UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number | 811-05641 | |||||||
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The Park Avenue Portfolio | ||||||||
(Exact name of registrant as specified in charter) | ||||||||
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7 Hanover Square New York, N.Y. |
| 10004 | ||||||
(Address of principal executive offices) |
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Frank L. Pepe |
| Thomas G. Sorell | ||||||
(Name and address of agent for service) | ||||||||
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Registrant’s telephone number, including area code: | (800) 221-3253 |
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Date of fiscal year end: | December 31 |
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Date of reporting period: | December 31, 2005 |
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ITEM 1. REPORTS TO STOCKHOLDERS.
The Annual Report to Stockholders follows.
The Park Avenue Portfolio®
Annual Report
to Shareholders
December 31, 2005
The Guardian Park Avenue Fund®
The Guardian UBS Large Cap Value FundSM
The Guardian Park Avenue Small Cap FundSM
The Guardian UBS Small Cap Value FundSM
The Guardian Asset Allocation FundSM
The Guardian S&P 500 Index FundSM
The Guardian Baillie Gifford International Growth FundSM
The Guardian Baillie Gifford Emerging Markets FundSM
The Guardian Investment Quality Bond FundSM
The Guardian Low Duration Bond FundSM
The Guardian High Yield Bond FundSM
The Guardian Tax-Exempt FundSM
The Guardian Cash Management FundSM
Dear Shareholder:
Thomas G. Sorrell, CFA
Chief Investment Officer
QUICK FACTS
• The U.S. economy overcame a number of challenges and continued to expand at a brisk pace in 2005.
• Even though corporate profits were solid, the stock market produced below average returns during the year.
• International stocks generated superior performance in 2005, outpacing their U.S. counterparts.
• Despite continued interest rate hikes by the Federal Reserve Board, the U.S. bond market held up fairly well and generated positive returns in 2005.
• Our outlook for the economy remains positive although it could soften somewhat in 2006. The stock and bond markets could again produce modest gains in the coming year.
The U.S. Economy, Still Going and Going?
Yogi Berra could have best described the economy in 2005 by saying, "It's deja vu all over again."
In our 2004 year-end summary we stated: "...even if you consider all of the headwinds the U.S. economy faced in 2004, one would still be hard pressed to have predicted its resiliency during the year." I would be hard pressed to find a better way to characterize what occurred in 2005. Steadily rising short-term interest rates, record high oil prices, inflationary pressures, a potential housing bubble, a series of devastating hurricanes, terrorist threats and attacks, and geopolitical issues were just some of the issues that could have derailed the economy. Yet, when all was said and done, American consumers, who account for roughly 70% of our gross domestic product (GDP), kept spending and spending, sustaining strong economic growth, but unlike the bunny in that battery commercial that seems to never stop, began to falter in the fourth quarter of 2005. While GDP grew 3.8% in the first quarter, 3.3% in the second quarter, and 4.1% in the third quarter it dropped precipitously to 1.1% in the fourth quarter, principally due to a significant decline in consumer spending. Nevertheless, for the year as a whole GDP grew 3.5% in 2005 versus 4.2% in 2004 year-over-year. The critical economic question for 2006 is to what degree does this decline in consumer spending represent a temporary respite, or a major retrenchment, and to what degree will growth in other sectors of the economy be sufficient to offset any decline? We will address this shortly in our Economic Outlook, but first let's review last year's financial markets and their performance.
A More Modest Year-End Rally
Perhaps we were spoiled by the previous two years, but the market's gains during the fourth quarter of 2005 didn't live up to some people's lofty expectations. During the last three months of the year, the S&P 500 Index returned 2.09%. This wasn't bad, considering the Index rose a fairly modest 4.91% during 2005. However, it didn't stand up to the 12.18% and 9.23% gains in the fourth quarters of 2003 and 2004, respectively.
While consumers may have been upbeat enough to propel the economy forward, investor sentiment was more subdued. Continued solid corporate profit growth in 2005, estimated to be 11% by First Call, did not translate into commensurate price gains for the overall market. In fact, for much of the year stocks traded in a fairly narrow range, sometimes taking two steps forward and then one step back. There were any number of factors impacting the markets, many of which were listed in our economic review. That said, there were pockets of opportunity. In the U.S., mid-capitalization stocks generated superior returns, with the Russell MidCap Index gaining 12.65%. International stocks performed even better, as the MSCI EAFE Index returned 14.02% and emerging market equities, as measured by the MSCI EMF Index, gained an outstanding 34.55%.
Bonds Hold Their Own, Again
Yogi Berra could be called on again to describe the bond market in 2005, as it closely resembled 2004. The outlook for 2004 was much like that of 2005—given continued interest rate hikes by the Federal Reserve Board (the "Fed") both short- and long-term interest rates would increase and bond prices would fall. Yet, as was the case in 2004, during the last 12 months short-term bond yields rose while longer-term bond yields remained fairly stable. During 2005, two-year Treasury yields rose from 3.08% to 4.41%. In contrast, 10-year Treasury yields only moved from 4.24% to 4.37% during the year.
As 2005 ended, much was being made of the fact the yield curve had inverted, meaning two-year Treasury yields were higher than their 10-year counterparts. This is unusual, as investors generally receive higher yields for assuming the greater risks associated with longer-term securities.
This anomaly typically foreshadows an economic recession. In fact, an official from the Federal Reserve Bank of New York concluded that an inverted yield curve "has predicted essentially every U.S. recession since 1950 with only one 'false' signal." We'll discuss this in greater detail in the Bond Outlook that follows.
Looking at 2005 as a whole, the overall bond market, as measured by the Lehman Aggregate Bond Index, returned 2.43%. High yield bonds performed marginally better, with the Lehman High Yield Bond Index returning 2.74% over the same period. While corporate balance sheets continued to improve in 2005, the high yield market was adversely affected by the highly publicized downgrades of General Motors, Ford Motor Company, and both of their finance subsidiaries.
Economic Outlook: A Somewhat Slower Expansion
While a number of economists have expressed concern over the past two years that economic growth was about to falter, we believe that in 2006 they may finally be right. The current Blue Chip consensus forecast for 2006 GDP is 3.4% year-over-year. As mentioned earlier, a critical concern for 2006 economic growth is the willingness and ability of consumers to continue spending at their recent pace. The other important question is will core inflation remain well contained or will rising input prices finally be passed onto the consumer, forcing the Fed to continue tightening monetary policy. As indicated earlier we believe the answer to the first question is that economic growth is more likely to disappoint, while we think inflation will in fact remain well contained.
A strong housing market has to a large degree supported personal consumption expenditures, and a negative savings rate. Consumers have used their homes as ATM's, removing significant equity that was then available for consumption, be it home improvement or a family vacation. Other homeowners took advantage of low interest rates and the ability to reduce their mortgage payments and were able to increase disposable income. Unfortunately, it appears that this economic stimulus is about to decline as the housing market cools and the full effect of rising short-term interest rates is reflected in the economy.
In addition, oil prices remain high, further straining consumer pocketbooks. The economy is near full employment limiting further gains from job growth. Disposable personal income has declined sequentially in real terms in recent quarters. These factors will most likely adversely impact spending by consumers since they have already overstepped income-based spending power. During the second and third quarter of 2005, U.S. households spent more than they earned for the first time since quarterly record keeping began in 1947. Furthermore, the savings rate for all of 2005 fell to a negative .5%, while spending exceeded income, the first time since the Depression. This is clearly not sustainable, and something we do not expect to be repeated in 2006.
On the plus side, corporations are flush with cash and could help pick up the slack by increasing capital expenditures. However, corporations remain conservative with respect to business investment, and capital expenditures have not yet returned to the 10% type growth rates experienced in the 1990's. There is some hope however that this will change if capacity utilization continues to increase above 80%, and creates potential production constraints. In addition to capital spending, export growth, inventory rebuilding, and government spending on hurricane reconstruction may offset some of the decline in personal consumption expenditures.
As mentioned earlier, the preliminary fourth quarter 2005 GDP report of 1.1% was much weaker than the prior three quarters, principally due to weak consumer spending. Despite the fact that a closer reading of the data indicates that the bulk of the weakness in personal consumption was the result of a decline in auto sales, possibly a pay back after heavily promoted employee discounts offered to the general public during the third quarter, we believe that weakness in housing, a decline in mortgage equity withdrawals, and other factors mentioned earlier are likely to slow consumption at some point in 2006. While we do not expect a recession, the economy faces greater downside risks and we believe is more likely to grow below the current consensus economic forecasts.
While economic growth may slow, we are not as concerned about inflationary pressures. Core inflation remains low, global sourcing and competition creates disinflation pressures, and we expect the Fed under its new Chairman Bernanke to remain vigilant in containing inflation expectations, despite recent indications that the Fed may be close to ending their 18-month tightening campaign.
While headline inflation levels are still high, the acceleration evident in core inflation measures in 2004 and early 2005 has dissipated. Overall headline Producer Price Index (PPI) ended 2005 at 5.4% year-over-year off the Fall peaks, but still up from 4.2% rate in December 2004. In December, the Consumer Price Index (CPI) was +3.4% year-over-year, up slightly from year earlier levels. The Fed continues to focus on core inflation measures, which have been fairly well behaved lately. Core CPI was 2.2% year-over-year in December, unchanged from the year earlier level, after doubling during 2004 (from 1.1% to 2.2%). Core Personal Consumption Expenditures (PCE) for December was 1.9% year-over-year and is therefore still within the Fed's central tendency forecast, and has been at about the same level for many months.
Equity Outlook: Single-Digit Gains on Tap for 2006?
Our projection for U.S. stocks in 2005 was for a mid single digit return. We believe that a high single digit return, not far from last year's, should be a reasonable estimate for 2006. Low interest rates and solid global economic expansion led to an estimated 11% growth in per share earnings for the S&P 500 Index last year. The modest appreciation of domestic stock prices caused valuations to drift downwards. Stock valuations are now close to long-term historical averages, despite lower than average long-term interest rates. We believe that stocks offer better value than bonds now. The irrational stock valuations of the bubble era are now a distant memory. Strong cash flow generation, healthy balance sheets and low capital expenditures spending have led to record levels of share buybacks and dividends paid. We believe the Fed tightening and the flat-to-inverted yield curve augur an economic slowdown and not a recession, and so corporate profits should continue to grow. On the flip side, an uptick in inflation or lower than expected economic growth could dampen profit margins. Some observers worry about the impact of the coming mandatory expensing of stock options on reported earnings. In addition, oil prices are again hovering around $60 a barrel, significantly higher than a year ago. Another worry is the effect on consumer spending of reduced mortgage equity withdrawal that would likely follow a cooling in home prices in 2006. However, we believe that a stock market that has eked out positive returns even in the face of $70 oil (per barrel), thirteen Fed rate increases, natural disasters, and geo-political uncertainty has considerable resilience, and will likely jump if and when some of the headwinds diminish, such as when the Fed ends the tightening campaign. All told, Thomson First Call consensus estimate for S&P 500 Index earnings per share growth in 2006 is a 7% increase. We believe it's reasonable to expect market returns a litt le over that during the next 12 months.
Should the economy and corporate profit growth slow, as we expect, stocks of more established high quality companies may outperform smaller, more speculative companies in 2006. In addition, if the dollar declines in 2006, domestic firms with substantial export earnings (typically large companies) will benefit. Elsewhere, value stocks have outperformed growth stocks for six years in a row. As a result, growth stock valuations are more attractive than they have been in quite some time. As such, they may be poised to produce better relative performance than value in the year ahead.
Looking overseas, international stocks have now outperformed their U.S. counterparts for three straight years. This has been a surprise to some, especially since economic growth rates in many foreign countries lagged that of the U.S. Supporting stock prices in the Eurozone and Japan were corporate restructuring, solid profit growth, low interest rates, and expectations for improving economic growth. Many emerging market countries have benefited from high energy and commodity prices, as well as rising domestic demand and improving balance sheets. Looking ahead, we continue to see long-term opportunities in international equities. While their returns may not be as robust as in recent years, U.S. investors may get a boost in their returns if the U.S. dollar weakens in 2006. A falling dollar is good news for Americans investing overseas, as returns from international securities are increased when translated back into U.S. dollars.
Bond Outlook: All Eyes on the "New" Fed
Since June 2004, the Fed has raised interest rates at 13 consecutive meetings, bringing the Federal Funds rate from 1.00% (a 45 year low) to 4.25% at the end of 2005. After each of these meetings, market participants have studiously analyzed the Fed's accompanying policy statement in an attempt to determine its next move. To a great extent, there hasn't been much to scrutinize, as the Fed has consistently stated, "policy accommodation can be removed at a pace that is likely to be measured." However, coinciding with the December 13, 2005 rate hike, the Fed modified the language in its statement by eliminating its view that its policy was accommodative. Then, in early January 2006, the release of the Fed's December meeting minutes said, "additional firming steps required probably would not be large." The market assumed this meant the Fed may stop raising rates at its meeting on January 31, 2006 or at its next meeting in March.
The timing of this potential policy shift is even more interesting given the fact that Alan Greenspan will end his 18-year reign as Fed Chairman at the end of January and Ben Bernanke will assume this role in February. All eyes will clearly be on this transition and on how Mr. Bernanke reacts to incoming economic data. This, in turn, could lead to increased volatility in the bond market. Taking a more broad view of the situation, we expect the Fed to raise rates in January and perhaps in March before pausing or officially ending its tightening campaign. This will no doubt be dependent on economic and inflation data.
As for the yield curve inversion we saw in late December, we do not feel this is a sign of an impending recession. Rather, it may have been a result of strong demand for longer-term bonds by foreign investors and pension funds. We would expect the yield curve to move to a more normalized position with longer-term rates again exceeding shorter-term rates. As for the bond market as a whole in 2006, we anticipate modest returns. It's also important to point out that the premium (or additional yield) for assuming incremental risks by investing in lower quality bonds could continue to be minimal in 2006. In this environment, investors would not be substantially rewarded for assuming additional credit risk.
Rebalancing May Be In Order
Given the market's returns in 2005, your portfolio's asset allocation may no longer be consistent with your goals, risk tolerance, and time horizon. We've found the beginning of the new year is an appropriate time to meet with your financial professional to take a fresh look at your individual situation and overall investment portfolio to determine if adjustments are needed. As in the past, we believe that maintaining a diversified portfolio, one that contains U.S. stocks and bonds and an international component as well, can be instrumental in helping to reach one's long-term goals.
Before I conclude, I would like to provide a brief update on The Guardian Park Avenue Fund.® As you may know, in August 2005, Manind ("Mani") Govil joined Guardian Investor Services LLC as Head of Equity Investments and Portfolio Manager of The Guardian Park Avenue Fund®. We are very pleased with the direction of the Fund since Mani's arrival.
I would like to thank you for your business, and the confidence and trust you place in The Park Avenue Portfolio management team to prudently manage your fund investments. We take this fiduciary responsibility very seriously and you can be sure we will continue to endeavor to generate investment returns that warrant your continued commitment and support.
Thomas G. Sorell, CFA
President, The Park Avenue Portfolio
Chief Investment Officer,
Guardian Investor Services LLC
Gross Domestic Product measures the value of goods and services produced in an economy.
The Morgan Stanley Capital International (MSCI) for Europe, Australia, and Far East (EAFE) is an index that is generally considered to be representative of international stock market activity. The MSCI EAFE is an unmanaged index that is not available for direct investment. Unlike mutual funds, there are no expenses associated with the index.
The Russell Midcap Index measures the performance of the 800 smallest companies in the Russell 1000 Index.
The S&P Index is an index of 500 primarily large-cap U.S. stocks that is generally considered to be representative of U.S. stock market activity. The S&P 500 Index is an unmanaged index that is not available for direct investment. Unlike mutual funds, there are no expenses associated with the index.
Please note that the opinions and outlooks about the markets in general and any specific securities expressed above reflect the viewpoints of Tom Sorrell as of December 31, 2005. Keep in mind that market conditions are constantly evolving and that past performance is not a guarantee of future results. This shareholder letter is not part of the funds' shareholder report for legal purposes and is submitted for the general information of The Park Avenue Portfolio shareholders. This letter is not authorized for distribution to prospective investors unless preceded or accompanied by a prospectus. Please consider the funds' investment objective, risks, fees and charges carefully before investing.
The Park Avenue Portfolio® family of mutual funds is sold by prospectus only. The prospectus contains important information, including fees and expenses and should be read carefully before investing or sending money. You should consider the funds' investment objectives, risks, fees and charges carefully before investing. A prospectus contains this and other important information and can be obtained from your investment professional or by calling 800-221-3253.
Shares of The Park Avenue Portfolio® family of mutual funds are not deposits or obligations of, or guaranteed or endorsed by, any bank or depository institution, nor are they insured by the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Association (NCUA), the Federal Reserve Board, or any other agency. Investment in the funds involves risks, including possible loss of the principal amount invested. Fund shares are subject to market fluctuations and, when redeemed, may be worth more or less than their original cost.
Guardian Investor Services LLC (GIS) is the distributor of The Park Avenue Portfolio family of mutual funds. GIS is an indirect wholly owned subsidiary of The Guardian Life Insurance Company of America (Guardian Life), New York, NY. GIS is located at 7 Hanover Square, New York, NY 10004. 800-221-3253. GIS is a member: NASD, SIPC.
THE PARK AVENUE PORTFOLIO
Table of Contents
Fund Highlights | Schedule of Investments | ||||||||||
The Guardian Park Avenue Fund | 2 | 58 | |||||||||
The Guardian UBS Large Cap Value Fund | 6 | 60 | |||||||||
The Guardian Park Avenue Small Cap Fund | 10 | 62 | |||||||||
The Guardian UBS Small Cap Value Fund | 14 | 64 | |||||||||
The Guardian Asset Allocation Fund | 18 | 66 | |||||||||
The Guardian S&P 500 Index Fund | 22 | 69 | |||||||||
The Guardian Baillie Gifford International Growth Fund | 26 | 75 | |||||||||
The Guardian Baillie Gifford Emerging Markets Fund | 30 | 78 | |||||||||
The Guardian Investment Quality Bond Fund | 34 | 81 | |||||||||
The Guardian Low Duration Bond Fund | 40 | 85 | |||||||||
The Guardian High Yield Bond Fund | 46 | 87 | |||||||||
The Guardian Tax-Exempt Fund | 51 | 92 | |||||||||
The Guardian Cash Management Fund | 55 | 95 | |||||||||
Financial Statements | 98 | ||||||||||
Notes to Financial Statements | 106 | ||||||||||
Financial Highlights | 126 | ||||||||||
Board Approval of Investment Management Agreements (Unaudited) | 141 | ||||||||||
Shareholder Voting Summary (Unaudited) | 146 | ||||||||||
(This page intentionally left blank)
About Your Annual Report
Information About Indexes:
Index returns are provided for comparative purposes and are quoted throughout the following fund information. Please note that the indices are not available for direct investment and the returns do not reflect the fees and expenses that have been deducted from the Fund. In addition, the return figures for the index do not reflect sales charges that an investor may pay when purchasing or redeeming shares of the Fund.
• The S&P 500 Index is an unmanaged index of 500 primarily large cap U.S. stocks that is generally considered to be representative of U.S. stock market activity.
• The Russell 1000 Value Index offers investors access to the large-cap value segment of the U.S. equity universe. The Russell 1000 Value is constructed to provide a comprehensive and unbiased barometer of the large-cap value market. Based on ongoing empirical research of investment manager behavior, the methodology used to determine growth probability approximates the aggregate large-cap value manager's opportunity set.
• The Russell 2000 Index is an unmanaged index that is generally considered to be representative of small capitalization issues in the U.S. stock market.
• The Russell 2000 Growth Index measures the performance of growth stocks within the Russell 2000 Index and is generally considered to be representative of small capitalization growth issues in the U.S. stock market.
• The Russell 2000 Value Index offers investors access to the small-cap value segment of the U.S. equity universe. The Russell 2000 Value is constructed to provide a comprehensive and unbiased barometer of the small-cap value market. Based on ongoing empirical research of investment manager behavior, the methodology used to determine value probability approximates the aggregate small-cap value manager's opportunity set.
• The Morgan Stanley Capital International (MSCI) Europe, Australasia and Far East (EAFE) Growth Index is an unmanaged index that is generally considered to be representative of the international growth stock market activity.
• The Morgan Stanley Capital International (MSCI) Emerging Markets Free (EMF) Index is an unmanaged index that is generally considered to be representative of the stock market activity of emerging markets. The MSCI EMF Index is a market capitalization weighted index composed of companies representative of the market structure of 22 emerging market countries of Europe, Latin America and the Pacific Basin. The MSCI EMF Index excludes closed markets and those shares in otherwise free markets that may not be purchased by foreigners.
• The Lehman Brothers Aggregate Bond Index is an unmanaged index that is generally considered to be representative of U.S. bond market activity.
• The Lehman Brothers U.S. Government 1-3 Year Bond Index is an unmanaged index that is generally considered to be representative of U.S. short duration bond market activity.
• The Lehman Brothers Corporate High Yield Bond Index is an unmanaged index that is generally considered to be representative of U.S. corporate high yield bond market activity.
• The Lehman Brothers Municipal Bond Index is an unmanaged index that is generally considered to be representative of U.S. municipal bond activity.
• The Lehman Brothers 3-Month Treasury Bill Index is generally considered representative of the average yield of three-month Treasury Bills.
• The Lehman Brothers Treasury Index is generally considered to be representative of U.S. Treasury market activity.
• The Lehman Brothers Municipal Long Index is a subset of the national index with a maturity constraint of greater than or equal to 22 years.
• The Lehman Brothers Municipal 1-Year Index is a subset of the main index rules with a maturity constraint of one year up to but not including two years.
• The Lehman Brothers Municipal 10-Year Index adheres to the same rules as the larger national index with a maturity constraint of years up to but not including 12 years.
Management's Discussion of Fund Performance
The views expressed in the "Update from Fund Management" section of each Fund are those of the Fund's portfolio manager(s) as of December 31, 2005 and are subject to change without notice. They do not necessarily represent the views of Guardian Investor Services LLC, Guardian Baillie Gifford Limited or UBS Global Asset Management (Americas) Inc. The views expressed herein are based on current market conditions and are not intended to predict or guarantee the future performance of any Fund, any individual security, any market or market segment. The composition of each Fund's portfolio is subject to change. No recommendation is made with respect to any security discussed herein.
n The Guardian Park Avenue Fund
Annual Report
to Shareholders
Manind V. Govil, CFA
Portfolio Manager
Objective:
Long-term growth of capital
Portfolio:
At least 80% common stocks and securities convertible into common stocks
Inception Date:
June 1, 1972
Net Assets at
December 31, 2005:
$881,067,068
An Update from Fund Management
U.S. stocks struggled to finish 2005 in positive territory, after two years of double-digit returns in 2003 and 2004. The S&P 500 Index returned 4.91% for the year, but needed an 11th-hour surge in November to move out of negative territory. Throughout 2005, the market was vulnerable to concerns that record-high energy prices, combined with Federal Reserve monetary policy tightening, would depress consumer spending and thereby cause the economic expansion to falter. In addition, investors fretted over the very real impact of high energy prices on the profit margins of industrial and other companies (such as truckers, restaurants and retailers) with heavy energy consumption needs.
Energy stocks led the market in 2005 with a 31% total return, as producers and energy service companies benefited from sustained high commodity prices. Utility stocks were the next best sector with a 17% total return, led by shares of independent power producers. No other sector posted a double-digit gain; financial stocks rose over 6% on the strength of broker-dealer and REIT shares, while healthcare also gained over 6% due to sharp gains in hospital and HMO stocks.
The Guardian Park Avenue Fund returned 3.90%1. Stock selection was positive across most sectors, most notably industrials and energy, while healthcare was the only significant negative. At the portfolio level, the net benefit from selection was offset by modestly negative sector allocation, most notably in the energy sector where our slight average underweight cost us relative performance in the market's strongest sector.
During 2005 our essential strategy was unchanged: to provide a fundamentally-managed large cap core fund. However, The Guardian Park Avenue Fund did experience a change of portfolio managers and investment process, as well as an interim period of approximately five months between the departure of Richard Goldman and my arrival as Portfolio Manager on August 1, 2005. During that period, the Fund was co-Managed by Tom Sorell, Chief Investment Officer of Guardian Investor Services LLC and President of The Park Avenue Portfolio and Matthew Ziehl, Portfolio Manager of The Guardian Park Avenue Small Cap Fund.
From August 1st through the end of 2005, The Guardian Park Avenue Fund returned 2.87%1 versus 2.09% for the S&P 500 Index. We firmly believe that our most critical mission is to increase performance relative to peers and the benchmark. In our efforts to achieve this objective, we are enhancing the fundamental research process by increasing the depth of research and critical thinking on each investment name in the portfolio. The involvement of our quantitative team is also being enhanced in the investment process. Our investment philosophy and style will likely result in fewer companies and lower turnover in the portfolio and alpha (return relative to the market) being driven primarily through stock selection.
Our endeavor is to invest in companies that we believe will emerge stronger from the current economic environment. We seek companies with improving fundamentals for the long-term, whose stocks we believe are mispriced and therefore do not fully reflect their stronger underlying business prospects. Fundamentals endure long after market emotions that cause volatile short-term swings in share prices are forgotten. We believe this strategy over time has the potential to generate superior long term results.
1 Total return is shown for Class A shares and does not take into account the current maximum sales charge of 4.5%.
About information in this report:
• It is important to consider the Fund's investment objectives, risks, fees and expenses before investing. All funds involve some risk, including possible loss of the principal amount invested.
• Please see the "About Your Annual Report" page for a description of the S&P 500 Index.
2
n The Guardian Park Avenue Fund
Annual Report
to Shareholders
Top Ten Holdings (As of 12/31/2005)
Company | Percentage of Total Net Assets | ||||||
AT & T, Inc. | 3.80 | % | |||||
Citigroup, Inc. | 3.07 | % | |||||
Procter & Gamble Co. | 2.93 | % | |||||
Wyeth | 2.59 | % | |||||
Wachovia Corp. | 2.55 | % | |||||
McDonald's Corp. | 2.19 | % | |||||
Caterpillar, Inc. | 2.16 | % | |||||
Chevron Corp. | 2.14 | % | |||||
General Electric Co. | 2.01 | % | |||||
Intel Corp. | 1.99 | % |
Sector Weightings vs. Index (As of 12/31/2005)
Average Annual Total Returns (For periods ended 12/31/2005)
Inception Date | 1 Yr | 5 Yrs | 10 Yrs | Since Inception | |||||||||||||||||||||||
Class A shares | (w/o sales charge) | 6/1/72 | 3.90 | % | -4.01 | % | 5.98 | % | 12.75 | % | |||||||||||||||||
(w/ sales charge) | 6/1/72 | -0.78 | % | -4.89 | % | 5.49 | % | 12.60 | % | ||||||||||||||||||
Class B shares | (w/o sales charge) | 5/1/96 | 2.83 | % | -4.94 | % | — | 4.44 | % | ||||||||||||||||||
(w/ sales charge) | 5/1/96 | -0.17 | % | -5.13 | % | — | 4.44 | % | |||||||||||||||||||
Class C shares | (w/o sales charge) | 8/7/00 | 2.70 | % | -5.14 | % | — | -9.01 | % | ||||||||||||||||||
(w/ sales charge) | 8/7/00 | 1.70 | % | -5.14 | % | — | -9.01 | % | |||||||||||||||||||
Class K shares | (w/o sales charge) | 5/15/01 | 3.51 | % | — | — | -2.13 | % | |||||||||||||||||||
(w/ sales charge) | 5/15/01 | 2.51 | % | — | — | -2.13 | % | ||||||||||||||||||||
S&P 500 Index | 4.91 | % | 0.55 | % | 9.07 | % | 11.0 | %* | |||||||||||||||||||
*Since Class A shares inception |
All performance data quoted is historical and the results represent past performance and neither guarantee nor predict future investment results. To obtain performance data current to the most recent month (available within 7 business days of the most recent month end), please call us at (800) 221-3253 or visit our website at www.guardianinvestor.com. Current performance may be higher or lower than the performance quoted here. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost.
Total return figures are historical and assume the reinvestment of dividends and distributions and the deduction of all Fund expenses. The return figures shown do not reflect the deduction of taxes that a shareholder may pay on distributions or redemption of shares. Total return figures for Class A shares do not take into account the current maximum sales charge of 4.5%, except where noted. Total return figures for Class B, Class C and Class K shares do not take into account the contingent deferred sales charge applicable to such shares (maximum 3% for Class B shares and 1% for Class C and Class K shares), except where noted. Prior to August 25, 1988, Class A shares of the Fund were offered at a higher sales charge, so that actual returns would have been somewhat lower.
3
n The Guardian Park Avenue Fund
Annual Report
to Shareholders
Growth of a Hypothetical $10,000 Investment
To give you a comparison, the chart below shows the performance of a hypothetical $10,000 investment made 10 years ago in Class A shares of The Guardian Park Avenue Fund and in the S&P 500 Index. The starting point of $9,550 for Class A shares reflects the current maximum sales charge 4.5%. This performance does not reflect the deduction of taxes that a shareholder may pay on distributions or redemption of shares. Returns represent past performance and are not indicative of future results. Index returns do not include the fees and expenses of the Fund, but do include the reinvestment of dividends.
Performance for Class B, Class C, and Class K shares, which were first offered on May 1, 1996, August 7, 2000, and May 15, 2001, respectively, will vary due to differences in sales load and other expenses charged to each share class.
Fund Expenses
By investing in the Fund, you incur two types of costs: (1) transaction costs, including, as applicable, sales charges on purchase payments, reinvested dividends, or other distributions; redemption fees and exchange fees; and (2) ongoing costs, including, as applicable, management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested on July 1, 2005 and held for six months ended December 31, 2005.
Actual Expenses
The first line in the table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the applicable line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
4
n The Guardian Park Avenue Fund
Annual Report
to Shareholders
Hypothetical Example for Comparison Purposes
The second line in the table provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if transactional costs were included, your costs would have been higher.
Beginning Account Value July 1, 2005 | Ending Account Value December 31, 2005 | Expenses Paid During the Period* | Annualized Expense Ratio | ||||||||||||||||
Class A | |||||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,067.20 | $ | 4.74 | 0.91 | % | |||||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,020.62 | $ | 4.63 | 0.91 | % | |||||||||||
Class B | |||||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,061.50 | $ | 9.98 | 1.92 | % | |||||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,015.53 | $ | 9.75 | 1.92 | % | |||||||||||
Class C | |||||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,061.00 | $ | 10.81 | 2.08 | % | |||||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,014.72 | $ | 10.56 | 2.08 | % | |||||||||||
Class K | |||||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,065.20 | $ | 6.51 | 1.28 | % | |||||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,018.90 | $ | 6.36 | 1.25 | % |
* Expenses are equal to the Fund's annualized expense ratio for the Fund's Class A, B, C and K shares, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the Fund's most recent fiscal half-year).
5
n The Guardian UBS Large Cap Value Fund
Annual Report
to Shareholders
John Leonard,
Lead Portfolio Manager
Objective:
Seeks to maximize total return, consisting of capital appreciation and current income
Portfolio:
At least 80% in equity securities issued by companies with a large market capitalization at the time of purchase
Inception Date:
February 3, 2003
Net Assets at
December 31, 2005:
$93,599,017
An Update from Fund Management
For the year ending December 31, 2005, The Guardian UBS Large Cap Value Fund had a total return of 9.32%1 versus a return of 7.05% for its benchmark, the Russell 1000 Value Index.
Energy was the big story of 2005. During a record-setting hurricane season, Hurricanes Katrina and Rita devastated the United States' Gulf Coast, forcing the evacuation of New Orleans and shutting down a significant portion of the country's oil-refining capacity. Shortly after Katrina made landfall, oil prices jumped to a record-high $70 a barrel, while at the pump, unleaded gasoline broke the $3.00-a-gallon mark in many states. Many economic forecasters expected the worst in the wake of the hurricanes—namely, that the higher cost of energy would act as a brake on the economy—but data showed the economy to be surprisingly resilient. Unemployment, despite a spike in jobless claims related to workers displaced by the hurricanes, remained low throughout the year. Gross domestic product (GDP) growth averaged more than 3.7% for the first three quarters of 2005, inflation continued to be low, corporate earnings remained robu st and consumer confidence, after plunging in the third quarter, made up for those declines to finish the year on a high note.
During the year, the bulk of the Fund's outperformance compared to the benchmark was attributible to stock selection. On a sector level, both energy and equity REITs (in which the portfolio had an underweight position throughout the year) detracted from returns. On the other hand, the Fund's positions in construction and real property, grocery stores and medical services all contributed to returns.
Our investment research focuses on identifying discrepancies between a security's fundamental or intrinsic value and its observed market price. For each stock under our analysis we discount to the present all future cash flows that we believe will accrue to an investor, incorporating our analyst team's considerations of company management, competitive advantage and each company's core competencies. These value estimates are then compared to current market prices and ranked against the other stocks in our valuation universe. The Fund is constructed by focusing on those stocks that rank in the top 20% based on their valuation estimates and takes into account market sensitivity, common characteristic exposures and industry weightings.
1 Total return is shown for Class A shares and does not take into account the current maximum sales charge of 4.5%.
About information in this report:
• It is important to consider the Fund's investment objectives, risks, fees and expenses before investing. All funds involve some risk, including possible loss of the principal amount invested.
• Please see the "About Your Annual Report" page for a description of the Russell 1000 Value Index.
6
n The Guardian UBS Large Cap Value Fund
Annual Report
to Shareholders
Top Ten Holdings (As of 12/31/2005)
Company | Percentage of Total Net Assets | ||||||
Citigroup, Inc. | 5.23 | % | |||||
Wells Fargo & Co. | 4.20 | % | |||||
Morgan Stanley | 4.15 | % | |||||
J.P. Morgan Chase & Co. | 4.10 | % | |||||
Exxon Mobil Corp. | 3.52 | % | |||||
S&P Depositary Receipts Trust Series I | 3.46 | % | |||||
American Int'l. Group, Inc. | 3.40 | % | |||||
Marathon Oil Corp. | 3.20 | % | |||||
Sprint Nextel Corp. | 2.88 | % | |||||
Federal Home Loan Mortgage Corp. | 2.62 | % |
Sector Weightings vs. Index (As of 12/31/2005)
Average Annual Total Returns (For periods ended 12/31/2005)
Inception Date | 1 Yr | 5 Yrs | 10 Yrs | Since Inception | |||||||||||||||||||||||
Class A shares | (w/o sales charge) | 2/3/03 | 9.32 | % | — | — | 18.31 | % | |||||||||||||||||||
(w/ sales charge) | 2/3/03 | 4.40 | % | — | — | 16.39 | % | ||||||||||||||||||||
Class B shares | (w/o sales charge) | 2/3/03 | 8.54 | % | — | — | 17.43 | % | |||||||||||||||||||
(w/ sales charge) | 2/3/03 | 5.54 | % | — | — | 16.92 | % | ||||||||||||||||||||
Class C shares | (w/o sales charge) | 2/3/03 | 8.54 | % | — | — | 17.43 | % | |||||||||||||||||||
(w/ sales charge) | 2/3/03 | 7.54 | % | — | — | 17.43 | % | ||||||||||||||||||||
Class K shares | (w/o sales charge) | 2/3/03 | 9.02 | % | — | — | 17.98 | % | |||||||||||||||||||
(w/ sales charge) | 2/3/03 | 8.02 | % | — | — | 17.98 | % | ||||||||||||||||||||
Russell 1000 Value Index | 7.05 | % | — | — | 18.84 | %* | |||||||||||||||||||||
*Since Fund's inception |
All performance data quoted is historical and the results represent past performance and neither guarantee nor predict future investment results. To obtain performance data current to the most recent month (available within 7 business days of the most recent month end), please call us at (800) 221-3253 or visit our website at www.guardianinvestor.com. Current performance may be higher or lower than the performance quoted here. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost.
Total return figures are historical and assume the reinvestment of dividends and distributions and the deduction of all Fund expenses. The return figures shown do not reflect the deduction of taxes that a shareholder may pay on distributions or redemption of shares. Total return figures for Class A shares do not take into account the current maximum sales charge of 4.5%, except where noted. Total return figures for Class B, Class C and Class K shares do not take into account the contingent deferred sales charge applicable to such shares (maximum 3% for Class B shares and 1% for Class C and Class K shares), except where noted.
7
n The Guardian UBS Large Cap Value Fund
Annual Report
to Shareholders
Growth of a Hypothetical $10,000 Investment
To give you a comparison, the chart below shows you the performance of a hypothetical $10,000 investment made in Class A, Class B, Class C, and Class K shares of the Fund and in the Russell 1000 Value Index. The starting point of $9,550 For Class A shares reflects the maximum sales charge of 4.5% that an investor may have to pay when purchasing Class A shares of the Fund. For Class B shares, the contingent deferred sales charge of 3% was imposed at the end of the period. The initial investment amount in the Russell 1000 Value Index, Class B, Class C and Class K shares is $10,000. This performance does not reflect the deduction of taxes that a shareholder may pay on distributions or redemption of shares. Returns represent past performance and are not indicative of future results. Index returns do not include the fees and expenses of the Fund, but do include the reinvestment of dividends.
Fund Expenses
By investing in the Fund, you incur two types of costs: (1) transaction costs, including, as applicable, sales charges on purchase payments, reinvested dividends, or other distributions; redemption fees and exchange fees; and (2) ongoing costs, including, as applicable, management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested on July 1, 2005 and held for six months ended December 31, 2005.
Actual Expenses
The first line in the table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the applicable line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
8
n The Guardian UBS Large Cap Value Fund
Annual Report
to Shareholders
Hypothetical Example for Comparison Purposes
The second line in the table provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if transactional costs were included, your costs would have been higher.
Beginning Account Value July 1, 2005 | Ending Account Value December 31, 2005 | Expenses Paid During the Period* | Annualized Expense Ratio | ||||||||||||||||
Class A | |||||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,073.70 | $ | 7.53 | 1.44 | % | |||||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,017.95 | $ | 7.32 | 1.44 | % | |||||||||||
Class B | |||||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,069.10 | $ | 11.42 | 2.19 | % | |||||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,014.17 | $ | 11.12 | 2.19 | % | |||||||||||
Class C | |||||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,069.10 | $ | 11.42 | 2.19 | % | |||||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,014.17 | $ | 11.12 | 2.19 | % | |||||||||||
Class K | |||||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,072.00 | $ | 8.93 | 1.71 | % | |||||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,016.59 | $ | 8.69 | 1.71 | % |
* Expenses are equal to the Fund's annualized expense ratio for the Fund's Class A, B, C and K shares, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the Fund's most recent fiscal half-year).
9
n The Guardian Park Avenue Small Cap Fund
Annual Report
to Shareholders
Matthew Ziehl, CFA, Portfolio Manager
Objective:
Long-term growth of capital
Portfolio:
At least 85% in a diversified portfolio of common stocks issued by companies with a small market capitalization at the time of initial purchase
Inception Date:
May 1, 1997
Net Assets at
December 31, 2005:
$167,028,738
An Update from Fund Management
After five years of outperforming larger companies, small cap stocks slightly lagged their large cap peers in a lackluster overall stock market environment during 2005. The Russell 2000 Index returned 4.55% versus a 4.91% result for the S&P 500 Index. Market leadership shifted a few times during the year, with large caps outperforming in the first and fourth quarters, while smaller companies led during the second and third quarters. Within the small cap space, value stocks slightly outperformed growth stocks in 2005, as the Russell 2000 Value Index returned 4.71% versus 4.15% for the Russell 2000 Growth Index.
At the sector level, energy stocks led the market in dramatic fashion with a 2005 return of nearly 48%, while the next-best performance was by industrial stocks with a 10% gain. Most other sectors posted flat or low single digit returns, while technology and consumer discretionary lagged with 2% declines.
The Guardian Park Avenue Small Cap Fund returned -0.15%1 during 2005. Most of the underperformance was due to stock selection in healthcare, consumer discretionary and financial stocks. In particular, we had disappointing results in our biotech, media and insurance holdings within the above-mentioned sectors. Most of the individual stocks that hurt results were liquidated from the portfolio, as we did not expect near- or intermediate-term recovery in the company fundamentals. These results more than offset solidly positive selection among industrial, technology and consumer staples companies. During 2005 our sector weightings remained very close to the benchmark, consistent with our bottom-up investment process; therefore the "allocation effect" of relative sector weightings was minimal.
Our strategy is to maintain a highly diversified portfolio of quality small cap companies chosen for their individual merits by our team of experienced sector analysts. We do not attempt to predict the direction of the overall stock market, or which economic sectors will outperform or trail. Our investment process generally limits any sector over- or underweight versus benchmark to 5% of the portfolio's value; such differences arise from the "bottom-up," as a result of finding a surplus or scarcity of attractive stock ideas within a particular sector at a given point in time.
With regard to the overall portfolio, we choose from a very broad universe of companies and therefore have never experienced a shortage of attractive investment ideas at any point in time. As a "core" or "blend" small cap fund, we can select individual stocks across the spectrum from growth stocks to value stocks, as well as across industries and sectors. Our mission is to provide our investors with diversified exposure to the U.S. small cap equity market, focusing on companies with strong fundamentals and competitive positions, with the goal of seeking superior long term returns while managing risk.
1 Total return is shown for Class A shares and does not take into account the current maximum sales charge of 4.5%.
About information in this report:
• It is important to consider the Fund's investment objectives, risks, fees and expenses before investing. All funds involve some risk, including possible loss of the principal amount invested. Small-cap investing entails special risks, as small-cap stocks have tended to be more volatile and to drop more in down markets than large-cap stocks. This may happen because small companies may be limited in terms of product lines, financial resources and management.
• Please see the "About Your Annual Report" page for a description of the Russell 2000 Index,the S&P 500 Index, the Russell 2000 Value Index and the Russell 2000 Growth Index.
10
n The Guardian Park Avenue Small Cap Fund
Annual Report
to Shareholders
Top Ten Holdings (As of 12/31/2005)
Company | Percentage of Total Net Assets | ||||||
Affiliated Managers Group, Inc. | 2.95 | % | |||||
Benchmark Electronics, Inc. | 2.02 | % | |||||
Varian Semiconductor Equipment Assoc., Inc. | 2.01 | % | |||||
Informatica Corp. | 1.98 | % | |||||
Hanover Insurance Group, Inc. | 1.83 | % | |||||
FactSet Research Systems, Inc. | 1.82 | % | |||||
Netlogic Microsystems, Inc. | 1.79 | % | |||||
Redwood Trust, Inc. | 1.73 | % | |||||
Nuveen Investments | 1.66 | % | |||||
Internet Security Systems, Inc. | 1.64 | % |
Sector Weightings vs. Index (As of 12/31/2005)
Average Annual Total Returns (For periods ended 12/31/2005)
Inception Date | 1 Yr | 5 Yrs | 10 Yrs | Since Inception | |||||||||||||||||||||||
Class A shares | (w/o sales charge) | 5/1/97 | -0.15 | % | 5.21 | % | — | 9.43 | % | ||||||||||||||||||
(w/ sales charge) | 5/1/97 | -4.64 | % | 4.25 | % | — | 8.84 | % | |||||||||||||||||||
Class B shares | (w/o sales charge) | 5/6/97 | -1.21 | % | 4.22 | % | — | 8.05 | % | ||||||||||||||||||
(w/ sales charge) | 5/6/97 | -4.21 | % | 4.05 | % | — | 8.05 | % | |||||||||||||||||||
Class C shares | (w/o sales charge) | 8/7/00 | -1.16 | % | 4.09 | % | — | 0.77 | % | ||||||||||||||||||
(w/ sales charge) | 8/7/00 | -2.15 | % | 4.09 | % | — | 0.77 | % | |||||||||||||||||||
Class K shares | (w/o sales charge) | 5/15/01 | -0.53 | % | — | — | 6.57 | % | |||||||||||||||||||
(w/ sales charge) | 5/15/01 | -1.52 | % | — | — | 6.57 | % | ||||||||||||||||||||
Russell 2000 Index | 4.55 | % | 8.22 | % | — | 9.46 | %* | ||||||||||||||||||||
*Since Class A shares inception |
All performance data quoted is historical and the results represent past performance and neither guarantee nor predict future investment results. To obtain performance data current to the most recent month (available within 7 business days of the most recent month end), please call us at (800) 221-3253 or visit our website at www.guardianinvestor.com. Current performance may be higher or lower than the performance quoted here. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost.
Total return figures are historical and assume the reinvestment of dividends and distributions and the deduction of all Fund expenses. The return figures shown do not reflect the deduction of taxes that a shareholder may pay on distributions or redemption of shares. Total return figures for Class A shares do not take into account the current maximum sales charge of 4.5%, except where noted. Total return figures for Class B, Class C and Class K shares do not take into account the contingent deferred sales charge applicable to such shares (maximum 3% for Class B shares and 1% for Class C and Class K shares), except where noted.
11
n The Guardian Park Avenue Small Cap Fund
Annual Report
to Shareholders
Growth of a Hypothetical $10,000 Investment
To give you a comparison, the chart below shows you the performance of a hypothetical $10,000 investment made in Class A, and Class B shares of the Fund and in the Russell 2000 Index. The starting point of $9,550 for Class A shares reflects the maximum sales charge of 4.5% that an investor may have to pay when purchasing Class A shares of the Fund. The initial investment amount in the Russell 2000 Index, and the Class B share is $10,000. This performance does not reflect the deduction of taxes that a shareholder may pay on distributions or redemption of shares. Returns represent past performance and are not indicative of future results. Index returns do not include the fees and expenses of the Fund, but do include the reinvestment of dividends.
Performance for Class C and Class K shares, which were first offered on August 7, 2000 and May 15, 2001, respectively, will vary due to differences in sales load and other expenses charged to each share class.
Fund Expenses
By investing in the Fund, you incur two types of costs: (1) transaction costs, including, as applicable, sales charges on purchase payments, reinvested dividends, or other distributions; redemption fees and exchange fees; and (2) ongoing costs, including, as applicable, management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested on July 1, 2005 and held for six months ended December 31, 2005.
Actual Expenses
The first line in the table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the applicable line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line in the table provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
12
n The Guardian Park Avenue Small Cap Fund
Annual Report
to Shareholders
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if transactional costs were included, your costs would have been higher.
Beginning Account Value July 1, 2005 | Ending Account Value December 31, 2005 | Expenses Paid During the Period* | Annualized Expense Ratio | ||||||||||||||||
Class A | |||||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,040.60 | $ | 6.43 | 1.25 | % | |||||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,018.90 | $ | 6.36 | 1.25 | % | |||||||||||
Class B | |||||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,034.90 | $ | 11.34 | 2.21 | % | |||||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,014.06 | $ | 11.22 | 2.21 | % | |||||||||||
Class C | |||||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,035.20 | $ | 11.44 | 2.23 | % | |||||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,013.96 | $ | 11.32 | 2.23 | % | |||||||||||
Class K | |||||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,038.50 | $ | 8.12 | 1.58 | % | |||||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,017.24 | $ | 8.03 | 1.58 | % |
* Expenses are equal to the Fund's annualized expense ratio for the Fund's Class A, B, C and K shares, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the Fund's most recent fiscal half-year).
13
n The Guardian UBS Small Cap Value Fund
Annual Report
to Shareholders
Wilford Talbot,
Lead Portfolio Manager
Objective:
Seeks to maximize total return, consisting of capital appreciation and current income
Portfolio:
At least 80% in equity securities issued by companies with a small market capitalization at the time of initial purchase
Inception Date:
February 3, 2003
Net Assets at
December 31, 2005:
$44,692,381
An Update from Fund Management
For the year ended December 31, 2005, The Guardian UBS Small Cap Value Fund had a total return of 3.70%1 versus a return of 4.71% for its benchmark, the Russell 2000 Value Index.
Energy was the big story of 2005. During a record-setting hurricane season, Hurricanes Katrina and Rita devastated the United States' Gulf Coast, forcing the evacuation of New Orleans and shutting down a significant portion of the country's oil-refining capacity. Shortly after Katrina made landfall, oil prices jumped to a record-high $70 a barrel, while at the pump, unleaded gasoline broke the $3.00-a-gallon mark in many states. Many economic forecasters expected the worst in the wake of the hurricanes—namely, that the higher cost of energy would act as a brake on the economy—but data showed the economy to be surprisingly resilient. Unemployment, despite a spike in jobless claims related to workers displaced by the hurricanes, remained low throughout the year. Gross domestic product (GDP) growth averaged more than 3.7% for the first three quarters of 2005, inflation continued to be low, corporate earnings remained robu st and consumer confidence, after plunging in the third quarter, made up for those declines to finish the year on a high note.
During the year, the bulk of the Fund's outperformance compared to the benchmark was attributible to stock selection, while industry weightings in general detracted somewhat from performance. On a sector level, equity REITs, airlines and energy reserves detracted from returns. On the other hand, the Fund's positions in securities and asset management companies, medical services and freight all contributed to returns.
Our investment research focuses on identifying discrepancies between a security's fundamental or intrinsic value and its observed market price. For each stock under our analysis we discount to the present all future cash flows that we believe will accrue to an investor, incorporating our analyst team's considerations of company management, competitive advantage, and each company's core competencies. We place particular emphasis on fundamental research conducted on-site at the companies we are covering. We utilize proprietary tools including our post-venture database/valuation system to calculate intrinsic value, and rank stocks by their relative price/intrinsic value attractiveness.
1 Total return is shown for Class A shares and does not take into account the current maximum sales charge of 4.5%.
About information in this report:
• It is important to consider the Fund's investment objectives, risks, fees and expenses before investing. All funds involve some risk, including possible loss of the principal amount invested. Small-cap investing entails special risks, as small-cap stocks have tended to be more volatile and to drop more in down markets than large-cap stocks. This may happen because small companies may be limited in terms of product lines, financial resources and management.
• Please see the "About Your Annual Report" page for a description of the Russell 2000 Value Index.
14
n The Guardian UBS Small Cap Value Fund
Annual Report
to Shareholders
Top Ten Holdings (As of 12/31/2005)
Company | Percentage of Total Net Assets | ||||||
National Financial Partners Corp. | 2.81 | % | |||||
Regal-Beloit Corp. | 2.72 | % | |||||
AMR Corp. | 2.29 | % | |||||
Coinstar, Inc. | 2.25 | % | |||||
Cooper Cos., Inc. | 2.25 | % | |||||
Oceaneering Int'l., Inc. | 2.15 | % | |||||
Apollo Investment Corp. | 2.02 | % | |||||
Colonial BancGroup, Inc. | 1.93 | % | |||||
Equitable Resources, Inc. | 1.92 | % | |||||
Ryland Group, Inc. | 1.82 | % |
Sector Weightings vs. Index (As of 12/31/2005)
Average Annual Total Returns (For periods ended 12/31/2005)
Inception Date | 1 Yr | 5 Yrs | 10 Yrs | Since Inception | |||||||||||||||||||||||
Class A shares | (w/o sales charge) | 2/3/03 | 3.70 | % | — | — | 19.12 | % | |||||||||||||||||||
(w/ sales charge) | 2/3/03 | –0.97 | % | — | — | 17.19 | % | ||||||||||||||||||||
Class B shares | (w/o sales charge) | 2/3/03 | 2.98 | % | — | — | 18.22 | % | |||||||||||||||||||
(w/ sales charge) | 2/3/03 | –0.02 | % | — | — | 17.72 | % | ||||||||||||||||||||
Class C shares | (w/o sales charge) | 2/3/03 | 2.99 | % | — | — | 18.22 | % | |||||||||||||||||||
(w/ sales charge) | 2/3/03 | 1.99 | % | — | — | 18.22 | % | ||||||||||||||||||||
Class K shares | (w/o sales charge) | 2/3/03 | 3.56 | % | — | — | 18.95 | % | |||||||||||||||||||
(w/ sales charge) | 2/3/03 | 2.56 | % | — | — | 18.95 | % | ||||||||||||||||||||
Russell 2000 Value Index | 4.71 | % | — | — | 25.36 | %* | |||||||||||||||||||||
*Since Class A shares inception |
All performance data quoted is historical and the results represent past performance and neither guarantee nor predict future investment results. To obtain performance data current to the most recent month (available within 7 business days of the most recent month end), please call us at (800) 221-3253 or visit our website at www.guardianinvestor.com. Current performance may be higher or lower than the performance quoted here. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost.
Total return figures are historical and assume the reinvestment of dividends and distributions and the deduction of all Fund expenses. The return figures shown do not reflect the deduction of taxes that a shareholder may pay on distributions or redemption of shares. Total return figures for Class A shares do not take into account the current maximum sales charge of 4.5%, except where noted. Total return figures for Class B, Class C and Class K shares do not take into account the contingent deferred sales charge applicable to such shares (maximum 3% for Class B shares and 1% for Class C and Class K shares), except where noted.
15
n The Guardian UBS Small Cap Value Fund
Annual Report
to Shareholders
Growth of a Hypothetical $10,000 Investment
To give you a comparison, the chart below shows you the performance of a hypothetical $10,000 investment made in Class A, Class B and Class C shares of the Fund and in the Russell 2000 Value Index. The starting point of $9,550 for Class A shares reflects the maximum sales charge of 4.5% that an investor may have to pay when purchasing Class A shares of the Fund. For Class B shares, the contingent deferred sales charge of 3% was imposed at the end of the period. The initial investment amount in the S&P 500 Index, Class B and Class C shares is $10,000. This performance does not reflect the deduction of taxes that a shareholder may pay on distributions or redemption of shares. Returns represent past performance and are not indicative of future results. Index returns do not include the fees and expenses of the Fund, but do include the reinvestment of dividends.
Fund Expenses
By investing in the Fund, you incur two types of costs: (1) transaction costs, including, as applicable, sales charges on purchase payments, reinvested dividends, or other distributions; redemption fees and exchange fees; and (2) ongoing costs, including, as applicable, management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested on July 1, 2005 and held for six months ended December 31, 2005.
Actual Expenses
The first line in the table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the applicable line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
16
n The Guardian UBS Small Cap Value Fund
Annual Report
to Shareholders
Hypothetical Example for Comparison Purposes
The second line in the table provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if transactional costs were included, your costs would have been higher.
Beginning Account Value July 1, 2005 | Ending Account Value December 31, 2005 | Expenses Paid During the Period* | Annualized Expense Ratio | ||||||||||||||||
Class A | |||||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,048.80 | $ | 9.92 | 1.92 | % | |||||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,015.53 | $ | 9.75 | 1.92 | % | |||||||||||
Class B | |||||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,045.00 | $ | 13.81 | 2.68 | % | |||||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,011.70 | $ | 13.59 | 2.68 | % | |||||||||||
Class C | |||||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,045.10 | $ | 13.87 | 2.69 | % | |||||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,011.64 | $ | 13.64 | 2.69 | % | |||||||||||
Class K | |||||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,048.20 | $ | 10.63 | 2.06 | % | |||||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,014.82 | $ | 10.46 | 2.06 | % |
* Expenses are equal to the Fund's annualized expense ratio for the Fund's Class A, B, C and K shares, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the Fund's most recent fiscal half-year).
17
n The Guardian Asset Allocation Fund
Annual Report
to Shareholders
Jonathan C. Jankus, CFA, Co-Portfolio Manager
Stewart Johnson, Co-Portfolio Manager
Objective:
Long- term total investment return consistent with moderate investment risk
Portfolio:
Generally purchases shares of The Guardian S&P 500 Index, The Guardian Park Avenue, The Guardian Investment Quality Bond and/or The Guardian Cash Management Funds. Also invests in individual securities and uses futures to manage allocations among the equity, debt and money market asset classes
Inception Date:
February 16, 1993
Net Assets at
December 31, 2005:
$137,621,022
An Update from Fund Management
For the year ended December 31, 2005, the Fund's return was 3.91%1 placing it below the average 5.63% return of 378 funds with similar objectives and policies in the Lipper universe. During this period, the Fund's return also slightly lagged the 4.00% return experienced by its not-quite-passive composite benchmark (60% of the S&P 500 Index and 40% of the Lehman Aggregate Bond Index rebalanced monthly without expenses or trading costs). Since its inception on February 16, 1993, the Fund's average annual total return of 8.50% places it behind the annualized return of 9.21% experienced by its composite benchmark.
Stock market returns were positive for a third straight year, with the S&P 500 Index earning a modest total return of 4.91% for 2005. That said, the market's returns for 2001 and 2002 were so poor that the cumulative return on the S&P 500 Index, including dividends, for the five-year period ended December 31, 2005 has only been a modest 0.54% average per year. Over this period, the market has had to deal with volatility due to corporate malfeasance, a mixed economy, the continuing threat of terrorist attacks, a war and record-setting natural disasters.
The Fund's performance was positively impacted by a correctly aggressive stance on the market. After the declines of 2000, 2001 and the first half of 2002, our models viewed the market as being extremely "cheap" relative to fixed income alternatives. In addition, the turnaround in the economy led to a pronounced rebound in corporate profitability.
Our investing was guided by our quantitative model which, as of year-end, has us invested 91% in stocks, 0% in bonds and 9% in cash. This compares to our "neutral" position of 60% stocks and 40% bonds.
We believe most signs indicate continuing economic growth, which we hope will continue to feed a rebound in corporate profits. A risk on the horizon is the extent to which interest rates will rise in the near term, especially given such exogenous factors as expensive oil and continued violence in the Middle East. "Real" interest rates (interest rates after subtracting expected inflation) remain relatively low, although not as low as they were two years ago. On balance, we remain optimistic, albeit a bit more cautiously so.
1 Total return is shown for Class A shares and does not take into account the current maximum sales charge of 4.5%.
About information in this report:
• It is important to consider the Fund's investment objectives, risks, fees and expenses before investing. All funds involve some risk, including possible loss of the principal amount invested.
• The Composite benchmark total return data is comprised of 60% of the S&P 500 Index and 40% of the Lehman Brothers Aggregate Bond Index to reflect a 60/40 neutral weighting of the Fund. Please see the "About Your Annual Report" page for a description of the S&P 500 Index and the Lehman Brothers Aggregate Bond Index.
• Lipper, Inc. is an independent mutual fund monitoring and rating service. Its database of performance information is based on historical returns, which assume the reinvestment of dividends and distributions and the deduction of all fund expenses. Lipper return figures do not reflect the deduction of any sales charges that an investor may pay when purchasing or redeeming shares of the Fund.
18
n The Guardian Asset Allocation Fund
Annual Report
to Shareholders
Portfolio Composition by Asset Class (As of 12/31/2005)
Average Annual Total Returns (For periods ended 12/31/2005)
Inception Date | 1 Yr | 5 Yrs | 10 Yrs | Since Inception | |||||||||||||||||||||||
Class A shares | (w/o sales charge) | 2/16/93 | 3.91 | % | 0.78 | % | 7.67 | % | 8.50 | % | |||||||||||||||||
(w/ sales charge) | 2/16/93 | –0.77 | % | –0.14 | % | 7.18 | % | 8.11 | % | ||||||||||||||||||
Class B shares | (w/o sales charge) | 5/1/96 | 3.16 | % | –0.08 | % | — | 6.49 | % | ||||||||||||||||||
(w/ sales charge) | 5/1/96 | 0.16 | % | –0.28 | % | — | 6.49 | % | |||||||||||||||||||
Class C shares | (w/o sales charge) | 8/7/00 | 2.98 | % | –0.39 | % | — | –1.15 | % | ||||||||||||||||||
(w/ sales charge) | 8/7/00 | 1.98 | % | –0.39 | % | — | –1.15 | % | |||||||||||||||||||
Class K shares | (w/o sales charge) | 5/15/01 | 3.67 | % | — | — | 1.27 | % | |||||||||||||||||||
(w/ sales charge) | 5/15/01 | 2.67 | % | — | — | 1.27 | % | ||||||||||||||||||||
Custom Index: 60% S&P 500 Index, 40% Lehman Brothers Aggregate Bond Index | 4.00 | % | 2.99 | % | 8.36 | % | 9.21 | %* | |||||||||||||||||||
*Since Class A shares inception |
All performance data quoted is historical and the results represent past performance and neither guarantee nor predict future investment results. To obtain performance data current to the most recent month (available within 7 business days of the most recent month end), please call us at (800) 221-3253 or visit our website at www.guardianinvestor.com. Current performance may be higher or lower than the performance quoted here. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost.
Total return figures are historical and assume the reinvestment of dividends and distributions and the deduction of all Fund expenses. The return figures shown do not reflect the deduction of taxes that a shareholder may pay on distributions or redemption of shares. Total return figures for Class A shares do not take into account the current maximum sales charge of 4.5%, except where noted. Total return figures for Class B, Class C and Class K shares do not take into account the contingent deferred sales charge applicable to such shares (maximum 3% for Class B shares and 1% for Class C and Class K shares), except where noted.
Growth of a Hypothetical $10,000 Investment
To give you a comparison, the chart shows the performance of a hypothetical $10,000 investment made 10 years ago in Class A shares of The Guardian Asset Allocation Fund, the S&P 500 Index and the Lehman Brothers Aggregate Bond Index. The starting point of $9,550 for Class A shares reflects the maximum sales charge of 4.5% that an investor may pay when purchasing Class A shares of the Fund. Each Index begins at $10,000. This performance does not reflect the deduction of taxes that a shareholder may pay on distributions or redemption of shares. Returns represent past performance and are not indicative of future results. Index returns do not include the fees and expenses of the Fund, but do include the reinvestment of dividends.
The investment allocation in the pie charts reflects the true economic impact of the portfolio composition, rather than its accounting treatment, which is shown in the Fund's Schedule of Investments.
19
n The Guardian Asset Allocation Fund
Annual Report
to Shareholders
Performance for Class B, Class C and Class K shares, which were first offered on May 1, 1996, August 7, 2000, and May 15, 2001, respectively, will vary due to differences in sales load and other expenses charged to each share class.
Fund Expenses
By investing in the Fund, you incur two types of costs: (1) transaction costs, including, as applicable, sales charges on purchase payments, reinvested dividends, or other distributions; redemption fees and exchange fees; and (2) ongoing costs, including, as applicable, management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested on July 1, 2005 and held for six months ended December 31, 2005.
Actual Expenses
The first line in the table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the applicable line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
This second table provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if transactional costs were included, your costs would have been higher.
20
n The Guardian Asset Allocation Fund
Annual Report
to Shareholders
Beginning Account Value July 1, 2005 | Ending Account Value December 31, 2005 | Expenses Paid During the Period* | Annualized Expense Ratio | ||||||||||||||||
Class A | |||||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,048.60 | $ | 2.07 | 0.40 | % | |||||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,023.19 | $ | 2.04 | 0.40 | % | |||||||||||
Class B | |||||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,044.40 | $ | 6.34 | 1.23 | % | |||||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,019.00 | $ | 6.26 | 1.23 | % | |||||||||||
Class C | |||||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,043.50 | $ | 7.06 | 1.37 | % | |||||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,018.30 | $ | 6.97 | 1.37 | % | |||||||||||
Class K | |||||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,046.40 | $ | 3.51 | 0.68 | % | |||||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,021.78 | $ | 3.47 | 0.68 | % |
* Expenses are equal to the Fund's annualized expense ratio for the Fund's Class A, B, C and K shares, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the Fund's most recent fiscal half-year).
21
n The Guardian S&P 500 Index Fund
Annual Report
to Shareholders
Jonathan C. Jankus, CFA, Co-Portfolio Manager
Stewart Johnson, Co-Portfolio Manager
Objective:
Seeks to track the investment performance of the Standard and Poor's 500 Composite Stock Price Index (the "S&P 500 Index") which emphasizes securities issued by large U.S. companies
Portfolio:
At least 95% of the Fund's assets are invested in common stocks of companies included in the S&P 500 Index under normal circumstances
Inception Date:
August 7, 2000
Net Assets at
December 31, 2005:
$185,075,840
An Update from Fund Management
For the year ended December 31, 2005, the Fund's return was 4.40%1. The Fund's objective is to match the returns of the S&P 500 Index, a theoretical portfolio of 500 blue-chip stocks, which returned 4.91% over the same period. The Fund outperformed the 4.36% average return achieved by the 166 funds in the Lipper universe with an S&P 500 Index objective. The S&P 500 Index is theoretical in the sense that its returns are computed as though shares of the Index were purchased and subsequently rebalanced without any trading costs or fund expenses. For the period from Fund inception on August 7, 2000 through December 31, 2005, the Fund's average annual total return was –1.92% compared to an average annual total return of –1.50% for the S&P 500 Index.
Stock market returns were positive for a third straight year, with the S&P 500 Index earning a modest total return of 4.91% for 2005. That said, the market's returns for 2001 and 2002 were so poor that the cumulative return on the S&P 500 Index, including dividends, for the five-year period ended December 31, 2005 has only been a modest 0.54% average per year. Over this period, the market has had to deal with volatility due to corporate malfeasance, a mixed economy, the continuing threat of terrorist attacks, a war and record-setting natural disasters.
The stock market rebound has been a product of the turnaround in the economy in general and corporate profits in particular. In spite of recent increases, interest rates and bond yields remained low in real (after-inflation) terms. Historically, this has been an attractive environment for stocks.
We will continue to manage the portfolio so as to be substantially fully invested in stocks, attempt to match the performance of the S&P 500 Index and keep trading costs to a minimum. If history is any indication, this has proven to be an extremely difficult strategy to surpass. In particular, for the five-year period ended 2005, the average return for the 619 "Large Cap Core" funds tracked by Lipper returned only –0.95% compared to the –0.02% average return for the 135 funds that simply tried to match the S&P 500 Index.
We believe most signs indicate continuing economic growth, which we hope will continue to feed a rebound in corporate profits. A risk on the horizon is the extent to which interest rates will rise in the near term, especially given such exogenous factors as expensive oil and continued violence in the Middle East. "Real" interest rates (interest rates after subtracting expected inflation) remain relatively low, although not as low as they were two years ago. On balance, we remain optimistic, although a bit more cautiously so.
1 Total return is shown for Class A shares and does not take into account the current maximum sales charge of 4.5%.
About information in this report:
• It is important to consider the Fund's investment objectives, risks, fees and expenses before investing. All funds involve some risk, including possible loss of the principal amount invested.
• Please see the "About Your Annual Report" page for a description of the S&P 500 Index.
• Lipper, Inc. is an independent mutual fund monitoring and rating service. Its database of performance information is based on historical returns, which assume the reinvestment of dividends and distributions and the deduction of all fund expenses. Lipper return figures do not reflect the deduction of any sales charges that an investor may pay when purchasing or redeeming shares of the Fund.
• "S&P," "S&P 500®," "Standard & Poor's 500," and "500" are trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by Guardian Investor Services LLC. The Fund is not sponsored, endorsed, sold or promoted by Standard & Poor's and Standard & Poor's makes no representation regarding the advisability of investing in the Fund. The S&P 500 Index is an unmanaged index of 500 primarily large cap U.S. stocks that is generally considered to be representative of U.S. stock market activity. The S&P 500 Index is not available for direct investment, and its returns do not reflect the fees and expenses that have been deducted from the Fund's returns. Likewise, return figures for the Index do not reflect any sales charges that an investor may pay when purchasing or redeeming shares of the Fund.
22
n The Guardian S&P 500 Index Fund
Annual Report
to Shareholders
Top Ten Holdings (As of 12/31/2005)
Company | Percentage of Total Net Assets | ||||||
General Electric Co. | 3.21 | % | |||||
Exxon Mobil Corp. | 3.09 | % | |||||
Microsoft Corp. | 2.12 | % | |||||
Citigroup, Inc. | 2.11 | % | |||||
Procter & Gamble Co. | 1.70 | % | |||||
Bank of America Corp. | 1.63 | % | |||||
Johnson & Johnson | 1.56 | % | |||||
American Int'l. Group, Inc. | 1.54 | % | |||||
Pfizer, Inc. | 1.51 | % | |||||
Altria Group, Inc. | 1.35 | % |
Sector Weightings vs. Index (As of 12/31/2005)
Average Annual Total Returns (For periods ended 12/31/2005)
Inception Date | 1 Yr | 5 Yrs | 10 Yrs | Since Inception | |||||||||||||||||||||||
Class A shares | (w/o sales charge) | 8/7/00 | 4.40 | % | 0.05 | % | — | –1.92 | % | ||||||||||||||||||
(w/ sales charge) | 8/7/00 | –0.30 | % | –0.87 | % | — | –2.77 | % | |||||||||||||||||||
Class B shares | (w/o sales charge) | 8/7/00 | 3.75 | % | –0.73 | % | — | –2.71 | % | ||||||||||||||||||
(w/ sales charge) | 8/7/00 | 0.75 | % | –0.93 | % | — | –2.89 | % | |||||||||||||||||||
Class C shares | (w/o sales charge) | 8/7/00 | 3.76 | % | –0.75 | % | — | –2.73 | % | ||||||||||||||||||
(w/ sales charge) | 8/7/00 | 2.76 | % | –0.75 | % | — | –2.73 | % | |||||||||||||||||||
Class K shares | (w/o sales charge) | 5/15/01 | 4.05 | % | — | — | 0.09 | % | |||||||||||||||||||
(w/ sales charge) | 5/15/01 | 3.05 | % | — | — | 0.09 | % | ||||||||||||||||||||
S&P 500 Index | 4.91 | % | 0.55 | % | — | –1.50 | %* | ||||||||||||||||||||
*Since Class A shares inception |
All performance data quoted is historical and the results represent past performance and neither guarantee nor predict future investment results. To obtain performance data current to the most recent month (available within 7 business days of the most recent month end), please call us at (800) 221-3253 or visit our website at www.guardianinvestor.com. Current performance may be higher or lower than the performance quoted here. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost.
Total return figures are historical and assume the reinvestment of dividends and distributions and the deduction of all Fund expenses. The return figures shown do not reflect the deduction of taxes that a shareholder may pay on distributions or redemption of shares. Total return figures for Class A shares do not take into account the current maximum sales charge of 4.5%, except where noted. Total return figures for Class B, Class C and Class K shares do not take into account the contingent deferred sales charge applicable to such shares (maximum 3% for Class B shares and 1% for Class C and Class K shares), except where noted.
23
n The Guardian S&P 500 Index Fund
Annual Report
to Shareholders
Growth of a Hypothetical $10,000 Investment
To give you a comparison, the chart below shows you the performance of a hypothetical $10,000 investment made in Class A, Class B and Class C shares of the Fund and in the S&P 500 Index. The starting point of $9,550 for Class A shares reflects the maximum sales charge of 4.5% that an investor may have to pay when purchasing Class A shares of the Fund. The initial investment amount in the S&P 500 Index, Class B and Class C shares is $10,000. For Class B shares, the contingent deferred sales charge of 1% was imposed at the end of the period. This performance does not reflect the deduction of taxes that a shareholder may pay on distributions or redemption of shares. Returns represent past performance and are not indicative of future results. Index returns do not include the fees and expenses of the Fund, but do include the reinvestment of dividends.
Fund Expenses
By investing in the Fund, you incur two types of costs: (1) transaction costs, including, as applicable, sales charges on purchase payments, reinvested dividends, or other distributions; redemption fees and exchange fees; and (2) ongoing costs, including, as applicable, management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested on July 1, 2005 and held for six months ended December 31, 2005.
Actual Expenses
The first line in the table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the applicable line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
24
n The Guardian S&P 500 Index Fund
Annual Report
to Shareholders
Hypothetical Example for Comparison Purposes
The second line in the table provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if transactional costs were included, your costs would have been higher.
Beginning Account Value July 1, 2005 | Ending Account Value December 31, 2005 | Expenses Paid During the Period* | Annualized Expense Ratio | ||||||||||||||||
Class A | |||||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,054.80 | $ | 2.74 | 0.53 | % | |||||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,022.53 | $ | 2.70 | 0.53 | % | |||||||||||
Class B | |||||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,051.60 | $ | 6.62 | 1.28 | % | |||||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,018.75 | $ | 6.51 | 1.28 | % | |||||||||||
Class C | |||||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,051.60 | $ | 6.62 | 1.28 | % | |||||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,018.75 | $ | 6.51 | 1.28 | % | |||||||||||
Class K | |||||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,052.00 | $ | 4.81 | 0.93 | % | |||||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,020.52 | $ | 4.74 | 0.93 | % |
* Expenses are equal to the Fund's annualized expense ratio for the Fund's Class A, B, C and K shares, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the Fund's most recent fiscal half-year).
25
n The Guardian Baillie Gifford International Growth Fund
Annual Report
to Shareholders
R. Robin Menzies,
Portfolio Manager
Objective:
Long-term growth of capital
Portfolio:
At least 80% in a diversified portfolio of common stocks and convertible securities of companies domiciled outside the United States
Inception Date:
February 16, 1993
Net Assets at
December 31, 2005:
$63,768,336
An Update from Fund Management
The Fund outperformed its benchmark, the MSCI EAFE Growth Index, during the year. The return of the Fund was 15.6%1 whereas the return of the Index was 13.6%. The most buoyant segment of the Index was Japan, which had a return of 28.3% over the year. The Asia Pacific region was the second strongest performer, returning 18.2%. The strongest sector in the Index was materials, where the Fund was underweight compared to the Index. The sector returned 34.6% over the year as demand, partly driven by fast-growing emerging market economies, pushed up resource prices. More positively from a performance point of view, the Fund had significant overweight positions in the financials and energy sectors, which both outperformed strongly over the year, producing total returns of 26.9% and 22.3%, respectively.
The main positive contribution to performance came from stock selection in mainland Europe. Among the larger European stock holdings were the industrial companies ABB in Switzerland, Atlas Copco in Sweden and Kone in Finland. These were among the five biggest contributors to the Fund's relative performance during 2005. Again, a significant part of the success of these firms was a result of high levels of demand from emerging market economies. The strongest stock contributor of all was Yamada Denki, the Japanese electronics retailer. On a less positive note, the UK economy has stagnated somewhat, as consumer demand, which had been remarkably resilient in recent years, finally succumbed to the twin pressures of high debt levels and a less buoyant housing market. Three of the top five stock detractors were from UK stocks (although only one, Kingfisher, the home improvement retail group, was directly hurt by the dent to UK consumer confidence). In industry terms, the Fund's substantial underweight position in telecommunications was the largest positive contributor to performance, while overweight positions in energy, particularly in emerging market oil stocks such as Petrobras in Brazil, helped performance.
Baillie Gifford is a growth manager with a bottom up approach to stock picking. We look for companies with the ability to generate sustainable earnings growth. In determining the potential of a company, we pay particular attention to competitive advantage, management attitudes, financial strength and the industry background that a company operates in. We regularly meet the management of the companies within our investment universe and constantly revisit the investment case for the companies within the portfolio to ensure that our expectations are being met.
Note: The securities mentioned above are not representative of the entire portfolio, and are subject to change at any time. The securities' representative percentage of total net assets as of 12/31/05 is as follows: ABB 2.0%; Atlas Copco 2.3%; Kone 2.1%; Yamada Denki 1.5%; Kingfisher 0.6% and Petrobras 1.5%.
1 Total return is shown for Class A shares and does not take into account the current maximum sales charge of 4.5%.
About information in this report:
• It is important to consider the Fund's investment objectives, risks, fees and expenses before investing. All funds involve some risk, including possible loss of the principal amount invested. International investing has special risks relating to changes in currency rates, foreign taxation, differences in auditing and other financial standards, political uncertainty and greater volatility.
• Please see the "About Your Annual Report" page for a description of the Morgan Stanley Capital International (MSCI) Europe, Australasia and Far East (EAFE) Growth Index.
26
n The Guardian Baillie Gifford International Growth Fund
Annual Report
to Shareholders
Top Ten Holdings (As of 12/31/2005)
Company | Country | Percentage of Total Net Assets | |||||||||
Total S.A. | France | 2.95 | % | ||||||||
UBS AG | Switzerland | 2.66 | % | ||||||||
Danske Bank AS | Denmark | 2.37 | % | ||||||||
Atlas Copco AB | Sweden | 2.33 | % | ||||||||
Essilor Int'l. S.A. | France | 2.25 | % | ||||||||
Kone OYJ | Finland | 2.13 | % | ||||||||
ABB Ltd. | Switzerland | 2.04 | % | ||||||||
SAP AG | Germany | 2.04 | % | ||||||||
BP PLC | United Kingdom | 2.00 | % | ||||||||
Vodafone Group | United Kingdom | 1.99 | % |
Geographical Location vs. Index (As of 12/31/2005)
Average Annual Total Returns (For periods ended 12/31/2005)
Inception Date | 1 Yr | 5 Yrs | 10 Yrs | Since Inception | |||||||||||||||||||||||
Class A shares | (w/o sales charge) | 2/16/93 | 15.63 | % | 1.51 | % | 5.52 | % | 7.20 | % | |||||||||||||||||
(w/ sales charge) | 2/16/93 | 10.43 | % | 0.58 | % | 5.04 | % | 6.81 | % | ||||||||||||||||||
Class B shares | (w/o sales charge) | 5/1/96 | 14.31 | % | 0.29 | % | — | 3.60 | % | ||||||||||||||||||
(w/ sales charge) | 5/1/96 | 11.31 | % | 0.09 | % | — | 3.60 | % | |||||||||||||||||||
Class C shares | (w/o sales charge) | 8/7/00 | 14.59 | % | 0.40 | % | — | –1.92 | % | ||||||||||||||||||
(w/ sales charge) | 8/7/00 | 13.59 | % | 0.40 | % | — | –1.92 | % | |||||||||||||||||||
Class K shares | (w/o sales charge) | 5/15/01 | 15.42 | % | — | — | 3.35 | % | |||||||||||||||||||
(w/ sales charge) | 5/15/01 | 14.42 | % | — | — | 3.35 | % | ||||||||||||||||||||
MSCI EAFE Growth Index | 13.64 | % | 2.23 | % | 3.59 | % | 5.94 | %* | |||||||||||||||||||
*Since Class A shares inception |
All performance data quoted is historical and the results represent past performance and neither guarantee nor predict future investment results. To obtain performance data current to the most recent month (available within 7 business days of the most recent month end), please call us at (800) 221-3253 or visit our website at www.guardianinvestor.com. Current performance may be higher or lower than the performance quoted here. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost.
Total return figures are historical and assume the reinvestment of dividends and distributions and the deduction of all Fund expenses. The return figures shown do not reflect the deduction of taxes that a shareholder may pay on distributions or redemption of shares. Total return figures for Class A shares do not take into account the current maximum sales charge of 4.5%, except where noted. Total return figures for Class B, Class C and Class K shares do not take into account the contingent deferred sales charge applicable to such shares (maximum 3% for Class B shares and 1% for Class C and Class K shares), except where noted.
27
n The Guardian Baillie Gifford International Growth Fund
Annual Report
to Shareholders
Growth of a Hypothetical $10,000 Investment
To give you a comparison, the chart below shows the performance of a hypothetical $10,000 investment made 10 years ago in Class A shares of The Guardian Baillie Gifford International Fund and the MSCI EAFE Growth Index. The starting point of $9,550 for Class A shares reflects the maximum sales charge of 4.5% that an investor may pay when purchasing Class A shares of the Fund. The Index begins at $10,000. This performance does not reflect the deduction of taxes that a shareholder may pay on distributions or redemption of shares. Returns represent past performance and are not indicative of future results. Index returns do not include the fees and expenses of the Fund, but do include the reinvestment of dividends.
Performance for Class B, Class C and Class K shares, which were first offered on May 1, 1996, August 7, 2000 and May 15, 2001, respectively, will vary due to differences in sales load and other expenses charged to each share class.
Fund Expenses
By investing in the Fund, you incur two types of costs: (1) transaction costs, including, as applicable, sales charges on purchase payments, reinvested dividends, or other distributions; redemption fees and exchange fees; and (2) ongoing costs, including, as applicable, management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested on July 1, 2005 and held for six months ended December 31, 2005.
Actual Expenses
The first line in the table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the applicable line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
28
n The Guardian Baillie Gifford International Growth Fund
Annual Report
to Shareholders
Hypothetical Example for Comparison Purposes
The second line in the table provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if transactional costs were included, your costs would have been higher.
Beginning Account Value July 1, 2005 | Ending Account Value December 31, 2005 | Expenses Paid During the Period* | Annualized Expense Ratio | ||||||||||||||||
Class A | |||||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,158.50 | $ | 10.12 | 1.86 | % | |||||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,015.83 | $ | 9.45 | 1.86 | % | |||||||||||
Class B | |||||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,151.70 | $ | 16.54 | 3.05 | % | |||||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,009.83 | $ | 15.45 | 3.05 | % | |||||||||||
Class C | |||||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,153.60 | $ | 15.25 | 2.81 | % | |||||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,011.04 | $ | 14.24 | 2.81 | % | |||||||||||
Class K | |||||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,157.00 | $ | 11.20 | 2.06 | % | |||||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,014.82 | $ | 10.46 | 2.06 | % |
* Expenses are equal to the Fund's annualized expense ratio for the Fund's Class A, B, C and K shares, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the Fund's most recent fiscal half-year).
29
n The Guardian Baillie Gifford Emerging Markets Fund
Annual Report to Shareholders
Edward H. Hocknell, Portfolio Manager
Objective:
Long-term capital appreciation
Portfolio:
At least 80% in a diversified portfolio of common stocks and convertible securities issued by companies in emerging markets
Inception Date:
May 1, 1997
Net Assets at
December 31, 2005:
$175,106,145
An Update from Fund Management
The Fund returned 39.83%1 in 2005 and outperformed its benchmark, the MSCI EMF Index, for the year ended December 31, 2005, which saw an increase of 34.54% in the Index. The absolute return in the emerging markets was strong as these countries profited from continued strong demand from China, the resulting surges in commodity prices and the oil bubble spreading out from the Middle East and Russia. The strongest sectors in the Index were energy, utilities and consumer staples, strongly attributable to South Africa and South America. Asian asset plays performed well as these economies profited from the rapid emergence of China as a global economic stimulator. Central European countries like the Czech Republic also showed continued strength as they prepare to join the European Union.
The main strength in the Fund's relative performance compared to the Index came from stock selection. This was particularly strong in South Korea with ownership of Samsung Heavy and Meritz Fire and Marine. In Taiwan, the Fund benefited from ownership of Hanwha Corporation, a large chemicals company. Furthermore, in Europe, the Fund benefited from ownership of Garanti Bank, which was a strong play on the development of the Eastern European financial sector. The greatest detractor from performance was the Fund having little or no holdings in Samsung Electronics and Kookmin Bank in Korea, which were both strong performers this year. Beyond these factors, the Fund was helped by the strength in industrials and energy sectors as China continued to stimulate demand in 2005.
