Lincoln Variable Insurance Products Trust

LVIP Baron Growth Opportunities Fund

LVIP Capital Growth Fund

LVIP Cohen & Steers Global Real Estate Fund

LVIP Columbia Value Opportunities Fund

LVIP Delaware Bond Fund

LVIP Delaware Growth and Income Fund

LVIP Delaware Social Awareness Fund

LVIP Delaware Special Opportunities Fund

LVIP Janus Capital Appreciation Fund

LVIP MFS International Growth Fund

LVIP MFS Value Fund

LVIP Mid-Cap Value Fund

LVIP Mondrian International Value Fund

LVIP Money Market Fund

LVIP SSgA Bond Index Fund

LVIP SSgA Developed International 150 Fund

LVIP SSgA Emerging Markets 100 Fund

LVIP SSgA International Index Fund

LVIP SSgA Large Cap 100 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 Fund

LVIP Turner Mid-Cap Growth Fund

LVIP Wells Fargo Intrinsic Value Fund

1300 South Clinton Street
Fort Wayne, Indiana 46802
Statement of Additional Information May 1, 2011

This Statement of Additional Information (SAI), which is not a prospectus,
provides more information about the thirty-five series - referred to as "funds"
- of Lincoln Variable Insurance Products Trust. The funds indicate the funds
named in the above caption. Each fund offers two classes of shares: the
Standard Class and the Service Class.

Each fund's audited financial statements and the report of Ernst &Young, LLP,
independent registered public accounting firm, are incorporated by reference to
the fund's 2009 annual report. This SAI should be read in conjunction with the
funds' prospectus dated May 1, 2011. You may obtain a copy of the funds'
prospectus or a fund's annual report on request and without charge. Please
write The Lincoln National Life Insurance Company, P.O. Box 2340, Fort Wayne,
Indiana 46801 or call 1-800-4LINCOLN (454-6265).

May 1, 2011

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Table of Contents

Item Page
Description of the Trust and the Funds 4
Fundamental Investment Restrictions 4
Additional Investment Strategies and Risks 5
Portfolio Transactions and Brokerage 19
Portfolio Turnover 24
Trustees and Officers 25
Investment Adviser and Sub-Advisers 30
Portfolio Managers 39
Principal Underwriter 50
Administration Agreement 50
Accounting Agreement 50
Code of Ethics 50
Description of Shares 51
Control Persons and Principal Holders of Securities 51
Rule 12b-1 Plan 56
Revenue Sharing 57
Valuation of Portfolio Securities 57
Portfolio Holdings Disclosure 57
Purchase and Redemption Information 58
Custodian and Transfer Agent 59
Independent Registered Public Accounting Firm 59
Financial Statements 59
Taxes 59
APPENDIX A 61
APPENDIX B 63
APPENDIX C 105

Description of the Trust and the Funds

Lincoln Variable Insurance Products Trust (the Trust), a Delaware statutory
trust formed on February 1, 2003, is an open-end management investment company.
Prior to April 30, 2003, each fund in existence at the time was organized as a
separate Maryland corporation (each, a predecessor fund). Eleven series of the
Trust are successors to a predecessor fund, the assets and liabilities of which
were acquired and assumed, respectively, on April 30, 2003. Each fund's
investment objective and certain investment restrictions are fundamental and
cannot be changed without the affirmative vote of a majority of the outstanding
voting securities of the fund. There can be no assurance that the objective of
a fund will be achieved. Each of the funds except the LVIP MFS International
Growth Fund, LVIP Cohen & Steers Global Real Estate Fund and the funds of funds
is diversified within the meaning of the Investment Company Act of 1940 (1940
Act). References to adviser in this SAI include both Lincoln Investment
Advisors Corporation (LIA) and a fund's sub-adviser (if applicable) unless the
context otherwise indicates.

Fundamental Investment Restrictions

The funds have adopted certain fundamental policies and investment restrictions
which may not be changed without a majority vote of a fund's outstanding
shares. Such majority is defined in the 1940 Act as the vote of the lesser of
(1) 67% or more of the outstanding voting securities present at a meeting, if
the holders of more than 50% of the outstanding voting securities are present
in person or by proxy, or (2) more than 50% of the outstanding voting
securities. For purposes of the following restrictions: (a) all percentage
limitations apply immediately after the making of an investment; and (b) any
subsequent change in any applicable percentage resulting from market
fluctuations does not require elimination of any security from the portfolio.

Each fund may not:

1. Change its investment objective, except for the LVIP Capital Growth Fund,
LVIP Cohen & Steers Global Real Estate Fund, LVIP Columbia Value
Opportunities Fund, LVIP MFS International Growth Fund, LVIP MFS Value
Fund, LVIP Mid-Cap Value Fund, LVIP SSgA Bond Index Fund, LVIP SSgA
Developed International 150 Fund, LVIP SSgA Emerging Markets 100 Fund, LVIP
SSgA International Index Fund, LVIP SSgA Large Cap 100 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 Templeton Growth Fund, and
the LVIP Turner Mid-Cap Growth Fund.

2. Make investments that will result in the concentration (as that term may be
defined in the 1940 Act, any rule or order thereunder, or official
interpretation thereof) of its investments in the securities of issuers
primarily engaged in the same industry, provided that this restriction does
not limit the fund from investing in obligations issued or guaranteed by
the U.S. Government, its agencies or instrumentalities, or in tax-exempt
securities or certificates of deposit, except for the LVIP Cohen & Steers
Global Real Estate Fund.

3. Borrow money or issue senior securities, except as the 1940 Act, any rule or
order thereunder, or official interpretation thereof, may permit.

4. Underwrite the securities of other issuers, except that the fund may engage
in transactions involving the acquisition, disposition or resale of its
portfolio securities, under circumstances where it may be considered to be
an underwriter under the Securities Act of 1933.

5. Purchase or sell real estate unless acquired as a result of ownership of
securities or other instruments and provided that this restriction does not
prevent the fund from investing in issuers which invest, deal, or otherwise
engage in transactions in real estate or interests therein, or investing in
securities that are secured by real estate or interests therein.

6. Purchase or sell physical commodities, unless acquired as a result of
ownership of securities or other instruments and provided that this
restriction does not prevent the fund from investing in securities that are
secured by physical commodities or engaging in transactions involving
financial commodities, such as financial options, financial futures
contracts, options on financial futures contracts, and financial forward
contracts.

7. Make loans of any security or make any other loan if, as a result, more than
33 1-3% of its total assets would be lent to other parties, provided that
this limitation does not apply to purchases of debt obligations, to
repurchase agreements, and to investments in loans, including assignments
and participation interests.

8. (Except for the LVIP Cohen & Steers Global Real Estate Fund, the LVIP MFS
International Growth Fund and the funds of funds) with respect to 75% of
its total assets, invest in a security if, as a result of such investment:
(a) more than 5% of its total assets would be invested in the securities of
any one issuer or (b) the fund would hold more than 10% of the outstanding
voting securities of any one issuer; except that these restrictions do not
apply to (i) securities issued or guaranteed by the U.S. Government or its
agencies or instrumentalities or (ii) securities of other investment
companies.

Additional Investment Strategies and Risks

The prospectus discusses each fund's principal investment strategies used to
pursue the fund's investment objective and the risks of those strategies.

Unless otherwise stated in the prospectus, many investment strategies and
techniques are discretionary. That means the fund's adviser may elect to engage
or not engage in the various strategies and techniques at its sole discretion.
Investors should not assume that any particular discretionary investment
technique or strategy will be employed at all times, or ever employed.

Investment Strategies and Risks Applicable to Funds

Money Market Instruments. Money market instruments include bank time deposits,
certificates of deposit, commercial paper, loan participations and bankers'
acceptances. Bank time deposits are funds kept on deposit with a bank for a
stated period of time in an interest-bearing account. Certificates of deposit
are certificates issued against funds deposited in a bank or financial
institution, are for a definite period of time, earn a specified rate of
return, and are normally negotiable. Commercial paper is a short-term note with
a maturity of up to nine months issued by banks, corporations or government
bodies. Loan participations are short-term, high-quality participations in
selected commercial bank loans issued by creditworthy banks.

Bankers' acceptances are short-term credit instruments used to finance
commercial transactions. Generally, a bankers' acceptance is a time draft or
bill of exchange drawn on a bank by an exporter or an importer to obtain a
stated amount of funds to pay for specific merchandise. The draft is then
accepted by a bank that, in effect, unconditionally guarantees to pay the face
value of the instrument on its maturity date. Bankers' acceptances may be
purchased in the secondary market at the going rate of discount for a specific
maturity. Although maturities for bankers' acceptances can be as long as 270
days, most bankers' acceptances have maturities of six months or less.

Repurchase Agreements. In a repurchase agreement, a fund purchases a security
and simultaneously commits to resell that security to the seller at an agreed
upon price on an agreed upon date within a number of days (usually not more
than seven) from the date of purchase. The resale price reflects the purchase
price plus an agreed upon incremental amount that is unrelated to the coupon
rate or maturity of the purchased security. A repurchase agreement involves the
obligation of the seller to pay the agreed upon price, which obligation is in
effect secured by the value (at least equal to the amount of the agreed upon
resale price and marked-to-market daily) of the underlying security.

A fund may engage in a repurchase agreement with respect to any security in
which it is authorized to invest. While it does not presently appear possible
to eliminate all risks from these transactions (particularly the possibility of
a decline in the market value of the underlying securities, as well as delays
and costs to the fund in the event of bankruptcy of the seller), it is the
policy of the fund to limit repurchase agreements to those parties whose
creditworthiness has been reviewed and found satisfactory by the board of
trustees or its delegates. In addition, the collateral will be segregated and
will be marked-to-market daily to determine that the full value of the
collateral, as specified in the agreement, does not decrease below 102% of the
purchase price plus accrued interest. If such decrease occurs, additional
collateral will be requested and, when received, added to maintain full
collateralization. In the event of a default or bankruptcy by a selling
financial institution, the fund will seek to liquidate such collateral.
However, the fund may incur delay and costs in selling the underlying security
or may suffer a loss of principal and interest if the fund is treated as an
unsecured creditor and required to return the underlying collateral to the
seller's estate.

U.S. Government Securities. A fund may invest in securities issued or
guaranteed by the U.S. Government. Securities guaranteed by the U.S. Government
include: (1) direct obligations of the U.S. Treasury (such as Treasury bills,
notes and bonds) and (2) federal agency obligations guaranteed as to principal
and interest by the U.S. Treasury (such as Government National Mortgage
Association (GNMA) certificates and Federal Housing Administration (FHA)
debentures). These securities are of the highest possible credit quality,
because the payment of principal and interest is unconditionally guaranteed by
the U.S. Government. They are subject to variations in market value due to
fluctuations in interest rates, but, if held to maturity are deemed to be free
of credit risk for the life of the investment.

Securities issued by U.S. Government instrumentalities and certain federal
agencies are neither direct obligations of, nor are they guaranteed by, the
U.S. Treasury. However, they do generally involve federal sponsorship in one
way or another. Some are backed by specific types of collateral. Some are
supported by the issuer's right to borrow from the U.S. Treasury. Some are
supported by the discretionary authority of the U.S. Treasury to purchase
certain obligations of the issuer. Others are supported only by the credit of
the issuing government agency or instrumentality. These agencies and
instrumentalities include, but are not limited to, Federal Land Banks, Farmers
Home Administration, Central Bank for Cooperatives, Federal Intermediate Credit
Banks and Federal Home Loan Banks. There is no guarantee that the government
will support these types of securities and, therefore, they may involve more
risk than other government obligations.

U.S. Government securities may be acquired by the fund in the form of
separately-traded principal and interest segments of selected securities issued
or guaranteed by the U.S. Treasury. These segments are traded independently
under the Separate Trading of Registered Interest and Principal Securities
(STRIPS) program. Under the STRIPS program, the principal and interest parts
are individually numbered and separately issued by the U.S. Treasury at the
request of depository financial institutions, which then trade the parts

independently. Obligations of the Resolution Funding Corp. are similarly
divided into principal and interest parts and maintained on the book entry
records of the Federal Reserve Banks.

The fund may also invest in custodial receipts that evidence ownership of
future interest payments, principal payments, or both, on certain U.S. Treasury
notes or bonds in connection with programs sponsored by banks and brokerage
firms. Such notes and bonds are held in custody by a bank on behalf of the
owners of the receipts. These custodial receipts are known by various names,
including Treasury Receipts (TRs), Treasury Interest Guarantee Receipts
(TIGRs), and Certificates of Accrual on Treasury Securities (CATS) and may not
be deemed U.S. Government securities.

The fund may invest occasionally in collective investment vehicles, the assets
of which consist principally of U.S. Government securities or other assets
substantially collateralized or supported by such securities, such as
government trust certificates.

In general, the U.S. Government securities in which the fund invests do not
have as high a yield as do more speculative securities not supported by the
U.S. Government or its agencies or instrumentalities.

Investment in Securities of Other Investment Companies. Subject to certain
restrictions, as described below, the funds are permitted to invest in other
investment companies, including open-end, closed-end or unregistered investment
companies, either within the percentage limits of the Investment Company Act of
1940 Act (1940 Act), any rule or order thereunder, or any SEC staff
interpretation thereof, or without regard to percentage limits in connection
with a merger, reorganization, consolidation, or other similar transaction. In
addition, certain sub-advisers may invest fund assets in money market funds
that they advise or in other investment companies. Each fund (except the funds
of funds) has a policy that prohibits it from acquiring any securities of
open-end investment companies or registered unit investment trusts in reliance
on Section 12(d)(1)(G) or Section 12(d)(1)(F) of the 1940 Act.

Exchange-Traded Funds ("ETFs"). These are a type of index fund bought and sold
on a securities exchange. An ETF trades like common stock and represents a
fixed portfolio of securities designed to track a particular market index. The
funds could purchase an ETF to temporarily gain exposure to a portion of the
U.S. or a foreign market while awaiting purchase of underlying securities. The
risks of owning an ETF generally reflect the risks of owning the underlying
securities they are designed to track, although lack of liquidity in an ETF
could result in it being more volatile and ETFs have management fees that
increase their costs.

Investment Strategies Available to All Funds Except LVIP Money Market Fund

Options on Securities. The funds may purchase and sell (write) put and call
options on securities that are traded on United States and foreign securities
exchanges and over-the-counter and on indices of securities. By purchasing a
put option, the purchaser obtains the right (but not the obligation) to sell
the option's underlying instrument at a fixed strike price. In return for this
right, the purchaser pays the current market price for the option (known as the
option premium). Options have various types of underlying instruments,
including specific securities, indices of securities prices, and futures
contracts. The purchaser may terminate its position in a put option by allowing
it to expire or by exercising the option. If the option is allowed to expire,
the purchaser will lose the entire premium. If the option is exercised, the
purchaser completes the sale of the underlying instrument at the strike price.
A purchaser may also terminate a put option position by closing it out in the
secondary market at its current price, if a liquid secondary market exists.

The buyer of a typical put option can expect to realize a gain if security
prices fall substantially. However, if the underlying instrument's price does
not fall enough to offset the cost of purchasing the option, a put buyer can
expect to suffer a loss (limited to the amount of the premium, plus related
transaction costs).

The features of call options are essentially the same as those of put options,
except that the purchaser of a call option obtains the right to purchase,
rather than sell, the underlying instrument at the option's strike price. A
call buyer typically attempts to participate in potential price increases of
the underlying instrument with risk limited to the cost of the option if
security prices fall. At the same time, the buyer can expect to suffer a loss
if security prices do not rise sufficiently to offset the cost of the option.

The writer of a put or call option takes the opposite side of the transaction
from the option's purchaser. In return for receipt of the premium, the writer
of a put option assumes the obligation to pay the strike price for the option's
underlying instrument if the other party to the option chooses to exercise it.
The writer may seek to terminate a position in a put option before exercise by
closing out the option in the secondary market at its current price. If the
secondary market is not liquid for a put option, however, the writer must
continue to be prepared to pay the strike price while the option is
outstanding, regardless of price changes. When writing an option on a futures
contract, a fund will be required to make margin payments to a futures
commission merchant (FCM) as described below for futures contracts.

If security prices rise, a put writer would generally expect to profit,
although its gain would be limited to the amount of the premium it received. If
security prices remain the same over time, it is likely that the writer will
also profit, because it should be able to close out the option at a lower
price. If security prices fall, the put writer would expect to suffer a loss.
This loss should be less than the loss from purchasing the underlying
instrument directly, however, because the premium received for writing the
option should mitigate the effects of the decline.

Writing a call option obligates the writer to sell or deliver the option's
underlying instrument, in return for the strike price, upon exercise of the
option. The characteristics of writing call options are similar to those of
writing put options, except that writing calls generally is a profitable
strategy if prices remain the same or fall. Through receipt of the option
premium, a call writer mitigates the effects

of a price decline. At the same time, because a call writer must be prepared to
deliver the underlying instrument in return for the strike price, even if its
current value is greater, a call writer gives up some ability to participate in
security price increases.

The successful use of a fund's options strategies depends on the ability of the
adviser to forecast correctly market movements. For example, if the fund were
to write a call option based on the adviser's expectation that the price of the
underlying security would fall, but the price were to rise instead, the fund
could be required to sell the security upon exercise at a price below the
current market price. Similarly, if the fund were to write a put option based
on the adviser's expectation that the price of the underlying security would
rise, but the price were to fall instead, the fund could be required to
purchase the security upon exercise at a price higher than the current market
price.

When the fund purchases an option, it runs the risk that it will lose its
entire investment in the option in a relatively short period of time, unless
the fund exercises the option or enters into a closing sale transaction before
the option's expiration. If the price of the underlying security does not rise
(in the case of a call) or fall (in the case of a put) to an extent sufficient
to cover the option premium and transaction costs, the fund will lose part or
all of its investment in the option. This contrasts with an investment by the
fund in the underlying security, since the fund will not lose any of its
investment in such security if the price does not change.

A fund's written options positions will be covered at all times. A call option
written by a fund will be deemed to be covered if the fund holds the underlying
instrument or an option on the underlying instrument with an exercise price
equal to or less than the exercise price of the call written. A put option
written by a fund will be deemed to be covered if the fund holds a put option
on the same instrument with an exercise price equal to or greater than the
exercise price of the put option written by the fund. A fund may also cover a
written options position by segregating cash or liquid securities equal to the
fund's net uncovered obligation.

The effective use of options also depends on the fund's ability to terminate
option positions at times when the adviser deems it desirable to do so.
Although the fund will take an option position only if the adviser believes
there is a liquid secondary market for the option, there is no assurance that
the fund will be able to effect closing transactions at any particular time or
at an acceptable price.

If a secondary market in options were to become unavailable, the fund could no
longer engage in closing transactions. Lack of investor interest might
adversely affect the liquidity of the market for particular options or series
of options. A market may discontinue trading of a particular option or options
generally. In addition, a market could become temporarily unavailable if
unusual events, such as volume in excess of trading or clearing capability,
were to interrupt its normal operations.

A market may at times find it necessary to impose restrictions on particular
types of options transactions, such as opening transactions. For example, if an
underlying security ceases to meet qualifications imposed by the market or the
Options Clearing Corp. (OCC), new series of options on that security will no
longer be opened to replace expiring series, and opening transactions in
existing series may be prohibited. If an options market were to become
unavailable, the fund as a holder of an option would be able to realize profits
or limit losses only by exercising the option, and the fund, as option writer,
would remain obligated under the option until expiration or exercise.

Disruption in the markets for the securities underlying options purchased or
sold by the fund could result in losses on the option. If trading is
interrupted in an underlying security, the trading of options on that security
is normally halted as well. As a result, the fund as purchaser or writer of an
option will be unable to close out its positions until options trading resumes,
and it may be faced with considerable losses if trading in the security reopens
at a substantially different price. In addition, the OCC or other options
markets may impose exercise restrictions. If a prohibition on exercise is
imposed at the time when trading in the option has also been halted, the fund
as purchaser or writer of an option will be locked into its position until one
of the two restrictions has been lifted. If the OCC were to determine that the
available supply of an underlying security appears insufficient to permit
delivery by the writers of all outstanding calls in the event of exercise, it
may prohibit indefinitely the exercise of put options. The fund, as holder of
such a put option could lose its entire investment if the prohibition remained
in effect until the put option's expiration and the fund was unable either to
acquire the underlying security or to sell the put option in the market.

Spreads and Straddles. In addition to the options strategies described
previously, a fund may engage in spread transactions in which it purchases and
writes a put or call option on the same underlying instrument, with the options
having different exercise prices and/or expiration dates. The fund may also
engage in so-called straddles, in which it purchases or sells combinations of
put and call options on the same instrument. Spread and straddle transactions
require the fund to purchase and/or write more than one option simultaneously.
Accordingly, the fund's ability to enter into such transactions and to
liquidate its positions when necessary or deemed advisable may be more limited
than if the fund were to purchase or sell a single option. Similarly, costs
incurred by the fund in connection with these transactions will in many cases
be greater than if the fund were to purchase or sell a single option.

A call option included in a spread or straddle will be deemed to be covered if
the fund holds an option on the same instrument with an exercise price equal to
or less than the exercise price of the call written (or, where the exercise
price is greater than that of the option written by the fund, if the fund
segregates cash or liquid securities equal to the difference). Similarly, a put
option included in a spread or straddle will be deemed to be covered if the
fund holds a put option on the same instrument with an exercise price equal to
or greater than the exercise price of the put option written by the fund (or,
where the exercise price is less than that of the option written by the fund,
if the fund segregates cash or liquid securities equal to the difference).

OTC Options. Unlike exchange-traded options, which are standardized with
respect to the underlying instrument, expiration date, contract size, and
strike price, the terms of over-the-counter (OTC) options (options not traded
on exchanges) generally are established through negotiation with the other
party to the option contract. While this type of arrangement allows the
purchaser or writer greater flexibility to tailor an option to its needs, OTC
options generally involve greater credit risk than exchange-traded options,
which are guaranteed by the clearing organization of the exchanges where they
are traded.

Futures Contracts. The funds may enter into contracts for the purchase or sale
for future delivery of fixed income securities, foreign currencies or contracts
based on financial indices including interest rates or an index of U.S.
Government securities, foreign government securities, equity securities or
fixed income securities. The buyer or seller of a futures contract is not
required to deliver or pay for the underlying instrument unless the contract is
held until the delivery date. However, both the buyer and seller are required
to deposit initial margin for the benefit of an Futures Commission Merchant
(FCM) when the contract is entered into and maintain variation margin
requirements. In the event of the bankruptcy of an FCM that holds margin on
behalf of the fund, the fund may be entitled to return of margin owed to it
only in proportion to the amount received by FCM's other customers. The adviser
will attempt to minimize this risk by careful monitoring of the
creditworthiness of the FCMs with which the fund does business.

Pursuant to rules adopted by the Commodity Futures Trading Commission (CFTC),
each fund is permitted to engage in unlimited futures trading activity without
registration with the CFTC. Although the fund would deposit with the FCM margin
consisting of cash and liquid assets, these assets would be available to the
fund immediately upon closing out the futures position, while settlement of
securities transactions could take several days. However, because the fund's
cash that may otherwise be invested would be held uninvested or invested in
liquid assets so long as the futures position remains open, the fund's return
could be diminished due to the opportunity losses of foregoing other potential
investments.

The ordinary spreads between prices in the cash and futures markets, due to
differences in the nature of those markets, are subject to distortions. First,
all participants in the futures market are subject to initial margin and
variation margin requirements. Rather than meeting additional variation margin
requirements, investors may close out futures contracts through offsetting
transactions which could distort the normal price relationship between the cash
and futures markets. Second, the liquidity of the futures market depends on
participants entering into offsetting transactions rather than making or taking
delivery. To the extent participants decide to make or take delivery, liquidity
in the futures market could be reduced and prices in the futures market
distorted. Third, from the point of view of speculators, the margin deposit
requirements in the futures market are less onerous than margin requirements in
the securities market. Therefore, increased participation by speculators in the
futures market may cause temporary price distortions. Due to the possibility of
the foregoing distortions, a correct forecast of general price trends by the
adviser still may not result in a successful use of futures.

Because futures contracts are generally settled within a day from the date they
are closed out, compared with a settlement period of three days for some types
of securities, the futures markets may provide superior liquidity to the
securities markets. Nevertheless, there is no assurance that a liquid secondary
market will exist for any particular futures contract at any particular time.
In addition, futures exchanges may establish daily price fluctuation limits for
futures contracts and may halt trading if a contract's price moves upward or
downward more than the limit on a given day. On volatile trading days when the
price fluctuation limit is reached, it may be impossible for the fund to enter
into new positions or close out existing positions. If the secondary market for
a futures contract is not liquid because of price fluctuation limits or
otherwise, the fund may not be able to promptly liquidate unfavorable futures
positions and potentially could be required to continue to hold a futures
position until the delivery date, regardless of changes in its value. As a
result, the fund's access to other assets held to cover its futures positions
also could be impaired.

Successful use of futures contracts is subject to the ability of the adviser to
correctly predict movements in the direction of interest rates or changes in
market conditions. These predictions involve skills and techniques that may be
different from those involved in the management of the portfolio being hedged.
In addition, there can be no assurance that there will be a correlation between
movements in the price of the underlying index or securities and movements in
the price of the securities which are the subject of the hedge. A decision of
whether, when and how to hedge involves the exercise of skill and judgment, and
even a well-conceived hedge may be unsuccessful to some degree because of
market behavior or unexpected trends in interest rates or markets.

Options on Futures Contracts. A fund may purchase and sell (write) call and put
options on futures contracts and enter into closing transactions with respect
to such options to terminate existing positions. A fund may use options on
futures contracts in lieu of writing or buying options directly on the
underlying securities or purchasing and selling the underlying futures
contracts. For example, to hedge against a possible decrease in the value of
its portfolio securities, a fund may purchase put options or write call options
on futures contracts rather than selling futures contracts. Similarly, a fund
may purchase call options or write put options on futures contracts as a
substitute for the purchase of futures contracts to hedge against a possible
increase in the price of securities which the fund expects to purchase. Such
options generally operate in the same manner as options purchased or written
directly on the underlying investments.

As with options on securities, the holder or writer of an option may terminate
the position by selling or purchasing an offsetting option. There is no
guarantee that such closing transactions can be effected.

A fund will be required to deposit initial margin and maintenance margin with
respect to put and call options on futures contracts written by it pursuant to
brokers' requirements similar to those described above. The fund does not
intend to leverage the futures contracts.

Illiquid Investments. The funds may invest in securities or other investments
that are considered illiquid. A security or investment is considered illiquid
if it cannot be sold or disposed of in the ordinary course of business at
approximately the price at which it is valued. A security or investment might
be illiquid due to the absence of a readily available market or due to legal or
contractual restrictions on resale. LIA will determine the liquidity of
securities purchased by the funds, subject to oversight by the board of
trustees.

The fund may have to bear the expense of registering restricted securities for
resale and risk the substantive delays in effecting such registration. However,
the fund may avail itself of Rule 144A under the Securities Act of 1933 which
permits the fund to purchase securities which have been privately placed and
resell such securities to certain qualified institutional buyers without
restriction. Certain restricted securities that are not registered for sale to
the general public but can be resold to institutional investors may not be
considered illiquid, provided that a dealer or institutional trading market
exists. The institutional trading market is relatively new and liquidity of the
fund's investments could be impaired if trading fails to further develop, or if
it declines.

Borrowing. Each fund may borrow money to the extent permitted under the 1940
Act. Borrowing may exaggerate the effect on net asset value of any increase or
decrease in the market value of a fund. Money borrowed will be subject to
interest costs and other fees, which could reduce a fund's return and may or
may not be recovered by appreciation of the securities purchased. A fund also
may be required to maintain minimum average balances in connection with such
borrowing or to pay a commitment or other fee to maintain a line of credit;
either of these requirements would increase the cost of borrowing over the
stated interest rate. In addition, purchasing securities when the fund has
borrowed money may involve an element of leverage.

Pledging Assets. A fund may not pledge, hypothecate, mortgage or otherwise
encumber its assets in excess of 15% of its total assets (taken at current
value) and then only to secure borrowings permitted by the "Borrowing"
restriction. The deposit of underlying securities and other assets in escrow
and other collateral arrangements with respect to margin for options on
financial futures contracts are not deemed to be pledges or other encumbrances.

Foreign Currency Transactions. A fund may hold foreign currency deposits from
time to time and may convert dollars and foreign currencies in the foreign
exchange markets. Although foreign exchange dealers generally do not charge a
fee for such conversions, they do realize a profit based on the difference
between the prices at which they are buying and selling various currencies.
Thus, a dealer may offer to sell a foreign currency at one rate, while offering
a lesser rate of exchange should the counterparty desire to resell that
currency to the dealer. A fund also may enter into forward foreign currency
exchange contracts (forward contracts). Forward contracts are customized
transactions that require a specific amount of a currency to be delivered at a
specific exchange rate on a specific date or range of dates in the future.
Forward contracts are generally traded in an interbank market directly between
currency traders (usually large commercial banks) and their customers. The
parties to a forward contract may agree to offset or terminate the contract
before its maturity, or may hold the contract to maturity and complete the
contemplated currency exchange.

A fund will exchange foreign currencies for U.S. dollars and for other foreign
currencies in the normal course of business and may buy and sell currencies
through forward contracts in order to fix a price for securities it has agreed
to buy or sell (transaction hedge). A fund also may hedge some or all of its
investments denominated in or exposed to foreign currency against a decline in
the value of that currency relative to the U.S. dollar by entering into forward
contracts to sell an amount of that currency (or a proxy currency whose
performance is expected to replicate the performance of that currency)
approximating the value of some or all of its portfolio securities denominated
in or exposed to that currency (position hedge) or by participating in options
or futures contracts with respect to the currency. The fund also may enter into
a forward contract with respect to a currency where the fund is considering the
purchase of investments denominated in or exposed to that currency but has not
yet done so (anticipatory hedge).

A fund may enter into forward contracts to shift its investment exposure from
one currency into another. This may include shifting exposure from U.S. dollars
to a foreign currency, or from one foreign currency to another foreign
currency. This type of strategy, sometimes known as a "cross-hedge," will tend
to reduce or eliminate exposure to the currency that is sold, and increase
exposure to the currency that is purchased, much as if a fund had sold a
security denominated in one currency and purchased an equivalent security
denominated in another. Cross-hedges protect against losses resulting from a
decline in the hedged currency, but will cause a fund to assume the risk of
fluctuations in the value of the currency it purchases.

The matching of the increase in value of a forward contract and the decline in
the U.S. dollar equivalent value of the foreign currency denominated asset that
is the subject of the hedge generally will not be precise. In addition, a fund
may not always be able to enter into forward contracts at attractive prices and
may be limited in its ability to use these contracts to hedge fund assets.
Also, with regard to a fund's use of cross-hedges, there can be no assurance
that historical correlations between the movement of certain foreign currencies
relative to the U.S. dollar will continue. Poor correlation may exist between
movements in the exchange rates of the foreign currencies underlying a fund's
cross-hedges and the movements in the exchange rates of the foreign currencies
in which its assets that are the subject of such cross-hedges are denominated.

Successful use of currency management strategies will depend on the adviser's
skill in analyzing currency values. Currency management strategies may
substantially change a fund's investment exposure to changes in currency
exchange rates and could result in

losses to a fund if currencies do not perform as the adviser anticipates. For
example, if a currency's value rose at a time when the adviser had hedged a
fund by selling that currency in exchange for dollars, a fund would not
participate in the currency's appreciation. If the adviser hedges currency
exposure through proxy hedges, a fund could realize currency losses from both
the hedge and the security position if the two currencies do not move in
tandem. Similarly, if the adviser increases a fund's exposure to a foreign
currency and that currency's value declines, a fund will realize a loss. There
is no assurance that the adviser's use of currency management strategies will
be advantageous to a fund or that it will hedge at appropriate times.

Options and Futures Relating to Foreign Currencies. Currency futures contracts
are similar to forward contracts, except that they are traded on exchanges (and
have margin requirements) and are standardized as to contract size and delivery
date. Most currency futures contracts call for payment or delivery in U.S.
dollars. The underlying instrument of a currency option may be a foreign
currency, which generally is purchased or delivered in exchange for U.S.
dollars, or may be a futures contract. The purchaser of a currency call obtains
the right to purchase the underlying currency, and the purchaser of a currency
put obtains the right to sell the underlying currency.

The uses and risks of currency options and futures are similar to those of
options and futures relating to securities or indices, as discussed above. A
fund may purchase and sell currency futures and may purchase and write currency
options to increase or decrease its exposure to different foreign currencies.
Currency options may also be purchased or written in conjunction with each
other or with currency futures or forward contracts. Currency futures and
options values can be expected to correlate with exchange rates, but may not
reflect other factors that affect the value of a fund's investments. A currency
hedge, for example, should protect a Yen-denominated security from a decline in
the Yen, but will not protect a fund against a price decline resulting from
deterioration in the issuer's creditworthiness. Because the value of a fund's
foreign-denominated investments changes in response to many factors other than
exchange rates, it may not be possible to match the amount of currency options
and futures to the value of the fund's investments exactly over time.

Unlike transactions entered into by a fund in futures contracts, options on
foreign currencies and forward contracts are not traded on contract markets
regulated by the CFTC or (with the exception of certain foreign currency
options) by the Securities and Exchange Commission (SEC). To the contrary, such
instruments are traded through financial institutions acting as market-makers,
although foreign currency options are also traded on certain national
securities exchanges, such as the Philadelphia Stock Exchange and the Chicago
Board Options Exchange, subject to SEC regulation. Similarly, options on
currencies may be traded over-the-counter. In an over-the-counter trading
environment, many of the protections afforded to exchange participants will not
be available. For example, there are no daily price fluctuation limits, and
adverse market movements could therefore continue to an unlimited extent over a
period of time. Although the buyer of an option cannot lose more than the
amount of the premium plus related transaction costs, this entire amount could
be lost. Moreover, an option writer and a buyer or seller of futures or forward
contracts could lose amounts substantially in excess of any premium received or
initial margin or collateral posted due to the potential additional margin and
collateral requirements associated with such positions.

Options on foreign currencies traded on national securities exchanges are
within the jurisdiction of the SEC, as are other securities traded on such
exchanges. As a result, many of the protections provided to traders on
organized exchanges will be available with respect to such transactions. In
particular, all foreign currency option positions entered into on a national
securities exchange are cleared and guaranteed by the OCC, thereby reducing the
risk of counterparty default. Further, a liquid secondary market in options
traded on a national securities exchange may be more readily available than in
the over-the-counter market, potentially permitting a fund to liquidate open
positions at a profit before exercise or expiration, or to limit losses in the
event of adverse market movements.

Foreign Options and Futures Markets. Options on U.S. Government securities,
futures contracts, options on futures contracts, forward contracts and options
on foreign currencies may be traded on foreign exchanges and over-the-counter
in foreign countries. Such transactions are subject to the risk of governmental
actions affecting trading in or the prices of foreign currencies or securities.
The value of such positions also could be adversely affected by (1) other
complex foreign political and economic factors, (2) lesser availability than in
the United States of data on which to make trading decisions, (3) delays in a
fund's ability to act upon economic events occurring in foreign markets during
non-business hours in the United States, (4) the imposition of different
exercise and settlement terms and procedures and margin requirements than in
the United States, and (5) low trading volume.

Special risks are presented by internationally-traded options. Because of time
differences between the United States and the various foreign countries, and
because different holidays are observed in different countries, foreign options
markets may be open for trading during hours or on days when U.S. markets are
closed. As a result, option premiums may not reflect the current prices of the
underlying interest in the United States.

Debt and Other Fixed-Income Securities. Fixed-income securities include, but
are not limited to, preferred stocks, warrants, stock rights, corporate bonds
and debentures and longer-term government securities. Fixed-income securities
also include mortgage-backed securities, which are debt obligations issued by
government agencies and other non-government agency issuers. Mortgage-backed
securities include obligations backed by a mortgage or pool of mortgages and
direct interests in an underlying pool of mortgages. Mortgage-backed securities
also include collateralized mortgage obligations (CMOs). The mortgages involved
could be those on commercial or residential real estate properties. Fixed
income securities may be issued by U.S. companies, the U.S. Government

and its agencies and instrumentalities, foreign companies, foreign governments
and their agencies and instrumentalities, and supranational organizations such
as (but not limited to) the European Economic Community and the World Bank, or
other issuers.

As a general matter, the value of debt securities will fluctuate with changes
in interest rates, and these fluctuations can be greater for debt securities
with longer maturities. The market value of debt securities typically varies
inversely to changes in prevailing interest rates. In periods of declining
interest rates, the value of debt securities typically increase. In periods of
rising interest rates, the value of those securities typically decrease. These
fluctuations in the value of debt securities may cause the value of the fund's
shares to fluctuate in value.

A fund's share price and yield also depend, in part, on the quality of its
investments. U.S. Government securities generally are of high quality. Debt
securities that are not backed by the full faith and credit of the United
States (including those of foreign governments) may be affected by changes in
the creditworthiness of the issuer of the security. The prices of investment
grade bonds generally fluctuate less than the prices of bonds that are below
investment grade. Investment grade bonds are those rated at the time of
purchase in the top four credit rating categories of Moody's Investors Service
(Moody's) or Standard & Poor's Corp. (S&P), or their equivalents from other
nationally recognized rating agencies, or are unrated securities judged by the
adviser to be of comparable value.

High Yield Fixed Income Securities. Debt securities rated below investment
grade by the primary rating agencies (bonds rated Ba or lower by Moody's or BB
or lower by S&P, or their equivalents from other nationally recognized rating
agencies) constitute lower-rated fixed income securities (commonly referred to
as high yield bonds). See Appendix A to the SAI for a description of these
ratings. Unrated bonds or bonds with split ratings are included in this limit
if the adviser determines that these securities have the same characteristics
as non-investment-grade bonds.

High yield bonds involve a higher degree of credit risk, that is, the risk that
the issuer will not make interest or principal payments when due. In the event
of an unanticipated default, a fund would experience a reduction in its income,
and could expect a decline in the market value of the securities affected. More
careful analysis of the financial condition of each issuer of high yield bonds
is necessary. During an economic downturn or substantial period of rising
interest rates, issuers of high yield bonds may experience financial stress
which would adversely affect their ability to honor their principal and
interest payment obligations, to meet projected business goals, and to obtain
additional financing.

The market prices of high yield bonds are generally less sensitive to interest
rate changes than higher-rated investments, but more sensitive to adverse
economic or political changes, or in the case of corporate issuers, to
individual corporate developments. Periods of economic or political uncertainty
and change can be expected to result in volatility of prices of high yield
bonds. High yield bonds also may have less liquid markets than higher-rated
securities, and their liquidity as well as their value may be negatively
affected by adverse economic conditions. Adverse publicity and investor
perceptions as well as new or proposed laws may also have a negative impact on
the market for high yield bonds.

The market for high yield bonds may be less active than that for higher-rated
debt securities, which may make it difficult to value these securities. If
market quotations are not available, high yield bonds will be valued in
accordance with procedures established by the board of trustees, including the
use of outside pricing services. Judgment plays a greater role in valuing high
yield bonds than is the case for securities for which more external sources for
quotations and last-sale information are available.

Convertible Securities. Convertible securities are bonds, debentures, notes,
preferred stocks or other securities that may be converted or exchanged (by the
holder or by the issuer) into shares of the underlying common stock (or cash or
securities of equivalent value) at a stated exchange ratio. A convertible
security may also be called for redemption or conversion by the issuer after a
particular date and under certain circumstances (including a specified price)
established upon issue. If a convertible security held by a fund is called for
redemption or conversion, the fund could be required to tender it for
redemption, convert it into the underlying common stock, or sell it to a third
party.

Convertible securities generally have less potential for gain or loss than
common stocks. Convertible securities generally provide yields higher than the
underlying common stocks, but generally lower than comparable non-convertible
securities. Because of this higher yield, convertible securities generally sell
at prices above their "conversion value," which is the current market value of
the stock to be received upon conversion. The difference between this
conversion value and the price of convertible securities will vary over time
depending on changes in the value of the underlying common stocks and interest
rates. When the underlying common stocks decline in value, convertible
securities will tend not to decline to the same extent because of the interest
or dividend payments and the repayment of principal at maturity for certain
types of convertible securities. However, securities that are convertible other
than at the option of the holder generally do not limit the potential for loss
to the same extent as securities convertible at the option of the holder. When
the underlying common stocks rise in value, the value of convertible securities
may also be expected to increase. At the same time, however, the difference
between the market value of convertible securities and their conversion value
will narrow, which means that the value of convertible securities will
generally not increase to the same extent as the value of the underlying common
stocks. Because convertible securities may also be interest-rate sensitive,
their value may increase as interest rates fall and decrease as interest rates
rise. Convertible securities are also subject to credit risk, and are often
lower-quality securities.

Short Sales. Stocks underlying a fund's convertible security holdings can be
sold short. For example, if the adviser anticipates a decline in the price of
the stock underlying a convertible security held by a fund, it may sell the
stock short. If the stock price subsequently declines, the proceeds of the
short sale could be expected to offset all or a portion of the effect of the
stock's decline on the value of the convertible security. A fund may hedge no
more than 15% of its total assets with short sales on equity securities
underlying its convertible security holdings under normal circumstances.

A fund will be required to segregate securities equivalent in kind and amount
to those sold short (or securities convertible or exchangeable into such
securities) and will be required to hold them aside while the short sale is
outstanding. A fund will incur transaction costs, including interest expenses,
in connection with opening, maintaining, and closing short sales.

Real Estate Investment Trusts. Equity real estate investment trusts own real
estate properties, while mortgage real estate investment trusts make
construction, development, and long-term mortgage loans. Their value may be
affected by changes in the value of the underlying property of the trusts, the
creditworthiness of the issuer, property taxes, interest rates, and tax and
regulatory requirements, such as those relating to the environment. Both types
of trusts are dependent upon management skill, are not diversified, and are
subject to heavy cash flow dependency, defaults by borrowers, self-liquidation,
and the possibility of failing to qualify for tax-free status of income under
the Internal Revenue Code and failing to maintain exemption from the 1940 Act.

Foreign Investments. Foreign investments can involve significant risks in
addition to the risks inherent in U.S. investments. The value of securities
denominated in or indexed to foreign currencies, and of dividends and interest
from such securities, can change significantly when foreign currencies
strengthen or weaken relative to the U.S. dollar. Foreign securities markets
generally have less trading volume and less liquidity than U.S. markets, and
prices on some foreign markets can be highly volatile. Many foreign countries
lack uniform accounting and disclosure standards comparable to those applicable
to U.S. companies, and it may be more difficult to obtain reliable information
regarding an issuer's financial condition and operations. In addition, the
costs of foreign investing, including withholding taxes, brokerage commissions
and custodial costs, are generally higher than for U.S. investments.

Foreign markets may offer less protection to investors than U.S. markets.
Foreign issuers, brokers, and securities markets may be subject to less
government supervision. Foreign security trading practices, including those
involving the release of assets in advance of payment, may involve increased
risks in the event of a failed trade or the insolvency of a broker-dealer, and
may involve substantial delays. It may also be difficult to enforce legal
rights in foreign countries.

Investing abroad also involves different political and economic risks. Foreign
investments may be affected by actions of foreign governments adverse to the
interests of U.S. investors, including the possibility of expropriation or
nationalization of assets, confiscatory taxation, restrictions on U.S.
investment or on the ability to repatriate assets or convert currency into U.S.
dollars or other government intervention. There may be a greater possibility of
default by foreign governments or foreign government-sponsored enterprises.
Investments in foreign countries also involve a risk of local political,
economic or social instability, military action or unrest or adverse diplomatic
developments. There is no assurance that the adviser will be able to anticipate
these potential events or counter their effects.

Investing in securities of issuers located in countries considered to be
emerging markets involves additional risks. While emerging market countries may
change over time depending on market and economic conditions, at present the
fund believes that emerging market countries include every country in the world
except Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany,
Greece, Hong Kong, Ireland, Israel, Italy, Japan, Luxembourg, the Netherlands,
New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, the
United Kingdom and the United States. The considerations noted previously
generally are intensified for investments in emerging market countries.
Emerging market countries may have relatively unstable governments, economies
based on only a few industries and securities markets that trade a small number
of securities. Securities of issuers located in these countries tend to have
volatile prices and may offer significant potential for loss as well as gain.

In addition to investing directly in equity securities, the funds may invest in
American Depositary Receipts (ADRs), European Depositary Receipts (EDRs) and
Global Depositary Receipts (GDRs). Generally, ADRs in registered form are U.S.
dollar denominated securities designed for use in the U.S. securities markets,
which represent and may be converted into the underlying foreign security. EDRs
are typically issued in bearer form and are designed for use in the European
securities markets. GDRs are designed for use in the global securities markets.
Depositary receipts involve many of the same risks of investing directly in
foreign securities, including currency risks and risks of foreign investing.
Depositary receipts may be sponsored or unsponsored. Issuers of the stock of
unsponsored ADRs, EDRs and GDRs are not obligated to disclose material
information in the United States and, therefore, there may not be an accurate
correlation between such information and the market value of such depositary
receipts.

Temporary Defensive Strategies. In response to market, economic, political or
other conditions, the funds may temporarily use a different investment strategy
for defensive purposes. If the funds do so, different factors could affect fund
performance and the funds may not achieve their investment objectives.

Investment Strategies and Limitations Applicable to Certain Funds

Stock Index Futures (LVIP Columbia Value Opportunities Fund, LVIP Mid-Cap Value
Fund, LVIP SSgA Bond Index Fund, LVIP SSgA Developed International 150 Fund,
LVIP SSgA Emerging Markets 100 Fund, LVIP SSgA International Index Fund, LVIP
SSgA Large Cap 100 Fund, LVIP SSgA S&P 500 Fund, LVIP SSgA Small-Cap Index
Fund, LVIP SSgA Small-Mid Cap 200 Fund, LVIP T. Rowe

Price Growth Stock Fund and LVIP MFS Value Fund only). A stock index futures
contract does not require the physical delivery of securities, but merely
provides for profits and losses resulting from changes in the market value of
the contract to be credited or debited at the close of each trading day to the
respective accounts of the parties to the contract. On the contract's
expiration date, a final cash settlement occurs and the futures positions are
simply closed out. Changes in the market value of a particular stock index
futures contract reflect changes in the specified index of equity securities on
which the future is based. Stock index futures may be used to hedge the equity
portion of a Portfolio's securities portfolio with regard to market risk
(involving the market's assessment of over-all economic prospects), as
distinguished from stock-specific risk (involving the market's evaluation of
the merits of the issuer of a particular security). By establishing an
appropriate "short" position in stock index futures, a Portfolio may seek to
protect the value of its portfolio against an overall decline in the market for
equity securities. Alternatively, in anticipation of a generally rising market,
a Portfolio can seek to avoid losing the benefit of apparently low current
prices by establishing a "long" position in stock index futures and later
liquidating that position as particular equity securities are in fact acquired.
To the extent that these hedging strategies are successful, a Portfolio will be
affected to a lesser degree by adverse overall market price movements,
unrelated to the merits of specific portfolio equity securities, than would
otherwise be the case.

Mortgage-Related Securities (All funds except LVIP Capital Growth Fund, LVIP
Mid-Cap Value Fund, LVIP Money Market Fund, LVIP SSgA Developed International
150 Fund, LVIP SSgA Emerging Markets 100 Fund, LVIP SSgA International Index
Fund, LVIP SSgA Large Cap 100 Fund, LVIP SSgA S&P 500 Index Fund, LVIP SSgA
Small-Cap Index Fund, LVIP SSgA Small-Mid Cap 200 Fund, LVIP Templeton Growth
Fund and LVIP Turner Mid-Cap Growth Fund). Mortgage-related securities are
issued by government and non-government entities such as banks, mortgage
lenders, or other institutions. A mortgage-related security is an obligation of
the issuer backed by a mortgage or pool of mortgages or a direct interest in an
underlying pool of mortgages. Some mortgage-related securities make payments of
both principal and interest at a range of specified intervals; others make
semiannual interest payments at a predetermined rate and repay principal at
maturity (like a typical bond). Mortgage-related securities are based on
different types of mortgages, including those on commercial real estate or
residential properties. Stripped mortgage-related securities are created when
the interest and principal components of a mortgage-related security are
separated and sold as individual securities. In the case of a stripped
mortgage-related security, the holder of the "principal-only" security (PO)
receives the principal payments made by the underlying mortgage, while the
holder of the "interest-only" security (IO) receives interest payments from the
same underlying mortgage.

Mortgage-related securities include collaterized mortgage obligations (CMOs)
and real estate mortgage investment conduits (REMICs). CMOs are mortgage-backed
bonds whose underlying value is the mortgages that are collected into different
pools according to their maturity. CMOs are issued by U.S. government agencies
and private issuers. REMICs are privately issued mortgage-backed bonds whose
underlying value is a fixed pool of mortgages secured by an interest in real
property. Like CMOs, REMICs offer different pools according to the underlying
mortgages' maturity. CMOs and REMICs issued by private entities - so-called
"non-agency mortgage-backed securities" - are not collateralized by securities
issued or guaranteed by the U.S. government, its agencies, or
instrumentalities.

Fannie Maes and Freddie Macs are pass-through securities issued by Fannie Mae
and Freddie Mac, respectively. Fannie Mae and Freddie Mac, which guarantee
payment of interest and repayment of principal on Fannie Maes and Freddie Macs,
respectively, are federally chartered corporations supervised by the U.S.
Government that act as governmental instrumentalities under authority granted
by Congress. Fannie Mae is authorized to borrow from the U.S. Treasury to meet
its obligations. Fannie Maes and Freddie Macs are not backed by the full faith
and credit of the U.S. Government.

The value of mortgage-related securities may change due to shifts in the
market's perception of issuers and changes in interest rates. In addition,
regulatory or tax changes may adversely affect the mortgage-related securities
market as a whole. Non-government mortgage-related securities may offer higher
yields than those issued by government entities, but also may be subject to
greater price changes than government issues. Mortgage-related securities are
subject to prepayment risk, which is the risk that early principal payments
made on the underlying mortgages, usually in response to a reduction in
interest rates, will result in the return of principal to the investor, causing
it to be invested subsequently at a lower current interest rate. Alternatively,
in a rising interest rate environment, mortgage-related security values may be
adversely affected when prepayments on underlying mortgages do not occur as
anticipated, resulting in the extension of the security's effective maturity
and the related increase in interest rate sensitivity of a longer-term
instrument (extension risk). The prices of stripped mortgage-related securities
tend to be more volatile in response to changes in interest rates than those of
non-stripped mortgage-related securities.

Asset-Backed Securities (All funds except LVIP Capital Growth, LVIP MFS Value
Fund, LVIP Mid-Cap Value Fund, LVIP Money Market Fund, LVIP SSgA Developed
International 150 Fund, LVIP SSgA Emerging Markets 100 Fund, LVIP SSgA
International Index Fund, LVIP SSgA Large Cap 100 Fund, LVIP SSgA S&P 500 Index
Fund, LVIP SSgA Small-Cap Index Fund, LVIP SSgA Small-Mid Cap 200 Fund, LVIP
Templeton Growth Fund and LVIP Turner Mid-Cap Growth Fund). Asset-backed
securities represent interests in pools of mortgages, loans, receivables or
other assets. Payment of interest and repayment of principal may be largely
dependent upon the cash flows generated by the assets backing the securities
and, in certain cases, supported by letters of credit, surety bonds, or other
credit enhancements. Asset-backed security values may also be affected by other
factors including changes in interest rates, the availability of information
concerning the pool and its structure, the creditworthiness of the servicing
agent for the pool, the originator of the loans or receivables, or the entities
providing the credit enhancement. If the credit enhancement is

exhausted, certificate holders may experience losses or delays in payment if
the required payments of principal and interest are not made to the trust with
respect to the underlying loans.

In addition, these securities may be subject to prepayment risk. Prepayment,
which occurs when unscheduled or early payments are made on the underlying
obligations, may shorten the effective maturities of these securities and may
lower their total returns. Additionally, asset-backed securities are also
subject to maturity extension risk. This is the risk that in a period of rising
interest rates, prepayments may occur at a slower than expected rate, which may
cause these securities to fluctuate more widely in response to changes in
interest rates.

Delayed Delivery and When-Issued Securities and Forward Commitments (LVIP
Capital Growth Fund, LVIP Columbia Value Opportunities Fund, LVIP Delaware Bond
Fund, LVIP Janus Capital Appreciation Fund, LVIP MFS International Growth Fund,
LVIP MFS Value Fund, LVIP Mid-Cap Value Fund, LVIP SSgA Developed International
150 Fund, LVIP SSgA Emerging Markets 100 Fund, LVIP SSgA International Index
Fund, LVIP SSgA Large Cap 100 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 Fund and LVIP Turner Mid-Cap Growth Fund only). Each fund may
purchase securities on a delayed delivery or when-issued basis and may purchase
or sell securities on a forward commitment basis. When such transactions are
negotiated, the price is fixed at the time of the commitment, but delivery and
payment can take place a month or more after the date of the commitment. The
securities so purchased are subject to market fluctuation and no interest
accrues to the purchaser during this period. While a fund will only purchase
securities on a when-issued, delayed delivery or forward commitment basis with
the intention of acquiring the securities, the fund may sell the securities
before the settlement date, if it is deemed advisable. At the time a fund makes
the commitment to purchase securities on a when-issued or delayed delivery
basis, the fund will record the transaction and thereafter reflect the value,
each day, of such security in determining the net asset value of the fund. At
the time of delivery of the securities, the value may be more or less than the
purchase price. A fund will also segregate cash or liquid assets equal in value
to commitments for such when-issued or delayed delivery securities; subject to
this requirement, a fund may purchase securities on such basis without limit.
An increase in the percentage of a fund's assets committed to the purchase of
securities on a when-issued or delayed delivery basis may increase the
volatility of the fund's net asset value. The board of trustees does not
believe that a fund's net asset value or income will be adversely affected by
its purchases of securities on such basis.

Special Situations (LVIP Janus Capital Appreciation Fund and LVIP T. Rowe Price
Structured Mid-Cap Growth Fund only). A fund may invest in certain securities
under special situations. A special situation arises when, in the adviser's
opinion, the securities of a particular company will be recognized and will
appreciate in value due to a specific development at that company. Developments
creating a special situation might include a new product or process, a
management change, a technological breakthrough or another event considered
significant. Investment in special situations may carry an additional risk of
loss in the event that the anticipated development does not occur or does not
attract the expected attention.

A fund may invest in the securities of companies which have been in continuous
operation for less than three years, or have capitalizations of less than $250
million at the time of purchase. Securities of these companies may have limited
liquidity which can result in their being priced lower than they may be
otherwise. Investments in unseasoned or smaller companies are more speculative
and involve greater risk than do investments in companies with established
operating records or that are larger.

