AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 27, 1998.
REGISTRATION NOS. 2-81149
811-3636
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |_|
POST-EFFECTIVE AMENDMENT No. 16 |X|
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |_|
AMENDMENT No. 17 |X|
(Check appropriate box or boxes)
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THE GUARDIAN STOCK FUND, INC.
(Exact Name of Registrant as Specified in Charter)
201 Park Avenue South, New York, New York 10003
(Address of Principal Executive Offices)
Registrant's Telephone Number: (212) 598-8359
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Copy to:
Richard T. Potter, Jr., Esq. Cathy G. O'Kelly, Esq.
c/o The Guardian Insurance Vedder, Price, Kaufman & Kammholz
& Annuity Company, Inc. 222 North LaSalle Street
201 Park Avenue South Chicago, Illinois 60601
New York, New York 10003
(Name and Address of Agent for Service)
------------------------
It is proposed that this filing will
become effective (check appropriate box):
|_| immediately upon filing pursuant to paragraph (b)
|_| on (date) pursuant to paragraph (b)
|_| 60 days after filing pursuant to paragraph (a)(1)
|X| on May 1, 1998 pursuant to paragraph (a)(1)
|_| 75 days after filing pursuant to paragraph (a)(2)
|_| on (date) pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
|_| this post-effective amendment designates a new effective
date for a previously filed post-effective amendment.
------------------------
The Registrant has registered an indefinite number of its shares under the
Securities Act of 1933 pursuant to Rule 24f-2 under the Investment Company Act
of 1940. The notice required by such rule for the Registrant's most recent
fiscal year will be filed on or before March 31, 1998.
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<PAGE>
THE GUARDIAN STOCK FUND, INC.
CROSS REFERENCE SHEET
(as required by Rule 495)
Form N-1A Item No. Location
Part A
Item 1. Cover Page............................ Cover
Item 2. Synopsis.............................. Not Applicable
Item 3. Condensed Financial Information....... Financial Highlights
Item 4. General Description of Registrant..... Cover Page; Investment
Objective and Policies;
Other Information
Item 5. Management of the Fund................ Fund Management and the
Investment Adviser;
Performance of the Fund;
Other Information
Item 5a. Management Discussion of Fund
Performance......................... Performance Results
Item 6. Capital Stock and Other Securities.... Dividends; Distributions and
Taxes; Other Information
Item 7. Purchase of Securities Being Offered.. Purchase and Redemption of
Shares; Calculation of Net
Asset Value
Item 8. Redemption or Repurchase.............. Purchase and Redemption of
Shares
Item 9. Pending Legal Proceedings............. Not Applicable
Part B
Item 10. Cover Page............................ Cover Page
Item 11. Table of Contents..................... Table of Contents
Item 12. General Information and History....... Not Applicable
Item 13. Investment Objectives and Policies.... Investment Restrictions;
Special Investment
Techniques
Item 14. Management of the Fund................ Fund Management
Item 15. Control Persons and Principal
Holders of Securities............... Guardian Life and Other Fund
Affiliates
Item 16. Investment Advisory and
Other Services...................... Investment Adviser and Other
Services; Custodian and
Transfer Agent; Independent
Auditors and Financial
Statements
Item 17. Brokerage Allocation.................. Portfolio Transactions and
Brokerage
Item 18. Capital Stock and Other Securities.... Not Applicable
Item 19. Purchase, Redemption and Pricing
of Securities Being Offered......... Not Applicable
Item 20. Tax Status............................ Not Applicable
Item 21. Underwriters.......................... Not Applicable
Item 22. Calculations of Performance Data...... Performance Data
Item 23. Financial Statements.................. Independent Auditors and
Financial Statements
Part C
Information required to be included in Part C is set forth under the appropriate
item, so numbered, in Part C to this Registration Statement.
<PAGE>
PROSPECTUS
May 1, 1998
THE GUARDIAN STOCK FUND, INC.
The Guardian Stock Fund, Inc. (the "Fund") is an open-end investment
company (commonly known as a "mutual fund"). Its primary investment objective is
long-term growth of capital. The Fund primarily invests in U.S. common stocks
and securities which are convertible into such common stocks. Current income is
of lesser importance; however, it is expected that long-term growth of capital
will be accompanied by growth in income.
Shares of the Fund are available in two classes: Class I shares and Class
II shares. Class I shares are offered to the public only through the ownership
of variable annuities and variable life insurance policies issued by The
Guardian Insurance & Annuity Company, Inc. ("GIAC") through its separate
accounts. Class II shares are offered through the ownership of variable
annuities and variable life insurance policies issued by other insurance
companies that offer the Fund as an investment option through their separate
accounts.
This Prospectus sets forth important information that a contractowner
should know about the investment policies and operations of the Fund before
investing. This Prospectus should be retained for future reference. A Statement
of Additional Information, dated May 1, 1998, has been filed with the Securities
and Exchange Commission ("SEC") and is incorporated herein by reference. A free
copy of the Statement of Additional Information may be obtained and further
inquiries can be made by calling 1-800-221-3253 or by writing to Guardian
Investor Services Corporation(R) ("GISC") at 201 Park Avenue South, New York,
New York 10003. GISC is the Fund's investment adviser and the principal
underwriter of GIAC's variable annuities and variable life insurance policies.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO PERSON IS AUTHORIZED TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS.
GSF-1
<PAGE>
FINANCIAL HIGHLIGHTS
The following table provides selected data, total returns and ratios for
one Class I share of the Fund, and has been audited by Ernst & Young LLP,
independent auditors. This information is supplemented by the Fund's audited
financial statements, and their accompanying notes, for the year ended December
31, 1997 which appear in the Fund's 1997 Annual Report to Shareholders. This
Annual Report includes further information about the Fund's 1997 performance and
the unqualified report of Ernst & Young LLP on the Fund's 1997 financial
statements. The 1997 Annual Report is incorporated by reference into the
Statement of Additional Information. Class II shares have not been offered
prior to the date of this Prospectus, and therefore no information is provided
for Class II shares. Free copies of the Statement of Additional Information and
the Fund's 1997 Annual Report to Shareholders may be obtained by calling
1-800-221-3253 or by writing to GISC, 201 Park Avenue South, New York, New York
10003.
Selected data for a Class I share of capital stock outstanding throughout
the years indicated:
<TABLE>
<CAPTION>
Year Ended December 31,
- -----------------------------------------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period ......................... $ $34.72 $27.33 $29.00 $25.52 $23.28 $17.85
----- ------ ------ ------ ------ ------ ------
Income from investment
operations
Net investment income ............ 0.53 0.44 0.40 0.58 0.48 0.63
Net realized and unrealized
gain/(loss) on investments ..... 8.62 9.01 (0.77) 4.47 3.97 5.74
----- ------ ------ ------ ------ ------ ------
Net increase/(decrease) from
investment operations .......... 9.15 9.45 (0.37) 5.05 4.45 6.37
----- ------ ------ ------ ------ ------ ------
Distributions to shareholders
Dividends from net investment
income ......................... (0.54) (0.44) (0.40) (0.59) (0.48) (0.64)
Distributions from net realized
gain ........................... (4.74) (1.62) (0.90) (0.98) (1.73) (0.30)
----- ------ ------ ------ ------ ------ ------
Total distributions .............. (5.28) (2.06) (1.30) (1.57) (2.21) (0.94)
----- ------ ------ ------ ------ ------ ------
Net asset value, end of
period ......................... $ $38.59 $34.72 $27.33 $29.00 $25.52 $23.28
====== ====== ====== ====== ====== ====== ======
Total return* .................... % 26.90% 34.65% (1.27%) 19.96% 20.07% 35.96%
====== ====== ====== ====== ====== ====== ======
Ratios/supplemental data:
Net assets, end of period
(000's omitted) ................ $ $2,226,728 $1,615,271 $1,038,991 $869,116 $537,354 $380,962
Ratio of expenses to average
net assets ..................... % 0.53% 0.53% 0.53% 0.54% 0.55% 0.56%
Ratio of net investment income
to average net assets .......... % 1.50% 1.39% 1.49% 2.20% 2.14% 3.07%
Portfolio turnover rate .......... % 66% 78% 53% 45% 62% 51%
Average rate of commissions paid** $0.0470 -- -- -- -- --
</TABLE>
Year Ended December 31,
- --------------------------------------------------------------------------
1990 1989 1988
- --------------------------------------------------------------------------
Net asset value, beginning of
period ......................... $21.39 $19.18 $16.35
----- ------ ------
Income from investment
operations
Net investment income ............ 0.69 0.84 0.52
Net realized and unrealized
gain/(loss) on investments ..... (3.13) 3.61 2.80
----- ------ ------
Net increase/(decrease) from
investment operations .......... (2.44) 4.45 3.32
----- ------ ------
Distributions to shareholders
Dividends from net investment
income ......................... (0.71) (0.90) (0.49)
Distributions from net realized
gain ........................... (0.39) (1.34) --
----- ------ ------
Total distributions .............. (1.10) (2.24) (0.49)
----- ------ ------
Net asset value, end of
period ......................... $17.85 $21.39 $19.18
====== ====== ======
Total return* .................... (11.85%) 23.55% 20.37%
====== ====== ======
Ratios/supplemental data:
Net assets, end of period
(000's omitted) ................ $256,039 $269,950 $172,900
Ratio of expenses to average
net assets ..................... 0.57% 0.57% 0.61%
Ratio of net investment income
to average net assets .......... 3.66% 4.13% 2.88%
Portfolio turnover rate .......... 54% 38% 71%
Average rate of commissions paid** -- -- --
- --------------------------------------------------------------------------------
* Total returns do not reflect the effects of charges deducted under the
terms of GIAC's variable contracts. Including such charges would reduce the
total returns for all periods shown.
** 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.
GSF-2
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The Fund is registered with the SEC as an open-end, diversified,
management investment company. The Fund's primary investment objective is to
seek long-term growth of capital. Current income is not a specific objective,
although it is anticipated that long-term growth of capital will be accompanied
by growth in income. The Fund's investment objective is a fundamental policy
which cannot be changed without shareholder approval. There is no assurance that
the Fund will meet its investment objective, and the Fund cannot eliminate the
risk of loss inherent in the ownership of securities by following its investment
policies.
The Fund attempts to meet its objective by normally investing at least 80%
of the value of its assets in a diversified portfolio of U.S. common stocks and
convertible securities. The Fund intends to be fully invested in such securities
unless cicumstances dictate otherwise.
GISC, the Fund's investment adviser, employs quantitative investment
models, both proprietary and non-proprietary, to analyze and evaluate each
security which the Fund may purchase, hold or sell. These models are used to
identify those securities that represent good relative value in the marketplace
and have reasonable prospects for superior relative price performance. GISC uses
information from numerous sources and value, momentum and other market factors
to modify and refine the quantitative models over time. GISC can also change the
proportion of the Fund's assets which are invested in particular companies and
industries based on its evaluation of the outlook for specific industries and
companies and the economy.
Convertible securities are bonds or preferred stock issues which may be
converted at a specified time and price into shares of common stock of the same
or different issuers. Convertible securities are typically senior to common
stock in a corporation's capital structure, so they may entail less risk than
common stocks. Convertible securities purchased by the Fund will primarily be
rated in one of the top four rating categories established by nationally
recognized statistical ratings organizations, making them investment grade.
However, the Fund may acquire convertible securities without regard to their
ratings. See the Statement of Additional Information.
The Fund may also purchase readily marketable interests in real estate
such as real estate investment trusts ("REITs"). REITs are pooled investment
vehicles that invest in real estate. To the extent that the Fund acquires
securities issued by companies engaged in the real estate business, the Fund
could be affected by fluctuations in the real estate market. Real estate markets
are sensitive to variations in conditions such as overall property prices,
property taxes, rental income and interest rates. As with all portfolio
investments, the Fund will be affected by the operations of particular real
estate-related companies selected by GISC as a Fund investment.
The Fund typically invests its available cash in repurchase agreements. In
a repurchase agreement transaction, the Fund purchases a debt security and
obtains a simultaneous commitment from the seller (i.e., a bank or securities
dealer) to repurchase the debt security at an agreed time and price, reflecting
a market rate of interest. Repurchase agreements are fully collateralized
(including the interest earned thereon) by U.S. government securities, bank
obligations, cash or cash equivalents and are marked-to-market daily during
their respective terms. Costs, delays or losses could result if the seller
becomes bankrupt or is otherwise unable to repurchase a security that is subject
to a repurchase agreement. To attempt to minimize this risk, the Fund's Board of
Directors periodically receives and reviews information about the
creditworthiness of banks and securities dealers which enter into repurchase
agreements with the Fund. The Fund will not enter into a repurchase agreement
which matures in more than seven days if, as a result, more than 15% of its net
assets would be invested in illiquid securities.
From time to time, the Fund may invest up to 5% of its net assets in
securities of U.S. or foreign companies which are issued or settled overseas.
The Fund may enter into forward foreign currency exchange contracts in
connection with its investments in foreign securities. See the Statement of
Additional Information. If adverse market conditions necessitate a defensive
posture, the Fund may temporarily invest some or all of its assets in debt
obligations, including U.S. government securities, investment grade corporate
bonds, commercial paper, repurchase agreements and cash equivalents.
Special Investment Techniques -- Options and Futures
The Fund may, from time to time, purchase or write (sell) options on
securities. The Fund normally intends to use options to attempt to hedge the
value of securities in its portfolio that are involved in merger negotiations or
other corporate transactions. Hedging occurs when an investment technique is
used with the goal of managing or reducing risk to the Fund's portfolio. Using
options as a successful hedge depends on GISC's ability to predict pertinent
market movements. Incorrect predictions may make engaging in such transactions
riskier to the Fund than trading in the securities that the Fund is authorized
to buy and sell.
Basically, there are two types of options: call options and put options.
The purchaser of a call option acquires the right to buy a security at a fixed
price during a specified period. The writer (seller) of such an option is then
obligated to sell the security if the option is exercised, and bears the risk
that the security's market price will increase over the purchase price set by
the option. The purchaser of a put option acquires the right to sell a security
at a fixed price during a specified period. The writer of such an option is then
obligated to buy the security if the option is exercised, and bears the risk
that the security's market price will decline from the purchase price set by the
option. Options are typically purchased subject to a premium which can reduce
the risks retained by the option writer.
As the writer of a covered call option or the purchaser of a secured put
option, the Fund must own securities that can be used to cover or secure any
such outstanding options. The cover for a call option that is related to a
foreign currency can be short-term debt securities having a value equal to the
option's face that are denominated in the same currency as the call. Also, when
the Fund writes a put option, it must place cash or liquid securities, whose
value is at least equal to the exercise price of the put option, in a segregated
account with its custodian, marked to market daily, in accordance with SEC
guidelines. Segregating assets may limit the Fund's ability to pursue other
investment opportunities while options are outstanding. Options transactions can
be voluntarily terminated before the exercise or expiration of the options only
by entering into closing transactions. The ability to close out an option
depends, in part, upon the liquidity of the option market. If the Fund cannot
close an option when it wants, it may miss alternative investment opportunities.
Options trade on U.S. or foreign securities exchanges and in the
over-the-counter ("OTC") market. Exchange listed options are three-party
contracts issued by a clearing corporation. They generally have standardized
prices, expiration dates and performance mechanics. In contrast, all the terms
of an OTC option, including price and expiration date, are set by negotiation
between the buyer and seller. The Fund could lose any premium paid for an OTC
option, as well as any anticipated benefits of the transaction, if its
counterparty fails to perform under the option's terms. Generally, the staff of
the SEC currently requires OTC options and any assets used to cover such options
to be treated as illiquid assets because OTC options may not be actively traded.
Until the SEC staff revises this position, any of the Fund's OTC option
transactions would be subject to a limitation on investment in illiquid
securities of 15% of the Fund's net assets.
Through the writing or purchase of securities index options, the Fund can
achieve many of same objectives as through the use of options on individual
securities. An option on a securities index is similar to an option on a
particular security except that, rather than the right to take or make delivery
of a particular security at a specified price, an option on a securities index
gives the holder the right to receive, upon exercise of the option, an amount of
cash if the closing level of the securities index upon which the option is based
is greater than (in the case of a call) or less than (in the case of a put) the
exercise price of the option. Price movements in securities which an option
holder owns or intends to purchase probably will not correlate perfectly with
movements in the level of a securities index and, therefore, the option holder
bears the risk of a loss on a securities index option which is not completely
offset by movements in the price of such securities. Because securities index
options are settled in cash, a call writer cannot determine the amount of its
settlement obligations in advance and, unlike call writing on a specific stock,
cannot provide in advance for, or cover, its potential settlement obligations by
acquiring and holding underlying securities. Call options written on a
securities index may be covered by holding a mix of stocks which substantially
replicates the movement of the index or by holding a call option on the
securities index with an exercise price no higher than the call option sold.
The Fund may also purchase or sell futures contracts, typically securities
index futures contracts, in order to better manage its cash position. For
example, the use of stock index futures may permit the Fund to gain rapid
exposure to the equity markets following a large cash inflow into the Fund at
times when it is impracticable to purchase large blocks of individual
securities. The purchase of a financial futures contract may also provide the
Fund with a price advantage over the direct purchase of the underlying
securities, either based on a differential between the securities and the
futures markets or because of the lower transaction costs that are associated
with these types of instruments. The Fund may also purchase or sell options on
financial futures contracts as an attempt to hedge against market risks.
Regulations of the Commodity Futures Trading Commission limit the extent
to which mutual funds may engage in futures trading. Under these regulations,
the Fund may engage in futures transactions (i) for bona fide hedging purposes
and (ii) for non- hedging purposes, if the aggregate initial margin and premiums
paid to establish positions in futures contracts do not exceed 5% of the
liquidation value of the Fund's portfolio, after taking into account unrealized
profits and losses on the futures contracts and related options. As stated
above, the Fund intends to use futures contracts only for hedging purposes.
The Fund may purchase and sell interest rate futures contracts and
securities index futures contracts. Interest rate futures contracts obligate the
long or short holder to take or make delivery of a specified quantity of a
financial instrument during a specified future period at a specified price.
Securities index futures contracts are similar in economic effect, but they are
based on a specific index of securities (rather than on specified securities)
and are settled in cash. The Fund may also purchase and write put and call
options on financial futures contracts as an attempt to hedge against market
risks.
There are special risks associated with entering into financial futures
contracts. There may be an imperfect correlation between the price movements of
financial futures contracts and the price movements of the securities in which
the Fund invests. There is also a risk that the Fund could be unable to close a
futures position when desired because there is no liquid secondary market for
it. The skills needed to use financial futures contracts effectively are
different from those needed to select the Fund's investments. If GISC misjudges
the general direction of interest rates or markets, the Fund's overall
performance may be poorer than if no financial futures contracts had been
entered into. It is possible that the Fund could lose money on a financial
futures contract and also on the price of related securities, adversely
affecting the Fund's performance. The risk of loss in trading financial futures
contracts can be substantial due to the low margin deposits required and the
extremely high degree of leverage involved in futures pricing. A relatively
small price movement in a financial futures contract could have an immediate and
substantial impact, which may be favorable or unfavorable to a futures
contractholder. It is possible for a price-related loss to exceed the amount of
the Fund's margin deposit.
The risks associated with purchasing and writing put and call options on
financial futures contracts can be influenced by the market for financial
futures contracts. An increase in the market value of a financial futures
contract on which the Fund has written an option may cause the option to be
exercised. In this situation, the benefit to the Fund would be limited to the
value of the exercise price of the option and, if the Fund closes out the
option, the cost of entering into the offsetting transaction could exceed the
premium the Fund initially received for writing the option. In addition, the
Fund's ability to enter into an offsetting transaction depends upon the market's
demand for such financial futures contracts. If a purchased option expires
unexercised, the Fund would realize a loss in the amount of the premium paid for
the option.
GSF-3
<PAGE>
FUND MANAGEMENT AND THE INVESTMENT ADVISER
The management and affairs of the Fund are supervised by its Board of
Directors. The Board meets regularly to review the Fund's investments,
performance, expenses, and other business affairs. The Board elects the Fund's
officers. The Board has nine members. Five Directors are not "interested
persons" of the Fund, as that term is defined in the Investment Company Act of
1940 ("the 1940 Act"). The names and business experience of the Directors and
officers of the Fund are set forth in the Statement of Additional Information.
GISC serves as investment adviser and provides certain administrative
services and facilities necessary to conduct the ongoing business of the Fund.
GISC selects, buys and sells securities for the Fund; chooses brokers and
dealers to effect the transactions; and negotiates any brokerage commissions.
