THE GUARDIAN BOND FUND, INC.
THE GUARDIAN STOCK FUND, INC.
THE GUARDIAN CASH FUND, INC.
GBG FUNDS, INC.
201 Park Avenue South, New York, New York 10003
February 15, 1996
Dear Contractowner:
I am writing to inform you that a joint special meeting of shareholders of
The Guardian Bond Fund, Inc., The Guardian Cash Fund, Inc., The Guardian Stock
Fund Inc. and GBG Funds, Inc. (a series fund comprised of Baillie Gifford
International Fund and Baillie Gifford Emerging Markets Fund) (together, the
"Funds") will be held on Wednesday, March 20, 1996 to vote on several important
proposals. This package contains information about the proposals and materials
for you to use when voting by mail.
The Funds are only available as underlying investment options of variable
annuity contracts or variable life policies issued by The Guardian Insurance &
Annuity Company, Inc. ("GIAC"). Since some or all of the value of your contract
or policy is based on units invested in shares of one or more of the Funds, you
are considered to be a beneficial owner of these shares. As a beneficial owner,
you are entitled to direct how these shares will be voted at the joint special
meeting of shareholders of the Funds.
One of the primary purposes of the meeting is to elect directors for each
of the Funds. In addition, there are two proposals for consideration by
contractowners whose units are allocated to The Guardian Bond Fund. These
contractowners are being asked to approve amendments to certain of the Bond
Fund's fundamental investment restrictions. We have provided more information
about the slate of proposed directors and the Bond Fund proposals in the Joint
Proxy Statement.
The enclosed preference statement forms allow you to indicate how your
proportional interest should be voted. IT IS IMPORTANT THAT YOU EXERCISE THIS
PRIVILEGE. Shares attributable to those contractowners who do not respond will
be voted in the same proportion as contractowners who do. If your contract value
is allocated among multiple Funds, you should receive one preference statement
for each Fund owned, no matter how many contracts you own. For example, if you
have two annuity contracts and have chosen to allocate your contract values
between The Guardian Bond Fund and The Guardian Stock Fund in each contract, you
will receive one preference statement form representing all shares allocated to
the Bond Fund and a second preference statement form representing all shares
allocated to the Stock Fund.
If you do receive multiple sets of materials, please vote all preference
statement forms received, since this indicates that for some reason, the shares
attributable to multiple contracts could not be aggregated. You will not be
voting the same shares twice.
PLEASE COMPLETE, SIGN, DATE AND RETURN EACH PREFERENCE STATEMENT IN THE
ENCLOSED BUSINESS REPLY ENVELOPE AT YOUR EARLIEST CONVENIENCE, BUT IN SUFFICIENT
TIME TO BE COUNTED BEFORE THE JOINT SPECIAL MEETING OF SHAREHOLDERS TO BE HELD
ON MARCH 20, 1996.
Sincerely,
ARTHUR V. FERRARA
- ----------------------
Arthur V. Ferrara
Chairman of the Board
<PAGE>
THE GUARDIAN BOND FUND, INC.
THE GUARDIAN STOCK FUND, INC.
THE GUARDIAN CASH FUND, INC.
GBG FUNDS, INC.
201 Park Avenue South, New York, New York 10003
Telephone (800) 221-3253
----------------------
NOTICE OF JOINT SPECIAL MEETING OF SHAREHOLDERS
March 20, 1996
----------------------
A joint special meeting of shareholders of THE GUARDIAN BOND FUND, INC.
(the "Bond Fund"), THE GUARDIAN STOCK FUND, INC., THE GUARDIAN CASH FUND, INC.
and GBG FUNDS, INC. (comprised of the series funds known as BAILLIE GIFFORD
INTERNATIONAL FUND and BAILLIE GIFFORD EMERGING MARKETS FUND), each a Maryland
corporation, will be held on Wednesday, March 20, 1996, at 9:30 a.m. for the
following purposes:
(a) for each of the funds, to elect nine (9) directors to the Board of
Directors;
(b) for the BOND FUND ONLY, to consider a proposal to amend two of the
fund's fundamental investment restrictions with respect to borrowings;
(c) for the BOND FUND ONLY, to consider a proposal to amend the fund's
fundamental investment restriction with respect to industry
concentration;
(d) to transact such other business as may properly come before the
meeting or any adjournment thereof.
The meeting will be held at the offices of The Guardian Insurance & Annuity
Company, Inc. ("GIAC"), 201 Park Avenue South, Mezzanine Floor, New York, New
York 10003.
You are entitled to notice of and to provide voting instructions for use at
the meeting if, at the close of business on January 31, 1996, you owned a
variable annuity or variable life insurance policy issued by GIAC and some or
all of your contract value was allocated for investment in any of the funds
named above.
By order of the Boards of Directors,
Joseph A. Caruso, Secretary
February 15, 1996
YOUR VOTE IS IMPORTANT
Please provide your voting instructions on the enclosed preference
statement(s). Then date and sign the preference statement(s), and return the
statement(s) in the accompanying, postage-paid envelope. If you sign and date
the preference statement(s), but do not provide voting instructions, the shares
in which you have an interest will be voted FOR the proposals. Preference
statements submitted by corporations, partnerships, trusts or other entities
must be signed by the appropriate persons. If you are eligible to vote in more
than one fund, you must complete a separate preference statement for each fund
to provide voting instructions for all of the fund shares in which you have an
interest.
