SCHEDULE 14A (RULE 14a-101) INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14a INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. ) Filed by the Registrant [X] Filed by a Party other than the Registrant [ ] Check the appropriate box: <Table> [X] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) [ ] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to Rule 14a-12 </Table> THE PARK AVENUE PORTFOLIO - -------------------------------------------------------------------------------- (Name of Registrant as Specified In Its Charter) - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): [X] No fee required. [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. (1) Title of each class of securities to which transaction applies: ------------------------------------------------------------------------ (2) Aggregate number of securities to which transaction applies: ------------------------------------------------------------------------ (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): ------------------------------------------------------------------------ (4) Proposed maximum aggregate value of transaction: ------------------------------------------------------------------------ (5) Total fee paid: ------------------------------------------------------------------------ [ ] Fee paid previously with preliminary materials. [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: ------------------------------------------------------------------------ (2) Form, Schedule or Registration Statement no.: ------------------------------------------------------------------------ (3) Filing Party: ------------------------------------------------------------------------ (4) Date Filed: ------------------------------------------------------------------------ THE PARK AVENUE PORTFOLIO(R), ON BEHALF OF ITS SERIES, THE GUARDIAN PARK AVENUE FUND(R) THE GUARDIAN UBS LARGE CAP VALUE FUND(SM) THE GUARDIAN PARK AVENUE SMALL CAP FUND(SM) THE GUARDIAN UBS SMALL CAP VALUE FUND(SM) THE GUARDIAN ASSET ALLOCATION FUND(SM) THE GUARDIAN S&P 500 INDEX FUND(SM) THE GUARDIAN BAILLIE GIFFORD INTERNATIONAL GROWTH FUND(SM) THE GUARDIAN BAILLIE GIFFORD EMERGING MARKETS FUND(SM) THE GUARDIAN INVESTMENT QUALITY BOND FUND(SM) THE GUARDIAN LOW DURATION BOND FUND(SM) THE GUARDIAN HIGH YIELD BOND FUND(SM) THE GUARDIAN TAX-EXEMPT FUND(SM) THE GUARDIAN CASH MANAGEMENT FUND(SM) THE GUARDIAN VARIABLE CONTRACT FUNDS, INC., ON BEHALF OF ITS SERIES, THE GUARDIAN STOCK FUND THE GUARDIAN VC 500 INDEX FUND THE GUARDIAN VC ASSET ALLOCATION FUND THE GUARDIAN VC HIGH YIELD BOND FUND THE GUARDIAN VC LOW DURATION BOND FUND THE GUARDIAN UBS VC LARGE CAP VALUE FUND THE GUARDIAN UBS VC SMALL CAP VALUE FUND GIAC FUNDS, INC., ON BEHALF OF ITS SERIES, BAILLIE GIFFORD INTERNATIONAL GROWTH FUND BAILLIE GIFFORD EMERGING MARKETS FUND THE GUARDIAN SMALL CAP STOCK FUND THE GUARDIAN BOND FUND, INC. THE GUARDIAN CASH FUND, INC. NOTICE OF JOINT SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON NOVEMBER 15, 2005 September [28], 2005 Dear Shareholder: The Guardian Funds listed above (each, a "Fund," and collectively, the "Funds") will hold a joint special meeting of shareholders (the "Special Meeting") on November 15, 2005 at 4:00 p.m., New York time, at the principal offices of the Funds, located at 7 Hanover Square, New York, New York, 10004. At the Special Meeting, shareholders will be asked to vote on the following proposals: 1. Electing the eleven nominees to the Board of Trustees or Board of Directors of each Fund; 2. Approving a number of changes to your Fund's fundamental investment restrictions, including the elimination of certain of those restrictions, as described in the Proxy Statement; 3. Approving an amendment to the Amended and Restated Agreement and 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; and 4. Approving an amendment to the Amended and Restated Agreement and 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. Please read the enclosed Proxy Statement for a complete discussion of each of these proposals. Shareholders of record as of September 16, 2005 will receive notice of and be entitled to vote at the Special Meeting or any adjournment or postponement of the Special Meeting. A proxy card has been provided for you to indicate your voting instructions, if you cannot attend the Special Meeting in person. If you own shares of a Fund through a variable annuity or variable life insurance contract, your instructions will be received by The Guardian Insurance & Annuity Company, Inc., which, as shareholder of record, will vote the shares in accordance with the voting instructions received from variable annuity and variable life insurance policy owners for whose accounts the shares are held. If you are unable to attend the Special Meeting, please return your proxy card with your voting instructions promptly. Your vote is essential, no matter how many shares you own. Your prompt vote will eliminate the need to send additional mailings at a later time to increase voter participation to meet quorum requirements. YOUR PARTICIPATION IS IMPORTANT. EVERYTHING YOU NEED IN ORDER TO VOTE IS ENCLOSED, INCLUDING THE PROXY STATEMENT AND APPROPRIATE PROXY CARD(S). PLEASE READ THE INSTRUCTIONS ON THE PROXY CARD CAREFULLY FOR INFORMATION ON HOW TO SUBMIT YOUR VOTING INSTRUCTIONS. You are entitled to one vote for each share you own. Fractional votes will be counted. If you own more than one shareholder account, a separate proxy card has been provided for each account that you own. Please refer to page [41] of the Proxy Statement for more information about voting. We appreciate your careful consideration of each of the proposals described in the Proxy Statement and thank you for your participation in this important initiative for your Fund. By order of the Board of Trustees or Board of Directors, /s/ JOSEPH A. CARUSO Joseph A. Caruso Senior Vice President and Secretary THE PARK AVENUE PORTFOLIO(R), ON BEHALF OF ITS SERIES, THE GUARDIAN PARK AVENUE FUND(R) THE GUARDIAN UBS LARGE CAP VALUE FUND(SM) THE GUARDIAN PARK AVENUE SMALL CAP FUND(SM) THE GUARDIAN UBS SMALL CAP VALUE FUND(SM) THE GUARDIAN ASSET ALLOCATION FUND(SM) THE GUARDIAN S&P 500 INDEX FUND(SM) THE GUARDIAN BAILLIE GIFFORD INTERNATIONAL GROWTH FUND(SM) THE GUARDIAN BAILLIE GIFFORD EMERGING MARKETS FUND(SM) THE GUARDIAN INVESTMENT QUALITY BOND FUND(SM) THE GUARDIAN LOW DURATION BOND FUND(SM) THE GUARDIAN HIGH YIELD BOND FUND(SM) THE GUARDIAN TAX-EXEMPT FUND(SM) THE GUARDIAN CASH MANAGEMENT FUND(SM) THE GUARDIAN VARIABLE CONTRACT FUNDS, INC., ON BEHALF OF ITS SERIES, THE GUARDIAN STOCK FUND THE GUARDIAN VC 500 INDEX FUND THE GUARDIAN VC ASSET ALLOCATION FUND THE GUARDIAN VC HIGH YIELD BOND FUND THE GUARDIAN VC LOW DURATION BOND FUND THE GUARDIAN UBS VC LARGE CAP VALUE FUND THE GUARDIAN UBS VC SMALL CAP VALUE FUND GIAC FUNDS, INC., ON BEHALF OF ITS SERIES, BAILLIE GIFFORD INTERNATIONAL GROWTH FUND BAILLIE GIFFORD EMERGING MARKETS FUND THE GUARDIAN SMALL CAP STOCK FUND THE GUARDIAN BOND FUND, INC. THE GUARDIAN CASH FUND, INC. PROXY STATEMENT FOR JOINT SPECIAL MEETING OF SHAREHOLDERS NOVEMBER 15, 2005 This is a Proxy Statement for the Guardian-sponsored mutual funds listed above (each, a "Fund," and collectively, the "Funds"). Certain Funds are governed by a Board of Trustees, and others are governed by a Board of Directors, depending on the form of organization of the particular Fund. The same individuals, however, serve on both the Board of Trustees and the Board of Directors for all of the Funds. The Board of Trustees or the Board of Directors, as applicable (the "Board"), is soliciting proxies for a joint special meeting of shareholders of the Funds (the "Special Meeting") to approve proposals that have already been approved by the Board. For convenience, each member of the Board is referred to in the Proxy Statement individually as a "Trustee" and collectively as the "Trustees." This Proxy Statement describes the proposals to be considered and voted upon at the Special Meeting or any adjournments or postponements thereof, and will be first mailed to shareholders on or about September [28], 2005. You are entitled to notice of and to vote at the Special Meeting, and any adjournments or postponements thereof, as to any Fund, if you owned or had a voting interest in shares of the Fund at the close of business on September 16, 2005 (the "record date"). The Special Meeting is scheduled to be held on November 15, 2005 at 4:00 p.m., New York time, at the principal offices of the Funds, 7 Hanover Square, New York, New York, 10004, to consider the following proposals: PROPOSAL 1. Election of the eleven nominees for Trustees of each Fund; PROPOSAL 2. Approving an amendment to, or the elimination of, certain of the Funds' fundamental restrictions, with respect to the following: (a) Diversification of investments; (b) Borrowing; (c) Issuing senior securities; (d) Concentration of investments in the same industry; (e) Investments in real estate; (f) Investments in commodities; (g) Underwriting the securities of other issuers; (h) Making loans; (i) Investments in securities that are not readily marketable; (j) Investments for the purpose of exercising control or management; (k) Investments in other investment companies; (l) Purchasing securities on margin, selling securities short, or participating on a joint or joint and several basis in a securities trading account; (m) Pledging, mortgaging or hypothecating Fund assets; 2 (n) Investments in issuers in which management of a Fund or its investment adviser owns securities; (o) Investments in issuers having a record of less than three years of continuous operation; (p) Investments in oil, gas or mineral programs; (q) Investments in put options, call options, or combinations thereof; (r) Investments in warrants; (s) Investments in securities other than those discussed in the Fund's prospectus; (t) The Guardian Tax-Exempt Fund's investments in investment grade municipal obligations. PROPOSAL 3. Approving an amendment to the Amended and Restated Agreement and 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. PROPOSAL 4. Approving an amendment to the Amended and Restated Agreement and 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. Proposal Summary. The following table shows which of the above proposals applies to your Fund(s), each of which is referred to individually in this Proxy Statement as an "Affected Fund" and collectively as the "Affected Funds." The shareholders of each Affected Fund will vote separately with respect to each proposal other than the election of Trustees (Proposal 1) and approving the amendments to The Park Avenue Portfolio's Amended and Restated Declaration of Trust (Proposals 3 and 4). For Proposal 1, the shareholders of each series of The Park Avenue Portfolio, The Guardian Variable Contract Funds, Inc. and GIAC Funds, Inc., respectively, will vote together as a single class. The shareholders of The Guardian Bond Fund, Inc. and The Guardian Cash Fund, Inc., respectively, will vote together as a single class. For Proposals 3 and 4, the shareholders of each series of The Park Avenue Portfolio will vote together as a single class. <Table> <Caption> - ------------------------------------------------------------------------------------------ PAGE PROPOSAL AFFECTED FUND(S) NO. - ------------------------------------------------------------------------------------------ 1 Election of nominees for All Funds Trustees. - ------------------------------------------------------------------------------------------ Approving an amendment to All Funds 2(a) each Fund's fundamental investment restriction with respect to diversification of investments. - ------------------------------------------------------------------------------------------ </Table> 3 <Table> <Caption> - ------------------------------------------------------------------------------------------ PAGE PROPOSAL AFFECTED FUND(S) NO. - ------------------------------------------------------------------------------------------ Approving an amendment to All Funds 2(b) each Fund's fundamental investment restriction with respect to borrowing. - ------------------------------------------------------------------------------------------ Approving an amendment to All Funds 2(c) each Fund's fundamental investment restriction with respect to the issuance of senior securities. - ------------------------------------------------------------------------------------------ Approving an amendment to All Funds 2(d) each Fund's fundamental investment restriction with respect to concentration of investments in the same industry. - ------------------------------------------------------------------------------------------ Approving an amendment to All Funds 2(e) each Fund's fundamental investment restriction with respect to investments in real estate. - ------------------------------------------------------------------------------------------ Approving an amendment to All Funds except: 2(f) certain Funds' fundamental The Guardian High Yield Fund investment restriction The Guardian Low Duration Bond Fund with respect to The Guardian S&P 500 Index Fund investments in The Guardian Stock Fund commodities. The Guardian VC 500 Index Fund The Guardian VC Asset Allocation Fund The Guardian VC Low Duration Bond Fund The Guardian VC High Yield Fund - ------------------------------------------------------------------------------------------ Approving an amendment to All Funds except: 2(g) certain Funds' fundamental The Guardian Park Avenue Small Cap Fund investment restriction The Guardian S&P 500 Index Fund with respect to The Guardian Low Duration Bond Fund underwriting the The Guardian High Yield Fund Securities of other The Guardian Stock Fund issuers. The Guardian VC 500 Index Fund The Guardian VC Asset Allocation Fund The Guardian VC Low Duration Bond Fund The Guardian VC High Yield Fund The Guardian Small Cap Stock Fund - ------------------------------------------------------------------------------------------ </Table> 4 <Table> <Caption> - ------------------------------------------------------------------------------------------ PAGE PROPOSAL AFFECTED FUND(S) NO. - ------------------------------------------------------------------------------------------ Approving an amendment to All Funds except: 2(h) certain Funds' fundamental The Guardian UBS Large Cap Value Fund investment restriction The Guardian UBS Small Cap Value Fund with respect to making The Guardian UBS VC Large Cap Value Fund loans. The Guardian UBS VC Small Cap Value Fund - ------------------------------------------------------------------------------------------ Approving the elimination The Guardian Park Avenue Fund 2(i) of certain Funds' The Guardian Asset Allocation Fund fundamental investment The Guardian Baillie Gifford restriction with respect International Growth Fund to investments in The Guardian Investment Quality Bond securities that are not Fund readily marketable. The Guardian Tax-Exempt Fund The Guardian Cash Management Fund Baillie Gifford International Growth Fund The Guardian Bond Fund, Inc. The Guardian Cash Fund, Inc. - ------------------------------------------------------------------------------------------ Approving the elimination The Guardian Park Avenue Fund 2(j) of certain Funds' The Guardian Asset Allocation Fund fundamental investment The Guardian Baillie Gifford restriction with respect International Growth Fund to investments for the The Guardian Investment Quality Bond purpose of exercising Fund control or management of The Guardian Tax-Exempt Fund another company. The Guardian Cash Management Fund Baillie Gifford International Growth Fund The Guardian Bond Fund, Inc. The Guardian Cash Fund, Inc. - ------------------------------------------------------------------------------------------ Approving the elimination The Guardian Park Avenue Fund 2(k) of certain Funds' The Guardian Asset Allocation Fund fundamental investment The Guardian Baillie Gifford restriction with respect International to investments in other Growth Fund investment companies. The Guardian Investment Quality Bond Fund The Guardian Tax-Exempt Fund The Guardian Cash Management Fund Baillie Gifford International Growth Fund The Guardian Bond Fund, Inc. The Guardian Cash Fund, Inc. - ------------------------------------------------------------------------------------------ </Table> 5 <Table> <Caption> - ------------------------------------------------------------------------------------------ PAGE PROPOSAL AFFECTED FUND(S) NO. - ------------------------------------------------------------------------------------------ Approving the elimination The Guardian Park Avenue Fund 2(l) of certain Funds' The Guardian Asset Allocation Fund fundamental investment The Guardian Baillie Gifford restrictions with respect International Growth Fund to purchasing securities The Guardian Investment Quality Bond on margin, selling Fund securities short, or The Guardian Tax-Exempt Fund participating on a joint The Guardian Cash Management Fund or joint and several basis Baillie Gifford International Growth in a securities trading Fund account. The Guardian Bond Fund, Inc. The Guardian Cash Fund, Inc. - ------------------------------------------------------------------------------------------ Approving the elimination All Funds except: 2(m) of certain Funds' The Guardian UBS Large Cap Value Fund fundamental investment The Guardian UBS Small Cap Value Fund restriction with respect The Guardian UBS VC Large Cap Value Fund to pledging, mortgaging or The Guardian UBC VC Small Cap Value Fund hypothecating Fund assets. - ------------------------------------------------------------------------------------------ Approving the elimination The Guardian Park Avenue Fund 2(n) of certain Funds' The Guardian Asset Allocation Fund fundamental investment The Guardian Baillie Gifford restriction with respect International Growth Fund to issuers in which The Guardian Investment Quality Bond management of a Fund or Fund its investment adviser The Guardian Tax-Exempt Fund owns securities. The Guardian Cash Management Fund Baillie Gifford International Growth Fund The Guardian Bond Fund, Inc. The Guardian Cash Fund, Inc. - ------------------------------------------------------------------------------------------ Approving the elimination The Guardian Park Avenue Fund 2(o) of certain Funds' The Guardian Asset Allocation Fund fundamental investment The Guardian Investment Quality Bond restriction with respect Fund to investments in issuers The Guardian Bond Fund, Inc. having a record of less than three years continuous operation. - ------------------------------------------------------------------------------------------ </Table> 6 <Table> <Caption> - ------------------------------------------------------------------------------------------ PAGE PROPOSAL AFFECTED FUND(S) NO. - ------------------------------------------------------------------------------------------ Approving the elimination The Guardian Park Avenue Fund 2(p) of certain Funds' The Guardian Asset Allocation Fund fundamental investment The Guardian Baillie Gifford restriction with respect International Growth Fund to investments in oil, gas The Guardian Investment Quality Bond and mineral programs. Fund The Guardian Tax-Exempt Fund The Guardian Cash Management Fund Baillie Gifford International Growth Fund The Guardian Bond Fund, Inc. The Guardian Cash Fund, Inc. - ------------------------------------------------------------------------------------------ Approving the elimination The Guardian Park Avenue Fund 2(q) of certain Funds' The Guardian Park Avenue Small Cap Fund fundamental investment The Guardian Asset Allocation Fund restriction with respect The Guardian Baillie Gifford to investments in put International Growth Fund options, call options and The Guardian Investment Quality Bond combinations thereof. Fund The Guardian Tax-Exempt Fund The Guardian Cash Management Fund Baillie Gifford International Growth Fund The Guardian Small Cap Stock Fund The Guardian Bond Fund, Inc. The Guardian Cash Fund, Inc. - ------------------------------------------------------------------------------------------ Approving the elimination The Guardian Asset Allocation Fund 2(r) of certain Funds' The Guardian Baillie Gifford fundamental investment International Growth Fund restriction with respect The Guardian Investment Quality Bond to investments in Fund warrants. The Guardian Cash Management Fund Baillie Gifford International Growth Fund The Guardian Bond Fund, Inc. The Guardian Cash Fund, Inc. - ------------------------------------------------------------------------------------------ Approving the elimination The Guardian Park Avenue Fund 2(s) of certain Funds' The Guardian Investment Quality Bond fundamental investment Fund restriction with respect The Guardian Tax-Exempt Fund to investments in The Guardian Bond Fund, Inc. securities other than The Guardian Cash Fund, Inc. those described in the Fund's prospectus. - ------------------------------------------------------------------------------------------ </Table> 7 <Table> <Caption> - ------------------------------------------------------------------------------------------ PAGE PROPOSAL AFFECTED FUND(S) NO. - ------------------------------------------------------------------------------------------ Approving an amendment to The Guardian Tax-Exempt Fund 2(t) The Guardian Tax-Exempt Fund's fundamental policy with respect to investments in investment grade municipal obligations. - ------------------------------------------------------------------------------------------ 3 Approving an amendment to The Guardian Park Avenue Fund Amended and Restated The Guardian UBS Large Cap Value Fund Agreement and Declaration The Guardian Park Avenue Small Cap Fund of Trust of The Park The Guardian UBS Small Cap Value Fund Avenue Portfolio to The Guardian Asset Allocation Fund increase the maximum The Guardian S&P 500 Index Fund number of Trustees that The Guardian Baillie Gifford may serve on its Board of International Growth Fund Trustees from eleven to The Guardian Baillie Gifford Emerging twelve. 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 - ------------------------------------------------------------------------------------------ 4 Approving an amendment to The Guardian Park Avenue Fund the Amended and Restated The Guardian UBS Large Cap Value Fund Agreement and Declaration The Guardian Park Avenue Small Cap Fund of Trust of The Park The Guardian UBS Small Cap Value Fund Avenue Portfolio (the The Guardian Asset Allocation Fund "Trust document") to The Guardian S&P 500 Index Fund permit certain amendments The Guardian Baillie Gifford to the Trust document to International Growth Fund be made without The Guardian Baillie Gifford Emerging shareholder approval. 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 - ------------------------------------------------------------------------------------------ </Table> 8 PROPOSAL 1 ELECTION OF TRUSTEES There are eleven nominees being proposed for election as Trustees of the Funds. The Nominating and Governance Committee of the Trustees of each Fund makes recommendations concerning the nominees for Trustees. The Committee consists solely of Trustees who are not "interested persons" (as defined in the Investment Company Act of 1940, as amended (the "1940 Act")) of the Funds or their investment adviser or sub-adviser, as applicable. Those Trustees who are not "interested persons" of your Fund are referred to in this Proxy Statement as "Independent Trustees." The nominees and information regarding their backgrounds are shown in the following pages. This information includes each nominee's name, year of birth, principal occupation(s) during the past five years and other information about the nominee's professional background, including other directorships the nominee holds. Each Trustee oversees all of the Funds and serves until the election and qualification of his or her successor, or until he or she sooner dies, resigns or is removed. Each nominee other than Ms. Cuocolo and Messrs. Goetzmann and Paggioli currently serves as a Trustee of the Funds. Ms. Cuocolo, Mr. Goetzmann and Mr. Paggioli were each nominated by the Nominating and Governance Committee following a search for candidates. Each of the nominees has agreed to serve as a Trustee if elected. If any of the nominees is unavailable for election at the time of the meeting the Trustees may nominate other candidates at their discretion or fix the number of Trustees at fewer than eleven. The address of all of the Trustees and nominees is 7 Hanover Square, New York, New York 10004. Each of the current Trustees oversees all of the Funds in the Guardian Fund Complex, which currently consists of 25 Funds. NOMINEES FOR TRUSTEES INTERESTED TRUSTEES* <Table> <Caption> - --------------------------------------------------------------------------------------------- POSITION TERM OF OFFICE NAME AND WITH AND LENGTH OF PRINCIPAL OCCUPATIONS OTHER YEAR OF BIRTH THE FUNDS TIME SERVED+ DURING PAST 5 YEARS DIRECTORSHIPS - --------------------------------------------------------------------------------------------- Arthur V. Ferrara Trustee Since 1987 Director and former Director of various (1930) Chairman of the Board mutual funds and Chief Executive sponsored by Officer, The Guardian Gabelli Asset Life Insurance Management. Company of America. Director (Trustee) of all of the mutual funds within the Guardian Fund Complex. - --------------------------------------------------------------------------------------------- </Table> 9 <Table> <Caption> - --------------------------------------------------------------------------------------------- POSITION TERM OF OFFICE NAME AND WITH AND LENGTH OF PRINCIPAL OCCUPATIONS OTHER YEAR OF BIRTH THE FUNDS TIME SERVED+ DURING PAST 5 YEARS DIRECTORSHIPS - --------------------------------------------------------------------------------------------- Leo R. Futia Trustee Since 1982 Director and former None. (1919) 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. - --------------------------------------------------------------------------------------------- Dennis J. Manning Trustee Since 2003 President and Chief Director of The (1947) Executive Officer, Guardian Life The Guardian Life Insurance Company Insurance Company of of America and The America since 1/03; Guardian Insurance President and Chief & Annuity Company, Operating Officer, Inc. Manager, 1/02 to 12/02; Guardian Investor Executive Vice Services LLC and President and Chief Park Avenue Operating Officer, Securities LLC. 1/01 to 12/01; Director of various Executive Vice Guardian Life President, Individual subsidiaries. Markets and Group Pensions, 1/99 to 12/00. Director (Trustee) of all of the mutual funds within the Guardian Fund Complex. - --------------------------------------------------------------------------------------------- </Table> 10 INDEPENDENT TRUSTEES <Table> <Caption> - --------------------------------------------------------------------------------------------- POSITION TERM OF OFFICE NAME AND WITH AND LENGTH OF PRINCIPAL OCCUPATIONS YEAR OF BIRTH THE FUNDS TIME SERVED+ DURING PAST 5 YEARS OTHER DIRECTORSHIPS - --------------------------------------------------------------------------------------------- Kathleen C. Cuocolo, Nominee Principal, Cuocolo Chairman, Board of C.P.A. for Associates (corporate Directors, Select (1952) Trustee governance and Sector S&P operations consulting Depository Receipts firm), 2003 to Series Trust (9 present; Executive exchange traded Vice President, State funds), 1999 to Street Corporation, present; Director, prior thereto. World Markets PLC Employed by State (global performance Street Corporation in and analytics various capacities company), 2002 to since 1982. present; Director, The China Fund, Inc., 2001-2003; 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. - --------------------------------------------------------------------------------------------- Frank J. Fabozzi, Trustee Since 1992 Adjunct Professor of Director (Trustee) Ph.D. Finance, School of of various (1948) Management -- Yale closed-end University, 2/94 to investment present; Editor, companies sponsored Journal of Portfolio by BlackRock Management. Director Financial (Trustee) of all of Management. the mutual funds Director of within the Guardian BlackRock Funds (47 Fund Complex. funds). - --------------------------------------------------------------------------------------------- William N. Goetzmann, Nominee Edwin J. Beinecke Member of the Board Ph.D. for Professor of Finance of Directors of the (1956) Trustee and Management Commonfund. 