Registration Nos. 333-21975
811-08057
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |_|
POST-EFFECTIVE AMENDMENT No. 7 |X|
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |_|
POST-EFFECTIVE AMENDMENT No. 7 |X|
(Check appropriate box or boxes)
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THE GUARDIAN SEPARATE ACCOUNT E
(Exact Name of Registrant as Specified in Charter)
THE GUARDIAN INSURANCE & ANNUITY COMPANY, INC.
(Name of Depositor)
7 Hanover Square, New York, New York 10004
(Address of Principal Executive Offices)
Depositor's Telephone Number: (212) 598-8359
RICHARD T. POTTER, JR., Vice President and Counsel
The Guardian Insurance & Annuity Company, Inc.
7 Hanover Square
New York, New York 10004
(Name and address of agent for service)
Copy to:
KIMBERLY J. SMITH, ESQ.
Sutherland, Asbill & Brennan
1275 Pennsylvania Avenue, N.W.
Washington, D.C. 20004
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It is proposed that this filing will be effective (check appropriate box):
|_| immediately upon filing pursuant to paragraph (b) of Rule 485
|X| on May 1, 2000 pursuant to paragraph (b) of Rule 485
|_| 60 days after filing pursuant to paragraph (a)(1) of Rule 485
|_| on (date) pursuant to paragraph (a)(1) of Rule 485
|_| 75 days after filing pursuant to paragraph (a)(2) of Rule 485
|_| on (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
|_| This post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
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The Registrant has registered an indefinite number of its securities under the
Securities Act of 1933 pursuant to Rule 24f-2 under the Investment Company Act
of 1940. The notice required by such rule for the Registrant's most recent
fiscal year was filed on March 24, 2000.
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<PAGE>
THE GUARDIAN SEPARATE ACCOUNT E
Cross Reference Sheet to Items In
Registration Statement on Form N-4
<TABLE>
<CAPTION>
Form N-4 Item No. Location
<S> <C> <C>
Part A
Item 1. Cover Page............................................................. Cover
Item 2. Definitions............................................................ Special Terms Used in this
Prospectus
Item 3. Synopsis............................................................... Summary: What is a variable annuity
contract and how does it work?;
Costs and Expenses
Item 4. Condensed Financial Information........................................ Summary Financial Information About
the Separate Account; Performance
Results
Item 5. General Description of Registrant, Depositor and Portfolio
Companies ........................................................... The Guardian Insurance & Annuity
Company, Inc.; Variable Investment
Options; Fixed-Rate Investment Options;
Voting Rights
Item 6. Deductions............................................................. Expenses; Costs and Expenses;
Distribution of the Contracts
Item 7. General Description of Variable Annuity Contracts...................... Summary: What is a variable annuity
contract and how does it work?
Item 8. Annuity Period......................................................... The Annuity Period
Item 9. Death Benefit.......................................................... Death Benefits; Enhanced Death Benefits
Item 10. Purchases and Contract Value........................................... Buying a Contract; the Acccumulation
Period
Item 11. Redemptions............................................................ Surrenders and Partial Withdrawals
Item 12. Taxes.................................................................. Federal Tax Matters
Item 13. Legal Proceedings...................................................... Legal Proceedings
Item 14. Table of Contents of the Statement of Additional Information........... Where to get more Information
Part B
Item 15. Cover Page............................................................. Cover Page
Item 16. Table of Contents...................................................... Table of Contents
Item 17. General Information and History........................................ Not Applicable
Item 18. Services............................................................... Services to the Separate Account
Item 19. Purchase of Securities Being Offered................................... Valuation of Assets of the Separate
Account; Transferability Restrictions
Item 20. Underwriters........................................................... Services to the Separate Account
Item 21. Calculation of Performance Data........................................ Performance Data
Item 22. Annuity Payments....................................................... Annuity Payments
Item 23. Financial Statements................................................... Financial Statements
</TABLE>
Part C
Information required to be included in Part C is set forth under the appropriate
item, so numbered, in Part C to this Registration Statement.
<PAGE>
VARIABLE ANNUITY PROSPECTUS
May 1, 2000
THE GUARDIAN INVESTOR
RETIREMENT ASSET MANAGER
THIS PROSPECTUS describes an individual Flexible Premium Deferred Variable
Annuity Contract. It contains important information that you should know before
investing in the contract. Please read this prospectus carefully, along with the
accompanying Fund prospectuses, and keep them for future reference.
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The contract is issued by The Guardian Insurance & Annuity Company, Inc. (GIAC)
through its Separate Account E (the Separate Account). The contract is designed
to provide tax deferred annuity benefits under retirement programs. It will also
pay a death benefit if the owner or annuitant dies before annuity payments
begin.
The minimum initial premium payment is $500. Your premiums may be invested in up
to 20 variable investment options or 19 variable investment options and the
fixed-rate option. Special limits apply to transfers out of the fixed-rate
option. The variable investment options invest in the mutual funds listed below.
Some of these Funds may not be available in your state. The prospectuses for
these Funds are attached.
o The Guardian Variable Contract Funds, Inc.
- The Guardian Stock Fund
- The Guardian VC 500 Index Fund
- The Guardian VC Asset Allocation Fund
- The Guardian VC High Yield Bond Fund
o The Guardian Bond Fund
o The Guardian Cash Fund, Inc.
o GIAC Funds, Inc.
- Baillie Gifford International Fund
- Baillie Gifford Emerging Markets Fund
- The Guardian Small Cap Stock Fund
o AIM Variable Insurance Funds Inc.
- AIM V.I. Capital Appreciation Fund
- AIM V.I. Global Utilities Fund
- AIM V.I. Government Securities Fund
- AIM V.I. Value Fund
o Davis Variable Account Fund, Inc.
- Davis Financial Portfolio
- Davis Real Estate Portfolio
- Davis Value Portfolio
o Fidelity Variable Insurance Products Fund
- Fidelity VIP II Contrafund(R) Portfolio
- Fidelity VIP Equity-Income Portfolio
- Fidelity VIP III Growth Opportunities Portfolio
- Fidelity VIP III Mid Cap Portfolio
o Gabelli Capital Series Funds, Inc.
- Gabelli Capital Asset Fund
o Janus Aspen Series
- Janus Aspen Aggressive Growth Portfolio
- Janus Aspen Capital Appreciation Portfolio
- Janus Aspen Growth Portfolio
- Janus Aspen Worldwide Growth Portfolio
o MFS(R) Variable Insurance Trust(SM)
- MFS Emerging Growth Series
- MFS Growth With Income Series
- MFS New Discovery Series
- MFS Research Series
- MFS Total Return Series
o Value Line Strategic Asset Management Trust
o Value Line Centurion Fund
A Statement of Additional Information about the contract and the Separate
Account is available free of charge by writing to GIAC at its Customer Service
Office, P.O. Box 26210, Lehigh Valley, Pennsylvania 18002, or by calling
1-800-221-3253. Its contents are noted on the last page of this prospectus.
The Statement of Additional Information, which is also dated May 1, 2000, is
incorporated by reference into this prospectus.
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These securities have not been approved or disapproved by the Securities and
Exchange Commission or any state securities commission, nor has the Commission
or any state securities commission passed upon the accuracy or adequacy of this
prospectus.
The contract is not a deposit or obligation of, or guaranteed or endorsed by,
any bank or depository institution, and the contract is not federally insured by
the Federal Deposit Insurance Corporation, the Federal Reserve Board or any
other agency, and involves investment risk, including possible loss of the
principal amount invested.
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<PAGE>
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CONTENTS
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SUMMARY
What is a variable annuity contract? .......... 1
- How your annuity payments are calculated .... 1
- The annuity period .......................... 1
- Other contract features ..................... 2
- Expenses .................................... 2
- Deciding to purchase a contract ............. 2
Expense table .................................. 3
Buying a contract .............................. 9
- The application form ........................ 9
- Payments .................................... 9
The accumulation period ........................ 10
- How we allocate your premium payments ....... 10
- The Separate Account ........................ 10
- Variable investment options ................. 11
- Fixed-rate option ........................... 14
- Transfers ................................... 15
- Surrenders and partial withdrawals .......... 16
- Managing your annuity ....................... 18
The annuity period ............................. 20
- When annuity payments begin ................. 20
- How your annuity payments are calculated .... 20
- Variable annuity payout options ............. 21
- Fixed-rate annuity payout options ........... 22
Other contract features ........................ 23
- Death benefits .............................. 23
- Enhanced death benefits ..................... 24
- Living benefit rider (referred to as "Decade")26
Financial information .......................... 28
- How we calculate unit values ................ 28
- Summary financial information about the
Separate Account .......................... 28
- Contract costs and expenses ................. 33
- Federal tax matters ......................... 35
- Performance results ......................... 40
Your rights and responsibilities................ 42
Special terms used in this prospectus........... 44
Other information............................... 45
<PAGE>
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SUMMARY
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WHAT IS A VARIABLE ANNUITY CONTRACT?
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A variable annuity contract allows you to accumulate tax-deferred savings which
are invested in options that you choose. This is the accumulation period of the
contract. On an agreed date, you or someone else you have named as the annuitant
will start receiving regular payments from the amount you have saved and any
investment earnings. This is the annuity period. The amount of the annuity
payments will depend on earnings during the accumulation period, and afterward
if you select a variable annuity option. That's why this product is called a
variable annuity.
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HOW YOUR ANNUITY PAYMENTS ARE CALCULATED
During the accumulation period, this contract allows you to allocate your net
premium payments and accumulation value to as many as 20 variable investment
options, or 19 variable investment options and the fixed-rate option.
When you allocate your premiums to the variable investment options, you bear the
risk of any investment losses. No assurance can be given that the value of the
contract during the accumulation period, or the total amount of annuity payments
made under the contract, will equal or exceed the net premium payments allocated
to the variable investment options. When you allocate your net premium payments
to the fixed-rate option, the contract guarantees that they will earn a minimum
rate of interest and the investment risk is borne by GIAC.
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Annuity payments
The amount of the annuity payments will depend on earnings during the
accumulation period, and afterward if you select a variable annuity option.
That's why this product is called a variable annuity.
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GIAC has established a Separate Account to hold the variable investments in its
annuity contracts. The Separate Account has 32 investment divisions,
corresponding to 32 variable investment options, each of which invests in a
mutual fund. Your net premiums are used to buy accumulation units in the
investment divisions you have chosen, or are allocated to the fixed-rate option.
The total value of your contract's investment in the investment divisions and in
the fixed-rate option is known as the accumulation value. It's determined by
multiplying the number of variable accumulation units credited to your account
in each investment division by the current value of the division's units, and
adding your value in the fixed-rate option.
The value of units in a variable investment division reflects the investment
experience within the division. The value of units in the fixed-rate option
reflects interest accrued at a rate not less than the guaranteed minimum
specified in the contract. For a complete explanation, please see Financial
information: How we calculate unit values.
THE ANNUITY PERIOD
Payments to the annuitant under this contract must begin no later than his or
her 90th birthday. Distributions under the contract are taxable, and if you take
money out of the contract before age 59 1/2, you may also incur a 10% federal
tax penalty on your earnings.
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Payout options
Annuity payout options are available on either a variable or fixed-rate basis.
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You may select one or a combination of three annuity payout options under the
contract:
o Life annuity without a guaranteed period
o Life annuity with a 10-year guaranteed period
o Joint and survivor annuity
These payout options are available on either a variable or fixed-rate basis.
They're described in more detail in the section titled The annuity period.
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S U M M A R Y P R O S P E C T U S 1
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<PAGE>
OTHER CONTRACT FEATURES
Transfers among investment options
You can make transfers among the variable investment options at any time.
Transfers to and from the fixed-rate option are only permitted during the
accumulation period. Certain restrictions apply to transfers out of the
fixed-rate option. Transfers must also comply with the rules of any retirement
plan that apply. Please see The accumulation period: Transfers.
Death benefits
If you, or another person named as the annuitant, should die before annuity
payments begin, then we pay a death benefit to the beneficiary. The contract
also gives you the option of purchasing riders that may provide a greater death
benefit. Please see Other contract features: Death benefits.
Surrenders and partial withdrawals
At any time during the accumulation period, you may withdraw some or all of the
amount you have saved in the contract. Taking out all you have saved is known as
a surrender; taking out part of your savings is a partial withdrawal. These
options are not available once annuity payments begin. Please see The
accumulation period: Surrenders and partial withdrawals.
EXPENSES
The following are expenses that you will incur as a contract owner:
o Operating expenses for mutual funds comprising the variable investment
options
Management fees and other expenses associated with the Funds ranged from
0.28% to 1.44% in 1999. Actual charges will depend on the variable
investment options you select.
o Mortality and expense risk charges
1.05% annually of the net asset value of your variable investment options.
o Administrative expenses
0.20% annually of the net asset value of your variable investment options.
o Contract fee
An annual fee of $35, if the accumulation value in your contract is less
than $100,000 on your contract's anniversary date.
The following are expenses that you may incur as a contract owner:
o Contingent deferred sales charges
A charge of 1% to 7% against any amount that you withdraw that has been in
your contract for less than seven years. The actual amount will depend on
the number of years the amount has been invested.
o Enhanced death benefit expense
If you choose this benefit, the annual expense is up to 0.25% of the net
asset value of your variable investment options, depending on the rider
chosen.
o Living benefit rider expense
If you choose this rider, you will pay a daily charge based on an annual
rate of 0.25% of the net assets of your variable investment options.
o Annuity taxes
A tax on premiums or annuity payments, applicable in some states and
municipalities only, that varies from 0.5% to 3.5% of premiums paid to the
contract.
DECIDING TO PURCHASE A CONTRACT
You should consider purchasing a variable annuity contract if your objective is
to invest over a long period of time and to accumulate assets on a tax-deferred
basis, generally for retirement. You have the right to examine the contract and
return it for cancellation within 10 days of receiving it. This is known as the
free-look period. The period may be longer than 10 days in some states.
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Free-look period
You have the right to examine the contract and return it for cancellation
within 10 days of receiving it. This is known as the free-look period.
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Please see Financial information: Summary of financial information about the
Separate Account for more information about Separate Account E and unit values.
Please see Special terms used in this prospectus for definitions of key terms.
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2 P R O S P E C T U S S U M M A R Y
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<PAGE>
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EXPENSE TABLE
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CONTRACT OWNER TRANSACTION EXPENSES
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Sales Charge Imposed on Purchases: None
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Transfer Fee: Currently, none
(may charge $25 for each transfer)
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Contingent Deferred Sales Charge:
The following charges will be assessed on premiums withdrawn that have been in
the contract for less than 7 contract years.
Contingent
Number of contract years completed deferred sales charge
from date of the premium payment percentage(1)
================================================================================
0 7%
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1 6%
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2 5%
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3 4%
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4 3%
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5 2%
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6 1%
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7+ 0% and thereafter
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The maximum contingent deferred sales charge will be equal to 7% of the lesser
of (1) the total of all premium-payments made within 7 contract years (84
months) prior to the date of request for withdrawal or surrender; or (2) the
amount withdrawn or surrendered.
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Annual Contract Fee: $35.00(2)
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SEPARATE ACCOUNT LEVEL ANNUAL EXPENSES
(as a percentage of daily net asset value)
<TABLE>
<CAPTION>
Contracts
Contracts Contracts Contracts with with Contract
without Contracts with Contract 7 Year Anniversary
Enhanced with 7 Year Anniversary Enhanced Death Enhanced Death
Death Enhanced Enhanced Death Contracts with Benefit and Benefit and
Benefit Death Benefit Benefit Living Benefit Living Benefit Living Benefit
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Mortality & Expense Risk Charge 1.05% 1.05% 1.05% 1.05% 1.05% 1.05%
- ------------------------------------------------------------------------------------------------------------------------------------
Other Separate Account Fees
Administrative Charge 0.20% 0.20% 0.20% 0.20% 0.20% 0.20%
- ------------------------------------------------------------------------------------------------------------------------------------
Enhanced Death Benefit/
Living Benefit Charge 0.00% 0.20% 0.25% 0.25% 0.45% 0.50%
- ------------------------------------------------------------------------------------------------------------------------------------
Subtotal Other Separate Account Fees 0.20% 0.40% 0.45% 0.45% 0.65% 0.70%
====================================================================================================================================
Total Separate Account Level Annual Expenses 1.25% 1.45% 1.50% 1.50% 1.70% 1.75%
</TABLE>
Expenses
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The tables will assist you in understanding the various costs and expenses
of the Separate Account and its underlying Funds. The accompanying Fund
prospectuses provide a more complete description of the various costs and
expenses.
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E X P E N S E T A B L E P R O S P E C T U S 3
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<PAGE>
ANNUAL EXPENSES OF THE FUNDS(3)
(as a percentage of average net assets)
Total fund
Management Other operating
fees expenses expenses
================================================================================
The Guardian Cash Fund .50% .03% .53%
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The Guardian Bond Fund(4) .50% .07% .57%
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The Guardian Stock Fund .50% .02% .52%
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The Guardian Small Cap Stock Fund .75% .08% .83%
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The Guardian VC 500 Index Fund(5) .25% .03% .28%
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The Guardian VC Asset Allocation Fund(6) .50% .17% .67%
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The Guardian VC High Yield Bond Fund(7) .60% .54% 1.14%
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Baillie Gifford International Fund .80% .16% .96%
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Baillie Gifford Emerging Markets Fund 1.00% .44% 1.44%
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Value Line Centurion Fund(8) .50% .09% .59%
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Value Line Strategic Asset Management Trust(8) .50% .08% .58%
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Gabelli Capital Asset Fund 1.00% .08% 1.08%
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AIM V.I. Capital Appreciation Fund .62% .11% .73%
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AIM V.I. Global Utilities Fund .65% .49% 1.14%
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AIM V.I. Government Securities Fund .50% .40% .90%
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AIM V.I. Value Fund .61% .15% .76%
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Davis Financial Portfolio(9) .75% .25% 1.00%
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Davis Real Estate Portfolio(9) .75% .25% 1.00%
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Davis Value Portfolio(9) .75% .25% 1.00%
================================================================================
(1) After the first contract year, and during the first contract year if you
purchased your contract on or after May 1, 2000 (if available in your
state), you may withdraw in each contract year, without a deferred sales
charge, the greater of: (i) the excess of the accumulation value on the
date of withdrawal over the aggregate net premium payments that have not
been previously withdrawn, or (ii) 10% of the total premium payments made,
minus the aggregate amount of all prior partial withdrawals made in such
contract year. For contracts issued in Section 1035 exchanges,
trustee-to-trustee transfers, in certain IRA transfers or rollovers, or to
Charitable Remainder Trusts, this privilege may also be exercised in the
first contract year.
(2) Where required by state law, this fee may be lower.
(3) These percentages reflect the actual fees and expenses incurred by each
Fund during the year ended December 31, 1999 except for Janus Aspen Funds
and Guardian VC 500 Index Fund whose expenses are restated as described
below.
(4) Expenses reflected include interest expense. If interest expense were not
included, total expenses would be 0.55%.
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4 P R O S P E C T U S E X P E N S E T A B L E
- ----------------------
<PAGE>
Total fund
Management Other operating
fees expenses expenses
================================================================================
Fidelity VIP II Contrafund Portfolio(10) .59% .16% .75%
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Fidelity VIP Equity-Income Portfolio(10) .49% .17% .66%
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Fidelity VIP III Growth Opportunities
Portfolio(10) .59% .19% .78%
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Fidelity VIP III Mid Cap Portfolio(10) .59% .48% 1.07%
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Janus Aspen Aggressive Growth Portfolio(11) .65% .02% .67%
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Janus Aspen Capital Appreciation Portfolio(11) .65% .04% .69%
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Janus Aspen Growth Portfolio(11) .65% .02% .67%
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Janus Aspen Worldwide Growth Portfolio(11) .65% .05% .70%
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MFS Emerging Growth Series(12) .75% .09% .84%
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MFS Growth With Income Series .75% .13% .88%
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MFS New Discovery Series(12) .90% .27% 1.17%
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MFS Research Series(12) .75% .11% .86%
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MFS Total Return Series(12) .75% .15% .90%
================================================================================
(5) Expenses are based upon expenses for the fiscal year ended December 31,
1999, restated to reflect a reduction in the management fee for the Fund.
Expenses for the year ended December 31, 1999 were 0.29% after applicable
waivers and expense reimbursements, and 0.36% before applicable waivers
and expense reimbursements.
(6) Expenses do not include expenses of the underlying funds in which the
Guardian VC Asset Allocation Fund invests its assets. Including the
expense of the underlying funds, the Fund's total expenses would be 0.98%.
(7) Expenses reflected have not been grossed up to include the effects of
custody credits received by the Fund. With these credits, total expenses
would have been 0.99%.
(8) Total expenses have been grossed up to include custody credit
arrangements. However, the credit received does not affect the Funds'
total expenses. The operational expenses for Value Line Strategic Asset
Management Trust and Value Line Centurion Fund reflect expense
reimbursements paid by those funds to us for certain administrative and
shareholder servicing expenses that we incur on their behalf. For the year
ended December 31, 1999, we were reimbursed $857,868 by Value Line
Strategic Asset Management Trust, and $586,401 by Value Line Centurion
Fund.
(9) Had the adviser not absorbed certain expenses, the ratio of expenses to
average net assets would have been 2.29%, 4.24%, and 11.70% for Davis
Value Portfolio, Davis Financial Portfolio and Davis Real Estate
Portfolio, respectively.
(10) The expenses shown for Fidelity VIP II Contrafund Portfolio, Fidelity VIP
Equity-Income Portfolio, Fidelity VIP III Growth Opportunities Portfolio
and Fidelity VIP III Mid Cap Portfolio reflect varying arrangements
between these Funds and third parties who have either paid or reduced a
portion of the Funds' expenses. Without these reimbursements, total
expenses would have been .78%, .67%, .79% and 1.10% respectively.
(11) Expenses are based upon expenses for the fiscal year ended December 31,
1999, restated to reflect a reduction in the management fee for Janus
Aspen Growth, Janus Aspen Aggressive Growth, Janus Aspen Capital
Appreciation, and Janus Aspen Worldwide Growth Portfolios. All expenses
are shown without the effect of expense offset arrangements.
(12) The MFS Funds have expense offset arrangements which reduce their
custodian fees based upon the amount of cash maintained by each Fund with
its custodian. The "Total expenses" in the table do not take into account
this expense reduction and are therefore higher than the actual expenses
of each Fund. The expenses shown for MFS New Discovery Series reflect an
agreement by the Fund's adviser to bear expenses, subject to reimbursement
by the Fund, such that the Fund's "Other Expenses" will not exceed 0.25%
of the Fund's average daily net assets during 1999. Reimbursement by the
Fund will be accomplished by the payment of an expense reimbursement fee
by the Fund to the Adviser, subject to the maximum of 0.25% described
above. Effective May 1, 2000, the adviser has contractually agreed,
subject to reimbursement, to bear expenses for the New Discovery Series
such that the New Discovery Series' "Other expenses" (after taking into
effect expense offset arrangements referred to above) will not exceed
0.15%. This arrangement will continue until at least May 1, 2001, unless
changed with the consent of the board of trustees which oversees the
Series.
----------------------
S U M M A R Y 5 P R O S P E C T U S
----------------------
<PAGE>
Comparison of contract expenses among underlying funds
BC = Basic Contract
CAEDB = Contract Anniversary Enhanced Death Benefit
LB = Living Benefit
CAEDB plus LB = Contract Anniversary Enhanced Death Benefit plus Living Benefit
If you surrender your contract at the end of the applicable time period, you
would pay the following expenses on a $1,000 investment, assuming a 5% annual
return on assets.
<TABLE>
<CAPTION>
1 Yr. 3 Yrs. 5 Yrs. 10 Yrs.
===================== ===================== ===================== =====================
CAEDB CAEDB CAEDB CAEDB CAEDB CAEDB CAEDB CAEDB
BC OR LB plus LB BC OR LB plus LB BC OR LB plus LB BC OR LB plus LB
======================================== ===== ===== ======= ===== ===== ======= ===== ===== ======= ===== ===== =======
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
The Guardian Cash Fund 90 92 95 110 118 126 134 147 160 225 252 278
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
The Guardian Bond Fund 90 93 95 112 120 128 136 149 163 229 256 282
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
The Guardian Stock Fund 89 92 95 110 118 126 133 147 160 224 251 277
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
The Guardian Small Cap Stock Fund 93 95 98 120 128 136 150 163 176 257 283 309
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
The Guardian VC 500 Index Fund 87 90 92 103 110 118 120 134 147 197 225 252
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
The Guardian VC Asset Allocation Fund 91 94 96 115 123 131 141 155 168 240 267 293
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
The Guardian VC High Yield Bond Fund 96 99 101 130 138 145 166 179 192 290 315 340
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
Baillie Gifford International Fund 94 97 99 124 132 140 157 170 183 271 297 322
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
Baillie Gifford Emerging Markets Fund 99 102 104 139 147 155 182 195 207 320 345 369
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
Value Line Centurion Fund 90 93 95 112 120 128 137 150 164 231 258 284
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
Value Line Strategic Asset Management
Trust 90 93 95 112 120 128 137 150 163 230 257 283
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
Gabelli Capital Asset Fund 95 98 101 128 136 144 163 176 189 283 309 334
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
AIM V.I. Capital Appreciation Fund 92 94 97 117 125 133 145 158 171 246 273 299
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
AIM V.I. Global Utilities Fund 96 99 101 130 138 145 166 179 192 290 315 340
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
AIM V.I. Government Securities Fund 93 96 99 122 130 138 154 167 180 265 291 316
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
AIM V.I. Value Fund 92 95 97 118 126 134 146 159 172 250 276 302
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
Davis Financial Portfolio 94 97 100 125 133 141 159 172 185 275 301 326
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
Davis Real Estate Portfolio 94 97 100 125 133 141 159 172 185 275 301 326
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
Davis Value Portfolio 94 97 100 125 133 141 159 172 185 275 301 326
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
Fidelity VIP II Contrafund Portfolio 92 94 97 117 125 133 146 159 172 249 275 301
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
Fidelity VIP Equity-Income Portfolio 91 94 96 115 123 130 141 154 167 239 266 292
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
Fidelity VIP III Growth Opportunities
Portfolio 92 95 97 118 126 134 147 160 174 252 278 304
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
Fidelity VIP III Mid Cap Portfolio 95 98 100 128 135 143 163 176 188 282 308 333
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
Janus Aspen Aggressive Growth Portfolio 91 94 96 115 123 131 141 155 168 240 267 293
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
Janus Aspen Capital Appreciation
Portfolio 91 94 96 116 123 131 142 156 169 242 269 295
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
Janus Aspen Growth Portfolio 91 94 96 115 123 131 141 155 168 240 267 293
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
Janus Aspen Worldwide Growth Portfolio 91 94 97 116 124 132 143 156 169 243 270 296
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
MFS Emerging Growth Series 93 95 98 120 128 136 150 164 177 258 284 310
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
MFS Growth With Income Series 93 96 98 122 129 137 153 166 179 262 289 314
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
MFS New Discovery Series 96 99 102 131 139 146 168 181 194 293 318 343
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
MFS Research Series 93 96 98 121 129 137 152 165 178 260 287 312
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
MFS Total Return Series 93 96 99 122 130 138 154 167 180 265 291 316
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
</TABLE>
- ----------------------
6 P R O S P E C T U S S U M M A R Y
- ----------------------
<PAGE>
If you do not surrender your contract at the end of the applicable time period,
you would pay the following expenses on a $1,000 investment, assuming a 5%
annual return on assets.
