------------------------------------------------------------
TABLE OF CONTENTS
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PERFORMANCE SUMMARY 2
------------------------------------------------------------
LETTER TO SHAREHOLDERS 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 15
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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 June 30, 1997: $1,936,054,659
- -----------------------------------------------
"OUR QUANTITATIVE MODELS LOOK AT THE PORTFOLIO TWO DIFFERENT WAYS:
"TOP-DOWN" AND "BOTTOM-UP." THE "TOP-DOWN" APPROACH INVOLVES A CLUSTER OF
DIFFERENT PREDICTIVE MODELS THAT WE USE TO IDENTIFY WHICH OVERALL PORTFOLIO
STYLE HAS THE MOST ATTRACTIVE PERFORMANCE PROSPECTS. THE "BOTTOM-UP" APPROACH
USES OUR MULTI-FACTOR STOCK SCORING SYSTEM TO IDENTIFY SPECIFIC ATTRACTIVE
STOCKS WITHIN OUR 2000-STOCK RESEARCH UNIVERSE."
--CHARLES E. ALBERS, C.F.A.
PORTFOLIO MANAGER
<PAGE>
- -------------------------------------------------------------------------------
PERFORMANCE SUMMARY
- -------------------------------
[GRAPHICAL REPRESENTATION OF GUARDIAN LIFE BUILDING]
----------------------------------------------------
INVESTMENT OPTION TOTAL RETURN*
----------------- ------------
The Guardian Park Avenue Fund .......... 33.92%
Value Line Leveraged Growth Investors .. 21.23%
Value Line Special Situations Fund ..... 13.75%
Value Line Fund ........................ 18.44%
Value Line Income Fund ................. 18.87%
Value Line U.S. Govt. Securities Fund .. 14.00%
Value Line Cash Fund ................... 4.01%
----------------------------------------------------
FIXED-RATE OPTION
-----------------
The annual rates of interest for amounts
deposited or renewed (on a contract anniversary) in
the Fixed-Rate Option during the first six months of
1997 were as follows: for the months of January
through April, 5.25%; and for the months of May
through June, 5.40%.
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, 1997 through June 30, 1997. 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. Investment returns and principal value will
vary with market conditions.
You will receive, under a separate cover, annual reports for the Value Line
funds (available under Value Guard) shortly.
- --------------------------------------------------------------------------------
2
<PAGE>
- --------------------------------
DEAR CONTRACTOWNER:
- --------------------------------
[PHOTO]
Joseph D. Sargent, CLU
President & CEO
As the President and Chief Executive Officer of The Guardian Insurance &
Annuity Company, Inc. (GIAC) and its parent, The Guardian Life Insurance Company
of America, I am pleased to introduce this semiannual report on the performance
results of your contract's separate account and its underlying investment
options during the first six months of 1997.
ON OUR RATINGS
Once again, we are proud to report that as of June 30, 1997, the date of
this report, GIAC continues to enjoy exemplary ratings from four of the nation's
leading insurance company evaluators: Moody's, Standard & Poor's, A.M. Best, and
Duff & Phelps. GIAC's solid ratings reflect its ability to meet its guarantee of
your contract's Fixed-Rate Option and pre-retirement death benefit. However,
these ratings do not apply to Value Guard's underlying variable investment
options, which are subject to the risks of investing in securities. We are very
proud of our ratings as they reflect the strength of GIAC, which stands behind
the contract's guarantees.
OUR COMMITMENT TO YOU
We at The Guardian are proud of our tradition of commitment to you, our
contractowners. Charles Albers, portfolio manager for the Guardian Park Avenue
Fund, and I invite you to read his interview to learn more about the strategies
he used to manage your investment option during the first half of 1997.
Thank you for continuing to invest for your future through GIAC.
Regards,
/s/ JOSEPH D. SARGENT, CLU
- ----------------------------------------
Joseph D. Sargent, CLU
President & Chief Executive Officer
- --------------------------------------------------------------------------------
3
<PAGE>
- --------------------------------------------------------------------------------
THE GUARDIAN PARK AVENUE FUND
- ------------------------------------
[PHOTO]
Charles E. Albers, C.F.A.
Portfolio Manager
Q. THE STOCK MARKET'S CONTINUED STRENGTH IN 1997 HAS SURPRISED MANY MARKET
OBSERVERS. HOW HAS THE FUND PERFORMED DURING THE FIRST HALF OF 1997?
A. The Guardian Park Avenue Fund has performed very well in the first half of
1997, both absolutely and also relative to our mutual fund peer group. The
return to our shareholders for that period was a robust 18.40%,(1) far above
historic average returns for the U.S. stock market. Also, that return
substantially exceeded the return of the average fund in our peer group, Lipper
U.S. Growth Funds,(2) which was a lesser 14.26% over the same period. This was
accomplished in an environment where the large-cap stock index, the S&P 500,(3)
completely dominated the results of most "active" money managers: its total
return for the six-months ended June 30, 1997 was 20.60%.
Of course, from a shareholder's viewpoint, what is most important is the
long-term investment record. Here, too, the Fund has done well, placing it in
the top 5% of Lipper Growth Funds over the last 5 years, ranking number 12 out
of 280 for the five-year period and number 21 out of 174 funds (top 13%) for the
10-year peiod ended June 30, 1997.(4) And, for the last 15 years, we are pleased
to note that the Fund ranked number 5 out of 113 growth funds (top 5%), a pretty
impressive statistic!
- --------------------------------------------------------------------------------
COMPARATIVE AVERAGE ANNUAL
TOTAL RETURNS FOR THE PERIODS
ENDED JUNE 30, 1997
-------------------------------- GUARDIAN PARK GUARDIAN PARK
GUARDIAN PARK LIPPER U.S. AVENUE FUND AVENUE FUND
AVENUE FUND GROWTH FUNDS AVERAGE LIPPER RANK(4) PERCENT RANK
- --------------------------------------------------------------------------------
1 Year +35.26% +23.62% 66 (out of 758) Top 9%
- --------------------------------------------------------------------------------
5 Year +23.20% +16.58% 12 (out of 280) Top 5%
- --------------------------------------------------------------------------------
10 Year +15.77% +12.62% 21 (out of 174) Top 13%
- --------------------------------------------------------------------------------
15 Year +20.30% +16.02% 5 (out of 113) Top 5%
- --------------------------------------------------------------------------------
Q. WHAT FACTORS AFFECTED FUND PERFORMANCE IN THE FIRST HALF OF 1997?
A. Six months ago, in the Annual Report to shareholders, we said: "We continue
to believe that well-established, large-cap companies have the better prospects
in 1997. This view is supported both by our quantitative 'style predictor'
models and also by our fundamental investment judgment."
Our judgment at that time has been vindicated by subsequent developments.
The current multi-year
- --------------------------------------------------------------------------------
(1) Total return figures are historical and assume the reinvestment of
dividends and distributions and the deduction of all Fund expenses. Total
return represents total return for Class A shares--returns for Class B
shares would be lower to reflect higher operating expenses associated with
the B share class. Total return figures do not take into account the
current maximum sales charges. 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. Prior to August 25, 1988, shares of
the Fund were offered at a higher sales charge, so actual returns would
have been somewhat lower.
(2) Lipper Analytical Services, Inc. is an independent mutual fund monitoring
and rating service. 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.
(3) The S&P 500 Index is an unmanaged index of 500 large-cap U.S. stocks that
is generally considered to be representative of U.S. stock market activity.
The S&P 500 Index is not available for direct investment and its returns do
not reflect the fees and expenses that have been deducted from the Fund.
Likewise, return figures for the S&P 500 Index do not reflect any sales
charges that an investor may have to pay when purchasing or redeeming
shares of the Fund.
(4) Lipper rankings were reported in Lipper's Mutual Funds Performance Analysis
Special Report 2nd Quarter 1997. Lipper rankings are based on total returns
and do not take into account any deductions for sales loads.
- --------------------------------------------------------------------------------
4
<PAGE>
- --------------------------------------------------------------------------------
cycle of domestic large-cap outperformance, which began in 1995, has continued
to roll on in the first half of 1997. This phenomenon is shown in the following
table:
TOTAL RETURN %
----------------------------
SIX-
YEAR YEAR MONTHS
ENDED ENDED ENDED
DEC. 31, DEC. 31, JUNE 30,
1995 1996 1997
-------- -------- --------
Large-Cap (S&P 500) +37.4% +22.8% +20.6%
Small-Cap (Russell 2000)(5) +28.4% +16.5% +10.2%
----- ----- -----
Amount of Large-Cap
Outperformance + 9.0% + 6.3% +10.4%
Throughout this period, from mid-1995 through mid-1997, we have positioned
the Fund with a portfolio cap-size which has been much larger than those of most
other actively managed funds, and this has given us a meaningful competitive
advantage during this period.
THE GUARDIAN PARK AVENUE FUND
WEIGHTED AVERAGE MARKET CAPITALIZATION
($ Billions)
[GRAPHICAL REPRESENTATION OF BAR CHART]
Guardian Park Avenue Fund 6/30/95 12/31/95 6/30/96 12/31/96 6/30/97
------- -------- ------- -------- -------
14.9 24.6 34.7 37.7 46.1
Another factor that contributed to our relatively good investment
performance in the first half of 1997 was our multi-factor quantitative stock
scoring system. This system has generally provided us solid guidance over the
years in stock selection, and this favorable record has continued into 1997.
