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>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] 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.
PROX9-05
NOTICE OF JOINT SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON NOVEMBER 15, 2005
September 30, 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 44 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,
(JOSEPH A. CARUSO SIGNATURE)
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 30, 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"). Each share is entitled to one vote.
SHAREHOLDERS MAY REQUEST A FREE COPY OF THE FUNDS' MOST RECENT ANNUAL AND
SEMI-ANNUAL REPORTS BY CALLING 1-800-221-3253 OR BY WRITING GUARDIAN INVESTOR
SERVICES LLC, 7 HANOVER SQUARE, NEW YORK, NEW YORK 10004.
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;
2
(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;
(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
3
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 10
Trustees.
- ------------------------------------------------------------------------------------------
Approving an amendment to All Funds
2(a) each Fund's fundamental 22
investment restriction
with respect to
diversification of
investments.
- ------------------------------------------------------------------------------------------
Approving an amendment to All Funds
2(b) each Fund's fundamental 23
investment restriction
with respect to borrowing.
- ------------------------------------------------------------------------------------------
Approving an amendment to All Funds
2(c) each Fund's fundamental 24
investment restriction
with respect to the
issuance of senior
securities.
- ------------------------------------------------------------------------------------------
Approving an amendment to All Funds
2(d) each Fund's fundamental 26
investment restriction
with respect to
concentration of
investments in the same
industry.
- ------------------------------------------------------------------------------------------
Approving an amendment to All Funds
2(e) each Fund's fundamental 27
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 28
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
- ------------------------------------------------------------------------------------------
</Table>
4
<Table>
<Caption>
- ------------------------------------------------------------------------------------------
PAGE
PROPOSAL AFFECTED FUND(S) NO.
- ------------------------------------------------------------------------------------------
Approving an amendment to All Funds except:
2(g) certain Funds' fundamental The Guardian Park Avenue Small Cap Fund 29
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
- ------------------------------------------------------------------------------------------
Approving an amendment to All Funds except:
2(h) certain Funds' fundamental The Guardian UBS Large Cap Value Fund 29
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 31
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 32
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.
- ------------------------------------------------------------------------------------------
</Table>
5
<Table>
<Caption>
- ------------------------------------------------------------------------------------------
PAGE
PROPOSAL AFFECTED FUND(S) NO.
- ------------------------------------------------------------------------------------------
Approving the elimination The Guardian Park Avenue Fund
2(k) of certain Funds' The Guardian Asset Allocation Fund 32
fundamental investment The Guardian Baillie Gifford
restriction with respect International Growth Fund
to investments in other The Guardian Investment Quality Bond
investment companies. 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(l) of certain Funds' The Guardian Asset Allocation Fund 34
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 36
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 37
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.
- ------------------------------------------------------------------------------------------
</Table>
6
<Table>
<Caption>
- ------------------------------------------------------------------------------------------
PAGE
PROPOSAL AFFECTED FUND(S) NO.
- ------------------------------------------------------------------------------------------
Approving the elimination The Guardian Park Avenue Fund
2(o) of certain Funds' The Guardian Asset Allocation Fund 38
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.
- ------------------------------------------------------------------------------------------
Approving the elimination The Guardian Park Avenue Fund
2(p) of certain Funds' The Guardian Asset Allocation Fund 38
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 39
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 40
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.
- ------------------------------------------------------------------------------------------
</Table>
7
<Table>
<Caption>
- ------------------------------------------------------------------------------------------
PAGE
PROPOSAL AFFECTED FUND(S) NO.
- ------------------------------------------------------------------------------------------
Approving the elimination The Guardian Park Avenue Fund
2(s) of certain Funds' The Guardian Investment Quality Bond 40
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.
- ------------------------------------------------------------------------------------------
Approving an amendment to The Guardian Tax-Exempt Fund
2(t) The Guardian Tax-Exempt 41
Fund's fundamental policy
with respect to
investments in investment
grade municipal
obligations.