PLEASE HELP US TO AVOID UNNECESSARY EXPENSE BY COMPLETING AND MAILING YOUR
PREFERENCE STATEMENT PROMPTLY.
<PAGE>
THE GUARDIAN BOND FUND, INC.
THE GUARDIAN STOCK FUND, INC.
THE GUARDIAN CASH FUND, INC.
GBG FUNDS, INC.
201 Park Avenue South, New York, New York 10003
Telephone (800) 221-3253
----------------------
JOINT PROXY STATEMENT
JOINT SPECIAL MEETING OF SHAREHOLDERS--MARCH 20, 1996
----------------------
The Boards of Directors of each of THE GUARDIAN BOND FUND, INC. (the "Bond
Fund"), THE GUARDIAN STOCK FUND, INC. (the "Stock Fund"), THE GUARDIAN CASH
FUND, INC. (the "Cash Fund") and GBG FUNDS, INC. ("GBG Funds") (comprised of the
series funds known as BAILLIE GIFFORD INTERNATIONAL FUND and BAILLIE GIFFORD
EMERGING MARKETS FUND), are soliciting preference statements to be used at a
joint special meeting of shareholders of each of the funds named above
(together, the "Funds") to be held on Wednesday, March 20, 1996, or any
adjournment thereof. This Joint Proxy Statement describes the proposals to be
voted upon at the meeting and will be mailed to eligible voters on or about
February 15, 1996.
You are eligible to provide voting instructions for use at the meeting if,
at the close of business on January 31, 1996, you owned a variable annuity or
variable life insurance policy (either, a "Variable Contract") issued by The
Guardian Insurance & Annuity Company, Inc. ("GIAC") and some or all of your
Variable Contract value was allocated for investment in any of the Funds. GIAC,
which is the record shareholder of your Fund shares, will vote the Fund shares
attributable to your GIAC Variable Contract in accordance with the voting
instructions you provide on each enclosed preference statement if it is properly
executed and returned in a timely manner.
If your returned preference statement is signed and dated, but gives no
voting instructions, GIAC will vote the Fund shares attributable to your
Variable Contract FOR the election of the nine Board nominees for each Fund and
FOR the Bond Fund proposals described in this Joint Proxy Statement. If you are
eligible to vote in more than one Fund, you must submit a separate preference
statement for each Fund to provide instructions for all of the shares in which
you have an interest. For purposes of determining the approval of the matters
submitted for a vote of shareholders of each Fund, abstentions will be treated
as shares voted against the proposal. Votes will be tabulated by the inspector
of election appointed for the special meeting. You may revoke your voting
instructions by submitting a subsequent preference statement before the meeting,
by timely written notice, or by attending and providing voting instructions at
the meeting.
GIAC will vote the Fund shares attributable to Variable Contracts for which
it does NOT receive timely voting instructions in the same proportion as the
shares for which it does receive timely voting instructions. GIAC will vote the
Fund shares that it owns directly due to its contributions or accumulations in
the separate accounts through which it offers variable annuities FOR the
proposal described in this proxy statement. With regard to separate accounts
through which it offers variable life insurance policies, GIAC does not own any
Fund shares directly.
1
<PAGE>
Set forth below is a chart which lists for each Fund the following
information, all as of the close of business on January 31, 1996: the number of
shares outstanding, the number of such shares attributable to GIAC's Variable
Contracts, and the number of such shares directly owned by GIAC in the separate
accounts through which itoffers variable annuities. Each full share is entitled
to one vote, and fractional shares are entitled to proportionate fractional
votes.
<TABLE>
<CAPTION>
Outstanding GIAC Variable Shares Directly
Fund Shares Contract Shares Owned By GIAC
---- -------------- --------------------- -----------------
<S> <C> <C> <C>
The Guardian Bond Fund, Inc. ....... 30,994,601.278 30,910,918.639(99.56%) 83,682.639(.44%)
The Guardian Cash Fund, Inc. ....... 34,290,889.486 34,290,889.486 (100%) 0 (0%)
The Guardian Stock Fund, Inc. ...... 47,025,281.803 46,817,839.753(99.73%) 208,442.050(.27%)
GBG Funds, Inc. .................... 25,709,369.372 24,774,628.859(96.40%) 934,740.513(3.6%)
</TABLE>
The Guardian Life Insurance Company of America ("Guardian Life"), 201 Park
Avenue South, New York, New York 10003, owns 2,041,666.856 shares of the Baillie
Gifford Emerging Markets Fund ("BGEMF") series of GBG Funds, Inc., which
represents 43.62% of the 4,680,187.826 shares of BGEMF outstanding as of January
31, 1996. Guardian Life's ownership of the shares of BGEMF represents 7.9% of
the total shares of GBG Funds, Inc. outstanding as of that date. Guardian Life
intends to vote its shares in favor of the nominees for Director of GBG Funds,
Inc. Management does not know of any other person who was eligible to vote 5% or
more of any of the Funds' outstanding shares as of January 31, 1996.