Q. WHAT STRATEGIES DID YOU USE TO MANAGE THE FUND DURING THE FIRST HALF OF 1997?
A. There was no change in our strategic approach to managing the portfolio
during this period. We believe that soundly-based quantitative models provide a
valuable tool. At the same time, fast-breaking news and unusual investment
issues require the balanced judgment of a capable portfolio manager. We believe
the surest path to consistently above-average returns requires the synergistic
results of combining good quantitative tools with good manager judgment.
Our quantitative models look at the portfolio two different ways:
"top-down" and "bottom-up." The "top-down" approach involves a cluster of
different predictive models that we use to identify which overall portfolio
style has the most attractive performance prospects. The "bottom-up" approach
uses our multi-factor stock scoring system to identify specific attractive
stocks within our 2000-stock research universe. We believe that both the
"top-down" and "bottom-up" perspectives are important, and the best results can
be achieved by combining them both within one portfolio.
Q. WHAT ARE THE PORTFOLIO'S WEIGHTS IN DIFFERENT ECONOMIC SECTORS, AND HOW HAVE
THESE WEIGHTINGS AFFECTED PERFORMANCE?
A. The attached pie chart shows the Fund's portfolio weightings for each of the
major economic sectors as of June 30, 1997. These weightings are not the primary
driver of our portfolio management process, but there is an interesting
perspective here. The Fund's greatest sector overweight is the Financial sector
(26.3% weight versus 15.3% in the S&P 500), and this sector was a superior
performer in the first half of 1997. The Fund's greatest sector underweight was
Utilities (3.2% weight versus 8.5% in the S&P 500), and this sector was a
significant underperformer in the first half. The two largest S&P 500 sectors
are Consumer Staples and Technology, and the Fund weighting is close to the
benchmark for both.
Q. MANY INVESTORS HAVE SHIFTED TO PASSIVE "INDEXING" IN RECENT YEARS. WHAT DOES
THE FUTURE HOLD FOR "ACTIVE" PORTFOLIO MANAGEMENT?
A. As shown in the table above, within the U.S. stock market, large cap stocks
have been substantially
- --------------------------------------------------------------------------------
(5) The Russell 2000 Index is generally considered to be representative of
small-capitalization issues in the U.S. stock market. The returns for the
Russell 2000 do not reflect expenses, which are deducted from the Fund's
return.
- --------------------------------------------------------------------------------
5
<PAGE>
- --------------------------------------------------------------------------------
outperforming small caps for roughly the last 3 years. Most active money
managers in the U.S. have tended to be substantially "under-weighted" in the S&P
500 (large-cap) stocks, particularly the mega-cap stocks (the largest 50),
causing their performance to lag the S&P 500 over this span.
In response to those trends, "indexing" has been experiencing a boomlet of
popularity. Many investors have been "throwing in the towel" on active portfolio
management and shifting their money into funds which mimic a stock price index,
most often the S&P 500. Promptly, those "index funds" turn around and buy the
underlying stocks, with most of the money going into the mega-cap stocks. In the
short run, this boomlet of popularity of indexing has been like a
self-fulfilling prophecy: with the mega-cap stocks getting much of the
incremental buying power, their prices have been pushed upward, leading the
market.
Small cap stocks, compared to large ones, have now become very cheap by
historic norms. Over the long term, relative valuations between large caps and
small caps will almost certainly return to normal historic relationships, and
that implies that small caps will have to "catch up" on a relative performance
basis.
The bottom line: Most active money managers have looked bad during the last
few years, at least relative to the S&P 500 Index. However, this seems to be a
very poor time for investors to throw in the towel on all active equity
managers. Indeed, over the next several years, it seems quite likely that many
active managers will be able to do substantially better than the venerable, but
now-bloated, S&P 500 Index.
- --------------------------------------------------------------------------------
THE GUARDIAN PARK AVENUE FUND PROFILE AS OF 6/30/97
- ---------------------------------------------------------------
-----------------------------------------------------
THE GUARDIAN PARK AVENUE FUND--
TOP 10 HOLDINGS AS OF 6/30/97
1. General Electric 3.44%
-----------------------------------------------------
2. Merck & Co. 2.58%
-----------------------------------------------------
3. Bristol Myers Squibb 2.54%
-----------------------------------------------------
4. Intel Corp. 2.34%
-----------------------------------------------------
5. Citicorp 2.15%
-----------------------------------------------------
6. Exxon Corp. 2.03%
-----------------------------------------------------
7. Johnson & Johnson 1.85%
-----------------------------------------------------
8. DuPont DeNemours 1.69%
-----------------------------------------------------
9. Coca Cola Co. 1.68%
-----------------------------------------------------
10. BankAmerica 1.61%
-----------------------------------------------------
For a complete list of portfolio holdings, please see
the schedule of investments.
-----------------------------------------------------
SECTOR WEIGHTINGS OF
COMMON STOCKS HELD
BY THE FUND ON JUNE 30, 1997
[GRAPHICAL REPRESENTATION OF PIE CHART BELOW]
Credit Cyclicals - 0.46%
Utilities - 3.21%
Consumer Cyclical - 3.57%
Conglomerates - 1.47%
Consumer Services - 2.09%
Transportation - 2.10%
Consumer Staples - 19.99%
Financial - 26.29%
Capital Goods - 5.91%
Basic Industries - 3.86%
Energy - 15.82%
Capital Goods-Technology - 15.24%
- --------------------------------------------------------------------------------
6
<PAGE>
- --------------------------------------------------------------------------------
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
[GRAPHICAL REPRESENTATION OF MOUNTAIN CHART]
The Guardian Park Avenue Fund - $452,576
S&P 500 Index - $206,652
Lipper U.S. Equity Growth Fund Average - $172,283
Cost of Living - $39,010
A hypothetical $10,000 investment in Class A shares 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 for Class A shares of 4.5%. This
investment would have grown to $452,576 on June 30, 1997. 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 now be worth $206,652. 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 $172,283. The Cost of Living, as measured by
the ConsumerPrice Index, which is generally representative ofthe level of U.S.
inflation, is also provided to lenda more complete understanding of the
investment'sreal worth.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS(1) FOR PERIODS ENDED 6/30/97
Since
Inception
1 Year 5 Years 10 Years (6/1/72)
- --------------------------------------------------------------------------------
At Net Asset Value(2) (without sales
charge) 35.26% 23.20% 15.77% 16.51%
- --------------------------------------------------------------------------------
Class A Shares(3) (with sales charge) 29.17% 22.07% 15.24% 16.30%
- --------------------------------------------------------------------------------
S&P 500 Index 34.59% 18.29% 14.59% 12.68%
- --------------------------------------------------------------------------------
PERFORMANCE FOR CLASS B SHARES, WHICH WERE FIRST OFFERED ON MAY 1, 1996, WILL
VARY DUE TO DIFFERENCES IN EXPENSES CHARGED TO EACH SHARE CLASS.
(1) 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.
(2) Net Asset Value (NAV) assumes the reinvestment of all dividends and
distributions and does not reflect the payment of sales charges.
(3) Class A share performance assumes the current maximum front-end sales
charge of 4.5%.
- --------------------------------------------------------------------------------
7
<PAGE>
- --------------------------------------------------------------------------------
THE GUARDIAN/VALUE LINE SEPARATE ACCOUNT
- -------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1997 (UNAUDITED)
COMBINED
------------
FIFO cost .................................................... --
============
ASSETS
Shares outstanding ......................................... --
Net asset value per share (NAV) ............................ --
Total Assets (Shares x NAV) .............................. $269,735,539
------------
LIABILITIES
Risk charges and other liabilities .......................... 3,002,913
------------
NET ASSETS--NOTE 3 ............................................ $266,732,626
============
- --------------------------------------------------------------------------------
THE GUARDIAN/VALUE LINE SEPARATE ACCOUNT
- ---------------------------------------------
COMBINED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED)
INVESTMENT INCOME
Income:
Reinvested dividends ........................................ $ 1,851,174
Expenses--Note 4:
Mortality and expense risk charges .......................... 1,363,357
------------
Net investment income/(expense) ............................. 487,817
------------
REALIZED AND UNREALIZED GAIN/(LOSS) FROM INVESTMENTS
Realized gain/(loss) from sale of investments:
Net realized gain/(loss) from sale of investments ......... 6,794,884
Reinvested realized gain distributions .................... 3,122,270
------------
Net realized gain/(loss) on investments ................... 9,917,154
Unrealized appreciation/(depreciation) of investments:
End of period .............................................. 87,451,870
Beginning of period ........................................ 62,197,663
------------
Change in unrealized appreciation/(depreciation) ........... 25,254,207
------------
Net realized and unrealized gain/(loss) from investments .... 35,171,361
------------
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS ................................................... $ 35,659,178
============
See notes to financial statements.