- ------------------------------------------------------------------------------------------
3 Approving an amendment to The Guardian Park Avenue Fund 42
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
- ------------------------------------------------------------------------------------------
</Table>
8
<Table>
<Caption>
- ------------------------------------------------------------------------------------------
PAGE
PROPOSAL AFFECTED FUND(S) NO.
- ------------------------------------------------------------------------------------------
4 Approving an amendment to The Guardian Park Avenue Fund 43
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>
9
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 Retired. Director and Director of various
(1930) former Chairman of mutual funds
the Board and Chief sponsored by
Executive Officer, Gabelli Asset
The Guardian Life Management.
Insurance Company of
America. Director
(Trustee) of all of
the mutual funds
within the Guardian
Fund Complex.
- ---------------------------------------------------------------------------------------------
</Table>
10
<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 Retired. Director and None.
(1919) former Chairman of
the Board and Chief
Executive Officer,
The Guardian Life
Insurance Company of
America. Director
(Trustee) of all of
the mutual funds
within the Guardian
Fund Complex.
- ---------------------------------------------------------------------------------------------
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>
11
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>
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
- ---------------------------------------------------------------------------------------------
Anne M. Goggin, Esq. Trustee Since 2004 Attorney at law in None.
(1948) private practice
since 8/04; Partner,
Edwards and Angell,
LLP, 4/04 to 8/04;
Chief Counsel,
Metropolitan Life
Insurance Company,
6/00 to 12/03; Senior
Vice President and
General Counsel, New
England Life
Insurance Company,
6/00 to 12/03;
Chairman, President
and Chief Executive
Officer, MetLife
Advisors LLC, 6/99 to
12/03; Chairman of
the Board,
Metropolitan Series
Fund, 1/02 to 12/03;
Chairman of the
Board, New England
Zenith Fund, 6/99 to
12/03. Director
(Trustee) of all of
the mutual funds
within the Guardian
Fund Complex.
- ---------------------------------------------------------------------------------------------
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>
13
<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 on Committee Member,
Trustee investment company Managers Funds and
matters since 7/2001; Managers AMG Funds
Executive Vice (36 portfolios),
President, Director 6/90 to present;
and Principal of The Trustee,
Wadsworth Group Professionally
(administration, Managed Portfolios
consulting and (20 portfolios),
executive search 5/91 to present;
firm) prior thereto. 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 at least quarterly to review each Fund's
investments, performance, expenses and other business affairs. During the last
fiscal year, no Trustee attended fewer than 75% of the meetings of the Board or
the Board Committees on which the Trustee served. 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
responsible for the
14
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 Secretary of
the Funds. Such submission should include information about the
15
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
INDEPENDENT TRUSTEES 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>
16
<Table>
<Caption>
- ---------------------------------------------------------------------------------------------------
ACCRUED TOTAL
AGGREGATE PENSION OR COMPENSATION
COMPENSATION RETIREMENT ESTIMATED FROM ALL FUNDS IN
FROM THE BENEFITS PAID BENEFITS UPON THE GUARDIAN FUND
INDEPENDENT TRUSTEES 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>
17
<Table>
<Caption>
- ---------------------------------------------------------------------------------------------------
ACCRUED TOTAL
AGGREGATE PENSION OR COMPENSATION
COMPENSATION RETIREMENT ESTIMATED FROM ALL FUNDS IN
FROM THE BENEFITS PAID BENEFITS UPON THE GUARDIAN FUND
INTERESTED TRUSTEES FUND** BY THE FUND RETIREMENT COMPLEX (25)**
- ---------------------------------------------------------------------------------------------------
Arthur V. Ferrara
The Park Avenue
Portfolio $0 N/A N/A $0
The Guardian Variable
Contract Funds, Inc. $0
GIAC Funds, Inc. $0
The Guardian Bond
Fund, Inc. $0
The Guardian Cash
Fund, Inc. $0
- ---------------------------------------------------------------------------------------------------
Leo R. Futia
The Park Avenue
Portfolio $0 N/A N/A $0
The Guardian Variable
Contract Funds, Inc. $0
GIAC Funds, Inc. $0
The Guardian Bond
Fund, Inc. $0
The Guardian Cash
Fund, Inc. $0
- ---------------------------------------------------------------------------------------------------
Dennis J. Manning
The Park Avenue
Portfolio $0 N/A N/A $0
The Guardian Variable
Contract Funds, Inc. $0
GIAC Funds, Inc. $0
The Guardian Bond
Fund, Inc. $0
The Guardian Cash
Fund, Inc. $0
- ---------------------------------------------------------------------------------------------------
</Table>
* Trustees who are "interested persons" of the Funds are not compensated by the
Funds. Ms. Cuocolo and Messrs. Goetzmann and Paggioli, as nominees, were not
Trustees during the period, and therefore 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.
