities		2,649			896			1,055
Cash Flows from Investing Activities
Purchases of available-for-sale securities		(8,306	)		(11,002	)		(11,021	)
Sales of available-for-sale securities		1,120			954			1,098
Maturities of available-for-sale securities		4,984			5,952			5,757
Purchases of other investments		(5,013	)		(2,481	)		(2,112	)
Sales or maturities of other investments		4,411			2,494			2,009
Increase (decrease) in payables for collateral on investments		1,446			(1,256	)		374
Proceeds (outflows) from business ceded, recaptured and novated		(3	)		(22	)		35
Other		(82	)		(95	)		(130	)
Net cash provided by (used in) investing activities		(1,443	)		(5,456	)		(3,990	)
Cash Flows from Financing Activities
Issuance of long-term debt, net of issuance costs		-			311			-
Issuance (decrease) in short-term debt		(49	)		23			18
Proceeds from sales leaseback transaction		83			-			-
Deposits of fixed account values, including the fixed portion of variable		10,363			10,466			10,667
Withdrawals of fixed account values, including the fixed portion of variable		(5,775	)		(5,230	)		(5,618	)
Transfers to and from separate accounts, net		(2,509	)		(3,001	)		(2,091	)
Common stock issued for benefit plans and excess tax benefits		(19	)		(17	)		(2	)
Dividends paid to common and preferred stockholders		(706	)		(640	)		(605	)
Net cash provided by (used in) financing activities		1,388			1,912			2,369
Net increase (decrease) in cash and invested cash		2,594			(2,648	)		(566	)
Cash and invested cash as of beginning-of-year		630			3,278			3,844
Cash and invested cash as of end-of-year	$	3,224		$	630		$	3,278

See accompanying Notes to Consolidated Financial Statements

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THE LINCOLN NATIONAL LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  Nature of Operations, Basis of Presentation and Summary of Significant Accounting Policies

Nature of Operations

The Lincoln National Life Insurance Company (“LNL” or the “Company,” which also may be referred to as “we,” “our” or “us”), a wholly-owned subsidiary of Lincoln National Corporation (“LNC” or the “Parent Company”), is domiciled in the state of Indiana.  We own 100% of the outstanding common stock of one insurance company subsidiary, Lincoln Life & Annuity Company of New York (“LLANY”). We also own several non-insurance companies, including Lincoln Financial Distributors and Lincoln Financial Advisors, LNC’s wholesaling and retailing business units, respectively.  LNL’s principal businesses consist of underwriting annuities, deposit-type contracts and life insurance through multiple distribution channels.  LNL is licensed and sells its products throughout the U.S. and several U.S. territories.  See Note 23 for additional information.

Basis of Presentation

The accompanying consolidated financial statements are prepared in accordance with United States of America generally accepted accounting principles (“GAAP”).  Certain GAAP policies, which significantly affect the determination of financial condition, results of operations and cash flows, are summarized below.

Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of LNL and all other entities in which we have a controlling financial interest and any variable interest entities (“VIEs”) in which we are the primary beneficiary.  Entities in which we do not have a controlling financial interest and do not exercise significant management influence over the operating and financing decisions are reported using the equity method.  All material inter-company accounts and transactions have been eliminated in consolidation. 

Our involvement with VIEs is primarily to invest in assets that allow us to gain exposure to a broadly diversified portfolio of asset classes.  A VIE is an entity that does not have sufficient equity to finance its own activities without additional financial support or where investors lack certain characteristics of a controlling financial interest.  We assess our contractual, ownership or other interests in a VIE to determine if our interest participates in the variability the VIE was designed to absorb and pass onto variable interest holders.  We perform an ongoing qualitative assessment of our variable interests in VIEs to determine whether we have a controlling financial interest and would therefore be considered the primary beneficiary of the VIE.  If we determine we are the primary beneficiary of a VIE, we consolidate the assets and liabilities of the VIE in our consolidated financial statements.

Accounting Estimates and Assumptions

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions affecting the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses for the reporting period.  Those estimates are inherently subject to change and actual results could differ from those estimates.  Included among the material (or potentially material) reported amounts and disclosures that require extensive use of estimates are:  fair value of certain invested assets and derivatives, other-than-temporary impairment (“OTTI”) and asset valuation allowances, deferred acquisition costs (“DAC”),  value of business acquired (“VOBA”), deferred sales inducements (“DSI”), goodwill, future contract benefits, other contract holder funds including deferred front-end loads (“DFEL”), pension plans, stock-based incentive compensation, income taxes and the potential effects of resolving litigated matters.

Business Combinations

We use the acquisition method of accounting for all business combination transactions, and accordingly, recognize the fair values of assets acquired, liabilities assumed and any noncontrolling interests in our consolidated financial statements.  The allocation of fair values may be subject to adjustment after the initial allocation for up to a one-year period as more information becomes available relative to the fair values as of the acquisition date.  The consolidated financial statements include the results of operations of any acquired company since the acquisition date.

Fair Value Measurement

Our measurement of fair value is based on assumptions used by market participants in pricing the asset or liability, which may include inherent risk, restrictions on the sale or use of an asset or non-performance risk (“NPR”), which would include our own credit risk.  Our estimate of an exchange price is the price in an orderly transaction between market participants to sell the asset or transfer the liability (“exit price”) in the principal market, or the most advantageous market in the absence of a principal market, for that asset or liability, as opposed to the price that would be paid to acquire the asset or receive a liability (“entry price”).  Pursuant to the Fair Value Measurements and Disclosures Topic of the Financial Accounting Standards Board (“FASB”) Accounting Standards CodificationTM (“ASC”),

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we categorize our financial instruments carried at fair value into a three-level fair value hierarchy, based on the priority of inputs to the respective valuation technique.  The three-level hierarchy for fair value measurement is defined as follows:

· Level 1 – inputs to the valuation methodology are quoted prices available in active markets for identical investments as of the reporting date, except for large holdings subject to “blockage discounts” that are excluded;

· Level 2 – inputs to the valuation methodology are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value can be determined through the use of models or other valuation methodologies; and

· Level 3 – inputs to the valuation methodology are unobservable inputs in situations where there is little or no market activity for the asset or liability, and we make estimates and assumptions related to the pricing of the asset or liability, including assumptions regarding risk.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy.  In such cases, the level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.  Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the investment.

When a determination is made to classify an asset or liability within Level 3 of the fair value hierarchy, the determination is based upon the significance of the unobservable inputs to the overall fair value measurement.  Because certain securities trade in less liquid or illiquid markets with limited or no pricing information, the determination of fair value for these securities is inherently more difficult.  However, Level 3 fair value investments may include, in addition to the unobservable or Level 3 inputs, observable components, which are components that are actively quoted or can be validated to market-based sources.

Available-For-Sale Securities – Fair Valuation Methodologies and Associated Inputs

Securities classified as available-for-sale (“AFS”) consist of fixed maturity and equity securities and are stated at fair value with unrealized gains and losses included within accumulated other comprehensive income (loss) (“AOCI”), net of associated DAC, VOBA, DSI, future contract benefits, other contract holder funds and deferred income taxes. 

We measure the fair value of our securities classified as AFS based on assumptions used by market participants in pricing the security.  The most appropriate valuation methodology is selected based on the specific characteristics of the fixed maturity or equity security, and we consistently apply the valuation methodology to measure the security’s fair value.  Our fair value measurement is based on a market approach that utilizes prices and other relevant information generated by market transactions involving identical or comparable securities.  Sources of inputs to the market approach primarily include third-party pricing services, independent broker quotations or pricing matrices.  We do not adjust prices received from third parties; however, we do analyze the third-party pricing services’ valuation methodologies and related inputs and perform additional evaluation to determine the appropriate level within the fair value hierarchy.

The observable and unobservable inputs to our valuation methodologies are based on a set of standard inputs that we generally use to evaluate all of our AFS securities.  Observable inputs include benchmark yields, reported trades, broker-dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data.  In addition, market indicators, industry and economic events are monitored, and further market data is acquired if certain triggers are met.For certain security types, additional inputs may be used, or some of the inputs described above may not be applicable.  For private placement securities, we use pricing matrices that utilize observable pricing inputs of similar public securities and Treasury yields as inputs to the fair value measurement.  Depending on the type of security or the daily market activity, standard inputs may be prioritized differently or may not be available for all AFS securities on any given day.  For broker-quoted only securities, non-binding quotes from market makers or broker-dealers are obtained from sources recognized as market participants.For securities trading in less liquid or illiquid markets with limited or no pricing information, we use unobservable inputs to measure fair value. 

The following summarizes our fair valuation methodologies and associated inputs, which are particular to the specified security type and are in addition to the defined standard inputs to our valuation methodologies for all of our AFS securities discussed above:

· Corporate bonds and U.S. government bonds – We also use Trade Reporting and Compliance EngineTM reported tables for our corporate bonds and vendor trading platform data for our U.S. government bonds. 

· Mortgage- and asset-backed securities(“ABS”) – We also utilize additional inputs, which include new issues data, monthly payment information and monthly collateral performance, including prepayments, severity, delinquencies, step-down features and over collateralization features for each of our mortgage-backed securities (“MBS”), which include collateralized mortgage obligations and mortgage pass through securities backed by residential mortgages (“RMBS”), commercial mortgage-backed securities (“CMBS”), collateralized loan obligations (“CLOs”) and collateralized debt obligations (“CDOs”).

· State and municipal bonds – We also use additional inputs that include information from the Municipal Securities Rule Making Board, as well as material event notices, new issue data, issuer financial statements and Municipal Market Data benchmark yields for our state and municipal bonds.

· Hybrid and redeemable preferred and equity securities – We also utilize additional inputs of exchange prices (underlying and common stock of the same issuer) for our hybrid and redeemable preferred and equity securities.

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In order to validate the pricing information and broker-dealer quotes, we employ, where possible, procedures that include comparisons with similar observable positions, comparisons with subsequent sales and observations of general market movements for those security classes.  We have policies and procedures in place to review the process that is utilized by our third-party pricing service and the output that is provided to us by the pricing service.  On a periodic basis, we test the pricing for a sample of securities to evaluate the inputs and assumptions used by the pricing service, and we perform a comparison of the pricing service output to an alternative pricing source.  We also evaluate prices provided by our primary pricing service to ensure that they are not stale or unreasonable by reviewing the prices for unusual changes from period to period based on certain parameters or for lack of change from one period to the next. 

AFS Securities – Evaluation for Recovery of Amortized Cost

We regularly review our AFS securities for declines in fair value that we determine to be other-than-temporary.  For an equity security, if we do not have the ability and intent to hold the security for a sufficient period of time to allow for a recovery in value, we conclude that an OTTI has occurred and the amortized cost of the equity security is written down to the current fair value, with a corresponding charge to realized gain (loss) on our Consolidated Statements of Comprehensive Income (Loss).  When assessing our ability and intent to hold the equity security to recovery, we consider, among other things, the severity and duration of the decline in fair value of the equity security as well as the cause of the decline, a fundamental analysis of the liquidity, and business prospects and overall financial condition of the issuer.

For our fixed maturity AFS securities (also referred to as “debt securities”), we generally consider the following to determine whether our unrealized losses are other-than-temporarily impaired:

· The estimated range and average period until recovery;

· The estimated range and average holding period to maturity;

· Remaining payment terms of the security;

· Current delinquencies and nonperforming assets of underlying collateral;

· Expected future default rates;

· Collateral value by vintage, geographic region, industry concentration or property type;

· Subordination levels or other credit enhancements as of the balance sheet date as compared to origination; and

· Contractual and regulatory cash obligations.

For a debt security, if we intend to sell a security, or it is more likely than not we will be required to sell a debt security before recovery of its amortized cost basis and the fair value of the debt security is below amortized cost, we conclude that an OTTI has occurred and the amortized cost is written down to current fair value, with a corresponding charge to realized gain (loss) on our Consolidated Statements of Comprehensive Income (Loss).  If we do not intend to sell a debt security, or it is not more likely than not we will be required to sell a debt security before recovery of its amortized cost basis but the present value of the cash flows expected to be collected is less than the amortized cost of the debt security (referred to as the credit loss), we conclude that an OTTI has occurred and the amortized cost is written down to the estimated recovery value with a corresponding charge to realized gain (loss) on our Consolidated Statements of Comprehensive Income (Loss), as this amount is deemed the credit portion of the OTTI.  The remainder of the decline to fair value is recorded in other comprehensive income (“OCI”) to unrealized OTTI on AFS securities on our Consolidated Statements of Stockholder’s Equity, as this amount is considered a noncredit (i.e., recoverable) impairment.

When assessing our intent to sell a debt security, or if it is more likely than not we will be required to sell a debt security before recovery of its cost basis, we evaluate facts and circumstances such as, but not limited to, decisions to reposition our security portfolio, sales of securities to meet cash flow needs and sales of securities to capitalize on favorable pricing.  In order to determine the amount of the credit loss for a debt security, we calculate the recovery value by performing a discounted cash flow analysis based on the current cash flows and future cash flows we expect to recover.  The discount rate is the effective interest rate implicit in the underlying debt security.  The effective interest rate is the original yield, or the coupon if the debt security was previously impaired.  See the discussion below for additional information on the methodology and significant inputs, by security type, which we use to determine the amount of a credit loss.

Our conclusion that it is not more likely than not that we will be required to sell the fixed maturity AFS securities before recovery of their amortized cost basis, the estimated future cash flows are equal to or greater than the amortized cost basis of the debt securities, or we have the ability to hold the equity AFS securities for a period of time sufficient for recovery is based upon our asset-liability management process.  Management considers the following as part of the evaluation:

· The current economic environment and market conditions;

· Our business strategy and current business plans;

· The nature and type of security, including expected maturities and exposure to general credit, liquidity, market and interest rate risk;

· Our analysis of data from financial models and other internal and industry sources to evaluate the current effectiveness of our hedging and overall risk management strategies;

· The current and expected timing of contractual maturities of our assets and liabilities, expectations of prepayments on investments and expectations for surrenders and withdrawals of life insurance policies and annuity contracts;

· The capital risk limits approved by management; and

· Our current financial condition and liquidity demands.

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To determine the recovery period of a debt security, we consider the facts and circumstances surrounding the underlying issuer including, but not limited to, the following:

· Historical and implied volatility of the security;

· Length of time and extent to which the fair value has been less than amortized cost;

· Adverse conditions specifically related to the security or to specific conditions in an industry or geographic area;

· Failure, if any, of the issuer of the security to make scheduled payments; and

· Recoveries or additional declines in fair value subsequent to the balance sheet date.

In periods subsequent to the recognition of an OTTI, the AFS security is accounted for as if it had been purchased on the measurement date of the OTTI.  Therefore, for the fixed maturity AFS security, the original discount or reduced premium is reflected in net investment income over the contractual term of the investment in a manner that produces a constant effective yield.

To determine recovery value of a corporate bond, CLO or CDO, we perform additional analysis related to the underlying issuer including, but not limited to, the following:

· Fundamentals of the issuer to determine what we would recover if they were to file bankruptcy versus the price at which the market is trading;

· Fundamentals of the industry in which the issuer operates;

· Earnings multiples for the given industry or sector of an industry that the underlying issuer operates within, divided by the outstanding debt to determine an expected recovery value of the security in the case of a liquidation;

· Expected cash flows of the issuer (e.g., whether the issuer has cash flows in excess of what is required to fund its operations);

· Expectations regarding defaults and recovery rates;

· Changes to the rating of the security by a rating agency; and

· Additional market information (e.g., if there has been a replacement of the corporate debt security).

Each quarter we review the cash flows for the MBS to determine whether or not they are sufficient to provide for the recovery of our amortized cost.  We revise our cash flow projections only for those securities that are at most risk for impairment based on current credit enhancement and trends in the underlying collateral performance.  To determine recovery value of a MBS, we perform additional analysis related to the underlying issuer including, but not limited to, the following:

· Discounted cash flow analysis based on the current cash flows and future cash flows we expect to recover;

· Level of creditworthiness of the home equity loans or residential mortgages that back an RMBS or commercial mortgages that back a CMBS;

· Susceptibility to fair value fluctuations for changes in the interest rate environment;

· Susceptibility to reinvestment risks, in cases where market yields are lower than the securities’ book yield earned;

· Susceptibility to reinvestment risks, in cases where market yields are higher than the book yields earned on a security;

· Expectations of sale of such a security where market yields are higher than the book yields earned on a security; and

· Susceptibility to variability of prepayments.

When evaluating MBS and mortgage-related ABS, we consider a number of pool-specific factors as well as market level factors when determining whether or not the impairment on the security is temporary or other-than-temporary.  The most important factor is the performance of the underlying collateral in the security and the trends of that performance in the prior periods.  We use this information about the collateral to forecast the timing and rate of mortgage loan defaults, including making projections for loans that are already delinquent and for those loans that are currently performing but may become delinquent in the future.  Other factors used in this analysis include type of underlying collateral (e.g., prime, Alt-A or subprime), geographic distribution of underlying loans and timing of liquidations by state.  Once default rates and timing assumptions are determined, we then make assumptions regarding the severity of a default if it were to occur.  Factors that impact the severity assumption include expectations for future home price appreciation or depreciation, loan size, first lien versus second lien, existence of loan level private mortgage insurance, type of occupancy and geographic distribution of loans.  Once default and severity assumptions are determined for the security in question, cash flows for the underlying collateral are projected including expected defaults and prepayments.  These cash flows on the collateral are then translated to cash flows on our tranche based on the cash flow waterfall of the entire capital security structure.  If this analysis indicates the entire principal on a particular security will not be returned, the security is reviewed for OTTI by comparing the expected cash flows to amortized cost.  To the extent that the security has already been impaired or was purchased at a discount, such that the amortized cost of the security is less than or equal to the present value of cash flows expected to be collected, no impairment is required. 

Otherwise, if the amortized cost of the security is greater than the present value of the cash flows expected to be collected, and the security was not purchased at a discount greater than the expected principal loss, then impairment is recognized.

We further monitor the cash flows of all of our AFS securities backed by pools on an ongoing basis.  We also perform detailed analysis on all of our subprime, Alt-A, non-agency residential MBS and on a significant percentage of our AFS securities backed by pools of commercial mortgages.  The detailed analysis includes revising projected cash flows by updating the cash flows for actual cash received

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and applying assumptions with respect to expected defaults, foreclosures and recoveries in the future.  These revised projected cash flows are then compared to the amount of credit enhancement (subordination) in the structure to determine whether the amortized cost of the security is recoverable.  If it is not recoverable, we record an impairment of the security. 

Trading Securities

Trading securities consist of fixed maturity and equity securities in designated portfolios, some of which support modified coinsurance (“Modco”) and coinsurance with funds withheld (“CFW”) reinsurance arrangements.  Investment results for the portfolios that support Modco and CFW reinsurance arrangements, including gains and losses from sales, are passed directly to the reinsurers pursuant to contractual terms of the reinsurance arrangements.  Trading securities are carried at fair value and changes in fair value and changes in the fair value of embedded derivative liabilities associated with the underlying reinsurance arrangements, are recorded in realized gain (loss) on our Consolidated Statements of Comprehensive Income (Loss) as they occur.

Alternative Investments

Alternative investments, which consist primarily of investments in limited partnerships (“LPs”), are included in other investments on our Consolidated Balance Sheets.We account for our investments in LPs using the equity method to determine the carrying value.  Recognition of alternative investment income is delayed due to the availability of the related financial statements, which are generally obtained from the partnerships’ general partners.  As a result, our venture capital, real estate and oil and gas portfolios are generally on a three-month delay and our hedge funds are on a one-month delay.  In addition, the impact of audit adjustments related to completion of calendar-year financial statement audits of the investees are typically received during the second quarter of each calendar year.  Accordingly, our investment income from alternative investments for any calendar-year period may not include the complete impact of the change in the underlying net assets for the partnership for that calendar-year period. 

Payables for Collateral on Investments

When we enter into collateralized financing transactions on our investments, a liability is recorded equal to the cash or non-cash collateral received.  This liability is included within payables for collateral on investments on our Consolidated Balance Sheets.  Income and expenses associated with these transactions are recorded as investment income and investment expenses within net investment income on our Consolidated Statements of Comprehensive Income (Loss).  Changes in payables for collateral on investments are reflected within cash flows from investing activities on our Consolidated Statements of Cash Flows.

Mortgage Loans on Real Estate

Mortgage loans on real estate are carried at unpaid principal balances adjusted for amortization of premiums and accretion of discounts and are net of valuation allowances.  Interest income is accrued on the principal balance of the loan based on the loan’s contractual interest rate.  Premiums and discounts are amortized using the effective yield method over the life of the loan.  Interest income and amortization of premiums and discounts are reported in net investment income on our Consolidated Statements of Comprehensive Income (Loss) along with mortgage loan fees, which are recorded as they are incurred.

Our commercial loan portfolio is comprised of long-term loans secured by existing commercial real estate.  As such, it does not exhibit risk characteristics unique to mezzanine, construction, residential, agricultural, land or other types of real estate loans.  We believe all of the loans in our portfolio share three primary risks:  borrower creditworthiness; sustainability of the cash flow of the property; and market risk; therefore, our methods for monitoring and assessing credit risk are consistent for our entire portfolio.  Loans are considered impaired when it is probable that, based upon current information and events, we will be unable to collect all amounts due under the contractual terms of the loan agreement.  When we determine that a loan is impaired, a valuation allowance is established for the excess carrying value of the loan over its estimated value.  The loan’s estimated value is based on:  the present value of expected future cash flows discounted at the loan’s effective interest rate; the loan’s observable market price; or the fair value of the loan’s collateral.  Valuation allowances are maintained at a level we believe is adequate to absorb estimated probable credit losses of each specific loan.  Our periodic evaluation of the adequacy of the allowance for losses is based on our past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay (including the timing of future payments), the estimated value of the underlying collateral, composition of the loan portfolio, current economic conditions and other relevant factors.  Trends in market vacancy and rental rates are incorporated into the analysis that we perform for monitored loans and may contribute to the establishment of (or an increase or decrease in) an allowance for credit losses.  In addition, we review each loan individually in our commercial mortgage loan portfolio on an annual basis to identify emerging risks.  We focus on properties that experienced a reduction in debt-service coverage or that have significant exposure to tenants with deteriorating credit profiles.  Where warranted, we establish or increase loss reserves for a specific loan based upon this analysis.  Our process for determining past due or delinquency status begins when a payment date is missed, at which time the borrower is contacted.  After the grace period expiration that may last up to 10 days, we send a default notice.  The default notice generally provides a short time period to cure the default. Our policy is to report loans that are 60 or more days past due, which equates to two or more payments missed, as delinquent.  We do not accrue interest on loans 90 days past due, and any interest received on these loans is either applied to the principal or recorded in net investment income on our Consolidated Statements of Comprehensive Income (Loss) when received, depending on the assessment of the collectability of the loan.  We resume accruing interest once a loan complies with all of its original terms or restructured terms.  Mortgage loans deemed uncollectable are charged against the allowance for losses, and subsequent recoveries, if any, are credited to the allowance for losses.  All mortgage loans that are impaired have an established allowance for credit losses.  Changes in valuation allowances are reported in realized gain (loss) on our Consolidated Statements of Comprehensive Income (Loss).

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We measure and assess the credit quality of our mortgage loans by using loan-to-value and debt-service coverage ratios.  The loan-to-value ratio compares the principal amount of the loan to the fair value at origination of the underlying property collateralizing the loan and is commonly expressed as a percentage.  Loan-to-value ratios greater than 100% indicate that the principal amount is greater than the collateral value.  Therefore, all else being equal, a lower loan-to-value ratio generally indicates a higher quality loan.  The debt-service coverage ratio compares a property’s net operating income to its debt-service payments.  Debt-service coverage ratios of less than 1.0 indicate that property operations do not generate enough income to cover its current debt payments.  Therefore, all else being equal, a higher debt-service coverage ratio generally indicates a higher quality loan.

Policy Loans

Policy loans represent loans we issue to contract holders that use the cash surrender value of their life insurance policy as collateral.  Policy loans are carried at unpaid principal balances. 

Real Estate

Real estate includes both real estate held for the production of income and real estate held-for-sale.  Real estate held for the production of income is carried at cost less accumulated depreciation.  Depreciation is calculated on a straight-line basis over the estimated useful life of the asset.  We periodically review properties held for the production of income for impairment.  Properties whose carrying values are greater than their projected undiscounted cash flows are written down to estimated fair value, with impairment losses reported in realized gain (loss) on our Consolidated Statements of Comprehensive Income (Loss).  The estimated fair value of real estate is generally computed using the present value of expected future cash flows from the real estate discounted at a rate commensurate with the underlying risks.  Real estate classified as held-for-sale is stated at the lower of depreciated cost or fair value less expected disposition costs at the time classified as held-for-sale.  Real estate is not depreciated while it is classified as held-for-sale.  Also, valuation allowances for losses are established, as appropriate, for real estate held-for-sale and any changes to the valuation allowances are reported in realized gain (loss) on our Consolidated Statements of Comprehensive Income (Loss).  Real estate acquired through foreclosure proceedings is recorded at fair value at the settlement date. 

Derivative Instruments

We hedge certain portions of our exposure to interest rate risk, foreign currency exchange risk, equity market risk and credit risk by entering into derivative transactions.  All of our derivative instruments are recognized as either assets or liabilities on our Consolidated Balance Sheets at estimated fair value.  We categorized derivatives into a three-level hierarchy, based on the priority of the inputs to the respective valuation technique as discussed above in “Fair Value Measurement.”  The accounting for changes in the estimated fair value of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship, and further, on the type of hedging relationship.  For those derivative instruments that are designated and qualify as hedging instruments, we designate the hedging instrument based upon the exposure being hedged: as a cash flow hedge or a fair value hedge.

For derivative instruments that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative instrument is reported as a component of AOCI and reclassified into net income in the same period or periods during which the hedged transaction affects net income.  The remaining gain or loss on the derivative instrument in excess of the cumulative change in the present value of designated future cash flows of the hedged item (hedge ineffectiveness), if any, is recognized in net income during the period of change.  For derivative instruments that are designated and qualify as a fair value hedge, the gain or loss on the derivative instrument, as well as the offsetting gain or loss on the hedged item attributable to the hedged risk are recognized in net income during the period of change in estimated fair values.  For derivative instruments not designated as hedging instruments, but that are economic hedges, the gain or loss is recognized in net income.

We purchase and issue financial instruments and products that contain embedded derivative instruments.  When it is determined that the embedded derivative possesses economic characteristics that are not clearly and closely related to the economic characteristics of the host contract, and a separate instrument with the same terms would qualify as a derivative instrument, the embedded derivative is bifurcated from the host for measurement purposes.  The embedded derivative is carried at fair value with changes in fair value recognized in net income during the period of change. 

We employ several different methods for determining the fair value of our derivative instruments.  The fair value of our derivative contracts are measured based on current settlement values, which are based on quoted market prices, industry standard models that are commercially available and broker quotes.  These techniques project cash flows of the derivatives using current and implied future market conditions.  We calculate the present value of the cash flows to measure the current fair market value of the derivative.

Cash and Invested Cash

Cash and invested cash is carried at cost and includes all highly liquid debt instruments purchased with an original maturity of three months or less.

DAC, VOBA, DSI and DFEL

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Acquisition costs directly related to successful contract acquisitions or renewals of universal lifeinsurance (“UL”),  variable universal life insurance (“VUL”), traditional life insurance, annuities and other investment contracts have been deferred (i.e., DAC) to the extent recoverable.  VOBA is an intangible asset that reflects the estimated fair value of in-force contracts in a life insurance company acquisition and represents the portion of the purchase price that is allocated to the value of the right to receive future cash flows from the business in force at the acquisition date.  Bonus credits and excess interest for dollar cost averaging contracts are considered DSI.  Contract sales charges that are collected in the early years of an insurance contract are deferred (i.e., DFEL), and the unamortized balance is reported in other contract holder funds on our Consolidated Balance Sheets. 

Both DAC and VOBA amortization, excluding amounts reported in realized gain (loss), is reported within commissions and other expenses on our Consolidated Statements of Comprehensive Income (Loss).  DSI amortization, excluding amounts reported in realized gain (loss), is reported in interest credited on our Consolidated Statements of Comprehensive Income (Loss).  The amortization of DFEL, excluding amounts reported in realized gain (loss), is reported within fee income on our Consolidated Statements of Comprehensive Income (Loss).  The methodology for determining the amortization of DAC, VOBA, DSI and DFEL varies by product type.  For all insurance contracts, amortization is based on assumptions consistent with those used in the development of the underlying contract adjusted for emerging experience and expected trends. 

Acquisition costs for UL and VUL insurance and investment-type products, which include fixed and variable deferred annuities, are generally amortized over the lives of the policies in relation to the incidence of estimated gross profits (“EGPs”) from surrender charges, investment, mortality net of reinsurance ceded and expense margins and actual realized gain (loss) on investments.  Contract lives for UL and VUL policies are estimated to be30 to 40 years based on the expected lives of the contracts.  Contract lives for fixed and variable deferred annuities are generally between 13 and 30 years, while some of our fixed multi-year guarantee products have amortization periods equal to the guarantee period.  The front-end load annuity product has an assumed life of 25 years.  Longer lives are assigned to those blocks that have demonstrated favorable lapse experience. 

Acquisition costs for all traditional contracts, including traditional life insurance contracts, such as individual whole life, group business and term life insurance, are amortized over the expected premium-paying period that ranges from 7 to 77 years.  Acquisition costs are either amortized on astraight-line basis or as a level percent of premium of the related policies depending on the block of business.  There is currently no DAC, VOBA, DSI or DFEL balance or related amortization for fixed and variable payout annuities.

We account for modifications of insurance contracts that result in a substantially unchanged contract as a continuation of the replaced contract.  We account for modifications of insurance contracts that result in a substantially changed contract as an extinguishment of the replaced contract.

The carrying amounts of DAC, VOBA, DSI and DFEL are adjusted for the effects of realized and unrealized gains and losses on securities classified as AFS and certain derivatives and embedded derivatives.  Amortization expense of DAC, VOBA, DSI and DFEL reflects an assumption for an expected level of credit-related investment losses.  When actual credit-related investment losses are realized, we recognize a true-up to our DAC, VOBA, DSI and DFEL amortization within realized gain (loss) on our Consolidated Statements of Comprehensive Income (Loss) reflecting the incremental effect of actual versus expected credit-related investment losses.  These actual to expected amortization adjustments can create volatility from period to period in realized gain (loss). 

During the third quarter of each year, we conduct our annual comprehensive review of the assumptions and the projection models used for our estimates of future gross profits underlying the amortization of DAC, VOBA, DSI and DFEL and the calculations of the embedded derivatives and reserves for life insurance and annuity products with living benefit and death benefit guarantees.  These assumptions include investment margins, mortality, retention, rider utilization and maintenance expenses (costs associated with maintaining records relating to insurance and individual and group annuity contracts, and with the processing of premium collections, deposits, withdrawals and commissions).  Based on our review, the cumulative balances of DAC, VOBA, DSI and DFEL included on our Consolidated Balance Sheets are adjusted with an offsetting benefit or charge to revenue or amortization expense to reflect such change related to our expectations of future EGPs (“unlocking”).  We may have unlocking in other quarters as we become aware of information that warrants updating assumptions outside of our annual comprehensive review.  We may also identify and implement actuarial modeling refinements that result in increases or decreases to the carrying values of DAC, VOBA, DSI, DFEL, embedded derivatives and reserves for life insurance and annuity products with living benefit and death benefit guarantees.

DAC, VOBA, DSI and DFEL are reviewed to ensure that the unamortized portion does not exceed the expected recoverable amounts.

Reinsurance

We enter into reinsurance agreements with other companies in the normal course of business.  Assets and liabilities and premiums and benefits from certain reinsurance contracts that grant statutory surplus relief to other insurance companies are netted on our Consolidated Balance Sheets and Consolidated Statements of Comprehensive Income (Loss), respectively, because there is a right of offset.  All other reinsurance agreements are reported on a gross basis on our Consolidated Balance Sheets as an asset for amounts recoverable from reinsurers or as a component of other liabilities for amounts, such as premiums, owed to the reinsurers, with the exception of Modco agreements for which the right of offset also exists.  Reinsurance premiums and benefits paid or provided are accounted for on bases consistent with those used in accounting for the original policies issued and the terms of the reinsurance contracts.  Premiums, benefits and DAC are reported net of insurance ceded. 

Goodwill

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We recognize the excess of the purchase price, plus the fair value of any noncontrolling interest in the acquiree, over the fair value of identifiable net assets acquired as goodwill.  Goodwill is not amortized, but is reviewed at least annually for indications of value impairment, with consideration given to financial performance and other relevant factors.  We perform a two-step test in our evaluation of the carrying value of goodwill for each of our reporting units, ifqualitative factors determine it is necessary to complete the two-step goodwill impairment test.  The results of one test on one reporting unit cannot subsidize the results of another reporting unit.  In Step 1 of the evaluation, the fair value of each reporting unit is determined and compared to the carrying value of the reporting unit.  If the fair value is greater than the carrying value, then the carrying value of the reporting unit is deemed to be recoverable, and Step 2 is not required.  If the fair value estimate is less than the carrying value, it is an indicator that impairment may exist, and Step 2 is required.  In Step 2, the implied fair value of goodwill is determined for the reporting unit.  The reporting unit’s fair value as determined in Step 1 is assigned to all of its net assets (recognized and unrecognized) as if the reporting unit were acquired in a business combination as of the date of the impairment test.  If the implied fair value of the reporting unit’s goodwill is lower than its carrying amount, goodwill is impaired and written down to its fair value; and a charge is reported in impairment of intangibles on our Consolidated Statements of Comprehensive Income (Loss).

Other Assets and Other Liabilities

Other assets consist primarily ofDSI, specifically identifiable intangible assets, property and equipment owned by the Company, balances associated with corporate-owned and bank-owned life insurance, certain reinsurance assets, receivables resulting from sales of securities that had not yet settled as of the balance sheet date, debt issue costs, assets under capital leases,guaranteed living benefit (“GLB”) reserves embedded derivatives, other prepaid expenses and deferred losses on business sold through reinsurance.  Other liabilities consist primarily of current and deferred taxes, pension and other employee benefit liabilities, derivative instrument liabilities, certain reinsurance payables, payables resulting from purchases of securities that had not yet settled as of the balance sheet date, interest on borrowed funds, obligations under capital leases and other accrued expenses.

Other assets and other liabilities on our Consolidated Balance Sheets include GLB features and remaining guaranteed interest and similar contracts that are carried at fair value, which may be reported in either other assets or other liabilities.  The fair value of these items represents approximate exit price including an estimate for our NPR. Certain of these features have elements of both insurance benefits and embedded derivatives.  Through our hybrid accounting approach, for reserve calculation purposes we assign product cash flows to the embedded derivative or insurance portion of the reserves based on the life-contingent nature of the benefits. We classify these GLB reserves embedded derivatives in Level 3 within the hierarchy levels described above in “Fair Value Measurement.”  We report the insurance portion of the reserves in future contract benefits.

The carrying values of specifically identifiable intangible assets are reviewed at least annually for indicators of impairment in value that are other-than-temporary, including unexpected or adverse changes in the following:  the economic or competitive environments in which the company operates; profitability analyses; cash flow analyses; and the fair value of the relevant business operation.  If there was an indication of impairment, then the discounted cash flow method would be used to measure the impairment, and the carrying value would be adjusted as necessary and reported in impairment of intangibles on our Consolidated Statements of Comprehensive Income (Loss).  Sales force intangibles are attributable to the value of the new business distribution system acquired through business combinations.  These assets are amortized on a straight-line basis over their useful life of 25 years.  Federal Communications Commission (“FCC”) licenses acquired through business combinations are not amortized. 

Property and equipment owned for company use is carried at cost less allowances for depreciation.  Provisions for depreciation of investment real estate and property and equipment owned for company use are computed principally on the straight-line method over the estimated useful lives of the assets, which include buildings, computer hardware and software and other property and equipment.  Certain assets on our Consolidated Balance Sheets are related to capital leases.  These assets under capital leases are depreciated in a manner consistent with our current depreciation policy for owned assets.  We periodically review the carrying value of our long-lived assets, including property and equipment, for impairment whenever events or circumstances indicate that the carrying amount of such assets may not be fully recoverable.  For long-lived assets to be held and used, impairments are recognized when the carrying amount of a long-lived asset is not recoverable and exceeds its fair value.  The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset.  An impairment loss is measured as the amount by which the carrying amount of a long-lived asset exceeds its fair value.

Long-lived assets to be disposed of by abandonment or in an exchange for a similar productive long-lived asset are classified as held-for-use until they are disposed. Long-lived assets to be sold are classified as held-for-sale and are no longer depreciated.  Certain criteria have to be met in order for the long-lived asset to be classified as held-for-sale, including that a sale is probable and expected to occur within one year.  Long-lived assets classified as held-for-sale are recorded at the lower of their carrying amount or fair value less cost to sell.

We completed reinsurance transactions in 2012 and 2014 whereby we ceded closed blocks of UL contracts with secondary guarantees to Lincoln National Reinsurance Company (Barbados) Limited (“LNBAR”), a wholly-owned subsidiary of LNC.  We are recognizing the losses related to these transactions over a period of 30 years.

Separate Account Assets and Liabilities

We maintain separate account assets, which are reported at fair value.  The related liabilities are reported at an amount equivalent to the separate account assets.  Investment risks associated with market value changes are borne by the contract holders, except to the extent of minimum guarantees made by the Company with respect to certain accounts. 

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We issue variable annuity contracts through our separate accounts for which investment income and investment gains and losses accrue directly to, and investment risk is borne by, the contract holder (traditional variable annuities).  We also issue variable annuity and life contracts through separate accounts that include various types of guaranteed death benefit (“GDB”), guaranteed withdrawal benefit (“GWB”) and guaranteed income benefit (“GIB”) features.  The GDB features include those where we contractually guarantee to the contract holder either:  return of no less than total deposits made to the contract less any partial withdrawals (“return of net deposits”); total deposits made to the contract less any partial withdrawals plus a minimum return (“minimum return”); or the highest contract value on any contract anniversary date through age 80 minus any payments or withdrawals following the contract anniversary (“anniversary contract value”). 

As discussed in Note 7, certain features of these guarantees are accounted for as embedded derivative reserves, whereas other guarantees are accounted for as benefit reserves.  Other guarantees contain characteristics of both and are accounted for under an approach that calculates the value of the embedded derivative reserve and the benefit reserve based on the specific characteristics of each GLB feature.  We use derivative instruments to hedge our exposure to the risks and earnings volatility that result from the embedded derivatives for living benefits in certain of our variable annuity products.  The change in fair value of these instruments tends to move in the opposite direction of the change in the value of the associated reserves.  The net impact of these changes is reported as a component of realized gain (loss) on our Consolidated Statements of Comprehensive Income (Loss).

The “market consistent scenarios” used in the determination of the fair value of the GLB liability are similar to those used by an investment bank to value derivatives for which the pricing is not transparent and the aftermarket is nonexistent or illiquid.  We use risk-neutral Monte Carlo simulations in our calculation to value the entire block of guarantees, which involve 100 unique scenarios per policy or approximately 46 million scenarios.  The market consistent scenario assumptions, as of each valuation date, are those we view to be appropriate for a hypothetical market participant.  The market consistent inputs include assumptions for the capital markets (e.g., implied volatilities, correlation among indices, risk-free swap curve, etc.), policyholder behavior (e.g., policy lapse, benefit utilization, mortality, etc.), risk margins, administrative expenses and a margin for profit.  We believe these assumptions are consistent with those that would be used by a market participant; however, as the related markets develop we will continue to reassess our assumptions.  It is possible that different valuation techniques and assumptions could produce a materially different estimate of fair value.

Future Contract Benefits and Other Contract Holder Funds

Future contract benefits represent liability reserves that we have established and carry based on estimates of how much we will need to pay for future benefits and claims.  Other contract holder funds represent liabilities for fixed account values, including the fixed portion of variable, dividends payable, premium deposit funds, undistributed earnings on participating business and other contract holder funds as well the carrying value of DFEL discussed above.

The liabilities for future contract benefits and claim reserves for UL and VUL policies consist of contract account balances that accrue to the benefit of the contract holders, excluding surrender charges.  The liabilities for future insurance contract benefits and claim reserves for traditional life policies are computed using assumptions for investment yields, mortality and withdrawals based principally on generally accepted actuarial methods and assumptions at the time of contract issue.  Investment yield assumptions for traditional direct individual life reserves for all contracts range from 2.25% to 7.75% depending on the time of contract issue.  The investment yield assumptions for immediate and deferred paid-up annuities range from 1.50% to 13.50%.  These investment yield assumptions are intended to represent an estimation of the interest rate experience for the period that these contract benefits are payable.

The liabilities for future claim reserves for variable annuity products containing GDB features are calculated by estimating the present value of total expected benefit payments over the life of the contract from inception divided by the present value of total expected assessments over the life of the contract (“benefit ratio”) multiplied by the cumulative assessments recorded from the contract inception through the balance sheet date less the cumulative GDB payments plus interest on the liability.  The change in the liability for a period is the benefit ratio multiplied by the assessments recorded for the period less GDB claims paid in the period plus interest.  As experience or assumption changes result in a change in expected benefit payments or assessments, the benefit ratio is unlocked, that is, recalculated using the updated expected benefit payments and assessments over the life of the contract since inception.  The revised benefit ratio is then applied to the liability calculation described above, with the resulting change in liability reported in benefits on our Consolidated Statements of Comprehensive Income (Loss).

With respect to our future contract benefits and other contract holder funds, we continually review overall reserve position, reserving techniques and reinsurance arrangements.  As experience develops and new information becomes known, liabilities are adjusted as deemed necessary.  The effects of changes in estimates are included in the operating results for the period in which such changes occur.

The business written or assumed by us includes participating life insurance contracts, under which the contract holder is entitled to share in the earnings of such contracts via receipt of dividends.  The dividend scale for participating policies is reviewed annually and may be adjusted to reflect recent experience and future expectations.  As of December 31, 2014 and 2013, participating policies comprised approximately 1% of the face amount of insurance in force, and dividend expenses were $64 million,$62 million and $71 million for the years ended December 31, 2014,  2013 and 2012, respectively.

Liabilities for the secondary guarantees on UL-type products are calculated by multiplying the benefit ratio by the cumulative assessments recorded from contract inception through the balance sheet date less the cumulative secondary guarantee benefit payments plus interest.  If experience or assumption changes result in a new benefit ratio, the reserves are adjusted to reflect the changes in a manner similar to

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the unlocking of DAC, VOBA, DFEL and DSI.  The accounting for secondary guarantee benefits impacts, and is impacted by, EGPs used to calculate amortization of DAC, VOBA, DFEL and DSI.

Certain of our variable annuity contracts reported within future contract benefits contain GLB reserves embedded derivatives, a portion of which may be reported in either other assets or other liabilities, and include guaranteed interest and similar contracts, that are carried at fair value on our Consolidated Balance Sheets, which represents approximate exit price including an estimate for our NPR.  Certain of these features have elements of both insurance benefits and embedded derivatives.  Through our hybrid accounting approach, for reserve calculation purposes we assign product cash flows to the embedded derivative or insurance portion of the reserves based on the life-contingent nature of the benefits.  We classify these GLB reserves embedded derivatives items in Level 3 within the hierarchy levels described above in “Fair Value Measurement.”  We report the insurance portion of the reserves in future contract benefits.

The fair value of our indexed annuity contracts is based on their approximate surrender values.

Borrowed Funds

LNL’s short-term borrowings are defined as borrowings with contractual or expected maturities of one year or less.  Long-term borrowings have contractual or expected maturities greater than one year.

Deferred Gain on Business Sold Through Reinsurance

Our reinsurance operations were acquired by Swiss Re Life & Health America, Inc. (“Swiss Re”) in December 2001 through a series of indemnity reinsurance transactions.  We are recognizing the gain related to these transactions at the rate that earnings on the reinsured business are expected to emerge, over a period of 15 years from the date of sale.

We completed a reinsurance transaction in 2009 whereby we assumed a closed block of term contracts from First Penn-Pacific Life Insurance Company.  We are recognizing the gain related to this transaction over a period of 15 years.

We completed reinsurance transactions in 2012 and 2013 whereby we ceded a closed block of UL contracts with secondary guarantees to LNBAR.  We are recognizing the gains related to these transactions over a period of 30 years.

Contingencies and Commitments

Contingencies arising from environmental remediation costs, regulatory judgments, claims, assessments, guarantees, litigation, recourse reserves, fines, penalties and other sources are recorded when deemed probable and reasonably estimable.

Fee Income

Fee income for investment and interest-sensitive life insurance contracts consist of asset-based fees, cost of insurance charges, percent of premium charges, contract administration charges and surrender charges that are assessed against contract holder account balances.  Investment products consist primarily of individual and group variable and fixed deferred annuities.  Interest-sensitive life insurance products include UL, VUL and other interest-sensitive life insurance policies.  These products include life insurance sold to individuals, corporate-owned life insurance and bank-owned life insurance. 

In bifurcating the embedded derivative of our GLB features on our variable annuity products, we attribute to the embedded derivative the portion of total fees collected from the contract holder that relate to the GLB riders (the “attributed fees”), which are not reported within fee income on our Consolidated Statements of Comprehensive Income (Loss).  These attributed fees represent the present value of future claims expected to be paid for the GLB at the inception of the contract plus a margin that a theoretical market participant would include for risk/profit and are reported within realized gain (loss) on our Consolidated Statements of Comprehensive Income (Loss).

The timing of revenue recognition as it relates to fees assessed on investment contracts is determined based on the nature of such fees.  Asset-based fees, cost of insurance and contract administration charges are assessed on a daily or monthly basis and recognized as revenue when assessed and earned.  Percent of premium charges are assessed at the time of premium payment and recognized as revenue when assessed and earned.  Certain amounts assessed that represent compensation for services to be provided in future periods are reported as unearned revenue and recognized in income over the periods benefited.  Surrender charges are recognized upon surrender of a contract by the contract holder in accordance with contractual terms.

For investment and interest-sensitive life insurance contracts, the amounts collected from contract holders are considered deposits and are not included in revenue.

Insurance Premiums

Our insurance premiums for traditional life insurance and group insurance products are recognized as revenue when due from the contract holder.  Our traditional life insurance products include those products with fixed and guaranteed premiums and benefits and consist primarily of whole life insurance, limited-payment life insurance, term life insurance and certain annuities with life contingencies.  Our group non-medical insurance products consist primarily of term life, disability and dental.

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Net Investment Income

Dividends and interest income, recorded in net investment income, are recognized when earned.  Amortization of premiums and accretion of discounts on investments in debt securities are reflected in net investment income over the contractual terms of the investments in a manner that produces a constant effective yield. 

For CLOs and MBS, included in the trading and AFS fixed maturity securities portfolios, we recognize income using a constant effective yield based on anticipated prepayments and the estimated economic life of the securities.  When actual prepayments differ significantly from originally anticipated prepayments, the retrospective effective yield is recalculated to reflect actual payments to date and a catch up adjustment is recorded in the current period.  In addition, the new effective yield, which reflects anticipated future payments, is used prospectively.  Any adjustments resulting from changes in effective yield are reflected in net investment income on our Consolidated Statements of Comprehensive Income (Loss).

Realized Gain (Loss)

Realized gain (loss) on our Consolidated Statements of Comprehensive Income (Loss) includes realized gains and losses from the sale of investments, write-downs for OTTI of investments, certain derivative and embedded derivative gains and losses, gains and losses on the sale of subsidiaries and businesses and net gains and losses on reinsurance embedded derivatives and trading securities.  Realized gains and losses on the sale of investments are determined using the specific identification method.  Realized gain (loss) is recognized in net income, net of associated amortization of DAC, VOBA, DSI and DFEL.  Realized gain (loss) is also net of allocations of investment gains and losses to certain contract holders and certain funds withheld on reinsurance arrangements for which we have a contractual obligation. 

Other Revenues

Other revenues consists primarily of proceeds from reinsurance recaptures, fees attributable to broker-dealer services recorded as earned at the time of sale, changes in the market value of our seed capital investments and communications sales recognized as earned, net of agency and representative commissions. 

Interest Credited

Interest credited includes interest credited to contract holder account balances.  Interest crediting rates associated with funds invested in our general account during 2012 through 2014 ranged from 1% to 10%.

Benefits

Benefits for UL and other interest-sensitive life insurance products include benefit claims incurred during the period in excess of contract account balances.  Benefits also include the change in reserves for life insurance products with secondary guarantee benefits, annuity products with guaranteed death and living benefits and certain annuities with life contingencies.  For traditional life, group health and disability income products, benefits are recognized when incurred in a manner consistent with the related premium recognition policies. 

Pension and Other Postretirement Benefit Plans

Pursuant to the accounting rules for our obligations to employees and agents under our various pension and other postretirement benefit plans, we are required to make a number of assumptions to estimate related liabilities and expenses.  The mortality assumption is based on actual and anticipated plan experience, determined using acceptable actuarial methods.  We use assumptions for the weighted-average discount rate and expected return on plan assets to estimate pension expense.  The discount rate assumptions are determined using an analysis of current market information and the projected benefit flows associated with these plans.  The expected long-term rate of return on plan assets is based on historical and projected future rates of return on the funds invested in the plan.  The calculation of our accumulated postretirement benefit obligation also uses an assumption of weighted-average annual rate of increase in the per capita cost of covered benefits, which reflects a health care cost trend rate. 

Stock-Based Compensation

In general, we expense the fair value of stock awards included in our incentive compensation plans.  As of the date LNC’s Board of Directors approves stock awards, the fair value of stock options is determined using a Black-Scholes options valuation methodology, and the fair value of other stock awards is based upon the market value of the stock.  The fair value of the awards is expensed over the performance or service period, which generally corresponds to the vesting period, and is recognized as an increase to common stock in stockholder’s equity.  We classify certain stock awards as liabilities.  For these awards, the settlement value is classified as a liability on our Consolidated Balance Sheets, and the liability is marked-to-market through net income at the end of each reporting period.  Stock-based compensation expense is reflected in commissions and other expenses on our Consolidated Statements of Comprehensive Income (Loss). 

Interest and Debt Expense

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Interest expense on our short-term and long-term debt is recognized as due and any associated premiums, discounts and costs are amortized (accreted) over the term of the related borrowing utilizing the effective interest method.  In addition, gains or losses related to certain derivative instruments associated with debt are recognized in interest and debt expense during the period of the change.

Income Taxes

We file a U.S. consolidated income tax return with LNC and its eligible subsidiaries.  Ineligible subsidiaries file separate individual corporate tax returns.  Deferred income taxes are recognized, based on enacted rates, when assets and liabilities have different values for financial statement and tax reporting purposes.  A valuation allowance is recorded to the extent required.  Considerable judgment and the use of estimates are required in determining whether a valuation allowance is necessary and, if so, the amount of such valuation allowance.  In evaluating the need for a valuation allowance, we consider many factors, including:  the nature and character of the deferred tax assets and liabilities; taxable income in prior carryback years; future reversals of temporary differences; the length of time carryovers can be utilized; and any tax planning strategies we would employ to avoid a tax benefit from expiring unused.

Discontinued Operations

As of October 1, 2014, the results of operations of a component of the Company that either has been disposed of or is classified as held-for-sale are reported in income (loss) from discontinued operations, net of federal income taxes, if the disposal represents a strategic shift that has, or will have, a major effect on our consolidated financial condition and results of operations.  See Note 2 for more information regarding the change to our discontinued operations policy.

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2.New Accounting Standards

Adoption of New Accounting Standards

The following table provides a description of our adoption of new Accounting Standard Updates (“ASUs”) issued by the FASB and the impact of the adoption on our financial statements:

Standard	Description	Date of Adoption	Effect on Financial Statements or Other Significant Matters
ASU 2011-06, Fees Paid to the Federal Government by Health Insurer	This standard addresses the recognition and classification of fees mandated by the Patient Protection and Affordable Care Act.  The annual fee is imposed on health insurers for each calendar year beginning on or after January 1, 2014, and is payable no later than September 30 of the applicable year.  If a fee payment is required, the insurer is required to record the liability in full with a corresponding deferred cost that is amortized to expense using a straight-line method of allocation over the applicable year.  The ASU indicates that the annual fee does not meet the definition of an acquisition cost.	January 1, 2014	The amendments in this ASU did not have a material effect on our consolidated financial condition and results of operations.
ASU 2013-08, Amendments to the Scope, Measurement, and Disclosure Requirements (Topic 946, Investment Companies)	This standard provides comprehensive accounting guidance for assessing whether an entity is an investment company through the use of a new two-tiered approach; considering the entity’s purpose and design to determine whether the entity is an investment company.  Upon adoption, all entities must be re-evaluated against the new investment company criteria to determine if investment company classification is permitted.	January 1, 2014	The adoption of this ASU did not have an effect on our consolidated financial condition and results of operations.
ASU 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists	This standard requires an entity to present unrecognized tax benefits as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward.  The standard defines specific exceptions when the unrecognized tax benefit should be presented in the financial statements as a liability and not combined with deferred tax assets.	January 1, 2014	The adoption of this ASU did not have an effect on the deferred tax asset or liability classification on our balance sheet and did not result in any additional disclosures to our financial statements.
ASU 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity	This standard changes the requirements for reporting discontinued operations.  The disposal of a component of an entity must be reported as a discontinued operation if the disposal represents a strategic shift that has a major effect on an entity’s operations and financial results.  The amendments also require entities to provide new disclosures about a disposal of an individually significant component of an entity that does not qualify for discontinued operations presentation.  Early adoption is permitted, but only for disposals that have not been reported in financial statements previously issued or available for issuance.	Early adopted as of October 1, 2014	We applied the guidance in this standard to the sale of Lincoln Financial Media (“LFM”) in the fourth quarter of 2014.  For more information regarding the sale of LFM, see Note 3.

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Future Adoption of New Accounting Standards

The following table provides a description of future adoptions of new accounting standards that may have an impact on our financial statements when adopted:

Standard	Description	Projected Date of Adoption	Effect on Financial Statements or Other Significant Matters
ASU 2014-01, Accounting for Investments in Qualified Affordable Housing Projects	Under current GAAP, the use of the effective yield method for investments in qualified affordable housing projects is limited, and may result in certain investments being accounted for under a method of accounting that may not fairly represent the economics of the investment.  This standard permits an entity to make an accounting policy election to use the proportional amortization method of accounting if certain conditions are met.  The amendments are to be applied retrospectively for interim and annual reporting periods.	January 1, 2015	We are currently evaluating the impact of adopting this standard, and do not expect the adoption to have a material effect on our consolidated financial condition and results of operations.
ASU 2014-09, Revenue from Contracts with Customers	This standard establishes the core principle of recognizing revenue to depict the transfer of promised goods and services.  The amendments define a five-step process that systematically identifies the various components of the revenue recognition process, culminating with the recognition of revenue upon satisfaction of an entity’s performance obligation.  Retrospective application is required, and early adoption is not permitted.	January 1, 2017	We will adopt the accounting guidance in this standard for non-insurance related products and services, and are currently evaluating the impact of adoption on our consolidated financial condition and results of operations.
ASU 2014-11, Repurchase-to-Maturity Transactions, Repurchase Financings and Disclosures	This standard eliminates a distinction in current GAAP related to certain repurchase agreements, and amends current GAAP to require repurchase-to-maturity transactions and linked repurchase financings to be accounted for as secured borrowings; consistent with the accounting for other repurchase agreements.  The standard also includes new disclosure requirements related to transfers accounted for as sales that are economically similar to repurchase agreements.  The new disclosures are not required for comparative periods before the effective date.	January 1, 2015	We are currently evaluating the impact of adopting this standard on our consolidated financial condition and results of operations and will provide the required disclosures, as necessary, in our 2015 consolidated financial statements.
ASU 2014-16, Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity	This standard clarifies that when considering the nature of the host contract in a hybrid financial instrument issued in the form of a share; an entity must consider all of the stated and implied substantive terms of the hybrid instrument, including the embedded derivative feature that is being considered for separate accounting from the host contract.  Early adoption of this standard is permitted and application is under a modified retrospective basis to existing hybrid financial instruments that are within the scope of the standard.	January 1, 2016	We are currently evaluating the impact of adopting this standard on our consolidated financial condition and results of operations.
ASU 2015-02, Amendments to the Consolidation Analysis	This standard is intended to improve consolidation accounting guidance related to LPs, limited liability corporations and securitization structures.  The new standard includes changes to existing consolidation models that will eliminate the presumption that a general partner should consolidate a LP, clarify when fees paid to a decision maker should be a factor in the VIE consolidation evaluation and reduce the VIE consolidation models from two to one by eliminating the indefinite deferral for certain investment funds.  Early adoption is permitted including adoption in an interim period.	January 1, 2016	We are currently evaluating the impact of adopting this standard on our consolidated financial condition and results of operations.

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3.  Dispositions

LFM

On December 7, 2014, we entered into a stock purchase agreement with Entercom Communications Corp. (“Entercom Parent”) and Entercom Radio, LLC (“Entercom”), pursuant to which we agreed to sell LFM to Entercom for $105 million consisting of cash and perpetual cumulative convertible preferred stock of Entercom Parent.  The transaction is subject to FCC, Hart-Scott-Rodino (“H-S-R”) and other customary regulatory approvals and closing conditions.  As a result of a request for additional information under the H-S-R Act, closing may be delayed beyond the second quarter of 2015.

As of December 31, 2014, we adjusted the carrying amount of the assets and liabilities of LFM that will be sold to fair value less cost to sell and have reclassified such amounts as held-for-sale within other assets and other liabilities on our Consolidated Balance Sheets.  Accordingly, we recognized a loss of $28 million, after-tax, during the fourth quarter of 2014 reflected within income (loss) from continuing operations on our Consolidated Statements of Comprehensive Income (Loss).

4.  Business Ceded, Recaptured and Novated

Business Ceded

We completed a reinsurance transaction during 2014 whereby we ceded a block of business to LNBAR that resulted in the release of $64 million of capital previously supporting a portion of statutory reserves related to our Worksite UL business.  The following summarizes the effect of this transaction (in millions) on our Consolidated Balance Sheets as of December 31, 2014:

Assets
Cash and invested cash	$	(1	)
DAC and VOBA		(12	)
Reinsurance recoverables		3
Other assets (deferred loss on business sold through reinsurance)		9
Total assets	$	(1	)
Liabilities
Other liabilities		(1	)
Total liabilities	$	(1	)

We completed a reinsurance transaction during 2014 whereby we ceded an additional block of business to LNBAR that resulted in the release of $28 million of capital previously supporting a portion of statutory reserves related to our UL/survivorship UL (“SUL”) business.  The following summarizes the effect of this transaction (in millions) on our Consolidated Balance Sheets as of December 31, 2014:

Assets
Cash and invested cash	$	(2	)
DAC and VOBA		(8	)
Reinsurance recoverables		5
Other assets (deferred loss on business sold through reinsurance)		1
Total assets	$	(4	)
Liabilities
Other contract holder funds	$	(2	)
Other liabilities		(2	)
Total liabilities	$	(4	)

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We completed reinsurance transactions during 2013 whereby we ceded blocks of business to LNBAR that resulted in the release of $196 million of capital previously supporting a portion of statutory reserves related to our UL/SUL business.  The following summarizes the effect of these transactions (in millions) on our Consolidated Balance Sheets as of December 31, 2013:

Assets
Cash and invested cash	$	(22	)
DAC and VOBA		(65	)
Reinsurance recoverables		76
Total assets	$	(11	)
Liabilities
Other contract holder funds	$	(7	)
Deferred gain on business sold through reinsurance		18
Other liabilities		(22	)
Total liabilities	$	(11	)

We completed a reinsurance transaction during 2012 whereby we ceded a block of business to LNBAR that resulted in the release of $164 million of capital previously supporting a portion of statutory reserves related to our Duet/Legend business.  The following summarizes the effect of this transaction (in millions) on our Consolidated Balance Sheets as of December 31, 2012:

Assets
Cash and invested cash	$	(32	)
DAC and VOBA		(148	)
Reinsurance recoverables		547
Total assets	$	367
Liabilities
Other contract holder funds	$	(44	)
Deferred gain on business sold through reinsurance		(233	)
Funds withheld reinsurance liabilities		676
Other liabilities		(32	)
Total liabilities	$	367

Business Recaptured

We completed a reinsurance transaction during 2014 whereby we entered into an agreement to recapture certain traditional and interest sensitive business under several yearly renewable term reinsurance treaties that were originally ceded to a reinsurer.  As part of this agreement, we received cash consideration of $500 million, of which $78 million represented reimbursement for prepaid reinsurance premiums related to the recaptured treaties.  We recognized a one-time gain of $57 million, after-tax, related to this recapture with the remaining difference between the proceeds and the gain being driven primarily by increases in reserves of $226 million and a reduction of DAC of $123 million.

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We completed a reinsurance transaction during 2012 whereby we recaptured a block of secondary guaranteed UL business previously ceded to LNBAR.  The following summarizes the effect of this transaction (in millions) on our Consolidated Balance Sheets and Consolidated Statements of Comprehensive Income (Loss) as of and for the year ended December 31, 2012:

Assets
Cash and invested cash	$	119
Other assets		(34	)
Total assets	$	85
Liabilities
Reinsurance related embedded derivatives	$	39
Other liabilities		45
Total liabilities	$	84
Revenues and Expenses
Benefits	$	290
Commissions and other expenses		(289	)
Net income (loss)	$	1

Business Novated

We completed a reinsurance transaction during 2012 wherebyLincoln Reinsurance Company of Vermont II (“LRCVII”) novated SUL business to LNBAR.  The following summarizes the effect of this transaction (in millions) on our Consolidated Balance Sheets as of December 31, 2012:

Assets
Cash and invested cash	$	(52	)
Total assets	$	(52	)
Liabilities
Reinsurance related embedded derivatives	$	(18	)
Deferred gain on business sold through reinsurance		8
Long-term debt		(500	)
Funds withheld reinsurance liabilities		500
Other liabilities		(16	)
Total liabilities	$	(26	)
Revenue and Expenses
Net investment income	$	(13	)
Benefits		13
Net income (loss)	$	(26	)

5.  VIE

Consolidated VIEs

Credit-Linked Notes

We have invested in the Class 1 notes of two credit-linked note (“CLN”) structures, which represent special purpose trusts combining ABS with credit default swaps to produce multi-class structured securities.  The CLN structures also include subordinated Class 2 notes, which are held by third parties, and, together with the Class 1 notes, represent 100% of the outstanding notes of the CLN structures.  The entities that issued the CLNs are financed by the note holders, and, as such, the note holders participate in the expected losses and residual returns of the entities. 

Because the note holders do not have voting rights or similar rights, we determined the entities issuing the CLNs are VIEs, and as a note holder, our interest represented a variable interest.  We have the power to direct the most significant activity affecting the performance of both CLN structures, as we have the ability to actively manage the reference portfolios underlying the credit default swaps.  In addition, we receive returns from the CLN structures and may absorb losses that could potentially be significant to the CLN structures.  As such, we concluded that we are the primary beneficiary of the VIEs associated with the CLNs.  We reflect the assets and liabilities on our Consolidated Balance Sheets and recognize the results of operations of these VIEs on our Consolidated Statements of Comprehensive Income (Loss).

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As a result of consolidating the CLNs, we also consolidate the derivative instruments in the CLN structures.  The credit default swaps create variability in the CLN structures and expose the note holders to the credit risk of the referenced portfolio.  The contingent forward contracts transfer a portion of the loss in the underlying fixed maturity corporate asset-backed credit card loan securities back to the counterparty after credit losses reach our attachment point.

The following summarizes information regarding the CLN structures (dollars in millions) as of December 31, 2014:

	Amount and Date of Issuance
		$400	$200
		December	April
		2006	2007
Original attachment point (subordination)		5.50%	2.05%
Current attachment point (subordination)		4.21%	1.48%
Maturity		12/20/2016	3/20/2017
Current rating of tranche		BBB-	Ba2
Current rating of underlying reference obligations		AA - BB	AAA - CCC
Number of defaults in underlying reference obligations		3	2
Number of entities		123	99
Number of countries		20	21

There has been no event of default on the CLNs themselves.  Based upon our analysis, the remaining subordination as represented by the attachment point should be sufficient to absorb future credit losses, subject to changing market conditions.  Similar to other debt market instruments, our maximum principal loss is limited to our original investment.

The following summarizes the exposure of the CLN structures’ underlying reference obligations by industry and rating as of December 31, 2014:  

	AAA	AA	A	BBB	BB	B	CCC	Total
Industry
Financial intermediaries	0.0%	2.1%	6.4%	2.1%	0.0%	0.0%	0.0%	10.6%
Telecommunications	0.0%	0.0%	3.5%	6.1%	1.4%	0.0%	0.0%	11.0%
Oil and gas	0.3%	2.1%	1.3%	4.3%	0.0%	0.0%	0.0%	8.0%
Utilities	0.0%	0.0%	2.6%	2.0%	0.0%	0.0%	0.0%	4.6%
Chemicals and plastics	0.0%	0.0%	2.3%	1.2%	0.3%	0.0%	0.0%	3.8%
Drugs	0.3%	2.2%	1.2%	0.0%	0.0%	0.0%	0.0%	3.7%
Retailers (except food
and drug)	0.0%	0.0%	2.1%	0.9%	0.5%	0.0%	0.0%	3.5%
Industrial equipment	0.0%	0.0%	2.1%	0.7%	0.0%	0.0%	0.0%	2.8%
Sovereign	0.0%	0.7%	1.6%	1.0%	0.0%	0.0%	0.0%	3.3%
Conglomerates	0.0%	2.3%	0.9%	0.0%	0.0%	0.0%	0.0%	3.2%
Forest products	0.0%	0.0%	0.5%	1.1%	1.4%	0.0%	0.0%	3.0%
Other	0.0%	4.7%	14.2%	17.5%	5.5%	0.3%	0.3%	42.5%
Total	0.6%	14.1%	38.7%	36.9%	9.1%	0.3%	0.3%	100.0%

Statutory Trust Note

In August2011, we purchased a $100 million note issued by a statutory trust (“Issuer”) in a private placement offering.  The proceeds were used by the Issuer to purchase U.S. government bonds to be held as collateral assets supporting an excess mortality swap.  Weconcluded that the Issuer of the note was a VIE and that we were the primary beneficiary.  We consolidated all of the assets and liabilities of the Issuer on our Consolidated Balance Sheets as of August 1, 2011.

On December 16, 2013, the excess mortality swap underlying this VIE was terminated as a result of a cancellation event under the associated swap agreement.  Subsequently, the U.S. government bonds were redeemed on January 6, 2014, and our $100 million note issued by the statutory trust was cancelled.The combination of these two events, under the direction of LNC and its counterparty, has provided for the dissolution of this VIE effective January 6, 2014.  As such, we no longer have any exposure to loss related to this VIE.

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Asset and liability information (dollars in millions) for the consolidated VIEs included on our Consolidated Balance Sheets was as follows:

		As of December 31, 2014							As of December 31, 2013
		Number							Number
		of		Notional		Carrying			of		Notional		Carrying
	Instruments			Amounts		Value		Instruments			Amounts		Value
Assets
Fixed maturity securities:
Asset-backed credit card loans			N/A	$	-	$	598			N/A	$	-	$	595
U.S. government bonds			N/A		-		-			N/A		-		102
Total assets (1)			-	$	-	$	598			-	$	-	$	697
Liabilities
Non-qualifying hedges:
Credit default swaps			2	$	600	$	13			2	$	600	$	27
Contingent forwards			2		-		-			2		-		-
Total liabilities (2)			4	$	600	$	13			4	$	600	$	27

⁽¹⁾ Reported in variable interest entities’ fixed maturity securities on our Consolidated Balance Sheets.

⁽²⁾ Reported in variable interest entities’ liabilities on our Consolidated Balance Sheets.

For details related to the fixed maturity AFS securities for these VIEs, see Note 6.

As described more fully in Note 1, we regularly review our investment holdings for OTTI.  Based upon this review, we believe that the AFS fixed maturity securities were not other-than-temporarily impaired as of December 31, 2014.  

The gains (losses) for the consolidated VIEs (in millions) recorded on our Consolidated Statements of Comprehensive Income (Loss) were as follows:

	For the Years Ended
	December 31,
	2014		2013
Non-Qualifying Hedges
Credit default swaps	$	14	$	101
Contingent forwards		-		-
Total non-qualifying hedges (1)	$	14	$	101

⁽¹⁾ Reported in realized gain (loss) on our Consolidated Statements of Comprehensive Income (Loss).

Unconsolidated VIEs

Structured Securities

Through our investment activities, we make passive investments in structured securities issued by VIEs for which we are not the manager.  These structured securities include our RMBS, CMBS, CLOs and CDOs.  We have not provided financial or other support with respect to these VIEs other than our original investment.  We have determined that we are not the primary beneficiary of these VIEs due to the relative size of our investment in comparison to the principal amount of the structured securities issued by the VIEs and the level of credit subordination that reduces our obligation to absorb losses or right to receive benefits.  Our maximum exposure to loss on these structured securities is limited to the amortized cost for these investments.  We recognize our variable interest in these VIEs at fair value on our Consolidated Balance Sheets.  For information about these structured securities, see Note 6.

Qualified Affordable Housing Projects

We invest in certain LPs that operate qualified affordable housing projects that we concluded are VIEs.  We receive returns from the LPs in the form of income tax credits, and our exposure to loss is limited to the capital we invest in the LPs.  We are not the primary beneficiary of these VIEs as we do not have the power to direct the most significant activities of the LPs.  Our maximum exposure to loss was $60 million and $77 million as of December 31, 2014and 2013, respectively.

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6.  Investments

AFS Securities

Pursuant to the Fair Value Measurements and Disclosures Topic of the FASB ASC, we have categorized AFS securities into a three-level hierarchy, based on the priority of the inputs to the respective valuation technique.  The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3), as described in Note 1, which also includes additional disclosures regarding our fair value measurements.

The amortized cost, gross unrealized gains, losses and OTTI and fair value of AFS securities (in millions) were as follows:

	As of December 31, 2014
	Amortized		Gross Unrealized						Fair
	Cost		Gains		Losses		OTTI		Value
Fixed maturity securities:
Corporate bonds	$	67,000	$	6,495	$	398	$	42	$	73,055
ABS		1,037		82		2		39		1,078
U.S. government bonds		339		51		-		-		390
Foreign government bonds		468		68		-		-		536
RMBS		3,797		256		3		17		4,033
CMBS		532		25		-		10		547
CLOs		374		3		2		-		375
State and municipal bonds		3,628		855		4		-		4,479
Hybrid and redeemable preferred securities		864		104		40		-		928
VIEs' fixed maturity securities		587		11		-		-		598
Total fixed maturity securities		78,626		7,950		449		108		86,019
Equity securities		216		16		1		-		231
Total AFS securities	$	78,842	$	7,966	$	450	$	108	$	86,250

	As of December 31, 2013
	Amortized		Gross Unrealized						Fair
	Cost		Gains		Losses		OTTI		Value
Fixed maturity securities:
Corporate bonds	$	64,257	$	4,189	$	1,109	$	43	$	67,294
ABS		1,166		58		32		45		1,147
U.S. government bonds		314		25		14		-		325
Foreign government bonds		498		45		1		-		542
RMBS		3,939		244		9		30		4,144
CMBS		686		33		4		17		698
CLOs		232		-		1		6		225
State and municipal bonds		3,549		302		27		-		3,824
Hybrid and redeemable preferred securities		944		86		51		-		979
VIEs' fixed maturity securities		682		15		-		-		697
Total fixed maturity securities		76,267		4,997		1,248		141		79,875
Equity securities		182		19		-		-		201
Total AFS securities	$	76,449	$	5,016	$	1,248	$	141	$	80,076

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The amortized cost and fair value of fixed maturity AFS securities by contractual maturities (in millions) as of December 31, 2014, were as follows:

	Amortized		Fair
	Cost		Value
Due in one year or less	$	2,188	$	2,237
Due after one year through five years		16,990		18,321
Due after five years through ten years		21,950		22,861
Due after ten years		32,795		37,645
Subtotal		73,923		81,064
MBS		4,329		4,580
CLOs		374		375
Total fixed maturity AFS securities	$	78,626	$	86,019

Actual maturities may differ from contractual maturities because issuers may have the right to call or pre-pay obligations.

The fair value and gross unrealized losses, including the portion of OTTI recognized in OCI, of AFS securities (dollars in millions), aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, were as follows:

	As of December 31, 2014
	Less Than or Equal					Greater Than
	to Twelve Months					Twelve Months					Total
				Gross					Gross					Gross
			Unrealized					Unrealized					Unrealized
	Fair		Losses and			Fair		Losses and			Fair		Losses and
	Value			OTTI		Value			OTTI		Value			OTTI
Fixed maturity securities:
Corporate bonds	$	4,636		$	202	$	4,291		$	238	$	8,927		$	440
ABS		94			1		310			40		404			41
RMBS		417			7		238			13		655			20
CMBS		121			-		19			10		140			10
CLOs		110			1		69			1		179			2
State and municipal bonds		6			-		26			4		32			4
Hybrid and redeemable
preferred securities		29			-		176			40		205			40
Total fixed maturity securities		5,413			211		5,129			346		10,542			557
Equity securities		37			1		-			-		37			1
Total AFS securities	$	5,450		$	212	$	5,129		$	346	$	10,579		$	558
Total number of AFS securities in an unrealized loss position															990

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	As of December 31, 2013
	Less Than or Equal					Greater Than
	to Twelve Months					Twelve Months					Total
				Gross					Gross					Gross
			Unrealized					Unrealized					Unrealized
	Fair		Losses and			Fair		Losses and			Fair		Losses and
	Value			OTTI		Value			OTTI		Value			OTTI
Fixed maturity securities:
Corporate bonds	$	16,457		$	998	$	915		$	154	$	17,372		$	1,152
ABS		163			6		318			71		481			77
U.S. government bonds		151			14		-			-		151			14
Foreign government bonds		69			1		-			-		69			1
RMBS		455			15		259			24		714			39
CMBS		109			7		43			14		152			21
CLOs		136			3		50			4		186			7
State and municipal bonds		359			20		24			7		383			27
Hybrid and redeemable
preferred securities		58			6		195			45		253			51
Total fixed maturity securities		17,957			1,070		1,804			319		19,761			1,389
Equity securities		-			-		-			-		-			-
Total AFS securities	$	17,957		$	1,070	$	1,804		$	319	$	19,761		$	1,389
Total number of AFS securities in an unrealized loss position															1,449

For information regarding our investments in VIEs, see Note 5.

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We perform detailed analysis on the AFS securities backed by pools of residential and commercial mortgages that are most at risk of impairment based on factors discussed in Note 1.  Selected information for these securities in a gross unrealized loss position (in millions) was as follows:

	As of December 31, 2014
	Amortized		Fair		Unrealized
	Cost		Value		Loss
Total
AFS securities backed by pools of residential mortgages	$	1,057	$	997	$	60
AFS securities backed by pools of commercial mortgages		150		140		10
Total	$	1,207	$	1,137	$	70
Subject to Detailed Analysis
AFS securities backed by pools of residential mortgages	$	929	$	871	$	58
AFS securities backed by pools of commercial mortgages		13		12		1
Total	$	942	$	883	$	59

	As of December 31, 2013
	Amortized		Fair		Unrealized
	Cost		Value		Loss
Total
AFS securities backed by pools of residential mortgages	$	1,198	$	1,087	$	111
AFS securities backed by pools of commercial mortgages		193		169		24
Total	$	1,391	$	1,256	$	135
Subject to Detailed Analysis
AFS securities backed by pools of residential mortgages	$	871	$	774	$	97
AFS securities backed by pools of commercial mortgages		29		23		6
Total	$	900	$	797	$	103

The fair value, gross unrealized losses, the portion of OTTI recognized in OCI (in millions) and number of AFS securities where the fair value had declined and remained below amortized cost by greater than 20% were as follows:

	As of December 31, 2014
								Number
	Fair		Gross Unrealized					of
	Value		Losses		OTTI		Securities (1)
Less than six months	$	48	$	19	$	-			12
Six months or greater, but less than nine months		8		7		-			3
Twelve months or greater		239		70		59			82
Total	$	295	$	96	$	59			97

	As of December 31, 2013
								Number
	Fair		Gross Unrealized					of
	Value		Losses		OTTI		Securities (1)
Less than six months	$	1	$	-	$	-			4
Six months or greater, but less than nine months		7		3		-			1
Nine months or greater, but less than twelve months		56		18		-			4
Twelve months or greater		340		89		81			92
Total	$	404	$	110	$	81			101

⁽¹⁾ We may reflect a security in more than one aging category based on various purchase dates. 

We regularly review our investment holdings for OTTI.  Our gross unrealized losses, including the portion of OTTI recognized in OCI, on AFS securities decreased $831 million for the year ended December 31, 2014.  As discussed further below, we believe the unrealized loss position as of December 31, 2014, did not represent OTTI as (i) we did not intend to sell these fixed maturity AFS securities; (ii) it is not more likely than not that we will be required to sell the fixed maturity AFS securities before recovery of their amortized cost basis; (iii) the estimated future cash flows were equal to or greater than the amortized cost basis of the debt securities; and (iv) we had the ability and intent to hold the equity AFS securities for a period of time sufficient for recovery. 

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Based upon this evaluation as of December 31, 2014, management believes we have the ability to generate adequate amounts of cash from our normal operations (e.g., insurance premiums and fees and investment income) to meet cash requirements with a prudent margin of safety without requiring the sale of our temporarily-impaired securities.

As of December 31, 2014,  the unrealized losses associated with our corporate bond securities were attributable primarily to widening credit spreads and rising interest rates since purchase.  We performed a detailed analysis of the financial performance of the underlying issuers and determined that we expected to recover the entire amortized cost for each security.

As of December 31, 2014, the unrealized losses associated with our MBS and ABS were attributable primarily to collateral losses and credit spreads.  We assessed for credit impairment using a cash flow model that incorporates key assumptions including default rates, severities and prepayment rates.  We estimated losses for a security by forecasting the underlying loans in each transaction.  The forecasted loan performance was used to project cash flows to the various tranches in the structure, as applicable.  Our forecasted cash flows also considered, as applicable, independent industry analyst reports and forecasts, sector credit ratings and other independent market data.  Based upon our assessment of the expected credit losses of the security given the performance of the underlying collateral compared to our subordination or other credit enhancement, we expected to recover the entire amortized cost basis of each temporarily impaired security.

As of December 31, 2014, the unrealized losses associated with our hybrid and redeemable preferred securities were attributable primarily to wider credit spreads caused by illiquidity in the market and subordination within the capital structure, as well as credit risk of underlying issuers.  For our hybrid and redeemable preferred securities, we evaluated the financial performance of the underlying issuers based upon credit performance and investment ratings and determined that we expected to recover the entire amortized cost of each security.

Changes in the amount of credit loss of OTTI recognized in net income (loss) where the portion related to other factors was recognized in OCI (in millions) on fixed maturity AFS securities were as follows:

	For the Years Ended December 31,
	2014			2013			2012
Balance as of beginning-of-year	$	378		$	402		$	380
Increases attributable to:
Credit losses on securities for which an OTTI was not previously recognized		4			37			98
Credit losses on securities for which an OTTI was previously recognized		15			40			59
Decreases attributable to:
Securities sold, paid down or matured		(37	)		(101	)		(135	)
Balance as of end-of-year	$	360		$	378		$	402

During 2014,  2013 and 2012, we recorded credit losses on securities for which an OTTI was not previously recognized as we determined the cash flows expected to be collected would not be sufficient to recover the entire amortized cost basis of the debt security.  The credit losses we recorded on securities for which an OTTI was not previously recognized were attributable primarily to one or a combination of the following reasons:

· Failure of the issuer of the security to make scheduled payments;

· Deterioration of creditworthiness of the issuer;

· Deterioration of conditions specifically related to the security;

· Deterioration of fundamentals of the industry in which the issuer operates; and

· Deterioration of the rating of the security by a rating agency.

We recognize the OTTI attributed to the noncredit portion as a separate component in OCI referred to as unrealized OTTI on AFS securities. 

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Details of the amount of credit loss of OTTI recognized in net income (loss) for which a portion related to other factors was recognized in OCI (in millions), were as follows:

	As of December 31, 2014
			Gross Unrealized						OTTI in
	Amortized				Losses and		Fair		Credit
	Cost		Gains		OTTI		Value		Losses
Corporate bonds	$	38	$	5	$	9	$	34	$	20
ABS		217		31		22		226		101
RMBS		417		24		7		434		180
CMBS		46		4		10		40		59
Total	$	718	$	64	$	48	$	734	$	360

	As of December 31, 2013
			Gross Unrealized						OTTI in
	Amortized				Losses and		Fair		Credit
	Cost		Gains		OTTI		Value		Losses
Corporate bonds	$	53	$	-	$	16	$	37	$	32
ABS		199		18		32		185		94
RMBS		513		17		17		513		175
CMBS		34		3		12		25		77
Total	$	799	$	38	$	77	$	760	$	378

Trading Securities

Trading securities at fair value (in millions) consisted of the following:

	As of December 31,
	2014		2013
Fixed maturity securities:
Corporate bonds	$	1,434	$	1,650
ABS		32		33
U.S. government bonds		278		272
Foreign government bonds		24		24
RMBS		132		152
CMBS		4		7
CLOs		9		2
State and municipal bonds		21		20
Hybrid and redeemable preferred securities		32		30
Total trading securities	$	1,966	$	2,190

The portion of the market adjustment for gains (losses) that relate to trading securities still held as of December 31, 2014,  2013 and 2012,  was $40 million,  $(166) million and $53 million, respectively.

Mortgage Loans on Real Estate

Mortgage loans on real estate principally involve commercial real estate.  The commercial loans are geographically diversified throughout the U.S. with the largest concentrations in California and Texas, which accounted for 24%  and 9%, respectively, of mortgage loans on real estate as of December 31, 2014 and 23% and 9%, respectively, of mortgage loans on real estate as of December 31, 2013.

The following provides the current and past due composition of our mortgage loans on real estate (in millions):

	As of December 31,
	2014			2013
Current	$	7,386		$	7,026
Valuation allowance associated with impaired mortgage loans on real estate		(3	)		(3	)
Unamortized premium (discount)		4			6
Total carrying value	$	7,387		$	7,029

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The number of impaired mortgage loans on real estate, each of which had an associated specific valuation allowance, and the carrying value of impaired mortgage loans on real estate (dollars in millions) were as follows:

	As of December 31,
	2014			2013
Number of impaired mortgage loans on real estate	3			3
Principal balance of impaired mortgage loans on real estate	$	26		$	27
Valuation allowance associated with impaired mortgage loans on real estate		(3	)		(3	)
Carrying value of impaired mortgage loans on real estate	$	23		$	24

The changes in the valuation allowance associated with impaired mortgage loans on real estate (in millions) were as follows:

	As of December 31,
	2014		2013			2012
Balance as of beginning-of-year	$	3	$	6		$	3
Additions		-		3			4
Charge-offs, net of recoveries		-		(6	)		(1	)
Balance as of end-of-year	$	3	$	3		$	6

The average carrying value on the impaired mortgage loans on real estate (in millions) was as follows:

	For the Years Ended December 31,
	2014		2013		2012
Average carrying value for impaired mortgage loans on real estate	$	24	$	30	$	17
Interest income recognized on impaired mortgage loans on real estate		2		2		1
Interest income collected on impaired mortgage loans on real estate		2		2		1

As described in Note 1, we use the loan-to-value and debt-service coverage ratios as credit quality indicators for our mortgage loans, which were as follows (dollars in millions):

	As of December 31, 2014				As of December 31, 2013
				Debt-				Debt-
				Service				Service
	Carrying		% of	Coverage	Carrying		% of	Coverage
	Value		Total	Ratio	Value		Total	Ratio
Less than 65%	$	6,463	87.5%	1.91	$	5,898	83.9%	1.79
65% to 74%		622	8.4%	1.55		737	10.5%	1.42
75% to 100%		271	3.7%	0.73		363	5.2%	0.83
Greater than 100%		31	0.4%	0.77		31	0.4%	0.78
Total mortgage loans on real estate	$	7,387	100.0%		$	7,029	100.0%

Alternative Investments 

As of December 31, 2014 and 2013, alternative investments included investments in 156 and 121 different partnerships, respectively, and the portfolio represented approximately 1% of our overall invested assets.

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Net Investment Income

The major categories of net investment income (in millions) on our Consolidated Statements of Comprehensive Income (Loss) were as follows:

	For the Years Ended December 31,
	2014			2013			2012
Fixed maturity AFS securities	$	3,937		$	3,876		$	3,813
Equity AFS securities		9			6			6
Trading securities		119			130			138
Mortgage loans on real estate		367			377			381
Real estate		3			5			11
Policy loans		153			153			163
Invested cash		1			3			4
Commercial mortgage loan prepayment and bond make-whole premiums		132			107			39
Alternative investments		130			86			125
Consent fees		2			4			3
Other investments		(2	)		4			(5	)
Investment income		4,851			4,751			4,678
Investment expense		(203	)		(190	)		(127	)
Net investment income	$	4,648		$	4,561		$	4,551

Realized Gain (Loss) Related to Certain Investments

The detail of the realized gain (loss) related to certain investments (in millions) was as follows:

	For the Years Ended December 31,
	2014			2013			2012
Fixed maturity AFS securities:
Gross gains	$	37		$	20		$	14
Gross losses		(28	)		(89	)		(187	)
Equity AFS securities:
Gross gains		5			8			1
Gross losses		-			(2	)		(9	)
Gain (loss) on other investments		4			6			15
Associated amortization of DAC, VOBA, DSI and DFEL
and changes in other contract holder funds		(31	)		(27	)		2
Total realized gain (loss) related to certain investments	$	(13	)	$	(84	)	$	(164	)

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Details underlying write-downs taken as a result of OTTI (in millions) that were recognized in net income (loss) and included in realized gain (loss) on AFS securities above, and the portion of OTTI recognized in OCI (in millions) were as follows:

	For the Years Ended December 31,
	2014			2013			2012
OTTI Recognized in Net Income (Loss)
Fixed maturity securities:
Corporate bonds	$	(1	)	$	(16	)	$	(26	)
ABS		(8	)		(18	)		(36	)
RMBS		(7	)		(28	)		(50	)
CMBS		(1	)		(14	)		(47	)
CLOs		(2	)		(1	)		(2	)
Total fixed maturity securities		(19	)		(77	)		(161	)
Equity securities		-			(1	)		(8	)
Gross OTTI recognized in net income (loss)		(19	)		(78	)		(169	)
Associated amortization of DAC, VOBA, DSI, and DFEL		4			13			30
Net OTTI recognized in net income (loss), pre-tax	$	(15	)	$	(65	)	$	(139	)
Portion of OTTI Recognized in OCI
Gross OTTI recognized in OCI	$	11		$	11		$	118
Change in DAC, VOBA, DSI and DFEL		(1	)		(1	)		(15	)
Net portion of OTTI recognized in OCI, pre-tax	$	10		$	10		$	103

Determination of Credit Losses on Corporate Bonds and ABS

As of December 31, 2014 and 2013, we reviewed our corporate bond and ABS portfolios for potential shortfall in contractual principal and interest based on numerous subjective and objective inputs.  The factors used to determine the amount of credit loss for each individual security, include, but are not limited to, near term risk, substantial discrepancy between book and market value, sector or company-specific volatility, negative operating trends and trading levels wider than peers. 

Credit ratings express opinions about the credit quality of a security.  Securities rated investment grade, that is those rated BBB- or higher by Standard & Poor’s (“S&P”) Rating Services or Baa3 or higher by Moody’s Investors Service (“Moody’s”), are generally considered by the rating agencies and market participants to be low credit risk.  As of December 31, 2014 and 2013, 96% of the fair value of our corporate bond portfolio was rated investment grade.  As of December 31, 2014 and 2013, the portion of our corporate bond portfolio rated below investment grade had an amortized cost of $3.2 billion and $2.7 billion, respectively, and a fair value of $3.2 billion and $2.7 billion, respectively.  As of December 31, 2014 and 2013, 88% and 89%, respectively, of the fair value of our ABS portfolio was rated investment grade.  As of December 31, 2014 and 2013, the portion of our ABS portfolio rated below investment grade had an amortized cost of $188 million and $262 million, respectively, and a fair value of $171 million and $217 million, respectively.  Based upon the analysis discussed above, we believed as of December 31, 2014 and 2013, that we would recover the amortized cost of each investment grade corporate bond and ABS security.

Determination of Credit Losses on MBS

As of December 31, 2014 and 2013, default rates were projected by considering underlying MBS loan performance and collateral type.  Projected default rates on existing delinquencies vary between 10% to 100% depending on loan type and severity of delinquency status.  In addition, we estimate the potential contributions of currently performing loans that may become delinquent in the future based on the change in delinquencies and loan liquidations experienced in the recent history.  Finally, we develop a default rate timing curve by aggregating the defaults for all loans in the pool (delinquent loans, foreclosure and real estate owned and new delinquencies from currently performing loans) and the associated loan-level loss severities. 

We use certain available loan characteristics such as lien status, loan sizes and occupancy to estimate the loss severity of loans.  Second lien loans are assigned 100% severity, if defaulted.  For first lien loans, we assume a minimum of 30% severity with higher severity assumed for investor properties and further adjusted by housing price assumptions.  With the default rate timing curve and loan-level severity, we derive the future expected credit losses.

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Payables for Collateral on Investments

The carrying value of the payables for collateral on investments (in millions) included on our Consolidated Balance Sheets and the fair value of the related investments or collateral consisted of the following:

	As of December 31, 2014				As of December 31, 2013
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
Collateral payable held for derivative investments (1)	$	1,577	$	1,577	$	264	$	264
Securities pledged under securities lending agreements (2)		204		196		184		178
Securities pledged under repurchase agreements (3)		605		631		530		553
Securities pledged for Term Asset-Backed Securities
Loan Facility (“TALF”) (4)		-		-		36		49
Investments pledged for Federal Home Loan Bank of
Indianapolis (“FHLBI”) (5)		1,925		3,151		1,851		3,127
Total payables for collateral on investments	$	4,311	$	5,555	$	2,865	$	4,171

(1)    We obtain collateral based upon contractual provisions with our counterparties.  These agreements take into consideration the counterparties’ credit rating as compared to ours, the fair value of the derivative investments and specified thresholds that if exceeded result in the receipt of cash that is typically invested in cash and invested cash.  See Note 7 for additional information.

(2)    Our pledged securities under securities lending agreements are included in fixed maturity AFS securities on our Consolidated Balance Sheets.  We generally obtain collateral in an amount equal to 102% and 105% of the fair value of the domestic and foreign securities, respectively.  We value collateral daily and obtain additional collateral when deemed appropriate.  The cash received in our securities lending program is typically invested in cash and invested cash or fixed maturity AFS securities.

(3)    Our pledged securities under repurchase agreements are included in fixed maturity AFS securities on our Consolidated Balance Sheets.  We obtain collateral in an amount equal to 95% of the fair value of the securities, and our agreements with third parties contain contractual provisions to allow for additional collateral to be obtained when necessary.  The cash received in our repurchase program is typically invested in fixed maturity AFS securities.

(4)    Our pledged securities for TALF are included in fixed maturity AFS securities on our Consolidated Balance Sheets.  We obtain collateral in an amount that has typically averaged 90% of the fair value of the TALF securities.  The cash received in these transactions is invested in fixed maturity AFS securities.

(5)    Our pledged investments for FHLBI are included in fixed maturity AFS securities and mortgage loans on real estate on our Consolidated Balance Sheets.  The collateral requirements are generally 105% to 115% of the fair value for fixed maturity AFS securities and 155% to 175% of the fair value for mortgage loans on real estate.  The cash received in these transactions is primarily invested in cash and invested cash or fixed maturity AFS securities.

Increase (decrease) in payables for collateral on investments (in millions) consisted of the following:

	For the Years Ended December 31,
	2014			2013			2012
Collateral payable held for derivative investments	$	1,313		$	(2,243	)	$	(487	)
Securities pledged under securities lending agreements		20			(13	)		(3	)
Securities pledged under repurchase agreements		75			250			-
Securities pledged for TALF		(36	)		(1	)		(136	)
Investments pledged for FHLBI		74			751			1,000
Total increase (decrease) in payables for collateral on investments	$	1,446		$	(1,256	)	$	374

Investment Commitments

As of December 31, 2014, our investment commitments were $1.4 billion, which included $615 million of LPs, $388 million of private placement securities and $372 million of mortgage loans on real estate.

Concentrations of Financial Instruments

As of December 31, 2014 and 2013, our most significant investments in one issuer were our investments in securities issued by the Federal Home Loan Mortgage Corporation with a fair value of $2.1 billion and $2.5 billion, respectively, or 2% and 3% of our invested assets portfolio, respectively, and our investments in securities issued by Fannie Mae with a fair value of $1.3 billion and $1.7 billion, respectively, or 1% and 2%, respectively, of our invested assets portfolio.  These investments are included in corporate bonds in the tables above.

As of December 31, 2014 and 2013, our most significant investments in one industry were our investment securities in the utilities industry with a fair value of $12.4 billion and $10.9 billion, respectively, or 12% of our invested assets portfolio, and our investment

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securities in the consumer non-cyclical industry with a fair value of $11.3 billion and $10.7 billion, respectively, or 11% of our invested assets portfolio. 

7.  Derivative Instruments

We maintain an overall risk management strategy that incorporates the use of derivative instruments to minimize significant unplanned fluctuations in earnings that are caused by interest rate risk, foreign currency exchange risk, equity market risk, default risk, basis risk and credit risk.  We assess these risks by continually identifying and monitoring changes in our exposures that may adversely affect expected future cash flows and by evaluating hedging opportunities.

Derivative activities are monitored by various management committees.  The committees are responsible for overseeing the implementation of various hedging strategies that are developed through the analysis of financial simulation models and other internal and industry sources.  The resulting hedging strategies are incorporated into our overall risk management strategies.    

See Note 1 for a detailed discussion of the accounting treatment for derivative instruments.  See Note 22 for additional disclosures related to the fair value of our derivative instruments and Note 5 for derivative instruments related to our consolidated VIEs.

Interest Rate Contracts

We use derivative instruments as part of our interest rate risk management strategy.  These instruments are economic hedges unless otherwise noted and include:

Consumer Price Index Swaps

We use consumer price index swaps to hedge the liability exposure on certain options in fixed annuity products.  Consumer price index swaps are contracts entered into at no cost and whose payoff is the difference between the consumer price index inflation rate and the fixed-rate determined as of inception.

Forward-Starting Interest Rate Swaps

We use forward-starting interest rate swaps designated and qualifying as cash flow hedges to hedge our exposure to interest rate fluctuations related to the forecasted purchases of certain assets. 

Interest Rate Cap Corridors

We use interest rate cap corridors to provide a level of protection from the effect of rising interest rates for certain life insurance products and annuity contracts.  Interest rate cap corridors involve purchasing an interest rate cap at a specific cap rate and selling an interest rate cap with a higher cap rate.  For each corridor, the amount of quarterly payments, if any, is determined by the rate at which the underlying index rate resets above the original capped rate.  The corridor limits the benefit the purchaser can receive as the related interest rate index rises above the higher capped rate.  There is no additional liability to us other than the purchase price associated with the interest rate cap corridor.

Interest Rate Futures

We use interest rate futures contracts to hedge the liability exposure on certain options in variable annuity products.  These futures contracts require payment between our counterparty and us on a daily basis for changes in the futures index price.

Interest Rate Swap Agreements

We use interest rate swap agreements to hedge the liability exposure on certain options in variable annuity products.

We also use interest rate swap agreements designated and qualifying as cash flow hedges.  These instruments either hedge the interest rate risk of floating-rate bond coupon payments by replicating a fixed-rate bond, or hedge our exposure to fixed-rate bond coupon payments and the change in the underlying asset values as interest rates fluctuate. 

Reverse Treasury Locks

We use reverse treasury locks designated and qualifying as cash flow hedges to hedge the interest rate exposure related to the purchase of fixed-rate securities or the anticipated future cash flows of floating-rate fixed maturity securities due to changes in interest rates.  These derivatives are primarily structured to hedge interest rate risk inherent in the assumptions used to price certain liabilities. 

Foreign Currency Contracts

We use derivative instruments as part of our foreign currency risk management strategy.  These instruments are economic hedges unless otherwise noted and include: 

Currency Futures

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We use currency futures to hedge foreign exchange risk associated with certain options in variable annuity products.  Currency futures exchange one currency for another at a specified date in the future at a specified exchange rate. 

Foreign Currency Swaps

We use foreign currency swaps designated and qualifying as cash flow hedges to hedge some of the foreign exchange risk of investments in fixed maturity securities denominated in foreign currencies.  A foreign currency swap is a contractual agreement to exchange the currencies of two different countries at a specified rate of exchange in the future. 

Equity Market Contracts

We use derivative instruments as part of our equity market risk management strategy that are economic hedges and include: 

Call Options Based on the S&P 500 Index®

We issue indexed annuity contracts that permit the holder to elect an interest rate return or an equity market component, where interest credited to the contracts is linked to the performance of the S&P 500 Index® (“S&P 500”).  Contract holders may elect to rebalance index options at renewal dates, either annually or biannually.  As of each renewal date, we have the opportunity to re-price the indexed component by establishing participation rates, caps, spreads and specified rates, subject to contractual guarantees.  We purchase call options that are highly correlated to the portfolio allocation decisions of our contract holders, such that we are economically hedged with respect to equity returns for the current reset period. 

Equity Futures

We use equity futures contracts to hedge the liability exposure on certain options in variable annuity products.  These futures contracts require payment between our counterparty and us on a daily basis for changes in the futures index price.

Put Options

We use put options to hedge the liability exposure on certain options in variable annuity products.  Put options are contracts that require counterparties to pay us at a specified future date the amount, if any, by which a specified equity index is less than the strike rate stated in the agreement, applied to a notional amount.

Total Return Swaps

We use total return swaps to hedge the liability exposure on certain options in variable annuity products.  We receive the total return on a portfolio of indexes and pay a floating-rate of interest.

In addition, we use total return swaps to hedge a portion of the liability related to our deferred compensation plans.  We receive the total return on a portfolio of indexes and pay a floating-rate of interest.

Variance Swaps

We use variance swaps to hedge the liability exposure on certain options in variable annuity products.  Variance swaps are contracts entered into at no cost and whose payoff is the difference between the realized variance rate of an underlying index and the fixed variance rate determined as of inception.

Credit Contracts

We use derivative instruments as part of our credit risk management strategy that are economic hedges and include: 

Credit Default Swaps – Selling Protection

We sell credit default swaps to offer credit protection to contract holders and investors.  The credit default swaps hedge the contract holders and investors against a drop in bond prices due to credit concerns of certain bond issuers.  A credit default swap allows the investor to put the bond back to us at par upon a default event by the bond issuer.  A default event is defined as bankruptcy, failure to pay, obligation acceleration or restructuring. 

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Embedded Derivatives

We have embedded derivatives that include:

GLB Reserves Embedded Derivatives

We use a hedging strategy designed to mitigate the risk and income statement volatility caused by changes in the equity markets, interest rates and volatility associated with GLBs offered in our variable annuity products, including products with GWB and GIB features.  The hedging strategy is designed such that changes in the value of the hedge contracts due to changes in equity markets, interest rates and implied volatilities move in the opposite direction of changes in embedded derivative GLB reserves caused by those same factors.We rebalance our hedge positions based upon changes in these factors as needed.  While we actively manage our hedge positions, these hedge positions may not be totally effective in offsetting changes in the embedded derivative reserve due to, among other things, differences in timing between when a market exposure changes and corresponding changes to the hedge positions, extreme swings in the equity markets and interest rates, market volatility, contract holder behavior, divergence between the performance of the underlying funds and the hedging indices, divergence between the actual and expected performance of the hedge instruments and our ability to purchase hedging instruments at prices consistent with our desired risk and return trade-off.  However, the hedging results do not impact LNL due to a funds withheld agreement with LNBAR, which causes the financial impact of the derivatives, as well as the cash flow activity, to be reflected on LNBAR.

Certain features of these guarantees have elements of both insurance benefits accounted for under the Financial Services – Insurance – Claim Costs and Liabilities for Future Policy Benefits Subtopic of the FASB ASC (“benefit reserves”) and embedded derivatives accounted for under the Derivatives and Hedging and the Fair Value Measurements and Disclosures Topics of the FASB ASC (“embedded derivative reserves”).We calculate the value of the embedded derivative reserve and the benefit reserve based on the specific characteristics of each GLB feature.