The cost of preparing, printing and mailing the enclosed preference
statement, accompanying notice and proxy statement and all other costs in
connection with the solicitation of preference statements will be paid by the
Funds on a pro rata basis. The Funds have engaged Management Information Systems
Corporation ("MIS") to assist in the solicitation of preference statements at an
estimated cost of $39,000. Although MIS will conduct the solicitation of
preference statements primarily by mail, its representatives and selected
officers and directors of the Funds or Guardian Investor Services Corporation
may also solicit preference statements in person or by telephone. EACH FUND WILL
FURNISH, WITHOUT CHARGE, A COPY OF ITS SEMI-ANNUAL REPORT AND ANNUAL REPORT
(WHICH WILL SOON BE AVAILABLE) UPON REQUEST. SUCH WRITTEN OR ORAL REQUESTS
SHOULD BE DIRECTED TO THE FUND AT 201 PARK AVENUE SOUTH, NEW YORK, NEW YORK
10003 OR BY CALLING 1-800-221-3253.
The following table indicates which shareholders are solicited with respect
to each matter:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Matter All Funds The Guardian Bond Fund only
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Election of Nine Directors X
- ------------------------------------------------------------------------------------------------------------
Amendment of Fundamental Investment
Restrictions With Respect to Borrowings X
- ------------------------------------------------------------------------------------------------------------
Amendment of Fundamental Investment
Restriction With Respect to Industry
Concentration X
- ------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS OF EACH FUND
Pursuant to the By-Laws of each of the Funds, the Boards of Directors have
determined that the number of Directors shall be fixed at nine. At a meeting
held on December 14, 1995, the Boards of Directors of each of the Funds
nominated the nine persons named below as Directors of the Funds. Preference
statements received in a timely manner will be voted as specified in connection
with the election of the nine (9) nominees named below as Directors for the
Funds. Each Director shall hold office until a successor is elected and
qualified or until the Director's death, resignation or removal. Each nominee
has consented to be named in this Joint Proxy Statement and to serve if elected.
Although all of the nominees have agreed to serve, in the event that any one or
more should be unable to do so and it becomes necessary to make other
nominations, the preference statements may be voted for such substitute nominee
or nominees as the Boards of Directors of the Funds, in their respective
discretion, may recommend. A shareholder may withhold authority to vote for any
individual nominee by entering the name of the nominee on the line provided for
such purpose in Item 1 of the enclosed preference statement. Directors must be
elected by vote of a majority of shares of each of the Funds held of record as
of January 31, 1996.
Messrs. Angle, Ferrara, Futia, Lirtzman and Smith were last elected to the
Boards of each of the Bond Fund, the Cash Fund and the Stock Fund at the most
recent shareholders meetings of these Funds which were held on March 18, 1988.
Messrs. Hewitt and Fabozzi were appointed to each of these Boards on September
15, 1989 and April 2, 1992, respectively, to fill Board vacancies. Each of the
aforementioned Directors have served continuously since originally elected or
appointed. Messrs. Fabozzi, Hewitt, Sargent, and Schafer are standing for
election by shareholders of each of the Bond Fund, the Stock Fund and the Cash
Fund for the first time at the Meeting.
Messrs. Ferrara, Hewitt, Lirtzman and Smith were last elected to the Board
of GBG Funds at a Special Meeting of Shareholders held on March 30, 1992 and
have served in that capacity continuously since the Funds' inception. Messrs.
Fabozzi and Sargent were appointed to the Board on September 28, 1995 to fill
Board vacancies. Messrs. Angle, Fabozzi, Futia, Sargent and Schafer are standing
for election by shareholders of GBG Funds for the first time at the Meeting.
Those nominees indicated below by an asterisk (*) are "interested persons"
of the Funds by virtue of, among other factors, their affiliation with Guardian
Investor Services Corporation ("GISC"), which serves as the investment adviser
of the Cash Fund, Bond Fund and Stock Fund, and the distributor of all of the
Funds, or Guardian Baillie Gifford Limited ("GBG"), which serves as the
investment adviser for the series funds comprising GBG Funds. The nominees and
the officers of the Funds did not own, either individually or in the aggregate,
more than 1% of any Fund's outstanding shares as of January 31, 1996.
3
<PAGE>
INFORMATION REGARDING NOMINEES FOR THE BOARDS OF DIRECTORS
The table below provides information concerning each of the nominees for
election to each of the Fund Boards. It includes his name, age, principal
occupation(s) or employment during the past five years and director or
trusteeships with other companies which file reports periodically with the
Securities and Exchange Commission.
<TABLE>
<CAPTION>
Year of Election
Nominee (Age) or Appointment Principal Occupation and Affiliations
- ------------ ----------------- -------------------------------------
<S> <C> <C>
John C. Angle* (72) ............. 1982--Bond Fund, Retired. Former Chairman of the Board and Chief
Cash Fund, Stock Fund Executive Officer, The Guardian Life Insurance
Company of America; Director 1/78-present.
Director (Trustee) of The Guardian Insurance &
Annuity Company, Inc. and Guardian Investor
Services Corporation from 6/82-2/96. Director
(Trustee) of four mutual funds within the Guardian
Fund Complex.