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. - --------------------------------------------------------------------------------------------- </Table> 11 <Table> <Caption> - --------------------------------------------------------------------------------------------- POSITION TERM OF OFFICE NAME AND WITH AND LENGTH OF PRINCIPAL OCCUPATIONS YEAR OF BIRTH THE FUNDS TIME SERVED+ DURING PAST 5 YEARS OTHER DIRECTORSHIPS - --------------------------------------------------------------------------------------------- Anne M. Goggin, Esq. Trustee Since 2004 Partner, Edwards and None. (1948) 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. - --------------------------------------------------------------------------------------------- William W. Hewitt, Trustee Since 1989 Retired. Former None. Jr. Executive Vice (1928) President, Shearson Lehman Brothers, Inc. Director (Trustee) of all of the mutual funds within the Guardian Fund Complex. - --------------------------------------------------------------------------------------------- Sidney I. Lirtzman, Trustee Since 1987 Emanuel Saxe Emeritus Director, 6/02 to Ph.D. Professor of 8/03, and chair of (1930) Management, Zicklin the audit School of Business, committee, Baruch College, City Youthstream, Inc. University of New Member, Advisory York since 11/04; Board of Directors, Emanuel Saxe New York City Professor of Independent Budget Management 9/96 to Office 5/98 to 10/04; Dean from 5/01, Director, 10/95 to 9/02; International Interim President Center for 9/99 to 9/00. Corporate President, Fairfield Accountability Consulting since 11/03, and Associates, Inc. Chairman of the Director (Trustee) of Board since 6/05. all of the mutual funds within the Guardian Fund Complex. - --------------------------------------------------------------------------------------------- </Table> 12 <Table> <Caption> - --------------------------------------------------------------------------------------------- POSITION TERM OF OFFICE NAME AND WITH AND LENGTH OF PRINCIPAL OCCUPATIONS YEAR OF BIRTH THE FUNDS TIME SERVED+ DURING PAST 5 YEARS OTHER DIRECTORSHIPS - --------------------------------------------------------------------------------------------- Steven J. Paggioli Nominee Independent Trustee and Audit (1950) for consultant since Committee Member, Trustee 7/2001; Executive Managers Funds and Vice President, Managers AMG Funds Director and (36 portfolios), Principal of The 6/90 to present; Wadsworth Group Trustee, (administration, Professionally consulting and Managed Portfolios executive search (20 portfolios), firm) prior thereto. 5/91 to present; Advisory Board Member, Sustainable Growth Advisers, L.P., 10/02 to present. - --------------------------------------------------------------------------------------------- Robert G. Smith, Trustee Since 1982 Chairman and Chief Governor Ph.D. Executive Officer, appointments as (1932) Smith Affiliated Director of New Capital Corp. since York Health Care 4/82. Director Reform Act (Trustee) of all of Charitable the mutual funds Organization and within the Guardian Nassau County Fund Complex. 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 (Common Fund). - --------------------------------------------------------------------------------------------- </Table> * "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. The table reflects the year from which each person has served as Trustee. The Board of Trustees meets regularly to review each Fund's investments, performance, expenses and other business affairs. The Trustees also elect each Fund's officers, who are listed in this Proxy Statement under the heading "Officers of the Funds." The Board currently consists of eight trustees, five of whom are not "interested persons" of the Funds within the meaning of the 1940 Act. These five trustees are also members of the Audit Committee and the Nominating and Governance Committee of the Board. The Audit Committee is 13 responsible for the selection and evaluation of the independent registered public accounting firm for the Funds to be recommended to the Board and has oversight responsibility for the integrity of each Fund's financial reporting process and internal controls regarding finance and accounting. The Audit Committee is also responsible for monitoring the independence and performance of the Funds' independent registered public accounting firm. The Trustees have adopted a written charter for the Audit Committee. During the year ended December 31, 2004, the Audit Committee met five times. The Nominating and Governance Committee is responsible for recommending to the Board those persons to be nominated for election as Independent Trustees and oversees the administration of the Funds' Governance Procedures and Guidelines. The Committee identifies prospective nominees for election as Independent Trustees by considering individuals who come to its attention through the recommendation of current Trustees, the Funds' investment adviser, or other sources, including shareholders or third-party search firms. Candidates properly submitted by shareholders (as described below) will be considered and evaluated on the same basis as candidates recommended by other sources. The Committee may, but is not required to, engage a third-party professional search firm to assist it in identifying and evaluating potential nominees. When evaluating a potential candidate for membership on the Board, the Committee considers the skills and characteristics that it believes would benefit the Funds' shareholders. The Committee may take into account whatever qualifications it deems desirable and appropriate in considering potential Independent Trustee candidates, including, but not limited to: (i) availability and commitment of a candidate to attend meetings and perform his or her responsibilities to the Board, (ii) other board experience, (iii) relevant industry and related experience, (iv) educational background, (v) financial expertise, (vi) an assessment of the candidate's ability, judgment and expertise, (vii) an assessment of the needs of the Board and (viii) overall Board composition. In connection with this evaluation, the Committee will determine whether to interview prospective nominees. Once this evaluation is completed, the Committee recommends such candidates as it determines appropriate to the Independent Trustees for nomination, and the Independent Trustees select the nominees after considering the recommendation of the Committee. The Trustees have adopted a written charter for the Nominating and Governance Committee, which is attached to this Proxy Statement as APPENDIX A. During the year ended December 31, 2004, the Nominating and Governance Committee met four times. The Funds do not hold regular annual meetings of shareholders, but may from time to time schedule special meetings. Shareholders wishing to submit the name of a candidate for consideration as a Board member by the Committee should submit their recommendation(s) in writing to the Senior Vice President and 14 Secretary of the Funds. Such submission should include information about the candidate that would be required to be included in a proxy statement. The Committee will consider nominees recommended by shareholders of a Fund provided shareholders submit timely recommendations, and provided the shareholders' recommendations comply with applicable securities laws, including Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the "1934 Act"). TRUSTEE COMPENSATION The Guardian Fund Complex pays the Independent Trustees fees consisting of a $5,000 per meeting fee and an annual retainer fee of $30,500 allocated among all Funds in the Guardian Fund Complex. Board committee members also receive $2,000 per committee meeting. Trustees who are "interested persons" of the Funds, except Mr. Manning, receive the same fees, but they are paid by Guardian Investor Services LLC, not the Funds. Mr. Manning receives no compensation for serving on the Board of the Funds. The table below provides information about the compensation paid to the Trustees for the year ended December 31, 2004. COMPENSATION TABLE* <Table> <Caption> - --------------------------------------------------------------------------------------------------- ACCRUED TOTAL AGGREGATE PENSION OR COMPENSATION COMPENSATION RETIREMENT ESTIMATED FROM ALL FUNDS IN FROM THE BENEFITS PAID BENEFITS UPON THE GUARDIAN FUND NAME FUND** BY THE FUND RETIREMENT COMPLEX (25)** - --------------------------------------------------------------------------------------------------- Frank J. Fabozzi The Park Avenue Portfolio $33,853 N/A N/A $68,500 The Guardian Variable Contract Funds, Inc. $20,056 GIAC Funds, Inc. $ 6,050 The Guardian Bond Fund, Inc. $ 4,413 The Guardian Cash Fund, Inc. $ 4,128 - --------------------------------------------------------------------------------------------------- Anne M. Goggin The Park Avenue Portfolio $10,627 N/A N/A $21,625 The Guardian Variable Contract Funds, Inc. $ 6,465 GIAC Funds, Inc. $ 1,989 The Guardian Bond Fund, Inc. $ 1,340 The Guardian Cash Fund, Inc. $ 1,204 - --------------------------------------------------------------------------------------------------- </Table> 15 <Table> <Caption> - --------------------------------------------------------------------------------------------------- ACCRUED TOTAL AGGREGATE PENSION OR COMPENSATION COMPENSATION RETIREMENT ESTIMATED FROM ALL FUNDS IN FROM THE BENEFITS PAID BENEFITS UPON THE GUARDIAN FUND NAME FUND** BY THE FUND RETIREMENT COMPLEX (25)** - --------------------------------------------------------------------------------------------------- William W. Hewitt, Jr. The Park Avenue Portfolio $33,853 N/A N/A $68,500 The Guardian Variable Contract Funds, Inc. $20,056 GIAC Funds, Inc. $ 6,050 The Guardian Bond Fund, Inc. $ 4,413 The Guardian Cash Fund, Inc. $ 4,128 - --------------------------------------------------------------------------------------------------- Sidney I. Lirtzman The Park Avenue Portfolio $37,558 N/A N/A $76,000 The Guardian Variable Contract Funds, Inc. $22,255 GIAC Funds, Inc. $ 6,715 The Guardian Bond Fund, Inc. $ 4,894 The Guardian Cash Fund, Inc. $ 4,577 - --------------------------------------------------------------------------------------------------- Robert G. Smith The Park Avenue Portfolio $41,263 N/A N/A $83,500 The Guardian Variable Contract Funds, Inc. $24,455 GIAC Funds, Inc. $ 7,380 The Guardian Bond Fund, Inc. $ 5,376 The Guardian Cash Fund, Inc. $ 5,026 - --------------------------------------------------------------------------------------------------- </Table> * Trustees who are "interested persons" of the Funds are not compensated by the Funds, so they are omitted from this table. Ms. Cuocolo and Messrs. Goetzmann and Paggioli, as nominees who are not currently Trustees, also did not receive compensation from the Funds during the period shown, and are omitted from this table. ** Includes compensation paid for attendance at meetings of the Board's Audit Committee, and additional compensation paid to Mr. Lirtzman and Mr. Smith for service as Chairman of the Nominating and Governance Committee and the Audit Committee, respectively. - -------------------------------------------------------------------------------- 16 FUND SHARE OWNERSHIP BY TRUSTEES The following table sets forth the dollar range of equity securities in the Funds beneficially owned by a Trustee, and, on an aggregate basis, in all registered investment companies overseen by a Trustee in the Guardian Fund Complex on or after June 30, 2005. TRUSTEE SHARE OWNERSHIP TABLES <Table> <Caption> - -------------------------------------------------------------------------------------- AGGREGATE DOLLAR RANGE OF SECURITIES IN ALL REGISTERED INVESTMENT COMPANIES DOLLAR RANGE OF OVERSEEN BY TRUSTEE INDEPENDENT TRUSTEES SHARES OF THE FUNDS IN GUARDIAN FUND COMPLEX (25) - -------------------------------------------------------------------------------------- Frank J. Fabozzi Guardian Cash Management $50,001-$100,000 $50,001-$100,000 Park Avenue Small Cap $1-$10,000 Guardian Baillie Gifford Emerging Markets $1-$10,000 Guardian High Yield $1-$10,000 Park Avenue Fund $1-$10,000 Investment Quality Bond $1-$10,000 Guardian Tax-Exempt $1-$10,000 Guardian Asset Allocation $1-$10,000 Guardian Baillie Gifford International Growth $1-$10,000 Guardian S&P 500 Index $1-$10,000 - -------------------------------------------------------------------------------------- Anne M. Goggin Park Avenue Fund $1-$10,000 $10,001-$50,000 Guardian Baillie Gifford Emerging Markets $1-$10,000 Guardian Tax-Exempt $1-$10,000 - -------------------------------------------------------------------------------------- William W. Hewitt, Jr. Park Avenue Fund $10,001-$50,000 $10,001-$50,000 Guardian Baillie Gifford Emerging Markets $10,001-$50,000 - -------------------------------------------------------------------------------------- Sidney I. Lirtzman Park Avenue Fund $1-$10,000 $10,001-$50,000 Guardian Baillie Gifford Emerging Markets $1-$10,000 Guardian Asset Allocation $1-$10,000 - -------------------------------------------------------------------------------------- Robert G. Smith Guardian Tax-Exempt $10,001-$50,000 $10,001-$50,000 - -------------------------------------------------------------------------------------- </Table> 17 <Table> <Caption> - -------------------------------------------------------------------------------------- AGGREGATE DOLLAR RANGE OF SECURITIES IN ALL REGISTERED INVESTMENT COMPANIES DOLLAR RANGE OF OVERSEEN BY TRUSTEE INTERESTED TRUSTEES SHARES OF THE FUNDS IN GUARDIAN FUND COMPLEX (25) - -------------------------------------------------------------------------------------- Arthur V. Ferrara Guardian Bond Fund, Inc. $1-$10,000 Over $100,000 Park Avenue Fund $10,001-$50,000 Guardian Asset Allocation $1-$10,000 Guardian Baillie Gifford International Growth $10,001-$50,000 Guardian Cash Fund, Inc. $1-$10,000 Guardian Cash Management $10,001-$50,000 Guardian Stock Fund Over $100,000 - -------------------------------------------------------------------------------------- Leo R. Futia Park Avenue Small Cap $50,001-$100,000 Over $100,000 Guardian Bond Fund, Inc. $1-$10,000 Guardian Baillie Gifford International Growth Over $100,000 Guardian Baillie Gifford Emerging Markets $50,001-$100,000 Park Avenue Fund Over $100,000 Guardian Cash Management $10,001-$50,000 Investment Quality Bond $50,001-$100,000 Guardian S&P 500 Index Over $100,000 Guardian Asset Allocation $10,001-$50,000 Guardian Tax-Exempt $50,001-$100,000 - -------------------------------------------------------------------------------------- Dennis J. Manning Park Avenue Small Cap $50,001-$100,000 Over $100,000 Park Avenue Fund Over $100,000 Guardian Asset Allocation $10,001-$50,000 Guardian S&P 500 Index Over $100,000 Guardian Stock Fund Over $100,000 - -------------------------------------------------------------------------------------- </Table> RECOMMENDED SHAREHOLDER ACTION AND REQUIRED VOTE It is recommended that shareholders vote FOR the election of each of the nominees. The Trustees of The Park Avenue Portfolio will be elected by a plurality, which means that the eleven nominees who receive the most votes will be elected as Trustees. The nominees for Directors of The Guardian Variable Contract Funds, Inc., The Guardian Bond Fund, Inc. and The Guardian Cash Fund, Inc. will be elected by the affirmative vote of the holders of a majority of the outstanding shares entitled to vote. The nominees for Directors of GIAC Funds, Inc. will be elected by the affirmative vote of a majority of the outstanding shares entitled to vote present in person or represented by proxy. 18 PROPOSAL 2 CHANGES TO FUNDAMENTAL INVESTMENT POLICIES FOR PURPOSES OF DISCUSSION REGARDING PROPOSALS 2(A) THROUGH 2(T), THE TERM "AFFECTED FUND" OR "AFFECTED FUNDS" REFERS TO THE LIST OF AFFECTED FUNDS WITH RESPECT TO EACH PROPOSAL AS SET FORTH IN THE PROPOSAL SUMMARY TABLE, WHICH BEGINS ON PAGE [3] OF THIS PROXY STATEMENT. APPENDIX B to this Proxy Statement sets out the specific language of each current fundamental investment policy proposed to be amended or eliminated with respect to each Affected Fund. From time to time, the Funds may be referred to collectively herein as the "Guardian Fund Complex." As described in the following proposals, the Board of Trustees is recommending that shareholders approve changes to certain fundamental investment policies (also referred to as "investment restrictions") with respect to the Affected Funds. One of the main purposes of these proposals is to create one standardized set of fundamental investment restrictions for all of the Funds in the Guardian Fund Complex, to promote efficiencies in compliance monitoring, respond to changes in regulatory requirements or market conditions, and provide increased investment flexibility. The proposals request that shareholders approve amending or eliminating certain fundamental restrictions and making others non-fundamental. Unless otherwise noted, no material change in an Affected Fund's investment strategies or approaches is expected as a result of the proposed changes to its fundamental investment restrictions. The Board of Trustees has determined that the proposed changes are in the best interests of each Fund's shareholders and recommends that shareholders vote FOR each of the proposals. BACKGROUND Each Fund has adopted certain fundamental investment policies, as required by applicable law. Under the 1940 Act, if a Fund's investment policy is "fundamental," that means that it may be changed only by a shareholder vote. Some of the Funds' fundamental investment policies were adopted in order to comply with the requirements of the 1940 Act. Others were adopted over time in response to the requirements of state securities regulators or state insurance departments. In 1996, Congress enacted securities legislation that reduced the extent to which states may regulate the operations of the Funds. Some of the Funds' current fundamental investment restrictions reflect those now obsolete state requirements. As a result, some of the Funds are currently subject to fundamental investment restrictions that (i) are no longer required, (ii) are no longer required to be "fundamental," or (iii) are more restrictive than required under current regulations. The proposed changes to the Funds' fundamental investment restrictions reflect current regulatory and legal requirements under the 1940 Act, and are designed to provide maximum investment flexibility and the ability to respond to future legal or regulatory developments and changes in market or economic conditions. 19 One of the goals of these proposals is to promote efficiencies in monitoring for compliance with varying sets of fundamental investment policies within the Guardian Fund Complex. For the most part, many of the proposed amendments to the Affected Funds' fundamental investment restrictions are substantively the same as their existing fundamental investment restrictions. The proposed amendments to these restrictions are intended to standardize, to the extent possible, the language of the fundamental investment restrictions among all of the Funds in the Guardian Fund Complex, and are not expected to result in any material changes in an Affected Fund's operations. Although it is expected that the proposed amendments to the fundamental investment restrictions will, in certain instances, give the Funds greater flexibility to respond to future investment opportunities, unless otherwise noted it is not anticipated that the proposed amendments, individually or in the aggregate, with respect to an Affected Fund, will result in a material change in the level of investment risk associated with investment in the Fund. In several instances, the proposed investment restrictions are stated in terms of the extent to which applicable law permits the investment activity covered by the restriction. Applicable law can change over time, and certain of these proposed restrictions are written so that a change in applicable law would not require the Funds to propose further amendments to these restrictions to shareholders for approval. The approval of any particular proposal by shareholders of an Affected Fund is not dependent on the approval of any other proposal by shareholders of that Affected Fund or any other Affected Fund. If the shareholders of a particular Affected Fund do not approve a proposal, the Fund's existing fundamental investment policy with respect to that proposal will remain in effect. PROPOSAL 2(a) AMENDING FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO DIVERSIFICATION OF INVESTMENTS It is proposed that each Affected Fund's fundamental investment restriction with respect to the diversification of its investments be revised to standardize the fundamental investment restrictions among all of the Funds in the Guardian Fund Complex, all of which are "diversified" funds as defined in the 1940 Act. Under Section 5(b)(1) of the 1940 Act, a "diversified" fund generally may not, with respect to 75% of its total assets, invest more than 5% of its total assets in the securities of any one issuer (except U.S. government securities, cash, cash items or the securities of other investment companies). The remaining 25% of the fund's total assets is not subject to this restriction. 20 Appendix B lists the current fundamental investment restrictions with respect to diversification of investments of each of the Affected Funds (see page B- ). The proposed amended fundamental investment restriction is set forth below: "The Fund may not .... make any purchase that would result in the Fund ceasing to be "diversified" within the meaning of the 1940 Act, applicable rules thereunder and any orders or interpretations of the Securities and Exchange Commission ("1940 Act rules and orders")." If the proposed amendment is approved, each Affected Fund will be able to invest up to 25% of its total assets in the securities of any one issuer. The amended restriction would continue to exclude from its limitations U.S. government securities, cash and cash items, and would also exclude from its limitations securities of other investment companies. The purpose of the proposed amendment is to reduce administrative and compliance burdens by simplifying and making uniform the fundamental investment restriction with respect to diversification of investments for all Funds in the Guardian Fund Complex. The proposed revision of this fundamental investment restriction will not affect the classification of these Funds as "diversified" under Section 5(b)(l) of the 1940 Act and is not intended to change the investment practices of the Funds. Rather, the revision of the current policy should allow the Funds to rely on the definition of the term "diversified" under the 1940 Act rather than state the relevant percentage limitations expressed under current law. If such requirements were to change, the amended policy would automatically apply the requirements of "diversification" contained in Section 5(b)(1) of the 1940 Act, without the need for shareholder approval. PROPOSAL 2(b) AMENDING FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO BORROWING It is proposed that each Affected Fund's fundamental investment restriction with respect to borrowing money be revised to standardize the fundamental investment restrictions among all of the Funds in the Guardian Fund Complex. The 1940 Act requires investment companies to adopt a fundamental policy with respect to the borrowing of money, which cannot be changed without shareholder approval, and imposes certain limitations on borrowing activities of investment companies. Appendix B lists the current fundamental investment restriction of each of the Affected Funds with respect to borrowing (see page B- ). The proposed amended fundamental investment restriction is set forth below: "The Fund may not .... borrow money, except to the extent permitted by the 1940 Act, rules and orders." Under the 1940 Act, an investment company is permitted to borrow up to 5% of its total assets from any person for temporary purposes, and also may borrow from banks, provided that if borrowings exceed 5%, the investment company must have 21 assets totaling at least 300% of the amount borrowed when the amount borrowed is added to the investment company's other assets. Thus, an investment company may borrow, in the aggregate, from banks and others, amounts up to one-third (33 1/3%) of its total assets (including those assets represented by the amount borrowed). Investment companies may desire to borrow money to meet redemptions while waiting for cash from sales of new shares or proceeds from the sale of portfolio securities or to avoid being forced to sell portfolio securities. This technique provides investment companies with greater flexibility to buy and sell portfolio securities for investment or tax considerations, rather than because of a need for short-term cash. The limitations on borrowing are generally designed to protect shareholders and their investments by restricting an investment company's ability to subject its assets to any claims of creditors who might have a claim to the investment company's assets or rights upon liquidation that would take precedence over the claims of shareholders. The proposed amended fundamental investment restriction would provide that the Affected Funds may borrow not only from banks, but from other parties as well, to the extent permitted by the 1940 Act or any exemptions from the 1940 Act. The Funds' greater flexibility to borrow may subject the Funds to additional costs, as well as risks inherent in borrowing, such as reduced total return and increased volatility of net asset value. PROPOSAL 2(c) AMENDING FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO ISSUING SENIOR SECURITIES It is proposed that each Affected Fund's fundamental investment restriction with respect to issuing senior securities be revised to standardize the fundamental investment restrictions among all of the Funds in the Guardian Fund Complex. Under the 1940 Act, the Funds must have an investment policy describing their ability to issue senior securities. Appendix B lists the current fundamental investment restriction of each of the Affected Funds with respect to issuing senior securities (see page B- ). The proposed amended fundamental investment restriction is set forth below: "The Fund may not .... issue any senior securities except as permitted by the 1940 Act, rules and orders." A "senior security" is defined under the 1940 Act generally as any security (such as a bond, debenture, note or similar obligation or instrument) evidencing indebtedness. The 1940 Act generally prohibits an open-end fund from issuing senior securities, in order to limit the ability of an investment company to use leverage. In general, an investment company uses leverage when it borrows money to enter into securities transactions or acquires an asset without being required to make payment until a later point in time. 22 Interpretations of the staff of the Securities and Exchange Commission ("SEC") allow an investment company to engage to a limited extent in certain investment techniques that might otherwise be considered to create senior securities, such as short sales, certain options and futures transactions, and reverse repurchase agreements. Other securities transactions that obligate the investment company to pay money at a future date to meet certain collateralization requirements may also create senior securities. The proposed fundamental investment policy would permit each Affected Fund to engage in options, futures contracts, forward contracts and repurchase transactions, and to make short sales as permitted under the 1940 Act and any exemptions available by rule or order under the 1940 Act. Similar proposals to amend the current fundamental investment restrictions with respect to these investments are discussed throughout this Proxy Statement (see, for example, Proposal 2(q) relating to investments in options). The proposed amended fundamental investment restriction has been drafted to provide flexibility for the Affected Funds to respond to regulatory changes, including changes in the SEC staff interpretations and conditions described above, without the expense and delay associated with holding a shareholder meeting. Additionally, the proposed fundamental restriction regarding the issuance of senior securities is intended to promote consistency among the fundamental investment restrictions of all of the Funds in the Guardian Fund Complex. PROPOSAL 2(d) AMENDING FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO CONCENTRATION OF INVESTMENTS WITHIN A PARTICULAR INDUSTRY It is proposed that each Affected Fund's fundamental investment restriction with respect to concentration of investments within a particular industry be amended to promote consistency among the fundamental investment restrictions of all of the Funds within the Guardian Fund Complex. Under the 1940 Act, a Fund must adopt a fundamental investment policy describing its ability to concentrate its investments in a single industry. Appendix B lists the current fundamental investment restriction of each of the Affected Funds with respect to concentration (see page B- ). The proposed amended fundamental investment restriction is set forth below: All Affected Funds except The Guardian S&P 500 Index Fund, The Guardian VC 500 Index Fund and The Guardian Tax-Exempt Fund: "The Fund may not .... purchase any securities other than the obligations of the U.S. government, or its agencies or instrumentalities, if, immediately after such purchase, more than 25% of the value of the Fund's total assets would be invested in the securities of issuers in the same industry." 