The Fund pays GISC an investment management fee for these services at an annual
rate of 0.50% of its average daily net assets. All payments are due on a
quarterly basis. The Fund also incurs other expenses, including legal fees,
auditors' and custodial fees, proxy solicitation expenses, and compensation of
the Directors who are not affiliates of the Fund. The Fund's overall annual
expense ratio, including the management fee and other operating expenses, was
____% of the Fund's average daily net assets for the year ended December 31,
1997. During this period, only Class I shares were offered by the Fund. The
expenses of the Class II shares of the Fund, which were not offered prior to the
date of this Prospectus, will be higher to reflect the distribution fee
associated with Class II shares, described below.
GISC is located at 201 Park Avenue South, New York, New York 10003. GISC
is wholly owned by GIAC, which is, in turn, wholly owned by The Guardian Life
Insurance Company of America ("Guardian Life"), a mutual life insurance company
organized in the State of New York in 1860. GISC is the investment adviser to
eight of the ten series funds comprising The Park Avenue Portfolio, The Guardian
Bond Fund, Inc. The Guardian Cash Fund, Inc., and The Guardian Small Cap Stock
Fund, all of which are open-end management investment companies, or series
thereof, and is the manager of another open-end management investment company.
GISC is also the principal underwriter and distributor of The Park Avenue
Portfolio and of variable annuities and variable life insurance policies issued
by GIAC. See the Statement of Additional Information.
Charles E. Albers, CFA, President of the Fund, has managed the Fund since
its inception in March, 1983. Mr. Albers also manages or co-manages the assets
of two series of The Park Avenue Portfolio (The Guardian Park Avenue Fund and
The Guardian Park Avenue Small Cap Fund), The Guardian Small Cap Stock Fund
series of GIAC Funds, Inc., and the equity assets of Guardian Life. Mr. Albers
is a Senior Vice President of Guardian Life.
The Class II shares of the Fund, which are offered through variable
annuities and variable life insurance policies issued by insurance companies
other than GIAC, bear a pro rata share of the expenses described above for Class
I shares, and also bear an annual fee of 0.25% of the average daily net assets
of the Class II shares. This fee is paid in accordance with a Distribution and
Service Plan adopted under Rule 12b-1 under the Investment Company Act of 1940.
This annual fee is used to pay for marketing and distribution expenses, and/or
ongoing shareholder services, that are provided to Class II shareholders. Some
or all of this fee may be paid to third parties that provide shareholder
services or that offer Class II shares of the Fund.
PERFORMANCE OF THE FUND
The Fund may, from time to time, provide performance information in
advertisements, sales literature or other materials furnished to existing or
prospective owners of the variable contracts through which the Fund is offered.
When performance information is provided in advertisements, it will include the
effect of all charges deducted under the terms of the specified contract, as
well as all recurring and non-recurring charges incurred by the Fund. All
performance results are historical and are not representative of future results.
Total return and average annual total return reflect the change in value
of an investment in the Fund over a specified period, assuming the reinvestment
of all capital gains distributions and income dividends. Average annual total
returns show the average change in value for each annual period within a
specified period. Total returns, which are not annualized, show the total
percentage or dollar change in value over a specified period. Promotional
materials relating to the Fund's performance will always at least provide
average annual total returns for each of a short (one to four years), medium
(five to nine years) and long (ten years or more) period of time.
The Fund may also compare its performance to other investment vehicles or
other mutual funds which have similar investment objectives or programs. Also,
the Fund may quote information from securities indices or financial and
industry or general interest publications in its promotional materials.
Additionally, the Fund's promotional materials may contain references to types
and characteristics of certain securities; features of its portfolio; financial
markets; or historical, current or prospective economic trends. Topics of
general interest, such as personal finan-
GSF-4
<PAGE>
cial planning, may also be discussed. More information about the Fund's
performance is contained in the Fund's Statement of Additional Information and
Annual Report. Free copies may be obtained by calling 1-800-221-3253 or by
writing to GISC.
CALCULATION OF NET ASSET VALUE
The Fund's net asset value per share ("NAV") is determined as of the
earlier of the close of trading on the New York Stock Exchange or 4:00 p.m.,
Eastern time, on each day on which the New York Stock Exchange is open for
business. NAV is calculated by subtracting the Fund's liabilities, including
expenses which are accrued daily, from its total assets and dividing the result
by the number of shares outstanding. The Fund values its assets at their current
market value when market quotations are readily available. If a market value
cannot be established, assets are valued at fair value as determined in good
faith by or under the direction of the Fund's Board of Directors. Short-term
securities which mature in 60 days or less are valued by using the amortized
cost method, unless the Board determines that this does not represent fair
value. Specific information about how the Fund values certain assets is set
forth in the Statement of Additional Information.
PURCHASE AND REDEMPTION OF SHARES
Fund shares are continuously offered at the then current NAV to
contractowners of variable annuity contracts and variable life insurance
policies offered by GIAC or other insurance companies. Contractowners acquire
units in the separate accounts through which these contracts are offered which
directly correspond to shares in the Fund. GIAC, or another participating
insurance company, as applicable, submits purchase and redemption orders to the
Fund based on allocation instructions for premium payments, transfer
instructions, or surrender and withdrawal requests which are furnished by such
contractowners. GIAC contractowners can send such instructions and requests to
GIAC at P.O. Box 26210, Lehigh Valley, PA 18002 by first class mail or 3900
Burgess Place, Bethlehem, PA 18017 by overnight or express mail. For contracts
owned through separate accounts of other insurance companies, please consult the
prospectus for your variable contract to determine how to purchase or redeem
shares of the Fund. Payment for redeemed shares will ordinarily be made within
three (3) business days after the Fund receives a redemption order. The
redemption price will be the NAV next determined after the separate account
processes the contractowner's instructions or request in proper form. The Fund
may suspend the right of redemption or postpone the date of payment during any
period when trading on the New York Stock Exchange is restricted, or such
Exchange is closed for other than weekends and holidays; when an emergency makes
it not reasonably practicable for the Fund to dispose of assets or calculate its
NAV; or as permitted by the SEC.
The accompanying prospectus for a variable annuity or variable life insurance
policy describes the allocation, transfer and withdrawal provisions of such
annuity or policy.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund intends to remain qualified as a regulated investment company
under the Internal Revenue Code of 1986, as amended ("Code"), so that it will
not be subject to federal income tax on net investment income and net capital
gains that are distributed to the separate accounts. Each separate account
reinvests all such distributions in additional shares of the Fund at NAV. The
Fund typically distributes any net investment income twice each year and any net
capital gains once each year. The Fund's Board of Directors can change this
policy. Contractowners who own units in a separate account which correspond to
shares in the Fund will be notified when distributions are made.
The Code and its related Treasury Department regulations require mutual
funds that are offered through insurance company separate accounts to meet
certain diversification requirements to preserve the tax-deferral benefits
provided by the variable contracts which are offered in connection with such
separate accounts. GISC intends to diversify the Fund's investments in
accordance with those requirements. The prospectuses for the variable
GSF-5
<PAGE>
annuities and variable life insurance policies describe the federal income tax
treatment of distributions from such contracts.
The foregoing is only a summary of important federal tax law provisions
that can affect the Fund. Other federal, state, or local tax law provisions may
also affect the Fund and its operations. Anyone who is considering allocating,
transferring or withdrawing monies held under a variable contract to or from
this Fund should consult a qualified tax adviser.
OTHER INFORMATION
Organization of the Fund. The Fund is a Maryland corporation which
commenced operations in April 1983. The Fund has authorized capital stock of
400,000,000 shares of $0.001 par value. The Fund currently offers its shares in
two classes, of which 300,000,000 shares are designated Class I shares and
100,000,000 shares are designated Class II shares. Unissued shares may be
redesignated by the Fund's Board of Directors. Class I shares are offered
through variable annuity contracts and variable life insurance policies issued
by GIAC, and Class II shares are offered through variable annuity contracts and
variable life insurance policies issued by other insurance companies. Each class
of shares is invested in a common investment portfolio, but has a separate
expense structure, as described in "Fund Management and the Investment Adviser".
The Fund currently has one series fund. The Board of Directors may authorize
additional classes and series of shares in the future.
Voting Rights. Through their respective separate accounts, GIAC and other
participating insurance companies are the Fund's only shareholders of record.
Nevertheless, when a shareholders' meeting occurs, each insurance company
solicits and accepts voting instructions from its contractowners who have
allocated or transferred monies for an investment in the Fund as of the record
date for the meeting. Each insurance company then votes the Fund's shares that
are attributable to its contractowners' interests in the Fund in accordance with
their instructions. Shares for which no instructions are received will be voted
in the same proportion as shares for which instructions have been received. Each
participating insurance company will vote any shares that it is entitled to vote
directly due to amounts it has contributed or accumulated in its separate
accounts in the manner described in the prospectuses for its variable annuities
and variable life insurance policies.
Each share of the Fund is entitled to one vote, and fractional shares are
entitled to fractional votes. Fund shares have non-cumulative voting rights, so
the vote of more than 50% of the shares can elect 100% of the directors. All
classes of the Fund's shares are voted together as one class, unless a matter
affects only the shareholders of a particular class. In those cases only the
shareholders of the affected class will be eligible to vote on the matter.
The Fund is not required to hold annual shareholder meetings, but special
meetings may be called to elect or remove directors, change fundamental policies
or approve an investment advisory agreement, among other things.
Availability Of The Fund. The Fund is only available to owners of variable
annuities or variable life insurance policies issued through the separate
accounts of GIAC and other insurance companies. The Fund does not currently
foresee any disadvantages to the contractowners arising from offering its shares
to variable annuity and variable life insurance policy separate accounts
simultaneously, and its Board monitors events for the existence of any material
irreconcilable conflict between or among contractowners. If a material
irreconcilable conflict arises, one or more separate accounts may withdraw their
investments in the Fund. This could possibly force the Fund to sell portfolio
securities at disadvantageous prices. GIAC or other participating insurance
companies will bear the expenses of establishing separate portfolios for
variable annuity and variable life insurance separate accounts if such action
becomes necessary; however, ongoing expenses that are ultimately borne by
contractowners will likely increase due to the loss of the economies of scale
benefits that can be provided to mutual funds with substantial assets.
Custodian, Transfer Agent And Dividend Paying Agent. State Street Bank and
Trust Company, Custody Division, 1776 Heritage Drive, North Quincy,
Massachusetts 02171, is the Fund's custodian, transfer agent and dividend paying
agent.
GSF-6
<PAGE>
THE GUARDIAN STOCK FUND, INC.
201 Park Avenue South, New York, New York 10003
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
May 1, 1998
- --------------------------------------------------------------------------------
This Statement of Additional Information is not a prospectus, but should
be read in conjunction with the Prospectus of The Guardian Stock Fund, Inc. (the
"Fund") dated May 1, 1998. The Prospectus may be obtained without charge either
by writing to Guardian Investor Services Corporation(R), 201 Park Avenue South,
New York, New York 10003 or by telephoning 1-800-221-3253. Please retain this
document for future reference.
TABLE OF CONTENTS
Page
----
Investment Restrictions.....................................................
Special Investment Techniques...............................................
Portfolio Transactions and Brokerage........................................
Fund Management.............................................................
Guardian Life and Other Fund Affiliates.....................................
Investment Adviser and Other Services.......................................
Performance Data............................................................
Calculation of Net Asset Value..............................................
Custodian and Transfer Agent................................................
Legal Opinions..............................................................
Independent Auditors and Financial Statements...............................
<PAGE>
INVESTMENT RESTRICTIONS
The Fund has adopted the following investment restrictions. Investment
restrictions designated as "fundamental" cannot be changed without the approval
of the holders of a majority of the outstanding shares of the Fund. As defined
by the Investment Company Act of 1940, as amended (the "1940 Act"), the vote of
a majority of the outstanding voting securities of the Fund means the lesser of
the vote of (a) 67 percent of the shares of the Fund at a meeting where more
than 50 percent of the outstanding voting shares are present in person or by
proxy, or (b) more than 50 percent of the outstanding voting shares of the Fund.
Following the list of fundamental investment restrictions are the Fund's
"non-fundamental" restrictions. Non-fundamental restrictions may be changed by
the Board of Directors without shareholder approval. All percentage restrictions
on investments apply when an investment is made. A later increase or decrease
beyond a specified limit that results from a change in value or net assets shall
not constitute a violation of the applicable restriction.
The following fundamental investment restrictions provide that the Fund
may not:
1. Make any investment inconsistent with the Fund's classification as a
diversified company under the Investment Company Act of 1940;
2. Borrow money or pledge its assets, except that the Fund may (i) borrow for
temporary or emergency needs, and engage in reverse repurchase agreements,
mortgage 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; (ii)
obtain such short-term credit as may be necessary for the clearance of
transactions in portfolio securities; and (iii) purchase securities on
margin to the extent permitted by applicable law;
3. Make loans to other persons except (i) loans of portfolio securities and
entry into repurchase agreements to the extent permitted under applicable
law; and (ii) to the extent that the purchase of debt obligations in which
the Fund may invest, consistent with its investment objectives and
policies, may be deemed to be loans;
4. 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 conducting their principal business activities
in the same industry or group of industries;
5. Engage in the underwriting of the securities of other issuers, except to
the extent that the Fund may be deemed to be an underwriter under the
Securities Act of 1933 in connection with the sale of portfolio
securities;
6. Purchase or sell commodities or commodity contracts, except to the extent
permitted under applicable law without registration as a commodity pool
operator under the Commodity Exchange Act (or any comparable registration
under successor legislation);
7. Purchase, hold, sell or deal in real estate, although the Fund may (i)
purchase and sell securities that are secured by real estate or interests
therein; (ii) purchase and sell securities of issuers that engage in real
estate operations, as well as real estate investment trusts and
mortgage-related securities; and (iii) hold and sell real estate acquired
by the Fund as a result of the ownership of securities; and
8. Issue any senior securities to the extent such issuance would violate
applicable law.
The following non-fundamental restrictions, which may be changed by the Board
of Directors without shareholder approval, provide that the Fund may not:
1. Invest in (i) securities which at the time of such investment are not
readily marketable; (ii) securities restricted as to resale or other
disposition; or (iii) repurchase agreements maturing in more than seven
days, if, as a result, more than 15% of the Fund's net assets (taken at
current value), or such other percentage provided by applicable law, would
then be invested in the aggregate in securities described in (i), (ii),
and (iii) above. This restriction shall not apply to securities which the
Board of Directors of the Fund has determined to be liquid pursuant to
applicable law;
2. Make short sales of securities or maintain a short position, except to the
extent permitted by applicable law; and
3. Purchase securities for the purpose of exercising control over another
company.
2
<PAGE>
SPECIAL INVESTMENT TECHNIQUES
Convertible Securities.
As described in the Prospectus, the Fund is permitted to invest in
convertible securities. Convertible securities are bonds or preferred stock
issues which may be converted at a stated price within a specified period of
time into a specific number of shares of common stock of the same or a different
issuer. Convertible securities also have characteristics similar to
non-convertible debt securities in that they ordinarily provide income with
generally higher yields than those of common stock of the same or a similar
issuer. However, convertible securities are usually subordinated to
non-convertible debt securities. Convertible securities carry the potential for
capital appreciation should the value of the underlying common stock increase,
but they are subject to a lesser risk of a decline in value, relative to the
underlying common stock, due to their fixed-income nature. Due to the conversion
feature, however, the interest rate or dividend rate on convertible securities
is generally less than would be the case if the securities were not convertible.
In evaluating a convertible security for the Fund, Guardian Investor
Services Corporation ("GISC") looks primarily at the attractiveness of the
underlying common stock and at the fundamental business strengths of the issuer.
Other factors considered by GISC include the yield of the convertible security
in relation to the yield of the underlying common stock, the premium over
investment value and the degree of call protection.
Options on Securities.
General. The Fund may purchase put and call options and write (sell)
covered call options and secured put options. As a covered call option writer,
the Fund must own securities which are acceptable for the purpose of covering
any outstanding options. So long as the Fund is obligated as a writer of a put
option, it will invest an amount not less than the exercise price of the put
option in eligible securities (i.e., cash or cash equivalents). These duties
reduce the Fund's flexibility to pursue other investment opportunities while
options are outstanding.
During the option period, the covered call writer gives up the potential
for capital appreciation above the exercise price should the underlying security
rise in value, and the secured put writer retains the risk of loss should the
underlying security decline in value. For the covered call writer, substantial
appreciation in the value of the underlying security would result in the writer
having to deliver the underlying security to the holder of the option at the
exercise price, which will likely be lower than the security's value. For the
secured put writer, substantial depreciation in the value of the underlying
security would result in the exercise of the option by the holder, thereby
obligating the writer to purchase the underlying securities at the exercise
price, which will likely exceed the security's value. If a covered call option
expires unexercised, the writer realizes a gain and the buyer a loss in the
amount of the premium. If the covered call option writer has to sell the
underlying security because of the exercise of the call option, the writer
realizes a gain or loss from the sale of the underlying security, with the
proceeds being increased by the amount of the premium. If a secured put option
expires unexercised, the writer realizes a gain and the buyer a loss in the
amount of the premium. If the secured put writer has to buy the underlying
security because of the exercise of the put option, the secured put writer
incurs an unrealized loss to the extent that the current market value of the
underlying security is less than the exercise price of the put option. However,
this would be offset in whole or in part by gain from the premium received and
any interest income earned on the investment of the premium.
The exercise price of an option may be below, equal to or above the
current market value of the underlying security at the time the option is
written. The buyer of a put who also owns the related security is protected by
ownership of a put option against any decline in that security's price below the
exercise price less the amount paid for the option. The ability to purchase put
options allows the Fund to protect capital gains in an appreciated security
which is already owned, without being required to actually sell that security.
At times the Fund may seek to establish a position in securities upon which call
options are available. By purchasing a call option the Fund is able to fix the
cost of acquiring the security, this being the cost of the call plus the
exercise price of the option. This procedure also provides some protection from
an unexpected downturn in the market, because the Fund is only at risk for the
amount of the premium paid for the call option which it can, if it chooses,
permit to expire.
The Fund may also write or purchase spread options, which are options for
which the exercise price may be a fixed monetary spread or yield spread between
the security underlying the option and another security that is used as a
benchmark. Spread options involve the same risks as are associated with
purchasing and selling options on securities generally, as described above. The
writer (seller) of a spread option which expires unexercised realizes a gain in
the amount of the premium and any interest earned on the investment of the
premium. However, if the spread option is exercised, the writer will forego the
potential for capital appreciation or incur an unrealized loss to the extent the
market value of the underlying security exceeds or is less than the exercise
price of such spread option. The purchaser of a spread option incurs costs equal
to the amount of the premium paid for such option if the spread option expires
unexercised, or the associated transaction costs if the purchaser closes out the
spread option position.
The Fund may purchase a put option and a call option, each with the same
expiration date, on the same underlying security. The Fund will profit from the
combination position if an increase or decrease in the value of the underlying
security is sufficient for the Fund to profit from exercise of either the call
option or the put option. Combined option positions involve higher transaction
costs (because of the multiple positions taken) and may be more difficult to
open and close out than other option positions.
Options on Securities Indices. The Fund may write or purchase options on
securities indices. Index options offer the Fund the opportunity to achieve many
of the same objectives sought through the use of options on individual
securities. Options on securities indices are similar to options on a security
except that, rather than the right to take or make delivery of a security at a
specified price, an option on a securities index gives the holder the right to
receive, upon exercise of the option, an amount of cash if the closing level of
the securities index upon which the option is based is greater than, in the case
of a call, or less than, in the case of a put, the exercise price of the option.
This amount of cash is equal to such difference between the closing price of the
index and the exercise price of the option. The writer of the option is
obligated, in return for the premium received, to make delivery of this amount.
Unlike security options, all settlements are in cash and gain or loss depends on
the aggregate price movements in the relevant index rather than price movements
in individual securities.
Price movements in securities which the Fund owns or intends to purchase
probably will not correlate perfectly with movements in the level of a
securities index and, therefore, the Fund bears the risk of a loss on a
securities index option which is not completely offset by movements in the price
of such securities. Because securities index options are settled in cash, a call
writer cannot determine the amount of its settlement obligations in advance and,
unlike call writing on a specific security, cannot provide in advance for, or
cover, its potential settlement obligations by acquiring and holding underlying
securities. The Fund may, however, cover call options written on a securities
index by holding a mix of securities which substantially replicate the movement
of the index or by holding a call option on the securities index with an
exercise price no higher than the call option sold.
When the Fund writes an option on a securities index, it will be required
to cover the option or to segregate assets equal in value to 100% of the
exercise price in the case of a put, or the contract value in the case of a
call. In addition, where the Fund writes a call option on a securities index at
a time when the exercise price exceeds the contract value, the Fund will
segregate, until the option expires or is closed out, cash or cash equivalents
equal in value to such excess.
Options on securities indices involve risks similar to those risks
relating to transactions in financial futures contracts described below. Also, a
purchased option may expire worthless, in which case the premium which was paid
for it is lost.
Financial Futures Transactions.
