TABLE OF CONTENTS
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PERFORMANCE SUMMARY 2
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LETTER TO CONTRACTOWNERS 3
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THE GUARDIAN PARK AVENUE FUND
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INTERVIEW WITH CHARLES E. ALBERS 4
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FUND PROFILE 6
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FINANCIALS
------------------------------------------------------------
THE GUARDIAN/VALUE LINE SEPARATE ACCOUNT 8
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THE GUARDIAN PARK AVENUE FUND 16
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THE GUARDIAN PARK AVENUE FUND
OBJECTIVE: Long-term growth of capital
- ---------------------------------------------
PORTFOLIO: At least 80% common stocks and
securities convertible into
common stocks
- ---------------------------------------------
INCEPTION: June 1, 1972
- ---------------------------------------------
NET ASSETS AT DECEMBER 31, 1995: $972,274,595
- ---------------------------------------------
"WE UTILIZE WHAT WE BELIEVE TO BE SUPERIOR DECISION-MAKING SYSTEMS
INCLUDING A BOTTOM-UP QUANTITATIVE STOCK SCORING SYSTEM AND TOP-DOWN PORTFOLIO
MANAGEMENT STYLE PREDICTORS. OUR ORGANIZATIONAL CULTURE SUPPORTS INDEPENDENT
THINKING AND THE FLEXIBILITY TO ACT QUICKLY. AND, I SUSPECT, WE WORK JUST A
LITTLE HARDER THAN MOST OF OUR COMPETITORS."
--Charles E. Albers
PORTFOLIO MANAGER
<PAGE>
PERFORMANCE SUMMARY
[GUARDIAN LIFE BUILDING DEPICTED]
INVESTMENT OPTION TOTAL RETURN*
----------------- -------------
The Guardian Park Avenue Fund ................ 32.97%
Value Line Leveraged Growth Investors ........ 35.72%
Value Line Special Situations Fund ........... 27.70%
Value Line Fund .............................. 30.82%
Value Line Income Fund ....................... 25.00%
Value Line U.S. Govt. Securities Fund ........ 13.32%
Value Line Cash Fund ......................... 4.39%
FIXED-RATE OPTION
The annual rate of interest for amounts deposited or renewed (on a contract
anniversary) in the Fixed-Rate Option for the period January 1, 1995 to October
31, 1995 was 5.50%; for the month of November it was 5.35% and for the month of
December it was 5.20%.
Rates paid by the Fixed-Rate Option are subject to change at any time, and
may be higher or lower for new deposits or renewals, but are guaranteed from the
date of deposit or renewal to the next contract anniversary.
* The chart above shows the total returns for each investment option under
Value Guard based on the percentage change in unit values during the period
January 1, 1995 through December 31, 1995. In contrast to the returns
presented elsewhere, changes in unit values reflect the effects of
mortality and expense risk charges as well as each option's expenses to
give you a better picture of an investment option's performance under the
contract. Total return performance figures stated above do not, however,
reflect the annual contract administration charge or possible withdrawal
charges. Deduction of these amounts would reduce the stated total returns.
Past performance is not a guarantee of future results.
You will receive annual reports for the Value Line funds available under
Value Guard shortly.
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2
<PAGE>
DEAR CONTRACTOWNER:
[PHOTO]
Joe D. Sargent, CLU
President & CEO
As the new President and Chief Executive Officer of The Guardian Insurance
& Annuity Company, Inc. and its parent, The Guardian Life Insurance Company of
America, I am pleased to introduce this annual report on 1995's results. I would
like to take a moment and thank Arthur V. Ferrara for his years of stewardship
at the helm of The Guardian Insurance & Annuity Company, Inc. (GIAC). Although
Mr. Ferrara has recently retired from The Guardian as Chairman of the Board and
Chief Executive Officer, we are pleased that he will continue to serve on the
Board of Directors of GIAC, the issuer of your Value Guard variable annuity
contract. In my new position, I look forward to maintaining our commitment of
providing you with a full range of insurance and investment options to help you
build your future.
ON OUR RATINGS
Once again, we are proud to report that as of January 31, 1996, both GIAC,
and its parent, The Guardian Life Insurance Company of America, continue to
enjoy the highest rating available from four of the nation's leading insurance
company evaluators: Moody's (Aaa), Standard & Poor's (AAA), A.M. Best (A++), and
Duff & Phelps (AAA). Although these ratings do not apply to Value Guard's
underlying variable investment options, which are subject to the risks of
investing in securities, GIAC's triple-A ratings reflect its ability to meet its
guarantee of the contract's Fixed-Rate Option and pre-retirement death benefit.
OUR COMMITMENT TO YOU
Although 1995 brought a change in leadership at GIAC, we will continue our
proud tradition of commitment to you, our contractowners and as a provider of
superior customer service.
I invite you to read the interview with Charles Albers, portfolio manager
for The Guardian Park Avenue Fund, to learn more about the strategies he used to
manage the Fund during 1995.
Thank you for continuing to invest for your future through GIAC.
Regards,
JOSEPH D. SARGENT, CLU [Signature]
Joseph D. Sargent, CLU
President & Chief Executive Officer
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3
<PAGE>
THE GUARDIAN PARK AVENUE FUND
[PHOTO]
Charles E. Albers, C.F.A.
Portfolio Manager
Q. THIS HAS BEEN A TERRIFIC YEAR FOR ALL INVESTMENT CLASSES IN THE U.S. HOW HAS
THE FUND PERFORMED IN THIS MARKET?
A. Stock market returns in 1995 were far above the previous 25-year compounded
annual S&P 500 Index rate of 11.0%.(1) The 37.36% total return on the S&P 500
Index surpassed the 37.16% return of 1975, and one must go back to 1958 to find
a higher return: 43.36%. Three major factors were behind 1995's stellar
performance. First, the market experienced a drop in long-term interest rates
during the year of roughly 2 full percentage points, from 7.9% to 5.9% on the
30-year Treasury Bond. Second, U.S. businesses generally experienced strong
operating profits in 1995, with earnings from operations for S&P 500 companies
increasing by roughly 14% from 1994 levels. And third, until the federal budget
crisis at year's end, there was a reasonably balanced domestic political
environment in 1995, with hopes for a reduction of capital gains taxes providing
a special impetus to the securities markets.
Most stock market investors did very well in 1995. However, the average
investor had a lot of trouble keeping up with the performance of the S&P 500
Index, which was pulled upward by the strong leadership of roughly 25-50
large-capitalization growth stocks. For example, the Russell 2000 Index, a
measure of small-capitalization stock behavior, returned only 28.45%, fully
8.91% behind the S&P 500.(1)
In this context, for the fifth consecutive year, The Guardian Park Avenue
Fund succeeded in outperforming the average growth mutual fund in our peer
group, as tracked by Lipper Analytical Services, Inc., an independent mutual
fund monitoring organization. The Guardian Park Avenue Fund produced a total
return to shareholders of 34.28% in 1995,(2) compared with a lesser average
return of 30.79% from the Lipper peer group average.(3)
We are particularly proud of the Fund's long-term record. Over the last 15
years, the Fund's performance, as measured by total return, has ranked it among
the top 10 U.S. equity funds, based on Lipper data, reported by Barron's.(4)
Q. HAS THERE BEEN ANY CHANGE IN PORTFOLIO MANAGEMENT STRATEGY? WHAT HAS BEEN THE
IMPACT OF PORTFOLIO MANAGER JUDGMENT DURING 1995?
A. Our basic strategy has not changed. As you know, we use several quantitative
models in managing the Fund, and believe that this has given us a competitive
advantage over the years. Our multi-factor stock-scoring system has helped us
keep the portfolio positioned in the more attractive stocks and sectors. This
system performed well again in 1995.
One portfolio characteristic where judgment comes into play is the
positioning with respect to capitalization-size of stocks in the portfolio.
Beginning in the first quarter of 1995, our analysis suggested that a move to
larger capitalization stocks was desirable, and we moved substantially in that
direction, as the chart indicates.
(1) The S&P 500 Index is an unmanaged index of 500 stocks that is generally
considered to be representative of U.S. stock market activity. Likewise,
the Russell 2000 Index is another index comprising 2,000 stocks with
smaller capitalization than those of the S&P 500 Index and generally is
considered to be another reflection of stock market performance. Neither
index is available for investment and their returns do not reflect any
sales charges which an investor may have to pay when purchasing shares of
the Fund.
(2) Total return figures shown are historical and assume the reinvestment of
dividends and distributions and the deduction of all Fund expenses. Total
return figures do not take into account the current maximum sales charge of
4.5%. Returns represent past performance and are not a guarantee of future
results. Investment return and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than the
original cost.
(3) Lipper Analytical Service, Inc. is an independent mutual fund monitoring
and rating service and its database of performance information is based on
historical total returns, which assume the reinvestment of dividends and
distributions, and the deduction of all fund expenses. Lipper returns do
not reflect the deduction of sales loads, and performance would be
different if sales loads were deducted.
(4) Lipper rankings were reported in Lipper's Mutual Funds Performance Analysis
Special Report 4th Quarter 1995. Rankings for the periods ended December
31, 1995 illustrate the Fund versus other growth funds in the specified
period. The Fund ranked 6 out of a field of 108 growth funds over a
fifteen-year period, 25 out of 153 for the ten-year period, 27 out of 237
for the five-year period and 187 out of 572 for the one-year period. Lipper
rankings are based on total return and do not take into account any
deductions for sales loads. The fifteen-year figures were presented in
Barron's Lipper Mutual Funds Quarterly Report dated January 8, 1996.
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4
<PAGE>
Weighted Average Market Capitalization
($ millions)
Graphical Representation of Bar Graph below
12/31/94 3/31/95 6/30/95 9/30/95 12/31/95
-------- ------- ------- ------- --------
6,012 6,279 14,902 21,757 24,560
As noted earlier, the large capitalization stocks produced the highest
market performance in 1995, so our move was in the right direction. However, in
retrospect, we did not go far enough in implementing this theme. The weighted
average market capitalization of the S&P 500 Index was $30.57 billion at
year-end and, ideally, our portfolio would have had an even higher
average-capitalization size.