Indexed Annuity and Indexed Universal Life Contracts Embedded Derivatives

We distribute indexed annuity and indexed universal life (“IUL”) contracts that permit the holder to elect an interest rate return or an equity market component, where interest credited to the contracts is linked to the performance of the S&P 500.  Contract holders may elect to rebalance index options at renewal dates, either annually or biannually.  As of each renewal date, we have the opportunity to re-price the indexed component by establishing participation rates, caps, spreads and specified rates, subject to contractual guarantees.  We purchase S&P 500 call options that are highly correlated to the portfolio allocation decisions of our contract holders, such that we are economically hedged with respect to equity returns for the current reset period.

Reinsurance Related Embedded Derivatives

We have certain Modco arrangements and CFW reinsurance arrangements with embedded derivatives related to the withheld assets of the related funds.  These derivatives are considered total return swaps with contractual returns that are attributable to various assets and liabilities associated with these reinsurance arrangements.

We are involved in an inter-company reinsurance agreement where we cede to LNBAR the risk under certain UL contracts for no lapse benefit guarantees.  If our contract holders’ account value is not sufficient to pay the cost of insurance charges required to keep the policy inforce, and the contract holder has made required deposits, LNBAR will reimburse us for the charges.

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We have derivative instruments with off-balance-sheet risks whose notional or contract amounts exceed the related credit exposure.  Outstanding derivative instruments with off-balance-sheet risks (in millions) were as follows:

	As of December 31, 2014						As of December 31, 2013
	Notional		Fair Value				Notional		Fair Value
	Amounts		Asset		Liability		Amounts		Asset		Liability
Qualifying Hedges
Cash flow hedges:
Interest rate contracts (1)	$	2,091	$	369	$	198	$	2,876	$	160	$	149
Foreign currency contracts (1)		642		46		21		615		32		46
Total cash flow hedges		2,733		415		219		3,491		192		195
Non-Qualifying Hedges
Interest rate contracts (1)		54,401		989		342		44,620		214		744
Foreign currency contracts (1)		68		-		-		102		-		-
Equity market contracts (1)		24,144		886		243		19,804		956		192
Credit contracts (2)		126		-		3		126		-		2
Embedded derivatives:
GLB reserves (3)		-		174		-		-		1,244		-
GLB reserves (2)		-		-		174		-		-		1,244
Reinsurance related (4)		-		-		109		-		159		-
Indexed annuity and IUL contracts (5)		-		-		1,170		-		-		1,048
Total derivative instruments	$	81,472	$	2,464	$	2,260	$	68,143	$	2,765	$	3,425

⁽¹⁾ Reported in derivative investments and other liabilities on our Consolidated Balance Sheets.

⁽²⁾ Reported in other liabilities on our Consolidated Balance Sheets.

⁽³⁾ Reported in other assets on our Consolidated Balance Sheets.

⁽⁴⁾ Reported in reinsurance related embedded derivatives on our Consolidated Balance Sheets.

⁽⁵⁾ Reported in future contract benefits on our Consolidated Balance Sheets.

The maturity of the notional amounts of derivative instruments (in millions) was as follows:

	Remaining Life as of December 31, 2014
	Less Than		1 – 5		6 – 10		11 – 30		Over 30
	1 Year		Years		Years		Years		Years		Total
Interest rate contracts (1)	$	2,569	$	30,777	$	11,676	$	11,470	$	-	$	56,492
Foreign currency contracts (2)		98		126		276		210		-		710
Equity market contracts		13,799		5,746		4,439		20		140		24,144
Credit contracts		-		126		-		-		-		126
Total derivative instruments
with notional amounts	$	16,466	$	36,775	$	16,391	$	11,700	$	140	$	81,472

⁽¹⁾ As of December 31, 2014, the latest maturity date for which we were hedging our exposure to the variability in future cash flows for these instruments was June 2042.

⁽²⁾ As of December 31, 2014, the latest maturity date for which we were hedging our exposure to the variability in future cash flows for these instruments was December 2029.

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The change in our unrealized gain (loss) on derivative instruments in AOCI (in millions) was as follows:

	For the Years Ended December 31,
	2014			2013			2012
Unrealized Gain (Loss) on Derivative Instruments
Balance as of beginning-of-year	$	5		$	101		$	132
Other comprehensive income (loss):
Unrealized holding gains (losses) arising during the year:
Cash flow hedges:
Interest rate contracts		78			(126	)		(41	)
Foreign currency contracts		36			(24	)		(22	)
Change in foreign currency exchange rate adjustment		50			(19	)		(12	)
Change in DAC, VOBA, DSI and DFEL		2			5			14
Income tax benefit (expense)		(58	)		57			20
Less:
Reclassification adjustment for gains (losses) included in net income (loss):
Cash flow hedges:
Interest rate contracts (1)		(22	)		(21	)		(21	)
Foreign currency contracts (1)		-			3			3
Associated amortization of DAC, VOBA, DSI and DFEL		1			1			3
Income tax benefit (expense)		7			6			5
Balance as of end-of-year	$	127		$	5		$	101

⁽¹⁾ The OCI offset is reported within net investment income on our Consolidated Statements of Comprehensive Income (Loss).

The gains (losses) on derivative instruments (in millions) recorded within income (loss) from continuing operations on our Consolidated Statements of Comprehensive Income (Loss) were as follows:

	For the Years Ended December 31,
	2014			2013			2012
Qualifying Hedges
Cash flow hedges:
Interest rate contracts (1)	$	(22	)	$	(21	)	$	(22	)
Foreign currency contracts (1)		-			3			3
Total cash flow hedges		(22	)		(18	)		(19	)
Non-Qualifying Hedges
Interest rate contracts (2)		1,304			(998	)		26
Foreign currency contracts (2)		(8	)		(4	)		(8	)
Equity market contracts (2)		(215	)		(1,306	)		(1,014	)
Equity market contracts (3)		11			37			(362	)
Credit contracts (2)		(1	)		9			2
Embedded derivatives:
Other assets – GLB reserves (2)		1,391			(2,153	)		-
Other liabilities – GLB reserves (2)		(1,391	)		2,153			1,308
Reinsurance related (2)		(242	)		352			(50	)
Indexed annuity and IUL contracts (2)		(210	)		(356	)		(136	)
Total derivative instruments	$	617		$	(2,284	)	$	(253	)

⁽¹⁾ Reported in net investment income on our Consolidated Statements of Comprehensive Income (Loss).

⁽²⁾ Reported in realized gain (loss) on our Consolidated Statements of Comprehensive Income (Loss).

⁽³⁾ Reported in commissions and other expenses on our Consolidated Statements of Comprehensive Income (Loss).

Gains (losses) (in millions) on derivative instruments designated and qualifying as cash flow hedges were as follows:

	For the Years Ended December 31,
	2014			2013			2012
Gain (loss) recognized as a component of OCI with
the offset to net investment income	$	(22	)	$	(18	)	$	(18	)

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As of December 31, 2014, $19 million of the deferred net losses on derivative instruments in AOCI were expected to be reclassified to earnings during the next 12 months.  This reclassification would be due primarily to interest rate variances related to our interest rate swap agreements.

For the years ended December 31, 2014 and 2013, there were no material reclassifications to earnings due to hedged firm commitments no longer deemed probable or due to hedged forecasted transactions that had not occurred by the end of the originally specified time period.

Information related to our open credit default swap liabilities for which we are the seller (dollars in millions) was as follows:

As of December 31, 2014
				Credit
	Reason	Nature		Rating of	Number				Maximum
	for	of	Underlying		of	Fair			Potential
Maturity	Entering	Recourse	Obligation (1)		Instruments	Value (2)			Payout
12/20/2016 (3)	(4)	(5)		BBB-	3	$	(2	)	$	68
3/20/2017 (3)	(4)	(5)		BBB-	3		(1	)		58
					6	$	(3	)	$	126

As of December 31, 2013
				Credit
	Reason	Nature		Rating of	Number				Maximum
	for	of	Underlying		of	Fair			Potential
Maturity	Entering	Recourse	Obligation (1)		Instruments	Value (2)			Payout
12/20/2016 (3)	(4)	(5)		BBB-	3	$	(1	)	$	68
3/20/2017 (3)	(4)	(5)		BBB-	3		(1	)		58
					6	$	(2	)	$	126

⁽¹⁾ Represents average credit ratings based on the midpoint of the applicable ratings among Moody’s, S&P and Fitch Ratings, as scaled to the corresponding S&P ratings.

⁽²⁾ Broker quotes are used to determine the market value of our credit default swaps.

⁽³⁾ These credit default swaps were sold to a counterparty of the consolidated VIEs discussed in Note 5.

⁽⁴⁾ Credit default swaps were entered into in order to generate income by providing default protection in return for a quarterly payment.

⁽⁵⁾ Sellers do not have the right to demand indemnification or compensation from third parties in case of a loss (payment) on the contract.

Details underlying the associated collateral of our open credit default swaps for which we are the seller if credit risk-related contingent features were triggered (in millions) were as follows:

	As of December 31,
	2014		2013
Maximum potential payout	$	126	$	126
Less:  Counterparty thresholds		-		-
Maximum collateral potentially required to post	$	126	$	126

Certain of our credit default swap agreements contain contractual provisions that allow for the netting of collateral with our counterparties related to all of our collateralized financing transactions that we have outstanding.  If these netting agreements were not in place, we would have been required to post $3 million as of December 31, 2014, after considering the fair values of the associated investments and counterparties’ credit ratings as compared to ours and specified thresholds that once exceeded result in the payment of cash. 

Credit Risk

We are exposed to credit loss in the event of non-performance by our counterparties on various derivative contracts and reflect assumptions regarding the credit or NPR.  The NPR is based upon assumptions for each counterparty’s credit spread over the estimated weighted average life of the counterparty exposure less collateral held. As of December 31, 2014, the NPR adjustment was less than $1 million.  The credit risk associated with such agreements is minimized by entering into such agreements with financial institutions with long-standing, superior performance records.  Additionally, we maintain a policy of requiring derivative contracts to be governed by an International Swaps and Derivatives Association (“ISDA”) Master Agreement.  We are required to maintain minimum ratings as a matter of routine practice in negotiating ISDA agreements.  Under some ISDA agreements, our insurance subsidiaries have agreed to maintain certain financial strength or claims-paying ratings.  A downgrade below these levels could result in termination of derivative contracts, at which time any amounts payable by us would be dependent on the market value of the underlying derivative contracts.  In certain transactions, we and the counterparty have entered into a credit support annex requiring either party to post collateral when net exposures

40

exceed pre-determined thresholds.  These thresholds vary by counterparty and credit rating.  The amount of such exposure is essentially the net replacement cost or market value less collateral held for such agreements with each counterparty if the net market value is in our favor.  As of December 31, 2014, our exposure was $41 million.

The amounts recognized (in millions) by S&P credit rating of counterparty, for which we had the right to reclaim cash collateral or were obligated to return cash collateral, were as follows:

	As of December 31, 2014					As of December 31, 2013
	Collateral		Collateral			Collateral		Collateral
	Posted by		Posted by			Posted by		Posted by
S&P	Counter-		LNL			Counter-		LNL
Credit	Party		(Held by			Party		(Held by
Rating of	(Held by		Counter-			(Held by		Counter-
Counterparty	LNL)		Party)			LNL)		Party)
AA-	$	64	$	-		$	34	$	(10	)
A+		48		-			19		-
A		1,047		(85	)		228		(183	)
A-		252		-			207		(123	)
BBB+		27		-			79		-
	$	1,438	$	(85	)	$	567	$	(316	)

Balance Sheet Offsetting

Information related to the effects of offsetting on our Consolidated Balance Sheets (in millions) was as follows:

		As of December 31, 2014
					Embedded
	Derivative				Derivative
	Instruments				Instruments			Total
Financial Assets
Gross amount of recognized assets		$	2,240			$	174	$	2,414
Gross amounts offset			(477	)			-		(477	)
Net amount of assets			1,763				174		1,937
Gross amounts not offset:
Cash collateral			(1,438	)			-		(1,438	)
Net amount		$	325			$	174	$	499
Financial Liabilities
Gross amount of recognized liabilities		$	330			$	1,453	$	1,783
Gross amounts offset			(50	)			-		(50	)
Net amount of liabilities			280				1,453		1,733
Gross amounts not offset:
Cash collateral			(85	)			-		(85	)
Net amount		$	195			$	1,453	$	1,648

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		As of December 31, 2013
					Embedded
	Derivative				Derivative
	Instruments				Instruments			Total
Financial Assets
Gross amount of recognized assets		$	1,170			$	1,403	$	2,573
Gross amounts offset			(553	)			-		(553	)
Net amount of assets			617				1,403		2,020
Gross amounts not offset:
Cash collateral			(251	)			-		(251	)
Net amount		$	366			$	1,403	$	1,769
Financial Liabilities
Gross amount of recognized liabilities		$	580			$	2,292	$	2,872
Gross amounts offset			(192	)			-		(192	)
Net amount of liabilities			388				2,292		2,680
Gross amounts not offset:
Cash collateral			-				-		-
Net amount		$	388			$	2,292	$	2,680

8.  Federal Income Taxes

The federal income tax expense (benefit) on continuing operations (in millions) was as follows:

	For the Years Ended December 31,
	2014		2013		2012
Current	$	104	$	211	$	(320	)
Deferred		116		220		664
Federal income tax expense (benefit)	$	220	$	431	$	344

A reconciliation of the effective tax rate differences (in millions) was as follows:

	For the Years Ended December 31,
	2014			2013			2012
Tax rate times pre-tax income	$	425		$	616		$	527
Effect of:
Separate account dividend
received deduction		(174	)		(145	)		(128	)
Tax credits		(24	)		(35	)		(34	)
Goodwill		-			-			(2	)
Change in uncertain tax positions		(12	)		7			(88	)
Other items		5			(12	)		69
Federal income tax expense (benefit)	$	220		$	431		$	344
Effective tax rate		18%			24%			23%

The effective tax rate is the ratio of tax expense over pre-tax income (loss).  The benefit for tax credits is attributable to foreign tax credits and low income housing tax credits.

The federal income tax asset (liability) (in millions) was as follows:

	As of December 31,
	2014			2013
Current	$	49		$	(8	)
Deferred		(3,306	)		(2,278	)
Total federal income tax asset (liability)	$	(3,257	)	$	(2,286	)

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Significant components of our deferred tax assets and liabilities (in millions) were as follows:

	As of December 31,
	2014			2013
Deferred Tax Assets
Future contract benefits and other contract holder funds	$	544		$	963
Deferred gain on business sold through reinsurance		(7	)		21
Reinsurance related embedded derivative asset		177			17
Investments		317			274
Compensation and benefit plans		198			177
Net operating loss		-			4
Net capital loss		3			-
Tax credits		-			184
VIE		45			4
Other		62			32
Total deferred tax assets		1,339			1,676
Deferred Tax Liabilities
DAC		1,731			1,954
VOBA		(186	)		409
Net unrealized gain on AFS securities		3,100			1,273
Net unrealized gain on trading securities		100			86
Intangibles		22			151
Other		(122	)		81
Total deferred tax liabilities		4,645			3,954
Net deferred tax asset (liability)	$	(3,306	)	$	(2,278	)

Although realization is not assured, management believes that it is more likely than not that the Company will realize the benefits of its deferred tax assets, and, accordingly, no valuation allowance has been recorded.

As of December 31, 2014 and 2013, $10 million and $64 million, respectively, of our unrecognized tax benefits presented below, if recognized, would have affected our income tax expense and our effective tax rate.  The Company is not aware of any events for which it is likely that unrecognized tax benefits will significantly increase or decrease within the next year.  A reconciliation of the unrecognized tax benefits (in millions) was as follows:

	For the Years Ended
	December 31,
	2014			2013
Balance as of beginning-of-year	$	75		$	67
Increases for prior year tax positions		35			-
Decreases for prior year tax positions		(23	)		-
Increases for current year tax positions		-			8
Decreases for settlements with taxing authorities		(77	)		-
Balance as of end-of-year	$	10		$	75

We recognize interest and penalties accrued, if any, related to unrecognized tax benefits as a component of tax expense.  For the years ended December 31, 2014, 2013 and 2012, we recognized interest and penalty expense (benefit) related to uncertain tax positions of $(12) million, $2 million and $(78) million, respectively.  We had accrued interest and penalty expense related to the unrecognized tax benefits of $1 million and $13 million as of December 31, 2014 and 2013, respectively.

The Company is subject to examination by U.S. federal, state, local and non-U.S. income authorities.  The Company is currently under examination by the Internal Revenue Service (“IRS”) for tax years 2009 through 2011.  The Company anticipates closing the current exam cycle in 2015.  Furthermore, LNC has filed a protest with the IRS Appeals division for tax years 2005 through 2008.  These years remain open as the Company works with Appeals to finalize the tax computations in these years.  All protested items have been resolved and we anticipate reaching a final settlement in 2015.  The Company does not expect any adjustments that would be material to its consolidated results of operations or its financial condition.

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9.  DAC, VOBA, DSI and DFEL

Changes in DAC (in millions) were as follows:

	For the Years Ended December 31,
	2014			2013			2012
Balance as of beginning-of-year	$	7,690		$	6,030		$	5,887
Business acquired (sold) through reinsurance		(20	)		(67	)		(126	)
Deferrals		1,525			1,559			1,294
Amortization, net of interest:
Amortization, excluding unlocking, net of interest		(956	)		(795	)		(760	)
Unlocking		18			42			(71	)
Adjustment related to realized (gains) losses		(58	)		(49	)		(49	)
Adjustment related to unrealized (gains) losses		(672	)		970			(145	)
Balance as of end-of-year	$	7,527		$	7,690		$	6,030

Changes in VOBA (in millions) were as follows:

	For the Years Ended December 31,
	2014			2013			2012
Balance as of beginning-of-year	$	1,169		$	702		$	1,055
Business acquired (sold) through reinsurance		2			3			(20	)
Deferrals		9			13			12
Amortization:
Amortization, excluding unlocking		(185	)		(179	)		(225	)
Unlocking		(21	)		(52	)		(23	)
Accretion of interest (1)		64			68			73
Adjustment related to realized (gains) losses		(1	)		(1	)		9
Adjustment related to unrealized (gains) losses		(409	)		615			(179	)
Balance as of end-of-year	$	628		$	1,169		$	702

⁽¹⁾ The interest accrual rates utilized to calculate the accretion of interest ranged from 4.02% to 7.05%.

Estimated future amortization of VOBA, net of interest (in millions), as of December 31, 2014, was as follows:

2015	$	49
2016		46
2017		43
2018		41
2019		41

Changes in DSI (in millions) were as follows:

	For the Years Ended December 31,
	2014			2013			2012
Balance as of beginning-of-year	$	310		$	296		$	309
Deferrals		13			10			39
Amortization, net of interest:
Amortization, excluding unlocking, net of interest		(37	)		(41	)		(43	)
Unlocking		2			8			14
Adjustment related to realized (gains) losses		(3	)		(3	)		(5	)
Adjustment related to unrealized (gains) losses		-			40			(18	)
Balance as of end-of-year	$	285		$	310		$	296

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Changes in DFEL (in millions) were as follows:

	For the Years Ended December 31,
	2014			2013			2012
Balance as of beginning-of-year	$	1,899		$	1,342		$	1,360
Business acquired (sold) through reinsurance		(2	)		(7	)		(44	)
Deferrals		400			319			348
Amortization, net of interest:
Amortization, excluding unlocking, net of interest		(326	)		(210	)		(206	)
Unlocking		(50	)		(14	)		(69	)
Adjustment related to realized (gains) losses		(8	)		(8	)		(5	)
Adjustment related to unrealized (gains) losses		(548	)		477			(42	)
Balance as of end-of-year	$	1,365		$	1,899		$	1,342

10.  Reinsurance

The following summarizes reinsurance amounts (in millions) recorded on our Consolidated Statements of Comprehensive Income (Loss), excluding amounts attributable to the indemnity reinsurance transaction with Swiss Re:

	For the Years Ended December 31,
	2014			2013			2012
Direct insurance premiums and fee income	$	8,880		$	7,833		$	7,185
Reinsurance assumed		16			19			18
Reinsurance ceded		(1,917	)		(1,505	)		(1,287	)
Total insurance premiums and fee income	$	6,979		$	6,347		$	5,916
Direct insurance benefits	$	5,970		$	5,346		$	4,717
Reinsurance recoveries netted against benefits		(1,616	)		(1,733	)		(1,778	)
Total benefits	$	4,354		$	3,613		$	2,939

We cede insurance to other companies.  The portion of our life insurance and annuity risks exceeding our retention limit is reinsured with other insurers.  We seek reinsurance coverage to limit our exposure to mortality losses and to enhance our capital management. As discussed in Note 25, a portion of this reinsurance activity is with affiliated companies.

Under our reinsurance program, we reinsure approximately 25% of the mortality risk on newly issued life insurance contracts.  Our policy for this program is to retain no more than $20 million on a single insured life.  Portions of our deferred annuity business have been reinsured on a Modco basis with other companies to limit our exposure to interest rate risks.  As of December 31, 2014, the reserves associated with these reinsurance arrangements totaled $676 million.

Our amounts recoverable from reinsurers represent receivables from and reserves ceded to reinsurers.  The amounts recoverable from reinsurers were $6.9 billion and $7.1 billion as of December 31, 2014 and 2013, respectively.  We focus on obtaining reinsurance from a diverse group of reinsurers, and we monitor concentration as well as financial strength ratings of our reinsurers.  Our reinsurance operations were acquired by Swiss Re in December 2001 through a series of indemnity reinsurance transactions.  As such, Swiss Re reinsured certain of our liabilities and obligations under the indemnity reinsurance agreements and thereby represents our largest reinsurance exposure.  As we are not relieved of our liability to the ceding companies for this business, the liabilities and obligations associated with the reinsured policies remain on our Consolidated Balance Sheets with a corresponding reinsurance receivable from Swiss Re, which totaled $3.1 billion and $3.2 billion as of December 31, 2014 and 2013, respectively.  Swiss Re has funded a trust, with a balance of $2.6 billion as of December 31, 2014, to support this business.  In addition to various remedies that we would have in the event of a default by Swiss Re, we continue to hold assets in support of certain of the transferred reserves.  These assets consist of those reported as trading securities and certain mortgage loans.  Our liabilities for funds withheld and embedded derivatives as of December 31, 2014, included $1.3 billion and $128 million, respectively, related to the business sold to Swiss Re.

We recorded the gain related to the indemnity reinsurance transactions with Swiss Re as a deferred gain on business sold through reinsurance on our Consolidated Balance Sheets.  The deferred gain is being amortized into income at the rate that earnings on the reinsured business are expected to emerge, over a period of 15 years from the date of sale.  We amortized $48 million, after-tax, of deferred gain on business sold through reinsurance during each of 2014, 2013 and 2012.

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11.  Goodwill and Specifically Identifiable Intangible Assets

The changes in the carrying amount of goodwill (in millions) by reportable segment were as follows:

		For the Year Ended December 31, 2014
	Acquisition			Cumulative
	Balance			Impairment
	as of			as of						Balance
	Beginning-			Beginning-						as of End-
		of-Year			of-Year			Impairment		of-Year
Annuities		$	1,040		$	(600	)	$	-	$	440
Retirement Plan Services			20			-			-		20
Life Insurance			2,186			(647	)		-		1,539
Group Protection			274			-			-		274
Other Operations – Media			176			(176	)		-		-
Total goodwill		$	3,696		$	(1,423	)	$	-	$	2,273

		For the Year Ended December 31, 2013
	Acquisition			Cumulative
	Balance			Impairment
	as of			as of						Balance
	Beginning-			Beginning-						as of End-
		of-Year			of-Year			Impairment		of-Year
Annuities		$	1,040		$	(600	)	$	-	$	440
Retirement Plan Services			20			-			-		20
Life Insurance			2,186			(647	)		-		1,539
Group Protection			274			-			-		274
Other Operations – Media			176			(176	)		-		-
Total goodwill		$	3,696		$	(1,423	)	$	-	$	2,273

We perform a Step 1 goodwill impairment analysis on all of our reporting units at least annually on October 1.  To determine the implied fair value for our reporting units, we utilize primarily a discounted cash flow valuation technique (“income approach”), although limited available market data is also considered.  In determining the estimated fair value, we consider discounted cash flow calculations, the level of LNC’s share price and assumptions that market participants would make in valuing the reportingunit.  This analysis requires us to make judgments about revenues, earnings projections, capital market assumptions and discount rates.

As of October 1, 2014 and 2013, our Annuities and Retirement Plan Services reporting units passed the Step 1 analysis.  Given the Step 1 results, we performed a Step 2 analysis for our Life Insurance and Group Protection reporting units.  Based upon our Step 2 analysis for Life Insurance and Group Protection, we determined that there was no impairment due to the implied fair value of goodwill being in excess of the carrying value of goodwill.

As of October 1, 2012,  our Annuities, Retirement Plan Services and Group Protection reporting units passed the Step 1 analysis, and although the carrying value of the net assets for Group Protection was within the estimated fair value range, we deemed it prudent to validate the carrying value of goodwill through a Step 2 analysis.  Given the Step 1 results, we also performed a Step 2 analysis for our Life Insurance reporting unit.  Based upon our Step 2 analysis for Life Insurance and Group Protection, we determined that there was no impairment due to the implied fair value of goodwill being in excess of the carrying value of goodwill.

46

The gross carrying amounts and accumulated amortization (in millions) for each major specifically identifiable intangible asset class by reportable segment were as follows:

	As of December 31, 2014					As of December 31, 2013
	Gross					Gross
	Carrying		Accumulated			Carrying		Accumulated
	Amount		Amortization			Amount		Amortization
Life Insurance:
Sales force	$	100		$	35	$	100		$	31
Retirement Plan Services:
Mutual fund contract rights (1)		5			-		5			-
Other Operations:
FCC licenses (1) (2)		-			-		131			-
Other (2)		-			-		4			3
Total	$	105		$	35	$	240		$	34

⁽¹⁾ No amortization recorded as the intangible asset has indefinite life.

⁽²⁾ As of December 31, 2014, LFM’s intangible assets were reclassified as other assets held-for-sale.  For more information, see Note 3.

Future estimated amortization of specifically identifiable intangible assets (in millions) as of December 31, 2014, was as follows:

2015	$	4
2016		4
2017		4
2018		4
2019		4
Thereafter		45

12.  Guaranteed Benefit Features

Information on the GDBfeatures outstanding (dollars in millions) was as follows:

	As of December 31,
	2014 (1)		2013 (1)
Return of Net Deposits
Total account value	$	85,917	$	79,391
Net amount at risk (2)		183		141
Average attained age of contract holders		62 years		61 years
Minimum Return
Total account value	$	135	$	151
Net amount at risk (2)		25		27
Average attained age of contract holders		74 years		73 years
Guaranteed minimum return		5%		5%
Anniversary Contract Value
Total account value	$	26,021	$	25,958
Net amount at risk (2)		597		570
Average attained age of contract holders		68 years		68 years

(1)    Our variable contracts with guarantees may offer more than one type of guarantee in each contract; therefore, the amounts listed are not mutually exclusive.

(2)  Represents the amount of death benefit in excess of the account balance that is subject to market volatility.

The determination of GDB liabilities is based on models that involve a range of scenarios and assumptions, including those regarding expected market rates of return and volatility, contract surrender rates and mortality experience. 

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The following summarizes the balances of and changes in the liabilities for GDBs (in millions), which were recorded in future contract benefits on our Consolidated Balance Sheets:

	For the Years Ended December 31,
	2014			2013			2012
Balance as of beginning-of-year	$	73		$	104		$	84
Changes in reserves		34			(10	)		64
Benefits paid		(18	)		(21	)		(44	)
Balance as of end-of-year	$	89		$	73		$	104

Variable Annuity Contracts

Account balances of variable annuity contracts with guarantees (in millions) were invested in separate account investment options as follows:

	As of December 31,
	2014		2013
Asset Type
Domestic equity	$	47,930	$	45,590
International equity		18,103		17,707
Bonds		25,742		23,648
Money market		12,173		10,518
Total	$	103,948	$	97,463
Percent of total variable annuity
separate account values		99%		99%

Secondary Guarantee Products

Future contract benefits and other contract holder funds include reserves for our secondary guarantee products sold through our Life Insurance segment.  These UL and VUL products with secondary guarantees represented 35% of total life insurance in-force reserves as of December 31, 2014, and 39% of total sales for the year ended December 31, 2014.

13.  Short-Term and Long-Term Debt

Details underlying short-term and long-term debt (in millions) were as follows:

	As of December 31,
	2014		2013
Short-Term Debt
Short-term debt (1)	$	2	$	51
Long-Term Debt, Excluding Current Portion
1.40% note, due 2016	$	4	$	4
LIBOR + 3 bps loan, due 2017		250		250
Surplus notes due LNC:
LIBOR + 142 bps surplus note, due 2023		240		240
9.76% surplus note, due 2024		50		50
6.56% surplus note, due 2028		500		500
LIBOR + 111 bps surplus note, due 2028		71		71
LIBOR + 226 bps surplus note, due 2028		422		360
6.03% surplus note, due 2028		750		750
LIBOR + 100 bps surplus note, due 2037		375		375
Total surplus notes		2,408		2,346
Total long-term debt	$	2,662	$	2,600

(1)The short-term debt represents short-term notes payable to LNC.

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Future principal payments due on long-term debt (in millions) as of December 31, 2014, were as follows:

2015	$	-
2016		4
2017		250
2018		-
2019		-
Thereafter		2,408
Total	$	2,662

On September 10, 2013, we issued a note of $4 million to LNC.  This note calls for us to pay the principal amount of the note on or before September 10, 2016, and interest to be paid semiannually at an annual rate of 1.40%.

We have a $250 million floating-rate loan outstanding under our borrowing capacity with the FHLBI due June 20, 2017.

On June 28, 2013, we issued a surplus note of $240 million to LNC.  The note calls for us to pay the principal amount of the note on or before June 28, 2023, and interest to be paid quarterly at an annual rate of the London Interbank Offered Rate “LIBOR” + 142 bps.  Subject to approval by the Indiana Insurance Commissioner (the “Commissioner”), we have the right to repay the note in whole or in part prior to the maturity date, if our statutory capital surplus exceeds the sum of our surplus at closing plus any accrued but unpaid interest.

We issued a surplus note of $50 million to LNC in 1994.  The note calls for us to pay the principal amount of the note on or before September 30, 2024, and interest to be paid semiannually at an annual rate of 9.76%.  Subject to approval by the Commissioner, we have the right to repay the note on any March 31 or September 30.

We issued a surplus note of $500 million to LNC in 1998.  The note calls for us to pay the principal amount of the note on or before March 31, 2028, and interest to be paid quarterly at an annual rate of 6.56%.  Subject to approval by the Commissioner, LNC also has a right to redeem the note for immediate repayment in total or in part once per year on the anniversary date of the note.  Any payment of interest or repayment of principal may be paid only out of our statutory earnings, only if our statutory capital surplus exceeds our statutory capital as of the date of note issuance of $2.3 billion, and subject to approval by the Commissioner.

On October 1, 2013, we issued a surplus note of $71 million to LNC.  The note calls for us to pay the principal amount of the note on or before September 24, 2028, and interest to be paid quarterly at an annual rate of LIBOR + 111 bps.  Subject to approval by the Commissioner, we have the right to repay the note in whole or in part prior to the maturity date, if our statutory capital surplus exceeds the sum of our surplus at closing plus any accrued but unpaid interest.

On December 17, 2013, we issued a variable surplus note to a wholly-owned subsidiary of LNC with an initial outstanding principal amount of $287 million.  The outstanding principal amount as of December 31, 2014, was $422 million.  The note calls for us to pay the principal amount of the note on or before October 1, 2028, and interest to be paid quarterly at an annual rate of LIBOR + 226 bps.

We issued a surplus note of $750 million to LNC in 1998.  The note calls for us to pay the principal amount of the note on or before December 31, 2028, and interest to be paid quarterly at an annual rate of 6.03%.  Subject to approval by the Commissioner, LNC also has a right to redeem the note for immediate repayment in total or in part once per year on the anniversary date of the note.  Any payment of interest or repayment of principal may be paid only out of our statutory earnings, only if our statutory capital surplus exceeds our statutory capital surplus as of the date of note issuance of $2.4 billion, and subject to approval by the Commissioner.

On October 9, 2007, we issued a surplus note of $375 million that LNC has held effective December 31, 2008.  The note calls for us to pay the principal amount of the note on or before October 9, 2037, and interest to be paid quarterly at an annual rate of LIBOR + 100 bps.

14.  Contingencies and Commitments

Contingencies

Regulatory and Litigation Matters

Regulatory bodies, such as state insurance departments, the Securities and Exchange Commission, Financial Industry Regulatory Authority and other regulatory bodies regularly make inquiries and conduct examinations or investigations concerning our compliance with, among other things, insurance laws, securities laws, laws governing the activities of broker-dealers, registered investment advisors and unclaimed property laws. 

LNL and its subsidiaries are involved in various pending or threatened legal or regulatory proceedings, including purported class actions, arising from the conduct of business both in the ordinary course and otherwise.  In some of the matters, very large and/or indeterminate amounts, including punitive and treble damages, are sought.  Modern pleading practice in the U.S. permits considerable variation in the

49

assertion of monetary damages or other relief.  Jurisdictions may permit claimants not to specify the monetary damages sought or may permit claimants to state only that the amount sought is sufficient to invoke the jurisdiction of the trial court.  In addition, jurisdictions may permit plaintiffs to allege monetary damages in amounts well exceeding reasonably possible verdicts in the jurisdiction for similar matters.  This variability in pleadings, together with the actual experiences of LNL in litigating or resolving through settlement numerous claims over an extended period of time, demonstrates to management that the monetary relief which may be specified in a lawsuit or claim bears little relevance to its merits or disposition value.

Due to the unpredictable nature of litigation, the outcome of a litigation matter and the amount or range of potential loss at particular points in time is normally difficult to ascertain.  Uncertainties can include how fact finders will evaluate documentary evidence and the credibility and effectiveness of witness testimony, and how trial and appellate courts will apply the law in the context of the pleadings or evidence presented, whether by motion practice, or at trial or on appeal.  Disposition valuations are also subject to the uncertainty of how opposing parties and their counsel will themselves view the relevant evidence and applicable law.

We establish liabilities for litigation and regulatory loss contingencies when information related to the loss contingencies shows both that it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated.  It is possible that some matters could require us to pay damages or make other expenditures or establish accruals in amounts that could not be estimated as of December 31, 2014.  While the potential future charges could be material in the particular quarterly or annual periods in which they are recorded, based on information currently known by management, management does not believe any such charges are likely to have a material adverse effect on LNL’s financial condition.

For some matters, the Company is able to estimate a reasonably possible range of loss.  For such matters in which a loss is probable, an accrual has been made.  For such matters where a loss is believed to be reasonably possible, but not probable, no accrual has been made.  Accordingly, the estimate contained in this paragraph reflects two types of matters.  For some matters included within this estimate, an accrual has been made, but there is a reasonable possibility that an exposure exists in excess of the amount accrued.  In these cases, the estimate reflects the reasonably possible range of loss in excess of the accrued amount.  For other matters included within this estimation, no accrual has been made because a loss, while potentially estimable, is believed to be reasonably possible but not probable.  In these cases, the estimate reflects the reasonably possible loss or range of loss.  As of December 31, 2014, LNC, LNL’s parent company, disclosed in its Annual Report on Form 10-K filed with the SEC that it estimates the aggregate range of reasonably possible losses on a consolidated basis, including amounts in excess of amounts accrued for these matters as of such date, to be up to approximately $200million.

For other matters, we are not currently able to estimate the reasonably possible loss or range of loss.  We are often unable to estimate the possible loss or range of loss until developments in such matters have provided sufficient information to support an assessment of the range of possible loss, such as quantification of a damage demand from plaintiffs, discovery from other parties and investigation of factual allegations, rulings by the court on motions or appeals, analysis by experts and the progress of settlement negotiations.  On a quarterly and annual basis, we review relevant information with respect to litigation contingencies and update our accruals, disclosures and estimates of reasonably possible losses or ranges of loss based on such reviews.  

On June 13, 2009, a single named plaintiff filed a putative national class action in the Circuit Court of Allen County (“Court”), Indiana, captioned Peter S. Bezich v. LNL, No. 02C01-0906-PL73, asserting he was charged a cost of insurance fee that exceeded the applicable mortality charge, and that this fee breached the terms of the insurance contract.  We dispute the allegations and are vigorously defending this matter.  Plaintiff petitioned the Court to certify a class action, on behalf of all persons who purchased or owned the relevant insurance product between 1999 and 2009, alleging that:  (i) LNL breached the contract by including non-mortality factors in cost of insurance rates; (ii) LNL breached the contract when it charged administrative expenses in excess of set amount; and (iii) LNL breached the contract by failing to adjust cost of insurance rates to reflect improving mortality expectations.  On June 12, 2014, the Court issued an Order denying certification on all of the Plaintiff’s counts and claims except with respect to a single legal issue:  whether the contract was breached as alleged in Count III.  However, any damages arising from this alleged breach would have to be tried on an individual case-by-case basis.  The appellate court granted permission for our interlocutory appeal of the Court’s certification of the single issue class.  The plaintiff has cross-appealed and both appeals are pending.

On July 23, 2012, LNL was added as a noteholder defendant to a putative class action adversary proceeding captioned Lehman Brothers Special Financing, Inc. v. Bank of America, N.A. et al., Adv. Pro. No. 10-03547 (JMP) and instituted under In re Lehman Brothers Holdings Inc. in the United States Bankruptcy Court in the Southern District of New York.  Plaintiff Lehman Brothers Special Financing Inc. seeks to (i) overturn the application of certain priority of payment provisions in 47 CDO transactions on the basis such provisions are unenforceable under the Bankruptcy Code; and (ii) recover funds paid out to noteholders in accordance with the note agreements.  We are vigorously defending this matter. 

Commitments

Operating Leases

We lease our home office properties.  In 2006, we exercised the right and option to extend the Fort Wayne lease for two extended terms such that the lease shall expire in 2019.  We retain our right and option to exercise the remaining four extended terms of five years each in accordance with the lease agreement.  These agreements also provide us with the right of first refusal to purchase the properties at a price defined in the agreements and the option to purchase the leased properties at fair market value on the last day of any renewal period.  In 2012, we exercised the right and option to extend the Hartford lease for one extended term such that the lease shall expire in 2018. 

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Total rental expense on operating leases for the years ended December 31, 2014, 2013 and 2012, was $38 million,  $37 million and $36 million, respectively.  Future minimum rental commitments (in millions) as of December 31, 2014, were as follows:

2014	$	32
2015		29
2016		22
2017		15
2018		7
Thereafter		2
Total	$	107

Capital Leases

In December 2014, we entered into a five-year, sale-leaseback transaction on $83 million (net of amortization) of assets, which we have classified as a capital lease on our Consolidated Balance Sheets.  These assets will continue to be amortized on a straight-line basis over the assets’ remaining lives.  Total accumulated amortization related to these leased assets was $55 million as of December 31, 2014. As of December 31, 2013, we did not have any leased assets that met the criteria of a capital lease.  Future minimum lease payments under capital leases (in millions) as of December 31, 2014, were as follows:

2015	$	1
2016		1
2017		1
2018		1
2019		86
Total minimum lease payments		90
Less: Amount representing interest		7
Present value of minimum lease payments	$	83

Vulnerability from Concentrations

As of December 31, 2014, we did not have a concentration of:  business transactions with a particular customer or lender; sources of supply of labor or services used in the business; or a market or geographic area in which business is conducted that makes us vulnerable to an event that is at least reasonably possible to occur in the near term and which could cause a severe impact to our financial condition. 

Although we do not have any significant concentration of customers, our American Legacy Variable Annuity (“ALVA”) product offered in our Annuities segment is significant to this segment.  The ALVA product accounted for 20%,  17% and 19% of Annuities’ variable annuity product deposits in 2014, 2013 and 2012, respectively, and represented approximately 44%,  47% and 50% of the segment’s total variable annuity product account values as of December 31, 2014, 2013 and 2012, respectively.  In addition, fund choices for certain of our other variable annuity products offered in our Annuities segment include American Fund Insurance SeriesSM (“AFIS”) funds.  For the Annuities segment, AFIS funds accounted for 22%, 19% and 21% of variable annuity product deposits in 2014, 2013 and 2012, respectively, and represented 50%,  54% and 58% of the segment’s total variable annuity product account values as of December 31, 2014, 2013 and 2012, respectively.

Other Contingency Matters

State guaranty funds assess insurance companies to cover losses to contract holders of insolvent or rehabilitated companies.  Mandatory assessments may be partially recovered through a reduction in future premium taxes in some states.  We have accrued for expected assessments and the related reductions in future state premium taxes, which net to assessments (recoveries) of $(17) million and $(7) million as of December 31, 2014 and 2013, respectively.

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15.  Shares and Stockholder’s Equity

All authorized and issued shares of LNL are owned by LNC.

AOCI

The following summarizes the components and changes in AOCI (in millions):

	For the Years Ended December 31,
	2014			2013			2012
Unrealized Gain (Loss) on AFS Securities
Balance as of beginning-of-year	$	1,521		$	3,876		$	2,805
Unrealized holding gains (losses) arising during the year		3,762			(5,569	)		2,631
Change in foreign currency exchange rate adjustment		(47	)		20			14
Change in DAC, VOBA, DSI, future contract benefits and other contract holder funds		(1,252	)		1,835			(1,233	)
Income tax benefit (expense)		(865	)		1,300			(459	)
Less:
Reclassification adjustment for gains (losses) included in net income (loss)		14			(63	)		(181	)
Associated amortization of DAC, VOBA, DSI and DFEL		(32	)		(28	)		(1	)
Income tax benefit (expense)		6			32			64
Balance as of end-of-year	$	3,131		$	1,521		$	3,876
Unrealized OTTI on AFS Securities
Balance as of beginning-of-year	$	(78	)	$	(105	)	$	(103	)
(Increases) attributable to:
Gross OTTI recognized in OCI during the year		(11	)		(11	)		(118	)
Change in DAC, VOBA, DSI and DFEL		1			1			15
Income tax benefit (expense)		3			4			35
Decreases attributable to:
Sales, maturities or other settlements of AFS securities		44			58			118
Change in DAC, VOBA, DSI and DFEL		(6	)		(8	)		(17	)
Income tax benefit (expense)		(11	)		(17	)		(35	)
Balance as of end-of-year	$	(58	)	$	(78	)	$	(105	)
Unrealized Gain (Loss) on Derivative Instruments
Balance as of beginning-of-year	$	5		$	101		$	132
Unrealized holding gains (losses) arising during the year		114			(150	)		(63	)
Change in foreign currency exchange rate adjustment		50			(19	)		(12	)
Change in DAC, VOBA, DSI and DFEL		2			5			14
Income tax benefit (expense)		(58	)		57			20
Less:
Reclassification adjustment for gains (losses) included in net income (loss)		(22	)		(18	)		(18	)
Associated amortization of DAC, VOBA, DSI and DFEL		1			1			3
Income tax benefit (expense)		7			6			5
Balance as of end-of-year	$	127		$	5		$	101
Funded Status of Employee Benefit Plans
Balance as of beginning-of-year	$	(18	)	$	(12	)	$	(14	)
Adjustment arising during the year		(5	)		(9	)		3
Income tax benefit (expense)		2			3			(1	)
Balance as of end-of-year	$	(21	)	$	(18	)	$	(12	)

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The following summarizes the reclassifications out of AOCI (in millions) and the associated line item in the Consolidated Statements of Comprehensive Income (Loss):

	For the Years Ended
	December 31,
	2014			2013
Unrealized Gain (Loss) on AFS Securities
Gross reclassification	$	14		$	(63	)	Total realized gain (loss)
Associated amortization of DAC,
VOBA, DSI and DFEL		(32	)		(28	)	Total realized gain (loss)
Reclassification before income
tax benefit (expense)		(18	)		(91	)	Income (loss) from continuing operations before taxes
Income tax benefit (expense)		6			32		Federal income tax expense (benefit)
Reclassification, net of income tax	$	(12	)	$	(59	)	Net income (loss)
Unrealized OTTI on AFS Securities
Gross reclassification	$	44		$	58		Total realized gain (loss)
Change in DAC, VOBA, DSI and DFEL		(6	)		(8	)	Total realized gain (loss)
Reclassification before income
tax benefit (expense)		38			50		Income (loss) from continuing operations before taxes
Income tax benefit (expense)		(11	)		(17	)	Federal income tax expense (benefit)
Reclassification, net of income tax	$	27		$	33		Net income (loss)
Unrealized Gain (Loss) on Derivative Instruments
Gross reclassifications:
Interest rate contracts	$	(22	)	$	(21	)	Net investment income
Foreign currency contracts		-			3		Net investment income
Total gross reclassifications		(22	)		(18	)
Associated amortization of DAC,
VOBA, DSI and DFEL		1			1		Commissions and other expenses
Reclassification before income
tax benefit (expense)		(21	)		(17	)	Income (loss) from continuing operations before taxes
Income tax benefit (expense)		7			6		Federal income tax expense (benefit)
Reclassification, net of income tax	$	(14	)	$	(11	)	Net income (loss)

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16.  Realized Gain (Loss)

Details underlying realized gain (loss) (in millions) reported on our Consolidated Statements of Comprehensive Income (Loss) were as follows:

	For the Years Ended December 31,
	2014			2013			2012
Total realized gain (loss) related to certain investments (1)	$	(13	)	$	(84	)	$	(164	)
Realized gain (loss) on the mark-to-market on certain instruments (2)		(250	)		308			138
Indexed annuity and IUL contracts net derivatives results: (3)
Gross gain (loss)		(35	)		(39	)		16
Associated amortization of DAC, VOBA, DSI and DFEL		6			9			(5	)
Variable annuity net derivatives results: (4)
Gross gain (loss)		(150	)		(104	)		(77	)
Associated amortization of DAC, VOBA, DSI and DFEL		(36	)		(33	)		(31	)
Realized gain (loss) on sale of subsidiaries/businesses (5)		(46	)		-			-
Total realized gain (loss)	$	(524	)	$	57		$	(123	)

⁽¹⁾ See “Realized Gain (Loss) Related to Certain Investments” section in Note 6.

⁽²⁾ Represents changes in the fair values of certain derivative investments (not including those associated with our variable annuity net derivatives results), reinsurance related embedded derivatives and trading securities.

⁽³⁾ Represents the net difference between the change in the fair value of the S&P 500 call options that we hold and the change in the fair value of the embedded derivative liabilities of our indexed annuity and IUL products along with changes in the fair value of embedded derivative liabilities related to index call options we may purchase in the future to hedge contract holder index allocations applicable to future reset periods for our indexed annuity products.

⁽⁴⁾ Includes the net difference in the change in embedded derivative reserves of our GLB riders and the change in the fair value of the derivative instruments we own to hedge the change in embedded derivative reserves on our GLB riders and the benefit ratio unlocking on our GDB riders, including the cost of purchasing the hedging instruments.

⁽⁵⁾ See LFM in Note 3.

17.  Commissions and Other Expenses

Details underlying commissions and other expenses (in millions) were as follows:

	For the Years Ended December 31,
	2014			2013			2012
Commissions	$	2,100		$	1,980		$	1,972
General and administrative expenses		1,582			1,569			1,553
Expenses associated with reserve financing and unrelated LOCs		31			40			40
DAC and VOBA deferrals and interest, net of amortization		(454	)		(656	)		(300	)
Broker-dealer expenses		302			288			243
Specifically identifiable intangible asset amortization		4			4			4
Media expenses		60			62			66
Taxes, licenses and fees		251			239			244
Restructuring charges		-			-			16
Total	$	3,876		$	3,526		$	3,838

18.  Pension, Postretirement Health Care and Life Insurance Benefit Plans

LNC and LNL maintain qualified funded defined benefit pension plans in which many of our employees and agents are participants.  LNC and LNL also maintain non-qualified, unfunded defined benefit pension plans for certain employees and agents.  In addition, for certain former employees we have supplemental retirement plans that provide defined benefit pension benefits in excess of limits imposed by federal tax law.  All of our defined benefit pension plans are frozenand there are no new participants and no future accruals of benefits from the date of the freeze.

LNC and LNL also sponsor a voluntary employees’ beneficiary association (“VEBA”) trust that provides postretirement medical, dental and life insurance benefits to retired full-time employees and agents who, depending on the plan, have worked for us for at least 10 years and attained age 55 (age 60 for agents).  VEBAs are a special type of tax-exempt trust used to provide benefits that are subject to preferential tax treatment under the Internal Revenue Code.  Medical and dental benefits are available to spouses and other eligible dependents of retired employees and agents.  Retirees may be required to contribute toward the cost of these benefits.  Eligibility and the amount of required contribution for these benefits varies based upon a variety of factors including years of service and year of retirement.

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Obligations, Funded Status and Assumptions

Information (in millions) with respect to our benefit plans’ assets and obligations was as follows:

	As of or For the Years Ended December 31,
	2014			2013			2014			2013
							Other
	Pension Benefits						Postretirement Benefits
Change in Plan Assets
Fair value as of beginning-of-year	$	127		$	145		$	6		$	5
Actual return on plan assets		16			(9	)		-			1
Company and participant contributions		-			-			3			3
Benefits paid		(10	)		(9	)		(3	)		(3	)
Fair value as of end-of-year		133			127			6			6
Change in Benefit Obligation
Balance as of beginning-of-year		115			126			15			17
Interest cost		6			5			1			1
Company and participant contributions		-			-			1			1
Amendments		-			-			-			(1	)
Actuarial (gains) losses		16			(7	)		2			(1	)
Benefits paid		(10	)		(9	)		(3	)		(2	)
Balance as of end-of-year		127			115			16			15
Funded status of the plans	$	6		$	12		$	(10	)	$	(9	)
Amounts Recognized on the
Consolidated Balance Sheets
Other assets	$	9		$	14		$	-		$	-
Other liabilities		(3	)		(2	)		(10	)		(9	)
Net amount recognized	$	6		$	12		$	(10	)	$	(9	)
Amounts Recognized in
AOCI, Net of Tax
Net (gain) loss	$	22		$	20		$	-		$	(1	)
Prior service credit		-			-			-			(1	)
Net amount recognized	$	22		$	20		$	-		$	(2	)
Rate of Increase in Compensation
Retiree Life Insurance Plan		N/A			N/A			4.00%			4.00%
All other plans		N/A			N/A			N/A			N/A
Weighted-Average Assumptions
Benefit obligations:
Weighted-average discount rate		4.00%			4.50%			4.00%			4.50%
Net periodic benefit cost:
Weighted-average discount rate		4.50%			3.93%			4.50%			4.03%
Expected return on plan assets		5.00%			6.50%			6.50%			6.50%

⁽¹⁾ Amounts for our U.S. pension plans represent general and administrative expenses.

Consistent with our benefit plans’ year end, we use December 31 as the measurement date.

The expected return on plan assets was determined based on historical and expected future returns of the various asset categories, using the plans’ target plan allocation.  We reevaluate this assumption each plan year.  For 2015, our expected return on plan assets will be5.00% forour pension plans. 

The discount rate was determined based on a corporate yield curve as of December 31, 2014, and projected benefit obligation cash flows for the pension plans.  We reevaluate this assumption each plan year.  For 2015, our discount rate will be 4.00% for our pension plans.

In October 2014, the Society of Actuaries published updated mortality tables that were incorporated into our assumptions, resulting in an increase in our pension plans benefit obligation of $7 million, pre-tax.

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The calculation of the accumulated other postretirement benefit obligation assumes a weighted-average annual rate of increase in the per capita cost of covered benefits (i.e., health care cost trend rate) as follows: 

	As of or For the
	Years Ended December 31,
	2014	2013	2012
Pre-65 health care cost trend rate	8.00%	7.50%	8.00%
Post-65 health care cost trend rate	6.25%	7.50%	8.00%
Ultimate trend rate	4.50%	4.50%	4.50%
Year that the rate reaches the ultimate trend rate	2022	2020	2020

We expect the health care cost trend rate for 2015 to be 8.00% for the pre-65 populationand 6.25% forthe post-65 population.  A one percent increase in assumed health care cost trend rates would have increased the accumulated postretirement benefit obligation by $1 million and total service and interest cost components by less than $1 million.  A one percent decrease in assumed health care cost trend rates would have decreased the accumulated postretirement benefit obligation by $1 million and total service and interest cost components by less than $1 million.

Information for our pension plans with an accumulated benefit obligation in excess of plan assets (in millions) was as follows:

	As of December 31,
	2014		2013
Accumulated benefit obligation	$	2	$	2
Projected benefit obligation		2		2
Fair value of plan assets		-		-

Components of Net Periodic Benefit Cost

The components of net periodic benefit cost (in millions) for our pension and other postretirement plans were as follows:

	For the Years Ended December 31,
	2014			2013			2012			2014			2013			2012
	Pension Benefits									Other Postretirement Benefits
Interest cost	$	6		$	5		$	5		$	1		$	1		$	1
Expected return on plan assets		(6	)		(9	)		(9	)		(1	)		-			-
Recognized net actuarial loss (gain)		3			1			1			-			-			-
Recognized actuarial gain due
to curtailments		-			-			-			-			(1	)		-
Net periodic benefit cost (recovery)	$	3		$	(3	)	$	(3	)	$	-		$	-		$	1

We expect our 2015 pension plans’ net periodic benefit cost to be approximately $3 million. 

For 2015, the estimated amount of amortization from AOCI into net periodic benefit cost related to net actuarial loss or gain is expected to be a  $4 million loss for our pension plans and less than  a $1 millionloss for our other postretirement plans.

Plan Assets

Our pension plans’ asset target allocations by asset category based on estimated fair values were as follows:

	For the Years Ended
	December 31,
	2014	2013
Fixed maturity securities	100%	100%

The investment objectives for the assets related to our pension plans are to:

· Maintain sufficient liquidity to pay obligations of the plans as they come due;

· Minimize the effect of a single investment loss and large losses to the plans through prudent risk/reward diversification consistent with sound fiduciary standards;

· Maintain an appropriate asset allocation policy;

· Earn a return commensurate with the level of risk assumed through the asset allocation policy; and

· Control costs of administering and managing the plans’ investment operations.

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Investments can be made in various asset classes and styles, including, but not limited to: domestic and international equity, fixed-income securities, derivatives and other asset classes the investment managers deem prudent.  Our plans follow a strategic assetallocation policy that strives to systemically increase the percentage of assets in liability-matching fixed-income investments as funding levels increase.

Our pension plans’ assets have been combined into a master retirement trust where a variety of qualified managers, including manager of managers, are expected to have returns that exceed the median of similar funds over three-year periods, above an appropriate index over five-year periods and meet real return standards over ten-year periods.  Managers are monitored for adherence to approved investment policy guidelines and managers not meeting these criteria are subject to additional due diligence review, corrective action or possible termination.

Fair Value of Plan Assets

See “Fair Value Measurement” in Note 1 for discussion of how we categorize our pension plans’ assets into the three-level fair value hierarchy.  See “Financial Instruments Carried at Fair Value” in Note 22 for a summary of our fair value measurements of our pension plans’ assets by the three-level fair value hierarchy. 

The following summarizes our fair value measurements of benefit plans’ assets (in millions) on a recurring basis by asset category:

	As of December 31,
	2014		2013		2014		2013
					Other
	Pension Plans				Postretirement Benefits
Fixed maturity securities:
Corporate bonds	$	30	$	86	$	-	$	-
U.S. government bonds		99		31		-		-
State and municipal bonds		-		9		-		-
Cash and invested cash		4		1		-		-
Other investments		-		-		6		6
Total	$	133	$	127	$	6	$	6

Valuation Methodologies and Associated Inputs for Pension Plans’ Assets

The fair value measurements of our pension plans’ assets are based on assumptions used by market participants in pricing the security.  The most appropriate valuation methodology is selected based on the specific characteristics of the security, and the valuation methodology is consistently applied to measure the security’s fair value.  The fair value measurement is based on a market approach, which utilizes prices and other relevant information generated by market transactions involving identical or comparable securities.  Sources of inputs to the market approach include third-party pricing services, independent broker quotations or pricing matrices.  Both observable and unobservable inputs are used in the valuation methodologies.  Observable inputs include benchmark yields, reported trades, broker quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data.  In addition, market indicators, industry and economic events are monitored and further market data is acquired if certain triggers are met.  For certain security types, additional inputs may be used, or some of the inputs described above may not be applicable.  For broker-quoted only securities, quotes from market makers or broker dealers are obtained from sources recognized to be market participants.  In order to validate the pricing information and broker quotes, procedures are employed, where possible, that include comparisons with similar observable positions, comparisons with subsequent sales, discussions with brokers and observations of general market movements for those security classes.  For those securities trading in less liquid or illiquid markets with limited or no pricing information, unobservable inputs are used in order to measure the fair value of these securities.  In cases where this information is not available, such as for privately placed securities, fair value is estimated using an internal pricing matrix.  This matrix relies on judgment concerning the discount rate used in calculating expected future cash flows, credit quality, industry sector performance and expected maturity.

Prices received from third parties are not adjusted; however, the third-party pricing services’ valuation methodologies and related inputs are evaluated and additional evaluation is performed to determine the appropriate level within the fair value hierarchy.

The observable and unobservable inputs to the valuation methodologies are based on general standard inputs.  The standard inputs used in order of priority are benchmark yields, reported trades, broker quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data.  Depending on the type of security or the daily market activity, standard inputs may be prioritized differently or may not be available for all securities on any given day. 

Cash and invested cash is carried at cost, which approximates fair value.  This category includes highly liquid debt instruments purchased with a maturity of three months or less.  Due to the nature of these assets, we believe these assets should be classified as Level 2.

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Plan Cash Flows

It is our practice to make contributions to our qualified pension plans to comply with minimum funding requirements of the Employee Retirement Income Security Act of 1974, as amended and with guidance issued there under. We do not expect to be required to make any contributions to these plans in 2015.

For our nonqualified pension and other postretirement benefit plans, we fund benefits as they become due to retirees.  The amount expected to be contributed to the plans during 2015 is less than $1 million and $2 million, respectively.

We expect the following benefit payments (in millions):

	Defined		Other
	Benefit		Post-
	Pension		retirement
	Plans		Plans
2015	$	12	$	2
2016		10		2
2017		10		1
2018		9		1
2019		9		1
Following five years thereafter		42		5

19.  Defined Contribution and Deferred Compensation Plans

Defined Contribution Plans

LNC and LNL sponsor defined contribution plans, which include 401(k) and money purchase plans, for eligible employees and agents.  We make contributions and matching contributions to each of the active plans in accordance with the plan documents and various limitations under Section 401(a) of the Internal Revenue Code of 1986, as amended.  For the years ended December 31, 2014,  2013 and 2012, expenses for these plans were$75 million, $70 million and $68 million, respectively. 

Deferred Compensation Plans

LNC and LNL sponsor six separate non-qualified, unfunded, deferred compensation plans for employees, agents and non-employee directors.

The results for certain investment options within the plans are hedged by total return swaps.  Participants’ account values change due primarily to investment earnings driven by market fluctuations.  Our expenses increase or decrease in direct proportion to the change in market value of the participants’ investment options.  Participants are able to select our stock as an investment option; however, it is not hedged by the total return swaps and is a primary source of expense volatility related to these plans.  For further discussion of total return swaps related to our deferred compensation plans, see Note 7.

Information (in millions) with respect to these plans was as follows:

	As of December 31,
	2014		2013
Total liabilities (1)	$	423	$	398
Investments held to fund liabilities (2)		160		166

⁽¹⁾ Reported in other liabilities on our Consolidated Balance Sheets.

⁽²⁾ Reported in other assets on our Consolidated Balance Sheets.

Deferred Compensation Plan for Employees

Participants may elect to defer a portion of their compensation as defined by the plan.  Participants may select from prescribed “phantom” investment options that are used as measures for calculating the returns that are notionally credited to their accounts.  Under the terms of the plan, we agree to pay out amounts based upon the aggregate performance of the investment measures selected by the participants.  We make matching contributions based upon amounts placed into the plan by individuals after participants have exceeded

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applicable limits of the Internal Revenue Code applicable to 401(k) plans.  The amount of our contribution is calculated in accordance with the plan document.  Expenses (in millions) for this plan were as follows:

	For the Years Ended December 31,
	2014		2013		2012
Company matching contributions	$	10	$	9	$	7
Increase (decrease) in measurement of
liabilities, net of total return swap		5		11		11
Total	$	15	$	20	$	18

Deferred Compensation Plans for Agents

We sponsor three deferred compensation plans for certain eligible agents.  Participants may elect to defer a portion of their compensation as defined by the respective plan.  Participants may select from prescribed “phantom” investment options that are used as measures for calculating the returns that are notionally credited to their accounts.  Under the terms of these plans, we agree to pay out amounts based upon the aggregate performance of the investment measures selected by the participants.  We make matching contributions based upon amounts placed into the plans by individuals after participants have exceeded applicable limits of the Internal Revenue Code applicable to 401(k) plans.  The amounts of our contributions are calculated in accordance with the plans’ documents.  Expenses (in millions) for these plans were as follows:

	For the Years Ended December 31,
	2014		2013		2012
Company matching contributions	$	2	$	1	$	1
Increase (decrease) in measurement of
liabilities, net of total return swap		2		4		5
Total	$	4	$	5	$	6

Deferred Compensation Plan for Non-Employee Directors of LNC

Non-employee directors may defer a portion of their annual cash retainers as defined by the plan.  They also receive a portion of their retainer in the form of deferred stock units, which we credit quarterly in arrears to their accounts.  The prescribed “phantom” investment options are identical to those offered in the employees’ deferred compensation plan.  For the years ended December 31, 2014, 2013 and 2012, expenses (income) for this plan wereless than $(1) million, less than $1 million and $2 million, respectively. 

Deferred Compensation Plan for Former JP Agents

Eligible former agents of JP may defer a portion of their commissions and bonuses as defined by the plan.  Participants may select from “phantom” investment options that are used as measures for calculating the returns that are notionally credited to their accounts.  For the years ended December 31, 2014,  2013 and 2012, expenses for this plan were $2 million, $2 million and $3 million, respectively.

20.  Stock-Based Incentive Compensation Plans

Our employees and agents are included in LNC’s various incentive plans that provide for the issuance of stock options, performance shares (performance-vested shares as opposed to time-vested shares), stock appreciation rights (“SARs”) and restricted stock units (“RSUs”).  LNC issues new shares to satisfy option exercises.

Total compensation expense (in millions) for all of our stock-based incentive plans was as follows:

	For the Years Ended December 31,
	2014		2013		2012
Stock options	$	9	$	8	$	8
Performance shares		12		10		5
SARs		2		5		1
RSUs and nonvested stock		15		15		17
Total	$	38	$	38	$	31
Recognized tax benefit	$	13	$	13	$	11

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21.  Statutory Information and Restrictions

We prepare financial statements in accordance with statutory accounting principles (“SAP”) prescribed or permitted by the insurance departments of our states of domicile, which may vary materially from GAAP.

Prescribed SAP includes the Accounting Practices and Procedures Manual of the National Association of Insurance Commissioners (“NAIC”) as well as state laws, regulations and administrative rules.  Permitted SAP encompasses all accounting practices not so prescribed.  The principal differences between statutory financial statements and financial statements prepared in accordance with GAAP are that statutory financial statements do not reflect DAC, some bond portfolios may be carried at amortized cost, assets and liabilities are presented net of reinsurance, contract holder liabilities are generally valued using more conservative assumptions and certain assets are non-admitted.

We are subject to the applicable laws and regulations of our states of domicile.  Changes in these laws and regulations could change capital levels or capital requirements for the Company.

Statutory capital and surplus, net gain (loss) from operations, after-tax, net income (loss) and dividends to the LNC holding company amounts (in millions) below consist of all or a combination of the following entities:  LNL, Lincoln Reinsurance Company of South Carolina, LLANY, Lincoln Reinsurance Company of Vermont I, LRCVII, Lincoln Reinsurance Company of Vermont III, Lincoln Reinsurance Company of Vermont IV and Lincoln Reinsurance Company of Vermont V.

	As of December 31,
	2014		2013
U.S. capital and surplus	$	7,991	$	7,248

	For the Years Ended December 31,
	2014		2013		2012
U.S. net gain (loss) from operations, after-tax	$	1,170	$	425	$	649
U.S. net income (loss)		1,401		495		600
U.S. dividends to LNC holding company		705		640		605

The increase in statutory net income (loss) when comparing 2014 to 2013 was due primarily to the recapture of certain traditional and interest sensitive business under several yearly renewable term reinsurance treaties that were originally ceded to a reinsurer, a change in estimate on reserves for certain products and a lower effective tax rate due to the use of tax credit carryforwards.

The decrease in statutory net income (loss) when comparing 2013 to 2012 was due primarily to the effects of reserve financing transactions in 2013.

Our states of domicile, Indiana for LNL and New York for LLANY,  have adopted certain prescribed accounting practices that differ from those found in NAIC SAP.  These prescribed practices are the use of continuous Commissioners Annuity Reserve Valuation Method (“CARVM”) in the calculation of reserves as prescribed by the state of New York, the calculation of reserves on universal life policies based on the Indiana universal life method as prescribed by the state of Indiana for policies issued before January 1, 2006, and the use of a more conservative valuation interest rate on certain annuities prescribed by the states of Indiana and New York.  The Vermont insurance subsidiaries also have an accounting practice permitted by the state of Vermont that differs from that found in NAIC SAP.  Specifically, the permitted practice involves accounting for the lesser of the face amount of all amounts outstanding under an LOC and the value of the Valuation of Life Insurance Policies Model Regulation (“XXX”) additional statutory reserves as an admitted asset and a form of surplus as of December 31, 2014 and 2013.

The favorable (unfavorable) effects on statutory surplus compared to NAIC statutory surplus from the use of these prescribed and permitted practices (in millions) were as follows:

	As of December 31,
	2014			2013
Calculation of reserves using the Indiana universal life method	$	140		$	219
Calculation of reserves using continuous CARVM		(1	)		(2	)
Conservative valuation rate on certain annuities		(39	)		(30	)
Lesser of LOC and XXX additional reserve as surplus		2,751			2,635

During the third quarter of 2013, the New York State Department of Financial Services (“NYDFS”) announced that it would not recognize the NAIC revisions to Actuarial Guideline 38 in applying the New York law governing the reserves to be held for UL and VUL products containing secondary guarantees.  The change, effective December 31, 2013, impacts our New York-domiciled insurance subsidiary, LLANY.  LLANY discontinued the sale of these products in early 2013, but the change affects those policies sold prior to that time.  We  began phasing in the increase in reserves over five years beginning in 2013.  As of December 31, 2014, we have increased

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reserves by $180 million.  The additional increase in reserves over the next three years is subject to ongoing discussions with the NYDFS.  However, we do not expect the amount for each of the remaining years to exceed $90 million per year.

The NAIC has adopted risk-based capital (“RBC”) requirements for life insurance companies to evaluate the adequacy of statutory capital and surplus in relation to investment and insurance risks.  The requirements provide a means of measuring the minimum amount of statutory surplus appropriate for an insurance company to support its overall business operations based on its size and risk profile.  Under RBC requirements, regulatory compliance is determined by the ratio of a company’s total adjusted capital, as defined by the NAIC, to its company action level of RBC (known as the “RBC ratio”), also as defined by the NAIC.  The company action level may be triggered if the RBC ratio is between 75% and 100%, which would require the insurer to submit a plan to the regulator detailing corrective action it proposes to undertake.  As of December 31, 2014, the Company’s RBC ratio was approximately fivetimes the aforementioned company action level.

We are subject to certain insurance department regulatory restrictions as to the transfer of funds and payment of dividends to the holding company.  Under Indiana laws and regulations, LNL may pay dividends to LNC without prior approval of the Commissioner, only from unassigned surplus and must receive prior approval of the Commissioner to pay a dividend if such dividend, along with all other dividends paid within the preceding 12 consecutive months, would exceed the statutory limitation.  The current statutory limitation is the greater of 10% of the insurer’s contract holders’ surplus, as shown on its last annual statement on file with the Commissioner or the insurer’s statutory net gain from operations for the previous 12 months, but in no event to exceed statutory unassigned surplus.  Indiana law gives the Commissioner broad discretion to disapprove requests for dividends in excess of these limits.  LNL’s subsidiary, LLANY, a New York domiciled insurance company, has similar restrictions, except that in New York it is the lesser of 10% of surplus to contract holders as of the immediately preceding calendar year or net gain from operations for the immediately preceding calendar year, not including realized capital gains.  We expect that we could pay dividends of approximately $1.3billion in 2015 without prior approval from the respective state commissioner.

All payments of principal and interest on surplus notes must be approved by the respective Commissioner of Insurance.

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22.  Fair Value of Financial Instruments

The carrying values and estimated fair values of our financial instruments (in millions) were as follows:

	As of December 31, 2014						As of December 31, 2013
	Carrying			Fair			Carrying			Fair
	Value			Value			Value			Value
Assets
AFS securities:
Fixed maturity securities	$	85,421		$	85,421		$	79,178		$	79,178
VIEs’ fixed maturity securities		598			598			697			697
Equity securities		231			231			201			201
Trading securities		1,966			1,966			2,190			2,190
Mortgage loans on real estate		7,387			7,838			7,029			7,193
Derivative investments (1)		1,763			1,763			617			617
Other investments		1,551			1,551			1,208			1,208
Cash and invested cash		3,224			3,224			630			630
Reinsurance related embedded derivatives		-			-			159			159
Other assets:
Reinsurance recoverable		174			174			-			-
GLB reserves embedded derivatives (2)		-			-			1,244			1,244
Separate account assets		125,265			125,265			117,135			117,135
Liabilities
Future contract benefits – indexed annuity and
IUL contracts embedded derivatives		(1,170	)		(1,170	)		(1,048	)		(1,048	)
Other contract holder funds:
Remaining guaranteed interest and similar contracts		(699	)		(699	)		(809	)		(809	)
Account values of certain investment contracts		(27,779	)		(31,493	)		(29,024	)		(30,514	)
Short-term debt		(2	)		(2	)		(51	)		(51	)
Long-term debt		(2,662	)		(3,047	)		(2,600	)		(2,634	)
Reinsurance related embedded derivatives		(109	)		(109	)		-			-
VIEs’ liabilities – derivative instruments		(13	)		(13	)		(27	)		(27	)
Other liabilities:
Credit default swaps		(3	)		(3	)		(2	)		(2	)
Derivative liabilities (1)		(277	)		(277	)		(386	)		(386	)
GLB reserves embedded derivatives (2)		(174	)		(174	)		(1,244	)		(1,244	)
Benefit Plans' Assets (3)		139			139			133			133

⁽¹⁾ We have master netting agreements with each of our derivative counterparties, which allow for the netting of our derivative asset and liability positions by counterparty.

⁽²⁾ Portions of our GLB reserves embedded derivatives are ceded to third-party reinsurance counterparties.  Refer to Note 7 for additional detail.  

⁽³⁾ Included in the funded statuses of the benefit plans, which is reported in other liabilities on our Consolidated Balance Sheets.  Refer to Note 18 for additional detail.

Valuation Methodologies and Associated Inputs for Financial Instruments Not Carried at Fair Value

The following discussion outlines the methodologies and assumptions used to determine the fair value of our financial instruments not carried at fair value on our Consolidated Balance Sheets.  Considerable judgment is required to develop these assumptions used to measure fair value.  Accordingly, the estimates shown are not necessarily indicative of the amounts that would be realized in a one-time, current market exchange of all of our financial instruments.

Mortgage Loans on Real Estate

The fair value of mortgage loans on real estate is established using a discounted cash flow method based on credit rating, maturity and future income.  The ratings for mortgages in good standing are based on property type, location, market conditions, occupancy, debt-service coverage, loan-to-value, quality of tenancy, borrower and payment record.  The fair value for impaired mortgage loans is based on the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s market price or the fair value of

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the collateral if the loan is collateral dependent.  The inputs used to measure the fair value of our mortgage loans on real estate are classified as Level 2 within the fair value hierarchy.

Other Investments

The carrying value of our assets classified as other investments approximates fair value.  Other investments includes primarily LPs and other privately held investments that are accounted for using the equity method of accounting and the carrying value is based on our proportional share of the net assets of the LPs.  The inputs used to measure the fair value of our LPs and other privately held investments are classified as Level 3 within the fair value hierarchy.  Other investments also includes securities that are not LPs or other privately held investments and the inputs used to measure the fair  value of these securities are classified as Level 1 within the fair value hierarchy.

Other Contract Holder Funds

Other contract holder funds include remaining guaranteed interest and similar contracts and account values of certain investment contracts.  The fair value for the remaining guaranteed interest and similar contracts is estimated using discounted cash flow calculations as of the balance sheet date.  These calculations are based on interest rates currently offered on similar contracts with maturities that are consistent with those remaining for the contracts being valued.  As of December 31, 2014 and 2013, the remaining guaranteed interest and similar contracts carrying value approximated fair value.  The fair value of the account values of certain investment contracts is based on their approximate surrender value as of the balance sheet date.  The inputs used to measure the fair value of our other contract holder funds are classified as Level 3 within the fair value hierarchy.

Short-Term and Long-Term Debt

The fair value of long-term debt is based on quoted market prices.  For short-term debt, excluding current maturities of long-term debt, the carrying value approximates fair value.  The inputs used to measure the fair value of our short-term and long-term debt are classified as Level 2 within the fair value hierarchy.   

Financial Instruments Carried at Fair Value

We did not have any assets or liabilities measured at fair value on a nonrecurring basis as of December 31, 2014 or 2013, and we noted no changes in our valuation methodologies between these periods.

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The following summarizes our financial instruments carried at fair value (in millions) on a recurring basis by the fair value hierarchy levels described above:

		As of December 31, 2014
		Quoted
		Prices
		in Active
	Markets for			Significant				Significant
		Identical		Observable				Unobservable				Total
		Assets			Inputs				Inputs			Fair
		(Level 1)			(Level 2)				(Level 3)			Value
Assets
Investments:
Fixed maturity AFS securities:
Corporate bonds		$	63		$	68,940			$	4,052		$	73,055
ABS			-			1,045				33			1,078
U.S. government bonds			354			36				-			390
Foreign government bonds			-			426				110			536
RMBS			-			4,032				1			4,033
CMBS			-			532				15			547
CLOs			-			7				368			375
State and municipal bonds			-			4,479				-			4,479
Hybrid and redeemable preferred securities			44			829				55			928
VIEs’ fixed maturity securities			-			598				-			598
Equity AFS securities			7			67				157			231
Trading securities			-			1,893				73			1,966
Other investments			150			-				-			150
Derivative investments (1)			-			1,059				1,232			2,291
Cash and invested cash			-			3,224				-			3,224
Other assets – reinsurance recoverable			-			-				174			174
Separate account assets			1,539			123,726				-			125,265
Total assets		$	2,157		$	210,893			$	6,270		$	219,320
Liabilities
Future contract benefits – indexed annuity
and IUL contracts embedded derivatives		$	-		$	-			$	(1,170	)	$	(1,170	)
Reinsurance related embedded derivatives			-			(109	)			-			(109	)
VIEs’ liabilities – derivative instruments			-			-				(13	)		(13	)
Other liabilities:
Credit default swaps			-			-				(3	)		(3	)
Derivative liabilities (1)			-			(562	)			(243	)		(805	)
GLB reserves embedded derivatives			-			-				(174	)		(174	)
Total liabilities		$	-		$	(671	)		$	(1,603	)	$	(2,274	)
Benefit Plans' Assets		$	-		$	139			$	-		$	139

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		As of December 31, 2013
		Quoted
		Prices
		in Active
	Markets for			Significant				Significant
		Identical		Observable				Unobservable				Total
		Assets			Inputs				Inputs			Fair
		(Level 1)			(Level 2)				(Level 3)			Value
Assets
Investments:
Fixed maturity AFS securities:
Corporate bonds		$	60		$	64,322			$	2,912		$	67,294
ABS			-			1,099				48			1,147
U.S. government bonds			304			21				-			325
Foreign government bonds			-			464				78			542
RMBS			-			4,143				1			4,144
CMBS			-			678				20			698
CLOs			-			47				178			225
State and municipal bonds			-			3,796				28			3,824
Hybrid and redeemable preferred securities			39			874				66			979
VIEs’ fixed maturity securities			102			595				-			697
Equity AFS securities			3			37				161			201
Trading securities			-			2,137				53			2,190
Derivative investments (1)			-			244				1,118			1,362
Cash and invested cash			-			630				-			630
Reinsurance related embedded derivatives			-			159				-			159
Other assets – GLB reserves embedded
derivatives			-			-				1,244			1,244
Separate account assets			1,766			115,369				-			117,135
Total assets		$	2,274		$	194,615			$	5,907		$	202,796
Liabilities
Future contract benefits – indexed annuity and
IUL contracts embedded derivatives		$	-		$	-			$	(1,048	)	$	(1,048	)
VIEs’ liabilities – derivative instruments			-			-				(27	)		(27	)
Other liabilities:
Credit default swaps			-			-				(2	)		(2	)
Derivative liabilities (1)			-			(879	)			(252	)		(1,131	)
GLB reserves embedded derivatives			-			-				(1,244	)		(1,244	)
Total liabilities		$	-		$	(879	)		$	(2,573	)	$	(3,452	)
Benefit Plans' Assets		$	-		$	133			$	-		$	133

⁽¹⁾ Derivative investment assets and liabilities presented within the fair value hierarchy are presented on a gross basis by derivative type and not on a master netting basis by counterparty.  

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The following summarizes changes to our financial instruments carried at fair value (in millions) and classified within Level 3 of the fair value hierarchy.  This summary excludes any effect of amortization of DAC, VOBA, DSI and DFEL.  The gains and losses below may include changes in fair value due in part to observable inputs that are a component of the valuation methodology.

	For the Year Ended December 31, 2014
									Purchases,
							Gains		Issuances,				Transfers
				Items			(Losses)		Sales,				Into or
				Included			in		Maturities,				Out
	Beginning			in			OCI		Settlements,				of			Ending
	Fair			Net			and			Calls,			Level 3,			Fair
	Value			Income			Other (1)			Net			Net (2)(3)			Value
Investments: (4)
Fixed maturity AFS securities:
Corporate bonds	$	2,951		$	8		$	28		$	1,039		$	26		$	4,052
ABS		9			-			-			-			24			33
Foreign government bonds		78			-			7			-			25			110
RMBS		1			-			-			-			-			1
CMBS		20			-			2			(13	)		6			15
CLOs		178			-			6			134			50			368
State and municipal bonds		28			-			-			-			(28	)		-
Hybrid and redeemable
preferred securities		66			-			-			(5	)		(6	)		55
Equity AFS securities		161			4			(3	)		(5	)		-			157
Trading securities		53			3			7			10			-			73
Derivative investments		866			72			357			(280	)		(26	)		989
Other assets:
GLB reserves embedded derivatives		1,244			(1,264	)		-			-			20			-
Reinsurance recoverable		-			174			-			-						174
Future contract benefits – indexed
annuity and IUL contracts
embedded derivatives (5)		(1,048	)		(210	)		-			88			-			(1,170	)
VIEs’ liabilities – derivative instruments (6)		(27	)		14			-			-			-			(13	)
Other liabilities:
Credit default swaps (7)		(2	)		(1	)		-			-			-			(3	)
GLB reserves embedded derivatives (5)		(1,244	)		1,090			-			-			(20	)		(174	)
Total, net	$	3,334		$	(110	)	$	404		$	968		$	71		$	4,667

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	For the Year Ended December 31, 2013
									Purchases,
							Gains		Issuances,				Transfers
				Items			(Losses)		Sales,				Into or
				Included			in		Maturities,				Out
	Beginning			in			OCI		Settlements,				of			Ending
	Fair			Net			and			Calls,			Level 3,			Fair
	Value			Income			Other (1)			Net			Net (2)			Value
Investments: (4)
Fixed maturity AFS securities:
Corporate bonds	$	2,051		$	(17	)	$	-		$	996		$	(79	)	$	2,951
ABS		14			-			-			30			(35	)		9
U.S. government bonds		1			-			-			(1	)		-			-
Foreign government bonds		46			-			(1	)		33			-			78
RMBS		3			-			-			(2	)		-			1
CMBS		27			-			6			(5	)		(8	)		20
CLOs		154			(1	)		4			50			(29	)		178
State and municipal bonds		32			-			(4	)		-			-			28
Hybrid and redeemable
preferred securities		116			-			13			(33	)		(30	)		66
Equity AFS securities		87			(1	)		2			73			-			161
Trading securities		56			2			(7	)		(6	)		8			53
Derivative investments		1,916			(681	)		(194	)		(175	)		-			866
Other assets – GLB embedded derivatives		909			(2,153	)		-			-			2,488			1,244
Future contract benefits – indexed
annuity and IUL contracts
embedded derivatives (5)		(732	)		(356	)		-			40			-			(1,048	)
VIEs' liabilities – derivative instruments (6)		(128	)		101			-			-			-			(27	)
Other liabilities – credit default swaps (7)		(11	)		9			-			-			-			(2	)
GLB reserves embedded derivatives (5)		(909	)		2,153			-			-			(2,488	)		(1,244	)
Total, net	$	3,632		$	(944	)	$	(181	)	$	1,000		$	(173	)	$	3,334

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	For the Year Ended December 31, 2012
									Purchases,
							Gains		Issuances,				Transfers
				Items			(Losses)		Sales,				Into or
				Included			in		Maturities,				Out
	Beginning			in			OCI		Settlements,				of			Ending
	Fair			Net			and			Calls,			Level 3,			Fair
	Value			Income			Other (1)			Net			Net (2)			Value
Investments: (4)
Fixed maturity AFS securities:
Corporate bonds	$	2,370		$	(25	)	$	34		$	277		$	(605	)	$	2,051
ABS		53			-			1			(3	)		(37	)		14
U.S. government bonds		1			-			-			-			-			1
Foreign government bonds		97			-			-			(5	)		(46	)		46
RMBS		158			(3	)		3			(8	)		(147	)		3
CMBS		31			(11	)		16			(11	)		2			27
CLOs		101			(2	)		8			61			(14	)		154
State and municipal bonds		-			-			-			32			-			32
Hybrid and redeemable
preferred securities		99			(1	)		23			-			(5	)		116
Equity AFS securities		56			(8	)		13			26			-			87
Trading securities		67			3			4			(2	)		(16	)		56
Derivative investments		2,484			(823	)		73			182			-			1,916
Future contract benefits – indexed
annuity and IUL contracts
embedded derivatives (5)		(399	)		(136	)		-			(197	)		-			(732	)
VIEs' liabilities – derivative instruments (6)		(291	)		163			-			-			-			(128	)
Other liabilities – credit default swaps (7)		(16	)		5			-			-			-			(11	)
GLB reserves embedded derivatives (5)		(2,217	)		1,308			-			-			-			(909	)
Total, net	$	2,594		$	470		$	175		$	352		$	(868	)	$	2,723

⁽¹⁾ The changes in fair value of the interest rate swaps are offset by an adjustment to derivative investments (see Note 6).

⁽²⁾ Transfers into or out of Level 3 for AFS and trading securities are displayed at amortized cost as of the beginning-of-year.  For AFS and trading securities, the difference between beginning-of-year amortized cost and beginning-of-year fair value was included in OCI and earnings, respectively, in prior years.

⁽³⁾ Transfers into or out of Level 3 for GLB reserves embedded derivatives between future contract benefits, other assets and other liabilities on our Consolidated Balance Sheets.

⁽⁴⁾ Amortization and accretion of premiums and discounts are included in net investment income on our Consolidated Statements of Comprehensive Income (Loss).  Gains (losses) from sales, maturities, settlements and calls and OTTI are included in realized gain (loss) on our Consolidated Statements of Comprehensive Income (Loss).

⁽⁵⁾ Gains (losses) from sales, maturities, settlements and calls are included in realized gain (loss) on our Consolidated Statements of Comprehensive Income (Loss).

⁽⁶⁾ Gains (losses) from sales, maturities, settlements and calls are included in net investment income on our Consolidated Statements of Comprehensive Income (Loss).

⁽⁷⁾ The changes in fair value of the credit default swaps and contingency forwards are included in realized gain (loss) on our Consolidated Statements of Comprehensive Income (Loss).

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The following provides the components of the items included in issuances, sales, maturities, settlements and calls, net, excluding any effect of amortization of DAC, VOBA, DSI and DFEL and changes in future contract benefits, (in millions) as reported above:

	For the Year Ended December 31, 2014
	Issuances			Sales			Maturities		Settlements				Calls			Total
Investments:
Fixed maturity AFS securities:
Corporate bonds	$	1,939		$	(576	)	$	(115	)	$	(47	)	$	(162	)	$	1,039
CMBS		-			-			-			(13	)		-			(13	)
CLOs		185			-			-			(46	)		(5	)		134
Hybrid and redeemable
preferred securities		-			(5	)		-			-			-			(5	)
Equity AFS securities		-			(5	)		-			-			-			(5	)
Trading securities		14			-			-			(4	)		-			10
Derivative investments		160			(87	)		(353	)		-			-			(280	)
Future contract benefits – indexed annuity
and IUL contracts embedded derivatives		(69	)		-			-			157			-			88
Total, net	$	2,229		$	(673	)	$	(468	)	$	47		$	(167	)	$	968

	For the Year Ended December 31, 2013
	Issuances			Sales			Maturities		Settlements				Calls			Total
Investments:
Fixed maturity AFS securities:
Corporate bonds	$	1,205		$	(51	)	$	(44	)	$	(45	)	$	(69	)	$	996
ABS		30			-			-			-			-			30
U.S. government bonds		-			-			-			(1	)		-			(1	)
Foreign government bonds		50			-			(17	)		-			-			33
RMBS		-			-			-			(2	)		-			(2	)
CMBS		-			-			-			(3	)		(2	)		(5	)
CLOs		74			-			-			(24	)		-			50
Hybrid and redeemable preferred
securities		-			(33	)		-			-			-			(33	)
Equity AFS securities		78			(5	)		-			-			-			73
Trading securities		-			(3	)		(1	)		(2	)		-			(6	)
Derivative investments		152			(23	)		(304	)		-			-			(175	)
Future contract benefits – indexed annuity
and IUL contracts embedded derivatives		(68	)		-			-			108			-			40
Total, net	$	1,521		$	(115	)	$	(366	)	$	31		$	(71	)	$	1,000

	For the Year Ended December 31, 2012
	Issuances			Sales			Maturities		Settlements				Calls			Total
Investments:
Fixed maturity AFS securities:
Corporate bonds	$	363		$	(26	)	$	(6	)	$	(49	)	$	(6	)	$	276
ABS		-			-			-			(2	)		-			(2	)
Foreign government bonds		-			-			(5	)		-			-			(5	)
RMBS		-			-			(6	)		(2	)		-			(8	)
CMBS		-			-			-			(11	)		-			(11	)
CLOs		72			-			-			(11	)		-			61
State and municipal bonds		32			-			-			-			-			32
Equity AFS securities		26			-			-			-			-			26
Trading securities		-			-			-			(2	)		-			(2	)
Derivative investments		454			(34	)		(238	)		-			-			182
Future contract benefits – indexed annuity
and IUL contracts embedded derivatives		(99	)		-			-			(98	)		-			(197	)
Total, net	$	848		$	(60	)	$	(255	)	$	(175	)	$	(6	)	$	352

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The following summarizes changes in unrealized gains (losses) included in net income, excluding any effect of amortization of DAC, VOBA, DSI and DFEL and changes in future contract benefits, related to financial instruments carried at fair value classified within Level 3 that we still held (in millions):

	For the Years Ended December 31,
	2014			2013			2012
Derivative investments (1)	$	(15	)	$	(753	)	$	(823	)
Indexed annuity and IUL contracts
embedded derivatives (1)		(37	)		(44	)		(10	)
Other assets – GLB reserves embedded derivatives (1)		(678	)		(2,444	)		-
VIEs’ liabilities – derivative instruments (1)		14			101			163
Other liabilities:
Credit default swaps (2)		(1	)		9			6
GLB reserves embedded derivatives (1)		678			2,444			1,472
Total, net	$	(39	)	$	(687	)	$	808

⁽¹⁾ Included in realized gain (loss) on our Consolidated Statements of Comprehensive Income (Loss). 

⁽²⁾ Included in net investment income on our Consolidated Statements of Comprehensive Income (Loss). 

The following provides the components of the transfers into and out of Level 3 (in millions) as reported above:

	For the Year Ended December 31, 2014
	Transfers		Transfers
	Into		Out of
	Level 3		Level 3			Total
Investments:
Fixed maturity AFS securities:
Corporate bonds	$	473	$	(447	)	$	26
ABS		26		(2	)		24
Foreign government bonds		25		-			25
CMBS		6		-			6
CLOs		50		-			50
State and municipal bonds		-		(28	)		(28	)
Hybrid and redeemable preferred
securities		17		(23	)		(6	)
Trading securities		10		(10	)		-
Derivative investments		-		(26	)		(26	)
Other assets – GLB reserves
embedded derivatives		20		-			20
Other liabilities – GLB reserves
embedded derivatives		-		(20	)		(20	)
Total, net	$	627	$	(556	)	$	71

	For the Year Ended December 31, 2013
	Transfers		Transfers
	Into		Out of
	Level 3		Level 3			Total
Investments:
Fixed maturity AFS securities:
Corporate bonds	$	367	$	(446	)	$	(79	)
ABS				(35	)		(35	)
CMBS		-		(8	)		(8	)
CLOs		-		(29	)		(29	)
Hybrid and redeemable preferred securities		20		(50	)		(30	)
Trading securities		8		-			8
Total, net	$	395	$	(568	)	$	(173	)

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	For the Year Ended December 31, 2012
	Transfers		Transfers
	Into		Out of
	Level 3		Level 3			Total
Investments:
Fixed maturity AFS securities:
Corporate bonds	$	33	$	(638	)	$	(605	)
ABS		2		(39	)		(37	)
Foreign government bonds		-		(46	)		(46	)
RMBS		-		(147	)		(147	)
CMBS		5		(3	)		2
CLOs		6		(20	)		(14	)
Hybrid and redeemable preferred securities		35		(40	)		(5	)
Trading securities		2		(18	)		(16	)
Total, net	$	83	$	(951	)	$	(868	)

Transfers into and out of Level 3 are generally the result of observable market information on a security no longer being available or becoming available to our pricing vendors.  For the years ended December 31, 2014, 2013 and 2012transfers in and out were attributable primarily to the securities’ observable market information no longer being available or becoming available.  Transfers in and out for GLB reserves embedded derivatives represent reclassifications between future contract benefits and other assets or other liabilities.  Transfers into and out of Levels 1 and 2 are generally the result of a change in the type of input used to measure the fair value of an asset or liability at the end of the reporting period.  When quoted prices in active markets become available, transfers from Level 2 to Level 1 will result.  When quoted prices in active markets become unavailable, but we are able to employ a valuation methodology using significant observable inputs, transfers from Level 1 to Level 2 will result.  For the years ended December 31, 2014, 2013 and 2012 the transfers between Levels 1 and 2 of the fair value hierarchy were less than $1 million for our financial instruments carried at fair value.

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The following summarizes the fair value (in millions), valuation techniques and significant unobservable inputs of the Level 3 fair value measurements as of December 31, 2014:

	Fair			Valuation	Significant	Assumption or
	Value			Technique	Unobservable Inputs	Input Ranges
Assets
Investments:
Fixed maturity AFS and trading
securities:
Corporate bonds	$	1,262		Discounted cash flow	Liquidity/duration adjustment (1)	0.5	%	-	11.6	%
ABS		64		Discounted cash flow	Liquidity/duration adjustment (1)	2.8	%	-	3.0	%
Foreign government bonds		80		Discounted cash flow	Liquidity/duration adjustment (1)	2.0	%	-	3.5	%
Hybrid and redeemable
preferred securities		20		Discounted cash flow	Liquidity/duration adjustment (1)	2.1	%	-	2.1	%
Equity AFS and trading securities		27		Discounted cash flow	Liquidity/duration adjustment (1)	4.3	%	-	7.3	%
Other assets – reinsurance
recoverable		174		Discounted cash flow	Long-term lapse rate (2)	1	%	-	30	%
					Utilization of guaranteed withdrawals (3)	90	%	-	100	%
					Claims utilization factor (4)	60	%	-	100	%
					Premiums utilization factor (4)	70	%	-	140	%
					NPR (5)	0.00	%	-	0.35	%
					Mortality rate (6)				(8)
					Volatility (7)	1	%	-	28	%
Liabilities
Future contract benefits – indexed
annuity and IUL contracts
embedded derivatives		(1,170	)	Discounted cash flow	Lapse rate (2)	1	%	-	15	%
					Mortality rate (6)				(9)
Other liabilities – GLB reserves
embedded derivatives		(174	)	Discounted cash flow	Long-term lapse rate (2)	1	%	-	30	%
					Utilization of guaranteed withdrawals (3)	90	%	-	100	%
					Claims utilization factor (4)	60	%	-	100	%
					Premiums utilization factor (4)	70	%	-	140	%
					NPR (5)	0.00	%	-	0.35	%
					Mortality rate (6)(8)				(9)
					Volatility (7)	1	%	-	28	%

⁽¹⁾ The liquidity/duration adjustment input represents an estimated market participant composite of adjustments attributable to liquidity premiums, expected durations, structures and credit quality that would be applied to the market observable information of an investment.

⁽²⁾ The lapse rate input represents the estimated probability of a contract surrendering during a year, and thereby forgoing any future benefits.  The range for indexed annuity and IUL contracts represents the lapse rates during the surrender charge period.

⁽³⁾ The utilization of guaranteed withdrawals input represents the estimated percentage of contract holders that utilize the guaranteed withdrawal feature.

⁽⁴⁾ The utilization factors are applied to the present value of claims or premiums, as appropriate, in the GLB reserve calculation to estimate the impact of inefficient withdrawal behavior, including taking less than or more than the maximum guaranteed withdrawal.

⁽⁵⁾ The NPR input represents the estimated additional credit spread that market participants would apply to the market observable discount rate when pricing a contract.

⁽⁶⁾ The mortality rate input represents the estimated probability of when an individual belonging to a particular group, categorized according to age or some other factor such as gender, will die.

⁽⁷⁾ The volatility input represents overall volatilities assumed for the underlying variable annuity funds, which include a mixture of equity and fixed-income assets.  Fair value of the variable annuity GLB embedded derivatives would increase if higher volatilities were used for valuation.

⁽⁸⁾ The mortality rate is based on a combination of company and industry experience, adjusted for improvement factors.

⁽⁹⁾ Based on the “Annuity 2000 Mortality Table” developed by the Society of Actuaries Committee on Life Insurance Research that was adopted by the National Association of Insurance Commissioners in 1996 for our mortality input.

From the table above, we have excluded Level 3 fair value measurements obtained from independent, third-party pricing sources.  We do not develop the significant inputs used to measure the fair value of these assets and liabilities, and the information regarding the significant inputs is not readily available to us.  Independent broker-quoted fair values are non-binding quotes developed by market

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makers or broker-dealers obtained from third-party sources recognized as market participants.  The fair value of a broker-quoted asset or liability is based solely on the receipt of an updated quote from a single market maker or a broker-dealer recognized as a market participant as we do not adjust broker quotes when used as the fair value measurement for an asset or liability.  Significant increases or decreases in any of the quotes received from a third-party broker-dealer may result in a significantly higher or lower fair value measurement. 

Changes in any of the significant inputs presented in the table above may result in a significant change in the fair value measurement of the asset or liability as follows:

· Investments – An increase in the liquidity/duration adjustment input would result in a decrease in the fair value measurement. 

· Indexed annuity and IUL contracts embedded derivatives – An increase in the lapse rate or mortality rate inputs would result in a decrease in the fair value measurement. 

· GLB reserves embedded derivatives –  Assuming our GLB reserves embedded derivatives are in a liability position:  an increase in our lapse rate, NPR or mortality rate inputs would result in a decrease in the fair value measurement; and an increase in the utilization of guarantee withdrawal or volatility inputs would result in an increase in the fair value measurement.

For each category discussed above, the unobservable inputs are not inter-related; therefore, a directional change in one input will not affect the other inputs. 

As part of our ongoing valuation process, we assess the reasonableness of our valuation techniques or models and make adjustments as necessary.  For more information, see “Summary of Significant Accounting Policies” above.

23.  Segment Information

We provide products and services and report results through our Annuities, Retirement Plan Services, Life Insurance and Group Protection segments.  We also have Other Operations, which includes the financial data for operations that are not directly related to the business segments.  Our reporting segments reflect the manner by which our chief operating decision makers view and manage the business.  The following is a brief description of these segments and Other Operations.

The Annuities segment provides tax-deferred investment growth and lifetime income opportunities for its clients by offering fixed (including indexed) and variable annuities.

The Retirement Plan Services segment provides employer-sponsored defined benefit and individual retirement accounts, as well as individual and group variable annuities, group fixed annuities and mutual-fund based programs in the retirement plan marketplace.

The Life Insurance segment focuses in the creation and protection of wealth through life insurance products, including term insurance, a linked-benefit product (which is a UL policy linked with riders that provide for long-term care costs), IUL and both single and survivorship versions of UL and VUL, including corporate-owned UL and VUL insurance and bank-owned UL and VUL insurance products.

The Group Protection segment offers principally group non-medical insurance products, including term life, universal life, disability, dental, vision, accident and critical illness insurance to the employer market place through various forms of contributory and non-contributory plans.  Its products are marketed primarily through a national distribution system of regional group offices.  These offices develop business through employee benefit brokers, third-party administrators and other employee benefit firms.

Other Operations includes investments related to our excess capital; investments in media properties (see Note 3 for more information) and other corporate investments; benefit plan net liability; the unamortized deferred gain on indemnity reinsurance related to the sale of reinsurance; the results of certain disability income business; our run-off Institutional Pension business, the majority of which was sold on a group annuity basis; and debt costs.

Segment operating revenues and income (loss) from operations are internal measures used by our management and Board of Directors to evaluate and assess the results of our segments.  Income (loss) from operations is GAAP net income excluding the after-tax effects of the following items, as applicable:

· Realized gains and losses associated with the following (“excluded realized gain (loss)”):

§ Sales or disposals and impairments of securities;  

§ Changes in the fair value of derivatives, embedded derivatives within certain reinsurance arrangements and trading securities;

§ Changes in the fair value of the derivatives we own to hedge our GDB riders within our variable annuities;

§ Changes in the fair value of the embedded derivatives of our GLB riders accounted for at fair value, net of the change in the fair value of the derivatives we own to hedge them; and

§ Changes in the fair value of the embedded derivative liabilities related to index call options we may purchase in the future to hedge contract holder index allocations applicable to future reset periods for our indexed annuity products accounted for at fair value;

· Changes in reserves resulting from benefit ratio unlocking on our GDB and GLB riders;

· Income (loss) from reserve changes, net of related amortization, on business sold through reinsurance;

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· Gains (losses) on early extinguishment of debt;

· Losses from the impairment of intangible assets;

· Income (loss) from discontinued operations; and

· Income (loss) from the initial adoption of new accounting standards.

Operating revenues represent GAAP revenues excluding the pre-tax effects of the following items, as applicable:

· Excluded realized gain (loss);

· Revenue adjustments from the initial adoption of new accounting standards;

· Amortization of DFEL arising from changes in GDB and GLB benefit ratio unlocking; and

· Amortization of deferred gains arising from reserve changes on business sold through reinsurance.

We use our prevailing corporate federal income tax rate of 35% while taking into account any permanent differences for events recognized differently in our financial statements and federal income tax returns when reconciling our non-GAAP measures to the most comparable GAAP measure.  Operating revenues and income (loss) from operations do not replace revenues and net income as the GAAP measures of our consolidated results of operations.