Reverse Repurchase Agreements (LVIP Janus Capital Appreciation Fund and LVIP
Wells Fargo Intrinsic Value Fund only). In a reverse repurchase agreement, a
fund sells a security to another party, such as a bank or broker-dealer, in
return for cash and agrees to repurchase that security at an agreed-upon price
and time. Reverse repurchase agreements may be used to provide cash to satisfy
unusually heavy redemption requests or for other temporary or emergency
purposes without the necessity of selling portfolio securities, or to earn
additional income on portfolio securities.

While a reverse repurchase agreement is outstanding, the fund will segregate
appropriate liquid assets to cover its obligation under the agreement. The fund
will enter into reverse repurchase agreements only with parties that the board
of trustees, or its delegate, deems creditworthy. Such transactions may
increase fluctuations in the market value of the fund's assets and may be
viewed as a form of leverage.

Swaps and Swaps-Related Products (LVIP Capital Growth Fund, LVIP Columbia Value
Opportunities Fund, LVIP Delaware Bond Fund, LVIP Janus Capital Appreciation
Fund, LVIP SSgA Developed International 150 Fund, LVIP SSgA Emerging Markets
100 Fund, LVIP SSgA International Index Fund, LVIP SSgA Large Cap 100 Fund,
LVIP SSgA Small-Mid Cap 200 Fund and LVIP Wells Fargo Intrinsic Value Fund
only). A fund may enter into swaps, caps and floors on either an asset-based or
liability-based basis, depending upon whether it is hedging its assets or its
liabilities. Swap agreements are two-party contracts entered into primarily by
institutional investors for periods ranging from a few weeks to more than one
year. In a standard swap transaction, two parties agree to exchange the returns
(or differential in rates of return) earned or realized on particular
predetermined investments or instruments, which may be adjusted for an interest
factor. The gross returns to be exchanged or "swapped" between the parties are
generally calculated with respect to a "notional amount," i.e., the return on
or increase in value of a particular dollar amount invested at a particular
interest rate, or in a "basket" of securities representing a particular index.
An interest rate swap is a contract in which two parties exchange different
types of interest payment streams, pegged to an underlying notional principal
amount. The three main types of interest rate swaps are coupon swaps (fixed
rate to floating rate in the same currency); basis swaps (one floating rate
index to another

floating rate index in the same currency); and cross-currency interest rate
swaps (fixed rate in one currency to floating rate in another). A cap is a
contract for which the buyer pays a fee, or premium, to obtain protection
against a rise in a particular interest rate above a certain level. For
example, an interest rate cap may cover a specified principal amount of a loan
over a designated time period, such as a calendar quarter. If the covered
interest rate rises above the rate ceiling, the seller of the rate cap pays the
purchaser an amount of money equal to the average rate differential times the
principal amount times one-quarter. A floor is a contract in which the seller
agrees to pay to the purchaser, in return for the payment of a premium, the
difference between current interest rates and an agreed (strike) rate times the
notional amount, should interest rates fall below the agreed level (the floor).
A floor contract has the effect of a string of interest rate guarantees.

The fund will usually enter into swaps on a net basis (i.e., the two payment
streams are netted out, with the fund receiving or paying, as the case may be,
only the net amount of the two payments). The net amount of the excess, if any,
of the fund's obligations over its entitlement with respect to each swap will
be calculated on a daily basis and an amount of cash or liquid assets having an
aggregate net asset value at least equal to the accrued excess will be
segregated by the fund's custodian. If the fund enters into a swap on other
than a net basis, it will segregate the full amount of its obligations, accrued
on a daily basis, with respect to the swap. The fund will not enter into any
interest rate swap, cap or floor transaction unless the unsecured senior debt
or the claims-paying ability of the other party thereto is rated in one of the
three highest credit rating categories of at least one nationally recognized
statistical rating organization at the time of entering into such transaction.
The adviser will monitor the creditworthiness of all counterparties on an
ongoing basis. If there is a default by the other party to such a transaction,
the fund will have contractual remedies pursuant to the agreements related to
the transaction.

The use of swaps is a highly specialized activity that involves investment
techniques and risks different from those associated with ordinary portfolio
transactions. Whether the fund's use of swaps will be successful in furthering
its investment objective will depend on a subadviser's ability to predict
correctly whether certain types of investments are likely to produce greater
returns than other investments. Swaps are generally considered illiquid and may
be aggregated with other illiquid positions for purposes of the limitation on
illiquid investments.

There is no limit on the amount of swap transactions that may be entered into
by the fund. These transactions may in some instances involve the delivery of
securities or other underlying assets by the fund or its counterparty to
collateralize obligations under the swap. Under the documentation currently
used in those markets, the risk of loss with respect to swaps is limited to the
net amount of the payments that the fund is contractually obligated to make. If
the other party to a swap that is not collateralized defaults, the fund would
risk the loss of the net amount of the payments that it contractually is
entitled to receive. The fund may buy and sell (i.e., write) caps and floors
without limitation, so long as it maintains a segregated account with cash or
liquid assets having an aggregate net asset value at least equal to the full
amount of its obligations accrued on a daily basis.

Rights and Warrants (All funds except LVIP Delaware Bond Fund and LVIP Money
Market Fund). Each fund may invest in rights and warrants which entitle the
holder to buy equity securities at a specified price for a specific period of
time. Rights and warrants do not entitle a holder to dividends or voting rights
with respect to the securities which may be purchased, nor do they represent
any rights to the assets of the issuing company. The value of a right or
warrant may be more volatile than the value of the underlying securities. Also,
their value does not necessarily change with the value of the underlying
securities. Warrants can be a speculative instrument. The value of a warrant
may decline because of a decrease in the value of the underlying stock, the
passage of time or a change in perception as to the potential of the underlying
stock or any other combination. If the market price of the underlying stock is
below the exercise price set forth in the warrant on the expiration date, the
warrant will expire worthless. Warrants generally are freely transferable and
are traded on the major stock exchanges. Rights and warrants purchased by a
fund which expire without being exercised will result in a loss to the fund.

Loans and Other Direct Debt Instruments (LVIP Capital Growth Fund, LVIP
Columbia Value Opportunities Fund, LVIP MFS International Growth Fund, LVIP MFS
Value Fund, LVIP Mid-Cap Value Fund, LVIP SSgA Developed International 150
Fund, LVIP SSgA Emerging Markets 100 Fund, LVIP SSgA International Index Fund,
LVIP SSgA Large Cap 100 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 Templeton Growth Fund, LVIP Turner Mid-Cap Growth Fund, and LVIP
Wells Fargo Intrinsic Value Fund only). Direct debt instruments are interests
in amounts owed by a corporate, governmental, or other borrowers to lenders or
lending syndicates (loans and loan participations), to suppliers of goods or
services (trade claims or other receivables), or to other parties. Direct debt
instruments involve a risk of loss in case of default or insolvency of the
borrower and may offer less legal protection to the purchaser in the event of
fraud or misrepresentation.

Purchasers of loans and other forms of direct indebtedness depend primarily
upon the creditworthiness of the borrower for payment of interest and repayment
of principal. If scheduled interest or principal payments are not made, the
value of the instrument may be adversely affected. Loans that are fully secured
provide more protections than an unsecured loan in the event of the borrower's
failure to make scheduled interest or principal payments. However, there is no
assurance that the liquidation of collateral from a secured loan would satisfy
the borrower's obligation, or that the collateral could be liquidated.
Indebtedness of borrowers whose creditworthiness is poor involves substantially
greater risks and may be highly speculative. Borrowers that are in bankruptcy
or restructuring may never pay off their indebtedness, or may pay only a small
fraction of the amount owed. Direct indebtedness of developing countries

also involves a risk that the governmental entities responsible for the
repayment of the debt may be unable, or unwilling, to pay interest and repay
principal when due.

Investments in loans through direct assignment of a financial institution's
interests with respect to a loan may involve additional risks. For example, if
a loan is foreclosed, the purchaser could become part owner of any collateral,
and would bear the costs and liabilities associated with owning and disposing
of the collateral. In addition, it is conceivable that under emerging legal
theories of lender liability, a purchaser could be held liable as a co-lender.
Direct debt instruments may also involve a risk of insolvency of the lending
bank or other intermediary.

A loan is often administered by a bank or other financial institution that acts
as agent for all holders. The agent administers the terms of the loan, as
specified in the loan agreement. Unless, under the terms of the loan or other
indebtedness, the purchaser has direct recourse against the borrower, the
purchaser may have to rely on the agent to apply appropriate credit remedies
against a borrower. If assets held by the agent for the benefit of a purchaser
were determined to be subject to the claims of the agent's general creditors,
the purchaser might incur certain costs and delays in realizing payment on the
loan or loan participation and could suffer a loss of principal or interest.

Direct indebtedness may include letters of credit, revolving credit facilities,
or other standby financing commitments that obligate purchasers to make
additional cash payments on demand. These commitments may have the effect of
requiring the fund to increase its investment in a borrower at a time when it
would not otherwise have done so, even if the borrower's condition makes it
unlikely that the amount will ever be repaid.

Limitations on Futures and Options Transactions (LVIP Wells Fargo Intrinsic
Value Fund only). The LVIP Wells Fargo Intrinsic Value Fund will not: (a) sell
futures contracts, purchase put options, or write call options if, as a result,
more than 25% of the fund's total assets would be hedged with futures and
options under normal conditions; (b) purchase futures contracts or write put
option if, as a result, the fund's total obligations upon settlement or
exercise of purchased future contracts and written put options would exceed 25%
of its total assets under normal conditions; or (c) purchase call options if,
as a result, the current value of option premiums for call options purchased by
the fund would exceed 5% of the fund's total assets. These limitations do not
apply to securities that incorporate features similar to options.

Indexed Securities (LVIP Wells Fargo Intrinsic Value Fund only). Indexed
securities are instruments whose prices are indexed to the prices of other
securities, securities indices, currencies, or other financial indicators.
Indexed securities typically, but not always, are debt securities or deposits
whose value at maturity or coupon rate is determined by reference to a specific
instrument or statistic.

Mortgage-indexed securities, for example, could be structured to replicate the
performance of mortgage securities and the characteristics of direct ownership.

Currency-indexed securities typically are short-term to intermediate-term debt
securities whose maturity values or interest rates are determined by reference
to the values of one or more specified foreign currencies and may offer higher
yields than U.S. dollar-denominated securities. Currency-indexed securities may
be positively or negatively indexed; that is, their maturity value may increase
when the specified currency value increases, resulting in a security that
performs similarly to a foreign-denominated instrument, or their maturity value
may decline when foreign currency values increase, resulting in a security
whose price characteristics are similar to a put on the underlying currency.
Currency-indexed securities may also have prices that depend on the value of a
number of different foreign currencies relative to each other.

The performance of indexed securities depends to a great extent on the
performance of the security, currency, or other instrument to which they are
indexed, and may also be influenced by interest rate changes in the United
States and abroad. Indexed securities may be more volatile than the underlying
investments. Indexed securities are also subject to the credit risks associated
with the issuer of the security, and their values may decline substantially if
the issuer's creditworthiness deteriorates. Recent issuers of indexed
securities have included banks, corporations, and certain U.S. Government
agencies.

Foreign Currency Denominated Cash (LVIP Mondrian International Value Fund
only). To facilitate overseas securities transactions, the fund may hold a
portion of its assets in foreign-currency-denominated cash or cash equivalents
and foreign government securities. The amount held in cash may range between 2%
and 15% of fund assets, although the fund anticipates that under normal
circumstances, less than 10% of fund assets would be held in cash. The amount
held in cash equivalents, combined with all other non-U.S. debt securities and
money market instruments, would not exceed 35% of the fund's assets.

Lincoln National Corporation (LNC) Stock (except LVIP SSgA S&P 500 Index Fund).
LNC is a publicly-held insurance holding company organized under Indiana law.
The funds are prohibited from purchasing securities issued by LNC or any
affiliate thereof with the exception of the LVIP SSgA S&P 500 Index Fund.
However, the Funds may invest in securities of other investment companies which
may in turn invest in LNC stock pursuant to an indexing strategy. Through its
subsidiaries, LNC provides, on a national basis, insurance and financial
services.

SEC Name Rule Requirement (LVIP Cohen & Steers Global Real Estate Fund, LVIP
Delaware Bond Fund, LVIP Mid-Cap Value Fund, LVIP SSgA Bond Index Fund, LVIP
SSgA International Index Fund, LVIP SSgA Large Cap 100 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 Turner Mid-Cap Growth Fund, and
Wells Fargo Intrinsic Value Fund only).

LVIP Cohen & Steers Global Real Estate Fund. The fund's policy of normally
investing at least 80% of its net assets in companies in the real estate
industry is a non-fundamental policy changeable only upon 60 days' prior notice
to shareholders.

LVIP Delaware Bond Fund. The fund's policy of normally investing at least 80%
of its net assets in debt securities is a non-fundamental policy changeable
only upon 60 days' prior notice to shareholders.

LVIP Mid-Cap Value Fund. The fund's policy of normally investing at least 80%
of its net assets in stocks of mid-cap companies is a non-fundamental policy
changeable only upon 60 days' prior notice to shareholders.

LVIP SSgA Bond Index Fund. The fund's policy of normally investing at least 80%
of its net assets in bond securities that are held in the Barclays Capital U.S.
Aggregate Bond Index is a non-fundamental policy changeable only upon 60 days'
prior notice to shareholders.

LVIP SSgA International Index Fund.The fund's policy of normally investing at
least 80% of its net assets in stocks held by the benchmark index, currently
the MSCI EAFE (Reg. TM) Index is a non-fundamental policy changeable only upon
60 days' prior notice to shareholders.

LVIP SSgA Large Cap 100 Fund. The fund's policy of normally investing at least
80% of its net assets in stocks of large U.S. companies by market
capitalization is a non-fundamental policy changeable only upon 60 days' prior
notice to shareholders.

LVIP SSgA Small-Cap Index Fund. The fund's policy of normally investing at
least 80% of its net assets in securities of stocks of companies included in
the Russell 2000 Index and in derivative instruments, such as stock index
futures contracts and options that provide exposure to the stocks of companies
in the Russell 2000 is a non-fundamental policy changeable only upon 60 days'
prior notice to shareholders.

LVIP SSgA Small- Mid Cap 200 Fund. The fund's policy of normally investing at
least 80% of its net assets in stocks of small and mid cap companies is a
non-fundamental policy changeable only upon 60 days' prior notice to
shareholders.

LVIP SSgA S&P 500 Index Fund. The fund's policy of normally investing at least
80% of its net assets in securities of issuers included in the S&P 500 Index is
a non-fundamental policy changeable only upon 60 days' prior notice to
shareholders.

LVIP T. Rowe Price Growth Stock Fund. The fund's policy of normally investing
at least 80% of its net assets in the common stocks of a diversified group of
growth companies is a non-fundamental policy changeable only upon 60 days'
prior notice to shareholders.

LVIP Turner Mid-Cap Growth Fund. The fund's policy of normally investing at
least 80% of its net assets in stocks of mid-cap companies is a non-fundamental
policy changeable only upon 60 days' prior notice to shareholders.

LVIP Wells Fargo Intrinsic Value Fund. The fund's policy of normally investing
at least 80% of its net assets in equity securities is a non-fundamental policy
changeable only upon 60 days' prior notice to shareholders.

More About the Barclays Capital U.S. Aggregate Bond Index (LVIP SSgA Bond Index
Fund). Licensee acknowledges and expressly agrees that the fund is not
sponsored, endorsed, sold or promoted by Licensor, and that Licensor makes no
warranty, express or implied, as to the results to be obtained by any person or
entity from the use of any Index, any opening, intra-day or closing value
therefore, or any data incuded therein or relating thereto, in conncection with
the management of any fund based thereon or for any other purpose. Licensor's
only relationship to the Licensee with respect to the fund is the licensing of
certain trademarks and trade names of Licensor and the Licensor Indexes that
are determined, composed and calculated by Licensor without regard to Licensee
or the Fund. Licensor has no obligation to take the needs of Licensee or the
owners of the fund into consideration in determining, composing or calculating
the Licensor Indexes. Licensor is not responsible for and has not participated
in any determination or calculation made with respect to issuance of the fund.
licensor has no obligation or liability in connection with the managment of the
fund.

LICENSOR DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE
INDEXES, OR ANY OPENING, INTRA-DAY OR CLOSING VALUE THEREFOR, OR ANY DATA
INCLUDED THEREIN OR RELATED THERETO. LICENSOR DOES WARRANT THAT IT WILL USE
COMMERCIALLY REASONABLE EFFORTS TO CORRECT ANY KNOWN ERRORS IN THE DATA AND
WILL NOTIFY LICENSEE OF ALL KNOWN ERRORS. LICENSOR FURTHER WARRANTS THAT IT
OWNS OR HAS THE RIGHT TO PROVIDE THE DATA. LICENSOR MAKES NO WARRANTY, EXPRESS
OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY OWNERS OF THE FUNDS OR ANY OTHER
PERSON OR ENTITY FROM THE USE OF THE INDEXES, ANY OPENING, INTRA-DAY OR CLOSING
VALUE THEREFOR, ANY DATA INCLUDED THEREIN OR RELATING THERETO, OR ANY FUND
BASED THEREON, IN CONNECTION WITH THE RIGHTS LICENSED HEREUNDER OR FOR ANY
OTHER USE. LICENSOR MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND HEREBY
EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE WITH RESPECT TO THE INDEXES, ANY OPENING, INTRA-DAY OR
CLOSING VALUE THEREFOR, ANY DATA INCLUDED THEREIN OR RELATING THERETO, OR ANY
FUND BASED THEREON. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL
EITHER PARTY HAVE ANY LIABILITY TO THE OTHER FOR ANY DAMAGES, CLAIMS, LOSSES
(INCLUDING ANY INDIRECT OR CONSEQUENTIAL LOSSES), EXPENSES OR DELAYS, WHETHER
DIRECT OR INDIRECT, FORESEEN OR UNFORESEEN, SUFFERED BY ANY PERSON

ARISING OUT OF ANY CIRCUMSTANCE OR OCCURRENCE RELATING TO THE PERSON'S USE OF
ANY INDEX, ANY OPENING, INTRA-DAY OR CLOSING VALUE THEREFOR, ANY DATA INCLUDED
THEREIN OR RELATING THERETO, OR ANY FUND BASED THEREON, OR ARISING OUT OF ANY
ERRORS OR DELAYS IN CALCULATING OR DISSEMINATING SUCH INDEX.

More About the MSCI EAFE (Reg. TM) Index (LVIP SSgA International Index Fund).
INVESTORS LOOK TO INDEXES AS A STANDARD OF MARKET PERFORMANCE. INDEXES ARE
MODEL PORTFOLIOS, THAT IS, GROUPS OF STOCKS OR BONDS SELECTED TO REPRESENT AN
ENTIRE MARKET. THE MSCI EAFE (Reg. TM) INDEX is a stock market index of foreign
stock from 21 developed markets, but excludes those from the U.S. and Canada.
The index targets coverage of 85% of the market capitalization of the equity
market of all countries that are part of the index.

The LVIP SSgA International Index Fund seeks to approximate as closely as
practicable, before fees and expenses, the performance of a broad market index
of non-U.S. foreign securities. This objective is non-fundamental and may be
changed without shareholder approval. When evaluating the fund's performance,
the MSCI EAFE (Reg. TM) Index is used as the benchmark.

The fund is normally fully invested. The sub-adviser invests in stock index
futures to maintain market exposure and manage cash flow. The fund may purchase
other types of securities that are not primarily investments vehicles, for
example American Depository Receipts (ADRs), Global Depositary Receipts (GDRs),
European depositary Receipts (EDRs), and certain ETFs, cash equivalents, and
certain derivatives. Although the fund may employ foreign currency hedging
techniques, they normally maintain the currency exposure of the underlying
equity investments. The fund may not track the performance of the index
perfectly due to expenses and transaction costs, the size and frequency of cash
flow into and out of the fund, and differences between how and when the fund
and the index are valued.

THIS FUND IS NOT SPONSORED, ENDORSED, SOLD OR PROMOTED BY MSCI INC. ("MSCI"),
ANY OF ITS AFFILIATES, ANY OF ITS INFORMATION PROVIDERS OR ANY OTHER THIRD
PARTY INVOLVED IN, OR RELATED TO, COMPILING, COMPUTING OR CREATING ANY MSCI
INDEX (COLLECTIVELY, THE "MSCI PARTIES"). THE MSCI INDEXES ARE THE EXCLUSIVE
PROPERTY OF MSCI. MSCI AND THE MSCI INDEX NAMES ARE SERVICE MARK(S) OF MSCI OR
ITS AFFILIATES AND HAVE BEEN LICENSED FOR USE FOR CERTAIN PURPOSES BY
[LICENSEE]. NONE OF THE MSCI PARTIES MAKES ANY REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, TO THE ISSUER OR OWNERS OF THIS FUND OR ANY OTHER PERSON OR
ENTITY REGARDING THE ADVISABILITY OF INVESTING IN FUNDS GENERALLY OR IN THIS
FUND PARTICULARLY OR THE ABILITY OF ANY MSCI INDEX TO TRACK CORRESPONDING STOCK
MARKET PERFORMANCE. MSCI OR ITS AFFILIATES ARE THE LICENSORS OF CERTAIN
TRADEMARKS, SERVICE MARKS AND TRADE NAMES AND OF THE MSCI INDEXES WHICH ARE
DETERMINED, COMPOSED AND CALCULATED BY MSCI WITHOUT REGARD TO THIS FUND OR THE
ISSUER OR OWNERS OF THIS FUND OR ANY OTHER PERSON OR ENTITY. NONE OF THE MSCI
PARTIES HAS ANY OBLIGATION TO TAKE THE NEEDS OF THE ISSUER OR OWNERS OF THIS
FUND OR ANY OTHER PERSON OR ENTITY INTO CONSIDERATION IN DETERMINING, COMPOSING
OR CALCULATING THE MSCI INDEXES. NONE OF THE MSCI PARTIES IS RESPONSIBLE FOR OR
HAS PARTICIPATED IN THE DETERMINATION OF THE TIMING OF, PRICES AT, OR
QUANTITIES OF THIS FUND TO BE ISSUED OR IN THE DETERMINATION OR CALCULATION OF
THE EQUATION BY OR THE CONSIDERATION INTO WHICH THIS FUND IS REDEEMABLE.
FURTHER, NONE OF THE MSCI PARTIES HAS ANY OBLIGATION OR LIABILITY TO THE ISSUER
OR OWNERS OF THIS FUND OR ANY OTHER PERSON OR ENTITY IN CONNECTION WITH THE
ADMINISTRATION, MARKETING OR OFFERING OF THIS FUND.

ALTHOUGH MSCI SHALL OBTAIN INFORMATION FOR INCLUSION IN OR FOR USE IN THE
CALCULATION OF THE MSCI INDEXES FROM SOURCES THAT MSCI CONSIDERS RELIABLE, NONE
OF THE MSCI PARTIES WARRANTS OR GUARANTEES THE ORIGINALITY, ACCURACY AND/OR THE
COMPLETENESS OF ANY MSCI INDEX OR ANY DATA INCLUDED THEREIN. NONE OF THE MSCI
PARTIES MAKES ANY WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY
THE ISSUER OF THE FUND, OWNERS OF THE FUND, OR ANY OTHER PERSON OR ENTITY, FROM
THE USE OF ANY MSCI INDEX OR ANY DATA INCLUDED THEREIN. NONE OF THE MSCI
PARTIES SHALL HAVE ANY LIABILITY FOR ANY ERRORS, OMISSIONS OR INTERRUPTIONS OF
OR IN CONNECTION WITH ANY MSCI INDEX OR ANY DATA INCLUDED THEREIN. FURTHER,
NONE OF THE MSCI PARTIES MAKES ANY EXPRESS OR IMPLIED WARRANTIES OF ANY KIND,
AND THE MSCI PARITES HEREBY EXPRESSLY DISCLAIM ALL WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT TO EACH MSCI
INDEX AND ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN
NO EVENT SHALL ANY OF THE MSCI PARTIES HAVE ANY LIABILITY FOR ANY DIRECT,
INDIRECT, SPECIAL, PUNITIVE, CONSEQUENTIAL OR ANY OTHER DAMAGES (INCLUDING LOST
PROFITS) EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.

No purchaser, seller or holder of this security, product or fund, or any other
person or entity, should use or refer to any MSCI trade name, trademark or
service mark to sponsor, endorse, market or promote this security without first
contacting MSCI to determine whether MSCI's permission is required. Under no
circumstances may any person or entity claim any affiliation with MSCI without
the prior written permission of MSCI.

More About the S&P 500 Index (LVIP SSgA S&P 500 Index Fund). Investors look to
indexes as a standard of market performance. Indexes are model portfolios, that
is, groups of stocks or bonds selected to represent an entire market. The S&P
500 Index is a widely used measure of large U.S. company stock performance. It
consists of the common stocks of 500 major corporations selected according to
size, frequency and ease by which their stocks trade and range and diversity of
the American economy.

The fund seeks to approximate as closely as possible, before fees and expenses,
the total return of the S&P 500 Index. To accomplish this objective the fund's
sub-adviser, SSgA Funds Management, Inc (SSgA FM), attempts to buy and sell all
of the index's securities in the same proportion as they are reflected in the
S&P 500 Index, although the fund reserves the right not to invest in every
security in the S&P 500 Index if it is not practical to do so under the
circumstances. SSgA FM does not seek to beat the S&P 500 Index and does not
seek temporary defensive positions when markets appear to be overvalued. SSgA
FM makes no attempt to apply economic, financial or market analysis when
managing the fund. Including a security among the fund's holdings implies no
opinion as to its attractiveness as an investment.

The fund may invest in stock index futures and options on stock index futures
as a substitute for a comparable market position in the underlying securities.
A stock index future obligates one party to deliver (and the other party to
take), effectively, an amount of cash equal to a specific dollar amount times
the difference between the value of a specific stock index at the close of the
last trading day of the contract and the price at which the agreement is made.
No physical delivery of the underlying stocks in the index is made. Instead,
the buyer and seller settle the difference in cash between the contract price
and the market price on the agreed upon date. The buyer pays the difference if
the actual price is lower than the contract price and the seller pays the
difference if the actual price is higher. There can be no assurance that a
liquid market will exist at the time when the fund seeks to close out a futures
contract or a futures option position. Lack of a liquid market may prevent
liquidation of any unfavorable position.

The fund is not sponsored, endorsed, sold or promoted by Standard & Poor's, a
division of The McGraw-Hill Companies, Inc. ("S&P"). S&P makes no
representation or warranty, express or implied, to the owners of the fund or
any member of the public regarding the advisability of investing in securities
generally or in the fund particularly or the ability of the S&P 500 Index to
track general stock market performance. S&P's only relationship to the fund is
the licensing of certain trademarks and trade names of S&P and of the S&P 500
Index which is determined, composed and calculated by S&P without regard to the
fund. S&P has no obligation to take the needs of the fund or its shareholders
into consideration in determining, composing or calculating the S&P 500 Index.
S&P is not responsible for and has not participated in the determination of the
prices and amount of the fund or the timing of the issuance or sale of the fund
or in the determination or calculation of the equation by which the fund is to
be converted into cash. S&P has no obligation or liability in connection with
the administration, marketing or trading of the fund.

S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P 500
INDEX OR ANY DATA INCLUDED THEREIN AND S&P SHALL HAVE NO LIABILITY FOR ANY
ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. S&P MAKES NO WARRANTY, EXPRESS OR
IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE FUND OR ITS SHAREHOLDERS, OR ANY
OTHER PERSON OR ENTITY FROM THE USE OF THE S&P 500 INDEX OR ANY DATA INCLUDED
THEEREIN. S&P MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS
ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE
WITH RESPECT TO THE S&P 500 INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT
LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL S&P HAVE ANY LIABILITY FOR ANY
SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS),
EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.

Portfolio Transactions and Brokerage

The adviser and the sub-adviser of each fund are responsible for decisions to
buy and sell securities and other investments for each fund, and for the
selection of brokers and dealers to effect the transactions and the negotiation
of brokerage commissions, if any. Purchases and sales of securities on an
exchange are effected through brokers who charge a commission for their
services. A particular broker may charge different commissions according to
such factors as the difficulty and size of the transaction. Transactions in
foreign securities generally involve the payment of fixed brokerage
commissions, which are generally higher than those in the United States. There
is generally no stated commission in the case of securities traded in the
over-the-counter markets, but the price paid by the fund usually includes an
undisclosed dealer commission or mark-up. In the U.S. Government securities
market, securities are generally traded on a net basis with dealers acting as
principal for their own accounts without a stated commission, although the
price of the securities usually includes a profit to the dealer. In
underwritten offerings, securities are purchased at a fixed price which
includes an amount of compensation to the underwriter, generally referred to as
the underwriter's concession or discount. On occasion, certain money market
instruments may be purchased directly from an issuer, in which case no
commission or discounts are paid.

The sub-adviser of each fund currently provides investment advice to a number
of other clients. It will be the practice of each sub-adviser to allocate
purchase and sale transactions among the fund and other clients whose assets
are managed in such manner as is deemed equitable. In making such allocations
among the major factors a sub-adviser considers are the investment objectives
of the relevant fund, the relative size of portfolio holdings of the same or
comparable securities, the availability of cash for investment, the size of
investment commitments generally held and the opinions of the persons
responsible for managing the portfolios of the fund and other client accounts.
Securities of the same issuer may be purchased, held, or sold at the same time
by the fund or other accounts or companies for which a sub-adviser provides
investment advice (including affiliates of a sub-adviser, as the case may be).

On occasions when a sub-adviser to a fund deems the purchase or sale of a
security to be in the best interest of the fund, as well as its' other clients,
the sub-adviser, to the extent permitted by applicable laws and regulations,
may aggregate such securities to be sold

or purchased for the fund with those to be sold or purchased for its' other
clients in order to obtain best execution and lower brokerage commissions, if
any. In such event, allocation of the securities so purchased or sold, as well
as the expenses incurred in the transaction, will be made by the sub-adviser in
the manner it considers to be most equitable and consistent with its fiduciary
obligations to all such clients, including the fund. In some instances, the
procedures may impact the price and size of the position obtainable for the
fund.

In connection with effecting portfolio transactions, primary consideration will
be given to securing the most favorable price and efficient execution. Within
the framework of this policy, the reasonableness of commission or other
transaction costs is a major factor in the selection of brokers and is
considered together with other relevant factors, including financial
responsibility, confidentiality (including trade anonymity), research and
investment information and other services provided by such brokers. It is
expected that,as a result of such factors, transaction costs charged by some
brokers may be greater than the amounts other brokers might charge. The
sub-adviser to a fund may determine in good faith that the amount of such
higher transaction costs is reasonable in relation to the value of the
brokerage and research services provided.

The Board of Trustees will review regularly the reasonableness of commissions
and other transaction costs incurred from time to time, and, will receive
reports regarding brokerage practices. The nature of the research services
provided to each sub-adviser by brokerage firms varies from time to time but
generally includes current and historical financial data concerning particular
companies and their securities; information and analysis concerning securities
markets and economic and industry matters; and technical and statistical
studies and data dealing with various investment opportunities; and risks and
trends, all of which the sub-adviser regards as a useful supplement of its own
internal research capabilities.

Each sub-adviser may from time to time direct trades to brokers which have
provided specific brokerage or research services for the benefit of the clients
of the sub-adviser; in addition, each sub-adviser may allocate trades among
brokers that generally provide superior brokerage and research services. During
2010, the total amount of brokerage transactions directed to these brokers and
the total commissions paid with respect to such transactions are set forth in
the second table below. Research services furnished by brokers are for the
benefit of all the clients of the sub-adviser and not solely or necessarily for
the benefit of the fund. Each sub-adviser believes that the value of research
services received is not determinable and does not significantly reduce its
expenses. A fund does not reduce its fee to any sub-adviser by any amount that
might be attributable to the value of such services.

During the fiscal years ended December 31, 2010, December 31, 2009 and December
31, 2008, the funds incurred brokerage commissions as follows:

Brokerage and Research Services

2010 2009 2008
------------- ------------ ------------
LVIP Baron Growth Opportunties Fund.................... $ 129,5511 $ 76,2822 $ 174,215
LVIP Capital Growth Fund............................... 215,597 266,446 276,752
LVIP Cohen & Steers Global Real Estate Fund............ 698,4543 914,2984 595,066
LVIP Columbia Value Opportunities Fund................. 120,9555 78,2174 62,917
LVIP Delaware Bond Fund................................ N/A 34,446 127,728
LVIP Delaware Growth and Income Fund................... 1,130,331 1,224,525 1,494,192
LVIP Delaware Social Awareness Fund.................... 603,790 582,4904 1,045,082
LVIP Delaware Special Opportunities Fund............... 195,571 222,468 259,137
LVIP Janus Capital Appreciation Fund................... 300,221 350,6374 543,159
LVIP MFS International Growth Fund..................... 1,048,4166 659,179 689,654
LVIP MFS Value Fund.................................... 264,178 270,868 293,063
LVIP Mid-Cap Value Fund................................ 150,298 221,190 191,594
LVIP Mondrian International Value Fund................. 195,454 139,907 125,434
LVIP Money Market Fund................................. N/A N/A N/A
LVIP SSgA Bond Index Fund.............................. N/A N/A N/A
LVIP SSgA Developed International 150 Fund............. 120,1105 34,964 15,426
LVIP SSgA Emerging Markets 100 Fund.................... 356,4695 164,3134 41,247
LVIP SSgA International Index Fund..................... 57,894 52,195 34,125
LVIP SSgA Large Cap 100 Fund........................... 149,6185 101,4254 26,485
LVIP SSgA S&P 500 Index Fund........................... 95,147 120,5947 51,582
LVIP SSgA Small-Cap Index Fund......................... 69,539 82,938 50,673
LVIP SSgA Small-Mid Cap 200 Fund....................... 123,0505 70,1094 18,123
LVIP T. Rowe Price Growth Stock Fund................... 157,694 167,085 161,859
LVIP T. Rowe Price Structured Mid-Cap Growth Fund...... 73,680 57,508 61,867
LVIP Templeton Growth Fund............................. 88,033 94,956 87,111
LVIP Turner Mid-Cap Growth Fund........................ 73,738 63,7474 95,402

2010 2009 2008
---------- ----------- -----------
LVIP Wells Fargo Instrinsic Value Fund..... 197,5843 1,661,517 1,473,727*

* of which $2,702 (0.18%) was paid to Fidelity Capital Markets ("FCM"), an
affiliate of Fidelity Management & Research Company ("FRMC") in 2008.

1 In 2010, portfolio brokerage was higher than in 2009 due significant
corporate merger activity creating higher portfolio turnover.

2 In 2009, portfolio brokerage was lower than in 2008 due to the fund's lower
portfolio turnover.

3 In 2010, portfolio brokerage was lower than in 2009 due to lower portfolio
turnover.

4 In 2009, portfolio brokerage was higher due to trading in volatile markets.

5 In 2010, portfolio brokerage was higher than in 2009 due to increased cash
flows contributed to higher volume of shares traded.

6 In 2010, portfolio brokerage was higher than in 2009 due to higher portfolio
turnover with sub-adviser change.

7 In 2009, portfolio brokerage was higher than in 2008 due to higher portfolio
turnover.

During the fiscal year ended December 31, 2010, the adviser or sub-adviser, as
appropriate, for each of the following funds allocated the following amount of
transactions to broker-dealers that provided them with certain research,
statistics and other information:

Related Brokerage
Transactions Commissions
-------------- ------------------
LVIP Baron Growth Opportunities Fund.......... 71,688,375 $ 105,014
LVIP Capital Growth Fund...................... 15,718,086 10,629
LVIP Cohen & Steers Global Real Estate Fund... N/A N/A
LVIP Columbia Value Opportunities Fund........ 67,048938 121,658
LVIP Delaware Bond Fund....................... N/A N/A
LVIP Delaware Growth and Income Fund.......... 853,744,174 1,105,516
LVIP Delaware Social Awareness Fund........... 445,825,166 592,070
LVIP Delaware Special Opportunities Fund...... 179,200,447 179,508
LVIP Janus Capital Appreciation Fund.......... 343,644,559 300,993
LVIP MFS International Growth Fund............ 74,065,127 134,294
LVIP MFS Value Fund........................... 172,573,614 112,749
LVIP Mid-Cap Value Fund....................... 4,416,674 4,370
LVIP Mondrian International Value Fund........ N/A N/A
LVIP Money Market Fund........................ N/A N/A
LVIP SSgA Bond Index Fund..................... N/A N/A
LVIP SSgA Developed International 150 Fund.... N/A N/A
LVIP SSgA Emerging Markets 100 Fund........... N/A N/A
LVIP SSgA International Index Fund............ N/A N/A
LVIP SSgA Large Cap 100 Fund.................. N/A N/A
LVIP SSgA S&P 500 Index Fund.................. N/A N/A
LVIP SSgA Small-Cap Index Fund................ N/A N/A
LVIP SSgA Small-Mid Cap 200 Fund.............. N/A N/A
LVIP T. Rowe Price Growth Stock Fund.......... 8,825,274 8,060
LVIP T. Rowe Price Structured Mid-Cap Growth Fund 9,055,646 9,021
LVIP Templeton Growth Fund.................... 47,773,638 32,938
LVIP Turner Mid-Cap Growth Fund............... 18,521,437 11,672
LVIP Wells Fargo Instrinsic Value Fund........ 107,630,622 125,708

Purchases of Securities of "Regular" Brokers or Dealers

As of December 31, 2010, the following funds held securities issued by their
"regular" broker-dealers or the parent companies of their "regular"
broker-dealers:

Value of Securities
of "Regular"
Broker-Dealers
--------------------
LVIP Baron Growth Opportunities Fund N/A

LVIP Capital Growth Fund
Goldman Sachs.............................. $5,281,000

LVIP Cohen & Steers Global Real Estate Fund N/A

Value of Securities
of "Regular"
Broker-Dealers
--------------------

LVIP Columbia Value Opportunties Fund N/A

LVIP Delaware Bond Fund
Morgan Stanley.......................... $31,981,000
Bank of America......................... $ 2,270,000
Citigroup Global Markets................ $29,997,000
Goldman Sachs........................... $12,188,000
JP Morgan Securities Inc................ $48,608,000

LVIP Delaware Growth and Income Fund
Bank of America......................... $17,451,000
JP Morgan Chase......................... $21,286,000
BNY Mellon.............................. $11,981,000

LVIP Delaware Social Awareness Fund
Bank of America......................... $12,689,000
BNY Mellon.............................. $ 9,176,000

LVIP Delaware Special Opportunities Fund N/A

LVIP Janus Capital Appreciation Fund
JP Morgan............................... $ 4,762,000
Goldman Sachs........................... $ 5,117,000
Morgan Stanley.......................... $ 1,994,000
Citigroup Global Markets, Inc........... $ 2,089,000

LVIP MFS International Growth Fund
Credit Suisse........................... $ 3,784,000

LVIP MFS Value Fund
Bank Of America......................... $11,806,000
Goldman Sachs........................... $21,183,000
JP Morgan............................... $19,532,000
BNY Mellon.............................. $19,079,000

LVIP Mid-Cap Value Fund N/A

LVIP Mondrian International Value Fund N/A

LVIP Money Market Fund
Goldman Sachs........................... $ 5,168,000
Barclays Investments, Inc............... $17,500,000
Credit Suisse First Boston Corp......... $25,000,000
JP Morgan............................... $ 5,023,000
Morgan Stanley.......................... $ 501,000
Bank of America......................... $ 2,270,000
Duetche Banc Securities................. $25,000,000

LVIP SSgA Bond Index Fund
Bank Of America......................... $ 5,004,000
Citigroup............................... $ 7,740,000
Credit Suisse........................... $ 2,185,000
Goldman Sachs........................... $ 6,195,000
JP Morgan............................... $ 9,728,000
BNY Mellon.............................. $ 883,000

Value of Securities
of "Regular"
Broker-Dealers
--------------------
Morgan Stanley................................... $ 5,320,000
Deutsche Banc.................................... $ 1,274,000
UBS Investment Bank.............................. $ 1,354,000
Barclays Investments............................. $ 1,404,000
BNP Paribas...................................... $ 202,000

LVIP SSgA Developed International 150 Fund N/A

LVIP SSgA Emerging Markets 100 Fund N/A

LVIP SSgA International Index Fund
Credit Suisse.................................... $ 1,633,000
Deutsche Banc.................................... $ 1,725,000
UBS Investment Bank.............................. $ 2,138,000
Barclays Investments............................. $ 1,638,000
BNP Paribas...................................... $ 2,144,000

LVIP SSgA Large Cap 100 Fund N/A

LVIP SSgA S&P 500 Index Fund
Bank Of America.................................. $12,191,000
Citigroup........................................ $12,448,000
Goldman Sachs.................................... $ 7,822,000
JP Morgan........................................ $15,005,000
BNY Mellon....................................... $ 3,455,000
Morgan Stanley................................... $ 3,662,000

LVIP SSgA Small-Cap Index Fund N/A

LVIP SSgA Small-Mid Cap 200 Fund N/A

LVIP T. Rowe Price Growth Stock Fund
JP Morgan........................................ $ 4,521,000

LVIP T. Rowe Price Structured Mid-Cap Growth Fund N/A

LVIP Templeton Growth Fund
Bank Of America.................................. $ 526,000
BNY Mellon....................................... $ 2,771,000

LVIP Turner Mid-Cap Growth Fund N/A

LVIP Wells Fargo Intrinsic Value Fund
JP Morgan........................................ $10,774,000
Bank Of America.................................. $ 7,737,000

* Denotes inclusion of fixed-income securities.

No Commissions to Finance Distribution

The Investment Company Act of 1940 permits a fund to use its selling brokers to
execute transactions in portfolio securities only if the fund or its adviser
has implemented policies and procedures designed to ensure that the selection
of brokers for portfolio securities transactions is not influenced by
considerations relating to the sale of fund shares. Accordingly, the funds
maintain, among other policies, a policy that prohibits them from directing to
a broker-dealer in consideration for the promotion or sale of fund shares: (a)

fund portfolio securities transactions; or (b) any commission or other
remuneration received or to be received from the funds' portfolio transactions
effected through any other broker-dealer. The funds have also established other
policies and procedures designed to ensure that a fund's brokerage commissions
are not used to finance the distribution of fund shares.

Commission Recapture Program

All funds except LVIP Delaware Bond, and LVIP Money Market funds, have entered
into a commission recapture program with Russell, pursuant to which the
commission rebates will be included in realized gain (loss) on securities in
the appropriate financial statements of the funds. If the adviser or
sub-adviser (if applicable) does not believe it can obtain best execution from
such broker-dealer, there is no obligation to execute portfolio transactions
through such broker-dealers. The Board of Trustees, with the assistance of
Russell, intends to continue to review whether recapture opportunities are
available and, if so, to determine in the exercise of its business judgment
whether it would be advisable for a fund to participate, or continue to
participate, in the commission recapture program.

Portfolio Turnover

A portfolio turnover rate is the percentage computed by dividing the lesser of
a fund's purchases or sales of securities (excluding short-term securities) by
the average market value of the fund's portfolio securities. The adviser
intends to manage each fund's assets (except for the LVIP Money Market Fund) by
buying and selling securities to help attain its investment objective. This may
result in increases or decreases in a fund's current income available for
distribution to its shareholders. While the funds are not managed with the
intent of generating short-term capital gains, each fund may dispose of
investments (including money market instruments) regardless of the holding
period if, in the opinion of the adviser, an issuer's creditworthiness or
perceived changes in a company's growth prospects or asset value make selling
them advisable. Such an investment decision may result in a high portfolio
turnover rate during a given period, resulting in increased transaction costs.

[
The LVIP Capital Growth Fund experienced a decrease in portfolio turnover from
102% in 2009 to 62% in 2010. The decrease was due to the manager's high
conviction in the fund's positioning at the end of 2009 and belief that current
holdings would continue to offer compelling upside.

The LVIP Cohen & Steers Global Real Estate Fund experienced a decrease in
portfolio turnover from 180% in 2009 to 119% in 2010. The decrease was due to
the market environment following the credit crisis and recession.

The LVIP Columbia Value Opportunities Fund experienced a decrease in portfolio
turnover from 76% in 2009 to 57% in 2010. The decrease was due to the market
environment and investment opportunity which was higher in 2009 due to the
emergence of the deep recession. The fund does not anticipate any significant
variation in the portfolio turnover rate for the upcoming fiscal year.

The LVIP MFS International Growth Fund (Formerly LVIP Marsico International
Growth) experienced an increase in turnover from 118% in 2009 to 207% in 2010
due to a change in sub-adviser which became effective in October 2010. The fund
does not anticipate that the high turnover experienced in 2010 will continue
under normal market conditions.

LVIP SSgA Bond Index Fund experienced a decrease in portfolio turnover from
172% in 2009 to 129% in 2010. The decrease was due to the the changes in the
composition of the index.

The LVIP SSgA Emerging Markets 100 Fund experienced an increase in portfolio
turnover from 29% in 2009 to 58% in 2010. The increase was due to the the
annual rebalance and cash flow.

The LVIP SSgA Large Cap 100 Fund experienced an increase in portfolio turnover
from 36% in 2009 to 133% in 2010. The increase was due to the annual rebalance
and cash flow.

LVIP SSgA S&P 500 Index Fund experienced a decrease in portfolio turnover from
21% in 2009 to 5% in 2010. The decrease was due to the the rebalancing to the
index and cash flow.

The LVIP SSgA Small-Mid Cap 200 Fund experienced an increase in portfolio
turnover from 42% in 2009 to 76% in 2010. The increase was due to the annual
rebalance and cash flow.

The LVIP SSgA Small-Cap Index Fund experienced a decrease in portfolio turnover
from 37% in 2009 to 17% in 2010. The decrease was due to the rebalancing to the
index and cash flow.

The LVIP Wells Fargo Intrinsic Value Fund experienced a decrease in portfolio
turnover from 222% in 2009 to 19% in 2010. The high turnover rate in 2009 was
due a change in sub-adviser, which became effective in October 2009.

Trustees and Officers

The Board of Trustees oversees the management of each fund and elects the
Trust's officers. The Trustees of the Trust (Trustees) have the power to amend
the Trust's bylaws of each fund, to declare and pay dividends, and to exercise
all the powers of the fund except those granted to the shareholders. The
Trustees hold their position until their successors are elected and qualified.
The Trust's officers, who also hold their positions until their successors are
elected and qualified, are responsible for the day-to-day operations of the
funds. Information pertaining to the trustees and executive officers of the
Trust is set forth below. Trustees that are deemed "interested persons," as
defined in the 1940 Act, are included in the table titled, "Interested
Trustees." Trustees who are not interested persons are referred to as
Independent Trustees. The Trustees were re-elected at the Special Meeting of
Stockholders of the funds on April 5, 2007 to serve until the next annual
meeting, if any, or until their successors shall have been duly elected and
qualified.

The term "Fund Complex" includes the 62 funds of the Trust.

Interested Trustees

* Daniel R. Hayes, currently Chairman and President of the Trust, is an
interested person of the Trust by reason of his being an officer of Lincoln
Life.

Independent Trustees

Position(s) Term of Office
Name, Address and Held With and Length of
Year of Birth the Fund Time Served
------------------------ ------------- ------------------------
Michael D. Coughlin Trustee Trustee since April
1300 S. Clinton Street 2007
Fort Wayne, IN 46802
YOB: 1942
Nancy L. Frisby Trustee Trustee since April
1300 S. Clinton Street 1992.
Fort Wayne, IN 46802
YOB: 1941
Elizabeth S. Hager Trustee Trustee since April
1300 S. Clinton Street 2007
Fort Wayne, IN 46802
YOB: 1944
Gary D. Lemon, Trustee Trustee since February
Ph.D. 2006; formerly:
1300 S. Clinton Street Advisory Trustee since
Fort Wayne, IN 46802 November 2004
YOB: 1948
Thomas D. Rath Trustee Trustee since April
1300 S. Clinton Street 2007
Fort Wayne, IN 46802
YOB: 1945

Number of
Funds in
Principal Fund
Occupation(s) Complex Other Board
Name, Address and During Past Overseen by Memberships
Year of Birth Five Years Trustee Held by Trustee
------------------------ ----------------------------- ------------- ---------------------------
Michael D. Coughlin Management Consultant, 62 Merrimack County Savings
1300 S. Clinton Street Owner of Coughlin Bank; Trustee of Merrimack
Fort Wayne, IN 46802 Associates Bankcorp, MHC
YOB: 1942
Nancy L. Frisby Retired; Formerly: Senior 62 N/A
1300 S. Clinton Street Vice President and Chief
Fort Wayne, IN 46802 Financial Officer, Desoto
YOB: 1941 Memorial Hospital
Elizabeth S. Hager Retired, State 62 N/A
1300 S. Clinton Street Representative, State of
Fort Wayne, IN 46802 New Hampshire; Retired,
YOB: 1944 Executive Director, United
Way of Merrimack County
Gary D. Lemon, Joseph Percival Allen, III, 62 N/A
Ph.D. University Professor;
1300 S. Clinton Street James W. Emison Director
Fort Wayne, IN 46802 of the Robert C.
YOB: 1948 McDermond Center for
Management and
Entrepreneurship;
Professor of Economics
and Management, DePauw
University
Thomas D. Rath Managing Partner, Rath, 62 Associated Grocers of New
1300 S. Clinton Street Young, and Pignatelli, P.C. England
Fort Wayne, IN 46802
YOB: 1945

Position(s) Term of Office
Name, Address and Held With and Length of
Year of Birth the Fund Time Served
------------------------ ------------- ------------------------
Kenneth G. Stella Trustee Trustee since February
1300 S. Clinton Street 1998.
Fort Wayne, IN 46802
YOB: 1943
David H. Windley Trustee Trustee since August
1300 S. Clinton Street 2004.
Fort Wayne, IN 46802
YOB: 1943

Officers Who Are Not Trustees

Number of
Funds in
Principal Fund
Position(s) Term of Office Occupation(s) Complex Other Board
Name, Address and Held With and Length of During Past Overseen by Memberships
Year of Birth the Fund Time Served Five Years Trustee Held by Trustee
------------------------ ------------------ ------------------------- ---------------------------- ------------- ----------------
Kevin J. Adamson Second Vice Second Vice President Vice President, Lincoln N/A N/A
1300 S. Clinton Street President since May 2006 Investment Advisors
Fort Wayne, IN 46802 Corporation; Vice
YOB: 1966 President, Director of
Funds Management, The
Lincoln National Life
Insurance Company;
Formerly: Director of
Financial Operations, Swiss
Re/Lincoln Re
Anant Bhalla Treasurer, Vice Treasurer and Vice Vice President and N/A N/A
Radnor Financial President President since March Treasurer, Lincoln National
Center 2011 Corporation; Formerly: Vice
150 N. Radnor Chester President and Treasurer,
Road Ameriprise Financial.
Radnor, PA 19087
YOB: 1978
Diann L. Eggleston Assistant Vice Assistant Vice Vice President, Lincoln N/A N/A
1300 S. Clinton Street President President since March National Corporation
Fort Wayne, IN 46802 2008
YOB: 1962
William P. Flory, Jr. Chief Accounting Chief Accounting Second Vice President and N/A N/A
1300 S. Clinton Street Officer and Officer since May 2006; Director of Separate
Fort Wayne, IN 46802 Second Vice Second Vice President Account Operations, The
YOB: 1961 President since August 2007 Lincoln National Life
Insurance Company
Kathleen S. Polston Assistant Assistant Treasurer Assistant Vice President N/A N/A
1300 S. Clinton Street Treasurer since May 2006 and Assistant Treasurer,
Fort Wayne, IN 46804 Director of Bank
YOB: 1957 Relationship, The Lincoln
National Life Insurance
Company
Cynthia A. Rose Secretary Secretary since Secretary; Lincoln VIP N/A N/A
1300 S. Clinton Street February 1995 Trust
Fort Wayne, IN 46802
YOB: 1954

Trustee Qualifications

The following is a brief description of the experience and attributes of each
Trustee that led the Board to conclude that each Trustee is qualified to serve
on the Trust's Board of Trustees. References to the experience and attributes
of Trustees are pursuant to requirements of the Securities and Exchange
Commission, and are not holding out the Board of Trustees or any Trustee as
having any special expertise and shall not impose any greater responsibility or
liability on any Trustee or on the Board of Trustees.

Michael D. Coughlin. Mr. Coughlin has served as a Trustee of the Lincoln
Variable Insurance Products Trust since 2007. Mr. Coughlin previously served as
a Director of the Jefferson Pilot Variable Fund, Inc. (JPVF) from 1989 to 2007,
and as Chairman of JPVF from 2005 to 2007. Mike is owner of Michael D. Coughlin
Associates (General Management Consulting) and previously was President of
Concord Litho Company, Inc. from 1985 to 1999. Mr. Coughlin's background
includes Chairman or President roles in a number of companies and charitable
organizations. He is currently a Trustee of Merrimack County Savings Bank in
New Hampshire. Through his experience, Mr. Coughlin is qualified to advise the
Board in management, financial and investment matters.

Nancy L. Frisby. Ms. Frisby has been a Trustee for the Trust since 1992. Ms.
Frisby served as the Senior Vice President (since 2000) and Chief Financial
Officer of the DeSoto Memorial Hospital, Arcadia, Florida from 1999 until her
retirement in 2007. She previously served as Chief Financial Officer of Bascom
Palmer Eye Institute at the University of Miami School of Medicine and the
Chief Financial Officer of St. Joseph Medical Center, Fort Wayne, IN. Ms.
Frisby is a member of the American Institute of Certified Public Accountants
and the Indiana CPA Society. She is a former officer of the Fort Wayne Chapter
of the Financial Executives Institute, and previously served as Board Chair of
the Byron Health Center in Fort Wayne. Through her experience, Ms. Frisby
brings leadership and financial insight as Chair of the Audit Committee.

Elizabeth S. Hager. Ms. Hager has served as Trustee of the Trust since 2007,
and previously had served as a Director of the Jefferson Pilot Variable Fund,
Inc. from 1989 to 2007. Ms. Hager served as Executive Director of the United
Way of Merrimack County from 1996 until July 1, 2010, then Executive Vice
President of Granite United Way until her retirement on March 31, 2011. Ms.
Hager has also served as a State Representative in the State of New Hampshire
for 26 years and on the Concord, New Hampshire City Council for nine years,
with two of those years as Mayor of Concord. Previous experience for Ms. Hager
also includes serving on the CFX Bank and Bank of New Hampshire Boards as well
as many non-profit association boards. Through her experience, Ms. Hager
provides the Board with legislative, consumer and market insights.