<TABLE>
<CAPTION>
1 Yr. 3 Yrs. 5 Yrs. 10 Yrs.
===================== ===================== ===================== =====================
CAEDB CAEDB CAEDB CAEDB CAEDB CAEDB CAEDB CAEDB
BC OR LB plus LB BC OR LB plus LB BC OR LB plus LB BC OR LB plus LB
======================================== ===== ===== ======= ===== ===== ======= ===== ===== ======= ===== ===== =======
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
The Guardian Cash Fund 20 22 25 60 68 76 104 117 130 225 252 278
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
The Guardian Bond Fund 20 23 25 62 70 78 106 119 133 229 256 282
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
The Guardian Stock Fund 19 22 25 60 68 76 103 117 130 224 251 277
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
The Guardian Small Cap Stock Fund 23 25 28 70 78 86 120 133 146 257 283 309
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
The Guardian VC 500 Index Fund 17 20 22 53 60 68 90 104 117 197 225 252
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
The Guardian VC Asset Allocation Fund 21 24 26 65 73 81 111 125 138 240 267 293
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
The Guardian VC High Yield Bond Fund 26 29 31 80 88 95 136 149 162 290 315 340
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
Baillie Gifford International Fund 24 27 29 74 82 90 127 140 153 271 297 322
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
Baillie Gifford Emerging Markets Fund 29 32 34 89 97 105 152 165 177 320 345 369
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
Value Line Centurion Fund 20 23 25 62 70 78 107 120 134 231 258 284
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
Value Line Strategic Asset Management
Trust 20 23 25 62 70 78 107 120 133 230 257 283
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
Gabelli Capital Asset Fund 25 28 31 78 86 94 133 146 159 283 309 334
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
AIM V.I. Capital Appreciation Fund 22 24 27 67 75 83 115 128 141 246 273 299
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
AIM V.I. Global Utilities Fund 26 29 31 80 88 95 136 149 162 290 315 340
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
AIM V.I. Government Securities Fund 23 26 29 72 80 88 124 137 150 265 291 316
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
AIM V.I. Value Fund 22 25 27 68 76 84 116 129 142 250 276 302
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
Davis Financial Portfolio 24 27 30 75 83 91 129 142 155 275 301 326
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
Davis Real Estate Portfolio 24 27 30 75 83 91 129 142 155 275 301 326
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
Davis Value Portfolio 24 27 30 75 83 91 129 142 155 275 301 326
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
Fidelity VIP II Contrafund Portfolio 22 24 27 67 75 83 116 129 142 249 275 301
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
Fidelity VIP Equity-Income Portfolio 21 24 26 65 73 80 111 124 137 239 266 292
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
Fidelity VIP III Growth Opportunities
Portfolio 22 25 27 68 76 84 117 130 144 252 278 304
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
Fidelity VIP III Mid Cap Portfolio 25 28 30 78 85 93 133 146 158 282 308 333
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
Janus Aspen Aggressive Growth Portfolio 21 24 26 65 73 81 111 125 138 240 267 293
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
Janus Aspen Capital Appreciation
Portfolio 21 24 26 66 73 81 112 126 139 242 269 295
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
Janus Aspen Growth Portfolio 21 24 26 65 73 81 111 125 138 240 267 293
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
Janus Aspen Worldwide Growth Portfolio 21 24 27 66 74 82 113 126 139 243 270 296
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
MFS Emerging Growth Series 23 25 28 70 78 86 120 134 147 258 284 310
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
MFS Growth With Income Series 23 26 28 72 79 87 123 136 149 262 289 314
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
MFS New Discovery Series 26 29 32 81 89 96 138 151 164 293 318 343
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
MFS Research Series 23 26 28 71 79 87 122 135 148 260 287 312
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
MFS Total Return Series 23 26 29 72 80 88 124 137 150 265 291 316
- ---------------------------------------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
</TABLE>
----------------------
E X P E N S E T A B L E P R O S P E C T U S 7
----------------------
<PAGE>
The comparison of Fund expenses assumes that the expenses incurred during the
periods shown will be the same as those reported in the Expense Table above. The
comparison does not represent past or future expenses. Actual expenses may be
higher or lower than those shown. The effect of the annual contract
administration fee was calculated by: (1) dividing the total contract
administration fees for the year ended December 31, 1999 by total average net
assets for the year; (2) adding this percentage to annual expenses; and (3)
calculating the dollar amounts. In addition, annuity taxes currently imposed by
certain states and municipalities on premium payments will reduce the amount of
each premium payment available for allocation under the contract.
- --------------------------------------------------------------------------------
THE GUARDIAN INSURANCE & ANNUITY COMPANY, INC.
The Guardian Insurance & Annuity Company, Inc. (GIAC) is a stock life insurance
company incorporated in the state of Delaware in 1970. GIAC, which issues the
contracts offered with this prospectus, is licensed to conduct an insurance
business in all 50 states of the United States and the District of Columbia. The
company had total assets of over $11.8 billion as of December 31, 1999. Its
financial statements appear in the Statement of Additional Information.
GIAC's executive office is located at 7 Hanover Square, New York, New York
10004. The mailing address of the GIAC Customer Service Office, which
administers these contracts, is P.O. Box 26210, Lehigh Valley, Pennsylvania
18002.
GIAC is wholly owned by The Guardian Life Insurance Company of America (Guardian
Life), a mutual life insurance company organized in the State of New York in
1860. As of December 31, 1999, Guardian Life had total assets in excess of $16.8
billion. Guardian Life does not issue the contracts offered under this
prospectus and does not guarantee the benefits they provide.
- --------------------------------------------------------------------------------
- ----------------------
8 P R O S P E C T U S E X P E N S E T A B L E
- ----------------------
<PAGE>
- --------------------------------------------------------------------------------
BUYING A CONTRACT
- --------------------------------------------------------------------------------
THE APPLICATION FORM
If you would like to buy a contract, you must complete and sign the application
form. You or your agent then must send it, along with your initial premium
payment, by regular U.S. mail to the following address:
The Guardian Insurance & Annuity Company, Inc.
Customer Service Office
P.O. Box 26210
Lehigh Valley, Pennsylvania 18002
If you wish to send your application and payment by certified, registered or
express mail, please address it to:
The Guardian Insurance & Annuity Company, Inc.
Customer Service Office
3900 Burgess Place
Bethlehem, Pennsylvania 18017
Our decision to accept or reject your application is based on administrative
rules such as whether you have completed the form completely and accurately. We
have the right to reject any application or initial premium payment for any
reason.
If we accept your application as received, we will credit your net premium
payment to your new contract within two business days. If your application is
not complete within five business days of our receiving it, we will return it to
you along with your payment.
PAYMENTS
We require a minimum initial premium payment of $500. Thereafter, the minimum
additional payment is $100. However, if you purchase a contract through an
employer payroll deduction plan, we will accept purchase payments below $100. We
will not accept an initial premium payment greater than $2,000,000 without prior
permission from an authorized officer of GIAC. Without our written consent,
total flexible premium payments made in any contract year after the first may
not exceed $1,000,000.
----------------------
B U Y I N G A C O N T R A C T P R O S P E C T U S 9
----------------------
<PAGE>
- --------------------------------------------------------------------------------
THE ACCUMULATION PERIOD
- --------------------------------------------------------------------------------
Accumulation units
- --------------------------------------------------------------------------------
The value of accumulation units will vary as you earn interest in the
fixed-rate option or as the value of investments rises and falls in the
variable investment options.
HOW WE ALLOCATE YOUR PREMIUM PAYMENTS
After we receive your initial premium payment and issue a contract to you, we
will normally credit subsequent net premium payments to your contract on the
same day we receive them, provided we receive them prior to the close of our
regular business day.
If we receive your payment on a non-business day, or after our close, we will
normally credit it on the next business day. If required in your state or
municipality, annuity taxes are deducted from your payment before we credit it
to your contract. We call the amount remaining after this deduction the net
premium payment.
We use your net premium payments to purchase accumulation units in the variable
investment options you have chosen or in the fixed-rate option, according to
your instructions in the application or as later changed. The prices of
accumulation units are set daily because they change along with the share values
of the Funds you invest in. The amount you pay for each unit will be the next
price calculated after we receive and accept your payment.
The value of accumulation units will vary as you earn interest in the fixed-rate
option or as the value of investments rises and falls in the variable investment
options.
You can change your investment option selections by notifying us in writing. We
will apply your new instructions to subsequent net premium payments after we
receive and accept them. Please remember that you cannot invest in more than 20
variable investment options, or 19 variable investment options and the
fixed-rate option, at any given time.
THE SEPARATE ACCOUNT
GIAC has established a Separate Account, known as Separate Account E, to receive
and invest your premium payments in the variable investment options. The
Separate Account has 32 investment divisions, corresponding to the 32 Funds
available to you. The performance of each division is based on the Fund in which
it invests.
The Separate Account was established by GIAC on September 26, 1996. It is
registered as a unit investment trust under the Investment Company Act of 1940
(the 1940 Act) and meets the definition of a separate account under federal
securities laws. State insurance law provides that the assets of the Separate
Account equal to its reserves and other liabilities are not chargeable with
GIAC's obligations except those under annuity contracts issued through the
Separate Account. Income, gains and losses of the Separate Account are kept
separate from other income, gains or losses of the contract owner.
- -----------------------
10 P R O S P E C T U S A C C U M U L A T I O N P E R I O D
- -----------------------
<PAGE>
Each investment division is administered and accounted for as part of the
general business of GIAC. Under Delaware law, the income and capital gains or
capital losses of each investment division, whether realized or unrealized, are
credited to or charged against the assets held in that division according to the
terms of each contract, without regard to other income, capital gains or capital
losses of the other investment divisions or of GIAC. Contract obligations are
GIAC's responsibility. According to Delaware insurance law, the assets of the
Separate Account are not chargeable with liabilities arising out of any other
business GIAC may conduct. Please see Financial Information: Federal tax
matters.
We have the right to make changes to the Separate Account, to the investment
divisions within it, and to the Fund shares they hold. These changes must be
made in a manner that is consistent with laws and regulations. When necessary,
we'll use this right to serve your best interests and to carry out the purposes
of the contract. Possible changes to the Separate Account and the investment
divisions include:
o deregistering the Separate Account under the 1940 Act
o operating the Separate Account as a management investment company, or in
another permissible form
o combining two or more Separate Accounts or investment divisions
o transferring assets between investment divisions, or into another Separate
Account, or into GIAC's general account
o modifying the contracts where necessary to preserve the favorable tax
treatment that owners of variable annuities currently receive under the
Internal Revenue Code
o eliminating the shares of any of the Funds and substituting shares of
another appropriate Fund
o adding to or suspending your ability to make allocations or transfers into
any variable investment option or the fixed-rate option.
VARIABLE INVESTMENT OPTIONS
You may choose to invest in a maximum of 20 of the 32 variable investment
options at any time. Each Fund is an open-end diversified management investment
company, registered with the Securities and Exchange Commission under the 1940
Act.
The Funds have different investment objectives which influence their risk and
return. The table below summarizes their main characteristics.
Variable investment options
- --------------------------------------------------------------------------------
You may choose to invest in a maximum of 20 of the 32 variable investment
options at any time.
-----------------------
A C C U M U L A T I O N P E R I O D P R O S P E C T U S 11
-----------------------
<PAGE>
Variable investment options
<TABLE>
<CAPTION>
Fund Investment objectives Typical investments
===========================================================================================================================
<S> <C> <C>
The Guardian Stock Fund Long-term growth of capital U.S. common stocks
- ---------------------------------------------------------------------------------------------------------------------------
The Guardian VC 500 Index Fund Seeks to match the investment performance Common stocks of companies in the S&P
of the Standard & Poor's 500 Corporate Index, which emphasizes large U.S.
Stock Price Index (the "S&P Index") companies
- ---------------------------------------------------------------------------------------------------------------------------
The Guardian Small Cap Stock Fund Long-term growth of capital U.S. common stocks of companies with
small market capitalization
- ---------------------------------------------------------------------------------------------------------------------------
The Guardian Bond Fund Maximum income without undue Investment grade debt obligations
risk of principal; capital appreciation
as a secondary objective
- ---------------------------------------------------------------------------------------------------------------------------
The Guardian VC High Yield Bond Fund Current income; capital appreciation is Corporate bonds and other debt
a secondary objective securities rated below investment
grade
- ---------------------------------------------------------------------------------------------------------------------------
The Guardian Cash Fund High level of current income consistent Money market instruments
with liquidity and preservation of capital
- ---------------------------------------------------------------------------------------------------------------------------
The Guardian VC Asset Allocation Fund Long-term total investment return Shares of The Guardian Stock Fund, The
consistent with moderate investment risk Guardian Bond Fund, and The Guardian
Cash Fund
- ---------------------------------------------------------------------------------------------------------------------------
Baillie Gifford International Fund Long-term capital appreciation Common stocks and convertible
securities issued by foreign companies
- ---------------------------------------------------------------------------------------------------------------------------
Baillie Gifford Emerging Markets Fund Long-term capital appreciation Common stocks and convertible
securities of emerging market
companies
- ---------------------------------------------------------------------------------------------------------------------------
Value Line Centurion Fund Long-term growth of capital U.S. common stocks with selections
based on rankings of the Value Line
Ranking System
- ---------------------------------------------------------------------------------------------------------------------------
Value Line Strategic Asset High total investment return (current U.S. common stocks with selections
Management Trust income and capital appreciation) based on rankings of the Value Line
consistent with reasonable risk Ranking System, bonds and money market
instruments
- ---------------------------------------------------------------------------------------------------------------------------
Gabelli Capital Asset Fund Growth of capital; current income as U.S. common stocks and convertible
a secondary objective securities
- ---------------------------------------------------------------------------------------------------------------------------
AIM V.I. Capital Appreciation Fund Growth of capital Common stocks of medium and
small-sized growth companies
- ---------------------------------------------------------------------------------------------------------------------------
AIM V.I. Global Utilities Fund High current income; growth of capital Common and preferred stocks of
as a secondary objective domestic or foreign public utilities
- ---------------------------------------------------------------------------------------------------------------------------
AIM V.I. Government Securities Fund Seeks a high current income consistent Debt securities issued, guaranteed or
with reasonable concern for safety of otherwise backed by the U.S. government
principal
- ---------------------------------------------------------------------------------------------------------------------------
AIM V.I. Value Fund Long-term growth of capital; income as a Equity securities judged to be
secondary objective undervalued by the investment adviser
- ---------------------------------------------------------------------------------------------------------------------------
Davis Financial Portfolio Growth of capital Common stocks of financial companies
- ---------------------------------------------------------------------------------------------------------------------------
Davis Real Estate Portfolio Total return through a combination of Securities issued by companies that
growth and income are "principally engaged" in real
estate
- ---------------------------------------------------------------------------------------------------------------------------
Davis Value Portfolio Growth of capital U.S. common stocks of companies with
at least $5 billion market
capitalization
- ---------------------------------------------------------------------------------------------------------------------------
Fidelity VIP II Contrafund Portfolio Long-term capital appreciation U.S. and foreign common stocks of
companies believed to be undervalued
- ---------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Equity-Income Portfolio Reasonable income; also considers Income-producing equity securities
potential for capital appreciation
- ---------------------------------------------------------------------------------------------------------------------------
Fidelity VIP III Growth Opportunities Capital growth U.S. and foreign common stocks
Portfolio
- ---------------------------------------------------------------------------------------------------------------------------
Fidelity VIP III Mid Cap Portfolio Long-term growth of capital Common stocks with medium market
capitalization, both U.S. and foreign
- ---------------------------------------------------------------------------------------------------------------------------
Janus Aspen Aggressive Growth Long-term growth of capital Equity securities of medium-sized
Portfolio companies; non-diversified
- ---------------------------------------------------------------------------------------------------------------------------
Janus Aspen Capital Appreciation Long-term growth of capital Equity securities of companies of any
Portfolio size; non-diversified
- ---------------------------------------------------------------------------------------------------------------------------
Janus Aspen Growth Portfolio Long-term growth of capital in a manner Common stocks of issuers of any size
consistent with preservation of capital
- ---------------------------------------------------------------------------------------------------------------------------
Janus Aspen Worldwide Growth Long-term growth of capital in a manner Common stocks of foreign and U.S.
Portfolio consistent with preservation of capital issuers; usually invests in at least
five countries, including the U.S.
- ---------------------------------------------------------------------------------------------------------------------------
MFS Emerging Growth Series Long-term growth of capital Common stocks of emerging growth
companies of any size
- ---------------------------------------------------------------------------------------------------------------------------
MFS Growth With Income Series Reasonable current income and long-term Equity securities issued by U.S. and
growth of capital and income foreign companies
- ---------------------------------------------------------------------------------------------------------------------------
MFS New Discovery Series To seek capital appreciation Equity securities of companies that
offer superior prospects for growth,
both U.S. and foreign
- ---------------------------------------------------------------------------------------------------------------------------
MFS Research Series Long-term growth of capital and future Equity securities of companies
income believed to possess better than average
prospects for long-term growth
- ---------------------------------------------------------------------------------------------------------------------------
MFS Total Return Series Above average income consistent with Broad list of securities, including
prudent employment of capital; as a a combination of equity and fixed-income,
secondary objective, to provide reasonable both U.S. and foreign
opportunity for growth of capital and
income
===========================================================================================================================
</TABLE>
Some of these Funds may not be available in your state.
Some Funds have similar investment objectives and policies to other funds
managed by the same adviser. However, the investment returns of the Funds may be
higher or lower than those of similar funds managed by the same adviser. There
is no assurance, and we make no representation, that the performance of any Fund
will be comparable to the performance of any other fund.
Some of these Funds are available under other separate accounts supporting
variable annuity contracts and variable life insurance policies of GIAC and
other companies. We do not anticipate any inherent conflicts with these
arrangements. However, it is possible that conflicts of interest may arise in
connection with the use of the same Funds under both variable life insurance
policies and variable annuity contracts, or issued by different companies. While
the Board of Directors of each Fund monitors activities in an effort to avoid or
- -----------------------
12 P R O S P E C T U S A C C U M U L A T I O N P E R I O D
- -----------------------
<PAGE>
correct any material irreconcilable conflicts of interest arising out of this
arrangement, we may also take actions to protect the interests of our contract
owners. See the accompanying Fund prospectuses for more information about
possible conflicts of interest.
Some investment advisers (or their affiliates) may pay us compensation for
administration, distribution or other expenses. Currently, these advisers
include Value Line, Inc., Massachusetts Financial Services Company, AIM
Advisors, Inc., Janus Capital Corporation, Fidelity Management & Research
Company, and Davis Selected Advisers, LP. The amount of compensation is usually
based on assets of the relevant variable investment options from contracts that
we issue, and some advisers may pay us more than others.
The Funds' investment advisers and their principal business addresses are shown
in the table below.
Investment advisers
<TABLE>
<CAPTION>
Investment adviser
Fund and principal business address
=====================================================================================
<S> <C>
The Guardian Stock Fund Guardian Investor Services Corporation
The Guardian Small Cap Stock Fund 7 Hanover Square
The Guardian Bond Fund New York, New York 10004
The Guardian Cash Fund
The Guardian VC 500 Index Fund
The Guardian VC Asset Allocation Fund
The Guardian VC High Yield Bond Fund
- -------------------------------------------------------------------------------------
Baillie Gifford International Fund Guardian Baillie Gifford Limited (Adviser)
Baillie Gifford Emerging Baillie Gifford Overseas Limited (Sub-adviser)
Markets Fund 1 Rutland Court
Edinburgh, Scotland EH3 8EY
- -------------------------------------------------------------------------------------
Value Line Centurion Fund Value Line, Inc.
Value Line Strategic Asset 220 East 42nd Street
Management Trust New York, New York 10017
- -------------------------------------------------------------------------------------
Gabelli Capital Asset Fund Gabelli Funds, LLC
One Corporate Center
Rye, New York 10580
- -------------------------------------------------------------------------------------
AIM V.I. Capital Appreciation Fund A I M Advisors, Inc.
AIM V.I. Global Utilities Fund 11 Greenway Plaza -- Suite 100
AIM V.I. Government Securities Fund Houston, Texas 77046-1173
AIM V.I. Value Fund
- -------------------------------------------------------------------------------------
Davis Financial Portfolio Davis Selected Advisers, LP
Davis Real Estate Portfolio 2949 East Elvira Road
Davis Value Portfolio Suite 101
Tucson, Arizona 85706
- -------------------------------------------------------------------------------------
Fidelity VIP II Contrafund Portfolio Fidelity Management & Research Company
Fidelity VIP Equity-Income Portfolio 82 Devonshire Street
Fidelity VIP III Growth Boston, Massachusetts 02109
Opportunities Portfolio
Fidelity VIP III Mid Cap Portfolio
- -------------------------------------------------------------------------------------
Janus Aspen Aggressive Growth Janus Capital Corporation
Portfolio 100 Fillmore Street
Janus Aspen Capital Appreciation Denver, Colorado 80206-4928
Portfolio
Janus Aspen Growth Portfolio
Janus Aspen Worldwide Growth
Portfolio
- -------------------------------------------------------------------------------------
MFS Growth With Income Series MFS Investment Management(R)
MFS Emerging Growth Series 500 Boylston Street
MFS New Discovery Series Boston, Massachusetts 02116
MFS Research Series
MFS Total Return Series
- -------------------------------------------------------------------------------------
</TABLE>
Before investing
- --------------------------------------------------------------------------------
Please read the accompanying Fund prospectuses carefully. They contain
important information on the investment objectives, policies, charges and
expenses of the Funds.
-----------------------
A C C U M U L A T I O N P E R I O D P R O S P E C T U S 13
-----------------------
<PAGE>
Fixed-rate option
- --------------------------------------------------------------------------------
In the fixed-rate option, we guarantee that the net premium payments you
invest will earn daily interest at a minimum annual rate of 3%.
FIXED-RATE OPTION
The fixed-rate option is not registered under the Securities Act of 1933 or as
an investment company under the 1940 Act, and is therefore not subject to the
provisions or restrictions of these Acts. However, the following disclosure
about the fixed-rate option may be subject to certain generally applicable
provisions of the federal securities laws regarding the accuracy and
completeness of statements not in prospectuses. The fixed-rate option may not be
available for allocation in all states in which the contracts are available.
In the fixed-rate option, we guarantee that the net premium payments you invest
will earn daily interest at a minimum annual rate of 3%. You can allocate all of
your net premium payments to this option, or you may choose it as one of your
investment selections. The value of your net premiums invested in the fixed-rate
option does not vary with the investment experience of any Fund. The money that
you put into your fixed-rate option becomes part of GIAC's general assets.
At certain times we may choose to pay interest at a rate higher than 3%, but we
aren't obliged to do so. Higher interest rates are determined at our discretion,
and we can change them prospectively without notice. We don't use a specific
formula to determine interest rates; rather we consider such factors as general
economic trends, current rates of return on our general account investments,
regulatory and tax requirements, and competitive factors. The rate of interest
we pay hasn't been limited by our Board of Directors.
Here are some of the important conditions that apply when we pay interest on
your investments in the fixed-rate option:
o The initial interest rate that we credit to your premiums or transfers
will be whatever rate is in effect on the date the amounts are allocated
to the fixed-rate option.
o This interest rate will continue until the next contract anniversary date
(unless you have elected Dollar Cost Averaging from the fixed-rate option
over a shorter period of time).
o At that time, all payments and transfers allocated to the fixed-rate
option during the previous year, together with interest earned, will be
credited with the rate of interest in effect on the renewal date, known as
the renewal rate.
- --------------------------------------------------------------------------------
When you buy a contract, please note:
o You can choose up to 20 investment options at any one time.
o If you select the fixed-rate option, you are limited to an additional 19
variable options.
o There are no initial sales charges on the premium payments that you
allocate to the variable investment options. However, there may be premium
tax charges.
o All of the dividends and capital gains distributions that are payable to
variable investment options are reinvested in shares of the applicable
Fund at the current net asset value.
o When the annuity period of the contract begins, we will apply your
accumulation value to a payment option in order to make annuity payments
to you.
o You can arrange to transfer your investments among the divisions by
notifying us in writing or by telephone. Currently, there is no fee for
this, but we reserve the right to charge a fee and to limit the number of
transactions.
> You can change beneficiaries as long as the annuitant is living.
- --------------------------------------------------------------------------------
- -----------------------
14 P R O S P E C T U S A C C U M U L A T I O N P E R I O D
- -----------------------
<PAGE>
o The renewal rate will be guaranteed until the next contract anniversary
date.
If your state's insurance department permits, your contract may have what's
known as a bailout rate. If the renewal rate set on any contract anniversary
date is less than the bailout rate, you can withdraw all or part of the money
you have invested in the fixed-rate option for at least one year from the
contract without incurring a deferred sales charge.
TRANSFERS
You can transfer money among variable investment options both before and after
the date annuity payments begin. You can also transfer to and from the
fixed-rate option, but only before the date annuity payments begin. Transfers
are subject to certain conditions, which are described below.
If you are considering a transfer, be sure to look into each option carefully
and make sure your decisions will help you to achieve your long-term investment
goals.
During the accumulation period and up to 30 days before the date annuity
payments are scheduled to begin, you can transfer all or part of your
accumulation value among the contract options. These transfers are subject to
the following rules:
o We permit transfers from the fixed-rate option to any variable investment
option only once each contract year, during the 30 days beginning on the
contract anniversary date. There is an exception for the dollar cost
averaging feature: amounts that have been on deposit in the fixed-rate
option longest will be transferred out first. The maximum yearly transfer
from the fixed-rate option is the greater of the following:
- 33 1/3% of the amount in the fixed-rate option on the applicable
contract anniversary date or
- $10,000, or
- the total dollar amount transferred from the fixed-rate option in
the previous contract year multiplied by 1.15
o Each transfer involving the variable investment options will be based on
the accumulation unit value that is next calculated after we have received
proper transfer instructions from you.
We will implement a transfer upon receiving your written or telephone
instructions in good order. If your request reaches our customer service office
before 3:30 p.m. Eastern time on a business day, we will normally implement it
that same day.
At this time, we do not limit the number of transfers you may make. However, we
have the right to limit the frequency of transfers to not more than once every
30 days.
Transfers
- --------------------------------------------------------------------------------
You can transfer money between variable investment options both before and
after the date annuity payments begin. You can also transfer to and from
the fixed-rate option, but only before the date annuity payments begin.
-----------------------
A C C U M U L A T I O N P E R I O D P R O S P E C T U S 15
-----------------------
<PAGE>
- --------------------------------------------------------------------------------
Personal security
When you call us, we will require identification of your contract as well as
your personal security code. We may accept transfer instructions from anyone who
can provide us with this information. Neither GIAC, Guardian Investor Services
Corporation, nor the Funds will be liable for any loss, damage, cost or expense
resulting from a telephone transfer we reasonably believe to be genuine. As a
result, you assume the risk of unauthorized or fraudulent telephone transfers.
We may record telephone conversations regarding transfers without disclosure to
the caller.
- --------------------------------------------------------------------------------
At this time, we do not charge for transfers; however, we do have the right to
impose a fee of up to $25 per transfer. We will deduct any transfer charges on a
pro-rata basis from the options you transfer from.
We require proper authorization to honor telephone transfer instructions. If you
would like this privilege, please complete a transfer authorization form, or
give us authorization on your application. Once we have your authorization on
file, you can carry out a telephone transfer by calling 1-800-533-0099 between
9:00 a.m. and 3:30 p.m. Eastern time on any business day when we are open.
During periods of drastic economic or market changes it may be difficult to
contact us to request a telephone transfer. At such times, please send your
transfer request by regular or express mail and we will process it using the
accumulation unit value first calculated after we receive the request. We have
the right to modify, suspend or discontinue telephone transfer privileges at any
time without prior notice.
After the date annuity payments begin, if you have a variable annuity option you
can transfer all or part of the value of your annuity among the variable
investment options only once each calendar year. No fixed-rate option transfers
are permitted.