Segment information (in millions) was as follows:

	For the Years Ended December 31,
	2014			2013			2012
Revenues
Operating revenues:
Annuities	$	3,450		$	3,044		$	2,713
Retirement Plan Services		1,081			1,061			1,015
Life Insurance		5,343			4,781			4,820
Group Protection		2,445			2,260			2,090
Other Operations		406			392			411
Excluded realized gain (loss), pre-tax		(689	)		(81	)		(235	)
Amortization of deferred gain arising from reserve changes on business
sold through reinsurance, pre-tax		3			3			3
Total revenues	$	12,039		$	11,460		$	10,817

	For the Years Ended December 31,
	2014			2013			2012
Net Income (Loss)
Income (loss) from operations:
Annuities	$	901		$	715		$	608
Retirement Plan Services		154			135			131
Life Insurance		373			464			538
Group Protection		23			71			72
Other Operations		(13	)		(5	)		(39	)
Excluded realized gain (loss), after-tax		(446	)		(53	)		(152	)
Income (loss) from reserve changes (net of related
amortization) on business sold through reinsurance, after-tax		2			2			2
Impairment of intangibles, after-tax		-			-			2
Net income (loss)	$	994		$	1,329		$	1,162

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	For the Years Ended December 31,
	2014		2013		2012
Net Investment Income
Annuities	$	1,013	$	1,022	$	1,058
Retirement Plan Services		828		825		797
Life Insurance		2,376		2,317		2,297
Group Protection		180		165		161
Other Operations		251		232		238
Total net investment income	$	4,648	$	4,561	$	4,551

	For the Years Ended December 31,
	2014		2013		2012
Amortization of DAC and VOBA, Net of Interest
Annuities	$	346	$	374	$	307
Retirement Plan Services		37		48		42
Life Insurance		640		441		609
Group Protection		57		53		48
Total amortization of DAC and VOBA, net of interest	$	1,080	$	916	$	1,006

	For the Years Ended December 31,
	2014			2013			2012
Federal Income Tax Expense (Benefit)
Annuities	$	225		$	159		$	117
Retirement Plan Services		48			46			29
Life Insurance		167			225			326
Group Protection		12			38			38
Other Operations		10			(9	)		(82	)
Excluded realized gain (loss)		(243	)		(29	)		(83	)
Reserve changes (net of related amortization)
on business sold through reinsurance		1			1			1
Impairment of intangibles		-			-			(2	)
Total federal income tax expense (benefit)	$	220		$	431		$	344

	As of December 31,
	2014		2013
Assets
Annuities	$	130,509	$	119,147
Retirement Plan Services		33,686		32,367
Life Insurance		69,712		67,470
Group Protection		4,239		3,865
Other Operations		15,364		14,659
Total assets	$	253,510	$	237,508

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24.  Supplemental Disclosures of Cash Flow Data

The following summarizes our supplemental cash flow data (in millions):

	For the Years Ended December 31,
	2014			2013			2012
Interest paid	$	104		$	91		$	134
Income taxes paid (received)		172			(6	)		136
Significant non-cash investing and financing transactions:
Disposal of note receivable from affiliate		(500	)		-			-
Acquisition of note receivable from affiliate		712			-			-
Exchange of surplus note for promissory note with affiliate:
Carrying value of asset		88			360			-
Carrying value of liability		(88	)		(360	)		-
Net asset (liability) from exchange	$	-		$	-		$	-
Reinsurance ceded:
Carrying value of assets	$	15		$	11		$	367
Carrying value of liabilities		15			11			(367	)
Total reinsurance ceded	$	30		$	22		$	-
Reinsurance recaptured:
Carrying value of assets	$	-		$	-		$	(34	)
Carrying value of liabilities		-			-			(84	)
Total reinsurance recaptured	$	-		$	-		$	(118	)
Reinsurance novated:
Carrying value of assets	$	-		$	-		$	-
Carrying value of liabilities		-			-			(26	)
Total reinsurance novated	$	-		$	-		$	(26	)

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25.  Transactions with Affiliates

The following summarizes transactions with affiliates (in millions) and the associated line item on our Consolidated Balance Sheets:

T

		As of December 31,
		2014			2013
Assets with affiliates:
	Accrued inter-company interest receivable	$	2		$	2	Accrued investment income
	Bonds		1,410			873	Fixed maturity AFS securities
	Ceded reinsurance contracts		(239	)		-	Deferred acquisition costs and value of
							business acquired
	Ceded reinsurance contracts		1,700			1,559	Reinsurance recoverables
	Ceded reinsurance contracts		44			268	Reinsurance related embedded derivatives
	Ceded reinsurance contracts		71			51	Other assets
	Cash management agreement investment		449			777	Other assets
	Promissory note due from LNC		-			-	Fixed maturity AFS securities
	Service agreement receivable		48			5	Other assets
	Ceded reinsurance contracts		10			202	Other assets
Liabilities with affiliates:
	Accrued inter-company interest payable		4			4	Other liabilities
	Assumed reinsurance contracts		25			407	Future contract benefits
	Assumed reinsurance contracts		413			-	Other contract holder funds
	Service agreement payable		62			-	Other liabilities
	Ceded reinsurance contracts		(53	)		-	Other contract holder funds
	Ceded reinsurance contracts		3,677			2,244	Funds withheld reinsurance liabilities
	Ceded reinsurance contracts		72			1,244	Other liabilities
	Inter-company short-term debt		2			51	Short-term debt
	Inter-company long-term debt		2,412			2,350	Long-term debt

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The following summarizes transactions with affiliates (in millions) and the associated line item on our Consolidated Statements of Comprehensive Income (Loss):

			For the Years Ended
			December 31,
			2014			2013			2012
Revenues with affiliates:
	Premiums received on assumed reinsurance contracts		$	(574	)	$	(318	)	$	(188	)	Insurance premiums
	Net investment income on intercompany notes			12			5			-		Net investment income
	Fees for management of general account			(105	)		(103	)		(92	)	Net investment income
	Realized gains (losses) on ceded reinsurance contracts:
		GLB reserves embedded derivatives		1,265			(2,153	)		-		Realized gain (loss)
		Reinsurance related settlements		(1,573	)		2,110			-		Realized gain (loss)
		Other gains (losses)		(199	)		242			-		Realized gain (loss)
Benefits and expenses with affiliates:
	Reinsurance (recoveries) benefits on ceded reinsurance			255			(205	)		(433	)	Benefits
	Service agreement payments			76			100			114		Commissions and other
												expenses
	Interest expense on inter-company debt			102			92			109		Interest and debt expense
	Interest credited on assumed reinsurance contracts			15			-			-		Interest credited

Bonds

LNC issues bonds to us for a predetermined face value to be repaid by LNC at a predetermined maturity with a specified interest rate. 

Cash Management Agreement

In order to manage our capital more efficiently, we participate in an inter-company cash management program where LNC can lend to or borrow from us to meet short-term borrowing needs.  The cash management program is essentially a series of demand loans, which are permitted under applicable insurance laws, among LNC and its affiliates that reduces overall borrowing costs by allowing LNC and its subsidiaries to access internal resources instead of incurring third-party transaction costs.  The borrowing and lending limit is currently 3% of our admitted assets as of our most recent year end.

Service Agreement

In accordance with service agreements with LNC and other subsidiaries of LNC for personnel and facilities usage, general management services and investment management services, we receive services from and provide services to affiliated companies and receive an allocation of corporate overhead.  Corporate overhead expenses are allocated based on specific methodologies for each function.  The majority of the expenses are allocated based on the following methodologies:  headcount, capital, investments by product, weighted policies in force, and sales. 

Fees for Management of General Account

Effective January 1, 2012, LNL entered into an Investment Advisory Agreement with Lincoln Investment Management Company (“LIMCO”), also a wholly-owned subsidiary of LNC.  LIMCO provides investment advisory services to LNL and enters into sub-advisory agreements with other third-party investment advisers.

Ceded Reinsurance Contracts

As discussed in Note 10, we cede insurance contracts to and assume insurance contracts from affiliated companies.  We cede certain guaranteed benefit risks (including certain GDB and GWB benefits) to LNBAR.  As discussed in Note 7, we cede the GLB reserves embedded derivatives and the related hedge results to LNBAR.  As discussed in Note 4, we also cede the risks for no-lapse benefit guarantees under certain UL contracts to LNBAR. 

Substantially all reinsurance ceded to affiliated companies is with unauthorized companies.  To take reserve credit for such reinsurance, we hold assets from the reinsurer, including funds held under reinsurance treaties, and are the beneficiary of LOCs aggregating to $186 million and $651 million as of December 31, 2014 and 2013, respectively.  The LOCs are obtained by the affiliate reinsurer and issued by banks in order for the Company to recognize the reserve credit.

26.  Subsequent Events

On March 16, 2015, LNL paid a cash dividend in the amount of $400 million to LNC.

E-78

Lincoln Life Variable Annuity Account N

N-1

Lincoln Life Variable Annuity Account N

Statements of assets and liabilities

December 31, 2014

Subaccount	Investments		Contract Purchases Due From The Lincoln National Life Insurance Company		Total Assets		Contract Redemptions Due To The Lincoln National Life Insurance Company		Mortality &Expense Guarantee Charges Payable To The Lincoln National Life Insurance Company		Net Assets
ABVPSF Global Thematic Growth Class B	$	28,688,922	$	5,277	$	28,694,199	$	—	$	1,294	$	28,692,905
ABVPSF International Value Class B		5,099		—		5,099		—		—		5,099
ABVPSF Large Cap Growth Class B		10,434,348		—		10,434,348		494		466		10,433,388
ABVPSF Small/Mid Cap Value Class A		57,826		—		57,826		—		1		57,825
ABVPSF Small/Mid Cap Value Class B		194,410,891		—		194,410,891		132,525		8,691		194,269,675
Alps|Alerian Energy Infrastructure Class I		109,931		7,275		117,206		—		1		117,205
Alps|Alerian Energy Infrastructure Class III		1,921,430		—		1,921,430		—		63		1,921,367
Alps|Stadion Tactical Defensive Class I		38,026		43,878		81,904		—		—		81,904
Alps|Stadion Tactical Defensive Class III		764,897		—		764,897		—		25		764,872
American Funds Asset Allocation Class 1		1,083,393		—		1,083,393		—		27		1,083,366
American Funds Asset Allocation Class 4		5,036,789		—		5,036,789		—		162		5,036,627
American Funds Blue Chip Income and Growth Class 1		2,328,872		—		2,328,872		—		55		2,328,817
American Funds Blue Chip Income and Growth Class 4		2,949,296		—		2,949,296		—		103		2,949,193
American Funds Bond Class 1		2,028,719		—		2,028,719		127		44		2,028,548
American Funds Capital Income Builder Class 1		44,135		73,069		117,204		—		1		117,203
American Funds Capital Income Builder Class 4		3,264,285		—		3,264,285		—		115		3,264,170
American Funds Global Balanced Class 1		344,393		—		344,393		—		7		344,386
American Funds Global Bond Class 1		1,648,880		198		1,649,078		—		42		1,649,036
American Funds Global Growth Class 1		929,886		—		929,886		—		19		929,867
American Funds Global Growth Class 2		300,075,885		7,694		300,083,579		—		12,746		300,070,833
American Funds Global Growth Class 4		1,707,680		—		1,707,680		—		57		1,707,623
American Funds Global Growth and Income Class 1		541,544		—		541,544		—		15		541,529
American Funds Global Small Capitalization Class 1		647,288		—		647,288		—		14		647,274
American Funds Global Small Capitalization Class 2		444,127,258		—		444,127,258		4,834		15,523		444,106,901
American Funds Global Small Capitalization Class 4		1,105,391		—		1,105,391		—		38		1,105,353
American Funds Growth Class 1		5,210,541		—		5,210,541		548		116		5,209,877
American Funds Growth Class 2		1,582,673,410		—		1,582,673,410		397,014		71,232		1,582,205,164
American Funds Growth Class 4		7,385,336		—		7,385,336		—		241		7,385,095
American Funds Growth-Income Class 1		2,917,925		—		2,917,925		422		60		2,917,443
American Funds Growth-Income Class 2		2,071,767,724		—		2,071,767,724		488,701		83,433		2,071,195,590
American Funds Growth-Income Class 4		4,572,559		—		4,572,559		—		151		4,572,408
American Funds High-Income Bond Class 1		777,620		148		777,768		—		19		777,749
American Funds International Class 1		2,008,291		382		2,008,673		—		39		2,008,634
American Funds International Class 2		729,785,976		—		729,785,976		182,297		29,112		729,574,567
American Funds International Class 4		3,027,331		—		3,027,331		—		106		3,027,225
American Funds International Growth and Income Class 1		1,533,947		—		1,533,947		—		36		1,533,911
American Funds Managed Risk Asset Allocation Class P1		749,963		—		749,963		—		13		749,950
American Funds Managed Risk Asset Allocation Class P2		6,290,963		8,667		6,299,630		—		250		6,299,380
American Funds Managed Risk Blue Chip Income and Growth Class P1		101,231		—		101,231		—		3		101,228
American Funds Managed Risk Growth Class P1		68,836		—		68,836		—		3		68,833

See accompanying notes.
N-2

Lincoln Life Variable Annuity Account N

Statements of assets and liabilities (continued)

December 31, 2014

Subaccount	Investments		Contract Purchases Due From The Lincoln National Life Insurance Company		Total Assets		Contract Redemptions Due To The Lincoln National Life Insurance Company		Mortality &Expense Guarantee Charges Payable To The Lincoln National Life Insurance Company		Net Assets
American Funds Managed Risk Growth-Income Class P1	$	26,677	$	—	$	26,677	$	—	$	1	$	26,676
American Funds Managed Risk International Class P1		13,648		—		13,648		—		—		13,648
American Funds Mortgage Class 1		276,235		—		276,235		—		9		276,226
American Funds Mortgage Class 4		52,830		—		52,830		—		2		52,828
American Funds New World Class 1		1,618,309		27,425		1,645,734		—		37		1,645,697
American Funds New World Class 4		2,083,577		—		2,083,577		—		70		2,083,507
American Funds U.S. Government/AAA-Rated Securities Class 1		186,394		—		186,394		—		6		186,388
BlackRock Global Allocation V.I. Class I		1,432,261		11,640		1,443,901		—		28		1,443,873
BlackRock Global Allocation V.I. Class III		1,315,235,424		—		1,315,235,424		342,662		63,033		1,314,829,729
ClearBridge Variable Aggressive Growth Class I		162,354		35,102		197,456		—		2		197,454
ClearBridge Variable Aggressive Growth Class II		4,723,218		—		4,723,218		—		152		4,723,066
ClearBridge Variable Mid Cap Core Class I		2,559		—		2,559		—		—		2,559
ClearBridge Variable Mid Cap Core Class II		14,288,490		19,150		14,307,640		—		638		14,307,002
Delaware VIP Diversified Income Standard Class		1,143,618		—		1,143,618		—		29		1,143,589
Delaware VIP Diversified Income Service Class		1,681,542,794		177,525		1,681,720,319		—		74,402		1,681,645,917
Delaware VIP Emerging Markets Standard Class		3,141		—		3,141		—		—		3,141
Delaware VIP Emerging Markets Service Class		325,242,690		184,358		325,427,048		—		14,695		325,412,353
Delaware VIP High Yield Standard Class		4,346,870		—		4,346,870		4		171		4,346,695
Delaware VIP High Yield Service Class		183,106,365		—		183,106,365		60,881		8,508		183,036,976
Delaware VIP International Value Equity Standard Class		159,210		—		159,210		—		6		159,204
Delaware VIP Limited-Term Diversified Income Standard Class		1,237,069		—		1,237,069		—		45		1,237,024
Delaware VIP Limited-Term Diversified Income Service Class		1,356,408,287		28,973		1,356,437,260		—		49,994		1,356,387,266
Delaware VIP REIT Standard Class		5,926,750		—		5,926,750		—		235		5,926,515
Delaware VIP REIT Service Class		176,180,396		—		176,180,396		9,104		8,168		176,163,124
Delaware VIP Small Cap Value Standard Class		7,560,261		—		7,560,261		—		296		7,559,965
Delaware VIP Small Cap Value Service Class		355,890,656		—		355,890,656		142,030		16,364		355,732,262
Delaware VIP Smid Cap Growth Standard Class		8,365,977		—		8,365,977		67		327		8,365,583
Delaware VIP Smid Cap Growth Service Class		147,833,233		—		147,833,233		184,130		6,726		147,642,377
Delaware VIP U.S. Growth Service Class		356,260,363		—		356,260,363		161,581		11,329		356,087,453
Delaware VIP Value Standard Class		7,091,786		—		7,091,786		—		281		7,091,505
Delaware VIP Value Service Class		288,254,080		—		288,254,080		376,157		13,677		287,864,246
Deutsche Alternative Asset Allocation VIP Class A		852,299		—		852,299		—		26		852,273
Deutsche Alternative Asset Allocation VIP Class B		55,629,108		8,003		55,637,111		—		2,587		55,634,524
Deutsche Equity 500 Index VIP Class A		7,058,748		—		7,058,748		—		321		7,058,427
Deutsche Small Cap Index VIP Class A		4,366,755		11		4,366,766		—		188		4,366,578
Eaton Vance VT Floating-Rate Income Fund Initial Class		1,407,422		—		1,407,422		—		47		1,407,375

See accompanying notes.
N-3

Lincoln Life Variable Annuity Account N

Statements of assets and liabilities (continued)

December 31, 2014

Subaccount	Investments		Contract Purchases Due From The Lincoln National Life Insurance Company		Total Assets		Contract Redemptions Due To The Lincoln National Life Insurance Company		Mortality &Expense Guarantee Charges Payable To The Lincoln National Life Insurance Company		Net Assets
Eaton Vance VT Floating-Rate Income Fund Advisor Class	$	439,062	$	—	$	439,062	$	—	$	6	$	439,056
Fidelity VIP Contrafund Initial Class		126,514		—		126,514		—		1		126,513
Fidelity VIP Contrafund Service Class 2		1,129,819,834		22,565		1,129,842,399		—		51,296		1,129,791,103
Fidelity VIP Growth Initial Class		5,379,633		—		5,379,633		—		208		5,379,425
Fidelity VIP Growth Service Class 2		156,869,185		215,056		157,084,241		—		7,420		157,076,821
Fidelity VIP Mid Cap Initial Class		588,676		—		588,676		—		7		588,669
Fidelity VIP Mid Cap Service Class 2		554,946,775		—		554,946,775		58,314		24,815		554,863,646
First Trust Multi Income Allocation Class I		424,582		—		424,582		—		14		424,568
First Trust/Dow Jones Dividend & Income Allocation Class I		1,555,752		—		1,555,752		—		58		1,555,694
Franklin Founding Funds Allocation VIP Class 4		6,459,806		—		6,459,806		—		221		6,459,585
Franklin Income VIP Class 2		640,695,802		—		640,695,802		416,686		27,867		640,251,249
Franklin Income VIP Class 4		7,785,417		—		7,785,417		—		267		7,785,150
Franklin Mutual Shares VIP Class 2		816,397,392		—		816,397,392		19,809		27,714		816,349,869
Franklin Mutual Shares VIP Class 4		821,229		—		821,229		—		28		821,201
Franklin Rising Dividends VIP Class 1		21,460		64,294		85,754		—		—		85,754
Franklin Rising Dividends VIP Class 4		2,612,551		—		2,612,551		—		93		2,612,458
Franklin Small Cap Value VIP Class 1		280,719		—		280,719		—		3		280,716
Franklin Small Cap Value VIP Class 4		729,639		—		729,639		—		24		729,615
Franklin Small-Mid Cap Growth VIP Class 4		631,706		—		631,706		—		22		631,684
Goldman Sachs VIT Large Cap Value Service Class		171,020,085		—		171,020,085		27,129		4,547		170,988,409
Goldman Sachs VIT Money Market Institutional Class		330,160		—		330,160		—		4		330,156
Goldman Sachs VIT Money Market Service Class		6,913,549		—		6,913,549		—		222		6,913,327
Goldman Sachs VIT Multi-Strategy Alternatives Advisor Class		761,080		—		761,080		—		24		761,056
Goldman Sachs VIT Multi-Strategy Alternatives Institutional Class		29,011		—		29,011		—		—		29,011
Goldman Sachs VIT Strategic Income Advisor Class		725,105		—		725,105		—		26		725,079
Guggenheim Long Short Equity		337,517		—		337,517		—		11		337,506
Guggenheim Multi-Hedge Strategies		504,115		—		504,115		—		16		504,099
Hartford Capital Appreciation HLS Class IA		49,360		—		49,360		—		1		49,359
Hartford Capital Appreciation HLS Class IC		1,575,831		—		1,575,831		—		57		1,575,774
Huntington VA Dividend Capture		1,389,976		—		1,389,976		—		53		1,389,923
Invesco V.I. American Franchise Series I		2,631,498		—		2,631,498		—		104		2,631,394
Invesco V.I. American Franchise Series II		1,160,188		6		1,160,194		—		54		1,160,140
Invesco V.I. Balanced-Risk Allocation Series I		163,615		—		163,615		—		2		163,613
Invesco V.I. Balanced-Risk Allocation Series II		1,409,987		—		1,409,987		—		51		1,409,936
Invesco V.I. Comstock Series II		1,123,639		—		1,123,639		—		36		1,123,603
Invesco V.I. Core Equity Series I		8,378,630		—		8,378,630		205		342		8,378,083
Invesco V.I. Core Equity Series II		2,328,554		—		2,328,554		18		102		2,328,434
Invesco V.I. Diversified Dividend Series I		20,112		—		20,112		—		—		20,112
Invesco V.I. Diversified Dividend Series II		703,275		—		703,275		—		22		703,253
Invesco V.I. Equally-Weighted S&P 500 Series II		1,469,634		14,007		1,483,641		—		49		1,483,592
Invesco V.I. Equity and Income Series II		1,296,517		—		1,296,517		—		43		1,296,474
Invesco V.I. International Growth Series I		2,385,989		—		2,385,989		—		90		2,385,899
Invesco V.I. International Growth Series II		11,570,829		47,099		11,617,928		—		486		11,617,442

See accompanying notes.
N-4

Lincoln Life Variable Annuity Account N

Statements of assets and liabilities (continued)

December 31, 2014

Subaccount	Investments		Contract Purchases Due From The Lincoln National Life Insurance Company		Total Assets		Contract Redemptions Due To The Lincoln National Life Insurance Company		Mortality &Expense Guarantee Charges Payable To The Lincoln National Life Insurance Company		Net Assets
Ivy Funds VIP Asset Strategy Class A	$	4,055,756	$	71,614	$	4,127,370	$	—	$	133	$	4,127,237
Ivy Funds VIP Energy Class A		882,754		—		882,754		—		27		882,727
Ivy Funds VIP High Income Class A		2,334,184		—		2,334,184		—		83		2,334,101
Ivy Funds VIP Micro Cap Growth Class A		400,419		—		400,419		—		13		400,406
Ivy Funds VIP Mid Cap Growth Class A		672,528		—		672,528		—		24		672,504
Ivy Funds VIP Science and Technology Class A		1,652,569		158,386		1,810,955		—		53		1,810,902
Janus Aspen Balanced Service Class		16,991,639		—		16,991,639		76		766		16,990,797
Janus Aspen Enterprise Service Class		5,735,334		—		5,735,334		13		257		5,735,064
Janus Aspen Global Research Service Class		960,561		—		960,561		—		42		960,519
JPMIT Intrepid Mid Cap Class 1		51,853		—		51,853		—		1		51,852
JPMIT Intrepid Mid Cap Class 2		1,581,280		—		1,581,280		—		49		1,581,231
LVIP American Balanced Allocation Standard Class		9,024,609		—		9,024,609		—		169		9,024,440
LVIP American Balanced Allocation Service Class		2,574,269		50,000		2,624,269		—		86		2,624,183
LVIP American Century VP Mid Cap Value RPM Service Class		83,904,107		115,219		84,019,326		—		3,881		84,015,445
LVIP American Global Growth Service Class II		90,280,789		25,009		90,305,798		—		4,133		90,301,665
LVIP American Global Small Capitalization Service Class II		67,233,349		382,607		67,615,956		—		3,069		67,612,887
LVIP American Growth Allocation Standard Class		732,094		—		732,094		—		18		732,076
LVIP American Growth Allocation Service Class		3,156,866		—		3,156,866		—		107		3,156,759
LVIP American Growth Service Class II		303,273,298		179,555		303,452,853		—		14,167		303,438,686
LVIP American Growth-Income Service Class II		250,210,442		203,377		250,413,819		—		11,609		250,402,210
LVIP American Income Allocation Standard Class		6,381		—		6,381		—		—		6,381
LVIP American International Service Class II		138,285,681		377,033		138,662,714		—		6,471		138,656,243
LVIP American Preservation Standard Class		127,961		—		127,961		—		4		127,957
LVIP American Preservation Service Class		151,903		—		151,903		—		5		151,898
LVIP AQR Enhanced Global Strategies Standard Class		14,825		—		14,825		—		—		14,825
LVIP AQR Enhanced Global Strategies Service Class		1,298,283		—		1,298,283		—		44		1,298,239
LVIP Baron Growth Opportunities Standard Class		524,982		—		524,982		—		7		524,975
LVIP Baron Growth Opportunities Service Class		175,945,216		—		175,945,216		13,860		8,136		175,923,220
LVIP BlackRock Emerging Markets RPM Standard Class		123,197		—		123,197		—		5		123,192
LVIP BlackRock Emerging Markets RPM Service Class		166,385,649		138,363		166,524,012		—		7,678		166,516,334
LVIP BlackRock Equity Dividend RPM Standard Class		351,621		—		351,621		—		6		351,615
LVIP BlackRock Equity Dividend RPM Service Class		459,100,176		135,688		459,235,864		—		21,679		459,214,185
LVIP BlackRock Global Allocation V.I. RPM Standard Class		292,910		—		292,910		—		8		292,902

See accompanying notes.
N-5

Lincoln Life Variable Annuity Account N

Statements of assets and liabilities (continued)

December 31, 2014

Subaccount	Investments		Contract Purchases Due From The Lincoln National Life Insurance Company		Total Assets		Contract Redemptions Due To The Lincoln National Life Insurance Company		Mortality &Expense Guarantee Charges Payable To The Lincoln National Life Insurance Company		Net Assets
LVIP BlackRock Global Allocation V.I. RPM Service Class	$	753,273,392	$	423,044	$	753,696,436	$	—	$	36,650	$	753,659,786
LVIP BlackRock Inflation Protected Bond Standard Class		500,792		—		500,792		—		13		500,779
LVIP BlackRock Inflation Protected Bond Service Class		789,727,615		—		789,727,615		71,910		34,813		789,620,892
LVIP BlackRock Multi-Asset Income Standard Class		137,693		70,205		207,898		—		2		207,896
LVIP BlackRock Multi-Asset Income Service Class		961,772		—		961,772		—		32		961,740
LVIP Capital Growth Service Class		316,408,116		—		316,408,116		79,626		8,946		316,319,544
LVIP Clarion Global Real Estate Standard Class		291,228		—		291,228		—		3		291,225
LVIP Clarion Global Real Estate Service Class		106,064,775		—		106,064,775		109,884		4,891		105,950,000
LVIP ClearBridge Variable Appreciation RPM Standard Class		65,850		—		65,850		—		2		65,848
LVIP ClearBridge Variable Appreciation RPM Service Class		60,797,135		516,261		61,313,396		—		2,658		61,310,738
LVIP Columbia Small-Mid Cap Growth RPM Service Class		248,312,842		—		248,312,842		202,749		11,580		248,098,513
LVIP Delaware Bond Standard Class		106,532,328		64,726		106,597,054		—		4,926		106,592,128
LVIP Delaware Bond Service Class		2,646,481,841		1,133,402		2,647,615,243		—		99,101		2,647,516,142
LVIP Delaware Diversified Floating Rate Standard Class		1,279,052		—		1,279,052		—		40		1,279,012
LVIP Delaware Diversified Floating Rate Service Class		752,438,855		—		752,438,855		607,088		35,181		751,796,586
LVIP Delaware Foundation Aggressive Allocation Standard Class		6,234,469		—		6,234,469		226		290		6,233,953
LVIP Delaware Foundation Aggressive Allocation Service Class		18,592,043		—		18,592,043		58,162		899		18,532,982
LVIP Delaware Growth and Income Service Class		42,474,974		19,991		42,494,965		—		1,963		42,493,002
LVIP Delaware Social Awareness Standard Class		9,365,809		—		9,365,809		14,786		417		9,350,606
LVIP Delaware Social Awareness Service Class		64,499,741		13,412		64,513,153		—		2,847		64,510,306
LVIP Delaware Special Opportunities Service Class		51,323,894		3,070		51,326,964		—		2,281		51,324,683
LVIP Dimensional Non-U.S. Equity RPM Standard Class		2,731,971		—		2,731,971		—		48		2,731,923
LVIP Dimensional Non-U.S. Equity RPM Service Class		171,458,204		—		171,458,204		221,803		7,880		171,228,521
LVIP Dimensional U.S. Equity RPM Standard Class		4,813,877		—		4,813,877		—		85		4,813,792
LVIP Dimensional U.S. Equity RPM Service Class		301,179,780		—		301,179,780		888,098		13,842		300,277,840
LVIP Dimensional/Vanguard Total Bond Standard Class		4,935,763		—		4,935,763		—		97		4,935,666
LVIP Dimensional/Vanguard Total Bond Service Class		337,901,495		181,461		338,082,956		—		15,475		338,067,481
LVIP Franklin Mutual Shares RPM Standard Class		19,769		—		19,769		—		—		19,769
LVIP Franklin Mutual Shares RPM Service Class		87,931,171		71,820		88,002,991		—		4,209		87,998,782

See accompanying notes.
N-6

Lincoln Life Variable Annuity Account N

Statements of assets and liabilities (continued)

December 31, 2014

Subaccount	Investments		Contract Purchases Due From The Lincoln National Life Insurance Company		Total Assets		Contract Redemptions Due To The Lincoln National Life Insurance Company		Mortality &Expense Guarantee Charges Payable To The Lincoln National Life Insurance Company		Net Assets
LVIP Franklin Templeton Multi-Asset Opportunities Service Class	$	591,642	$	—	$	591,642	$	—	$	19	$	591,623
LVIP Global Income Service Class		586,465,556		9,966		586,475,522		—		26,296		586,449,226
LVIP Goldman Sachs Income Builder Standard Class		20,030		—		20,030		—		—		20,030
LVIP Goldman Sachs Income Builder Service Class		589,564		—		589,564		—		20		589,544
LVIP Invesco Diversified Equity Income RPM Service Class		30,263,739		106,494		30,370,233		—		1,375		30,368,858
LVIP Invesco V.I. Comstock RPM Standard Class		79,232		—		79,232		—		3		79,229
LVIP Invesco V.I. Comstock RPM Service Class		68,946,340		200,102		69,146,442		—		3,097		69,143,345
LVIP JPMorgan High Yield Service Class		145,212,975		—		145,212,975		184,270		5,901		145,022,804
LVIP JPMorgan Mid Cap Value RPM Standard Class		80,065		—		80,065		—		1		80,064
LVIP JPMorgan Mid Cap Value RPM Service Class		305,584,371		300,158		305,884,529		—		14,336		305,870,193
LVIP Managed Risk American Balanced Allocation Standard Class		552,558		—		552,558		—		13		552,545
LVIP Managed Risk American Balanced Allocation Service Class		3,880,676		10,300		3,890,976		—		156		3,890,820
LVIP Managed Risk American Growth Allocation Standard Class		860,237		—		860,237		—		20		860,217
LVIP Managed Risk American Growth Allocation Service Class		19,106,135		35,215		19,141,350		—		772		19,140,578
LVIP Managed Risk Profile 2010 Service Class		5,629,675		—		5,629,675		—		257		5,629,418
LVIP Managed Risk Profile 2020 Service Class		14,458,615		—		14,458,615		—		646		14,457,969
LVIP Managed Risk Profile 2030 Service Class		7,397,136		—		7,397,136		—		342		7,396,794
LVIP Managed Risk Profile 2040 Service Class		6,008,306		—		6,008,306		—		278		6,008,028
LVIP Managed Risk Profile Conservative Standard Class		33,411		—		33,411		—		1		33,410
LVIP Managed Risk Profile Conservative Service Class		1,231,189,434		192,186		1,231,381,620		—		58,052		1,231,323,568
LVIP Managed Risk Profile Growth Standard Class		4,067,813		—		4,067,813		—		79		4,067,734
LVIP Managed Risk Profile Growth Service Class		8,252,197,912		5,484,496		8,257,682,408		—		352,133		8,257,330,275
LVIP Managed Risk Profile Moderate Standard Class		583,382		—		583,382		—		26		583,356
LVIP Managed Risk Profile Moderate Service Class		6,542,285,916		1,497,060		6,543,782,976		—		280,378		6,543,502,598
LVIP MFS International Growth Standard Class		2,350		7,275		9,625		—		—		9,625
LVIP MFS International Growth Service Class		152,250,020		36,725		152,286,745		—		5,430		152,281,315
LVIP MFS International Growth RPM Service Class		87,605,652		138,766		87,744,418		—		4,122		87,740,296
LVIP MFS Value Standard Class		6,835		—		6,835		—		—		6,835
LVIP MFS Value Service Class		879,838,085		—		879,838,085		182,481		28,785		879,626,819
LVIP Mid-Cap Value Service Class		137,050,112		—		137,050,112		42,504		6,256		137,001,352
LVIP Mondrian International Value Standard Class		15,358,180		—		15,358,180		25,043		720		15,332,417

See accompanying notes.
N-7

Lincoln Life Variable Annuity Account N

Statements of assets and liabilities (continued)

December 31, 2014

Subaccount	Investments		Contract Purchases Due From The Lincoln National Life Insurance Company		Total Assets		Contract Redemptions Due To The Lincoln National Life Insurance Company		Mortality &Expense Guarantee Charges Payable To The Lincoln National Life Insurance Company		Net Assets
LVIP Mondrian International Value Service Class	$	301,642,085	$	94,380	$	301,736,465	$	—	$	11,362	$	301,725,103
LVIP Money Market Standard Class		32,832,620		155,869		32,988,489		—		1,450		32,987,039
LVIP Money Market Service Class		262,205,485		—		262,205,485		301,420		11,841		261,892,224
LVIP Multi-Manager Global Equity RPM Service Class		5,051,085		5,946		5,057,031		—		247		5,056,784
LVIP PIMCO Low Duration Bond Standard Class		84,093		—		84,093		—		2		84,091
LVIP PIMCO Low Duration Bond Service Class		52,030,155		1,430,730		53,460,885		—		2,335		53,458,550
LVIP SSgA Bond Index Standard Class		423,156		—		423,156		—		9		423,147
LVIP SSgA Bond Index Service Class		982,150,781		—		982,150,781		156,955		45,592		981,948,234
LVIP SSgA Conservative Index Allocation Service Class		61,016,492		—		61,016,492		1,420		2,764		61,012,308
LVIP SSgA Conservative Structured Allocation Standard Class		166,187		—		166,187		—		2		166,185
LVIP SSgA Conservative Structured Allocation Service Class		190,013,205		—		190,013,205		5,371		8,817		189,999,017
LVIP SSgA Developed International 150 Standard Class		253,342		—		253,342		—		6		253,336
LVIP SSgA Developed International 150 Service Class		145,568,871		9,591		145,578,462		—		6,773		145,571,689
LVIP SSgA Emerging Markets 100 Standard Class		462,473		—		462,473		—		10		462,463
LVIP SSgA Emerging Markets 100 Service Class		169,930,966		—		169,930,966		220,384		7,906		169,702,676
LVIP SSgA Global Tactical Allocation RPM Standard Class		222,658		—		222,658		—		5		222,653
LVIP SSgA Global Tactical Allocation RPM Service Class		884,963,246		132,060		885,095,306		—		42,100		885,053,206
LVIP SSgA International Index Standard Class		372,410		43,833		416,243		—		9		416,234
LVIP SSgA International Index Service Class		274,338,324		159,501		274,497,825		—		12,774		274,485,051
LVIP SSgA International RPM Service Class		15,078,329		14,140		15,092,469		—		705		15,091,764
LVIP SSgA Large Cap 100 Standard Class		1,636,102		—		1,636,102		—		51		1,636,051
LVIP SSgA Large Cap 100 Service Class		324,559,432		635,953		325,195,385		—		15,393		325,179,992
LVIP SSgA Large Cap RPM Standard Class		1,417		—		1,417		—		—		1,417
LVIP SSgA Large Cap RPM Service Class		98,783,734		76,778		98,860,512		—		4,602		98,855,910
LVIP SSgA Moderate Index Allocation Service Class		190,734,856		—		190,734,856		4,285		8,808		190,721,763
LVIP SSgA Moderate Structured Allocation Service Class		830,539,527		—		830,539,527		110,273		38,518		830,390,736
LVIP SSgA Moderately Aggressive Index Allocation Service Class		166,333,843		—		166,333,843		270,537		7,577		166,055,729
LVIP SSgA Moderately Aggressive Structured Allocation Service Class		426,564,809		6,788		426,571,597		—		20,117		426,551,480
LVIP SSgA S&P 500 Index Standard Class		36,083,947		67,001		36,150,948		—		1,478		36,149,470
LVIP SSgA S&P 500 Index Service Class		857,365,640		—		857,365,640		237,944		40,217		857,087,479
LVIP SSgA Small-Cap Index Standard Class		1,363,893		63,197		1,427,090		—		27		1,427,063
LVIP SSgA Small-Cap Index Service Class		273,300,383		—		273,300,383		401,368		12,533		272,886,482
LVIP SSgA Small-Cap RPM Standard Class		80,915		—		80,915		—		2		80,913
LVIP SSgA Small-Cap RPM Service Class		89,148,460		63,379		89,211,839		—		4,140		89,207,699
LVIP SSgA Small-Mid Cap 200 Standard Class		1,469,362		—		1,469,362		—		42		1,469,320
LVIP SSgA Small-Mid Cap 200 Service Class		110,615,595		—		110,615,595		46,860		5,172		110,563,563

See accompanying notes.
N-8

Lincoln Life Variable Annuity Account N

Statements of assets and liabilities (continued)

December 31, 2014

Subaccount	Investments		Contract Purchases Due From The Lincoln National Life Insurance Company		Total Assets		Contract Redemptions Due To The Lincoln National Life Insurance Company		Mortality &Expense Guarantee Charges Payable To The Lincoln National Life Insurance Company		Net Assets
LVIP T. Rowe Price Growth Stock Standard Class	$	50,707	$	—	$	50,707	$	—	$	1	$	50,706
LVIP T. Rowe Price Growth Stock Service Class		177,623,753		—		177,623,753		30,777		8,128		177,584,848
LVIP T. Rowe Price Structured Mid-Cap Growth Standard Class		2,726,304		24		2,726,328		—		131		2,726,197
LVIP T. Rowe Price Structured Mid-Cap Growth Service Class		93,479,153		—		93,479,153		50,891		4,171		93,424,091
LVIP Templeton Growth RPM Service Class		592,835,950		503,471		593,339,421		—		27,384		593,312,037
LVIP UBS Large Cap Growth RPM Standard Class		2,252,620		14		2,252,634		—		116		2,252,518
LVIP UBS Large Cap Growth RPM Service Class		234,475,663		71,069		234,546,732		—		11,091		234,535,641
LVIP Vanguard Domestic Equity ETF Standard Class		451,352		—		451,352		—		14		451,338
LVIP Vanguard Domestic Equity ETF Service Class		98,989,207		302,673		99,291,880		—		4,391		99,287,489
LVIP Vanguard International Equity ETF Standard Class		384,747		—		384,747		—		12		384,735
LVIP Vanguard International Equity ETF Service Class		55,018,857		12,077		55,030,934		—		2,433		55,028,501
LVIP VIP Contrafund RPM Standard Class		436,128		—		436,128		—		10		436,118
LVIP VIP Contrafund RPM Service Class		270,364,850		—		270,364,850		42,293		12,738		270,309,819
LVIP VIP Mid Cap RPM Service Class		11,466,292		5,221		11,471,513		—		534		11,470,979
Lord Abbett Series Fund Bond Debenture Class VC		1,565,199		14,550		1,579,749		—		42		1,579,707
Lord Abbett Series Fund Developing Growth Class VC		796,485		96,532		893,017		—		25		892,992
Lord Abbett Series Fund Fundamental Equity Class VC		16,496,658		—		16,496,658		24,798		436		16,471,424
Lord Abbett Series Fund Short Duration Income Class VC		2,553,088		78,981		2,632,069		—		81		2,631,988
MFS VIT Core Equity Service Class		2,602,306		—		2,602,306		2		117		2,602,187
MFS VIT Growth Initial Class		3,261,160		—		3,261,160		114		127		3,260,919
MFS VIT Growth Service Class		50,713,489		30,078		50,743,567		—		1,952		50,741,615
MFS VIT Total Return Initial Class		9,082,721		—		9,082,721		85		360		9,082,276
MFS VIT Total Return Service Class		13,180		—		13,180		—		1		13,179
MFS VIT Utilities Initial Class		10,684,498		—		10,684,498		—		417		10,684,081
MFS VIT Utilities Service Class		233,401,545		—		233,401,545		21,176		10,365		233,370,004
MFS VIT II International Value Initial Class		36,885		32,147		69,032		—		—		69,032
MFS VIT II International Value Service Class		1,740,823		—		1,740,823		—		58		1,740,765
Morgan Stanley UIF Capital Growth Class II		1,743,781		—		1,743,781		—		46		1,743,735
NB AMT Mid Cap Intrinsic Value I Class		37,613,173		—		37,613,173		12,577		1,735		37,598,861
Oppenheimer Global Fund/VA Service Class		8,528,329		—		8,528,329		13,423		229		8,514,677
Oppenheimer International Growth Fund/VA Non-Service Class		527,493		—		527,493		—		7		527,486
Oppenheimer International Growth Fund/VA Service Class		1,205,035		—		1,205,035		—		40		1,204,995
Oppenheimer Main Street Small Cap Fund/VA Non-Service Class		868,067		—		868,067		—		31		868,036
PIMCO VIT All Asset All Authority Advisor Class		744,251		—		744,251		—		26		744,225
PIMCO VIT All Asset All Authority Institutional Class		96,767		—		96,767		—		1		96,766

See accompanying notes.
N-9

Lincoln Life Variable Annuity Account N

Statements of assets and liabilities (continued)

December 31, 2014

Subaccount	Investments		Contract Purchases Due From The Lincoln National Life Insurance Company		Total Assets		Contract Redemptions Due To The Lincoln National Life Insurance Company		Mortality &Expense Guarantee Charges Payable To The Lincoln National Life Insurance Company		Net Assets
PIMCO VIT CommodityRealReturn Strategy Advisor Class	$	11,260,416	$	4,028	$	11,264,444	$	—	$	471	$	11,263,973
PIMCO VIT CommodityRealReturn Strategy Institutional Class		4,126		—		4,126		—		—		4,126
PIMCO VIT Emerging Markets Bond Advisor Class		833,499		—		833,499		—		27		833,472
PIMCO VIT Unconstrained Bond Advisor Class		558,189		—		558,189		—		19		558,170
Putnam VT Absolute Return 500 Class IB		818,391		—		818,391		—		27		818,364
Putnam VT Global Health Care Class IB		6,660,456		—		6,660,456		—		281		6,660,175
Putnam VT Growth & Income Class IB		1,738,970		—		1,738,970		5		78		1,738,887
SIPT VP Market Growth Strategy Class III		259,810		—		259,810		—		8		259,802
SIPT VP Market Plus Strategy Class III		1,107,644		—		1,107,644		—		38		1,107,606
Templeton Foreign VIP Class 1		20,057		—		20,057		—		—		20,057
Templeton Foreign VIP Class 4		707,428		—		707,428		—		22		707,406
Templeton Global Bond VIP Class 1		864,411		100,851		965,262		—		9		965,253
Templeton Global Bond VIP Class 2		467,019,732		7,578		467,027,310		—		20,498		467,006,812
Templeton Global Bond VIP Class 4		3,945,526		—		3,945,526		—		137		3,945,389
Templeton Growth VIP Class 2		39,463,230		—		39,463,230		21,136		1,824		39,440,270
Transparent Value Directional Allocation VI Class I		34,995		—		34,995		—		—		34,995
Transparent Value Directional Allocation VI Class II		11,078,860		—		11,078,860		—		350		11,078,510
UIF Global Infrastructure Class I		49,490		—		49,490		—		1		49,489
UIF Global Infrastructure Class II		1,606,254		—		1,606,254		—		52		1,606,202
Van Eck VIP Global Hard Assets Class S		616,827		—		616,827		—		21		616,806
Van Eck VIP Global Hard Assets Initial Class		185,201		5,820		191,021		—		2		191,019
Virtus VIT Multi-Sector Fixed Income Class A		1,341,796		—		1,341,796		—		47		1,341,749
Virtus VIT Premium AlphaSector Class A		2,631,105		—		2,631,105		—		90		2,631,015
Virtus VIT Premium AlphaSector Class I		142,491		—		142,491		—		2		142,489

See accompanying notes.
N-10

[THIS PAGE INTENTIONALLY LEFT BLANK]

Lincoln Life Variable Annuity Account N

Statements of operations

Year Ended December 31, 2014

Subaccount	Dividends from Investment Income		Mortality and Expense Guarantee Charges			Net Investment Income (Loss)			Net Realized Gain (Loss) on Investments
ABVPSF Global Thematic Growth Class B	$	—	$	(476,185	)	$	(476,185	)	$	1,600,691
ABVPSF Growth and Income Class B		900		(561	)		339			(2,353	)
ABVPSF International Value Class B		58		(13	)		45			3
ABVPSF Large Cap Growth Class B		—		(160,425	)		(160,425	)		724,488
ABVPSF Small/Mid Cap Value Class A		133		(77	)		56			(5	)
ABVPSF Small/Mid Cap Value Class B		908,212		(3,177,451	)		(2,269,239	)		12,260,210
Alps|Alerian Energy Infrastructure Class I		373		(73	)		300			(3	)
Alps|Alerian Energy Infrastructure Class III		1,762		(5,175	)		(3,413	)		(5,630	)
Alps|Stadion Tactical Defensive Class I		—		(2	)		(2	)		—
Alps|Stadion Tactical Defensive Class III		—		(1,701	)		(1,701	)		(286	)
American Century VP Inflation Protection Class II		1,981		(1,065	)		916			1,799
American Funds Asset Allocation Class 1		14,921		(8,059	)		6,862			1,470
American Funds Asset Allocation Class 4		63,365		(11,654	)		51,711			(769	)
American Funds Blue Chip Income and Growth Class 1		69,010		(15,542	)		53,468			42,665
American Funds Blue Chip Income and Growth Class 4		63,174		(6,159	)		57,015			82
American Funds Bond Class 1		41,504		(13,195	)		28,309			1,095
American Funds Capital Income Builder Class 1		285		(37	)		248			(225	)
American Funds Capital Income Builder Class 4		20,649		(8,499	)		12,150			1,168
American Funds Global Balanced Class 1		4,180		(2,549	)		1,631			5,119
American Funds Global Bond Class 1		26,571		(13,530	)		13,041			1,037
American Funds Global Growth Class 1		10,761		(5,006	)		5,755			619
American Funds Global Growth Class 2		3,538,402		(4,839,654	)		(1,301,252	)		14,361,322
American Funds Global Growth Class 4		12,452		(3,821	)		8,631			53
American Funds Global Growth and Income Class 1		19,568		(4,482	)		15,086			767
American Funds Global Small Capitalization Class 1		2,145		(3,110	)		(965	)		853
American Funds Global Small Capitalization Class 2		554,940		(5,912,846	)		(5,357,906	)		18,171,312
American Funds Global Small Capitalization Class 4		598		(2,365	)		(1,767	)		(289	)
American Funds Growth Class 1		63,248		(32,122	)		31,126			26,161
American Funds Growth Class 2		12,392,150		(26,584,051	)		(14,191,901	)		101,107,606
American Funds Growth Class 4		54,829		(16,035	)		38,794			(2,668	)
American Funds Growth-Income Class 1		39,022		(15,516	)		23,506			6,412
American Funds Growth-Income Class 2		26,411,972		(30,906,233	)		(4,494,261	)		124,332,603
American Funds Growth-Income Class 4		45,789		(8,726	)		37,063			(874	)
American Funds High-Income Bond Class 1		42,291		(5,658	)		36,633			(297	)
American Funds International Class 1		32,903		(10,025	)		22,878			5,239
American Funds International Class 2		10,456,735		(11,119,634	)		(662,899	)		18,683,051
American Funds International Class 4		38,148		(7,631	)		30,517			(474	)
American Funds International Growth and Income Class 1		47,195		(11,868	)		35,327			718
American Funds Managed Risk Asset Allocation Class P1		1,427		(3,012	)		(1,585	)		503
American Funds Managed Risk Asset Allocation Class P2		2,758		(15,252	)		(12,494	)		78
American Funds Managed Risk Blue Chip Income and Growth Class P1		2,544		(465	)		2,079			100
American Funds Managed Risk Growth Class P1		699		(943	)		(244	)		235
American Funds Managed Risk Growth-Income Class P1		303		(122	)		181			(248	)
American Funds Managed Risk International Class P1		195		(69	)		126			1
American Funds Mortgage Class 1		2,489		(3,626	)		(1,137	)		1,031
American Funds Mortgage Class 4		264		(104	)		160			(22	)
American Funds New World Class 1		20,349		(11,743	)		8,606			(697	)
American Funds New World Class 4		17,204		(4,266	)		12,938			(1,186	)
American Funds U.S. Government/AAA-Rated Securities Class 1		2,708		(3,000	)		(292	)		952
BlackRock Global Allocation V.I. Class I		31,238		(8,221	)		23,017			429
BlackRock Global Allocation V.I. Class III		29,635,626		(23,925,615	)		5,710,011			17,849,657
ClearBridge Variable Aggressive Growth Class I		230		(169	)		61			—
ClearBridge Variable Aggressive Growth Class II		—		(10,485	)		(10,485	)		348
ClearBridge Variable Mid Cap Core Class I		7		(5	)		2			—
ClearBridge Variable Mid Cap Core Class II		9,516		(49,545	)		(40,029	)		(2,458	)
Delaware VIP Diversified Income Standard Class		14,554		(7,709	)		6,845			956
Delaware VIP Diversified Income Service Class		30,971,211		(25,326,581	)		5,644,630			2,160,926

See accompanying notes.
N-12

Subaccount	Dividends from Net Realized Gain on Investments		Total Net Realized Gain (Loss) on Investments			Net Change in Unrealized Appreciation or Depreciation on Investments			Net Increase (Decrease) in Net Assets Resulting from Operations
ABVPSF Global Thematic Growth Class B	$	—	$	1,600,691		$	(228,100	)	$	896,406
ABVPSF Growth and Income Class B		—		(2,353	)		—			(2,014	)
ABVPSF International Value Class B		—		3			(147	)		(99	)
ABVPSF Large Cap Growth Class B		—		724,488			561,463			1,125,526
ABVPSF Small/Mid Cap Value Class A		2,192		2,187			(855	)		1,388
ABVPSF Small/Mid Cap Value Class B		22,403,645		34,663,855			(19,170,127	)		13,224,489
Alps|Alerian Energy Infrastructure Class I		286		283			(3,754	)		(3,171	)
Alps|Alerian Energy Infrastructure Class III		9,474		3,844			(48,092	)		(47,661	)
Alps|Stadion Tactical Defensive Class I		—		—			(500	)		(502	)
Alps|Stadion Tactical Defensive Class III		—		(286	)		17,706			15,719
American Century VP Inflation Protection Class II		258		2,057			—			2,973
American Funds Asset Allocation Class 1		39,343		40,813			(13,407	)		34,268
American Funds Asset Allocation Class 4		—		(769	)		16,813			67,755
American Funds Blue Chip Income and Growth Class 1		—		42,665			101,896			198,029
American Funds Blue Chip Income and Growth Class 4		—		82			(13,282	)		43,815
American Funds Bond Class 1		532		1,627			35,154			65,090
American Funds Capital Income Builder Class 1		33		(192	)		(527	)		(471	)
American Funds Capital Income Builder Class 4		3,593		4,761			(58,919	)		(42,008	)
American Funds Global Balanced Class 1		6,857		11,976			(10,222	)		3,385
American Funds Global Bond Class 1		12,151		13,188			(24,709	)		1,520
American Funds Global Growth Class 1		48,645		49,264			(43,569	)		11,450
American Funds Global Growth Class 2		30,975,744		45,337,066			(41,853,807	)		2,182,007
American Funds Global Growth Class 4		—		53			(6,679	)		2,005
American Funds Global Growth and Income Class 1		—		767			627			16,480
American Funds Global Small Capitalization Class 1		962		1,815			(10,951	)		(10,101	)
American Funds Global Small Capitalization Class 2		2,054,615		20,225,927			(10,320,455	)		4,547,566
American Funds Global Small Capitalization Class 4		—		(289	)		(2,686	)		(4,742	)
American Funds Growth Class 1		143,150		169,311			81,462			281,899
American Funds Growth Class 2		79,947,328		181,054,934			(61,422,605	)		105,440,428
American Funds Growth Class 4		—		(2,668	)		140,430			176,556
American Funds Growth-Income Class 1		89,032		95,444			77,684			196,634
American Funds Growth-Income Class 2		102,535,257		226,867,860			(39,670,371	)		182,703,228
American Funds Growth-Income Class 4		—		(874	)		5,850			42,039
American Funds High-Income Bond Class 1		—		(297	)		(46,914	)		(10,578	)
American Funds International Class 1		—		5,239			(96,868	)		(68,751	)
American Funds International Class 2		—		18,683,051			(48,449,796	)		(30,429,644	)
American Funds International Class 4		—		(474	)		(84,930	)		(54,887	)
American Funds International Growth and Income Class 1		12,671		13,389			(116,677	)		(67,961	)
American Funds Managed Risk Asset Allocation Class P1		—		503			9,177			8,095
American Funds Managed Risk Asset Allocation Class P2		—		78			47,721			35,305
American Funds Managed Risk Blue Chip Income and Growth Class P1		—		100			2,100			4,279
American Funds Managed Risk Growth Class P1		1,131		1,366			(886	)		236
American Funds Managed Risk Growth-Income Class P1		562		314			(345	)		150
American Funds Managed Risk International Class P1		—		1			(707	)		(580	)
American Funds Mortgage Class 1		—		1,031			11,832			11,726
American Funds Mortgage Class 4		—		(22	)		(144	)		(6	)
American Funds New World Class 1		113,330		112,633			(251,413	)		(130,174	)
American Funds New World Class 4		—		(1,186	)		(140,149	)		(128,397	)
American Funds U.S. Government/AAA-Rated Securities Class 1		—		952			9,502			10,162
BlackRock Global Allocation V.I. Class I		105,630		106,059			(124,100	)		4,976
BlackRock Global Allocation V.I. Class III		114,752,917		132,602,574			(135,364,694	)		2,947,891
ClearBridge Variable Aggressive Growth Class I		7,738		7,738			(2,913	)		4,886
ClearBridge Variable Aggressive Growth Class II		207,527		207,875			(111,669	)		85,721
ClearBridge Variable Mid Cap Core Class I		175		175			(117	)		60
ClearBridge Variable Mid Cap Core Class II		787,627		785,169			(446,189	)		298,951
Delaware VIP Diversified Income Standard Class		—		956			17,712			25,513
Delaware VIP Diversified Income Service Class		—		2,160,926			40,090,149			47,895,705

N-13

Lincoln Life Variable Annuity Account N

Statements of operations (continued)

Year Ended December 31, 2014

Subaccount	Dividends from Investment Income		Mortality and Expense Guarantee Charges			Net Investment Income (Loss)			Net Realized Gain (Loss) on Investments
Delaware VIP Emerging Markets Standard Class	$	—	$	(4	)	$	(4	)	$	—
Delaware VIP Emerging Markets Service Class		1,459,386		(5,872,828	)		(4,413,442	)		6,656,744
Delaware VIP High Yield Standard Class		324,299		(72,135	)		252,164			133,121
Delaware VIP High Yield Service Class		14,078,615		(3,571,141	)		10,507,474			3,666,784
Delaware VIP International Value Equity Standard Class		2,795		(3,014	)		(219	)		(14,839	)
Delaware VIP Limited-Term Diversified Income Standard Class		17,905		(15,209	)		2,696			(307	)
Delaware VIP Limited-Term Diversified Income Service Class		17,942,574		(18,065,224	)		(122,650	)		(1,835,230	)
Delaware VIP REIT Standard Class		61,455		(66,555	)		(5,100	)		94,948
Delaware VIP REIT Service Class		1,755,049		(2,612,206	)		(857,157	)		4,953,072
Delaware VIP Small Cap Value Standard Class		43,371		(110,115	)		(66,744	)		371,901
Delaware VIP Small Cap Value Service Class		1,220,194		(6,043,058	)		(4,822,864	)		15,954,387
Delaware VIP Smid Cap Growth Standard Class		5,799		(119,693	)		(113,894	)		389,328
Delaware VIP Smid Cap Growth Service Class		—		(2,511,608	)		(2,511,608	)		6,130,255
Delaware VIP U.S. Growth Service Class		50,713		(3,853,610	)		(3,802,897	)		17,446,746
Delaware VIP Value Standard Class		120,696		(101,987	)		18,709			581,774
Delaware VIP Value Service Class		3,688,519		(4,454,587	)		(766,068	)		16,459,299
Deutsche Alternative Asset Allocation VIP Class A		13,407		(8,591	)		4,816			816
Deutsche Alternative Asset Allocation VIP Class B		842,735		(924,878	)		(82,143	)		310,036
Deutsche Equity 500 Index VIP Class A		138,150		(120,454	)		17,696			704,102
Deutsche Equity 500 Index VIP Class B		—		(4	)		(4	)		13
Deutsche Small Cap Index VIP Class A		45,396		(72,588	)		(27,192	)		391,864
Eaton Vance VT Floating-Rate Income Fund Initial Class		12,377		(4,510	)		7,867			(80	)
Eaton Vance VT Floating-Rate Income Fund Advisor Class		3,486		(432	)		3,054			(31	)
Fidelity VIP Contrafund Initial Class		436		(26	)		410			8
Fidelity VIP Contrafund Service Class 2		8,082,270		(18,585,268	)		(10,502,998	)		62,733,386
Fidelity VIP Equity-Income Service Class 2		—		(4	)		(4	)		35
Fidelity VIP Growth Initial Class		9,900		(78,643	)		(68,743	)		371,302
Fidelity VIP Growth Service Class 2		—		(2,805,438	)		(2,805,438	)		25,341,271
Fidelity VIP Mid Cap Initial Class		1,502		(416	)		1,086			37
Fidelity VIP Mid Cap Service Class 2		104,946		(9,016,167	)		(8,911,221	)		13,038,417
Fidelity VIP Overseas Service Class 2		—		—			—			1
First Trust Multi Income Allocation Class I		2,689		(996	)		1,693			576
First Trust/Dow Jones Dividend & Income Allocation Class I		645		(2,277	)		(1,632	)		(659	)
Franklin Founding Funds Allocation VIP Class 4		—		(16,099	)		(16,099	)		119
Franklin Income VIP Class 1		—		(18	)		(18	)		1,673
Franklin Income VIP Class 2		32,393,897		(10,353,031	)		22,040,866			10,795,732
Franklin Income VIP Class 4		—		(21,649	)		(21,649	)		(8,115	)
Franklin Mutual Shares VIP Class 2		16,389,141		(10,117,569	)		6,271,572			33,132,116
Franklin Mutual Shares VIP Class 4		4,270		(2,442	)		1,828			306
Franklin Rising Dividends VIP Class 1		—		(1	)		(1	)		—
Franklin Rising Dividends VIP Class 4		—		(7,220	)		(7,220	)		438
Franklin Small Cap Value VIP Class 1		—		(272	)		(272	)		7
Franklin Small Cap Value VIP Class 4		—		(1,952	)		(1,952	)		(194	)
Franklin Small-Mid Cap Growth VIP Class 2		—		(6	)		(6	)		(330	)
Franklin Small-Mid Cap Growth VIP Class 4		—		(1,192	)		(1,192	)		(181	)
Goldman Sachs VIT Large Cap Value Service Class		1,875,700		(1,658,220	)		217,480			7,102,148
Goldman Sachs VIT Money Market Institutional Class		18		(262	)		(244	)		—
Goldman Sachs VIT Money Market Service Class		175		(34,356	)		(34,181	)		—
Goldman Sachs VIT Multi-Strategy Alternatives Advisor Class		8,563		(1,659	)		6,904			11
Goldman Sachs VIT Multi-Strategy Alternatives Institutional Class		356		(38	)		318			(20	)
Goldman Sachs VIT Strategic Income Advisor Class		15,454		(2,448	)		13,006			(11,566	)
Guggenheim Long Short Equity		—		(695	)		(695	)		2
Guggenheim Multi-Hedge Strategies		—		(1,165	)		(1,165	)		126
Hartford Capital Appreciation HLS Class IA		408		(71	)		337			(5	)
Hartford Capital Appreciation HLS Class IC		10,516		(3,542	)		6,974			30
Huntington VA Balanced		74,160		(14,245	)		59,915			(266,044	)
Huntington VA Dividend Capture		72,070		(18,937	)		53,133			26,259

See accompanying notes.
N-14

Subaccount	Dividends from Net Realized Gain on Investments		Total Net Realized Gain (Loss) on Investments			Net Change in Unrealized Appreciation or Depreciation on Investments			Net Increase (Decrease) in Net Assets Resulting from Operations
Delaware VIP Emerging Markets Standard Class	$	—	$	—		$	(188	)	$	(192	)
Delaware VIP Emerging Markets Service Class		1,372,518		8,029,262			(36,840,698	)		(33,224,878	)
Delaware VIP High Yield Standard Class		77,214		210,335			(560,901	)		(98,402	)
Delaware VIP High Yield Service Class		3,476,201		7,142,985			(20,911,761	)		(3,261,302	)
Delaware VIP International Value Equity Standard Class		—		(14,839	)		(4,659	)		(19,717	)
Delaware VIP Limited-Term Diversified Income Standard Class		—		(307	)		(130	)		2,259
Delaware VIP Limited-Term Diversified Income Service Class		—		(1,835,230	)		2,931,189			973,309
Delaware VIP REIT Standard Class		—		94,948			1,030,333			1,120,181
Delaware VIP REIT Service Class		—		4,953,072			32,921,523			37,017,438
Delaware VIP Small Cap Value Standard Class		668,065		1,039,966			(645,300	)		327,922
Delaware VIP Small Cap Value Service Class		31,058,697		47,013,084			(28,288,765	)		13,901,455
Delaware VIP Smid Cap Growth Standard Class		802,217		1,191,545			(994,569	)		83,082
Delaware VIP Smid Cap Growth Service Class		15,185,706		21,315,961			(18,146,481	)		657,872
Delaware VIP U.S. Growth Service Class		23,581,692		41,028,438			(573,374	)		36,652,167
Delaware VIP Value Standard Class		—		581,774			214,762			815,245
Delaware VIP Value Service Class		—		16,459,299			13,122,123			28,815,354
Deutsche Alternative Asset Allocation VIP Class A		4,300		5,116			3,774			13,706
Deutsche Alternative Asset Allocation VIP Class B		312,669		622,705			167,770			708,332
Deutsche Equity 500 Index VIP Class A		247,871		951,973			(184,747	)		784,922
Deutsche Equity 500 Index VIP Class B		—		13			—			9
Deutsche Small Cap Index VIP Class A		258,529		650,393			(512,227	)		110,974
Eaton Vance VT Floating-Rate Income Fund Initial Class		—		(80	)		(17,124	)		(9,337	)
Eaton Vance VT Floating-Rate Income Fund Advisor Class		—		(31	)		(3,870	)		(847	)
Fidelity VIP Contrafund Initial Class		915		923			(1,460	)		(127	)
Fidelity VIP Contrafund Service Class 2		22,504,165		85,237,551			30,923,916			105,658,469
Fidelity VIP Equity-Income Service Class 2		—		35			—			31
Fidelity VIP Growth Initial Class		—		371,302			202,702			505,261
Fidelity VIP Growth Service Class 2		—		25,341,271			(7,658,341	)		14,877,492
Fidelity VIP Mid Cap Initial Class		4,458		4,495			9,723			15,304
Fidelity VIP Mid Cap Service Class 2		13,176,023		26,214,440			6,379,445			23,682,664
Fidelity VIP Overseas Service Class 2		—		1			—			1
First Trust Multi Income Allocation Class I		—		576			2,321			4,590
First Trust/Dow Jones Dividend & Income Allocation Class I		—		(659	)		28,627			26,336
Franklin Founding Funds Allocation VIP Class 4		—		119			(77,394	)		(93,374	)
Franklin Income VIP Class 1		—		1,673			—			1,655
Franklin Income VIP Class 2		—		10,795,732			(13,400,992	)		19,435,606
Franklin Income VIP Class 4		—		(8,115	)		(144,095	)		(173,859	)
Franklin Mutual Shares VIP Class 2		4,261,319		37,393,435			3,548,236			47,213,243
Franklin Mutual Shares VIP Class 4		1,190		1,496			(2,162	)		1,162
Franklin Rising Dividends VIP Class 1		—		—			(296	)		(297	)
Franklin Rising Dividends VIP Class 4		—		438			97,257			90,475
Franklin Small Cap Value VIP Class 1		—		7			14,038			13,773
Franklin Small Cap Value VIP Class 4		—		(194	)		6,218			4,072
Franklin Small-Mid Cap Growth VIP Class 2		—		(330	)		(4	)		(340	)
Franklin Small-Mid Cap Growth VIP Class 4		—		(181	)		15,682			14,309
Goldman Sachs VIT Large Cap Value Service Class		30,999,431		38,101,579			(19,256,532	)		19,062,527
Goldman Sachs VIT Money Market Institutional Class		—		—			—			(244	)
Goldman Sachs VIT Money Market Service Class		—		—			—			(34,181	)
Goldman Sachs VIT Multi-Strategy Alternatives Advisor Class		130		141			(17,018	)		(9,973	)
Goldman Sachs VIT Multi-Strategy Alternatives Institutional Class		5		(15	)		(925	)		(622	)
Goldman Sachs VIT Strategic Income Advisor Class		—		(11,566	)		(21,223	)		(19,783	)
Guggenheim Long Short Equity		—		2			12,397			11,704
Guggenheim Multi-Hedge Strategies		—		126			13,087			12,048
Hartford Capital Appreciation HLS Class IA		2,866		2,861			(2,943	)		255
Hartford Capital Appreciation HLS Class IC		35,294		35,324			(20,424	)		21,874
Huntington VA Balanced		606,238		340,194			(376,964	)		23,145
Huntington VA Dividend Capture		—		26,259			34,612			114,004

N-15

Lincoln Life Variable Annuity Account N

Statements of operations (continued)

Year Ended December 31, 2014

Subaccount	Dividends from Investment Income		Mortality and Expense Guarantee Charges			Net Investment Income (Loss)			Net Realized Gain (Loss) on Investments
Invesco V.I. American Franchise Series I	$	1,109	$	(38,556	)	$	(37,447	)	$	134,394
Invesco V.I. American Franchise Series II		—		(20,337	)		(20,337	)		80,991
Invesco V.I. Balanced-Risk Allocation Series I		—		(81	)		(81	)		5
Invesco V.I. Balanced-Risk Allocation Series II		—		(4,757	)		(4,757	)		(8,888	)
Invesco V.I. Comstock Series II		6,330		(3,690	)		2,640			389
Invesco V.I. Core Equity Series I		74,013		(130,795	)		(56,782	)		543,408
Invesco V.I. Core Equity Series II		16,357		(38,947	)		(22,590	)		149,108
Invesco V.I. Diversified Dividend Series I		—		(22	)		(22	)		31
Invesco V.I. Diversified Dividend Series II		6,143		(2,088	)		4,055			1,256
Invesco V.I. Equally-Weighted S&P 500 Series II		3,973		(2,868	)		1,105			(10	)
Invesco V.I. Equity and Income Series II		6,118		(3,305	)		2,813			(237	)
Invesco V.I. International Growth Series I		38,186		(37,058	)		1,128			322,128
Invesco V.I. International Growth Series II		108,101		(82,645	)		25,456			105,427
Ivy Funds VIP Asset Strategy Class A		—		(11,781	)		(11,781	)		(12,323	)
Ivy Funds VIP Energy Class A		—		(2,633	)		(2,633	)		(2,292	)
Ivy Funds VIP High Income Class A		—		(7,150	)		(7,150	)		(2,434	)
Ivy Funds VIP Micro Cap Growth Class A		—		(1,073	)		(1,073	)		(163	)
Ivy Funds VIP Mid Cap Growth Class A		—		(1,370	)		(1,370	)		(13	)
Ivy Funds VIP Science and Technology Class A		—		(4,039	)		(4,039	)		218
Janus Aspen Balanced Service Class		268,239		(290,701	)		(22,462	)		598,024
Janus Aspen Enterprise Service Class		1,974		(92,055	)		(90,081	)		428,683
Janus Aspen Global Research Service Class		10,310		(17,156	)		(6,846	)		89,791
JPMIT Intrepid Mid Cap Class 1		—		(72	)		(72	)		—
JPMIT Intrepid Mid Cap Class 2		—		(3,452	)		(3,452	)		1,320
LVIP American Balanced Allocation Standard Class		205,044		(59,920	)		145,124			39,429
LVIP American Balanced Allocation Service Class		49,641		(5,122	)		44,519			(1,031	)
LVIP American Century VP Mid Cap Value RPM Service Class		209,887		(501,575	)		(291,688	)		115,401
LVIP American Global Growth Service Class II		810,081		(1,381,279	)		(571,198	)		1,974,658
LVIP American Global Small Capitalization Service Class II		—		(1,109,230	)		(1,109,230	)		2,085,962
LVIP American Growth Allocation Standard Class		16,272		(5,886	)		10,386			2,961
LVIP American Growth Allocation Service Class		59,345		(6,374	)		52,971			150
LVIP American Growth Service Class II		2,787,254		(4,834,968	)		(2,047,714	)		8,419,262
LVIP American Growth-Income Service Class II		2,618,778		(3,983,896	)		(1,365,118	)		9,186,597
LVIP American Income Allocation Standard Class		157		(9	)		148			2
LVIP American International Service Class II		1,222,909		(2,380,758	)		(1,157,849	)		2,551,785
LVIP American Preservation Standard Class		1,405		(1,902	)		(497	)		191
LVIP American Preservation Service Class		1,588		(518	)		1,070			96
LVIP AQR Enhanced Global Strategies Standard Class		272		(13	)		259			(2	)
LVIP AQR Enhanced Global Strategies Service Class		21,677		(2,864	)		18,813			832
LVIP Baron Growth Opportunities Standard Class		2,108		(363	)		1,745			61
LVIP Baron Growth Opportunities Service Class		318,017		(2,994,392	)		(2,676,375	)		10,763,891
LVIP BlackRock Emerging Markets RPM Standard Class		1,598		(1,314	)		284			268
LVIP BlackRock Emerging Markets RPM Service Class		1,655,131		(2,303,547	)		(648,416	)		109,523
LVIP BlackRock Equity Dividend RPM Standard Class		5,042		(1,311	)		3,731			234
LVIP BlackRock Equity Dividend RPM Service Class		5,481,440		(6,659,562	)		(1,178,122	)		3,447,191
LVIP BlackRock Global Allocation V.I. RPM Standard Class		2,988		(3,378	)		(390	)		6,144
LVIP BlackRock Global Allocation V.I. RPM Service Class		5,016,552		(9,840,506	)		(4,823,954	)		929,967
LVIP BlackRock Inflation Protected Bond Standard Class		7,152		(4,250	)		2,902			(2,349	)
LVIP BlackRock Inflation Protected Bond Service Class		7,481,771		(12,720,814	)		(5,239,043	)		(5,580,001	)
LVIP BlackRock Multi-Asset Income Standard Class		3,413		(10	)		3,403			—
LVIP BlackRock Multi-Asset Income Service Class		22,239		(2,089	)		20,150			(2,348	)
LVIP Capital Growth Service Class		—		(3,268,487	)		(3,268,487	)		21,666,549
LVIP Clarion Global Real Estate Standard Class		4,497		(174	)		4,323			4
LVIP Clarion Global Real Estate Service Class		2,335,085		(1,747,549	)		587,536			4,586,660
LVIP ClearBridge Variable Appreciation RPM Standard Class		819		(19	)		800			—
LVIP ClearBridge Variable Appreciation RPM Service Class		542,569		(368,764	)		173,805			35,778
LVIP Columbia Small-Mid Cap Growth RPM Service Class		—		(3,698,337	)		(3,698,337	)		150,723

See accompanying notes.
N-16

Subaccount	Dividends from Net Realized Gain on Investments		Total Net Realized Gain (Loss) on Investments			Net Change in Unrealized Appreciation or Depreciation on Investments			Net Increase (Decrease) in Net Assets Resulting from Operations
Invesco V.I. American Franchise Series I	$	—	$	134,394		$	80,611		$	177,558
Invesco V.I. American Franchise Series II		—		80,991			12,948			73,602
Invesco V.I. Balanced-Risk Allocation Series I		—		5			575			499
Invesco V.I. Balanced-Risk Allocation Series II		27,659		18,771			(9,950	)		4,064
Invesco V.I. Comstock Series II		—		389			18,743			21,772
Invesco V.I. Core Equity Series I		41,323		584,731			45,686			573,635
Invesco V.I. Core Equity Series II		11,642		160,750			10,602			148,762
Invesco V.I. Diversified Dividend Series I		—		31			1,161			1,170
Invesco V.I. Diversified Dividend Series II		—		1,256			24,574			29,885
Invesco V.I. Equally-Weighted S&P 500 Series II		52,457		52,447			(12,724	)		40,828
Invesco V.I. Equity and Income Series II		18,869		18,632			492			21,937
Invesco V.I. International Growth Series I		—		322,128			(343,271	)		(20,015	)
Invesco V.I. International Growth Series II		—		105,427			(476,316	)		(345,433	)
Ivy Funds VIP Asset Strategy Class A		—		(12,323	)		(77,900	)		(102,004	)
Ivy Funds VIP Energy Class A		—		(2,292	)		(163,143	)		(168,068	)
Ivy Funds VIP High Income Class A		—		(2,434	)		(40,779	)		(50,363	)
Ivy Funds VIP Micro Cap Growth Class A		—		(163	)		20,887			19,651
Ivy Funds VIP Mid Cap Growth Class A		—		(13	)		17,605			16,222
Ivy Funds VIP Science and Technology Class A		—		218			13,526			9,705
Janus Aspen Balanced Service Class		453,897		1,051,921			66,797			1,096,256
Janus Aspen Enterprise Service Class		412,094		840,777			(184,140	)		566,556
Janus Aspen Global Research Service Class		—		89,791			(22,651	)		60,294
JPMIT Intrepid Mid Cap Class 1		—		—			2,819			2,747
JPMIT Intrepid Mid Cap Class 2		—		1,320			64,894			62,762
LVIP American Balanced Allocation Standard Class		318,503		357,932			(83,354	)		419,702
LVIP American Balanced Allocation Service Class		25,226		24,195			(69,552	)		(838	)
LVIP American Century VP Mid Cap Value RPM Service Class		—		115,401			3,232,908			3,056,621
LVIP American Global Growth Service Class II		33,030		2,007,688			(983,581	)		452,909
LVIP American Global Small Capitalization Service Class II		71,740		2,157,702			(1,042,023	)		6,449
LVIP American Growth Allocation Standard Class		21,803		24,764			(5,409	)		29,741
LVIP American Growth Allocation Service Class		20,316		20,466			(74,144	)		(707	)
LVIP American Growth Service Class II		184,995		8,604,257			11,136,362			17,692,905
LVIP American Growth-Income Service Class II		221,723		9,408,320			10,985,320			19,028,522
LVIP American Income Allocation Standard Class		71		73			(163	)		58
LVIP American International Service Class II		195,972		2,747,757			(8,130,822	)		(6,540,914	)
LVIP American Preservation Standard Class		—		191			2,586			2,280
LVIP American Preservation Service Class		—		96			(1,093	)		73
LVIP AQR Enhanced Global Strategies Standard Class		—		(2	)		795			1,052
LVIP AQR Enhanced Global Strategies Service Class		—		832			(4,288	)		15,357
LVIP Baron Growth Opportunities Standard Class		111		172			20,135			22,052
LVIP Baron Growth Opportunities Service Class		1,008,578		11,772,469			(4,010,858	)		5,085,236
LVIP BlackRock Emerging Markets RPM Standard Class		—		268			(10,580	)		(10,028	)
LVIP BlackRock Emerging Markets RPM Service Class		—		109,523			(10,320,777	)		(10,859,670	)
LVIP BlackRock Equity Dividend RPM Standard Class		—		234			1,120			5,085
LVIP BlackRock Equity Dividend RPM Service Class		—		3,447,191			5,262,186			7,531,255
LVIP BlackRock Global Allocation V.I. RPM Standard Class		2,461		8,605			(10,640	)		(2,425	)
LVIP BlackRock Global Allocation V.I. RPM Service Class		5,602,223		6,532,190			(17,900,614	)		(16,192,378	)
LVIP BlackRock Inflation Protected Bond Standard Class		—		(2,349	)		7,344			7,897
LVIP BlackRock Inflation Protected Bond Service Class		—		(5,580,001	)		18,928,704			8,109,660
LVIP BlackRock Multi-Asset Income Standard Class		—		—			(4,108	)		(705	)
LVIP BlackRock Multi-Asset Income Service Class		—		(2,348	)		(29,645	)		(11,843	)
LVIP Capital Growth Service Class		498,356		22,164,905			11,768,679			30,665,097
LVIP Clarion Global Real Estate Standard Class		—		4			4,678			9,005
LVIP Clarion Global Real Estate Service Class		—		4,586,660			6,445,217			11,619,413
LVIP ClearBridge Variable Appreciation RPM Standard Class		—		—			(1,317	)		(517	)
LVIP ClearBridge Variable Appreciation RPM Service Class		—		35,778			1,139,869			1,349,452
LVIP Columbia Small-Mid Cap Growth RPM Service Class		—		150,723			(15,599,269	)		(19,146,883	)

N-17

Lincoln Life Variable Annuity Account N

Statements of operations (continued)

Year Ended December 31, 2014

Subaccount	Dividends from Investment Income		Mortality and Expense Guarantee Charges			Net Investment Income (Loss)			Net Realized Gain (Loss) on Investments
LVIP Delaware Bond Standard Class	$	2,166,746	$	(1,915,244	)	$	251,502		$	1,237,874
LVIP Delaware Bond Service Class		44,922,517		(35,071,556	)		9,850,961			5,435,348
LVIP Delaware Diversified Floating Rate Standard Class		17,891		(13,832	)		4,059			600
LVIP Delaware Diversified Floating Rate Service Class		8,642,520		(12,945,643	)		(4,303,123	)		1,025,333
LVIP Delaware Foundation Aggressive Allocation Standard Class		163,466		(123,449	)		40,017			374,289
LVIP Delaware Foundation Aggressive Allocation Service Class		395,294		(357,223	)		38,071			1,297,096
LVIP Delaware Growth and Income Service Class		664,611		(710,485	)		(45,874	)		3,079,008
LVIP Delaware Social Awareness Standard Class		136,867		(150,876	)		(14,009	)		728,783
LVIP Delaware Social Awareness Service Class		732,641		(970,415	)		(237,774	)		4,137,668
LVIP Delaware Special Opportunities Service Class		503,536		(821,040	)		(317,504	)		1,628,911
LVIP Dimensional Non-U.S. Equity RPM Standard Class		59,464		(15,368	)		44,096			7,120
LVIP Dimensional Non-U.S. Equity RPM Service Class		3,278,999		(2,338,258	)		940,741			725,258
LVIP Dimensional U.S. Equity RPM Standard Class		45,235		(23,218	)		22,017			25,233
LVIP Dimensional U.S. Equity RPM Service Class		2,108,475		(3,945,943	)		(1,837,468	)		4,502,915
LVIP Dimensional/Vanguard Total Bond Standard Class		79,067		(26,766	)		52,301			1,473
LVIP Dimensional/Vanguard Total Bond Service Class		4,574,841		(4,664,544	)		(89,703	)		17,372
LVIP Franklin Mutual Shares RPM Standard Class		295		(34	)		261			—
LVIP Franklin Mutual Shares RPM Service Class		996,009		(719,458	)		276,551			251,703
LVIP Franklin Templeton Multi-Asset Opportunities Service Class		9,212		(1,109	)		8,103			33
LVIP Global Income Service Class		2,023,616		(9,007,622	)		(6,984,006	)		188,253
LVIP Goldman Sachs Income Builder Standard Class		511		(21	)		490			(1	)
LVIP Goldman Sachs Income Builder Service Class		14,065		(1,346	)		12,719			463
LVIP Invesco Diversified Equity Income RPM Service Class		153,119		(128,067	)		25,052			(3,066	)
LVIP Invesco V.I. Comstock RPM Standard Class		826		(24	)		802			1
LVIP Invesco V.I. Comstock RPM Service Class		472,319		(495,644	)		(23,325	)		(11,712	)
LVIP JPMorgan High Yield Service Class		5,889,571		(2,231,519	)		3,658,052			2,528,701
LVIP JPMorgan Mid Cap Value RPM Standard Class		739		(226	)		513			253
LVIP JPMorgan Mid Cap Value RPM Service Class		1,697,503		(4,276,059	)		(2,578,556	)		3,290,918
LVIP Managed Risk American Balanced Allocation Standard Class		11,193		(5,846	)		5,347			8,069
LVIP Managed Risk American Balanced Allocation Service Class		59,220		(8,978	)		50,242			467
LVIP Managed Risk American Growth Allocation Standard Class		16,887		(6,888	)		9,999			5,539
LVIP Managed Risk American Growth Allocation Service Class		276,575		(36,162	)		240,413			90
LVIP Managed Risk Profile 2010 Service Class		91,358		(98,908	)		(7,550	)		303,161
LVIP Managed Risk Profile 2020 Service Class		245,603		(261,825	)		(16,222	)		841,402
LVIP Managed Risk Profile 2030 Service Class		135,590		(145,262	)		(9,672	)		781,672
LVIP Managed Risk Profile 2040 Service Class		121,791		(102,829	)		18,962			123,835
LVIP Managed Risk Profile Conservative Standard Class		660		(76	)		584			(1	)
LVIP Managed Risk Profile Conservative Service Class		21,360,055		(20,006,718	)		1,353,337			13,541,162
LVIP Managed Risk Profile Growth Standard Class		82,441		(26,198	)		56,243			5,155
LVIP Managed Risk Profile Growth Service Class		147,096,428		(113,696,198	)		33,400,230			27,340,719
LVIP Managed Risk Profile Moderate Standard Class		11,367		(4,806	)		6,561			3,292
LVIP Managed Risk Profile Moderate Service Class		111,592,048		(92,968,186	)		18,623,862			35,921,394
LVIP MFS International Growth Standard Class		—		—			—			—
LVIP MFS International Growth Service Class		1,256,467		(2,009,990	)		(753,523	)		2,992,222
LVIP MFS International Growth RPM Service Class		510,982		(1,146,146	)		(635,164	)		(74,058	)
LVIP MFS Value Standard Class		157		(2	)		155			—
LVIP MFS Value Service Class		18,602,805		(10,089,971	)		8,512,834			41,746,411
LVIP Mid-Cap Value Service Class		145,838		(1,701,025	)		(1,555,187	)		5,066,671
LVIP Mondrian International Value Standard Class		648,021		(292,270	)		355,751			407,885
LVIP Mondrian International Value Service Class		11,822,716		(4,335,040	)		7,487,676			6,033,922
LVIP Money Market Standard Class		9,229		(572,947	)		(563,718	)		—
LVIP Money Market Service Class		71,437		(4,561,620	)		(4,490,183	)		—
LVIP Multi-Manager Global Equity RPM Service Class		69,342		(25,755	)		43,587			(1,907	)
LVIP PIMCO Low Duration Bond Standard Class		558		(232	)		326			24
LVIP PIMCO Low Duration Bond Service Class		241,664		(255,348	)		(13,684	)		20,312
LVIP SSgA Bond Index Standard Class		7,509		(2,181	)		5,328			262
LVIP SSgA Bond Index Service Class		15,772,472		(16,878,636	)		(1,106,164	)		4,697,329

See accompanying notes.
N-18

Subaccount	Dividends from Net Realized Gain on Investments		Total Net Realized Gain (Loss) on Investments			Net Change in Unrealized Appreciation or Depreciation on Investments			Net Increase (Decrease) in Net Assets Resulting from Operations
LVIP Delaware Bond Standard Class	$	568,766	$	1,806,640		$	2,753,512		$	4,811,654
LVIP Delaware Bond Service Class		14,175,408		19,610,756			74,256,020			103,717,737
LVIP Delaware Diversified Floating Rate Standard Class		—		600			(12,688	)		(8,029	)
LVIP Delaware Diversified Floating Rate Service Class		—		1,025,333			(7,256,666	)		(10,534,456	)
LVIP Delaware Foundation Aggressive Allocation Standard Class		—		374,289			(223,290	)		191,016
LVIP Delaware Foundation Aggressive Allocation Service Class		—		1,297,096			(845,337	)		489,830
LVIP Delaware Growth and Income Service Class		2,249,669		5,328,677			(906,893	)		4,375,910
LVIP Delaware Social Awareness Standard Class		461,151		1,189,934			(6,967	)		1,168,958
LVIP Delaware Social Awareness Service Class		3,094,356		7,232,024			414,625			7,408,875
LVIP Delaware Special Opportunities Service Class		2,381,408		4,010,319			(876,566	)		2,816,249
LVIP Dimensional Non-U.S. Equity RPM Standard Class		—		7,120			(281,256	)		(230,040	)
LVIP Dimensional Non-U.S. Equity RPM Service Class		—		725,258			(17,533,952	)		(15,867,953	)
LVIP Dimensional U.S. Equity RPM Standard Class		—		25,233			125,744			172,994
LVIP Dimensional U.S. Equity RPM Service Class		—		4,502,915			5,183,451			7,848,898
LVIP Dimensional/Vanguard Total Bond Standard Class		3,543		5,016			59,659			116,976
LVIP Dimensional/Vanguard Total Bond Service Class		235,233		252,605			6,216,243			6,379,145
LVIP Franklin Mutual Shares RPM Standard Class		—		—			(701	)		(440	)
LVIP Franklin Mutual Shares RPM Service Class		—		251,703			(1,338,204	)		(809,950	)
LVIP Franklin Templeton Multi-Asset Opportunities Service Class		—		33			(6,137	)		1,999
LVIP Global Income Service Class		815,163		1,003,416			5,362,592			(617,998	)
LVIP Goldman Sachs Income Builder Standard Class		—		(1	)		(627	)		(138	)
LVIP Goldman Sachs Income Builder Service Class		—		463			(15,010	)		(1,828	)
LVIP Invesco Diversified Equity Income RPM Service Class		114,748		111,682			45,032			181,766
LVIP Invesco V.I. Comstock RPM Standard Class		—		1			(1,120	)		(317	)
LVIP Invesco V.I. Comstock RPM Service Class		—		(11,712	)		412,271			377,234
LVIP JPMorgan High Yield Service Class		460,447		2,989,148			(5,529,496	)		1,117,704
LVIP JPMorgan Mid Cap Value RPM Standard Class		—		253			2,322			3,088
LVIP JPMorgan Mid Cap Value RPM Service Class		—		3,290,918			15,380,348			16,092,710
LVIP Managed Risk American Balanced Allocation Standard Class		12,834		20,903			2,340			28,590
LVIP Managed Risk American Balanced Allocation Service Class		13,164		13,631			(49,763	)		14,110
LVIP Managed Risk American Growth Allocation Standard Class		10,071		15,610			(13,997	)		11,612
LVIP Managed Risk American Growth Allocation Service Class		16,744		16,834			(311,209	)		(53,962	)
LVIP Managed Risk Profile 2010 Service Class		—		303,161			(138,777	)		156,834
LVIP Managed Risk Profile 2020 Service Class		—		841,402			(413,223	)		411,957
LVIP Managed Risk Profile 2030 Service Class		—		781,672			(573,883	)		198,117
LVIP Managed Risk Profile 2040 Service Class		—		123,835			(51,568	)		91,229
LVIP Managed Risk Profile Conservative Standard Class		406		405			(1,039	)		(50	)
LVIP Managed Risk Profile Conservative Service Class		14,746,198		28,287,360			11,590,505			41,231,202
LVIP Managed Risk Profile Growth Standard Class		—		5,155			33,478			94,876
LVIP Managed Risk Profile Growth Service Class		—		27,340,719			48,761,138			109,502,087
LVIP Managed Risk Profile Moderate Standard Class		—		3,292			(16,677	)		(6,824	)
LVIP Managed Risk Profile Moderate Service Class		—		35,921,394			70,746,433			125,291,689
LVIP MFS International Growth Standard Class		—		—			(28	)		(28	)
LVIP MFS International Growth Service Class		—		2,992,222			(12,209,923	)		(9,971,224	)
LVIP MFS International Growth RPM Service Class		—		(74,058	)		(6,025,563	)		(6,734,785	)
LVIP MFS Value Standard Class		—		—			(91	)		64
LVIP MFS Value Service Class		—		41,746,411			23,777,637			74,036,882
LVIP Mid-Cap Value Service Class		—		5,066,671			552,967			4,064,451
LVIP Mondrian International Value Standard Class		—		407,885			(1,377,563	)		(613,927	)
LVIP Mondrian International Value Service Class		—		6,033,922			(25,279,583	)		(11,757,985	)
LVIP Money Market Standard Class		—		—			—			(563,718	)
LVIP Money Market Service Class		—		—			—			(4,490,183	)
LVIP Multi-Manager Global Equity RPM Service Class		5,709		3,802			(160,299	)		(112,910	)
LVIP PIMCO Low Duration Bond Standard Class		122		146			(905	)		(433	)
LVIP PIMCO Low Duration Bond Service Class		72,078		92,390			(442,278	)		(363,572	)
LVIP SSgA Bond Index Standard Class		199		461			4,036			9,825
LVIP SSgA Bond Index Service Class		479,503		5,176,832			32,117,307			36,187,975

N-19

Lincoln Life Variable Annuity Account N

Statements of operations (continued)

Year Ended December 31, 2014

Subaccount	Dividends from Investment Income		Mortality and Expense Guarantee Charges			Net Investment Income (Loss)			Net Realized Gain (Loss) on Investments
LVIP SSgA Conservative Index Allocation Service Class	$	942,477	$	(990,779	)	$	(48,302	)	$	981,696
LVIP SSgA Conservative Structured Allocation Standard Class		4,038		(51	)		3,987			—
LVIP SSgA Conservative Structured Allocation Service Class		4,158,974		(3,229,445	)		929,529			2,510,062
LVIP SSgA Developed International 150 Standard Class		6,958		(994	)		5,964			309
LVIP SSgA Developed International 150 Service Class		4,443,239		(2,533,971	)		1,909,268			6,050,203
LVIP SSgA Emerging Markets 100 Standard Class		14,066		(3,017	)		11,049			(253	)
LVIP SSgA Emerging Markets 100 Service Class		4,746,963		(2,956,988	)		1,789,975			(1,207,497	)
LVIP SSgA Global Tactical Allocation RPM Standard Class		4,993		(1,855	)		3,138			4,196
LVIP SSgA Global Tactical Allocation RPM Service Class		17,697,672		(13,922,392	)		3,775,280			7,010,893
LVIP SSgA International Index Standard Class		9,277		(1,958	)		7,319			566
LVIP SSgA International Index Service Class		7,048,730		(4,912,079	)		2,136,651			7,733,940
LVIP SSgA International RPM Service Class		314,767		(133,680	)		181,087			(24,731	)
LVIP SSgA Large Cap 100 Standard Class		38,840		(14,787	)		24,053			13,987
LVIP SSgA Large Cap 100 Service Class		6,933,531		(5,335,344	)		1,598,187			26,752,256
LVIP SSgA Large Cap RPM Standard Class		29		(11	)		18			35
LVIP SSgA Large Cap RPM Service Class		1,807,037		(967,957	)		839,080			475,649
LVIP SSgA Moderate Index Allocation Service Class		3,406,217		(3,131,070	)		275,147			2,873,583
LVIP SSgA Moderate Structured Allocation Service Class		20,494,013		(14,391,351	)		6,102,662			13,251,053
LVIP SSgA Moderately Aggressive Index Allocation Service Class		3,135,204		(2,737,333	)		397,871			2,613,147
LVIP SSgA Moderately Aggressive Structured Allocation Service Class		11,290,967		(7,204,796	)		4,086,171			5,832,320
LVIP SSgA S&P 500 Index Standard Class		663,082		(525,496	)		137,586			874,856
LVIP SSgA S&P 500 Index Service Class		13,747,451		(14,051,563	)		(304,112	)		52,286,315
LVIP SSgA Small-Cap Index Standard Class		10,780		(8,336	)		2,444			7,270
LVIP SSgA Small-Cap Index Service Class		1,614,817		(4,642,532	)		(3,027,715	)		14,451,607
LVIP SSgA Small-Cap RPM Standard Class		887		(557	)		330			6
LVIP SSgA Small-Cap RPM Service Class		755,387		(990,363	)		(234,976	)		(7,490	)
LVIP SSgA Small-Mid Cap 200 Standard Class		48,365		(11,899	)		36,466			22
LVIP SSgA Small-Mid Cap 200 Service Class		3,393,828		(1,848,514	)		1,545,314			3,838,661
LVIP T. Rowe Price Growth Stock Standard Class		—		(72	)		(72	)		1
LVIP T. Rowe Price Growth Stock Service Class		—		(2,980,986	)		(2,980,986	)		19,296,185
LVIP T. Rowe Price Structured Mid-Cap Growth Standard Class		6,395		(50,500	)		(44,105	)		264,332
LVIP T. Rowe Price Structured Mid-Cap Growth Service Class		—		(1,455,496	)		(1,455,496	)		6,363,952
LVIP Templeton Growth RPM Service Class		7,403,312		(8,472,783	)		(1,069,471	)		5,602,400
LVIP UBS Large Cap Growth RPM Standard Class		—		(43,469	)		(43,469	)		101,946
LVIP UBS Large Cap Growth RPM Service Class		—		(3,519,868	)		(3,519,868	)		6,592,198
LVIP Vanguard Domestic Equity ETF Standard Class		7,952		(4,764	)		3,188			6,795
LVIP Vanguard Domestic Equity ETF Service Class		1,516,221		(1,465,091	)		51,130			4,613,582
LVIP Vanguard International Equity ETF Standard Class		7,892		(4,149	)		3,743			552
LVIP Vanguard International Equity ETF Service Class		985,494		(784,351	)		201,143			548,168
LVIP VIP Contrafund RPM Standard Class		11,855		(2,175	)		9,680			738
LVIP VIP Contrafund RPM Service Class		6,441,707		(3,085,403	)		3,356,304			873,190
LVIP VIP Mid Cap RPM Service Class		90,502		(44,999	)		45,503			4,349
Lord Abbett Series Fund Bond Debenture Class VC		63,445		(3,274	)		60,171			(1,521	)
Lord Abbett Series Fund Developing Growth Class VC		—		(2,571	)		(2,571	)		13,062
Lord Abbett Series Fund Fundamental Equity Class VC		73,217		(159,028	)		(85,811	)		553,239
Lord Abbett Series Fund Short Duration Income Class VC		49,794		(7,453	)		42,341			(357	)
MFS VIT Core Equity Service Class		14,074		(42,887	)		(28,813	)		215,951
MFS VIT Growth Initial Class		3,376		(46,252	)		(42,876	)		133,610
MFS VIT Growth Service Class		—		(652,348	)		(652,348	)		2,831,016
MFS VIT Total Return Initial Class		174,044		(136,764	)		37,280			425,927
MFS VIT Total Return Service Class		216		(133	)		83			96
MFS VIT Utilities Initial Class		231,588		(157,803	)		73,785			531,519
MFS VIT Utilities Service Class		4,383,213		(3,703,742	)		679,471			10,678,865
MFS VIT II International Value Initial Class		—		(2	)		(2	)		—
MFS VIT II International Value Service Class		10,132		(5,324	)		4,808			(238	)
Morgan Stanley UIF Capital Growth Class II		—		(17,469	)		(17,469	)		185,296
NB AMT Mid Cap Growth I Class		—		(11	)		(11	)		310

See accompanying notes.
N-20

Subaccount	Dividends from Net Realized Gain on Investments		Total Net Realized Gain (Loss) on Investments			Net Change in Unrealized Appreciation or Depreciation on Investments			Net Increase (Decrease) in Net Assets Resulting from Operations
LVIP SSgA Conservative Index Allocation Service Class	$	392,145	$	1,373,841		$	225,883		$	1,551,422
LVIP SSgA Conservative Structured Allocation Standard Class		53		53			(3,126	)		914
LVIP SSgA Conservative Structured Allocation Service Class		2,423,244		4,933,306			470,302			6,333,137
LVIP SSgA Developed International 150 Standard Class		4,143		4,452			(25,780	)		(15,364	)
LVIP SSgA Developed International 150 Service Class		2,870,394		8,920,597			(12,049,074	)		(1,219,209	)
LVIP SSgA Emerging Markets 100 Standard Class		—		(253	)		(31,758	)		(20,962	)
LVIP SSgA Emerging Markets 100 Service Class		—		(1,207,497	)		(8,783,047	)		(8,200,569	)
LVIP SSgA Global Tactical Allocation RPM Standard Class		—		4,196			(3,179	)		4,155
LVIP SSgA Global Tactical Allocation RPM Service Class		—		7,010,893			3,528,745			14,314,918
LVIP SSgA International Index Standard Class		—		566			(32,669	)		(24,784	)
LVIP SSgA International Index Service Class		—		7,733,940			(31,824,303	)		(21,953,712	)
LVIP SSgA International RPM Service Class		—		(24,731	)		(1,356,738	)		(1,200,382	)
LVIP SSgA Large Cap 100 Standard Class		50,810		64,797			79,505			168,355
LVIP SSgA Large Cap 100 Service Class		10,331,829		37,084,085			3,433,563			42,115,835
LVIP SSgA Large Cap RPM Standard Class		—		35			51			104
LVIP SSgA Large Cap RPM Service Class		—		475,649			1,754,042			3,068,771
LVIP SSgA Moderate Index Allocation Service Class		622,707		3,496,290			437,479			4,208,916
LVIP SSgA Moderate Structured Allocation Service Class		7,418,485		20,669,538			2,740,042			29,512,242
LVIP SSgA Moderately Aggressive Index Allocation Service Class		623,666		3,236,813			(344,462	)		3,290,222
LVIP SSgA Moderately Aggressive Structured Allocation Service Class		4,759,268		10,591,588			(1,573,270	)		13,104,489
LVIP SSgA S&P 500 Index Standard Class		276,320		1,151,176			2,632,691			3,921,453
LVIP SSgA S&P 500 Index Service Class		6,558,103		58,844,418			30,849,498			89,389,804
LVIP SSgA Small-Cap Index Standard Class		32,716		39,986			16,603			59,033
LVIP SSgA Small-Cap Index Service Class		7,227,976		21,679,583			(12,118,730	)		6,533,138
LVIP SSgA Small-Cap RPM Standard Class		—		6			(981	)		(645	)
LVIP SSgA Small-Cap RPM Service Class		—		(7,490	)		(501,180	)		(743,646	)
LVIP SSgA Small-Mid Cap 200 Standard Class		53,120		53,142			(42,227	)		47,381
LVIP SSgA Small-Mid Cap 200 Service Class		4,275,191		8,113,852			(7,141,932	)		2,517,234
LVIP T. Rowe Price Growth Stock Standard Class		—		1			1,674			1,603
LVIP T. Rowe Price Growth Stock Service Class		—		19,296,185			(6,050,278	)		10,264,921
LVIP T. Rowe Price Structured Mid-Cap Growth Standard Class		153,108		417,440			(126,151	)		247,184
LVIP T. Rowe Price Structured Mid-Cap Growth Service Class		4,997,841		11,361,793			(1,699,123	)		8,207,174
LVIP Templeton Growth RPM Service Class		—		5,602,400			(28,697,032	)		(24,164,103	)
LVIP UBS Large Cap Growth RPM Standard Class		—		101,946			14,988			73,465
LVIP UBS Large Cap Growth RPM Service Class		—		6,592,198			4,555,170			7,627,500
LVIP Vanguard Domestic Equity ETF Standard Class		1,380		8,175			30,200			41,563
LVIP Vanguard Domestic Equity ETF Service Class		300,450		4,914,032			3,837,911			8,803,073
LVIP Vanguard International Equity ETF Standard Class		—		552			(25,731	)		(21,436	)
LVIP Vanguard International Equity ETF Service Class		—		548,168			(4,389,129	)		(3,639,818	)
LVIP VIP Contrafund RPM Standard Class		—		738			1,321			11,739
LVIP VIP Contrafund RPM Service Class		—		873,190			4,185,437			8,414,931
LVIP VIP Mid Cap RPM Service Class		—		4,349			27,292			77,144
Lord Abbett Series Fund Bond Debenture Class VC		31,021		29,500			(93,577	)		(3,906	)
Lord Abbett Series Fund Developing Growth Class VC		1,435		14,497			39,265			51,191
Lord Abbett Series Fund Fundamental Equity Class VC		2,885,324		3,438,563			(2,365,315	)		987,437
Lord Abbett Series Fund Short Duration Income Class VC		—		(357	)		(58,084	)		(16,100	)
MFS VIT Core Equity Service Class		—		215,951			35,829			222,967
MFS VIT Growth Initial Class		215,416		349,026			(72,189	)		233,961
MFS VIT Growth Service Class		3,138,956		5,969,972			(2,140,371	)		3,177,253
MFS VIT Total Return Initial Class		242,239		668,166			(69,890	)		635,556
MFS VIT Total Return Service Class		334		430			(46	)		467
MFS VIT Utilities Initial Class		406,143		937,662			167,061			1,178,508
MFS VIT Utilities Service Class		8,448,680		19,127,545			3,247,512			23,054,528
MFS VIT II International Value Initial Class		—		—			(508	)		(510	)
MFS VIT II International Value Service Class		—		(238	)		(29,198	)		(24,628	)
Morgan Stanley UIF Capital Growth Class II		133,951		319,247			(206,655	)		95,123
NB AMT Mid Cap Growth I Class		—		310			—			299

