Registration Nos. 333-38292
811-09965
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-4
Pre-Effective Amendment No. 1 to the
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |X|
(Check appropriate box or boxes)
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THE GUARDIAN SEPARATE ACCOUNT F
(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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Individual Variable Annuity Contracts--The Registrant has registered an
indefinite amount of securities pursuant to Rule 24f-2 under the Investment
Company Act of 1940.
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Approximate date of proposed public offering
As soon as practicable after the effective date of this Registration Statement
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The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<PAGE>
THE GUARDIAN SEPARATE ACCOUNT F
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?; Expenses; Contract Costs and
Expenses
Item 4. Condensed Financial Information........................................ The Separate Account; Performance Results
Item 5. General Description of Registrant, Depositor and Portfolio
Companies ........................................................... The Guardian Insurance & Annuity
Company, Inc.; Variable Investment
Options; Voting Rights
Item 6. Deductions............................................................. Expenses; Contract Costs and Expenses;
Distribution of the Contract
Item 7. General Description of Variable Annuity Contracts...................... Summary: What is a variable annuity
contract?
Item 8. Annuity Period......................................................... The Annuity Period
Item 9. Death Benefit.......................................................... Death Benefits; Contract Anniversary
Enhanced Death Benefit
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
September 11, 2000
THE GUARDIAN C + C VARIABLE ANNUITY
The Guardian Insurance & Annuity Company, Inc. has applied for a patent for its
C-Share investment Credit Annuity System wherein the variable annuity contract
includes an Investment Credit, withdrawal charge percentages which are less than
or equal to the Investment Credit percentage, and level asset based compensation
to distibutors.
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 F (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 annuitant dies before annuity payments begin.
This contract provides for an investment credit. Therefore, it may have higher
expenses than a similar annuity without such credits or enhancements. Over time,
the higher charges could be more than the value of the credits. Accordingly, you
should always consider the expenses along with the features and enhancements to
be sure this annuity meets your financial needs and goals.
The minimum initial premium payment is $500. For each premium payment you make
during the first contract year, we credit an additional 3% (an investment
credit) of the net premium (premium minus any annuity taxes) to your
accumulation value. Your accumulation value may be invested in up to 20 of the
32 available variable investment options. 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 accompany this prospectus.
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, Inc.
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
- AIM V.I. Aggressive Growth Fund
- AIM V.I. Growth Fund
- AIM V.I. Government Securities Fund
- AIM V.I. Value Fund
o Alger
- Alger American Leveraged AllCap Portfolio
o American Century
- American Century VP Capital Appreciation Fund
o Fidelity Variable Insurance Products Fund (Service Class 2)
- Fidelity VIP Contrafund(R) Portfolio
- Fidelity VIP Equity-Income Portfolio
- Fidelity VIP Growth Portfolio
- Fidelity VIP Balanced Portfolio
o Janus Aspen Series (Service Shares)
- Janus Aspen Series Aggressive Growth Portfolio
- Janus Aspen Series Capital Appreciation Portfolio
- Janus Aspen Series Flexible Income Portfolio
- Janus Aspen Series Growth and Income Portfolio
- Janus Aspen Series Worldwide Growth Portfolio
o MFS(R)Variable Insurance Trust(SM) (Service Class)
- MFS Emerging Growth Series
- MFS Growth With Income Series
- MFS New Discovery Series
- MFS Global Governments Series
- MFS Capital Opportunities Series
o Prudential
- Prudential Jennison Portfolio (Class II)
o Value Line Strategic Asset Management Trust
o Value Line Centurion Fund
A Statement of Additional Information for 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 September 11, 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 allocated ................................. 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
- Transfers ............................................................... 16
- Surrenders and partial withdrawals ...................................... 17
- Managing your annuity ................................................... 19
The annuity period ........................................................ 21
- When annuity payments begin ............................................. 21
- How your annuity payments are calculated ................................ 21
- Variable annuity payout options ......................................... 22
- Fixed-rate annuity payout options ....................................... 24
Other contract features ................................................... 25
- Death benefits .......................................................... 25
- Contract anniversary enhanced death benefit ............................. 27
- Living Benefit Rider (referred to as "Decade") .......................... 28
Financial information ..................................................... 30
- How we calculate accumulation unit values ............................... 30
- Contract costs and expenses ............................................. 31
- Federal tax matters ..................................................... 33
- Performance results ..................................................... 38
Your rights and responsibilities .......................................... 41
Special terms used in this prospectus ..................................... 43
Other information ......................................................... 44
<PAGE>
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SUMMARY
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 payout option. That's why this product is
called a variable annuity.
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HOW YOUR ANNUITY PAYMENTS ARE ALLOCATED
During the accumulation period, this contract allows you to allocate your net
premium payments (premiums less any annuity taxes) and accumulation value to as
many as 20 of the 32 available variable investment options. For each premium
payment you make during the first contract year, we will credit an additional 3%
of the net premium to your accumulation value, The investment credits will be
allocated to the variable investment options in the same ratio as the applicable
net premium payment.
When you allocate your premiums or investment credits 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 and investment credits allocated to the variable investment
options. Further, because this contract provides for an investment credit and
may therefore, over time, have higher expenses than a similar annuity without
such a credit, no assurance can be given that in certain circumstances, such as
a period of poor market performance, the value of the investment credit will
exceed these expenses.
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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 payout
option. That's why this product is called a variable annuity.
--------------------------------------------------------------------------------
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.
The total value of your contract's investment in the investment divisions 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.
The value of units in a variable investment division reflects the investment
experience within the division. 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 591/2, you may also incur a 10% federal tax
penalty on your earnings.You may select one or a combination of four annuity
payout options under the contract:
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Payout options
Annuity payout options are available on either a variable or fixed-rate basis.
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o Life annuity without a guaranteed period
o Life annuity with a 10-year guaranteed period
o Joint and survivor annuity.
o Variable annuity payments to age 100.
The first three payout options are available on either a variable or fixed-rate
basis. The fourth option is only available on a variable payout basis. They're
described in more detail in the section titled The annuity period.
OTHER CONTRACT FEATURES
Investment credits
During the first contract year, we credit to the contract an investment credit
of 3% of each net premium payment you make. There is no specific charge for the
investment credit. We will pay the credit out of our surplus, and we will
recover it over time from a portion of the proceeds of the surrender charge,
contract fee, and mortality and expense risk charge. To the extent that these
charges exceed our actual costs, we may generate a profit. Generally, an annuity
with investment credits or other premium enhancements may have higher expenses
than a similar annuity without such credits or enhancements. Over time, the
higher charges could be more than the value of the credits. Accordingly, you
should always consider the expenses along with the features and enhancements to
be sure any annuity meets your financial needs and goals. Please see How we
allocate your premium payments.
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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>
Transfers among investment options
You can make transfers among the variable investment options at any time.