23 The Guardian S&P 500 Index Fund and The Guardian VC 500 Index Fund only: "The Fund may not .... purchase any securities other than the obligations of the U.S. government, or its agencies or instrumentalities, if, immediately after such purchase, more than 25% of the value of the Fund's total assets would be invested in the securities of issuers in the same industry, except that the Fund may purchase securities in excess of this limitation to the extent necessary from time to time to replicate the composition of the Standard & Poor's 500 Index in accordance with the Fund's investment objective." The Guardian Tax-Exempt Fund only: "The Fund may not .... purchase any securities other than the obligations of the U.S. government, or its agencies or instrumentalities, if, immediately after such purchase, more than 25% of the value of the Fund's total assets would be invested in the securities of issuers in the same industry, provided that there shall be no limit on the purchase of Municipal Obligations (as defined from time to time in the prospectus). The proposed amended fundamental investment restriction is substantively similar to the current restrictions of the Affected Funds. The proposed amendment is intended to standardize the fundamental investment restrictions among the Funds in the Guardian Fund Complex, with the noted variations in the restrictions applicable to The Guardian S&P 500 Index Fund, The Guardian VC 500 Index Fund and The Guardian Tax-Exempt Fund. If adopted by the shareholders, the proposed amended restrictions are not expected to alter materially the investment practices of the Affected Funds. PROPOSAL 2(e) AMENDING FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO INVESTMENTS IN REAL ESTATE It is proposed that each Affected Fund's fundamental investment restriction with respect to investments in real estate and interests in real estate be amended to promote consistency among the fundamental investment restrictions of all of the Funds within the Guardian Fund Complex. Under the 1940 Act, a Fund must adopt a fundamental investment policy describing its ability to purchase and sell real estate. Appendix B lists the current fundamental investment restriction of each of the Affected Funds with respect to investments in real estate (see page B- ). The proposed amended fundamental investment restriction is set forth below: "The Fund may not .... purchase or sell real estate, although the Fund may (a) purchase and sell securities of issuers that deal in real estate, (b) purchase and sell securities that represent interests in real estate and (c) acquire and dispose of real estate or interests in real estate acquired through the exercise of its rights as a holder of debt obligations secured by real estate or interests therein." 24 The proposed amended fundamental investment restriction is intended to standardize the fundamental investment restrictions among all of the Funds in the Guardian Fund Complex. If shareholders approve the proposal, each of the Affected Funds would be permitted to invest in securities currently prohibited in some of the Affected Funds, such as real estate investment trusts, provided such investments are consistent with each Fund's investment objective. In a real estate investment trust, investments in a variety of real estate assets are pooled together so that shareholders receive income from rents and capital gains upon the sale of the underlying assets. Investments may be made in income-producing property or real estate loans, such as mortgages. The risks associated with investments in real estate investment trusts are similar to those associated with direct investments in real estate, including volatility in the housing market or other adverse economic conditions that affect real estate investments. PROPOSAL 2(f) AMENDING FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO INVESTMENTS IN COMMODITIES It is proposed that each Affected Fund's fundamental investment restriction with respect to investments in commodities and commodity contracts be amended to promote consistency among the fundamental investment restrictions of all of the Funds within the Guardian Fund Complex. The proposed amended fundamental restriction would prohibit a Fund from investing in commodities or commodity contracts, except that it may invest in currency and financial instruments and contracts that may be considered commodities or commodity contracts. Under the 1940 Act, a Fund must adopt a fundamental investment policy describing its ability to purchase or sell commodities. At the time the 1940 Act was enacted, the term "commodities" generally referred to physical commodities rather than financial contracts and instruments, such as interest rate, currency, and securities index futures contracts, which are common today. Appendix B lists the current fundamental investment restriction of each of the Affected Funds with respect to investments in commodities and commodity contracts (see page B- ). The proposed amended fundamental investment restriction is set forth below: "The Fund may not .... purchase or sell commodities or commodity contracts, except to the extent permitted under applicable law without registration as a commodity pool operator under the Commodity Exchange Act (or any comparable registration under successor legislation)." The proposed amendment to this fundamental investment restriction is intended to standardize the fundamental investment restrictions within the Guardian Fund Complex. The Affected Funds do not intend to materially change their current practices with respect to investments in commodities, although the proposed policy would allow the Funds more flexibility with regard to investments in commodities or commodities contracts. For each Affected Fund, the change in policy could entail some new risks. For example, the permitted use of such instruments would no longer be limited solely to hedging purposes. The use by the 25 Funds of financial futures contracts and other financial instruments (including those that would be permitted under the proposed policy) entails certain risks, including the risk that the Funds' portfolio managers may be unable to forecast market and currency exchange rate movements accurately. If markets or exchange rates move in an unexpected manner, a Fund may not achieve the anticipated benefits of the financial instruments or may realize losses and thus be in a worse position than if such financial instruments had not been used. In addition, the imperfect correlation between movements in the prices or values of financial instruments and movements in the prices of any securities or currencies hedged using such instruments or used for cover may result in unanticipated losses. A Fund's ability to dispose of or close out its positions in financial instruments will depend on the availability of liquid markets in such instruments. A Fund may be unable to dispose of a financial instrument, or otherwise to close out its position in a financial instrument, at a time or price its portfolio manager considers desirable, and so may be unable to realize a gain on such a financial instrument or limit a loss on such a financial instrument at a desired time or price. PROPOSAL 2(g) AMENDING FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO UNDERWRITING THE SECURITIES OF OTHER ISSUERS It is proposed that each Affected Fund's fundamental investment restriction with respect to underwriting the securities of other issuers be amended to promote consistency among the fundamental investment restrictions of all of the Funds within the Guardian Fund Complex. Each of the Affected Funds has a fundamental investment policy prohibiting it from underwriting securities issued by other issuers. Under the 1940 Act, a Fund's policies concerning underwriting are required to be fundamental. Appendix B lists the current fundamental investment restriction of each of the Affected Funds with respect to underwriting (see page B- ). The proposed amended fundamental investment restriction is set forth below: "The Fund may not .... engage in the underwriting of securities of other issuers, except to the extent that the Fund may be deemed to be an underwriter under the Securities Act of 1933 in connection with the sale of portfolio securities." Under the federal securities laws, a person or company generally is considered an underwriter if it participates in the public distribution of securities of other issuers, usually by purchasing the securities from the issuer with the intention of re-selling the securities to the public. Occasionally an investment company may purchase a security for investment purposes that it later sells or redistributes to institutional investors or others under circumstances where the investment company could, technically, be considered to be an "underwriter" as defined in the Securities Act of 1933. The proposed amended fundamental investment restriction is intended to 26 standardize the fundamental investment restrictions among all of the Funds in the Guardian Fund Complex. If adopted by shareholders, the proposed amended restriction is not expected to alter materially the investment practices of the Affected Funds. PROPOSAL 2(h) AMENDING FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO MAKING LOANS It is proposed that each Affected Fund's fundamental investment restriction with respect to making loans be amended in order to promote consistency in the fundamental restrictions of all of the Funds in the Guardian Fund Complex. Under the 1940 Act, an investment company must have an investment policy describing its ability to make loans to other persons or entities. Appendix B lists the current fundamental investment restriction of each of the Affected Funds with respect to making loans (see page B- ). The proposed amended fundamental investment restriction is set forth below: "The Fund may not .... make loans to other persons, except (a) through the lending of its portfolio securities, (b) through the purchase of debt securities, loan participations and/or engaging in direct corporate loans in accordance with its investment objectives and policies and (c) to the extent the entry into a repurchase agreement is deemed to be a loan. The Fund may also make loans to affiliated investment companies to the extent permitted by the 1940 Act or any exemptions therefrom that may be granted by the Securities and Exchange Commission." SEC staff interpretations of the 1940 Act generally prohibit funds from lending more than one-third of their total assets, except through the purchase of debt obligations and the use of repurchase agreements. Under certain circumstances, certain investment techniques, such as investing in debt securities, may be considered to be loans. Many of the Affected Funds currently have an investment restriction that is substantively similar to the proposed amendment. The proposed fundamental investment policy would impose no limitations on any Affected Fund's lending other than those imposed by applicable law. The proposal is intended to standardize the fundamental investment policies among all of the Funds in the Guardian Fund Complex and to maximize the ability of the Funds to respond to regulatory changes. The proposed amended fundamental restriction would enable each Affected Fund to lend its portfolio securities as permitted by applicable law. When a Fund makes a loan, it takes the risk that the person or entity to which it makes the loan will be unable or unwilling to repay the loan. Any such failure to repay a loan or any delay in repaying a loan would likely result in a loss to the Fund. When the Fund lends its portfolio securities to another party, the Fund has the potential to increase its current income while retaining the securities' potential for capital 27 appreciation. Such loans are at all times secured by cash or other collateral and involve some risk to the Fund if the other party should default on its obligation to return the securities or to make related payments. If the other party should become involved in bankruptcy proceedings, the Fund may encounter a delay in recovery of or even a loss of rights in the collateral. If adopted by shareholders, this policy is not expected to alter materially the investment practices of the Affected Funds. PROPOSAL 2(i) ELIMINATING FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO INVESTMENTS IN SECURITIES THAT ARE NOT READILY MARKETABLE It is proposed that shareholders approve the elimination of the Affected Funds' fundamental investment restrictions with respect to investments in securities subject to restrictions on resale, also known as "restricted" securities, or securities that are otherwise not readily marketable, also known as "illiquid" securities. Appendix B lists the current fundamental investment restriction proposed to be eliminated with respect to each of the Affected Funds (see page B- ). If the proposal is approved, the Trustees will adopt the following non-fundamental investment policy for each Affected Fund except The Guardian Cash Management Fund and The Guardian Cash Fund, Inc.: "The Fund may not .... invest in (a) securities which at the time of investment are not readily marketable, (b) securities that are restricted as to resale under federal securities laws, excluding any such securities that have been determined by the Trustees (or the person(s) designated by them to make such determinations) to be readily marketable and (c) repurchase agreements maturing in more than seven days if, as a result, more than 15% of the Fund's net assets (taken at current value) would be invested in the aggregate in securities described in (a), (b) and (c) above." For The Guardian Cash Management Fund and The Guardian Cash Fund, Inc., the Trustees will adopt the following non-fundamental investment policy: "The Fund may not .... invest in (a) securities which at the time of investment are not readily marketable, (b) securities that are restricted as to resale under federal securities laws, excluding any such securities that have been determined by the Trustees (or the person(s) designated by them to make such determinations) to be readily marketable and (c) repurchase agreements maturing in more than seven days if, as a result, more than 10% of the Fund's net assets (taken at current value) would be invested in (a), (b) and (c) above." The existing investment restriction is not required to be fundamental under the 1940 Act. The purpose of this proposal is to provide all of the Funds with the maximum flexibility permitted by law to pursue its investment objective. If 28 shareholders approve this proposal, this fundamental restriction will be replaced by a non-fundamental policy that can be changed by the Trustees without shareholder approval. The non-fundamental policy would prohibit a Fund from investing more than 15% of its net assets (10% in the case of The Guardian Cash Management Fund and The Guardian Cash Fund, Inc.) in securities that are not readily marketable, securities that are subject to restrictions on resale or are illiquid (subject to a determination by the Trustees or their designee that such security is liquid pursuant to the Funds' liquidity procedures) and repurchase agreements maturing in more than seven days. If adopted by the shareholders, the proposed change is not expected to alter materially the investment practices of the Affected Funds. PROPOSAL 2(j) ELIMINATING FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO INVESTMENTS FOR THE PURPOSE OF EXERCISING CONTROL OR MANAGEMENT It is proposed that each Affected Fund's current fundamental investment restriction with respect to making investments for the purpose of exercising control or management of another company be eliminated and replaced with a non- fundamental policy that can be changed in the future without shareholder approval. The purpose of this proposal is to provide the Funds with the maximum flexibility permitted by law to pursue their investment objectives and to promote consistency among the fundamental investment restrictions of all of the Funds in the Guardian Fund Complex. Appendix B lists the current fundamental investment restriction proposed to be eliminated with respect to each of the Affected Funds (see page B- ). If the proposal is approved, the Trustees will adopt the following non-fundamental policy for each Affected Fund: "The Fund may not .... invest in the securities of any company for the purpose of exercising control or management." The 1940 Act does not require that policies on investing in other companies for the purpose of control or management of such company be fundamental. Making the policy non-fundamental would give the Board more flexibility without having to have the Funds incur the cost of obtaining shareholder approval should regulatory requirements change. If adopted by the shareholders, the proposed change is not expected to alter materially the investment practices of the Affected Funds. 29 PROPOSAL 2(k) ELIMINATING FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO INVESTMENTS IN OTHER INVESTMENT COMPANIES It is proposed that each Affected Fund's current fundamental investment restriction with respect to investments in other investment companies be eliminated and replaced with a non-fundamental policy that can be changed in the future without shareholder approval. The purpose of this proposal is to provide the Funds with the maximum flexibility permitted by law to pursue their investment objectives and to promote consistency among the fundamental investment restrictions of all of the Funds in the Guardian Fund Complex. Appendix B lists the current fundamental investment restriction proposed to be eliminated with respect to each of the Affected Funds (see page B- ). If the proposal is approved, the Trustees will adopt the following non-fundamental policy for each Affected Fund: "The Fund may not .... purchase the securities of any other investment company, except in accordance with the 1940 Act, rules and orders." The 1940 Act does not require that policies on investing in other investment companies be fundamental. This policy is non-fundamental for many of the other Guardian Funds. Making the policy on investing in other investment companies non-fundamental would give the Board more flexibility without having to have the Funds incur the cost of obtaining shareholder approval should regulatory requirements change or should it become advantageous for the Funds to invest in other investment companies to an extent different from what is currently permitted by their fundamental policies. The ability of the Funds to invest in other mutual funds is governed by Section 12(d)(1) of the 1940 Act. Subject to limited exceptions, Section 12(d)(1)(A) of the 1940 Act currently requires that, as determined immediately after a purchase is made (i) not more than 5% of the value of a Fund's total assets may be invested in the securities of any one investment company, (ii) not more than 10% of the value of a Fund's total assets may be invested in securities of investment companies as a group and (iii) not more than 3% of the outstanding voting securities of any one investment company may be owned by a Fund. The Guardian Asset Allocation Fund and The Guardian VC Asset Allocation Fund each currently operates as a "fund of funds" pursuant to an exemptive order granted by the SEC. Under the provisions of the exemptive order, The Guardian Asset Allocation Fund and The Guardian VC Asset Allocation may invest in other affiliated investment companies beyond these limits, and may also invest in other securities, such as common stocks and S&P 500 Index futures. Certain Affected Funds, such as The Guardian Park Avenue Fund, expect to purchase exchange-traded funds ("ETFs") for cash equitization or other investment purposes if this proposal is approved by shareholders. Cash equitization is a tool the Funds may use to manage cash flows in the portfolio. 30 ETFs typically are index funds. Investments in ETFs are subject to the risk of investments in other investment companies. For example, the price of an ETF can fluctuate within a wide range, and a Fund could lose money investing in an ETF if the prices of the securities owned by the ETF go down. In addition, ETFs are subject to the following risks that do not apply to mutual funds: (1) the market price of the ETF's shares may trade at a discount to their net asset value; (2) an active trading market for an ETF's shares may not develop or be maintained; or (3) trading of an ETF's shares may be halted if the listing exchange's officials deem such action appropriate, the shares are de-listed from the exchange, or the activation of market-wide "circuit breakers" (which are tied to large decreases in stock prices) halts stock trading generally. If adopted by the shareholders, the proposed change is not expected to alter materially the investment practices of the Affected Funds. PROPOSAL 2(l) ELIMINATING FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO PURCHASING SECURITIES ON MARGIN, SHORT SALES AND JOINT PARTICIPATION IN A SECURITIES TRADING ACCOUNT Each Affected Fund is currently subject to a fundamental investment restriction prohibiting it from purchasing securities on margin, engaging in short sales, and/or participating on a joint or joint and several basis in a securities trading account. These policies are not required to be a fundamental under the 1940 Act, and were originally adopted to address then-existing state requirements that are no longer applicable. It is proposed that the current fundamental restrictions with respect to these practices be eliminated for each Affected Fund. Appendix B lists the current fundamental investment restriction(s) proposed to be eliminated with respect to each Affected Fund (see page B- ). Purchasing securities on margin. Each of the Affected Funds is prohibited from purchasing securities on margin. Margin purchases involve the purchase of securities with borrowed money; the 1940 Act imposes certain restrictions on borrowing as discussed in this Proxy Statement under Proposal 2(b) relating to borrowing and Proposal 2(m) relating to pledging assets. Margin is the cash or securities that the borrower places with a broker as collateral against the loan. Although each Affected Fund currently has a fundamental investment restriction that prohibits it from purchasing securities on margin, the 1940 Act allows investment companies to obtain short-term credits as may be necessary for the clearance of transactions. In addition, SEC staff interpretations permit investment companies to make margin payments in connection with the purchase and sale of futures contracts and options on futures contracts. The practice of purchasing securities on margin creates the issuance of a senior security. Open-end investment companies are by law not permitted to issue senior securities except under very limited circumstances. (See Proposal 2(c) relating to 31 senior securities in this Proxy Statement.) Therefore, there is no need for the Funds to have a restriction on purchasing on margin because this practice is governed by statutory requirements and other investment restrictions adopted by the Funds. Short sales. Each Affected Fund is subject to a fundamental investment policy that it will not make short sales. If the shareholders approve this proposal, this fundamental investment policy will be eliminated and each Affected Fund will be permitted to engage in short sales in accordance with the provisions of the 1940 Act. As a result of regulatory changes, previously existing state restrictions on short sales no longer apply. It is recommended that shareholders eliminate this fundamental investment policy to promote consistency among all of the investment restrictions applicable to the Funds in the Guardian Fund Complex. Elimination of this fundamental investment policy is unlikely to affect management of the Funds, and is not expected to materially increase the risk of an investment in any Fund. In a short sale, an investor sells a borrowed security with a corresponding obligation to the lender to return the identical security. In an investment technique known as a short sale "against-the-box," an investor sells short while owning the same securities in the same amount, or having the right to obtain equivalent securities. The investor could have the right to obtain equivalent securities, for example, through ownership of options or convertible securities. A short sale is "against the box" to the extent that the Fund contemporaneously owns or has the right to obtain securities identical to those sold short at no added cost. Under current regulations, a Fund must segregate certain of its assets to cover its exposure arising from short sales, effectively limiting the amount of a Fund's short sales. This segregation requirement does not apply to short sales against the box. A Fund's use of short sales involves certain risks, including potential loss if the market price of the security sold short increases between the date when the Fund enters into the short position and the date when the Fund closes the short position. A short sale is a form of leverage. Leverage exists when a fund has the right to a return on an investment that exceeds the amount the fund contributed to the investment. The use of leverage exposes shareholders and their investments in a fund to a greater risk of loss. For example, engaging in short sales may cause the value of a fund's shares to be more volatile than if the fund did not engage in short selling. In addition, in a short sale, there is a risk that the investor may have to buy the security later at a price higher than the sales price and incur a loss as a result. The value of a particular borrowed security can increase without limitation, and the Fund potentially could realize losses with respect to short sales (other than those that are "against the box") that would be significantly greater than the value of the securities at the time they are sold short. 