==================================================
TABLE OF CONTENTS
==================================================
PERFORMANCE SUMMARY 2
- --------------------------------------------------
LETTER TO SHAREHOLDERS 3
- --------------------------------------------------
THE GUARDIAN PARK AVENUE FUND
- --------------------------------------------------
PORTFOLIO MANAGERS INTERVIEW 4
- --------------------------------------------------
FUND PROFILE 6
- --------------------------------------------------
FINANCIALS
- --------------------------------------------------
THE GUARDIAN/VALUE LINE SEPARATE ACCOUNT 8
- --------------------------------------------------
- - THE GUARDIAN PARK AVENUE FUND 15
- --------------------------------------------------
================================================--------------------------------
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, 1998: $3,216,233,759
- ------------------------------------------------
"WHILE MANY FOREIGN ECONOMIES WERE EXPERIENCING DIFFICULTIES, THE DOMESTIC
ECONOMY CONTINUED RECEIVING ACCOLADES . . . IN OUR PORTFOLIO, WE TRIED TO
CAPITALIZE ON THIS STATE OF AFFAIRS BY OVERWEIGHTING STABLE, HIGH-QUALITY GROWTH
STOCKS IN WHICH THE PREPONDERANCE OF THE ISSUERS' INCOME CAME FROM THE U.S."
--Frank J. Jones, Ph.D.
Co-Portfolio Manager
--Larry Luxenberg, C.F.A.
Co-Portfolio Manager
--John B. Murphy, C.F.A.
Co-Portfolio Manager
<PAGE>
====================------------------------------------------------------------
PERFORMANCE SUMMARY
===================
GRAPHICAL REPRESENTATION OF
GUARDIAN LIFE BUILDING
-----------------------------------------------------------------
INVESTMENT OPTION TOTAL RETURN*
----------------- ------------
The Guardian Park Avenue Fund ..................... 13.24%
Value Line Leveraged Growth Investors ............. 22.34%
Value Line Special Situations Fund ................ 19.72%
Value Line Fund ................................... 11.23%
Value Line Income Fund ............................ 10.38%
Value Line U.S. Govt. Securities Fund ............. 2.65%
Value Line Cash Fund .............................. 2.01%
-----------------------------------------------------------------
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 1998 were as follows: for the
month of January, 5.40%; and for the months of February through
June, 5.25%.
Rates paid by the Fixed-Rate Option are subject to change
at any time, and may be higher or lower for new deposits or
revewals, 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, 1998 through June 30, 1998. 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 CONTRACTHOLDER:
====================
[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 1998.
ON OUR RATINGS
Once again, we are proud to report that as of June 30, 1998, 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.
I am pleased to announce GIAC has been granted membership in the Insurance
Marketplace Standards Association (IMSA). IMSA is an independent voluntary
organization created by the life insurance industry as a means to ensure that
qualifying companies meet and maintain high standards of ethical conduct.
OUR COMMITMENT TO YOU
We at GIAC are proud of our tradition of commitment to you, our
contractowners. The portfolio management team for The Guardian Park Avenue Fund,
and I invite you to read their interview to learn more about the strategies used
to manage your investment option during the first half of 1998.
Thank you for continuing to invest for your future through GIAC.
Regards,
/s/ JOSEPH D. SARGENT
Joseph D. Sargent, CLU
President & Chief Executive Officer
- --------------------------------------------------------------------------------
3
<PAGE>
- --------------------------------------------------------------------------------
THE GUARDIAN PARK AVENUE FUND
- -----------------------------
[PHOTOS]
Frank J. Jones, Ph.D. Larry Luxenberg, C.F.A. John B. Murphy, C.F.A.
Co-Portfolio Manager Co-Portfolio Manager Co-Portfolio Manager
Q. U.S. STOCK MARKET AVERAGES CONTINUED THEIR POWERFUL ADVANCE IN THE FIRST HALF
OF 1998, ALTHOUGH THE PERFORMANCE FOR THE BROAD MARKET WAS MORE VARIED. HOW DID
THE FUND PERFORM DURING THIS TIME?
A. The Guardian Park Avenue Fund advanced 13.79% in the first half of the
year,(1) compared with a total return of 17.68% for the S&P 500.(2) Over the
last twelve months, the Fund was up 29.58%, nearly equal to the S&P 500's 30.03%
total return and ahead of the 25.56% total return of the Lipper Average U.S.
Growth Fund.(3)
Q. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE DURING THIS PERIOD?
A. Two notable policies have contributed to the Fund's recent performance.
First, for most of the last four years, we have anticipated that large stocks
would outperform smaller ones. Over the last three years we have increased our
portfolio's weighted average market capitalization by $46.3 billion to a total
of $61.2 billion as of June 30, 1998, as shown below.
THE GUARDIAN PARK AVENUE FUND
WEIGHTED AVERAGE MARKET CAPITALIZATION
($ Billions)
6/30/95 $14.9
6/30/96 $34.7
6/30/97 $46.1
6/30/98 $61.2
Secondly, we recognized early on that the economic problems in Asia would
have profound and long-lasting effects on the economies of major countries
throughout the world. We have lowered our holdings in companies whose profits
were heavily dependent on Asia.
The last year has been an unusual period in which the very largest stocks
have dominated the stock market averages. Performance has been concentrated in a
handful of huge companies such as Microsoft, General Electric and Pfizer. Part
of the phenomenon can be attributed to economic fundamentals. In addition, an
influx of foreign money, which generally seeks out the household names first,
has had an impact. Then, too, with the current worldwide economic volatility,
investors place a premium on safety.
While there is no telling how long these trends will continue, we believe
they are powerful. As of mid-year, our portfolio was positioned to benefit from
a continuation of these trends into the third quarter.
- --------------------------------------------------------------------------------
(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--return 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 except where noted. 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) 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.
(3) 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.
- --------------------------------------------------------------------------------
4
<PAGE>
- --------------------------------------------------------------------------------
Q. WERE THERE ANY OTHER IMPORTANT STRATEGIES THAT YOU USED TO MANAGE THE FUND?
A. While many foreign economies were experiencing difficulties, the domestic
economy continued receiving accolades. Pundits competed to heap praise on the
most balanced economic recovery in a generation. Among the most popular
nicknames were the "Goldilocks Economy" (not too hot, not too cold, just right)
and "Supertanker America."
In our portfolio, we tried to capitalize on this state of affairs by
overweighting stable, high-quality growth stocks in which the preponderance of
the issuers' income came from the U.S. In addition, we sought to benefit from
the gradual reduction in domestic interest rates, a nearly unprecedented
situation this late in a U.S. recovery. Employment remained strong, consumer
confidence soared, and inflation was on the verge of disappearing.
Q. WHAT ARE THE PORTFOLIO'S WEIGHTS IN DIFFERENT SECTORS AND HOW HAVE THESE
AFFECTED PERFORMANCE THIS YEAR?
A. Our sector weights are generally unchanged from last year. Our largest
weighting remained in financial stocks. At mid-year, 27% of the portfolio was in
financials compared to 17.7% for the S&P 500. Financials continue to benefit
from the continuing decline in interest rates, stable economic growth, and
industry consolidation.
Our second largest concentration was in consumer staples with 14.6%,
although that was under the S&P's 22.6% weighting. We have been increasing our
weighting in the pharmaceutical companies but have been underweighted in such
areas as tobacco and food. Pharmaceutical companies are benefiting from a golden
age of discovery of important new medicines. Given the strong increase in
disposable income, we have been gradually increasing our weighting in additional
areas that would benefit, such as retail and homebuilders.
Q. WHAT PROBLEMS DO YOU FORESEE LOOMING THAT COULD UPSET THIS HAPPY STATE OF
AFFAIRS?
A. The biggest concern at mid-summer had to be the continuing difficulties in
Asia, including Japan. The huge contraction in economic activity there casts a
shadow over worldwide commerce. If the economies of mainland Asia and Japan do
not begin a bottoming process, there is a risk of spreading deflationary
pressures and social chaos. Leaders worldwide recognize the scope and severity
of the problems, and we are hopeful that they will act prudently.
In the U.S., corporations have had their highest profit margins since the
mid-1960's. They have benefited from a period of intense cost-cutting and
reorganization, effective deployment of technology and telecommunications, and
progressive management. Most companies now have little ability to raise prices
and those most exposed to foreign competition must continually find new ways to
lower prices. At the same time, a scarcity of workers has put pressure on wages
for the first time in this recovery. As a consequence, corporate profits now
seem likely to be squeezed and are particularly vulnerable to any revenue
shortfalls.
An unknown wild card is the ability of corporations and governments
worldwide to adapt their computer systems to the new millenium, the "Y2K"
problem. While predictions of doom are increasing, no one seems to know with any
certainty what the end result will be. Hopefully, the feverish and expensive
efforts underway will be successful.
- --------------------------------------------------------------------------------
5
<PAGE>
- --------------------------------------------------------------------------------
THE GUARDIAN PARK AVENUE FUND PROFILE
AS OF JUNE 30, 1998
- --------------------------------------------
---------------------------------------- SECTOR WEIGHTINGS OF
TOP 10 HOLDINGS AS OF 6/30/98 COMMON STOCKS HELD
---------------------------------------- BY THE FUND ON JUNE 30, 1998
1. Microsoft Corp. 3.15%
----------------------------------------
2. General Electric Co. 2.83% [GRAPHICAL REPRESENTATION
---------------------------------------- OF PIE CHART]
3. Pfizer, Inc. 2.49%
---------------------------------------- Financial--27.1%
4. Exxon Corp. 2.44% Credit Cyclicals--0.5%
---------------------------------------- Conglomerates--1.0%
5. Int'l Business Machines 2.16% Consumer Services--2.2%
---------------------------------------- Transportation--3.2%
6. Storage Technology Corp. 2.00% Basic Industries--4.4%
---------------------------------------- Capital Goods--4.8%
7. Wal-Mart Stores, Inc. 1.90% Utilities--8.5%
---------------------------------------- Energy--8.8%
8. Chase Manhattan Corp. 1.81% Consumer Staples--14.6%
---------------------------------------- Capital Goods-
9. BellSouth Corp. 1.80% Technology--13.0%
---------------------------------------- Consumer Cyclical--11.9%
10. Ford Motor Co. 1.73%
----------------------------------------
For a complete list of portfolio holdings,
please see the Schedule of Investments.