General. The Fund may enter into interest rate futures contracts and
securities index futures contracts (collectively referred to as "financial
futures contracts") primarily to manage the Fund's cash position or to hedge
(protect) against anticipated future changes in equity market conditions which
otherwise might affect adversely the value of securities which the Fund holds or
intends to purchase. A "sale" of a financial futures contract means the
undertaking of a contractual obligation to deliver the securities or the cash
value called for by the contract at a specified price during a specified
delivery period. A "purchase" of a financial futures contract means the
undertaking of a contractual obligation to acquire the securities at a specified
price during a specified delivery period.
When the Fund enters into a financial futures contract, it is required to
deposit with its custodian, on behalf of the broker, a specified amount of cash
or eligible securities called "initial margin." The initial margin required for
a financial futures contract is set by the exchange on which the contract is
traded. Subsequent payments, called "variation margin," to and from the broker
are made on a daily basis as the market price of the financial futures contract
fluctuates. At the time of delivery, pursuant to the contract, adjustments are
made to recognize differences in value arising from the delivery of securities
with a different interest rate than that specified in the contract. With respect
to securities index futures contracts, settlement is made by means of a cash
payment based on any fluctuation in the contract value since the last adjustment
in the variation margin was made.
Although some financial futures contracts by their terms call for the
actual delivery or acquisition of securities, in most cases the contractual
commitment is closed out before delivery of the security. The offsetting of a
contractual obligation is accomplished by purchasing (or selling as the case may
be) on a commodities or futures exchange an identical financial futures contract
calling for delivery in the same month. Such a transaction, if effected through
a member of an exchange, cancels the obligation to make or take delivery of the
securities. All transactions in the futures market are made, offset or fulfilled
through a clearing house associated with the exchange on which the contracts are
traded. The Fund will incur brokerage fees when it purchases or sells financial
futures contracts, and will be required to maintain margin deposits. If a liquid
secondary market does not exist when the Fund wishes to close out a financial
futures contract, it will not be able to do so and will continue to be required
to make daily cash payments of variation margin in the event of adverse price
movements.
Special Considerations Relating to Financial Futures Contracts. Financial
futures contracts entail risks. If the investment adviser's judgment about the
general direction of interest rates or markets is wrong, the overall performance
may be poorer than if the Fund had not entered into financial futures contracts.
For example, in some cases, securities called for by a financial futures
contract may not have been issued at the time the contract was written. There
may also be an imperfect correlation between movements in prices of financial
futures contracts and portfolio securities being hedged. The degree of
difference in price movement between financial futures contracts and the
securities being hedged depends upon such things as differences between the
securities being hedged and the securities underlying the financial futures
contracts, and variations in speculative market demand for financial futures
contracts and securities. In addition, the market prices of financial futures
contracts may be affected by certain factors. If participants in the futures
market elect to close out their contracts through offsetting transactions rather
than meet margin requirements, distortions in the normal relationship between
the securities and financial futures markets could result. Price distortions
could also result if investors in financial futures contracts decide to make or
take delivery of underlying securities rather than engage in closing
transactions, which would reduce the liquidity of the futures market. In
addition, because the margin requirements in the futures markets are less
onerous than margin requirements in the cash market, increased participation by
the speculators in the futures market could cause temporary price distortions.
Due to the possibility of price distortions in the futures market and because
there may be an imperfect correlation between movements in the prices of
securities and movements in the prices of financial futures contracts, a correct
forecast of market trends by the investment adviser may still not result in a
successful hedging transaction. If this should occur, the Fund could lose money
on the financial futures contracts and also on the value of their portfolio
securities.
Regulatory Restrictions.
To the extent required to comply with the 1940 Act and rules and
interpretations thereunder, the Fund may not maintain open short positions in
financial futures contracts, call options written on financial futures contracts
or call options written on indexes if, in the aggregate, the market value of all
such open positions exceeds the current value of the securities in its
portfolio, plus or minus unrealized gains and losses on the open positions,
adjusted for the historical relative volatility of the relationship between the
portfolio and the positions. When purchasing a financial futures contract or
writing a put option on a financial futures contract, the Fund must segregate
cash, cash-equivalents (including any margin) or liquid high-grade debt
obligations equal to the market value of such contract. These cover and
segregation requirements may limit the Fund's ability to pursue other investment
opportunities.
In order to comply with the Commodity Futures Trading Commission
Regulation 4.5 and thereby avoid being deemed a "commodity pool operator," the
Fund will use commodity futures or commodity options contracts solely for bona
fide hedging purposes within the meaning and intent of Regulation 1.3(z), or,
with respect to positions in commodity futures and commodity options contracts
that do not come with the meaning and intent of Regulation 1.3(z), the aggregate
initial margin and premiums required to establish such positions will not exceed
5% of the fair market value of the assets of the Fund, after taking into account
unrealized profits and unrealized losses on any such contracts it has entered
into. In the case of an option that is in-the-money at the time of purchase, the
in-the-money amount (as defined in Section 190.01(x) of the CFTC Regulations)
may be excluded in computing such 5%.
Options on Financial Futures Contracts.
The Fund may purchase and write call and put options on financial futures
contracts. An option on a financial futures contract gives the purchaser the
right, in return for the premium paid, to assume a position in a financial
futures contract at a specified exercise price at any time during the period of
the option. Upon exercise, the writer of the option delivers the financial
futures contract to the holder at the exercise price. The Fund would be required
to deposit with its custodian initial margin and variation margin with respect
to put and call options on a financial futures contract it has written.
Foreign Securities and Forward Foreign Currency Transactions.
From time to time, the Fund may invest in securities of domestic (U.S.) or
foreign companies which are issued and settled overseas. Investing overseas
involves different and additional investment risks from investing in the U.S.
For example: (1) there may be less publicly available or less reliable
information about foreign companies and such companies may be subject to less
regulation and supervision than U.S. companies; (2) foreign stock exchanges and
brokers may be subject to less governmental regulation than similar U.S.
entities; (3) securities of foreign companies may be less liquid or more
volatile than securities of U.S. companies; (4) foreign companies may not be
subject to the same accounting, auditing, examination and recordkeeping
requirements which are imposed on U.S. companies; and (5) securities issued by
foreign companies may be adversely affected by political or economic unrest,
restrictions on the flow of international capital, withholding taxes on interest
or dividend income, expropriation, nationalization, confiscatory taxation,
investment or currency exchange controls, or other foreign governmental laws or
restrictions applicable to the payment of such securities. In addition, the time
period for settlement of transactions in foreign securities may be longer than
the corresponding period for settlement of transactions in domestic securities.
It may also be more difficult to obtain and enforce judgments against foreign
entities.
The foreign securities held by the Fund may be denominated in foreign
currencies and the Fund may temporarily hold foreign currency in connection with
such investments. As a result, the value of the assets held by the Fund may be
affected favorably or unfavorably by changes in foreign currency exchange rates
and exchange control regulations. The Fund may enter into forward foreign
currency exchange contracts ("forward currency contracts") in an effort to
control some of the uncertainties of foreign currency exchange rate
fluctuations. A forward currency contract is an agreement to purchase or sell a
specific currency at a specified future date and price agreed to by the parties
at the time of entering into the contract. The Fund will not engage in forward
currency contracts for speculation, but only as an attempt to hedge against
changes in currency exchange rates affecting the values of securities which it
holds or intends to purchase. Thus, the Fund will not enter into a forward
currency contract if such contract would obligate the Fund to deliver an amount
of foreign currency in excess of the value of the Fund's portfolio securities or
other assets denominated in that currency.
The Fund will normally be expected to use forward currency contracts to
fix the value of certain securities it has agreed to buy or sell. For example,
when the Fund enters into a contract to purchase or sell securities denominated
in a particular foreign currency, the Fund could effectively fix the maximum
cost of those securities by purchasing or selling a foreign currency contract,
for a fixed value of another currency, in the amount of foreign currency
involved in the underlying transaction. In this way, the Fund can protect the
value of securities in the underlying transaction from an adverse change in the
exchange rate between the currency of the underlying securities in the
transaction and the currency denominated in the foreign currency contract,
during the period between the date the security is purchased or sold and the
date on which payment is made or received.
The Fund may also use forward currency contracts to hedge the value, in
U.S. dollars, of securities it currently owns. For example, if the Fund holds
securities denominated in a foreign currency and anticipates a substantial
decline (or increase) in the value of that currency against the U.S. dollar, the
Fund may enter into a foreign currency contract to sell (or purchase), for a
fixed amount of U.S. dollars, the amount of foreign currency approximating the
value of all or a portion of the securities held which are denominated in such
foreign currency.
Upon the maturity of a forward currency transaction, the Fund may either
accept or make delivery of the currency specified in the contract or, at any
time prior to maturity, enter into a closing transaction which involves the
purchase or sale of an offsetting contract. An offsetting contract terminates
the Fund's contractual obligation to deliver the foreign currency pursuant to
the terms of the forward currency contract by obligating the Fund to purchase
the same amount of the foreign currency, on the same maturity date and with the
same currency trader, as specified in the forward currency contract. The Fund
will realize a gain or loss as a result of entering into such an offsetting
contract to the extent the exchange rate between the currencies involved moved
between the time of the execution of the original forward currency contract and
the offsetting contract.
The use of forward currency contracts to protect the value of securities
against a decline in the value of a currency does not eliminate fluctuations in
the underlying prices of the securities the Fund owns or intends to acquire, but
it does fix a future rate of exchange. Although such contracts minimize the risk
of loss resulting from a decline in the value of the hedged currency, they also
limit the potential for gain resulting from an increase in the value of the
hedged currency. The benefits of forward currency contracts to the Funds will
depend on the ability of the Fund's investment adviser to accurately predict
future currency exchange rates.
PORTFOLIO TRANSACTIONS AND BROKERAGE
GISC currently serves as investment adviser to several other
Guardian-sponsored mutual funds and may act as investment adviser to others in
the future. GISC allocates purchase and sale transactions among the Fund and
3
<PAGE>
its other mutual fund clients as it deems equitable. GISC is also registered
with the Securities and Exchange Commission ("SEC") and the National Association
of Securities Dealers, Inc. as a broker-dealer. GISC has no formula for the
distribution of brokerage business when it places orders to buy and sell
approved investments. For over-the-counter transactions, GISC will attempt to
deal with a primary market maker unless better prices and execution are
available elsewhere. In allocating portfolio transactions to different brokers,
GISC gives consideration to brokers whom it believes can obtain the best price
and execution of orders, and to brokers who furnish statistical data, research
and other factual information. GISC is authorized to pay a commission in excess
of that which another broker may charge for effecting the same transaction if
GISC considers that the commissions it pays for brokerage, research services and
other statistical data are appropriate and reasonable for the services rendered.
The research services and statistical data which GISC receives in connection
with the Fund's portfolio transactions may be used by GISC to benefit its other
clients and will not necessarily be used in connection with the Fund.
For the years ended December 31, 1995, 1996 and 1997, the Fund paid
brokerage commissions of $2,410,364, $________ and $________, respectively.
[Brokerage commissions increased significantly in 1997 because the Fund
experienced very favorable inflows from GIAC contractowners, which increased
investment opportunities.] The Fund's portfolio turnover rates for the years
ended December 31, 1995, 1996 and 1997 were 78%, 66% and ___%, respectively.
Changes in the Fund's portfolio turnover rate do not indicate any change in the
investment policy. GISC does not participate in commissions paid by the Fund to
other brokers or dealers and does not knowingly receive any reciprocal business
directly or indirectly as a result of paying commissions to other brokers or
dealers.
FUND MANAGEMENT
The directors and officers of the Fund are named below. Information about
their principal occupations during the past five years and certain other current
affiliations is also provided. The business address of each director and officer
is 201 Park Avenue South, New York, New York 10003 unless otherwise noted. The
"Guardian Fund Complex" referred to in this biographical information is
comprised of (1) the Fund, (2) The Guardian Bond Fund, Inc., (3) The Guardian
Cash Fund, Inc., (4) The Park Avenue Portfolio (a series trust that issues its
shares in ten series) and (5) GIAC Funds, Inc. (formerly GBG Funds, Inc.) (a
series fund that issues its shares in three series).
Name and Address Title Business History
- ---------------- ----- ----------------
CHARLES E. ALBERS (57) President Senior Vice President,
The Guardian Life
Insurance Company of
America. Vice President,
Equity Securities, The
Guardian Insurance &
Annuity Company, Inc.
Executive Vice President
of Guardian Investor
Services Corporation and
Guardian Asset Management
Corporation. Officer of
various mutual funds
within the Guardian Fund
Complex.
JOHN C. ANGLE* (74) Director Retired. Former Chairman
3800 South 42nd Street of the Board and Chief
Lincoln, Nebraska 68506 Executive Officer, The
Guardian Life Insurance
Company of America;
Director 1/78-present.
Director (Trustee) of
Guardian Investor
Services Corporation from
6/82-2/96 and The
Guardian Insurance &
Annuity Company, Inc.
Director (Trustee) of
various mutual funds
within the Guardian Fund
Complex.
JOSEPH A. CARUSO (46) Secretary Vice President and
Corporate Secretary, The
Guardian Life Insurance
Company of America
3/96-present; Second Vice
President and Corporate
Secretary 1/95-2/96;
Corporate Secretary prior
thereto. Secretary, The
Guardian Insurance &
Annuity Company, Inc.,
Guardian Investor
Services Corporation,
Guardian Asset Management
Corporation, Park Avenue
Life Insurance Company,
Guardian Baillie Gifford
Limited and various
mutual funds within the
Guardian Fund Complex.
- ----------
* Director who is deemed to be an "interested person" under the 1940 Act.
4
<PAGE>
Name and Address Title Business History
- ---------------- ----- ----------------
FRANK J. FABOZZI, PH.D. (49) Director Adjunct Professor of
858 Tower View Circle Finance, School of
New Hope, Pennsylvania 18938 Management -- Yale
University 2/94-present;
Visiting Professor of
Finance and Accounting,
Sloan School of
Management --
Massachusetts Institute
of Technology prior
thereto. Editor, Journal
of Portfolio Management.
Director (Trustee) of
various mutual funds
within the Guardian Fund
Complex. Director
(Trustee) of various
closed-end investment
companies sponsored by
Blackstone Financial
Management.
ARTHUR V. FERRARA* (67) Director Retired. Chairman of the
70 Baldwin Farms South Board and Chief Executive
Greenwich, CT 06831 Officer, The Guardian
Life Insurance Company of
America 1/93-12/95;
President and Chief
Executive Officer prior
thereto; Director
1/81-present. Director
(Trustee) of Guardian
Investor Services
Corporation, Guardian
Asset Management
Corporation, The Guardian
Insurance & Annuity
Company, Inc. and various
mutual funds within the
Guardian Fund Complex.
LEO R. FUTIA* (78) Director Retired. Former Chairman
18 Interlaken Road of the Board and Chief
Greenwich, Connecticut 06830 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
various mutual funds
within the Guardian Fund
Complex. Director
(Trustee) of various
mutual funds sponsored by
Value Line, Inc.
WILLIAM W. HEWITT, JR. (69) Director Retired. Former Executive
P.O. Box 2359 Vice President, Shearson
Princeton, New Jersey 08543 Lehman Brothers, Inc.
Director (Trustee) of
various mutual funds
within the Guardian Fund
Complex.
THOMAS R. HICKEY, JR. (45) Vice President Vice President, Equity
Operations, The Guardian
Life Insurance Company of
America. Vice President,
Administration, The
Guardian Insurance &
Annuity Company, Inc.
Vice President, Guardian
Investor Services
Corporation and various
mutual funds within the
Guardian Fund Complex.
ANN T. KEARNEY (46) Controller Second Vice President,
Group Pensions, The
Guardian Life Insurance
of America 1/95 to
present; Assistant Vice
President and Equity
Controller 6/94-12/94;
Assistant Controller
prior thereto. Second
Vice President of the
Guardian Insurance &
Annuity Company, Inc. and
Guardian Investor
Services Corporation.
Controller of various
mutual funds within the
Guardian Fund Complex.
SIDNEY I. LIRTZMAN, PH.D. (67) Director Professor of Management
38 West 26th Street 9/67-present and Acting
New York, New York 10010 Dean of the School of
Business Management
2/95-present, City
University of New York --
Baruch College.
President, Fairfield
Consulting Associates,
Inc.; Director (Trustee)
of various mutual funds
within the Guardian Fund
Complex.
- ----------
* Director who is deemed to be an "interested person" under the 1940 Act.
5
<PAGE>
Name and Address Title Business History
- ---------------- ----- ----------------
NIKOLAOS D. MONOYIOS (48) Vice President Vice President, Equity
Securities, The Guardian
Life Insurance Company of
America. Vice President,
Guardian Investor
Services Corporation,
Guardian Asset Management
Corporation and The Park
Avenue Portfolio.
JOHN B. MURPHY (53) Treasurer Second Vice President,
Equity Securities, The
Guardian Life Insurance
Company of America.
Second Vice President,
The Park Avenue
Portfolio.
FRANK L. PEPE (55) Vice President Vice President and Equity
Controller, The Guardian
Life Insurance Company of
America 1/96-present;
Second Vice President and
Equity Controller prior
thereto. Vice President
and Controller, The
Guardian Insurance &
Annuity Company, Inc. and
Guardian Investor
Services Corporation.
Officer of various mutual
funds within the Guardian
Fund Complex.
RICHARD T. POTTER, JR. (43) Counsel Vice President and Equity
Counsel, The Guardian
Life Insurance Company of
America 1/96-present;
Second Vice President and
Equity Counsel prior
thereto. Counsel, The
Guardian Insurance &
Annuity Company, Inc.,
Guardian Investor
Services Corporation,
Guardian Asset Management
Corporation and various
mutual funds within the
Guardian Fund Complex.
JOSEPH D. SARGENT*. (60) Director President, Chief
Executive Officer and
Director, The Guardian
Life Insurance Company of
America, since 1/96;
President and Director
prior thereto. Director,
President and Chief
Executive Officer of The
Guardian Insurance &
Annuity Company, Inc.,
Guardian Asset Management
Corporation and Park
Avenue Life Insurance
Company. Director,
Guardian Investor
Services Corporation.
Director (Trustee) of
various mutual funds
within the Guardian Fund
Complex.
CARL W. SCHAFER (62) Director President, Atlantic
P.O. Box 1164 Foundation (charitable
Princeton, New Jersey 08542 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 Nutraceutrix Inc.
(biotechnology). Chairman
of the Investment
Advisory Committee of the
Howard Hughes Medical
Institute 1985-1992.
Director (Trustee) of
various mutual funds
within the Guardian Fund
Complex. Director
(Trustee) of various
mutual funds sponsored by
Mitchell Hutchins Asset
Management, Inc. and
PaineWebber, Inc.
ROBERT G. SMITH, PH.D. (65) Director President, Smith
132 East 72nd Street Affiliated Capital Corp.
New York, New York 10028 Director (Trustee) of
various mutual funds
within the Guardian Fund
Complex.
- ----------
* Director who is deemed to be an "interested person" under the 1940 Act.
6
<PAGE>
The Fund pays Directors who are not "interested persons" directors' fees
of $350 per meeting and an annual retainer of $500. Directors who are
"interested persons," except Mr. Sargent, receive the same fees, but they are
paid by GISC. Mr. Sargent receives no compensation for his services as a Fund
Director. All officers of the Fund are employees of Guardian Life; they receive
no compensation from the Fund.
Each Fund Director is also a director of The Guardian Bond Fund, Inc., The
Guardian Cash Fund, Inc., and GIAC Funds, Inc. (formerly GBG Funds, Inc.), a
series fund consisting of Baillie Gifford International Fund, Baillie Gifford
Emerging Markets Fund and The Guardian Small Cap Stock Fund, and a trustee of
The Park Avenue Portfolio, a series trust consisting of The Guardian Park Avenue
Fund, The Guardian Park Avenue Small Cap Fund, The Guardian Park Avenue
Tax-Efficient Fund, The Guardian Investment Quality Bond Fund, The Guardian
Tax-Exempt Fund, The Guardian High Yield Fund, The Guardian Cash Management
Fund, The Guardian Baillie Gifford International Fund, The Guardian Baillie
Gifford Emerging Markets Fund and The Guardian Asset Allocation Fund. The Fund
and the other funds named in this paragraph are a "Fund Complex" for purposes of
the federal securities laws. The following table provides information about the
compensation paid by the Fund and the Fund Complex to the Fund's Directors for
the year ended December 31, 1997.
Compensation Table*
<TABLE>
<CAPTION>
Total Compensation
Aggregate Accrued Pension or Estimated from the Fund and
Compensation Retirement Benefits Annual Benefits Other Members of
Name and Title From the Fund** Paid by the Fund Upon Retirement the Fund Complex**
- -------------- --------------- ---------------- --------------- ------------------
<S> <C> <C> <C> <C>
Frank J. Fabozzi
Director $ N/A N/A $
William W. Hewitt, Jr.
