UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14C
Information Statement Pursuant to Section 14(c) of the
Securities Exchange Act of 1934
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Lincoln Variable Insurance Products Trust
(Name of Registrant as Specified in its Charter)
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JOINT INFORMATION STATEMENT
LINCOLN VARIABLE INSURANCE PRODUCTS TRUST
LVIP Delaware Bond Fund
LVIP Delaware Diversified Floating Rate Fund
LVIP Delaware Social Awareness Fund
LVIP Delaware Special Opportunities Fund
LVIP Delaware Wealth Builder Fund
August 8, 2019
Dear Contract Owners and Shareholders:
You currently have an investment interest in one or more of the Funds listed above (each, a “Fund” and collectively, the “Funds”) through your ownership of a variable annuity contract or variable life insurance policy (“Variable Contract”). As a “Contract Owner,” you are being furnished this Joint Information Statement to inform you about recent changes related to the Funds’ subadvisory arrangements.
At a meeting held on December 4, 2018 (the “Meeting”), the Board of Trustees (the “Board”) of the LVIP Variable Insurance Products Trust (the “Trust”) approved an amendment to thesub-advisory agreement between Lincoln Investment Advisors Corporation (“LIAC” or the “Adviser”) and Delaware Investments Fund Advisers (“DIFA” or the“Sub-Adviser”) (the “Amendment”), permitting DIFA to engagesub-sub-advisers to provide certainsub-advisory services to the Funds. In addition, the Board approved separatesub-sub-advisory agreements (each, a“Sub-Sub-Advisory Agreement,” collectively, the“Sub-Sub-Advisory Agreements”) between DIFA and Macquarie Investment Management Global Limited (“MIMGL”), Macquarie Investment Management Europe Limited (“MIMEL”), Macquarie Funds Management Hong Kong Limited (“MFMHKL”), and Macquarie Investment Management Austria Kapitalanlage (“MIMAK”) (together the“Sub-Sub-Advisers”), each dated April 30, 2019. DIFA will continue to serve assub-adviser to the Funds and theSub-Sub-Advisers may provide services to the Funds as and to the extent theSub-Adviser delegates itssub-advisory services to them from time to time. As of the date of this Joint Information Statement, theSub-Sub-Advisers have not begun providing services to the Funds. Each of theSub-Sub-Advisers is an affiliate of DIFA.
The Funds are investment portfolios, or series, of the Trust. The Trust has received an exemptive order (the “Order”) from the U.S. Securities and Exchange Commission (“SEC”) permitting the investment adviser, subject to the approval of the Trust’s Board, to enter into or materially amendsub-advisory agreements without obtaining shareholder approval. As a condition of relying on the Order, the Adviser is required to furnish Fund shareholders (or, in this case, the Contract Owners) with an information statement describing any new subadviser (includingsub-sub-advisers) within 90 days of hiring such subadviser when asub-advisory agreement is entered into or materially amended without a shareholder vote. Accordingly, approval of the Amendment or theSub-Sub-Advisory Agreements does not require a shareholder vote.
This document is for informational purposes only. You are not required
to take any action and you are not requested to send us a proxy with
respect to thissub-adviser change.
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I. | Background |
The Trust is anopen-end management investment company organized as a statutory trust under the laws of the State of Delaware. The Trust currently consists of 97 separate portfolio series. Shares of the Funds and the other Trust series are offered only through separate accounts of insurance companies to fund the benefits of Variable Contracts. The insurance companies are the actual shareholders of the Fund; however, the Contract Owners are the beneficial owners of the Funds’ shares.
II. | Board Considerations |
At the Meeting, the Trust’s Board met to consider, among other things, the approval of the Amendment between LIAC and DIFA, and the approval of theSub-Sub-Advisory Agreements between the DIFA and theSub-Sub-Advisers, with respect to the Funds. The trustees who were not “interested persons” of the Trust (as such term is defined in the Investment Company Act of 1940) (the “Independent Trustees”) reported that they had reviewed materials provided by the Adviser and theSub-Adviser prior to the meeting, and were advised by their independent legal counsel of their fiduciary duties pertaining to the approval ofsub-advisory andsub-sub-advisory agreements and the factors that they should consider in evaluating such agreements. The Independent Trustees and their independent legal counsel met separately from the “interested” trustee, Trust officers as well as other members of management to consider the approval of the proposed Amendment and the proposedSub-Sub-Advisory Agreements. The Independent Trustees reported that they had considered, among others, the factors listed below and reached the following conclusions with respect to their recommendation to the Board of Trustees.