32 Joint participation in a securities trading account. Each Affected Fund is currently subject to a fundamental investment policy providing that the Fund will not participate on a joint or a joint and several basis in any securities trading account. If the shareholders of the Affected Funds approve this proposal, this investment restriction will be eliminated. Under the 1940 Act, the Funds are not required to have an investment policy regarding securities trading accounts. Under certain circumstances, participation in a joint trading account may be beneficial to a Fund, resulting in potentially lower trading costs and promoting best execution. Participation in a joint trading account with affiliated persons of a Fund would require exemptive relief from the SEC. Elimination of the existing restriction would allow the Funds to participate in joint or joint and several securities trading accounts with other affiliated funds to the extent permissible under applicable law (including any exemptive relief that may be granted in the future by the SEC to the Funds). It is proposed that the above fundamental investment restrictions be eliminated in order to provide the Affected Funds with the flexibility to respond to changing market conditions consistent with applicable law in effect from time to time, without the expense and delay associated with presenting the change to shareholders for approval at a shareholders' meeting. The proposed changes would provide each Affected Fund with additional flexibility in pursuit of its investment objective and would bring its fundamental investment policies in line with the other Funds in the Guardian Fund Complex. If adopted by the shareholders, the proposed changes are not expected to alter materially the investment practices of the Affected Funds. PROPOSAL 2(m) ELIMINATING FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO PLEDGING, MORTGAGING OR HYPOTHECATING OF FUND ASSETS It is proposed that the fundamental investment restriction of each Affected Fund relating to pledging, mortgaging or hypothecating its assets be eliminated and replaced with a non-fundamental policy that could be changed by the Board of Trustees without shareholder approval. If the shareholders of the Affected Funds approve this proposal, this fundamental investment restriction will be eliminated and the Affected Funds will be permitted to pledge, mortgage and/or hypothecate their assets as permitted under the 1940 Act. Appendix B lists the current fundamental investment restriction proposed to be eliminated with respect to each of the Affected Funds (see page B- ). If the proposal is approved, the Trustees will adopt the following non-fundamental policy for each Affected Fund: "The Fund may not .... pledge, mortgage or hypothecate the Fund's assets, except as permitted by applicable law." 33 The Affected Funds' existing restrictions concerning pledging, mortgaging or hypothecating of assets are not required to be fundamental under the 1940 Act. The restriction on pledging and hypothecating assets was based on state law requirements that are no longer applicable. Removing this restriction would afford the Affected Funds greater flexibility in permitted borrowing transactions, because bank lenders often require a pledge of assets as security for loans. The elimination of this fundamental restriction would also standardize the fundamental investment restrictions among all of the Funds in the Guardian Fund Complex. Eliminating this restriction would not materially affect the Affected Funds' current investment practices. Although the Funds do not currently intend to change their practices with respect to pledging or otherwise encumbering its assets, the Trustees believe it would be in the best interests of the Funds to reserve the flexibility to allow the Funds to engage in these practices to the extent permitted by applicable law. Pledging or otherwise encumbering Fund assets entails certain risks. For instance, a Fund could incur costs or encounter delays in recovering the assets pledged or, in the event of the insolvency of the pledgee, the Fund might not be able to recover some or all of the pledged assets. The elimination of the existing fundamental investment policy would allow the Affected Funds greater flexibility to secure borrowings. With greater borrowing flexibility, a Fund may be subject to additional costs, as well as the risks inherent in borrowing, such as reduced total return and increased volatility of net asset value. Additionally, a Fund may also be forced to sell securities at inopportune times to repay loans. PROPOSAL 2(n) ELIMINATING FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO INVESTMENTS IN ISSUERS IN WHICH MANAGEMENT OF A FUND OR ITS INVESTMENT ADVISER OWNS SECURITIES It is proposed that each Affected Fund's fundamental investment restriction with respect to investments in issuers in which management or the Fund's investment adviser owns securities be eliminated. It is recommended that shareholders eliminate this fundamental investment policy to conform each Affected Fund's policies to those of the other Guardian Funds. The Affected Funds are currently prohibited from purchasing or holding the securities of an issuer if the officers and Trustees of the Funds or the investment adviser individually own 1/2 of 1% of such securities and together own more than 5% of such securities. This restriction was originally adopted to address then-existing state requirements in connection with the registration of shares of the Funds in a particular state or states. As a result of regulatory changes, the state restriction is no longer applicable. Elimination of this fundamental policy is unlikely to affect the management of the Affected Funds, and is not expected to materially increase the risk of an investment in any Affected Fund. 34 In addition, the elimination of this restriction could increase the Affected Fund's flexibility in selecting future investments. Appendix B lists the current fundamental investment restriction proposed to be eliminated with respect to each of the Affected Funds (see page B- ). PROPOSAL 2(o) ELIMINATING FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO INVESTMENTS IN ISSUERS HAVING A RECORD OF LESS THAN THREE YEARS OF CONTINUOUS OPERATION It is proposed that each Affected Fund's fundamental investment restriction with respect to making investments in issuers having a record of less than three years of continuous operation (also known as "unseasoned issuers") be eliminated. This restriction was originally adopted to address then-existing state requirements in connection with the registration of shares of the Funds in a particular state or states. As a result of regulatory changes, the state restriction is no longer required. An unseasoned issuer is a new company that has been in business for a short time, and therefore poses additional risks, as well as opportunities, to investors. Because they have shorter track records, unseasoned issuers may be unsuccessful in managing the transition to a more established business and may have a higher risk of failure than more established companies. It is recommended that shareholders eliminate this fundamental investment policy to conform each Affected Fund's policies to those of the other Funds in the Guardian Fund Complex. Elimination of this policy could increase the Affected Funds' flexibility in selecting future investments. If adopted by the shareholders, the proposed amended restriction is not expected to alter materially the investment practices of the Affected Funds. Appendix B lists the current fundamental investment restriction proposed to be eliminated with respect to each of the Affected Funds (see page B- ). PROPOSAL 2(p) ELIMINATING FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO INVESTMENTS IN OIL, GAS OR MINERAL PROGRAMS It is proposed that each Affected Fund's fundamental investment restriction with respect to investments in oil, gas or mineral programs be eliminated. The limitation on investing in oil, gas or other mineral exploration or development programs was originally adopted to address then-existing state requirements in connection with the registration of shares of the Funds for sale in a particular state or states. As a result of regulatory changes, this state restriction no longer applies. If this proposal is approved, each Affected Fund would be permitted to invest in interests in oil, gas or other mineral exploration or development programs, 35 including pipelines. Each Fund would also be permitted to invest in master limited partnerships in such interests. Among other things, the risks associated with investments in interests in oil, gas, or other mineral exploration or development programs include the risk of limited liquidity, so that the Fund could have difficulty selling such investments at an acceptable price when it wants to sell them, and the risk that the values of such investments may be more volatile than other investments. It is recommended that shareholders eliminate this fundamental investment policy and conform the Affected Funds' policies to those of the other Funds in the Guardian Fund Complex. Appendix B lists the current fundamental investment restriction proposed to be eliminated with respect to each of the Affected Funds (see page B- ). PROPOSAL 2(q) ELIMINATING FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO INVESTMENTS IN OPTIONS It is proposed that each Affected Fund's current fundamental investment restriction with respect to investments in put options, call options and combinations thereof be eliminated. The limitations on investing in options were originally adopted to address then-existing state requirements in connection with the registration of shares of the Funds for sale in a particular state or states. As a result of regulatory changes, this state restriction no longer applies. Elimination of this restriction would allow the Affected Funds to invest in options, including but not limited to, options on swap agreements. The Guardian Park Avenue Fund expects to make investments in options consistent with its investment objective if this proposal is approved by shareholders. In addition, The Guardian Investment Quality Bond Fund, The Guardian Bond Fund, Inc., The Guardian Low Duration Bond Fund, The Guardian VC Low Duration Bond Fund, The Guardian High Yield Bond Fund, The Guardian VC High Yield Bond Fund and The Guardian Tax-Exempt Fund (the "fixed income funds") expect to invest in swap agreements, including but not limited to credit derivatives, including credit derivative swaps and credit derivative index investments. The fixed income funds would use these investments (i) as alternatives to direct investment in a particular security, (ii) to invest a Fund's cash position on a short term basis in securities that are expected to perform in accordance with the fixed income markets generally or (iii) for hedging purposes. They may not be used for speculation. These investments may create additional investment risks that may subject a Fund to greater volatility than investments in more traditional securities. No Fund intends to invest materially (over 5% of its total assets) in options or swaps. It is recommended that shareholders approve the elimination of this fundamental investment restriction for each Affected Fund. Appendix B lists the current 36 fundamental investment restriction proposed to be eliminated with respect to each of the Affected Funds (see page B- ). PROPOSAL 2(r) ELIMINATING FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO INVESTMENTS IN WARRANTS It is proposed that each Affected Fund's current fundamental investment restriction with respect to investments in warrants be eliminated. The limitations on investing in warrants were originally adopted to address then-existing state requirements in connection with the registration of shares of the Funds for sale in a particular state or states. As a result of regulatory changes, this state restriction is no longer applicable. It is recommended that shareholders approve the elimination of this fundamental investment restriction for each Affected Fund. If adopted by the shareholders, the proposed change is not expected to alter materially the investment practices of the Affected Funds. Appendix B lists the current fundamental investment restriction proposed to be eliminated with respect to each of the Affected Funds (see page B- ). PROPOSAL 2(s) ELIMINATING FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO INVESTMENTS IN SECURITIES OTHER THAN THOSE DISCUSSED IN THE FUND'S PROSPECTUS The Affected Funds are currently subject to the fundamental investment restriction that they may not purchase any security that is not described in the Affected Fund's prospectus. This fundamental restriction is not required under the 1940 Act. It is proposed that this fundamental investment restriction be eliminated because it is unnecessary and is more restrictive than is required under applicable law. Under the 1940 Act, a mutual fund is required to disclose in its prospectus its principal investment strategies. Funds also may invest in other types of securities that do not constitute a principal investment strategy to the extent such investments are in the best interests of the Fund. Disclosure of such investments is required if such investments are expected to have a material impact on the Fund's investment strategy or risk profile. Appendix B lists the current fundamental investment policy proposed to be eliminated with respect to each of the Affected Funds (see page B- ). 37 PROPOSAL 2(t) AMENDING THE GUARDIAN TAX-EXEMPT FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH RESPECT TO INVESTMENTS IN INVESTMENT GRADE MUNICIPAL OBLIGATIONS It is proposed that the fundamental investment restriction of The Guardian Tax- Exempt Fund with respect to investments in investment grade municipal obligations be amended. The current policy states: "Under normal circumstances at least 80% of the value of the Fund's net assets will be invested in a diversified portfolio of investment grade municipal obligations." The proposed amended fundamental investment restriction is as follows: "Under normal circumstances at least 80% of the value of the Fund's net assets will be invested in a diversified portfolio of municipal obligations." An investment company that uses a name suggesting that its distributions are exempt from federal income tax or from both federal and state income tax adopt a fundamental policy (1) to invest at least 80% of its assets in investments the income from which is exempt, as applicable, from federal income tax or from both federal and state income tax or (2) to invest its assets so that at least 80% of the income that it distributes will be exempt, as applicable, from federal income tax or from both federal and state income tax. However, these investments are not required to be investment grade, which means rated at least BBB or the equivalent by a nationally recognized statistical ratings organization, such as Standard & Poor's Ratings Group. The Guardian Tax-Exempt Fund would continue to invest mainly in investment grade municipal obligations, and would continue to be allowed to invest up to 10% of its assets in bonds rated below investment grade. The Fund would not be required to sell a bond that has been downgraded, but its overall holdings in below investment grade bonds, including those that have been downgraded since the time of investment, would not exceed 20% of the Fund's assets. This proposal is intended to permit the Fund to increase its ability to hold below investment grade bonds consistent with its competitors in the marketplace. The Fund does not intend to invest more than 10% of its total assets in below investment grade municipal obligations. RECOMMENDED SHAREHOLDER ACTION AND REQUIRED VOTE Shareholders are being asked to vote FOR each of Proposals 2(a) through 2(t). Approval of a proposal with respect to an Affected Fund requires the affirmative vote of a "majority of the outstanding voting securities of the Fund (as defined in the 1940 Act), which means the affirmative vote of the lesser of (1) more than 50% of the outstanding shares of the Fund or (2) 67% or more of the shares of the 38 Fund present at a meeting if more than 50% of the outstanding shares of the Fund are represented at the meeting in person or by proxy. PROPOSALS 3 AND 4 AMENDING THE AGREEMENT AND DECLARATION OF TRUST OF THE PARK AVENUE PORTFOLIO PROPOSAL 3 It is proposed that shareholders approve an amendment to the Amended and Restated Agreement and 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. The current provision states as follows: ARTICLE IV TRUSTEES SECTION 5. Number of Trustees. The number of Trustees serving hereunder at any time shall be determined by the Trustees themselves, but shall not be less than five (5) nor more than eleven (11). No decrease in the number of Trustees shall have the effect of removing any Trustee from office prior to expiration of his term, except that the number of Trustees may be decreased in conjunction with the removal of a Trustee pursuant to Section 2 of this Article IV. The Trustees desire to increase the size of the Board to facilitate the implementation of an SEC rule that requires that at least 75% of the Board consist of members who are not "interested persons" (as defined in the 1940 Act) of a Fund or its investment adviser or sub-adviser. The Trustees may also wish to increase the size of the Board for other reasons. This amendment would enable the Board to seek candidates for an additional position on the Board while allowing current Trustees to continue to serve Fund shareholders. The proposed new provision is as follows: ARTICLE IV TRUSTEES SECTION 5. Number of Trustees. The number of Trustees serving hereunder at any time shall be determined by the Trustees themselves, but shall not be less than five (5) nor more than twelve (12). No decrease in the number of Trustees shall have the effect of removing any Trustee from office prior to expiration of his term, except that the number of Trustees may be decreased in conjunction with the removal of a Trustee pursuant to Section 2 of this Article IV. 39 PROPOSAL 4 It is proposed that shareholders approve an amendment to the Amended and Restated Agreement and 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. The current provision states as follows: ARTICLE XII MISCELLANEOUS SECTION 7. Amendments. If authorized by vote of the Trustees and a vote of the majority of the outstanding voting securities, or by any larger vote which may be required by applicable law or this Amended and Restated Declaration of Trust in any particular case (the "Required Majority"), the Trustees shall amend or otherwise supplement this instrument; provided, however, that an amendment that shall affect the Shareholders or one or more Series (or one or more Classes), but not the Shareholders of all outstanding Series (or Classes) shall be authorized by vote of the Required Majority of each such Series (or Class), and no vote of a Series (or Class) not affected shall be required. Copies of any amendments to this Amended and Restated Declaration of Trust shall be filed as specified in Section 5 of this Article XII. Amendments having the purpose of changing the name of the Trust or of supplying any omission, curing any ambiguity or curing, correcting or supplementing any provision which is defective or inconsistent with the 1940 Act or with the requirements of the Internal Revenue Code, as amended (any the regulations thereunder), with respect to obtaining the most favorable treatment thereunder available to regulated investment companies shall not require authorization by Shareholder vote. The Trustees request the shareholders' approval of an amendment to this provision to permit the Trustees to amend the Trust document as the Trustees deem necessary or desirable from time to time without the expense and delay associated with presenting each proposed change to shareholders for approval at a shareholders' meeting subject to the following exceptions: (i) amendments that would affect shareholder voting rights; (ii) amendments to the amendment provisions in the Trust document itself; (iii) amendments that may require shareholder approval under applicable law or by the Trust's registration statement; and (iv) amendments submitted to shareholders for their approval by the Trustees. The proposed new provision is as follows: ARTICLE XII MISCELLANEOUS SECTION 7. Amendments. Except as specifically provided in this Section 7, the Trustees may, without Shareholder vote, restate, amend or otherwise supplement this Amended and Restated Declaration of Trust. 40 Shareholders shall have the right to vote on (i) any amendment that would affect their voting powers granted in Article VIII, Section 1 hereof, (ii) any amendment to this Section 7 of Article XII; (iii) any amendment that may require their vote under applicable law or by the Trust's registration statement, as filed with the Securities and Exchange Commission, and (iv) any amendment submitted to them for their vote by the Trustees. Any amendment that shall affect the Shareholders of one or more Series (or one or more Classes), but not the Shareholders of all outstanding Series (or Classes) shall be authorized by a vote of the Shareholders of each Series affected and no vote of Shareholders of a Series not affected shall be required. Copies of any amendments to this Amended and Restated Declaration of Trust shall be filed as specified in Section 5 of this Article XII. RECOMMENDED SHAREHOLDER ACTION AND REQUIRED VOTE Shareholders are being asked to vote FOR each of Proposals 3 and 4. The shares of the Funds that are series of The Park Avenue Portfolio will vote together as a single class. Approval of each of Proposals 3 and 4 requires the affirmative vote of a majority of the outstanding voting entitled to vote present at the meeting in person or represented by proxy. FURTHER INFORMATION ABOUT VOTING You are being asked to give your voting instructions on each proposal discussed in this Proxy Statement. Please follow the directions on your proxy card, which accompanies this Proxy Statement. You are eligible to provide voting instructions for use at the meeting if, at the close of business on September 16, 2005, you owned shares of a Fund or if you owned a variable annuity or variable life insurance policy (either, a "Variable Contract") issued by The Guardian Insurance & Annuity Company, Inc. ("GIAC") and some or all of your Variable Contract value was allocated for investment in the Fund. GIAC, which is the sole record shareholder of the Variable Contract Funds, will vote the Fund shares attributable to your Variable Contract in accordance with the voting instructions you provide on your proxy card if it is properly executed and returned in a timely manner. If your proxy card is signed and dated, but gives no voting instructions, your shares will be voted FOR each of the proposals described in this Proxy Statement. The presence in person or by proxy of the holders of a majority of the shares of a Fund entitled to be voted at the Special Meeting is required to establish a quorum at the meeting except for the series funds of the Guardian Variable Contract Funds, Inc., for which one-third of the shares entitled to vote constitutes a quorum. Shares represented by proxies that reflect abstentions and "broker non-votes" (i.e., shares held by brokers or nominees as to which (i) instructions have not been received from the beneficial owners or the persons entitled to vote and 41 (ii) the broker or nominee does not have the discretionary voting power on a particular matter) will be counted as shares that are present and entitled to vote on the matter for purposes of determining the presence of a quorum. With respect to the election of Trustees, neither abstentions nor broker non-votes have an effect on the outcome of the proposal. With respect to any other proposals, abstentions and broker non-votes have the effect of a vote "against" the proposal. If sufficient votes in favor of any of the proposals set forth in the Notice of the Special Meeting are not received by the time scheduled for the meeting, the persons named as proxies may propose adjournments of the meeting for a reasonable time to permit further solicitation of proxies. Any meeting of shareholders may be adjourned from time to time by the affirmative vote of a majority of the votes cast upon the question and the meeting may be held as adjourned within a reasonable time after the date set for the original meeting without further notice. Your Fund pays the costs of any additional solicitation and of any adjourned session. Any proposals for which sufficient favorable votes have been received by the time of the meeting may be acted upon and considered final regardless of whether the meeting is adjourned to permit additional solicitation with respect to any other proposal. SHAREHOLDERS OF VARIABLE CONTRACT FUNDS If you are eligible to give voting instructions for a Fund in more than one Variable Contract, you must submit separate voting