Another important portfolio characteristic we must deal with is the weight
of the investments in each economic sector. Set forth on the following page are
pie charts showing how sector weightings changed during 1995.
The largest shift in sector weighting during 1995 was in Consumer Staples,
which we increased from 6.3% to 17.9% of the portfolio. This group includes
companies providing food, beverages, drugs and household products. Naturally,
these stocks were favorably ranked by our proprietary stock scoring models;
also, investing in these relatively large-cap, high-quality companies was
consistent with our overall theme of increasing those characteristics in the
portfolio. This shift has been positive for performance, as this sector provided
returns above the broad market average during 1995. The other large increase in
sector weight was in Utilities, which was increased from 0.3% up to 9.3% of the
portfolio during 1995. Although the overall Utility sector slightly
underperformed the S&P 500, the Fund's investments were made primarily in the
telecommunications portion of the Utility sector, which outperformed the S&P
500. In the telecommunications sector, here again our stock scoring system
identified some stocks which were well-ranked by our system, and exhibited the
high-quality characteristics which we are presently emphasizing.
The Capital Goods-Technology sector, which comprised on average one quarter
of the Fund's holdings through the year, produced an above-average performance
during 1995, when compared to the overall performance of the S&P 500. This
sector produced outstanding returns during the first three quarters, but was a
relative loser during the fourth. While these stocks were a major plus for the
Fund during the year as a whole, the Fund's quarterly performance reflected the
manic behavior of these volatile technology stocks.
Q. MR. ALBERS, YOU HAVE RECEIVED A LOT OF FAVORABLE PRESS COVERAGE THIS YEAR,
INCLUDING THE NEW YORK TIMES, FORBES, AND INVESTOR'S BUSINESS DAILY. ANY
COMMENT?
A. Basically, I try to manage these things so that media events do not take very
much of my time. I believe it's very important for a portfolio manager to stay
focused on the portfolio in order to achieve superior results.
As you know, I've been managing this Fund since 1972, and media coverage
has fluctuated from year-to-year. I really don't concern myself greatly with
what the press is (or isn't) saying about me currently. My view is simply that
if I keep doing the right things for the portfolio, then the performance figures
will generally work out well most of the time . . . and so will the media
coverage.
Q. WHAT IS YOUR OUTLOOK FOR 1996? AND WHAT CHANGES DO YOU ANTICIPATE MAKING IN
THE FUND?
A. It is hard to predict the future and just because something happened in the
past doesn't mean that it will happen again. But with that said, we hope to
learn from our good choices and mistakes in 1995 and do a better job in 1996.
Naturally, we will continue to follow the guidance of our proprietary
stock-scoring system closely in 1996, because it has been such a reliable guide
in the past.
The economic outlook for 1996 is murky, as is generally the case.
Currently, the evidence seems to
- -------------------------------------------------------------------------------
5
<PAGE>
suggest that U.S. economic growth and the rate of profit growth are both slowing
from the recent strong levels. In this type of slow-growth environment,
historically the best performance has been found in the stocks of higher-quality
companies, which are more resistant to profit pressures. Accordingly, during
early 1996 we expect to continue moving the Fund's portfolio toward these
higher-quality stocks.
The market's 37.36% return in 1995 is not likely to be repeated soon. A
review of the last 50 years of market history shows: After a "big" year (over
+35%, like 1995), in 75% of cases another above-average year follows. Although
past performance is no guarantee of future results, the history is compelling.
So in line with that historical pattern, we believe that many of the positive
underlying valuation dynamics which gave us a great 1995 are still in place, and
that investors may enjoy some excellent returns in the future, too.
THE GUARDIAN PARK AVENUE FUND PROFILE
AS OF DECEMBER 31, 1995
PORTFOLIO COMPOSITION
The Guardian Park Avenue Fund portfolio holds approximately 240 securities
in a variety of economic sectors. The portfolio manager's goal is to position
the portfolio for consistent performance in both "bull" and "bear" markets.
Graphical Representation of Pie Chart below
Cash & Cash Equivalents 8.10% Common Stocks 91.90%
COMPARISON OF COMMON STOCKS HELD BY THE FUND ON DECEMBER 31, 1994 AND 1995
Graphical Representation of two Pie Charts below
1994 1995
Utilities .3% Utilities 9.3%
Other 18.2% Other 8.2%
Financial 16.3% Financial 18.2%
Basic Industries 11.9% Basic Industries 7.4%
Energy 9.3% Energy 12.4%
Consumer Cyclical 12.3% Consumer Cyclical 3.3%
Consumer Staples 6.3% Consumer Staples 17.9%
Capital Goods--Technology 25.7% Capital Goods--Technology 23.3%
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6
<PAGE>
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
[GRAPHICAL REPRESENTATION OF DATA TABLE BELOW]
The Guardian Park S&P 500 Lipper U.S. Cost of
Avenue Fund Index Equity Growth Fund Living
----------- ----------- ----------- ----------
6/1/72 1 9550 1 10000 1 10000 1 10000
1972 3 9495 3 10173 3 9548 3 10169
4 9919 4 10936 4 10002 4 10266
5 8954 5 10404 5 8773 5 10483
6 7758 6 9802 6 7699 6 10676
1973 7 9104 7 10271 7 8788 7 10918
8 8355 8 9320 8 7686 8 11184
9 8898 9 9061 9 7492 9 11546
10 8095 10 8376 10 6661 10 11836
1974 11 6816 11 6276 11 5224 11 12222
12 7016 12 6861 12 5701 12 12536
13 9052 13 8434 13 7001 13 12754
14 10222 14 9724 14 8176 14 12923
1975 15 9524 15 8662 15 7174 15 13188
16 10311 16 9410 16 7588 16 13430
17 12315 17 10819 17 8924 17 13527
18 12926 18 11077 18 9084 18 13696
1976 19 13570 19 11281 19 9043 19 13913
20 14714 20 11627 20 9483 20 14106
21 14576 21 10762 21 8951 21 14396
22 15549 22 11107 22 9480 22 14614
1977 23 15171 23 10794 23 9340 23 14807
24 15894 24 10765 24 9674 24 15048
25 16187 25 10235 25 9527 25 15314
26 17953 26 11100 26 10724 26 15700
1978 27 19593 27 12062 27 11821 27 16023
28 18195 28 11455 28 11002 28 16401
29 19967 29 12263 29 11945 29 16884
30 20459 30 12583 30 12544 30 17440
1979 31 22496 31 13535 31 13793 31 17971
32 23490 32 13539 32 14501 32 18575
33 22448 33 12987 33 13536 33 19348
34 24637 34 14722 34 15484 34 19928
1980 35 27184 35 16363 35 18053 35 20266
36 28544 36 17908 36 19852 36 20870
37 30553 37 18146 37 20432 37 21401
38 30553 38 17726 38 20347 38 21860
1981 39 28042 39 15910 39 17993 39 22488
40 30197 40 17010 40 19380 40 22729
41 28244 41 15773 41 18074 41 22874
42 28221 42 15682 42 18100 42 23430
1982 43 32079 43 17473 43 20123 43 23599
44 37864 44 20656 44 24326 44 23599
45 42172 45 22720 45 27061 45 23696
46 49604 46 25228 46 30611 46 24010
1983 47 48521 47 25185 47 29869 47 24251
48 48699 48 25281 48 29333 48 24493
49 46645 49 24675 49 27414 49 24855
50 47823 50 24028 50 26721 50 25048
1984 51 53053 51 26344 51 28574 51 25290
52 54864 52 26823 52 28930 52 25483
53 61531 53 29283 53 31492 53 25797
54 65013 54 31410 54 33601 54 25966
1985 55 60468 55 30132 55 32193 55 26111
56 72961 56 35290 56 37156 56 26449
57 87232 57 40238 57 42720 57 26353
58 93553 58 42592 58 44999 58 26425
1986 59 82543 59 39627 59 41062 59 26570
60 86372 60 41842 60 42571 60 26763
61 106899 61 50759 61 51317 61 27126
62 104622 62 53272 62 52563 62 27440
1987 63 111995 63 56777 63 55749 63 27729
64 88928 64 43977 64 44085 64 27947
65 100336 65 46480 65 47392 65 28164
66 107312 66 49515 66 50056 66 28502
1988 67 105853 67 49653 67 49730 67 28913
68 107405 68 51158 68 50482 68 29179
69 117426 69 54775 69 54123 69 29565
70 124277 70 59546 70 58562 70 29976
1989 71 135523 71 65881 71 64497 71 30169
72 133004 72 67206 72 63984 72 30531
73 131155 73 65183 73 62581 73 31087
74 131990 74 69211 74 63101 74 31401
1990 75 111334 75 59736 75 56465 75 32029
76 116611 76 65046 76 61087 76 32415
77 138452 77 74504 77 71872 77 32633
78 136860 78 74303 78 71176 78 32874
1991 79 149260 79 78263 79 76341 79 33116
80 157618 80 84775 80 83235 80 33382
81 162079 81 82673 81 82319 81 33647
82 159469 82 84210 82 80113 82 33889
1992 83 167044 83 86846 83 82496 83 34106
84 189879 84 91214 84 89848 84 34396
85 208279 85 95200 85 92144 85 34686
86 215612 86 95619 86 92749 86 34879
1993 87 234327 87 98067 87 97203 87 35048
88 228375 88 100342 88 99458 88 35338
89 221844 89 96569 89 96044 89 35556
90 219204 90 96936 90 93504 90 35773
1994 91 227287 91 101657 91 98580 91 36087
92 225091 92 101617 92 97271 92 36280
93 245507 93 111514 93 104431 93 36546
94 271285 94 122063 94 114202 94 36836
12/31/95 95 302249 95 139569 95 126735 95 37126
A hypothetical $10,000 investment made at the inception of The Guardian
Park Avenue Fund on June 1, 1972 has a starting point of $9,550, which reflects
the current maximum sales charge of 4.5%. This investment would have grown to
$302,249 on December 31, 1995, which represents a total return of 2,922 percent.