Transfers must comply with the rules of any retirement plan that apply. Please
see The accumulation period: Transfers.
Death benefits
If the annuitant should die (or both the annuitant and contingent annuitant
should die, if a contingent annuitant has been named) before annuity payments
begin, then we pay a death benefit to the beneficiary. The contract also gives
you the option of purchasing a rider 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. During the annuity
period, under payment option V-4, all or a portion of the present value of the
remaining payments may be withdrawn. Please see The annuity period: Variable
annuity payout options.
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
1.55% annually for each of the first four contract years and thereafter
1.45% 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.
Please see Financial Information Contract costs and expenses.
The following are expenses that you may incur as a contract owner:
o Contingent deferred sales charges
A charge of up to 3% against any amount that you withdraw during the first
four contract years that is attributable to premium payments made during
the first contract year.
o Enhanced death benefit expense
If you choose this benefit, you will pay a daily charge at an annual rate
of 0.25% of the net asset value of your variable investment options.
o Living benefit rider expense
If you choose this rider, you will pay a daily charge at an annual rate of
0.25% of the net asset value 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.
o Partial withdrawal charge
During the annuity period, if you make more than one partial withdrawal in
a calendar quarter, you will pay an administrative charge equal to the
lesser of $25 or 2% of the amount of the partial withdrawal.
Please see Financial information: Contract costs and expenses.
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.
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.
Please see Financial information: Summary of financial information about the
Separate Account for more information about Separate Account F 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: $25.00(1)
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Partial Withdrawal Charge(2): Lesser of $25 or 2% of partial withdrawal amount
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(1) This fee is not currently charged, but we reserve the right to charge
$25.00 for each transfer.
(2) This fee applies to partial withdrawals during the annuity period in
excess of 1 per quarter.
Contingent Deferred Sales Charge:
The following charges will be assessed on premiums withdrawn that were paid into
your contract during the first contract year.
Contingent
deferred sales charge
Number of contract years completed percentage(1)
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0 3%
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1 2%
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2 1%
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3 1%
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4+ 0%
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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.
The maximum contingent deferred sales charge will be equal to 3% of the lesser
of (1) the total of all premium payments made during the first contract year; or
(2) the amount withdrawn or surrendered.
ANNUAL CONTRACT FEE
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Annual Contract Fee: $35.00(2)
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(1) During the first four contract years, 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 made during the first contract year that have not been
previously withdrawn, or (ii) 10% of the total premium payments made
during the first contract year, minus the aggregate amount of all prior
partial withdrawals made during the current contract year.
(2) Where required by state law, this fee may be lower.
SEPARATE ACCOUNT LEVEL ANNUAL EXPENSES
(as a percentage of daily net asset value)
<TABLE>
<CAPTION>
Contracts Contracts Contracts
without Contract with Contract with Contract
Anniversary Anniversary Anniversary
Enhanced Death Enhanced Death Enhanced Death
Benefit or Benefit or Benefit and
Living Benefit Living Benefit Living Benefit
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Mortality & Expense Risk Charge
o years 0-4 1.55% 1.55% 1.55%
o years 5 and beyond 1.45% 1.45% 1.45%
--------------------------------------------------------------------------------------------------
Other Separate Account Fees
o Administrative Charge 0.20% 0.20% 0.20%
o Enhanced Death Benefit/
Living Benefit Charge 0.00% 0.25% 0.50%
--------------------------------------------------------------------------------------------------
Subtotal Other Separate
Account Fees 0.20% 0.45% 0.70%
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Total Separate Account
Level Annual Expenses
o years 0-4 1.75% 2.00% 2.25%
o years 5 and beyond 1.65% 1.90% 2.15%
--------------------------------------------------------------------------------------------------
</TABLE>
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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 and after any applicable waivers and
expense reimbursements)
Total fund
Management Other operating
fees expenses expenses
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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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AIM V.I. Aggressive Growth Fund(9) -- 1.19% 1.19%
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AIM V.I. Growth Fund .63% .10% .73%
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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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American Century VP
Capital Appreciation Fund 1.00% -- 1.00%
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Alger American Leveraged
AllCap Portfolio .85% .08% .93%
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(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 the Fidelity portfolios, whose expenses are estimated for the year
ending December 31, 2000 and The 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%.
(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 reduced 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, Value Line Strategic Asset Management Trust
incurred expenses of $925,843 and Value Line Centurion Fund incurred
expenses of $598,640 in connection with such services.
(9) Had there been no fee waivers or expense reimbursements, expenses would
have been .80%, 1.62% and 2.42%, respectively.
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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
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<PAGE>
<TABLE>
<CAPTION>
Total fund
Management Other operating
fees expenses expenses
------------------------------------------------------------------------------------
<S> <C> <C> <C>
Fidelity VIP Contrafund(R) Portfolio
(Service Class 2)(10) .58% .37% .95%
------------------------------------------------------------------------------------
Fidelity VIP Equity-Income Portfolio
(Service Class 2)(10) .48% .35% .83%
------------------------------------------------------------------------------------
Fidelity VIP Growth Portfolio
(Service Class 2)(10) .58% .35% .93%
------------------------------------------------------------------------------------
Fidelity VIP Balanced Portfolio
(Service Class 2)(10) .43% .41% .84%
------------------------------------------------------------------------------------
Janus Aspen Series Aggressive Growth
Portfolio (Service Shares)(11) .65% .27% .92%
------------------------------------------------------------------------------------
Janus Aspen Series Capital Appreciation
Portfolio (Service Shares)(11) .65% .29% .94%
------------------------------------------------------------------------------------
Janus Aspen Series Flexible Income
Portfolio (Service Shares)(11) .65% .32% .97%
------------------------------------------------------------------------------------
Janus Aspen Series Growth and Income
Portfolio (Service Shares)(11) .65% .65% 1.30%
------------------------------------------------------------------------------------
Janus Aspen Series Worldwide Growth Portfolio
(Service Shares)(11) .65% .30% .95%
------------------------------------------------------------------------------------
MFS Emerging Growth Series (Service Class)(12) .75% .29% 1.04%
------------------------------------------------------------------------------------
MFS Growth With Income Series (Service Class)(12) .75% .33% 1.08%
------------------------------------------------------------------------------------
MFS New Discovery Series (Service Class)(12) .90% .37% 1.27%
------------------------------------------------------------------------------------
MFS Global Governments Series (Service Class)(12) .75% .36% 1.11%
------------------------------------------------------------------------------------
MFS Capital Opportunities Series (Service Class)(12) .75% .36% 1.11%
------------------------------------------------------------------------------------
Prudential Jennison Portfolio (Class II) .60% .43% 1.03%
------------------------------------------------------------------------------------
</TABLE>
(10) The expenses as of 12/31/99, shown for Fidelity VIP Contrafund Portfolio,
Fidelity VIP Equity-Income Portfolio, Fidelity VIP Growth Portfolio and
Fidelity VIP Balanced Portfolio are based on estimated expenses for the
first year and are without reimbursement. "Other expenses" include a 0.25%
distribution and service (12b-1) fee where applicable.