Director N/A N/A
Sidney I. Lirtzman
Director N/A N/A
Carl W. Schafer
Director N/A N/A
Robert G. Smith
Director N/A N/A
</TABLE>
* Directors who are "interested persons" of the Fund are not compensated by
the Fund, so information about their compensation is not included in this
table.
** Includes compensation paid to attend meetings of the Board's Audit
Committee.
The Fund's officers and directors had an aggregate interest of less than
1% in the Fund's outstanding shares as of April 1, 1998.
GUARDIAN LIFE AND OTHER FUND AFFILIATES
As of April 1, 1998, The Guardian Insurance & Annuity Company, Inc.
("GIAC") owned 100% of the Fund's outstanding shares. Such shares were allocated
among separate accounts established by GIAC. GIAC is a wholly owned subsidiary
of Guardian Life. The executive offices of GIAC and Guardian Life are located at
201 Park Avenue South, New York, New York 10003.
INVESTMENT ADVISER AND OTHER SERVICES
Under the investment advisory agreement between the Fund and GISC, GISC
furnishes investment advice and provides or pays for certain of the Fund's
administrative costs. Among other things, GISC pays the fees and expenses of the
Fund Directors who are interested persons under the 1940 Act. Under the
investment advisory agreement, GISC has also agreed to assume those operating
expenses of the Class I shares of the Fund (excluding interest charges and
income, franchise and other taxes) which exceed one percent (1%) of the Fund's
average daily net assets for any fiscal year. For the year ended December 31,
1997, the ratio of operating expenses to average daily net assets of the Fund
did not exceed 1%, so GISC was not obligated to assume any such expenses. From
time to time, GISC may, at its discretion, assume certain of the Fund's ordinary
operating expenses when they are less than 1% of average daily net assets.
For the years ended December 31, 1995, 1996 and 1997, the Fund paid GISC
$6,731,656, $9,077,501 and $_________, respectively, under the investment
advisory agreement.
7
<PAGE>
The investment advisory agreement between the Fund and GISC will continue
in full force and effect from year to year so long as its continuance is
specifically approved at least annually by vote of a majority of the Fund's
outstanding voting shares, or by vote of the Fund's Board of Directors,
including a majority of the Directors who are not parties to the agreement or
"interested persons" of the Fund or of GISC, cast in person at a meeting called
for that purpose. The agreement will terminate automatically upon its
assignment, and may be terminated without penalty at any time by either party
upon 60 days' written notice.
If the investment advisory agreement is terminated and it is not replaced
by an agreement with another affiliate of Guardian Life, the Fund's continued
use of the name "The Guardian Stock Fund, Inc." is subject to the approval of
Guardian Life, because Guardian Life maintains the exclusive ownership interest
of the service mark "The Guardian Stock Fund, Inc."
A service agreement between GISC and Guardian Life provides that Guardian
Life will furnish the office space, clerical staff, services and facilities
which GISC needs to perform under the investment advisory agreement. GISC's
officers are salaried employees of Guardian Life; they receive no compensation
from GISC. GISC reimburses Guardian Life for its expenses under the service
agreement.
Under a Distribution Plan adopted by the Fund pursuant to Rule 12b-1 under
the 1940 Act (the "12b-1 Plan"), the Fund's Class II shares are authorized to
pay a monthly 12b-1 fee at an annual rate of up to 0.25% of average daily net
assets of the Class II shares as compensation for distribution and shareholder
servicing provided to Class II shareholders of the Fund. The 12b-1 fee may be
paid to third parties which may enter into agreements with GIAC to offer Class
II shares of the Fund under variable contracts issued by insurance companies
other than GIAC. Under the 12b-1 Plan, the fee may be used to pay for
communications equipment charges, printing prospectuses, statements of
additional information and reports for prospective shareholders, the costs of
printing sales literature and advertising materials, training and educating
sales personnel and other distribution-related overhead.
The Fund, on behalf of the Class II shares, has entered into a
Distribution Agreement with GISC to effectuate the 12b-1 Plan. The Fund does not
pay GISC any additional amount under the Distribution Agreement. Shareholders
are not responsible for any additional fee if the 12b-1 fee is not sufficient to
pay all the distribution expenses of the Class II shares. Any such excess will
be paid by GISC, and will not be carried forward and assessed against the 12b-1
fees due in succeeding years. Similarly, if the 12b-1 fee is greater than the
amounts spent in any year on distribution-related services on behalf of the
Class II shares, GISC is entitled to retain the excess. The Fund's Board of
Directors may negotiate changes to the 12b-1 Plan to reduce the amount of the
12b-1 fee or to add services, or the Board may determine that the excess is
justifiable in the circumstances.
The 12b-1 Plan specifically provides that while it is in effect, the
selection and nomination of the Fund's Board who are not "interested persons" of
the Fund, as that term is defined in the 1940 Act, shall be made solely at the
discretion of the Directors who are not interested persons of the Fund. The fees
to be paid under the 12b-1 Plan may not be materially changed without approval
by vote of: (1) a majority of the Board; (2) a majority of the Directors who are
not "interested persons" of the Fund and who have no direct or indirect
financial interest in the operations of the 12b-1 Plan or related agreements
("Independent Directors"); and (3) a majority of the Fund's outstanding voting
Class II shares, as defined in the 1940 Act.
The 12b-1 Plan will continue from year to year if such continuance is
specifically approved by vote of the Board, and by vote of the Independent
Directors, cast in person at a meeting called for the purpose of voting on the
12b-1 Plan.
PERFORMANCE DATA
As described in the Prospectus, the Fund may state its cumulative total
return and average annual total return in advertisements, sales materials and
communications with existing or prospective owners of variable contracts.
"Cumulative total returns" and "average annual total returns" measure both net
investment income and realized and unrealized appreciation or depreciation for a
specified period, assuming reinvestment of capital gains distributions and
income dividends. Average annual total returns are annualized, so they show the
average annual percentage change over the specified period. Cumulative total
returns are not annualized, so they show the aggregate percentage or dollar
value change over the specified period. Because Class II shares had not
commenced operations prior to January 1, 1998, no information is provided for
Class II shares.
The tables below show the Fund's returns (Class I shares only) for the
periods noted. These figures reflect the reinvestment of all capital gains
distributions and income dividends paid by the Fund, and the deduction of all
Fund expenses. The actual returns for owners of variable annuities or variable
life insurance policies will be lower to reflect the effects of charges deducted
under the terms of the specific contracts.
Guardian
Stock Fund
Year Ended December 31, Total Return
______________________ ___________
1983*....................... 10.28 %
1984........................ 10.79 %
1985........................ 32.01 %
1986........................ 17.10 %
1987........................ 1.87 %
1988........................ 20.37 %
1989........................ 23.55 %
1990........................ (11.85)%
1991........................ 35.96 %
1992........................ 20.07 %
1993........................ 19.96 %
1994........................ (1.27)%
1995........................ 34.65 %
1996........................ 26.90 %
1997........................ _____ %
Cumulative and
Average Annual
Period Ended December 31, 1997 Total Returns
----------------------------- ------------
Lifetime Total Return of the Fund*........................ ______%
Average Annual Lifetime Total Return of the Fund........ ______%
Ten-Year Total Return..................................... ______%
Average Annual Ten-Year Total Return.................... ______%
Five-Year Total Return.................................... ______%
Average Annual Five-Year Total Return................... ______%
One-Year Total Return..................................... ______%
- ----------
* Beginning April 13, 1983 (commencement of Fund's investment operations).
8
<PAGE>
Stock prices fluctuated during the periods covered by the tables and the
results illustrated above are not representative of future performance.
The Fund uses the following standardized formula prescribed by the SEC to
compute its average annual total return.
P(1 + T)^n = ERV
Where: P = a hypothetical initial purchase order of $1,000 (No
sales load is deducted as Fund shares are sold at
net asset value
T = average annual total return
n = number of years
ERV = ending redeemable value of the hypothetical $1,000
purchase at the end of the period
Total return is calculated in a similar manner, except the results are not
annualized.
The following example shows the average annual total return performance of
the Class I shares of the Fund for the periods indicated by showing the average
annual percentage change for each period and the ending redeemable value of a
$1,000 investment. The example takes into account all Fund expenses and assumes
reinvestment of all capital gains distributions and income dividends, but does
not take into account charges deducted under the terms of a shareholder's
variable contracts or federal income taxes and tax penalties that may be
incurred when distributions are made from such variable contracts.
% Change ERV
--------- ----
For the year ended December 31, 1997................ % $
For the 5 years ended December 31, 1997............. % $
For the 10 years ended December 31, 1997............ % $
For the life of the Fund through December 31, 1997.. % $
The Fund may also compare its performance to that of other mutual funds
with similar investment objectives or programs and may quote information from
financial and industry or general interest publications in its promotional
materials. Additionally, the Fund's promotional materials may contain references
to types and characteristics of certain securities; features of its portfolio;
financial markets; or historical, current or prospective economic trends. Topics
of general interest, such as personal financial planning, may also be discussed.
Performance calculations contained in reports by Lipper Analytical
Services, Inc., CDA Investment Technologies, Inc., Morningstar, The WM Company,
Variable Annuity & Research Data Service or industry or financial publications
of general interest such as Business Week, Financial World, Forbes, Financial
Times, The Wall Street Journal, The New York Times, Barron's and Money which may
be quoted by the Fund are often based upon changes in net asset value with all
dividends reinvested and may not reflect the imposition of charges deducted
under the terms of specific variable contracts.
The Fund's performance figures are based upon historical results and do
not represent future performance. Returns on net asset value will fluctuate.
Factors affecting the Fund performance include general market conditions,
operating expenses and investment management. Shares of the Fund are redeemable
on behalf of contractowners at net asset value, which may be more or less than
original cost.
CALCULATION OF NET ASSET VALUE
The Fund's net asset value per share is determined as of the earlier of
4:00 p.m. Eastern time or the close of trading on the NYSE on each day on which
the NYSE is open for business. The net asset value per share is calculated by
adding the value of all securities, cash or other assets, subtracting
liabilities, dividing the remainder by the number of shares outstanding and
adjusting the results to the nearest full cent per share.
The calculation of the Fund's net asset value may not occur
contemporaneously with the determination of the value of any foreign securities
included in such calculation because trading on foreign exchanges may not take
place every day the NYSE is open and the NYSE may be closed when foreign
exchanges are open for business.
Securities Valuations. Securities which are listed or traded on any U.S.
or foreign securities exchange or on the NASDAQ National Market System are
valued at the last sale price or, if there have been no sales during the day, at
the mean of the closing bid and asked prices. Where a security is traded on more
than one exchange, the security is valued on the exchange on which it is
principally traded unless it was not traded on that exchange on the date in
question. In such cases, the last sale price of the security on other exchanges
shall be used. Securities traded both on an exchange and in the over-the-counter
markets will be valued according to the broadest and most representative market.
Investments in U.S. government securities (other than short-term securities) are
valued at the average of the quoted bid and asked price in the over-the-counter
market. Certain debt securities
9
<PAGE>
may be valued each business day by an independent pricing service ("Service").
Debt securities for which quoted bid prices, in the judgment of the Service, are
readily available and are 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
from dealers in 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 for securities of comparable
quality, coupon, maturity and type; indications as to values from dealers; and
general market conditions. Certain debt securities, including securities for
which market quotations are not readily available, such as illiquid securities,
are valued at fair value as determined in good faith by or under the direction
of the Fund's Board of Directors. Repurchase agreements are carried at cost
which approximates market value.
CUSTODIAN AND TRANSFER AGENT
State Street Bank and Trust Company ("State Street Bank"), Custody
Division, 1776 Heritage Drive, North Quincy, Massachusetts 02171, is the
custodian of the Fund's assets. Portfolio securities purchased for the Fund
outside of the U.S. are cleared through foreign depositories and are maintained
in the custody of foreign banks and trust companies which are members of State
Street Bank's Global Custody Network. State Street Bank and each of the foreign
custodial institutions holding portfolio securities of the Fund have been
approved by or under the direction of the Board in accordance with regulations
under the 1940 Act.
To the extent required by the SEC, the Board will review whether it is in
the best interest of the Fund and its shareholders to maintain Fund assets in
each foreign custodial institution. However, there can be no assurance that the
Fund will not be adversely affected by any non-investment risks associated with
holding assets abroad. Such risks may be greater than those associated with
holding assets in the U.S.
State Street Bank is also the Fund's transfer agent and dividend paying
agent. As such, State Street Bank issues and redeems shares of the Fund and
distributes dividends to the separate accounts which invest in the Fund's shares
on behalf of variable contractowners.
State Street Bank plays no part in formulating the investment policies of
the Fund or in determining which portfolio securities are to be purchased or
sold by the Fund.
LEGAL OPINIONS
The legality of the Fund shares described in the Prospectus has been
passed upon by Richard T. Potter, Jr., Esq., Vice President and Equity Counsel,
The Guardian Life Insurance Company of America, who is also Counsel of the Fund.
Federal securities law matters relating to the Fund have been passed upon by the
law firm of Vedder, Price, Kaufman & Kammholz of Chicago, Illinois.
INDEPENDENT AUDITORS AND FINANCIAL STATEMENTS
The independent auditors of the Fund are Ernst & Young LLP, 787 Seventh
Avenue, New York, New York 10019. Ernst & Young LLP audited and reported on the
financial statements of the Fund which appear in the Fund's Annual Report to
Shareholders for the year ended December 31, 1997. That Annual Report is
incorporated by reference in this Statement of Additional Information.
10
<PAGE>
THE GUARDIAN STOCK FUND, INC.
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements (incorporated by reference in Part B):
Schedule of Investments as of December 31, 1996
Statement of Assets and Liabilities as of December 31, 1996
Statement of Operations for the Year Ended December 31, 1996
Statement of Changes in Net Assets for the Years Ended December 31, 1996
and 1995
Financial Highlights
Notes to Financial Statements
Report of Ernst & Young LLP, Independent Auditors
(b) Exhibits
Number Description
-------- -----------
1 -- Form of Amendment and Restatement of Articles of Incorporation
2 -- By-Laws
3 -- Not Applicable
4 -- Not Applicable
5 -- Investment Advisory Agreement
6(a) -- Selected Dealers Agreement(1)
6(b) -- Distribution Agreement(1)
7 -- Not Applicable
8 -- Custodian Agreement and Amendment to Custodian Agreement
9 -- Transfer Agency Agreement
10(a) -- Opinion and Consent of Counsel(4)
10(b) -- Consent of Counsel
11(a) -- Consent of Ernst & Young LLP*
11(b) -- Consent of Vedder, Price, Kaufman & Kammholz
12 -- Not Applicable
13 -- Letter from The Guardian Insurance & Annuity Company, Inc. with
respect to providing the initial capital for the Registrant(1)
14(a) -- Individual Retirement Account Custodial Agreement(2)
14(b) -- Defined Contribution Prototype and Trust(2)
14(c) -- Defined Benefit Pension Plan and Trust(2)
15 -- Not Applicable
16(a) -- Powers of Attorney executed by a majority of the Board of
Directors and certain principal officers of the Fund(3)
16(b) -- Power of Attorney executed by Frank J. Fabozzi(5)
16(c) -- Power of Attorney executed by Joseph D. Sargent(5)
16(d) -- Power of Attorney executed by Carl W. Schafer(5)
16(e) -- Schedule for Computation of Performance Quotations(3)
27 -- Financial Data Schedule*
* To be filed by amendment.
- ----------
(1.) Incorporated by reference to Registrant's filing (Reg. No. 2-81149) of
March 29, 1983.
(2.) Incorporated by reference to Post-Effective Amendment No. 5 to the
Registrant's registration statement on Form N-1A (Reg. No. 2-81149), filed
April 23, 1987.
(3.) Incorporated by reference to Post-Effective Amendment No. 9 to the
Registrant's registration statement on Form N-1A (Reg. No. 2-81149), filed
April 22, 1991.
(4.) Incorporated by reference to Post-Effective Amendment No. 10 to the
Registrant's registration statement on Form N-1A (Reg. No. 2-81149), filed
April 17, 1992.
(5.) Incorporated by reference to Post-Effective Amendment No. 15 to the
Registrant's registration statement on Form N-1A (Reg. No. 2-81149), filed
April 23, 1997.
C-1
<PAGE>
Item 25. Persons Controlled by or Under Common Control with Registrant
The following list sets forth the persons directly controlled by The
Guardian Life Insurance Company of America ("Guardian Life") as of February 1,
1998:
Percentage of
State of Incorporation Voting Securities
Name of Entity or Organization Owned
------------ ------------------ -------------
The Guardian Insurance & Delaware 100%
Annuity Company, Inc.
Guardian Asset Management Delaware 100%
Corporation
Park Avenue Life Delaware 100%
Insurance Company
Guardian Reinsurance Connecticut 100%
Services Inc.
Physicians Health Delaware 14%
Services, Inc.
Private Healthcare Delaware 14%
Systems, Inc.
Managed Dental California 100%
Care, Inc.
The Guardian Baillie Gifford Massachusetts 30%
International Fund
The Guardian Investment Massachusetts 52%
Quality Bond Fund
Baillie Gifford Maryland 15%
International Fund
Baillie Gifford Emerging Maryland 23%
Markets Fund
The Guardian Tax-Exempt Fund Massachusetts 86%
The Guardian Asset Massachusetts 17%
Allocation Fund
The Guardian Park Avenue
Small Cap Fund Massachusetts 57%
The following list sets forth the persons directly controlled by
affiliates of Guardian Life, and thereby indirectly controlled by Guardian Life,
as of February 1, 1998:
Approximate
Percentage of Voting
Securities Owned
Place of Incorporation by Guardian Life
Name of Entity or Organization Affiliates
------------ ------------------- --------------
Guardian Investor Services New York 100%
Corporation
Guardian Baillie Gifford Limited Scotland 51%
The Guardian Cash Fund, Inc. Maryland 100%
The Guardian Bond Fund, Inc. Maryland 100%
The Guardian Stock Fund, Inc. Maryland 100%
GIAC Funds, Inc. Maryland 100%
Item 26. Number of Holders of Securities
Number of Record Holders
Title of Class as of February 1, 1997
----------- ----------------------
Capital Stock 11
Item 27. Indemnification
Reference is made to Registrant's Amended and Restated Articles of
Incorporation which are being filed as Exhibit Number 1 to the Registration
Statement and are incorporated herein by reference.
C-2
<PAGE>
Item 28. Business and Other Connections of Investment Adviser
Guardian Investor Services Corporation ("GISC") acts as the sole
investment adviser for The Guardian Stock Fund, Inc., The Guardian Cash Fund,
Inc., The Guardian Bond Fund, Inc., and six of the eight currently operating
series funds comprising The Park Avenue Portfolio, namely: The Guardian Cash
Management Fund, The Guardian Park Avenue Fund, The Guardian Park Avenue Small
Cap Fund, The Guardian Investment Quality Bond Fund, The Guardian Tax-Exempt
Fund and The Guardian Asset Allocation Fund and one of the three series funds
comprosing GIAC Funds, Inc. namely The Guardian Small Cap Stock Fund. GISC is
also the manager of Gabelli Capital Asset Fund. GISC's principal business
address is 201 Park Avenue South, New York, New York 10003. In addition, GISC is
the distributor of The Park Avenue Portfolio and variable annuities and variable
life insurance policies offered by The Guardian Insurance & Annuity Company,
Inc. ("GIAC") through its separate accounts. These separate accounts, The
Guardian/Value Line Separate Account, The Guardian Separate Account A, The
Guardian Separate Account B, The Guardian Separate Account C, The Guardian
Separate Account D, The Separate Account E, The Guardian Separate Account K and
The Guardian Separate Account M are all unit investment trusts registered under
the Investment Company Act of 1940, as amended.
A list of GISC's officers and directors is set forth below, indicating the
business, profession, vocation or employment of a substantial nature in which
each person has been engaged during the past two fiscal years for his or her own
account or in the capacity of director, officer, partner, or trustee, aside from
any affiliation with the Registrant. Except where otherwise noted, the principal
business address of each company is 201 Park Avenue South, New York, New York
10003.
Other Substantial Business,
Name Position(s) with GISC Profession, Vocation or Employment
---- --------------------- ----------------------------------
Charles E. Albers Executive Vice Senior Vice President:
President The Guardian Life Insurance
Company of America.Vice President,
Equity Securities: The Guardian
Insurance & Annuity Company,
Inc.Executive Vice President:
Guardian Asset Management
Corporation.Director, Guardian
Baillie Gifford Limited Officer of
various Guardian-sponsored mutual
funds.
Philip H. Dutter Director Independent Consultant
(self-employed). Director: The
Guardian Life Insurance Company of
America. Director: The Guardian
Insurance & Annuity Company, Inc.
William C. Warren Director Retired.