Frank J. Fabozzi, Ph.D. (47) .... 1992--Bond Fund, Adjunct Professor of Finance, School of
Cash Fund, Stock Fund Management-Yale University, 2/94-present; Visiting
1995--GBG Funds Professor of Finance and Accounting, Sloan School
of Management--Massachusetts Institute of
Technology prior thereto. Editor, Journal of
Portfolio Management. Director (Trustee) of five
mutual funds within the Guardian Fund Complex.
Director (Trustee) of various closed-end
investment companies sponsored by Blackstone
Financial Management.
Arthur V. Ferrara* (65) ......... 1987--Bond Fund, Retired. Former Chairman of the Board and Chief
Cash Fund, Stock Fund Executive Officer, The Guardian Life Insurance
1990--GBG Funds Company of America 1/93-12/95; President, Director
and Chief Executive Officer 1/89-12/92; Director
1/81 to present. Chairman of the Board and Chief
Executive Officer, The Guardian Insurance &
Annuity Company, Inc. Chairman of the Board,
Guardian Investor Services Corporation, Guardian
Asset Management Corporation, Guardian Baillie
Gifford Limited and Director (Trustee) of five
mutual funds within the Guardian Fund Complex.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Year of Election
Nominee (Age) or Appointment Principal Occupation and Affiliations
- ------------ ----------------- -------------------------------------
<S> <C> <C>
Leo R. Futia* (76) .............. 1982--Bond Fund, Retired. Former Chairman of the Board and Chief
Cash Fund, Stock Fund Executive Officer, The Guardian Life Insurance
Company of America; Director 5/70-present,
Director (Trustee) of The Guardian Insurance &
Annuity Company, Inc., Guardian Investor Services
Corporation and four mutual funds within the
Guardian Fund Complex. Director (Trustee) of
various mutual funds sponsored by Value Line, Inc.
William W. Hewitt, Jr. (67) ..... 1989--Bond Fund, Retired. Former Executive Vice President, Shearson
Cash Fund, Stock Fund Lehman Brothers, Inc. Director (Trustee) of five
1990--GBG Funds mutual funds within the Guardian Fund Complex.
Director (Trustee) of various mutual funds
sponsored by Mitchell Hutchins Asset Management,
Inc. and Paine Webber, Inc.
Sidney I. Lirtzman, Ph.D (64) ... 1987--Bond Fund, Professor of Management 9/67-present and Acting
Cash Fund, Stock Fund Dean of the School of Business Management
1990--GBG Funds 2/95-present, City University of New York-Baruch
College. President, Fairfield Consulting
Associates, Inc. Director (Trustee) of five mutual
funds within the Guardian Fund Complex.
Joseph D. Sargent* (58) ......... 1995--GBG Funds Chief Executive Officer, The Guardian Life
Insurance Company of America, 1/96-Present.
President and Director 1/93 to present. Executive
Vice President prior thereto. Director (Trustee)
of The Guardian Insurance & Annuity Company, Inc.,
Guardian Investor Services Corporation and two
mutual funds within the Guardian Fund Complex.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
Year of Election
Nominee (Age) or Appointment Principal Occupation and Affiliations
- ------------ ----------------- -------------------------------------
<S> <C> <C>
Carl W. Schafer (60) ............ None President, Atlantic Foundation (charitable
foundation supporting mainly oceanographic
exploration and research). Director of Roadway
Express (trucking), Evans Systems, Inc. (a motor
fuels, convenience store and diversified company),
Hidden Lake Gold Mines Ltd. (gold mining),
Electronic Clearing House, Inc. (financial
transactions processing), Wainoco Oil Corporation
and NutraCeutrics Inc. (biotechnology). Chairman
of the Investment Advisory Committee of the Howard
Hughes Medical Institute 1985-1992. Director
(trustee) of one mutual fund within the Guardian
Fund Complex. Director (Trustee) of various mutual
funds sponsored by Mitchell Hutchins Asset
Management, Inc. and Paine Webber, Inc.
Robert G. Smith, Ph.D (63) ...... 1982--Bond Fund, President, Smith Affiliated Capital Corp.
Cash Fund, Stock Fund 4/82-present. Director (Trustee) of five mutual
1990--GBG Funds funds within the Guardian Fund Complex.
- -----------------
<FN>
* "Interested person" as defined in the Investment Company Act of 1940, as
amended, by reason of being an officer or director of GISC.
</FN>
</TABLE>
Each of the nominees is also a Trustee of The Park Avenue Portfolio, a
series trust consisting of six series funds. The Bond Fund, Cash Fund, Stock
Fund, GBG Funds and The Park Avenue Portfolio are a "Fund Complex" for the
purposes of the federal securities laws and are advised by either GISC or GBG
and distributed by GISC. The Directors who are not "interested persons" of the
Funds receive director fees of $350 per meeting per series fund and an annual
retainer of $500 per series fund. GBG Funds is comprised of two series funds.