N-21

Lincoln Life Variable Annuity Account N

Statements of operations (continued)

Year Ended December 31, 2014

Subaccount	Dividends from Investment Income		Mortality and Expense Guarantee Charges			Net Investment Income (Loss)			Net Realized Gain (Loss) on Investments
NB AMT Mid Cap Intrinsic Value I Class	$	403,346	$	(642,924	)	$	(239,578	)	$	2,116,512
Oppenheimer Global Fund/VA Service Class		74,720		(84,270	)		(9,550	)		267,778
Oppenheimer International Growth Fund/VA Non-Service Class		—		(455	)		(455	)		48
Oppenheimer International Growth Fund/VA Service Class		—		(3,882	)		(3,882	)		(392	)
Oppenheimer Main Street Small Cap Fund/VA Non-Service Class		—		(1,459	)		(1,459	)		1,846
PIMCO VIT All Asset All Authority Advisor Class		28,619		(2,480	)		26,139			(179	)
PIMCO VIT All Asset All Authority Institutional Class		3,559		(54	)		3,505			(1	)
PIMCO VIT CommodityRealReturn Strategy Advisor Class		35,473		(202,182	)		(166,709	)		(883,622	)
PIMCO VIT CommodityRealReturn Strategy Institutional Class		9		(4	)		5			—
PIMCO VIT Emerging Markets Bond Advisor Class		10,681		(2,369	)		8,312			(4,933	)
PIMCO VIT Unconstrained Bond Advisor Class		1,663		(1,549	)		114			215
Putnam VT Absolute Return 500 Class IB		—		(2,703	)		(2,703	)		833
Putnam VT Global Health Care Class IB		15,415		(87,986	)		(72,571	)		462,153
Putnam VT Growth & Income Class IB		23,497		(28,758	)		(5,261	)		51,774
SIPT VP Market Growth Strategy Class III		6,053		(548	)		5,505			(1,926	)
SIPT VP Market Plus Strategy Class III		24,831		(1,965	)		22,866			1
Templeton Foreign VIP Class 1		—		(20	)		(20	)		(1	)
Templeton Foreign VIP Class 4		—		(2,006	)		(2,006	)		(339	)
Templeton Global Bond VIP Class 1		—		(497	)		(497	)		(51	)
Templeton Global Bond VIP Class 2		25,355,192		(7,987,145	)		17,368,047			4,620,821
Templeton Global Bond VIP Class 4		—		(9,029	)		(9,029	)		(270	)
Templeton Growth VIP Class 2		614,769		(768,541	)		(153,772	)		2,261,046
Transparent Value Directional Allocation VI Class I		—		(70	)		(70	)		(1,665	)
Transparent Value Directional Allocation VI Class II		—		(13,719	)		(13,719	)		(4,181	)
UIF Global Infrastructure Class I		—		(71	)		(71	)		(1	)
UIF Global Infrastructure Class II		—		(3,728	)		(3,728	)		(6,188	)
Van Eck VIP Global Hard Assets Class S		—		(1,979	)		(1,979	)		(1,050	)
Van Eck VIP Global Hard Assets Initial Class		—		(149	)		(149	)		(15	)
Virtus VIT Multi-Sector Fixed Income Class A		33,830		(3,546	)		30,284			(792	)
Virtus VIT Premium AlphaSector Class A		—		(5,592	)		(5,592	)		(498	)
Virtus VIT Premium AlphaSector Class I		—		(116	)		(116	)		—

See accompanying notes.
N-22

Subaccount	Dividends from Net Realized Gain on Investments		Total Net Realized Gain (Loss) on Investments			Net Change in Unrealized Appreciation or Depreciation on Investments			Net Increase (Decrease) in Net Assets Resulting from Operations
NB AMT Mid Cap Intrinsic Value I Class	$	1,068,438	$	3,184,950		$	1,352,723		$	4,298,095
Oppenheimer Global Fund/VA Service Class		393,143		660,921			(555,233	)		96,138
Oppenheimer International Growth Fund/VA Non-Service Class		—		48			5,749			5,342
Oppenheimer International Growth Fund/VA Service Class		—		(392	)		(49,541	)		(53,815	)
Oppenheimer Main Street Small Cap Fund/VA Non-Service Class		—		1,846			33,711			34,098
PIMCO VIT All Asset All Authority Advisor Class		414		235			(73,457	)		(47,083	)
PIMCO VIT All Asset All Authority Institutional Class		34		33			(6,395	)		(2,857	)
PIMCO VIT CommodityRealReturn Strategy Advisor Class		—		(883,622	)		(1,830,700	)		(2,881,031	)
PIMCO VIT CommodityRealReturn Strategy Institutional Class		—		—			(686	)		(681	)
PIMCO VIT Emerging Markets Bond Advisor Class		14,224		9,291			(55,996	)		(38,393	)
PIMCO VIT Unconstrained Bond Advisor Class		—		215			(840	)		(511	)
Putnam VT Absolute Return 500 Class IB		—		833			17,762			15,892
Putnam VT Global Health Care Class IB		558,872		1,021,025			277,909			1,226,363
Putnam VT Growth & Income Class IB		—		51,774			105,087			151,600
SIPT VP Market Growth Strategy Class III		52		(1,874	)		(4,026	)		(395	)
SIPT VP Market Plus Strategy Class III		34		35			(24,866	)		(1,965	)
Templeton Foreign VIP Class 1		—		(1	)		(1,837	)		(1,858	)
Templeton Foreign VIP Class 4		—		(339	)		(50,461	)		(52,806	)
Templeton Global Bond VIP Class 1		—		(51	)		(8,149	)		(8,697	)
Templeton Global Bond VIP Class 2		—		4,620,821			(20,335,347	)		1,653,521
Templeton Global Bond VIP Class 4		—		(270	)		(43,870	)		(53,169	)
Templeton Growth VIP Class 2		—		2,261,046			(3,890,776	)		(1,783,502	)
Transparent Value Directional Allocation VI Class I		—		(1,665	)		(836	)		(2,571	)
Transparent Value Directional Allocation VI Class II		—		(4,181	)		(259,213	)		(277,113	)
UIF Global Infrastructure Class I		—		(1	)		(808	)		(880	)
UIF Global Infrastructure Class II		—		(6,188	)		9,356			(560	)
Van Eck VIP Global Hard Assets Class S		—		(1,050	)		(131,694	)		(134,723	)
Van Eck VIP Global Hard Assets Initial Class		—		(15	)		(28,642	)		(28,806	)
Virtus VIT Multi-Sector Fixed Income Class A		—		(792	)		(60,270	)		(30,778	)
Virtus VIT Premium AlphaSector Class A		195,979		195,481			(237,308	)		(47,419	)
Virtus VIT Premium AlphaSector Class I		10,606		10,606			(12,319	)		(1,829	)

N-23

Lincoln Life Variable Annuity Account N

Statements of changes in net assets

Years Ended December 31, 2013 and 2014

	ABVPSF Global Thematic Growth Class B Subaccount			ABVPSF Growth and Income Class B Subaccount			ABVPSF International Value Class B Subaccount			ABVPSF Large Cap Growth Class B Subaccount			ABVPSF Small/Mid Cap Value Class A Subaccount			ABVPSF Small/Mid Cap Value Class B Subaccount			Alps|Alerian Energy Infrastructure Class I Subaccount
NET ASSETS AT JANUARY 1, 2013	$	24,004,879		$	150,854,074		$	197,847,060		$	8,789,778		$	—		$	143,146,719		$	—
Changes From Operations:
• Net investment income (loss)		(427,840	)		877,981			3,195,649			(151,018	)		—			(2,076,275	)		—
• Net realized gain (loss) on investments		620,618			34,702,592			(9,882,657	)		644,988			—			21,082,620			—
• Net change in unrealized appreciation or depreciation on investments		5,084,857			(11,084,075	)		26,198,610			2,305,479			—			32,641,063			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		5,277,635			24,496,498			19,511,602			2,799,449			—			51,647,408			—
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		1,309,649			486,755			1,031,799			219,016			—			11,200,984			—
• Contract withdrawals and transfers to annuity reserves		(2,371,144	)		(7,843,360	)		(5,248,646	)		(1,415,850	)		—			(16,576,678	)		—
• Contract transfers		2,063,822			(167,989,010	)		(213,141,687	)		(237,959	)		—			15,706,809			—
		1,002,327			(175,345,615	)		(217,358,534	)		(1,434,793	)		—			10,331,115			—
Annuity Reserves:
• Annuity Payments		—			(4,957	)		—			—			—			(5,842	)		—
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			—			—			—			10			—
		—			(4,957	)		—			—			—			(5,832	)		—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		1,002,327			(175,350,572	)		(217,358,534	)		(1,434,793	)		—			10,325,283			—
TOTAL INCREASE (DECREASE) IN NET ASSETS		6,279,962			(150,854,074	)		(197,846,932	)		1,364,656			—			61,972,691			—
NET ASSETS AT DECEMBER 31, 2013		30,284,841			—			128			10,154,434			—			205,119,410			—
Changes From Operations:
• Net investment income (loss)		(476,185	)		339			45			(160,425	)		56			(2,269,239	)		300
• Net realized gain (loss) on investments		1,600,691			(2,353	)		3			724,488			2,187			34,663,855			283
• Net change in unrealized appreciation or depreciation on investments		(228,100	)		—			(147	)		561,463			(855	)		(19,170,127	)		(3,754	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		896,406			(2,014	)		(99	)		1,125,526			1,388			13,224,489			(3,171	)
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		1,611,110			1,690			1,984			65,198			54,104			10,245,926			120,376
• Contract withdrawals and transfers to annuity reserves		(2,643,122	)		(65	)		(3,544	)		(1,202,066	)		—			(19,783,409	)		—
• Contract transfers		(1,456,330	)		389			6,630			290,296			2,333			(14,528,471	)		—
		(2,488,342	)		2,014			5,070			(846,572	)		56,437			(24,065,954	)		120,376
Annuity Reserves:
• Annuity Payments		—			—			—			—			—			(7,812	)		—
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			—			—			—			(458	)		—
		—			—			—			—			—			(8,270	)		—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		(2,488,342	)		2,014			5,070			(846,572	)		56,437			(24,074,224	)		120,376
TOTAL INCREASE (DECREASE) IN NET ASSETS		(1,591,936	)		—			4,971			278,954			57,825			(10,849,735	)		117,205
NET ASSETS AT DECEMBER 31, 2014	$	28,692,905		$	—		$	5,099		$	10,433,388		$	57,825		$	194,269,675		$	117,205

See accompanying notes.
N-24

	Alps|Alerian Energy Infrastructure Class III Subaccount			Alps|Stadion Tactical Defensive Class I Subaccount			Alps|Stadion Tactical Defensive Class III Subaccount			American Century VP Inflation Protection Class II Subaccount			American Funds Asset Allocation Class 1 Subaccount			American Funds Asset Allocation Class 4 Subaccount
NET ASSETS AT JANUARY 1, 2013	$	—		$	—		$	—		$	473,044,643		$	—		$	—
Changes From Operations:
• Net investment income (loss)		—			—			—			(659,742	)		5,349			—
• Net realized gain (loss) on investments		—			—			—			33,539,481			260			—
• Net change in unrealized appreciation or depreciation on investments		—			—			—			(42,745,360	)		44,336			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		—			—			—			(9,865,621	)		49,945			—
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		—			—			—			1,821,974			554,131			—
• Contract withdrawals and transfers to annuity reserves		—			—			—			(20,116,289	)		(6,763	)		—
• Contract transfers		—			—			—			(444,879,482	)		—			—
		—			—			—			(463,173,797	)		547,368			—
Annuity Reserves:
• Annuity Payments		—			—			—			(5,225	)		—			—
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			—			—			—			—
		—			—			—			(5,225	)		—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		—			—			—			(463,179,022	)		547,368			—
TOTAL INCREASE (DECREASE) IN NET ASSETS		—			—			—			(473,044,643	)		597,313			—
NET ASSETS AT DECEMBER 31, 2013		—			—			—			—			597,313			—
Changes From Operations:
• Net investment income (loss)		(3,413	)		(2	)		(1,701	)		916			6,862			51,711
• Net realized gain (loss) on investments		3,844			—			(286	)		2,057			40,813			(769	)
• Net change in unrealized appreciation or depreciation on investments		(48,092	)		(500	)		17,706			—			(13,407	)		16,813
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		(47,661	)		(502	)		15,719			2,973			34,268			67,755
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		1,845,768			82,406			514,097			306			473,070			4,778,934
• Contract withdrawals and transfers to annuity reserves		(13,106	)		—			(1,353	)		(791	)		(28,649	)		(35,744	)
• Contract transfers		136,366			—			236,409			(2,488	)		7,364			225,682
		1,969,028			82,406			749,153			(2,973	)		451,785			4,968,872
Annuity Reserves:
• Annuity Payments		—			—			—			—			—			—
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			—			—			—			—
		—			—			—			—			—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		1,969,028			82,406			749,153			(2,973	)		451,785			4,968,872
TOTAL INCREASE (DECREASE) IN NET ASSETS		1,921,367			81,904			764,872			—			486,053			5,036,627
NET ASSETS AT DECEMBER 31, 2014	$	1,921,367		$	81,904		$	764,872		$	—		$	1,083,366		$	5,036,627

N-25

Lincoln Life Variable Annuity Account N

Statements of changes in net assets (continued)

Years Ended December 31, 2013 and 2014

	American Funds Blue Chip Income and Growth Class 1 Subaccount			American Funds Blue Chip Income and Growth Class 4 Subaccount			American Funds Bond Class 1 Subaccount			American Funds Capital Income Builder Class 1 Subaccount			American Funds Capital Income Builder Class 4 Subaccount			American Funds Global Balanced Class 1 Subaccount			American Funds Global Bond Class 1 Subaccount
NET ASSETS AT JANUARY 1, 2013	$	545,963		$	—		$	97,818		$	—		$	—		$	29,698		$	289,169
Changes From Operations:
• Net investment income (loss)		8,490			—			10,573			—			—			2,653			(5,731	)
• Net realized gain (loss) on investments		17,181			—			2,290			—			—			4,117			2,179
• Net change in unrealized appreciation or depreciation on investments		171,868			—			(17,951	)		—			—			6,083			(6,939	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		197,539			—			(5,088	)		—			—			12,853			(10,491	)
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		308,772			—			700,753			—			—			376,545			699,525
• Contract withdrawals and transfers to annuity reserves		(26,605	)		—			(5,607	)		—			—			(2,193	)		(50,522	)
• Contract transfers		(54,016	)		—			30,964			—			—			(180,822	)		170,269
		228,151			—			726,110			—			—			193,530			819,272
Annuity Reserves:
• Annuity Payments		—			—			—			—			—			—			—
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			—			—			—			—			—
		—			—			—			—			—			—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		228,151			—			726,110			—			—			193,530			819,272
TOTAL INCREASE (DECREASE) IN NET ASSETS		425,690			—			721,022			—			—			206,383			808,781
NET ASSETS AT DECEMBER 31, 2013		971,653			—			818,840			—			—			236,081			1,097,950
Changes From Operations:
• Net investment income (loss)		53,468			57,015			28,309			248			12,150			1,631			13,041
• Net realized gain (loss) on investments		42,665			82			1,627			(192	)		4,761			11,976			13,188
• Net change in unrealized appreciation or depreciation on investments		101,896			(13,282	)		35,154			(527	)		(58,919	)		(10,222	)		(24,709	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		198,029			43,815			65,090			(471	)		(42,008	)		3,385			1,520
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		1,167,910			2,851,291			1,185,535			153,832			3,412,204			228,538			559,284
• Contract withdrawals and transfers to annuity reserves		(89,077	)		(22,192	)		(43,156	)		—			(15,355	)		(123,418	)		(39,208	)
• Contract transfers		80,302			76,279			2,239			(36,158	)		(90,671	)		(200	)		29,490
		1,159,135			2,905,378			1,144,618			117,674			3,306,178			104,920			549,566
Annuity Reserves:
• Annuity Payments		—			—			—			—			—			—			—
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			—			—			—			—			—
		—			—			—			—			—			—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		1,159,135			2,905,378			1,144,618			117,674			3,306,178			104,920			549,566
TOTAL INCREASE (DECREASE) IN NET ASSETS		1,357,164			2,949,193			1,209,708			117,203			3,264,170			108,305			551,086
NET ASSETS AT DECEMBER 31, 2014	$	2,328,817		$	2,949,193		$	2,028,548		$	117,203		$	3,264,170		$	344,386		$	1,649,036

See accompanying notes.
N-26

	American Funds Global Discovery Class 1 Subaccount			American Funds Global Growth Class 1 Subaccount			American Funds Global Growth Class 2 Subaccount			American Funds Global Growth Class 4 Subaccount			American Funds Global Growth and Income Class 1 Subaccount			American Funds Global Small Capitalization Class 1 Subaccount
NET ASSETS AT JANUARY 1, 2013	$	26,800		$	7,558		$	294,366,132		$	—		$	—		$	—
Changes From Operations:
• Net investment income (loss)		93			1,370			(992,758	)		—			4,094			(241	)
• Net realized gain (loss) on investments		6,564			528			15,061,326			—			129			210
• Net change in unrealized appreciation or depreciation on investments		(924	)		19,171			60,136,168			—			6,264			12,493
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		5,733			21,069			74,204,736			—			10,487			12,462
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		2,500			88,850			5,274,585			—			161,862			161,604
• Contract withdrawals and transfers to annuity reserves		(96	)		(1,722	)		(30,127,452	)		—			(1,490	)		(818	)
• Contract transfers		(34,937	)		64,915			(14,887,557	)		—			(1,691	)		(1,927	)
		(32,533	)		152,043			(39,740,424	)		—			158,681			158,859
Annuity Reserves:
• Annuity Payments		—			—			(15,986	)		—			—			—
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			244			—			—			—
		—			—			(15,742	)		—			—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		(32,533	)		152,043			(39,756,166	)		—			158,681			158,859
TOTAL INCREASE (DECREASE) IN NET ASSETS		(26,800	)		173,112			34,448,570			—			169,168			171,321
NET ASSETS AT DECEMBER 31, 2013		—			180,670			328,814,702			—			169,168			171,321
Changes From Operations:
• Net investment income (loss)		—			5,755			(1,301,252	)		8,631			15,086			(965	)
• Net realized gain (loss) on investments		—			49,264			45,337,066			53			767			1,815
• Net change in unrealized appreciation or depreciation on investments		—			(43,569	)		(41,853,807	)		(6,679	)		627			(10,951	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		—			11,450			2,182,007			2,005			16,480			(10,101	)
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		—			747,910			5,311,635			1,603,323			379,753			473,133
• Contract withdrawals and transfers to annuity reserves		—			(18,917	)		(32,707,582	)		(5,014	)		(16,573	)		(15,782	)
• Contract transfers		—			8,754			(3,508,863	)		107,309			(7,299	)		28,703
		—			737,747			(30,904,810	)		1,705,618			355,881			486,054
Annuity Reserves:
• Annuity Payments		—			—			(19,003	)		—			—			—
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			(2,063	)		—			—			—
		—			—			(21,066	)		—			—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		—			737,747			(30,925,876	)		1,705,618			355,881			486,054
TOTAL INCREASE (DECREASE) IN NET ASSETS		—			749,197			(28,743,869	)		1,707,623			372,361			475,953
NET ASSETS AT DECEMBER 31, 2014	$	—		$	929,867		$	300,070,833		$	1,707,623		$	541,529		$	647,274

N-27

Lincoln Life Variable Annuity Account N

Statements of changes in net assets (continued)

Years Ended December 31, 2013 and 2014

	American Funds Global Small Capitalization Class 2 Subaccount			American Funds Global Small Capitalization Class 4 Subaccount			American Funds Growth Class 1 Subaccount			American Funds Growth Class 2 Subaccount			American Funds Growth Class 4 Subaccount			American Funds Growth-Income Class 1 Subaccount			American Funds Growth-Income Class 2 Subaccount
NET ASSETS AT JANUARY 1, 2013	$	412,911,878		$	—		$	181,628		$	1,577,540,044		$	—		$	7,525		$	1,889,206,205
Changes From Operations:
• Net investment income (loss)		(1,940,529	)		—			5,747			(11,742,666	)		—			7,864			(2,960,510	)
• Net realized gain (loss) on investments		14,626,969			—			7,161			90,372,068			—			992			89,524,209
• Net change in unrealized appreciation or depreciation on investments		91,343,481			—			164,673			326,110,704			—			64,741			467,879,436
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		104,029,921			—			177,581			404,740,106			—			73,597			554,443,135
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		14,118,150			—			1,077,201			18,400,118			—			718,918			40,189,218
• Contract withdrawals and transfers to annuity reserves		(38,010,305	)		—			(19,504	)		(178,513,606	)		—			(6,744	)		(204,168,759	)
• Contract transfers		(24,268,325	)		—			437,982			(108,788,075	)		—			64,294			(110,351,787	)
		(48,160,480	)		—			1,495,679			(268,901,563	)		—			776,468			(274,331,328	)
Annuity Reserves:
• Annuity Payments		(10,431	)		—			—			(100,220	)		—			—			(236,955	)
• Receipt (reimbursement) of mortality guarantee adjustments		4,993			—			—			1,678			—			—			8,728
		(5,438	)		—			—			(98,542	)		—			—			(228,227	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		(48,165,918	)		—			1,495,679			(269,000,105	)		—			776,468			(274,559,555	)
TOTAL INCREASE (DECREASE) IN NET ASSETS		55,864,003			—			1,673,260			135,740,001			—			850,065			279,883,580
NET ASSETS AT DECEMBER 31, 2013		468,775,881			—			1,854,888			1,713,280,045			—			857,590			2,169,089,785
Changes From Operations:
• Net investment income (loss)		(5,357,906	)		(1,767	)		31,126			(14,191,901	)		38,794			23,506			(4,494,261	)
• Net realized gain (loss) on investments		20,225,927			(289	)		169,311			181,054,934			(2,668	)		95,444			226,867,860
• Net change in unrealized appreciation or depreciation on investments		(10,320,455	)		(2,686	)		81,462			(61,422,605	)		140,430			77,684			(39,670,371	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		4,547,566			(4,742	)		281,899			105,440,428			176,556			196,634			182,703,228
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		14,033,196			1,067,142			3,275,982			17,123,858			6,610,797			1,798,304			43,501,878
• Contract withdrawals and transfers to annuity reserves		(45,910,478	)		(4,396	)		(170,878	)		(193,981,259	)		(28,635	)		(47,820	)		(244,589,731	)
• Contract transfers		2,673,237			47,349			(32,014	)		(59,539,575	)		626,377			112,735			(79,261,243	)
		(29,204,045	)		1,110,095			3,073,090			(236,396,976	)		7,208,539			1,863,219			(280,349,096	)
Annuity Reserves:
• Annuity Payments		(14,842	)		—			—			(116,009	)		—			—			(252,611	)
• Receipt (reimbursement) of mortality guarantee adjustments		2,341			—			—			(2,324	)		—			—			4,284
		(12,501	)		—			—			(118,333	)		—			—			(248,327	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		(29,216,546	)		1,110,095			3,073,090			(236,515,309	)		7,208,539			1,863,219			(280,597,423	)
TOTAL INCREASE (DECREASE) IN NET ASSETS		(24,668,980	)		1,105,353			3,354,989			(131,074,881	)		7,385,095			2,059,853			(97,894,195	)
NET ASSETS AT DECEMBER 31, 2014	$	444,106,901		$	1,105,353		$	5,209,877		$	1,582,205,164		$	7,385,095		$	2,917,443		$	2,071,195,590

See accompanying notes.
N-28

	American Funds Growth-Income Class 4 Subaccount			American Funds High-Income Bond Class 1 Subaccount			American Funds International Class 1 Subaccount			American Funds International Class 2 Subaccount			American Funds International Class 4 Subaccount			American Funds International Growth and Income Class 1 Subaccount
NET ASSETS AT JANUARY 1, 2013	$	—		$	170,366		$	165,249		$	700,805,428		$	—		$	—
Changes From Operations:
• Net investment income (loss)		—			18,315			2,481			(1,058,776	)		—			16,062
• Net realized gain (loss) on investments		—			(500	)		3,132			14,268,499			—			12,384
• Net change in unrealized appreciation or depreciation on investments		—			(6,213	)		44,867			119,788,911			—			23,283
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		—			11,602			50,480			132,998,634			—			51,729
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		—			176,892			270,865			31,079,679			—			521,171
• Contract withdrawals and transfers to annuity reserves		—			(32,800	)		(7,363	)		(68,347,820	)		—			(11,143	)
• Contract transfers		—			24,487			(12,615	)		(18,070,762	)		—			256,305
		—			168,579			250,887			(55,338,903	)		—			766,333
Annuity Reserves:
• Annuity Payments		—			—			—			(29,205	)		—			—
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			—			1,240			—			—
		—			—			—			(27,965	)		—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		—			168,579			250,887			(55,366,868	)		—			766,333
TOTAL INCREASE (DECREASE) IN NET ASSETS		—			180,181			301,367			77,631,766			—			818,062
NET ASSETS AT DECEMBER 31, 2013		—			350,547			466,616			778,437,194			—			818,062
Changes From Operations:
• Net investment income (loss)		37,063			36,633			22,878			(662,899	)		30,517			35,327
• Net realized gain (loss) on investments		(874	)		(297	)		5,239			18,683,051			(474	)		13,389
• Net change in unrealized appreciation or depreciation on investments		5,850			(46,914	)		(96,868	)		(48,449,796	)		(84,930	)		(116,677	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		42,039			(10,578	)		(68,751	)		(30,429,644	)		(54,887	)		(67,961	)
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		4,442,491			418,925			1,606,949			30,722,949			2,764,930			832,396
• Contract withdrawals and transfers to annuity reserves		(10,255	)		(26,487	)		(40,100	)		(77,819,518	)		(9,786	)		(77,489	)
• Contract transfers		98,133			45,342			43,920			28,695,581			326,968			28,903
		4,530,369			437,780			1,610,769			(18,400,988	)		3,082,112			783,810
Annuity Reserves:
• Annuity Payments		—			—			—			(32,752	)		—			—
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			—			757			—			—
		—			—			—			(31,995	)		—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		4,530,369			437,780			1,610,769			(18,432,983	)		3,082,112			783,810
TOTAL INCREASE (DECREASE) IN NET ASSETS		4,572,408			427,202			1,542,018			(48,862,627	)		3,027,225			715,849
NET ASSETS AT DECEMBER 31, 2014	$	4,572,408		$	777,749		$	2,008,634		$	729,574,567		$	3,027,225		$	1,533,911

N-29

Lincoln Life Variable Annuity Account N

Statements of changes in net assets (continued)

Years Ended December 31, 2013 and 2014

	American Funds Managed Risk Asset Allocation Class P1 Subaccount			American Funds Managed Risk Asset Allocation Class P2 Subaccount			American Funds Managed Risk Blue Chip Income and Growth Class P1 Subaccount			American Funds Managed Risk Growth Class P1 Subaccount			American Funds Managed Risk Growth-Income Class P1 Subaccount			American Funds Managed Risk International Class P1 Subaccount			American Funds Mortgage Class 1 Subaccount
NET ASSETS AT JANUARY 1, 2013	$	—		$	—		$	—		$	—		$	—		$	—		$	147,411
Changes From Operations:
• Net investment income (loss)		3,113			—			156			217			59			—			(43	)
• Net realized gain (loss) on investments		86			—			1			10			—			—			151
• Net change in unrealized appreciation or depreciation on investments		24,094			—			872			1,520			147			—			(6,315	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		27,293			—			1,029			1,747			206			—			(6,207	)
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		355,037			—			11,148			50,010			6,069			—			147,950
• Contract withdrawals and transfers to annuity reserves		(946	)		—			—			(555	)		—			—			(4,654	)
• Contract transfers		(76	)		—			—			—			—			—			30,293
		354,015			—			11,148			49,455			6,069			—			173,589
Annuity Reserves:
• Annuity Payments		—			—			—			—			—			—			—
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			—			—			—			—			—
		—			—			—			—			—			—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		354,015			—			11,148			49,455			6,069			—			173,589
TOTAL INCREASE (DECREASE) IN NET ASSETS		381,308			—			12,177			51,202			6,275			—			167,382
NET ASSETS AT DECEMBER 31, 2013		381,308			—			12,177			51,202			6,275			—			314,793
Changes From Operations:
• Net investment income (loss)		(1,585	)		(12,494	)		2,079			(244	)		181			126			(1,137	)
• Net realized gain (loss) on investments		503			78			100			1,366			314			1			1,031
• Net change in unrealized appreciation or depreciation on investments		9,177			47,721			2,100			(886	)		(345	)		(707	)		11,832
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		8,095			35,305			4,279			236			150			(580	)		11,726
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		365,764			5,507,822			86,009			21,605			20,314			14,228			67,291
• Contract withdrawals and transfers to annuity reserves		(5,072	)		(8,768	)		(1,150	)		(3,579	)		(341	)		—			(122,970	)
• Contract transfers		(145	)		765,021			(87	)		(631	)		278			—			5,386
		360,547			6,264,075			84,772			17,395			20,251			14,228			(50,293	)
Annuity Reserves:
• Annuity Payments		—			—			—			—			—			—			—
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			—			—			—			—			—
		—			—			—			—			—			—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		360,547			6,264,075			84,772			17,395			20,251			14,228			(50,293	)
TOTAL INCREASE (DECREASE) IN NET ASSETS		368,642			6,299,380			89,051			17,631			20,401			13,648			(38,567	)
NET ASSETS AT DECEMBER 31, 2014	$	749,950		$	6,299,380		$	101,228		$	68,833		$	26,676		$	13,648		$	276,226

See accompanying notes.
N-30

	American Funds Mortgage Class 4 Subaccount			American Funds New World Class 1 Subaccount			American Funds New World Class 4 Subaccount			American Funds U.S. Government/ AAA-Rated Securities Class 1 Subaccount			BlackRock Global Allocation V.I. Class I Subaccount			BlackRock Global Allocation V.I. Class III Subaccount
NET ASSETS AT JANUARY 1, 2013	$	—		$	27,382		$	—		$	64,936		$	67,220		$	1,265,422,400
Changes From Operations:
• Net investment income (loss)		—			5,730			—			(357	)		5,034			(9,287,835	)
• Net realized gain (loss) on investments		—			1,456			—			(2,212	)		21,904			70,594,933
• Net change in unrealized appreciation or depreciation on investments		—			25,764			—			(8,881	)		13,074			93,822,866
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		—			32,950			—			(11,450	)		40,012			155,129,964
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		—			493,629			—			290,101			782,089			56,950,822
• Contract withdrawals and transfers to annuity reserves		—			(8,020	)		—			(6,528	)		(25,184	)		(82,994,050	)
• Contract transfers		—			135,554			—			(66,482	)		73,729			1,661,930
		—			621,163			—			217,091			830,634			(24,381,298	)
Annuity Reserves:
• Annuity Payments		—			—			—			—			—			(20,378	)
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			—			—			—			679
		—			—			—			—			—			(19,699	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		—			621,163			—			217,091			830,634			(24,400,997	)
TOTAL INCREASE (DECREASE) IN NET ASSETS		—			654,113			—			205,641			870,646			130,728,967
NET ASSETS AT DECEMBER 31, 2013		—			681,495			—			270,577			937,866			1,396,151,367
Changes From Operations:
• Net investment income (loss)		160			8,606			12,938			(292	)		23,017			5,710,011
• Net realized gain (loss) on investments		(22	)		112,633			(1,186	)		952			106,059			132,602,574
• Net change in unrealized appreciation or depreciation on investments		(144	)		(251,413	)		(140,149	)		9,502			(124,100	)		(135,364,694	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		(6	)		(130,174	)		(128,397	)		10,162			4,976			2,947,891
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		47,417			1,073,297			1,998,859			33,756			479,413			53,931,717
• Contract withdrawals and transfers to annuity reserves		(134	)		(35,959	)		(12,962	)		(130,998	)		(12,257	)		(112,029,952	)
• Contract transfers		5,551			57,038			226,007			2,891			33,875			(26,130,072	)
		52,834			1,094,376			2,211,904			(94,351	)		501,031			(84,228,307	)
Annuity Reserves:
• Annuity Payments		—			—			—			—			—			(38,059	)
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			—			—			—			(3,163	)
		—			—			—			—			—			(41,222	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		52,834			1,094,376			2,211,904			(94,351	)		501,031			(84,269,529	)
TOTAL INCREASE (DECREASE) IN NET ASSETS		52,828			964,202			2,083,507			(84,189	)		506,007			(81,321,638	)
NET ASSETS AT DECEMBER 31, 2014	$	52,828		$	1,645,697		$	2,083,507		$	186,388		$	1,443,873		$	1,314,829,729

N-31

Lincoln Life Variable Annuity Account N

Statements of changes in net assets (continued)

Years Ended December 31, 2013 and 2014

	ClearBridge Variable Aggressive Growth Class I Subaccount			ClearBridge Variable Aggressive Growth Class II Subaccount			ClearBridge Variable Mid Cap Core Class I Subaccount			ClearBridge Variable Mid Cap Core Class II Subaccount			Delaware VIP Diversified Income Standard Class Subaccount			Delaware VIP Diversified Income Service Class Subaccount			Delaware VIP Emerging Markets Standard Class Subaccount
NET ASSETS AT JANUARY 1, 2013	$	—		$	—		$	—		$	—		$	61,548		$	1,400,398,415		$	—
Changes From Operations:
• Net investment income (loss)		—			—			—			—			(193	)		7,667,643			—
• Net realized gain (loss) on investments		—			—			—			—			(1,064	)		19,285,385			—
• Net change in unrealized appreciation or depreciation on investments		—			—			—			—			(558	)		(71,365,727	)		—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		—			—			—			—			(1,815	)		(44,412,699	)		—
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		—			—			—			—			385,931			147,227,353			—
• Contract withdrawals and transfers to annuity reserves		—			—			—			—			(34,630	)		(111,539,752	)		—
• Contract transfers		—			—			—			—			152,136			28,910,594			—
		—			—			—			—			503,437			64,598,195			—
Annuity Reserves:
• Annuity Payments		—			—			—			—			—			(25,083	)		—
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			—			—			—			626			—
		—			—			—			—			—			(24,457	)		—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		—			—			—			—			503,437			64,573,738			—
TOTAL INCREASE (DECREASE) IN NET ASSETS		—			—			—			—			501,622			20,161,039			—
NET ASSETS AT DECEMBER 31, 2013		—			—			—			—			563,170			1,420,559,454			—
Changes From Operations:
• Net investment income (loss)		61			(10,485	)		2			(40,029	)		6,845			5,644,630			(4	)
• Net realized gain (loss) on investments		7,738			207,875			175			785,169			956			2,160,926			—
• Net change in unrealized appreciation or depreciation on investments		(2,913	)		(111,669	)		(117	)		(446,189	)		17,712			40,090,149			(188	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		4,886			85,721			60			298,951			25,513			47,895,705			(192	)
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		192,568			4,186,478			2,499			5,508,344			559,379			161,159,233			—
• Contract withdrawals and transfers to annuity reserves		—			(2,270	)		—			(75,208	)		(22,618	)		(135,694,852	)		—
• Contract transfers		—			453,137			—			8,574,915			18,145			187,776,295			3,333
		192,568			4,637,345			2,499			14,008,051			554,906			213,240,676			3,333
Annuity Reserves:
• Annuity Payments		—			—			—			—			—			(46,645	)		—
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			—			—			—			(3,273	)		—
		—			—			—			—			—			(49,918	)		—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		192,568			4,637,345			2,499			14,008,051			554,906			213,190,758			3,333
TOTAL INCREASE (DECREASE) IN NET ASSETS		197,454			4,723,066			2,559			14,307,002			580,419			261,086,463			3,141
NET ASSETS AT DECEMBER 31, 2014	$	197,454		$	4,723,066		$	2,559		$	14,307,002		$	1,143,589		$	1,681,645,917		$	3,141

See accompanying notes.
N-32

	Delaware VIP Emerging Markets Service Class Subaccount			Delaware VIP High Yield Standard Class Subaccount			Delaware VIP High Yield Service Class Subaccount			Delaware VIP International Value Equity Standard Class Subaccount			Delaware VIP Limited-Term Diversified Income Standard Class Subaccount			Delaware VIP Limited-Term Diversified Income Service Class Subaccount
NET ASSETS AT JANUARY 1, 2013	$	349,984,488		$	10,126,647		$	248,978,115		$	214,482		$	76,979		$	1,098,789,192
Changes From Operations:
• Net investment income (loss)		(671,082	)		639,021			13,305,838			240			(259	)		(635,155	)
• Net realized gain (loss) on investments		4,341,490			382,760			6,110,240			(11,046	)		(752	)		(1,654,789	)
• Net change in unrealized appreciation or depreciation on investments		24,441,965			(429,579	)		(3,181,721	)		50,190			(2,363	)		(27,575,156	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		28,112,373			592,202			16,234,357			39,384			(3,374	)		(29,865,100	)
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		11,528,945			8,215			1,664,856			111			380,913			182,202,100
• Contract withdrawals and transfers to annuity reserves		(26,685,586	)		(673,565	)		(28,449,137	)		(20,412	)		(14,825	)		(89,951,864	)
• Contract transfers		3,373,486			(4,930,327	)		(13,650,778	)		(15,785	)		463,119			135,199,449
		(11,783,155	)		(5,595,677	)		(40,435,059	)		(36,086	)		829,207			227,449,685
Annuity Reserves:
• Annuity Payments		(8,917	)		(314	)		(16,777	)		—			—			(12,821	)
• Receipt (reimbursement) of mortality guarantee adjustments		8			66			591			—			—			15
		(8,909	)		(248	)		(16,186	)		—			—			(12,806	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		(11,792,064	)		(5,595,925	)		(40,451,245	)		(36,086	)		829,207			227,436,879
TOTAL INCREASE (DECREASE) IN NET ASSETS		16,320,309			(5,003,723	)		(24,216,888	)		3,298			825,833			197,571,779
NET ASSETS AT DECEMBER 31, 2013		366,304,797			5,122,924			224,761,227			217,780			902,812			1,296,360,971
Changes From Operations:
• Net investment income (loss)		(4,413,442	)		252,164			10,507,474			(219	)		2,696			(122,650	)
• Net realized gain (loss) on investments		8,029,262			210,335			7,142,985			(14,839	)		(307	)		(1,835,230	)
• Net change in unrealized appreciation or depreciation on investments		(36,840,698	)		(560,901	)		(20,911,761	)		(4,659	)		(130	)		2,931,189
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		(33,224,878	)		(98,402	)		(3,261,302	)		(19,717	)		2,259			973,309
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		9,083,635			14,575			1,801,672			4,400			297,152			139,490,779
• Contract withdrawals and transfers to annuity reserves		(30,504,626	)		(766,762	)		(29,297,088	)		(26,642	)		(41,501	)		(126,723,902	)
• Contract transfers		13,777,268			74,606			(10,950,346	)		(16,617	)		76,302			46,293,527
		(7,643,723	)		(677,581	)		(38,445,762	)		(38,859	)		331,953			59,060,404
Annuity Reserves:
• Annuity Payments		(21,293	)		(313	)		(18,938	)		—			—			(6,727	)
• Receipt (reimbursement) of mortality guarantee adjustments		(2,550	)		67			1,751			—			—			(691	)
		(23,843	)		(246	)		(17,187	)		—			—			(7,418	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		(7,667,566	)		(677,827	)		(38,462,949	)		(38,859	)		331,953			59,052,986
TOTAL INCREASE (DECREASE) IN NET ASSETS		(40,892,444	)		(776,229	)		(41,724,251	)		(58,576	)		334,212			60,026,295
NET ASSETS AT DECEMBER 31, 2014	$	325,412,353		$	4,346,695		$	183,036,976		$	159,204		$	1,237,024		$	1,356,387,266

N-33

Lincoln Life Variable Annuity Account N

Statements of changes in net assets (continued)

Years Ended December 31, 2013 and 2014

	Delaware VIP REIT Standard Class Subaccount			Delaware VIP REIT Service Class Subaccount			Delaware VIP Small Cap Value Standard Class Subaccount			Delaware VIP Small Cap Value Service Class Subaccount			Delaware VIP Smid Cap Growth Standard Class Subaccount			Delaware VIP Smid Cap Growth Service Class Subaccount			Delaware VIP U.S. Growth Service Class Subaccount
NET ASSETS AT JANUARY 1, 2013	$	4,355,745		$	151,073,344		$	7,108,831		$	325,403,913		$	7,799,343		$	132,109,834		$	276,129,824
Changes From Operations:
• Net investment income (loss)		3,313			(582,745	)		(51,330	)		(4,052,593	)		(117,902	)		(2,461,174	)		(3,160,836	)
• Net realized gain (loss) on investments		32,081			2,801,314			839,602			33,931,053			902,413			15,253,977			28,518,909
• Net change in unrealized appreciation or depreciation on investments		(2,359	)		(1,691,895	)		1,284,911			64,867,532			2,022,154			35,339,747			62,455,438
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		33,035			526,674			2,073,183			94,745,992			2,806,665			48,132,550			87,813,511
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		15,992			8,535,178			25,249			10,810,499			29,925			9,644,355			15,982,014
• Contract withdrawals and transfers to annuity reserves		(451,585	)		(16,378,401	)		(1,011,898	)		(33,354,379	)		(1,124,117	)		(15,753,085	)		(19,950,756	)
• Contract transfers		325,234			(3,385,337	)		(136,831	)		(24,678,018	)		(79,982	)		(4,196,255	)		(24,564,335	)
		(110,359	)		(11,228,560	)		(1,123,480	)		(47,221,898	)		(1,174,174	)		(10,304,985	)		(28,533,077	)
Annuity Reserves:
• Annuity Payments		(19,977	)		(29,580	)		(1,268	)		(4,158	)		(2,701	)		(11,775	)		(931	)
• Receipt (reimbursement) of mortality guarantee adjustments		460			5,108			96			(706	)		46			(1,403	)		446
		(19,517	)		(24,472	)		(1,172	)		(4,864	)		(2,655	)		(13,178	)		(485	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		(129,876	)		(11,253,032	)		(1,124,652	)		(47,226,762	)		(1,176,829	)		(10,318,163	)		(28,533,562	)
TOTAL INCREASE (DECREASE) IN NET ASSETS		(96,841	)		(10,726,358	)		948,531			47,519,230			1,629,836			37,814,387			59,279,949
NET ASSETS AT DECEMBER 31, 2013		4,258,904			140,346,986			8,057,362			372,923,143			9,429,179			169,924,221			335,409,773
Changes From Operations:
• Net investment income (loss)		(5,100	)		(857,157	)		(66,744	)		(4,822,864	)		(113,894	)		(2,511,608	)		(3,802,897	)
• Net realized gain (loss) on investments		94,948			4,953,072			1,039,966			47,013,084			1,191,545			21,315,961			41,028,438
• Net change in unrealized appreciation or depreciation on investments		1,030,333			32,921,523			(645,300	)		(28,288,765	)		(994,569	)		(18,146,481	)		(573,374	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		1,120,181			37,017,438			327,922			13,901,455			83,082			657,872			36,652,167
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		82,849			9,821,506			74,208			12,666,631			36,621			6,867,980			15,230,598
• Contract withdrawals and transfers to annuity reserves		(687,733	)		(18,469,534	)		(827,649	)		(35,919,518	)		(832,820	)		(15,125,403	)		(28,819,371	)
• Contract transfers		1,173,027			7,465,464			(70,600	)		(7,822,676	)		(347,559	)		(14,667,404	)		(2,383,495	)
		568,143			(1,182,564	)		(824,041	)		(31,075,563	)		(1,143,758	)		(22,924,827	)		(15,972,268	)
Annuity Reserves:
• Annuity Payments		(21,140	)		(22,966	)		(1,410	)		(14,907	)		(2,933	)		(15,551	)		(2,336	)
• Receipt (reimbursement) of mortality guarantee adjustments		427			4,230			132			(1,866	)		13			662			117
		(20,713	)		(18,736	)		(1,278	)		(16,773	)		(2,920	)		(14,889	)		(2,219	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		547,430			(1,201,300	)		(825,319	)		(31,092,336	)		(1,146,678	)		(22,939,716	)		(15,974,487	)
TOTAL INCREASE (DECREASE) IN NET ASSETS		1,667,611			35,816,138			(497,397	)		(17,190,881	)		(1,063,596	)		(22,281,844	)		20,677,680
NET ASSETS AT DECEMBER 31, 2014	$	5,926,515		$	176,163,124		$	7,559,965		$	355,732,262		$	8,365,583		$	147,642,377		$	356,087,453

See accompanying notes.
N-34

	Delaware VIP Value Standard Class Subaccount			Delaware VIP Value Service Class Subaccount			Deutsche Alternative Asset Allocation VIP Class A Subaccount			Deutsche Alternative Asset Allocation VIP Class B Subaccount			Deutsche Equity 500 Index VIP Class A Subaccount			Deutsche Equity 500 Index VIP Class B Subaccount
NET ASSETS AT JANUARY 1, 2013	$	5,735,340		$	184,513,961		$	41,178		$	48,887,063		$	18,587,414		$	24,431,454
Changes From Operations:
• Net investment income (loss)		20,416			(373,735	)		(1,421	)		37,117			149,304			236,805
• Net realized gain (loss) on investments		300,939			12,555,323			(788	)		163,330			4,440,301			7,384,874
• Net change in unrealized appreciation or depreciation on investments		1,465,995			46,303,024			6,938			(700,499	)		(705,958	)		(3,701,998	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		1,787,350			58,484,612			4,729			(500,052	)		3,883,647			3,919,681
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		5,489			9,109,231			323,114			3,359,508			49,292			22,862
• Contract withdrawals and transfers to annuity reserves		(607,819	)		(22,376,380	)		(19,434	)		(3,953,006	)		(2,226,719	)		(1,808,043	)
• Contract transfers		487,228			20,401,005			287,857			5,204,417			(12,042,451	)		(26,564,769	)
		(115,102	)		7,133,856			591,537			4,610,919			(14,219,878	)		(28,349,950	)
Annuity Reserves:
• Annuity Payments		(2,510	)		(9,295	)		—			—			(2,006	)		(1,185	)
• Receipt (reimbursement) of mortality guarantee adjustments		524			(2,423	)		—			—			322			—
		(1,986	)		(11,718	)		—			—			(1,684	)		(1,185	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		(117,088	)		7,122,138			591,537			4,610,919			(14,221,562	)		(28,351,135	)
TOTAL INCREASE (DECREASE) IN NET ASSETS		1,670,262			65,606,750			596,266			4,110,867			(10,337,915	)		(24,431,454	)
NET ASSETS AT DECEMBER 31, 2013		7,405,602			250,120,711			637,444			52,997,930			8,249,499			—
Changes From Operations:
• Net investment income (loss)		18,709			(766,068	)		4,816			(82,143	)		17,696			(4	)
• Net realized gain (loss) on investments		581,774			16,459,299			5,116			622,705			951,973			13
• Net change in unrealized appreciation or depreciation on investments		214,762			13,122,123			3,774			167,770			(184,747	)		—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		815,245			28,815,354			13,706			708,332			784,922			9
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		157,393			11,653,754			211,026			6,935,133			49,266			3
• Contract withdrawals and transfers to annuity reserves		(885,575	)		(27,955,470	)		(20,716	)		(4,005,547	)		(792,979	)		(12	)
• Contract transfers		(388,544	)		25,244,525			10,813			(1,001,324	)		(1,231,765	)		—
		(1,116,726	)		8,942,809			201,123			1,928,262			(1,975,478	)		(9	)
Annuity Reserves:
• Annuity Payments		(1,893	)		(13,414	)		—			—			(942	)		—
• Receipt (reimbursement) of mortality guarantee adjustments		(10,723	)		(1,214	)		—			—			426			—
		(12,616	)		(14,628	)		—			—			(516	)		—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		(1,129,342	)		8,928,181			201,123			1,928,262			(1,975,994	)		(9	)
TOTAL INCREASE (DECREASE) IN NET ASSETS		(314,097	)		37,743,535			214,829			2,636,594			(1,191,072	)		—
NET ASSETS AT DECEMBER 31, 2014	$	7,091,505		$	287,864,246		$	852,273		$	55,634,524		$	7,058,427		$	—

N-35

Lincoln Life Variable Annuity Account N

Statements of changes in net assets (continued)

Years Ended December 31, 2013 and 2014

	Deutsche Small Cap Index VIP Class A Subaccount			Deutsche Small Cap Index VIP Class B Subaccount			Eaton Vance VT Floating-Rate Income Fund Initial Class Subaccount			Eaton Vance VT Floating-Rate Income Fund Advisor Class Subaccount			Fidelity VIP Contrafund Initial Class Subaccount			Fidelity VIP Contrafund Service Class 2 Subaccount			Fidelity VIP Equity-Income Initial Class Subaccount
NET ASSETS AT JANUARY 1, 2013	$	4,672,758		$	11,128,385		$	—		$	—		$	—		$	982,723,808		$	6,035,653
Changes From Operations:
• Net investment income (loss)		4,255			100,343			—			—			—			(8,780,677	)		(33,572	)
• Net realized gain (loss) on investments		444,538			2,647,871			—			—			—			37,609,681			364,648
• Net change in unrealized appreciation or depreciation on investments		1,103,588			(923,878	)		—			—			—			240,308,847			670,085
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		1,552,381			1,824,336			—			—			—			269,137,851			1,001,161
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		7,428			10,525			—			—			—			36,550,358			1,259
• Contract withdrawals and transfers to annuity reserves		(567,334	)		(797,687	)		—			—			—			(91,476,318	)		(395,818	)
• Contract transfers		(348,408	)		(12,165,559	)		—			—			—			(49,078,471	)		(6,642,255	)
		(908,314	)		(12,952,721	)		—			—			—			(104,004,431	)		(7,036,814	)
Annuity Reserves:
• Annuity Payments		—			—			—			—			—			(14,509	)		—
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			—			—			—			235			—
		—			—			—			—			—			(14,274	)		—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		(908,314	)		(12,952,721	)		—			—			—			(104,018,705	)		(7,036,814	)
TOTAL INCREASE (DECREASE) IN NET ASSETS		644,067			(11,128,385	)		—			—			—			165,119,146			(6,035,653	)
NET ASSETS AT DECEMBER 31, 2013		5,316,825			—			—			—			—			1,147,842,954			—
Changes From Operations:
• Net investment income (loss)		(27,192	)		—			7,867			3,054			410			(10,502,998	)		—
• Net realized gain (loss) on investments		650,393			—			(80	)		(31	)		923			85,237,551			—
• Net change in unrealized appreciation or depreciation on investments		(512,227	)		—			(17,124	)		(3,870	)		(1,460	)		30,923,916			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		110,974			—			(9,337	)		(847	)		(127	)		105,658,469			—
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		163,563			—			1,374,357			475,777			126,859			39,017,051			—
• Contract withdrawals and transfers to annuity reserves		(1,008,052	)		—			(4,797	)		(874	)		—			(111,065,850	)		—
• Contract transfers		(216,732	)		—			47,152			(35,000	)		(219	)		(51,634,515	)		—
		(1,061,221	)		—			1,416,712			439,903			126,640			(123,683,314	)		—
Annuity Reserves:
• Annuity Payments		—			—			—			—			—			(25,954	)		—
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			—			—			—			(1,052	)		—
		—			—			—			—			—			(27,006	)		—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		(1,061,221	)		—			1,416,712			439,903			126,640			(123,710,320	)		—
TOTAL INCREASE (DECREASE) IN NET ASSETS		(950,247	)		—			1,407,375			439,056			126,513			(18,051,851	)		—
NET ASSETS AT DECEMBER 31, 2014	$	4,366,578		$	—		$	1,407,375		$	439,056		$	126,513		$	1,129,791,103		$	—

See accompanying notes.
N-36

	Fidelity VIP Equity-Income Service Class 2 Subaccount			Fidelity VIP Growth Initial Class Subaccount			Fidelity VIP Growth Service Class 2 Subaccount			Fidelity VIP Mid Cap Initial Class Subaccount			Fidelity VIP Mid Cap Service Class 2 Subaccount			Fidelity VIP Overseas Initial Class Subaccount
NET ASSETS AT JANUARY 1, 2013	$	33,091,613		$	4,693,997		$	128,371,676		$	—		$	479,121,111		$	1,543,100
Changes From Operations:
• Net investment income (loss)		(213,883	)		(55,724	)		(2,398,251	)		—			(7,156,542	)		(8,461	)
• Net realized gain (loss) on investments		2,513,407			88,851			8,704,050			—			84,195,429			69,867
• Net change in unrealized appreciation or depreciation on investments		3,132,140			1,432,453			35,563,204			—			74,232,293			116,119
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		5,431,664			1,465,580			41,869,003			—			151,271,180			177,525
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		93,726			20,230			8,099,983			—			23,549,243			2,371
• Contract withdrawals and transfers to annuity reserves		(1,533,387	)		(581,513	)		(11,253,819	)		—			(40,012,680	)		(51,740	)
• Contract transfers		(37,066,175	)		(148,306	)		(6,417,882	)		—			(46,127,128	)		(1,671,256	)
		(38,505,836	)		(709,589	)		(9,571,718	)		—			(62,590,565	)		(1,720,625	)
Annuity Reserves:
• Annuity Payments		(17,617	)		(427	)		(5,761	)		—			(8,254	)		—
• Receipt (reimbursement) of mortality guarantee adjustments		176			159			1			—			(101	)		—
		(17,441	)		(268	)		(5,760	)		—			(8,355	)		—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		(38,523,277	)		(709,857	)		(9,577,478	)		—			(62,598,920	)		(1,720,625	)
TOTAL INCREASE (DECREASE) IN NET ASSETS		(33,091,613	)		755,723			32,291,525			—			88,672,260			(1,543,100	)
NET ASSETS AT DECEMBER 31, 2013		—			5,449,720			160,663,201			—			567,793,371			—
Changes From Operations:
• Net investment income (loss)		(4	)		(68,743	)		(2,805,438	)		1,086			(8,911,221	)		—
• Net realized gain (loss) on investments		35			371,302			25,341,271			4,495			26,214,440			—
• Net change in unrealized appreciation or depreciation on investments		—			202,702			(7,658,341	)		9,723			6,379,445			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		31			505,261			14,877,492			15,304			23,682,664			—
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		4			128,050			11,305,745			571,682			23,508,728			—
• Contract withdrawals and transfers to annuity reserves		(35	)		(786,768	)		(18,931,396	)		(984	)		(47,746,203	)		—
• Contract transfers		—			86,774			(10,831,723	)		2,667			(12,365,634	)		—
		(31	)		(571,944	)		(18,457,374	)		573,365			(36,603,109	)		—
Annuity Reserves:
• Annuity Payments		—			(204	)		(6,818	)		—			(9,324	)		—
• Receipt (reimbursement) of mortality guarantee adjustments		—			(3,408	)		320			—			44			—
		—			(3,612	)		(6,498	)		—			(9,280	)		—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		(31	)		(575,556	)		(18,463,872	)		573,365			(36,612,389	)		—
TOTAL INCREASE (DECREASE) IN NET ASSETS		—			(70,295	)		(3,586,380	)		588,669			(12,929,725	)		—
NET ASSETS AT DECEMBER 31, 2014	$	—		$	5,379,425		$	157,076,821		$	588,669		$	554,863,646		$	—

N-37

Lincoln Life Variable Annuity Account N

Statements of changes in net assets (continued)

Years Ended December 31, 2013 and 2014

	Fidelity VIP Overseas Service Class 2 Subaccount			First Trust Multi Income Allocation Class I Subaccount		First Trust/ Dow Jones Dividend & Income Allocation Class I Subaccount			Franklin Founding Funds Allocation VIP Class 4 Subaccount			Franklin Income VIP Class 1 Subaccount			Franklin Income VIP Class 2 Subaccount			Franklin Income VIP Class 4 Subaccount
NET ASSETS AT JANUARY 1, 2013	$	70,116,312		$	—	$	—		$	—		$	—		$	587,335,783		$	—
Changes From Operations:
• Net investment income (loss)		(439,883	)		—		—			—			—			28,952,647			—
• Net realized gain (loss) on investments		5,818,570			—		—			—			—			5,069,443			—
• Net change in unrealized appreciation or depreciation on investments		2,438,470			—		—			—			—			35,863,934			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		7,817,157			—		—			—			—			69,886,024			—
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		361,343			—		—			—			—			32,994,337			—
• Contract withdrawals and transfers to annuity reserves		(2,930,251	)		—		—			—			—			(56,556,195	)		—
• Contract transfers		(75,349,169	)		—		—			—			—			3,375,507			—
		(77,918,077	)		—		—			—			—			(20,186,351	)		—
Annuity Reserves:
• Annuity Payments		(15,414	)		—		—			—			—			(7,476	)		—
• Receipt (reimbursement) of mortality guarantee adjustments		22			—		—			—			—			(2,123	)		—
		(15,392	)		—		—			—			—			(9,599	)		—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		(77,933,469	)		—		—			—			—			(20,195,950	)		—
TOTAL INCREASE (DECREASE) IN NET ASSETS		(70,116,312	)		—		—			—			—			49,690,074			—
NET ASSETS AT DECEMBER 31, 2013		—			—		—			—			—			637,025,857			—
Changes From Operations:
• Net investment income (loss)		—			1,693		(1,632	)		(16,099	)		(18	)		22,040,866			(21,649	)
• Net realized gain (loss) on investments		1			576		(659	)		119			1,673			10,795,732			(8,115	)
• Net change in unrealized appreciation or depreciation on investments		—			2,321		28,627			(77,394	)		—			(13,400,992	)		(144,095	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		1			4,590		26,336			(93,374	)		1,655			19,435,606			(173,859	)
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		2			410,668		1,350,906			1,132,011			—			44,954,167			7,271,675
• Contract withdrawals and transfers to annuity reserves		(3	)		—		(911	)		(5,566	)		(1,655	)		(70,285,001	)		(51,293	)
• Contract transfers		—			9,310		179,363			5,426,514			—			9,148,741			738,627
		(1	)		419,978		1,529,358			6,552,959			(1,655	)		(16,182,093	)		7,959,009
Annuity Reserves:
• Annuity Payments		—			—		—			—			—			(24,705	)		—
• Receipt (reimbursement) of mortality guarantee adjustments		—			—		—			—			—			(3,416	)		—
		—			—		—			—			—			(28,121	)		—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		(1	)		419,978		1,529,358			6,552,959			(1,655	)		(16,210,214	)		7,959,009
TOTAL INCREASE (DECREASE) IN NET ASSETS		—			424,568		1,555,694			6,459,585			—			3,225,392			7,785,150
NET ASSETS AT DECEMBER 31, 2014	$	—		$	424,568	$	1,555,694		$	6,459,585		$	—		$	640,251,249		$	7,785,150

See accompanying notes.
N-38

	Franklin Mutual Shares VIP Class 2 Subaccount			Franklin Mutual Shares VIP Class 4 Subaccount			Franklin Rising Dividends VIP Class 1 Subaccount			Franklin Rising Dividends VIP Class 4 Subaccount			Franklin Small Cap Value VIP Class 1 Subaccount			Franklin Small Cap Value VIP Class 4 Subaccount
NET ASSETS AT JANUARY 1, 2013	$	714,861,663		$	—		$	—		$	—		$	—		$	—
Changes From Operations:
• Net investment income (loss)		6,360,506			—			—			—			—			—
• Net realized gain (loss) on investments		25,561,425			—			—			—			—			—
• Net change in unrealized appreciation or depreciation on investments		149,773,803			—			—			—			—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		181,695,734			—			—			—			—			—
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		29,636,998			—			—			—			—			—
• Contract withdrawals and transfers to annuity reserves		(50,334,772	)		—			—			—			—			—
• Contract transfers		(54,546,613	)		—			—			—			—			—
		(75,244,387	)		—			—			—			—			—
Annuity Reserves:
• Annuity Payments		(4,262	)		—			—			—			—			—
• Receipt (reimbursement) of mortality guarantee adjustments		25			—			—			—			—			—
		(4,237	)		—			—			—			—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		(75,248,624	)		—			—			—			—			—
TOTAL INCREASE (DECREASE) IN NET ASSETS		106,447,110			—			—			—			—			—
NET ASSETS AT DECEMBER 31, 2013		821,308,773			—			—			—			—			—
Changes From Operations:
• Net investment income (loss)		6,271,572			1,828			(1	)		(7,220	)		(272	)		(1,952	)
• Net realized gain (loss) on investments		37,393,435			1,496			—			438			7			(194	)
• Net change in unrealized appreciation or depreciation on investments		3,548,236			(2,162	)		(296	)		97,257			14,038			6,218
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		47,213,243			1,162			(297	)		90,475			13,773			4,072
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		30,470,804			857,818			86,051			2,380,519			264,610			683,534
• Contract withdrawals and transfers to annuity reserves		(74,506,541	)		(4,068	)		—			(14,966	)		—			(4,458	)
• Contract transfers		(8,122,074	)		(33,711	)		—			156,430			2,333			46,467
		(52,157,811	)		820,039			86,051			2,521,983			266,943			725,543
Annuity Reserves:
• Annuity Payments		(11,623	)		—			—			—			—			—
• Receipt (reimbursement) of mortality guarantee adjustments		(2,713	)		—			—			—			—			—
		(14,336	)		—			—			—			—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		(52,172,147	)		820,039			86,051			2,521,983			266,943			725,543
TOTAL INCREASE (DECREASE) IN NET ASSETS		(4,958,904	)		821,201			85,754			2,612,458			280,716			729,615
NET ASSETS AT DECEMBER 31, 2014	$	816,349,869		$	821,201		$	85,754		$	2,612,458		$	280,716		$	729,615

N-39

Lincoln Life Variable Annuity Account N

Statements of changes in net assets (continued)

Years Ended December 31, 2013 and 2014

	Franklin Small-Mid Cap Growth VIP Class 2 Subaccount			Franklin Small-Mid Cap Growth VIP Class 4 Subaccount			Goldman Sachs VIT Large Cap Value Service Class Subaccount			Goldman Sachs VIT Money Market Institutional Class Subaccount			Goldman Sachs VIT Money Market Service Class Subaccount			Goldman Sachs VIT Multi-Strategy Alternatives Advisor Class Subaccount			Goldman Sachs VIT Multi-Strategy Alternatives Institutional Class Subaccount
NET ASSETS AT JANUARY 1, 2013	$	95,465,313		$	—		$	160,364,887		$	—		$	—		$	—		$	—
Changes From Operations:
• Net investment income (loss)		(609,204	)		—			(33,544	)		—			—			—			—
• Net realized gain (loss) on investments		23,061,593			—			26,462,640			—			—			—			—
• Net change in unrealized appreciation or depreciation on investments		(7,116,865	)		—			20,221,525			—			—			—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		15,335,524			—			46,650,621			—			—			—			—
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		404,972			—			2,151,285			—			—			—			—
• Contract withdrawals and transfers to annuity reserves		(3,873,392	)		—			(9,575,759	)		—			—			—			—
• Contract transfers		(107,331,547	)		—			(21,950,583	)		—			—			—			—
		(110,799,967	)		—			(29,375,057	)		—			—			—			—
Annuity Reserves:
• Annuity Payments		(717	)		—			—			—			—			—			—
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			—			—			—			—			—
		(717	)		—			—			—			—			—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		(110,800,684	)		—			(29,375,057	)		—			—			—			—
TOTAL INCREASE (DECREASE) IN NET ASSETS		(95,465,160	)		—			17,275,564			—			—			—			—
NET ASSETS AT DECEMBER 31, 2013		153			—			177,640,451			—			—			—			—
Changes From Operations:
• Net investment income (loss)		(6	)		(1,192	)		217,480			(244	)		(34,181	)		6,904			318
• Net realized gain (loss) on investments		(330	)		(181	)		38,101,579			—			—			141			(15	)
• Net change in unrealized appreciation or depreciation on investments		(4	)		15,682			(19,256,532	)		—			—			(17,018	)		(925	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		(340	)		14,309			19,062,527			(244	)		(34,181	)		(9,973	)		(622	)
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		1,187			511,562			1,913,266			608,085			16,258,398			697,331			10,006
• Contract withdrawals and transfers to annuity reserves		(148	)		(1,403	)		(15,421,259	)		(10	)		(2,384	)		(378	)		—
• Contract transfers		(852	)		107,216			(12,204,548	)		(277,675	)		(9,308,506	)		74,076			19,627
		187			617,375			(25,712,541	)		330,400			6,947,508			771,029			29,633
Annuity Reserves:
• Annuity Payments		—			—			(1,565	)		—			—			—			—
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			(463	)		—			—			—			—
		—			—			(2,028	)		—			—			—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		187			617,375			(25,714,569	)		330,400			6,947,508			771,029			29,633
TOTAL INCREASE (DECREASE) IN NET ASSETS		(153	)		631,684			(6,652,042	)		330,156			6,913,327			761,056			29,011
NET ASSETS AT DECEMBER 31, 2014	$	—		$	631,684		$	170,988,409		$	330,156		$	6,913,327		$	761,056		$	29,011

See accompanying notes.
N-40

	Goldman Sachs VIT Strategic Income Advisor Class Subaccount			Guggenheim Long Short Equity Subaccount			Guggenheim Multi-Hedge Strategies Subaccount			Hartford Capital Appreciation HLS Class IA Subaccount			Hartford Capital Appreciation HLS Class IC Subaccount			Huntington VA Balanced Subaccount
NET ASSETS AT JANUARY 1, 2013	$	—		$	—		$	—		$	—		$	—		$	2,726,151
Changes From Operations:
• Net investment income (loss)		—			—			—			—			—			13,340
• Net realized gain (loss) on investments		—			—			—			—			—			59,449
• Net change in unrealized appreciation or depreciation on investments		—			—			—			—			—			287,085
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		—			—			—			—			—			359,874
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		—			—			—			—			—			45,313
• Contract withdrawals and transfers to annuity reserves		—			—			—			—			—			(114,297	)
• Contract transfers		—			—			—			—			—			3,016
		—			—			—			—			—			(65,968	)
Annuity Reserves:
• Annuity Payments		—			—			—			—			—			—
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			—			—			—			—
		—			—			—			—			—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		—			—			—			—			—			(65,968	)
TOTAL INCREASE (DECREASE) IN NET ASSETS		—			—			—			—			—			293,906
NET ASSETS AT DECEMBER 31, 2013		—			—			—			—			—			3,020,057
Changes From Operations:
• Net investment income (loss)		13,006			(695	)		(1,165	)		337			6,974			59,915
• Net realized gain (loss) on investments		(11,566	)		2			126			2,861			35,324			340,194
• Net change in unrealized appreciation or depreciation on investments		(21,223	)		12,397			13,087			(2,943	)		(20,424	)		(376,964	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		(19,783	)		11,704			12,048			255			21,874			23,145
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		1,191,383			257,080			395,406			49,104			1,354,525			20,378
• Contract withdrawals and transfers to annuity reserves		(581,819	)		(340	)		(213	)		—			(3,827	)		(24,014	)
• Contract transfers		135,298			69,062			96,858			—			203,202			(3,039,566	)
		744,862			325,802			492,051			49,104			1,553,900			(3,043,202	)
Annuity Reserves:
• Annuity Payments		—			—			—			—			—			—
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			—			—			—			—
		—			—			—			—			—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		744,862			325,802			492,051			49,104			1,553,900			(3,043,202	)
TOTAL INCREASE (DECREASE) IN NET ASSETS		725,079			337,506			504,099			49,359			1,575,774			(3,020,057	)
NET ASSETS AT DECEMBER 31, 2014	$	725,079		$	337,506		$	504,099		$	49,359		$	1,575,774		$	—

N-41

Lincoln Life Variable Annuity Account N

Statements of changes in net assets (continued)

Years Ended December 31, 2013 and 2014

	Huntington VA Dividend Capture Subaccount			Invesco V.I. American Franchise Series I Subaccount			Invesco V.I. American Franchise Series II Subaccount			Invesco V.I. Balanced-Risk Allocation Series I Subaccount			Invesco V.I. Balanced-Risk Allocation Series II Subaccount			Invesco V.I. Comstock Series II Subaccount			Invesco V.I. Core Equity Series I Subaccount
NET ASSETS AT JANUARY 1, 2013	$	1,143,254		$	2,448,434		$	1,160,818		$	—		$	—		$	—		$	8,273,284
Changes From Operations:
• Net investment income (loss)		21,498			(26,565	)		(17,086	)		—			—			—			(10,809	)
• Net realized gain (loss) on investments		28,242			96,800			33,496			—			—			—			420,573
• Net change in unrealized appreciation or depreciation on investments		162,295			799,424			382,367			—			—			—			1,722,247
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		212,035			869,659			398,777			—			—			—			2,132,011
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		48,655			7,558			6,528			—			—			—			37,299
• Contract withdrawals and transfers to annuity reserves		(57,818	)		(317,010	)		(181,781	)		—			—			—			(906,617	)
• Contract transfers		(14,920	)		(196,797	)		(34,006	)		—			—			—			(441,568	)
		(24,083	)		(506,249	)		(209,259	)		—			—			—			(1,310,886	)
Annuity Reserves:
• Annuity Payments		—			—			—			—			—			—			(1,297	)
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			—			—			—			—			810
		—			—			—			—			—			—			(487	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		(24,083	)		(506,249	)		(209,259	)		—			—			—			(1,311,373	)
TOTAL INCREASE (DECREASE) IN NET ASSETS		187,952			363,410			189,518			—			—			—			820,638
NET ASSETS AT DECEMBER 31, 2013		1,331,206			2,811,844			1,350,336			—			—			—			9,093,922
Changes From Operations:
• Net investment income (loss)		53,133			(37,447	)		(20,337	)		(81	)		(4,757	)		2,640			(56,782	)
• Net realized gain (loss) on investments		26,259			134,394			80,991			5			18,771			389			584,731
• Net change in unrealized appreciation or depreciation on investments		34,612			80,611			12,948			575			(9,950	)		18,743			45,686
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		114,004			177,558			73,602			499			4,064			21,772			573,635
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		6,465			4,802			1,764			163,409			2,101,525			1,059,025			28,992
• Contract withdrawals and transfers to annuity reserves		(87,451	)		(381,202	)		(208,732	)		(295	)		(13,820	)		(1,540	)		(849,797	)
• Contract transfers		25,699			18,392			(56,830	)		—			(681,833	)		44,346			(468,244	)
		(55,287	)		(358,008	)		(263,798	)		163,114			1,405,872			1,101,831			(1,289,049	)
Annuity Reserves:
• Annuity Payments		—			—			—			—			—			—			(1,455	)
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			—			—			—			—			1,030
		—			—			—			—			—			—			(425	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		(55,287	)		(358,008	)		(263,798	)		163,114			1,405,872			1,101,831			(1,289,474	)
TOTAL INCREASE (DECREASE) IN NET ASSETS		58,717			(180,450	)		(190,196	)		163,613			1,409,936			1,123,603			(715,839	)
NET ASSETS AT DECEMBER 31, 2014	$	1,389,923		$	2,631,394		$	1,160,140		$	163,613		$	1,409,936		$	1,123,603		$	8,378,083

See accompanying notes.
N-42

	Invesco V.I. Core Equity Series II Subaccount			Invesco V.I. Diversified Dividend Series I Subaccount			Invesco V.I. Diversified Dividend Series II Subaccount			Invesco V.I. Equally- Weighted S&P 500 Series II Subaccount			Invesco V.I. Equity and Income Series II Subaccount			Invesco V.I. International Growth Series I Subaccount
NET ASSETS AT JANUARY 1, 2013	$	2,319,966		$	—		$	—		$	—		$	—		$	2,817,427
Changes From Operations:
• Net investment income (loss)		(9,310	)		—			—			—			—			(7,478	)
• Net realized gain (loss) on investments		147,796			—			—			—			—			215,362
• Net change in unrealized appreciation or depreciation on investments		439,409			—			—			—			—			247,266
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		577,895			—			—			—			—			455,150
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		2,491			—			—			—			—			10,705
• Contract withdrawals and transfers to annuity reserves		(309,957	)		—			—			—			—			(351,761	)
• Contract transfers		(97,657	)		—			—			—			—			(89,363	)
		(405,123	)		—			—			—			—			(430,419	)
Annuity Reserves:
• Annuity Payments		—			—			—			—			—			—
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			—			—			—			—
		—			—			—			—			—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		(405,123	)		—			—			—			—			(430,419	)
TOTAL INCREASE (DECREASE) IN NET ASSETS		172,772			—			—			—			—			24,731
NET ASSETS AT DECEMBER 31, 2013		2,492,738			—			—			—			—			2,842,158
Changes From Operations:
• Net investment income (loss)		(22,590	)		(22	)		4,055			1,105			2,813			1,128
• Net realized gain (loss) on investments		160,750			31			1,256			52,447			18,632			322,128
• Net change in unrealized appreciation or depreciation on investments		10,602			1,161			24,574			(12,724	)		492			(343,271	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		148,762			1,170			29,885			40,828			21,937			(20,015	)
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		7,549			—			662,083			1,412,909			917,968			218,577
• Contract withdrawals and transfers to annuity reserves		(299,820	)		—			(4,205	)		(1,678	)		(5,621	)		(427,229	)
• Contract transfers		(20,795	)		18,942			15,490			31,533			362,190			(227,592	)
		(313,066	)		18,942			673,368			1,442,764			1,274,537			(436,244	)
Annuity Reserves:
• Annuity Payments		—			—			—			—			—			—
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			—			—			—			—
		—			—			—			—			—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		(313,066	)		18,942			673,368			1,442,764			1,274,537			(436,244	)
TOTAL INCREASE (DECREASE) IN NET ASSETS		(164,304	)		20,112			703,253			1,483,592			1,296,474			(456,259	)
NET ASSETS AT DECEMBER 31, 2014	$	2,328,434		$	20,112		$	703,253		$	1,483,592		$	1,296,474		$	2,385,899

N-43

Lincoln Life Variable Annuity Account N

Statements of changes in net assets (continued)

Years Ended December 31, 2013 and 2014

	Invesco V.I. International Growth Series II Subaccount			Ivy Funds VIP Asset Strategy Class A Subaccount			Ivy Funds VIP Energy Class A Subaccount			Ivy Funds VIP High Income Class A Subaccount			Ivy Funds VIP Micro Cap Growth Class A Subaccount			Ivy Funds VIP Mid Cap Growth Class A Subaccount			Ivy Funds VIP Science and Technology Class A Subaccount
NET ASSETS AT JANUARY 1, 2013	$	2,084,367		$	—		$	—		$	—		$	—		$	—		$	—
Changes From Operations:
• Net investment income (loss)		(12,210	)		—			—			—			—			—			—
• Net realized gain (loss) on investments		106,122			—			—			—			—			—			—
• Net change in unrealized appreciation or depreciation on investments		246,691			—			—			—			—			—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		340,603			—			—			—			—			—			—
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		1,743			—			—			—			—			—			—
• Contract withdrawals and transfers to annuity reserves		(268,741	)		—			—			—			—			—			—
• Contract transfers		136,997			—			—			—			—			—			—
		(130,001	)		—			—			—			—			—			—
Annuity Reserves:
• Annuity Payments		—			—			—			—			—			—			—
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			—			—			—			—			—
		—			—			—			—			—			—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		(130,001	)		—			—			—			—			—			—
TOTAL INCREASE (DECREASE) IN NET ASSETS		210,602			—			—			—			—			—			—
NET ASSETS AT DECEMBER 31, 2013		2,294,969			—			—			—			—			—			—
Changes From Operations:
• Net investment income (loss)		25,456			(11,781	)		(2,633	)		(7,150	)		(1,073	)		(1,370	)		(4,039	)
• Net realized gain (loss) on investments		105,427			(12,323	)		(2,292	)		(2,434	)		(163	)		(13	)		218
• Net change in unrealized appreciation or depreciation on investments		(476,316	)		(77,900	)		(163,143	)		(40,779	)		20,887			17,605			13,526
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		(345,433	)		(102,004	)		(168,068	)		(50,363	)		19,651			16,222			9,705
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		3,540,445			4,543,018			932,629			2,363,913			344,476			584,159			1,519,514
• Contract withdrawals and transfers to annuity reserves		(581,151	)		(25,924	)		(570	)		(9,749	)		(1,284	)		(1,732	)		(1,088	)
• Contract transfers		6,708,612			(287,853	)		118,736			30,300			37,563			73,855			282,771
		9,667,906			4,229,241			1,050,795			2,384,464			380,755			656,282			1,801,197
Annuity Reserves:
• Annuity Payments		—			—			—			—			—			—			—
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			—			—			—			—			—
		—			—			—			—			—			—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		9,667,906			4,229,241			1,050,795			2,384,464			380,755			656,282			1,801,197
TOTAL INCREASE (DECREASE) IN NET ASSETS		9,322,473			4,127,237			882,727			2,334,101			400,406			672,504			1,810,902
NET ASSETS AT DECEMBER 31, 2014	$	11,617,442		$	4,127,237		$	882,727		$	2,334,101		$	400,406		$	672,504		$	1,810,902

See accompanying notes.
N-44

	Janus Aspen Balanced Service Class Subaccount			Janus Aspen Enterprise Service Class Subaccount			Janus Aspen Global Research Service Class Subaccount			JPMIT Intrepid Mid Cap Class 1 Subaccount			JPMIT Intrepid Mid Cap Class 2 Subaccount			LVIP American Balanced Allocation Standard Class Subaccount
NET ASSETS AT JANUARY 1, 2013	$	17,573,781		$	5,788,938		$	1,007,347		$	—		$	—		$	108,777
Changes From Operations:
• Net investment income (loss)		(50,955	)		(71,856	)		(5,621	)		—			—			123,035
• Net realized gain (loss) on investments		1,523,595			734,294			62,906			—			—			35,090
• Net change in unrealized appreciation or depreciation on investments		1,502,135			835,747			194,808			—			—			612,165
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		2,974,775			1,498,185			252,093			—			—			770,290
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		55,259			6,303			5,575			—			—			7,410,669
• Contract withdrawals and transfers to annuity reserves		(3,029,338	)		(821,232	)		(225,444	)		—			—			(70,448	)
• Contract transfers		988,794			(650,274	)		105,845			—			—			190,205
		(1,985,285	)		(1,465,203	)		(114,024	)		—			—			7,530,426
Annuity Reserves:
• Annuity Payments		(30,244	)		—			(572	)		—			—			—
• Receipt (reimbursement) of mortality guarantee adjustments		116			—			326			—			—			—
		(30,128	)		—			(246	)		—			—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		(2,015,413	)		(1,465,203	)		(114,270	)		—			—			7,530,426
TOTAL INCREASE (DECREASE) IN NET ASSETS		959,362			32,982			137,823			—			—			8,300,716
NET ASSETS AT DECEMBER 31, 2013		18,533,143			5,821,920			1,145,170			—			—			8,409,493
Changes From Operations:
• Net investment income (loss)		(22,462	)		(90,081	)		(6,846	)		(72	)		(3,452	)		145,124
• Net realized gain (loss) on investments		1,051,921			840,777			89,791			—			1,320			357,932
• Net change in unrealized appreciation or depreciation on investments		66,797			(184,140	)		(22,651	)		2,819			64,894			(83,354	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		1,096,256			566,556			60,294			2,747			62,762			419,702
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		98,704			22,574			654			49,105			1,314,690			550,793
• Contract withdrawals and transfers to annuity reserves		(2,475,142	)		(532,362	)		(196,913	)		—			(3,050	)		(315,734	)
• Contract transfers		(251,654	)		(143,624	)		(48,175	)		—			206,829			(39,814	)
		(2,628,092	)		(653,412	)		(244,434	)		49,105			1,518,469			195,245
Annuity Reserves:
• Annuity Payments		(10,602	)		—			(924	)		—			—			—
• Receipt (reimbursement) of mortality guarantee adjustments		92			—			413			—			—			—
		(10,510	)		—			(511	)		—			—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		(2,638,602	)		(653,412	)		(244,945	)		49,105			1,518,469			195,245
TOTAL INCREASE (DECREASE) IN NET ASSETS		(1,542,346	)		(86,856	)		(184,651	)		51,852			1,581,231			614,947
NET ASSETS AT DECEMBER 31, 2014	$	16,990,797		$	5,735,064		$	960,519		$	51,852		$	1,581,231		$	9,024,440

N-45

Lincoln Life Variable Annuity Account N

Statements of changes in net assets (continued)

Years Ended December 31, 2013 and 2014

	LVIP American Balanced Allocation Service Class Subaccount			LVIP American Century VP Mid Cap Value RPM Service Class Subaccount			LVIP American Global Growth Service Class II Subaccount			LVIP American Global Small Capitalization Service Class II Subaccount			LVIP American Growth Allocation Standard Class Subaccount			LVIP American Growth Allocation Service Class Subaccount			LVIP American Growth Service Class II Subaccount
NET ASSETS AT JANUARY 1, 2013	$	—		$	—		$	52,186,669		$	50,971,346		$	313,703		$	—		$	203,561,029
Changes From Operations:
• Net investment income (loss)		—			—			(480,210	)		(841,777	)		8,782			—			(2,648,063	)
• Net realized gain (loss) on investments		—			—			1,895,411			1,457,514			2,997			—			6,632,918
• Net change in unrealized appreciation or depreciation on investments		—			—			13,439,102			12,461,992			59,049			—			53,074,467
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		—			—			14,854,303			13,077,729			70,828			—			57,059,322
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		—			—			11,878,479			5,980,286			232,536			—			31,789,337
• Contract withdrawals and transfers to annuity reserves		—			—			(2,537,166	)		(2,210,920	)		(4,509	)		—			(10,270,571	)
• Contract transfers		—			—			(1,704,123	)		(1,866,223	)		39,237			—			(13,724,211	)
		—			—			7,637,190			1,903,143			267,264			—			7,794,555
Annuity Reserves:
• Annuity Payments		—			—			—			—			—			—			(937	)
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			—			—			—			—			(585	)
		—			—			—			—			—			—			(1,522	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		—			—			7,637,190			1,903,143			267,264			—			7,793,033
TOTAL INCREASE (DECREASE) IN NET ASSETS		—			—			22,491,493			14,980,872			338,092			—			64,852,355
NET ASSETS AT DECEMBER 31, 2013		—			—			74,678,162			65,952,218			651,795			—			268,413,384
Changes From Operations:
• Net investment income (loss)		44,519			(291,688	)		(571,198	)		(1,109,230	)		10,386			52,971			(2,047,714	)
• Net realized gain (loss) on investments		24,195			115,401			2,007,688			2,157,702			24,764			20,466			8,604,257
• Net change in unrealized appreciation or depreciation on investments		(69,552	)		3,232,908			(983,581	)		(1,042,023	)		(5,409	)		(74,144	)		11,136,362
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		(838	)		3,056,621			452,909			6,449			29,741			(707	)		17,692,905
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		2,636,917			32,639,598			15,449,874			5,236,861			26,676			3,055,447			33,585,700
• Contract withdrawals and transfers to annuity reserves		(16,783	)		(1,350,529	)		(3,972,986	)		(3,121,323	)		(27,638	)		(6,970	)		(14,040,906	)
• Contract transfers		4,887			49,669,755			3,693,706			(461,318	)		51,502			108,989			(2,127,926	)
		2,625,021			80,958,824			15,170,594			1,654,220			50,540			3,157,466			17,416,868
Annuity Reserves:
• Annuity Payments		—			—			—			—			—			—			(131,324	)
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			—			—			—			—			46,853
		—			—			—			—			—			—			(84,471	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		2,625,021			80,958,824			15,170,594			1,654,220			50,540			3,157,466			17,332,397
TOTAL INCREASE (DECREASE) IN NET ASSETS		2,624,183			84,015,445			15,623,503			1,660,669			80,281			3,156,759			35,025,302
NET ASSETS AT DECEMBER 31, 2014	$	2,624,183		$	84,015,445		$	90,301,665		$	67,612,887		$	732,076		$	3,156,759		$	303,438,686

See accompanying notes.
N-46

	LVIP American Growth-Income Service Class II Subaccount			LVIP American Income Allocation Standard Class Subaccount			LVIP American International Service Class II Subaccount			LVIP American Preservation Standard Class Subaccount			LVIP American Preservation Service Class Subaccount			LVIP AQR Enhanced Global Strategies Standard Class Subaccount
NET ASSETS AT JANUARY 1, 2013	$	161,718,798		$	—		$	112,475,522		$	—		$	—		$	—
Changes From Operations:
• Net investment income (loss)		(1,259,913	)		25			(869,466	)		1,872			—			—
• Net realized gain (loss) on investments		6,517,008			2			2,476,772			171			—			—
• Net change in unrealized appreciation or depreciation on investments		45,503,364			29			20,371,692			(3,145	)		—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		50,760,459			56			21,978,998			(1,102	)		—			—
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		24,447,312			1,286			14,224,754			224,260			—			—
• Contract withdrawals and transfers to annuity reserves		(8,299,940	)		(3	)		(5,665,798	)		(4,799	)		—			—
• Contract transfers		(8,129,772	)		5			(6,316,092	)		(3,817	)		—			—
		8,017,600			1,288			2,242,864			215,644			—			—
Annuity Reserves:
• Annuity Payments		—			—			—			—			—			—
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			—			—			—			—
		—			—			—			—			—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		8,017,600			1,288			2,242,864			215,644			—			—
TOTAL INCREASE (DECREASE) IN NET ASSETS		58,778,059			1,344			24,221,862			214,542			—			—
NET ASSETS AT DECEMBER 31, 2013		220,496,857			1,344			136,697,384			214,542			—			—
Changes From Operations:
• Net investment income (loss)		(1,365,118	)		148			(1,157,849	)		(497	)		1,070			259
• Net realized gain (loss) on investments		9,408,320			73			2,747,757			191			96			(2	)
• Net change in unrealized appreciation or depreciation on investments		10,985,320			(163	)		(8,130,822	)		2,586			(1,093	)		795
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		19,028,522			58			(6,540,914	)		2,280			73			1,052
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		28,352,958			5,000			10,338,817			25,016			213,027			15,000
• Contract withdrawals and transfers to annuity reserves		(12,798,819	)		(14	)		(6,769,392	)		(116,656	)		(105,270	)		—
• Contract transfers		(4,593,315	)		(7	)		4,972,371			2,775			44,068			(1,227	)
		10,960,824			4,979			8,541,796			(88,865	)		151,825			13,773
Annuity Reserves:
• Annuity Payments		(131,200	)		—			(64,047	)		—			—			—
• Receipt (reimbursement) of mortality guarantee adjustments		47,207			—			22,024			—			—			—
		(83,993	)		—			(42,023	)		—			—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		10,876,831			4,979			8,499,773			(88,865	)		151,825			13,773
TOTAL INCREASE (DECREASE) IN NET ASSETS		29,905,353			5,037			1,958,859			(86,585	)		151,898			14,825
NET ASSETS AT DECEMBER 31, 2014	$	250,402,210		$	6,381		$	138,656,243		$	127,957		$	151,898		$	14,825

N-47

Lincoln Life Variable Annuity Account N

Statements of changes in net assets (continued)

Years Ended December 31, 2013 and 2014

	LVIP AQR Enhanced Global Strategies Service Class Subaccount			LVIP Baron Growth Opportunities Standard Class Subaccount			LVIP Baron Growth Opportunities Service Class Subaccount			LVIP BlackRock Emerging Markets RPM Standard Class Subaccount			LVIP BlackRock Emerging Markets RPM Service Class Subaccount			LVIP BlackRock Equity Dividend RPM Standard Class Subaccount			LVIP BlackRock Equity Dividend RPM Service Class Subaccount
NET ASSETS AT JANUARY 1, 2013	$	—		$	—		$	121,750,939		$	—		$	7,314,827		$	—		$	65,997,067
Changes From Operations:
• Net investment income (loss)		—			—			(1,907,363	)		326			(313,486	)		1,365			648,305
• Net realized gain (loss) on investments		—			—			22,638,315			(33	)		(191,636	)		3			1,826,190
• Net change in unrealized appreciation or depreciation on investments		—			—			27,709,947			(1,385	)		(1,638,933	)		1,717			23,325,594
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		—			—			48,440,899			(1,092	)		(2,144,055	)		3,085			25,800,089
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		—			—			12,803,605			65,930			56,139,068			98,436			146,965,474
• Contract withdrawals and transfers to annuity reserves		—			—			(12,205,006	)		(365	)		(1,325,666	)		(545	)		(7,598,324	)
• Contract transfers		—			—			13,765,691			(1,096	)		31,084,619			—			76,372,338
		—			—			14,364,290			64,469			85,898,021			97,891			215,739,488
Annuity Reserves:
• Annuity Payments		—			—			(1,999	)		—			—			—			—
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			(1,637	)		—			—			—			—
		—			—			(3,636	)		—			—			—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		—			—			14,360,654			64,469			85,898,021			97,891			215,739,488
TOTAL INCREASE (DECREASE) IN NET ASSETS		—			—			62,801,553			63,377			83,753,966			100,976			241,539,577
NET ASSETS AT DECEMBER 31, 2013		—			—			184,552,492			63,377			91,068,793			100,976			307,536,644
Changes From Operations:
• Net investment income (loss)		18,813			1,745			(2,676,375	)		284			(648,416	)		3,731			(1,178,122	)
• Net realized gain (loss) on investments		832			172			11,772,469			268			109,523			234			3,447,191
• Net change in unrealized appreciation or depreciation on investments		(4,288	)		20,135			(4,010,858	)		(10,580	)		(10,320,777	)		1,120			5,262,186
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		15,357			22,052			5,085,236			(10,028	)		(10,859,670	)		5,085			7,531,255
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		1,312,058			503,895			11,097,890			66,495			54,215,206			251,090			117,203,146
• Contract withdrawals and transfers to annuity reserves		(380	)		(972	)		(16,151,777	)		(3,576	)		(5,240,202	)		(4,360	)		(18,203,421	)
• Contract transfers		(28,796	)		—			(8,637,385	)		6,924			37,332,207			(1,176	)		45,146,561
		1,282,882			502,923			(13,691,272	)		69,843			86,307,211			245,554			144,146,286
Annuity Reserves:
• Annuity Payments		—			—			(19,219	)		—			—			—			—
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			(4,017	)		—			—			—			—
		—			—			(23,236	)		—			—			—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		1,282,882			502,923			(13,714,508	)		69,843			86,307,211			245,554			144,146,286
TOTAL INCREASE (DECREASE) IN NET ASSETS		1,298,239			524,975			(8,629,272	)		59,815			75,447,541			250,639			151,677,541
NET ASSETS AT DECEMBER 31, 2014	$	1,298,239		$	524,975		$	175,923,220		$	123,192		$	166,516,334		$	351,615		$	459,214,185

See accompanying notes.
N-48

	LVIP BlackRock Global Allocation V.I. RPM Standard Class Subaccount			LVIP BlackRock Global Allocation V.I. RPM Service Class Subaccount			LVIP BlackRock Inflation Protected Bond Standard Class Subaccount			LVIP BlackRock Inflation Protected Bond Service Class Subaccount			LVIP BlackRock Multi-Asset Income Standard Class Subaccount			LVIP BlackRock Multi-Asset Income Service Class Subaccount
NET ASSETS AT JANUARY 1, 2013	$	—		$	—		$	334,580		$	370,932,011		$	—		$	—
Changes From Operations:
• Net investment income (loss)		(423	)		(1,451,804	)		(1,809	)		(8,259,573	)		—			—
• Net realized gain (loss) on investments		426			619,308			(1,231	)		14,002,160			—			—
• Net change in unrealized appreciation or depreciation on investments		5,907			12,735,871			(34,956	)		(80,174,710	)		—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		5,910			11,903,375			(37,996	)		(74,432,123	)		—			—
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		249,242			200,424,300			274,549			99,690,152			—			—
• Contract withdrawals and transfers to annuity reserves		(381	)		(3,620,951	)		(33,176	)		(50,035,076	)		—			—
• Contract transfers		25,034			103,195,911			(80,272	)		407,639,928			—			—
		273,895			299,999,260			161,101			457,295,004			—			—
Annuity Reserves:
• Annuity Payments		—			(245	)		—			(8,914	)		—			—
• Receipt (reimbursement) of mortality guarantee adjustments		—			(585	)		—			501			—			—
		—			(830	)		—			(8,413	)		—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		273,895			299,998,430			161,101			457,286,591			—			—
TOTAL INCREASE (DECREASE) IN NET ASSETS		279,805			311,901,805			123,105			382,854,468			—			—
NET ASSETS AT DECEMBER 31, 2013		279,805			311,901,805			457,685			753,786,479			—			—
Changes From Operations:
• Net investment income (loss)		(390	)		(4,823,954	)		2,902			(5,239,043	)		3,403			20,150
• Net realized gain (loss) on investments		8,605			6,532,190			(2,349	)		(5,580,001	)		—			(2,348	)
• Net change in unrealized appreciation or depreciation on investments		(10,640	)		(17,900,614	)		7,344			18,928,704			(4,108	)		(29,645	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		(2,425	)		(16,192,378	)		7,897			8,109,660			(705	)		(11,843	)
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		73,571			334,689,796			138,549			63,783,980			208,601			1,057,533
• Contract withdrawals and transfers to annuity reserves		(120,854	)		(21,259,049	)		(110,555	)		(63,109,979	)		—			(2,525	)
• Contract transfers		62,805			144,520,282			7,203			27,066,128			—			(81,425	)
		15,522			457,951,029			35,197			27,740,129			208,601			973,583
Annuity Reserves:
• Annuity Payments		—			(722	)		—			(14,638	)		—			—
• Receipt (reimbursement) of mortality guarantee adjustments		—			52			—			(738	)		—			—
		—			(670	)		—			(15,376	)		—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		15,522			457,950,359			35,197			27,724,753			208,601			973,583
TOTAL INCREASE (DECREASE) IN NET ASSETS		13,097			441,757,981			43,094			35,834,413			207,896			961,740
NET ASSETS AT DECEMBER 31, 2014	$	292,902		$	753,659,786		$	500,779		$	789,620,892		$	207,896		$	961,740

N-49

Lincoln Life Variable Annuity Account N

Statements of changes in net assets (continued)

Years Ended December 31, 2013 and 2014

	LVIP Capital Growth Service Class Subaccount			LVIP Clarion Global Real Estate Standard Class Subaccount		LVIP Clarion Global Real Estate Service Class Subaccount			LVIP ClearBridge Variable Appreciation RPM Standard Class Subaccount			LVIP ClearBridge Variable Appreciation RPM Service Class Subaccount			LVIP Columbia Small-Mid Cap Growth RPM Service Class Subaccount			LVIP Delaware Bond Standard Class Subaccount
NET ASSETS AT JANUARY 1, 2013	$	271,319,390		$	—	$	95,736,001		$	—		$	—		$	40,704,286		$	152,403,393
Changes From Operations:
• Net investment income (loss)		(2,975,376	)		—		(1,676,921	)		—			—			(1,536,639	)		8,907
• Net realized gain (loss) on investments		14,041,430			—		4,071,668			—			—			2,821,456			3,150,860
• Net change in unrealized appreciation or depreciation on investments		76,015,886			—		(1,062,040	)		—			—			16,529,524			(8,653,943	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		87,081,940			—		1,332,707			—			—			17,814,341			(5,494,176	)
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		12,853,855			—		5,684,394			—			—			75,726,454			531,167
• Contract withdrawals and transfers to annuity reserves		(17,152,913	)		—		(7,748,240	)		—			—			(4,020,827	)		(18,445,003	)
• Contract transfers		(31,060,732	)		—		6,069,509			—			—			38,500,619			(7,212,985	)
		(35,359,790	)		—		4,005,663			—			—			110,206,246			(25,126,821	)
Annuity Reserves:
• Annuity Payments		—			—		(3,048	)		—			—			(226	)		(34,983	)
• Receipt (reimbursement) of mortality guarantee adjustments		—			—		3			—			—			—			5,369
		—			—		(3,045	)		—			—			(226	)		(29,614	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		(35,359,790	)		—		4,002,618			—			—			110,206,020			(25,156,435	)
TOTAL INCREASE (DECREASE) IN NET ASSETS		51,722,150			—		5,335,325			—			—			128,020,361			(30,650,611	)
NET ASSETS AT DECEMBER 31, 2013		323,041,540			—		101,071,326			—			—			168,724,647			121,752,782
Changes From Operations:
• Net investment income (loss)		(3,268,487	)		4,323		587,536			800			173,805			(3,698,337	)		251,502
• Net realized gain (loss) on investments		22,164,905			4		4,586,660			—			35,778			150,723			1,806,640
• Net change in unrealized appreciation or depreciation on investments		11,768,679			4,678		6,445,217			(1,317	)		1,139,869			(15,599,269	)		2,753,512
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		30,665,097			9,005		11,619,413			(517	)		1,349,452			(19,146,883	)		4,811,654
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		8,297,390			282,220		7,223,013			66,491			45,836,909			72,504,110			1,338,923
• Contract withdrawals and transfers to annuity reserves		(27,624,627	)		—		(8,474,796	)		(126	)		(748,942	)		(9,813,967	)		(18,858,347	)
• Contract transfers		(18,058,221	)		—		(5,480,774	)		—			14,873,319			35,833,804			(2,422,653	)
		(37,385,458	)		282,220		(6,732,557	)		66,365			59,961,286			98,523,947			(19,942,077	)
Annuity Reserves:
• Annuity Payments		(1,263	)		—		(6,482	)		—			—			(2,425	)		(36,226	)
• Receipt (reimbursement) of mortality guarantee adjustments		(372	)		—		(1,700	)		—			—			(773	)		5,995
		(1,635	)		—		(8,182	)		—			—			(3,198	)		(30,231	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		(37,387,093	)		282,220		(6,740,739	)		66,365			59,961,286			98,520,749			(19,972,308	)
TOTAL INCREASE (DECREASE) IN NET ASSETS		(6,721,996	)		291,225		4,878,674			65,848			61,310,738			79,373,866			(15,160,654	)
NET ASSETS AT DECEMBER 31, 2014	$	316,319,544		$	291,225	$	105,950,000		$	65,848		$	61,310,738		$	248,098,513		$	106,592,128