----------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS(1) FOR PERIODS ENDED 6/30/98
Inception Since
Date 1 Year 5 Years 10 Years Inception
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A Shares (with sales charge) 6/1/72 23.75% 21.03% 17.97% 16.78%
At Net Asset Value (without sales charge) 29.58% 22.15% 18.51% 16.98%
- ----------------------------------------------------------------------------------------------------------
Class B Shares (with sales charge) 5/1/96 25.44% N/A N/A 29.68%
At Net Asset Value (without sales charge) 28.44% N/A N/A 30.37%
- ----------------------------------------------------------------------------------------------------------
S&P 500 Index 30.03% 22.98% 18.44% 13.45%
(6/1/72)
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(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 for Class A shares do not take into account the current
maximum sales charge of 4.5%, except where indicated. Prior to August 25,
1988, Class A shares of the Fund were offered at a higher sales charge, so
actual returns would have been somewhat lower. Total return figures for
Class B shares do not take into account the contingent deferred sales
charge applicable to such shares (maximum of 3%), except where noted.
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.
- --------------------------------------------------------------------------------
6
<PAGE>
- --------------------------------------------------------------------------------
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
[GRAPHICAL REPRESENTATION OF MOUNTAIN CHART]
The Guardian Lipper U.S.
Park Avenue Fund S&P 500 Equity Growth Cost of
(Class A) Index Fund Average Living
----------- ----------- ----------- ----------
6/1/72 1 9550 1 10000 1 10000 1 10000
1972 2 9352 2 9791 2 9746 2 10072
3 9495 3 10173 3 9548 3 10169
4 9919 4 10936 4 10002 4 10266
1973 5 8954 5 10404 5 8773 5 10483
6 7758 6 9802 6 7699 6 10676
7 9104 7 10271 7 8788 7 10918
8 8355 8 9320 8 7686 8 11184
1974 9 8898 9 9061 9 7492 9 11546
10 8095 10 8376 10 6661 10 11836
11 6816 11 6276 11 5224 11 12222
12 7016 12 6861 12 5701 12 12536
1975 13 9052 13 8434 13 7001 13 12754
14 10222 14 9724 14 8176 14 12923
15 9524 15 8662 15 7174 15 13188
16 10311 16 9410 16 7588 16 13430
1976 17 12315 17 10819 17 8924 17 13527
18 12926 18 11077 18 9084 18 13696
19 13570 19 11281 19 9043 19 13913
20 14714 20 11627 20 9483 20 14106
1977 21 14578 21 10762 21 8951 21 14396
22 15548 22 11107 22 9480 22 14614
23 15171 23 10794 23 9340 23 14807
24 15894 24 10765 24 9674 24 15048
1978 25 16186 25 10235 25 9527 25 15314
26 17952 26 11100 26 10724 26 15700
27 19593 27 12062 27 11821 27 16063
28 18195 28 11455 28 11002 28 16401
1979 29 19967 29 12263 29 11945 29 16884
30 20459 30 12583 30 12544 30 17440
31 22475 31 13535 31 13793 31 17971
32 23489 32 13539 32 14501 32 18575
1980 33 22448 33 12987 33 13536 33 19348
34 24637 34 14722 34 15484 34 19928
35 27183 35 16363 35 18053 35 20266
36 28544 36 17908 36 19852 36 20870
1981 37 30553 37 18146 37 20432 37 21401
38 30553 38 17726 38 20347 38 21860
39 28041 39 15910 39 17993 39 22488
40 30196 40 17010 40 19380 40 22729
1982 41 28244 41 15773 41 18074 41 22874
42 28221 42 15682 42 18100 42 23430
43 32078 43 17473 43 20123 43 23599
44 37863 44 20656 44 24326 44 23599
1983 45 42172 45 22720 45 27061 45 23696
46 49604 46 25228 46 30611 46 24010
47 48521 47 25185 47 29869 47 24251
48 48698 48 25281 48 29333 48 24493
1984 49 46645 49 24675 49 27414 49 24855
50 47823 50 24028 50 26721 50 25048
51 53052 51 26344 51 28574 51 25290
52 54864 52 26823 52 28930 52 25483
1985 53 61530 53 29283 53 31492 53 25797
54 65012 54 31410 54 33601 54 25966
55 60468 55 30132 55 32193 55 26111
56 72960 56 35290 56 37156 56 26449
1986 57 87231 57 40238 57 42720 57 26353
58 93553 58 42592 58 44999 58 26425
59 82542 59 39627 59 41062 59 26570
60 86371 60 41842 60 42571 60 26763
1987 61 106898 61 50759 61 51317 61 27126
62 104621 62 53272 62 52563 62 27440
63 111995 63 56777 63 55749 63 27729
64 88927 64 43977 64 44085 64 27947
1988 65 100335 65 46480 65 47392 65 28164
66 107311 66 49515 66 50056 66 28502
67 105853 67 49653 67 49730 67 28913
68 107404 68 51158 68 50482 68 29179
1989 69 117426 69 54775 69 54123 69 29656
70 124277 70 59546 70 58562 70 29976
71 135522 71 65881 71 64497 71 30169
72 133003 72 67206 72 63984 72 30531
1990 73 131154 73 65183 73 62581 73 31087
74 131990 74 69211 74 67101 74 31401
75 111333 75 59736 75 56465 75 32029
76 116611 76 65046 76 61087 76 32415
1991 77 138452 77 74504 77 71872 77 32633
78 136860 78 74303 78 71176 78 32874
79 149259 79 78263 79 76341 79 33116
80 157618 80 84775 80 83235 80 33382
1992 81 162078 81 82672 81 82319 81 33647
82 159469 82 84210 82 80113 82 33889
83 167044 83 86846 83 82496 83 34106
84 189879 84 91214 84 89848 84 34396
1993 85 208278 85 95200 85 92144 85 34686
86 215651 86 95619 86 92749 86 34879
87 234327 87 98067 87 97203 87 35048
88 228375 88 100342 88 99458 88 35338
1994 89 221843 89 96569 89 96044 89 35556
90 219203 90 96936 90 93504 90 35773
91 227686 91 101657 91 98580 91 36087
92 225091 92 101617 92 97271 92 36280
1995 93 245506 93 111514 93 104431 93 36546
94 271285 94 122063 94 114202 94 36836
95 298576 95 131706 95 123909 95 37005
96 302248 96 139569 96 126735 96 37126
1996 97 317905 97 147050 97 133553 97 37585
98 334627 98 153579 98 139376 98 37850
99 348213 99 158217 99 143418 99 38019
100 382268 100 171365 100 150775 100 38331
1997 101 386091 101 176009 101 148815 101 38712
102 452576 102 206652 102 172283 102 39010
103 502902 103 222048 103 190631 103 39400
104 515475 104 228376 104 188286 104 39873
1998 105 570785 105 260189 105 212500 105 40271
6/30/98 106 586539 106 268697 106 216367 106 40497
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 $586,539 on June 30, 1998. 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 cannot invest directly in the S&P 500Index, a similar hypothetical
investment would now be worth $268,697. 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 $216,367. 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's real worth.
- --------------------------------------------------------------------------------
7
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
THE GUARDIAN/VALUE LINE SEPARATE ACCOUNT
----------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998 (UNAUDITED)
COMBINED
------------
<S> <C>
FIFO cost .................................................................. --
============
ASSETS
Shares owned in underlying fund--Note 1 .................................. --
Net asset value per share (NAV) .......................................... --
Total Assets (Shares x NAV) ............................................ $289,614,080
------------
LIABILITIES
Risk charges and other liabilities ....................................... 2,767,213
------------
NET ASSETS--NOTE 3 ......................................................... $286,846,867
============
- ----------------------------------------------------------------------------------------------------------------
THE GUARDIAN/VALUE LINE SEPARATE ACCOUNT
----------------------------------------
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
<S> <C>
INVESTMENT INCOME
Income:
Reinvested dividends ................................................... $ 1,639,877
Expenses--Note 4:
Mortality and expense risk charges ..................................... 1,512,102
------------
Net investment income/(expense) ........................................ 127,775
------------
REALIZED AND UNREALIZED GAIN/(LOSS) FROM INVESTMENTS
Realized gain/(loss) from sale of investments:
Net realized gain/(loss) from sale of investments ...................... 14,283,168
Reinvested realized gain distributions ................................. 4,469,386
------------
Net realized gain/(loss) on investments ................................ 18,752,554
------------
Unrealized appreciation/(depreciation) of investments:
End of period ........................................................ 100,079,403
Beginning of period .................................................. 86,566,226
------------
Change in unrealized appreciation/(depreciation) ..................... 13,513,177
------------
Net realized and unrealized gain/(loss) from investments ............... 32,265,731
------------
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ............ $ 32,393,506
============
See notes to financial statements.