Baillie Gifford is a growth manager with a bottom up approach to stock picking. We look for companies with the ability to generate sustainable earnings growth. In determining the potential of a company, we pay particular attention to competitive advantage, management attitudes, financial strength and the industry background that a company operates in. We regularly meet the management of the companies within our investment universe and constantly revisit the investment case for the companies within the portfolio to ensure that our expectations are being met.
Note: The securities mentioned above are not representative of the entire portfolio, and are subject to change at any time. The securities' representative percentage of total net assets as of 12/31/05 is as follows: Samsung Heavy 2.7%; Meritz Fire and Marine 1.5%; Hanwha Corporation 2.9%; Turkey Garanti Bankasi A.S. 2.1%; Samsung Electronics 0.0% and Kookmin Bank 0.0%.
1 Total return is shown for Class A shares and does not take into account the current maximum sales charge of 4.5%.
About information in this report:
• It is important to consider the Fund's investment objectives, risks, fees and expenses before investing. All funds involve some risk, including possible loss of the principal amount invested. International investing has special risks relating to changes in currency rates, foreign taxation, differences in auditing and other financial standards, political uncertainty and greater volatility. These risks are even greater when investing in emerging markets
• Please see the "About Your Annual Report" page for a description of the Morgan Stanley Capital International (MSCI) Emerging Markets Free (EMF) Index.
30
n The Guardian Baillie Gifford Emerging Markets Fund
Annual Report to Shareholders
Top Ten Holdings (As of 12/31/2005)
Company | Country | Percentage of Total Net Assets | |||||||||
Petroleo Brasileiro S.A. ADR | Brazil | 3.55 | % | ||||||||
Samsung Corp. | South Korea | 3.12 | % | ||||||||
Hon Hai Precision Inds. Co. Ltd. | Taiwan | 2.98 | % | ||||||||
Hanwha Corp. | South Korea | 2.87 | % | ||||||||
Sasol Ltd. | South Africa | 2.84 | % | ||||||||
Samsung Heavy Inds. Co. Ltd. | South Korea | 2.72 | % | ||||||||
Itausa-Investimentos Itau S.A. | Brazil | 2.63 | % | ||||||||
LUKOIL ADR | Russia | 2.53 | % | ||||||||
Comp. Vale Do Rio Doce | Brazil | 2.36 | % | ||||||||
Samsung Fire & Marine Ins. Co. Ltd. | South Korea | 2.34 | % |
Geographical Location vs. Index (As of 12/31/2005)
Average Annual Total Returns (For periods ended 12/31/2005)
Inception Date | 1 Yr | 5 Yrs | 10 Yrs | Since Inception | |||||||||||||||||||||||
Class A shares | (w/o sales charge) | 5/1/97 | 39.83 | % | 20.83 | % | — | 9.40 | % | ||||||||||||||||||
(w/ sales charge) | 5/1/97 | 33.54 | % | 19.72 | % | — | 8.81 | % | |||||||||||||||||||
Class B shares | (w/o sales charge) | 5/6/97 | 38.56 | % | 19.45 | % | — | 7.58 | % | ||||||||||||||||||
(w/ sales charge) | 5/6/97 | 35.56 | % | 19.35 | % | — | 7.58 | % | |||||||||||||||||||
Class C shares | (w/o sales charge) | 8/7/00 | 38.68 | % | 19.51 | % | — | 13.29 | % | ||||||||||||||||||
(w/ sales charge) | 8/7/00 | 37.68 | % | 19.51 | % | — | 13.29 | % | |||||||||||||||||||
Class K shares | (w/o sales charge) | 5/15/01 | 39.34 | % | — | — | 21.80 | % | |||||||||||||||||||
(w/ sales charge) | 5/15/01 | 38.34 | % | — | — | 21.80 | % | ||||||||||||||||||||
MSCI EMF Index | 34.54 | % | 19.44 | % | — | 6.35 | %* | ||||||||||||||||||||
*Since Class A shares inception |
All performance data quoted is historical and the results represent past performance and neither guarantee nor predict future investment results. To obtain performance data current to the most recent month (available within 7 business days of the most recent month end), please call us at (800) 221-3253 or visit our website at www.guardianinvestor.com. Current performance may be higher or lower than the performance quoted here. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost.
Total return figures are historical and assume the reinvestment of dividends and distributions and the deduction of all Fund expenses. The return figures shown do not reflect the deduction of taxes that a shareholder may pay on distributions or redemption of shares. Total return figures for Class A shares do not take into account the current maximum sales charge of 4.5%, except where noted. Total return figures for Class B, Class C and Class K shares do not take into account the contingent deferred sales charge applicable to such shares (maximum 3% for Class B shares and 1% for Class C and Class K shares), except where noted.
31
n The Guardian Baillie Gifford Emerging Markets Fund
Annual Report to Shareholders
Growth of a Hypothetical $10,000 Investment
To give you a comparison, the chart below shows the performance of a hypothetical $10,000 investment made in Class A and Class B shares of the Fund and the MSCI EMF Index. The starting point of $9,550 for Class A shares reflects the maximum sales charge of 4.5% that an investor may have to pay when purchasing Class A shares of the Fund. The Index and Class B shares begin at $10,000. This performance does not reflect the deduction of taxes that a shareholder may pay on distributions or redemption of shares. Returns represent past performance and are not indicative of future results. Index returns do not include the fees and expenses of the Fund, but do include the reinvestment of dividends.
Performance for Class C and Class K shares, which were first offered on August 7, 2000 and May 15, 2001, respectively, will vary due to differences in sales load and other expenses charged to each share class.
Fund Expenses
By investing in the Fund, you incur two types of costs: (1) transaction costs, including, as applicable, sales charges on purchase payments, reinvested dividends, or other distributions; redemption fees and exchange fees; and (2) ongoing costs, including, as applicable, management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested on July 1, 2005 and held for six months ended December 31, 2005.
Actual Expenses
The first line in the table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the applicable line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
32
n The Guardian Baillie Gifford Emerging Markets Fund
Annual Report to Shareholders
Hypothetical Example for Comparison Purposes
The second line in the table provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if transactional costs were included, your costs would have been higher.
Beginning Account Value July 1, 2005 | Ending Account Value December 31, 2005 | Expenses Paid During the Period* | Annualized Expense Ratio | ||||||||||||||||
Class A | |||||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,293.10 | $ | 10.29 | 1.78 | % | |||||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,016.23 | $ | 9.05 | 1.78 | % | |||||||||||
Class B | |||||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,287.30 | $ | 15.80 | 2.74 | % | |||||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,011.39 | $ | 13.89 | 2.74 | % | |||||||||||
Class C | |||||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,287.70 | $ | 15.45 | 2.68 | % | |||||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,011.70 | $ | 13.59 | 2.68 | % | |||||||||||
Class K | |||||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,290.90 | $ | 12.24 | 2.12 | % | |||||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,014.52 | $ | 10.76 | 2.12 | % |
* Expenses are equal to the Fund's annualized expense ratio for the Fund's Class A, B, C and K shares, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the Fund's most recent fiscal half-year).
33
n The Guardian Investment Quality Bond Fund
Annual Report to Shareholders
Howard W. Chin, Co-Portfolio Manager
Robert Crimmins, Co-Portfolio Manager
Objective:
High level of current income and capital appreciation without undue risk to principal
Portfolio:
At least 80% in different kinds of investment grade bonds, such as corporate bonds, mortgage-backed and asset-backed securities, and obligations of the U.S. government and its agencies
Inception Date:
February 16, 1993
Net Assets at
December 31, 2005:
$132,414,688
An Update from Fund Management
The Fund had a total return of 2.07%1 for the year ended December 31, 2005, outperforming the average fund in the Lipper Investment Grade peer group, which returned 1.78% for the same period (the peer group consisted of 468 other mutual funds that invest primarily in investment grade debt with average maturities of 5-10 years). Additionally, the Fund's benchmark, the Lehman Brothers Aggregate Bond Index, which measures the taxable fixed income market, returned 2.43% in 2005.
Market Overview
In contrast to 2004, interest rates in 2005 were remarkably well-behaved and experienced little in the way of surprises. Short maturity yields rose as the Federal Reserve (the "Fed") continued its policy of predictably raising interest rates in consistent quarter-point increments. As a result, the interest rate market did not undergo any sharp dislocations. To the extent that there was a surprise in the marketplace, the stubbornness of longer maturity yields in the wake of continued rate increases surprised and confounded some investors. However, this "surprising" behavior became better understood as more data became available during the year.
Specifically, the yield curve flattened in 2005 as the difference between 2- and 10-year Treasuries narrowed steadily from 1.15% at the beginning of the year to finish at a spread of -0.02%, resulting in a condition known as an "inverted yield curve" where short maturity rates exceed longer maturity rates. The primary contributor to the inversion was a substantial 1.34% increase in 2-year Treasury rates over the course of the year, finishing at 4.41%. The increase in 10-year yields was much more modest, up by only 0.18% to finish at 4.40%. The longer maturity portion of the curve also flattened as the yield difference between 10-year and 30-year maturities declined by 0.47% to end the year at 0.14%. In notable contrast to the yield increases seen for shorter maturity Treasuries, the yield on the 30-year bond actually decreased by 0.29% and finished at 4.54%. Not surprisingly, long maturity bonds performed best in the Treasury se ctor.
While an inverted yield curve is not a common occurrence—it last occurred in 2000—the upward movement in short rates was largely expected by the market. The Fed telegraphed its intentions to tighten monetary policy by increasing interest rates at a "measured" pace, and this increased transparency removed considerable uncertainty from the marketplace. As a result, the Federal Funds rate was increased eight times during 2005 to finish the year at 4.25%, but each 0.25% increase was fully anticipated well in advance of the actual move by the Fed. There were no surprises here.
1 Total return is shown for Class A shares and does not take into account the current maximum sales charge of 4.5%.
About information in this report:
• It is important to consider the Fund's investment objectives, risks, fees and expenses before investing. All funds involve some risk, including possible loss of the principal amount invested. Investing in bond funds exposes you to the general risk of investing in the debt markets. Duration is a measure of bond price sensitivity to a given change in interest rates. Generally, the higher a bond's duration, the greater its price sensitivity to a given change in interest rates. Bond funds are subject to interest rate risk. When interest rates rise, bond prices generally fall, and when interest rates fall, bond prices generally rise. Currently, interest rates are at historically low levels. Please keep in mind that in this kind of environment, the risk that bond prices may fall when interest rates rise is potentially greater.
• Please see the "About Your Annual Report" page for a description of the Lehman Brothers Aggregate Bond Index and Lehman Brothers Treasury Index.
• Lipper, Inc. is an independent mutual fund monitoring and rating service. Its database of performance information is based on historical returns, which assume the reinvestment of dividends and distributions and the deduction of all fund expenses. Lipper return figures do not reflect the deduction of any sales charges that an investor may pay when purchasing or redeeming shares of the Fund.
34
n The Guardian Investment Quality Bond Fund
Annual Report to Shareholders
However, many investors were perplexed by the stubbornly low rates at the long end of the yield curve. Despite thirteen rate hikes by the Fed since mid-2004, long rates barely budged. In fact, as mentioned earlier, they fell. Federal Reserve Chairman Greenspan labeled it a "conundrum." A good portion of the lower bond yields was attributed to strong buying by overseas central banks and investors as countries such as China needed to reinvest a good portion of their trade surpluses into U.S. securities. In addition, longer maturity securities also lost much of their risk premium as investors recognized the Fed's vigilance and success in battling inflation and as a result, required lower yield premiums in light of the reduced inflation risk. If anything, many investors believed the Fed was overestimating the risk of inflation. Data released during the year indicated that many inflation measures might have peaked in 2005, while the Fed's favorite inflation measure may have actually peaked in 2004 and was reliably trending downwards into the Fed's comfort zone. Energy costs for oil, gasoline and natural gas remained persistently high but did not appear to result in higher product prices. Accordingly, investors grew more comfortable with owning longer maturity securities and the increased demand drove yields lower still.
Against this backdrop, the domestic economy was quite robust. The first three quarters of 2005 exhibited an above-trend growth rate of 3.8% and economists expect the fourth quarter to come in at 3.2%. Coming into 2005, market observers had expected increased investment by the business sector to replace consumer spending as the economy's growth engine. This did not materialize. In fact, consumers increased their role in the economy as the boom in the housing sector enabled many to increase their spending by tapping into their homes' increased value through mortgage refinancings and cash takeouts. The damage caused by Hurricanes Katrina and Rita devastated specific regions and their economies, but it did not appear to have inflicted lasting damage on the overall economy. Employment continued to grow at a strong pace and the unemployment rate dropped to 4.9% by the end of 2005 relative to a pre-hurricane peak of 5.4% earlier in the year.
Overall, the fixed income market put in a mixed performance in 2005. Treasuries returned 2.79% as measured by the Lehman Brothers Treasury Index, but unlike 2004 where each segment of the investment grade bond market outperformed Treasuries, there were clear winners and losers in 2005. Notably, two portions of the securitized bond market—asset-backed securities (ABS)2 and commercial mortgage-backed securities (CMBS)2—returned 2.09% and 1.82%, respectively, and outperformed their Treasury counterparts by 0.32% and 0.15%. The agency debenture sector also fared well, returning 2.33% and outperforming by 0.13%. On the other hand, corporate bonds and mortgage-backed securities (MBS)2 fared less well, returning 1.96% and 2.61%, respectively, but underperforming comparable duration Treasuries by 0.85% and 0.37%.
The solid performance of the ABS and CMBS sectors was attributed to the lack of event risk in 2005 as well as the continued strong performance of the underlying housing and real estate assets that was the collateral for ABS and CMBS bonds. In contrast, the troubles experienced in the corporate bond market can be laid at the doors of the automotive sector and the overall weak performance of long maturity corporate bonds. Specifically, both GM and Ford were downgraded to below investment grade status, which accounted for 0.62% of the 0.85% of underperformance that the investment grade corporate bond market underwent. Further, as mentioned above, 30-year Treasury yields fell during 2005, but long maturity corporate bonds were unable to keep pace with that rally. Instead of rallying in lockstep, corporate bond investors continued to demand higher yields to take on the additional risk of longer maturity bonds and caused corporate bon d spreads to widen and the sector to underperform by 3.76%. We also noted a sharp difference in performance among different credit rating classes; the BBB sector underperformed Treasuries by 1.77% while the AAA sector underperformed by just 0.13%. Duration extension concerns in a potentially rising interest rate environment caused MBS investors to reduce their exposure to this sector, which resulted in the sector's underperformance.
Strategy Overview
Each segment of the fixed income market performed very well in 2004, but we did not believe we would see a repeat performance in 2005. We believed it more likely that some sectors would underperform. As a result, we adjusted our asset allocation to reflect our updated relative value views.
Our allocation decision for the corporate bond sector was a case in point. We decided to underweight corporate bonds relative to our benchmark even though credit fundamentals were positive. We believed their incremental yield advantage was not enough to warrant a major commitment to the sector. We also thought there were more attractive risk/reward opportunities in
2 The respective indices are: the Lehman Brothers Asset-Backed Securities (ABS) Index, the Lehman Brothers Commercial Mortgage-Backed Securities (CMBS) Index and the Lehman Brothers Mortgage-Backed Securities (MBS) Index.
35
n The Guardian Investment Quality Bond Fund
Annual Report to Shareholders
other bond sectors and better re-entry points for corporates down the road. That re-entry opportunity emerged in the second quarter. The credit market underperformed dramatically following GM's downward revision to its 2005 outlook and the market's new concerns regarding heightened leveraged buyouts and merger and acquisition activity. As a result of this cheapening, the Fund increased its corporate holdings. Our strategy turned out to be timely as the corporate market outperformed Treasuries after our purchases by 0.61% in the second half of May alone. In the following four months, the sector added another 0.39% of outperformance. The Fund was well-served by this allocation decision, but it also benefited significantly from our decision to underweight the worst performing corporate bond sector (autos) in 2005. The Fund remained overweight in corporates until the end of the third quarter, when we began to reduce our holdings. We ended 2005 with an underweight.
Our strategy in MBS was simpler. We came into 2005 with a slight overweight, believing 2004's positive fundamentals would carry over into 2006, which turned out to be the case. However, after some outperformance in the first quarter, we reduced our exposure to an underweight as the flatter yield curve reduced the sector's attractiveness to many investors such as money center banks and hedge funds. We retained this underweight for the balance of the year, but changed our coupon exposures several times as relative value shifted. We also added collateratized mortagage obligations (CMOs) as the attractiveness of MBS waned. MBS underperformed by 0.40% over the final three quarters of the year, and our underweighted posture significantly benefited the Fund.
We were also overweighted in ABS and CMBS during the entire year. As noted before, these two sectors performed well in 2005, especially ABS. We increased our exposure to this sector by 6% during the year as it grew to about 10% of the Fund's overall portfolio. Our largest exposure within ABS was the home equity loan (HEL) segment as we added fixed rate and floating rate HEL securities, the latter as part of a curve flattening strategy. At year's end, HEL comprised more than 5% of the Fund's holdings and contributed significantly to the Fund's performance as the HEL sector outperformed by 0.79%, relative to the ABS sector's overall showing of 0.32%.
In summary, the Fund performed well as the result of our asset allocation decisions. Notably, our underweighted exposures to MBS and timely re-entry to corporate bonds coupled with our overweight in ABS served the Fund particularly well.
Top Ten Holdings (As of 12/31/2005)
Company | Coupon | Maturity Date | Percentage of Total Net Assets | ||||||||||||
FHLMC (30 yr. TBA) | 5.500 | % | N/A | 4.11 | % | ||||||||||
FNMA | 5.000 | % | 8/1/2035 | 3.78 | % | ||||||||||
U.S. Treasury Notes | 4.500 | % | 11/15/2015 | 3.03 | % | ||||||||||
FNMA (30 yr. TBA) | 6.000 | % | N/A | 2.59 | % | ||||||||||
U.S. Treasury Notes | 3.625 | % | 1/15/2010 | 2.22 | % | ||||||||||
Countrywide Home Loans | 5.500 | % | 10/25/2035 | 2.17 | % | ||||||||||
U.S. Treasury Bonds | 6.250 | % | 8/15/2023 | 2.15 | % | ||||||||||
U.S. Treasury Notes | 4.500 | % | 11/15/2010 | 2.01 | % | ||||||||||
J.P. Morgan Mtg. Tr. | 6.000 | % | 9/25/2035 | 1.96 | % | ||||||||||
FHLMC | 6.000 | % | 11/1/2034 | 1.86 | % |
36
n The Guardian Investment Quality Bond Fund
Annual Report to Shareholders
Sector Allocation (As of 12/31/2005 and 6/30/2005)
Average Annual Total Returns (For periods ended 12/31/2005)
Inception Date | 1 Yr | 5 Yrs | 10 Yrs | Since Inception | |||||||||||||||||||||||
Class A shares | (w/o sales charge) | 2/16/93 | 2.07 | % | 5.66 | % | 5.58 | % | 5.61 | % | |||||||||||||||||
(w/ sales charge) | 2/16/93 | –2.52 | % | 4.69 | % | 5.09 | % | 5.23 | % | ||||||||||||||||||
Class B shares | (w/o sales charge) | 8/7/00 | 1.41 | % | 4.90 | % | — | 5.37 | % | ||||||||||||||||||
(w/ sales charge) | 8/7/00 | –1.59 | % | 4.73 | % | — | 5.22 | % | |||||||||||||||||||
Class C shares | (w/o sales charge) | 8/7/00 | 1.41 | % | 4.90 | % | — | 5.37 | % | ||||||||||||||||||
(w/ sales charge) | 8/7/00 | 0.41 | % | 4.90 | % | — | 5.37 | % | |||||||||||||||||||
Class K shares | (w/o sales charge) | 5/15/01 | 1.67 | % | — | — | 5.06 | % | |||||||||||||||||||
(w/ sales charge) | 5/15/01 | 0.67 | % | — | — | 5.06 | % | ||||||||||||||||||||
Lehman Brothers Aggregate Bond Index | 2.43 | % | 5.87 | % | 6.16 | % | 6.46 | %* | |||||||||||||||||||
*Since Class A shares inception |
All performance data quoted is historical and the results represent past performance and neither guarantee nor predict future investment results. To obtain performance data current to the most recent month (available within 7 business days of the most recent month end), please call us at (800) 221-3253 or visit our website at www.guardianinvestor.com. Current performance may be higher or lower than the performance quoted here. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost.
Total return figures are historical and assume the reinvestment of dividends and distributions and the deduction of all Fund expenses. The return figures shown do not reflect the deduction of taxes that a shareholder may pay on distributions or redemption of shares. Total return figures for Class A shares do not take into account the current maximum sales charge of 4.5%, except where noted. Total return figures for Class B, Class C and Class K shares do not take into account the contingent deferred sales charge applicable to such shares (maximum 3% for Class B shares and 1% for Class C and Class K shares), except where noted. Since June 1, 1994, the investment adviser for the Fund has assumed certain ordinary operating expenses for the Fund. Without this assumption of expenses, returns would have been lower.
Growth of a Hypothetical $10,000 Investment
To give you a comparison, the chart shows the performance of a hypothetical $10,000 investment made 10 years ago in Class A shares of The Guardian Investment Quality Bond Fund and the Lehman Brothers Aggregate Bond Index. The starting point of $9,550 for Class A shares reflects the maximum sales charge of 4.5% that an investor may pay when purchasing Class A shares of the Fund. The Index begins at $10,000. This performance does not reflect the deduction of taxes that a shareholder may pay on distributions or redemption of shares. Returns represent past performance and are not indicative of future results. Index returns do not include the fees and expenses of the Fund, but do include the reinvestment of dividends.
37
n The Guardian Investment Quality Bond Fund
Annual Report to Shareholders
Performance for Class B and C shares, which were first offered on August 7, 2000 and for Class K shares, which were first offered on May 15, 2001, will vary due to differences in sales load and other expenses charged to each share class.
Fund Expenses
By investing in the Fund, you incur two types of costs: (1) transaction costs, including sales charges on purchase payments, reinvested dividends, or other distributions; redemption fees and exchange fees; and (2) ongoing costs, including, as applicable, management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested on July 1, 2005 and held for six months ended December 31, 2005.
Actual Expenses
The first line in the table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the applicable line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line in the table provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if transactional costs were included, your costs would have been higher.
38
n The Guardian Investment Quality Bond Fund
Annual Report to Shareholders
Beginning Account Value July 1, 2005 | Ending Account Value December 31, 2005 | Expenses Paid During the Period* | Annualized Expense Ratio | ||||||||||||||||
Class A | |||||||||||||||||||
Actual | $ | 1,000.00 | $ | 995.90 | $ | 4.28 | 0.85 | % | |||||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,020.92 | $ | 4.33 | 0.85 | % | |||||||||||
Class B | |||||||||||||||||||
Actual | $ | 1,000.00 | $ | 993.20 | $ | 8.04 | 1.60 | % | |||||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,017.14 | $ | 8.13 | 1.60 | % | |||||||||||
Class C | |||||||||||||||||||
Actual | $ | 1,000.00 | $ | 993.20 | $ | 8.04 | 1.60 | % | |||||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,017.14 | $ | 8.13 | 1.60 | % | |||||||||||
Class K | |||||||||||||||||||
Actual | $ | 1,000.00 | $ | 993.90 | $ | 6.28 | 1.25 | % | |||||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,018.90 | $ | 6.36 | 1.25 | % |
* Expenses are equal to the Fund's annualized expense ratio for the Fund's Class A, B, C and K shares, respectively, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the Fund's most recent fiscal half-year).
39
n The Guardian Low Duration Bond Fund
Annual Report to Shareholders
Howard W. Chin, Co-Portfolio Manager
Robert Crimmins, Co-Portfolio Manager
Objective:
Seeks a high level of current income, consistent with preservation of capital
Portfolio:
At least 80% in different kinds of investment grade bonds, such as corporate bonds, mortgage-backed and asset-backed securities, and obligations of the U.S. government and its agencies.
Inception Date:
July 30, 2003
Net Assets at
December 31, 2005:
$33,790,973
An Update from Fund Management
The Fund had a total return of 1.34%1 for the year ended December 31, 2005, underperforming the Fund's benchmark, the Lehman Brothers U. S. Government 1-3 Year Bond Index, which returned 1.73% during the same period. The average fund in the Lipper-Short Investment Grade peer group, which consists of 227 funds, returned 1.62% in 2005.
Market Overview
In contrast to 2004, interest rates in 2005 were remarkably well-behaved and experienced little in the way of surprises. Short maturity yields rose as the Federal Reserve Board ("the Fed") continued its policy of predictably raising interest rates in consistent quarter-point increments. As a result, the interest rate market did not undergo any sharp dislocations. To the extent that there was a surprise in the marketplace, the stubbornness of longer maturity yields in the wake of continued rate increases surprised and confounded some investors. However, this "surprising" behavior became better understood as more data became available during the year.
Specifically, the yield curve flattened in 2005 as the difference between 2- and 10-year Treasuries narrowed steadily from 1.15% at the beginning of the year to finish at a spread of –0.02%, resulting in a condition known as an "inverted yield curve," where short maturity rates exceed longer maturity ones. The primary contributor to the inversion was a substantial 1.34% increase in 2-year Treasury rates over the course of the year, finishing at 4.41%. The increase in 10-year yields was much more modest, up by only 0.18% to finish at 4.40%. The longer maturity portion of the curve also flattened as the yield difference between 10-year and 30-year maturities declined by 0.47% to end the year at 0.14%. In notable contrast to the yield increases seen for shorter maturity Treasuries, the yield on the 30-year bond actually decreased by 0.29% and finished at 4.54%. Not surprisingly, long maturity bonds performed best in the Treasu ry sector.
While an inverted yield curve is not a common occurrence—it last occurred in 2000—the upward movement in short rates was largely expected by the market. The Federal Reserve telegraphed its intentions to tighten monetary policy by increasing interest rates at a "measured" pace, and this increased transparency removed considerable uncertainty from the marketplace. As a result, the Federal Funds rate was increased eight times during 2005 to finish the year at 4.25%, but each 0.25% increase was fully anticipated well in advance of the actual move by the Fed. There were no surprises here.
1 Total return is shown for Class A shares and does not take into account the current maximum sales charge of 3.0%.
About information in this report:
• It is important to consider the Fund's investment objectives, risks, fees and expenses before investing. All funds involve some risk, including possible loss of the principal amount invested. Investing in bond funds exposes you to the general risk of investing in the debt markets. Duration is a measure of bond price sensitivity to a given change in interest rates. Generally, the higher a bond's duration, the greater its price sensitivity to a given change in interest rates. Bond funds are subject to interest rate risk. When interest rates rise, bond prices generally fall, and when interest rates fall, bond prices generally rise. Currently, interest rates are at historically low levels. Please keep in mind that in this kind of environment, the risk that bond prices may f all when interest rates rise is potentially greater.
• Low duration bond funds may not be a suitable alternative to money market funds because, unlike money market funds, low duration bond funds do not seek to maintain a stable net asset value and, as a result, are a riskier asset class.
• Please see the "About Your Annual Report" page for a description of the Lehman Brothers U.S. Government 1-3 Year Bond Index.
• Lipper, Inc. is an independent mutual fund monitoring and rating service. Its database of performance information is based on historical returns, which assume the reinvestment of dividends and distributions and the deduction of all fund expenses. Lipper return figures do not reflect the deduction of any sales charges that an investor may pay when purchasing or redeeming shares of the Fund.
40
n The Guardian Low Duration Bond Fund
Annual Report to Shareholders
However, many investors were perplexed by the stubbornly low rates at the long end of the yield curve. Despite thirteen rate hikes by the Fed since mid-2004, long rates barely budged. In fact, as mentioned earlier, they fell. Federal Reserve Chairman Greenspan labeled it a "conundrum." A good portion of the lower bond yields was attributed to strong buying by overseas central banks and investors as countries such as China needed to reinvest a good portion of their trade surpluses into U.S. securities. In addition, longer maturity securities also lost much of their risk premium as investors recognized the Fed's vigilance and success in battling inflation and as a result, required lower yield premiums in light of the reduced inflation risk. If anything, many investors believed the Fed was overestimating the risk of inflation. Inflation data released during 2005 indicated that inflation may have peaked in 2004 and was reliably tren ding downwards into the Fed's comfort zone. Energy costs for oil, gasoline and natural gas remained persistently high but did not appear to result in higher product prices. Accordingly, investors grew more comfortable with owning longer maturity securities and the increased demand drove yields lower still.
Against this backdrop, the domestic economy was quite robust. The first three quarters of 2005 exhibited an above-trend growth rate of 3.8% and economists expect the fourth quarter to come in at 3.2%. Coming into 2005, market observers had expected increased investment by the business sector to replace consumer spending as the economy's growth engine. This did not materialize. In fact, consumers increased their role in the economy as the boom in the housing sector enabled many to increase their spending by tapping into their homes' increased value through mortgage refinancings and cash takeouts. The damage caused by Hurricanes Katrina and Rita devastated specific regions and their economies, but it did not appear to have inflicted lasting damage on the overall economy. Employment continued to grow at a strong pace and the unemployment rate dropped to 4.9% by the end of 2005 relative to a pre-hurricane peak of 5.4% earlier in the year.
Overall, the fixed income market put in a mixed performance in 2005. Treasuries returned 2.79% as measured by the Lehman Brothers Treasury Index, but unlike 2004 where each segment of the investment grade bond market outperformed Treasuries, there were clear winners and losers in 2005. Notably, two portions of the securitized bond market—asset-backed securities (ABS) and commercial mortgage-backed securities (CMBS)—returned 2.09% and 1.82%2, respectively, and outperformed their Treasury counterparts by 0.32% and 0.15%. The agency debenture sector also fared well, returning 2.33% and outperforming by 0.13%. On the other hand, corporate bonds fared less well, returning 1.96% but underperforming comparable duration Treasuries by 0.85%.
The solid performance of the ABS and CMBS sectors was attributed to the lack of event risk in 2005 as well as the continued strong performance of the underlying housing and real estate assets that is the collateral for ABS and CMBS bonds. In contrast, the troubles experienced in the corporate bond market can be laid at the doors of the automotive sector and the overall weak performance of long maturity corporate bonds. Specifically, both GM and Ford were downgraded to below investment grade status, which accounted for 0.62% of the 0.85% of underperformance that the investment grade corporate bond market underwent. Further, as mentioned before, 30-year Treasury yields fell during 2005, but long maturity corporate bonds were unable to keep pace with that rally. Instead of rallying in lockstep, corporate bond investors continued to demand higher yields to take on the additional risk of longer maturity bonds and caused corporate bon d spreads to widen and the sector to underperform by 3.76%. We also noted a sharp difference in performance among different credit rating classes; the BBB sector underperformed Treasuries by 1.77% while the AAA sector underperformed by just 0.13%.
Strategy Overview
The Fund began 2005 with a significant exposure in corporate bonds as we expected continued economic growth, which would be supportive of credit fundamentals and positive for the sector's prospects. However, as the year progressed, the growing leveraged and merger and acquisition activity and the downgrade of Ford and GM caused the credit sector to substantially underperform. As a result, our overweight had a negative impact on the Fund's performance during the first half of 2005. During the second half, the Fund reduced its overweight in corporates through opportunistic sales while holding on to our short-maturity issues because of their attractive breakeven spreads. Our holdings were further pared back as several of the Fund's bonds were called or tendered. This strategy paid off during the second half of the year, as the performance of the short-maturity corporate bond market improved.
We also held significant positions in ABS and CMBS for all of 2005, which served the Fund well since these two sectors were the best performing ones in 2005 among investment grade assets on an excess return basis. ABS made up 28% of the Fund
2 The respective indices are: the Lehman Brothers Asset-Backed Securities (ABS) Index and the Lehman Brothers Commercial Mortgage-Backed Securities (CMBS) Index.
41
n The Guardian Low Duration Bond Fund
Annual Report to Shareholders
and our holdings were concentrated in the auto and home equity loan (HEL) segments of the ABS market. Despite the extreme widening in corporate auto issues following the Ford and GM downgrades, ABS issued by Ford Motor Credit and GMAC proved to be robust, amidst the turmoil in the corporate bond market. HEL made up about 9% of the Fund's holdings and contributed significantly to the Fund's performance as the HEL sector outperformed by 0.79%, relative to the ABS sector's overall showing of 0.32%. Our purchases in the CMBS sector consisted almost exclusively of 3-year average life AAA-rated bonds. The 1-3.5 year portion of the Lehman Brothers CMBS Index was the best performing segment in 2005, outperforming Treasuries by 0.64% relative to the overall Index's outperformance of 0.15%.
Despite the positive contributions made by our asset allocation decisions among corporates, ABS and CMBS, the Fund underperformed its benchmark primarily due to its exposure to intermediate maturity Treasuries. As many of our shareholders know, one of the Fund's goals is to seek to remain consistently duration neutral to the Fund's benchmark. In 2005, we used 5-year Treasury notes to maintain the Fund's duration at the duration of its benchmark, but the 5-year sector was the worst performing portion of the Treasury market in 2005, returning just 0.09% for the entire year while 2- and 3-year Treasuries returned 1.36% and 1.07%, respectively. This return difference had a significant impact on the Fund's performance.
In summary, the Fund benefited from our asset allocation decisions, but our need to buy longer maturity Treasuries caused the Fund to underperform overall in 2005.
Top Ten Holdings (As of 12/31/2005)
Company | Coupon | Maturity Date | Percentage of Total Net Assets | ||||||||||||
U.S. Treasury Notes | 4.500 | % | 11/15/2010 | 5.01 | % | ||||||||||
U.S. Treasury Notes | 4.250 | % | 11/30/2007 | 2.80 | % | ||||||||||
FNMA | 3.875 | % | 2/15/2010 | 2.64 | % | ||||||||||
U.S. Treasury Notes | 4.125 | % | 8/15/2008 | 2.60 | % | ||||||||||
U.S. Treasury Notes | 3.125 | % | 5/15/2007 | 2.22 | % | ||||||||||
U.S. Treasury Notes | 3.875 | % | 5/15/2010 | 1.98 | % | ||||||||||
U.S. Treasury Notes | 4.250 | % | 10/31/2007 | 1.92 | % | ||||||||||
Chase Comm'l. Mtg. Secs. Corp. | 6.390 | % | 11/18/2030 | 1.83 | % | ||||||||||
Chase Comm'l. Mtg. Secs. Corp. | 7.370 | % | 6/19/2029 | 1.73 | % | ||||||||||
World Omni Auto Receivables Tr. | 3.820 | % | 11/12/2011 | 1.70 | % |
42
n The Guardian Low Duration Bond Fund
Annual Report to Shareholders
Sector Allocation (As of 12/31/2005 and 6/30/2005)
Average Annual Total Returns (For periods ended 12/31/2005)
Inception Date | 1 Yr | 5 Yrs | 10 Yrs | Since Inception | |||||||||||||||||||||||
Class A shares | (w/o sales charge) | 7/30/03 | 1.34 | % | — | — | 1.52 | % | |||||||||||||||||||
(w/ sales charge) | 7/30/03 | –1.70 | % | — | — | 0.48 | % | ||||||||||||||||||||
Class B shares | (w/o sales charge) | 7/30/03 | 0.58 | % | — | — | 0.77 | % | |||||||||||||||||||
(w/ sales charge) | 7/30/03 | –2.42 | % | — | — | –0.12 | % | ||||||||||||||||||||
Class C shares | (w/o sales charge) | 7/30/03 | 0.58 | % | — | — | 0.77 | % | |||||||||||||||||||
(w/ sales charge) | 7/30/03 | –0.42 | % | — | — | 0.77 | % | ||||||||||||||||||||
Class K shares | (w/o sales charge) | 7/30/03 | 0.93 | % | — | — | 1.12 | % | |||||||||||||||||||
(w/ sales charge) | 7/30/03 | –0.07 | % | — | — | 1.12 | % | ||||||||||||||||||||
Lehman Brothers U.S. Government 1-3 Year Bond Index | 1.73 | % | — | — | 1.55 | %* | |||||||||||||||||||||
*Since the Fund's inception |
All performance data quoted is historical and the results represent past performance and neither guarantee nor predict future investment results. To obtain performance data current to the most recent month (available within 7 business days of the most recent month end), please call us at (800) 221-3253 or visit our website at www.guardianinvestor.com. Current performance may be higher or lower than the performance quoted here. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost.
Total return figures are historical and assume the reinvestment of dividends and distributions and the deduction of all Fund expenses. The return figures shown do not reflect the deduction of taxes that a shareholder may pay on distributions or redemption of shares. Total return figures for Class A shares do not take into account the current maximum sales charge of 3.0%, except where noted. Total return figures for Class B, Class C and Class K shares do not take into account the contingent deferred sales charge applicable to such shares (maximum 3% for Class B shares and 1% for Class C and Class K shares), except where noted. Since inception, the investment adviser for the Fund has assumed certain operating expenses for the Fund. Without this assumption of expenses, returns would have been lower.
43
n The Guardian Low Duration Bond Fund
Annual Report to Shareholders
Growth of a Hypothetical $10,000 Investment
To give you a comparison, the chart below shows you the performance of a hypothetical $10,000 investment made in Class A, Class B and Class C and Class K shares of the Fund and in the Lehman Brothers Government 1-3 Year Bond Index. The starting point of $9,700 for Class A shares reflects the maximum sales charge of 3.0% that an investor may have to pay when purchasing Class A shares of the Fund. For Class B shares, the contingent deferred sales charge of 3% was imposed at the end of the period. The initial investment amount in the Lehman Brothers U.S. Government 1-3 year Bond Index, Class B and Class C shares is $10,000. This performance does not reflect the deduction of taxes that a shareholder may pay on distributions or redemption of shares. Returns represent past performance and are not indicative of future results. Index returns do not include the fees and expenses of the Fund, but do include the reinvestment of dividends.
Fund Expenses
By investing in the Fund, you incur two types of costs: (1) transaction costs, including, as applicable, sales charges on purchase payments, reinvested dividends, or other distributions; redemption fees and exchange fees; and (2) ongoing costs, including, as applicable, management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested on July 1, 2005 and held for six months ended December 31, 2005.
Actual Expenses
The first line in the table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the applicable line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
44
n The Guardian Low Duration Bond Fund
Annual Report to Shareholders
Hypothetical Example for Comparison Purposes
The second line in the table provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if transactional costs were included, your costs would have been higher.
Beginning Account Value July 1, 2005 | Ending Account Value December 31, 2005 | Expenses Paid During the Period* | Annualized Expense Ratio | ||||||||||||||||
Class A | |||||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,004.80 | $ | 4.04 | 0.80 | % | |||||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,021.17 | $ | 4.08 | 0.80 | % | |||||||||||
Class B | |||||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,001.00 | $ | 7.82 | 1.55 | % | |||||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,017.39 | $ | 7.88 | 1.55 | % | |||||||||||
Class C | |||||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,001.00 | $ | 7.82 | 1.55 | % | |||||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,017.39 | $ | 7.88 | 1.55 | % | |||||||||||
Class K | |||||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,002.80 | $ | 6.06 | 1.20 | % | |||||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,019.16 | $ | 6.11 | 1.20 | % |
* Expenses are equal to the Fund's annualized expense ratio for the Fund's Class A, B, C and K shares multiplied by the average account value over the period, multiplied by 184/365 (to reflect the Fund's most recent fiscal half-year).
45
n The Guardian High Yield Bond Fund
Annual Report to Shareholders
Leslie Barbi,
Portfolio Manager
Objective:
Seeks current income. Capital appreciation is a secondary objective.
Portfolio:
At least 80% is invested in corporate bonds and other debt securities that, at the time of purchase, are rated below investment grade or are unrated.
Inception Date:
September 1, 1998
Net Assets at
December 31, 2005:
$80,354,464
An Update from Fund Management
The Fund had a total return of 3.34%1 for the year ended December 31, 2005, outperforming the average fund in the Lipper High Current Yield peer group, which returned 2.44% for the same period (the peer group consisted of 423 other mutual funds that invest primarily in below investment grade debt). Additionally, the Fund's benchmark, the Lehman Brothers Corporate High Yield Bond Index, which measures the domestic taxable below investment grade corporate debt market, returned 2.74% in 2005.
Market Overview
During 2005, the economy grew at a very solid pace, as a robust housing market and job growth continued to support consumption. The first three quarters of 2005 exhibited an above-trend GDP growth rate of 3.8% and economists expect the fourth quarter to come in at 3.2%. Coming into 2005, market observers had expected increased investment by the business sector to replace consumer spending as the economy's growth engine. This did not materialize. In fact, consumers increased their role in the economy as the boom in the housing sector enabled many to increase their spending by tapping into their homes' increased value through mortgage refinancings and cash takeouts. The damage caused by Hurricanes Katrina and Rita devastated specific regions and regional economies, but it did not appear to have inflicted lasting damage on the overall national economy. Employment continued to grow at a strong pace and the unemployment rate dropped to 4.9% by the end of 2005 relative to a pre-hurricane peak of 5.4% earlier in the year.
Good demand plus high energy prices and rising input costs caused some inflation concerns at different points in the year, which kept the Federal Reserve Board ("the Fed") on the tightening path raising the target Fed Funds target rate by 0.25% at every Federal Open Market Committee's (FOMC) meeting, for a cumulative increase in 2005 of two full percentage points to end the year at 4.25%. The Fed hikes, plus fairly stable longer term rates, which Federal Reserve Chairman Greenspan labeled a "conundrum" early in the year, led to a much flatter Treasury yield curve. At year end, the two-year Treasury yield of 4.41% was just above the yield on the 10-year Treasury yield of 4.39% so the curve was slightly "inverted." Flat and inverted yield curves generally put pressure on spread product and riskier asset classes since they reduce investment incentives relative to short term "risk-free" rates, and they more typically occur in advanc e of economic slowdowns. The current flat yield curve is not necessarily seen as an economic forecast this time around. The more stable yields in the long end of the Treasury curve were attributed to strong buying by overseas central banks and investors as countries such as China needed to reinvest a good portion of their trade surpluses into U.S. securities. In addition, longer maturity securities
1 Total return is shown for Class A shares and does not take into account the current maximum sales charge of 4.5%.
About information in this report:
• It is important to consider the Fund's investment objectives, risks, fees and expenses before investing. All funds involve some risk, including possible loss of the principal amount invested. Investing in bond funds exposes you to the general risk of investing in the debt markets. Duration is a measure of bond price sensitivity to a given change in interest rates. Generally, the higher a bond's duration, the greater its price sensitivity to a given change in interest rates. Bond funds are subject to interest rate risk. When interest rates rise, bond prices generally fall, and when interest rates fall, bond prices generally rise. Currently, interest rates are at historically low levels. Please keep in mind that in this kind of environment, the risk that bond prices may fall when interest rates rise is potentially greater. Investing in high y ield bonds involves special risks because investments in lower rated and unrated debt securities are subject to greater loss of principal and interest than higher rated securities.
• Please see the "About Your Annual Report" page for a description of the Lehman Brothers Corporate High Yield Bond Index.
• Lipper, Inc. is an independent mutual fund monitoring and rating service. Its database of performance information is based on historical returns, which assume the reinvestment of dividends and distributions and the deduction of all fund expenses. Lipper return figures do not reflect the deduction of any sales charges that an investor may pay when purchasing or redeeming shares of the Fund.
46
n The Guardian High Yield Bond Fund
Annual Report to Shareholders
also lost much of their risk premium as investors recognized the Fed's vigilance and success in battling inflation and as a result, required lower yield premiums in light of the reduced risk of a major inflation episode. Energy costs for oil, gasoline and natural gas stayed at high levels but thus far have not resulted in broadly higher product prices.
In terms of high yield market conditions, spreads began the year at tight levels, credit quality remained strong, but risks increased. Yield spreads began 2005 at levels that were tight on a historical basis, with the OAS (option-adjusted spread) on the Lehman Brothers Corporate High Yield Bond Index ending 2004, at just 2.88% over Treasuries. These levels were somewhat justified after an extended period of deleveraging and liquidity improvement, but also reflected many investors' "search for yield" in a generally low yield and tight spread environment. During 2005, credit quality remained fairly strong; however, companies shifted focus from debt reduction and liquidity enhancement to more shareholder-friendly and private equity investor-friendly moves, such as share buybacks, dividend deals, and merger and acquisition transactions. Additionally, the deterioration in the automotive sector impacted the high yield market. This led to some general risk aversion and fears that a "financial accident" was brewing as some players in structured credit took big hits as Ford and GM bonds fell substantially and simultaneously. Meanwhile, a bid for GM stock from Kirk Kerkorian particularly hurt some capital arbitrage players who lost on both sides of their long GM bonds and short GM stock trades. The pending large "fallen angel" supply and heightened risk aversion sent the spreads on the high yield market 1.67% wider from mid-March to mid-May. While the high yield market rebound started in mid-May, autos again roiled the markets in the fall as Delphi filed for bankruptcy on October 8th, which along with energy impacts from Hurricane Katrina disrupted the market enough to slow high yield issuance for a number of weeks. Soaring energy prices, especially right after Hurricane Katrina, raised the specter of a slowing economy as higher energy costs would weigh on discretionary spending from consumers, and increase costs for businesses. However, tha t view dissipated before October was over and high yield issuance returned in force. By year end, Ford, Ford Motor Credit, General Motors, and GMAC had all entered the high yield index, at the start of 2006 representing about 12% combined and bringing the automotive total to 14.3% of the overall market.
Overall earnings were better than had been expected at the beginning of the year, and stocks put in a moderate performance, with the S&P 500 Index up 4.91% on the year. New issuance was about 110 billion, down from about 158 billion the year before. However, like 2004, a higher than average portion of issuance was in CCC rated area (per JP Morgan Chase, more than 15% of issuance in 2004 and 2005 was CCC or Split B rated), and a higher than average portion of issuance was done to raise money for acquisition financing (per JP Morgan Chase, 32% of issuance in 2005, the highest since 1989, versus 12.9% to 15.5% in 2001 through 2003).
Strategy Overview
The Fund invests primarily in bonds rated below investment grade. Based on its long-term investment philosophy, the Fund makes individual bond investments by considering the underlying creditworthiness of an issuer, including industry factors, as a starting point. The investment decision also incorporates valuation and relative value of individual bonds, including assessment of the adequacy of risk premium over Treasuries, potential price appreciation and comparison of specific bond features. We avoided holdings in credits that went bankrupt, such as Collins & Aikman, Delphi, and Calpine. While we focus on avoiding credit problems, speculative grade bonds do carry higher credit risk than investment grade rated securities, so the Fund uses portfolio diversification to limit the impact from a negative event affecting an individual issuer's bonds, and also to avoid excessive concentrations in any one industry. The Fund held les s than a dozen credits with positions of 2% or higher of the net asset value of the Fund, with a very limited number of those at 3% or higher. Similarly, most industries made up less than 5% of the investments in the Fund, with only a handful of industries at higher levels. The highest industry weighting was 12.3% in electrics as of December 31, 2005.
In addition to security selection, the Fund used quality bias and industry selection to drive performance. High yield spreads began 2005 at levels that were tight on a historical basis. Despite good fundamentals, our view was that credit fundamentals had likely plateaued and that a number of risk factors were on the rise: we expected the Fed to continue to tighten, and event risk was higher with issuers shifting focus to more shareholder and private equity investor-friendly moves. Given what we felt were tight valuations, meaning spreads that did not adequately compensate for what we perceived as the risks, the Fund took a defensive posture in terms of quality and industry weighting. In 2005, the Fund maintained a higher average credit quality than the general high yield market, as represented by the Lehman Brothers Corporate High Yield Bond Index. At year end, the portfolio average quality was low BB, versus high/mid single B f or the general market. This higher quality bias served the Fund well, as higher quality high yield (BB and B rated securities) outperformed Treasuries. In 2005, the Lehman Brothers Corporate High Yield Index
47
n The Guardian High Yield Bond Fund
Annual Report to Shareholders
outperformed same duration Treasuries by 0.47%. Ba and B securities outperformed by 0.4% and 1.29%, respectively and Caa and Ca-D securities underperformed by 1.35% and 3.47%, respectively. NR (not rated) securities outperformed by 9.78%, but only accounted for 1.2% of the Index.
A combination of outlook and analysis of industries and individual credits drove our industry allocation. A few highlights follow. Our relatively large weight in utilities actually was fairly defensive given our specific issuer selections and positions in the capital structure, and went hand in hand with our strategy to have lower weights in sectors where we thought the outlook was less favorable. For example, the Fund had lower than market average weightings in a number of sectors, each of which performed poorly in 2005; specifically, automotive, paper and pharmaceutical, which underperformed by 13.49%, 6.99% and 3.08%, respectively. Of course, not all of our industry weightings added value to the portfolio. While we did have an overweight to wireless, which outperformed by 7.6%, we had an underweight to wirelines, which outperformed by 5.3%. We also did not have the foresight to overweight environmental, which outperformed by 6.10%.
Top Ten Holdings (As of 12/31/2005)
Company | Coupon | Maturity Date | Percentage of Total Net Assets | ||||||||||||
General Motors Acceptance Corp. | 6.750 | % | 12/1/2014 | 2.95 | % | ||||||||||
Mission Energy Hldg. | 13.500 | % | 7/15/2008 | 2.66 | % | ||||||||||
Nextel Comm., Inc. | 7.375 | % | 8/1/2015 | 2.59 | % | ||||||||||
J.C. Penney Co., Inc. | 7.950 | % | 4/1/2017 | 2.38 | % | ||||||||||
Sierra Pacific Resources | 8.625 | % | 3/15/2014 | 2.15 | % | ||||||||||
Allegheny Energy Supply | 7.800 | % | 3/15/2011 | 2.02 | % | ||||||||||
Williams Cos., Inc. | 7.750 | % | 6/15/2031 | 1.71 | % | ||||||||||
Teco Energy, Inc. | 7.000 | % | 5/1/2012 | 1.69 | % | ||||||||||
Federative Republic of Brazil | 9.250 | % | 10/22/2010 | 1.62 | % | ||||||||||
Equistar Chemicals LP | 10.125 | % | 9/1/2008 | 1.60 | % |
Bond Quality (As of 12/31/2005 and 6/30/2005)
Source: Standard and Poor's Ratings Group
48
n The Guardian High Yield Bond Fund
Annual Report to Shareholders
Average Annual Total Returns (For periods ended 12/31/2005)
Inception Date | 1 Yr | 5 Yrs | 10 Yrs | Since Inception | |||||||||||||||||||||||
Class A shares | (w/o sales charge) | 9/1/98 | 3.34 | % | 7.07 | % | — | 5.08 | % | ||||||||||||||||||
(w/ sales charge) | 9/1/98 | –1.31 | % | 6.09 | % | — | 4.41 | % | |||||||||||||||||||
Class B shares | (w/o sales charge) | 9/1/98 | 2.70 | % | 6.27 | % | — | 4.18 | % | ||||||||||||||||||
�� | (w/ sales charge) | 9/1/98 | –0.30 | % | 6.11 | % | — | 4.18 | % | ||||||||||||||||||
Class C shares | (w/o sales charge) | 8/7/00 | 2.70 | % | 6.30 | % | — | 4.53 | % | ||||||||||||||||||
(w/ sales charge) | 8/7/00 | 1.70 | % | 6.30 | % | — | 4.53 | % | |||||||||||||||||||
Class K shares | (w/o sales charge) | 5/15/01 | 2.93 | % | — | — | 6.49 | % | |||||||||||||||||||
(w/ sales charge) | 5/15/01 | 1.93 | % | — | — | 6.49 | % | ||||||||||||||||||||
Lehman Brothers Corporate High Yield Bond Index | 2.74 | % | 8.85 | % | — | 5.84 | %* | ||||||||||||||||||||
*Since Class A shares inception |
All performance data quoted is historical and the results represent past performance and neither guarantee nor predict future investment results. To obtain performance data current to the most recent month (available within 7 business days of the most recent month end), please call us at (800) 221-3253 or visit our website at www.guardianinvestor.com. Current performance may be higher or lower than the performance quoted here. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost.
Total return figures are historical and assume the reinvestment of dividends and distributions and the deduction of all Fund expenses. The return figures shown do not reflect the deduction of taxes that a shareholder may pay on distributions or redemption of shares. Total return figures for Class A shares do not take into account the current maximum sales charge of 4.5%, except where noted. Total return figures for Class B, Class C and Class K shares do not take into account the contingent deferred sales charge applicable to such shares (maximum 3% for Class B shares and 1% for Class C and Class K shares), except where noted.
Growth of a Hypothetical $10,000 Investment
To give you a comparison, the chart below shows the performance of a hypothetical $10,000 investment made in Class A and Class B shares of The Guardian High Yield Bond Fund and the Lehman Brothers Corporate High Yield Index. The starting point of $9,550 for Class A shares reflects the maximum sales charge of 4.5% that an investor may pay when purchasing Class A shares of the Fund. The Index and Class B shares begin at $10,000. This performance does not reflect the deduction of taxes that a shareholder may pay on distributions or redemption of shares. Returns represent past performance and are not indicative of future results. Index returns do not include the fees and expenses of the Fund, but do include the reinvestment of dividends.
Performance for Class C and Class K shares, which were first offered on August 7, 2000 and May 15, 2001, respectively, will vary due to differences in sales load and other expenses charged to each share class.
49
n The Guardian High Yield Bond Fund
Annual Report to Shareholders
Fund Expenses
By investing in the Fund, you incur two types of costs: (1) transaction costs, including, as applicable, sales charges on purchase payments, reinvested dividends, or other distributions; redemption fees and exchange fees; and (2) ongoing costs, including, as applicable, management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested on July 1, 2005 and held for six months ended December 31, 2005.
Actual Expenses
The first line in the table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the applicable line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line in the table provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if transactional costs were included, your costs would have been higher.
Beginning Account Value July 1, 2005 | Ending Account Value December 31, 2005 | Expenses Paid During the Period* | Annualized Expense Ratio | ||||||||||||||||
Class A | |||||||||||||||||||
Actual $1,000 | .00 | $ | 1,021.40 | $ | 4.33 | 0.85 | % | ||||||||||||
Hypothetical (5% return before expenses) $1,000 | .00 | $ | 1,020.92 | $ | 4.33 | 0.85 | % | ||||||||||||
Class B | |||||||||||||||||||
Actual $1,000 | .00 | $ | 1,017.60 | $ | 8.14 | 1.60 | % | ||||||||||||
Hypothetical (5% return before expenses) $1,000 | .00 | $ | 1,017.14 | $ | 8.13 | 1.60 | % | ||||||||||||
Class C | |||||||||||||||||||
Actual $1,000 | .00 | $ | 1,017.50 | $ | 8.14 | 1.60 | % | ||||||||||||
Hypothetical (5% return before expenses) $1,000 | .00 | $ | 1,017.14 | $ | 8.13 | 1.60 | % | ||||||||||||
Class K | |||||||||||||||||||
Actual $1,000 | .00 | $ | 1,019.40 | $ | 6.36 | 1.25 | % | ||||||||||||
Hypothetical (5% return before expenses) $1,000 | .00 | $ | 1,018.90 | $ | 6.36 | 1.25 | % |
* Expenses are equal to the Fund's annualized expense ratio for the Fund's Class A, B, C and K shares, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the Fund's most recent fiscal half-year).
50
n The Guardian Tax-Exempt Fund
Annual Report to Shareholders
Alexander M. Grant, Jr., Portfolio Manager
Objective:
Seeks to maximize current income exempt from federal income taxes, consistent with the preservation of capital
Portfolio:
At least 80% in investment grade municipal debt obligations
Inception Date:
February 16, 1993
Net Assets at
December 31, 2005:
$97,574,870
An Update from Fund Management
The Guardian Tax-Exempt Fund produced a total return of 4.02% for 20051. The Lehman Municipal Bond Index, which does not include expenses, produced a total return of 3.51% for the same period. The return of the Index reflects the different investment parameters of the Index, which includes all bonds and maturities. In 2005, the Lehman Brothers Municipal Bond Index produced its lowest total return since 1999 and the Fund exceeded it by 0.51%.
Meaningful peer group comparisons are available from Lipper and Morningstar. The Lipper General Municipal Average return for the year was 3.00%, ranking the Fund 38th out of 260 for the one-year period ended December 31, 2005, placing it in Lipper's 15th percentile. In Morningstar's universe of municipal national long funds, the average return for the year ended December 31, 2005 was 3.10%. This universe currently consists of 324 funds. The Fund exceeded it by 0.92%
For the three-year period ended December 31, 2005, Lipper ranked the Fund 49th out of 247 funds and in the 20th percentile. For the five- year period ended December 31, 2005, Lipper ranked the Fund 24th out of 216 funds and in the 12th percentile. For the 10-year period ended December 31, 2005, Lipper ranked the Fund 16th out of 141 funds and in the 12th percentile.
As of December 31, 2005, the Fund's 30-day yield was 3.38%, which compares to a 5.20% taxable equivalent yield for a person in the highest federal income tax bracket (35%) in 2005.
In 2005, new issuance was $408.18 billion, surpassing the previous all-time high of $383.71 billion in 2003 and a 13.4% increase over 2004. In 2004, issuers sold $360.02 billion in bonds. Even though the Federal Reserve Board raised interest rates in 2005, long-term interest rates remained low and a flattened taxable yield curve was also significant. Of the $408.18 billion issued in 2005, $226.51 billion was for new money, $130.36 billion was for refunding, and $51.31 billion was for combined new money/refunding.
The market easily absorbed this volume and produced strong taxable equivalent returns despite the low yield/high supply environment. Municipal investors were rewarded for taking on somewhat more credit risk. Municipals rated Baa outperformed over the first three quarters of the year and for the year overall and the total return of the Lehman Brothers Municipal Long Index outperformed the Lehman Brothers Municipal 10-Year Index by 4.28% and the Lehman Brothers Municipal 1-Year Index by 5.57%.
In terms of total return performance in 2005, diversity and moderation by issuer, insurance, industry, sector and state continued to be the most rewarding. Our strategy was to buy some undervalued lower quality bonds in the short end of the curve while staying with higher quality throughout the curve. Continuous sensitivity to coupon and structure along with supply and demand factors also allowed the Fund to capture above average returns while maintaining an overall portfolio credit quality of AA (as noted by Standard and Poor's).
1 Total return is shown for Class A shares and does not take into account the current maximum sales charge of 4.5%.
About information in this report:
• It is important to consider the Fund's investment objectives, risks, fees and expenses before investing. All funds involve some risk, including possible loss of the principal amount invested. Investing in bond funds exposes you to the general risk of investing in the debt markets. Duration is a measure of bond price sensitivity to a given change in interest rates. Generally, the higher a bond's duration, the greater its price sensitivity to a given change in interest rates. Bond funds are subject to interest rate risk. When interest rates rise, bond prices generally fall, and when interest rates fall, bond prices generally rise. Currently interest rates are at historically low levels. Please keep in mind that in this kind of environment, the risk that bond prices may fall when interest rates is potentially greater.
Please see the "About Your Annual Report" page for a description of the Lehman Brothers Municipal Bond Index, the Lehman Brothers Municipal Long Index, the Lehman Municipal 10-Year Index and the Lehman Brothers Municipal 1-Year Index.
• ®2005 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Morningstar is not responsible for any damages or losses arising from any use of this information and has not granted its consent to be considered or deemed an "expert" under the Securities Act of 1933. Returns represent past performance and are no guarantee of future results. Morningstar's database of performance information is based on historical total returns, which assumes the reinvestment of dividends and distributions, and the deduction of all fund expenses.
• Lipper, Inc. is an independent mutual fund monitoring and rating service. Its database of performance information is based on historical returns, which assume the reinvestment of dividends and distributions and the deduction of all fund expenses. Lipper return figures do not reflect the deduction of any sales charges that an investor may pay when purchasing or redeeming shares of the Fund.
51
n The Guardian Tax-Exempt Fund
Annual Report to Shareholders
Top Ten Holdings (As of 12/31/2005)
Company | Coupon | Maturity Date | Percentage of Total Net Assets | ||||||||||||
North Carolina Educ. Facs. Fin. Agy. Rev. Duke Univ. | 3.490 | % | 12/1/2021 | 3.38 | % | ||||||||||
Ohio St. Bldg. Auth. Ref.-St. Facs. Hwy., | 5.000 | % | 10/1/2010 | 2.19 | % | ||||||||||
North Carolina St. Univ., NC Raleigh Rev. Gen Ser. A | 5.000 | % | 10/1/2024 | 2.18 | % | ||||||||||
California St. G.O. | 5.250 | % | 11/1/2027 | 2.18 | % | ||||||||||
New York St. Environmental Facs. | 5.000 | % | 6/15/2025 | 2.17 | % | ||||||||||
Minnesota St. Muni. Power Agy. | 5.250 | % | 10/1/2024 | 2.17 | % | ||||||||||
Pennsylvania St. Ref. | 5.000 | % | 10/1/2009 | 2.17 | % | ||||||||||
Massachusetts St. Cons. Ln. Ser. C, | 5.000 | % | 9/1/2025 | 2.16 | % | ||||||||||
Puerto Rico Comwlth. Hwy. &Trans. Auth. Rev. Ser. K | 5.000 | % | 7/1/2019 | 2.14 | % | ||||||||||
New York, NY City Tran. Fin. Auth. Fac. Rev. | 5.000 | % | 11/1/2008 | 2.14 | % |
Sector Allocation (As of 12/31/2005)
Average Annual Total Returns (For periods ended 12/31/2005)
Inception Date | 1 Yr | 5 Yrs | 10 Yrs | Since Inception | |||||||||||||||||||||||
Class A shares | (w/o sales charge) | 2/16/93 | 4.02 | % | 5.72 | % | 5.54 | % | 5.21 | % | |||||||||||||||||
(w/ sales charge) | 2/16/93 | –0.66 | % | 4.75 | % | 5.06 | % | 4.83 | % | ||||||||||||||||||
Class C shares | (w/o sales charge) | 8/7/00 | 3.24 | % | 4.92 | % | — | 5.48 | % | ||||||||||||||||||
(w/ sales charge) | 8/7/00 | 2.24 | % | 4.92 | % | — | 5.48 | % | |||||||||||||||||||
Lehman Brothers Municipal Bond Index | 3.51 | % | 5.59 | % | 5.71 | % | 6.05 | %* | |||||||||||||||||||
*Since Class A shares inception |
All performance data quoted is historical and the results represent past performance and neither guarantee nor predict future investment results. To obtain performance data current to the most recent month (available within 7 business days of the most recent month end), please call us at (800) 221-3253 or visit our website at www.guardianinvestor.com. Current performance may be higher or lower than the performance quoted here. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost.
Total return figures are historical and assume the reinvestment of dividends and distributions and the deduction of all Fund expenses. The return figures shown do not reflect the deduction of taxes that a shareholder may pay on distributions or redemption of shares. Total return figures for Class A shares do not take into account the current maximum sales charge of 4.5%, except where noted. Total return figures for Class C shares do not take into account the contingent deferred sales charges applicable to such shares (maximum of 1%) except where noted. Since June 1, 1994, the investment adviser for the Fund has assumed certain ordinary operating expenses for the Fund. Without this assumption of expenses, returns would have been lower.
52
n The Guardian Tax-Exempt Fund
Annual Report to Shareholders
Growth of a Hypothetical $10,000 Investment
To give you a comparison, the chart below shows the performance of a hypothetical $10,000 investment made 10 years ago in Class A shares of The Guardian Tax-Exempt Fund and the Lehman Brothers Municipal Bond Index. The starting point of $9,550 for Class A shares reflects the maximum sales charge of 4.5% that an investor may pay when purchasing Class A shares of the Fund. The Index begins at $10,000. This performance does not reflect the deduction of taxes that a shareholder may pay on distributions or redemption of shares. Returns represent past performance and are not indicative of future results. Index returns do not include the fees and expenses of the Fund, but do include the reinvestment of dividends.
Performance for Class C shares, which were first offered on August 7, 2000, will vary due to differences in sales load and other expenses charged to such share class.
Fund Expenses
By investing in the Fund, you incur two types of costs: (1) transaction costs, including, as applicable, sales charges on purchase payments, reinvested dividends, or other distributions; redemption fees and exchange fees; and (2) ongoing costs, including, as applicable, management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested on July 1, 2005 and held for six months ended December 31, 2005.
Actual Expenses
The first table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the applicable line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line in the table provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the table is useful in comparing
53
n The Guardian Tax-Exempt Fund
Annual Report to Shareholders
ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if transactional costs were included, your costs would have been higher.
Beginning Account Value July 1, 2005 | Ending Account Value December 31, 2005 | Expenses Paid During the Period* | Annualized Expense Ration | ||||||||||||||||
Class A | |||||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,001.70 | $ | 4.29 | 0.85 | % | |||||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,020.92 | $ | 4.33 | 0.85 | % | |||||||||||
Class C | |||||||||||||||||||
Actual | $ | 1,000.00 | $ | 997.90 | $ | 8.06 | 1.60 | % | |||||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,017.14 | $ | 8.13 | 1.60 | % |
* Expenses are equal to the Fund's annualized expense ratio for the Fund's Class A, and C shares, respectively, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the Fund's most recent fiscal half-year).
54
n The Guardian Cash Management Fund
Annual Report to Shareholders
Alexander M. Grant, Jr., Portfolio Manager
Objective:
Seeks as high a level of current income as is consistent with liquidity and preservation of capital
Portfolio:
Short-term money market investments
Inception Date:
November 3, 1982
Net Assets at
December 31, 2005:
$417,357,155
An Update from Fund Management
As of December 31, 2005 the effective 7-day net annualized yield for The Guardian Cash Management Fund was 3.45%. The Fund produced a total net annualized return of 2.41%. In contrast, the effective 7-day annualized yield of Tier One money market funds as measured by iMoneyNet, Inc. was 3.44%; total return for the same category was 2.44%. iMoneyNet, Inc. (formerly IBC Financial Data, Inc.) is a research firm that tracks money market funds.1
The Guardian Cash Management Fund is a place where our investors may put their money while they decide on a long-term investment vehicle, be it stocks or bonds. Also, some of our investors prefer the relative stability of the money markets. To best accommodate all our investors, we will continue to try to provide a strong 7-day yield, while offering safety and liquidity. Our investment strategy was to create a diversified portfolio of money market instruments that presents minimal credit risks according to our criteria. As always, we only purchased securities from issuers that had received ratings in the two highest credit quality categories established by nationally recognized statistical ratings organizations like Moody's Investors Service Inc. and Standard & Poor's Corporation for the Fund's portfolio. The portfolio was invested in commercial paper (64.8%), floating rate taxable municipal bonds (20.27%), repurchase agreem ents (4.18%), certificates of deposits (3.62%), short maturity corporate bonds (5.9%) and U.S. government agencies (1.19%).
Money market funds are directly affected by the actions of the Federal Reserve Board ("the Fed"). In June 2004, the Fed began tightening the overnight lending rate by 0.25% at each Federal Open Market Committee (FOMC) meeting. By December 31, 2005, the Fed Funds rate had risen to 4.25%, an increase of 2.00% in the calendar year. Throughout the year, money market issuers altered their rate offerings in response to monetary policy and stock market expectations.
The Fed Funds target is the rate at which banks can borrow from each other overnight. While the Fed does not set this rate, it can establish a target rate and, through open market operations, the Fed can move member banks in the direction of that target rate. The Discount Rate is the rate at which banks can borrow directly from the Fed. Another factor affecting performance was the portfolio's average maturity of 34 days as of December 31, 2005. The average Tier One money market fund as measured by iMoneyNet, Inc. had an average maturity of 38 days.
1 Yields are annualized historical figures. Effective yield assumes reinvested income. Yields will vary as interest rates change. Past performance is not a guarantee of future results.
About information in this report:
• It is important to consider the Fund's investment objectives, risks, fees and expenses before investing. All funds involve some risk, including possible loss of the principal amount invested.
• Please see the "About You Annual Report" page for a description of the Lehman Brothers 3-Month Treasury Bill Index.
• The Shares of The Guardian Cash Management Fund are not issued or guaranteed by the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Association (NCUA), the Federal Reserve Board or any other agency. Although the Fund seeks to preserve the value of an investment at $1.00 per share, it is possible to lose money by investing in the Fund.
55
n The Guardian Cash Management Fund
Annual Report to Shareholders
Portfolio Statistics (as of 12/31/2005)
Average Maturity (days) | 34 | ||||||
Yields: | |||||||
Effective 7-day Yield | With subsidy 3.51% Without subsidy 3.45% | ||||||
Current 7-day Yield | With subsidy 3.45% Without subsidy 3.39% |
Annualized historical yields for the 7-day periods ended December 31, 2005. Effective yield assumes reinvested income. Yields will vary. The yield figures cited represent yield for Class A shares.
Sector Allocation (as of 12/31/2005)
Average Annual Total Returns (For periods ended 12/31/2005)
Inception Date | 1 Yr | 3 Yrs | 5 Yrs | 10 Yrs | Since Inception | ||||||||||||||||||||||||||
Class A shares | (w/o sales charge) | 9/13/82 | 2.41 | % | 1.11 | % | 1.51 | % | 3.17 | % | 4.92 | % | |||||||||||||||||||
Class B shares | (w/o sales charge) | 5/1/96 | 1.76 | % | 0.84 | % | 1.04 | % | — | 2.82 | % | ||||||||||||||||||||
(w/ sales charge) | 5/1/96 | –1.24 | % | 0.18 | % | 0.85 | % | — | 2.82 | % | |||||||||||||||||||||
Class C shares | (w/o sales charge) | 8/7/00 | 1.76 | % | 0.84 | % | 1.04 | % | — | 1.34 | % | ||||||||||||||||||||
(w/ sales charge) | 8/7/00 | 0.76 | % | 0.84 | % | 1.04 | % | — | 1.34 | % | |||||||||||||||||||||
Class K shares | (w/o sales charge) | 5/15/01 | 2.00 | % | 0.88 | % | — | — | 0.96 | % | |||||||||||||||||||||
(w/ sales charge) | 5/15/01 | 1.00 | % | 0.88 | % | — | — | 0.96 | % | ||||||||||||||||||||||
Lehman Brothers 3 Month T-Bill Index | 3.07 | % | 1.83 | % | 2.34 | % | 3.89 | % | 4.10 | %* | |||||||||||||||||||||
*Since Class A shares inception |
All performance data quoted is historical and the results represent past performance and neither guarantee nor predict future investment results. To obtain performance data current to the most recent month (available within 7 business days of the most recent month end), please call us at (800) 221-3253 or visit our website at www.guardianinvestor.com. Current performance may be higher or lower than the performance quoted here. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost.
Total return figures are historical and assume the reinvestment of dividends and distributions and the deduction of all Fund expenses. The return figures shown do not reflect the deduction of taxes that a shareholder may pay on distributions or redemption of shares. Total return figures for Class B, Class C and Class K shares do not take into account the contingent deferred sales charge applicable to such shares (maximum 3% for Class B shares and 1% for Class C and Class K shares), except where noted. Since June 1, 1994, the investment adviser for the Fund has assumed certain ordinary operating expenses of the Fund. Without these expense assumptions, the returns would have been lower.
56
n The Guardian Cash Management Fund
Annual Report to Shareholders
Fund Expenses
By investing in the Fund, you incur two types of costs: (1) transaction costs, including sales charges on purchase payments, reinvested dividends, or other distributions; redemption fees and exchange fees; and (2) ongoing costs, including, as applicable, management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested on July 1, 2005 and held for six months ended December 31, 2005.
Actual Expenses
The first line in the table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the applicable line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line in the table provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if transactional costs were included, your costs would have been higher.
Beginning Account Value July 1, 2005 | Ending Account Value December 31, 2005 | Expenses Paid During the Period* | Annualized Expense Ratio | ||||||||||||||||
Class A | |||||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,014.70 | $ | 4.32 | 0.85 | % | |||||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,020.92 | $ | 4.33 | 0.85 | % | |||||||||||
Class B | |||||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,010.80 | $ | 7.45 | 1.47 | % | |||||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,017.80 | $ | 7.48 | 1.47 | % | |||||||||||
Class C | |||||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,010.80 | $ | 7.45 | 1.47 | % | |||||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,017.80 | $ | 7.48 | 1.47 | % | |||||||||||
Class K | |||||||||||||||||||
Actual | $ | 1,000.00 | $ | 1,012.60 | $ | 6.34 | 1.25 | % | |||||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,018.90 | $ | 6.36 | 1.25 | % |
* Expenses are equal to the Fund's annualized expense ratio for the Fund's Class A, B, C and K shares, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the Fund's most recent fiscal half-year).
57
n The Guardian Park Avenue Fund
Schedule of Investments
December 31, 2005
Shares | Value | ||||||||||
Common Stocks — 99.8% | |||||||||||
Aerospace and Defense — 3.8% | |||||||||||
192,400 | Boeing Co. | $ | 13,514,176 | ||||||||
98,000 | General Dynamics Corp. | 11,176,900 | |||||||||
162,200 | United Technologies Corp. | 9,068,602 | |||||||||
33,759,678 | |||||||||||
Beverages — 1.3% | |||||||||||
195,600 | PepsiCo., Inc. | 11,556,048 | |||||||||
Biotechnology — 1.6% | |||||||||||
180,400 | Amgen, Inc.* | 14,226,344 | |||||||||
Capital Markets — 3.0% | |||||||||||
85,100 | Affiliated Managers Group, Inc.* | 6,829,275 | |||||||||
82,600 | Goldman Sachs Group, Inc. | 10,548,846 | |||||||||
68,800 | Lehman Brothers Hldgs., Inc. | 8,818,096 | |||||||||
26,196,217 | |||||||||||
Chemicals — 0.6% | |||||||||||
105,700 | Rohm & Haas Co. | 5,117,994 | |||||||||
Commercial Banks — 4.3% | |||||||||||
340,100 | Bank of America Corp. | 15,695,615 | |||||||||
424,400 | Wachovia Corp. | 22,433,784 | |||||||||
38,129,399 | |||||||||||
Commercial Services and Supplies — 0.6% | |||||||||||
130,500 | Robert Half Int'l., Inc. | 4,944,645 | |||||||||
Communications Equipment — 2.3% | |||||||||||
790,200 | Cisco Systems, Inc.* | 13,528,224 | |||||||||
163,700 | QUALCOMM, Inc. | 7,052,196 | |||||||||
20,580,420 | |||||||||||
Computers and Peripherals — 4.6% | |||||||||||
89,200 | Apple Computer, Inc.* | 6,412,588 | |||||||||
823,300 | EMC Corp.* | 11,213,346 | |||||||||
407,400 | Hewlett Packard Co. | 11,663,862 | |||||||||
139,200 | Int'l. Business Machines | 11,442,240 | |||||||||
40,732,036 | |||||||||||
Consumer Finance — 1.6% | |||||||||||
101,200 | American Express Co. | 5,207,752 | |||||||||
106,400 | Capital One Financial Corp. | 9,192,960 | |||||||||
14,400,712 | |||||||||||
Diversified Financial Services — 3.1% | |||||||||||
556,766 | Citigroup, Inc. | 27,019,854 | |||||||||
Diversified Telecommunication Services — 3.8% | |||||||||||
1,367,697 | AT & T, Inc. | 33,494,899 | |||||||||
Electric Utilities — 1.3% | |||||||||||
213,000 | Exelon Corp. | 11,318,820 | |||||||||
Electrical Equipment — 1.6% | |||||||||||
230,800 | Rockwell Automation, Inc. | 13,654,128 | |||||||||
Electronic Equipment and Instruments — 0.6% | |||||||||||
140,600 | Jabil Circuit, Inc.* | 5,214,854 | |||||||||
Energy Equipment and Services — 1.2% | |||||||||||
156,500 | Transocean, Inc.* | 10,906,485 | |||||||||
Food and Staples Retailing — 1.4% | |||||||||||
259,200 | Wal-Mart Stores, Inc. | 12,130,560 | |||||||||
Food Products — 3.8% | |||||||||||
137,200 | Bunge Ltd. | 7,766,892 | |||||||||
297,500 | Dean Foods Co.* | 11,203,850 | |||||||||
301,400 | General Mills, Inc. | 14,865,048 | |||||||||
33,835,790 |
Shares | Value | ||||||||||
Health Care Equipment and Supplies — 1.6% | |||||||||||
117,100 | Fisher Scientific Int'l., Inc.* | $ | 7,243,806 | ||||||||
131,600 | St. Jude Medical, Inc.* | 6,606,320 | |||||||||
13,850,126 | |||||||||||
Health Care Providers and Services — 2.0% | |||||||||||
120,000 | McKesson Corp. | 6,190,800 | |||||||||
189,100 | UnitedHealth Group, Inc. | 11,750,674 | |||||||||
17,941,474 | |||||||||||
Hotels, Restaurants and Leisure — 2.2% | |||||||||||
573,200 | McDonald's Corp. | 19,328,304 | |||||||||
Household Durables — 1.6% | |||||||||||
195,000 | KB Home | 14,168,700 | |||||||||
Household Products — 4.2% | |||||||||||
198,700 | Colgate-Palmolive Co. | 10,898,695 | |||||||||
446,500 | Procter & Gamble Co. | 25,843,420 | |||||||||
36,742,115 | |||||||||||
Industrial Conglomerates — 2.9% | |||||||||||
504,700 | General Electric Co. | 17,689,735 | |||||||||
257,100 | Tyco Int'l. Ltd. | 7,419,906 | |||||||||
25,109,641 | |||||||||||
Information Technology Services — 0.7% | |||||||||||
110,800 | Affiliated Computer Svcs., Inc. – Class A* | 6,557,144 | |||||||||
Insurance — 4.5% | |||||||||||
246,500 | Allstate Corp. | 13,328,255 | |||||||||
275,500 | Aon Corp. | 9,904,225 | |||||||||
195,300 | Fidelity National Financial, Inc. | 7,185,087 | |||||||||
269,700 | Genworth Financial, Inc. – Class A | 9,326,226 | |||||||||
39,743,793 | |||||||||||
Internet and Catalog Retail — 0.9% | |||||||||||
174,600 | eBay, Inc.* | 7,551,450 | |||||||||
Internet Software and Services — 0.5% | |||||||||||
109,500 | Yahoo! Inc.* | 4,290,210 | |||||||||
Machinery — 3.2% | |||||||||||
329,600 | Caterpillar, Inc. | 19,040,992 | |||||||||
222,600 | Ingersoll-Rand Co. Ltd. – Class A | 8,986,362 | |||||||||
28,027,354 | |||||||||||
Media — 2.6% | |||||||||||
640,400 | Time Warner, Inc. | 11,168,576 | |||||||||
359,400 | Viacom, Inc. – Class B* | 11,716,440 | |||||||||
22,885,016 | |||||||||||
Multiline Retail — 1.4% | |||||||||||
223,200 | J.C. Penney Co., Inc. | 12,409,920 | |||||||||
Multi-Utilities — 0.9% | |||||||||||
101,700 | Dominion Resources, Inc. | 7,851,240 | |||||||||
Office Electronics — 0.7% | |||||||||||
111,900 | Canon, Inc. ADR | 6,583,077 | |||||||||
Oil, Gas and Consumable Fuels — 7.6% | |||||||||||
332,100 | Chevron Corp. | 18,853,317 | |||||||||
162,900 | Cimarex Energy Co.* | 7,006,329 | |||||||||
277,100 | ConocoPhillips | 16,121,678 | |||||||||
307,600 | Noble Energy, Inc. | 12,396,280 | |||||||||
155,500 | Occidental Petroleum Corp. | 12,421,340 | |||||||||
66,798,944 |
See notes to financial statements.
58
n The Guardian Park Avenue Fund
Schedule of Investments (Continued)
December 31, 2005
Shares | Value | ||||||||||
Pharmaceuticals — 7.5% | |||||||||||
224,100 | Abbott Laboratories | $ | 8,836,263 | ||||||||
126,500 | AstraZeneca PLC ADR | 6,147,900 | |||||||||
187,740 | Johnson & Johnson | 11,283,174 | |||||||||
712,440 | Pfizer, Inc. | 16,614,101 | |||||||||
495,400 | Wyeth | 22,823,078 | |||||||||
65,704,516 | |||||||||||
Road and Rail — 1.6% | |||||||||||
195,500 | Burlington Northern Santa Fe | 13,845,310 | |||||||||
Semiconductors and Semiconductor Equipment — 3.1% | |||||||||||
704,100 | Intel Corp. | 17,574,336 | |||||||||
291,300 | Texas Instruments, Inc. | 9,341,991 | |||||||||
26,916,327 | |||||||||||
Software — 3.1% | |||||||||||
165,100 | Adobe Systems, Inc. | 6,102,096 | |||||||||
219,200 | BMC Software, Inc.* | 4,491,408 | |||||||||
652,000 | Microsoft Corp. | 17,049,800 | |||||||||
27,643,304 | |||||||||||
Specialty Retail — 1.0% | |||||||||||
220,400 | Home Depot, Inc. | 8,921,792 | |||||||||
Thrifts and Mortgage Finance — 2.8% | |||||||||||
319,700 | Countrywide Financial Corp. | 10,930,543 | |||||||||
213,700 | Federal Home Loan Mortgage Corp. | 13,965,295 | |||||||||
24,895,838 | |||||||||||
Tobacco — 1.6% | |||||||||||
190,700 | Altria Group, Inc. | 14,249,104 | |||||||||
Wireless Telecommunication Services — 1.1% | |||||||||||
367,200 | American Tower Corp.* | 9,951,120 | |||||||||
Total Common Stocks (Cost $779,065,996) | 879,184,702 | ||||||||||
Principal Amount | Value | ||||||||||
Repurchase Agreement — 0.2% | |||||||||||
$ | 1,874,000 | State Street Bank and Trust Co. | |||||||||
repurchase agreement, | |||||||||||
dated 12/30/2005, maturity | |||||||||||
value of $1,874,858 at | |||||||||||
4.12%, due 1/3/2006 (1) | |||||||||||
(Cost $1,874,000) | $ | 1,874,000 | |||||||||
Total Investments — 100.0% (Cost $780,939,996) | 881,058,702 | ||||||||||
Cash, Receivables, and Other Assets Less Liabilities — 0.0% | 8,366 | ||||||||||
Net Assets — 100% | $ | 881,067,068 |
* Non-income producing security.
(1) The repurchase agreement is fully collateralized by $1,905,000 in U.S. Government Agency, 5.50%, due 11/16/2015, with a value of $1,914,525.