(11) Expenses for Janus Aspen Flexible Income, Janus Aspen Aggressive Growth,
Janus Aspen Capital Appreciation, Janus Aspen Worldwide Growth, and Janus
Aspen Growth and Income Portfolios are based upon the estimated expenses
that the new Services Shares Class of each portfolio expects to incur in
its initial fiscal year. "Other expenses" include distribution (12b-1)
fees.
(12) Each series of the MFS Funds has adopted a distribution plan under Rule
12b-1 that permits it to pay marketing and other fees to support the sale
and distribution of service class shares. This distribution fee, currently
0.20%, is reflected in "Other expenses" in the table. Additionally, each
series has an expense offset arrangement that reduces the series'
custodian fee based upon the amount of cash maintained by the series with
its custodian and dividend disbursing agent. "Other expenses" do not take
into account these expense reductions, and are therefore higher than the
actual expenses of the series. MFS has contractually agreed, subject to
reimbursement, to bear the series' expenses such that "Other expenses"
(after taking into account the expense offset arrangement described above,
but not including the distribution fee) do not exceed 0.15% annually.
These contractual fee arrangements will continue until at least May 1,
2001, unless changed with the consent of the board of trustees which
oversees the series.
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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 | 5
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<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 (excluding any
investment credit), assuming a 5% annual return on assets.
<TABLE>
<CAPTION>
1 Yr. 3 Yrs.
------------------------------------------------------
CAEDB CAEDB CAEDB CAEDB
BC or LB plus LB BC or LB plus LB
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
The Guardian Cash Fund 55 57 60 86 94 102
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The Guardian Bond Fund 55 58 60 88 95 103
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The Guardian Stock Fund 55 57 60 86 94 102
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The Guardian Small Cap Stock Fund 58 61 63 96 104 111
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The Guardian VC 500 Index Fund 52 55 57 78 86 94
------------------------------------------------------------------------------------------------------------------------------
The Guardian VC Asset Allocation Fund 56 59 62 91 99 106
------------------------------------------------------------------------------------------------------------------------------
The Guardian VC High Yield Bond Fund 61 64 66 105 113 121
------------------------------------------------------------------------------------------------------------------------------
Baillie Gifford International Fund 59 62 65 100 108 115
------------------------------------------------------------------------------------------------------------------------------
Baillie Gifford Emerging Markets Fund 64 67 70 115 122 130
------------------------------------------------------------------------------------------------------------------------------
Value Line Centurion Fund 55 58 61 88 96 104
------------------------------------------------------------------------------------------------------------------------------
Value Line Strategic Asset Management Trust 55 58 61 88 96 104
------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Aggressive Growth Fund 62 64 67 107 115 122
------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Growth Fund 57 60 62 93 100 108
------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Government Securities Fund 59 61 64 98 106 113
------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Value Fund 57 60 62 94 101 109
------------------------------------------------------------------------------------------------------------------------------
Alger American Leveraged AllCap Portfolio 59 62 64 99 107 114
------------------------------------------------------------------------------------------------------------------------------
American Century VP Capital Appreciation Fund 60 62 65 101 109 117
------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Contrafund Portfolio (Service Class 2) 59 62 64 99 107 115
------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Equity-Income Portfolio (Service Class 2) 58 61 63 96 104 111
------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Growth Portfolio (Service Class 2) 59 62 64 99 107 114
------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Balanced Portfolio (Service Class 2) 58 61 63 96 104 112
------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series Aggressive Growth Portfolio (Service Shares) 59 62 64 99 106 114
------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series Capital Appreciation Portfolio (Service Shares) 59 62 64 99 107 115
------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series Flexible Income Portfolio (Service Shares) 59 62 65 100 108 116
------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series Growth and Income Portfolio (Service Shares) 63 66 68 110 118 126
------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series Worldwide Growth Portfolio (Service Shares) 59 62 64 99 107 115
------------------------------------------------------------------------------------------------------------------------------
MFS Emerging Growth Series (Service Class) 60 63 65 102 110 118
------------------------------------------------------------------------------------------------------------------------------
MFS Growth With Income Series (Service Class) 61 63 66 104 111 119
------------------------------------------------------------------------------------------------------------------------------
MFS New Discovery Series (Service Class) 63 65 68 109 117 125
------------------------------------------------------------------------------------------------------------------------------
MFS Global Governments Series (Service Class) 61 64 66 104 112 120
------------------------------------------------------------------------------------------------------------------------------
MFS Capital Opportunities Series (Service Class) 61 64 66 104 112 120
------------------------------------------------------------------------------------------------------------------------------
Prudential Jennison Portfolio (Class II) 60 63 65 102 110 117
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-----------------------
6 | P R O S P E C T U S E X P E N S E T A B L E
-----------------------
<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 (excluding any
investment credit), assuming a 5% annual return on assets.