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
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>
$140,617,498 $ 8,256,306 $ 6,225,951 $ 425,005 $ 3,918,312 $10,066,444 $20,025,161
=================================================================================================================
4,577,702 488,154 840,446 28,878 143,322 897,886 20,025,161
51.31 21.51 8.79 17.42 43.74 11.19 1.00
234,881,888 10,500,197 7,387,519 503,063 6,268,909 10,047,343 20,025,161
- ------------ ----------- ----------- ----------- ----------- ----------- -----------
118,108 8,425 12,608 2,434 2,354 (4,612) 2,627,896
- ------------ ----------- ----------- ----------- ----------- ----------- -----------
$234,763,780 $10,491,772 $ 7,374,911 $ 500,629 $ 6,266,555 $10,051,955 $17,397,265
============ =========== =========== =========== =========== =========== ===========
- -----------------------------------------------------------------------------------------------------------------
$ 747,510 $ 25,552 $ 51,290 $ -- $ -- $ 312,401 $ 503,124
1,177,618 54,767 37,145 4,090 32,709 53,549 152,224
- ------------ ----------- ----------- ----------- ----------- ----------- -----------
(430,108) (29,215) 14,145 (4,090) (32,709) 258,852 350,900
- ------------ ----------- ----------- ----------- ----------- ----------- -----------
13,435,889 488,591 142,412 7,727 315,048 (106,499) --
4,469,386 -- -- -- -- -- --
- ------------ ----------- ----------- ----------- ----------- ----------- -----------
17,905,275 488,591 142,412 7,727 315,048 (106,499) --
- ------------ ----------- ----------- ----------- ----------- ----------- -----------
94,264,390 2,243,891 1,161,568 78,058 2,350,597 (19,101) --
83,175,714 1,547,835 592,757 (14,818) 1,419,410 (154,672) --
- ------------ ----------- ----------- ----------- ----------- ----------- -----------
11,088,676 696,056 568,811 92,876 931,187 135,571 --
- ------------ ----------- ----------- ----------- ----------- ----------- -----------
28,993,951 1,184,647 711,223 100,603 1,246,235 29,072 --
- ------------ ----------- ----------- ----------- ----------- ----------- -----------
$ 28,563,843 $ 1,155,432 $ 725,368 $ 96,513 $ 1,213,526 $ 287,924 $ 350,900
============ =========== =========== =========== =========== =========== ===========
See notes to financial statements.
- -----------------------------------------------------------------------------------------------------------------
9
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
THE GUARDIAN/VALUE LINE SEPARATE ACCOUNT
----------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31, 1997 (AUDITED)
AND SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
COMBINED
-----------
<S> <C>
1997 INCREASE/(DECREASE) FROM OPERATIONS
Net investment income/(expense) ...................................... $ 991,572
Net realized gain/(loss) from sale of investments .................... 18,218,460
Reinvested realized gain distributions ............................... 22,774,320
Change in unrealized appreciation/(depreciation) of investments ...... 24,368,563
------------
Net increase/(decrease) resulting from operations .................... 66,352,915
------------
CONTRACT TRANSACTIONS
Net contract purchase payments ....................................... 4,742,437
Transfers between funds .............................................. --
Administrative charges ............................................... (189,665)
Redemptions and annuity benefits--Note 4 ............................. (40,519,435)
Transfers--other ..................................................... 1,846
------------
Net increase/(decrease) from contract transactions ................... (35,964,817)
------------
ACTUARIAL INCREASE IN RESERVES FOR CONTRACTS IN PAYMENT PERIOD ........... 56,687
------------
TOTAL INCREASE/(DECREASE) IN NET ASSETS .................................. 30,444,785
NET ASSETS AT DECEMBER 31, 1996 ...................................... 245,735,610
------------
NET ASSETS AT DECEMBER 31, 1997 ...................................... $276,180,395
============
1998 INCREASE/(DECREASE) FROM OPERATIONS
Net investment income/(expense) ...................................... $ 127,775
Net realized gain/(loss) from sale of investments .................... 14,283,168
Reinvested realized gain distributions ............................... 4,469,386
Change in unrealized appreciation/(depreciation) of investments ...... 13,513,177
------------
Net increase/(decrease) resulting from operations .................... 32,393,506
------------
CONTRACT TRANSACTIONS
Net contract purchase payments ....................................... 2,469,738
Transfers between funds .............................................. --
Administrative charges--Note 4 ....................................... (130,692)
Redemptions and annuity benefits ..................................... (24,105,786)
Transfers--other ..................................................... 6,934
------------
Net increase/(decrease) from contract transactions ................... (21,759,806)
------------
ACTUARIAL INCREASE IN RESERVES FOR CONTRACTS IN PAYMENT PERIOD ........... 32,772
------------
TOTAL INCREASE/(DECREASE) IN NET ASSETS .................................. 10,666,472
NET ASSETS AT DECEMBER 31, 1997 ...................................... 276,180,395
------------
NET ASSETS AT JUNE 30, 1998--NOTE 3 .................................. $286,846,867
============
See notes to financial statements.
- ----------------------------------------------------------------------------------------------------------------
10
</TABLE>
<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>
$ (364,364) $ (40,244) $ 61,320 $ (6,270) $ (56,678) $ 677,650 $ 720,158
17,648,492 579,402 225,732 6,228 377,593 (618,987) --
19,979,111 1,744,863 495,950 87,677 466,719 -- --
22,943,346 (315,668) 431,823 48,858 345,570 914,634 --
- ------------ ----------- ---------- ---------- ---------- ----------- -----------
60,206,585 1,968,353 1,214,825 136,493 1,133,204 973,297 720,158
- ------------ ----------- ---------- ---------- ---------- ----------- -----------
3,401,837 131,359 111,683 17,205 69,173 330,369 680.811
2,593,421 (250,803) 188,559 4,042 35,846 (622,765) (1,948,300)
(136,832) (8,754) (6,623) (850) (4,557) (10,037) (22,012)
(29,859,341) (972,170) (1,620,181) (132,063) (694,981) (3,238,338) (4,002,361)
1,879 13 (167) 133 (9) 14 (17)
- ------------ ----------- ---------- ---------- ---------- ----------- -----------
(23,999,036) (1,100,355) (1,326,729) (111,533) (594,528) (3,540,757) (5,291,879)
- ------------ ----------- ---------- ---------- ---------- ----------- -----------
30,822 -- 954 -- 1,377 11,702 11,832
- ------------ ----------- ---------- ---------- ---------- ----------- -----------
36,238,371 867,998 (110,950) 24,960 540,053 (2,555,758) (4,559,889)
188,659,702 9,847,018 7,574,463 484,293 5,065,886 13,620,966 20,483,282
- ------------ ----------- ---------- ---------- ---------- ----------- -----------
$224,898,073 $10,715,016 $7,463,513 $ 509,253 $5,605,939 $11,065,208 $15,923,393
============ =========== ========== ========== ========== =========== ===========
$ (430,108) $ (29,215) $ 14,145 $ (4,090) $ (32,709) $ 258,852 $ 350,900
13,435,889 488,591 142,412 7,727 315,048 (106,499) --
4,469,386 -- -- -- -- -- --
11,088,676 696,056 568,811 92,876 931,187 135,571 --
- ------------ ----------- ---------- ---------- ---------- ----------- -----------
28,563,843 1,155,432 725,368 96,513 1,213,526 287,924 350,900
- ------------ ----------- ---------- ---------- ---------- ----------- -----------
1,890,415 52,974 49,543 2,388 23,912 91,892 358,614
(3,410,799) (129,907) (70,575) 1,395 21,816 232,242 3,355,828
(101,882) (5,765) (3,643) (660) (3,099) (4,983) (10,660)
(17,092,622) (1,296,418) (789,166) (108,261) (598,287) (1,633,254) (2,587,778)
6,557 545 (112) 1 (228) 187 (16)
- ------------ ----------- ---------- ---------- ---------- ----------- -----------
(18,708,331) (1,378,571) (813,953) (105,137) (555,886) (1,313,916) 1,115,988
- ------------ ----------- ---------- ---------- ---------- ----------- -----------
10,195 (105) (17) -- 2,976 12,739 6,984
- ------------ ----------- ---------- ---------- ---------- ----------- -----------
9,865,707 (223,244) (88,602) (8,624) 660,616 (1,013,253) 1,473,872
224,898,073 10,715,016 7,463,513 509,253 5,605,939 11,065,208 15,923,393
- ------------ ----------- ---------- ---------- ---------- ----------- -----------
$234,763,780 $10,491,772 $7,374,911 $ 500,629 $6,266,555 $10,051,955 $17,397,265
============ =========== ========== ========== ========== =========== ===========
See notes to financial statements.
