The Guardian Life Insurance Company of America
7 Hanover Square
New York, NY 10004
September 30, 2005
VIA EDGAR
Mr. Christian Sandoe
Division of Investment Management
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, DC 20549-0505
Re: Preliminary Proxy Materials
The Park Avenue Portfolio (File Nos. 33-23966; 811-5641)
The Guardian Variable Contract Funds, Inc. (File Nos. 2-81149; 811-3636)
GIAC Funds, Inc. (File Nos. 33-37883; 811-6231)
The Guardian Bond Fund, Inc. (File Nos. 2-81150; 811-3634
The Guardian Cash Fund, Inc. (File Nos. 2-74905; 811-3324)
Dear Mr. Sandoe:
This letter is in response the comments you relayed to me in our telephone
conversation of September 16, 2005, with respect to preliminary proxy materials
filed on behalf of the above referenced registrants on September 9, 2005. Each
registrant and applicable series fund is referred to herein as a "Fund." This
letter sets forth each comment and our response.
Proposal 1 - Election of Trustees
1. Comment: Please state (if accurate) that Messrs. Ferrara and Futia
are retired. In addition, please include more detailed information
regarding Ms. Goggin's employment history after August 2004 and
describe the nature of Mr. Paggioli's consulting work.
Response: Agreed. The applicable disclosure has been revised in
response to this comment.
2. Comment: Please state how often the Board meets and state whether
during the last fiscal year any Trustee attended fewer than 75% of
the meetings of the Board or Board committees on which the Trustee
served.
Response: Agreed. The applicable disclosure has been revised as
follows:
"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."
3. Comment: In the Compensation Table, where it is stated that the
Interested Trustees are not compensated by the Funds, please include
such information in the table itself rather than in a narrative
format, showing the dollar amounts received as $0.
Response: Agreed. The applicable disclosure has been revised
in response to this comment.
4. Comment: In the section entitled "Recommended Shareholder Action and
Required Vote," for The Guardian Variable Contract Funds, Inc., The
Guardian Bond Fund, Inc., The Guardian Cash Fund, Inc. and GIAC
Funds, Inc., please add disclosure that explains the voting
requirements for the election of Directors in plain English.
Response: Agreed. The applicable disclosure has been revised in
response to this comment as follows:
"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."
Proposal 2 - Changes to Fundamental Investment Policies
1. Comment: Throughout Proposal 2, please indicate whether an Affected
Fund may operate differently if proposals 2(a) through 2(t) are
approved, if the Affected Fund cannot so operate currently.
Response: Agreed. The applicable disclosure has been revised or
supplemented as appropriate in response to this comment. For
example, see Proposal 2(e) (real estate) and Proposal 2(q)
(options).
2. Comment: In Proposal 2(c), please discuss the risks of investments
in short sales, futures and reverse repurchase agreements.
Response: Agreed. The following disclosure has been added in
response to this comment:
"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 the 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
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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."
3. Comment: In Proposal 2(e), please list the Affected Funds that may
not currently invest in real estate investment trusts.
Response: Agreed. The applicable disclosure has been revised as
follows:
"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."
4. Comment: In Proposal 2(i), please discuss whether any Affected Fund
would operate differently under the non-fundamental restriction with
respect to illiquid securities as compared to the restriction being
repealed.
Response: No Affected Fund is expected to operate differently than
it currently does with respect to investments in illiquid securities
under the non-fundamental restriction.
5. Comment: In Proposal 2(r), describe any risks associated with
investments in warrants.
Response: Agreed. The applicable disclosure has been revised in
response to this comment as follows:
"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."
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6. Comment: In Proposal 2(t), please revise the proposed fundamental
investment restriction to include the words "tax-exempt" in the
policy to invest at least 80% of The Guardian Tax-Exempt Fund's net
assets in municipal obligations.
Response: Agreed. The proposed fundamental investment policy for The
Guardian Tax-Exempt Fund has been revised in response to this
comment.
Proposal 4
1. Comment: In Proposal 4, please discuss what changes the Trustees
could make to the trust document that previously required
shareholder approval.
Response: If Proposal 4 is approved, the Trustees would be
authorized to make any changes to the trust document that are not
expressly required to be approved by shareholders. For example, as
discussed in Proposal 3, the Trustees would be authorized to
increase or decrease the maximum number of members that may serve on
the Board in order to comply with new regulatory requirements,
without obtaining shareholder approval. Shareholders would continue
to have the express right to approve changes in their voting rights,
changes to the amendment provisions of the trust document, and any
matter required by applicable law to have shareholder approval. In
addition, the Trustees may request shareholder approval of matters
for which shareholder approval is not expressly required by the
trust document. After our consultation with Massachusetts counsel,
we believe that the proposed language with respect to this proposal
is necessary to preserve the ability of the Trustees to submit
proposals to shareholders on matters that do not expressly require
shareholder approval.
Other Matters
1. Comment: State how the costs of preparation of the proxy materials
will be allocated among the Funds.
Response: Each Fund will bear its pro rata share of such costs. The
applicable disclosure has been revised in response to this comment.
2. Comment: Please use bold type for the disclosure regarding how
shareholders may obtain copies of the Funds' shareholder reports,
and include such disclosure in the first two pages of the proxy
statement.
Response: Agreed. The requested disclosure has been added in bold
type to the second page of the proxy statement, as follows:
"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."
3. Comment: Please state how many votes may be cast per share owned.
Response: Agreed. Disclosure that each share is entitled to one vote
was included in the Notice of the Special Meeting and has also been
added to the proxy statement in response to this comment.
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Representations
Each registrant acknowledges that SEC staff comments or changes to the
disclosure in the proxy statement reviewed by the staff do not foreclose the
Commission from taking any action with respect to the proxy statement. In
addition, each registrant acknowledges that it is responsible for the adequacy
and accuracy of the disclosure in the proxy statement. Each registrant further
acknowledges that it may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the federal
securities laws of the United States.
* * * * *
Please do not hesitate to contact me at (212) 598-1297 if you have further
questions or comments, or if you require further information.
Sincerely,
Kathleen M. Moynihan
Assistant Counsel
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