Glossary:
ADR — American Depositary Receipt.
See notes to financial statements.
59
n The Guardian UBS Large Cap Value Fund
Schedule of Investments
December 31, 2005
Shares | Value | ||||||||||
Common Stocks — 95.1% | |||||||||||
Aerospace and Defense — 3.0% | |||||||||||
26,700 | Lockheed Martin Corp. | $ | 1,698,921 | ||||||||
19,000 | Northrop Grumman Corp. | 1,142,090 | |||||||||
2,841,011 | |||||||||||
Air Freight and Logistics — 1.8% | |||||||||||
15,900 | FedEx Corp. | 1,643,901 | |||||||||
Auto Components — 2.8% | |||||||||||
14,300 | BorgWarner, Inc. | 867,009 | |||||||||
23,600 | Johnson Controls, Inc. | 1,720,676 | |||||||||
2,587,685 | |||||||||||
Automobiles — 0.8% | |||||||||||
14,400 | Harley-Davidson, Inc. | 741,456 | |||||||||
Beverages — 1.2% | |||||||||||
26,000 | Anheuser-Busch Cos., Inc. | 1,116,960 | |||||||||
Biotechnology — 1.3% | |||||||||||
18,800 | Cephalon, Inc.* | 1,217,112 | |||||||||
Building Products — 1.6% | |||||||||||
48,800 | Masco Corp. | 1,473,272 | |||||||||
Capital Markets — 7.7% | |||||||||||
62,700 | Mellon Financial Corp. | 2,147,475 | |||||||||
68,500 | Morgan Stanley | 3,886,690 | |||||||||
22,500 | Northern Trust Corp. | 1,165,950 | |||||||||
7,200,115 | |||||||||||
Commercial Banks — 10.1% | |||||||||||
34,556 | Bank of America Corp. | 1,594,760 | |||||||||
57,900 | Fifth Third Bancorp | 2,183,988 | |||||||||
28,300 | PNC Financial Svcs. Group | 1,749,789 | |||||||||
62,600 | Wells Fargo & Co. | 3,933,158 | |||||||||
9,461,695 | |||||||||||
Commercial Services and Supplies — 0.9% | |||||||||||
50,800 | Cendant Corp. | 876,300 | |||||||||
Diversified Financial Services — 9.3% | |||||||||||
100,900 | Citigroup, Inc. | 4,896,677 | |||||||||
96,800 | J.P. Morgan Chase & Co. | 3,841,992 | |||||||||
8,738,669 | |||||||||||
Diversified Telecommunication Services — 1.8% | |||||||||||
69,200 | AT & T, Inc. | 1,694,708 | |||||||||
Electric Utilities — 6.5% | |||||||||||
46,800 | American Electric Power, Inc. | 1,735,812 | |||||||||
43,700 | Exelon Corp. | 2,322,218 | |||||||||
23,400 | FirstEnergy Corp. | 1,146,366 | |||||||||
37,300 | Pepco Hldgs., Inc. | 834,401 | |||||||||
6,038,797 | |||||||||||
Energy Equipment and Services — 1.7% | |||||||||||
9,600 | Baker Hughes, Inc. | 583,488 | |||||||||
21,900 | GlobalSantaFe Corp. | 1,054,485 | |||||||||
1,637,973 | |||||||||||
Food and Staples Retailing — 3.5% | |||||||||||
42,000 | Costco Wholesale Corp. | 2,077,740 | |||||||||
63,100 | Kroger Co.* | 1,191,328 | |||||||||
3,269,068 |
Shares | Value | ||||||||||
Health Care Providers and Services — 3.9% | |||||||||||
8,900 | Caremark Rx, Inc.* | $ | 460,931 | ||||||||
23,900 | Medco Health Solutions, Inc.* | 1,333,620 | |||||||||
30,600 | UnitedHealth Group, Inc. | 1,901,484 | |||||||||
3,696,035 | |||||||||||
Information Technology Services — 1.2% | |||||||||||
40,000 | Accenture Ltd. – Class A | 1,154,800 | |||||||||
Insurance — 5.2% | |||||||||||
46,600 | American Int'l. Group, Inc. | 3,179,518 | |||||||||
19,500 | Hartford Financial Svcs. Group, Inc. | 1,674,855 | |||||||||
4,854,373 | |||||||||||
Internet and Catalog Retail — 1.4% | |||||||||||
53,900 | Expedia, Inc.* | 1,291,444 | |||||||||
Machinery — 2.1% | |||||||||||
22,400 | Illinois Tool Works, Inc. | 1,970,976 | |||||||||
Media — 5.1% | |||||||||||
3,662 | CCE Spinco, Inc.* | 47,972 | |||||||||
29,300 | Clear Channel Comm., Inc. | 921,485 | |||||||||
22,800 | Omnicom Group, Inc. | 1,940,964 | |||||||||
56,600 | The DIRECTV Group, Inc.* | 799,192 | |||||||||
36,400 | Univision Comm., Inc. – Class A* | 1,069,796 | |||||||||
4,779,409 | |||||||||||
Multi-Utilities — 1.5% | |||||||||||
24,600 | NiSource, Inc. | 513,156 | |||||||||
20,100 | Sempra Energy | 901,284 | |||||||||
1,414,440 | |||||||||||
Oil, Gas and Consumable Fuels — 6.7% | |||||||||||
58,700 | Exxon Mobil Corp. | 3,297,179 | |||||||||
49,100 | Marathon Oil Corp. | 2,993,627 | |||||||||
6,290,806 | |||||||||||
Pharmaceuticals — 4.2% | |||||||||||
35,200 | Bristol-Myers Squibb Corp. | 808,896 | |||||||||
14,700 | Johnson & Johnson | 883,470 | |||||||||
48,500 | Wyeth | 2,234,395 | |||||||||
3,926,761 | |||||||||||
Road and Rail — 2.1% | |||||||||||
27,300 | Burlington Northern Santa Fe | 1,933,386 | |||||||||
Software — 2.2% | |||||||||||
77,000 | Microsoft Corp. | 2,013,550 | |||||||||
Thrifts and Mortgage Finance — 2.6% | |||||||||||
37,500 | Federal Home Loan Mortgage Corp. | 2,450,625 | |||||||||
Wireless Telecommunication Services — 2.9% | |||||||||||
115,342 | Sprint Nextel Corp. | 2,694,389 | |||||||||
Total Common Stocks (Cost $67,270,675) | 89,009,716 | ||||||||||
Exchange-Traded Fund — 3.4% | |||||||||||
26,000 | S&P Depositary Receipts Trust | ||||||||||
Series I | |||||||||||
exp. 12/31/2099 | |||||||||||
(Cost $3,225,239) | $ | 3,237,260 |
See notes to financial statements.
60
n The Guardian UBS Large Cap Value Fund
Schedule of Investments (Continued)
December 31, 2005
Principal Amount | Value | ||||||||||
Repurchase Agreement — 1.6% | |||||||||||
$ | 1,488,000 | State Street Bank and Trust Co. | |||||||||
repurchase agreement, | |||||||||||
dated 12/30/2005, maturity | |||||||||||
value of $1,488,681 at | |||||||||||
4.12%, due 1/3/2006 (1) | |||||||||||
(Cost $1,488,000) | $ | 1,488,000 | |||||||||
Total Investments — 100.1% (Cost $71,983,914) | 93,734,976 | ||||||||||
Liabilities in Excess of Cash, Receivables and Other Assets — (0.1)% | (135,959 | ) | |||||||||
Net Assets — 100% | $ | 93,599,017 |
* Non-income producing security.
(1) The repurchase agreement is fully collateralized by $1,515,000 in U.S. Government Agency, 5.50%, due 11/16/2015, with a value of $1,522,575.
See notes to financial statements.
61
n The Guardian Park Avenue Small Cap Fund
Schedule of Investments
December 31, 2005
Shares | Value | ||||||||||
Common Stocks — 100.1% | |||||||||||
Aerospace and Defense — 1.6% | |||||||||||
66,800 | AAR Corp.* | $ | 1,599,860 | ||||||||
37,900 | Aviall, Inc.* | 1,091,520 | |||||||||
2,691,380 | |||||||||||
Air Freight and Logistics — 1.0% | |||||||||||
17,900 | UTi Worldwide, Inc. | 1,661,836 | |||||||||
Airlines — 1.2% | |||||||||||
72,000 | Skywest, Inc. | 1,933,920 | |||||||||
Auto Components — 0.7% | |||||||||||
64,100 | American Axle & Mfg. Hldgs., Inc. | 1,174,953 | |||||||||
Biotechnology — 3.9% | |||||||||||
21,200 | Albany Molecular Research, Inc.* | 257,580 | |||||||||
14,000 | Alkermes, Inc.* | 267,680 | |||||||||
6,700 | Amylin Pharmaceuticals, Inc.* | 267,464 | |||||||||
21,800 | Cotherix, Inc.* | 231,516 | |||||||||
12,100 | Cubist Pharmaceuticals, Inc.* | 257,125 | |||||||||
9,100 | Digene Corp.* | 265,447 | |||||||||
14,400 | Idenix Pharmaceuticals, Inc.* | 246,384 | |||||||||
17,500 | Illumina, Inc.* | 246,750 | |||||||||
108,700 | Immunicon Corp.* | 372,841 | |||||||||
46,600 | Incyte Corp.* | 248,844 | |||||||||
16,000 | InterMune, Inc.* | 268,800 | |||||||||
64,000 | Keryx Biopharmaceuticals, Inc.* | 936,960 | |||||||||
4,200 | Neurocrine Biosciences, Inc.* | 263,466 | |||||||||
10,700 | Progenics Pharmaceuticals, Inc.* | 267,607 | |||||||||
44,900 | Protein Design Labs., Inc.* | 1,276,058 | |||||||||
13,600 | Serologicals Corp.* | 268,464 | |||||||||
3,700 | United Therapeutics Corp.* | 255,744 | |||||||||
9,300 | Vertex Pharmaceuticals, Inc.* | 257,331 | |||||||||
6,456,061 | |||||||||||
Building Products — 0.6% | |||||||||||
36,100 | Trex Co., Inc.* | 1,012,605 | |||||||||
Capital Markets — 5.8% | |||||||||||
61,500 | Affiliated Managers Group, Inc.* | 4,935,375 | |||||||||
112,500 | Apollo Investment Corp. | 2,017,125 | |||||||||
65,200 | Nuveen Investments | 2,778,824 | |||||||||
9,731,324 | |||||||||||
Chemicals — 3.7% | |||||||||||
26,400 | Albemarle Corp. | 1,012,440 | |||||||||
83,600 | Georgia Gulf Corp. | 2,543,112 | |||||||||
26,700 | Lubrizol Corp. | 1,159,581 | |||||||||
76,100 | Olin Corp. | 1,497,648 | |||||||||
6,212,781 | |||||||||||
Commercial Banks — 3.5% | |||||||||||
34,800 | Center Financial Corp. | 875,568 | |||||||||
48,300 | East West Bancorp, Inc. | 1,762,467 | |||||||||
11,800 | Placer Sierra Bancshares | 326,978 | |||||||||
30,400 | Signature Bank* | 853,328 | |||||||||
21,900 | Sterling Bancorp | 432,087 | |||||||||
26,900 | SVB Financial Group* | 1,259,996 | |||||||||
13,500 | Vineyard National Bancorp Co. | 416,340 | |||||||||
5,926,764 | |||||||||||
Commercial Services and Supplies — 6.0% | |||||||||||
103,600 | Knoll, Inc. | 1,772,596 | |||||||||
76,800 | Korn/Ferry Int'l.* | 1,435,392 | |||||||||
103,900 | Labor Ready, Inc.* | 2,163,198 | |||||||||
95,000 | Resources Connection, Inc.* | 2,475,700 | |||||||||
36,700 | Stericycle, Inc.* | 2,160,896 | |||||||||
10,007,782 |
Shares | Value | ||||||||||
Communications Equipment — 2.1% | |||||||||||
221,900 | Arris Group, Inc.* | $ | 2,101,393 | ||||||||
96,100 | Polycom, Inc.* | 1,470,330 | |||||||||
3,571,723 | |||||||||||
Computers and Peripherals — 1.4% | |||||||||||
71,000 | Palm, Inc.* | 2,257,800 | |||||||||
Diversified Consumer Services — 0.9% | |||||||||||
46,700 | Universal Technical Institute, Inc.* | 1,444,898 | |||||||||
Diversified Telecommunication Services — 2.0% | |||||||||||
135,400 | Iowa Telecom. Svcs., Inc. | 2,097,346 | |||||||||
105,700 | Valor Comm. Group, Inc. | 1,204,980 | |||||||||
3,302,326 | |||||||||||
Electric Utilities — 1.5% | |||||||||||
45,300 | ITC Hldgs. Corp. | 1,272,477 | |||||||||
57,700 | Weststar Energy, Inc. | 1,240,550 | |||||||||
2,513,027 | |||||||||||
Electronic Equipment and Instruments — 2.5% | |||||||||||
100,500 | Benchmark Electronics, Inc.* | 3,379,815 | |||||||||
34,100 | Plexus Corp.* | 775,434 | |||||||||
4,155,249 | |||||||||||
Energy Equipment and Services — 1.7% | |||||||||||
101,200 | Key Energy Svcs., Inc.* | 1,363,164 | |||||||||
47,500 | TETRA Technologies, Inc.* | 1,449,700 | |||||||||
2,812,864 | |||||||||||
Food Products — 3.1% | |||||||||||
49,300 | Flowers Foods, Inc. | 1,358,708 | |||||||||
83,000 | Hain Celestial Group, Inc.* | 1,756,280 | |||||||||
81,000 | Lance, Inc. | 1,509,030 | |||||||||
34,000 | TreeHouse Foods, Inc.* | 636,480 | |||||||||
5,260,498 | |||||||||||
Health Care Equipment and Supplies — 3.3% | |||||||||||
91,600 | American Medical Systems Hldgs., Inc.* | 1,633,228 | |||||||||
48,000 | DJ Orthopedics, Inc.* | 1,323,840 | |||||||||
66,700 | Immucor, Inc.* | 1,558,112 | |||||||||
14,900 | Integra LifeSciences Hldgs.* | 528,354 | |||||||||
19,900 | Kensey Nash Corp.* | 438,397 | |||||||||
5,481,931 | |||||||||||
Hotels, Restaurants and Leisure — 2.8% | |||||||||||
22,100 | Fairmont Hotels & Resorts, Inc. | 937,261 | |||||||||
34,100 | Rare Hospitality Int'l., Inc.* | 1,036,299 | |||||||||
91,800 | Sonic Corp.* | 2,708,100 | |||||||||
4,681,660 | |||||||||||
Household Durables — 4.3% | |||||||||||
20,400 | Meritage Homes Corp.* | 1,283,568 | |||||||||
42,300 | Snap-On, Inc. | 1,588,788 | |||||||||
60,200 | Standard Pacific Corp. | 2,215,360 | |||||||||
78,100 | WCI Communities, Inc.* | 2,096,985 | |||||||||
7,184,701 | |||||||||||
Insurance — 3.0% | |||||||||||
53,700 | Endurance Specialty Hldgs. Ltd. | 1,925,145 | |||||||||
73,200 | Hanover Insurance Group, Inc. | 3,057,564 | |||||||||
4,982,709 | |||||||||||
Internet and Catalog Retail — 1.5% | |||||||||||
131,700 | Insight Enterprises, Inc.* | 2,582,637 | |||||||||
Internet Software and Services — 0.5% | |||||||||||
37,700 | WebEx Comm., Inc.* | 815,451 |
See notes to financial statements.
62
n The Guardian Park Avenue Small Cap Fund
Schedule of Investments (Continued)
December 31, 2005
Shares | Value | ||||||||||
Machinery — 1.0% | |||||||||||
55,400 | Watts Water Technologies, Inc. | $ | 1,678,066 | ||||||||
Media — 1.1% | |||||||||||
112,100 | Gray Television, Inc. | 1,100,822 | |||||||||
64,200 | Lin TV Corp.* | 715,188 | |||||||||
1,816,010 | |||||||||||
Metals and Mining — 1.0% | |||||||||||
64,800 | Century Aluminum Co.* | 1,698,408 | |||||||||
Oil, Gas and Consumable Fuels — 6.2% | |||||||||||
47,900 | Alon USA Energy, Inc.* | 941,235 | |||||||||
38,400 | Bill Barrett Corp.* | 1,482,624 | |||||||||
38,900 | Cimarex Energy Co.* | 1,673,089 | |||||||||
59,600 | DCP Midstream Partners LP* | 1,459,008 | |||||||||
40,500 | Goodrich Petroleum Corp.* | 1,018,575 | |||||||||
211,600 | Int'l. Coal Group, Inc.* | 2,010,200 | |||||||||
32,200 | Teekay LNG Partners LP | 953,764 | |||||||||
25,300 | TEPPCO Partners LP | 881,452 | |||||||||
10,419,947 | |||||||||||
Personal Products — 0.6% | |||||||||||
74,800 | Playtex Products, Inc.* | 1,022,516 | |||||||||
Pharmaceuticals — 1.7% | |||||||||||
66,000 | Barrier Therapeutics, Inc.* | 541,200 | |||||||||
226,800 | Discovery Laboratories, Inc.* | 1,515,024 | |||||||||
49,250 | Salix Pharmaceuticals Ltd.* | 865,815 | |||||||||
2,922,039 | |||||||||||
Real Estate — 5.7% | |||||||||||
11,000 | Alexandria Real Estate Equities | 885,500 | |||||||||
13,800 | Federal Realty Investment Trust | 836,970 | |||||||||
22,100 | Home Pptys., Inc. | 901,680 | |||||||||
45,400 | Reckson Assocs. Realty Corp. | 1,633,492 | |||||||||
69,900 | Redwood Trust, Inc. | 2,884,074 | |||||||||
84,300 | Tanger Factory Outlet Centers, Inc. | 2,422,782 | |||||||||
9,564,498 | |||||||||||
Road and Rail — 1.0% | |||||||||||
83,300 | Werner Enterprises, Inc. | 1,641,010 | |||||||||
Semiconductors and Semiconductor Equipment — 5.7% | |||||||||||
130,600 | Cypress Semiconductor Corp.* | 1,861,050 | |||||||||
109,800 | Netlogic Microsystems, Inc.* | 2,990,952 | |||||||||
148,900 | Silicon Image, Inc.* | 1,347,545 | |||||||||
76,500 | Varian Semiconductor Equipment Assoc., Inc.* | 3,360,645 | |||||||||
9,560,192 | |||||||||||
Software — 7.7% | |||||||||||
57,500 | Blackboard, Inc.* | 1,666,350 | |||||||||
73,700 | FactSet Research Systems, Inc. | 3,033,492 | |||||||||
276,100 | Informatica Corp.* | 3,313,200 | |||||||||
130,400 | Internet Security Systems, Inc.* | 2,731,880 | |||||||||
340,000 | Parametric Technology Corp.* | 2,074,000 | |||||||||
12,818,922 | |||||||||||
Specialty Retail — 4.1% | |||||||||||
54,000 | Aeropostale, Inc.* | 1,420,200 | |||||||||
87,400 | bebe stores, inc. | 1,226,222 | |||||||||
289,200 | Blockbuster, Inc. – Class A | 1,084,500 | |||||||||
33,700 | Build-A-Bear Workshop, Inc.* | 998,868 | |||||||||
43,600 | The Sports Authority, Inc.* | 1,357,268 | |||||||||
17,400 | Zumiez, Inc.* | 752,028 | |||||||||
6,839,086 |
Shares | Value | ||||||||||
Thrifts and Mortgage Finance — 4.2% | |||||||||||
194,000 | BankAtlantic Bancorp, Inc. | $ | 2,716,000 | ||||||||
36,500 | BankUnited Financial Corp. | 969,805 | |||||||||
152,000 | Commercial Capital Bancorp, Inc. | 2,602,240 | |||||||||
14,800 | Triad Guaranty, Inc.* | 651,052 | |||||||||
6,939,097 | |||||||||||
Trading Companies and Distributors — 1.5% | |||||||||||
67,600 | Hughes Supply, Inc. | 2,423,460 | |||||||||
Total Common Stocks (Cost $155,071,779) | 167,200,131 | ||||||||||
Principal Amount | Value | ||||||||||
Repurchase Agreement — 0.8% | |||||||||||
$ | 1,395,000 | State Street Bank and Trust Co. | |||||||||
repurchase agreement, | |||||||||||
dated 12/30/2005, maturity | |||||||||||
value of $1,395,639 at | |||||||||||
4.12%, due 1/3/2006 (1) | |||||||||||
(Cost $1,395,000) | $ | 1,395,000 | |||||||||
Total Investments — 100.9% (Cost $156,466,779) | 168,595,131 | ||||||||||
Liabilities in Excess of Cash, Receivables and Other Assets — (0.9)% | (1,566,393 | ) | |||||||||
Net Assets — 100% | $ | 167,028,738 |
* Non-income producing security.
(1) The repurchase agreement is fully collateralized by $1,420,000 in U.S. Government Agency, 5.50%, due 11/16/2015, with a value of $1,427,100.
See notes to financial statements.
63
n The Guardian UBS Small Cap Value Fund
Schedule of Investments
December 31, 2005
Shares | Value | ||||||||||
Common Stocks — 96.0% | |||||||||||
Aerospace and Defense — 3.3% | |||||||||||
20,800 | Esterline Technologies Corp.* | $ | 773,552 | ||||||||
18,900 | Triumph Group, Inc.* | 691,929 | |||||||||
1,465,481 | |||||||||||
Airlines — 3.0% | |||||||||||
46,100 | AMR Corp.* | 1,024,803 | |||||||||
47,900 | Pinnacle Airlines Corp.* | 319,493 | |||||||||
1,344,296 | |||||||||||
Auto Components — 1.4% | |||||||||||
33,900 | American Axle & Mfg. Hldgs., Inc. | 621,387 | |||||||||
Automobiles — 1.1% | |||||||||||
14,700 | Winnebago Inds., Inc. | 489,216 | |||||||||
Biotechnology — 0.8% | |||||||||||
18,700 | Alkermes, Inc.* | 357,544 | |||||||||
700 | Keryx Biopharmaceuticals, Inc.* | 10,248 | |||||||||
367,792 | |||||||||||
Building Products — 2.3% | |||||||||||
15,600 | American Woodmark Corp. | 386,724 | |||||||||
22,700 | Trex Co., Inc.* | 636,735 | |||||||||
1,023,459 | |||||||||||
Capital Markets — 3.1% | |||||||||||
50,400 | Apollo Investment Corp. | 903,672 | |||||||||
14,400 | Lazard Ltd. | 459,360 | |||||||||
1,363,032 | |||||||||||
Chemicals — 2.3% | |||||||||||
16,800 | Airgas, Inc. | 552,720 | |||||||||
10,900 | Lubrizol Corp. | 473,387 | |||||||||
1,026,107 | |||||||||||
Commercial Banks — 6.0% | |||||||||||
21,800 | Boston Private Financial Hldgs., Inc. | 663,156 | |||||||||
36,300 | Colonial BancGroup, Inc. | 864,666 | |||||||||
7,700 | Cullen/Frost Bankers, Inc. | 413,336 | |||||||||
27,600 | South Financial Group, Inc. | 760,104 | |||||||||
2,701,262 | |||||||||||
Commercial Services and Supplies — 4.0% | |||||||||||
44,100 | Coinstar, Inc.* | 1,006,803 | |||||||||
27,900 | McGrath Rentcorp | 775,620 | |||||||||
1,782,423 | |||||||||||
Communications Equipment — 3.0% | |||||||||||
16,100 | Harris Corp. | 692,461 | |||||||||
16,500 | Plantronics, Inc. | 466,950 | |||||||||
14,300 | Tekelec* | 198,770 | |||||||||
1,358,181 | |||||||||||
Containers and Packaging — 0.9% | |||||||||||
46,800 | Caraustar Inds., Inc.* | 406,692 | |||||||||
Diversified Consumer Services — 1.6% | |||||||||||
26,000 | Jackson Hewitt Tax Svc., Inc. | 720,460 | |||||||||
Diversified Telecommunication Services — 0.5% | |||||||||||
6,600 | Neustar, Inc.* | 201,234 | |||||||||
Electric Utilities — 1.5% | |||||||||||
25,600 | Hawaiian Electric Inds., Inc. | 663,040 | |||||||||
Electrical Equipment — 3.4% | |||||||||||
34,300 | Regal-Beloit Corp. | 1,214,220 | |||||||||
26,900 | Ultralife Batteries, Inc.* | 322,800 | |||||||||
1,537,020 |
Shares | Value | ||||||||||
Electronic Equipment and Instruments — 1.6% | |||||||||||
36,700 | Newport Corp.* | $ | 496,918 | ||||||||
8,700 | Park Electrochemical Corp. | 226,026 | |||||||||
722,944 | |||||||||||
Energy Equipment and Services — 3.1% | |||||||||||
19,300 | Oceaneering Int'l., Inc.* | 960,754 | |||||||||
14,200 | Offshore Logistics, Inc.* | 414,640 | |||||||||
1,375,394 | |||||||||||
Gas Utilities — 3.2% | |||||||||||
16,500 | AGL Resources, Inc. | 574,365 | |||||||||
23,400 | Equitable Resources, Inc. | 858,546 | |||||||||
1,432,911 | |||||||||||
Health Care Equipment and Supplies — 4.0% | |||||||||||
32,700 | Candela Corp.* | 472,188 | |||||||||
19,600 | Cooper Cos., Inc. | 1,005,480 | |||||||||
3,300 | Diagnostic Prods. Corp. | 160,215 | |||||||||
3,500 | Dionex Corp.* | 171,780 | |||||||||
1,809,663 | |||||||||||
Health Care Providers and Services — 4.0% | |||||||||||
14,800 | LifePoint Hospitals, Inc.* | 555,000 | |||||||||
24,100 | Molina Healthcare, Inc.* | 642,024 | |||||||||
27,800 | Odyssey Healthcare, Inc.* | 518,192 | |||||||||
6,700 | Option Care, Inc. | 89,512 | |||||||||
1,804,728 | |||||||||||
Household Durables — 6.5% | |||||||||||
31,900 | Comstock Homebuilding Cos., Inc.* | 450,109 | |||||||||
21,200 | Lenox Group, Inc.* | 280,688 | |||||||||
10,300 | Lifetime Brands, Inc. | 212,901 | |||||||||
11,300 | Ryland Group, Inc. | 815,069 | |||||||||
8,300 | Snap-On, Inc. | 311,748 | |||||||||
30,800 | Tempur-Pedic Int'l., Inc.* | 354,200 | |||||||||
18,400 | The Yankee Candle Co., Inc. | 471,040 | |||||||||
2,895,755 | |||||||||||
Information Technology Services — 1.1% | |||||||||||
36,900 | Bearingpoint, Inc.* | 290,034 | |||||||||
22,200 | SM&A* | 182,706 | |||||||||
472,740 | |||||||||||
Insurance — 6.1% | |||||||||||
9,400 | AmerUs Group Co. | 532,698 | |||||||||
47,800 | KMG America Corp.* | 438,804 | |||||||||
23,900 | National Financial Partners Corp. | 1,255,945 | |||||||||
30,900 | Seabright Insurance Hldgs.* | 513,867 | |||||||||
2,741,314 | |||||||||||
Internet Software and Services — 1.1% | |||||||||||
25,600 | iVillage, Inc.* | 205,312 | |||||||||
94,400 | Tumbleweed Comm. Corp.* | 290,752 | |||||||||
496,064 | |||||||||||
Machinery — 2.9% | |||||||||||
16,000 | Gardner Denver, Inc.* | 788,800 | |||||||||
7,300 | Harsco Corp. | 492,823 | |||||||||
1,281,623 | |||||||||||
Media — 3.7% | |||||||||||
18,100 | ADVO, Inc. | 510,058 | |||||||||
42,900 | Radio One, Inc.* | 444,015 | |||||||||
24,300 | Saga Comm., Inc.* | 264,141 | |||||||||
48,000 | Sinclair Broadcast Group, Inc. | 441,600 | |||||||||
1,659,814 |
See notes to financial statements.
64
n The Guardian UBS Small Cap Value Fund
Schedule of Investments (Continued)
December 31, 2005
Shares | Value | ||||||||||
Oil, Gas and Consumable Fuels — 2.3% | |||||||||||
13,100 | Cimarex Energy Co.* | $ | 563,431 | ||||||||
34,400 | NGP Capital Resources Co. | 451,672 | |||||||||
1,015,103 | |||||||||||
Personal Products — 2.3% | |||||||||||
14,300 | Chattem, Inc.* | 520,377 | |||||||||
29,200 | Nu Skin Enterprises, Inc. | 513,336 | |||||||||
1,033,713 | |||||||||||
Pharmaceuticals — 0.8% | |||||||||||
23,400 | Connetics Corp.* | 338,130 | |||||||||
Real Estate — 2.8% | |||||||||||
19,007 | Government Pptys. Trust, Inc.* | 177,335 | |||||||||
18,800 | LaSalle Hotel Pptys. | 690,336 | |||||||||
15,100 | Thornburg Mortgage, Inc. | 395,620 | |||||||||
1,263,291 | |||||||||||
Road and Rail — 2.6% | |||||||||||
4,950 | Genesee & Wyoming, Inc.* | 185,873 | |||||||||
9,700 | Landstar System, Inc. | 404,878 | |||||||||
12,500 | Yellow Roadway Corp.* | 557,625 | |||||||||
1,148,376 | |||||||||||
Semiconductors and Semiconductor Equipment — 0.5% | |||||||||||
41,600 | Monolithic System Technology, Inc.* | 228,800 | |||||||||
Software — 0.5% | |||||||||||
7,900 | Reynolds & Reynolds Co. | 221,753 | |||||||||
Specialty Retail — 3.4% | |||||||||||
25,200 | Movie Gallery, Inc. | 141,372 | |||||||||
26,500 | Petco Animal Supplies, Inc.* | 581,675 | |||||||||
25,500 | The Sports Authority, Inc.* | 793,815 | |||||||||
1,516,862 | |||||||||||
Textiles, Apparel and Luxury Goods — 0.7% | |||||||||||
18,300 | Movado Group, Inc. | 334,890 | |||||||||
Thrifts and Mortgage Finance — 3.6% | |||||||||||
6,000 | Accredited Home Lenders Hldg. Co.* | 297,480 | |||||||||
13,900 | IndyMac Bancorp, Inc. | 542,378 | |||||||||
85,800 | Ocwen Financial Corp.* | 746,460 | |||||||||
1,586,318 | |||||||||||
Wireless Telecommunication Services — 1.0% | |||||||||||
51,300 | InPhonic, Inc.* | 445,797 | |||||||||
Total Common Stocks (Cost $36,766,184) | 42,897,065 | ||||||||||
Exchange-Traded Fund — 1.3% | |||||||||||
9,000 | iShares Russell 2000 Value | ||||||||||
Index Fund | |||||||||||
(Cost $596,091) | $ | 593,370 |
Principal Amount | Value | ||||||||||
Repurchase Agreement — 2.7% | |||||||||||
$ | 1,201,000 | State Street Bank and Trust Co. | |||||||||
repurchase agreement, | |||||||||||
dated 12/30/2005, maturity | |||||||||||
value of $1,201,550 at | |||||||||||
4.12%, due 1/3/2006 (1) | |||||||||||
(Cost $1,201,000) | $ | 1,201,000 | |||||||||
Total Investments — 100.0% (Cost $38,563,275) | 44,691,435 | ||||||||||
Cash, Receivables, and Other Assets Less Liabilities — 0.0% | 946 | ||||||||||
Net Assets — 100% | $ | 44,692,381 |
* Non-income producing security.
(1) The repurchase agreement is fully collateralized by $1,220,000 in U.S. Government Agency, 5.50%, due 11/16/2015, with a value of $1,226,100.
See notes to financial statements.
65
n The Guardian Asset Allocation Fund
Schedule of Investments
December 31, 2005
Shares | Value | ||||||||||
Common Stocks — 4.4% | |||||||||||
Aerospace and Defense — 0.1% | |||||||||||
444 | Boeing Co. | $ | 31,186 | ||||||||
536 | Honeywell Int'l., Inc. | 19,966 | |||||||||
446 | Lockheed Martin Corp. | 28,379 | |||||||||
312 | Northrop Grumman Corp. | 18,754 | |||||||||
424 | Raytheon Co. | 17,024 | |||||||||
636 | United Technologies Corp. | 35,559 | |||||||||
150,868 | |||||||||||
Air Freight and Logistics — 0.0% | |||||||||||
619 | United Parcel Svc., Inc. – Class B | 46,518 | |||||||||
Automobiles — 0.1% | |||||||||||
2,735 | Ford Motor Co. | 21,114 | |||||||||
338 | General Motors Corp. | 6,564 | |||||||||
619 | Harley-Davidson, Inc. | 31,872 | |||||||||
59,550 | |||||||||||
Beverages — 0.1% | |||||||||||
538 | Anheuser-Busch Cos., Inc. | 23,113 | |||||||||
1,095 | Coca-Cola Co. | 44,139 | |||||||||
967 | PepsiCo., Inc. | 57,130 | |||||||||
124,382 | |||||||||||
Biotechnology — 0.1% | |||||||||||
742 | Amgen, Inc.* | 58,514 | |||||||||
417 | Biogen Idec, Inc.* | 18,903 | |||||||||
435 | Chiron Corp.* | 19,340 | |||||||||
426 | MedImmune, Inc.* | 14,918 | |||||||||
111,675 | |||||||||||
Building Products — 0.0% | |||||||||||
508 | Masco Corp. | 15,337 | |||||||||
Capital Markets — 0.1% | |||||||||||
194 | Ameriprise Financial, Inc. | 7,954 | |||||||||
347 | Bank of New York, Inc. | 11,052 | |||||||||
48 | Charles Schwab Corp. | 704 | |||||||||
300 | Goldman Sachs Group, Inc. | 38,313 | |||||||||
80 | Lehman Brothers Hldgs., Inc. | 10,254 | |||||||||
756 | Mellon Financial Corp. | 25,893 | |||||||||
410 | Merrill Lynch & Co., Inc. | 27,769 | |||||||||
452 | Morgan Stanley | 25,647 | |||||||||
57 | State Street Corp. | 3,160 | |||||||||
150,746 | |||||||||||
Chemicals — 0.1% | |||||||||||
567 | Dow Chemical Co. | 24,846 | |||||||||
335 | E.I. Du Pont de Nemours & Co. | 14,238 | |||||||||
385 | Monsanto Co. | 29,849 | |||||||||
574 | PPG Inds., Inc. | 33,235 | |||||||||
170 | Rohm & Haas Co. | 8,231 | |||||||||
110,399 | |||||||||||
Commercial Banks — 0.3% | |||||||||||
2,794 | Bank of America Corp. | 128,943 | |||||||||
872 | BB&T Corp. | 36,546 | |||||||||
617 | Fifth Third Bancorp | 23,273 | |||||||||
1,410 | KeyCorp | 46,431 | |||||||||
712 | U.S. Bancorp | 21,282 | |||||||||
1,292 | Wachovia Corp. | 68,295 | |||||||||
750 | Wells Fargo & Co. | 47,122 | |||||||||
371,892 |
Shares | Value | ||||||||||
Commercial Services and Supplies — 0.0% | |||||||||||
796 | Cendant Corp. | $ | 13,731 | ||||||||
307 | Cintas Corp. | 12,642 | |||||||||
269 | PHH Corp.* | 7,537 | |||||||||
479 | Waste Management, Inc. | 14,538 | |||||||||
48,448 | |||||||||||
Communications Equipment — 0.1% | |||||||||||
2,325 | Cisco Systems, Inc.* | 39,804 | |||||||||
1,682 | Corning, Inc.* | 33,068 | |||||||||
2,075 | Motorola, Inc. | 46,874 | |||||||||
968 | QUALCOMM, Inc. | 41,702 | |||||||||
161,448 | |||||||||||
Computers and Peripherals — 0.2% | |||||||||||
776 | Dell, Inc.* | 23,272 | |||||||||
2,986 | EMC Corp.* | 40,669 | |||||||||
1,615 | Hewlett Packard Co. | 46,238 | |||||||||
866 | Int'l. Business Machines | 71,185 | |||||||||
6,516 | Sun Microsystems, Inc.* | 27,302 | |||||||||
208,666 | |||||||||||
Consumer Finance — 0.1% | |||||||||||
972 | American Express Co. | 50,019 | |||||||||
146 | Capital One Financial Corp. | 12,614 | |||||||||
1,450 | MBNA Corp. | 39,368 | |||||||||
865 | SLM Corp. | 47,653 | |||||||||
149,654 | |||||||||||
Distributors — 0.0% | |||||||||||
667 | Genuine Parts Co. | 29,295 | |||||||||
Diversified Financial Services — 0.1% | |||||||||||
3,073 | Citigroup, Inc. | 149,133 | |||||||||
466 | J.P. Morgan Chase & Co. | 18,495 | |||||||||
167,628 | |||||||||||
Diversified Telecommunication Services — 0.1% | |||||||||||
2,350 | AT & T, Inc. | 57,551 | |||||||||
1,378 | BellSouth Corp. | 37,344 | |||||||||
1,371 | Verizon Comm. | 41,295 | |||||||||
136,190 | |||||||||||
Electric Utilities — 0.1% | |||||||||||
505 | Entergy Corp. | 34,668 | |||||||||
250 | Exelon Corp. | 13,285 | |||||||||
728 | FPL Group, Inc. | 30,256 | |||||||||
495 | Progress Energy, Inc. | 21,740 | |||||||||
1,250 | Southern Co. | 43,163 | |||||||||
143,112 | |||||||||||
Electrical Equipment — 0.0% | |||||||||||
424 | Cooper Inds. Ltd. – Class A | 30,952 | |||||||||
Electronic Equipment and Instruments — 0.0% | |||||||||||
2,123 | Solectron Corp.* | 7,770 | |||||||||
Energy Equipment and Services — 0.1% | |||||||||||
705 | Baker Hughes, Inc. | 42,850 | |||||||||
581 | Schlumberger Ltd. | 56,444 | |||||||||
99,294 | |||||||||||
Food and Staples Retailing — 0.1% | |||||||||||
840 | Albertson's, Inc. | 17,934 | |||||||||
1,240 | CVS Corp. | 32,761 | |||||||||
1,009 | Kroger Co.* | 19,050 | |||||||||
699 | Safeway, Inc. | 16,538 | |||||||||
1,295 | Wal-Mart Stores, Inc. | 60,606 | |||||||||
146,889 |
See notes to financial statements.
66
n The Guardian Asset Allocation Fund
Schedule of Investments (Continued)
December 31, 2005
Shares | Value | ||||||||||
Food Products — 0.1% | |||||||||||
994 | Archer-Daniels-Midland Co. | $ | 24,512 | ||||||||
321 | Campbell Soup Co. | 9,556 | |||||||||
162 | ConAgra Foods, Inc. | 3,285 | |||||||||
128 | General Mills, Inc. | 6,313 | |||||||||
224 | H.J. Heinz Co. | 7,553 | |||||||||
234 | Hershey Co. (The) | 12,929 | |||||||||
512 | Kellogg Co. | 22,129 | |||||||||
369 | W.M. Wrigley Jr. Co. | 24,535 | |||||||||
110,812 | |||||||||||
Health Care Equipment and Supplies — 0.1% | |||||||||||
328 | Baxter Int'l., Inc. | 12,349 | |||||||||
22 | Becton Dickinson & Co., Inc. | 1,322 | |||||||||
632 | Boston Scientific Corp.* | 15,477 | |||||||||
272 | C.R. Bard, Inc. | 17,930 | |||||||||
956 | Medtronic, Inc. | 55,037 | |||||||||
584 | St. Jude Medical, Inc.* | 29,317 | |||||||||
588 | Stryker Corp. | 26,125 | |||||||||
384 | Zimmer Hldgs., Inc.* | 25,897 | |||||||||
183,454 | |||||||||||
Health Care Providers and Services — 0.1% | |||||||||||
596 | AmerisourceBergen Corp. | 24,674 | |||||||||
246 | Cigna Corp. | 27,478 | |||||||||
306 | HCA, Inc. | 15,453 | |||||||||
1,529 | Health Management Assoc., Inc. – Class A | 33,577 | |||||||||
378 | McKesson Corp. | 19,501 | |||||||||
1,512 | Tenet Healthcare Corp.* | 11,582 | |||||||||
258 | WellPoint, Inc.* | 20,586 | |||||||||
152,851 | |||||||||||
Hotels, Restaurants and Leisure — 0.1% | |||||||||||
90 | Carnival Corp. | 4,812 | |||||||||
551 | McDonald's Corp. | 18,580 | |||||||||
1,286 | Starbucks Corp.* | 38,593 | |||||||||
61,985 | |||||||||||
Household Products — 0.1% | |||||||||||
614 | Clorox Co. | 34,930 | |||||||||
55 | Kimberly-Clark Corp. | 3,281 | |||||||||
1,874 | Procter & Gamble Co. | 108,467 | |||||||||
146,678 | |||||||||||
Independent Power Producers and Energy Traders — 0.0% | |||||||||||
1,368 | AES Corp.* | 21,655 | |||||||||
404 | Duke Energy Corp. | 11,090 | |||||||||
184 | TXU Corp. | 9,235 | |||||||||
41,980 | |||||||||||
Industrial Conglomerates — 0.2% | |||||||||||
636 | 3M Co. | 49,290 | |||||||||
5,003 | General Electric Co. | 175,355 | |||||||||
1,024 | Tyco Int'l. Ltd. | 29,553 | |||||||||
254,198 | |||||||||||
Information Technology Services — 0.1% | |||||||||||
242 | Automatic Data Processing, Inc. | 11,105 | |||||||||
1,125 | Electronic Data Systems Corp. | 27,045 | |||||||||
116 | First Data Corp. | 4,989 | |||||||||
957 | Paychex, Inc. | 36,481 | |||||||||
108 | Sabre Hldgs. Corp. – Class A | 2,604 | |||||||||
82,224 |
Shares | Value | ||||||||||
Insurance — 0.2% | |||||||||||
153 | AFLAC, Inc. | $ | 7,102 | ||||||||
408 | Allstate Corp. | 22,061 | |||||||||
1,615 | American Int'l. Group, Inc. | 110,191 | |||||||||
181 | Chubb Corp. | 17,675 | |||||||||
186 | Loews Corp. | 17,642 | |||||||||
664 | Marsh & McLennan Cos., Inc. | 21,089 | |||||||||
884 | MetLife, Inc. | 43,316 | |||||||||
253 | Progressive Corp. | 29,545 | |||||||||
687 | St. Paul Travelers Cos., Inc. | 30,688 | |||||||||
299,309 | |||||||||||
Internet Software and Services — 0.0% | |||||||||||
784 | Yahoo! Inc.* | 30,717 | |||||||||
Leisure Equipment and Products — 0.0% | |||||||||||
849 | Eastman Kodak Co. | 19,867 | |||||||||
1,448 | Mattel, Inc. | 22,907 | |||||||||
42,774 | |||||||||||
Machinery — 0.0% | |||||||||||
452 | Caterpillar, Inc. | 26,112 | |||||||||
391 | Deere & Co. | 26,631 | |||||||||
52,743 | |||||||||||
Media — 0.2% | |||||||||||
230 | CCE Spinco, Inc.* | 3,013 | |||||||||
1,846 | Clear Channel Comm., Inc. | 58,057 | |||||||||
1,017 | Comcast Corp. – Class A* | 26,401 | |||||||||
429 | Gannett Co., Inc. | 25,985 | |||||||||
495 | New York Times Co. – Class A | 13,093 | |||||||||
2,712 | Time Warner, Inc. | 47,297 | |||||||||
77 | Tribune Co. | 2,330 | |||||||||
749 | Viacom, Inc. – Class B* | 24,417 | |||||||||
967 | Walt Disney Co. | 23,179 | |||||||||
223,772 | |||||||||||
Metals and Mining — 0.0% | |||||||||||
1,064 | Alcoa, Inc. | 31,462 | |||||||||
Multiline Retail — 0.1% | |||||||||||
702 | Kohl's Corp.* | 34,117 | |||||||||
481 | Target Corp. | 26,441 | |||||||||
60,558 | |||||||||||
Multi-Utilities — 0.0% | |||||||||||
82 | Public Svc. Enterprise Group, Inc. | 5,328 | |||||||||
Oil, Gas and Consumable Fuels — 0.3% | |||||||||||
206 | Anadarko Petroleum Corp. | 19,518 | |||||||||
294 | Burlington Resources, Inc. | 25,343 | |||||||||
1,774 | Chevron Corp. | 100,710 | |||||||||
966 | ConocoPhillips | 56,202 | |||||||||
1,936 | El Paso Corp. | 23,542 | |||||||||
3,898 | Exxon Mobil Corp. | 218,951 | |||||||||
444,266 | |||||||||||
Personal Products — 0.0% | |||||||||||
852 | Avon Products, Inc. | 24,325 | |||||||||
Pharmaceuticals — 0.2% | |||||||||||
216 | Allergan, Inc. | 23,319 | |||||||||
962 | Bristol-Myers Squibb Corp. | 22,107 | |||||||||
449 | Eli Lilly & Co. | 25,409 | |||||||||
1,772 | Johnson & Johnson | 106,497 | |||||||||
979 | King Pharmaceuticals, Inc.* | 16,564 | |||||||||
4,515 | Pfizer, Inc. | 105,290 | |||||||||
475 | Schering-Plough Corp. | 9,904 | |||||||||
309,090 |
See notes to financial statements.
67
n The Guardian Asset Allocation Fund
Schedule of Investments (Continued)
December 31, 2005
Shares | Value | ||||||||||
Real Estate — 0.0% | |||||||||||
483 | Plum Creek Timber Co., Inc. | $ | 17,412 | ||||||||
472 | Simon Ppty. Group, Inc. | 36,170 | |||||||||
53,582 | |||||||||||
Road and Rail — 0.1% | |||||||||||
552 | Burlington Northern Santa Fe | 39,092 | |||||||||
374 | Union Pacific Corp. | 30,111 | |||||||||
69,203 | |||||||||||
Semiconductors and Semiconductor Equipment — 0.2% | |||||||||||
54 | Analog Devices, Inc. | 1,937 | |||||||||
548 | Applied Materials, Inc. | 9,831 | |||||||||
288 | Broadcom Corp. – Class A* | 13,579 | |||||||||
670 | Freescale Semiconductor, Inc. – Class B* | 16,864 | |||||||||
3,330 | Intel Corp. | 83,117 | |||||||||
1,048 | KLA-Tencor Corp. | 51,698 | |||||||||
249 | Linear Technology Corp. | 8,981 | |||||||||
494 | Maxim Integrated Products, Inc. | 17,903 | |||||||||
702 | Micron Technology, Inc.* | 9,344 | |||||||||
1,503 | Texas Instruments, Inc. | 48,201 | |||||||||
261,455 | |||||||||||
Software — 0.2% | |||||||||||
1,104 | Adobe Systems, Inc. | 40,804 | |||||||||
490 | Computer Associates Int'l., Inc. | 13,813 | |||||||||
5,145 | Microsoft Corp. | 134,542 | |||||||||
2,830 | Siebel Systems, Inc. | 29,941 | |||||||||
1,479 | Symantec Corp.* | 25,883 | |||||||||
244,983 | |||||||||||
Specialty Retail — 0.1% | |||||||||||
716 | Bed, Bath & Beyond, Inc.* | 25,883 | |||||||||
645 | Best Buy Co., Inc. | 28,045 | |||||||||
943 | Home Depot, Inc. | 38,173 | |||||||||
315 | Lowe's Cos., Inc. | 20,998 | |||||||||
648 | Staples, Inc. | 14,716 | |||||||||
247 | The Gap, Inc. | 4,357 | |||||||||
132,172 | |||||||||||
Textiles, Apparel and Luxury Goods — 0.0% | |||||||||||
455 | NIKE, Inc. – Class B | 39,489 | |||||||||
Thrifts and Mortgage Finance — 0.0% | |||||||||||
350 | Federal National Mortgage Assn. | 17,084 | |||||||||
645 | Washington Mutual, Inc. | 28,057 | |||||||||
45,141 | |||||||||||
Tobacco — 0.1% | |||||||||||
1,216 | Altria Group, Inc. | 90,860 | |||||||||
509 | UST, Inc. | 20,782 | |||||||||
111,642 | |||||||||||
Wireless Telecommunication Services — 0.1% | |||||||||||
364 | ALLTEL Corp. | 22,968 | |||||||||
1,710 | Sprint Nextel Corp. | 39,946 | |||||||||
62,914 | |||||||||||
Total Common Stocks (Cost $6,020,837) | 6,049,820 | ||||||||||
Mutual Fund — 92.5% | |||||||||||
Equity — 92.5% | |||||||||||
14,890,483 | The Guardian S&P 500 Index Fund, | ||||||||||
Class A†(1) | |||||||||||
(Cost $128,834,860) | $ | 127,313,627 |
Principal Amount | Value | ||||||||||
U.S. Government Securities — 0.3% | |||||||||||
U.S. Treasury Bills — 0.3% | |||||||||||
U.S. Treasury Bills | |||||||||||
$ | 150,000 | 3.745% due 1/19/2006 (2) | $ | 149,719 | |||||||
300,000 | 3.808% due 3/16/2006 (2) | 297,652 | |||||||||
Total U.S. Government Securities (Cost $447,371) | 447,371 | ||||||||||
Repurchase Agreement — 3.1% | |||||||||||
$ | 4,239,000 | State Street Bank and Trust Co. | |||||||||
repurchase agreement, | |||||||||||
dated 12/30/2005, maturity | |||||||||||
value of $4,240,941 at | |||||||||||
4.12%, due 1/3/2006 (3) | |||||||||||
(Cost $4,239,000) | $ | 4,239,000 | |||||||||
Total Investments — 100.3% (Cost $139,542,068) | 138,049,818 | ||||||||||
Liabilities in Excess of Cash, Receivables and Other Assets — (0.3)% | (428,796 | ) | |||||||||
Net Assets — 100% | $ | 137,621,022 |
* Non-income producing security.
† The Guardian S&P 500 Index Fund financial statements and financial highlights are included herein.
(1) Majority-owned subsidiary.
(2) The U.S. Treasury Bill is segregated as collateral to cover margin requirements on open futures contracts.
(3) The repurchase agreement is fully collateralized by $4,305,000 in U.S. Government Agency, 5.50%, due 11/16/2015, with a value of $4,326,525.
Contracts | Description | Expiration | Unrealized Appreciation | ||||||||||||
Sold Futures Contracts | |||||||||||||||
26 | S&P 500 Index | 3/2006 | $ | 80,082 |
See notes to financial statements.
68
n The Guardian S&P 500 Index Fund
Schedule of Investments
December 31, 2005
Shares | Value | ||||||||||
Common Stocks — 98.3% | |||||||||||
Aerospace and Defense — 2.2% | |||||||||||
12,788 | Boeing Co. | $ | 898,229 | ||||||||
3,125 | General Dynamics Corp. | 356,406 | |||||||||
2,343 | Goodrich Corp. | 96,297 | |||||||||
13,224 | Honeywell Int'l., Inc. | 492,594 | |||||||||
1,600 | L-3 Comm. Hldgs., Inc. | 118,960 | |||||||||
6,804 | Lockheed Martin Corp. | 432,939 | |||||||||
5,740 | Northrop Grumman Corp. | 345,032 | |||||||||
6,629 | Raytheon Co. | 266,154 | |||||||||
2,645 | Rockwell Collins, Inc. | 122,913 | |||||||||
15,510 | United Technologies Corp. | 867,164 | |||||||||
3,996,688 | |||||||||||
Air Freight and Logistics — 1.0% | |||||||||||
4,550 | FedEx Corp. | 470,425 | |||||||||
810 | Ryder Systems, Inc. | 33,226 | |||||||||
17,015 | United Parcel Svc., Inc. – Class B | 1,278,677 | |||||||||
1,782,328 | |||||||||||
Airlines — 0.1% | |||||||||||
12,232 | Southwest Airlines Co. | 200,972 | |||||||||
Auto Components — 0.2% | |||||||||||
945 | Cooper Tire & Rubber Co. | 14,477 | |||||||||
2,085 | Dana Corp. | 14,970 | |||||||||
4,365 | Goodyear Tire & Rubber Co.* | 75,864 | |||||||||
2,858 | Johnson Controls, Inc. | 208,377 | |||||||||
1,852 | Visteon Corp.* | 11,594 | |||||||||
325,282 | |||||||||||
Automobiles — 0.4% | |||||||||||
33,159 | Ford Motor Co. | 255,987 | |||||||||
8,879 | General Motors Corp. | 172,430 | |||||||||
4,838 | Harley-Davidson, Inc. | 249,109 | |||||||||
677,526 | |||||||||||
Beverages — 2.1% | |||||||||||
11,891 | Anheuser-Busch Cos., Inc. | 510,837 | |||||||||
1,990 | Brown-Forman Corp. – Class B | 137,947 | |||||||||
35,832 | Coca-Cola Co. | 1,444,388 | |||||||||
4,764 | Coca-Cola Enterprises, Inc. | 91,326 | |||||||||
3,100 | Constellation Brands, Inc. – Class A* | 81,313 | |||||||||
1,325 | Molson Coors Brewing Co. – Class B | 88,762 | |||||||||
25,965 | PepsiCo., Inc. | 1,534,012 | |||||||||
2,459 | The Pepsi Bottling Group, Inc. | 70,352 | |||||||||
3,958,937 | |||||||||||
Biotechnology — 1.5% | |||||||||||
20,158 | Amgen, Inc.* | 1,589,660 | |||||||||
3,019 | Applera Corp. – Applied Biosystems Group | 80,185 | |||||||||
5,322 | Biogen Idec, Inc.* | 241,246 | |||||||||
2,723 | Chiron Corp.* | 121,064 | |||||||||
4,379 | Genzyme Corp.* | 309,946 | |||||||||
6,600 | Gilead Sciences, Inc.* | 347,358 | |||||||||
3,661 | MedImmune, Inc.* | 128,208 | |||||||||
2,817,667 | |||||||||||
Building Products — 0.2% | |||||||||||
3,186 | American Standard Cos., Inc. | 127,281 | |||||||||
7,483 | Masco Corp. | 225,912 | |||||||||
353,193 | |||||||||||
Capital Markets — 3.2% | |||||||||||
3,930 | Ameriprise Financial, Inc. | 161,130 | |||||||||
11,877 | Bank of New York, Inc. | 378,282 | |||||||||
2,989 | Bear Stearns Cos., Inc. | 345,319 |
Shares | Value | ||||||||||
19,889 | Charles Schwab Corp. | $ | 291,772 | ||||||||
5,500 | E*TRADE Financial Corp.* | 114,730 | |||||||||
1,600 | Federated Investors, Inc. – Class B | 59,264 | |||||||||
2,401 | Franklin Resources, Inc. | 225,718 | |||||||||
7,766 | Goldman Sachs Group, Inc. | 991,796 | |||||||||
3,184 | Janus Capital Group, Inc. | 59,318 | |||||||||
4,199 | Lehman Brothers Hldgs., Inc. | 538,186 | |||||||||
6,309 | Mellon Financial Corp. | 216,083 | |||||||||
15,654 | Merrill Lynch & Co., Inc. | 1,060,245 | |||||||||
16,508 | Morgan Stanley | 936,664 | |||||||||
3,195 | Northern Trust Corp. | 165,565 | |||||||||
5,114 | State Street Corp. | 283,520 | |||||||||
1,728 | T. Rowe Price Group, Inc. | 124,468 | |||||||||
5,952,060 | |||||||||||
Chemicals — 1.6% | |||||||||||
3,281 | Air Products & Chemicals, Inc. | 194,202 | |||||||||
966 | Ashland, Inc. | 55,931 | |||||||||
15,665 | Dow Chemical Co. | 686,440 | |||||||||
15,109 | E.I. Du Pont de Nemours & Co. | 642,133 | |||||||||
1,083 | Eastman Chemical Co. | 55,872 | |||||||||
4,653 | Ecolab, Inc. | 168,764 | |||||||||
1,823 | Engelhard Corp. | 54,964 | |||||||||
1,497 | Hercules, Inc.* | 16,916 | |||||||||
1,377 | Int'l. Flavors & Fragrances, Inc. | 46,130 | |||||||||
4,436 | Monsanto Co. | 343,923 | |||||||||
2,774 | PPG Inds., Inc. | 160,615 | |||||||||
5,132 | Praxair, Inc. | 271,791 | |||||||||
3,834 | Rohm & Haas Co. | 185,642 | |||||||||
1,093 | Sigma-Aldrich | 69,176 | |||||||||
2,952,499 | |||||||||||
Commercial Banks — 5.7% | |||||||||||
5,373 | AmSouth Bancorporation | 140,826 | |||||||||
65,476 | Bank of America Corp. | 3,021,717 | |||||||||
8,563 | BB&T Corp. | 358,875 | |||||||||
2,548 | Comerica, Inc. | 144,625 | |||||||||
1,900 | Compass Bancshares, Inc. | 91,751 | |||||||||
9,346 | Fifth Third Bancorp | 352,531 | |||||||||
1,845 | First Horizon Nat'l. Corp. | 70,922 | |||||||||
3,600 | Huntington Bancshares, Inc. | 85,500 | |||||||||
6,165 | KeyCorp | 203,013 | |||||||||
1,800 | M & T Bank Corp. | 196,290 | |||||||||
3,714 | Marshall & Ilsley Corp. | 159,851 | |||||||||
11,065 | National City Corp. | 371,452 | |||||||||
7,607 | North Fork Bancorporation, Inc. | 208,128 | |||||||||
4,177 | PNC Financial Svcs. Group | 258,264 | |||||||||
7,283 | Regions Financial Corp. | 248,787 | |||||||||
5,676 | SunTrust Banks, Inc. | 412,986 | |||||||||
4,926 | Synovus Financial Corp. | 133,051 | |||||||||
30,104 | U.S. Bancorp | 899,809 | |||||||||
26,414 | Wachovia Corp. | 1,396,244 | |||||||||
25,987 | Wells Fargo & Co. | 1,632,763 | |||||||||
1,438 | Zions Bancorporation | 108,655 | |||||||||
10,496,040 | |||||||||||
Commercial Services and Supplies — 0.7% | |||||||||||
4,995 | Allied Waste Inds., Inc.* | 43,656 | |||||||||
1,581 | Avery Dennison Corp. | 87,382 | |||||||||
15,262 | Cendant Corp. | 263,269 | |||||||||
2,425 | Cintas Corp. | 99,862 | |||||||||
2,052 | Equifax, Inc. | 78,017 | |||||||||
1,707 | Monster Worldwide, Inc.* | 69,680 | |||||||||
3,634 | Pitney Bowes, Inc. | 153,536 | |||||||||
4,423 | R.R. Donnelley & Sons Co. | 151,311 |
See notes to financial statements.
69
n The Guardian S&P 500 Index Fund
Schedule of Investments (Continued)
December 31, 2005
Shares | Value | ||||||||||
2,547 | Robert Half Int'l., Inc. | $ | 96,506 | ||||||||
8,974 | Waste Management, Inc. | 272,361 | |||||||||
1,315,580 | |||||||||||
Communications Equipment — 2.6% | |||||||||||
1,590 | ADC Telecomm., Inc.* | 35,521 | |||||||||
2,400 | Andrew Corp.* | 25,752 | |||||||||
6,102 | Avaya, Inc.* | 65,109 | |||||||||
10,503 | CIENA Corp.* | 31,194 | |||||||||
103,242 | Cisco Systems, Inc.* | 1,767,503 | |||||||||
2,380 | Comverse Technology, Inc.* | 63,284 | |||||||||
23,897 | Corning, Inc.* | 469,815 | |||||||||
36,234 | JDS Uniphase Corp.* | 85,512 | |||||||||
67,556 | Lucent Technologies, Inc.* | 179,699 | |||||||||
39,925 | Motorola, Inc. | 901,906 | |||||||||
25,104 | QUALCOMM, Inc. | 1,081,480 | |||||||||
2,311 | Scientific Atlanta, Inc. | 99,535 | |||||||||
5,897 | Tellabs, Inc.* | 64,277 | |||||||||
4,870,587 | |||||||||||
Computers and Peripherals — 3.6% | |||||||||||
13,769 | Apple Computer, Inc.* | 989,853 | |||||||||
38,726 | Dell, Inc.* | 1,161,393 | |||||||||
36,868 | EMC Corp.* | 502,142 | |||||||||
4,621 | Gateway, Inc.* | 11,599 | |||||||||
46,798 | Hewlett Packard Co. | 1,339,827 | |||||||||
26,281 | Int'l. Business Machines | 2,160,298 | |||||||||
1,823 | Lexmark Int'l. Group, Inc. – Class A* | 81,725 | |||||||||
2,758 | NCR Corp.* | 93,607 | |||||||||
5,702 | Network Appliance, Inc.* | 153,954 | |||||||||
1,349 | QLogic Corp.* | 43,856 | |||||||||
54,932 | Sun Microsystems, Inc.* | 230,165 | |||||||||
6,768,419 | |||||||||||
Construction and Engineering — 0.1% | |||||||||||
1,550 | Fluor Corp. | 119,753 | |||||||||
Construction Materials — 0.1% | |||||||||||
1,439 | Vulcan Materials Co. | 97,492 | |||||||||
Consumer Finance — 1.2% | |||||||||||
19,651 | American Express Co. | 1,011,240 | |||||||||
3,450 | Capital One Financial Corp. | 298,080 | |||||||||
19,217 | MBNA Corp. | 521,742 | |||||||||
7,101 | SLM Corp. | 391,194 | |||||||||
2,222,256 | |||||||||||
Containers and Packaging — 0.2% | |||||||||||
1,626 | Ball Corp. | 64,585 | |||||||||
1,504 | Bemis Co., Inc. | 41,916 | |||||||||
2,261 | Pactiv Corp.* | 49,742 | |||||||||
2,781 | Sealed Air Corp.* | 156,209 | |||||||||
1,394 | Temple-Inland, Inc. | 62,521 | |||||||||
374,973 | |||||||||||
Distributors — 0.1% | |||||||||||
2,486 | Genuine Parts Co. | 109,185 | |||||||||
Diversified Consumer Services — 0.2% | |||||||||||
2,845 | Apollo Group, Inc. – Class A* | 172,009 | |||||||||
5,208 | H & R Block, Inc. | 127,856 | |||||||||
299,865 | |||||||||||
Diversified Financial Services — 3.7% | |||||||||||
3,200 | CIT Group, Inc. | 165,696 | |||||||||
80,462 | Citigroup, Inc. | 3,904,821 | |||||||||
57,653 | J.P. Morgan Chase & Co. | 2,288,248 |
Shares | Value | ||||||||||
4,718 | Moody's Corp. | $ | 289,779 | ||||||||
5,116 | Principal Financial Group, Inc. | 242,652 | |||||||||
6,891,196 | |||||||||||
Diversified Telecommunication Services — 2.2% | |||||||||||
64,567 | AT & T, Inc. | 1,581,246 | |||||||||
28,012 | BellSouth Corp. | 759,125 | |||||||||
1,992 | CenturyTel, Inc. | 66,055 | |||||||||
6,319 | Citizens Comm. Co. | 77,281 | |||||||||
30,623 | Qwest Comm. Int'l., Inc.* | 173,020 | |||||||||
44,585 | Verizon Comm. | 1,342,900 | |||||||||
3,999,627 | |||||||||||
Electric Utilities — 1.5% | |||||||||||
2,653 | Allegheny Energy, Inc.* | 83,967 | |||||||||
6,284 | American Electric Power, Inc. | 233,074 | |||||||||
2,886 | CiNergy Corp. | 122,540 | |||||||||
5,948 | Edison Int'l. | 259,392 | |||||||||
3,618 | Entergy Corp. | 248,376 | |||||||||
11,404 | Exelon Corp. | 606,009 | |||||||||
5,049 | FirstEnergy Corp. | 247,350 | |||||||||
5,814 | FPL Group, Inc. | 241,630 | |||||||||
1,212 | Pinnacle West Capital Corp. | 50,116 | |||||||||
5,384 | PPL Corp. | 158,290 | |||||||||
4,069 | Progress Energy, Inc. | 178,710 | |||||||||
12,246 | Southern Co. | 422,854 | |||||||||
2,852,308 | |||||||||||
Electrical Equipment — 0.4% | |||||||||||
2,786 | American Power Conversion Corp. | 61,292 | |||||||||
1,359 | Cooper Inds. Ltd. – Class A | 99,207 | |||||||||
6,564 | Emerson Electric Co. | 490,331 | |||||||||
2,645 | Rockwell Automation, Inc. | 156,478 | |||||||||
807,308 | |||||||||||
Electronic Equipment and Instruments — 0.3% | |||||||||||
7,382 | Agilent Technologies, Inc.* | 245,747 | |||||||||
2,726 | Jabil Circuit, Inc.* | 101,107 | |||||||||
2,802 | Molex, Inc. | 72,712 | |||||||||
7,816 | Sanmina-SCI Corp.* | 33,296 | |||||||||
12,349 | Solectron Corp.* | 45,197 | |||||||||
3,132 | Symbol Technologies, Inc. | 40,152 | |||||||||
1,336 | Tektronix, Inc. | 37,689 | |||||||||
575,900 | |||||||||||
Energy Equipment and Services — 1.6% | |||||||||||
5,434 | B.J. Svcs. Co. | 199,265 | |||||||||
5,564 | Baker Hughes, Inc. | 338,180 | |||||||||
8,090 | Halliburton Co. | 501,256 | |||||||||
2,392 | Nabors Inds., Inc.* | 181,194 | |||||||||
2,600 | National-Oilwell Varco, Inc.* | 163,020 | |||||||||
2,008 | Noble Corp. | 141,644 | |||||||||
1,317 | Rowan Cos., Inc. | 46,938 | |||||||||
9,803 | Schlumberger Ltd. | 952,361 | |||||||||
5,572 | Transocean, Inc.* | 388,313 | |||||||||
4,000 | Weatherford Int'l. Ltd.* | 144,800 | |||||||||
3,056,971 | |||||||||||
Food and Staples Retailing — 2.3% | |||||||||||
5,902 | Albertson's, Inc. | 126,008 | |||||||||
7,059 | Costco Wholesale Corp. | 349,209 | |||||||||
12,602 | CVS Corp. | 332,945 | |||||||||
11,800 | Kroger Co.* | 222,784 | |||||||||
7,230 | Safeway, Inc. | 171,062 | |||||||||
1,885 | Supervalu, Inc. | 61,225 |
See notes to financial statements.
70
n The Guardian S&P 500 Index Fund
Schedule of Investments (Continued)
December 31, 2005
Shares | Value | ||||||||||
9,731 | Sysco Corp. | $ | 302,147 | ||||||||
41,052 | Wal-Mart Stores, Inc. | 1,921,233 | |||||||||
15,872 | Walgreen Co. | 702,495 | |||||||||
4,189,108 | |||||||||||
Food Products — 1.1% | |||||||||||
9,568 | Archer-Daniels-Midland Co. | 235,947 | |||||||||
4,269 | Campbell Soup Co. | 127,088 | |||||||||
8,628 | ConAgra Foods, Inc. | 174,976 | |||||||||
5,846 | General Mills, Inc. | 288,325 | |||||||||
5,823 | H.J. Heinz Co. | 196,351 | |||||||||
2,920 | Hershey Co. (The) | 161,330 | |||||||||
6,444 | Kellogg Co. | 278,510 | |||||||||
1,968 | McCormick & Co., Inc. | 60,850 | |||||||||
12,269 | Sara Lee Corp. | 231,884 | |||||||||
3,000 | Tyson Foods, Inc. – Class A | 51,300 | |||||||||
3,730 | W.M. Wrigley Jr. Co. | 248,008 | |||||||||
2,054,569 | |||||||||||
Gas Utilities — 0.0% | |||||||||||
674 | NICOR, Inc. | 26,495 | |||||||||
527 | Peoples Energy Corp. | 18,482 | |||||||||
44,977 | |||||||||||
Health Care Equipment and Supplies — 2.1% | |||||||||||
755 | Bausch & Lomb, Inc. | 51,265 | |||||||||
9,370 | Baxter Int'l., Inc. | 352,780 | |||||||||
3,689 | Becton Dickinson & Co., Inc. | 221,635 | |||||||||
3,846 | Biomet, Inc. | 140,648 | |||||||||
10,182 | Boston Scientific Corp.* | 249,357 | |||||||||
1,442 | C.R. Bard, Inc. | 95,057 | |||||||||
1,700 | Fisher Scientific Int'l., Inc.* | 105,162 | |||||||||
5,722 | Guidant Corp. | 370,499 | |||||||||
2,380 | Hospira, Inc.* | 101,816 | |||||||||
20,480 | Medtronic, Inc. | 1,179,034 | |||||||||
653 | Millipore Corp.* | 43,124 | |||||||||
2,010 | PerkinElmer, Inc. | 47,356 | |||||||||
5,634 | St. Jude Medical, Inc.* | 282,827 | |||||||||
4,894 | Stryker Corp. | 217,440 | |||||||||
2,568 | Thermo Electron Corp.* | 77,374 | |||||||||
2,045 | Waters Corp.* | 77,301 | |||||||||
3,813 | Zimmer Hldgs., Inc.* | 257,149 | |||||||||
3,869,824 | |||||||||||
Health Care Providers and Services — 3.1% | |||||||||||
4,672 | Aetna, Inc. | 440,616 | |||||||||
3,708 | AmerisourceBergen Corp. | 153,511 | |||||||||
6,958 | Cardinal Health, Inc. | 478,363 | |||||||||
6,800 | Caremark Rx, Inc.* | 352,172 | |||||||||
2,221 | Cigna Corp. | 248,086 | |||||||||
3,000 | Coventry Health Care, Inc.* | 170,880 | |||||||||
2,330 | Express Scripts, Inc.* | 195,254 | |||||||||
7,462 | HCA, Inc. | 376,831 | |||||||||
3,671 | Health Management Assoc., Inc. – Class A | 80,615 | |||||||||
2,389 | Humana, Inc.* | 129,794 | |||||||||
3,317 | IMS Health, Inc. | 82,660 | |||||||||
2,100 | Laboratory Corp. of America Hldgs.* | 113,085 | |||||||||
1,456 | Manor Care, Inc. | 57,905 | |||||||||
4,585 | McKesson Corp. | 236,540 | |||||||||
4,611 | Medco Health Solutions, Inc.* | 257,294 | |||||||||
1,800 | Patterson Cos., Inc.* | 60,120 | |||||||||
3,476 | Quest Diagnostics, Inc. | 178,944 | |||||||||
6,941 | Tenet Healthcare Corp.* | 53,168 | |||||||||
20,540 | UnitedHealth Group, Inc. | 1,276,356 | |||||||||
9,712 | WellPoint, Inc.* | 774,921 | |||||||||
5,717,115 |
Shares | Value | ||||||||||
Hotels, Restaurants and Leisure — 1.5% | |||||||||||
8,514 | Carnival Corp. | $ | 455,243 | ||||||||
2,575 | Darden Restaurants, Inc. | 100,116 | |||||||||
2,649 | Harrah's Entertainment, Inc. | 188,847 | |||||||||
5,226 | Hilton Hotels Corp. | 125,999 | |||||||||
5,356 | Int'l. Game Technology | 164,858 | |||||||||
3,443 | Marriott Int'l., Inc. – Class A | 230,578 | |||||||||
20,021 | McDonald's Corp. | 675,108 | |||||||||
12,296 | Starbucks Corp.* | 369,003 | |||||||||
3,141 | Starwood Hotels & Resorts Worldwide, Inc. | 200,584 | |||||||||
1,623 | Wendy's Int'l., Inc. | 89,687 | |||||||||
4,234 | Yum! Brands, Inc. | 198,490 | |||||||||
2,798,513 | |||||||||||
Household Durables — 0.7% | |||||||||||
1,127 | Black & Decker Corp. | 98,004 | |||||||||
2,084 | Centex Corp. | 148,985 | |||||||||
4,100 | D.R. Horton, Inc. | 146,493 | |||||||||
2,219 | Fortune Brands, Inc. | 173,127 | |||||||||
1,236 | KB Home | 89,808 | |||||||||
2,782 | Leggett & Platt, Inc. | 63,875 | |||||||||
2,100 | Lennar Corp. – Class A | 128,142 | |||||||||
1,066 | Maytag Corp. | 20,062 | |||||||||
3,827 | Newell Rubbermaid, Inc. | 91,006 | |||||||||
4,092 | Pulte Homes, Inc. | 161,061 | |||||||||
811 | Snap-On, Inc. | 30,461 | |||||||||
1,228 | Stanley Works | 58,993 | |||||||||
933 | Whirlpool Corp. | 78,148 | |||||||||
1,288,165 | |||||||||||
Household Products — 2.3% | |||||||||||
3,390 | Clorox Co. | 192,857 | |||||||||
8,248 | Colgate-Palmolive Co. | 452,403 | |||||||||
7,704 | Kimberly-Clark Corp. | 459,543 | |||||||||
54,201 | Procter & Gamble Co. | 3,137,154 | |||||||||
4,241,957 | |||||||||||
Independent Power Producers and Energy Traders — 0.7% | |||||||||||
10,232 | AES Corp.* | 161,973 | |||||||||
3,535 | Constellation Energy Group, Inc. | 203,616 | |||||||||
16,678 | Duke Energy Corp. | 457,811 | |||||||||
4,647 | Dynegy, Inc. – Class A* | 22,491 | |||||||||
7,890 | TXU Corp. | 395,999 | |||||||||
1,241,890 | |||||||||||
Industrial Conglomerates — 4.3% | |||||||||||
11,794 | 3M Co. | 914,035 | |||||||||
169,266 | General Electric Co. | 5,932,773 | |||||||||
2,056 | Textron, Inc. | 158,271 | |||||||||
34,410 | Tyco Int'l. Ltd. | 993,073 | |||||||||
7,998,152 | |||||||||||
Information Technology Services — 1.0% | |||||||||||
2,100 | Affiliated Computer Svcs., Inc. – Class A* | 124,278 | |||||||||
9,179 | Automatic Data Processing, Inc. | 421,225 | |||||||||
2,951 | Computer Sciences Corp.* | 149,439 | |||||||||
2,482 | Convergys Corp.* | 39,340 | |||||||||
7,704 | Electronic Data Systems Corp. | 185,204 | |||||||||
14,105 | First Data Corp. | 606,656 | |||||||||
2,689 | Fiserv, Inc.* | 116,353 | |||||||||
6,010 | Paychex, Inc. | 229,101 | |||||||||
1,910 | Sabre Hldgs. Corp. – Class A | 46,050 | |||||||||
4,516 | Unisys Corp.* | 26,328 | |||||||||
1,943,974 |
See notes to financial statements.
71
n The Guardian S&P 500 Index Fund
Schedule of Investments (Continued)
December 31, 2005
Shares | Value | ||||||||||
Insurance — 4.8% | |||||||||||
4,286 | ACE Ltd. | $ | 229,044 | ||||||||
7,659 | AFLAC, Inc. | 355,531 | |||||||||
10,558 | Allstate Corp. | 570,871 | |||||||||
1,504 | Ambac Financial Group, Inc. | 115,898 | |||||||||
41,806 | American Int'l. Group, Inc. | 2,852,423 | |||||||||
4,649 | Aon Corp. | 167,132 | |||||||||
2,889 | Chubb Corp. | 282,111 | |||||||||
3,377 | Cincinnati Financial Corp. | 150,884 | |||||||||
6,100 | Genworth Financial, Inc. – Class A | 210,938 | |||||||||
5,161 | Hartford Financial Svcs. Group, Inc. | 443,278 | |||||||||
2,226 | Jefferson-Pilot Corp. | 126,726 | |||||||||
2,766 | Lincoln Nat'l. Corp. | 146,681 | |||||||||
2,251 | Loews Corp. | 213,507 | |||||||||
9,335 | Marsh & McLennan Cos., Inc. | 296,480 | |||||||||
2,115 | MBIA, Inc. | 127,238 | |||||||||
12,697 | MetLife, Inc. | 622,153 | |||||||||
3,436 | Progressive Corp. | 401,256 | |||||||||
8,227 | Prudential Financial, Inc. | 602,134 | |||||||||
1,823 | SAFECO Corp. | 103,000 | |||||||||
10,367 | St. Paul Travelers Cos., Inc. | 463,094 | |||||||||
1,831 | Torchmark Corp. | 101,804 | |||||||||
4,975 | UnumProvident Corp. | 113,181 | |||||||||
2,213 | XL Capital Ltd. – Class A | 149,112 | |||||||||
8,844,476 | |||||||||||
Internet and Catalog Retail — 0.5% | |||||||||||
4,900 | Amazon.com, Inc* | 231,035 | |||||||||
17,412 | eBay, Inc.* | 753,069 | |||||||||
984,104 | |||||||||||
Internet Software and Services — 0.4% | |||||||||||
20,701 | Yahoo! Inc.* | 811,065 | |||||||||
Leisure Equipment and Products — 0.2% | |||||||||||
1,223 | Brunswick Corp. | 49,727 | |||||||||
4,324 | Eastman Kodak Co. | 101,181 | |||||||||
2,426 | Hasbro, Inc. | 48,957 | |||||||||
6,117 | Mattel, Inc. | 96,771 | |||||||||
296,636 | |||||||||||
Machinery — 1.4% | |||||||||||
10,476 | Caterpillar, Inc. | 605,199 | |||||||||
571 | Cummins, Inc. | 51,236 | |||||||||
4,676 | Danaher Corp. | 260,827 | |||||||||
3,730 | Deere & Co. | 254,050 | |||||||||
2,911 | Dover Corp. | 117,866 | |||||||||
2,354 | Eaton Corp. | 157,930 | |||||||||
4,071 | Illinois Tool Works, Inc. | 358,207 | |||||||||
5,306 | Ingersoll-Rand Co. Ltd. – Class A | 214,203 | |||||||||
1,256 | ITT Inds., Inc. | 129,142 | |||||||||
1,366 | Navistar Int'l. Corp.* | 39,095 | |||||||||
2,467 | PACCAR, Inc. | 170,791 | |||||||||
1,735 | Pall Corp. | 46,602 | |||||||||
1,682 | Parker-Hannifin Corp. | 110,945 | |||||||||
2,516,093 | |||||||||||
Media — 3.3% | |||||||||||
1,157 | CCE Spinco, Inc.* | 15,157 | |||||||||
9,260 | Clear Channel Comm., Inc. | 291,227 | |||||||||
34,494 | Comcast Corp. – Class A* | 895,464 | |||||||||
1,237 | Dow Jones & Co., Inc. | 43,901 | |||||||||
4,065 | Gannett Co., Inc. | 246,217 | |||||||||
5,651 | Interpublic Group Cos., Inc.* | 54,532 | |||||||||
1,337 | Knight-Ridder, Inc. | 84,632 | |||||||||
5,632 | McGraw-Hill Cos., Inc. | 290,780 | |||||||||
690 | Meredith Corp. | 36,115 |
Shares | Value | ||||||||||
2,319 | New York Times Co. – Class A | $ | 61,338 | ||||||||
42,200 | News Corp. – Class A | 656,210 | |||||||||
2,999 | Omnicom Group, Inc. | 255,305 | |||||||||
73,818 | Time Warner, Inc. | 1,287,386 | |||||||||
5,202 | Tribune Co. | 157,412 | |||||||||
4,887 | Univision Comm., Inc. – Class A* | 143,629 | |||||||||
26,391 | Viacom, Inc. – Class B* | 860,347 | |||||||||
31,096 | Walt Disney Co. | 745,371 | |||||||||
6,125,023 | |||||||||||
Metals and Mining — 0.8% | |||||||||||
13,096 | Alcoa, Inc. | 387,249 | |||||||||
1,448 | Allegheny Technologies, Inc. | 52,244 | |||||||||
3,526 | Freeport-McMoran Copper & Gold, Inc. – Class B | 189,699 | |||||||||
7,119 | Newmont Mining Corp. | 380,154 | |||||||||
2,435 | Nucor Corp. | 162,463 | |||||||||
1,425 | Phelps Dodge Corp. | 205,015 | |||||||||
1,892 | United States Steel Corp. | 90,948 | |||||||||
1,467,772 | |||||||||||
Multiline Retail — 1.1% | |||||||||||
1,561 | Big Lots, Inc.* | 18,748 | |||||||||
1,201 | Dillards, Inc. – Class A | 29,809 | |||||||||
4,737 | Dollar General Corp. | 90,335 | |||||||||
2,900 | Family Dollar Stores, Inc. | 71,891 | |||||||||
4,168 | Federated Department Stores, Inc. | 276,463 | |||||||||
4,629 | J.C. Penney Co., Inc. | 257,372 | |||||||||
5,280 | Kohl's Corp.* | 256,608 | |||||||||
2,774 | Nordstrom, Inc. | 103,748 | |||||||||
1,563 | Sears Hldgs. Corp.* | 180,573 | |||||||||
13,845 | Target Corp. | 761,060 | |||||||||
2,046,607 | |||||||||||
Multi-Utilities — 1.0% | |||||||||||
3,771 | Ameren Corp. | 193,226 | |||||||||
4,248 | CenterPoint Energy, Inc. | 54,587 | |||||||||
2,596 | CMS Energy Corp.* | 37,668 | |||||||||
3,075 | Consolidated Edison, Inc. | 142,465 | |||||||||
4,770 | Dominion Resources, Inc. | 368,244 | |||||||||
2,578 | DTE Energy Co. | 111,344 | |||||||||
4,116 | KeySpan Corp. | 146,900 | |||||||||
4,276 | NiSource, Inc. | 89,197 | |||||||||
6,344 | PG&E Corp. | 235,489 | |||||||||
3,650 | Public Svc. Enterprise Group, Inc. | 237,141 | |||||||||
3,727 | Sempra Energy | 167,119 | |||||||||
2,624 | TECO Energy, Inc. | 45,080 | |||||||||
6,601 | Xcel Energy, Inc. | 121,854 | |||||||||
1,950,314 | |||||||||||
Office Electronics — 0.1% | |||||||||||
11,648 | Xerox Corp.* | 170,643 | |||||||||
Oil, Gas and Consumable Fuels — 7.5% | |||||||||||
1,272 | Amerada Hess Corp. | 161,315 | |||||||||
3,676 | Anadarko Petroleum Corp. | 348,301 | |||||||||
4,912 | Apache Corp. | 336,570 | |||||||||
6,212 | Burlington Resources, Inc. | 535,474 | |||||||||
36,734 | Chevron Corp. | 2,085,389 | |||||||||
22,346 | ConocoPhillips | 1,300,090 | |||||||||
7,142 | Devon Energy Corp. | 446,661 | |||||||||
10,252 | El Paso Corp. | 124,664 | |||||||||
3,648 | EOG Resources, Inc. | 267,654 | |||||||||
101,680 | Exxon Mobil Corp. | 5,711,366 | |||||||||
1,850 | Kerr-McGee Corp. | 168,091 | |||||||||
1,448 | Kinder Morgan, Inc. | 133,144 | |||||||||
6,284 | Marathon Oil Corp. | 383,136 | |||||||||
2,600 | Murphy Oil Corp. | 140,374 |
See notes to financial statements.