Daniel R. Hayes. Mr. Hayes has served as President and Trustee of the Trust
since 2008, and as Chairman of the Trust since 2009.Mr. Hayes joined Lincoln
Financial Group as Head of Funds Management in 2008. Mr. Hayes also serves as
President and Director of Lincoln Investment Advisors Corporation. Mr. Hayes
previously served as Senior Vice President with Fidelity Investments, managing
Fidelity's business and relationships with insurance companies. Prior to his
employment with Fidelity, Mr. Hayes served as Vice President with Provident
Mutual Life Insurance Company and as Vice President with Ameritas Financial.
Mr. Hayes brings over twenty years of knowledge and experience in retirement,
investment management, insurance, distribution, operations, marketing and
business management.

Gary D. Lemon. Dr. Lemon has served as Advisory Trustee for the Trust since
2004 and a Trustee since 2006. Dr. Lemon has a Master's Degree and Ph.D in
Economics. Since 1976, Dr. Lemon has been a Professor of Economics at DePauw
University. Dr. Lemon currently is the Joseph Percival Allen III University
Professor and is the Director of the McDermond Center for Management and
Entrepreneurship. He has served on several committees and in various advisory
roles in both the community and university settings. Through his experience,
Dr. Lemon brings academic and investment insight as the Chair of the Investment
Committee.

Thomas D. Rath. Mr. Rath has served as a Trustee of the Trust since 2007 and
previously served as a Director of the Jefferson Pilot Variable Fund, Inc.
since 1997. Mr. Rath, currently Chairman of Rath, Young and Pignatelli (Law
Firm), served as Managing Partner of the firm until 2006 and has been with the
firm since 1987 when he founded it. Mr. Rath was previously Vice Chairman of
Primary Bank, Chairman of Horizon Bank, and Attorney General of the State of
New Hampshire. Through his experience, Mr. Rath brings a legal and legislative
perspective to the Board.

Kenneth G. Stella. Mr. Stella has served as a Trustee of the Trust since 1998.
Mr. Stella is President Emeritus of the Indiana Hospital Association,
Indianapolis, Indiana, ("Association"). Mr. Stella served as the Chief
Executive Officer for the Association from 1983 to 2007, providing executive
management and leadership of all Association programs and services. Mr. Stella
also serves as a Board Member of St. Vincent Health. Through his experience,
Mr. Stella brings leadership and direction to the Board as the Lead Independent
Trustee and Chair of the Nominating and Governance Committee.

David H. Windley. Mr. Windley has served as a Trustee of the Trust since 2004.
Mr. Windley served as partner of the CPA firm of Blue & Co., LLC, from 1971
until his retirement in 2006, and worked as an auditor for healthcare,
manufacturing, construction and various other industries. He was also a
financial consultant to a number of different businesses. Through his
experience, Mr. Windley provides accounting and business management insight to
the Board.

Each Trustee also now has considerable familiarity with The Trust, its
investment adviser and distributor, and their operations, as well as the
special regulatory requirements governing regulated investment companies and
the special responsibilities of investment company trustees as a result of his
or her prior service as a Trustee of the Trust.

Board Oversight

The primary responsibility of the Board of Trustees is to represent the
interests of the shareholders of the Trust and to provide oversight of the
management of the Trust. The Trust's day to day operations are managed by the
Advisor and other service providers who have been approved by the Board. The
Board is currently comprised of eight trustees, seven of whom are classified
under the 1940 Act as "non-interested" persons of the Trust ("Independent
Trustees") and one of whom is classified as an interested person of the Trust
("Interested Trustees"). An Interested Trustee serves as the Chairperson of the
Board.

The Board has a Lead Independent Trustee that serves as the primary liaison
between Trust management and the Independent Trustees. The Lead Independent
Trustee is selected by the Independent Trustees and serves until a successor is
selected. Mr. Stella currently serves as the Lead Independent Trustee. The Lead
Independent Trustee is the Independent Trustee that is currently serving as the
Chairperson of the Nominating and Governance Committee.

Generally, the Board acts by majority vote of all the Trustees, including a
majority vote of the Independent Trustees if required by applicable law. The
Board establishes the policies and reviews and approves contracts and their
continuance. The Board regularly requests and/or receives reports from the
investment adviser, the Trust's other service providers and the Trust's Chief
Compliance Officer. The Board has established three standing committees and has
delegated certain responsibilities to those committees. The Board and its
committees meet periodically throughout the year to oversee the Trust's
activities, review the fund's financial statements, oversee compliance with
regulatory requirements, and review performance. The Independent Trustees are
represented by independent legal counsel at Board meetings.

As part of its general oversight of the Trust, the Board is involved in the
risk oversight of the Trust. The Board/Investment Committee reviews the
investment performance of the funds with the Advisor at each of its regularly
scheduled quarterly Board meetings. The Board also reviews fair valuation
reports at the quarterly Board meetings. In addition, the Board must approve
any material changes to a Fund's investment policies or restrictions. With
respect to compliance matters, the Trust's Chief Compliance Officer provides
the annual compliance report required by Rule 38a-1 under the 1940 Act, a
quarterly report to the Board regarding the operation of the Trust's compliance
policies and procedures and any material compliance issues that arose during
the quarter and meets with the Audit Committee at its quarterly meeting.

The Board considered the number of funds in the Trust, the total assets of the
Trust and the general nature of the funds' investments and determined that its
leadership structure is appropriate given the characteristics of the Trust.

Board Committees

The Board of Trustees has established an Audit Committee, which is responsible
for overseeing the funds' financial reporting process on behalf of the Board of
Trustees and for reporting the result of their activities to the Board. The
Audit Committee will assist and act as a liaison with the Board of Trustees in
fulfilling the Board's responsibility to shareholders of the Trust and others
relating to oversight of fund accounting, the Trust's systems of control, the
Trust's process for monitoring compliance with laws and regulations, and

the quality and integrity of the financial statements, financial reports, and
audit of the Trust. In addition, the Audit Committee oversees the Trust's
accounting policies, financial reporting and internal control systems. The
members of the Audit Committee include independent trustees: Nancy L. Frisby,
Elizabeth S. Hager, and David H. Windley. The Audit Committee met four times
during the last fiscal year.

Effective January 1, 2008, the Board of Trustees established an Investment
Committee, which is responsible for overseeing underperforming or troubled
funds and for performing certain contract renewal tasks as requested by the
board. The members of the Investment Committee are: Michael D. Coughlin, Gary
D. Lemon and Thomas D. Rath. The Investment Committee met five times during the
last fiscal year.

On February 23, 2004, the Board of Trustees established a Nominating and
Governance Committee. The current members of the committee are: Nancy L.
Frisby, Elizabeth S. Hager, Kenneth G. Stella and David H. Windley. The
Nominating and Governance Committee is responsible for, among other things, the
identification, evaluation and nomination of potential candidates to serve on
the Board of Trustees. The Nominating and Governance Committee met once during
the last fiscal year. The Nominating and Governance Committee will accept
shareholder trustee nominations. Any such nominations should be sent to the
Trust's Nominating and Governance Committee, c/o The Lincoln National Life
Insurance Company.

Ownership of Securities

As of December 31, 2010, the Trustees and officers as a group owned variable
contracts that entitled them to give voting instructions with respect to less
than 1% of the outstanding shares of each fund. As of December 31, 2010, the
dollar range of equity securities owned beneficially by each trustee in the
funds and in any registered investment companies overseen by the trustees
within the same family of investment companies as the funds is as follows:

Interested Trustees

Independent Trustees

Name of Trustee Dollar Range of Equity Securities in the Funds
--------------------- --------------------------------------------------------------------------
Michael D. Coughlin LVIP MFS Value Fund - $1-$10,000
LVIP Mid-Cap Value Fund - $1-$10,000
LVIP Mondrian International Value Fund - $1-$10,000
LVIP SSgA Small-Cap Index Fund - $1-$10,000
Nancy L. Frisby LVIP Delaware Foundation Conservative Allocation Fund - $50,001-$100,000
LVIP Delaware Growth and Income Fund - $10,001-$50,000
LVIP Delaware Social Awareness Fund - $50,001-$100,000
LVIP Delaware Special Opportunities Fund - $50,001-$100,000
LVIP SSgA Small Cap Index Fund - $10,001-$50,000
Elizabeth S. Hager LVIP Delaware Growth & Income Fund - $10,001-$50,000
LVIP Delaware Social Awareness Fund - $10,001-$50,000
LVIP Janus Capital Appreciation Fund - $1-$10,000
LVIP Mondrian International Value Fund - $1-$10,000
LVIP Moderate Profile Fund - $1-$$10,000
LVIP Moderately Aggressive Profile Fund - $1-$10,000
Gary D. Lemon LVIP Delaware Growth & Income Fund - $10,001-$50,000
Thomas D. Rath LVIP Delaware Growth & Income Fund - $1-$10,000
LVIP Global Income Fund - $1-$10,000
LVIP SSgA Emerging Markets 100 Fund - $1-$10,000
LVIP T. Rowe Price Growth Stock Fund - $1-$10,000
Kenneth G. Stella LVIP Delaware Social Awareness Fund - $10,001-$50,000
LVIP Delaware Special Opportunities Fund - $10,001-$50,000

Aggregate Dollar Range of Equity
Securities in All Registered Investment
Companies Overseen by Trustee in
Name of Trustee Family of Investment Companies
--------------------- ----------------------------------------
Michael D. Coughlin $ 10,001-$50,000
Nancy L. Frisby Over $100,000
Elizabeth S. Hager $50,001-$100,000
Gary D. Lemon $ 10,001-$50,000
Thomas D. Rath $ 1-$10,000
Kenneth G. Stella $50,001-$100,000

Aggregate Dollar Range of Equity
Securities in All Registered Investment
Companies Overseen by Trustee in
Name of Trustee Dollar Range of Equity Securities in the Funds Family of Investment Companies
------------------ ------------------------------------------------------------- ----------------------------------------
David H. Windley LVIP Delaware Bond Fund - $1-$10,000 $50,001-$100,000
LVIP Delaware Social Awareness Fund - $10,001-$50,000
LVIP Delaware Special Opportunities Fund - $10,001-$50,000
LVIP MFS International Growth Fund - $1-$10,000
LVIP Mondrian International Value Fund - $1-$10,000
LVIP SSgA Developed International 150 Fund - $10,001-$50,000
LVIP SSgA Emerging Markets 100 Fund - $10,001-$50,000
LVIP Wells Fargo Intrinsic Value Fund - $1-$10,000

The following table sets forth the compensation paid to the independent
trustees by the Trust as well as the compensation paid to the independent
trustees by the Fund Complex for the fiscal year ended December 31, 2010:

Compensation Table

Aggregate Compensation Total Compensation From the
Name of Person, Position From the Trust Trust And Fund Complex
-------------------------------- ------------------------ ----------------------------
Michael D. Coughlin, Trustee $69,000 $69,000
Nancy L. Frisby, Trustee 75,000 75,000
Elizabeth S. Hager, Trustee 69,000 69,000
Gary D. Lemon, Trustee 76,000 76,000
Thomas D. Rath, Trustee 69,000 69,000
Kenneth G. Stella, Trustee 79,000 79,000
David H. Windley, Trustee 69,000 69,000

Investment Adviser and Sub-Advisers

Investment Adviser: Lincoln Investment Advisors Corporation (LIA) is the
investment adviser to the funds. LIA is a registered investment adviser and
wholly-owned subsidiary of Lincoln National Corporation (LNC). LIA's address is
One Granite Place, Concord, New Hampshire 03301. LIA (or its predecessors) has
served as an investment adviser to mutual funds for over 20 years.

LNC is a publicly-held insurance holding company organized under Indiana law.
Through its subsidiaries, LNC provides, on a national basis, insurance and
financial services.

The advisory fee rates payable by both the Standard Class and the Service Class
of each fund to LIA are set forth in the following table:

Annual Fee Rate Based on
Fund Average Daily Net Asset Value
------------------------------------------------------- ------------------------------------------------
LVIP Baron Growth Opportunities Fund.......... 1.00% of the average daily net assets.

LVIP Capital Growth Fund...................... .75 of 1% of the first $100 million;
.70 of 1% of the next $150 million;
.65 of 1% of the next $750 million;
and 0.60 of 1 %of the excess over $1 billion.

LVIP Cohen & Steers Global Real Estate Fund... .95 of 1% of average daily net assets.

LVIP Columbia Value Opportunities Fund........ 1.05 of 1% of the first $60 million;
.75 of 1% of the next $90 million;
and .65 of 1 % of the excess over $150 million.

Annual Fee Rate Based on
Fund Average Daily Net Asset Value
------------------------------------------------------- ------------------------------------------------
LVIP Delaware Bond Fund....................... .48 of 1% of the first $200 million;
.40 of 1% of the next $200 million; and
.30 of 1% in excess over $400 million.

LVIP Delaware Growth and Income Fund.......... .48 of 1% of the first $200 million;
.40 of 1% of the next $200 million; and
.30 of 1% in excess over $400 million.

LVIP Delaware Social Awareness Fund........... .48 of 1% of the first $200 million;
.40 of 1% of the next $200 million; and
.30 of 1% in excess over $400 million.

LVIP Delaware Special Opportunities Fund...... .48 of 1% of the first $200 million;
.40 of 1% of the next $200 million; and
.30 of 1% in excess over $400 million.

LVIP Janus Capital Appreciation Fund.......... .75 of 1% of the first $500 million; and
.70 of 1% of the excess over $500 million.

LVIP MFS International Growth Fund............ 1.00 of 1% of the first $50 million;
.95 of 1% of the next $50 million;
.90 of 1% of the next $50 million;
.85 of 1% of the next $100 million;
and .80 of 1 % of the excess over $250 million.

LVIP MFS Value Fund........................... .75 of 1% of the first $75 million;
.70 of 1% of the next $75 million;
.65 of 1% of the next $50 million;
and .60 of 1 % of the excess over $200 million.

LVIP Mid-Cap Value Fund....................... 1.05 of 1% of the first $25 million;
.95 of 1% of the next $25 million;
.85 of 1% of the next $50 million;
.75 of 1% of the next $150 million;
and .70 of 1 % of the excess over $250 million.

LVIP Mondrian International Value Fund........ .90 of 1% of the first $200 million;
.75 of 1% of the next $200 million; and
.60 of 1% in excess over $400 million.

LVIP Money Market Fund........................ .48 of 1% of the first $200 million;
.40 of 1% of the next $200 million; and
.30 of 1% in excess over $400 million.

LVIP SSgA Bond Index Fund..................... .40 of 1% of the average daily net asset value.

LVIP SSgA International Index Fund............ .40 of 1% of the average daily net asset value.

LVIP SSgA S&P 500 Index Fund.................. .24 of 1% of the first $500 million;
.20 of 1% of the next $500 million and
.16 of 1% of the excess over $1 billion.

LVIP SSgA Small-Cap Index Fund................ .32 of 1% of the average daily net asset value.

LVIP SSgA Large Cap 100 Fund.................. .52 of 1% of the average daily net asset value.

Annual Fee Rate Based on
Fund Average Daily Net Asset Value
---------------------------------------------------------------- -------------------------------------------------
LVIP SSgA Small Mid-Cap 200 Fund....................... .69 of 1% of the average daily net asset value.

LVIP SSgA Developed International 150 Fund............. .75 of 1% of the average daily net asset value.

LVIP SSgA Emerging Markets 100 Fund.................... 1.09 of 1% of the average daily net asset value.

LVIP T. Rowe Price Growth Stock Fund................... .80 of 1% of the first $50 million;
.75 of 1% of the next $50 million;
.70 of 1% of the next $150 million;
.65 of 1% of the next $250 million;
and .60 of 1 % of the excess over $500 million.

LVIP T. Rowe Price Structured Mid-Cap Growth Fund...... .75 of 1% of the first $200 million;
.70 of 1% of the next $200 million; and
.65 of 1% of the excess over $400 million.

LVIP Templeton Growth Fund............................. .75 of 1% of the first $200 million;
.65 of 1% of the next $300 million;
and .60 of 1 % of the excess over $500 million.

LVIP Turner Mid-Cap Growth Fund........................ .90 of 1% of the first $25 million;
.85 of 1% of the next $50 million;
.80 of 1% of the next $75 million;
.70 of 1% of the next $100 million;
and .65 of 1 % of the excess over $250 million.

LVIP Wells Fargo Intrinsic Value Fund.................. .75% of the first $500 million;
.70% of the excess over $500 million

During the last three years, the adviser received the amounts, as illustrated
in the table below, for investment advisory services with respect to each fund
and its predecessor fund:

Advisory Fees Paid by Each Fund and Its Predecessor Fund

2010 2009 2008
--------------- ------------- -------------
LVIP Baron Growth Opportunities Fund............. $ 3,525,788 $2,817,651 $3,057,596
LVIP Capital Growth Fund......................... 1,472,906 1,142,605 1,599,864
LVIP Cohen & Steers Global Real Estate Fund...... 2,055,302 1,157,614 1,645,025
LVIP Columbia Value Opportunities Fund........... 374,130 231,490 268,740
LVIP Delaware Bond Fund.......................... 8,183,895 6,117,777 5,394,480
LVIP Delaware Growth and Income Fund............. 3,949,999 3,708,233 5,024,286
LVIP Delaware Social Awareness Fund.............. 2,531,088 2,394,019 3,164,669
LVIP Delaware Special Opportunities Fund......... 2,229,177 1,866,004 2,317,757
LVIP Janus Capital Appreciation Fund............. 2,813,828 2,409,631 3,220,268
LVIP MFS International Growth Fund............... 2,503,623* 2,085,419 2,035,371
LVIP MFS Value Fund.............................. 3,679,723 2,727,322 2,255,611
LVIP Mid-Cap Value Fund.......................... 780,601 703,188 1,044,636
LVIP Mondrian International Value Fund........... 4,703,474 4,690,325 6,108,001
LVIP Money Market Fund........................... 3,586,300 4,654,902 4,200,751
LVIP SSgA Bond Index Fund........................ 3,771,066 1,566,776 194,955
LVIP SSgA Developed International 150 Fund....... 1,092,624 368,541 61,727
LVIP SSgA Emerging Markets 100 Fund.............. 1,814,108 638,773 62,243
LVIP SSgA International Index Fund............... 1,186,857 564,697 95,017
LVIP SSgA Large Cap 100 Fund..................... 1,403,679 459,047 46,520
LVIP SSgA S&P 500 Index Fund..................... 1,846,794 1,275,457 1,114,890
LVIP SSgA Small-Cap Index Fund................... 796,549 538,245 512,044

2010 2009 2008
------------ ------------ ------------
LVIP SSgA Small-Mid Cap 200 Fund...................... 526,935 214,810 35,581
LVIP T. Rowe Price Growth Stock Fund.................. 2,230,648 1,603,129 1,654,431
LVIP T. Rowe Price Structured Mid-Cap growth Fund..... 2,002,281 1,530,823 1,623,603
LVIP Templeton Growth Fund............................ 1,845,556 1,693,833 1,694,379
LVIP Turner Mid-Cap Growth Fund....................... 317,530 227,093 270,561
LVIP Wells Fargo Intrinsic Value Fund................. 2,952,800 2,554,640 2,124,157

Advisory Fees Waived by Each Fund and Its Predecessor Fund

2010 2009 2008
------------- ----------- -----------
LVIP Cohen & Steers Global Real Estate Fund$ .475,965 $351,447 $380,953
LVIP Columbia Value Opportunities Fund... 12,607 N/A N/A
LVIP Janus Capital Appreciation Fund..... 300,001 313,117 568,740
LVIP MFS International Growth Fund....... 36,351* N/A N/A
LVIP MFS Value Fund...................... 1,414 N/A N/A
LVIP Mid-Cap Value Fund.................. 12,501 3,151 N/A
LVIP Money Market Fund................... 1,379,913 N/A N/A
LVIP SSgA Bond Index Fund................ 881,320 286,984 34,117
LVIP SSgA Developed International 150 Fund . 549,740 171,986 28,806
LVIP SSgA Emerging Markets 100 Fund...... 1,194,882 405,373 39,402
LVIP SSgA International Index Fund....... 178,029 84,704 14,252
LVIP SSgA Large Cap 100 Fund............. 493,864 117,216 10,735
LVIP SSgA Small-Mid Cap 200 Fund......... 221,896 90,283 14,954
LVIP Turner Mid-Cap Growth Fund.......... 30,443 24,443 27,124
LVIP Wells Fargo Intrinsic Value Fund.... 189,965 147,529 279,916

* On October 1, 2010, the Fund name changed to LVIP MFS International Growth
Fund due to a sub-advisor change. The Fund was formerly LVIP Marsico
International Growth Fund.

Pursuant to an Investment Management Agreement dated April 30, 2007 (the
Management Agreement), the adviser manages each fund's portfolio investments
and reports to the board of trustees. With limited exception, each fund
conducts its other business and affairs and bears the expenses and salaries
necessary and incidental thereto. These expenses include, without limitation,
expenses related to: the maintenance of the fund's books, records and
procedures, including corporate secretary services; general accounting
oversight; preparation of tax returns and reports; and, legal services provided
by the adviser or an affiliate of the adviser.

With respect to the LVIP Cohen & Steers Global Real Estate Fund, the adviser
has contractually agreed to waive the following portion of its advisory fee:
0.22% on the first $250,000,000 of average daily net assets of the Fund; 0.32%
of the excess over $250,000,000 of average daily net assets of the Fund. The
waiver agreement will continue at least through April 30, 2012 and will renew
automatically for one-year terms unless the adviser provides written notice of
termination to the Fund.

With respect to the LVIP Columbia Value Opportunities Fund, the adviser has
contractually agreed to waive the following portion of its advisory fee: 0.09%
on the first $60,000,000 of average daily net assets of the Fund. The waiver
agreement will continue at least through April 30, 2012 and will renew
automatically for one-year terms unless the adviser provides written notice of
termination to the Fund.

To help limit expenses, the adviser has contractually agreed to waive the
following portion of its advisory fee for the LVIP T. Rowe Price Structured
Mid-Cap Growth Fund: 0.05% of the excess over $750,000,000 of average daily net
assets of the Fund. The waiver agreement will continue at least through April
30, 2012 and will renew automatically for one-year terms unless the adviser
provides written notice of termination to the Fund.

With respect to the LVIP Janus Capital Appreciation Fund, the adviser has
contractually agreed to waive the following portion of its advisory fee: 0.15%
of the first $100,000,000 of average daily net assets of the Fund; 0.10% of the
next $150,000,000 of average daily net assets of the Fund. The fee waiver
agreement will continue at least through April 30, 2012 and will renew
automatically for one-year terms unless the adviser provides written notice of
termination to the Fund.

With respect to the LVIP Mid Cap Value Fund, the adviser has contractually
agreed to waive the following portion of its advisory fee: 0.05% on the first
$25,000,000 of average daily net assets of the Fund. The fee waiver agreement
will continue at least through April 30, 2012 and will renew automatically for
one-year terms unless the adviser provides written notice of termination to the
Fund.

With respect to the LVIP MFS International Growth Fund, the adviser has
contractually agreed to waive the following portion of its advisory fee: 0.05%
on the first $400,000,000 of average daily net assets of the Fund. The waiver
agreement will continue at least through April 30, 2012 and will renew
automatically for one-year terms unless the adviser provides written notice of
termination to the Fund.

With respect to the LVIP MFS Value Fund, the adviser has contractually agreed
to waive the following portion of its advisory fee: 0.0125% of assets of
$500,000,000 to $1 billion of average daily net assets of the Fund; 0.0375% on
excess $1 billion of average daily net assets of the Fund. The waiver agreement
will continue at least through April 30, 2012 and will renew automatically for
one-year terms unless the adviser provides written notice of termination to the
Fund.

With respect to the LVIP SSgA Bond Index Fund, the adviser has contractually
agreed to waive the following portion of its advisory fee: 0.07% on the first
$500,000,000 of average daily net assets of the Fund; 0.12% of the excess over
$500,000,000 of daily net assets of the Fund. The waiver agreement will
continue at least through April 30, 2012 and will renew automatically for
one-year terms unless the adviser provides written notice of termination to the
Fund.

With respect to the LVIP SSgA International Index Fund, the adviser has
contractually agreed to waive the following portion of its advisory fee: 0.03%
on the first $500,000,000 of average daily net assets of the Fund; 0.05% of the
excess over $500,000,000 of daily net assets of the Fund. The waiver agreement
will continue at least through April 30, 2012 and will renew automatically for
one-year terms unless the adviser provides written notice of termination to the
Fund.

With respect to the LVIP SSgA Large Cap 100 Fund, the adviser has contractually
agreed to waive the following portion of its advisory fee: 0.12% on the first
$100,000,000 of average daily net assets of the Fund; 0.22% of the excess over
$100,000,000 of daily net assets of the Fund. The waiver agreement will
continue at least through April 30, 2012 and will renew automatically for
one-year terms unless the adviser provides written notice of termination to the
Fund.

With respect to the LVIP SSgA Small-Mid Cap 200 Fund, the adviser has
contractually agreed to waive the following portion of its advisory fee: 0.29%
on the first $100,000,000 of average daily net assets of the Fund; 0.39% of the
excess over $100,000,000 of daily net assets of the Fund. The waiver agreement
will continue at least through April 30, 2012 and will renew automatically for
one-year terms unless the adviser provides written notice of termination to the
Fund.

With respect to the LVIP SSgA Developed International 150 Fund, the adviser has
contractually agreed to waive the following portion of its advisory fee: 0.35%
on the first $100,000,000 of average daily net assets of the Fund; 0.43% of the
excess over $100,000,000 of daily net assets of the Fund. The waiver agreement
will continue at least through April 30, 2012 and will renew automatically for
one-year terms unless the adviser provides written notice of termination to the
Fund.

With respect to the LVIP SSgA Emerging Markets 100 Fund, the adviser has
contractually agreed to waive the following portion of its advisory fee: 0.69%
on the first $100,000,000 of average daily net assets of the Fund; 0.76% of the
excess over $100,000,000 of daily net assets of the Fund. The waiver agreement
will continue at least through April 30, 2012 and will renew automatically for
one-year terms unless the adviser provides written notice of termination to the
Fund.

With respect to the LVIP Turner Mid-Cap Growth Fund, the adviser has
contractually agreed to waive the following portion of its advisory fee: 0.10%
on the first $25,000,000 of average daily net assets of the Fund; 0.05% of the
next $50,000,000 of average daily net assets of the Fund. The waiver agreement
will continue at least through April 30, 2012 and will renew automatically for
one-year terms unless the adviser provides written notice of termination to the
Fund.

With respect to the LVIP Wells Fargo Intrinsic Value Fund, the adviser has
contractually agreed to waive the following portion of its advisory fee: 0.03%
on the first $250,000,000 of average daily net assets of the Fund; 0.08% on the
next $500,000,000 of average daily net assets of the Fund; 0.13% on the excess
over $750,000,000 of average daily net assets of the Fund. This waiver will
continue through at least April 30, 2012 and will renew automatically for
one-year terms unless the adviser provides written notice of termination to the
Fund.

There can be no assurance that the above fee waivers will continue beyond the
dates indicated.

Sub-Advisers. As adviser, LIA is primarily responsible for investment decisions
affecting each of the funds under its management. However, LIA has entered into
sub-advisory agreements with several professional investment management firms.
These firms are responsible for the day-to-day investment management of those
funds' portfolios. Each sub-adviser makes investment decisions for its
respective fund in accordance with that fund's investment objectives and places
orders on behalf of that fund to effect those decisions. See the following
table for more information about the sub-advisers and their fees:

Annual Fee Rate Based On
Fund Sub-Adviser Average Daily Net Asset Value
-------------------- ------------------- ----------------------------------------------
LVIP Baron Growth BAMCO, Inc. 0.50% of the fund's average daily net assets.
Opportunities Fund 767 Fifth Avenue
New York, NY 10153

Fund Sub-Adviser
----------------------------- --------------------------
LVIP Capital Growth Fund Wellington Management
Company, LLP (Wellington
Management)
280 Congress Street
Boston Massachusetts
02210
LVIP Cohen & Steers Global Cohen & Steers Capital
Real Estate Fund Management, Inc.
280 Park Avenue)
New York, NY 10017
LVIP Columbia Value Columbia Management
Opportunities Fund Advisors, LLC.
One Financial Center
Boston, MA 02111
LVIP Delaware Bond Fund Delaware Management
Company (DMC)
2005 Market Street
Philadelphia, PA 19103
LVIP Delaware Growth and Delaware Management
Income Fund Company (DMC)
2005 Market Street
Philadelphia, PA 19103
LVIP Delaware Social Delaware Management
Awareness Fund Company (DMC)
2005 Market Street
Philadelphia, PA 19103
LVIP Delaware Special Delaware Management
Opportunities Fund Company (DMC)
2005 Market Street
Philadelphia, PA 19103
LVIP Janus Capital Janus Capital Management
Appreciation Fund LLC (Janus)
151 Detroit Street
Denver, CO 80206
LVIP MFS International Massachusetts Financial
Growth Fund Services Company (MFS)
500 Boylston Street
Boston, Massachusetts
02116
LVIP MFS Value Fund Massachusetts Financial
Services Company (MFS)
500 Boylston Street
Boston, Massachusetts
02116
LVIP Mid-Cap Value Fund Wellington Management
280 Congress Street
Boston, Massachusetts
02110
LVIP Mondrian International Mondrian Investment
Value Fund Partners Limited.
10 Gresham Street,
London, United Kingdom
EC2V 7JD
LVIP Money Market Fund Delaware Management
Company (DMC)
2005 Market Street
Philadelphia, PA 19103

Annual Fee Rate Based On
Fund Average Daily Net Asset Value
----------------------------- ------------------------------------------------------------------------------
LVIP Capital Growth Fund 0.45% of the first $100 million of the fund's average daily net assets;
0.40% of the fund's average daily net assets over $100 million.
LVIP Cohen & Steers Global 0.55% on the first $150 million of the fund's average daily net assets;
Real Estate Fund 0.45% on the next $100 million of the fund's average daily net assets;
0.35% on the excess of $250 million of the fund's average daily net assets.
LVIP Columbia Value 0.66% on the first $60 million of the fund's average daily net assets;
Opportunities Fund 0.50% on the next $90 million of the fund's average daily net assets;
0.40% on the excess of $150 million of the fund's average daily net assets.1
LVIP Delaware Bond Fund 0.18% of the first $2 billion of the fund's average daily net assets;
0.15% on the next $1 billion of the fund's average daily net assets;
0.09% on the excess of $3 billion of the fund's average daily net assets.2
LVIP Delaware Growth and 0.20% of the fund's average daily net assets.
Income Fund
LVIP Delaware Social 0.20% of the fund's average daily net assets.
Awareness Fund
LVIP Delaware Special 0.20% of the fund's average daily net assets.
Opportunities Fund
LVIP Janus Capital 0.40% on the first $250 million of the fund's average daily net assets;
Appreciation Fund 0.35% on the next $500 million of the fund's average daily net assets;
0.30% on the next $750 million of the fund's average daily net assets;
0.25% on any excess of the fund's average daily net assets over $1.5 billion.
LVIP MFS International 0.45% on the first $400 million of the fund's average daily net assets;
Growth Fund 0.40% on the next $600 million of the fund's average daily net assets;
0.35% on any excess of the fund's average daily net assets over $1 billion.3
LVIP MFS Value Fund 0.375% on the first $250 million of the fund's average daily net assets;
0.35% on the next $250 million of the fund's average daily net assets;
0.300% on the next $1 billion of the fund's average daily net assets;
0.250% on any excess of the fund's average daily net assets over $1.5
billion.4
LVIP Mid-Cap Value Fund 65% on the first $50 million of the fund's average daily net assets;
0.55% on the next $50 million of the fund's average daily net assets;
0.45% on any excess of the fund's average daily net assets over $100
million.
LVIP Mondrian International 0.40% on the first $800 million of the fund's average daily net assets;
Value Fund 0.35% on the next $500 million of the fund's average daily net assets;
0.33% on any excess of the fund's average daily net assets over $1.3 billion.
LVIP Money Market Fund 0.08% on the first $500 million of the fund's average daily net assets;
0.07% on the next $500 million of the fund's average daily net assets;
0.06% on any excess of the fund's average daily net assets.

Fund Sub-Adviser
--------------------------- ---------------------------
LVIP SSgA Bond Index Fund SSgA Funds Management,
Inc.
One Lincoln Street
Boston, MA 02111
LVIP SSgA International SSgA Funds Management,
Index Fund Inc.
One Lincoln Street
Boston, MA 02111
LVIP SSgA S&P 500 Index SSgA Funds Management,
Fund Inc.
One Lincoln Street
Boston, MA 02111
LVIP SSgA Small-Cap Index SSgA Funds Management,
Fund Inc.
One Lincoln Street
Boston, MA 02111
LVIP SSgA Developed SSgA Funds Management,
International 150 Fund Inc.
One Lincoln Street
Boston, MA 02111
LVIP SSgA Emerging SSgA Funds Management,
Markets 100 Fund Inc.
One Lincoln Street
Boston, MA 02111
LVIP SSgA Large Cap 100 SSgA Funds Management,
Fund Inc.
One Lincoln Street
Boston, MA 02111
LVIP SSgA Small-Mid Cap SSgA Funds Management,
200 Fund Inc.
One Lincoln Street
Boston, MA 02111
LVIP T. Rowe Price Growth T. Rowe Price Associates,
Stock Fund Inc. (T. Rowe Price)
100 East Pratt Street
Baltimore, MD 21202
LVIP T. Rowe Price T. Rowe Price Associates,
Structured Mid-Cap Growth Inc. (T. Rowe Price)
Fund 100 East Pratt Street
Baltimore, MD 21202
LVIP Templeton Growth Templeton Investment
Fund Counsel, LLC (Templeton)
500 East Broward
Boulevard, Suite 2100
Fort Lauderdale, Florida
33394

Annual Fee Rate Based On
Fund Average Daily Net Asset Value
--------------------------- --------------------------------------------------------------------------------
LVIP SSgA Bond Index Fund 0.06% on the first $100 million of the fund's average daily net assets;
0.03% on the next $400 million of the fund's average daily net assets;
.0.02% on the excess over $500 million of the fund's daily net assets.
Subject to a minimum annual fee of $100,000.
LVIP SSgA International 0.10% on the first $50 million;
Index Fund 0.06% on the next $450 million;
0.04% on the excess over $500 million. Subject to a minimum annual fee of
$100,000.5
LVIP SSgA S&P 500 Index 0.015% on the first $1 billion of the fund's average daily net assets;
Fund 0.01% on any excess of the fund's average daily net assets over $1 billion.
Subject to a minimum annual fee of $100,000.
LVIP SSgA Small-Cap Index 0.03% on the first $500 million of the fund's average daily net assets;
Fund 0.02% on any excess of the fund's average daily net assets over $500
million. Subject to a minimum annual fee of $100,000
LVIP SSgA Developed 0.18% on the first $50 million of the fund's average daily net assets;
International 150 Fund 0.06% on the next $450 million of the fund's average daily net assets; and
0.04% on any excess of the fund's average daily net assets over $500
million. Subject to a minimum annual fee of $50,000.6
LVIP SSgA Emerging 0.18% on the first $50 million of the fund's average daily net assets;
Markets 100 Fund 0.10% on the next $50 million of the fund's average daily net assets;
0.06% on the next $400 million of the fund's average daily net assets; and
0.05% on any excess of the fund's average daily net assets over $500
million. Subject to a minimum annual fee of $50,000.
LVIP SSgA Large Cap 100 0.18% on the first $50 million of the fund's average daily net assets;
Fund 0.10% on the next $50 million of the fund's average daily net assets;
0.05% on the next $400 million of the fund's average daily net assets; and
0.02% on any excess of the fund's average daily net assets over $500
million. Subject to a minimum annual fee of $50,000.
LVIP SSgA Small-Mid Cap 0.18% on the first $50 million of the fund's average daily net assets;
200 Fund 0.05% on the next $450 million of the fund's average daily net assets; and
0.02% on any excess of the fund's average daily net assets over $500
million. Subject to a minimum annual fee of $50,000.7
LVIP T. Rowe Price Growth 0.40% on the first $250 million of the fund's average daily net assets;
Stock Fund 0.375% on the next $250 million of the fund's average daily net assets;
0.35% on any excess of the fund's average daily net assets over $500
million.
LVIP T. Rowe Price 0.50% for the first $250 million of the fund's average daily net assets;
Structured Mid-Cap Growth 0.45% of the next $500 million of the fund's average daily net assets;
Fund 0.40% of the excess of the fund's average daily net assets over $750 million.
LVIP Templeton Growth 0.50% for the first $200 million of the fund's average daily net assets;
Fund 0.425% of the next $300 million of the fund's average daily net assets;
0.40% of the excess of the fund's average daily net assets over $500 million.

Fund Sub-Adviser
---------------------------- -----------------------------
LVIP Turner Mid-Cap Growth Turner Investment Partners,
Fund Inc.
1205 Westlakes Drive, Suite
100
Berwyn, Pennsylvania
19312
LVIP Wells Fargo Intrinsic Metropolitan West Capital
Value Fund Management, LLC.
(MetWest Capital))
610 Newport Center Drive,
Suite 1000
Newport Beach, CA 92660

Annual Fee Rate Based On
Fund Average Daily Net Asset Value
---------------------------- ------------------------------------------------------------------------
LVIP Turner Mid-Cap Growth 0.50% on the first $150 million of the fund's average daily net assets;
Fund 0.45% on any excess of the fund's average daily net assets over $150
million.
LVIP Wells Fargo Intrinsic 0.40% of the first $250 million of the fund's average daily net assets;
Value Fund 0.35% of any excess of the fund's average daily net assets over $250
million.

1 Prior to September 15, 2010, the sub-advisory fee was the following: 0.75%
on the first $60 million of the average daily net assets of the fund.

2 Prior to September 15, 2010, the sub-advisory fee was 0.18% of the average
daily net assets of the fund.

3 Prior to October 1, 2010, the sub-advisory fee was 0.50% on the first $300
million of the average daily net assets of the fund; 0.45% on the next $100
million of the average daily net assets of the fund; 0.40% on the next $600
million of the average daily net assets of the fund; and 0.35% on the
excess of $1 billion of the average daily net assets of the fund.

4 Prior to December 8, 2010, the sub-advisory fee was 0.375% on the first
$250 million of the average daily net assets of the fund; 0.35% on the next
$250 million of the average daily net assets of the fund; and 0.325% on the
excess of $500 million of the average daily net assets of the fund.

5 Prior to October 1, 2010, the sub-advisory fee was 0.10% on the first $50
million of the average daily net assets of the fund; 0.08% on the next $50
million of the average daily net assets of the fund; 0.06% on the next $400
million of the average daily net assets of the fund; and 0.04% on the
excess of $500 million of the average daily net assets of the fund.

6 Prior to October 1, 2010, the sub-advisory fee was 0.18% on the first $50
million of the average daily net assets of the fund; 0.10% on the next $50
million of the average daily net assets of the fund; 0.06% on the next $400
million of the average daily net assets of the fund; and 0.04% on the
excess of $500 million of the average daily net assets of the fund.

7 Prior to October 1, 2010, the sub-advisory fee was 0.18% on the first $50
million of the average daily net assets of the fund; 0.10% on the next $50
million of the average daily net assets of the fund; 0.05% on the next $400
million of the average daily net assets of the fund; and 0.02% on the
excess of $500 million of the average daily net assets of the fund.

BAMCO, Inc., a New York corporation, is a wholly-owned subsidiary of Baron
Capital Group, Inc. ("BCG"). Mr. Ronald Baron, with his family, is the
controlling stockholder of BCG and is BAMCO's chief investment officer.

Cohen & Steers Capital Management, Inc. ("Cohen & Steers"), was founded in 1986
as the first U.S. investment adviser to focus on investing in real estate
securities and is registered with the SEC. Cohen & Steers is a wholly-owned
subsidiary of Cohen & Steers, Inc. a public company listed on the New York
Stock Exchange (NYSE: CNS).

Columbia Management Advisors, LLC. (Columbia Management) is an indirect,
wholly-owned subsidiary of Bank of America Corporation, which has agreed to
sell Columbia to Ameriprise Financial which sale is anticipated to close during
the second quarter of 2010. Columbia is a major financial services company
engaged in a broad range of financial activities beyond the mutual fund-related
activities of Columbia Management, including among others, banking, investment
banking, broker/dealer (sales and trading), asset management, insurance and
other financial activities.

As of December 31, 2010, Delaware Management Company (DMC) and its affiliates
within Delaware Investments were managing in the aggregate more than $150
billion in assets in various institutional or separately managed, investment
company, and insurance accounts. DMC is a series of Delaware Management
Business Trust, which is a subsidiary of Delaware Management Holdings, Inc.
("DMHI"). DMHI is a subsidiary, and subject to the ultimate control, of
Macquarie Group, Ltd. Macquarie is a Sydney, Australia-headquartered global
provider of banking, financial, advisory, investment and funds management
services ("Macquarie"). Delaware Investments is the marketing name for DMHI and
its subsidiaries.

Janus (together with its predecessors) has served as an investment adviser
since 1969 and currently serves as investment adviser, or sub-adviser, to
separately managed accounts, mutual funds, as well as commingled pools or
private funds, and wrap fee accounts. Janus Capital Management LLC is a direct
subsidiary of Janus Capital Group, Inc. ("JCGI"), a publicly traded company
with principal operations in financial asset management businesses. JCGI owns
approximately 95% of Janus Capital Management LLC, with the remaining 5% held
by Janus Management Holdings Corporation.

Metropolitan West Capital Management, LLC (MetWest Capital) was founded in 1997
and is an SEC-registered asset management firm based in Newport Beach,
California. MetWest Capital is majority owned by Wells Fargo Bank, N.A. a
division of Wells Fargo & Company.

MFS is America's oldest mutual fund organization. MFS and its predecessor
organizations have a history of money management dating from 1924 and the
founding of the first mutual fund in the United States, Massachusetts Investors
Trust. Net assets under the

management of the MFS organization were approximately $200 billion as of
December 31, 2010. MFS is a majority owned subsidiary of Sun Life of Canada
(U.S.) Financial Services Holdings Inc., which in turn is an indirect wholly
owed subsidiary of Sun Life Financial, Inc. (a diversified financial services
organization).

Mondrian Investment Partners Limited is owned by its current management and
others, including various private investment firms affiliated with Hellman &
Friedman LLC, a private equity firm. Mondrian is registered as an investment
adviser with the SEC and is regulated in the United Kingdom by the Financial
Services Authority. As of December 31, 2010, Mondrian managed over U.S. $68.3
billion in mutual fund institutional and separately managed accounts.

SSgA Funds Management, Inc. ("SSgA FM") is registered with the Securities and
Exchange Commission as an investment adviser under the 1940 Act and is a wholly
owned subsidiary of State Street Corporation, a publicly held bank holding
company. SSgA FM and other advisory affiliates of State Street make up State
Street Global Advisors ("SSgA"), the investment management arm of State Street
Corporation.

T. Rowe Price is one of the nation's largest investment management firms for
individual and institutional investors, retirement plans and financial
intermediaries. T. Rowe Price is a wholly-owned subsidiary of T. Rowe Price
Group, Inc., a publicly-traded financial services holding company. As of
December 1, 2010, T. Rowe Price had assets under management of approximately
$482 billion.

Templeton is a registered investment adviser and a Delaware Limited Liability
Company. Templeton is an indirect wholly-owned subsidiary of Franklin
Resources, Inc. ("Franklin"), a Delaware corporation. Net assets under the
management of the Franklin organization was over $670 billion as of December
31,2010.

Turner is a registered investment adviser. As of December 31, 2010, it had
assets under management totaling approximately $18 billion. Turner is 100%
owned by its employees, including Robert E. Turner, who is the Chairman and
controlling shareholder of Turner.

Wellington Management Company, LLP ("Wellington Management") is a Massachusetts
limited liability partnership with principal offices at 280 Congress Street,
Boston, Massachusetts 02210. Wellington Management is a professional investment
counseling firm which provides investment services to investment companies,
employee benefit plans, endowments, foundations and other institutions.
Wellington Management and its predecessor organization have provided investment
advisory services for over 70 years. As of December 31, 2010, Wellington
Management had investment management authority with respect to approximately
$634 billion in assets.

During the last three years, sub-advisers received the following amounts for
investment sub-advisory services with respect to the management of each fund
and its predecessor fund. LIA, not the fund, pays all sub-advisory fees owed.

Sub-Advisory Fees Paid by the Adviser

2010 2009 2008
------------- ------------- -------------
LVIP Baron Growth Opportunities Fund................... $ 1,762,894 $1,408,826 $1,528,798
LVIP Capital Growth Fund............................... 863,338 674,346 936,118
LVIP Cohen & Steers Global Real Estate Fund............ 1,123,564 857,857 924,237
LVIP Columbia Value Opportunities Fund................. 254,577 165,350 191,957
LVIP Delaware Bond Fund................................ 4,504,234 3,334,667 2,900,688
LVIP Delaware Growth and Income Fund................... 2,259,999 2,098,822 2,976,191
LVIP Delaware Social Awareness Fund.................... 1,314,058 1,222,680 1,736,446
LVIP Delaware Special Opportunities Fund............... 1,112,785 879,059 1,173,715
LVIP Janus Capital Appreciation Fund................... 1,438,120 1,249,495 1,628,073
LVIP MFS International Growth Fund..................... 1,356,896A 1,139,942 1,109,812
LVIP MFS Value Fund.................................... 2,062,752 1,528,849 1,285,394
LVIP Mid-Cap Value Fund................................ 506,565 475,197 696,194
LVIP Mondrian International Value Fund................. 2,535,649 2,526,884 2,800,663
LVIP Money Market Fund................................. 931,498 2,456,941 2,184,451
LVIP SSgA Bond Index Fund.............................. 268,553 146,530 66,940B
LVIP SSgA Developed International Index Fund........... 160,779 83,616 33,470B
LVIP SSgA Emerging Markets 100 Fund.................... 179,859 93,196 26,913C
LVIP SSgA International Index Fund..................... 205,508 123,020 66,940B
LVIP SSgA Large Cap 100 Fund........................... 224,969 121,686 33,470B
LVIP SSgA S&P 500 Index Fund........................... 123,494 100,276 100,000D
LVIP SSgA Small-Cap Index Fund......................... 100,000 100,000 100,000D
LVIP SSgA Small-Mid Cap 200 Fund....................... 110,256 63,063 33,470B
LVIP T. Rowe Price Growth Stock Fund................... 1,234,028 873,396 902,735
LVIP T. Rowe Price Structured Mid-Cap Growth Fund...... 1,347,895 1,026,524 1,092,210
LVIP Templeton Growth Fund............................. 1,225,941 1,126,797 1,126,968

2010 2009 2008
------------ ------------ ------------
LVIP Turner Mid-Cap Growth................ 179,429 126,656 152,148
LVIP Wells Fargo Intrinsic Value Fund..... 1,502,973 1,317,165E 2,149,582

A Commencing October 1, 2010, Massachusetts Financial Services Company
replaced Marsico Capital Management, LLC as the Fund's sub-advisor. The
portion of the 2010 payment attributed to Marsico Capital Management, LLC
was $1,029,738.

B The Fund commenced operations on May 1, 2008

C The Fund commenced operations on June 18, 2008.

D Commencing May 1,2008, SSgA Funds Management, Inc. replaced Mellon Capital
Management Corporation as the Fund's sub-adviser. The portion of the 2008
payment attributed to Mellon was $33,060 for SSgA S&P 500 Index Fund and
$33,060 for SSgA Small Cap Index Fund.

E Commencing October 1, 2009, Metropolitan West Capital Management, LLC
(MetWest Capital) replaced Pyramis Global Advisors, LLC, as the fund's
sub-adviser. The portion of the 2009 payment attributed to Pyramis was
$949,071.

Service marks. The service mark for the funds and the name Lincoln have been
adopted by the funds with the permission of LNC, and their continued use is
subject to the right of LNC to withdraw this permission in the event the
adviser should not be the investment adviser of the funds.

In the prospectus and sales literature, the name Baron will be used with the
LVIP Baron Growth Opportunities Fund; Cohen & Steers will be used with the LVIP
Cohen & Steers Global Real Estate Fund; Columbia will be used with the LVIP
Columbia Value Opportunities Fund; Delaware will be used with the LVIP Delaware
Bond Fund, LVIP Delaware Growth and Income Fund, LVIP Delaware Social Awareness
Fund and LVIP Delaware Special Opportunities Fund; Janus will be used with the
LVIP Janus Capital Appreciation Fund; MFS will be used with the LVIP MFS Value
Fund and LVIP MFS international Growth Fund; Mondrian Investment Partners
Limited will be used with the LVIP Mondrian International Fund; SSgA Funds
Management, Inc. (SSgA FM) will be used for LVIP Bond Index Fund, LVIP
International Index Fund, LVIP SSgA S&P 500 Index Fund, LVIP SSgA Small-Cap
Index Fund, LVIP Developed International 150 Fund, LVIP Emerging Markets 100
Fund, LVIP Large Cap 100 Fund, and LVIP Small-Mid Cap 200 Fund; T. Rowe Price
will be used with the LVIP T. Rowe Price Growth Stock Fund and LVIP T. Rowe
Price Structured Mid-Cap Growth Fund; Templeton will be used with the LVIP
Templeton Growth Stock Fund; Turner will be used with the LVIP Turner Mid-Cap
Growth Fund; and Wells Fargo will be used with the LVIP Wells Fargo Intrinsic
Value Fund. The continued use of these names is subject to the right of the
respective sub-adviser to withdraw its permission in the event it ceases to be
the sub-adviser to the particular fund it advises. In addition, the Trust has
licensed certain trademarks and the trade names of S&P and of the S&P 500
Index, which is determined, composed and calculated by S&P without regard to
the LVIP SSgA S&P 500 Index Fund.

LIA has obtained a license to use the trademarks of MSCI (Reg. TM) and EAFE
(Reg. TM) in connection with the LVIP SSgA International Index Fund.

Fund Expenses. Expenses specifically assumed by each fund under its advisory
agreement include, among others, compensation and expenses of the members of
the fund's board of trustees who are not interested persons of the fund;
custodian fees; independent auditor fees; brokerage commissions; legal and
accounting fees; registration and other fees in connection with maintaining
required fund and share registration with the SEC and state securities
authorities; and the expenses of printing and mailing updated prospectuses,
proxy statements and shareholder reports to current contract owners.

Proxy Voting Policies and Procedures. The board of trustees has delegated to
each fund's sub-adviser responsibility for voting any proxies relating to
portfolio securities held by the fund in accordance with the sub-adviser's
proxy voting policies and procedures. Summaries of the proxy voting policies
and procedures to be followed by sub-advisers on behalf of the funds, including
procedures to be used when a vote represents a conflict of interest, are
attached hereto as Appendix B.

Information regarding how each fund voted proxies relating to portfolio
securities during the most recent 12-month period ended June 30 is available
(1) without charge, upon request, by call 1-800-4LINCOLN (454-6265); and (2) on
the SEC's website at http://
www.sec.gov.

Portfolio Managers
The following provides information regarding each portfolio manager's other
accounts managed, material conflicts of interests, compensation, and any
ownership of securities in a fund. Each portfolio manager or team member is
referred to in this section as a "portfolio manager." The portfolio managers
are shown together in this section only for ease in presenting the information
and should not be viewed for purposes of comparing the portfolio managers or
the sub-advisory firms against one another. Each sub-advisory firm is a
separate entity that may employ different compensation structures, may have
different management requirements, and each portfolio manager may be affected
by different conflicts of interest.