SURRENDERS AND PARTIAL WITHDRAWALS
During the accumulation period and while the annuitant and all contract owners
are living, you can redeem your contract in whole. This is known as surrendering
the contract. If you redeem part of the contract, it's called a partial
withdrawal. We will not accept requests for surrenders or partial withdrawals
after the date annuity payments begin.
Your request for surrenders and partial withdrawals must be received in good
order. If you wish to surrender your contract, you must send us the contract or
we will not process the request. If you have lost the contract, we will require
an acceptable affidavit of loss.
To process a partial withdrawal, we will redeem enough accumulation units to
equal the dollar value of your request. When you surrender your contract, we
redeem all the units. For both transactions we use the unit value next
calculated after we receive a proper request from you. We will deduct any
applicable contract charges and deferred sales charges from the proceeds of a
surrender. In the case of a partial withdrawal, we will cash additional units to
cover these charges. If you have less than $500 left in your contract
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16 P R O S P E C T U S A C C U M U L A T I O N P E R I O D
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<PAGE>
- --------------------------------------------------------------------------------
Special restrictions
There are special restrictions on withdrawals from contracts issued in
connection with Section 403(b) qualified plans. Please see Financial
information: Federal tax matters for details about how withdrawals can be made
from these contracts.
- --------------------------------------------------------------------------------
after a partial withdrawal, we have the right to cancel the contract and pay you
the balance of the proceeds. This is called an involuntary surrender, and it may
be subject to any applicable contract charges and a deferred sales charge.
Please see Financial information: Federal tax matters.
Surrenders and partial withdrawals are subject to tax, and may be subject to
penalty taxes and mandatory federal income tax withholding. After the first
contract year, you are allowed to make an annual withdrawal from the contract
without paying a deferred sales charge in the following circumstances:
o If, on the date of withdrawal, the accumulation value is greater than the
total of the net premium payments that you have made (and not withdrawn),
you may withdraw the excess, or if greater,
o You may withdraw 10% of the total premium payments you have made, minus
the total of all the withdrawals you already made during that contract
year.
This withdrawal privilege can be exercised in the first contract year of the
following contracts:
o Contracts purchased on or after May 1, 2000 (this contract feature may not
be available in your state)
o trustee-to-trustee transfers
o Section 1035 exchanges
o IRA transfers
o rollovers from annuity contracts
o Charitable Remainder Trusts.
Unless you are making a withdrawal directly from the fixed-rate option in
accordance with the bailout provisions, we will cash accumulation units in the
following order:
o all variable accumulation units attributable to the investment divisions;
this will be done on a pro-rata basis unless you instruct us differently,
then
o all fixed accumulation units attributable to the fixed-rate option.
We will send you your payment within seven days of receiving a request from you
in good order. Please see the margin note Payments later in this section.
If you have a question about surrenders or withdrawals, please call us toll free
at 1-800-221-3253.
Surrenders and partial withdrawals
- --------------------------------------------------------------------------------
Surrenders and partial withdrawals are subject to tax, and may be subject
to penalty taxes and mandatory federal income tax withholding.
Programs to build your annuity
- --------------------------------------------------------------------------------
You may wish to take advantage of one of the programs we offer to help you
build a stronger annuity. These include dollar cost averaging and
portfolio rebalancing.
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A C C U M U L A T I O N P E R I O D P R O S P E C T U S 17
-----------------------
<PAGE>
- --------------------------------------------------------------------------------
Assigning contract interests
If the contract is part of a corporate retirement plan or an individual plan
under sections 401(a), 403(b) or 408 of the Internal Revenue Code, the contract
owner's interest in the contract cannot be assigned, unless the contract owner
is not the annuitant or the annuitant's employer. Assigned contract interests
may be treated as a taxable distribution to the contract owner. See Federal tax
matters for more information.
- --------------------------------------------------------------------------------
MANAGING YOUR ANNUITY
You may wish to take advantage of one of the programs we offer to help you build
a stronger annuity. These include dollar cost averaging and portfolio
rebalancing.
There is no fee for dollar cost averaging or portfolio rebalancing, but we have
the right to introduce one. We also have the right to modify or discontinue
these programs. We'll give you written notice if we do so.
Dollar Cost Averaging Programs
You can transfer specific amounts of money from one investment option to another
on a monthly basis, as opposed to investing the total amount at one time. This
approach may help lower your average dollar cost of investing over time.
However, there is no guarantee that dollar cost averaging will result in profits
or prevent losses.
If you wish to take advantage of this program, you must designate a dollar
amount to be transferred automatically out of either the Cash Fund investment
division or the fixed-rate option, but not from both. The money can go into one
or more of the other variable investment options or the fixed-rate option. The
rule still applies that you can invest in a maximum of only 20 options at one
time (this includes the required Cash Fund or fixed-rate option).
You can begin dollar cost averaging when you buy your contract or at any time
afterwards, until annuity payments begin, by completing the dollar cost
averaging election form and returning it to us. We must receive it in good order
at least three business days before the monthly anniversary date of when you
wish the transfers to begin.
You may select dollar cost averaging from the Cash Fund investment division for
periods of 12, 24 or 36 months. Dollar cost averaging from the fixed-rate option
may be selected for a period of 36 months. Your total accumulation value at the
time must be at least $10,000 for transfers over a 12-month period, and $20,000
for transfers over a 24 to 36 month period. Transfers will be made in the
amounts you designate and must be at least $100 per receiving contract
investment option.
Additionally, we may offer special rates of interest when you elect dollar cost
averaging for shorter periods from the fixed-rate option at the time your
contract is issued. Currently, we are offering special six transfer and twelve
transfer programs if you allocate $5,000 or more to the fixed-rate option at the
time your contract is issued.
- --------------------------------------------------------------------------------
Reports
At least twice each year, we send a report to each contract owner that contains
financial information about the Separate Account, according to applicable laws,
rules and regulations. Additionally, at least once each year, we send a
statement to each contract owner that reports the number of accumulation units
and their value under the contract.
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18 P R O S P E C T U S A C C U M U L A T I O N P E R I O D
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<PAGE>
Portfolio Rebalancing
Over time, you may find that the investment performance of certain Funds results
in a shift in your holdings beyond the percentage you originally allocated. If
this occurs, you may wish to use our portfolio rebalancing program to maintain a
desired asset allocation mix. If you choose, we will automatically transfer
amounts among your variable investment options to return them to the designated
percentages. We will process these transfers quarterly. To participate in this
program you must have an accumulation value of at least $10,000.
Payments
For all transactions, we can delay payment if the contract is being contested.
We may postpone any calculation or payment from the variable investment options
if:
o the New York Stock Exchange is closed for trading or trading has been
suspended, or
o the Securities and Exchange Commission restricts trading or determines
that a state of emergency exists which may make payment or transfer
impracticable.
-----------------------
S U M M A R Y P R O S P E C T U S 19
-----------------------
<PAGE>
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THE ANNUITY PERIOD
- --------------------------------------------------------------------------------
WHEN ANNUITY PAYMENTS BEGIN
You choose the month and year in which we will begin paying annuity benefits.
The first payment is made on the first day of the month. The date you choose
can't be later than the annuitant's 90th birthday, unless we have agreed. Please
note that this date may be determined by the retirement plan under which your
annuity contract was issued.
HOW YOUR ANNUITY PAYMENTS ARE CALCULATED
Your annuity payments will be fixed, variable or a combination of both,
depending on whether you have chosen a fixed-rate or a variable rate payment
option. Your payments are determined by the following:
o the table in your contract reflecting the nearest age of the annuitant
o the annuity payout option you choose
o the investment returns of the variable investment options you choose, if
you choose a variable payment option.
The number and amount of your annuity payments won't be affected by the
longevity of annuitants as a group. Nor will they be affected by an increase in
our expenses over the amount we have charged in your contract.
We will make annuity payments once a month, except as follows:
o Proceeds of less than $2,000 will be delivered in a single payment.
o We may change the schedule of installment payments to avoid payments of
less than $20.
If you choose a variable annuity payment, or a combination of variable and fixed
payments, variable annuity payments assume a 4% annual investment return. We
compare the assumed rate of 4% to the actual returns of the variable investment
options you have chosen:
o if the actual net annual return on investment equals 4% - the amount of
your variable annuity payments will not change
o if the actual net annual return on investment is greater than 4% - the
amount of your variable annuity payments will increase
o if the actual net annual return on investment is less than 4% - the amount
of your variable annuity payments will decrease.
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20 P R O S P E C T U S S U M M A R Y
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<PAGE>
VARIABLE ANNUITY PAYOUT OPTIONS
The payout options currently offered are discussed below. You can choose to have
annuity payments made under any one or a combination of the variable or
fixed-rate annuity payout options that are available. You can make your choice
at any time before your annuity payments begin. At any time, we may discontinue
any of these options or make additional options available.
All variable annuity payout options are designated with the letter "V." After
the first payment, the amount of variable annuity payments will increase or
decrease to reflect the value of your variable annuity units. The value of the
units will reflect the performance of the variable investment options chosen.
This is why the amount of each payment will vary.
There are a variety of payout options for you to choose from that we've
described below. If you do not make a choice, we will automatically select
Option V-2. You may change options if you wish, provided you do so before
payments begin.
OPTION V-1 - Life Annuity without Guaranteed Period
We make a payment once a month during the annuitant's lifetime, ending with the
payment preceding the annuitant's death. This option allows for the maximum
variable monthly payment because there is neither a guaranteed minimum number of
payments nor a provision for a death benefit for beneficiaries. It is possible
that an annuitant could receive only one payment, if he or she dies before the
date of the second payment.
OPTION V-2 - Life Annuity with 10-Year Guaranteed Period
We make a payment once a month during the annuitant's lifetime, but if the
annuitant dies before receiving 10 years' worth of payments (120), the remaining
payments will be made to the beneficiary. The beneficiary can then choose to
take all or part of the remaining payments in a lump sum at their current dollar
value. If the beneficiary dies while receiving the payments, the balance will be
paid in one sum at its current dollar value to the beneficiary's estate.
OPTION V-3 - Joint and Survivor Annuity
We make a payment once a month during the joint lifetimes of the annuitant and a
designated second person, the joint annuitant. If one dies, payments will
continue during the survivor's lifetime, but the amount of the payment will then
be reduced to two-thirds of the number of units paid out each month when both
parties were alive. It is possible that the joint annuitants could receive only
one payment if they both die before the date of the second payment.
Variable annuity payout options
- --------------------------------------------------------------------------------
o OPTION V-1 Life Annuity without Guaranteed Period
o OPTION V-2 Life Annuity with 10-Year Guaranteed Period
o OPTION V-3 Joint and Survivor Annuity
-----------------------
A N N U I T Y P E R I O D P R O S P E C T U S 21
-----------------------
<PAGE>
Fixed-rate annuity payout options
- --------------------------------------------------------------------------------
o OPTION F-1 Life Annuity without Guaranteed Period
o OPTION F-2 Life Annuity with 10-Year Guaranteed Period
o OPTION F-3 Joint and Survivor Annuity
FIXED-RATE ANNUITY PAYOUT OPTIONS
All Fixed Annuity Payout Options are designated by the letter "F."
OPTION F-1 - Life Annuity without Guaranteed Period
We make a fixed payment once a month during the annuitant's lifetime, ending
with the payment preceding the annuitant's death. This option offers the maximum
fixed payment because there is neither a guaranteed minimum number of fixed
monthly payments nor a provision for a death benefit for beneficiaries. It is
possible that the annuitant could receive only one payment if he or she dies
before the date of the second payment.
OPTION F-2 - Life Annuity with 10-Year Guaranteed Period
We make a fixed payment once a month during the annuitant's lifetime, but if the
annuitant dies before receiving 10 years worth of payments (120), the remaining
payments will be made to the beneficiary. The beneficiary can then choose to
take all or part of the remaining payments in a lump sum at their current dollar
value. If the beneficiary dies while receiving the payments, the balance will be
paid in one sum at its current dollar value to the beneficiary's estate.
OPTION F-3 - Joint and Survivor Annuity
We make a fixed payment once a month during the joint lifetimes of the annuitant
and a designated second person, the joint annuitant. If one dies, payments will
continue during the survivor's lifetime, but the amount of the payment will then
be reduced to two-thirds of the number of units paid out each month when both
parties were alive. It is possible that the joint annuitants could receive only
one payment if they both die before the date of the second payment.
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22 P R O S P E C T U S A N N U I T Y P E R I O D
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<PAGE>
- --------------------------------------------------------------------------------
OTHER CONTRACT FEATURES
- --------------------------------------------------------------------------------
DEATH BENEFITS
If you, or the annuitant you have named, dies before the date annuity payments
begin, we pay a death benefit. In addition, you have the option of buying an
enhanced death benefit rider which may provide a higher death benefit.
The regular death benefit is the greater of:
o The accumulation value of the contract at the end of the valuation period
during which we receive proof of death, minus any annuity taxes; or
o The total of all premiums paid, minus any partial withdrawals, any
deferred sales charges paid on any withdrawals and any annuity taxes.
For annuitants aged 75 or older on the contract's issue date, the death benefit
will be the accumulation value at the end of the valuation period during which
we receive proof of death, minus any annuity taxes.
We normally pay the death benefit within seven days of receiving in good order
proof of death. However, we have the right to defer the payment of other
contract benefits under certain circumstances. These are described under
Surrenders and partial withdrawals.
If the annuitant is not the contract owner and dies on or before the date that
annuity payments begin, we will pay the death benefits to the beneficiary. If
the beneficiary has also died, we will pay the benefits to the contingent
beneficiary. If a contingent beneficiary hasn't been named, then we will pay the
benefits to you, the contract owner. However, if you are no longer living, we
will pay the benefits to your estate.
If you are both the annuitant and the owner of the contract, and you die before
the date annuity payments begin, we will pay the death benefit to your
beneficiary, as described above. However, we must distribute your interest
according to the Special requirements outlined below. In this situation, your
beneficiary will become the new owner of the contract.
We will pay the death benefit in a lump sum unless:
o You have chosen a different annuity payout option for the death benefit.
We must receive notification of your choice at least three business days
before we pay out the proceeds.
o You, the contract owner, have not chosen a payout option and the
beneficiary has. Again, we must receive the beneficiary's request at least
three business days before we pay out the proceeds, and within a year of
the annuitant's death.
Death benefits
- --------------------------------------------------------------------------------
If you, or the annuitant you have named, dies before the date annuity
payments begin, we pay a death benefit. In addition, you have the option
of buying an enhanced death benefit rider which may provide a higher death
benefit.
-----------------------
A N N U I T Y P E R I O D P R O S P E C T U S 23
-----------------------
<PAGE>
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Primary annuitant
Please note that the primary annuitant is determined in accordance with Section
72(s) of the Internal Revenue Code, which states that he or she is the person
the events in the life of whom are of primary importance in affecting the timing
or amount of the payout under the contract.
- --------------------------------------------------------------------------------
If you are a contract owner but not the annuitant, and you die before the date
annuity payments begin, then any joint contract owner will become the new owner
of the contract. If you haven't named a joint contract owner, then your
beneficiary will become the new owner of the contract. In the event of any
contract owner's death, we must distribute all of the owner's interest in the
contract according to the Special requirements outlined below.
Generally, your beneficiaries will be taxed on the gain in your annuity
contract. Consult your tax adviser about the estate tax and income tax
consequences of your particular situation.
Special requirements
If the contract owner dies, the following rules apply.
If the beneficiary (or the sole surviving joint contract owner) is not your
spouse, and you die before the date annuity payments begin, then we must
distribute all of your interest in the contract within five years of your death.
These distribution requirements will be satisfied if any portion of the deceased
contract owner's interest:
o is payable to, or for the benefit of, any new contract owner, and
o will be distributed over the new contract owner's life, or over a period
not extending beyond the life expectancy of any new contract owner.
Under the above conditions, distributions must begin within one year of your
death.
If the beneficiary (or sole surviving joint contract owner) is your spouse, he
or she can continue the contract, assuming the role of contract owner.
If the owner of the contract is not an individual, then the primary annuitant
will be treated as the owner of the contract. In this situation, any change in
the annuitant will be treated as the death of the contract owner.
ENHANCED DEATH BENEFITS
When you buy your contract, you can choose to buy an enhanced death benefit
rider. If a death benefit is payable and one of these options is in force, the
beneficiary will receive either the death benefit described above or the
enhanced death benefit, whichever is greater.
Two riders are offered:
o the 7 Year Enhanced Death Benefit Rider which has a daily charge
based on an annual rate of 0.20% of the net assets of your variable
investment options.
o the Contract Anniversary Enhanced Death Benefit Rider, which has a
daily charge based on an annual rate of 0.25% of the net assets of
your variable investment options.
We may offer these riders to existing contract owners in the future. These
riders are available only in states where they have been approved.
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24 P R O S P E C T U S O T H E R C O N T R A C T F E A T U R E S
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<PAGE>
7 Year Enhanced Death Benefit Rider
The enhanced death benefit under this rider is calculated as follows:
o The accumulation value of the contract at the end of the reset date
immediately preceding the annuitant's death:
- Plus any premiums paid after the reset date
- Minus any partial withdrawals after the reset date
- Minus any deferred sales charges and annuity taxes.
The first reset date is on the seventh contract anniversary date. After this,
each reset date will be each seventh contract anniversary date after that (i.e.,
the 14th, 21st and 28th contract anniversaries, and so on).
Contract Anniversary Enhanced Death Benefit Rider
The enhanced death benefit under this rider is calculated as follows:
o the highest accumulation value of the contract on any contract anniversary
before the annuitant's 85th birthday:
- plus any premiums paid after that contract anniversary
- minus any partial withdrawals after that contract anniversary
- minus any deferred sales charges and annuity taxes
Owners who select this rider at the time their contract is issued may be
eligible for waivers of deferred sales charges. See Contract costs and
expenses - Contingent deferred sales charge.
We will terminate either enhanced death benefit rider on the earliest of the
following dates:
o the date the enhanced death benefit is paid out
o the date the contract terminates
o the date of the annuitant's 85th birthday
o the date annuity payments begin
o the date we receive a written termination request from you.
Once the rider is terminated, it cannot be reinstated.
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O T H E R C O N T R A C T F E A T U R E S P R O S P E C T U S 25
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<PAGE>
Living Benefit Rider (referred to as "Decade")
When you buy your contract, you can choose to buy a living benefit rider.
You will pay a daily charge for this rider based on an annual rate of 0.25% of
the net assets of your variable investment options.
This rider provides for a living benefit on the tenth contract
anniversary if the accumulation value of your contract on that date is less than
your initial premium payment, adjusted as described below for any partial
withdrawals you've made before that date. The living benefit amount you may
receive is equal to the amount by which the adjusted initial premium payment
exceeds your accumulation value on the tenth contract anniversary.
If you elect the living benefit rider, you will be subject to a number of
special rules while the rider is in force:
- We will not accept any additional premium payments into your
contract.
- You must allocate your net premiums at the time your contract is
issued among the following groupings of allocation options. Each
grouping is designated as an Asset Allocation Class.
10% - The Guardian Cash Fund or The Fixed-Rate Option
40% - The Guardian Bond Fund, AIM V.I. Government Securities Fund or The
Fixed-Rate Option.
40% - The Guardian Stock Fund, The Guardian VC 500 Index Fund, The
Guardian VC Asset Allocation Fund, The Guardian VC High Yield Bond
Fund, Baillie Gifford International Fund, Value Line Centurion
Fund, Value Line Strategic Asset Management Trust, Gabelli Capital
Asset Fund, AIM V.I. Capital Appreciation Fund, AIM V.I. Global
Utilities Fund, AIM V.I. Value Fund, Davis Real Estate Portfolio,
Davis Value Portfolio, Fidelity VIP II Contrafund Portfolio,
Fidelity VIP Equity-Income Portfolio, Fidelity VIP III Growth
Opportunities Portfolio, Janus Aspen Growth Portfolio, MFS Growth
With Income Series, MFS Total Return Series or MFS Research Series.
10% - The Guardian Small Cap Stock Fund, Baillie Gifford Emerging Markets
Fund, Davis Financial Portfolio, Fidelity VIP III Mid Cap
Portfolio, Janus Aspen Aggressive Growth Portfolio, Janus Aspen
Capital Appreciation Portfolio, Janus Aspen Worldwide Growth
Portfolio, MFS Emerging Growth Series, or MFS New Discovery Series.
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26 P R O S P E C T U S O T H E R C O N T R A C T F E A T U R E S
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<PAGE>
- On each quarterly anniversary, your accumulation value will be
rebalanced to the allocation percentage listed above. If necessary,
we will waive the usual fixed rate option transfer restrictions to
perform the rebalancing. Within each Allocation Class, we will make
shifts pro rata among the allocation options you have chosen for
that class at the time of the rebalancing.
- You may only make transfers to allocation options within the same
Asset Allocation Class.
- We will deduct any partial withdrawals from all allocation options
pro rata. You will not be able to choose the allocation options
from which withdrawals are made.
If you are eligible to receive the living benefit at the tenth contract
anniversary, the living benefit amount will be credited to The Guardian Cash
Fund variable investment option.
As mentioned above, for the purposes of calculating the living benefit, the
amount of the initial premium is adjusted for any partial withdrawals. Each
time you make a partial withdrawal, we will adjust the initial premium payment
amount by multiplying the initial premium payment amount (or, if the amount has
been previously adjusted, the adjusted initial premium payment amount) by
your withdrawal amount
-------------------------
the accumulation value of
your contract
We will terminate the living benefit rider on the earliest of the following
dates:
o the date we process any transaction requested by you that is
inconsistent with the special rules outlined above
o the date the annuitant dies
o the tenth contract anniversary
o the date the contract terminates
o the date annuity payments begin
o the date we receive a written termination request from you
This rider is only available if it is approved in your state. Once the
rider is terminated, it cannot be reinstated.
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O T H E R C O N T R A C T F E A T U R E S P R O S P E C T U S 27
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<PAGE>
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FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
The value of your account
- --------------------------------------------------------------------------------
To determine the value of your account, we multiply the number of
accumulation units in each option by the current unit value for the
option.
HOW WE CALCULATE UNIT VALUES
When you choose a variable investment option, you accumulate variable
accumulation units. With the fixed-rate option, you accumulate fixed
accumulation units. To calculate the number of accumulation units you buy with
each payment, we divide the amount you invest in each option by the value of
units in the option. We use the unit value next calculated after we have
received and accepted your payment. We calculate unit values at the close of
business of the New York Stock Exchange, usually at 4:00 p.m. Eastern time, each
day the Exchange is open for trading and GIAC is open for business.
To determine the value of your account, we multiply the number of accumulation
units in each option by the current unit value for the option.
The net investment factor is a measure of the investment experience of each
variable investment option. We determine the net investment factor for a given
valuation period as follows:
o At the end of the valuation period we add together the net asset value of
a Fund share and its portion of dividends and distributions made by the
Fund during the period
o We divide this total by the net asset value of the particular Fund share
calculated at the end of the preceding valuation period
o Finally we add up the daily charges (mortality and expense risks,
administrative expenses, any annuity taxes, and the enhanced death benefit
rider where applicable) and subtract them from the above total.
SUMMARY FINANCIAL INFORMATION ABOUT THE SEPARATE ACCOUNT
The following unit information is derived from the financial statements of
Separate Account E, which were audited by PricewaterhouseCoopers LLP,
independent accountants, for the year ended December 31, 1999. The data should
be read in conjunction with the financial statements, related notes and other
financial information from the Separate Account E's 1999 Annual Report to
contract owners which is incorporated by reference into the Statement of
Additional Information. A copy of the 1999 Annual Report to contract owners and
the Statement of Additional Information may be obtained by calling or writing
GIAC's Customer Service Office. The address and phone number appear on the cover
of this Prospectus.
The AIM V.I. Government Securities Fund is not presented in the table below
because it was not available under this contract until May 1, 2000.
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28 P R O S P E C T U S O T H E R C O N T R A C T F E A T U R E S
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<PAGE>
BASIC CONTRACT
Variable accumulation unit value
at beginning of period ($):
<TABLE>
<CAPTION>
Period from
Year ended Year ended Sep 15, 1997(1) to
Dec 31, 1999 Dec 31, 1998 Dec 31, 1997
Fund ($) ($) ($)
====================================================================================================
<S> <C> <C> <C>
The Guardian Cash Fund 10.506 10.121 10.00
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The Guardian Stock Fund 12.354 10.437 10.00
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The Guardian Bond Fund 10.993 10.299 10.00
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The Guardian Small Cap Stock Fund 9.605 10.320 10.00
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The Guardian VC 500 Index Fund 10.00 (3)
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The Guardian VC Asset Allocation Fund 10.00 (3)
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The Guardian VC High Yield Bond Fund 10.00 (3)
- ----------------------------------------------------------------------------------------------------
Gabelli Capital Asset Fund 12.137 11.002 10.00
- ----------------------------------------------------------------------------------------------------
Baillie Gifford International Fund 11.592 9.688 10.00
- ----------------------------------------------------------------------------------------------------
Baillie Gifford Emerging Markets Fund 6.097 8.431 10.00
- ----------------------------------------------------------------------------------------------------
Value Line Centurion Fund 12.185 9.680 10.00
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Value Line Strategic Asset Management Trust 12.904 10.253 10.00
- ----------------------------------------------------------------------------------------------------
AIM V.I. Capital Appreciation Fund 10.00 (2)
- ----------------------------------------------------------------------------------------------------
AIM V.I. Global Utilities Fund 10.00 (2)
- ----------------------------------------------------------------------------------------------------
AIM V.I. Value Fund 10.00 (2)
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Davis Financial Portfolio 10.00 (2)
- ----------------------------------------------------------------------------------------------------
Davis Real Estate Portfolio 10.00 (2)
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Davis Value Portfolio 10.00 (2)
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Fidlity VIP II Contrafund Portfolio 10.00 (2)
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Fidelity VIP Equity Income Portfolio 10.00 (2)
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Fidelity VIP III Growth Opportunities Portfolio 10.00 (2)
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Fidelity VIP III Mid Cap Portfolio 10.00 (2)
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Janus Aspen Aggressive Growth Portfolio 10.00 (2)
- ----------------------------------------------------------------------------------------------------
Janus Aspen Capital Appreciation Portfolio 10.00 (2)
- ----------------------------------------------------------------------------------------------------
Janus Aspen Growth Portfolio 10.00 (2)
- ----------------------------------------------------------------------------------------------------
Janus Aspen Worldwide Growth Portfolio 10.00 (2)
- ----------------------------------------------------------------------------------------------------
MFS Emerging Growth Series 10.00 (2)
- ----------------------------------------------------------------------------------------------------
MFS Growth With Income Series 12.756 10.560 10.00
- ----------------------------------------------------------------------------------------------------
MFS New Discovery Series 10.00 (2)
- ----------------------------------------------------------------------------------------------------
MFS Research Series 10.00 (2)
- ----------------------------------------------------------------------------------------------------
MFS Total Return Series 10.00 (2)
====================================================================================================
</TABLE>
(1) Commencement of operations of the Separate Account.
(2) Commencing July 6, 1999.
(3) Commencing September 13, 1999.