These director fees are paid by the Funds. With the exception of Mr. Sargent,
who receives no compensation in connection with his service as a Director of
each Fund, Directors who are "interested persons" of the Funds receive the same
fees set forth above, but they are paid by GISC. Mr. Ferrara received no
compensation in connection with his service as a Director in the past, but if
elected, will also be paid by GISC. The table below shows for each Director who
is not an "interested person" the aggregate compensation paid by each Fund and
the Fund Complex for the year ended December 31, 1995. The Directors do not
receive any pension or retirement benefits from the Funds. Each Fund held four
(4) Board Meetings during the year ended December 31, 1995. Each current
Director attended 75% or more of the respective meetings of the Boards and the
committees of which he was a member during that period.
6
<PAGE>
<TABLE>
COMPENSATION TABLE*
<CAPTION>
Total
Aggregate Compensation From Funds** Compensation from
----------------------------------------------------- Funds within
GBG The Guardian Fund
Name of Director Bond Fund Cash Fund Stock Fund Funds Complex
- ---------------- --------- --------- ---------- ------ ------------------
<S> <C> <C> <C> <C> <C>
Frank J. Fabozzi ............ $2,500 $2,500 $2,500 $1,700 $32,000
William W. Hewitt, Jr. ...... $2,500 $2,500 $2,500 $5,000 $35,300
Sidney I. Lirtzman .......... $2,500 $2,500 $2,500 $5,000 $35,300
Robert G. Smith ............. $2,500 $2,500 $2,500 $5,000 $35,300
- --------------
<FN>
* Directors who are "interested persons" of the Funds are not compensated by
the Funds, so information about their compensation is not included in this
table.
** Includes compensation paid for attendance at meetings of the Funds' Audit
Committees.
</FN>
</TABLE>
The Board of Directors of each Fund has established an Audit Committee
which is composed of all of the Directors who are not "interested persons" of
the Funds. The Audit Committees: (a) review the services provided by the Funds'
independent auditors; (b) confer with the independent auditors regarding each
Fund's financial statements, the results of the annual audits and other related
matters; and (c) perform such other tasks as the Boards of Directors may assign
from time to time. Each Audit Committee held four meetings during the year ended
December 31, 1995.
None of the Boards have established a Nominating Committee.
The officers of the Funds are selected annually by the Boards of Directors
and receive no compensation from the Funds. The current executive officers of
each of the Funds are named below.
CHARLES E. ALBERS (55) Senior Vice President, Guardian Life Investment
Department. President of the Stock Fund since March, 1977 and Vice President of
the Cash Fund since March, 1984. Officer of other Guardian Life-sponsored
investment companies and certain Guardian Life subsidiaries, including GISC.
MICHELE S. BABAKIAN (40) Vice President, Fixed Income Securities, Guardian Life
Investment Department. Vice President of the Bond Fund and the Cash Fund since
March, 1991. Officer of other Guardian Life-sponsored investment companies and
certain Guardian Life subsidiaries, including GISC.
JOSEPH A. CARUSO (44) Second Vice President and Secretary of Guardian Life.
Secretary of the Funds since October, 1992. Secretary of other Guardian
Life-sponsored investment companies and Guardian Life subsidiaries, including
GISC.
ALEXANDER M. GRANT, JR. (46) Assistant Vice President, Fixed Income Securities,
Guardian Life Investment Department. Treasurer of the Bond Fund and the Cash
Fund since March, 1991. Officer of other Guardian Life-sponsored investment
companies and certain Guardian Life subsidiaries, including GISC.
THOMAS R. HICKEY, JR. (43) Vice President, Equity Operations, Guardian Life
Equity Products Department. Officer of other Guardian Life-sponsored investment
companies and certain Guardian Life subsidiaries, including GISC.
EDWARD H. HOCKNELL (35) Director, Baillie Gifford Overseas Limited and GBG.
Portfolio Manager, Baillie Gifford & Co. Vice President, GBG Funds, Inc.
FRANK J. JONES (57) Executive Vice President and Chief Investment Officer,
Guardian Life Investment Department. President of the Bond Fund and the Cash
Fund since September, 1991. Officer of other Guardian Life-sponsored investment
companies and Officer and/or Director of certain Guardian Life subsidiaries,
including GISC.
7
<PAGE>
R. ROBIN MENZIES (43) Partner, Baillie Gifford & Co. Director of Baillie Gifford
Overseas. Vice President of GBG Funds since December, 1990. Officer of other
Guardian Life-sponsored investment companies and Director of GBG.
NIKOLAOS D. MONOYIOS (46) Vice President, Guardian Life Investment Department.
Vice President of the Stock Fund since June, 1981. Officer of other Guardian
Life-sponsored investment companies and certain Guardian Life subsidiaries,
including GISC.
JOHN B. MURPHY (51) Second Vice President, Equity Securities, Guardian Life
Investment Department. Treasurer, The Guardian Stock Fund.
FRANK L. PEPE (53) Second Vice President and Equity Controller, Guardian Life
Equity Products Department. Vice President of the Funds since March, 1995.
Officer of other Guardian Life-sponsored investment companies and certain
Guardian Life subsidiaries, including GISC.
JOHN M. SMITH (59) Executive Vice President, Guardian Life Equity Products
Department. President of GBG Funds since December 1990. Officer of other
Guardian Life-sponsored investment companies and Officer and/or Director certain
Guardian Life subsidiaries, including GISC.