Amendment toSub-Advisory Agreement
In considering the approval of the Amendment with theSub-Adviser, the Board noted that the Amendment would allow theSub-Adviser to usesub-sub-advisers and would require theSub-Adviser to assist the Adviser in the supervision of suchsub-sub-advisers, and that the DIFA would be fully responsible to the Trust for the acts and omissions of theSub-Sub-Advisers. The Board noted that the proposed changes would not change the advisory fees charged to the Funds.
Sub-Sub-Advisory Agreements
In considering the approval of the proposedSub-Sub-Advisory Agreements between DIFA and each of theSub-Sub-Advisers, the Board did not identify any single factor or group of factors asall-important or controlling and considered a variety of factors in its analysis including those discussed below. The Board did not allot a particular weight to any one factor or group of factors.
Nature, Extent and Quality of Services and Performance. In considering the approval of the proposedSub-Sub-Advisory Agreement between DIFA and theSub-Sub-Adviser with respect to each Fund, as set forth in the table below, the Board considered the nature, extent and quality of services to be provided by theSub-Sub-Advisers under the proposedSub-Sub-Advisory Agreements. The Board considered that theSub-Sub-Advisers were proposed in order to allow theSub-Adviser to draw on their asset management capabilities. The Board noted that the DIFA would be fully responsible to the Trust for the acts and omissions of theSub-Sub-Advisers. The Board concluded that the services to be provided by eachSub-Sub-Adviser were expected to be satisfactory.
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Fund | Sub-Sub-Advisers on Fund | |
LVIP Delaware Bond Fund | MIMEL, MIMAK and MIMGL | |
LVIP Delaware Diversified Floating Rate Fund | MIMEL, MIMAK and MIMGL | |
LVIP Delaware Social Awareness Fund | MIMGL and MFMHKL | |
LVIP Delaware Special Opportunities Fund | MIMGL and MFMHKL | |
LVIP Delaware Wealth Builder Fund | MIMEL, MIMAK, MIMGL and MFMHKL |
Sub-Sub-Advisory Fee and Economies of Scale. The Board noted that the proposedSub-Sub-Advisory Agreements would entail no fees to the Funds.
Profitability and Fallout Benefits. The Board noted that compensation, if any, to theSub-Sub-Advisers would be theSub-Adviser’s responsibility. The Board noted that theSub-Sub-Advisory Agreements may further Macquarie Investment Management’s strategic initiative to integrate and publicize its global asset management businesses.
Overall Conclusions
Based on all the information considered and conclusions reached, the Board determined that the terms of the proposed Amendment and the proposedSub-Sub-Advisory Agreements are fair and reasonable, and that approval of the proposed Amendment and eachSub-Sub-Advisory Agreement is in the best interests of each Fund.
III. | Additional Information about theSub-Sub-Advisory Agreements |
As of the date of this Joint Information Statement, the Sub-Sub-Advisers have not begun providing services to the Funds. EachSub-Sub-Advisory Agreement is dated April 30, 2019 and has an initialtwo-year term. Thereafter, continuance of each of theSub-Sub-Advisory Agreements will require the annual approval of the Board, including a majority of the Independent Trustees.
Under eachSub-Sub-Advisory Agreement, subject to the oversight and supervision of theSub-Adviser, the Adviser and the Board, theSub-Sub-Adviser may performsub-advisory services at the request of theSub-Adviser such as quantitative support, investment research and advice, and trading services. EachSub-Sub-Advisory Agreement may be terminated at any time, without the payment of any penalty, upon 60 days’ notice to theSub-Sub-Adviser by the Trust or theSub-Adviser, provided that such termination shall be directed or approved by the vote of a majority of the Trustees of the Trust or by the vote of the holders of a majority of the outstanding voting securities of the Fund entitled to vote. ASub-Sub-Adviser may also terminate theSub-Sub-Advisory Agreement upon 60 days’ written notice to the Adviser. EachSub-Sub-Advisory Agreement will terminate automatically upon the termination of theSub-Advisory Agreement between the Trust and theSub-Adviser or immediately upon its assignment.