72
n The Guardian S&P 500 Index Fund
Schedule of Investments (Continued)
December 31, 2005
Shares | Value | ||||||||||
6,371 | Occidental Petroleum Corp. | $ | 508,916 | ||||||||
2,338 | Sunoco, Inc. | 183,252 | |||||||||
10,000 | Valero Energy Corp. | 516,000 | |||||||||
9,907 | Williams Cos., Inc. | 229,545 | |||||||||
5,466 | XTO Energy, Inc. | 240,176 | |||||||||
13,820,118 | |||||||||||
Paper and Forest Products — 0.3% | |||||||||||
7,547 | Int'l. Paper Co. | 253,655 | |||||||||
1,413 | Louisiana-Pacific Corp. | 38,815 | |||||||||
2,831 | MeadWestvaco Corp. | 79,353 | |||||||||
4,011 | Weyerhaeuser Co. | 266,090 | |||||||||
637,913 | |||||||||||
Personal Products — 0.1% | |||||||||||
1,201 | Alberto-Culver Co. | 54,946 | |||||||||
6,846 | Avon Products, Inc. | 195,453 | |||||||||
250,399 | |||||||||||
Pharmaceuticals — 6.3% | |||||||||||
24,216 | Abbott Laboratories | 954,837 | |||||||||
1,885 | Allergan, Inc. | 203,505 | |||||||||
29,523 | Bristol-Myers Squibb Corp. | 678,439 | |||||||||
18,227 | Eli Lilly & Co. | 1,031,466 | |||||||||
5,593 | Forest Laboratories, Inc.* | 227,523 | |||||||||
48,070 | Johnson & Johnson | 2,889,007 | |||||||||
3,608 | King Pharmaceuticals, Inc.* | 61,047 | |||||||||
36,962 | Merck & Co., Inc. | 1,175,761 | |||||||||
4,100 | Mylan Laboratories, Inc. | 81,836 | |||||||||
119,992 | Pfizer, Inc. | 2,798,213 | |||||||||
22,681 | Schering-Plough Corp. | 472,899 | |||||||||
2,740 | Watson Pharmaceuticals, Inc.* | 89,077 | |||||||||
20,740 | Wyeth | 955,492 | |||||||||
11,619,102 | |||||||||||
Real Estate — 0.7% | |||||||||||
1,513 | Apartment Investment & Management Co. – Class A | 57,297 | |||||||||
2,900 | Archstone-Smith Trust | 121,481 | |||||||||
6,439 | Equity Office Pptys. Trust | 195,295 | |||||||||
4,460 | Equity Residential | 174,475 | |||||||||
2,659 | Plum Creek Timber Co., Inc. | 95,857 | |||||||||
2,678 | ProLogis | 125,116 | |||||||||
1,300 | Public Storage, Inc. | 88,036 | |||||||||
3,660 | Simon Ppty. Group, Inc. | 280,466 | |||||||||
2,100 | Vornado Realty Trust | 175,287 | |||||||||
1,313,310 | |||||||||||
Road and Rail — 0.7% | |||||||||||
5,663 | Burlington Northern Santa Fe | 401,054 | |||||||||
3,037 | CSX Corp. | 154,188 | |||||||||
6,560 | Norfolk Southern Corp. | 294,085 | |||||||||
4,600 | Union Pacific Corp. | 370,346 | |||||||||
1,219,673 | |||||||||||
Semiconductors and Semiconductor Equipment — 3.2% | |||||||||||
7,969 | Advanced Micro Devices, Inc.* | 243,851 | |||||||||
5,686 | Altera Corp.* | 105,362 | |||||||||
5,668 | Analog Devices, Inc. | 203,311 | |||||||||
27,399 | Applied Materials, Inc. | 491,538 | |||||||||
4,283 | Applied Micro Circuits Corp.* | 11,007 | |||||||||
5,795 | Broadcom Corp. – Class A* | 273,234 | |||||||||
7,613 | Freescale Semiconductor, Inc. – Class B* | 191,619 | |||||||||
99,614 | Intel Corp. | 2,486,365 | |||||||||
3,041 | KLA-Tencor Corp. | 150,013 | |||||||||
4,550 | Linear Technology Corp. | 164,119 | |||||||||
5,783 | LSI Logic Corp.* | 46,264 |
Shares | Value | ||||||||||
4,899 | Maxim Integrated Products, Inc. | $ | 177,540 | ||||||||
8,530 | Micron Technology, Inc.* | 113,534 | |||||||||
6,136 | National Semiconductor Corp. | 159,413 | |||||||||
2,577 | Novellus Systems, Inc.* | 62,157 | |||||||||
2,760 | NVIDIA Corp.* | 100,906 | |||||||||
3,235 | PMC-Sierra, Inc.* | 24,942 | |||||||||
2,493 | Teradyne, Inc.* | 36,323 | |||||||||
26,280 | Texas Instruments, Inc. | 842,800 | |||||||||
5,339 | Xilinx, Inc. | 134,596 | |||||||||
6,018,894 | |||||||||||
Software — 3.5% | |||||||||||
7,500 | Adobe Systems, Inc. | 277,200 | |||||||||
3,550 | Autodesk, Inc. | 152,473 | |||||||||
3,499 | BMC Software, Inc.* | 71,695 | |||||||||
2,659 | Citrix Systems, Inc.* | 76,526 | |||||||||
9,148 | Computer Associates Int'l., Inc. | 257,882 | |||||||||
5,272 | Compuware Corp.* | 47,290 | |||||||||
4,446 | Electronic Arts, Inc.* | 232,570 | |||||||||
3,242 | Intuit, Inc.* | 172,799 | |||||||||
1,159 | Mercury Interactive Corp.* | 32,209 | |||||||||
150,276 | Microsoft Corp. | 3,929,717 | |||||||||
6,727 | Novell, Inc.* | 59,399 | |||||||||
62,999 | Oracle Corp.* | 769,218 | |||||||||
3,803 | Parametric Technology Corp.* | 23,198 | |||||||||
6,843 | Siebel Systems, Inc. | 72,399 | |||||||||
17,331 | Symantec Corp.* | 303,292 | |||||||||
6,477,867 | |||||||||||
Specialty Retail — 2.2% | |||||||||||
4,489 | AutoNation, Inc.* | 97,546 | |||||||||
1,333 | AutoZone, Inc.* | 122,303 | |||||||||
4,634 | Bed, Bath & Beyond, Inc.* | 167,519 | |||||||||
7,234 | Best Buy Co., Inc. | 314,534 | |||||||||
2,929 | Circuit City Stores, Inc. | 66,166 | |||||||||
34,767 | Home Depot, Inc. | 1,407,368 | |||||||||
5,655 | Limited Brands | 126,389 | |||||||||
12,053 | Lowe's Cos., Inc. | 803,453 | |||||||||
4,230 | Office Depot, Inc.* | 132,822 | |||||||||
1,654 | OfficeMax, Inc. | 41,946 | |||||||||
2,665 | RadioShack Corp. | 56,045 | |||||||||
2,265 | Sherwin-Williams Co. | 102,876 | |||||||||
11,179 | Staples, Inc. | 253,875 | |||||||||
10,290 | The Gap, Inc. | 181,516 | |||||||||
2,083 | Tiffany & Co. | 79,758 | |||||||||
7,969 | TJX Cos., Inc. | 185,120 | |||||||||
4,139,236 | |||||||||||
Textiles, Apparel and Luxury Goods — 0.4% | |||||||||||
5,600 | Coach, Inc.* | 186,704 | |||||||||
2,039 | Jones Apparel Group, Inc. | 62,638 | |||||||||
1,864 | Liz Claiborne, Inc. | 66,768 | |||||||||
3,506 | NIKE, Inc. – Class B | 304,286 | |||||||||
649 | Reebok Int'l. Ltd. | 37,791 | |||||||||
1,473 | V.F. Corp. | 81,516 | |||||||||
739,703 | |||||||||||
Thrifts and Mortgage Finance — 1.6% | |||||||||||
8,654 | Countrywide Financial Corp. | 295,881 | |||||||||
10,495 | Federal Home Loan Mortgage Corp. | 685,848 | |||||||||
15,754 | Federal National Mortgage Assn. | 768,953 | |||||||||
4,552 | Golden West Financial Corp. | 300,432 | |||||||||
1,532 | MGIC Investment Corp. | 100,836 | |||||||||
5,100 | Sovereign Bancorp, Inc. | 110,262 | |||||||||
15,464 | Washington Mutual, Inc. | 672,684 | |||||||||
2,934,896 |
See notes to financial statements.
73
n The Guardian S&P 500 Index Fund
Schedule of Investments (Continued)
December 31, 2005
Shares | Value | ||||||||||
Tobacco — 1.5% | |||||||||||
33,365 | Altria Group, Inc. | $ | 2,493,033 | ||||||||
1,545 | Reynolds American, Inc. | 147,285 | |||||||||
2,362 | UST, Inc. | 96,440 | |||||||||
2,736,758 | |||||||||||
Trading Companies and Distributors — 0.1% | |||||||||||
1,444 | W.W. Grainger, Inc. | 102,668 | |||||||||
Wireless Telecommunication Services — 0.8% | |||||||||||
5,814 | ALLTEL Corp. | 366,863 | |||||||||
47,919 | Sprint Nextel Corp. | 1,119,388 | |||||||||
1,486,251 | |||||||||||
Total Common Stocks (Cost $166,383,062) | 181,972,377 | ||||||||||
Principal Amount | Value | ||||||||||
U.S. Government Security — 0.1% | |||||||||||
U.S. Treasury Bill — 0.1% | |||||||||||
$ | 250,000 | U.S. Treasury Bill | |||||||||
3.86% due 3/30/2006 (1) | |||||||||||
(Cost $247,641) | $ | 247,641 |
Principal Amount | Value | ||||||||||
Repurchase Agreement — 1.5% | |||||||||||
$ | 2,754,000 | State Street Bank and Trust Co. | |||||||||
repurchase agreement, | |||||||||||
dated 12/30/2005, maturity | |||||||||||
value of $2,755,261 at | |||||||||||
4.12%, due 1/3/2006 (2) | |||||||||||
(Cost $2,754,000) | $ | 2,754,000 | |||||||||
Total Investments — 99.9% (Cost $169,384,703) | 184,974,018 | ||||||||||
Cash, Receivables, and Other Assets Less Liabilities — 0.1% | 101,822 | ||||||||||
Net Assets — 100% | $ | 185,075,840 |
* Non-income producing security.
(1) The U.S. Treasury Bill is segregated as collateral to cover margin requirements on open futures contracts.
(2) The repurchase agreement is fully collateralized by $2,800,000 in U.S. Government Agency, 5.50%, due 11/16/2015, with a value of $2,814,000.
Contracts | Description | Expiration | Unrealized Depreciation | ||||||||||||
Purchased Futures Contracts | |||||||||||||||
8 | S&P 500 Index | 3/2006 | $ | (22,540 | ) |
See notes to financial statements.
74
n The Guardian Baillie Gifford International Growth Fund
Schedule of Investments
December 31, 2005
Shares | Value | ||||||||||
Common Stocks — 95.7% | |||||||||||
Australia — 4.8% | |||||||||||
Beverages — 0.3% | |||||||||||
53,400 | Fosters Group Ltd. | $ | 218,756 | ||||||||
Commercial Banks — 1.0% | |||||||||||
22,354 | Australia and NZ Banking Group Ltd. | 393,048 | |||||||||
15,000 | Westpac Banking Corp. | 250,529 | |||||||||
643,577 | |||||||||||
Commercial Services and Supplies — 0.4% | |||||||||||
31,000 | Brambles Inds. Ltd. | 230,318 | |||||||||
Construction Materials — 0.3% | |||||||||||
24,000 | James Hardie Inds. NV | 158,577 | |||||||||
Food and Staples Retailing — 0.5% | |||||||||||
27,306 | Woolworths Ltd. | 337,787 | |||||||||
Media — 0.2% | |||||||||||
33,000 | John Fairfax Hldgs. Ltd. | 97,150 | |||||||||
Metals and Mining — 1.2% | |||||||||||
45,406 | BHP Billiton Ltd. | 758,367 | |||||||||
Oil, Gas and Consumable Fuels — 0.5% | |||||||||||
11,900 | Woodside Petroleum Ltd. | 342,379 | |||||||||
Real Estate — 0.4% | |||||||||||
19,000 | Westfield Group | 253,311 | |||||||||
3,040,222 | |||||||||||
Belgium — 1.8% | |||||||||||
Diversified Financial Services — 1.8% | |||||||||||
11,816 | Groupe Bruxelles Lambert S.A. | 1,159,279 | |||||||||
Brazil — 0.5% | |||||||||||
Diversified Telecommunication Services — 0.5% | |||||||||||
16,700 | Telecom. Norte Leste Participacoes ADR | 299,264 | |||||||||
Denmark — 3.4% | |||||||||||
Chemicals — 1.0% | |||||||||||
11,980 | Novozymes AS | 656,131 | |||||||||
Commercial Banks — 2.4% | |||||||||||
42,840 | Danske Bank AS | 1,509,792 | |||||||||
2,165,923 | |||||||||||
Finland — 2.1% | |||||||||||
Construction and Engineering — 2.1% | |||||||||||
34,200 | Kone OYJ* | 1,357,953 | |||||||||
France — 11.0% | |||||||||||
Beverages — 0.9% | |||||||||||
3,340 | Pernod-Ricard S.A. | 583,001 | |||||||||
Diversified Financial Services — 1.5% | |||||||||||
9,065 | Eurazeo | 946,270 | |||||||||
Health Care Equipment and Supplies — 2.3% | |||||||||||
17,790 | Essilor Int'l. S.A. | 1,436,764 | |||||||||
Oil, Gas and Consumable Fuels — 3.0% | |||||||||||
7,490 | Total S.A. | 1,882,141 | |||||||||
Personal Products — 1.5% | |||||||||||
13,091 | L'Oreal S.A. | 973,548 | |||||||||
Pharmaceuticals — 1.8% | |||||||||||
13,265 | Sanofi-Aventis | 1,162,423 | |||||||||
6,984,147 | |||||||||||
Germany — 5.7% | |||||||||||
Health Care Providers and Services — 1.6% | |||||||||||
11,672 | Celesio AG | 1,004,305 | |||||||||
Multi–Utilities — 1.0% | |||||||||||
8,100 | RWE AG* | 599,981 | |||||||||
Software — 2.0% | |||||||||||
7,163 | SAP AG | 1,299,168 |
Shares | Value | ||||||||||
Textiles, Apparel and Luxury Goods — 1.1% | |||||||||||
3,770 | Adidas-Salomon AG | $ | 714,310 | ||||||||
3,617,764 | |||||||||||
Hong Kong — 1.9% | |||||||||||
Commercial Banks — 0.2% | |||||||||||
60,500 | BOC Hong Kong Hldgs. Ltd. | 116,653 | |||||||||
Distributors — 0.2% | |||||||||||
78,000 | Li & Fung Ltd. | 150,396 | |||||||||
Diversified Financial Services — 0.3% | |||||||||||
50,000 | Hong Kong Exchanges & Clearing Ltd. | 207,324 | |||||||||
Media — 0.2% | |||||||||||
20,000 | Television Broadcasts Ltd. | 106,274 | |||||||||
Real Estate — 1.0% | |||||||||||
48,000 | Cheung Kong Hldgs. Ltd. | 493,090 | |||||||||
17,000 | Sun Hung Kai Properties Ltd. | 166,085 | |||||||||
659,175 | |||||||||||
1,239,822 | |||||||||||
Ireland — 2.9% | |||||||||||
Commercial Banks — 1.3% | |||||||||||
39,230 | Allied Irish Banks PLC | 838,534 | |||||||||
Construction Materials — 1.6% | |||||||||||
35,380 | CRH PLC | 1,041,140 | |||||||||
1,879,674 | |||||||||||
Italy — 0.9% | |||||||||||
Oil, Gas and Consumable Fuels — 0.9% | |||||||||||
19,810 | ENI SPA | 549,644 | |||||||||
Japan — 23.7% | |||||||||||
Auto Components — 1.1% | |||||||||||
33,000 | Bridgestone Corp. | 687,267 | |||||||||
Automobiles — 1.5% | |||||||||||
94,100 | Nissan Motor Co. Ltd. | 953,932 | |||||||||
Building Products — 1.5% | |||||||||||
76,000 | Asahi Glass Co. | 981,914 | |||||||||
Commercial Banks — 1.4% | |||||||||||
64 | Mitsubishi UFJ Financial Group, Inc. | 868,680 | |||||||||
Diversified Financial Services — 1.0% | |||||||||||
9,700 | Promise Co. | 645,953 | |||||||||
Electronic Equipment and Instruments — 3.2% | |||||||||||
2,800 | Keyence Corp. | 796,912 | |||||||||
34,500 | Konica Minolta Hldgs., Inc. | 351,497 | |||||||||
8,200 | Nidec Corp. | 697,710 | |||||||||
20,000 | YASKAWA Electric Corp.* | 201,900 | |||||||||
2,048,019 | |||||||||||
Household Products — 0.9% | |||||||||||
22,000 | Kao Corp. | 589,752 | |||||||||
Insurance — 1.3% | |||||||||||
70,000 | Mitsui Sumitomo Insurance Co. | 856,888 | |||||||||
Machinery — 1.1% | |||||||||||
24,900 | Daikin Inds. Ltd. | 728,750 | |||||||||
Marine — 1.2% | |||||||||||
89,000 | Mitsui O.S.K. Lines Ltd. | 776,900 | |||||||||
Office Electronics — 1.4% | |||||||||||
14,800 | Canon, Inc. | 866,305 | |||||||||
Paper and Forest Products — 0.4% | |||||||||||
55 | Nippon Paper Group, Inc. | 220,224 | |||||||||
Real Estate — 0.9% | |||||||||||
27,000 | Sumitomo Realty & Dev't. Co. Ltd. | 587,504 | |||||||||
Road and Rail — 1.2% | |||||||||||
105,000 | Tokyu Corp. | 742,874 | |||||||||
Specialty Retail — 1.5% | |||||||||||
7,600 | Yamada Denki Co. Ltd. | 951,612 |
See notes to financial statements.
75
n The Guardian Baillie Gifford International Growth Fund
Schedule of Investments (Continued)
December 31, 2005
Shares | Value | ||||||||||
Tobacco — 1.1% | |||||||||||
46 | Japan Tobacco, Inc. | $ | 671,191 | ||||||||
Trading Companies and Distributors — 2.1% | |||||||||||
8,400 | Hitachi High-Technologies Corp. | 210,214 | |||||||||
86,000 | Mitsui & Co. Ltd. | 1,105,276 | |||||||||
1,315,490 | |||||||||||
Wireless Telecommunication Services — 0.9% | |||||||||||
104 | KDDI Corp. | 599,932 | |||||||||
15,093,187 | |||||||||||
Luxembourg — 1.4% | |||||||||||
Wireless Telecommunication Services — 1.4% | |||||||||||
51,000 | SES Global | 893,230 | |||||||||
New Zealand — 0.3% | |||||||||||
Diversified Telecommunication Services — 0.3% | |||||||||||
53,400 | Telecom. Corp. of New Zealand | 219,663 | |||||||||
Russia — 0.4% | |||||||||||
Wireless Telecommunication Services — 0.4% | |||||||||||
7,100 | Mobile Telesystems ADR | 248,500 | |||||||||
Singapore — 0.4% | |||||||||||
Industrial Conglomerates — 0.2% | |||||||||||
19,000 | Keppel Corp. Ltd. | 125,669 | |||||||||
Media — 0.2% | |||||||||||
56,000 | Singapore Press Hldgs. Ltd. | 144,790 | |||||||||
270,459 | |||||||||||
South Africa — 0.5% | |||||||||||
Oil, Gas and Consumable Fuels — 0.5% | |||||||||||
8,956 | Sasol Ltd. | 320,717 | |||||||||
South Korea — 0.6% | |||||||||||
Semiconductors and Semiconductor Equipment — 0.6% | |||||||||||
1,080 | Samsung Electronics Co. Ltd. GDR† | 355,860 | |||||||||
Spain — 2.3% | |||||||||||
Commercial Banks — 1.1% | |||||||||||
60,650 | Banco Popular Espanol S.A. | 739,764 | |||||||||
Tobacco — 1.2% | |||||||||||
16,720 | Altadis S.A. | 758,729 | |||||||||
1,498,493 | |||||||||||
Sweden — 6.9% | |||||||||||
Commercial Banks — 1.5% | |||||||||||
39,376 | Svenska Handelsbanken AB | 976,789 | |||||||||
Communications Equipment — 1.0% | |||||||||||
182,870 | LM Ericsson | 628,649 | |||||||||
Health Care Equipment and Supplies — 1.1% | |||||||||||
51,430 | Getinge AB | 709,143 | |||||||||
Machinery — 3.3% | |||||||||||
74,580 | Atlas Copco AB | 1,488,519 | |||||||||
13,479 | Sandvik AB | 628,004 | |||||||||
2,116,523 | |||||||||||
4,431,104 | |||||||||||
Switzerland — 4.7% | |||||||||||
Commercial Banks — 2.7% | |||||||||||
17,810 | UBS AG | 1,694,384 | |||||||||
Electrical Equipment — 2.0% | |||||||||||
134,300 | ABB Ltd.* | 1,302,198 | |||||||||
2,996,582 |
Shares | Value | ||||||||||
United Kingdom — 19.5% | |||||||||||
Commercial Banks — 2.8% | |||||||||||
41,664 | Royal Bank of Scotland | $ | 1,256,682 | ||||||||
23,000 | Standard Chartered PLC | 511,900 | |||||||||
1,768,582 | |||||||||||
Commercial Services and Supplies — 1.1% | |||||||||||
56,000 | Capita Group PLC | 401,098 | |||||||||
141,000 | Hays PLC | 304,124 | |||||||||
705,222 | |||||||||||
Health Care Equipment and Supplies — 0.7% | |||||||||||
44,000 | Smith & Nephew PLC | 404,948 | |||||||||
Hotels, Restaurants and Leisure — 2.4% | |||||||||||
14,800 | Carnival PLC | 839,389 | |||||||||
112,000 | Hilton Group PLC | 699,697 | |||||||||
1,539,086 | |||||||||||
Media — 1.0% | |||||||||||
67,805 | Yell Group PLC | 625,200 | |||||||||
Metals and Mining — 1.0% | |||||||||||
40,000 | BHP Billiton PLC | 652,743 | |||||||||
Oil, Gas and Consumable Fuels — 3.2% | |||||||||||
79,000 | BG Group PLC | 780,018 | |||||||||
120,000 | BP PLC | 1,276,613 | |||||||||
2,056,631 | |||||||||||
Pharmaceuticals — 1.6% | |||||||||||
40,902 | GlaxoSmithKline PLC | 1,032,652 | |||||||||
Specialty Retail — 0.6% | |||||||||||
98,000 | Kingfisher PLC | 399,595 | |||||||||
Tobacco — 2.1% | |||||||||||
42,000 | Gallaher Group PLC | 633,408 | |||||||||
24,000 | Imperial Tobacco | 716,471 | |||||||||
1,349,879 | |||||||||||
Trading Companies and Distributors — 1.0% | |||||||||||
29,000 | Wolseley PLC | 610,551 | |||||||||
Wireless Telecommunication Services — 2.0% | |||||||||||
587,650 | Vodafone Group | 1,267,506 | |||||||||
12,412,595 | |||||||||||
Total Common Stocks (Cost $41,569,515) | 61,034,082 | ||||||||||
Preferred Stocks — 2.3% | |||||||||||
Brazil — 1.5% | |||||||||||
Oil, Gas and Consumable Fuels — 1.5% | |||||||||||
14,700 | Petroleo Brasileiro S.A. ADR | $ | 946,239 | ||||||||
Germany — 0.8% | |||||||||||
Automobiles — 0.8% | |||||||||||
700 | Porsche AG | 503,142 | |||||||||
Total Preferred Stocks (Cost $522,356) | 1,449,381 |
See notes to financial statements.
76
n The Guardian Baillie Gifford International Growth Fund
Schedule of Investments (Continued)
December 31, 2005
Principal Amount | Value | ||||||||||
Repurchase Agreement — 2.3% | |||||||||||
$ | 1,498,000 | State Street Bank and Trust Co. | |||||||||
repurchase agreement, | |||||||||||
dated 12/30/2005, maturity | |||||||||||
value of $1,498,341 at | |||||||||||
2.05%, due 1/3/2006 (1) | |||||||||||
(Cost $1,498,000) | $ | 1,498,000 | |||||||||
Total Investments — 100.3% (Cost $43,589,871) | 63,981,463 | ||||||||||
Liabilities in Excess of Cash, Receivables and Other Assets — (0.3)% | (213,127 | ) | |||||||||
Net Assets — 100% | $ | 63,768,336 |
* Non-income producing security.
† Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities have been deemed liquid pursuant to the Fund's liquidity procedures approved by the Board of Trustees and may be resold in transactions exempt from registration, normally to certain qualified buyers. At 12/31/2005, the aggregate market value of these securities amounted to $355,860 representing 0.6% of net assets.
(1) The repurchase agreement is fully collateralized by $1,520,000 in U.S. Treasury Note, 4.25%, due 8/15/2015, with a value of $1,530,275.
Glossary of Terms:
ADR — American Depositary Receipt.
GDR — Global Depositary Receipt.
See notes to financial statements.
77
n The Guardian Baillie Gifford Emerging Markets Fund
Schedule of Investments
December 31, 2005
Shares | Value | ||||||||||
Common Stocks — 93.0% | |||||||||||
Argentina — 0.0% | |||||||||||
Food and Staples Retailing — 0.0% | |||||||||||
11,480 | Imp. Y Exp. Patagonia | $ | 66,386 | ||||||||
Brazil — 4.1% | |||||||||||
Diversified Telecommunication Services — 0.6% | |||||||||||
62,600 | Telecom. Norte Leste Participacoes ADR | 1,121,792 | |||||||||
Media — 1.1% | |||||||||||
4,089,677 | Net Servicos de Comunicacao S.A.* | 1,873,669 | |||||||||
Metals and Mining — 0.9% | |||||||||||
36,900 | Comp. Vale Do Rio Doce ADR | 1,518,066 | |||||||||
Oil, Gas and Consumable Fuels — 1.5% | |||||||||||
37,800 | Petroleo Brasileiro S.A. ADR | 2,694,006 | |||||||||
7,207,533 | |||||||||||
Chile — 0.5% | |||||||||||
Commercial Banks — 0.5% | |||||||||||
21,000 | Banco Santander Chile ADR | 936,600 | |||||||||
Egypt — 1.5% | |||||||||||
Wireless Telecommunication Services — 1.5% | |||||||||||
49,292 | Orascom Telecom Hldg. SAE GDR | 2,637,122 | |||||||||
Hungary — 1.1% | |||||||||||
Commercial Banks — 1.1% | |||||||||||
56,000 | OTP Bank Rt. | 1,827,966 | |||||||||
India — 4.7% | |||||||||||
Chemicals — 1.6% | |||||||||||
69,000 | Reliance Inds. Ltd. GDR† | 2,727,570 | |||||||||
Commercial Banks — 1.0% | |||||||||||
35,500 | HDFC Bank Ltd. ADR | 1,806,950 | |||||||||
Information Technology Services — 2.1% | |||||||||||
46,000 | Infosys Technologies Ltd. ADR | 3,719,560 | |||||||||
8,254,080 | |||||||||||
Indonesia — 2.9% | |||||||||||
Commercial Banks — 1.0% | |||||||||||
5,659,500 | PT Bank Rakyat Indonesia | 1,739,836 | |||||||||
Diversified Telecommunication Services — 1.7% | |||||||||||
5,015,000 | PT Telekomunikasi Indonesia | 3,006,961 | |||||||||
Metals and Mining — 0.2% | |||||||||||
4,340,500 | PT Bumi Resources Tbk | 335,242 | |||||||||
5,082,039 | |||||||||||
Israel — 4.7% | |||||||||||
Chemicals — 1.0% | |||||||||||
309,100 | Makhteshim-Agan Inds. Ltd. | 1,782,392 | |||||||||
Commercial Banks — 1.2% | |||||||||||
470,000 | Bank Hapoalim Ltd. | 2,181,632 | |||||||||
Internet Software and Services — 1.3% | |||||||||||
112,000 | Check Point Software Technologies Ltd. ADR* | 2,251,200 | |||||||||
Pharmaceuticals — 1.2% | |||||||||||
48,000 | Teva Pharmaceutical Inds. Ltd. ADR | 2,064,480 | |||||||||
8,279,704 | |||||||||||
Malaysia — 4.0% | |||||||||||
Diversified Telecommunication Services — 1.0% | |||||||||||
655,000 | Telekom Malaysia Berhad | 1,655,047 | |||||||||
Electric Utilities — 0.4% | |||||||||||
355,000 | Malakoff Berhad | 770,208 | |||||||||
Food Products — 1.0% | |||||||||||
506,400 | IOI Corp. Berhad | 1,661,426 | |||||||||
Media — 0.7% | |||||||||||
920,000 | Astro All Asia Networks PLC | 1,277,947 |
Shares | Value | ||||||||||
Real Estate — 0.5% | |||||||||||
1,370,000 | Glomac Berhad | $ | 358,857 | ||||||||
530,000 | SP Setia Berhad | 457,150 | |||||||||
816,007 | |||||||||||
Transportation Infrastructure — 0.4% | |||||||||||
900,000 | PLUS Expressways Berhad | 728,668 | |||||||||
6,909,303 | |||||||||||
Mexico — 6.7% | |||||||||||
Commercial Banks — 1.3% | |||||||||||
1,122,800 | Grupo Fin. Banorte S.A. de C.V. | 2,326,149 | |||||||||
Construction and Engineering — 0.1% | |||||||||||
80,583 | Empresas ICA S.A. de C.V.* | 196,364 | |||||||||
Food and Staples Retailing — 1.2% | |||||||||||
364,511 | Wal-Mart de Mexico S.A. de C.V. | 2,023,394 | |||||||||
Household Durables — 0.5% | |||||||||||
214,000 | Consorcio Ara S.A. de C.V. | 936,234 | |||||||||
Transportation Infrastructure — 0.5% | |||||||||||
25,606 | Grupo Aeroportuario del Sureste S.A. de C.V. ADR | 828,098 | |||||||||
Wireless Telecommunication Services — 3.1% | |||||||||||
115,100 | America Movil S.A. de C.V. ADR | 3,367,826 | |||||||||
401,000 | America Telecom S.A. de C.V.* | 1,950,530 | |||||||||
5,318,356 | |||||||||||
11,628,595 | |||||||||||
Mozambique — 0.4% | |||||||||||
Metals and Mining — 0.4% | |||||||||||
900,000 | Kenmare Resources PLC* | 603,246 | |||||||||
People's Republic of China — 3.0% | |||||||||||
Diversified Telecommunication Services — 1.0% | |||||||||||
4,674,000 | China Telecom Corp. Ltd. | 1,702,969 | |||||||||
Oil, Gas and Consumable Fuels — 2.0% | |||||||||||
2,490,000 | CNOOC Ltd. | 1,653,887 | |||||||||
2,406,000 | PetroChina Co. Ltd. | 1,954,950 | |||||||||
3,608,837 | |||||||||||
5,311,806 | |||||||||||
Poland — 0.5% | |||||||||||
Media — 0.5% | |||||||||||
40,000 | Agora S.A. | 848,865 | |||||||||
Russia — 5.7% | |||||||||||
Diversified Consumer Services — 1.1% | |||||||||||
84,000 | AFK Sistema GDR | 1,974,000 | |||||||||
Metals and Mining — 0.4% | |||||||||||
44,000 | Peter Hambro Mining PLC* | 697,978 | |||||||||
Oil, Gas and Consumable Fuels — 3.2% | |||||||||||
75,000 | LUKOIL ADR | 4,425,000 | |||||||||
17,300 | OAO Gazprom ADR | 1,240,410 | |||||||||
5,665,410 | |||||||||||
Wireless Telecommunication Services — 1.0% | |||||||||||
38,000 | VimpelCom ADR* | 1,680,740 | |||||||||
10,018,128 | |||||||||||
South Africa — 10.9% | |||||||||||
Commercial Banks — 1.4% | |||||||||||
208,500 | Standard Bank Group Ltd. | 2,499,033 | |||||||||
Diversified Telecommunication Services — 1.0% | |||||||||||
86,000 | Telkom Group Ltd. | 1,832,174 | |||||||||
Food and Staples Retailing — 0.6% | |||||||||||
118,811 | Massmart Hldgs. Ltd. | 970,212 | |||||||||
Industrial Conglomerates — 1.2% | |||||||||||
91,868 | Imperial Hldgs. Ltd.* | 2,042,157 |
See notes to financial statements.
78
n The Guardian Baillie Gifford Emerging Markets Fund
Schedule of Investments (Continued)
December 31, 2005
Shares | Value | ||||||||||
Media — 1.1% | |||||||||||
109,000 | Naspers Ltd. | $ | 1,930,291 | ||||||||
Metals and Mining — 2.3% | |||||||||||
34,635 | Anglo American Platinum Corp. | 2,502,482 | |||||||||
56,000 | Lonmin PLC* | 1,552,422 | |||||||||
4,054,904 | |||||||||||
Oil, Gas and Consumable Fuels — 2.8% | |||||||||||
138,800 | Sasol Ltd. | 4,970,466 | |||||||||
Specialty Retail — 0.5% | |||||||||||
148,000 | Edgars Consolidated Stores Ltd. | 822,716 | |||||||||
19,121,953 | |||||||||||
South Korea — 23.9% | |||||||||||
Commercial Services and Supplies — 1.0% | |||||||||||
39,700 | S1 Corp.* | 1,719,090 | |||||||||
Construction and Engineering — 0.8% | |||||||||||
31,970 | Hyundai Development Co.* | 1,447,579 | |||||||||
Household Durables — 1.6% | |||||||||||
117,000 | Woongjin Coway Co. Ltd. | 2,770,292 | |||||||||
Industrial Conglomerates — 5.0% | |||||||||||
149,630 | Hanwha Corp.* | 5,029,580 | |||||||||
122,000 | LG Corp.* | 3,811,369 | |||||||||
8,840,949 | |||||||||||
Insurance — 3.9% | |||||||||||
50,900 | Meritz Fire & Marine Ins. Co. Ltd. | 2,656,965 | |||||||||
32,400 | Samsung Fire & Marine Ins. Co. Ltd. | 4,100,049 | |||||||||
6,757,014 | |||||||||||
Marine — 4.0% | |||||||||||
84,000 | Daewoo Shipbuilding & Marine Engineering Co. Ltd.* | 2,287,889 | |||||||||
271,000 | Samsung Heavy Inds. Co. Ltd.* | 4,755,561 | |||||||||
7,043,450 | |||||||||||
Media — 1.4% | |||||||||||
7,300 | Cheil Comms., Inc.* | 1,591,350 | |||||||||
11,000 | Daekyo Co. Ltd. | 856,945 | |||||||||
2,448,295 | |||||||||||
Oil, Gas and Consumable Fuels — 1.3% | |||||||||||
95,000 | GS Hldgs. Corp.* | 2,211,814 | |||||||||
Pharmaceuticals — 1.8% | |||||||||||
17,636 | Yuhan Corp.* | 3,173,260 | |||||||||
Trading Companies and Distributors — 3.1% | |||||||||||
255,700 | Samsung Corp.* | 5,460,326 | |||||||||
41,872,069 | |||||||||||
Taiwan — 9.8% | |||||||||||
Chemicals — 1.1% | |||||||||||
1,615,000 | Taiwan Fertilizer Co. Ltd. | 1,881,969 | |||||||||
Computers and Peripherals — 1.8% | |||||||||||
171,000 | High Tech Computer Corp. | 3,209,115 | |||||||||
Construction and Engineering — 0.1% | |||||||||||
495,000 | CTCI Corp. | 207,356 | |||||||||
Diversified Financial Services — 1.9% | |||||||||||
2,059,499 | Shin Kong Financial Hldg. Co. Ltd. | 1,603,101 | |||||||||
3,407,570 | SinoPac Hldgs. | 1,645,442 | |||||||||
3,248,543 | |||||||||||
Electronic Equipment and Instruments — 3.0% | |||||||||||
952,470 | Hon Hai Precision Inds. Co. Ltd. | 5,223,148 | |||||||||
Multiline Retail — 0.6% | |||||||||||
1,921,500 | Far Eastern Dept. Stores Ltd. | 1,141,520 | |||||||||
Semiconductors and Semiconductor Equipment — 1.3% | |||||||||||
1,191,000 | Taiwan Semiconductor Mfg. | 2,267,777 | |||||||||
17,179,428 |
Shares | Value | ||||||||||
Thailand — 4.8% | |||||||||||
Commercial Banks — 1.3% | |||||||||||
860,000 | Bangkok Bank Public Co. Ltd. | $ | 2,202,170 | ||||||||
Diversified Financial Services — 0.6% | |||||||||||
1,565,000 | TISCO Finance Pub. Co. Ltd. | 1,059,109 | |||||||||
Oil, Gas and Consumable Fuels — 1.4% | |||||||||||
221,000 | PTT Exploration & Production Pub. Co. Ltd. | 2,543,885 | |||||||||
Wireless Telecommunication Services — 1.5% | |||||||||||
990,000 | Advanced Info Service Pub. Co. Ltd. | 2,607,487 | |||||||||
8,412,651 | |||||||||||
Turkey — 3.8% | |||||||||||
Commercial Banks — 2.5% | |||||||||||
1,007,874 | Turkiye Garanti Bankasi A.S.* | 3,657,126 | |||||||||
157,400 | Turkiye Vakiflar Bankasi T.A.O.* | 833,390 | |||||||||
4,490,516 | |||||||||||
Food and Staples Retailing — 0.6% | |||||||||||
40,500 | BIM Birlesik Magazalar A.S.* | 1,004,703 | |||||||||
Media — 0.7% | |||||||||||
307,837 | Dogan Yayin Hldgs. A.S.* | 1,219,585 | |||||||||
6,714,804 | |||||||||||
Total Common Stocks (Cost $107,072,607) | 162,912,278 | ||||||||||
Preferred Stocks — 7.0% | |||||||||||
Brazil — 7.0% | |||||||||||
Commercial Banks — 2.6% | |||||||||||
1,455,055 | Itausa-Investimentos Itau S.A. | $ | 4,610,322 | ||||||||
Electric Utilities — 0.9% | |||||||||||
67,300,000 | AES Tiete S.A. | 1,466,739 | |||||||||
Food Products — 0.0% | |||||||||||
4,700,000 | Comp. Lorenz S.A.*†† | 0 | |||||||||
Metals and Mining — 1.5% | |||||||||||
9,000 | Comp. Vale Do Rio Doce | 322,736 | |||||||||
63,400 | Comp. Vale Do Rio Doce ADR | 2,298,250 | |||||||||
2,620,986 | |||||||||||
Oil, Gas and Consumable Fuels — 2.0% | |||||||||||
54,600 | Petroleo Brasileiro S.A. ADR | 3,514,602 | |||||||||
Total Preferred Stocks (Cost $5,622,567) | 12,212,649 |
See notes to financial statements.
79
n The Guardian Baillie Gifford Emerging Markets Fund
Schedule of Investments (Continued)
December 31, 2005
Principal Amount | Value | ||||||||||
Repurchase Agreement — 0.1% | |||||||||||
$ | 126,000 | State Street Bank and Trust Co. | |||||||||
repurchase agreement | |||||||||||
dated 12/30/2005, maturity | |||||||||||
value of $126,029 at | |||||||||||
2.05%, due 1/3/2006 (1) | |||||||||||
(Cost $126,000) | $ | 126,000 | |||||||||
Total Investments — 100.1% (Cost $112,821,174) | 175,250,927 | ||||||||||
Liabilities in Excess of Cash, Receivables and Other Assets — (0.1)% | (144,782 | ) | |||||||||
Net Assets — 100% | $ | 175,106,145 |
* Non-income producing security.
† Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities have been deemed liquid pursuant to the Fund's liquidity procedures approved by the Board of Trustees and may be resold in transactions exempt from registration, normally to certain qualified buyers. At 12/31/2005, the aggregate market value of these securities amounted to $2,727,570 representing 1.6% of net assets.
†† At 12/31/2005, these securities have been deemed illiquid by the investment adviser with a market value of $0.
(1) The repurchase agreement is fully collateralized by $95,000 in U.S. Treasury Bond, 7.875%, due 2/15/2021, with a value of $130,625.
Glossary of Terms:
ADR — American Depositary Receipt.
GDR — Global Depositary Receipt.
See notes to financial statements.
80
n The Guardian Investment Quality Bond Fund
Schedule of Investments
December 31, 2005
Principal Amount | Value | ||||||||||
Asset Backed Securities — 10.5% | |||||||||||
$ | 1,495,000 | Ameriquest Mtg. Secs., Inc. 2003-5 A6 4.541% due 4/25/2033 (1) | $ | 1,474,669 | |||||||
86,252 | Amresco 1997-1 MIF 7.42% due 3/25/2027 | 85,927 | |||||||||
750,000 | Capital Auto Receivables Asset Tr. 2005-1 A4 4.05% due 7/15/2009 | 741,747 | |||||||||
1,264,000 | Carmax Auto Owner Tr. 2005-1 A4 4.35% due 3/15/2010 | 1,248,655 | |||||||||
267,239 | Caterpillar Financial Asset Tr. 2004-A A3 3.13% due 1/26/2009 | 263,671 | |||||||||
215,000 | Countrywide Asset-Backed Certificates 2004-S1 A2 3.872% due 3/25/2020 | 211,314 | |||||||||
1,300,000 | Hertz Vehicle Financing LLC 2005-2A A1 4.52% due 2/25/2010†(1) | 1,300,000 | |||||||||
1,500,000 | New Century Home Equity Loan Tr. 2005-A A4 5.114% due 8/25/2035 (1) | 1,461,957 | |||||||||
810,000 | Nissan Auto Receivables Owner Tr. 2003-B A4 2.05% due 3/16/2009 | 790,479 | |||||||||
1,200,000 | Renaissance Home Equity Loan Tr. 2005-2 AF3 4.499% due 8/25/2035 (1) | 1,179,240 | |||||||||
1,550,000 | Residential Asset Mtg. Prods., Inc. 2004-RS9 AII2 4.719% due 5/25/2034 (1) | 1,555,327 | |||||||||
1,346,011 | Residential Funding Mtg. Secs. 2003-HS3 AI2 3.15% due 7/25/2018 | 1,325,875 | |||||||||
1,900,000 | Vanderbilt Acquisition Loan Tr. 2002-1 A3 5.70% due 9/7/2023 | 1,903,917 | |||||||||
330,000 | Volkswagen Auto Lease Tr. 2004-A A4A 3.09% due 8/20/2010 | 323,637 | |||||||||
Total Asset Backed Securities (Cost $14,033,803) | 13,866,415 | ||||||||||
Collateralized Mortgage Obligations — 13.0% | |||||||||||
Countrywide Home Loans 2005-21 A2 | |||||||||||
$ | 2,919,625 | 5.50% due 10/25/2035 2002-19 1A1 | $2,869,443 | ||||||||
1,111,370 | 6.25% due 11/25/2032 | 1,114,129 | |||||||||
FHLMC H006 A2 | |||||||||||
244,779 | 2.837% due 2/15/2010 2626 KA | 242,503 | |||||||||
700,000 | 3.00% due 3/15/2030 1534 Z | 643,592 | |||||||||
786,793 | 5.00% due 6/15/2023 2500 TD | 778,922 | |||||||||
364,599 | 5.50% due 2/15/2016 2367 ME | 366,333 | |||||||||
1,200,000 | 6.50% due 10/15/2031 | 1,255,202 |
Principal Amount | Value | ||||||||||
FNMA 2005-22 HK | |||||||||||
$ | 1,030,000 | 5.00% due 11/25/2023 | $ | 1,023,946 | |||||||
2005-39 CL | |||||||||||
1,400,000 | 5.00% due 12/25/2021 2001-51 PH | 1,395,584 | |||||||||
690,956 | 6.00% due 8/25/2030 | 699,037 | |||||||||
2,592,318 | J.P. Morgan Mtg. Tr. 2005-S2 2A15 6.00% due 9/25/2035 | 2,594,750 | |||||||||
918,000 | Mastr Asset Securitization Tr. 2003-10 3A7 5.50% due 11/25/2033 | 898,481 | |||||||||
Wells Fargo Mtg.-Backed Secs. Tr. 2003-11 1A3 | |||||||||||
1,500,000 | 4.75% due 10/25/2018 2005-5 1A1 | 1,473,642 | |||||||||
1,842,483 | 5.00% due 5/25/2020 | 1,809,665 | |||||||||
Total Collateralized Mortgage Obligations (Cost $17,469,304) | 17,165,229 | ||||||||||
Commercial Mortgage Backed Securities — 8.2% | |||||||||||
$ | 1,400,000 | Banc of America Comm'l. Mtg., Inc. 2005-6 AJ 5.182% due 9/10/2047 | $ | 1,393,670 | |||||||
Chase Comm'l. Mtg. Secs. Corp. 1998-2 A2 | |||||||||||
292,637 | 6.39% due 11/18/2030 1997-1C | 302,570 | |||||||||
400,000 | 7.37% due 6/19/2029 | 410,517 | |||||||||
1,500,000 | Crown Castle Towers LLC 2005-1A AFX 4.643% due 6/15/2035†(1) | 1,468,072 | |||||||||
413,294 | First Union National Bank Comm'l. Mtg. Tr. 2000-C2 A1 6.94% due 10/15/2032 | 421,795 | |||||||||
1,500,000 | GE Comm'l. Mtg. Corp. 2005-C1 A5 4.772% due 6/10/2048 | 1,458,981 | |||||||||
669,987 | GMAC Comm'l. Mtg. Secs., Inc. 1997-C1 A3 6.869% due 7/15/2029 | 684,828 | |||||||||
1,550,000 | Greenwich Capital Comm'l. Funding Corp. 2005-GG3 AJ 4.859% due 8/10/2042 | 1,502,226 | |||||||||
1,300,000 | J.P. Morgan Chase Comm'l. Mtg. Secs. Corp. 2005-LDP5 A4 5.179% due 12/15/2044 (1) | 1,307,897 | |||||||||
Merrill Lynch Mtg. Tr. 2004-BPC1 A5 | |||||||||||
200,000 | 4.855% due 10/12/2041 (1) 2005-CIP1 A4 | 195,576 | |||||||||
1,300,000 | 5.047% due 7/12/2038 (1) | 1,288,334 | |||||||||
225,000 | Morgan Stanley Capital I 1999-RM1 E 6.982% due 12/15/2031 (1) | 236,883 | |||||||||
159,967 | Mtg. Capital Funding, Inc. 1997-MC1 A3 7.288% due 7/20/2027 | 161,968 | |||||||||
Total Commercial Mortgage Backed Securities (Cost $11,065,459) | 10,833,317 |
See notes to financial statements.
81
n The Guardian Investment Quality Bond Fund
Schedule of Investments (Continued)
December 31, 2005
Principal Amount | Value | ||||||||||
Corporate Bonds — 20.3% | |||||||||||
Aerospace and Defense — 0.6% | |||||||||||
$ | 200,000 | General Dynamics Corp. 4.50% due 8/15/2010 | $ | 196,805 | |||||||
150,000 | TRW, Inc. 7.75% due 6/1/2029 | 189,687 | |||||||||
United Technologies Corp. | |||||||||||
200,000 | 4.375% due 5/1/2010 | 196,782 | |||||||||
200,000 | 5.40% due 5/1/2035 | 199,303 | |||||||||
782,577 | |||||||||||
Automotive — 0.7% | |||||||||||
DaimlerChrysler NA Hldg. | |||||||||||
150,000 | 4.05% due 6/4/2008 | 146,024 | |||||||||
80,000 | 6.50% due 11/15/2013 | 83,764 | |||||||||
250,000 | Ford Motor Credit Co. 6.50% due 1/25/2007 | 241,867 | |||||||||
450,000 | General Motors Acceptance Corp. 6.125% due 9/15/2006 | 437,110 | |||||||||
908,765 | |||||||||||
Chemicals — 0.1% | |||||||||||
150,000 | Lubrizol Corp. 5.50% due 10/1/2014 | 150,399 | |||||||||
Energy — 0.6% | |||||||||||
447,000 | RAS Laffan Liquefied Natural Gas 3.437% due 9/15/2009† | 431,458 | |||||||||
350,000 | Western Oil Sands, Inc. 8.375% due 5/1/2012 | 393,312 | |||||||||
824,770 | |||||||||||
Energy–Refining — 0.3% | |||||||||||
250,000 | Tosco Corp. 8.125% due 2/15/2030 | 337,042 | |||||||||
Entertainment — 0.3% | |||||||||||
400,000 | Time Warner, Inc. 7.57% due 2/1/2024 | 436,301 | |||||||||
Environmental — 0.3% | |||||||||||
400,000 | Waste Management, Inc. 7.375% due 8/1/2010 | 435,317 | |||||||||
Finance Companies — 1.3% | |||||||||||
400,000 | Capital One Bank 5.75% due 9/15/2010 | 409,539 | |||||||||
500,000 | CIT Group, Inc. 4.588% due 5/18/2007 (1) | 501,355 | |||||||||
200,000 | General Electric Capital Corp. 6.75% due 3/15/2032 | 234,770 | |||||||||
400,000 | Household Finance Corp. 6.375% due 11/27/2012 | 425,032 | |||||||||
125,000 | Residential Capital Corp. 6.125% due 11/21/2008 | 125,304 | |||||||||
1,696,000 | |||||||||||
Financial — 1.3% | |||||||||||
250,000 | Ameriprise Financial, Inc. 5.65% due 11/15/2015 | 254,048 | |||||||||
450,000 | Goldman Sachs Group, Inc. 5.125% due 1/15/2015 | 444,911 | |||||||||
Lehman Brothers Hldgs., Inc. | |||||||||||
200,000 | 4.25% due 1/27/2010 | 195,034 | |||||||||
200,000 | 6.625% due 1/18/2012 | 215,934 | |||||||||
250,000 | Merrill Lynch & Co. 5.00% due 1/15/2015 | 246,245 |
Principal Amount | Value | ||||||||||
Morgan Stanley | |||||||||||
$ | 150,000 | 4.00% due 1/15/2010 | $ | 144,290 | |||||||
200,000 | 4.75% due 4/1/2014 | 191,813 | |||||||||
1,692,275 | |||||||||||
Financial–Banks — 3.1% | |||||||||||
550,000 | Bank of America Corp. 4.875% due 9/15/2012 | 546,179 | |||||||||
300,000 | BB&T Corp. 4.90% due 6/30/2017 | 291,153 | |||||||||
Citigroup, Inc. | |||||||||||
400,000 | 4.625% due 8/3/2010 | 394,460 | |||||||||
500,000 | 5.00% due 9/15/2014 | 492,178 | |||||||||
300,000 | City Nat'l. Corp. 5.125% due 2/15/2013 | 298,246 | |||||||||
200,000 | Credit Suisse First Boston 6.50% due 1/15/2012 | 213,956 | |||||||||
200,000 | HSBC USA, Inc. 4.625% due 4/1/2014 | 192,030 | |||||||||
450,000 | J.P. Morgan Chase & Co. 5.75% due 1/2/2013 | 464,078 | |||||||||
375,000 | MBNA America Bank Nat'l. 7.125% due 11/15/2012 | 419,213 | |||||||||
400,000 | Sovereign Bank 5.125% due 3/15/2013 | 392,641 | |||||||||
200,000 | Wachovia Corp. 5.25% due 8/1/2014 | 200,265 | |||||||||
150,000 | Washington Mutual Bank 5.65% due 8/15/2014 | 151,902 | |||||||||
4,056,301 | |||||||||||
Food and Beverage — 0.5% | |||||||||||
400,000 | Kellogg Co. 2.875% due 6/1/2008 | 381,107 | |||||||||
300,000 | Kraft Foods, Inc. 5.25% due 10/1/2013 | 300,114 | |||||||||
681,221 | |||||||||||
Gaming — 0.1% | |||||||||||
150,000 | Harrahs Operating Co., Inc. 5.625% due 6/1/2015 | 147,363 | |||||||||
Home Construction — 0.4% | |||||||||||
250,000 | D. R. Horton, Inc. 5.625% due 1/15/2016 | 238,374 | |||||||||
300,000 | Ryland Group, Inc. 5.375% due 6/1/2008 | 299,836 | |||||||||
538,210 | |||||||||||
Insurance — 1.2% | |||||||||||
250,000 | Genworth Financial, Inc. 4.95% due 10/1/2015 | 244,076 | |||||||||
Metlife, Inc. | |||||||||||
250,000 | 5.00% due 6/15/2015 | 245,202 | |||||||||
125,000 | 5.70% due 6/15/2035 | 125,463 | |||||||||
600,000 | UnumProvident Finance Co. 6.85% due 11/15/2015† | 624,977 | |||||||||
400,000 | Willis Group NA 5.625% due 7/15/2015 | 399,845 | |||||||||
1,639,563 | |||||||||||
Media–Cable — 0.9% | |||||||||||
300,000 | AT & T Broadband Corp. 9.455% due 11/15/2022 | 393,059 | |||||||||
800,000 | Comcast Cable Comm., Inc. 6.875% due 6/15/2009 | 840,265 | |||||||||
1,233,324 |
See notes to financial statements.
82
n The Guardian Investment Quality Bond Fund
Schedule of Investments (Continued)
December 31, 2005
Principal Amount | Value | ||||||||||
Media–NonCable — 1.0% | |||||||||||
$ | 150,000 | News America Hldgs. 8.00% due 10/17/2016 | $ | 176,824 | |||||||
1,150,000 | Scholastic Corp. 5.75% due 1/15/2007 | 1,154,218 | |||||||||
1,331,042 | |||||||||||
Merchandising–Supermarkets — 0.6% | |||||||||||
400,000 | Delhaize America, Inc. 7.375% due 4/15/2006 | 402,089 | |||||||||
400,000 | Safeway, Inc. 6.15% due 3/1/2006 | 400,153 | |||||||||
802,242 | |||||||||||
Natural Gas–Pipelines — 0.2% | |||||||||||
250,000 | Keyspan Corp. 7.625% due 11/15/2010 | 277,909 | |||||||||
Paper and Forest Products — 0.1% | |||||||||||
150,000 | Weyerhaeuser Co. 6.75% due 3/15/2012 | 159,208 | |||||||||
Pharmaceuticals — 0.4% | |||||||||||
Genentech, Inc. | |||||||||||
300,000 | 4.75% due 7/15/2015 | 291,929 | |||||||||
250,000 | 5.25% due 7/15/2035 | 240,921 | |||||||||
532,850 | |||||||||||
Railroads — 0.7% | |||||||||||
200,000 | Burlington Northern Santa Fe Corp. 7.95% due 8/15/2030 | 261,704 | |||||||||
150,000 | CSX Corp. 4.875% due 11/1/2009 | 148,883 | |||||||||
450,000 | Norfolk Southern Corp. 6.75% due 2/15/2011 | 485,447 | |||||||||
896,034 | |||||||||||
Real Estate Investment Trust — 0.3% | |||||||||||
100,000 | EOP Operating LP 7.00% due 7/15/2011 | 107,034 | |||||||||
200,000 | Liberty Ppty. LP 7.25% due 3/15/2011 | 217,327 | |||||||||
100,000 | Regency Centers LP 6.75% due 1/15/2012 | 106,887 | |||||||||
431,248 | |||||||||||
Retailers — 0.4% | |||||||||||
250,000 | CVS Corp. 4.875% due 9/15/2014 | 241,304 | |||||||||
150,000 | Federated Department Stores, Inc. 7.00% due 2/15/2028 | 163,370 | |||||||||
150,000 | Wal-Mart Stores, Inc. 4.50% due 7/1/2015 | 144,442 | |||||||||
549,116 | |||||||||||
Technology — 0.4% | |||||||||||
200,000 | Motorola, Inc. 6.50% due 9/1/2025 | 218,102 | |||||||||
250,000 | Pitney Bowes, Inc. 4.75% due 1/15/2016 | 240,913 | |||||||||
459,015 | |||||||||||
Utilities–Electric — 1.8% | |||||||||||
300,000 | Alabama Power Co. 5.65% due 3/15/2035 | 289,749 | |||||||||
200,000 | Exelon Corp. 4.45% due 6/15/2010 | 193,440 |
Principal Amount | Value | ||||||||||
$ | 250,000 | FirstEnergy Corp. 6.45% due 11/15/2011 | $ | 264,999 | |||||||
300,000 | Florida Power & Light Co. 4.95% due 6/1/2035 | 274,198 | |||||||||
100,000 | Pacific Gas & Electric Co. 6.05% due 3/1/2034 | 103,496 | |||||||||
300,000 | Potomac Edison Co. 5.35% due 11/15/2014 | 299,853 | |||||||||
300,000 | PSI Energy, Inc. 6.12% due 10/15/2035 | 306,788 | |||||||||
500,000 | Public Service Co. of New Mexico 4.40% due 9/15/2008 | 489,636 | |||||||||
200,000 | Public Service Electric Gas Co. 5.125% due 9/1/2012 | 200,310 | |||||||||
2,422,469 | |||||||||||
Wireless Communications — 1.9% | |||||||||||
300,000 | America Movil S.A. de C.V. 6.375% due 3/1/2035 | 295,890 | |||||||||
AT & T Wireless Svcs., Inc. | |||||||||||
400,000 | 8.125% due 5/1/2012 | 462,171 | |||||||||
250,000 | 8.75% due 3/1/2031 | 331,204 | |||||||||
600,000 | Sprint Capital Corp. 8.375% due 3/15/2012 | 695,378 | |||||||||
690,000 | Verizon Wireless Capital LLC 5.375% due 12/15/2006 | 692,273 | |||||||||
2,476,916 | |||||||||||
Wireline Communications — 0.8% | |||||||||||
250,000 | Deutsche Telekom Int'l. Finance BV 8.25% due 6/15/2030 (1) | 317,967 | |||||||||
France Telecom S.A. | |||||||||||
325,000 | 7.75% due 3/1/2011 (1) | 363,005 | |||||||||
115,000 | 8.50% due 3/1/2031 (1) | 153,440 | |||||||||
200,000 | Verizon Global Funding Corp. 5.85% due 9/15/2035 | 192,735 | |||||||||
1,027,147 | |||||||||||
Total Corporate Bonds (Cost $26,678,841) | 26,924,624 | ||||||||||
Mortgage Pass-Through Securities — 25.5% | |||||||||||
FHLMC | |||||||||||
$ | 5,369,558 | 5.50% due 9/1/2034 - 12/1/2035 | $ | 5,323,946 | |||||||
2,441,833 | 6.00% due 11/1/2034 | 2,469,519 | |||||||||
5,453 | 7.00% due 8/1/2008 | 5,576 | |||||||||
5,500,000 | 5.50%, (30 yr. TBA) | 5,448,437 | |||||||||
FNMA | |||||||||||
8,588,898 | 5.00% due 10/1/2019 - 8/1/2035 | 8,366,343 | |||||||||
1,898,938 | 5.50% due 8/1/2019 - 8/1/2035 | 1,892,277 | |||||||||
787,205 | 6.00% due 10/1/2013 - 4/1/2016 | 804,521 | |||||||||
2,170,494 | 6.50% due 12/1/2017 - 11/1/2034 | 2,230,222 | |||||||||
559,770 | 7.00% due 2/1/2009 - 6/1/2032 | 583,545 | |||||||||
378,078 | 7.50% due 5/1/2027 - 2/1/2031 | 396,690 | |||||||||
161,590 | 8.00% due 6/1/2030 - 9/1/2030 | 172,611 | |||||||||
1,500,000 | 5.50%, (15 yr. TBA) | 1,508,907 | |||||||||
3,400,000 | 6.00%, (30 yr. TBA) | 3,430,811 | |||||||||
GNMA | |||||||||||
346,250 | 6.00% due 12/15/2033 | 354,934 | |||||||||
691,813 | 6.50% due 4/15/2033 | 723,018 | |||||||||
Total Mortgage Pass-Through Securities (Cost $33,956,156) | 33,711,357 |
See notes to financial statements.
83
n The Guardian Investment Quality Bond Fund
Schedule of Investments (Continued)
December 31, 2005
Principal Amount | Value | ||||||||||
Sovereign Debt Securities — 1.3% | |||||||||||
Pemex Project Funding Master Tr. | |||||||||||
$ | 200,000 | 5.791% due 6/15/2010†(1) | $ | 207,000 | |||||||
350,000 | 7.875% due 2/1/2009 | 374,325 | |||||||||
250,000 | Quebec Province 4.60% due 5/26/2015 | 243,919 | |||||||||
475,000 | Republic of South Africa 6.50% due 6/2/2014 | 513,594 | |||||||||
United Mexican States | |||||||||||
100,000 | 4.625% due 10/8/2008 | 98,750 | |||||||||
250,000 | 8.00% due 9/24/2022 | 308,437 | |||||||||
Total Sovereign Debt Securities (Cost $1,620,608) | 1,746,025 | ||||||||||
Taxable Municipal Security — 0.1% | |||||||||||
$ | 200,000 | Oregon Sch. Brds. Association 4.759% due 6/30/2028 (Cost $200,000) | $ | 189,362 | |||||||
U.S. Government Securities — 18.9% | |||||||||||
U.S. Government Agency Securities — 2.7% | |||||||||||
$ | 390,000 | FHLMC 3.15% due 12/16/2008 | $ | 373,237 | |||||||
FNMA | |||||||||||
1,850,000 | 3.25% due 1/15/2008 | 1,797,170 | |||||||||
310,000 | 4.50% due 12/1/2009 | 304,462 | |||||||||
1,100,000 | 4.625% due 10/15/2014 | 1,087,036 | |||||||||
3,561,905 | |||||||||||
U.S. Treasury Bonds and Notes — 16.2% | |||||||||||
U.S. Treasury Bonds | |||||||||||
2,003,000 | 5.375% due 2/15/2031 | 2,249,932 | |||||||||
1,610,000 | 6.00% due 2/15/2026 | 1,898,543 | |||||||||
2,380,000 | 6.25% due 8/15/2023 (2) | 2,842,056 | |||||||||
U.S. Treasury Notes | |||||||||||
3,025,000 | 3.625% due 1/15/2010 | 2,942,048 | |||||||||
2,776,000 | 4.125% due 8/15/2008 - 8/15/2010 | 2,756,829 | |||||||||
2,095,000 | 4.375% due 11/15/2008 - 8/15/2012 | 2,094,781 | |||||||||
6,635,000 | 4.50% due 11/15/2010 - 11/15/2015 | 6,681,975 | |||||||||
21,466,164 | |||||||||||
Total U.S. Government Securities (Cost $24,940,671) | 25,028,069 | ||||||||||
Commercial Paper — 8.5% | |||||||||||
Finance Companies — 2.0% | |||||||||||
$ | 2,700,000 | Barton Capital Corp. 4.27% due 1/12/2006 (2) | $ | 2,696,477 | |||||||
Financial–Other — 2.9% | |||||||||||
2,200,000 | Countrywide Fin. Corp. 4.30% due 1/12/2006 (2) | 2,197,110 | |||||||||
1,600,000 | American General Fin. Corp. 4.25% due 1/18/2006 (2) | 1,596,789 | |||||||||
3,793,899 | |||||||||||
Health Care Providers and Services — 1.7% | |||||||||||
2,300,000 | United Healthcare Corp. 4.25% due 1/12/2006 (2) | 2,297,013 |
Principal Amount | Value | ||||||||||
Metals and Mining — 1.9% | |||||||||||
$ | 2,500,000 | Alcoa, Inc. 4.30% due 1/12/2006 (2) | $ | 2,496,715 | |||||||
Total Commercial Paper (Cost $11,284,104) | 11,284,104 | ||||||||||
Repurchase Agreement — 1.6% | |||||||||||
$ | 2,180,000 | State Street Bank and Trust Co. | |||||||||
repurchase agreement, | |||||||||||
dated 12/30/2005, maturity | |||||||||||
value of $2,180,998 at | |||||||||||
4.12%, due 1/3/2006 (2)(3) | |||||||||||
(Cost $2,180,000) | $ | 2,180,000 | |||||||||
Total Investments — 107.9% (Cost $143,428,946) | 142,928,502 | ||||||||||
Payables for Mortgage Pass-Throughs Delayed Delivery Securities (3) — (7.8)% | (10,347,113 | ) | |||||||||
Liabilities in Excess of Cash, Receivables and Other Assets — (0.1)% | (166,701 | ) | |||||||||
Net Assets — 100% | $ | 132,414,688 |
† Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to certain qualified buyers. At 12/31/2005, the aggregate market value of these securities amounted to $4,031,507 representing 3.0% of net assets of which $3,600,049 have been deemed liquid by the investment adviser pursuant to the Fund's liquidity procedures approved by the Board of Trustees.
(1) Floating rate note. The rate shown is the rate in effect at 12/31/2005.
(2) Securities are segregated to cover forward mortgage purchases.
(3) The repurchase agreement is fully collateralized by $2,215,000 in U.S. Government Agency, 5.50%, due 11/16/2015, with a value of $2,226,075.
Glossary of Terms:
TBA — To be Announced.
See notes to financial statements.
84
n The Guardian Low Duration Bond Fund
Schedule of Investments
December 31, 2005
Principal Amount | Value | ||||||||||
Asset Backed Securities — 27.6% | |||||||||||
$ | 340,000 | Ameriquest Mtg. Secs., Inc. 2003-5 A6 4.541% due 4/25/2033 | $ | 335,376 | |||||||
570,000 | Capital Auto Receivables Asset Tr. 2005-1 A4 4.05% due 7/15/2009 | 563,728 | |||||||||
225,000 | Capital One Multi-Asset Execution Tr. 2003-A4 A4 3.65% due 7/15/2011 | 218,441 | |||||||||
390,000 | Carmax Auto Owner Tr. 2005-1 A4 4.35% due 3/15/2010 | 385,265 | |||||||||
251,205 | Caterpillar Financial Asset Tr. 2004-A A3 3.13% due 1/26/2009 | 247,851 | |||||||||
500,000 | Chase Manhattan Auto Owner Tr. 2003-A A4 2.06% due 12/15/2009 | 488,764 | |||||||||
345,000 | Countrywide Asset-Backed Certificates 2004-S1 A2 3.872% due 3/25/2020 | 339,085 | |||||||||
565,000 | Ford Credit Auto Owner Tr. 2005-B A4 4.38% due 1/15/2010 | 559,489 | |||||||||
590,000 | Harley-Davidson Motorcycle Tr. 2004-1 A2 2.53% due 11/15/2011 | 569,875 | |||||||||
330,000 | Hertz Vehicle Financing LLC 2005-2A A1 4.52% due 2/25/2010†(1) | 330,000 | |||||||||
340,000 | MBNA Credit Card Master Nt. Tr. 2005-A7 A7 4.30% due 2/15/2011 | 335,858 | |||||||||
224,817 | Navistar Financial Corp. Owner Tr. 2004-A A3 2.01% due 8/15/2008 | 221,742 | |||||||||
510,000 | New Century Home Equity Loan Tr. 2004-4 A4 4.659% due 2/25/2035 (1) | 510,601 | |||||||||
335,000 | Nissan Auto Receivables Owner Tr. 2003-B A4 2.05% due 3/16/2009 | 326,927 | |||||||||
385,322 | PP&L Transition Bond Co. LLC 1999-1 A7 7.05% due 6/25/2009 | 392,630 | |||||||||
510,000 | Renaissance Home Equity Loan Tr. 2005-2 AF3 4.499% due 8/25/2035 (1) | 501,177 | |||||||||
Residential Asset Mtg. Prods., Inc. 2003-RZ4 A5 | |||||||||||
510,000 | 4.66% due 2/25/2032 2004-RS9 AII2 | 502,795 | |||||||||
340,000 | 4.719% due 5/25/2034 (1) 2003-RS3 AI4 | 341,168 | |||||||||
290,000 | 5.67% due 4/25/2033 (2) | 291,736 | |||||||||
252,377 | Residential Funding Mtg. Secs. 2003-HS3 AI2 3.15% due 7/25/2018 | 248,602 | |||||||||
137,086 | SLMA Student Loan Tr. 2002-5 A4L 4.641% due 9/17/2018 (1) | 137,566 | |||||||||
Volkswagen Auto Lease Tr. 2004-A A4A | |||||||||||
450,000 | 3.09% due 8/20/2010 | 441,323 |
Principal Amount | Value | ||||||||||
2005-A A2 | |||||||||||
$456,281 | 3.52% due 4/20/2007 | $ | 454,597 | ||||||||
587,000 | World Omni Auto Receivables Tr. 2005-A A4 3.82% due 11/12/2011 | 572,897 | |||||||||
Total Asset Backed Securities (Cost $9,418,715) | 9,317,493 | ||||||||||
Collateralized Mortgage Obligations — 12.0% | |||||||||||
$ | 238,046 | Countrywide Alternative Loan Tr. 2005-14 1A1 3.30% due 5/25/2035 (1) | $ | 233,427 | |||||||
FHLMC 2598 QC | |||||||||||
435,000 | 4.50% due 6/15/2027 1534 Z | 428,967 | |||||||||
328,862 | 5.00% due 6/15/2023 2500 TD | 325,572 | |||||||||
378,103 | 5.50% due 2/15/2016 20 H | 379,901 | |||||||||
141,813 | 5.50% due 10/25/2023 1650 J | 142,620 | |||||||||
338,196 | 6.50% due 6/15/2023 | 343,837 | |||||||||
FNMA 2003-24 PU | |||||||||||
375,674 | 3.50% due 11/25/2015 2005-39 CL | 362,368 | |||||||||
340,000 | 5.00% due 12/25/2021 2005-22 HK | 338,927 | |||||||||
300,000 | 5.00% due 11/25/2023 2003-13 ME | 298,237 | |||||||||
443,000 | 5.00% due 2/25/2026 2002-55 PC | 441,872 | |||||||||
189,004 | 5.50% due 4/25/2026 2001-51 PH | 188,790 | |||||||||
134,499 | 6.00% due 8/25/2030 | 136,072 | |||||||||
85,656 | GNMA 2002-93 NV 4.75% due 2/20/2032 | 83,729 | |||||||||
340,000 | Washington Mutual 2003-AR10 A4 4.067% due 10/25/2033 (1) | 336,348 | |||||||||
Total Collateralized Mortgage Obligations (Cost $4,108,898) | 4,040,667 | ||||||||||
Commercial Mortgage Backed Securities — 10.6% | |||||||||||
Chase Comm'l. Mtg. Secs. Corp. 1998-2 A2 | |||||||||||
$ | 599,666 | 6.39% due 11/18/2030 | $ | 620,020 | |||||||
1997-1 | C | ||||||||||
570,000 | 7.37% due 6/19/2029 | 584,987 | |||||||||
GMAC Comm'l. Mtg. Secs., Inc. 1997-C1 A3 | |||||||||||
218,942 | 6.869% due 7/15/2029 1999-C2 A2 | 223,792 | |||||||||
140,000 | 6.945% due 9/15/2033 | 147,657 | |||||||||
248,064 | Greenwich Capital Comm'l. Funding Corp. 2004-GG1 A2 3.835% due 6/10/2036 | 243,391 |
See notes to financial statements.
85
n The Guardian Low Duration Bond Fund
Schedule of Investments (Continued)
December 31, 2005
Principal Amount | Value | ||||||||||
$ | 260,000 | J.P. Morgan Comm'l. Mtg. Fin. Corp. 1997-C5 B 7.159% due 9/15/2029 | $ | 267,545 | |||||||
121,254 | LB UBS Comm'l. Mtg. Tr. 2001-C3 A1 6.058% due 6/15/2020 | 123,580 | |||||||||
340,000 | Morgan Stanley Capital I 1999-RM1 E 6.982% due 12/15/2031 (1) | 357,957 | |||||||||
466,160 | Mtg. Capital Funding, Inc. 1998-MC3 A2 6.337% due 11/18/2031 | 477,088 | |||||||||
529,000 | Salomon Brothers Mtg. Secs. VII, Inc. 2001-C2 A2 6.168% due 2/13/2010 | 540,555 | |||||||||
Total Commercial Mortgage Backed Securities (Cost $3,686,792) | 3,586,572 | ||||||||||
Corporate Bonds — 22.3% | |||||||||||
Automotive — 3.8% | |||||||||||
$ | 500,000 | Daimler Chrysler NA Hldg. 4.75% due 1/15/2008 | $ | 495,438 | |||||||
400,000 | Ford Motor Credit Co. 6.875% due 2/1/2006 | 399,140 | |||||||||
400,000 | General Motors Acceptance Corp. 6.125% due 9/15/2006 | 388,542 | |||||||||
1,283,120 | |||||||||||
Entertainment — 1.2% | |||||||||||
400,000 | AOL Time Warner, Inc. 6.15% due 5/1/2007 | 404,964 | |||||||||
Finance Companies — 4.4% | |||||||||||
500,000 | Capital One Bank 6.875% due 2/1/2006 | 500,807 | |||||||||
500,000 | General Electric Capital Corp. 3.50% due 8/15/2007 | 489,924 | |||||||||
500,000 | MBNA America Bank NA 6.50% due 6/20/2006 | 503,845 | |||||||||
1,494,576 | |||||||||||
Financial — 0.7% | |||||||||||
250,000 | Lehman Brothers Hldgs., Inc. 6.25% due 5/15/2006 | 251,267 | |||||||||
Media–Cable — 1.5% | |||||||||||
500,000 | Cox Comm., Inc. 7.75% due 8/15/2006 | 507,184 | |||||||||
Metals and Mining — 1.6% | |||||||||||
500,000 | Steel Dynamics, Inc. 9.50% due 3/15/2009 | 526,250 | |||||||||
Natural Gas–Pipelines — 2.6% | |||||||||||
500,000 | Enterprise Prod. Operating LP 4.00% due 10/15/2007 | 489,552 | |||||||||
400,000 | Sempra Energy 4.621% due 5/17/2007 | 397,165 | |||||||||
886,717 | |||||||||||
Real Estate Investment Trust — 1.5% | |||||||||||
505,000 | Avalon Bay Communities, Inc. 6.80% due 7/15/2006 | 509,905 | |||||||||
Services — 0.7% | |||||||||||
250,000 | Cendant Corp. 6.875% due 8/15/2006 | 252,566 |
Principal Amount | Value | ||||||||||
Utilities–Electric and Water — 1.3% | |||||||||||
$ | 425,000 | PSEG Power LLC 6.875% due 4/15/2006 | $ | 427,201 | |||||||
Wireline Communications — 3.0% | |||||||||||
500,000 | France Telecom 7.20% due 3/1/2006 (1) | 502,006 | |||||||||
500,000 | Sprint Capital Corp. 6.00% due 1/15/2007 | 504,889 | |||||||||
1,006,895 | |||||||||||
Total Corporate Bonds (Cost $7,661,314) | 7,550,645 | ||||||||||
U.S. Government Securities — 25.5% | |||||||||||
U.S. Government Agency Securities — 6.9% | |||||||||||
FHLMC | |||||||||||
$ | 585,000 | 3.15% due 12/16/2008 | $ | 559,856 | |||||||
375,000 | 3.625% due 2/15/2008 | 366,658 | |||||||||
FNMA | |||||||||||
920,000 | 3.875% due 2/15/2010 | 890,763 | |||||||||
520,000 | 4.50% due 12/1/2009 | 510,711 | |||||||||
2,327,988 | |||||||||||
U.S. Treasury Notes — 18.6% | |||||||||||
U.S. Treasury Notes | |||||||||||
215,000 | 2.625% due 5/15/2008 | 206,534 | |||||||||
765,000 | 3.125% due 5/15/2007 | 751,762 | |||||||||
340,000 | 3.375% due 12/15/2008 | 330,637 | |||||||||
180,000 | 3.75% due 5/15/2008 | 177,441 | |||||||||
683,000 | 3.875% due 5/15/2010 | 670,061 | |||||||||
884,000 | 4.125% due 8/15/2008 | 879,131 | |||||||||
650,000 | 4.25% due 10/31/2007 | 648,095 | |||||||||
950,000 | 4.25% due 11/30/2007 | 947,216 | |||||||||
1,685,000 | 4.50% due 11/15/2010 | 1,694,084 | |||||||||
6,304,961 | |||||||||||
Total U.S. Government Securities (Cost $8,687,812) | 8,632,949 | ||||||||||
Repurchase Agreement — 4.1% | |||||||||||
$ | 1,382,000 | State Street Bank and Trust Co. | |||||||||
repurchase agreement, | |||||||||||
dated 12/30/2005, maturity | |||||||||||
value of $1,382,633 at | |||||||||||
4.12%, due 1/3/2006 (3) | |||||||||||
(Cost $1,382,000) | $ | 1,382,000 | |||||||||
Total Investments — 102.1% (Cost $34,945,531) | 34,510,326 | ||||||||||
Liabilities in Excess of Cash, Receivables and Other Assets — (2.1)% | (719,353 | ) | |||||||||
Net Assets — 100% | $ | 33,790,973 |
† Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities have been deemed liquid pursuant to the Fund's liquidity procedures approved by the Board of Trustees and may be resold in transactions exempt from registration, normally to certain qualified buyers. At 12/31/2005, the aggregate market value of these securities amounted to $330,000 representing 1.0% of net assets.
(1) Floating rate note. The rate shown is the rate in effect at 12/31/2005.
(2) Step-up bond.
(3) The repurchase agreement is fully collateralized by $1,405,000 in U.S. Government Agency, 5.50%, due 11/16/2015, with a value of $1,412,025.
See notes to financial statements.
86
n The Guardian High Yield Bond Fund
Schedule of Investments
December 31, 2005
Principal Amount | Rating Moody's/ S&P* | Value | |||||||||||||
Corporate Bonds — 94.0% | |||||||||||||||
Aerospace and Defense — 1.6% | |||||||||||||||
Comm. & Power Inds., Inc. | |||||||||||||||
$ | 671,000 | Sr. Sub. Nt. 8.00% due 2/1/2012 | B3/B– | $ | 669,323 | ||||||||||
L-3 Comms. Corp. | |||||||||||||||
404,000 | Sr. Sub. Nt. 6.125% due 7/15/2013 | Ba3/BB+ | 400,970 | ||||||||||||
200,000 | Sr. Sub. Nt.† 6.375% due 10/15/2015 | Ba3/BB+ | 199,500 | ||||||||||||
1,269,793 | |||||||||||||||
Automotive — 6.4% | |||||||||||||||
Ford Motor Credit Co. | |||||||||||||||
780,000 | Nt. 7.00% due 10/1/2013 | Baa3/BB– | 666,477 | ||||||||||||
1,200,000 | Sr. Nt. 7.25% due 10/25/2011 | Baa3/BB– | 1,036,627 | ||||||||||||
General Motors Acceptance Corp. | |||||||||||||||
2,635,000 | Nt. 6.75% due 12/1/2014 | Ba1/BB | 2,370,501 | ||||||||||||
Keystone Automotive Operations | |||||||||||||||
808,000 | Sr. Sub. Nt. 9.75% due 11/1/2013 | Caa1/B– | 698,920 | ||||||||||||
United Components, Inc. | |||||||||||||||
400,000 | Sr. Sub. Nt. 9.375% due 6/15/2013 | B3/B | 398,000 | ||||||||||||
5,170,525 | |||||||||||||||
Building Materials — 1.4% | |||||||||||||||
Norcraft Cos. Fin. | |||||||||||||||
500,000 | Sr. Sub. Nt. 9.00% due 11/1/2011 | B3/B– | 517,500 | ||||||||||||
Texas Inds., Inc. | |||||||||||||||
570,000 | Sr. Nt.† 7.25% due 7/15/2013 | Ba3/BB– | 591,375 | ||||||||||||
1,108,875 | |||||||||||||||
Chemicals — 5.5% | |||||||||||||||
Equistar Chemicals LP | |||||||||||||||
1,185,000 | Sr. Nt. 10.125% due 9/1/2008 | B2/BB– | 1,285,725 | ||||||||||||
Huntsman ICI Chemicals LLC | |||||||||||||||
400,000 | Sr. Sub. Nt. 10.125% due 7/1/2009 | B3/B | 413,000 | ||||||||||||
Huntsman Int'l. LLC | |||||||||||||||
224,000 | Sr. Nt. 9.875% due 3/1/2009 | B2/B | 236,320 | ||||||||||||
Koppers, Inc. | |||||||||||||||
584,000 | Sr. Nt. 9.875% due 10/15/2013 | B2/B | 633,640 | ||||||||||||
Lyondell Chemical Co. | |||||||||||||||
372,000 | Sr. Sub. Nt. 10.875% due 5/1/2009 | B3/B | 386,415 | ||||||||||||
Millennium America, Inc. | |||||||||||||||
484,000 | Sr. Nt. 9.25% due 6/15/2008 | B1/BB– | 522,115 | ||||||||||||
Nell AF SARL | |||||||||||||||
700,000 | Sr. Nt.† 8.375% due 8/15/2015 | B2/B– | 693,000 | ||||||||||||
Rhodia S.A. | |||||||||||||||
200,000 | Sr. Nt. 10.25% due 6/1/2010 | B3/CCC+ | 219,000 | ||||||||||||
4,389,215 |
Principal Amount | Rating Moody's/ S&P* | Value | |||||||||||||
Construction Machinery — 2.6% | |||||||||||||||
Nationsrent, Inc. | |||||||||||||||
$ | 400,000 | Sr. Sub. Nt. 9.50% due 5/1/2015 | Caa1/B– | $ | 420,000 | ||||||||||
NMHG Hldg. Co. | |||||||||||||||
140,000 | Sr. Nt. 10.00% due 5/15/2009 | B3/B+ | 149,100 | ||||||||||||
Terex Corp. | |||||||||||||||
285,000 | Sr. Sub. Nt. 9.25% due 7/15/2011 | Caa1/B | 304,237 | ||||||||||||
285,000 | Sr. Sub. Nt. Ser. B 10.375% due 4/1/2011 | Caa1/B | 302,100 | ||||||||||||
United Rentals NA, Inc. | |||||||||||||||
960,000 | Sr. Sub. Nt. 7.75% due 11/15/2013 | Caa1/B+ | 936,000 | ||||||||||||
2,111,437 | |||||||||||||||
Consumer Products — 2.0% | |||||||||||||||
Bombardier Recreational Products | |||||||||||||||
286,000 | Sr. Sub. Nt. 8.375% due 12/15/2013 | B3/B | 286,358 | ||||||||||||
Elizabeth Arden, Inc. | |||||||||||||||
410,000 | Sr. Sub. Nt. 7.75% due 1/15/2014 | B2/B– | 414,100 | ||||||||||||
Jafra Cosmetics | |||||||||||||||
539,000 | Sr. Sub. Nt. 10.75% due 5/15/2011 | B3/B– | 590,205 | ||||||||||||
Riddell Bell Hldgs., Inc. | |||||||||||||||
360,000 | Sr. Sub. Nt. 8.375% due 10/1/2012 | B3/B– | 333,900 | ||||||||||||
1,624,563 | |||||||||||||||
Electric — 12.3% | |||||||||||||||
Allegheny Energy Supply | |||||||||||||||
1,490,000 | Nt. 7.80% due 3/15/2011 | Ba3/B | 1,624,100 | ||||||||||||
Edison Mission Energy | |||||||||||||||
365,000 | Sr. Nt. 9.875% due 4/15/2011 | B1/B+ | 425,681 | ||||||||||||
Mission Energy Hldg. | |||||||||||||||
1,840,000 | Sr. Sec. Nt. 13.50% due 7/15/2008 | B2/CCC+ | 2,134,400 | ||||||||||||
Nevada Power Co. | |||||||||||||||
515,000 | Mtg. Nt. Ser. L 5.875% due 1/15/2015 | Ba1/BB | 511,046 | ||||||||||||
Sierra Pacific Resources | |||||||||||||||
1,600,000 | Sr. Nt. 8.625% due 3/15/2014 | B1/B– | 1,731,183 | ||||||||||||
Teco Energy, Inc. | |||||||||||||||
202,000 | Sr. Nt. 6.75% due 5/1/2015 | Ba2/BB | 209,070 | ||||||||||||
1,295,000 | Nt. 7.00% due 5/1/2012 | Ba2/BB | 1,359,750 | ||||||||||||
TXU Corp. | |||||||||||||||
705,000 | Sr. Nt. Ser. P 5.55% due 11/15/2014 | Ba1/BB+ | 669,634 | ||||||||||||
UtiliCorp United, Inc. | |||||||||||||||
1,200,000 | Sr. Nt. 7.75% due 6/15/2011 | B2/B– | 1,227,000 | ||||||||||||
9,891,864 |
See notes to financial statements.