Variable accumulation unit value
at the end of period ($):
<TABLE>
<CAPTION>
Period from
Year ended Year ended Sep 15, 1997(1) to
Dec 31, 1999 Dec 31, 1998 Dec 31, 1997
Fund ($) ($) ($)
==============================================================================================
<S> <C> <C> <C>
The Guardian Cash Fund 10.870 10.506 10.121
- ----------------------------------------------------------------------------------------------
The Guardian Stock Fund 16.001 12.354 10.437
- ----------------------------------------------------------------------------------------------
The Guardian Bond Fund 10.765 10.993 10.299
- ----------------------------------------------------------------------------------------------
The Guardian Small Cap Stock Fund 12.808 9.605 10.320
- ----------------------------------------------------------------------------------------------
The Guardian VC 500 Index Fund 10.864
- ----------------------------------------------------------------------------------------------
The Guardian VC Asset Allocation Fund 10.760
- ----------------------------------------------------------------------------------------------
The Guardian VC High Yield Bond Fund 10.258
- ----------------------------------------------------------------------------------------------
Gabelli Capital Asset Fund 14.359 12.137 11.002
- ----------------------------------------------------------------------------------------------
Baillie Gifford International Fund 15.925 11.592 9.688
- ----------------------------------------------------------------------------------------------
Baillie Gifford Emerging Markets Fund 10.371 6.097 8.431
- ----------------------------------------------------------------------------------------------
Value Line Centurion Fund 15.429 12.185 9.680
- ----------------------------------------------------------------------------------------------
Value Line Strategic Asset Management Trust 15.842 12.904 10.253
- ----------------------------------------------------------------------------------------------
AIM V.I. Capital Appreciation Fund 13.121
- ----------------------------------------------------------------------------------------------
AIM V.I. Global Utilities Fund 12.400
- ----------------------------------------------------------------------------------------------
AIM V.I. Value Fund 11.279
- ----------------------------------------------------------------------------------------------
Davis Financial Portfolio 9.224
- ----------------------------------------------------------------------------------------------
Davis Real Estate Portfolio 8.864
- ----------------------------------------------------------------------------------------------
Davis Value Portfolio 10.199
- ----------------------------------------------------------------------------------------------
Fidelity VIP II Contrafund Portfolio 11.096
- ----------------------------------------------------------------------------------------------
Fidelity VIP Equity Income Portfolio 9.371
- ----------------------------------------------------------------------------------------------
Fidelity VIP III Growth Opportunities Portfolio 9.726
- ----------------------------------------------------------------------------------------------
Fidelity VIP III Mid Cap Portfolio 12.866
- ----------------------------------------------------------------------------------------------
Janus Aspen Aggressive Growth Portfolio 17.133
- ----------------------------------------------------------------------------------------------
Janus Aspen Capital Appreciation Portfolio 13.203
- ----------------------------------------------------------------------------------------------
Janus Aspen Growth Portfolio 12.264
- ----------------------------------------------------------------------------------------------
Janus Aspen Worldwide Growth Portfolio 14.493
- ----------------------------------------------------------------------------------------------
MFS Emerging Growth Series 15.566
- ----------------------------------------------------------------------------------------------
MFS Growth With Income Series 13.440 12.756 10.560
- ----------------------------------------------------------------------------------------------
MFS New Discovery Series 14.335
- ----------------------------------------------------------------------------------------------
MFS Research Series 11.324
- ----------------------------------------------------------------------------------------------
MFS Total Return Series 9.745
==============================================================================================
</TABLE>
(1) Commencement of operations of the Separate Account.
-----------------------
F I N A N C I A L I N F O R M A T I O N P R O S P E C T U S 29
-----------------------
<PAGE>
Number of variable accumulation units
outstanding at end of period:
<TABLE>
<CAPTION>
Period from
Year ended Year ended Sep 15, 1997(1) to
Dec 31, 1999 Dec 31, 1998 Dec 31, 1997
Fund
===============================================================================================
<S> <C> <C> <C>
The Guardian Cash Fund 3,621,007 1,863,035 236,194
- -----------------------------------------------------------------------------------------------
The Guardian Stock Fund 14,520,394 11,216,780 1,140,651
- -----------------------------------------------------------------------------------------------
The Guardian Bond Fund 1,979,764 1,405,204 80,998
- -----------------------------------------------------------------------------------------------
The Guardian Small Cap Stock Fund 1,425,465 1,564,027 219,901
- -----------------------------------------------------------------------------------------------
The Guardian VC 500 Index Fund 113,170
- -----------------------------------------------------------------------------------------------
The Guardian VC Asset Allocation Fund 41,897
- -----------------------------------------------------------------------------------------------
The Guardian VC High Yield Bond Fund 15,385
- -----------------------------------------------------------------------------------------------
Gabelli Capital Asset Fund 1,551,862 1,164,806 60,181
- -----------------------------------------------------------------------------------------------
Baillie Gifford International Fund 1,301,917 925,784 62,578
- -----------------------------------------------------------------------------------------------
Baillie Gifford Emerging Markets Fund 287,364 160,493 31,926
- -----------------------------------------------------------------------------------------------
Value Line Centurion Fund 1,958,842 820,180 65,085
- -----------------------------------------------------------------------------------------------
Value Line Strategic Asset Management Trust 6,322,183 3,577,617 241,130
- -----------------------------------------------------------------------------------------------
AIM V.I. Capital Appreciation Fund 154,399
- -----------------------------------------------------------------------------------------------
AIM V.I. Global Utilities Fund 39,656
- -----------------------------------------------------------------------------------------------
AIM V.I. Value Fund 1,129,019
- -----------------------------------------------------------------------------------------------
Davis Financial Portfolio 148,313
- -----------------------------------------------------------------------------------------------
Davis Real Estate Portfolio 13,467
- -----------------------------------------------------------------------------------------------
Davis Value Portfolio 722,104
- -----------------------------------------------------------------------------------------------
Fidelity VIP II Contrafund Portfolio 878,721
- -----------------------------------------------------------------------------------------------
Fidelity VIP Equity Income Portfolio 282,515
- -----------------------------------------------------------------------------------------------
Fidelity VIP III Growth Opportunities Portfolio 218,432
- -----------------------------------------------------------------------------------------------
Fidelity VIP III Mid Cap Portfolio 115,626
- -----------------------------------------------------------------------------------------------
Janus Aspen Aggressive Growth Portfolio 1,036,284
- -----------------------------------------------------------------------------------------------
Janus Aspen Capital Appreciation Portfolio 1,765,832
- -----------------------------------------------------------------------------------------------
Janus Aspen Growth Portfolio 888,418
- -----------------------------------------------------------------------------------------------
Janus Aspen Worldwide Growth Portfolio 636,892
- -----------------------------------------------------------------------------------------------
MFS Emerging Growth Series 190,540
- -----------------------------------------------------------------------------------------------
MFS Growth With Income Series 2,513,945 1,743,600 117,002
- -----------------------------------------------------------------------------------------------
MFS New Discovery Series 27,979
- -----------------------------------------------------------------------------------------------
MFS Research Series 37,056
- -----------------------------------------------------------------------------------------------
MFS Total Return Series 128,045
===============================================================================================
</TABLE>
(1) Commencement of operations of the Separate Account.
- -----------------------
30 P R O S P E C T U S F I N A N C I A L I N F O R M A T I O N
- -----------------------
<PAGE>
CONTRACT WITH 7 YEAR ENHANCED DEATH BENEFIT
Variable accumulation unit value
at beginning of period ($):
<TABLE>
<CAPTION>
Period from
Year ended Year ended Sep 15, 1997(1) to
Dec 31, 1999 Dec 31, 1998 Dec 31, 1997
Fund ($) ($) ($)
===============================================================================================
<S> <C> <C> <C>
The Guardian Cash Fund 10.478 10.115 10.00
- -----------------------------------------------------------------------------------------------
The Guardian Stock Fund 13.321 10.430 10.00
- -----------------------------------------------------------------------------------------------
The Guardian Bond Fund 10.964 10.292 10.00
- -----------------------------------------------------------------------------------------------
The Guardian Small Cap Stock Fund 9.579 10.314 10.00
- -----------------------------------------------------------------------------------------------
The Guardian VC 500 Index Fund 10.00 (3)
- -----------------------------------------------------------------------------------------------
The Guardian VC Asset Allocation Fund 10.00 (3)
- -----------------------------------------------------------------------------------------------
The Guardian VC High Yield Bond Fund 10.00 (3)
- -----------------------------------------------------------------------------------------------
Gabelli Capital Asset Fund 12.105 10.995 10.00
- -----------------------------------------------------------------------------------------------
Baillie Gifford International Fund 11.562 9.682 10.00
- -----------------------------------------------------------------------------------------------
Baillie Gifford Emerging Markets Fund 6.081 8.425 10.00
- -----------------------------------------------------------------------------------------------
Value Line Centurion Fund 12.153 9.674 10.00
- -----------------------------------------------------------------------------------------------
Value Line Strategic Asset Management Trust 12.870 10.246 10.00
- -----------------------------------------------------------------------------------------------
AIM V.I. Capital Appreciation Fund 10.00 (2)
- -----------------------------------------------------------------------------------------------
AIM V.I. Global Utilities Fund 10.00 (2)
- -----------------------------------------------------------------------------------------------
AIM V.I. Value Fund 10.00 (2)
- -----------------------------------------------------------------------------------------------
Davis Financial Portfolio 10.00 (2)
- -----------------------------------------------------------------------------------------------
Davis Real Estate Portfolio 10.00 (2)
- -----------------------------------------------------------------------------------------------
Davis Value Portfolio 10.00 (2)
- -----------------------------------------------------------------------------------------------
Fidelity VIP II Contrafund Portfolio 10.00 (2)
- -----------------------------------------------------------------------------------------------
Fidelity VIP Equity Income Portfolio 10.00 (2)
- -----------------------------------------------------------------------------------------------
Fidelity VIP III Growth Opportunities Portfolio 10.00 (2)
- -----------------------------------------------------------------------------------------------
Fidelity VIP III Mid Cap Portfolio 10.00 (2)
- -----------------------------------------------------------------------------------------------
Janus Aspen Aggressive Growth Portfolio 10.00 (2)
- -----------------------------------------------------------------------------------------------
Janus Aspen Capital Appreciation Portfolio 10.00 (2)
- -----------------------------------------------------------------------------------------------
Janus Aspen Growth Portfolio 10.00 (2)
- -----------------------------------------------------------------------------------------------
Janus Aspen Worldwide Growth Portfolio 10.00 (2)
- -----------------------------------------------------------------------------------------------
MFS Emerging Growth Series 10.00 (2)
- -----------------------------------------------------------------------------------------------
MFS Growth With Income Series 12.723 10.553 10.00
- -----------------------------------------------------------------------------------------------
MFS New Discovery Series 10.00 (2)
- -----------------------------------------------------------------------------------------------
MFS Research Series 10.00 (2)
- -----------------------------------------------------------------------------------------------
MFS Total Return Series 10.00 (2)
===============================================================================================
</TABLE>
(1) Commencement of operations of the Separate Account.
(2) Commencing July 6, 1999.
(3) Commencing September 13, 1999.
Variable accumulation unit value
at the end of period ($):
<TABLE>
<CAPTION>
Period from
Year ended Year ended Sep 15, 1997(1) to
Dec 31, 1999 Dec 31, 1998 Dec 31, 1997
Fund ($) ($) ($)
===============================================================================================
<S> <C> <C> <C>
The Guardian Cash Fund 10.820 10.478 10.115
- -----------------------------------------------------------------------------------------------
The Guardian Stock Fund 15.927 12.321 10.430
- -----------------------------------------------------------------------------------------------
The Guardian Bond Fund 10.715 10.964 10.292
- -----------------------------------------------------------------------------------------------
The Guardian Small Cap Stock Fund 12.749 9.579 10.314
- -----------------------------------------------------------------------------------------------
The Guardian VC 500 Index Fund 10.858
- -----------------------------------------------------------------------------------------------
The Guardian VC Asset Allocation Fund 10.754
- -----------------------------------------------------------------------------------------------
The Guardian VC High Yield Bond Fund 10.252
- -----------------------------------------------------------------------------------------------
Gabelli Capital Asset Fund 14.293 12.015 10.995
- -----------------------------------------------------------------------------------------------
Baillie Gifford International Fund 15.851 11.562 9.682
- -----------------------------------------------------------------------------------------------
Baillie Gifford Emerging Markets Fund 10.323 6.081 8.425
- -----------------------------------------------------------------------------------------------
Value Line Centurion Fund 15.358 12.153 9.674
- -----------------------------------------------------------------------------------------------
Value Line Strategic Asset Management Trust 15.769 12.870 10.246
- -----------------------------------------------------------------------------------------------
AIM V.I. Capital Appreciation Fund 13.107
- -----------------------------------------------------------------------------------------------
AIM V.I. Global Utilities Fund 12.388
- -----------------------------------------------------------------------------------------------
AIM V.I. Value Fund 11.268
- -----------------------------------------------------------------------------------------------
Davis Financial Portfolio 9.215
- -----------------------------------------------------------------------------------------------
Davis Real Estate Portfolio 8.855
- -----------------------------------------------------------------------------------------------
Davis Value Portfolio 10.188
- -----------------------------------------------------------------------------------------------
Fidelity VIP II Contrafund Portfolio 11.085
- -----------------------------------------------------------------------------------------------
Fidelity VIP Equity Income Portfolio 9.361
- -----------------------------------------------------------------------------------------------
Fidelity VIP III Growth Opportunities Portfolio 9.717
- -----------------------------------------------------------------------------------------------
Fidelity VIP III Mid Cap Portfolio 12.853
- -----------------------------------------------------------------------------------------------
Janus Aspen Aggressive Growth Portfolio 17.116
- -----------------------------------------------------------------------------------------------
Janus Aspen Capital Appreciation Portfolio 13.190
- -----------------------------------------------------------------------------------------------
Janus Aspen Growth Portfolio 12.251
- -----------------------------------------------------------------------------------------------
Janus Aspen Worldwide Growth Portfolio 14.478
- -----------------------------------------------------------------------------------------------
MFS Emerging Growth Series 15.550
- -----------------------------------------------------------------------------------------------
MFS Growth With Income Series 13.378 12.723 10.553
- -----------------------------------------------------------------------------------------------
MFS New Discovery Series 14.320
- -----------------------------------------------------------------------------------------------
MFS Research Series 11.313
- -----------------------------------------------------------------------------------------------
MFS Total Return Series 9.735
===============================================================================================
</TABLE>
(1) Commencement of operations of the Separate Account.
-----------------------
F I N A N C I A L I N F O R M A T I O N P R O S P E C T U S 31
-----------------------
<PAGE>
Number of variable accumulation units
outstanding at end of period:
<TABLE>
<CAPTION>
Period from
Year ended Year ended Sep 15, 1997(1) to
Dec 31, 1999 Dec 31, 1998 Dec 31, 1997
Fund
===============================================================================================
<S> <C> <C> <C>
The Guardian Cash Fund 2,185,124 1,193,443 251,513
- -----------------------------------------------------------------------------------------------
The Guardian Stock Fund 6,829,408 5,229,812 1,035,889
- -----------------------------------------------------------------------------------------------
The Guardian Bond Fund 877,200 714,752 45,208
- -----------------------------------------------------------------------------------------------
The Guardian Small Cap Stock Fund 821,061 977,859 235,639
- -----------------------------------------------------------------------------------------------
The Guardian VC 500 Index Fund 49,119
- -----------------------------------------------------------------------------------------------
The Guardian VC Asset Allocation Fund 19,481
- -----------------------------------------------------------------------------------------------
The Guardian VC High Yield Bond Fund 6,477
- -----------------------------------------------------------------------------------------------
Gabelli Capital Asset Fund 987,057 782,502 69,958
- -----------------------------------------------------------------------------------------------
Baillie Gifford International Fund 789,579 582,412 73,071
- -----------------------------------------------------------------------------------------------
Baillie Gifford Emerging Markets Fund 212,200 129,642 47,030
- -----------------------------------------------------------------------------------------------
Value Line Centurion Fund 734,392 345,803 46,080
- -----------------------------------------------------------------------------------------------
Value Line Strategic Asset Management Trust 2,869,022 1,764,143 218,490
- -----------------------------------------------------------------------------------------------
AIM V.I. Capital Appreciation Fund 58,378
- -----------------------------------------------------------------------------------------------
AIM V.I. Global Utilities Fund 50,258
- -----------------------------------------------------------------------------------------------
AIM V.I. Value Fund 389,988
- -----------------------------------------------------------------------------------------------
Davis Financial Portfolio 169,937
- -----------------------------------------------------------------------------------------------
Davis Real Estate Portfolio 4,942
- -----------------------------------------------------------------------------------------------
Davis Value Portfolio 409,555
- -----------------------------------------------------------------------------------------------
Fidelity VIP II Contrafund Portfolio 501,256
- -----------------------------------------------------------------------------------------------
Fidelity VIP Equity Income Portfolio 98,110
- -----------------------------------------------------------------------------------------------
Fidelity VIP III Growth Opportunities Portfolio 121,432
- -----------------------------------------------------------------------------------------------
Fidelity VIP III Mid Cap Portfolio 28,549
- -----------------------------------------------------------------------------------------------
Janus Aspen Aggressive Growth Portfolio 532,518
- -----------------------------------------------------------------------------------------------
Janus Aspen Capital Appreciation Portfolio 621,635
- -----------------------------------------------------------------------------------------------
Janus Aspen Growth Portfolio 309,594
- -----------------------------------------------------------------------------------------------
Janus Aspen Worldwide Growth Portfolio 318,242
- -----------------------------------------------------------------------------------------------
MFS Emerging Growth Series 75,946
- -----------------------------------------------------------------------------------------------
MFS Growth With Income Series 1,597,899 1,076,023 76,805
- -----------------------------------------------------------------------------------------------
MFS New Discovery Series 43,323
- -----------------------------------------------------------------------------------------------
MFS Research Series 19,166
- -----------------------------------------------------------------------------------------------
MFS Total Return Series 61,489
===============================================================================================
</TABLE>
(1) Commencement of operations of the Separate Account.
CONTRACT WITH CONTRACT ANNIVERSARY
ENHANCED DEATH BENEFIT (1)
Variable accumulation unit value
at beginning of period ($):
Year ended
Dec 31, 1999
================================================================================
The Guardian Cash Fund 10.00
- --------------------------------------------------------------------------------
The Guardian Stock Fund 10.00
- --------------------------------------------------------------------------------
The Guardian Bond Fund 10.00
- --------------------------------------------------------------------------------
The Guardian Small Cap Stock Fund 10.00
- --------------------------------------------------------------------------------
The Guardian VC 500 Index Fund 10.00
- --------------------------------------------------------------------------------
The Guardian VC Asset Allocation Fund 10.00
- --------------------------------------------------------------------------------
The Guardian VC High Yield Bond Fund 10.00
- --------------------------------------------------------------------------------
Gabelli Capital Asset Fund 10.00
- --------------------------------------------------------------------------------
Baillie Gifford International Fund 10.00
- --------------------------------------------------------------------------------
Baillie Gifford Emerging Markets Fund 10.00
- --------------------------------------------------------------------------------
Value Line Centurion Fund 10.00
- --------------------------------------------------------------------------------
Value Line Strategic Asset Management Trust 10.00
- --------------------------------------------------------------------------------
AIM V.I. Capital Appreciation Fund 10.00
- --------------------------------------------------------------------------------
AIM V.I. Global Utilities Fund 10.00
- --------------------------------------------------------------------------------
AIM V.I. Value Fund 10.00
- --------------------------------------------------------------------------------
Davis Financial Portfolio 10.00
- --------------------------------------------------------------------------------
Davis Real Estate Portfolio 10.00
- --------------------------------------------------------------------------------
Davis Value Portfolio 10.00
- --------------------------------------------------------------------------------
Fidelity VIP II Contrafund Portfolio 10.00
- --------------------------------------------------------------------------------
Fidelity VIP Equity Income Portfolio 10.00
- --------------------------------------------------------------------------------
Fidelity VIP III Growth Opportunities Portfolio 10.00
- --------------------------------------------------------------------------------
Fidelity VIP III Mid Cap Portfolio 10.00
- --------------------------------------------------------------------------------
Janus Aspen Aggressive Growth Portfolio 10.00
- --------------------------------------------------------------------------------
Janus Aspen Capital Appreciation Portfolio 10.00
- --------------------------------------------------------------------------------
Janus Aspen Growth Portfolio 10.00
- --------------------------------------------------------------------------------
Janus Aspen Worldwide Growth Portfolio 10.00
- --------------------------------------------------------------------------------
MFS Emerging Growth Series 10.00
- --------------------------------------------------------------------------------
MFS Growth with Income Series 10.00
- --------------------------------------------------------------------------------
MFS New Discovery Series 10.00
- --------------------------------------------------------------------------------
MFS Research Series 10.00
- --------------------------------------------------------------------------------
MFS Total Return Series 10.00
================================================================================
(1) The Contract Anniversary Enhanced Death Benefit Rider became available
under this contract commencing September 13, 1999.
Variable accumulation unit value
at end of period ($):
Year ended
Dec 31, 1999
================================================================================
The Guardian Cash Fund 10.111
- --------------------------------------------------------------------------------
The Guardian Stock Fund 12.016
- --------------------------------------------------------------------------------
The Guardian Bond Fund 10.028
- --------------------------------------------------------------------------------
The Guardian Small Cap Stock Fund 13.426
- --------------------------------------------------------------------------------
The Guardian VC 500 Index Fund 10.856
- --------------------------------------------------------------------------------
The Guardian VC Asset Allocation Fund 10.752
- --------------------------------------------------------------------------------
The Guardian VC High Yield Bond Fund 10.250
- --------------------------------------------------------------------------------
Gabelli Capital Asset Fund 10.597
- --------------------------------------------------------------------------------
Baillie Gifford International Fund 12.303
- --------------------------------------------------------------------------------
Baillie Gifford Emerging Markets Fund 13.380
- --------------------------------------------------------------------------------
Value Line Centurion Fund 11.521
- --------------------------------------------------------------------------------
Value Line Strategic Asset Management Trust 10.985
- --------------------------------------------------------------------------------
AIM V.I. Capital Appreciation Fund 13.119
- --------------------------------------------------------------------------------
AIM V.I. Global Utilities Fund 12.361
- --------------------------------------------------------------------------------
AIM V.I. Value Fund 11.474
- --------------------------------------------------------------------------------
Davis Financial Portfolio 9.924
- --------------------------------------------------------------------------------
Davis Real Estate Portfolio --
- --------------------------------------------------------------------------------
Davis Value Portfolio 10.619
- --------------------------------------------------------------------------------
Fidelity VIP II Contrafund Portfolio 11.336
- --------------------------------------------------------------------------------
Fidelity VIP Equity Income Portfolio 9.782
- --------------------------------------------------------------------------------
Fidelity VIP III Growth Opportunities Portfolio 10.133
- --------------------------------------------------------------------------------
Fidelity VIP III Mid Cap Portfolio 12.313
- --------------------------------------------------------------------------------
Janus Aspen Aggressive Growth Portfolio 15.557
- --------------------------------------------------------------------------------
Janus Aspen Capital Appreciation Portfolio 13.708
- --------------------------------------------------------------------------------
Janus Aspen Growth Portfolio 12.129
- --------------------------------------------------------------------------------
Janus Aspen Worldwide Growth Portfolio 14.008
- --------------------------------------------------------------------------------
MFS Emerging Growth Series 15.069
- --------------------------------------------------------------------------------
MFS Growth With Income Series 10.428
- --------------------------------------------------------------------------------
MFS New Discovery Series 14.771
- --------------------------------------------------------------------------------
MFS Research Series 11.564
- --------------------------------------------------------------------------------
MFS Total Return Series 9.931
================================================================================
(1) Commencement of operations of the Separate Account.
Number of variable accumulation units outstanding
at end of period:
Year ended
Dec 31, 1999
================================================================================
The Guardian Cash Fund 52,362
- --------------------------------------------------------------------------------
The Guardian Stock Fund 100,936
- --------------------------------------------------------------------------------
The Guardian Bond Fund 4,817
- --------------------------------------------------------------------------------
The Guardian Small Cap Stock Fund 443
- --------------------------------------------------------------------------------
The Guardian VC 500 Index Fund 4,794
- --------------------------------------------------------------------------------
The Guardian VC Asset Allocation Fund 8,371
- --------------------------------------------------------------------------------
The Guardian VC High Yield Bond Fund 519
- --------------------------------------------------------------------------------
Gabelli Capital Asset Fund 7,324
- --------------------------------------------------------------------------------
Baillie Gifford International Fund 12,370
- --------------------------------------------------------------------------------
Baillie Gifford Emerging Markets Fund 40
- --------------------------------------------------------------------------------
Value Line Centurion Fund 12,558
- --------------------------------------------------------------------------------
Value Line Strategic Asset Management Trust 67,525
- --------------------------------------------------------------------------------
AIM V.I. Capital Appreciation Fund 15,589
- --------------------------------------------------------------------------------
AIM V.I. Global Utilities Fund 4,618
- --------------------------------------------------------------------------------
AIM V.I. Value Fund 47,122
- --------------------------------------------------------------------------------
Davis Financial Portfolio 6,321
- --------------------------------------------------------------------------------
Davis Real Estate Portfolio --
- --------------------------------------------------------------------------------
Davis Value Portfolio 6,916
- --------------------------------------------------------------------------------
Fidelity VIP II Contrafund Portfolio 22,453
- --------------------------------------------------------------------------------
Fidelity VIP Equity Income Portfolio 13,102
- --------------------------------------------------------------------------------
Fidelity VIP III Growth Opportunities Portfolio 7,563
- --------------------------------------------------------------------------------
Fidelity VIP III Mid Cap Portfolio 3,872
- --------------------------------------------------------------------------------
Janus Aspen Aggressive Growth Portfolio 15,869
- --------------------------------------------------------------------------------
Janus Aspen Capital Appreciation Portfolio 55,123
- --------------------------------------------------------------------------------
Janus Aspen Growth Portfolio 20,303
- --------------------------------------------------------------------------------
Janus Aspen Worldwide Growth Portfolio 20,814
- --------------------------------------------------------------------------------
MFS Emerging Growth Series 11,012
- --------------------------------------------------------------------------------
MFS Growth With Income Series 24,219
- --------------------------------------------------------------------------------
MFS New Discovery Series 3,226
- --------------------------------------------------------------------------------
MFS Research Series 584
- --------------------------------------------------------------------------------
MFS Total Return Series 1,332
================================================================================
CONTRACT WITH LIVING BENEFIT RIDER (1)
Variable accumulation unit value
at beginning of period ($):
Year ended
Dec 31, 1999
================================================================================
The Guardian Stock Fund 10.00
- --------------------------------------------------------------------------------
The Guardian VC 500 Index Fund 10.00
- --------------------------------------------------------------------------------
The Guardian Bond Fund 10.00
- --------------------------------------------------------------------------------
Janus Aspen Growth Portfolio 10.00
- --------------------------------------------------------------------------------
Janus Aspen Worldwide Growth Portfolio 10.00
================================================================================
(1) The Living Benefit Rider became available under this contract commencing
December 20, 1999.
Variable accumulation unit value
at end of period ($):
Year ended
Dec 31, 1999
================================================================================
The Guardian Stock Fund 10.766
- --------------------------------------------------------------------------------
The Guardian VC 500 Index Fund 10.365
- --------------------------------------------------------------------------------
The Guardian Bond Fund 9.941
- --------------------------------------------------------------------------------
Janus Aspen Growth Portfolio 10.695
- --------------------------------------------------------------------------------
Janus Aspen Worldwide Growth Portfolio 11.128
================================================================================
Number of variable accumulation units outstanding
at end of period:
Year ended
Dec 31, 1999
================================================================================
The Guardian Stock Fund 1,369
- --------------------------------------------------------------------------------
The Guardian VC 500 Index Fund 2,122
- --------------------------------------------------------------------------------
The Guardian Bond Fund 5,841
- --------------------------------------------------------------------------------
Janus Aspen Growth Portfolio 2,060
- --------------------------------------------------------------------------------
Janus Aspen Worldwide Growth Portfolio 1,343
================================================================================
- -----------------------
32 P R O S P E C T U S F I N A N C I A L I N F O R M A T I O N
- -----------------------
<PAGE>
CONTRACT COSTS AND EXPENSES
The amount of a charge may not strictly correspond to the costs of providing the
services or benefits indicated by the name of the charge or related to a
particular contract. For example, the contingent deferred sales charge may not
fully cover all of the sales and distribution expenses actually incurred by
GIAC, and proceeds from other charges, including the mortality and expense risk
charge, may be used in part to cover these expenses.