- --------------------------------------------------------------------------------
18
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>
19
<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, which means if more than 50% of the Fund's
outstanding shares are voted in favor of election. 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,
which means if more than 50% of the Fund's shares that are represented at the
meeting are voted in favor of election.
20
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.
21
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.
22
Appendix B lists the current fundamental investment restrictions with respect to
diversification of investments of each of the Affected Funds (see page B-1). 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-5). 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
23
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-10). 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.
24
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.
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 Fund's use of call options and put options similarly involves risks.
The purchaser of a call option acquires the right to buy a security at a fixed
price during a specified period. The writer (seller) of such an option is then
obligated to sell the security if the option is exercised, and bears the risk
that the security's market price will increase over the purchase price set by
the option. The purchaser of a put option acquires the right to sell a security
at a fixed price during a specified period. The writer of such an option is then
obligated to buy the security if the option is exercised, and bears the risk
that the security's market price will decline from the purchase price set by the
option. The risks associated with purchasing and writing put and call options on
financial futures contracts can be influenced by the market for financial
futures contracts. An increase in the market value of a financial futures
contract on which the Fund has written an option may cause the option to be
exercised. In this situation, the benefit to the Fund would be limited to the
value of the exercise price of the option and, if a Fund closes out the option,
the cost of entering into the offsetting transaction could exceed the premium
the Fund initially received for writing the option. In a reverse repurchase
agreement transaction, a Fund sells securities to a bank or securities dealer
and agrees to repurchase them at an agreed time and price. Reverse repurchase
agreements involve the risk that the buyer of the sold securities might be
unable to deliver them when a Fund seeks to repurchase the securities.
The proposed fundamental investment policy would permit each Affected Fund to
engage in options, financial futures contracts and reverse repurchase agreement
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
25
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-12). 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."
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
26
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-16). 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."
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 the securities described in the
proposed amendment. Currently, The Guardian Park Avenue Fund and The Guardian
Asset Allocation Fund may not invest in real estate investment trusts. If
shareholders approve the proposal, each Fund would be permitted to invest in
real estate investment trusts consistent with its 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.
27
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-18).
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 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
28
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-19). 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 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
29
the current fundamental investment restriction of each of the Affected Funds
with respect to making loans (see page B-21). 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 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.
30
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-24). 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
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
31
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-26). 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.
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
32
of the Affected Funds (see page B-27). 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.
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
33
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-29).
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 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
34
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.
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
35
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-31). 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."
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
36
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.
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-33).
37
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-35).
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,
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
38
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-36).