87
n The Guardian High Yield Bond Fund
Schedule of Investments (Continued)
December 31, 2005
Principal Amount | Rating Moody's/ S&P* | Value | |||||||||||||
Energy — 4.6% | |||||||||||||||
Chaparral Energy, Inc. | |||||||||||||||
$ | 190,000 | Sr. Nt.† 8.50% due 12/1/2015 | B3/B | $ | 196,650 | ||||||||||
Chesapeake Energy Corp. | |||||||||||||||
318,000 | Sr. Nt. 6.375% due 6/15/2015 | Ba2/BB | 318,000 | ||||||||||||
398,000 | Sr. Nt. 6.625% due 1/15/2016 | Ba2/BB | 402,975 | ||||||||||||
Dresser, Inc. | |||||||||||||||
447,000 | Sr. Nt. 9.375% due 4/15/2011 | B2/B– | 470,467 | ||||||||||||
Encore Acquisition Co. | |||||||||||||||
600,000 | Sr. Sub. Nt. 7.25% due 12/1/2017 | B2/B | 594,000 | ||||||||||||
Newpark Resources, Inc. | |||||||||||||||
700,000 | Sr. Sub. Nt. Ser. B 8.625% due 12/15/2007 | B2/B | 700,000 | ||||||||||||
Pride Int'l., Inc. | |||||||||||||||
219,000 | Sr. Nt. 7.375% due 7/15/2014 | Ba2/BB– | 234,878 | ||||||||||||
Western Oil Sands, Inc. | |||||||||||||||
298,000 | Sr. Sec Nt. 8.375% due 5/1/2012 | Ba2/BB+ | 334,877 | ||||||||||||
Whiting Petroleum Corp. | |||||||||||||||
400,000 | Sr. Sub. Nt.† 7.00% due 2/1/2014 | B2/B– | 401,000 | ||||||||||||
3,652,847 | |||||||||||||||
Entertainment — 0.9% | |||||||||||||||
Intrawest Corp. | |||||||||||||||
720,000 | Sr. Nt. 7.50% due 10/15/2013 | B1/B+ | 729,000 | ||||||||||||
Environmental — 0.4% | |||||||||||||||
Allied Waste NA, Inc. | |||||||||||||||
335,000 | Sr. Nt. 7.875% due 4/15/2013 | B2/BB– | 345,888 | ||||||||||||
Food and Beverage — 3.1% | |||||||||||||||
American Seafood Group LLC | |||||||||||||||
560,000 | Sr. Sub. Nt. 10.125% due 4/15/2010 | B3/B– | 590,100 | ||||||||||||
ASG Consolidated LLC | |||||||||||||||
550,000 | Sr. Disc. Nt. (1) 0/11.50% due 11/1/2011 | Caa1/B– | 437,250 | ||||||||||||
Del Monte Corp. | |||||||||||||||
618,000 | Sr. Nt. 6.75% due 2/15/2015 | B2/NR | 602,550 | ||||||||||||
Michael Foods, Inc. | |||||||||||||||
808,000 | Sr. Sub. Nt. 8.00% due 11/15/2013 | B3/B– | 828,200 | ||||||||||||
2,458,100 | |||||||||||||||
Gaming — 2.4% | |||||||||||||||
Boyd Gaming Corp. | |||||||||||||||
600,000 | Sr. Sub. Nt. 6.75% due 4/15/2014 | B1/B+ | 595,500 | ||||||||||||
MGM MIRAGE, Inc. | |||||||||||||||
500,000 | Sr. Nt. 6.625% due 7/15/2015 | Ba2/BB | 498,750 | ||||||||||||
400,000 | Sr. Nt. 8.50% due 9/15/2010 | Ba2/BB | 433,500 |
Principal Amount | Rating Moody's/ S&P* | Value | |||||||||||||
Station Casinos | |||||||||||||||
$ | 400,000 | Sr. Sub. Nt. 6.875% due 3/1/2016 | Ba3/B+ | $ | 409,000 | ||||||||||
1,936,750 | |||||||||||||||
Health Care — 7.3% | |||||||||||||||
Accellent, Inc. | |||||||||||||||
400,000 | Sr. Nt.† 10.50% due 12/1/2013 | Caa1/B– | 410,000 | ||||||||||||
Coventry Health Care, Inc. | |||||||||||||||
618,000 | Sr. Nt. 6.125% due 1/15/2015 | Ba1/BBB– | 633,450 | ||||||||||||
DaVita, Inc. | |||||||||||||||
560,000 | Sr. Sub. Nt.† 7.25% due 3/15/2015 | B3/B | 567,000 | ||||||||||||
Fisher Scientific Int'l., Inc. | |||||||||||||||
800,000 | Sr. Sub. Nt.† 6.125% due 7/1/2015 | Ba2/BB+ | 800,000 | ||||||||||||
Fresenius Medical Care | |||||||||||||||
570,000 | Capital Tr. 7.875% due 6/15/2011 | B1/BB– | 607,050 | ||||||||||||
HCA, Inc. | |||||||||||||||
995,000 | Sr. Nt. 6.30% due 10/1/2012 | Ba2/BB+ | 999,968 | ||||||||||||
Lifecare Hldgs., Inc. | |||||||||||||||
400,000 | Sr. Sub. Nt.† 9.25% due 8/15/2013 | Caa1/CCC+ | 316,000 | ||||||||||||
National Nephrology Assocs., Inc. | |||||||||||||||
515,000 | Sr. Sub. Nt.† 9.00% due 11/1/2011 | B1/B | 570,363 | ||||||||||||
Triad Hospitals, Inc. | |||||||||||||||
498,000 | Sr. Sub. Nt. 7.00% due 11/15/2013 | B3/B+ | 499,245 | ||||||||||||
Vanguard Health Hldg. Co. II | |||||||||||||||
400,000 | Sr. Sub. Nt. 9.00% due 10/1/2014 | Caa1/CCC+ | 425,000 | ||||||||||||
5,828,076 | |||||||||||||||
Home Construction — 0.8% | |||||||||||||||
K. Hovnanian Enterprises, Inc. | |||||||||||||||
400,000 | Sr. Nt. 6.25% due 1/15/2016 | Ba1/BB | 371,130 | ||||||||||||
309,000 | Sr. Sub. Nt. 7.75% due 5/15/2013 | Ba2/B+ | 305,019 | ||||||||||||
676,149 | |||||||||||||||
Industrial–Other — 0.4% | |||||||||||||||
Da Lite Screen Co., Inc. | |||||||||||||||
224,000 | Sr. Nt. 9.50% due 5/15/2011 | B2/B– | 235,200 | ||||||||||||
Stripes Acquisition/Susser Fin. | |||||||||||||||
100,000 | Sr. Nt.† 10.625% due 12/15/2013 | B2/B | 101,500 | ||||||||||||
336,700 | |||||||||||||||
Insurance — 0.5% | |||||||||||||||
UnumProvident Finance Co. | |||||||||||||||
400,000 | Sr. Nt.† 6.85% due 11/15/2015 | Ba1/BB+ | 416,651 | ||||||||||||
Lodging — 1.6% | |||||||||||||||
Host Marriott LP | |||||||||||||||
900,000 | Sr. Nt. Ser. O 6.375% due 3/15/2015 | Ba2/BB– | 897,750 |
See notes to financial statements.
88
n The Guardian High Yield Bond Fund
Schedule of Investments (Continued)
December 31, 2005
Principal Amount | Rating Moody's/ S&P* | Value | |||||||||||||
Royal Caribbean Cruises Ltd. | |||||||||||||||
$ | 400,000 | Sr. Nt. 6.875% due 12/1/2013 | Ba1/BB+ | $ | 423,656 | ||||||||||
1,321,406 | |||||||||||||||
Media–Cable — 3.7% | |||||||||||||||
Charter Comm. Hldgs. II | |||||||||||||||
1,272,000 | Sr. Nt. 10.25% due 9/15/2010 | Caa1/CCC– | 1,265,640 | ||||||||||||
Charter Comm. Operating LLC | |||||||||||||||
372,000 | Sr. Nt.† 8.00% due 4/30/2012 | B2/B– | 370,140 | ||||||||||||
CSC Hldgs., Inc. | |||||||||||||||
400,000 | Sr. Nt. Ser. B 7.625% due 4/1/2011 | B2/B+ | 398,000 | ||||||||||||
Insight Comm., Inc. | |||||||||||||||
515,000 | Sr. Disc. Nt. (1) 0/12.25% due 2/15/2011 | Caa1/CCC+ | 538,175 | ||||||||||||
Insight Midwest LP | |||||||||||||||
373,000 | Sr. Nt. 10.50% due 11/1/2010 | B2/B | 392,116 | ||||||||||||
2,964,071 | |||||||||||||||
Media–NonCable — 4.8% | |||||||||||||||
Dex Media East LLC | |||||||||||||||
351,000 | Sr. Sub. Nt. 12.125% due 11/15/2012 | B1/B | 410,670 | ||||||||||||
DirecTV Hldgs. Fin. | |||||||||||||||
800,000 | Sr. Nt. 6.375% due 6/15/2015 | Ba2/BB– | 782,000 | ||||||||||||
181,000 | Sr. Nt. 8.375% due 3/15/2013 | Ba2/BB– | 194,575 | ||||||||||||
EchoStar DBS Corp. | |||||||||||||||
365,000 | Sr. Nt. 6.375% due 10/1/2011 | Ba3/BB– | 351,313 | ||||||||||||
295,000 | Sr. Nt. 6.625% due 10/1/2014 | Ba3/BB– | 282,831 | ||||||||||||
Houghton Mifflin Co. | |||||||||||||||
500,000 | Sr. Sub. Nt. 9.875% due 2/1/2013 | Caa1/B– | 534,375 | ||||||||||||
R.H. Donnelley Fin. Corp. I | |||||||||||||||
465,000 | Sr. Sub. Nt.† 10.875% due 12/15/2012 | B2/B+ | 524,287 | ||||||||||||
Radio One, Inc. | |||||||||||||||
795,000 | Sr. Nt. 6.375% due 2/15/2013 | B2/B | 772,144 | ||||||||||||
3,852,195 | |||||||||||||||
Metals and Mining — 3.1% | |||||||||||||||
Chaparral Steel Co. | |||||||||||||||
400,000 | Sr. Nt. 10.00% due 7/15/2013 | B1/B | 431,000 | ||||||||||||
Gibraltar Inds., Inc. | |||||||||||||||
380,000 | Sr. Sub. Nt.† 8.00% due 12/1/2015 | Ba3/B+ | 382,850 | ||||||||||||
Massey Energy Co. | |||||||||||||||
200,000 | Sr. Nt.† 6.875% due 12/15/2013 | B1/BB– | 201,750 | ||||||||||||
Oregon Steel Mills, Inc. | |||||||||||||||
1,030,000 | 1st Mtg. Nt. 10.00% due 7/15/2009 | Ba3/B+ | 1,102,100 |
Principal Amount | Rating Moody's/ S&P* | Value | |||||||||||||
Peabody Energy Corp. | |||||||||||||||
$ | 365,000 | Sr. Nt. Ser. B 6.875% due 3/15/2013 | Ba3/BB– | $ | 379,600 | ||||||||||
2,497,300 | |||||||||||||||
Natural Gas–Pipelines — 6.4% | |||||||||||||||
Atlas Pipeline Partners | |||||||||||||||
200,000 | Sr. Nt.† 8.125% due 12/15/2015 | B1/B+ | 201,750 | ||||||||||||
Colorado Interstate Gas | |||||||||||||||
800,000 | Sr. Nt.† 6.80% due 11/15/2015 | B1/B | 817,420 | ||||||||||||
El Paso Natural Gas | |||||||||||||||
670,000 | Sr. Nt. Ser. A 7.625% due 8/1/2010 | B1/B | 704,558 | ||||||||||||
Holly Energy Partners LP | |||||||||||||||
410,000 | Sr. Nt. 6.25% due 3/1/2015 | Ba3/B+ | 397,187 | ||||||||||||
Northwest Pipeline Corp. | |||||||||||||||
208,000 | Sr. Nt. 8.125% due 3/1/2010 | Ba2/B+ | 220,480 | ||||||||||||
Semgroup LP | |||||||||||||||
400,000 | Sr. Nt.† 8.75% due 11/15/2015 | B1/NR | 409,000 | ||||||||||||
Southern Natural Gas Co. | |||||||||||||||
623,000 | Nt. 7.35% due 2/15/2031 | B1/B | 639,139 | ||||||||||||
Transcontinental Gas Pipeline Corp. | |||||||||||||||
180,000 | Nt. Ser. B 7.00% due 8/15/2011 | Ba2/B+ | 187,875 | ||||||||||||
Williams Cos., Inc. | |||||||||||||||
1,300,000 | Sr. Nt. 7.75% due 6/15/2031 | B1/B+ | 1,371,500 | ||||||||||||
175,000 | Sr. Nt. 8.125% due 3/15/2012 | B1/B+ | 190,750 | ||||||||||||
5,139,659 | |||||||||||||||
Non Sovereign — 1.4% | |||||||||||||||
Gazprom OAO | |||||||||||||||
900,000 | Nt.† 9.625% due 3/1/2013 | NR/BB | 1,085,625 | ||||||||||||
Noncaptive Consumer — 0.7% | |||||||||||||||
Dollar Financial Group, Inc. | |||||||||||||||
559,000 | Sr. Nt. 9.75% due 11/15/2011 | B3/B | 575,770 | ||||||||||||
Packaging — 3.0% | |||||||||||||||
Ball Corp. | |||||||||||||||
417,000 | Sr. Nt. 6.875% due 12/15/2012 | Ba2/BB | 430,552 | ||||||||||||
Crown Americas | |||||||||||||||
800,000 | Sr. Nt.† 7.75% due 11/15/2015 | B1/B | 828,000 | ||||||||||||
Owens-Brockway Glass Container | |||||||||||||||
400,000 | Sr. Sec. Nt. 7.75% due 5/15/2011 | B1/BB– | 417,500 | ||||||||||||
424,000 | Sr. Sec. Nt. 8.875% due 2/15/2009 | B1/BB– | 442,550 | ||||||||||||
Silgan Hldgs., Inc. | |||||||||||||||
298,000 | Sr. Sub. Nt. 6.75% due 11/15/2013 | B1/B+ | 296,510 | ||||||||||||
2,415,112 |
See notes to financial statements.
89
n The Guardian High Yield Bond Fund
Schedule of Investments (Continued)
December 31, 2005
Principal Amount | Rating Moody's/ S&P* | Value | |||||||||||||
Paper and Forest Products — 1.5% | |||||||||||||||
Graphic Packaging Int'l., Inc. | |||||||||||||||
$ | 1,022,000 | Sr. Sub. Nt. 9.50% due 8/15/2013 | B3/B– | $ | 976,010 | ||||||||||
Millar Western Forest | |||||||||||||||
298,000 | Sr. Nt. 7.75% due 11/15/2013 | B2/B+ | 222,010 | ||||||||||||
1,198,020 | |||||||||||||||
Retailers — 2.9% | |||||||||||||||
J.C. Penney Co., Inc. | |||||||||||||||
1,648,000 | Debt. 7.95% due 4/1/2017 | Ba1/BB+ | 1,914,218 | ||||||||||||
Rent-A-Center | |||||||||||||||
400,000 | Sr. Sub. Nt. Ser. B 7.50% due 5/1/2010 | B1/BB– | 382,000 | ||||||||||||
2,296,218 | |||||||||||||||
Services — 0.3% | |||||||||||||||
Williams Scotsman, Inc. | |||||||||||||||
200,000 | Sr. Nt. 8.50% due 10/1/2015 | B3/B | 207,000 | ||||||||||||
Technology — 1.6% | |||||||||||||||
Iron Mountain, Inc. | |||||||||||||||
700,000 | Sr. Sub. Nt. 8.625% due 4/1/2013 | Caa1/B | 729,750 | ||||||||||||
Magnachip Semiconductor | |||||||||||||||
600,000 | Sr. Sec. Nt. 6.875% due 12/15/2011 | Ba3/B+ | 589,500 | ||||||||||||
1,319,250 | |||||||||||||||
Textile — 1.4% | |||||||||||||||
Oxford Inds., Inc. | |||||||||||||||
300,000 | Sr. Nt. 8.875% due 6/1/2011 | B2/B | 305,625 | ||||||||||||
Russell Corp. | |||||||||||||||
785,000 | Sr. Nt. 9.25% due 5/1/2010 | B2/B | 795,794 | ||||||||||||
1,101,419 | |||||||||||||||
Transportation — 1.0% | |||||||||||||||
Hertz Corp. | |||||||||||||||
200,000 | Sr. Nt.† 8.875% due 1/1/2014 | B1/B | 203,750 | ||||||||||||
OMI Corp. | |||||||||||||||
600,000 | Sr. Nt. 7.625% due 12/1/2013 | B1/B+ | 608,250 | ||||||||||||
812,000 | |||||||||||||||
Wireless Communications — 4.6% | |||||||||||||||
Centennial Cell Comm. Corp. | |||||||||||||||
300,000 | Sr. Nt. 10.125% due 6/15/2013 | B3/CCC | 326,250 | ||||||||||||
Inmarsat Fin. PLC | |||||||||||||||
310,000 | Sr. Nt. 7.625% due 6/30/2012 | B1/B | 319,688 | ||||||||||||
Nextel Comm., Inc. | |||||||||||||||
1,970,000 | Sr. Nt. Ser. D 7.375% due 8/1/2015 | Baa2/A– | 2,078,976 | ||||||||||||
Nextel Partners, Inc. | |||||||||||||||
350,000 | Sr. Nt. 8.125% due 7/1/2011 | Ba3/BB– | 374,062 |
Principal Amount | Rating Moody's/ S&P* | Value | |||||||||||||
Rogers Wireless, Inc. | |||||||||||||||
$ | 580,000 | Sr. Sub. Nt. 8.00% due 12/15/2012 | B2/B+ | $ | 614,075 | ||||||||||
3,713,051 | |||||||||||||||
Wireline Communications — 3.8% | |||||||||||||||
Citizens Comm. Co. | |||||||||||||||
400,000 | Sr. Nt. 9.25% due 5/15/2011 | Ba3/BB+ | 441,000 | ||||||||||||
MCI, Inc. | |||||||||||||||
397,000 | Sr. Nt. (2) 7.688% due 5/1/2009 | Ba3/B+ | 409,903 | ||||||||||||
Qwest Corp. | |||||||||||||||
500,000 | Sr. Nt.† 7.625% due 6/15/2015 | Ba3/BB | 535,000 | ||||||||||||
1,085,000 | Sr. Nt. 7.875% due 9/1/2011 | Ba3/BB | 1,169,087 | ||||||||||||
U.S. West Comm. | |||||||||||||||
480,000 | Debt. 8.875% due 6/1/2031 | Ba3/BB | 501,600 | ||||||||||||
3,056,590 | |||||||||||||||
Total Corporate Bonds (Cost $74,519,766) | 75,501,119 | ||||||||||||||
Sovereign Debt Security — 1.6% | |||||||||||||||
Federative Republic of Brazil | |||||||||||||||
$1,163,000 | Nt. 9.25% due 10/22/2010 (Cost $1,194,209) | Ba3/BB– | $1,301,397 | ||||||||||||
Indexed Security — 0.2% | |||||||||||||||
Targeted Return Index Secs. Tr. | |||||||||||||||
$175,610 | Ser. HY-2005-1†(2) 7.362% due 6/15/2015 (Cost $182,166) | B1/BB– | $180,439 |
Shares | Value | ||||||||||
Warrant — 0.0% | |||||||||||
XM Satellite Radio, Inc. | |||||||||||
330 | exp. 3/15/2010 (Cost $66,660) | $ | 14,850 |
See notes to financial statements.
90
n The Guardian High Yield Bond Fund
Schedule of Investments (Continued)
December 31, 2005
Principal Amount | Value | ||||||||||
Repurchase Agreement — 3.5% | |||||||||||
$ | 2,772,000 | State Street Bank and Trust Co. | |||||||||
repurchase agreement, | |||||||||||
dated 12/30/2005, maturity | |||||||||||
value of $2,773,269 at | |||||||||||
4.12%, due 1/3/2006 (3) | |||||||||||
(Cost $2,772,000) | $ | 2,772,000 | |||||||||
Total Investments — 99.3% (Cost $78,734,801) | 79,769,805 | ||||||||||
Cash, Receivables, and Other Assets Less Liabilities — 0.7% | 584,659 | ||||||||||
Net Assets — 100% | $ | 80,354,464 |
* Unaudited.
† Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to certain qualified buyers. At 12/31/2005, the aggregate market value of these securities amounted to $11,003,050 representing 13.7% of net assets of which $9,733,837 have been deemed liquid pursuant to the Fund's liquidity procedures approved by the Board of Trustees.
(1) Step-up bond.
(2) Floating rate note. The rate shown is the rate in effect at 12/31/2005.
(3) The repurchase agreement is fully collateralized by $2,815,000 in U.S. Government Agency, 5.50%, due 11/16/2015, with a value of $2,829,075.
Glossary:
NR — Not Rated.
See notes to financial statements.
91
n The Guardian Tax-Exempt Fund
Schedule of Investments
December 31, 2005
Principal Amount | Rating Moody's/ S&P* | Value | |||||||||||||
Municipal Bonds — 98.7% | |||||||||||||||
Alabama — 1.3% | |||||||||||||||
$ | 1,000,000 | Alabama 21st Century Auth. Tobacco Settlement Rev., 5.25% due 12/1/2009 | Baa1/A– | $ | 1,064,830 | ||||||||||
160,000 | Alabama 21st Century Auth. Tobacco, 5.75% due 12/1/2019 | Baa1/A– | 170,040 | ||||||||||||
1,234,870 | |||||||||||||||
Alaska — 1.4% | |||||||||||||||
1,300,000 | Northern Tobacco Securitization Corp., 5.80% due 6/1/2012 | Baa3/BBB | 1,377,441 | ||||||||||||
Arizona — 3.3% | |||||||||||||||
1,000,000 | Phoenix, AZ G.O. Ser. B, 5.375% due 7/1/2020 | Aa1/AA+ | 1,095,840 | ||||||||||||
Salt River Proj., AZ Agric. Impt. & Pwr. Dist. Rev. Ser. A, | |||||||||||||||
1,500,000 | 5.00% due 1/1/2028 | Aa2/AA | 1,590,780 | ||||||||||||
500,000 | 5.00% due 1/1/2029 | Aa2/AA | 529,425 | ||||||||||||
3,216,045 | |||||||||||||||
Arkansas — 1.1% | |||||||||||||||
1,000,000 | Arkansas St. G.O. Fed. Hwy. Grant Ser. A, 5.50% due 8/1/2011 | Aa2/AA | 1,068,320 | ||||||||||||
California — 6.9% | |||||||||||||||
750,000 | California Hsg. Fin. Agy. Rev. Multifamily III Ser. F, 3.53% due 2/1/2032 (1) | Aa3/AA– | 750,000 | ||||||||||||
1,500,000 | California St. Var. Purp. G.O., 5.00% due 3/1/2028 | A2/A | 1,566,735 | ||||||||||||
2,000,000 | California St. G.O., 5.25% due 11/1/2027 | A2/A | 2,126,320 | ||||||||||||
750,000 | Golden St. Tobacco Securitization Corp. Ser. 2003-A-1, 5.00% due 6/1/2012 | Baa3/BBB | 781,223 | ||||||||||||
1,500,000 | Tobacco Securitization Auth. Northern California Rev. Ser. A-1, 5.375% due 6/1/2038 | Baa3/BBB | 1,500,465 | ||||||||||||
6,724,743 | |||||||||||||||
Connecticut — 6.3% | |||||||||||||||
1,500,000 | Connecticut St. G.O. Ref. Ser. C, 5.25% due 12/15/2009 | Aa3/AA | 1,602,735 | ||||||||||||
2,000,000 | Connecticut St. Health & Edl. Facs. Auth. Rev. Wesleyan Univ. Ser. F, 3.52% due 7/1/2040 (1) | Aa3/AA | 2,000,000 | ||||||||||||
1,000,000 | Connecticut St. Special Tax Obligation Rev. Trans. Infrastructure Ser. 1, 3.52% due 9/1/2020 (1) | Aaa/AAA | 1,000,000 | ||||||||||||
1,500,000 | Greater New Haven Wtr. Pollution Ctrl. Auth. Ser. A, 5.00% due 11/15/2030 | Aaa/AAA | 1,588,545 | ||||||||||||
6,191,280 |
Principal Amount | Rating Moody's/ S&P* | Value | |||||||||||||
Florida — 2.7% | |||||||||||||||
$ | 1,500,000 | Florida St. Brd. of Ed. Lottery Rev. Ser. C, 5.25% due 7/1/2016 | Aaa/AAA | $ | 1,608,705 | ||||||||||
1,000,000 | West Palm Beach, FL Cmnty. Redev. Agy. Northwood Pleasant Cmty., 5.00% due 3/1/2035 | NR/A | 1,015,860 | ||||||||||||
2,624,565 | |||||||||||||||
Georgia — 1.5% | |||||||||||||||
1,000,000 | Fulton Cnty., GA Dev. Auth. Rev. Georgia Tech. Foundation Ser. A, 5.125% due 11/1/2021 | Aa1/AA+ | 1,066,960 | ||||||||||||
350,000 | Gainesville, GA Wtr. & Swg. Rev., 5.25% due 11/15/2018 | Aaa/AAA | 377,759 | ||||||||||||
1,444,719 | |||||||||||||||
Idaho — 1.0% | |||||||||||||||
1,000,000 | Ada & Canyon Cntys., ID Jt. Sch. Dist. G.O., 4.00% due 8/15/2009 | Aa2/AA– | 1,021,570 | ||||||||||||
Illinois — 2.1% | |||||||||||||||
1,500,000 | Chicago, IL O'Hare Int'l. Arpt. Rev. Third Lien Ser. A, 5.00% due 1/1/2033 | Aaa/AAA | 1,551,255 | ||||||||||||
500,000 | Illinois St. G.O. Ser. B, 3.58% due 10/1/2033 (1) | Aa3/AA | 500,000 | ||||||||||||
2,051,255 | |||||||||||||||
Indiana — 2.1% | |||||||||||||||
1,000,000 | Indiana Hlth. Fac. Fing. Auth. Rev. Ser. F, 5.50% due 11/15/2008 | Aa2/AA | 1,055,910 | ||||||||||||
1,030,000 | Indiania St. Hsg. & Cmnty. Dev. Auth. Rev. AMT Mtg. Ser. C-2, 5.00% due 7/1/2031 | Aaa/NR | 1,040,022 | ||||||||||||
2,095,932 | |||||||||||||||
Iowa — 1.8% | |||||||||||||||
1,615,000 | Tobacco Settlement Auth. IA Rev. Ser. B ETM, 5.50% due 6/1/2011 | Baa3/AAA | 1,754,536 | ||||||||||||
Kansas — 2.5% | |||||||||||||||
1,300,000 | Kansas St. Dev. Fin. Auth. Lease, 5.125% due 4/1/2022 | Aaa/AAA | 1,391,351 | ||||||||||||
1,000,000 | Wyandotte Cnty., Kansas City, KS Impt. Ser. B, 5.00% due 9/1/2028 | Aaa/AAA | 1,046,410 | ||||||||||||
2,437,761 | |||||||||||||||
Kentucky — 1.4% | |||||||||||||||
1,250,000 | Kentucky St. Ppty. & Bldgs. Commn. Rev., 5.00% due 8/1/2025 | Aaa/AAA | 1,320,038 | ||||||||||||
Maryland — 1.1% | |||||||||||||||
1,000,000 | Prince Georges Cnty., MD Indl. Dev. Auth. Ref., 5.00% due 6/30/2019 | Aaa/AAA | 1,069,480 |
See notes to financial statements.
92
n The Guardian Tax-Exempt Fund
Schedule of Investments (Continued)
December 31, 2005
Principal Amount | Rating Moody's/ S&P* | Value | |||||||||||||
Massachusetts — 6.4% | |||||||||||||||
$ | 2,000,000 | Massachusetts St. Cons. Ln. Ser. C, 5.00% due 9/1/2025 | Aa2/AA | $ | 2,109,560 | ||||||||||
1,500,000 | Massachusetts St. Hsg. Fin. Agy. Ser. B, 5.00% due 6/1/2030 | Aa3/AA– | 1,533,600 | ||||||||||||
1,550,000 | Massachusetts St. Hsg. Fin. Agy. Rev. AMT Ser. H, 5.00% due 12/1/2028 | Aa3/AA– | 1,561,501 | ||||||||||||
1,000,000 | Massachusetts St. Wtr. Resources Auth. Rev. Ser. A, 5.00% due 8/1/2029 | Aaa/AAA | 1,049,710 | ||||||||||||
6,254,371 | |||||||||||||||
Minnesota — 5.4% | |||||||||||||||
2,000,000 | Minnesota St. Muni. Power Agy. Electric, 5.25% due 10/1/2024 | A3/NR | 2,117,620 | ||||||||||||
1,500,000 | Rochester, MN Waste Wtr. Ser. A G.O., 5.00% due 2/1/2026 | Aaa/AAA | 1,590,870 | ||||||||||||
1,500,000 | St. Paul, MN Port Auth. Lease Rev., 5.125% due 12/1/2027 | Aa2/AA+ | 1,581,105 | ||||||||||||
5,289,595 | |||||||||||||||
Missouri — 2.2% | |||||||||||||||
1,000,000 | Camdenton, MO Reorganized Sch. Dist. Ref. & Impt. G.O., 5.25% due 3/1/2024 | Aaa/AAA | 1,080,650 | ||||||||||||
1,000,000 | Missouri St. Hwys. & Trans. Commn. St. Rd. Rev. Ser. A, 5.00% due 2/1/2008 | Aaa/AAA | 1,035,380 | ||||||||||||
2,116,030 | |||||||||||||||
New Hampshire — 1.6% | |||||||||||||||
1,500,000 | New Hampshire St. Hsg. Fin. Auth. Rev. AMT Mtg. Acquisition Ser. E, 5.00% due 7/1/2030 | Aa2/NR | 1,518,405 | ||||||||||||
New Jersey — 1.9% | |||||||||||||||
1,735,000 | Tobacco Settlement Fin. Corp., 5.50% due 6/1/2012 | Baa3/BBB | 1,815,816 | ||||||||||||
New York — 8.9% | |||||||||||||||
1,255,000 | New York City Indl. Dev. Agy., 5.25% due 3/1/2018 | Aaa/AAA | 1,356,580 | ||||||||||||
2,000,000 | New York St. Environmental Facs., 5.00% due 6/15/2025 | Aaa/AAA | 2,120,440 | ||||||||||||
1,500,000 | New York St. Urban Dev. Corp., 5.25% due 1/1/2021 | NR/AA– | 1,570,395 | ||||||||||||
2,000,000 | New York, NY City Tran. Fin. Auth. Ref. Sub. Ser. A-2, 5.00% due 11/1/2008 | Aa2/AAA | 2,089,720 | ||||||||||||
1,500,000 | Sales Tax Asset Receivable Corp. Ser. A Rev., 5.00% due 10/15/2029 | Aaa/AAA | 1,586,115 | ||||||||||||
8,723,250 |
Principal Amount | Rating Moody's/ S&P* | Value | |||||||||||||
North Carolina — 12.8% | |||||||||||||||
$ | 1,345,000 | Appalachian St. Univ. NC Rev. Ref., 5.00% due 7/15/2025 | Aaa/NR | $ | 1,422,257 | ||||||||||
2,000,000 | Fayetteville, NC Pub. Wks. Commn. Rev. Nts., 3.55% due 1/15/2008 | Aaa/AAA | 2,012,060 | ||||||||||||
3,300,000 | North Carolina Educ. Facs. Fin. Agy. Rev. Duke Univ. Proj. Ser. B, 3.49% due 12/1/2021 (1) | Aa1/AA+ | 3,300,000 | ||||||||||||
1,500,000 | North Carolina St. Ref. G.O., 5.00% due 3/1/2010 | Aa1/AAA | 1,594,005 | ||||||||||||
2,000,000 | North Carolina St. Univ., NC Raleigh Rev. General Ser. A, 5.00% due 10/1/2024 | Aaa/AAA | 2,129,980 | ||||||||||||
1,975,000 | Wilmington, NC Wtr. & Swr. Sys. Rev. Ref. 5.00% due 6/1/2030 | Aaa/AAA | 2,073,157 | ||||||||||||
12,531,459 | |||||||||||||||
Ohio — 3.4% | |||||||||||||||
2,000,000 | Ohio St. Bldg. Auth. Ref. St. Facs. Hwy., 5.00% due 10/1/2010 | Aaa/AAA | 2,137,060 | ||||||||||||
1,050,000 | Univ. of Cincinnati, OH General Rcpts. Ser. A, 5.50% due 6/1/2011 | Aaa/AAA | 1,153,656 | ||||||||||||
3,290,716 | |||||||||||||||
Pennsylvania — 3.7% | |||||||||||||||
1,500,000 | Bradford Cnty., PA Solid Waste Disp. Rev. Ref. AMT Ser. B, 5.20% due 12/1/2019 | Baa3/BBB | 1,511,475 | ||||||||||||
2,000,000 | Pennsylvania St. Ref. Second Ser., 5.00% due 10/1/2009 | Aaa/AAA | 2,116,400 | ||||||||||||
3,627,875 | |||||||||||||||
Puerto Rico — 6.5% | |||||||||||||||
1,500,000 | Puerto Rico Comwlth. Pub. Impt. G.O. Ser. A, 5.00% due 7/1/2029 | Aaa/AAA | 1,577,280 | ||||||||||||
2,000,000 | Puerto Rico Comwlth. Hwy. & Transitional Auth. Rev. Ser. K, 5.00% due 7/1/2019 | Baa2/BBB+ | 2,092,260 | ||||||||||||
1,000,000 | Puerto Rico Muni. Fin. Agency Ser. A, 5.25% due 8/1/2021 | Aaa/AAA | 1,082,390 | ||||||||||||
1,500,000 | Puerto Rico Pub. Bldgs. Auth. Rev. Gov't. Facs. Ser. I, 5.50% due 7/1/2020 | Baa2/BBB | 1,620,240 | ||||||||||||
6,372,170 | |||||||||||||||
South Carolina — 4.9% | |||||||||||||||
350,000 | Charleston Cnty., SC Sch. Dist. Ref. Ser. B, 5.00% due 2/1/2016 | Aa1/AA | 371,598 | ||||||||||||
1,250,000 | Charleston, SC Wtrwks. & Swr. Rev., 5.25% due 1/1/2018 | Aa3/AA– | 1,346,150 |
See notes to financial statements.
93
n The Guardian Tax-Exempt Fund
Schedule of Investments (Continued)
December 31, 2005
Principal Amount | Rating Moody's/ S&P* | Value | |||||||||||||
$ | 1,000,000 | Mount Pleasant, SC Wtr. & Swr. Rev. Ref. & Impt., 5.25% due 12/1/2019 | Aaa/AAA | $ | 1,085,410 | ||||||||||
2,000,000 | Piedmont Muni. Power Agy. SC Electric Rev. Ref. Ser. B, 3.45% due 1/1/2019 (1) | Aaa/Aa | 2,000,000 | ||||||||||||
4,803,158 | |||||||||||||||
Virginia — 1.6% | |||||||||||||||
1,430,000 | Newport News, VA Gen. Impt. Ser. D, 5.00% due 12/1/2022 | Aa2/AA | 1,527,354 | ||||||||||||
Washington — 2.9% | |||||||||||||||
1,250,000 | Snohomish Cnty., WA G.O., 5.375% due 12/1/2019 | Aaa/AAA | 1,351,850 | ||||||||||||
1,500,000 | Univ. of Washington Univ. Rev. General Ser. A Rev., 3.52% due 12/1/2036 (1) | Aaa/AAA | 1,500,000 | ||||||||||||
2,851,850 | |||||||||||||||
Total Municipal Bonds (Cost $94,716,670) | 96,354,604 |
Total Investments — 98.7% (Cost $94,716,670) | 96,354,604 | ||||||
Cash, Receivables, and Other Assets Less Liabilities — 1.3% | 1,220,266 | ||||||
Net Assets — 100% | $ | 97,574,870 |
* Unaudited.
(1) Variable rate demand notes.
Glossary of Terms:
G.O. — General Obligation.
AMT — Alternative Minimum Tax.
NR — Not Rated.
See notes to financial statements.
94
n The Guardian Cash Management Fund
Schedule of Investments
December 31, 2005
Principal Amount | Value | ||||||||||
Corporate Bonds — 5.9% | |||||||||||
Capital Markets — 1.1% | |||||||||||
Goldman Sachs Group LP | |||||||||||
$ | 3,500,000 | 6.34% due 3/1/2006 | $ | 3,514,900 | |||||||
1,000,000 | 6.75% due 2/15/2006 (1) | 1,003,271 | |||||||||
4,518,171 | |||||||||||
Conglomerates — 1.2% | |||||||||||
5,000,000 | General Electric Capital Corp. 5.35% due 3/30/2006 | 5,014,173 | |||||||||
Diversified Financial Services — 1.2% | |||||||||||
5,000,000 | CIT Group, Inc. 6.50% due 2/7/2006 | 5,013,139 | |||||||||
Financial — 1.2% | |||||||||||
5,000,000 | Lehman Brothers Hldgs., Inc. 6.25% due 5/15/2006 | 5,030,566 | |||||||||
Financial–Other — 1.2% | |||||||||||
5,000,000 | Countrywide Home Loans, Inc. (2) 4.243% due 4/12/2006 | 5,000,036 | |||||||||
100,000 | Societe Generale NA (2) 4.04% due 7/27/2006 | 99,655 | |||||||||
5,099,691 | |||||||||||
Total Corporate Bonds (Cost $24,675,740) | 24,675,740 | ||||||||||
Certificates of Deposit (2) — 3.6% | |||||||||||
$ | 5,000,000 | Barclays Bank PLC 4.33% due 4/18/2006 | $ | 4,999,557 | |||||||
5,000,000 | Societe Generale NA 4.29% due 6/7/2006 | 5,000,000 | |||||||||
5,000,000 | Wells Fargo Bank NA 4.31% due 11/20/2006 | 5,000,000 | |||||||||
Total Certificates of Deposit (Cost $14,999,557) | 14,999,557 | ||||||||||
U.S. Government Security — 1.2% | |||||||||||
U.S. Government Agency Security — 1.2% | |||||||||||
$ | 5,000,000 | FNMA 2.75% due 5/10/2006 (Cost $4,969,859) | $ | 4,969,859 | |||||||
Commercial Paper — 64.8% | |||||||||||
ASSET BACKED — 3.6% | |||||||||||
$ | 5,000,000 | Barton Capital Corp. 4.30% due 1/20/2006 | $ | 4,988,652 | |||||||
5,000,000 | Surrey Funding Corp. 4.25% due 1/5/2006 | 4,997,639 | |||||||||
5,000,000 | Barton Capital Corp. 4.35% due 3/3/2006 | 4,963,146 | |||||||||
TOTAL ASSET BACKED | 14,949,437 | ||||||||||
FINANCIAL — 21.8% | |||||||||||
Capital Markets — 2.5% | |||||||||||
$ | 5,000,000 | Goldman Sachs Group LP 4.31% due 1/17/2006 | $ | 4,990,422 | |||||||
5,550,000 | J.P. Morgan Chase 4.25% due 1/11/2006 | 5,543,448 | |||||||||
10,533,870 |
Principal Amount | Value | ||||||||||
Diversified Financial Services — 1.2% | |||||||||||
$ | 5,000,000 | Credit Suisse First Boston 4.30% due 2/28/2006 | $ | 4,965,361 | |||||||
Finance Companies — 1.2% | |||||||||||
5,000,000 | Danske Corp. 4.26% due 1/19/2006 | 4,989,350 | |||||||||
Financial–Banks — 7.4% | |||||||||||
5,000,000 | Abbey National NA LLC 4.21% due 1/3/2006 | 4,998,831 | |||||||||
10,000,000 | BNP Paribas Finance 4.225% due 1/30/2006 | 9,965,965 | |||||||||
6,000,000 | Dexia Delaware 4.25% due 2/7/2006 | 5,973,792 | |||||||||
UBS Finance LLC | |||||||||||
5,000,000 | 4.135% due 1/3/2006 | 4,998,851 | |||||||||
5,000,000 | 4.435% due 4/28/2006 | 4,927,931 | |||||||||
30,865,370 | |||||||||||
Financial–Other — 9.5% | |||||||||||
10,000,000 | American General Fin. Corp. 4.29% due 2/6/2006 | 9,957,100 | |||||||||
5,000,000 | Barclays US Fdg. LLC 4.34% due 2/13/2006 | 4,974,081 | |||||||||
Bear Stearns Co., Inc. | |||||||||||
5,000,000 | 4.05% due 1/11/2006 | 4,994,375 | |||||||||
5,000,000 | 4.37% due 3/30/2006 | 4,946,589 | |||||||||
Cooperative Association of Tractor Dealers | |||||||||||
5,000,000 | 4.35% due 1/18/2006 | 4,989,729 | |||||||||
5,000,000 | 4.30% due 2/3/2006 | 4,980,292 | |||||||||
5,000,000 | Govco, Inc. 4.38% due 3/14/2006 | 4,956,200 | |||||||||
39,798,366 | |||||||||||
TOTAL FINANCIAL | 91,152,317 | ||||||||||
INDUSTRIAL — 39.4% | |||||||||||
Automotive — 8.3% | |||||||||||
$ | 10,000,000 | American Honda Fin. Corp. 4.22% due 1/4/2006 | $ | 9,996,483 | |||||||
BMW US Capital LLC | |||||||||||
10,000,000 | 4.23% due 1/9/2006 | 9,990,600 | |||||||||
5,000,000 | 4.28% due 1/20/2006 | 4,988,706 | |||||||||
10,000,000 | Toyota Motor Credit Corp. 4.32% due 2/10/2006 | 9,952,000 | |||||||||
34,927,789 | |||||||||||
Beverages — 3.6% | |||||||||||
5,000,000 | Atlantic Industries 4.20% due 1/17/2006 | 4,990,667 | |||||||||
5,000,000 | Concentrate Mfg. Co. 4.22% due 1/13/2006 | 4,992,966 | |||||||||
5,000,000 | Concentrate Mfg. Corp. 4.26% due 1/27/2006 | 4,984,617 | |||||||||
14,968,250 | |||||||||||
Diversified Manufacturing — 4.7% | |||||||||||
10,000,000 | Eaton Corp. 4.26% due 1/3/2006 | 9,997,634 | |||||||||
5,000,000 | Siemens Capital Corp 4.34% due 3/10/2006 | 4,959,011 | |||||||||
5,000,000 | Siemens Capital Corp. 4.36% due 3/17/2006 | 4,954,583 | |||||||||
19,911,228 |
See notes to financial statements.
95
n The Guardian Cash Management Fund
Schedule of Investments (Continued)
December 31, 2005
Principal Amount | Value | ||||||||||
Electronic Equipment and Instruments — 2.4% | |||||||||||
$ | 10,000,000 | Hitachi America 4.26% due 1/10/2006 | $ | 9,989,350 | |||||||
Food Products — 2.4% | |||||||||||
5,000,000 | Hershey Foods Corp. 4.23% due 1/23/2006 | 4,987,075 | |||||||||
5,000,000 | Nestle Capital Corp. 4.03% due 1/18/2006 | 4,990,485 | |||||||||
9,977,560 | |||||||||||
Health Care Equipment and Supplies — 1.2% | |||||||||||
5,000,000 | Medtronic, Inc. 4.25% due 1/18/2006 | 4,989,965 | |||||||||
Health Care Providers and Services — 2.4% | |||||||||||
10,000,000 | United Healthcare Corp. 4.20% due 2/6/2006 | 9,958,000 | |||||||||
Metals and Mining — 2.4% | |||||||||||
10,000,000 | Alcoa, Inc. 4.15% due 1/3/2006 | 9,997,694 | |||||||||
Personal Products — 2.4% | |||||||||||
10,000,000 | L'Oreal USA, Inc. 4.31% due 1/11/2006 | 9,988,028 | |||||||||
Pharmaceuticals — 4.8% | |||||||||||
10,000,000 | Alcon Fin. 4.25% due 1/24/2006 | 9,972,847 | |||||||||
10,000,000 | Novartis 4.29% due 1/5/2006 | 9,995,234 | |||||||||
19,968,081 | |||||||||||
Utilities–Electric and Water — 4.8% | |||||||||||
10,000,000 | National Rural Utilities Coop. Fin. 4.26% due 1/20/2006 | 9,977,517 | |||||||||
10,000,000 | Southern Co. 4.26% due 1/20/2006 | 9,977,516 | |||||||||
19,955,033 | |||||||||||
TOTAL INDUSTRIAL | 164,630,978 | ||||||||||
Total Commercial Paper (Cost $270,732,732) | 270,732,732 | ||||||||||
Taxable Municipal Securities — 20.3% | |||||||||||
California — 3.7% | |||||||||||
$ | 7,465,000 | California Housing Fin. Agency 4.45% due 1/4/2006 (2) | $ | 7,465,000 | |||||||
8,100,000 | Sacramento Cnty., CA 4.45% due 1/4/2006 (2) | 8,100,000 | |||||||||
15,565,000 | |||||||||||
Colorado — 2.9% | |||||||||||
12,230,000 | Colorado Housing & Fin. Auth. 4.45% due 1/4/2006 (2) | 12,230,000 | |||||||||
Connecticut — 1.9% | |||||||||||
8,000,000 | Connecticut St. Housing & Fin. Auth. 4.38% due 1/5/2006 (2) | 8,000,000 | |||||||||
Michigan — 1.0% | |||||||||||
4,000,000 | Michigan St. Housing Dev. Auth. 4.45% due 1/4/2006 (2) | 4,000,000 | |||||||||
New York — 5.7% | |||||||||||
16,355,000 | New York City Trans. 4.45% due 1/4/2006 (2) | 16,355,000 |
Principal Amount | Value | ||||||||||
$ | 7,385,000 | New York St. Dormitory Auth. Rev. 4.46% due 1/5/2006 (2) | $ | 7,385,000 | |||||||
23,740,000 | |||||||||||
Utah — 4.4% | |||||||||||
Utah Housing Corp. Single Family | |||||||||||
5,895,000 | 4.45% due 1/4/2006 (2) | 5,895,000 | |||||||||
6,055,000 | 4.45% due 1/4/2006 (2) | 6,055,000 | |||||||||
6,320,000 | Utah St. Housing Fin. Agency 4.45% due 1/4/2006 | 6,320,000 | |||||||||
18,270,000 | |||||||||||
Washington — 0.7% | |||||||||||
2,795,000 | Seattle, WA 4.24% due 8/30/2006 (2) | 2,795,000 | |||||||||
Total Taxable Municipal Securities (Cost $84,600,000) | 84,600,000 | ||||||||||
Repurchase Agreement — 4.2% | |||||||||||
$ | 17,449,000 | State Street Bank and Trust Co. | |||||||||
repurchase agreement, | |||||||||||
dated 12/30/2005, maturity | |||||||||||
value of $17,456,988 | |||||||||||
4.12%, due 1/3/2006 (3) | |||||||||||
(Cost $17,449,000) | $ | 17,449,000 | |||||||||
Total Investments — 100.0% (Cost $417,426,888) | 417,426,888 | ||||||||||
Liabilities in Excess of Cash, Receivables and Other Assets — 0.0% | (69,733 | ) | |||||||||
Net Assets — 100% | $ | 417,357,155 |
(1) Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities have been deemed liquid pursuant to the Fund's liquidity procedures approved by the Board of Trustees and may be resold in transactions exempt from registration, normally to certain qualified buyers. At 12/31/2005, the aggregate market value of these securities amounted to $1,003,271 representing 0.2% of net assets.
(2) Floating rate note. The rate shown is the rate in effect at 12/31/2005.
(3) The repurchase agreement is fully collateralized by $17,710,000 in U.S. Government Agency, 5.50%, due 11/16/2015, with a value of $17,798,550.
See notes to financial statements.
96
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97
n The Park Avenue Portfolio
Statements of Assets and Liabilities
December 31, 2005
The Guardian Park Avenue Fund | The Guardian UBS Large Cap Value Fund | The Guardian Park Avenue Small Cap Fund | The Guardian UBS Small Cap Value Fund | The Guardian Asset Allocation Fund | The Guardian S&P 500 Index Fund | The Guardian Baillie Gifford International Growth Fund | |||||||||||||||||||||||||
ASSETS | |||||||||||||||||||||||||||||||
Investments, at identified cost (includes majority-owned subsidiary of $128,834,860 for GAAF) | $ | 780,939,996 | $ | 71,983,914 | $ | 156,466,779 | $ | 38,563,275 | $ | 139,542,068 | $ | 169,384,703 | $ | 43,589,871 | |||||||||||||||||
Investments, at market — Note 1 (includes majority- owned subsidiary of $127,313,627 for GAAF) | 881,058,702 | 93,734,976 | 168,595,131 | 44,691,435 | 138,049,818 | 184,974,018 | 63,981,463 | ||||||||||||||||||||||||
Cash | 892 | 4 | 976 | 982 | 564 | 106,773 | 325 | ||||||||||||||||||||||||
Foreign currency (cost $178 GBGIF and $198,280 GBGEMF, respectively) | — | — | — | — | — | — | 180 | ||||||||||||||||||||||||
Receivable for securities sold | 13,186,033 | — | 30,737 | 369,462 | — | — | — | ||||||||||||||||||||||||
Dividends receivable | 715,061 | 123,431 | 219,376 | 43,019 | 6,953 | 239,728 | 71,390 | ||||||||||||||||||||||||
Receivable for fund shares sold | 167,018 | 6,414 | 34,263 | 12,426 | 19,434 | 25,414 | 19,964 | ||||||||||||||||||||||||
Interest receivable | 429 | 340 | 319 | 275 | 970 | 630 | 171 | ||||||||||||||||||||||||
Receivable for variation margin — Note 1 | — | — | — | — | 34,450 | — | — | ||||||||||||||||||||||||
Dividend reclaim receivable | — | — | — | — | — | — | 10,365 | ||||||||||||||||||||||||
Principal paydowns receivable | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Other assets | 23,717 | 1,767 | 4,788 | 1,067 | 3,299 | 4,264 | 1,309 | ||||||||||||||||||||||||
Total Assets | 895,151,852 | 93,866,932 | 168,885,590 | 45,118,666 | 138,115,488 | 185,350,827 | 64,085,167 | ||||||||||||||||||||||||
LIABILITIES | |||||||||||||||||||||||||||||||
Payable for securities purchased | 10,529,459 | — | 832,322 | 299,644 | — | — | 53,237 | ||||||||||||||||||||||||
Payable for fund shares redeemed | 2,569,618 | 87,636 | 765,691 | 9,900 | 378,178 | 78,455 | 146,444 | ||||||||||||||||||||||||
Accrued expenses | 392,371 | 58,637 | 94,247 | 52,350 | 86,100 | 87,582 | 91,756 | ||||||||||||||||||||||||
Payable for variation margin — Note 1 | — | — | — | — | — | 10,600 | — | ||||||||||||||||||||||||
Accrued foreign capital gains tax | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Payable for forward mortgage securities purchased — Note 6 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Distributions payable | — | — | — | — | 47 | — | — | ||||||||||||||||||||||||
Unrealized depreciation on forward foreign currency contracts | — | — | — | — | — | — | 135 | ||||||||||||||||||||||||
Due to GIS | 593,336 | 121,642 | 164,592 | 64,391 | 30,141 | 98,350 | 25,259 | ||||||||||||||||||||||||
Total Liabilities | 14,084,784 | 267,915 | 1,856,852 | 426,285 | 494,466 | 274,987 | 316,831 | ||||||||||||||||||||||||
Net Assets | $ | 881,067,068 | $ | 93,599,017 | $ | 167,028,738 | $ | 44,692,381 | $ | 137,621,022 | $ | 185,075,840 | $ | 63,768,336 | |||||||||||||||||
COMPONENTS OF NET ASSETS | |||||||||||||||||||||||||||||||
Shares of beneficial interest, at par | $ | 274,218 | $ | 71,755 | $ | 102,498 | $ | 37,962 | $ | 116,394 | $ | 216,459 | $ | 42,780 | |||||||||||||||||
Additional paid-in capital | 1,381,082,848 | 70,238,241 | 148,336,128 | 37,638,399 | 189,823,641 | 265,624,098 | 78,250,613 | ||||||||||||||||||||||||
Undistributed/(distribution in excess of) net investment income/(accumulated net investment loss) | 4,499,868 | 1,567 | — | — | 1,208,270 | 28,156 | (80,602 | ) | |||||||||||||||||||||||
Accumulated net realized gain/(loss) on investments and foreign currency related transactions | (604,908,572 | ) | 1,536,392 | 6,461,760 | 887,860 | (52,115,115 | ) | (96,359,648 | ) | (34,834,384 | ) | ||||||||||||||||||||
Net unrealized appreciation/(depreciation) of investments and foreign currency related transactions | 100,118,706 | 21,751,062 | 12,128,352 | 6,128,160 | (1,412,168 | ) | 15,566,775 | 20,389,929 | |||||||||||||||||||||||
Net Assets | $ | 881,067,068 | $ | 93,599,017 | $ | 167,028,738 | $ | 44,692,381 | $ | 137,621,022 | $ | 185,075,840 | $ | 63,768,336 | |||||||||||||||||
NET ASSETS | |||||||||||||||||||||||||||||||
Class A | $ | 796,033,981 | $ | 27,050,078 | $ | 132,245,735 | $ | 13,038,057 | $ | 97,665,002 | $ | 149,718,801 | $ | 39,786,087 | |||||||||||||||||
Class B | $ | 69,158,875 | $ | 22,643,431 | $ | 12,970,948 | $ | 10,369,024 | $ | 21,199,730 | $ | 12,913,280 | $ | 5,518,327 | |||||||||||||||||
Class C | $ | 6,357,613 | $ | 21,004,643 | $ | 9,536,493 | $ | 9,852,478 | $ | 8,485,501 | $ | 9,369,865 | $ | 7,659,530 | |||||||||||||||||
Class K | $ | 9,516,599 | $ | 22,900,865 | $ | 12,275,562 | $ | 11,432,822 | $ | 10,270,789 | $ | 13,073,894 | $ | 10,804,392 | |||||||||||||||||
Shares of Beneficial Interest Outstanding — $0.01 Par Value | |||||||||||||||||||||||||||||||
Class A | 24,678,265 | 2,070,158 | 7,978,357 | 1,091,517 | 8,246,044 | 17,505,424 | 2,603,338 | ||||||||||||||||||||||||
Class B | 2,237,433 | 1,739,614 | 868,025 | 893,059 | 1,803,235 | 1,512,828 | 401,645 | ||||||||||||||||||||||||
Class C | 209,020 | 1,613,563 | 643,881 | 848,739 | 721,996 | 1,098,684 | 554,329 | ||||||||||||||||||||||||
Class K | 297,099 | 1,752,145 | 759,586 | 962,914 | 868,154 | 1,528,921 | 718,708 | ||||||||||||||||||||||||
Net Asset Value Per Share | |||||||||||||||||||||||||||||||
Class A | $ | 32.26 | $ | 13.07 | $ | 16.58 | $ | 11.94 | $ | 11.84 | $ | 8.55 | $ | 15.28 | |||||||||||||||||
Class B | $ | 30.91 | $ | 13.02 | $ | 14.94 | $ | 11.61 | $ | 11.76 | $ | 8.54 | $ | 13.74 | |||||||||||||||||
Class C | $ | 30.42 | $ | 13.02 | $ | 14.81 | $ | 11.61 | $ | 11.75 | $ | 8.53 | $ | 13.82 | |||||||||||||||||
Class K | $ | 32.03 | $ | 13.07 | $ | 16.16 | $ | 11.87 | $ | 11.83 | $ | 8.55 | $ | 15.03 | |||||||||||||||||
Maximum Offering Price Per Share | |||||||||||||||||||||||||||||||
Class A (Net Asset Value x 104.71%)* | $ | 33.78 | $ | 13.69 | $ | 17.36 | $ | 12.50 | $ | 12.40 | $ | 8.95 | $ | 16.00 | |||||||||||||||||
Class A (Net Asset Value x 103.09%)* | — | — | — | — | — | — | — |
* Based on sale of less than $100,000. On sale of $100,000 or more, the offering price is reduced.
** No load is charged on Class A shares.
See notes to financial statements.
98
The Guardian Baillie Gifford Emerging Markets Fund | The Guardian Investment Quality Bond Fund | The Guardian Low Duration Bond Fund | The Guardian High Yield Bond Fund | The Guardian Tax-Exempt Fund | The Guardian Cash Management Fund | ||||||||||||||||||||||
ASSETS | |||||||||||||||||||||||||||
Investments, at identified cost (includes majority-owned subsidiary of $128,834,860 for GAAF) | $ | 112,821,174 | $ | 143,428,946 | $ | 34,945,531 | $ | 78,734,801 | $ | 94,716,670 | $ | 417,426,888 | |||||||||||||||
Investments, at market — Note 1 (includes majority- owned subsidiary of $127,313,627 for GAAF) | 175,250,927 | 142,928,502 | 34,510,326 | 79,769,805 | 96,354,604 | 417,426,888 | |||||||||||||||||||||
Cash | 21 | 74,410 | 59,407 | 86,358 | 375,652 | 109,425 | |||||||||||||||||||||
Foreign currency (cost $178 GBGIF and $198,280 GBGEMF, respectively) | 201,772 | — | — | — | — | — | |||||||||||||||||||||
Receivable for securities sold | — | — | — | — | — | — | |||||||||||||||||||||
Dividends receivable | 292,239 | — | — | — | — | — | |||||||||||||||||||||
Receivable for fund shares sold | 166,587 | 38,056 | 1,797 | 6,791 | 51,070 | 677,392 | |||||||||||||||||||||
Interest receivable | 14 | 1,073,600 | 262,012 | 1,451,289 | 945,516 | 1,156,919 | |||||||||||||||||||||
Receivable for variation margin — Note 1 | — | — | — | — | — | — | |||||||||||||||||||||
Dividend reclaim receivable | — | — | — | — | — | — | |||||||||||||||||||||
Principal paydowns receivable | — | 59,864 | — | — | — | — | |||||||||||||||||||||
Other assets | 2,566 | 3,405 | 809 | 2,081 | 2,278 | 11,069 | |||||||||||||||||||||
Total Assets | 175,914,126 | 144,177,837 | 34,834,351 | 81,316,324 | 97,729,120 | 419,381,693 | |||||||||||||||||||||
LIABILITIES | |||||||||||||||||||||||||||
Payable for securities purchased | — | 899,780 | 951,767 | 782,770 | — | — | |||||||||||||||||||||
Payable for fund shares redeemed | 406,673 | 240,038 | 9,863 | 29,587 | 26,200 | 1,568,588 | |||||||||||||||||||||
Accrued expenses | 135,474 | 82,535 | 48,272 | 64,321 | 50,424 | 173,192 | |||||||||||||||||||||
Payable for variation margin — Note 1 | — | — | — | — | — | — | |||||||||||||||||||||
Accrued foreign capital gains tax | 201,987 | — | — | — | — | — | |||||||||||||||||||||
Payable for forward mortgage securities purchased — Note 6 | — | 10,347,113 | — | — | — | — | |||||||||||||||||||||
Distributions payable | 544 | 90,879 | 293 | 10,516 | 8,937 | 3,937 | |||||||||||||||||||||
Unrealized depreciation on forward foreign currency contracts | 18 | — | — | — | — | — | |||||||||||||||||||||
Due to GIS | 63,285 | 102,804 | 33,183 | 74,666 | 68,689 | 278,821 | |||||||||||||||||||||
Total Liabilities | 807,981 | 11,763,149 | 1,043,378 | 961,860 | 154,250 | 2,024,538 | |||||||||||||||||||||
Net Assets | $ | 175,106,145 | $ | 132,414,688 | $ | 33,790,973 | $ | 80,354,464 | $ | 97,574,870 | $ | 417,357,155 | |||||||||||||||
COMPONENTS OF NET ASSETS | |||||||||||||||||||||||||||
Shares of beneficial interest, at par | $ | 92,808 | $ | 135,659 | $ | 34,574 | $ | 109,339 | $ | 97,798 | $ | 4,173,572 | |||||||||||||||
Additional paid-in capital | 108,184,350 | 133,074,213 | 34,558,447 | 95,638,079 | 95,790,850 | 413,183,583 | |||||||||||||||||||||
Undistributed/(distribution in excess of) net investment income/(accumulated net investment loss) | 76,611 | — | — | — | — | — | |||||||||||||||||||||
Accumulated net realized gain/(loss) on investments and foreign currency related transactions | 4,519,947 | (294,740 | ) | (366,843 | ) | (16,427,958 | ) | 48,288 | — | ||||||||||||||||||
Net unrealized appreciation/(depreciation) of investments and foreign currency related transactions | 62,232,429 | (500,444 | ) | (435,205 | ) | 1,035,004 | 1,637,934 | — | |||||||||||||||||||
Net Assets | $ | 175,106,145 | $ | 132,414,688 | $ | 33,790,973 | $ | 80,354,464 | $ | 97,574,870 | $ | 417,357,155 | |||||||||||||||
NET ASSETS | |||||||||||||||||||||||||||
Class A | $ | 121,194,422 | $ | 99,230,062 | $ | 9,315,552 | $ | 48,245,895 | $ | 86,514,612 | $ | 396,012,002 | |||||||||||||||
Class B | $ | 13,494,699 | $ | 13,925,391 | $ | 8,317,349 | $ | 9,874,119 | — | $ | 5,029,977 | ||||||||||||||||
Class C | $ | 17,895,327 | $ | 10,008,481 | $ | 7,730,075 | $ | 10,462,572 | $ | 11,060,258 | $ | 6,232,500 | |||||||||||||||
Class K | $ | 22,521,697 | $ | 9,250,754 | $ | 8,427,997 | $ | 11,771,878 | — | $ | 10,082,676 | ||||||||||||||||
Shares of Beneficial Interest Outstanding — $0.01 Par Value | |||||||||||||||||||||||||||
Class A | 6,284,769 | 10,166,350 | 953,183 | 6,564,247 | 8,671,235 | 396,012,002 | |||||||||||||||||||||
Class B | 776,989 | 1,427,082 | 850,977 | 1,344,102 | — | 5,029,977 | |||||||||||||||||||||
Class C | 1,026,264 | 1,025,635 | 790,899 | 1,424,483 | 1,108,591 | 6,232,500 | |||||||||||||||||||||
Class K | 1,192,747 | 946,809 | 862,302 | 1,601,113 | — | 10,082,676 | |||||||||||||||||||||
Net Asset Value Per Share | |||||||||||||||||||||||||||
Class A | $ | 19.28 | $ | 9.76 | $ | 9.77 | $ | 7.35 | $ | 9.98 | $ | 1.00 | |||||||||||||||
Class B | $ | 17.37 | $ | 9.76 | $ | 9.77 | $ | 7.35 | — | $ | 1.00 | ||||||||||||||||
Class C | $ | 17.44 | $ | 9.76 | $ | 9.77 | $ | 7.34 | $ | 9.98 | $ | 1.00 | |||||||||||||||
Class K | $ | 18.88 | $ | 9.77 | $ | 9.77 | $ | 7.35 | — | $ | 1.00 | ||||||||||||||||
Maximum Offering Price Per Share | |||||||||||||||||||||||||||
Class A (Net Asset Value x 104.71%)* | $ | 20.19 | $ | 10.22 | — | $ | 7.70 | $ | 10.45 | N/A** | |||||||||||||||||
Class A (Net Asset Value x 103.09%)* | — | — | $ | 10.07 | — | — | — |
99
n The Park Avenue Portfolio
Statements of Operations
Year Ended December 31, 2005
The Guardian Park Avenue Fund | The Guardian UBS Large Cap Value Fund | The Guardian Park Avenue Small Cap Fund | The Guardian UBS Small Cap Value Fund | The Guardian Asset Allocation Fund | The Guardian S&P 500 Index Fund | The Guardian Baillie Gifford International Growth Fund | |||||||||||||||||||||||||
INVESTMENT INCOME | |||||||||||||||||||||||||||||||
Dividends (includes $1,685,757 from a majority-owned subsidiary for GAAF) | $ | 21,330,460 | $ | 1,929,619 | $ | 1,885,829 | $ | 617,768 | $ | 1,978,627 | $ | 3,275,518 | $ | 1,482,242 | |||||||||||||||||
Interest | 227,066 | 41,166 | 94,462 | 38,061 | 126,495 | 132,257 | 16,469 | ||||||||||||||||||||||||
Less: Foreign tax withheld | (8,902 | ) | — | (937 | ) | (123 | ) | — | — | (144,488 | ) | ||||||||||||||||||||
Total Income | 21,548,624 | 1,970,785 | 1,979,354 | 655,706 | 2,105,122 | 3,407,775 | 1,354,223 | ||||||||||||||||||||||||
Expenses: | |||||||||||||||||||||||||||||||
Investment advisory fees — Note 2 | 4,837,778 | 744,415 | 1,402,203 | 439,534 | 947,398 | 451,587 | 462,607 | ||||||||||||||||||||||||
Administrative fees — Class A — Note 2 | 1,704,314 | 63,350 | 368,952 | 32,698 | 257,993 | 366,874 | 89,663 | ||||||||||||||||||||||||
Administrative fees — Class B — Note 2 | 235,890 | 55,018 | 45,125 | 25,695 | 61,347 | 32,669 | 14,260 | ||||||||||||||||||||||||
Administrative fees — Class C — Note 2 | 15,587 | 51,176 | 23,773 | 24,329 | 20,946 | 23,354 | 17,206 | ||||||||||||||||||||||||
Administrative fees — Class K — Note 2 | 22,163 | 54,677 | 29,551 | 27,162 | 24,098 | 28,690 | 23,436 | ||||||||||||||||||||||||
12b-1 fees — Class B — Note 2 | 707,670 | 165,053 | 135,374 | 77,084 | 184,042 | 98,006 | 42,782 | ||||||||||||||||||||||||
12b-1 fees — Class C — Note 2 | 46,760 | 153,527 | 71,320 | 72,985 | 62,838 | 70,061 | 51,617 | ||||||||||||||||||||||||
12b-1 fees — Class K — Note 2 | 35,460 | 87,484 | 47,282 | 43,460 | 38,557 | 45,905 | 37,497 | ||||||||||||||||||||||||
Transfer agent fees — Class A | 1,202,773 | 36,292 | 155,407 | 37,190 | 138,980 | 48,822 | 81,001 | ||||||||||||||||||||||||
Transfer agent fees — Class B | 331,775 | 31,685 | 56,060 | 30,333 | 52,918 | 37,289 | 37,968 | ||||||||||||||||||||||||
Transfer agent fees — Class C | 31,631 | 29,160 | 30,985 | 29,190 | 30,220 | 31,217 | 29,365 | ||||||||||||||||||||||||
Transfer agent fees — Class K | 2,758 | 2,352 | 3,084 | 2,194 | 1,979 | 5,462 | 2,079 | ||||||||||||||||||||||||
Custodian fees | 185,080 | 100,628 | 124,545 | 90,816 | 102,672 | 150,436 | 230,772 | ||||||||||||||||||||||||
Printing expense | 148,214 | 16,836 | 30,579 | 10,081 | 24,950 | 27,427 | 12,489 | ||||||||||||||||||||||||
Trustees' fees — Note 2 | 107,683 | 9,610 | 21,045 | 4,715 | 15,757 | 18,592 | 3,195 | ||||||||||||||||||||||||
Registration fees | 79,702 | 32,778 | 54,562 | 33,581 | 50,639 | 70,951 | 51,265 | ||||||||||||||||||||||||
Insurance expense | 67,768 | 6,450 | 12,881 | 3,269 | 10,418 | 10,974 | 3,903 | ||||||||||||||||||||||||
Legal fees | 36,155 | 3,700 | 8,804 | 2,182 | 5,907 | 8,181 | 3,944 | ||||||||||||||||||||||||
Audit fees | 29,398 | 23,982 | 23,927 | 23,926 | 23,926 | 23,928 | 32,021 | ||||||||||||||||||||||||
Loan commitment fees — Note 8 | 18,531 | 1,622 | 3,596 | 809 | 2,724 | 3,146 | 762 | ||||||||||||||||||||||||
Interest expense on reverse repurchase agreements | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Other | 2,264 | 620 | 457 | 474 | 930 | 455 | 631 | ||||||||||||||||||||||||
Total Expenses before waivers/reimbursements and Custody credits | 9,849,354 | 1,670,415 | 2,649,512 | 1,011,707 | 2,059,239 | 1,554,026 | 1,228,463 | ||||||||||||||||||||||||
Less: Expenses waived and reimbursed by investment adviser — Note 2 | — | — | — | — | (1,165,112 | ) | (382,690 | ) | — | ||||||||||||||||||||||
Custody credits — Note 1 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Expenses Net of Waivers/Reimbursements and Custody credits | 9,849,354 | 1,670,415 | 2,649,512 | 1,011,707 | 894,127 | 1,171,336 | 1,228,463 | ||||||||||||||||||||||||
Net Investment Income/(Loss) | 11,699,270 | 300,370 | (670,158 | ) | (356,001 | ) | 1,210,995 | 2,236,439 | 125,760 | ||||||||||||||||||||||
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES — NOTE 3 | |||||||||||||||||||||||||||||||
Net realized gain/(loss) on investments — Note 1 | 85,603,277 | 9,230,191 | 21,956,703 | 6,579,020 | (110,973 | ) | (100,250 | ) | 5,647,701 | ||||||||||||||||||||||
Net realized gain on futures contracts | — | — | — | — | 159,482 | 127,300 | — | ||||||||||||||||||||||||
Net realized loss on sales of affiliated underlying funds | — | — | — | — | (268,895 | ) | — | — | |||||||||||||||||||||||
Net realized loss on foreign currency related transactions — Note 1 | — | — | — | — | — | — | (32,055 | ) | |||||||||||||||||||||||
Net change in unrealized appreciation/(depreciation) on investments — Note 3 | (68,370,583 | ) | (1,936,794 | ) | (24,814,340 | ) | (4,830,288 | ) | 4,085,766 | 5,775,072 | 2,706,615 | ||||||||||||||||||||
Unrealized foreign capital gains tax | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Net change in unrealized appreciation of futures contracts — Note 1 | — | — | — | — | (52,257 | ) | (128,411 | ) | — | ||||||||||||||||||||||
Net change in unrealized appreciation/(depreciation) from translation of other assets and liabilities denominated in foreign currencies — Note 1 | — | — | — | — | — | — | (5,304 | ) | |||||||||||||||||||||||
Net Realized and Unrealized Gain/(Loss) on Investments and Foreign Currencies | 17,232,694 | 7,293,397 | (2,857,637 | ) | 1,748,732 | 3,813,123 | 5,673,711 | 8,316,957 | |||||||||||||||||||||||
NET INCREASE/(DECREASE) IN NET ASSETS FROM OPERATIONS | $ | 28,931,964 | $ | 7,593,767 | $ | (3,527,795 | ) | $ | 1,392,731 | $ | 5,024,118 | $ | 7,910,150 | $ | 8,442,717 |
See notes to financial statements.
100
The Guardian Baillie Gifford Emerging Markets Fund | The Guardian Investment Quality Bond Fund | The Guardian Low Duration Bond Fund | The Guardian High Yield Bond Fund | The Guardian Tax-Exempt Fund | The Guardian Cash Management Fund | ||||||||||||||||||||||
INVESTMENT INCOME | |||||||||||||||||||||||||||
Dividends (includes $1,685,757 from a majority-owned subsidiary for GAAF) | $ | 3,641,300 | — | — | — | — | — | ||||||||||||||||||||
Interest | 43,418 | $ | 6,508,758 | $ | 1,270,762 | $ | 6,100,071 | $ | 4,158,386 | $ | 14,431,664 | ||||||||||||||||
Less: Foreign tax withheld | (360,762 | ) | — | — | — | — | — | ||||||||||||||||||||
Total Income | 3,323,956 | 6,508,758 | 1,270,762 | 6,100,071 | 4,158,386 | 14,431,664 | |||||||||||||||||||||
Investment advisory fees — Note 2 | 1,286,911 | 695,231 | 152,327 | 506,342 | 479,694 | 2,244,962 | |||||||||||||||||||||
Administrative fees — Class A — Note 2 | 211,434 | 259,072 | 23,704 | 132,829 | 212,578 | 1,063,372 | |||||||||||||||||||||
Administrative fees — Class B — Note 2 | 30,345 | 37,809 | 21,218 | 24,617 | — | 16,035 | |||||||||||||||||||||
Administrative fees — Class C — Note 2 | 35,633 | 26,341 | 19,337 | 25,585 | 27,269 | 17,657 | |||||||||||||||||||||
Administrative fees — Class K — Note 2 | 44,315 | 24,393 | 20,367 | 27,945 | — | 25,417 | |||||||||||||||||||||
12b-1 fees — Class B — Note 2 | 91,035 | 113,428 | 63,655 | 73,851 | — | 48,107 | |||||||||||||||||||||
12b-1 fees — Class C — Note 2 | 106,900 | 79,023 | 58,011 | 76,756 | 81,809 | 52,970 | |||||||||||||||||||||
12b-1 fees — Class K — Note 2 | 70,904 | 39,029 | 32,587 | 44,711 | — | 40,667 | |||||||||||||||||||||
Transfer agent fees — Class A | 54,964 | 72,115 | 31,767 | 34,954 | 37,023 | 365,022 | |||||||||||||||||||||
Transfer agent fees — Class B | 34,156 | 36,804 | 29,701 | 32,278 | — | 17,906 | |||||||||||||||||||||
Transfer agent fees — Class C | 31,194 | 30,336 | 29,367 | 29,744 | 29,626 | 6,871 | |||||||||||||||||||||
Transfer agent fees — Class K | 1,841 | 3,039 | 1,174 | 1,555 | — | 8,768 | |||||||||||||||||||||
Custodian fees | 465,290 | 128,280 | 75,649 | 101,472 | 74,845 | 132,394 | |||||||||||||||||||||
Printing expense | 18,681 | 22,986 | 9,782 | 16,228 | 15,321 | 59,404 | |||||||||||||||||||||
Trustees' fees — Note 2 | 11,741 | 14,885 | 3,452 | 9,100 | 9,934 | 48,392 | |||||||||||||||||||||
Registration fees | 52,476 | 50,097 | 46,201 | 57,053 | 24,124 | 47,392 | |||||||||||||||||||||
Insurance expense | 6,631 | 9,956 | 2,689 | 5,589 | 6,337 | 29,762 | |||||||||||||||||||||
Legal fees | 5,412 | 3,681 | 1,558 | 3,957 | 4,400 | 12,085 | |||||||||||||||||||||
Audit fees | 32,021 | 23,928 | 26,020 | 29,503 | 23,927 | 23,153 | |||||||||||||||||||||
Loan commitment fees — Note 8 | 2,088 | 2,498 | 596 | 1,525 | 1,681 | — | |||||||||||||||||||||
Interest expense on reverse repurchase agreements | — | 943 | — | — | — | — | |||||||||||||||||||||
Other | 528 | 460 | 504 | 777 | 1,171 | 479 | |||||||||||||||||||||
Total Expenses before waivers/reimbursements and Custody credits | 2,594,500 | 1,674,334 | 649,666 | 1,236,371 | 1,029,739 | 4,260,815 | |||||||||||||||||||||
Less: Expenses waived and reimbursed by investment adviser — Note 2 | — | (260,013 | ) | (224,560 | ) | (323,413 | ) | (117,606 | ) | (320,259 | ) | ||||||||||||||||
Custody credits — Note 1 | — | — | — | — | (14,128 | ) | — | ||||||||||||||||||||
Expenses Net of Waivers/Reimbursements and Custody credits | 2,594,500 | 1,414,321 | 425,106 | 912,958 | 898,005 | 3,940,556 | |||||||||||||||||||||
Net Investment Income/(Loss) | 729,456 | 5,094,437 | 845,656 | 5,187,113 | 3,260,381 | 10,491,108 | |||||||||||||||||||||
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES — NOTE 3 | |||||||||||||||||||||||||||
Net realized gain/(loss) on investments — Note 1 | 10,680,866 | 262,547 | (304,320 | ) | 1,283,425 | 2,344,289 | — | ||||||||||||||||||||
Net realized gain on futures contracts | — | — | — | — | — | — | |||||||||||||||||||||
Net realized loss on sales of affiliated underlying funds | — | — | — | — | — | — | |||||||||||||||||||||
Net realized loss on foreign currency related transactions — Note 1 | (338,391 | ) | — | — | — | — | — | ||||||||||||||||||||
Net change in unrealized appreciation/(depreciation) on investments — Note 3 | 35,202,625 | (2,690,899 | ) | (232,687 | ) | (3,918,482 | ) | (1,962,673 | ) | — | |||||||||||||||||
Unrealized foreign capital gains tax | (158,403 | ) | — | — | — | — | — | ||||||||||||||||||||
Net change in unrealized appreciation of futures contracts — Note 1 | — | — | — | — | — | — | |||||||||||||||||||||
Net change in unrealized appreciation/(depreciation) from translation of other assets and liabilities denominated in foreign currencies — Note 1 | 2,086 | — | — | — | — | — | |||||||||||||||||||||
Net Realized and Unrealized Gain/(Loss) on Investments and Foreign Currencies | 45,388,783 | (2,428,352 | ) | (537,007 | ) | (2,635,057 | ) | 381,616 | — | ||||||||||||||||||
NET INCREASE/(DECREASE) IN NET ASSETS FROM OPERATIONS | $ | 46,118,239 | $ | 2,666,085 | $ | 308,649 | $ | 2,552,056 | $ | 3,641,997 | $ | 10,491,108 |
101
n The Park Avenue Portfolio
Statements of Changes in Net Assets
The Guardian Park Avenue Fund | The Guardian UBS Large Cap Value Fund | The Guardian Park Avenue Small Cap Fund | The Guardian UBS Small Cap Value Fund | ||||||||||||||||||||||||||||||||
Year Ended December 31, | Year Ended December 31, | Year Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||||||||||||
2005 | 2004 | 2005 | 2004 | 2005 | 2004 | 2005 | 2004 | ||||||||||||||||||||||||||||
INCREASE/(DECREASE) IN NET ASSETS | |||||||||||||||||||||||||||||||||||
From Operations: | |||||||||||||||||||||||||||||||||||
Net investment income/(loss) | $ | 11,699,270 | $ | 9,874,920 | $ | 300,370 | $ | 217,881 | $ | (670,158 | ) | $ | (1,699,438 | ) | $ | (356,001 | ) | $ | (277,382 | ) | |||||||||||||||
Net realized gain/(loss) on investments and foreign currency related transactions | 85,603,277 | 43,914,493 | 9,230,191 | 5,880,973 | 21,956,703 | 36,997,666 | 6,579,020 | 4,594,611 | |||||||||||||||||||||||||||
Net change in unrealized appreciation/ (depreciation) of investments and foreign currency related transactions | (68,370,583 | ) | 5,480,778 | (1,936,794 | ) | 5,118,409 | (24,814,340 | ) | (6,630,509 | ) | (4,830,288 | ) | 2,797,353 | ||||||||||||||||||||||
Net Increase/(Decrease) in Net Assets Resulting from Operations | 28,931,964 | 59,270,191 | 7,593,767 | 11,217,263 | (3,527,795 | ) | 28,667,719 | 1,392,731 | 7,114,582 | ||||||||||||||||||||||||||
Dividends and Distributions to Shareholders from: | |||||||||||||||||||||||||||||||||||
Net investment income | |||||||||||||||||||||||||||||||||||
Class A | (8,770,151 | ) | (12,988,844 | ) | (209,073 | ) | (130,775 | ) | — | — | — | — | |||||||||||||||||||||||
Class B | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Class C | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Class K | (81,418 | ) | (97,044 | ) | (116,217 | ) | (61,348 | ) | — | — | — | — | |||||||||||||||||||||||
Net realized gain on investments and foreign currency related transactions | |||||||||||||||||||||||||||||||||||
Class A | — | — | (2,541,630 | ) | (2,047,005 | ) | (20,505,404 | ) | (20,434,106 | ) | (1,667,186 | ) | (1,668,270 | ) | |||||||||||||||||||||
Class B | — | — | (2,146,014 | ) | (1,934,103 | ) | (2,470,625 | ) | (2,882,448 | ) | (1,353,648 | ) | (1,424,466 | ) | |||||||||||||||||||||
Class C | — | — | (1,987,994 | ) | (1,856,823 | ) | (1,564,893 | ) | (1,179,600 | ) | (1,283,764 | ) | (1,360,553 | ) | |||||||||||||||||||||
Class K | — | — | (2,149,631 | ) | (1,898,407 | ) | (1,807,918 | ) | (1,406,422 | ) | (1,454,574 | ) | (1,415,192 | ) | |||||||||||||||||||||
Total Dividends and Distributions to Shareholders | (8,851,569 | ) | (13,085,888 | ) | (9,150,559 | ) | (7,928,461 | ) | (26,348,840 | ) | (25,902,576 | ) | (5,759,172 | ) | (5,868,481 | ) | |||||||||||||||||||
From Capital Share Transactions: | |||||||||||||||||||||||||||||||||||
Net increase/(decrease) in net assets from capital share transactions — Note 7 | (265,569,217 | ) | (232,136,779 | ) | (4,015,797 | ) | 11,055,749 | (29,884,116 | ) | 23,001,400 | 173,598 | 8,906,264 | |||||||||||||||||||||||
Redemption fees | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
(265,569,217 | ) | (232,136,779 | ) | (4,015,797 | ) | 11,055,749 | (29,884,116 | ) | 23,001,400 | 173,598 | 8,906,264 | ||||||||||||||||||||||||
Net Increase/(Decrease) in Net Assets | (245,488,822 | ) | (185,952,476 | ) | (5,572,589 | ) | 14,344,551 | (59,760,751 | ) | 25,766,543 | (4,192,843 | ) | 10,152,365 | ||||||||||||||||||||||
NET ASSETS: | |||||||||||||||||||||||||||||||||||
Beginning of year | 1,126,555,890 | 1,312,508,366 | 99,171,606 | 84,827,055 | 226,789,489 | 201,022,946 | 48,885,224 | 38,732,859 | |||||||||||||||||||||||||||
End of year* | $ | 881,067,068 | $ | 1,126,555,890 | $ | 93,599,017 | $ | 99,171,606 | $ | 167,028,738 | $ | 226,789,489 | $ | 44,692,381 | $ | 48,885,224 | |||||||||||||||||||
* Includes undistributed/(distributions in excess of) net investment income/(accumulated net investment loss) | $ | 4,499,868 | $ | 1,652,167 | $ | 1,567 | $ | 26,487 | $ | — | $ | — | $ | — | $ | — |
See notes to financial statements.