- --------------------------------------------------------------------------------
8
<PAGE>
<TABLE>
<CAPTION>
VALUE LINE VALUE LINE VALUE LINE
GUARDIAN VALUE LINE SPECIAL LEVERAGED U.S. GOVERNMENT VALUE LINE
PARK AVENUE VALUE LINE INCOME SITUATIONS GROWTH SECURITIES CASH
FUND FUND FUND FUND INVESTORS FUND FUND
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$129,191,867 $ 7,829,622 $6,837,073 $527,115 $3,958,109 $13,339,581 $20,600,302
===========================================================================================
4,817,758 494,577 948,150 35,054 157,025 1,158,718 20,600,302
44.06 21.50 8.04 14.95 35.03 10.86 1.00
212,270,398 10,633,403 7,623,123 524,053 5,500,586 12,583,674 20,600,302
- ------------ ---------- --------- -------- ---------- ----------- -----------
294,236 26,786 16,484 4,853 11,333 13,281 2,635,940
- ------------ ----------- ---------- -------- ---------- ----------- -----------
$211,976,162 $10,606,617 $7,606,639 $519,200 $5,489,253 $12,570,393 $17,964,362
============ =========== ========== ======== ========== =========== ===========
- -------------------------------------------------------------------------------------------
$ 790,412 $ 32,183 $ 76,080 $ -- $ -- $ 431,810 $ 520,689
1,025,904 51,463 37,356 2,797 26,260 65,213 154,364
- ----------- ---------- --------- ------- --------- ---------- -----------
(235,492) (19,280) 38,724 (2,797) (26,260) 366,597 366,325
- ----------- ---------- --------- ------- --------- ---------- -----------
6,926,059 158,653 21,982 (2,699) 84,148 (393,259) --
3,122,270 -- -- -- -- -- --
- ----------- ---------- --------- ------- --------- ---------- -----------
10,048,329 158,653 21,982 (2,699) 84,148 (393,259) --
- ----------- ---------- --------- ------- --------- ---------- -----------
83,078,531 2,803,781 786,050 (3,062) 1,542,477 (755,907) --
60,232,368 1,863,503 160,934 (63,676) 1,073,840 (1,069,306) --
- ----------- ---------- --------- ------- --------- ---------- -----------
22,846,163 940,278 625,116 60,614 468,637 313,399 --
- ----------- ---------- --------- ------- --------- ---------- -----------
32,894,492 1,098,931 647,098 57,915 552,785 (79,860) --
- ----------- ---------- --------- ------- --------- ---------- -----------
$32,659,000 $ 1,079,651 $ 685,822 $ 55,118 $ 526,525 $ 286,737 $ 366,325
=========== =========== ========== ======== ========== ========== ===========
See notes to financial statements.
- ------------------------------------------------------------------------------------------
9
</TABLE>
<PAGE>
- -------------------------------------------------------------------------------
THE GUARDIAN/VALUE LINE SEPARATE ACCOUNT
- -----------------------------------------------
COMBINED STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31, 1996 (AUDITED)
AND SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED)
COMBINED
--------
1996 INCREASE/(DECREASE) FROM OPERATIONS
Net investment income/(expense) $ 1,921,998
Net realized gain/(loss) from sale of investments 9,507,128
Reinvested realized gain distributions 22,997,974
Change in unrealized appreciation/(depreciation) of
investments 9,691,875
------------
Net increase/(decrease) resulting from operations 44,118,975
------------
CONTRACT TRANSACTIONS
Net contract purchase payments 5,585,974
Transfers between funds --
Administrative charges (204,157)
Redemptions and annuity benefits (21,757,228)
------------
Net increase/(decrease) from contract transactions (16,375,411)
------------
ACTUARIAL INCREASE IN RESERVES FOR CONTRACTS IN PAYMENT
PERIOD 47,929
------------
TOTAL INCREASE/(DECREASE) IN NET ASSETS 27,791,493
NET ASSETS AT DECEMBER 31, 1995 217,944,117
------------
NET ASSETS AT DECEMBER 31, 1996 $245,735,610
============
1997 INCREASE/(DECREASE) FROM OPERATIONS
Net investment income/(expense) $ 487,817
Net realized gain/(loss) from sale of investments 6,794,884
Reinvested realized gain distributions 3,122,270
Change in unrealized appreciation/(depreciation) of
investments 25,254,207
------------
Net increase/(decrease) resulting from operations 35,659,178
------------
CONTRACT TRANSACTIONS
Net contract purchase payments 2,560,598
Transfers between funds --
Administrative charges (130,843)
Redemptions and annuity benefits (17,135,388)
------------
Net increase/(decrease) from contract transactions (14,705,633)
------------
ACTUARIAL INCREASE IN RESERVES FOR CONTRACTS IN PAYMENT
PERIOD 43,471
------------
TOTAL INCREASE/(DECREASE) IN NET ASSETS 20,997,016
NET ASSETS AT DECEMBER 31, 1996 245,735,610
------------
NET ASSETS AT JUNE 30, 1997--NOTE 3 $266,732,626
============
See notes to financial statements.
- --------------------------------------------------------------------------------
10
<PAGE>
<TABLE>
<CAPTION>
VALUE LINE VALUE LINE VALUE LINE
GUARDIAN VALUE LINE SPECIAL LEVERAGED U.S. GOVERNMENT VALUE LINE
PARK AVENUE VALUE LINE INCOME SITUATIONS GROWTH SECURITIES CASH
FUND FUND FUND FUND INVESTORS FUND FUND
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 226,308 $ (43,458) $ 144,733 $ 2,134 $ (49,595) $ 851,698 $ 790,178
9,259,219 234,674 121,475 9,974 379,973 (498,187) --
20,456,737 1,014,458 924,788 104,840 497,151 -- --
9,229,331 570,745 (129,333) (86,049) 94,562 12,619 --
- ------------ ----------- ---------- ---------- ---------- ----------- -----------
39,171,595 1,776,419 1,061,663 30,899 922,091 366,130 790,178
- ------------ ----------- ---------- ---------- ---------- ----------- -----------
4,104,455 163,013 140,420 14,788 49,624 226,268 887,406
(736,955) 25,430 410,522 15,945 (166,525) (607,440) 1,059,023
(143,825) (10,142) (6,737) (1,142) (5,134) (13,013) (24,164)
(13,789,822) (546,223) (624,340) (88,512) (484,999) (2,666,666) (3,556,666)
- ------------ ----------- ---------- ---------- ---------- ----------- -----------
(10,566,147) (367,922) (80,135) (58,921) (607,034) (3,060,851) (1,634,401)
- ------------ ----------- ---------- ---------- ---------- ----------- -----------
21,247 -- 1,981 -- 972 11,156 12,573
- ----------- ----------- ---------- ---------- ---------- ----------- -----------
28,626,695 1,408,497 983,509 (28,022) 316,029 (2,683,565) (831,650)
160,033,007 8,438,521 6,590,954 512,315 4,749,857 16,304,531 21,314,932
- ----------- ----------- ---------- ---------- ---------- ----------- -----------
$188,659,702 $ 9,847,018 $7,574,463 $ 484,293 $5,065,886 $13,620,966 $20,483,282
============ =========== ========== ========== ========== =========== ===========
$ (235,492) $ (19,280) $ 38,724 $ (2,797)$ (26,260) $ 366,597 $ 366,325
6,926,059 158,653 21,982 (2,699) 84,148 (393,259) --
3,122,270 -- -- -- -- -- --
22,846,163 940,278 625,116 60,614 468,637 313,399 --
- ------------ ----------- ---------- ---------- ---------- ----------- -----------
32,659,000 1,079,651 685,822 55,118 526,525 286,737 366,325
- ------------ ----------- ---------- ---------- ---------- ----------- -----------
1,997,072 69,134 51,930 15,833 53,259 88,437 284,933
1,134,672 (70,832) 82,531 1,481 (14,114) (279,867) (853,871)
(96,494) (6,119) (4,176) (624) (3,108) (7,049) (13,273)
(12,400,594) (312,235) (783,875) (36,901) (141,442) (1,150,601) (2,309,740)
- ------------ ----------- ---------- ---------- ---------- ----------- -----------
(9,365,344) (320,052) (653,590) (20,211) (105,405) (1,349,080) (2,891,951)
- ------------ ----------- ---------- ---------- ---------- ----------- -----------
22,804 -- (56) -- 2,247 11,770 6,706
- ------------ ----------- ---------- ---------- ---------- ----------- -----------
23,316,460 759,599 32,176 34,907 423,367 (1,050,573) (2,518,920)
188,659,702 9,847,018 7,574,463 484,293 5,065,886 13,620,966 20,483,282
- ------------ ----------- ---------- ---------- ---------- ----------- -----------
$211,976,162 $10,606,617 $7,606,639 $ 519,200 $5,489,253 $12,570,393 $17,964,362
============ =========== ========== ========== ========== =========== ===========
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
11
<PAGE>
THE GUARDIAN/VALUE LINE SEPARATE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997 (UNAUDITED)
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 the six months ended June 30, 1997 and the year ended December 31,
1996, purchases and sales of shares of the Funds were as follows:
<TABLE>
<CAPTION>
PURCHASES PURCHASES SALES SALES
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
THE GUARDIAN/VALUE LINE SEPARATE ACCOUNT 1997 1996 1997 1996
------------ ----------- ----------- ------------
<S> <C> <C> <C> <C>
Guardian Park Avenue Fund ................. $ 6,807,688 $28,392,918 $13,220,350 $18,051,599
Value Line Fund ........................... 192,915 1,381,332 520,785 767,037
Value Line Income Fund .................... 249,938 1,813,831 857,447 814,226
Value Line Special Situations Fund ........ 19,051 180,605 39,262 131,347
Value Line Leveraged Growth Fund .......... 82,280 720,240 207,685 873,064
Value Line US Govt Bond Fund .............. 1,221,359 1,978,391 2,188,629 4,162,798
Value Line Cash Fund ...................... 2,263,078 8,016,045 4,624,340 8,539,952
----------- ----------- ----------- -----------
Total ................................... $10,836,309 $42,483,362 $21,658,498 $33,340,023
=========== =========== =========== ===========
</TABLE>
12
<PAGE>
THE GUARDIAN/VALUE LINE SEPARATE ACCOUNT
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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.
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.