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 credit
derivatives, including credit default swaps and credit default index
investments. The fixed income funds would use these investments (i) as
alternatives to direct investment in a particular security, (ii) to adjust a
Fund's asset allocation or risk exposure to the corporate credit sector of the
fixed income market 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. A Fund's investment in credit default swaps and credit default index
swaps could result in losses if the Fund does not correctly evaluate the
creditworthiness of the company on which the swap is based. If a Fund is a buyer
and no event of default occurs, the Fund will lose its investment and recover
nothing. If an event of default occurs, the Fund (if the buyer) will receive the
full notional value of the company on which the swap is based, which may have
little or no value. If the Fund is the seller, it will receive a fixed rate of
income throughout the term of the contract, typically six months to one year,
provided there is no event of default. If an event of default occurs, the Fund
(if the seller) must pay the buyer the full notional value of the company on
which the swap is based. Credit derivatives may not always be successful hedges;
using them could lower fund total return and the
39
other party to a swap agreement could default on its obligations or refuse to
cash out a Fund's investment at a reasonable price, which could turn an expected
gain into a loss. 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
fundamental investment restriction proposed to be eliminated with respect to
each of the Affected Funds (see page B-36).
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. Warrants are normally
issued together with a bond or preferred stock, and permit the buyer to purchase
an underlying asset (typically common stock) of the issuer at a specified price.
Warrants are subject to volatility risk of derivatives generally, because the
value of the warrant is based on the value of the underlying asset, and the
value of the warrant may rise or fall more rapidly than the change in value of
the underlying asset. Warrant holders do not have the voting rights of common
stockholders. 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-38).
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
40
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-39).
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 tax-exempt 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.
41
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 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
42
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.
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;
43
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.
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.
44
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
(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 all shares attributable to your account value in proportion to
all voting instructions for the Fund actually received from contract owners in
the separate accounts through which it offers variable annuities and variable
life insurance policies. 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
45
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 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
D.F. King & Co., Inc., 48 Wall Street, New York, New York 10005, to aid in the
solicitation of instructions for registered and nominee accounts, for a fee
expected not to exceed $25,000. The expenses of the preparation of proxy
statements and related materials, including printing and delivery costs, are
borne by each Fund pro rata.
46
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 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 100 F Street, N.E., 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.
47
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
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>
48
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
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.
SHARES OUTSTANDING AS OF RECORD DATE
The table below shows the number of shares outstanding for each Fund as of
September 16, 2005, the record date for the Special Meeting:
<Table>
<Caption>
- ---------------------------------------------------------------------------------
FUND SHARES OUTSTANDING
- ---------------------------------------------------------------------------------
The Guardian Park Avenue Fund 29,599,066.781
- ---------------------------------------------------------------------------------
The Guardian UBS Large Cap Value Fund 6,554,094.257
- ---------------------------------------------------------------------------------
The Guardian Park Avenue Small Cap Fund 10,181,051.799
- ---------------------------------------------------------------------------------
The Guardian UBS Small Cap Value Fund 3,361,177.386
- ---------------------------------------------------------------------------------
The Guardian Asset Allocation Fund 12,244,555.025
- ---------------------------------------------------------------------------------
The Guardian S&P 500 Index Fund 22,068,629.730
- ---------------------------------------------------------------------------------
The Guardian Baillie Gifford International Growth Fund 4,212,446.065
- ---------------------------------------------------------------------------------
The Guardian Baillie Gifford Emerging Markets Fund 8,242,457.582
- ---------------------------------------------------------------------------------