- -----------------------------------------------------------------------------------------------------------------
11
</TABLE>
<PAGE>
THE GUARDIAN/VALUE LINE SEPARATE ACCOUN
NOTES TO FINANCIAL STATEMENTS
jUNE 30, 1998 (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 contract 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, 1998 and the year ended December 31,
1997, 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 1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
The Guardian Park Avenue Fund .............. $ 9,402,637 $28,757,901 $24,314,071 $32,991,819
Value Line Fund, Inc. ...................... 68,781 2,151,626 1,491,801 1,539,131
Value Line Income Fund, Inc. ............... 215,464 1,125,897 1,018,128 1,888,027
Value Line Special Situations Fund, Inc. ... 3,657 115,214 118,796 139,053
Value Line Leveraged Growth
Investors Fund, Inc. ..................... 40,597 614,731 636,482 792,540
Value Line U.S. Government
Securities Fund, Inc. .................... 1,311,904 2,329,086 2,373,418 5,175,751
Value Line Cash Fund, Inc. ................. 8,347,307 6,976,200 6,728,195 11,531,715
----------- ----------- ----------- -----------
Total .................................. $19,390,347 $42,070,655 $36,680,891 $54,058,036
=========== =========== =========== ===========
</TABLE>
12
<PAGE>
THE GUARDIAN/VALUE LINE SEPARATE ACCOUN
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, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
ACCUMULATION
UNIT TOTAL
UNITS OWNED VALUE UNIT VALUE
----------- ------------ ------------
<S> <C> <C> <C>
TAX-QUALIFIED ACCOUNTS
The Guardian Park Avenue Fund ......................... 1,444,074.436 $161.754418 $233,585,420
Value Line Fund, Inc. ................................. 144,820.951 72.404314 10,485,662
Value Line Income Fund, Inc. .......................... 107,553.095 68.099352 7,324,296
Value Line Special Situations Fund, Inc. .............. 12,695.726 39.432833 500,628
Value Line Leveraged Growth Investors, Inc. ........... 60,494.469 101.977931 6,169,101
Value Line U.S. Government Securities Fund, Inc. ...... 211,729.502 45.405737 9,613,734
Value Line Cash Fund, Inc. ............................ 619,232.128 27.577022 17,076,578
NON-TAX-QUALIFIED ACCOUNTS
The Guardian Park Avenue Fund ......................... 509.996 147.624344 75,288
Value Line Fund, Inc. ................................. -- 62.349728 --
Value Line Income Fund, Inc. .......................... -- 64.138848 --
Value Line Special Situations Fund, Inc. .............. -- 39.241949 --
Value Line Leveraged Growth Investors, Inc. ........... 65.896 101.834632 6,710
Value Line U.S. Government Securities Fund, Inc. ...... -- 45.407207 --
Value Line Cash Fund, Inc. ............................ 1,463.059 27.577022 40,347
------------
284,877,764
Contracts receiving annuity payments .................. 1,969,103
------------
Total Net Assets ...................................... $286,846,867
============
</TABLE>
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;
(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
13
<PAGE>
<TABLE>
<CAPTION>
THE GUARDIAN/VALUE LINE SEPARATE ACCOUN
NOTES TO FINANCIAL STATEMENTS (Continued)
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
JUNE 30, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1996 1995 1994
----------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
TAX-QUALIFIED ACCOUNTS
The Guardian Park
Avenue Fund ................ $161.754418 $142.844239 $106.975783 $85.415119 $64.239324
Value Line Fund, Inc. ........ 72.404314 65.095659 54.067255 44.564679 34.065614
Value Line Income
Fund, Inc. .................. 68.099352 61.696713 52.560176 45.222228 36.177740
Value Line Special
Situations Fund, Inc. ....... 39.432833 32.938107 25.181424 23.713301 18.569957
Value Line Leveraged
Growth Investors, Inc. ...... 101.977931 83.359180 68.003247 56.152490 41.374494
Value Line U.S.
Government Securities
Fund, Inc. .................. 45.405737 44.232575 40.899347 39.743747 35.073507
Value Line Cash Fund, Inc. ... 27.577022 27.033761 25.974172 24.991807 23.942278
NON-TAX-QUALIFIED ACCOUNTS
The Guardian Park
Avenue Fund ................. 147.624344 130.366067 97.630911 77.953689 58.627708
Value Line Fund, Inc. ........ 62.349728 56.056010 46.559081 38.376101 29.335015
Value Line Income Fund, Inc. . 64.138848 58.108568 49.503397 42.592212 34.073730
Value Line Special
Situations Fund, Inc. ....... 39.241949 32.778671 25.059541 23.598522 18.480070
Value Line Leveraged
Growth Investors, Inc. ...... 101.834632 83.242057 67.907692 56.073569 41.316345
Value Line U.S.
Government Securities
Fund, Inc. .................. 45.407207 44.234002 40.900662 39.745016 35.074624
Value Line Cash Fund, Inc. ... 27.577022 27.033761 25.974172 24.991807 23.942278
NOTE: In some instances the calculation of total assets may not agree due to rounding.
</TABLE>
14
<PAGE>
SCHEDULE OF INVESTMENTS
June 30, 1998 (Unaudited)
O The Guardian Park Avenue Fund
- --------------------------------------------------------------------------------
COMMON STOCKS -- 93.0%
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
AEROSPACE AND DEFENSE -- 1.7%
39,000 Alliant Techsystems, Inc.* $ 2,466,750
80,000 Cordant Technologies, Inc. 3,690,000
68,800 General Dynamics Corp. 3,199,200
48,889 Lockheed Martin Corp. 5,176,123
115,580 Northrop Grumman Corp. 11,919,188
138,950 Precision Castparts Corp. 7,416,456
98,800 Rockwell Int'l. Corp. 4,748,575
50,000 Sundstrand Corp. 2,862,500
128,200 United Technologies Corp. 11,858,500
-----------
53,337,292
- --------------------------------------------------------------------------------
AIR TRANSPORTATION -- 1.7%
63,000 Alaska Air Group, Inc.* 3,437,438
125,000 America West Hldg. Corp.* 3,570,313
348,000 AMR Corp., DE* 28,971,000
43,000 Comair Hldgs., Inc. 1,327,625
100,000 Continental Airlines, Inc.* 6,087,500
75,000 Delta Airlines, Inc. 9,693,750
37,000 UAL Corp.* 2,886,000
55,973,626
-----------
- --------------------------------------------------------------------------------
APPLIANCE AND FURNITURE -- 0.8%
176,000 Ethan Allen Interiors, Inc. 8,789,000
141,000 Furniture Brands Int'l., Inc.* 3,956,812
100,000 Hon Industries, Inc. 3,400,000
80,000 Knoll Corp.* 2,360,000
60,000 Leggett & Platt, Inc. 1,500,000
180,000 Herman Miller, Inc. 4,376,250
-----------
24,382,062
- --------------------------------------------------------------------------------
AUTOMOTIVE -- 2.1%
150,000 Chrysler Corp. 8,456,250
940,000 Ford Motor Co. 55,460,000
69,700 General Motors Corp. 4,656,831
-----------
68,573,081
- --------------------------------------------------------------------------------
AUTOMOTIVE PARTS -- 0.6%
38,000 Arvin Industries, Inc. 1,379,875
68,000 Cooper Tire & Rubber Co. 1,402,500
84,000 Goodyear Tire & Rubber Co. 5,412,750
104,500 Kaydon Corp. 3,690,156
282,933 Meritor Automotive, Inc. 6,790,392
24,000 Modine Mfg. Co. 831,000
18,000 Timken Co. 554,625
-----------
20,061,298
- --------------------------------------------------------------------------------
BIOTECHNOLOGY -- 0.1%
56,100 Amgen, Inc.* 3,667,538
- --------------------------------------------------------------------------------
BUILDING MATERIALS AND HOMEBUILDERS -- 0.9%
33,000 Centex Construction Products, Inc. 1,270,500
16,500 Crossman Communities, Inc.* 501,188
65,000 Fleetwood Enterprises, Inc. 2,600,000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
150,000 D.R. Horton, Inc.* $ 3,131,250
92,500 Lafarge Corp. 3,636,406
63,000 Lennar Corp. 1,858,500
6,700 Lone Star Industries, Inc. 516,319
50,555 Martin Marietta Materials, Inc. 2,274,975
18,000 Medusa Corp. 1,129,500
62,000 Southdown, Inc. 4,425,250
65,000 USG Corp. 3,518,125
24,000 U.S. Home Corp.* 990,000
6,300 Valspar Corp. 249,637
38,600 Vulcan Materials Co. 4,118,138
-----------
30,219,788
- --------------------------------------------------------------------------------
CAPITAL GOODS-MISCELLANEOUS TECHNOLOGY -- 0.0%
40,000 AFC Cable Systems, Inc.* 1,420,000
- --------------------------------------------------------------------------------
CHEMICALS -- 3.9%
68,000 Albemarle Corp. 1,500,250
233,400 Cambrex Corp. 6,126,750
49,000 Carlisle Cos., Inc. 2,110,063
115,000 Crompton & Knowles Corp. 2,896,562
36,900 Dexter Corp. 1,173,881
270,000 Dow Chemical Co. 26,105,625
551,600 E.I. Dupont de Nemours, Inc. 41,163,150
230,000 Lyondell Petrochemical Co. 7,000,625
150,000 Millennium Chemicals, Inc. 5,081,250
153,500 Minnesota Mining & Mfg. Co. 12,615,781
146,100 Morton Int'l., Inc. 3,652,500
65,000 PPG Industries, Inc. 4,521,562
25,000 Rohm & Haas Co. 2,598,438
215,000 Solutia, Inc. 6,167,812
43,700 Union Carbide Corp. 2,332,488
-----------
125,046,737
- --------------------------------------------------------------------------------
COMPUTER SOFTWARE -- 3.9%
8,000 ChoicePoint, Inc.* 405,000
215,000 Computer Associates Int'l., Inc. 11,945,938
27,000 DST Systems, Inc.* 1,512,000
7,500 J.D. Edwards* 322,031
932,000 Microsoft Corp.* 101,005,500
74,000 Sterling Software, Inc.* 2,187,625
100,000 SunGuard Data Systems, Inc.* 3,837,500
65,000 Symantec Corp.* 1,698,125
36,000 Wind River Systems, Inc.* 1,291,500
-----------
124,205,219
- --------------------------------------------------------------------------------
COMPUTER SYSTEMS -- 6.1%
24,000 Apple Computer, Inc.* 687,000
325,300 Compaq Computer Corp. 9,230,387
37,200 Honeywell, Inc. 3,108,525
602,100 Int'l. Business Machines 69,128,606
459,600 Lexmark Int'l. Group, Inc.* 28,035,600
150,000 Pitney Bowes, Inc. 7,218,750
- --------------------------------------------------------------------------------
See notes to financial statements. * Non-income producing security.