102
The Guardian Asset Allocation Fund | The Guardian S&P 500 Index Fund | The Guardian Baillie Gifford International Growth Fund | |||||||||||||||||||||||||
Year Ended December 31, | Year Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||||
2005 | 2004 | 2005 | 2004 | 2005 | 2004 | ||||||||||||||||||||||
INCREASE/(DECREASE) IN NET ASSETS | |||||||||||||||||||||||||||
From Operations: | |||||||||||||||||||||||||||
Net investment income/(loss) | $ | 1,210,995 | $ | 1,739,902 | $ | 2,236,439 | $ | 2,274,307 | $ | 125,760 | $ | (70,715 | ) | ||||||||||||||
Net realized gain/(loss) on investments and foreign currency related transactions | (220,386 | ) | 2,053,678 | 27,050 | 487,112 | 5,615,646 | 1,214,443 | ||||||||||||||||||||
Net change in unrealized appreciation/ (depreciation) of investments and foreign currency related transactions | 4,033,509 | 10,480,742 | 5,646,661 | 13,652,953 | 2,701,311 | 6,736,411 | |||||||||||||||||||||
Net Increase/(Decrease) in Net Assets Resulting from Operations | 5,024,118 | 14,274,322 | 7,910,150 | 16,414,372 | 8,442,717 | 7,880,139 | |||||||||||||||||||||
Dividends and Distributions to Shareholders from: | |||||||||||||||||||||||||||
Net investment income | |||||||||||||||||||||||||||
Class A | (313,326 | ) | (2,400,470 | ) | (1,976,532 | ) | (1,978,008 | ) | (118,286 | ) | (89,371 | ) | |||||||||||||||
Class B | — | (271,768 | ) | (77,597 | ) | (89,432 | ) | — | — | ||||||||||||||||||
Class C | — | (48,522 | ) | (55,845 | ) | (66,023 | ) | — | — | ||||||||||||||||||
Class K | (7,361 | ) | (141,931 | ) | (108,909 | ) | (94,839 | ) | (25,687 | ) | — | ||||||||||||||||
Net realized gain on investments and foreign currency related transactions | |||||||||||||||||||||||||||
Class A | — | — | — | — | — | — | |||||||||||||||||||||
Class B | — | — | — | — | — | — | |||||||||||||||||||||
Class C | — | — | — | — | — | — | |||||||||||||||||||||
Class K | — | — | — | — | — | — | |||||||||||||||||||||
Total Dividends and Distributions to Shareholders | (320,687 | ) | (2,862,691 | ) | (2,218,883 | ) | (2,228,302 | ) | (143,973 | ) | (89,371 | ) | |||||||||||||||
From Capital Share Transactions: | |||||||||||||||||||||||||||
Net increase/(decrease) in net assets from capital share transactions — Note 7 | (25,519,608 | ) | (20,540,477 | ) | 831,769 | 6,679,825 | (1,422,124 | ) | (2,103,573 | ) | |||||||||||||||||
Redemption fees | — | — | — | — | 283 | 17,925 | |||||||||||||||||||||
(25,519,608 | ) | (20,540,477 | ) | 831,769 | 6,679,825 | (1,421,841 | ) | (2,085,648 | ) | ||||||||||||||||||
Net Increase/(Decrease) in Net Assets | (20,816,177 | ) | (9,128,846 | ) | 6,523,036 | 20,865,895 | 6,876,903 | 5,705,120 | |||||||||||||||||||
NET ASSETS: | |||||||||||||||||||||||||||
Beginning of year | 158,437,199 | 167,566,045 | 178,552,804 | 157,686,909 | 56,891,433 | 51,186,313 | |||||||||||||||||||||
End of year* | $ | 137,621,022 | $ | 158,437,199 | $ | 185,075,840 | $ | 178,552,804 | $ | 63,768,336 | $ | 56,891,433 | |||||||||||||||
* Includes undistributed/(distributions in excess of) net investment income/(accumulated net investment loss) | $ | 1,208,270 | $ | 320,666 | $ | 28,156 | $ | 26,546 | $ | (80,602 | ) | $ | (39,426 | ) |
103
n The Park Avenue Portfolio
Statements of Changes in Net Assets (Continued)
The Guardian Baillie Gifford Emerging Markets Fund | The Guardian Investment Quality Bond Fund | The Guardian Low Duration Bond Fund | |||||||||||||||||||||||||
Year Ended December 31, | Year Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||||
2005 | 2004 | 2005 | 2004 | 2005 | 2004 | ||||||||||||||||||||||
INCREASE/(DECREASE) IN NET ASSETS | |||||||||||||||||||||||||||
From Operations: | |||||||||||||||||||||||||||
Net investment income | $ | 729,456 | $ | 115,635 | $ | 5,094,437 | $ | 5,832,835 | $ | 845,656 | $ | 588,430 | |||||||||||||||
Net realized gain/(loss) on investments and foreign currency related transactions | 10,342,475 | 10,147,991 | 262,547 | 1,606,034 | (304,320 | ) | (28,179 | ) | |||||||||||||||||||
Net change in unrealized appreciation/ (depreciation) of investments and foreign currency related transactions | 35,046,308 | 7,529,328 | (2,690,899 | ) | (1,524,310 | ) | (232,687 | ) | (294,183 | ) | |||||||||||||||||
Net Increase in Net Assets Resulting from Operations | 46,118,239 | 17,792,954 | 2,666,085 | 5,914,559 | 308,649 | 266,068 | |||||||||||||||||||||
Dividends and Distributions to Shareholders from: | |||||||||||||||||||||||||||
Net investment income | |||||||||||||||||||||||||||
Class A | (289,672 | ) | (116,609 | ) | (3,968,273 | ) | (4,631,841 | ) | (279,907 | ) | (206,517 | ) | |||||||||||||||
Class B | — | — | (466,343 | ) | (519,948 | ) | (186,640 | ) | (123,667 | ) | |||||||||||||||||
Class C | — | — | (324,807 | ) | (337,129 | ) | (170,354 | ) | (116,473 | ) | |||||||||||||||||
Class K | — | (11,893 | ) | (335,014 | ) | (343,917 | ) | (208,755 | ) | (141,773 | ) | ||||||||||||||||
Net realized gain on investments and foreign currency related transactions | |||||||||||||||||||||||||||
Class A | (5,997,317 | ) | (2,415,890 | ) | (872,637 | ) | (1,090,742 | ) | — | — | |||||||||||||||||
Class B | (789,741 | ) | (515,212 | ) | (122,551 | ) | (164,526 | ) | — | — | |||||||||||||||||
Class C | (1,023,484 | ) | (519,613 | ) | (85,993 | ) | (109,717 | ) | — | — | |||||||||||||||||
Class K | (1,188,897 | ) | (601,842 | ) | (76,798 | ) | (103,230 | ) | — | — | |||||||||||||||||
Total Dividends and Distributions to Shareholders | (9,289,111 | ) | (4,181,059 | ) | (6,252,416 | ) | (7,301,050 | ) | (845,656 | ) | (588,430 | ) | |||||||||||||||
From Capital Share Transactions: | |||||||||||||||||||||||||||
Net increase/(decrease) in net assets from capital share transactions — Note 7 | 36,661,288 | 13,696,283 | (8,241,670 | ) | (37,306,362 | ) | 611,632 | 2,663,253 | |||||||||||||||||||
Redemption fees | 9,327 | 5,372 | — | — | — | — | |||||||||||||||||||||
36,670,615 | 13,701,655 | (8,241,670 | ) | (37,306,362 | ) | 611,632 | 2,663,253 | ||||||||||||||||||||
Net Increase/(Decrease) in Net Assets | 73,499,743 | 27,313,550 | (11,828,001 | ) | (38,692,853 | ) | 74,625 | 2,340,891 | |||||||||||||||||||
NET ASSETS: | |||||||||||||||||||||||||||
Beginning of year | 101,606,402 | 74,292,852 | 144,242,689 | 182,935,542 | 33,716,348 | 31,375,457 | |||||||||||||||||||||
End of year* | $ | 175,106,145 | $ | 101,606,402 | $ | 132,414,688 | $ | 144,242,689 | $ | 33,790,973 | $ | 33,716,348 | |||||||||||||||
* Includes undistributed/(distribution in excess of) net investment income | $ | 76,611 | $ | (147,983 | ) | $ | — | $ | — | $ | — | $ | — |
See notes to financial statements.
104
The Guardian High Yield Bond Fund | The Guardian Tax-Exempt Fund | The Guardian Cash Management Fund | |||||||||||||||||||||||||
Year Ended December 31, | Year Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||||
2005 | 2004 | 2005 | 2004 | 2005 | 2004 | ||||||||||||||||||||||
INCREASE/(DECREASE) IN NET ASSETS | |||||||||||||||||||||||||||
From Operations: | |||||||||||||||||||||||||||
Net investment income | $ | 5,187,113 | $ | 5,190,729 | $ | 3,260,381 | $ | 3,078,209 | $ | 10,491,108 | $ | 2,784,129 | |||||||||||||||
Net realized gain/(loss) on investments and foreign currency related transactions | 1,283,425 | 1,382,997 | 2,344,289 | 1,899,375 | — | — | |||||||||||||||||||||
Net change in unrealized appreciation/ (depreciation) of investments and foreign currency related transactions | (3,918,482 | ) | 242,109 | (1,962,673 | ) | (1,173,809 | ) | — | — | ||||||||||||||||||
Net Increase in Net Assets Resulting from Operations | 2,552,056 | 6,815,835 | 3,641,997 | 3,803,775 | 10,491,108 | 2,784,129 | |||||||||||||||||||||
Dividends and Distributions to Shareholders from: | |||||||||||||||||||||||||||
Net investment income | |||||||||||||||||||||||||||
Class A | (3,388,997 | ) | (3,299,787 | ) | (2,962,128 | ) | (2,791,145 | ) | (10,064,694 | ) | (2,633,636 | ) | |||||||||||||||
Class B | (554,064 | ) | (625,306 | ) | — | — | (108,025 | ) | (53,655 | ) | |||||||||||||||||
Class C | (575,926 | ) | (602,260 | ) | (298,253 | ) | (287,064 | ) | (119,561 | ) | (49,517 | ) | |||||||||||||||
Class K | (668,126 | ) | (663,376 | ) | — | — | (198,828 | ) | (47,321 | ) | |||||||||||||||||
Net realized gain on investments and foreign currency related transactions | |||||||||||||||||||||||||||
Class A | — | — | (2,167,130 | ) | (1,571,408 | ) | — | — | |||||||||||||||||||
Class B | — | — | — | — | — | — | |||||||||||||||||||||
Class C | — | — | (276,986 | ) | (204,912 | ) | — | — | |||||||||||||||||||
Class K | — | — | — | — | — | — | |||||||||||||||||||||
Total Dividends and Distributions to Shareholders | (5,187,113 | ) | (5,190,729 | ) | (5,704,497 | ) | (4,854,529 | ) | (10,491,108 | ) | (2,784,129 | ) | |||||||||||||||
From Capital Share Transactions: | |||||||||||||||||||||||||||
Net increase/(decrease) in net assets from capital share transactions — Note 7 | (5,118,741 | ) | 14,976,472 | 6,815,254 | 3,295,052 | (51,945,439 | ) | (91,284,950 | ) | ||||||||||||||||||
Redemption fees | 1,076 | 1,737 | — | — | — | — | |||||||||||||||||||||
(5,117,665 | ) | 14,978,209 | 6,815,254 | 3,295,052 | (51,945,439 | ) | (91,284,950 | ) | |||||||||||||||||||
Net Increase/(Decrease) in Net Assets | (7,752,722 | ) | 16,603,315 | 4,752,754 | 2,244,298 | (51,945,439 | ) | (91,284,950 | ) | ||||||||||||||||||
NET ASSETS: | |||||||||||||||||||||||||||
Beginning of year | 88,107,186 | 71,503,871 | 92,822,116 | 90,577,818 | 469,302,594 | 560,587,544 | |||||||||||||||||||||
End of year* | $ | 80,354,464 | $ | 88,107,186 | $ | 97,574,870 | $ | 92,822,116 | $ | 417,357,155 | $ | 469,302,594 | |||||||||||||||
* Includes undistributed/(distribution in excess of) net investment income | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — |
105
n The Park Avenue Portfolio
Notes to Financial Statements
December 31, 2005
n The Guardian Park Avenue Fund
n The Guardian UBS Large Cap Value Fund
n The Guardian Park Avenue Small Cap Fund
n The Guardian UBS Small Cap Value Fund
n The Guardian Asset Allocation Fund
n The Guardian S&P 500 Index Fund
n The Guardian Baillie Gifford International Growth Fund
n The Guardian Baillie Gifford Emerging Markets Fund
n The Guardian Investment Quality Bond Fund
n The Guardian Low Duration Bond Fund
n The Guardian High Yield Bond Fund
n The Guardian Tax-Exempt Fund
n The Guardian Cash Management Fund
Note 1. Organization and Accounting Policies
The Park Avenue Portfolio (the Portfolio) is a diversified open-end management investment company registered under the Investment Company Act of 1940, as amended (the 1940 Act), which is organized as a business trust under the laws of the Commonwealth of Massachusetts. The Portfolio consists of thirteen series, namely: The Guardian Park Avenue Fund (GPAF); The Guardian UBS Large Cap Value Fund (GULCVF); The Guardian Park Avenue Small Cap Fund (GPASCF); The Guardian UBS Small Cap Value Fund (GUSCVF); The Guardian Asset Allocation Fund (GAAF); The Guardian S&P 500 Index Fund (GSP500F); The Guardian Baillie Gifford International Growth Fund (GBGIF); The Guardian Baillie Gifford Emerging Markets Fund (GBGEMF); The Guardian Investment Quality Bond Fund (GIQBF); The Guardian Low Duration Bond Fund (GLDBF); The Guardian High Yield Bond Fund (GHYBF); The Guardian Tax-Exempt Fund (GTEF); and The Guardian Cash Management Fund (GCMF). The series ar e collectively referred to herein as the "Funds".
The Funds offer up to five classes of shares: Class A, Class B, Class C, Class K and the Institutional Class. Each of the Funds offers Class A shares. Class A shares are sold with an initial sales load of up to 4.50% (up to 3.00% for GLDBF and 0.00% for GCMF) and an administrative fee of up to 0.25% on an annual basis of the Funds' average daily net assets attributable to Class A shares. A redemption fee of 2% is imposed on purchases of Class A shares of GBGIF, GBGEMF and GHYBF if redeemed within 60 days of purchase, except for shares held in omnibus accounts. Class B shares are offered by all of the Funds, except for GTEF. Class B shares are sold without an initial sales load but are subject to a 12b-1 fee of 0.75% and an administrative fee of 0.25% on an annual basis of each Fund's Class B average daily net assets, and a contingent deferred sales load (CDSL) of up to 3% imposed on certain redemptions. Each of the Funds offers Class C share s. Class C shares are sold without an initial sales load but are subject to a 12b-1 fee of 0.75% and an administrative fee of 0.25% on an annual basis of each Fund's Class C average daily net assets, and a CDSL of 1% imposed on certain redemptions. Class K shares are offered by all of the Funds, except for GTEF. Class K shares are sold without an initial sales load but are subject to a 12b-1 fee of 0.40% and an administrative fee of 0.25% on an annual basis of each Fund's Class K average daily net assets, and a CDSL of 1% imposed on certain redemptions. Institutional Class shares are offered by GPAF, GPASCF, GAAF, GSP500F, GBGIF, GBGEMF, GIQBF and GHYBF. As of December 31, 2005, none of the Funds had issued Institutional Class shares. Institutional Class shares are offered at net asset value, without an initial sales load or a CDSL. All classes of shares for each Fund represent interests in the same portfolio of investments, have the sam e rights and are generally identical in all respects except that each class bears its separate distribution (12b-1 and administrative) and certain class expenses, and has exclusive voting rights with respect to any matter to which a separate vote of any class is required.
The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income, gains (losses) and expenses during the reporting period. Actual results could differ from those estimates.
Significant accounting policies of the Funds are as follows:
Investments
Securities listed on domestic or foreign securities exchanges are valued at the last sale price on such exchanges, or if no sale occurred, at the mean of the closing bid and asked prices. Securities that are traded on the NASDAQ National Securities Market are valued at the NASDAQ Official Closing Price. In GAAF, investments in an underlying Fund are valued at the closing net asset value of each underlying Fund on the day of valuation.
Pursuant to valuation procedures approved by the Board of Trustees, certain debt securities may be valued each business day by an independent pricing service (Service). Debt securities for which quoted bid prices are readily available and representative of the bid side of the market, in the judgment of the
106
n The Park Avenue Portfolio
Notes to Financial Statements (Continued)
December 31, 2005
Service, are valued at the bid price, except for GTEF. In GTEF, debt securities are valued at the mean between the bid and asked prices obtained by the Service. Other debt securities that are valued by the Service are carried at fair value as determined by the Service, based on methods which include consideration of: yields or prices of securities of comparable quality, coupon, maturity and type; indications as to values from dealers; and general market conditions.
Other securities, including securities for which market quotations are not readily available (such as certain mortgage-backed securities, restricted securities, illiquid securities and foreign securities subject to a "significant event") are valued at fair value as determined in good faith by or under the direction of the Funds' Board of Trustees. A "significant event" is an event that will affect the value of a portfolio security that occurs after the close of trading in the security's primary trading market or exchange but before each Fund's NAV is calculated.
Investing outside of the U.S. may involve certain considerations and risks not typically associated with domestic investments, including the possibility of political and economic unrest and different levels of governmental supervision and regulation of foreign securities markets.
GHYBF invests primarily in below investment grade securities (i.e. lower-quality debt), which are subject to certain risks. Lower-quality debt is considered to be speculative because it's less certain that the issuer will be able to pay interest or repay the principal. These securities are generally more volatile and less liquid than investment grade debt. Lower quality debt securities can also be more sensitive to adverse economic conditions, including the issuer's financial condition or stresses in its industry.
Futures contracts are valued at the settlement prices established by the boards of trade or exchanges on which they are traded.
Repurchase agreements are carried at cost which approximates market value (see Note 4). Short-term debt securities with maturities of 60 days of less are valued on an amortized cost basis which approximates market value. GCMF values its investments based on amortized cost in accordance with Rule 2a-7 under the 1940 Act.
Investment transactions are recorded on the date of purchase or sale. Security gains or losses are determined on an identified cost basis. Interest income, including amortization/accretion of premium/discount, is accrued daily. Dividend income is recorded on the ex-dividend date.
All income, expenses (other than class-specific expenses) and realized and unrealized gains or losses are allocated daily to each class of shares based upon the relative value of shares of each class. Class-specific expenses, which include any items that are specifically attributed to a particular class, are charged directly to such class. For the year ended December 31, 2005, 12b-1, administrative and transfer agent fees were the only class-specific expenses.
Foreign Currency Translation
GPAF, GULCVF, GPASCF, GUSCVF, GAAF, GBGIF, GBGEMF and GHYBF are permitted to buy international securities that are not U.S. dollar denominated. Their books and records are maintained in U.S. dollars as follows:
(1) The foreign currency market value of investment securities and other assets and liabilities stated in foreign currencies are translated into U.S. dollars at the current rate of exchange.
(2) Security purchases and sales, income and expenses are translated at the rate of exchange prevailing on the respective dates of such transactions.
The resulting gains and losses are included in the Statement of Operations as follows:
Gains and losses attributable to foreign currency exchange rates on sales of securities are recorded for financial statement purposes as net realized gains and losses on investments. Realized foreign exchange gains and losses, which result from changes in foreign exchange rates between the date on which a Fund earns dividends and interest or pays foreign withholding taxes or other expenses and the date on which U.S. dollar equivalent amounts are actually received or paid, are included in net realized gains or losses on foreign currency related transactions. Realized foreign exchange gains and losses which result from changes in foreign exchange rates between the trade and settlement dates on security and currency transactions are also included in net realized gains and losses on foreign currency related transactions. Net currency gains and losses from valuing other assets and liabilities denominated in foreign currency at the period end exch ange rate are reflected in net change in unrealized appreciation or depreciation from translation of other assets and liabilities denominated in foreign currencies.
Forward Foreign Currency Contracts
GPAF, GULCVF, GPASCF, GUSCVF, GAAF, GBGIF, GBGEMF and GHYBF may enter into forward foreign currency contracts in connection with planned purchases or sales of securities, or to hedge against changes in currency exchange rates affecting the values of their investments that are denominated in a particular currency. A forward foreign currency contract is a commitment to purchase or sell a foreign currency at a future date at a negotiated forward exchange rate. Risks may arise from the potential inability of a counterparty to meet the terms of a contract and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar.
107
n The Park Avenue Portfolio
Notes to Financial Statements (Continued)
December 31, 2005
Fluctuations in the value of forward foreign currency contracts are recorded for book purposes as unrealized gains or losses from translation of other assets and liabilities denominated in foreign currencies by the Funds. When forward contracts are closed, the Funds will record realized gains or losses equal to the difference between the values of such forward contracts at the time each was opened and the values at the time each was closed. Such amounts are recorded in net realized gains or losses on foreign currency related transactions. The Funds will not enter into a forward foreign currency contract if such contract would obligate the applicable Funds to deliver an amount of foreign currency in excess of the value of the Funds' portfolio securities or other assets denominated in that currency.
Futures Contracts
GULCVF, GUSCVF, GAAF, GSP500F, GBGIF, GBGEMF, GIQBF, GLDBF, GHYBF and GTEF may enter into financial futures contracts for the delayed delivery of securities, currency or contracts based on financial indices at a fixed price on a future date. In entering into such contracts, the Funds are required to deposit either in cash or securities an amount equal to a certain percentage of the contract amount. Subsequent payments are made or received by the Funds each day, depending on the daily fluctuations in the value of the underlying security, and are recorded for financial statement purposes as variation margins by the Funds. The daily changes in the variation margin are recognized as unrealized gains or losses by the Funds. The Funds' investments in financial futures contracts are designed to hedge against anticipated future changes in interest or exchange rates or securities prices. In addition, GAAF may enter into financial futures contracts fo r non-hedging purposes. Should interest or exchange rates, securities prices or prices of futures contracts move unexpectedly, the Funds may not achieve the anticipated benefits of the financial futures contracts and may realize a loss. GAAF's portfolio holdings correspond to the custodian bank's records and reflect accounting treatment for the futures contracts in the portfolio.
Dividend Distributions
Dividends from net investment income are declared and accrued daily and are paid monthly for GIQBF, GLDBF, GHYBF and GTEF, and declared and paid semi-annually for GPAF, GULCVF, GPASCF, GUSCVF, GAAF, GSP500F, GBGIF and GBGEMF. Net realized short-term and long-term capital gains for these Funds will be distributed at least annually. Dividends from GCMF's net investment income, which includes any net realized capital gains or losses, are declared and accrued daily and paid monthly on the last business day of each month.
All dividends and distributions are recorded on the ex-dividend date. Such distributions are determined in conformity with federal income tax regulations. Differences between the recognition of income on an income tax basis and recognition of income based on GAAP may cause temporary overdistributions of net realized gains and net investment income on a GAAP basis.
The tax character of dividends and distributions paid to shareholders during the years ended December 31, 2005 and 2004 were as follows:
2005 | |||||||||||||||||||
Tax Exempt | Ordinary Income | Long-Term Capital Gain | Total | ||||||||||||||||
GPAF | $ | — | $ | 8,851,569 | $ | — | $ | 8,851,569 | |||||||||||
GULCVF | — | 1,842,150 | 7,308,409 | 9,150,559 | |||||||||||||||
GPASCF | — | 4,601,655 | 21,747,185 | 26,348,840 | |||||||||||||||
GUSCVF | — | 190,918 | 5,568,254 | 5,759,172 | |||||||||||||||
GAAF | — | 320,687 | — | 320,687 | |||||||||||||||
GSP500F | — | 2,218,883 | — | 2,218,883 | |||||||||||||||
GBGIF | — | 143,973 | — | 143,973 | |||||||||||||||
GBGEMF | — | 289,672 | 8,999,439 | 9,289,111 | |||||||||||||||
GIQBF | — | 5,687,988 | 564,428 | 6,252,416 | |||||||||||||||
GLDBF | — | 845,656 | — | 845,656 | |||||||||||||||
GHYBF | — | 5,187,113 | — | 5,187,113 | |||||||||||||||
GTEF | 3,260,381 | 1,030,049 | 1,414,067 | 5,704,497 | |||||||||||||||
GCMF | — | 10,491,108 | — | 10,491,108 | |||||||||||||||
2004 | |||||||||||||||||||
GPAF | $ | — | $ | 13,085,888 | $ | — | $ | 13,085,888 | |||||||||||
GULCVF | — | 4,297,882 | 3,630,580 | 7,928,462 | |||||||||||||||
GPASCF | — | 2,521,505 | 23,381,071 | 25,902,576 | |||||||||||||||
GUSCVF | — | 2,314,532 | 3,553,949 | 5,868,481 | |||||||||||||||
GAAF | — | 2,862,691 | — | 2,862,691 | |||||||||||||||
GSP500F | — | 2,228,302 | — | 2,228,302 | |||||||||||||||
GBGIF | — | 89,371 | — | 89,371 | |||||||||||||||
GBGEMF | — | 128,502 | 4,052,557 | 4,181,059 | |||||||||||||||
GIQBF | — | 5,932,497 | 1,368,554 | 7,301,051 | |||||||||||||||
GLDBF | — | 588,430 | — | 588,430 | |||||||||||||||
GHYBF | — | 5,190,729 | — | 5,190,729 | |||||||||||||||
GTEF | 3,078,209 | 27,210 | 1,749,110 | 4,854,529 | |||||||||||||||
GCMF | — | 2,784,129 | — | 2,784,129 | |||||||||||||||
As of December 31, 2005, the components of distributable earnings/accumulated losses on a tax basis were as follows:
Undistributed Ordinary Income | Long-Term Capital Gain/Loss Carryforward (Including Post- October Loss) | Unrealized Appreciation (Depreciation) | |||||||||||||
GPAF | $ | 4,499,868 | $ | (602,248,073 | ) | $ | 97,458,207 | ||||||||
GULCVF | 11,455 | 1,577,450 | 21,700,116 | ||||||||||||
GPASCF | 2,140,990 | 5,274,173 | 11,174,949 | ||||||||||||
GUSCVF | 63,628 | 992,894 | 5,959,498 | ||||||||||||
GAAF | 1,208,270 | (51,993,664 | ) | (1,533,619 | ) | ||||||||||
GSP500F | 28,156 | (96,107,166 | ) | 15,314,293 | |||||||||||
GBGIF | 327,869 | (34,557,522 | ) | 19,704,596 | |||||||||||
GBGEMF | 890,763 | 3,835,590 | 62,102,634 | ||||||||||||
GIQBF | 239,498 | (480,894 | ) | (553,788 | ) | ||||||||||
GLDBF | — | (351,142 | ) | (450,906 | ) | ||||||||||
GHYBF | — | (16,396,415 | ) | 1,003,461 | |||||||||||
GTEF | — | 48,288 | 1,637,934 | ||||||||||||
GCMF | 5,821 | (5,700 | ) | — | |||||||||||
108
n The Park Avenue Portfolio
Notes to Financial Statements (Continued)
December 31, 2005
Taxes
Each Fund has qualified and intends to remain qualified to be taxed as a "regulated investment company" under the provisions of the U.S. Internal Revenue Code (Code), and as such will not be subject to federal income tax on taxable income (including any realized capital gains) which is distributed in accordance with the provisions of the Code. Therefore, no federal income tax provision is required.
Withholding taxes on foreign interest, dividends and capital gains in GPAF, GPASCF, GUSCVF, GBGIF and GBGEMF have been provided for in accordance with the applicable country's tax rules and rates.
As of December 31, 2005, for federal income tax purposes, the following Funds have capital losses carryforward as follows:
Capital Loss Carryforward | Expiration Date | ||||||||||
GPAF | $ | (290,693,388 | ) | 2009 | |||||||
(255,258,469 | ) | 2010 | |||||||||
(11,076,797 | ) | 2011 | |||||||||
(45,219,419 | ) | 2012 | |||||||||
Total | $ | (602,248,073 | ) | ||||||||
GAAF | $ | (37,258,433 | ) | 2009 | |||||||
(14,453,505 | ) | 2010 | |||||||||
Total | $ | (51,711,938 | ) | ||||||||
GSP500F | $ | (95,848,928 | ) | 2010 | |||||||
(155,054 | ) | 2011 | |||||||||
(103,184 | ) | 2013 | |||||||||
Total | $ | (96,107,166 | ) | ||||||||
GBGIF | $ | (3,928,881 | ) | 2009 | |||||||
(22,118,121 | ) | 2010 | |||||||||
(8,510,520 | ) | 2011 | |||||||||
Total | $ | (34,557,522 | ) | ||||||||
GLDBF | $ | (2,657 | ) | 2011 | |||||||
(18,478 | ) | 2012 | |||||||||
(325,837 | ) | 2013 | |||||||||
Total | $ | (346,972 | ) | ||||||||
GHYBF | $ | (373,330 | ) | 2007 | |||||||
(3,128,645 | ) | 2008 | |||||||||
(7,587,223 | ) | 2009 | |||||||||
(5,307,217 | ) | 2010 | |||||||||
Total | $ | (16,396,415 | ) | ||||||||
GCMF | $ | (195 | ) | 2007 | |||||||
(5,073 | ) | 2011 | |||||||||
(432 | ) | 2012 | |||||||||
Total | $ | (5,700 | ) |
As of December 31, 2005, GAAF, GIQBF and GLDBF had post-October capital losses of $281,726, $640,447 and $4,170, respectively.
Reclassification of Capital Accounts
The treatment for financial statement purposes of distributions made during the year from net investment income and net realized gains may differ from their ultimate treatment for federal income tax purposes. These differences primarily are caused by differences in the timing of the recognition of certain components of income or capital gains, and the recharacterization of foreign exchange gains or losses to either ordinary income or realized capital gains for federal income tax purposes. Where such differences are permanent in nature, they are reclassified in the components of net assets based on their ultimate characterization for federal income tax purposes. Any such reclassifications would have no effect on net assets, results of operations, or net asset value per share of the Funds.
During the year ended December 31, 2005, certain Funds reclassified amounts to paid-in capital from undistributed/(distributions in excess of) net investment income and accumulated net realized gain/(loss) on investments and foreign currency related transactions. Increases/(decreases) to the various capital accounts were as follows:
Paid-In Capital | Undistributed/ (Distributions in Excess of) Net Investment Income | Accumulated Net Realized Gain/(Loss) on Investments and Foreign Currency Related Transactions | |||||||||||||
GPASCF | $ | — | $ | 670,158 | $ | (670,158 | ) | ||||||||
GUSCVF | — | 356,001 | (356,001 | ) | |||||||||||
GAAF | — | (2,704 | ) | 2,704 | |||||||||||
GSP500F | — | (15,946 | ) | 15,946 | |||||||||||
GBGIF | — | (22,963 | ) | 22,963 | |||||||||||
GBGEMF | — | (215,190 | ) | 215,190 | |||||||||||
Custody Credits
GTEF has entered into an arrangement with its custodian whereby credits realized as a result of uninvested cash balances were used to reduce a portion of the Fund's expenses. During the period, GTEF's custodian fees were reduced by $14,128 under this arrangement. GTEF could have employed the uninvested assets to produce income if GTEF had not entered into such arrangement.
Note 2. Investment Advisory Agreements and Payments to or from Related Parties
The Funds (except GBGIF and GBGEMF) have an investment advisory agreement with Guardian Investor Services LLC (GIS), an indirect wholly-owned subsidiary of The Guardian Life Insurance Company of America (Guardian Life). Fees for investment advisory are at an annual rate of 0.50% of the average daily net assets for GPAF, GIQBF and GTEF. GPASCF, GSP500F, GHYBF and GLDBF pay GIS at annual rates of 0.75%, 0.25%, 0.60% and 0.45%, respectively, of their average daily net assets. GCMF pays GIS investment advisory fees at an annual rate of 0.50% of its average daily net assets for the first $500 million and at an annual rate of 0.45% of its daily average net assets in excess of $500 million .
GAAF is subject to a contractual annual advisory fee of 0.65% of its average daily net assets. However, GIS has agreed
109
n The Park Avenue Portfolio
Notes to Financial Statements (Continued)
December 31, 2005
to a waiver of 0.15% of GAAF's annual advisory fee when GAAF is operated as a "fund of funds" so that GAAF's effective advisory fee is 0.50% of its average daily net assets. There are no duplicative advisory and administrative service fees charged to GAAF on assets invested in other Guardian Funds. Under an SEC exemptive order, advisory and administrative fees are paid at the underlying Fund level.
GULCVF pays investment advisory fees to GIS at an annual rate of 0.83% of its average daily net assets. GUSCVF pays investment advisory fees to GIS at an annual rate of 1.00% of its average daily net assets for the first $50 million and an annual rate of 0.95% of its average daily net assets in excess of $50 million. GIS has entered into a sub-investment advisory agreement with UBS Global Asset Management (Americas), Inc. (UBS Global AM). UBS Global AM is responsible for the day-to-day management of GULCVF and GUSCVF. GIS continually monitors and evaluates the performance of UBS Global AM. As compensation for its services, GIS pays UBS Global AM at an annual rate of 0.43% of GULCVF's average daily net assets and at an annual rate of 0.60% for the first $50 million and at an annual rate of 0.55% of GUSCVF's average daily net assets in excess of $50 million. Payment of sub-investment advisory fees does not represent a separate or additional ex pense to GULCVF or GUSCVF.
The Portfolio, on behalf of GBGIF and GBGEMF, has an investment management agreement with Guardian Baillie Gifford Limited (GBG), a Scottish corporation owned by The Guardian Insurance & Annuity Company, Inc. (GIAC), a wholly-owned subsidiary of Guardian Life and Baillie Gifford Overseas Limited (BG Overseas). GBG is responsible for the overall investment management of GBGIF's and GBGEMF's portfolios of investments, subject to the supervision of the Portfolio's Board of Trustees. GBG has entered into a sub-investment management agreement with BG Overseas pursuant to which BG Overseas is responsible for the day-to-day management of GBGIF and GBGEMF. GBG continually monitors and evaluates the performance of BG Overseas. As compensation for its services, GBGIF and GBGEMF pay GBG annual investment management fees of 0.80% and 1.00%, respectively, of their average daily net assets. One half of these fees is payable by GBG to BG Overseas for i ts services. Payment of the sub-investment management fee does not represent a separate or additional expense to GBGIF or GBGEMF.
The Guardian Fund Complex pays trustees who are not "interested persons" (as defined in the 1940 Act) fees consisting of a $5,000 per meeting fee and an annual retainer of $30,500, allocated among all funds in the Guardian Fund Complex based on their relative average daily net assets. Board committee members also receive a fee of $2,000 per committee meeting, which also is allocated among all funds in the Guardian Fund Complex based on their relative average daily net assets. Additional compensation is paid to the Chairmen of the Nominating and Governance Committee and the Audit Committee, respectively. GIS pays compensation to certain
trustees who are interested persons. Certain officers and trustees of the Funds are affiliated with GIS.
GAAF received $1,685,757 in dividends from other Guardian mutual funds.
Park Avenue Securities LLC (PAS), a wholly-owned subsidiary of GIAC and an affiliate of GIS, distributes the Portfolio's shares as a retail broker-dealer. For the year ended December 31, 2005, PAS received $2,328,326 for brokerage commissions from the Portfolio.
Pursuant to the Administrative Services Agreement adopted by the Funds on behalf of the Class A, Class B, Class C and Class K shares, each of the Funds, except GPAF, pays GIS an administrative service fee at an annual rate of 0.25% of the Funds' average daily net assets. GPAF pays this fee to GIS at an annual rate of up to 0.25% of the average daily net assets for which a "dealer of record" has been designated. For the year ended December 31, 2005, GPAF Class A shares paid an annualized rate of 0.20% of its average daily net assets pursuant to the Administrative Services Agreement.
Under Distribution Plans adopted by the Portfolio pursuant to Rule 12b-1 under the 1940 Act (the "12b-1 Plans"), each Fund is authorized to pay a monthly 12b-1 fee for certain classes of shares at an annual rate of 0.75% of the average daily net assets of the Fund's Class B and Class C shares and 0.40% of the average daily net assets of the Fund's Class K shares as compensation for distribution-related services provided to the Class B, Class C and Class K shares of the Funds.
For the year ended December 31, 2005, GIS voluntarily assumed a portion of the ordinary operating expenses (excluding interest expense associated with reverse repurchase agreements and securities lending) so that total expenses do not exceed on an annual basis the following expense ratios of the repective Funds:
Fund | Class A | Class B | Class C | Class K | |||||||||||||||
GSP500F | 0.53 | % | 1.28 | % | 1.28 | % | 0.93 | % | |||||||||||
GIQBF | 0.85 | % | 1.60 | % | 1.60 | % | 1.25 | % | |||||||||||
GLDBF | 0.80 | % | 1.55 | % | 1.55 | % | 1.20 | % | |||||||||||
GHYBF | 0.85 | % | 1.60 | % | 1.60 | % | 1.25 | % | |||||||||||
GTEF | 0.85 | % | N/A | 1.60 | % | N/A | |||||||||||||
GCMF | 0.85 | % | 1.47 | % | 1.47 | % | 1.25 | % |
For the year ended December 31, 2005, GIS voluntarily assumed a portion of certain Funds' expenses based on their respective average daily net assets as follows:
GSP500F | |||||||||||||||||||
Class A | Class B | Class C | Class K | ||||||||||||||||
Administrative Fees | 0.18 | % | 0.25 | % | 0.25 | % | 0.19 | % | |||||||||||
12 | b-l Fees | — | 0.18 | % | 0.23 | % | — | ||||||||||||
0.18 | % | 0.43 | % | 0.48 | % | 0.19 | % |
110
n The Park Avenue Portfolio
Notes to Financial Statements (Continued)
December 31, 2005
GIQBF
Class A | Class B | Class C | Class K | ||||||||||||||||
Administrative Fees | 0.15 | % | 0.25 | % | 0.25 | % | 0.12 | % | |||||||||||
12b-l Fees | — | 0.08 | % | 0.13 | % | — | |||||||||||||
0.15 | % | 0.33 | % | 0.38 | % | 0.12 | % |
GLDBF
Class A | Class B | Class C | Class K | ||||||||||||||||
Advisory Fees | 0.14 | % | 0.14 | % | 0.14 | % | 0.14 | % | |||||||||||
Administrative Fees | 0.25 | % | 0.25 | % | 0.25 | % | 0.25 | % | |||||||||||
12b-l Fees | — | 0.36 | % | 0.38 | % | — | |||||||||||||
Transfer Agent Fees | 0.34 | % | — | — | — | ||||||||||||||
0.73 | % | 0.75 | % | 0.77 | % | 0.39 | % |
GHYBF
Class A | Class B | Class C | Class K | ||||||||||||||||
Advisory Fees | 0.27 | % | 0.27 | % | 0.27 | % | 0.27 | % | |||||||||||
Transfer Agent Fees | 0.07 | % | 0.32 | % | 0.28 | % | — | ||||||||||||
0.34 | % | 0.59 | % | 0.55 | % | 0.27 | % |
GTEF
Class A | Class C | ||||||||||
Administrative Fees | 0.10 | % | 0.25 | % | |||||||
12b-1 Fees | — | 0.08 | % | ||||||||
0.10 | % | 0.33 | % |
GCMF
Class A | Class B | Class C | Class K | ||||||||||||||||
Administrative Fees | 0.06 | % | 0.06 | % | 0.06 | % | 0.06 | % | |||||||||||
12b-1 Fees | — | 0.33 | % | 0.15 | % | 0.01 | % | ||||||||||||
0.06 | % | 0.39 | % | 0.21 | % | 0.07 | % |
For the year ended December 31, 2005, GIS voluntarily assumed $382,690, $260,013, $117,606 and $302,611 of the administrative and 12b-1 fees of GSP500F, GIQBF, GTEF and GCMF, respectively. GIS voluntarily assumed $224,560 of the advisory, administrative, 12b-1 and transfer agent fees of GLDBF. GIS voluntarily assumed $323,413 of the advisory and transfer agent fees of GHYBF. In addition, GIS reimbursed $8,248 and $9,400 in expenses of GCMF Class B and Class C shares, respectively, in order to maintain a minimum yield threshold. These arrangements can be terminated at any time by GIS.
The Portfolio has entered into an Underwriting Agreement with GIS pursuant to which GIS serves as the principal underwriter for shares of the Funds.
For the year ended December 31, 2005, aggregate front-end sales charges for the sale of Class A shares paid to GIS were as follows:
Fund | Commissions | Fund | Commissions | ||||||||||||
GPAF | $ | 29,818 | GBGIF | $ | 400 | ||||||||||
GULCVF | 907 | GBGEMF | 755 | ||||||||||||
GPASCF | 1,321 | GIQBF | 2,573 | ||||||||||||
GUSCVF | 360 | GHYBF | 436 | ||||||||||||
GAAF | 2,564 | GTEF | 2,293 | ||||||||||||
GSP500F | 2,974 |
GIS is entitled to retain any CDSL imposed on certain Class B, Class C and Class K share redemptions. For the year ended December 31, 2005, GIS received CDSL charges on Class B, Class C and Class K as follows:
Fund | Class B | Class C | Class K | ||||||||||||
GPAF | $ | 123,895 | $ | 241 | $ | 1,706 | |||||||||
GULCVF | 2,548 | 144 | 769 | ||||||||||||
GPASCF | 13,677 | 357 | 2,041 | ||||||||||||
GUSCVF | 384 | 21 | 1,882 | ||||||||||||
GAAF | 26,668 | 93 | 144 | ||||||||||||
GSP500F | 6,546 | 1,596 | 3,539 | ||||||||||||
GBGIF | 1,950 | 127 | 1,203 | ||||||||||||
GBGEMF | 4,018 | 65 | 1,976 | ||||||||||||
GIQBF | 10,349 | 48 | 248 | ||||||||||||
GLDBF | 3,052 | 277 | 1,433 | ||||||||||||
GHYBF | 2,832 | 705 | 218 | ||||||||||||
GTEF | N/A | 96 | N/A | ||||||||||||
GCMF | 10,146 | — | 17 |
Note 3. Investment Transactions
Purchases and proceeds from sales of securities (excluding short-term securities) for the year ended December 31, 2005 were as follows:
GPAF | GULCVF | ||||||||||
Purchases | $ | 968,325,384 | $ | 31,253,498 | |||||||
Proceeds | 1,229,256,981 | 44,050,145 | |||||||||
GPASCF | GUSCVF | ||||||||||
Purchases | $ | 228,698,557 | $ | 28,810,927 | |||||||
Proceeds | 283,428,864 | 33,790,769 | |||||||||
GAAF | GSP500F | ||||||||||
Purchases | $ | 4,685,757 | $ | 9,548,424 | |||||||
Proceeds | 25,877,415 | 6,241,028 | |||||||||
GBGIF | GBGEMF | ||||||||||
Purchases | $ | 16,208,483 | $ | 78,403,932 | |||||||
Proceeds | 18,180,167 | 48,080,406 |
111
n The Park Avenue Portfolio
Notes to Financial Statements (Continued)
December 31, 2005
GIQBF | GLDBF | ||||||||||
Purchases | $ | 262,333,912 | $ | 43,864,044 | |||||||
Proceeds | 256,386,411 | 40,240,307 | |||||||||
GHYBF | GTEF | ||||||||||
Purchases | $ | 70,971,937 | $ | 158,488,467 | |||||||
Proceeds | 73,999,948 | 153,860,004 |
The gross unrealized appreciation and depreciation of investments, on a tax basis, excluding foreign currency and futures at December 31, 2005 were as follows:
GPAF | GULCVF | ||||||||||
Appreciation | $ | 109,706,319 | $ | 22,419,279 | |||||||
(Depreciation) | (12,248,112 | ) | (719,163 | ) | |||||||
Net Unrealized Appreciation | $ | 97,458,207 | $ | 21,700,116 | |||||||
Cost of investments for tax purposes | $ | 783,600,495 | $ | 72,034,860 | |||||||
GPASCF | GUSCVF | ||||||||||
Appreciation | $ | 19,700,700 | $ | 9,101,188 | |||||||
(Depreciation) | (8,525,751 | ) | (3,141,690 | ) | |||||||
Net Unrealized Appreciation | $ | 11,174,949 | $ | 5,959,498 | |||||||
Cost of investments for tax purposes | $ | 157,420,182 | $ | 38,731,937 | |||||||
GAAF | GSP500F | ||||||||||
Appreciation | $ | 1,155,487 | $ | 43,971,498 | |||||||
(Depreciation) | (2,689,106 | ) | (28,657,205 | ) | |||||||
Net Unrealized Appreciation/ (Depreciation) | $ | (1,533,619 | ) | $ | 15,314,293 | ||||||
Cost of investments for tax purposes | $ | 139,583,437 | $ | 169,659,725 | |||||||
GBGIF | GBGEMF | ||||||||||
Appreciation | $ | 20,778,922 | $ | 63,826,392 | |||||||
(Depreciation) | (1,072,663 | ) | (1,526,434 | ) | |||||||
Net Unrealized Appreciation | $ | 19,706,259 | $ | 62,299,958 | |||||||
Cost of investments for tax purposes | $ | 44,275,204 | $ | 112,950,969 | |||||||
GIQBF | GLDBF | ||||||||||
Appreciation | $ | 1,106,877 | $ | 8,797 | |||||||
(Depreciation) | (1,660,665 | ) | (459,703 | ) | |||||||
Net Unrealized Depreciation | $ | (553,788 | ) | $ | (450,906 | ) | |||||
Cost of investments for tax purposes | $ | 143,482,290 | $ | 34,961,232 |
GHYBF | GTEF | ||||||||||
Appreciation | $ | 1,995,081 | $ | 1,790,440 | |||||||
(Depreciation) | (991,620 | ) | (152,506 | ) | |||||||
Net Unrealized Appreciation | $ | 1,003,461 | $ | 1,637,934 | |||||||
Cost of investments for tax purposes | $ | 78,766,344 | $ | 94,716,670 |
Note 4. Repurchase Agreements
The collateral for repurchase agreements is either cash or fully negotiable U.S. government securities. Repurchase agreements are fully collateralized (including the interest earned thereon) and such collateral is marked-to-market daily while the agreements remain in force. If the value of the collateral falls below the value of the repurchase price plus accrued interest, the applicable Fund will require the seller to deposit additional collateral by the next business day. If the request for additional collateral is not met, or the seller defaults, the applicable Fund maintains the right to sell the collateral and may claim any resulting loss against the seller.
Note 5. Reverse Repurchase Agreements
GAAF, GIQBF, GLDBF and GHYBF may enter into reverse repurchase agreements with banks or third party broker-dealers to borrow short-term funds. Interest on the value of reverse repurchase agreements issued and outstanding is based upon competitive market rates at the time of issuance. At the time GAAF, GIQBF, GLDBF and GHYBF enter into a reverse repurchase agreement, the Funds establish and segregate cash, U.S. government securities or liquid, unencumbered securities that are marked-to-market daily. The value of such segregated assets must be at least equal to the value of the repurchase obligation (principal plus accrued interest), as applicable. Reverse repurchase agreements involve the risk that the buyer of the securities sold by GAAF, GIQBF, GLDBF and GHYBF may be unable to deliver the securities when the Funds seek to repurchase them.
Note 6. Dollar Roll Transactions
GAAF, GIQBF, GLDBF and GHYBF may enter into dollar rolls (principally using TBA's) in which each of the Funds sell mortgage securities for delivery in the current month and simultaneously contract to repurchase similar securities at an agreed-upon price on a fixed date. The securities repurchased will bear the same interest as those sold, but generally will be collateralized at the time of delivery by different pools of mortgages with different prepayment histories than those securities sold. During the period between the sale and repurchase, the Fund will not be entitled to receive interest and principal payments on the securities sold. Dollar roll transactions involve the risk that the buyer of the securities sold by GAAF, GIQBF, GLDBF and GHYBF may be unable to deliver the securities when the Funds seek to repurchase them. GAAF, GIQBF, GLDBF and GHYBF are compensated by the difference between the current sales price and the forward price for the future purchase (often referred to as the "drop"), as well as by the interest earned on the cash proceeds of the initial sale. Dollar rolls may increase fluctuations in GAAF's, GIQBF's, GLDBF's and GHYBF's net asset value and may be viewed as a form of leverage.
112
n The Park Avenue Portfolio
Notes to Financial Statements (Continued)
December 31, 2005
Note 7. Shares of Beneficial Interest
There is an unlimited number of $0.01 par value shares of beneficial interest authorized, divided into five classes, designated as Class A, Class B, Class C, Class K and Institutional Class shares. As of December 31, 2005: (i) the Funds (except for GULCVF, GUSCVF, GLDBF, GTEF and GCMF offered all five classes; (ii) GTEF offered Class A and Class C shares; and (iii) GULCVF, GUSCVF, GLDBF and GCMF offered Class A, Class B, Class C and Class K shares. Through December 31, 2005, no Institutional Class shares of the Funds were sold.
Transactions in shares of beneficial interest were as follows:
n The Guardian Park Avenue Fund
Year Ended December 31, | Year Ended December 31, | ||||||||||||||||||
2005 | 2004 | 2005 | 2004 | ||||||||||||||||
Shares | Amount | ||||||||||||||||||
Class A | |||||||||||||||||||
Shares sold | 1,513,157 | 1,190,345 | $ | 46,723,805 | $ | 35,901,738 | |||||||||||||
Shares issued in reinvestment of dividends | 277,896 | 410,983 | 8,486,804 | 12,593,649 | |||||||||||||||
Shares repurchased | (8,378,796 | ) | (8,021,112 | ) | (258,847,128 | ) | (241,079,852 | ) | |||||||||||
Net decrease | (6,587,743 | ) | (6,419,784 | ) | $ | (203,636,519 | ) | $ | (192,584,465 | ) | |||||||||
Class B | |||||||||||||||||||
Shares sold | 54,862 | 120,793 | $ | 1,533,950 | $ | 3,485,291 | |||||||||||||
Shares repurchased | (2,154,769 | ) | (1,537,731 | ) | (63,619,864 | ) | (43,974,403 | ) | |||||||||||
Net decrease | (2,099,907 | ) | (1,416,938 | ) | $ | (62,085,914 | ) | $ | (40,489,112 | ) | |||||||||
Class C | |||||||||||||||||||
Shares sold | 4,312 | 10,462 | $ | 125,786 | $ | 296,587 | |||||||||||||
Shares repurchased | (16,450 | ) | (22,706 | ) | (478,871 | ) | (635,942 | ) | |||||||||||
Net decrease | (12,138 | ) | (12,244 | ) | $ | (353,085 | ) | $ | (339,355 | ) | |||||||||
Class K | |||||||||||||||||||
Shares sold | 34,104 | 41,501 | $ | 1,045,347 | $ | 1,245,335 | |||||||||||||
Shares issued in reinvestment of dividends | 2,679 | 3,162 | 81,418 | 97,044 | |||||||||||||||
Shares repurchased | (20,253 | ) | (2,258 | ) | (620,464 | ) | (66,226 | ) | |||||||||||
Net increase | 16,530 | 42,405 | $ | 506,301 | $ | 1,276,153 |
n The Guardian UBS Large Cap Value Fund
Year Ended December 31, | Year Ended December 31, | ||||||||||||||||||
2005 | 2004 | 2005 | 2004 | ||||||||||||||||
Shares | Amount | ||||||||||||||||||
Class A | |||||||||||||||||||
Shares sold | 256,824 | 174,657 | $ | 3,436,404 | $ | 2,262,682 | |||||||||||||
Shares issued in reinvestment of dividends and distributions | 206,497 | 166,765 | 2,719,154 | 2,170,261 | |||||||||||||||
Shares repurchased | (398,898 | ) | (28,215 | ) | (5,327,077 | ) | (362,577 | ) | |||||||||||
Net increase | 64,423 | 313,207 | $ | 828,481 | $ | 4,070,366 | |||||||||||||
Class B | |||||||||||||||||||
Shares sold | 79,206 | 81,632 | $ | 1,051,005 | $ | 1,054,685 | |||||||||||||
Shares issued in reinvestment of distributions | 162,005 | 148,409 | 2,124,852 | 1,925,522 | |||||||||||||||
Shares repurchased | (362,510 | ) | (39,293 | ) | (4,807,935 | ) | (506,949 | ) | |||||||||||
Net increase/(decrease) | (121,299 | ) | 190,748 | $ | (1,632,078 | ) | $ | 2,473,258 | |||||||||||
Class C | |||||||||||||||||||
Shares sold | 9,933 | 6,593 | $ | 137,223 | $ | 84,107 | |||||||||||||
Shares issued in reinvestment of distributions | 151,567 | 143,136 | 1,987,920 | 1,856,821 | |||||||||||||||
Shares repurchased | (322,729 | ) | — | (4,276,277 | ) | — | |||||||||||||
Net increase/(decrease) | (161,229 | ) | 149,729 | $ | (2,151,134 | ) | $ | 1,940,928 | |||||||||||
Class K | |||||||||||||||||||
Shares sold | 84,885 | 51,807 | $ | 1,135,639 | $ | 682,461 | |||||||||||||
Shares issued in reinvestment of dividends and distributions | 172,078 | 150,644 | 2,265,844 | 1,959,753 | |||||||||||||||
Shares repurchased | (334,796 | ) | (5,504 | ) | (4,462,549 | ) | (71,017 | ) | |||||||||||
Net increase/(decrease) | (77,833 | ) | 196,947 | $ | (1,061,066 | ) | $ | 2,571,197 |
113
n The Park Avenue Portfolio
Notes to Financial Statements (Continued)
December 31, 2005
n The Guardian Park Avenue Small Cap Fund
Year Ended December 31, | Year Ended December 31, | ||||||||||||||||||
2005 | 2004 | 2005 | 2004 | ||||||||||||||||
Shares | Amount | ||||||||||||||||||
Class A | |||||||||||||||||||
Shares sold | 1,146,962 | 1,343,980 | $ | 20,825,476 | $ | 26,373,297 | |||||||||||||
Shares issued in reinvestment of distributions | 1,186,890 | 1,031,848 | 20,049,455 | 20,020,556 | |||||||||||||||
Shares repurchased | (3,686,700 | ) | (1,447,680 | ) | (66,493,964 | ) | (27,991,349 | ) | |||||||||||
Net increase/(decrease) | (1,352,848 | ) | 928,148 | $ | (25,619,033 | ) | $ | 18,402,504 | |||||||||||
Class B | |||||||||||||||||||
Shares sold | 64,547 | 140,829 | $ | 1,075,299 | $ | 2,576,277 | |||||||||||||
Shares issued in reinvestment of distributions | 152,442 | 149,273 | 2,342,306 | 2,681,069 | |||||||||||||||
Shares repurchased | (663,104 | ) | (257,947 | ) | (10,975,095 | ) | (4,675,874 | ) | |||||||||||
Net increase/(decrease) | (446,115 | ) | 32,155 | $ | (7,557,490 | ) | $ | 581,472 | |||||||||||
Class C | |||||||||||||||||||
Shares sold | 21,471 | 39,603 | $ | 354,526 | $ | 688,850 | |||||||||||||
Shares issued in reinvestment of distributions | 102,339 | 65,829 | 1,554,091 | 1,173,573 | |||||||||||||||
Shares repurchased | (27,984 | ) | (11,175 | ) | (457,564 | ) | (204,574 | ) | |||||||||||
Net increase | 95,826 | 94,257 | $ | 1,451,053 | $ | 1,657,849 | |||||||||||||
Class K | |||||||||||||||||||
Shares sold | 83,010 | 52,945 | $ | 1,466,414 | $ | 1,003,863 | |||||||||||||
Shares issued in reinvestment of distributions | 109,684 | 73,805 | 1,807,914 | 1,406,418 | |||||||||||||||
Shares repurchased | (83,591 | ) | (2,648 | ) | (1,432,974 | ) | (50,706 | ) | |||||||||||
Net increase | 109,103 | 124,102 | $ | 1,841,354 | $ | 2,359,575 |
n The Guardian UBS Small Cap Value Fund
Year Ended December 31, | Year Ended December 31, | ||||||||||||||||||
2005 | 2004 | 2005 | 2004 | ||||||||||||||||
Shares | Amount | ||||||||||||||||||
Class A | |||||||||||||||||||
Shares sold | 89,226 | 190,281 | $ | 1,143,795 | $ | 2,526,654 | |||||||||||||
Shares issued in reinvestment of distributions | 135,228 | 123,870 | 1,632,731 | 1,605,478 | |||||||||||||||
Shares repurchased | (221,474 | ) | (18,561 | ) | (2,883,276 | ) | (239,521 | ) | |||||||||||
Net increase/(decrease) | 2,980 | 295,590 | $ | (106,750 | ) | $ | 3,892,611 | ||||||||||||
Class B | |||||||||||||||||||
Shares sold | 22,136 | 35,115 | $ | 281,988 | $ | 454,187 | |||||||||||||
Shares issued in reinvestment of distributions | 113,924 | 110,609 | 1,338,329 | 1,410,041 | |||||||||||||||
Shares repurchased | (143,366 | ) | (17,277 | ) | (1,818,944 | ) | (220,955 | ) | |||||||||||
Net increase/(decrease) | (7,306 | ) | 128,447 | $ | (198,627 | ) | $ | 1,643,273 | |||||||||||
Class C | |||||||||||||||||||
Shares sold | 7,361 | 3,638 | $ | 92,631 | $ | 46,138 | |||||||||||||
Shares issued in reinvestment of distributions | 109,359 | 106,734 | 1,283,760 | 1,360,553 | |||||||||||||||
Shares repurchased | (125,331 | ) | — | (1,592,849 | ) | — | |||||||||||||
Net increase/(decrease) | (8,611 | ) | 110,372 | $ | (216,458 | ) | $ | 1,406,691 | |||||||||||
Class K | |||||||||||||||||||
Shares sold | 82,453 | 52,642 | $ | 1,061,232 | $ | 683,169 | |||||||||||||
Shares issued in reinvestment of distributions | 121,188 | 109,649 | 1,454,573 | 1,415,186 | |||||||||||||||
Shares repurchased | (141,014 | ) | (10,438 | ) | (1,820,372 | ) | (134,666 | ) | |||||||||||
Net increase | 62,627 | 151,853 | $ | 695,433 | $ | 1,963,689 |
114
n The Park Avenue Portfolio
Notes to Financial Statements (Continued)
December 31, 2005
n The Guardian Asset Allocation Fund
Year Ended December 31, | Year Ended December 31, | ||||||||||||||||||
2005 | 2004 | 2005 | 2004 | ||||||||||||||||
Shares | Amount | ||||||||||||||||||
Class A | |||||||||||||||||||
Shares sold | 772,419 | 790,317 | $ | 8,828,652 | $ | 8,537,011 | |||||||||||||
Shares issued in reinvestment of dividends | 25,850 | 208,464 | 302,099 | 2,305,931 | |||||||||||||||
Shares repurchased | (2,309,637 | ) | (2,432,345 | ) | (26,442,628 | ) | (26,267,499 | ) | |||||||||||
Net decrease | (1,511,368 | ) | (1,433,564 | ) | $ | (17,311,877 | ) | $ | (15,424,557 | ) | |||||||||
Class B | |||||||||||||||||||
Shares sold | 83,488 | 102,043 | $ | 939,236 | $ | 1,100,025 | |||||||||||||
Shares issued in reinvestment of dividends | — | 23,248 | — | 259,342 | |||||||||||||||
Shares repurchased | (843,757 | ) | (671,863 | ) | (9,574,092 | ) | (7,213,089 | ) | |||||||||||
Net decrease | (760,269 | ) | (546,572 | ) | $ | (8,634,856 | ) | $ | (5,853,722 | ) | |||||||||
Class C | |||||||||||||||||||
Shares sold | 8,369 | 20,244 | $ | 94,820 | $ | 214,709 | |||||||||||||
Shares issued in reinvestment of dividends | — | 4,285 | — | 48,490 | |||||||||||||||
Shares repurchased | (25,076 | ) | (29,495 | ) | (286,950 | ) | (311,293 | ) | |||||||||||
Net decrease | (16,707 | ) | (4,966 | ) | $ | (192,130 | ) | $ | (48,094 | ) | |||||||||
Class K | |||||||||||||||||||
Shares sold | 78,598 | 65,378 | $ | 898,768 | $ | 705,819 | |||||||||||||
Shares issued in reinvestment of dividends | 630 | 12,780 | 7,361 | 141,931 | |||||||||||||||
Shares repurchased | (24,773 | ) | (5,606 | ) | (286,874 | ) | (61,854 | ) | |||||||||||
Net increase | 54,455 | 72,552 | $ | 619,255 | $ | 785,896 |
n The Guardian S&P 500 Index Fund
Year Ended December 31, | Year Ended December 31, | ||||||||||||||||||
2005 | 2004 | 2005 | 2004 | ||||||||||||||||
Shares | Amount | ||||||||||||||||||
Class A | |||||||||||||||||||
Shares sold | 1,249,283 | 1,359,992 | $ | 10,320,093 | $ | 10,600,735 | |||||||||||||
Shares issued in reinvestment of dividends | 230,660 | 27,719 | 1,953,111 | 226,075 | |||||||||||||||
Shares repurchased | (1,462,490 | ) | (841,650 | ) | (12,233,454 | ) | (6,529,210 | ) | |||||||||||
Net increase | 17,453 | 546,061 | $ | 39,750 | $ | 4,297,600 | |||||||||||||
Class B | |||||||||||||||||||
Shares sold | 126,377 | 226,852 | $ | 1,029,998 | $ | 1,760,369 | |||||||||||||
Shares issued in reinvestment of dividends | 8,974 | 10,594 | 75,808 | 86,674 | |||||||||||||||
Shares repurchased | (240,154 | ) | (204,588 | ) | (1,988,016 | ) | (1,588,671 | ) | |||||||||||
Net increase/(decrease) | (104,803 | ) | 32,858 | $ | (882,210 | ) | $ | 258,372 | |||||||||||
Class C | |||||||||||||||||||
Shares sold | 41,469 | 186,853 | $ | 339,240 | $ | 1,437,277 | |||||||||||||
Shares issued in reinvestment of dividends | 6,473 | 7,898 | 54,669 | 64,524 | |||||||||||||||
Shares repurchased | (139,012 | ) | (160,903 | ) | (1,150,094 | ) | (1,237,474 | ) | |||||||||||
Net increase/(decrease) | (91,070 | ) | 33,848 | $ | (756,185 | ) | $ | 264,327 | |||||||||||
Class K | |||||||||||||||||||
Shares sold | 371,082 | 242,188 | $ | 3,071,277 | $ | 1,876,104 | |||||||||||||
Shares issued in reinvestment of dividends | 12,845 | 11,599 | 108,909 | 94,838 | |||||||||||||||
Shares repurchased | (90,057 | ) | (14,508 | ) | (749,772 | ) | (111,416 | ) | |||||||||||
Net increase | 293,870 | 239,279 | $ | 2,430,414 | $ | 1,859,526 |
115
n The Park Avenue Portfolio
Notes to Financial Statements (Continued)
December 31, 2005
n The Guardian Baillie Gifford International Growth Fund
Year Ended December 31, | Year Ended December 31, | ||||||||||||||||||
2005 | 2004 | 2005 | 2004 | ||||||||||||||||
Shares | Amount | ||||||||||||||||||
Class A | |||||||||||||||||||
Shares sold | 606,020 | 662,514 | $ | 8,355,801 | $ | 7,884,998 | |||||||||||||
Shares issued in reinvestment of dividends | 8,850 | 7,506 | 115,852 | 87,669 | |||||||||||||||
Shares repurchased | (658,641 | ) | (834,343 | ) | (9,013,710 | ) | (9,889,156 | ) | |||||||||||
Net decrease | (43,771 | ) | (164,323 | ) | $ | (542,057 | ) | $ | (1,916,489 | ) | |||||||||
Class B | |||||||||||||||||||
Shares sold | 29,711 | 28,247 | $ | 372,952 | $ | 307,868 | |||||||||||||
Shares repurchased | (152,593 | ) | (129,102 | ) | (1,876,081 | ) | (1,401,616 | ) | |||||||||||
Net decrease | (122,882 | ) | (100,855 | ) | $ | (1,503,129 | ) | $ | (1,093,748 | ) | |||||||||
Class C | |||||||||||||||||||
Shares sold | 3,859 | 27,182 | $ | 51,302 | $ | 308,977 | |||||||||||||
Shares repurchased | (3,855 | ) | (2,578 | ) | (46,506 | ) | (27,430 | ) | |||||||||||
Net increase | 4 | 24,604 | $ | 4,796 | $ | 281,547 | |||||||||||||
Class K | |||||||||||||||||||
Shares sold | 60,090 | 53,942 | $ | 813,349 | $ | 648,581 | |||||||||||||
Shares issued in reinvestment of dividends | 1,993 | — | 25,687 | — | |||||||||||||||
Shares repurchased | (16,383 | ) | (2,052 | ) | (220,770 | ) | (23,464 | ) | |||||||||||
Net increase | 45,700 | 51,890 | $ | 618,266 | $ | 625,117 |
n The Guardian Baillie Gifford Emerging Markets Fund
Year Ended December 31, | Year Ended December 31, | ||||||||||||||||||
2005 | 2004 | 2005 | 2004 | ||||||||||||||||
Shares | Amount | ||||||||||||||||||
Class A | |||||||||||||||||||
Shares sold | 2,705,237 | 1,405,868 | $ | 45,014,259 | $ | 18,918,924 | |||||||||||||
Shares issued in reinvestment of dividends and distributions | 348,486 | 172,261 | 6,164,055 | 2,480,952 | |||||||||||||||
Shares repurchased | (994,014 | ) | (869,934 | ) | (16,730,419 | ) | (11,026,232 | ) | |||||||||||
Net increase | 2,059,709 | 708,195 | $ | 34,447,895 | $ | 10,373,644 | |||||||||||||
Class B | |||||||||||||||||||
Shares sold | 53,859 | 91,087 | $ | 797,216 | $ | 1,115,800 | |||||||||||||
Shares issued in reinvestment of distributions | 48,106 | 37,243 | 756,699 | 494,590 | |||||||||||||||
Shares repurchased | (231,443 | ) | (42,565 | ) | (3,332,061 | ) | (506,264 | ) | |||||||||||
Net increase/(decrease) | (129,478 | ) | 85,765 | $ | (1,778,146 | ) | $ | 1,104,126 | |||||||||||
Class C | |||||||||||||||||||
Shares sold | 73,409 | 54,177 | $ | 1,127,203 | $ | 643,204 | |||||||||||||
Shares issued in reinvestment of distributions | 64,416 | 38,909 | 1,019,334 | 518,275 | |||||||||||||||
Shares repurchased | (26,603 | ) | (9,827 | ) | (434,407 | ) | (121,577 | ) | |||||||||||
Net increase | 111,222 | 83,259 | $ | 1,712,130 | $ | 1,039,902 | |||||||||||||
Class K | |||||||||||||||||||
Shares sold | 95,468 | 55,567 | $ | 1,541,636 | $ | 719,161 | |||||||||||||
Shares issued in reinvestment of dividends and distributions | 69,474 | 43,129 | 1,188,894 | 613,008 | |||||||||||||||
Shares repurchased | (28,267 | ) | (11,138 | ) | (451,121 | ) | (153,558 | ) | |||||||||||
Net increase | 136,675 | 87,558 | $ | 2,279,409 | $ | 1,178,611 |
116
n The Park Avenue Portfolio
Notes to Financial Statements (Continued)
December 31, 2005
n The Guardian Investment Quality Bond Fund
Year Ended December 31, | Year Ended December 31, | ||||||||||||||||||
2005 | 2004 | 2005 | 2004 | ||||||||||||||||
Shares | Amount | ||||||||||||||||||
Class A | |||||||||||||||||||
Shares sold | 1,354,098 | 1,063,835 | $ | 13,456,975 | $ | 10,712,545 | |||||||||||||
Shares issued in reinvestment of dividends and distributions | 473,634 | 502,991 | 4,690,865 | 5,039,162 | |||||||||||||||
Shares repurchased | (2,158,091 | ) | (5,293,237 | ) | (21,359,313 | ) | (53,080,160 | ) | |||||||||||
Net decrease | (330,359 | ) | (3,726,411 | ) | $ | (3,211,473 | ) | $ | (37,328,453 | ) | |||||||||
Class B | |||||||||||||||||||
Shares sold | 55,037 | 87,162 | $ | 545,715 | $ | 881,154 | |||||||||||||
Shares issued in reinvestment of dividends and distributions | 57,043 | 65,499 | 564,839 | 655,658 | |||||||||||||||
Shares repurchased | (351,460 | ) | (307,375 | ) | (3,485,023 | ) | (3,078,041 | ) | |||||||||||
Net decrease | (239,380 | ) | (154,714 | ) | $ | (2,374,469 | ) | $ | (1,541,229 | ) | |||||||||
Class C | |||||||||||||||||||
Shares sold | 28,508 | 9,411 | $ | 283,688 | $ | 95,145 | |||||||||||||
Shares issued in reinvestment of dividends and distributions | 40,986 | 43,962 | 405,769 | 440,050 | |||||||||||||||
Shares repurchased | (184,583 | ) | (23,399 | ) | (1,837,513 | ) | (234,564 | ) | |||||||||||
Net increase/(decrease) | (115,089 | ) | 29,974 | $ | (1,148,056 | ) | $ | 300,631 | |||||||||||
Class K | |||||||||||||||||||
Shares sold | 147,493 | 92,817 | $ | 1,464,978 | $ | 935,863 | |||||||||||||
Shares issued in reinvestment of dividends and distributions | 41,529 | 44,606 | 411,720 | 447,123 | |||||||||||||||
Shares repurchased | (339,735 | ) | (11,921 | ) | (3,384,370 | ) | (120,297 | ) | |||||||||||
Net increase/(decrease) | (150,713 | ) | 125,502 | $ | (1,507,672 | ) | $ | 1,262,689 |
n The Guardian Low Duration Bond Fund
Year Ended December 31, | Year Ended December 31, | ||||||||||||||||||
2005 | 2004 | 2005 | 2004 | ||||||||||||||||
Shares | Amount | ||||||||||||||||||
Class A | |||||||||||||||||||
Shares sold | 45,792 | 217,235 | $ | 451,141 | $ | 2,176,482 | |||||||||||||
Shares issued in reinvestment of dividends | 27,885 | 20,264 | 274,046 | 202,280 | |||||||||||||||
Shares repurchased | (76,056 | ) | (125,558 | ) | (747,020 | ) | (1,252,947 | ) | |||||||||||
Net increase/(decrease) | (2,379 | ) | 111,941 | $ | (21,833 | ) | $ | 1,125,815 | |||||||||||
Class B | |||||||||||||||||||
Shares sold | 5,523 | 97,549 | $ | 54,377 | $ | 974,331 | |||||||||||||
Shares issued in reinvestment of dividends | 18,670 | 12,212 | 183,474 | 121,895 | |||||||||||||||
Shares repurchased | (48,867 | ) | (6,485 | ) | (481,065 | ) | (64,820 | ) | |||||||||||
Net increase/(decrease) | (24,674 | ) | 103,276 | $ | (243,214 | ) | $ | 1,031,406 | |||||||||||
Class C | |||||||||||||||||||
Shares sold | 1,859 | 18,572 | $ | 18,352 | $ | 185,410 | |||||||||||||
Shares issued in reinvestment of dividends | 17,263 | 11,618 | 169,651 | 115,977 | |||||||||||||||
Shares repurchased | (15,489 | ) | (2,131 | ) | (152,795 | ) | (21,257 | ) | |||||||||||
Net increase | 3,633 | 28,059 | $ | 35,208 | $ | 280,130 | |||||||||||||
Class K | |||||||||||||||||||
Shares sold | 139,083 | 8,500 | $ | 1,373,151 | $ | 84,748 | |||||||||||||
Shares issued in reinvestment of dividends | 21,224 | 14,202 | 208,562 | 141,773 | |||||||||||||||
Shares repurchased | (75,275 | ) | (62 | ) | (740,242 | ) | (619 | ) | |||||||||||
Net increase | 85,032 | 22,640 | $ | 841,471 | $ | 225,902 |
117
n The Park Avenue Portfolio
Notes to Financial Statements (Continued)
December 31, 2005
n The Guardian High Yield Bond Fund
Year Ended December 31, | Year Ended December 31, | ||||||||||||||||||
2005 | 2004 | 2005 | 2004 | ||||||||||||||||
Shares | Amount | ||||||||||||||||||
Class A | |||||||||||||||||||
Shares sold | 352,480 | 1,934,200 | $ | 2,617,964 | $ | 14,283,811 | |||||||||||||
Shares issued in reinvestment of dividends | 421,270 | 439,968 | 3,118,740 | 3,265,041 | |||||||||||||||
Shares repurchased | (1,763,465 | ) | (536,446 | ) | (13,063,049 | ) | (3,988,418 | ) | |||||||||||
Net increase/(decrease) | (989,715 | ) | 1,837,722 | $ | (7,326,345 | ) | $ | 13,560,434 | |||||||||||
Class B | |||||||||||||||||||
Shares sold | 32,448 | 38,772 | $ | 241,695 | $ | 286,046 | |||||||||||||
Shares issued in reinvestment of dividends | 72,450 | 78,636 | 536,049 | 582,493 | |||||||||||||||
Shares repurchased | (82,706 | ) | (140,632 | ) | (612,615 | ) | (1,041,229 | ) | |||||||||||
Net increase/(decrease) | 22,192 | (23,224 | ) | $ | 165,129 | $ | (172,690 | ) | |||||||||||
Class C | |||||||||||||||||||
Shares sold | 24,564 | 15,621 | $ | 184,733 | $ | 115,550 | |||||||||||||
Shares issued in reinvestment of dividends | 77,734 | 81,203 | 575,100 | 601,376 | |||||||||||||||
Shares repurchased | (12,800 | ) | (13,136 | ) | (94,196 | ) | (96,779 | ) | |||||||||||
Net increase | 89,498 | 83,688 | $ | 665,637 | $ | 620,147 | |||||||||||||
Class K | |||||||||||||||||||
Shares sold | 118,465 | 47,295 | $ | 883,885 | $ | 352,627 | |||||||||||||
Shares issued in reinvestment of dividends | 90,260 | 89,467 | 668,034 | 663,370 | |||||||||||||||
Shares repurchased | (23,544 | ) | (6,387 | ) | (175,081 | ) | (47,416 | ) | |||||||||||
Net increase | 185,181 | 130,375 | $ | 1,376,838 | $ | 968,581 |
n The Guardian Tax-Exempt Fund
Year Ended December 31, | Year Ended December 31, | ||||||||||||||||||
2005 | 2004 | 2005 | 2004 | ||||||||||||||||
Shares | Amount | ||||||||||||||||||
Class A | |||||||||||||||||||
Shares sold | 316,889 | 171,456 | $ | 3,246,272 | $ | 1,759,539 | |||||||||||||
Shares issued in reinvestment of dividends and distributions | 489,576 | 417,665 | 4,963,329 | 4,260,609 | |||||||||||||||
Shares repurchased | (193,679 | ) | (292,175 | ) | (1,984,200 | ) | (2,999,696 | ) | |||||||||||
Net increase | 612,786 | 296,946 | $ | 6,225,401 | $ | 3,020,452 | |||||||||||||
Class C | |||||||||||||||||||
Shares sold | 5,377 | 10,161 | $ | 55,450 | $ | 103,572 | |||||||||||||
Shares issued in reinvestment of dividends and distributions | 56,489 | 47,821 | 571,830 | 487,634 | |||||||||||||||
Shares repurchased | (3,666 | ) | (31,129 | ) | (37,427 | ) | (316,606 | ) | |||||||||||
Net increase | 58,200 | 26,853 | $ | 589,853 | $ | 274,600 |
118
n The Park Avenue Portfolio
Notes to Financial Statements (Continued)
December 31, 2005
n The Guardian Cash Management Fund
Year Ended December 31, | |||||||||||
2005 | 2004 | ||||||||||
Shares @ $1 per share | |||||||||||
Class A | |||||||||||
Shares sold | 191,144,428 | 176,701,322 | |||||||||
Shares issued in reinvestment of dividends | 10,019,075 | 2,621,389 | |||||||||
Shares repurchased | (247,260,891 | ) | (266,534,396 | ) | |||||||
Net decrease | (46,097,388 | ) | (87,211,685 | ) | |||||||
Class B | |||||||||||
Shares sold | 1,308,497 | 2,629,517 | |||||||||
Shares issued in reinvestment of dividends | 100,850 | 50,094 | |||||||||
Shares repurchased | (4,523,198 | ) | (7,034,259 | ) | |||||||
Net decrease | (3,113,851 | ) | (4,354,648 | ) | |||||||
Class C | |||||||||||
Shares sold | 14,755 | 572,903 | |||||||||
Shares issued in reinvestment of dividends | 119,560 | 49,455 | |||||||||
Shares repurchased | (2,527,403 | ) | (1,082,301 | ) | |||||||
Net decrease | (2,393,088 | ) | (459,943 | ) | |||||||
Class K | |||||||||||
Shares sold | 16,830,845 | 8,049,743 | |||||||||
Shares issued in reinvestment of dividends | 196,957 | 46,831 | |||||||||
Shares repurchased | (17,368,914 | ) | (7,355,248 | ) | |||||||
Net increase/(decrease) | (341,112 | ) | 741,326 |
Note 8. Line of Credit
A $100,000,000 line of credit available to all of the Funds and other related Guardian Funds has been established with State Street Bank and Trust Company and Bank of Montreal. The rate of interest charged on any borrowing is based upon the prevailing Federal Funds rate at the time of the loan plus 0.50% calculated on a 360 day basis per annum. For the year ended December 31, 2005, none of the Funds borrowed against this line of credit.
The Funds are obligated to pay State Street Bank and Trust Company and Bank of Montreal a commitment fee computed at a rate of 0.08% per annum on the average daily unused portion of the revolving credit.
Note 9. Investments in Affiliates1
A summary of GAAF transactions in affiliated issuers during the year ended December 31, 2005 is set forth below:
Name of Issuer | Balance of Shares Held December 31, 2004 | Gross Purchases and Additions | Gross Sales and Reductions | Balance of Shares Held December 31, 2005 | Value December 31, 2005 | Dividends Included in Dividend Income | Net Realized Gains from Underlying Funds | Net Realized Loss on Sales | |||||||||||||||||||||||||||
Majority-Owned Subsidiary | |||||||||||||||||||||||||||||||||||
The Guardian S&P 500 Index Fund, Class A | 15,277,311 | 563,620 | (950,448 | ) | 14,890,483 | $ | 127,313,627 | $ | 1,685,757 | — | $ | (268,895 | ) |
1 Affiliated issuers, as defined in the 1940 Act, include issuers in which the Fund held 5% or more of the outstanding voting securities. Majority-owned subsidiaries include issuers in which the Fund held 50% or more of the outstanding voting securities.