The Guardian Investment Quality Bond Fund 13,895,592.496
- ---------------------------------------------------------------------------------
The Guardian Low Duration Bond Fund 3,468,811.591
- ---------------------------------------------------------------------------------
The Guardian High Yield Bond Fund 10,863,425.210
- ---------------------------------------------------------------------------------
The Guardian Tax-Exempt Fund 9,452,507.817
- ---------------------------------------------------------------------------------
The Guardian Cash Management Fund 439,691,411.831
- ---------------------------------------------------------------------------------
The Guardian Stock Fund 37,320,548.470
- ---------------------------------------------------------------------------------
</Table>
49
<Table>
<Caption>
- ---------------------------------------------------------------------------------
FUND SHARES OUTSTANDING
- ---------------------------------------------------------------------------------
The Guardian VC 500 Index Fund 23,421,068.684
- ---------------------------------------------------------------------------------
The Guardian VC Asset Allocation Fund 4,966,011.922
- ---------------------------------------------------------------------------------
The Guardian VC High Yield Bond Fund 7,519,895.481
- ---------------------------------------------------------------------------------
The Guardian VC Low Duration Bond Fund 2,696,060.880
- ---------------------------------------------------------------------------------
The Guardian UBS VC Large Cap Value Fund 4,038,930.552
- ---------------------------------------------------------------------------------
The Guardian UBS VC Small Cap Value Fund 1,684,492.426
- ---------------------------------------------------------------------------------
The Guardian Bond Fund, Inc. 27,268,455.466
- ---------------------------------------------------------------------------------
The Guardian Cash Fund, Inc. 23,461,856.632
- ---------------------------------------------------------------------------------
Baillie Gifford International Growth Fund 11,850,050.222
- ---------------------------------------------------------------------------------
Baillie Gifford Emerging Markets Fund 5,136,020.014
- ---------------------------------------------------------------------------------
The Guardian Small Cap Stock Fund 15,445,680.006
- ---------------------------------------------------------------------------------
</Table>
BENEFICIAL OWNERSHIP OF FUND SHARES
The table below shows the names and addresses of the holders of 5% or more of a
Fund's shares as of the record date.
THE GUARDIAN INSURANCE & ANNUITY COMPANY, INC.
7 HANOVER SQUARE
NEW YORK, NEW YORK 10004
<Table>
<Caption>
- ---------------------------------------------------------------------------------------------
NUMBER OF SHARES
FUND OWNED+ % OWNERSHIP
- ---------------------------------------------------------------------------------------------
The Guardian Asset Allocation Fund 2,563,192.735 20.96%
- ---------------------------------------------------------------------------------------------
The Guardian Baillie Gifford Emerging Markets Fund 3,325,050.406 41.28%
- ---------------------------------------------------------------------------------------------
The Guardian Baillie Gifford International Growth Fund 949,333.559 23.11%
- ---------------------------------------------------------------------------------------------
The Guardian Cash Management Fund 170,756,517.590 38.84%
- ---------------------------------------------------------------------------------------------
The Guardian High Yield Bond Fund 924,395.148 8.51%
- ---------------------------------------------------------------------------------------------
The Guardian Investment Quality Bond Fund 4,616,192.702 33.22%
- ---------------------------------------------------------------------------------------------
The Guardian Park Avenue Fund 5,641,031.146 19.13%
- ---------------------------------------------------------------------------------------------
The Guardian Park Avenue Small Cap Fund 3,457,943.879 34.49%
- ---------------------------------------------------------------------------------------------
The Guardian Bond Fund, Inc. 27,268,455.466 100%
- ---------------------------------------------------------------------------------------------
The Guardian Stock Fund 37,320,548.470 100%
- ---------------------------------------------------------------------------------------------
The Guardian Cash Fund, Inc. 23,461,856.632 100%
- ---------------------------------------------------------------------------------------------
The Guardian Small Cap Stock Fund 12,993,462.719 84.13%
- ---------------------------------------------------------------------------------------------
The Guardian VC Asset Allocation Fund 4,966,011.922 100%
- ---------------------------------------------------------------------------------------------
The Guardian VC High Yield Fund 7,519,895.481 100%
- ---------------------------------------------------------------------------------------------
</Table>
50
<Table>
<Caption>
- ---------------------------------------------------------------------------------------------
NUMBER OF SHARES
FUND OWNED+ % OWNERSHIP
- ---------------------------------------------------------------------------------------------
The Guardian VC 500 Index Fund 23,421,068.684 100%
- ---------------------------------------------------------------------------------------------
The Guardian UBS VC Large Cap Value Fund 918,025.780 22.73%
- ---------------------------------------------------------------------------------------------