NOTE 3-- NET ASSETS, JUNE 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
ACCUMULATION
UNIT TOTAL
UNITS OWNED VALUE UNIT VALUE
------------- ------------ ------------
<S> <C> <C> <C>
TAX-QUALIFIED ACCOUNTS
The Guardian Park Avenue Fund ............... 1,674,172.707 $126.038222 $211,009,751
Value Line Fund, Inc. ....................... 175,373.929 60.155961 10,549,787
Value Line Income Fund, Inc. ................ 130,672.580 57.653599 7,533,745
Value Line Special Situations Fund, Inc. .... 18,154.251 28.083065 509,827
Value Line Leveraged Growth Investors, Inc. . 71,926.198 75.231558 5,411,120
Value Line U.S. Government Securities Fund,
Inc. ....................................... 290,173.917 41.814493 12,133,475
Value Line Cash Fund, Inc. .................. 663,479.278 26.486097 17,572,976
NON-TAX-QUALIFIED ACCOUNTS
The Guardian Park Avenue Fund ............... 364.482 115.028149 41,926
Value Line Fund, Inc. ....................... 1,097.051 51.802271 56,830
Value Line Income Fund, Inc. ................ 492.298 54.300591 26,732
Value Line Special Situations Fund, Inc. .... 335.378 27.947134 9,373
Value Line Leveraged Growth Investors, Inc. . 66.001 75.125855 4,958
Value Line U.S. Government Securities Fund,
Inc. ....................................... -- 41.815838 --
Value Line Cash Fund, Inc. .................. 3,800.972 26.486097 100,673
------------
264,961,173
Contracts receiving annuity payments ........ 1,771,453
------------
Total Net Assets ............................ $266,732,626
============
</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;
13
<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 PERIOD AND THE FOUR
PRIOR YEAR ENDS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1995 1994 1993
----------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
TAX-QUALIFIED ACCOUNTS
The Guardian Park
Avenue Fund ................. $126.038222 $106.975783 $85.415119 $64.239324 $65.820751
Value Line Fund, Inc. ......... 60.155961 54.067255 44.564679 34.065614 36.013237
Value Line Income
Fund, Inc. .................. 57.653599 52.560176 45.222228 36.177740 38.200993
Value Line Special
Situations Fund, Inc. ....... 28.083065 25.181424 23.713301 18.569957 18.562076
Value Line Leveraged
Growth Investors, Inc. ...... 75.231558 68.003247 56.152490 41.374494 43.392851
Value Line U.S.
Government Securities
Fund, Inc. .................. 41.814493 40.899347 39.743747 35.073507 39.653412
Value Line Cash Fund,
Inc. ........................ 26.486097 25.974172 24.991807 23.942278 23.319713
NON-TAX-QUALIFIED ACCOUNTS
The Guardian Park
Avenue Fund ................. 115.028149 97.630911 77.953689 58.627708 60.070986
Value Line Fund, Inc. ......... 51.802271 46.559081 38.376101 29.335015 31.012168
Value Line Income Fund,
Inc. ........................ 54.300591 49.503397 42.592212 34.073730 35.979291
Value Line Special
Situations Fund, Inc. ....... 27.947134 25.059541 23.598522 18.480070 18.472220
Value Line Leveraged
Growth Investors, Inc. ...... 75.125855 67.907692 56.073569 41.316345 43.331875
Value Line U.S.
Government Securities
Fund, Inc. .................. 41.815838 40.900662 39.745016 35.074624 39.654667
Value Line Cash Fund, Inc. .... 26.486097 25.974172 24.991807 23.942278 23.319713
</TABLE>
14
<PAGE>
- -----------------------------------------
SCHEDULE OF INVESTMENTS
- -----------------------------------------
June 30, 1997 (Unaudited)
o THE GUARDIAN PARK AVENUE FUND
COMMON STOCKS--95.3%
- ---------------------------------------------------------------------
Shares Value
- ---------------------------------------------------------------------
AEROSPACE AND DEFENSE -- 3.2%
294,098 Boeing Co. $ 15,605,575
34,400 General Dynamics Corp. 2,580,000
60,800 Gulfstream Aerospace Corp. 1,793,600
48,889 Lockheed Martin Corp. 5,063,067
187,600 Logicon, Inc. 9,942,800
138,950 Precision Castparts Corp. 8,284,894
98,800 Rockwell Int'l. Corp. 5,829,200
25,000 Sundstrand Corp. 1,395,313
40,000 Thiokol Corp. 2,800,000
36,100 TRW, Inc. 2,050,931
73,200 United Technologies Corp. 6,075,600
------------
61,420,980
- ---------------------------------------------------------------------
AIR TRANSPORTATION -- 0.8%
94,000 AMR Corp., DE 8,695,000
100,000 Continental Airlines, Inc. 3,493,750
54,000 UAL Corp. 3,864,375
------------
16,053,125
- ---------------------------------------------------------------------
APPLIANCE AND FURNITURE -- 0.5%
30,000 Ethan Allen Interiors, Inc. 1,710,000
133,000 Furniture Brands Int'l., Inc. 2,576,875
40,000 Hon Industries, Inc. 1,770,000
30,000 Leggett & Platt, Inc. 1,290,000
40,000 Miller Herman, Inc. 1,440,000
------------
8,786,875
- ---------------------------------------------------------------------
AUTOMOTIVE PARTS -- 0.4%
19,130 Autoliv, Inc. 748,461
37,500 Borg-Warner Automotive, Inc. 2,027,344
84,000 Goodyear Tire & Rubber Co. 5,318,250
17,000 Tower Automotive, Inc. 731,000
------------
8,825,055
- ---------------------------------------------------------------------
BIOTECHNOLOGY -- 0.2%
56,100 Amgen, Inc. 3,260,812
- ---------------------------------------------------------------------
BUILDING MATERIALS AND HOMEBUILDERS -- 0.8%
12,000 Armstrong World Industries, Inc. 880,500
82,000 Johns Manville Corp. 968,625
63,000 Lennar Corp. 2,012,062
60,000 McGrath Rent Corp. 1,230,000
43,400 Sherwin-Williams Co. 1,339,975
30,000 Southdown, Inc. 1,308,750
65,000 USG Corp. 2,372,500
24,000 U.S. Home Corp. 637,500
38,600 Vulcan Materials Co. 3,030,100
20,200 Webb (Del) Corp. 328,250
------------
14,108,262
- ---------------------------------------------------------------------
CAPITAL GOODS-MISCELLANEOUS TECHNOLOGY -- 0.4%
50,555 Martin Marietta Materials, Inc. 1,636,718
154,462 Paychex, Inc. 5,869,556
37,300 Rexel, Inc. 690,050
------------
8,196,324
- ---------------------------------------------------------------------
CHEMICALS -- 2.5%
116,700 Cambrex Corp. 4,638,825
506,600 E.I. Dupont de Nemours, Inc. 31,852,475
81,100 Lubrizol Corp. 3,401,131
56,100 Morton Int'l., Inc. 1,693,519
65,000 PPG Industries, Inc. 3,778,125
25,000 Rohm & Haas Co. 2,251,562
------------
47,615,637
- ---------------------------------------------------------------------
COMPUTER SOFTWARE -- 2.4%
50,000 Affiliated Computer Services, Inc. 1,400,000
89,000 BMC Software, Inc. 4,928,375
18,900 Cadence Design Systems, Inc. 633,150
74,800 Compuware Corp. 3,571,700
38,000 Fair Isaac & Co., Inc. 1,693,375
240,000 Microsoft Corp. 30,330,000
37,000 Sterling Software, Inc. 1,156,250
50,000 SunGuard Data Systems, Inc. 2,325,000
------------
46,037,850
- ---------------------------------------------------------------------
COMPUTER SYSTEMS -- 5.1%
208,400 Compaq Computer Corp. 20,683,700
32,400 Diebold, Inc. 1,263,600
19,400 Hewlett Packard Co. 1,086,400
37,200 Honeywell, Inc. 2,822,550
236,500 Int'l. Business Machines 21,329,344
309,600 Lexmark Int'l. Group, Inc. 9,404,100
75,000 Pitney Bowes, Inc. 5,212,500
80,000 Quantum Corp. 1,625,000
60,000 SCI Systems, Inc. 3,825,000
450,000 Storage Technology Corp. 20,025,000
49,000 Stratus Computer, Inc. 2,450,000
65,200 Sun Microsystems, Inc. 2,451,620
60,000 Tandem Computers, Inc. 1,215,000
186,600 Western Digital Corp. 5,901,225
------------
99,295,039
- ---------------------------------------------------------------------
CONGLOMERATES -- 1.4%
65,300 Allied Signal, Inc. 5,485,200
90,000 Loews Corp. 9,011,250
190,000 Textron, Inc. 12,611,250
------------
27,107,700
- ---------------------------------------------------------------------
- --------------------------------------------------------------------------------
See notes to financial statements.