15
<PAGE>
THE GUARDIAN PARK AVENUE FUND
Schedule of Investments (Continued)
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
30,600 Sanmina Corp.* $ 1,327,275
1,465,600 Storage Technology Corp.* 63,570,400
240,200 Sun Microsystems, Inc.* 10,433,687
186,600 Western Digital Corp.* 2,204,213
------------
194,944,443
- --------------------------------------------------------------------------------
CONGLOMERATES -- 0.7%
90,000 Loews Corp. 7,841,250
190,000 Textron, Inc. 13,620,625
------------
21,461,875
- --------------------------------------------------------------------------------
CONTAINERS-METALS AND PLASTIC -- 0.1%
37,000 Aptargroup, Inc. 2,300,937
- --------------------------------------------------------------------------------
COSMETICS AND TOILETRIES -- 0.0%
14,400 Alberto-Culver Co. 365,400
15,666 Herbalife Int'l., Inc. 323,111
------------
688,511
- --------------------------------------------------------------------------------
DRUGS AND HOSPITALS -- 9.4%
1,060,000 Abbott Laboratories 43,327,500
65,820 Allegiance Corp. 3,373,275
240,000 American Home Products Corp. 12,420,000
302,000 Arterial Vascular Engineering, Inc.* 10,796,500
19,500 Biomet, Inc.* 644,719
463,200 Bristol-Myers Squibb Corp. 53,239,050
25,000 Health Care & Retirement Co.* 985,938
145,000 Lincare Hldgs., Inc.* 6,099,062
319,300 Merck & Co., Inc. 42,706,375
27,000 Patterson Dental Co.* 988,875
734,900 Pfizer, Inc. 79,874,444
27,000 Safeskin Corp.* 1,110,375
517,400 Schering-Plough Corp. 47,406,775
------------
302,972,888
- --------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT -- 2.9%
998,000 General Electric Co. 90,818,000
25,000 Hubbel, Inc. 1,040,625
------------
91,858,625
- --------------------------------------------------------------------------------
ELECTRONICS AND INSTRUMENTS -- 0.1%
46,000 Analogic Corp. 2,058,500
30,600 Dynatech Corp.* 95,625
23,200 Fluke Corp. 762,700
60,000 Tektronix, Inc. 2,122,500
------------
5,039,325
- --------------------------------------------------------------------------------
ENERGY-MISCELLANEOUS -- 0.3%
495,300 Frontier Oil Corp.* 3,962,400
129,500 Giant Industries, Inc. 2,250,063
167,104 Holly Corp. 4,302,928
86,500 Howell Corp. 940,687
------------
11,456,078
- --------------------------------------------------------------------------------
ENTERTAINMENT AND LEISURE -- 0.5%
16,500 Anchor Gaming* 1,280,812
400,000 Carnival Corp. 15,850,000
------------
17,130,812
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
FINANCIAL-BANKS -- 9.2%
25,000 Associated Bank Corp. $ 940,625
471,000 BankAmerica Corp. 40,712,063
221,944 Bank of Boston Corp. 12,345,635
130,000 Bank of New York, Inc. 7,889,375
53,000 BB&T Corp. 3,584,125
13,000 CCB Financial Corp. 1,381,250
15,000 Centura Banks, Inc. 937,500
768,520 Chase Manhattan Corp. 58,023,260
153,364 Citicorp 22,889,577
81,000 City National Corp. 2,991,937
94,050 Comerica, Inc. 6,230,813
67,875 Commerce Bankshares, Inc. 3,313,148
22,000 Community First Bankshares 576,125
20,100 Cullen Frost Bankers, Inc. 1,090,425
51,255 Fifth Third Bancorp* 3,229,065
36,200 First Chicago NBD Corp. 3,208,225
40,000 First Merit Corp. 1,165,000
482,200 First Union Corp. 28,088,150
235,000 Fleet Financial Group, Inc. 19,622,500
51,989 Hubco, Inc. 1,861,856
90,000 Imperial Bancorp* 2,700,000
92,200 KeyCorp 3,284,625
14,631 M & T Bank Corp. 8,105,574
187,600 Mellon Bank Corp. 13,061,650
61,060 National City Corp. 4,335,260
165,496 Norwest Corp. 6,185,413
34,500 Premier Bancshares, Inc., GA 914,250
67,500 Star Banc Corp. 4,311,563
201,642 Summit Bancorp 9,577,995
38,000 Union BanCal Corp. 3,667,000
150,000 U.S. Bancorp, Inc. 6,450,000
15,000 U.S. Trust Corp. 1,143,750
52,000 Webster Financial Corp. 1,729,000
21,500 Wells Fargo & Co. 7,933,500
36,000 Westamerica Bancor 1,156,500
49,600 Zions Bancorp 2,635,000
------------
297,271,734
- --------------------------------------------------------------------------------
FINANCIAL-OTHER -- 7.9%
302,400 American Express Co. 34,473,600
200,495 Associates First Capital Corp. 15,413,053
155,000 Countrywide Credit Industries, Inc. 7,866,250
25,000 Dain Rauscher Corp. 1,368,750
23,000 Donaldson, Lufkin & Jenrette Sec. Corp. 1,168,688
10,000 Duff & Phelps Credit Rating Co. 557,500
124,800 A.G. Edwards, Inc. 5,327,400
154,800 Federal Home Loan Mortgage Corp. 7,285,275
396,500 Federal National Mortgage Assn. 24,087,375
186,000 Franklin Resources, Inc. 10,044,000
125,000 H & R Block, Inc. 5,265,625
200,000 Jefferies Group, Inc. 8,200,000
109,333 Legg Mason, Inc. 6,293,481
122,000 Lehman Brothers Hldgs., Inc. 9,462,625
164,800 McDonald & Co. Investments, Inc. 5,407,500
- --------------------------------------------------------------------------------
* Non-income producineg security. See notes to financial statements.
16
<PAGE>
THE GUARDIAN PARK AVENUE FUND
Schedule of Investments (Continued)
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
213,500 Merrill Lynch & Co., Inc. $ 19,695,375
251,775 Morgan Keegan, Inc. 6,514,678
180,000 Morgan Stanley Dean Witter 16,447,500
175,000 Paine Webber Group, Inc. 7,503,125
26,200 Ragen MacKenzie Group, Inc.* 396,275
151,425 Raymond James Financial, Inc. 4,533,286
175,000 SLM Hldg. Corp. 8,575,000
787,500 Travelers Group, Inc. 47,742,187
------------
253,628,548
- --------------------------------------------------------------------------------
FINANCIAL-THRIFT -- 1.6%
16,164 H.F. Ahmanson & Co. 1,147,644
39,200 Astoria Financial Corp. 2,097,200
308,593 BankAtlantic Bancorp, Inc. 3,762,130
16,000 California Federal Bancorp, Inc.* 344,000
216,292 Charter One Financial, Inc. 7,286,337
70,500 Coastal Bancorp, Inc. 1,727,250
20,000 Coast Federal Litigation Trust* 302,500
102,150 Commercial Federal Corp. 3,230,494
220,000 Dime Bancorp, Inc. 6,586,250
46,400 Golden State Bancorp, Inc.* 1,380,400
46,400 Golden State Bancorp, Inc.* (warrants) 246,500
108,000 Greenpoint Financial Corp. 4,063,500
76,000 Long Island Bancorp, Inc. 4,617,000
40,590 MAF Bancorp, Inc. 1,476,461
20,960 Pacific Crest Capital, Inc.* 369,420
127,200 Progressive Bank, Inc. 4,968,750
525,949 Sovereign Bancorp, Inc. 8,595,979
------------
52,201,815
- --------------------------------------------------------------------------------
FOOD, BEVERAGE AND TOBACCO -- 1.4%
66,220 CKE Restaurants, Inc. 2,731,575
48,256 Earthgrains Co. 2,696,304
189,000 Fortune Brands, Inc. 7,264,688
100,000 Interstate Bakeries Corp. 3,318,750
338,700 Philip Morris Cos., Inc. 13,336,313
72,600 Pioneer Hi-Bred Int'l., Inc. 3,003,825
125,000 Sara Lee Corp. 6,992,188
38,000 Smithfield Foods, Inc.* 1,159,000
63,000 Universal Corp., VA 2,354,625
------------
42,857,268
- --------------------------------------------------------------------------------
FOOTWEAR -- 0.3%
107,200 Footstar, Inc.* 5,145,600
49,000 Payless ShoeSource, Inc.* 3,610,687
64,000 Stride Rite Corp. 964,000
------------
9,720,287
- --------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS -- 1.5%
186,700 Dial Corp. 4,842,531
478,600 Procter & Gamble Co 43,582,512
------------
48,425,043
- --------------------------------------------------------------------------------
INSURANCE -- 6.1%
37,500 Allied Group, Inc. 1,755,469
487,800 Allstate Corp. 44,664,188
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
30,000 W.R. Berkley Corp. $ 1,201,875
134,000 Chicago Title Corp.* 6,189,125
46,000 Chubb Corp. 3,697,250
153,000 Cigna Corp. 10,557,000
40,000 CMAC Investment Corp. 2,460,000
24,000 Enhance Financial Svcs. Group, Inc. 810,000
130,000 Equitable Cos., Inc. 9,741,875
98,000 Everest Reinsurance Hldgs 3,766,875
40,500 Executive Risk, Inc. 2,986,875
33,000 Fidelity National Financial, Inc. 1,313,812
37,000 Financial Sec. Assur. Hldgs. Ltd. 2,173,750
74,000 General RE Corp. 18,759,000
90,100 Hartford Financial Svcs. Group, Inc. 10,305,187
150,000 Horace Mann Educators Corp. 5,175,000
54,000 Jefferson Pilot Corp. 3,128,625
63,120 Liberty Financial Cos., Inc. 2,177,640
118,000 Lincoln National Corp., Inc. 10,782,250
237,000 Marsh & McLennan Cos., Inc. 14,323,687
50,600 MBIA, Inc. 3,788,675
30,000 Mercury General Corp. 1,933,125
206,000 MGIC Investment Corp. 11,754,875
229,500 Old Republic Int'l. Corp. 6,727,219
134,000 Penn America Group, Inc.* 1,809,000
58,000 Reinsurance Group of America* 2,976,125
56,706 ReliaStar Financial Group 2,721,888
130,045 St. Paul Cos., Inc. 5,470,018
92,250 State Auto Financial Corp. 2,940,469
8,000 Unitrin, Inc. 556,000
------------
196,646,877
- --------------------------------------------------------------------------------
LODGING -- 0.1%
100,000 Fairfield Communities, Inc.* 1,918,750
135,000 Prime Hospitality Corp.* 2,354,063
------------
4,272,813
- --------------------------------------------------------------------------------
MACHINERY AND EQUIPMENT -- 0.7%
100,500 AAR Corp. 2,971,031
72,500 Dover Corp. 2,483,125
93,000 Eaton Corp. 7,230,750
54,100 Illinois Tool Works, Inc. 3,607,794
102,500 Parker Hannifin Corp. 3,907,813
25,000 SPX Corp.* 1,609,375
------------
21,809,888
- --------------------------------------------------------------------------------
MERCHANDISING-DEPARTMENT STORES -- 3.0%
120,400 Dayton Hudson Corp. 5,839,400
125,000 Federated Department Stores, Inc.* 6,726,562
215,000 Fred Meyer, Inc., DE* 9,137,500
87,000 Shopko Stores, Inc.* 2,958,000
40,000 Stein Mart, Inc.* 540,000
376,800 TJX Cos., Inc. 9,090,300
1,001,900 Wal-Mart Stores, Inc. 60,865,425
------------
95,157,187
- --------------------------------------------------------------------------------
See notes to financial statements. * Non-income producing security.