No sales charges are deducted from your premium payments when you make them.
However, the following charges do apply:
Expenses of the Funds
The Funds you choose through your variable investment options have their own
management fees and general operating expenses. The deduction of these fees and
expenses is reflected in the per-share value of the Funds. They are fully
described in the Funds' prospectuses.
Mortality and expense risk charge
You will pay a daily charge based on an annual rate of 1.05% of the net assets
of your variable investment options to cover our mortality and expense risks.
Mortality risks arise from our promise to pay death benefits and make annuity
payments to each annuitant for life. Expense risks arise from the possibility
that the amounts we deduct to cover sales and administrative expenses may not be
sufficient.
Administrative expenses
You will also pay a daily charge based on an annual rate of 0.20% of the net
assets of your variable investment options for our administrative expenses.
Contract fee
We deduct a yearly fee of $35 on each anniversary date of your contract. To pay
this charge, we will cancel the number of accumulation units that is equal in
value to the fee. We cancel accumulation units in the same proportion as the
percentage of the contract's accumulation value attributable to each variable
investment option and the fixed-rate option. If you surrender your contract
before the contract anniversary date, we will still deduct the contract fee for
that year. We will waive the contract fee if the accumulation value is $100,000
or more on the anniversary date of your contract.
Cost and expenses
- --------------------------------------------------------------------------------
No sales charges are deducted from your premium payments when you make
them. However, the following charges do apply:
o expenses of the Funds
o mortality and expense risk charge
o administrative expenses
o contract fee.
See accompanying text for details.
-----------------------
F I N A N C I A L I N F O R M A T I O N P R O S P E C T U S 33
-----------------------
<PAGE>
Deferred sales charges
- --------------------------------------------------------------------------------
Number of contract Deferred
years completed sales
from the date of charge
premium payment (%)
==========================================================================
0 7
--------------------------------------------------------------------------
1 6
--------------------------------------------------------------------------
2 5
--------------------------------------------------------------------------
3 4
--------------------------------------------------------------------------
4 3
--------------------------------------------------------------------------
5 2
--------------------------------------------------------------------------
6 1
--------------------------------------------------------------------------
7+ 0
--------------------------------------------------------------------------
Annuity taxes
- --------------------------------------------------------------------------------
Some states and municipalities may charge annuity taxes when premium
payments are made or when you begin to receive annuity payments.
In addition, the following charges may apply:
Contingent deferred sales charge
If you make a partial withdrawal from your account or surrender your contract,
you will pay a deferred sales charge on any amount that has been in your
contract for less than seven contract years. This charge compensates us for
expenses related to the sale of contracts. These include commissions to
registered representatives, as well as promotional expenses.
When we calculate the deferred sales charge, all amounts taken out are assumed
to come from the oldest premium. We do this to minimize the amount you owe.
Deferred sales charges are listed in the table.
The deferred sales charge percentage is applied to the lesser of:
o the premium payments you have made within seven contract years (84 months)
before the date of your request for the withdrawal or surrender; or
o the amount withdrawn or surrendered.
We don't impose deferred sales charges on contracts bought by:
o Guardian Life, its subsidiaries or any of their separate accounts
o present or retired directors, officers, employees, general agents, or
field representatives of Guardian Life or its subsidiaries
o present or retired directors or officers of any of the Funds
o present and retired directors, trustees, officers, partners, registered
representatives and employees of broker-dealer firms that have written
sales agreements with Guardian Investor Services Corporation
o immediate family members of the individuals named above, based on their
status at the time the contract was purchased, limited to their:
- spouses
- children and grandchildren
- parents and grandparents
- brothers and sisters
o trustees or custodians of any employee benefit plan, IRA, Keogh plan or
trust established for the benefit of persons named in the second and third
bullets above
o clients of broker-dealers, financial institutions and registered
investment advisers that have entered into an agreement with GIAC to
participate in fee-based wrap accounts or similar programs to purchase
contracts.
o Contract owners who elect the Contract Anniversary Enhanced Death Benefit
Option at the time the contract is issued may have surrender charges
waived if the contractowner is confined to a long term care facility or
hospital for a continuous 90 day period commencing on or after the third
contract anniversary or if the contract owner is diagnosed to have a
terminal illness at any time while the contract is in force.
- -----------------------
34 P R O S P E C T U S F I N A N C I A L I N F O R M A T I O N
- -----------------------
<PAGE>
Enhanced death benefit expenses
If you choose one of the enhanced death benefit options and it is in effect, you
will pay a daily charge based on an annual rate of up to 0.25% of the net assets
of your variable investment options depending on the option chosen.
Living benefit rider expense
If you choose the living benefit rider and it is in effect, you will pay a daily
charge based on an annual rate of 0.25% of the net assets of your variable
investment options.
Annuity taxes
Some states and municipalities may charge annuity taxes when premium payments
are made or when you begin to receive annuity payments. These taxes range from
about 0.5% to 3.5% of your premium payments. We may deduct the annuity tax
either from your premium payment when made, or from the annuity payments on the
date annuity payments begin, depending on state laws.
In jurisdictions where the annuity tax is incurred when a premium payment is
made, we deduct the amount from your premium payment at the time it is made. We
reserve the right to pay the annuity tax on your behalf and then deduct the same
amount from the value of your contract when you surrender it, or on your death,
or on the date annuity payments begin, whichever is first. We will do this only
if permitted by applicable law.
Transfer charge
Currently, we do not charge for transfers. However, we reserve the right to
charge up to $25 for each transfer. We will deduct this charge on a proportional
basis from the options from which amounts are transferred.
FEDERAL TAX MATTERS
The following summary provides a general description of the Federal income tax
considerations associated with the contract. It is not intended to be complete
or to cover all tax situations. This summary is not intended as tax advice. You
should consult a tax adviser for more complete information. This summary is
based on our understanding of the present Federal income tax laws. We make no
representation as to the likelihood of continuation of the present Federal
income tax laws or as to how they may be interpreted by the Internal Revenue
Service (IRS).
We believe that our contracts will qualify as annuity contracts for Federal
income tax purposes and the following summary assumes so. Further details are
available in the Statement of Additional Information, under the heading Tax
Status of the Contracts.
When you invest in an annuity contract, you usually don't pay taxes on your
investment gains until you withdraw the money - generally for retirement
purposes. In this way, annuity contracts have been recognized by the tax
authorities as a legitimate means of deferring tax on investment income.
Deferring tax
- --------------------------------------------------------------------------------
When you invest in an annuity contract, you usually don't pay taxes on
your investment gains until you withdraw the money - generally for
retirement purposes. In this way, annuity contracts have been recognized
by the tax authorities as a legitimate means of deferring tax on
investment income.
-----------------------
F I N A N C I A L I N F O R M A T I O N P R O S P E C T U S 35
-----------------------
<PAGE>
Employer-sponsored or independent?
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If you invest in a variable annuity as part of a pension plan or
employer-sponsored retirement program, your contract is called a qualified
contract. If your annuity is independent of any formal retirement or
pension plan, it is termed a non-qualified contract.
We believe that if you are a natural person you won't be taxed on increases in
the accumulation value of a contract until a distribution occurs or until
annuity payments begin. For these purposes, the agreement to assign or pledge
any portion of a contact's accumulation value and, in the case of a qualified
contract (described below), any portion of an interest in the qualified plan
generally will be treated as a distribution.
When annuity payments begin, you will be taxed only on the investment gains you
have earned and not on the payments you made to purchase the contract.
Generally, withdrawals from your annuity should only be made once you reach age
59 1/2, die or are disabled, otherwise a 10% tax penalty may be applied against
any amounts included in income. Additional exceptions may apply to distributions
from a qualified contract. You should consult a tax adviser with regard to
exceptions from the penalty tax.
If you invest in a variable annuity as part of a pension plan or
employer-sponsored retirement program, your contract is called a qualified
contract. If your annuity is independent of any formal retirement or pension
plan, it is termed a non-qualified contract.
Taxation of non-qualified contracts
Non-natural person - If a non-natural person owns a non-qualified annuity
contract, the owner generally must include in income any increase in the excess
of the accumulation value over the investment in the contract (generally, the
premiums or other consideration paid for the contract) during the taxable year.
There are some exceptions to this rule and a prospective owner that is not a
natural person should discuss these with a tax adviser.
This following summary generally applies to contracts owned by natural persons.
Withdrawals - When a withdrawal from a non-qualified contract occurs, the amount
received will be treated as ordinary income subject to tax up to an amount equal
to any excess of the accumulation value immediately before the distribution that
exceeds the owner's investment in the contract. Generally, the owner's
investment in the contract is the amount equal to the premiums or other
consideration paid for the contract, reduced by any amounts previously
distributed from the contract that were not subject to tax at that time. In the
case of a surrender under a non-qualified contract, the amount received
generally will be taxable only to the extent it exceeds the owner's investment
in the contract.
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36 P R O S P E C T U S F I N A N C I A L I N F O R M A T I O N
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Penalty tax on certain withdrawals - In the case of a distribution from a
non-qualified contract, a federal tax penalty may be imposed equal to 10% of the
amount treated as income. However, there is generally no penalty on
distributions that are:
o made on or after the taxpayer reaches age 59 1/2
o made on or after the death of an owner
o attributable to the taxpayer's becoming disabled, or
o made as part of a series of substantially equal periodic payments for the
life - or life expectancy - of the taxpayer.
Other exceptions may apply under certain circumstances. Special rules may also
apply to the exceptions noted above. You should consult a tax adviser with
regard to exceptions from the penalty tax.
Annuity payments - Although tax consequences may vary depending on the payout
option elected under an annuity contract, a portion of each annuity payment is
generally not taxed, and the remainder is taxed as ordinary income. The
non-taxable portion of an annuity payment is generally determined so that you
recover your investment in the contract ratably on a tax-free basis over the
expected stream of annuity payments, as determined when annuity payments begin.
However, once your investment in the contract has been fully recovered, the full
amount of each annuity payment is subject to tax as ordinary income.
Taxation of death benefits - Amounts may be distributed from a contract because
of your death or the death of the annuitant. Generally, such amounts are
included in the income of the recipient as follows:
o if distributed in a lump sum, they are taxed in the same manner as a
surrender of the contract
o if distributed under a payout option, they are taxed in the same way as
annuity payments.
Transfers, assignments and contract exchanges - Transferring or assigning
ownership of a contract, designating an annuitant, selecting certain maturity
dates or exchanging a contract may result in certain tax consequences to you
that are not outlined here. If you are considering any such transaction, you
should consult a professional tax adviser.
Withholding tax - Annuity distributions are generally subject to withholding for
the recipient's federal income tax liability. However, recipients can generally
choose not to have tax withheld from distributions.
Taxation of annuity payments
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Once your investment in the contract has been fully recovered, the full
amount of each annuity payment is subject to tax as ordinary income.
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F I N A N C I A L I N F O R M A T I O N P R O S P E C T U S 37
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Multiple contracts - All annuity contracts issued by GIAC or its affiliates to
the same owner during any calendar year are treated as one annuity contract for
purposes of determining the amount included in the contract owner's income when
a taxable distribution occurs.
Taxation of qualified contracts
Your rights under a qualified contract may be subject to the terms of the
retirement plan itself, regardless of the terms of the qualified contract.
Adverse tax consequences may result if you do not ensure that contributions,
distributions and other transactions with respect to the contract comply with
the law.
Individual Retirement Accounts (IRAs) - As defined in Sections 219 and 408 of
the Internal Revenue Code, individuals are allowed to make annual contributions
to an IRA of up to the lesser of $2,000 or 100% of their adjusted gross income.
All or a portion of these contributions may be deductible, depending on the
person's income.
Distributions from certain pension plans may be rolled over into an IRA on a
tax-deferred basis without regard to these limits. So-called SIMPLE IRAs under
Section 408(p) of the Internal Revenue Code and Roth IRAs under Section 408A,
may also be used in connection with variable annuity contracts.
SIMPLE IRAs allow employees to defer a percentage of annual compensation up to
$6,000 to a retirement plan, if the sponsoring employer makes matching or
non-elective contributions that meet the requirements of the Internal Revenue
Code. The penalty for a distribution from a SIMPLE IRA that occurs within the
first two years after the employee begins to participate in the plan is 25%,
instead of the usual 10%.
Contributions to Roth IRAs are not tax-deductible and contributions must be made
in cash or as a rollover or transfer from another Roth IRA or IRA. A rollover or
conversion of an IRA to a Roth IRA may be subject to tax. You may wish to
consult a tax adviser before combining any converted amounts with any other Roth
IRA contributions, including any other conversion amounts from other tax years.
Distributions from Roth IRAs are generally not taxed. In addition to the 10%
penalty which generally applies to distributions made before age 59 1/2, a 10%
penalty will be imposed for any distribution made from a Roth IRA during the
five taxable years starting after you first contribute to any Roth IRA. A 10%
penalty tax may apply to amounts attributable to a conversion from an IRA if
they are distributed during the five taxable years beginning with the year in
which the conversion was made.
Corporate pension and profit-sharing plans - Under Section 401(a) of the
Internal Revenue Code, corporate employers are allowed to establish various
types of retirement plans for employees, and self-employed individuals are
allowed to establish qualified plans for themselves and their employees.
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38 P R O S P E C T U S F I N A N C I A L I N F O R M A T I O N
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<PAGE>
Adverse tax consequences to the retirement plan, the participant or both may
result if the contract is transferred to any individual as a means of providing
benefit payments, unless the plan complies with all applicable requirements
before transferring the contract.
Tax-sheltered annuities - Under Section 403(b) of the Internal Revenue Code,
public schools and other eligible employers are allowed to purchase annuity
contracts and mutual fund shares through custodial accounts on behalf of
employees. Generally, these purchase payments are excluded for tax purposes from
employee gross incomes. However, these payments may be subject to FICA (Social
Security) taxes.
Distributions of salary reduction contributions and earnings (other than your
salary reduction accumulation as of December 31, 1988) are not allowed before
age 59 1/2, separation from service, death or disability. Salary reduction
contributions may also be distributed upon hardship, but would generally be
subject to penalties.
Other tax issues - You should note that the annuity contract includes a death
benefit that in some cases may exceed the greater of the purchase payments or
the contract value. The death benefit could be viewed as an incidental benefit,
the amount of which is limited in any 401(a) or 403(b) plan. Because the death
benefit may exceed this limitation, employers using the contract in connection
with corporate pension and profit-sharing plans, or tax-sheltered annuities,
should consult their tax adviser.
Qualified contracts other than Roth IRAs have minimum distribution rules that
govern the timing and amount of distributions. You should refer to your
retirement plan, adoption agreement or consult a tax adviser for more
information about these distribution rules. Pension and annuity distributions
generally are subject to withholding for the recipient's federal income tax
liability at rates that vary according to the type of distribution and the
recipient's tax status. Recipients generally are provided the opportunity to
elect not to have tax withheld from distributions. "Eligible rollover
distributions" from section 401(a), 403(a) and 403(b) plans are subject to a
mandatory federal income tax withholding of 20%. An eligible rollover
distribution is the taxable portion of any distribution to an employee from such
a plan, except certain distributions such as distributions required by the
Internal Revenue Code or distributions in a specified annuity form. The 20%
withholding does not apply, however, if the employee chooses a direct rollover
from the plan to another tax-qualified plan or IRA.
Our income taxes
At the present time, we make no charge for any Federal, state or local taxes -
other than the charge for state and local premium taxes that we incur - that may
be attributable to the investment divisions of the Separate Account or to the
contracts. We do have the right in the future to make additional charges for any
such tax or other economic burden resulting from the application of the tax laws
that we determine is attributable to the investment divisions of the Separate
Account or the contracts.
Under current laws in several states, we may incur state and local taxes in
addition to premium taxes. These taxes are not now significant and we are not
currently charging for them. If they increase, we may deduct charges for such
taxes.
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F I N A N C I A L I N F O R M A T I O N P R O S P E C T U S 39
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<PAGE>
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Gender-neutral and gender-distinct tables
As a result of a U.S. Supreme Court ruling, employer-related plans must use rate
tables that are gender-neutral to calculate annuity purchase rates. We have
revised our tables for employer-related plans and filed them in the states where
we do business. We will continue to use our gender-distinct tables in all other
contracts, unless it is prohibited by state law. In those cases our
gender-neutral tables will be used.
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Possible tax law changes
Although the likelihood of legislative change is uncertain, there is always the
possibility that the tax treatment of the contract could change by legislation
or otherwise. You should consult a tax adviser with respect to legislative
developments and their effect on the contract.
We have the right to modify the contract in response to legislative changes that
could otherwise diminish the favorable tax treatment annuity contract owners
currently receive. We make no guarantee regarding the tax status of any contract
and do not intend this summary as tax advice.
PERFORMANCE RESULTS
From time to time, we may show performance information for the Separate
Account's investment divisions in advertisements, sales literature or other
materials provided to existing or prospective contract owners. These materials
are based upon historical information and are not necessarily representative of
future performance. More detail about historical performance appears in the
Statement of Additional Information. When we show performance, we'll always
include SEC standard performance, which reflects all fees and charges for
specified periods. We may also show non-standard performance, for example,
without showing the effect of certain charges such as deferred sales charges.
Among the key performance measures we use are total returns and yields.
Total returns include: average annual total return, total return, and change in
accumulation unit value - all of which reflect the change in the value of an
investment in an investment division of the Separate Account over a specified
period, assuming the reinvestment of all income dividends and capital gains
distributions.
Yield figures may be quoted for investments in shares of the Cash Fund and other
investment divisions. Current yield is a measure of the income earned on a
hypothetical investment over a specified base period of seven days for the Cash
Fund investment division, and 30 days (or one month) for other investment
divisions. Effective yield is another measure which may be quoted by the Cash
Fund investment division, which assumes that the net investment income earned
during a base period will be earned and reinvested for a year. Yields are
expressed as a percentage of the value of an accumulation
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40 P R O S P E C T U S F I N A N C I A L I N F O R M A T I O N
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<PAGE>
unit at the beginning of the base period. Yields are annualized, which assumes
that an investment division will generate the same level of net investment
income over a one-year period. However, yields fluctuate daily.
Advertisements and sales literature for the Separate Account's investment
divisions may compare a Fund's performance to that of investments offered
through the separate accounts of other insurance companies that have similar
investment objectives or programs. Promotional material may also compare a
Fund's performance to one or more indices of the types of securities which the
Fund buys and sells for its portfolio. Performance comparisons may be
illustrated by tables, graphs or charts. Additionally, promotional material may
refer to:
o the types and characteristics of certain securities
o features of a Fund's portfolio
o financial markets
o historical, current or perceived economic trends, and
o topics of general investor interest, such as personal financial planning.
In addition, advertisements and sales literature may refer to or reprint all or
portions of articles, reports or independent rankings or ratings which relate
specifically to the investment divisions or to other comparable investments.
However, such material will not be used to indicate future performance.
Advertisements and sales literature about the variable annuity contract and the
Separate Account may also refer to ratings given to GIAC by insurance company
rating organizations such as:
o Moody's Investors Service, Inc.
o Standard & Poor's Ratings Group
o A.M. Best & Co.
o Duff & Phelps.
These ratings relate only to GIAC's ability to meet its obligations under the
contract's fixed-rate option and to pay death benefits provided under the
contract, not to the performance of the variable investment options.
We are a member of the Insurance Marketplace Standards Association (IMSA), and
may include the IMSA logo and information about IMSA membership in our
advertisements. Companies that belong to IMSA subscribe to a set of ethical
standards for sales and service of individually sold life insurance and
annuities.
Further information about the performance of each investment division is
contained in their respective annual reports, which may be obtained from GISC
free of charge.
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F I N A N C I A L I N F O R M A T I O N P R O S P E C T U S 41
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YOUR RIGHTS AND RESPONSIBILITIES
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Free-look period
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During the 10-day period after receiving your contract, the free-look
period, you have the right to examine your contract and return it for
cancellation if you change your mind about buying it.
VOTING RIGHTS
We own the Fund's shares, but you may have voting rights in the various Funds.
To the extent that we are required by law, we will cast our votes according to
the instructions of those contract owners who have an interest in variable
investment options investing in Funds holding a shareholder vote, as of the
shareholder meeting record date. Those votes for which we receive no
instructions will be voted in the same proportion as those we have received
instructions for. We'll solicit instructions when the Funds hold shareholder
votes. We have the right to restrict contract owner voting instructions if the
laws change to allow us to do so.
The owner of the contract has voting rights until the date annuity payments
begin. After that date, rights switch to the annuitant. Voting rights diminish
with the reduction of your contract value. The fixed-rate option has no voting
rights.
YOUR RIGHT TO CANCEL THE CONTRACT
During the 10-day period after receiving your contract, the free-look period,
you have the right to examine your contract and return it for cancellation if
you change your mind about buying it. Longer periods may apply in some states.
In order to cancel your contract, we must receive both the contract and your
cancellation notice in good order. You can forward these documents to GIAC's
customer service office or to the registered representative who sold you the
contract. If you mail the notice, we consider it received on the postmark date,
provided it has been properly addressed and the full postage has been paid.
Upon cancellation, we'll refund to you:
o the difference between the gross premiums you paid (including contract
fees, annuity taxes and other charges) and the amounts we allocated to the
variable investment and fixed-rate options you chose; and
o the accumulation value of the contract on the date we receive your
cancellation.
If state law requires, you will receive the total premium you paid for the
contract instead.
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42 P R O S P E C T U S F I N A N C I A L I N F O R M A T I O N
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<PAGE>
DISTRIBUTION OF THE CONTRACT
The variable annuity contract is sold by insurance agents who are licensed by
GIAC and who are either registered representatives of GISC or of broker-dealer
firms which have entered into sales agreements with GISC and GIAC. GISC and such
other broker-dealers are members of the National Association of Securities
Dealers, Inc.
GIAC will generally pay commissions to these individuals or entities for the
sale of contracts. These commissions may vary, but in total are not expected to
exceed 7% of each contract premium payment. We also reserve the right to pay
additional annual sales compensation of up to .13% of the value of contracts
with an enhanced death benefit rider in force. Where permitted by state law, we
reserve the right to pay additional sales or service compensation while a
contract is in force, based on the value of a contract.
Additional amounts may also be paid in connection with special promotional
incentives. The principal underwriter of the contracts is GISC, located at 7
Hanover Square, New York, New York 10004.
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R I G H T S A N D R E S P O N S I B I L I T I E S P R O S P E C T U S 43
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SPECIAL TERMS USED IN THIS PROSPECTUS
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Accumulation period
The period between the issue date of the contract and the annuity commencement
date.
Accumulation unit
A measure used to determine the value of a contract owner's interest under the
contract before annuity payments begin. The contract has variable accumulation
units and fixed accumulation units.
Accumulation value
The value of all the accumulation units in the variable investment options
and/or the fixed-rate option credited to a contract.
Annuitant
The person on whose life the annuity payments are based and on whose death,
prior to the annuity commencement date, benefits under the contract are paid.
Annuity commencement date
The date on which annuity payments under the contact begin.
Annuity Payments
Periodic payments, either variable or fixed in nature, made by GIAC to the
contract owner at monthly intervals after the annuity commencement date.
Annuity unit
A measure used to determine the amount of any variable annuity payment.
Business day
Each day the New York Stock Exchange is open for trading and GIAC is open for
business.
Contract anniversary date
The annual anniversary measured from the issue date of the contract.
Contract owner
You (or your); the person(s) or entity designated as the owner in the contract.
Funds
The diversified open-end management investment companies, each corresponding to
a variable investment option. The Funds are listed on the front cover of this
prospectus.
Good order
Notice from any party authorized to initiate a transaction under this contract,
received in a format satisfactory to GIAC at its customer service office, that
contains all information required by GIAC to process that transaction.
Valuation period
The time period from the determination of one accumulation unit and annuity unit
value to the next.
Variable investment options
The Funds underlying the contract are the variable investment options - as
distinguished from the fixed-rate option - available for allocations of net
premium payments and accumulation values.
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44 P R O S P E C T U S R I G H T S A N D R E S P O N S I B I L I T I E S
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OTHER INFORMATION
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S P E C I A L T E R M S P R O S P E C T U S 45
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LEGAL PROCEEDINGS
Neither the Separate Account nor GIAC is a party to any pending material legal
proceeding.
WHERE TO GET MORE INFORMATION
Our Statement of Additional Information (SAI) has more details about the
contract described in this prospectus. If you would like a free copy, please
call us toll-free at 1-800-221-3253, or write to us at the following address:
The Guardian Insurance & Annuity Company, Inc.
Customer Service Office
Box 26210
Lehigh Valley, Pennsylvania 18002
The SAI contains the following information:
o Services to the Separate Account
o Annuity payments
o Tax status of the contracts
o Performance data
o Valuation of assets of the Separate Account
o Transferability restrictions
o Experts
o Financial statements
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46 P R O S P E C T U S O T H E R I N F O R M A T I O N
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<PAGE>
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY CONTRACT
Issued Through
THE GUARDIAN SEPARATE ACCOUNT E
OF
THE GUARDIAN INSURANCE & ANNUITY COMPANY, INC.
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Statement of Additional Information dated May 1, 2000
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This Statement of Additional Information is not a prospectus but should be
read in conjunction with the current Prospectus for The Guardian Separate
Account E (marketed under the name "The Guardian Investor Retirement Asset
Manager") dated May 1, 2000.
A free Prospectus is available upon request by writing or calling:
The Guardian Insurance & Annuity Company, Inc.
Customer Service Office
P.O. Box 26210 Lehigh Valley, Pennsylvania 18002
1-800-221-3253
Read the prospectus before you invest. Terms used in this Statement of
Additional Information shall have the same meaning as in the Prospectus.
TABLE OF CONTENTS
Page
Services to the Separate Account B-2
Annuity Payments B-2
Tax Status of the Contracts B-3
Performance Data B-4
Valuation of Assets of the Separate Account B-8
Transferability Restrictions B-9
Experts B-9
Financial Statements B-9
B-1
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SERVICES TO THE SEPARATE ACCOUNT
The Guardian Insurance & Annuity Company, Inc. ("GIAC") maintains the books
and records of The Guardian Separate Account E (the "Separate Account"). GIAC, a
wholly owned subsidiary of The Guardian Life Insurance Company of America, acts
as custodian of the assets of the Separate Account. GIAC bears all expenses
incurred in the operations of the Separate Account, except the mortality and
expense risk charge and the administrative charge (as described in the
Prospectus), which are borne by the Contract owner.
Guardian Investor Services Corporation ("GISC"), a wholly owned subsidiary
of GIAC, serves as principal underwriter for the Separate Account pursuant to a
distribution and service agreement between GIAC and GISC. The Contracts are
offered continuously and are sold by GIAC insurance agents who are registered
representatives of either Park Avenue Securities LLC or of other broker-dealers
which have selling agreements with GISC and GIAC. In the years 1999, 1998 and
1997, GIAC paid commissions through GISC with respect to the sales of variable
annuity contracts in the amount of $32,178,498, $34,195,299 and $33,206,571,
respectively.
ANNUITY PAYMENTS
The objective of the Contracts is to provide benefit payments which will
increase at a rate sufficient to maintain purchasing power at a constant level.
For this to occur, the actual net investment rate must exceed the assumed
investment rate of 4% by an amount equal to the rate of inflation. Of course, no
assurance can be made that this objective will be met. If the assumed interest
rate were to be increased, benefit payments would start at a higher level but
would increase more slowly or decrease more rapidly. Likewise, a lower assumed
interest rate would provide a lower initial payment with greater increases or
lesser decreases in subsequent Annuity Payments.