See accompanying notes.
N-50

	LVIP Delaware Bond Service Class Subaccount			LVIP Delaware Diversified Floating Rate Standard Class Subaccount			LVIP Delaware Diversified Floating Rate Service Class Subaccount			LVIP Delaware Foundation Aggressive Allocation Standard Class Subaccount			LVIP Delaware Foundation Aggressive Allocation Service Class Subaccount			LVIP Delaware Growth and Income Service Class Subaccount
NET ASSETS AT JANUARY 1, 2013	$	2,330,108,586		$	44,255		$	197,971,410		$	8,954,404		$	21,274,343		$	36,050,101
Changes From Operations:
• Net investment income (loss)		3,882,541			2,631			(3,496,682	)		(29,054	)		(103,636	)		(81,169	)
• Net realized gain (loss) on investments		32,093,057			(24	)		65,836			259,306			879,254			3,279,352
• Net change in unrealized appreciation or depreciation on investments		(132,192,644	)		(2,662	)		(478,554	)		1,198,972			2,767,603			7,578,017
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		(96,217,046	)		(55	)		(3,909,400	)		1,429,224			3,543,221			10,776,200
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		205,649,084			650,977			157,413,496			18,067			67,615			267,140
• Contract withdrawals and transfers to annuity reserves		(173,420,899	)		(17,344	)		(25,496,630	)		(1,478,072	)		(2,670,573	)		(2,467,799	)
• Contract transfers		180,140,043			310,703			345,209,308			(939,781	)		(492,123	)		855,895
		212,368,228			944,336			477,126,174			(2,399,786	)		(3,095,081	)		(1,344,764	)
Annuity Reserves:
• Annuity Payments		(60,934	)		—			(8,840	)		(3,549	)		—			—
• Receipt (reimbursement) of mortality guarantee adjustments		385			—			1			23			—			—
		(60,549	)		—			(8,839	)		(3,526	)		—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		212,307,679			944,336			477,117,335			(2,403,312	)		(3,095,081	)		(1,344,764	)
TOTAL INCREASE (DECREASE) IN NET ASSETS		116,090,633			944,281			473,207,935			(974,088	)		448,140			9,431,436
NET ASSETS AT DECEMBER 31, 2013		2,446,199,219			988,536			671,179,345			7,980,316			21,722,483			45,481,537
Changes From Operations:
• Net investment income (loss)		9,850,961			4,059			(4,303,123	)		40,017			38,071			(45,874	)
• Net realized gain (loss) on investments		19,610,756			600			1,025,333			374,289			1,297,096			5,328,677
• Net change in unrealized appreciation or depreciation on investments		74,256,020			(12,688	)		(7,256,666	)		(223,290	)		(845,337	)		(906,893	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		103,717,737			(8,029	)		(10,534,456	)		191,016			489,830			4,375,910
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		241,368,941			313,472			129,707,487			20,640			93,394			226,828
• Contract withdrawals and transfers to annuity reserves		(217,782,040	)		(96,979	)		(54,187,709	)		(1,929,381	)		(3,340,725	)		(5,154,430	)
• Contract transfers		74,081,443			82,012			15,632,496			(24,867	)		(432,000	)		(2,436,843	)
		97,668,344			298,505			91,152,274			(1,933,608	)		(3,679,331	)		(7,364,445	)
Annuity Reserves:
• Annuity Payments		(66,487	)		—			(577	)		(3,803	)		—			—
• Receipt (reimbursement) of mortality guarantee adjustments		(2,671	)		—			—			32			—			—
		(69,158	)		—			(577	)		(3,771	)		—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		97,599,186			298,505			91,151,697			(1,937,379	)		(3,679,331	)		(7,364,445	)
TOTAL INCREASE (DECREASE) IN NET ASSETS		201,316,923			290,476			80,617,241			(1,746,363	)		(3,189,501	)		(2,988,535	)
NET ASSETS AT DECEMBER 31, 2014	$	2,647,516,142		$	1,279,012		$	751,796,586		$	6,233,953		$	18,532,982		$	42,493,002

N-51

Lincoln Life Variable Annuity Account N

Statements of changes in net assets (continued)

Years Ended December 31, 2013 and 2014

	LVIP Delaware Social Awareness Standard Class Subaccount			LVIP Delaware Social Awareness Service Class Subaccount			LVIP Delaware Special Opportunities Service Class Subaccount			LVIP Dimensional Non-U.S. Equity RPM Standard Class Subaccount			LVIP Dimensional Non-U.S. Equity RPM Service Class Subaccount			LVIP Dimensional U.S. Equity RPM Standard Class Subaccount			LVIP Dimensional U.S. Equity RPM Service Class Subaccount
NET ASSETS AT JANUARY 1, 2013	$	9,070,228		$	45,098,660		$	37,946,677		$	834,490		$	28,397,526		$	906,466		$	48,901,415
Changes From Operations:
• Net investment income (loss)		(39,867	)		(333,697	)		(391,453	)		21,970			528,203			12,404			(461,878	)
• Net realized gain (loss) on investments		955,936			4,010,559			5,256,765			11,612			715,439			39,796			3,065,029
• Net change in unrealized appreciation or depreciation on investments		1,796,250			11,235,370			7,405,013			116,365			5,220,672			268,255			18,169,149
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		2,712,319			14,912,232			12,270,325			149,947			6,464,314			320,455			20,772,300
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		51,764			2,723,243			3,456,953			790,045			22,050,916			1,250,463			39,958,654
• Contract withdrawals and transfers to annuity reserves		(1,603,970	)		(6,078,629	)		(3,339,658	)		(22,038	)		(2,803,898	)		(47,726	)		(5,080,017	)
• Contract transfers		(428,442	)		4,562,932			460,098			(34,327	)		42,706,021			(140,153	)		61,482,450
		(1,980,648	)		1,207,546			577,393			733,680			61,953,039			1,062,584			96,361,087
Annuity Reserves:
• Annuity Payments		(7,082	)		—			(911	)		—			—			—			—
• Receipt (reimbursement) of mortality guarantee adjustments		5			—			11			—			—			—			—
		(7,077	)		—			(900	)		—			—			—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		(1,987,725	)		1,207,546			576,493			733,680			61,953,039			1,062,584			96,361,087
TOTAL INCREASE (DECREASE) IN NET ASSETS		724,594			16,119,778			12,846,818			883,627			68,417,353			1,383,039			117,133,387
NET ASSETS AT DECEMBER 31, 2013		9,794,822			61,218,438			50,793,495			1,718,117			96,814,879			2,289,505			166,034,802
Changes From Operations:
• Net investment income (loss)		(14,009	)		(237,774	)		(317,504	)		44,096			940,741			22,017			(1,837,468	)
• Net realized gain (loss) on investments		1,189,934			7,232,024			4,010,319			7,120			725,258			25,233			4,502,915
• Net change in unrealized appreciation or depreciation on investments		(6,967	)		414,625			(876,566	)		(281,256	)		(17,533,952	)		125,744			5,183,451
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		1,168,958			7,408,875			2,816,249			(230,040	)		(15,867,953	)		172,994			7,848,898
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		94,776			3,600,596			3,087,998			910,480			52,211,839			1,867,772			89,138,294
• Contract withdrawals and transfers to annuity reserves		(1,172,883	)		(6,523,337	)		(4,314,433	)		(26,597	)		(8,169,590	)		(61,878	)		(14,976,603	)
• Contract transfers		(524,461	)		(1,194,266	)		(1,057,602	)		359,963			46,239,346			545,399			52,232,449
		(1,602,568	)		(4,117,007	)		(2,284,037	)		1,243,846			90,281,595			2,351,293			126,394,140
Annuity Reserves:
• Annuity Payments		(10,177	)		—			(1,025	)		—			—			—			—
• Receipt (reimbursement) of mortality guarantee adjustments		(429	)		—			1			—			—			—			—
		(10,606	)		—			(1,024	)		—			—			—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		(1,613,174	)		(4,117,007	)		(2,285,061	)		1,243,846			90,281,595			2,351,293			126,394,140
TOTAL INCREASE (DECREASE) IN NET ASSETS		(444,216	)		3,291,868			531,188			1,013,806			74,413,642			2,524,287			134,243,038
NET ASSETS AT DECEMBER 31, 2014	$	9,350,606		$	64,510,306		$	51,324,683		$	2,731,923		$	171,228,521		$	4,813,792		$	300,277,840

See accompanying notes.
N-52

	LVIP Dimensional/ Vanguard Total Bond Standard Class Subaccount			LVIP Dimensional/ Vanguard Total Bond Service Class Subaccount			LVIP Franklin Mutual Shares RPM Standard Class Subaccount			LVIP Franklin Mutual Shares RPM Service Class Subaccount			LVIP Franklin Templeton Multi-Asset Opportunities Service Class Subaccount			LVIP Global Income Service Class Subaccount
NET ASSETS AT JANUARY 1, 2013	$	999,276		$	127,902,501		$	—		$	—		$	—		$	482,894,133
Changes From Operations:
• Net investment income (loss)		18,433			(503,011	)		—			—			—			(6,852,779	)
• Net realized gain (loss) on investments		322			150,741			—			—			—			386,761
• Net change in unrealized appreciation or depreciation on investments		(72,755	)		(7,484,721	)		—			—			—			(17,073,179	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		(54,000	)		(7,836,991	)		—			—			—			(23,539,197	)
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		1,265,056			68,045,796			—			—			—			24,907,555
• Contract withdrawals and transfers to annuity reserves		(80,119	)		(8,258,740	)		—			—			—			(26,473,669	)
• Contract transfers		159,215			37,502,059			—			—			—			49,390,192
		1,344,152			97,289,115			—			—			—			47,824,078
Annuity Reserves:
• Annuity Payments		—			—			—			—			—			(16,409	)
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			—			—			—			(1,692	)
		—			—			—			—			—			(18,101	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		1,344,152			97,289,115			—			—			—			47,805,977
TOTAL INCREASE (DECREASE) IN NET ASSETS		1,290,152			89,452,124			—			—			—			24,266,780
NET ASSETS AT DECEMBER 31, 2013		2,289,428			217,354,625			—			—			—			507,160,913
Changes From Operations:
• Net investment income (loss)		52,301			(89,703	)		261			276,551			8,103			(6,984,006	)
• Net realized gain (loss) on investments		5,016			252,605			—			251,703			33			1,003,416
• Net change in unrealized appreciation or depreciation on investments		59,659			6,216,243			(701	)		(1,338,204	)		(6,137	)		5,362,592
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		116,976			6,379,145			(440	)		(809,950	)		1,999			(617,998	)
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		2,289,849			80,462,466			20,004			45,463,073			530,761			78,023,175
• Contract withdrawals and transfers to annuity reserves		(139,834	)		(15,674,702	)		(26	)		(1,744,244	)		(849	)		(34,955,610	)
• Contract transfers		379,247			49,545,947			231			45,089,903			59,712			36,869,858
		2,529,262			114,333,711			20,209			88,808,732			589,624			79,937,423
Annuity Reserves:
• Annuity Payments		—			—			—			—			—			(29,263	)
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			—			—			—			(1,849	)
		—			—			—			—			—			(31,112	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		2,529,262			114,333,711			20,209			88,808,732			589,624			79,906,311
TOTAL INCREASE (DECREASE) IN NET ASSETS		2,646,238			120,712,856			19,769			87,998,782			591,623			79,288,313
NET ASSETS AT DECEMBER 31, 2014	$	4,935,666		$	338,067,481		$	19,769		$	87,998,782		$	591,623		$	586,449,226

N-53

Lincoln Life Variable Annuity Account N

Statements of changes in net assets (continued)

Years Ended December 31, 2013 and 2014

	LVIP Goldman Sachs Income Builder Standard Class Subaccount			LVIP Goldman Sachs Income Builder Service Class Subaccount			LVIP Invesco Diversified Equity Income RPM Service Class Subaccount			LVIP Invesco V.I. Comstock RPM Standard Class Subaccount			LVIP Invesco V.I. Comstock RPM Service Class Subaccount			LVIP JPMorgan High Yield Service Class Subaccount			LVIP JPMorgan Mid Cap Value RPM Standard Class Subaccount
NET ASSETS AT JANUARY 1, 2013	$	—		$	—		$	—		$	—		$	—		$	123,454,963		$	—
Changes From Operations:
• Net investment income (loss)		—			—			—			—			—			4,067,070			—
• Net realized gain (loss) on investments		—			—			—			—			—			3,459,375			—
• Net change in unrealized appreciation or depreciation on investments		—			—			—			—			—			(2,126,715	)		—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		—			—			—			—			—			5,399,730			—
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		—			—			—			—			—			18,140,781			—
• Contract withdrawals and transfers to annuity reserves		—			—			—			—			—			(10,381,180	)		—
• Contract transfers		—			—			—			—			—			4,791,720			—
		—			—			—			—			—			12,551,321			—
Annuity Reserves:
• Annuity Payments		—			—			—			—			—			(2,348	)		—
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			—			—			—			3			—
		—			—			—			—			—			(2,345	)		—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		—			—			—			—			—			12,548,976			—
TOTAL INCREASE (DECREASE) IN NET ASSETS		—			—			—			—			—			17,948,706			—
NET ASSETS AT DECEMBER 31, 2013		—			—			—			—			—			141,403,669			—
Changes From Operations:
• Net investment income (loss)		490			12,719			25,052			802			(23,325	)		3,658,052			513
• Net realized gain (loss) on investments		(1	)		463			111,682			1			(11,712	)		2,989,148			253
• Net change in unrealized appreciation or depreciation on investments		(627	)		(15,010	)		45,032			(1,120	)		412,271			(5,529,496	)		2,322
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		(138	)		(1,828	)		181,766			(317	)		377,234			1,117,704			3,088
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		—			366,945			24,294,147			79,736			47,494,519			24,155,720			71,147
• Contract withdrawals and transfers to annuity reserves		—			(2,792	)		(268,795	)		(190	)		(1,103,588	)		(10,875,962	)		(69	)
• Contract transfers		20,168			227,219			6,161,740			—			22,375,180			(10,764,645	)		5,898
		20,168			591,372			30,187,092			79,546			68,766,111			2,515,113			76,976
Annuity Reserves:
• Annuity Payments		—			—			—			—			—			(11,551	)		—
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			—			—			—			(2,131	)		—
		—			—			—			—			—			(13,682	)		—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		20,168			591,372			30,187,092			79,546			68,766,111			2,501,431			76,976
TOTAL INCREASE (DECREASE) IN NET ASSETS		20,030			589,544			30,368,858			79,229			69,143,345			3,619,135			80,064
NET ASSETS AT DECEMBER 31, 2014	$	20,030		$	589,544		$	30,368,858		$	79,229		$	69,143,345		$	145,022,804		$	80,064

See accompanying notes.
N-54

	LVIP JPMorgan Mid Cap Value RPM Service Class Subaccount			LVIP Managed Risk American Balanced Allocation Standard Class Subaccount			LVIP Managed Risk American Balanced Allocation Service Class Subaccount			LVIP Managed Risk American Growth Allocation Standard Class Subaccount			LVIP Managed Risk American Growth Allocation Service Class Subaccount			LVIP Managed Risk Profile 2010 Service Class Subaccount
NET ASSETS AT JANUARY 1, 2013	$	34,515,420		$	—		$	—		$	—		$	—		$	7,354,722
Changes From Operations:
• Net investment income (loss)		(1,222,837	)		7,569			—			5,145			—			(47,420	)
• Net realized gain (loss) on investments		1,299,640			13,239			—			7,575			—			408,172
• Net change in unrealized appreciation or depreciation on investments		16,718,306			11,161			—			13,352			—			83,964
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		16,795,109			31,969			—			26,072			—			444,716
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		89,188,851			628,257			—			443,660			—			32,828
• Contract withdrawals and transfers to annuity reserves		(3,642,359	)		(3,298	)		—			(1,696	)		—			(947,124	)
• Contract transfers		52,246,641			—			—			(1,155	)		—			(426,276	)
		137,793,133			624,959			—			440,809			—			(1,340,572	)
Annuity Reserves:
• Annuity Payments		(225	)		—			—			—			—			—
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			—			—			—			—
		(225	)		—			—			—			—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		137,792,908			624,959			—			440,809			—			(1,340,572	)
TOTAL INCREASE (DECREASE) IN NET ASSETS		154,588,017			656,928			—			466,881			—			(895,856	)
NET ASSETS AT DECEMBER 31, 2013		189,103,437			656,928			—			466,881			—			6,458,866
Changes From Operations:
• Net investment income (loss)		(2,578,556	)		5,347			50,242			9,999			240,413			(7,550	)
• Net realized gain (loss) on investments		3,290,918			20,903			13,631			15,610			16,834			303,161
• Net change in unrealized appreciation or depreciation on investments		15,380,348			2,340			(49,763	)		(13,997	)		(311,209	)		(138,777	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		16,092,710			28,590			14,110			11,612			(53,962	)		156,834
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		88,118,483			48,013			3,525,658			479,826			17,311,759			12,067
• Contract withdrawals and transfers to annuity reserves		(11,433,380	)		(180,890	)		(5,049	)		(126,757	)		(16,700	)		(1,364,165	)
• Contract transfers		23,993,780			(96	)		356,101			28,655			1,899,481			365,816
		100,678,883			(132,973	)		3,876,710			381,724			19,194,540			(986,282	)
Annuity Reserves:
• Annuity Payments		(2,966	)		—			—			—			—			—
• Receipt (reimbursement) of mortality guarantee adjustments		(1,871	)		—			—			—			—			—
		(4,837	)		—			—			—			—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		100,674,046			(132,973	)		3,876,710			381,724			19,194,540			(986,282	)
TOTAL INCREASE (DECREASE) IN NET ASSETS		116,766,756			(104,383	)		3,890,820			393,336			19,140,578			(829,448	)
NET ASSETS AT DECEMBER 31, 2014	$	305,870,193		$	552,545		$	3,890,820		$	860,217		$	19,140,578		$	5,629,418

N-55

Lincoln Life Variable Annuity Account N

Statements of changes in net assets (continued)

Years Ended December 31, 2013 and 2014

	LVIP Managed Risk Profile 2020 Service Class Subaccount			LVIP Managed Risk Profile 2030 Service Class Subaccount			LVIP Managed Risk Profile 2040 Service Class Subaccount			LVIP Managed Risk Profile Conservative Standard Class Subaccount			LVIP Managed Risk Profile Conservative Service Class Subaccount			LVIP Managed Risk Profile Growth Standard Class Subaccount			LVIP Managed Risk Profile Growth Service Class Subaccount
NET ASSETS AT JANUARY 1, 2013	$	15,957,108		$	10,532,657		$	5,576,367		$	51,153		$	797,064,640		$	—		$	2,378,472,131
Changes From Operations:
• Net investment income (loss)		(81,834	)		(60,862	)		(38,608	)		(24	)		1,194,880			48,399			19,817,628
• Net realized gain (loss) on investments		717,352			628,217			181,173			513			34,865,111			4,445			14,320,630
• Net change in unrealized appreciation or depreciation on investments		808,433			490,386			630,092			212			33,378,258			139,793			414,534,507
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		1,443,951			1,057,741			772,657			701			69,438,249			192,637			448,672,765
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		82,708			213,199			92,203			—			263,844,028			3,457,017			2,425,022,663
• Contract withdrawals and transfers to annuity reserves		(1,431,938	)		(1,389,404	)		(218,586	)		—			(83,861,255	)		(14,596	)		(180,237,663	)
• Contract transfers		856,193			(685,388	)		(128,708	)		(51,854	)		49,228,676			24,108			1,071,827,550
		(493,037	)		(1,861,593	)		(255,091	)		(51,854	)		229,211,449			3,466,529			3,316,612,550
Annuity Reserves:
• Annuity Payments		—			—			—			—			(224	)		—			(2,733	)
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			—			—			—			—			3
		—			—			—			—			(224	)		—			(2,730	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		(493,037	)		(1,861,593	)		(255,091	)		(51,854	)		229,211,225			3,466,529			3,316,609,820
TOTAL INCREASE (DECREASE) IN NET ASSETS		950,914			(803,852	)		517,566			(51,153	)		298,649,474			3,659,166			3,765,282,585
NET ASSETS AT DECEMBER 31, 2013		16,908,022			9,728,805			6,093,933			—			1,095,714,114			3,659,166			6,143,754,716
Changes From Operations:
• Net investment income (loss)		(16,222	)		(9,672	)		18,962			584			1,353,337			56,243			33,400,230
• Net realized gain (loss) on investments		841,402			781,672			123,835			405			28,287,360			5,155			27,340,719
• Net change in unrealized appreciation or depreciation on investments		(413,223	)		(573,883	)		(51,568	)		(1,039	)		11,590,505			33,478			48,761,138
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		411,957			198,117			91,229			(50	)		41,231,202			94,876			109,502,087
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		52,068			48,087			4,513			33,750			145,573,267			477,254			1,784,062,563
• Contract withdrawals and transfers to annuity reserves		(2,107,195	)		(1,558,785	)		(127,707	)		(90	)		(89,864,548	)		(212,699	)		(320,561,935	)
• Contract transfers		(806,883	)		(1,019,430	)		(53,940	)		(200	)		38,673,109			49,137			540,575,634
		(2,862,010	)		(2,530,128	)		(177,134	)		33,460			94,381,828			313,692			2,004,076,262
Annuity Reserves:
• Annuity Payments		—			—			—			—			(2,680	)		—			(2,791	)
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			—			—			(896	)		—			1
		—			—			—			—			(3,576	)		—			(2,790	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		(2,862,010	)		(2,530,128	)		(177,134	)		33,460			94,378,252			313,692			2,004,073,472
TOTAL INCREASE (DECREASE) IN NET ASSETS		(2,450,053	)		(2,332,011	)		(85,905	)		33,410			135,609,454			408,568			2,113,575,559
NET ASSETS AT DECEMBER 31, 2014	$	14,457,969		$	7,396,794		$	6,008,028		$	33,410		$	1,231,323,568		$	4,067,734		$	8,257,330,275

See accompanying notes.
N-56

	LVIP Managed Risk Profile Moderate Standard Class Subaccount			LVIP Managed Risk Profile Moderate Service Class Subaccount			LVIP MFS International Growth Standard Class Subaccount			LVIP MFS International Growth Service Class Subaccount			LVIP MFS International Growth RPM Service Class Subaccount			LVIP MFS Value Standard Class Subaccount
NET ASSETS AT JANUARY 1, 2013	$	—		$	2,680,696,958		$	—		$	133,401,119		$	—		$	—
Changes From Operations:
• Net investment income (loss)		734			10,317,326			—			(1,014,215	)		27,162			—
• Net realized gain (loss) on investments		6			28,108,243			—			3,444,662			22,081			—
• Net change in unrealized appreciation or depreciation on investments		114			330,891,621			—			13,666,556			786,593			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		854			369,317,190			—			16,097,003			835,836			—
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		50,000			1,618,950,647			—			6,663,747			20,377,292			—
• Contract withdrawals and transfers to annuity reserves		(549	)		(227,145,530	)		—			(9,213,859	)		(227,926	)		—
• Contract transfers		—			750,337,845			—			7,180,428			13,833,585			—
		49,451			2,142,142,962			—			4,630,316			33,982,951			—
Annuity Reserves:
• Annuity Payments		—			(29,592	)		—			(870	)		—			—
• Receipt (reimbursement) of mortality guarantee adjustments		—			(43,933	)		—			18			—			—
		—			(73,525	)		—			(852	)		—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		49,451			2,142,069,437			—			4,629,464			33,982,951			—
TOTAL INCREASE (DECREASE) IN NET ASSETS		50,305			2,511,386,627			—			20,726,467			34,818,787			—
NET ASSETS AT DECEMBER 31, 2013		50,305			5,192,083,585			—			154,127,586			34,818,787			—
Changes From Operations:
• Net investment income (loss)		6,561			18,623,862			—			(753,523	)		(635,164	)		155
• Net realized gain (loss) on investments		3,292			35,921,394			—			2,992,222			(74,058	)		—
• Net change in unrealized appreciation or depreciation on investments		(16,677	)		70,746,433			(28	)		(12,209,923	)		(6,025,563	)		(91	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		(6,824	)		125,291,689			(28	)		(9,971,224	)		(6,734,785	)		64
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		558,760			1,185,146,618			9,653			9,414,634			39,074,346			6,771
• Contract withdrawals and transfers to annuity reserves		(18,561	)		(348,209,206	)		—			(12,049,678	)		(2,402,684	)		—
• Contract transfers		(324	)		389,225,607			—			10,761,625			22,984,632			—
		539,875			1,226,163,019			9,653			8,126,581			59,656,294			6,771
Annuity Reserves:
• Annuity Payments		—			(36,973	)		—			(1,464	)		—			—
• Receipt (reimbursement) of mortality guarantee adjustments		—			1,278			—			(164	)		—			—
		—			(35,695	)		—			(1,628	)		—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		539,875			1,226,127,324			9,653			8,124,953			59,656,294			6,771
TOTAL INCREASE (DECREASE) IN NET ASSETS		533,051			1,351,419,013			9,625			(1,846,271	)		52,921,509			6,835
NET ASSETS AT DECEMBER 31, 2014	$	583,356		$	6,543,502,598		$	9,625		$	152,281,315		$	87,740,296		$	6,835

N-57

Lincoln Life Variable Annuity Account N

Statements of changes in net assets (continued)

Years Ended December 31, 2013 and 2014

	LVIP MFS Value Service Class Subaccount			LVIP Mid-Cap Value Service Class Subaccount			LVIP Mondrian International Value Standard Class Subaccount			LVIP Mondrian International Value Service Class Subaccount			LVIP Money Market Standard Class Subaccount			LVIP Money Market Service Class Subaccount			LVIP Multi-Manager Global Equity RPM Service Class Subaccount
NET ASSETS AT JANUARY 1, 2013	$	672,516,930		$	58,307,396		$	15,038,849		$	108,228,121		$	48,429,176		$	327,023,277		$	—
Changes From Operations:
• Net investment income (loss)		2,234,198			(927,659	)		136,439			3,486,732			(705,369	)		(5,201,222	)		—
• Net realized gain (loss) on investments		36,875,786			5,150,140			141,235			1,455,338			—			1			—
• Net change in unrealized appreciation or depreciation on investments		182,216,066			13,465,609			2,664,491			31,523,931			—			(1	)		—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		221,326,050			17,688,090			2,942,165			36,466,001			(705,369	)		(5,201,222	)		—
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		43,092,518			5,233,453			46,375			5,978,899			668,501			64,669,787			—
• Contract withdrawals and transfers to annuity reserves		(48,874,701	)		(4,771,024	)		(2,425,402	)		(19,767,398	)		(38,371,591	)		(182,529,114	)		—
• Contract transfers		(37,923,992	)		(4,518,866	)		2,313,082			192,399,559			30,123,818			75,454,010			—
		(43,706,175	)		(4,056,437	)		(65,945	)		178,611,060			(7,579,272	)		(42,405,317	)		—
Annuity Reserves:
• Annuity Payments		(45,870	)		(5,718	)		(4,771	)		(1,109	)		(3,175	)		(17,155	)		—
• Receipt (reimbursement) of mortality guarantee adjustments		75			10			(17	)		(59	)		401			224			—
		(45,795	)		(5,708	)		(4,788	)		(1,168	)		(2,774	)		(16,931	)		—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		(43,751,970	)		(4,062,145	)		(70,733	)		178,609,892			(7,582,046	)		(42,422,248	)		—
TOTAL INCREASE (DECREASE) IN NET ASSETS		177,574,080			13,625,945			2,871,432			215,075,893			(8,287,415	)		(47,623,470	)		—
NET ASSETS AT DECEMBER 31, 2013		850,091,010			71,933,341			17,910,281			323,304,014			40,141,761			279,399,807			—
Changes From Operations:
• Net investment income (loss)		8,512,834			(1,555,187	)		355,751			7,487,676			(563,718	)		(4,490,183	)		43,587
• Net realized gain (loss) on investments		41,746,411			5,066,671			407,885			6,033,922			—			—			3,802
• Net change in unrealized appreciation or depreciation on investments		23,777,637			552,967			(1,377,563	)		(25,279,583	)		—			—			(160,299	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		74,036,882			4,064,451			(613,927	)		(11,757,985	)		(563,718	)		(4,490,183	)		(112,910	)
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		47,116,366			8,762,332			263,172			7,814,540			392,871			66,500,312			3,641,689
• Contract withdrawals and transfers to annuity reserves		(71,014,074	)		(7,753,978	)		(1,976,313	)		(32,616,356	)		(18,479,212	)		(169,723,029	)		(57,044	)
• Contract transfers		(20,549,719	)		60,001,747			(245,873	)		14,983,031			11,498,115			90,224,058			1,585,049
		(44,447,427	)		61,010,101			(1,959,014	)		(9,818,785	)		(6,588,226	)		(12,998,659	)		5,169,694
Annuity Reserves:
• Annuity Payments		(53,092	)		(6,539	)		(5,151	)		(2,053	)		(3,225	)		(17,735	)		—
• Receipt (reimbursement) of mortality guarantee adjustments		(554	)		(2	)		228			(88	)		447			(1,006	)		—
		(53,646	)		(6,541	)		(4,923	)		(2,141	)		(2,778	)		(18,741	)		—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		(44,501,073	)		61,003,560			(1,963,937	)		(9,820,926	)		(6,591,004	)		(13,017,400	)		5,169,694
TOTAL INCREASE (DECREASE) IN NET ASSETS		29,535,809			65,068,011			(2,577,864	)		(21,578,911	)		(7,154,722	)		(17,507,583	)		5,056,784
NET ASSETS AT DECEMBER 31, 2014	$	879,626,819		$	137,001,352		$	15,332,417		$	301,725,103		$	32,987,039		$	261,892,224		$	5,056,784

See accompanying notes.
N-58

	LVIP PIMCO Low Duration Bond Standard Class Subaccount			LVIP PIMCO Low Duration Bond Service Class Subaccount			LVIP SSgA Bond Index Standard Class Subaccount			LVIP SSgA Bond Index Service Class Subaccount			LVIP SSgA Conservative Index Allocation Service Class Subaccount			LVIP SSgA Conservative Structured Allocation Standard Class Subaccount
NET ASSETS AT JANUARY 1, 2013	$	—		$	—		$	26,227		$	997,851,378		$	55,716,735		$	—
Changes From Operations:
• Net investment income (loss)		—			—			1,336			241,351			(228,216	)		—
• Net realized gain (loss) on investments		—			—			115			6,514,749			1,080,883			—
• Net change in unrealized appreciation or depreciation on investments		—			—			(3,293	)		(52,777,596	)		1,546,564			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		—			—			(1,842	)		(46,021,496	)		2,399,231			—
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		—			—			143,675			37,916,125			6,577,526			—
• Contract withdrawals and transfers to annuity reserves		—			—			(922	)		(83,954,507	)		(4,856,938	)		—
• Contract transfers		—			—			(2,714	)		86,247,334			(2,648,474	)		—
		—			—			140,039			40,208,952			(927,886	)		—
Annuity Reserves:
• Annuity Payments		—			—			—			—			(224	)		—
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			—			—			—			—
		—			—			—			—			(224	)		—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		—			—			140,039			40,208,952			(928,110	)		—
TOTAL INCREASE (DECREASE) IN NET ASSETS		—			—			138,197			(5,812,544	)		1,471,121			—
NET ASSETS AT DECEMBER 31, 2013		—			—			164,424			992,038,834			57,187,856			—
Changes From Operations:
• Net investment income (loss)		326			(13,684	)		5,328			(1,106,164	)		(48,302	)		3,987
• Net realized gain (loss) on investments		146			92,390			461			5,176,832			1,373,841			53
• Net change in unrealized appreciation or depreciation on investments		(905	)		(442,278	)		4,036			32,117,307			225,883			(3,126	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		(433	)		(363,572	)		9,825			36,187,975			1,551,422			914
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		117,524			28,692,362			267,930			32,901,879			4,182,692			78
• Contract withdrawals and transfers to annuity reserves		—			(3,786,034	)		(19,915	)		(106,934,129	)		(5,646,463	)		—
• Contract transfers		(33,000	)		28,915,794			883			27,760,342			3,740,365			165,193
		84,524			53,822,122			248,898			(46,271,908	)		2,276,594			165,271
Annuity Reserves:
• Annuity Payments		—			—			—			(6,667	)		(2,673	)		—
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			—			—			(891	)		—
		—			—			—			(6,667	)		(3,564	)		—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		84,524			53,822,122			248,898			(46,278,575	)		2,273,030			165,271
TOTAL INCREASE (DECREASE) IN NET ASSETS		84,091			53,458,550			258,723			(10,090,600	)		3,824,452			166,185
NET ASSETS AT DECEMBER 31, 2014	$	84,091		$	53,458,550		$	423,147		$	981,948,234		$	61,012,308		$	166,185

N-59

Lincoln Life Variable Annuity Account N

Statements of changes in net assets (continued)

Years Ended December 31, 2013 and 2014

	LVIP SSgA Conservative Structured Allocation Service Class Subaccount			LVIP SSgA Developed International 150 Standard Class Subaccount			LVIP SSgA Developed International 150 Service Class Subaccount			LVIP SSgA Emerging Markets 100 Standard Class Subaccount			LVIP SSgA Emerging Markets 100 Service Class Subaccount			LVIP SSgA Global Tactical Allocation RPM Standard Class Subaccount			LVIP SSgA Global Tactical Allocation RPM Service Class Subaccount
NET ASSETS AT JANUARY 1, 2013	$	198,661,657		$	—		$	141,627,471		$	104,207		$	176,646,426		$	63,094		$	367,052,105
Changes From Operations:
• Net investment income (loss)		(73,237	)		446			992,521			4,162			567,624			3,321			3,084,405
• Net realized gain (loss) on investments		2,528,468			82			4,785,618			(254	)		(2,291,712	)		751			3,487,177
• Net change in unrealized appreciation or depreciation on investments		6,873,585			1,027			18,195,511			(3,394	)		(5,306,346	)		2,342			35,810,079
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		9,328,816			1,555			23,973,650			514			(7,030,434	)		6,414			42,381,661
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		6,724,541			17,130			2,525,392			170,129			4,983,437			149,236			271,307,095
• Contract withdrawals and transfers to annuity reserves		(13,174,771	)		(525	)		(10,353,693	)		(10,548	)		(12,271,208	)		(22,003	)		(27,020,937	)
• Contract transfers		(11,711,277	)		6,804			(8,741,283	)		15,380			15,538,062			3,388			78,504,567
		(18,161,507	)		23,409			(16,569,584	)		174,961			8,250,291			130,621			322,790,725
Annuity Reserves:
• Annuity Payments		—			—			—			—			(2,276	)		—			(112,822	)
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			—			—			3			—			757
		—			—			—			—			(2,273	)		—			(112,065	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		(18,161,507	)		23,409			(16,569,584	)		174,961			8,248,018			130,621			322,678,660
TOTAL INCREASE (DECREASE) IN NET ASSETS		(8,832,691	)		24,964			7,404,066			175,475			1,217,584			137,035			365,060,321
NET ASSETS AT DECEMBER 31, 2013		189,828,966			24,964			149,031,537			279,682			177,864,010			200,129			732,112,426
Changes From Operations:
• Net investment income (loss)		929,529			5,964			1,909,268			11,049			1,789,975			3,138			3,775,280
• Net realized gain (loss) on investments		4,933,306			4,452			8,920,597			(253	)		(1,207,497	)		4,196			7,010,893
• Net change in unrealized appreciation or depreciation on investments		470,302			(25,780	)		(12,049,074	)		(31,758	)		(8,783,047	)		(3,179	)		3,528,745
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		6,333,137			(15,364	)		(1,219,209	)		(20,962	)		(8,200,569	)		4,155			14,314,918
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		9,442,108			247,674			3,558,771			215,165			5,617,596			133,895			167,238,183
• Contract withdrawals and transfers to annuity reserves		(12,086,137	)		(7,451	)		(14,264,634	)		(8,058	)		(15,652,171	)		(117,685	)		(41,857,010	)
• Contract transfers		(3,519,057	)		3,513			8,465,224			(3,364	)		10,076,015			2,159			13,366,020
		(6,163,086	)		243,736			(2,240,639	)		203,743			41,440			18,369			138,747,193
Annuity Reserves:
• Annuity Payments		—			—			—			—			(2,205	)		—			(121,960	)
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			—			—			—			—			629
		—			—			—			—			(2,205	)		—			(121,331	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		(6,163,086	)		243,736			(2,240,639	)		203,743			39,235			18,369			138,625,862
TOTAL INCREASE (DECREASE) IN NET ASSETS		170,051			228,372			(3,459,848	)		182,781			(8,161,334	)		22,524			152,940,780
NET ASSETS AT DECEMBER 31, 2014	$	189,999,017		$	253,336		$	145,571,689		$	462,463		$	169,702,676		$	222,653		$	885,053,206

See accompanying notes.
N-60

	LVIP SSgA International Index Standard Class Subaccount			LVIP SSgA International Index Service Class Subaccount			LVIP SSgA International RPM Service Class Subaccount			LVIP SSgA Large Cap 100 Standard Class Subaccount			LVIP SSgA Large Cap 100 Service Class Subaccount			LVIP SSgA Large Cap RPM Standard Class Subaccount
NET ASSETS AT JANUARY 1, 2013	$	33,709		$	208,702,144		$	—		$	3,764		$	279,058,585		$	—
Changes From Operations:
• Net investment income (loss)		1,152			(475,454	)		—			11,767			665,819			15
• Net realized gain (loss) on investments		1,068			7,228,804			—			32,409			41,813,444			—
• Net change in unrealized appreciation or depreciation on investments		16,658			35,458,740			—			29,510			43,597,563			94
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		18,878			42,212,090			—			73,686			86,076,826			109
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		120,515			4,296,373			—			227,159			5,828,238			1,287
• Contract withdrawals and transfers to annuity reserves		(1,762	)		(20,153,653	)		—			(11,778	)		(24,277,263	)		(3	)
• Contract transfers		(1,204	)		66,292,905			—			499,066			(29,926,373	)		19
		117,549			50,435,625			—			714,447			(48,375,398	)		1,303
Annuity Reserves:
• Annuity Payments		—			(2,290	)		—			—			—			—
• Receipt (reimbursement) of mortality guarantee adjustments		—			10			—			—			—			—
		—			(2,280	)		—			—			—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		117,549			50,433,345			—			714,447			(48,375,398	)		1,303
TOTAL INCREASE (DECREASE) IN NET ASSETS		136,427			92,645,435			—			788,133			37,701,428			1,412
NET ASSETS AT DECEMBER 31, 2013		170,136			301,347,579			—			791,897			316,760,013			1,412
Changes From Operations:
• Net investment income (loss)		7,319			2,136,651			181,087			24,053			1,598,187			18
• Net realized gain (loss) on investments		566			7,733,940			(24,731	)		64,797			37,084,085			35
• Net change in unrealized appreciation or depreciation on investments		(32,669	)		(31,824,303	)		(1,356,738	)		79,505			3,433,563			51
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		(24,784	)		(21,953,712	)		(1,200,382	)		168,355			42,115,835			104
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		256,780			4,940,039			9,010,344			824,732			5,819,873			—
• Contract withdrawals and transfers to annuity reserves		(4,075	)		(31,253,342	)		(243,440	)		(53,116	)		(33,099,988	)		(38	)
• Contract transfers		18,177			21,436,535			7,525,242			(95,817	)		(6,415,741	)		(61	)
		270,882			(4,876,768	)		16,292,146			675,799			(33,695,856	)		(99	)
Annuity Reserves:
• Annuity Payments		—			(29,941	)		—			—			—			—
• Receipt (reimbursement) of mortality guarantee adjustments		—			(2,107	)		—			—			—			—
		—			(32,048	)		—			—			—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		270,882			(4,908,816	)		16,292,146			675,799			(33,695,856	)		(99	)
TOTAL INCREASE (DECREASE) IN NET ASSETS		246,098			(26,862,528	)		15,091,764			844,154			8,419,979			5
NET ASSETS AT DECEMBER 31, 2014	$	416,234		$	274,485,051		$	15,091,764		$	1,636,051		$	325,179,992		$	1,417

N-61

Lincoln Life Variable Annuity Account N

Statements of changes in net assets (continued)

Years Ended December 31, 2013 and 2014

	LVIP SSgA Large Cap RPM Service Class Subaccount			LVIP SSgA Moderate Index Allocation Service Class Subaccount			LVIP SSgA Moderate Structured Allocation Service Class Subaccount			LVIP SSgA Moderately Aggressive Index Allocation Service Class Subaccount			LVIP SSgA Moderately Aggressive Structured Allocation Service Class Subaccount			LVIP SSgA S&P 500 Index Standard Class Subaccount			LVIP SSgA S&P 500 Index Service Class Subaccount
NET ASSETS AT JANUARY 1, 2013	$	—		$	135,403,254		$	535,387,963		$	127,959,706		$	357,707,878		$	1,630,111		$	502,663,971
Changes From Operations:
• Net investment income (loss)		176,853			(704,048	)		4,522,273			(553,250	)		1,819,453			181,721			(1,850,241	)
• Net realized gain (loss) on investments		24,453			2,374,561			7,159,583			2,833,467			5,407,307			175,903			35,935,996
• Net change in unrealized appreciation or depreciation on investments		1,275,948			13,638,125			55,338,456			14,672,207			38,736,196			3,551,682			133,210,668
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		1,477,254			15,308,638			67,020,312			16,952,424			45,962,956			3,909,306			167,296,423
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		15,342,618			23,542,500			28,953,516			16,557,581			13,447,576			621,577			21,027,882
• Contract withdrawals and transfers to annuity reserves		(210,238	)		(8,392,415	)		(49,269,959	)		(7,891,645	)		(23,038,973	)		(2,664,683	)		(65,387,432	)
• Contract transfers		9,337,884			8,707,104			279,623,711			7,108,868			10,538,846			32,703,964			213,076,180
		24,470,264			23,857,189			259,307,268			15,774,804			947,449			30,660,858			168,716,630
Annuity Reserves:
• Annuity Payments		—			(168	)		(13,548	)		(224	)		—			(6,638	)		(10,334	)
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			3,255			—			—			473			973
		—			(168	)		(10,293	)		(224	)		—			(6,165	)		(9,361	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		24,470,264			23,857,021			259,296,975			15,774,580			947,449			30,654,693			168,707,269
TOTAL INCREASE (DECREASE) IN NET ASSETS		25,947,518			39,165,659			326,317,287			32,727,004			46,910,405			34,563,999			336,003,692
NET ASSETS AT DECEMBER 31, 2013		25,947,518			174,568,913			861,705,250			160,686,710			404,618,283			36,194,110			838,667,663
Changes From Operations:
• Net investment income (loss)		839,080			275,147			6,102,662			397,871			4,086,171			137,586			(304,112	)
• Net realized gain (loss) on investments		475,649			3,496,290			20,669,538			3,236,813			10,591,588			1,151,176			58,844,418
• Net change in unrealized appreciation or depreciation on investments		1,754,042			437,479			2,740,042			(344,462	)		(1,573,270	)		2,632,691			30,849,498
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		3,068,771			4,208,916			29,512,242			3,290,222			13,104,489			3,921,453			89,389,804
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		34,603,038			20,358,371			27,548,723			10,180,726			21,232,571			966,828			23,420,200
• Contract withdrawals and transfers to annuity reserves		(2,211,890	)		(10,984,726	)		(66,947,670	)		(6,800,195	)		(21,659,296	)		(4,825,915	)		(93,657,735	)
• Contract transfers		37,448,473			2,572,961			(21,415,449	)		(1,298,175	)		9,255,433			(96,804	)		(661,101	)
		69,839,621			11,946,606			(60,814,396	)		2,082,356			8,828,708			(3,955,891	)		(70,898,636	)
Annuity Reserves:
• Annuity Payments		—			(2,002	)		(16,292	)		(2,665	)		—			(10,871	)		(64,516	)
• Receipt (reimbursement) of mortality guarantee adjustments		—			(670	)		3,932			(894	)		—			669			(6,836	)
		—			(2,672	)		(12,360	)		(3,559	)		—			(10,202	)		(71,352	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		69,839,621			11,943,934			(60,826,756	)		2,078,797			8,828,708			(3,966,093	)		(70,969,988	)
TOTAL INCREASE (DECREASE) IN NET ASSETS		72,908,392			16,152,850			(31,314,514	)		5,369,019			21,933,197			(44,640	)		18,419,816
NET ASSETS AT DECEMBER 31, 2014	$	98,855,910		$	190,721,763		$	830,390,736		$	166,055,729		$	426,551,480		$	36,149,470		$	857,087,479

See accompanying notes.
N-62

	LVIP SSgA Small-Cap Index Standard Class Subaccount			LVIP SSgA Small-Cap Index Service Class Subaccount			LVIP SSgA Small-Cap RPM Standard Class Subaccount			LVIP SSgA Small-Cap RPM Service Class Subaccount			LVIP SSgA Small-Mid Cap 200 Standard Class Subaccount			LVIP SSgA Small-Mid Cap 200 Service Class Subaccount
NET ASSETS AT JANUARY 1, 2013	$	61,884		$	143,442,614		$	—		$	—		$	21,540		$	93,579,793
Changes From Operations:
• Net investment income (loss)		2,028			(2,467,740	)		406			113,319			15,955			676,462
• Net realized gain (loss) on investments		7,058			15,346,230			—			44,838			45,160			14,076,888
• Net change in unrealized appreciation or depreciation on investments		66,607			52,267,857			652			1,315,169			8,335			13,642,097
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		75,693			65,146,347			1,058			1,473,326			69,450			28,395,447
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		508,895			6,406,547			39,008			16,155,058			452,857			3,655,521
• Contract withdrawals and transfers to annuity reserves		(5,100	)		(19,430,814	)		—			(171,487	)		(10,881	)		(8,202,447	)
• Contract transfers		(15,597	)		102,011,607			—			9,689,224			259,833			(6,682,580	)
		488,198			88,987,340			39,008			25,672,795			701,809			(11,229,506	)
Annuity Reserves:
• Annuity Payments		—			(1,475	)		—			—			—			—
• Receipt (reimbursement) of mortality guarantee adjustments		—			876			—			—			—			—
		—			(599	)		—			—			—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		488,198			88,986,741			39,008			25,672,795			701,809			(11,229,506	)
TOTAL INCREASE (DECREASE) IN NET ASSETS		563,891			154,133,088			40,066			27,146,121			771,259			17,165,941
NET ASSETS AT DECEMBER 31, 2013		625,775			297,575,702			40,066			27,146,121			792,799			110,745,734
Changes From Operations:
• Net investment income (loss)		2,444			(3,027,715	)		330			(234,976	)		36,466			1,545,314
• Net realized gain (loss) on investments		39,986			21,679,583			6			(7,490	)		53,142			8,113,852
• Net change in unrealized appreciation or depreciation on investments		16,603			(12,118,730	)		(981	)		(501,180	)		(42,227	)		(7,141,932	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		59,033			6,533,138			(645	)		(743,646	)		47,381			2,517,234
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		794,694			7,164,571			39,358			42,635,037			684,224			4,543,124
• Contract withdrawals and transfers to annuity reserves		(26,028	)		(28,497,642	)		(1,086	)		(2,399,482	)		(72,010	)		(9,938,223	)
• Contract transfers		(26,411	)		(9,884,740	)		3,220			22,569,669			16,926			2,695,694
		742,255			(31,217,811	)		41,492			62,805,224			629,140			(2,699,405	)
Annuity Reserves:
• Annuity Payments		—			(4,745	)		—			—			—			—
• Receipt (reimbursement) of mortality guarantee adjustments		—			198			—			—			—			—
		—			(4,547	)		—			—			—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		742,255			(31,222,358	)		41,492			62,805,224			629,140			(2,699,405	)
TOTAL INCREASE (DECREASE) IN NET ASSETS		801,288			(24,689,220	)		40,847			62,061,578			676,521			(182,171	)
NET ASSETS AT DECEMBER 31, 2014	$	1,427,063		$	272,886,482		$	80,913		$	89,207,699		$	1,469,320		$	110,563,563

N-63

Lincoln Life Variable Annuity Account N

Statements of changes in net assets (continued)

Years Ended December 31, 2013 and 2014

	LVIP T. Rowe Price Growth Stock Standard Class Subaccount			LVIP T. Rowe Price Growth Stock Service Class Subaccount			LVIP T. Rowe Price Structured Mid-Cap Growth Standard Class Subaccount			LVIP T. Rowe Price Structured Mid-Cap Growth Service Class Subaccount			LVIP Templeton Growth RPM Service Class Subaccount			LVIP UBS Large Cap Growth RPM Standard Class Subaccount			LVIP UBS Large Cap Growth RPM Service Class Subaccount
NET ASSETS AT JANUARY 1, 2013	$	—		$	143,608,085		$	2,298,791		$	80,236,899		$	154,522,717		$	2,243,019		$	60,049,258
Changes From Operations:
• Net investment income (loss)		—			(2,731,610	)		(45,961	)		(1,363,906	)		(418,147	)		(38,816	)		(1,812,374	)
• Net realized gain (loss) on investments		—			10,102,034			317,474			9,121,636			4,308,161			183,219			3,261,316
• Net change in unrealized appreciation or depreciation on investments		—			43,378,370			455,460			15,788,161			36,077,707			326,861			22,052,314
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		—			50,748,794			726,973			23,545,891			39,967,721			471,264			23,501,256
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		—			10,686,226			58,184			7,503,889			153,963,771			8,457			62,084,184
• Contract withdrawals and transfers to annuity reserves		—			(10,092,575	)		(282,058	)		(5,351,028	)		(12,544,669	)		(267,407	)		(6,972,075	)
• Contract transfers		—			(6,351,954	)		(109,216	)		(18,415,548	)		43,236,807			(8,545	)		21,928,845
		—			(5,758,303	)		(333,090	)		(16,262,687	)		184,655,909			(267,495	)		77,040,954
Annuity Reserves:
• Annuity Payments		—			(2,173	)		—			(1,255	)		—			—			—
• Receipt (reimbursement) of mortality guarantee adjustments		—			4			—			11			—			—			—
		—			(2,169	)		—			(1,244	)		—			—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		—			(5,760,472	)		(333,090	)		(16,263,931	)		184,655,909			(267,495	)		77,040,954
TOTAL INCREASE (DECREASE) IN NET ASSETS		—			44,988,322			393,883			7,281,960			224,623,630			203,769			100,542,210
NET ASSETS AT DECEMBER 31, 2013		—			188,596,407			2,692,674			87,518,859			379,146,347			2,446,788			160,591,468
Changes From Operations:
• Net investment income (loss)		(72	)		(2,980,986	)		(44,105	)		(1,455,496	)		(1,069,471	)		(43,469	)		(3,519,868	)
• Net realized gain (loss) on investments		1			19,296,185			417,440			11,361,793			5,602,400			101,946			6,592,198
• Net change in unrealized appreciation or depreciation on investments		1,674			(6,050,278	)		(126,151	)		(1,699,123	)		(28,697,032	)		14,988			4,555,170
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		1,603			10,264,921			247,184			8,207,174			(24,164,103	)		73,465			7,627,500
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		49,103			16,476,885			25,868			7,330,726			205,369,787			2,937			55,954,592
• Contract withdrawals and transfers to annuity reserves		—			(12,661,114	)		(649,805	)		(7,222,848	)		(27,519,488	)		(166,870	)		(12,181,993	)
• Contract transfers		—			(25,085,616	)		410,276			(2,403,351	)		60,479,494			(103,802	)		22,544,074
		49,103			(21,269,845	)		(213,661	)		(2,295,473	)		238,329,793			(267,735	)		66,316,673
Annuity Reserves:
• Annuity Payments		—			(5,519	)		—			(5,103	)		—			—			—
• Receipt (reimbursement) of mortality guarantee adjustments		—			(1,116	)		—			(1,366	)		—			—			—
		—			(6,635	)		—			(6,469	)		—			—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		49,103			(21,276,480	)		(213,661	)		(2,301,942	)		238,329,793			(267,735	)		66,316,673
TOTAL INCREASE (DECREASE) IN NET ASSETS		50,706			(11,011,559	)		33,523			5,905,232			214,165,690			(194,270	)		73,944,173
NET ASSETS AT DECEMBER 31, 2014	$	50,706		$	177,584,848		$	2,726,197		$	93,424,091		$	593,312,037		$	2,252,518		$	234,535,641

See accompanying notes.
N-64

	LVIP Vanguard Domestic Equity ETF Standard Class Subaccount			LVIP Vanguard Domestic Equity ETF Service Class Subaccount			LVIP Vanguard International Equity ETF Standard Class Subaccount			LVIP Vanguard International Equity ETF Service Class Subaccount			LVIP VIP Contrafund RPM Standard Class Subaccount			LVIP VIP Contrafund RPM Service Class Subaccount
NET ASSETS AT JANUARY 1, 2013	$	112,131		$	44,730,410		$	57,783		$	26,145,484		$	—		$	—
Changes From Operations:
• Net investment income (loss)		409			(341,459	)		5,561			188,131			958			275,897
• Net realized gain (loss) on investments		5,941			1,982,855			2,676			570,100			11			55,659
• Net change in unrealized appreciation or depreciation on investments		61,544			13,114,686			10,351			3,351,149			2,091			5,336,422
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		67,894			14,756,082			18,588			4,109,380			3,060			5,667,978
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		208,735			10,268,674			298,572			5,600,524			110,294			50,584,830
• Contract withdrawals and transfers to annuity reserves		(25,922	)		(2,662,971	)		(10,009	)		(1,285,781	)		(554	)		(607,095	)
• Contract transfers		12,199			14,160,162			(5,772	)		7,035,836			—			39,989,982
		195,012			21,765,865			282,791			11,350,579			109,740			89,967,717
Annuity Reserves:
• Annuity Payments		—			(281	)		—			—			—			—
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			—			—			—			—
		—			(281	)		—			—			—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		195,012			21,765,584			282,791			11,350,579			109,740			89,967,717
TOTAL INCREASE (DECREASE) IN NET ASSETS		262,906			36,521,666			301,379			15,459,959			112,800			95,635,695
NET ASSETS AT DECEMBER 31, 2013		375,037			81,252,076			359,162			41,605,443			112,800			95,635,695
Changes From Operations:
• Net investment income (loss)		3,188			51,130			3,743			201,143			9,680			3,356,304
• Net realized gain (loss) on investments		8,175			4,914,032			552			548,168			738			873,190
• Net change in unrealized appreciation or depreciation on investments		30,200			3,837,911			(25,731	)		(4,389,129	)		1,321			4,185,437
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		41,563			8,803,073			(21,436	)		(3,639,818	)		11,739			8,414,931
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		60,356			14,371,814			66,834			8,097,255			325,753			109,758,306
• Contract withdrawals and transfers to annuity reserves		(12,955	)		(4,649,684	)		(40,761	)		(2,136,615	)		(8,231	)		(6,807,445	)
• Contract transfers		(12,663	)		(485,224	)		20,936			11,102,236			(5,943	)		63,308,332
		34,738			9,236,906			47,009			17,062,876			311,579			166,259,193
Annuity Reserves:
• Annuity Payments		—			(3,415	)		—			—			—			—
• Receipt (reimbursement) of mortality guarantee adjustments		—			(1,151	)		—			—			—			—
		—			(4,566	)		—			—			—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		34,738			9,232,340			47,009			17,062,876			311,579			166,259,193
TOTAL INCREASE (DECREASE) IN NET ASSETS		76,301			18,035,413			25,573			13,423,058			323,318			174,674,124
NET ASSETS AT DECEMBER 31, 2014	$	451,338		$	99,287,489		$	384,735		$	55,028,501		$	436,118		$	270,309,819

N-65

Lincoln Life Variable Annuity Account N

Statements of changes in net assets (continued)

Years Ended December 31, 2013 and 2014

	LVIP VIP Mid Cap RPM Service Class Subaccount			Lord Abbett Series Fund Bond Debenture Class VC Subaccount			Lord Abbett Series Fund Developing Growth Class VC Subaccount			Lord Abbett Series Fund Fundamental Equity Class VC Subaccount			Lord Abbett Series Fund Short Duration Income Class VC Subaccount			MFS VIT Core Equity Service Class Subaccount			MFS VIT Growth Initial Class Subaccount
NET ASSETS AT JANUARY 1, 2013	$	—		$	—		$	—		$	14,919,914		$	—		$	2,143,823		$	2,756,529
Changes From Operations:
• Net investment income (loss)		—			—			—			(115,134	)		—			(21,164	)		(35,439	)
• Net realized gain (loss) on investments		—			—			—			2,823,693			—			145,235			99,179
• Net change in unrealized appreciation or depreciation on investments		—			—			—			2,075,200			—			564,855			843,529
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		—			—			—			4,783,759			—			688,926			907,269
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		—			—			—			295,024			—			2,716			16,321
• Contract withdrawals and transfers to annuity reserves		—			—			—			(924,264	)		—			(182,877	)		(264,400	)
• Contract transfers		—			—			—			(1,836,597	)		—			135,081			(4,244	)
		—			—			—			(2,465,837	)		—			(45,080	)		(252,323	)
Annuity Reserves:
• Annuity Payments		—			—			—			—			—			—			—
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			—			—			—			—			—
		—			—			—			—			—			—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		—			—			—			(2,465,837	)		—			(45,080	)		(252,323	)
TOTAL INCREASE (DECREASE) IN NET ASSETS		—			—			—			2,317,922			—			643,846			654,946
NET ASSETS AT DECEMBER 31, 2013		—			—			—			17,237,836			—			2,787,669			3,411,475
Changes From Operations:
• Net investment income (loss)		45,503			60,171			(2,571	)		(85,811	)		42,341			(28,813	)		(42,876	)
• Net realized gain (loss) on investments		4,349			29,500			14,497			3,438,563			(357	)		215,951			349,026
• Net change in unrealized appreciation or depreciation on investments		27,292			(93,577	)		39,265			(2,365,315	)		(58,084	)		35,829			(72,189	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		77,144			(3,906	)		51,191			987,437			(16,100	)		222,967			233,961
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		7,855,441			1,527,006			804,742			200,918			2,530,403			2,489			450
• Contract withdrawals and transfers to annuity reserves		(113,237	)		(15,335	)		(15,496	)		(1,466,309	)		(115,183	)		(227,884	)		(301,224	)
• Contract transfers		3,651,631			71,942			52,555			(488,458	)		232,868			(183,054	)		(83,743	)
		11,393,835			1,583,613			841,801			(1,753,849	)		2,648,088			(408,449	)		(384,517	)
Annuity Reserves:
• Annuity Payments		—			—			—			—			—			—			—
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			—			—			—			—			—
		—			—			—			—			—			—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		11,393,835			1,583,613			841,801			(1,753,849	)		2,648,088			(408,449	)		(384,517	)
TOTAL INCREASE (DECREASE) IN NET ASSETS		11,470,979			1,579,707			892,992			(766,412	)		2,631,988			(185,482	)		(150,556	)
NET ASSETS AT DECEMBER 31, 2014	$	11,470,979		$	1,579,707		$	892,992		$	16,471,424		$	2,631,988		$	2,602,187		$	3,260,919

See accompanying notes.
N-66

	MFS VIT Growth Service Class Subaccount			MFS VIT Total Return Initial Class Subaccount			MFS VIT Total Return Service Class Subaccount			MFS VIT Utilities Initial Class Subaccount			MFS VIT Utilities Service Class Subaccount			MFS VIT II International Value Initial Class Subaccount
NET ASSETS AT JANUARY 1, 2013	$	24,495,882		$	10,712,722		$	278,375,650		$	10,154,800		$	202,449,105		$	—
Changes From Operations:
• Net investment income (loss)		(439,827	)		30,523			(1,736,397	)		94,868			950,393			—
• Net realized gain (loss) on investments		1,950,122			371,034			48,970,308			597,536			12,465,093			—
• Net change in unrealized appreciation or depreciation on investments		7,572,993			1,282,650			(18,194,394	)		1,127,717			21,861,013			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		9,083,288			1,684,207			29,039,517			1,820,121			35,276,499			—
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		3,255,661			39,735			750,065			8,437			8,866,287			—
• Contract withdrawals and transfers to annuity reserves		(1,776,990	)		(1,578,931	)		(12,981,272	)		(1,090,734	)		(20,190,343	)		—
• Contract transfers		3,953,777			(622,410	)		(295,178,936	)		(93,524	)		(8,627,497	)		—
		5,432,448			(2,161,606	)		(307,410,143	)		(1,175,821	)		(19,951,553	)		—
Annuity Reserves:
• Annuity Payments		—			(2,988	)		(5,024	)		(6,096	)		(17,335	)		—
• Receipt (reimbursement) of mortality guarantee adjustments		—			73			—			622			(1,103	)		—
		—			(2,915	)		(5,024	)		(5,474	)		(18,438	)		—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		5,432,448			(2,164,521	)		(307,415,167	)		(1,181,295	)		(19,969,991	)		—
TOTAL INCREASE (DECREASE) IN NET ASSETS		14,515,736			(480,314	)		(278,375,650	)		638,826			15,306,508			—
NET ASSETS AT DECEMBER 31, 2013		39,011,618			10,232,408			—			10,793,626			217,755,613			—
Changes From Operations:
• Net investment income (loss)		(652,348	)		37,280			83			73,785			679,471			(2	)
• Net realized gain (loss) on investments		5,969,972			668,166			430			937,662			19,127,545			—
• Net change in unrealized appreciation or depreciation on investments		(2,140,371	)		(69,890	)		(46	)		167,061			3,247,512			(508	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		3,177,253			635,556			467			1,178,508			23,054,528			(510	)
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		10,785,806			24,177			4,727			79,801			12,589,997			69,542
• Contract withdrawals and transfers to annuity reserves		(2,941,426	)		(1,565,322	)		(11,587	)		(1,093,832	)		(24,167,816	)		—
• Contract transfers		708,364			(241,451	)		19,572			(268,103	)		4,158,068			—
		8,552,744			(1,782,596	)		12,712			(1,282,134	)		(7,419,751	)		69,542
Annuity Reserves:
• Annuity Payments		—			(3,184	)		—			(6,629	)		(20,994	)		—
• Receipt (reimbursement) of mortality guarantee adjustments		—			92			—			710			608			—
		—			(3,092	)		—			(5,919	)		(20,386	)		—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		8,552,744			(1,785,688	)		12,712			(1,288,053	)		(7,440,137	)		69,542
TOTAL INCREASE (DECREASE) IN NET ASSETS		11,729,997			(1,150,132	)		13,179			(109,545	)		15,614,391			69,032
NET ASSETS AT DECEMBER 31, 2014	$	50,741,615		$	9,082,276		$	13,179		$	10,684,081		$	233,370,004		$	69,032

N-67

Lincoln Life Variable Annuity Account N

Statements of changes in net assets (continued)

Years Ended December 31, 2013 and 2014

	MFS VIT II International Value Service Class Subaccount			Morgan Stanley UIF Capital Growth Class II Subaccount			NB AMT Mid Cap Growth I Class Subaccount			NB AMT Mid Cap Intrinsic Value I Class Subaccount			Oppenheimer Global Fund/VA Service Class Subaccount			Oppenheimer International Growth Fund/VA Non-Service Class Subaccount			Oppenheimer International Growth Fund/VA Service Class Subaccount
NET ASSETS AT JANUARY 1, 2013	$	—		$	1,585,107		$	36,876,586		$	36,696,208		$	7,598,199		$	—		$	—
Changes From Operations:
• Net investment income (loss)		—			(12,131	)		(236,204	)		(196,089	)		16,981			—			—
• Net realized gain (loss) on investments		—			227,837			17,491,888			838,772			311,799			—			—
• Net change in unrealized appreciation or depreciation on investments		—			454,266			(12,183,928	)		10,973,336			1,538,994			—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		—			669,972			5,071,756			11,616,019			1,867,774			—			—
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		—			12,989			144,544			190,541			89,646			—			—
• Contract withdrawals and transfers to annuity reserves		—			(204,735	)		(1,953,032	)		(6,769,771	)		(412,350	)		—			—
• Contract transfers		—			(65,264	)		(40,139,854	)		(1,033,974	)		(350,640	)		—			—
		—			(257,010	)		(41,948,342	)		(7,613,204	)		(673,344	)		—			—
Annuity Reserves:
• Annuity Payments		—			—			—			(7,205	)		—			—			—
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			—			91			—			—			—
		—			—			—			(7,114	)		—			—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		—			(257,010	)		(41,948,342	)		(7,620,318	)		(673,344	)		—			—
TOTAL INCREASE (DECREASE) IN NET ASSETS		—			412,962			(36,876,586	)		3,995,701			1,194,430			—			—
NET ASSETS AT DECEMBER 31, 2013		—			1,998,069			—			40,691,909			8,792,629			—			—
Changes From Operations:
• Net investment income (loss)		4,808			(17,469	)		(11	)		(239,578	)		(9,550	)		(455	)		(3,882	)
• Net realized gain (loss) on investments		(238	)		319,247			310			3,184,950			660,921			48			(392	)
• Net change in unrealized appreciation or depreciation on investments		(29,198	)		(206,655	)		—			1,352,723			(555,233	)		5,749			(49,541	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		(24,628	)		95,123			299			4,298,095			96,138			5,342			(53,815	)
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		1,646,921			23,461			—			168,686			51,747			523,103			1,181,988
• Contract withdrawals and transfers to annuity reserves		(1,741	)		(230,292	)		(299	)		(6,958,369	)		(579,716	)		(959	)		(1,728	)
• Contract transfers		120,213			(142,626	)		—			(593,410	)		153,879			—			78,550
		1,765,393			(349,457	)		(299	)		(7,383,093	)		(374,090	)		522,144			1,258,810
Annuity Reserves:
• Annuity Payments		—			—			—			(8,175	)		—			—			—
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			—			125			—			—			—
		—			—			—			(8,050	)		—			—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		1,765,393			(349,457	)		(299	)		(7,391,143	)		(374,090	)		522,144			1,258,810
TOTAL INCREASE (DECREASE) IN NET ASSETS		1,740,765			(254,334	)		—			(3,093,048	)		(277,952	)		527,486			1,204,995
NET ASSETS AT DECEMBER 31, 2014	$	1,740,765		$	1,743,735		$	—		$	37,598,861		$	8,514,677		$	527,486		$	1,204,995

See accompanying notes.
N-68

	Oppenheimer Main Street Small Cap Fund/VA Non-Service Class Subaccount			PIMCO VIT All Asset All Authority Advisor Class Subaccount			PIMCO VIT All Asset All Authority Institutional Class Subaccount			PIMCO VIT CommodityRealReturn Strategy Advisor Class Subaccount			PIMCO VIT CommodityRealReturn Strategy Institutional Class Subaccount			PIMCO VIT Emerging Markets Bond Advisor Class Subaccount
NET ASSETS AT JANUARY 1, 2013	$	—		$	—		$	—		$	13,956,075		$	—		$	—
Changes From Operations:
• Net investment income (loss)		—			—			—			14,302			—			—
• Net realized gain (loss) on investments		—			—			—			(906,844	)		—			—
• Net change in unrealized appreciation or depreciation on investments		—			—			—			(1,405,139	)		—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		—			—			—			(2,297,681	)		—			—
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		—			—			—			1,705,251			—			—
• Contract withdrawals and transfers to annuity reserves		—			—			—			(1,403,815	)		—			—
• Contract transfers		—			—			—			340,331			—			—
		—			—			—			641,767			—			—
Annuity Reserves:
• Annuity Payments		—			—			—			(4,008	)		—			—
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			—			4			—			—
		—			—			—			(4,004	)		—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		—			—			—			637,763			—			—
TOTAL INCREASE (DECREASE) IN NET ASSETS		—			—			—			(1,659,918	)		—			—
NET ASSETS AT DECEMBER 31, 2013		—			—			—			12,296,157			—			—
Changes From Operations:
• Net investment income (loss)		(1,459	)		26,139			3,505			(166,709	)		5			8,312
• Net realized gain (loss) on investments		1,846			235			33			(883,622	)		—			9,291
• Net change in unrealized appreciation or depreciation on investments		33,711			(73,457	)		(6,395	)		(1,830,700	)		(686	)		(55,996	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		34,098			(47,083	)		(2,857	)		(2,881,031	)		(681	)		(38,393	)
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		719,716			492,926			78,831			2,712,141			4,757			723,297
• Contract withdrawals and transfers to annuity reserves		(2,533	)		(3,192	)		—			(1,393,426	)		—			(4,386	)
• Contract transfers		116,755			301,574			20,792			536,146			50			152,954
		833,938			791,308			99,623			1,854,861			4,807			871,865
Annuity Reserves:
• Annuity Payments		—			—			—			(5,392	)		—			—
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			—			(622	)		—			—
		—			—			—			(6,014	)		—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		833,938			791,308			99,623			1,848,847			4,807			871,865
TOTAL INCREASE (DECREASE) IN NET ASSETS		868,036			744,225			96,766			(1,032,184	)		4,126			833,472
NET ASSETS AT DECEMBER 31, 2014	$	868,036		$	744,225		$	96,766		$	11,263,973		$	4,126		$	833,472

N-69

Lincoln Life Variable Annuity Account N

Statements of changes in net assets (continued)

Years Ended December 31, 2013 and 2014

	PIMCO VIT Unconstrained Bond Advisor Class Subaccount			Putnam VT Absolute Return 500 Class IB Subaccount			Putnam VT Global Health Care Class IB Subaccount			Putnam VT Growth &Income Class IB Subaccount			SIPT VP Market Growth Strategy Class III Subaccount			SIPT VP Market Plus Strategy Class III Subaccount			Templeton Foreign VIP Class 1 Subaccount
NET ASSETS AT JANUARY 1, 2013	$	—		$	—		$	5,014,006		$	1,285,320		$	—		$	—		$	—
Changes From Operations:
• Net investment income (loss)		—			—			(15,553	)		(1,285	)		—			—			—
• Net realized gain (loss) on investments		—			—			790,367			15,204			—			—			—
• Net change in unrealized appreciation or depreciation on investments		—			—			904,260			412,000			—			—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		—			—			1,679,074			425,919			—			—			—
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		—			—			35,616			17,008			—			—			—
• Contract withdrawals and transfers to annuity reserves		—			—			(452,943	)		(205,607	)		—			—			—
• Contract transfers		—			—			(2,219,931	)		222,274			—			—			—
		—			—			(2,637,258	)		33,675			—			—			—
Annuity Reserves:
• Annuity Payments		—			—			—			—			—			—			—
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			—			—			—			—			—
		—			—			—			—			—			—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		—			—			(2,637,258	)		33,675			—			—			—
TOTAL INCREASE (DECREASE) IN NET ASSETS		—			—			(958,184	)		459,594			—			—			—
NET ASSETS AT DECEMBER 31, 2013		—			—			4,055,822			1,744,914			—			—			—
Changes From Operations:
• Net investment income (loss)		114			(2,703	)		(72,571	)		(5,261	)		5,505			22,866			(20	)
• Net realized gain (loss) on investments		215			833			1,021,025			51,774			(1,874	)		35			(1	)
• Net change in unrealized appreciation or depreciation on investments		(840	)		17,762			277,909			105,087			(4,026	)		(24,866	)		(1,837	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		(511	)		15,892			1,226,363			151,600			(395	)		(1,965	)		(1,858	)
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		446,816			730,870			16,470			2,374			196,006			1,099,638			—
• Contract withdrawals and transfers to annuity reserves		(1,973	)		(1,440	)		(599,039	)		(129,744	)		—			—			—
• Contract transfers		113,838			73,042			1,960,559			(30,257	)		64,191			9,933			21,915
		558,681			802,472			1,377,990			(157,627	)		260,197			1,109,571			21,915
Annuity Reserves:
• Annuity Payments		—			—			—			—			—			—			—
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			—			—			—			—			—
		—			—			—			—			—			—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		558,681			802,472			1,377,990			(157,627	)		260,197			1,109,571			21,915
TOTAL INCREASE (DECREASE) IN NET ASSETS		558,170			818,364			2,604,353			(6,027	)		259,802			1,107,606			20,057
NET ASSETS AT DECEMBER 31, 2014	$	558,170		$	818,364		$	6,660,175		$	1,738,887		$	259,802		$	1,107,606		$	20,057

See accompanying notes.
N-70

	Templeton Foreign VIP Class 4 Subaccount			Templeton Global Bond VIP Class 1 Subaccount			Templeton Global Bond VIP Class 2 Subaccount			Templeton Global Bond VIP Class 4 Subaccount			Templeton Growth VIP Class 2 Subaccount			Transparent Value Directional Allocation VI Class I Subaccount
NET ASSETS AT JANUARY 1, 2013	$	—		$	—		$	568,205,330		$	—		$	46,734,678		$	—
Changes From Operations:
• Net investment income (loss)		—			—			17,408,922			—			479,910			—
• Net realized gain (loss) on investments		—			—			14,773,388			—			1,150,873			—
• Net change in unrealized appreciation or depreciation on investments		—			—			(32,493,561	)		—			10,468,756			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		—			—			(311,251	)		—			12,099,539			—
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		—			—			4,306,932			—			230,388			—
• Contract withdrawals and transfers to annuity reserves		—			—			(60,003,529	)		—			(6,972,136	)		—
• Contract transfers		—			—			9,379,207			—			(2,522,417	)		—
		—			—			(46,317,390	)		—			(9,264,165	)		—
Annuity Reserves:
• Annuity Payments		—			—			(5,306	)		—			(9,620	)		—
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			(73	)		—			599			—
		—			—			(5,379	)		—			(9,021	)		—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		—			—			(46,322,769	)		—			(9,273,186	)		—
TOTAL INCREASE (DECREASE) IN NET ASSETS		—			—			(46,634,020	)		—			2,826,353			—
NET ASSETS AT DECEMBER 31, 2013		—			—			521,571,310			—			49,561,031			—
Changes From Operations:
• Net investment income (loss)		(2,006	)		(497	)		17,368,047			(9,029	)		(153,772	)		(70	)
• Net realized gain (loss) on investments		(339	)		(51	)		4,620,821			(270	)		2,261,046			(1,665	)
• Net change in unrealized appreciation or depreciation on investments		(50,461	)		(8,149	)		(20,335,347	)		(43,870	)		(3,890,776	)		(836	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		(52,806	)		(8,697	)		1,653,521			(53,169	)		(1,783,502	)		(2,571	)
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		704,300			1,007,861			8,524,377			3,662,642			371,283			71,257
• Contract withdrawals and transfers to annuity reserves		(936	)		—			(61,083,510	)		(12,075	)		(6,718,947	)		—
• Contract transfers		56,848			(33,911	)		(3,652,635	)		347,991			(1,979,849	)		(33,691	)
		760,212			973,950			(56,211,768	)		3,998,558			(8,327,513	)		37,566
Annuity Reserves:
• Annuity Payments		—			—			(5,501	)		—			(10,478	)		—
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			(750	)		—			732			—
		—			—			(6,251	)		—			(9,746	)		—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		760,212			973,950			(56,218,019	)		3,998,558			(8,337,259	)		37,566
TOTAL INCREASE (DECREASE) IN NET ASSETS		707,406			965,253			(54,564,498	)		3,945,389			(10,120,761	)		34,995
NET ASSETS AT DECEMBER 31, 2014	$	707,406		$	965,253		$	467,006,812		$	3,945,389		$	39,440,270		$	34,995

N-71

Lincoln Life Variable Annuity Account N

Statements of changes in net assets (continued)

Years Ended December 31, 2013 and 2014

	Transparent Value Directional Allocation VI Class II Subaccount			UIF Global Infrastructure Class I Subaccount			UIF Global Infrastructure Class II Subaccount			Van Eck VIP Global Hard Assets Class S Subaccount
NET ASSETS AT JANUARY 1, 2013	$	—		$	—		$	—		$	—
Changes From Operations:
• Net investment income (loss)		—			—			—			—
• Net realized gain (loss) on investments		—			—			—			—
• Net change in unrealized appreciation or depreciation on investments		—			—			—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		—			—			—			—
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		—			—			—			—
• Contract withdrawals and transfers to annuity reserves		—			—			—			—
• Contract transfers		—			—			—			—
		—			—			—			—
Annuity Reserves:
• Annuity Payments		—			—			—			—
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			—			—
		—			—			—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		—			—			—			—
TOTAL INCREASE (DECREASE) IN NET ASSETS		—			—			—			—
NET ASSETS AT DECEMBER 31, 2013		—			—			—			—
Changes From Operations:
• Net investment income (loss)		(13,719	)		(71	)		(3,728	)		(1,979	)
• Net realized gain (loss) on investments		(4,181	)		(1	)		(6,188	)		(1,050	)
• Net change in unrealized appreciation or depreciation on investments		(259,213	)		(808	)		9,356			(131,694	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		(277,113	)		(880	)		(560	)		(134,723	)
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		11,366,876			50,369			1,458,140			529,998
• Contract withdrawals and transfers to annuity reserves		(910	)		—			(4,457	)		(1,355	)
• Contract transfers		(10,343	)		—			153,079			222,886
		11,355,623			50,369			1,606,762			751,529
Annuity Reserves:
• Annuity Payments		—			—			—			—
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			—			—
		—			—			—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		11,355,623			50,369			1,606,762			751,529
TOTAL INCREASE (DECREASE) IN NET ASSETS		11,078,510			49,489			1,606,202			616,806
NET ASSETS AT DECEMBER 31, 2014	$	11,078,510		$	49,489		$	1,606,202		$	616,806

See accompanying notes.
N-72

	Van Eck VIP Global Hard Assets Initial Class Subaccount			Virtus VIT Multi-Sector Fixed Income Class A Subaccount			Virtus VIT Premium AlphaSector Class A Subaccount			Virtus VIT Premium AlphaSector Class I Subaccount
NET ASSETS AT JANUARY 1, 2013	$	—		$	—		$	—		$	—
Changes From Operations:
• Net investment income (loss)		—			—			—			—
• Net realized gain (loss) on investments		—			—			—			—
• Net change in unrealized appreciation or depreciation on investments		—			—			—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		—			—			—			—
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		—			—			—			—
• Contract withdrawals and transfers to annuity reserves		—			—			—			—
• Contract transfers		—			—			—			—
		—			—			—			—
Annuity Reserves:
• Annuity Payments		—			—			—			—
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			—			—
		—			—			—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		—			—			—			—
TOTAL INCREASE (DECREASE) IN NET ASSETS		—			—			—			—
NET ASSETS AT DECEMBER 31, 2013		—			—			—			—
Changes From Operations:
• Net investment income (loss)		(149	)		30,284			(5,592	)		(116	)
• Net realized gain (loss) on investments		(15	)		(792	)		195,481			10,606
• Net change in unrealized appreciation or depreciation on investments		(28,642	)		(60,270	)		(237,308	)		(12,319	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		(28,806	)		(30,778	)		(47,419	)		(1,829	)
Changes From Unit Transactions:
Accumulation Units:
• Contract purchases		219,158			992,946			2,298,838			144,318
• Contract withdrawals and transfers to annuity reserves		—			(6,832	)		(3,295	)		—
• Contract transfers		667			386,413			382,891			—
		219,825			1,372,527			2,678,434			144,318
Annuity Reserves:
• Annuity Payments		—			—			—			—
• Receipt (reimbursement) of mortality guarantee adjustments		—			—			—			—
		—			—			—			—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM UNIT TRANSACTIONS		219,825			1,372,527			2,678,434			144,318
TOTAL INCREASE (DECREASE) IN NET ASSETS		191,019			1,341,749			2,631,015			142,489
NET ASSETS AT DECEMBER 31, 2014	$	191,019		$	1,341,749		$	2,631,015		$	142,489

N-73

Lincoln Life Variable Annuity Account N

Notes to financial statements

December 31, 2014

1. Accounting Policies and Variable Account Information

The Variable Account: Lincoln Life Variable Annuity Account N (the Variable Account) is a segregated investment account of The Lincoln National Life Insurance Company (the Company) and is registered as a unit investment trust with the Securities and Exchange Commission under the Investment Company Act of 1940, as amended. The operations of the Variable Account, which commenced on November 24, 1998, are part of the operations of the Company. The Variable Account consists of thirty-one products as follows:

• Lincoln ChoicePlus
• Lincoln ChoicePlus Access
• Lincoln ChoicePlus Bonus
• Lincoln ChoicePlus II
• Lincoln ChoicePlus II Access
• Lincoln ChoicePlus II Advance
• Lincoln ChoicePlus II Bonus
• Lincoln ChoicePlus Design 1
• Lincoln ChoicePlus Design 2
• Lincoln ChoicePlus Design 3
• Lincoln ChoicePlus Assurance A Share
• Lincoln ChoicePlus Assurance A Share Fee-Based
• Lincoln ChoicePlus Assurance B Share
• Lincoln ChoicePlus Assurance Bonus
• Lincoln ChoicePlus Assurance C Share
• Lincoln ChoicePlus Assurance L Share
• Lincoln ChoicePlus Assurance A Class • Lincoln ChoicePlus Assurance B Class
• Lincoln ChoicePlus Signature 1
• Lincoln ChoicePlus Signature 2
• Lincoln ChoicePlus Rollover
• Lincoln ChoicePlus Fusion
• Lincoln Investment Solutions
• Lincoln ChoicePlus Assurance Series B-Share
• Lincoln ChoicePlus Assurance Series C-Share
• Lincoln ChoicePlus Assurance Series L-Share
• Lincoln ChoicePlus Assurance (Prime)
• Lincoln Investor Advantage B-Share
• Lincoln Investor Advantage C-Share
• Lincoln Investor Advantage Fee-Based
• Lincoln Investor Advantage RIA

The assets of the Variable Account are owned by the Company. The Variable Account's assets support the annuity contracts and may not be used to satisfy liabilities arising from any other business of the Company.

Basis of Presentation: The accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for unit investment trusts.

Accounting Estimates: The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions affecting the reported amounts as of the date of the financial statements. Those estimates are inherently subject to change and actual results could differ from those estimates. Included among the material (or potentially material) reported amounts that require use of estimates is the fair value of certain assets.

Investments: The assets of the Variable Account are divided into variable subaccounts, each of which may be invested in shares of one of three hundred sixty-four available mutual funds (the Funds) of thirty-five diversified, open-ended management investment companies, each Fund with its own investment objective. The Funds are:

AllianceBernstein Variable Products Series Fund, Inc. (ABVPSF):

ABVPSF Global Thematic Growth Class A Portfolio**

ABVPSF Global Thematic Growth Class B Portfolio

ABVPSF Growth and Income Class A Portfolio**

ABVPSF Growth and Income Class B Portfolio**

ABVPSF International Value Class A Portfolio**

ABVPSF International Value Class B Portfolio

ABVPSF Large Cap Growth Class B Portfolio

ABVPSF Small/Mid Cap Value Class A Portfolio

ABVPSF Small/Mid Cap Value Class B Portfolio

ALPS Variable Investment Trust:

Alps|Alerian Energy Infrastructure Class I Portfolio

Alps|Alerian Energy Infrastructure Class III Portfolio

Alps|Stadion Tactical Defensive Class I Portfolio

Alps|Stadion Tactical Defensive Class III Portfolio

American Century Variable Portfolios, Inc. (American Century VP):

American Century VP Inflation Protection Class I Fund**

American Century VP Inflation Protection Class II Fund**

American Funds Insurance Series (American Funds):

American Funds Asset Allocation Class 1 Fund

American Funds Asset Allocation Class 4 Fund

American Funds Blue Chip Income and Growth Class 1 Fund

American Funds Blue Chip Income and Growth Class 4 Fund

American Funds Bond Class 1 Fund

American Funds Capital Income Builder Class 1 Fund

American Funds Capital Income Builder Class 4 Fund

American Funds Global Balanced Class 1 Fund

American Funds Global Bond Class 1 Fund

American Funds Global Growth Class 1 Fund

American Funds Global Growth Class 2 Fund

American Funds Global Growth Class 4 Fund

N-74

Lincoln Life Variable Annuity Account N

Notes to financial statements (continued)

1. Accounting Policies and Variable Account Information (continued)

American Funds Global Growth and Income Class 1 Fund

American Funds Global Small Capitalization Class 1 Fund

American Funds Global Small Capitalization Class 2 Fund

American Funds Global Small Capitalization Class 4 Fund

American Funds Growth Class 1 Fund

American Funds Growth Class 2 Fund

American Funds Growth Class 4 Fund

American Funds Growth-Income Class 1 Fund

American Funds Growth-Income Class 2 Fund

American Funds Growth-Income Class 4 Fund

American Funds High-Income Bond Class 1 Fund

American Funds International Class 1 Fund

American Funds International Class 2 Fund

American Funds International Class 4 Fund

American Funds International Growth and Income Class 1 Fund

American Funds Managed Risk Asset Allocation Class P1 Fund

American Funds Managed Risk Asset Allocation Class P2 Fund

American Funds Managed Risk Blue Chip Income and Growth Class P1 Fund

American Funds Managed Risk Growth Class P1 Fund

American Funds Managed Risk Growth-Income Class P1 Fund

American Funds Managed Risk International Class P1 Fund

American Funds Mortgage Class 1 Fund

American Funds Mortgage Class 4 Fund

American Funds New World Class 1 Fund

American Funds New World Class 4 Fund

American Funds U.S. Government/AAA-Rated Securities Class 1 Fund

BlackRock Variable Series Funds, Inc. (BlackRock):

BlackRock Global Allocation V.I. Class I Fund

BlackRock Global Allocation V.I. Class III Fund

Delaware VIP Trust (Delaware VIP):

Delaware VIP Diversified Income Standard Class Series

Delaware VIP Diversified Income Service Class Series

Delaware VIP Emerging Markets Standard Class Series

Delaware VIP Emerging Markets Service Class Series

Delaware VIP High Yield Standard Class Series

Delaware VIP High Yield Service Class Series

Delaware VIP International Value Equity Standard Class Series

Delaware VIP Limited-Term Diversified Income Standard Class Series

Delaware VIP Limited-Term Diversified Income Service Class Series

Delaware VIP REIT Standard Class Series

Delaware VIP REIT Service Class Series

Delaware VIP Small Cap Value Standard Class Series

Delaware VIP Small Cap Value Service Class Series

Delaware VIP Smid Cap Growth Standard Class Series

Delaware VIP Smid Cap Growth Service Class Series

Delaware VIP U.S. Growth Standard Class Series**

Delaware VIP U.S. Growth Service Class Series

Delaware VIP Value Standard Class Series

Delaware VIP Value Service Class Series

Deutsche Variable Series II (Deutsche):

Deutsche Alternative Asset Allocation VIP Class A Portfolio

Deutsche Alternative Asset Allocation VIP Class B Portfolio

Deutsche Investments VIT Funds (Deutsche):

Deutsche Equity 500 Index VIP Class A Portfolio

Deutsche Equity 500 Index VIP Class B Portfolio**

Deutsche Small Cap Index VIP Class A Portfolio

Deutsche Small Cap Index VIP Class B Portfolio**

Eaton Vance Variable Trust (Eaton Vance VT):

Eaton Vance VT Floating-Rate Income Fund Initial Class Fund

Eaton Vance VT Floating-Rate Income Fund Advisor Class Fund

Fidelity Variable Insurance Products Fund (Fidelity VIP):

Fidelity VIP Contrafund Initial Class Portfolio

Fidelity VIP Contrafund Service Class 2 Portfolio

Fidelity VIP Equity-Income Initial Class Portfolio**

Fidelity VIP Equity-Income Service Class 2 Portfolio**

Fidelity VIP Growth Initial Class Portfolio

Fidelity VIP Growth Service Class 2 Portfolio

Fidelity VIP Mid Cap Initial Class Portfolio

Fidelity VIP Mid Cap Service Class 2 Portfolio

Fidelity VIP Overseas Initial Class Portfolio**

Fidelity VIP Overseas Service Class 2 Portfolio**

First Trust Variable Insurance Trust:

First Trust Multi Income Allocation Class I Portfolio

First Trust Multi Income Allocation Class II Portfolio**

First Trust/Dow Jones Dividend & Income Allocation Class I Portfolio

First Trust/Dow Jones Dividend & Income Allocation Class II Portfolio**

Franklin Templeton Variable Insurance Products Trust:

Franklin Founding Funds Allocation VIP Class 1 Fund**

Franklin Founding Funds Allocation VIP Class 4 Fund

Franklin Income VIP Class 1 Fund**

Franklin Income VIP Class 2 Fund

Franklin Income VIP Class 4 Fund

Franklin Mutual Shares VIP Class 1 Fund**

Franklin Mutual Shares VIP Class 2 Fund

Franklin Mutual Shares VIP Class 4 Fund

N-75

Lincoln Life Variable Annuity Account N

Notes to financial statements (continued)

1. Accounting Policies and Variable Account Information (continued)

Franklin Rising Dividends VIP Class 1 Fund

Franklin Rising Dividends VIP Class 4 Fund

Franklin Small Cap Value VIP Class 1 Fund

Franklin Small Cap Value VIP Class 4 Fund

Franklin Small-Mid Cap Growth VIP Class 1 Fund**

Franklin Small-Mid Cap Growth VIP Class 2 Fund**

Franklin Small-Mid Cap Growth VIP Class 4 Fund

Templeton Foreign VIP Class 1 Fund

Templeton Foreign VIP Class 4 Fund

Templeton Global Bond VIP Class 1 Fund

Templeton Global Bond VIP Class 2 Fund

Templeton Global Bond VIP Class 4 Fund

Templeton Growth VIP Class 2 Fund

Goldman Sachs Variable Insurance Trust (Goldman Sachs VIT):

Goldman Sachs VIT Large Cap Value Service Class Fund

Goldman Sachs VIT Money Market Institutional Class Fund

Goldman Sachs VIT Money Market Service Class Fund

Goldman Sachs VIT Multi-Strategy Alternatives Advisor Class Fund

Goldman Sachs VIT Multi-Strategy Alternatives Institutional Class Fund

Goldman Sachs VIT Strategic Income Advisor Class Fund

Goldman Sachs VIT Strategic Income Institutional Class Fund**

Guggenheim Funds Rydex Variable Trust:

Guggenheim Long Short Equity Fund

Guggenheim Multi-Hedge Strategies Fund

Hartford Series Fund, Inc.:

Hartford Capital Appreciation HLS Class IA Fund

Hartford Capital Appreciation HLS Class IC Fund

Hunting VA Funds:

Huntington VA Dividend Capture Fund

Invesco Variable Insurance Funds (Invesco V.I.):

Invesco V.I. American Franchise Series I Fund

Invesco V.I. American Franchise Series II Fund

Invesco V.I. Balanced-Risk Allocation Series I Fund

Invesco V.I. Balanced-Risk Allocation Series II Fund

Invesco V.I. Comstock Series I Fund**

Invesco V.I. Comstock Series II Fund

Invesco V.I. Core Equity Series I Fund

Invesco V.I. Core Equity Series II Fund

Invesco V.I. Diversified Dividend Series I Fund

Invesco V.I. Diversified Dividend Series II Fund

Invesco V.I. Equally-Weighted S&P 500 Series I Fund**

Invesco V.I. Equally-Weighted S&P 500 Series II Fund

Invesco V.I. Equity and Income Series I Fund**

Invesco V.I. Equity and Income Series II Fund

Invesco V.I. International Growth Series I Fund

Invesco V.I. International Growth Series II Fund

Ivy Funds Variable Insurance Portfolios (Ivy Funds VIP):

Ivy Funds VIP Asset Strategy Class A Portfolio

Ivy Funds VIP Energy Class A Portfolio

Ivy Funds VIP High Income Class A Portfolio

Ivy Funds VIP Micro Cap Growth Class A Portfolio

Ivy Funds VIP Mid Cap Growth Class A Portfolio

Ivy Funds VIP Science and Technology Class A Portfolio

Janus Aspen Series:

Janus Aspen Balanced Service Class Portfolio

Janus Aspen Enterprise Service Class Portfolio

Janus Aspen Global Research Service Class Portfolio

JPMorgan Insurance Trust:

JPMIT Intrepid Mid Cap Class 1 Portfolio

JPMIT Intrepid Mid Cap Class 2 Portfolio

Legg Mason Partners Variable Equity Trust:

ClearBridge Variable Aggressive Growth Class I Portfolio

ClearBridge Variable Aggressive Growth Class II Portfolio

ClearBridge Variable Mid Cap Core Class I Portfolio

ClearBridge Variable Mid Cap Core Class II Portfolio

Lincoln Variable Insurance Products Trust (LVIP)*:

LVIP American Balanced Allocation Standard Class Fund

LVIP American Balanced Allocation Service Class Fund

LVIP American Century VP Mid Cap Value RPM Standard Class Fund**

LVIP American Century VP Mid Cap Value RPM Service Class Fund

LVIP American Global Growth Service Class II Fund

LVIP American Global Small Capitalization Service Class II Fund

LVIP American Growth Allocation Standard Class Fund

LVIP American Growth Allocation Service Class Fund

LVIP American Growth Service Class II Fund

LVIP American Growth-Income Service Class II Fund

LVIP American Income Allocation Standard Class Fund

LVIP American International Service Class II Fund

LVIP American Preservation Standard Class Fund

LVIP American Preservation Service Class Fund

LVIP AQR Enhanced Global Strategies Standard Class Fund

LVIP AQR Enhanced Global Strategies Service Class Fund

LVIP Baron Growth Opportunities Standard Class Fund

LVIP Baron Growth Opportunities Service Class Fund

N-76

Lincoln Life Variable Annuity Account N

Notes to financial statements (continued)

1. Accounting Policies and Variable Account Information (continued)

LVIP BlackRock Emerging Markets RPM Standard Class Fund

LVIP BlackRock Emerging Markets RPM Service Class Fund

LVIP BlackRock Equity Dividend RPM Standard Class Fund

LVIP BlackRock Equity Dividend RPM Service Class Fund

LVIP BlackRock Global Allocation V.I. RPM Standard Class Fund

LVIP BlackRock Global Allocation V.I. RPM Service Class Fund

LVIP BlackRock Inflation Protected Bond Standard Class Fund

LVIP BlackRock Inflation Protected Bond Service Class Fund

LVIP BlackRock Multi-Asset Income Standard Class Fund

LVIP BlackRock Multi-Asset Income Service Class Fund

LVIP Capital Growth Standard Class Fund**

LVIP Capital Growth Service Class Fund

LVIP Clarion Global Real Estate Standard Class Fund

LVIP Clarion Global Real Estate Service Class Fund

LVIP ClearBridge Variable Appreciation RPM Standard Class Fund

LVIP ClearBridge Variable Appreciation RPM Service Class Fund

LVIP Columbia Small-Mid Cap Growth RPM Standard Class Fund**

LVIP Columbia Small-Mid Cap Growth RPM Service Class Fund

LVIP Delaware Bond Standard Class Fund

LVIP Delaware Bond Service Class Fund

LVIP Delaware Diversified Floating Rate Standard Class Fund

LVIP Delaware Diversified Floating Rate Service Class Fund

LVIP Delaware Foundation Aggressive Allocation Standard Class Fund

LVIP Delaware Foundation Aggressive Allocation Service Class Fund

LVIP Delaware Foundation Conservative Allocation Standard Class Fund**

LVIP Delaware Foundation Conservative Allocation Service Class Fund**

LVIP Delaware Foundation Moderate Allocation Standard Class Fund**

LVIP Delaware Foundation Moderate Allocation Service Class Fund**

LVIP Delaware Growth and Income Standard Class Fund**

LVIP Delaware Growth and Income Service Class Fund

LVIP Delaware Social Awareness Standard Class Fund

LVIP Delaware Social Awareness Service Class Fund

LVIP Delaware Special Opportunities Standard Class Fund**

LVIP Delaware Special Opportunities Service Class Fund

LVIP Dimensional Non-U.S. Equity RPM Standard Class Fund

LVIP Dimensional Non-U.S. Equity RPM Service Class Fund

LVIP Dimensional U.S. Equity RPM Standard Class Fund

LVIP Dimensional U.S. Equity RPM Service Class Fund

LVIP Dimensional/Vanguard Total Bond Standard Class Fund

LVIP Dimensional/Vanguard Total Bond Service Class Fund

LVIP Franklin Mutual Shares RPM Standard Class Fund

LVIP Franklin Mutual Shares RPM Service Class Fund

LVIP Franklin Templeton Multi-Asset Opportunities Standard Class Fund**

LVIP Franklin Templeton Multi-Asset Opportunities Service Class Fund

LVIP Global Income Standard Class Fund**

LVIP Global Income Service Class Fund

LVIP Goldman Sachs Income Builder Standard Class Fund

LVIP Goldman Sachs Income Builder Service Class Fund

LVIP Invesco Diversified Equity Income RPM Standard Class Fund**

LVIP Invesco Diversified Equity Income RPM Service Class Fund

LVIP Invesco V.I. Comstock RPM Standard Class Fund

LVIP Invesco V.I. Comstock RPM Service Class Fund

LVIP JPMorgan High Yield Standard Class Fund**

LVIP JPMorgan High Yield Service Class Fund

LVIP JPMorgan Mid Cap Value RPM Standard Class Fund

LVIP JPMorgan Mid Cap Value RPM Service Class Fund

LVIP Managed Risk American Balanced Allocation Standard Class Fund

LVIP Managed Risk American Balanced Allocation Service Class Fund

LVIP Managed Risk American Growth Allocation Standard Class Fund

LVIP Managed Risk American Growth Allocation Service Class Fund

LVIP Managed Risk Profile 2010 Service Class Fund

N-77

Lincoln Life Variable Annuity Account N

Notes to financial statements (continued)

1. Accounting Policies and Variable Account Information (continued)

LVIP Managed Risk Profile 2020 Service Class Fund

LVIP Managed Risk Profile 2030 Service Class Fund

LVIP Managed Risk Profile 2040 Service Class Fund

LVIP Managed Risk Profile Conservative Standard Class Fund

LVIP Managed Risk Profile Conservative Service Class Fund

LVIP Managed Risk Profile Growth Standard Class Fund

LVIP Managed Risk Profile Growth Service Class Fund

LVIP Managed Risk Profile Moderate Standard Class Fund

LVIP Managed Risk Profile Moderate Service Class Fund

LVIP MFS International Growth Standard Class Fund

LVIP MFS International Growth Service Class Fund

LVIP MFS International Growth RPM Standard Class Fund**

LVIP MFS International Growth RPM Service Class Fund

LVIP MFS Value Standard Class Fund

LVIP MFS Value Service Class Fund

LVIP Mid-Cap Value Standard Class Fund**

LVIP Mid-Cap Value Service Class Fund

LVIP Mondrian International Value Standard Class Fund

LVIP Mondrian International Value Service Class Fund

LVIP Money Market Standard Class Fund

LVIP Money Market Service Class Fund

LVIP Multi-Manager Global Equity RPM Standard Class Fund**

LVIP Multi-Manager Global Equity RPM Service Class Fund

LVIP PIMCO Low Duration Bond Standard Class Fund

LVIP PIMCO Low Duration Bond Service Class Fund

LVIP SSgA Bond Index Standard Class Fund

LVIP SSgA Bond Index Service Class Fund

LVIP SSgA Conservative Index Allocation Standard Class Fund**

LVIP SSgA Conservative Index Allocation Service Class Fund

LVIP SSgA Conservative Structured Allocation Standard Class Fund

LVIP SSgA Conservative Structured Allocation Service Class Fund

LVIP SSgA Developed International 150 Standard Class Fund

LVIP SSgA Developed International 150 Service Class Fund

LVIP SSgA Emerging Markets 100 Standard Class Fund

LVIP SSgA Emerging Markets 100 Service Class Fund

LVIP SSgA Global Tactical Allocation RPM Standard Class Fund

LVIP SSgA Global Tactical Allocation RPM Service Class Fund

LVIP SSgA International Index Standard Class Fund

LVIP SSgA International Index Service Class Fund

LVIP SSgA International RPM Standard Class Fund**

LVIP SSgA International RPM Service Class Fund

LVIP SSgA Large Cap 100 Standard Class Fund

LVIP SSgA Large Cap 100 Service Class Fund

LVIP SSgA Large Cap RPM Standard Class Fund

LVIP SSgA Large Cap RPM Service Class Fund

LVIP SSgA Moderate Index Allocation Standard Class Fund**

LVIP SSgA Moderate Index Allocation Service Class Fund

LVIP SSgA Moderate Structured Allocation Standard Class Fund**

LVIP SSgA Moderate Structured Allocation Service Class Fund

LVIP SSgA Moderately Aggressive Index Allocation Standard Class Fund**

LVIP SSgA Moderately Aggressive Index Allocation Service Class Fund

LVIP SSgA Moderately Aggressive Structured Allocation Standard Class Fund**

LVIP SSgA Moderately Aggressive Structured Allocation Service Class Fund

LVIP SSgA S&P 500 Index Standard Class Fund

LVIP SSgA S&P 500 Index Service Class Fund

LVIP SSgA Small-Cap Index Standard Class Fund

LVIP SSgA Small-Cap Index Service Class Fund

LVIP SSgA Small-Cap RPM Standard Class Fund

LVIP SSgA Small-Cap RPM Service Class Fund

LVIP SSgA Small-Mid Cap 200 Standard Class Fund

LVIP SSgA Small-Mid Cap 200 Service Class Fund

LVIP T. Rowe Price Growth Stock Standard Class Fund

LVIP T. Rowe Price Growth Stock Service Class Fund

LVIP T. Rowe Price Structured Mid-Cap Growth Standard Class Fund

LVIP T. Rowe Price Structured Mid-Cap Growth Service Class Fund

LVIP Templeton Growth RPM Standard Class Fund**

LVIP Templeton Growth RPM Service Class Fund

LVIP UBS Large Cap Growth RPM Standard Class Fund

LVIP UBS Large Cap Growth RPM Service Class Fund

LVIP Vanguard Domestic Equity ETF Standard Class Fund

LVIP Vanguard Domestic Equity ETF Service Class Fund

LVIP Vanguard International Equity ETF Standard Class Fund

LVIP Vanguard International Equity ETF Service Class Fund

LVIP VIP Contrafund RPM Standard Class Fund

N-78

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Notes to financial statements (continued)

1. Accounting Policies and Variable Account Information (continued)

LVIP VIP Contrafund RPM Service Class Fund

LVIP VIP Mid Cap RPM Standard Class Fund**

LVIP VIP Mid Cap RPM Service Class Fund

Lord Abbett Securities Trust (Lord Abbett):

Lord Abbett Series Fund Bond Debenture Class VC Portfolio

Lord Abbett Series Fund Developing Growth Class VC Portfolio

Lord Abbett Series Fund Fundamental Equity Class VC Portfolio

Lord Abbett Series Fund Short Duration Income Class VC Portfolio

MFS Variable Insurance Trust (MFS VIT):

MFS VIT Core Equity Service Class Series

MFS VIT Growth Initial Class Series

MFS VIT Growth Service Class Series

MFS VIT Total Return Initial Class Series

MFS VIT Total Return Service Class Series

MFS VIT Utilities Initial Class Series

MFS VIT Utilities Service Class Series

MFS Variable Insurance Trust II (MFS VIT II):

MFS VIT II International Value Initial Class Series

MFS VIT II International Value Service Class Series

Morgan Stanley Universal Institutional Funds (Morgan Stanley UIF):

Morgan Stanley UIF Capital Growth Class II Portfolio

Neuberger Berman Advisers Management Trust (NB AMT):

NB AMT Mid Cap Growth I Class Portfolio**

NB AMT Mid Cap Intrinsic Value I Class Portfolio

Oppenheimer Variable Account Funds (Oppenheimer):

Oppenheimer Global Fund/VA Service Class

Oppenheimer International Growth Fund/VA Non-Service Class

Oppenheimer International Growth Fund/VA Service Class

Oppenheimer Main Street Small Cap Fund/VA Non-Service Class

Oppenheimer Main Street Small Cap Fund/VA Service Class**

PIMCO Variable Insurance Trust (PIMCO VIT):

PIMCO VIT All Asset All Authority Advisor Class Portfolio

PIMCO VIT All Asset All Authority Institutional Class Portfolio

PIMCO VIT CommodityRealReturn Strategy Administrative Class Portfolio**

PIMCO VIT CommodityRealReturn Strategy Advisor Class Portfolio

PIMCO VIT CommodityRealReturn Strategy Institutional Class Portfolio

PIMCO VIT Emerging Markets Bond Advisor Class Portfolio

PIMCO VIT Emerging Markets Bond Institutional Class Portfolio**

PIMCO VIT Unconstrained Bond Advisor Class Portfolio

PIMCO VIT Unconstrained Bond Institutional Class Portfolio**

Putnam Variable Trust (Putnam VT):

Putnam VT Absolute Return 500 Class IA Fund**

Putnam VT Absolute Return 500 Class IB Fund

Putnam VT Global Health Care Class IB Fund

Putnam VT Growth & Income Class IB Fund

SEI Insurance Products Trust (SIPT):

SIPT VP Market Growth Strategy Class II Fund**

SIPT VP Market Growth Strategy Class III Fund

SIPT VP Market Plus Strategy Class II Fund**

SIPT VP Market Plus Strategy Class III Fund

Transparent Value Trust:

Transparent Value Directional Allocation VI Class I Portfolio

Transparent Value Directional Allocation VI Class II Portfolio

The Universal Institutional Funds, Inc. (UIF):

UIF Global Infrastructure Class I Portfolio

UIF Global Infrastructure Class II Portfolio

Van Eck VIP Trust:

Van Eck VIP Global Hard Assets Class S Fund

Van Eck VIP Global Hard Assets Initial Class Fund

Virtus Variable Insurance Trust (Virtus VIT):

Virtus VIT Multi-Sector Fixed Income Class A Series

Virtus VIT Multi-Sector Fixed Income Class I Series**

Virtus VIT Premium AlphaSector Class A Series

Virtus VIT Premium AlphaSector Class I Series

*  Denotes an affiliate of the Company

**  Available fund with no money invested at December 31, 2014

Investments in the Funds are stated at fair value as determined by the closing net asset value per share on December 31, 2014. The difference between cost and net asset value is reflected as unrealized appreciation or depreciation of investments.