Director: The Guardian Life
Insurance Company of America.
Director: The Guardian Insurance &
Annuity Company, Inc.
C-3
<PAGE>
Other Substantial Business,
Name Position(s) with GISC Profession, Vocation or Employment
---- --------------------- ----------------------------------
Arthur V. Ferrara Director Retired. Chairman of the Board and
Chief Executive Officer: The
Guardian Life Insurance Company of
America until 12/95. Director
(Trustee) of The Guardian
Insurance & Annuity Company, Inc.,
and various Guardian-sponsored
mutual funds.
John M. Smith President & Executive Vice President: The
Director Guardian Life Insurance Company of
America since 1/95; Senior Vice
President thereto. Executive Vice
President and Director: The
Guardian Insurance & Annuity
Company, Inc. Director: Guardian
Baillie Gifford Limited* and
Guardian Asset Management
Corporation. President: GIAC
Funds, Inc.
Leo R. Futia Director Director: The Guardian Life
Insurance Company of America.
Director: The Guardian Insurance &
Annuity Company, Inc.
Director/Trustee of various
Guardian-sponsored mutual funds.
Director/Trustee of various mutual
funds sponsored by Value Line,
Inc.**
Peter L. Hutchings Director Executive Vice President and Chief
Financial Officer: The Guardian
Life Insurance Company of America.
Director: The Guardian Insurance &
Annuity Company, Inc. Director:
Guardian Asset Management
Corporation.
Ryan W. Johnson Vice President and Second Vice President, Equity
National Sales Director Sales: The Guardian Life Insurance
Company of America since 3/95;
Regional Sales Director, Western
Division, for Equity Products
prior thereto.
- ----------
* Principal business address:1 Rutland Court, Edinburgh EH#3 8EY, Scotland.
** Principal business address:711 Third Avenue, New York, NY 10017.
C-4
<PAGE>
Other Substantial Business,
Name Position(s) with GISC Profession, Vocation or Employment
---- --------------------- ----------------------------------
Frank J. Jones Director Executive Vice President and Chief
Investment Officer: The Guardian
Life Insurance Company of America.
Director, Executive Vice President
and Chief Investment Officer: The
Guardian Insurance & Annuity
Company, Inc. Director: Guardian
Asset Management Corporation and
Guardian Baillie Gifford Limited.*
Officer of various
Guardian-sponsored mutual funds.
Joseph D. Sargent Director President, Chief Executive Officer
and Director: The Guardian Life
Insurance Company of America,
since 1/96; President and Director
prior thereto. President, Chief
Executive Officer and Director:
The Guardian Insurance & Annuity
Company, Inc. Director: Guardian
Asset Management
Corporation.Director: Guardian
Baillie Gifford Limited.* Chairman
and Director of various
Guardian-sponsored mutual funds.
Thomas R. Hickey, Vice President Vice President, Equity Operations:
Jr. The OperationsGuardian Life
Insurance Company of America. Vice
President, Administration: The
Guardian Insurance & Annuity
Company, Inc. Officer of various
Guardian-sponsored mutual funds.
Nikolaos D. Monoyios Vice President Vice President, Equity Securities:
The Guardian Life Insurance
Company of America. Vice
President: Guardian Asset
Management Corporation. Officer of
various Guardian-sponsored mutual
funds.
- ----------
**Principal business address:1 Rutland Court, Edinburgh EH3 8EY, Scotland.
C-5
<PAGE>
Other Substantial Business,
Name Position(s) with GISC Profession, Vocation or Employment
---- --------------------- ----------------------------------
Frank L. Pepe Vice President & Vice President and Equity
Controller Controller: The Guardian Life
Insurance Company of America
since 1/96; Second Vice President
and Equity Controller prior
thereto. Vice President and
Controller: The Guardian Insurance
& Annuity Company, Inc. Officer of
various Guardian-sponsored mutual
funds.
Richard T. Potter, Vice President and Vice President and Equity Counsel:
Jr. Counsel The Guardian Life Insurance
Company of America since 1/96;
Second Vice President and Equity
Counsel prior thereto. Counsel:
The Guardian Insurance & Annuity
Company, Inc., Guardian Asset
Management Corporation and various
Guardian-sponsored mutual funds.
Donald P. Sullivan, Vice President Second Vice President: The
Jr. Guardian Life Insurance Company of
America since 1/95; Assistant Vice
President prior thereto. Vice
President: The Guardian Insurance
& Annuity Company, Inc.
Kevin S. Alter Second Director, Broker-Dealer
Vice President Operations: The Guardian Life
Insurance Company of America.
Ann T. Kearney Second Vice Second Vice President: Group
President Pensions: The Guardian Life
Insurance Company of America since
1/95; Assistant Vice President
prior thereto. Second Vice
President: The Guardian Insurance
& Annuity Company, Inc.
Alexander M. Grant, Second Vice Second Vice President:
Jr. President Investments: The Guardian Life
Insurance Company of America since
1/97; Assistant Vice President
3/93-12/96. Officer of various
Guardian-sponsored mutual funds.
Earl Harry Treasurer Treasurer: The Guardian Life
Insurance Company of America since
7/96, Assistant Treasurer prior
thereto. Treasurer, The Guardian
Insurance &Annuity Company, Inc.
C-6
<PAGE>
Other Substantial Business,
Name Position(s) with GISC Profession, Vocation or Employment
---- --------------------- ----------------------------------
Joseph A. Caruso Secretary Vice President and Secretary, The
Guardian Life Insurance Company of
America since 3/96; Second Vice
President and Secretary,
1/95-2/96; Secretary prior
thereto. Officer of various
Guardian-sponsored mutual funds.
Secretary: The Guardian Insurance & Annuity Company, Inc., Guardian Asset
Management Corporation, five Guardian-sponsored mutual funds.
Item 29. Principal Underwriters
(a) GISC is the principal underwriter and distributor of the eight
operational series funds comprising The Park Avenue Portfolio, namely: The
Guardian Park Avenue Fund, The Guardian Park Avenue Small Cap Fund, The Guardian
Cash Management Fund, The Guardian Investment Quality Bond Fund, The Guardian
Tax-Exempt Fund, The Guardian Baillie Gifford International Fund, The Baillie
Gifford Emerging Markets Fund and The Guardian Asset Allocation Fund. In
addition, GISC is the distributor of variable annuities and variable life
insurance policies offered by GIAC through GIAC's separate accounts, The
Guardian/Value Line Separate Account, The Guardian Separate Account A, The
Guardian Separate Account B, The Guardian Separate Account C, The Guardian
Separate Account D, The Separate Account E, The Guardian Separate Account K, and
The Guardian Separate Account M, which are all registered as unit investment
trusts under the Investment Company Act of 1940, as amended. These latter
separate accounts buy and sell shares of The Guardian Stock Fund, Inc., The
Guardian Bond Fund, Inc., The Guardian Cash Fund, Inc. and GIAC Funds, Inc. on
behalf of GIAC's variable contractowners.
(b) The principal business address of the officers and directors of GISC
listed below is 201 Park Avenue South, New York, New York 10003.
Position(s) Position(s)
Name with Underwriter with Registrant
----- --------------- -------------
John M. Smith President & Director None
Arthur V. Ferrara Director Director
Leo R. Futia Director Director
Peter L. Hutchings Director None
Philip H. Dutter Director None
William C. Warren Director None
Joseph D. Sargent Director Director
Frank J. Jones Director None
Charles E. Albers Executive Vice President President
Ryan W. Johnson Vice President and None
National Sales Director
Frank L. Pepe Vice President & Controller Vice President
Nikolaos D. Monoyios Vice President None
Thomas R. Hickey, Jr. Vice President Vice President
Richard T. Potter, Jr. Vice President and Counsel Counsel
Donald P. Sullivan, Jr. Vice President None
Ann T. Kearney Second Vice President Controller
Alexander M. Grant, Jr. Second Vice President Treasurer
Kevin S. Alter Second Vice President None
Donald P. Sullivan, Jr. Second Vice President None
Earl Harry Treasurer None
Joseph A. Caruso Secretary Secretary
(c) Not Applicable.
C-7
<PAGE>
Item 30. Location of Accounts and Records
Most of the Registrant's accounts, books and other documents required to
be maintained by Section 31(a) of the Investment Company Act of 1940 and the
rules promulgated thereunder are maintained by the custodian and the transfer
agent for the Registrant, the State Street Bank and Trust Company, 1776 Heritage
Drive, North Quincy, Massachusetts 02171. The Registrant's corporate records are
maintained by the Registrant at 201 Park Avenue South, New York, New York 10003.
Item 31. Management Services
None.
Item 32. Undertakings
Subject to the terms and conditions of Section 15(d) of the Securities and
Exchange Act of 1934, the undersigned Registrant hereby undertakes to file with
the Securities and Exchange Commission supplementary and periodic information,
documents and reports as may be prescribed by any rule or regulation of the
Commission heretofore or hereafter duly adopted pursuant to authority conferred
in that Section.
Registrant hereby undertakes to furnish upon request and without charge, a
copy of the Registrant's latest Annual Report to Shareholders to each person to
whom a copy of the Registrant's prospectus is delivered.
C-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, and the Investment
Company Act of 1940, the Registrant, The Guardian Stock Fund, Inc., certifies
that it has duly caused this Post-Effective Amendment to the Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York and the State of New York on the 27th day of
February, 1998.
THE GUARDIAN STOCK FUND, INC.
By /s/ THOMAS R. HICKEY, JR.
------------------------------
Thomas R. Hickey, Jr.
Vice President
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment to the Registration Statement has been signed below by the following
persons in the capacities and on the date indicated.
/s/FRANK J. JONES* President
- -------------------------------------
Frank J. Jones (Principal Executive Officer)
/s/ALEXANDER M. GRANT* Treasurer
- -------------------------------------
Alexander M. Grant (Principal Financial Officer)
/s/FRANK L. PEPE* Controller
- -------------------------------------
Frank L. Pepe (Principal Accounting Officer)
/s/JOHN C. ANGLE* Director
- -------------------------------------
John C. Angle
/s/FRANK J. FABOZZI Director
- -------------------------------------
Frank J. Fabozzi
/s/ARTHUR V. FERRARA* Director
- -------------------------------------
Arthur V. Ferrara
/s/LEO R. FUTIA* Director
- -------------------------------------
Leo R. Futia
/s/WILLIAM W. HEWITT, JR.* Director
- -------------------------------------
William W. Hewitt, Jr.
/s/SIDNEY I. LIRTZMAN* Director
- -------------------------------------
Sidney I. Lirtzman
/s/JOSEPH D. SARGENT* Director
- -------------------------------------
Joseph D. Sargent
/s/CARL W. SCHAFER* Director
- -------------------------------------
Carl W. Schafer
/s/ROBERT G. SMITH* Director
- -------------------------------------
Robert G. Smith
*By /s/ THOMAS R. HICKEY, JR. Date: February 27, 1998
- -------------------------------------
Thomas R. Hickey, Jr.
Vice President
Pursuant to a Power of Attorney
<PAGE>
THE GUARDIAN STOCK FUND, INC.
Exhibit Index
Number Description
------ -----------
1 Form of Articles of Amendment and Restatement of Articles
of Incorporation
2 By-Laws
5 Investment Advisory Agreement
8 Custodian Agreement, as amended
9 Transfer Agency Agreement
10(b) Consent of Counsel
11(b) Consent of Vedder, Price,
Kaufman & Kammholz
ARTICLES OF AMENDMENT AND RESTATEMENT
OF
ARTICLES OF INCORPORATION
OF
THE GUARDIAN STOCK FUND, INC.
The Guardian Stock Fund, Inc., a Maryland corporation having its
principal office in the City of Baltimore, Maryland (hereinafter called the
"Corporation"), hereby certifies to the State Department of Assessment and
Taxation of Maryland that:
FIRST: The Charter of the Corporation is amended and as so amended
is restated in its entirety by striking out Articles First through Eighth and
inserting in lieu thereof the following:
ARTICLE I.
INCORPORATOR
The undersigned, Sandra Camillo, Joan Brunson and Ralph Greggs, each
of whose post office address is 1633 Broadway, New York, New York 10019, all
being of full legal age, do, under and by virtue of the General Laws of the
State of Maryland authorizing the formation of corporations, associate ourselves
with the intention of forming a corporation.
ARTICLE II.
NAME
The name of the corporation is The Guardian Stock Fund, Inc. (the
"Corporation").
ARTICLE III.
PURPOSES AND POWERS
The Corporation is formed for the following purposes:
(1) To conduct and carry on the business of an investment company.
<PAGE>
(2) To hold, invest and reinvest its assets in securities and other
investments or to hold part or all of its assets in cash.
(3) To issue and sell shares of its capital stock in such amounts,
on such terms and conditions, for such purposes and for such amount or kind of
consideration as may now or hereafter be permitted by law.
(4) To exchange, classify, reclassify, redesignate, convert, rename,
redeem, purchase or acquire in any other manner, hold, dispose of, resell,
transfer, reissue or cancel (all without the vote or consent of the stockholders
of the Corporation) shares of its capital stock, in any manner and to the extent
now or hereafter permitted by law and by this charter.
(5) To do any and all additional acts and to exercise any and all
additional powers or rights as may be necessary, incidental, appropriate or
desirable for the accomplishment of all or any of the foregoing purposes.
The Corporation shall be authorized to exercise and enjoy all of the
powers, rights and privileges granted to, or conferred upon, corporations by the
Maryland General Corporation Law now or hereafter in force, and the enumeration
of the foregoing shall not be deemed to exclude any powers, rights or privileges
so granted or conferred.
ARTICLE IV.
PRINCIPAL OFFICE AND RESIDENT AGENT
The post office address of the principal office of the corporation
in the State of Maryland is c/o The Corporation Trust Company Incorporated, 300
E. Lombard Street, Baltimore, Maryland 21202. The name and address of the
resident agent of the corporation in the State of Maryland is The Corporation
Trust Company Incorporated, a Maryland corporation, 300 E. Lombard Street,
Baltimore, Maryland 21202.
ARTICLE V.
CAPITAL STOCK
(1) The total number of shares of capital stock that the Corporation
shall have authority to issue is four hundred million (400,000,000) shares
having a par value of one-tenth of one cent ($.001) per share and an aggregate
par value of four hundred thousand dollars ($400,000). Until such time as the
Board of Directors of the Corporation shall provide otherwise in accordance with
paragraph 2 of Article V hereof, three hundred million (300,000,000) shares of
the authorized shares of the Corporation are classified as Class I Common Stock
and one hundred million (100,000,000) shares of the authorized shares of the
Corporation are classified as Class II Common Stock. The Class I Common Stock
and the Class II Common Stock shall be invested in a common
-2-
<PAGE>
investment portfolio which shall constitute the initial series of the
Corporation. The said series shall consist initially of all the authorized
shares of common stock of the Corporation. The said shares shall have the terms
and provisions set forth in this Article V and elsewhere in this Charter with
respect to series and classes of shares of the Corporation.
(2) The Board of Directors of the Corporation is authorized, from
time to time, to classify or to reclassify, as the case may be, any unissued
shares of the Corporation, whether now or hereafter authorized, in separate
series and classes, or otherwise. The said shares of stock shall have such
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and conditions of
redemption as shall be fixed and determined from time to time by the Board of
Directors. The Board of Directors is authorized to increase or decrease the
number of shares of any series or class, but the number of shares of any series
or class shall not be decreased by the Board of Directors below the number of
shares thereof then outstanding.
(3) The Board of Directors, through such charter document filings or
other procedures as may be required by Maryland law, may redesignate a class or
series of shares of capital stock whether or not shares of such class or series
are issued and outstanding, subject to pertinent provisions of law.
(4) Without limiting the authority of the Board of Directors set
forth herein to establish, designate and redesignate any series or classes of
shares, and to classify and reclassify any unissued shares, and subject to such
authority, shares of each series, now authorized and hereafter authorized, shall
be subject to the following provisions:
(a) As more fully set forth hereafter, the assets and liabilities
and the income and expenses of each series shall be determined separately
and, accordingly, the net asset value, the dividends payable to holders,
and the amounts distributable in the event of liquidation or dissolution
of the Corporation to holders of shares of the Corporation's stock may
vary from series to series.
(b) All consideration received by the Corporation for the issue or
sale of shares of a particular series, together with all assets in which
such consideration is invested or reinvested, all income, earnings,
profits, and proceeds thereof, including all proceeds derived from the
sale, exchange or liquidation thereof, and any funds or payments derived
from any reinvestment of such proceeds in whatever form the same may be,
shall irrevocably belong to that series for all purposes, subject only to
the rights of creditors and shall be referred to as "assets belonging to"
that series. The assets belonging to a particular series shall be so
recorded upon the books of the Corporation.
(c) The assets belonging to each particular series shall be charged
with the liabilities of the Corporation with respect to that series, all
expenses, costs,
-3-
<PAGE>
charges and reserves attributable to that series and that series' share of
the liabilities, expenses, costs, charges or reserves of the Corporation
not attributable to any particular series, in the latter case in the
proportion that the net asset value of that series (determined without
regard to such liabilities) bears to the net asset value of all series
(determined without regard to such liabilities), or in such other manner
as may be determined by the Board of Directors in accordance with law. The
determination of the Board of Directors shall be conclusive as to the
allocation of liabilities, including accrued expenses and reserves, and
assets to a particular series or series.
(d) Shares of each series shall be entitled to such dividends and
distributions, in shares or in cash or both, as may be declared from time
to time by the Board of Directors, acting in its sole discretion, with
respect to such series, provided that dividends and distributions shall be
paid on shares of a series only out of lawfully available assets belonging
to that series. Dividends may be declared daily or otherwise pursuant to a
standing resolution or resolutions adopted only once or with such
frequency as the Board of Directors may determine.
(e) The Board of Directors shall have the power, in its sole
discretion, to distribute in any fiscal year as dividends (including
dividends designated in whole or in part as capital gain distributions) an
amount sufficient, in the opinion of the Board of Directors, to enable
each series of the Corporation to qualify as a regulated investment
company under the Internal Revenue Code of 1986, as from time to time
amended, or any successor or comparable statute thereto, and regulations
promulgated thereunder, and to avoid liability of each series of the
Corporation for federal income and excise taxes in respect of that year.
However, nothing in the foregoing shall limit the authority of the Board
of Directors to make distributions greater than or less than the amount
necessary to qualify as a regulated investment company and to avoid
liability of any series of the Corporation for such taxes.
(f) In the event of the liquidation or dissolution of the
Corporation, the stockholders of a series shall be entitled to receive, as
a single class, out of the assets of the Corporation available for
distribution to stockholders, the assets belonging to that series. The
assets so distributable to the stockholders of a series shall be
distributed among such stockholders in proportion to the number of shares
of that series held by them and recorded on the books of the Corporation
or, in the event that the series is divided into classes, in the manner
determined by the Board of Directors in accordance with the Investment
Company Act of 1940, as amended (the "1940 Act"). In the event that there
are any assets available for distribution that are not attributable to any
particular series, such assets shall be allocated to all series in
proportion to the net assets of the respective series, or in such other
manner as may be determined by the Board of Directors in accordance with
law, and then distributed to the holders of stock of each series as
aforesaid.
-4-
<PAGE>
(g) If a series is divided into multiple classes, the classes may be
invested with one or more other classes in the common investment portfolio
comprising the series. Notwithstanding the foregoing provisions of this
Article V(4) of these Articles of Incorporation, if two or more classes
are invested in a common investment portfolio, the shares of each such
class of stock of the Corporation shall be subject to the following
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms and conditions of
redemption, and, if there are other classes of stock invested in a
different investment portfolio comprising a different series, shall also
be subject to the provisions of Article V(4)(a) through (f) of these
Articles of Incorporation at the series level as if the classes invested
in the common investment portfolio were one class:
(i) The income and expenses of the series shall be allocated
among the classes comprising the series in such manner as may be
determined by the Board of Directors in accordance with law.
(ii) As more fully set forth in this Article V(4)(g) of these
Articles of Incorporation, the liabilities and expenses of the classes
comprising the series shall be determined separately from those of each
other and, accordingly, the net asset values, the dividends and
distributions payable to holders, and the amounts distributable in the
event of liquidation of the Corporation or termination of a series to
holders of shares of the Corporation's stock may vary within the classes
comprising the series.
(iii) The dividends and distributions of investment income and
capital gains with respect to the classes comprising a series shall be in
such amounts as may be declared from time to time by the Board of
Directors, and such dividends and distributions may vary among the classes
comprising the series to reflect differing allocations of the expenses and
liabilities of the Corporation among the classes and any resultant
differences between the net asset values per share of the classes, to such
extent and for such purposes as the Board of Directors may deem
appropriate. The allocation of investment income, realized and unrealized
capital gains and losses, expenses and liabilities of the Corporation
among the classes comprising a series shall be determined by the Board of
Directors in a manner that is consistent with applicable law.