Value of an Annuity Unit: The value of an Annuity Unit is determined
independently for each of the Variable Investment Options. For any Valuation
Period, the value of an Annuity Unit is equal to the value for the immediately
preceding Valuation Period multiplied by the annuity change factor for the
current Valuation Period. The Annuity Unit value for a Valuation Period is the
value determined as of the end of such period. The annuity change factor is
equal to the net investment factor for the same Valuation Period adjusted to
neutralize the assumed investment return used in determining the Annuity
Payments. The net investment factor is reduced by (a) the mortality and expense
risk charges, (b) administrative expenses and (c) if applicable, the Enhanced
Death Benefit Rider charge on an annual basis during the life of the Contract.
The dollar amount of any monthly payment due after the first monthly payment
under a Variable Investment Option will be determined by multiplying the number
of Annuity Units by the value of an Annuity Unit for the Valuation Period ending
ten (10) days prior to the Valuation Period in which the monthly payment is due.
Determination of the First Monthly Annuity Payment: At the time Annuity
Payments begin, the value of the Contract owner's account is determined by
multiplying the appropriate Variable or Fixed Accumulation Unit Value on the
Valuation Period ten (10) days before the date the first variable or fixed
Annuity Payment is due by the corresponding number of Variable or Fixed
Accumulation Units credited to the Contract owner's account as of the date the
first Annuity Payment is due, less any applicable premium taxes not previously
deducted.
The Contracts contain tables reflecting the dollar amount of the first
monthly payment which can be purchased with each $1,000 of value accumulated
under the Contract. The amounts depend on the variable or fixed Annuity Payout
Option selected, the mortality table used under the Contract (the 1983
Individual Mortality Table a projected using Scale G) and the nearest age of the
Annuitant. The first Annuity Payment is determined by multiplying the benefit
per $1,000 of value shown in the Contract tables by the number of thousands of
dollars of value accumulated under the Contract.
Determination of the Second and Subsequent Monthly Variable Annuity
Payments: The amount of the second and subsequent variable Annuity Payments is
determined by multiplying the number of Annuity Units by the appropriate Annuity
Unit Value as of the valuation period ten (10) days prior to the day such
payment is due. The number of Annuity Units under a Contract is determined by
dividing the first monthly variable Annuity Payment by the value of the
appropriate Annuity Unit on the date of such payment. This number of Annuity
Units remains
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fixed during the variable Annuity Payment period, provided no transfers among
the Variable Investment Options are made. If a transfer among the Variable
Investment Options is made, the number of Annuity Units will be adjusted
accordingly.
The assumed investment return of 4% under the Contract is the measuring
point for subsequent variable Annuity Payments. If the actual net investment
rate (on an annual basis) remains constant at 4%, the variable Annuity Payments
will remain constant. If the actual net investment rate exceeds 4%, the variable
Annuity Payment will increase at a rate equal to the amount of such excess.
Conversely, if the actual rate is less than 4%, variable Annuity Payments will
decrease.
The second and subsequent monthly payments made under a Fixed Annuity
Payout Option will be equal to the amount of the first monthly fixed Annuity
Payment (described above).
TAX STATUS OF THE CONTRACTS
Tax law imposes several requirements that variable annuities must satisfy
in order to receive the tax treatment normally accorded to annuity contracts.
Diversification Requirements. The Code requires that the investments of
each investment division of the separate account underlying the contracts be
"adequately diversified" in order for the contracts to be treated as annuity
contracts for Federal income tax purposes. It is intended that each investment
division, through the fund in which it invests, will satisfy these
diversification requirements.
Owner Control. In certain circumstances, owners of variable annuity
contracts have been considered for Federal income tax purposes to be the owners
of the assets of the separate account supporting their contracts due to their
ability to exercise investment control over those assets. When this is the case,
the contract owners have been currently taxed on income and gains attributable
to the variable account assets. There is little guidance in this area, and some
features of our contracts, such as the flexibility of an owner to allocate
premium payments and transfer amounts among the investment divisions of the
separate account, have not been explicitly addressed in published rulings. While
we believe that the contracts do not give owners investment control over
separate account assets, we reserve the right to modify the contracts as
necessary to prevent an owner from being treated as the owner of the separate
account assets supporting the contract.
Required Distributions. In order to be treated as an annuity contract for
Federal income tax purposes, section 72(s) of the Internal Revenue Code requires
any non-qualified contract to contain certain provisions specifying how your
interest in the contract will be distributed in the event of the death of a
holder of the contract. Specifically, section 72(s) requires that (a) if any
holder dies on or after the annuity starting date, but prior to the time the
entire interest in the contract has been distributed, the entire interest in the
contract will be distributed at least as rapidly as under the method of
distribution being used as of the date of such holders death; and (b) if any
holder dies prior to the annuity starting date, the entire interest in the
contract will be distributed within five years after the date of such holder's
death. These requirements will be considered satisfied as to any portion of a
holder's interest which is payable to or for the benefit of a designated
beneficiary and which is distributed over the life of such designated
beneficiary or over a period not extending beyond the life expectancy of that
beneficiary, provided that such distributions begin within one year of the
holder's death. The designated beneficiary refers to a natural person designated
by the holder as a beneficiary and to whom ownership of the contract passes by
reason of death. However, if the designated beneficiary is the surviving spouse
of the deceased holder, the contract may be continued with the surviving spouse
as the new holder.
The non-qualified contracts contain provisions that are intended to comply
with these Code requirements, although no regulations interpreting these
requirements have yet been issued. We intend to review such provisions and
modify them if necessary to assure that they comply with the applicable
requirements when such requirements are clarified by regulation or otherwise.
Other rules may apply to qualified contracts.
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PERFORMANCE DATA
The tables below provide performance results for each of the Separate
Account's Investment Divisions through December 31, 1999. The results shown in
this section are not an estimate or guarantee of future investment performance,
and do not represent the actual experience of amounts invested by a particular
Contract owner. Moreover, the performance information for each Investment
Division reflects the investment experience of its underlying Funds for periods
prior to the commencement of operations of the Separate Account (September 15,
1997) if the Funds existed prior to such date. Such results were calculated by
applying all Contract and Separate Account level charges to the historical Fund
performance results for such prior periods. During such prior periods, the Funds
were utilized as the underlying Funds for other separate accounts of GIAC which
were established in connection with the issuance of other variable contracts.
The Investment Division corresponding to the AIM V.I. Government
Securities Fund was added to the Separate Account as of May 1, 2000. For
performance information about this Investment Division, you should refer to the
Fund prospectus. This prospectus was provided with the prospectus for the
Contract.
Average Annual Total Return Calculations
The first section of the following table was calculated using the
standardized method prescribed by the Securities and Exchange Commission. It
illustrates each Investment Division's average annual total return over the
periods shown. The average annual total return for an Investment Division for a
specified period is determined by reference to a hypothetical $1,000 investment
that includes capital appreciation and depreciation for the stated period,
according to the following formula:
P(1 + T)n = ERV
Where: P = A hypothetical purchase of $1,000 from which no sales
load is deducted.
T = average annual total return.
n = number of years.
ERV = ending redeemable value of the hypothetical $1,000
purchase at the end of the period.
Each calculation assumes that all dividends and distributions are
reinvested at net asset value on the reinvestment dates during the period, that
no transfers or additional purchase payments were made and the surrender of the
Contract at the end of each period. The Investment Division's average annual
total return is the annual rate that would be necessary to achieve the ending
value of an investment kept in the Investment Division for the period specified.
The rate of return reflects all charges assessed against a Contract and at the
Separate Account level except for any annuity taxes that may be payable. The
charges reflected include any applicable contingent deferred sales charge; the
mortality and expense risk charge; and a pro-rated portion of the contract
administration fee. See the Prospectus for a detailed description of such
charges.
The second section of the table was calculated in the same manner as the
first except that no contingent deferred sales charge was deducted since it is
assumed that the Contract continues through the end of each period.
B-4
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Return for a
Contract Surrendered on 12/31/99
(CAEDB and LB = Contract Anniversary Enhanced
Death Benefit and Living Benefit / CAEDB = Contract
Anniversary Enhanced Death Benefit / Average Annual Total Return on 12/31/99
LB = Living Benefit / BC = Basic Contract) Assuming Contract Continues
------------------------------------------------------- ---------------------------------------
Length of Investment Period Length of Investment Period
------------------------------------------------------- ---------------------------------------
Ten Years (or Ten Years (or
Since Fund Since Fund
Investment Division Date of Fund Inception, Inception,
Corresponding To Inception One Year Five Years If Less) One Year Five Years If Less)
<S> <C> <C> <C> <C> <C> <C> <C>
CAEDB and LB CAEDB and LB CAEDB and LB CAEDB and LB CAEDB and LB CAEDB and LB
CAEDB or LB CAEDB or LB CAEDB or LB CAEDB or LB CAEDB or LB CAEDB or LB
BC BC BC BC BC BC
The Guardian Cash -4.12 2.68 2.98 2.88 3.21 2.98
Fund 1/7/82 -3.87 2.93 3.23 3.13 3.46 3.23
-3.82 3.19 3.48 3.38 3.71 3.48
The Guardian Bond -9.47 4.74 5.34 -2.66 5.23 5.34
Fund 5/1/83 -8.24 4.99 5.59 -2.41 5.48 5.59
-9.01 5.25 5.84 -2.16 5.73 5.84
The Guardian Stock 21.92 27.05 17.94 28.92 27.28 17.94
Fund 4/13/83 22.17 27.30 18.19 29.17 27.53 18.19
22.42 27.55 18.44 29.42 27.78 18.44
The Guardian Small 25.75 N/A 12.59 32.75 N/A 14.28
Cap Stock Fund 5/1/97 26.00 N/A 12.81 33.00 N/A 14.50
26.25 N/A 13.02 33.25 N/A 14.71
The Guardian VC N/A N/A 1.66 N/A N/A 8.66
500 Index Fund 9/13/99 N/A N/A 1.75 N/A N/A 8.75
N/A N/A 1.85 M/A N/A 8.85
The Guardian VC N/A N/A 0.40 N/A N/A 7.40
Asset Allocation Fund 9/13/99 N/A N/A 0.49 N/A N/A 7.49
N/A N/A 0.59 M/A N/A 7.59
The Guardian VC N/A N/A -4.72 N/A N/A 2.28
High Yield Bond Fund 9/13/99 N/A N/A -4.63 N/A N/A 2.37
N/A N/A -4.53 M/A N/A 2.47
Gabelli Capital 10.71 N/A 17.01 17.71 N/A 17.37
Asset Fund 5/1/95 10.96 N/A 17.28 17.96 N/A 17.64
11.21 N/A 17.56 18.21 N/A 17.91
Baillie Gifford 29.76 16.94 12.15 39.76 17.26 12.15
International Fund 2/8/91 30.01 17.20 12.37 37.01 17.51 12.37
30.26 17.45 12.60 37.26 17.76 12.60
Baillie Gifford
Emerging Markets 62.47 7.33 4.49 69.47 7.78 4.81
Fund 10/17/94 62.72 7.59 4.73 69.72 8.04 5.05
62.97 7.86 4.98 69.97 8.30 5.29
Value Line Centurion 19.02 24.23 17.38 26.02 24.48 17.38
Fund ("VLCF") 11/15/83 19.27 24.48 17.63 26.27 24.73 17.63
19.52 24.73 17.88 26.52 24.98 17.88
Value Line Strategic
Asset Management 15.16 19.82 14.88 22.16 20.11 14.88
Trust ("VLSAM") 10/1/87 15.41 20.07 15.13 22.41 20.36 15.13
15.66 20.33 15.38 22.66 20.61 15.38
AIM V.I. Capital 40.71 24.10 20.90 47.71 24.36 20.95
Appreciation Fund 5/5/93 40.96 24.36 21.13 47.96 24.61 21.18
41.21 24.61 21.36 48.21 24.86 21.41
AIM V.I. Global 24.27 19.45 16.28 31.27 19.75 16.46
Utilities Fund 5/2/94 24.52 19.71 16.50 31.52 20.00 16.67
24.77 19.96 16.72 31.77 20.25 16.89
AIM V.I. 20.67 24.78 20.94 27.67 25.03 20.99
Value Fund 5/5/93 20.92 25.04 21.17 27.92 25.28 21.22
21.17 25.29 21.39 28.17 25.53 21.44
Davis Financial N/A N/A -14.05 N/A N/A -8.06
Portfolio 7/1/99 N/A N/A -14.38 N/A N/A -7.94
N/A N/A -14.25 N/A N/A -7.80
Davis Real N/A N/A -19.69 N/A N/A -13.64
Estate Portfolio 7/1/99 N/A N/A -19.58 N/A N/A -13.53
N/A N/A -19.45 N/A N/A -13.39
Davis Value N/A N/A -5.34 N/A N/A 1.66
Portfolio 7/1/99 N/A N/A -5.21 N/A N/A 1.79
N/A N/A -5.06 N/A N/A 1.94
Fidelity VIP II 15.04 N/A 25.27 22.04 N/A 25.52
Contrafund Portfolio 1/13/95 15.29 N/A 25.52 22.29 N/A 25.77
15.54 N/A 25.78 22.54 N/A 26.02
Fidelity VIP -2.66 16.16 12.44 4.34 16.48 12.44
Equity Income Portfolio 10/9/86 -2.41 16.41 12.69 4.59 16.73 12.69
-2.16 16.66 12.94 4.84 16.99 12.94
Fidelity VIP III -4.70 N/A 19.07 2.30 N/A 19.36
Growth Opportunities
Portfolio 1/3/95 -4.46 N/A 19.32 2.54 N/A 19.62
-4.21 N/A 19.57 2.79 N/A 19.87
Fidelity VIP III 38.35 N/A 43.55 45.35 N/A 49.51
Mid Cap Portfolio 12/28/98 38.60 N/A 43.81 45.60 N/A 49.76
38.85 N/A 44.07 45.85 N/A 50.02
Janus Aspen Aggressive 114.91 33.71 32.11 121.91 33.90 32.14
Growth Portfolio 4/13/93 115.16 33.97 32.35 122.16 34.16 32.39
115.41 34.23 32.60 122.41 34.42 32.64
Janus Aspen Capital 57.27 N/A 53.93 64.27 N/A 54.85
Appreciation Portfolio 5/1/97 57.52 N/A 54.12 64.52 N/A 55.03
57.27 N/A 54.30 64.77 N/A 55.21
Janus Aspen Growth 34.57 27.43 22.10 41.57 27.66 22.15
Portfolio 9/13/93 34.82 27.68 22.34 41.82 27.91 22.39
35.07 27.93 22.58 42.07 28.16 22.63
Janus Aspen Worldwide 54.76 31.12 27.46 61.76 31.32 27.50
Growth Portfolio 9/13/93 55.01 31.37 27.70 62.01 31.57 27.74
55.26 31.62 27.95 62.26 31.82 27.99
MFS Emerging 66.86 N/A 33.97 73.86 N/A 34.22
Growth Series 7/24/95 67.11 N/A 34.20 74.11 N/A 34.45
67.36 N/A 34.43 74.36 N/A 34.68
MFS Growth With -2.23 N/A 18.64 4.77 N/A 19.04
Income Series 10/9/95 -1.98 N/A 18.88 5.02 N/A 19.28
-1.73 N/A 19.12 5.27 N/A 19.52
MFS New 63.61 N/A 36.01 70.61 N/A 38.93
Discovery Series 5/1/98 63.86 N/A 36.13 70.86 N/A 39.05
64.11 N/A 36.26 71.11 N/A 39.17
MFS Research 14.90 N/A 20.44 21.90 N/A 20.80
Series 7/26/95 15.15 N/A 20.67 22.15 N/A 21.03
15.40 N/A 20.90 22.40 N/A 21.25
MFS Total -5.79 N/A 13.01 1.21 N/A 13.38
Return Series 1/3/95 -5.54 N/A 13.27 1.46 N/A 13.63
-5.29 N/A 13.52 1.71 N/A 13.88
</TABLE>
Change in Accumulation Unit Value
The following performance information illustrates the cumulative change and
the actual annual change in Accumulation Unit values for the periods specified
for each Investment Division and is computed differently than the standardized
average annual total return information. No information is provided for
Investment Divisions that were added after December 31, 1999.
An Investment Division's cumulative change in Accumulation Unit values is
the rate at which the value of an Accumulation Unit changed over the time period
illustrated. The actual annual change in Accumulation Unit values is the rate at
which the value of an Accumulation Unit changed over each 12-month period
illustrated. The rates of change in Accumulation Unit values quoted in the
tables reflect a deduction for the mortality and expense risk charge and
administrative charge. They do not reflect deductions for any Enhanced Death
Benefit charges, any contingent deferred sales charge, contract administration
fee or annuity taxes. The rates of change would be lower if these charges were
included.
B-5
<PAGE>
BASIC CONTRACT
<TABLE>
<CAPTION>
Cumulative Change in Accumulation Unit Value
for Period Ended December 31, 1999
-----------------------------------------------------------------
Ten Years (or
Since Fund
Investment Division Inception, Date of Fund
Corresponding To One Year Five Years If Less) Inception
<S> <C> <C> <C> <C>
The Guardian Cash Fund 3.47 20.49 41.94 1/7/82
The Guardian Bond Fund -2.08 32.70 77.89 5/1/83
The Guardian Stock Fund 29.53 242.03 447.87 4/13/83
The Guardian Small Cap Stock Fund 33.36 N/A 40.36 5/1/97
The Guardian VC 500 Index Fund N/A N/A 8.88 9/13/99
The Guardian VC Asset Allocation Fund N/A N/A 7.62 9/13/99
The Guardian VC High Yield Bond Fund N/A N/A 2.50 9/13/99
Gabelli Capital Asset Fund 18.31 N/A 116.47 5/1/95
Baillie Gifford International Fund 37.37 127.44 189.47 2/8/91
Baillie Gifford Emerging Markets Fund 70.11 49.57 31.33 10/17/94
Value Line Centurion Fund 26.62 206.21 422.53 11/15/83
Value Line Strategic Asset Management Trust 22.76 156.28 321.63 10/1/87
AIM V.I. Capital Appreciation Fund 48.33 204.70 265.50 5/5/93
AIM V.I. Global Utilities Fund 31.88 152.44 143.03 5/2/94
AIM V.I. Value Fund 28.28 213.01 266.21 5/5/93
Davis Financial Portfolio N/A N/A -7.76 7/1/99
Davis Real Estate Portfolio N/A N/A -13.36 7/1/99
Davis Value Portfolio N/A N/A 1.99 7/1/99
Fidelity VIP II Contrafund Portfolio 22.64 N/A 218.49 1/3/95
Fidelity VIP Equity-Income Portfolio 4.93 120.02 240.54 10/9/86
Fidelity VIP III Growth Opportunities Portfolio 2.88 N/A 148.11 1/3/95
Fidelity VIP III Mid Cap Portfolio 45.97 N/A 50.48 12/28/98
Janus Aspen Aggressive Growth Portfolio 122.59 340.16 495.29 9/13/93
Janus Aspen Capital Appreciation Portfolio 64.91 N/A 223.25 5/1/97
Janus Aspen Growth Portfolio 42.19 247.14 263.24 9/13/93
Janus Aspen Worldwide Growth Portfolio 62.40 299.68 375.51 9/13/93
MFS Emerging Growth Series 74.51 N/A 275.67 7/24/95
MFS Growth With Income Series 5.36 N/A 113.16 10/9/95
MFS New Discovery Series 71.26 N/A 73.56 5/1/98
MFS Research Series 22.50 N/A 135.58 7/26/95
MFS Total Return Series 1.80 N/A 92.12 1/3/95
</TABLE>
B-6
<PAGE>
<TABLE>
<CAPTION>
Change in Accumulation Unit Value for 12-Month Period ended December 31,
(For Basic Contract)
Investment Division
Corresponding To 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
The Guardian Cash Fund 6.66 4.27 1.93 1.36 2.52 4.22 3.67 3.83 3.80 3.47
- ----------------------------------------------------------------------------------------------------------------------------
The Guardian Bond Fund 6.22 14.74 6.35 8.48 -4.66 16.12 1.58 7.63 6.74 -2.08
- ----------------------------------------------------------------------------------------------------------------------------
The Guardian Stock Fund -12.87 34.26 18.57 18.46 -2.51 32.98 25.30 33.89 18.37 29.53
- ----------------------------------------------------------------------------------------------------------------------------
The Guardian Small Cap
Stock Fund 3.20* -6.93 33.36
- ----------------------------------------------------------------------------------------------------------------------------
The Guardian VC 500 Index
Fund 8.88*
- ----------------------------------------------------------------------------------------------------------------------------
The Guardian VC Asset
Allocation Fund 7.62*
- ----------------------------------------------------------------------------------------------------------------------------
The Guardian VC High
Yield Bond Fund 2.50*
- ----------------------------------------------------------------------------------------------------------------------------
Gabelli Capital Asset Fund 9.62* 40.81 10.31 18.31
- ----------------------------------------------------------------------------------------------------------------------------
Baillie Gifford International
Fund -10.05* 32.36 -0.39 9.84 13.96 10.53 19.66 37.37
- ----------------------------------------------------------------------------------------------------------------------------
Baillie Gifford Emerging
Markets Fund -1.84* 23.02 0.70 -27.69 70.11
- ----------------------------------------------------------------------------------------------------------------------------
Value Line Centurion Fund
("VLCF") 4.24 50.28 4.60 7.84 -3.43 38.33 15.86 19.87 25.88 26.62
- ----------------------------------------------------------------------------------------------------------------------------
Value Line Strategic Asset
Management Trust
("VLSAM") -1.40 41.55 13.61 10.46 -6.07 26.93 14.41 14.21 25.86 22.76
- ----------------------------------------------------------------------------------------------------------------------------
AIM V.I. Capital
Appreciation Fund 18.51* 1.22 33.96 16.14 12.05 17.83 48.33
- ----------------------------------------------------------------------------------------------------------------------------
AIM V.I. Global
Utilities Fund -3.73* 25.16 10.67 20.08 15.08 31.88
- ----------------------------------------------------------------------------------------------------------------------------
AIM V.I. Value Fund 13.88* 2.74 34.51 13.61 22.15 30.72 28.28
- ----------------------------------------------------------------------------------------------------------------------------
Davis Financial Portfolio -7.76*
- ----------------------------------------------------------------------------------------------------------------------------
Davis Real Estate Portfolio -13.36*
- ----------------------------------------------------------------------------------------------------------------------------
Davis Value Portfolio 1.99*
- ----------------------------------------------------------------------------------------------------------------------------
Fidelity VIP II Contrafund
Portfolio 38.00* 19.69 22.53 28.31 22.64
- ----------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Equity Income
Portfolio 16.35 29.80 15.42 16.82 5.73 33.41 12.84 26.46 10.15 4.93
- ----------------------------------------------------------------------------------------------------------------------------
Fidelity VIP III Growth
Opportunities Portfolio 30.89* 16.78 28.33 22.95 2.88
- ----------------------------------------------------------------------------------------------------------------------------
Fidelity VIP III Mid Cap
Portfolio 3.09* 45.97
- ----------------------------------------------------------------------------------------------------------------------------
Janus Aspen Aggressive Growth
Portfolio 17.61* 14.88 25.90 6.59 11.26 32.58 122.59
- ----------------------------------------------------------------------------------------------------------------------------
Janus Aspen Capital Appreciation
Portfolio 25.54* 56.14 64.91
- ----------------------------------------------------------------------------------------------------------------------------
Janus Aspen Growth Portfolio 3.11* 1.48 28.55 16.96 21.21 33.96 42.19
- ----------------------------------------------------------------------------------------------------------------------------
Janus Aspen Worldwide Growth
Portfolio 18.65* 0.27 25.78 27.41 20.63 27.31 62.40
- ----------------------------------------------------------------------------------------------------------------------------
MFS Emerging Growth Series 16.76* 15.56 20.38 32.54 74.51
- ----------------------------------------------------------------------------------------------------------------------------
MFS Growth With
Income Series 22.89* 28.16 20.80 5.36
- ----------------------------------------------------------------------------------------------------------------------------
MFS New Discovery Series 1.34* 71.26
- ----------------------------------------------------------------------------------------------------------------------------
MFS Research Series 10.03* 20.79 18.76 21.84 22.50
- ----------------------------------------------------------------------------------------------------------------------------
MFS Total Return Series 25.77* 12.93 19.78 10.93 1.80
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
* From date of commencement of public offering of Fund's shares through
December 31.
B-7
<PAGE>
Calculation of Yield Quotations for the Cash Fund Investment Division
The yield of the Investment Division of the Separate Account investing in
the Cash Fund represents the net change, exclusive of gains and losses realized
by the Investment Division or the Cash Fund and unrealized appreciation and
depreciation with respect to the Cash Fund's portfolio of securities, in the
value of a hypothetical pre-existing Contract that is credited with one
Accumulation Unit at the beginning of the period for which yield is determined
(the "base period"). The base period generally will be a seven-day period. The
current yield for a base period is calculated by dividing (1) the net change in
the value of the Contract for the base period (see "Accumulation Period" in the
Prospectus) by (2) the value of the Contract at the beginning of the base period
and multiplying the result by 365/7. Deductions from purchase payments (for
example, any applicable premium taxes) and any applicable contingent deferred
sales charge assessed at the time of withdrawal or annuitization are not
reflected in the computation of current yield of the Investment Division. The
determination of net change in Contract value reflects all deductions that are
charged to a Contract owner, in proportion to the length of the base period and
the Investment Division's average Contract size. The current annualized yield of
the Cash Fund Investment Division for the 7-day period ended December 31, 1999
was 5.33%.
Yield also may be calculated on an effective or compound basis, which
assumes continual reinvestment by the Investment Division throughout an entire
year of net income earned by the Investment Division at the same rate as net
income is earned in the base period. The effective or compound yield for a base
period is calculated by (1) dividing (i) the net change in the value of the
Contract for the base period by (ii) the value of the Contract as of the
beginning of the base period, (2) adding 1 to the result, (3) raising the sum to
a power equal to 365 divided by the number of days in the base period, and (4)
subtracting 1 from the result. The effective annualized yield of the Cash Fund
Investment Division for the 7-day period ended December 31, 1999 was 5.47%.
The current and effective yields of the Cash Fund Investment Division will
vary depending on prevailing interest rates, the operating expenses and the
quality, maturity and type of instruments held in the Cash Fund's portfolio.
Consequently, no yield quotation should be considered as representative of what
the yield of the Investment Division may be for any specified period in the
future. The yield is subject to fluctuation and is not guaranteed.
Performance Comparisons
Advertisements and sales literature for the Separate Account's Investment
Divisions and their underlying Funds may compare their performance to other
investment vehicles and the separate accounts of other insurance companies as
reflected in independent performance data furnished by sources such as Lipper
Analytical Services, Inc., Morningstar, and Variable Annuity Research & Data
Service, all of which are independent services which monitor and rank the
performance of variable annuity issuers in each of the major categories of
investment objectives on an industry-wide basis. The performance analyses
prepared by such services rank issuers on the basis of total return, assuming
reinvestment of distributions, but may not take sales charges, redemption fees,
or certain expense deductions into consideration.
VALUATION OF ASSETS OF THE SEPARATE ACCOUNT
The value of Fund shares held in each Investment Division at the time of
each valuation is the redemption value of such shares at such time. If the right
to redeem shares of a Fund has been suspended, or payment of redemption value
has been postponed for the sole purpose of computing Annuity Payments, the
shares held in the Separate Account (and corresponding Annuity Units) may be
valued at fair value as determined in good faith by GIAC's Board of Directors.