We compare our performance to that of the S&P 500 Index, which is an unmanaged
index that is generally considered the performance benchmark of the U.S. stock
market. While you may not invest directly in the S&P 500 Index, a similar
hypothetical investment would have had a total return of 1,296 percent and would
now be worth $139,569. The Fund also fared well relative to other U.S. growth
funds. The average return of U.S. equity growth funds reported by Lipper
Analytical Services, Inc. measures the performance of other funds with
investment objectives and policies similar to those of The Guardian Park Avenue
Fund. The average of U.S. growth funds on the same $10,000 investment over the
same time period would have been only $126,735. The cost of living index, as
measured by the consumer price index, which is generally representative of the
level of U.S. inflation, is also provided to lend a more complete understanding
of the investment's real worth.
AVERAGE ANNUAL RETURNS FOR PERIODS ENDED 12/31/95
Since
Inception
1 Year 5 Years 10 Years (6/1/72)
- --------------------------------------------------------------------------------
Guardian Park Avenue Fund
(without 4.5% sales charge) 34.28% 20.99% 15.27% 15.78%
- --------------------------------------------------------------------------------
Guardian Park Avenue Fund
(incl. 4.5% sales charge) 28.24% 19.88% 14.74% 15.55%
- --------------------------------------------------------------------------------
S&P 500 Index 37.36% 16.51% 14.75% 11.83%
- --------------------------------------------------------------------------------
Total return figures shown are historical and assume the reinvestment of
dividends and distributions and the deduction of all Fund expenses. Total return
figures do not take into account the current maximum sales charge of 4.5%,
except where indicated. Prior to August 25, 1988 shares of the Fund were offered
at a higher sales charge, so actual returns would have been somewhat lower.
Returns represent past performance and are not a guarantee of future results.
Investment return and principal value will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than the original cost. Lipper
Analytical Services, Inc. is an independent mutual fund monitoring organization.
- --------------------------------------------------------------------------------
7
<PAGE>
THE GUARDIAN/VALUE LINE SEPARATE ACCOUNT
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
<TABLE>
<S> <C>
ASSETS
Investments in mutual funds:
The Guardian Park Avenue Fund (4,712,422 shares at net asset value of
$33.97 per share; FIFO cost, $109,077,932) .............................................. $160,080,969
Value Line Fund, Inc. (478,878 shares at net asset value of $17.63 per share;
FIFO cost, $7,149,869) .................................................................. 8,442,627
Value Line Income Fund, Inc. (894,408 shares at net asset value of $7.37 per
share; FIFO cost, $6,301,521) ........................................................... 6,591,788
Value Line Special Situations Fund, Inc. (31,599 shares at net asset value of
$16.24 per share; FIFO cost, $490,794) .................................................. 513,167
Value Line Leveraged Growth Investors, Inc. (166,719 shares at net asset value
of $28.50 per share; FIFO cost, $3,772,216) ............................................. 4,751,495
Value Line U.S. Government Securities Fund, Inc. (1,445,105 shares at net asset
value of $11.28 per share; FIFO cost, $17,382,704) ...................................... 16,300,779
Value Line Cash Fund, Inc. (23,485,471 shares at net asset value of $1.00
per share; which equals cost) ........................................................... 23,485,471
------------
Total Assets ................................................................................ 220,166,296
============
LIABILITIES
Annuitant Mortality Fluctuation Fund ...................................................... 1,871,483
Due to The Guardian Insurance & Annuity Company, Inc. ..................................... 350,696
------------
Total Liabilities ......................................................................... 2,222,179
------------
NET ASSETS -- NOTE 3 .......................................................................... $217,944,117
============
</TABLE>
See notes to financial statements.
8
<PAGE>
<TABLE>
<CAPTION>
THE GUARDIAN/VALUE LINE SEPARATE ACCOUNT
COMBINED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
Guardian Value Line Value Line Value Line Value Line Value Line
Park Avenue Value Line Income Special Leveraged U.S. Gov. Cash
Combined Fund Fund Fund Situations Growth Securities Fund
----------- ----------- ---------- ---------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Income:
Reinvested dividends ..... $ 4,175,266 $ 1,483,486 $ 58,591 $ 222,097 $ 1,560 $ 13,671 $1,084,674 $1,311,187
Expenses -- Note 4:
Mortality and expense risk
charges ................. 2,241,150 1,541,060 84,884 65,144 6,040 45,800 167,746 330,476
----------- ----------- ---------- ---------- -------- ---------- ---------- ----------
Net investment income/
(expense) ............... 1,934,116 (57,574) (26,293) 156,953 (4,480) (32,129) 916,928 980,711
----------- ----------- ---------- ---------- -------- ---------- ---------- ----------
REALIZED AND UNREALIZED GAIN/
(LOSS) FROM INVESTMENTS
Realized gain/(loss) from
investments:
Net realized gain/(loss)
from sale of
investments ............ 10,291,941 9,836,679 337,826 22,942 142,942 242,302 (290,750) --
Reinvested realized
gain distributions ..... 9,277,636 7,985,632 535,047 171,757 110,630 474,570 -- --
----------- ----------- ---------- ---------- -------- ---------- ---------- ----------
Net realized gain/(loss)
on investments ......... 19,569,577 17,822,311 872,873 194,699 253,572 716,872 (290,750) --
----------- ----------- ---------- ---------- -------- ---------- ---------- ----------
Unrealized appreciation/
(depreciation) of
investments:
End of year ............. 52,505,788 51,003,037 1,292,758 290,267 22,373 979,278 (1,081,925) --
Beginning of year ....... 24,468,941 27,324,802 (39,612) (768,312) 144,196 362,502 (2,554,635) --
----------- ----------- ---------- ---------- -------- ---------- ---------- ----------
Change in unrealized
appreciation/
(depreciation) .......... 28,036,847 23,678,235 1,332,370 1,058,579 (121,823) 616,776 1,472,710 --
----------- ----------- ---------- ---------- -------- ---------- ---------- ----------
Net realized and
unrealized gain/(loss)
from investments ....... 47,606,424 41,500,546 2,205,243 1,253,278 131,749 1,333,648 1,181,960 --
----------- ----------- ---------- ---------- -------- ---------- ---------- ----------
NET INCREASE/(DECREASE) IN
NET ASSETS RESULTING
FROM OPERATIONS ........... $49,540,540 $41,442,972 $2,178,950 $1,410,231 $127,269 $1,301,519 $2,098,888 $ 980,711
=========== =========== ========== ========== ======== ========== ========== ==========
</TABLE>
See notes to financial statements.
9
<PAGE>
THE GUARDIAN/VALUE LINE SEPARATE ACCOUNT
COMBINED STATEMENT OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1994 AND 1995
<TABLE>
<CAPTION>
Guardian Value Line
Park Avenue Value Line Income
Combined Fund Fund Fund
------------ ------------ ---------- ----------
<S> <C> <C> <C> <C>
1994 INCREASE/(DECREASE) FROM
OPERATIONS
Net investment income/
(expense) .................... $ 2,079,000 $ 151,414 $ (34,758) $ 150,577
Net realized gain/(loss)
from sale of investments ..... (485,173) (53,483) (26,526) (21,945)
Reinvested realized gain
distributions ................ 6,073,252 4,750,309 1,147,498 52,641
Change in unrealized
appreciation/
(depreciation)
of investments ............... (13,905,080) (8,082,658) (1,535,167) (554,761)
------------ ------------ ---------- ----------
Net increase/(decrease)
resulting from operations .... (6,238,001) (3,234,418) (448,953) (373,488)
------------ ------------ ---------- ----------
CONTRACT TRANSACTIONS
Net contract purchase
payments ..................... 6,617,648 4,241,358 329,177 260,955
Transfers between funds ....... -- 2,241,317 (13,316) (255,918)
Administrative charges ........ (237,095) (155,115) (11,312) (8,543)
Redemptions and annuity
benefits ..................... (18,051,453) (8,152,557) (1,045,116) (598,689)
------------ ------------ ---------- ----------
Net increase/(decrease)
from contract transactions ... (11,670,900) (1,824,997) (740,567) (602,195)
------------ ------------ ---------- ----------
ACTUARIAL INCREASE IN RESERVES
FOR CONTRACTS IN PAYMENT
PERIOD ........................ 49,666 11,146 -- 316
------------ ------------ ---------- ----------
TOTAL INCREASE/(DECREASE)
IN NET ASSETS .................. (17,859,235) (5,048,299) (1,189,520) (975,367)
NET ASSETS AT DECEMBER 31,
1993 ........................... 206,623,071 134,699,089 8,675,696 7,149,122
------------ ------------ ---------- ----------
NET ASSETS AT DECEMBER 31,
1994 ........................... $188,763,836 $129,650,820 $7,486,176 $6,173,755
============ ============ ========== ==========
1995 INCREASE/(DECREASE) FROM
OPERATIONS
Net investment income/
(expense) .................... $ 1,934,116 $ (57,574) $ (26,293) $ 156,953
Net realized gain/(loss)
from sale of investments ..... 10,291,941 9,836,679 337,826 22,942
Reinvested realized gain
distributions ................ 9,277,636 7,985,632 535,047 171,757
Change in unrealized
appreciation/
(depreciation)
of investments ............... 28,036,847 23,678,235 1,332,370 1,058,579
------------ ------------ ---------- ----------
Net increase/(decrease)
resulting from operations .... 49,540,540 41,442,972 2,178,950 1,410,231
------------ ------------ ---------- ----------
CONTRACT TRANSACTIONS
Net contract purchase
payments ..................... 5,089,897 3,608,939 169,566 173,365
Transfers between funds ....... -- (893,011) (45,640) (250,799)
Administrative charges ........ (228,962) (157,925) (9,942) (7,659)
Redemptions and annuity
benefits ..................... (25,235,537) (13,626,884) (1,340,589) (910,315)