instructions for each Variable Contract to provide instructions for all of the shares in which you have an interest. Votes will be tabulated by the inspector of election appointed for the Special Meeting. You may revoke your voting instructions by submitting a subsequent proxy card before the meeting, by timely written notice, or by attending and providing voting instructions at the meeting. GIAC will vote the Fund shares attributable to Variable Contracts for which it does not receive timely voting instructions in the same proportion as the shares for which it does receive timely voting instructions. GIAC will also vote the Fund shares that it owns directly due to its contributions or accumulations in the separate accounts through which it offers variable annuities in proportion to the shares for which it receives timely voting instructions. With regard to separate accounts through which it offers variable life insurance policies, GIAC does not own any Fund shares directly. SHAREHOLDERS OF THE PARK AVENUE PORTFOLIO FUNDS Shareholders of the Funds within The Park Avenue Portfolio have the opportunity to submit their voting instructions via the Internet through a program provided by a third party vendor hired by the Funds or by automated telephone service. The giving of such a proxy will not affect your right to vote in person should you decide to attend the meeting. To use the Internet, please access the Internet address 42 listed on your proxy card, and follow the instructions on the Internet site. To record your voting instructions via automated telephone service, call the toll-free number listed on your proxy card. The Internet and telephone voting procedures are designed to authenticate shareholder identities, to allow shareholders to give their voting instructions and to confirm that shareholders' instructions have been recorded properly. Shareholders voting via the Internet should understand that there may be costs associated with electronic access, such as usage charges from Internet access providers and telephone companies, that must be borne by the shareholders. Proxies may be revoked at any time before they are voted either (i) by a written revocation received by the Fund, (ii) by properly executing a later-dated proxy, (iii) by recording later-dated voting instructions via the Internet or (iv) by attending the meeting and voting in person. Internet and automated telephone voting are not available if you own your Fund shares through a variable annuity or variable life contract or if you own shares of The Guardian Park Avenue Fund through a Value Guard variable annuity contract. OTHER MATTERS The Trustees know of no matters other than those set forth herein to be brought before the meeting. If, however, any other matters properly come before the meeting, it is the Trustees' intention that proxies will be voted on such matters in accordance with the judgment of the persons named in the enclosed form of proxy. The expenses of this proxy solicitation will be paid by the Funds. The solicitation of proxies will be made primarily by mail, but also may include telephone communication by officers of the Funds, or by regular employees of Guardian Investor Services LLC or The Guardian Life Insurance Company of America, none of whom will receive compensation from the Funds for their participation in the solicitation. The Funds have retained at their own expense Management Information Services ("MIS"), 60 Research Road, Hingham, Massachusetts 02043 to aid in the solicitation of instructions for registered and nominee accounts, for a fee expected not to exceed $ plus reasonable out-of-pocket expenses for mailing. The expenses of the preparation of proxy statements and related materials, including printing and delivery costs, are borne by each Fund. Your Fund does not regularly hold annual shareholder meetings, but may from time to time schedule special meetings. In order to be considered for inclusion in the Fund's proxy statement for such a meeting, a shareholder proposal must be received a reasonable time before the Fund prints and mails its proxy statement. If a shareholder who wishes to present a proposal at a special shareholder meeting fails to notify the Fund within a reasonable time before the Fund mails its proxy statement, the proxies solicited for the meeting will have discretionary authority to vote on the shareholder's proposal if it is properly brought before the meeting. If a shareholder makes a timely notification, the proxies may still exercise discretionary voting authority under circumstances consistent with the SEC's 43 proxy rules. All shareholder proposals must also comply with the rules of the SEC and each Fund's charter documents. REPORTS TO SHAREHOLDERS AND OTHER FUND INFORMATION The Annual Report to Shareholders of each Fund, including financial statements of the Fund, has previously been sent to shareholders. Upon request, each Fund's most recent annual and semi-annual report is available at no cost. To request a report please call the Funds toll-free at 1-800-221-3253), or write to the Funds at Guardian Investor Services LLC, 7 Hanover Square, New York, New York 10004. Only one Proxy Statement is being sent to multiple shareholders sharing the same address unless contrary instructions have been received by the Funds. The Funds are required by federal law to file shareholder reports, proxy statements and other information with the SEC. The SEC maintains a website that contains information about the Funds (www.sec.gov). Fund information and shareholder reports are also available free of charge on the Internet at www.guardianinvestor.com. You can inspect and copy the proxy material, shareholder reports and other information at the public reference facilities of the SEC, 450 Fifth Street, N.W., Washington, DC 20549. You can also obtain copies of these materials from the Public Reference Branch, Office of Consumer Affairs and Information Services of the SEC at 450 Fifth Street, N.W., Washington, DC 20549, at prescribed rates. Guardian Investor Services LLC ("GIS") is the investment adviser for all of the Funds in the Guardian Fund Complex, except for The Guardian Baillie Gifford International Growth Fund, The Guardian Baillie Gifford Emerging Markets Fund, Baillie Gifford International Growth Fund and Baillie Gifford Emerging Markets Fund. GIS is a Delaware limited liability company, which is wholly owned by The Guardian Insurance & Annuity Company, Inc. ("GIAC"), a Delaware insurance company. GIAC is wholly owned by The Guardian Life Insurance Company of America ("Guardian Life"), a New York mutual insurance company. GIS is the investment adviser to several other accounts managed by Guardian Life, and it is the underwriter and distributor of the Funds' shares and of variable annuity and variable life insurance contracts issued by GIAC. GIS, Guardian Life and GIAC are located at 7 Hanover Square, New York, New York 10004. The sub-adviser for The Guardian UBS Large Cap Value Fund, The Guardian UBS Small Cap Value Fund, The Guardian UBS VC Large Cap Value Fund and The Guardian UBS VC Small Cap Value Fund is UBS Global Asset Management (Americas) Inc. ("UBS Global AM"). UBS Global AM is a Delaware corporation and an investment management firm located at One North Wacker Drive, Chicago, Illinois 60606. The investment adviser of The Guardian Baillie Gifford International Growth Fund, The Guardian Baillie Gifford Emerging Markets Fund, Baillie Gifford 44 International Growth Fund and Baillie Gifford Emerging Markets Fund (the "International Funds") is Guardian Baillie Gifford Limited ("GBG"), an investment management company based in Edinburgh, Scotland. GIAC owns 51% of GBG, and the remaining 49% is owned by Baillie Gifford Overseas Limited ("BG Overseas"), which is wholly owned by a Scottish investment company, Baillie Gifford & Co. BG Overseas is the sub-adviser for the International Funds. GBG and BG Overseas are regulated by the Financial Services Authority (FSA), an independent regulator of investment advisory firms. GBG, BG Overseas and Baillie Gifford & Co. are located at Calton Square, 1 Greenside Row, Edinburgh, EH1 3AN, United Kingdom. INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Trustees have approved Ernst & Young LLP, 200 Clarendon Street, Boston, Massachusetts 02116, as the independent registered public accounting firm for each Fund's current fiscal year. Ernst & Young LLP was approved primarily on the basis of its expertise as auditors of investment companies, the quality of its audit services and the competitiveness of its fees. Representatives of Ernst & Young LLP are not expected to be present at the Special Meeting. The following information relates to the fees billed in each of the last two fiscal years for services rendered to a Fund by Ernst & Young LLP. Audit Fees include amounts related to the audit and report on the Fund's annual financial statements. Tax fees include amounts related to tax compliance services. <Table> <Caption> - ------------------------------------------------------------ 2004 2003 2004 2003 FUND AUDIT FEES AUDIT FEES TAX FEES TAX FEES - ------------------------------------------------------------ The Park Avenue Portfolio $249,218 $239,315 $73,832 $72,000 - ------------------------------------------------------------ The Guardian Variable Contract Funds, Inc. $127,860 $122,765 $37,890 $37,000 - ------------------------------------------------------------ GIAC Funds, Inc. $ 60,825 $ 58,500 $18,025 $17,595 - ------------------------------------------------------------ The Guardian Bond Fund, Inc. $ 17,626 $ 17,010 $ 5,224 $ 5,115 - ------------------------------------------------------------ The Guardian Cash Fund, Inc. $ 16,971 $ 16,300 $ 5,029 $ 4,900 - ------------------------------------------------------------ </Table> Pursuant to the Funds' Audit Committee charter, the Audit Committee of the Board is responsible for pre-approving any engagement of the Funds' accountant to provide any non-prohibited services to the Funds, 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 Funds 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 Funds' accountant, including the fees and other compensation to be paid to the accountant, to provide any non-audit services to the Funds' investment 45 adviser (or any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the Fund), if the engagement relates directly to the operations and financial reporting of the Fund. 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 Fund). All such delegated pre-approvals shall be presented to the Audit Committee no later than the next Audit Committee meeting. Other than tax services described above, the Audit Committee has not approved any other non-audit services to the Fund in the last two fiscal years. [TABLE TO COME] [SHARES OUTSTANDING AND 5% BENEFICIAL OWNERS AS OF RECORD DATE] 46 OFFICERS OF THE FUNDS <Table> <Caption> - ------------------------------------------------------------------------------------------------------ NUMBER OF FUNDS TERM OF IN THE OFFICE AND GUARDIAN FUND POSITION LENGTH OF COMPLEX FOR NAME, ADDRESS* AND WITH TIME PRINCIPAL OCCUPATIONS WHICH OFFICER YEAR OF BIRTH FUNDS SERVED+ DURING PAST 5 YEARS SERVES - ------------------------------------------------------------------------------------------------------ Joseph A. Caruso Senior Vice Since 1992 Director, The Guardian 25 (1952) President and Life Insurance Company Secretary of America, since 1/05; Senior Vice President and Corporate Secretary, The Guardian Life Insurance Company of America since 1/01; 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. - ------------------------------------------------------------------------------------------------------ </Table> 47 <Table> <Caption> - ------------------------------------------------------------------------------------------------------ NUMBER OF FUNDS TERM OF IN THE OFFICE AND GUARDIAN FUND POSITION LENGTH OF COMPLEX FOR NAME, ADDRESS* AND WITH TIME PRINCIPAL OCCUPATIONS WHICH OFFICER YEAR OF BIRTH FUNDS SERVED+ DURING PAST 5 YEARS SERVES - ------------------------------------------------------------------------------------------------------ Howard W. Chin Managing Since 1997 Managing Director, The 15 (1952) Director Guardian Life Insurance Company of America. Officer of various mutual funds within the Guardian Fund Complex. - ------------------------------------------------------------------------------------------------------ Robert J. Crimmins, Jr. Senior Since 2003 Senior Director, The 15 (1960) Director 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. - ------------------------------------------------------------------------------------------------------ Richard A. Cumiskey Chief Since 2002 Second Vice President, 25 (1960) Compliance Equity Administration Officer 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. - ------------------------------------------------------------------------------------------------------ </Table> 48 <Table> <Caption> - ------------------------------------------------------------------------------------------------------ NUMBER OF FUNDS TERM OF IN THE OFFICE AND GUARDIAN FUND POSITION LENGTH OF COMPLEX FOR NAME, ADDRESS* AND WITH TIME PRINCIPAL OCCUPATIONS WHICH OFFICER YEAR OF BIRTH FUNDS SERVED+ DURING PAST 5 YEARS SERVES - ------------------------------------------------------------------------------------------------------ Alexander M. Grant, Jr. Managing Since 1993 Managing Director, The 15 (1949) Director Guardian Life Insurance Company of America. Officer of various mutual funds within the Guardian Fund Complex. - ------------------------------------------------------------------------------------------------------ Edward H. Hocknell Vice President Since 1997 Partner, Baillie 16 c/o Baillie Gifford Gifford & Co. Overseas, Director, Baillie Limited Gifford Overseas 1 Greenside Row Limited. Officer of Edinburgh, EH1 3AN, various mutual funds Scotland within the Guardian (1960) Fund Complex. - ------------------------------------------------------------------------------------------------------ Jonathan C. Jankus Managing Since 1995 Managing Director, The 20 (1947) Director Guardian Life Insurance Company of America. Officer of various mutual funds within the Guardian Fund Complex. - ------------------------------------------------------------------------------------------------------ Stewart M. Johnson Senior Since 2002 Senior Director, The 15 (1952) Director 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. - ------------------------------------------------------------------------------------------------------ Peter J. Liebst Managing Since 1999 Managing Director, The 20 (1956) Director Guardian Life Insurance Company of America. Officer of various mutual funds within the Guardian Fund Complex. - ------------------------------------------------------------------------------------------------------ </Table> 49 <Table> <Caption> - ------------------------------------------------------------------------------------------------------ NUMBER OF FUNDS TERM OF IN THE OFFICE AND GUARDIAN FUND POSITION LENGTH OF COMPLEX FOR NAME, ADDRESS* AND WITH TIME PRINCIPAL OCCUPATIONS WHICH OFFICER YEAR OF BIRTH FUNDS SERVED+ DURING PAST 5 YEARS SERVES - ------------------------------------------------------------------------------------------------------ R. Robin Menzies Vice President Since 1991 Partner, Baillie 16 c/o Baillie Gifford Gifford & Co. Overseas, Director, Baillie Limited Gifford Overseas 1 Greenside Row Limited. Director, Edinburgh, EH1 3AN, Guardian Baillie Scotland Gifford Limited. (1952) Trustee, Baillie Gifford Funds, Inc. (2 funds). Officer of various mutual funds within the Guardian Fund Complex. - ------------------------------------------------------------------------------------------------------ Nydia Morrison Controller Since 2003 Director, Mutual Fund 25 (1958) 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. - ------------------------------------------------------------------------------------------------------ Frank L. Pepe Vice President Since 1985 Vice President and 25 (1942) and Treasurer 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. - ------------------------------------------------------------------------------------------------------ </Table> 50 <Table> <Caption> - ------------------------------------------------------------------------------------------------------ NUMBER OF FUNDS TERM OF IN THE OFFICE AND GUARDIAN FUND POSITION LENGTH OF COMPLEX FOR NAME, ADDRESS* AND WITH TIME PRINCIPAL OCCUPATIONS WHICH OFFICER YEAR OF BIRTH FUNDS SERVED+ DURING PAST 5 YEARS SERVES - ------------------------------------------------------------------------------------------------------ Richard T. Potter, Jr. Vice President Since 1992 Vice President and 25 (1954) and Counsel 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. - ------------------------------------------------------------------------------------------------------ Robert A. Reale Managing Since 2001 Managing Director, The 25 (1960) Director 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. - ------------------------------------------------------------------------------------------------------ </Table> 51 <Table> <Caption> - ------------------------------------------------------------------------------------------------------ NUMBER OF FUNDS TERM OF IN THE OFFICE AND GUARDIAN FUND POSITION LENGTH OF COMPLEX FOR NAME, ADDRESS* AND WITH TIME PRINCIPAL OCCUPATIONS WHICH OFFICER YEAR OF BIRTH FUNDS SERVED+ DURING PAST 5 YEARS SERVES - ------------------------------------------------------------------------------------------------------ Thomas G. Sorell President Since 1997 Executive Vice 25 (1955) 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. - ------------------------------------------------------------------------------------------------------ Donald P. Sullivan, Jr. Vice President Since 1995 Vice President, Equity 25 (1954) 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. - ------------------------------------------------------------------------------------------------------ </Table> 52 <Table> <Caption> - ------------------------------------------------------------------------------------------------------ NUMBER OF FUNDS TERM OF IN THE OFFICE AND GUARDIAN FUND POSITION LENGTH OF COMPLEX FOR NAME, ADDRESS* AND WITH TIME PRINCIPAL OCCUPATIONS WHICH OFFICER YEAR OF BIRTH FUNDS SERVED+ DURING PAST 5 YEARS SERVES - ------------------------------------------------------------------------------------------------------ Matthew P. Ziehl Managing Since 2002 Managing Director, The 16 (1967) Director 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. - ------------------------------------------------------------------------------------------------------ </Table> * Unless otherwise indicated, the address of each Officer is 7 Hanover Square, New York, NY 10004. + There is no set term of office for Officers. The table reflects the number of years for which each person has served as an Officer. "S&P(R)", "S&P 500(R)", "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 Funds are 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. 53 APPENDIX A GUARDIAN FUNDS NOMINATING AND GOVERNANCE COMMITTEE CHARTER I. PURPOSE The Nominating and Governance Committee is a committee of the Board of the Fund. Its primary functions are to oversee the administration of the Board Governance and Procedures Guidelines and identify and recommend individuals for membership as independent members on the Board. II. COMPOSITION The Nominating and Governance Committee shall be comprised of independent board members who, in the opinion of the Board, are free from any relationship that would interfere with the exercise of his or her independent judgment as a member of the Nominating and Governance Committee. For these purposes, a board member is considered an independent board member if he or she is not an "interested person" of the Fund as that term is defined in the Investment Company Act of 1940. The members of the Nominating and Governance Committee shall be elected by the Board annually and serve until their successors shall be duly elected and qualified. The members of the Nominating and Governance Committee may designate a Chair by majority vote. III. MEETINGS The Nominating and Governance Committee shall meet at least once annually, or more frequently as circumstances dictate. Special meetings (including telephone meetings) may be called by the Chair or a majority of the members of the Nominating and Governance Committee upon reasonable notice to the other members of the Nominating and Governance Committee. IV. RESPONSIBILITIES AND DUTIES To fulfill its responsibilities and duties the Nominating and Governance Committee shall: A. Board Nominations and Functions 1. Identify and recommend individuals for membership on the Board as Independent Trustees. The principal criterion for selection of candidates is their ability to A-1 carry out the responsibilities of the Board. In addition, the following factors are taken into consideration: (a) The Board collectively should represent a broad cross section of backgrounds, functional disciplines and experience. (b) Candidates should exhibit stature commensurate with the responsibility of representing shareholders. (c) Candidates shall affirm their availability and willingness to strive for high attendance levels at regular and special meetings, and participate in committee activities as needed. (d) Candidates should represent the best choices available based upon thorough identification, investigation and recruitment of candidates. 2. Review the Board Governance Procedures and Guidelines, annually, and recommend changes, if any, to the Board. 3. Periodically review the composition of the Board to determine whether it may be appropriate to add individuals with different backgrounds or skill sets from those already on the Board. 4. Review annually Independent Trustee compensation and Fund ownership criteria, and recommend any appropriate changes to the Independent Trustees as a group. 5. Coordinate with legal counsel to the Independent Trustees an annual evaluation of the performance of the Board. 6. Periodically review the orientation of new trustees and ongoing education for trustees provided by the Fund's investment manager and legal counsel for the Independent Trustees. B. Committee Nominations and Functions 1. Identify and recommend individuals for membership on all committees and review committee assignments at least annually. 2. Review as necessary the responsibilities of any committees of the Board, whether there is a continuing need for each committee, whether there is a need for additional committees of the Board, and whether committees should be combined or reorganized. C. Insurance 1. At least annually, review the Fund's fidelity bond for appropriateness of the type and amount of coverage, as well as the appropriateness of the premium and the financial condition and/or rating of the issuing company. Review the terms of any joint allocation agreement. A-2 2. At least annually, review the Fund's directors and officers and errors and omissions insurance coverage for appropriateness of the type and amount of coverage as well as the premium and the financial condition and/or rating of the issuing company. Review the terms of any joint allocation agreement. 3. At least annually, review any other insurance policies and assess needs for other types of coverage. D. Other Powers and Responsibilities 1. Review this Charter, as necessary, and recommend any material changes to the Board. 2. Monitor the performance of legal counsel for the Independent Trustees. 3. Investigate any other matter brought to its attention within the scope of its duties, with the power to retain outside counsel or other experts for this purpose at the expense of the Fund, if, in its judgment, that is appropriate. 4. Perform any other activities consistent with this Charter, the Fund's Charter, By-Laws and governing law, as the Nominating and Governance Committee or the Board deems necessary or appropriate. 5. Report its significant activities and findings to the Board. Adopted: November 15, 2001 Amended: November 14, 2002 Amended: June 23, 2005 A-3 APPENDIX B PROPOSAL 2(a) AMENDING FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO DIVERSIFICATION OF INVESTMENTS Listed below is the current fundamental investment restriction that is proposed to be amended or eliminated with respect to each Affected Fund as discussed in Proposal 2(a) of the Proxy Statement. Each investment restriction is prefaced by the words "The Fund may not..." <Table> <Caption> The Guardian Park Avenue Fund 1. Make any purchase which would result in more than 5% of the value of its total assets being invested in the securities of any one issuer except U.S. government securities. 2. Purchase the securities of any issuer if such purchase would result in more than 10% of the voting securities, or the securities of any class of such issuer, being held by the Fund. The Guardian Park Avenue Small Cap Fund 1. As to 75% of the Fund's total assets, purchase any security (other than obligations of the U.S. Government, its agencies or instrumentalities and investment companies) if as a result, more than 5% of the Fund's total assets (taken at current value) would then be invested in the securities of a single issuer. 2. Purchase more than 10% of any class of securities of any issuer. All debt securities and all preferred stocks are each considered as one class. The Guardian Baillie Gifford Invest more than 5% of the value of its International Growth Fund total assets in the securities of any one Baillie Gifford International Growth issuer or purchase more than 10% of the Fund outstanding voting securities, or any Baillie Gifford Emerging Markets Fund class of securities, of any one issuer. For purposes of this restriction, all outstanding debt securities of an issuer are considered as one class, and all preferred stock of an issuer is considered as one class. (This restriction does not apply to obligations issued or guaranteed by the U.S. or foreign governments, or their respective agencies or instrumentalities.) </Table> B-1 <Table> <Caption> The Guardian Baillie Gifford Emerging Purchase any security (other than Markets Fund obligations of the U.S. Government, its agencies or instrumentalities and investment companies) if as a result, more than 5% of the Fund's total assets (taken at current value) would then be invested in the securities of any one issuer, or purchase more than 10% of the outstanding voting securities, or any class of securities, of any one issuer. For purposes of this restriction, all outstanding debt securities of an issuer are considered as one class, and all preferred stock of an issuer is considered as one class. (This restriction does not apply to obligations issued or guaranteed by the U.S. or foreign governments, or their respective agencies or instrumentalities.) The Guardian Investment Quality Bond With respect to 75% of its total assets, Fund invest more than 5% of the value of its total assets in the securities of any one issuer or purchase more than 10% of the outstanding voting securities, or any other class of securities, of any one issuer. For purposes of this restriction, all outstanding debt securities of an issuer are considered as one class, and all preferred stock of an issuer is considered as one class. This restriction does not apply to obligations issued or guaranteed by the U.S. government, its agencies or instrumentalities. The Guardian High Yield Bond Fund Make any investment inconsistent with the The Guardian Low Duration Bond Fund Fund's classification as a diversified The Guardian S&P 500 Index Fund company under the 1940 Act. The Guardian Stock Fund The Guardian VC Asset Allocation Fund The Guardian VC Low Duration Bond Fund The Guardian VC High Yield Fund The Guardian VC 500 Index Fund The Guardian UBS Large Cap Value Fund Make any investment inconsistent with the The Guardian UBS Small Cap Value Fund Fund's classification as a diversified company under the 1940 Act as described above in "Organization of the Portfolio." </Table> B-2 <Table> <Caption> The Guardian Tax-Exempt Fund 1. Invest more than 5% of its assets in the obligations of any issuer, except that up to 25% of the value of the Fund's total assets may be invested, and securities issued or guaranteed by the U.S. government or its agencies or instrumentalities may be purchased, without regard to any such limitations. For purposes of this Investment Restriction, identification of the "issuer" will be based on a determination of the source of assets and revenues committed to meeting interest and principal payments of each security. 