Other Accounts Managed

The following table provides information about other accounts for which each
portfolio manager was primarily responsible as of December 31, 2010:

Registered Other Pooled
Investment Companies Investment Vehicles
------------------------------ ------------------------------
Number of Total Assets* in Number of Total Assets* in
Adviser/Sub-Adviser and Portfolio Manager Accounts the Accounts Accounts the Accounts
------------------------------------------- ----------- ------------------ ----------- ------------------
BAMCO, Inc.
Ron Baron.................................. 7 $ 9,174 2 $ 36
Cohen & Steers Capital Management, Inc.
Scott Crowe................................ 5 2,710 29 10,847
Joseph Harvey.............................. 16 14,127 36 11,541
Chip McKinley.............................. 2 922 27 10,005
Columbia Management Advisors, LLC
Christian K. Stadlinger.................... 2 2,000 0 0
Jarl Ginsberg.............................. 2 2,000 0 0
Delaware Management Company
Christopher Adams.......................... 5 1,900 0 0
Christopher Beck........................... 5 2,100 0 0
Thomas H. Chow............................. 13 15,100 0 0
Roger A Early.............................. 18 18,400 0 0
Paul Grillo................................ 20 18,000 0 0
Cynthia I. Isom............................ 3 1,200 0 0
Francis Morris............................. 12 3,200 0 0
Michael Morris............................. 5 1,900 0 0
Donald Padilla............................. 5 1,900 0 0
Janus Capital Management LLC
Jonathan D. Coleman........................ 7 10,886 0 0
Daniel Riff................................ 8 10,976 0 0
Metropolitan West Capital Management,
LLC
Jeffrey Peck............................... 11 4,071 8 727
Gary Lisenbee.............................. 11 4,071 8 727
Massachusetts Financial Services Company
Nevin Chitkara............................. 20 39,027 6 2,345
Steven Gorham.............................. 20 39,027 6 2,345
David Antonelli............................ 7 6,247 6 767
Mondrian Investment Partners Limited
Elizabeth Desmond.......................... 9 2,847 5 3,653
Clive Gillmore............................. 4 2,363 1 1,898
Emma Lewis................................. 6 1,314 0 0
Melissa Platt.............................. 3 540 0 0
SSgA Funds Management, Inc.(Global
Structured Products Group)
Lynn Blake................................. 92 76,000 254 289,000
John Tucker................................ 92 76,000 254 289,000
SSgA Funds Management, Inc.(Passive
Fixed Income Team)
John Kirby................................. 19 26,000 67 38,000
Michael J. Brunell......................... 19 26,000 67 38,000
SSgA Funds Management, Inc.(Multi-Asset
Class Solution Team)
Daniel Farley.............................. 5 3,000 3 670
Christopher J. Goolgasian.................. 5 3,000 3 670

Other Accounts
-----------------------------
Number of Total Assets* in
Adviser/Sub-Adviser and Portfolio Manager Accounts the Accounts
------------------------------------------- ----------- -----------------
BAMCO, Inc.
Ron Baron.................................. 41 $ 747
Cohen & Steers Capital Management, Inc.
Scott Crowe................................ 17 1,527
Joseph Harvey.............................. 42 4,237
Chip McKinley.............................. 11 1,382
Columbia Management Advisors, LLC
Christian K. Stadlinger.................... 29 4
Jarl Ginsberg.............................. 43 4
Delaware Management Company
Christopher Adams.......................... 12 333
Christopher Beck........................... 13 119
Thomas H. Chow............................. 11 3,200
Roger A Early.............................. 45 5,800
Paul Grillo................................ 23 2,100
Cynthia I. Isom............................ 5 545
Francis Morris............................. 13 335
Michael Morris............................. 9 333
Donald Padilla............................. 12 333
Janus Capital Management LLC
Jonathan D. Coleman........................ 4 42
Daniel Riff................................ 4 42
Metropolitan West Capital Management,
LLC
Jeffrey Peck............................... 469 7,115
Gary Lisenbee.............................. 469 7,115
Massachusetts Financial Services Company
Nevin Chitkara............................. 32 9,442
Steven Gorham.............................. 32 9,442
David Antonelli............................ 17 3,266
Mondrian Investment Partners Limited
Elizabeth Desmond.......................... 18 6,401
Clive Gillmore............................. 8 711
Emma Lewis................................. 4 715
Melissa Platt.............................. 3 327
SSgA Funds Management, Inc.(Global
Structured Products Group)
Lynn Blake................................. 294 263,000
John Tucker................................ 294 263,000
SSgA Funds Management, Inc.(Passive
Fixed Income Team)
John Kirby................................. 196 86,000
Michael J. Brunell......................... 196 86,000
SSgA Funds Management, Inc.(Multi-Asset
Class Solution Team)
Daniel Farley.............................. 290 59
Christopher J. Goolgasian.................. 290 59

James N. Mordy............................. 11 13,087 3 555
Andrew J. Shilling......................... 5 2,982 7 1,974

Other Accounts
-----------------------------
Number of Total Assets* in
Adviser/Sub-Adviser and Portfolio Manager Accounts the Accounts
------------------------------------------- ----------- -----------------
T. Rowe Price Associates, Inc.
P. Robert Bartolo.......................... 9 859
Donald J. Peters........................... 28 1,319
Donald J. Easley........................... 2 35
Templeton Investment Counsel, LLC
Peter Nori................................. 28 4,807
Cindy Sweeting............................. 17 4,238
Tina Sadler................................ 9 433
Turner Investment Partners, Inc.
Christopher McHugh......................... 18 930
Wellington Management Company, LLP

James N. Mordy............................. 7 969
Andrew J. Shilling......................... 33 7,372

* in millions of dollars

Other Accounts Managed with Performance-Based Advisory Fees

The following table provides information for other accounts managed by each
portfolio manager, with respect to which the advisory fee is based on account
performance. Information is shown as of December 31, 2010:

Number of Accounts
Adviser/Sub-Adviser and Portfolio Managers With Incentive Fees Total Assets
--------------------------------------------- --------------------- -----------------
BAMCO, Inc. (Ron Baron) 1 $ 60,000,000
Columbia Management Advisors, LLC 0 0
(Christian K. Stadlinger, Jarl Ginsberg)
Cohen & Steers Capital Management, Inc. 2 $ 105,885,000
(Scott Crowe, Joseph Harvey, Chip
McKinley)
Delaware Management Company (Francis X. 0 0
Morris, Christopher S. Adams, Michael S.
Morris, Donald G. Padilla)
Delaware Management Company (Thomas 0 0
H. Chow)
Delaware Management Company (Roger A. 1 $ 546,400,000
Early, Paul Grillo)
Delaware Management Company (Cynthia 0 0
Isom)
Delaware Management Company 0 0
(Christopher Beck)
Janus Capital Management LLC (Jonathan 2 $9,088,050,092
D. Coleman, Daniel Riff)
Massachusetts Financial Services Company 0 0
()
Massachusetts Financial Services Company 0 0
(Nevin Chitkara, Steven Gorham, David
Antonelli)
Metropolitan West Capital Management, 2 $ 115,000,000
LLC (Howard Gleicher)
Mondrian Investment Partners Ltd. (Clive A. 0 0
Gillmore, Elizabeth A. Desmond, Emma R.
E. Lewis, Melissa J. A. Platt)

Number of Accounts
Adviser/Sub-Adviser and Portfolio Managers With Incentive Fees Total Assets
-------------------------------------------- --------------------- --------------
SSgA Funds Management, Inc. (Global 0 0
Structured Products Group)
SSgA Funds Management, Inc. (Passive 0 0
Fixed Income Team)
SSgA Funds Management, Inc. (Multi-Asset 0 0
Class Solutions Team)
T. Rowe Price Associates, Inc.
P. Robert Bartolo 0 0
Donald J. Peters 0 0
Donald J. Easley 0 0
Templeton Investment Counsel, LLC
Peter Nori 0 0
Cindy Sweeting 0 0
Tina Sadler 0 0
Turner Investment Partners, Inc.
Christopher McHugh 5 331,000,000
Wellington Management Company
James Mordy 3 9,591,157,395
Andrew J. Shilling 3 1,678,918,818

Material Conflicts of Interest

Actual or apparent conflicts of interest may arise when a portfolio manager has
day-to-day management responsibilities with respect to more than one investment
account. Portfolio managers who manage other investment accounts in addition to
a Lincoln VIP fund may be presented with the following potential conflicts:

BAMCO, Inc. ("Baron") (LVIP Baron Growth Opportunities Fund)

Conflicts of interest could arise in connection with managing the Fund along
with other funds and clients of BAMCO and its affiliated investment adviser
Baron Capital Management, Inc. ("BCM"). Because of market conditions, client
investment restrictions, adviser imposed investment guidelines and the
consideration of factors such as cash availability and diversification
considerations, not all investment opportunities will be available to the Fund
and all clients at all times. BAMCO has joint trading policies and procedures
designed to ensure that no fund or client is systematically given preferential
treatment over time. The Fund's Chief Compliance Officer monitors allocations
for consistency with this policy annually. Because an investment opportunity
may be suitable for multiple accounts, the Fund may not be able to take full
advantage of that opportunity because the opportunity may be allocated among
many or all of the accounts of clients managed by BAMCO and its affiliate.

To the extent that the Fund's portfolio manager has responsibilities for
managing other client accounts, the portfolio manager may have conflicts of
interest with respect to his time and attention among relevant accounts. In
addition, differences in the investment restrictions or strategies among the
fund and other accounts may cause a portfolio manager to take action with
respect to another account that differs from the action taken with respect to
the Fund. In some cases, another account managed by a portfolio manager may
provide more revenue to BAMCO. While this may create additional conflicts of
interest for the portfolio manager in the allocation of management time,
resources and investment opportunities, BAMCO takes all necessary steps to
ensure that portfolio managers endeavor to exercise his discretion in a manner
that is equitable to the Fund and other accounts.

A conflict could arise when a portfolio manager has an investment in one fund
as opposed to another or has a larger investment in one Fund than in others he
manages. BAMCO or its affiliate may also receive a performance-based fee with
respect to certain accounts.

BAMCO believes that it has policies and procedures in place that address its
potential conflicts of interest. Such policies and procedures address, among
other things, trading practices (e.g., brokerage commissions, cross trading,
aggregation and allocation of transactions, sequential transactions, allocation
of orders for execution to broker-dealers), disclosure of confidential
information and employee trading.

Like other investment professionals with multiple clients, the Fund's portfolio
manager(s) may face certain potential conflicts of interest in connection with
managing both the Fund and other accounts at the same time. CMIA has adopted
compliance policies and procedures that attempt to address certain of the
potential conflicts that portfolio managers face in this regard. Certain of
these conflicts of interest are summarized below.

The management of accounts with different advisory fee rates and/or fee
structures, including accounts that pay advisory fees based on account
performance (performance fee accounts), may raise potential conflicts of
interest for a portfolio manager by creating an incentive to favor higher fee
accounts.

Potential conflicts of interest also may arise when a portfolio manager has
personal investments in other accounts that may create an incentive to favor
those accounts. As a general matter and subject to CMIA's Code of Ethics and
certain limited exceptions, CMIA's investment professionals do not have the
opportunity to invest in client accounts, other than the Columbia Funds. A
portfolio manager who is responsible for managing multiple funds and/or
accounts may devote unequal time and attention to the management of those funds
and/or accounts. The effects of this potential conflict may be more pronounced
where funds and/or accounts managed by a particular portfolio manager have
different investment strategies.

A portfolio manager may be able to select or influence the selection of the
broker/dealers that are used to execute securities transactions for the Fund. A
portfolio manager's decision as to the selection of broker/dealers could
produce disproportionate costs and benefits among the Fund and the other funds
and accounts the portfolio manager manages.

A potential conflict of interest may arise when a portfolio manager buys or
sells the same securities for the Fund and other accounts. On occasions when a
portfolio manager considers the purchase or sale of a security to be in the
best interests of a Fund as well as other accounts, CMIA's trading desk may, to
the extent consistent with applicable laws and regulations, aggregate the
securities to be sold or bought in order to obtain the best execution and lower
brokerage commissions, if any. Aggregation of trades may create the potential
for unfairness to the Fund or another fund or account if a portfolio manager
favors one account over another in allocating the securities bought or sold.

"Cross trades," in which a portfolio manager sells a particular security held
by the Fund to another account (potentially saving transaction costs for both
accounts), could involve a potential conflict of interest if, for example, a
portfolio manager is permitted to sell a security from one account to another
account at a higher price than an independent third party would pay. CMIA has
adopted compliance procedures that provide that any transactions between the
Fund and another fund or account managed by CMIA are to be made at a current
market price, consistent with applicable laws and regulations.

Another potential conflict of interest may arise based on the different
investment objectives and strategies of the Fund and other funds or accounts
managed by its portfolio manager(s). Depending on another account's objectives
and other factors, a portfolio manager may give advice to and make decisions
for the Fund that may differ from advice given, or the timing or nature of
decisions made, with respect to another fund or account. A portfolio manager's
investment decisions are the product of many factors in addition to basic
suitability for the particular account involved. Thus, a portfolio manager may
buy or sell a particular security for certain accounts, and not for the Fund,
even though it could have been bought or sold for the Fund at the same time. A
portfolio manager also may buy a particular security for one or more accounts
when one or more other accounts are selling the security (including short
sales). There may be circumstances when a portfolio manager's purchases or
sales of portfolio securities for one or more accounts or other funds may have
an adverse effect on other accounts or funds, including the Fund.

In addition to executing trades, some brokers and dealers provide portfolio
managers with brokerage and research services (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934), which may result in the
payment of higher brokerage fees than might otherwise be available. These
services may be more beneficial to certain funds or accounts than to others.
Although the payment of brokerage commissions is subject to the requirement
that the portfolio manager determine in good faith that the commissions are
reasonable in relation to the value of the brokerage and research services
provided to the fund, a portfolio manager's decision as to the selection of
brokers and dealers could yield disproportionate costs and benefits among the
funds and/or accounts that he or she manages.

CMIA or an affiliate may provide more services (such as distribution or
recordkeeping) for some types of funds or accounts than for others. In such
cases, a portfolio manager may benefit, either directly or indirectly, by
devoting disproportionate attention to the management of fund and/or accounts
that provide greater overall returns to CMIA and its affiliates.

Additional actual or potential conflicts of interest and certain investment
activity limitations that could affect the fund may arise from the financial
services activities of Ameriprise Financial, Inc. and its affiliates, including
the investment advisory/management services it provides for clients and
customers other than the fund. In this regard, Ameriprise Financial, Inc.is a
major financial services company, engaged in a wide range of financial
activities beyond the mutual fund-related activities of CMIA, including, among
others, banking, broker/dealer (sales and trading), asset management, insurance
and other financial activities. The broad range of financial services
activities of Ameriprise Financial, Inc. and its affiliates may involve
multiple advisory, transactional, lending, financial and other interests in
securities and other instruments, and in companies, that may be bought, sold or
held by the Fund.

Part 1A of CMIA's Form ADV, which it must file with the SEC as an investment
adviser registered under the Investment Advisers Act of 1940, provides
information about CMIA's business, assets under management, affiliates and
potential conflicts of interest. Part 1A of the Form ADV is available online
through the SEC's website at www.adviserinfo.sec.gov.

Portfolio managers may also face other potential conflicts of interest in
managing the Fund and the description above is not a complete description of
every conflict that could be deemed to exist in managing both the fund and
other accounts. In addition, portfolio

managers may also manage other accounts (including their personal assets or the
assets of family members) in their personal capacity. The management of these
accounts may also involve certain of the potential conflicts described above.

Cohen & Steers Capital Management, Inc. ("Cohen & Steers") (LVIP Cohen & Steers
Global Real Estate Fund)

It is possible that conflicts of interest may arise in connection with the
portfolio managers' management of the Fund's investments on the one hand and
the investments of other accounts or vehicles for which the portfolio managers
are responsible on the other.

For example, a portfolio manager may have conflicts of interest in allocating
management time, resources and investment opportunities among the Fund and the
other accounts or vehicles he advises. In addition, due to differences in the
investment strategies or restrictions among the Fund or other accounts, a
portfolio manager may take action with respect to another account that differs
from the action taken with respect to the Fund. In some cases, another account
managed by a portfolio manager may provide more revenue to Cohen & Steers.
While this may appear to create additional conflicts of interest for the
portfolio manager in the allocation of management time, resources and
investment opportunities, Cohen & Steers strives to ensure that portfolio
managers endeavor to exercise their discretion in a manner that is equitable to
all interested persons. In this regard, in the absence of specific
account-related impediments (such as client-imposed restrictions or lack of
available cash), it is the policy of Cohen & Steers to allocated investment
ideas pro-rata to all client accounts with the same primary investment
objective.

In addition, certain of the portfolio managers may from time to time manage one
or more accounts on behalf of Cohen & Steers and its affiliated companies (the
"CNS Accounts"). Certain securities held and traded in the CNS Accounts also
may be held and traded in one or more client accounts. It is the policy of
Cohen & Steers, however, not to put the interests of the CNS Accounts ahead of
the interests of client accounts. Cohen & Steers may aggregate orders of client
accounts with those of the CNS Accounts; however, under no circumstances will
preferential treatment be given to the CNS Accounts. For all orders involving
the CNS Accounts, purchases or sales will be allocated prior to trade
placement, and orders that are only partially filled will be allocated across
all accounts in proportion to the shares each account, including the CNS
Accounts, was designated to receive prior to trading. As a result, it is
expected that the CNS Accounts will receive the same average price as other
accounts included in the aggregated order. Shares will not be allocated or
re-allocated to the CNS Accounts after trade execution or after the average
price is known. In the event so few shares of an order are executed that a
pro-rata allocation is not practical, a rotational system of allocation may be
used; however, the CNS Accounts will not be part of that rotation or receive
shares of a partially filled order other than on a pro-rata basis.

Because certain CNS Accounts are managed with a cash management objective, it
is possible that a security will be sold out of the CNS Accounts but continue
to be held for one or more client accounts. In situations when this occurs,
such security will remain in a client account only if the Advisor, acting in
its reasonable judgment and consistent with its fiduciary duties, believes this
is appropriate for, and consistent with the objectives and profile of, the
client account.

Delaware Management Company ("DMC") (LVIP Delaware Bond Fund, LVIP Delaware
Growth and Income Fund, LVIP Money Market Fund, LVIP Delaware Social Awareness
Fund, LVIP Delaware Special Opportunities Fund)

Material conflicts of interest may arise in connection with any Portfolio
Manager's management of any of the Funds' investments and the investments of
the other accounts managed by the Portfolio Manager. For example, material
conflicts may occur between the investment strategy of a Fund and the
investment strategy of the other accounts managed by the Portfolio Manager, and
material conflicts in allocation of investment opportunities between a Fund and
such other accounts.

One or more of the accounts managed by a portfolio manager may have a
performance-based fee. This compensation structure presents a potential
conflict of interest. The portfolio manager has an incentive to manage such
account so as to enhance its performance, to the possible detriment of other
accounts for which the investment manager does not receive a performance-based
fee.

Janus Capital Management LLC ("Janus") (LVIP Janus Capital Appreciation Fund)

The portfolio managers may manage other accounts with investment strategies
similar to the fund. Those other accounts

may include other Janus funds, private-label mutual funds for which Janus
serves as sub-adviser, and separately managed accounts. Fees earned by Janus
may vary among these accounts, the portfolio managers may personally invest in
some but not all of these accounts, and certain of these accounts may have a
greater impact on their compensation than others. In addition, certain
portfolio managers may also have roles as research analysts for one or more
Janus funds and receive compensation with respect to the analyst role.

These factors could create conflicts of interest because the portfolio managers
may have incentives to favor certain accounts over others, resulting in the
potential for other accounts outperforming the fund. A conflict may also exist
if the portfolio managers identify a limited investment opportunity that may be
appropriate for more than one account, but the fund is not able to take full
advantage of that opportunity due to the need to allocate that opportunity
among multiple accounts. In addition, the portfolio managers may execute
transactions for another account that may adversely impact the value of
securities held by the fund.

However, Janus believes that these conflicts may be mitigated to a certain
extent by the fact that accounts with like investment strategies managed by a
particular portfolio manager are generally managed in a similar fashion,
subject to a variety of exceptions, for example, to account for particular
investment restrictions or policies applicable only to certain accounts,
certain portfolio holdings

that may be transferred in-kind when an account is opened, differences in cash
flows and account sizes, and similar factors. In addition, Janus has adopted
trade allocation procedures that govern allocation of securities among various
Janus accounts.

Massachusetts Financial Services Company ("MFS") (LVIP MFS International Growth
Fund and LVIP MFS Value Fund)

MFS seeks to identify potential conflicts of interest resulting from a
portfolio manager's management of both the Fund and other accounts, and has
adopted policies and procedures designed to address such potential conflicts.

The management of multiple funds and accounts (including proprietary accounts)
may give rise to potential conflicts of interest if the funds and accounts have
different objectives and strategies, benchmarks, time horizons and fees as a
portfolio manager must allocate his or her time and investment ideas across
multiple funds and accounts. In certain instances, there may be securities
which are suitable for the fund's portfolio as well as for accounts of MFS or
its subsidiaries with similar investment objectives. A fund's trade allocation
policies may give rise to conflicts of interest if the fund's orders do not get
fully executed or are delayed in getting executed due to being aggregated with
those of other accounts of MFS or its subsidiaries. A portfolio manager may
execute transactions for another found or account that may adversely affect the
value of the fund's investments. Investments selected for funds or accounts
other than the fund may outperform investments selected for the fund.

When two or more clients are simultaneously engaged in the purchase or sale of
the same security, the securities are allocated among clients in a manner
believed by MFS to be fair and equitable to each. It is recognized that in some
cases this system could have a detrimental effect on the price or volume of the
security as far as the fund is concerned. In most cases, however, MFS believes
that the fund's ability to participate in volume transactions will product
better executions for the fund.

MFS and/or a portfolio manager may have a financial incentive to allocate
favorable or limited opportunity investments or structure the timing of
investments to favor accounts other than the fund, for instance, those that pay
a higher advisory fee and/or have a performance adjustment and/or include an
investment by the portfolio manager of a signficant percentage of the portfolio
manager's assets.

Metropolitan West Capital Management, LLC ("MetWest Capital") (LVIP Wells Fargo
Intrinsic Value Fund)

Portfolio managers generally face two types of conflicts of interest: (1)
conflicts between and among the interests of the various accounts they manage,
and (2) conflicts between the interests of the accounts they manage and their
own personal interests. The policies of MetWest Capital require that portfolio
managers treat all accounts they manage equitably and fairly in the face of
such real or potential conflicts.

The management of multiple Funds and other accounts may require the portfolio
manager to devote less than all of his or her time to a Fund, particularly if
the Funds and accounts have different objectives, benchmarks and time horizons.
The portfolio manager may also be required to allocate his or her investment
ideas across multiple Funds and accounts. In addition, if a portfolio manager
identifies a limited investment opportunity, such as an initial public offering
that may be suitable for more than one Fund or other account, a Fund may not be
able to take full advantage of that opportunity due to an allocation of that
investment across all eligible Funds and accounts. Further, security purchase
and sale orders for multiple accounts often are aggregated for purpose of
execution. Although such aggregation generally benefits clients, it may cause
the price or brokerage costs to be less favorable to a particular client than
if similar transactions were not being executed concurrently for other
accounts. It may also happen that a Fund's advisor or sub-advisor will
determine that it would be in the best interest, and consistent with the
investment policies, of another account to sell a security (including by means
of a short sale) that a Fund holds long, potentially resulting in a decrease in
the market value of the security held by the Fund.

MetWest Capital does not receive a performance fee for its management of the
Fund. MetWest Capital and/or a portfolio manager may have an incentive to
allocate favorable or limited opportunity investments or structure the timing
of investments to favor accounts other than the Funds - for instance, those
that pay a higher advisory fee and/or have a performance fee. The policies of
MetWest Capital, however, require that portfolio managers treat all accounts
they manage equitably and fairly.

As noted above, portfolio managers may also experience certain conflicts
between the interests of the accounts they manage and their own personal
interests. The structure of a portfolio manager's or an investment advisor's
compensation may create an incentive for the manager or advisor to favor
accounts whose performance has a greater impact on such compensation. The
portfolio manager may, for example, have an incentive to allocate favorable or
limited opportunity investments or structure the timing of investments to favor
such accounts. Similarly, if a portfolio manager holds a larger personal
investment in one Fund than he or she does in another, the portfolio manager
may have an incentive to favor the Fund in which he or she holds a larger
stake.

MetWest Capital may engage in cross trades, in which one Fund sells a
particular security to another Fund or account (potentially saving transaction
costs for both accounts). Cross trades may pose a potential conflict of
interest if, for example, one account sells a security to another account at a
higher price than an independent third party would pay.

In general MetWest Capital has policies and procedures to address the various
potential conflicts of interest described above. MetWest Capital has policies
and procedures designed to ensure that portfolio managers have sufficient time
and resources to devote to the various accounts they manage. Similarly, MetWest
Capital has policies and procedures designed to ensure that investments and
investment opportunities are allocated fairly across accounts, and that the
interests of client accounts are placed ahead of a portfolio

manager's personal interests. However, there is no guarantee that such
procedures will detect or address each and every situation where a conflict
arises.

Mondrian Investment Partners Limited ("Mondrian") (LVIP Mondrian International
Value Fund)

Mondrian Investment Partners Limited ("Mondrian") has a fiduciary duty to its
clients and as such must identify and take steps to mitigate potential
conflicts of interest.

A conflict of interest arises when Mondrian and/or its employees have a
competing professional or personal interest which could affect their ability to
act in the best interests of Mondrian's clients. A conflict could exist even if
no unethical or improper act results from it.

The UK regulator, the Financial Services Authority, requires regulated firms to
identify conflicts of interest and establish, implement and maintain an
effective written conflicts of interest policy. Mondrian is also registered
with the Securities and Exchange Commission (SEC) which has similar
requirements for identification and management of conflicts of interest.

Mondrian maintains and operates various policies and procedures which are
designed to prevent conflicts of interest materializing and damaging the
interests of our clients.

The purpose of this conflicts of interest policy is to outline Mondrian's
approach to the identification, management, recording and where relevant,
disclosure of conflict of interests.

Identifying Conflicts of Interest

For the purpose of identifying conflicts of interest that may arise in the
course of providing a service to our clients, we have considered whether
Mondrian or its employees are, directly or indirectly, likely to:

o Make a financial gain, or avoid a financial loss, at the expense of the
client;

o Have an interest in the outcome of a service provided to a client or in a
transaction carried out on behalf of the client, which is distinct from the
client's interest in that outcome;

o Have a financial or other incentive to favor the interest of one client or
group of clients over the interest of another client or group of clients;

o Receive from a person other than the client an inducement in relation to
the service provided to the client, in the form of monies, goods or
services, other than the standard fee for that service.

Monitoring of Compliance with Conflicts of Interest Procedures

Mondrian maintains a Conflicts of Interest Register that lists all potential
conflicts of interest that have been identified. Any conflicts arising are
logged immediately in the Conflicts of Interest Register.

Mondrian has written policies and procedures addressing each conflict
identified in the Register. These policies and procedures are designed to
manage the potential conflict so that the interests of clients are always put
ahead of Mondrian or its employees.

Where a conflict has arisen, steps are taken to ensure that the conflict either
does not arise again or its properly managed so that the client interests
remain paramount. These details are also recorded in the Register.

Mondrian's Compliance Monitoring Program incorporates periodic reviews of all
areas where conflicts of interest might arise. Any apparent violations of the
procedures designed to manage conflicts are investigated and reported to the
Chief Compliance Officer, who will determine any action necessary.

Any material matters would be reported to senior management and the Mondrian
Compliance Committee and, where required, any relevant regulator.

Disclosure of Potential Conflicts of Interest

Mondrian acts solely as an investment manager and does not engage in any other
business activities. The following is a list of some potential conflicts of
interest that can arise in the course of normal investment management business
activities:

o Access to non-public information

o Allocation of aggregated trades

o Allocation of investment opportunities

o Allocation of IPO opportunities

o "Cherry picking" (inappropriate attempts to improve the appearance of a
portfolio)

o Dealing in investments as agent for more than one party

o Dealing in investments as principal in connection with the provision of
seed capital for Mondrian sponsored Limited Partnerships and Alpha Funds

o Directorships and external business arrangements

o Dual agency

o Employee compensation

o Employee personal account dealing

o Gifts and entertainment

o Investment in shares issued by companies who are clients of Mondrian.

o Management of investment capability

o Performance fees

o Portfolio holdings disclosure

o Portfolio pumping

o Pricing and valuation

o Proxy voting

o Relationships with consultants

o Side-by-side management of hedge funds (Mondrian Alpha Funds)

o Soft dollar arrangements

o "Step out trades" (where a broker shares commission with a third party)

o Transactions with affiliated brokers

o "Window dressing" (inappropriate attempts to improve the appearance of
portfolio performance)

Mondrian has separately documented policies and procedures in place to address
each of these potential conflicts of interest.

SSgA Funds Management, Inc. ("SSgA FM") (LVIP SSgA Bond Index Fund, LVIP SSgA
Developed International 150 Fund, LVIP SSgA Emerging Markets 100 Fund, LVIP
SSgA International Index Fund, LVIP SSgA Large Cap 100 Fund, LVIP SSgA S&P 500
Index Fund and SSgA Small-Cap Index Fund, LVIP SSgA Small-Mid Cap 200 Fund)

A portfolio manager that has responsibility for managing more than one account
may be subject to potential conflicts of interest because he or she is
responsible for other accounts in addition to the Fund. Those conflicts could
include preferential treatment of one account over others in terms of: (a) the
Portfolio Manager's execution of different investment strategies for various
accounts; or (b) the allocation of investment opportunities. SSgA FM has
adopted policies and procedures designed to address these potential material
conflicts. For instance, portfolio managers are normally responsible for all
accounts within a certain investment discipline, and do not, absent special
circumstances, differentiate among the various accounts when allocating
resources. Additionally, SSgA FM and its advisory affiliates have processes and
procedures for allocating investment opportunities among portfolios that are
designed to provide a fair and equitable allocation among the portfolio
accounts for multiple clients. These accounts may include registered investment
companies, other types of pooled accounts (e.g., collective investment funds),
and separate accounts (i.e., accounts managed on behalf of individuals or
public or private institutions). Portfolio managers make investment decisions
for each account based on the investment objectives and policies and other
relevant investment considerations applicable to that portfolio.

A potential conflict of interest may arise as a result of the portfolio
managers' responsibility for multiple accounts with similar investment
guidelines. Under these circumstances, a potential investment may be suitable
for more than one of the portfolio managers' accounts, but the quantity of the
investment available for purchase is less than the aggregate amount the
accounts would ideally devote to the opportunity. Similar conflicts may arise
when multiple accounts seek to dispose of the same investment. The portfolio
managers may also manage accounts whose objectives and policies differ from
that of the Funds. These differences may be such that under certain
circumstances, trading activity appropriate for one account managed by the
portfolio manager may have adverse consequences for another account managed by
the portfolio manager. For example, an account may sell a significant position
in a security, which could cause the market price of that security to decrease,
while a Fund maintained its position in that security.

A potential conflict may arise when the Portfolio Manager is responsible for
accounts that have different advisory fees - the difference in fees could
create an incentive for the Portfolio Manager to favor one account over
another, for example, in terms of access to investment opportunities. This
conflict may be heightened if an account is subject to a performance-based fee.
Another potential conflict may arise when the Portfolio Manager has an
investment in one or more accounts that participates in transactions with other
accounts. His or her investment(s) may create an incentive for the portfolio
manager to favor one account over another. SSgA FM has

adopted policies and procedures reasonably designed to address these potential
material conflicts. For instance, portfolio managers within SSgA FM are
normally responsible for all accounts within a certain investment discipline,
and do not, absent special circumstances, differentiate among the various
accounts when allocating resources. Special circumstances refers to specific
guidelines and prohibitions applicable to one account, but not others.
Additionally, SSgA FM and its advisory affiliates have processes and procedures
for allocating investment opportunities among portfolios that are designed to
provide a fair and equitable allocation.

T. Rowe Price Associates, Inc. ("T. Rowe Price") (LVIP T. Rowe Price Growth
Stock Fund and T. Rowe Price Structured Mid-Cap Growth Fund)

Portfolio managers at T. Rowe Price typically manage multiple accounts. These
accounts may include, among others, mutual funds, separate accounts (assets
managed on behalf of institutions such as pension funds, colleges and
universities, foundations), and commingled trust accounts. Portfolio managers
make investment decisions for each portfolio based on the investment
objectives, policies, practices and other relevant investment considerations
that the managers believe are applicable to that portfolio. Consequently,
portfolio managers may purchase (or sell) securities for one portfolio and not
another portfolio. T. Rowe Price has adopted brokerage and trade allocation
policies and procedures which it believes are reasonably designed to address
any potential conflicts associated with managing multiple accounts for multiple
clients.

T. Rowe Price does not anticipate experiencing any conflicts in managing the
funds in relation to its discretionary authority over any other accounts.
Sub-advised fund procedures are incorporated into or covered by general
compliance manuals and internal control policies and procedures kept by each
separate business unit that services the funds. T. Rowe Price believes that
these polices and procedures are adequate to address any potential conflicts of
interest between and among its clients in its investment advisory business.
Procedures for the identification and management of conflicts of interest are
incorporated into certain elements of our compliance program where such
conflicts may be present (e.g., Trade Allocation Guidelines, Proxy Voting
Polices and Procedures, Code of Ethics, etc.). In addition, conflicts of
interest are addressed through internal controls, and where appropriate, the
separation of functions and duties within the business units.

Templeton Investment Counsel, LLC ("Templeton") (LVIP Templeton Growth Fund)

The management of multiple funds, including the Sub-Advised Funds, and accounts
may also give rise to potential conflicts of interest if the funds and other
accounts have different objectives, benchmarks, time horizons, and fees as the
portfolio manager must allocate his or her time and investment ideas across
multiple funds and accounts. The manager seeks to manage such competing
interests for the time and attention of portfolio managers by having portfolio
managers focus on a particular investment discipline. Most other accounts
managed by a portfolio manager are managed using the same investment strategies
that are used in connection with the management of the Fund. Accordingly,
portfolio holdings, position sizes, and industry and sector exposures tend to
be similar across similar portfolios, which may minimize the potential for
conflicts of interest. As noted above, the separate management of the trade
execution and valuation functions from the portfolio management process also
helps to reduce potential conflicts of interest. However, securities selected
for funds or accounts other than the Fund may outperform the securities
selected for the Sub-Advised Funds. Moreover, if a portfolio manager identifies
a limited investment opportunity that may be suitable for more than one fund or
other account, the Sub-Advised Funds may not be able to take full advantage of
that opportunity due to an allocation of that opportunity across all eligible
funds and other accounts. The manager seeks to manage such potential conflicts
by using procedures intended to provide a fair allocation of buy and sell
opportunities among funds and other accounts.

The structure of a portfolio manager's compensation may give rise to potential
conflicts of interest. A portfolio manager's base pay and bonus tend to
increase with additional and more complex responsibilities that include
increased assets under management. As such, there may be an indirect
relationship between a portfolio manager's marketing or sales efforts and his
or her bonus.

Finally, the management of personal accounts by a portfolio manager may give
rise to potential conflicts of interest. While the funds and the manager have
adopted a code of ethics which they believe contains provisions reasonably
necessary to prevent a wide range of prohibited activities by portfolio
managers and others with respect to their personal trading activities, there
can be no assurance that the code of ethics addresses all individual conduct
that could result in conflicts of interest.

The manager and the Sub-Advised Funds have adopted certain compliance
procedures that are designed to address these, and other, types of conflicts.
However, there is no guarantee that such procedures will detect each and every
situation where a conflict arises.

Turner Investment Partners, Inc. ("Turner") (LVIP Turner Mid-Cap Growth Fund)

As is typical for many money managers, potential conflicts of interest may
arise related to Turner's management of accounts including the fund, where not
all accounts are able to participate in a desired IPO, or other limited
opportunity, relating to use of soft dollars and other brokerage practices,
related to the voting of proxies, employee personal securities trading, and
relating to a variety of other circumstances. In all cases, however, Turner
believes it has written policies and procedures in place reasonably designed to
prevent violations of the federal securities laws and to prevent material
conflicts of interest from arising. Please see Turner's Form ADV, Part II for a
description of some of its policies and procedures in this regard.

Wellington Management Company, LLP ("Wellington") (LVIP Capital Growth Fund and
LVIP Mid-Cap Value Fund)

Individual investment professionals at Wellington Management manage multiple
accounts for multiple clients. These accounts may include mutual funds,
separate accounts (assets managed on behalf of institutions, such as pension
funds, insurance companies, foundations, or separately managed account programs
sponsored by financial intermediaries), bank common trust accounts, and hedge
funds. Each Fund's manager listed in the prospectus who are primarily
responsible for the day-to-day management of the Funds ("Portfolio Managers")
generally manages accounts in several different investment styles. These
accounts may have investment objectives, strategies, time horizons, tax
considerations and risk profiles that differ from those of the Funds. The
Portfolio Managers make investment decisions for each account, including the
relevant Fund, based on the investment objectives, policies, practices,
benchmarks, cash flows, tax and other relevant investment considerations
applicable to that account. Consequently, the Portfolio Managers may purchase
or sell securities, including IPOs, for one account and not another account,
and the performance of securities purchased for one account may vary from the
performance of securities purchased for other accounts. Alternatively, these
accounts may be managed in a similar fashion to the relevant Fund and thus the
accounts may have similar, and in some cases nearly identical, objectives,
strategies and/or holdings to that of the relevant Fund.

A Portfolio Manager or other investment professionals at Wellington Management
may place transactions on behalf of other accounts that are directly or
indirectly contrary to investment decisions made on behalf of the relevant
Fund, or make investment decisions that are similar to those made for the
relevant Fund, both of which have the potential to adversely impact the
relevant Fund depending on market conditions. For example, an investment
professional may purchase a security in one account while appropriately selling
that same security in another account. Similarly, a Portfolio Manager may
purchase the same security for the relevant Fund and one or more other accounts
at or about the same time. In those instances the other accounts will have
access to their respective holdings prior to the public disclosure of the
relevant Fund's holdings. In addition, some of these accounts have fee
structures, including performance fees, which are or have the potential to be
higher, in some cases significantly higher, than the fees Wellington Management
receives for managing the Funds. Because incentive payments paid by Wellington
Management to the Portfolio Managers are tied to revenues earned by Wellington
Management, and, where noted, to the performance achieved by the manager in
each account, the incentives associated with any given account may be
significantly higher or lower than those associated with other accounts managed
by a given Portfolio Manager. Finally, the Portfolio Managers may hold shares
or investments in the other pooled investment vehicles and/or other accounts
identified above.

Wellington Management's goal is to meet its fiduciary obligation to treat all
clients fairly and provide high quality investment services to all of its
clients. Wellington Management has adopted and implemented policies and
procedures, including brokerage and trade allocation policies and procedures,
which it believes address the conflicts associated with managing multiple
accounts for multiple clients. In addition, Wellington Management monitors a
variety of areas, including compliance with primary account guidelines, the
allocation of IPOs, and compliance with the firm's Code of Ethics, and places
additional investment restrictions on investment professionals who manage hedge
funds and certain other accounts. Furthermore, senior investment and business
personnel at Wellington Management periodically review the performance of
Wellington Management's investment professionals. Although Wellington
Management does not track the time an investment professional spends on a
single account, Wellington Management does periodically assess whether an
investment professional has adequate time and resources to effectively manage
the investment professional's various client mandates.

Wilshire Associates Incorporated ("Wilshire") (LVIP Wilshire Conservative
Profile Fund, LVIP Wilshire Moderate Profile Fund, LVIP Wilshire Moderately
Aggressive Profile Fund, LVIP Wilshire Aggressive Profile Fund, LVIP Wilshire
2010 Profile Fund, LVIP Wilshire 2020 Profile Fund, LVIP Wilshire 2030 Profile
Fund, LVIP Wilshire 2040 Profile Fund)

Each of the Profile Funds invests substantially all of its assets in other
mutual funds (underlying funds) through a structure known as "fund of funds."
It is the policy of Wilshire that all decisions concerning the selection of
funds be based solely on the best interests of each Profile Fund and its
investors, and without regard to any revenue that Wilshire receives, might
receive, or has received in the past, directly or indirectly, from portfolio
managers or funds for services provided by any Wilshire business unit.
Accordingly, Wilshire operates Wilshire Funds Management, Wilshire Analytics,
Wilshire Consulting and Wilshire Private Markets as separate business units.
Each business unit has its own leadership team and professional and support
staff. Moreover, Wilshire has adopted policies and procedures that are designed
to provide full disclosure of all potential, actual or perceived conflicts and
to prevent staff from having internal access to information that otherwise
might appear to compromise their objectivity.

In addition, personal accounts may give rise to potential conflicts of interest
and must be maintained and conducted pursuant to Wilshire's Code of Ethics.
Additional information regarding conflicts of interest can be found in our Form
ADV Part II.

Compensation Structures and Methods

Information regarding each portfolio manager's compensation is attached hereto
as Appendix C.

Beneficial Interest of Portfolio Managers

Information regarding securities of each Lincoln VIP fund beneficially owned,
if any, by portfolio managers is disclosed below. In order to own securities of
a fund, a portfolio manager would need to own a Lincoln Life variable life
insurance policy or variable annuity contract. Portfolio managers are not
required to own securities of a fund. In addition, although the level of a
portfolio manager's

securities ownership may be an indicator of his or her confidence in the
portfolio's investment strategy, it does not necessarily follow that a
portfolio manager who owns few or no securities has any less confidence or is
any less concerned about the applicable portfolio's performance.

As of the funds' fiscal year ended, December 31, 2010, no portfolio manager of
any fund beneficially owned securities of any fund.

Principal Underwriter

Lincoln Financial Distributors, Inc. ("LFD"), 130 North Radnor-Chester Road,
Radnor, Pennsylvania 19087, serves as the principal underwriter for the Trust
pursuant to a Principal Underwriting Agreement with the Trust dated June 1,
2007. Under the agreement, the Trust has appointed LFD as the principal
underwriter and distributor of the Trust to sell shares of each class of each
fund series of the Trust at net asset value in a continuous offering to
insurance company separate accounts or employer-sponsored products. LFD will
not retain underwriting commissions from the sale of fund shares. From January
1, 2010 through December 31, 2010, LFD received $19,125,575 in compensation
from the Trust.

Administration Agreement

The Lincoln Variable Insurance Products Trust ("Trust") has entered into an
Administration Agreement (the Administration Agreement) with Lincoln National
Life Insurance Company (Lincoln Life), pursuant to which Lincoln Life provides
various administrative services necessary for the operation of the funds. These
services include, among others: coordination of all service providers;
providing personnel and office space; maintenance of each fund's books and
records; general accounting monitoring and oversight; preparation of tax
returns and reports; preparing and arranging for the distribution of all
shareholder materials; preparing and coordinating the filing of all materials
with the SEC and other federal and state regulatory authorities. As
reimbursement for the cost of providing these administrative services for the
year ended December 31, 2010, the Trust paid Lincoln Life $1,045,236 which was
allocated to the funds based on average net assets. In addition, for the year
ended December 31, 2010, the Trust reimbursed Lincoln Life for the cost of
legal and corporate secretary services in the amount of $321,094. Beginning
January 1, 2011, the Trust will pay Lincoln Life a monthly fee which will be
.01% of the average daily net assets of each Fund during the month and will
reimburse Lincoln Life for the cost of legal services.

Accounting Agreement

The Trust has entered into a fund accounting and financial administration
services agreement (the Accounting Agreement) with The Bank of New York Mellon
(Mellon), effective October 1, 2007, pursuant to which Mellon provides certain
accounting services for the funds. Services provided under the Accounting
Agreement include, among others, functions related to calculating the daily net
asset values of each fund's shares, providing financial reporting information,
regulatory compliance testing and other related accounting services. For these
services, the funds pay Mellon an asset-based fee, subject to certain fee
minimums, plus certain out-of-pocket expenses as set forth in the following
table. The fees are payable on a monthly basis.

Annual Rate as a Percent of Average Daily Net Assets *
-------------------------------------------------------
0.035% of first $15 billion
0.0325% of next $5 billion
0.030% of next $5 billion
0.025% of next $5 billion
0.020% over $30 billion

* Pursuant to the Accounting Agreement, Mellon receives the following minimum
annual fees: Year 1 - $3,000,000; Year 2 - $2,700,000; Year 3 - $2,300,000;
Year 4 - $2,300,000; Year 5 - $2,300,000.

Code of Ethics
The Trust, LIA and the sub-advisers have each adopted a Code of Ethics pursuant
to Rule 17j-1 under the 1940 Act. The board of trustees has reviewed and
approved these Codes of Ethics. Subject to certain limitations and procedures,
these codes permit personnel that they cover, including employees of LIA and
the sub-advisers (if applicable) who regularly have access to information about
securities purchase for the funds, to invest in securities for their own
accounts. This could include securities that may be purchased by funds. The
codes are intended to prevent these personnel from taking inappropriate
advantage of their positions and to prevent fraud upon the fund. The Trust's
Code of Ethics requires reporting to the board of trustees on compliance
violations.

Description of Shares

The Trust was organized as a Delaware statutory trust on February 1, 2003 and
is registered with the SEC as an open-end, management investment company. The
Trust's Certificate of Trust is on file with the Secretary of State of
Delaware. The Trust's Declaration of Trust authorizes the board of trustees to
issue an unlimited number of shares, which are shares of beneficial interest,
without par value. The Trust consists of 62 funds organized as separate series
of shares. The Declaration of Trust authorizes the board of trustees to divide
or redivide any unissued shares of the Trust into one or more additional series
by setting or changing in any one or more respects their respective
preferences, conversion or other rights, voting power, restrictions,
limitations as to dividends, qualifications, and terms and conditions of
redemption, and to establish separate classes of shares.

Each fund currently offers two classes of shares: the Standard Class and the
Service Class. The two classes of shares are identical, except that Service
Class shares are subject to a distribution (Rule 12b-1) fee. The Trust's 12b-1
plan allows each fund to pay distribution fees of up to 0.35% per year to those
organizations that sell and distribute Service Class shares and provide
services to Service Class shareholders and contract owners. The 12b-1 plan for
the Service Class is discussed in the "Rule 12b-1 Plan" section of this SAI.

Each fund's shares (all classes) have no subscription or preemptive rights and
only such conversion or exchange rights as the board of trustees may grant in
its discretion. When issued for payment as described in the prospectus and this
SAI, the shares will be fully paid and non-assessable, which means that the
consideration for the shares has been paid in full and the issuing fund may not
impose levies on shareholders for more money. In the event of a liquidation or
dissolution of the Trust, shareholders of each fund are entitled to receive the
assets available for distribution belonging to that fund, and a proportionate
distribution, based upon the relative asset values of the respective funds, of
any general assets not belonging to any particular fund which are available for
distribution, subject to any differential class expenses.

Rule 18f-2 under the 1940 Act provides that any matter required to be submitted
to the holders of outstanding voting securities of an investment company such
as the Trust shall not be deemed to have been effectively acted upon unless
approved by the holders of a majority of the outstanding shares of each fund
affected by the matter. For purposes of determining whether the approval of a
majority of the outstanding shares of a fund will be required in connection
with a matter, a fund will be deemed to be affected by a matter unless it is
clear that the interests of each fund in the matter are identical, or that the
matter does not affect any interest of the fund. Under Rule 18f-2, the approval
of an investment advisory agreement or any change in investment policy would be
effectively acted upon with respect to a fund only if approved by a majority of
the outstanding shares of that fund. However, Rule 18f-2 also provides that the
ratification of independent public accountants (for funds having the same
independent accountants), the approval of principal underwriting contracts, and
the election of trustees may be effectively acted upon by shareholders of the
Trust voting without regard to individual funds. In such matters, all shares of
the Trust have equal voting rights.

Unless otherwise required by the 1940 Act, ordinarily it will not be necessary
for the Trust to hold annual meetings of shareholders. As a result,
shareholders may not consider each year the election of trustees or the
appointment of auditors. However, the holders of at least 10% of the shares
outstanding and entitled to vote may require the Trust to hold a special
meeting of shareholders for purposes of removing a trustee from office.
Shareholders may remove a trustee by the affirmative vote of two-thirds of the
Trust's outstanding voting shares. In addition, the board of trustees will call
a meeting of shareholders for the purpose of electing trustees if, at any time,
less than a majority of the trustees then holding office have been elected by
shareholders.

Control Persons and Principal Holders of Securities

Each fund sells its shares of beneficial interest directly or indirectly to
certain life insurance companies (Insurance Companies) for allocation to
certain of their separate accounts established for the purpose of funding
variable annuity contracts and variable life insurance policies (collectively,
Variable Contract). These Insurance Companies include, without limitation, (1)
The Lincoln National Life Insurance Company (Lincoln Life), an Indiana
insurance company, at 1300 South Clinton Street, Fort Wayne, IN 46802; (2)
except for the LVIP Delaware Special Opportunities Fund, Lincoln Life & Annuity
Company of New York (Lincoln New York), a New York insurance company, at 100
Madison Street, Suite 1860, Syracuse, NY 13202-2802; and (3) with respect to
the LVIP Baron Growth Opportunities Fund, six unaffiliated insurance companies.

The Insurance Companies as record owners are entitled to be present and vote
fund shares at any shareholder meeting. However, under the 1940 Act, the
Insurance Companies are required to vote the fund shares at shareholder
meetings according to the instructions received from the contract owners of the
Variable Contract. Fund shares held in an Insurance Company separate account
for which no timely instructions are received will, subject to fair
representation requirements, be voted by the Insurance Company in the same
proportion as the voting instructions which are received from all other
contract owners participating in that separate account. As a result of this
"echo voting," the instructions of a small number of contract owners may
determine the outcome of matters subject to shareholder vote. Please refer to
the prospectus and SAI for your variable annuity or variable life contract for
additional information on the voting of shares at fund shareholder meetings.

The funds may sell their shares directly to the LVIP fund of funds, the shares
of which are owned by Lincoln Life and Lincoln New York. The LVIP fund of funds
will vote shares of funds that they hold in the same proportion as the vote of
all other holders of shares of such fund, as is described by Section
12(d)(1)(E)(iii)(aa) of the 1940 Act.

25% Plus Record Holders

As of March 9, 2011, the following entities held of record more than 25% of
each fund's outstanding shares as noted below:

Fund and Shareholder Total Share Ownership
------------------------------------------------------ ----------------------
LVIP Baron Growth Opportunities Fund
Lincoln Life................................. 68.91%
LVIP Capital Growth Fund
Lincoln Life................................. 99.08%
LVIP Cohen & Steers Global Real Estate Fund
Lincoln Life................................. 68.24%
LVIP Columbia Value Opportunities Fund
Lincoln Life................................. 32.50%
LVIP Moderately Aggressive Profile Fund...... 25.21%
LVIP Delaware Bond Fund
Lincoln Life................................. 83.17%
LVIP Delaware Growth and Income Fund
Lincoln Life................................. 99.56%
LVIP Delaware Social Awareness Fund
Lincoln Life................................. 98.61%
LVIP Delaware Special Opportunities Fund
Lincoln Life................................. 91.11%
LVIP Janus Capital Appreciation Fund
Lincoln Life................................. 99.18%
LVIP MFS International Growth Fund
Lincoln Life................................. 45.13%
LVIP Moderately Aggressive Profile Fund...... 26.74%
LVIP MFS Value Fund
Lincoln Life................................. 71.60%
LVIP Mid-Cap Value Fund
Lincoln Life................................. 92.51%
LVIP Mondrian International Value Fund
Lincoln Life................................. 81.74%
LVIP Money Market Fund
Lincoln Life................................. 94.65%
LVIP SSgA S&P 500 Index Fund
Lincoln Life................................. 84.08%
LVIP SSgA Small-Cap Index Fund
Lincoln Life................................. 89.81%
LVIP SSgA International Index Fund
Lincoln Life................................. 74.45%
LVIP SSgA Bond Index Fund
Lincoln Life................................. 83.13%
LVIP SSgA Large Cap 100 Fund
Lincoln Life................................. 50.22%

Fund and Shareholder Total Share Ownership
------------------------------------------------------------- ----------------------
LVIP SSgA Small-Mid Cap 200 Fund
Lincoln Life........................................ 65.06%
LVIP SSgA Global Tactical Allocation Fund........... 27.04%
LVIP SSgA Developed International 150 Fund
Lincoln Life........................................ 49.68%
LVIP SSgA Emerging Markets 100 Fund
Lincoln Life........................................ 73.86%
LVIP T. Rowe Price Growth Stock Fund
Lincoln Life........................................ 41.62%
LVIP Moderately Aggressive Profile Fund............. 29.07%
LVIP T. Rowe Price Structured Mid-Cap Growth Fund
Lincoln Life........................................ 81.55%
LVIP Templeton Growth Fund
Lincoln Life........................................ 78.56%
LVIP Turner Mid-Cap Growth Fund
Lincoln Life........................................ 88.25%
LVIP Wells Fargo Intrinsic Value Fund
Lincoln Life........................................ 91.03%

5% Plus Record Holders

As of March 9, 2011, the shareholders listed below held of record 5% or more of
a class of a fund's outstanding shares

Fund / Shareholder - Share Class Share Ownership
------------------------------------------------------------------------------- ----------------
LVIP Baron Growth Opportunities Fund
Lincoln Life - Service Class.......................................... 82.50%
LVIP Conservative Profile Fund - Standard Class....................... 15.46%
LVIP Moderate Profile Fund - Standard Class........................... 17.65%
LVIP Moderately Aggressive Profile Fund - Standard Class.............. 34.55%
LVIP 2010 Profile Fund - Standard Class............................... 22.45%
Lincoln New York - Service Class...................................... 5.48%
LVIP Capital Growth Fund
Lincoln Life - Service Class.......................................... 98.65%
Lincoln Life - Standard Class......................................... 99.66%
LVIP Cohen & Steers Global Real Estate Fund...........................
Lincoln Life - Service Class.......................................... 92.96%
Lincoln Life - Standard Class......................................... 55.67%
LVIP 2010 Profile Fund - Standard Class............................... 16.90%
LVIP Wilshire Moderately Aggressive Profile Fund - Standard Class..... 17.34%
Lincoln New York - Service Class...................................... 7.04%
LVIP Columbia Value Opportunities Fund
Lincoln Life - Standard Class......................................... 22.45%
Lincoln Life - Service Class.......................................... 59.04%
Lincoln New York - Service Class...................................... 40.96%
LVIP Moderate Profile Fund - Standard Class........................... 11.82%
LVIP Moderately Aggressive Profile Fund - Standard Class.............. 34.75%
LVIP 2010 Profile Fund - Standard Class............................... 22.59%

Fund / Shareholder - Share Class Share Ownership
---------------------------------------------------------------------- ----------------
LVIP Delaware Bond Fund
Lincoln Life - Service Class................................. 97.09%
Lincoln Life - Standard Class................................ 64.35%
LVIP Moderate Profile Fund - Standard Class.................. 10.97%
LVIP Moderately Aggressive Profile Fund - Standard Class..... 14.41%
LVIP 2010 Profile Fund - Standard Class...................... 8.29%
LVIP Delaware Growth and Income Fund
Lincoln Life - Standard Class................................ 99.69%
Lincoln Life - Service Class................................. 97.59%
LVIP Delaware Social Awareness Fund
Lincoln Life - Standard Class................................ 99.14%
Lincoln Life - Service Class................................. 93.45%
Lincoln New York - Service Class............................. 6.55%
LVIP Delaware Special Opportunities Fund
Lincoln Life - Standard Class................................ 90.78%
Lincoln Life - Service Class................................. 95.04%
LVIP Janus Capital Appreciation Fund
Lincoln Life - Standard Class................................ 99.51%
Lincoln Life - Service Class................................. 97.60%
LVIP MFS International Growth Fund
Lincoln Life - Service Class................................. 96.39%
Lincoln Life - Standard Class................................ 21.90%
LVIP Moderately Aggressive Profile Fund - Standard Class..... 38.85%
LVIP Moderate Profile Fund - Standard Class.................. 8.21%
LVIP 2010 Profile Fund - Standard Class...................... 29.94%
LVIP MFS Value Fund
Lincoln Life - Service Class................................. 94.78%
Lincoln Life - Standard Class................................ 31.48%
LVIP Moderately Aggressive Profile Fund - Standard Class..... 33.14%
LVIP Moderate Profile Fund................................... 9.04%
LVIP 2010 Profile Fund - Standard Class...................... 24.92%
Lincoln New York - Service Class............................. 5.22%
LVIP Mid-Cap Value Fund
Lincoln Life - Service Class................................. 84.44%
Lincoln Life - Standard Class................................ 98.97%
Lincoln New York - Service Class............................. 15.56%
LVIP Mondrian International Value Fund
Lincoln Life - Service Class................................. 94.51%
Lincoln Life - Standard Class................................ 78.04%
LVIP Moderately Aggressive Profile Fund - Standard Class..... 11.07%
LVIP 2010 Profile Fund - Standard Class...................... 7.19%
Lincoln New York - Service Class............................. 5.49%
LVIP Money Market Fund
Lincoln Life - Service Class................................. 94.91%
Lincoln Life - Standard Class................................ 94.49%
Lincoln New York - Standard Class............................ 5.48%
Lincoln New York - Service Class............................. 5.09%
LVIP SSgA S&P 500 Index Fund
Lincoln Life - Standard Class................................ 76.47%
Lincoln Life - Service Class................................. 95.49%

Fund / Shareholder - Share Class Share Ownership
--------------------------------------------------------------------------------------- ----------------
LVIP SSgA Small-Cap Index Fund
Lincoln Life - Standard Class................................................. 87.38%
Lincoln Life - Service Class.................................................. 93.69%
Lincoln New York - Service Class.............................................. 6.31%
LVIP SSgA International Index Fund
Lincoln Life - Standard Class................................................. 60.26%
Lincoln Life - Service Class.................................................. 88.84%
Lincoln New York - Standard Class............................................. 8.96%
Lincoln New York - Service Class.............................................. 11.16%
LVIP 2010 Profile Fund - Standard Class....................................... 5.04%
LVIP SSgA Bond Index Fund
Lincoln Life - Standard Class................................................. 49.91%
Lincoln Life - Service Class.................................................. 96.63%
LVIP SSgA Global Tactical Allocation Fund - Standard Class.................... 6.93%
LVIP 2010 Profile Fund - Standard Class....................................... 6.70%
LVIP 2030 Profile Fund - Standard Class....................................... 6.42%
LVIP SSgA Conservative Structured Allocation Fund - Standard Class............ 7.12%
LVIP SSgA Large Cap 100 Fund
Lincoln Life - Service Class.................................................. 95.85%
LVIP Conservative Profile Fund - Standard Class............................... 37.34%
LVIP Moderate Profile Fund - Standard Class................................... 5.23%
LVIP Moderately Aggressive Profile Fund - Standard Class...................... 25.61%
LVIP SSgA Global Tactical Allocation Fund - Standard Class.................... 16.65%
LVIP SSgA Moderately Aggressive Structured Allocation Fund.................... 6.17%
LVIP SSgA Small Mid-Cap 200 Fund
Lincoln Life - Standard Class................................................. 8.50%
Lincoln Life - Service Class.................................................. 96.45%
LVIP SSgA Global Tactical Allocation Fund..................................... 75.77%
LVIP SSgA Moderate Structured Allocation Fund................................. 5.70%
LVIP SSgA Conservative Structured Allocation Fund............................. 7.18%
LVIP SSgA Developed International 150 Fund....................................
LVIP Conservative Profile Fund - Standard Class............................... 6.11%
LVIP Moderate Profile Fund - Standard Class................................... 7.30%
LVIP Moderately Aggressive Profile Fund - Standard Class...................... 32.12%
LVIP SSgA Global Tactical Allocation Fund..................................... 27.91%
LVIP SSgA Moderately Aggressive Structured Allocation Fund - Standard Class 11.97%
LVIP SSgA Conservative Structured Allocation Fund - Standard Class............ 6.95%
Lincoln Life - Service Class.................................................. 90.45%
Lincoln New York - Standard Class............................................. 9.55%
LVIP SSgA Emerging Markets 100 Fund
Lincoln Life - Standard Class................................................. 40.31%
Lincoln Life - Service Class.................................................. 96.44%
LVIP Conservative Profile Fund - Standard Class............................... 21.45%
LVIP Moderately Aggressive Profile Fund - Standard Class...................... 7.24%
LVIP SSgA Global Tactical Allocation Fund - Standard Class.................... 11.78%
LVIP SSgA Moderate Structured Allocation Fund - Standard Class................ 5.02%
LVIP T. Rowe Price Growth Stock Fund
Lincoln Life - Service Class.................................................. 83.89%
Lincoln Life - Standard Class................................................. 28.84%
Lincoln New York - Service Class.............................................. 16.11%
LVIP Moderate Profile Fund - Standard Class................................... 7.83%
LVIP Moderately Aggressive Profile Fund - Standard Class...................... 37.86%
LVIP 2010 Profile Fund - Standard Class....................................... 25.22%

Fund / Shareholder - Share Class Share Ownership
---------------------------------------------------------------------- ----------------
LVIP T. Rowe Price Structured Mid-Cap Growth Fund
Lincoln Life - Standard Class................................ 78.30%
Lincoln Life - Service Class................................. 95.55%
LVIP 2010 Profile Fund - Standard Class...................... 6.42%
LVIP Moderately Aggressive Profile Fund - Standard Class..... 9.87%
LVIP Templeton Growth Fund
Lincoln Life - Standard Class................................ 73.89%
Lincoln Life - Service Class................................. 82.87%
Lincoln New York - Service Class............................. 17.13%
LVIP Moderately Aggressive Profile Fund - Standard Class..... 9.78%
LVIP 2010 Profile Fund - Standard Class...................... 12.71%
LVIP Turner Mid-Cap Growth Fund
Lincoln Life - Standard Class................................ 97.65%
Lincoln Life - Service Class................................. 82.98%
Lincoln New York - Service Class............................. 17.02%
LVIP Wells Fargo Intrinsic Value Fund
Lincoln Life - Standard Class................................ 90.54%
Lincoln Life - Service Class................................. 96.33%

Rule 12b-1 Plan

Pursuant to Rule 12b-1 under the 1940 Act, the Trust has adopted a distribution
and service plan (the Plan) for the Service Class of shares of each fund. As
previously noted, the Trust offers shares of beneficial interest to Insurance
Companies for allocation to certain of their Variable Contracts. The Trust may
pay the Insurance Companies or others, out of the assets of a Service Class,
for activities primarily intended to sell Service Class shares or Variable
Contracts offering Service Class shares. The Trust would pay each third party
for these services pursuant to a written agreement with that third party.