<TABLE>
<CAPTION>
1 Yr. 3 Yrs.
------------------------------------------------------
CAEDB CAEDB CAEDB CAEDB
BC or LB plus LB BC or LB plus LB
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
The Guardian Cash Fund 25 27 30 76 84 92
--------------------------------------------------------------------------------------------------------------------------------
The Guardian Bond Fund 25 28 30 78 85 93
--------------------------------------------------------------------------------------------------------------------------------
The Guardian Stock Fund 25 27 30 76 84 92
--------------------------------------------------------------------------------------------------------------------------------
The Guardian Small Cap Stock Fund 28 31 33 86 94 101
--------------------------------------------------------------------------------------------------------------------------------
The Guardian VC 500 Index Fund 22 25 27 68 76 84
--------------------------------------------------------------------------------------------------------------------------------
The Guardian VC Asset Allocation Fund 26 29 32 81 89 96
--------------------------------------------------------------------------------------------------------------------------------
The Guardian VC High Yield Bond Fund 31 34 36 95 103 111
--------------------------------------------------------------------------------------------------------------------------------
Baillie Gifford International Fund 29 32 35 90 98 105
--------------------------------------------------------------------------------------------------------------------------------
Baillie Gifford Emerging Markets Fund 34 37 40 105 112 120
--------------------------------------------------------------------------------------------------------------------------------
Value Line Centurion Fund 25 28 31 78 86 94
--------------------------------------------------------------------------------------------------------------------------------
Value Line Strategic Asset Management Trust 25 28 31 78 86 94
--------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Aggressive Growth Fund 32 34 37 97 105 112
--------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Growth Fund 27 30 32 83 90 98
--------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Government Securities Fund 29 31 34 88 96 103
--------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Value Fund 27 30 32 84 91 99
--------------------------------------------------------------------------------------------------------------------------------
Alger American Leveraged AllCap Portfolio 29 32 34 89 97 104
--------------------------------------------------------------------------------------------------------------------------------
American Century VP Capital Appreciation Fund 30 32 35 91 99 107
--------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Contrafund Portfolio (Service Class 2) 29 32 34 89 97 105
--------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Equity-Income Portfolio (Service Class 2) 28 31 33 86 94 101
--------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Growth Portfolio (Service Class 2) 29 32 34 89 97 104
--------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Balanced Portfolio (Service Class 2) 28 31 33 86 94 102
--------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series Aggressive Growth Portfolio (Service Shares) 29 32 34 89 96 104
--------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series Capital Appreciation Portfolio (Service Shares) 29 32 34 89 97 105
--------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series Flexible Income Portfolio (Service Shares) 29 32 35 90 98 106
--------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series Growth and Income Portfolio (Service Shares) 33 36 38 100 108 116
--------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series Worldwide Growth Portfolio (Service Shares) 29 32 34 89 97 105
--------------------------------------------------------------------------------------------------------------------------------
MFS Emerging Growth Series (Service Class) 30 33 35 92 100 108
--------------------------------------------------------------------------------------------------------------------------------
MFS Growth With Income Series (Service Class) 31 33 36 94 101 109
--------------------------------------------------------------------------------------------------------------------------------
MFS New Discovery Series (Service Class) 33 35 38 99 107 115
--------------------------------------------------------------------------------------------------------------------------------
MFS Global Governments Series (Service Class) 31 34 36 94 102 110
--------------------------------------------------------------------------------------------------------------------------------
MFS Capital Opportunities Series (Service Class) 31 34 36 94 102 110
--------------------------------------------------------------------------------------------------------------------------------
Prudential Jennison Portfolio (Class II) 30 33 35 92 100 107
--------------------------------------------------------------------------------------------------------------------------------
</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>
This comparison of contract expenses assumes that the expenses incurred during
the periods shown will be the same as those reported in the Expense Table above
and that any applicable waivers and expense reimbursements will continue through
the periods noted in the examples. 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 estimated annual total amount of such fees by the total average net assets
of the Separate Account; (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 $12.3 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 $31.6
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 or employer-sponsored 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 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 and any investment credits to purchase
accumulation units in the variable investment options you have chosen, 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 the value of investments rises and
falls in the variable investment options.
We credit to the contract an investment credit of 3% of each net premium payment
made during the first contract year. Each investment credit is credited to the
contract when the applicable net premium payment is allocated to the variable
investment options. Investment credits are applied pro-rata to the variable
investment options in the same ratio as the applicable net premium payment.
Investment credits posted during the free look period vest after expiration of
the free look period. Investment credits posted after expiration of the free
look period vest immediately.
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, at any given time.
THE SEPARATE ACCOUNT
GIAC has established a Separate Account, known as Separate Account F, 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 on February 24, 2000 under Delaware law. 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. Delaware insurance law provides that the assets of the Separate
Account equal to
------------------------
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>
Variable investment options
--------------------------------------------------------------------------------
You may choose to invest in a maximum of 20 of the 32 variable investment
options at any time.
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.
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. 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 eliminating the shares of any of the Funds and substituting shares of
another appropriate Fund,
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, and
o adding to or suspending your ability to make allocations or transfers into
any variable investment 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.
------------------------
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 the Value Line Timeliness(TM)
Ranking System
------------------------------------------------------------------------------------------------------------------------------------
Value Line Strategic Asset High total investment return U.S. common stocks with selections
Management Trust consistent with reasonable risk based on the Value Line Ranking Systems,
bonds and money market instruments
------------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Aggressive Growth Fund Long-term growth of capital Common stocks, convertible bonds,
convertible preferred stocks and warrants
of small and medium sized companies
------------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Growth Fund Growth of capital Seasoned and better capitalized
companies considered to have strong
earnings momentum. May also invest in
foreign securities
------------------------------------------------------------------------------------------------------------------------------------
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
------------------------------------------------------------------------------------------------------------------------------------
Alger American Leveraged AllCap Long-term capital appreciation Equity securities of companies of any
Portfolio size which demonstrate promising
growth potential
------------------------------------------------------------------------------------------------------------------------------------
American Century VP Capital growth Common stocks of U.S. and foreign
Capital Appreciation Fund companies
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
------------------------
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>
Variable investment options
<TABLE>
<CAPTION>
Fund Investment objectives Typical investments
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Fidelity VIP Contrafund(R)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 Growth Portfolio Capital appreciation Common stocks believed to have
above-average growth potential
------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Balanced Portfolio Income and growth of capital Balance between stocks, bonds and other
debt securities
------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series Aggressive Growth Long-term growth of capital Equity securities of medium-sized
Portfolio companies; non-diversified
------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series Capital Appreciation Long-term growth of capital Equity securities of companies of any
Portfolio size; non-diversified
------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series Flexible Income Maximum total return consistent Income producing securities such as
Portfolio with preservation of capital corporate bonds and notes, government
securities and preferred stock
------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series Growth and Income Long-term capital growth Equity securities selected primarily for
Portfolio and current income their growth potential
------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series 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 Global Governments Series Income and capital appreciation U.S. and foreign government securities,
corporate bonds and mortgage-backed
and asset-backed securities
------------------------------------------------------------------------------------------------------------------------------------
MFS Capital Opportunities Series Capital appreciation Common stocks and related securities
such as preferred stocks, convertible
securities and depositary receipts for
these securities
------------------------------------------------------------------------------------------------------------------------------------
Prudential Jennison Portfolio II Long-term growth of capital Equity securities of major, established
corporations believed to have above
average growth prospects
------------------------------------------------------------------------------------------------------------------------------------
</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
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.
------------------------
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>
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, A I M
Advisors, Inc., Janus Capital Corporation, American Century and Fidelity
Management & Research Company. 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.
Before investing
--------------------------------------------------------------------------------
Please read the accompanying Fund prospectuses carefully. They contain important
information on the investment objectives, policies, charges and expenses of the
Funds.
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
------------------------------------------------------------------------------------------------------
Alger American Leveraged AllCap Portfolio Fred Alger Management, Inc.
One World Trade Center, Suite 9333
New York, New York 10048
------------------------------------------------------------------------------------------------------
Value Line Centurion Fund Value Line, Inc.
Value Line Strategic Asset 220 East 42nd Street
Management Trust New York, New York 10017
------------------------------------------------------------------------------------------------------
AIM V.I. Aggressive Growth Fund A I M Advisors, Inc.
AIM V.I. Growth Fund 11 Greenway Plaza -- Suite 100
AIM V.I. Government Securities Fund Houston, Texas 77046-1173
AIM V.I. Value Fund
------------------------------------------------------------------------------------------------------
American Century VP Capital American Century Investment
Appreciation Fund Management, Inc.