------------ ------------ ---------- ----------
Net increase/(decrease)
from contract transactions ... (20,374,602) (11,068,881) (1,226,605) (995,408)
------------ ------------ ---------- ----------
ACTUARIAL INCREASE IN RESERVES
FOR CONTRACTS IN PAYMENT
PERIOD ......................... 14,343 8,096 -- 2,376
------------ ------------ ---------- ----------
TOTAL INCREASE/(DECREASE)
IN NET ASSETS .................. 29,180,281 30,382,187 952,345 417,199
NET ASSETS AT DECEMBER 31,
1994 ........................... 188,763,836 129,650,820 7,486,176 6,173,755
------------ ------------ ---------- ----------
NET ASSETS AT DECEMBER 31,
1995--NOTE 3 ................... $217,944,117 $160,033,007 $8,438,521 $6,590,954
============ ============ ========== ==========
<CAPTION>
Value Line Value Line Value Line Value Line
Special Leveraged U.S. Gov. Cash
Situations Growth Securities Fund
--------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
1994 INCREASE/(DECREASE) FROM
OPERATIONS
Net investment income/
(expense) .................. $ (8,811) $ (21,375) $ 1,181,609 $ 660,344
Net realized gain/(loss)
from sale of investments ... 2,315 (11,960) (373,574) --
Reinvested realized gain
distributions .............. 48,663 74,141 -- --
Change in unrealized
appreciation/
(depreciation)
of investments ............. (40,008) (242,672) (3,449,814) --
--------- ---------- ----------- -----------
Net increase/decrease
resulting from operations .. 2,159 (201,866) (2,641,779) 660,344
--------- ---------- ----------- -----------
CONTRACT TRANSACTIONS
Net contract purchase
payments ................... 27,652 94,924 623,245 1,040,337
Transfers between funds ..... 1,933 (90,426) (3,514,931) 1,631,341
Administrative charges ...... (1,248) (6,046) (21,264) (33,567)
Redemptions and annuity
benefits ................... (19,852) (416,218) (2,548,861) (5,270,160)
--------- ---------- ----------- -----------
Net increase/(decrease)
from contract transactions . 8,485 (417,766) (5,461,811) (2,632,049)
--------- ---------- ----------- -----------
ACTUARIAL INCREASE IN RESERVES
FOR CONTRACTS IN PAYMENT
PERIOD ...................... -- 510 28,221 9,473
--------- ---------- ----------- -----------
TOTAL INCREASE/(DECREASE)
IN NET ASSETS ................ 10,644 (619,122) (8,075,369) (1,962,232)
NET ASSETS AT DECEMBER 31,
1993 ......................... 847,391 4,430,162 24,880,867 25,940,744
--------- ---------- ----------- -----------
NET ASSETS AT DECEMBER 31,
1994 ......................... $ 858,035 $3,811,040 $16,805,498 $23,978,512
========= ========== =========== ===========
1995 INCREASE/(DECREASE) FROM
OPERATIONS
Net investment income/
(expense) .................. $ (4,480) $ (32,129) $ 916,928 $ 980,711
Net realized gain/(loss)
from sale of investments ... 142,942 242,302 (290,750) --
Reinvested realized gain
distributions .............. 110,630 474,570 -- --
Change in unrealized
appreciation/
(depreciation)
of investments ............. (121,823) 616,776 1,472,710 --
--------- ---------- ----------- -----------
Net increase/(decrease)
resulting from operations .. 127,269 1,301,519 2,098,888 980,711
--------- ---------- ----------- -----------
CONTRACT TRANSACTIONS
Net contract purchase
payments ................... 13,301 78,008 319,602 727,116
Transfers between funds ..... (54,146) (93,640) (535,085) 1,872,321
Administrative charges ...... (1,244) (5,563) (17,518) (29,111)
Redemptions and annuity
benefits ................... (430,900) (342,179) (2,376,318) (6,208,352)
--------- ---------- ----------- -----------
Net increase/(decrease)
from contract transactions . (472,989) (363,374) (2,609,319) (3,638,026)
--------- ---------- ----------- -----------
ACTUARIAL INCREASE IN RESERVES
FOR CONTRACTS IN PAYMENT
PERIOD ....................... -- 672 9,464 (6,265)
--------- ---------- ----------- -----------
TOTAL INCREASE/(DECREASE)
IN NET ASSETS ................ (345,720) 938,817 (500,967) (2,663,580)
NET ASSETS AT DECEMBER 31,
1994 ......................... 858,035 3,811,040 16,805,498 23,978,512
--------- ---------- ----------- -----------
NET ASSETS AT DECEMBER 31,
1995--NOTE 3 ................. $ 512,315 $4,749,857 $16,304,531 $21,314,932
========= ========== =========== ===========
</TABLE>
See notes to financial statements.
10
<PAGE>
THE GUARDIAN/VALUE LINE SEPARATE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
NOTE 1 -- ORGANIZATION
The Guardian/Value Line Separate Account (the Account), a unit investment
trust registered under the Investment Company Act of 1940, as amended, was
established by The Guardian Insurance & Annuity Company, Inc. (GIAC) on October
6, 1980. GIAC is a wholly owned subsidiary of The Guardian Life Insurance
Company of America (Guardian Life). GIAC issues the deferred variable annuity
contracts offered through the Account. GIAC provides for accumulations and
benefits under the contracts by crediting the net premium purchase payments to
one or more investment divisions within the Account or to the Fixed Rate Option
(FRO). Amounts allocated to the FRO are maintained by GIAC in its general
account. The Guardian Park Avenue Fund, one of the investment options available
under the contracts, has an investment advisory agreement with Guardian Investor
Services Corporation a wholly owned subsidiary of GIAC. A tax-qualified
investment division and a non-tax-qualified investment division have been
established within each investment option available in the Account.
Under applicable insurance law, the assets and liabilities of the Account
are clearly identified and distinguished from the other assets and liabilities
of GIAC. The assets of the Account will not be charged with any liabilities
arising out of any other business conducted by GIAC, but the obligations of the
Account, including the promise to make annuity payments, are obligations of
GIAC.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies of the
Account.
Investments
(a) Net proceeds of payments made by contractowners to the Account are
invested by the Account's investment divisions in shares of the corresponding
Funds at net asset value. All distributions made by a Fund are reinvested in
shares of the same Fund.
(b) The market value of investments is based on the net asset value of the
respective Funds as of their close of business on the valuation date.
(c) Investment transactions are accounted for on the trade date and income
is recorded on the ex-dividend date.
(d) The cost of investments sold is determined on a first in, first out
(FIFO) basis. During 1995, the basis used in recording gains and losses on
investments sold was changed from the last in, first out (LIFO) basis to the
first in, first out (FIFO) basis. This change had no effect on the net assets of
the Account.
During the years ended December 31, 1995 and December 31, 1994, purchases
of shares of all of the Funds aggregated $33,352,857 and $37,368,355,
respectively. Aggregate sales of shares of all of the Funds amounted to
$42,232,555 and $40,735,309 in the years ended December 31, 1995 and December
31, 1994, respectively.
The Annuitant Mortality Fluctuation Fund
The Annuitant Mortality Fluctuation Fund is funded by GIAC and has been
established in response to various regulatory requirements and provides for any
possible adverse experience.
Federal Income Taxes
The operations of the Account are part of the operations of GIAC and as
such, are included in the combined tax return of GIAC. GIAC is taxed as a life
insurance company under the Internal Revenue Code of 1986, as amended.
Under the tax law, no federal income taxes are payable by GIAC with respect
to the operations of the Account.
11
<PAGE>
THE GUARDIAN/VALUE LINE SEPARATE ACCOUNT
NOTES TO FINANCIAL STATEMENTS (Continued)
Owners of non-tax-qualified contracts are taxed directly on the investment
income and realized capital gains distributed by the underlying mutual funds to
the Account's non-tax-qualified divisions.
Annuity Reserves
Annuity reserves are computed for currently payable contracts according to
the 1971 Individual Annuity Mortality Table and the 1983 Individual Annuity
Table. The assumed interest rate is 4.0%. Charges to annuity reserves for
mortality and expense risk experience are reimbursed to GIAC if the reserves
required are less than originally estimated. If additional reserves are
required, GIAC reimburses the Account.
NOTE 3 -- NET ASSETS, DECEMBER 31, 1995
<TABLE>
<CAPTION>
Accumulation
Unit Total
Units Owned Value Unit Value
------------- ------------- ------------
<S> <C> <C> <C>
TAX-QUALIFIED ACCOUNTS
The Guardian Park Avenue Fund ....................... 1,867,807.004 $85.415119 $159,538,958
Value Line Fund, Inc. ............................... 187,751.547 44.564679 8,367,087
Value Line Income Fund, Inc. ........................ 144,583.804 45.222228 6,538,402
Value Line Special Situations Fund, Inc. ............ 21,088.934 23.713301 500,088
Value Line Leveraged Growth Investors, Inc. ......... 83,438.422 56.152490 4,685,275
Value Line U.S. Government Securities Fund,
Inc. ............................................... 398,207.913 39.743747 15,826,275
Value Line Cash Fund, Inc. .......................... 835,912.170 24.991807 20,890,956
NON-TAX-QUALIFIED ACCOUNTS
The Guardian Park Avenue Fund ....................... 364.974 77.953689 28,451
Value Line Fund, Inc. ............................... 1,861.397 38.376101 71,433
Value Line Income Fund, Inc. ........................ 493.023 42.592212 20,999
Value Line Special Situations Fund, Inc. ............ 518.120 23.598522 12,227
Value Line Leveraged Growth Investors, Inc. ......... 66.142 56.073569 3,709
Value Line U.S. Government Securities Fund,
Inc. ............................................... 235.330 39.745016 9,353
Value Line Cash Fund, Inc. .......................... 4,675.570 24.991807 116,851
------------
216,610,064
Contracts receiving annuity payments ................ 1,334,053
------------
$217,944,117
============
</TABLE>
In some instances the calculation of total assets may not agree due to
rounding.