B-8
<PAGE>
TRANSFERABILITY RESTRICTIONS
Where a Contract is owned in conjunction with a retirement plan qualified
under the Internal Revenue Code of 1986, as amended ("Code"), a tax-sheltered
annuity program or individual retirement account, and notwithstanding any other
provisions of the Contract, the Contract owner may not change the ownership of
the Contract nor may the Contract be sold, assigned or pledged as collateral for
a loan or as security for the performance of an obligation or for any other
purpose to any person other than GIAC unless the Contract owner is the trustee
of an employee trust qualified under the Code, the custodian of a custodial
account treated as such, or the employer under a qualified non-trusteed pension
plan.
EXPERTS
The firm of PricewaterhouseCoopers LLP, 1177 Avenue of the Americas, New
York, New York 10036 currently serves as independent accountants for GIAC and
the Separate Account.
The financial statements of The Guardian Separate Account E incorporated
in this Registration Statement by reference to the Annual Report to
Contractowners for the year ended December 31, 1999 have been so incorporated in
reliance on the report of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting.
The consolidated financial statements of the Guardian Insurance & Annuity
Company, Inc., as of December 31, 1999 and 1998 and for each of three years in
the period ended December 31, 1999 included in this Registration Statement have
been so included in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
FINANCIAL STATEMENTS
The consolidated financial statements of GIAC which are set forth herein
beginning on page B-9 should be considered only as bearing upon the ability of
GIAC to meet its obligations under the Contracts.
The financial statements of the Guardian Separate Account E are
incorporated herein by reference to the Separate Account's 1999 Annual Report to
Contractowners. Such financial statements, the notes thereto and the report of
independent accountants thereon are incorporated herein by reference or are
included elsewhere in this Registration Statement. A free copy of the 1999
Annual Report to Contractowners accompanies this Statement of Additional
Information.
B-9
<PAGE>
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Board of Directors of
The Guardian Insurance & Annuity Company, Inc.:
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income and comprehensive income, of changes in equity
and of cash flows present fairly, in all material respects, the financial
position of The Guardian Insurance & Annuity Company, Inc. and its subsidiaries
at December 31, 1999 and 1998, and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 1999, in
conformity with accounting principles generally accepted in the United States.
These financial statements are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States, which require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for the opinion expressed above.
As discussed in Note 2 to the consolidated financial statements, the Company
changed its method of accounting for costs of computer software developed or
obtained for internal use in 1999.
/s/ Pricewaterhouse Coopers LLP
February 14, 2000
B-10
<PAGE>
- --------------------------------------------------------------------------------
THE GUARDIAN INSURANCE
& ANNUITY COMPANY, INC.
- --------------------------------------------------------------------------------
The Guardian Insurance & Annuity Company, Inc.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
As of December 31,
---------------------
1999 1998
-------- --------
(In millions)
<S> <C> <C>
Assets:
Bonds, available for sale at fair
value (cost $572.7 million; $538.6 million, respectively) ....... $ 554.8 $ 549.0
Affiliated mutual funds ............................................ 78.0 42.9
Joint ventures ..................................................... 0.5 0.4
Policy loans ....................................................... 80.1 72.9
Short-term investments ............................................. 7.1 --
--------- ---------
Total invested assets .............................................. 720.5 665.2
--------- ---------
Cash and cash equivalents .......................................... 63.6 18.5
Deferred acquisition costs ......................................... 357.5 313.6
Deferred software costs ............................................ 11.6 --
Uncollected and unpaid premiums .................................... 3.4 2.1
Amounts receivable from reinsurers ................................. 46.5 42.5
Investment income due and accrued .................................. 9.9 9.4
Other assets ....................................................... 5.1 3.3
Accounts receivable ................................................ 37.5 22.2
Separate account assets ............................................ 11,063.8 8,841.7
--------- ---------
Total Assets ....................................................... $12,319.4 $ 9,918.5
========= =========
Liabilities:
Future policy benefits and other policyholder liabilities .......... $ 547.9 $ 480.0
Due to parent and mutual fund affiliates ........................... 69.6 32.2
Current federal income taxes ....................................... 18.2 25.8
Deferred federal income taxes ...................................... 102.8 98.8
Accrued expenses and other liabilities ............................. 110.0 47.5
Separate account liabilities ....................................... 10,970.4 8,764.8
--------- ---------
Total Liabilities .................................................. 11,818.9 9,449.1
--------- ---------
Stockholder's equity:
Common stock, 1999 - $100 par value, 25,000 shares authorized,
issued and outstanding; 1998 - $100 par value, 20,000 shares
authorized, issued and oustanding ............................... 2.5 2.0
Additional paid-in capital ......................................... 136.9 137.4
Retained earnings .................................................. 347.9 310.6
Accumulated other comprehensive income ............................. 13.2 19.4
--------- ---------
Stockholder's equity ............................................... 500.5 469.4
--------- ---------
Total Liabilities & Stockholder's Equity ........................... $12,319.4 $ 9,918.5
========= =========
</TABLE>
See notes to consolidated financial statements.
B-11
<PAGE>
The Guardian Insurance & Annuity Company, Inc.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
For the years ended December 31,
--------------------------------
1999 1998 1997
------ ------ ------
(In millions)
Revenues:
<S> <C> <C> <C>
Premiums ............................................... $ 12.0 $ 9.1 $ 3.7
Net investment income .................................. 45.4 41.4 38.7
Realized capital (losses) gains on investments ......... (1.7) 2.1 0.9
Income from brokerage operations ....................... 67.1 39.7 31.1
Administrative service fees ............................ 217.1 173.6 130.5
Other income ........................................... 17.5 24.0 20.3
------ ------ ------
Total revenues ......................................... 357.4 289.9 225.2
------ ------ ------
Benefits and other deductions:
Policyholder benefits .................................. 21.2 23.7 20.3
Amortization of deferred policy acquisition costs ...... 67.1 55.3 36.6
Amortization of deferred software costs ................ 1.8 -- --
Other operating costs and expenses ..................... 165.6 105.1 73.3
------ ------ ------
Total benefits and other deductions .................... 255.7 184.1 130.2
------ ------ ------
Income before income taxes ............................. 101.7 105.8 95.0
Federal income taxes:
Current expense ........................................ 12.1 24.4 17.2
Deferred expense ....................................... 12.3 12.0 16.2
------ ------ ------
Total federal income taxes ............................. 24.4 36.4 33.4
------ ------ ------
Net income ............................................. 77.3 69.4 61.6
Other comprehensive income, net of income tax:
Change in unrealized investment (losses) gains ......... (6.2) 3.2 12.6
------ ------ ------
Comprehensive income ................................... $ 71.1 $ 72.6 $ 74.2
====== ====== ======
</TABLE>
See notes to consolidated financial statements.
B-12
<PAGE>
The Guardian Insurance & Annuity Company, Inc.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
For the years ended December 31,
--------------------------------
1999 1998 1997
------ ------ ------
(In millions)
<S> <C> <C> <C>
Common stock at par value, beginning of year ........... $ 2.0 $ 2.0 $ 2.0
Increase in par value .................................. 0.5 -- --
------ ------ ------
Common stock at par value, end of year ................. 2.5 2.0 2.0
------ ------ ------
Capital in excess of par value, beginning of year ...... 137.4 137.4 137.4
(Decrease) in capital .................................. (0.5) -- --
------ ------ ------
Capital in excess of par value, end of year ............ 136.9 137.4 137.4
------ ------ ------
Retained earnings, beginning of year ................... 310.6 241.2 179.6
Net income ............................................. 77.3 69.4 61.6
Dividends to parent .................................... (40.0) -- --
------ ------ ------
Retained earnings, end of year ......................... 347.9 310.6 241.2
------ ------ ------
Accumulated comprehensive income,
net of deferred taxes, beginning of year ............ 19.4 16.2 3.6
Change in unrealized investment (losses) gains,
net of deferred taxes ............................... (6.2) 3.2 12.6
------ ------ ------
Accumulated comprehensive income,
net of deferred taxes, end of year .................. 13.2 19.4 16.2
------ ------ ------
Total stockholder's equity, end of year ................ $500.5 $469.4 $396.8
====== ====== ======
</TABLE>
See notes to consolidated financial statements
B-13
<PAGE>
The Guardian Insurance & Annuity Company, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
For the years ended December 31,
--------------------------------
1999 1998 1997
------ ------ ------
(In millions)
<S> <C> <C> <C>
Operating activities
Net income .............................................. $ 77.3 $ 69.4 $ 61.6
Adjustments to reconcile net income to net
cash provided by operating activities:
Changes in
Deferred policy acquisition costs .................... (43.9) (46.2) (45.9)
Deferred software costs .............................. (11.6) -- --
Uncollected premiums ................................. (1.3) 2.4 0.5
Amounts receivable from reinsurers ................... (4.0) (13.4) 24.9
Investment income due and accrued .................... (0.5) (0.5) (0.3)
Other assets ......................................... (1.8) 0.1 0.6
Accounts receivable .................................. (15.3) 8.6 (10.4)
Separate accounts, net ............................... (16.5) (14.8) (5.1)
Future policy benefits and policyholder liabilities .. 20.9 21.9 (17.0)
Payable to parent .................................... 10.7 5.7 8.9
Federal income taxes:
Current ............................................ (7.6) 9.1 6.9
Deferred ........................................... 4.0 14.1 19.2
Accrued expenses and other liabilities ............... 62.5 (1.5) (14.0)
Realized losses(gains) on investments ................ 1.7 (2.1) (0.9)
Other, net ........................................... (0.7) 1.0 (3.8)
------ ------ ------
Net cash provided by operating activities .......... 73.9 53.8 25.2
------ ------ ------
Investment activities
Proceeds from investments sold
Bonds ................................................ 142.2 280.9 315.4
Other items, net ..................................... -- -- (1.3)
Investments purchased
Bonds ................................................ (180.1) (331.7) (310.5)
Affiliated mutual funds .............................. (24.6) (3.3) (20.5)
------ ------ ------
Net cash used by investing activities .............. (62.5) (54.1) (16.9)
------ ------ ------
Financing activities
Additions to policyholder contract deposits ............. 107.7 54.8 61.7
Withdrawals from policyholder contract deposits ......... (60.7) (64.4) (61.8)
Dividend to parent ...................................... (13.3) -- --
------ ------ ------
Net cash provided (used) by financing activities ... 33.7 (9.6) (0.1)
------ ------ ------
(Decrease) Increase in cash ................................ 45.1 (9.9) 8.2
Cash and cash equivalents, at beginning of year ............ 18.5 28.4 20.2
------ ------ ------
Cash and cash equivalents, at end of year .................. $ 63.6 $ 18.5 $ 28.4
====== ====== ======
Supplemental disclosure:
Federal income taxes paid ............................... $ 19.7 $ 15.4 $ 10.2
====== ====== ======
</TABLE>
See notes to consolidated financial statements.
B-14
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION
The Guardian Insurance & Annuity Company, Inc. (GIAC or the Company) is a
wholly owned subsidiary of The Guardian Life Insurance Company of America (The
Guardian). The Company, domiciled in the state of Delaware, is licensed to
conduct life and health insurance business in all fifty states and the District
of Columbia. The Company's primary business is the sale of variable deferred
annuity contracts and variable and term life insurance policies. For variable
products, other than 401(k) products, contracts are sold by insurance agents who
are licensed by GIAC and are either Registered Representatives of Park Avenue
Securities, LLP (PAS) or of broker dealer firms that have entered into sales
agreements with GIAC. The Company's general agency distribution system is used
for the sale of other products and policies.
PAS, a wholly owned subsidiary of the Company, is a registered broker
dealer under the Securities Exchange Act of 1934. PAS was established as a
broker dealer during 1999 and has assumed the registered representatives
formally affiliated with Guardian Investor Services Corporation (GISC).
GISC, a wholly owned subsidiary of the Company, is a registered broker
dealer under the Securities Exchange Act of 1934 and is a registered investment
advisor under the Investment Adviser's Act of 1940. GISC is the distributor and
underwriter for GIAC's variable products, and is the investment advisor to
certain mutual funds sponsored by GIAC which are investment options for the
variable products.
The Company has established fourteen insurance separate accounts primarily
to support the variable annuity, universal variable life and variable life
insurance products it offers. The majority of the separate accounts are unit
investment trusts registered under the Investment Company Act of 1940. Proceeds
from the sale of variable products are invested through these separate accounts
in certain mutual funds specified by the contractholders. Of these separate
accounts the Company maintains two separate accounts whose sole purpose is to
fund certain employee benefits plans of The Guardian.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation: The Company's consolidated financial statements are
prepared in accordance with accounting principles generally accepted in the
United States (GAAP). All significant intercompany balances and transactions
have been eliminated.
Accounting Changes: In March 1998, the American Institute of Certified
Public Accountants ("AICPA") issued Statement of Position ("SOP") 98-1,
"Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use", which requires capitalization of external and certain internal
costs incurred to obtain or develop internal-use computer software during the
application development stage. The Company applied the provisions of SOP 98-1
prospectively effective January 1, 1999. The adoption of SOP 98-1 resulted in
$14.9 million of software costs being capitalized. Capitalized internal use
software is amortized on a straight-line basis over the estimated useful life of
the software.
Use of Estimates: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the period. Actual results could differ from those estimates.
VALUATION OF INVESTMENTS AND RELATED GAINS AND LOSSES:
Bonds and common stocks are classified as available for sale and carried
at estimated fair value, with unrealized appreciation or depreciation recorded
net of applicable deferred taxes are included in a separate component of equity,
"Accumulated other comprehensive income". The investment portfolio is reviewed
for investments that may have experienced a decline in value considered to be
other than temporary.
Joint ventures are carried on the equity basis of accounting.
Policy loans are stated at unpaid principal balance. The carrying amount
approximates fair value since loans on policies have no defined maturity date
and reduce the amount payable at death or surrender of the contract.
B-15
<PAGE>
The Guardian Insurance & Annuity Company, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
Securities purchase under agreements to resell and securities sold under
agreements to repurchase are treated as financing arrangements and are carried
at the amounts at which the securities will be subsequently resold or
reacquired, including accrued interest, as specified in the respective
agreements. The Company's policy is to take possession of securities purchased
under agreements to resell. The market value of securities to be repurchased or
resold is monitored, and additional collateral is requested, where appropriate,
to protect against credit exposure.
Securities repurchase and resale agreements and securities borrowed and
loaned transactions are used to generate net investment income and facilitate
trading activity. These instruments are short-term in nature (usually 30 days or
less) and are collateralized principally by U.S. Government and mortgage-backed
securities. The carrying amounts of these instruments approximate fair value
because of the relatively short period of time between the origination of the
instruments and their expected realization.
Realized investment gains, net are computed using the specific
identification method. Costs of bonds and stocks are adjusted for impairments
considered other than temporary. Allowances for losses on mortgage loans and
real estate are netted against asset categories to which they apply and
provisions for losses on investments are included in "Realized investment gains,
net." Decreases in lower of depreciated cost or fair value less selling costs of
investment real estate held for sale are recorded in "Realized investment gains,
net."
Short-term investments are stated at amortized cost and consist primarily
of investments with maturities as of purchase date of six months or less. Market
values for such investments approximate carrying value.
Cash and cash equivalents include cash on hand and highly liquid debt
instruments purchased with an original maturity of three months or less.
Deferred Policy Acquisition Costs are costs of acquiring new business,
principally commissions, underwriting, agency and policy issue expenses, all of
which vary with and are primarily related to the production of new business, are
deferred. Deferred policy acquisition costs are subject to recoverability
testing at the time of policy issue and loss recognition testing at the end of
each accounting period.
For investment-type products, deferred policy acquisition costs are
amortized over the shorter of the expected average life of the contracts or
thirty years, as a constant percentage of estimated gross profits arising
principally from investment results, mortality and expense margins and surrender
charges based on actual results and anticipated future experience, updated at
the end of each accounting period. The effect on the amortization of deferred
policy acquisition costs of revisions to estimated gross profits is reflected in
earnings in the period such estimated gross profits are revised.
For life insurance products, deferred policy acquisition costs are
amortized in proportion to anticipated premiums. Assumptions as to anticipated
premiums are estimated at the date of policy issue and are consistently applied
during the life of the contracts. Deviations from estimated experience are
reflected in earnings in the period such deviations occur. For these contracts,
the amortization periods generally are for the estimated life of the policy.
Separate account assets and liabilities are reported at market value, and
represent policyholder funds maintained in accounts having specific investment
objectives. The assets of each account are legally segregated and are not
subject to claims that arise out of any other business of the Company.
Investment risks associated with market value changes are generally borne by the
customers, except to the extent of minimum guarantees made by the Company with
respect to certain amounts. The investment results of separate accounts are
reflected in separate account liabilities. The amounts provided by the Company
to establish separate account investment portfolios (seed money) are included in
separate account assets.
Insurance Revenue and Expense Recognition consists of premiums and
benefits. Premiums for term life and certain annuity insurance products are
recognized as revenue when due and collected. The reserve for future policy
benefits has been provided on a net-level premium method based upon estimated
investment yields, mortality, and other assumptions which were appropriate at
the time the policies were issued. Benefits and expenses are associated with
earned premiums so as to result in recognition of profits over the life of the
contract. This association is accomplished by the provision for future policy
benefits and the deferral and amortization of policy acquisition costs.
Revenues for variable life and for individual and group variable annuity
products consist of net investment income and cost of insurance, policy
administration and surrender charges that have been earned and assessed against
policyholder account balances during the period. Policy benefits and claims that
are charged to expense include benefits and
B-16
<PAGE>
The Guardian Insurance & Annuity Company, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
claims incurred in the period in excess of related policy account balances,
maintenance costs and interest credited to policyholder account balances. The
policyholder account values represent an accumulation of gross premium payments
plus credited interest less expense and mortality charges and withdrawals.
Income Taxes for the Guardian and its life insurance and non-life
insurance subsidiaries file a consolidated federal income tax return. Current
federal taxes are charged or credited to operations based on amounts estimated
to be payable or recoverable as a result of taxable operations for the current
year. Deferred income tax assets and liabilities are recognized based on the
difference between financial statement carrying amounts and income tax basis of
assets and liabilities using enacted income tax rates and laws.
Reclassifications of certain amounts in prior years have been adjusted to
conform to current year presentation.
NOTE 3 - INVESTMENT SECURITIES
Market values of bonds and common stocks are based on quoted prices as
available. For certain private placement debt securities where quoted market
prices are not available, management estimates fair market value by using
adjusted market prices for like securities.
The cost and estimated market values of investments by major investment
category as of December 31, 1999 and 1998 are as follows:
<TABLE>
<CAPTION>
December 31, 1999
(In millions)
-------------------------------------------------
Gross Gross Estimated
Cost Unrealized Unrealized Market
Basis Gains Losses Value
------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
U.S. Treasury securities & obligations of U.S. ....
government corporations and agencies ............ $ 24.5 $ 0.2 $ 0.7 $ 24.0
Obligations of states and political subdivisions .. 30.7 0.1 0.5 30.3
Debt securities issued by foreign governments ..... 3.8 -- 0.1 3.7
Corporate debt securities ......................... 513.7 0.5 17.4 496.8
------- ------- ------- -------
Subtotal ........................................ 572.7 0.8 18.7 554.8
Affiliated mutual funds ........................... 61.0 17.2 0.2 78.0
------- ------- ------- -------
$ 633.7 $ 18.0 $ 18.9 $ 632.8
======= ======= ======= =======
(In millions)
-------------------------------------------------
Gross Gross Estimated
Cost Unrealized Unrealized Market
Basis Gains Losses Value
------- ---------- ---------- ---------
U.S. Treasury securities & obligations of U.S. ....
government corporations and agencies ............ $ 28.4 $ 1.5 $ -- $ 29.9
Obligations of states and political subdivisions .. 60.2 1.4 -- 61.6
Debt securities issued by foreign governments ..... 8.0 0.1 -- 8.1
Corporate debt securities ......................... 442.0 10.0 2.6 449.4
------- ------- ------- -------
Subtotal ........................................ 538.6 13.0 2.6 549.0
Affiliated mutual funds ........................... 36.9 6.6 0.6 42.9
------- ------- ------- -------
$ 575.5 $ 19.6 $ 3.2 $ 591.9
======= ======= ======= =======
</TABLE>
The amortized cost and estimated market value of bonds as of December 31,
1999 and 1998 by contractual maturity is shown below. Expected maturities will
differ from contractual maturities because borrowers may have the right to call
or prepay obligations.
B-17
<PAGE>
The Guardian Insurance & Annuity Company, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
<TABLE>
<CAPTION>
As of December 31, 1999
(In millions)
-----------------------
Estimated
Amortized Market
Cost Value
--------- ---------
<S> <C> <C>
Due in one year or less ............................................ $ 61.4 $ 61.2
Due after one year through five years .............................. 296.4 290.0
Due after five years through ten years ............................. 100.1 95.5
Due after ten years ................................................ 51.7 46.7
Sinking fund bonds (including collateralized mortgage obligations) . 63.1 61.4
--------- ---------
$ 572.7 $ 554.8
========= =========
As of December 31, 1998
(In millions)
-----------------------
Estimated
Amortized Market
Cost Value
--------- ---------
<S> <C> <C>
Due in one year or less ............................................ $ 47.5 $ 47.7
Due after one year through five years .............................. 250.0 253.2
Due after five years through ten years ............................. 102.5 107.8
Due after ten years ................................................ 67.6 68.3
Sinking fund bonds (including collateralized mortgage obligations) . 71.0 72.0
--------- ---------
$ 538.6 $ 549.0
========= =========
</TABLE>
The major categories of net investment income are summarized as follows:
<TABLE>
<CAPTION>
For the year ended December 31,
(In millions)
--------------------------------
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Fixed maturities ....................................... $ 37.2 $ 33.9 $ 31.8
Affiliated mutual funds ................................ 1.6 1.5 1.1
Policy loans ........................................... 3.7 3.5 3.4
Short-term investment .................................. 2.9 2.3 2.4
Joint venture dividend ................................. 1.3 1.3 1.1
------ ------ ------
46.7 42.5 39.8
Less: Investment expenses .............................. 1.3 1.1 1.1
------ ------ ------
Net investment income .................................. $ 45.4 $ 41.4 $ 38.7
====== ====== ======
</TABLE>
Realized gains and losses are based upon specific identification of the
investments. The components of gross realized gains and losses for the year
ended December 31, 1999, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
For the year ended December 31,
(In millions)
--------------------------------
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Realized gains from dispositions:
Bonds ................................................ $ 0.6 $ 2.2 $ 1.1
Separate account seed ................................ 0.9 -- 0.9
Realized losses from dispositions:
Bonds ................................................ (3.1) (0.1) (1.1)
Affiliated mutual funds .............................. (0.1) -- --
------ ------ ------
Realized gains ......................................... $ (1.7) $ 2.1 $ 0.9
====== ====== ======
</TABLE>
B-18
<PAGE>
The Guardian Insurance & Annuity Company, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
The net unrealized holding gains and losses, included in the consolidated
balance sheets as a component of comprehensive income and the changes for the
corresponding years are summarized as follows:
<TABLE>
<CAPTION>
For the years ended December 31,
(In millions)
--------------------------------
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Balance, beginning of year ............................. $ 19.4 $ 16.2 $ 3.6
Changes in unrealized investment gains (losses),
net of deferred taxes, attributable to:
Bonds .............................................. (20.4) 2.6 4.6
Affiliated mutual funds ............................ 9.1 (1.8) 7.3
Separate account seed .............................. 5.1 2.4 1.7
Other .............................................. -- -- (1.0)
------ ------ ------
Balance, end of year ................................... $ 13.2 $ 19.4 $ 16.2
====== ====== ======
</TABLE>
Currently, comprehensive income for the Company consists of net income and
the change in unrealized gains and losses on securities. As of December 31,
1999, 1998 and 1997, the change in unrealized gains and losses before tax was
$(12.9), $7.4 and $15.6 and after tax was $(6.2), $3.2 and $12.6, respectively.
Reclassification adjustments for the period, which include gains on
investment securities that were realized and included in net income of the
current period that also had been included in other comprehensive income as
unrealized holding gains in the period in which they arose, are as follows:
<TABLE>
<CAPTION>
For the years ended December 31,
(In millions)
--------------------------------
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Unrealized holding (losses) gains ...................... $(14.5) $ 5.7 $ 15.6
Less: Reclassification adjustments ..................... 1.6 1.7 --
------ ------ ------
Change in unrealized holding (losses) gains ............ $(12.9) $ 7.4 $ 15.6
====== ====== ======
</TABLE>
Special Deposit assets of $3.7 million and $4.1 million at December 31,
1999 and 1998, respectively, were on deposit with governmental authorities or
trustees as required by certain insurance laws.
NOTE 4 - DEFERRED POLICY ACQUISITION COSTS
The balances of and changes in deferred policy acquisition costs as of and
for the years ended December 31, 1999 and 1998 are summarized as follows:
<TABLE>
<CAPTION>
As of December 31
(In millions)
-----------------------
1999 1998
<S> <C> <C>
Balance, beginning of year ......................................... $ 313.6 $ 267.4
Capitalization of deferrable expenses .............................. 93.8 77.0
Amortization of recoverable DAC balances ........................... (67.1) (55.3)
Interest on DAC .................................................... 21.7 24.2
Retrospectively applied adjustments ................................ (4.5) 0.3
--------- ---------
Balance, end of year ............................................... $ 357.5 $ 313.6
========= =========
</TABLE>
B-19
<PAGE>
The Guardian Insurance & Annuity Company, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
NOTE 5 - POLICYHOLDERS' ACCOUNT BALANCES
The balances of policyholders' account balances as of and for the years
ended December 31, 1999 and 1998 are summarized as follows:
As of December 31,
(In millions)
-----------------------
1999 1998
---------- ---------
Individual annuities ................................ $ 7,617.9 $ 6,492.8
Group annuities ..................................... 3,105.7 2,104.3
Variable life ....................................... 713.7 569.6
Interest-sensitive life contracts ................... 4.2 4.5
---------- ---------
Policyholders' account balances ..................... $ 11,441.5 $ 9,171.2
========== =========
Policyholders' account balances for investment-type contracts represent an
accumulation of gross premium payments plus credited interest less withdrawals,
expenses and mortality charges.
NOTE 6 - FEDERAL INCOME TAXES
The federal income tax expense in the consolidated statements of earnings
is summarized as follows:
For the years ended December 31,
(In millions)
--------------------------------
1999 1998 1997
------ ------ ------
Federal Income Tax expense:
Current ................................... $ 12.1 $ 24.4 $ 17.2
Deferred .................................. 12.3 12.0 16.2
------ ------ ------
Total ....................................... $ 24.4 $ 36.4 $ 33.4
====== ====== ======
The federal income taxes attributable to consolidated operations in
certain circumstances can be different from the amounts determined by
multiplying the earnings from operations before federal income taxes by the
expected federal income tax rate of 35%. The sources of the difference and the
tax effects of each source are as follows:
<TABLE>
<CAPTION>
For the years ended December 31,
(In millions)
--------------------------------
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Expected taxes on pre-tax income ....................... $ 35.6 $ 37.5 $ 33.3
Permanent adjustments:
Dividends received deduction on separate accounts .... (13.1) -- --
Reserve on overpayment of 1998 taxes in 1999 ........... 1.3 -- --
True-up of tax basis reserves .......................... 1.3 -- --
State and local taxes .................................. -- (0.5) 0.1
Foreign tax credit ..................................... (0.3) (0.3) --
Other .................................................. (0.4) (0.3) --
------ ------ ------
Total tax expense ...................................... $ 24.4 $ 36.4 $ 33.4
====== ====== ======
</TABLE>
B-20
<PAGE>
The Guardian Insurance & Annuity Company, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
The tax effect of temporary differences which give rise to deferred
federal income tax assets and liabilities as of December 31, 1999 and 1998, are
as follows:
As of December 31
(In millions)
-----------------------
1999 1998
--------- ---------
Deferred tax assets:
Other liabilities ................................... $ 19.5 $ 15.7
DAC Proxy ........................................... 13.7 11.1
Amounts receivable from reinsurer ................... 0.3 0.9
Other ............................................... 3.9 1.4
--------- ---------
Total deferred tax assets ........................... 37.4 29.1
Deferred tax liabilities:
Deferred acquisition costs .......................... $ 125.1 $ 109.8
Capitalized software costs .......................... 4.1 --
Reserves ............................................ 7.7 6.0
Investments ......................................... 3.3 10.3
Other ............................................... -- 1.8
--------- ---------
Total deferred tax liabilities ...................... 140.2 127.9
--------- ---------
Net deferred tax liability .......................... $ 102.8 $ 98.8
========= =========
Management has concluded that the deferred income tax assets are more
likely than not to be realized. Therefore, no valuation allowance has been
provided.