The Guardian UBS VC Small Cap Value Fund 1,044,848.993 62.03%
- ---------------------------------------------------------------------------------------------
The Guardian VC Low Duration Bond Fund 1,921,389.456 71.27%
- ---------------------------------------------------------------------------------------------
Baillie Gifford International Growth Fund 11,813,910.553 99.70%
- ---------------------------------------------------------------------------------------------
Baillie Gifford Emerging Markets Fund 5,136,020.014 100%
- ---------------------------------------------------------------------------------------------
</Table>
THE GUARDIAN LIFE INSURANCE COMPANY OF AMERICA
7 HANOVER SQUARE
NEW YORK, NEW YORK 10004
<Table>
<Caption>
- ---------------------------------------------------------------------------------------------
NUMBER OF SHARES
FUND OWNED+ % OWNERSHIP
- ---------------------------------------------------------------------------------------------
The Guardian Asset Allocation Fund 1,372,947.838 11.19%
- ---------------------------------------------------------------------------------------------
The Guardian Baillie Gifford Emerging Markets Fund 3,203,246.789 37.86%
- ---------------------------------------------------------------------------------------------
The Guardian Baillie Gifford International Growth Fund 1,140,299.744 26.33%
- ---------------------------------------------------------------------------------------------
The Guardian High Yield Bond Fund 8,469,894.475 77.97%
- ---------------------------------------------------------------------------------------------
The Guardian Investment Quality Bond Fund 5,025,020.968 36.17%
- ---------------------------------------------------------------------------------------------
The Guardian Low Duration Bond Fund 3,119,873.636 89.94%
- ---------------------------------------------------------------------------------------------
The Guardian Park Avenue Fund 4,033,423.306 13.65%
- ---------------------------------------------------------------------------------------------
The Guardian Park Avenue Small Cap Fund 2,252,264.188 21.86%
- ---------------------------------------------------------------------------------------------
The Guardian S&P 500 Index Fund 2,590,216.768 11.70%
- ---------------------------------------------------------------------------------------------
The Guardian Tax-Exempt Fund 8,233,813.261 87.11%
- ---------------------------------------------------------------------------------------------
The Guardian UBS Large Cap Value Fund 5,912,312.620 90.20%
- ---------------------------------------------------------------------------------------------
The Guardian UBS Small Cap Value Fund 2,949,767.429 87.68%
- ---------------------------------------------------------------------------------------------
The Guardian Small Cap Stock Fund 2,452,217.287 15.88%
- ---------------------------------------------------------------------------------------------
The Guardian UBS VC Large Cap Value Fund 3,120,904.772 77.28%
- ---------------------------------------------------------------------------------------------
The Guardian UBS VC Small Cap Value Fund 639,643.433 37.98%
- ---------------------------------------------------------------------------------------------
The Guardian VC Low Duration Bond Fund 774,671.424 28.73%
- ---------------------------------------------------------------------------------------------
</Table>
51
NATIONAL FINANCIAL SERVICES LLC
200 LIBERTY STREET
NEW YORK, NEW YORK 10281
<Table>
<Caption>
- ---------------------------------------------------------------------------------------------
NUMBER OF SHARES
FUND OWNED+ % OWNERSHIP
- ---------------------------------------------------------------------------------------------
The Guardian Asset Allocation Fund 1,311,911.188 10.71%
- ---------------------------------------------------------------------------------------------
The Guardian Baillie Gifford International Growth Fund 287,260.746 6.78%
- ---------------------------------------------------------------------------------------------
The Guardian Cash Management Fund 185,573,930.410 42.21%
- ---------------------------------------------------------------------------------------------
The Guardian Investment Quality Bond Fund 777,766.020 5.60%
- ---------------------------------------------------------------------------------------------
The Guardian Low Duration Bond Fund 196,793.478 5.67%
- ---------------------------------------------------------------------------------------------
The Guardian Park Avenue Fund 1,653,480.791 5.56%
- ---------------------------------------------------------------------------------------------
The Guardian Park Avenue Small Cap Fund 937,548.996 9.09%
- ---------------------------------------------------------------------------------------------
</Table>
THE GUARDIAN ASSET ALLOCATION FUND
7 HANOVER SQUARE
NEW YORK, NEW YORK 10004
<Table>
<Caption>
- ---------------------------------------------------------------------------------------------
NUMBER OF SHARES
FUND OWNED+ % OWNERSHIP
- ---------------------------------------------------------------------------------------------
The Guardian S&P 500 Index Fund 15,351,801.143 69.61%
- ---------------------------------------------------------------------------------------------
</Table>
+ The Guardian Annuity & Insurance Company, Inc., is the record owner of Fund
shares on behalf of the separate accounts through which it offers variable
annuities and variable life insurance policies, but is not the beneficial owner.