The Variable Account's investments in the Funds are valued in accordance with the Fair Value Measurements and Disclosure Topic of the Financial Accounting Standards Board Accounting Standards Codification (Topic). The Topic defines fair value as the price that the Variable Account would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. The Topic also establishes a framework for measuring fair value and a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an

N-79

Lincoln Life Variable Annuity Account N

Notes to financial statements (continued)

1. Accounting Policies and Variable Account Information (continued)

asset or liability. Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the reporting entity's own assessment regarding the assumptions market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances. The Variable Account's investments in the Funds are assigned a level based upon the observability of the inputs which are significant to the overall valuation. The three-tier hierarchy of inputs is summarized below.

Level 1 - inputs to the valuation methodology are quoted prices in active markets

Level 2 - inputs to the valuation methodology are observable, directly or indirectly

Level 3 - inputs to the valuation methodology are unobservable and reflect assumptions on the part of the reporting entity

The Variable Account's investments in the Funds are valued within the fair value hierarchy as Level 2. Net asset value is quoted by the Funds as derived by the fair value of the Funds' underlying investments. The Funds are not considered Level 1 as they are not traded in the open market; rather the Company sells and redeems shares at net asset value with the Funds.

Investment transactions are accounted for on a trade-date basis. The cost of investments sold is determined by the average cost method.

ASU 2013-08, Amendments to the Scope, Measurement, and Disclosure Requirements (Topic 946, Investment Companies) provides accounting guidance for assessing whether an entity is an investment company; considering the entity's purpose and design to determine whether the entity is an investment company. The standard also adds additional disclosure requirements regarding contractually required commitments to investees. Management has evaluated the criteria in the standard and concluded that the Variable Account qualifies as an investment company and therefore will continue to apply the accounting requirements of ASC 946. The adoption of this ASU did not have an effect on our financial condition and results of operations

Dividends: Dividends paid to the Variable Account are automatically reinvested in shares of the Funds on the payable date. Dividend income is recorded on the ex-dividend date.

Federal Income Taxes: Operations of the Variable Account form a part of and are taxed with operations of the Company, which is taxed as a "life insurance company" under the Internal Revenue Code. The Variable Account will not be taxed as a regulated investment company under Subchapter M of the Internal Revenue Code, as amended. Under current federal income tax law, no federal income taxes are payable or receivable with respect to the Variable Account's net investment income and the net realized gain (loss) on investments.

Annuity Reserves: Reserves on contracts not involving life contingencies are calculated using an assumed investment return of 3%, 4%, 5% or 6%, as approved in each state. Reserves on contracts involving life contingencies are calculated using a modification of the 1983a Individual Mortality Table and an assumed investment return of 3%, 4%, 5% or 6%, as approved in each state.

Investment Fund Changes: During 2013, the following funds became available as investment options for account contract owners. Accordingly, for the subaccounts that commenced operations during 2013, the 2013 statements of changes in net assets and total return and investment income ratios in note 3 are for the period from the commencement of operations to December 31, 2013:

American Funds Managed Risk Blue Chip Income and Growth Class P1 Fund	LVIP MFS International Growth RPM Service Class Fund
American Funds Managed Risk Growth Class P1 Fund	LVIP SSgA Large Cap RPM Standard Class Fund
American Funds Managed Risk Growth-Income Class P1 Fund	LVIP SSgA Large Cap RPM Service Class Fund
American Funds Managed Risk International Class P1 Fund	LVIP SSgA Small-Cap RPM Standard Class Fund
LVIP BlackRock Global Allocation V.I. RPM Standard Class Fund	LVIP SSgA Small-Cap RPM Service Class Fund
LVIP BlackRock Global Allocation V.I. RPM Service Class Fund	LVIP VIP Contrafund RPM Standard Class Fund
LVIP MFS International Growth RPM Standard Class Fund	LVIP VIP Contrafund RPM Service Class Fund

N-80

Lincoln Life Variable Annuity Account N

Notes to financial statements (continued)

1. Accounting Policies and Variable Account Information (continued)

Also during 2013, the following funds changed their names:

Previous Fund Name New Fund Name

American Funds Protected Asset Allocation Class P1 Fund	American Funds Managed Risk Asset Allocation Class P1 Fund
American Funds Protected Asset Allocation Class P2 Fund	American Funds Managed Risk Asset Allocation Class P2 Fund
Invesco Van Kampen V.I. American Franchise Series I Fund	Invesco V.I. American Franchise Series I Fund
Invesco Van Kampen V.I. American Franchise Series II Fund	Invesco V.I. American Franchise Series II Fund
Janus Aspen Series Worldwide Service Class Portfolio	Janus Aspen Series Global Research Service Class Portfolio
LVIP BlackRock Emerging Markets Index RPM Standard Class Fund	LVIP BlackRock Emerging Markets RPM Standard Class Fund
LVIP BlackRock Emerging Markets Index RPM Service Class Fund	LVIP BlackRock Emerging Markets RPM Service Class Fund
LVIP Dimensional Non-U.S. Equity Standard Class Fund	LVIP Dimensional Non-U.S. Equity RPM Standard Class Fund
LVIP Dimensional Non-U.S. Equity Service Class Fund	LVIP Dimensional Non-U.S. Equity RPM Service Class Fund
LVIP Dimensional U.S. Equity Standard Class Fund	LVIP Dimensional U.S. Equity RPM Standard Class Fund
LVIP Dimensional U.S. Equity Service Class Fund	LVIP Dimensional U.S. Equity RPM Service Class Fund
LVIP Protected Profile 2010 Service Class Fund	LVIP Managed Risk Profile 2010 Service Class Fund
LVIP Protected Profile 2020 Service Class Fund	LVIP Managed Risk Profile 2020 Service Class Fund
LVIP Protected Profile 2030 Service Class Fund	LVIP Managed Risk Profile 2030 Service Class Fund
LVIP Protected Profile 2040 Service Class Fund	LVIP Managed Risk Profile 2040 Service Class Fund
LVIP Protected American Balanced Allocation Standard Class Fund	LVIP Managed American Balanced Allocation Standard Class Fund
LVIP Protected American Growth Allocation Standard Class Fund	LVIP Managed American Growth Allocation Standard Class Fund
LVIP Protected Profile Conservative Standard Class Fund	LVIP Managed Risk Profile Conservative Standard Class Fund
LVIP Protected Profile Conservative Service Class Fund	LVIP Managed Risk Profile Conservative Service Class Fund
LVIP Protected Profile Growth Standard Class Fund	LVIP Managed Risk Profile Growth Standard Class Fund
LVIP Protected Profile Growth Service Class Fund	LVIP Managed Risk Profile Growth Service Class Fund
LVIP Protected Profile Moderate Standard Class Fund	LVIP Managed Risk Profile Moderate Standard Class Fund
LVIP Protected Profile Moderate Service Class Fund	LVIP Managed Risk Profile Moderate Service Class Fund
Oppenheimer Global Securities Service Class Fund/VA	Oppenheimer Global Fund/VA Service Class

During 2013, the American Funds Global Discovery Class 1 Fund merged into the American Funds Global Growth Class 1 Fund.

During 2014, the following funds became available as investment options for account contract owners. Accordingly, for the subaccounts that commenced operations during 2014, the 2014 statements of operations and statements of changes in net assets and total return and investment income ratios in note 3 are for the period from the commencement of operations to December 31, 2014:

Alps|Alerian Energy Infrastructure Class I Portfolio	Franklin Income VIP Class 4 Fund
Alps|Alerian Energy Infrastructure Class III Portfolio	Franklin Mutual Shares VIP Class 4 Fund
Alps|Stadion Tactical Defensive Class I Portfolio	Franklin Rising Dividends VIP Class 1 Fund
Alps|Stadion Tactical Defensive Class III Portfolio	Franklin Rising Dividends VIP Class 4 Fund
American Funds Asset Allocation Class 4 Fund	Franklin Small Cap Value VIP Class 1 Fund
American Funds Blue Chip Income and Growth Class 4 Fund	Franklin Small Cap Value VIP Class 4 Fund
American Funds Capital Income Builder Class 1 Fund	Franklin Small-Mid Cap Growth VIP Class 4 Fund
American Funds Capital Income Builder Class 4 Fund	Goldman Sachs VIT Money Market Institutional Class Fund
American Funds Global Growth Class 4 Fund	Goldman Sachs VIT Money Market Service Class Fund
American Funds Global Small Capitalization Class 4 Fund	Goldman Sachs VIT Multi-Strategy Alternatives Advisor Class Fund
American Funds Growth Class 4 Fund	Goldman Sachs VIT Multi-Strategy Alternatives Institutional Class Fund
American Funds Growth-Income Class 4 Fund	Goldman Sachs VIT Strategic Income Advisor Class Fund
American Funds International Class 4 Fund	Goldman Sachs VIT Strategic Income Institutional Class Fund
American Funds Mortgage Class 4 Fund	Guggenheim Long Short Equity Fund
American Funds New World Class 4 Fund	Guggenheim Multi-Hedge Strategies Fund
ClearBridge Variable Aggressive Growth Class I Portfolio	Hartford Capital Appreciation HLS Class IA Fund
ClearBridge Variable Aggressive Growth Class II Portfolio	Hartford Capital Appreciation HLS Class IC Fund
ClearBridge Variable Mid Cap Core Class I Portfolio	Invesco V.I. Balanced-Risk Allocation Series I Fund
ClearBridge Variable Mid Cap Core Class II Portfolio	Invesco V.I. Balanced-Risk Allocation Series II Fund
Eaton Vance VT Floating-Rate Income Fund Initial Class Fund	Invesco V.I. Comstock Series I Fund
Eaton Vance VT Floating-Rate Income Fund Advisor Class Fund	Invesco V.I. Comstock Series II Fund
First Trust Multi Income Allocation Class I Portfolio	Invesco V.I. Diversified Dividend Series I Fund
First Trust Multi Income Allocation Class II Portfolio	Invesco V.I. Diversified Dividend Series II Fund
First Trust/Dow Jones Dividend & Income Allocation Class I Portfolio	Invesco V.I. Equally-Weighted S&P 500 Series I Fund
First Trust/Dow Jones Dividend & Income Allocation Class II Portfolio	Invesco V.I. Equally-Weighted S&P 500 Series II Fund
Franklin Founding Funds Allocation VIP Class 1 Fund	Invesco V.I. Equity and Income Series I Fund
Franklin Founding Funds Allocation VIP Class 4 Fund	Invesco V.I. Equity and Income Series II Fund

N-81

Lincoln Life Variable Annuity Account N

Notes to financial statements (continued)

1. Accounting Policies and Variable Account Information (continued)

Ivy Funds VIP Asset Strategy Class A Portfolio	LVIP VIP Mid Cap RPM Service Class Fund
Ivy Funds VIP Energy Class A Portfolio	Lord Abbett Series Fund Bond Debenture Class VC Portfolio
Ivy Funds VIP High Income Class A Portfolio	Lord Abbett Series Fund Developing Growth Class VC Portfolio
Ivy Funds VIP Micro Cap Growth Class A Portfolio	Lord Abbett Series Fund Short Duration Income Class VC Portfolio
Ivy Funds VIP Mid Cap Growth Class A Portfolio	MFS VIT II International Value Initial Class Series
Ivy Funds VIP Science and Technology Class A Portfolio	MFS VIT II International Value Service Class Series
JPMIT Intrepid Mid Cap Class 1 Portfolio	Oppenheimer International Growth Fund/VA Non-Service Class
JPMIT Intrepid Mid Cap Class 2 Portfolio	Oppenheimer International Growth Fund/VA Service Class
LVIP American Balanced Allocation Service Class Fund	Oppenheimer Main Street Small Cap Fund/VA Non-Service Class
LVIP American Century VP Mid Cap Value RPM Standard Class Fund	Oppenheimer Main Street Small Cap Fund/VA Service Class
LVIP American Century VP Mid Cap Value RPM Service Class Fund	PIMCO VIT All Asset All Authority Advisor Class Portfolio
LVIP American Growth Allocation Service Class Fund	PIMCO VIT All Asset All Authority Institutional Class Portfolio
LVIP AQR Enhanced Global Strategies Standard Class Fund	PIMCO VIT CommodityRealReturn Strategy Institutional Class Portfolio
LVIP AQR Enhanced Global Strategies Service Class Fund	PIMCO VIT Emerging Markets Bond Advisor Class Portfolio
LVIP BlackRock Multi-Asset Income Standard Class Fund	PIMCO VIT Emerging Markets Bond Institutional Class Portfolio
LVIP BlackRock Multi-Asset Income Service Class Fund	PIMCO VIT Unconstrained Bond Advisor Class Portfolio
LVIP ClearBridge Variable Appreciation RPM Standard Class Fund	PIMCO VIT Unconstrained Bond Institutional Class Portfolio
LVIP ClearBridge Variable Appreciation RPM Service Class Fund	Putnam VT Absolute Return 500 Class IA Fund
LVIP Franklin Mutual Shares RPM Standard Class Fund	Putnam VT Absolute Return 500 Class IB Fund
LVIP Franklin Mutual Shares RPM Service Class Fund	SIPT VP Market Growth Strategy Class II Fund
LVIP Franklin Templeton Multi-Asset Opportunities Standard Class Fund	SIPT VP Market Growth Strategy Class III Fund
LVIP Franklin Templeton Multi-Asset Opportunities Service Class Fund	SIPT VP Market Plus Strategy Class II Fund
LVIP Goldman Sachs Income Builder Standard Class Fund	SIPT VP Market Plus Strategy Class III Fund
LVIP Goldman Sachs Income Builder Service Class Fund	Templeton Foreign VIP Class 1 Fund
LVIP Invesco Diversified Equity Income RPM Standard Class Fund	Templeton Foreign VIP Class 4 Fund
LVIP Invesco Diversified Equity Income RPM Service Class Fund	Templeton Global Bond VIP Class 1 Fund
LVIP Invesco V.I. Comstock RPM Standard Class Fund	Templeton Global Bond VIP Class 4 Fund
LVIP Invesco V.I. Comstock RPM Service Class Fund	Transparent Value Directional Allocation VI Class I Portfolio
LVIP Managed Risk American Balanced Allocation Service Class Fund	Transparent Value Directional Allocation VI Class II Portfolio
LVIP Managed Risk American Growth Allocation Service Class Fund	UIF Global Infrastructure Class I Portfolio
LVIP Multi-Manager Global Equity RPM Standard Class Fund	UIF Global Infrastructure Class II Portfolio
LVIP Multi-Manager Global Equity RPM Service Class Fund	Van Eck VIP Global Hard Assets Class S Fund
LVIP PIMCO Low Duration Bond Standard Class Fund	Van Eck VIP Global Hard Assets Initial Class Fund
LVIP PIMCO Low Duration Bond Service Class Fund	Virtus VIT Multi-Sector Fixed Income Class A Series
LVIP SSgA International RPM Standard Class Fund	Virtus VIT Multi-Sector Fixed Income Class I Series
LVIP SSgA International RPM Service Class Fund	Virtus VIT Premium AlphaSector Class A Series
LVIP VIP Mid Cap RPM Standard Class Fund	Virtus VIT Premium AlphaSector Class I Series

Also during 2014, the following funds changed their names:

Previous Fund Name New Fund Name

FTVIPT Franklin Income Securities Class 1 Fund	Franklin Income VIP Class 1 Fund
FTVIPT Franklin Income Securities Class 2 Fund	Franklin Income VIP Class 2 Fund
FTVIPT Franklin Small-Mid Cap Growth Securities Class 1 Fund	Franklin Small-Mid Cap Growth VIP Class 1 Fund
FTVIPT Franklin Small-Mid Cap Growth Securities Class 2 Fund	Franklin Small-Mid Cap Growth VIP Class 2 Fund
FTVIPT Mutual Shares Securities Class 1 Fund**	Franklin Mutual Shares VIP Class 1 Fund
FTVIPT Mutual Shares Securities Class 2 Fund	Franklin Mutual Shares VIP Class 2 Fund
FTVIPT Templeton Global Bond Securities Class 2 Fund	Templeton Global Bond VIP Class 2 Fund
FTVIPT Templeton Growth Securities Class 2 Fund	Templeton Growth VIP Class 2 Fund

Also during 2014, the DWS Variable Series II (DWS) family of funds changed its name to the Deutsche Variable Series II (Deutsche) and the DWS Investments VIT Funds (DWS) family of funds changed its name to Deutsche Investments VIT Funds (Deutsche).

During 2014, the Huntington VA Balanced Fund ceased to be available as an investment option to Variable Account Contract owners.

N-82

Lincoln Life Variable Annuity Account N

Notes to financial statements (continued)

2. Mortality and Expense Guarantees and Other Transactions with Affiliates

Amounts are paid to the Company for mortality and expense guarantees at a percentage of the current value of the Variable Account each day. The ranges of rates are as follows for the thirty-one contract types within the Variable Account:

•  Lincoln ChoicePlus at a daily rate of .0038356% to .0073973% (1.40% to 2.70% on an annual basis).

•  Lincoln ChoicePlus Access at a daily rate of .0038356% to .0080822% (1.40% to 2.95% on an annual basis).

•  Lincoln ChoicePlus Bonus at a daily rate of .0038356% to .0079452% (1.40% to 2.90% on an annual basis).

•  Lincoln ChoicePlus II at a daily rate of .0035616% to .0073973% (1.30% to 2.70% on an annual basis).

•  Lincoln ChoicePlus II Access at a daily rate of .0038356% to .0080822% (1.40% to 2.95% on an annual basis).

•  Lincoln ChoicePlus II Advance at a daily rate of .0038356% to .0082192% (1.40% to 3.00% on an annual basis).

•  Lincoln ChoicePlus II Bonus at a daily rate of .0038356% to .0079452% (1.40% to 2.90% on an annual basis).

•  Lincoln ChoicePlus Design 1 at a daily rate of .0030137% to .0072603% (1.10% to 2.65% on an annual basis)

•  Lincoln ChoicePlus Design 2 at a daily rate of .0030137% to .0084932% (1.10% to 3.10% on an annual basis)

•  Lincoln ChoicePlus Design 3 at a daily rate of .0030137% to .0084932% (1.10% to 3.10% on an annual basis)

•  Lincoln ChoicePlus Assurance A Share at a daily rate of .0016438% to .0063014% (.60% to 2.30% on an annual basis).

•  Lincoln ChoicePlus Assurance A Share Fee-Based at a daily rate of .0016438% to .0058904% (0.60% to 2.15% on an annual basis)

•  Lincoln ChoicePlus Assurance B Share at a daily rate of .0034247% to .0076712% (1.25% to 2.80% on an annual basis).

•  Lincoln ChoicePlus Assurance Bonus at a daily rate of .0038356% to .0083562% (1.40% to 3.05% on an annual basis).

•  Lincoln ChoicePlus Assurance C Share at a daily rate of .0038356% to .0087671% (1.40% to 3.20% on an annual basis).

•  Lincoln ChoicePlus Assurance L Share at a daily rate of .0038356% to .0087671% (1.40% to 3.20% on an annual basis).

•  Lincoln ChoicePlus Assurance A Class at a daily rate of .0016438% to .0063014% (.60% to 2.30% on an annual basis).

•  Lincoln ChoicePlus Assurance B Class at a daily rate of .0034247% to .0076712% (1.25% to 2.80% on an annual basis).

•  Lincoln ChoicePlus Signature 1 at a daily rate of .0034247% to .0076712% (1.25% to 2.80% on an annual basis)

•  Lincoln ChoicePlus Signature 2 at a daily rate of .0038356% to .0086301% (1.40% to 3.15% on an annual basis)

•  Lincoln ChoicePlus Rollover at a daily rate of .0027397% to .0069863% (1.00% to 2.55% on an annual basis).

•  Lincoln ChoicePlus Fusion at a daily rate of .0021918% to .0064384% (0.80% to 2.35% on an annual basis).

•  Lincoln Investment Solutions at a daily rate of .0016438% to .0058904% (0.60% to 2.15% on an annual basis).

•  Lincoln ChoicePlus Assurance Series B-Share at a daily rate of .0034247% to .0076712% (1.25% to 2.80% on an annual basis).

•  Lincoln ChoicePlus Assurance Series C-Share at a daily rate of .0038356% to .0087671% (1.40% to 3.20% on an annual basis).

•  Lincoln ChoicePlus Assurance Series L-Share at a daily rate of .0038356% to .0087671% (1.40% to 3.20% on an annual basis).

•  Lincoln ChoicePlus Assurance (Prime) at a daily rate of .0034247% to .0076712% (1.25% to 2.80% on an annual basis).

•  Lincoln Investor Advantage B-Share at a daily rate of .0026027% to .0041096% (0.95% to 1.50% on an annual basis).

•  Lincoln Investor Advantage C-Share at a daily rate of .0026027% to .0045205% (0.95% to 1.65% on an annual basis).

•  Lincoln Investor Advantage Fee-Based at a daily rate of .0004110% to .0019178% (0.15% to 0.70% on an annual basis).

•  Lincoln Investor Advantage RIA at a daily rate of .0006849% to .0021918% (0.25% to 0.80% on an annual basis).

N-83

Lincoln Life Variable Annuity Account N

Notes to financial statements (continued)

2. Mortality and Expense Guarantees and Other Transactions with Affiliates (continued)

During May, 2013, the fund replacements listed below occurred in certain products. The replacement funds have higher fund expenses than the funds they replaced, so the Company enacted a mortality and expense guarantee (M&E) reduction to ensure that overall fund expenses were the same after the replacement. The M&E reduction will last for a period of two years. The fund replacements were as follows:

Previous Fund Name	Replacement Fund Name	M&E Reduction
ABVPSF International Value Class B Portfolio	LVIP Mondrian International Value Service Class Fund		0.02	%
American Century VP Inflation Protection Class II Fund	LVIP BlackRock Inflation Protected Bond Service Class Fund		0.06	%

In addition, $342,291,315 and $258,512,077 was retained by the Company for contract charges and surrender charges during 2014 and 2013, respectively.

For the Lincoln ChoicePlus Assurance A Share, Lincoln ChoicePlus Assurance A Share Fee-Based and Lincoln ChoicePlus Assurance A Class products, a front-end load or sales charge is applied as a percentage (5.75% maximum) to all gross purchase payments. For the Lincoln ChoicePlus Fusion product, a premium based charge or sales charge is applied on a quarterly basis over a seven year period as a percentage (.175% maximum per quarter) of all purchase payments received. For the years ending December 31, 2014 and 2013, sales charges amounted to $4,574,969 and $5,115,035, respectively.

Surrender, contract and all other charges are included within Contract withdrawals on the Statements of Changes in Net Assets.

3. Financial Highlights

A summary of the fee rates, unit values, units outstanding, net assets and total return and investment income ratios for variable annuity contracts as of and for each year or period in the five years ended December 31, 2014, follows:

Subaccount	Year	Commencement Date(1)	Minimum Fee Rate(2)			Maximum Fee Rate(2)			Minimum Unit Value(3)		Maximum Unit Value(3)		Units Outstanding		Net Assets		Minimum Total Return(4)			Maximum Total Return(4)			Investment Income Ratio(5)
ABVPSF Global Thematic Growth Class B
	2014			0.65	%		2.95	%	$	4.86	$	19.11		2,705,522	$	28,692,905		1.76	%		4.13	%		0.00	%
	2013			0.65	%		2.95	%		4.72		18.57		3,028,771		30,284,841		19.36	%		22.13	%		0.02	%
	2012			0.65	%		2.95	%		3.91		15.39		2,753,447		24,004,879		9.95	%		12.51	%		0.00	%
	2011			0.65	%		2.95	%		3.51		13.84		2,984,851		22,863,398		-25.57	%		-23.91	%		0.34	%
	2010			0.65	%		2.85	%		4.67		18.41		3,004,150		29,512,963		15.25	%		17.81	%		2.00	%
ABVPSF Growth and Income Class B
	2014			0.00	%		0.00	%		—		—		—		—		0.00	%		0.00	%		1.11	%
	2013			0.00	%		0.00	%		—		—		—		—		0.00	%		0.00	%		1.48	%
	2012			0.65	%		3.15	%		9.81		16.81		11,502,329		150,854,074		13.84	%		16.49	%		1.33	%
	2011			0.65	%		2.95	%		8.60		14.60		12,608,426		144,047,406		3.09	%		5.38	%		1.10	%
	2010			0.65	%		2.85	%		8.35		14.03		13,986,390		153,878,947		9.63	%		12.07	%		0.00	%
ABVPSF International Value Class B
	2014			1.55	%		1.90	%		7.41		7.64		678		5,099		-8.21	%		-7.88	%		3.17	%
	2013			1.30	%		1.30	%		8.45		8.45		15		128		21.14	%		21.14	%		2.73	%
	2012			0.65	%		3.20	%		6.05		10.98		28,812,602		197,847,060		10.60	%		13.45	%		1.39	%
	2011			0.65	%		3.20	%		5.66		9.26		30,051,265		182,677,468		-21.75	%		-19.96	%		4.21	%
	2010			0.65	%		2.90	%		7.10		7.81		23,913,577		177,374,151		1.37	%		3.62	%		3.08	%
ABVPSF Large Cap Growth Class B
	2014			1.30	%		2.80	%		9.44		22.27		848,639		10,433,388		10.70	%		12.37	%		0.00	%
	2013			1.30	%		2.80	%		8.44		19.82		909,766		10,154,434		33.22	%		35.23	%		0.00	%
	2012			1.30	%		2.80	%		6.27		14.65		1,054,995		8,789,778		13.10	%		14.72	%		0.03	%
	2011			1.30	%		2.65	%		5.50		12.77		1,335,065		9,727,179		-5.80	%		-4.52	%		0.09	%
	2010			1.30	%		2.65	%		5.79		13.38		1,688,466		12,963,373		6.96	%		8.41	%		0.27	%
ABVPSF Small/Mid Cap Value Class A
	2014	7/24/14		0.40	%		0.80	%		10.46		10.48		5,516		57,825		1.02	%		1.76	%		0.31	%

N-84

Lincoln Life Variable Annuity Account N

Notes to financial statements (continued)

3. Financial Highlights (continued)

Subaccount	Year	Commencement Date(1)	Minimum Fee Rate(2)			Maximum Fee Rate(2)			Minimum Unit Value(3)		Maximum Unit Value(3)		Units Outstanding		Net Assets		Minimum Total Return(4)			Maximum Total Return(4)			Investment Income Ratio(5)
ABVPSF Small/Mid Cap Value Class B
	2014			0.60	%		3.20	%	$	15.45	$	36.24		7,291,406	$	194,269,675		5.51	%		8.24	%		0.46	%
	2013			0.65	%		3.20	%		14.64		33.83		8,139,879		205,119,410		33.30	%		36.74	%		0.44	%
	2012			0.65	%		3.20	%		11.00		25.04		7,832,184		143,146,719		14.80	%		17.70	%		0.29	%
	2011			0.65	%		3.15	%		10.09		21.53		8,277,391		131,094,788		-11.19	%		-9.21	%		0.25	%
	2010			0.65	%		2.85	%		11.45		24.00		8,248,951		150,623,922		23.04	%		25.77	%		0.27	%
Alps|Alerian Energy Infrastructure Class I
	2014	7/24/14		0.40	%		0.40	%		10.35		10.35		11,325		117,205		-6.09	%		-6.09	%		0.92	%
Alps|Alerian Energy Infrastructure Class III
	2014	7/2/14		0.30	%		1.65	%		10.23		10.32		187,200		1,921,367		-6.49	%		-0.84	%		0.21	%
Alps|Stadion Tactical Defensive Class I
	2014	12/26/14		0.40	%		0.40	%		10.57		10.57		7,749		81,904		-1.30	%		-1.30	%		0.00	%
Alps|Stadion Tactical Defensive Class III
	2014	7/17/14		1.10	%		1.65	%		10.46		10.51		72,836		764,872		-0.67	%		2.46	%		0.00	%
American Century VP Inflation Protection Class II
	2014			0.00	%		0.00	%		—		—		—		—		0.00	%		0.00	%		1.34	%
	2013			0.00	%		0.00	%		—		—		—		—		0.00	%		0.00	%		0.66	%
	2012			0.65	%		3.15	%		11.15		14.52		34,203,692		473,044,643		4.06	%		6.69	%		2.41	%
	2011			0.65	%		3.15	%		11.72		13.70		36,648,252		480,337,366		8.61	%		11.02	%		4.01	%
	2010			0.65	%		2.85	%		10.79		12.42		41,433,338		494,227,301		2.15	%		4.42	%		1.65	%
American Funds Asset Allocation Class 1
	2014			0.40	%		1.95	%		13.69		14.22		81,493		1,083,366		3.62	%		4.72	%		1.91	%
	2013	5/28/13		0.90	%		1.95	%		13.21		13.58		44,228		597,313		8.28	%		8.96	%		1.64	%
American Funds Asset Allocation Class 4
	2014	7/11/14		0.30	%		1.65	%		10.28		10.37		488,562		5,036,627		0.73	%		2.37	%		2.97	%
American Funds Blue Chip Income and Growth Class 1
	2014			0.40	%		1.90	%		15.55		16.30		168,673		2,328,817		13.51	%		15.00	%		4.84	%
	2013			0.60	%		1.90	%		13.70		14.18		69,801		971,653		30.75	%		32.46	%		2.55	%
	2012	3/1/12		0.60	%		1.90	%		10.48		10.70		51,725		545,963		1.54	%		8.47	%		2.91	%
American Funds Blue Chip Income and Growth Class 4
	2014	6/27/14		0.30	%		1.65	%		10.88		10.97		270,432		2,949,193		-0.94	%		7.83	%		6.32	%
American Funds Bond Class 1
	2014			0.60	%		1.90	%		10.59		11.10		184,166		2,028,548		3.60	%		4.95	%		2.53	%
	2013			0.60	%		1.90	%		10.27		10.57		78,093		818,840		-3.54	%		-2.47	%		4.51	%
	2012	5/31/12		0.60	%		1.70	%		10.65		10.84		9,154		97,818		0.67	%		2.23	%		3.29	%
American Funds Capital Income Builder Class 1
	2014	8/13/14		0.40	%		0.60	%		9.93		9.95		11,785		117,203		-0.92	%		-0.63	%		1.21	%
American Funds Capital Income Builder Class 4
	2014	7/11/14		0.30	%		1.65	%		9.83		9.92		331,104		3,264,170		-2.81	%		2.10	%		1.46	%
American Funds Global Balanced Class 1
	2014			0.60	%		1.70	%		11.75		12.22		28,351		344,386		0.15	%		1.26	%		1.55	%
	2013			0.60	%		1.70	%		12.06		12.07		19,898		236,081		11.84	%		11.89	%		3.54	%
	2012	5/31/12		0.60	%		0.65	%		10.78		10.79		2,753		29,698		10.94	%		12.34	%		2.52	%
American Funds Global Bond Class 1
	2014			0.60	%		2.15	%		9.90		10.47		159,471		1,649,036		-0.45	%		1.10	%		1.84	%
	2013			0.60	%		2.15	%		10.06		10.35		107,161		1,097,950		-4.05	%		-2.99	%		0.00	%
	2012	3/26/12		0.60	%		1.70	%		10.48		10.67		27,264		289,169		-0.10	%		3.57	%		4.08	%
American Funds Global Discovery Class 1
	2013			0.00	%		0.00	%		—		—		—		—		0.00	%		0.00	%		0.49	%
	2012	7/18/12		0.65	%		0.65	%		10.54		10.54		2,542		26,800		8.58	%		8.58	%		1.04	%
American Funds Global Growth Class 1
	2014			0.40	%		1.90	%		16.32		20.76		53,456		929,867		0.84	%		1.85	%		1.74	%
	2013			0.65	%		1.65	%		20.38		20.38		9,962		180,670		28.67	%		28.67	%		2.64	%
	2012	12/17/12		0.65	%		0.65	%		15.84		15.84		477		7,558		0.77	%		0.77	%		0.61	%

N-85

Lincoln Life Variable Annuity Account N

Notes to financial statements (continued)

3. Financial Highlights (continued)

Subaccount	Year	Commencement Date(1)	Minimum Fee Rate(2)			Maximum Fee Rate(2)			Minimum Unit Value(3)		Maximum Unit Value(3)		Units Outstanding		Net Assets		Minimum Total Return(4)			Maximum Total Return(4)			Investment Income Ratio(5)
American Funds Global Growth Class 2
	2014			0.65	%		3.15	%	$	13.41	$	22.62		15,062,955	$	300,070,833		-0.86	%		1.65	%		1.13	%
	2013			0.65	%		3.15	%		13.53		22.40		16,531,915		328,814,702		25.17	%		28.34	%		1.22	%
	2012			0.65	%		3.15	%		10.81		17.56		18,726,406		294,366,132		18.76	%		21.77	%		0.88	%
	2011			0.65	%		3.15	%		9.76		14.52		21,166,368		277,693,041		-11.45	%		-9.48	%		1.29	%
	2010			0.65	%		2.85	%		11.02		16.14		22,438,581		331,309,961		8.61	%		11.02	%		1.54	%
American Funds Global Growth Class 4
	2014	7/7/14		0.30	%		1.65	%		10.25		10.34		166,172		1,707,623		-2.09	%		6.92	%		1.88	%
American Funds Global Growth and Income Class 1
	2014			0.60	%		1.90	%		13.18		13.82		39,804		541,529		4.00	%		5.36	%		4.40	%
	2013	5/31/13		0.60	%		1.90	%		12.68		13.12		13,187		169,168		3.15	%		11.86	%		7.06	%
American Funds Global Small Capitalization Class 1
	2014			0.40	%		1.90	%		12.12		20.24		38,850		647,274		0.43	%		1.74	%		0.56	%
	2013	3/18/13		0.60	%		1.90	%		12.07		19.90		9,572		171,321		3.23	%		18.71	%		0.36	%
American Funds Global Small Capitalization Class 2
	2014			0.65	%		3.15	%		11.39		34.07		24,595,417		444,106,901		-1.04	%		1.46	%		0.12	%
	2013			0.65	%		3.15	%		11.51		33.99		25,652,712		468,775,881		24.30	%		27.45	%		0.86	%
	2012			0.65	%		3.15	%		9.26		26.99		28,256,850		412,911,878		14.52	%		17.41	%		1.34	%
	2011			0.65	%		3.15	%		8.88		23.26		27,803,290		361,902,049		-21.42	%		-19.67	%		1.32	%
	2010			0.65	%		2.85	%		11.10		29.31		23,033,389		405,935,380		18.98	%		21.62	%		1.76	%
American Funds Global Small Capitalization Class 4
	2014	7/10/14		1.10	%		1.65	%		10.05		10.09		109,654		1,105,353		-3.11	%		0.33	%		0.15	%
American Funds Growth Class 1
	2014			0.40	%		2.15	%		15.57		23.24		265,323		5,209,877		6.47	%		8.14	%		1.77	%
	2013			0.60	%		2.15	%		20.43		21.43		95,918		1,854,888		28.24	%		29.59	%		2.17	%
	2012	7/18/12		0.65	%		1.70	%		15.93		16.54		11,356		181,628		6.66	%		8.59	%		0.86	%
American Funds Growth Class 2
	2014			0.60	%		3.20	%		14.09		27.83		77,008,391		1,582,205,164		5.09	%		7.86	%		0.76	%
	2013			0.60	%		3.20	%		13.22		26.12		88,916,417		1,713,280,045		26.01	%		29.26	%		0.91	%
	2012			0.65	%		3.20	%		10.35		20.46		104,648,159		1,577,540,044		14.24	%		17.13	%		0.76	%
	2011			0.65	%		3.15	%		8.94		17.67		122,382,686		1,598,331,081		-6.97	%		-4.90	%		0.60	%
	2010			0.65	%		2.85	%		9.51		18.81		139,384,213		1,945,075,727		15.35	%		17.91	%		0.73	%
American Funds Growth Class 4
	2014	7/11/14		0.30	%		1.65	%		10.68		10.78		689,230		7,385,095		1.48	%		8.58	%		1.88	%
American Funds Growth-Income Class 1
	2014			0.40	%		1.90	%		16.68		23.04		136,191		2,917,443		8.82	%		10.24	%		1.91	%
	2013			0.60	%		1.90	%		20.84		20.84		42,509		857,590		32.95	%		32.95	%		4.20	%
	2012	12/17/12		0.65	%		0.65	%		15.68		15.68		480		7,525		0.14	%		0.14	%		0.87	%
American Funds Growth-Income Class 2
	2014			0.60	%		3.20	%		14.13		25.23		108,518,744		2,071,195,590		7.15	%		9.98	%		1.25	%
	2013			0.60	%		3.20	%		13.13		23.23		123,574,320		2,169,089,785		29.30	%		32.71	%		1.32	%
	2012			0.60	%		3.20	%		10.11		17.73		141,043,265		1,889,206,205		13.84	%		16.78	%		1.59	%
	2011			0.60	%		3.15	%		8.84		15.37		152,637,821		1,782,292,860		-4.59	%		-2.42	%		1.54	%
	2010			0.60	%		2.85	%		9.19		15.95		160,676,140		1,965,743,078		8.30	%		10.70	%		1.51	%
American Funds Growth-Income Class 4
	2014	7/11/14		0.30	%		1.65	%		10.62		10.71		429,293		4,572,408		1.70	%		7.62	%		2.87	%
American Funds High-Income Bond Class 1
	2014			0.60	%		1.90	%		11.07		11.61		67,751		777,749		-1.09	%		0.20	%		7.05	%
	2013			0.60	%		1.90	%		11.19		11.58		30,666		350,547		4.88	%		6.26	%		9.56	%
	2012	3/26/12		0.60	%		1.90	%		10.67		10.90		15,785		170,366		0.25	%		7.13	%		15.17	%
American Funds International Class 1
	2014			0.40	%		1.70	%		15.19		16.15		150,309		2,008,634		-4.05	%		-2.99	%		2.73	%
	2013			0.60	%		1.70	%		15.83		15.83		28,752		466,616		19.85	%		19.85	%		2.40	%
	2012	8/7/12		1.70	%		1.70	%		13.21		13.21		12,512		165,249		8.46	%		8.46	%		1.63	%

N-86

Lincoln Life Variable Annuity Account N

Notes to financial statements (continued)

3. Financial Highlights (continued)

Subaccount	Year	Commencement Date(1)	Minimum Fee Rate(2)			Maximum Fee Rate(2)			Minimum Unit Value(3)		Maximum Unit Value(3)		Units Outstanding		Net Assets		Minimum Total Return(4)			Maximum Total Return(4)			Investment Income Ratio(5)
American Funds International Class 2
	2014			0.65	%		3.15	%	$	10.69	$	25.96		44,124,291	$	729,574,567		-5.67	%		-3.28	%		1.38	%
	2013			0.65	%		3.15	%		11.34		27.16		44,360,488		778,437,194		17.86	%		20.85	%		1.36	%
	2012			0.65	%		3.15	%		9.62		22.75		46,582,914		700,805,428		14.25	%		17.14	%		1.49	%
	2011			0.65	%		3.15	%		8.52		19.65		46,345,677		622,060,997		-16.39	%		-14.52	%		1.76	%
	2010			0.65	%		2.85	%		10.06		23.27		47,415,131		763,935,853		4.22	%		6.54	%		2.09	%
American Funds International Class 4
	2014	7/8/14		0.30	%		1.65	%		9.49		9.57		318,221		3,027,225		-6.56	%		2.94	%		3.02	%
American Funds International Growth and Income Class 1
	2014			0.60	%		2.15	%		11.05		11.68		132,517		1,533,911		-4.99	%		-3.51	%		3.51	%
	2013	3/18/13		0.60	%		2.15	%		11.63		12.11		68,436		818,062		2.18	%		14.51	%		5.76	%
American Funds Managed Risk Asset Allocation Class P1
	2014			0.65	%		0.65	%		12.59		12.59		59,551		749,950		2.58	%		2.58	%		0.31	%
	2013	5/20/13		0.65	%		0.65	%		12.28		12.28		31,059		381,308		7.24	%		7.24	%		2.06	%
American Funds Managed Risk Asset Allocation Class P2
	2014	8/20/14		1.30	%		2.55	%		12.03		12.35		511,562		6,299,380		-1.32	%		3.75	%		0.10	%
American Funds Managed Risk Blue Chip Income and Growth Class P1
	2014			0.60	%		1.70	%		11.82		11.82		8,638		101,228		7.93	%		7.93	%		4.48	%
	2013	9/9/13		0.60	%		0.60	%		10.96		10.96		1,111		12,177		9.23	%		9.23	%		1.52	%
American Funds Managed Risk Growth Class P1
	2014			0.60	%		1.70	%		11.09		11.09		6,172		68,833		0.46	%		0.46	%		1.05	%
	2013	11/14/13		1.70	%		1.70	%		11.04		11.04		4,637		51,202		3.51	%		3.51	%		0.65	%
American Funds Managed Risk Growth-Income Class P1
	2014			0.65	%		1.70	%		11.71		11.71		2,307		26,676		4.18	%		4.18	%		2.58	%
	2013	12/16/13		0.65	%		0.65	%		11.24		11.24		558		6,275		3.40	%		3.40	%		0.98	%
American Funds Managed Risk International Class P1
	2014	3/10/14		0.60	%		0.60	%		10.04		10.04		1,359		13,648		-4.08	%		-4.08	%		1.37	%
American Funds Mortgage Class 1
	2014			0.40	%		1.90	%		10.37		10.85		26,208		276,226		3.56	%		4.86	%		0.90	%
	2013			0.65	%		1.90	%		10.01		10.34		31,044		314,793		-3.26	%		-2.05	%		1.29	%
	2012	6/22/12		0.65	%		1.90	%		10.35		10.56		14,108		147,411		-0.50	%		0.49	%		0.80	%
American Funds Mortgage Class 4
	2014	7/24/14		1.10	%		1.65	%		10.10		10.14		5,213		52,828		0.65	%		0.94	%		1.37	%
American Funds New World Class 1
	2014			0.40	%		2.15	%		9.67		10.23		165,600		1,645,697		-9.60	%		-8.19	%		1.59	%
	2013			0.60	%		2.15	%		10.76		11.12		62,079		681,495		9.56	%		10.94	%		3.86	%
	2012	6/22/12		0.65	%		1.90	%		9.82		10.03		2,740		27,382		15.20	%		16.03	%		1.74	%
American Funds New World Class 4
	2014	6/30/14		0.30	%		1.65	%		9.05		9.13		229,661		2,083,507		-13.72	%		-2.61	%		2.44	%
American Funds U.S. Government/AAA-Rated Securities Class 1
	2014			0.60	%		1.90	%		10.31		10.81		17,594		186,388		3.26	%		4.61	%		1.14	%
	2013			0.60	%		1.90	%		9.99		10.33		26,690		270,577		-4.70	%		-3.45	%		1.34	%
	2012	5/31/12		0.60	%		1.90	%		10.48		10.70		6,133		64,936		-0.37	%		0.30	%		1.57	%
BlackRock Global Allocation V.I. Class I
	2014			0.40	%		1.90	%		11.85		15.53		95,187		1,443,873		0.19	%		1.50	%		2.77	%
	2013			0.60	%		1.90	%		15.10		15.30		61,891		937,866		13.73	%		14.07	%		2.74	%
	2012	9/4/12		0.60	%		0.90	%		13.28		13.41		5,032		67,220		-0.04	%		3.55	%		4.39	%
BlackRock Global Allocation V.I. Class III
	2014			0.30	%		3.20	%		11.12		15.29		91,977,049		1,314,829,729		-1.28	%		1.27	%		2.17	%
	2013			0.60	%		3.20	%		11.26		15.13		97,802,754		1,396,151,367		10.81	%		13.73	%		1.06	%
	2012			0.60	%		3.20	%		10.16		13.30		99,634,318		1,265,422,400		6.51	%		9.31	%		1.54	%
	2011			0.60	%		3.20	%		10.23		12.17		88,294,663		1,039,089,031		-6.40	%		-4.22	%		2.89	%
	2010			0.60	%		2.90	%		12.25		12.69		49,546,291		617,625,604		6.68	%		9.05	%		1.72	%
ClearBridge Variable Aggressive Growth Class I
	2014	7/24/14		0.40	%		0.40	%		11.22		11.22		17,600		197,454		2.42	%		2.42	%		0.24	%
ClearBridge Variable Aggressive Growth Class II
	2014	6/27/14		0.30	%		1.65	%		11.11		11.20		423,885		4,723,066		1.61	%		4.95	%		0.00	%

N-87

Lincoln Life Variable Annuity Account N

Notes to financial statements (continued)

3. Financial Highlights (continued)

Subaccount	Year	Commencement Date(1)	Minimum Fee Rate(2)			Maximum Fee Rate(2)			Minimum Unit Value(3)		Maximum Unit Value(3)		Units Outstanding		Net Assets		Minimum Total Return(4)			Maximum Total Return(4)			Investment Income Ratio(5)
ClearBridge Variable Mid Cap Core Class I
	2014	7/24/14		0.40	%		0.40	%	$	10.64	$	10.64		241	$	2,559		2.40	%		2.40	%		0.28	%
ClearBridge Variable Mid Cap Core Class II
	2014	5/19/14		0.30	%		3.00	%		10.45		10.63		1,357,176		14,307,002		-0.52	%		9.15	%		0.20	%
Delaware VIP Diversified Income Standard Class
	2014			0.40	%		2.15	%		10.81		14.75		85,063		1,143,589		3.08	%		4.69	%		1.88	%
	2013			0.60	%		2.15	%		14.05		14.05		43,579		563,170		-1.90	%		-1.90	%		0.88	%
	2012	12/14/12		0.65	%		0.65	%		14.32		14.32		4,298		61,548		0.06	%		0.06	%		0.00	%
Delaware VIP Diversified Income Service Class
	2014			0.30	%		3.20	%		10.25		16.76		110,189,860		1,681,645,917		1.68	%		4.36	%		1.97	%
	2013			0.60	%		3.20	%		10.08		16.18		96,298,898		1,420,559,454		-4.53	%		-2.06	%		2.15	%
	2012			0.65	%		3.20	%		10.57		16.62		91,557,117		1,400,398,415		3.56	%		6.18	%		2.94	%
	2011			0.65	%		3.15	%		10.28		15.76		81,034,287		1,190,826,571		3.12	%		5.47	%		3.88	%
	2010			0.65	%		2.90	%		12.70		15.04		69,940,824		998,422,247		4.84	%		7.17	%		4.24	%
Delaware VIP Emerging Markets Standard Class
	2014	9/17/14		0.80	%		0.80	%		9.06		9.06		347		3,141		-14.13	%		-14.13	%		0.00	%
Delaware VIP Emerging Markets Service Class
	2014			0.60	%		3.20	%		8.47		44.57		18,418,834		325,412,353		-11.15	%		-8.82	%		0.41	%
	2013			0.60	%		3.20	%		9.54		49.49		18,654,260		366,304,797		6.40	%		9.15	%		1.47	%
	2012			0.65	%		3.20	%		8.96		45.89		19,252,075		349,984,488		10.59	%		13.45	%		0.75	%
	2011			0.65	%		3.20	%		8.67		40.94		18,913,750		308,378,797		-22.25	%		-20.52	%		1.58	%
	2010			0.65	%		2.85	%		11.14		52.13		14,644,887		312,915,951		14.89	%		17.44	%		0.57	%
Delaware VIP High Yield Standard Class
	2014			1.40	%		2.35	%		19.12		26.78		223,892		4,346,695		-2.60	%		-1.67	%		6.44	%
	2013			1.40	%		2.35	%		19.44		26.46		259,899		5,122,924		6.68	%		7.70	%		10.17	%
	2012			1.40	%		2.35	%		18.05		24.75		557,596		10,126,647		15.09	%		16.19	%		6.04	%
	2011			1.40	%		2.35	%		15.54		21.46		334,426		5,252,890		0.00	%		0.96	%		7.91	%
	2010			1.40	%		2.35	%		15.39		21.42		750,316		11,622,616		12.64	%		13.72	%		6.76	%
Delaware VIP High Yield Service Class
	2014			0.65	%		3.15	%		11.49		26.04		9,085,188		183,036,976		-3.62	%		-1.18	%		6.66	%
	2013			0.65	%		3.15	%		11.92		26.67		10,902,384		224,761,227		5.60	%		8.27	%		7.38	%
	2012			0.65	%		3.15	%		11.29		24.93		12,959,675		248,978,115		13.72	%		16.59	%		8.61	%
	2011			0.65	%		3.15	%		12.41		21.64		14,588,017		243,741,485		-0.55	%		1.67	%		8.92	%
	2010			0.65	%		2.85	%		12.47		21.54		19,118,188		319,535,835		11.69	%		14.17	%		7.33	%
Delaware VIP International Value Equity Standard Class
	2014			1.40	%		1.65	%		17.97		17.97		8,854		159,204		-9.94	%		-9.94	%		1.34	%
	2013			1.40	%		2.15	%		19.95		22.16		10,844		217,780		20.18	%		21.08	%		1.56	%
	2012			1.40	%		2.15	%		16.48		18.44		12,932		214,482		12.75	%		13.60	%		2.57	%
	2011			1.40	%		2.15	%		14.50		16.35		15,242		222,522		-16.26	%		-15.63	%		1.26	%
	2010			1.40	%		2.15	%		17.19		19.53		19,350		334,606		8.57	%		9.38	%		3.98	%
Delaware VIP Limited-Term Diversified Income Standard Class
	2014			0.60	%		2.15	%		9.71		11.53		115,875		1,237,024		-0.47	%		1.09	%		1.60	%
	2013			0.60	%		2.15	%		9.83		11.41		86,433		902,812		-2.92	%		-1.65	%		1.42	%
	2012	6/22/12		0.60	%		1.90	%		10.13		11.60		6,886		76,979		-0.28	%		0.46	%		0.91	%
Delaware VIP Limited-Term Diversified Income Service Class
	2014			0.60	%		3.20	%		9.19		12.25		120,406,279		1,356,387,266		-1.75	%		0.84	%		1.33	%
	2013			0.60	%		3.20	%		9.36		12.15		114,924,314		1,296,360,971		-4.43	%		-1.92	%		1.28	%
	2012			0.60	%		3.20	%		9.80		12.39		94,626,180		1,098,789,192		-0.66	%		1.91	%		1.43	%
	2011			0.60	%		3.15	%		10.27		12.15		78,519,076		911,377,732		-0.32	%		1.94	%		1.62	%
	2010			0.60	%		2.85	%		10.84		11.90		56,532,719		658,386,518		1.36	%		3.62	%		2.03	%
Delaware VIP REIT Standard Class
	2014			0.40	%		2.35	%		30.35		44.21		141,768		5,926,515		26.46	%		27.66	%		1.33	%
	2013			1.40	%		2.35	%		24.00		34.63		126,712		4,258,904		-0.23	%		0.72	%		1.53	%
	2012			1.40	%		2.35	%		24.06		34.38		130,450		4,355,745		14.23	%		15.32	%		1.60	%
	2011			1.40	%		2.35	%		21.06		29.81		160,337		4,660,435		8.38	%		9.42	%		1.62	%
	2010			1.40	%		2.35	%		19.43		27.25		200,164		5,329,560		24.04	%		25.22	%		2.80	%

N-88

Lincoln Life Variable Annuity Account N

Notes to financial statements (continued)

3. Financial Highlights (continued)

Subaccount	Year	Commencement Date(1)	Minimum Fee Rate(2)			Maximum Fee Rate(2)			Minimum Unit Value(3)		Maximum Unit Value(3)		Units Outstanding		Net Assets		Minimum Total Return(4)			Maximum Total Return(4)			Investment Income Ratio(5)
Delaware VIP REIT Service Class
	2014			0.30	%		3.20	%	$	13.04	$	36.44		7,537,961	$	176,163,124		25.06	%		28.35	%		1.12	%
	2013			0.60	%		3.20	%		10.27		28.62		7,541,026		140,346,986		-1.29	%		1.26	%		1.31	%
	2012			0.65	%		3.20	%		10.24		28.47		8,020,243		151,073,344		12.99	%		15.85	%		1.26	%
	2011			0.65	%		3.15	%		8.93		24.76		7,381,989		124,874,170		7.51	%		9.90	%		1.34	%
	2010			0.65	%		2.85	%		8.46		22.70		6,696,391		110,546,563		23.06	%		25.79	%		2.55	%
Delaware VIP Small Cap Value Standard Class
	2014			0.40	%		2.35	%		32.00		39.58		195,050		7,559,965		3.40	%		4.39	%		0.56	%
	2013			1.40	%		2.35	%		30.95		37.91		213,991		8,057,362		30.41	%		31.65	%		0.74	%
	2012			1.40	%		2.35	%		23.73		28.80		248,520		7,108,831		11.26	%		12.32	%		0.60	%
	2011			1.40	%		2.35	%		21.33		25.64		295,505		7,526,918		-3.63	%		-2.70	%		0.52	%
	2010			1.40	%		2.35	%		22.13		26.35		363,786		9,531,790		29.20	%		30.43	%		0.65	%
Delaware VIP Small Cap Value Service Class
	2014			0.30	%		3.20	%		14.99		39.61		14,687,106		355,732,262		2.29	%		4.93	%		0.34	%
	2013			0.65	%		3.20	%		14.66		38.03		15,896,125		372,923,143		28.98	%		32.31	%		0.52	%
	2012			0.65	%		3.20	%		11.36		28.96		18,110,280		325,403,913		10.06	%		12.90	%		0.35	%
	2011			0.65	%		3.20	%		10.75		25.85		20,004,931		323,498,204		-4.36	%		-2.23	%		0.28	%
	2010			0.65	%		2.85	%		11.62		26.63		17,716,673		309,429,689		28.21	%		31.06	%		0.46	%
Delaware VIP Smid Cap Growth Standard Class
	2014			0.40	%		2.35	%		28.00		35.41		238,939		8,365,583		0.75	%		1.71	%		0.07	%
	2013			1.40	%		2.35	%		27.58		34.81		271,774		9,429,179		38.05	%		39.36	%		0.03	%
	2012			1.40	%		2.35	%		19.83		24.98		312,966		7,799,343		8.44	%		9.48	%		0.24	%
	2011			1.40	%		2.35	%		18.15		22.82		374,688		8,532,844		5.62	%		6.63	%		0.98	%
	2010	10/8/10		1.40	%		2.35	%		17.06		21.40		442,067		9,442,351		13.16	%		13.41	%		0.00	%
Delaware VIP Smid Cap Growth Service Class
	2014			0.30	%		3.15	%		15.00		32.49		6,122,012		147,642,377		-0.32	%		2.21	%		0.00	%
	2013			0.65	%		3.15	%		14.85		32.18		7,136,137		169,924,221		36.61	%		40.06	%		0.00	%
	2012			0.65	%		3.15	%		10.72		23.25		7,728,235		132,109,834		7.28	%		9.99	%		0.01	%
	2011			0.65	%		3.15	%		9.86		21.00		7,446,364		115,611,592		4.92	%		7.20	%		0.74	%
	2010	10/8/10		0.65	%		2.80	%		9.31		19.87		5,869,618		84,963,927		12.98	%		13.54	%		0.00	%
Delaware VIP U.S. Growth Service Class
	2014			0.65	%		3.15	%		16.27		23.75		18,204,155		356,087,453		9.00	%		11.76	%		0.01	%
	2013			0.65	%		3.15	%		14.89		21.51		19,086,029		335,409,773		30.28	%		33.57	%		0.12	%
	2012			0.65	%		3.15	%		11.39		16.29		20,861,489		276,129,824		12.53	%		15.20	%		0.00	%
	2011			0.65	%		3.00	%		10.11		14.31		20,137,700		232,573,464		4.48	%		6.81	%		0.04	%
	2010			0.65	%		2.85	%		9.68		13.56		11,708,708		124,714,441		10.35	%		12.81	%		0.00	%
Delaware VIP Value Standard Class
	2014			0.40	%		2.35	%		22.18		28.07		321,113		7,091,505		11.35	%		12.41	%		1.71	%
	2013			1.40	%		2.35	%		19.73		25.08		370,671		7,405,602		30.59	%		31.84	%		1.76	%
	2012			1.40	%		2.35	%		14.97		19.11		379,166		5,735,340		12.07	%		13.14	%		2.24	%
	2011			1.40	%		2.35	%		13.23		16.97		434,858		5,811,505		6.99	%		8.01	%		2.01	%
	2010			1.40	%		2.35	%		12.25		15.78		508,244		6,281,230		12.94	%		14.02	%		2.43	%
Delaware VIP Value Service Class
	2014			0.30	%		3.20	%		14.77		27.25		13,857,245		287,864,246		10.12	%		12.96	%		1.42	%
	2013			0.65	%		3.20	%		13.30		24.42		13,475,411		250,120,711		29.18	%		32.51	%		1.53	%
	2012			0.65	%		3.20	%		10.14		18.65		13,064,224		184,513,961		10.83	%		13.69	%		1.98	%
	2011			0.65	%		3.20	%		9.01		16.30		12,147,550		154,062,662		6.19	%		8.55	%		1.70	%
	2010			0.65	%		2.85	%		8.38		15.22		10,530,555		125,406,966		12.09	%		14.46	%		2.20	%
Deutsche Alternative Asset Allocation VIP Class A
	2014			0.60	%		2.15	%		10.30		14.06		67,124		852,273		1.30	%		2.88	%		1.78	%
	2013			0.60	%		2.15	%		10.25		13.67		52,526		637,444		-0.97	%		0.34	%		0.67	%
	2012	6/22/12		0.60	%		1.90	%		10.35		13.62		3,133		41,178		0.20	%		6.64	%		0.00	%
Deutsche Alternative Asset Allocation VIP Class B
	2014			0.30	%		3.20	%		9.76		13.91		4,275,328		55,634,524		-0.02	%		2.57	%		1.56	%
	2013			0.65	%		3.20	%		9.76		13.67		4,140,319		52,997,930		-2.42	%		0.10	%		1.80	%
	2012			0.65	%		3.20	%		10.00		13.77		3,782,943		48,887,063		5.92	%		8.66	%		3.19	%
	2011			0.65	%		3.20	%		11.72		12.77		3,156,835		37,965,035		-5.79	%		-3.74	%		1.01	%
	2010			0.65	%		2.80	%		12.44		13.38		1,476,223		18,687,740		9.05	%		11.42	%		0.74	%

N-89

Lincoln Life Variable Annuity Account N

Notes to financial statements (continued)

3. Financial Highlights (continued)

Subaccount	Year	Commencement Date(1)	Minimum Fee Rate(2)			Maximum Fee Rate(2)			Minimum Unit Value(3)		Maximum Unit Value(3)		Units Outstanding		Net Assets		Minimum Total Return(4)			Maximum Total Return(4)			Investment Income Ratio(5)
Deutsche Equity 500 Index VIP Class A
	2014			1.30	%		2.65	%	$	13.79	$	23.66		400,529	$	7,058,427		10.43	%		11.93	%		1.88	%
	2013			1.30	%		2.65	%		12.39		21.14		540,134		8,249,499		28.48	%		30.22	%		2.77	%
	2012			1.30	%		2.65	%		9.56		16.82		1,573,706		18,587,414		12.67	%		14.20	%		1.80	%
	2011			1.30	%		2.65	%		8.41		14.81		1,765,361		18,412,219		-0.83	%		0.52	%		1.74	%
	2010			1.30	%		2.65	%		8.41		14.81		2,369,761		24,773,760		11.71	%		13.22	%		1.94	%
Deutsche Equity 500 Index VIP Class B
	2013			0.00	%		0.00	%		—		—		—		—		0.00	%		0.00	%		1.57	%
	2012			1.15	%		3.05	%		10.90		15.77		1,745,099		24,431,454		12.23	%		14.10	%		1.50	%
	2011			1.15	%		2.80	%		9.71		13.84		2,068,470		25,866,328		-1.30	%		0.34	%		1.41	%
	2010			1.15	%		2.80	%		9.84		13.83		2,867,522		35,007,227		11.36	%		13.21	%		1.67	%
Deutsche Small Cap Index VIP Class A
	2014			1.30	%		2.65	%		15.94		31.23		157,921		4,366,578		2.00	%		3.39	%		0.98	%
	2013			1.30	%		2.65	%		15.61		30.37		197,615		5,316,825		35.02	%		36.85	%		1.67	%
	2012			1.30	%		2.65	%		11.54		22.32		237,379		4,672,758		13.21	%		14.75	%		0.90	%
	2011			1.30	%		2.65	%		10.18		19.02		290,157		5,003,402		-6.92	%		-5.65	%		0.88	%
	2010			1.30	%		2.65	%		10.92		20.33		390,509		7,149,169		23.09	%		24.76	%		0.93	%
Deutsche Small Cap Index VIP Class B
	2013			0.00	%		0.00	%		—		—		—		—		0.00	%		0.00	%		1.47	%
	2012			1.10	%		2.80	%		11.53		19.44		716,261		11,128,385		12.68	%		14.61	%		0.67	%
	2011			1.10	%		2.80	%		10.18		17.00		897,245		12,331,980		-7.21	%		-5.62	%		0.60	%
	2010			1.10	%		2.80	%		10.88		18.06		1,109,169		16,421,906		22.63	%		24.73	%		0.70	%
Eaton Vance VT Floating-Rate Income Fund Initial Class
	2014	7/8/14		1.10	%		1.65	%		9.88		9.91		142,143		1,407,375		-1.51	%		-1.22	%		1.61	%
Eaton Vance VT Floating-Rate Income Fund Advisor Class
	2014	9/22/14		0.40	%		0.80	%		9.94		9.97		44,060		439,056		-0.62	%		-0.23	%		1.00	%
Fidelity VIP Contrafund Initial Class
	2014	9/12/14		0.40	%		0.40	%		10.93		10.93		11,580		126,513		3.23	%		3.23	%		2.01	%
Fidelity VIP Contrafund Service Class 2
	2014			0.30	%		3.20	%		14.47		28.00		49,380,506		1,129,791,103		8.14	%		10.99	%		0.72	%
	2013			0.60	%		3.20	%		13.23		25.41		54,960,895		1,147,842,954		26.83	%		30.10	%		0.82	%
	2012			0.65	%		3.20	%		10.32		19.65		60,353,643		982,723,808		12.48	%		15.39	%		1.11	%
	2011			0.65	%		3.20	%		9.61		17.14		63,087,761		912,428,246		-5.52	%		-3.41	%		0.81	%
	2010			0.65	%		2.85	%		10.16		17.87		61,036,851		938,786,812		13.64	%		16.17	%		1.06	%
Fidelity VIP Equity-Income Initial Class
	2012			1.40	%		2.35	%		13.73		17.12		417,316		6,035,653		14.58	%		15.68	%		3.07	%
	2011			1.40	%		2.35	%		11.89		14.87		468,306		5,855,188		-1.38	%		-0.43	%		2.36	%
	2010			1.40	%		2.35	%		11.96		15.00		556,864		6,992,880		12.48	%		13.55	%		1.73	%
Fidelity VIP Equity-Income Service Class 2
	2013			0.00	%		0.00	%		—		—		—		—		0.00	%		0.00	%		0.00	%
	2012			1.30	%		2.85	%		10.51		16.69		2,313,710		33,091,613		13.77	%		15.54	%		2.73	%
	2011			1.30	%		2.85	%		9.21		14.53		2,861,794		35,610,265		-1.98	%		-0.65	%		2.09	%
	2010			1.30	%		2.65	%		9.38		14.70		3,620,280		45,488,308		11.91	%		13.43	%		1.53	%
Fidelity VIP Growth Initial Class
	2014			0.40	%		2.35	%		17.25		23.84		312,379		5,379,425		8.71	%		9.75	%		0.18	%
	2013			1.40	%		2.35	%		15.72		21.82		344,916		5,449,720		33.17	%		34.44	%		0.28	%
	2012			1.40	%		2.35	%		11.69		16.30		399,781		4,693,997		12.03	%		13.10	%		0.58	%
	2011			1.40	%		2.35	%		10.34		14.48		460,052		4,775,306		-2.13	%		-1.19	%		0.34	%
	2010			1.40	%		2.35	%		10.46		14.72		538,248		5,652,969		21.29	%		22.45	%		0.26	%
Fidelity VIP Growth Service Class 2
	2014			0.30	%		3.15	%		10.43		23.12		8,743,528		157,076,821		7.57	%		10.29	%		0.00	%
	2013			0.65	%		3.15	%		9.57		21.21		9,844,980		160,663,201		31.79	%		35.12	%		0.05	%
	2012			0.65	%		3.15	%		7.16		15.89		10,524,487		128,371,676		10.86	%		13.66	%		0.41	%
	2011			0.65	%		3.15	%		6.38		14.15		10,487,630		112,879,306		-2.84	%		-0.68	%		0.15	%
	2010			0.65	%		2.85	%		6.49		14.42		6,704,736		72,730,755		20.38	%		22.94	%		0.03	%
Fidelity VIP Mid Cap Initial Class
	2014	7/24/14		0.40	%		0.80	%		10.50		10.53		55,948		588,669		0.58	%		0.70	%		0.73	%

N-90

Lincoln Life Variable Annuity Account N

Notes to financial statements (continued)

3. Financial Highlights (continued)

Subaccount	Year	Commencement Date(1)	Minimum Fee Rate(2)			Maximum Fee Rate(2)			Minimum Unit Value(3)		Maximum Unit Value(3)		Units Outstanding		Net Assets		Minimum Total Return(4)			Maximum Total Return(4)			Investment Income Ratio(5)
Fidelity VIP Mid Cap Service Class 2
	2014			0.30	%		3.20	%	$	13.33	$	21.44		27,773,055	$	554,863,646		2.69	%		5.40	%		0.02	%
	2013			0.60	%		3.20	%		12.98		20.48		29,593,175		567,793,371		31.59	%		34.99	%		0.27	%
	2012			0.65	%		3.20	%		9.86		15.26		33,298,343		479,121,111		10.96	%		13.82	%		0.39	%
	2011			0.65	%		3.20	%		10.17		13.49		33,192,208		426,177,922		-13.40	%		-11.43	%		0.02	%
	2010			0.65	%		2.90	%		11.75		15.32		27,343,150		403,627,732		24.96	%		27.74	%		0.14	%
Fidelity VIP Overseas Initial Class
	2012			1.40	%		2.50	%		12.99		18.08		117,396		1,543,100		17.76	%		19.06	%		1.77	%
	2011			1.40	%		2.50	%		10.93		15.30		153,184		1,688,755		-18.93	%		-18.32	%		1.33	%
	2010			1.40	%		2.15	%		13.38		18.87		169,524		2,285,225		10.71	%		11.54	%		1.31	%
Fidelity VIP Overseas Service Class 2
	2012			0.65	%		2.95	%		8.91		18.63		5,375,511		70,116,312		16.88	%		19.60	%		1.59	%
	2011			0.65	%		2.95	%		7.52		15.68		6,621,278		73,555,411		-19.67	%		-17.88	%		1.17	%
	2010			0.65	%		2.85	%		9.25		19.21		6,387,666		87,005,111		9.66	%		12.10	%		1.25	%
First Trust Multi Income Allocation Class I
	2014	7/11/14		0.30	%		1.65	%		10.30		10.39		41,113		424,568		-0.28	%		1.38	%		1.45	%
First Trust/Dow Jones Dividend & Income Allocation Class I
	2014	7/16/14		0.30	%		1.65	%		10.57		10.66		146,866		1,555,694		3.49	%		4.96	%		0.17	%
Franklin Founding Funds Allocation VIP Class 4
	2014	7/7/14		1.10	%		1.65	%		9.69		9.73		664,782		6,459,585		-5.07	%		-3.68	%		0.00	%
Franklin Income VIP Class 2
	2014			0.65	%		3.20	%		12.31		16.70		42,936,639		640,251,249		1.32	%		3.94	%		4.95	%
	2013			0.65	%		3.20	%		12.14		16.44		44,017,116		637,025,857		10.35	%		13.20	%		6.33	%
	2012			0.65	%		3.20	%		11.01		14.86		45,522,467		587,335,783		9.11	%		11.92	%		6.50	%
	2011			0.65	%		3.20	%		10.61		12.06		45,492,856		530,064,143		-0.49	%		1.72	%		5.71	%
	2010			0.65	%		2.85	%		10.65		11.93		43,099,161		498,814,149		9.51	%		11.94	%		6.56	%
Franklin Income VIP Class 4
	2014	7/2/14		0.30	%		1.65	%		9.71		9.80		799,422		7,785,150		-5.16	%		-4.05	%		0.00	%
Franklin Mutual Shares VIP Class 2
	2014			0.60	%		3.20	%		12.35		17.95		57,601,956		816,349,869		3.75	%		6.48	%		1.99	%
	2013			0.60	%		3.20	%		11.85		17.26		61,488,681		821,308,773		24.23	%		27.49	%		2.05	%
	2012			0.60	%		3.20	%		9.50		13.86		67,978,309		714,861,663		10.70	%		13.56	%		2.11	%
	2011			0.60	%		3.15	%		8.54		10.61		66,563,230		615,076,571		-3.83	%		-1.64	%		2.47	%
	2010			0.60	%		2.85	%		8.88		9.80		54,494,842		509,112,460		8.07	%		10.47	%		1.69	%
Franklin Mutual Shares VIP Class 4
	2014	6/27/14		1.10	%		1.65	%		10.13		10.16		80,873		821,201		-2.00	%		0.38	%		1.09	%
Franklin Rising Dividends VIP Class 1
	2014	12/26/14		0.40	%		0.40	%		10.62		10.62		8,072		85,754		-1.37	%		-1.37	%		0.00	%
Franklin Rising Dividends VIP Class 4
	2014	7/8/14		0.30	%		1.65	%		10.52		10.61		247,836		2,612,458		3.35	%		9.47	%		0.00	%
Franklin Small Cap Value VIP Class 1
	2014	7/24/14		0.40	%		0.80	%		9.89		9.92		28,306		280,716		-1.64	%		-0.06	%		0.00	%
Franklin Small Cap Value VIP Class 4
	2014	6/30/14		0.30	%		1.65	%		9.81		9.90		74,120		729,615		-4.40	%		2.72	%		0.00	%
Franklin Small-Mid Cap Growth VIP Class 2
	2013			1.30	%		1.30	%		18.34		18.34		8		153		36.36	%		36.36	%		0.00	%
	2012			0.65	%		3.05	%		8.30		20.65		6,950,142		95,465,313		7.58	%		10.13	%		0.00	%
	2011			0.65	%		3.00	%		7.59		18.98		7,932,229		99,563,324		-7.46	%		-5.45	%		0.00	%
	2010			0.65	%		2.80	%		8.09		20.31		8,661,182		115,470,893		24.10	%		26.80	%		0.00	%
Franklin Small-Mid Cap Growth VIP Class 4
	2014	6/27/14		1.10	%		1.65	%		10.68		10.72		59,006		631,684		1.72	%		11.79	%		0.00	%
Goldman Sachs VIT Large Cap Value Service Class
	2014			0.65	%		2.60	%		15.74		21.56		8,521,063		170,988,409		9.72	%		11.88	%		1.08	%
	2013			0.65	%		2.60	%		14.33		19.27		9,859,446		177,640,451		29.52	%		32.07	%		0.93	%
	2012			0.65	%		2.60	%		11.06		14.59		11,719,759		160,364,887		15.77	%		18.05	%		1.11	%
	2011			0.65	%		2.60	%		10.01		12.36		13,467,908		156,722,125		-9.51	%		-7.87	%		1.32	%
	2010			0.65	%		2.45	%		12.91		13.41		7,082,817		94,298,079		8.21	%		10.17	%		1.10	%

N-91

Lincoln Life Variable Annuity Account N

Notes to financial statements (continued)

3. Financial Highlights (continued)

Subaccount	Year	Commencement Date(1)	Minimum Fee Rate(2)			Maximum Fee Rate(2)			Minimum Unit Value(3)		Maximum Unit Value(3)		Units Outstanding		Net Assets		Minimum Total Return(4)			Maximum Total Return(4)			Investment Income Ratio(5)
Goldman Sachs VIT Money Market Institutional Class
	2014	8/13/14		0.40	%		0.40	%	$	9.98	$	9.98		33,096	$	330,156		-0.15	%		-0.15	%		0.01	%
Goldman Sachs VIT Money Market Service Class
	2014	6/27/14		0.30	%		1.65	%		9.90		9.98		696,493		6,913,327		-0.62	%		-0.15	%		0.00	%
Goldman Sachs VIT Multi-Strategy Alternatives Advisor Class
	2014	7/17/14		0.30	%		1.65	%		9.72		9.81		78,046		761,056		-3.44	%		-0.96	%		2.70	%
Goldman Sachs VIT Multi-Strategy Alternatives Institutional Class
	2014	7/25/14		0.40	%		0.40	%		9.83		9.83		2,951		29,011		-2.79	%		-2.79	%		1.62	%
Goldman Sachs VIT Strategic Income Advisor Class
	2014	6/30/14		1.10	%		1.65	%		9.79		9.82		73,914		725,079		-2.50	%		-1.46	%		3.93	%
Guggenheim Long Short Equity
	2014	7/8/14		0.40	%		1.50	%		10.48		10.56		32,127		337,506		3.47	%		7.33	%		0.00	%
Guggenheim Multi-Hedge Strategies
	2014	7/17/14		0.40	%		1.50	%		10.34		10.42		48,619		504,099		3.03	%		3.22	%		0.00	%
Hartford Capital Appreciation HLS Class IA
	2014	7/24/14		0.40	%		0.40	%		10.51		10.51		4,695		49,359		0.91	%		0.91	%		1.01	%
Hartford Capital Appreciation HLS Class IC
	2014	7/7/14		1.10	%		1.65	%		10.40		10.43		151,210		1,575,774		0.55	%		9.77	%		1.81	%
Huntington VA Balanced
	2014			0.00	%		0.00	%		—		—		—		—		0.00	%		0.00	%		3.01	%
	2013			1.10	%		2.75	%		11.50		11.98		255,104		3,020,057		12.13	%		13.88	%		2.00	%
	2012			1.10	%		2.65	%		10.25		10.51		261,079		2,726,151		6.64	%		8.25	%		1.74	%
	2011	6/13/11		1.15	%		2.65	%		9.62		9.71		96,988		939,589		-2.89	%		5.80	%		1.55	%
Huntington VA Dividend Capture
	2014			1.10	%		2.20	%		13.47		14.02		100,138		1,389,923		7.76	%		8.95	%		5.21	%
	2013			1.10	%		2.20	%		12.50		12.87		104,189		1,331,206		17.35	%		18.65	%		3.04	%
	2012			1.10	%		2.20	%		10.65		10.84		105,834		1,143,254		9.04	%		10.19	%		4.76	%
	2011	6/29/11		1.15	%		2.20	%		9.77		9.83		32,379		317,940		-0.64	%		9.19	%		6.87	%
Invesco V.I. American Franchise Series I
	2014			1.40	%		1.80	%		6.04		10.09		277,239		2,631,394		6.51	%		6.93	%		0.04	%
	2013			1.40	%		1.80	%		5.68		9.44		318,698		2,811,844		37.64	%		38.19	%		0.43	%
	2012	4/27/12		1.40	%		2.15	%		4.12		12.71		388,788		2,448,434		-3.92	%		-3.42	%		0.00	%
Invesco V.I. American Franchise Series II
	2014			1.30	%		2.15	%		13.35		18.17		82,287		1,160,140		5.87	%		6.77	%		0.00	%
	2013			1.30	%		2.15	%		12.58		17.02		101,689		1,350,336		36.83	%		37.99	%		0.25	%
	2012	4/27/12		1.30	%		2.15	%		9.18		12.37		119,108		1,160,818		-4.09	%		-3.54	%		0.00	%
Invesco V.I. Balanced-Risk Allocation Series I
	2014	10/6/14		0.40	%		0.80	%		10.21		10.24		15,983		163,613		1.17	%		1.64	%		0.00	%
Invesco V.I. Balanced-Risk Allocation Series II
	2014	7/17/14		0.30	%		1.65	%		10.14		10.23		138,690		1,409,936		-1.41	%		0.72	%		0.00	%
Invesco V.I. Capital Appreciation Series I
	2011			1.40	%		2.15	%		3.73		11.54		430,501		2,450,534		-9.87	%		-9.19	%		0.15	%
	2010			1.40	%		2.35	%		4.12		12.80		507,972		3,167,577		12.80	%		13.88	%		0.73	%
Invesco V.I. Capital Appreciation Series II
	2011			1.30	%		2.15	%		8.34		11.26		137,771		1,219,587		-10.07	%		-9.30	%		0.00	%
	2010			1.30	%		2.35	%		9.25		12.53		169,708		1,684,412		12.53	%		13.72	%		0.52	%
Invesco V.I. Comstock Series II
	2014	6/27/14		0.30	%		1.50	%		10.50		10.58		106,746		1,123,603		0.33	%		2.02	%		1.00	%
Invesco V.I. Core Equity Series I
	2014			1.40	%		2.35	%		10.93		21.78		561,170		8,378,083		5.63	%		6.64	%		0.84	%
	2013			1.40	%		2.35	%		10.29		20.58		649,963		9,093,922		26.25	%		27.45	%		1.36	%
	2012			1.40	%		2.35	%		8.11		16.27		760,319		8,273,284		11.24	%		12.30	%		0.95	%
	2011			1.40	%		2.35	%		7.25		14.60		923,568		8,890,121		-2.39	%		-1.45	%		0.93	%
	2010			1.40	%		2.35	%		7.39		14.92		1,084,566		10,646,779		7.01	%		8.03	%		0.95	%

N-92

Lincoln Life Variable Annuity Account N

Notes to financial statements (continued)

3. Financial Highlights (continued)

Subaccount	Year	Commencement Date(1)	Minimum Fee Rate(2)			Maximum Fee Rate(2)			Minimum Unit Value(3)		Maximum Unit Value(3)		Units Outstanding		Net Assets		Minimum Total Return(4)			Maximum Total Return(4)			Investment Income Ratio(5)
Invesco V.I. Core Equity Series II
	2014			1.30	%		2.55	%	$	16.12	$	21.93		132,515	$	2,328,434		5.13	%		6.45	%		0.67	%
	2013			1.30	%		2.55	%		15.24		20.71		151,110		2,492,738		25.69	%		27.27	%		1.20	%
	2012			1.30	%		2.55	%		12.05		16.36		177,661		2,319,966		10.75	%		12.15	%		0.78	%
	2011			1.30	%		2.55	%		10.82		14.67		246,051		2,952,470		-2.81	%		-1.58	%		0.74	%
	2010			1.30	%		2.55	%		11.06		14.99		308,954		3,809,067		6.50	%		7.84	%		0.79	%
Invesco V.I. Diversified Dividend Series I
	2014	9/25/14		0.40	%		0.40	%		10.63		10.63		1,891		20,112		6.02	%		6.02	%		0.00	%
Invesco V.I. Diversified Dividend Series II
	2014	7/10/14		0.30	%		1.65	%		10.53		10.62		66,573		703,253		0.40	%		9.67	%		1.58	%
Invesco V.I. Equally-Weighted S&P 500 Series II
	2014	7/9/14		0.30	%		1.65	%		10.80		10.90		136,960		1,483,592		4.07	%		11.61	%		0.81	%
Invesco V.I. Equity and Income Series II
	2014	7/8/14		1.10	%		1.65	%		10.47		10.51		123,483		1,296,474		0.74	%		2.15	%		1.09	%
Invesco V.I. International Growth Series I
	2014			0.40	%		2.15	%		13.09		26.44		143,078		2,385,899		-1.80	%		-1.06	%		1.50	%
	2013			1.40	%		2.15	%		13.29		26.92		156,767		2,842,158		16.48	%		17.36	%		1.20	%
	2012			1.40	%		2.15	%		11.37		23.11		180,597		2,817,427		13.08	%		13.93	%		1.44	%
	2011			1.40	%		2.15	%		10.02		20.44		204,907		2,801,448		-8.73	%		-8.04	%		1.58	%
	2010			1.40	%		2.35	%		10.94		22.39		263,208		3,840,873		10.24	%		11.29	%		2.20	%
Invesco V.I. International Growth Series II
	2014			0.30	%		2.95	%		21.82		26.40		596,520		11,617,442		-2.52	%		-1.25	%		2.05	%
	2013			1.35	%		2.65	%		22.23		26.73		96,272		2,294,969		15.61	%		17.13	%		1.02	%
	2012			1.35	%		2.65	%		19.09		22.83		101,919		2,084,367		12.24	%		13.71	%		1.19	%
	2011			1.30	%		2.65	%		16.89		20.16		142,128		2,577,326		-9.43	%		-8.19	%		1.21	%
	2010			1.30	%		2.65	%		18.52		21.96		172,385		3,412,347		9.74	%		11.15	%		1.80	%
Ivy Funds VIP Asset Strategy Class A
	2014	7/8/14		0.30	%		1.65	%		9.71		9.80		423,661		4,127,237		-5.27	%		-3.27	%		0.00	%
Ivy Funds VIP Energy Class A
	2014	7/9/14		0.30	%		1.65	%		8.08		8.15		108,849		882,727		-25.22	%		-10.48	%		0.00	%
Ivy Funds VIP High Income Class A
	2014	6/30/14		1.10	%		1.65	%		9.71		9.75		239,799		2,334,101		-3.71	%		-2.63	%		0.00	%
Ivy Funds VIP Micro Cap Growth Class A
	2014	7/8/14		0.30	%		1.65	%		10.58		10.67		37,742		400,406		1.78	%		8.97	%		0.00	%
Ivy Funds VIP Mid Cap Growth Class A
	2014	7/8/14		0.60	%		1.50	%		10.63		10.68		63,050		672,504		1.50	%		5.85	%		0.00	%
Ivy Funds VIP Science and Technology Class A
	2014	7/7/14		0.30	%		1.65	%		10.46		10.55		172,676		1,810,902		-2.84	%		9.91	%		0.00	%
Janus Aspen Balanced Service Class
	2014			1.30	%		2.70	%		16.63		22.76		776,151		16,990,797		5.41	%		6.84	%		1.51	%
	2013			1.30	%		2.65	%		15.73		21.32		899,833		18,533,143		16.67	%		18.26	%		1.33	%
	2012			1.30	%		2.65	%		13.44		18.05		1,004,049		17,573,781		10.41	%		11.91	%		2.45	%
	2011			1.30	%		2.65	%		12.52		16.14		1,260,860		19,911,213		-1.30	%		0.04	%		2.12	%
	2010			1.30	%		2.65	%		12.67		16.15		1,509,432		23,906,019		5.29	%		6.72	%		2.48	%
Janus Aspen Enterprise Service Class
	2014			1.30	%		2.65	%		20.14		34.81		191,245		5,735,064		9.31	%		10.79	%		0.03	%
	2013			1.30	%		2.65	%		18.40		31.42		214,172		5,821,920		28.59	%		30.33	%		0.36	%
	2012			1.30	%		2.65	%		14.28		24.21		275,692		5,788,938		13.93	%		15.48	%		0.00	%
	2011			1.30	%		2.65	%		12.52		21.14		355,119		6,511,254		-4.23	%		-2.92	%		0.00	%
	2010			1.30	%		2.65	%		13.05		22.15		433,483		8,185,966		22.24	%		23.90	%		0.00	%
Janus Aspen Global Research Service Class
	2014			1.30	%		2.20	%		14.47		18.74		62,180		960,519		4.85	%		5.86	%		0.95	%
	2013			1.30	%		2.20	%		13.77		17.70		77,993		1,145,170		25.29	%		26.40	%		1.05	%
	2012			1.30	%		2.20	%		10.96		14.01		86,498		1,007,347		17.25	%		18.48	%		0.77	%
	2011			1.30	%		2.20	%		9.32		11.82		105,908		1,045,639		-15.86	%		-15.08	%		0.43	%
	2010			1.30	%		2.20	%		11.05		13.92		161,259		1,893,080		13.01	%		14.03	%		0.48	%
JPMIT Intrepid Mid Cap Class 1
	2014	7/24/14		0.40	%		0.40	%		11.12		11.12		4,661		51,852		6.21	%		6.21	%		0.00	%

N-93

Lincoln Life Variable Annuity Account N

Notes to financial statements (continued)

3. Financial Highlights (continued)

Subaccount	Year	Commencement Date(1)	Minimum Fee Rate(2)			Maximum Fee Rate(2)			Minimum Unit Value(3)		Maximum Unit Value(3)		Units Outstanding		Net Assets		Minimum Total Return(4)			Maximum Total Return(4)			Investment Income Ratio(5)
JPMIT Intrepid Mid Cap Class 2
	2014	6/30/14		0.30	%		1.50	%	$	11.03	$	11.11		143,019	$	1,581,231		5.93	%		12.45	%		0.00	%
LVIP American Balanced Allocation Standard Class
	2014			0.40	%		1.70	%		12.25		12.72		718,032		9,024,440		3.96	%		5.06	%		2.37	%
	2013			0.65	%		1.70	%		12.03		12.03		695,070		8,409,493		13.95	%		13.95	%		2.66	%
	2012	6/4/12		0.90	%		0.90	%		10.56		10.56		10,301		108,777		9.31	%		9.31	%		2.96	%
LVIP American Balanced Allocation Service Class
	2014	7/21/14		1.10	%		1.65	%		10.14		10.18		257,979		2,624,183		-0.71	%		1.70	%		5.19	%
LVIP American Century VP Mid Cap Value RPM Service Class
	2014	1/7/14		0.60	%		3.20	%		11.02		11.31		7,508,948		84,015,445		1.36	%		13.56	%		0.70	%
LVIP American Global Growth Service Class II
	2014			0.60	%		3.20	%		13.16		17.62		5,379,314		90,301,665		-1.34	%		1.26	%		0.99	%
	2013			0.60	%		3.20	%		13.34		17.37		4,463,816		74,678,162		24.64	%		27.86	%		0.94	%
	2012			0.65	%		3.20	%		10.72		13.59		3,950,993		52,186,669		18.33	%		21.31	%		1.04	%
	2011			0.65	%		3.15	%		10.88		11.20		3,000,311		33,023,222		-11.55	%		-9.85	%		0.09	%
	2010	9/30/10		0.65	%		2.55	%		12.30		12.42		215,895		2,669,105		-0.11	%		8.17	%		0.00	%
LVIP American Global Small Capitalization Service Class II
	2014			0.65	%		3.15	%		11.20		15.38		4,607,468		67,612,887		-1.46	%		1.03	%		0.00	%
	2013			0.65	%		3.15	%		11.37		15.22		4,496,644		65,952,218		23.83	%		26.96	%		0.24	%
	2012			0.65	%		3.15	%		9.18		11.99		4,370,857		50,971,346		14.11	%		16.99	%		1.05	%
	2011			0.65	%		3.15	%		9.92		10.17		3,402,354		34,253,853		-21.71	%		-20.40	%		0.75	%
	2010	11/15/10		1.15	%		2.80	%		12.67		12.78		272,886		3,475,601		0.64	%		5.16	%		0.00	%
LVIP American Growth Allocation Standard Class
	2014			0.60	%		1.70	%		12.50		13.01		56,849		732,076		3.84	%		4.99	%		2.44	%
	2013			0.60	%		1.70	%		12.37		12.37		52,998		651,795		17.18	%		17.18	%		2.84	%
	2012	3/5/12		0.65	%		0.65	%		10.56		10.56		29,710		313,703		5.40	%		5.40	%		2.88	%
LVIP American Growth Allocation Service Class
	2014	7/8/14		1.10	%		1.50	%		10.16		10.18		310,305		3,156,759		-0.69	%		-0.13	%		5.62	%
LVIP American Growth Service Class II
	2014			0.60	%		3.20	%		14.53		19.22		16,598,196		303,438,686		4.73	%		7.48	%		0.99	%
	2013			0.60	%		3.20	%		13.87		17.85		15,625,430		268,413,384		25.57	%		28.81	%		0.61	%
	2012			0.65	%		3.20	%		11.06		13.86		15,111,468		203,561,029		13.81	%		16.69	%		0.22	%
	2011			0.65	%		3.15	%		11.11		11.79		11,423,039		133,305,045		-7.40	%		-5.77	%		0.06	%
	2010	11/15/10		1.15	%		2.90	%		12.00		12.51		1,002,804		12,501,693		-5.95	%		7.68	%		0.00	%
LVIP American Growth-Income Service Class II
	2014			0.60	%		3.20	%		15.41		20.03		13,133,949		250,402,210		6.79	%		9.60	%		1.11	%
	2013			0.60	%		3.20	%		14.43		18.24		12,555,756		220,496,857		28.84	%		32.16	%		1.07	%
	2012			0.65	%		3.20	%		11.21		13.80		12,052,379		161,718,798		13.42	%		16.29	%		1.22	%
	2011			0.65	%		3.15	%		11.00		11.78		8,600,561		100,295,861		-5.03	%		-3.35	%		0.11	%
	2010	11/15/10		1.15	%		2.90	%		11.58		12.19		716,818		8,707,074		0.81	%		6.27	%		0.00	%
LVIP American Income Allocation Standard Class
	2014			0.65	%		0.65	%		12.23		12.23		522		6,381		5.52	%		5.52	%		10.93	%
	2013	7/2/13		0.65	%		0.65	%		11.59		11.59		116		1,344		5.92	%		5.92	%		2.37	%
LVIP American International Service Class II
	2014			0.60	%		3.20	%		10.49		14.19		10,256,151		138,656,243		-6.06	%		-3.63	%		0.88	%
	2013			0.65	%		3.20	%		11.17		14.72		9,651,334		136,697,384		17.34	%		20.37	%		1.03	%
	2012			0.65	%		3.20	%		9.53		12.23		9,463,522		112,475,522		13.81	%		16.69	%		2.58	%
	2011			0.65	%		3.15	%		10.15		10.48		6,987,342		71,931,847		-16.69	%		-14.88	%		0.10	%
	2010	9/30/10		0.65	%		2.80	%		12.18		12.31		491,701		6,021,912		0.05	%		6.50	%		0.00	%
LVIP American Preservation Standard Class
	2014			0.60	%		1.90	%		9.71		10.01		12,906		127,957		0.22	%		1.53	%		0.84	%
	2013	1/25/13		0.60	%		1.90	%		9.69		9.86		21,962		214,542		-1.48	%		0.07	%		3.73	%
LVIP American Preservation Service Class
	2014	8/25/14		1.10	%		1.65	%		9.69		9.82		15,494		151,898		-0.59	%		-0.13	%		1.21	%
LVIP AQR Enhanced Global Strategies Standard Class
	2014	7/25/14		0.40	%		0.40	%		10.38		10.38		1,429		14,825		0.34	%		0.34	%		1.85	%
LVIP AQR Enhanced Global Strategies Service Class
	2014	7/17/14		0.30	%		1.50	%		10.29		10.37		125,959		1,298,239		0.94	%		3.25	%		4.27	%

N-94

Lincoln Life Variable Annuity Account N

Notes to financial statements (continued)

3. Financial Highlights (continued)

Subaccount	Year	Commencement Date(1)	Minimum Fee Rate(2)			Maximum Fee Rate(2)			Minimum Unit Value(3)		Maximum Unit Value(3)		Units Outstanding		Net Assets		Minimum Total Return(4)			Maximum Total Return(4)			Investment Income Ratio(5)
LVIP Baron Growth Opportunities Standard Class
	2014	9/22/14		0.40	%		0.80	%	$	10.73	$	10.76		48,824	$	524,975		5.18	%		5.52	%		0.75	%
LVIP Baron Growth Opportunities Service Class
	2014			0.30	%		3.20	%		16.68		24.24		9,552,708		175,923,220		1.55	%		4.18	%		0.18	%
	2013			0.65	%		3.20	%		16.36		23.81		10,317,699		184,552,492		35.66	%		39.16	%		0.45	%
	2012			0.65	%		3.20	%		11.99		17.51		9,373,136		121,750,939		14.58	%		17.48	%		1.21	%
	2011			0.65	%		3.15	%		10.49		12.18		8,903,616		99,455,460		1.15	%		3.35	%		0.00	%
	2010			0.65	%		2.80	%		10.37		11.84		8,058,862		87,917,150		22.90	%		25.57	%		0.00	%
LVIP BlackRock Emerging Markets RPM Standard Class
	2014			0.60	%		1.90	%		9.25		9.54		13,176		123,192		-6.68	%		-5.46	%		1.66	%
	2013	4/18/13		0.60	%		1.90	%		9.91		10.09		6,337		63,377		-2.57	%		4.75	%		1.93	%
LVIP BlackRock Emerging Markets RPM Service Class
	2014			0.30	%		3.20	%		8.92		9.48		18,013,586		166,516,334		-8.12	%		-5.70	%		1.22	%
	2013			0.60	%		3.20	%		9.71		10.05		9,192,141		91,068,793		-11.02	%		-8.72	%		1.02	%
	2012	9/28/12		0.65	%		3.20	%		10.91		11.01		666,865		7,314,827		1.90	%		8.84	%		1.87	%
LVIP BlackRock Equity Dividend RPM Standard Class
	2014			0.60	%		0.65	%		19.81		19.88		17,740		351,615		2.82	%		2.87	%		2.46	%
	2013	10/30/13		0.60	%		0.65	%		19.27		19.32		5,234		100,976		2.22	%		4.63	%		2.77	%
LVIP BlackRock Equity Dividend RPM Service Class
	2014			0.60	%		3.20	%		10.92		17.19		35,940,252		459,214,185		-0.02	%		2.61	%		1.41	%
	2013			0.60	%		3.20	%		10.88		17.16		24,406,648		307,536,644		14.26	%		17.16	%		2.10	%
	2012			0.65	%		3.15	%		9.94		14.98		6,108,551		65,997,067		13.07	%		15.93	%		0.57	%
	2011			0.65	%		3.15	%		8.77		9.73		3,350,081		31,584,371		-5.50	%		-3.44	%		0.78	%
	2010			0.65	%		2.80	%		9.11		10.14		2,793,737		27,532,649		14.39	%		16.88	%		0.77	%
LVIP BlackRock Global Allocation V.I. RPM Standard Class
	2014			0.60	%		1.70	%		10.23		10.41		28,334		292,902		-1.89	%		-0.81	%		0.99	%
	2013	9/17/13		0.60	%		1.70	%		10.42		10.50		26,759		279,805		1.48	%		4.71	%		0.00	%
LVIP BlackRock Global Allocation V.I. RPM Service Class
	2014			0.65	%		3.20	%		9.92		10.35		74,198,915		753,659,786		-3.69	%		-1.20	%		0.90	%
	2013	5/20/13		0.65	%		3.20	%		10.30		10.47		29,999,735		311,901,805		1.26	%		9.06	%		0.00	%
LVIP BlackRock Inflation Protected Bond Standard Class
	2014			0.60	%		1.90	%		10.66		11.21		45,430		500,779		1.33	%		2.45	%		1.58	%
	2013			0.60	%		1.70	%		10.52		10.94		42,520		457,685		-9.92	%		-8.92	%		0.43	%
	2012	3/1/12		0.60	%		1.90	%		11.34		12.01		28,208		334,580		0.82	%		5.06	%		0.00	%
LVIP BlackRock Inflation Protected Bond Service Class
	2014			0.59	%		3.14	%		9.68		11.07		74,918,783		789,620,892		-0.36	%		2.21	%		0.95	%
	2013			0.59	%		3.14	%		9.62		10.83		72,358,284		753,786,479		-11.45	%		-8.33	%		0.33	%
	2012			0.65	%		3.20	%		10.62		11.92		32,045,992		370,932,011		2.90	%		5.56	%		0.00	%
	2011			0.65	%		3.20	%		10.74		11.27		20,637,422		228,952,130		8.74	%		11.04	%		3.13	%
	2010	11/15/10		0.75	%		2.85	%		9.87		10.15		1,401,242		14,135,797		-2.27	%		1.40	%		0.59	%
LVIP BlackRock Multi-Asset Income Standard Class
	2014	10/22/14		0.40	%		0.40	%		9.89		9.89		21,018		207,896		-0.07	%		-0.07	%		38.76	%
LVIP BlackRock Multi-Asset Income Service Class
	2014	7/17/14		1.10	%		1.65	%		9.80		9.83		97,900		961,740		-2.80	%		-1.52	%		6.05	%
LVIP Capital Growth Service Class
	2014			0.65	%		3.15	%		13.20		20.28		20,181,591		316,319,544		7.65	%		10.37	%		0.00	%
	2013			0.65	%		3.15	%		12.22		18.80		22,655,444		323,041,540		31.66	%		34.79	%		0.00	%
	2012			0.65	%		3.00	%		9.26		14.27		25,591,881		271,319,390		15.26	%		18.00	%		0.00	%
	2011			0.65	%		3.00	%		8.02		10.50		22,126,342		198,333,052		-11.75	%		-9.83	%		0.00	%
	2010			0.65	%		2.80	%		9.09		9.82		14,883,910		144,635,021		15.39	%		17.90	%		0.00	%
LVIP Clarion Global Real Estate Standard Class
	2014	9/22/14		0.40	%		0.40	%		10.48		10.48		27,800		291,225		5.78	%		5.78	%		2.84	%
LVIP Clarion Global Real Estate Service Class
	2014			0.60	%		3.20	%		8.29		18.63		11,604,961		105,950,000		10.02	%		12.92	%		2.23	%
	2013			0.60	%		3.20	%		7.51		16.89		12,385,268		101,071,326		-0.21	%		2.37	%		0.00	%
	2012			0.65	%		3.20	%		7.50		16.89		11,904,617		95,736,001		20.48	%		23.59	%		0.00	%
	2011			0.65	%		3.20	%		6.20		10.58		12,157,357		79,776,963		-11.47	%		-9.49	%		0.00	%
	2010			0.65	%		2.85	%		7.01		7.59		9,934,577		72,646,063		14.36	%		16.90	%		0.00	%