NOTE 7 - REINSURANCE
The Company has entered into cession and assumption agreements on a
coinsurance, modified coinsurance and yearly renewable term basis with
affiliated and non-affiliated companies. Ceding reinsurance is used by the
Company to limit its risk from large exposures and to permit recovery of a
portion of direct losses, although ceded reinsurance does not relieve the
originating insurer of liability.
The Company has assumed and ceded coinsurance and modified coinsurance
agreements with affiliated companies. Under these agreements, included in the
consolidated statements of income are $0.9 million, $0.9 million and $1.0
million of assumed premiums at December 31, 1999, 1998 and 1997, and $83.1
million, $65.2 million and $43.6 million of ceded premiums at December 31, 1999,
1998 and 1997, respectively.
The Company terminated, during 1997, an assumption agreement with an
unaffiliated company. Under this agreement, included in the consolidated
statements of income are $(2.3) million of premiums at December 31, 1997.
NOTE 8 - FAIR VALUE OF FINANCIAL INSTRUMENTS
Estimated fair values for fixed maturities and equity securities, other
than private placement securities, are based on quoted market prices or
estimates from independent pricing services. Fair values for private placement
securities are estimated using a discounted cash flow model which considers the
current market spreads between the U.S. Treasury yield curve and corporate bond
yield curve, adjusted for the type of issue, its current credit quality and its
remaining average life. The fair value of certain non-performing private
placement securities is based on amounts estimated by management.
B-21
<PAGE>
The Guardian Insurance & Annuity Company, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
NOTE 9 - RELATED PARTY TRANSACTIONS
The Company is billed by The Guardian for all compensation and related
employee benefits for those employees of The Guardian who are engaged in the
Company's business and for the Company's use of The Guardian's centralized
services and agency force. The amounts charged for these services amounted to
$141.0 million in 1999, $100.8 million in 1998 and $72.2 million in 1997, and,
in the opinion of management, were considered appropriate for the services
rendered.
The Company had an investment in the Guardian Real Estate Account (GREA),
which was established in 1987 under Delaware Insurance law as an insurance
company separate account. GIAC had contributed capital to GREA to provide for
funds and to preserve liquidity. Effective December 19, 1997 GREA was liquidated
and, as a result, $6.7 million was returned to GIAC in the form of capital and
there was a realized gain recorded of $1.0 million.
A significant portion of the Company's separate account assets is invested
in affiliated mutual funds. Each of these funds has an investment advisory
agreement with the Company, except for The Baillie Gifford International Fund,
The Baillie Gifford Emerging Markets Fund, The Guardian Baillie Gifford
International Fund and The Guardian Baillie Gifford Emerging Markets Fund.
The separate account assets invested in affiliated mutual funds as of
December 31, 1999 and 1998 are as follows (in millions):
1999 1998
--------- ---------
The Guardian Stock Fund .............................. $ 4,153.9 $ 3,664.9
The Guardian VC 500 Index Fund ....................... 1.8 --
The Guardian VC Allocation Fund ...................... 0.8 --
The Guardian High Yield Bond Fund .................... 0.2 --
The Guardian Bond Fund ............................... 320.0 381.5
The Guardian Cash Fund ............................... 484.1 419.5
The Baillie Gifford International Fund ............... 662.3 526.4
The Baillie Gifford Emerging Markets Fund ............ 64.6 34.6
The Guardian Small Cap Stock Fund .................... 130.6 109.2
The Guardian Park Avenue Fund ........................ 621.3 511.6
The Guardian Park Avenue Small Cap Fund .............. 22.8 13.2
The Guardian Asset Allocation Fund ................... 46.0 39.8
The Guardian Baillie Gifford International Fund ...... 15.5 9.1
The Guardian Baillie Gifford Emerging Markets Fund ... 6.8 0.8
The Guardian Investment Quality Bond Fund ............ 12.7 9.3
The Guardian High Yield Bond Fund .................... 0.8 --
The Guardian Cash Management Fund .................... 126.4 57.9
--------- ---------
$ 6,670.6 $ 5,777.8
========= =========
The Company, in agreement with Baillie Gifford Overseas Ltd., has a joint
venture company -- Guardian Baillie Gifford Ltd. (GBG) -- that is organized as a
corporation in Scotland. GBG is registered in both the United Kingdom and the
United States to act as an investment advisor for the Baillie Gifford
International Fund (BGIF), the Baillie Gifford Emerging Markets Fund (BGEMF),
The Guardian Baillie Gifford International Fund (GBGIF) and The Guardian Baillie
Gifford Emerging Markets Fund (GBGEMF). The Funds are offered in the U.S. as
investment options under certain variable annuity contracts and variable life
policies.
B-22
<PAGE>
The Guardian Insurance & Annuity Company, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
The Company maintains investments in affiliated mutual funds. These
investments as of December 31, 1999 and 1998 are as follows (in millions):
1999 1998
--------- ---------
The Guardian Park Avenue Fund ........................ $ 0.1 $ 0.1
The Guardian Park Avenue Small Cap Fund .............. 2.5 1.8
The Guardian Small Cap Stock Fund .................... 35.2 26.1
The Guardian Asset Allocation Fund ................... 2.8 2.5
The Guardian Baillie Gifford International Fund ...... 2.9 2.1
The Guardian Baillie Gifford Emerging Markets Fund ... 1.5 0.9
The Guardian Investment Quality Bond Fund ............ 1.6 1.6
The Guardian High Yield Bond Fund .................... 1.6 1.6
The Guardian Cash Management Fund .................... 29.8 6.2
--------- ---------
$ 78.0 $ 42.9
========= =========
NOTE 10 - STATUTORY EQUITY AND INCOME
Applicable insurance department regulations require that the Company
prepare statutory financial statements in accordance with statutory accounting
practices prescribed or permitted by the New York Department of Insurance.
Statutory accounting practices primarily differ from GAAP by charging policy
acquisition costs to expense as incurred, establishing future policy benefits
reserves using different actuarial and interest assumptions, not providing for
deferred taxes, and valuing securities on a different basis.
The following reconciles the consolidated GAAP net income of the Company
to statutory net income as reported to the regulatory authorities:
<TABLE>
<CAPTION>
For the years ended December 31,
(In millions)
--------------------------------
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Consolidated GAAP net income ........................... $ 77.3 $ 69.4 $ 61.6
Adjustments to restate to statutory basis:
Statutory net income of subsidiaries ................. 3.3 (4.5) (4.3)
Change in deferred policy acquisition costs .......... (45.2) (43.2) (41.9)
Change in deferred software costs .................... (8.8) -- --
Deferred premiums .................................... 0.3 1.5 5.6
Re-estimation of future policy benefits .............. 13.1 9.7 3.3
Reinsurance .......................................... (3.8) (4.1) (12.4)
Deferred federal income tax expense .................. 11.2 11.9 16.2
Amortization of interest maintenance reserve ......... 0.4 0.3 0.1
Transfer to interest maintenance reserve ............. 2.4 (1.4) --
Other, net ........................................... 2.8 0.9 (0.2)
------ ------ ------
Statutory net income ................................... $ 53.0 $ 40.5 $ 28.0
====== ====== ======
</TABLE>
B-23
<PAGE>
The Guardian Insurance & Annuity Company, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
The following reconciles the consolidated GAAP stockholder's equity of the
Company to statutory capital and surplus as reported to the regulatory
authorities:
<TABLE>
<CAPTION>
As of December 31
(In millions)
--------------------------------
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Consolidated GAAP stockholder's equity ................. $500.5 $469.4 $396.8
Add (deduct) cumulative effect of adjustments:
Deferred policy acquisition costs .................... (357.5) (313.6) (267.4)
Deferred software costs .............................. (11.6) -- --
Elimination of asset valuation reserve ............... (42.7) (29.6) (26.3)
Re-estimation of future policy benefits .............. (53.4) (46.9) (41.3)
Establishment of deferred income tax liability ....... 102.8 98.8 84.7
Unrealized gains on investments ...................... 19.8 (11.7) (7.9)
Other liabilities .................................... 66.7 48.1 33.5
Deferred premiums .................................... 8.2 7.8 7.0
Other, net ........................................... 5.4 5.1 3.6
------ ------ ------
Statutory capital and surplus .......................... $238.2 $227.4 $182.7
====== ====== ======
</TABLE>
B-24
<PAGE>
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) The following financial statements have been incorporated by reference
or are included in Part B:
(1) The Guardian Separate Account E (incorporated by reference into
Part B):
Statement of Assets and Liabilities as of December 31, 1999
Statement of Operations for the Year Ended December 31, 1999
Statements of Changes in Net Assets for the Two Years Ended
December 31, 1999 and 1998
Notes to Financial Statements
Report of PricewaterhouseCoopers LLP, Independent Accountants
(2) The Guardian Insurance & Annuity Company, Inc. (included in Part
B):
Statutory Basis Balance Sheets as of December 31, 1999 and 1998
Statutory Basis Statements of Operations for the Three Years
Ended December 31, 1999, 1998 and 1997
Statutory Basis Statements of Changes in Common Stock and Surplus
for the Three Years Ended December 31, 1999, 1998 and 1997
Statutory Basis Statements of Cash Flow for the Three Years
Ended December 31, 1999, 1998 and 1997
Notes to Statutory Basis Financial Statements
Report of PricewaterhouseCoopers LLP, Independent Accountants
(b) Exhibits
Number Description
------ -----------
1 Resolutions of the Board of Directors of The
Guardian Insurance & Annuity Company, Inc.
establishing Separate Account E(1)
2 Not Applicable
3 Underwriting and Distribution Contracts:
(a) Distribution and Service Agreement
between The Guardian Insurance &
Annuity Company, Inc. and Guardian
Investor Services Corporation, as
amended(1)
(b) Form of Broker-Dealer Supervisory and
Service Agreement(2)
4 Specimen of Variable Annuity Contract(1)
5 Form of Application for Variable Annuity
Contract(2)
6 (a) Certificate of Incorporation of The
Guardian Insurance & Annuity Company,
Inc.(1)
(b) By-laws of The Guardian Insurance &
Annuity Company, Inc.(1)
7 Not Applicable
8 Amended and Restated Agreement for Services
and Reimbursement Therefor, between The
Guardian Life Insurance Company of America
and The Guardian Insurance & Annuity
Company, Inc.(2)
9 Opinion and Consent of Counsel(1)
10 (a) Consent of PricewaterhouseCoopers LLP.
11 Not Applicable
12 Not Applicable
13 (a) Powers of Attorney executed by a
majority of the Board of Directors and
certain principal officers of The
Guardian Insurance & Annuity Company,
Inc.
(c) Schedule for Computation of Performance
Quotations(2)
- -------------------
(1) Incorporated by reference to the Registration Statement on Form N-4, (Reg.
No. 333-21975), as initially filed on February 18, 1997.
(2) Incorporated by reference to the Registration Statement on Form N-4, (Reg.
No. 333-21975), as previously filed on August 1, 1997.
C-1
<PAGE>
Item 25. Directors and Officers of the Depositor
The following is a list of directors and officers of The Guardian
Insurance & Annuity Company, Inc. ("GIAC"), the depositor of the Registrant. The
principal business address of each director and officer is 7 Hanover Square, New
York, New York 10004.
Name Positions with GIAC
---- -------------------
Joseph D. Sargent President, Chief Executive Officer
& Director
Edward K. Kane Executive Vice President & Director
Frank J. Jones Executive Vice President, Chief
Investment Officer & Director
Bruce C. Long Executive Vice President & Director
Thomas G. Sorell Senior Vice President
Philip H. Dutter Director
Arthur V. Ferrara Director
Leo R. Futia Director
Peter L. Hutchings Director
William C. Warren Director
Charles G. Fisher Vice President & Actuary
Frank L. Pepe Vice President & Controller
Richard T. Potter, Jr. Vice President and Counsel
Howard G. Most Vice President
Alexander M. Grant, Jr. Vice President
Howard W. Chin Vice President
Thomas M. Donahue Vice President
Robert J. Crimmins Vice President
Dennis P. Mosticchio Vice President, Group Pensions
Donald P. Sullivan, Jr. Vice President
Joseph A. Caruso Vice President & Corporate Secretary
Earl Harry Treasurer
C-2
<PAGE>
Item 26. Persons Controlled by or under Common Control with Registrant
The following list sets forth the persons directly controlled by The
Guardian Life Insurance Company of America ("Guardian Life"), the parent company
of GIAC, the Registrant's depositor, as of March 1, 2000:
State of Percent of
Incorporation Voting Securities
Name or Organization Owned
---- --------------- -----------------
The Guardian Insurance & Delaware 100%
Annuity Company, Inc.
Guardian Asset Management Delaware 100%
Corporation
Guardian Trust Company, FSB Federal Savings
Bank 100%
Fiduciary Insurance Company
of America New York 100%
Park Avenue Life Insurance Company Delaware 100%
Managed Dental Care, Inc. California 100%
Private Healthcare Systems, Inc. Delaware 15%
First Commonwealth Delaware 100%
Guardian Hanover Corporation New York 100%
Managed Dental Guard, Inc. Texas 100%
Innovative Underwriters Services New Jersey 100%
Dental Guard Preferred, Inc. Washington 100%
The Guardian Tax-Exempt Bond Fund Massachusetts 92%
The Guardian Baillie Gifford Massachusetts 19%
International Fund
The Guardian Investment Quality Massachusetts 35%
Bond Fund
The Guardian Asset Allocation Fund Massachusetts 10%
Baillie Gifford Emerging Markets Fund Maryland 28%
Baillie Gifford International Fund Maryland 29%
The Guardian Park Avenue Small Cap Fund Massachusetts 24%
The Guardian Baillie Gifford Massachusetts 60%
Emerging Markets Fund
The Guardian High Yield Bond Fund Massachusetts 88%
The Guardian Small Cap Stock Fund Maryland 35%
The Guardian VC Asset Allocation Fund Maryland 94%
The Guardian VC 500 Index Fund Maryland 99%
The Guardian VC High Yield Bond Fund Maryland 99%
The following list sets forth the persons directly controlled by GIAC
or other affiliates of Guardian Life and, thus, indirectly controlled by
Guardian Life, as of March 1, 2000:
Approximate
Percentage of Voting
Place of Securities Owned
Incorporation by Guardian Life
Name or Organization Affiliates
---- --------------- -------------------
Guardian Investor Services
Corporation New York 100%
Guardian Baillie Gifford Ltd. Scotland 51%
The Guardian Cash Fund, Inc. Maryland 100%
The Guardian Bond Fund, Inc. Maryland 100%
The Guardian Variable Contract
Funds, Inc. Maryland 100%
GIAC Funds, Inc. Maryland 100%
The Guardian Park Avenue Fund Massachusetts 2%
Park Avenue Securities LLC Delaware 100%
Item 27. Number of Contract owners
Type of Contract As of April 1, 2000
---------------- -------------------
Non-Qualified .............. 7,010
Qualified .................. 17,490
Total .............. 24,500
C-3
<PAGE>
Item 28. Indemnification
The By-Laws of The Guardian Insurance & Annuity Company, Inc. provide that
the Company shall, to the fullest extent legally permissible under the General
Corporation Law of the State of Delaware, indemnify and hold harmless officers
and directors of the Corporation for certain liabilities reasonably incurred in
connection with such person's capacity as an officer or director.
The Certificate of Incorporation of the Corporation includes the following
provision:
No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders; (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of the law; (iii) under Section 164 of the Delaware General
Corporation Law, or (iv) for any transaction for which the director derived an
improper personal benefit.
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel, the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
Item 29. Principal Underwriters
(a) Guardian Investor Services Corporation ("GISC") is the
principal underwriter of the Registrant's variable annuity contracts and it is
also the principal underwriter of shares of The Guardian Bond Fund, Inc.; The
Guardian Variable Contract Funds, Inc., a series fund consisting of the
following four series: The Guardian Stock Fund, The Guardian VC Asset Allocation
Fund, The Guardian VC High Yield Bond Fund and The Guardian VC 500 Index Fund;
The Guardian Cash Fund, Inc.; The Park Avenue Portfolio, a series trust
consisting of the following nine series: The Guardian Cash Management Fund, The
Guardian Park Avenue Fund, The Guardian Investment Quality Bond Fund, The
Guardian High Yield Bond Fund, The Guardian Tax-Exempt Fund, The Guardian Asset
Allocation Fund, The Guardian Park Avenue Small Cap Fund, The Guardian Baillie
Gifford International Fund and The Guardian Baillie Gifford Emerging Markets
Fund and GIAC Funds, Inc. a series fund consisting of Baillie Gifford
International Fund, Baillie Gifford Emerging Markets Fund and The Guardian Small
Cap Stock Fund. All of the aforementioned funds and the series trust are
registered with the SEC as open-end management investment companies under the
Investment Company Act of 1940, as amended ("1940 Act"). In addition, GISC is
the distributor of variable annuity and variable life insurance contracts
currently offered by GIAC through its separate accounts, The Guardian/Value Line
Separate Account, The Guardian Separate Account A, The Guardian Separate Account
B, The Guardian Separate Account C, The Guardian Separate Account D, The
Guardian Separate Account E, The Guardian Separate Account K, and The Guardian
Separate Account M, which are all registered as unit investment trusts under the
1940 Act.
(b) The following is a list of each director and officer of
GISC. The principal business address of each person is 7 Hanover Square,
New York, New York 10004.
Name Position(s) with GISC
---- ---------------------
Bruce C. Long President & Director
Thomas G. Sorell Senior Vice President
Arthur V. Ferrara Director
Leo R. Futia Director
Peter L. Hutchings Director
Philip H. Dutter Director
Joseph D. Sargent Director
William C. Warren Director
Frank J. Jones Director
John B. Murphy Vice President
Frank L. Pepe Vice President & Controller
Richard T. Potter, Jr. Vice President and Counsel
Donald P. Sullivan, Jr. Vice President
Joseph A. Caruso Vice President and Corporate
Secretary
C-4
<PAGE>
Name Position(s) with GISC
---- ---------------------
Earl C. Harry Treasurer
Item 30. Location of Accounts and Records
Most of the Registrant's accounts, books and other documents
required to be maintained by Section 31(a) of the 1940 Act and the rules
promulgated thereunder are maintained by GIAC, the depositor, at its Customer
Service Office, 3900 Burgess Place, Bethlehem, Pennsylvania 18017. Documents
constituting the Registrant's corporate records are also maintained by GIAC but
are located at its Executive Office, 7 Hanover Square, New York, New York
10004.
Item 31. Management Services
None.
Item 32. Undertakings
(a) The Registrant hereby undertakes to file a post-effective amendment to
this registration statement as frequently as is necessary to ensure
that the audited financial statements in the registration statement are
never more than 16 months old for so long as payment under the variable
annuity contracts may be accepted.
(b) The Registrant hereby undertakes to include, as part of any application
to purchase a contract offered by the prospectus, a space that an
applicant can check to request a Statement of Additional Information.
(c) The Registrant hereby undertakes to deliver any Statement of Additional
Information and any financial statements required to be made available
under this Form promptly upon written or oral request.
(d) The Depositor, GIAC, hereby undertakes and represents that the fees and
charges deducted under the contract, in the aggregate, are reasonable
in relation to the services rendered, the expenses expected to be
incurred, and the risks assumed by GIAC.
C-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, The Guardian Separate Account E,
certifies that it meets all of the requirements for effectiveness of this
Registration statement pursuant to Rule 485(b) under the Securities Act of 1933
and has duly caused this Post-Effective Amendment to the Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of New York and the State of New York on the 14th of April, 2000.
The Guardian Separate Account E
(Registrant)
By: THE GUARDIAN INSURANCE & ANNUITY
COMPANY, INC.
(Depositor)
By: /s/ Bruce C. Long
--------------------------------
Bruce C. Long
Executive Vice President
C-6
<PAGE>
As required by the Securities Act of 1933, this Registration Statement
has been signed by the following directors and principal officers of The
Guardian Insurance & Annuity Company, Inc. in the capacities and on the date
indicated.
/s/ Joseph D. Sargent* President, Chief Executive
- ----------------------------------- Officer and Director
Joseph D. Sargent
(Principal Executive Officer)
/s/ Frank J. Jones* Executive Vice President, Chief
- ----------------------------------- Investment Officer and Director
Frank J. Jones
(Principal Financial Officer)
/s/ Frank L. Pepe Vice President and Controller
- -----------------------------------
Frank L. Pepe
(Principal Accounting Officer)
/s/ Bruce C. Long Executive Vice President
- ----------------------------------- and Director
Bruce C. Long
/s/ Arthur V. Ferrara* Director
- -----------------------------------
Arthur V. Ferrara
/s/ William C. Warren* Director
- -----------------------------------
William C. Warren
/s/ Edward K. Kane* Executive Vice President
- ----------------------------------- and Director
Edward K. Kane
/s/ Leo R. Futia* Director
- -----------------------------------
Leo R. Futia
/s/ Philip H. Dutter* Director
- -----------------------------------
Philip H. Dutter
/s/ Peter L. Hutchings* Director
- -----------------------------------
Peter L. Hutchings
By /s/ Bruce C. Long Date: April 14, 2000
--------------------------------
Bruce C. Long
Executive Vice President
* Pursuant to a Power of Attorney
C-7
<PAGE>
Exhibit Index
Number Description
10(a) Consent of PricewaterhouseCoopers LLP
13(a) Powers of Attorney
C-8
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Post-Effective
amendment No. 7 to the registration statement on Form N-4 (the "Registration
Statement") of our report dated February 20, 2000, relating to the financial
statements appearing in the December 31, 1999 Annual Report to Contractowners of
The Guardian Separate Account E.
We also consent to the use in this Post-Effective amendment No. 7 to the
registration statement on Form N-4 (the "Registration Statement") of our report
dated February 14, 2000 relating to the consolidated financial statements of The
Guardian Insurance & Annuity Company, Inc., which appears in such Registration
Statement. We also consent to the reference to us under the headings "Experts"
and "Summary Financial Information about the Separate Account" in such
Registration Statement.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
New York, New York
April 14, 2000
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that Joseph D. Sargent, whose
signature appears below, constitutes and appoints Bruce C. Long, Frank L. Pepe
and Richard T. Potter, Jr. each of them, his attorney-in-fact, each with the
power of substitution, for him in any and all capacities, to sign any
registration statements and amendments to registration statements for any and
all separate accounts established by The Guardian Insurance & Annuity Company,
Inc. which are currently in existance or which may be established in the future
and to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that each of said attorneys-in-fact, or his or her substitutes,
may do or cause to be done by virtue hereof.
Dated September 23, 1999
/s/ Joseph D. Sargent
----------------------------
Joseph D. Sargent
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that Arthur V. Ferrara, whose
signature appears below, constitutes and appoints Bruce C. Long, Frank L. Pepe
and Richard T. Potter, Jr. each of them, his attorney-in-fact, each with the
power of substitution, for him in any and all capacities, to sign any
registration statements and amendments to registration statements for any and
all separate accounts established by The Guardian Insurance & Annuity Company,
Inc. which are currently in existance or which may be established in the future
and to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that each of said attorneys-in-fact, or his or her substitutes,
may do or cause to be done by virtue hereof.
Dated September 23, 1999
/s/ Arthur V. Ferrara
----------------------------
Arthur V. Ferrara
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that Frank J. Jones, whose
signature appears below, constitutes and appoints Bruce C. Long, Frank L. Pepe
and Richard T. Potter, Jr. each of them, his attorney-in-fact, each with the
power of substitution, for him in any and all capacities, to sign any
registration statements and amendments to registration statements for any and
all separate accounts established by The Guardian Insurance & Annuity Company,
Inc. which are currently in existance or which may be established in the future
and to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that each of said attorneys-in-fact, or his or her substitutes,
may do or cause to be done by virtue hereof.
Dated September 23, 1999
/s/ Frank J. Jones
----------------------------
Frank J. Jones
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that Edward K. Kane, whose
signature appears below, constitutes and appoints Bruce C. Long, Frank L. Pepe
and Richard T. Potter, Jr. each of them, his attorney-in-fact, each with the
power of substitution, for him in any and all capacities, to sign any
registration statements and amendments to registration statements for any and
all separate accounts established by The Guardian Insurance & Annuity Company,
Inc. which are currently in existance or which may be established in the future
and to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that each of said attorneys-in-fact, or his or her substitutes,
may do or cause to be done by virtue hereof.
Dated September 23, 1999
/s/ Edward K. Kane
----------------------------
Edward K. Kane
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that Philip H. Dutter, whose
signature appears below, constitutes and appoints Bruce C. Long, Frank L. Pepe
and Richard T. Potter, Jr. each of them, his attorney-in-fact, each with the
power of substitution, for him in any and all capacities, to sign any
registration statements and amendments to registration statements for any and
all separate accounts established by The Guardian Insurance & Annuity Company,
Inc. which are currently in existance or which may be established in the future
and to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that each of said attorneys-in-fact, or his or her substitutes,
may do or cause to be done by virtue hereof.
Dated September 23, 1999
/s/ Philip H. Dutter
----------------------------
Philip H. Dutter
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that Leo R. Futia, whose
signature appears below, constitutes and appoints Bruce C. Long, Frank L. Pepe
and Richard T. Potter, Jr. each of them, his attorney-in-fact, each with the
power of substitution, for him in any and all capacities, to sign any
registration statements and amendments to registration statements for any and
all separate accounts established by The Guardian Insurance & Annuity Company,
Inc. which are currently in existance or which may be established in the future
and to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that each of said attorneys-in-fact, or his or her substitutes,
may do or cause to be done by virtue hereof.
Dated September 23, 1999
/s/ Leo R. Futia
----------------------------
Leo R. Futia
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that Peter L. Hutchings, whose
signature appears below, constitutes and appoints Bruce C. Long, Frank L. Pepe
and Richard T. Potter, Jr. each of them, his attorney-in-fact, each with the
power of substitution, for him in any and all capacities, to sign any
registration statements and amendments to registration statements for any and
all separate accounts established by The Guardian Insurance & Annuity Company,
Inc. which are currently in existance or which may be established in the future
and to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that each of said attorneys-in-fact, or his or her substitutes,
may do or cause to be done by virtue hereof.
Dated September 23, 1999
/s/ Peter L. Hutchings
----------------------------
Peter L. Hutchings
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that William C. Warren, whose
signature appears below, constitutes and appoints Bruce C. Long, Frank L. Pepe
and Richard T. Potter, Jr. each of them, his attorney-in-fact, each with the
power of substitution, for him in any and all capacities, to sign any
registration statements and amendments to registration statements for any and
all separate accounts established by The Guardian Insurance & Annuity Company,
Inc. which are currently in existance or which may be established in the future
and to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that each of said attorneys-in-fact, or his or her substitutes,
may do or cause to be done by virtue hereof.
Dated September 23, 1999
/s/ William C. Warren
----------------------------
William C. Warren