119
n The Park Avenue Portfolio
Notes to Financial Statements (Continued)
December 31, 2005
Note 10. Management Information (Unaudited)
The trustees and officers of the Portfolio are named below. Information about their principal occupations during the past five years and certain other affiliations is also provided. The business address of each trustee and officer is 7 Hanover Square, New York, New York 10004, unless otherwise noted. The "Guardian Fund Complex" referred to in this biographical information is composed of (1) the Portfolio, (2) The Guardian Variable Contract Funds, Inc. (a series fund that issues its shares in seven series), (3) The Guardian Bond Fund, Inc., (4) The Guardian Cash Fund, Inc. and (5) GIAC Funds, Inc. (a series fund that issues its shares in three series).
Name, Address and Year of Birth | Position with Portfolio | Term of Office and Length of Time Served† | Principal Occupations During Past 5 Years | Number of Funds in the Guardian Fund Complex Overseen by Trustee | Other Directorships | ||||||||||||||||||
Interested Trustees* | |||||||||||||||||||||||
Arthur V. Ferrara (1930) | Trustee | Since 1987 | Retired. Director and former Chairman of the Board and Chief Executive Officer, The Guardian Life Insurance Company of America. Director (Trustee) of all of the mutual funds within the Guardian Fund Complex. | 25 | Director of various mutual funds sponsored by Gabelli Asset Management. | ||||||||||||||||||
Leo R. Futia (1919) | Trustee | Since 1982 | Retired. Director and former Chairman of the Board and Chief Executive Officer, The Guardian Life Insurance Company of America. Director (Trustee) of all of the mutual funds within the Guardian Fund Complex. | 25 | None. | ||||||||||||||||||
Dennis J. Manning 81 Graenest Ridge Road Wilton, Connecticut 06897 (1947) | Trustee | Since 2003 | President and Chief Executive Officer, The Guardian Life Insurance Company of America since 1/03; President and Chief Operating Officer, 1/02 to 12/02; Executive Vice President and Chief Operating Officer, 1/01 to 12/01; Executive Vice President, Individual Markets and Group Pensions, 1/99 to 12/00. Director (Trustee) of all of the mutual funds within the Guardian Fund Complex. | 25 | Director of The Guardian Life Insurance Company of America and The Guardian Insurance & Annuity Company, Inc. Manager, Guardian Investor Services LLC and Park Avenue Securities LLC. Director of various Guardian Life subsidiaries. | ||||||||||||||||||
Disinterested Trustees | |||||||||||||||||||||||
Kathleen C. Cuocolo (1952) | Trustee | Since 11/16/05 | Principal, Cuocolo Associates (corporate governance and operations consulting firm), 2003 to present; Executive Vice President, State Street Corporation, prior thereto. Employed by State Street Corporation in various capacities since 1982. Director (Trustee) of all of the mutual funds within the Guardian Fund Complex. | 25 | Chairman, Board of Directors, Select Sector S&P Depository Receipts Series Trust (9 exchange traded funds), 1999 to present; Director, World Markets PLC (global performance and analytics company), 2002 to present; Director, The China Fund, Inc., 2001to 2003; Board of Advisors, Venturi Aeration, Inc. (water remediation services), 2001 to present; Board of Advisors, Inter-Unity Group (systems optimization consulting firm), 2003 to present. | ||||||||||||||||||
* "Interested" Trustee means one who is an "interested person" under the Investment Company Act of 1940 by virtue of a current or past position with The Guardian Life Insurance Company of America, the indirect parent company of Guardian Investor Services LLC, the investment adviser of certain Funds in the Guardian Fund Complex.
† There is no set term of office for Trustees and Officers. The table reflects the year from which each person has served as Trustee and/or Officer.
120
n The Park Avenue Portfolio
Notes to Financial Statements (Continued)
December 31, 2005
Name, Address and Year of Birth | Position with Portfolio | Term of Office and Length of Time Served† | Principal Occupations During Past 5 Years | Number of Funds in the Guardian Fund Complex Overseen by Trustee | Other Directorships | ||||||||||||||||||
Frank J. Fabozzi, Ph.D. (1948) | Trustee | Since 1992 | Adjunct Professor of Finance, School of Management — Yale University, 2/94 to present; Editor, Journal of Portfolio Management. Director (Trustee) of all of the mutual funds within the Guardian Fund Complex. | 25 | Director (Trustee) of various closed-end investment companies sponsored by BlackRock Financial Management. Director of BlackRock Funds (47 funds). | ||||||||||||||||||
William N. Goetzmann, Ph.D. (1956) | Trustee | Since 11/16/05 | Edwin J. Beinecke Professor of Finance and Management Studies, Yale School of Management, 7/94 to present; Director, International Center for Finance, Yale School of Management, 7/99 to present; Visiting professor, Harvard Business School, 7/05 to present. Director (Trustee) of all of the mutual funds within the Guardian Fund Complex. | 25 | Member of the Board of Directors of the Commonfund. | ||||||||||||||||||
Anne M. Goggin, Esq. (1948) | Trustee | Since 2004 | Attorney at law in private practice since 8/04; Partner, Edwards and Angell, LLP, 4/04 to 8/04; Chief Counsel, Metropolitan Life Insurance Company, 6/00 to 12/03; Senior Vice President and General Counsel, New England Life Insurance Company, 6/00 to 12/03; Chairman, President and Chief Executive Officer, MetLife Advisors LLC, 6/99 to 12/03; Chairman of the Board, Metropolitan Series Fund, 1/02 to 12/03; Chairman of the Board, New England Zenith Fund, 6/99 to 12/03. Director (Trustee) of all of the mutual funds within the Guardian Fund Complex. | 25 | None. | ||||||||||||||||||
William W. Hewitt, Jr. (1928) | Trustee | Since 1989 | Retired. Former Executive Vice President, Shearson Lehman Brothers, Inc. Director (Trustee) of all of the mutual funds within the Guardian Fund Complex. | 25 | None. | ||||||||||||||||||
Sidney I. Lirtzman, Ph.D. 200 East 57th Street #10H New York, New York 10022 (1930) | Trustee | Since 1987 | Emanuel Saxe Emeritus Professor of Management, Zicklin School of Business, Baruch College, City University of New York since 11/04; Emanuel Saxe Professor of Management 9/96 to 10/04; Dean from 10/95 to 9/02; Interim President 9/99 to 9/00. President, Fairfield Consulting Associates, Inc. Director (Trustee) of all of the mutual funds within the Guardian Fund Complex. | 25 | Director, since 6/01 Youthstream, Inc. Member, Advisory Board of Directors, New York City Independent Budget Office 5/98 to 5/01. | ||||||||||||||||||
Steven J. Paggioli (1950) | Trustee | Since 11/16/05 | Independent consultant on investment company matters since 7/01; Executive Vice President, Director and Principal of The Wadsworth Group (administration, consulting and executive search firm) prior thereto. Director (Trustee) of all of the mutual funds within the Guardian Fund Complex. | 25 | Trustee and Audit Committee Member, Managers Funds and Managers AMG Funds 36 portfolios), 6/90 to present; Trustee, Professionally Managed Portfolios (20 portfolios), 5/91 to present; Advisory Board Member, Sustainable Growth Advisers L.P., 10/02 to present. | ||||||||||||||||||
† There is no set term of office for Trustees and Officers. The table reflects the year from which each person has served as Trustee and/or Officer.
121
n The Park Avenue Portfolio
Notes to Financial Statements (Continued)
December 31, 2005
Name, Address and Year of Birth | Position with Portfolio | Term of Office and Length of Time Served† | Principal Occupations During Past 5 Years | Number of Funds in the Guardian Fund Complex Overseen by Trustee | Other Directorships | ||||||||||||||||||
Robert G. Smith, Ph.D. 132 East 72nd Street, Apt. #1 New York, New York 10021 (1932) | Trustee | Since 1982 | Chairman and Chief Executive Officer, Smith Affiliated Capital Corp. since 4/82. Director (Trustee) of all of the mutual funds within the Guardian Fund Complex. | 25 | Governor appointments as Director of New York Health Care Reform Act Charitable Organization and Nassau County Interim Finance Authority. Senior private member of the New York State Financial Control Board for New York City. Senior Director for the New York State Comptroller's Investment Advisory Committee for State Pension Funds (Commonfund). | ||||||||||||||||||
Name, Address and Date of Birth | Position with Portfolio | Term of Office and Length of Time Served† | Principal Occupations During Past 5 Years | Number of Funds in the Guardian Fund Complex for which Officer Serves | |||||||||||||||
Officers | |||||||||||||||||||
Joseph A. Caruso (1952) | Senior Vice President and Secretary | Since 1992 | Director, The Guardian Life Insurance Company of America since 1/05; Senior Vice President and Corporate Secretary, The Guardian Life Insurance Company of America since1/01; Vice President and Corporate Secretary prior thereto. Director, Senior Vice President and Secretary, The Guardian Insurance & Annuity Company, Inc. Manager, Senior Vice President and Corporate Secretary, Guardian Investor Services LLC. Director, Senior Vice President and Secretary, Park Avenue Life Insurance Company; Manager, Park Avenue Securities LLC; Senior Vice President and Secretary of Guardian Baillie Gifford Limited, and all of the mutual funds within the Guardian Fund Complex. Director and Officer of various Guardian Life subsidiaries. | 25 | |||||||||||||||
Howard W. Chin (1952) | Managing Director | Since 1997 | Managing Director, The Guardian Life Insurance Company of America. Officer of various mutual funds within the Guardian Fund Complex. | 15 | |||||||||||||||
Robert J. Crimmins, Jr. (1960) | Senior Director | Since 2003 | Senior Director, The Guardian Life Insurance Company of America since 3/01. Assistant Vice President, Fixed Income Investments, prior thereto. Officer of various mutual funds within the Guardian Fund Complex. | 15 | |||||||||||||||
Richard A. Cumiskey (1960) | Chief Compliance Officer | Since 2002 | Second Vice President, Equity Administration and Oversight, The Guardian Life Insurance Company of America since 1/01; Assistant Vice President, Equity Administration and Oversight prior thereto. Senior Vice President and Chief Compliance Officer of The Guardian Insurance & Annuity Company, Inc. and Guardian Investor Services LLC since 4/04; Second Vice President and Compliance Officer prior thereto. Chief Compliance Officer of all of the mutual funds within the Guardian Fund Complex. | 25 | |||||||||||||||
† There is no set term of office for Trustees and Officers. The table reflects the year from which each person has served as Trustee and/or Officer.
122
n The Park Avenue Portfolio
Notes to Financial Statements (Continued)
December 31, 2005
Name, Address and Date of Birth | Position with Portfolio | Term of Office and Length of Time Served† | Principal Occupations During Past 5 Years | Number of Funds in the Guardian Fund Complex for which Officer Serves | |||||||||||||||
Manind V. Govil (1969) | Managing Director | Since 2005 | Managing Director and Head of Equity Investments at The Guardian Life Insurance Company of America since 8/05; Lead Portfolio Manager — Large Cap Blend/Core Equity, Co-Head of Equities and Head of Equity Research at Mercantile Capital Advisers since 2001; Lead Portfolio Manager - Core Equity at Mercantile Capital Advisers prior thereto. Officer of various mutual funds within the Guardian Fund Complex. | 23 | |||||||||||||||
Alexander M. Grant, Jr. (1949) | Managing Director | Since 1993 | Managing Director, The Guardian Life Insurance Company of America. Officer of various mutual funds within the Guardian Fund Complex. | 15 | |||||||||||||||
Edward H. Hocknell c/o Baillie Gifford Overseas, Limited 1 Greenside Row Edinburgh, EH1 3AN, Scotland (1960) | Vice President | Since 1997 | Partner, Baillie Gifford & Company. Director, Baillie Gifford Overseas Limited. Officer of various mutual funds within the Guardian Fund Complex. | 16 | |||||||||||||||
Jonathan C. Jankus (1947) | Managing Director | Since 1995 | Managing Director, The Guardian Life Insurance Company of America. Officer of various mutual funds within the Guardian Fund Complex. | 20 | |||||||||||||||
Stewart M. Johnson (1952) | Senior Director | Since 2002 | Senior Director, The Guardian Life Insurance Company of America since 1/02. Second Vice President from 12/00 to 1/02; Assistant Vice President prior thereto. Officer of various mutual funds within the Guardian Fund Complex. | 20 | |||||||||||||||
R. Robin Menzies c/o Baillie Gifford Overseas, Limited 1 Greenside Row Edinburgh, EH1 3AN, Scotland (1952) | Vice President | Since 1991 | Partner, Baillie Gifford & Company. Director, Baillie Gifford Overseas Limited. Director, Guardian Baillie Gifford Limited. Trustee, Baillie Gifford Funds, Inc. (2 funds). Officer of various mutual funds within the Guardian Fund Complex. | 16 | |||||||||||||||
Nydia Morrison (1958) | Controller | Since 2003 | Director, Mutual Fund Reporting, The Guardian Life Insurance Company of America since 5/04; Manager prior thereto. Officer of all of the mutual funds within the Guardian Fund Complex. | 25 | |||||||||||||||
Frank L. Pepe (1942) | Vice President and Treasurer | Since 1985 | Vice President and Equity Controller, The Guardian Life Insurance Company of America. Senior Vice President and Controller, The Guardian Insurance & Annuity Company, Inc. since 4/04; Vice President and Controller prior thereto. Senior Vice President and Controller, Guardian Investor Services LLC. Vice President and Treasurer of all of the mutual funds within the Guardian Fund Complex. | 25 | |||||||||||||||
Richard T. Potter, Jr. (1954) | Vice President and Counsel | Since 1992 | Vice President and Equity Counsel, The Guardian Life Insurance Company of America. Senior Vice President and Counsel, The Guardian Insurance & Annuity Company, Inc. and Guardian Investor Services LLC since 4/04; Vice President and Counsel prior thereto. Vice President and Counsel of Park Avenue Securities LLC and all of the mutual funds within the Guardian Fund Complex. | 25 | |||||||||||||||
† There is no set term of office for Trustees and Officers. The table reflects the year from which each person has served as Trustee and/or Officer.
123
n The Park Avenue Portfolio
Notes to Financial Statements (Continued)
December 31, 2005
Name, Address and Date of Birth | Position with Portfolio | Term of Office and Length of Time Served† | Principal Occupations During Past 5 Years | Number of Funds in the Guardian Fund Complex for which Officer Serves | |||||||||||||||
Robert A. Reale (1960) | Managing Director | Since 2001 | Managing Director, The Guardian Life Insurance Company of America, The Guardian Insurance & Annuity Company, Inc. and Guardian Investor Services LLC since 3/01; Second Vice President 10/99 to 2/01. Assistant Vice President, Metropolitan Life prior thereto. Officer of all of the mutual funds within the Guardian Fund Complex. | 25 | |||||||||||||||
Thomas G. Sorell (1955) | President | Since 1997 | Executive Vice President and Chief Investment Officer, The Guardian Life Insurance Company of America since 1/03; Senior Managing Director, Fixed Income Securities since 3/00; Vice President, Fixed Income Securities prior thereto. Managing Director, Investments: Park Avenue Life Insurance Company. President of all of the mutual funds within the Guardian Fund Complex. | 25 | |||||||||||||||
Donald P. Sullivan, Jr. (1954) | Vice President | Since 1995 | Vice President, Equity Administration, The Guardian Life Insurance Company of America. Vice President, The Guardian Insurance & Annuity Company, Inc. and Guardian Investor Services LLC. Officer of all of the mutual funds within the Guardian Fund Complex. | 25 | |||||||||||||||
Matthew P. Ziehl (1967) | Managing Director | Since 2002 | Managing Director, The Guardian Life Insurance Company of America since 1/02; prior thereto, Team Leader, Salomon Brothers Asset Management, Inc. from 1/01 to 12/01; Co-Portfolio Manager, prior thereto. Officer of various mutual funds within the Guardian Fund Complex. | 16 | |||||||||||||||
The Statement of Additional Information includes additional information about fund trustees and is available upon request, without charge, by calling 1-800-221-3253 or by writing to Guardian Investor Services LLC at 7 Hanover Square, New York, New York 10004.
† There is no set term of office for Trustees and Officers. The table reflects the year from which each person has served as Trustee and/or Officer.
124
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125
n The Park Avenue Portfolio
Financial Highlights
Selected data for a share of beneficial interest outstanding throughout the periods indicated:
Net Realized & Unrealized | Distributions from | ||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income/ (Loss) | Gain/(Loss) on Investments and Foreign Currency Related Transactions | Increase/ (Decrease) from Investment Operations | Dividends from Net Investment Income | Net Realized Gain on Investments and Foreign Currency Related Transactions | ||||||||||||||||||||||
The Guardian Park Avenue Fund | |||||||||||||||||||||||||||
Class A: | |||||||||||||||||||||||||||
Year ended 12/31/2005 | $ | 31.37 | $ | 0.47 | $ | 0.74 | $ | 1.21 | $ | (0.32 | ) | — | |||||||||||||||
Year ended 12/31/2004 | 30.08 | 0.34 | 1.35 | 1.69 | (0.40 | ) | — | ||||||||||||||||||||
Year ended 12/31/2003 | 25.03 | 0.23 | 5.00 | 5.23 | (0.18 | ) | — | ||||||||||||||||||||
Year ended 12/31/2002 | 32.00 | 0.17 | (7.06 | ) | (6.89 | ) | (0.08 | ) | — | ||||||||||||||||||
Year ended 12/31/2001 | 41.18 | 0.12 | (9.06 | ) | (8.94 | ) | (0.03 | ) | $ | (0.21 | ) | ||||||||||||||||
Class B: | |||||||||||||||||||||||||||
Year ended 12/31/2005 | 30.06 | (0.59 | ) | 1.44 | 0.85 | — | — | ||||||||||||||||||||
Year ended 12/31/2004 | 28.72 | (0.20 | ) | 1.54 | 1.34 | — | — | ||||||||||||||||||||
Year ended 12/31/2003 | 23.99 | (0.16 | ) | 4.89 | 4.73 | — | — | ||||||||||||||||||||
Year ended 12/31/2002 | 30.88 | (0.20 | ) | (6.69 | ) | (6.89 | ) | — | — | ||||||||||||||||||
Year ended 12/31/2001 | 40.08 | (0.23 | ) | (8.76 | ) | (8.99 | ) | — | (0.21 | ) | |||||||||||||||||
Class C: | |||||||||||||||||||||||||||
Year ended 12/31/2005 | 29.62 | (0.00 | )† | 0.80 | 0.80 | — | — | ||||||||||||||||||||
Year ended 12/31/2004 | 28.37 | (0.09 | ) | 1.34 | 1.25 | — | — | ||||||||||||||||||||
Year ended 12/31/2003 | 23.75 | (0.16 | ) | 4.78 | 4.62 | — | — | ||||||||||||||||||||
Year ended 12/31/2002 | 30.64 | (0.19 | ) | (6.70 | ) | (6.89 | ) | — | — | ||||||||||||||||||
Year ended 12/31/2001 | 39.85 | (0.25 | ) | (8.75 | ) | (9.00 | ) | — | (0.21 | ) | |||||||||||||||||
Class K: | |||||||||||||||||||||||||||
Year ended 12/31/2005 | 31.23 | 0.29 | 0.79 | 1.08 | (0.28 | ) | — | ||||||||||||||||||||
Year ended 12/31/2004 | 30.00 | 0.20 | 1.39 | 1.59 | (0.36 | ) | — | ||||||||||||||||||||
Year ended 12/31/2003 | 24.96 | 0.11 | 5.02 | 5.13 | (0.09 | ) | — | ||||||||||||||||||||
Year ended 12/31/2002 | 31.93 | 0.05 | (7.02 | ) | (6.97 | ) | — | — | |||||||||||||||||||
Period from 5/15/2001†† to 12/31/2001 | 35.55 | 0.00 | † | (3.41 | ) | (3.41 | ) | — | (0.21 | ) | |||||||||||||||||
The Guardian UBS Large Cap Value Fund | |||||||||||||||||||||||||||
Class A: | |||||||||||||||||||||||||||
Year ended 12/31/2005 | 13.30 | 0.10 | 1.12 | 1.22 | (0.11 | ) | (1.34 | ) | |||||||||||||||||||
Year ended 12/31/2004 | 12.82 | 0.08 | 1.59 | 1.67 | (0.07 | ) | (1.12 | ) | |||||||||||||||||||
Period from 2/3/2003†† to 12/31/2003 | 10.00 | 0.08 | 3.06 | 3.14 | (0.07 | ) | (0.25 | ) | |||||||||||||||||||
Class B: | |||||||||||||||||||||||||||
Year ended 12/31/2005 | 13.24 | (0.00 | )† | 1.12 | 1.12 | — | (1.34 | ) | |||||||||||||||||||
Year ended 12/31/2004 | 12.80 | (0.01 | ) | 1.57 | 1.56 | — | (1.12 | ) | |||||||||||||||||||
Period from 2/3/2003†† to 12/31/2003 | 10.00 | 0.00 | † | 3.06 | 3.06 | (0.01 | ) | (0.25 | ) | ||||||||||||||||||
Class C: | |||||||||||||||||||||||||||
Year ended 12/31/2005 | 13.24 | (0.00 | )† | 1.12 | 1.12 | — | (1.34 | ) | |||||||||||||||||||
Year ended 12/31/2004 | 12.80 | (0.01 | ) | 1.57 | 1.56 | — | (1.12 | ) | |||||||||||||||||||
Period from 2/3/2003†† to 12/31/2003 | 10.00 | 0.00 | † | 3.06 | 3.06 | (0.01 | ) | (0.25 | ) | ||||||||||||||||||
Class K: | |||||||||||||||||||||||||||
Year ended 12/31/2005 | 13.30 | 0.07 | 1.11 | 1.18 | (0.07 | ) | (1.34 | ) | |||||||||||||||||||
Year ended 12/31/2004 | 12.83 | 0.05 | 1.58 | 1.63 | (0.04 | ) | (1.12 | ) | |||||||||||||||||||
Period from 2/3/2003†† to 12/31/2003 | 10.00 | 0.05 | 3.07 | 3.12 | (0.04 | ) | (0.25 | ) |
† Rounds to less than $0.01.
†† Commencement of operations.
* Excludes the effect of sales load.
(a) Not annualized.
(b) Annualized.
126
Ratios/Supplemental Data | |||||||||||||||||||||||||||
Net Asset Value, End of Period | Total Return* | Net Assets, End of Period (000's Omitted) | Expenses to Average Net Assets | Net Investment Income/(Loss) to Average Net Assets | Portfolio Turnover Rate | ||||||||||||||||||||||
The Guardian Park Avenue Fund | |||||||||||||||||||||||||||
Class A: | |||||||||||||||||||||||||||
Year ended 12/31/2005 | $ | 32.26 | 3.90 | % | $ | 796,034 | 0.91 | % | 1.32 | % | 101 | % | |||||||||||||||
Year ended 12/31/2004 | 31.37 | 5.64 | 980,872 | 0.88 | 0.95 | 75 | |||||||||||||||||||||
Year ended 12/31/2003 | 30.08 | 20.95 | 1,133,468 | 0.89 | 0.72 | 74 | |||||||||||||||||||||
Year ended 12/31/2002 | 25.03 | (21.56 | ) | 1,120,351 | 0.87 | 0.51 | 60 | ||||||||||||||||||||
Year ended 12/31/2001 | 32.00 | (21.75 | ) | 1,779,818 | 0.83 | 0.31 | 143 | ||||||||||||||||||||
Class B: | |||||||||||||||||||||||||||
Year ended 12/31/2005 | 30.91 | 2.83 | 69,159 | 1.92 | 0.34 | 101 | |||||||||||||||||||||
Year ended 12/31/2004 | 30.06 | 4.67 | 130,372 | 1.84 | (0.02 | ) | 75 | ||||||||||||||||||||
Year ended 12/31/2003 | 28.72 | 19.72 | 165,274 | 1.84 | (0.24 | ) | 74 | ||||||||||||||||||||
Year ended 12/31/2002 | 23.99 | (22.31 | ) | 167,471 | 1.83 | (0.44 | ) | 60 | |||||||||||||||||||
Year ended 12/31/2001 | 30.88 | (22.46 | ) | 274,761 | 1.75 | (0.61 | ) | 143 | |||||||||||||||||||
Class C: | |||||||||||||||||||||||||||
Year ended 12/31/2005 | 30.42 | 2.70 | 6,358 | 2.08 | 0.13 | 101 | |||||||||||||||||||||
Year ended 12/31/2004 | 29.62 | 4.41 | 6,551 | 2.06 | (0.21 | ) | 75 | ||||||||||||||||||||
Year ended 12/31/2003 | 28.37 | 19.45 | 6,622 | 2.12 | (0.52 | ) | 74 | ||||||||||||||||||||
Year ended 12/31/2002 | 23.75 | (22.49 | ) | 5,884 | 2.07 | (0.67 | ) | 60 | |||||||||||||||||||
Year ended 12/31/2001 | 30.64 | (22.62 | ) | 7,594 | 1.96 | (0.81 | ) | 143 | |||||||||||||||||||
Class K: | |||||||||||||||||||||||||||
Year ended 12/31/2005 | 32.03 | 3.51 | 9,517 | 1.25 | 0.94 | 101 | |||||||||||||||||||||
Year ended 12/31/2004 | 31.23 | 5.34 | 8,761 | 1.20 | 0.69 | 75 | |||||||||||||||||||||
Year ended 12/31/2003 | 30.00 | 20.58 | 7,145 | 1.20 | 0.41 | 74 | |||||||||||||||||||||
Year ended 12/31/2002 | 24.96 | (21.83 | ) | 5,752 | 1.21 | 0.19 | 60 | ||||||||||||||||||||
Period from 5/15/2001†† to 12/31/2001 | 31.93 | (9.63 | )(a) | 7,229 | 1.22 | (b) | 0.02 | (b) | 143 | ||||||||||||||||||
The Guardian UBS Large Cap Value Fund | |||||||||||||||||||||||||||
Class A: | |||||||||||||||||||||||||||
Year ended 12/31/2005 | 13.07 | 9.32 | 27,050 | 1.44 | 0.75 | 35 | |||||||||||||||||||||
Year ended 12/31/2004 | 13.30 | 13.43 | 26,676 | 1.44 | 0.68 | 32 | |||||||||||||||||||||
Period from 2/3/2003†† to 12/31/2003 | 12.82 | 31.48 | (a) | 21,705 | 1.59 | (b) | 0.78 | (b) | 45 | ||||||||||||||||||
Class B: | |||||||||||||||||||||||||||
Year ended 12/31/2005 | 13.02 | 8.54 | 22,643 | 2.19 | 0.01 | 35 | |||||||||||||||||||||
Year ended 12/31/2004 | 13.24 | 12.52 | 24,646 | 2.19 | (0.07 | ) | 32 | ||||||||||||||||||||
Period from 2/3/2003†† to 12/31/2003 | 12.80 | 30.65 | (a) | 21,378 | 2.33 | (b) | 0.03 | (b) | 45 | ||||||||||||||||||
Class C: | |||||||||||||||||||||||||||
Year ended 12/31/2005 | 13.02 | 8.54 | 21,005 | 2.19 | 0.01 | 35 | |||||||||||||||||||||
Year ended 12/31/2004 | 13.24 | 12.52 | 23,507 | 2.19 | (0.07 | ) | 32 | ||||||||||||||||||||
Period from 2/3/2003†† to 12/31/2003 | 12.80 | 30.65 | (a) | 20,801 | 2.33 | (b) | 0.04 | (b) | 45 | ||||||||||||||||||
Class K: | |||||||||||||||||||||||||||
Year ended 12/31/2005 | 13.07 | 9.02 | 22,901 | 1.71 | 0.49 | 35 | |||||||||||||||||||||
Year ended 12/31/2004 | 13.30 | 13.05 | 24,342 | 1.70 | 0.42 | 32 | |||||||||||||||||||||
Period from 2/3/2003†† to 12/31/2003 | 12.83 | 31.22 | (a) | 20,944 | 1.88 | (b) | 0.49 | (b) | 45 |
127
n The Park Avenue Portfolio
Financial Highlights (Continued)
Selected data for a share of beneficial interest outstanding throughout the periods indicated:
Net Realized & Unrealized | Distributions from | ||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income/ (Loss) | Gain/(Loss) on Investments and Foreign Currency Related Transactions | Increase/ (Decrease) from Investment Operations | Net Realized Gain on Investments and Foreign Currency Related Transactions | Net Asset Value, End of Period | ||||||||||||||||||||||
The Guardian Park Avenue Small Cap Fund | |||||||||||||||||||||||||||
Class A: | |||||||||||||||||||||||||||
Year ended 12/31/2005 | $ | 19.40 | $ | (0.04 | ) | $ | (0.05 | ) | $ | (0.09 | ) | $ | (2.73 | ) | $ | 16.58 | |||||||||||
Year ended 12/31/2004 | 19.05 | (0.12 | ) | 2.90 | 2.78 | (2.43 | ) | 19.40 | |||||||||||||||||||
Year ended 12/31/2003 | 13.30 | (0.10 | ) | 5.85 | 5.75 | — | 19.05 | ||||||||||||||||||||
Year ended 12/31/2002 | 15.74 | (0.07 | ) | (2.37 | ) | (2.44 | ) | — | 13.30 | ||||||||||||||||||
Year ended 12/31/2001 | 16.93 | (0.06 | ) | (1.13 | ) | (1.19 | ) | — | 15.74 | ||||||||||||||||||
Class B: | |||||||||||||||||||||||||||
Year ended 12/31/2005 | 17.94 | (0.25 | ) | (0.02 | ) | (0.27 | ) | (2.73 | ) | 14.94 | |||||||||||||||||
Year ended 12/31/2004 | 17.93 | (0.27 | ) | 2.71 | 2.44 | (2.43 | ) | 17.94 | |||||||||||||||||||
Year ended 12/31/2003 | 12.64 | (0.24 | ) | 5.53 | 5.29 | — | 17.93 | ||||||||||||||||||||
Year ended 12/31/2002 | 15.10 | (0.20 | ) | (2.26 | ) | (2.46 | ) | — | 12.64 | ||||||||||||||||||
Year ended 12/31/2001 | 16.39 | (0.20 | ) | (1.09 | ) | (1.29 | ) | — | 15.10 | ||||||||||||||||||
Class C: | |||||||||||||||||||||||||||
Year ended 12/31/2005 | 17.80 | (0.17 | ) | (0.09 | ) | (0.26 | ) | (2.73 | ) | 14.81 | |||||||||||||||||
Year ended 12/31/2004 | 17.83 | (0.26 | ) | 2.66 | 2.40 | (2.43 | ) | 17.80 | |||||||||||||||||||
Year ended 12/31/2003 | 12.59 | (0.27 | ) | 5.51 | 5.24 | — | 17.83 | ||||||||||||||||||||
Year ended 12/31/2002 | 15.07 | (0.22 | ) | (2.26 | ) | (2.48 | ) | — | 12.59 | ||||||||||||||||||
Year ended 12/31/2001 | 16.39 | (0.21 | ) | (1.11 | ) | (1.32 | ) | — | 15.07 | ||||||||||||||||||
Class K: | |||||||||||||||||||||||||||
Year ended 12/31/2005 | 19.05 | (0.07 | ) | (0.09 | ) | (0.16 | ) | (2.73 | ) | 16.16 | |||||||||||||||||
Year ended 12/31/2004 | 18.79 | (0.16 | ) | 2.85 | 2.69 | (2.43 | ) | 19.05 | |||||||||||||||||||
Year ended 12/31/2003 | 13.15 | (0.14 | ) | 5.78 | 5.64 | — | 18.79 | ||||||||||||||||||||
Year ended 12/31/2002 | 15.62 | (0.11 | ) | (2.36 | ) | (2.47 | ) | — | 13.15 | ||||||||||||||||||
Period from 5/15/2001† to 12/31/2001 | 15.71 | (0.07 | ) | (0.02 | ) | (0.09 | ) | — | 15.62 | ||||||||||||||||||
The Guardian UBS Small Cap Value Fund | |||||||||||||||||||||||||||
Class A: | |||||||||||||||||||||||||||
Year ended 12/31/2005 | 13.17 | (0.05 | ) | 0.54 | 0.49 | (1.72 | ) | 11.94 | |||||||||||||||||||
Year ended 12/31/2004 | 12.71 | (0.03 | ) | 2.25 | 2.22 | (1.76 | ) | 13.17 | |||||||||||||||||||
Period from 2/3/2003† to 12/31/2003 | 10.00 | (0.01 | ) | 3.60 | 3.59 | (0.88 | ) | 12.71 | |||||||||||||||||||
Class B: | |||||||||||||||||||||||||||
Year ended 12/31/2005 | 12.94 | (0.14 | ) | 0.53 | 0.39 | (1.72 | ) | 11.61 | |||||||||||||||||||
Year ended 12/31/2004 | 12.61 | (0.12 | ) | 2.21 | 2.09 | (1.76 | ) | 12.94 | |||||||||||||||||||
Period from 2/3/2003† to 12/31/2003 | 10.00 | (0.09 | ) | 3.58 | 3.49 | (0.88 | ) | 12.61 | |||||||||||||||||||
Class C: | |||||||||||||||||||||||||||
Year ended 12/31/2005 | 12.94 | (0.14 | ) | 0.53 | 0.39 | (1.72 | ) | 11.61 | |||||||||||||||||||
Year ended 12/31/2004 | 12.61 | (0.12 | ) | 2.21 | 2.09 | (1.76 | ) | 12.94 | |||||||||||||||||||
Period from 2/3/2003† to 12/31/2003 | 10.00 | (0.10 | ) | 3.59 | 3.49 | (0.88 | ) | 12.61 | |||||||||||||||||||
Class K: | |||||||||||||||||||||||||||
Year ended 12/31/2005 | 13.12 | (0.06 | ) | 0.53 | 0.47 | (1.72 | ) | 11.87 | |||||||||||||||||||
Year ended 12/31/2004 | 12.68 | (0.04 | ) | 2.24 | 2.20 | (1.76 | ) | 13.12 | |||||||||||||||||||
Period from 2/3/2003† to 12/31/2003 | 10.00 | (0.03 | ) | 3.59 | 3.56 | (0.88 | ) | 12.68 |
† Commencement of operations.
* Excludes the effect of sales load.
(a) Not annualized.
(b) Annualized.
128
Ratios/Supplemental Data | |||||||||||||||||||||||
Total Return* | Net Assets, End of Period (000's Omitted) | Expenses to Average Net Assets | Net Investment Income/(Loss) to Average Net Assets | Portfolio Turnover Rate | |||||||||||||||||||
The Guardian Park Avenue Small Cap Fund | |||||||||||||||||||||||
Class A: | |||||||||||||||||||||||
Year ended 12/31/2005 | (0.15 | )% | $ | 132,246 | 1.25 | % | (0.20 | )% | 124 | % | |||||||||||||
Year ended 12/31/2004 | 14.74 | 181,068 | 1.21 | (0.67 | ) | 127 | |||||||||||||||||
Year ended 12/31/2003 | 43.23 | 160,049 | 1.27 | (0.67 | ) | 105 | |||||||||||||||||
Year ended 12/31/2002 | (15.50 | ) | 111,803 | 1.25 | (0.45 | ) | 108 | ||||||||||||||||
Year ended 12/31/2001 | (7.03 | ) | 139,774 | 1.28 | (0.37 | ) | 131 | ||||||||||||||||
Class B: | |||||||||||||||||||||||
Year ended 12/31/2005 | (1.21 | ) | 12,971 | 2.21 | (1.19 | ) | 124 | ||||||||||||||||
Year ended 12/31/2004 | 13.76 | 23,574 | 2.13 | (1.59 | ) | 127 | |||||||||||||||||
Year ended 12/31/2003 | 41.85 | 22,989 | 2.21 | (1.61 | ) | 105 | |||||||||||||||||
Year ended 12/31/2002 | (16.29 | ) | 17,189 | 2.19 | (1.40 | ) | 108 | ||||||||||||||||
Year ended 12/31/2001 | (7.87 | ) | 20,876 | 2.18 | (1.27 | ) | 131 | ||||||||||||||||
Class C: | |||||||||||||||||||||||
Year ended 12/31/2005 | (1.16 | ) | 9,536 | 2.23 | (1.13 | ) | 124 | ||||||||||||||||
Year ended 12/31/2004 | 13.62 | 9,757 | 2.23 | (1.69 | ) | 127 | |||||||||||||||||
Year ended 12/31/2003 | 41.62 | 8,092 | 2.39 | (1.79 | ) | 105 | |||||||||||||||||
Year ended 12/31/2002 | (16.46 | ) | 5,824 | 2.40 | (1.60 | ) | 108 | ||||||||||||||||
Year ended 12/31/2001 | (8.05 | ) | 6,752 | 2.34 | (1.43 | ) | 131 | ||||||||||||||||
Class K: | |||||||||||||||||||||||
Year ended 12/31/2005 | (0.53 | ) | 12,276 | 1.58 | (0.48 | ) | 124 | ||||||||||||||||
Year ended 12/31/2004 | 14.47 | 12,391 | 1.52 | (0.97 | ) | 127 | |||||||||||||||||
Year ended 12/31/2003 | 42.89 | 9,893 | 1.55 | (0.96 | ) | 105 | |||||||||||||||||
Year ended 12/31/2002 | (15.81 | ) | 6,748 | 1.55 | (0.75 | ) | 108 | ||||||||||||||||
Period from 5/15/2001† to 12/31/2001 | (0.57 | )(a) | 7,959 | 1.61 | (b) | (0.77 | )(b) | 131 | |||||||||||||||
The Guardian UBS Small Cap Value Fund | |||||||||||||||||||||||
Class A: | |||||||||||||||||||||||
Year ended 12/31/2005 | 3.70 | 13,038 | 1.92 | (0.43 | ) | 67 | |||||||||||||||||
Year ended 12/31/2004 | 18.14 | 14,332 | 1.95 | (0.25 | ) | 53 | |||||||||||||||||
Period from 2/3/2003† to 12/31/2003 | 35.76 | (a) | 10,081 | 2.17 | (b) | (0.07 | )(b) | 94 | |||||||||||||||
Class B: | |||||||||||||||||||||||
Year ended 12/31/2005 | 2.98 | 10,369 | 2.68 | (1.19 | ) | 67 | |||||||||||||||||
Year ended 12/31/2004 | 17.22 | 11,652 | 2.71 | (1.04 | ) | 53 | |||||||||||||||||
Period from 2/3/2003† to 12/31/2003 | 34.76 | (a) | 9,737 | 2.91 | (b) | (0.81 | )(b) | 94 | |||||||||||||||
Class C: | |||||||||||||||||||||||
Year ended 12/31/2005 | 2.99 | 9,852 | 2.69 | (1.20 | ) | 67 | |||||||||||||||||
Year ended 12/31/2004 | 17.22 | 11,095 | 2.72 | (1.04 | ) | 53 | |||||||||||||||||
Period from 2/3/2003† to 12/31/2003 | 34.76 | (a) | 9,422 | 2.91 | (b) | (0.81 | )(b) | 94 | |||||||||||||||
Class K: | |||||||||||||||||||||||
Year ended 12/31/2005 | 3.56 | 11,433 | 2.06 | (0.56 | ) | 67 | |||||||||||||||||
Year ended 12/31/2004 | 18.01 | 11,807 | 2.07 | (0.39 | ) | 53 | |||||||||||||||||
Period from 2/3/2003† to 12/31/2003 | 35.46 | (a) | 9,492 | 2.35 | (b) | (0.25 | )(b) | 94 |
129
n The Park Avenue Portfolio
Financial Highlights (Continued)
Selected data for a share of beneficial interest outstanding throughout the periods indicated:
Net Realized & Unrealized | Distributions from | ||||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income/ (Loss) | Gain/(Loss) on Investments and Foreign Currency Related Transactions | Increase/ (Decrease) from Investment Operations | Dividends from Net Investment Income | Net Realized Gain on Investments and Foreign Currency Related Transactions | Net Asset Value, End of Period | |||||||||||||||||||||||||
The Guardian Asset Allocation Fund | |||||||||||||||||||||||||||||||
Class A: | |||||||||||||||||||||||||||||||
Year ended 12/31/2005 | $ | 11.43 | $ | 0.14 | $ | 0.31 | $ | 0.45 | $ | (0.04 | ) | — | $ | 11.84 | |||||||||||||||||
Year ended 12/31/2004 | 10.63 | 0.16 | 0.88 | 1.04 | (0.24 | ) | — | 11.43 | |||||||||||||||||||||||
Year ended 12/31/2003 | 8.45 | 0.14 | 2.20 | 2.34 | (0.16 | ) | — | 10.63 | |||||||||||||||||||||||
Year ended 12/31/2002 | 10.84 | 0.17 | (2.38 | ) | (2.21 | ) | (0.18 | ) | — | 8.45 | |||||||||||||||||||||
Year ended 12/31/2001 | 13.00 | 0.30 | (1.61 | ) | (1.31 | ) | (0.18 | ) | $ | (0.67 | ) | 10.84 | |||||||||||||||||||
Class B: | |||||||||||||||||||||||||||||||
Year ended 12/31/2005 | 11.40 | 0.03 | 0.33 | 0.36 | — | — | 11.76 | ||||||||||||||||||||||||
Year ended 12/31/2004 | 10.57 | 0.06 | 0.87 | 0.93 | (0.10 | ) | — | 11.40 | |||||||||||||||||||||||
Year ended 12/31/2003 | 8.41 | 0.05 | 2.18 | 2.23 | (0.07 | ) | — | 10.57 | |||||||||||||||||||||||
Year ended 12/31/2002 | 10.77 | 0.09 | (2.37 | ) | (2.28 | ) | (0.08 | ) | — | 8.41 | |||||||||||||||||||||
Year ended 12/31/2001 | 12.95 | 0.19 | (1.59 | ) | (1.40 | ) | (0.11 | ) | (0.67 | ) | 10.77 | ||||||||||||||||||||
Class C: | |||||||||||||||||||||||||||||||
Year ended 12/31/2005 | 11.41 | 0.01 | 0.33 | 0.34 | — | — | 11.75 | ||||||||||||||||||||||||
Year ended 12/31/2004 | 10.56 | 0.04 | 0.88 | 0.92 | (0.07 | ) | — | 11.41 | |||||||||||||||||||||||
Year ended 12/31/2003 | 8.39 | 0.02 | 2.19 | 2.21 | (0.04 | ) | — | 10.56 | |||||||||||||||||||||||
Year ended 12/31/2002 | 10.77 | 0.05 | (2.38 | ) | (2.33 | ) | (0.05 | ) | — | 8.39 | |||||||||||||||||||||
Year ended 12/31/2001 | 12.94 | 0.17 | (1.64 | ) | (1.47 | ) | (0.03 | ) | (0.67 | ) | 10.77 | ||||||||||||||||||||
Class K: | |||||||||||||||||||||||||||||||
Year ended 12/31/2005 | 11.42 | 0.09 | 0.33 | 0.42 | (0.01 | ) | — | 11.83 | |||||||||||||||||||||||
Year ended 12/31/2004 | 10.60 | 0.11 | 0.89 | 1.00 | (0.18 | ) | — | 11.42 | |||||||||||||||||||||||
Year ended 12/31/2003 | 8.43 | 0.09 | 2.19 | 2.28 | (0.11 | ) | — | 10.60 | |||||||||||||||||||||||
Year ended 12/31/2002 | 10.82 | 0.13 | (2.39 | ) | (2.26 | ) | (0.13 | ) | — | 8.43 | |||||||||||||||||||||
Period from 5/15/2001† to 12/31/2001 | 12.06 | 0.11 | (0.68 | ) | (0.57 | ) | — | (0.67 | ) | 10.82 | |||||||||||||||||||||
The Guardian S&P 500 Index Fund | |||||||||||||||||||||||||||||||
Class A: | |||||||||||||||||||||||||||||||
Year ended 12/31/2005 | 8.30 | 0.11 | 0.25 | 0.36 | (0.11 | ) | — | 8.55 | |||||||||||||||||||||||
Year ended 12/31/2004 | 7.63 | 0.12 | 0.66 | 0.78 | (0.11 | ) | — | 8.30 | |||||||||||||||||||||||
Year ended 12/31/2003 | 6.04 | 0.08 | 1.59 | 1.67 | (0.08 | ) | — | 7.63 | |||||||||||||||||||||||
Year ended 12/31/2002 | 7.90 | 0.10 | (1.86 | ) | (1.76 | ) | (0.10 | ) | — | 6.04 | |||||||||||||||||||||
Year ended 12/31/2001 | 9.07 | 0.06 | (1.17 | ) | (1.11 | ) | (0.06 | ) | — | 7.90 | |||||||||||||||||||||
Class B: | |||||||||||||||||||||||||||||||
Year ended 12/31/2005 | 8.28 | 0.05 | 0.26 | 0.31 | (0.05 | ) | — | 8.54 | |||||||||||||||||||||||
Year ended 12/31/2004 | 7.62 | 0.06 | 0.66 | 0.72 | (0.06 | ) | — | 8.28 | |||||||||||||||||||||||
Year ended 12/31/2003 | 6.03 | 0.03 | 1.59 | 1.62 | (0.03 | ) | — | 7.62 | |||||||||||||||||||||||
Year ended 12/31/2002 | 7.88 | 0.02 | (1.85 | ) | (1.83 | ) | (0.02 | ) | — | 6.03 | |||||||||||||||||||||
Year ended 12/31/2001 | 9.05 | 0.01 | (1.18 | ) | (1.17 | ) | (0.00 | )†† | — | 7.88 | |||||||||||||||||||||
Class C: | |||||||||||||||||||||||||||||||
Year ended 12/31/2005 | 8.27 | 0.05 | 0.26 | 0.31 | (0.05 | ) | — | 8.53 | |||||||||||||||||||||||
Year ended 12/31/2004 | 7.61 | 0.06 | 0.66 | 0.72 | (0.06 | ) | — | 8.27 | |||||||||||||||||||||||
Year ended 12/31/2003 | 6.03 | 0.03 | 1.58 | 1.61 | (0.03 | ) | — | 7.61 | |||||||||||||||||||||||
Year ended 12/31/2002 | 7.88 | 0.02 | (1.85 | ) | (1.83 | ) | (0.02 | ) | — | 6.03 | |||||||||||||||||||||
Year ended 12/31/2001 | 9.05 | 0.01 | (1.17 | ) | (1.16 | ) | (0.01 | ) | — | 7.88 | |||||||||||||||||||||
Class K: | |||||||||||||||||||||||||||||||
Year ended 12/31/2005 | 8.29 | 0.07 | 0.26 | 0.33 | (0.07 | ) | — | 8.55 | |||||||||||||||||||||||
Year ended 12/31/2004 | 7.63 | 0.08 | 0.66 | 0.74 | (0.08 | ) | — | 8.29 | |||||||||||||||||||||||
Year ended 12/31/2003 | 6.04 | 0.06 | 1.59 | 1.65 | (0.06 | ) | — | 7.63 | |||||||||||||||||||||||
Year ended 12/31/2002 | 7.90 | 0.05 | (1.86 | ) | (1.81 | ) | (0.05 | ) | — | 6.04 | |||||||||||||||||||||
Period from 5/15/2001† to 12/31/2001 | 8.59 | 0.02 | (0.69 | ) | (0.67 | ) | (0.02 | ) | — | 7.90 |
† Commencement of operations.
†† Rounds to less than $0.01.
* Excludes the effect of sales load.
(a) After expenses subsidized by GIS and do not include the expenses of the underlying Funds.
(b) Amounts include the expenses of the underlying Funds.
(c) Not annualized.
(d) Annualized.
(e) Reflects adjustments made on prior year's expense waivers.
130
Ratios/Supplemental Data | |||||||||||||||||||||||||||||||
Total Return* | Net Assets, End of Period (000's Omitted) | Expenses to Average Net Assets(a) | Expenses Waived/ Subsidized by GIS | GAAF Gross Expense Ratio(b) | Net Investment Income/(Loss) to Average Net Assets | Portfolio Turnover Rate | |||||||||||||||||||||||||
The Guardian Asset Allocation Fund | |||||||||||||||||||||||||||||||
Class A: | |||||||||||||||||||||||||||||||
Year ended 12/31/2005 | 3.91 | % | $ | 97,665 | 0.40 | % | 0.80 | % | 0.85 | % | 1.05 | % | 3 | % | |||||||||||||||||
Year ended 12/31/2004 | 9.84 | 111,486 | 0.41 | 0.76 | 0.86 | 1.30 | 0 | ||||||||||||||||||||||||
Year ended 12/31/2003 | 27.87 | 118,988 | 0.43 | 0.77 | 0.92 | (e) | 1.25 | 0 | |||||||||||||||||||||||
Year ended 12/31/2002 | (20.64 | ) | 110,593 | 0.42 | 0.73 | 0.89 | (e) | 1.60 | 4 | ||||||||||||||||||||||
Year ended 12/31/2001 | (10.23 | ) | 169,386 | 0.47 | 0.63 | 0.83 | (e) | 2.44 | 51 | ||||||||||||||||||||||
Class B: | |||||||||||||||||||||||||||||||
Year ended 12/31/2005 | 3.16 | 21,200 | 1.23 | 0.80 | 1.69 | 0.16 | 3 | ||||||||||||||||||||||||
Year ended 12/31/2004 | 8.83 | 29,226 | 1.23 | 0.76 | 1.68 | 0.46 | 0 | ||||||||||||||||||||||||
Year ended 12/31/2003 | 26.65 | 32,863 | 1.27 | 0.77 | 1.75 | (e) | 0.43 | 0 | |||||||||||||||||||||||
Year ended 12/31/2002 | (21.31 | ) | 29,064 | 1.25 | 0.73 | 1.71 | (e) | 0.78 | 4 | ||||||||||||||||||||||
Year ended 12/31/2001 | (10.99 | ) | 44,813 | 1.28 | 0.63 | 1.64 | (e) | 1.62 | 51 | ||||||||||||||||||||||
Class C: | |||||||||||||||||||||||||||||||
Year ended 12/31/2005 | 2.98 | 8,486 | 1.37 | 0.80 | 1.83 | 0.11 | 3 | ||||||||||||||||||||||||
Year ended 12/31/2004 | 8.68 | 8,431 | 1.42 | 0.76 | 1.87 | 0.35 | 0 | ||||||||||||||||||||||||
Year ended 12/31/2003 | 26.39 | 7,857 | 1.51 | 0.77 | 2.00 | (e) | 0.19 | 0 | |||||||||||||||||||||||
Year ended 12/31/2002 | (21.70 | ) | 6,470 | 1.50 | 0.73 | 1.97 | (e) | 0.58 | 4 | ||||||||||||||||||||||
Year ended 12/31/2001 | (11.48 | ) | 8,080 | 1.46 | 0.63 | 1.82 | (e) | 1.43 | 51 | ||||||||||||||||||||||
Class K: | |||||||||||||||||||||||||||||||
Year ended 12/31/2005 | 3.67 | 10,271 | 0.68 | 0.80 | 1.14 | 0.84 | 3 | ||||||||||||||||||||||||
Year ended 12/31/2004 | 9.51 | 9,293 | 0.68 | 0.76 | 1.13 | 1.13 | 0 | ||||||||||||||||||||||||
Year ended 12/31/2003 | 27.20 | 7,859 | 0.68 | 0.77 | 1.17 | (e) | 1.04 | 0 | |||||||||||||||||||||||
Year ended 12/31/2002 | (21.05 | ) | 6,126 | 0.70 | 0.73 | 1.16 | (e) | 1.39 | 4 | ||||||||||||||||||||||
Period from 5/15/2001† to 12/31/2001 | (4.85 | )(c) | 7,619 | 0.75 | (d) | 0.72 | (d) | 1.16 | (d)(e) | 1.57 | (d) | 51 | |||||||||||||||||||
The Guardian S&P 500 Index Fund | |||||||||||||||||||||||||||||||
Class A: | |||||||||||||||||||||||||||||||
Year ended 12/31/2005 | 4.40 | 149,719 | 0.53 | 0.18 | — | 1.36 | 4 | ||||||||||||||||||||||||
Year ended 12/31/2004 | 10.30 | 145,072 | 0.53 | 0.18 | — | 1.50 | 1 | ||||||||||||||||||||||||
Year ended 12/31/2003 | 27.78 | 129,228 | 0.53 | 0.25 | — | 1.26 | 4 | ||||||||||||||||||||||||
Year ended 12/31/2002 | (22.35 | ) | 100,129 | 0.53 | 0.13 | — | 1.03 | 10 | |||||||||||||||||||||||
Year ended 12/31/2001 | (12.25 | ) | 276,645 | 0.53 | 0.10 | — | 0.87 | 1 | |||||||||||||||||||||||
Class B: | |||||||||||||||||||||||||||||||
Year ended 12/31/2005 | 3.75 | 12,913 | 1.28 | 0.43 | — | 0.60 | 4 | ||||||||||||||||||||||||
Year ended 12/31/2004 | 9.40 | 13,394 | 1.28 | 0.45 | — | 0.75 | 1 | ||||||||||||||||||||||||
Year ended 12/31/2003 | 26.94 | 12,070 | 1.28 | 0.61 | — | 0.51 | 4 | ||||||||||||||||||||||||
Year ended 12/31/2002 | (23.22 | ) | 8,472 | 1.28 | 0.52 | — | 0.33 | 10 | |||||||||||||||||||||||
Year ended 12/31/2001 | (12.87 | ) | 9,705 | 1.28 | 0.47 | — | 0.09 | 1 | |||||||||||||||||||||||
Class C: | |||||||||||||||||||||||||||||||
Year ended 12/31/2005 | 3.76 | 9,370 | 1.28 | 0.48 | — | 0.61 | 4 | ||||||||||||||||||||||||
Year ended 12/31/2004 | 9.41 | 9,842 | 1.28 | 0.49 | — | 0.74 | 1 | ||||||||||||||||||||||||
Year ended 12/31/2003 | 26.77 | 8,796 | 1.28 | 0.67 | — | 0.51 | 4 | ||||||||||||||||||||||||
Year ended 12/31/2002 | (23.21 | ) | 6,175 | 1.28 | 0.57 | — | 0.33 | 10 | |||||||||||||||||||||||
Year ended 12/31/2001 | (12.87 | ) | 7,598 | 1.28 | 0.49 | — | 0.09 | 1 | |||||||||||||||||||||||
Class K: | |||||||||||||||||||||||||||||||
Year ended 12/31/2005 | 4.05 | 13,074 | 0.93 | 0.19 | — | 0.96 | 4 | ||||||||||||||||||||||||
Year ended 12/31/2004 | 9.72 | 10,244 | 0.93 | 0.16 | — | 1.13 | 1 | ||||||||||||||||||||||||
Year ended 12/31/2003 | 27.31 | 7,594 | 0.93 | 0.21 | — | 0.86 | 4 | ||||||||||||||||||||||||
Year ended 12/31/2002 | (23.00 | ) | 5,722 | 0.93 | 0.10 | — | 0.68 | 10 | |||||||||||||||||||||||
Period from 5/15/2001† to 12/31/2001 | (7.76 | )(c) | 7,383 | 0.93 | (d) | 0.15 | (d) | — | 0.47 | (d) | 1 |
131
n The Park Avenue Portfolio
Financial Highlights (Continued)
Selected data for a share of beneficial interest outstanding throughout the periods indicated:
Net Realized & Unrealized | Distributions from | ||||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income/ (Loss) | Gain/(Loss) on Investments and Foreign Currency Related Transactions | Increase/ (Decrease) from Investment Operations | Dividends from Net Investment Income | Net Realized Gain on Investments and Foreign Currency Related Transactions | Redemption Fees | |||||||||||||||||||||||||
The Guardian Baillie Gifford International Growth Fund | |||||||||||||||||||||||||||||||
Class A: | |||||||||||||||||||||||||||||||
Year ended 12/31/2005 | $ | 13.26 | $ | 0.07 | $ | 2.00 | $ | 2.07 | $ | (0.05 | ) | — | $ | 0.00 | (a) | ||||||||||||||||
Year ended 12/31/2004 | 11.43 | 0.03 | 1.83 | 1.86 | (0.03 | ) | — | 0.00 | (a) | ||||||||||||||||||||||
Year ended 12/31/2003 | 8.90 | 0.18 | 2.33 | 2.51 | (0.01 | ) | — | 0.03 | |||||||||||||||||||||||
Year ended 12/31/2002 | 11.09 | 0.06 | (2.25 | ) | (2.19 | ) | — | — | — | ||||||||||||||||||||||
Year ended 12/31/2001 | 14.28 | 0.01 | (3.20 | ) | (3.19 | ) | — | — | — | ||||||||||||||||||||||
Class B: | |||||||||||||||||||||||||||||||
Year ended 12/31/2005 | 12.02 | (0.46 | ) | 2.18 | 1.72 | — | — | 0.00 | (a) | ||||||||||||||||||||||
Year ended 12/31/2004 | 10.45 | (0.29 | ) | 1.86 | 1.57 | — | — | 0.00 | (a) | ||||||||||||||||||||||
Year ended 12/31/2003 | 8.22 | (0.16 | ) | 2.36 | 2.20 | — | — | 0.03 | |||||||||||||||||||||||
Year ended 12/31/2002 | 10.38 | (0.19 | ) | (1.97 | ) | (2.16 | ) | — | — | — | |||||||||||||||||||||
Year ended 12/31/2001 | 13.54 | (0.20 | ) | (2.96 | ) | (3.16 | ) | — | — | — | |||||||||||||||||||||
Class C: | |||||||||||||||||||||||||||||||
Year ended 12/31/2005 | 12.06 | (0.06 | ) | 1.82 | 1.76 | — | — | 0.00 | (a) | ||||||||||||||||||||||
Year ended 12/31/2004 | 10.47 | (0.08 | ) | 1.67 | 1.59 | — | — | 0.00 | (a) | ||||||||||||||||||||||
Year ended 12/31/2003 | 8.24 | (0.08 | ) | 2.28 | 2.20 | — | — | 0.03 | |||||||||||||||||||||||
Year ended 12/31/2002 | 10.40 | (0.09 | ) | (2.07 | ) | (2.16 | ) | — | — | — | |||||||||||||||||||||
Year ended 12/31/2001 | 13.55 | (0.12 | ) | (3.03 | ) | (3.15 | ) | — | — | — | |||||||||||||||||||||
Class K: | |||||||||||||||||||||||||||||||
Year ended 12/31/2005 | 13.06 | 0.03 | 1.98 | 2.01 | (0.04 | ) | — | 0.00 | (a) | ||||||||||||||||||||||
Year ended 12/31/2004 | 11.24 | 0.00 | †† | 1.82 | 1.82 | — | — | 0.00 | (a) | ||||||||||||||||||||||
Year ended 12/31/2003 | 8.76 | 0.00 | †† | 2.45 | 2.45 | — | — | 0.03 | |||||||||||||||||||||||
Year ended 12/31/2002 | 10.94 | 0.00 | †† | (2.18 | ) | (2.18 | ) | — | — | — | |||||||||||||||||||||
Period from 5/15/2001† to 12/31/2001 | 12.96 | (0.04 | ) | (1.98 | ) | (2.02 | ) | — | — | — | |||||||||||||||||||||
The Guardian Baillie Gifford Emerging Markets Fund | |||||||||||||||||||||||||||||||
Class A: | |||||||||||||||||||||||||||||||
Year ended 12/31/2005 | 14.67 | 0.10 | 5.61 | 5.71 | (0.05 | ) | $ | (1.05 | ) | 0.00 | (a) | ||||||||||||||||||||
Year ended 12/31/2004 | 12.39 | 0.05 | 2.85 | 2.90 | (0.03 | ) | (0.59 | ) | 0.00 | (a) | |||||||||||||||||||||
Year ended 12/31/2003 | 8.07 | 0.05 | 4.27 | 4.32 | — | — | — | ||||||||||||||||||||||||
Year ended 12/31/2002 | 8.45 | 0.01 | (0.39 | ) | (0.38 | ) | — | — | — | ||||||||||||||||||||||
Year ended 12/31/2001 | 8.31 | 0.01 | 0.13 | 0.14 | — | — | — | ||||||||||||||||||||||||
Class B: | |||||||||||||||||||||||||||||||
Year ended 12/31/2005 | 13.39 | (0.04 | ) | 5.07 | 5.03 | — | (1.05 | ) | 0.00 | (a) | |||||||||||||||||||||
Year ended 12/31/2004 | 11.44 | (0.05 | ) | 2.59 | 2.54 | — | (0.59 | ) | 0.00 | (a) | |||||||||||||||||||||
Year ended 12/31/2003 | 7.55 | (0.04 | ) | 3.93 | 3.89 | — | — | — | |||||||||||||||||||||||
Year ended 12/31/2002 | 7.98 | (0.10 | ) | (0.33 | ) | (0.43 | ) | — | — | — | |||||||||||||||||||||
Year ended 12/31/2001 | 7.97 | (0.10 | ) | 0.11 | 0.01 | — | — | — | |||||||||||||||||||||||
Class C: | |||||||||||||||||||||||||||||||
Year ended 12/31/2005 | 13.43 | 0.00 | †† | 5.06 | 5.06 | — | (1.05 | ) | 0.00 | (a) | |||||||||||||||||||||
Year ended 12/31/2004 | 11.47 | (0.06 | ) | 2.61 | 2.55 | — | (0.59 | ) | 0.00 | (a) | |||||||||||||||||||||
Year ended 12/31/2003 | 7.56 | (0.04 | ) | 3.95 | 3.91 | — | — | — | |||||||||||||||||||||||
Year ended 12/31/2002 | 8.00 | (0.09 | ) | (0.35 | ) | (0.44 | ) | — | — | — | |||||||||||||||||||||
Year ended 12/31/2001 | 7.98 | (0.09 | ) | 0.11 | 0.02 | — | — | — | |||||||||||||||||||||||
Class K: | |||||||||||||||||||||||||||||||
Year ended 12/31/2005 | 14.39 | 0.07 | 5.47 | 5.54 | — | (1.05 | ) | 0.00 | (a) | ||||||||||||||||||||||
Year ended 12/31/2004 | 12.19 | 0.01 | 2.79 | 2.80 | (0.01 | ) | (0.59 | ) | 0.00 | (a) | |||||||||||||||||||||
Year ended 12/31/2003 | 7.97 | 0.03 | 4.19 | 4.22 | — | — | — | ||||||||||||||||||||||||
Year ended 12/31/2002 | 8.36 | (0.03 | ) | (0.36 | ) | (0.39 | ) | — | — | — | |||||||||||||||||||||
Period from 5/15/2001† to 12/31/2001 | 8.35 | (0.06 | ) | 0.07 | 0.01 | — | — | — |
† Commencement of operations.
†† Rounds to less than $0.01.
* Excludes the effect of sales load.
(a) Rounds to less than $0.01.
(b) Not annualized.
(c) Annualized.
132
Ratios/Supplemental Data | |||||||||||||||||||||||||||
Net Asset Value, End of Period | Total Return* | Net Assets, End of Period (000's Omitted) | Expenses to Average Net Assets | Net Investment Income/(Loss) to Average Net Assets | Portfolio Turnover Rate | ||||||||||||||||||||||
The Guardian Baillie Gifford International Growth Fund | |||||||||||||||||||||||||||
Class A: | |||||||||||||||||||||||||||
Year ended 12/31/2005 | $ | 15.28 | 15.63 | % | $ | 39,786 | 1.86 | % | 0.48 | % | 28 | % | |||||||||||||||
Year ended 12/31/2004 | 13.26 | 16.34 | 35,106 | 1.94 | 0.13 | 24 | |||||||||||||||||||||
Year ended 12/31/2003 | 11.43 | 28.57 | 32,126 | 1.93 | 0.50 | 44 | |||||||||||||||||||||
Year ended 12/31/2002 | 8.90 | (19.75 | ) | 47,948 | 1.62 | 0.29 | 45 | ||||||||||||||||||||
Year ended 12/31/2001 | 11.09 | (22.34 | ) | 80,856 | 1.53 | 0.06 | 63 | ||||||||||||||||||||
Class B: | |||||||||||||||||||||||||||
Year ended 12/31/2005 | 13.74 | 14.31 | 5,518 | 3.05 | (0.64 | ) | 28 | ||||||||||||||||||||
Year ended 12/31/2004 | 12.02 | 15.02 | 6,307 | 3.08 | (0.98 | ) | 24 | ||||||||||||||||||||
Year ended 12/31/2003 | 10.45 | 27.13 | 6,535 | 3.19 | (1.00 | ) | 44 | ||||||||||||||||||||
Year ended 12/31/2002 | 8.22 | (20.81 | ) | 5,598 | 2.87 | (0.98 | ) | 45 | |||||||||||||||||||
Year ended 12/31/2001 | 10.38 | (23.34 | ) | 8,228 | 2.62 | (1.05 | ) | 63 | |||||||||||||||||||
Class C: | |||||||||||||||||||||||||||
Year ended 12/31/2005 | 13.82 | 14.59 | 7,660 | 2.81 | (0.48 | ) | 28 | ||||||||||||||||||||
Year ended 12/31/2004 | 12.06 | 15.19 | 6,687 | 2.95 | (0.89 | ) | 24 | ||||||||||||||||||||
Year ended 12/31/2003 | 10.47 | 27.06 | 5,546 | 3.10 | (0.93 | ) | 44 | ||||||||||||||||||||
Year ended 12/31/2002 | 8.24 | (20.77 | ) | 4,381 | 2.85 | (0.99 | ) | 45 | |||||||||||||||||||
Year ended 12/31/2001 | 10.40 | (23.25 | ) | 5,530 | 2.60 | (1.04 | ) | 63 | |||||||||||||||||||
Class K: | |||||||||||||||||||||||||||
Year ended 12/31/2005 | 15.03 | 15.42 | 10,804 | 2.06 | 0.25 | 28 | |||||||||||||||||||||
Year ended 12/31/2004 | 13.06 | 16.19 | 8,792 | 2.04 | 0.00 | (a) | 24 | ||||||||||||||||||||
Year ended 12/31/2003 | 11.24 | 28.31 | 6,979 | 2.13 | 0.04 | 44 | |||||||||||||||||||||
Year ended 12/31/2002 | 8.76 | (19.93 | ) | 5,407 | 1.86 | 0.01 | 45 | ||||||||||||||||||||
Period from 5/15/2001† to 12/31/2001 | 10.94 | (15.59 | )(b) | 6,753 | 1.84 | (c) | (0.60 | )(c) | 63 | ||||||||||||||||||
The Guardian Baillie Gifford Emerging Markets Fund | |||||||||||||||||||||||||||
Class A: | |||||||||||||||||||||||||||
Year ended 12/31/2005 | 19.28 | 39.83 | 121,194 | 1.78 | 0.78 | 38 | |||||||||||||||||||||
Year ended 12/31/2004 | 14.67 | 23.53 | 61,975 | 1.88 | 0.42 | 71 | |||||||||||||||||||||
Year ended 12/31/2003 | 12.39 | 53.53 | 43,561 | 2.10 | 0.57 | 74 | |||||||||||||||||||||
Year ended 12/31/2002 | 8.07 | (4.50 | ) | 27,356 | 2.10 | (0.04 | ) | 81 | |||||||||||||||||||
Year ended 12/31/2001 | 8.45 | 1.68 | 19,777 | 2.39 | (0.19 | ) | 101 | ||||||||||||||||||||
Class B: | |||||||||||||||||||||||||||
Year ended 12/31/2005 | 17.37 | 38.56 | 13,495 | 2.74 | (0.05 | ) | 38 | ||||||||||||||||||||
Year ended 12/31/2004 | 13.39 | 22.28 | 12,138 | 2.90 | (0.58 | ) | 71 | ||||||||||||||||||||
Year ended 12/31/2003 | 11.44 | 51.52 | 9,389 | 3.20 | (0.54 | ) | 74 | ||||||||||||||||||||
Year ended 12/31/2002 | 7.55 | (5.39 | ) | 5,965 | 3.21 | (1.16 | ) | 81 | |||||||||||||||||||
Year ended 12/31/2001 | 7.98 | 0.13 | 6,023 | 3.51 | (1.28 | ) | 101 | ||||||||||||||||||||
Class C: | |||||||||||||||||||||||||||
Year ended 12/31/2005 | 17.44 | 38.68 | 17,895 | 2.68 | (0.06 | ) | 38 | ||||||||||||||||||||
Year ended 12/31/2004 | 13.43 | 22.30 | 12,291 | 2.85 | (0.55 | ) | 71 | ||||||||||||||||||||
Year ended 12/31/2003 | 11.47 | 51.72 | 9,540 | 3.17 | (0.51 | ) | 74 | ||||||||||||||||||||
Year ended 12/31/2002 | 7.56 | (5.50 | ) | 6,306 | 3.12 | (1.08 | ) | 81 | |||||||||||||||||||
Year ended 12/31/2001 | 8.00 | 0.25 | 6,486 | 3.34 | (1.12 | ) | 101 | ||||||||||||||||||||
Class K: | |||||||||||||||||||||||||||
Year ended 12/31/2005 | 18.88 | 39.44 | 22,522 | 2.12 | 0.49 | 38 | |||||||||||||||||||||
Year ended 12/31/2004 | 14.39 | 23.16 | 15,202 | 2.19 | 0.12 | 71 | |||||||||||||||||||||
Year ended 12/31/2003 | 12.19 | 52.95 | 11,803 | 2.38 | 0.29 | 74 | |||||||||||||||||||||
Year ended 12/31/2002 | 7.97 | (4.67 | ) | 7,685 | 2.36 | (0.32 | ) | 81 | |||||||||||||||||||
Period from 5/15/2001† to 12/31/2001 | 8.36 | 0.12 | (b) | 8,020 | 2.63 | (c) | (1.23 | )(c) | 101 |
133
n The Park Avenue Portfolio
Financial Highlights (Continued)
Selected data for a share of beneficial interest outstanding throughout the periods indicated:
Net Realized & Unrealized | Distributions from | ||||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income | Gain/(Loss) on Investments and Foreign Currency Related Transactions | Increase/ (Decrease) from Investment Operations | Dividends from Net Investment Income | Net Realized Gain on Investments and Foreign Currency Related Transactions | Net Asset Value, End of Period | |||||||||||||||||||||||||
The Guardian Investment Quality Bond Fund | |||||||||||||||||||||||||||||||
Class A: | |||||||||||||||||||||||||||||||
Year ended 12/31/2005 | $ | 10.02 | $ | 0.38 | $ | (0.18 | ) | $ | 0.20 | $ | (0.38 | ) | $ | (0.08 | ) | $ | 9.76 | ||||||||||||||
Year ended 12/31/2004 | 10.09 | 0.38 | 0.03 | 0.41 | (0.38 | ) | (0.10 | ) | 10.02 | ||||||||||||||||||||||
Year ended 12/31/2003 | 10.28 | 0.35 | 0.11 | 0.46 | (0.35 | ) | (0.30 | ) | 10.09 | ||||||||||||||||||||||
Year ended 12/31/2002 | 9.86 | 0.44 | 0.45 | 0.89 | (0.44 | ) | (0.03 | ) | 10.28 | ||||||||||||||||||||||
Year ended 12/31/2001 | 9.61 | 0.50 | 0.30 | 0.80 | (0.50 | ) | (0.05 | ) | 9.86 | ||||||||||||||||||||||
Class B: | |||||||||||||||||||||||||||||||
Year ended 12/31/2005 | 10.01 | 0.31 | (0.17 | ) | 0.14 | (0.31 | ) | (0.08 | ) | 9.76 | |||||||||||||||||||||
Year ended 12/31/2004 | 10.09 | 0.30 | 0.02 | 0.32 | (0.30 | ) | (0.10 | ) | 10.01 | ||||||||||||||||||||||
Year ended 12/31/2003 | 10.28 | 0.27 | 0.11 | 0.38 | (0.27 | ) | (0.30 | ) | 10.09 | ||||||||||||||||||||||
Year ended 12/31/2002 | 9.86 | 0.37 | 0.45 | 0.82 | (0.37 | ) | (0.03 | ) | 10.28 | ||||||||||||||||||||||
Year ended 12/31/2001 | 9.60 | 0.43 | 0.31 | 0.74 | (0.43 | ) | (0.05 | ) | 9.86 | ||||||||||||||||||||||
Class C: | |||||||||||||||||||||||||||||||
Year ended 12/31/2005 | 10.01 | 0.31 | (0.17 | ) | 0.14 | (0.31 | ) | (0.08 | ) | 9.76 | |||||||||||||||||||||
Year ended 12/31/2004 | 10.09 | 0.30 | 0.02 | 0.32 | (0.30 | ) | (0.10 | ) | 10.01 | ||||||||||||||||||||||
Year ended 12/31/2003 | 10.28 | 0.27 | 0.11 | 0.38 | (0.27 | ) | (0.30 | ) | 10.09 | ||||||||||||||||||||||
Year ended 12/31/2002 | 9.86 | 0.37 | 0.45 | 0.82 | (0.37 | ) | (0.03 | ) | 10.28 | ||||||||||||||||||||||
Year ended 12/31/2001 | 9.60 | 0.43 | 0.31 | 0.74 | (0.43 | ) | (0.05 | ) | 9.86 | ||||||||||||||||||||||
Class K: | |||||||||||||||||||||||||||||||
Year ended 12/31/2005 | 10.03 | 0.34 | (0.18 | ) | 0.16 | (0.34 | ) | (0.08 | ) | 9.77 | |||||||||||||||||||||
Year ended 12/31/2004 | 10.10 | 0.34 | 0.03 | 0.37 | (0.34 | ) | (0.10 | ) | 10.03 | ||||||||||||||||||||||
Year ended 12/31/2003 | 10.29 | 0.31 | 0.11 | 0.42 | (0.31 | ) | (0.30 | ) | 10.10 | ||||||||||||||||||||||
Year ended 12/31/2002 | 9.87 | 0.40 | 0.45 | 0.85 | (0.40 | ) | (0.03 | ) | 10.29 | ||||||||||||||||||||||
Period from 5/15/2001† to 12/31/2001 | 9.68 | 0.28 | 0.24 | 0.52 | (0.28 | ) | (0.05 | ) | 9.87 | ||||||||||||||||||||||
The Guardian Low Duration Bond Fund | |||||||||||||||||||||||||||||||
Class A: | |||||||||||||||||||||||||||||||
Year ended 12/31/2005 | 9.93 | 0.29 | (0.16 | ) | 0.13 | (0.29 | ) | — | 9.77 | ||||||||||||||||||||||
Year ended 12/31/2004 | 10.02 | 0.23 | (0.09 | ) | 0.14 | (0.23 | ) | — | 9.93 | ||||||||||||||||||||||
Period from 7/30/2003† to 12/31/2003 | 10.00 | 0.08 | 0.02 | 0.10 | (0.08 | ) | — | 10.02 | |||||||||||||||||||||||
Class B: | |||||||||||||||||||||||||||||||
Year ended 12/31/2005 | 9.93 | 0.22 | (0.16 | ) | 0.06 | (0.22 | ) | — | 9.77 | ||||||||||||||||||||||
Year ended 12/31/2004 | 10.02 | 0.15 | (0.09 | ) | 0.06 | (0.15 | ) | — | 9.93 | ||||||||||||||||||||||
Period from 7/30/2003† to 12/31/2003 | 10.00 | 0.05 | 0.02 | 0.07 | (0.05 | ) | — | 10.02 | |||||||||||||||||||||||
Class C: | |||||||||||||||||||||||||||||||
Year ended 12/31/2005 | 9.93 | 0.22 | (0.16 | ) | 0.06 | (0.22 | ) | — | 9.77 | ||||||||||||||||||||||
Year ended 12/31/2004 | 10.02 | 0.15 | (0.09 | ) | 0.06 | (0.15 | ) | — | 9.93 | ||||||||||||||||||||||
Period from 7/30/2003† to 12/31/2003 | 10.00 | 0.05 | 0.02 | 0.07 | (0.05 | ) | — | 10.02 | |||||||||||||||||||||||
Class K: | |||||||||||||||||||||||||||||||
Year ended 12/31/2005 | 9.93 | 0.25 | (0.16 | ) | 0.09 | (0.25 | ) | — | 9.77 | ||||||||||||||||||||||
Year ended 12/31/2004 | 10.02 | 0.19 | (0.09 | ) | 0.10 | (0.19 | ) | — | 9.93 | ||||||||||||||||||||||
Period from 7/30/2003† to 12/31/2003 | 10.00 | 0.06 | 0.02 | 0.08 | (0.06 | ) | — | 10.02 |
† Commencement of operations.
* Excludes the effect of sales load.
(a) After expenses subsidized by GIS.
(b) Expense ratio includes interest expense associated with reverse repurchase agreements.
(c) Not annualized.
(d) Annualized.