A copy of the Amendment andSub-Sub-Advisory Agreements will be filed with the SEC and accessible via the SEC’s website (www.sec.gov) through the EDGAR Database.
IV. | Information about theSub-Sub-Advisers |
TheSub-Sub-Advisers operate within Macquarie Investment Management (“MIM”), which is the marking name for certain companies comprising the asset management division of Macquarie Group
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Limited, the ultimate parent company of the Macquarie Group, and its subsidiaries and affiliates worldwide. As of March 31, 2019, MIM had approximately $246.4 billion in assets under management.
MIMGL
MIMGL is a registered investment adviser established in February 1999. MIMGL is incorporated and domiciled in Australia.
The table below provides the name and principal occupation of the MIMGL’s directors and executive officers. The principal address of each of the directors and executive officers is 50 Martin Place, Sydney, Australia 2000.
Name | Principal Occupation | |
Scot Thompson | Director | |
Brett Lewthwaite | Director | |
Graham Maiden | Director | |
Bruce Terry | Director | |
Rajiv Gohil | Director | |
Nicholas Allton | Chief Legal Officer | |
Kean Lim | Chief Compliance Officer |
MIMGL does not serve as an investment adviser orsub-adviser to any registered investment company which has an investment objective similar to the investment objectives of the Fund.
MIMEL
MIMEL is a registered investment adviser established in May 2015. MIMEL is incorporated in the United Kingdom.
The table below provides the name and principal occupation of the MIMEL’s directors and executive officers. The principal address of each of the directors and executive officers is 28 Ropemaker Street, London, United Kingdom EC2Y 9HD.
Name | Principal Occupation | |
David Fass | Director | |
Stephen Haswell | Director | |
Graham McDevitt | Director | |
Alison Wood | Chief Compliance Officer | |
Kathryn Burgess | Director |
MIMEL does not serve as an investment adviser orsub-adviser to any registered investment company which has an investment objective similar to the investment objectives of the Fund.
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MFMHKL
MFMHKL is a registered investment adviser established in July 2000. MFMHKL is incorporated and domiciled in Hong Kong.
The table below provides the name and principal occupation of the MFMHKL’s directors and executive officers. MFMHKL’s principal address is Level 18, One International Finance Centre, 1 Harbour View Street, Central, Hong Kong.
Name | Principal Occupation | |
John Bugg | Director | |
Benjamin Austin | Chief Compliance Officer | |
Jennifer Oswald | Legal Entity Controller | |
Wei Cheong | Director | |
Bastiaan Van Buuren | Director |
MFMHKL does not serve as an investment adviser orsub-adviser to any registered investment company which has an investment objective similar to the investment objectives of the Fund.
MIMAK
MIMAK is a registered investment adviser established in September 1998. MIMAK is incorporated in Austria.
The table below provides the name and principal occupation of the MIMAK’s directors and executive officers. MIMAK’s principal address is Kaerntner Strasse 28 1010 Vienna, Austria.
Name | Principal Occupation | |
Rene Kreisl | Director, Chief Compliance Officer | |
Gerhard Aigner | Director | |
Konrad Kontriner | Director |
MIMAK does not serve as an investment adviser orsub-adviser to any registered investment company which has an investment objective similar to the investment objectives of the Fund.
V. | Information about the Adviser and the Trust |
Investment Adviser
The Adviser – Lincoln Investment Advisor Corporation – serves as the Funds’ investment adviser and is located at 150 N. Radnor-Chester Road, Radnor, Pennsylvania 19087.