* * *
PROPOSAL 2
APPROVAL OF AMENDMENTS TO THE BOND FUND'S FUNDAMENTAL INVESTMENT
RESTRICTIONS WITH RESPECT TO BORROWINGS
At a meeting held on December 15, 1994, the Bond Fund's Board of Directors
approved amendments to two of the Bond Fund's fundamental investment
restrictions relating to borrowings, subject to submission for approval by the
affirmative vote of the required majority of the fund's outstanding shares at
such time as Bond Fund management deemed it appropriate. At a meeting held on
December 14, 1995, the Bond Fund's Board approved the submission of this
proposal to shareholders at the request of Fund management. If adopted, the
amended restrictions would liberalize the Bond Fund's current restrictions on
borrowings to permit the Bond Fund to engage in dollar roll and reverse
repurchase agreement transactions. The Bond Fund's management believes that the
ability to enter into these transactions will provide more investment
flexibility to the Fund's investment adviser and, perhaps, enhance the Fund's
performance.
In a dollar roll transaction, the Bond Fund would sell mortgage-backed or
other securities for delivery in the current month and simultaneously contract
to purchase substantially similar securities on a specified future date. Where a
dollar roll transaction involves mortgage-backed securities, the securities that
are to be purchased will be of the same type and have the same coupon rate as
the sold securities, but will be supported by different pools of mortgages. The
Bond Fund would forgo principal and interest paid on the sold securities during
the roll period, but would be compensated by the difference between the current
sales price and the lower forward price for the future purchase. In addition,
the Bond Fund can earn interest by investing the transaction proceeds during the
roll period. The Bond Fund may also be compensated through the receipt of fee
income equivalent to the lower forward price.
In a reverse repurchase agreement transaction, the Bond Fund would sell
securities to a bank or securities dealer and agree to repurchase them at an
agreed time and price that reflects a market rate of interest. Reverse
repurchase agreements involve the risk that the buyer of the sold securities
might be unable to deliver them when the Bond Fund seeks to repurchase the
securities. If the buyer files for bankruptcy or becomes insolvent, such buyer
or its representative may ask for and receive an extension of time to decide
whether to enforce the Bond Fund's repurchase obligation. The Fund's use of the
reverse repurchase agreement's transaction proceeds may be restricted
pending such decision.
8
<PAGE>
The Bond Fund will normally use the proceeds of dollar roll and reverse
repurchase agreement transactions to maintain offsetting positions in securities
or repurchase agreements that mature on or before the settlement date for the
related dollar rolls or reverse repurchase agreements. The market value of
securities sold under reverse repurchase agreements is typically greater than
the transaction proceeds, so the value of the securities acquired with such
proceeds will be lower than the value of the sold securities.
Both dollar rolls and reverse repurchase agreements may involve leveraging
of the Bond Fund's assets. The Fund will be leveraged when more than 100% of its
assets are invested or committed, which occur when the proceeds of dollar rolls
or reverse repurchase agreements are invested in an attempt to increase the Bond
Fund's income. To minimize the risks typically associated with leverage, the
Bond Fund will maintain either cash equivalents or liquid, high-grade debt
securities that are marked to market daily in a segregated account with its
custodian whenever it enters into dollar roll or reverse repurchase agreement
transactions. Segregating assets will put a practical limit on the extent to
which the Bond Fund may engage in these transactions because it will limit the
Fund's ability to pursue other investment opportunities.
Since dollar roll and reverse repurchase agreement transactions are
considered to be borrowings, they are subject to the Bond Fund's fundamental
investment restrictions for borrowings. The Bond Fund's present restrictions on
borrowings effectively preclude the Fund from engaging in these transactions
because they prohibit borrowings for purposes other than meeting temporary or
emergency needs. For this reason, your Board of Directors recommends that you
adopt the proposal to amend the Fund's present fundamental investment
restrictions for borrowings.
The Bond Fund's CURRENT fundamental investment restrictions for borrowings
provide that THE BOND FUND MAY NOT:
Borrow money, except that the Fund may borrow from banks up to 5% of
the value of its total assets as a temporary measure for extraordinary or
emergency needs and not for investment purposes, such as enabling the Fund
to meet redemption requests which might otherwise require the sale of
portfolio securities at a time when it is not in the Fund's best interests.
Mortgage, pledge or hypothecate more than 5% of the value of its total
assets, and then only to secure borrowings effected within the above
restriction.
The proposed AMENDED versions of these fundamental investment restrictions
would provide that THE BOND FUND MAY NOT:
Borrow money, except that the Fund may (i) borrow up to 5% of its
total assets (not including the amount borrowed) for temporary or emergency
purposes; and (ii) engage in reverse repurchase agreements, dollar rolls or
other transactions which may involve a borrowing from banks or other
persons, provided that the aggregate amount involved in all such
transactions shall not exceed 33-1/3% of the value of the Fund's total
assets (including the amount borrowed) less liabilities (other than
borrowings) or such other percentage permitted by law.
Mortgage, pledge or hypothecate more than 5% of the value of its total
assets, and then only to secure temporary or emergency borrowings effected
within the above restriction. For purposes of this restriction, collateral
arrangements which may be required in connection with securities
transactions by the Investment Company Act of 1940 are not considered a
pledge of assets.