2. Purchase more than 10% of the voting securities of any issuer or invest in companies for the purpose of exercising control. The Guardian Cash Management Fund 1. Purchase the securities of any issuer if, immediately after such purchase, more than 5% of the Fund's total assets, taken at market value, would be invested in such securities. 2. Purchase any securities, other than obligations of the U.S. government or its agencies or instrumentalities, if, immediately after such purchase, more than 10% of the outstanding voting securities of one issuer would be owned by the Fund. The Guardian Asset Allocation Fund Invest more than 5% of the value of its total assets in the securities of any one issuer or purchase more than 10% of the outstanding voting securities, or any other class of securities, of any one issuer. For purposes of this 10% restriction, all outstanding debt securities of an issuer are considered as one class, and all preferred stock of an issuer is considered as one class. This restriction does not apply to obligations issued or guaranteed by the U.S. government, its agencies or instrumentalities or to any security issued by any investment company or series thereof. </Table> B-3 <Table> <Caption> The Guardian Small Cap Stock Fund 1. As to 75% of the Fund's total assets, purchase any security (other than obligations of the U.S. Government, its agencies or instrumentalities and investment companies) if as a result, more than 5% of the Fund's total assets (taken at current value) would then be invested in the securities of a single issuer. 2. Purchase more than 10% of any class of securities of any issuer. All debt securities and all preferred stocks are each considered as one class. The Guardian UBS VC Large Cap Value Make any investment inconsistent with the Fund Fund's classification as a diversified The Guardian UBS VC Small Cap Value company under the 1940 Act as described Fund above in "Organization of the Company." The Guardian Bond Fund, Inc. Invest more than 5% of the value of its total assets in the securities of any one issuer or purchase more than 10% of the outstanding voting securities, or any other class of securities, of any one issuer. For purposes of this restriction, all outstanding debt securities of an issuer are considered as one class, and all preferred stock of an issuer is considered as one class. This restriction does not apply to obligations issued or guaranteed by the United States Government, its agencies or instrumentalities. The Guardian Cash Fund, Inc. 1. Purchase the securities of any issuer other than obligations of the U.S. Government or its agencies or instrumentalities if, immediately after such purchase, more than 5% of the Fund's total assets, taken at market value, would be invested in such securities. 2. Purchase any securities, other than obligations of the U.S. Government or its agencies or instrumentalities, if, immediately after such purchase, more than 10% of the outstanding securities of one issuer would be owned by the Fund. </Table> B-4 PROPOSAL 2(b) AMENDING FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO BORROWING Listed below is the current fundamental investment restriction that is proposed to be amended or eliminated with respect to each Affected Fund as discussed in Proposal 2(b) of the Proxy Statement. Each investment restriction is prefaced by the words "The Fund may not..." <Table> <Caption> The Guardian Park Avenue Fund Borrow money, except as a temporary measure for emergency purposes, in an aggregate amount exceeding 5% of the total assets of the Fund. The Guardian Park Avenue Small Cap Fund Borrow money, except that the Fund may (i) borrow up to 5% of the value of its total assets (not including the amount borrowed) for temporary or emergency needs; and (ii) engage in reverse repurchase agreements or other transactions which may involve a borrowing from banks or other persons, provided that the aggregate amount involved in all such transactions shall not exceed 33% of the value of the Fund's total assets (including the amount borrowed) less liabilities (other than borrowings) or such other percentage permitted by law. The Guardian Baillie Gifford Borrow money, except that the Fund may International Growth Fund borrow from banks up to 20% of the value The Guardian Baillie Gifford Emerging of its total assets as a temporary Markets Fund measure for extraordinary or emergency needs, for example, to enable the Fund to meet redemption requests or to settle transactions on different stock markets where different settlement dates apply which might otherwise require the sale of portfolio securities at a time when it would not be in the Fund's best interests to do so. Up to 5% of the Fund's total assets may be borrowed from non-banking institutions. The Fund may not, however, borrow money for investment purposes. </Table> B-5 <Table> <Caption> The Guardian Investment Quality Bond Borrow money, except that the Fund may Fund (i) borrow up to 10% of the value of its total assets for temporary or emergency purposes; and (ii) engage in reverse repurchase agreements, dollar rolls or other transactions which may involve a borrowing from banks or other persons, provided that the aggregate amount involved in all such transactions shall not exceed 33 1/3% of the value of the Fund's total assets (including the amount borrowed) less liabilities (other than borrowings) or such other percentage permitted by law. The Guardian High Yield Bond Fund Borrow money or pledge its assets, except The Guardian Low Duration Bond Fund that the Fund may (i) borrow for temporary or emergency needs, and engage in reverse repurchase agreements, mortgage dollar rolls or other transactions which may involve a borrowing from banks or other persons, provided that the aggregate amount involved in all such transactions shall not exceed 33 1/3% of the value of the Fund's total assets (including the amount borrowed) less liabilities (other than borrowings) or such other percentage permitted by law; (ii) obtain such short-term credit as may be necessary for the clearance of transactions in portfolio securities; and (iii) purchase securities on margin to the extent permitted by applicable law. The Guardian Tax-Exempt Fund Borrow money, except that the Fund may borrow up to 10% of the value of its total assets as a temporary measure for extraordinary or emergency needs, such as enabling the Fund to meet redemption requests which might otherwise require the sale of portfolio securities at a time when it is not in the Fund's best interests. The Fund may not, however, borrow money for investment purposes. </Table> B-6 <Table> <Caption> The Guardian Cash Management Fund Borrow money, except from banks for temporary or emergency purposes or to meet redemption requests which might otherwise require the untimely disposition of securities (not for leveraging), provided that borrowing in the aggregate may not exceed 10% of the value of the Fund's total assets, including the amount borrowed, at the time of such borrowing. The Guardian Asset Allocation Fund Borrow money, except that the Fund may borrow up to 10% of the value of its total assets as a temporary measure for extraordinary or emergency needs, such as enabling the Fund to meet redemption requests which might otherwise require the sale of portfolio securities at a time when it is not in the Fund's best interests. The Fund may not, however, borrow money for investment purposes. The Guardian S&P 500 Index Fund Borrow money or pledge its assets, except that the Fund may (i) borrow for temporary or emergency needs, and engage in reverse repurchase agreements, mortgage dollar rolls or other transactions which may involve a borrowing from banks or other persons, provided that the aggregate amount involved in all such transactions shall not exceed 33 1/3% of the value of the Fund's total assets (including the amount borrowed) less liabilities (other than borrowings) or such other percentage permitted by law; (ii) obtain such short-term credit as may be necessary for the clearance of transactions in portfolio securities; and (iii) purchase securities on margin to the extent permitted by applicable law. </Table> B-7 <Table> <Caption> The Guardian UBS Large Cap Value Fund Borrow money, except that the Fund may The Guardian UBS Small Cap Value Fund (i) borrow money from banks to the extent permitted by the 1940 Act, or to the extent permitted by any exemptions therefrom which may be granted by the SEC, or for temporary or emergency purposes, and engage in reverse repurchase agreements, dollar rolls, the purchase or sale of securities on a when-issued or delayed delivery basis, short sales or other transactions which may involve a borrowing from banks or other persons, and then in an amount not exceeding 33 1/3% of the value of the Fund's total assets (including the amount borrowed) or such other percentage permitted by law; (ii) obtain such short-term credit as may be necessary for the clearance of transactions in portfolio securities; and (iii) purchase securities on margin to the extent permitted by applicable law. Baillie Gifford International Growth Borrow money, except that the Fund may Fund borrow from banks up to 20% of the value Baillie Gifford Emerging Markets Fund of its total assets as a temporary measure for extraordinary or emergency needs, for example, to enable the Fund to meet redemption requests or to settle transactions on different stock markets where different settlement dates apply which might otherwise require the sale of portfolio securities at a time when it would not be in a Fund's best interests to do so. Up to 5% of the Fund's total assets may be borrowed from non-banking institutions. The Fund may not, however, borrow money for investment purposes. The Guardian Small Cap Stock Fund Borrow money, except that the Fund may (i) borrow up to 5% of the value of its total assets (not including the amount borrowed) for temporary or emergency needs; and (ii) engage in reverse repurchase agreements or other transactions which may involve a borrowing from banks or other persons, provided that the aggregate amount involved in all such transactions shall not exceed 33 1/3% of the value of the Fund's total assets (including the amount borrowed) less liabilities (other than borrowings) or such other percentage permitted by law. </Table> B-8 <Table> <Caption> The Guardian Stock Fund Borrow money or pledge its assets, except The Guardian VC Asset Allocation Fund that the Fund may (i) borrow for The Guardian VC Low Duration Bond Fund temporary or emergency needs, and engage The Guardian VC High Yield Fund in reverse repurchase agreements, The Guardian VC 500 Index Fund mortgage dollar rolls or other transactions which may involve a borrowing from banks or other persons, provided that the aggregate amount involved in all such transactions shall not exceed 33 1/3% of the value of the Fund's total assets (including the amount borrowed) less liabilities (other than borrowings) or such other percentage permitted by law; (ii) obtain such short-term credit as may be necessary for the clearance of transactions in portfolio securities; and (iii) purchase securities on margin to the extent permitted by applicable law. The Guardian UBS VC Large Cap Value Borrow money, except that the Fund may Fund (i) borrow money from banks to the extent The Guardian UBS VC Small Cap Value permitted by the 1940 Act, or to the Fund extent permitted by any exemptions therefrom, which may be granted by the SEC, or for temporary or emergency purposes, and engage in reverse repurchase agreements, dollar rolls, the purchase or sale of securities on a when-issued or delayed delivery basis, short sales or other transactions which may involve a borrowing from banks or other persons, and then in an amount not exceeding 33 1/3% of the value of the Fund's total assets (including the amount borrowed) or such other percentage permitted by law; (ii) obtain such short-term credit as may be necessary for the clearance of transactions in portfolio securities; and (iii) purchase securities on margin to the extent permitted by applicable law. The Guardian Bond Fund, Inc. Borrow money, except that the Fund may (i) borrow up to 33 1/3% of its total assets (not including the amount borrowed) for temporary or emergency purposes; and (ii) engage in reverse repurchase agreements, dollar rolls or other transactions which may involve a borrowing from banks or other persons, provided that the aggregate amount involved in all such transactions shall not exceed 33 1/3% of the value of the Fund's total assets (including the amount borrowed) less liabilities (other than borrowings) or such other percentage permitted by law. </Table> B-9 <Table> <Caption> The Guardian Cash Fund, Inc. Borrow money, except from banks for temporary or emergency purposes or to meet redemption requests which might otherwise require the untimely disposition of securities (not for leveraging), provided that borrowing in the aggregate may not exceed 10% of the value of the Fund's total assets; or mortgage, pledge or hypothecate any assets except in connection with any such borrowing and in amounts not in excess of 10% of the value of the Fund's total assets at the time of such borrowing. </Table> PROPOSAL 2(c) AMENDING FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO ISSUING SENIOR SECURITIES Listed below is the current fundamental investment restriction that is proposed to be amended or eliminated with respect to each Affected Fund as discussed in Proposal 2(c) of the Proxy Statement. Each investment restriction is prefaced by the words "The Fund may not..." <Table> <Caption> The Guardian Park Avenue Fund Issue any senior securities except as permitted by applicable law. The Guardian Park Avenue Small Cap Fund Issue any senior securities except as permitted under the 1940 Act. The Guardian Baillie Gifford Issue any "senior securities" as defined International Growth Fund in the 1940 Act (except for engaging in futures and options transactions as well as any other investment techniques set forth in the Prospectus or Statement of Additional Information, and except for borrowing subject to the restrictions set forth under Investment Restriction 1, above). The Guardian Baillie Gifford Emerging Issue any "senior securities" as defined Markets Fund in the 1940 Act (except for engaging in futures and options transactions as well as any other investment techniques described in the Prospectus or Statement of Additional Information, and except for borrowing subject to the restrictions set forth under Investment Restriction 1, above). </Table> B-10 <Table> The Guardian Investment Quality Bond Issue any "senior securities" as defined Fund in the 1940 Act, except for engaging in futures and options transactions as well as any other investment techniques set forth in the Prospectus or the Statement of Additional Information, and except for borrowing subject to the restrictions set forth under Investment Restriction 3, above. The Guardian High Yield Fund Issue any senior securities to the extent The Guardian Low Duration Bond Fund such issuance would violate applicable The Guardian Stock Fund law. The Guardian VC Asset Allocation Fund The Guardian VC Low Duration Bond Fund The Guardian VC High Yield Fund The Guardian VC 500 Index Fund The Guardian Tax-Exempt Fund Issue any "senior securities" as defined The Guardian Asset Allocation Fund in the 1940 Act, except for engaging in futures and options transactions as well as any other investment techniques set forth in the Prospectus or Statement of Additional Information, and except for borrowing subject to the restrictions set forth under Investment Restriction 2, above. The Guardian Cash Management Fund Issue any senior securities (except for borrowing subject to the restrictions set forth in the Prospectus). The Guardian S&P 500 Index Fund Issue senior securities to the extent such issuance would violate applicable law. The Guardian UBS Large Cap Value Fund Issue senior securities to the extent The Guardian UBS Small Cap Value Fund that such issuance would violate The Guardian UBS VC Large Cap Value applicable law, except that this Fund restriction shall not be deemed to The Guardian UBS VC Small Cap Value prohibit the Fund from (a) making any Fund permitted borrowings, loans, mortgages or pledges, (b) entering into options, futures contracts, forward contracts, repurchase transactions or reverse repurchase transactions, or (c) making short sales of securities to the extent permitted by the 1940 Act and any rule or order thereunder, or Securities and Exchange Commission (the "SEC") staff interpretations thereof. </Table> B-11 <Table> <Caption> Baillie Gifford International Growth Issue any "senior securities" as defined Fund in the 1940 Act (except for engaging in Baillie Gifford Emerging Markets Fund futures and options transactions as well as any other investment techniques described in the Prospectus or Statement of Additional Information, and except for borrowing subject to the restrictions set forth under Investment Restriction 1, above). The Guardian Small Cap Stock Fund Issue any senior securities except as permitted under the Investment Company Act of 1940. The Guardian Bond Fund, Inc. Issue any senior securities (except for borrowing subject to the restrictions set forth under Investment Restriction 3, above). The Guardian Cash Fund, Inc. Issue any senior securities (except for borrowing subject to the restrictions set forth under Investment Restriction 2, above). </Table> PROPOSAL 2(d) AMENDING FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO CONCENTRATION OF INVESTMENTS WITHIN A PARTICULAR INDUSTRY Listed below is the current fundamental investment restriction that is proposed to be amended or eliminated with respect to each Affected Fund as discussed in Proposal 2(d) of the Proxy Statement. Each investment restriction is prefaced by the words "The Fund may not..." <Table> <Caption> The Guardian Park Avenue Fund Purchase a security if as a result thereof more than 25% of its total assets will be invested in a particular industry. The Guardian Park Avenue Small Cap Fund Purchase any securities other than the obligations of the U.S. Government, or its agencies or instrumentalities, if, immediately after such purchase, more than 25% of the value of the Fund's total assets would be invested in the securities of issuers in the same industry (there is no limitation as to investments in obligations issued or guaranteed by the U.S. Government or its agencies or instrumentalities). </Table> B-12 <Table> The Guardian Baillie Gifford Purchase any securities if, immediately International Growth Fund after such purchase, more than 25% of the value of the Fund's total assets would be invested in the securities of issuers in the same industry. For purposes of this restriction, the obligations of each foreign government are deemed to constitute an industry. The Guardian Baillie Gifford Emerging Purchase any securities if, immediately Markets Fund after such purchase, more than 25% of the value of a Fund's total assets would be invested in the securities of issuers in the same industry. There is no limitation as to the Fund's investments in obligations issued by U.S. branches of domestic banks or issued or guaranteed by the U.S. government, its agencies or instrumentalities. For purposes of this restriction, the obligations of each foreign government are deemed to constitute an industry. The Guardian Investment Quality Bond Purchase any securities other than the Fund obligations of U.S. branches of domestic banks or of the U.S. government, or its agencies or instrumentalities, if, immediately after such purchase, more than 25% of the value of the Fund's total assets would be invested in the securities of issuers in the same industry. For the purpose of this restriction, gas, electric, water and telephone utilities will each be treated as a separate industry. The Guardian High Yield Fund Purchase any securities other than the The Guardian Low Duration Bond Fund obligations of the U.S. Government, or its agencies or instrumentalities, if, immediately after such purchase, 25% or more of the value of the Fund's total assets would be invested in the securities of issuers conducting their principal business activities in the same industry or group of industries. The Guardian Tax-Exempt Fund Invest more than 25% of its assets in the securities of issuers in any single industry; provided that there shall be no limitation on the purchase of Municipal Obligations. For purposes of this Investment Restriction, industrial development bonds, where the payment of principal and interest is the ultimate responsibility of companies within the same industry, are grouped together as an "industry." </Table> B-13 <Table> <Caption> The Guardian Cash Management Fund Purchase any securities, other than obligations of U.S. branches of domestic banks or of the U.S. government, or its agencies or instrumentalities, if, immediately after such purchase, more than 25% of the value of the Fund's total assets would be invested in the securities of issuers in the same industry. The Guardian Asset Allocation Fund Invest 25% or more of its assets in securities of issuers in any one industry. For the purpose of this restriction, gas, electric, water and telephone utilities will each be treated as a separate industry. The Guardian S&P 500 Index Fund Purchase any securities other than the obligations of the U.S. Government, or its agencies or instrumentalities, if, immediately after such purchase, 25% or more of the value of the Fund's total assets would be invested in the securities of issuers conducting their principal business activities in the same industry or group of industries, except that the Fund may purchase securities in excess of this limitation to the extent necessary from time to time to replicate the composition of the Standard & Poor's 500 Index in accordance with the Fund's investment objective. The Guardian UBS Large Cap Value Fund Concentrate (invest more than 25% of its The Guardian UBS Small Cap Value Fund net assets) in securities of issuers in a The Guardian UBS VC Large Cap Value particular industry (other than Fund securities issued or guaranteed by the The Guardian UBS VC Small Cap Value U.S. government or any of its agencies). Fund Baillie Gifford International Growth Purchase any securities if, immediately Fund after such purchase, more than 25% of the Baillie Gifford Emerging Markets Fund value of a Fund's total assets would be invested in the securities of issuers in the same industry. There is no limitation as to the Fund's investments in obligations issued by U.S. branches of domestic banks or in obligations issued or guaranteed by the U.S. government, its agencies or instrumentalities. For purposes of this restriction, the obligations of each foreign government are deemed to constitute an industry. </Table> B-14 <Table> <Caption> The Guardian Small Cap Stock Fund Purchase any securities other than the obligations of the U.S. Government, or its agencies or instrumentalities, if, immediately after such purchase, more than 25% of the value of the Fund's total assets would be invested in the securities of issuers in the same industry (there is no limitation as to investments in obligations issued or guaranteed by the United States Government or its agencies or instrumentalities). The Guardian Stock Fund Purchase any securities other than the The Guardian VC Asset Allocation Fund obligations of the U.S. Government, or The Guardian VC Low Duration Bond Fund its agencies or instrumentalities, if, The Guardian VC High Yield Fund immediately after such purchase, 25% or more of the value of the Fund's total assets would be invested in the securities of issuers conducting their principal business activities in the same industry or group of industries. The Guardian VC 500 Index Fund Purchase any securities other than the obligations of the U.S. Government, or its agencies or instrumentalities, if, immediately after such purchase, 25% or more of the value of the Fund's total assets would be invested in the securities of issuers conducting their principal business activities in the same industry or group of industries, except that the Fund may purchase securities in excess of this limitation to the extent necessary from time to time to replicate the composition of the Standard & Poor's 500 Index in accordance with the Fund's investment objective. The Guardian Bond Fund, Inc. Purchase any securities other than the obligations of the U.S. Government, or its agencies or instrumentalities, if, immediately after such purchase, 25% or more of the value of the Fund's total assets would be invested in the securities of issuers in the same industry. (There is no limitation as to investments in obligations issued or guaranteed by the United States Government or its agencies or instrumentalities.) For the purpose of this restriction, gas, electric, water and telephone utilities will each be treated as a separate industry. </Table> B-15 <Table> <Caption> The Guardian Cash Fund, Inc. Purchase any securities, other than obligations of domestic banks or of the U.S. Government, or its agencies or instrumentalities, if, immediately after such purchase, more than 25% of the value of the Fund's total assets would be invested in the securities of issuers in the same industry (there is no limitation as to investments in domestic bank obligations or in obligations issued or guaranteed by the U.S. Government or its agencies or instrumentalities). </Table> PROPOSAL 2(e) AMENDING FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO INVESTMENTS IN REAL ESTATE Listed below is the current fundamental investment restriction that is proposed to be amended or eliminated with respect to each Affected Fund as discussed in Proposal 2(e) of the Proxy Statement. Each investment restriction is prefaced by the words "The Fund may not..." <Table> <Caption> The Guardian Park