2008 Annual Report to Shareholders - Lincoln Financial Group

existing shareholders. A-, B-, C- and R-classes are generally subject to Rule 12b-1 fees. A closed-end fund offers a fixed number
of shares and is usually sold through a brokerage firm. After the initial offering, shares normally trade on a major stock exchange.
The Investment Management segment also provides investment advisory services to clients through separately managed accounts,
commonly referred to as wrap accounts. These products are offered by a sponsor, typically a broker-dealer, to higher net worth
individuals with a minimum investment of approximately $250,000. During 2006, the Investment Management segment closed the
International American Depository Receipt (“ADR”) separately managed account product, which is sub-advised by Mondrian, and
the Delaware Large Cap Growth Equity separately managed account to new investors. During 2008, both of these products were
reopened to new investors. An ADR is a security that trades in the U.S., but represents a specified number of shares in a foreign
corporation. ADRs are bought and sold on U.S. markets just like traditional stocks and are issued or sponsored in the U.S. by a
bank or brokerage firm.
Institutional Products and Services
For institutional clients, the Investment Management segment offers Delaware Pooled Trust and institutional separate accounts
and manages CDOs. External institutional assets under management were $20.9 billion, $33.3 billion and $43.1 billion as of
December 31, 2008, 2007 and 2006, respectively.
Delaware Pooled Trust is a registered investment company that offers a series of mutual funds managed in styles that are similar to
institutional separate account offerings and are best suited for smaller- to medium-sized institutional investment mandates.
Delaware Pooled Trust’s minimum initial investment is typically $1 million. The funds included in Delaware Pooled Trust are
offered without a sales charge directly through Delaware Investments’ institutional marketing and client services group.
The Investment Management segment provides investment advisory services through individually managed accounts to a broad
range of institutional clients, such as corporate and public retirement plans, endowments and foundations, nuclear
decommissioning trusts, sub-advisory clients and Taft-Hartley plans, among others. Included among sub-advisory clients are
mutual funds and other commingled vehicles offered by institutional parties. Most clients utilize individually managed separate
accounts, which means clients have the opportunity to customize the management of their portfolio by including or excluding
certain types of securities, sectors or segments within a given asset class. Because of their individually managed nature, these
separate accounts are best suited for larger investment mandates. Currently, the minimum account size is typically $25 million.
The Investment Management segment also provides investment advisory services for CDOs. CDOs are pools of debt instruments
that are securitized and sold to investors through a sponsor, typically an investment bank. The Investment Management segment
does not invest in these securities, but the insurance portfolios of LNC’s insurance subsidiaries are invested in certain of these
securities. The Investment Management segment provides investment advisory services at a fee. As of December 31, 2008, 2007
and 2006, the Investment Management segment provided advisory services for $5.0 billion, $6.1 billion and $3.7 billion,
respectively, of CDOs.
As stated in “Acquisitions and Dispositions” above, during the fourth quarter of 2007, we completed the sale of certain
institutional taxable fixed income business with an unaffiliated investment management company involving certain members of our
fixed income team and related institutional taxable fixed income business.
The Investment Management segment also provides investment management services for LNC’s general account assets for which
it earns advisory revenue.
Distribution
The businesses in the Investment Management segment deliver their broad range of products through multiple distribution
channels, enabling them to reach an expanding community of retail and institutional investors. Investment Management
distributes retail mutual funds and managed accounts through intermediaries, including LFN, which are serviced by the LFD
wholesaling distribution network. Delaware Distributors, L.P. is the principal underwriter for the Delaware Investments mutual
funds and serves as a liaison between the funds and LFD.
Delaware Investments’ institutional marketing group, working closely with manager selection consultants, markets substantially all
of the institutional products.
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