N-95

Lincoln Life Variable Annuity Account N

Notes to financial statements (continued)

3. Financial Highlights (continued)

Subaccount	Year	Commencement Date(1)	Minimum Fee Rate(2)			Maximum Fee Rate(2)			Minimum Unit Value(3)		Maximum Unit Value(3)		Units Outstanding		Net Assets		Minimum Total Return(4)			Maximum Total Return(4)			Investment Income Ratio(5)
LVIP ClearBridge Variable Appreciation RPM Standard Class
	2014	12/18/14		0.65	%		1.70	%	$	10.45	$	10.56		6,259	$	65,848		-0.99	%		-0.09	%		1.61	%
LVIP ClearBridge Variable Appreciation RPM Service Class
	2014	1/8/14		0.65	%		3.20	%		10.26		10.53		5,878,451		61,310,738		-1.30	%		9.14	%		2.28	%
LVIP Columbia Small-Mid Cap Growth RPM Service Class
	2014			0.60	%		3.20	%		9.53		16.28		23,713,219		248,098,513		-10.46	%		-8.14	%		0.00	%
	2013			0.65	%		3.20	%		10.61		18.14		14,636,851		168,724,647		20.60	%		23.72	%		0.00	%
	2012			0.65	%		3.20	%		8.79		15.00		4,348,921		40,704,286		2.87	%		5.52	%		0.00	%
	2011			0.65	%		3.20	%		8.51		9.40		3,834,978		34,168,087		-10.38	%		-8.43	%		0.00	%
	2010			0.65	%		2.80	%		9.49		10.26		2,994,921		29,442,450		23.44	%		26.12	%		0.00	%
LVIP Delaware Bond Standard Class
	2014			0.40	%		3.00	%		10.43		19.82		6,086,602		106,592,128		2.84	%		4.61	%		1.91	%
	2013			1.30	%		3.00	%		10.14		18.97		7,178,428		121,752,782		-5.20	%		-3.57	%		1.68	%
	2012			1.30	%		3.00	%		10.70		19.69		8,572,620		152,403,393		3.46	%		5.23	%		1.89	%
	2011			1.30	%		3.00	%		12.73		18.73		10,208,683		174,089,656		4.82	%		6.25	%		3.14	%
	2010			1.30	%		2.65	%		12.12		17.65		12,528,320		202,938,969		5.65	%		7.09	%		3.28	%
LVIP Delaware Bond Service Class
	2014			0.60	%		3.20	%		10.20		14.83		197,607,072		2,647,516,142		2.28	%		4.97	%		1.75	%
	2013			0.60	%		3.20	%		9.97		14.24		189,824,697		2,446,199,219		-5.71	%		-3.28	%		1.53	%
	2012			0.65	%		3.20	%		10.57		14.82		172,657,336		2,330,108,586		2.94	%		5.55	%		1.76	%
	2011			0.65	%		3.15	%		10.27		14.14		146,615,142		1,917,256,346		4.19	%		6.56	%		3.24	%
	2010			0.65	%		2.90	%		11.58		13.36		118,782,318		1,497,358,649		5.08	%		7.42	%		3.52	%
LVIP Delaware Diversified Floating Rate Standard Class
	2014			0.60	%		2.15	%		9.66		10.41		126,128		1,279,012		-1.52	%		0.01	%		1.50	%
	2013			0.60	%		2.15	%		10.01		10.41		97,323		988,536		-0.94	%		0.15	%		2.00	%
	2012	3/26/12		0.60	%		1.70	%		10.10		10.40		4,316		44,255		0.43	%		2.17	%		2.90	%
LVIP Delaware Diversified Floating Rate Service Class
	2014			0.60	%		3.20	%		9.15		10.29		76,869,743		751,796,586		-2.80	%		-0.24	%		1.15	%
	2013			0.60	%		3.20	%		9.42		10.30		67,745,589		671,179,345		-2.66	%		-0.15	%		0.83	%
	2012			0.65	%		3.20	%		9.67		10.31		19,747,210		197,971,410		0.69	%		3.29	%		1.39	%
	2011			0.65	%		3.20	%		9.63		9.97		13,165,319		129,180,469		-3.29	%		-1.23	%		2.27	%
	2010	11/15/10		0.75	%		2.85	%		9.96		10.09		1,228,387		12,318,833		-0.19	%		0.07	%		0.21	%
LVIP Delaware Foundation Aggressive Allocation Standard Class
	2014			1.30	%		2.65	%		13.76		20.12		323,940		6,233,953		1.61	%		3.00	%		2.22	%
	2013			1.30	%		2.65	%		13.52		19.54		426,362		7,980,316		17.21	%		18.68	%		1.37	%
	2012			1.30	%		2.55	%		11.53		16.52		567,202		8,954,404		10.44	%		11.83	%		1.59	%
	2011			1.30	%		2.55	%		10.44		14.88		731,988		10,388,706		-4.49	%		-3.29	%		1.99	%
	2010			1.30	%		2.55	%		10.92		15.50		882,963		13,017,473		9.65	%		11.03	%		2.51	%
LVIP Delaware Foundation Aggressive Allocation Service Class
	2014			0.65	%		2.85	%		13.37		19.44		1,085,243		18,532,982		1.15	%		3.40	%		1.94	%
	2013			0.65	%		2.85	%		13.21		18.93		1,304,751		21,722,483		16.57	%		19.16	%		1.26	%
	2012			0.65	%		2.90	%		11.13		16.00		1,506,881		21,274,343		9.84	%		12.28	%		1.44	%
	2011			0.65	%		2.85	%		9.93		14.35		1,807,281		23,106,109		-5.02	%		-2.90	%		1.72	%
	2010			0.65	%		2.85	%		10.26		14.88		2,214,985		29,667,952		9.05	%		11.48	%		2.34	%
LVIP Delaware Growth and Income Service Class
	2014			0.65	%		2.95	%		14.68		20.46		2,602,579		42,493,002		9.50	%		12.04	%		1.55	%
	2013			0.65	%		2.95	%		13.39		18.68		3,082,752		45,481,537		28.94	%		31.94	%		1.45	%
	2012			0.65	%		2.95	%		10.38		14.49		3,189,434		36,050,101		11.58	%		14.17	%		0.72	%
	2011			0.65	%		2.95	%		9.18		10.32		3,596,976		36,014,898		-1.94	%		0.09	%		0.73	%
	2010			0.75	%		2.80	%		9.26		10.36		3,514,396		35,521,339		9.44	%		11.70	%		0.67	%
LVIP Delaware Social Awareness Standard Class
	2014			1.30	%		2.80	%		16.56		27.93		380,182		9,350,606		12.02	%		13.71	%		1.46	%
	2013			1.30	%		2.80	%		14.73		23.88		451,153		9,794,822		31.95	%		33.94	%		1.19	%
	2012			1.30	%		2.80	%		11.13		17.98		560,004		9,070,228		12.21	%		13.79	%		0.73	%
	2011			1.30	%		2.70	%		9.90		15.93		682,911		9,729,522		-1.99	%		-0.66	%		0.69	%
	2010			1.30	%		2.65	%		10.09		16.31		859,633		12,406,132		8.65	%		10.13	%		0.58	%

N-96

Lincoln Life Variable Annuity Account N

Notes to financial statements (continued)

3. Financial Highlights (continued)

Subaccount	Year	Commencement Date(1)	Minimum Fee Rate(2)			Maximum Fee Rate(2)			Minimum Unit Value(3)		Maximum Unit Value(3)		Units Outstanding		Net Assets		Minimum Total Return(4)			Maximum Total Return(4)			Investment Income Ratio(5)
LVIP Delaware Social Awareness Service Class
	2014			0.65	%		3.00	%	$	15.03	$	25.76		3,110,764	$	64,510,306		11.40	%		14.05	%		1.21	%
	2013			0.65	%		3.00	%		13.46		22.75		3,317,344		61,218,438		31.21	%		34.34	%		0.97	%
	2012			0.65	%		3.00	%		10.55		17.05		3,180,903		45,098,660		11.49	%		14.14	%		0.40	%
	2011			0.65	%		3.00	%		9.35		15.05		3,498,836		44,160,362		-2.48	%		-0.36	%		0.41	%
	2010			0.65	%		2.80	%		9.41		15.21		3,768,826		49,233,488		8.22	%		10.46	%		0.26	%
LVIP Delaware Special Opportunities Service Class
	2014			0.65	%		3.15	%		12.28		21.42		3,774,984		51,324,683		3.93	%		6.56	%		0.99	%
	2013			0.65	%		3.15	%		11.79		20.57		3,943,413		50,793,495		29.19	%		32.45	%		0.79	%
	2012			0.65	%		3.15	%		9.10		15.89		3,869,080		37,946,677		10.98	%		13.79	%		0.42	%
	2011			0.65	%		3.15	%		8.19		9.04		4,447,468		38,587,554		-8.14	%		-6.14	%		0.00	%
	2010			0.65	%		2.80	%		8.92		9.64		2,926,149		27,220,347		26.59	%		29.33	%		0.51	%
LVIP Dimensional Non-U.S. Equity RPM Standard Class
	2014			0.40	%		1.90	%		9.91		10.39		264,344		2,731,923		-9.24	%		-8.05	%		2.51	%
	2013			0.60	%		1.90	%		10.92		11.30		152,261		1,718,117		12.96	%		14.43	%		2.79	%
	2012			0.60	%		1.90	%		9.70		9.87		84,607		834,490		16.77	%		18.00	%		3.53	%
	2011	12/5/11		0.65	%		1.70	%		8.31		8.36		11,357		94,696		-3.15	%		1.73	%		0.00	%
LVIP Dimensional Non-U.S. Equity RPM Service Class
	2014			0.60	%		3.20	%		9.37		11.18		17,282,606		171,228,521		-10.64	%		-8.29	%		2.38	%
	2013			0.60	%		3.20	%		10.49		12.22		8,871,404		96,814,879		11.22	%		14.09	%		2.74	%
	2012			0.65	%		3.20	%		9.46		9.83		2,937,775		28,397,526		14.97	%		17.70	%		2.59	%
	2011	5/24/11		0.65	%		3.00	%		8.23		8.35		1,692,525		14,040,113		-18.73	%		1.75	%		0.17	%
LVIP Dimensional U.S. Equity RPM Standard Class
	2014			0.40	%		1.90	%		14.03		14.70		332,493		4,813,792		2.73	%		4.07	%		1.26	%
	2013			0.60	%		1.90	%		13.65		14.13		162,325		2,289,505		26.74	%		28.40	%		1.66	%
	2012			0.60	%		1.90	%		10.81		10.99		82,495		906,466		15.43	%		16.65	%		1.67	%
	2011	12/5/11		0.65	%		1.70	%		9.36		9.42		8,907		83,740		-0.06	%		0.74	%		0.00	%
LVIP Dimensional U.S. Equity RPM Service Class
	2014			0.30	%		3.20	%		13.26		16.11		21,410,663		300,277,840		1.15	%		3.81	%		0.90	%
	2013			0.60	%		3.20	%		13.18		15.56		12,170,990		166,034,802		25.05	%		28.02	%		1.22	%
	2012			0.65	%		3.00	%		10.54		10.95		4,541,689		48,901,415		13.66	%		16.36	%		1.01	%
	2011	5/24/11		0.65	%		3.00	%		9.27		9.41		2,594,767		24,262,709		-8.42	%		11.63	%		0.00	%
LVIP Dimensional/Vanguard Total Bond Standard Class
	2014			0.40	%		1.90	%		10.31		10.81		459,743		4,935,666		2.67	%		4.01	%		2.15	%
	2013			0.60	%		1.90	%		10.04		10.39		221,441		2,289,428		-4.59	%		-3.34	%		2.10	%
	2012			0.60	%		1.90	%		10.56		10.74		93,099		999,276		1.98	%		3.06	%		2.58	%
	2011	12/5/11		0.65	%		1.70	%		10.35		10.42		8,895		92,396		0.20	%		0.56	%		0.00	%
LVIP Dimensional/Vanguard Total Bond Service Class
	2014			0.60	%		3.20	%		9.75		10.71		32,833,097		338,067,481		1.11	%		3.77	%		1.65	%
	2013			0.60	%		3.20	%		9.64		10.31		21,685,649		217,354,625		-6.06	%		-3.63	%		1.40	%
	2012			0.65	%		3.20	%		10.26		10.70		12,172,914		127,902,501		0.22	%		2.81	%		1.73	%
	2011	5/23/11		0.65	%		3.20	%		10.12		10.41		4,856,542		50,192,610		-0.13	%		3.71	%		0.26	%
LVIP Franklin Mutual Shares RPM Standard Class
	2014	9/22/14		0.65	%		0.65	%		10.40		10.40		1,900		19,769		-2.92	%		-2.92	%		1.56	%
LVIP Franklin Mutual Shares RPM Service Class
	2014	1/9/14		0.60	%		3.20	%		10.10		10.37		8,583,610		87,998,782		-4.39	%		8.31	%		2.44	%
LVIP Franklin Templeton Multi-Asset Opportunities Service Class
	2014	8/11/14		1.10	%		1.65	%		9.95		9.98		59,280		591,623		-1.44	%		0.36	%		3.93	%
LVIP Global Income Service Class
	2014			0.60	%		3.20	%		9.39		12.14		51,337,307		586,449,226		-1.52	%		1.08	%		0.37	%
	2013			0.60	%		3.20	%		9.54		12.05		44,409,424		507,160,913		-6.12	%		-3.66	%		0.26	%
	2012			0.60	%		3.20	%		10.08		12.50		40,326,405		482,894,133		4.04	%		6.78	%		1.75	%
	2011			0.60	%		3.20	%		10.75		11.71		34,679,354		393,735,508		-2.01	%		0.23	%		4.55	%
	2010			0.60	%		2.85	%		11.26		11.67		20,536,946		235,905,015		6.34	%		8.71	%		3.35	%
LVIP Goldman Sachs Income Builder Standard Class
	2014	9/25/14		0.40	%		0.40	%		10.02		10.02		1,998		20,030		-0.68	%		-0.68	%		2.54	%
LVIP Goldman Sachs Income Builder Service Class
	2014	7/17/14		1.10	%		1.65	%		9.93		9.96		59,236		589,544		-2.73	%		-1.55	%		6.10	%

N-97

Lincoln Life Variable Annuity Account N

Notes to financial statements (continued)

3. Financial Highlights (continued)

Subaccount	Year	Commencement Date(1)	Minimum Fee Rate(2)			Maximum Fee Rate(2)			Minimum Unit Value(3)		Maximum Unit Value(3)		Units Outstanding		Net Assets		Minimum Total Return(4)			Maximum Total Return(4)			Investment Income Ratio(5)
LVIP Invesco Diversified Equity Income RPM Service Class
	2014	5/21/14		0.65	%		3.00	%	$	10.16	$	10.32		2,962,723	$	30,368,858		-1.27	%		5.42	%		1.21	%
LVIP Invesco V.I. Comstock RPM Standard Class
	2014	12/18/14		0.65	%		1.70	%		10.31		10.42		7,645		79,229		-0.55	%		0.20	%		1.38	%
LVIP Invesco V.I. Comstock RPM Service Class
	2014	1/8/14		0.60	%		3.00	%		10.14		10.39		6,726,601		69,143,345		-2.64	%		6.66	%		1.51	%
LVIP JPMorgan High Yield Service Class
	2014			0.60	%		3.20	%		11.25		13.61		11,221,017		145,022,804		-0.65	%		1.97	%		4.03	%
	2013			0.60	%		3.20	%		11.32		13.32		11,062,730		141,403,669		2.95	%		5.61	%		4.78	%
	2012			0.65	%		3.20	%		11.00		12.61		10,089,573		123,454,963		11.02	%		13.89	%		5.08	%
	2011			0.65	%		3.20	%		10.50		10.98		6,925,613		75,331,715		-0.40	%		1.36	%		9.46	%
	2010	11/16/10		1.15	%		2.90	%		10.54		10.84		300,856		3,246,962		0.07	%		1.53	%		1.12	%
LVIP JPMorgan Mid Cap Value RPM Standard Class
	2014	3/11/14		0.60	%		0.90	%		22.67		23.04		3,485		80,064		2.19	%		6.57	%		1.70	%
LVIP JPMorgan Mid Cap Value RPM Service Class
	2014			0.60	%		3.20	%		11.52		19.93		24,046,021		305,870,193		4.45	%		7.20	%		0.67	%
	2013			0.60	%		3.20	%		11.02		19.04		15,748,040		189,103,437		19.96	%		23.06	%		0.42	%
	2012			0.65	%		3.20	%		9.15		15.83		3,507,185		34,515,420		10.17	%		12.73	%		0.00	%
	2011			0.65	%		2.95	%		8.30		10.87		2,717,477		23,880,418		-4.71	%		-2.64	%		0.00	%
	2010			0.65	%		2.80	%		8.71		9.40		1,678,328		15,228,244		21.02	%		23.64	%		0.00	%
LVIP Managed Risk American Balanced Allocation Standard Class
	2014			0.65	%		0.90	%		12.00		12.00		46,000		552,545		4.55	%		4.55	%		1.72	%
	2013	4/29/13		0.90	%		0.90	%		11.48		11.48		57,213		656,928		5.56	%		5.56	%		1.88	%
LVIP Managed Risk American Balanced Allocation Service Class
	2014	8/13/14		1.30	%		2.60	%		10.02		10.07		386,653		3,890,820		-1.15	%		2.81	%		3.84	%
LVIP Managed Risk American Growth Allocation Standard Class
	2014			0.65	%		1.70	%		11.91		12.26		70,567		860,217		0.83	%		1.90	%		2.32	%
	2013	4/18/13		0.65	%		1.70	%		11.81		12.04		39,102		466,881		1.84	%		11.61	%		3.49	%
LVIP Managed Risk American Growth Allocation Service Class
	2014	8/18/14		1.30	%		2.60	%		9.88		9.93		1,928,498		19,140,578		-2.93	%		2.40	%		4.13	%
LVIP Managed Risk Profile 2010 Service Class
	2014			0.75	%		2.80	%		11.08		12.95		466,189		5,629,418		1.63	%		3.73	%		1.55	%
	2013			0.75	%		2.80	%		10.90		12.48		550,183		6,458,866		5.66	%		7.85	%		0.99	%
	2012			0.75	%		2.80	%		10.31		11.57		669,034		7,354,722		5.28	%		7.46	%		1.67	%
	2011			0.75	%		2.80	%		9.80		10.77		761,580		7,858,988		-1.80	%		0.24	%		0.74	%
	2010			0.75	%		2.80	%		9.98		10.74		828,075		8,599,298		8.11	%		10.35	%		0.81	%
LVIP Managed Risk Profile 2020 Service Class
	2014			0.75	%		2.80	%		10.69		12.50		1,237,075		14,457,969		1.25	%		3.35	%		1.53	%
	2013			0.75	%		2.80	%		10.56		12.09		1,483,685		16,908,022		7.79	%		10.02	%		1.13	%
	2012			0.75	%		2.80	%		9.80		10.99		1,525,836		15,957,108		5.12	%		7.30	%		1.53	%
	2011			0.75	%		2.80	%		9.32		10.24		1,695,997		16,681,468		-2.81	%		-0.80	%		0.74	%
	2010			0.75	%		2.80	%		9.59		10.33		1,816,906		18,173,482		8.67	%		10.92	%		0.68	%
LVIP Managed Risk Profile 2030 Service Class
	2014			0.75	%		2.85	%		10.52		12.34		643,512		7,396,794		0.98	%		3.12	%		1.59	%
	2013			0.75	%		2.85	%		10.41		11.97		866,126		9,728,805		10.27	%		12.61	%		1.06	%
	2012			0.75	%		2.85	%		9.44		10.63		1,045,549		10,532,657		4.61	%		6.82	%		1.32	%
	2011			0.75	%		2.85	%		9.03		9.95		1,054,400		10,026,943		-3.60	%		-1.55	%		0.63	%
	2010			0.75	%		2.85	%		9.37		10.10		1,090,359		10,633,763		9.10	%		11.42	%		0.55	%
LVIP Managed Risk Profile 2040 Service Class
	2014			1.15	%		2.85	%		9.96		11.34		551,697		6,008,028		0.32	%		2.04	%		1.99	%
	2013			1.15	%		2.85	%		9.93		11.12		568,319		6,093,933		12.99	%		14.92	%		1.03	%
	2012			1.15	%		2.85	%		8.79		9.67		594,495		5,576,367		3.86	%		5.64	%		1.19	%
	2011			1.15	%		2.85	%		8.47		9.16		633,963		5,663,052		-4.47	%		-2.83	%		0.62	%
	2010			1.15	%		2.85	%		8.86		9.42		681,006		6,293,112		10.20	%		12.09	%		0.56	%
LVIP Managed Risk Profile Conservative Standard Class
	2014	8/25/14		0.65	%		0.65	%		16.60		16.60		2,012		33,410		-0.15	%		-0.15	%		1.98	%
	2012	9/12/12		1.70	%		1.70	%		13.97		13.97		3,663		51,153		0.55	%		0.55	%		1.49	%

N-98

Lincoln Life Variable Annuity Account N

Notes to financial statements (continued)

3. Financial Highlights (continued)

Subaccount	Year	Commencement Date(1)	Minimum Fee Rate(2)			Maximum Fee Rate(2)			Minimum Unit Value(3)		Maximum Unit Value(3)		Units Outstanding		Net Assets		Minimum Total Return(4)			Maximum Total Return(4)			Investment Income Ratio(5)
LVIP Managed Risk Profile Conservative Service Class
	2014			0.60	%		3.20	%	$	11.62	$	15.72		82,528,356	$	1,231,323,568		2.11	%		4.75	%		1.84	%
	2013			0.65	%		3.20	%		11.38		15.09		76,136,302		1,095,714,114		6.03	%		8.76	%		1.86	%
	2012			0.60	%		3.20	%		10.74		13.96		59,642,778		797,064,640		6.11	%		8.79	%		4.29	%
	2011			0.65	%		3.15	%		10.62		12.91		33,493,486		417,683,901		0.47	%		2.76	%		1.79	%
	2010			0.65	%		2.90	%		11.56		12.64		30,806,255		378,674,328		7.13	%		9.52	%		3.58	%
LVIP Managed Risk Profile Growth Standard Class
	2014			0.60	%		1.70	%		15.97		16.98		241,037		4,067,734		1.72	%		2.85	%		2.19	%
	2013	1/10/13		0.60	%		1.70	%		15.70		16.51		222,966		3,659,166		5.21	%		9.34	%		3.44	%
	2012			0.00	%		0.00	%		—		—		—		—		0.00	%		0.00	%		1.51	%
LVIP Managed Risk Profile Growth Service Class
	2014			0.30	%		3.20	%		11.44		14.69		608,030,501		8,257,330,275		-0.05	%		2.54	%		2.01	%
	2013			0.65	%		3.20	%		11.45		14.66		458,530,041		6,143,754,716		9.70	%		12.53	%		2.07	%
	2012			0.65	%		3.20	%		10.45		13.33		196,562,087		2,378,472,131		5.50	%		8.17	%		3.11	%
	2011			0.65	%		3.15	%		9.94		11.84		64,143,521		733,350,041		-3.05	%		-0.89	%		1.76	%
	2010			0.65	%		2.85	%		10.24		12.02		55,624,756		649,763,390		9.27	%		11.70	%		2.66	%
LVIP Managed Risk Profile Moderate Standard Class
	2014			0.65	%		1.70	%		15.84		15.84		36,624		583,356		2.39	%		2.39	%		3.93	%
	2013	11/14/13		1.70	%		1.70	%		15.47		15.47		3,252		50,305		1.72	%		1.72	%		1.69	%
LVIP Managed Risk Profile Moderate Service Class
	2014			0.30	%		3.20	%		11.47		15.25		462,756,704		6,543,502,598		0.61	%		3.26	%		1.88	%
	2013			0.60	%		3.20	%		11.40		14.87		374,792,206		5,192,083,585		8.07	%		10.86	%		1.88	%
	2012			0.65	%		3.20	%		10.55		13.49		210,587,184		2,680,696,958		5.88	%		8.61	%		3.73	%
	2011			0.65	%		3.20	%		11.07		12.49		97,255,844		1,171,356,272		-1.92	%		0.26	%		1.56	%
	2010			0.65	%		2.85	%		11.16		12.54		88,617,281		1,078,285,914		8.54	%		10.96	%		2.80	%
LVIP MFS International Growth Standard Class
	2014	12/26/14		0.40	%		0.40	%		9.34		9.34		1,030		9,625		-1.20	%		-1.20	%		0.00	%
LVIP MFS International Growth Service Class
	2014			0.60	%		3.15	%		8.11		13.77		16,020,823		152,281,315		-8.09	%		-5.86	%		0.81	%
	2013			0.60	%		3.00	%		8.81		14.66		15,179,658		154,127,586		9.97	%		12.64	%		0.58	%
	2012			0.60	%		3.00	%		8.00		13.10		14,701,095		133,401,119		15.65	%		18.40	%		0.52	%
	2011			0.60	%		2.95	%		6.91		11.04		14,718,003		113,856,658		-12.63	%		-10.64	%		2.85	%
	2010			0.60	%		2.85	%		7.91		8.56		11,583,789		96,896,427		9.66	%		12.09	%		0.58	%
LVIP MFS International Growth RPM Service Class
	2014			0.65	%		3.20	%		8.93		9.31		9,592,942		87,740,296		-10.27	%		-7.95	%		0.77	%
	2013	5/20/13		0.65	%		3.20	%		9.95		10.11		3,467,430		34,818,787		-0.83	%		7.53	%		1.28	%
LVIP MFS Value Standard Class
	2014	12/11/14		0.40	%		0.40	%		10.76		10.76		635		6,835		0.95	%		0.95	%		2.30	%
LVIP MFS Value Service Class
	2014			0.30	%		3.20	%		12.38		19.49		59,468,552		879,626,819		6.76	%		9.52	%		2.18	%
	2013			0.65	%		3.20	%		11.55		18.21		62,841,073		850,091,010		31.35	%		34.74	%		1.47	%
	2012			0.65	%		3.20	%		8.76		13.83		66,735,671		672,516,930		12.44	%		15.29	%		0.98	%
	2011			0.65	%		3.15	%		7.77		10.79		64,066,802		551,815,744		-3.15	%		-1.00	%		1.33	%
	2010			0.65	%		2.85	%		8.02		8.69		48,122,826		409,771,177		8.19	%		10.59	%		1.24	%
LVIP Mid-Cap Value Service Class
	2014			0.30	%		3.20	%		11.81		22.35		10,536,038		137,001,352		4.62	%		7.32	%		0.14	%
	2013			0.65	%		3.20	%		11.25		21.31		5,852,727		71,933,341		29.60	%		32.95	%		0.23	%
	2012			0.65	%		3.20	%		8.65		16.40		6,254,372		58,307,396		19.92	%		23.01	%		0.14	%
	2011			0.65	%		3.20	%		7.18		7.95		5,810,819		44,365,619		-12.09	%		-10.13	%		0.00	%
	2010			0.65	%		2.85	%		8.17		8.85		4,779,106		40,801,285		20.12	%		22.79	%		0.01	%
LVIP Mondrian International Value Standard Class
	2014			0.40	%		2.70	%		11.90		23.08		718,501		15,332,417		-5.14	%		-3.80	%		3.77	%
	2013			1.30	%		2.70	%		12.52		23.46		794,784		17,910,281		18.60	%		20.27	%		2.50	%
	2012			1.30	%		2.70	%		10.53		19.66		798,201		15,038,849		6.70	%		8.20	%		2.74	%
	2011			1.30	%		2.70	%		9.85		18.32		983,587		17,121,039		-6.72	%		-5.45	%		2.83	%
	2010			1.30	%		2.65	%		10.55		19.61		1,202,225		22,423,804		-0.21	%		1.14	%		3.16	%

N-99

Lincoln Life Variable Annuity Account N

Notes to financial statements (continued)

3. Financial Highlights (continued)

Subaccount	Year	Commencement Date(1)	Minimum Fee Rate(2)			Maximum Fee Rate(2)			Minimum Unit Value(3)		Maximum Unit Value(3)		Units Outstanding		Net Assets		Minimum Total Return(4)			Maximum Total Return(4)			Investment Income Ratio(5)
LVIP Mondrian International Value Service Class
	2014			0.63	%		3.18	%	$	9.51	$	21.36		22,620,521	$	301,725,103		-5.83	%		-3.40	%		3.72	%
	2013			0.63	%		3.18	%		10.05		22.26		23,262,285		323,304,014		17.74	%		20.78	%		2.88	%
	2012			0.65	%		3.20	%		8.50		18.56		7,898,412		108,228,121		5.90	%		8.63	%		2.67	%
	2011			0.65	%		3.20	%		8.00		17.21		7,933,392		102,799,297		-7.14	%		-5.07	%		2.83	%
	2010			0.65	%		2.85	%		8.52		18.25		7,872,078		111,459,611		-0.66	%		1.55	%		3.15	%
LVIP Money Market Standard Class
	2014			0.65	%		2.70	%		8.55		11.09		3,254,385		32,987,039		-2.64	%		-0.62	%		0.03	%
	2013			0.65	%		2.70	%		8.78		11.24		3,896,189		40,141,761		-2.64	%		-0.63	%		0.02	%
	2012			0.65	%		2.70	%		9.01		11.39		4,634,580		48,429,176		-2.59	%		-1.27	%		0.03	%
	2011			1.30	%		2.65	%		9.25		11.55		5,721,128		60,993,041		-2.59	%		-1.26	%		0.03	%
	2010			1.30	%		2.65	%		9.50		11.71		6,137,587		66,685,675		-2.57	%		-1.24	%		0.05	%
LVIP Money Market Service Class
	2014			0.60	%		3.20	%		8.49		10.22		27,288,172		261,892,224		-3.12	%		-0.57	%		0.03	%
	2013			0.60	%		3.20	%		8.73		10.31		28,577,156		279,399,807		-3.13	%		-0.59	%		0.02	%
	2012			0.60	%		3.20	%		8.96		10.38		32,954,585		327,023,277		-3.12	%		-0.57	%		0.03	%
	2011			0.60	%		3.20	%		9.20		10.47		35,549,205		358,035,288		-2.78	%		-0.58	%		0.03	%
	2010			0.60	%		2.85	%		9.44		10.60		33,514,174		342,966,801		-2.77	%		-0.61	%		0.04	%
LVIP Multi-Manager Global Equity RPM Service Class
	2014	5/19/14		0.80	%		2.95	%		9.72		9.85		516,390		5,056,784		-5.26	%		2.70	%		3.04	%
LVIP PIMCO Low Duration Bond Standard Class
	2014	9/2/14		0.40	%		0.80	%		9.97		9.99		8,434		84,091		-0.70	%		-0.43	%		0.60	%
LVIP PIMCO Low Duration Bond Service Class
	2014	5/19/14		0.30	%		3.20	%		9.80		9.98		5,401,272		53,458,550		-1.71	%		-0.29	%		0.98	%
LVIP SSgA Bond Index Standard Class
	2014			0.40	%		1.70	%		11.48		12.21		37,055		423,147		3.97	%		5.12	%		3.37	%
	2013			0.60	%		1.70	%		11.04		11.58		14,497		164,424		-4.21	%		-3.20	%		4.11	%
	2012	7/12/12		0.65	%		1.70	%		11.53		11.96		2,256		26,227		0.27	%		0.42	%		1.80	%
LVIP SSgA Bond Index Service Class
	2014			0.60	%		3.15	%		9.87		12.68		83,120,936		981,948,234		2.21	%		4.85	%		1.59	%
	2013			0.60	%		3.15	%		9.64		12.10		87,085,679		992,038,834		-5.83	%		-3.44	%		1.73	%
	2012			0.65	%		3.15	%		10.24		12.53		83,692,180		997,851,378		0.39	%		2.93	%		2.22	%
	2011			0.65	%		3.15	%		10.18		12.17		81,296,726		952,715,198		4.07	%		6.44	%		2.79	%
	2010			0.65	%		2.90	%		10.82		11.43		85,241,062		948,775,048		2.74	%		5.02	%		2.10	%
LVIP SSgA Conservative Index Allocation Service Class
	2014			0.65	%		3.00	%		11.42		12.67		5,037,227		61,012,308		1.38	%		3.79	%		1.59	%
	2013			0.65	%		3.00	%		11.27		12.21		4,858,768		57,187,856		3.38	%		5.84	%		1.31	%
	2012			0.65	%		3.00	%		10.90		11.53		4,957,355		55,716,735		5.60	%		8.11	%		2.90	%
	2011			0.65	%		3.00	%		10.35		10.57		3,047,205		32,014,658		-0.39	%		1.12	%		0.23	%
	2010	11/17/10		1.30	%		2.80	%		10.39		10.45		282,388		2,944,310		0.50	%		1.74	%		0.00	%
LVIP SSgA Conservative Structured Allocation Standard Class
	2014	11/17/14		0.40	%		0.40	%		10.21		10.21		16,276		166,185		0.41	%		0.41	%		3.83	%
LVIP SSgA Conservative Structured Allocation Service Class
	2014			0.65	%		3.15	%		11.07		12.67		15,729,078		189,999,017		2.01	%		4.59	%		2.21	%
	2013			0.65	%		3.15	%		10.85		12.11		16,283,286		189,828,966		3.49	%		6.11	%		1.73	%
	2012			0.65	%		3.15	%		10.48		11.42		17,898,932		198,661,657		4.74	%		7.39	%		3.92	%
	2011			0.65	%		3.15	%		10.33		10.53		13,733,029		143,541,076		-0.19	%		1.22	%		0.21	%
	2010	11/17/10		1.30	%		2.70	%		10.35		10.41		1,020,141		10,594,850		0.00	%		1.55	%		0.00	%
LVIP SSgA Developed International 150 Standard Class
	2014			0.40	%		1.90	%		11.38		16.18		18,936		253,336		-0.99	%		0.26	%		6.42	%
	2013	2/8/13		0.65	%		1.90	%		11.49		16.14		1,864		24,964		14.46	%		15.32	%		5.33	%
LVIP SSgA Developed International 150 Service Class
	2014			0.30	%		3.00	%		9.72		14.04		13,887,185		145,571,689		-2.33	%		-0.01	%		2.97	%
	2013			0.65	%		3.00	%		9.93		14.37		14,069,224		149,031,537		16.47	%		19.24	%		2.40	%
	2012			0.65	%		3.00	%		8.51		12.33		15,786,539		141,627,471		10.07	%		12.63	%		2.40	%
	2011			0.65	%		2.95	%		7.73		8.35		16,169,685		130,126,370		-14.82	%		-12.92	%		2.29	%
	2010			0.65	%		2.85	%		9.07		9.59		14,813,167		138,293,111		3.99	%		6.31	%		1.23	%

N-100

Lincoln Life Variable Annuity Account N

Notes to financial statements (continued)

3. Financial Highlights (continued)

Subaccount	Year	Commencement Date(1)	Minimum Fee Rate(2)			Maximum Fee Rate(2)			Minimum Unit Value(3)		Maximum Unit Value(3)		Units Outstanding		Net Assets		Minimum Total Return(4)			Maximum Total Return(4)			Investment Income Ratio(5)
LVIP SSgA Emerging Markets 100 Standard Class
	2014			0.40	%		1.90	%	$	8.74	$	15.95		30,189	$	462,463		-5.19	%		-3.95	%		3.72	%
	2013			0.60	%		1.90	%		9.22		16.60		17,442		279,682		-4.66	%		-3.41	%		3.07	%
	2012			0.60	%		1.90	%		16.52		16.52		6,313		104,207		10.75	%		10.75	%		4.73	%
	2011	12/5/11		1.70	%		1.70	%		14.91		14.91		944		14,087		-4.18	%		-4.18	%		0.00	%
LVIP SSgA Emerging Markets 100 Service Class
	2014			0.65	%		3.15	%		8.22		13.79		14,465,410		169,702,676		-6.60	%		-4.24	%		2.73	%
	2013			0.65	%		3.15	%		8.80		14.74		14,368,529		177,864,010		-6.08	%		-3.70	%		2.04	%
	2012			0.65	%		3.15	%		9.37		15.66		13,590,884		176,646,426		8.90	%		11.66	%		2.42	%
	2011			0.65	%		3.15	%		11.31		12.22		13,252,989		155,980,136		-17.54	%		-15.70	%		2.37	%
	2010			0.65	%		2.85	%		13.71		14.50		11,936,863		168,453,712		23.87	%		26.62	%		1.10	%
LVIP SSgA Global Tactical Allocation RPM Standard Class
	2014			0.60	%		1.70	%		15.44		16.42		13,756		222,653		2.22	%		3.34	%		3.08	%
	2013			0.60	%		1.70	%		15.68		15.89		13,034		200,129		8.82	%		9.15	%		5.24	%
	2012	9/4/12		0.60	%		0.90	%		14.41		14.56		4,351		63,094		-0.01	%		4.07	%		2.41	%
LVIP SSgA Global Tactical Allocation RPM Service Class
	2014			0.65	%		3.20	%		10.37		14.21		70,165,415		885,053,206		0.44	%		3.04	%		2.19	%
	2013			0.65	%		3.20	%		10.28		14.11		59,096,862		732,112,426		6.09	%		8.82	%		2.28	%
	2012			0.65	%		3.20	%		9.65		13.27		31,954,603		367,052,105		7.44	%		10.16	%		3.41	%
	2011			0.65	%		3.15	%		9.13		10.94		21,907,148		231,199,458		-2.80	%		-0.69	%		1.48	%
	2010			0.65	%		2.80	%		9.21		11.09		5,918,960		63,997,052		5.48	%		7.78	%		0.84	%
LVIP SSgA International Index Standard Class
	2014			0.40	%		1.90	%		14.38		15.29		32,119		416,234		-7.43	%		-6.41	%		3.97	%
	2013			0.60	%		1.70	%		16.30		16.34		10,493		170,136		20.20	%		20.26	%		1.97	%
	2012	5/16/12		0.60	%		0.65	%		13.56		13.59		2,485		33,709		18.03	%		22.12	%		2.50	%
LVIP SSgA International Index Service Class
	2014			0.60	%		3.00	%		8.51		13.40		29,861,518		274,485,051		-8.86	%		-6.69	%		2.42	%
	2013			0.65	%		3.00	%		9.33		14.51		30,268,833		301,347,579		17.13	%		19.91	%		1.51	%
	2012			0.65	%		3.00	%		7.95		12.38		24,895,325		208,702,144		14.39	%		17.05	%		1.66	%
	2011			0.65	%		2.95	%		6.94		7.50		26,518,034		191,861,496		-15.05	%		-13.16	%		1.15	%
	2010			0.65	%		2.85	%		8.17		8.64		23,605,346		198,623,794		3.78	%		6.09	%		1.49	%
LVIP SSgA International RPM Service Class
	2014	1/7/14		0.60	%		3.00	%		9.04		9.26		1,647,011		15,091,764		-12.34	%		-4.71	%		4.04	%
LVIP SSgA Large Cap 100 Standard Class
	2014			0.40	%		2.15	%		17.50		28.02		73,723		1,636,051		14.24	%		15.97	%		3.30	%
	2013			0.65	%		2.15	%		24.16		24.16		43,459		791,897		34.97	%		34.97	%		5.67	%
	2012	12/17/12		0.65	%		0.65	%		17.90		17.90		210		3,764		0.29	%		0.29	%		0.00	%
LVIP SSgA Large Cap 100 Service Class
	2014			0.30	%		3.15	%		16.62		24.32		17,880,867		325,179,992		12.83	%		15.68	%		2.22	%
	2013			0.65	%		3.15	%		14.73		21.51		19,935,882		316,760,013		31.30	%		34.62	%		1.93	%
	2012			0.65	%		3.15	%		11.22		16.35		23,390,895		279,058,585		8.48	%		11.22	%		1.33	%
	2011			0.65	%		3.15	%		10.42		11.25		26,026,743		282,152,292		-0.81	%		1.40	%		1.37	%
	2010			0.65	%		2.85	%		10.50		11.10		26,778,012		289,254,755		15.56	%		18.13	%		1.21	%
LVIP SSgA Large Cap RPM Standard Class
	2014			0.65	%		0.65	%		11.61		11.61		122		1,417		5.82	%		5.82	%		1.92	%
	2013	7/2/13		0.65	%		0.65	%		10.97		10.97		129		1,412		11.12	%		11.12	%		1.50	%
LVIP SSgA Large Cap RPM Service Class
	2014			0.65	%		3.20	%		11.12		11.56		8,699,562		98,855,910		3.09	%		5.54	%		3.16	%
	2013	5/21/13		0.65	%		3.00	%		10.79		10.95		2,385,134		25,947,518		2.68	%		10.29	%		2.63	%
LVIP SSgA Moderate Index Allocation Service Class
	2014			0.60	%		3.20	%		11.56		13.53		14,787,994		190,721,763		0.87	%		3.53	%		1.85	%
	2013			0.60	%		3.20	%		11.46		13.07		13,875,395		174,568,913		8.65	%		11.51	%		1.29	%
	2012			0.60	%		3.20	%		10.56		11.68		11,876,296		135,403,254		7.97	%		10.59	%		2.38	%
	2011			0.65	%		3.15	%		10.29		10.50		6,709,031		69,827,648		-3.03	%		-1.62	%		0.09	%
	2010	11/16/10		1.15	%		2.60	%		10.61		10.67		386,790		4,120,405		-0.04	%		2.82	%		0.00	%
LVIP SSgA Moderate Structured Allocation Service Class
	2014			0.60	%		3.20	%		11.58		13.53		64,486,754		830,390,736		1.98	%		4.66	%		2.42	%
	2013			0.60	%		3.20	%		11.36		12.90		69,297,730		861,705,250		8.99	%		11.80	%		2.34	%
	2012			0.65	%		3.20	%		10.43		11.54		47,682,796		535,387,963		6.85	%		9.55	%		3.72	%
	2011			0.65	%		3.15	%		10.25		10.52		32,114,185		332,998,959		-2.82	%		-0.71	%		0.20	%
	2010	11/16/10		0.75	%		2.90	%		10.51		10.75		2,706,824		28,557,076		0.32	%		2.75	%		0.00	%

N-101

Lincoln Life Variable Annuity Account N

Notes to financial statements (continued)

3. Financial Highlights (continued)

Subaccount	Year	Commencement Date(1)	Minimum Fee Rate(2)			Maximum Fee Rate(2)			Minimum Unit Value(3)		Maximum Unit Value(3)		Units Outstanding		Net Assets		Minimum Total Return(4)			Maximum Total Return(4)			Investment Income Ratio(5)
LVIP SSgA Moderately Aggressive Index Allocation Service Class
	2014			0.65	%		3.20	%	$	11.69	$	13.73		12,652,800	$	166,055,729		0.48	%		3.08	%		1.91	%
	2013			0.65	%		3.20	%		11.63		13.32		12,507,329		160,686,710		10.92	%		13.78	%		1.31	%
	2012			0.65	%		3.20	%		10.64		11.70		11,219,554		127,959,706		9.25	%		11.84	%		2.25	%
	2011			0.65	%		3.00	%		10.15		10.39		7,300,410		75,180,805		-5.47	%		-3.90	%		0.03	%
	2010	11/18/10		1.15	%		2.80	%		10.74		10.81		542,212		5,847,902		-0.04	%		2.21	%		0.00	%
LVIP SSgA Moderately Aggressive Structured Allocation Service Class
	2014			0.30	%		3.20	%		11.89		13.94		32,084,393		426,551,480		1.71	%		4.34	%		2.70	%
	2013			0.65	%		3.20	%		11.69		13.36		31,418,682		404,618,283		11.26	%		14.14	%		2.21	%
	2012			0.65	%		3.20	%		10.95		11.71		31,366,763		357,707,878		7.83	%		10.39	%		3.99	%
	2011			0.65	%		3.00	%		10.30		10.59		22,719,184		237,348,906		-4.61	%		-2.73	%		0.18	%
	2010	11/18/10		0.75	%		2.70	%		10.80		10.89		1,483,235		16,077,151		0.03	%		3.66	%		0.00	%
LVIP SSgA S&P 500 Index Standard Class
	2014			0.40	%		2.60	%		14.85		24.25		2,174,940		36,149,470		10.52	%		12.75	%		1.88	%
	2013			0.60	%		2.60	%		13.44		21.45		2,441,004		36,194,110		28.61	%		31.15	%		2.35	%
	2012			0.65	%		2.60	%		10.45		11.44		141,381		1,630,111		12.68	%		14.04	%		0.86	%
	2011			1.40	%		2.60	%		9.27		10.04		191,922		1,897,063		-0.76	%		0.43	%		0.97	%
	2010			1.40	%		2.60	%		9.37		9.99		204,002		2,012,755		11.84	%		13.13	%		1.25	%
LVIP SSgA S&P 500 Index Service Class
	2014			0.30	%		3.20	%		13.72		20.98		54,354,571		857,087,479		9.58	%		12.41	%		1.65	%
	2013			0.65	%		3.20	%		12.46		19.10		59,168,258		838,667,663		27.60	%		30.82	%		1.44	%
	2012			0.65	%		3.15	%		9.73		14.94		45,862,651		502,663,971		11.78	%		14.61	%		0.76	%
	2011			0.65	%		3.15	%		8.67		9.97		43,622,939		421,172,307		-1.26	%		0.94	%		0.68	%
	2010			0.65	%		2.85	%		8.77		9.94		43,337,481		418,910,568		11.23	%		13.71	%		1.14	%
LVIP SSgA Small-Cap Index Standard Class
	2014			0.40	%		1.90	%		16.08		24.74		66,149		1,427,063		2.70	%		4.05	%		1.00	%
	2013			0.60	%		1.90	%		15.66		23.77		28,036		625,775		35.31	%		37.08	%		1.75	%
	2012			0.60	%		1.90	%		16.67		16.67		3,759		61,884		13.94	%		13.94	%		1.24	%
	2011	12/5/11		1.70	%		1.70	%		14.63		14.63		798		11,669		-0.78	%		-0.78	%		0.00	%
LVIP SSgA Small-Cap Index Service Class
	2014			0.30	%		3.20	%		12.25		21.40		20,318,198		272,886,482		1.12	%		3.77	%		0.58	%
	2013			0.60	%		3.20	%		12.07		21.11		22,742,885		297,575,702		33.24	%		36.67	%		0.62	%
	2012			0.65	%		3.20	%		9.03		15.80		14,853,295		143,442,614		11.97	%		14.86	%		0.46	%
	2011			0.65	%		3.20	%		8.03		8.89		14,871,629		126,195,557		-7.48	%		-5.42	%		0.11	%
	2010			0.65	%		2.85	%		8.68		9.40		13,551,043		122,688,382		22.34	%		25.06	%		0.36	%
LVIP SSgA Small-Cap RPM Standard Class
	2014			0.65	%		1.70	%		11.01		11.01		7,373		80,913		-2.04	%		-2.04	%		1.29	%
	2013	12/19/13		0.65	%		0.65	%		11.24		11.24		3,565		40,066		3.04	%		3.04	%		1.09	%
LVIP SSgA Small-Cap RPM Service Class
	2014			0.60	%		3.20	%		10.52		10.96		8,275,647		89,207,699		-4.73	%		-2.27	%		1.30	%
	2013	5/20/13		0.65	%		3.20	%		11.04		11.22		2,436,000		27,146,121		2.73	%		11.29	%		2.08	%
LVIP SSgA Small-Mid Cap 200 Standard Class
	2014			0.40	%		2.15	%		15.23		26.52		75,395		1,469,320		2.08	%		3.68	%		4.59	%
	2013			0.60	%		2.15	%		25.50		25.50		38,577		792,799		33.62	%		33.62	%		7.43	%
	2012	7/18/12		0.65	%		0.65	%		19.09		19.09		1,129		21,540		7.77	%		7.77	%		2.82	%
LVIP SSgA Small-Mid Cap 200 Service Class
	2014			0.30	%		3.15	%		14.46		22.94		5,695,923		110,563,563		0.82	%		3.37	%		3.13	%
	2013			0.65	%		3.15	%		14.35		22.71		5,835,284		110,745,734		30.00	%		33.29	%		2.37	%
	2012			0.65	%		3.15	%		11.04		17.43		6,502,550		93,579,793		10.02	%		12.81	%		2.26	%
	2011			0.65	%		3.15	%		12.39		13.39		6,952,262		89,660,120		-5.20	%		-3.09	%		1.40	%
	2010			0.65	%		2.85	%		13.07		13.81		7,055,885		94,875,875		23.85	%		26.61	%		1.81	%
LVIP T. Rowe Price Growth Stock Standard Class
	2014	7/24/14		0.40	%		0.40	%		11.10		11.10		4,568		50,706		3.89	%		3.89	%		0.00	%
LVIP T. Rowe Price Growth Stock Service Class
	2014			0.30	%		3.00	%		13.54		21.86		11,919,254		177,584,848		5.24	%		7.74	%		0.00	%
	2013			0.65	%		3.00	%		12.85		20.76		13,530,291		188,596,407		34.61	%		37.81	%		0.00	%
	2012			0.65	%		3.00	%		9.53		15.42		14,060,882		143,608,085		14.59	%		17.25	%		0.00	%
	2011			0.65	%		2.95	%		8.31		9.20		9,783,128		86,030,329		-4.65	%		-2.53	%		0.00	%
	2010			0.65	%		2.85	%		8.72		9.44		7,849,330		71,341,526		13.17	%		15.68	%		0.00	%

N-102

Lincoln Life Variable Annuity Account N

Notes to financial statements (continued)

3. Financial Highlights (continued)

Subaccount	Year	Commencement Date(1)	Minimum Fee Rate(2)			Maximum Fee Rate(2)			Minimum Unit Value(3)		Maximum Unit Value(3)		Units Outstanding		Net Assets		Minimum Total Return(4)			Maximum Total Return(4)			Investment Income Ratio(5)
LVIP T. Rowe Price Structured Mid-Cap Growth Standard Class
	2014			1.30	%		3.00	%	$	16.05	$	30.01		103,895	$	2,726,197		8.29	%		10.15	%		0.22	%
	2013			1.30	%		3.00	%		14.82		27.25		112,290		2,692,674		30.82	%		33.06	%		0.00	%
	2012			1.30	%		3.00	%		13.18		20.64		126,393		2,298,791		13.09	%		14.80	%		0.00	%
	2011			1.30	%		2.80	%		11.62		18.13		137,181		2,184,638		-6.38	%		-5.11	%		0.00	%
	2010			1.30	%		2.65	%		12.40		19.27		169,937		2,874,844		25.02	%		26.71	%		0.00	%
LVIP T. Rowe Price Structured Mid-Cap Growth Service Class
	2014			0.65	%		3.20	%		15.75		28.99		3,954,096		93,424,091		7.80	%		10.58	%		0.00	%
	2013			0.65	%		3.20	%		14.64		26.40		4,027,389		87,518,859		30.29	%		33.59	%		0.00	%
	2012			0.65	%		3.15	%		11.49		19.90		4,766,371		80,236,899		12.64	%		15.26	%		0.00	%
	2011			0.65	%		2.95	%		11.02		17.39		4,086,361		60,225,079		-6.81	%		-4.74	%		0.00	%
	2010			0.65	%		2.85	%		11.59		18.38		3,027,569		47,561,006		24.46	%		27.23	%		0.00	%
LVIP Templeton Growth RPM Service Class
	2014			0.60	%		3.20	%		9.18		15.36		58,481,505		593,312,037		-5.31	%		-2.82	%		1.47	%
	2013			0.60	%		3.20	%		9.66		16.18		35,895,869		379,146,347		15.86	%		18.86	%		1.49	%
	2012			0.65	%		3.20	%		8.31		13.93		17,221,882		154,522,717		17.16	%		20.13	%		1.77	%
	2011			0.65	%		3.15	%		7.07		10.81		15,769,152		118,673,830		-6.11	%		-3.96	%		2.04	%
	2010			0.65	%		2.90	%		7.53		8.15		13,007,007		102,455,858		3.31	%		5.61	%		1.78	%
LVIP UBS Large Cap Growth RPM Standard Class
	2014			1.30	%		2.80	%		14.36		20.35		126,910		2,252,518		2.49	%		3.99	%		0.00	%
	2013			1.30	%		2.75	%		13.98		19.57		142,373		2,446,788		22.22	%		23.88	%		0.00	%
	2012			1.30	%		2.65	%		11.42		15.80		160,781		2,243,019		13.35	%		14.89	%		0.00	%
	2011			1.30	%		2.65	%		10.06		13.82		173,576		2,112,536		-8.15	%		-6.90	%		0.20	%
	2010			1.30	%		2.65	%		10.94		14.97		215,585		2,825,485		8.54	%		9.91	%		0.70	%
LVIP UBS Large Cap Growth RPM Service Class
	2014			0.60	%		3.20	%		13.03		19.65		13,936,492		234,535,641		1.78	%		4.46	%		0.00	%
	2013			0.60	%		3.20	%		12.80		18.96		9,802,967		160,591,468		21.24	%		24.37	%		0.00	%
	2012			0.65	%		3.20	%		10.56		15.35		4,411,010		60,049,258		12.45	%		15.35	%		0.00	%
	2011			0.65	%		3.20	%		9.84		13.40		4,028,664		48,611,933		-8.53	%		-6.54	%		0.00	%
	2010			0.65	%		2.80	%		10.64		14.44		4,790,609		63,658,856		8.01	%		10.25	%		0.52	%
LVIP Vanguard Domestic Equity ETF Standard Class
	2014			0.40	%		1.90	%		14.89		15.61		31,272		451,338		10.10	%		11.54	%		2.01	%
	2013			0.60	%		1.90	%		13.53		13.99		27,270		375,037		28.07	%		29.74	%		1.36	%
	2012	6/22/12		0.60	%		1.90	%		10.56		10.79		10,419		112,131		-0.96	%		9.08	%		1.88	%
LVIP Vanguard Domestic Equity ETF Service Class
	2014			0.65	%		3.20	%		14.08		17.04		6,643,364		99,287,489		8.41	%		11.21	%		1.69	%
	2013			0.65	%		3.20	%		12.99		15.35		5,998,517		81,252,076		26.10	%		29.36	%		1.12	%
	2012			0.65	%		3.20	%		10.31		11.89		4,232,339		44,730,410		11.32	%		14.13	%		1.59	%
	2011	5/31/11		0.65	%		3.15	%		9.26		10.44		1,559,907		14,571,491		-8.09	%		11.02	%		0.84	%
LVIP Vanguard International Equity ETF Standard Class
	2014			0.40	%		1.90	%		10.29		10.79		36,374		384,735		-6.44	%		-5.21	%		2.13	%
	2013			0.60	%		1.90	%		11.00		11.38		32,064		359,162		12.59	%		14.08	%		4.76	%
	2012	3/26/12		0.60	%		1.90	%		9.77		9.97		5,807		57,783		1.29	%		18.64	%		7.35	%
LVIP Vanguard International Equity ETF Service Class
	2014			0.65	%		3.20	%		9.72		11.49		5,333,936		55,028,501		-7.88	%		-5.50	%		2.05	%
	2013			0.65	%		3.20	%		10.56		12.18		3,780,849		41,605,443		10.86	%		13.72	%		2.24	%
	2012			0.65	%		3.20	%		9.53		10.74		2,676,477		26,145,484		15.35	%		18.27	%		5.00	%
	2011	5/24/11		0.65	%		3.15	%		8.26		9.10		1,069,284		8,915,387		-18.92	%		6.08	%		0.00	%
LVIP VIP Contrafund RPM Standard Class
	2014			0.60	%		1.70	%		11.56		11.76		37,183		436,118		4.39	%		5.49	%		4.51	%
	2013	11/14/13		0.65	%		1.70	%		11.07		11.15		10,150		112,800		2.47	%		3.36	%		1.67	%
LVIP VIP Contrafund RPM Service Class
	2014			0.60	%		3.20	%		11.21		11.70		23,523,972		270,309,819		2.48	%		5.18	%		3.57	%
	2013	5/20/13		0.60	%		3.20	%		10.94		11.13		8,656,233		95,635,695		4.63	%		14.23	%		1.77	%
LVIP VIP Mid Cap RPM Service Class
	2014	5/23/14		0.60	%		3.00	%		10.04		10.19		1,133,185		11,470,979		-3.04	%		8.82	%		2.02	%
Lord Abbett Series Fund Bond Debenture Class VC
	2014	7/8/14		0.40	%		1.65	%		9.97		10.05		157,782		1,579,707		-1.68	%		-0.05	%		9.97	%

N-103

Lincoln Life Variable Annuity Account N

Notes to financial statements (continued)

3. Financial Highlights (continued)

Subaccount	Year	Commencement Date(1)	Minimum Fee Rate(2)			Maximum Fee Rate(2)			Minimum Unit Value(3)		Maximum Unit Value(3)		Units Outstanding		Net Assets		Minimum Total Return(4)			Maximum Total Return(4)			Investment Income Ratio(5)
Lord Abbett Series Fund Developing Growth Class VC
	2014	7/8/14		0.30	%		1.65	%	$	10.94	$	11.03		81,316	$	892,992		0.88	%		6.22	%		0.00	%
Lord Abbett Series Fund Fundamental Equity Class VC
	2014			0.65	%		2.55	%		14.66		23.83		767,451		16,471,424		4.44	%		6.45	%		0.44	%
	2013			0.65	%		2.55	%		14.04		22.38		850,301		17,237,836		32.34	%		34.88	%		0.23	%
	2012			0.65	%		2.55	%		10.61		16.60		987,863		14,919,914		7.80	%		9.87	%		0.54	%
	2011			0.65	%		2.55	%		14.28		15.11		1,045,826		14,435,281		-6.80	%		-5.11	%		0.24	%
	2010			0.65	%		2.45	%		15.41		15.92		630,717		9,982,968		16.44	%		18.26	%		0.39	%
Lord Abbett Series Fund Short Duration Income Class VC
	2014	7/8/14		0.30	%		1.65	%		9.90		9.98		265,058		2,631,988		-1.03	%		-0.55	%		3.98	%
MFS VIT Core Equity Service Class
	2014			1.30	%		2.65	%		16.11		23.66		128,539		2,602,187		8.07	%		9.54	%		0.53	%
	2013			1.30	%		2.65	%		14.89		21.60		150,821		2,787,669		30.72	%		32.50	%		0.79	%
	2012			1.30	%		2.65	%		11.37		16.30		153,734		2,143,823		12.92	%		14.45	%		0.47	%
	2011			1.30	%		2.65	%		10.06		14.36		182,259		2,225,017		-3.86	%		-2.55	%		0.66	%
	2010			1.30	%		2.65	%		10.44		14.91		214,952		2,729,647		13.81	%		15.35	%		0.92	%
MFS VIT Growth Initial Class
	2014			1.40	%		2.35	%		20.44		28.70		158,635		3,260,919		6.42	%		7.43	%		0.10	%
	2013			1.40	%		2.35	%		19.03		26.91		178,292		3,411,475		33.68	%		34.95	%		0.23	%
	2012			1.40	%		2.35	%		14.10		20.09		194,320		2,756,529		14.66	%		15.76	%		0.00	%
	2011			1.40	%		2.35	%		12.18		17.49		217,368		2,664,912		-2.64	%		-1.71	%		0.19	%
	2010			1.40	%		2.35	%		12.39		17.93		252,322		3,148,241		12.66	%		13.73	%		0.12	%
MFS VIT Growth Service Class
	2014			0.65	%		3.15	%		9.85		28.86		2,896,838		50,741,615		5.31	%		7.98	%		0.00	%
	2013			0.65	%		3.15	%		9.23		27.05		2,388,555		39,011,618		32.26	%		35.61	%		0.13	%
	2012			0.65	%		3.15	%		6.88		20.19		2,031,830		24,495,882		13.45	%		16.32	%		0.00	%
	2011			0.65	%		3.15	%		5.99		17.57		1,819,693		18,605,962		-3.31	%		-1.20	%		0.02	%
	2010			0.65	%		2.80	%		6.13		17.99		1,377,501		14,515,038		11.85	%		14.16	%		0.00	%
MFS VIT Total Return Initial Class
	2014			1.40	%		2.35	%		17.97		21.13		434,113		9,082,276		5.97	%		6.99	%		1.83	%
	2013			1.40	%		2.35	%		16.96		19.75		523,192		10,232,408		16.28	%		17.39	%		1.72	%
	2012			1.40	%		2.35	%		14.53		16.82		641,850		10,712,722		8.67	%		9.71	%		2.73	%
	2011			1.40	%		2.35	%		13.27		15.34		771,762		11,755,872		-0.59	%		0.36	%		2.54	%
	2010			1.40	%		2.35	%		13.25		15.28		930,794		14,141,260		7.38	%		8.40	%		2.78	%
MFS VIT Total Return Service Class
	2014	1/10/14		0.75	%		1.95	%		14.42		17.38		794		13,179		2.11	%		7.29	%		2.59	%
	2012			0.65	%		3.00	%		10.78		15.45		21,159,447		278,375,650		7.66	%		10.22	%		2.49	%
	2011			0.65	%		3.00	%		9.88		14.13		23,744,780		287,424,116		-1.27	%		0.93	%		2.35	%
	2010			0.65	%		2.85	%		9.89		14.10		26,324,559		320,891,076		6.55	%		8.92	%		2.53	%
MFS VIT Utilities Initial Class
	2014			0.40	%		2.35	%		31.76		47.45		297,483		10,684,081		10.11	%		11.17	%		2.07	%
	2013			1.40	%		2.35	%		28.63		43.00		329,869		10,793,626		17.72	%		18.84	%		2.31	%
	2012			1.40	%		2.35	%		24.14		36.46		368,766		10,154,800		10.85	%		11.91	%		6.65	%
	2011			1.40	%		2.35	%		21.61		32.82		438,395		10,788,087		4.30	%		5.30	%		3.17	%
	2010			1.40	%		2.35	%		20.57		31.41		528,719		12,359,268		11.17	%		12.23	%		3.15	%
MFS VIT Utilities Service Class
	2014			0.65	%		3.20	%		14.69		47.76		8,596,870		233,370,004		8.92	%		11.74	%		1.91	%
	2013			0.65	%		3.20	%		13.48		43.26		8,857,378		217,755,613		16.43	%		19.44	%		2.07	%
	2012			0.65	%		3.20	%		11.58		36.65		9,710,700		202,449,105		9.65	%		12.48	%		6.46	%
	2011			0.65	%		3.20	%		12.18		32.38		9,912,951		187,068,650		3.51	%		5.82	%		3.04	%
	2010			0.65	%		2.85	%		11.62		31.03		9,659,921		176,418,368		10.32	%		12.77	%		3.03	%
MFS VIT II International Value Initial Class
	2014	12/26/14		0.40	%		0.40	%		9.78		9.78		7,060		69,032		-1.37	%		-1.37	%		0.00	%
MFS VIT II International Value Service Class
	2014	6/27/14		0.30	%		1.65	%		9.69		9.77		179,168		1,740,765		-4.68	%		-0.41	%		1.13	%

N-104

Lincoln Life Variable Annuity Account N

Notes to financial statements (continued)

3. Financial Highlights (continued)

Subaccount	Year	Commencement Date(1)	Minimum Fee Rate(2)			Maximum Fee Rate(2)			Minimum Unit Value(3)		Maximum Unit Value(3)		Units Outstanding		Net Assets		Minimum Total Return(4)			Maximum Total Return(4)			Investment Income Ratio(5)
Morgan Stanley UIF Capital Growth Class II
	2014			0.65	%		2.30	%	$	19.90	$	34.90		59,632	$	1,743,735		3.68	%		5.40	%		0.00	%
	2013			0.65	%		2.30	%		18.74		33.11		70,080		1,998,069		44.51	%		46.76	%		0.21	%
	2012			0.65	%		2.20	%		12.90		22.56		80,314		1,585,107		11.96	%		13.31	%		0.00	%
	2011			0.65	%		1.85	%		19.30		19.91		83,417		1,463,259		-4.63	%		-3.67	%		0.00	%
	2010			0.65	%		1.65	%		20.24		20.67		61,149		1,257,711		20.61	%		21.82	%		0.00	%
NB AMT Mid Cap Growth I Class
	2012			1.15	%		2.90	%		13.79		21.86		1,992,717		36,876,586		9.31	%		11.13	%		0.00	%
	2011			1.15	%		2.80	%		12.41		19.70		2,549,870		42,704,716		-2.30	%		-0.68	%		0.00	%
	2010			1.15	%		2.80	%		12.49		19.87		3,131,370		53,220,622		25.54	%		27.62	%		0.00	%
NB AMT Mid Cap Intrinsic Value I Class
	2014			1.15	%		2.90	%		15.38		30.19		1,351,272		37,598,861		10.58	%		12.54	%		1.04	%
	2013			1.15	%		2.90	%		14.70		27.02		1,643,558		40,691,909		33.14	%		35.48	%		1.15	%
	2012			1.15	%		2.90	%		10.97		20.08		1,996,543		36,696,208		12.28	%		14.21	%		0.59	%
	2011			1.15	%		2.85	%		9.71		17.71		2,478,404		40,147,591		-9.12	%		-7.57	%		0.60	%
	2010			1.15	%		2.85	%		10.63		19.29		3,131,986		55,143,709		22.64	%		24.74	%		0.68	%
Oppenheimer Global Fund/VA Service Class
	2014			0.65	%		2.20	%		13.68		24.71		396,094		8,514,677		-0.17	%		1.39	%		0.86	%
	2013			0.65	%		2.20	%		13.68		24.37		413,888		8,792,629		24.35	%		26.17	%		1.17	%
	2012			0.65	%		2.10	%		11.00		19.32		451,145		7,598,199		18.44	%		20.17	%		1.93	%
	2011			0.65	%		2.20	%		10.60		16.08		489,083		6,783,278		-10.52	%		-9.12	%		0.80	%
	2010			0.65	%		2.20	%		17.26		17.69		218,942		3,814,587		13.64	%		14.95	%		0.82	%
Oppenheimer International Growth Fund/VA Non-Service Class
	2014	9/22/14		0.40	%		0.80	%		9.02		9.04		58,349		527,486		-3.86	%		2.07	%		0.00	%
Oppenheimer International Growth Fund/VA Service Class
	2014	6/30/14		1.10	%		1.65	%		8.98		9.02		133,741		1,204,995		-9.94	%		-5.22	%		0.00	%
Oppenheimer Main Street Small Cap Fund/VA Non-Service Class
	2014	6/27/14		1.10	%		1.65	%		11.01		11.05		78,643		868,036		6.41	%		11.95	%		0.00	%
PIMCO VIT All Asset All Authority Advisor Class
	2014	7/10/14		1.10	%		1.65	%		9.25		9.28		80,259		744,225		-8.62	%		-6.62	%		6.83	%
PIMCO VIT All Asset All Authority Institutional Class
	2014	9/15/14		0.40	%		0.40	%		9.33		9.33		10,366		96,766		-6.31	%		-6.31	%		7.83	%
PIMCO VIT CommodityRealReturn Strategy Advisor Class
	2014			0.65	%		2.80	%		8.67		10.20		1,160,090		11,263,973		-20.83	%		-19.15	%		0.27	%
	2013			0.65	%		2.75	%		10.58		12.62		1,018,149		12,296,157		-16.86	%		-15.27	%		1.67	%
	2012			0.65	%		2.80	%		12.56		14.90		970,247		13,956,075		2.23	%		4.44	%		2.44	%
	2011			0.65	%		2.80	%		13.48		14.26		1,029,506		14,298,970		-10.10	%		-8.14	%		14.26	%
	2010			0.65	%		2.80	%		14.99		15.53		774,132		11,842,341		20.82	%		23.44	%		15.68	%
PIMCO VIT CommodityRealReturn Strategy Institutional Class
	2014	9/12/14		0.40	%		0.40	%		7.41		7.41		556		4,126		-16.96	%		-16.96	%		0.28	%
PIMCO VIT Emerging Markets Bond Advisor Class
	2014	7/8/14		1.10	%		1.65	%		9.53		9.56		87,196		833,472		-7.47	%		-5.25	%		2.55	%
PIMCO VIT Unconstrained Bond Advisor Class
	2014	7/18/14		0.30	%		1.65	%		9.99		10.08		55,732		558,170		-0.62	%		0.23	%		0.62	%
Putnam VT Absolute Return 500 Class IB
	2014	7/17/14		1.10	%		1.50	%		10.19		10.22		80,141		818,364		1.70	%		2.31	%		0.00	%
Putnam VT Global Health Care Class IB
	2014			1.30	%		2.65	%		22.39		27.64		280,068		6,660,175		24.31	%		25.99	%		0.27	%
	2013			1.30	%		2.65	%		17.89		21.94		214,575		4,055,822		37.97	%		39.84	%		1.22	%
	2012			1.30	%		2.65	%		12.88		15.69		368,991		5,014,006		19.08	%		20.69	%		1.09	%
	2011			1.30	%		2.65	%		10.74		13.00		229,560		2,578,235		-3.77	%		-2.45	%		0.83	%
	2010			1.30	%		2.65	%		11.08		13.33		247,720		2,883,922		-0.21	%		1.14	%		1.96	%
Putnam VT Growth & Income Class IB
	2014			1.30	%		2.35	%		14.04		21.30		96,045		1,738,887		8.16	%		9.30	%		1.33	%
	2013			1.30	%		2.35	%		12.97		19.70		105,381		1,744,914		32.53	%		33.93	%		1.56	%
	2012			1.30	%		2.35	%		9.77		14.86		103,687		1,285,320		16.37	%		17.60	%		1.78	%
	2011			1.30	%		2.35	%		10.18		12.52		130,443		1,384,436		-6.86	%		-5.87	%		1.23	%
	2010			1.30	%		2.35	%		10.89		13.41		175,377		2,005,396		11.72	%		12.90	%		1.61	%

N-105

Lincoln Life Variable Annuity Account N

Notes to financial statements (continued)

3. Financial Highlights (continued)

Subaccount	Year	Commencement Date(1)	Minimum Fee Rate(2)			Maximum Fee Rate(2)			Minimum Unit Value(3)		Maximum Unit Value(3)		Units Outstanding		Net Assets		Minimum Total Return(4)			Maximum Total Return(4)			Investment Income Ratio(5)
SIPT VP Market Growth Strategy Class III
	2014	7/16/14		1.10	%		1.25	%	$	10.04	$	10.05		25,852	$	259,802		-1.91	%		-0.84	%		5.61	%
SIPT VP Market Plus Strategy Class III
	2014	7/2/14		0.30	%		1.25	%		10.12		10.18		109,455		1,107,606		-2.30	%		3.98	%		8.11	%
Templeton Foreign VIP Class 1
	2014	9/25/14		0.40	%		0.40	%		8.70		8.70		2,307		20,057		-9.49	%		-9.49	%		0.00	%
Templeton Foreign VIP Class 4
	2014	7/11/14		0.30	%		1.50	%		8.62		8.69		81,880		707,406		-13.21	%		-4.86	%		0.00	%
Templeton Global Bond VIP Class 1
	2014	9/15/14		0.40	%		0.40	%		9.99		9.99		96,642		965,253		-1.71	%		-1.71	%		0.00	%
Templeton Global Bond VIP Class 2
	2014			0.60	%		3.15	%		10.46		18.85		25,988,750		467,006,812		-1.33	%		1.17	%		5.08	%
	2013			0.65	%		3.15	%		10.60		18.74		29,046,516		521,571,310		-1.52	%		0.97	%		4.79	%
	2012			0.65	%		3.15	%		10.78		18.67		31,621,406		568,205,330		11.61	%		14.32	%		6.41	%
	2011			0.65	%		3.05	%		14.79		16.43		36,180,320		574,633,153		-3.66	%		-1.51	%		5.68	%
	2010			0.65	%		2.85	%		15.36		16.79		40,764,015		663,735,354		11.23	%		13.71	%		1.44	%
Templeton Global Bond VIP Class 4
	2014	6/30/14		0.30	%		1.65	%		9.88		9.97		398,338		3,945,389		-2.52	%		-1.89	%		0.00	%
Templeton Growth VIP Class 2
	2014			1.10	%		2.90	%		12.05		20.52		2,321,118		39,440,270		-5.60	%		-3.88	%		1.35	%
	2013			1.10	%		2.90	%		12.56		21.51		2,795,534		49,561,031		27.15	%		29.39	%		2.67	%
	2012			1.10	%		2.85	%		9.71		16.75		3,394,051		46,734,678		17.73	%		19.74	%		2.05	%
	2011			1.10	%		2.80	%		8.11		14.09		4,138,216		48,108,484		-9.55	%		-7.99	%		1.35	%
	2010			1.10	%		2.80	%		8.82		15.43		4,977,019		63,340,595		4.43	%		6.22	%		1.38	%
Transparent Value Directional Allocation VI Class I
	2014	7/25/14		0.40	%		0.40	%		9.96		9.96		3,511		34,995		-3.23	%		-3.23	%		0.00	%
Transparent Value Directional Allocation VI Class II
	2014	7/11/14		1.10	%		1.50	%		9.89		9.92		1,117,078		11,078,510		-3.44	%		6.83	%		0.00	%
UIF Global Infrastructure Class I
	2014	7/24/14		0.40	%		0.40	%		10.64		10.64		4,651		49,489		-1.02	%		-1.02	%		0.00	%
UIF Global Infrastructure Class II
	2014	6/30/14		1.10	%		1.65	%		10.52		10.56		152,233		1,606,202		-0.23	%		1.01	%		0.00	%
Van Eck VIP Global Hard Assets Class S
	2014	7/10/14		0.30	%		1.65	%		7.50		7.57		81,965		616,806		-28.81	%		-22.40	%		0.00	%
Van Eck VIP Global Hard Assets Initial Class
	2014	7/24/14		0.40	%		0.80	%		7.56		7.58		25,206		191,019		-29.20	%		-24.78	%		0.00	%
Virtus VIT Multi-Sector Fixed Income Class A
	2014	7/2/14		1.10	%		1.65	%		9.69		9.72		138,168		1,341,749		-4.16	%		-3.20	%		6.12	%
Virtus VIT Premium AlphaSector Class A
	2014	7/15/14		0.30	%		1.65	%		9.81		9.89		267,587		2,631,015		-4.62	%		2.50	%		0.00	%
Virtus VIT Premium AlphaSector Class I
	2014	9/22/14		0.40	%		0.40	%		9.89		9.89		14,402		142,489		-3.90	%		-3.90	%		0.00	%

(1)  Reflects less than a full year of activity. Funds were first received in this option on the commencement date noted or the option was inactive at the date funds were received thereby a succeeding commencement date is disclosed.

(2)  These amounts represent the annualized minimum and maximum contract expenses of the separate account, consisting primarily of mortality and expense charges, for each period indicated. The ratios include only those expenses that result in a direct reduction to unit values. Charges made directly to contract owner accounts through the redemption of units and expenses of the underlying funds have been excluded.

(3)  As the unit value is presented as a range of minimum to maximum values for only those subaccounts which existed for the entire year, some individual contract unit values may not be within the ranges presented as a result of partial year activity.

(4)  These amounts represent the total return, including changes in value of mutual funds, and reflect deductions for all items included in the fee rate. The total return does not include contract charges deducted directly from policy account values. The total return is not annualized. As the total return is presented as a range of minimum to

N-106

Lincoln Life Variable Annuity Account N

Notes to financial statements (continued)

3. Financial Highlights (continued)

maximum values, for only those subaccounts which existed for the entire year, some individual contract total returns may not be within the ranges presented as a result of partial year activity.

(5)  These amounts represent the dividends, excluding distributions of capital gains, received by the subaccount from the underlying mutual fund, net of management fees assessed by the fund manager, divided by the average net assets. These ratios exclude those expenses, such as mortality and expense guarantee charges, that result in direct reductions in the unit values. The recognition of investment income by the subaccount is affected by the timing of the declaration of dividends by the underlying fund in which the subaccounts invest. Investment income ratios are not annualized.

Note: Fee rate, unit value and total return minimum and maximum are the same where there is only one active contract level charge for the subaccount.

4. Purchases and Sales of Investments

The aggregate cost of investments purchased and the aggregate proceeds from investments sold were as follows for 2014:

Subaccount	Aggregate Cost of Purchases		Aggregate Proceeds from Sales
ABVPSF Global Thematic Growth Class B	$	4,342,349	$	7,288,053
ABVPSF Growth and Income Class B		118,516		116,163
ABVPSF International Value Class B		12,739		7,624
ABVPSF Large Cap Growth Class B		783,879		1,715,550
ABVPSF Small/Mid Cap Value Class A		58,757		71
ABVPSF Small/Mid Cap Value Class B		34,461,312		38,065,106
Alps|Alerian Energy Infrastructure Class I		113,730		42
Alps|Alerian Energy Infrastructure Class III		2,136,050		160,898
Alps|Stadion Tactical Defensive Class I		38,526		—
Alps|Stadion Tactical Defensive Class III		766,047		18,570
American Century VP Inflation Protection Class II		210,601		212,400
American Funds Asset Allocation Class 1		533,348		35,349
American Funds Asset Allocation Class 4		5,055,022		34,277
American Funds Blue Chip Income and Growth Class 1		1,364,899		152,275
American Funds Blue Chip Income and Growth Class 4		3,092,607		130,111
American Funds Bond Class 1		1,276,451		69,241
American Funds Capital Income Builder Class 1		81,068		36,181
American Funds Capital Income Builder Class 4		3,527,260		205,224
American Funds Global Balanced Class 1		240,367		126,960
American Funds Global Bond Class 1		637,586		54,614
American Funds Global Growth Class 1		872,972		80,812
American Funds Global Growth Class 2		43,540,240		44,746,371
American Funds Global Growth Class 4		1,718,960		4,654
American Funds Global Growth and Income Class 1		524,617		153,642
American Funds Global Small Capitalization Class 1		504,020		17,960
American Funds Global Small Capitalization Class 2		17,908,478		50,299,440
American Funds Global Small Capitalization Class 4		1,110,970		2,604
American Funds Growth Class 1		3,531,202		259,430
American Funds Growth Class 2		94,898,702		265,282,357
American Funds Growth Class 4		7,333,749		86,175
American Funds Growth-Income Class 1		2,100,207		98,788
American Funds Growth-Income Class 2		134,596,016		316,769,252
American Funds Growth-Income Class 4		4,746,510		178,927
American Funds High-Income Bond Class 1		510,140		28,866
American Funds International Class 1		1,747,603		98,913
American Funds International Class 2		47,039,419		65,765,893
American Funds International Class 4		3,120,157		7,422
American Funds International Growth and Income Class 1		946,100		114,280
American Funds Managed Risk Asset Allocation Class P1		367,080		8,112
American Funds Managed Risk Asset Allocation Class P2		6,258,170		15,006
American Funds Managed Risk Blue Chip Income and Growth Class P1		88,509		1,655
American Funds Managed Risk Growth Class P1		24,411		6,128
American Funds Managed Risk Growth-Income Class P1		21,414		419

N-107

Lincoln Life Variable Annuity Account N

Notes to financial statements (continued)

4. Purchases and Sales of Investments (continued)

Subaccount	Aggregate Cost of Purchases		Aggregate Proceeds from Sales
American Funds Managed Risk International Class P1	$	14,414	$	60
American Funds Mortgage Class 1		77,402		128,835
American Funds Mortgage Class 4		53,460		464
American Funds New World Class 1		1,276,021		73,118
American Funds New World Class 4		2,341,438		116,526
American Funds U.S. Government/AAA-Rated Securities Class 1		152,312		246,959
BlackRock Global Allocation V.I. Class I		635,218		17,171
BlackRock Global Allocation V.I. Class III		163,577,022		126,934,644
ClearBridge Variable Aggressive Growth Class I		165,375		108
ClearBridge Variable Aggressive Growth Class II		4,836,445		1,906
ClearBridge Variable Mid Cap Core Class I		2,682		6
ClearBridge Variable Mid Cap Core Class II		14,903,068		165,931
Delaware VIP Diversified Income Standard Class		594,834		33,070
Delaware VIP Diversified Income Service Class		265,264,827		45,825,961
Delaware VIP Emerging Markets Standard Class		3,333		4
Delaware VIP Emerging Markets Service Class		36,412,663		47,282,700
Delaware VIP High Yield Standard Class		3,037,496		3,385,979
Delaware VIP High Yield Service Class		26,045,118		50,246,780
Delaware VIP International Value Equity Standard Class		48,423		87,504
Delaware VIP Limited-Term Diversified Income Standard Class		442,217		107,560
Delaware VIP Limited-Term Diversified Income Service Class		149,235,974		89,075,173
Delaware VIP REIT Standard Class		1,525,493		983,101
Delaware VIP REIT Service Class		18,653,247		20,666,471
Delaware VIP Small Cap Value Standard Class		844,992		1,069,304
Delaware VIP Small Cap Value Service Class		44,604,695		49,572,114
Delaware VIP Smid Cap Growth Standard Class		976,923		1,436,436
Delaware VIP Smid Cap Growth Service Class		22,593,508		32,578,087
Delaware VIP U.S. Growth Service Class		38,566,643		34,881,155
Delaware VIP Value Standard Class		610,057		1,720,706
Delaware VIP Value Service Class		44,241,785		35,778,575
Deutsche Alternative Asset Allocation VIP Class A		240,124		29,880
Deutsche Alternative Asset Allocation VIP Class B		8,240,647		6,072,808
Deutsche Equity 500 Index VIP Class A		408,387		2,118,863
Deutsche Equity 500 Index VIP Class B		47,014		47,027
Deutsche Small Cap Index VIP Class A		629,344		1,459,880
Eaton Vance VT Floating-Rate Income Fund Initial Class		1,446,711		22,085
Eaton Vance VT Floating-Rate Income Fund Advisor Class		479,163		36,200
Fidelity VIP Contrafund Initial Class		128,197		231
Fidelity VIP Contrafund Service Class 2		40,264,480		152,094,267
Fidelity VIP Equity-Income Service Class 2		47,091		47,126
Fidelity VIP Growth Initial Class		688,530		1,332,838
Fidelity VIP Growth Service Class 2		52,259,090		73,711,863
Fidelity VIP Mid Cap Initial Class		579,754		838
Fidelity VIP Mid Cap Service Class 2		30,902,385		63,148,105
Fidelity VIP Overseas Service Class 2		276		277
First Trust Multi Income Allocation Class I		464,879		43,194
First Trust/Dow Jones Dividend & Income Allocation Class I		1,635,385		107,601
Franklin Founding Funds Allocation VIP Class 4		6,642,627		105,546
Franklin Income VIP Class 1		409,922		411,595
Franklin Income VIP Class 2		72,272,523		66,475,386
Franklin Income VIP Class 4		8,373,508		435,881
Franklin Mutual Shares VIP Class 2		42,189,965		83,892,243
Franklin Mutual Shares VIP Class 4		935,781		112,696
Franklin Rising Dividends VIP Class 1		21,756		—
Franklin Rising Dividends VIP Class 4		2,524,991		10,135
Franklin Small Cap Value VIP Class 1		266,840		166
Franklin Small Cap Value VIP Class 4		730,974		7,359
Franklin Small-Mid Cap Growth VIP Class 2		29,490		29,309
Franklin Small-Mid Cap Growth VIP Class 4		635,212		19,007
Goldman Sachs VIT Large Cap Value Service Class		32,998,926		27,543,695
Goldman Sachs VIT Money Market Institutional Class		608,305		278,145

N-108

Lincoln Life Variable Annuity Account N

Notes to financial statements (continued)

4. Purchases and Sales of Investments (continued)

Subaccount	Aggregate Cost of Purchases		Aggregate Proceeds from Sales
Goldman Sachs VIT Money Market Service Class	$	15,870,617	$	8,957,068
Goldman Sachs VIT Multi-Strategy Alternatives Advisor Class		780,070		1,983
Goldman Sachs VIT Multi-Strategy Alternatives Institutional Class		30,541		585
Goldman Sachs VIT Strategic Income Advisor Class		1,320,949		563,055
Guggenheim Long Short Equity		326,900		1,782
Guggenheim Multi-Hedge Strategies		570,079		79,177
Hartford Capital Appreciation HLS Class IA		52,370		62
Hartford Capital Appreciation HLS Class IC		1,599,612		3,387
Huntington VA Balanced		743,250		3,120,426
Huntington VA Dividend Capture		166,139		168,290
Invesco V.I. American Franchise Series I		106,888		502,353
Invesco V.I. American Franchise Series II		4,563		287,144
Invesco V.I. Balanced-Risk Allocation Series I		163,378		343
Invesco V.I. Balanced-Risk Allocation Series II		2,090,051		661,226
Invesco V.I. Comstock Series II		1,137,586		33,079
Invesco V.I. Core Equity Series I		151,193		1,456,156
Invesco V.I. Core Equity Series II		92,024		414,485
Invesco V.I. Diversified Dividend Series I		20,187		1,267
Invesco V.I. Diversified Dividend Series II		684,728		7,283
Invesco V.I. Equally-Weighted S&P 500 Series II		1,518,721		36,353
Invesco V.I. Equity and Income Series II		1,304,781		8,519
Invesco V.I. International Growth Series I		319,643		754,783
Invesco V.I. International Growth Series II		10,136,885		490,241
Ivy Funds VIP Asset Strategy Class A		4,987,623		841,644
Ivy Funds VIP Energy Class A		1,126,312		78,123
Ivy Funds VIP High Income Class A		2,505,656		128,259
Ivy Funds VIP Micro Cap Growth Class A		389,423		9,728
Ivy Funds VIP Mid Cap Growth Class A		656,651		1,715
Ivy Funds VIP Science and Technology Class A		1,682,678		43,853
Janus Aspen Balanced Service Class		1,228,073		3,435,301
Janus Aspen Enterprise Service Class		825,679		1,092,211
Janus Aspen Global Research Service Class		86,176		325,850
JPMIT Intrepid Mid Cap Class 1		49,096		62
JPMIT Intrepid Mid Cap Class 2		1,549,982		34,916
LVIP American Balanced Allocation Standard Class		1,028,642		369,760
LVIP American Balanced Allocation Service Class		2,796,158		151,306
LVIP American Century VP Mid Cap Value RPM Service Class		82,046,699		1,490,901
LVIP American Global Growth Service Class II		18,736,479		4,179,703
LVIP American Global Small Capitalization Service Class II		7,090,826		6,855,073
LVIP American Growth Allocation Standard Class		116,515		33,784
LVIP American Growth Allocation Service Class		3,234,802		3,942
LVIP American Growth Service Class II		31,564,884		16,305,001
LVIP American Growth-Income Service Class II		26,018,702		16,607,789
LVIP American Income Allocation Standard Class		5,245		47
LVIP American International Service Class II		15,649,609		8,511,966
LVIP American Preservation Standard Class		28,484		117,850
LVIP American Preservation Service Class		318,040		165,140
LVIP AQR Enhanced Global Strategies Standard Class		29,041		15,009
LVIP AQR Enhanced Global Strategies Service Class		1,346,930		45,191
LVIP Baron Growth Opportunities Standard Class		505,575		789
LVIP Baron Growth Opportunities Service Class		13,638,439		28,950,786
LVIP BlackRock Emerging Markets RPM Standard Class		81,399		11,269
LVIP BlackRock Emerging Markets RPM Service Class		89,826,839		3,790,510
LVIP BlackRock Equity Dividend RPM Standard Class		256,211		6,922
LVIP BlackRock Equity Dividend RPM Service Class		153,787,396		9,858,055
LVIP BlackRock Global Allocation V.I. RPM Standard Class		242,469		224,877
LVIP BlackRock Global Allocation V.I. RPM Service Class		469,249,930		7,923,939
LVIP BlackRock Inflation Protected Bond Standard Class		150,298		112,199
LVIP BlackRock Inflation Protected Bond Service Class		74,410,554		51,242,682
LVIP BlackRock Multi-Asset Income Standard Class		141,807		6
LVIP BlackRock Multi-Asset Income Service Class		1,251,666		257,901

N-109

Lincoln Life Variable Annuity Account N

Notes to financial statements (continued)

4. Purchases and Sales of Investments (continued)

Subaccount	Aggregate Cost of Purchases		Aggregate Proceeds from Sales
LVIP Capital Growth Service Class	$	7,333,992	$	47,623,135
LVIP Clarion Global Real Estate Standard Class		286,696		150
LVIP Clarion Global Real Estate Service Class		9,067,231		15,132,673
LVIP ClearBridge Variable Appreciation RPM Standard Class		67,300		133
LVIP ClearBridge Variable Appreciation RPM Service Class		59,830,841		209,353
LVIP Columbia Small-Mid Cap Growth RPM Service Class		115,198,799		19,456,464
LVIP Delaware Bond Standard Class		3,802,246		23,033,913
LVIP Delaware Bond Service Class		208,657,413		87,944,688
LVIP Delaware Diversified Floating Rate Standard Class		401,827		99,257
LVIP Delaware Diversified Floating Rate Service Class		179,989,733		90,841,276
LVIP Delaware Foundation Aggressive Allocation Standard Class		277,547		2,174,925
LVIP Delaware Foundation Aggressive Allocation Service Class		3,860,272		7,508,161
LVIP Delaware Growth and Income Service Class		4,629,367		9,815,410
LVIP Delaware Social Awareness Standard Class		916,854		2,068,051
LVIP Delaware Social Awareness Service Class		9,520,174		10,802,348
LVIP Delaware Special Opportunities Service Class		8,498,270		8,768,896
LVIP Dimensional Non-U.S. Equity RPM Standard Class		1,340,504		52,545
LVIP Dimensional Non-U.S. Equity RPM Service Class		98,257,060		6,121,070
LVIP Dimensional U.S. Equity RPM Standard Class		2,526,046		152,692
LVIP Dimensional U.S. Equity RPM Service Class		136,439,380		10,164,586
LVIP Dimensional/Vanguard Total Bond Standard Class		2,869,670		284,517
LVIP Dimensional/Vanguard Total Bond Service Class		118,505,632		3,879,123
LVIP Franklin Mutual Shares RPM Standard Class		20,490		20
LVIP Franklin Mutual Shares RPM Service Class		95,279,154		6,261,482
LVIP Franklin Templeton Multi-Asset Opportunities Service Class		600,138		2,392
LVIP Global Income Service Class		83,638,419		9,747,152
LVIP Goldman Sachs Income Builder Standard Class		20,698		40
LVIP Goldman Sachs Income Builder Service Class		669,917		65,806
LVIP Invesco Diversified Equity Income RPM Service Class		30,323,629		101,856
LVIP Invesco V.I. Comstock RPM Standard Class		80,551		200
LVIP Invesco V.I. Comstock RPM Service Class		70,727,871		2,182,090
LVIP JPMorgan High Yield Service Class		58,522,116		51,415,589
LVIP JPMorgan Mid Cap Value RPM Standard Class		91,224		13,734
LVIP JPMorgan Mid Cap Value RPM Service Class		109,483,273		10,700,943
LVIP Managed Risk American Balanced Allocation Standard Class		71,938		186,733
LVIP Managed Risk American Balanced Allocation Service Class		4,024,434		94,462
LVIP Managed Risk American Growth Allocation Standard Class		538,281		136,481
LVIP Managed Risk American Growth Allocation Service Class		19,491,992		74,738
LVIP Managed Risk Profile 2010 Service Class		1,270,102		2,263,972
LVIP Managed Risk Profile 2020 Service Class		819,602		3,619,715
LVIP Managed Risk Profile 2030 Service Class		403,779		2,838,916
LVIP Managed Risk Profile 2040 Service Class		413,278		571,527
LVIP Managed Risk Profile Conservative Standard Class		34,814		363
LVIP Managed Risk Profile Conservative Service Class		175,119,140		63,739,428
LVIP Managed Risk Profile Growth Standard Class		607,995		238,053
LVIP Managed Risk Profile Growth Service Class		2,046,965,244		9,816,472
LVIP Managed Risk Profile Moderate Standard Class		667,233		120,773
LVIP Managed Risk Profile Moderate Service Class		1,289,664,046		42,505,747
LVIP MFS International Growth Standard Class		2,378		—
LVIP MFS International Growth Service Class		17,433,410		10,069,029
LVIP MFS International Growth RPM Service Class		61,138,920		1,874,514
LVIP MFS Value Standard Class		6,927		1
LVIP MFS Value Service Class		37,205,099		73,085,688
LVIP Mid-Cap Value Service Class		69,934,248		10,416,906
LVIP Mondrian International Value Standard Class		1,301,866		2,918,574
LVIP Mondrian International Value Service Class		32,211,015		34,631,472
LVIP Money Market Standard Class		16,037,646		23,738,070
LVIP Money Market Service Class		210,544,680		228,527,879
LVIP Multi-Manager Global Equity RPM Service Class		5,251,145		37,854
LVIP PIMCO Low Duration Bond Standard Class		118,186		33,212
LVIP PIMCO Low Duration Bond Service Class		55,873,576		3,421,455

N-110

Lincoln Life Variable Annuity Account N

Notes to financial statements (continued)

4. Purchases and Sales of Investments (continued)

Subaccount	Aggregate Cost of Purchases		Aggregate Proceeds from Sales
LVIP SSgA Bond Index Standard Class	$	281,473	$	27,044
LVIP SSgA Bond Index Service Class		44,521,830		89,965,392
LVIP SSgA Conservative Index Allocation Service Class		11,795,881		9,580,954
LVIP SSgA Conservative Structured Allocation Standard Class		169,358		45
LVIP SSgA Conservative Structured Allocation Service Class		19,278,187		22,097,083
LVIP SSgA Developed International 150 Standard Class		264,218		10,370
LVIP SSgA Developed International 150 Service Class		18,236,525		16,291,945
LVIP SSgA Emerging Markets 100 Standard Class		262,933		48,137
LVIP SSgA Emerging Markets 100 Service Class		22,231,281		20,579,473
LVIP SSgA Global Tactical Allocation RPM Standard Class		142,214		120,709
LVIP SSgA Global Tactical Allocation RPM Service Class		174,242,763		31,143,052
LVIP SSgA International Index Standard Class		240,166		5,793
LVIP SSgA International Index Service Class		25,194,332		28,075,076
LVIP SSgA International RPM Service Class		17,023,964		564,166
LVIP SSgA Large Cap 100 Standard Class		900,779		150,098
LVIP SSgA Large Cap 100 Service Class		30,947,615		54,392,669
LVIP SSgA Large Cap RPM Standard Class		15,036		15,117
LVIP SSgA Large Cap RPM Service Class		74,162,474		3,242,517
LVIP SSgA Moderate Index Allocation Service Class		25,603,731		12,761,072
LVIP SSgA Moderate Structured Allocation Service Class		46,835,421		94,056,670
LVIP SSgA Moderately Aggressive Index Allocation Service Class		17,412,992		13,885,790
LVIP SSgA Moderately Aggressive Structured Allocation Service Class		50,331,368		32,518,023
LVIP SSgA S&P 500 Index Standard Class		2,053,855		5,684,785
LVIP SSgA S&P 500 Index Service Class		61,556,755		127,381,550
LVIP SSgA Small-Cap Index Standard Class		834,218		107,388
LVIP SSgA Small-Cap Index Service Class		20,402,946		47,142,163
LVIP SSgA Small-Cap RPM Standard Class		44,930		3,107
LVIP SSgA Small-Cap RPM Service Class		64,620,016		1,722,110
LVIP SSgA Small-Mid Cap 200 Standard Class		804,326		85,585
LVIP SSgA Small-Mid Cap 200 Service Class		13,893,550		11,046,887
LVIP T. Rowe Price Growth Stock Standard Class		49,103		71
LVIP T. Rowe Price Growth Stock Service Class		21,838,779		45,984,611
LVIP T. Rowe Price Structured Mid-Cap Growth Standard Class		979,134		1,085,219
LVIP T. Rowe Price Structured Mid-Cap Growth Service Class		15,859,740		14,667,899
LVIP Templeton Growth RPM Service Class		246,186,989		7,869,394
LVIP UBS Large Cap Growth RPM Standard Class		54,061		365,273
LVIP UBS Large Cap Growth RPM Service Class		79,976,156		16,711,938
LVIP Vanguard Domestic Equity ETF Standard Class		73,397		34,090
LVIP Vanguard Domestic Equity ETF Service Class		25,497,048		16,229,409
LVIP Vanguard International Equity ETF Standard Class		124,474		73,722
LVIP Vanguard International Equity ETF Service Class		20,269,834		2,997,124
LVIP VIP Contrafund RPM Standard Class		337,085		15,819
LVIP VIP Contrafund RPM Service Class		174,883,440		4,649,811
LVIP VIP Mid Cap RPM Service Class		11,572,000		137,349
Lord Abbett Series Fund Bond Debenture Class VC		1,751,094		90,797
Lord Abbett Series Fund Developing Growth Class VC		986,302		242,144
Lord Abbett Series Fund Fundamental Equity Class VC		3,395,386		2,328,244
Lord Abbett Series Fund Short Duration Income Class VC		2,881,922		270,393
MFS VIT Core Equity Service Class		71,341		645,814
MFS VIT Growth Initial Class		234,119		446,104
MFS VIT Growth Service Class		17,463,067		6,430,776
MFS VIT Total Return Initial Class		437,557		1,943,859
MFS VIT Total Return Service Class		59,865		46,735
MFS VIT Utilities Initial Class		853,275		1,660,597
MFS VIT Utilities Service Class		30,099,003		28,380,774
MFS VIT II International Value Initial Class		37,393		—
MFS VIT II International Value Service Class		1,784,083		13,824
Morgan Stanley UIF Capital Growth Class II		292,535		526,164
NB AMT Mid Cap Growth I Class		23,310		23,620
NB AMT Mid Cap Intrinsic Value I Class		2,954,120		9,565,274
Oppenheimer Global Fund/VA Service Class		880,310		859,735

N-111

Lincoln Life Variable Annuity Account N

Notes to financial statements (continued)