Payments made under the Plan may be used for, among other things: the printing
of prospectuses and reports used for sales purposes; preparing and distributing
sales literature and related expenses; advertisements; education of contract
owners or dealers and their representatives; and other distribution-related
expenses. Payments made under the Plan may also be used to pay Insurance
Companies, dealers or others for, among other things: service fees as defined
under NASD rules; furnishing personal services or such other enhanced services
as the Trust or a Variable Contract may require; or maintaining customer
accounts and records.

For the noted services, the Plan authorizes each fund to pay to Insurance
Companies or others, out of the assets of the Service Class, a monthly fee (the
Plan Fee) not to exceed 0.35% per annum of the average daily net asset value of
the Service Class shares of such fund, as compensation or reimbursement for
services rendered and/or expenses borne. The Plan Fee is currently 0.35% for
the Service Class shares of the following funds: LVIP Delaware Bond Fund, LVIP
Delaware Growth and Income Fund, LVIP Delaware Social Awareness Fund, and LVIP
Delaware Special Opportunities Fund. The Plan Fee for Service Class shares of
all other funds is 0.25%. The Plan Fee may be adjusted by the Trust's board of
trustees from time to time. The Plan may not limit Plan Fees to amounts
actually expended by third-parties for services rendered and/or expenses borne.
A third-party, therefore, may realize a profit from Plan Fees in any particular
year.

No "interested person" or independent trustee of a fund had or has a direct or
indirect financial interest in the operation of the Plan or any related
agreement.

The Board of Trustees, including a majority of the Independent Trustees, have
determined that, in the exercise of reasonable business judgment and in light
of their fiduciary duties, there is a reasonable likelihood that the Plan will
benefit each fund and contract owners of the Service Class of each fund. Each
year, the Trustees must make this determination for the Plan to be continued.

For the fiscal year ended December 31, 2010, the total amount of distribution
related expenses paid by the Service Class shares of the funds was
approximately $19,125,575. For the fiscal year ended December 31, 2010, the
distribution related expenses paid by the Service Class under the Plan were
used for compensation to broker-dealers and sales personnel and for printing
and mailing of prospectuses to other than current shareholders.

Revenue Sharing

LIA and its affiliates, including Lincoln Financial Distributors, Inc. ("LFD"),
and/or the funds' sub-advisers (if applicable) may pay compensation at their
own expense, including the profits from the advisory fees LIA receives from the
funds or the sub-advisory fees the sub-advisers receive from LIA (if
applicable), to affiliated or unaffiliated brokers, dealers or other financial
intermediaries ("financial intermediaries") in connection with the sale or
retention of fund shares or the sales of insurance products that contain the
funds and/or shareholder servicing ("distribution assistance"). For example,
LFD may pay additional compensation to financial intermediaries for various
purposes, including, but not limited to, promoting the sale of fund shares and
the products that include the fund shares; access to their registered
representatives; sub-accounting, administrative or shareholder processing
services; and marketing and education support. Such payments are in addition to
any distribution fees, service fees and/or transfer agency fees that may be
payable by the funds. The additional payments may be based on factors,
including level of sales, the funds' advisory fees, some other agreed upon
amount, or other measures as determined from time to time.

A significant purpose of these payments is to increase sales of the funds'
shares and the products that contain the funds. LIA and/or its affiliates may
benefit from these payments of compensation to financial intermediaries through
increased fees resulting from additional assets acquired through the sale of
insurance products through such intermediaries.

Valuation of Portfolio Securities

A fund determines its net asset value per share by subtracting its liabilities
(including accrued expenses and dividends payable) from its total assets (the
value of the securities the fund holds plus cash and other assets, including
income accrued but not yet received) and dividing the result by the total
number of shares outstanding. In addition to the disclosure in the funds'
prospectus under the "Net Asset Value" section, the value of a fund's
investments is determined as follows.

Options Trading. For those funds engaging in options trading, fund investments
underlying call options will be valued as described previously. Options are
valued at the last sale price or, if there has been no sale that day, at the
mean of the last bid and asked price on the principal exchange where the option
is traded, as of the close of trading on the NYSE. The fund's net asset value
will be increased or decreased by the difference between the premiums received
on writing options and the cost of liquidating those positions measured by the
closing price of those options on the exchange where traded.

Futures Contracts and Options. for those funds buying and selling futures
contracts and related options thereon,, the futures contracts and options are
valued at their daily settlement price.

Foreign Securities. For funds investing in foreign securities, the value of a
foreign portfolio security held by a fund is determined based upon its closing
price or upon the mean of the closing bid and asked prices on the foreign
exchange or market on which it is traded and in the currency of that market, as
of the close of the appropriate exchange. As of the close of business on the
NYSE, the fund's portfolio securities which are quoted in foreign currencies
are converted into their U.S. dollar equivalents at the prevailing market
rates, as computed by the custodian of the fund's assets.

However, trading on foreign exchanges may take place on dates or at times of
day when the NYSE is not open; conversely, overseas trading may not take place
on dates or at times of day when the NYSE is open. Any of these circumstances
could affect the net asset value of fund shares on days when the investor has
no access to the fund.

Portfolio Holdings Disclosure

The Trust's Board of Trustees has adopted policies and procedures designed to
ensure that disclosure of information regarding a fund's portfolio securities
is in the best interests of fund shareholders. In accordance with these
policies and procedures, fund management will make shareholders reports or
other regulatory filings containing a fund's portfolio holdings available free
of charge to individual investors, institutional investors, intermediaries that
distribute the fund's shares, and affiliated persons of the fund that make
requests for such holdings information. Shareholder reports are available 60
days after the end of each semi-annual reporting period.

Fund management may provide a fund's top-ten holdings immediately after each
quarter-end to Lincoln Life and other insurance companies who include the funds
in their products ("Insurance Companies"). All Insurance Companies that receive
nonpublic portfolio holdings information must sign a confidentiality agreement
agreeing to keep the nonpublic portfolio information strictly confidential and
not to engage in trading on the basis of the information. The Insurance
Companies may include this information in marketing and other public materials
(including via website posting) 15 days after the end of the quarter.

Fund management will post all of the holdings and other information required by
Rule 2a-7 of the LVIP Money Market fund to a publicly available website no
later than the 5th business day of the month. At the time of the disclosure on
the website, the portfolio holdings of the LVIP Money Market fund will be
deemed to be public. The LVIP Money Market fund information will be maintained
on the website for no less than six months from the time of posting.

Fund management will post all of the holdings for each fund other than the LVIP
Money Market fund, to a publicly available website no earlier than 25 calendar
days after quarter end. In addition, fund management may post all of the
holdings for each LVIP Fund of Fund no earlier than 25 calendar days after
inception, rebalance, or after any material changes are made to the holdings of
such LVIP Fund of Fund. At the time of the disclosure on the website, the
portfolio holdings of these funds will be deemed public.

Fund management may also provide holdings information following the end of the
quarterly reporting period under a confidentiality agreement to third-party
service providers, including but not limited to independent rating and ranking
organizations, which conduct market analyses of the fund's portfolio holdings
against benchmarks or securities market indices. All such third parties must
sign a confidentiality agreement agreeing to keep the non-public portfolio
information strictly confidential and not to engage in trading on the basis of
the information. These parties may disseminate the portfolio holdings
information when the portfolio holdings are deemed to be public. Fund
management currently provides holdings information to Factset on a daily basis.

The Trust sub-advisers have an ongoing arrangement with the following third
parties to make available information about a fund's portfolio holdings: (1)
ratings organizations, such as Moodys, S&P, Morningstar and Lipper, provided
generally on a monthly basis for the purpose of reviewing the particular fund;
(2) portfolio analysis companies, such as Factset Research Systems, Linedata
Services, Inc., Glass, Lewis & Co., Investment Technology Group Inc., BondEdge,
Investools, Plexus, Saloman Analytics, Inc., Wilshire Analytics Axiom, ITG
Plexus Alpha Capture, MSCI BARRA, Inc. Bloomberg L.P., Investor Tools Perform,
J.P. Morgan Securities, Inc., BARRA TotalRisk Systems, Thompson Baseline
RiskMetrics and Barclay Point provided generally on a daily or monthly basis
for the purpose of compiling reports, preparing comparative analysis data and
trade execution evaluation; (3) proxy voting or class action services, such as
ADP, Broadridge Financial Solutions, Inc., Institutional Shareholder Services
(ISS) - ISS/RiskMetrics or Brown Brothers Harriman & Co., provided generally on
a daily basis or bi-monthly basis for the purpose of voting proxies relating to
portfolio holdings or providing corporate actions services and trade
confirmation; (4) computer systems, products, services and software vendors,
such as Advent Software, Inc., Eagle Investment Systems Corp., The MacGregor
Group, OMEGO LLC, CDS/ Computer, Checkfree, Cogent Consulting, GFP Acquisition
Company, Inc, D.B.A. GCom2 Solutions, Siemens Business Services, Inc., and
GainsKeeper, Inc. provided generally on a daily basis for the purpose of
providing computer products, services, software and accounting systems to the
sub-advisers; and (5) operational services such as Bank of New York Mellon,
State Street Bank and Trust Company, State Street Investment Manager Solutions,
Markit WSO Corporation and Standard & Poor's Securities Evaluation Services
provided generally on a daily basis for the purpose of providing operational
functions including fund pricing and OTC derivative swap products to the
sub-advisers. Each of the above unaffiliated third parties must agree to keep
the fund's holdings information confidential and not engage in trading on the
basis of the information. The sub-advisers do not receive compensation in
connections with these arrangements.

Fund management may provide, at any time, portfolio holdings information to:
(a) fund service providers and affiliates, such as the funds' investment
adviser, sub-advisers, custodian and independent registered public accounting
firm, to the extent necessary to perform services for the funds; and (b) state
and federal regulators and government agencies as required by law or judicial
process. These entities are subject to duties of confidentiality imposed by
law, contract, or fiduciary obligations.

The funds will disclose their portfolio holdings in public SEC filings. The
Trust's board of trustees also may, on a case-by-case basis, authorize
disclosure of the funds' portfolio holdings, provided that, in its judgment,
such disclosure is not inconsistent with the best interests of shareholders, or
may impose additional restrictions on the dissemination of portfolio
information.

Neither the funds, the investment adviser nor any affiliate receive any
compensation or consideration in connection with the disclosure of the funds'
portfolio holdings information.

Fund management is responsible for ensuring appropriate disclosure is made
regarding these procedures in the funds' prospectus and/or SAI.

The Trust's board of trustees exercises oversight of these policies and
procedures. In this regard, fund management will inform the trustees if any
substantial changes to the procedures become necessary to ensure that the
procedures are in the best interest of fund shareholders. The officers will
consider any possible conflicts between the interest of fund shareholders, on
the one hand, and those of the funds' investment adviser and other fund
affiliates, on the other. Moreover, the funds' chief compliance officer will
address the operation of the funds' procedures in the annual compliance report
to the board and will recommend any remedial changes to the procedures.

Purchase and Redemption Information

Shares of a fund may not be purchased or redeemed by individual investors
directly but may be purchased or redeemed by such investors only through
variable annuity contracts or variable life contracts offered by Lincoln Life,
LNY and other insurance companies. Shares of the funds may also be purchased by
the LVIP fund of funds, which invest their assets in other mutual funds. The
offering price of each fund's shares is equal to its net asset value per share.

If conditions exist which make payment of redemption proceeds wholly in cash
unwise or undesirable, a fund may make payment wholly or partly in securities
or other investment instruments which may not constitute securities as such
term is defined in the applicable securities laws. If a redemption is paid
wholly or partly in securities or other property, a shareholder would incur
transaction costs in disposing of the redemption proceeds.

Custodian and Transfer Agent

All securities, cash and other similar assets of the funds are currently held
in custody by The Bank of New York Mellon, One Mellon Center, Pittsburgh,
Pennsylvania 15258.

The custodian shall: receive and disburse money; receive and hold securities;
transfer, exchange, or deliver securities; present for payment coupons and
other income items, collect interest and cash dividends received, hold stock
dividends, etc.; cause escrow and deposit receipts to be executed; register
securities; and deliver to the funds proxies, proxy statements, etc.

Lincoln Life performs the dividend and transfer agent functions for each fund.

Independent Registered Public Accounting Firm
The board of trustees has engaged Ernst & Young LLP, Two Commerce Square, Suite
4000, 2001 Market Street, Philadelphia, PA 19103, to serve as the Independent
Registered Public Accounting Firm for the funds. In addition to the audits of
the financial statements of the funds, other services provided include review
of annual reports and registration statements filed with the SEC; consultation
on financial accounting and reporting matters; and meetings with the Audit
Committee.

Financial Statements

The audited financial statements and the reports of Ernst & Young LLP are
incorporated by reference to each fund's 2010 annual report. We will provide a
copy of each fund's annual report on request and without charge. Either write
The Lincoln National Life Insurance Company, P.O. Box 2340, Fort Wayne, Indiana
46801 or call: 1-800-4LINCOLN (454-6265).

Taxes

Each fund intends to qualify and has elected to be taxed as a regulated
investment company under certain provisions of the Internal Revenue Code of
1986 (the Code). If a fund qualifies as a regulated investment company and
complies with the provisions of the Code relieving regulated investment
companies which distribute substantially all of their net income (both net
ordinary income and net capital gain) from federal income tax, it will be
relieved from such tax on the part of its net ordinary income and net realized
capital gain which it distributes to its shareholders. To qualify for treatment
as a regulated investment company, each fund must, among other things, derive
in each taxable year at least 90% of its gross income from dividends, interest,
payments with respect to securities loans and gains from the sale or other
disposition of stock or securities or foreign currencies (subject to the
authority of the Secretary of the Treasury to exclude foreign currency gains
which are not directly related to the fund's principal business of investing in
stock or securities or options and futures with respect to such stock or
securities), or other income (including but not limited to gains from options,
futures, or forward contracts) derived with respect to its investing in such
stocks, securities, or currencies.

Each fund also intends to comply with diversification regulations under Section
817(h) of the Code, that apply to mutual funds underlying variable contracts.
Generally, a fund will be required to diversify its investments so that on the
last day of each quarter of a calendar year, no more than 55% of the value of
its total assets is represented by any one investment, no more than 70% is
represented by any two investments, no more than 80% is represented by any
three investments, and no more than 90% is represented by any four investments.
For this purpose, securities of a given issuer are treated as one investment,
but each U.S. government agency or instrumentality is treated as a separate
issuer. Any security issued, guaranteed, or insured (to the extent so
guaranteed or insured) by the U.S. government or an agency or instrumentality
of the U.S. government is treated as a security issued by the U.S. government
or its agency or instrumentality, whichever is applicable.

Failure by a fund to both qualify as a regulated investment company and satisfy
the Section 817(h) diversification requirements would generally cause Variable
Contracts that include the fund as an underlying investment to lose their
favorable tax status and require contract holders to include in ordinary income
any income under the contracts for the current and all prior taxable years.
Under certain circumstances described in the applicable Treasury regulations,
inadvertent failure to satisfy the applicable diversification requirements may
be corrected, but such a correction would require a payment to the Internal
Revenue Service (IRS) based on the tax contract holders would have incurred if
they were treated as receiving the income on the contract for the period during
which the diversification requirements were not satisfied. Any such failure may
also result in adverse tax consequences for the insurance company

issuing the contracts. Failure by a fund to qualify as a regulated investment
company would also subject a fund to federal and state income taxation on all
of its taxable income and gain, whether or not distributed to shareholders.

Since individual contract owners are generally not treated as shareholders of
the funds, no discussion is included regarding the federal income tax
consequences at the shareholder level.

The discussion of federal income tax considerations in the prospectus, in
conjunction with the foregoing, is a general and abbreviated summary of the
applicable provisions of the Code and Treasury Regulations currently in effect
as interpreted by the Courts and the Internal Revenue Service (IRS). These
interpretations can be changed at any time. The above discussion covers only
federal tax considerations with respect to the funds. State and local taxes
vary.

APPENDIX A

Bond and Commercial Paper Ratings

Certain of the funds' investment policies and restrictions include references
to bond and commercial paper ratings. The following is a discussion of the
rating categories of Moody's Investors Service, Inc. and Standard & Poor's
Corp.

Moody's Investors Service, Inc.

Aaa-Bonds which are rated Aaa are judged to be of the best quality and carry
the smallest degree of investment risk. Interest payments are protected by a
large or by an exceptionally stable margin, and principal is secure. While the
various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position of
such issues.

Aa-Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high
grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.

A-Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment some time in the future.

Baa-Bonds which are rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

Ba-Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.

B-Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

Caa-Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.

Ca-Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked
shortcomings.

Standard & Poor's Corp.

AAA-This is the highest rating assigned by Standard & Poor's Corp. to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.

AA-Bonds rated AA also qualify as high-quality debt obligations. Capacity to
pay principal and interest is very strong, and in the majority of instances
they differ from AAA issues only in small degree.

A-Bonds rated A have a strong capacity to pay principal and interest, although
they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions.

BBB-Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas these bonds normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to pay principal and interest
than for bonds in the A category and higher.

BB-B-CCC-CC-Bonds rated BB, B, CCC and CC are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB
indicates the lowest degree of speculation and C the highest degree of
speculation. While such bonds will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.

Moody's Investors Service, Inc.

Moody's Commercial Paper ratings are opinions of the ability of issuers to
repay punctually promissory obligations not having an original maturity in
excess of nine months. Moody's employs the following three designations, all
judged to be investment grade, to indicate the relative repayment capacity of
rated issuers:

Prime 1-Highest Quality;

Prime 2-Higher Quality;

Prime 3-High Quality.

(The funds will not invest in commercial paper rated Prime 3).

Standard & Poor's Corp.

A Standard & Poor's Corp. commercial paper rating is a current assessment of
the likelihood of timely payment of debt having an original maturity of no more
than 365 days. The fund will invest in commercial paper rated in the A
Categories, as follows:

A-Issues assigned this highest rating are regarded as having the greatest
capacity for timely payment. Issues in this category are further refined with
the designation 1, 2, and 3 to indicate the relative degree of safety. (The
funds will not invest in commercial paper rated A-3).

A-1 This designation indicates that the degree of safety regarding timely
payment is very strong.

A-2 Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not overwhelming as for issues
designated A-1.

APPENDIX B

BAMCO, Inc.
Introduction - Baron Capital Management, Inc. and BAMCO, Inc. (the "Adviser" or
"Advisers") are adopting these proxy voting policies and procedures (the
"Policies and Procedures") in order to comply with Rule 206(4)-6 under the
Investment Advisers Act of 1940, as amended and its associated record-keeping
requirements.

The Policies and Procedures apply to those client accounts (i) that contain
voting securities; and (ii) for which an Adviser has authority to vote client
proxies. The Policies and Procedures will be reviewed and, as necessary,
updated periodically to address new or revised proxy voting issues. Other,
similar rights such as consent rights shall be evaluated on a case by case
basis.

Pursuant to the Policies and Procedures and its fiduciary duties, each Adviser
will vote client proxies as part of its authority to manage, acquire and
dispose of account assets. When voting proxies for client accounts, the
Adviser's primary objective is to make voting decisions solely in the best
interests of clients and beneficiaries and participants of benefits plans for
which we manage assets. In fulfilling its obligations to clients, the Adviser
will act in a manner deemed to be prudent and diligent and which is intended to
enhance the economic value of the underlying securities held in client
accounts. In certain situations, a client or its fiduciary may provide the
Adviser with a statement of proxy voting policy. In these situations, the
Adviser seeks to comply with such policy to the extent it would not be
inconsistent with applicable regulation or the fiduciary responsibility of the
Adviser.

Duty to Vote Proxies - The Adviser acknowledges that it is part of its
fiduciary duty to its clients to vote client proxies, except in cases in which
the cost of doing so, in the opinion of the Adviser, would exceed the expected
benefits to the client. This may be particularly true in the case of non-U.S.
securities. While the proxy voting process is well established in the United
States and other developed markets with a number of tools and services
available to assist an investment manager, voting proxies of non-US companies
located in certain jurisdictions, particularly emerging markets, may involve a
number of logistical problems that may have a detrimental effect on the
Adviser's ability to vote such proxies. The logistical problems include, but
are not limited to: (i) proxy statements and ballots being written in a
language other than English, (ii) untimely and/or inadequate notice of
shareholder meetings, (iii) restrictions on the ability of holders outside the
issuer's jurisdiction of organization to exercise votes, (iv) requirements to
vote proxies in person, (v) the imposition of restrictions on the sale of the
securities for a period of time in proximity to the shareholder meeting, and
(vi) requirements to provide local agents with power of attorney to facilitate
the Adviser's voting instructions. Accordingly, the Adviser may conduct a
cost-benefit analysis in determining whether to attempt to vote its clients'
shares at a non-US company's meeting, whereby if it is determined that the cost
associated with the attempt to exercise its vote outweighs the benefit the
Adviser believes its clients will derive by voting on the company's proposal,
the Adviser may decide not to attempt to vote at the meeting.

Material Conflicts - The Adviser will vote its clients' proxies in the best
interests of its clients and not its own. In voting client proxies, the Adviser
will avoid material conflicts of interests between the interests of the Adviser
and its affiliates on the one hand and the interests of its clients on the
other. The Adviser recognizes that it may have a material conflict of interest
in voting a client proxy where (i) it manages assets, administers employee
benefit plans, or provides brokerage, underwriting or insurance to companies
whose management is soliciting proxies; (ii) it manages money for an employee
group that is the proponent of a proxy proposal; (iii) has a personal
relationship with participants in a proxy solicitation or a director or
candidate for director; or (iv) it otherwise has a personal interest in the
outcome in a particular matter before shareholders. Notwithstanding the above
categories, the Adviser understands that the determination of whether a
"material conflict" exists depends on all of the facts and circumstances of the
particular situation. The Adviser acknowledges the existence of a relationship
of the type discussed above, even in the absence of any active efforts to
solicit the investment adviser with respect to a proxy vote, is sufficient for
a material conflict to exist.

Assumptions Related to Director Independence - In 2003, the New York Stock
Exchange (or "NYSE") and NASDAQ implemented increased standards for board
independence, including a stronger definition of "independent" director and a
requirement that a majority of the board be independent. In general, according
to the NYSE and NASDAQ independence standards, a director will be deemed
independent if the board affirmatively attests that he or she has no
relationship with the company that would interfere with the director's exercise
of independent judgment or in carrying out the responsibilities of a director.
Certain types of relationships will preclude a finding of independence by the
board. Such relationships include: directors (or those with family members) who
are former employees of the company or its auditor; have commercial, advisory
or, in the case of NASDAQ, charitable ties with the company; or have
interlocking compensation committees. Such relationships carry a three-year
cooling-off, or look-back, period beginning on the date the relationship ends.
The Adviser has adopted a policy which assumes director independence after a
five-year cooling-off period.

GENERAL PROXY VOTING GUIDELINES

It is the policy of the Adviser in voting proxies to consider and vote each
proposal with the objective of maximizing long-term investment returns for its
clients. To ensure consistency in voting proxies on behalf of its clients, the
Adviser utilizes the proxy voting guidelines (the "Proxy Voting Guidelines")
set forth below. These guidelines address a broad range of issues, including
board size and composition, executive compensation, anti-takeover proposals,
capital structure proposals and social responsibility issues.

I. Management Proposals:

A. The following management sponsored proposals are usually voted in support of
management.

1. Approval of auditors and financial statements

2. Election of Directors

3. Requirement that at least 51% of its Board's members be comprised of
independent and unaffiliated Directors

4. Requirement that the majority of members of the company's compensation
committee, and 100% of members of the company's nominating and audit
committees, be comprised of independent or unaffiliated Directors

5. Recommendations to set retirement ages or require specific levels of
stock ownership by Directors

6. General updating/corrective amendments to the charter

7. Elimination of cumulative voting

8. Elimination of preemptive rights

9. Provisions for confidential voting and independent tabulation of
voting results

10. Proposals related to the conduct of the annual meeting except those
proposals which relate to the "transaction of such other business
which may come before the meeting"

11. Capitalization changes which eliminate other classes of stock and
voting rights

12. Proposals to increase the authorization of existing classes of stock
if: (i) a clear and legitimate business purpose is stated and (ii) the
number of shares requested is reasonable in relation to the purpose
for which authorization is requested

13. Proposals for share repurchase plans, unless it appears that a
repurchase plan lacks a bona fide business purpose

14. Proposals to effect stock splits unless such a split would be contrary
to shareholders' best interests

15. Proposals to effect reverse stock splits if management proportionately
reduces the authorized share amount set forth in the corporate
charter. Reverse stock splits that do not adjust proportionately to
the authorized share amount will generally be approved if the
resulting increase in authorized shares coincides with the proxy
guidelines set forth above for common stock increases

16. Director fees unless the amounts are excessive relative to other
companies in the country or industry

17. Employee stock purchase plans that permit discounts up to 15%, but
only for grants that are part of a broad based employee plan,
including all non-executive employees, are fair reasonable, and in the
best interest of shareholders.

18. Establishment of Employee Stock Option Plans and other employee
ownership plans

19. Proposals to expense stock options

20. Executive/Director stock option plans. Generally, the stock option
plans should meet the following criteria: (i) the stock option plan
should be incentive based; (ii) should be no more than 2% per annum of
the issued capital at the time of approval; (iii) should be broad
based; (iv) priced at fair market value; (v) have no repricing
provisions; (vi) the number of non-employee directors should be
considered; and (vii) any other relevant factors.

21. Non-employee Director stock option plans. Generally, the stock options
plans should meet the following criteria: (i) the stockoption plan
should be incentive based; (ii) should be no more than 2% per annum of
the issued capital at the time of approval; (iii) should be broad
based; (iv) priced at fair market value; (v) have no repricing
provisions; (vi) the number of non-employee directors should be
considered; and (vii) any other relevant factors.

22. Modify or rescind existing supermajority vote requirements to amend
the charters or bylaws

23. Adoption of anti-greenmail provisions provided that the proposal (a)
defines greenmail, (b) prohibits buyback offers to large block holders
not made to all shareholders or not approved by disinterested
shareholders, and (c) contains no anti-takeover measures or other
provisions restricting the rights of shareholders

24. Proposals requiring shareholder ratification of poison pills

B. The following proposals are usually voted against, notwithstanding
management support:

1. Capitalization changes which add classes of stock which may
significantly dilute the voting interests of existing shareholders

2. Proposals to increase the authorized number of shares of existing
classes of stock which carry preemptive rights or super voting rights

3. Creation of blank check preferred stock

4. Changes in capitalization by 2% or more where management does not
offer an appropriate rationale or where it is contrary to the best
interests of existing shareholders

5. Compensation proposals that allow for discounted stock options which
have not been offered to employees in general

6. Executive compensation plans that are excessive relative to other
companies in the industry

7. Anti-takeover and related provision that serve to prevent the majority
of shareholders from exercising their rights or effectively deter the
appropriate tender offers and other offers

8. Shareholders rights plans which allow appropriate offers to
shareholders to be blocked by the board or trigger provisions which
prevent legitimate offers from proceeding

9. Amendments to bylaws that would require a supermajority shareholder
vote to pass or repeal certain provisions

10. Proposals to indemnify auditors

11. Proposals to adopt poison pills

12. Classified boards

C. The following types of proposals are usually voted on a case-by-case basis:

1. Change-in-control provisions in non-salary compensation plans,
employment contracts, and severance agreements that benefit management
and would be costly to shareholders if triggered are not supported by
the Advisers, however the Adviser does not want to vote against a good
management team, and so will usually abstain

2. Mergers, acquisitions and other special corporate transactions (i.e.,
takeovers, spin-offs, sales of assets, reorganizations, restructurings
and recapitalizations)

3. Proposals to create a new class of preferred stock or for issuances of
preferred stock up to 5% of issued capital unless the terms of the
preferred stock would adversely affect the rights of existing
shareholders, in which case we are opposed

4. Proposals to reduce the number of authorized shares of common or
preferred stock, or to eliminate classes of preferred stock, provided
such proposals have a legitimate business purpose

5. Proposals to change covenants or other terms in connection with
financings or debt issuances

6. Proposals to amend terms of shareholder rights agreements or similar
documents which will affect the rights of a client

7. Limiting Directors' liability and broadening indemnification of
Directors

II. Shareholder Proposals:

A. The following shareholder proposals are usually voted in support:

1. Requirement that a majority of members of the company's compensation,
nominating and audit committees be comprised of independent or
unaffiliated Directors

2. Prohibit payment of greenmail

3. Proposals which request or require disclosure of executive
compensation in addition to the disclosure required by the Securities
and Exchange Commission ("SEC") regulations

4. Elimination of certain anti-takeover related provisions

5. Reduction or elimination of supermajority vote requirements

6. Proposals to expense stock options

7. Confidential voting

8. Majority vote for the election of Directors

9. Declassified boards

B. The following shareholder proposals are usually voted against:

1. Requirements that the issuer prepare reports which are costly to
provide or which would require duplicative efforts or expenditures
which are of a non-business nature or would provide no pertinent
information from the perspective of institutional shareholders

2. Restrictions related to social, political or special interest issues
that impact the ability of the company to do business or be
competitive and which have a significant financial or best interest
impact to the shareholders

3. Proposals that require inappropriate endorsements or corporate actions

4. Proposals requiring Directors to own large amounts of stock to be
eligible for election

5. Proposals which limit tenure of Directors

6. Requiring shareholder approval of golden parachutes

7. Requiring separate chairman and CEO positions

8. Limiting benefits under supplemental executive retirement plans

9. Limiting executive compensation with regards to "pay-for-superior
performance" stock option plans, employee stock purchase plans, and
non-employee director stock option plans

C. The following shareholder proposals are usually determined on a
case-by-case basis:

1. Proposals to limit golden parachutes

2. Restoring cumulative voting in the election of Directors

3. Requirement that a certain percentage of its Board's members be
comprised of independent and unaffiliated Directors

4. Proposals which limit retirement benefits or executive compensation

5. Requiring shareholder approval for Bylaw or charter amendments

6. Requiring shareholder approval for shareholder rights plan or poison
pill

ADMINISTRATION OF PROXY POLICIES AND PROCEDURES

I. Proxy Review Committee

A. The Adviser's Proxy Review Committee (the "Committee") is responsible for
creating and implementing the Policies and Procedures and, in that regard,
has adopted the general principles and guidelines set forth above in
Sections I and II. Among other things, the Committee is responsible for the
following:

1. The Committee shall establish and review these Policies and Procedures
and determine how the Adviser will vote proxies on an ongoing basis.

2. The Committee shall have the authority to amend and change the
Policies and Procedures and designate voting positions consistent with
the objective of maximizing long-term investment returns for the
Adviser's clients.

3. The Committee shall meet as needed to oversee and address all
questions relating to the Adviser's Policies and Procedures, which may
include: (1) general review of proposals being put forth at
shareholder meetings of portfolio companies; (2) adopting changes in
the Policies and Procedures; (3) determining whether voting on matters
in the manner favored by the Adviser are "material" conflicts of
interests within the meaning of Rule 206(4)-6 under the Investment
Advisers Act of 1940, as amended; (4) determining how to vote matters
for which specific direction has not been provided the Proxy Voting
Guidelines (i.e. "case by case" matters) or are otherwise not covered
by the Proxy Voting Guidelines (collectively, "Discretionary
Proposals"); and (5) override review.

4. The Committee will periodically review the Proxy Voting Guidelines to
determine if they are current and consistent with the Adviser's policy
and will make appropriate changes as needed.

Operating Procedures

B. The following operating procedures are intended to ensure that the Adviser
satisfies its proxy voting obligations:

1. The legal department will review all new client accounts to determine
whether (i) the account contains voting securities and (ii) the client
has delegated proxy voting authorization to the Adviser in the
investment Advisory agreement or (iii) the client has otherwise
provided specific voting instructions. Any questions regarding whether
or not a security is a "voting" security or whether voting authority
has been delegated by a client will be directed to the legal
department.

2. The designated proxy reviewer, as supervised by the legal department,
will receive proxy materials and ballots and reconcile these materials
with holdings in client accounts as they occur.

3. The designated proxy reviewer will compile and review the matters to
be voted on, and determine: (i) which matters are to be voted in
accordance with the Proxy Voting Guidelines (a "Pre-Determined
Matter"); and (ii) which matters are Discretionary Matters and (iii)
which matters are to be voted pursuant to the instructions of clients
(a "Directed Matter"). Any questions regarding whether a matter is a
Pre-Determined Matter, a Discretionary Matter or a Directed Matter
will be directed to the legal department.

4. For all Discretionary Matters, the designated proxy reviewer, as
supervised by the legal department, shall screen the matter and make a
preliminary determination regarding whether the matter presents a
potential material conflict of interest between the interests of the
Adviser and its affiliates on the one hand and the Adviser's client on
the other. In order to determine whether a Discretionary Matter poses
a potential material conflict of interest, the designated proxy
reviewer shall compile and maintain a list of the following as
applicable.

a. all issuers for which the Adviser or its affiliates manage
assets;

b. all issuers for which the Adviser or its affiliates manages
employee benefit plans;

c. any issuer for which the Adviser or its affiliates is soliciting
the provision of services enumerated in (a) and (b);

d. any other issuer with which the Adviser or its affiliates or its
senior officers has a material business relationship; and

e. any employee group for which the Adviser manages money. This
list, which shall be reviewed quarterly by the Director of Mutual
Fund Marketing and the Director of Institutional Marketing, shall
be known as the "Master Conflicts List".

5. The designated proxy reviewer, as supervised by the legal department,
shall screen the issuer, employee group or any other material related
party ("Material Parties") involved in the Discretionary Matter
against the Master Conflicts List and develop a list of potential
conflicts ("Potential Conflicts List").

6. For each Discretionary Matter, the designated proxy reviewer, as
supervised by the legal department, may solicit relevant information
from portfolio managers, investment personnel, analysts and other
employees of the Adviser who may have an investment or other
professional interest in the Discretionary Matter.

7. The Committee shall meet at least quarterly and shall review whether
any person listed on the Master Conflicts List would, under the facts
and circumstances, create a material conflict of interest between the
interests of the Adviser and its affiliates on the one hand and the
Adviser's clients on the other. In making the finding required in (ii)
above, the Committee shall consider the Potential Conflicts List and
any other material relationship known to the Committee between the
Adviser and its affiliates and the Material Parties. The Committee may
act by consent.

8. If the Proxy Review Committee in consultation with the legal
department determines that with respect to any Discretionary Matter a
material conflict of interest exists in voting the Discretionary
Matter, the Committee shall direct the legal department to obtain the
informed written consent of the affected client (or clients) to the
Committee's favored vote. If obtaining such consent from any client is
impracticable or undesirable, the Adviser shall vote the client's
proxy in accordance with the published recommendation of Institutional
Shareholder Services ("ISS") or shall appoint an independent third
party to vote.

9. If any portfolio manager, investment person, or any other employee of
the Adviser wishes to vote a proxy with respect to a Pre-Determined
Matter in a manner other than that set forth in the Proxy Voting
Guidelines (an "Override Matter"), such person shall contact the legal
department. The legal department shall review the Override Matter
against the Master List and make a determination whether a material
conflict exists. If a material conflict is found to exist, it shall be
duly recorded. If the legal department determines that a material
conflict of interest exists with respect to voting the Override Matter
in the manner it favors, the legal department shall either: (i) vote
the Override Matter in the manner originally prescribed by the Proxy
Voting Guidelines; or (ii) obtain the informed written consent of the
affected client (or clients). A list of Override Matters shall be
presented at the next meeting of the Committee.

10. Directed Matters will be voted in accordance with the instructions of
the client.

11. The designated proxy reviewer, as supervised by the legal department,
will ensure that all proxies are voted in accordance with these
Procedures and Policies.

12. The functions described hereunder may be delegated to a third party
proxy voting or other service provider.

13. All decisions of the Committee, including all determinations regarding
the existence of a material conflict of interest with respect to a
Discretionary or Override Matter and the basis for such determination,
shall be documented in writing and maintained for a period of at least
6 years.

III. CLIENT DISCLOSURE POLICIES

BCM will give a copy of the Policies and Procedures to its clients. The legal
department will provide any client, upon written request, with a tabulation of
how such client's proxies were voted by BCM. BAMCO will follow the same
procedures with respect to its sub-advised fund clients.

For BAMCO managed Funds, a quarterly proxy voting report shall be provided to
the Board of each Fund. Form N-PX will be filed with the SEC no later than
August 31 for each year ended June 30 by the legal department. The Funds will
also include in their SAIs, pursuant to Item 13(F) of Form N-1A, a description
of the policies and procedures that BAMCO uses when a vote presents a conflict
of interest between the Funds' shareholders and BAMCO. The Funds' SAIs will
also state the location of each of the Funds' Form N-PX disclosing how each of
the Funds' proxies relating to portfolio securities were voted during the most
recent 12-month period ended June 30. The Funds will include in their
semi-annual report and annual reports to shareholders a statement that the
Funds' proxy voting policies and procedures are available without charge on the
Fund's website, www.BaronFunds.com, or by calling 1-800-99-BARON, and on the
SEC's website at www.sec.gov for the most recent twelve-month period ending
June 30 is available on or through the Funds' website and on the SEC's website.
Such information will be posted to the website as soon as reasonably
practicable after the filing with the SEC. The Funds will also include in their
semi-annual report and annual reports to shareholders a statement that the
Funds' proxy voting record for the most recent twelve-month period ending June
30 is available on or through the Funds' website and on the SEC's website. Such
information will be posted to the website as soon as reasonably practicable
after filing with the SEC.

RECORDKEEPING

Rule 204-2 under the Advisers Act, as amended, requires that the Adviser retain
(i) its proxy voting policies and procedures; (ii) proxy statements received
regarding client securities; (iii) records of votes it cast on behalf of
clients; (iv) records of client requests for proxy voting information and (v)
any documents prepared by the investment adviser that were material to making a
decision how to vote or that memorialized the basis for the decision. The
Adviser will keep all written requests from clients and any written response
from the Adviser (to either a written or an oral request). The Adviser may rely
on proxy statements filed on the SEC's EDGAR system instead of keeping its own
copies, and may rely on proxy statements and records of proxy votes cast by the
Adviser that are maintained with a third party such as a proxy voting service,
provided that the Adviser has obtained an undertaking from the third party to
provide a copy of the documents promptly upon request.

Cohen & Steers Capital Management, Inc.

This statement sets forth the policies and procedures that Cohen & Steers
Capital Management, Inc. ("C&S") follows in exercising voting rights with
respect to securities held in our client portfolios. All proxy-voting rights
that are exercised by C&S shall be subject to this Statement of Policy and
Procedures.

I. Objectives

Voting rights are an important component of corporate governance. C&S has three
overall objectives in exercising voting rights:

A. Responsibility. C&S shall seek to ensure that there is an effective means in
place to hold companies accountable for their actions. While management must be
accountable to its board, the board must be accountable to a company's
shareholders. Although accountability can be promoted in a variety of ways,
protecting shareholder voting rights may be among our most important tools.

B. Rationalizing Management and Shareholder Concerns. C&S seeks to ensure that
the interests of a company's management and board are aligned with those of the
company's shareholders. In this respect, compensation must be structured to
reward the creation of shareholder value.

C. Shareholder Communication. Since companies are owned by their shareholders,
C&S seeks to ensure that management effectively communicates with its owners
about the company's business operations and financial performance. It is only
with effective communication that shareholders will be able to assess the
performance of management and to make informed decisions on when to buy, sell
or hold a company's securities.

II. General Principles

In exercising voting rights, C&S shall conduct itself in accordance with the
general principles set forth below.

1. The ability to exercise a voting right with respect to a security is a
valuable right and, therefore, must be viewed as part of the asset itself.

2. In exercising voting rights, C&S shall engage in a careful evaluation of
issues that may materially affect the rights of shareholders and the value
of the security.

3. Consistent with general fiduciary principles, the exercise of voting rights
shall always be conducted with reasonable care, prudence and diligence.

4. In exercising voting rights on behalf of clients, C&S shall conduct itself
in the same manner as if C&S were the constructive owner of the securities.

5. To the extent reasonably possible, C&S shall participate in each
shareholder voting opportunity.

6. Voting rights shall not automatically be exercised in favor of
management-supported proposals.

7. C&S, and its officers and employees, shall never accept any item of value
in consideration of a favorable proxy voting decision.

III. General Guidelines

Set forth below are general guidelines that C&S shall follow in exercising
proxy voting rights:

Prudence

In making a proxy voting decision, C&S shall give appropriate consideration to
all relevant facts and circumstances, including the value of the securities to
be voted and the likely effect any vote may have on that value. Since voting
rights must be exercised on the basis of an informed judgment, investigation
shall be a critical initial step.

Third Party Views

While C&S may consider the views of third parties, C&S shall never base a proxy
voting decision solely on the opinion of a third party. Rather, decisions shall
be based on a reasonable and good faith determination as to how best to
maximize shareholder value.

Shareholder Value

Just as the decision whether to purchase or sell a security is a matter of
judgment, determining whether a specific proxy resolution will increase the
market value of a security is a matter of judgment as to which informed parties
may differ. In determining how a proxy vote may affect the economic value of a
security, C&S shall consider both short-term and long-term views about a
company's business and prospects, especially in light of our projected holding
period on the stock (e.g., C&S may discount long-term views on a short-term
holding).

IV. Specific Issues

Set forth below are guidelines as to how specific proxy voting issues shall be
analyzed and assessed by C&S. While these guidelines will provide a framework
for C&S' decision making process, the mechanical application of these
guidelines can never address all proxy voting decisions. When new issues arise
or old issues present nuances not encountered before, C&S must be guided by
their reasonable judgment to vote in a manner that C&S deems to be in the best
interests of the Fund and its shareholders. In addition, because the regulatory
framework and the business cultures and practices vary from region to region,
the below general guidelines may be inconsistent in certain circumstances for
proxies of issuers of securities in Europe and Asia.

A. Uncontested Director Elections

Votes on director nominees should be made on a case-by-case basis using a
"mosaic" approach, where all factors are considered in director elections and
where no single issue is deemed to be determinative. For example, a nominee's
experience and business judgment may be critical to the long-term success of
the portfolio company, notwithstanding the fact that he or she may serve on the
board of more than four public companies. In evaluating nominees, C&S considers
the following factors:

o Whether the nominee attended less than 75 percent of the board and
committee meetings without a valid excuse for the absences;

o Whether the nominee is an inside or affiliated outside director and sits on
the audit, compensation, or nominating committees;

o Whether the nominee ignored a significant shareholder proposal that was
approved by a (i) majority of the shares outstanding or (ii) majority of
the votes cast for two consecutive years;

o Whether the nominee, without shareholder approval, to C&S' knowledge
instituted a new poison pill plan, extended an existing plan, or adopted a
new plan upon the expiration of an existing plan during the past year;

o Whether the nominee is an inside or affiliated outside director and the
full board serves as the audit, compensation, or nominating committee or
the company does not have one of these committees;

o Whether the nominee is an insider or affiliated outsider on boards that are
not at least majority independent;

o Whether the nominee is the CEO of a publicly-traded company who serves on
more than two public boards;

o Whether the nominee serves on more than four public company boards;

o Whether the nominee serves on the audit committee where there is evidence
(such as audit reports or reports mandated under the Sarbanes-Oxley Act)
that there exists material weaknesses in the company's internal controls;

o Whether the nominee serves on the compensation committee if that director
was present at the time of the grant of backdated options or options the
pricing or the timing of which C&S believes may have been manipulated to
provide additional benefits to executives;

o Whether the nominee is believed by C&S to have a material conflict of
interest with the portfolio company; and

o Whether the nominee (or the overall board) in C&S' view has a record of
making poor corporate or strategic decisions or has demonstrated an overall
lack of good business judgment.

C&S votes on a case-by-case basis for shareholder proposals requesting
companies to amend their bylaws in order to create access to the proxy so as to
nominate candidates for directors. C&S recognizes the importance of shareholder
access to the ballot process as a means to ensure that boards do not become
self-perpetuating and self-serving. However, C&S is also aware that some
proposals may promote certain interest groups and could be disruptive to the
nomination process. Special attention will be paid to companies that display a
chronic lack of shareholder accountability.

B. Proxy Contests

Director Nominees in a Contested Election. By definition, this type of board
candidate or slate runs for the purpose of seeking a significant change in
corporate policy or control. Therefore, the economic impact of the vote in
favor of or in opposition to that director or slate must be analyzed using a
higher standard such as is normally applied to changes in control. Criteria for
evaluating director nominees as a group or individually should also include:
the underlying reason why the new slate (or individual director) is being
proposed; performance; compensation; corporate governance provisions and
takeover activity; criminal activity; attendance at meetings; investment in the
company; interlocking directorships; inside, outside and independent directors;
number of other board seats; and other experience. It is impossible to have a
general policy regarding director nominees in a contested election.

Reimbursement of Proxy Solicitation Expenses. Decisions to provide full
reimbursement for dissidents waging a proxy contest should be made on a
case-by-case basis.

C. Ratification of Auditors

C&S votes for proposals to ratify auditors, unless an auditor has a financial
interest in or association with the company, and are therefore not independent;
or there is reason to believe that the independent auditor has rendered an
opinion that is neither accurate nor indicative of the company's financial
position. Generally, C&S votes against auditor ratification and withhold votes
from audit committee members if non-audit fees exceed audit fees. C&S votes on
a case-by-case basis on auditor rotation proposals. Criteria for evaluating the
rotation proposal include, but are not limited to: tenure of the audit firm;
establishment and disclosure of a renewal process whereby the auditor is
regularly evaluated for both audit quality and competitive price; length of the
rotation period advocated in the proposal; and any significant audit related
issues. Generally, C&S votes against auditor indemnification and limitation of
liability; however C&S recognizes there may be situations where indemnification
and limitations on liability may be appropriate.

D. Takeover Defenses

While C&S recognizes that a takeover attempt can be a significant distraction
for the board and management to deal with, the simple fact is that the
possibility of a corporate takeover keeps management focused on maximizing
shareholder value. As a result, C&S opposes measures that are designed to
prevent or obstruct corporate takeovers because they can entrench current
management. The following are C&S' guidelines on change of control issues:

Shareholder Rights Plans. C&S acknowledges that there are arguments for and
against shareholder rights plans, also known as "poison pills." Companies
should put their case for rights plans to shareholders. C&S reviews on a
case-by-case basis management proposals to ratify a poison pill. C&S generally
looks for shareholder friendly features including a two- to three-year sunset
provision, a permitted bid provision and a 20 percent or higher flip-in
provision.

Greenmail. C&S votes for proposals to adopt anti-greenmail charter or bylaw
amendments or otherwise restricts a company's ability to make greenmail
payments.

Unequal Voting Rights. Generally, C&S votes against dual-class
recapitalizations as they offer an effective way for a firm to thwart hostile
takeovers by concentrating voting power in the hands of management or other
insiders.

Classified Boards. C&S generally votes in favor of shareholder proposals to
declassify a board of directors, although C&S acknowledges that a classified
board may be in the long-term best interests of a company in certain
situations. In voting on shareholder proposals to declassify a board of
directors, C&S evaluates all facts and circumstances surrounding such proposal,
including whether the shareholder proposing the de-classification has an agenda
in making such proposal that may be at odds with the long-term best interests
of the company or whether it would be in the best interests of the company to
thwart a shareholder's attempt to control the board of director .

Cumulative Voting. Having the ability to cumulate votes for the election of
directors-that is, cast more than one vote for a director about whom they feel
strongly-generally increases shareholders' rights to effect change in the
management of a corporation. C&S generally supports, therefore, proposals to
adopt cumulative voting.

Shareholder Ability to Call Special Meeting. C&S votes on a case-by-case basis
for shareholder proposals requesting companies to amend their governance
documents (bylaws and/or charter) in order to allow shareholders to call
special meetings. C&S recognizes the importance of shareholder ability to call
a special meeting, however, C&S is also aware that some proposals are put forth
in order to promote the agenda(s) of certain special interest groups and could
be disruptive to the management of the company.

Shareholder Ability to Act by Written Consent. C&S generally votes against
proposals to allow or facilitate shareholder action by written consent. The
requirement that all shareholders be given notice of a shareholders' meeting
and matters to be discussed therein seems to provide a reasonable protection of
minority shareholder rights.

Shareholder Ability to Alter the Size of the Board. C&S generally votes for
proposals that seek to fix the size of the board and vote against proposals
that give management the ability to alter the size of the board without
shareholder approval. While C&S recognizes the importance of such proposals,
C&S is however also aware that these proposals are sometimes put forth in order
to promote the agenda(s) of certain special interest groups and could be
disruptive to the management of the company.

E. Miscellaneous Board Provisions

Board Committees. Boards should delegate key oversight functions, such as
responsibility for audit, nominating and compensation issues, to independent
committees. The chairman and members of any committee should be clearly
identified in the annual report. Any committee should have the authority to
engage independent advisors where appropriate at the company's expense.

Audit, nominating and compensation committees should consist solely of
non-employee directors, who are independent of management.

Separate Chairman and CEO Positions. C&S will generally vote for proposals
looking to separate the CEO and Chairman roles. C&S does acknowledge, however,
that under certain circumstances, it may be reasonable for the CEO and Chairman
roles to be held by a single person.

Lead Directors and Executive Sessions. In cases where the CEO and Chairman
roles are combined, C&S will vote for the appointment of a "lead" (non-insider)
director and for regular "executive" sessions (board meetings taking place
without the CEO/Chairman present).

Majority of Independent Directors. C&S votes for proposals that call for the
board to be composed of a majority of independent directors. C&S believes that
a majority of independent directors can be an important factor in facilitating
objective decision making and enhancing accountability to shareholders.

Independent Committees. C&S votes for shareholder proposals requesting that the
board's audit, compensation, and nominating committees consist exclusively of
independent directors.

Stock Ownership Requirements. C&S supports measures requiring senior executives
to hold a minimum amount of stock in a company (often expressed as a percentage
of annual compensation), requiring stock acquired through option exercise to be
held for a certain minimum amount of time and issuing restricted stock awards
instead of options.

Term of Office. C&S votes against shareholder proposals to limit the tenure of
outside directors. Term limits pose artificial and arbitrary impositions on the
board and could harm shareholder interests by forcing experienced and
knowledgeable directors off the board.

Director and Officer Indemnification and Liability Protection. Proposals
concerning director and officer indemnification and liability protection should
be evaluated on a case-by-case basis.

Board Size. C&S generally votes for proposals to limit the size of the board to
15 members or less.