National Financial Services LLC is the record owner of shares of the Funds on
behalf of its customers, but is not the beneficial owner.
52
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>
53
<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>
54
<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>
55
<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>
56
<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>
57
<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>
58
<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 Guardian S&P 500 Index Fund or The Guardian VC
500 Index Fund.
59
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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
(This page intentionally left blank)
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
(GUARDIAN LOGO)
PROXY CARD FOR SUBMITTING VOTING INSTRUCTIONS
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. GIAC will vote all shares attributable to your account
value in proportion to all voting instructions for the Fund actually received
from contract owners in the Separate Account.
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.
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.
ADV - sc
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;
(01) Kathleen C. Cuocolo (04) Leo R. Futia (07) William W. Hewitt (10) Steven J. Paggioli
(02) Frank J. Fabozzi (05) William N. Goetzmann (08) Sidney I. Lirtzman (11) Robert G. Smith
(03) Arthur V. Ferrara (06) Anne M. Goggin (09) Dennis J. Manning
FOR WITHHOLD FOR ALL
ALL ALL EXCEPT*
[ ] [ ] [ ]
* INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NUMBER ON THE LINE BELOW.
________________________________________________________________________________
2. Approving an amendment to, or the elimination of, the applicable Fund's
fundamental restriction, as described in the Proxy Statement, with
respect to the following:
(2a) Diversification of investments;
(2b) Borrowing;
(2c) Issuing senior securities;
(2d) Concentration of investments in the same industry;
(2e) Investments in real estate;
(2f) Investments in commodities;
(2g) Underwriting the securities of other issuers;
(2h) Making loans;
(2i) Investments in securities that are not readily marketable;
(2j) Investments for the purpose of exercising control or management;
(2k) Investments in other investment companies;
(2l) Purchasing securities on margin, selling securities short, or participating
on a joint or joint and several basis in a securities trading account;
(2m) Pledging, mortgaging or hypothecating its assets;
(2n) Investments in issuers in which management of a Fund or its investment
adviser owns securities;
(2o) Investments in issuers having a record of less than three years of
continuous operation;
(2p) Investments in oil, gas or mineral programs;
(2q) Investments in put options, call options, or combinations thereof;
(2r) Investments in warrants;
(2s) Investments in securities other than those discussed in the Fund's
prospectus.
FOR ALL AGAINST ABSTAIN
(EXCEPT AS ALL ALL
INDICATED)
[ ] [ ] [ ]
________________________________________________________________________________
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".
FOR AGAINST ABSTAIN
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.
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.
ADV - sc
(GUARDIAN LOGO)
PROXY CARD FOR SUBMITTING VOTING INSTRUCTIONS
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.
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.
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.
PAP - sc
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;
(01) Kathleen C. Cuocolo (04) Leo R. Futia (07) William W. Hewitt (10) Steven J. Paggioli
(02) Frank J. Fabozzi (05) William N. Goetzmann (08) Sidney I. Lirtzman (11) Robert G. Smith
(03) Arthur V. Ferrara (06) Anne M. Goggin (09) Dennis J. Manning
FOR WITHHOLD FOR ALL
ALL ALL EXCEPT*
[ ] [ ] [ ]
* INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NUMBER ON THE LINE BELOW.