4500 Main Street
Kansas City, Missouri 64111
------------------------------------------------------------------------------------------------------
Fidelity VIP Contrafund(R)Portfolio Fidelity Management & Research Company
Fidelity VIP Equity-Income Portfolio 82 Devonshire Street
Fidelity VIP Growth Portfolio Boston, Massachusetts 02109
Fidelity VIP Balanced Portfolio
------------------------------------------------------------------------------------------------------
Janus Aspen Series Aggressive Growth Portfolio Janus Capital Corporation
Janus Aspen Series Capital Appreciation Portfolio 100 Fillmore Street
Janus Aspen Series Flexible Income Portfolio Denver, Colorado 80206-4928
Janus Aspen Series Growth and Income Portfolio
Janus Aspen Series 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 Global Governments Series
MFS Capital Opportunities Series
------------------------------------------------------------------------------------------------------
Prudential Jennison Portfolio II Jennison Associates LLC
466 Lexington Avenue
New York, New York 10017
------------------------------------------------------------------------------------------------------
</TABLE>
------------------------
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>
--------------------------------------------------------------------------------
When you buy a contract, please note:
o You can choose up to 20 investment options at any one time.
o There are no initial sales charges on the premium payments that you
allocate to the variable investment options.
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.
o You can change beneficiaries as long as the annuitant is living.
--------------------------------------------------------------------------------
------------------------
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>
Transfers
--------------------------------------------------------------------------------
You can transfer money between variable investment options both before and after
the date annuity payments begin.
TRANSFERS
You can transfer money among variable investment options both before and after
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. Each transfer 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. We also reserve the right to limit the number of transfers in any
contract year, or to refuse any transfer request if:
o We are concerned that excessive trading by the owner(s) or a specific
transfer request or group of transfer requests may have a detrimental
effect on the unit value of the share prices of the underlying variable
investment options; or
o We are informed by an underlying variable investment option that the
purchase or redemption of shares should be restricted due to excessive
trading, or that a specific transfer or group of transfers is deemed to
have a detrimental effect on share prices of the affected underlying
variable investment option.
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.
------------------------
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
------------------------
<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.
--------------------------------------------------------------------------------
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.
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 payout
option you can transfer all or part of the value of your annuity among the
variable investment options only once each calendar month. We must receive your
transfer instructions in good order at least 15 days before the due date of the
first variable annuity payment to which the transfer applies. If you have
elected a fixed annuity payout option, you may not transfer into or out of such
option.
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. During the annuity period, unless you selected variable annuity
payout Option V-4, Variable Annuity Payments to age 100, we will not accept
requests for surrenders or partial withdrawals after the date annuity payments
begin. See Variable annuity payout options.
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. See Contract Costs and Expenses-Contingent Deferred Sales
Charge. To effect your request, we will cash variable accumulation units from
the variable investment divisions on a pro-rata basis, unless you instruct us
differently.
If you have less than $500 left in your contract 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.
------------------------
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>
--------------------------------------------------------------------------------
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.
--------------------------------------------------------------------------------
Surrenders and partial withdrawals are subject to tax, and may be subject to
penalty taxes and mandatory federal income tax withholding.
In the first four contract years, you are allowed to make an annual withdrawal
from the contract, without paying a deferred sales charge, of an amount equal to
the greater of:
o On the date of withdrawal, the excess of the accumulation value over the
total of the net premium payments that you have made (and not withdrawn),
in the first contract year; or
o 10% of the total premium payments made during the first contract year
minus the total of all the withdrawals you already made during the current
contract year.
For the purpose of calculating the deferred sales charge and in order to
minimize the applicable deferred sales charge, all amounts withdrawn are deemed
to be withdrawn on a last-in first-out basis. Premium payments made in the
second contract year and later will not be subject to a deferred sales charge
upon withdrawal.
We will send you your payment within seven days of receiving a request from you
in good order. Please see Payments later in this section.
If you have a question about surrenders or withdrawals, please call us toll free
at 1-800-221-3253.
------------------------
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
------------------------
<PAGE>
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.
--------------------------------------------------------------------------------
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.
--------------------------------------------------------------------------------
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 the Cash Fund investment division.
The money can go into one or more of the other variable investment options. The
rule still applies that you can invest in a maximum of only 20 options at one
time (this includes the required Cash Fund).
Programs to build your annuity
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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.
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 on which you
wish the transfers to begin.
You may select dollar cost averaging for periods of 12, 24 or 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.
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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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There is no fee for dollar cost averaging, but we have the right to introduce
one. We also have the right to modify or discontinue this program. We will give
you written notice if we take any of these actions. Transfers under a dollar
cost averaging program do not count against any free transfers permitted under
the contract.
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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.
There is no fee for portfolio rebalancing, but we have the right to introduce
one. We also have the right to modify or discontinue this program. We will give
you written notice if we take any of these actions. Transfers under the
portfolio rebalancing program do not count against any free transfers permitted
under the contract.
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.
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<PAGE>
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THE ANNUITY PERIOD
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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 and assumed investment return you choose, and
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, you may choose an assumed investment return on the variable annuity
payments of 0%, 31/2%, or 5%, if allowed by applicable law or regulation, before
we start making payments to you. If no choice is made, an effective annual
interest rate of 31/2% will be used as the assumed investment return.
The assumed investment rate is a critical assumption for calculating variable
dollar amount annuity payments. The greater the assumed investment return
selected, the greater your initial annuity payment will be. A higher assumed
rate may result in a smaller potential growth in annuity payments. Conversely, a
lower assumed rate results in a lower initial annuity payment, but future
annuity payments have the potential to be greater. The first payment will be
based on the assumed investment rate; subsequent payments will fluctuate based
on the performance of the variable investment options you have chosen as
compared to the assumed investment rate. For each such subsequent payment:
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Variable annuity payout options
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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
o Option V-4 Variable Annuity Payments to Age 100
o If the actual net annual return on investment equals the assumed rate, the
amount of your variable annuity payment will not change.
o If the actual net annual return on investment is greater than the assumed
rate, the amount of your variable annuity payments will increase.
o If the actual net annual return on investment is less than the assumed
rate, the amount of your variable annuity payments will decrease.
The interest rate used to compute the present value of any remaining unpaid
payments will be the assumed investment return.
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 at least 60
days 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.
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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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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.
OPTION V-4 - Variable Annuity Payments to Age 100
We make a payment once a month for a whole number of years. The number of years
will equal 100 minus the annuitant's age when annuity payments begin. If the
annuitant dies before age 100, we will pay the balance of the payments to the
beneficiary for the remainder of that period, unless the beneficiary elects to
be paid the present value of the remaining annuity payments in a lump sum. If
the beneficiary dies while receiving such payments, we will pay the present
value of the remaining payments to the beneficiary's estate. Under this option,
the payee has the right to change to Option V-1, the Life Annuity without
Guaranteed Period.