Avenue Fund Engage in the purchase or sale of real estate or interests therein or interests in real estate investment trusts, commodities or commodity contracts. The Guardian Park Avenue Small Cap Fund Purchase or sell real estate (although it may purchase securities of issuers that engage in real estate operations as well as readily marketable interests such as real estate investment trusts and readily marketable securities of companies which invest in real estate). The Guardian Baillie Gifford Purchase or sell real estate (although it International Growth Fund may purchase securities of issuers that The Guardian Baillie Gifford Emerging engage in real estate operations, Markets Fund securities that are secured by interests in real estate, or securities that represent interests in real estate, including real estate investment trusts). The Guardian Investment Quality Bond Purchase or sell real estate (although it Fund may purchase securities of issuers that The Guardian Bond Fund, Inc. engage in real estate operations), securities that are secured by interests in real estate, or securities that represent interests in real estate, including real estate investment trusts. </Table> B-16 <Table> The Guardian High Yield Bond Fund Purchase, hold, sell or deal in real The Guardian Low Duration Bond Fund estate, although the Fund may (i) The Guardian S&P 500 Index Fund purchase and sell securities that are The Guardian Stock Fund secured by real estate or interests The Guardian VC Asset Allocation Fund therein, (ii) purchase and sell The Guardian VC High Yield Fund securities of issuers that engage in real The Guardian VC Low Duration Bond Fund estate operations, as well as real estate The Guardian VC 500 Index Fund investment trusts and mortgage-related securities, and (iii) hold and sell real estate acquired by the Fund as a result of the ownership of securities. The Guardian Tax-Exempt Fund Purchase or sell real estate or real estate limited partnerships, but this shall not prevent the Fund from investing in Municipal Obligations secured by real estate or interests therein. The Guardian Cash Management Fund Purchase or sell real estate; however, the Fund may purchase marketable securities issued by the companies which invest in real estate or interests therein. The Guardian Asset Allocation Fund Invest in real estate, real estate limited partnership interests, securities that are secured by interests in real estate, or securities that represent interests in real estate, including real estate investment trusts, although the Fund may purchase securities of issuers which engage in real estate operations. The Guardian UBS Large Cap Value Fund Purchase or sell real estate, except that The Guardian UBS Small Cap Value Fund the Fund may (i) purchase and sell The Guardian UBS VC Large Cap Value securities that are secured by real Fund estate or interests therein; (ii) The Guardian UBS VC Small Cap Value purchase and sell securities of issuers Fund that engage in real estate operations, as well as real estate investment trusts and mortgage-related securities; and (iii) hold and sell real estate acquired by the Fund as a result of the ownership of securities. Baillie Gifford International Growth Purchase or sell real estate (although it Fund may purchase securities of issuers that Baillie Gifford Emerging Markets Fund engage in real estate operations, securities that are secured by interests in real estate, or securities that represent interests in real estate, including real estate investment trusts). The Guardian Small Cap Stock Fund Purchase or sell real estate (although it may purchase securities of issuers that engage in real estate operations as well as readily marketable interests such as real estate investment trusts and readily marketable securities of companies which invest in real estate). </Table> B-17 <Table> <Caption> The Guardian Cash Fund, Inc. Purchase or sell real estate; however, the Fund may purchase marketable securities issued by companies which invest in real estate or interests therein. </Table> PROPOSAL 2(f) AMENDING FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO INVESTMENTS IN COMMODITIES Listed below is the current fundamental investment restriction that is proposed to be amended or eliminated with respect to each Affected Fund as discussed in Proposal 2(f) of the Proxy Statement. Each investment restriction is prefaced by the words "The Fund may not..." <Table> The Guardian Park Avenue Fund Engage in the purchase or sale of real estate or interests therein or interests in real estate investment trusts, commodities or commodity contracts. The Guardian Park Avenue Small Cap Fund Purchase or sell commodities or commodity The Guardian Small Cap Stock Fund contracts. The Guardian Bond Fund, Inc. The Guardian Baillie Gifford Purchase or sell commodities or commodity International Growth Fund contracts, except that the Fund may enter The Guardian Baillie Gifford Emerging into financial futures contracts, options Markets Fund contracts, options on futures contracts and forward foreign currency exchange contracts as described in the Prospectus and Statement of Additional Information. The Guardian Investment Quality Bond Purchase or sell commodities or commodity Fund contracts, except that the Fund may invest in financial futures contracts, options and options on financial futures contracts as described in the Prospectus and Statement of Additional Information. The Guardian Tax-Exempt Fund Purchase or sell commodities or commodity contracts, except that the Fund may enter into financial futures contracts, options contracts and options on futures contracts as described in the Prospectus and Statement of Additional Information. The Guardian Cash Management Fund Purchase or sell commodities or commodity futures contracts, or oil, gas or mineral exploration or development programs. </Table> B-18 <Table> The Guardian Asset Allocation Fund Invest in commodities or commodity contracts, except that it may invest in financial futures contracts, options and options on financial futures contracts as described in the Prospectus or Statement of Additional Information. The Guardian UBS Large Cap Value Fund Purchase or sell commodities, except to The Guardian UBS Small Cap Value Fund the extent permitted under applicable law The Guardian UBS VC Large Cap Fund without registration as a commodity pool The Guardian UBS VC Small Cap Value operator under the Commodity Exchange Act Fund (or any comparable registration under successor legislation). Baillie Gifford International Growth Purchase or sell commodities or commodity Fund contracts, except that the Funds may Baillie Gifford Emerging Markets Fund enter into financial futures contracts, options contracts, options on futures contracts and forward foreign currency exchange contracts as described in the "Special Investment Techniques" sections of the Company's Prospectus and Statement of Additional Information. The Guardian Cash Fund, Inc. Purchase or sell commodities or commodity futures contracts, or oil, gas or mineral exploration or development programs. </Table> PROPOSAL 2(g) AMENDING FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO UNDERWRITING THE SECURITIES OF OTHER ISSUERS Listed below is the current fundamental investment restriction that is proposed to be amended or eliminated with respect to each Affected Fund as discussed in Proposal 2(g) of the Proxy Statement. Each investment restriction is prefaced by the words "The Fund may not..." <Table> The Guardian Park Avenue Fund Act as a securities underwriter except to the extent that it may be regarded as an underwriter upon disposition of any of its securities which are subject to legal or contractual restrictions on re-sale or are otherwise not readily saleable. </Table> B-19 <Table> The Guardian Baillie Gifford Engage in the underwriting of the International Growth Fund securities of other issuers, except to The Guardian Baillie Gifford Emerging the extent that the Fund may be deemed to Markets Fund be an underwriter under the Securities Baillie Gifford International Growth Act of 1933 in selling its portfolio Fund securities. Baillie Gifford Emerging Markets Fund The Guardian Investment Quality Bond Engage in the underwriting of the Fund securities of other issuers, except to The Guardian Bond Fund, Inc. the extent that the Fund may be deemed to be an underwriter under the Securities Act of 1933 in selling portfolio securities. The Guardian Tax-Exempt Fund Underwrite the securities of other issuers, except to the extent that the Fund may be deemed to be an underwriter under the Securities Act of 1933 in selling portfolio securities and except that the Fund may bid separately or as part of a group for the purchase of Municipal Obligations directly from an issuer for its own portfolio to take advantage of the lowest purchase price available. The Guardian Cash Fund, Inc. Underwrite securities of other issuers. The Guardian UBS Large Cap Value Fund Act as an underwriter, except to the The Guardian UBS Small Cap Value Fund extent the Fund may be deemed to be an The Guardian UBS VC Large Cap Value underwriter when disposing of securities Fund it owns or when selling its own shares. The Guardian UBS VC Small Cap Value Fund The Guardian Asset Allocation Fund Engage in the underwriting of the securities, except to the extent that the Fund may be deemed to be an underwriter under the Securities Act of 1933 in selling portfolio securities. The Guardian Cash Management Fund Underwrite securities of other issuers, except to the extent that the Fund or its investment adviser may be deemed to be an underwriter under the Securities Act of 1933 in selling portfolio securities. </Table> B-20 PROPOSAL 2(H) AMENDING FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO MAKING LOANS Listed below is the current fundamental investment restriction that is proposed to be amended or eliminated with respect to each Affected Fund as discussed in Proposal 2(h) of the Proxy Statement. Each investment restriction is prefaced by the words "The Fund may not..." <Table> <Caption> The Guardian Park Avenue Fund Make loans of money or other assets except through the purchase of privately issued notes, bonds, debentures or other debt securities either from the issuer or others. Purchases of a portion of an issue of publicly distributed debt securities and repurchase agreements are not deemed to be loans for purposes of this limitation. Under a repurchase agreement, the Fund may purchase and simultaneously resell for later delivery (normally within seven days) obligations issued or guaranteed as to principal and interest by the U.S. government, its agencies or instrumentalities. The Guardian Park Avenue Small Cap Fund Make loans to other persons except for The Guardian Small Cap Stock Fund loans of portfolio securities and except through the purchase of debt obligations and repurchase agreements in which the Fund may invest, consistent with its investment objectives and policies, provided that repurchase agreements maturing in more than seven days, when taken together and at current value, may not exceed 15% of the Fund's net assets. The Guardian Baillie Gifford Make loans of money or portfolio International Growth Fund securities, except through the purchase Baillie Gifford International Growth of debt obligations or repurchase Fund agreements in which the Fund may invest Baillie Gifford Emerging Markets Fund consistent with its investment objective and policies. The Guardian Baillie Gifford Emerging Make loans to other persons except for Markets Fund loans of portfolio securities and except through the purchase of debt obligations and repurchase agreements in which the Fund may invest, consistent with its investment objectives and policies, provided that repurchase agreements maturing in more than seven days, when taken together and at current value, may not exceed 15% of the Fund's net assets. </Table> B-21 <Table> <Caption> The Guardian Investment Quality Bond Make loans to others, except through the Fund purchase of debt obligations or repurchase agreements, or by lending the Fund's portfolio securities, consistent with its investment objectives, policies and techniques as set forth in the Prospectus or Statement of Additional Information. The Guardian Asset Allocation Fund Make loans to others, except through the purchase of debt obligations or repurchase agreements, or by lending the Fund's portfolio securities consistent with its investment objectives, policies and techniques as set forth in the Prospectus or Statement of Additional Information. The Guardian High Yield Bond Fund Make loans to other persons except (i) The Guardian Low Duration Bond Fund loans of portfolio securities and entry into repurchase agreements to the extent permitted under applicable law, and (ii) to the extent that the purchase of debt obligations in which the Fund may invest, consistent with its investment objectives and policies, may be deemed to be loans. The Guardian S&P 500 Index Fund Make loans to other persons except (i) loans of portfolio securities and entry into repurchase agreements to the extent permitted under applicable law; and (ii) to the extent that the purchase of debt obligations in which the Fund may invest, consistent with its investment objectives and policies, may be deemed to be loans. The Guardian Tax-Exempt Fund Make loans to others, except through the purchase of debt obligations or repurchase agreements or by lending the Fund's portfolio securities consistent with its investment objectives, policies and techniques as set forth in the Prospectus or Statement of Additional Information. The Guardian Cash Management Fund Make loans to others, except through the purchase of debt obligations and repurchase agreements in which the Fund may invest, consistent with its investment objective and policies. </Table> B-22 <Table> <Caption> The Guardian UBS Large Cap Value Fund Make loans to other persons, except (a) The Guardian UBS Small Cap Value Fund through the lending of its portfolio The Guardian UBS VC Large Cap Value securities, (b) through the purchase of Fund debt securities, loan participations The Guardian UBS VC Small Cap Value and/or engaging in direct corporate loans Fund in accordance with its investment objectives and policies and (c) to the extent the entry into a repurchase agreement is deemed to be a loan. The Fund may also make loans to affiliated investment companies to the extent permitted by the 1940 Act or any exemptions therefrom that may be granted by the SEC. The Guardian Stock Fund Make loans to other persons except (i) The Guardian VC Asset Allocation Fund loans of portfolio securities and entry The Guardian VC Low Duration Bond Fund into repurchase agreements to the extent The Guardian VC High Yield Bond Fund permitted under applicable law; and (ii) The Guardian VC 500 Index Fund to the extent that the purchase of debt obligations in which the Fund may invest, consistent with its investment objectives and policies, may be deemed to be loans. The Guardian Bond Fund, Inc Make loans of money, except through the purchase of debt obligations and repurchase agreements in which the Fund may invest, consistent with its investment objectives and policies, provided that repurchase agreements maturing in more than seven days, when taken together and at current value, may not exceed 10% of the Fund's net assets. The Guardian Cash Fund, Inc Make loans to others, except through the purchase of debt obligations and repurchase agreements in which the Fund may invest, consistent with its investment objective and policies, provided that repurchase agreements maturing in more than seven days, when taken together and at current value, may not exceed 10% of the Fund's net assets. </Table> B-23 PROPOSAL 2(I) ELIMINATING FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO INVESTMENTS IN SECURITIES THAT ARE NOT READILY MARKETABLE Listed below is the current fundamental investment restriction that is proposed to be amended or eliminated with respect to each Affected Fund as discussed in Proposal 2(i) of the Proxy Statement. Each investment restriction is prefaced by the words "The Fund may not..." <Table> <Caption> The Guardian Park Avenue Fund Invest more than 15% of the value of its The Guardian Investment Quality Bond net assets in securities which are not Fund readily marketable or which are The Guardian Tax-Exempt Fund restricted as to resale under federal The Guardian Asset Allocation Fund securities laws, excluding any such securities that have been determined by the Trustees (or the person(s) designated by them to make such determinations) to be readily marketable. The Guardian International Growth Fund Invest more than 15% of the value of its net assets in securities which are not readily marketable or which are restricted as to resale under the U.S. federal securities laws, excluding any such securities that have been determined by the Trustees (or the person(s) designated by them to make such determinations) to be readily marketable. The Guardian Cash Management Fund Invest more than 10% of the value of its net assets in securities which are not readily marketable or which are restricted as to resale under federal securities laws, excluding any such securities that have been determined by the trustees (or the person(s) designated by them to make such determinations) to be readily marketable. </Table> B-24 <Table> <Caption> Baillie Gifford International Growth Invest more than 10% of the value of the Fund net assets of the International Fund or 15% of the net assets of the Emerging Markets Fund in securities that are not readily marketable or which are restricted as to disposition under the U.S. securities laws or otherwise. This restriction shall not apply to securities purchased or sold pursuant to Rule 144A under the Securities Act of 1933. This restriction will apply to repurchase agreements maturing in more than seven days. This restriction will also apply to securities received as a result of a corporate reorganization or similar transaction affecting readily marketable securities already held in a Fund's portfolio. To the extent that securities received under these circumstances, together with other securities considered illiquid by the staff of the Securities and Exchange Commission ("SEC") or by the Company's Board, exceed the applicable percentage of the value of the Fund's total assets, the Fund will attempt to dispose of them in an orderly fashion in order to reduce its holdings in such securities to less than the applicable threshold. The Guardian Bond Fund, Inc. Invest more than 10% of the value of its total assets in securities that are not readily marketable or which are restricted as to disposition under the federal securities laws or otherwise. This restriction will apply to repurchase agreements maturing in more than seven days. This restriction will also apply to securities received as a result of a corporate reorganization or similar transaction affecting readily-marketable securities already held in the portfolio of the Fund. To the extent that securities received under these circumstances, together with other unmarketable securities, exceed 10% of the value of the Fund's total assets, the Fund will attempt to dispose of them in an orderly fashion in order to reduce its holdings in such securities to less than 10%. </Table> B-25 PROPOSAL 2(J) ELIMINATING FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO INVESTMENTS FOR THE PURPOSE OF EXERCISING CONTROL OR MANAGEMENT Listed below is the current fundamental investment restriction that is proposed to be amended or eliminated with respect to each Affected Fund as discussed in Proposal 2(j) of the Proxy Statement. Each investment restriction is prefaced by the words "The Fund may not..." <Table> <Caption> The Guardian Park Avenue Fund Invest in the securities of any company for the purpose of exercising control or management. The Guardian Asset Allocation Fund Purchase securities for the purpose of The Guardian Baillie Gifford exercising control over another company. International Growth Fund The Guardian Investment Quality Bond Fund Baillie Gifford International Growth Fund The Guardian Bond Fund, Inc. The Guardian Tax-Exempt Fund Purchase more than 10% of the voting securities of any issuer or invest in companies for the purpose of exercising control. The Guardian Cash Management Fund Purchase securities of any issuer for the The Guardian Cash Fund, Inc. purpose of exercising control or management. </Table> B-26 PROPOSAL 2(k) ELIMINATING FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO INVESTMENTS IN OTHER INVESTMENT COMPANIES Listed below is the current fundamental investment restriction that is proposed to be amended or eliminated with respect to each Affected Fund as discussed in Proposal 2(k) of the Proxy Statement. Each investment restriction is prefaced by the words "The Fund may not..." <Table> <Caption> The Guardian Park Avenue Fund Purchase the securities of any other The Guardian Cash Management Fund investment company. The Guardian Cash Fund, Inc The Guardian Baillie Gifford Invest in securities of other U.S. or International Growth Fund foreign investment companies, except that: (a) the Fund may purchase such securities in the open market, without regard to section (b) below, provided that immediately thereafter (i) not more than 10% of the Fund's total assets would be invested in such securities, (ii) not more than 5% of the Fund's total assets would be invested in securities of any one investment company, and (iii) not more than 3% of the total outstanding voting stock of any one investment company would be owned by the Fund; or (b) the Fund may acquire such securities as part of a merger, consolidation, reorganization, acquisition of assets, offer of exchange or as a dividend. Baillie Gifford International Growth Purchase securities of other U.S. or Fund foreign investment companies, except that the Fund may make such a purchase (a) in the open market provided that immediately thereafter (i) not more than 10% of the Fund's total assets would be invested in such securities; (ii) not more than 5% of the Fund's total assets would be invested in securities of any one investment company; and (iii) not more than 3% of the total outstanding voting stock of any one investment company would be owned by the Fund; or (b) as part of an offer of exchange, reorganization or as a dividend. </Table> B-27 <Table> <Caption> The Guardian Asset Allocation Fund Invest in the securities of other investment companies, except that (a) during any period in which the Fund operates as a "fund of funds" in accordance with the Prospectus and applicable law, and notwithstanding (b) and (c) below, the Fund may purchase, without limit, shares of The Guardian Park Avenue Fund, The Guardian Investment Quality Bond Fund and The Guardian Cash Management Fund, and any other mutual fund currently existing or hereafter created whose investment adviser is the Fund's adviser or an affiliate thereof, or the respective successors in interest of any such mutual fund or adviser; (b) during any period in which the Fund does not operate as a "fund of funds" in accordance with the Prospectus, the Fund may purchase securities of other investment companies in the open market, without regard to section (c) below, provided that immediately thereafter (i) not more than 10% of the Fund's total assets would be invested in such securities, (ii) not more than 5% of the Fund's total assets would be invested in securities of any one investment company, and (iii) not more than 3% of the total outstanding voting stock of any one investment company would be owned by the Fund; or (c) the Fund may acquire securities of other investment companies as part of a merger, consolidation, reorganization, acquisition of assets, offer of exchange or as a dividend. The Guardian Investment Quality Bond Invest in securities of other investment Fund companies, except that: (a) the Fund may The Guardian Tax-Exempt Fund purchase such securities in the open market, without regard to section (b), below, provided that immediately thereafter (i) not more than 10% of the Fund's total assets would be invested in such securities, (ii) not more than 5% of the Fund's total assets would be invested in securities of any one investment company, and (iii) not more than 3% of the total outstanding voting stock of any one investment company would be owned by the Fund; or (b) the Fund may acquire such securities as part of a merger, consolidation, reorganization, acquisition of assets, offer of exchange or as a dividend. The Guardian Bond Fund, Inc Purchase securities issued by any other investment company. </Table> B-28 PROPOSAL 2(L) ELIMINATING FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO PURCHASING SECURITIES ON MARGIN, SHORT SALES AND JOINT PARTICIPATION IN A SECURITIES TRADING ACCOUNT Listed below is the current fundamental investment restriction that is proposed to be amended or eliminated with respect to each Affected Fund as discussed in Proposal 2(l) of the Proxy Statement. Each investment restriction is prefaced by the words "The Fund may not..." <Table> <Caption> The Guardian Park Avenue Fund Purchase securities on margin or make any short sales of securities. The Guardian Baillie Gifford Purchase securities on margin, sell International Growth Fund securities short, maintain a short Baillie Gifford International Growth position or participate on a joint or a Fund joint and several basis in any trading account in securities, except that the Fund may (i) obtain such short-term credits as may be necessary for the clearance of purchases and sales of securities; (ii) purchase or sell futures contracts; and (iii) deposit or pay initial or variation margin in connection with financial futures contracts or related options transactions. The Guardian Bond Fund, Inc. Purchase securities on margin or sell securities short, or participate on a joint or a joint and several basis in any trading account in securities. The Guardian Cash Management Fund 1. Purchase securities on margin or sell The Guardian Cash Fund, Inc. short. 