15
<PAGE>
THE GUARDIAN PARK AVENUE FUND
Schedule of Investments (Continued)
- ---------------------------------------------------------------------
Shares Value
- ---------------------------------------------------------------------
DRUGS AND HOSPITALS -- 12.4%
299,000 Abbott Laboratories $ 19,958,250
65,820 Allegiance Corp. 1,793,595
280,700 American Home Products Corp. 21,473,550
27,400 Becton Dickinson & Co. 1,387,125
590,800 Bristol-Myers Squibb Corp. 47,854,800
65,296 Eli Lilly & Co., Inc. 7,137,669
25,000 Health Care & Retirement Co. 834,375
25,900 Integrated Health Services, Inc. 997,150
542,400 Johnson & Johnson 34,917,000
81,300 Kinetic Concepts, Inc. 1,463,400
23,000 Lincare Hldgs., Inc. 989,000
476,300 Merck & Co., Inc. 49,297,050
182,300 Pfizer, Inc. 21,784,850
302,400 Schering-Plough Corp. 14,477,400
20,000 Sybron Int'l. Corp., WI 797,500
8,000 Unitrin, Inc. 488,000
230,000 Universal Health Services, Inc. 8,855,000
29,600 Warner-Lambert Co. 3,677,800
26,000 Wellpoint Health Networks, Inc. 1,192,750
------------
239,376,264
- ---------------------------------------------------------------------
ELECTRICAL EQUIPMENT -- 4.0%
163,600 Emerson Electric Co. 9,008,225
998,000 General Electric Co. 65,244,250
24,500 W.W. Grainger, Inc. 1,915,594
6,500 Jabil Circuit, Inc. 545,187
------------
76,713,256
- ---------------------------------------------------------------------
ELECTRONICS AND INSTRUMENTS -- 0.2%
46,000 Analogic Corp. 1,564,000
61,200 Dynatech Corp. 2,187,900
15,300 Sanmina Corp. 971,550
------------
4,723,450
- ---------------------------------------------------------------------
ENERGY-MISCELLANEOUS -- 0.4%
129,500 Giant Industries, Inc. 2,047,719
167,104 Holly Corp. 4,146,268
86,500 Howell Corp. 1,730,000
------------
7,923,987
- ---------------------------------------------------------------------
ENTERTAINMENT AND LEISURE -- 0.1%
52,400 Galoob Toys, Inc. 989,050
17,000 Harley-Davidson, Inc. 814,938
24,000 Regal Cinemas, Inc. 792,000
------------
2,595,988
- ---------------------------------------------------------------------
FINANCIAL-BANKS -- 12.6%
164,392 Banc One Corp. 7,962,733
471,000 BankAmerica Corp. 30,408,937
109,100 Bank of Boston Corp. 7,862,019
87,600 Barnett Banks, Inc. 4,599,000
284,260 Chase Manhattan Corp. 27,590,986
336,764 Citicorp 40,601,110
62,700 Comerica, Inc. 4,263,600
30,000 Compass Bancshares, Inc. 1,008,750
89,200 First Bank Systems Corp. 7,615,450
205,200 First Chicago NBD Corp. 12,414,600
12,400 First Empire State Corp. 4,178,800
20,000 First Merit Corp. 960,000
191,100 First Union Corp. ` 17,676,750
50,475 Hubco, Inc. 1,463,775
46,100 KeyCorp 2,575,838
127,600 Mellon Bank Corp. 5,757,950
59,300 National City Corp. 3,113,250
218,000 Nationsbank Corp. 14,061,000
82,748 Norwest Corp. 4,654,575
23,000 Premier Bancshares, Inc., GA 395,312
55,000 Provident Financial Group, Inc. 2,351,250
67,500 Star Banc Corp. 2,851,875
80,000 State Street Corp. 3,700,000
147,964 TCF Financial Corp. 7,305,723
375,000 Travelers Group, Inc. 23,648,437
38,000 Union BanCal Corp. 2,731,250
49,600 Zions Bancorp 1,866,200
------------
243,619,170
- ---------------------------------------------------------------------
FINANCIAL-OTHER -- 4.3%
105,000 American Express Co. 7,822,500
75,000 Countrywide Credit Industries, Inc. 2,339,062
10,000 Duff & Phelps Credit Rating Co. 303,750
83,200 A.G. Edwards, Inc. 3,556,800
154,800 Federal Home Loan Mortgage Corp. 5,321,250
299,500 Federal National Mortgage Assn. 13,065,688
93,000 Franklin Resources, Inc. 6,748,312
67,200 Green Tree Financial Corp. 2,394,000
100,000 Jefferies Group, Inc. 5,700,000
72,000 Lehman Brothers Hldgs., Inc. 2,916,000
57,400 McDonald & Co. Investments, Inc. 2,633,225
302,400 Merrill Lynch & Co., Inc. 18,030,600
52,000 J.P. Morgan & Co., Inc. 5,427,500
167,850 Morgan Keegan, Inc. 3,336,019
22,000 Pacific Century Financial Corp. 1,017,500
100,950 Raymond James Financial, Inc. 2,763,506
------------
83,375,712
- ---------------------------------------------------------------------
- --------------------------------------------------------------------------------
See notes to financial statements.
16
<PAGE>
THE GUARDIAN PARK AVENUE FUND
Schedule of Investments (Continued)
- ---------------------------------------------------------------------
Shares Value
- ---------------------------------------------------------------------
FINANCIAL-THRIFT -- 2.0%
39,200 Astoria Financial Corp. $ 1,862,000
137,500 Bank Atlantic Bancorp, Inc. 1,938,750
16,000 California Federal Bancorp, Inc. 270,000
93,187 Charter One Financial, Inc. 5,020,450
34,000 CitFed Bancorp, Inc. 1,317,500
47,000 Coastal Bancorp, Inc. 1,398,250
20,000 Coast Savings Financial, Inc. 908,750
150,199 Collective Bancorp, Inc. 6,740,180
68,100 Commercial Federal Corp. 2,528,212
33,000 Greenpoint Financial Corp. 2,196,562
76,000 Long Island Bancorp, Inc. 2,759,750
27,060 MAF Bancorp, Inc. 1,133,138
20,960 Pacific Crest Capital, Inc. 277,720
127,200 Progressive Bank, Inc. 4,006,800
438,291 Sovereign Bancorp, Inc. 6,683,938
------------
39,042,000
- ---------------------------------------------------------------------
FOOD, BEVERAGE AND TOBACCO -- 5.6%
118,700 Anheuser-Busch Cos., Inc. 4,977,981
140,000 Campbell Soup Co. 7,000,000
466,300 Coca Cola Co. 31,475,250
328,200 Coca Cola Enterprises, Inc. 7,548,600
59,400 ConAgra, Inc. 3,809,025
71,000 Dean Foods Co. 2,866,625
4,128 Earthgrains Co. 270,642
89,000 Fortune Brands, Inc. 3,320,813
89,000 Gallaher Group Plc. 1,640,938
34,000 Hershey Foods Corp. 1,880,625
50,000 Interstate Bakeries Corp. 2,965,625
616,200 Philip Morris Cos., Inc. 27,343,875
54,100 Ralston-Purina Group 4,446,344
12,000 Scweitzer-Mauduit Int'l., Inc. 450,000
38,800 Unilever NV 8,458,400
------------
108,454,743
- ---------------------------------------------------------------------
FOOTWEAR -- 0.4%
88,200 Nike, Inc. 5,148,675
49,000 Payless ShoeSource, Inc. 2,679,688
------------
7,828,363
- ---------------------------------------------------------------------
HOUSEHOLD PRODUCTS -- 0.8%
78,080 Kimberly-Clark Corp. 3,884,480
79,300 Procter & Gamble Co. 11,201,125
------------
15,085,605
- ---------------------------------------------------------------------
INSURANCE -- 6.1%
152,800 Allstate Corp. 11,154,400
27,000 AMBAC, Inc. 2,062,125
74,000 Amer. Bankers Ins. Group, Inc. 4,680,500
86,300 Amer. Int'l. Group, Inc. 12,891,063
20,000 W.R. Berkley Corp. 1,177,500
46,000 Chubb Corp. 3,076,250
51,000 Cigna Corp. 9,052,500
22,000 Cincinnati Financial Corp. 1,738,000
40,000 CMAC Investment Corp. 1,910,000
12,000 Enhance Financial Svcs. Group, Inc. 526,500
98,000 Everest Reinsurance Hldgs. 3,883,250
40,500 Executive Risk, Inc. 2,106,000
13,000 Financial Sec. Assur. Hldgs. Ltd. 506,187
40,000 Fremont General Corp. 1,610,000
24,000 Frontier Insurance Group, Inc. 1,554,000
28,400 General Re Corp. 5,168,800
60,100 Hartford Financial Svcs. Group, Inc. 4,973,275
75,000 Horace Mann Educators Corp. 3,675,000
36,000 Jefferson Pilot Corp. 2,515,500
42,080 Liberty Financial Cos., Inc. 2,098,740
61,000 Lincoln National Corp., Inc. 3,926,875
43,000 Marsh & McLennan Cos., Inc. 3,069,125
25,300 MBIA, Inc. 2,854,156
15,000 Mercury General Corp. 1,091,250
206,000 MGIC Investment Corp. 9,875,125
39,200 Ohio Casualty Corp. 1,724,800
60,000 Old Republic Int'l. Corp. 1,818,750
30,800 Progressive Corp. of Ohio 2,679,600
28,000 ReliaStar Financial Group 2,047,500
47,900 St. Paul Cos., Inc. 3,652,375
92,250 State Auto Financial Corp. 2,075,625
63,000 SunAmerica, Inc. 3,071,250
34,000 Torchmark, Inc. 2,422,500
38,500 Travelers Ppty. Casualty Corp. 1,535,188
------------
118,203,709
- ---------------------------------------------------------------------
LODGING -- 0.2%
17,000 Doubletree Corp. 699,125
175,000 Prime Hospitality Corp. 3,456,250
------------
4,155,375
- ---------------------------------------------------------------------
MACHINERY AND EQUIPMENT -- 1.5%
67,000 AAR Corp. 2,123,062
94,800 Caterpillar, Inc. 10,179,150
88,400 Deere & Co. 4,850,950
15,000 Eaton Corp. 1,309,688
102,400 Illinois Tool Works, Inc. 5,113,600
30,800 Robbins & Myers, Inc. 1,001,000
35,000 Universal Corp., VA 1,111,250
60,000 York Int'l. Corp. 2,760,000
------------
28,448,700
- ---------------------------------------------------------------------
See notes to financial statements.