Majority Vote Standard. C&S generally votes for proposals asking for the board
to initiate the appropriate process to amend the company's governance documents
(charter or bylaws) to provide that director nominees shall be elected by the
affirmative vote of the majority of votes cast at an annual meeting of
shareholders. C&S would generally review on a case-by-case basis proposals that
address alternative approaches to a majority vote requirement.

Confidential Voting. C&S votes for shareholder proposals requesting that
companies adopt confidential voting, use independent tabulators, and use
independent inspectors of election as long as the proposals include clauses for
proxy contests as follows: in the case of a contested election, management
should be permitted to request that the dissident group honor its confidential
voting policy. If the dissidents agree, the policy remains in place. If the
dissidents do not agree, the confidential voting policy is waived.

C&S also votes for management proposals to adopt confidential voting.

Bundled Proposals. C&S reviews on a case-by-case basis bundled or "conditioned"
proxy proposals. In the case of items that are conditioned upon each other, C&S
examines the benefits and costs of the packaged items. In instances where the
joint effect of the conditioned items is not in shareholders' best interests,
C&S votes against the proposals. If the combined effect is positive, C&S
supports such proposals.

Date/Location of Meeting. C&S votes against shareholder proposals to change the
date or location of the shareholders' meeting. No one site will meet the needs
of all shareholders.

Adjourn Meeting if Votes are Insufficient. Open-ended requests for adjournment
of a shareholder meeting generally will not be supported. However, where
management specifically states the reason for requesting an adjournment and the
requested adjournment is necessary to permit a proposal that would otherwise be
supported under this policy to be carried out; the adjournment request will be
supported.

Disclosure of Shareholder Proponents. C&S votes for shareholder proposals
requesting that companies disclose the names of shareholder proponents.
Shareholders may wish to contact the proponents of a shareholder proposal for
additional information.

F. Capital Structure

Increase Additional Common Stock. C&S generally votes for increases in
authorized shares, provided that the increase is not greater than three times
the number of shares outstanding and reserved for issuance (including shares
reserved for stock-related plans and

securities convertible into common stock, but not shares reserved for any
poison pill plan). Votes generally are cast in favor of proposals to authorize
additional shares of stock except where the proposal:
o creates a blank check preferred stock; or
o establishes classes of stock with superior voting rights.

Blank Check Preferred Stock. Votes generally are cast in opposition to
management proposals authorizing the creation of new classes of preferred stock
with unspecific voting, conversion, distribution and other rights, and
management proposals to increase the number of authorized blank check preferred
shares. C&S may vote in favor of this type of proposal when it receives
assurances to its reasonable satisfaction that (i) the preferred stock was
authorized by the board for the use of legitimate capital formation purposes
and not for anti- takeover purposes, and (ii) no preferred stock will be issued
with voting power that is disproportionate to the economic interests of the
preferred stock. These representations should be made either in the proxy
statement or in a separate letter from the company to C&S.

Preemptive Rights. Votes regarding shareholder proposals seeking preemptive
rights are determined on a case-by-case basis after evaluating:

o the size of the company;

o the shareholder base; and

o the liquidity of the stock.

For example, it would be difficult to support a shareholder proposal that would
require an S&P 500 company with over $1 billion in equity held by thousands of
shareholders (with no single shareholder owning a significant percentage of
outstanding shares) to implement preemptive rights each time it conducted a new
offering. Such a requirement would be impractical and extremely costly.
Moreover, at companies with that large of a shareholder base and the ease with
which shareholders could preserve their relative interest through purchases of
shares on the open market, the cost of implementing preemptive rights does not
seem justifiable in relation to the benefits.

Dual Class Capitalizations. Because classes of common stock with unequal voting
rights limit the rights of certain shareholders, C&S votes against adoption of
a dual or multiple class capitalization structure.

Restructurings/Recapitalizations. C&S review proposals to increase common
and/or preferred shares and to issue shares as part of a debt restructuring
plan on a case-by-case basis. In voting, C&S considers the following issues:

o dilution-how much will ownership interest of existing shareholders be
reduced, and how extreme will dilution to any future earnings be?

o change in control-will the transaction result in a change in control of the
company?

o bankruptcy-generally, approve proposals that facilitate debt restructurings
unless there are clear signs of self-dealing or other abuses.

Share Repurchase Programs. Boards may institute share repurchase or stock
buy-back programs for a number of reasons. C&S will generally vote in favor of
such programs where the repurchase would be in the long-term best interests of
shareholders, and where the company is not thought to be able to use the cash
in a more useful way.

C&S will vote against such programs when shareholders' interests could be
better served by deployment of the cash for alternative uses, or where the
repurchase is a defensive maneuver or an attempt to entrench management.

Targeted Share Placements. These shareholder proposals ask companies to seek
shareholder approval before placing 10% or more of their voting stock with a
single investor. The proposals are typically in reaction to the placement by
various companies of a large block of their voting stock in an ESOP, parent
capital fund or with a single friendly investor, with the aim of protecting
themselves against a hostile tender offer. These proposals are voted on a
case-by-case basis after reviewing the individual situation of the company
receiving the proposal.

G. Executive and Director Compensation

Stock-based Incentive Plans. Votes with respect to compensation plans should be
determined on a case-by-case basis. The analysis of compensation plans focuses
primarily on the transfer of shareholder wealth (the dollar cost of pay plans
to shareholders). Other matters included in the analysis are the amount of the
company's outstanding stock to be reserved for the award of stock options or
restricted stock, whether the exercise price of an option is less than the
stock's fair market value at the date of the grant of the options, and whether
the plan provides for the exchange of outstanding options for new ones at lower
exercise prices. Every award type is valued. An estimated dollar cost for the
proposed plan and all continuing plans is derived. This cost, dilution to
shareholders' equity, will also be expressed as a percentage figure for the
transfer of shareholder wealth and will be considered along with dilution to
voting power. Once the cost of the plan is estimated, it is compared to an
allowable industry-specific and market cap-based dilution cap.

If the proposed plan cost is above the allowable cap, an against vote is
indicated. If the proposed cost is below the allowable cap, a vote for the plan
is indicated unless the plan violates the repricing guidelines. If the company
has a history of repricing options or has

the express ability to reprice underwater stock options without first securing
shareholder approval under the proposed plan, the plan receives an against
vote-even in cases where the plan cost is considered acceptable based on the
quantitative analysis.

C&S votes against equity plans that have high average three year burn rates,
unless the company has publicly committed to reduce the burn rate to a rate
that is comparable to its peer group (as determined by C&S).

Approval of Cash or Cash-and-Stock Bonus Plans. C&S votes for cash or
cash-and-stock bonus plans to exempt the compensation from limits on
deductibility under the provisions of Section 162(m) of the Code.

Executive Compensation. Executive compensation should be tied to the
performance of the executive and the company as well as relevant market
conditions. C&S feels that the performance criteria and specific amounts and
types of executive compensation are best decided by a company's board of
directors and/or its compensation committee and fully disclosed to
shareholders.

C&S will, however, vote for shareholder proposals that call for shareholders to
vote, in a non-binding manner, on executive pay since such vote is non-binding
and is merely informative for the board of directors and/or compensation
committee. Further, C&S generally votes for shareholder proposals that seek
additional disclosure of executive and director pay information.

Reload/Evergreen Features. C&S will generally vote against plans that enable
the issuance of reload options and that provide an automatic share
replenishment ("evergreen") feature.

Golden Parachutes. C&S opposes the use of accelerated employment contracts that
result in cash grants of greater than three times annual compensation (salary
and bonus) in the event of termination of employment following a change in
control of a company. In general, the guidelines call for voting against
"golden parachute" plans because they impede potential takeovers that
shareholders should be free to consider. C&S generally withholds its votes at
the next shareholder meeting for directors whom to its knowledge approved
golden parachutes.

401(k) Employee Benefit Plans. C&S votes for proposals to implement a 401(k)
savings plan for employees.

Employee Stock Purchase Plans. C&S supports employee stock purchase plans,
although C&S generally believes the discounted purchase price should be at
least 85% of the current market price.

Option Expensing. C&S votes for shareholder proposals to expense fixed-price
options.

Vesting. C&S believes that restricted stock awards normally should vest over at
least a two-year period.

Option Repricing. C&S believes that stock options generally should not be
re-priced, and never should be re-priced without shareholder approval. In
addition, companies should not issue new options, with a lower strike price, to
make up for previously issued options that are substantially underwater. C&S
will vote against the election of any slate of directors that, to its
knowledge, has authorized a company to re-price or replace underwater options
during the most recent year without shareholder approval.

Stock Holding Periods. C&S generally votes against all proposals requiring
executives to hold the stock received upon option exercise for a specific
period of time.

Transferable Stock Options. C&S reviews on a case-by-case basis proposals to
grant transferable stock options or otherwise permit the transfer of
outstanding stock options, including cost of proposal and alignment with
shareholder interests.

Recoup Bonuses. C&S votes on a case-by-case on shareholder proposals to recoup
unearned incentive bonuses or other incentive payments made to senior
executives if it is later determined that fraud, misconduct, or negligence
significantly contributed to a restatement of financial results that led to the
awarding of unearned incentive compensation.

H. Incorporation

Reincorporation Outside of the United States. Generally, C&S will vote against
companies looking to reincorporate outside of the U.S.

Voting on State Takeover Statutes. C&S reviews on a case-by-case basis
proposals to opt in or out of state takeover statutes (including control share
acquisition statutes, control share cash-out statutes, freeze out provisions,
fair price provisions, stakeholder laws, poison pill endorsements, severance
pay and labor contract provisions, anti greenmail provisions, and disgorgement
provisions). In voting on these shareholder proposals, C&S evaluates all facts
and circumstances surrounding such proposal, including whether the shareholder
proposing such measure has an agenda in making such proposal that may be at
odds with the long-term best interests of the company or whether it would be in
the best interests of the company to thwart a shareholder's attempt to control
the board of directors.

Voting on Reincorporation Proposals. Proposals to change a company's state of
incorporation are examined on a case-by-case basis. In making its decision, C&S
reviews management's rationale for the proposal, changes to the charter/bylaws,
and differences in the state laws governing the companies.

I. Mergers and Corporate Restructurings

Mergers and Acquisitions. Votes on mergers and acquisitions should be
considered on a case-by-case basis, taking into account factors including the
following: anticipated financial and operating benefits; offer price (cost vs.
premium); prospects of the combined companies; how the deal was negotiated; and
changes in corporate governance and their impact on shareholder rights.

C&S votes against proposals that require a super-majority of shareholders to
approve a merger or other significant business combination. C&S supports
proposals that seek to lower supermajority voting requirements.

Nonfinancial Effects of a Merger or Acquisition. Some companies have proposed a
charter provision which specifies that the board of directors may examine the
nonfinancial effect of a merger or acquisition on the company. This provision
would allow the board to evaluate the impact a proposed change in control would
have on employees, host communities, suppliers and/or others. C&S generally
votes against proposals to adopt such charter provisions. C&S feels it is the
directors' fiduciary duty to base decisions solely on the financial interests
of the shareholders.

Corporate Restructuring. Votes on corporate restructuring proposals, including
minority squeeze outs, leveraged buyouts, "going private" proposals, spin-offs,
liquidations, and asset sales, should be considered on a case-by-case basis.

Spin-offs. Votes on spin-offs should be considered on a case-by-case basis
depending on the tax and regulatory advantages, planned use of sale proceeds,
market focus, and managerial incentives.

Asset Sales. Votes on asset sales should be made on a case-by-case basis after
considering the impact on the balance sheet/working capital, value received for
the asset, and potential elimination of diseconomies.

Liquidations. Votes on liquidations should be made on a case-by-case basis
after reviewing management's efforts to pursue other alternatives, appraisal
value of assets, and the compensation plan for executives managing the
liquidation.

Appraisal Rights. C&S votes for proposals to restore, or provide shareholders
with, rights of appraisal. Rights of appraisal provide shareholders who are not
satisfied with the terms of certain corporate transactions the right to demand
a judicial review in order to determine a fair value for their shares.

Changing Corporate Name. C&S votes for changing the corporate name.

J. Social Issues

C&S believes that it is the responsibility of the board and management to run a
company on a daily basis. With this in mind, in the absence of unusual
circumstances, C&S does not believe that shareholders should be involved in
determining how a company should address broad social and policy issues. As a
result, C&S generally votes against these types of proposals, which are
generally initiated by shareholders, unless C&S believes the proposal has
significant economic implications.

Columbia Management Advisors, LLC

Proxy Voting Policies and Procedures - Columbia Management Investment Advisers,
LLC

General. The policy of Columbia Management Investment Advisers, LLC (CMIA) is
to vote all proxies for fund securities in a manner considered by CMIA to be in
the best economic interests of its clients, including the funds that it
subadvises, without regard to any benefit or detriment to CMIA, its employees
or its affiliates. The best economic interests of clients is defined for this
purpose as the interest of enhancing or protecting the value of client
accounts, considered as a group rather than individually, as CMIA determines in
its discretion. CMIA endeavors to vote all proxies of which it becomes aware
prior to the vote deadline; provided, however, that in certain circumstances
CMIA may refrain from voting securities. For instance, CMIA may refrain from
voting foreign securities if it determines that the costs of voting outweigh
the expected benefits of voting and typically will not vote securities if
voting would impose trading restrictions. In addition, CMIA will generally
refrain from recalling portfolio securities on loan to vote proxies.

Oversight. The operation of CMIA's proxy voting policy and procedures is
overseen by a committee (the Proxy Voting Committee) composed of
representatives of CMIA's equity investments, equity research, compliance,
legal and operations functions. The Proxy Voting Committee has the
responsibility to review, at least annually, CMIA's proxy voting policies to
ensure consistency with internal policies, regulatory requirements, conflicts
of interest and client disclosures.

The Proxy Voting Committee also develops predetermined voting guidelines used
to vote securities. The voting guidelines indicate whether to vote for, against
or abstain from particular proposals, or whether the matter should be
considered on a case-by-case basis. The Proxy Voting Committee may determine to
vote differently from the guidelines on particular proposals in the event it
determines that doing so is in the clients' best economic interests. CMIA may
also consider the voting recommendations of analysts, portfolio managers and
information obtained from outside resources, including one or more third-party
research providers. When proposals are not covered by the voting guidelines or
a voting determination must be made on a case-by-case basis, a portfolio
manager or analyst will make the voting determination based on his or her
determination of the clients' best economic interests. In addition, the Proxy
Voting Committee may determine proxy votes when proposals require special
consideration.

Addressing Conflicts of Interest. CMIA seeks to address potential material
conflicts of interest by having predetermined voting guidelines. In addition,
if CMIA determines that a material conflict of interest exists, CMIA will
invoke one or more of the following conflict management practices: (i) causing
the proxies to be voted in accordance with the recommendations of an
independent third party

(which may be CMIA's proxy voting administrator or research provider); (ii)
causing the proxies to be delegated to an independent third party (which may be
CMIA's proxy voting administrator or research provider); and (iii) in unusual
cases, with the client's consent and upon ample notice, forwarding the proxies
to CMIA's clients so that they may vote the proxies directly. A member of the
Proxy Voting Committee is prohibited from voting on any proposal for which he
or she has a conflict of interest by reason of a direct relationship with the
issuer or other party affected by a given proposal. Persons making
recommendations to the Proxy Voting Committee or its members are required to
disclose to the committee any relationship with a party making a proposal or
other matter known to the person that would create a potential conflict of
interest.

Proxy Voting Agents. CMIA has retained Institutional Shareholder Services Inc.,
a third-party vendor, as its proxy voting administrator to implement its proxy
voting process and to provide recordkeeping and vote disclosure services. CMIA
has retained both Institutional Shareholder Services Inc. and Glass-Lewis & Co.
to provide proxy research services.

Proxy Voting Guidelines. Set forth below are guidelines adopted and used by
CMIA (the Adviser, We, Us or Our) in voting proxies (the Guidelines). The
Guidelines are organized by issue and present certain factors that may be
considered in making proxy voting determinations. The Adviser may, in
exercising its fiduciary discretion, determine to vote any proxy in a manner
contrary to these Guidelines.

Directors, Boards, Committees

Elect Directors

In a routine election of directors, the Adviser generally votes FOR the slate
nominated by the nominating committee of independent directors, who are in the
best position to know what qualifications are needed for each director to
contribute to an effective board. The Adviser generally will WITHHOLD support
from a nominee who fails to meet one or more of the following criteria:

Independence - A nominee who is deemed an affiliate of the company by
virtue of a material business, familial or other relationship with the
company but is otherwise not an employee.

Attendance - A nominee who failed to attend at least 75% of the board's
meetings.

Over Boarding - A nominee who serves on more than four other public company
boards or an employee director nominee who serves on more than two other
public company boards.

Committee Membership - A nominee who has been assigned to the audit,
compensation, nominating, or governance committee if that nominee is not
independent of management, or if the nominee does not meet the specific
independence and experience requirements for audit committees or the
independence requirements for compensation committees.

Audit Committee Chair- A nominee who serves as audit committee chair where
the committee failed to put forth shareholder proposals for ratification of
auditors.

Board Independence- A nominee of a company whose board as proposed to be
constituted would have more than one-third of its members from management.

Interlocking Directorship - A nominee who is an executive officer of
another company on whose board one of the company's executive officers
sits.

Poor Governance - A nominee involved with options backdating, financial
restatements or material weakness in controls, approving egregious
compensation, or who has consistently disregarded the interests of
shareholders.

The Adviser will vote on a CASE-BY-CASE basis on any director nominee who meets
the aforementioned criteria but whose candidacy has otherwise been identified
by the third party research provider as needing further consideration for any
reason not identified above.

In the case of contested elections, the Adviser will vote on a CASE-BY-CASE
basis, taking into consideration the above criteria and other factors such as
the background of the proxy contest, the performance of the company, current
board and management, and qualifications of nominees on both slates.

Shareholder Nominations for Director

The Adviser will vote on a CASE-BY-CASE basis for shareholder-nominated
candidates for director, taking into account various factors including, but not
limited to: company performance, the circumstances compelling the nomination by
the shareholder, composition of the incumbent board, and the criteria listed
above the Adviser uses to evaluate nominees.

Shareholder Nominations for Director - Special Criteria

The Adviser generally votes in accordance with recommendations made by its
third party research provider, which are typically based on the view that board
nominating committees are responsible for establishing and implementing
policies regarding the composition of the board and are therefore in the best
position to make determinations with respect to special nominating criteria.

Director Independence and Committees

The Adviser generally will vote FOR proposals that require all members of a
board's key committees (audit, compensation, nominating or governance) be
independent from management.

Independent Board Chair / Lead Director

The Adviser generally will vote FOR proposals supporting an independent board
chair or lead director and FOR the separation of the board chair and CEO roles,
as independent board leaders foster the effectiveness of the independent
directors and ensure appropriate oversight of management.

Removal of Directors

The Adviser generally will vote FOR proposals that amend governing documents to
grant or restore shareholder ability to remove directors with cause, and
AGAINST proposals that provide directors may be removed only by supermajority
vote. The Adviser will vote on a CASE-BY-CASE basis on proposals calling for
removal of specific directors.

Board Vacancies

The Adviser generally votes in accordance with recommendations made by its
third party research provider in the case of vacancies filled by continuing
directors, taking into account factors including whether the proposal is in
connection with a proxy contest or takeover situation.

Cumulative Voting

In the absence of proxy access rights or majority voting, the Adviser generally
will vote FOR the restoration or provision for cumulative voting and AGAINST
its elimination.

Majority Voting

The Adviser generally will vote FOR amendments to governing documents that
provide that nominees standing for election to the board must receive a
majority of votes cast in order to be elected to the board.

Number of Directors

The Adviser generally will vote FOR amendments to governing documents that
provide directors the authority to adjust the size of the board to adapt to
needs that may arise.

Term Limits

The Adviser generally will vote AGAINST proposals seeking to establish a limit
on director terms or mandatory retirement.

General Corporate Governance

Right to Call a Special Meeting

The Adviser generally votes in accordance with recommendations made by its
third party research provider, which typically recommends votes FOR adoption,
considering factors such as proposed ownership threshold, company size, and
shareholder ownership, but will not support proposals allowing for investors
with less than 10% ownership to call a special meeting.

Eliminate or Restrict Right to Call Special Meeting

The Adviser will generally vote AGAINST proposals to eliminate the right of
shareholders to call special meetings.

Lead Independent Director Right to Call Special Meeting

The Adviser will generally vote FOR governance document amendments or other
proposals which give the lead independent director the authority to call
special meetings of the independent directors at any time.

Adjourn Meeting

The Adviser will vote on a CASE-BY-CASE basis on adjournment proposals and
generally in the same direction as the primary proposal (i.e., if supporting
the primary proposal, favor adjournment; if not supporting the primary
proposal, oppose adjournment).

Other Business

The Adviser generally will vote AGAINST proposals seeking to give management
the authority to conduct or vote on other business at shareholder meetings on
the grounds that shareholders not present at the meeting would be unfairly
excluded from such deliberations.

Eliminate or Restrict Action by Written Consent

The Adviser will generally vote AGAINST proposals to eliminate the right of
shareholders to act by written consent since it may be appropriate to take such
action in some instances.

Vote Unmarked Proxies

The Adviser generally will vote FOR proposals prohibiting voting of unmarked
proxies in favor of management.

Proxy Contest Advance Notice

The Adviser generally will vote AGAINST proposals to amend governing documents
that require advance notice for shareholder proposals or director nominees
beyond notice that allows for sufficient time for company response, SEC review,
and analysis by other shareholders.

Minimum Stock Ownership

The Adviser will vote on a CASE-BY-CASE basis on proposals regarding minimum
stock ownership levels.

Director and Officer Indemnification

The Adviser will generally vote FOR the provision of a maximum dollar amount
that can be obtained through the course of legal action from a director or
officer who acts in good faith and does not benefit from a transaction.

Confidential Voting

The Adviser generally will vote FOR actions that ensure all proxies, ballots,
and voting tabulations which identify shareholders be kept confidential, except
where disclosure is mandated by law. The Adviser supports the proposal to
minimize pressure on shareholders, particularly employee shareholders.

Miscellaneous Governing Document Amendments

The Adviser generally will vote FOR bylaw or charter changes that are of a
housekeeping nature (e.g., updates or corrections).

Change Company Name

The Adviser will generally vote FOR routine business matters such as changing
the company's name.

Approve Minutes

The Adviser will generally vote FOR routine procedural matters such as
approving the minutes of a prior meeting.

Change Date/Time/Location of Annual Meeting

The Adviser will vote in accordance with the recommendation of the third-party
research provider on proposals to change the date, time or location of the
company's annual meeting of shareholders.

Approve Annual, Financial and Statutory Reports

The Adviser generally will vote FOR proposals to approve the annual reports and
accounts, financial and statutory reports, provided companies required to
comply with U.S. securities laws have included the certifications required by
the Sarbanes Oxley Act of 2002.

Compensation

Approve or Amend Omnibus Equity Compensation Plan

The Adviser generally votes in accordance with recommendations made by its
third party research provider, which typically recommends votes FOR adoption or
amendments to omnibus (general) equity compensation plans for employees or
non-employee directors if they are reasonable and consistent with industry and
country standards, and AGAINST compensation plans that substantially dilute
ownership interest in a company, provide participants with excessive awards, or
have objectionable structural features.

Approve or Amend Stock Option Plan

The Adviser generally votes in accordance with recommendations made by its
third party research provider, which are typically based on factors including
cost, size, and pattern of grants in comparison to peer groups, history of
repricing, and grants to senior executives and non-employee directors.

Approve or Amend Employee Stock Purchase Plan

The Adviser generally votes in accordance with recommendations made by its
third party research provider, which are typically based on factors including
the plan's cost to shareholders, whether those costs are in line with the
company's peer's plans, and whether the plan requires shareholder approval
within five years.

Approve or Amend Performance-Based 162(m) Compensation Plan

The Adviser generally votes in accordance with recommendations made by its
third party research provider, which are typically based on factors that
consider the goal of the plan and in particular the linkage between potential
payments to senior executives and the attainment of preset performance-based
metrics.

Approve or Amend Restricted Stock Plan

The Adviser generally votes in accordance with recommendations made by its
third party research provider, which considers such factors as the balance of
all equity grants and awards, the term and other restrictions in place for
restricted stock.

Stock Option Repricing or Exchanges

The Adviser generally votes in accordance with recommendations made by its
third party research provider on matters relating to the repricing of stock
options, which are typically based on factors such as whether the amending
terms lead to a reduction in shareholder rights, allow the plan to be amended
without shareholder approval, or change the terms to the detriment of employee
incentives such as excluding a certain class or group of employees. The Adviser
generally will vote FOR proposals to put stock option repricings to a
shareholder vote.

Performance-Based Stock Options

The Adviser will vote on a CASE-BY-CASE basis regarding proposals urging that
stock options be performance-based rather than tied to the vagaries of the
stock market.

Ban Future Stock Option Grants

The Adviser generally will vote AGAINST proposals seeking to ban or eliminate
stock options in equity compensation plans as such an action would preclude the
company from offering a balanced compensation program.

Require Stock Retention Period

The Adviser generally will vote FOR proposals requiring senior executives to
hold stock obtained by way of a stock option plan for a minimum of three years.

Require Approval of Extraordinary Benefits

The Adviser generally will vote FOR proposals specifying that companies
disclose any extraordinary benefits paid or payable to current or retired
senior executives and generally will vote AGAINST proposals requiring
shareholder approval of any such extraordinary benefits.

Pay for Performance

The Adviser will vote on a CASE-BY-CASE basis regarding proposals seeking to
align executive compensation with shareholders' interests.

Say on Pay

The Adviser generally votes in accordance with recommendations made by its
third party research provider on these proposals, taking into consideration the
nature of the proposal, whether the proposal seeks any change in compensation
policy, and an analysis of the Compensation Discussion and Analysis disclosure
and pay for performance practices of the company.

Executive Severance Agreements

The Adviser generally votes in accordance with recommendations made by its
third party research provider on these proposals regarding approval of specific
executive severance arrangements in the event of change in control of a company
or due to other circumstances.

Approve or Amend Deferred Compensation Plans for Directors

The Adviser generally will vote FOR approval or amendments to deferred
compensation plans for non-employee directors, so that they may defer
compensation earned until retirement.

Set Director Compensation

The Adviser generally will vote AGAINST proposals that seek to limit director
compensation or mandate that compensation be paid solely in shares of stock.

Director Retirement Plans

The Adviser will generally vote AGAINST the adoption or amendment of director
retirement plans on the basis that directors should be appropriately
compensated while serving and should not view service on a board as a long-term
continuing relationship with a company.

Business Entity and Capitalization

Common or Preferred Stock - Increase in Authorized Shares or Classes

The Adviser will vote on a CASE-BY-CASE basis regarding proposals to increase
authorized shares of common stock or to add a class of common stock, taking
into consideration the company's capital goals that may include stock splits,
stock dividends, or financing for acquisitions or general operations. With
respect to proposals seeking to increase authorized shares of preferred stock,
to add a

class of preferred stock, to authorize the directors to set the terms of the
preferred stock or to amend the number of votes per share of preferred stock,
The Adviser will vote on a CASE-BY-CASE basis on the grounds that such actions
may be connected to a shareholder rights' plan that the Adviser also will
consider on a CASE-BY-CASE basis.

Common or Preferred Stock - Decrease in Authorized Shares or Classes

The Adviser generally will vote FOR proposals seeking to decrease authorized
shares of common or preferred stock or the elimination of a class of common or
preferred stock.

Common Stock - Change in Par Value

The Adviser generally will vote FOR proposals to change the par value of the
common stock, provided that the changes do not cause a diminution in
shareholder rights.

Authorize Share Repurchase Program

The Adviser generally will vote FOR proposals to institute or renew open market
share repurchase plans in which all shareholders may participate on equal
terms.

Stock Splits

The Adviser generally will vote FOR stock split proposals on the grounds that
they intended to encourage stock ownership of a company.

Private Placements, Conversion of Securities, Issuance of Warrants or
Convertible Debentures

The Adviser will generally vote FOR the issuance of shares for private
placements, the conversion of securities from one class to another, and the
issuance of warrants or convertible debentures on the grounds that such
issuances may be necessary and beneficial for the financial health of the
company and may be a low cost source of equity capital. The Adviser will
generally vote AGAINST any such issuance or related action if the proposal
would in any way result in new equity holders having superior voting rights,
would result in warrants or debentures, when exercised, holding in excess of 20
percent of the currently outstanding voting rights, or if the proposal would in
any way diminish the rights of existing shareholders.

Issuance of Equity or Equity-Linked Securities without Subscription Rights
(Preemptive Rights)

The Adviser generally will vote FOR proposals that seek shareholder approval of
the issuance of equity, convertible bonds or other equity-linked debt
instruments, or to issue shares to satisfy the exercise of such securities that
are free of subscription (preemptive) rights on the grounds that companies must
retain the ability to issue such securities for purposes of raising capital.
The Adviser generally will vote AGAINST any proposal where dilution exceeds 20
percent of the company's outstanding capital.

Recapitalization

The Adviser generally will vote FOR recapitalization plans that combine two or
more classes of stock into one class, or that authorize the company to issue
new common or preferred stock for such plans. The Adviser generally will vote
AGAINST recapitalization plans that would result in the diminution of rights
for existing shareholders.

Merger Agreement

The Adviser will vote on a CASE-BY-CASE basis on proposals seeking approval of
a merger or merger agreement and all proposals related to such primary
proposals, taking into consideration the particular facts and circumstances of
the proposed merger and its potential benefits to existing shareholders.

Going Private

The Adviser will vote on a CASE-BY-CASE basis on proposals that allow listed
companies to de-list and terminate registration of their common stock, taking
into consideration the cash-out value to shareholders, and weighing the value
in continuing as a publicly traded entity.

Reincorporation

The Adviser will vote on a CASE-BY-CASE basis on reincorporation proposals,
taking into consideration whether financial benefits (e.g., reduced fees or
taxes) likely to accrue to the company as a result of a reincorporation or
other change of domicile outweigh any accompanying material diminution of
shareholder rights. The Adviser will generally vote AGAINST the proposal unless
the long-term business reasons for doing so are valid. The Adviser will
generally vote FOR proposals to consider reincorporating in the United States
if a company left the country for the purpose of avoiding taxes.

Bundled Proposals

The Adviser generally votes in accordance with recommendations made by its
third party research provider on "bundled" or otherwise conditioned proposals,
which are determined depending on the overall economic effects to shareholders.

Defense Mechanisms

Shareholder Rights' Plan (Poison Pill)

The Adviser will vote on a CASE-BY-CASE basis regarding management proposals
seeking ratification of a shareholder rights' plan, including a net operating
loss (NOL) shareholder rights' plan, or stockholder proposals seeking
modification or elimination of any existing shareholder rights' plan.

Supermajority Voting

The Adviser generally will vote FOR the elimination or material diminution of
provisions in company governing documents that require the affirmative vote of
a supermajority of shareholders for approval of certain actions, and generally
will vote AGAINST the adoption of any supermajority voting clause.

Control Share Acquisition Provisions

The Adviser generally will vote FOR proposals to opt out of control share
acquisition statutes and will generally vote AGAINST proposals seeking approval
of control share acquisition provisions in company governing documents on the
grounds that such provisions may harm long-term share value by effectively
entrenching management. The ability to buy shares should not be constrained by
requirements to secure approval of the purchase from other shareholders.

Anti-Greenmail

The Adviser generally will vote FOR proposals to adopt anti-greenmail governing
document amendments or to otherwise restrict a company's ability to make
greenmail payments.

Classification of Board of Directors

The Adviser generally will vote FOR proposals to declassify a board and AGAINST
proposals to classify a board, absent special circumstances that would indicate
that shareholder interests are better served by voting to the contrary.

Auditors

Ratify or Appoint Auditors

The Adviser generally votes in accordance with recommendations made by its
third party research provider, which typically recommends votes FOR
ratification or appointment except in situations where there are questions
about the relative qualification of the auditors, conflicts of interest,
auditor involvement in significant financial restatements, option backdating,
material weaknesses in controls, attempts to limit auditor liability or
situations where independence has been compromised.

Prohibit or Limit Auditor's Non-Audit Services

The Adviser generally votes in accordance with recommendations made by its
third party research provider, which typically recommends votes AGAINST these
proposals since it may be necessary or appropriate for auditors to provide a
service related to the business of a company and that service will not
compromise the auditors' independence. In addition, Sarbanes-Oxley legislation
spells out the types of services that need pre-approval or would compromise
independence.

Indemnification of External Auditor

The Adviser will generally vote AGAINST proposals to indemnify external
auditors on the grounds that indemnification agreements may limit pursuit of
legitimate legal recourse against the audit firm.

Indemnification of Internal Auditor

The Adviser will generally vote FOR the indemnification of internal auditors,
unless the costs associated with the approval are not disclosed.

Social and Environmental

Disclose Social Agenda

The Adviser generally will ABSTAIN from voting on proposals that seek
disclosure, often in the form of a report, on items such as military contracts
or sales, environmental or conservation initiatives, business relationships
with foreign countries, or animal welfare for the following reasons: a) our
clients are likely to have different views of what is a socially responsible
policy, b) whether social responsibility issues other than those mandated by
law should be the subject of corporate policy, or c) because the impact of such
disclosure on share value can rarely be anticipated with any degree of
confidence.

Socially Responsible Investing

The Adviser generally will ABSTAIN from voting on proposals that seek to have a
company take a position on social or environmental issues, for the reasons
cited under `Disclose Social Agenda' above.

Prohibit or Disclose Contributions and Lobbying Expenses

The Adviser generally votes in accordance with recommendations made by its
third party research provider, which typically considers the proposal in the
context of the company's current disclosures, Federal and state laws, and
whether the proposal is in shareholders' best interests.

Disclose Prior Government Service

The Adviser generally will ABSTAIN from voting on proposals seeking the company
to furnish a list of high-ranking employees who served in any governmental
capacity over the last five years.

Change in Operations or Products Manufactured or Sold

The Adviser generally will ABSTAIN from voting on proposals seeking to change
the way a company operates (e.g., protect human rights, sexual orientation,
stop selling tobacco products, move manufacturing operations to another
country, etc.) .

Executive Compensation Report

The Adviser generally will vote AGAINST proposals seeking companies to issue a
report on linkages between executive compensation and financial, environmental
and social performance on the grounds that executive compensation is a business
matter for the company's board to consider.

Pay Equity

The Adviser will generally vote AGAINST proposals seeking a cap on the total
pay and other compensation of its executive officers to no more than a
specified multiple of the pay of the average employee of the company.

Foreign Issues

Foreign Issues- Directors, Boards, Committees

Approve Discharge of Management (Supervisory) Board

The Adviser generally votes in accordance with recommendations made by its
third party research provider, which typically recommends votes FOR approval of
the board, based on factors including whether there is an unresolved
investigation or whether the board has participated in wrongdoing. This is a
standard request in Germany and discharge is generally granted unless a
shareholder states a specific reason for withholding discharge and intends to
take legal action.

Announce Vacancies on Management (Supervisory) Board

The Adviser generally will vote FOR proposals requesting shareholder approval
to announce vacancies on the board, as is required under Dutch law.

Approve Director Fees

The Adviser generally votes in accordance with recommendations made by its
third party research provider on proposals seeking approval of director fees.

Foreign Issues- General Corporate Governance

Digitalization of Certificates

The Adviser generally will vote FOR proposals seeking shareholder approval to
amend a company's articles of incorporation to eliminate references to share
certificates and beneficial owners, and to make other related changes to bring
the articles in line with recent regulatory changes for Japanese companies.

Authorize Filing of Required Documents and Other Formalities

The Adviser generally will vote FOR proposals requesting shareholders authorize
the holder of a copy of the minutes of the general assembly to accomplish any
formalities required by law, as is required in France.

Propose Publications Media

The Adviser generally will vote FOR proposals requesting shareholders approve
the designation of a newspaper as the medium to publish the company's meeting
notice, as is common in Chile and other countries.

Clarify Articles of Association or Incorporation

The Adviser generally will vote FOR proposals seeking shareholder approval of
routine housekeeping of the company's articles, including clarifying items and
deleting obsolete items.

Update Articles of Association or Incorporation with Proxy Results

The Adviser generally will vote FOR proposals requesting shareholders approve
changes to the company's articles of association or incorporation to reflect
the results of a proxy vote by shareholders, which is a routine proposal in
certain country's proxies.

Conform Articles of Association or Incorporation to Law or Stock Exchange

The Adviser generally will vote FOR proposals requesting shareholder approval
to amend the articles of association or incorporation to conform to new
requirements in local or national law or rules established by a stock exchange
on which its stock is listed.

Authorize Board to Ratify and Execute Approved Resolutions

The Adviser generally will vote FOR proposals requesting shareholder approval
to authorize the board to ratify and execute any resolutions approved at the
meeting.

Prepare and Approve List of Shareholders

The Adviser generally votes FOR proposals requesting shareholder approval for
the preparation and approval of the list of shareholders entitled to vote at
the meeting, which is a routine formality in European countries.

Authorize Company to Engage in Transactions with Related Parties

The Adviser generally will vote FOR proposals requesting shareholder approval
for the company, its subsidiaries, and target associated companies to enter
into certain transactions with persons who are considered "interested parties"
as defined in Chapter 9A of the Listing Manual of the Stock Exchange of
Singapore (SES), as the SES related-party transaction rules are fairly
comprehensive and provide shareholders with substantial protection against
insider trading abuses.

Amend Articles to Lower Quorum Requirement for Special Business

The Adviser generally will vote on a CASE-BY-CASE basis on proposals seeking to
amend the articles to lower the quorum requirement to one-third for special
business resolutions at a shareholder meeting, which is common when certain
material transactions such as mergers or acquisitions are to be considered by
shareholders.

Change Date/Location of Annual Meeting

The Adviser will vote in accordance with the recommendation of the third-party
research provider on proposals to change the date, time or location of the
company's annual meeting of shareholders.

Elect Chairman of the Meeting

The Adviser generally will vote FOR proposals requesting shareholder approval
to elect the chairman of the meeting, which is a routine meeting formality in
certain European countries.

Authorize New Product Lines

The Adviser generally will vote FOR proposals requesting shareholder approval
to amend the company's articles to allow the company to expand into new lines
of business.

Approve Financial Statements, Directors' Reports and Auditors' Reports

The Adviser generally will vote FOR proposals that request shareholder approval
of the financial statements, directors' reports, and auditors' reports.

Foreign Issues- Compensation

Approve Retirement Bonuses for Directors/Statutory Auditors

The Adviser generally will ABSTAIN from voting on proposals requesting
shareholder approval for the payment of retirement bonuses to retiring
directors and/or statutory auditors, which is a standard request in Japan,
because information to justify the proposal is typically insufficient.

Approve Payment to Deceased Director's/Statutory Auditor's Family

The Adviser generally will ABSTAIN from voting on proposals requesting
shareholder approval for the payment of a retirement bonus to the family of a
deceased director or statutory auditor, which is a standard request in Japan,
because information to justify the proposal is typically insufficient.

Foreign Issues- Business Entity, Capitalization

Set or Approve the Dividend

The Adviser generally will vote FOR proposals requesting shareholders approve
the dividend rate set by management.

Approve Allocation of Income and Dividends

The Adviser generally will vote FOR proposals requesting shareholders approve a
board's allocation of income for the current fiscal year, as well as the
dividend rate.

Approve Scrip (Stock) Dividend Alternative

The Adviser generally will vote FOR proposals requesting shareholders authorize
dividend payments in the form of either cash or shares at the discretion of
each shareholder, provided the options are financially equal. The Adviser
generally will vote AGAINST proposals that do not allow for a cash option
unless management demonstrates that the cash option is harmful to shareholder
value.

Authorize Issuance of Equity or Equity-Linked Securities

The Adviser generally will vote FOR proposals requesting shareholder approval
to permit the board to authorize the company to issue convertible bonds or
other equity-linked debt instruments or to issue shares to satisfy the exercise
of such securities.

Authorize Issuance of Bonds

The Adviser generally will vote FOR proposals requesting shareholder approval
granting the authority to the board to issue bonds or subordinated bonds.

Authorize Capitalization of Reserves for Bonus Issue or Increase in Par Value

The Adviser generally will vote FOR proposals requesting shareholder approval
to increase authorized stock by capitalizing various reserves or retained
earnings, which allows shareholders to receive either new shares or a boost in
the par value of their shares at no cost.

Increase Issued Capital for Rights Issue

The Adviser generally will vote FOR proposals requesting shareholder approval
to increase to issued capital in order to offer a rights issue to current
registered shareholders, which provides shareholders the option of purchasing
additional shares of the company's stock, often at a discount to market value,
and the company will use the proceeds from the issue to provide additional
financing.

Board Authority to Repurchase Shares

The Adviser generally will vote FOR proposals requesting that a board be given
the authority to repurchase shares of the company on the open market, with such
authority continuing until the next annual meeting.

Authorize Reissuance of Repurchased Shares

The Adviser generally will vote FOR proposals requesting shareholder approval
to reissue shares of the company's stock that had been repurchased by the
company at an earlier date.

Approve Payment of Corporate Income Tax

The Adviser generally will vote FOR proposals seeking approval for the use by a
company of its reserves in order to pay corporate taxes, which is common
practice in Europe.

Cancel Pre-Approved Capital Issuance Authority

The Adviser generally will vote FOR proposals requesting shareholders cancel a
previously approved authority to issue capital, which may be necessary in
Denmark as companies there do not have authorized but unissued capital that
they may issue as needed like their counterparts in other countries.

Allotment of Unissued Shares

The Adviser generally will vote FOR proposals requesting that shareholders give
the board the authority to allot or issue unissued shares.

Authority to Allot Shares for Cash

The Adviser generally will vote FOR proposals requesting that shareholders give
the board the ability to allot a set number of authorized but unissued shares
for the purpose of employee share schemes and to allot equity securities for
cash to persons other than existing shareholders up to a limited aggregate
nominal amount (a percentage of the issued share capital of the company).

Foreign Issues- Defense Mechanisms

Authorize Board to Use All Outstanding Capital

The Adviser will vote on a CASE-BY-CASE basis on proposals requesting
shareholders authorize the board, for one year, to use all outstanding capital
authorizations in the event that a hostile public tender or exchange offer is
made for the company, which is a common anti-takeover measure in France similar
to the way U.S. companies use preferred stock.

Foreign Issues- Auditors

Approve Special Auditors' Report

The Adviser generally will vote FOR proposals that present shareholders of
French companies, as required by French law, with a special auditor's report
that confirms the presence or absence of any outstanding related party
transactions. At a minimum, such transactions (with directors or similar
parties) must be previously authorized by the board. This part of the French
commercial code provides shareholders with a mechanism to ensure an annual
review of any outstanding related party transactions.

Appoint Statutory Auditor

The Adviser generally will vote FOR proposals requesting shareholder approval
to appoint the internal statutory auditor, designated as independent internal
auditor as required by the revised Japanese Commercial Code.

Foreign Issues- Social and Environmental

Authorize Company to Make EU Political Organization Donations

The Adviser generally will ABSTAIN from voting on proposals that seek
authorization for the company to make EU political organization donations and
to incur EU political expenditures.

Delaware Management Company

If and when proxies need to be voted on behalf of the Funds, the Delaware
Management Company (the sub-adviser) will vote such proxies pursuant to its
Proxy Voting Policies and Procedures (the "Procedures"). The sub-adviser has
established a Proxy Voting Committee (the "Committee") which is responsible for
overseeing the Adviser's proxy voting process for the Funds. One of the main
responsibilities of the Committee is to review and approve the Procedures to
ensure that the Procedures are designed to allow the sub-adviser to vote
proxies in a manner consistent with the goal of voting in the best interests of
the Funds.

In order to facilitate the actual process of voting proxies, the Adviser has
contracted with Institutional Shareholder Services ("ISS"), a Delaware
corporation and wholly owned subsidiary of RiskMetrics Group ("RiskMetrics") to
analyze proxy statements on behalf of the Funds and other Adviser clients and
vote proxies generally in accordance with the Procedures. The Committee is
responsible for overseeing ISS/Risk Metrics proxy voting activities. If a proxy
has been voted for the Funds, ISS/Risk Metrics will create a record of the
vote.

The Procedures contain a general guideline that recommendations of company
management on an issue (particularly routine issues) should be given a fair
amount of weight in determining how proxy issues should be voted. However, the
Adviser will normally vote against management's position when it runs counter
to its specific Proxy Voting Guidelines (the "Guidelines"), and the Adviser
will also vote against management's recommendation when it believes that such
position is not in the best interests of the Funds.

As stated above, the Procedures also list specific Guidelines on how to vote
proxies on behalf of the Funds. Some examples of the Guidelines are as follows:
(i) generally vote for shareholder proposals asking that a majority or more of
directors be independent; (ii) generally vote against proposals to require a
supermajority shareholder vote; (iii) votes on mergers and acquisitions should
be considered on a case-by-case basis, determining whether the transaction
enhances shareholder value; (iv) generally vote against proposals at companies
with more than one class of common stock to increase the number of authorized
shares of the class that has superior voting rights; (v) generally vote
re-incorporation proposals on a case-by-case bases; (vi) votes with respect to
equity-based compensation plans are generally determined on a case-by-case
basis; and (vii) generally vote for proposals requesting reports on the level
of greenhouse gas emissions from a company's operations and products.

The Adviser has a section in its Procedures that addresses the possibility of
conflicts of interest. Most proxies which the Adviser receives on behalf of the
Funds are voted by ISS/Risk Metrics in accordance with the Procedures. Because
almost all Fund proxies are voted by ISS/Risk Metrics pursuant to the
pre-determined Procedures, it normally will not be necessary for the Adviser to
make an actual determination of how to vote a particular proxy, thereby largely
eliminating conflicts of interest for the Adviser during the proxy voting
process. In the very limited instances where the Adviser is considering voting
a proxy contrary to ISS/Risk Metrics' recommendation, the Committee will first
assess the issue to see if there is any possible conflict of interest involving
the Adviser or affiliated persons of the Adviser. If a member of the Committee
has actual knowledge of a conflict of interest, the Committee will normally use
another independent third party to do additional research on the particular
proxy issue in order to make a recommendation to the Committee on how to vote
the proxy in the best interests of the Funds. The Committee will then review
the proxy voting materials and recommendation provided by ISS/Risk Metrics and
the independent third party to determine how to vote the issue in a manner
which the Committee believes is consistent with the Procedures and in the best
interests of the Funds.

Janus Capital Management LLC

Proxy Voting Procedures - February 2011

The following represents the procedures for Janus Capital Management LLC
("Janus") with respect to the voting of proxies on behalf of all clients,
including mutual funds advised by Janus, for which Janus has voting
responsibility and the keeping of records relating to proxy voting.

General Policy. Janus votes proxies in the best interest of its clients. Janus
will not accept direction as to how to vote individual proxies for which it has
voting responsibility from any other person or organization (other than the
research and information provided by the Proxy Voting Service (as hereinafter
defined)). Subject to specific provisions in a client's account documentation
related to exception voting, Janus only accepts direction from a client to vote
proxies for that client's account pursuant to: 1) the Janus Capital Management
LLC Proxy Voting Guidelines ("Guidelines"); 2) the recommendations of
Institutional Shareholder Services ("ISS"); or 3) the recommendations of the
Proxy Voting Service under their Proxy Voter Services program.

ERISA Plan Policy. On behalf of client accounts subject to ERISA, Janus seeks
to discharge its fiduciary duty by voting proxies solely in the best interest
of the participants and beneficiaries of such plans. Janus recognizes that the
exercise of voting rights on securities held by ERISA plans for which Janus has
voting responsibility is a fiduciary duty that must be exercised with care,
skill, prudence and diligence. In voting proxies for ERISA accounts, Janus will
exercise its fiduciary responsibility to vote all proxies for shares for which
it has investment discretion as investment manager unless the power to vote
such shares has been retained by the appointing fiduciary as set forth in the
documents in which the named fiduciary has appointed Janus as investment
manager.

Proxy Voting Committee. The Janus Proxy Voting Committee (the "Committee")
develops Janus' positions on all major corporate issues, creates guidelines and
oversees the voting process. The Committee is comprised of the Vice President
of Investment Accounting, the Vice President of Compliance, and one or more
portfolio management representatives (or their respective designees) that
provide input on behalf of the portfolio management team. Internal legal
counsel serves as a consultant to the Committee and is a non-voting member. A
quorum is required for all Committee meetings. In formulating proxy voting
recommendations, the Committee analyzes proxy proposals, from the Proxy Voting
Service from the prior year, and evaluates whether those proposals would
adversely or beneficially affect shareholders' interests. The Committee also
reviews policy rationale provided by the Proxy Voting Service related to voting
recommendations for the upcoming proxy season. Once the Committee establishes
its recommendations, they are distributed to Janus' portfolio managers for
review and implementation. While the Committee sets the Guidelines and serves
as a resource for Janus portfolio management, it does not have proxy voting
authority for any proprietary or non-proprietary mutual fund or any investment
advisory client. The portfolio managers are responsible for proxy votes on
securities they own in the portfolios they manage. Most portfolio managers vote
consistently with the Guidelines. However, a portfolio manager may choose to
vote contrary to the Guidelines. When portfolio managers cast votes which are
contrary to the Guidelines, the manager is required to document the reasons in
writing for the Committee. In many cases, a security may be held by multiple
portfolio managers. Portfolio managers are not required to cast consistent
votes. Annually the Janus Funds Board of Trustees, or a committee thereof, will
review Janus' proxy voting process, policies and voting records.

Investment Accounting Group. The Investment Accounting Group is responsible for
administering the proxy voting process as set forth in these procedures and the
Guidelines. The Proxy Administrator in the Investment Accounting Group works
with the Proxy Voting Service and is responsible for ensuring that all meeting
notices are reviewed against the Guidelines and proxy matters are communicated
to the portfolio managers and analysts for consideration pursuant to the
Guidelines.

Voting and Use of Proxy Voting Service. Janus has engaged an independent proxy
voting service, the Proxy Voting Service, to assist in the voting of proxies.
The Proxy Voting Service is responsible for coordinating with the clients'
custodians to ensure that all proxy materials received by the custodians
relating to the clients' portfolio securities are processed in a timely
fashion. In addition, the Proxy Voting Service is responsible for maintaining
copies of all proxy statements received by issuers and to promptly provide such
materials to Janus upon request.

To the extent applicable, the Proxy Voting Service will process all proxy votes
in accordance with the Guidelines. Portfolio managers may decide to vote their
proxies consistent with the Guidelines and instruct the Proxy Administrator to
vote all proxies accordingly. In such cases, he or she may request to review
the vote recommendations and sign-off on all the proxies before the votes are
cast, or may choose to only sign-off on those votes cast against management.
The portfolio managers are also given the option of reviewing and determining
the votes on all proxies without utilizing the Guidelines. In all cases, the
portfolio mangers may elect to receive a weekly report summarizing all proxy
votes in his or her client accounts. The Proxy Administrator is responsible for
maintaining this documentation. If the Proxy Administrator does not receive a
voting instruction from a Portfolio Manager, and the Guidelines require
Portfolio Manager input on the issue, the vote will be cast by the Chief
Investment Officer(s) or the Director of Research.
The Proxy Voting Service will refer proxy questions to the Proxy Administrator
for instructions under circumstances where: (1) the application of the
Guidelines is unclear; (2) the proxy question relates to a company and/or issue
in which the Proxy Voting Services does not have research, analysis and/or a
recommendation available, or (3) the Guidelines call for Janus portfolio
manager input. The Proxy Administrator solicits feedback from the Portfolio
Manager or the Committee as required. Janus also utilizes research services
relating to proxy questions provided by the Proxy Voting Service.

Procedures for Proxy Issues Outside the Guidelines. In situations where the
Proxy Voting Service refers a proxy question to the Proxy Administrator, the
Proxy Administrator will consult with the portfolio manager regarding how the
shares will be voted. The Proxy Administrator will refer such questions,
through a written request, to the portfolio manager(s) who hold(s) the security
for a voting recommendation. The Proxy Administrator may also refer such
questions, through a written request to any member of the Committee, but the
Committee cannot direct the Proxy Administrator how to vote. If the proxy issue
raises a conflict of interest (see Conflict of Interest discussion below), the
portfolio manager will document how the proxy should be voted and the rationale
for such recommendation. If the portfolio manager has had any contact with
persons outside of Janus (excluding routine communications with

proxy solicitors) regarding the proxy issue, the portfolio manager will
disclose that contact to the Committee. In such cases, the Committee will
review the portfolio manager's voting recommendation. If the Committee believes
a conflict exists and that the portfolio manager's voting recommendation is not
in the best interests of the shareholders, the Committee will refer the issue
to the Janus Chief Investment Officer(s) (or the Director of Research in
his/her absence) to determine how to vote.

Procedures for Voting Janus "Fund of Funds". Janus advises certain portfolios
or "fund of funds" that invest in other Janus funds. From time to time, a fund
of funds may be required to vote proxies for the underlying Janus funds in
which it is invested. Accordingly, if an underlying Janus fund submits a matter
to a vote of its shareholders, votes for and against such matters on behalf of
the owner fund of funds will be cast in the same proportion as the votes of the
other shareholders in the underlying fund (also know as "echo-voting").

Conflicts of Interest. The Committee is responsible for monitoring and
resolving possible material conflicts with respect to proxy voting. Because the
Guidelines are pre-determined and designed to be in the best interests of
shareholders, application of the Guidelines to vote client proxies should, in
most cases, adequately address any possible conflicts of interest. On a
quarterly basis, the Committee reviews records of votes that were cast
inconsistently wit the Guidelines and the related rationale for such votes.
Additionally, and In instances where a portfolio manager proposes to vote a
proxy inconsistent with the Guidelines and a potential conflict of interest is
identified, the Committee will review the proxy votes to determine whether the
portfolio manager's voting rationale appears reasonable and no material
conflict exists.

A conflict of interest may exist, for example, if Janus has a business
relationship with (or is actively soliciting business from) either the company
soliciting the proxy or a third party that has a

material interest in the outcome of a proxy vote or that is actively lobbying
for a particular outcome of a proxy vote. In addition, any portfolio manager
with knowledge of a personal conflict of interest (i.e., a family member in a
company's management) relating to a particular referral item shall disclose
that conflict to the Committee and may be required to recuse himself or herself
from the proxy voting process. Issues raising possible conflicts of interest
are referred by the Proxy Administrator to the Committee for resolution. If the
Committee does not agree that the portfolio manager's rationale is reasonable,
the Committee will refer the matter to the Chief Investment Officer(s) (or the
Director of Research) to vote the proxy.

If a matter is referred to the Chief Investment Officer(s) (or the Director of
Research) the decision made and basis for the decision will be documented by
the Committee.

Reporting and Record Retention. Upon request, on an annual basis, Janus will
provide its non-mutual fund clients with the proxy voting record for that
client's account.