NOTE 4 -- ADMINISTRATIVE AND MORTALITY AND EXPENSE RISK CHARGES
Contractual charges paid to GIAC include:
(1) an annual fee to cover GIAC's administrative expenses to be deducted on
each contract anniversary before annuitization and upon surrender prior to
annuitization. Such charge is $30 for a Single Purchase Payment Contract and $35
for a Flexible Purchase Payment Contract;
(2) a charge for mortality and expense risk is computed daily and is equal
to an annual rate of 1% of the average daily net assets applicable to
contractowners;
12
<PAGE>
THE GUARDIAN/VALUE LINE SEPARATE ACCOUNT
NOTES TO FINANCIAL STATEMENTS (Continued)
(3) contingent deferred sales charges on certain partial or total
surrenders. These charges are assessed against redemptions and paid to GIAC
during the first six contract years for a Single Purchase Payment Contract. For
a Flexible Purchase Payment Contract, each payment is subject to a contingent
deferred sales charge for six years; and
(4) a charge for premium taxes deducted from either the contract payment or
upon annuitization, as determined in accordance with applicable state law.
Currently, GIAC makes no charge against the Account for GIAC's federal
income taxes. However, GIAC reserves the right to charge taxes attributable to
the Account in the future.
NOTE 5 -- ACCUMULATION UNIT VALUES FOR THE CURRENT YEAR END AND THE FOUR PRIOR
YEAR ENDS
<TABLE>
<CAPTION>
December 31, December 31, December 31, December 31, December 31,
1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
TAX-QUALIFIED ACCOUNTS
The Guardian Park
Avenue Fund .................. $85.415119 $64.239324 $65.820751 $55.265742 $46.327481
Value Line Fund, Inc. .......... 44.564679 34.065614 36.013237 34.047914 32.846074
Value Line Income
Fund, Inc. .................... 45.222228 36.177740 38.200993 35.635145 35.370728
Value Line Special
Situations Fund, Inc. ......... 23.713301 18.569957 18.562076 16.591003 17.355098
Value Line Leveraged
Growth Investors, Inc. ........ 56.152490 41.374494 43.392851 37.713144 39.049373
Value Line U.S.
Government Securities
Fund, Inc. .................... 39.743747 35.073507 39.653412 36.472675 34.650120
Value Line Cash Fund,
Inc. .......................... 24.991807 23.942278 23.319713 22.851156 22.245770
NON-TAX-QUALIFIED ACCOUNTS
The Guardian Park
Avenue Fund ................... 77.953689 58.627708 60.070986 50.438005 42.280543
Value Line Fund, Inc. .......... 38.376101 29.335015 31.012168 29.319768 28.284828
Value Line Income Fund,
Inc. .......................... 42.592212 34.073730 35.979291 33.562683 33.313643
Value Line Special
Situations Fund, Inc. ......... 23.598522 18.480070 18.472220 16.510695 17.271094
Value Line Leveraged
Growth Investors, Inc. ........ 56.073569 41.316345 43.331875 37.660164 38.994527
Value Line U.S.
Government Securities
Fund, Inc. .................... 39.745016 35.074624 39.654667 36.473831 34.651219
Value Line Cash Fund,
Inc. .......................... 24.991807 23.942278 23.319713 22.851156 22.245770
</TABLE>
13
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
The Guardian Insurance & Annuity Company, Inc.
and Contractowners of The Guardian/Value Line
Separate Account, "Value Guard"
In our opinion, the accompanying statement of assets and liabilities and
the related combined statements of operations and of changes in net assets
present fairly, in all material respects, the financial position of the
investment divisions relating to Guardian Park Avenue Fund, Value Line Fund,
Value Line Income Fund, Value Line Special Situations Fund, Value Line Leveraged
Growth Investors, Value Line U.S. Government Securities Fund and Value Line Cash
Fund (constituting The Guardian/Value Line Separate Account, "Value Guard",
hereafter referred to as the "Separate Account") at December 31, 1995, and the
results of each of their operations for the year then ended and the changes in
each of their net assets for each of the two years then ended, in conformity
with generally accepted accounting principles. These financial statements are
the responsibility of the management of The Guardian Insurance & Annuity
Company, Inc.; 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 generally accepted auditing standards 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, which included confirmation of securities at
December 31, 1995 by correspondence with the transfer agents of the underlying
funds, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
New York, New York
February 16, 1996
14
<PAGE>
(THIS PAGE INTENTIONALLY LEFT BLANK)
15
<PAGE>
SCHEDULE OF INVESTMENTS
December 31, 1995
o The Guardian Park Avenue Fund
COMMON STOCKS -- 91.9%
Shares Value
- -----------------------------------------------------
AEROSPACE AND DEFENSE -- 4.5%
25,500 Boeing Co. $ 1,998,563
59,000 Litton Industries, Inc. 2,625,500
36,400 Lockheed Martin Corp. 2,875,600
187,600 Logicon, Inc. 5,159,000
18,000 Loral Corporation 636,750
231,000 McDonnell Douglas Corp. 21,252,000
93,950 Precision Castparts Corp. 3,734,513
110,000 Rockwell Int'l. Corp. 5,816,250
-----------
44,098,176
- -----------------------------------------------------
BROADCASTING AND PUBLISHING -- 1.2%
92,000 Capital Cities/ABC, Inc. 11,350,500
10,000 Duff & Phelps Cr. Rating Co. 143,750
-----------
11,494,250
- -----------------------------------------------------
BUILDING MATERIALS AND HOMEBUILDERS -- 0.2%
32,700 Coachmen Industries, Inc. 711,225
24,600 Del Webb Corp.* 495,075
30,000 McGrath RentCorp. 570,000
10,100 NCI Building Systems, Inc.* 249,975
-----------
2,026,275
- -----------------------------------------------------
CAPITAL GOODS-MISCELLANEOUS TECHNOLOGY -- 1.0%
69,400 Komag, Inc. 3,201,075
78,650 Paychex, Inc. 3,922,668
105,000 Read-Rite Corp.* 2,441,250
37,300 Rexel, Inc. 503,550
-----------
10,068,543
- -----------------------------------------------------
CHEMICALS -- 3.1%
34,000 Albemarle Corp. 658,750
77,800 Cambrex Corp. 3,218,975
59,700 E.I.Dupont De Nemours, Inc.* 4,171,536
127,700 Eastman Chemical Co. 7,997,213
50,200 Hercules, Inc. 2,830,025
12,900 OM Group, Inc. 427,313
145,000 PPG Industries, Inc. 6,633,750
126,400 Sterling Chemicals, Inc.* 1,027,000
100,000 Union Carbide Corp. 3,750,000
-----------
30,714,562
- -----------------------------------------------------
COAL -- 0.1%
17,000 Eastern Enterprises 599,250
- -----------------------------------------------------
COMPUTER SOFTWARE -- 4.0%
387,000 Computer Associates
International, Inc. 22,010,625
55,000 Fair Isaac & Co., Inc. 1,423,125
120,000 Microsoft Corp.* 10,530,000
40,000 Oracle Systems Corp* 1,695,000
101,000 SunGard Data Systems, Inc. 2,878,500
-----------
38,537,250
- -----------------------------------------------------
CONGLOMERATES -- 1.4%
90,000 Loews Corp. $ 7,053,750
95,000 Textron, Inc. 6,412,500
-----------
13,466,250
- -----------------------------------------------------
CONTAINERS -- 0.1%
14,250 Alltrista Corp.* 256,500
29,000 Ball Corp. 797,500
-----------
1,054,000
- -----------------------------------------------------
COSMETICS AND TOILETRIES -- 0.4%
72,800 Gillette Co. 3,794,700
8,100 Helen of Troy Ltd.* 170,100
-----------
3,964,800
- -----------------------------------------------------
DRUGS AND HOSPITALS -- 8.5%
154,000 Abbott Labs 6,429,500
35,000 Boston Scientific Corp.* 1,715,000
82,400 Bristol-Myers Squibb Corp. 7,076,100
97,377 Guidant Corp. 4,114,178
115,100 Johnson & Johnson 9,855,437
90,396 Eli Lilly & Co., Inc. 5,084,775
104,000 McKesson Corp. 5,265,000
90,000 Medtronic, Inc. 5,028,750
209,400 Merck & Co., Inc. 13,768,050
129,000 Pfizer, Inc. 8,127,000
191,000 Schering Corp. 10,457,250
100,000 Universal Health Svcs., Inc. 4,437,500
37,400 Watson Pharmaceuticals, Inc.* 1,832,600
-----------
83,191,140
- -----------------------------------------------------
ELECTRICAL EQUIPMENT -- 0.8%
98,000 Applied Materials, Inc. 3,858,750
60,000 Integrated Device Technology 772,500
42,600 Linear Technology Corp. 1,672,050
18,000 Sundstrand Corp. 1,266,750
-----------
7,570,050
- -----------------------------------------------------
ELECTRONICS AND INSTRUMENTS -- 0.9%
200,000 Analogic Corp. 3,700,000
74,000 Electroglas, Inc. 1,813,000
38,000 Tektronix, Inc. 1,866,750
55,000 Vishay Intertechnology, Inc. 1,732,500
-----------
9,112,250
- -----------------------------------------------------
ENERGY-MISCELLANEOUS -- 0.7%
129,500 Giant Industries, Inc. 1,586,375
167,104 Holly Corp. 3,780,728
86,500 Howell Corp. 1,243,438
-----------
6,610,541
- -----------------------------------------------------
ENTERTAINMENT -- 0.2%
59,272 Mattel, Inc. 1,822,614
- -----------------------------------------------------
* Non-income producing securities. See notes to financial statements.