17
<PAGE>
THE GUARDIAN PARK AVENUE FUND
Schedule of Investments (Continued)
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
MERCHANDISING-DRUGS -- 0.6%
38,000 Cardinal Health, Inc. $ 3,562,500
261,956 CVS Corp. 10,199,912
37,000 General Nutrition Cos., Inc.* 1,151,625
75,000 Walgreen Co. 3,098,437
------------
18,012,474
- --------------------------------------------------------------------------------
MERCHANDISING-FOOD -- 1.1%
240,000 Albertson's, Inc. 12,435,000
377,650 Safeway, Inc.* 15,365,634
20,000 Suiza Foods Corp.* 1,193,750
113,000 Supervalu, Inc. 5,014,375
------------
34,008,759
- --------------------------------------------------------------------------------
MERCHANDISING-MASS -- 0.1%
43,500 Brylane, Inc.* 2,001,000
20,000 Lands End, Inc.* 632,500
------------
2,633,500
- --------------------------------------------------------------------------------
MERCHANDISING-SPECIAL -- 2.9%
42,300 Best Buy, Inc.* 1,530,625
69,000 BJ's Wholesale Club, Inc.* 2,803,125
71,000 The Dress Barn* 1,766,125
360,000 GAP, Inc. 22,185,000
370,000 Home Depot, Inc. 30,733,125
46,600 Lowes Cos., Inc.* 1,890,213
237,500 Pier 1 Imports, Inc. 5,670,312
143,750 Proffitts, Inc.* 5,803,906
159,000 Ross Stores, Inc.* 6,837,000
250,000 Tandy Corp. 13,265,625
32,500 Tiffany & Co., Inc. 1,560,000
------------
94,045,056
- --------------------------------------------------------------------------------
METALS-MISCELLANEOUS -- 0.1%
47,619 Alumax, Inc. 2,208,331
- --------------------------------------------------------------------------------
MISCELLANEOUS-CAPITAL GOODS -- 0.1%
69,000 Aeroquip-Vickers, Inc. 4,027,875
- --------------------------------------------------------------------------------
MISCELLANEOUS-CONSUMER GROWTH STAPLES -- 0.8%
70,000 American Greetings Corp. 3,565,625
174,200 Cognizant Corp.* 10,974,600
36,000 Interpublic Group Cos., Inc. 2,184,750
90,000 A.C. Nielsen Corp.* 2,272,500
190,000 Valassis Communications, Inc.* 7,326,875
------------
26,324,350
- --------------------------------------------------------------------------------
NATURAL GAS-DIVERSIFIED -- 0.1%
153,000 Mitchell Energy & Dev. Corp. 2,945,250
- --------------------------------------------------------------------------------
OIL AND GAS PRODUCING -- 1.6%
78,400 Barrett Resources Corp.* 2,935,100
238,900 Basin Exploration, Inc.* 4,210,612
64,300 Callon Petroleum Co.* 920,294
263,600 Chieftain Int'l., Inc.* 6,244,025
153,000 Devon Energy Corp. 5,345,437
190,401 Diamond Offshore Drilling, Inc. 7,616,009
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
26,100 Forcenergy Gas Exploration, Inc.* $ 464,906
97,200 Meridian Resource Corp.* 686,475
497,300 Petromet Resources Ltd.* 1,118,925
46,000 Petsec Energy Ltd.* 744,625
60,000 Pride Int'l., Inc.* 1,016,250
570,000 Rigel Energy Corp.* 5,190,446
204,600 St. Mary Land & Exploration Co. 4,935,975
91,300 Snyder Oil Corp. 1,820,294
152,100 Vastar Resources, Inc. 6,644,869
------------
49,894,242
- --------------------------------------------------------------------------------
OIL AND GAS SERVICES -- 2.2%
150,000 BJ Services Co.* 4,359,375
85,960 Camco Int'l., Inc. 6,694,135
64,000 Cooper Cameron Corp.* 3,264,000
82,900 ENSCO Int'l., Inc. 1,440,388
121,000 Halliburton Co. 5,392,062
190,500 Input/Output, Inc.* 3,393,281
466,400 Nabors Industries, Inc.* 9,240,550
200,000 Noble Drilling Corp.* 4,812,500
127,700 Offshore Logistics, Inc.* 2,266,675
215,600 Schlumberger Ltd. 14,728,175
80,000 Smith Int'l., Inc.* 2,785,000
52,000 Transocean Offshore, Inc. 2,314,000
144,800 Varco Int'l., Inc.* 2,868,850
30,000 Veritas DGC, Inc.* 1,498,125
112,100 Weatherford Enterra, Inc.* 4,161,712
170,000 Willbros Group, Inc.* 2,656,250
------------
71,875,078
- --------------------------------------------------------------------------------
OIL-INTEGRATED-DOMESTIC -- 0.3%
142,000 Sun, Inc. 5,511,375
284,000 Tesoro Petroleum, Inc.* 4,508,500
------------
10,019,875
- --------------------------------------------------------------------------------
OIL-INTEGRATED-INTERNATIONAL -- 3.7%
168,800 Chevron Corp. 14,020,950
1,093,700 Exxon Corp. 77,994,481
346,600 Mobil Corp. 26,558,225
------------
118,573,656
- --------------------------------------------------------------------------------
PAPER AND FOREST PRODUCTS -- 0.5%
34,285 Deltic Timber Corp. 859,268
215,000 Kimberly Clark Corp. 9,863,125
111,500 Rayonier, Inc. 5,129,000
------------
15,851,393
- --------------------------------------------------------------------------------
PUBLISHING-NEWS -- 0.8%
45,000 Central Newspapers, Inc. 3,138,750
86,400 Gannett Co., Inc. 6,139,800
191,400 Harte-Hanks Communications 4,940,513
80,000 New York Times Co. 6,340,000
50,000 Tribune Co. 3,440,625
5,700 Washington Post Co. 3,283,200
------------
27,282,888
- --------------------------------------------------------------------------------
* Non-income producing security. See notes to financial statements.