On an annual basis, Janus will provide its proxy voting record for each
proprietary mutual fund for the one-year period ending on June 30th on Janus'
website at www.janus.com/proxyvoting. Such voting record, on Form N-PX, is also
available on the SEC's website at http://www.sec.gov. A complete copy of Janus
Capital's proxy voting policies and procedures, including specific guidelines,
is available at www.janus.com/proxyvoting.

Janus retains proxy statements received regarding client securities, records of
votes cast on behalf of clients, records of client requests for proxy voting
information and all documents prepared by Janus regarding votes cast in
contradiction to the Janus Guidelines. In addition, any document prepared by
Janus that is material to a proxy voting decision such as the Guidelines, Proxy
Voting Committee materials and other internal research relating to voting
decisions will be kept. Proxy statements received from issuers are either
available on the SEC's EDGAR database or are kept by a third party voting
service and are available on request. All proxy voting materials and supporting
documentation are retained for a minimum of 6 years.

Massachusetts Financial Services Company

PROXY VOTING POLICIES AND PROCEDURES
February 1, 2011

Massachusetts Financial Services Company, MFS Institutional Advisors, Inc., MFS
International (UK) Limited, MFS Heritage Trust Company, and MFS' other
subsidiaries that perform discretionary investment management activities
(collectively, "MFS") have adopted proxy voting policies and procedures, as set
forth below ("MFS Proxy Voting Policies and Procedures"), with respect to
securities owned by the clients for which MFS serves as investment adviser and
has the power to vote proxies, including the registered investment companies
sponsored by MFS (the "MFS Funds"). References to "clients" in these policies
and procedures include the MFS Funds and other clients of MFS, such as funds
organized offshore, sub-advised funds and separate account clients, to the
extent these clients have delegated to MFS the responsibility to vote proxies
on their behalf under the MFS Proxy Voting Policies and Procedures.

The MFS Proxy Voting Policies and Procedures include:

A. Voting Guidelines;

B. Administrative Procedures;

C. Records Retention; and

D. Reports.

A. VOTING GUIDELINES

1. General Policy; Potential Conflicts of Interest

MFS' policy is that proxy voting decisions are made in what MFS believes to be
the best long-term economic interests of MFS' clients, and not in the interests
of any other party or in MFS' corporate interests, including interests such as
the distribution of MFS Fund shares and institutional client relationships.

In developing these proxy voting guidelines, MFS reviews corporate governance
issues and proxy voting matters that are presented for shareholder vote by
either management or shareholders of public companies. Based on the overall
principle that all votes cast by MFS on behalf of its clients must be in what
MFS believes to be the best long-term economic interests of such clients, MFS
has adopted proxy voting guidelines, set forth below, that govern how MFS
generally will vote on specific matters presented for shareholder vote.

As a general matter, MFS votes consistently on similar proxy proposals across
all shareholder meetings. However, some proxy proposals, such as certain
excessive executive compensation, environmental, social and governance matters,
are analyzed on a case-by-case basis in light of all the relevant facts and
circumstances of the proposal. Therefore, MFS may vote similar proposals
differently at different shareholder meetings based on the specific facts and
circumstances of the issuer or the terms of the proposal. In addition, MFS also
reserves the right to override the guidelines with respect to a particular
proxy proposal when such an override is, in MFS' best judgment, consistent with
the overall principle of voting proxies in the best long-term economic
interests of MFS' clients.

MFS also generally votes consistently on the same matter when securities of an
issuer are held by multiple client accounts, unless MFS has received explicit
voting instructions to vote differently from a client for its own account. From
time to time, MFS may also receive comments on the MFS Proxy Voting Policies
and Procedures from its clients. These comments are carefully considered by MFS
when it reviews these guidelines and revises them as appropriate.

These policies and procedures are intended to address any potential material
conflicts of interest on the part of MFS or its subsidiaries that are likely to
arise in connection with the voting of proxies on behalf of MFS' clients. If
such potential material conflicts of interest do arise, MFS will analyze,
document and report on such potential material conflicts of interest (see
Sections B.2 and D below), and shall ultimately vote the relevant proxies in
what MFS believes to be the best long-term economic interests of its clients.
The MFS Proxy Voting Committee is responsible for monitoring and reporting with
respect to such potential material conflicts of interest.

MFS is also a signatory to the United Nations Principles for Responsible
Investment. In developing these guidelines, MFS considered environmental,
social and corporate governance issues in light of MFS' fiduciary obligation to
vote proxies in the best long-term economic interest of its clients.

B. ADMINISTRATIVE PROCEDURES

1. MFS Proxy Voting Committee

The administration of these MFS Proxy Voting Policies and Procedures is
overseen by the MFS Proxy Voting Committee, which includes senior personnel
from the MFS Legal and Global Investment Support Departments. The Proxy Voting
Committee does not include individuals whose primary duties relate to client
relationship management, marketing, or sales. The MFS Proxy Voting Committee:

a. Reviews these MFS Proxy Voting Policies and Procedures at least annually and
recommends any amendments considered to be necessary or advisable;

b. Determines whether any potential material conflict of interest exists with
respect to instances in which MFS (i) seeks to override these MFS Proxy
Voting Policies and Procedures; (ii) votes on ballot items not governed by
these MFS Proxy Voting Policies and Procedures; (iii) evaluates an
excessive executive compensation issue in relation to the election of
directors; or (iv) requests a vote recommendation from an MFS portfolio
manager or investment analyst (e.g. mergers and acquisitions); and

c. Considers special proxy issues as they may arise from time to time.

2. Potential Conflicts of Interest

The MFS Proxy Voting Committee is responsible for monitoring potential material
conflicts of interest on the part of MFS or its subsidiaries that could arise
in connection with the voting of proxies on behalf of MFS' clients. Due to the
client focus of our investment management business, we believe that the
potential for actual material conflict of interest issues is small.
Nonetheless, we have developed precautions to assure that all proxy votes are
cast in the best long-term economic interest of shareholders.[1] Other MFS
internal policies require all MFS employees to avoid actual and potential
conflicts of interests between personal activities and MFS' client activities.
If an employee identifies an actual or potential conflict of interest with
respect to any voting decision, then that employee

must recuse himself/herself from participating in the voting process.
Additionally, with respect to decisions concerning all Non-Standard Votes, as
defined below, MFS will review the securities holdings reported by investment
professionals that participate in such decisions to determine whether such
person has a direct economic interest in the decision, in which case such
person shall not further participate in making the decision. Any significant
attempt by an employee of MFS or its subsidiaries to unduly influence MFS'
voting on a particular proxy matter should also be reported to the MFS Proxy
Voting Committee.

[1] For clarification purposes, note that MFS votes in what we believe to be
the best, long-term economic interest of our clients entitled to vote at
the shareholder meeting, regardless of whether other MFS clients hold
"short" positions in the same issuer.

In cases where proxies are voted in accordance with these MFS Proxy Voting
Policies and Procedures, no material conflict of interest will be deemed to
exist. In cases where (i) MFS is considering overriding these MFS Proxy Voting
Policies and Procedures, (ii) matters presented for vote are not governed by
these MFS Proxy Voting Policies and Procedures, (iii) MFS evaluates a
potentially excessive executive compensation issue in relation to the election
of directors or advisory pay or severance package vote, or (iv) a vote
recommendation is requested from an MFS portfolio manager or investment analyst
(e.g. mergers and acquisitions) (collectively, "Non-Standard Votes"); the MFS
Proxy Voting Committee will follow these procedures:

a. Compare the name of the issuer of such proxy against a list of significant
current (i) distributors of MFS Fund shares, and (ii) MFS institutional
clients (the "MFS Significant Client List");

b. If the name of the issuer does not appear on the MFS Significant Client
List, then no material conflict of interest will be deemed to exist, and
the proxy will be voted as otherwise determined by the MFS Proxy Voting
Committee;

c. If the name of the issuer appears on the MFS Significant Client List, then
the MFS Proxy Voting Committee will be apprised of that fact and each
member of the MFS Proxy Voting Committee will carefully evaluate the
proposed vote in order to ensure that the proxy ultimately is voted in what
MFS believes to be the best long-term economic interests of MFS' clients,
and not in MFS' corporate interests; and

d. For all potential material conflicts of interest identified under clause (c)
above, the MFS Proxy Voting Committee will document: the name of the
issuer, the issuer's relationship to MFS, the analysis of the matters
submitted for proxy vote, the votes as to be cast and the reasons why the
MFS Proxy Voting Committee determined that the votes were cast in the best
long-term economic interests of MFS' clients, and not in MFS' corporate
interests. A copy of the foregoing documentation will be provided to MFS'
Conflicts Officer.

The members of the MFS Proxy Voting Committee are responsible for creating and
maintaining the MFS Significant Client List, in consultation with MFS'
distribution and institutional business units. The MFS Significant Client List
will be reviewed and updated periodically, as appropriate.

From time to time, certain MFS Funds (the "top tier fund") may own shares of
other MFS Funds (the "underlying fund"). If an underlying fund submits a matter
to a shareholder vote, the top tier fund will generally vote its shares in the
same proportion as the other shareholders of the underlying fund. If there are
no other shareholders in the top tier fund, the top tier fund will vote in what
MFS believes to be in the top tier fund's best long-term economic interest.

3. Gathering Proxies

Most proxies received by MFS and its clients originate at Broadridge Financial
Solutions, Inc. ("Broadridge"). Broadridge and other service providers, on
behalf of custodians, send proxy related material to the record holders of the
shares beneficially owned by MFS' clients, usually to the client's proxy voting
administrator or, less commonly, to the client itself. This material will
include proxy ballots reflecting the shareholdings of Funds and of clients on
the record dates for such shareholder meetings, as well as proxy materials with
the issuer's explanation of the items to be voted upon.

MFS, on behalf of itself and certain of its clients (including the MFS Funds)
has entered into an agreement with an independent proxy administration firm
pursuant to which the proxy administration firm performs various proxy vote
related administrative services such as vote processing and recordkeeping
functions. Except as noted below, the proxy administration firm for MFS and its
clients, including the MFS Funds, is Institutional Shareholder Services, Inc.
("ISS"). The proxy administration firm for MFS Development Funds, LLC is Glass,
Lewis & Co., Inc. ("Glass Lewis"; Glass Lewis and ISS are each hereinafter
referred to as the "Proxy Administrator").

The Proxy Administrator receives proxy statements and proxy ballots directly or
indirectly from various custodians, logs these materials into its database and
matches upcoming meetings with MFS Fund and client portfolio holdings, which
are input into the Proxy Administrator's system by an MFS holdings data-feed.
Through the use of the Proxy Administrator system, ballots and proxy material
summaries for all upcoming shareholders' meetings are available on-line to
certain MFS employees and members of the MFS Proxy Voting Committee.

It is the responsibility of the Proxy Administrator and MFS to monitor the
receipt of ballots. When proxy ballots and materials for clients are received
by the Proxy Administrator, they are input into the Proxy Administrator's
on-line system. The Proxy Administrator then reconciles a list of all MFS
accounts that hold shares of a company's stock and the number of shares held on
the record date by these accounts with the Proxy Administrator's list of any
upcoming shareholder's meeting of that company. If a proxy ballot has not been
received, the Proxy Administrator contacts the custodian requesting the reason
as to why a ballot has not been received.

4. Analyzing Proxies

Proxies are voted in accordance with these MFS Proxy Voting Policies and
Procedures. The Proxy Administrator, at the prior direction of MFS,
automatically votes all proxy matters that do not require the particular
exercise of discretion or judgment with respect to these MFS Proxy Voting
Policies and Procedures as determined by MFS. With respect to proxy matters
that require the particular exercise of discretion or judgment, the MFS Proxy
Voting Committee considers and votes on those proxy matters. MFS also receives
research and recommendations from the Proxy Administrator which it may take
into account in deciding how to vote. MFS uses the research of ISS to identify
(i) circumstances in which a board may have approved excessive executive
compensation, (ii) environmental and social proposals that warrant
consideration or (iii) circumstances in which a non-U.S. company is not in
compliance with local governance best practices. In those situations where the
only MFS fund that is eligible to vote at a shareholder meeting has Glass Lewis
as its Proxy Administrator, then we will rely on research from Glass Lewis to
identify such issues. Representatives of the MFS Proxy Voting Committee review,
as appropriate, votes cast to ensure conformity with these MFS Proxy Voting
Policies and Procedures.

As a general matter, portfolio managers and investment analysts have little or
no involvement in most votes taken by MFS. This is designed to promote
consistency in the application of MFS' voting guidelines, to promote
consistency in voting on the same or similar issues (for the same or for
multiple issuers) across all client accounts, and to minimize the potential
that proxy solicitors, issuers, or third parties might attempt to exert
inappropriate influence on the vote. In limited types of votes (e.g. mergers
and acquisitions, capitalization matters, potentially excessive executive
compensation issues, or shareholder proposals relating to environmental and
social issues), a representative of MFS Proxy Voting Committee may consult with
or seek recommendations from MFS portfolio managers or investment analysts.[2]
However, the MFS Proxy Voting Committee would ultimately determine the manner
in which all proxies are voted.

[2] From time to time, due to travel schedules and other commitments, an
appropriate portfolio manager or research analyst may not be available to
provide a vote recommendation. If such a recommendation cannot be obtained
within a reasonable time prior to the cut-off date of the shareholder
meeting, the MFS Proxy Voting Committee may determine to abstain from
voting.

As noted above, MFS reserves the right to override the guidelines when such an
override is, in MFS' best judgment, consistent with the overall principle of
voting proxies in the best long-term economic interests of MFS' clients. Any
such override of the guidelines shall be analyzed, documented and reported in
accordance with the procedures set forth in these policies.

5. Voting Proxies

In accordance with its contract with MFS, the Proxy Administrator also
generates a variety of reports for the MFS Proxy Voting Committee, and makes
available on-line various other types of information so that the MFS Proxy
Voting Committee may review and monitor the votes cast by the Proxy
Administrator on behalf of MFS' clients.

6. Securities Lending

From time to time, the MFS Funds or other pooled investment vehicles sponsored
by MFS may participate in a securities lending program. In the event MFS or its
agent receives timely notice of a shareholder meeting for a U.S. security, MFS
and its agent will attempt to recall any securities on loan before the
meeting's record date so that MFS will be entitled to vote these shares.
However, there may be instances in which MFS is unable to timely recall
securities on loan for a U.S. security, in which cases MFS will not be able to
vote these shares. MFS will report to the appropriate board of the MFS Funds
those instances in which MFS is not able to timely recall the loaned
securities. MFS generally does not recall non-U.S. securities on loan because
there may be insufficient advance notice of proxy materials, record dates, or
vote cut-off dates to allow MFS to timely recall the shares in certain markets.
As a result, non-U.S. securities that are on loan will not generally be voted.
If MFS receives timely notice of what MFS determines to be an unusual,
significant vote for a non-U.S. security whereas MFS shares are on loan, and
determines that voting is in the best long-term economic interest of
shareholders, then MFS will attempt to timely recall the loaned shares.

7. Engagement

The MFS Proxy Voting Policies and Procedures are available on www.mfs.com and
may be accessed by both MFS' clients and the companies in which MFS' clients
invest. From time to time, MFS may determine that it is appropriate and
beneficial for representatives from the MFS Proxy Voting Committee to engage in
a dialogue or written communication with a company or other shareholder
regarding certain matters on the company's proxy statement that are of concern
to shareholders, including environmental, social and governance matters. A
company or shareholder may also seek to engage with representatives of the MFS
Proxy Voting Committee in advance of the company's formal proxy solicitation to
review issues more generally or gauge support for certain contemplated
proposals.

C. RECORDS RETENTION

MFS will retain copies of these MFS Proxy Voting Policies and Procedures in
effect from time to time and will retain all proxy voting reports submitted to
the Board of Trustees and Board of Managers of the MFS Funds for the period
required by applicable law. Proxy solicitation materials, including electronic
versions of the proxy ballots completed by representatives of the MFS Proxy
Voting Committee, together with their respective notes and comments, are
maintained in an electronic format by the Proxy Administrator and are
accessible on-line by the MFS Proxy Voting Committee. All proxy voting
materials and supporting documentation, including records

generated by the Proxy Administrator's system as to proxies processed,
including the dates when proxy ballots were received and submitted, and the
votes on each company's proxy issues, are retained as required by applicable
law.

D. REPORTS

All MFS Advisory Clients

MFS may publicly disclose the proxy voting records of certain clients or the
votes it casts with respect to certain matters as required by law. At any time,
a report can also be printed by MFS for each client who has requested that MFS
furnish a record of votes cast. The report specifies the proxy issues which
have been voted for the client during the year and the position taken with
respect to each issue and, upon request, may identify situations where MFS did
not vote in accordance with the MFS Proxy Voting Policies and Procedures.

Except as described above, MFS generally will not divulge actual voting
practices to any party other than the client or its representatives because we
consider that information to be confidential and proprietary to the client.
However, as noted above, MFS may determine that it is appropriate and
beneficial to engage in a dialogue with a company regarding certain matters.
During such dialogue with the company, MFS may disclose the vote it intends to
cast in order to potentially effect positive change at a company in regards to
environmental, social or governance issues.

Metropolitan West Capital Management, LLC

Proxy Voting Policies and Procedures Summary

In compliance with the guidelines of the SEC, MWCM has adopted the required
proxy voting policies and procedures. A summary of MWCM's Policies and
Procedures is provided below.

Generally, and except to the extent that a client otherwise instructs MWCM in
writing, MWCM will vote by proxy or otherwise on all matters for which a
shareholder vote is solicited by, or with respect to, issuers of securities
beneficially held in client accounts in such manner as MWCM deems appropriate,
in accordance with its written Policies and Procedures. These Policies and
Procedures set forth guidelines for voting many typical proxy proposals. In
certain instances, MWCM may determine that it is in its clients' best interest
to deviate from the guidelines or the proxy issue may require individual
case-by-case consideration under the guidelines. These guidelines typically
result in MWCM voting consistent with the recommendations of the issuer's
management in most routine matters, which MWCM believes to be in the best
interest of clients. The Lead Strategist or designee is primarily responsible
for monitoring corporate developments and voting proxies in the best interest
of clients.

Where a proxy proposal raises a material conflict of interest between the
interests of MWCM and its clients, MWCM will vote in accordance with the
guidelines where MWCM does not have discretion to deviate from the guidelines.
Alternatively, MWCM will obtain voting direction from an independent third
party or disclose the conflict of interest to the client and abstain from
voting or obtain client consent prior to voting the securities. There may also
be a variety of corporate actions or other matters for which shareholder action
is required or solicited and with respect to which MWCM may take action that it
deems appropriate in its best judgment, except to the extent otherwise required
by agreement with the client. These actions may include, for example and
without limitation, tender offers or exchanges, bankruptcy proceedings and
class actions.

By written request to Metropolitan West Capital Management, LLC, 610 Newport
Center Drive, Suite 1000, Newport Beach, CA 92660, a client may obtain a copy
of MWCM's Proxy Voting Policies and Procedures and/or information on how MWCM
has voted proxies with respect to the client's securities.

Mondrian Investment Partners Limited

The Fund has formally delegated to its investment adviser, Mondrian Investment
Partners Ltd. (the "Adviser"), the ability to make all proxy voting decisions
in relation to portfolio securities held by the Fund. The Adviser will vote
proxies on behalf of the Fund pursuant to its Proxy Voting Policies and
Procedures (the "Procedures"). The Adviser has established a Proxy Voting
Committee (the "Committee") which is responsible for overseeing the Adviser's
proxy voting process for the Fund. One of the main responsibilities of the
Committee is to review and approve the Procedures to ensure that the Procedures
are designed to allow the Adviser to vote proxies in a manner consistent with
the goal of voting in the best interests of the Fund.

In order to facilitate the actual process of voting proxies, the Adviser has
contracted with Institutional Shareholder Services ("ISS") to analyze proxy
statements on behalf of the Fund and other Adviser clients and vote proxies
generally in accordance with the Procedures. After a proxy has been voted for
the Fund, RMG will create a record of the vote that will be available to
stockholders and filed with the SEC on a yearly basis beginning no later than
August 31, 2004. The Committee is responsible for overseeing ISS's proxy voting
activities.

As stated above, the Procedures also list specific Guidelines on how to vote
proxies on behalf of the Fund. Some examples of the Guidelines are as follows:
(i) generally vote for shareholder proposals asking that a majority or more of
directors be independent; (ii) generally vote against proposals to require a
supermajority shareholder vote; (iii) generally vote for debt restructuring if
it is expected that the company will file for bankruptcy if the transaction is
not approved; (iv) votes on mergers and acquisitions should be considered on a
case-by-case basis, determining whether the transaction enhances shareholder
value; (v) generally vote against proposals to create a new class of common
stock with superior voting rights; (vi) generally vote for proposals to
authorize preferred stock in cases where the company specifies the voting,
dividend, conversion, and other rights of such stock and the terms of the
preferred stock appear reasonable; (vii) generally vote for management
proposals to institute open-market share repurchase plans in which all
shareholders may participate on equal terms; (viii) votes with respect to
management compensation plans are determined on a case-by-case basis; (ix)
generally vote case-by-case on proposals asking for a report on the feasibility
of labeling products containing genetically modified ingredients.

The Sub-Adviser does have a section in its Procedures that addresses the
possibility of conflicts of interest. Most proxies which the Adviser receives
on behalf of the Fund are voted by RMG in accordance with the Procedures.
Because almost all Fund proxies are voted by RMG pursuant to the pre-determined
Procedures, it normally will not be necessary for the Adviser to make an actual
determination of how to vote a particular proxy, thereby largely eliminating
conflicts of interest for the Adviser during the proxy voting process. In the
very limited instances where the Adviser is considering voting a proxy contrary
to RMG's recommendation, the Committee will first assess the issue to see if
there is any possible conflict of interest involving the Adviser or affiliated
persons of the Adviser. If a member of the Committee has actual knowledge of a
conflict of interest, the Committee will normally use another independent third
party to do additional research on the particular proxy issue in order to make
a recommendation to the Committee on how to vote the proxy in the best
interests of the Fund. The Committee will then review the proxy voting
materials and recommendation provided by RMG and the independent third party to
determine how to vote the issue in a manner which the Committee believes is
consistent with the Procedures and in the best interests of the Fund. In these
instances, the Committee must come to a unanimous decision regarding how to
vote the proxy, or they must vote the proxy in accordance with RMG's original
recommendation.

SSgA Proxy Voting Policy

Introduction

SSgA Funds Management, Inc. ("FM") seeks to vote proxies for which we have
discretionary authority in the best interests of our clients. This means that
we make proxy voting decisions in the manner we believe will most likely
protect and promote the long-term economic value of client accounts. Absent
unusual circumstances or specific client instructions, we vote proxies on a
particular matter in the same way for all clients, regardless of their
investment style or strategies. FM takes the view that voting in a manner
consistent with maximizing the monetary value of our clients' holdings will
benefit our direct clients (e.g. investment funds) and, indirectly, the
ultimate owners and beneficiaries of those clients (e.g. fund shareholders).

Oversight of the proxy voting process is the responsibility of the SSgA
Investment Committee. The SSgA Investment Committee reviews and approves
amendments to this FM Proxy Voting Policy and delegates authority to vote in
accordance with this policy to the FM Proxy Review Committee, a subcommittee of
the SSgA Investment Committee, which is supported by the FM Corporate
Governance Team. FM retains the final authority and responsibility for voting.
In addition to voting proxies, SSgA:

1) describes its proxy voting procedures to its clients in Part II of its Form
ADV;

2) provides the client with this written proxy policy, upon request;

3) discloses to its clients how they may obtain information on how FM voted the
client's proxies;

4) matches proxies received with holdings as of record date;

5) reconciles holdings as of record date and rectifies any discrepancies;

6) generally applies its proxy voting policy consistently and keeps records of
votes for each client;

7) documents the reason(s) for voting for all non-routine items; and

8) keeps records of such proxy voting available for inspection by the client or
governmental agencies.

Process

The FM Corporate Governance Team is comprised of corporate governance
professionals and governance analysts. The responsibilities of the FM Corporate
Governance Team include corporate governance research and analysis across
domestic and global investment strategies, with oversight of all governance and
proxy voting processing on FM discretionary portfolios. In addition, the FM
Corporate Governance Team assumes responsibility for voting decisions on
certain case-by-case items, informal commencement of engagement activities for
the purposes of advocating FM positions on various governance issues, and the
research and analysis of all governance related issues impacting shareholder
value. As stated above, oversight of the proxy voting process is the
responsibility of the SSgA Investment Committee.

In order to facilitate our proxy voting process, FM retains Institutional
Shareholder Services Inc. ("ISS"), a firm with expertise in the proxy voting
and corporate governance fields. ISS assists in the proxy voting process,
including acting as our voting agent (i.e. actually processing the proxies),
advising us as to current and emerging governance issues that we may wish to
address, interpreting this policy and applying it to individual proxy items,
and providing analytical information concerning specific issuers and proxy
items as well as governance trends and developments. This Policy does not
address all issues as to which we may receive proxies nor does it seek to
describe in detail all factors that we may consider relevant to any particular
proposal. To assist ISS in interpreting and applying this Policy, we meet with
ISS at least annually, provide written guidance on certain topics generally on
an annual basis and communicate more regularly as necessary to discuss how
specific issues should be addressed. This guidance permits ISS to apply this
Policy without consulting us as to each proxy but in a manner that is
consistent with our investment view and not its own governance opinions. If an
issue raised by a proxy is not addressed by this Policy or our prior guidance
to ISS, ISS refers the proxy to us for direction on voting. On issues that we
do not believe affect the monetary value of our portfolio holdings or are
considered by us to be routine matters as to which we have not provided
specific guidance, we have agreed with ISS for ISS to act as our voting agent
in voting such proxies in accordance with its own recommendations which, to the
extent possible, take into account this Policy and FM's general positions on
similar matters. The FM Corporate Governance Team is responsible, working with
ISS, for submitting proxies in a timely manner and in accordance with our
policy. The FM Corporate Governance Team works with ISS to establish and update
detailed procedures to implement this policy.

From time to time, proxy votes will be solicited, which fall into one of the
following categories:

(i) proxies that involve special circumstances and require additional research
and discussion (e.g. a material merger or acquisition, or a material
governance issue with the potential to become a significant precedent in
corporate governance); or

(ii) proxies that are not directly addressed by our policies and which are
reasonably anticipated to have an impact on the current or potential value
of a security or which we do not consider to be routine.

The FM Corporate Governance Team identifies these proxies using a number of
methods, including but not limited to, in house governance research,
notifications from ISS and other third party research providers, concerns of
clients or issuers, review by FM Corporate Governance Team analysts, and
questions from consultants. The role of third parties in identifying special
circumstances does not mean that we will depart from our guidelines; these
third parties are all treated as information sources. If they raise issues that
we determine to be material before voting a particular proxy or departing from
our prior guidance to ISS, we will weigh the issue along with other relevant
factors before making an informed decision. In all cases, we vote proxies as to
which we have voting discretion in a manner that we determine to be in the best
interest of our clients. As stated above, if the proposal has a quantifiable
effect on shareholder value, we seek to maximize the value of a portfolio's
holdings. With respect to matters that are not quantifiable, we exercise
greater judgment but still seek to maximize long-term value by promoting sound
governance policies.

In instances of significant circumstances or issues not directly addressed by
our policies or guidance to ISS, the issue is referred to the FM Global Proxy
Review Committee ("FM PRC") for a determination of the proxy vote. In making
the determination whether to refer a proxy vote to the FM PRC, the FM Corporate
Governance Team will examine whether there is a material conflict of interest
between the interests of our client and those of FM or its affiliates (as
explained in greater detail below under "Potential Conflicts"). If the Manager
of FM's Corporate Governance Team determines that there is a material conflict,
the process detailed below under "Potential Conflicts" is followed. If there is
no material conflict, we examine the proposals that involve special
circumstances or are not addressed by our policy or guidance in detail in
seeking to determine what vote would be in the best interests of our clients
(i.e., to maximize the economic value of our clients' securities). The FM PRC
may determine that a proxy involves the consideration of particularly
significant issues and present the proxy item to the SSgA Investment Committee
for a final decision on voting the proxy. The SSgA Investment Committee will
use the same rationale for determining the appropriate vote.

FM reviews proxies of non-US issuers consistent with these guidelines; however,
FM also endeavors to show sensitivity to local market practices when voting
non-US proxies. This may lead to contrasting votes to the extent that local
market practices around items requiring shareholder approval differ from market
to market. For example, in certain non-US markets, items are put to vote that
have little or no effect on shareholder value, but are routinely voted on in
those jurisdictions; in the absence of material effect on our clients, we will
follow local market practice. FM votes in all markets where it is feasible;
however, FM may refrain from voting meetings where voting will have a material
impact on our ability to trade the security or where issuer-specific special
documentation is required. FM is unable to vote proxies when certain
custodians, used by our clients, do not offer proxy voting in a jurisdiction or
when they charge a meeting specific fee in excess of the typical custody
service agreement.

Proxy Voting Guidelines

For most issues and in most circumstances, we abide by the following general
guidelines. However, it is important to remember that these are simply
guidelines. As discussed above, in certain circumstances, we may determine that
it would be in the best interests of our clients to deviate from these
guidelines.

I. Generally, FM votes for the following ballot items:

Board of Directors

o Elections of directors in an uncontested election who (i) we determine to
be adequately independent of management and (ii) do not simultaneously
serve on an unreasonable (as determined by FM) number of other boards
(other than those affiliated with the issuer). Factors that we consider in
evaluating independence include whether the nominee is an employee of or
related to an employee of the issuer or its auditor, whether the nominee
provides professional services to the issuer, whether the nominee has
attended an appropriate number of scheduled board meetings (as determined
by FM), or whether the nominee receives non-board related compensation from
the issuer

o Directors' compensation, provided the amounts are not excessive relative to
other issuers in the market or industry. In making such a determination, we
review whether the compensation is overly dilutive to existing shareholders

o Proposals to limit directors' liability and/or expand indemnification of
directors, provided that a director shall only be eligible for
indemnification and liability protection if he or she has not acted in bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of his or her office

o Discharge of board members' duties-, in the absence of pending litigation,
governmental investigation, charges of fraud or other indications of
significant concern

o The establishment of annual elections of the board of directors unless the
board is comprised of a supermajority of independent directors (e.g., 80%
or more), including wholly independent board committees, and the company
does not have a shareholder rights plan (poison pill)

o Mandates requiring a majority of independent directors on the board of
directors

o Mandates that audit, compensation and nominating committee members should
all be independent directors

o Mandates giving the audit committee the sole responsibility for the
selection and dismissal of the auditing firm and any subsequent result of
audits are reported to the audit committee

o Elimination of cumulative voting

o Establishment of confidential voting

o Proposals seeking to establish or decrease an existing required ownership
threshold that offer shareholders the right to call special meetings to as
low as 10% of shares outstanding.

o Proposals seeking to fix the board size or designate a range for the board
size

o Proposals to restore shareholders' ability to remove directors with or
without cause

o Proposals that permit shareholders to elect directors to fill board
vacancies

o Shareholder proposals seeking disclosure regarding the company, board, or
compensation committee's use of compensation consultants, such as company
name, business relationship(s) and fees paid

Auditors

o Approval of auditors, unless the fees paid to auditors are excessive;
auditors' fees will be deemed excessive if the non-audit fees for the prior
year constituted 50% or more of the total fees paid to the auditors

o Auditors' compensation, provided the issuer has properly disclosed audit
and non-audit fees relative to market practice and that non-audit fees for
the prior year constituted no more than 50% of the total fees paid to the
auditors

o Discharge of auditors

o Approval of financial statements, auditor reports and allocation of income

o Requirements that auditors attend the annual meeting of shareholders

o Disclosure of auditor and consulting relationships when the same or related
entities are conducting both activities

o Establishment of a selection committee responsible for the final approval
of significant management consultant contract awards where existing firms
are already acting in an auditing function

Capitalization

o Dividend payouts that are greater than or equal to country and industry
standards; we generally support a dividend that constitutes 30% or more of
net income

o Authorization of share repurchase programs, unless the issuer does not
clearly state the business purpose for the program, a definitive number of
shares to be repurchased, and the time frame for the repurchase

o Capitalization changes that eliminate other classes of stock and/or unequal
voting rights

o Changes in capitalization authorization for stock splits, stock dividends,
and other specified needs that are no more than 50% of the existing
authorization for U.S. companies and no more than 100% of existing
authorization for non-U.S. companies.

o Elimination of pre-emptive rights for share issuance of less than a certain
percentage (country specific: ranging from 5% to 20%) of the outstanding
shares, unless even such small amount could have a material dilutive effect
on existing shareholders (e.g. in illiquid markets)

Anti-Takeover Measures

o Elimination of shareholder rights plans ("poison pill")

o Amendment to a shareholder rights plans ("poison pill") where the terms of
the new plans are more favorable to shareholders' ability to accept
unsolicited offers (i.e. if one of the following conditions are met: (i)
minimum trigger, flip-in or flip-over of 20%, (ii) maximum term of three
years, (iii) no "dead hand," "slow hand," "no hand" or similar feature that
limits the ability of a future board to redeem the pill, and (iv) inclusion
of a shareholder redemption feature (qualifying offer clause), permitting
ten percent of the shares to call a special meeting or seek a written
consent to vote on rescinding the pill if the board refuses to redeem the
pill 90 days after a qualifying offer is announced)

o Adoption or renewal of a non-US issuer's shareholder rights plans ("poison
pill") if the following conditions are met: (i) minimum trigger, flip-in or
flip-over of 20%, (ii) maximum term of three years, (iii) no "dead hand,"
"slow hand," "no hand" or similar feature that limits the ability of a
future board to redeem the pill, and (iv) inclusion of a shareholder
redemption feature (qualifying offer clause), permitting ten percent of the
shares to call a special meeting or seek a written consent to vote on
rescinding the pill if the board refuses to redeem the pill 90 days after a
qualifying offer is announced

o Reduction or elimination of super-majority vote requirements, unless
management of the issuer was concurrently seeking to or had previously made
such reduction or elimination

* Common for non-US issuers; request from the issuer to discharge from
liability the directors or auditors with respect to actions taken by them
during the previous year.

o Mandates requiring shareholder approval of a shareholder rights plans
("poison pill")

o Repeals of various anti-takeover related provisions

Executive Compensation/Equity Compensation

o Stock purchase plans with an exercise price of not less that 85% of fair
market value

o Stock option plans which are incentive based and not excessively dilutive.
In order to assess the dilutive effect, we divide the number of shares
required to fully fund the proposed plan, the number of authorized but
unissued shares, and the issued but unexercised shares by fully diluted
share count. We review that number in light of certain factors, including
the industry of the issuer

o Other stock-based plans that are not excessively dilutive, using the same
process set forth in the preceding bullet

o Management proposals on executive compensation where there is a strong
relationship between executive pay and performance over a five-year period

o Management proposals to adopt executive pay advisroy votes on an annual
basis

o Expansions to reporting of financial or compensation-related information,
within reason

o Proposals requiring the disclosure of executive retirement benefits if the
issuer does not have an independent compensation committee

o Remuneration policies that are judged to be in-line with local market
practices

Routine Business Items

o General updating of or corrective amendments to charter and by-laws not
otherwise specifically addressed herein, unless such amendments would
reasonably be expected to diminish shareholder rights (e.g. extension of
directors' term limits, amending shareholder vote requirement to amend the
charter documents, insufficient information provided as to the reason
behind the amendment)

o Change in corporation name

o Mandates that amendments to bylaws or charters have shareholder approval

o Management proposals to change the date, time, and/or location of the
annual meeting unless the proposed change is unreasonable

Other

o Adoption of anti-greenmail provisions

o Repeals or prohibitions of greenmail provisions

o Opting-out of business combination provision

o Reimbursement of all appropriate proxy solicitation expenses associated
with the election when voting in conjunction with support of a dissident
slate

o Management proposals to implement a reverse stock split when the number of
authorized shares will be proportionately reduced

o Management proposals to implement a reverse stock split to avoid delisting

o Proposals to allow or make easier shareholder action by written consent

o Proposals that remove restrictions on the right of shareholders to act
independently of management

o Liquidation of the company if the company will file for bankruptcy if the
proposal is not approved

o Shareholder proposals to put option repricings to a shareholder vote

o Shareholder proposals requiring the separation of the chairman/CEO position
taking into account company performance

II. Generally, FM votes against the following items:

Board of Directors

o Establishment of classified boards of directors, unless 80% of the board is
independent and the company does not have shareholder rights plan (poison
pill)

o Proposals requesting re-election of insiders or affiliated directors who
serve on audit, compensation, or nominating committees

o Limits to tenure of directors

o Requirements that candidates for directorships own large amounts of stock
before being eligible to be elected

o Restoration of cumulative voting in the election of directors

o Removal of a director, unless we determine the director (i) is not
adequately independent of management or (ii) simultaneously serves on an
unreasonable (as determined by FM) number of other boards (other than those
affiliated with the issuer). Factors that we consider in evaluating
independence include whether the director is an employee of or related to
an employee of the issuer or its auditor, whether the director provides
professional services to the issuer, or whether the director receives
non-board related compensation from the issuer

o The elimination of shareholders' right to call special meetings or attempts
to raise the ownership threshold beyond reasonable levels (as determined by
FM)

o Proposals that relate to the "transaction of other business as properly
comes before the meeting", which extend "blank check" powers to those
acting as proxy

o Approval of directors who have failed to act on a shareholder proposal that
has been approved by a majority of outstanding shares

o Directors at companies where prior non-cash compensation was improperly
backdated or spring-loaded

o Proposals that provide that only continuing directors may elect
replacements to fill board vacancies

o Proposals that give management the ability to alter the size of the board
outside of a specified range without shareholder approval

o Shareholder proposals requiring two candidates per board seat

o Proposals asking the board to adopt any form of majority voting for
election of directors, unless the majority standard indicated is based on a
majority of shares outstanding

Capitalization

o Capitalization changes that add "blank check" classes of stock (i.e.
classes of stock with undefined voting rights) or classes that dilute the
voting interests of existing shareholders

o Capitalization changes that exceed 100% of the issuer's current authorized
capital unless management provides an appropriate rationale for such change

Anti-Takeover Measures

o Anti-takeover and related provisions that serve to prevent the majority of
shareholders from exercising their rights or effectively deter appropriate
tender offers and other offers

o Shareholder rights plans that do not include a shareholder redemption
feature (qualifying offer clause), permitting ten percent of the shares to
call a special meeting or seek a written consent to vote on rescinding the
pill if the board refuses to redeem the pill 90 days after a qualifying
offer is announced

o Adoption or renewal of a US issuer's shareholder rights plan ("poison
pill")

o Adjournment of meeting to solicit additional votes in connection with a
merger or transaction

Executive Compensation/Equity Compensation

o Excessive compensation (i.e. compensation plans that are deemed by FM to be
overly dilutive)

o Retirement bonuses for non-executive directors and auditors

o Proposals requiring the disclosure of executive retirement benefits if the
issuer has an independent compensation committee

o Management proposals on executive compensation where there is a weak
relationship between executive pay and performance over a five-year period

Routine Business Items

o Proposals to reduce quorum requirements for shareholder meetings below a
majority of the shares outstanding unless there are compelling reasons to
support the proposal

o Amendments to bylaws that would require supermajority shareholder votes to
pass or repeal certain provisions

o Reincorporation to a location that we believe has more negative attributes
than its current location of incorporation.

o Shareholder proposals to change the date, time, and/or location of the
annual meeting unless the current scheduling or location is unreasonable

o Proposals to approve other business when it appears as voting item

o Proposals giving the board exclusive authority to amend the bylaws

o Proposals to restrict or prohibit shareholder ability to take action by
written consent

Other

o Proposals asking companies to adopt full tenure holding periods for their
executives

Mergers and Acquisitions

FM evaluates Mergers and Acquisitions on a case-by-case basis. Consistent with
our proxy policy, we support management in seeking to achieve their objectives
for shareholders. However, in all cases, FM uses its discretion in order to
maximize shareholder value. FM generally votes as follows:

o Against offers with potentially damaging consequences for minority
shareholders because of illiquid stock, especially in some non-US markets

o Against offers when we believe that reasonable prospects exist for an
enhanced bid or other bidders

o Against offers where, at the time of voting, the current market price of
the security exceeds the bid price

o For proposals to restructure or liquidate closed end investment funds in
which the secondary market price is substantially lower than the net asset
value

o For offers made at a premium where no other higher bidder exists

Special Note Regarding Social and Environmental Proposals

Proposals relating to social and environmental issues, typically initiated by
shareholders, generally request that the company disclose or amend certain
business practices. Often, proposals may address concerns with which FM
philosophically agrees, but absent a compelling economic impact on shareholder
value, FM will typically abstain from voting on these proposals.

Protecting Shareholder Value

FM has designed our proxy voting policy and procedures with the intent that our
clients receive the best possible returns on their investments.

FM regularly engages with companies to discuss a variety of corporate
governance issues, with the goal of obtaining insight on the principles and
practices that drive our voting decisions. Through our discussions with boards
and management, we seek to strengthen the quality of corporate governance, as a
means to protect and enhance shareholder value. We meet directly with
corporation representatives and participate in conference calls and third-party
inquiries in order to ensure our processes are as fully informed as possible.
During our discussions, we focus on the attributes and practices that we
believe enhance our clients' returns, and we use each piece of information we
receive-whether from clients, consultants, the media, issuers, ISS, or other
sources-as one part of our analysis in seeking to carry out our duties as a
fiduciary and act in the best interest of our clients. We are not unduly
influenced by the identity of any particular source, but use all the
information to form our opinion as to the best outcome for our clients.

Through our membership in the Council of Institutional Investors as well as our
contact with corporate pension plans, public funds, and unions, we are able to
communicate extensively with other shareholders regarding events and issues
relevant to individual corporations, general industry, and current shareholder
concerns.

In addition to tracking lists provided by third party advisory firms, the
Governance Team screens for underperforming issuers that may trigger a deeper
review of company governance profiles and practices. The Governance Team, along
with the Proxy Review Committee when necessary, will monitor and perform
case-by-case analyses of companies identified through these screens.

As an active shareholder, FM's role is to support corporate policies that serve
the best interests of our clients. Though we do not seek involvement in the
day-to-day operations of an organization, we recognize the need for
conscientious oversight of and input into management decisions that may affect
a company's value. We believe that FM should support proposals that encourage
economically advantageous corporate practices and governance, while leaving
direct oversight of company management and strategy to boards of directors. To
that end, our monitoring of corporate management and industry events is
substantially more detailed than that of the typical shareholder. We have
demonstrated our willingness to vote against management-sponsored initiatives
and to support shareholder proposals when appropriate. To date, while we have
not filed proposals or initiated letter-writing or other campaigns, we have
used our active participation in the corporate governance process-especially
the proxy voting process-to communicate our and our clients' legitimate
shareholder concerns. Should an issue arise in conjunction with a specific
corporation that cannot be satisfactorily resolved through these means, we
shall consider other approaches.

Potential Conflicts

As discussed above under Process, from time to time, FM will review a proxy
which may present a potential conflict of interest. As a fiduciary to its
clients, FM takes these potential conflicts very seriously While FM's only goal
in addressing any such potential conflict is to ensure that proxy votes are
cast in the clients' best interests and are not affected by FM's potential
conflict, there are a number of courses FM may take. Although various
relationships could be deemed to give rise to a conflict of interest, we have
determined that two categories of relationships present a sufficiently serious
concern to warrant an alternative process: customers of FM or its affiliates
which are among the top 100 clients of State Street Corporation or its
affiliates based upon revenue; and the 10 largest broker-dealers used by SSgA,
based upon revenue (a "Material Relationship").

When the matter falls clearly within the polices set forth above or the
guidance previously provided by FM to ISS and the proxy is to be voted in
accordance with that guidance, we do not believe that such decision represents
a conflict of interest and no special procedures are warranted.

In circumstances where either (i) the matter does not fall clearly within the
policies set forth above or the guidance previously provided to ISS, or (ii) FM
determines that voting in accordance with such policies or guidance is not in
the best interests of its clients, the Head of Corporate Governance will
compare the name of the issuer against a list of the top 100 revenue generating
clients of State Street Corporation and its affiliates and a list of the top 10
broker-dealer relationships to determine if a Material Relationship exists.
(These lists are updated quarterly.) If the issuer's name appears on either
list and the pre-determined policy is not being followed, FM will employ the
services of a third party, wholly independent of FM, its affiliates and those
parties involved in the proxy issue, to determine the appropriate vote.
However, in certain circumstances the FM Proxy Review Committee may determine
that the use of a third party fiduciary is not necessary or appropriate, either
because the matter involved does not involve a material issue or because the
issue in question affects the underlying value of the portfolio position and it
is appropriate for FM, notwithstanding the potential conflict of interest, to
vote the security in a manner that it determines will maximize the value to its
client. In such situations, the FM Proxy Committee, or if a broader discussion
is warranted, the SSgA Investment Committee, shall make a decision as to the
voting of the proxy. The basis for the voting decision, including the basis for
the determination that the decision is in the best interests of FM's clients,
shall be formalized in writing as a part of the minutes to the Investment
Committee.

Recordkeeping

In accordance with applicable law, FM shall retain the following documents for
not less than five years from the end of the year in which the proxies were
voted, the first two years in FM's office:

1) FM's Proxy Voting Policy and any additional procedures created pursuant to
such Policy;

2) a copy of each proxy statement FM receives regarding securities held by its
clients (note: this requirement may be satisfied by a third party who has
agreed in writing to do so or by obtaining a copy of the proxy statement
from the EDGAR database);

3) a record of each vote cast by FM (note: this requirement may be satisfied by
a third party who has agreed in writing to do so);

4) a copy of any document created by FM that was material in making its voting
decision or that memorializes the basis for such decision; and

5) a copy of each written request from a client, and response to the client,
for information on how FM voted the client's proxies.

More Information

Any client who wishes to receive information on how its proxies were voted
should contact its FM relationship manager.

T. Rowe Price Associates, Inc.

PROXY VOTING - PROCESS AND POLICIES

T. Rowe Price recognizes and adheres to the principle that one of the
privileges of owning stock in a company is the right to vote on issues
submitted to shareholder vote-such as election of directors and important
matters affecting a company's structure and operations. As an investment
adviser with a fiduciary responsibility to its clients, T. Rowe Price analyzes
the proxy statements of issuers whose stock is owned by the investment
companies that it sponsors and serves as investment adviser. T. Rowe Price also
is involved in the proxy process on behalf of its institutional and private
counsel clients who have requested such service. For those private counsel
clients who have not delegated their voting responsibility but who request
advice, T. Rowe Price makes recommendations regarding proxy voting. T. Rowe
Price reserves the right to decline to vote proxies in accordance with
client-specific voting guidelines.

Proxy Administration

The T. Rowe Price Proxy Committee develops our firm's positions on all major
corporate and social responsibility issues, creates guidelines, and oversees
the voting process. The Proxy Committee composed of portfolio managers,
investment operations managers, and internal legal counsel, analyzes proxy
policies based on whether they would adversely affect shareholders' interests
and make a company less attractive to own. In evaluating proxy policies each
year, the Proxy Committee relies upon our own fundamental research, independent
proxy research provided by third parties such as RiskMetrics Group ("RMG")
(formerly known as Institutional Shareholder Services) and Glass Lewis, and
information presented by company managements and shareholder groups.

Once the Proxy Committee establishes its recommendations, they are distributed
to the firm's portfolio managers as voting guidelines. Ultimately, the
portfolio manager decides how to vote on the proxy proposals of companies in
his or her portfolio. Because portfolio managers may have differences of
opinion on portfolio companies and their proxies, or their portfolios may have
different investment objectives, these factors, among others, may lead to
different votes between portfolios on the same proxies. When portfolio managers
cast votes that are counter to the Proxy Committee's guidelines, they are
required to document their reasons in writing to the Proxy Committee. Annually,
the Proxy Committee reviews T. Rowe Price's proxy voting process, policies, and
voting records.

T. Rowe Price has retained RMG, an expert in the proxy voting and corporate
governance area, to provide proxy advisory and voting services. These services
include in-depth research, analysis, and voting recommendations as well as vote
execution, reporting, auditing and consulting assistance for the handling of
proxy voting responsibility and corporate governance-related efforts. While the
Proxy Committee relies upon RMG research in establishing T. Rowe Price's voting
guidelines-many of which are consistent with RMG positions-T. Rowe Price
deviates from RMG recommendations on some general policy issues and a number of
specific proxy proposals.

Fiduciary Considerations

T. Rowe Price's decisions with respect to proxy issues are made in light of the
anticipated impact of the issue on the desirability of investing in the
portfolio company. Proxies are voted solely in the interests of the client,
Price Fund shareholders or, where employee benefit plan assets are involved, in
the interests of plan participants and beneficiaries. Practicalities and costs
involved with international investing may make it impossible at times, and at
other times disadvantageous, to vote proxies in every instance. For example, we
might refrain from voting if we or our agents are required to appear in person
at a shareholder meeting or if the exercise of voting rights results in the
imposition of trading or other ownership restrictions.

Consideration Given Management Recommendations

One of the primary factors T. Rowe Price considers when determining the
desirability of investing in a particular company is the quality and depth of
its management. We recognize that a company's management is entrusted with the
day-to-day operations of the company, as well as its long-term direction and
strategic planning, subject to the oversight of the company's board of
directors. Accordingly, our proxy voting guidelines are not intended to
substitute our judgment for management's with respect to the company's day-
to-day operations. Rather, our voting guidelines are designed to promote
accountability of a company's management and board of directors to its
shareholders, to align the interests of management with those of shareholders,
and to encourage companies to adopt

best practices in terms of their corporate governance. In addition to our
voting guidelines, we rely on a company's disclosures, its board's
recommendations, a company's track record, country-specific best practices
codes, our research providers and, most importantly, our investment
professionals' views, in making voting decisions.

T. Rowe Price Voting Policies

Specific voting guidelines have been established by the Proxy Committee for
recurring issues that appear on proxies. The following is a summary of the more
significant T. Rowe Price policies:

Election of Directors

T. Rowe Price generally supports slates with a majority of independent
directors. We vote against outside directors that do not meet certain criteria
relating to their independence but who serve on key board committees. We vote
against directors who are unable to dedicate sufficient time to their board
duties due to their commitment to other boards. We may vote against certain
directors who have served on company boards where we believe there has been a
gross failure in governance or oversight. T. Rowe Price also votes against
inside directors serving on key board committees and directors who miss more
than one-fourth of the scheduled board meetings. We may vote against directors
for failing to establish a formal nominating committee, as well as compensation
committee members who approve excessive compensation plans. We support efforts
to elect all board members annually because boards with staggered terms act as
deterrents to takeover proposals. To strengthen boards' accountability to
shareholders, T. Rowe Price generally supports proposals calling for a majority
vote threshold for the election of directors.

Executive Compensation

Our goal is to assure that a company's equity-based compensation plan is
aligned with shareholders' long-term interests. We evaluate plans on a
case-by-case basis, using a proprietary, scorecard-based approach that employs
a number of factors, including dilution to shareholders, problematic plan
features, burn rate, and the equity compensation mix. Plans that are
constructed to effectively and fairly align executives' and shareholders'
incentives generally earn our approval. Conversely, we oppose compensation
packages that provide what we view as excessive awards to few senior
executives, contain the potential for excessive dilution relative to the
company's peers, or rely on an inappropriate mix of options and full-value
awards. We also may oppose equity plans at any company where we deem the
overall compensation practices to be problematic. We generally oppose plans
that give a company the ability to reprice options or to grant options at below
market prices, unless such plans appropriately balance shareholder and employee
interests, and the retention of key personnel has become a genuine risk to the
company's business. For companies with particularly egregious pay practices, we
may vote against compensation committee members. Finally, we vote in favor of
proposals (either management or shareholder-sponsored) calling for shareholder
ratification of a company's executive compensation practices ("Say-on-Pay"
proposals) a majority of the time.

Mergers and Acquisitions

T. Rowe Price considers takeover offers, mergers, and other extraordinary
corporate transactions on a case-by-case basis to determine if they are
beneficial to shareholders' current and future earnings stream and to ensure
that our Price Funds and clients are receiving fair compensation in exchange
for their investment.

Anti-takeover, Capital Structure, and Corporate Governance Issues

T. Rowe Price generally opposes anti-takeover measures and other proposals
designed to limit the ability of shareholders to act on possible transactions.
Such anti-takeover mechanisms include classified boards, supermajority voting
requirements, dual share classes and poison pills. We also oppose proposals
that give management a "blank check" to create new classes of stock with
disparate rights and privileges. When voting on capital structure proposals, we
will consider the dilutive impact to shareholders and the effect on shareholder
rights. We generally support shareholder proposals that call for the separation
of the Chairman and CEO positions unless there are sufficient governance
safeguards already in place. With respect to proposals for the approval of a
company's auditor, we typically oppose auditors who have a significant
non-audit relationship with the company.

Social and Corporate Responsibility Issues

T. Rowe Price generally votes with a company's management on social,
environmental, and corporate responsibility issues unless they have substantial
investment implications for the company's business and operations that have not
been adequately addressed by management. T. Rowe Price supports well targeted
shareholder proposals on environmental and other public policy issues that are
particularly relevant to a company's businesses.

Monitoring and Resolving Conflicts of Interest

The Proxy Committee is also responsible for monitoring and resolving possible
material conflicts between the interests of T. Rowe Price and those of its
clients with respect to proxy voting. We have adopted safeguards to ensure that
our proxy voting is not influenced by interests other than those of our fund
shareholders. While membership on the Proxy Committee is diverse, it does not
include individuals whose primary duties relate to client relationship
management, marketing, or sales. Since our voting guidelines are predetermined
by the Proxy Committee using recommendations from RMG, an independent third
party, application of the T. Rowe Price guidelines to vote clients' proxies
should in most instances adequately address any possible conflicts of interest.
However, for proxy votes inconsistent with T. Rowe Price guidelines, the Proxy
Committee reviews all such proxy votes in order to determine whether the
portfolio manager's voting rationale appears reasonable. The Proxy Committee
also assesses whether any business or other relationships between T. Rowe Price
and a portfolio company could have influenced an inconsistent vote on that
company's proxy. Issues raising possible conflicts of interest are referred to
designated members of the Proxy Committee for immediate resolution prior to the
time T. Rowe Price casts its vote. With respect to personal conflicts of
interest, T. Rowe Price's Code of Ethics requires all employees to avoid
placing themselves in a "compromising position" where their interests may
conflict with those of our clients and restricts their ability to engage in
certain outside business activities. Portfolio managers or Proxy Committee
members with a personal conflict of interest regarding a particular proxy vote
must recuse themselves and not participate in the voting decisions with respect
to that proxy.