Under option V-4, the payee has the right to withdraw all or a portion of the
present value of the remaining payments. The following conditions apply to
partial withdrawals.
o the payee may not withdraw less than $500,
o the present value of the remaining payments must be at least $2,000,
o the remaining monthly payment is at least $20 (or $60 quarterly,
$120 semi-annually, or $240 annually), and
o 1 partial withdrawal is permitted each quarter without charge and
additional withdrawals are permitted at a charge not to exceed the lesser
of $25 or 2% of the amount withdrawn.
In a recent ruling, the Internal Revenue Service (IRS) concluded that a partial
withdrawal on or after the annuity commencement date is ordinary income subject
to tax up to an amount equal to any excess of the cash value (determined without
surrender charges) immediately before the withdrawal over the owner's investment
in the contract at that time (i.e., on an income first basis). In prior rulings,
the IRS had concluded that the entire amount received as a partial withdrawal on
or after the annuity commencement date from a non-qualified contract was to be
taxed as ordinary income (i.e., on an all taxable basis). GIAC currently intends
to report amounts received as partial withdrawals pursuant to the income first
basis set forth in the IRS's most recent ruling. Given the uncertainty in this
area, you should consult a tax advisor regarding the tax consequences to you of
a partial withdrawal under Option V-4. Other rules may apply to partial
withdrawals from qualified contracts that elect option V-4.
Surrender or partial withdrawal during the annuity period will not trigger a new
deferred sales charge; however, if we waived the deferred sales charge when the
contract proceeds were applied to the payout option, the present value will be
reduced by a portion of the charge that was waived. The reduction in the present
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Fixed-rate annuity payout options
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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
value will be the amount obtained by multiplying (a) by the result of (b)
divided by (c) where:
(a) is the deferred sales charge that was waived;
(b) is the number of whole months of any remaining unpaid payments until the
date when the deferred sales charge would be zero; and
(c) is the number of whole months remaining when the contract proceeds were
applied to the payout option until the date when the deferred sales charge
would be zero.
The interest rate used to compute the present value of any remaining unpaid
payments will be the assumed investment return.
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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OTHER CONTRACT FEATURES
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Death benefits
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If the later to survive of the annuitant and the contingent annuitant 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.
DEATH BENEFITS
If the annuitant you have named dies before the date annuity payments begin, we
pay a death benefit unless you have named a contingent annuitant. If you have
named a contingent annuitant, we pay a death benefit prior to the date annuity
payments commence upon the death of the later to survive of the annuitant and
contingent annuitant. In addition, you have the option of buying an enhanced
death benefit rider which may provide a higher death benefit.
The regular death benefit if the annuitant dies before age 85 is the greatest
of:
o the accumulation value of the contract at the end of the valuation period
during which we receive proof of death in good order, minus any annuity
taxes;
o the total of all premiums paid, minus any partial withdrawals, any
deferred sales charges paid on any withdrawals and any annuity taxes; or
o the accumulation value of the contract as of the reset date immediately
preceding the annuitant's date of death, plus any net premiums paid after
that date, less the amount of any partial withdrawals after that date, any
deferred sales charges paid on any such withdrawals and any annuity taxes.
The first reset date is on the seventh contract anniversary. After this,
each reset date will be each seventh contract anniversary after that
(i.e., the 14h, 21st, 28th contract anniversaries, and so on).
For annuitants aged 80 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 in good order, minus any annuity taxes.
If the annuitant is age 85 or older at the time of death, the death benefit
payable will be the accumulation value as of the end of the valuation period
during which we received proof of death in good order, 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 a 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.
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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.
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 a contract owner dies before the annuity commencement date, 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 a
contract owner's 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 an owner dies on or after the annuity commencement date but before the entire
contract has been distributed then the remaining portion must be distributed at
least as rapidly as under the method of distribution in effect as of the date of
the owner's death.
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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.
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<PAGE>
requirements. In this situation, any change in or death of the annuitant will be
treated as the death of a contract owner.
CONTRACT ANNIVERSARY ENHANCED DEATH BENEFIT
When you buy your contract, you can choose to buy an enhanced death benefit. If
a death benefit is payable and this option is in force, the beneficiary will
receive either the death benefit described above or the enhanced death benefit,
whichever is greater.
The enhanced death benefit is available only in states where it has been
approved.
This rider has a daily charge based on an annual rate of 0.25% of the net assets
of your variable investment options.
The enhanced death benefit 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 benefit 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 this benefit 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, and the death benefit
reverts to the regular death benefit, and no further charges will be deducted
for this benefit. Please see Death benefits.
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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 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.
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% Capital Preservation - The Guardian Cash Fund.
40% Income - The Guardian Bond Fund or AIM V.I. Government
Securities Fund.
40% Growth - AIM V.I. Growth Fund, AIMV.I. Value Fund, Fidelity
VIP Balanced Portfolio, Fidelity VIP Contrafund Portfolio,
Fidelity VIP Equity-Income Portfolio, Fidelity VIP Growth
Portfolio, Guardian Baillie Giffford International Fund,
Guardian Stock Fund, Guardian VC 500 Index Fund, Guardian VC
Asset Allocation Fund, Guardian VCHigh Yield Bond Fund, Janus
Aspen Flexible Income Portfolio, Janus Aspen Growth and Income
Portfolio, MFSGlobal Governments Series, MFS Growth with Income
Series, Prudential Jennison Portfolio, Value Line Centurion
Fund, Value Line Strategic Asset Management Trust.
10% Aggressive Growth - AIMV.I.Aggressive Growth Fund, Alger
American Leveraged Allcap Portfolio, American Century VP
Capital Appreciation, Guardian Baillie Gifford Emerging Markets
Fund, Guardian Baillie Gifford International Fund, Guardian
Small Cap Stock Fund, Janus Aspen Aggressive Growth Portfolio,
Janus Aspen Capital Appreciation Portfolio, Janus Aspen
Worldwide Growth Portfolio, MFSCapital Opportunities Series,
MFSEmerging Growth Series, MFSNew Discovery Series.
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- On each quarterly anniversary, your accumulation value will be rebalanced
to the allocation percentage listed above. Within each Asset 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.
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
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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, and no further charges will be deducted for
this benefit.
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FINANCIAL INFORMATION
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The value of your account
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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 ACCUMULATION UNIT VALUES
When you choose a variable investment option, you accumulate variable
accumulation units. To calculate the number of accumulation units you buy with
each payment (and any investment credit), 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.
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, the enhanced death benefit
rider and the living benefit rider where applicable) and subtract them
from the above total.
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Cost and expenses
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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;
and the following charges may apply:
o enhanced death benefit expenses
o living benefit rider expenses
o contingent deferred sales charge.
o partial withdrawal charge
See accompanying text for details.