18
<PAGE>
THE GUARDIAN PARK AVENUE FUND
Schedule of Investments (Continued)
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
RAILROADS -- 0.4%
40,301 Burlington Northern Santa Fe $ 3,957,054
182,500 Kansas City Southern Inds., Inc. 9,056,563
------------
13,013,617
- --------------------------------------------------------------------------------
REAL ESTATE -- 0.1%
63,000 LNR Property Corp. 1,614,375
- --------------------------------------------------------------------------------
TEXTILE-APPAREL AND PRODUCTION -- 1.0%
70,000 Burlington Industries, Inc.* 984,375
93,000 Liz Claiborne, Inc. 4,859,250
196,000 Jones Apparel Group, Inc.* 7,166,250
29,000 Kellwood Co. 1,036,750
37,500 Nautica Enterprises, Inc.* 1,005,469
15,000 St. John Knits, Inc. 579,375
215,000 Unifi, Inc. 7,363,750
136,000 V.F. Corp. 7,004,000
53,000 Westpoint Stevens, Inc.* 1,749,000
------------
31,748,219
- --------------------------------------------------------------------------------
TRANSPORTATION-MISCELLANEOUS -- 0.7%
192,000 Airborne Freight Corp. 6,708,000
37,000 Alexander & Baldwin, Inc. 1,077,625
22,000 Expeditors Int'l. Wash., Inc. 968,000
108,000 GATX Corp.* 4,738,500
239,500 Maritrans, Inc. 2,170,469
120,000 Sea Containers Ltd.* 4,590,000
42,000 Trinity Industries, Inc. 1,743,000
------------
21,995,594
- --------------------------------------------------------------------------------
TRUCKERS -- 0.1%
18,000 FRP Pptys., Inc.* 585,000
49,500 Rollins Truck Leasing Corp. 612,562
60,000 U.S. Freightways Corp. 1,970,625
56,250 Werner Enterprises, Inc. 1,072,266
------------
4,240,453
- --------------------------------------------------------------------------------
UTILITIES-ELECTRIC -- 1.3%
22,600 Cleco Corp. 672,350
134,464 Duke Energy Co. 7,966,992
85,600 Energy East Corp. 3,563,100
185,000 Florida Progress Corp. 7,608,125
210,000 FPL Group, Inc. 13,230,000
57,100 IPALCO Enterprises 2,537,381
43,420 LG & E Energy Corp. 1,175,054
21,500 Minnesota Power & Light Co. 854,625
58,000 NIPSCO Industries, Inc. 1,624,000
58,500 Texas Utilities Co. 2,435,063
------------
41,666,690
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
UTILITIES-GAS AND PIPELINE -- 0.1%
5,100 Indiana Energy, Inc. $ 152,363
45,000 KN Energy, Inc. 2,438,437
33,700 NICOR, Inc. 1,352,212
------------
3,943,012
- --------------------------------------------------------------------------------
UTILITIES-TELECOMMUNICATIONS -- 6.8%
29,000 Aliant Communications, Inc. 795,688
680,700 Ameritech Corp. 30,546,412
666,200 AT & T Corp. 38,056,675
650,000 Bell Atlantic Corp. 29,656,250
858,100 BellSouth Corp. 57,599,963
440,000 GTE Corp.* 24,475,000
386,200 SBC Communications, Inc. 15,448,000
120,000 Sprint Corp.* 8,460,000
285,000 U.S. West, Inc.* 13,395,000
------------
218,432,988
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(COST $2,096,367,434) 2,991,089,270
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 6.4%
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------------------------------------------------------------------------------
$205,104,000 State Street Bank & Trust Co.
repurchase agreement,
dated 6/30/98, maturity
value $205,136,475 at 5.70%,
due 7/1/98 (collateralized
by $5,105,000 U.S. Treasury
Notes, 5.50%, due 3/31/03,
by $25,505,000 U.S. Treasury
Notes, 5.625%, due 12/31/99,
by $20,405,000 U.S. Treasury
Notes, 6.00%, due 6/30/99,
by $51,010,000 U.S. Treasury
Notes, 6.625%, due 6/30/01,
by $56,215,000 U.S. Treasury
Notes, 6.75%, due 5/31/99, and
by $51,005,000 U.S. Treasury
Notes, 6.75%, due 4/30/00) $ 205,104,000
- --------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(COST $205,104,000) 205,104,000
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 99.4%
(COST $2,301,471,434) 3,196,193,270
CASH, RECEIVABLES AND OTHER
ASSETS LESS LIABILITIES -- 0.6% 20,040,489
- --------------------------------------------------------------------------------
NET ASSETS -- 100.0% $3,216,233,759
- --------------------------------------------------------------------------------
See notes to financial statements. * Non-income producing security.
19
<PAGE>
FINANCIAL STATEMENTS
- --------------------
[ ] THE GUARDIAN PARK AVENUE FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
ASSETS
Investments, at market (cost $2,301,471,434) $3,196,193,270
Cash 823,936
Receivable for securities sold 52,559,711
Receivable for fund shares sold 5,846,077
Dividends receivable 2,484,411
Interest receivable 32,500
Other assets 1,929
- --------------------------------------------------------------------------------
TOTAL ASSETS 3,257,941,834
- --------------------------------------------------------------------------------
LIABILITIES
Payable for securities purchased 31,486,373
Payable for fund shares redeemed 3,072,722
Accrued expenses 351,898
Due to affiliates 6,797,082
- --------------------------------------------------------------------------------
TOTAL LIABILITIES 41,708,075
- --------------------------------------------------------------------------------
NET ASSETS $3,216,233,759
================================================================================
COMPONENTS OF NET ASSETS
Shares of beneficial interest, at par $ 627,011
Additional paid-in capital 2,204,075,918
Undistributed net investment income 1,012,257
Accumulated net realized gain on
investments 115,796,737
Net unrealized appreciation
of investments 894,721,836
- --------------------------------------------------------------------------------
NET ASSETS $3,216,233,759
================================================================================
NET ASSETS:
Class A $2,876,742,621
Class B $ 339,491,138
- --------------------------------------------------------------------------------
SHARES OF BENEFICIAL INTEREST OUTSTANDING -- $0.01 PAR VALUE
Class A 56,061,398
Class B 6,639,677
- --------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
Class A $51.31
Class B $51.13
- --------------------------------------------------------------------------------
MAXIMUM OFFERING PRICE PER SHARE
Class A Only (Net Asset Value x 104.71%)* $53.73
- --------------------------------------------------------------------------------
* 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, 1998 (Unaudited)
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends $ 17,369,345
Interest 5,179,084
Less: Foreign tax withheld (6,750)
- --------------------------------------------------------------------------------
Total Income 22,541,679
- --------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees -- Note 2 7,284,233
Administrative fees -- Class A -- Note 2 2,202,622
Administrative fees -- Class B -- Note 2 344,161
12b-1 fees -- Class B -- Note 3 1,032,483
Transfer agent fees 1,315,990
Custodian fees 205,779
Printing expense 199,313
Registration fees 146,280
Trustees' fees -- Note 2 12,000
Audit fees 10,250
Legal fees 6,250
Insurance expense 1,899
Other 350
- --------------------------------------------------------------------------------
Total Expenses 12,761,610
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME 9,780,069
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN/(LOSS)
ON INVESTMENTS -- NOTE 5
Net realized gain on
investments -- Note 1 115,802,323
Net change in unrealized appreciation
of investments -- Note 5 250,877,923
- --------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS 366,680,246
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS $376,460,315
================================================================================
- --------------------------------------------------------------------------------
20 See notes to financial statements.
<PAGE>
THE GUARDIAN PARK AVENUE FUND
(Continued)
- ----------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- ----------------------------------
Six Months
Ended Year Ended
June 30, December 31,
1998 1997
(Unaudited) (Audited)
- --------------------------------------------------------------------------------
INCREASE/(DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income $ 9,780,069 $ 17,523,581
Net realized gain on
investments 115,802,323 250,113,783
Net change in unrealized
appreciation of investments 250,877,923 296,292,118
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS 376,460,315 563,929,482
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income
Class A (9,135,616) (17,140,750)
Class B -- (15,027)
Net realized gain on
investments
Class A (54,649,863) (200,697,619)
Class B (6,490,127) (16,602,423)
- --------------------------------------------------------------------------------
TOTAL DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS (70,275,606) (234,455,819)
- --------------------------------------------------------------------------------
FROM CAPITAL SHARE TRANSACTIONS:
Net increase in net assets
from capital share
transactions -- Note 6 395,670,861 756,713,154
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS 701,855,570 1,086,186,817
NET ASSETS
Beginning of period 2,514,378,189 1,428,191,372
- --------------------------------------------------------------------------------
End of period* $3,216,233,759 $2,514,378,189
================================================================================
* Includes undistributed net
investment income of $ 1,012,257 $ 367,804
- --------------------------------------------------------------------------------
See notes to financial statements 21
<PAGE>
- --------------------
NOTES TO
FINANCIAL STATEMENTS
- --------------------
June 30, 1998 (Unaudited)
o THE GUARDIAN PARK AVENUE FUND
NOTE 1. ACCOUNTING POLICIES
The Guardian Park Avenue Fund (the Fund or GPAF) is a series of The Park
Avenue Portfolio, which 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:
The Fund offers three classes of shares. Class A shares are sold with an
initial sales load of up to 4.50% and an administrative fee of up to .25% on an
annual basis of the Fund's average daily net assets. Class B shares are sold
without an initial sales load but are subject to a 12b-1 fee of .75% and an
administrative fee of up to .25% on an annual basis of the Fund's average daily
net assets, and a contingent deferred sales load (CDSL) of up to 3% imposed on
certain redemptions. Institutional Class shares are offered at net asset value,
without an initial or contingent deferred sales load. All three classes of
shares 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 conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of 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 or foreign securities 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 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.
Security gains or losses are determined on an 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, 1998, distribution, administrative and transfer agent
fees were the only class-specific expenses.
Foreign Currency Translation
GPAF is permitted to buy international securities that are not U.S.
dollar-denominated. GPAF's books and records are maintained in U.S. dollars as
follows:
(1) The foreign currency market value of investment securities and other
assets and liabilities stated in foreign currencies are translated into U.S.
dollars at the current rate of exchange.
22
<PAGE>
(2) Purchases, sales, income and expenses are translated at the rate of
exchange prevailing on the respective dates of such transactions.
The resulting gains and losses are included in the Statement of Operations.
Realized foreign exchange gains and losses, which result from changes in foreign
exchange rates between the date on which a Fund earns dividends and interest or
pays foreign withholding taxes or other expenses and the date on which U.S.
dollar equivalent amounts are actually received or paid, are included in net
realized gain or loss on foreign currencies. Realized foreign exchange gains and
losses which result from changes in foreign exchange rates between the trade and
settlement dates on security and currency transactions are also included in net
realized gain on foreign currencies. Net currency gains and losses from valuing
investments and other assets and liabilities denominated in foreign currency as
of June 30, 1998 are reflected in net change in unrealized appreciation or
depreciation from translation of assets and liabilities in foreign currencies
based on the applicable exchange rate in effect at the end of period.