(h) The proceeds of the redemption of the shares of any class of
stock of the Corporation may be reduced by the amount of any contingent
deferred sales charge, liquidation charge, or other charge (which charges
may vary within and among the classes) payable on such redemption pursuant
to the terms of issuance of such shares, all in accordance with the 1940
Act and applicable rules and regulations of the National Association of
Securities Dealers, Inc. ("NASD").
-5-
<PAGE>
(i) At such times (which may vary between and among the holders of
particular classes) as may be determined by the Board of Directors (or
with the authorization of the Board of Directors, by the officers of the
Corporation) in accordance with the 1940 Act, applicable rules and
regulations thereunder and applicable rules and regulations of the NASD
and reflected in the pertinent registration statement of the Corporation,
shares of any particular class of stock of the Corporation may be
automatically converted into shares of another class of stock of the
Corporation based on the relative net asset values of such classes at the
time of conversion, subject, however, to any conditions of conversion that
may be imposed by the Board of Directors (or with the authorization of the
Board of Directors, by the officers of the Corporation) and reflected in
the pertinent registration statement of the Corporation as aforesaid.
Except as provided above, all provisions of the Articles of
Incorporation relating to stock of the Corporation shall apply to shares of, and
to the holders of, all series and classes of stock.
(5) On each matter submitted to a vote of stockholders, each holder
of a share shall be entitled to one vote for each share standing in his/her name
on the books of the Corporation, irrespective of the series or class thereof,
and all shares of all series and classes shall vote as a single class ("Single
Class Voting"); provided, however, that (i) as to any matter with respect to
which a separate vote of any series or class is required by the 1940 Act, or by
the Maryland General Corporation Law, such requirement as to a separate vote by
that series or class shall apply in lieu of Single Class Voting as described
above; (ii) in the event that the separate vote requirements referred to in (i)
above apply with respect to one or more series or classes, then subject to (iii)
below, the shares of all other series and classes shall vote as a single class;
and (iii) as to any matter which does not affect the interests of a particular
series or class, only the holders of shares of the one or more affected series
or classes shall be entitled to vote.
(6) The presence in person or by proxy of the holders of one-third
(1/3) of the shares of capital stock of the corporation outstanding and entitled
to vote thereat shall constitute a quorum for the transaction of business at a
stockholders' meeting, except that where any provision of law or of the Charter
of the Corporation permit or require that holders of any series or class shall
vote as a separate series or class, then one-third (1/3) of the aggregate number
of shares of capital stock of that series or class, as applicable, outstanding
and entitled to vote shall constitute a quorum for the transaction of that
business by that series or class, as applicable.
(7) The Corporation may issue shares in fractional denominations to
the same extent as its whole shares, and any fractional share shall carry
proportionately the rights of a whole share including, without limitation, the
right to vote, the right to receive dividends and distributions and the right to
participate upon liquidation of the Corporation. Regardless of whether a full
share has such a right, a fractional share shall not have any right to receive a
certificate evidencing it.
-6-
<PAGE>
(8) No holder of stock of the Corporation by virtue of being such a
holder shall have any right to purchase, subscribe for, or otherwise acquire any
shares of the Corporation or any other security that the Corporation may issue
or sell (whether out of the number of shares authorized by the Charter of the
Corporation or out of any shares of the Corporation's capital stock that the
Corporation may acquire) other than a right that the Board of Directors in its
discretion may determine to grant.
(9) Notwithstanding any provision of the Maryland General
Corporation Law requiring any action to be taken or authorized by the
affirmative vote of a greater proportion than a majority of the votes of all
classes or of any class of stock of the Corporation, such action shall be
effective and valid if taken or authorized by the affirmative vote of a majority
of the total number of votes entitled to be cast thereon, except as otherwise
provided in the Charter of the Corporation or by law.
(10) All persons who shall acquire stock in the Corporation shall
acquire the same subject to the provisions of the Charter of the Corporation and
the By-Laws of the Corporation, as from time to time amended or supplemented.
ARTICLE VI.
REDEMPTION
Each holder of shares of the Corporation's capital stock shall be
entitled to require the Corporation to redeem all or any part of the shares of
capital stock of the Corporation standing in the name of the holder on the books
of the Corporation, and all shares of capital stock issued by the Corporation
shall be subject to redemption by the Corporation, at the redemption price of
the shares as in effect from time to time as may be determined by or pursuant to
the direction of the Board of Directors of the Corporation in accordance with
the provisions of Article VII, subject to the right of the Board of Directors of
the Corporation to suspend the right of redemption or postpone the date of
payment of the redemption price in accordance with provisions of applicable law.
Without limiting the generality of the foregoing, the Corporation shall, to the
extent permitted by applicable law, have the right at any time, at its option,
to redeem in whole or in part the shares owned by any holder of capital stock of
the Corporation (i) if the redemption is, in the opinion of the Board of
Directors of the Corporation, desirable in order to prevent the Corporation from
being deemed a "personal holding company" within the meaning of the Internal
Revenue Code of 1986; (ii) if the redemption is, in the opinion of the Board of
Directors of the Corporation, necessary to reimburse the Corporation for any
loss sustained by the Corporation by reason of the failure of the stockholder in
whose name such account is registered to make full payment for shares of the
Corporation purchased by such stockholder; or (iii) if the value of the shares
in the account maintained by the Corporation or its transfer agent for any class
of stock for the stockholder is below an amount determined from time to time by
the Board of Directors of the Corporation (the "Minimum Account Balance") and
the stockholder has been given written notice of the
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<PAGE>
redemption and has failed to make additional purchases of shares in an amount
sufficient to bring the value in his account to at least the Minimum Account
Balance before the redemption is effected by the Corporation. With respect to
any redemption effected to collect fees to be paid to the Corporation by any
stockholder whose account has fallen below such Minimum Account Balance, the
entire redemption value of the shares so redeemed may be retained by the
Corporation to the extent of such fees. The Corporation, at its option, also may
cause the redemption of outstanding shares of capital stock of any series or
class if the Board of Directors has determined that it is in the best interests
of the corporation and its stockholders to discontinue issuance of shares of
stock of such series or class. Payment of the redemption price shall be made by
the Corporation at the time and in the manner as may be determined from time to
time by the Board of Directors of the Corporation or under direction of the
Board of Directors, in accordance with the provisions of applicable law.
Purchase and redemption of shares of stock of the corporation is conditioned
upon the Corporation having funds or property legally available therefor. The
Board of Directors may establish procedures for redemption of shares.
ARTICLE VII.
BOARD OF DIRECTORS
(1) The number of directors constituting the Board of Directors is
currently nine (9). The number of Directors may be changed pursuant to the
By-Laws of the Corporation but shall at no time be less than the minimum number
required under the Maryland General Corporation Law.
(2) In furtherance, and not in limitation, of the powers conferred
by the Maryland General Corporation Law, the Board of Directors is expressly
authorized:
(i) To make, alter or repeal the By-Laws of the Corporation,
except as otherwise required by the 1940 Act.
(ii) From time to time to determine whether and to what extent
and at what times and places and under what conditions and regulations the
books and accounts of the Corporation, or any of them other than the stock
ledger, shall be open to the inspection of the stockholders. No
stockholder shall have any right to inspect any account or book or
document of the Corporation, except as conferred by law or authorized by
resolution of the Board of Directors.
(iii) Without the assent or vote of the stockholders, to
authorize the issuance from time to time of shares of the stock of any
series or class of the Corporation, whether now or hereafter authorized,
and securities convertible into shares of stock of the Corporation of any
series, class or classes whether now or hereafter authorized, for such
consideration as the Board of Directors may deem advisable.
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<PAGE>
(iv) Without the assent or vote of the stockholders, to
authorize and issue obligations of the Corporation, secured and unsecured,
as the Board of Directors may determine, and to authorize and cause to be
executed mortgages and liens upon the real or personal property of the
Corporation.
(v) Notwithstanding anything in this Charter to the contrary,
to establish in its absolute discretion the basis or method for
determining the value of the assets belonging to or attributable to any
series or class, the value of the liabilities belonging to or attributable
to any series or class and the net asset value of each share of any class
of the Corporation's stock.
(vi) To determine in accordance with accepted accounting
practices what constitutes net profits, earnings, surplus or net assets in
excess of capital, and to determine what accounting periods shall be used
by the Corporation for any purpose; to set apart out of any funds of the
Corporation reserves for such purposes as it shall determine and to
abolish the same; to declare and pay any dividends and distributions in
cash, securities or other property from surplus or any other funds legally
available therefor, at such intervals as it shall determine; to declare
dividends or distributions by means of a formula or other method of
determination, at meetings held less frequently than the frequency of the
effectiveness of such declarations; and to establish payment dates for
dividends or any other distributions on any basis, including dates
occurring less frequently than the effectiveness of declarations thereof.
(vii) In addition to the powers and authorities granted herein
and by statute expressly conferred upon it, the Board of Directors is
authorized to exercise all powers and do all acts that may be exercised or
done by the Corporation pursuant to the provisions of the laws of the
State of Maryland, this Charter and the By-Laws of the corporation.
(3) Any determination made in good faith, and in accordance with
applicable law and accepted accounting practices, if applicable, by or pursuant
to the direction of the Board of Directors, with respect to the amount of
assets, obligations or liabilities of the Corporation, as to the amount of net
income of the Corporation from dividends and interest for any period or amounts
at any time legally available for the payment of dividends, as to the amount of
any reserves or charges set up and the propriety thereof, as to the time of or
purpose for creating reserves or as to the use, alteration or cancellation of
any reserves or charges (whether or not any obligation or liability for which
the reserves or charges have been created has been paid or discharged or is then
or thereafter required to be paid or discharged), as to the value of any
security owned by the Corporation, the determination of the net asset value of
shares of any series or class of the Corporation's capital stock, or as to any
other matters relating to the issuance, sale or other acquisition or disposition
of securities or shares of capital stock of the Corporation shall be final and
conclusive and shall be binding upon the Corporation and all holders of its
capital stock, past, present and future, and shares of the capital stock of the
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<PAGE>
Corporation are issued and sold on the condition and understanding, evidenced by
the purchase of shares of capital stock or acceptance of share certificates,
that any and all such determinations shall be binding as aforesaid. No provision
of this Charter shall be effective to (i) require a waiver of compliance with
any provision of the Securities Act of 1933, as amended, or the 1940 Act, or of
any valid rule, regulation or order of the Securities and Exchange Commission
under those Acts or (ii) protect or purport to protect any director or officer
of the Corporation against any liability to the Corporation or its security
holders to which he or she would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his or her office.
ARTICLE VIII.
INDEMNIFICATION AND LIMITATION OF LIABILITY
(1) Subject to any limitations imposed by the 1940 Act and to the
fullest extent that limitations on the liability of directors and officers are
permitted by the Maryland General Corporation Law, no director or officer of the
Corporation shall have any liability to the Corporation or its stockholders for
money damages. This limitation on liability applies to events occurring at the
time a person serves as a director or officer of the Corporation whether or not
such person is a director or officer at the time of any proceeding in which
liability is asserted.
(2) No provision of this Article VIII shall protect any director or
officer of the Corporation (i) against any liability for noncompliance with any
provision of the Securities Act of 1933, as amended, or the 1940 Act, or of any
valid rule, regulation or order of the Securities and Exchange Commission under
those Acts, or (ii) against any liability to the Corporation or its security
holders to which such director or officer would otherwise be subject by reason
of willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his or her office.
(3) The Corporation shall indemnify and advance expenses to its
currently acting and its former directors to the fullest extent that
indemnification of directors and advancement of expenses to directors is
permitted by the Maryland General Corporation Law. The Corporation shall
indemnify and advance expenses to its officers to the same extent as its
directors and to such further extent as is consistent with such law. The Board
of Directors may, through a By-Law, resolution or agreement, make further
provisions for indemnification of directors, officers, employees and agents to
the fullest extent permitted by the Maryland General Corporation Law.
(4) References to the Maryland General Corporation Law in this
Article VIII are to the law as from time to time amended. No amendment to this
Charter shall affect any right of any person under this Article VIII based on
any event, omission or proceeding prior to such amendment. The term "Charter" as
used herein shall have the
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<PAGE>
meaning set forth in the Maryland General Corporation Law and includes these
Articles of Incorporation and all amendments and supplements thereto.
ARTICLE IX.
AMENDMENTS
The Corporation reserves the right from time to time to make any
amendment to its Charter, now or hereafter authorized by law, including any
amendment that alters the contract rights, as expressly set forth in this
Charter, of any outstanding stock, and all rights at any time conferred upon the
stockholders of the Corporation by its Charter are granted subject to the
provisions of this Article and the reservation of the right to amend the Charter
herein contained.
SECOND: The current name and address of the Corporation's resident
agent and address of the principal office of the Corporation in Maryland are as
set forth herein. The number of directors is currently set at nine (9) and their
names are: John C. Angle, Frank H. Fabozzi, Arthur V. Ferrara, Leo R. Futia,
William W. Hewitt, Jr., Sidney I. Lirtzman, Joseph D. Sargent, Carl W. Schafer
and Robert G. Smith.
THIRD: The Corporation desires to amend and restate its Charter as
currently in effect. The provisions set forth in these Articles of Amendment and
Restatement are all the provisions of the Charter currently in effect as herein
amended. The amendment and restatement of the Charter of the Corporation as
hereinabove set forth has been duly advised by the Board of Directors of the
Corporation and approved by its stockholders.
FOURTH: Each share (including for this purpose a fraction of a
share) of stock issued and outstanding immediately prior to these Articles of
Amendment and Restatement becoming effective, shall, at such effective time, be
reclassified automatically, and without any action or choice on the part of the
holder, into a share (or the same fraction of share) of Class I Common Stock.
Shares of Class I Common Stock resulting from the aforesaid reclassification
shall be subject, without limitation, to such rights and restrictions of such
class as set forth in these Articles of Amendment and Restatement. Outstanding
certificates representing issued and outstanding shares of stock of the
Corporation immediately prior to these Articles of Amendment and Restatement
becoming effective, shall upon these Articles of Amendment and Restatement
becoming effective be deemed to represent the same number of shares of the Class
I Common Stock. Certificates representing shares of the Class I Common Stock
resulting from the aforesaid reclassification need not be issued until
certificates representing the shares of stock so reclassified, if issued, have
been received by the Corporation or its agent duly endorsed for transfer with
the request that a new certificate be provided. The Class I Common Stock and the
Class II Common Stock shall have the preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends, qualifications and
terms and
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<PAGE>
conditions of redemption as set forth in the Charter of the Corporation as
herein amended and restated.
FIFTH: The total number of shares of capital stock that the
Corporation had authority to issue immediately prior to these Articles of
Amendment and Restatement becoming effective was one hundred million
(100,000,000) shares having a par value of ten cents ($.10) per share and an
aggregate par value of ten million dollars ($10,000,000), all of which shares
were of one class. The total number of shares of capital stock that the
Corporation has authority to issue upon these Articles of Amendment and
Restatement becoming effective is four hundred million (400,000,000) shares
having a par value of one-tenth of one cent ($.001) per share and an aggregate
par value of four hundred thousand dollars ($400,000), of which three hundred
million (300,000,000) shares of the authorized shares of the Corporation are
classified as Class I Common Stock and one hundred million (100,000,000) shares
of the authorized shares of the Corporation are classified as Class II Common
Stock.
SIXTH: These Articles of Amendment and Restatement shall become
effective on May 1, 1998 at 8:00 a.m. Eastern Time.
IN WITNESS WHEREOF, The Guardian Stock Fund, Inc. has caused these
Articles of Amendment and Restatement to be signed in its name and on its behalf
by its President and witnessed by its Secretary, as of this ____ day of
_________, 1998.
The undersigned President acknowledges these Articles of Amendment
and Restatement to be the corporate act of the Corporation and states that to
the best of his knowledge, information and belief, the matters and facts set
forth in these Articles with respect to the authorization and approval of the
amendment and restatement of the Corporation's Charter are true in all material
respects and that this statement is made under penalties of perjury.
THE GUARDIAN STOCK FUND, INC.
By:
--------------------------
Name: Charles E. Albers
Title: President
Witness:
- --------------------------
Name: Joseph A. Caruso
Title: Secretary
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EXHIBIT 99.2
The Guardian Stock Fund, Inc.
* * * * *
BY-LAWS
* * * * *
ARTICLE I
STOCKHOLDERS
Section 1. Annual Meeting. At the discretion of the Board of Directors and
in accordance with the laws of the State of Maryland, an annual meeting of
stockholders of the Corporation for the election of directors and for the
transaction of any other business which may properly be considered at such
meeting may be held in each year. The annual meeting, if any, shall be held no
less than 30 days and no more than 120 days after the close of the Corporation's
previous fiscal year at such hour and at such place within or without the State
of Maryland as may be fixed by the Board of Directors.
Section 2. Special or Extraordinary Meetings. Special or extraordinary
meetings of the stockholders for any purpose or purposes may be called by the
Chairman of the Board of Directors, if any, or by the President or by a majority
of
<PAGE>
the Board of Directors who are not interested persons, as that term is defined
in the Investment Company Act of 1940 (the "1940 Act") of the Corporation or of
the Corporation's investment advisor, and shall be called by the Secretary upon
receipt of the request in writing signed by stockholders holding not less than
one quarter in amount of the entire capital stock issued and outstanding and
entitled to vote thereat. Such request shall state the purpose or purposes of
the proposed meeting.
Section 3. Notice of Meetings of Stockholders. Not less than ten days and
not more than ninety days written or printed notice of every meeting of
stockholders, stating the time and place thereof (and the general nature of the
business proposed to be transacted at any special or extraordinary meeting),
shall be given to each stockholder entitled to vote thereat by leaving the same
with him or at his residence or usual place of business or by mailing it,
postage prepaid, and addressed to him at his address as it appears upon the
books of the Corporation.
No notice of the time, place or purpose of any meeting of stockholders
need be given to any stockholder who attends in person or by proxy or to any
stockholder who, in writing executed and filed with the records of the meeting,
either before or after the holding thereof, waives such notice.
Section 4. Closing of Transfer Books; Record Dates. The Board of Directors
may fix the time, not exceeding twenty
<PAGE>
days preceding the date of any meeting of stockholders, and dividend payment
date or any date for the allotment of rights, during which the books of the
Corporation shall be closed against transfers of stock which may be affected by
such meeting or payment or allotment. If such books are closed for the purpose
of determining stockholders entitled to notice of or to vote at a meeting of
stockholders, such books shall be closed for at least ten days immediately
preceding such meeting. In lieu of providing for the closing of the books
against transfers of stock as aforesaid, the Board of Directors may fix, in
advance, a date, not exceeding sixty days and not less than ten days preceding
the date of any meeting of stockholders, and not exceeding sixty days preceding
any dividend payment date or any date for the allotment of rights, as a record
date for the determination of the stockholders entitled to notice of and to vote
at such meeting, or entitled to receive such dividends or rights, as the case
may be; and only stockholders of record on such fixed date shall be entitled to
notice of and to vote at such meeting or to receive such dividends or rights, as
the case may be.
Section 5. Quorum, Adjournment of Meetings. The presence in person or by
proxy of the holders of record of a majority of the shares of the capital stock
of the Corporation issued and outstanding and entitled to vote thereat, shall
constitute a quorum at all meetings of the stockholders. If at any meeting of
the stockholders there shall be less than a
<PAGE>
quorum present, the stockholders present at such meeting may, without further
notice, adjourn the same from time to time until a quorum shall attend, but no
business shall be transacted at any such adjourned meeting except such as might
have been lawfully transacted had the meeting not been adjourned.
Section 6. Voting and Inspectors. At all meetings of stockholders every
stockholder of record entitled to vote thereat shall be entitled to one vote for
each share of stock standing in his name on the books of the Corporation (and
such stockholders of record holding fractional shares, if any, shall have
proportionate voting rights as provided in the Articles of Incorporation) on the
date for the determination of stockholders entitled to vote at such meeting
either in person or by proxy appointed by instrument in writing subscribed by
such stockholder or his duly authorized attorney. No proxy which is dated more
than three months before the meeting at which it is offered shall be accepted,
unless such proxy shall, on its face, provide a longer period for which its is
to remain in force.
All elections shall be had and all questions decided by a majority of the
votes cast at a duly constituted meeting, except as otherwise provided in the
Articles of Incorporation or in these By-Laws or by specific statutory provision
superseding the restrictions and limitations contained in the Articles of
Incorporation or in these By-Laws.
<PAGE>
At any election of Directors, the Board of Directors prior thereto may,
or, if they have not so acted, the Chairman of the meeting may, and upon the
request of the holders of ten percent (10%) of the stock entitled to vote at
such election shall, appoint two inspectors to election who shall first
subscribe an oath or affirmation to execute faithfully the duties of inspectors
at such election with strict impartiality and according to the best of their
ability, and shall after the election make a certificate of the result of the
vote taken. No candidate for the office of Director shall be appointed such
Inspector.