16
<PAGE>
THE GUARDIAN PARK AVENUE FUND
Schedule of Investments (Continued)
- -----------------------------------------------------
Shares Value
- -----------------------------------------------------
FERTILIZER -- 0.7%
120,100 First Mississippi Corp. $ 2,792,325
289,300 Terra Industries, Inc. 4,086,362
-----------
6,878,687
- -----------------------------------------------------
FINANCIAL-BANKS -- 3.8%
90,000 BankAmerica Corp. 5,827,500
80,000 Bank of New York, Inc. 3,900,000
23,000 Central & Southern Holding Co. 207,000
80,000 Chemical Banking Corp. 4,700,000
123,464 Citicorp 8,302,954
75,000 Corestates Financial Corp. 2,840,625
12,200 First Bank Systems Corp. 605,425
12,400 First Empire State Corp. 2,703,200
49,005 Hubco, Inc. 1,084,236
122,248 Norwest Corp. 4,034,184
70,000 Premier Bancorp., Inc. 1,636,250
12,000 Star Banc Corp. 714,000
-----------
36,555,374
- -----------------------------------------------------
FINANCIAL-OTHERS -- 7.4%
105,000 American Express Co. 4,344,375
123,240 Capital One Financial Corp. 2,942,355
95,000 Dean Witter Discover & Co. 4,465,000
63,200 A.G. Edwards, Inc. 1,508,900
60,000 Federal National Mortgage
Association 7,447,500
15,245 Financial Sec. Assur
Holdings Ltd. 379,219
163,000 First USA, Inc. 7,233,125
577,000 Green Tree Financial Corp. 15,218,375
50,000 Jefferies Group, Inc. 2,362,500
57,400 McDonald & Co. Investments,
Inc. 1,033,200
151,200 Merrill Lynch & Co., Inc. 7,711,200
167,850 Morgan Keegan, Inc. 2,119,106
152,200 Phoenix Duff & Phelps Corp. 1,046,375
67,300 Raymond James Financial, Inc. 1,421,713
120,000 Charles Schwab Corp. 2,415,000
170,000 Travelers Group, Inc. 10,688,750
-----------
72,336,693
- -----------------------------------------------------
FINANCIAL-THRIFT -- 3.3%
24,000 Bell Bancorp 858,000
75,000 Brooklyn Bancorp., Inc.* 3,056,250
88,750 Charter One Financial, Inc. 2,717,969
47,000 Coastal Bank Svgs. Assn.-TX 822,500
152,199 Collective Bancorp, Inc. 3,862,050
90,000 Greenpoint Financial Corp. 2,407,500
59,800 Loyola Capital Corp. 2,264,925
27,060 MAF Bancorp, Inc. 676,500
20,960 Pacific Crest Capital, Inc. 151,960
84,800 Progressive Bank, Inc. $ 2,501,600
78,000 Standard Federal Bancorp-
Troy, MI 3,071,250
347,851 Sovereign Bancorp, Inc. 3,521,991
187,964 TCF Financial Corp. 6,226,308
-----------
32,138,803
- -----------------------------------------------------
FOOD, BEVERAGE AND TOBACCO -- 6.5%
70,000 Anheuser-Busch Cos., Inc. 4,681,250
206,800 Coca-Cola Co. 15,354,900
73,700 IBP, Inc. 3,721,850
131,200 PepsiCo, Inc. 7,330,800
352,000 Philip Morris Cos., Inc. 31,856,000
-----------
62,944,800
- -----------------------------------------------------
FOOTWEAR -- 0.2%
66,100 Reebok International Ltd. 1,867,325
- -----------------------------------------------------
HOUSEHOLD PRODUCTS -- 1.0%
115,400 Procter & Gamble Co. 9,578,200
- -----------------------------------------------------
INFORMATION PROCESSING AND COMPUTERS -- 4.5%
227,700 Amdahl Corp.* 1,935,450
46,200 Astro-Med, Inc. 427,350
60,000 Bay Networds, Inc. 2,467,500
81,000 Cisco Systems, Inc. 6,044,625
60,000 Compaq Computer Corp. 2,880,000
146,400 Hewlett Packard Co. 12,261,000
30,500 In Focus Systems, Inc.* 1,101,813
245,400 Sun Microsystems, Inc. 11,196,375
340,000 Tandem Computers, Inc. 3,612,500
77,800 Teradyne, Inc. 1,945,000
-----------
43,871,613
- -----------------------------------------------------
INSURANCE -- 2.2%
119,700 Allstate Corp. 4,922,663
74,000 Amer. Bankers Ins. Group,
Inc. 2,886,000
9,000 Capitol Amer. Fin'l. Corp. 203,625
20,000 CMAC Investment Corp. 880,000
20,000 Integon Corp. 412,500
42,080 Liberty Financial Cos., Inc. 1,272,920
65,000 MBIA, Inc. 4,875,000
67,000 MGIC Investment Corp. 3,634,750
61,500 State Auto Financial Corp. 1,599,000
7,900 Torchmark, Inc. 357,475
----------
21,043,933
- -----------------------------------------------------
LEISURE PRODUCTS -- 0.1%
64,200 Thor Industries, Inc. 1,243,875
- -----------------------------------------------------
LODGING -- 0.7%
417,800 Host Marriott Corp.* 5,535,850
175,000 Prime Hospitality Corp.* 1,750,000
-----------
7,285,850
- -----------------------------------------------------
See notes to financial statements. * Non-income producing securities.
17
<PAGE>
THE GUARDIAN PARK AVENUE FUND
Schedule of Investments (Continued)
- -----------------------------------------------------
Shares Value
- -----------------------------------------------------
MACHINERY AND EQUIPMENT -- 2.4%
16,000 AGCO Corp. $ 816,000
30,000 Case Corp. 1,372,500
118,000 Dover Corp. 4,351,250
155,600 Global Industrial
Technologies, Inc.* 2,936,950
65,000 Kulicke & Soffa
Industries, Inc. 1,511,250
90,000 Millipore Corp. 3,701,250
15,400 Robbins & Myers, Inc. 462,000
31,000 Strattec Security Corp. 558,000
58,900 Tecumseh Products Co. 3,048,075
63,937 Varlen Corp. 1,374,645
60,000 York International Corp. 2,820,000
----------
22,951,920
- -----------------------------------------------------
MERCHANDISING-DEPARTMENT STORES -- 0.4%
130,000 Dillard Dept. Stores, Inc. 3,705,000
- -----------------------------------------------------
MERCHANDISING-DRUGS -- 0.3%
10,000 Longs Drug Stores Corp. 478,750
75,000 Walgreen Co. 2,240,625
----------
2,719,375
- -----------------------------------------------------
MERCHANDISING-FOOD -- 0.9%
33,900 American Stores Co.* 906,825
294,700 Casey's General Stores, Inc. 6,446,563
22,000 Fleming Cos., Inc. 453,750
23,000 SuperValu, Inc. 724,500
----------
8,531,638
- -----------------------------------------------------
MERCHANDISING-SPECIAL -- 0.4%
35,000 CompUSA, Inc.* 1,089,375
80,000 Melville Corp. 2,460,000
45,000 Pier 1 Imports, Inc. 511,875
----------
4,061,250
- -----------------------------------------------------
METALS AND MINING -- 0.4%
70,000 Aluminum Co. of America 3,701,250
- -----------------------------------------------------
NATURAL GAS-DIVERSIFIED -- 0.5%
143,000 Mitchell Energy & Dev. Corp. 2,681,250
60,000 Panhandle Eastern Co. 1,672,500
----------
4,353,750
- -----------------------------------------------------
OIL AND GAS PRODUCING -- 3.4%
58,100 Alexander Energy Corp.* 265,081
76,900 Basin Exploration, Inc.* 379,694
267,900 Tom Brown, Inc.* 3,918,038
90,000 Cairn Energy USA, Inc.* 1,260,000
120,000 Chieftain International,
Inc.* 2,130,000
96,500 Coho Energy, Inc.* 470,437
153,000 Devon Energy Corp. 3,901,500
301,400 Enron Oil & Gas Co. 7,233,600
271,000 Global Natural Res., Inc.* 2,845,500
18,900 H S Resources, Inc.* 243,337
259,200 Phoenix Resource Cos., Inc. 4,471,200
92,500 Pogo Producing Co. 2,613,125
125,278 United Meridian Corp. 2,176,705
13,400 Vintage Petroleum, Inc. 301,500
170,000 Wainoco Oil Ltd. 552,500
----------
32,762,217
- -----------------------------------------------------
OIL-INTEGRATED-DOMESTIC -- 0.2%
252,100 Tesoro Petroleum, Inc.* $ 2,174,363
- -----------------------------------------------------
OIL-INTEGRATED-INTERNATIONAL -- 5.8%
379,000 Exxon Corp. 30,367,375
162,900 Mobil Corp. 18,244,800
54,000 Royal Dutch Pete Co. 7,620,750
----------
56,232,925
- -----------------------------------------------------
OIL SERVICES -- 0.8%
20,800 Cliffs Drilling Co. 309,400
209,400 Nabors Industries, Inc. 2,329,575
86,300 Offshore Logistics, Inc.* 1,089,537
130,000 Smith International, Inc.* 3,055,000
24,000 Weatherford International,
Inc.* 693,000
----------
7,476,512
- -----------------------------------------------------
PAPER AND FOREST PRODUCTS -- 2.4%
99,840 Kimberly-Clark Corp. 8,261,760
331,500 Rayonier, Inc. 11,063,812
76,000 Willamette Industries, Inc. 4,275,000
----------
23,600,572
- -----------------------------------------------------
POLLUTION CONTROL -- 0.6%
150,000 Browning-Ferris Industries,
Inc. 4,425,000
60,000 Safety-Kleen Corp. 937,500
11,400 Zurn Industries, Inc. 243,675
----------
5,606,175
- -----------------------------------------------------
RAILROADS -- 0.8%
40,301 Burlington Northern Santa Fe 3,143,478
64,900 Union Pacific Corp. 4,283,400
----------
7,426,878
- -----------------------------------------------------
RESTAURANTS -- 0.4%
157,900 Applebees Int'l., Inc. 3,592,225
60,000 Ryan's Family Steak Houses,
Inc. 420,000
----------
4,012,225
- -----------------------------------------------------
SEMICONDUCTOR -- 5.0%
20,000 Altera Corp.* 995,000
39,000 Analog Devices, Inc. 1,379,625
61,400 Atmel Corp. 1,373,825
122,800 Cypress Semiconductor Corp. 1,565,700
142,000 Intel Corp. 8,058,500
146,000 International Rectifier Corp. 3,650,000
115,000 LSI Logic Corp. 3,766,250
219,500 Micron Technology, Inc. 8,697,688
110,000 National Semiconductor Corp. 2,447,500
14,000 Novellus Systems, Inc.* 756,000
221,800 Texas Instruments, Inc. 11,478,150
150,000 Xilinx, Inc. 4,575,000
----------
48,743,238
- -----------------------------------------------------
*Non-income producing securities. See notes to financial statements.