Forward Foreign Currency Contracts
GPAF may enter into forward foreign currency contracts in connection with
planned purchases or sales or securities, or to hedge against changes in
currency exchange rates affecting the values of its investments that are
denominated in a particular currency. A forward foreign currency contract is a
commitment to purchase or sell a foreign currency at a future date at a
negotiated forward exchange rate. Fluctuations in the value of forward foreign
currency contracts are recorded for book purposes as unrealized gains or losses
from translation of other assets and liabilities denominated in foreign
currencies by GPAF. When a forward contract is closed, GPAF will record a
realized gain or loss equal to the difference between the value of the forward
contract at the time it was opened and the value at the time it was closed. Such
amount is recorded in net realized gain or loss on foreign currencies. GPAF will
not enter into a forward foreign currency contract if such contract would
obligate it to deliver an amount of foreign currency in excess of the value of
its portfolio securities or other assets denominated in that currency.
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 accordance with federal
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 overdistributions 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
(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), an indirect 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.
Trustees who are not deemed to be "interested persons" (as defined in the
1940 Act) are paid $500 for each meeting of the Board of Trustees. An annual fee
of $1,000 was also paid to each such Trustee during such period. GISC pays
compensation to the Trustees who are interested persons.
23
<PAGE>
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 the Class A and Class B shares, the Fund pays GISC an administrative
service fee at an annual rate of .25% of the average daily net assets for which
a "dealer of record" has been designated. For the six months ended June 30,
1998, GPAF Class A shares paid an annualized rate of .17% of its average daily
net assets under the Administrative Services Agreement.
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
$4,645,433 for the six months ended June 30, 1998.
Under a Distribution Plan adopted by the Fund pursuant to Rule 12b-1 under
the 1940 Act (the "12b-1 Plan"), the 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.
GISC is entitled to retain any CDSL imposed on certain redemptions on Class B
shares. For the six months ended June 30, 1998, such charges were $299,380.
NOTE 4. REPURCHASE AGREEMENTS
Collateral under repurchase agreements takes 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 collateral 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 has established standards to evaluate
the creditworthiness of broker-dealers and banks which engage in repurchase
agreements with the Fund.
NOTE 5. INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of securities (excluding short-term
securities) amounted to $846,531,416 and $581,608,020, respectively, for the six
months ended June 30, 1998.
The cost of investments owned at June 30, 1998 for federal income tax
purposes was the same as the cost for financial reporting purposes.
Gross unrealized appreciation and depreciation of investments aggregated
$927,754,001 and $33,032,165, respectively, resulting in net unrealized
appreciation of $894,721,836.
Forward foreign currency contracts represent commitments to purchase or sell
a specified amount of foreign currency at a future date and at a future price
(See Note 1). Risks may arise from the potential inability of a counterparty to
meet the terms of a contract and from unanticipated movements in the value of a
foreign currency relative to the U.S. dollar.
At June 30, 1998, GPAF had no open forward foreign currency contracts.
24
<PAGE>
NOTE 6. SHARES OF BENEFICIAL INTEREST
There is an unlimited number of $0.01 par value shares of beneficial
interest authorized, divided into three classes, designated as Class A, Class B
and Institutional Class shares. Through June 30, 1998, no Institutional Class
shares of the Fund were sold. Transactions in shares of beneficial interest were
as follows:
<TABLE>
<CAPTION>
Six Months Six Months
Ended Year Ended Ended Year Ended
June 30, 1998 December 31, 1997 June 30, 1998 December 31, 1997
(Unaudited) (Audited) (Unaudited) (Audited)
- ------------------------------------------------------------------------------------------------------------------
Shares Amount
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold 11,308,679 17,883,364 $553,993,879 $799,066,805
Shares issued in reinvestment of
dividends and distributions 1,208,282 4,641,797 61,659,044 208,919,318
Shares repurchased (6,600,323) (9,104,998) (330,412,066) (403,755,099)
- ------------------------------------------------------------------------------------------------------------------
NET INCREASE 5,916,638 13,420,163 $285,240,857 $604,231,024
==================================================================================================================
CLASS B
Shares sold 2,534,441 3,236,995 $124,247,004 $143,714,212
Shares issued in reinvestment of
dividends and distributions 123,215 359,417 6,266,728 16,167,277
Shares repurchased (401,677) (162,809) (20,083,728) (7,399,359)
- ------------------------------------------------------------------------------------------------------------------
NET INCREASE 2,255,979 3,433,603 $110,430,004 $152,482,130
==================================================================================================================
</TABLE>
NOTE 7. LINE OF CREDIT
A $50,000,000 line of credit available to GPAF and the other
Guardian-related Funds has been established with Morgan Guaranty Trust Company.
The rate of interest charged on any borrowing 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, 1998, the Fund had not
borrowed against this line of credit.
25
<PAGE>
<TABLE>
<CAPTION>
- --------------------
FINANCIAL HIGHLIGHTS
- --------------------
o THE GUARDIAN PARK AVENUE FUND
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT THE
PERIODS INDICATED:
-------
Class A
-------
Six Months
Ended Year Ended December 31, (Audited)
June 30, 1998 ---------------------------------------------------------------------------------------------
(Unaudited) 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF
PERIOD $46.12 $37.91 $33.97 $26.89 $28.63 $25.17 $22.23 $18.26 $21.56 $20.46 $18.63
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment
income 0.18 0.40 0.42 0.33 0.31 0.50 0.45 0.65 0.68 0.92 0.60
Net realized and
unrealized gain/
(loss) on
investments 6.18 12.61 8.41 8.87 (0.72) 4.56 4.05 5.71 (3.28) 3.88 3.23
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase/
(decrease) from
investment
operations 6.36 13.01 8.83 9.20 (0.41) 5.06 4.50 6.36 (2.60) 4.80 3.83
- ------------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS
TO SHAREHOLDERS FROM:
Net investment
income (0.17) (0.39) (0.42) (0.33) (0.31) (0.50) (0.44) (0.66) (0.70) (0.98) (0.55)
Distributions in excess
of net investment
income -- -- (0.01) -- -- -- -- -- -- -- --
Net realized gain
on investments (1.00) (4.41) (4.46) (1.79) (1.02) (1.10) (1.12) (1.73) -- (2.72) (1.45)
- ------------------------------------------------------------------------------------------------------------------------------------
Total dividends and
distributions (1.17) (4.80) (4.89) (2.12) (1.33) (1.60) (1.56) (2.39) (0.70) (3.70) (2.00)
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE,
END OF PERIOD $51.31 $46.12 $37.91 $33.97 $26.89 $28.63 $25.17 $22.23 $18.26 $21.56 $20.46
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN* 13.79% 34.85% 26.49% 34.28% (1.44)% 20.28% 20.48% 35.16% (12.21)% 23.66% 20.78%
====================================================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of
period (000's
omitted) $2,876,743 $2,312,632 $1,392,186 $972,275 $640,917 $560,193 $335,660 $270,095 $216,457 $228,190 $176,000
Ratio of expenses
to average net
assets 0.79%(a) 0.79% 0.79% 0.81% 0.84% 0.81% 0.68% 0.67% 0.69% 0.70% 0.69%
Ratio of net invest-
ment income to
average net assets 0.74%(a) 0.95% 1.19% 1.07% 1.15% 1.89% 1.94% 2.96% 3.51% 4.01% 2.82%
Portfolio turnover
rate 21% 50% 81% 78% 54% 46% 64% 57% 47% 47% 58%
Average rate of
commissions
paid(b) $0.0507 $0.0461 $0.0470 -- -- -- -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* 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>
<TABLE>
<CAPTION>
- --------------------
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 Year Ended May 1, 1996+
Ended December to December
June 30, 1998 31, 1997 31, 1996
(Unaudited) (Audited) (Audited)
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF
PERIOD $46.02 $37.90 $36.26
- ------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment
income/(loss) (0.03) 0.00 0.05
Net realized and
unrealized gain
on investments 6.14 12.54 6.10
- -------------------------------------------------------------------------------------------
Net increase from
investment
operations 6.11 12.54 6.15
- -------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS
TO SHAREHOLDERS FROM:
Net investment
income -- (0.01) (0.05)
Net realized gain
on investments (1.00) (4.41) (4.46)
- -------------------------------------------------------------------------------------------
Total dividends and
distributions (1.00) (4.42) (4.51)
- -------------------------------------------------------------------------------------------
NET ASSET VALUE,
END OF PERIOD $51.13 $46.02 $37.90
- -------------------------------------------------------------------------------------------
TOTAL RETURN* 13.28% 33.53% 17.35%
===========================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's omitted) $339,491 $201,746 $36,006
Ratio of expenses
to average net
assets 1.71 %(a) 1.73% 1.77%(a)
Ratio of net invest-
ment income to
average net assets (0.16)%(a) 0.00% 0.04%(a)
Portfolio turnover
rate 21 % 50% 81%
Average rate of
commissions
paid(b) $0.0507 $0.0461 $0.0470
===========================================================================================
</TABLE>
+ Commencement of operations.
* Excludes effect of sales load.
(a) Annualized.
(b) For fiscal year 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.
27
<PAGE>
[LOBO] EB--010248 06/98
[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. 1104
CLIFTON, NJ
[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, 1998
<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, 1998.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<INVESTMENTS-AT-COST> 189,534,677
<INVESTMENTS-AT-VALUE> 289,614,080
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 289,614,080
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,767,213
<TOTAL-LIABILITIES> 2,767,213
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 127,775
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 18,752,554
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 100,079,403
<NET-ASSETS> 286,846,867
<DIVIDEND-INCOME> 1,639,877
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 1,512,102
<NET-INVESTMENT-INCOME> 127,775
<REALIZED-GAINS-CURRENT> 18,752,554
<APPREC-INCREASE-CURRENT> 13,513,177
<NET-CHANGE-FROM-OPS> 32,393,506
<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> 1,512,102
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,512,102
<AVERAGE-NET-ASSETS> 281,513,631
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 32,265,731
<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>