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.
There is no specific charge for the investment credit. We will pay the credit
out of our surplus, and we will recover it over time from a portion of the
proceeds of the surrender charge, contract fee, and mortality and expense risk
charge. To the extent these charges exceed our actual costs, we may generate a
profit.
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
To cover our mortality and expense risks, during the first four contract years
you will pay a daily charge based on an annual rate of 1.55% of the value of the
assets in your variable investment options. Thereafter, the charge will be based
on an annual rate of 1.45%. 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 value
of the assets in your variable investment options for our administrative
expenses.
Enhanced death benefit expenses
If you choose the enhanced death benefit and it is in effect, you will pay a
daily charge based on an annual rate of 0.25% of the value of the assets in your
variable investment options.
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 value of the assets in your
variable investment options.
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Deferred sales charges
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Number of contract Deferred
years completed sales
from the date of charge
premium payment (%)
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0 3
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1 2
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2 1
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3 1
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4+ 0
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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. If you surrender your contract before the contract
anniversary date, we will still deduct the contract fee for that year on the
date of surrender. We will waive the contract fee if the accumulation value is
$100,000 or more on the anniversary date of your contract.
In addition, the following charges may apply:
Contingent deferred sales charge
If you make a partial withdrawal from your account or surrender your contract
during the first four contract years, you may pay a deferred sales charge on any
amount that was paid into your contract during the first contract year. This
charge compensates us for expenses related to the sale of contracts.
When we calculate the deferred sales charge, all amounts taken out are deemed to
be withdrawn on a last-in, first-out basis. We do this to minimize the amount
you owe. Deferred sales charges are listed in the table.
The maximum contingent deferred sales charge that you will pay is equal to 3% of
the lesser of: (i) the total of all premium payments made within the first
contract year; or (ii) the amount withdrawn or surrendered. However, during the
first four contract years, you may make a partial withdrawal without a deferred
sales charge, of an amount equal to the greater of: (i) the excess of the
accumulation value on the date of withdrawal over the total of the net premium
payments that you have made (and not withdrawn) in the first contract year; or
(ii) 10% of the total premium payments made during the first contract year minus
the total of all the withdrawals you already made during the current contract
year. For purposes of calculating the contingent deferred sales charge, we do
not take into account any investment credits.
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.
In jurisdictions in which an annuity tax is payable, either when premium
payments are received or when the accumulation value is applied under a payout
option, we will deduct the amount of tax payable, if any, from the contract's
accumulation value when it is applied under a payout option or on surrender.
Partial withdrawal charge
During the annuity period, if you make more than one partial withdrawal in a
calendar quarter, you will pay an administrative charge equal to the lesser of
$25 or 2% of the amount of the partial withdrawal.
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Deferring tax
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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.
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.
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 contract'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 in other
situations and 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.
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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.
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 Before the Annuity Commencement Date - 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. Investment credits are not considered part of the owner's
investment in the contract and will be treated as income when a distribution is
taken. 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.
Withdrawals After the Annuity Commencement Date - After the Annuity Commencement
Date, under Option V-4 the payee has the right to withdraw a portion of the
present value of the remaining payments. In a recent ruling, the IRS concluded
that a partial withdrawal on or after the annuity starting date is ordinary
income subject to tax up to an amount equal to any excess of the cash value
(determined without surrender charges) immediately before the withdrawal over
the owner's investment in the contract at that time (i.e., on an income first
basis). In prior rulings, the IRS had concluded that the entire amount received
as a partial withdrawal on or after the annuity starting date from a
non-qualified contract was to be taxed as ordinary income (i.e., on an all
taxable basis). GIAC currently intends to report amounts received as partial
withdrawals pursuant to the income first basis set forth in the IRS's most
recent ruling. Given the uncertainty in this area, you should consult a tax
advisor regarding the tax consequences to you of a partial withdrawal under
Option V-4. Other rules may apply to partial withdrawals from qualified
contracts that elect option V-4.
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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 or payee who is not an owner,
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.
Multiple contracts - All non-qualified deferred 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.
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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.
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 the amount of compenstation
includible in their gross income for the year. 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 591/2, a 10%
penalty may 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.
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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.
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 (but not earnings) 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. The Internal Revenue Service has not reviewed
the contract for qualification as an IRA and has not addressed in a ruling of
general applicability whether a death benefit provision such as the enhanced
death benefit provision in the contract comports with IRA qualification
requirements.
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
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<PAGE>
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.
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.
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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. Total return reflects the investment credit (for standard returns
only), all Fund expenses, the mortality and expense risks charge, administrative
expenses, the contract fee, contingent deferred sales charge, and any other
expenses.
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 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.
--------------------------------------------------------------------------------
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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<PAGE>
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 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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YOUR RIGHTS AND RESPONSIBILITIES
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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, if you have selected a variable payout option, rights
switch to the annuitant. Voting rights diminish with the reduction of your
contract value.
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 and other charges) and the amounts we allocated to the variable
investment options you chose; and
o the accumulation value of the contract on the date we receive your
cancellation.
The above amount payable will be reduced by the accumulation value of any
investment credit(s) on the date we receive your cancellation notice. We will
return to you any mortality and expense risk charge and administrative expense
charge assessed on the accumulation value of the investment credit(s) prior to
receipt of your cancellation notice.
If state law requires, you will receive the total premium you paid for the
contract instead, not including investment credits.
Free-look period
--------------------------------------------------------------------------------
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.
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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. A commission of 1% will be paid on all premium payments
received in the first contract year exclusive of investment credits. A
commission of 1% per annum of the accumulation value of the contract will be
paid quarterly beginning in the second contract year. If the annuitant is age 81
or over at issue, the first year commission will be .60% and the trail
commission will be .60%. Trail commissions will continue after the annuity
commencement date. 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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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.
Accumulation value
The value of all the accumulation units in the variable investment options
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.
Contingent annuitant
A contingent annuitant is the person you name in the application to become the
annuitant if the annuitant dies before the annuity commencement date. A
contingent annuitant may be named only if the owner and the annuitant are not
the same person. Only the owner may change a contingent annuitant.
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.
Investment credit
During the first contract year, a credit of 3% of each net premium payment that
is credited to this contract at the time a net premium payment is allocated to
your contract's allocation options.
Reset date
The first reset date occurs on the seventh contract anniversary of the contract,
excluding any additional benefit riders. Thereafter, each reset date occurs on
each subsequent seventh contract anniversary.
Valuation date
A date on which accumulation unit values are determined. Accumulation unit
values are determined on each date on which the New York Stock Exchange or its
successor is open for trading. Valuations for any date other than a valuation
date will be determined on the next valuation date.
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 available
for allocations of net premium payments and accumulation values.