18
<PAGE>
The Guardian Park Avenue Fund
Schedule of Investments (Continued)
- -----------------------------------------------------
Shares Value
- -----------------------------------------------------
Telecommunications -- 0.7%
121,350 Andrew Corp. $ 4,641,638
43,300 Harris Corp. Del. 2,365,262
-----------
7,006,900
- -----------------------------------------------------
Textile-Apparel and Production -- 0.2%
103,000 Fieldcrest Cannon, Inc. 1,712,375
19,700 Russell Corp. 546,675
-----------
2,259,050
- -----------------------------------------------------
Transportation-Miscellaneous -- 0.1%
109,400 Maritrans, Inc. 642,725
- -----------------------------------------------------
Truckers -- 0.1%
59,000 FRP Pptys., Inc. 1,209,500
- -----------------------------------------------------
Utilities-Communications -- 7.1%
175,000 Ameritech Corp. 10,325,000
365,000 AT&T Corp. 23,633,750
47,600 Bell Atlantic Corp. 3,183,250
343,900 BellSouth Corp. 14,959,650
175,000 GTE Corp. 7,700,000
44,700 NYNEX Corp. 2,413,800
121,300 SBC Communications, Inc. 6,974,750
-----------
69,190,200
- -----------------------------------------------------
Utilities-Electric -- 1.3%
42,400 Consolidated Edison Co.
of N.Y., Inc. 1,356,800
100,500 Detroit Edison Co. 3,467,250
55,000 Illinova Corp. 1,650,000
55,000 Northeast Utilities 1,340,625
110,000 SCECorp 1,952,500
90,700 Unicom Corp. 2,970,425
-----------
12,737,600
- -----------------------------------------------------
Utilities-Gas and Pipeline -- 0.1%
49,400 Entergy Corp. 1,444,950
- -----------------------------------------------------
Total Common Stocks
(Cost $674,081,186) 892,625,317
- -----------------------------------------------------
Preferred Stock -- 0.1%
Shares Value
- -----------------------------------------------------
15,220 Phoenix Duff & Phelps Corp.,
Preferred Ser. "A" $384,305
- -----------------------------------------------------
TOTAL PREFERRED STOCK
(COST $0) 384,305
- -----------------------------------------------------
Repurchase Agreement -- 7.8%
Principal Maturity
Amount Date Value
- ------------------------------------------------------------------
$76,014,000 State Street Bank & Trust
repurchase agreement,
dated 12/29/95, maturity
value $76,061,298, at 5.6%,
due 1/2/96 (collateralized by
$71,305,000 U.S. Treasury
Notes, 7.125% due 2/29/00,
market value $77,611,036) 1/2/96 $ 76,014,000
- ------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(COST $76,014,000) 76,014,000
- ------------------------------------------------------------------
TOTAL INVESTMENTS -- 99.7%
(COST $750,095,186) 969,023,622
CASH, RECEIVABLES AND OTHER ASSETS
LESS PAYABLES -- 0.3% 3,250,973
- ------------------------------------------------------------------
NET ASSETS -- 100.0% $972,274,595
- ------------------------------------------------------------------
See notes to financial statements. * Non-income producing securities.
19
<PAGE>
FINANCIAL STATEMENTS
o The Guardian Park Avenue Fund
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1995
- -----------------------------------------------------
ASSETS
Investments, at identified cost* $ 750,095,186
=====================================================
Investments, at market $ 893,009,622
Repurchase agreements 76,014,000
- -----------------------------------------------------
TOTAL INVESTMENTS 969,023,622
Cash 790
Receivable for securities sold 25,525,110
Receivable for fund shares sold 4,467,730
Dividends receivable 1,527,626
Interest receivable 35,473
- -----------------------------------------------------
Total Assets 1,000,580,351
- -----------------------------------------------------
LIABILITIES
Payable for securities purchased 23,482,091
Distribution payable 2,277,504
Payable for fund shares redeemed 437,366
Accrued expenses 260,516
Due to affiliates -- Note 2 1,848,279
- -----------------------------------------------------
TOTAL LIABILITIES 28,305,756
- -----------------------------------------------------
NET ASSETS $ 972,274,595
=====================================================
COMPONENTS OF NET ASSETS
Capital Stock $ 286,181
Paid-in capital 715,332,947
Undistributed net investment income --
Accumulated net realized gain on
investments 37,727,031
Net unrealized appreciation of
investments 218,928,436
- -----------------------------------------------------
NET ASSETS $ 972,274,595
=====================================================
Shares of beneficial interest
outstanding -- $0.01 par value
(unlimited number of
shares authorized) 28,617,956
- -----------------------------------------------------
Net Asset Value Per Share $33.97
- -----------------------------------------------------
MAXIMUM OFFERING PRICE PER SHARE
(NET ASSET VALUE PER SHARE X 104.71%)* $35.57
- -----------------------------------------------------
* Based on sale of less than $100,000. On sales of
$100,000 or more, the offering price is reduced.
See Notes to Financial Statements.
STATEMENT OF OPERATIONS
Year Ended December 31, 1995
- -----------------------------------------------------
INVESTMENT INCOME:
Income:
Dividends $ 12,039,208
Interest 3,330,987
Other income 32,823
- -----------------------------------------------------
Total Income 15,403,018
- -----------------------------------------------------
Expenses:
Investment advisory fees -- Note 2 4,093,163
12b-1 fees -- Note 3 1,227,949
Transfer agent fees 924,671
Custodian fees 193,757
Printing expense 124,800
Registration fees 54,045
Audit fees 19,500
Trustees' fees -- Note 2 15,700
Insurance expense 7,724
Legal Fees 5,052
Other 721
- -----------------------------------------------------
Total Expenses 6,667,082
- -----------------------------------------------------
NET INVESTMENT INCOME 8,735,936
- -----------------------------------------------------
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS -- NOTE 4
Net realized gain on investments --
Note 1 84,973,348
Net change in unrealized appreciation
of investments -- Note 4 138,277,500
- -----------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS 223,250,848
- -----------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $231,986,784
=====================================================
20
<PAGE>
The Guardian Park Avenue Fund
(Continued)
STATEMENT OF CHANGES IN NET ASSETS
Year Ended December 31,
------------------------
1995 1994
- -----------------------------------------------------------
INCREASE/(DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income $ 8,735,936 $ 6,992,131
Net realized gain on
investments 84,973,348 14,157,157
Net change in unrealized
appreciation/(depreciation)
of investments 138,277,500 (30,003,248)
- -----------------------------------------------------------
NET INCREASE/(DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS 231,986,784 (8,853,960)
- -----------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (8,718,311) (7,003,966)
Net realized gain on
investments (48,212,589) (22,969,311)
- -----------------------------------------------------------
TOTAL DISTRIBUTIONS TO
SHAREHOLDERS (56,930,900) (29,973,277)
- -----------------------------------------------------------
FROM CAPITAL SHARE TRANSACTIONS:
Net increase in net
assets from capital share
transactions -- Note 7 156,301,684 119,550,874
- -----------------------------------------------------------
NET INCREASE IN
NET ASSETS 331,357,568 80,723,637
NET ASSETS:
Beginning of year 640,917,027 560,193,390
- -----------------------------------------------------------
End of year* $972,274,595 $640,917,027
- -----------------------------------------------------------
* Includes undistributed net
investment income of: $ -- $ 81,001
21
<PAGE>
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
o THE GUARDIAN PARK AVENUE FUND
NOTE 1. ACCOUNTING POLICIES
The Guardian Park Avenue Fund (the Fund) is a diversified open-end management
investment company registered under the Investment Company Act of 1940, as
amended (1940 Act). GPAF, originally organized as a Delaware corporation in
1970, was reorganized into a Massachusetts business trust on April 28, 1989. On
December 30, 1992, a majority of the outstanding shares of GPAF voted in favor
of reorganizing the Fund as a series of the Park Avenue Portfolio, also a
Massachusetts business trust. The reorganization is expected to be effected in
February, 1993. Significant accounting policies of the Fund are as follows:
Investments
Equity and debt securities listed on domestic exchanges are valued at the
closing sales prices on such exchanges, or, lacking any sales, at the mean
between closing bid and asked prices. Securities traded in the over-the-counter
market are valued using the last sales price, when available. Otherwise,
over-the-counter securities are valued at the mean between the bid and asked
prices or yield equivalents as obtained from one or more dealers that make a
market in the securities.
Certain debt securities may be valued each business day by an independent
pricing service ("Service") approved by the Board of Trustees. Debt securities
for which quoted bid prices, in the judgment of the Service, are readily
available and representative of the bid side of the market, are valued at the
mean between the quoted bid prices (as obtained by the Service from dealers in
such securities) and asked prices (as calculated by the Service based upon its
evaluation of the market for such securities). Other debt securities that are
valued by the Service are carried at fair value as determined by the Service,
based on methods which include consideration of: yields or prices of municipal
securities of comparable quality, coupon, maturity and type; indications as to
values from dealers; and general market conditions.
Other securities, including securities for which market quotations are not
readily available, such as mortgage-backed securities and restricted securities,
are valued at fair value as determined in good faith by or under the direction
of the Fund's Board of Trustees. Repurchase agreements are carried at cost which
approximates market value (see Note 4). Investment transactions are recorded on
the date of purchase or sale.
Net realized gain or loss on sales of investments is determined on the basis
of identified cost. Interest income, including amortization of premium and
discount, is recorded when earned. Dividends are recorded on the ex-dividend
date.
Distributions to Shareholders
GPAF distributes each year as dividends or capital gains distributions
substantially all realized earnings by the Fund, if any.
All dividends or distributions to the shareholders are recorded on the
ex-dividend date. Such distributions are determined in conformity with income
tax regulations, which may differ from generally accepted accounting principles
(GAAP). Differences between the recognition of income on an income tax basis and
a GAAP basis may cause temporary over distributions of net realized gains and
net investment income.
Federal Income Taxes
The Fund qualifies and intends to remain qualified to be taxed as a "regulated
investment company" under the provisions of the Internal Revenue Code of 1986,
as amended (Code) and as such will not be subject to federal income tax on
taxable income (including any realized capital gains) which is distributed in
accordance with the provisions of the Code. Therefore, no federal income tax
provision is required.