2. Participate on a joint or joint-and-several basis in any securities trading account. The Guardian Tax-Exempt Fund Purchase securities on margin, sell securities short or participate on a joint or a joint and several basis in any trading account in securities, except that the Fund may (i) obtain such short-term credits as may be necessary for the clearance of purchases and sales of securities; (ii) purchase or sell futures contracts; and (iii) deposit or pay initial or variation margin in connection with financial futures contracts or related options transactions. </Table> B-29 <Table> <Caption> The Guardian Asset Allocation Fund Purchase securities on margin or sell securities short or participate on a joint or joint and several basis in any trading account in securities, except that the Fund may (i) obtain such short-term credits as may be necessary for the clearance of purchase and sales of securities, (ii) purchase or sell futures contracts; and (iii) deposit or pay initial or variation margin in connection with financial futures contracts or related options transactions. The Guardian Investment Quality Bond Purchase securities on margin or sell Fund securities short, or participate on a joint or joint and several basis in any trading account in securities, except that the Fund may (i) obtain such short-term credits as may be necessary for the clearance of purchase and sales of securities, (ii) purchase or sell futures contracts; and (iii) deposit or pay initial or variation margin in connection with financial futures contracts or related options transactions. </Table> B-30 PROPOSAL 2(M) ELIMINATING FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO PLEDGING, MORTGAGING OR HYPOTHECATING OF ASSETS Listed below is the current fundamental investment restriction that is proposed to be amended or eliminated with respect to each Affected Fund as discussed in Proposal 2(m) of the Proxy Statement. Each investment restriction is prefaced by the words "The Fund may not..." <Table> <Caption> The Guardian Park Avenue Fund Pledge, mortgage or hypothecate its assets to an extent greater than 10% of the Fund's total asset value. However, in order to comply with certain state statutes or investment restrictions, the Fund will not as a matter of operating policy, pledge, mortgage or hypothecate its assets to the extent that at any time the percentage of pledged assets plus the sales load will exceed 10% of the offering price of the Fund's shares. The Guardian Baillie Gifford Mortgage, pledge or hypothecate more than International Growth Fund 5% of the value of its total assets, and The Guardian Investment Quality Bond then only to secure borrowings effected Fund within the above restriction. For The Guardian Tax-Exempt Fund purposes of this restriction, collateral The Guardian Asset Allocation Fund arrangements with respect to options, financial futures contracts, options on futures contracts, when-issued or delayed delivery securities, forward contracts, or similar collateral arrangements which may be required in connection with securities transactions by the 1940 Act are not considered a pledge of assets. The Guardian Baillie Gifford Emerging Mortgage, pledge or hypothecate more than Markets Fund 5% of the value of the Fund's total Baillie Gifford International Growth assets, and then only to secure Fund borrowings effected within the above Baillie Gifford Emerging Markets Fund restriction. Neither the deposit in escrow of underlying securities in connection with the writing of call options, nor the deposit in escrow of U.S. Treasury bills in connection with the writing of put options, nor the deposit of cash and cash equivalents in a segregated account with the Fund's custodian or in a margin account with a broker in connection with futures transactions, options transactions, nor the writing of call and put options in spread transactions, is deemed to be a pledge. </Table> B-31 <Table> <Caption> The Guardian High Yield Bond Fund Borrow money or pledge its assets, except The Guardian Low Duration Bond Fund that the Fund may (i) borrow for The Guardian S&P 500 Index Fund temporary or emergency needs, and engage The Guardian Stock Fund in reverse repurchase agreements, The Guardian VC Asset Allocation Fund mortgage dollar rolls or other The Guardian VC Low Duration Bond Fund transactions which may involve a The Guardian VC High Yield Bond Fund borrowing from banks or other persons, The Guardian VC 500 Index Fund provided that the aggregate amount involved in all such transactions shall not exceed 33 1/3% of the value of the Fund's total assets (including the amount borrowed) less liabilities (other than borrowings) or such other percentage permitted by law; (ii) obtain such short-term credit as may be necessary for the clearance of transactions in portfolio securities; and (iii) purchase securities on margin to the extent permitted by applicable law. The Guardian Cash Management Fund Mortgage, pledge or hypothecate any assets except in connection with any borrowing and in amounts not in excess of 10% of the value of the Fund's total assets at the time of such borrowing or make additional investments during any period that borrowings exceed 5% of the value of the Fund's total assets. The Guardian Small Cap Stock Fund Mortgage, pledge or hypothecate more than The Guardian Park Avenue Small Cap Fund 5% of the value of its total assets and then only to secure borrowings effected within the above restriction. The Guardian Bond Fund, Inc. Mortgage, pledge or hypothecate more than 5% of the value of its total assets, and then only to secure temporary or emergency borrowings effected within the above restriction. For purposes of this restriction, collateral arrangements which may be required in connection with securities transactions by the Investment Company Act of 1940 are not considered a pledge of assets. The Guardian Cash Fund, Inc. Borrow money, except from banks for temporary or emergency purposes or to meet redemption requests which might otherwise require the untimely disposition of securities (not for leveraging), provided that borrowing in the aggregate may not exceed 10% of the value of the Fund's total assets; or mortgage, pledge or hypothecate any assets except in connection with any such borrowing and in amounts not in excess of 10% of the value of the Fund's total assets at the time of such borrowing. </Table> B-32 PROPOSAL 2(n) ELIMINATING FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO INVESTMENTS IN ISSUERS IN WHICH MANAGEMENT OF A FUND OR ITS INVESTMENT ADVISER OWNS SECURITIES Listed below is the current fundamental investment restriction that is proposed to be amended or eliminated with respect to each Affected Fund as discussed in Proposal 2(n) of the Proxy Statement. Each investment restriction is prefaced by the words "The Fund may not..." <Table> <Caption> The Guardian Park Avenue Fund Purchase or retain the securities of any issuer if, to the knowledge of the Fund, officers or trustees of the Fund or of the Fund's investment adviser who own individually more than one-half of 1% of the securities of such issuer together own more than 5% of such securities. The Guardian Asset Allocation Fund Purchase or retain the securities of any issuer if, to the knowledge of the Fund, those officers and trustees of the Fund or of the Fund's investment adviser who individually own more than one-half of 1% of the outstanding securities of such issuer together own more than 5% of such securities. The Guardian Baillie Gifford Purchase or retain the securities of any International Growth Fund issuer if, to the knowledge of the Fund, the officers, trustees and employees of the Fund or of the Fund's investment adviser or sub-investment adviser who individually own more than one-half of 1% of the outstanding securities of such issuer together own more than 5% of the securities of such issuer. The Guardian Investment Quality Bond Purchase or retain the securities of any Fund issuer if, to the knowledge of the Fund, the officers, trustees and employees of the Fund or of the Adviser who individually own more than one-half of 1% of the outstanding securities of such issuer together own more than 5% of the securities of such issuer. The Guardian Tax-Exempt Fund Purchase or retain the securities of any issuer if, to the knowledge of the Fund, the officers, trustees and employees of the Fund or of the Fund's investment adviser who individually own more than one-half of 1% of the outstanding securities of such issuer together own more than 5% of the securities of such issuer. </Table> B-33 <Table> <Caption> The Guardian Cash Management Fund Purchase or retain the securities of any issuer if any officer or trustee of the Fund is an officer or director of such issuer and owns beneficially more than one-half of 1% of the securities of such issuer and all of the officers and trustees of the Fund and its investment adviser together own more than 5% of the securities of such issuer. Baillie Gifford International Growth Purchase or retain the securities of any Fund issuer if, to the knowledge of the Company, the officers, directors and employees of the Company or of the Company's investment manager or sub-investment manager who individually own more than one half of 1% of the outstanding securities of such issuer together own more than 5% of the securities of such issuer. The Guardian Bond Fund, Inc. Purchase or retain the securities of any issuer if, to the knowledge of the Fund, the officers, directors and employees of the Fund or of the Adviser who individually own more than 1/2 of 1% of the outstanding securities of such issuer together own more than 5% of the securities of such issuer. The Guardian Cash Fund, Inc. Purchase or retain the securities of any issuer if any officer or director of the Fund or of the Adviser owns beneficially more than 1/2 of 1% of the securities of such issuer and all of the officers and directors of the Fund and the Adviser together own more than 5% of the securities of such issuer. </Table> B-34 PROPOSAL 2(o) ELIMINATING FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO INVESTMENTS IN ISSUERS HAVING A RECORD OF LESS THAN THREE YEARS OF CONTINUOUS OPERATION Listed below is the current fundamental investment restriction that is proposed to be amended or eliminated with respect to each Affected Fund as discussed in Proposal 2(o) of the Proxy Statement. Each investment restriction is prefaced by the words "The Fund may not..." <Table> <Caption> The Guardian Park Avenue Fund Invest more than 5% of the value of its total assets in companies (including predecessors) having a record of less than 3 years continuous operation. The Guardian Asset Allocation Fund Invest more than 5% of the value of its The Guardian Investment Quality Bond total assets in securities of issuers Fund having a record, together with predecessors, of less than three years of continuous operation. The restriction does not apply to any obligation issued or guaranteed by the U.S. government, its agencies or instrumentalities. The Guardian Bond Fund, Inc. Invest more than 5% of the value of its total assets in securities of issuers having a record, together with predecessors, of less than three years of continuous operation. This restriction does not apply to any obligation issued or guaranteed by the United States Government, its agencies or instrumentalities. </Table> B-35 PROPOSAL 2(p) ELIMINATING FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO INVESTMENTS IN OIL, GAS OR MINERAL PROGRAMS Listed below is the current fundamental investment restriction that is proposed to be amended or eliminated with respect to each Affected Fund as discussed in Proposal 2(p) of the Proxy Statement. Each investment restriction is prefaced by the words "The Fund may not..." <Table> <Caption> The Guardian Park Avenue Fund Purchase any interest in oil, gas or other mineral exploration or development programs. The Guardian Investment Quality Bond Purchase oil, gas or other mineral Fund leases, rights or royalty contracts or The Guardian Asset Allocation Fund exploration or development programs, The Guardian Baillie Gifford except that the Fund may invest in the International Growth Fund securities of companies which invest in Baillie Gifford International Growth or sponsor such programs. Fund The Guardian Bond Fund, Inc. The Guardian Tax-Exempt Fund Purchase oil, gas or other mineral leases, rights or royalty contracts or exploration or development programs, except that the Fund may invest in the securities of issuers which invest in or sponsor such programs. The Guardian Cash Management Fund Purchase or sell commodities or commodity The Guardian Cash Fund, Inc. futures contracts, or oil, gas or mineral exploration or development programs. </Table> PROPOSAL 2(q) ELIMINATING FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO INVESTMENTS IN OPTIONS Listed below is the current fundamental investment restriction that is proposed to be amended or eliminated with respect to each Affected Fund as discussed in Proposal 2(q) of the Proxy Statement. Each investment restriction is prefaced by the words "The Fund may not..." <Table> <Caption> The Guardian Park Avenue Fund Purchase any put, call, straddle, spread or any combination thereof. The Guardian Park Avenue Small Cap Fund Write, purchase or sell puts, calls, or The Guardian Small Cap Stock Fund combination thereof. </Table> B-36 <Table> <Caption> The Guardian Asset Allocation Fund Purchase or sell put options, call The Guardian Baillie Gifford options, or combinations thereof, except International Growth Fund that the Fund may (i) write covered call The Guardian Investment Quality Bond and secured put options and enter into Fund closing purchase transactions with The Guardian Tax-Exempt Fund respect to such options, (ii) purchase put and call options, provided that the premiums on all outstanding options do not exceed 5% of its total assets, and enter into closing sale transactions with respect to such options; and (iii) engage in financial futures contracts and related options transactions to seek to hedge against either a decline in the value of securities included in the Fund's portfolio or an increase in the price of securities which the Fund plans to purchase in the future. The Guardian Cash Management Fund Purchase warrants, or write, purchase or The Guardian Cash Fund, Inc sell puts, calls, straddles, spreads or combinations thereof. Baillie Gifford International Growth Purchase or sell put options, call Fund options, or combinations thereof, except that the Funds may (i) write covered call and secured put options and enter into closing purchase transactions with respect to such options, (ii) purchase put and call options, provided that the premiums on all outstanding options do not exceed 5% of its total assets, and enter into closing sale transactions with respect to such options; and (iii) engage in financial futures contracts and related options transactions to seek to hedge against either a decline in the value of securities included in the Fund's portfolio or an increase in the price of securities which the Fund plans to purchase in the future, or to increase the current return of its portfolio by writing covered call or covered put options, as each is described under the "Special Investment Techniques" sections of the Company's Prospectus and Statement of Additional Information. The Guardian Bond Fund, Inc. Write, purchase or sell puts, calls, straddles, spreads or combinations thereof. </Table> B-37 PROPOSAL 2(r) ELIMINATING FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO INVESTMENTS IN WARRANTS Listed below is the current fundamental investment restriction that is proposed to be amended or eliminated with respect to each Affected Fund as discussed in Proposal 2(r) of the Proxy Statement. Each investment restriction is prefaced by the words "The Fund may not..." <Table> <Caption> The Guardian Asset Allocation Fund Invest more than 10% of the value of its The Guardian Bond Fund, Inc. total assets in warrants or more than 2% of such value in warrants which are not listed on the New York or American Stock Exchanges, except that warrants attached to other securities in which the Fund invests are not subject to these limitations. The Guardian Baillie Gifford Invest more than 10% of the value of its International Growth Fund total assets in warrants or more than 2% Baillie Gifford International Growth of such value in warrants which are not Fund listed on the New York Stock Exchange, American Stock Exchange, or one of the major foreign stock exchanges, except that warrants attached to other securities in which the Fund invests are not subject to these limitations. The Guardian Investment Quality Bond Invest more than 5% of the value of its Fund total assets in warrants or more than 2% of such value in warrants which are not listed on the New York or American Stock Exchanges, except that warrants attached to other securities in which the Fund invests are not subject to these limitations. The Guardian Cash Management Fund Purchase warrants, or write, purchase or The Guardian Cash Fund, Inc sell puts, calls, straddles, spreads or combinations thereof. </Table> B-38 PROPOSAL 2(s) ELIMINATING FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO INVESTMENTS IN SECURITIES OTHER THAN THOSE DISCUSSED IN THE FUND'S PROSPECTUS Listed below is the current fundamental investment restriction that is proposed to be amended or eliminated with respect to each Affected Fund as discussed in Proposal 2(s) of the Proxy Statement. Each investment restriction is prefaced by the words "The Fund may not..." <Table> <Caption> The Guardian Park Avenue Fund Purchase any security other than those The Guardian Investment Quality Bond discussed under "Investment Objectives Fund and Policies," as set forth in the The Guardian Bond Fund, Inc. Prospectus. The Guardian Cash Fund, Inc. The Guardian Tax-Exempt Fund Purchase securities other than Municipal Obligations (as that term is defined in the Prospectus) and certain taxable obligations as set forth in the Prospectus and Statement of Additional Information. </Table> B-39 LABEL BELOW FOR MIS USE ONLY! PO# N1170 GUARDIAN #552 GUARDIAN ANNUITY ORIGINAL SIZE 1UP 8-31-05 KD STEPHANIE (GUARDIAN ANNUITY NOV 2005 SC) REVISION #1 9-07-05 KD MIS EDITS: # OF CHANGES ___/___ PRF 1 ___ PRF 2 ____ OK TO PRINT AS IS* ____________ *By signing this form you are authorizing MIS to print this form in its current state. _____________________________________________________________ SIGNATURE OF PERSON AUTHORIZING PRINTING DATE FUND NAME PRINTS HERE INSURANCE COMPANY NAME PRINTS HERE This Proxy is solicited on behalf of the Board of Directors. The undersigned, revoking any previously executed proxies, hereby directs The Guardian Insurance & Annuity Company, Inc. ("GIAC") to vote all shares of the Fund(s) (as defined in the Proxy Statement) in which the undersigned has a beneficial interest on September 16, 2005 on each of the proposals specified on the reverse side, and upon any other business that may properly come before the Special Meeting of Shareholders to be held at 7 Hanover Square, New York, New York 10004 on November 15, 2005 at 4:00 p.m. New York time and at any adjournments thereof. Receipt of the Notice of Special Meeting and accompanying Proxy Statement which describes the matters to be considered and voted on is hereby acknowledged. Please sign, date and return promptly in the enclosed postage-paid envelope. SHARES Date __________________, 2005 ______________________________________________________________ ______________________________________________________________ Signature(s) and, if applicable, Title(s) (SIGN IN THE BOX) Please sign exactly as your name(s) appear(s) on your account and this proxy card. When signing as attorney-in-fact, executor, trustee, administrator, guardian or other capacity, please give full title. Corporate, partnership and trust owners should have this proxy signed by an authorized person, and that person's title should be given. Guardian Annuity - sc LABEL BELOW FOR MIS USE ONLY! PO# N 1170 GUARDIAN #552 GUARDIAN ANNUITY ORIGINAL SIZE 1UP 8-31-05 KD STEPHANIE (GUARDIAN ANNUITY NOV 2005 SC) REVISION #1 9-07-05 KD MIS EDITS: # OF CHANGES ___/___ PRF 1 ___ PRF 2 ____ OK TO PRINT AS IS* ____________ *By signing this form you are authorizing MIS to print this form in its current state. _____________________________________________________________ SIGNATURE OF PERSON AUTHORIZING PRINTING DATE PLEASE FILL IN BOX(ES) AS SHOWN USING BLACK OR BLUE INK OR NUMBER 2 PENCIL. [X] PLEASE DO NOT USE FINE POINT PENS. 1. Election of the eleven nominees for Directors of each Fund; (1) Kathleen C. Cuocolo (4) Leo R. Futia (7) William W. Hewitt (10) Steven J. Paggioli FOR WITHHOLD FOR ALL (2) Frank J. Fabozzi (5) William N. Goetzmann (8) Sidney I. Lirtzman (11) Robert G. Smith ALL ALL EXCEPT* (3) Arthur V. Ferrara (6) Anne M. Goggin (9) Dennis J. Manning [ ] [ ] [ ] * INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE THAT NOMINEE'S NUMBER ON THE LINE ABOVE. ____________________________________________________________________________ 2. Approving an amendment to, or the elimination of, the applicable Fund's FOR ALL AGAINST ABSTAIN fundamental restriction, as described in the Proxy Statement, with respect to (EXCEPT AS ALL ALL the following: INDICATED) [ ] [ ] [ ] (a) Diversification of investments; (b) Borrowing; (c) Issuing senior securities; (d) Concentration of investments in the same industry; (e) Investments in real estate; (f) Investments in commodities; (g) Underwriting the securities of other issuers; (h) Making loans; (i) Investments in securities that are not readily marketable; (j) Investments for the purpose of exercising control or management; (k) Investments in other investment companies; (l) Purchasing securities on margin, selling securities short, or participating on a joint or joint and several basis in a securities trading account; (m) Pledging, mortgaging or hypothecating its assets; (n) Investments in issuers in which management of a Fund or its investment adviser owns securities; (o) Investments in issuers having a record of less than three years of continuous operation; (p) Investments in oil, gas or mineral programs; (q) Investments in put options, call options, or combinations thereof; (r) Investments in warrants; (s) Investments in securities other than those discussed in the Fund's prospectus; (t) The Guardian Tax-Exempt Fund's investments in investment grade municipal obligations. ____________________________________________________________________________ INSTRUCTIONS: IF YOU WISH TO WITHHOLD A VOTE FROM A PARTICULAR SUB-PROPOSAL PLEASE WRITE THE NUMBER AND LETTER(S) OF THE SUB-PROPOSAL ON THE LINE ABOVE AND INDICATE A "VOTE AGAINST" OR AN "ABSTENTION". 3. Approving an amendment to the Amended and Restated Agreement and Declaration FOR AGAINST ABSTAIN 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. [ ] [ ] [ ] 4. Approving an amendment to the Amended and Restated Agreement and 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. PLEASE SIGN AND DATE ON THE REVERSE SIDE. Guardian Annuity - sc LABEL BELOW FOR MIS USE ONLY! PO# M1171 GUARDIAN #552 GUARDIAN MUTUAL FUNDS ORIGINAL SIZE 1UP 8-31-05 KD STEPHANIE (GUARDIAN FUNDS NOV 2005 SC) REVISION #1 9-07-05 KD MIS EDITS: # OF CHANGES ___/___ PRF 1 ___ PRF 2 ____ OK TO PRINT AS IS* ____________ *By signing this form you are authorizing MIS to print this form in its current state. _____________________________________________________________ SIGNATURE OF PERSON AUTHORIZING PRINTING DATE ____________________________________________________________________ THREE EASY WAYS TO VOTE YOUR PROXY READ THE PROXY STATEMENT AND HAVE THE PROXY CARD AT HAND. TELEPHONE: Call 1-800-690-6903 and follow the simple instructions. INTERNET: Go to WWW.PROXYWEB.COM and follow the on-line directions. MAIL: Vote, sign, date and return your proxy by mail. IF YOU VOTE BY TELEPHONE OR INTERNET, DO NOT MAIL YOUR PROXY. ____________________________________________________________________ 999 999 999 999 99 FUND NAME PRINTS HERE This Proxy is solicited on behalf of the Board of Trustees. The undersigned, revoking any previously executed proxies, hereby appoints Joseph A. Caruso, Frank L. Pepe and Thomas G. Sorell as proxies, each with the power of substitution, and hereby authorizes each of them to represent and to vote all shares of the Fund(s) (as defined in the Proxy Statement) held of record by the undersigned on September 16, 2005 on each of the proposals specified on the reverse side, and upon any other business that may properly come before the Special Meeting of Shareholders to be held at 7 Hanover Square, New York, New York 10004 on November 15, 2005 at 4:00 p.m. New York time and at any adjournments thereof. Receipt of the Notice of Special Meeting and accompanying Proxy Statement which describes the matters to be considered and voted on is hereby acknowledged. Please sign, date and return promptly in the enclosed postage-paid envelope. SHARES Date __________________, 2005 Signature(s) and, if applicable, Title(s) (SIGN IN THE BOX) Please sign exactly as your name(s) appear(s) on your account and this proxy card. When signing as attorney-in-fact, executor, trustee, administrator, guardian or other capacity, please give full title. Corporate, partnership and trust owners should have this proxy signed by an authorized person, and that person's title should be given. Guardian - sc LABEL BELOW FOR MIS USE ONLY! PO# GUARDIAN #552 GUARDIAN MUTUAL FUNDS ORIGINAL SIZE 1UP 8-19-05 KD STEPHANIE (GUARDIAN FUNDS NOV 2005 SC) REVISION #1 9-07-05 KD MIS EDITS: # OF CHANGES ___/___ PRF 1 ___ PRF 2 ____ OK TO PRINT AS IS* ____________ *By signing this form you are authorizing MIS to print this form in its current state. _____________________________________________________________ SIGNATURE OF PERSON AUTHORIZING PRINTING DATE PLEASE FILL IN BOX(ES) AS SHOWN USING BLACK OR BLUE INK OR NUMBER 2 PENCIL. [X] PLEASE DO NOT USE FINE POINT PENS. 1. Election of the eleven nominees for Directors of each Fund; (1) Kathleen C. Cuocolo (4) Leo R. Futia (7) William W. Hewitt (10) Steven J. Paggioli FOR WITHHOLD FOR ALL (2) Frank J. Fabozzi (5) William N. Goetzmann (8) Sidney I. Lirtzman (11) Robert G. Smith ALL ALL EXCEPT* (3) Arthur V. Ferrara (6) Anne M. Goggin (9) Dennis J. Manning [ ] [ ] [ ] * INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE THAT NOMINEE'S NUMBER ON THE LINE ABOVE. ____________________________________________________________________________ 2. Approving an amendment to, or the elimination of, the applicable Fund's FOR ALL AGAINST ABSTAIN fundamental restriction, as described in the Proxy Statement, with respect to (EXCEPT AS ALL ALL the following: INDICATED) [ ] [ ] [ ] (a) Diversification of investments; (b) Borrowing; (c) Issuing senior securities; (d) Concentration of investments in the same industry; (e) Investments in real estate; (f) Investments in commodities; (g) Underwriting the securities of other issuers; (h) Making loans; (i) Investments in securities that are not readily marketable; (j) Investments for the purpose of exercising control or management; (k) Investments in other investment companies; (l) Purchasing securities on margin, selling securities short, or participating on a joint or joint and several basis in a securities trading account; (m) Pledging, mortgaging or hypothecating its assets; (n) Investments in issuers in which management of a Fund or its investment adviser owns securities; (o) Investments in issuers having a record of less than three years of continuous operation; (p) Investments in oil, gas or mineral programs; (q) Investments in put options, call options, or combinations thereof; (r) Investments in warrants; (s) Investments in securities other than those discussed in the Fund's prospectus; (t) The Guardian Tax-Exempt Fund's investments in investment grade municipal obligations. ____________________________________________________________________________ INSTRUCTIONS: IF YOU WISH TO WITHHOLD A VOTE FROM A PARTICULAR SUB-PROPOSAL PLEASE WRITE THE NUMBER AND LETTER(S) OF THE SUB-PROPOSAL ON THE LINE ABOVE AND INDICATE A "VOTE AGAINST" OR AN "ABSTENTION". 3. Approving an amendment to the Amended and Restated Agreement and Declaration FOR AGAINST ABSTAIN 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. 4. Approving an amendment to the Amended and Restated Agreement and 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. PLEASE SIGN AND DATE ON THE REVERSE SIDE. Guardian - sc