17
<PAGE>
THE GUARDIAN PARK AVENUE FUND
Schedule of Investments (Continued)
- ---------------------------------------------------------------------
Shares Value
- ---------------------------------------------------------------------
MERCHANDISING-DEPARTMENT STORES -- 0.7%
65,000 Carson Pirie Scott & Co. $ 2,063,750
33,750 Consolidated Stores Corp. 1,172,813
60,200 Dayton Hudson Corp. 3,201,888
50,000 Dollar General Corp. 1,875,000
16,000 MacFrugals Bargains Closeouts 436,000
82,500 Fred Meyer, Inc., DE 4,264,219
48,000 Shopko Stores, Inc. 1,224,000
------------
14,237,670
- ---------------------------------------------------------------------
MERCHANDISING-DRUGS -- 0.3%
35,000 Bergen Brunswig Corp. 975,625
66,000 Value Health, Inc. 1,336,500
75,000 Walgreen Co. 4,021,875
------------
6,334,000
- ---------------------------------------------------------------------
MERCHANDISING-FOOD -- 0.5%
120,000 Richfood Hldgs., Inc. 3,120,000
128,825 Safeway, Inc. 5,942,053
19,000 Smithfield Foods, Inc. 1,168,500
------------
10,230,553
- ---------------------------------------------------------------------
MERCHANDISING-SPECIAL -- 0.6%
45,978 CVS Corp. 2,356,372
83,560 Host Marriott Services Corp. 981,830
65,000 Pier 1 Imports, Inc. 1,722,500
125,000 Ross Stores, Inc. 4,085,938
20,000 Stein Mart, Inc. 600,000
32,500 Tiffany & Co., Inc. 1,501,094
35,000 Waban, Inc. 1,126,562
------------
12,374,296
- ---------------------------------------------------------------------
MISCELLANEOUS -- 0.1%
14,400 Alberto-Culver Co. 335,700
16,200 Helen of Troy Ltd. 415,125
20,000 Lands End, Inc. 592,500
22,900 Mississippi Chemical Corp. 475,175
37,500 Zeigler Coal Hldg. Co. 876,563
------------
2,695,063
- ---------------------------------------------------------------------
MISCELLANEOUS-CONSUMER GROWTH STAPLES -- 0.6%
59,200 Cognizant Corp. 2,397,600
80,000 Equifax, Inc. 2,975,000
24,000 Interpublic Group Cos., Inc. 1,471,500
55,000 A.C. Nielsen Corp. 1,079,375
35,000 Omnicom Group 2,156,875
60,000 Valassis Communications, Inc. 1,440,000
------------
11,520,350
- ---------------------------------------------------------------------
NATURAL GAS-DIVERSIFIED -- 0.5%
260,000 ENSERCH Corp. 5,785,000
158,300 Mitchell Energy & Dev. Corp. 3,443,025
43,000 Western Gas Resources, Inc. 838,500
------------
10,066,525
- ---------------------------------------------------------------------
OIL AND GAS PRODUCING -- 3.5%
194,400 Apache Corp. 6,318,000
98,000 Barrett Resources Corp. 2,933,875
121,900 Basin Exploration, Inc. 944,725
172,500 Tom Brown, Inc. 3,665,625
90,000 Cairn Energy USA, Inc. 1,181,250
185,000 Chieftain Int'l., Inc. 4,058,438
153,000 Devon Energy Corp. 5,622,750
50,200 Diamond Offshore Drilling, Inc. 3,921,875
146,400 Enron Oil and Gas Co. 2,653,500
264,600 Enserch Exploration, Inc. 2,894,063
38,100 Forcenergy Gas Exploration, Inc. 1,157,288
20,000 Nuevo Energy Co. 820,000
497,300 Petromet Resources Ltd. 1,150,006
54,700 Petsec Energy Ltd. 1,244,425
79,700 Pogo Producing Co. 3,083,394
770,000 Ranger Oil Ltd. 7,170,625
245,000 Rigel Energy Corp. 2,618,438
204,600 St. Mary Land & Exploration Co. 7,186,575
305,536 Seagull Energy Corp. 5,346,880
39,300 Snyder Oil Corp. 722,137
33,378 United Meridian Corp. 1,001,340
33,000 Vintage Petroleum, Inc. 1,014,750
270,000 Wainoco Oil Ltd. 1,147,500
------------
67,857,459
- ---------------------------------------------------------------------
OIL AND GAS SERVICES -- 3.5%
62,000 BJ Services Co. 3,324,750
85,960 Camco Int'l., Inc. 4,706,310
41,600 Cliffs Drilling Co. 1,518,400
64,000 Cooper Cameron Corp. 2,992,000
70,000 ENSCO Int'l., Inc. 3,692,500
60,500 Halliburton Co. 4,794,625
14,616 Halter Marine Group, Inc. 350,784
370,500 Input/Output, Inc. 6,715,312
329,400 Nabors Industries, Inc. 8,235,000
130,000 Noble Drilling Corp. 2,933,125
127,700 Offshore Logistics, Inc. 2,410,338
60,000 Pride Petroleum Services, Inc. 1,440,000
107,800 Schlumberger Ltd. 13,475,000
80,000 Smith Int'l., Inc. 4,860,000
26,000 Transocean Offshore, Inc. 1,888,250
72,400 Varco Int'l., Inc. 2,334,900
70,000 Weatherford Enterra, Inc. 2,695,000
------------
68,366,294
- ---------------------------------------------------------------------
OIL-INTEGRATED-DOMESTIC -- 1.3%
74,800 Amoco Corp. 6,502,925
109,000 Atlantic Richfield Co. 7,684,500
120,000 Murphy Oil Corp. 5,850,000
284,000 Tesoro Petroleum, Inc. 4,206,750
------------
24,244,175
- ---------------------------------------------------------------------
- --------------------------------------------------------------------------------
See notes to financial statements.
18
<PAGE>
THE GUARDIAN PARK AVENUE FUND
Schedule of Investments (Continued)
- ---------------------------------------------------------------------
Shares Value
- ---------------------------------------------------------------------
OIL-INTEGRATED-INTERNATIONAL -- 5.9%
168,800 Chevron Corp. $ 12,480,650
624,400 Exxon Corp. 38,400,600
346,600 Mobil Corp. 24,218,675
506,800 Royal Dutch Petroleum Co. 27,367,200
103,200 Texaco, Inc. 11,223,000
------------
113,690,125
- ---------------------------------------------------------------------
PAPER AND FOREST PRODUCTS -- 0.9%
50,000 Caraustar Industries, Inc. 1,731,250
18,000 Consolidated Papers, Inc. 972,000
34,285 Deltic Timber Corp. 1,004,979
331,500 Rayonier, Inc. 13,943,719
------------
17,651,948
- ---------------------------------------------------------------------
PHOTOGRAPHY -- 0.4%
99,700 Eastman Kodak Co. 7,651,975
- ---------------------------------------------------------------------
PUBLISHING-NEWS -- 0.6%
45,000 Central Newspapers, Inc. 3,223,125
43,200 Gannett Co., Inc. 4,266,000
65,700 Harte-Hanks Communications 1,938,150
20,000 Lee Enterprises, Inc. 527,500
5,700 Washington Post Co. 2,268,600
------------
12,223,375
- ---------------------------------------------------------------------
RAILROADS -- 0.7%
40,301 Burlington Northern Santa Fe 3,622,052
15,000 Kansas City Southern Inds., Inc. 967,500
45,800 Norfolk Southern Corp. 4,614,350
64,900 Union Pacific Corp. 4,575,450
------------
13,779,352
- ---------------------------------------------------------------------
SEMICONDUCTOR -- 2.7%
60,000 Adaptec, Inc. 2,085,000
57,100 Altera Corp. 2,883,550
80,000 Dallas Semiconductor Corp. 3,140,000
311,200 Intel Corp. 44,132,050
------------
52,240,600
- ---------------------------------------------------------------------
TEXTILE-APPAREL AND PRODUCTION -- 0.6%
73,000 Jones Apparel Group, Inc. 3,485,750
50,000 Liz Claiborne, Inc. 2,331,250
46,100 Russell Corp. 1,365,712
43,000 V.F. Corp. 3,644,250
------------
10,826,962
- ---------------------------------------------------------------------
TRANSPORTATION-MISCELLANEOUS -- 0.4%
46,000 Airborne Freight Corp. 1,926,250
22,000 Expeditors Int'l. Wash., Inc. 624,250
32,000 GATX Corp. 1,848,000
239,500 Maritrans, Inc. 1,856,125
42,000 Trinity Industries, Inc. 1,333,500
------------
7,588,125
- ---------------------------------------------------------------------
TRUCKERS -- 0.1%
18,000 FRP Ppty., Inc. 486,000
25,000 Swift Transportation, Inc. 737,500
------------
1,223,500
- ---------------------------------------------------------------------
UTILITIES-COMMUNICATIONS -- 2.5%
140,600 Ameritech Corp. 9,552,013
251,600 Bellsouth Corp. 11,667,950
9,200 Harris Corp., DE 772,800
312,000 NYNEX Corp. 17,979,000
151,700 SBC Communications, Inc. 9,386,438
------------
49,358,201
- ---------------------------------------------------------------------
UTILITIES-ELECTRIC -- 0.5%
36,000 CalEnergy, Inc. 1,368,000
62,664 Duke Power Co. 3,003,955
26,000 KU Energy Corp. 887,250
31,000 LG&E Energy Corp. 683,938
29,000 Nipsco Industries, Inc. 1,198,061
40,000 Public Service Co., CO 1,660,000
------------
8,801,204
- ---------------------------------------------------------------------
UTILITIES-GAS AND PIPELINE -- 0.1%
45,000 KN Energy, Inc. 1,895,623
- ---------------------------------------------------------------------
TOTAL COMMON STOCKS
(COST $1,301,517,930) 1,845,111,356
- ---------------------------------------------------------------------
SHORT-TERM INVESTMENTS -- 5.5%
- ---------------------------------------------------------------------
Principal
Amount Value
- ---------------------------------------------------------------------
COMMERCIAL PAPER -- 5.5%
$38,000,000 Corning, Inc.