4. Purchases and Sales of Investments (continued)

Subaccount	Aggregate Cost of Purchases		Aggregate Proceeds from Sales
Oppenheimer International Growth Fund/VA Non-Service Class	$	522,506	$	810
Oppenheimer International Growth Fund/VA Service Class		1,259,712		4,744
Oppenheimer Main Street Small Cap Fund/VA Non-Service Class		861,083		28,573
PIMCO VIT All Asset All Authority Advisor Class		821,896		4,009
PIMCO VIT All Asset All Authority Institutional Class		103,183		20
PIMCO VIT CommodityRealReturn Strategy Advisor Class		3,721,071		2,067,291
PIMCO VIT CommodityRealReturn Strategy Institutional Class		4,812		—
PIMCO VIT Emerging Markets Bond Advisor Class		1,180,072		285,644
PIMCO VIT Unconstrained Bond Advisor Class		662,672		103,858
Putnam VT Absolute Return 500 Class IB		911,203		111,407
Putnam VT Global Health Care Class IB		4,823,596		2,958,616
Putnam VT Growth & Income Class IB		92,626		253,954
SIPT VP Market Growth Strategy Class III		388,421		122,659
SIPT VP Market Plus Strategy Class III		1,134,238		1,729
Templeton Foreign VIP Class 1		21,914		19
Templeton Foreign VIP Class 4		802,648		44,420
Templeton Global Bond VIP Class 1		918,101		45,490
Templeton Global Bond VIP Class 2		37,936,322		76,858,314
Templeton Global Bond VIP Class 4		4,030,637		40,971
Templeton Growth VIP Class 2		3,961,622		12,444,778
Transparent Value Directional Allocation VI Class I		86,602		49,106
Transparent Value Directional Allocation VI Class II		11,499,479		157,225
UIF Global Infrastructure Class I		50,341		42
UIF Global Infrastructure Class II		1,965,411		362,325
Van Eck VIP Global Hard Assets Class S		844,487		94,916
Van Eck VIP Global Hard Assets Initial Class		213,926		68
Virtus VIT Multi-Sector Fixed Income Class A		1,507,739		104,881
Virtus VIT Premium AlphaSector Class A		2,892,124		23,213
Virtus VIT Premium AlphaSector Class I		154,874		64

5. Investments

The following is a summary of investments owned at December 31, 2014:

Subaccount	Shares Owned		Net Asset Value		Fair Value of Shares		Cost of Shares
ABVPSF Global Thematic Growth Class B		1,356,450	$	21.15	$	28,688,922	$	23,815,549
ABVPSF International Value Class B		380		13.41		5,099		5,240
ABVPSF Large Cap Growth Class B		220,227		47.38		10,434,348		5,913,670
ABVPSF Small/Mid Cap Value Class A		2,634		21.95		57,826		58,681
ABVPSF Small/Mid Cap Value Class B		8,922,024		21.79		194,410,891		160,487,219
Alps|Alerian Energy Infrastructure Class I		9,230		11.91		109,931		113,685
Alps|Alerian Energy Infrastructure Class III		161,465		11.90		1,921,430		1,969,522
Alps|Stadion Tactical Defensive Class I		3,571		10.65		38,026		38,526
Alps|Stadion Tactical Defensive Class III		72,024		10.62		764,897		747,191
American Funds Asset Allocation Class 1		48,736		22.23		1,083,393		1,052,464
American Funds Asset Allocation Class 4		227,806		22.11		5,036,789		5,019,976
American Funds Blue Chip Income and Growth Class 1		158,535		14.69		2,328,872		2,047,034
American Funds Blue Chip Income and Growth Class 4		201,592		14.63		2,949,296		2,962,578
American Funds Bond Class 1		183,097		11.08		2,028,719		2,012,378
American Funds Capital Income Builder Class 1		4,499		9.81		44,135		44,662
American Funds Capital Income Builder Class 4		333,090		9.80		3,264,285		3,323,204
American Funds Global Balanced Class 1		30,998		11.11		344,393		347,330
American Funds Global Bond Class 1		140,092		11.77		1,648,880		1,682,021
American Funds Global Growth Class 1		33,839		27.48		929,886		954,252
American Funds Global Growth Class 2		10,991,791		27.30		300,075,885		241,870,796
American Funds Global Growth Class 4		62,461		27.34		1,707,680		1,714,359
American Funds Global Growth and Income Class 1		42,374		12.78		541,544		534,653
American Funds Global Small Capitalization Class 1		24,810		26.09		647,288		645,746

N-112

Lincoln Life Variable Annuity Account N

Notes to financial statements (continued)

5. Investments (continued)

Subaccount	Shares Owned		Net Asset Value		Fair Value of Shares		Cost of Shares
American Funds Global Small Capitalization Class 2		17,321,656	$	25.64	$	444,127,258	$	337,426,868
American Funds Global Small Capitalization Class 4		42,646		25.92		1,105,391		1,108,077
American Funds Growth Class 1		65,010		80.15		5,210,541		4,953,445
American Funds Growth Class 2		19,823,064		79.84		1,582,673,410		1,062,798,904
American Funds Growth Class 4		92,618		79.74		7,385,336		7,244,906
American Funds Growth-Income Class 1		55,306		52.76		2,917,925		2,775,512
American Funds Growth-Income Class 2		39,530,008		52.41		2,071,767,724		1,410,686,843
American Funds Growth-Income Class 4		87,279		52.39		4,572,559		4,566,709
American Funds High-Income Bond Class 1		73,778		10.54		777,620		834,620
American Funds International Class 1		98,688		20.35		2,008,291		2,048,976
American Funds International Class 2		35,967,766		20.29		729,785,976		638,003,803
American Funds International Class 4		149,646		20.23		3,027,331		3,112,261
American Funds International Growth and Income Class 1		94,281		16.27		1,533,947		1,627,341
American Funds Managed Risk Asset Allocation Class P1		61,022		12.29		749,963		716,692
American Funds Managed Risk Asset Allocation Class P2		512,711		12.27		6,290,963		6,243,242
American Funds Managed Risk Blue Chip Income and Growth Class P1		8,652		11.70		101,231		98,259
American Funds Managed Risk Growth Class P1		6,054		11.37		68,836		68,202
American Funds Managed Risk Growth-Income Class P1		2,286		11.67		26,677		26,875
American Funds Managed Risk International Class P1		1,351		10.10		13,648		14,355
American Funds Mortgage Class 1		25,816		10.70		276,235		272,368
American Funds Mortgage Class 4		4,961		10.65		52,830		52,974
American Funds New World Class 1		78,104		20.72		1,618,309		1,842,184
American Funds New World Class 4		101,341		20.56		2,083,577		2,223,726
American Funds U.S. Government/AAA-Rated Securities Class 1		15,032		12.40		186,394		186,404
BlackRock Global Allocation V.I. Class I		88,248		16.23		1,432,261		1,543,426
BlackRock Global Allocation V.I. Class III		92,818,308		14.17		1,315,235,424		1,324,171,901
ClearBridge Variable Aggressive Growth Class I		5,397		30.08		162,354		165,267
ClearBridge Variable Aggressive Growth Class II		158,924		29.72		4,723,218		4,834,887
ClearBridge Variable Mid Cap Core Class I		137		18.73		2,559		2,676
ClearBridge Variable Mid Cap Core Class II		766,139		18.65		14,288,490		14,734,679
Delaware VIP Diversified Income Standard Class		105,500		10.84		1,143,618		1,126,399
Delaware VIP Diversified Income Service Class		156,132,107		10.77		1,681,542,794		1,658,027,087
Delaware VIP Emerging Markets Standard Class		161		19.54		3,141		3,329
Delaware VIP Emerging Markets Service Class		16,696,237		19.48		325,242,690		323,797,262
Delaware VIP High Yield Standard Class		766,644		5.67		4,346,870		4,417,353
Delaware VIP High Yield Service Class		32,408,206		5.65		183,106,365		183,167,860
Delaware VIP International Value Equity Standard Class		14,487		10.99		159,210		189,075
Delaware VIP Limited-Term Diversified Income Standard Class		125,336		9.87		1,237,069		1,239,726
Delaware VIP Limited-Term Diversified Income Service Class		138,409,009		9.80		1,356,408,287		1,373,524,153
Delaware VIP REIT Standard Class		382,371		15.50		5,926,750		4,945,344
Delaware VIP REIT Service Class		11,388,520		15.47		176,180,396		140,497,659
Delaware VIP Small Cap Value Standard Class		187,926		40.23		7,560,261		5,052,111
Delaware VIP Small Cap Value Service Class		8,879,507		40.08		355,890,656		279,159,568
Delaware VIP Smid Cap Growth Standard Class		277,019		30.20		8,365,977		6,033,466
Delaware VIP Smid Cap Growth Service Class		5,088,923		29.05		147,833,233		123,861,678
Delaware VIP U.S. Growth Service Class		26,331,143		13.53		356,260,363		244,215,846
Delaware VIP Value Standard Class		242,537		29.24		7,091,786		4,576,561
Delaware VIP Value Service Class		9,885,257		29.16		288,254,080		208,226,501
Deutsche Alternative Asset Allocation VIP Class A		61,405		13.88		852,299		840,761
Deutsche Alternative Asset Allocation VIP Class B		4,010,750		13.87		55,629,108		54,646,141
Deutsche Equity 500 Index VIP Class A		345,848		20.41		7,058,748		4,349,988
Deutsche Small Cap Index VIP Class A		252,122		17.32		4,366,755		3,206,509
Eaton Vance VT Floating-Rate Income Fund Initial Class		153,147		9.19		1,407,422		1,424,546
Eaton Vance VT Floating-Rate Income Fund Advisor Class		47,776		9.19		439,062		442,932
Fidelity VIP Contrafund Initial Class		3,386		37.36		126,514		127,974
Fidelity VIP Contrafund Service Class 2		30,785,282		36.70		1,129,819,834		777,215,074
Fidelity VIP Growth Initial Class		84,745		63.48		5,379,633		3,777,336
Fidelity VIP Growth Service Class 2		2,497,917		62.80		156,869,185		117,723,570
Fidelity VIP Mid Cap Initial Class		15,623		37.68		588,676		578,953
Fidelity VIP Mid Cap Service Class 2		15,063,702		36.84		554,946,775		465,852,480
First Trust Multi Income Allocation Class I		40,864		10.39		424,582		422,261

N-113

Lincoln Life Variable Annuity Account N

Notes to financial statements (continued)

5. Investments (continued)

Subaccount	Shares Owned		Net Asset Value		Fair Value of Shares		Cost of Shares
First Trust/Dow Jones Dividend & Income Allocation Class I		125,363	$	12.41	$	1,555,752	$	1,527,125
Franklin Founding Funds Allocation VIP Class 4		856,738		7.54		6,459,806		6,537,200
Franklin Income VIP Class 2		40,043,487		16.00		640,695,802		604,107,522
Franklin Income VIP Class 4		477,340		16.31		7,785,417		7,929,512
Franklin Mutual Shares VIP Class 2		36,123,778		22.60		816,397,392		597,614,678
Franklin Mutual Shares VIP Class 4		36,146		22.72		821,229		823,391
Franklin Rising Dividends VIP Class 1		724		29.63		21,460		21,756
Franklin Rising Dividends VIP Class 4		89,502		29.19		2,612,551		2,515,294
Franklin Small Cap Value VIP Class 1		12,307		22.81		280,719		266,681
Franklin Small Cap Value VIP Class 4		32,242		22.63		729,639		723,421
Franklin Small-Mid Cap Growth VIP Class 4		26,168		24.14		631,706		616,024
Goldman Sachs VIT Large Cap Value Service Class		15,028,127		11.38		171,020,085		154,089,116
Goldman Sachs VIT Money Market Institutional Class		330,160		1.00		330,160		330,160
Goldman Sachs VIT Money Market Service Class		6,913,549		1.00		6,913,549		6,913,549
Goldman Sachs VIT Multi-Strategy Alternatives Advisor Class		77,741		9.79		761,080		778,098
Goldman Sachs VIT Multi-Strategy Alternatives Institutional Class		2,957		9.81		29,011		29,936
Goldman Sachs VIT Strategic Income Advisor Class		74,830		9.69		725,105		746,328
Guggenheim Long Short Equity		22,382		15.08		337,517		325,120
Guggenheim Multi-Hedge Strategies		21,172		23.81		504,115		491,028
Hartford Capital Appreciation HLS Class IA		902		54.71		49,360		52,303
Hartford Capital Appreciation HLS Class IC		28,867		54.59		1,575,831		1,596,255
Huntington VA Dividend Capture		105,863		13.13		1,389,976		1,167,525
Invesco V.I. American Franchise Series I		47,950		54.88		2,631,498		1,813,952
Invesco V.I. American Franchise Series II		21,633		53.63		1,160,188		795,842
Invesco V.I. Balanced-Risk Allocation Series I		13,302		12.30		163,615		163,040
Invesco V.I. Balanced-Risk Allocation Series II		115,858		12.17		1,409,987		1,419,937
Invesco V.I. Comstock Series II		58,891		19.08		1,123,639		1,104,896
Invesco V.I. Core Equity Series I		204,307		41.01		8,378,630		5,214,351
Invesco V.I. Core Equity Series II		57,439		40.54		2,328,554		1,486,143
Invesco V.I. Diversified Dividend Series I		867		23.21		20,112		18,951
Invesco V.I. Diversified Dividend Series II		30,432		23.11		703,275		678,701
Invesco V.I. Equally-Weighted S&P 500 Series II		74,981		19.60		1,469,634		1,482,358
Invesco V.I. Equity and Income Series II		68,744		18.86		1,296,517		1,296,025
Invesco V.I. International Growth Series I		68,425		34.87		2,385,989		1,487,611
Invesco V.I. International Growth Series II		336,166		34.42		11,570,829		11,261,382
Ivy Funds VIP Asset Strategy Class A		373,173		10.87		4,055,756		4,133,656
Ivy Funds VIP Energy Class A		135,643		6.51		882,754		1,045,897
Ivy Funds VIP High Income Class A		606,187		3.85		2,334,184		2,374,963
Ivy Funds VIP Micro Cap Growth Class A		14,981		26.73		400,419		379,532
Ivy Funds VIP Mid Cap Growth Class A		62,016		10.84		672,528		654,923
Ivy Funds VIP Science and Technology Class A		66,041		25.02		1,652,569		1,639,043
Janus Aspen Balanced Service Class		515,367		32.97		16,991,639		13,929,218
Janus Aspen Enterprise Service Class		96,783		59.26		5,735,334		3,177,134
Janus Aspen Global Research Service Class		23,560		40.77		960,561		670,745
JPMIT Intrepid Mid Cap Class 1		2,134		24.30		51,853		49,034
JPMIT Intrepid Mid Cap Class 2		65,396		24.18		1,581,280		1,516,386
LVIP American Balanced Allocation Standard Class		706,815		12.77		9,024,609		8,489,215
LVIP American Balanced Allocation Service Class		201,666		12.77		2,574,269		2,643,821
LVIP American Century VP Mid Cap Value RPM Service Class		7,393,084		11.35		83,904,107		80,671,199
LVIP American Global Growth Service Class II		5,124,640		17.62		90,280,789		72,837,639
LVIP American Global Small Capitalization Service Class II		4,322,020		15.56		67,233,349		54,611,377
LVIP American Growth Allocation Standard Class		55,053		13.30		732,094		669,628
LVIP American Growth Allocation Service Class		237,448		13.30		3,156,866		3,231,010
LVIP American Growth Service Class II		15,634,256		19.40		303,273,298		220,893,032
LVIP American Growth-Income Service Class II		12,560,135		19.92		250,210,442		177,889,863
LVIP American Income Allocation Standard Class		540		11.83		6,381		6,515
LVIP American International Service Class II		9,888,143		13.99		138,285,681		120,924,827
LVIP American Preservation Standard Class		12,941		9.89		127,961		128,520
LVIP American Preservation Service Class		15,362		9.89		151,903		152,996
LVIP AQR Enhanced Global Strategies Standard Class		1,446		10.25		14,825		14,030
LVIP AQR Enhanced Global Strategies Service Class		126,674		10.25		1,298,283		1,302,571

N-114

Lincoln Life Variable Annuity Account N

Notes to financial statements (continued)

5. Investments (continued)

Subaccount	Shares Owned		Net Asset Value		Fair Value of Shares		Cost of Shares
LVIP Baron Growth Opportunities Standard Class		10,979	$	47.82	$	524,982	$	504,847
LVIP Baron Growth Opportunities Service Class		3,740,809		47.03		175,945,216		131,530,779
LVIP BlackRock Emerging Markets RPM Standard Class		13,182		9.35		123,197		135,162
LVIP BlackRock Emerging Markets RPM Service Class		17,797,160		9.35		166,385,649		178,082,981
LVIP BlackRock Equity Dividend RPM Standard Class		19,748		17.81		351,621		348,784
LVIP BlackRock Equity Dividend RPM Service Class		25,819,705		17.78		459,100,176		426,683,624
LVIP BlackRock Global Allocation V.I. RPM Standard Class		27,923		10.49		292,910		297,643
LVIP BlackRock Global Allocation V.I. RPM Service Class		71,973,379		10.47		753,273,392		758,438,135
LVIP BlackRock Inflation Protected Bond Standard Class		48,386		10.35		500,792		526,494
LVIP BlackRock Inflation Protected Bond Service Class		76,287,444		10.35		789,727,615		837,399,426
LVIP BlackRock Multi-Asset Income Standard Class		14,197		9.70		137,693		141,801
LVIP BlackRock Multi-Asset Income Service Class		99,162		9.70		961,772		991,417
LVIP Capital Growth Service Class		7,631,832		41.46		316,408,116		188,625,926
LVIP Clarion Global Real Estate Standard Class		29,925		9.73		291,228		286,550
LVIP Clarion Global Real Estate Service Class		10,999,147		9.64		106,064,775		84,219,909
LVIP ClearBridge Variable Appreciation RPM Standard Class		6,271		10.50		65,850		67,167
LVIP ClearBridge Variable Appreciation RPM Service Class		5,789,101		10.50		60,797,135		59,657,266
LVIP Columbia Small-Mid Cap Growth RPM Service Class		20,044,627		12.39		248,312,842		246,657,807
LVIP Delaware Bond Standard Class		7,662,542		13.90		106,532,328		102,132,865
LVIP Delaware Bond Service Class		190,366,986		13.90		2,646,481,841		2,618,416,618
LVIP Delaware Diversified Floating Rate Standard Class		127,180		10.06		1,279,052		1,294,463
LVIP Delaware Diversified Floating Rate Service Class		74,817,426		10.06		752,438,855		759,594,024
LVIP Delaware Foundation Aggressive Allocation Standard Class		391,342		15.93		6,234,469		5,242,167
LVIP Delaware Foundation Aggressive Allocation Service Class		1,167,842		15.92		18,592,043		15,947,954
LVIP Delaware Growth and Income Service Class		959,800		44.25		42,474,974		31,571,501
LVIP Delaware Social Awareness Standard Class		202,640		46.22		9,365,809		6,213,145
LVIP Delaware Social Awareness Service Class		1,399,461		46.09		64,499,741		48,405,153
LVIP Delaware Special Opportunities Service Class		1,227,815		41.80		51,323,894		45,768,160
LVIP Dimensional Non-U.S. Equity RPM Standard Class		290,543		9.40		2,731,971		2,804,072
LVIP Dimensional Non-U.S. Equity RPM Service Class		18,234,415		9.40		171,458,204		181,543,517
LVIP Dimensional U.S. Equity RPM Standard Class		340,035		14.16		4,813,877		4,343,191
LVIP Dimensional U.S. Equity RPM Service Class		21,283,286		14.15		301,179,780		272,619,097
LVIP Dimensional/Vanguard Total Bond Standard Class		469,268		10.52		4,935,763		4,948,697
LVIP Dimensional/Vanguard Total Bond Service Class		32,122,967		10.52		337,901,495		337,951,125
LVIP Franklin Mutual Shares RPM Standard Class		1,917		10.32		19,769		20,470
LVIP Franklin Mutual Shares RPM Service Class		8,523,762		10.32		87,931,171		89,269,375
LVIP Franklin Templeton Multi-Asset Opportunities Service Class		59,533		9.94		591,642		597,779
LVIP Global Income Service Class		50,820,238		11.54		586,465,556		587,241,212
LVIP Goldman Sachs Income Builder Standard Class		2,039		9.82		20,030		20,657
LVIP Goldman Sachs Income Builder Service Class		60,013		9.82		589,564		604,574
LVIP Invesco Diversified Equity Income RPM Service Class		2,926,012		10.34		30,263,739		30,218,707
LVIP Invesco V.I. Comstock RPM Standard Class		7,636		10.38		79,232		80,352
LVIP Invesco V.I. Comstock RPM Service Class		6,644,149		10.38		68,946,340		68,534,069
LVIP JPMorgan High Yield Service Class		13,105,864		11.08		145,212,975		147,918,754
LVIP JPMorgan Mid Cap Value RPM Standard Class		5,125		15.62		80,065		77,743
LVIP JPMorgan Mid Cap Value RPM Service Class		19,697,330		15.51		305,584,371		269,938,093
LVIP Managed Risk American Balanced Allocation Standard Class		49,234		11.22		552,558		539,057
LVIP Managed Risk American Balanced Allocation Service Class		345,840		11.22		3,880,676		3,930,439
LVIP Managed Risk American Growth Allocation Standard Class		74,325		11.57		860,237		860,882
LVIP Managed Risk American Growth Allocation Service Class		1,651,066		11.57		19,106,135		19,417,344
LVIP Managed Risk Profile 2010 Service Class		452,437		12.44		5,629,675		4,608,497
LVIP Managed Risk Profile 2020 Service Class		1,194,236		12.11		14,458,615		11,483,483
LVIP Managed Risk Profile 2030 Service Class		607,717		12.17		7,397,136		5,822,535
LVIP Managed Risk Profile 2040 Service Class		516,444		11.63		6,008,306		4,414,473
LVIP Managed Risk Profile Conservative Standard Class		2,396		13.94		33,411		34,450
LVIP Managed Risk Profile Conservative Service Class		88,326,956		13.94		1,231,189,434		1,144,405,525
LVIP Managed Risk Profile Growth Standard Class		301,901		13.47		4,067,813		3,894,542
LVIP Managed Risk Profile Growth Service Class		612,408,008		13.48		8,252,197,912		7,729,580,967
LVIP Managed Risk Profile Moderate Standard Class		41,348		14.11		583,382		599,945
LVIP Managed Risk Profile Moderate Service Class		463,761,673		14.11		6,542,285,916		6,021,026,331
LVIP MFS International Growth Standard Class		172		13.69		2,350		2,378

N-115

Lincoln Life Variable Annuity Account N

Notes to financial statements (continued)

5. Investments (continued)

Subaccount	Shares Owned		Net Asset Value		Fair Value of Shares		Cost of Shares
LVIP MFS International Growth Service Class		11,104,224	$	13.71	$	152,250,020	$	137,919,608
LVIP MFS International Growth RPM Service Class		9,328,682		9.39		87,605,652		92,844,622
LVIP MFS Value Standard Class		183		37.27		6,835		6,926
LVIP MFS Value Service Class		23,612,208		37.26		879,838,085		567,185,550
LVIP Mid-Cap Value Service Class		5,999,654		22.84		137,050,112		113,351,007
LVIP Mondrian International Value Standard Class		906,515		16.94		15,358,180		14,905,673
LVIP Mondrian International Value Service Class		17,812,808		16.93		301,642,085		300,929,823
LVIP Money Market Standard Class		3,283,261		10.00		32,832,620		32,832,619
LVIP Money Market Service Class		26,220,547		10.00		262,205,485		262,205,485
LVIP Multi-Manager Global Equity RPM Service Class		513,844		9.83		5,051,085		5,211,384
LVIP PIMCO Low Duration Bond Standard Class		8,461		9.94		84,093		84,998
LVIP PIMCO Low Duration Bond Service Class		5,233,895		9.94		52,030,155		52,472,433
LVIP SSgA Bond Index Standard Class		37,038		11.43		423,156		422,849
LVIP SSgA Bond Index Service Class		85,950,012		11.43		982,150,781		946,702,745
LVIP SSgA Conservative Index Allocation Service Class		4,977,687		12.26		61,016,492		57,207,845
LVIP SSgA Conservative Structured Allocation Standard Class		13,992		11.88		166,187		169,313
LVIP SSgA Conservative Structured Allocation Service Class		16,001,112		11.88		190,013,205		176,707,694
LVIP SSgA Developed International 150 Standard Class		27,910		9.08		253,342		278,095
LVIP SSgA Developed International 150 Service Class		16,031,814		9.08		145,568,871		127,291,119
LVIP SSgA Emerging Markets 100 Standard Class		49,793		9.29		462,473		497,125
LVIP SSgA Emerging Markets 100 Service Class		18,293,785		9.29		169,930,966		188,266,924
LVIP SSgA Global Tactical Allocation RPM Standard Class		18,587		11.98		222,658		222,940
LVIP SSgA Global Tactical Allocation RPM Service Class		73,882,388		11.98		884,963,246		834,619,435
LVIP SSgA International Index Standard Class		43,018		8.66		372,410		385,085
LVIP SSgA International Index Service Class		31,678,790		8.66		274,338,324		246,760,281
LVIP SSgA International RPM Service Class		1,652,420		9.13		15,078,329		16,435,067
LVIP SSgA Large Cap 100 Standard Class		102,551		15.95		1,636,102		1,527,073
LVIP SSgA Large Cap 100 Service Class		20,356,211		15.94		324,559,432		213,780,051
LVIP SSgA Large Cap RPM Standard Class		121		11.68		1,417		1,272
LVIP SSgA Large Cap RPM Service Class		8,461,134		11.68		98,783,734		95,753,744
LVIP SSgA Moderate Index Allocation Service Class		14,497,937		13.16		190,734,856		169,604,906
LVIP SSgA Moderate Structured Allocation Service Class		65,676,066		12.65		830,539,527		753,411,376
LVIP SSgA Moderately Aggressive Index Allocation Service Class		12,449,206		13.36		166,333,843		145,011,942
LVIP SSgA Moderately Aggressive Structured Allocation Service Class		32,964,823		12.94		426,564,809		378,720,176
LVIP SSgA S&P 500 Index Standard Class		2,462,900		14.65		36,083,947		29,617,529
LVIP SSgA S&P 500 Index Service Class		58,511,270		14.65		857,365,640		595,638,925
LVIP SSgA Small-Cap Index Standard Class		50,533		26.99		1,363,893		1,276,541
LVIP SSgA Small-Cap Index Service Class		10,127,113		26.99		273,300,383		204,164,216
LVIP SSgA Small-Cap RPM Standard Class		7,100		11.40		80,915		81,244
LVIP SSgA Small-Cap RPM Service Class		7,822,785		11.40		89,148,460		88,334,471
LVIP SSgA Small-Mid Cap 200 Standard Class		98,562		14.91		1,469,362		1,503,324
LVIP SSgA Small-Mid Cap 200 Service Class		7,423,367		14.90		110,615,595		91,004,750
LVIP T. Rowe Price Growth Stock Standard Class		1,626		31.18		50,707		49,033
LVIP T. Rowe Price Growth Stock Service Class		5,777,510		30.74		177,623,753		121,820,696
LVIP T. Rowe Price Structured Mid-Cap Growth Standard Class		123,479		22.08		2,726,304		1,884,661
LVIP T. Rowe Price Structured Mid-Cap Growth Service Class		4,355,769		21.46		93,479,153		69,597,503
LVIP Templeton Growth RPM Service Class		18,045,108		32.85		592,835,950		570,248,700
LVIP UBS Large Cap Growth RPM Standard Class		72,348		31.14		2,252,620		1,505,281
LVIP UBS Large Cap Growth RPM Service Class		7,643,868		30.68		234,475,663		199,401,002
LVIP Vanguard Domestic Equity ETF Standard Class		30,604		14.75		451,352		357,427
LVIP Vanguard Domestic Equity ETF Service Class		6,714,319		14.74		98,989,207		79,150,165
LVIP Vanguard International Equity ETF Standard Class		40,099		9.60		384,747		397,246
LVIP Vanguard International Equity ETF Service Class		5,735,911		9.59		55,018,857		54,443,425
LVIP VIP Contrafund RPM Standard Class		36,838		11.84		436,128		432,716
LVIP VIP Contrafund RPM Service Class		22,838,727		11.84		270,364,850		260,842,991
LVIP VIP Mid Cap RPM Service Class		1,115,941		10.28		11,466,292		11,439,000
Lord Abbett Series Fund Bond Debenture Class VC		131,640		11.89		1,565,199		1,658,776
Lord Abbett Series Fund Developing Growth Class VC		32,563		24.46		796,485		757,220
Lord Abbett Series Fund Fundamental Equity Class VC		886,441		18.61		16,496,658		15,252,343
Lord Abbett Series Fund Short Duration Income Class VC		173,443		14.72		2,553,088		2,611,172
MFS VIT Core Equity Service Class		100,398		25.92		2,602,306		1,415,849

N-116

Lincoln Life Variable Annuity Account N

Notes to financial statements (continued)

5. Investments (continued)

Subaccount	Shares Owned		Net Asset Value		Fair Value of Shares		Cost of Shares
MFS VIT Growth Initial Class		82,042	$	39.75	$	3,261,160	$	2,296,931
MFS VIT Growth Service Class		1,308,060		38.77		50,713,489		41,689,954
MFS VIT Total Return Initial Class		373,621		24.31		9,082,721		7,059,126
MFS VIT Total Return Service Class		550		23.95		13,180		13,226
MFS VIT Utilities Initial Class		314,620		33.96		10,684,498		7,477,679
MFS VIT Utilities Service Class		6,971,372		33.48		233,401,545		191,095,481
MFS VIT II International Value Initial Class		1,697		21.73		36,885		37,393
MFS VIT II International Value Service Class		81,195		21.44		1,740,823		1,770,021
Morgan Stanley UIF Capital Growth Class II		58,184		29.97		1,743,781		1,213,171
NB AMT Mid Cap Intrinsic Value I Class		2,104,822		17.87		37,613,173		28,896,445
Oppenheimer Global Fund/VA Service Class		218,060		39.11		8,528,329		6,528,903
Oppenheimer International Growth Fund/VA Non-Service Class		228,352		2.31		527,493		521,744
Oppenheimer International Growth Fund/VA Service Class		502,098		2.40		1,205,035		1,254,576
Oppenheimer Main Street Small Cap Fund/VA Non-Service Class		33,057		26.26		868,067		834,356
PIMCO VIT All Asset All Authority Advisor Class		82,603		9.01		744,251		817,708
PIMCO VIT All Asset All Authority Institutional Class		10,728		9.02		96,767		103,162
PIMCO VIT CommodityRealReturn Strategy Advisor Class		2,293,364		4.91		11,260,416		16,442,354
PIMCO VIT CommodityRealReturn Strategy Institutional Class		852		4.84		4,126		4,812
PIMCO VIT Emerging Markets Bond Advisor Class		65,682		12.69		833,499		889,495
PIMCO VIT Unconstrained Bond Advisor Class		53,415		10.45		558,189		559,029
Putnam VT Absolute Return 500 Class IB		76,700		10.67		818,391		800,629
Putnam VT Global Health Care Class IB		330,216		20.17		6,660,456		5,221,937
Putnam VT Growth & Income Class IB		66,576		26.12		1,738,970		1,328,964
SIPT VP Market Growth Strategy Class III		24,958		10.41		259,810		263,836
SIPT VP Market Plus Strategy Class III		104,495		10.60		1,107,644		1,132,510
Templeton Foreign VIP Class 1		1,307		15.34		20,057		21,894
Templeton Foreign VIP Class 4		46,664		15.16		707,428		757,889
Templeton Global Bond VIP Class 1		46,574		18.56		864,411		872,560
Templeton Global Bond VIP Class 2		25,959,963		17.99		467,019,732		456,461,899
Templeton Global Bond VIP Class 4		214,664		18.38		3,945,526		3,989,396
Templeton Growth VIP Class 2		2,701,111		14.61		39,463,230		34,713,101
Transparent Value Directional Allocation VI Class I		3,448		10.15		34,995		35,831
Transparent Value Directional Allocation VI Class II		1,091,513		10.15		11,078,860		11,338,073
UIF Global Infrastructure Class I		5,316		9.31		49,490		50,298
UIF Global Infrastructure Class II		173,274		9.27		1,606,254		1,596,898
Van Eck VIP Global Hard Assets Class S		25,034		24.64		616,827		748,521
Van Eck VIP Global Hard Assets Initial Class		7,300		25.37		185,201		213,843
Virtus VIT Multi-Sector Fixed Income Class A		145,059		9.25		1,341,796		1,402,066
Virtus VIT Premium AlphaSector Class A		209,650		12.55		2,631,105		2,868,413
Virtus VIT Premium AlphaSector Class I		11,345		12.56		142,491		154,810

6. Changes in Units Outstanding

The change in units outstanding for the year ended December 31, 2014, is as follows:

Subaccount	Units Issued		Units Redeemed			Net Increase (Decrease)
ABVPSF Global Thematic Growth Class B		474,490		(797,739	)		(323,249	)
ABVPSF Growth and Income Class B		7,348		(7,348	)		—
ABVPSF International Value Class B		1,643		(980	)		663
ABVPSF Large Cap Growth Class B		66,854		(127,981	)		(61,127	)
ABVPSF Small/Mid Cap Value Class A		5,516		—			5,516
ABVPSF Small/Mid Cap Value Class B		468,732		(1,317,205	)		(848,473	)
Alps|Alerian Energy Infrastructure Class I		11,325		—			11,325
Alps|Alerian Energy Infrastructure Class III		202,489		(15,289	)		187,200
Alps|Stadion Tactical Defensive Class I		7,749		—			7,749
Alps|Stadion Tactical Defensive Class III		74,590		(1,754	)		72,836
American Century VP Inflation Protection Class II		16,429		(16,429	)		—
American Funds Asset Allocation Class 1		39,266		(2,001	)		37,265
American Funds Asset Allocation Class 4		491,561		(2,999	)		488,562

N-117

Lincoln Life Variable Annuity Account N

Notes to financial statements (continued)

6. Changes in Units Outstanding (continued)

Subaccount	Units Issued		Units Redeemed			Net Increase (Decrease)
American Funds Blue Chip Income and Growth Class 1		108,183		(9,311	)		98,872
American Funds Blue Chip Income and Growth Class 4		282,711		(12,279	)		270,432
American Funds Bond Class 1		111,823		(5,750	)		106,073
American Funds Capital Income Builder Class 1		15,406		(3,621	)		11,785
American Funds Capital Income Builder Class 4		351,193		(20,089	)		331,104
American Funds Global Balanced Class 1		18,816		(10,363	)		8,453
American Funds Global Bond Class 1		56,766		(4,456	)		52,310
American Funds Global Growth Class 1		47,371		(3,877	)		43,494
American Funds Global Growth Class 2		544,079		(2,013,039	)		(1,468,960	)
American Funds Global Growth Class 4		166,527		(355	)		166,172
American Funds Global Growth and Income Class 1		37,910		(11,293	)		26,617
American Funds Global Small Capitalization Class 1		30,138		(860	)		29,278
American Funds Global Small Capitalization Class 2		1,069,121		(2,126,416	)		(1,057,295	)
American Funds Global Small Capitalization Class 4		109,832		(178	)		109,654
American Funds Growth Class 1		181,022		(11,617	)		169,405
American Funds Growth Class 2		251,359		(12,159,385	)		(11,908,026	)
American Funds Growth Class 4		697,590		(8,360	)		689,230
American Funds Growth-Income Class 1		97,798		(4,116	)		93,682
American Funds Growth-Income Class 2		510,881		(15,566,457	)		(15,055,576	)
American Funds Growth-Income Class 4		446,563		(17,270	)		429,293
American Funds High-Income Bond Class 1		39,252		(2,167	)		37,085
American Funds International Class 1		127,261		(5,704	)		121,557
American Funds International Class 2		2,599,939		(2,836,136	)		(236,197	)
American Funds International Class 4		318,756		(535	)		318,221
American Funds International Growth and Income Class 1		74,194		(10,113	)		64,081
American Funds Managed Risk Asset Allocation Class P1		28,911		(419	)		28,492
American Funds Managed Risk Asset Allocation Class P2		512,715		(1,153	)		511,562
American Funds Managed Risk Blue Chip Income and Growth Class P1		7,607		(80	)		7,527
American Funds Managed Risk Growth Class P1		2,007		(472	)		1,535
American Funds Managed Risk Growth-Income Class P1		1,769		(20	)		1,749
American Funds Managed Risk International Class P1		1,359		—			1,359
American Funds Mortgage Class 1		7,265		(12,101	)		(4,836	)
American Funds Mortgage Class 4		5,251		(38	)		5,213
American Funds New World Class 1		109,653		(6,132	)		103,521
American Funds New World Class 4		241,004		(11,343	)		229,661
American Funds U.S. Government/AAA-Rated Securities Class 1		14,491		(23,587	)		(9,096	)
BlackRock Global Allocation V.I. Class I		33,995		(699	)		33,296
BlackRock Global Allocation V.I. Class III		1,759,856		(7,585,561	)		(5,825,705	)
ClearBridge Variable Aggressive Growth Class I		17,600		—			17,600
ClearBridge Variable Aggressive Growth Class II		423,885		—			423,885
ClearBridge Variable Mid Cap Core Class I		241		—			241
ClearBridge Variable Mid Cap Core Class II		1,373,339		(16,163	)		1,357,176
Delaware VIP Diversified Income Standard Class		43,519		(2,035	)		41,484
Delaware VIP Diversified Income Service Class		16,422,143		(2,531,181	)		13,890,962
Delaware VIP Emerging Markets Standard Class		347		—			347
Delaware VIP Emerging Markets Service Class		1,937,786		(2,173,212	)		(235,426	)
Delaware VIP High Yield Standard Class		130,813		(166,820	)		(36,007	)
Delaware VIP High Yield Service Class		438,578		(2,255,774	)		(1,817,196	)
Delaware VIP International Value Equity Standard Class		2,343		(4,333	)		(1,990	)
Delaware VIP Limited-Term Diversified Income Standard Class		38,623		(9,181	)		29,442
Delaware VIP Limited-Term Diversified Income Service Class		13,131,879		(7,649,914	)		5,481,965
Delaware VIP REIT Standard Class		39,533		(24,477	)		15,056
Delaware VIP REIT Service Class		896,393		(899,458	)		(3,065	)
Delaware VIP Small Cap Value Standard Class		6,302		(25,243	)		(18,941	)
Delaware VIP Small Cap Value Service Class		630,477		(1,839,496	)		(1,209,019	)
Delaware VIP Smid Cap Growth Standard Class		7,055		(39,890	)		(32,835	)
Delaware VIP Smid Cap Growth Service Class		357,826		(1,371,951	)		(1,014,125	)
Delaware VIP U.S. Growth Service Class		849,707		(1,731,581	)		(881,874	)
Delaware VIP Value Standard Class		29,079		(78,637	)		(49,558	)
Delaware VIP Value Service Class		2,117,044		(1,735,210	)		381,834
Deutsche Alternative Asset Allocation VIP Class A		16,609		(2,011	)		14,598
Deutsche Alternative Asset Allocation VIP Class B		568,926		(433,917	)		135,009

N-118

Lincoln Life Variable Annuity Account N

Notes to financial statements (continued)

6. Changes in Units Outstanding (continued)

Subaccount	Units Issued		Units Redeemed			Net Increase (Decrease)
Deutsche Equity 500 Index VIP Class A		1,599		(141,204	)		(139,605	)
Deutsche Equity 500 Index VIP Class B		2,297		(2,297	)		—
Deutsche Small Cap Index VIP Class A		12,674		(52,368	)		(39,694	)
Eaton Vance VT Floating-Rate Income Fund Initial Class		144,266		(2,123	)		142,143
Eaton Vance VT Floating-Rate Income Fund Advisor Class		47,635		(3,575	)		44,060
Fidelity VIP Contrafund Initial Class		11,600		(20	)		11,580
Fidelity VIP Contrafund Service Class 2		676,638		(6,257,027	)		(5,580,389	)
Fidelity VIP Equity-Income Service Class 2		2,352		(2,352	)		—
Fidelity VIP Growth Initial Class		42,958		(75,495	)		(32,537	)
Fidelity VIP Growth Service Class 2		3,065,726		(4,167,178	)		(1,101,452	)
Fidelity VIP Mid Cap Initial Class		56,042		(94	)		55,948
Fidelity VIP Mid Cap Service Class 2		1,111,185		(2,931,305	)		(1,820,120	)
Fidelity VIP Overseas Service Class 2		19		(19	)		—
First Trust Multi Income Allocation Class I		45,237		(4,124	)		41,113
First Trust/Dow Jones Dividend & Income Allocation Class I		157,362		(10,496	)		146,866
Franklin Founding Funds Allocation VIP Class 4		674,529		(9,747	)		664,782
Franklin Income VIP Class 1		40,104		(40,104	)		—
Franklin Income VIP Class 2		2,913,982		(3,994,459	)		(1,080,477	)
Franklin Income VIP Class 4		843,072		(43,650	)		799,422
Franklin Mutual Shares VIP Class 2		1,730,708		(5,617,433	)		(3,886,725	)
Franklin Mutual Shares VIP Class 4		91,752		(10,879	)		80,873
Franklin Rising Dividends VIP Class 1		8,072		—			8,072
Franklin Rising Dividends VIP Class 4		248,611		(775	)		247,836
Franklin Small Cap Value VIP Class 1		28,306		—			28,306
Franklin Small Cap Value VIP Class 4		74,802		(682	)		74,120
Franklin Small-Mid Cap Growth VIP Class 2		1,382		(1,390	)		(8	)
Franklin Small-Mid Cap Growth VIP Class 4		60,799		(1,793	)		59,006
Goldman Sachs VIT Large Cap Value Service Class		12,022		(1,350,405	)		(1,338,383	)
Goldman Sachs VIT Money Market Institutional Class		60,940		(27,844	)		33,096
Goldman Sachs VIT Money Market Service Class		1,595,209		(898,716	)		696,493
Goldman Sachs VIT Multi-Strategy Alternatives Advisor Class		78,176		(130	)		78,046
Goldman Sachs VIT Multi-Strategy Alternatives Institutional Class		3,009		(58	)		2,951
Goldman Sachs VIT Strategic Income Advisor Class		130,812		(56,898	)		73,914
Guggenheim Long Short Equity		32,283		(156	)		32,127
Guggenheim Multi-Hedge Strategies		56,394		(7,775	)		48,619
Hartford Capital Appreciation HLS Class IA		4,695		—			4,695
Hartford Capital Appreciation HLS Class IC		151,405		(195	)		151,210
Huntington VA Balanced		5,383		(260,487	)		(255,104	)
Huntington VA Dividend Capture		7,245		(11,296	)		(4,051	)
Invesco V.I. American Franchise Series I		12,574		(54,033	)		(41,459	)
Invesco V.I. American Franchise Series II		121		(19,523	)		(19,402	)
Invesco V.I. Balanced-Risk Allocation Series I		16,012		(29	)		15,983
Invesco V.I. Balanced-Risk Allocation Series II		203,936		(65,246	)		138,690
Invesco V.I. Comstock Series II		109,745		(2,999	)		106,746
Invesco V.I. Core Equity Series I		3,679		(92,472	)		(88,793	)
Invesco V.I. Core Equity Series II		3,591		(22,186	)		(18,595	)
Invesco V.I. Diversified Dividend Series I		2,013		(122	)		1,891
Invesco V.I. Diversified Dividend Series II		67,160		(587	)		66,573
Invesco V.I. Equally-Weighted S&P 500 Series II		140,342		(3,382	)		136,960
Invesco V.I. Equity and Income Series II		124,092		(609	)		123,483
Invesco V.I. International Growth Series I		26,399		(40,088	)		(13,689	)
Invesco V.I. International Growth Series II		519,437		(19,189	)		500,248
Ivy Funds VIP Asset Strategy Class A		508,836		(85,175	)		423,661
Ivy Funds VIP Energy Class A		116,164		(7,315	)		108,849
Ivy Funds VIP High Income Class A		252,733		(12,934	)		239,799
Ivy Funds VIP Micro Cap Growth Class A		38,670		(928	)		37,742
Ivy Funds VIP Mid Cap Growth Class A		63,165		(115	)		63,050
Ivy Funds VIP Science and Technology Class A		176,665		(3,989	)		172,676
Janus Aspen Balanced Service Class		24,800		(148,482	)		(123,682	)
Janus Aspen Enterprise Service Class		12,879		(35,806	)		(22,927	)
Janus Aspen Global Research Service Class		4,481		(20,294	)		(15,813	)
JPMIT Intrepid Mid Cap Class 1		4,661		—			4,661

N-119

Lincoln Life Variable Annuity Account N

Notes to financial statements (continued)

6. Changes in Units Outstanding (continued)

Subaccount	Units Issued		Units Redeemed			Net Increase (Decrease)
JPMIT Intrepid Mid Cap Class 2		146,031		(3,012	)		143,019
LVIP American Balanced Allocation Standard Class		47,827		(24,865	)		22,962
LVIP American Balanced Allocation Service Class		272,556		(14,577	)		257,979
LVIP American Century VP Mid Cap Value RPM Service Class		7,649,216		(140,268	)		7,508,948
LVIP American Global Growth Service Class II		1,142,966		(227,468	)		915,498
LVIP American Global Small Capitalization Service Class II		544,872		(434,048	)		110,824
LVIP American Growth Allocation Standard Class		6,105		(2,254	)		3,851
LVIP American Growth Allocation Service Class		310,410		(105	)		310,305
LVIP American Growth Service Class II		1,805,048		(832,282	)		972,766
LVIP American Growth-Income Service Class II		1,384,111		(805,918	)		578,193
LVIP American Income Allocation Standard Class		409		(3	)		406
LVIP American International Service Class II		1,148,238		(543,421	)		604,817
LVIP American Preservation Standard Class		2,755		(11,811	)		(9,056	)
LVIP American Preservation Service Class		32,393		(16,899	)		15,494
LVIP AQR Enhanced Global Strategies Standard Class		2,879		(1,450	)		1,429
LVIP AQR Enhanced Global Strategies Service Class		130,116		(4,157	)		125,959
LVIP Baron Growth Opportunities Standard Class		48,869		(45	)		48,824
LVIP Baron Growth Opportunities Service Class		793,973		(1,558,964	)		(764,991	)
LVIP BlackRock Emerging Markets RPM Standard Class		7,823		(984	)		6,839
LVIP BlackRock Emerging Markets RPM Service Class		9,184,530		(363,085	)		8,821,445
LVIP BlackRock Equity Dividend RPM Standard Class		12,808		(302	)		12,506
LVIP BlackRock Equity Dividend RPM Service Class		12,277,302		(743,698	)		11,533,604
LVIP BlackRock Global Allocation V.I. RPM Standard Class		22,609		(21,034	)		1,575
LVIP BlackRock Global Allocation V.I. RPM Service Class		44,919,434		(720,254	)		44,199,180
LVIP BlackRock Inflation Protected Bond Standard Class		13,078		(10,168	)		2,910
LVIP BlackRock Inflation Protected Bond Service Class		6,866,893		(4,306,394	)		2,560,499
LVIP BlackRock Multi-Asset Income Standard Class		21,018		—			21,018
LVIP BlackRock Multi-Asset Income Service Class		123,857		(25,957	)		97,900
LVIP Capital Growth Service Class		549,249		(3,023,102	)		(2,473,853	)
LVIP Clarion Global Real Estate Standard Class		27,800		—			27,800
LVIP Clarion Global Real Estate Service Class		847,040		(1,627,347	)		(780,307	)
LVIP ClearBridge Variable Appreciation RPM Standard Class		6,271		(12	)		6,259
LVIP ClearBridge Variable Appreciation RPM Service Class		5,898,561		(20,110	)		5,878,451
LVIP Columbia Small-Mid Cap Growth RPM Service Class		10,879,712		(1,803,344	)		9,076,368
LVIP Delaware Bond Standard Class		103,393		(1,195,219	)		(1,091,826	)
LVIP Delaware Bond Service Class		13,229,549		(5,447,174	)		7,782,375
LVIP Delaware Diversified Floating Rate Standard Class		37,893		(9,088	)		28,805
LVIP Delaware Diversified Floating Rate Service Class		17,996,831		(8,872,677	)		9,124,154
LVIP Delaware Foundation Aggressive Allocation Standard Class		14,193		(116,615	)		(102,422	)
LVIP Delaware Foundation Aggressive Allocation Service Class		209,082		(428,590	)		(219,508	)
LVIP Delaware Growth and Income Service Class		128,706		(608,879	)		(480,173	)
LVIP Delaware Social Awareness Standard Class		14,429		(85,400	)		(70,971	)
LVIP Delaware Social Awareness Service Class		348,344		(554,924	)		(206,580	)
LVIP Delaware Special Opportunities Service Class		466,910		(635,339	)		(168,429	)
LVIP Dimensional Non-U.S. Equity RPM Standard Class		115,863		(3,780	)		112,083
LVIP Dimensional Non-U.S. Equity RPM Service Class		9,000,534		(589,332	)		8,411,202
LVIP Dimensional U.S. Equity RPM Standard Class		179,825		(9,657	)		170,168
LVIP Dimensional U.S. Equity RPM Service Class		10,010,146		(770,473	)		9,239,673
LVIP Dimensional/Vanguard Total Bond Standard Class		263,626		(25,324	)		238,302
LVIP Dimensional/Vanguard Total Bond Service Class		11,496,614		(349,166	)		11,147,448
LVIP Franklin Mutual Shares RPM Standard Class		1,900		—			1,900
LVIP Franklin Mutual Shares RPM Service Class		9,183,737		(600,127	)		8,583,610
LVIP Franklin Templeton Multi-Asset Opportunities Service Class		59,451		(171	)		59,280
LVIP Global Income Service Class		7,639,157		(711,274	)		6,927,883
LVIP Goldman Sachs Income Builder Standard Class		2,001		(3	)		1,998
LVIP Goldman Sachs Income Builder Service Class		65,671		(6,435	)		59,236
LVIP Invesco Diversified Equity Income RPM Service Class		2,972,591		(9,868	)		2,962,723
LVIP Invesco V.I. Comstock RPM Standard Class		7,663		(18	)		7,645
LVIP Invesco V.I. Comstock RPM Service Class		6,946,071		(219,470	)		6,726,601
LVIP JPMorgan High Yield Service Class		4,057,535		(3,899,248	)		158,287
LVIP JPMorgan Mid Cap Value RPM Standard Class		4,106		(621	)		3,485
LVIP JPMorgan Mid Cap Value RPM Service Class		9,145,740		(847,759	)		8,297,981

N-120

Lincoln Life Variable Annuity Account N

Notes to financial statements (continued)

6. Changes in Units Outstanding (continued)

Subaccount	Units Issued		Units Redeemed			Net Increase (Decrease)
LVIP Managed Risk American Balanced Allocation Standard Class		3,974		(15,187	)		(11,213	)
LVIP Managed Risk American Balanced Allocation Service Class		396,066		(9,413	)		386,653
LVIP Managed Risk American Growth Allocation Standard Class		41,982		(10,517	)		31,465
LVIP Managed Risk American Growth Allocation Service Class		1,935,895		(7,397	)		1,928,498
LVIP Managed Risk Profile 2010 Service Class		102,680		(186,674	)		(83,994	)
LVIP Managed Risk Profile 2020 Service Class		46,322		(292,932	)		(246,610	)
LVIP Managed Risk Profile 2030 Service Class		15,641		(238,255	)		(222,614	)
LVIP Managed Risk Profile 2040 Service Class		27,832		(44,454	)		(16,622	)
LVIP Managed Risk Profile Conservative Standard Class		2,030		(18	)		2,012
LVIP Managed Risk Profile Conservative Service Class		10,257,256		(3,865,202	)		6,392,054
LVIP Managed Risk Profile Growth Standard Class		31,456		(13,385	)		18,071
LVIP Managed Risk Profile Growth Service Class		149,926,052		(425,592	)		149,500,460
LVIP Managed Risk Profile Moderate Standard Class		40,587		(7,215	)		33,372
LVIP Managed Risk Profile Moderate Service Class		90,279,050		(2,314,552	)		87,964,498
LVIP MFS International Growth Standard Class		1,030		—			1,030
LVIP MFS International Growth Service Class		1,780,864		(939,699	)		841,165
LVIP MFS International Growth RPM Service Class		6,312,722		(187,210	)		6,125,512
LVIP MFS Value Standard Class		635		—			635
LVIP MFS Value Service Class		1,543,550		(4,916,071	)		(3,372,521	)
LVIP Mid-Cap Value Service Class		5,463,951		(780,640	)		4,683,311
LVIP Mondrian International Value Standard Class		40,860		(117,143	)		(76,283	)
LVIP Mondrian International Value Service Class		1,548,326		(2,190,090	)		(641,764	)
LVIP Money Market Standard Class		1,582,114		(2,223,918	)		(641,804	)
LVIP Money Market Service Class		22,074,582		(23,363,566	)		(1,288,984	)
LVIP Multi-Manager Global Equity RPM Service Class		520,062		(3,672	)		516,390
LVIP PIMCO Low Duration Bond Standard Class		11,734		(3,300	)		8,434
LVIP PIMCO Low Duration Bond Service Class		5,742,463		(341,191	)		5,401,272
LVIP SSgA Bond Index Standard Class		24,673		(2,115	)		22,558
LVIP SSgA Bond Index Service Class		2,866,684		(6,831,427	)		(3,964,743	)
LVIP SSgA Conservative Index Allocation Service Class		901,592		(723,133	)		178,459
LVIP SSgA Conservative Structured Allocation Standard Class		16,276		—			16,276
LVIP SSgA Conservative Structured Allocation Service Class		1,148,626		(1,702,834	)		(554,208	)
LVIP SSgA Developed International 150 Standard Class		17,665		(593	)		17,072
LVIP SSgA Developed International 150 Service Class		1,114,027		(1,296,066	)		(182,039	)
LVIP SSgA Emerging Markets 100 Standard Class		15,639		(2,892	)		12,747
LVIP SSgA Emerging Markets 100 Service Class		1,611,978		(1,515,097	)		96,881
LVIP SSgA Global Tactical Allocation RPM Standard Class		8,341		(7,619	)		722
LVIP SSgA Global Tactical Allocation RPM Service Class		13,368,991		(2,300,438	)		11,068,553
LVIP SSgA International Index Standard Class		21,897		(271	)		21,626
LVIP SSgA International Index Service Class		2,102,967		(2,510,282	)		(407,315	)
LVIP SSgA International RPM Service Class		1,701,471		(54,460	)		1,647,011
LVIP SSgA Large Cap 100 Standard Class		37,113		(6,849	)		30,264
LVIP SSgA Large Cap 100 Service Class		903,596		(2,958,611	)		(2,055,015	)
LVIP SSgA Large Cap RPM Standard Class		1,396		(1,403	)		(7	)
LVIP SSgA Large Cap RPM Service Class		6,597,257		(282,829	)		6,314,428
LVIP SSgA Moderate Index Allocation Service Class		1,810,212		(897,613	)		912,599
LVIP SSgA Moderate Structured Allocation Service Class		1,822,778		(6,633,754	)		(4,810,976	)
LVIP SSgA Moderately Aggressive Index Allocation Service Class		1,118,343		(972,872	)		145,471
LVIP SSgA Moderately Aggressive Structured Allocation Service Class		2,834,392		(2,168,681	)		665,711
LVIP SSgA S&P 500 Index Standard Class		77,451		(343,515	)		(266,064	)
LVIP SSgA S&P 500 Index Service Class		3,035,711		(7,849,398	)		(4,813,687	)
LVIP SSgA Small-Cap Index Standard Class		42,646		(4,533	)		38,113
LVIP SSgA Small-Cap Index Service Class		1,014,664		(3,439,351	)		(2,424,687	)
LVIP SSgA Small-Cap RPM Standard Class		4,052		(244	)		3,808
LVIP SSgA Small-Cap RPM Service Class		5,997,893		(158,246	)		5,839,647
LVIP SSgA Small-Mid Cap 200 Standard Class		40,400		(3,582	)		36,818
LVIP SSgA Small-Mid Cap 200 Service Class		384,395		(523,756	)		(139,361	)
LVIP T. Rowe Price Growth Stock Standard Class		4,568		—			4,568
LVIP T. Rowe Price Growth Stock Service Class		1,649,765		(3,260,802	)		(1,611,037	)
LVIP T. Rowe Price Structured Mid-Cap Growth Standard Class		34,121		(42,516	)		(8,395	)
LVIP T. Rowe Price Structured Mid-Cap Growth Service Class		526,477		(599,770	)		(73,293	)
LVIP Templeton Growth RPM Service Class		23,330,519		(744,883	)		22,585,636

N-121

Lincoln Life Variable Annuity Account N

Notes to financial statements (continued)

6. Changes in Units Outstanding (continued)

Subaccount	Units Issued		Units Redeemed			Net Increase (Decrease)
LVIP UBS Large Cap Growth RPM Standard Class		3,506		(18,969	)		(15,463	)
LVIP UBS Large Cap Growth RPM Service Class		5,047,127		(913,602	)		4,133,525
LVIP Vanguard Domestic Equity ETF Standard Class		6,084		(2,082	)		4,002
LVIP Vanguard Domestic Equity ETF Service Class		1,768,049		(1,123,202	)		644,847
LVIP Vanguard International Equity ETF Standard Class		10,804		(6,494	)		4,310
LVIP Vanguard International Equity ETF Service Class		1,816,701		(263,614	)		1,553,087
LVIP VIP Contrafund RPM Standard Class		28,234		(1,201	)		27,033
LVIP VIP Contrafund RPM Service Class		15,281,233		(413,494	)		14,867,739
LVIP VIP Mid Cap RPM Service Class		1,146,435		(13,250	)		1,133,185
Lord Abbett Series Fund Bond Debenture Class VC		166,711		(8,929	)		157,782
Lord Abbett Series Fund Developing Growth Class VC		103,515		(22,199	)		81,316
Lord Abbett Series Fund Fundamental Equity Class VC		23,582		(106,432	)		(82,850	)
Lord Abbett Series Fund Short Duration Income Class VC		294,960		(29,902	)		265,058
MFS VIT Core Equity Service Class		2,855		(25,137	)		(22,282	)
MFS VIT Growth Initial Class		914		(20,571	)		(19,657	)
MFS VIT Growth Service Class		918,034		(409,751	)		508,283
MFS VIT Total Return Initial Class		1,393		(90,472	)		(89,079	)
MFS VIT Total Return Service Class		3,671		(2,877	)		794
MFS VIT Utilities Initial Class		9,958		(42,344	)		(32,386	)
MFS VIT Utilities Service Class		700,751		(961,259	)		(260,508	)
MFS VIT II International Value Initial Class		7,060		—			7,060
MFS VIT II International Value Service Class		180,332		(1,164	)		179,168
Morgan Stanley UIF Capital Growth Class II		7,249		(17,697	)		(10,448	)
NB AMT Mid Cap Growth I Class		979		(979	)		—
NB AMT Mid Cap Intrinsic Value I Class		74,899		(367,185	)		(292,286	)
Oppenheimer Global Fund/VA Service Class		19,661		(37,455	)		(17,794	)
Oppenheimer International Growth Fund/VA Non-Service Class		58,401		(52	)		58,349
Oppenheimer International Growth Fund/VA Service Class		134,049		(308	)		133,741
Oppenheimer Main Street Small Cap Fund/VA Non-Service Class		81,333		(2,690	)		78,643
PIMCO VIT All Asset All Authority Advisor Class		80,522		(263	)		80,259
PIMCO VIT All Asset All Authority Institutional Class		10,366		—			10,366
PIMCO VIT CommodityRealReturn Strategy Advisor Class		311,503		(169,562	)		141,941
PIMCO VIT CommodityRealReturn Strategy Institutional Class		556		—			556
PIMCO VIT Emerging Markets Bond Advisor Class		115,712		(28,516	)		87,196
PIMCO VIT Unconstrained Bond Advisor Class		65,977		(10,245	)		55,732
Putnam VT Absolute Return 500 Class IB		90,987		(10,846	)		80,141
Putnam VT Global Health Care Class IB		200,946		(135,453	)		65,493
Putnam VT Growth & Income Class IB		3,934		(13,270	)		(9,336	)
SIPT VP Market Growth Strategy Class III		38,131		(12,279	)		25,852
SIPT VP Market Plus Strategy Class III		109,472		(17	)		109,455
Templeton Foreign VIP Class 1		2,307		—			2,307
Templeton Foreign VIP Class 4		86,279		(4,399	)		81,880
Templeton Global Bond VIP Class 1		101,104		(4,462	)		96,642
Templeton Global Bond VIP Class 2		821,071		(3,878,837	)		(3,057,766	)
Templeton Global Bond VIP Class 4		402,290		(3,952	)		398,338
Templeton Growth VIP Class 2		195,574		(669,990	)		(474,416	)
Transparent Value Directional Allocation VI Class I		8,474		(4,963	)		3,511
Transparent Value Directional Allocation VI Class II		1,132,647		(15,569	)		1,117,078
UIF Global Infrastructure Class I		4,651		—			4,651
UIF Global Infrastructure Class II		187,109		(34,876	)		152,233
Van Eck VIP Global Hard Assets Class S		91,148		(9,183	)		81,965
Van Eck VIP Global Hard Assets Initial Class		25,206		—			25,206
Virtus VIT Multi-Sector Fixed Income Class A		148,471		(10,303	)		138,168
Virtus VIT Premium AlphaSector Class A		269,720		(2,133	)		267,587
Virtus VIT Premium AlphaSector Class I		14,402		—			14,402

N-122

Lincoln Life Variable Annuity Account N

Notes to financial statements (continued)

6. Changes in Units Outstanding (continued)

The change in units outstanding for the year ended December 31, 2013, is as follows:

Subaccount	Units Issued		Units Redeemed			Net Increase (Decrease)
ABVPSF Global Thematic Growth Class B		1,007,770		(732,446	)		275,324
ABVPSF Growth and Income Class B		136,041		(11,638,370	)		(11,502,329	)
ABVPSF International Value Class B		419,929		(29,232,516	)		(28,812,587	)
ABVPSF Large Cap Growth Class B		37,080		(182,309	)		(145,229	)
ABVPSF Small/Mid Cap Value Class B		1,334,821		(1,027,126	)		307,695
American Century VP Inflation Protection Class II		320,698		(34,524,390	)		(34,203,692	)
American Funds Asset Allocation Class 1		44,765		(537	)		44,228
American Funds Blue Chip Income and Growth Class 1		26,700		(8,624	)		18,076
American Funds Bond Class 1		69,189		(250	)		68,939
American Funds Global Balanced Class 1		33,645		(16,500	)		17,145
American Funds Global Bond Class 1		86,305		(6,408	)		79,897
American Funds Global Discovery Class 1		1,319		(3,861	)		(2,542	)
American Funds Global Growth Class 1		9,967		(482	)		9,485
American Funds Global Growth Class 2		497,976		(2,692,467	)		(2,194,491	)
American Funds Global Growth and Income Class 1		13,375		(188	)		13,187
American Funds Global Small Capitalization Class 1		9,671		(99	)		9,572
American Funds Global Small Capitalization Class 2		811,549		(3,415,687	)		(2,604,138	)
American Funds Growth Class 1		89,609		(5,047	)		84,562
American Funds Growth Class 2		576,428		(16,308,170	)		(15,731,742	)
American Funds Growth-Income Class 1		42,610		(581	)		42,029
American Funds Growth-Income Class 2		999,286		(18,468,231	)		(17,468,945	)
American Funds High-Income Bond Class 1		18,770		(3,889	)		14,881
American Funds International Class 1		17,638		(1,398	)		16,240
American Funds International Class 2		2,638,797		(4,861,223	)		(2,222,426	)
American Funds International Growth and Income Class 1		70,549		(2,113	)		68,436
American Funds Managed Risk Asset Allocation Class P1		31,144		(85	)		31,059
American Funds Managed Risk Blue Chip Income and Growth Class P1		1,111		—			1,111
American Funds Managed Risk Growth Class P1		4,689		(52	)		4,637
American Funds Managed Risk Growth-Income Class P1		558		—			558
American Funds Mortgage Class 1		17,300		(364	)		16,936
American Funds New World Class 1		60,905		(1,566	)		59,339
American Funds U.S. Government/AAA-Rated Securities Class 1		53,520		(32,963	)		20,557
BlackRock Global Allocation V.I. Class I		58,920		(2,061	)		56,859
BlackRock Global Allocation V.I. Class III		5,119,205		(6,950,769	)		(1,831,564	)
Delaware VIP Diversified Income Standard Class		42,589		(3,308	)		39,281
Delaware VIP Diversified Income Service Class		11,452,989		(6,711,208	)		4,741,781
Delaware VIP Emerging Markets Service Class		1,644,094		(2,241,909	)		(597,815	)
Delaware VIP High Yield Standard Class		11,612		(309,309	)		(297,697	)
Delaware VIP High Yield Service Class		769,931		(2,827,222	)		(2,057,291	)
Delaware VIP International Value Equity Standard Class		10		(2,098	)		(2,088	)
Delaware VIP Limited-Term Diversified Income Standard Class		85,605		(6,058	)		79,547
Delaware VIP Limited-Term Diversified Income Service Class		25,626,456		(5,328,322	)		20,298,134
Delaware VIP REIT Standard Class		17,647		(21,385	)		(3,738	)
Delaware VIP REIT Service Class		898,966		(1,378,183	)		(479,217	)
Delaware VIP Small Cap Value Standard Class		7,936		(42,465	)		(34,529	)
Delaware VIP Small Cap Value Service Class		811,684		(3,025,839	)		(2,214,155	)
Delaware VIP Smid Cap Growth Standard Class		14,036		(55,228	)		(41,192	)
Delaware VIP Smid Cap Growth Service Class		780,327		(1,372,425	)		(592,098	)
Delaware VIP U.S. Growth Service Class		1,023,034		(2,798,494	)		(1,775,460	)
Delaware VIP Value Standard Class		48,375		(56,870	)		(8,495	)
Delaware VIP Value Service Class		2,445,541		(2,034,354	)		411,187
Deutsche Alternative Asset Allocation VIP Class A		53,028		(3,635	)		49,393
Deutsche Alternative Asset Allocation VIP Class B		829,506		(472,130	)		357,376
Deutsche Equity 500 Index VIP Class A		20,914		(1,054,486	)		(1,033,572	)
Deutsche Equity 500 Index VIP Class B		51,513		(1,796,612	)		(1,745,099	)
Deutsche Small Cap Index VIP Class A		5,677		(45,441	)		(39,764	)
Deutsche Small Cap Index VIP Class B		26,502		(742,763	)		(716,261	)
Fidelity VIP Contrafund Service Class 2		1,201,301		(6,594,049	)		(5,392,748	)
Fidelity VIP Equity-Income Initial Class		847		(418,163	)		(417,316	)

N-123

Lincoln Life Variable Annuity Account N

Notes to financial statements (continued)

6. Changes in Units Outstanding (continued)

Subaccount	Units Issued		Units Redeemed			Net Increase (Decrease)
Fidelity VIP Equity-Income Service Class 2		8,722		(2,322,432	)		(2,313,710	)
Fidelity VIP Growth Initial Class		4,011		(58,876	)		(54,865	)
Fidelity VIP Growth Service Class 2		1,061,145		(1,740,652	)		(679,507	)
Fidelity VIP Mid Cap Service Class 2		1,414,942		(5,120,110	)		(3,705,168	)
Fidelity VIP Overseas Initial Class		1,346		(118,742	)		(117,396	)
Fidelity VIP Overseas Service Class 2		113,460		(5,488,971	)		(5,375,511	)
Franklin Income VIP Class 2		2,513,912		(4,019,263	)		(1,505,351	)
Franklin Mutual Shares VIP Class 2		1,915,849		(8,405,477	)		(6,489,628	)
Franklin Small-Mid Cap Growth VIP Class 2		94,897		(7,045,031	)		(6,950,134	)
Goldman Sachs VIT Large Cap Value Service Class		18,271		(1,878,584	)		(1,860,313	)
Huntington VA Balanced		19,585		(25,560	)		(5,975	)
Huntington VA Dividend Capture		19,026		(20,671	)		(1,645	)
Invesco V.I. American Franchise Series I		6,048		(76,138	)		(70,090	)
Invesco V.I. American Franchise Series II		2,006		(19,425	)		(17,419	)
Invesco V.I. Core Equity Series I		3,298		(113,654	)		(110,356	)
Invesco V.I. Core Equity Series II		4,250		(30,801	)		(26,551	)
Invesco V.I. International Growth Series I		4,750		(28,580	)		(23,830	)
Invesco V.I. International Growth Series II		9,819		(15,466	)		(5,647	)
Janus Aspen Balanced Service Class		70,102		(174,318	)		(104,216	)
Janus Aspen Enterprise Service Class		10,778		(72,298	)		(61,520	)
Janus Aspen Global Research Service Class		15,586		(24,091	)		(8,505	)
LVIP American Balanced Allocation Standard Class		690,285		(5,516	)		684,769
LVIP American Global Growth Service Class II		869,379		(356,556	)		512,823
LVIP American Global Small Capitalization Service Class II		595,985		(470,198	)		125,787
LVIP American Growth Allocation Standard Class		23,752		(464	)		23,288
LVIP American Growth Service Class II		1,694,714		(1,180,752	)		513,962
LVIP American Growth-Income Service Class II		1,529,512		(1,026,135	)		503,377
LVIP American Income Allocation Standard Class		116		—			116
LVIP American International Service Class II		1,051,544		(863,732	)		187,812
LVIP American Preservation Standard Class		24,424		(2,462	)		21,962
LVIP Baron Growth Opportunities Service Class		2,076,627		(1,132,064	)		944,563
LVIP BlackRock Emerging Markets RPM Standard Class		6,581		(244	)		6,337
LVIP BlackRock Emerging Markets RPM Service Class		8,568,857		(43,581	)		8,525,276
LVIP BlackRock Equity Dividend RPM Standard Class		5,264		(30	)		5,234
LVIP BlackRock Equity Dividend RPM Service Class		18,391,938		(93,841	)		18,298,097
LVIP BlackRock Global Allocation V.I. RPM Standard Class		26,793		(34	)		26,759
LVIP BlackRock Global Allocation V.I. RPM Service Class		29,999,735		—			29,999,735
LVIP BlackRock Inflation Protected Bond Standard Class		29,350		(15,038	)		14,312
LVIP BlackRock Inflation Protected Bond Service Class		48,122,497		(7,810,205	)		40,312,292
LVIP Capital Growth Service Class		444,069		(3,380,506	)		(2,936,437	)
LVIP Clarion Global Real Estate Service Class		1,963,667		(1,483,016	)		480,651
LVIP Columbia Small-Mid Cap Growth RPM Service Class		10,314,090		(26,160	)		10,287,930
LVIP Delaware Bond Standard Class		83,946		(1,478,138	)		(1,394,192	)
LVIP Delaware Bond Service Class		21,138,059		(3,970,698	)		17,167,361
LVIP Delaware Diversified Floating Rate Standard Class		96,051		(3,044	)		93,007
LVIP Delaware Diversified Floating Rate Service Class		48,768,651		(770,272	)		47,998,379
LVIP Delaware Foundation Aggressive Allocation Standard Class		11,937		(152,777	)		(140,840	)
LVIP Delaware Foundation Aggressive Allocation Service Class		249,927		(452,057	)		(202,130	)
LVIP Delaware Growth and Income Service Class		434,195		(540,877	)		(106,682	)
LVIP Delaware Social Awareness Standard Class		28,339		(137,190	)		(108,851	)
LVIP Delaware Social Awareness Service Class		598,032		(461,591	)		136,441
LVIP Delaware Special Opportunities Service Class		919,075		(844,742	)		74,333
LVIP Dimensional Non-U.S. Equity RPM Standard Class		73,877		(6,223	)		67,654
LVIP Dimensional Non-U.S. Equity RPM Service Class		6,094,652		(161,023	)		5,933,629
LVIP Dimensional U.S. Equity RPM Standard Class		95,307		(15,477	)		79,830
LVIP Dimensional U.S. Equity RPM Service Class		8,101,282		(471,981	)		7,629,301
LVIP Dimensional/Vanguard Total Bond Standard Class		136,083		(7,741	)		128,342
LVIP Dimensional/Vanguard Total Bond Service Class		10,335,816		(823,081	)		9,512,735
LVIP Global Income Service Class		5,822,436		(1,739,417	)		4,083,019
LVIP JPMorgan High Yield Service Class		4,721,265		(3,748,108	)		973,157
LVIP JPMorgan Mid Cap Value RPM Service Class		12,277,786		(36,931	)		12,240,855
LVIP Managed Risk American Balanced Allocation Standard Class		57,511		(298	)		57,213

N-124

Lincoln Life Variable Annuity Account N

Notes to financial statements (continued)

6. Changes in Units Outstanding (continued)

Subaccount	Units Issued		Units Redeemed			Net Increase (Decrease)
LVIP Managed Risk American Growth Allocation Standard Class		39,339		(237	)		39,102
LVIP Managed Risk Profile 2010 Service Class		140,135		(258,986	)		(118,851	)
LVIP Managed Risk Profile 2020 Service Class		217,884		(260,035	)		(42,151	)
LVIP Managed Risk Profile 2030 Service Class		134,139		(313,562	)		(179,423	)
LVIP Managed Risk Profile 2040 Service Class		132,523		(158,699	)		(26,176	)
LVIP Managed Risk Profile Conservative Standard Class		—		(3,663	)		(3,663	)
LVIP Managed Risk Profile Conservative Service Class		23,921,934		(7,428,410	)		16,493,524
LVIP Managed Risk Profile Growth Standard Class		227,949		(4,983	)		222,966
LVIP Managed Risk Profile Growth Service Class		262,634,169		(666,215	)		261,967,954
LVIP Managed Risk Profile Moderate Standard Class		3,288		(36	)		3,252
LVIP Managed Risk Profile Moderate Service Class		168,818,021		(4,612,999	)		164,205,022
LVIP MFS International Growth Service Class		2,085,108		(1,606,545	)		478,563
LVIP MFS International Growth RPM Service Class		3,474,536		(7,106	)		3,467,430
LVIP MFS Value Service Class		2,727,011		(6,621,609	)		(3,894,598	)
LVIP Mid-Cap Value Service Class		870,542		(1,272,187	)		(401,645	)
LVIP Mondrian International Value Standard Class		167,852		(171,269	)		(3,417	)
LVIP Mondrian International Value Service Class		17,768,572		(2,404,699	)		15,363,873
LVIP Money Market Standard Class		3,742,562		(4,480,953	)		(738,391	)
LVIP Money Market Service Class		25,328,500		(29,705,929	)		(4,377,429	)
LVIP SSgA Bond Index Standard Class		12,827		(586	)		12,241
LVIP SSgA Bond Index Service Class		7,981,033		(4,587,534	)		3,393,499
LVIP SSgA Conservative Index Allocation Service Class		1,503,236		(1,601,823	)		(98,587	)
LVIP SSgA Conservative Structured Allocation Service Class		1,109,000		(2,724,646	)		(1,615,646	)
LVIP SSgA Developed International 150 Standard Class		2,043		(179	)		1,864
LVIP SSgA Developed International 150 Service Class		656,413		(2,373,728	)		(1,717,315	)
LVIP SSgA Emerging Markets 100 Standard Class		12,688		(1,559	)		11,129
LVIP SSgA Emerging Markets 100 Service Class		2,855,653		(2,078,008	)		777,645
LVIP SSgA Global Tactical Allocation RPM Standard Class		10,231		(1,548	)		8,683
LVIP SSgA Global Tactical Allocation RPM Service Class		31,018,109		(3,875,850	)		27,142,259
LVIP SSgA International Index Standard Class		8,627		(619	)		8,008
LVIP SSgA International Index Service Class		9,183,871		(3,810,363	)		5,373,508
LVIP SSgA Large Cap 100 Standard Class		47,447		(4,198	)		43,249
LVIP SSgA Large Cap 100 Service Class		621,432		(4,076,445	)		(3,455,013	)
LVIP SSgA Large Cap RPM Standard Class		129		—			129
LVIP SSgA Large Cap RPM Service Class		2,390,286		(5,152	)		2,385,134
LVIP SSgA Moderate Index Allocation Service Class		3,205,321		(1,206,222	)		1,999,099
LVIP SSgA Moderate Structured Allocation Service Class		27,242,848		(5,627,914	)		21,614,934
LVIP SSgA Moderately Aggressive Index Allocation Service Class		2,825,462		(1,537,687	)		1,287,775
LVIP SSgA Moderately Aggressive Structured Allocation Service Class		2,653,099		(2,601,180	)		51,919
LVIP SSgA S&P 500 Index Standard Class		2,568,909		(269,286	)		2,299,623
LVIP SSgA S&P 500 Index Service Class		21,721,590		(8,415,983	)		13,305,607
LVIP SSgA Small-Cap Index Standard Class		25,856		(1,579	)		24,277
LVIP SSgA Small-Cap Index Service Class		11,974,475		(4,084,885	)		7,889,590
LVIP SSgA Small-Cap RPM Standard Class		3,565		—			3,565
LVIP SSgA Small-Cap RPM Service Class		2,443,657		(7,657	)		2,436,000
LVIP SSgA Small-Mid Cap 200 Standard Class		39,583		(2,135	)		37,448
LVIP SSgA Small-Mid Cap 200 Service Class		406,820		(1,074,086	)		(667,266	)
LVIP T. Rowe Price Growth Stock Service Class		1,566,435		(2,097,026	)		(530,591	)
LVIP T. Rowe Price Structured Mid-Cap Growth Standard Class		42,419		(56,522	)		(14,103	)
LVIP T. Rowe Price Structured Mid-Cap Growth Service Class		600,363		(1,339,345	)		(738,982	)
LVIP Templeton Growth RPM Service Class		18,882,252		(208,265	)		18,673,987
LVIP UBS Large Cap Growth RPM Standard Class		30,130		(48,538	)		(18,408	)
LVIP UBS Large Cap Growth RPM Service Class		5,520,413		(128,456	)		5,391,957
LVIP Vanguard Domestic Equity ETF Standard Class		20,036		(3,185	)		16,851
LVIP Vanguard Domestic Equity ETF Service Class		2,212,463		(446,285	)		1,766,178
LVIP Vanguard International Equity ETF Standard Class		28,598		(2,341	)		26,257
LVIP Vanguard International Equity ETF Service Class		1,426,823		(322,451	)		1,104,372
LVIP VIP Contrafund RPM Standard Class		10,201		(51	)		10,150
LVIP VIP Contrafund RPM Service Class		8,656,233		—			8,656,233
Lord Abbett Series Fund Fundamental Equity Class VC		27,900		(165,462	)		(137,562	)
MFS VIT Core Equity Service Class		26,243		(29,156	)		(2,913	)
MFS VIT Growth Initial Class		5,330		(21,358	)		(16,028	)

N-125

Lincoln Life Variable Annuity Account N

Notes to financial statements (continued)

6. Changes in Units Outstanding (continued)

Subaccount	Units Issued		Units Redeemed			Net Increase (Decrease)
MFS VIT Growth Service Class		652,328		(295,603	)		356,725
MFS VIT Total Return Initial Class		5,294		(123,952	)		(118,658	)
MFS VIT Total Return Service Class		100,646		(21,260,093	)		(21,159,447	)
MFS VIT Utilities Initial Class		8,183		(47,080	)		(38,897	)
MFS VIT Utilities Service Class		627,068		(1,480,390	)		(853,322	)
Morgan Stanley UIF Capital Growth Class II		10,666		(20,900	)		(10,234	)
NB AMT Mid Cap Growth I Class		34,239		(2,026,956	)		(1,992,717	)
NB AMT Mid Cap Intrinsic Value I Class		87,108		(440,093	)		(352,985	)
Oppenheimer Global Fund/VA Service Class		21,287		(58,544	)		(37,257	)
PIMCO VIT CommodityRealReturn Strategy Advisor Class		255,642		(207,740	)		47,902
Putnam VT Global Health Care Class IB		43,002		(197,418	)		(154,416	)
Putnam VT Growth & Income Class IB		16,043		(14,349	)		1,694
Templeton Global Bond VIP Class 2		999,132		(3,574,022	)		(2,574,890	)
Templeton Growth VIP Class 2		168,752		(767,269	)		(598,517	)

7. Subsequent Event

Management evaluated subsequent events through the date these financial statements were issued and determined there were no additional matters to be disclosed.

N-126

Report of Independent Registered Public Accounting Firm

Board of Directors of The Lincoln National Life Insurance Company
and

Contract Owners of Lincoln Life Variable Annuity Account N

We have audited the accompanying statements of assets and liabilities of Lincoln Life Variable Annuity Account N ("Variable Account"), comprised of the subaccounts described in Note 1, as of December 31, 2014, and the related statements of operations for the year then ended and the statements of changes in net assets for each of the two years in the period then ended, or for those sub-accounts operating for portions of such periods as disclosed in the financial statements. These financial statements are the responsibility of the Variable Account's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Variable Account's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Variable Account's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of investments owned as of December 31, 2014, by correspondence with the fund companies, or their transfer agent, as applicable. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of each of the respective subaccounts constituting Lincoln Life Variable Annuity Account N at December 31, 2014, and the results of their operations and the changes in their net assets for the periods described above, in conformity with U.S. generally accepted accounting principles.

Philadelphia, Pennsylvania

April 8, 2015

N-127

Lincoln Life Variable Annuity Account N

PART C - OTHER INFORMATION

Item 24. Financial Statements and Exhibits

(a) List of Financial Statements

1. Part A

The Table of Condensed Financial Information is included in Part A of this Registration Statement.

2. Part B

The following financial statements for the Variable Account are included in Part B of this Registration Statement:

Statement of Assets and Liabilities - December 31, 2014

Statement of Operations - Year ended December 31, 2014

Statements of Changes in Net Assets - Years ended December 31, 2014 and 2013

Notes to Financial Statements - December 31, 2014

Report of Independent Registered Public Accounting Firm

3. Part B

The following consolidated financial statements for The Lincoln National Life Insurance Company are included in Part B of this Registration Statement:

Consolidated Balance Sheets - Years ended December 31, 2014 and 2013

Consolidated Statements of Comprehensive Income (Loss) - Years ended December 31, 2014, 2013 and 2012

Consolidated Statements of Stockholder’s Equity - Years ended December 31, 2014, 2013 and 2012

Consolidated Statements of Cash Flows - Years ended December 31, 2014, 2013 and 2012

Notes to Consolidated Financial Statements - December 31, 2014

Report of Independent Registered Public Accounting Firm

(b) List of Exhibits

(1) Resolutions of the Board of Directors of The Lincoln National Life Insurance Company establishing Separate Account N incorporated herein by reference to Registration Statement on Form N-4 (File No. 333-40937) filed on November 25, 1997.

(2) Not Applicable

(3)(a) Broker-Dealer Selling Agreement among The Lincoln National Life Insurance Company, Lincoln Life & Annuity Company of New York and Lincoln Financial Distributors, Inc. incorporated herein by reference to Pre-Effective Amendment No. 1 (File No. 333-170897) filed on April 8, 2011.

(b) Amended and Restated Principal Underwriting Agreement dated May 1, 2007 between The Lincoln National Life Insurance Company and Lincoln Financial Distributors, Inc. incorporated herein by reference to Post-Effective Amendment No. 24 (File No. 333-61554) filed on December 18, 2007.

(4)(a) Annuity Contract (30070-B) incorporated herein by reference to Post-Effective Amendment No. 3 (File No. 333-36304) filed on August 8, 2001.

(b) Contract Specifications (30070-CD-B) incorporated herein by reference to Registration Statement on Form N-4 (File No. 333-193272) filed on January 10, 2014.

(c) Large Account Credit Rider (AR-568) incorporated herein by reference to Registration Statement on Form N-4 (File No. 333-193272) filed on January 10, 2014.

(d) Annuity Payment Option Rider (32147) incorporated herein by reference to Post-Effective Amendment No. 3 (File No. 333-36304) filed on August 8, 2001.

(e) DCA Fixed Account Rider (32145) incorporated herein by reference to Registration Statement on Form N-4 (File No. 333-135039) filed on June 15, 2006.

(f) IRA Contract Amendment (28877) incorporated herein by reference to Post-Effective Amendment No. 14 (File No. 40937) filed on April 24, 2003.

(g) Variable Annuity Death Benefit Rider (DB-8) (To Be Filed by Amendment)

(h) Contract Benefit Data (CBD 8/10) (To Be Filed by Amendment)

(i) Variable Annuity Payment Option Rider (I4LA-NQ 8/10) incorporated herein by reference to Post-Effective Amendment No. 44 (File No. 333-40937) filed on October 28, 2010.

(j) Variable Annuity Payment Option Rider (I4LA-Q 8/10) incorporated herein by reference to Post-Effective Amendment No. 44 (File No. 333-40937) filed on October 28, 2010.

(k) Contract Amendment – Maturity Date (AR-554 10/14) incorporated herein by reference to Post-Effective Amendment No. 11 (File No. 333-181616) filed on April 8, 2015.

(5) Application (AN06747-LIA) incorporated herein by reference to Pre-Effective Amendment No. 1 (File No. 333-193272) filed on May 16, 2014.

(6)(a) Articles of Incorporation of The Lincoln National Life Insurance Company incorporated herein by reference to Pre-Effective Amendment No. 1 (File No. 333-04999) filed on September 24, 1996.

(b) By-laws of The Lincoln National Life Insurance Company incorporated herein by reference to Post-Effective Amendment No. 3 on Form N-6 (File No. 333-118478) filed on April 5, 2007.

(7) Not Applicable

(8)(a) Fund Participation Agreements and Amendments between The Lincoln National Life Insurance Company and:

(i) AIM (Invesco) Variable Insurance Funds (Invesco Variable Insurance Funds) incorporated herein by reference to Post-Effective Amendment No. 21 on Form N-6 (File No. 333-146507) filed on April 2, 2013.

(ii) AllianceBernstein Variable Products Series Fund incorporated herein by reference to Post-Effective Amendment No. 23 on Form N-6 (File No. 333-146507) filed on April 1, 2015.

(iii) ALPS Variable Investment Trust

(iv) American Funds Insurance Series incorporated herein by reference to Post-Effective Amendment No. 23 on Form N-6 (File No. 333-146507) filed on April 1, 2015.

(v) BlackRock Variable Series Funds, Inc. incorporated herein by reference to Post-Effective Amendment No. 16 on Form N-6 (File No. 333-146507) filed on April 1, 2011.

(vi) Delaware VIP Trust incorporated herein by reference to Post-Effective Amendment No. 23 on Form N-6 (File No. 333-146507) filed on April 1, 2015.

(vii) Deutsche (fka DWS) Variable Series II incorporated herein by reference to Post-Effective Amendment No. 23 on Form N-6 (File No. 333-146507) filed on April 1, 2015.

(viii) Eaton Vance Variable Trust incorporated herein by reference to Pre-Effective Amendment No. 1 (File No. 333-193272) filed on May 16, 2014.

(ix) Fidelity Variable Insurance Products Fund incorporated herein by reference to Post-Effective Amendment No. 23 on Form N-6 (File No. 333-146507) filed on April 1, 2015.

(x) First Trust Variable Insurance Trust and First Trust Portfolios, L.P. incorporated herein by reference to Pre-Effective Amendment No. 1 (File No. 333-193272) filed on May 16, 2014.

(xi) Franklin Templeton Variable Insurance Products Trust incorporated herein by reference to Post-Effective Amendment No. 23 on Form N-6 (File No. 333-146507) filed on April 1, 2015.

(xii) Goldman Sachs Variable Insurance Trust incorporated herein by reference to Post-Effective Amendment No. 23 on Form N-6 (File No. 333-146507) filed on April 1, 2015.

(xiii) Hartford Funds Management Company, LLC, Harford Funds Distributors, LLC, and Hartford Administrative Services Company incorporated herein by reference to Pre-Effective Amendment No. 1 (File No. 333-193272) filed on May 16, 2014.

(xiv) Ivy Funds Variable Insurance Portfolios and Waddell & Reed, Inc. incorporated herein by reference to Pre-Effective Amendment No. 1 (File No. 333-193272) filed on May 16, 2014.

(xv) JPMorgan Insurance Trust incorporated herein by reference to Post-Effective Amendment No. 23 on Form N-6 (File No. 333-146507) filed on April 1, 2015.

B-2

(xvi) Legg Mason Partners Variable Equity Trust incorporated herein by reference to Post-Effective Amendment No. 23 on Form N-6 (File No. 333-146507) filed on April 1, 2015.

(xvii) Lincoln Variable Insurance Products Trust incorporated herein by reference to Post-Effective Amendment No. 23 on Form N-6 (File No. 333-146507) filed on April 1, 2015.

(xviii) Lord Abbott Series Fund, Inc. incorporated herein by reference to Post-Effective Amendment No. 9 (File No. 333-138190) filed on April 7, 2009.

(xix) MFS^® Variable Insurance Trust incorporated herein by reference to Post-Effective Amendment No. 23 on Form N-6 (File No. 333-146507) filed on April 1, 2015.

(xx) Oppenheimer Variable Account Funds incorporated herein by reference to Post-Effective Amendment No. 23 on Form N-6 (File No. 333-146507) filed on April 1, 2015.

(xxi) PIMCO Variable Insurance Trust incorporated herein by reference to Post-Effective Amendment No. 23 on Form N-6 (File No. 333-146507) filed on April 1, 2015.

(xxii) Putnam Variable Trust incorporated herein by reference to Post-Effective Amendment No. 23 on Form N-6 (File No. 333-146507) filed on April 1, 2015.

(xxiii) Rydex Variable Trust and Guggenheim Funds Distributors, LLC

(xxiv) SEI Insurance Products Trust

(xxv) Transparent Value Trust

(xxvi) The Universal Institutional Funds, Inc. (Morgan Stanley) incorporated herein by reference to Post-Effective Amendment No. 23 on Form N-6 (File No. 333-146507) filed on April 1, 2015.

(xxvii) Van Eck VIP Trust

(xxviii) Virtus Variable Insurance Trust and VP Distributors, LLC

(b) Rule 22c-2 Agreements between The Lincoln National Life Insurance Company and:

(i) AIM Variable Insurance Funds incorporated herein by reference to Post-Effective Amendment No. 30 (File No. 333-36304) filed on May 29, 2008.

(ii) ALPS Variable Investment Trust

(iii) American Funds Insurance Series incorporated herein by reference to Post-Effective Amendment No. 30 (File No. 333-36304) filed on May 29, 2008.

(iv) BlackRock Variable Series Funds, Inc. incorporated herein by reference to Post-Effective Amendment No. 22 (File No. 333-68842) filed on June 22, 2009.

(v) Delaware VIP Trust incorporated herein by reference to Post-Effective Amendment No. 57 (File No. 333-36316) filed on March 30, 2012.

(vi) Fidelity Variable Insurance Products Trust incorporated herein by reference to Post-Effective Amendment No. 30 (File No. 333-36304) filed on May 29, 2008.

(vii) Franklin Templeton Variable Insurance Products Trust incorporated herein by reference to Post-Effective Amendment No. 30 (File No. 333-36304) filed on May 29, 2008.

(viii) Guggenheim Funds Distributors, LLC incorporated herein by reference to Pre-Effective Amendment No. 1 (File No. 333-193272) filed on May 16, 2014.

(ix) Hartford Series Fund, Inc. and Hartford HLS Series Fund II, Inc. incorporated herein by reference to Pre-Effective Amendment No. 1 (File No. 333-193272) filed on May 16, 2014.

(x) Ivy Funds Variable Insurance Portfolios and Waddell & Reed, Inc. incorporated herein by reference to Pre-Effective Amendment No. 1 (File No. 333-193272) filed on May 16, 2014.

(xi) Lincoln Variable Insurance Products Trust incorporated herein by reference to Post-Effective Amendment No. 30 (File No. 333-36304) filed on May 29, 2008.

(xii) MFS Variable Insurance Trust incorporated herein by reference to Post-Effective Amendment No. 30 (File No. 333-36304) filed on May 29, 2008.

(xiii) Oppenheimer Variable Account Funds incorporated herein by reference to Post-Effective Amendment No. 9 (File No. 333-138190) filed on April 7, 2009.

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(xiv) Putnam Variable Insurance Trust incorporated herein by reference to Post-Effective Amendment No. 30 (File No. 333-36304) filed on May 29, 2008.

(xv) Van Eck Securities Corporation

(c) Accounting and Financial Administration Services Agreement dated October 1, 2007 among Mellon Bank, N.A., The Lincoln National Life Insurance Company and Lincoln Life & Annuity Company of New York is incorporated herein by reference to Registration Statement on Form N-4 (File No. 333-147673) filed on November 28, 2007.

(9) Opinion and Consent of Scott C. Durocher, Senior Counsel of The Lincoln National Life Insurance Company, as to the legality of securities being issued incorporated herein by reference to Pre-Effective Amendment No. 1 (File No. 333-193272) filed on May 16, 2014.

(10)(a) Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm

(b) Power of Attorney - Principal Officers and Directors of The Lincoln National Life Insurance Company

(11) Not applicable

(12) Not applicable

(13) Organizational Chart of the Lincoln National Insurance Holding Company System incorporated herein by reference to Post-Effective Amendment No. 23 on Form N-6 (File No. 333-146507) filed on April 1, 2015.

Item 25. Directors and Officers of the Depositor

The following list contains the officers and directors of The Lincoln National Life Insurance Company who are engaged directly or indirectly in activities relating to Lincoln Life Variable Annuity Account N as well as the contracts. The list also shows The Lincoln National Life Insurance Company's executive officers.

Name	Positions and Offices with Depositor
Charles A. Brawley, III**	Senior Vice President, Associate General Counsel and Secretary
Ellen G. Cooper**	Executive Vice President, Chief Investment Officer and Director
Jeffrey D. Coutts**	Senior Vice President and Treasurer
Randal J. Freitag**	Executive Vice President, Chief Financial Officer and Director
Dennis R. Glass**	President and Director
Mark E. Konen**	Executive Vice President and Director
Douglas N. Miller**	Senior Vice President, Chief Accounting Officer and Controller
Keith J. Ryan*	Vice President and Director

*Principal business address is 1300 South Clinton Street, Fort Wayne, Indiana 46802

**Principal business address is Radnor Financial Center, 150 Radnor Chester Road, Radnor, PA 19087

Item 26. Persons Controlled by or Under Common Control with the Depositor or Registrant

See Exhibit 13: Organizational Chart of the Lincoln National Insurance Holding Company System.

Item 27. Number of Contractowners

As of February 28, 2015 there were 328,705 contract owners under Account N.

Item 28. Indemnification

a) Brief description of indemnification provisions.

In general, Article VII of the By-Laws of The Lincoln National Life Insurance Company (Lincoln Life or Company) provides that Lincoln Life will indemnify certain persons against expenses, judgments and certain other specified costs incurred by any such person if he/she is made a party or is threatened to be made a party to a suit or proceeding because he/she was a director, officer, or employee of Lincoln Life, as long as he/she acted in good faith and in a manner he/she reasonably believed to be in the best interests of, or act opposed to the best interests of, Lincoln Life. Certain additional conditions apply to indemnification in criminal proceedings.

In particular, separate conditions govern indemnification of directors, officers, and employees of Lincoln Life in connection with suits by, or in the right of, Lincoln Life.

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Please refer to Article VII of the By-Laws of Lincoln Life (Exhibit no. 6(b) hereto) for the full text of the indemnification provisions. Indemnification is permitted by, and is subject to the requirements of, Indiana law.

b) Undertaking pursuant to Rule 484 of Regulation C under the Securities Act of 1933:

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the provisions described in Item 28(a) above or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer, or controlling person of the Registrant in the successful defense of any such action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

Item 29. Principal Underwriter

(a) Lincoln Financial Distributors, Inc. (“LFD”) currently serves as Principal Underwriter for: Lincoln National Variable Annuity Account C; Lincoln National Flexible Premium Variable Life Account D; Lincoln National Variable Annuity Account E; Lincoln National Flexible Premium Variable Life Account F; Lincoln National Flexible Premium Variable Life Account G; Lincoln National Variable Annuity Account H; Lincoln Life & Annuity Variable Annuity Account H; Lincoln Life Flexible Premium Variable Life Account J; Lincoln Life Flexible Premium Variable Life Account K; Lincoln National Variable Annuity Account L; Lincoln Life & Annuity Variable Annuity Account L; Lincoln Life Flexible Premium Variable Life Account M; Lincoln Life & Annuity Flexible Premium Variable Life Account M; Lincoln Life Variable Annuity Account N; Lincoln New York Account N for Variable Annuities; Lincoln Life Variable Annuity Account Q; Lincoln Life Flexible Premium Variable Life Account R; LLANY Separate Account R for Flexible Premium Variable Life Insurance; Lincoln Life Flexible Premium Variable Life Account S; LLANY Separate Account S for Flexible Premium Variable Life Insurance; Lincoln Life Variable Annuity Account T; Lincoln Life Variable Annuity Account W; and Lincoln Life Flexible Premium Variable Life Account Y and Lincoln Life & Annuity Flexible Premium Variable Life Account Y; Lincoln Life Variable Annuity Account JF-H; Lincoln Life Variable Annuity Account JF-I; Lincoln Life Flexible Premium Variable Life Account JF-A; Lincoln Life Flexible Premium Variable Life Account JF-C; Lincoln Life Variable Annuity Account JL-A; Lincoln Life & Annuity Flexible Premium Variable Life Account JA-B; Lincoln Variable Insurance Products Trust; Lincoln Advisors Trust.

(b) Officers and Directors of Lincoln Financial Distributors, Inc.:

Name	Positions and Offices with Underwriter
Patrick J. Caulfield**	Vice President, Chief Compliance Officer and Senior Counsel
Jeffrey D. Coutts*	Senior Vice President and Treasurer
Wilford H. Fuller*	President, Chief Executive Officer and Director
Elizabeth M. O’Brien*	Senior Vice President and Director
Thomas P. O'Neill*	Senior Vice President, Chief Operating Officer and Director
Nancy A. Smith*	Secretary
Vacant	Vice President and Chief Financial Officer

*Principal Business address is Radnor Financial Center, 150 Radnor Chester Road, Radnor, PA 19087

**Principal Business address is 350 Church Street, Hartford, CT 06103

(c) N/A

Item 30. Location of Accounts and Records

All accounts, books, and other documents, except accounting records, required to be maintained by Section 31a of the 1940 Act and the Rules promulgated thereunder are maintained by The Lincoln National Life Insurance Company, 1300 South Clinton Street, Fort Wayne, Indiana 46802. The accounting records are maintained by The Bank of New York Mellon, One Mellon Bank Center, 500 Grant Street, Pittsburgh, PA 15258.

Item 31. Management Services

Not Applicable.

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Item 32. Undertakings

(a) Registrant undertakes that it will file a post-effective amendment to this registration statement as frequently as necessary to ensure that the audited financial statements in the registration statement are never more than 16 months old for so long as payments under the variable annuity contracts may be accepted.

(b) Registrant undertakes that it will include either (1) as part of any application to purchase a Certificate or an Individual Contract offered by the Prospectus, a space that an applicant can check to request a Statement of Additional Information, or (2) a post card or a similar written communication affixed to or included in the Prospectus that the applicant can remove to send for a Statement of Additional Information.

(c) Registrant undertakes to deliver any Statement of Additional Information and any financial statements required to be made available under this Form promptly upon written or oral request to Lincoln Life at the address or phone number listed in the Prospectus.

(d) The Lincoln National Life Insurance Company hereby represents that the fees and charges deducted under the contract, in the aggregate, are reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed by The Lincoln National Life Insurance Company.

SIGNATURES

(a) As required by the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets the requirements of Securities Act Rule 485(b) for effectiveness of this Registration Statement and has caused this Post-Effective Amendment No. 1 to the Registration Statement to be signed on its behalf, in the City of Fort Wayne, and State of Indiana on this 28th day of April, 2015.

Lincoln Life Variable Annuity Account N (Registrant) Lincoln Investor Advantage®
By:	/s/ Kimberly A. Genovese Kimberly A.Genovese Assistant Vice President, The Lincoln National Life Insurance Company (Title)
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY (Depositor)
By:	/s/ Stephen R. Turer Stephen R. Turer (Signature-Officer of Depositor) Vice President, The Lincoln National Life Insurance Company (Title)

(b) As required by the Securities Act of 1933, this Amendment to the Registration Statement has been signed by the following persons in their capacities indicated on April 28, 2015.

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Signature	Title
* Dennis R. Glass	President and Director (Principal Executive Officer)
* Ellen Cooper	Executive Vice President, Chief Investment Officer and Director
* Randal J. Freitag	Executive Vice President, Chief Financial Officer and Director (Principal Financial Officer)
* Mark E. Konen	Executive Vice President and Director
* Keith J. Ryan	Vice President and Director
*By: /s/ Kimberly A.Genovese Kimberly A.Genovese	Pursuant to a Power of Attorney

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