S P E C I A L T E R M S U S E D ------------------------
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OTHER INFORMATION
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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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INDIVIDUAL FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY CONTRACT
Issued Through
THE GUARDIAN SEPARATE ACCOUNT F
OF
THE GUARDIAN INSURANCE & ANNUITY COMPANY, INC.
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Statement of Additional Information dated September 11, 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 F dated September 11, 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-5
Transferability Restrictions B-6
Experts B-6
Financial Statements B-6
B-1
<PAGE>
SERVICES TO THE SEPARATE ACCOUNT
The Guardian Insurance & Annuity Company, Inc. ("GIAC") maintains the books
and records of The Guardian Separate Account F (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 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.
If a Contract owner chooses a variable annuity payment, or a combination
of variable and fixed payments, he or she may choose an assumed investment
return on the variable annuity payments of either 0%, 3 1/2%, or 5%, if allowed
by applicable law or regulation. If no choice is made, an effective annual
interest rate of 3 1/2% will be used as the assumed investment return. As
discussed later, the assumed investment return chosen is compared to the actual
returns of the variable investment options chosen to determine the amount of
subsequent variable 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 and/or Living 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 Variable Accumulation Unit Value on the Valuation Date ten (10)
days before the date the first variable or fixed Annuity Payment is due by the
corresponding number of Variable 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 date 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
B-2
<PAGE>
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 the contractowner selects under the Contract
is the measuring point for subsequent variable Annuity Payments. If the actual
net investment rate (on an annual basis) remains equal to the assumed investment
return selected, the variable Annuity Payments will remain constant. If the
actual net investment rate exceeds the assumed investment return selected, the
variable Annuity Payment will increase at a rate equal to the amount of such
excess. Conversely, if the actual rate is less than the assumed investment
return selected, 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.
B-3
<PAGE>
PERFORMANCE DATA
We may show performance results for each of the Separate Account's
Investment Divisions for various time periods. These results 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, certain
performance information for each Investment Division will reflect the investment
experience of its underlying Fund for periods prior to the commencement of
operations of the Separate Account (September 11, 2000) if the Fund existed
prior to such date. Performance information for periods predating the
commencement of operations of the Separate Account will not reflect the effects
of any investment credits. Such results will be calculated by applying all
Contract and Separate Account level charges to the historical Fund performance
results for such prior periods. During such prior periods, several of the Funds
will have been utilized as the underlying Funds for other separate accounts of
GIAC which were established in connection with the issuance of other variable
contracts.
Average Annual Total Return Calculations
Average annual total return calculations illustrate 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.
The calculations assume 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.
Two types of average annual total return calculations can be shown -- standard
and non-standard. Standard average annual return calculations reflect 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. Standard returns cannot
pre-date the commencement of operations of the Separate Account. As a result, no
standard returns are shown in this Statement of Additional Information.
Non-standard average annual total returns are calculated in the same
manner as standard returns but may utilize different assumptions and time
periods.
B-4
<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-5
<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 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-8 should be considered only as bearing upon the ability of
GIAC to meet its obligations under the Contracts.
B-6
<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-7
<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-8
<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-9
<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-10
<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-11
<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-12
<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-13
<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-14
<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-15
<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-16
<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-17
<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-18
<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-19
<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-20
<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-21
<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:
The Guardian Insurance & Annuity Company, Inc. (included in Part
B):
Consolidated Balance Sheets as of December 31, 1999 and 1998
Consolidated Statements of Income and Comprehensive Income for
the Three Years Ended December 31, 1999, 1998 and 1997
Consolidated Statements of Changes in Stockholder's Equity for
the Three Years Ended December 31, 1999, 1998 and 1997
Consolidated Statements of Cash Flow for the Three Years Ended
December 31, 1999, 1998 and 1997
Notes to Consolidated 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 F(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(1)
4 Specimen of Variable Annuity Contract(1)
5 Form of Application for Variable Annuity
Contract(1)
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.(1)
9 (a) Opinion of Counsel
(b) Consent of Counsel
10 Consent of PricewaterhouseCoopers LLP
11 Not Applicable
12 Not Applicable
13 Schedule for Computation of Performance
Quotations(1)
14 Powers of Attorney executed by a majority of
the Board of Directors and certain principal
officers of The Guardian Insurance & Annuity
Company, Inc.(1)
-------------------
(1) Incorporated by reference to the Registration Statement on Form N-4 (Reg.
No. 333-38292) as initially filed on June 1, 2000.
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 June 30, 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 of Texas, Inc. Texas 100%
Managed Dental Guard of Missouri, Inc. Missouri 100%
Managed Dental Guard, Inc. Maryland 100%
Corporate Financial Services, Inc. Pennsylvania 100%
Innovative Underwriters Services New Jersey 100%
Dental Guard Preferred, Inc. Washington 100%
The Guardian Tax-Exempt Bond Fund Massachusetts 93%
The Guardian Baillie Gifford Massachusetts 36%
International Fund
The Guardian Investment Quality Massachusetts 35%
Bond Fund
The Guardian Asset Allocation Fund Massachusetts 11%
Baillie Gifford Emerging Markets Fund Maryland 30%
Baillie Gifford International Fund Maryland 49%
The Guardian Park Avenue Small Cap Fund Massachusetts 26%
The Guardian Baillie Gifford Massachusetts 58%
Emerging Markets Fund
The Guardian High Yield Bond Fund Massachusetts 92%
The Guardian Small Cap Stock Fund Maryland 63%
The Guardian VC Asset Allocation Fund Maryland 85%
The Guardian VC 500 Index Fund Maryland 98%
The Guardian VC High Yield Bond Fund Maryland 96%
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 June 30, 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 3%
Park Avenue Securities LLC Delaware 100%
Family Service Life Insurance Co. Texas 100%
Famlico, Inc. Texas 100%
Guardian Reinsurance Services Corp. Connecticut 100%
Sentinel American Life Insurance Co. Texas 100%
Item 27. Number of Contract owners
Type of Contract As of June 30, 2000
---------------- -------------------
Non-Qualified .............. 0
Qualified .................. 0
Total .............. 0
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<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 ten 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 S&P 500 Index 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, The Guardian Separate Account M, and The Guardian Separate
Account N 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 F,
has duly caused this Pre-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 6th of September, 2000.
The Guardian Separate Account F
(Registrant)
By: THE GUARDIAN INSURANCE & ANNUITY
COMPANY, INC.
(Depositor)
By: /s/ Bruce C. Long
--------------------------------
Bruce C. Long
Executive Vice President
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<PAGE>
As required by the Securities Act of 1933, this Pre-Effective Amendment to
the 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: September 6, 2000
--------------------------------
Bruce C. Long
Executive Vice President
* Pursuant to a Power of Attorney
C-7
<PAGE>
Exhibit Index
Number Description
9 (a) Opinion of Counsel
(b) Consent of Counsel
10 Consent of PricewaterhouseCoopers LLP
C-8