________________________________________________________________________________
2. Approving an amendment to, or the elimination of, the applicable Fund's
fundamental restriction, as described in the Proxy Statement, with
respect to the following:
(2a) Diversification of investments;
(2b) Borrowing;
(2c) Issuing senior securities;
(2d) Concentration of investments in the same industry;
(2e) Investments in real estate;
(2f) Investments in commodities;
(2g) Underwriting the securities of other issuers;
(2h) Making loans;
(2i) Investments in securities that are not readily marketable;
(2j) Investments for the purpose of exercising control or management;
(2k) Investments in other investment companies;
(2l) Purchasing securities on margin, selling securities short, or participating
on a joint or joint and several basis in a securities trading account;
(2m) Pledging, mortgaging or hypothecating its assets; (2n) Investments in
issuers in which management of a Fund or its investment adviser owns
securities;
(2o) Investments in issuers having a record of less than three years of
continuous operation;
(2p) Investments in oil, gas or mineral programs;
(2q) Investments in put options, call options, or combinations thereof;
(2r) Investments in warrants;
(2s) Investments in securities other than those discussed in the Fund's
prospectus.
(2t) The Guardian Tax-Exempt Fund's investments in investment grade municipal
obligations.
FOR ALL ABSTAIN ALL AGAINST ALL
(EXCEPT AS
INDICATED)
[ ] [ ] [ ]
________________________________________________________________________________
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".
FOR AGAINST ABSTAIN
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.
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.
PAP - sc
(GUARDIAN LOGO)
PROXY CARD FOR SUBMITTING VOTING INSTRUCTIONS
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. GIAC will vote all shares attributable to your account
value in proportion to all voting instructions for the Fund actually received
from contract owners in the Separate Account.
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.
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.
GVC - sc
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;
(01) Kathleen C. Cuocolo (04) Leo R. Futia (07) William W. Hewitt (10) Steven J. Paggioli
(02) Frank J. Fabozzi (05) William N. Goetzmann (08) Sidney I. Lirtzman (11) Robert G. Smith
(03) Arthur V. Ferrara (06) Anne M. Goggin (09) Dennis J. Manning
FOR WITHHOLD FOR ALL
ALL ALL EXCEPT*
[ ] [ ] [ ]
* INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NUMBER ON THE LINE BELOW.
________________________________________________________________________________
2. Approving an amendment to, or the elimination of, the applicable Fund's
fundamental restriction, as described in the Proxy Statement, with
respect to the following:
(2a) Diversification of investments;
(2b) Borrowing;
(2c) Issuing senior securities;
(2d) Concentration of investments in the same industry;
(2e) Investments in real estate;
(2f) Investments in commodities;
(2g) Underwriting the securities of other issuers;
(2h) Making loans;
(2i) Investments in securities that are not readily marketable;
(2j) Investments for the purpose of exercising control or management;
(2k) Investments in other investment companies;
(2l) Purchasing securities on margin, selling securities short, or participating
on a joint or joint and several basis in a securities trading account;
(2m) Pledging, mortgaging or hypothecating its assets;
(2n) Investments in issuers in which management of a Fund or its investment
adviser owns securities;
(2o) Investments in issuers having a record of less than three years of
continuous operation;
(2p) Investments in oil, gas or mineral programs;
(2q) Investments in put options, call options, or combinations thereof;
(2r) Investments in warrants;
(2s) Investments in securities other than those discussed in the Fund's
prospectus.
FOR ALL AGAINST ABSTAIN
(EXCEPT AS ALL ALL
INDICATED)
[ ] [ ] [ ]
________________________________________________________________________________
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".
PLEASE SIGN AND DATE ON THE REVERSE SIDE.
GVC - sc