9
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If approved, the primary effect of these amended fundamental investment
restrictions would be to allow the Bond Fund to: (1) borrow up to 33-1/3% (or
such other amount permitted by law) of its total assets (including the amount
borrowed) less liabilities (other than borrowings) through transactions which
may involve borrowings; (2) borrow from persons in addition to banks; and (3)
exclude assets that are segregated with the Fund's custodian in connection with
transactions like dollar rolls and reverse repurchase agreements from being
treated as pledged assets. As currently interpreted by the Securities and
Exchange Commission ("SEC"), the Investment Company Act of 1940 limits borrowing
by funds to 33-1/3% of total assets, less liabilities.
Additionally, the proposed amendments would provide more investment
flexibility to the Bond Fund's investment adviser in managing the Bond Fund's
portfolio. As a result, to the extent consistent with the Bond Fund's investment
objective, the investment adviser could pursue investment strategies that it
must forgo under the Bond Fund's current fundamental investment restrictions.
REQUIRED VOTE
The amendments to the Bond Fund's fundamental investment restrictions for
borrowings must be approved by the affirmative vote of a majority of the Bond
Fund's outstanding voting shares entitled to vote at the meeting, within the
meaning of the Investment Company Act of 1940. The required majority is the
LESSER of (1) 67% or more of the shares present at the meeting, if at least 50%
of the outstanding shares entitled to vote are present or represented by proxy;
or (2) more than 50% of the outstanding shares of the Bond Fund entitled to vote
at the meeting. If the proposal fails to attract the required vote for approval,
the current fundamental investment restrictions will remain in effect.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU
VOTE "FOR" PROPOSAL 2.
* * *
PROPOSAL 3
APPROVAL OF AMENDMENT TO THE BOND FUND'S FUNDAMENTAL
INVESTMENT RESTRICTION WITH RESPECT TO INDUSTRY CONCENTRATION
At a meeting held on December 15, 1994, the Bond Fund's Board of Directors
approved an amendment to the Bond Fund's investment restriction regarding its
ability to concentrate investments in a particular industry or group of
industries, subject to submission for approval by the affirmative vote of the
required majority of the fund's outstanding shares at such time as Bond Fund
management deemed it appropriate. At a meeting held on December 14, 1995, the
Bond Fund's Board approved the submission of this proposal to shareholders at
the request of Fund management.
Presently, the Bond Fund's investment restriction on industry concentration
prevents it from investing 25% or more of its assets in any one industry, but
permits greater concentrations in U.S. government securities and securities
issued by domestic banks. As currently interpreted by the SEC, the federal
securities laws permit only money market funds to reserve the right to invest
25% or more of their assets in securities issued by domestic banks; other funds
are required to have an express, affirmative policy regarding whether they will
concentrate or will not concentrate in such investments. Moreover, a policy
regarding industry concentration can only be formally changed with shareholder
approval, even when the change is mandated by federal securities law
requirements.
10
<PAGE>
The Bond Fund's CURRENT fundamental restriction for industry concentration
provides that THE BOND FUND MAY NOT:
Purchase any securities other than the obligations of U.S. branches of
domestic banks or the U.S. Government, or its agencies or
instrumentalities, if, immediately after such purchase, more than 25% of
the value of the Fund's total assets would be invested in the securities of
issuers in the same industry. (There is no limitation as to investments in
obligations issued by U.S. branches of domestic banks or in obligations
issued or guaranteed by the United States Government or its agencies or
instrumentalities.) For the purpose of this restriction, gas, electric,
water and telephone utilities will each be treated as a separate industry.
The proposed AMENDED version of the fundamental investment restriction
would provide that THE BOND FUND MAY NOT:
Purchase any securities other than the obligations of the U.S.
Government, or its agencies or instrumentalities, if, immediately after
such purchase, 25% or more of the value of the Fund's total assets would be
invested in the securities of issuers in the same industry. (There is no
limitation as to investments in obligations issued or guaranteed by the
United States Government or its agencies or instrumentalities.) For the
purpose of this restriction, gas, electric, water and telephone utilities
will each be treated as a separate industry.
If approved, the primary effect of the amended fundamental investment
restriction would be to preclude the fund from investing 25% or more of its
respective assets in securities issued by domestic banks. Since the Bond Fund
has never concentrated its investments in bank securities, changing the
applicable restriction in this way will have no effect on its overall investment
strategy.
REQUIRED VOTE
The amendment to the Bond Fund's fundamental investment restriction for
industry concentration must be approved by the affirmative vote of a majority of
the Bond Fund's outstanding voting shares entitled to vote at the meeting,
within the meaning of the Investment Company Act of 1940. The required majority
is the LESSER of (1) 67% or more of the shares present at the meeting, if at
least 50% of the outstanding shares entitled to vote are present or represented
by proxy; or (2) more than 50% of the outstanding shares of the Bond Fund
entitled to vote at the meeting. If the proposal fails to attract the required
vote for approval, the current fundamental investment restriction will remain in
effect but, as described above, will remain ineffective with respect to fund
concentration due to federal securities law limitations.