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For the fiscal year ended December 31, 2018, the Funds paid fees to the Adviser equal to the following aggregate annual rates, expressed as a percentage of a Fund’s average daily net assets:
Name of Fund | Aggregate Annual Rate as a Percentage of Average Daily Net Assets | |
LVIP Delaware Bond Fund | 0.31% | |
LVIP Delaware Diversified Floating Rate Fund | 0.55% | |
LVIP Delaware Social Awareness Fund | 0.38% | |
LVIP Delaware Special Opportunities Fund | 0.38% | |
LVIP Delaware Wealth Builder Fund | 0.63% |
For the fiscal year ended December 31, 2018, the Funds paid investment advisory fees, net of fee waivers and expense reimbursements, as follows:
Name of Fund | FYE Ended December 31, 2018 | |||
LVIP Delaware Bond Fund | $19,512,202 | |||
LVIP Delaware Diversified Floating Rate Fund | 4,923,575 | |||
LVIP Delaware Social Awareness Fund | 2,725,611 | |||
LVIP Delaware Special Opportunities Fund | 2,542,710 | |||
LVIP Delaware Wealth Builder Fund | 1,125,016 |
Principal Underwriter and Distributor
The Funds’ principal underwriter and distributor, Lincoln Financial Distributors, Inc. (“LFD”), is located at 130 N. Radnor-Chester Road, Radnor, Pennsylvania 19087. LFD is an affiliate of the Adviser.
Broker-Dealers Affiliated with the Adviser
The Adviser has the following affiliated brokers: Lincoln Financial Advisors Corporation, Lincoln Financial Distributors, Inc., and Lincoln Financial Securities Corporation.
Payments of Commissions to Affiliated Brokers
For the fiscal year ended December 31, 2018, the Funds paid no commissions to any affiliated broker.
Administrator
The Funds’ administrator, Lincoln National Life Insurance Company (“Lincoln Life”), is located at 1300 S. Clinton St., Fort Wayne, Indiana 46802. Lincoln Life is an affiliate of the Adviser.
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Outstanding Shares
As of August 1, 2019, the Funds’ outstanding shares were as follows:
Fund/Class | Outstanding Shares | |||
LVIP Delaware Bond Fund – Standard Class | 172,208,296.5 | |||
LVIP Delaware Bond Fund – Service Class | 281,714,477.4 | |||
LVIP Delaware Diversified Floating Rate Fund – Standard Class | 5,455,573.342 | |||
LVIP Delaware Diversified Floating Rate Fund – Service Class | 84,107,634.04 | |||
LVIP Delaware Social Awareness Fund – Standard Class | 15,100,308.04 | |||
LVIP Delaware Social Awareness Fund – Service Class | 2,350,855.146 | |||
LVIP Delaware Special Opportunities Fund – Standard Class | 12,681,410.34 | |||
LVIP Delaware Special Opportunities Fund – Service Class | 3,817,690.042 | |||
LVIP Delaware Wealth Builder Fund – Standard Class | 11,630,390.81 | |||
LVIP Delaware Wealth Builder Fund – Service Class | 2,349,045.004 |
Because the Funds are available as an investment for Variable Contracts offered by certain life insurance companies, the insurance companies could be deemed to control the voting securities of a Fund (i.e., by owning more than 25%). However, an insurance company would exercise voting rights attributable to any Fund shares that it owns (directly or indirectly) in accordance with, and in proportion to, voting instructions received by owners of the Variable Contracts. A small number of Contract Owners could therefore determine whether a Fund’s proposals are approved.
Ownership of Shares
As of August 1, 2019, no persons beneficially owned 5% (or 25% or more) of the Funds’ shares.
As of August 1, 2019, the Trustees and officers of the Trust as a group beneficially owned less than 1% of each Fund’s outstanding shares.
VI. | Other Information |
Householding
Only one copy of this Information Statement is mailed to households, even if more than one person in a household is a Fund shareholder of record, unless the Funds have received instructions to the contrary. If you need additional copies of this Information Statement, or if you do not want the mailing of an Information Statement to be combined with those for other members of your household in the future, or if you are receiving multiple copies and would rather receive just one copy for the household, please contact the Trust by calling1-800-454-6265 or by writing to the Trust at P.O. Box 2340, Fort Wayne, Indiana 46801 (regular mail) or 1300 S. Clinton Street, Fort Wayne, Indiana 46802 (express mail).
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Financial Statements
Shareholders can obtain a copy of each Fund’s most recent Annual Report and Semi-Annual Report without charge, by calling1-800-454-6265, by writing to the Trust at P.O. Box 2340, Fort Wayne, Indiana 46801 (regular mail) or 1300 S. Clinton Street, Fort Wayne, Indiana 46802 (express mail) or by visiting https://www.lfg.com/lvip.
PLEASE RETAIN THIS INFORMATION STATEMENT FOR FUTURE REFERENCE
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