134
Ratios/Supplemental Data | |||||||||||||||||||||||||||||||
Total Return* | Net Assets, End of Period (000's Omitted) | Net Expenses to Average Net Assets(a)(b) | Expenses (excluding interest expense) to Average Net Assets(a) | Expenses Subsidized by GIS | Net Investment Income to Average Net Assets | Portfolio Turnover Rate | |||||||||||||||||||||||||
The Guardian Investment Quality Bond Fund | |||||||||||||||||||||||||||||||
Class A: | |||||||||||||||||||||||||||||||
Year ended 12/31/2005 | 2.07 | % | $ | 99,230 | 0.85 | % | 0.85 | % | 0.15 | % | 3.83 | % | 189 | % | |||||||||||||||||
Year ended 12/31/2004 | 4.10 | 105,131 | 0.85 | 0.85 | 0.13 | 3.74 | 233 | ||||||||||||||||||||||||
Year ended 12/31/2003 | 4.53 | 143,536 | 0.85 | 0.85 | 0.11 | 3.40 | 257 | ||||||||||||||||||||||||
Year ended 12/31/2002 | 9.25 | 170,658 | 0.85 | 0.85 | 0.08 | 4.37 | 275 | ||||||||||||||||||||||||
Year ended 12/31/2001 | 8.55 | 144,900 | 0.86 | 0.85 | 0.09 | 5.11 | 414 | ||||||||||||||||||||||||
Class B: | |||||||||||||||||||||||||||||||
Year ended 12/31/2005 | 1.41 | 13,925 | 1.60 | 1.60 | 0.33 | 3.08 | 189 | ||||||||||||||||||||||||
Year ended 12/31/2004 | 3.22 | 16,685 | 1.60 | 1.60 | 0.28 | 2.99 | 233 | ||||||||||||||||||||||||
Year ended 12/31/2003 | 3.75 | 18,374 | 1.60 | 1.60 | 0.27 | 2.65 | 257 | ||||||||||||||||||||||||
Year ended 12/31/2002 | 8.43 | 19,308 | 1.60 | 1.60 | 0.27 | 3.58 | 275 | ||||||||||||||||||||||||
Year ended 12/31/2001 | 7.86 | 13,036 | 1.61 | 1.60 | 0.31 | 4.31 | 414 | ||||||||||||||||||||||||
Class C: | |||||||||||||||||||||||||||||||
Year ended 12/31/2005 | 1.41 | 10,008 | 1.60 | 1.60 | 0.38 | 3.08 | 189 | ||||||||||||||||||||||||
Year ended 12/31/2004 | 3.22 | 11,422 | 1.60 | 1.60 | 0.33 | 2.99 | 233 | ||||||||||||||||||||||||
Year ended 12/31/2003 | 3.75 | 11,206 | 1.60 | 1.60 | 0.35 | 2.66 | 257 | ||||||||||||||||||||||||
Year ended 12/31/2002 | 8.44 | 10,753 | 1.60 | 1.60 | 0.36 | 3.64 | 275 | ||||||||||||||||||||||||
Year ended 12/31/2001 | 7.85 | 9,090 | 1.61 | 1.60 | 0.36 | 4.36 | 414 | ||||||||||||||||||||||||
Class K: | |||||||||||||||||||||||||||||||
Year ended 12/31/2005 | 1.67 | 9,251 | 1.25 | 1.25 | 0.12 | 3.43 | 189 | ||||||||||||||||||||||||
Year ended 12/31/2004 | 3.69 | 11,004 | 1.25 | 1.25 | 0.06 | 3.34 | 233 | ||||||||||||||||||||||||
Year ended 12/31/2003 | 4.11 | 9,820 | 1.25 | 1.25 | 0.05 | 3.00 | 257 | ||||||||||||||||||||||||
Year ended 12/31/2002 | 8.81 | 9,213 | 1.25 | 1.25 | 0.03 | 4.00 | 275 | ||||||||||||||||||||||||
Period from 5/15/2001† to 12/31/2001 | 5.43 | (c) | 8,436 | 1.26 | (d) | 1.25 | (d) | 0.08 | (d) | 4.48 | (d) | 414 | |||||||||||||||||||
The Guardian Low Duration Bond Fund | |||||||||||||||||||||||||||||||
Class A: | |||||||||||||||||||||||||||||||
Year ended 12/31/2005 | 1.34 | 9,316 | 0.80 | — | 0.73 | 2.95 | 122 | ||||||||||||||||||||||||
Year ended 12/31/2004 | 1.36 | 9,487 | 0.80 | — | 0.69 | 2.25 | 68 | ||||||||||||||||||||||||
Period from 7/30/2003† to 12/31/2003 | 0.99 | (c) | 8,457 | 0.80 | (d) | — | 1.20 | (d) | 1.87 | (d) | 97 | ||||||||||||||||||||
Class B: | |||||||||||||||||||||||||||||||
Year ended 12/31/2005 | 0.58 | 8,317 | 1.55 | — | 0.75 | 2.20 | 122 | ||||||||||||||||||||||||
Year ended 12/31/2004 | 0.61 | 8,695 | 1.55 | — | 0.70 | 1.51 | 68 | ||||||||||||||||||||||||
Period from 7/30/2003† to 12/31/2003 | 0.67 | (c) | 7,743 | 1.55 | (d) | — | 1.20 | (d) | 1.11 | (d) | 97 | ||||||||||||||||||||
Class C: | |||||||||||||||||||||||||||||||
Year ended 12/31/2005 | 0.58 | 7,730 | 1.55 | — | 0.77 | 2.20 | 122 | ||||||||||||||||||||||||
Year ended 12/31/2004 | 0.61 | 7,817 | 1.55 | — | 0.73 | 1.51 | 68 | ||||||||||||||||||||||||
Period from 7/30/2003† to 12/31/2003 | 0.67 | (c) | 7,611 | 1.55 | (d) | — | 1.21 | (d) | 1.11 | (d) | 97 | ||||||||||||||||||||
Class K: | |||||||||||||||||||||||||||||||
Year ended 12/31/2005 | 0.93 | 8,428 | 1.20 | — | 0.39 | 2.56 | 122 | ||||||||||||||||||||||||
Year ended 12/31/2004 | 0.96 | 7,718 | 1.20 | — | 0.39 | 1.86 | 68 | ||||||||||||||||||||||||
Period from 7/30/2003† to 12/31/2003 | 0.82 | (c) | 7,565 | 1.20 | (d) | — | 0.97 | (d) | 1.46 | (d) | 97 |
135
n The Park Avenue Portfolio
Financial Highlights (Continued)
Selected data for a share of beneficial interest outstanding throughout the periods indicated:
Net Realized & Unrealized | Distributions from | ||||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income | Gain/(Loss) on Investments and Foreign Currency Related Transactions | Increase/ (Decrease) from Investment Operations | Dividends from Net Investment Income | Net Realized Gain on Investments and Foreign Currency Related Transactions | Redemption Fees | |||||||||||||||||||||||||
The Guardian High Yield Bond Fund | |||||||||||||||||||||||||||||||
Class A: | |||||||||||||||||||||||||||||||
Year ended 12/31/2005 | $ | 7.58 | $ | 0.47 | $ | (0.23 | ) | $ | 0.24 | $ | (0.47 | ) | $ | — | $ | 0.00 | (b) | ||||||||||||||
Year ended 12/31/2004 | 7.45 | 0.52 | 0.13 | 0.65 | (0.52 | ) | — | 0.00 | (b) | ||||||||||||||||||||||
Year ended 12/31/2003 | 6.69 | 0.54 | 0.76 | 1.30 | (0.54 | ) | — | — | |||||||||||||||||||||||
Year ended 12/31/2002 | 7.19 | 0.55 | (0.50 | ) | 0.05 | (0.55 | ) | — | — | ||||||||||||||||||||||
Year ended 12/31/2001 | 7.66 | 0.69 | (0.47 | ) | 0.22 | (0.69 | ) | — | — | ||||||||||||||||||||||
Class B: | |||||||||||||||||||||||||||||||
Year ended 12/31/2005 | 7.57 | 0.42 | (0.22 | ) | 0.20 | (0.42 | ) | — | 0.00 | (b) | |||||||||||||||||||||
Year ended 12/31/2004 | 7.45 | 0.47 | 0.12 | 0.59 | (0.47 | ) | — | 0.00 | (b) | ||||||||||||||||||||||
Year ended 12/31/2003 | 6.69 | 0.48 | 0.76 | 1.24 | (0.48 | ) | — | — | |||||||||||||||||||||||
Year ended 12/31/2002 | 7.18 | 0.50 | (0.49 | ) | 0.01 | (0.50 | ) | — | — | ||||||||||||||||||||||
Year ended 12/31/2001 | 7.66 | 0.64 | (0.48 | ) | 0.16 | (0.64 | ) | — | — | ||||||||||||||||||||||
Class C: | |||||||||||||||||||||||||||||||
Year ended 12/31/2005 | 7.57 | 0.42 | (0.23 | ) | 0.19 | (0.42 | ) | — | 0.00 | (b) | |||||||||||||||||||||
Year ended 12/31/2004 | 7.45 | 0.47 | 0.12 | 0.59 | (0.47 | ) | — | 0.00 | (b) | ||||||||||||||||||||||
Year ended 12/31/2003 | 6.69 | 0.48 | 0.76 | 1.24 | (0.48 | ) | — | — | |||||||||||||||||||||||
Year ended 12/31/2002 | 7.18 | 0.50 | (0.49 | ) | 0.01 | (0.50 | ) | — | — | ||||||||||||||||||||||
Year ended 12/31/2001 | 7.65 | 0.64 | (0.47 | ) | 0.17 | (0.64 | ) | — | — | ||||||||||||||||||||||
Class K: | |||||||||||||||||||||||||||||||
Year ended 12/31/2005 | 7.58 | 0.44 | (0.23 | ) | 0.21 | (0.44 | ) | — | 0.00 | (b) | |||||||||||||||||||||
Year ended 12/31/2004 | 7.45 | 0.49 | 0.13 | 0.62 | (0.49 | ) | — | 0.00 | (b) | ||||||||||||||||||||||
Year ended 12/31/2003 | 6.69 | 0.51 | 0.76 | 1.27 | (0.51 | ) | — | — | |||||||||||||||||||||||
Year ended 12/31/2002 | 7.19 | 0.53 | (0.50 | ) | 0.03 | (0.53 | ) | — | — | ||||||||||||||||||||||
Period from 5/15/2001† to 12/31/2001 | 7.68 | 0.39 | (0.49 | ) | (0.10 | ) | (0.39 | ) | — | — | |||||||||||||||||||||
The Guardian Tax-Exempt Fund | |||||||||||||||||||||||||||||||
Class A: | |||||||||||||||||||||||||||||||
Year ended 12/31/2005 | 10.19 | 0.36 | 0.05 | 0.41 | (0.36 | ) | (0.26 | ) | — | ||||||||||||||||||||||
Year ended 12/31/2004 | 10.31 | 0.36 | 0.08 | 0.44 | (0.36 | ) | (0.20 | ) | — | ||||||||||||||||||||||
Year ended 12/31/2003 | 10.51 | 0.37 | 0.18 | 0.55 | (0.37 | ) | (0.38 | ) | — | ||||||||||||||||||||||
Year ended 12/31/2002 | 10.09 | 0.40 | 0.61 | 1.01 | (0.40 | ) | (0.19 | ) | — | ||||||||||||||||||||||
Year ended 12/31/2001 | 10.10 | 0.41 | 0.06 | 0.47 | (0.41 | ) | (0.07 | ) | — | ||||||||||||||||||||||
Class C: | |||||||||||||||||||||||||||||||
Year ended 12/31/2005 | 10.19 | 0.28 | 0.05 | 0.33 | (0.28 | ) | (0.26 | ) | — | ||||||||||||||||||||||
Year ended 12/31/2004 | 10.31 | 0.28 | 0.08 | 0.36 | (0.28 | ) | (0.20 | ) | — | ||||||||||||||||||||||
Year ended 12/31/2003 | 10.51 | 0.29 | 0.18 | 0.47 | (0.29 | ) | (0.38 | ) | — | ||||||||||||||||||||||
Year ended 12/31/2002 | 10.09 | 0.32 | 0.61 | 0.93 | (0.32 | ) | (0.19 | ) | — | ||||||||||||||||||||||
Year ended 12/31/2001 | 10.10 | 0.34 | 0.06 | 0.40 | (0.34 | ) | (0.07 | ) | — |
† Commencement of operations.
* Excludes the effect of sales load.
(a) After expenses subsidized by GIS.
(b) Rounds to less than $0.01.
(c) Not annualized.
(d) Annualized.
(e) Before offset of custody credits. Including the custody credits in Class A, the expense ratio is 0.85% for each year ended 12/31/2001, 2002, 2003, 2004 and 2005; in Class C the expense ratio is 1.60% for each year ended 12/31/2001, 2002, 2003, 2004 and 2005.
136
Ratios/Supplemental Data | |||||||||||||||||||||||||||||||
Net Asset Value, End of Period | Total Return* | Net Assets, End of Period (000's Omitted) | Net Expenses to Average Net Assets(a) | Expenses Subsidized by GIS | Net Investment Income to Average Net Assets | Portfolio Turnover Rate | |||||||||||||||||||||||||
The Guardian High Yield Bond Fund | |||||||||||||||||||||||||||||||
Class A: | |||||||||||||||||||||||||||||||
Year ended 12/31/2005 | $ | 7.35 | 3.34 | % | $ | 48,246 | 0.85 | % | 0.34 | % | 6.38 | % | 89 | % | |||||||||||||||||
Year ended 12/31/2004 | 7.58 | 9.15 | 57,250 | 0.85 | 0.34 | 7.00 | 95 | ||||||||||||||||||||||||
Year ended 12/31/2003 | 7.45 | 20.11 | 42,589 | 0.85 | 0.42 | 7.59 | 153 | ||||||||||||||||||||||||
Year ended 12/31/2002 | 6.69 | 0.96 | 33,894 | 0.85 | 0.45 | 8.17 | 69 | ||||||||||||||||||||||||
Year ended 12/31/2001 | 7.19 | 2.87 | 33,797 | 0.85 | 0.47 | 9.21 | 141 | ||||||||||||||||||||||||
Class B: | |||||||||||||||||||||||||||||||
Year ended 12/31/2005 | 7.35 | 2.70 | 9,874 | 1.60 | 0.59 | 5.63 | 89 | ||||||||||||||||||||||||
Year ended 12/31/2004 | 7.57 | 8.20 | 10,013 | 1.60 | 0.62 | 6.30 | 95 | ||||||||||||||||||||||||
Year ended 12/31/2003 | 7.45 | 19.22 | 10,018 | 1.60 | 0.72 | 6.85 | 153 | ||||||||||||||||||||||||
Year ended 12/31/2002 | 6.69 | 0.35 | 8,336 | 1.60 | 0.77 | 7.42 | 69 | ||||||||||||||||||||||||
Year ended 12/31/2001 | 7.18 | 1.96 | 8,182 | 1.60 | 0.78 | 8.42 | 141 | ||||||||||||||||||||||||
Class C: | |||||||||||||||||||||||||||||||
Year ended 12/31/2005 | 7.34 | 2.56 | 10,463 | 1.60 | 0.55 | 5.63 | 89 | ||||||||||||||||||||||||
Year ended 12/31/2004 | 7.57 | 8.20 | 10,110 | 1.60 | 0.59 | 6.29 | 95 | ||||||||||||||||||||||||
Year ended 12/31/2003 | 7.45 | 19.22 | 9,316 | 1.60 | 0.71 | 6.85 | 153 | ||||||||||||||||||||||||
Year ended 12/31/2002 | 6.69 | 0.35 | 7,710 | 1.60 | 0.77 | 7.42 | 69 | ||||||||||||||||||||||||
Year ended 12/31/2001 | 7.18 | 2.09 | 7,657 | 1.60 | 0.71 | 8.43 | 141 | ||||||||||||||||||||||||
Class K: | |||||||||||||||||||||||||||||||
Year ended 12/31/2005 | 7.35 | 2.93 | 11,772 | 1.25 | 0.27 | 5.98 | 89 | ||||||||||||||||||||||||
Year ended 12/31/2004 | 7.58 | 8.72 | 10,734 | 1.25 | 0.28 | 6.64 | 95 | ||||||||||||||||||||||||
Year ended 12/31/2003 | 7.45 | 19.63 | 9,581 | 1.25 | 0.33 | 7.20 | 153 | ||||||||||||||||||||||||
Year ended 12/31/2002 | 6.69 | 0.55 | 7,944 | 1.25 | 0.35 | 7.77 | 69 | ||||||||||||||||||||||||
Period from 5/15/2001† to 12/31/2001 | 7.19 | (1.31 | )(c) | 7,893 | 1.25 | (d) | 0.41 | (d) | 8.36 | (d) | 141 | ||||||||||||||||||||
The Guardian Tax-Exempt Fund | |||||||||||||||||||||||||||||||
Class A: | |||||||||||||||||||||||||||||||
Year ended 12/31/2005 | 9.98 | 4.02 | 86,515 | 0.86 | (e) | 0.10 | 3.48 | 160 | |||||||||||||||||||||||
Year ended 12/31/2004 | 10.19 | 4.38 | 82,118 | 0.87 | (e) | 0.09 | 3.49 | 161 | |||||||||||||||||||||||
Year ended 12/31/2003 | 10.31 | 5.34 | 80,025 | 0.89 | (e) | 0.09 | 3.52 | 68 | |||||||||||||||||||||||
Year ended 12/31/2002 | 10.51 | 10.20 | 113,852 | 0.87 | (e) | 0.06 | 3.85 | 99 | |||||||||||||||||||||||
Year ended 12/31/2001 | 10.09 | 4.78 | 107,676 | 0.91 | (e) | 0.09 | 4.03 | 181 | |||||||||||||||||||||||
Class C: | |||||||||||||||||||||||||||||||
Year ended 12/31/2005 | 9.98 | 3.24 | 11,060 | 1.61 | (e) | 0.33 | 2.73 | 160 | |||||||||||||||||||||||
Year ended 12/31/2004 | 10.19 | 3.60 | 10,704 | 1.62 | (e) | 0.33 | 2.74 | 161 | |||||||||||||||||||||||
Year ended 12/31/2003 | 10.31 | 4.54 | 10,553 | 1.64 | (e) | 0.36 | 2.77 | 68 | |||||||||||||||||||||||
Year ended 12/31/2002 | 10.51 | 9.37 | 9,741 | 1.62 | (e) | 0.37 | 3.11 | 99 | |||||||||||||||||||||||
Year ended 12/31/2001 | 10.09 | 3.99 | 8,783 | 1.66 | (e) | 0.37 | 3.28 | 181 |
137
n The Park Avenue Portfolio
Financial Highlights (Continued)
Selected data for a share of beneficial interest outstanding throughout the periods indicated:
Net Asset Value, Beginning of Period | Net Investment Income | Dividends from Net Investment Income | Net Net Asset Value, End of Period | Total Return* | |||||||||||||||||||
The Guardian Cash Management Fund | |||||||||||||||||||||||
Class A: | |||||||||||||||||||||||
Year ended 12/31/2005 | $ | 1.000 | $ | 0.024 | $ | (0.024 | ) | $ | 1.000 | 2.41 | % | ||||||||||||
Year ended 12/31/2004 | 1.000 | 0.006 | (0.006 | ) | 1.000 | 0.57 | |||||||||||||||||
Year ended 12/31/2003 | 1.000 | 0.004 | (0.004 | ) | 1.000 | 0.37 | |||||||||||||||||
Year ended 12/31/2002 | 1.000 | 0.009 | (0.009 | ) | 1.000 | 0.95 | |||||||||||||||||
Year ended 12/31/2001 | 1.000 | 0.032 | (0.032 | ) | 1.000 | 3.27 | |||||||||||||||||
Class B: | |||||||||||||||||||||||
Year ended 12/31/2005 | 1.000 | 0.017 | (0.017 | ) | 1.000 | 1.76 | |||||||||||||||||
Year ended 12/31/2004 | 1.000 | 0.006 | (0.006 | ) | 1.000 | 0.57 | |||||||||||||||||
Year ended 12/31/2003 | 1.000 | 0.002 | (0.002 | ) | 1.000 | 0.21 | |||||||||||||||||
Year ended 12/31/2002 | 1.000 | 0.002 | (0.002 | ) | 1.000 | 0.23 | |||||||||||||||||
Year ended 12/31/2001 | 1.000 | 0.025 | (0.025 | ) | 1.000 | 2.48 | |||||||||||||||||
Class C: | |||||||||||||||||||||||
Year ended 12/31/2005 | 1.000 | 0.017 | (0.017 | ) | 1.000 | 1.76 | |||||||||||||||||
Year ended 12/31/2004 | 1.000 | 0.006 | (0.006 | ) | 1.000 | 0.57 | |||||||||||||||||
Year ended 12/31/2003 | 1.000 | 0.002 | (0.002 | ) | 1.000 | 0.21 | |||||||||||||||||
Year ended 12/31/2002 | 1.000 | 0.002 | (0.002 | ) | 1.000 | 0.22 | |||||||||||||||||
Year ended 12/31/2001 | 1.000 | 0.025 | (0.025 | ) | 1.000 | 2.48 | |||||||||||||||||
Class K: | |||||||||||||||||||||||
Year ended 12/31/2005 | 1.000 | 0.020 | (0.020 | ) | 1.000 | 2.00 | |||||||||||||||||
Year ended 12/31/2004 | 1.000 | 0.005 | (0.005 | ) | 1.000 | 0.47 | |||||||||||||||||
Year ended 12/31/2003 | 1.000 | 0.002 | (0.002 | ) | 1.000 | 0.18 | |||||||||||||||||
Year ended 12/31/2002 | 1.000 | 0.005 | (0.005 | ) | 1.000 | 0.55 | |||||||||||||||||
Period from 5/15/2001† to 12/31/2001 | 1.000 | 0.013 | (0.013 | ) | 1.000 | 1.26 | †† |
* Excludes the effect of sales load.
† Commencement of operations.
†† Not annualized
(a) After expenses subsidized by GIS.
(b) Revised to reflect additional subsidies to maintain a minimum yield threshold.
(c) Annualized.
138
Ratios/Supplemental Data | |||||||||||||||||||
Net Assets, End of Period (000's Omitted) | Net Expenses to Average Net Assets(a) | Expenses Subsidized by GIS | Investment Income to Average Net Assets | ||||||||||||||||
The Guardian Cash Management Fund | |||||||||||||||||||
Class A: | |||||||||||||||||||
Year ended 12/31/2005 | $ | 396,012 | 0.85 | % | 0.06 | % | 2.37 | % | |||||||||||
Year ended 12/31/2004 | 442,109 | 0.85 | 0.04 | 0.55 | |||||||||||||||
Year ended 12/31/2003 | 529,321 | 0.85 | 0.05 | 0.38 | |||||||||||||||
Year ended 12/31/2002 | 658,159 | 0.85 | 0.02 | 0.94 | |||||||||||||||
Year ended 12/31/2001 | 606,045 | 0.85 | 0.04 | 3.13 | |||||||||||||||
Class B: | |||||||||||||||||||
Year ended 12/31/2005 | 5,030 | 1.47 | 0.39 | 1.68 | |||||||||||||||
Year ended 12/31/2004 | 8,144 | 0.85 | 0.99 | 0.53 | |||||||||||||||
Year ended 12/31/2003 | 12,498 | 1.03 | (b) | 0.73 | (b) | 0.21 | |||||||||||||
Year ended 12/31/2002 | 18,485 | 1.57 | (b) | 0.16 | (b) | 0.22 | |||||||||||||
Year ended 12/31/2001 | 15,685 | 1.60 | 0.12 | 2.37 | |||||||||||||||
Class C: | |||||||||||||||||||
Year ended 12/31/2005 | 6,233 | 1.47 | 0.21 | 1.69 | |||||||||||||||
Year ended 12/31/2004 | 8,626 | 0.85 | 0.80 | 0.57 | |||||||||||||||
Year ended 12/31/2003 | 9,086 | 1.02 | (b) | 0.63 | (b) | 0.21 | |||||||||||||
Year ended 12/31/2002 | 9,330 | 1.57 | (b) | 0.06 | (b) | 0.22 | |||||||||||||
Year ended 12/31/2001 | 8,492 | 1.60 | 0.04 | 2.47 | |||||||||||||||
Class K: | |||||||||||||||||||
Year ended 12/31/2005 | 10,083 | 1.25 | 0.07 | 1.96 | |||||||||||||||
Year ended 12/31/2004 | 10,424 | 0.95 | 0.30 | 0.48 | |||||||||||||||
Year ended 12/31/2003 | 9,682 | 1.25 | — | 0.18 | |||||||||||||||
Year ended 12/31/2002 | 8,500 | 1.25 | — | 0.54 | |||||||||||||||
Period from 5/15/2001† to 12/31/2001 | 8,125 | 1.25 | (c) | 0.01 | (c) | 1.99 | (c) |
139
n The Park Avenue Portfolio
Report of Ernst & Young LLP,
Independent Registered Public Accounting Firm
Board of Trustees and Shareholders
The Park Avenue Portfolio
We have audited the accompanying statements of assets and liabilities of The Park Avenue Portfolio (comprising, respectively, The Guardian Park Avenue Fund, The Guardian UBS Large Cap Value Fund, The Guardian Park Avenue Small Cap Fund, The Guardian UBS Small Cap Value Fund, The Guardian Asset Allocation Fund, The Guardian S&P 500 Index Fund, The Guardian Baillie Gifford International Growth Fund, The Guardian Baillie Gifford Emerging Markets Fund, The Guardian Investment Quality Bond Fund, The Guardian Low Duration Bond Fund, The Guardian High Yield Bond Fund, The Guardian Tax-Exempt Fund, and The Guardian Cash Management Fund) (the "Funds"), including the schedules of investments, as of December 31, 2005, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. Thes e financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds' internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds' internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial h ighlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2005, by correspondence with the custodian, the transfer agent and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the respective Funds constituting The Park Avenue Portfolio at December 31, 2005, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.
Boston, Massachusetts
February 8, 2006
140
n The Park Avenue Portfolio
Board Approval of Investment Management Agreements (Unaudited)
The Board of Trustees of the Park Avenue Portfolio (the "Portfolio") approved the renewal of the management agreement for each series of the Portfolio (each a "Fund" and collectively the "Funds") and, as applicable, the subadvisory agreement for each Fund on November 17, 2005. As a part of the renewal process, the Independent Trustees (those Board Members who are not interested persons as defined by the Investment Company Act of 1940) of the Board of Trustees of the Portfolio met independently of Fund management and of the interested Trustees to consider the renewal of: (1) the management agreement ("Management Agreement") between each of the Funds and Guardian Investor Services LLC ("GIS") or as applicable, Guardian Baillie Gifford Limited ("GBG" and together with GIS, each referred to as a "Manager"); (2) as applicable, the subadvisory agreements (each a "Subadvisory Agreement") between GBG and Baillie Gifford Overseas Limited ("BGO") and the subadvisory agreements between GIS and UBS Global Asset Management (Americas) Inc. ("UBS" and together with BGO, each referred to as a "Subadvisor"). (The Management Agreements and the Subadvisory Agreements are together referred to as the "Advisory Agreements.") As part of the review process, the Independent Trustees were represented by independent legal counsel. The Independent Trustees reviewed comprehensive materials received from the Managers, Subadvisors and independent counsel in connection with contract review. The Independent Trustees noted that the Board also received regular information throughout the year regarding performance and operating results of each Fund and that in evaluating the Advisory Agreements, they were taking into account their accumulated experience as Board members in working with the Managers on matters relating to the Funds.
In preparation for the review process, the Independent Trustees met with independent legal counsel and discussed the type and nature of information to be provided and sent a formal request for information to Fund management. The Managers and Subadvisors provided extensive information to all Board members in response to the request. Among other information, the Independent Trustees reviewed materials to assess the services provided by each Manager and Subadvisor, and, as applicable, information comparing the performance, advisory fees and expense ratios of each Fund to other mutual funds, information about the profitability from the Advisory Agreements to the Managers and to the Subadvisors, information about economies of scale and information about the other benefits to the Managers and Subadvisors and their affiliates resulting from their relationship with the Funds ("fall-out benefits"). The Independent Trustees reviewed comparative perfor mance and management fee and expense ratios of peer groups of funds selected by Morningstar, Inc. ("Morningstar"). The Independent Trustees also received a memorandum from independent legal counsel advising them of their duties and responsibilities in connection with the review of the Advisory Agreements. In preparation for the November 17th meeting, the Independent Trustees met on November 3, 2005, to review and discuss with independent legal counsel the information provided by Morningstar.
Based upon their review, the Independent Trustees concluded that it was in the best interest of each Fund to renew each relevant Advisory Agreement and, accordingly, recommended to the full Board of Trustees the renewal of each applicable Advisory Agreement. In reaching this conclusion for each Fund, the Independent Trustees did not identify any single factor or group of factors as all important or controlling and considered all factors together.
Management Agreements
Nature, Quality and Extent of Services. In reviewing the nature, quality and extent of services provided by the Managers, the Independent Trustees considered the services provided by each Manager under the Management Agreements, including administrative services. The Independent Trustees considered the experience and skills of senior management responsible for fund operations, the experience and skills of the personnel performing the functions under each Management Agreement and the resources made available to such personnel, the ability of the Managers to attract and retain high-quality personnel, and the organizational depth of the Managers. The Independent Trustees concluded that appropriate resources were provided under each Management Agreement. The Independent Trustees also considered the delegation of day-to-day portfolio management responsibility to UBS w ith respect to the Guardian UBS Large Cap Value Fund and the Guardian UBS Small Cap Value Fund and to BGO with respect to the Guardian Baillie Gifford International Growth Fund and the Guardian Baillie Gifford Emerging Markets Fund and the Managers' ability to supervise the activities of the Subadvisors. The Independent Trustees concluded each Manager's supervisory program was satisfactory. The Independent Trustees also considered the compliance program established by the Managers and the level of compliance attained by the Managers. Further, the Independent Trustees considered that each Manager has had a long-term relationship with the Funds and has
141
n The Park Avenue Portfolio
Board Approval of Investment Management Agreements (Unaudited) (Continued)
demonstrated its past and future commitment to support the Funds. The Independent Trustees concluded that a long-term relationship with a capable, conscientious adviser was in the best interests of each Fund. Based upon all relevant factors, the Independent Trustees concluded that the nature, quality and extent of the services provided by the Managers to each applicable Fund were satisfactory.
Investment Performance. The Independent Trustees reviewed each Fund's investment performance over short-term (one-year) and longer-term (three year, five year and ten year) periods, as applicable, and compared those returns to various agreed-upon performance measures, including market indices and peer groups. The Independent Trustees received comparative performance information prepared by Morningstar. The Independent Trustees also considered whether investment results were consistent with a Fund's investment objective(s) and policies. For most Funds, the Independent Trustees concluded that investment performance met acceptable levels of investment performance. For Funds that experienced underperformance, the Independent Trustees reviewed the reasons for the underperformance and the remedial measures taken by the Manager to improve performance. The Independent Tr ustees concluded that the Managers have in place an effective process to monitor performance and that reasonable steps had been implemented to address circumstances of underperformance where appropriate. Therefore, the Independent Trustees concluded that it was in the best interests of the Funds to renew the Management Agreements and to continue to closely monitor performance with a particular emphasis on those Funds experiencing underperformance.
Fees and Expenses. The Independent Trustees considered each Fund's management fees and net expense ratios. The Independent Trustees received information, based on data supplied by Morningstar, comparing each Fund's management fee rates and total net expense ratio to advisory fees and total net expense ratios of the mutual funds in its peer group (as selected by Morningstar). The Independent Trustees also received and considered information on fee waivers and/or reimbursements for each Fund compared to those of its peer group. The Independent Trustees noted that a number of the Funds have received fee waivers for many years and that such fee waivers remained current through the time of the review process.
The Independent Trustees also compared each Fund's management fee rates to fees charged by the Manager for comparable mutual funds. For each Fund, the Independent Trustees reviewed the fees charged by other advisors for mutual funds in the Fund's peer group. GIS provided information on the advisory fees it charges its two institutional accounts and noted the information was not comparable with the Funds because the investment objectives and management style of the institutional accounts were very different than those of the Funds. GBG has no clients other than the Funds.
On the basis of all information provided, the Independent Trustees concluded that the management fee schedules for each Fund were reasonable and appropriate in light of the nature, quality and extent of services provided by the Manager.
Profitability. The Independent Trustees reviewed detailed information regarding revenues received by each Manager under each Management Agreement, including identification of the estimated direct and indirect costs of the Managers of providing those services to each Fund that are covered under the Management Agreements. The Independent Trustees also received information regarding the enterprise-wide profitability of the Managers with respect to all fund services in totality.
For all Funds, based upon the profitability percentage provided, the Independent Trustees concluded that the profitability to the applicable Manager from the management of each Fund was not unreasonable.
Economies of Scale. The Independent Trustees considered whether there are economies of scale with respect to the management of each Fund and whether the Funds benefit from any such economies of scale through breakpoints in fees or otherwise. The Independent Trustees noted that the Guardian UBS Small Cap Value Fund and the Guardian Cash Management Fund had management fee schedules that each contained one breakpoint. The Independent Trustees also considered whether the effective management fee rate for each Fund under the Management Agreement is reasonable in relation to the asset size of such Fund. The Independent Trustees noted GIS's representation that it did not anticipate that the Funds would experience any significant economies in the near future, given their asset size. The Independent Trustees concluded that, in light of the Funds' current asset levels, the fee schedule for each Fund reflects an appropriate level of sharing of any economies of scale.
142
n The Park Avenue Portfolio
Board Approval of Investment Management Agreements (Unaudited) (Continued)
Other Benefits to Manager. The Independent Trustees also considered the character and amount of other incidental benefits received by the Managers and their affiliates as a result of their relationship with the Funds. The Independent Trustees noted the Managers' representation that each has the ability to obtain proprietary research as a result of the Funds' brokerage business that may be used for the benefit of the Funds and other clients of the Managers. The Independent Trustees concluded that management fees for each Fund were reasonable in light of these fall-out benefits.
Subadvisory Agreements
Nature, Quality and Extent of Services. The Independent Trustees considered the nature, extent and quality of services provided under each Subadvisory Agreement. The Independent Trustees considered the reputation, qualifications and background of the Subadvisors, the experience and skills of investment personnel responsible for the day-to-day management of each Fund, and the resources made available to such personnel. The Independent Trustees also considered the Subadvisors' compliance with investment policies and general legal compliance. The Independent Trustees concluded that each Subadvisor was providing satisfactory services and recommended that the Subadvisory Agreement for each applicable Fund be continued.
Investment Performance. The Independent Trustees reviewed each Fund's investment performance over short-term (one-year) and, where applicable, longer-term periods, and compared those returns to various agreed-upon performance measures, including market indices and peer groups. Based upon all relevant factors, the Independent Trustees concluded that the investment performance of each subadvised Fund either met acceptable levels of investment performance or, in situations where there was underperformance, the underperformance was not over a long enough period of time to provide a meaningful measure of performance. Therefore, the Independent Trustees concluded, based upon each Fund's particular circumstances, that it was in the best interests of each Fund to renew the Subadvisory Agreements and to continue to closely monitor performance with a particular emphasis on those Funds experiencing underperformance.
Fees and Expenses. The Independent Trustees considered each Fund's subadvisory fees and how they related to the overall management fee structure of each Fund. The Independent Trustees evaluated the competitiveness of the subadvisory fees based upon data supplied by Fund management, which showed each Subadvisor's standard fee schedule for similarly managed institutional accounts. Based on the information provided by Fund management, the Independent Trustees noted that the Subadvisors charged comparable or lower fees for the Funds than their standard fee schedules. The Independent Trustees also considered that the Managers compensate the Subadvisors from their own management fees.
Based upon all of the above, the Independent Trustees determined that the subadvisory fees for each Fund were reasonable.
Profitability. The Independent Trustees received general information with respect to each Subadvisor's profitability. The Independent Trustees noted that the Managers compensate the Subadvisors from their own management fees and that the fees were competitive based on the information provided by the Subadvisors and the Managers. In addition, the Independent Trustees noted that the Subadvisory Agreements with UBS were negotiated at arm's length between GIS and UBS. The Independent Trustees also noted the amount of revenue generated by each Subadvisor from its subadvisory fees. The Independent Trustees reviewed data on the estimated range of profitability to UBS for the Funds it subadvised and concluded that its profitability was not unreasonable. The Independent Trustees took into account the level of revenues and the profitability to the parent entity of BGO as a result of BGO's subadvisory relationship with the Funds it subadvised and concluded that profitability was not unreasonable.
Economies of Scale. The Independent Trustees considered whether there are economies of scale with respect to the subadvisory services provided to each applicable Fund and whether the subadvisory fees reflect such economies of scale through breakpoints in fees or otherwise. The Independent Trustees noted that the Guardian UBS Small Cap Value Fund contained one breakpoint in its subadvisory fee schedule. The Independent Trustees also considered whether the effective subadvisory fee rate for each Fund under the Subadvisory Agreement is reasonable in relation to the asset size of the Fund. The Independent Trustees concluded that the fee schedule for each Fund reflects an appropriate recognition of any economies of scale.
143
n The Park Avenue Portfolio
Board Approval of Investment Management Agreements (Unaudited) (Continued)
Other Benefits to Subadvisors. The Independent Trustees also considered the character and amount of other incidental benefits received by each Subadvisor, including any benefit derived from their affiliation with the Funds. The Independent Trustees considered that UBS may use an affiliate to execute portfolio transactions for the Funds it subadvises, subject to Rule 17e-1 procedures that have been approved by the Board. The Independent Trustees also considered each Subadvisor's soft dollar practices. The Independent Trustees concluded that the fees charged under each Subadvisory Agreement were reasonable in light of these fall-out benefits.
Specific Findings as to each Fund
The Guardian Park Avenue Fund
In determining to recommend renewal of the Fund's Management Agreement, the Independent Trustees noted the investment underperformance over the period reviewed, but considered the steps taken by the Manager to remediate performance, including most recently the hiring of a new lead portfolio manager by the Manager in August 2005. The Independent Trustees noted the favorable historical record of the new portfolio manager, his prior success in remediating a fund, his investment strategy for managing the Fund and the very recent relative improvement in performance following the beginning of the implementation of his investment strategy. The Independent Trustees considered these remedial actions along with the long term support and effective administration of this Fund by the Manager, as well as the Fund's low expense ratio and management fees as compared to its peer group, and concluded that it was appropriate to renew the Management Agreement a nd monitor the impact of the remedial actions.
The Guardian UBS Large Cap Value Fund
In determining to recommend renewal of the Fund's Advisory Agreements, the Independent Trustees noted the favorable relative investment performance over the one-year period reviewed, with performance above the median of its peer group. Although the management fee rate was higher than the median of the Fund's peer group, the Independent Trustees concluded that such fees were within an acceptable range, particularly given the reasonableness of the Fund's expense ratio and the favorable investment performance of the Fund.
The Guardian Park Avenue Small Cap Fund
In determining to recommend renewal of the Fund's Management Agreement, the Independent Trustees noted the favorable relative investment performance of the Fund over the periods reviewed, with performance above the median of its peer group over the short and longer-term periods reviewed, as well as the below median advisory fees and expense ratio.
The Guardian UBS Small Cap Value Fund
In determining to recommend renewal of the Fund's Advisory Agreements, the Independent Trustees concluded that although the Fund experienced slight underperformance relative to its peer group, such performance was within a reasonable range of the peer group average in light of the Fund's satisfactory absolute performance. The Independent Trustees also noted the reasonableness of its management fee rate.
The Guardian Asset Allocation Fund
In determining to recommend renewal of the Fund's Management Agreement, the Independent Trustees concluded that investment performance was satisfactory, falling within a reasonable range of the median of its peer group, and that the management fee rate was within an acceptable range in light of the Fund's net expense ratio.
The Guardian S&P 500 Index Fund
In determining to recommend renewal of the Fund's Management Agreement, the Independent Trustees noted the favorable relative investment performance of the Fund, with performance above the median of its peer group, as well as the reasonableness of its management fee rate.
144
n The Park Avenue Portfolio
Board Approval of Investment Management Agreements (Unaudited) (Continued)
The Guardian Baillie Gifford International Growth Fund
In determining to recommend renewal of the Fund's Advisory Agreements, the Independent Trustees noted the favorable relative investment performance of the Fund, with performance above the median of its peer group, as well as the reasonableness of its management fee rate.
The Guardian Baillie Gifford Emerging Markets Fund
In determining to recommend renewal of the Fund's Advisory Agreements, the Independent Trustees noted the favorable relative investment performance of the Fund, with performance above the median of its peer group, as well as the reasonableness of its management fee rate.
The Guardian Investment Quality Bond Fund
In determining to recommend renewal of the Fund's Management Agreement, the Independent Trustees noted the favorable relative investment performance of the Fund, with performance above the median of its peer group, as well as the reasonableness of its management fee rate.
The Guardian Low Duration Bond Fund
In determining to recommend renewal of the Fund's Management Agreement, the Independent Trustees concluded that investment performance was satisfactory during the short-term period reviewed and that a longer than one-year period was needed to assess performance in comparison to its peer group, and that the management fee rate was reasonable.
The Guardian High Yield Bond Fund
In determining to recommend renewal of the Fund's Management Agreement, the Independent Trustees concluded that investment performance was satisfactory, with performance during more recent periods falling within a reasonable range of the median of its peer group, and that the management fee rate was reasonable.
The Guardian Tax-Exempt Fund
In determining to recommend renewal of the Fund's Management Agreement, the Independent Trustees noted the favorable relative investment performance of the Fund, with performance above the median of its peer group, as well as the reasonableness of its management fee rate.
The Guardian Cash Management Fund
In determining to recommend renewal of the Fund's Management Agreement, the Independent Trustees noted that the Fund pursues an investment strategy that is conservative in nature, even within its peer group of money market funds, with a shorter average portfolio maturity and more limited investment in "second tier" securities. The Independent Trustees noted that, as a result of this strategy, along with the Fund's size and fee structure, the Fund underperforms in comparison to its peer group of funds. They also noted that the Fund's management fee rate is higher than the median for its peer group. However, the Independent Trustees concluded that given the size of the Fund, the subsidies provided by the Manager and the Fund's conservative investment program, performance and the management fees, which include a breakpoint, were reasonable.
Overall Conclusions
Based upon all of the information considered and the conclusions reached, the Independent Trustees determined that the terms of each Advisory Agreement continue to be fair and reasonable and that the continuation of each Advisory Agreement is in the best interests of each Fund.
145
n The Park Avenue Portfolio
Shareholder Voting Summary (Unaudited)
November 15, 2005
On November 15, 2005, a Special Shareholder Meeting of The Park Avenue Portfolio was held at which the eleven Trustees, identified below, were elected (Proposal No. 1), each of the sub-proposals in Proposal No. 2 and Proposals 3 and 4, as described in the Proxy Statement, were approved.
The following is a report of the votes cast:
Proposal No. 1
Election of the Eleven Nominees for Trustee.
NOMINEES | FOR | WITHHELD | TOTAL | ||||||||||||
Kathleen C. Cuocolo | 321,945,945.320 | 8,769,620.566 | 330,715,565.886 | ||||||||||||
Frank J. Fabozzi | 321,948,521.207 | 8,767,044.679 | 330,715,565.886 | ||||||||||||
Arthur V. Ferrara | 321,942,549.187 | 8,773,016.699 | 330,715,565.886 | ||||||||||||
Leo R. Futia | 321,915,572.724 | 8,799,993.162 | 330,715,565.886 | ||||||||||||
William N. Goetzmann | 321,947,373.692 | 8,768,192.194 | 330,715,565.886 | ||||||||||||
Anne M. Goggin | 321,943,228.652 | 8,772,337.234 | 330,715,565.886 | ||||||||||||
William W. Hewitt | 321,913,438.477 | 8,802,127.409 | 330,715,565.886 | ||||||||||||
Sidney I. Lirtzman | 321,929,898.266 | 8,785,667.620 | 330,715,565.886 | ||||||||||||
Dennis H. Manning | 321,442,223.168 | 9,273,342.718 | 330,715,565.886 | ||||||||||||
Steven J. Paggioli | 321,942,341.120 | 8,773,224.766 | 330,715,565.886 | ||||||||||||
Robert G. Smith | 321,937,020.354 | 8,778,545.532 | 330,715,565.886 |
146
n The Guardian Park Avenue Fund
Shareholder Voting Summary (Unaudited)
November 15, 2005
For the above named Fund, the sub-proposals in Proposal No. 2 as described in the Proxy Statement, were approved by shareholders as follows:
Proposal No. 2
Approving an amendment to, or the elimination of, the Fund's fundamental investment restriction, as described in the Proxy Statement, with respect to the following.
SUB-PROPOSALS | FOR | AGAINST | ABSTAIN | BROKER NON-VOTE | TOTAL | ||||||||||||||||||
2(a) Diversification of investments; | 12,151,453.165 | 704,216.388 | 940,356.431 | 1,858,673.000 | 15,654,698.984 | ||||||||||||||||||
2(b) Borrowing; | 12,089,502.663 | 764,190.878 | 942,332.443 | 1,858,673.000 | 15,654,698.984 | ||||||||||||||||||
2(c) Issuing senior securities; | 12,104,532.177 | 750,650.235 | 940,843.572 | 1,858,673.000 | 15,654,698.984 | ||||||||||||||||||
2(d) Concentration of investments in the same industry; | 12,103,298.041 | 749,727.988 | 942,999.955 | 1,858,673.000 | 15,654,698.984 | ||||||||||||||||||
2(e) Investments in real estate; | 12,140,060.847 | 709,901.880 | 946,063.257 | 1,858,673.000 | 15,654,698.984 | ||||||||||||||||||
2(f) Investments in commodities; | 12,092,845.156 | 760,444.508 | 942,736.320 | 1,858,673.000 | 15,654,698.984 | ||||||||||||||||||
2(g) Underwriting the securities of other issuers; | 12,118,221.071 | 740,326.811 | 937,478.102 | 1,858,673.000 | 15,654,698.984 | ||||||||||||||||||
2(h) Making loans; | 12,097,058.694 | 762,217.295 | 936,749.995 | 1,858,673.000 | 15,654,698.984 | ||||||||||||||||||
2(i) Investments in securities that are not readily marketable; | 12,063,653.011 | 790,537.930 | 941,835.043 | 1,858,673.000 | 15,654,698.984 | ||||||||||||||||||
2(j) Investments for the purpose of exercising control or management; | 12,142,181.477 | 713,119.358 | 940,725.149 | 1,858,673.000 | 15,654,698.984 | ||||||||||||||||||
2(k) Investments in other investment companies; | 12,139,722.143 | 714,522.686 | 941,781.155 | 1,858,673.000 | 15,654,698.984 | ||||||||||||||||||
2(l) Purchasing securities on margin, selling securities short, or participating on a joint or joint and several basis in a securities trading account; | 12,074,236.615 | 783,208.634 | 938,580.735 | 1,858,673.000 | 15,654,698.984 | ||||||||||||||||||
2(m) Pledging, mortgaging or hypothecating its assets; | 12,083,495.868 | 768,115.970 | 944,414.146 | 1,858,673.000 | 15,654,698.984 | ||||||||||||||||||
2(n) Investments in issuers in which management of a Fund or its investment adviser owns securities; | 12,095,266.202 | 759,233.630 | 941,526.152 | 1,858,673.000 | 15,654,698.984 | ||||||||||||||||||
2(o) Investments in issuers having a record of less than three years of continuous operation; | 12,107,549.529 | 745,508.446 | 942,968.009 | 1,858,673.000 | 15,654,698.984 | ||||||||||||||||||
2(p) Investments in oil, gas or mineral programs; | 12,150,292.907 | 704,257.686 | 941,475.391 | 1,858,673.000 | 15,654,698.984 | ||||||||||||||||||
2(q) Investments in put options, call options or combinations thereof; and | 12,049,789.808 | 804,056.427 | 942,179.749 | 1,858,673.000 | 15,654,698.984 | ||||||||||||||||||
2(s) Investments in securities other than those discussed in the Fund's prospectus. | 12,032,085.968 | 824,217.540 | 939,722.476 | 1,858,673.000 | 15,654,698.984 |
147
n The Guardian UBS Large Cap Value Fund
Shareholder Voting Summary (Unaudited)
November 15, 2005
For the above named Fund, the sub-proposals in Proposal No. 2 as described in the Proxy Statement, were approved by shareholders as follows:
Proposal No. 2
Approving an amendment to, or the elimination of, the Fund's fundamental investment restriction, as described in the Proxy Statement, with respect to the following.
SUB-PROPOSALS | FOR | AGAINST | ABSTAIN | BROKER NON-VOTE | TOTAL | ||||||||||||||||||
2(a) Diversification of investments; | 5,989,683.486 | 19,353.143 | 3,866.638 | 139,272.000 | 6,152,175.267 | ||||||||||||||||||
2(b) Borrowing; | 5,989,683.486 | 19,353.143 | 3,866.638 | 139,272.000 | 6,152,175.267 | ||||||||||||||||||
2(c) Issuing senior securities; | 5,989,683.486 | 19,353.143 | 3,866.638 | 139,272.000 | 6,152,175.267 | ||||||||||||||||||
2(d) Concentration of investments in the same industry; | 5,989,683.486 | 19,353.143 | 3,866.638 | 139,272.000 | 6,152,175.267 | ||||||||||||||||||
2(e) Investments in real estate; | 5,989,683.486 | 19,353.143 | 3,866.638 | 139,272.000 | 6,152,175.267 | ||||||||||||||||||
2(f) Investments in commodities; and | 5,989,683.486 | 19,353.143 | 3,866.638 | 139,272.000 | 6,152,175.267 | ||||||||||||||||||
2(g) Underwriting the securities of other issuers. | 5,989,683.486 | 19,353.143 | 3,866.638 | 139,272.000 | 6,152,175.267 |
148
n The Guardian Park Avenue Small Cap Fund
Shareholder Voting Summary (Unaudited)
November 15, 2005
For the above named Fund, the sub-proposals in Proposal No. 2 as described in the Proxy Statement, were approved by shareholders as follows:
Proposal No. 2
Approving an amendment to, or the elimination of, the Fund's fundamental investment restriction, as described in the Proxy Statement, with respect to the following.
SUB-PROPOSALS | FOR | AGAINST | ABSTAIN | BROKER NON-VOTE | TOTAL | ||||||||||||||||||
2(a) Diversification of investments; | 6,149,726.804 | 161,415.538 | 203,703.944 | 456,741.000 | 6,971,587.286 | ||||||||||||||||||
2(b) Borrowing; | 6,184,180.015 | 127,285.883 | 203,380.388 | 456,741.000 | 6,971,587.286 | ||||||||||||||||||
2(c) Issuing senior securities; | 6,184,892.505 | 125,574.372 | 204,379.409 | 456,741.000 | 6,971,587.286 | ||||||||||||||||||
2(d) Concentration of investments in the same industry; | 6,188,757.905 | 121,708.972 | 204,379.409 | 456,741.000 | 6,971,587.286 | ||||||||||||||||||
2(e) Investments in real estate; | 6,189,393.940 | 122,106.539 | 203,345.807 | 456,741.000 | 6,971,587.286 | ||||||||||||||||||
2(f) Investments in commodities; | 6,185,328.880 | 125,778.881 | 203,738.525 | 456,741.000 | 6,971,587.286 | ||||||||||||||||||
2(h) Making loans; | 6,187,738.072 | 123,727.826 | 203,380.388 | 456,741.000 | 6,971,587.286 | ||||||||||||||||||
2(m) Pledging, mortgaging or hypothecating its assets; and | 6,159,508.454 | 150,923.842 | 204,413.990 | 456,741.000 | 6,971,587.286 | ||||||||||||||||||
2(q) Investments in put options, call options or combinations thereof. | 6,171,157.801 | 140,342.678 | 203,345.807 | 456,741.000 | 6,971,587.286 |
149
n The Guardian UBS Small Cap Value Fund
Shareholder Voting Summary (Unaudited)
November 15, 2005
For the above named Fund, the sub-proposals in Proposal No. 2 as described in the Proxy Statement, were approved by shareholders as follows:
Proposal No. 2
Approving an amendment to, or the elimination of, the Fund's fundamental investment restriction, as described in the Proxy Statement, with respect to the following.
SUB-PROPOSALS | FOR | AGAINST | ABSTAIN | BROKER NON-VOTE | TOTAL | ||||||||||||||||||
2(a) Diversification of investments; | 3,009,551.054 | 5,001.081 | 685.013 | 111,074.000 | 3,126,311.148 | ||||||||||||||||||
2(b) Borrowing; | 3,007,117.460 | 7,434.675 | 685.013 | 111,074.000 | 3,126,311.148 | ||||||||||||||||||
2(c) Issuing senior securities; | 3,007,117.460 | 5,001.081 | 3,118.607 | 111,074.000 | 3,126,311.148 | ||||||||||||||||||
2(d) Concentration of investments in the same industry; | 3,009,551.054 | 5,001.081 | 685.013 | 111,074.000 | 3,126,311.148 | ||||||||||||||||||
2(e) Investments in real estate; | 3,007,117.460 | 5,001.081 | 3,118.607 | 111,074.000 | 3,126,311.148 | ||||||||||||||||||
2(f) Investments in commodities; and | 3,009,551.054 | 5,001.081 | 685.013 | 111,074.000 | 3,126,311.148 | ||||||||||||||||||
2(g) Underwriting the securities of other issuers. | 3,009,551.054 | 5,001.081 | 685.013 | 111,074.000 | 3,126,311.148 |
150
n The Guardian S&P 500 Index Fund
Shareholder Voting Summary (Unaudited)
November 15, 2005
For the above named Fund, the sub-proposals in Proposal No. 2 as described in the Proxy Statement, were approved by shareholders as follows:
Proposal No. 2
Approving an amendment to, or the elimination of, the Fund's fundamental investment restriction, as described in the Proxy Statement, with respect to the following.
SUB-PROPOSALS | FOR | AGAINST | ABSTAIN | BROKER NON-VOTE | TOTAL | ||||||||||||||||||
2(a) Diversification of investments; | 18,530,154.427 | 56,333.555 | 14,997.737 | 1,410,122.000 | 20,011,607.719 | ||||||||||||||||||
2(b) Borrowing; | 18,530,154.427 | 56,333.555 | 14,997.737 | 1,410,122.000 | 20,011,607.719 | ||||||||||||||||||
2(c) Issuing senior securities; | 18,530,154.427 | 56,333.555 | 14,997.737 | 1,410,122.000 | 20,011,607.719 | ||||||||||||||||||
2(d) Concentration of investments in the same industry; | 18,528,964.427 | 57,523.555 | 14,997.737 | 1,410,122.000 | 20,011,607.719 | ||||||||||||||||||
2(e) Investments in real estate; | 18,530,154.427 | 56,333.555 | 14,997.737 | 1,410,122.000 | 20,011,607.719 | ||||||||||||||||||
2(h) Making loans; and | 18,529,874.575 | 56,613.407 | 14,997.737 | 1,410,122.000 | 20,011,607.719 | ||||||||||||||||||
2(m) Pledging, mortgaging or hypothecating its assets. | 18,527,384.427 | 59,103.555 | 14,997.737 | 1,410,122.000 | 20,011,607.719 |
151
n The Guardian Asset Allocation Fund
Shareholder Voting Summary (Unaudited)
November 15, 2005
For the above named Fund, the sub-proposals in Proposal No. 2 as described in the Proxy Statement, were approved by shareholders as follows:
Proposal No. 2
Approving an amendment to, or the elimination of, the Fund's fundamental investment restriction, as described in the Proxy Statement, with respect to the following.
SUB-PROPOSALS | FOR | AGAINST | ABSTAIN | BROKER NON-VOTE | TOTAL | ||||||||||||||||||
2(a) Diversification of investments; | 5,228,660.659 | 200,530.096 | 294,800.414 | 714,062.000 | 6,438,026.169 | ||||||||||||||||||
2(b) Borrowing; | 5,227,928.304 | 201,235.451 | 294,800.414 | 714,062.000 | 6,438,026.169 | ||||||||||||||||||
2(c) Issuing senior securities; | 5,229,950.339 | 199,213.416 | 294,800.414 | 714,062.000 | 6,438,026.169 | ||||||||||||||||||
2(d) Concentration of investments in the same industry; | 5,218,580.637 | 210,583.118 | 294,800.414 | 714,062.000 | 6,438,026.169 | ||||||||||||||||||
2(e) Investments in real estate; | 5,229,950.339 | 199,213.416 | 294,800.414 | 714,062.000 | 6,438,026.169 | ||||||||||||||||||
2(f) Investments in commodities; | 5,227,928.304 | 201,235.451 | 294,800.414 | 714,062.000 | 6,438,026.169 | ||||||||||||||||||
2(g) Underwriting the securities of other issuers; | 5,223,279.542 | 205,884.213 | 294,800.414 | 714,062.000 | 6,438,026.169 | ||||||||||||||||||
2(h) Making loans; | 5,226,247.675 | 202,916.080 | 294,800.414 | 714,062.000 | 6,438,026.169 | ||||||||||||||||||
2(i) Investments in securities that are not readily marketable; | 5,227,060.304 | 202,103.451 | 294,800.414 | 714,062.000 | 6,438,026.169 | ||||||||||||||||||
2(j) Investments for the purpose of exercising control or management; | 5,223,149.507 | 206,014.248 | 294,800.414 | 714,062.000 | 6,438,026.169 | ||||||||||||||||||
2(k) Investments in other investment companies; | 5,221,257.507 | 207,776.213 | 294,930.449 | 714,062.000 | 6,438,026.169 | ||||||||||||||||||
2(l) Purchasing securities on margin, selling securities short, or participating on a joint or joint and several basis in a securities trading account; | 5,217,258.107 | 211,905.648 | 294,800.414 | 714,062.000 | 6,438,026.169 | ||||||||||||||||||
2(m) Pledging, mortgaging or hypothecating its assets; | 5,216,832.456 | 212,331.299 | 294,800.414 | 714,062.000 | 6,438,026.169 | ||||||||||||||||||
2(n) Investments in issuers in which management of a Fund or its investment adviser owns securities; | 5,219,184.021 | 209,979.734 | 294,800.414 | 714,062.000 | 6,438,026.169 | ||||||||||||||||||
2(o) Investments in issuers having a record of less than three years of continuous operation; | 5,215,967.383 | 213,196.372 | 294,800.414 | 714,062.000 | 6,438,026.169 | ||||||||||||||||||
2(p) Investments in oil, gas or mineral programs; and | 5,217,258.107 | 211,905.648 | 294,800.414 | 714,062.000 | 6,438,026.169 | ||||||||||||||||||
2(q) Investments in put options, call options or combinations thereof; | 5,228,058.339 | 201,105.416 | 294,800.414 | 714,062.000 | 6,438,026.169 | ||||||||||||||||||
2(r) Investments in warrants. | 5,229,950.339 | 199,213.416 | 294,800.414 | 714,062.000 | 6,438,026.169 |
152
n The Guardian Baillie Gifford International Growth Fund
Shareholder Voting Summary (Unaudited)
November 15, 2005
For the above named Fund, the sub-proposals in Proposal No. 2 as described in the Proxy Statement, were approved by shareholders as follows:
Proposal No. 2
Approving an amendment to, or the elimination of, the Fund's fundamental investment restriction, as described in the Proxy Statement, with respect to the following.
SUB-PROPOSALS | FOR | AGAINST | ABSTAIN | BROKER NON-VOTE | TOTAL | ||||||||||||||||||
2(a) Diversification of investments; | 2,195,358.930 | 101,611.141 | 234,832.511 | 360,743.000 | 2,892,545.582 | ||||||||||||||||||
2(b) Borrowing; | 2,195,358.930 | 101,611.141 | 234,832.511 | 360,743.000 | 2,892,545.582 | ||||||||||||||||||
2(c) Issuing senior securities; | 2,195,358.930 | 101,611.141 | 234,832.511 | 360,743.000 | 2,892,545.582 | ||||||||||||||||||
2(d) Concentration of investments in the same industry; | 2,195,305.831 | 101,664.240 | 234,832.511 | 360,743.000 | 2,892,545.582 | ||||||||||||||||||
2(e) Investments in real estate; | 2,195,358.930 | 101,611.141 | 234,832.511 | 360,743.000 | 2,892,545.582 | ||||||||||||||||||
2(f) Investments in commodities; | 2,194,971.988 | 101,611.141 | 235,219.453 | 360,743.000 | 2,892,545.582 | ||||||||||||||||||
2(g) Underwriting the securities of other issuers; | 2,195,358.930 | 101,611.141 | 234,832.511 | 360,743.000 | 2,892,545.582 | ||||||||||||||||||
2(h) Making loans; | 2,194,971.988 | 101,611.141 | 235,219.453 | 360,743.000 | 2,892,545.582 | ||||||||||||||||||
2(i) Investments in securities that are not readily marketable; | 2,194,971.988 | 101,611.141 | 235,219.453 | 360,743.000 | 2,892,545.582 | ||||||||||||||||||
2(j) Investments for the purpose of exercising control or management; | 2,195,617.140 | 101,352.931 | 234,832.511 | 360,743.000 | 2,892,545.582 | ||||||||||||||||||
2(k) Investments in other investment companies; | 2,195,358.930 | 101,611.141 | 234,832.511 | 360,743.000 | 2,892,545.582 | ||||||||||||||||||
2(l) Purchasing securities on margin, selling securities short, or participating on a joint or joint and several basis in a securities trading account; | 2,194,971.988 | 101,611.141 | 235,219.453 | 360,743.000 | 2,892,545.582 | ||||||||||||||||||
2(m) Pledging, mortgaging or hypothecating its assets; | 2,172,411.315 | 124,171.814 | 235,219.453 | 360,743.000 | 2,892,545.582 | ||||||||||||||||||
2(n) Investments in issuers in which management of a Fund or its investment adviser owns securities; | 2,172,094.024 | 124,876.047 | 234,832.511 | 360,743.000 | 2,892,545.582 | ||||||||||||||||||
2(p) Investments in oil, gas or mineral programs; and | 2,189,781.334 | 102,273.251 | 239,747.997 | 360,743.000 | 2,892,545.582 | ||||||||||||||||||
2(q) Investments in put options, call options or combinations thereof; | 2,190,443.444 | 101,611.141 | 239,747.997 | 360,743.000 | 2,892,545.582 | ||||||||||||||||||
2(r) Investments in warrants. | 2,190,443.444 | 101,611.141 | 239,747.997 | 360,743.000 | 2,892,545.582 |
153
n The Guardian Baillie Gifford Emerging Markets Fund
Shareholder Voting Summary (Unaudited)
November 15, 2005
For the above named Fund, the sub-proposals in Proposal No. 2 as described in the Proxy Statement, were approved by shareholders as follows:
Proposal No. 2
Approving an amendment to, or the elimination of, the Fund's fundamental investment restriction, as described in the Proxy Statement, with respect to the following.
SUB-PROPOSALS | FOR | AGAINST | ABSTAIN | BROKER NON-VOTE | TOTAL | ||||||||||||||||||
2(a) Diversification of investments; | 6,620,322.490 | 121,138.075 | 165,032.118 | 546,588.000 | 7,453,080.683 | ||||||||||||||||||
2(b) Borrowing; | 6,618,737.468 | 122,488.365 | 165,266.850 | 546,588.000 | 7,453,080.683 | ||||||||||||||||||
2(c) Issuing senior securities; | 6,618,972.200 | 121,580.040 | 165,940.443 | 546,588.000 | 7,453,080.683 | ||||||||||||||||||
2(d) Concentration of investments in the same industry; | 6,620,322.490 | 121,138.075 | 165,032.118 | 546,588.000 | 7,453,080.683 | ||||||||||||||||||
2(e) Investments in real estate; | 6,620,322.490 | 121,138.075 | 165,032.118 | 546,588.000 | 7,453,080.683 | ||||||||||||||||||
2(f) Investments in commodities; | 6,619,622.758 | 121,603.075 | 165,266.850 | 546,588.000 | 7,453,080.683 | ||||||||||||||||||
2(g) Underwriting the securities of other issuers; | 6,618,839.165 | 122,621.400 | 165,032.118 | 546,588.000 | 7,453,080.683 | ||||||||||||||||||
2(h) Making loans; and | 6,618,162.468 | 123,063.365 | 165,266.850 | 546,588.000 | 7,453,080.683 | ||||||||||||||||||
2(m) Pledging, mortgaging or hypothecating its assets. | 6,597,958.624 | 142,358.884 | 166,175.175 | 546,588.000 | 7,453,080.683 |
154
n The Guardian Investment Quality Bond Fund
Shareholder Voting Summary (Unaudited)
November 15, 2005
For the above named Fund, the sub-proposals in Proposal No. 2 as described in the Proxy Statement, were approved by shareholders as follows:
Proposal No. 2
Approving an amendment to, or the elimination of, the Fund's fundamental investment restriction, as described in the Proxy Statement, with respect to the following.
SUB-PROPOSALS | FOR | AGAINST | ABSTAIN | BROKER NON-VOTE | TOTAL | ||||||||||||||||||
2(a) Diversification of investments; | 10,137,624.643 | 226,264.471 | 441,154.450 | 940,671.000 | 11,745,714.564 | ||||||||||||||||||
2(b) Borrowing; | 10,156,646.721 | 207,242.393 | 441,154.450 | 940,671.000 | 11,745,714.564 | ||||||||||||||||||
2(c) Issuing senior securities; | 10,156,784.207 | 207,104.907 | 441,154.450 | 940,671.000 | 11,745,714.564 | ||||||||||||||||||
2(d) Concentration of investments in the same industry; | 10,155,652.708 | 208,236.406 | 441,154.450 | 940,671.000 | 11,745,714.564 | ||||||||||||||||||
2(e) Investments in real estate; | 10,156,784.207 | 207,104.907 | 441,154.450 | 940,671.000 | 11,745,714.564 | ||||||||||||||||||
2(f) Investments in commodities; | 10,156,646.721 | 207,242.393 | 441,154.450 | 940,671.000 | 11,745,714.564 | ||||||||||||||||||
2(g) Underwriting the securities of other issuers; | 10,156,142.207 | 207,746.907 | 441,154.450 | 940,671.000 | 11,745,714.564 | ||||||||||||||||||
2(h) Making loans; | 10,156,784.207 | 207,104.907 | 441,154.450 | 940,671.000 | 11,745,714.564 | ||||||||||||||||||
2(i) Investments in securities that are not readily marketable; | 10,142,409.778 | 221,479.336 | 441,154.450 | 940,671.000 | 11,745,714.564 | ||||||||||||||||||
2(j) Investments for the purpose of exercising control or management; | 10,153,704.282 | 210,184.832 | 441,154.450 | 940,671.000 | 11,745,714.564 | ||||||||||||||||||
2(k) Investments in other investment companies; | 10,153,704.282 | 210,047.346 | 441,291.936 | 940,671.000 | 11,745,714.564 | ||||||||||||||||||
2(l) Purchasing securities on margin, selling securities short, or participating on a joint or joint and several basis in a securities trading account; | 10,154,010.207 | 209,878.907 | 441,154.450 | 940,671.000 | 11,745,714.564 | ||||||||||||||||||
2(m) Pledging, mortgaging or hypothecating its assets; | 10,141,482.385 | 222,406.729 | 441,154.450 | 940,671.000 | 11,745,714.564 | ||||||||||||||||||
2(n) Investments in issuers in which management of a Fund or its investment adviser owns securities; | 10,131,158.279 | 232,730.835 | 441,154.450 | 940,671.000 | 11,745,714.564 | ||||||||||||||||||
2(o) Investments in issuers having a record of less than three years of continuous operation; | 10,153,485.684 | 210,403.430 | 441,154.450 | 940,671.000 | 11,745,714.564 | ||||||||||||||||||
2(p) Investments in oil, gas or mineral programs; | 10,156,984.388 | 206,904.726 | 441,154.450 | 940,671.000 | 11,745,714.564 | ||||||||||||||||||
2(q) Investments in put options, call options or combinations thereof; | 10,154,041.949 | 209,847.165 | 441,154.450 | 940,671.000 | 11,745,714.564 | ||||||||||||||||||
2(r) Investments in warrants; and | 10,156,784.207 | 207,104.907 | 441,154.450 | 940,671.000 | 11,745,714.564 | ||||||||||||||||||
2(s) Investments in securities other than those discussed in the Fund's prospectus. | 10,141,862.370 | 222,026.744 | 441,154.450 | 940,671.000 | 11,745,714.564 |
155
n The Guardian Low Duration Bond Fund
Shareholder Voting Summary (Unaudited)
November 15, 2005
For the above named Fund, the sub-proposals in Proposal No. 2 as described in the Proxy Statement, were approved by shareholders as follows:
Proposal No. 2
Approving an amendment to, or the elimination of, the Fund's fundamental investment restriction, as described in the Proxy Statement, with respect to the following.
SUB-PROPOSALS | FOR | AGAINST | ABSTAIN | BROKER NON-VOTE | TOTAL | ||||||||||||||||||
2(a) Diversification of investments; | 3,149,404.336 | 1,925.000 | 11,058.000 | 163,122.000 | 3,325,509.336 | ||||||||||||||||||
2(b) Borrowing; | 3,147,723.335 | 3,606.001 | 11,058.000 | 163,122.000 | 3,325,509.336 | ||||||||||||||||||
2(c) Issuing senior securities; | 3,147,723.335 | 1,925.000 | 12,739.001 | 163,122.000 | 3,325,509.336 | ||||||||||||||||||
2(d) Concentration of investments in the same industry; | 3,147,723.335 | 3,606.001 | 11,058.000 | 163,122.000 | 3,325,509.336 | ||||||||||||||||||
2(e) Investments in real estate; | 3,149,404.336 | 1,925.000 | 11,058.000 | 163,122.000 | 3,325,509.336 | ||||||||||||||||||
2(h) Making loans; and | 3,147,723.335 | 3,606.001 | 11,058.000 | 163,122.000 | 3,325,509.336 | ||||||||||||||||||
2(m) Pledging, mortgaging or hypothecating its assets. | 3,147,723.335 | 3,606.001 | 11,058.000 | 163,122.000 | 3,325,509.336 |
156
n The Guardian High Yield Bond Fund
Shareholder Voting Summary (Unaudited)
November 15, 2005
For the above named Fund, the sub-proposals in Proposal No. 2 as described in the Proxy Statement, were approved by shareholders as follows:
Proposal No. 2
Approving an amendment to, or the elimination of, the Fund's fundamental investment restriction, as described in the Proxy Statement, with respect to the following.
SUB-PROPOSALS | FOR | AGAINST | ABSTAIN | BROKER NON-VOTE | TOTAL | ||||||||||||||||||
2(a) Diversification of investments; | 9,656,399.852 | 69,345.952 | 24,399.880 | 621,925.000 | 10,372,070.684 | ||||||||||||||||||
2(b) Borrowing; | 9,656,399.852 | 69,345.952 | 24,399.880 | 621,925.000 | 10,372,070.684 | ||||||||||||||||||
2(c) Issuing senior securities; | 9,656,399.852 | 69,345.952 | 24,399.880 | 621,925.000 | 10,372,070.684 | ||||||||||||||||||
2(d) Concentration of investments in the same industry; | 9,656,399.852 | 69,345.952 | 24,399.880 | 621,925.000 | 10,372,070.684 | ||||||||||||||||||
2(e) Investments in real estate; | 9,656,399.852 | 69,345.952 | 24,399.880 | 621,925.000 | 10,372,070.684 | ||||||||||||||||||
2(h) Making loans; and | 9,656,399.852 | 69,345.952 | 24,399.880 | 621,925.000 | 10,372,070.684 | ||||||||||||||||||
2(m) Pledging, mortgaging or hypothecating its assets. | 9,649,707.860 | 70,820.944 | 24,399.880 | 627,142.000 | 10,372,070.684 |
157
n The Guardian Tax-Exempt Fund
Shareholder Voting Summary (Unaudited)
November 15, 2005
For the above named Fund, the sub-proposals in Proposal No. 2 as described in the Proxy Statement, were approved by shareholders as follows:
Proposal No. 2
Approving an amendment to, or the elimination of, the Fund's fundamental investment restriction, as described in the Proxy Statement, with respect to the following.
SUB-PROPOSALS | FOR | AGAINST | ABSTAIN | BROKER NON-VOTE | TOTAL | ||||||||||||||||||
2(a) Diversification of investments; | 8,435,836.951 | 10,372.405 | 4,870.194 | 393,158.000 | 8,844,237.550 | ||||||||||||||||||
2(b) Borrowing; | 8,435,836.951 | 10,372.405 | 4,870.194 | 393,158.000 | 8,844,237.550 | ||||||||||||||||||
2(c) Issuing senior securities; | 8,435,836.951 | 10,372.405 | 4,870.194 | 393,158.000 | 8,844,237.550 | ||||||||||||||||||
2(d) Concentration of investments in the same industry; | 8,435,836.951 | 10,372.405 | 4,870.194 | 393,158.000 | 8,844,237.550 | ||||||||||||||||||
2(e) Investments in real estate; | 8,435,836.951 | 10,372.405 | 4,870.194 | 393,158.000 | 8,844,237.550 | ||||||||||||||||||
2(f) Investments in commodities; | 8,435,836.951 | 10,372.405 | 4,870.194 | 393,158.000 | 8,844,237.550 | ||||||||||||||||||
2(g) Underwriting the securities of other issuers; | 8,435,836.951 | 10,372.405 | 4,870.194 | 393,158.000 | 8,844,237.550 | ||||||||||||||||||
2(h) Making loans; | 8,435,836.951 | 10,372.405 | 4,870.194 | 393,158.000 | 8,844,237.550 | ||||||||||||||||||
2(i) Investments in securities that are not readily marketable; | 8,435,836.951 | 10,372.405 | 4,870.194 | 393,158.000 | 8,844,237.550 | ||||||||||||||||||
2(j) Investments for the purpose of exercising control or management; | 8,435,836.951 | 10,372.405 | 4,870.194 | 393,158.000 | 8,844,237.550 | ||||||||||||||||||
2(k) Investments in other investment companies; | 8,435,836.951 | 10,372.405 | 4,870.194 | 393,158.000 | 8,844,237.550 | ||||||||||||||||||
2(l) Purchasing securities on margin, selling securities short, or participating on a joint or joint and several basis in a securities trading account; | 8,435,836.951 | 10,372.405 | 4,870.194 | 393,158.000 | 8,844,237.550 | ||||||||||||||||||
2(m) Pledging, mortgaging or hypothecating its assets; | 8,435,836.951 | 10,372.405 | 4,870.194 | 393,158.000 | 8,844,237.550 | ||||||||||||||||||
2(n) Investments in issuers in which management of a Fund or its investment adviser owns securities; | 8,435,836.951 | 10,372.405 | 4,870.194 | 393,158.000 | 8,844,237.550 | ||||||||||||||||||
2(p) Investments in oil, gas or mineral programs; | 8,436,903.240 | 9,306.116 | 4,870.194 | 393,158.000 | 8,844,237.550 | ||||||||||||||||||
2(q) Investments in put options, call options or combinations thereof; | 8,435,836.951 | 10,372.405 | 4,870.194 | 393,158.000 | 8,844,237.550 | ||||||||||||||||||
2(s) Investments in securities other than those discussed in the Fund's prospectus; and | 8,435,836.951 | 10,372.405 | 4,870.194 | 393,158.000 | 8,844,237.550 | ||||||||||||||||||
2(t) The Guardian Tax-Exempt Fund's investments in investment grade municipal obligations. | 8,436,903.240 | 9,306.116 | 4,870.194 | 393,158.000 | 8,844,237.550 |
158
n The Guardian Cash Management Fund
Shareholder Voting Summary (Unaudited)
November 15, 2005
For the above named Fund, the sub-proposals in Proposal No. 2 as described in the Proxy Statement, were approved by shareholders as follows:
Proposal No. 2
Approving an amendment to, or the elimination of, the Fund's fundamental investment restriction, as described in the Proxy Statement, with respect to the following.
SUB-PROPOSALS | FOR | AGAINST | ABSTAIN | BROKER NON-VOTE | TOTAL | ||||||||||||||||||
2(a) Diversification of investments; | 201,256,642.813 | 13,166,067.619 | 11,872,783.482 | 1,432,507.000 | 227,728,000.914 | ||||||||||||||||||
2(b) Borrowing; | 202,846,458.366 | 11,576,252.066 | 11,872,783.482 | 1,432,507.000 | 227,728,000.914 | ||||||||||||||||||
2(c) Issuing senior securities; | 203,365,354.606 | 11,057,355.826 | 11,872,783.482 | 1,432,507.000 | 227,728,000.914 | ||||||||||||||||||
2(d) Concentration of investments in the same industry; | 202,889,926.786 | 11,532,783.646 | 11,872,783.482 | 1,432,507.000 | 227,728,000.914 | ||||||||||||||||||
2(e) Investments in real estate; | 202,879,717.676 | 11,542,764.366 | 11,873,011.872 | 1,432,507.000 | 227,728,000.914 | ||||||||||||||||||
2(f) Investments in commodities; | 202,783,131.426 | 11,639,350.616 | 11,873,011.872 | 1,432,507.000 | 227,728,000.914 | ||||||||||||||||||
2(g) Underwriting the securities of other issuers; | 202,863,874.736 | 11,553,736.246 | 11,877,882.932 | 1,432,507.000 | 227,728,000.914 | ||||||||||||||||||
2(h) Making loans; | 202,882,590.566 | 11,539,891.476 | 11,873,011.872 | 1,432,507.000 | 227,728,000.914 | ||||||||||||||||||
2(i) Investments in securities that are not readily marketable; | 202,401,035.947 | 12,016,575.035 | 11,877,882.932 | 1,432,507.000 | 227,728,000.914 | ||||||||||||||||||
2(j) Investments for the purpose of exercising control or management; | 202,584,974.916 | 11,837,507.126 | 11,873,011.872 | 1,432,507.000 | 227,728,000.914 | ||||||||||||||||||
2(k) Investments in other investment companies; | 202,594,158.016 | 11,828,324.026 | 11,873,011.872 | 1,432,507.000 | 227,728,000.914 | ||||||||||||||||||
2(l) Purchasing securities on margin, selling securities short, or participating on a joint or joint and several basis in a securities trading account; | 202,708,580.336 | 11,714,130.096 | 11,872,783.482 | 1,432,507.000 | 227,728,000.914 | ||||||||||||||||||
2(m) Pledging, mortgaging or hypothecating its assets; | 202,435,737.585 | 11,986,972.847 | 11,872,783.482 | 1,432,507.000 | 227,728,000.914 | ||||||||||||||||||
2(n) Investments in issuers in which management of a Fund or its investment adviser owns securities; | 202,415,171.167 | 12,007,539.265 | 11,872,783.482 | 1,432,507.000 | 227,728,000.914 | ||||||||||||||||||
2(p) Investments in oil, gas or mineral programs; | 202,842,426.826 | 11,580,283.606 | 11,872,783.482 | 1,432,507.000 | 227,728,000.914 | ||||||||||||||||||
2(q) Investments in put options, call options or combinations thereof; and | 203,822,042.366 | 11,887,494.066 | 10,585,957.482 | 1,432,507.000 | 227,728,000.914 | ||||||||||||||||||
2(r) Investments in warrants. | 204,039,012.394 | 11,670,524.038 | 10,585,957.482 | 1,432,507.000 | 227,728,000.914 |
159
n The Park Avenue Portfolio
Shareholder Voting Summary (Unaudited)
November 15, 2005
With respect to Proposal No. 3 and Proposal No. 4, changes in the Amended and Restated Declaration of Trust of The Park Avenue Portfolio, were approved by shareholders as follows:
Proposal No. 3
FOR | AGAINST | ABSTAIN | BROKER NON-VOTE | TOTAL | |||||||||||||||||||
Approving an amendment to the Amended and Restated Declaration of Trust of The Park Avenue Portfolio to increase the maximum number of Trustees that may serve on its Board of Trustees from eleven to twelve. | 290,670,362.414 | 16,560,019.652 | 14,336,525.820 | 9,148,658.000 | 330,715,565.886 |
Proposal No. 4
Approving an amendment to the Amended and Restated Declaration of Trust of The Park Avenue Portfolio (the "Trust Document") to permit certain amendments to the Trust Document to be made without shareholder approval. | 280,630,825.634 | 31,815,324.272 | 9,120,757.980 | 9,148,658.000 | 330,715,565.886 |
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• Trustees
Dennis J. Manning, CLU, ChFC
Frank J. Fabozzi, Ph.D.
Arthur V. Ferrara, CLU
Leo R. Futia, CLU
Anne M. Goggin, Esq.
William W. Hewitt, Jr.
Sidney I. Lirtzman, Ph.D.
Robert G. Smith, Ph.D.
Kathleen C. Cuocolo
William N. Goetzmann
Steven J. Paggioli
• Officers
Thomas G. Sorell
Joseph A. Caruso
Howard W. Chin
Robert J. Crimmins, Jr.
Richard A. Cumiskey
Manind V. Govil
Alexander M. Grant, Jr.
Edward H. Hocknell
Jonathan C. Jankus
Stewart M. Johnson
R. Robin Menzies
Nydia Morrison
Karen L. Olvany
Frank L. Pepe
Richard T. Potter, Jr.
Robert A. Reale
Donald P. Sullivan, Jr.
Raman Vardharaj
Matthew P. Ziehl
• Investment Adviser & Distributor
Guardian Investor Services LLC
7 Hanover Square
New York, New York 10004
• Custodian of Assets
State Street Bank and Trust Company
Custody Division
1776 Heritage Drive
North Quincy, Massachusetts 02171
• Shareholder Servicing Agent, Transfer Agent & Dividend Paying Agent for State Street Bank and Trust Company
Boston Financial Data Services
Post Office Box 219611
Kansas City, Missouri 64121-9611
• Independent Registered Public Accounting Firm
Ernst & Young LLP
200 Clarendon Street
Boston, MA 02116
• Proxy Voting Policies and Procedures:
A description of the policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities, as well as information regarding how each Fund voted proxies relating to portfolio securities during the 12-month period ended June 30, 2005, is available without charge upon request by logging on to www.guardianinvestor.com or the Securities and Exchange Commission's ("SEC") website at www.sec.gov.
• Form N-Q:
The Park Avenue Portfolio files a complete schedule of portfolio holdings with the SEC for the first and third quarters of each year on the Form N-Q. The Portfolio's Forms N-Q are available on the SEC's Internet site at www.sec.gov, and can be reviewed and copied at the SEC's Public Reference Room in Washington D.C. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330.
• Code of Ethics:
The Park Avenue Portfolio has adopted a code of ethics for its Principal Executive Officer and Principal Financial Officers (the "Code"). The purpose of the Code is to promote, among other things: honest and ethical conduct, including the handling of conflicts of interest; full, fair, accurate, timely and understandable disclosure in reports and documents filed with the SEC; and compliance with applicable laws and regulations. A copy of the Code has been filed with the SEC on Form N-CSR and can be obtained on the SEC's website at www.sec.gov.
Copies for all of the above can also be obtained free of charge by calling 1-800-221-3253 or by writing Guardian Investor Services LLC at 7 Hanover Square, New York, New York 10004. Shares of the Funds are not deposits or obligations of, or guaranteed or endorsed by, any bank or depository institution, nor are they federally insured by the Federal Deposit Insurance Corporation, The Federal Reserve Board, the National Credit Union Association or any other agency. They involve investment risk, including possible loss of principal amount invested.
This report is submitted for the general information of the shareholders of The Park Avenue Portfolio family of mutual funds. This report is not authorized for distribution to the public unless accompanied or preceded by a current prospectus for the funds which comprise The Park Avenue Portfolio. The prospectus contains important information, including fees and expenses. Please read the prospectus carefully before investing or sending money. You should consider the investment objectives, risks, fees and charges of the investment company carefully before investing. For an additional prospectus, which contains this and other information, please contact your investment professional or call Guardian Investor Services LLC at 800-221-3253.
Guardian Investor Services LLC
7 Hanover Square
New York, New York 10004.
EB-011566 (12/05)
Guardian Investor Services LLC
7 Hanover Square
New York, New York 10004
PRSRT STANDARD
U.S. POSTAGE PAID
ITEM 2. CODE OF ETHICS.
The registrant has adopted a code of ethics, as defined in Item 2 of Form N-CSR, applicable to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions (the “Code”). A copy of the Code is filed as an exhibit to this Form N-CSR. There were no substantive amendments made to the Code, nor were there any waivers granted under the Code, during the period covered by this report.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
The registrant’s Board of Directors/Trustees has determined that Robert G. Smith qualifies as an audit committee financial expert, as defined in Item 3 of Form N-CSR. Dr. Smith serves as Chairman of the registrant’s audit committee and is considered “independent” for purposes of Item 3 of Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) – (d) Aggregate fees billed to the registrant for the last two fiscal years for professional services rendered by the registrant’s principal accountant were as follows: 2005 – (a) Audit Fees $257,806; (c) Tax Fees $76,733; 2004 – (a) Audit Fees $249,218; (c) Tax Fees $73,832.
Audit Fees include amounts related to the audit and report on the registrant’s annual financial statements. Tax fees include amounts related to tax compliance services.
(e)(1) Pursuant to the Audit Committee charter, the Audit Committee of the Board is responsible for pre-approving any engagement of the Registrant’s accountant to provide any non-prohibited services to the Registrant, including the fees and other compensation to be paid to the accountant. The Chairman of the Audit Committee may grant the pre-approval of services to the Registrant for non-prohibited services. All such delegated pre-approvals shall be presented to the Audit Committee no later than the next Audit Committee meeting.
The Audit Committee of the Board is responsible for pre-approving any engagement of the Registrant’s accountant, including the fees and other compensation to be paid to the accountant, to provide any non- audit services to the Registrant’s investment adviser (or any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the Registrant), if the engagement relates directly to the operations and financial reporting of the Registrant. The Chairman of the Audit Committee may pre-approve non-audit services, which are not prohibited, to the adviser (or any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the Registrant). All such delegated pre-approvals shall be presented to the Audit Committee no later than the next Audit Committee meeting.
(2) No services described in paragraph (b) – (d) of Item 4, were approved by the Audit Committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) Not Applicable.
(g) Not Applicable.
(h) Not Applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS
Included in response to Item 1.
ITEM 7. |
| DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable.
ITEM 8. |
| PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable.
ITEM 9. |
| PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASES. |
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were no material changes to the procedures by which shareholders may recommend nominees to the registrant’s board during the most recent fiscal half-year.
ITEM 11. CONTROLS AND PROCEDURES.
a) The registrant’s certifying officers have evaluated the registrant’s disclosure controls and procedures within 90 days of this filing and have concluded that the registrant’s disclosure controls and procedures were effective, as of that date, in ensuring that information required to be disclosed by the registrant in this Form N-CSR was recorded, processed, summarized, and reported timely.
(b) The registrant’s certifying officers are aware of no changes in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal half-year that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) The registrant’s code of ethics pursuant to Item 2 of Form N-CSR is attached.
(a)(2) Separate certifications by the registrant’s certifying officers, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and required by Rule 30a-2(a) under the Investment Company Act of 1940, are attached.
(a)(3) Not applicable.
(b) A certification by the registrant’s certifying officers, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and required by Rule 30a-2(b) under the Investment Company Act of 1940, is attached.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
The Park Avenue Portfolio
By: | /s/ Thomas G. Sorell |
|
| Thomas G. Sorell | |
| President of | |
| The Park Avenue Portfolio |
Date: March 3, 2006
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/ Thomas G. Sorell |
|
| Thomas G. Sorell | |
| President of | |
| The Park Avenue Portfolio |
Date: March 3, 2006
By: | /s/ Frank L. Pepe |
|
| Frank L. Pepe | |
| Vice President and Treasurer of | |
| The Park Avenue Portfolio |
Date: March 3, 2006