Index, Retirement, and Spectrum Funds

Voting of T. Rowe Price Group, Inc., common stock (sym: TROW) by certain T.
Rowe Price index funds will be done in all instances in accordance with T. Rowe
Price policy, and votes inconsistent with policy will not be permitted. The
Retirement and Spectrum Funds own shares in underlying T. Rowe Price funds. If
an underlying T. Rowe Price fund has a shareholder meeting, the Retirement and
Spectrum Funds normally would vote their shares in the underlying fund in the
same proportion as the votes of the other shareholders of the underlying fund.
This is known as "echo voting" and is designed to avoid any potential for a
conflict of interest. This same process would be followed with respect to any
T. Rowe Price funds owning shares in other T. Rowe Price funds.

TEMPLETON

Proxy Voting Policies and Procedures

The board of directors of the Fund has delegated the authority to vote proxies
related to the portfolio securities held by the Fund to the Fund's manager
Templeton Global Advisors Limited in accordance with the Proxy Voting Policies
and Procedures (Policies) adopted by the manager.

The investment manager has delegated its administrative duties with respect to
the voting of proxies to the Proxy Group within Franklin Templeton Companies,
LLC (Proxy Group), an affiliate and wholly owned subsidiary of Franklin
Resources, Inc. All proxies received by the Proxy Group will be voted based
upon the investment manager's instructions and/or policies. The investment
manager votes proxies solely in the interests of the Fund and its shareholders.

To assist it in analyzing proxies, the investment manager subscribes to
RiskMetrics Group (RiskMetrics), an unaffiliated third-party corporate
governance research service that provides in-depth analyses of shareholder
meeting agendas, vote recommendations, recordkeeping and vote disclosure
services. In addition, the investment manager subscribes to Glass, Lewis & Co.,
LLC (Glass Lewis), an unaffiliated third-party analytical research firm, to
receive analyses and vote recommendations on the shareholder meetings of
publicly held U.S. companies. Although RiskMetrics' and/or Glass Lewis' analyses
are thoroughly reviewed and considered in making a final voting decision, the
investment manager does not consider recommendations from RiskMetrics, Glass
Lewis or any other third party to be determinative of the investment manager's
ultimate decision. As a matter of policy, the officers, directors/ trustees and
employees of the investment manager and the Proxy Group will not be influenced
by outside sources whose interests conflict with the interests of the Fund and
its shareholders. Efforts are made to resolve all conflicts in the interests of
the investment manager's clients. Material conflicts of interest are identified
by the Proxy Group based upon analyses of client, distributor, broker-dealer and
vendor lists, information periodically gathered from directors and officers, and
information derived from other sources, including public filings. In situations
where a material conflict of interest is identified, the Proxy Group may defer
to the voting recommendation of RiskMetrics, Glass Lewis or those of another
independent third-party provider of proxy services; or send the proxy directly
to the Fund with the investment manager's recommendation regarding the vote for
approval. If the conflict is not resolved by the Fund, the Proxy Group may refer
the matter, along with the recommended course of action by the investment
manager, if any, to an interdepartmental Proxy Review Committee (which may
include portfolio managers and/or research analysts employed by the investment
manager), for evaluation and voting instructions. The Proxy Review Committee may
defer to the voting recommendation of RiskMetrics, Glass Lewis or those of
another independent third-party provider of proxy services; or send the proxy
directly to the

100

Fund. Where the Proxy Group or the Proxy Review Committee refers a matter to
the Fund, it may rely upon the instructions of a representative of the Fund,
such as the board or a committee of the board.

Where a material conflict of interest has been identified, but the items on
which the investment manager's vote recommendations differ from Glass Lewis,
RiskMetrics, or another independent third-party provider of proxy services
relate specifically to (1) shareholder proposals regarding social or
environmental issues or political contributions, (2) "Other Business" without
describing the matters that might be considered, or (3) items the investment
manager wishes to vote in opposition to the recommendations of an issuer's
management, the Proxy Group may defer to the vote recommendations of the
investment manager rather than sending the proxy directly to the Fund for
approval.

To avoid certain potential conflicts of interest, the investment manager will
employ echo voting, if possible, in the following instances: (1) when the Fund
invests in an underlying fund in reliance on any one of Sections 12(d) (1) (E),
(F), or (G) of the 1940 Act, the rules thereunder, or pursuant to any SEC
exemptive orders thereunder; (2) when the Fund invests uninvested cash in
affiliated money market funds pursuant to the rules under the 1940 Act or any
exemptive orders thereunder ("cash sweep arrangement"); or (3) when required
pursuant to the Fund's governing documents or applicable law. Echo voting means
that the investment manager will vote the shares in the same proportion as the
vote of all of the other holders of the Fund's shares.

The recommendation of management on any issue is a factor that the investment
manager considers in determining how proxies should be voted. However, the
investment manager does not consider recommendations from management to be
determinative of the investment manager's ultimate decision. As a matter of
practice, the votes with respect to most issues are cast in accordance with the
position of the company's management. Each issue, however, is considered on its
own merits, and the investment manager will not support the position of the
company's management in any situation where it deems that the ratification of
management's position would adversely affect the investment merits of owning
that company's shares.

Manager's proxy voting policies and principles The investment manager has
adopted general proxy voting guidelines, which are summarized below. These
guidelines are not an exhaustive list of all the issues that may arise and the
investment manager cannot anticipate all future situations. In all cases, each
proxy will be considered based on the relevant facts and circumstances.

Board of directors. The investment manager supports an independent board of
directors, and prefers that key committees such as audit, nominating, and
compensation committees be comprised of independent directors. The investment
manager will generally vote against management efforts to classify a board and
will generally support proposals to declassify the board of directors. The
investment manager will consider withholding votes from directors who have
attended less than 75% of meetings without a valid reason. While generally in
favor of separating Chairman and CEO positions, the investment manager will
review this issue as well as proposals to restore or provide for cumulative
voting on a case-by-case basis, taking into consideration factors such as the
company's corporate governance guidelines or provisions and performance.

Ratification of auditors of portfolio companies. The investment manager will
closely scrutinize the role and performance of auditors. On a case-by-case
basis, the investment manager will examine proposals relating to non-audit
relationships and non-audit fees. The investment manager will also consider, on
a case-by-case basis, proposals to rotate auditors, and will vote against the
ratification of auditors when there is clear and compelling evidence of
accounting irregularities or negligence.

Management and director compensation. A company's equity-based compensation
plan should be in alignment with the shareholders' long-term interests. The
investment manager believes that executive compensation should be directly
linked to the performance of the company. The investment manager evaluates
plans on a case-by-case basis by considering several factors to determine
whether the plan is fair and reasonable, including the RiskMetrics quantitative
model utilized to assess such plans and/or the Glass Lewis evaluation of the
plans. The investment manager will generally oppose plans that have the
potential to be excessively dilutive, and will almost always oppose plans that
are structured to allow the repricing of underwater options, or plans that have
an automatic share replenishment "evergreen" feature. The investment manager
will generally support employee stock option plans in which the purchase price
is at least 85% of fair market value, and when potential dilution is 10% or
less.

Severance compensation arrangements will be reviewed on a case-by-case basis,
although the investment manager will generally oppose "golden parachutes" that
are considered to be excessive. The investment manager will normally support
proposals that require a percentage of directors' compensation to be in the
form of common stock, as it aligns their interests with those of shareholders.

Anti-takeover mechanisms and related issues. The investment manager generally
opposes anti-takeover measures since they tend to reduce shareholder rights.
However, as with all proxy issues, the investment manager conducts an
independent review of each anti-takeover proposal. On occasion, the investment
manager may vote with management when the research analyst has concluded that
the proposal is not onerous and would not harm the Fund or its shareholders'
interests. The investment manager generally supports proposals that require
shareholder rights' plans ("poison pills") to be subject to a shareholder vote
and will closely evaluate such plans on a case-by-case basis to determine
whether or not they warrant support. In addition, the investment manager will
generally vote against any proposal to issue stock that has unequal or
subordinate voting rights. The investment manager generally opposes any
supermajority voting requirements as well as the payment of "greenmail." The
investment manager generally supports "fair price" provisions and confidential
voting.

101

Changes to capital structure. The investment manager realizes that a company's
financing decisions have a significant impact on its shareholders, particularly
when they involve the issuance of additional shares of common or preferred
stock or the assumption of additional debt. The investment manager will review,
on a case-by-case basis, proposals by companies to increase authorized shares
and the purpose for the increase. The investment manager will generally not
vote in favor of dual-class capital structures to increase the number of
authorized shares where that class of stock would have superior voting rights.
The investment manager will generally vote in favor of the issuance of
preferred stock in cases where the company specifies the voting, dividend,
conversion and other rights of such stock and the terms of the preferred stock
issuance are deemed reasonable.

Mergers and corporate restructuring. Mergers and acquisitions will be subject
to careful review by the research analyst to determine whether they would be
beneficial to shareholders. The investment manager will analyze various
economic and strategic factors in making the final decision on a merger or
acquisition. Corporate restructuring proposals are also subject to a thorough
examination on a case-by-case basis.

Social and corporate policy issues. The investment manager will generally give
management discretion with regard to social, environmental and ethical issues,
although the investment manager may vote in favor of those that are believed to
have significant economic benefits or implications for the Fund and its
shareholders.

Global corporate governance. Many of the tenets discussed above are applied to
the investment manager's proxy voting decisions for international investments.
However, the investment manager must be flexible in these instances and must be
mindful of the varied market practices of each region.

The investment manager will attempt to process every proxy it receives for all
domestic and foreign issuers. However, there may be situations in which the
investment manager cannot process proxies, for example, where a meeting notice
was received too late, or sell orders preclude the ability to vote. If a
security is on loan, the investment manager may determine that it is not in the
best interests of the Fund to recall the security for voting purposes. Also,
the investment manager may abstain from voting under certain circumstances or
vote against items such as "Other Business" when the investment manager is not
given adequate information from the company.

Shareholders may view the complete Policies online at franklintempleton.com.
Alternatively, shareholders may request copies of the Policies free of charge
by calling the Proxy Group collect at (954) 527-7678 or by sending a written
request to: Franklin Templeton Companies, LLC, 500 East Broward Boulevard,
Suite 1500, Fort Lauderdale, FL 33394, Attention: Proxy Group. Copies of the
Fund's proxy voting records are available online at franklintempleton.com and
posted on the SEC website at www.sec.gov. The proxy voting records are updated
each year by August 31 to reflect the most recent 12-month period ended June
30.

Turner Investment Partners, Inc.

PROXY VOTING POLICY AND PROCEDURES

Turner Investment Partners, Inc., as well as its investment advisory affiliate,
Turner Investment Management, LLC (collectively, Turner), act as fiduciaries in
relation to their clients and the assets entrusted by them to their management.
Where the assets placed in Turner's care include shares of corporate stock, and
except where the client has expressly reserved to itself or another party the
duty to vote proxies, it is Turner's duty as a fiduciary to vote all proxies
relating to such shares.

Duties with Respect to Proxies:

Turner has an obligation to vote all proxies appurtenant to shares of corporate
stock owned by its client accounts in the best interests of those clients. In
voting these proxies, Turner may not be motivated by, or subordinate the
client's interests to, its own objectives or those of persons or parties
unrelated to the client. Turner will exercise all appropriate and lawful care,
skill, prudence and diligence in voting proxies, and shall vote all proxies
relating to shares owned by its client accounts and received by Turner. Turner
shall not be responsible, however, for voting proxies that it does not receive
in sufficient time to respond.

Delegation:

In order to carry out its responsibilities in regard to voting proxies, Turner
must track all shareholder meetings convened by companies whose shares are held
in Turner client accounts, identify all issues presented to shareholders at
such meetings, formulate a principled position on each such issue and ensure
that proxies pertaining to all shares owned in client accounts are voted in
accordance with such determinations.

Consistent with these duties, Turner has delegated certain aspects of the proxy
voting process to Institutional Shareholder Services, and its Proxy Voting
Service (PVS) subsidiary. PVS is a separate investment adviser registered under
the Investment Advisers Act of 1940, as amended. Under an agreement entered
into with Turner, PVS has agreed to vote proxies in accordance with
recommendations developed by PVS and overseen by Turner, except in those
instances where Turner has provided it with different direction.

Review and Oversight:

Turner has reviewed the methods used by PVS to identify and track shareholder
meetings called by publicly traded issuers throughout the United States and
around the globe. Turner has satisfied itself that PVS operates a system
reasonably designed to identify all such

102

meetings and to provide Turner with timely notice of the date, time and place
of such meetings. Turner has further reviewed the principles and procedures
employed by PVS in making recommendations on voting proxies on each issue
presented, and has satisfied itself that PVS's recommendations are: (i) based
upon an appropriate level of diligence and research, and (ii) designed to
further the interests of shareholders and not serve other unrelated or improper
interests. Turner, either directly or through its duly-constituted Proxy
Committee, shall review its determinations as to PVS at least annually.

Notwithstanding its belief that PVS's recommendations are consistent with the
best interests of shareholders and appropriate to be implemented for Turner's
client accounts, Turner has the right and the ability to depart from a
recommendation made by PVS as to a particular vote, slate of candidates or
otherwise, and can direct PVS to vote all or a portion of the shares owned for
client accounts in accordance with Turner's preferences. PVS is bound to vote
any such shares subject to that direction in strict accordance with all such
instructions. Turner, through its Proxy Committee, reviews on a regular basis
the overall shareholder meeting agenda, and seeks to identify shareholder votes
that warrant further review based upon either (i) the total number of shares of
a particular company stock that Turner holds for its clients accounts, or (ii)
the particular subject matter of a shareholder vote, such as board independence
or shareholders' rights issues. In determining whether to depart from a PVS
recommendation, the Turner Proxy Committee looks to its view of the best
interests of shareholders, and provides direction to PVS only where in Turner's
view departing from the PVS recommendation appears to be in the best interests
of Turner's clients as shareholders. The Proxy Committee keeps minutes of its
determinations in this regard.

Conflicts of Interest:

Turner stock is not publicly traded, and Turner is not otherwise affiliated
with any issuer whose shares are available for purchase by client accounts.
Further, no Turner affiliate currently provides brokerage, underwriting,
insurance, banking or other financial services to issuers whose shares are
available for purchase by client accounts.

Where a client of Turner is a publicly traded company in its own right, Turner
may be restricted from acquiring that company's securities for the client's
benefit. Further, while Turner believes that any particular proxy issues
involving companies that engage Turner, either directly or through their
pension committee or otherwise, to manage assets on their behalf, generally
will not present conflict of interest dangers for the firm or its clients, in
order to avoid even the appearance of a conflict of interest, the Proxy
Committee will determine, by surveying the Firm's employees or otherwise,
whether Turner, an affiliate or any of their officers has a business, familial
or personal relationship with a participant in a proxy contest, the issuer
itself or the issuer's pension plan, corporate directors or candidates for
directorships. In the event that any such relationship is found to exist, the
Proxy Committee will take appropriate steps to ensure that any such
relationship (or other potential conflict of interest), does not influence
Turner's or the Committee's decision to provide direction to PVS on a given
vote or issue. Further to that end, Turner will adhere to all recommendations
made by PVS in connection with all shares issued by such companies and held in
Turner client accounts, and, absent extraordinary circumstances that will be
documented in writing, will not subject any such proxy to special review by the
Proxy Committee. Turner will seek to resolve any conflicts of interests that
may arise prior to voting proxies in a manner that reflects the best interests
of its clients.

Securities Lending:

Turner will generally not vote nor seek to recall in order to vote shares on
loan in connection with client administered securities lending programs, unless
it determines that a vote is particularly significant. Seeking to recall
securities in order to vote them even in these limited circumstances may
nevertheless not result in Turner voting the shares because the securities are
unable to be recalled in time from the party with custody of the securities, or
for other reasons beyond Turner's control.

Obtaining Proxy Voting Information:

To obtain information on how Turner voted proxies, please contact:

Andrew Mark, Director of Operations and Technology Administration
C/o Turner Investment Partners, Inc.
1205 Westlakes Drive, Suite 100
Berwyn, PA 19312

Recordkeeping:

Turner shall retain its (i) proxy voting policies and procedures; (ii) proxy
statements received regarding client statements; (iii) records or votes it
casts on behalf of clients; (iv) records of client requests for proxy voting
information, and (v) any documents prepared by Turner that are material in
making a proxy voting decision. Such records may be maintained with a third
party, such as PVS, that will provide a copy of the documents promptly upon
request.

Adopted: July 1, 2003

Last revised: April 1, 2007

Wellington Management Company, LLP

The Funds for which Wellington Management Company, LLP (`Wellington
Management") serves as sub-adviser have granted to Wellington Management the
authority to vote proxies on their behalf with respect to the assets managed by
Wellington Management. Wellington Management votes proxies in what it believes
are the best economic interests of its clients and in accordance with its
Global

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Proxy Policy and Procedures. Wellington Management's Corporate Governance
Committee is responsible for the review and oversight of the firm's Global
Proxy Policy and Procedures. The Corporate Governance Group within Wellington
Management's Investment Services Department is responsible for the day-to-day
administration of the proxy voting process. Although Wellington Management may
utilize the services of various external resources in analyzing proxy issues
and has established its own Global Proxy Voting Guidelines setting forth
general guidelines for voting proxies, Wellington Management personnel analyze
all proxies and vote proxies based on their assessment of the merits of each
proposal. Each Fund's portfolio manager has the authority to determine the
final vote for securities held in the Fund, unless the portfolio manager is
determined to have a material conflict of interest related to that proxy vote.

Wellington Management maintains procedures designed to identify and address
material conflicts of interest in voting proxies. Its Corporate Governance
Committee sets standards for identifying material conflicts based on client,
vendor and lender relationships. Proxy votes for which Wellington Management
identifies a material conflict are reviewed by designated members of its
Corporate Governance Committee or by the entire committee in some cases to
resolve the conflict and direct the vote.

Wellington Management may be unable to vote or may determine not to vote a
proxy on behalf of a Fund due to securities lending, share blocking and
re-registration requirements, lack of adequate information, untimely receipt of
proxy materials, immaterial impact of the vote, and/or excessive costs.

LVIP Wilshire Risk-based Funds and LVIP Wilshire Target Maturity Funds

Background

The Lincoln Variable Insurance Products Trust offers certain series
fund-of-funds, which are referred to as the "Profile Funds." Each Profile Fund
intends to invest substantially all of its assets in shares of the Trust series
referred to as "Underlying Funds." The Underlying Funds are other investment
companies or series that offer their shares as investment options for variable
annuity and/or variable life insurance contracts issued by The Lincoln National
Life Insurance Company ("Lincoln Life") and Lincoln Life & Annuity Company of
New York (collectively, the "Insurance Companies").

The Insurance Companies and the Underlying Funds currently rely on Paragraph
(b)(15) of Rule 6e-3(T) under the Investment Company Act of 1940 (the "1940
Act") for an exemption from the certain provisions of the 1940 Act to the
extent necessary to permit shares of an Underlying Fund to be sold to and held
by variable annuity and variable life insurance separate accounts of the
Insurance Companies (such exemption referred to as "Mixed Funding Relief").

The Trust, on behalf of the Profile Funds, will comply with all the conditions
that apply to it as specified in Paragraph (b)(15) of Rule 6e-3(T) in
connection with the Mixed Funding Relief, and in this respect, the Profile
Funds will monitor for the existence of any material irreconcilable conflict
between the interests of variable annuity contractholders and variable life
insurance contractholders investing in such Fund. The Profile Funds shall have
the rights and responsibilities of registered investment companies in which
insurance companies invest as specified in such Paragraph.

The SEC staff has informally taken the position that Mixed Funding Relief may
be relied upon by the insurance companies and underlying funds of a
fund-of-funds, subject to the certain "echo voting" procedures, notwithstanding
the investment in the underlying funds by an intervening fund-of-funds. The
Trust wishes to adhere to the informal position of the SEC staff, and,
accordingly has established the following procedures.

Procedures

To the extent that an Underlying Fund whose shares are held by a Profile Fund
solicits a shareholder vote on any matter, the Profile Fund shall vote such
shares of the Underlying Fund in the same proportion as the vote of all other
holders of shares of such Underlying Fund, as described by Section
12(d)(1)(E)(iii)(aa) of the 1940 Act. This type of voting structure is commonly
referred to as "echo voting."

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APPENDIX C

Compensation Structures and Methodologies of Portfolio Managers
The following describes the structure of, and the method(s) used to determine
the different types of compensation (e.g., salary, bonus, deferred
compensation, retirement plans and arrangements) for each portfolio manager as
of the funds' fiscal year ended December 31, 2010:

BAMCO, Inc. (LVIP Baron Growth Opportunities Fund)

Mr. Baron has an employment agreement that includes a fixed base salary, a
fixed bonus and a performance bonus based on a percentage of the management
fees earned on the funds that he manages. The terms of his contract are based
on Mr. Baron's role as the Firm's (Baron Capital Group, Inc. ("BCG") with its
subsidiaries Baron Capital, Inc., Baron Capital Management, Inc. ("BCM") and
BAMCO) Founder, Chief Executive Officer, and Chief Investment Officer, and his
position as portfolio manager for the majority of the Firm's assets under
management. Consideration is given to Mr. Baron's reputation, the long-term
performance records of the funds under his management and the profitability of
the Firm.

Cohen & Steers (LVIP Cohen & Steers Global Real Estate Fund)
Compensation Structure. The Advisor's compensation of portfolio managers and
other investment professionals has three primary components: (1) base salary,
(2) an annual cash bonus and (3) annual stock-based compensation consisting
generally of restricted stock units of the Advisor's parent, Cohen & Steers
Inc. ("CNS"). Cohen & Steers investment professionals, including the portfolio
managers, also receive certain retirement, insurance and other benefits that
are broadly available to all of their employees. Compensation of Cohen & Steers
investment professionals is reviewed primarily on an annual basis.
Method to Determine Compensation. Cohen & Steers compensates their portfolio
managers based primarily on the total return performance of funds and accounts
managed by a portfolio manager versus appropriate peer groups or benchmarks. In
evaluating the performance of a portfolio manager, primary emphasis is normally
placed on one- and three- year performance, with secondary consideration of
performance over longer periods of time. Performance is evaluated on a pre-tax
and pre-expense basis. In addition to rankings within peer groups of funds on
the basis of absolute performance, consideration may also be given to
risk-adjusted performance. For portfolio managers responsible for multiple
funds and accounts, investment performance is evaluated on an aggregate basis.
Portfolio managers are also evaluated on the basis of their success in managing
their dedicated team of analysts. Base compensation for portfolio managers of
Cohen & Steers varies in line with the portfolio manager's seniority and
position with the firm. Salaries, bonuses and stock-based compensation are also
influenced by the operating performance of Cohen & Steers, and CNS. While the
annual salaries of Cohen & Steers portfolio managers are fixed, cash bonuses
and stock based compensation may fluctuate significantly from year to year,
based on changes in manager performance and other factors.

Columbia Management Investment Advisers, LLC (Columbia Value Opportunities
Fund)

Columbia Management's portfolio managers received their compensation from in
the form of salary, bonus, stock options, restricted stock, and notional
investments through an incentive plan, the value of which is measured by
reference to the performance of the Columbia Funds (which is a separate family
of funds managed by Columbia Management) in which the account is invested. A
portfolio manager's bonus is variable and generally is based on (1) an
evaluation of the portfolio manager's investment performance and (2) the
results of a peer and/or management review of the portfolio manager, which
takes into account skills and attributes such as team participation, investment
process, communication and professionalism. In evaluating investment
performance, Columbia Management generally considers the one, three and five
year performance of mutual funds and other accounts managed by the portfolio
manager relative to the Russell 2000 Value Index and Lipper Small Cap Value
peer group, emphasizing the portfolio manager's three and five year
performance. Columbia Management also may consider a portfolio manager's
performance in managing client assets in sectors and industries assigned to the
portfolio manager as part of his/her investment team responsibilities, when
applicable. For portfolio managers who also have group management
responsibilities, another factor in their evaluation is an assessment of the
group's overall investment performance. The size of the overall bonus pool each
year depends on, among other factors, the levels of compensation generally in
the investment management industry (based on market compensation data) and
CMIA's profitability for the year, which is largely determined by asset under
management.

Delaware Management Company (DMC) (LVIP Delaware Bond Fund, LVIP Delaware
Growth and Income Fund, LVIP Delaware Social Awareness Fund, LVIP Delaware
Special Opportunities Fund and LVIP Money Market Fund)

Compensation structure for Roger A. Early, CPA, CFA, CFP, Thomas H. Chow, CFA,
Cynthia I. Isom:

The structure of and method used to determine any Portfolio Manager's
compensation from the investment adviser or any other source with respect to
management of the Funds and any other account included by the Funds in response
to the question above regarding other accounts managed by the Portfolio Manager
must be disclosed.

105

For purposes of this question, compensation includes, without limitation,
salary, bonus, deferred compensation, and pension and retirement plans and
arrangements, whether the compensation is cash or non-cash.

The criteria on which each type of compensation is based must be described with
specificity. For example, whether compensation is fixed, whether (and, if so,
how) compensation is based on a Fund's pre- or after-tax performance over a
certain period, and whether (and, if so, how) compensation is based on the
value of assets held in the Fund's portfolio.

Any differences between the method used to determine a Portfolio Manager's
compensation with respect to the Funds and other accounts must be disclosed. If
the Portfolio Manager receives part of an advisory fee that is based on
performance with respect to some accounts but not any of the Funds, this must
be disclosed as well.

Compensation structure for Frank X. Morris, Christopher S. Adams, CFA, Michael
S. Morris, CFA, Donald G. Padilla, CFA, and Christopher S. Beck, CFA:

Compensation Structure

Each portfolio manager's compensation consists of the following:

Base Salary-Each named portfolio manager receives a fixed base salary. Salaries
are determined by a comparison to industry data prepared by third parties to
ensure that portfolio manager salaries are in line with salaries paid at peer
investment advisory firms.

Bonus-Messrs. Adams, F. Morris, M. Morris, Padilla, : Each named portfolio
manager is eligible to receive an annual cash bonus. The bonus pool is
determined by the revenues associated with the products a portfolio manager
manages. Delaware Investments keeps a percentage of the revenues and the
remaining percentage of revenues (minus appropriate expenses associated with
relevant product and the investment management team) creates the "bonus pool"
for the product. Various members of the team have the ability to earn a
percentage of the bonus pool with the most senior contributor having the
largest share. The pool is allotted based on subjective factors (50%) and
objective factors (50%). The primary objective factor is the performance of the
funds managed relative to the performance of the appropriate Lipper peer groups
and the performance of institutional composites relative to the appropriate
indices. Performance is measured as the result of one's standing in the Lipper
peer groups on a one-year, three-year, and five-year basis. Three-year and
five-year performance is weighted more heavily and there is no objective award
for a fund whose performance falls below the 50th percentile for a given time
period.

Bonus (Mr. Beck): The portfolio manager is eligible to receive an annual cash
bonus. The bonus pool is determined by the revenues associated with the
products a portfolio manager manages. The Manager keeps a percentage of the
revenues and the remaining percentage of revenues (minus appropriate expenses
associated with relevant product and the investment management team) create the
"bonus pool" for the product. Various members of the team have the ability to
earn a percentage of the bonus pool with the most senior contributor having the
largest share. The pool is allotted based on subjective factors (50%) and
objective factors (50%). The primary objective factor is the performance of the
funds managed relative to the performance of the appropriate Lipper peer groups
and the performance of institutional composites relative to the appropriate
indices. Performance is measured as the result of one's standing in the Lipper
peer groups on a one-year, three-year and five-year basis. Three-year and
five-year performance is weighted more heavily and there is no objective award
for a fund whose performance falls below the 50th percentile for a given time
period.

Individual allocations of the bonus pool are based on individual performance
measurements, both objective and subjective, as determined by senior
management.

Janus Capital Management LLC ("Janus") (LVIP Janus Capital Appreciation Fund)

The following describes the structure and method of calculating a portfolio
manager's compensation as of December 31, 2009.

Portfolio managers and, if applicable, co-portfolio managers ("portfolio
manager" or "portfolio managers") are compensated for managing the fund and any
other funds, portfolios or accounts for which they have exclusive shared
responsibilities (collectively, the "Managed Funds") through two components:
fixed compensation and variable compensation. Certain portfolio managers are
eligible to receive additional discretionary compensation in recognition of
their continued analyst responsibilities, and the Chief Investment Officers
("CIO") of Janus are eligible for additional variable compensation in
recognition of their CIO roles, each as noted below.

Fixed Compensation: Fixed compensation is paid in cash and is comprised of an
annual base salary established on factors such as the complexity of managing
funds and other accounts and scope of responsibility (including assets under
management).

Variable Compensation: Variable compensation is paid in the form of cash and
long-term incentive awards (consisting of a mixture of Janus Capital Group Inc.
("JCGI") restricted stock, stock options, and a cash deferred award that is
credited with income, gains, and losses based on the performance of Janus
mutual fund investments selected by the portfolio manager. Variable
compensation is calculated on pre-tax performance of the Managed Funds.

Variable compensation is structured to pay the portfolio managers primarily on
the Managed Funds' performance, with additional discretionary compensation
available from one or more bonus pools as discussed below.

Aggregate compensation derived from the Managed Funds' performance is
calculated based upon a percentage of the total revenue received on the Managed
Funds adjusted to reflect the actual performance of such Managed Funds. Actual
performance is calculated

106

based on the Managed Funds' aggregate asset-weighted Lipper peer group
performance ranking on a one-, three-, and five-year rolling period basis with
a predominant weighting on the Managed Funds' performance in the three- and
five-year periods. The compensation determined from the Managed Funds'
performance is then allocated to the respective portfolio manager(s).

A portfolio manager is also eligible to participate in a portfolio manager
discretionary bonus pool. The size of the portfolio manager bonus pool
fluctuates depending on both the revenue derived from firm-wide managed assets
(excluding assets managed by subadvisers) and the investment performance of
such firm-wide managed assets. Compensation from the portfolio manager bonus
pool is then allocated among the eligible respective participants at the
discretion of Janus based upon, among other things: (i) teamwork and support of
team culture; (ii) mentoring of analysts; (iii) contributions to the sales
process; and (iv) client relationships.

Analyst Variable Compensation: If a portfolio manager also has analyst
responsibilities, then such portfolio manager is eligible to participate in a
discretionary analyst team pool. The aggregate compensation available under the
analyst team pool is derived from a formula tied to a combination of the
aggregate fund-weighted and asset-weighted Lipper peer group performance
ranking of certain Janus mutual funds for one- and three-year rolling periods,
subject to a reduction in the event of absolute negative performance. The
analyst team pool is then allocated among the eligible analysts at the
discretion of Janus based on factors which may include performance of
investment recommendations, individual and team contributions, scope of
coverage, and other subjective criteria.

CIO Variable Compensation: The CIOs are entitled to additional compensation in
consideration of their role as CIO of Janus that is generally based on
firm-wide investment performance (excluding assets managed by subadvisers),
Janus-managed net long-term flows (excluding assets managed by subadvisers and
money market funds), investment team leadership factors, and overall corporate
leadership factors. Variable compensation from firm-wide investment performance
is calculated based upon the firm-wide aggregate asset-weighted Lipper peer
group performance ranking on a one- and three-year rolling period basis.

Portfolio managers may elect to defer payment of a designated percentage of
their fixed compensation and/or up to all of their variable compensation in
accordance with JCGI's Executive Income Deferral Program.

The Fund's Lipper peer group for compensation purposes is the Large-Cap Growth
Funds.

Massachusetts Financial Services Company (LVIP MFS International Growth Fund
and LVIP MFS Value Fund)

Portfolio manager compensation is reviewed annually. Portfolio manager total
cash compensation is a combination of base salary and performance bonus:

Base Salary - Base salary represents a smaller percentage of portfolio manager
total cash compensation than performance bonus.

Performance Bonus - Generally, the performance bonus represents more than a
majority of portfolio manager total cash compensation.

Mr. Antonelli is Vice Chairman of MFS in addition to being a portfolio manager.
His compensation reflects this broader role within MFS. The Chief Executive
Officer of MFS determines and recommends the amount of his compensation to the
Sun Life Management Resources Committee of the Board of Directors of Sun Life
Financial, Inc. (the ultimate parent of MFS).

His performance bonus is based on a combination of quantitative and qualitative
factors. The quantitative portion is based on overall group investment
performance and business performance metrics. The qualitative portion is based
on the results of an annual internal review process conducted by the Chief
Executive Officer which takes into account his broad leadership
responsibilities.

In addition, he participates in a mandatory deferred compensation program
whereby a portion of his performance bonus is deferred and awarded in the form
of restricted stock units.

With respect to Messrs. Antonelli, Chitkara and Gorham, the performance bonus
is based on a combination of quantitative and qualitative factors, generally
with more weight given to the former and less weight given to the latter.

The quantitative portion is based on pre-tax performance of all of the accounts
managed by the portfolio manager over a one-, three-, and five-year periods
relative to peer group universes and/or indices ("benchmarks"). As of December
31, 2010, the following benchmarks were used:

Portfolio Manager Benchmark(s)
David A. Antonelli MSCI EAFE Index
Nevin P. Chitkara Russell 1000 Value Index
Steven R. Gotham Russell 1000 Value Index

Additional or different benchmarks, including versions of indices and custom
indices may also be used. Primary weight is given to portfolio performance over
three-year period with lesser consideration given to portfolio performance over
one-year period and five-year periods (adjusted as appropriate if the portfolio
manager has served for less than five years).

107

The qualitative portion is based on the results of an annual internal peer
review process (conducted by other portfolio managers, analysts, and traders)
and management's assessment of overall portfolio manager contributions to
investor relations and the investment process (distinct from fund and other
account performance).

Portfolio managers also typically benefit from the opportunity to participate
in the MFS Equity Plan. Equity interests and/or options to acquire equity
interests in MFS or its parent company are awarded by management, on a
discretionary basis, taking into account tenure at MFS, contribution to the
investment process, and other factors.

Finally, portfolio managers also participate in benefit plans (including
defined contribution plan and health and other insurance plans) and programs
available generally to other employees of MFS. The percentage such benefits
represent of any portfolio manager's compensation depends upon the length of
the individual's tenure at MFS and salary level, as well as other factors.

Metropolitan West Capital Management, LLC (LVIP Wells Fargo Intrinsic Value
Fund)

Compensation for investment professionals consists of a base salary and bonus.
A material portion of each professional's annual compensation is in the form of
a bonus tied to results relative to clients' benchmarks and overall client
satisfaction. While Wells Fargo & Company, holds a majority ownership interest
in MetWest Capital, certain MetWest Capital professionals still hold ownership
interests in the firm and accordingly receive payments based on the
profitability of the firm.

MetWest Capital's compensation system is not determined on an account-specific
basis. Rather, bonuses are tied to overall firm profitability and composite
performance relative to the benchmark. To reinforce long-term focus,
performance is measured over longer time periods (typically three to five
years). Portfolio Managers and Analysts are encouraged to maintain a long-term
focus and are not compensated for the number of their recommendations that are
purchased in the portfolio. Rather, their bonuses are tied to overall strategy
performance.

Recently, retention agreements have been put in place in the form of long-term
incentive plans for all members of MetWest Capital's investment team. These new
retention agreements augment those incentive opportunities already in place.

Mondrian Investment Partners Limited ("Mondrian") (International Fund)

Mondrian has the following programs in place to retain key investment staff:

1) Competitive Salary - All investment professionals are remunerated with a
competitive base salary.

2) Profit Sharing Bonus Pool - All Mondrian staff, including portfolio
managers and senior officers, qualify for participation in an annual profit
sharing pool determined by the company's profitability (approximately 30%
of profits).

3) Equity Ownership - Mondrian is ultimately controlled by a partnership of
senior management and private equity funds sponsored by Hellman & Friedman,
LLC, an independent private equity firm. Mondrian is currently 61% owned by
approximately 80 of its senior employees, including the majority of
investment professionals, senior client service officers, and senior
operations personnel through Atlantic Value Investment Partnership LP, and
33% owned by private equity funds sponsored by Hellman & Friedman, LLC. The
private equity funds sponsored by Hellman & Friedman LLC are passive,
non-controlling minority investors in Mondrian and do not have day-to-day
involvement in the management of Mondrian.

Incentives (Bonus and Equity Programs) focus on the key areas of research
quality, long-term and short-term stock performance, teamwork, client service
and marketing. As an individual's ability to influence these factors depends on
that individual's position and seniority within the firm, so the allocation of
participation in these programs will reflect this.

At Mondrian, the investment management of particular portfolios is not

"star manager" based but uses a team system. This means that Mondrian's
investment professionals are primarily assessed on their contribution to the
team's effort and results, though with an important element of their assessment
being focused on the quality of their individual research contribution.

Compensation Committee

In determining the amount of bonuses and equity awarded, Mondrian's Board of
Directors consults with the company's Compensation Committee, who will make
recommendations based on a number of factors including investment research,
organization management, team work, client servicing and marketing.

Defined Contribution Pension Plan

All portfolio managers are members of the Mondrian defined contribution pension
plan where Mondrian pays a regular monthly contribution and the member may pay
additional voluntary contributions if they wish. The Plan is governed by
Trustees who have responsibility for the trust fund and payments of benefits to
members. In addition, the Plan provides death benefits for death in service and
a spouse's or dependant's pension may also be payable.

Mondrian believes that this compensation structure, coupled with the
opportunities that exist within a successful and growing business, are adequate
to attract and retain high caliber employees.

108

SSgA Funds Management, Inc. ("SSgA FM") (LVIP SSgA Bond Index Fund, LVIP SSgA
Developed International 150 Fund, LVIP SSgA Emerging Markets 100 Fund, LVIP
SSgA International Index Fund, LVIP SSgA Large Cap 100 Fund, LVIP SSgA S&P 500
Index Fund, LVIP SSgA Small-Cap Index Fund, LVIP SSgA Small-Mid Cap 200 Fund)

The compensation of SSgA FM's investment professionals is based on a number of
factors. The first factor considered is external market. Through a compensation
survey process, SSgA FM seeks to understand what its competitors are paying
people to perform similar roles. This data is then used to determine a
competitive baseline in the areas of base pay, bonus and other incentives. The
second factor taken into consideration is the size of the pool available for
compensation. SSgA FM is a part of State Street Corporation, and therefore
works within its corporate environment on determining the overall level of its
incentive compensation pool. Once determined, this pool is then allocated to
the various locations and departments of SSgA FM and its affiliates. The
discretionary determination of the allocation amounts to these locations and
departments is influenced by the competitive market data, as well as the
overall performance of the group, and in the case of our active and enhanced
investment teams, the one and three year investment performance of their
strategies against the benchmark. The pool is then allocated on a discretionary
basis to individual employees based on their individual performance. The same
process is followed in determining incentive equity allocations.

T. Rowe Price Associates ("T. Rowe Price") (LVIP T. Rowe Price Structured
Mid-Cap Growth Fund)

Portfolio manager compensation consists primarily of a base salary, a cash
bonus, and an equity incentive that usually comes in the form of a stock option
grant. Occasionally, portfolio managers will also have the opportunity to
participate in venture capital partnerships. Compensation is variable and is
determined based on the following factors.

Investment performance over one-, three-, five-, and 10-year periods is the
most important input. We evaluate performance in absolute, relative, and
risk-adjusted terms. The weightings for these timer periods are generally
balanced and are applied consistently across similar strategies. Relative
performance and risk-adjusted performance are determined with reference to a
broad based index (e.g., S&P 500) and the Lipper index (e.g., Large-Cap Growth)
set forth in the total return table of the fund's prospectus, although other
benchmarks may be used as well. Investment results are also measured against
comparably managed funds of competitive investment management firms. The
selection of comparable funds is approved by our Investment Steering Committee
and those funds are the same ones presented to our mutual fund directors in
their regular review of fund performance. Performance is primarily measured on
a pre-tax basis though tax-efficiency is considered and is especially important
for the Tax Efficient Funds. Compensation is viewed with a long term time
horizon. The more consistent a manager's performance over time, the higher the
compensation opportunity. The increase or decrease in a fund's assets due to
the purchase or sale of fund shares is not considered a material factor. In
reviewing relative performance for fixed-income funds, a fund's expense ratio
is usually taken into account.

Contribution to our overall investment process is an important consideration as
well. Sharing ideas with other portfolio managers, working effectively with and
mentoring our younger analysts, and being good corporate citizens are important
components of our long term success and are highly valued.

All employees of T. Rowe Price, including portfolio managers, participate in a
401(k) plan sponsored by T. Rowe Price Group. In addition, all employees are
eligible to purchase T. Rowe Price common stock through an employee stock
purchase plan that features a limited corporate matching contribution.
Eligibility for and participation in these plans is on the same basis as for
all employees. Finally, all vice presidents of T. Rowe Price Group, including
all portfolio managers, receive supplemental medical/hospital reimbursement
benefits.

This compensation structure is used for all portfolios managed by the portfolio
manager.

Templeton Investment Counsel, LLC (Templeton Growth Fund)

The manager seeks to maintain a compensation program that is competitively
positioned to attract, retain and motivate top-quality investment
professionals. Portfolio managers receive a base salary, a cash incentive bonus
opportunity, an equity compensation opportunity, and a benefits package.
Portfolio manager compensation is reviewed annually and the level of
compensation is based on individual performance, the salary range for a
portfolio manager's level of responsibility and Franklin Templeton guidelines.
Portfolio managers are provided no financial incentive to favor one fund or
account over another. Each portfolio manager's compensation consists of the
following three elements:

Base Salary Each portfolio manager is paid a base salary.

Annual Bonus Annual bonuses are structured to align the interests of the
portfolio manager with those of the Fund's shareholders. Each portfolio manager
is eligible to receive an annual bonus. Bonuses generally are split between
cash (50% to 65%) and restricted shares of Franklin Resources stock (17.5% to
25%) and mutual fund shares (17.5% to 25%). The deferred equity-based
compensation is intended to build a vested interest of the portfolio manager in
the financial performance of both Franklin Resources and mutual funds advised
by the manager. The bonus plan is intended to provide a competitive level of
annual bonus compensation that is tied to the portfolio manager achieving
consistently strong investment performance, which aligns the financial
incentives of the portfolio manager and Fund shareholders. The Chief Investment
Officer of the manager and/or other officers of the manager, with
responsibility

109

for the Fund, have discretion in the granting of annual bonuses to portfolio
managers in accordance with Franklin Templeton guidelines. The following
factors are generally used in determining bonuses under the plan:

Investment Performance. Primary consideration is given to the historic
investment performance over the 1, 3 and 5 preceding years of all accounts
managed by the portfolio manager. The pre-tax performance of each fund managed
is measured relative to a relevant peer group and/or applicable benchmark as
appropriate.

Research. Where the portfolio management team also has research
responsibilities, each portfolio manager is evaluated on the number and
performance of recommendations over time, productivity and quality of
recommendations, and peer evaluation.

Non-Investment Performance. For senior portfolio managers, there is a
qualitative evaluation based on leadership and the mentoring of staff.

Responsibilities. The characteristics and complexity of funds managed by the
portfolio manager are factored in the manager's appraisal.

Additional Long-Term Equity-Based Compensation Portfolio managers may also be
awarded restricted shares or units of Franklin Resources stock or restricted
shares or units of one or more mutual funds, and options to purchase common
shares of Franklin Resources stock. Awards of such deferred equity-based
compensation typically vest over time, so as to create incentives to retain key
talent.

Portfolio managers also participate in benefit plans and programs available
generally to all employees of the manager

Ownership of Fund shares. The managers has a policy of encouraging portfolio
managers to invest in funds they manage. Exceptions arise, when for example, a
fund is closed to new investors or when tax considerations or jurisdictional
constraints cause such an investment to be inappropriate for the portfolio
manager.

Portfolio managers may also participate in retirement and benefit plans
available generally to all employees of Franklin Templeton Investments.

Turner Investment Partners, Inc. (Turner Mid-Cap Growth Fund)

Turner's compensation program is designed to promote excellence, accountability
and teamwork. Portfolio managers are compensated for superior investment
results, not the level of assets in a strategy. The analyst role is compensated
based upon the performance of individual stocks recommendations, within an
industry specialty, that make it into a portfolio. A portion of investment
professional bonus compensation is linked to a subjective teamwork and peer
assessment. Merit bonuses are capped at a multiple of base salary, and
performance targets are set and measured over multiple time periods to
discourage undue risk in execution. Base salary, as well as the potential range
of earning for an individual, is benchmarked to the industry and to the
individual's level of experience. Finally, all of our investment professionals
are principals of the firm and, as such, have a long-term vested interest in
the success of all of our investment strategies. Each employee has the
opportunity to become an equity owner, which we believe is a key factor in
promoting accountability and in attracting and retaining top-tier professionals
within all areas of the firm.

Wellington Management Company, LLP (Capital Growth Fund and Mid-Cap Value)

Wellington Management receives a fee based on the assets under management of
the each Fund as set forth in the Subadvisory Agreements between Wellington
Management and Lincoln Investment Advisors Corporation on behalf of each Fund.
Wellington Management pays its investment professionals out of its total
revenues and other resources, including the advisory fees earned with respect
to each Fund. The following information relates to the fiscal year ended
December 31, 2010.

Wellington Management's compensation structure is designed to attract and
retain high-caliber investment professionals necessary to deliver high quality
investment management services to its clients. Wellington Management's
compensation of each Fund's manager listed in the prospectuses who are
primarily responsible for the day-to-day management of the Funds (Portfolio
Managers) includes a base salary and incentive components. The base salary for
each Portfolio Manager who is a partner of Wellington Management is generally a
fixed amount that is determined by the Managing Partners of the firm.

Each Portfolio Manager is eligible to receive an incentive payment based on the
revenues earned by Wellington Management from the Fund managed by the Portfolio
Manager and generally each other account managed by such Portfolio Manager.
Each Portfolio Manager's incentive payment relating to the relevant Fund is
linked to the gross pre-tax performance of the Fund managed by the Portfolio
Manager compared to the benchmark index and/or peer group identified below over
one and three year periods, with an emphasis on three year results. Wellington
Management applies similar incentive compensation structures (although the
benchmarks or peer groups, time periods and rates may differ) to other accounts
managed by the Portfolio Managers, including accounts with performance fees.

Portfolio-based incentives across all accounts managed by an investment
professional can, and typically do, represent a significant portion of an
investment professional's overall compensation; incentive compensation varies
significantly by individual and can vary significantly from year to year. The
Portfolio Managers may also be eligible for bonus payments based on their
overall contribution to Wellington Management's business operations. Senior
management at Wellington Management may reward individuals as it deems

110

appropriate based on factors other than account performance. Each partner of
Wellington Management is eligible to participate in a partner-funded tax
qualified retirement plan, the contributions to which are made pursuant to an
actuarial formula. Messrs. Mordy and Shilling are partners of the firm.

Fund Benchmark Index and/or Peer Group for Incentive Period
LVIP Capital Growth Fund............. Russell 1000 Growth
LVIP Mid-Cap Value Fund.............. Russell 2500 Value

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Item	Page
Summary Section	1
Investment Objective	1
Fees and Expenses	1
Shareholder Fees	1
Annual Fund Operating Expenses	1
Example	1
Portfolio Turnover	1
Principal Investment Strategies	1
Principal Risks	2
Fund Performance	3
Investment Adviser and Sub-Adviser	3
Tax Information	3
Payments to Insurance Companies, Broker-Dealers and other Financial Intermediaries	3
Investment Objective and Principal Investment Strategies	4
Principal Risks	4
Management and Organization	4
Pricing of Fund Shares	5
Purchase and Sale of Fund Shares	6
Market Timing	6
Portfolio Holdings Disclosure	7
Share Classes and Distribution Arrangements	7
Distribution Policy and Federal Income Tax Considerations	7
Financial Highlights	8

	1 year	3 years	5 years	10 years
Standard Class	$31	$97	$169	$381
Service Class	$56	$176	$307	$689

	Average Annual Total Returns For periods ended 12/31/10
	1 year	5 years	10 years or Life of class
LVIP SSgA S&P 500 Index Fund – Standard Class	14.73%	2.01%	1.13%
S&P 500 Index	15.06%	2.29%	1.41%
LVIP SSgA S&P 500 Index Fund – Service Class	14.45%	N/A	(2.76%)*
S&P 500 Index	15.06%	N/A	(2.24%)*

Portfolio Manager(s)	Company Title	Experience w/Fund
Lynn Blake	Managing Director	Since May 2008
John Tucker	Managing Director	Since May 2008

Adviser	LIA (aggregate advisory fee paid to LIA for fiscal year ended December 31, 2010 was 0.22% of the fund’s average net assets).
Sub-Adviser	SSgA Funds Management, Inc. (SSgA FM) is registered with the Securities and Exchange Commission as an investment advisor under the Investment Advisers Act of 1940 and is a wholly owned subsidiary of State Street Corporation, a publicly held bank holding company. As of December 31, 2010 SSgA FM had over $200 billion in assets under management. SSgA FM, State Street, and other advisory affiliates of State Street make up State Street Global Advisors (“SSgA”), the investment management arm of State Street Corporation. With over $2 trillion under management as of December 31, 2010, SSgA provides complete global investment management services from offices in North America, South America, Europe, Asia, Australia and the Middle East. Mellon Capital Management Corporation served as sub-adviser to the fund through April 30, 2008.
Portfolio Manager(s)	The Fund is managed by the Global Structured Products Team. Portfolio managers Lynn Blake and John Tucker jointly and primarily have responsibility for the day-to-day management. Ms. Blake is a Managing Director of SSgA FM, Senior Managing Director of State Street Global Advisors and the Head of Non-US Markets in the Global Structured Products Group. Ms. Blake joined SSgA in 1987, and is currently responsible for overseeing the management of all non-US equity index strategies as well as serving as portfolio manager for several non-US equity index portfolios. Mr. Tucker is a Managing Director of SSgA FM, Managing Director of State Street Global Advisors and Head of US Equity Markets in the Global Structured Products Group, he is also responsible for all Derivative Strategies and Exchange Traded Funds. Mr. Tucker manages numerous index strategies and works closely with the other Unit Heads in the group. Previously, Mr. Tucker was head of the Structured Products group in SSgA’s London office, where he was responsible for the management of all index strategies in their second largest investment center. Mr. Tucker joined State Street in 1988.

	Standard Class	Service Class
Shareholder Fees (fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases	N/A	N/A
Maximum Deferred Sales Charge (Load)	N/A	N/A
Maximum Sales Charge (Load) Imposed on Reinvested Dividends	N/A	N/A
Redemption Fee	N/A	N/A
Exchange Fee	N/A	N/A
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Management Fee	0.22%	0.22%
Distribution and/or Service (12b-1) fees	None	0.25%
Other Expenses	0.08%	0.08%
Total Annual Fund Operating Expenses	0.30%	0.55%

	LVIP SSgA S&P 500 Index Fund Standard Class¹
	Year Ended
	12/31/2010	12/31/2009	12/31/2008²	12/31/2007	12/31/2006
Net asset value, beginning of period	$7.768	$6.237	$10.318	$9.916	$8.718
Income (loss) from investment operations:
Net investment income³	0.137	0.131	0.177	0.183	0.154
Net realized and unrealized gain (loss) on investments	1.004	1.495	(4.011)	0.333	1.185
Total from investment operations	1.141	1.626	(3.834)	0.516	1.339
Less dividends and distributions from:
Net investment income	(0.094)	(0.095)	(0.170)	(0.114)	(0.141)
Return of capital	-	-	(0.077)	-	-
Total dividends and distributions	(0.094)	(0.095)	(0.247)	(0.114)	(0.141)
Net asset value, end of period	$8.815	$7.768	$6.237	$10.318	$9.916
Total return⁴	14.73%	26.11%	(37.19%)	5.23%	15.52%
Ratios and supplemental data:
Net assets, end of period (000 omitted)	$614,978	$478,447	$338,927	$504,728	$236,510
Ratio of expenses to average net assets	0.30%	0.31%	0.28%	0.28%	0.28%
Ratio of expenses to average net assets prior to expenses waived/reimbursed and expense paid indirectly	0.30%	0.32%	0.33%	0.32%	0.34%
Ratio of net investment income to average net assets	1.72%	1.97%	2.07%	1.75%	1.69%
Ratio of net investment income to average net assets prior to expenses waived/reimbursed and expense paid indirectly	1.72%	1.96%	2.02%	1.71%	1.63%
Portfolio turnover	5%	21%	12%	25%	4%

¹	Effective April 30 2007, the Jefferson Pilot Variable Fund, Inc. S&P 500 Portfolio (the JPVF Fund) was reorganized into the Fund. The financial highlights for the periods prior to April 30, 2007 reflect the performance of the JPVF Fund.
²	Commencing May 1, 2008, SSgA Funds Management, Inc. replaced Mellon Capital Management Corporation as the Fund’s sub-adviser.
³	The average shares outstanding method has been applied for per share information.
⁴	Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value. Total investment reflects a waiver by the manager, as applicable. Performance would have been lower had the waiver not been in effect.

	LVIP SSgA S&P 500 Index Fund Service Class
	Year Ended
	12/31/2010	12/31/2009	12/31/2008¹	4/30/2007² to 12/31/2007
Net asset value, beginning of period	$7.773	$6.243	$10.314	$10.412
Income (loss) from investment operations:
Net investment income³	0.118	0.114	0.157	0.130
Net realized and unrealized gain (loss) on investments	1.003	1.494	(4.006)	(0.128)
Total from investment operations	1.121	1.608	(3.849)	0.002
Less dividends and distributions from:
Net investment income	(0.074)	(0.078)	(0.145)	(0.100)
Return of capital	-	-	(0.077)	-
Total dividends and distributions	(0.074)	(0.078)	(0.222)	(0.100)
Net asset value, end of period	$8.820	$7.773	$6.243	$10.314
Total return⁴	14.45%	25.78%	(37.34%)	0.04%
Ratios and supplemental data:
Net assets, end of period (000 omitted)	$438,189	$228,498	$70,614	$21,295
Ratio of expenses to average net assets	0.55%	0.56%	0.53%	0.53%
Ratio of expenses to average net assets prior to expenses waived/reimbursed and expense paid indirectly	0.55%	0.57%	0.58%	0.57%
Ratio of net investment income to average net assets	1.47%	1.72%	1.82%	1.83%
Ratio of net investment income to average net assets prior to expenses waived/reimbursed and expense paid indirectly	1.47%	1.71%	1.77%	1.79%
Portfolio turnover	5%	21%	12%	25%⁵

¹	Commencing May 1, 2008, SSgA Funds Management, Inc. replaced Mellon Capital Management Corporation as the Fund’s sub-advisor.
²	Date of commencement of operations; ratios have been annualized and total return has not been annualized.
³	The average shares outstanding method has been applied for per share information.
⁴	Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value. Total investment return reflects a waiver by the manager, as applicable. Performance would have been lower had the waiver not been in effect.
⁵	Portfolio turnover is representative of the Fund for the entire year.