The Chairman of the Meeting may cause a vote by ballot to be taken upon
any election or matter, and such vote shall be taken upon the request of the
holders of ten percent (10%) of the stock entitled to vote on such election or
matter.
Section 7. Conduct of Stockholders' Meetings. The meetings of the
stockholders shall be presided over by the Chairman of the Board of Directors,
if any, or if he shall not be present by the President or if he shall not be
present, by a Vice-President, or if neither Chairman of the Board of Directors,
the President nor any Vice-President is present, by a chairman to be elected at
the meeting. The Secretary of the Corporation, if present, shall act as
Secretary of such meetings, or if he is not present, an Assistant Secretary
shall so act; if neither the Secretary nor an Assistant Secretary is present,
then the meeting shall elect its secretary.
<PAGE>
Section 8. Concerning Validity of Proxies, Ballots, Etc. At every meeting
of the stockholders, all proxies shall be received and taken in charge of and
all ballots shall be received and canvassed by the secretary of the meeting, who
shall decide all questions touching the qualification of voters, the validity of
the proxies, and the acceptance or rejection of votes, unless inspectors of
election shall have been appointed as provided in Section 6, in which event such
inspectors of election shall decide all such questions.
ARTICLE II
BOARD OF DIRECTORS
Section 1. Number and Tenure of Office. The business and property of the
Corporation shall be conducted and managed by a Board of Directors consisting of
seven Directors, which number may be increased or decreased as provided in
Section 3 of this Article. Each director shall hold office until the annual
meeting of stockholders of the Corporation next succeeding his election or until
his successor is duly elected and qualifies. Directors need not be stockholders.
Section 2. Chairman of the Board. The Chairman of the Board, if there be
one, shall preside at all meetings of stockholders and of the Board of
Directors, and shall have such other powers and duties as may be delegated to
him by the Board of Directors.
<PAGE>
Section 3. Increase or Decrease in Number of Directors. The Board of
Directors, by the vote of a majority of the entire Board, may increase the
number of directors to a number not exceeding fifteen, and may elect Directors
to fill the vacancies created by any such increase in the number of Directors
until the next annual meeting or until their successors are duly elected and
qualify; The Board of Directors, by the vote of a majority of the entire Board,
may likewise decrease the number of Directors to a number not less than three.
Vacancies occurring other than by reason of any such increase shall be filled as
provided by the Maryland General Corporation Law.
Section 4. Place of Meeting. The Directors may hold their meetings, or
more offices, and keep the books of the Corporation outside the Maryland, at any
office or offices of the Corporation or at any other they may from time to time
by resolution determine, or, in the case of as they may from time to time by
resolution determine or as shall be or fixed in the respective notices or
waivers of notice thereof.
Section 5. Regular Meetings. Regular meetings of the Board of shall be
held at such time and on such notice, if any, as the may from time to time
determine.
The annual meeting of the Board of Directors shall be held no less than 30
days and no more than 120 days after the close of the Corporation's previous
fiscal year.
<PAGE>
Section 6. Special Meetings. Special meetings of the Board of Directors
may be held from time to time upon call of the Chairman of the Board of
Directors, if any, the President or two or more of the Directors, by oral or
telegraphic or written notice duly served on or sent or mailed to each Director
not less than one day before such meeting. No notice need be given to any
Director who attends in person or to any Director who, in writing executed and
filed with the records of the meeting either before or after the holding
thereof, waives such notice. Such notice or waiver of notice need not state the
purpose or purposes of such meeting.
Section 7. Quorum. One-third of the Directors then in office shall
constitute a quorum for the transaction of business, provided that a quorum
shall in no case be less than two Directors. If at any meeting of the Board
there shall be less than a quorum present, a majority of those present may
adjourn the meeting from time to time until a quorum shall have been obtained.
The act of the majority of the Directors present at any meeting at which there
is a quorum shall be the act of the Directors, except as may be otherwise
specifically provided by statute, by the Articles of Incorporation or by these
By-Laws.
Section 8. Executive Committee. The Board of Directors may, by the
affirmative vote of a majority of the entire Board, elect from the Directors an
Executive Committee to consist of such number of Directors as the Board may from
time
<PAGE>
to time determine. The Board of Directors by such affirmative vote shall have
the power at any time to change the members of such Committee and may fill
vacancies in the Committee by election from the Directors. When the Board of
Directors is not in session, the Executive Committee shall have and may exercise
any or all of the powers of the Board of Directors in the management of the
business and affairs of the Corporation (including the power to authorize the
seal of the Corporation to be affixed to all papers which may require it) except
as provided by law and except the power to increase or decrease the size of, or
fill vacancies on the Board. The Executive Committee may fix its own rules of
procedure, and may meet, when and as provided by such rules or by resolution of
the Board of Directors, but in every case the presence of a majority shall be
necessary to constitute a quorum. In the absence of any member of the Executive
Committee the members thereof present at any meeting, whether or not they
constitute a quorum, may appoint a member of the Board of Directors to act in
the place of such absent member.
Section 9. Audit Committee. That there shall be an audit committee of
three "non-interested" directors whose primary concern shall be liaison with the
company's public accountants. They shall also perform such other audit matters
as they deem necessary.
Section 10. Other Committees. The Board of Directors, by the affirmative
vote of a majority of the entire
<PAGE>
Board; may appoint other committees which shall in each case consist of such
number of members (not less than two) and shall have and may exercise such
powers as the Board may determine in the resolution appointing them. A majority
of all members of any such committee may determine its action, and fix the time
and place of its meetings, unless the Board of Directors shall otherwise
provide. The Board of Directors shall have power at any time to change the
members and powers of any such committee, to fill vacancies, and to discharge
any such committee.
Section 11. Informal Action by Directors and Committees. Any action
required or permitted to be taken at any meeting of the Board of Directors or
any committee thereof may be taken without a meeting, if a written consent to
such action is signed by a majority of the Board, or of such committee, as the
case may be.
Section 12. Compensation of Directors. No Directors shall receive any
stated salary or fees from the Corporation for his services and such Director if
such Director is, otherwise then by reason of being such Director, employed by
the Corporation or any manager/investment adviser of the Corporation. Except as
provided in the preceding sentence, Directors shall be entitled to receive such
compensation from the Corporation for their services as may from time to time be
voted by the Board of Directors.
Section 13. Contracts and Transactions Involving Directors. No contract or
transaction between the Corporation
<PAGE>
and one or more of its directors or officers, or between the Corporation and any
other corporation, partnership, association, or other organization in which one
or more of its directors or officers, are directors or officers or have a
financial interest, shall be void or voidable solely for this reason, or solely
because the director or officer is present at or participates in the meeting of
the Board or committee thereof which authorizes the contract or transaction, or
solely because his or their votes are counted for such purpose, if: (1) the
material facts as to his interest and as to the contract or transaction are
disclosed or are known to the Board of Directors or the committee and the Board
or committee in good faith authorizes the contract or transaction by a vote
sufficient for such purpose without counting the vote of the interested director
or directors; or (2) the material facts as to his interest and as to the
contract or transaction are disclosed or are known to the shareholders entitled
to vote thereon, and the contract or transaction is specifically approved in
good faith by vote of shareholders; or (3) the contract or transaction is fair
as to the Corporation as of the time it is authorized, approved or ratified, by
the Board of Directors, a committee thereof, or the shareholders. Interested
directors may be counted in determining the presence of a quorum at a meeting of
the Board of Directors or of a committee which authorizes the contract or
transaction.
<PAGE>
ARTICLE III
OFFICERS
Section 1. Executive Officers. The executive officers of the Corporation
shall be chosen by the Board of Directors as soon as may be practicable after
the annual meeting of the stockholders. These may include a Chairman of the
Board of Directors, and shall include a President, one or more Vice-Presidents
(the number thereof to be determined by the Board of Directors), a Secretary and
a Treasurer. The Chairman of the Board of Directors, if any, and the President
shall be selected from among the Directors. The Board of Directors may also in
its discretion appoint Assistant Secretaries, Assistant Treasurers, and other
officers, agents and employees, who shall have such authority and perform such
duties as the Board or the Executive Committee or the President may determine or
if not expressed, then such duties as are customary to the office. The Board of
Directors may fill any vacancy which may occur in any office.
Any two officers, except those of President and Vice-President, may be
held by the same person, but no officer shall execute, acknowledge or verify any
instrument in more than one capacity, if such instrument is required by law or
these By-Laws to be executed, acknowledged or verified by two or more officers.
In the absence of the Chairman of the Board (or if there be none), the President
shall preside at all meetings of the stockholders and of the Board of Directors.
<PAGE>
Section 2. Term of Office. The term of office of all officers shall be one
year and until their respective successors are chosen and qualify, subject,
however, to any provisions for removal contained in the Articles of
Incorporation. Any officer may be removed from office at any time with or
without cause by the vote of a majority of the entire Board of Directors.
Section 3. Powers and Duties. The officers of the Corporation shall have
such powers and duties as generally pertain to their respective offices, as well
as such powers and duties as may from time to time be conferred by the Board of
Directors or the Executive Committee or the President.
Section 4. Bond. The Corporation may secure the fidelity of any or all of
its officers, agents, or employees by bond.
ARTICLE IV
CAPITAL STOCK
Section 1. Certificates of Shares. Each stockholder of the Corporation
shall be entitled to a certificate or certificates for the full shares of stock
of the Corporation owned by them in such form as the Board of Directors may from
time to time prescribe.
Section 2. Transfer of Shares. Shares of the Corporation shall be
transferable on the books of the Corporation by the holder thereof in person or
by his duly authorized attorney
<PAGE>
or legal representative, upon surrender and cancelling of certificates, if any,
for the same number of shares, duly endorsed or accompanied by proper
instruments of assignment and transfer, with such proof of the authenticity of
the signature of the Corporation or its agents may reasonably require. In the
case of shares not represented by certificates, the same or similar requirements
may be imposed by the Board of Directors.
Section 3. Stock Ledgers. The stock ledgers of the Corporation, containing
the name and address of the stockholders and the number of shares held by them
respectively, shall be kept at the principal offices of the Corporation or, if
the Corporation employs a transfer agent, at the offices of the transfer agent
of the Corporation.
Section 4. Lost, Stolen or Destroyed Certificates. The Board of Directors
may determine the conditions upon which a new certificate of stock of the
Corporation of any class may be issued in place of a certificate which is
alleged to have been lost, stolen or destroyed; and may at their discretion,
require the owner of such certificate or his legal representative to give bond,
with sufficient surety to the Corporation and the transfer agent, if any, to
indemnify it and such transfer agent against any and all loss or claims which
may arise by reason of the issue of a new certificate in the place of the one so
lost, stolen or destroyed.
<PAGE>
ARTICLE V
CORPORATE SEAL
The Board of Directors shall provide a suitable corporate seal, in such
form and bearing such inscriptions as it may determine.
ARTICLE VI
FISCAL YEAR
Unless otherwise determined by the Board of Directors, the fiscal year of
the Corporation shall end on the 31st day of December in each year.
ARTICLE VII
EXECUTION OF INSTRUMENTS
Section 1. Checks, Notes, Drafts, Etc. Checks, notes, drafts, acceptances,
bills of exchange and other orders or obligations for the payment of money shall
be signed by such officer or officers or person or persons as the Board of
Directors by resolution shall from time to time designate.
Section 2. Sale or transfer of Securities. Stock certificates, bonds or
other securities at any time owned by the Corporation may be held on behalf of
the Corporation or sold, pledged, hypothecated, transferred or otherwise
disposed of pursuant to authorization by the Board and when so authorized to be
held on behalf of the Corporation or sold, pledged, hypothecated, transferred or
otherwise disposed of, may be transferred from the name of the Corporation by
the
<PAGE>
signature of the President or a Vice-President or the Treasurer or such other
officer as may be designated by the Board.
ARTICLE VIII
BLUE SKY PROVISIONS
Section 1. Long and Short Positions. The Investment Adviser and the
Distributors of the Corporation, the officers, directors or partners of the
Investment Adviser and Distributors, and the officers and directors of the
Corporation shall not take long or short positions in the securities issued by
the Corporation, provided, however, that:
(a) A Distributor may purchase from the Corporation securities issued by
the Corporation, provided that orders to purchase from the Corporation are
entered with the Corporation by the Distributor upon receipt by the Distributor
of purchase orders for the securities of the Corporation and provided such
purchases are not in excess of purchase orders received by the Distributor.
(b) Sales of the Corporation's securities at not less than the applicable
net asset value, upon written assurance of the purchaser that the purchase is
for investment purposes and the shares purchased may not be resold except
through redemption by the Corporation, may be made to the following:
1. The separate accounts of The Guardian Insurance & Annuity Company, Inc.
which are registered as unit investment trusts under the Investment Company Act
of 1940, as amended.
<PAGE>
2. The Officers, Directors, and bona fide full-time employees and sales
representatives who have acted as such for not less than 90 days, of:
(a) The Corporation
(b) The Investment Adviser or Distributor, if more than one-half of
such person's working time involves (1) selling or offering for sale shares of
the Corporation or shares of other investment companies having the same
distributor, (2) supervising sales representatives entitled to purchase shares
at net asset value or (3) acting in a position necessary for the persons in (1)
and (2) to carry out such functions.
3. Any trust, pension, profit sharing or other benefit plan for the
persons described in item #2.
ARTICLE IX
MISCELLANEOUS
Section 1. Indemnification. Each director and officer (and his heirs,
executors and administrators ) are indemnified by the Corporation to the extent
set forth in the Articles of Incorporation.
Section 2. Advisory Contract. Any advisory or management contract to which
the Corporation shall be a party shall not be amended, without the affirmative
vote or the written consent of the holders of a majority (as defined in the
Investment Company Act of 1940, of all the shares of the
<PAGE>
capital stock of the Corporation at the time outstanding and entitled to vote.
Section 3. Custodianship. All cash and securities owned by the Corporation
shall be held by a bank or trust company of good standing, having a capital,
surplus and undivided profits aggregating not less than Two Million Dollars
($2,000,000.00); provided such a bank or trust company can be found ready and
willing to act. Upon resignation or inability to serve of any such bank or trust
company the Corporation shall (i) use its best efforts to obtain a qualified
successor, (ii) require the cash and securities of the Corporation held by such
bank or trust company to be delivered directly to the successor, and (iii) in
the event that no qualified successor can be found, submit to the holders of the
shares of the capital stock of the Corporation at the time outstanding and
entitled to vote, before permitting delivery of such cash and securities to
anyone other than a qualified successor, the question whether the Corporation
shall be dissolved and liquidated or shall function without a qualified bank or
trust company to hold, such cash and securities. Upon such resignation or
inability to serve, such bank or trust company may deliver any assets of the
Corporation held by it to a qualified bank or trust company selected by it, such
assets to be held subject to the terms of the agreement which governed such
retiring bank or trust company, pending action by the Corporation as set forth
in this Section 3. Nothing herein contained,
<PAGE>
however, shall prevent the termination of any agreement between the Corporation
and any such bank or trust company by the Corporation at the discretion of the
Board of Directors, and any such agreement shall be terminated upon the
affirmative vote of the holders of a majority of all the shares of the capital
stock of the Corporation at the time outstanding and entitled to vote.
ARTICLE X
AMENDMENT OF BY-LAWS
Except as set forth below, the By-Laws of the Corporation may be altered,
amended, added to or repealed by a majority vote of the stockholders or by
majority vote of the entire Board of Directors; but any such alteration,
amendment, addition or repeal of the By-Laws by action of the Board of Directors
may be altered or repealed by the stockholders. Sections 2 and 3 of Article IX
may be altered, amended or repealed only by the stockholders.
MANAGER AND INVESTMENT ADVISOR CONTRACT CONFORMED COPY
AGREEMENT made as of the 29th day of March, 1983 between THE GUARDIAN STOCK
FUND, INC., a Maryland corporation (hereinafter called "the Fund") of the first
part, and GUARDIAN INVESTOR SERVICES CORPORATION, a New York corporation
(hereinafter called "the Company") of the second part,
WITNESSETH:
WHEREAS, the Fund desires to have the Company act as its Manager and Investment
Advisor and provide it with investment research, advice, supervision and
management; and
WHEREAS, the Company is willing to undertake the same upon the terms and
conditions set forth,
NOW, THEREFORE, it is hereby agreed by and between the parties hereto as
follows:
1. Duties of Manager and Investment Advisor. The Company shall provide the Fund
with such investment research, data, advice and supervision as the latter may,
from time to time, consider necessary for the proper supervision of its funds.
The Company shall act as Manager and Investment Advisor of the Fund, and, as
such, shall furnish continuously an investment program and regularly furnish to
the Board of Directors of the Fund recommendations with respect to an investment
program for approval, modification or rejection by the Board, take such steps to
implement the investment program approved by the Board by purchase and sale of
securities including the placing of orders for such purchase and sale, and
regularly report to the Board with respect to implementation of the approved
investment program and the Advisor's activities in connection with the
administration of the Fund, subject always to the provisions of the Investment
Company Act of 1940 and all other applicable laws, to the provisions of the
Fund's Articles of Incorporation and By-Laws, to the Fund's fundamental
investment policies as in effect from time to time and to control and review by
the Fund's Board of Directors. The Company shall take, on behalf of the Fund,
all actions which it deems necessary to carry into effect the investment
policies determined as provided above, and to that end the Company may designate
a person or persons who are to be authorized by the Fund as the representative
or representatives of the Fund, to give instructions to the Custodian of the
assets of the Fund as to deliveries of securities and payments of cash for the
account of the Fund.
2. Allocation of Charges and Expenses; Brokerage. The Company shall furnish at
its own expense all administrative services, office space, equipment and
administrative, bookkeeping and clerical personnel necessary for managing the
affairs of the Fund. The Company shall also provide persons satisfactory to the
Fund's Board of Directors to act as officers and employees of the Fund and the
expenses of the directors of the Fund who are affiliated with The Guardian Life
Insurance Company of America or its subsidiaries. In addition, the Company shall
pay all fees and expenses in connection with the registration of the Fund and/or
its shares under the securities or "Blue Sky" laws of the States and all costs
of printing prospectuses of the Fund (except those used for distribution to
shareholders of the Fund). All other costs and expenses not expressly assumed by
the Company under this Contract, shall be paid by the Fund, including (i)
interest and taxes; (ii) brokerage commissions and other costs in connection
with the purchase or sale of securities; (iii) insurance premiums for fidelity
and other coverage requisite to its operations; (iv) compensation and expenses
of its directors other than those affiliated with the Company; (v) legal and
audit expenses; (vi) custodian and shareholder servicing agent fees and
expenses; (vii) expenses incident to the redemption of its shares; (viii)
expenses incident to the issuance of its shares against payment therefor by or
on behalf of the subscribers thereto, including printing of stock certificates;
(ix) fees and expenses incident to the registration under the Securities Act of
1933 of shares of the Fund for public sale (other than the costs of printing
prospectuses), and fees imposed on the Fund under the Investment Company Act of
1940; (x) expenses of printing and mailing shareholders' reports; (xi) all
expenses incidental to holding meetings of the Fund's shareholders; and (xii)
such non-recurring expenses as may arise, including
<PAGE>
actions, suits or proceedings to which the Fund is a party and the legal
obligation which the Fund may have to indemnify its officers and directors with
respect thereto.
In selecting dealers through whom to effect transactions, the Advisor considers
a number of factors including the value, quality, efficiency of execution and
research, statistical, quotation and valuation services provided. Research
services by dealers include advice, either directly or through publications or
writings, as to the value of securities, the advisability of purchasing or
selling securities, the availability of securities or purchasers or sellers of
securities; and analyses and reports concerning issuers, industries, securities,
economic factors and trends and portfolio strategy. In making such
determination, the Advisor may use a dealer whose spread in effecting a
securities transaction is in excess of that of some other dealer if the Advisor
determines in good faith that the amount of such spread is reasonable in
relation to the value of the research and related services provided by such
dealer.
It is understood that, consistent with the Company's fiduciary duty to the Fund,
it is the intent of this Contract to allow the Company the widest discretion
permitted by law in determining the manner and means by which portfolio
securities transactions can be effected in the best interest of the Fund.
3. Compensation of Manager and Investment Advisor. (a) For the services to be
rendered, and for the facilities to be furnished, as provided in Articles 1 and
2 above, the Fund shall pay to the Company a fee payable monthly at the end of
each calendar month and computed at the annual rate of 5/10 of 1% of the average
value of the Fund's net assets during the fiscal year. For this purpose the
value of the Fund's net assets shall be computed in the manner specified in its
Articles of Incorporation for the computation of the value of such net assets in
connection with the determination of the net asset value of its shares. (b) To
the extent that the aggregate expenses of every character incurred by the Fund
in any fiscal year, including, but not limited to, fees of the Company computed
as hereinabove set forth, but excluding interest, taxes and extraordinary
expenses borne by the Fund, shall exceed the limits prescribed by any State in
which shares are qualified for sale, the fee, as determined above, shall be
reduced, but not below zero, by the amount of such expense excess. The Company
shall remit payment to the Fund not later than the last day of the first month
of the next succeeding fiscal year, in an amount equal to the amount of such
excess.