Reclassification of Capital Accounts
During the year ended December 31, 1995, the Fund reclassified amounts to
paid-in capital from undistributed/(overdistributed) net investment income and
accumulated net realized gain on investments. Increases (decreases) to the
various capital accounts were as follows:
Undistributed Accumulated
Paid-in net investment net realized gain/(loss)
capital income on investments
- -------------------------------------------------------------------------------
$653,749 $(98,626) $(555,123)
===============================================================================
The GPAF redesignated $65,857 of ordinary dividends as long term capital gain
dividends.
NOTE 2. INVESTMENT ADVISORY AGREEMENTS AND PAYMENTS TO RELATED PARTIES
The Fund has an investment advisory agreement with Guardian Investor Services
Corporation (GISC), a wholly-owned subsidiary of The Guardian Life Insurance
Company of America. The investment advisory agreement provides, among other
things, for the quarterly payment by the Fund of a fee calculated at an annual
rate of one-half of 1% of the average daily net assets of the Fund.
22
<PAGE>
In addition, pursuant to the investment advisory agreement, if total
expenses of the Fund, as defined, exceed 1% per annum of the average daily net
asset value of the Fund, GISC has agreed to assume any such excess. Total
expenses of the Fund did not exceed this limitation for the year ended December
31, 1995.
The aggregate remuneration paid by the Fund to its unaffiliated trustees
($500 per meeting plus and annual stipend of $1,000) amounted to $15,700 for the
year ended December 31, 1995.
Certain officers and trustees of the Fund are affiliated with GISC.
NOTE 3. UNDERWRITING AGREEMENT AND DISTRIBUTION PLAN
The Fund has entered into an Underwriting Agreement with GISC pursuant to which
GISC serves as the principal underwriter for shares of the Fund. As compensation
for its services, GISC received aggregate sales commissions of $2,576,003 for
the year ended December 31, 1995. GISC and the Fund has entered into a
Distribution Plan and Agreement pursuant to Rule 12b-1 under the Investment
Company Act of 1940 (the "Plan"). Pursuant to the Plan the Fund pays GISC, on a
monthly basis, a distribution fee of up to .15% on an annual basis of its
average daily net assets. Under the Plan, GISC uses the fees received from the
Fund to pay distribution expenses incurred during the fiscal year, including the
payment of fees to dealers selling shares of the Fund, the payment of
advertising costs and the payment for the preparation, printing and distribution
of prospectuses to prospective investors.
NOTE 4. REPURCHASE AGREEMENTS
Collateral under repurchase agreements take the form of either cash or fully
negotiable U.S. Government securities. Repurchase agreements are fully
collateralized (including the interest earned thereon) and marked to market
daily while the agreements remain in force. If the value of the underlying
securities falls below the value of the repurchase price plus accrued interest,
the Fund will require the seller to deposit additional collateral by the next
business day. If the request for additional collateral is not met, or the seller
defaults, the Fund maintains the right to sell the collateral and may claim any
resulting loss against the seller. The Board of Trustees evaluates the
creditworthiness of broker-dealers and banks engaged in repurchase agreements
with the Fund. The Fund will not enter into repurchase agreements for more than
one week's duration (or invest in any other securities which are not readily
marketable) if more than 10% of its net assets would be so invested. On December
30, 1992, the shareholders of GPAF voted to amend the Fund's fundamental
investment policies to permit up to 15% of the Fund's net assets to be invested
in securities which are not readily marketable, including repurchase agreements
which mature in more than seven days.
NOTE 5. INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of securities (excluding short-term
securities) amounted to $659,173,513 and $594,165,296, respectively, during the
year ended December 31, 1995.
Gross unrealized appreciation and depreciation of investments aggregated
$228,060,141 and $(9,131,705), respectively, resulting in net unrealized
appreciation of $218,928,436 at December 31, 1995.
The cost of investments owned at December 31, 1995 for Federal income tax
purposes was the same for financial reporting purposes.
NOTE 6. FUND SHARES TRANSACTIONS IN FUND SHARES WERE AS FOLLOWS
o THE GUARDIAN Year Ended
PARK AVENUE FUND December 31, 1995
- ----------------------------------------------------------------------------
Shares Amount
- ----------------------------------------------------------------------------
Shares sold 7,677,062 $248,191,463
Shares issued to shareholders in
reinvestment of dividends from
net investment income and net
realized gain on investments 1,609,384 54,438,335
- ----------------------------------------------------------------------------
9,286,446 302,629,798
Less shares repurchased (4,502,822) (146,328,114)
- ----------------------------------------------------------------------------
Net Increase 4,783,624 $156,301,684
============================================================================
o THE GUARDIAN Year Ended
PARK AVENUE FUND December 31, 1994
- ----------------------------------------------------------------------------
Shares Amount
- ----------------------------------------------------------------------------
Shares sold 6,037,382 $170,046,951
Shares issued to shareholders in
reinvestment of dividends from
net investment income and
net realized gain on investments 1,053,246 28,635,093
- ----------------------------------------------------------------------------
7,090,628 198,682,044
Less shares repurchased (2,821,719) (79,131,170)
- ----------------------------------------------------------------------------
Net Increase 4,268,909 $119,550,874
============================================================================
Note 7. Line of Credit
A $20,000,000 line of credit available to The Guardian Park Avenue Fund and
other related Guardian Funds has been established with Morgan Guaranty Trust
Company. The rate of interest charged on any borrowings is based upon the
prevailing Federal Funds rate at the time of the loan plus .25% calculated on a
360 day basis per annum. For the year ended December 31, 1995, the Fund had not
borrowed against this line of credit.
23
<PAGE>
Financial Highlights
H The Guardian Park Avenue Fund
Selected data for a share of beneficial interest outstanding throughout the
years indicated:
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF
YEAR $26.89 $28.63 $25.17 $22.23 $18.26 $21.56 $20.46 $18.63 $20.74 $21.20
- ----------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net investment
income 0.33 0.31 0.50 0.45 0.65 0.68 0.92 0.60 0.47 0.35
Net realized and
unrealized gain/
(loss) on
investments 8.87 (0.72) 4.56 4.05 5.71 (3.28) 3.88 3.23 0.20 3.33
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase/
(decrease) from
investment
operations 9.20 (0.41) 5.06 4.50 6.36 (2.60) 4.80 3.83 0.67 3.68
- ----------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net
investment income (0.33) (0.31) (0.50) (0.44) (0.66) (0.70) (0.98) (0.55) (0.60) (0.33)
Distributions from
net realized gain
on investments (1.79) (1.02) (1.10) (1.12) (1.73) -- (2.72) (1.45) (2.18) (3.81)
- ----------------------------------------------------------------------------------------------------------------------------------
Total distributions (2.12) (1.33) (1.60) (1.56) (2.39) (0.70) (3.70) (2.00) (2.78) (4.14)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE,
END OF YEAR $33.97 $26.89 $28.63 $25.17 $22.23 $18.26 $21.56 $20.46 $18.63 $20.74
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN* 34.28% (1.44%) 20.28% 20.48% 35.16% (12.21%) 23.66% 20.78% 2.95% 18.38%
==================================================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of
year (000's
omitted) $972,275 $640,917 $560,193 $335,660 $270,095 $216,457 $228,190 $176,000 $157,045 $136,243
Ratio of expenses
to average net
assets 0.81% 0.84% 0.81% 0.68% 0.67% 0.69% 0.70% 0.69% 0.68% 0.71%
Ratio of net
investment income
to average net
assets 1.07% 1.15% 1.89% 1.94% 2.96% 3.51% 4.01% 2.82% 2.08% 1.79%
Portfolio turnover
ratio 78% 54% 46% 64% 57% 47% 47% 58% 50% 48%
==================================================================================================================================
<FN>
** Excludes effect of sales load.
</FN>
</TABLE>
24
<PAGE>
REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS
BOARD OF TRUSTEES AND SHAREHOLDERS
THE GUARDIAN PARK AVENUE FUND
We have audited the accompanying statements of assets and liabilities,
including the schedules of investments of The Guardian Park Avenue Fund as of
December 31, 1995, and the related statements of operations for the year then
ended, and the statements of changes in net assets per each of the two years in
the period then ended and the financial highlights for each of the years
indicated therein. These financial statements and financial highlights are the
responsibility of the Portfolio's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of the
Fund at December 31, 1995, the results of its operations for the year then ended
and the changes in its net assets per each of the two years in the period then
ended and financial highlights for each of the years indicated therein, in
conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
New York, New York
February 9, 1996
25
<PAGE>
[logo]
THE GUARDIAN
INSURANCE & ANNUITY
COMPANY, INC.
A WHOLLY OWNED SUBSIDIARY OF
THE GUARDIAN LIFE INSURANCE
COMPANY OF AMERICA
Annual Report
to Contractowners
[logo]
THE GUARDIAN/VALUE LINE
SEPARATE ACCOUNT
Executive Offices
201 Park Avenue South
New York, NY 10003
Customer Service Office
P.O. Box 26210
Lehigh Valley, PA 18002-6210
1-800-221-3253
December 31, 1995
[logo]
The Guardian Insurance & Annuity Company, Inc.
201 Park Avenue South
New York, NY 10003
BULK RATE MAIL
U.S. POSTAGE PAID
PERMIT NO. 45
NEWARK, NJ
EB-010248 12/95
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE VALUE LINE SEPARATE ACCOUNT - VALUE GUARD I
This schedule contains financial information extracted from the "Annual
Report to Shareholders" dated December 31, 1995, and is qualified in its entirety to
such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 167,660,508
<INVESTMENTS-AT-VALUE> 220,166,295
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 220,166,295
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,222,179
<TOTAL-LIABILITIES> 2,222,179
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 1,934,116
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 19,569,578
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 52,505,787
<NET-ASSETS> 217,944,116
<DIVIDEND-INCOME> 4,175,266
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 2,241,150
<NET-INVESTMENT-INCOME> 1,934,116
<REALIZED-GAINS-CURRENT> 19,569,578
<APPREC-INCREASE-CURRENT> 28,036,846
<NET-CHANGE-FROM-OPS> 49,540,540
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</TABLE>