* * *
INVESTMENT ADVISERS AND DISTRIBUTOR
Guardian Investor Services Corporation ("GISC"), 201 Park Avenue South, New
York, New York 10003, serves as investment adviser for each of the Bond Fund,
the Cash Fund and the Stock Fund, and as distributor for all of the Funds. GISC
is a wholly-owned subsidiary of GIAC, which is a wholly-owned subsidiary
of Guardian Life.
Guardian Baillie Gifford Limited ("GBG") serves as investment adviser for
Baillie Gifford International Fund and Baillie Gifford Emerging Markets Fund,
the two funds which comprise GBG Funds. Baillie Gifford Overseas Limited ("BGO")
serves as sub-investment adviser for these two funds. Both GBG and BGO are
located at 1 Rutland Court, Edinburgh, EH3 8EY, Scotland. GBG is jointly owned
by GIAC and BGO.
11
<PAGE>
FUTURE MEETINGS OF SHAREHOLDERS
The Funds are not required to hold Annual Meetings of Shareholders and do
not plan to do so. The Boards of Directors may call Special Meetings of
Shareholders from time to time for action by shareholder vote as may be required
by the Investment Company Act of 1940 or a Funds' Articles of Incorporation.
OTHER MATTERS
The Boards of Directors know of no other matters to be presented at the
Meeting. However, if any other business should properly come before the Meeting,
it is intended that GIAC will vote thereon in its discretion.
By order of the Boards of Directors,
JOSEPH A. CARUSO
Secretary
Dated: February 15, 1996
12
<PAGE>
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[Name of Fund ]
PREFERENCE STATEMENT SOLICITED BY THE BOARDS OF DIRECTORS
The undersigned, revoking any previous preference statements, hereby directs
Guardian Insurance & Annuity Company, Inc. ("GIAC") to vote all shares of the
above-referenced Fund in which the undersigned has a beneficial interest, as
specified on the reverse side, and upon any other business that may properly
come before the Joint Special Meeting of Shareholders to be held at 201 Park
Avenue South, Mezzanine Floor, New York, NY 10003 on March 20, 1996 at 9:30 a.m.
Eastern time and at any adjournments thereof.
Receipt of the Notice of Joint Special Meeting and the accompanying Proxy
Statement which describes the matters to be considered and voted on is hereby
acknowledged.
PLEASE sign exactly as your name(s) appear(s) on
your GIAC contract and this preference statement.
When signing as attorney, executor, trustee,
administrator, guardian, etc., please give full
title. Corporate, partnership and trust owners
should have this preference statement signed by an
authorized person, and that person's title should
be given.
Date_________________________________________,1996
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
Signature(s) and, if applicable, Title(s)
PLEASE SIGN, DATE, AND RETURN PROMPTLY IN
THE ENCLOSED POSTAGE-PAID ENVELOPE.
INDICATE YOUR VOTE ON THE REVERSE SIDE OF THIS CARD BY FILLING IN THE
APPROPRIATE BOXES COMPLETELY USING BLACK INK OR DARK PENCIL. PLEASE DO NOT USE
RED INK.
<PAGE>
IF YOU SIGN AND DATE THIS PREFERENCE STATEMENT, BUT DO NOT SPECIFY YOUR VOTE ON
THE REVERSE SIDE, THE GUARDIAN INSURANCE & ANNUITY COMPANY, INC. ("GIAC") WILL
VOTE THE SHARES IN WHICH YOU HAVE A BENEFICIAL INTEREST FOR THE PROPOSALS. A
SEPARATE PREFERENCE STATEMENT IS PROVIDED FOR EACH FUND IN WHICH YOUR CONTRACT
VALUES WERE INVESTED AS OF JANUARY 31, 1996. PLEASE SIGN, DATE AND RETURN ALL
PREFERENCE STATEMENTS RECEIVED IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
THIS PREFERENCE STATEMENT, IF PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED BY THE CONTRACTOWNER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR ALL PROPOSALS. PLEASE REFER TO THE PROXY STATEMENT FOR A DISCUSSION OF THE
PROPOSALS.
GIAC will vote the shares in which you have a beneficial interest as directed by
you in accordance with the voting procedures described in the prospectus for
your GIAC variable annuity contract or variable life policy.
FOR ALL FUNDS
1. Election of Directors |_| FOR all nominees |_| WITHHOLD AUTHORITY
listed below or bona fide to vote for all
substitutions as set forth nominees listed
in the Proxy Statement below.
(except as marked to the
contrary below).
Nominees: John C. Angle, Frank J. Fabozzi, Arthur V. Ferrara,
Leo R. Futia, William W. Hewitt, Jr., Sidney I. Lirtzman,
Joseph D. Sargent, Carl W. Schafer and Robert G. Smith.
(Instruction: To withhold authority to vote for any individual
nominee, write that nominee's name on the line below.)
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FOR BOND FUND SHAREHOLDERS ONLY:
2. To amend the Fund's fundamental |_| FOR |_| AGAINST |_| ABSTAIN
investment restrictions with
respect to borrowings.
3. To amend the Fund's fundamental |_| FOR |_| AGAINST |_| ABSTAIN
investment restrictions with respect
to industry concentration.