6.15% due 7/1/97 $ 38,000,000
19,250,000 Goldman Sachs Group, LP
6.15% due 7/1/97 19,250,000
50,000,000 Koch Industries, Inc.
6.07% due 7/1/97 50,000,000
- ---------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS
(COST $107,250,000)107,250,000
- ---------------------------------------------------------------------
TOTAL INVESTMENTS -- 100.8%
(COST $1,408,767,930) 1,952,361,356
PAYABLES IN EXCESS OF CASH, RECEIVABLES
AND OTHER ASSETS -- (0.8%) (16,306,697)
- ---------------------------------------------------------------------
NET ASSETS -- 100.0% $1,936,054,659
- ---------------------------------------------------------------------
- --------------------------------------------------------------------------------
See notes to financial statements.
19
<PAGE>
- ---------------------------------------------------------------------
FINANCIAL STATEMENTS
- ---------------------------------------------------------------------
o THE GUARDIAN PARK AVENUE FUND
- ---------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- ---------------------------------------------------------------------
June 30, 1997 (Unaudited)
- ---------------------------------------------------------------------
ASSETS
Investments, at identified cost $1,408,767,930
=====================================================================
Investments, at market 1,952,361,356
- ---------------------------------------------------------------------
Cash 6,800
Receivable for securities sold 27,564,113
Receivable for fund shares sold 6,245,469
Dividends receivable 1,393,742
Other assets 5,015
- ---------------------------------------------------------------------
TOTAL ASSETS 1,987,576,495
- ---------------------------------------------------------------------
LIABILITIES
Payable for securities purchased 46,533,718
Payable for fund shares redeemed 1,020,056
Accrued expenses 391,184
Due to affiliates 3,576,878
- ---------------------------------------------------------------------
TOTAL LIABILITIES 51,521,836
- ---------------------------------------------------------------------
NET ASSETS $1,936,054,659
=====================================================================
COMPONENTS OF NET ASSETS
Shares of beneficial interest, at par $ 439,416
Additional paid-in capital 1,311,709,644
Undistributed net investment income 851,481
Accumulated net realized gain on
investments 79,460,692
Net unrealized appreciation of investments 543,593,426
- ---------------------------------------------------------------------
NET ASSETS $1,936,054,659
=====================================================================
NET ASSETS:
Class A $1,826,532,074
Class B $ 109,522,585
- ---------------------------------------------------------------------
SHARES OF BENEFICIAL INTEREST OUTSTANDING--
$0.01 PAR VALUE
Class A 41,451,039
Class B 2,490,566
- ---------------------------------------------------------------------
NET ASSET VALUE PER SHARE
Class A $44.06
Class B $43.97
- ---------------------------------------------------------------------
MAXIMUM OFFERING PRICE PER SHARE
Class A Only (Net Asset Value x 104.71%)* $46.14
- ---------------------------------------------------------------------
* Based on sale of less than $100,000. On sale of $100,000
or more, the offering price is reduced.
- ---------------------------------------------------------------------
STATEMENT OF OPERATIONS
- ---------------------------------------------------------------------
Six Months Ended June 30, 1997 (Unaudited)
- ---------------------------------------------------------------------
INVESTMENT INCOME
INCOME:
Dividends $11,509,091
Interest 2,986,999
Other income 13,636
- ---------------------------------------------------------------------
14,509,726
Less: Foreign tax withheld 85,563
- ---------------------------------------------------------------------
Total Income 14,424,163
- ---------------------------------------------------------------------
EXPENSES:
Investment advisory fees -- Note 2 4,075,522
Administrative fees -- Class A 1,070,880
Administrative fees -- Class B 85,131
12b-1 fees-- Note 3 255,393
Transfer agent fees 964,799
Custodian fees 141,448
Printing expense 101,900
Registration fees 67,600
Audit fees 10,250
Trustees fees-- Note 2 9,500
Legal fees 6,250
Insurance expense 4,934
Other 350
- ---------------------------------------------------------------------
Total Expenses 6,793,957
- ---------------------------------------------------------------------
NET INVESTMENT INCOME 7,630,206
- ---------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN/(LOSS)
ON INVESTMENTS -- NOTE 5
Net realized gain on
investments -- Note 1 79,458,180
Net change in unrealized appreciation
of investments -- Note 5 196,041,631
- ---------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS 275,499,811
- ---------------------------------------------------------------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS $283,130,017
=====================================================================
- --------------------------------------------------------------------------------
See notes to financial statements.
20
<PAGE>
THE GUARDIAN PARK AVENUE FUND
(Continued)
- ---------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- ---------------------------------------------------------------------
Six Months
Ended Year Ended
June 30, December 31,
1997 1996
(Unaudited) (Audited)
- ---------------------------------------------------------------------
INCREASE/(DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income $ 7,630,206 $ 13,816,372
Net realized gain on
investments 79,458,180 140,062,592
Net change in unrealized
appreciation of investments 196,041,631 128,623,359
- ---------------------------------------------------------------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS 283,130,017 282,502,323
- ---------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income
Class A (6,763,141) (13,778,621)
Class B (15,584) (37,751)
Distributions in excess of net
investment income
Class A -- (358,731)
Class B -- (7,535)
Net realized gain on
investments
Class A (26,715,624) (146,944,706)
Class B (1,602,527) (2,841,272)
- ---------------------------------------------------------------------
TOTAL DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS (35,096,876) (163,968,616)
- ---------------------------------------------------------------------
FROM CAPITAL SHARE TRANSACTIONS:
Net increase in net assets
from capital share
transactions -- Note 7 259,830,146 337,383,070
- ---------------------------------------------------------------------
NET INCREASE IN NET ASSETS 507,863,287 455,916,777
NET ASSETS
Beginning of period 1,428,191,372 972,274,595
- ---------------------------------------------------------------------
End of period* $1,936,054,659 $1,428,191,372
=====================================================================
* Includes undistributed net
investment income of $ 851,481 $ --
- --------------------------------------------------------------------------------
See notes to financial statements.
21
<PAGE>
NOTES TO
FINANCIAL STATEMENTS
June 30, 1997 (Unaudited)
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 (the 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. Significant accounting policies of the Fund are as
follows:
GPAF, GPASCF, GAAF, GBGIF, GBGEMF and GCMF (the Multiple Class Funds) offer
two classes of shares. All shares existing prior to May 1, 1996, were classified
as Class A shares. Class A shares are sold with an initial sales load of up to
4.50% and a continuing administrative fee of up to .25% on an annual basis.
Class B shares are sold without an initial sales load but are subject to a
distribution fee of .75% and an administrative fee of up to .25% on an annual
basis, and a contingent deferred sales load (CDSL) of 4% imposed on certain
redemptions. The two classes of shares for each Fund represent interests in the
same portfolio of investments, have the same rights and are generally identical
in all respects except that each class bears its separate distribution and
certain class expenses, and has exclusive voting rights with respect to any
matter to which a separate vote of any class is required.
The preparation of financial statements in conformitywith 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
reporting period. Actual results could differ from those estimates.
Investments
Equity and debt securities listed on domestic exchanges are valued at the
last sales price of such exchanges, or, if no sale occurred, at the mean of the
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 includeconsideration 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.
Security gains or losses are determined on the identified cost basis.
Interest income, including amortization of premium and discount, is accrued
daily. Dividend income is recorded on the ex-dividend date.
All income, expenses (other than class-specific expenses) and realized and
unrealized gains or losses are allocated daily to each class of shares based
upon the relative value of shares of each class. Class-specific expenses which
include distribution and service fees and any other items that are specifically
attributed to a particular class, are charged directly to such class. For the
six months ended June 30, 1997, distribution, administrative and transfer agent
fees were the only class-specific expenses.
Dividends and 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
22
<PAGE>
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
The treatment for financial statement purposes of distributions made during
the year from net investment income and net realized gains may differ from their
ultimate treatment for federal income tax purposes. These differences primarily
are caused by differences in the timing of the recognition of certain components
of income or capital gain; and the recharacterization of foreign exchange gains
or losses to either ordinary income or realized capital gains for federal income
tax purposes. Where such differences are permanent in nature, they are
reclassified in the components of net assets based on their ultimate
characterization for federal income tax purposes. Any such reclassifications
will have no effect on net assets, results of operations, or net asset value per
share of the Fund.
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 .50% of the average daily net assets of the Fund.
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 six months ended
June 30, 1997.
The aggregate remuneration paid by the Fund to its unaffiliated trustees
($500 per meeting plus an annual stipend of $1,000) amounted to $9,500 for the
six months ended June 30, 1997. GISC pays compensation to the trustees who are
interested persons.
Certain officers and trustees of the Fund are affiliated with GISC.
Administrative Services Agreement
Pursuant to the Administrative Services Agreement adopted by the Fund on
behalf of both classes of shares, the Fund pays GISC an administrative services
fee of up to an annual rate of .25% of the average daily net assets. GPAF
currently pays GISC up to .15% of its average daily net assets on an annual
basis.
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
$3,217,006 for the six months ended June 30, 1997.
Under a Distribution Plan adopted by the Fund pursuant to Rule 12b-1 under
the 1940 Act (the "12b-1 Plan"), each Multiple Class Fund is authorized to pay a
monthly 12b-1 fee at an annual rate of up to .75% of average daily net assets of
the Fund's Class B shares as compensation for distribution-related services
provided to the Class B shares of the Fund.
The Fund has also entered into a Distribution Plan pursuant to Rule 12b-1
under the 1940 Act with GISC on behalf of the Class A shares. Effective May 1,
1996, the Plan has been made dormant and no 12b-1 fees are authorized to be paid
in connection with sales of Class A shares.
GISC is entitled to retain any CDSL imposed on certain redemptions. For the
six months ended June 30, 1997, such charges were $34,580.
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.
23
<PAGE>
NOTE 5. INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of securities (excluding short-term
securities) amounted to $577,443,899 and $353,108,493, respectively, during the
six months ended June 30, 1997.
Gross unrealized appreciation and depreciation of investments aggregated
$549,163,961 and $5,570,535, respectively, resulting in net unrealized
appreciation of $543,593,426 at June 30, 1997.
The cost of investments owned at June 30, 1997 for Federal income tax
purposes was the same for financial reporting purposes.
NOTE 6. SHARES OF BENEFICIAL INTEREST
There is an unlimited number of $0.01 par value shares of beneficial
interest authorized, divided into two classes, designated as Class A and Class B
shares. Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
Six Months Six Months
Ended Year Ended Ended Year Ended
June 30, 1997 December 31, 1996 June 30, 1997 December 31, 1996
(Unaudited) (Audited) (Unaudited) (Audited)
- ------------------------------------------------------------------------------------------------------------
Shares Amount
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold 8,377,352 64,654,097 $342,894,835 $331,495,449
Shares issued in reinvestment of
dividends and distributions 732,636 4,095,860 32,303,506 154,626,271
Shares repurchased (4,383,546) (60,643,315) (178,410,298) (184,533,351)
- ------------------------------------------------------------------------------------------------------------
NET INCREASE 4,726,442 8,106,642 $196,788,043 $301,588,369
============================================================================================================
CLASS B
Shares sold 1,558,077 893,821 $ 63,615,660 $ 33,652,331
Shares issued in reinvestment of
dividends and distributions 35,827 73,790 1,576,637 2,826,851
Shares repurchased (53,433) (17,517) (2,150,194) (684,481)
- ------------------------------------------------------------------------------------------------------------
NET INCREASE 1,540,471 950,094 $ 63,042,103 $ 35,794,701
============================================================================================================
</TABLE>
NOTE 7. LINE OF CREDIT
A $20,000,000 line of credit available to The Guardian Park Avenue Fund and
the 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 six months ended June 30, 1997, the Fund had
not borrowed against this line of credit.
24
<PAGE>
- ------------------------------------------
FINANCIAL HIGHLIGHTS
- ------------------------------------------
o THE GUARDIAN PARK AVENUE FUND
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT THE
PERIODS INDICATED:
<TABLE>
<CAPTION>
=================================================================================================================================
-------
CLASS A
-------
Six Months
Ended Year Ended December 31, (Audited)
June 30, 1997 ------------------------------------------------------------------------------------------------
(Unaudited) 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF
PERIOD $37.91 $33.97 $26.89 $28.63 $25.17 $22.23 $18.26 $21.56 $20.46 $18.63 $20.74
- ---------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS
Net investment
income 0.19 0.42 0.33 0.31 0.50 0.45 0.65 0.68 0.92 0.60 0.47
Net realized and
unrealized gain/
(loss) on
investments 6.79 8.41 8.87 (0.72) 4.56 4.05 5.71 (3.28) 3.88 3.23 0.20
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase/
(decrease) from
investment
operations 6.98 8.83 9.20 (0.41) 5.06 4.50 6.36 (2.60) 4.80 3.83 0.67
- ---------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS
TO SHAREHOLDERS FROM:
Net investment
income (0.17) (0.42) (0.33) (0.31) (0.50) (0.44) (0.66) (0.70) (0.98) (0.55) (0.60)
Distributions in excess
of net investment
income -- (0.01) -- -- -- -- -- -- -- -- --
Net realized gain
on investments (0.66) (4.46) (1.79) (1.02) (1.10) (1.12) (1.73) -- (2.72) (1.45) (2.18)
- ---------------------------------------------------------------------------------------------------------------------------------
Total dividends and
distributions (0.83) (4.89) (2.12) (1.33) (1.60) (1.56) (2.39) (0.70) (3.70) (2.00) (2.78)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE,
END OF PERIOD $44.06 $37.91 $33.97 $26.89 $28.63 $25.17 $22.23 $18.26 $21.56 $20.46 $18.63
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN* 18.40% 26.49% 34.28% (1.44%) 20.28% 20.48% 35.16% (12.21%) 23.66% 20.78% 2.95%
=================================================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of
period (000's
omitted) $1,826,532 $1,392,186 $972,275 $640,917 $560,193 $335,660 $270,095 $216,457 $228,190 $176,000 $157,045
Ratio of expenses
to average net
assets 0.79%(a) 0.79% 0.81% 0.84% 0.81% 0.68% 0.67% 0.69% 0.70% 0.69% 0.68%
Ratio of net invest-
ment income to
average net assets 1.00%(a) 1.19% 1.07% 1.15% 1.89% 1.94% 2.96% 3.51% 4.01% 2.82% 2.08%
Portfolio turnover
ratio 23% 81% 78% 54% 46% 64% 57% 47% 47% 58% 50%
Average rate of
commissions
paid(b) $0.055 $0.047
=================================================================================================================================
<FN>
* Excludes effect of sales load.
(a) Annualized.
(b) For fiscal years beginning on or after September 1, 1995, a fund is required to disclose its average commission rate
per share for trades on which commissions are charged.
</FN>
</TABLE>
25
<PAGE>
- -------------------------
FINANCIAL HIGHLIGHTS
- -------------------------
o THE GUARDIAN PARK AVENUE FUND
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT THE
PERIODS INDICATED:
================================================================================
-------
CLASS B
-------
Six Months May 1, 1996+
Ended to December
June 30, 1997 31, 1996
(Unaudited) (Audited)
- ------------------------------------------------------------------
NET ASSET VALUE,
BEGINNING OF
PERIOD $37.90 $36.26
- ------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS
Net investment
income -- 0.05
Net realized and
unrealized gain/
on investments 6.74 6.10
- ------------------------------------------------------------------
Net increase from
investment operations 6.74 6.15
- ------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS
TO SHAREHOLDERS FROM:
Net investment income (0.01) (0.05)
Net realized gain
on investments (0.66) (4.46)
- ------------------------------------------------------------------
Total dividends and
distributions (0.67) (4.51)
- ------------------------------------------------------------------
NET ASSET VALUE,
END OF PERIOD $43.97 $37.90
- ------------------------------------------------------------------
TOTAL RETURN* 17.77% 17.35%
==================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's omitted) $109,523 $36,006
Ratio of expenses
to average net
assets 1.75%(a) 1.77%(a)
Ratio of net invest-
ment income to
average net assets -- 0.04%(a)
Portfolio turnover
ratio 23% 81%
Average rate of
commissions
paid(b) $0.055 $0.047
================================================================================
+ Commencement of operations.
* Excludes effect of sales load.
(a) Annualized.
(b) For fiscal years beginning on or after September 1, 1995, a fund is required
to disclose its average commission rate per share for trades on which
commissions are charged.
26
<PAGE>
[LOGO] THE GUARDIAN[R]
THE GUARDIAN
INSURANCE & ANNUITY
COMPANY, INC.
A WHOLLY OWNED SUBSIDIARY OF
THE GUARDIAN LIFE INSURANCE
COMPANY OF AMERICA
Semiannual Report
to Contractowners
[LOGO] VALUE GUARD
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
JUNE 30, 1997
[LOGO] THE GUARDIAN[R]
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
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE VALUE LINE SEPARATE ACCOUNT -- VALUE GUARD I
This schedule contains financial information extracted from
the "Semi-Annual Report to Shareholders" dated June 30, 1997.
</LEGEND>
<CIK> 0000320580
<NAME> VALUE LINE SEPARATE ACCOUNT - VALUE GUARD I
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 182,283,669
<INVESTMENTS-AT-VALUE> 269,735,539
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 269,735,539
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,002,913
<TOTAL-LIABILITIES> 3,002,913
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 487,817
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 9,917,154
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 87,451,870
<NET-ASSETS> 266,732,626
<DIVIDEND-INCOME> 1,851,174
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 1,363,357
<NET-INVESTMENT-INCOME> 487,817
<REALIZED-GAINS-CURRENT> 9,917,154
<APPREC-INCREASE-CURRENT> 25,254,207
<NET-CHANGE-FROM-OPS> 35,659,178
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,363,357
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,363,357
<AVERAGE-NET-ASSETS> 256,234,118
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 35,171,361
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> .005
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