4. Covenants of Manager and Investment Advisor. The Company agrees that it will
not deal with itself, or with the Fund, as principal in making purchases or
sales of securities or other property for the account of the Fund, and will not
take a short position in the shares of the Fund.
5. Duration and Termination of Contract. This Contract shall go into effect on
the effective date of the Fund's Registration Statement under the Securities Act
of 1933 and will remain in effect until the first meeting of shareholders (but
in any event not more than two years from such effective date) and will continue
in effect from year to year thereafter only so long as such continuance is
specifically approved at least annually in accordance with the Investment
Company Act of 1940.
This Contract may, on sixty days' written notice to the other party, be
terminated at any time, without the payment of any penalty, --
(a) by the Fund, acting pursuant to a direction given by a majority of the
Board of Directors of the Fund, or by the vote of the holders of a
majority (as defined in the Investment Company Act of 1940) of the
outstanding shares of the Fund; or
(b) by the Company.
<PAGE>
This Contract shall automatically terminate in the event of its assignment, the
expression "assignment" for this purpose having the meaning defined in the
Investment Company Act of 1940. It is provided however that upon any termination
of this agreement before the end of any quarter such compensation for the
period from the end of the last quarter, ending prior to the date of
termination shall be pro-rated according to the proportion which such period
bears to a full quarter year and shall be payable upon the date of termination.
6. Amendment of Contract. This agreement may be amended by mutual consent but
the consent of the Fund must be approved by vote of a majority of the
outstanding voting securities of the Fund.
7. Nothing here contained shall limit the freedom of the Company or any
affiliated person of the Company to render investment advisory and corporate
administrative services to other investment companies, to act as investment
advisor or investment counselor to other persons, firms or corporations, and to
engage in other business activities.
8. The Company shall not be liable for any error of judgment or mistake of law
or for any loss suffered by the Fund in connection with the matters to which
this Contract relates, except for loss resulting from willful misfeasance, bad
faith or gross negligence of the Company in the performance of its duties or
from reckless disregard by the Company of its obligations and duties under this
Contract.
9. Any notice under this agreement shall be in writing addressed and delivered
or mailed postage paid to the other party at such address as such other party
may designate for the receipt of such notice. Until further notice to the other
party it is agreed that the address of the Fund and the Company shall be 201
Park Avenue South, New York, New York 10003.
IN WITNESS WHEREOF, THE GUARDIAN STOCK FUND, INC., has caused these presents to
be executed and delivered in its name and behalf by an officer thereunto duly
authorized, and Guardian Investor Services Corporation has caused these presents
to be executed and delivered in its name and behalf by an officer thereunto duly
authorized as of the date first above written.
WITNESS: THE GUARDIAN STOCK FUND, INC.
LAWRENCE KANTOR BY CHARLES E. ALBERS
- ------------------------------ -------------------------------
President
WITNESS: GUARDIAN INVESTOR SERVICES CORPORATION
LAWRENCE KANTOR BY JOHN M. SMITH
- ------------------------------ -------------------------------
President
CUSTODIAN CONTRACT
Between
THE GUARDIAN STOCK FUND, INC.
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
Page
----
1. Employment of Custodian and Property to be Held By It ................. 1
2. Duties of the Custodian with Respect to Property of the
Fund Held by the Custodian............................................. 2
2.1 Holding Securities .............................................. 2
2.2 Delivery of Securities .......................................... 2
2.3 Registration of Securities ...................................... 6
2.4 Bank Accounts ................................................... 6
2.5 Payments for Shares ............................................. 7
2.6 Investment and Availability of Federal Funds .................... 7
2.7 Collection of Income ............................................ 8
2.8 Payment of Fund Moneys .......................................... 8
2.9 Liability for Payment in Advance of Receipt of
Securities Purchased ............................................ 11
2.10 Payments for Repurchases or Redemptions of Shares of
the Fund ........................................................ 12
2.11 Appointment of Agents ........................................... 12
2.12 Deposit of Fund Assets in Securities System ..................... 13
2.13 Ownership Certificates for Tax Purposes ......................... 16
2.14 Proxies ......................................................... 16
2.15 Communications Relating to Fund Portfolio Securities ............ 16
2.16 Proper Instructions ............................................. 17
2.17 Actions Permitted Without Express Authority ..................... 18
2.18 Evidence of Authority ........................................... 19
3. Duties of Custodian With Respect to the Books of Account
and Calculation of Net Asset Value and Net Income ..................... 19
4. Records ............................................................... 20
5. Opinion of Fund's Independent Accountant .............................. 21
6. Reports to Fund by Independent Public Accountants ..................... 21
7. Compensation of Custodian ............................................. 21
8. Responsibility of Custodian ........................................... 21
9. Effective Period, Termination and Amendment ........................... 23
10. Successor Custodian ................................................... 24
11. Interpretive and Additional Provisions ................................ 25
12. Massachusetts Law to Apply ............................................ 26
13. Prior Contracts ....................................................... 26
<PAGE>
CUSTODIAN CONTRACT
This Contract between The Guardian Stock Fund, Inc., a corporation
organized and existing under the laws of _________________, having its principal
place of business at ___________________, hereinafter called the "Fund", and
State Street Bank and Trust Company, a Massachusetts trust company, having its
principal place of business at 225 Franklin Street, Boston, Massachusetts,
02110, hereinafter called the "Custodian",
WITNESSETH: That in consideration of the mutual covenants and
agreements hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
The Fund hereby employs the Custodian as the custodian of its assets
pursuant to the provisions of the Articles of Incorporation. The Fund agrees to
deliver to the Custodian all securities and cash owned by it, and all payments
of income, payments of principal or capital distributions received by it with
respect to all securities owned by the Fund from time to time, and the cash
consideration received by it for such new or treasury shares of capital stock,
$________ par value, ("Shares") of the Fund as may be issued or sold from time
to time. The Custodian shall not be responsible for any property of the Fund
held or received by the Fund and not delivered to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Section
2.16), the Custodian shall from time to time employ
<PAGE>
one or more sub-custodians, but only in accordance with an applicable vote by
the Board of Directors of the Fund, and provided that the Custodian shall have
no more or less responsibility or liability to the Fund on account of any
actions or omissions of any sub-custodian so employed than any such
sub-custodian has to the Custodian.
2. Duties of the Custodian with Respect to Property of the Fund Held By the
Custodian
2.1 Holding Securities. The Custodian shall hold and physically segregate for
the account of the Fund all non-cash property, including all securities
owned by the Fund, other than securities which are maintained pursuant to
Section 2.12 in a clearing agency which acts as a securities depository or
in a book-entry system authorized by the U.S. Department of the Treasury,
collectively referred to herein as "Securities System".
2.2 Delivery of Securities. The Custodian shall release and deliver securities
owned by the Fund held by the Custodian or in a Securities System account
of the Custodian only upon receipt of Proper Instructions, which may be
continuing instructions when deemed appropriate by the parties, and only
in the following cases:
1) Upon sale of such securities for the account of the Fund and
receipt of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such
-2-
<PAGE>
securities entered into by the Fund;
3) In the case of a sale effected through a Securities System, in
accordance with the provisions of Section 2.12 hereof;
4) To the depository agent in connection with tender or other
similar offers for portfolio securities of the Fund;
5) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable;
provided that, in any such case, the cash or other
consideration is to be delivered to the Custodian;
6) To the issuer thereof, or its agent, for transfer into the
name of the Fund or into the name of any nominee or nominees
of the Custodian or into the name or nominee name of any agent
appointed pursuant to Section 2.11 or into the name or nominee
name of any sub-custodian appointed pursuant to Article 1; or
for exchange for a different number of bonds, certificates or
other evidence representing the same aggregate face amount or
number of units; provided that, in any such case, the new
securities are to be delivered to the Custodian;
-3-
<PAGE>
7) To the broker selling the same for examination in accordance
with the "street delivery" custom;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or
readjustment of the securities of the issuer of such
securities, or pursuant to provisions for conversion
contained in such securities, or pursuant to any deposit
agreement; provided that, in any such case, the new securities
and cash, if any, are to be delivered to the Custodian;
9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or
temporary securities for definitive securities; provided that,
in any such case, the new securities and cash, if any, are to
be delivered to the Custodian;
10) For delivery in connection with any loans of securities made
by the Fund, but only against receipt of adequate collateral
as agreed upon from time to time by the Custodian and the
Fund, which may be in the form of cash or
-4-
<PAGE>
obligations issued by the United States government, its
agencies or instrumentalities;
11) For delivery as security in connection with any borrowings by
the Fund requiring a pledge of assets by the Fund, but only
against receipt of amounts borrowed;
12) Upon receipt of instructions from the transfer agent
("Transfer Agent") for the Fund, for delivery to such Transfer
Agent or to the holders of shares in connection with
distributions in kind, as may be described from time to time
in the Fund's currently effective prospectus, in satisfaction
of requests by holders of Shares for repurchase or
redemption; and
13) For any other proper corporate purpose, but only upon receipt
of, in addition to Proper Instructions, a certified copy of a
resolution of the Board of Directors or of the Executive
Committee signed by an officer of the Fund and certified by
the Secretary or an Assistant Secretary, specifying the
securities to be delivered, setting forth the purpose for
which such delivery is to be made, declaring such purposes to
be proper
-5-
<PAGE>
corporate purposes, and naming the person or persons to whom
delivery of such securities shall be made.
2.3 Registration of Securities. Securities held by the Custodian (other than
bearer securities) shall be registered in the name of the Fund or in the
name of any nominee of the Fund or of any nominee of the Custodian which
nominee shall be assigned exclusively to the Fund, unless the Fund has
authorized in writing the appointment of a nominee to be used in common
with other registered investment companies having the same investment
adviser as the Fund, or in the name or nominee name of any agent appointed
pursuant to Section 2.11 or in the name or nominee name of any
sub-custodian appointed pursuant to Article 1. All securities accepted by
the Custodian on behalf of the Fund under the terms of this Contract shall
be in "street name" or other good delivery form.
2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts in the name of the Fund, subject only to draft or
order by the Custodian acting pursuant to the terms of this Contract, and
shall hold in such account or accounts, subject to the provisions hereof,
all cash received by it from or for the account of the Fund, other than
cash maintained by the Fund in a bank account established and used in
accordance with Rule 17f-3 under the Investment Company
-6-
<PAGE>
Act of 1940. Funds held by the Custodian for the Fund may be deposited by
it to its credit as Custodian in the Banking Department of the Custodian
or in such other banks or trust companies as it may in its discretion deem
necessary or desirable; provided, however, that every such bank or trust
company shall be qualified to act as a custodian under the Investment
Company Act of 1940 and that each such bank or trust company and the funds
to be deposited with each such bank or trust company shall be approved by
vote of a majority of the Board of Directors of the Fund. Such funds shall
be deposited by the Custodian in its capacity as Custodian and shall be
withdrawable by the Custodian only in that capacity.
2.5 Payments for Shares. The Custodian shall receive from the distributor for
the Fund's Shares or from the Transfer Agent of the Fund and deposit into
the Fund's account such payments as are received for Shares of the Fund
issued or sold from time to time by the Fund. The Custodian will provide
timely notification to the Fund and the Transfer Agent of any receipt by
it of payments for Shares of the Fund.
2.6 Investment and Availability of Federal Funds. Upon mutual agreement
between the Fund and the Custodian, the Custodian shall, upon the receipt
of Proper Instructions,
1) invest in such instruments as may be set forth in such
instructions on the same day as
-7-
<PAGE>
received all federal funds received after a time agreed upon
between the Custodian and the Fund; and
2) make federal funds available to the Fund as of specified times
agreed upon from time to time by the Fund and the Custodian in
the amount of checks received in payment for Shares of the
Fund which are deposited into the Fund's account.
2.7 Collection of Income. The Custodian shall collect on a timely basis all
income and other payments with respect to registered securities held
hereunder to which the Fund shall be entitled either by law or pursuant to
custom in the securities business, and shall collect on a timely basis all
income and other payments with respect to bearer securities if, on the
date of payment by the issuer, such securities are held by the Custodian
or agent thereof and shall credit such income, as collected, to the Fund's
custodian account. Without limiting the generality of the foregoing, the
Custodian shall detach and present for payment all coupons and other
income items requiring presentation as and when they become due and shall
collect interest when due on securities held hereunder.
2.8 Payment of Fund Moneys. Upon receipt of Proper Instructions, which may be
continuing instructions when
-8-
<PAGE>
deemed appropriate by the parties, the Custodian shall pay out moneys of
the Fund in the following cases only:
1) Upon the purchase of securities for the account of the Fund
but only (a) against the delivery of such securities to the
Custodian (or any bank, banking firm or trust company doing
business in the United States or abroad which is qualified
under the Investment Company Act of 1940, as amended, to act
as a custodian and has been designated by the Custodian as its
agent for this purpose) registered in the name of the Fund or
in the name of a nominee of the Custodian referred to in
Section 2.3 hereof or in proper form for transfer; (b) in the
case of a purchase effected through a Securities System, in
accordance with the conditions set forth in Section 2.12
hereof or (c) in the case of repurchase agreements entered
into between the Fund and the Custodian, or another bank, (i)
against delivery of the securities either in certificate form
or through an entry crediting the Custodian's account at the
Federal Reserve Bank with such securities or (ii) against
delivery of the receipt evidencing purchase by the Fund of
securities
-9-
<PAGE>
owned by the Custodian along with written evidence of the
agreement by the Custodian to repurchase such securities from
the Fund;
2) In connection with conversion, exchange or surrender of
securities owned by the Fund as set forth in Section 2.2
hereof;
3) For the redemption or repurchase of Shares issued by the Fund
as set forth in Section 2.10 hereof;
4) For the payment of any expense or liability incurred by the
Fund, including but not limited to the following payments for
the account of the Fund: interest, taxes, management,
accounting, transfer agent and legal fees, and operating
expenses of the Fund whether or not such expenses are to be in
whole or part capitalized or treated as deferred expenses;
5) For the payment of any dividends declared pursuant to the
governing documents of the Fund;
6) For any other proper purpose, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a
resolution of the Board of Directors or of the Executive
Committee of the Fund signed by
-10-
<PAGE>
an officer of the Fund and certified by its Secretary or an
Assistant Secretary, specifying the amount of such payment,
setting forth the purpose for which such payment is to be
made, declaring such purpose to be a proper purpose, and
naming the person or persons to whom such payment is to be
made.
2.9 Liability for Payment in Advance of Receipt of Securities Purchased. In
any and every case where payment for purchase of securities for the
account of the Fund is made by the Custodian in advance of receipt of the
securities purchased in the absence of specific written instructions from
the Fund to so pay in advance, the Custodian shall be absolutely liable to
the Fund for such securities to the same extent as if the securities had
been received by the Custodian, except that in the case of repurchase
agreements entered into by the Fund with a bank which is a member of the
Federal Reserve System, the Custodian may transfer funds to the account of
such bank prior to the receipt of written evidence that the securities
subject to such repurchase agreement have been transferred by book-entry
into a segregated non-proprietary account of the Custodian maintained
with the Federal Reserve Bank of Boston or of the safe-keeping receipt,
provided that such securities have in fact been
-11-
<PAGE>
so transferred by book-entry.
2.10 Payments for Repurchases or Redemptions of Shares of the Fund. From such
funds as may be available for the purpose but subject to the limitations
of the Articles of Incorporation and any applicable votes of the Board of
Directors of the Fund pursuant thereto, the Custodian shall, upon receipt
of instructions from the Transfer Agent, make funds available for payment
to holders of Shares who have delivered to the Transfer Agent a request
for redemption or repurchase of their Shares. In connection with the
redemption or repurchase of Shares of the Fund, the Custodian is
authorized upon receipt of instructions from the Transfer Agent to wire
funds to or through a commercial bank designated by the redeeming
shareholders. In connection with the redemption or repurchase of Shares of
the Fund, the Custodian shall honor checks drawn on the Custodian by a
holder of Shares, which checks have been furnished by the Fund to the
holder of Shares, when presented to the Custodian in accordance with such
procedures and controls as are mutually agreed upon from time to time
between the Fund and the Custodian.
2.11 Appointment of Agents. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or trust
company which is itself qualified under the Investment Company Act of
1940, as amended, to act as a custodian, as its agent to carry out
-12-
<PAGE>
such of the provisions of this Article 2 as the Custodian may from time to
time direct; provided, however, that the appointment of any agent shall
not relieve the Custodian of its responsibilities or liabilities
hereunder.
2.12 Deposit of Fund Assets in Securities Systems. The Custodian may deposit
and/or maintain securities owned by the Fund in a clearing agency
registered with the Securities and Exchange Commission under Section 17A
of the Securities Exchange Act of 1934, which acts as a securities
depository, or in the book-entry system authorized by the U.S. Department
of the Treasury and certain federal agencies, collectively referred to
herein as "Securities System" in accordance with applicable Federal
Reserve Board and Securities and Exchange Commission rules and
regulations, if any, and subject to the following provisions:
1) The Custodian may keep securities of the Fund in a Securities System
provided that such securities are represented in an account
("Account") of the Custodian in the Securities System which shall
not include any assets of the Custodian other than assets held as a
fiduciary, custodian or otherwise for customers;
2) The records of the Custodian with respect to securities of the Fund
which are maintained
-13-
<PAGE>
in a Securities System shall identify by book-entry those
securities belonging to the Fund;
3) The Custodian shall pay for securities purchased for the account of
the Fund upon (i) receipt of advice from the Securities System that
such securities have been transferred to the Account, and (ii) the
making of an entry on the records of the Custodian to reflect such
payment and transfer for the account of the Fund. The Custodian
shall transfer securities sold for the account of the Fund upon (i)
receipt of advice from the Securities System that payment for such
securities has been transferred to the Account, and (ii) the making
of an entry on the records of the Custodian to reflect such transfer
and payment for the account of the Fund. Copies of all advices from
the Securities System of transfers of securities for the account of
the Fund shall identify the Fund, be maintained for the Fund by the
Custodian and be provided to the Fund at its request. Upon request,
the Custodian shall furnish the Fund confirmation of each transfer
to or from the
-14-
<PAGE>
account of the Fund in the form of a written advice or notice and
shall furnish to the Fund copies of daily transaction sheets
reflecting each day's transactions in the Securities System for the
account of the Fund.
4) The Custodian shall provide the Fund with any report obtained by the
Custodian on the Securities System's accounting system, internal
accounting control and procedures for safeguarding securities
deposited in the Securities System;
5) The Custodian shall have received the initial or annual
certificate, as the case may be, required by Article 9 hereof;
6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Fund for any loss or damage to the
Fund resulting from use of the Securities System by reason of any
negligence, misfeasance or misconduct of the Custodian or any of its
agents or of any of its or their employees or from failure of the
Custodian or any such agent to enforce effectively such rights as it
may have against the Securities System; at the election of the Fund,
it shall
-15-
<PAGE>
be entitled to be subrogated to the rights of the Custodian with
respect to any claim against the Securities System or any other
person which the Custodian may have as a consequence of any such
loss or damage if and to the extent that the Fund has not been made
whole for any such loss or damage.
2.13 Ownership Certificates for Tax Purposes. The Custodian shall execute
ownership and other certificates and affidavits for all federal and state
tax purposes in connection with receipt of income or other payments with
respect to securities of the Fund held by it and in connection with
transfers of securities.
2.14 Proxies. The Custodian shall, with respect to the securities held
hereunder, cause to be promptly executed by the registered holder of such
securities, if the securities are registered otherwise than in the name of
the Fund or a nominee of the Fund, all proxies, without indication of the
manner in which such proxies are to be voted, and shall promptly deliver
to the Fund such proxies, all proxy soliciting materials and all notices
relating to such securities.
2.15 Communications Relating to Fund Portfolio Securities. The Custodian shall
transmit promptly to the Fund all written information (including, without
limitation, pendency of calls and maturities of securities and
-16-
<PAGE>
expirations of rights in connection therewith) received by the
Custodian from issuers of the securities being held for the Fund.
With respect to tender or exchange offers, the Custodian shall
transmit promptly to the Fund all written information received by
the Custodian from issuers of the securities whose tender or
exchange is sought and from the party (or his agents) making the
tender or exchange offer. If the Fund desires to take action with
respect to any tender offer, exchange offer or any other similar
transaction, the Fund shall notify the Custodian at least three
business days prior to the date on which the Custodian is to take
such action.
2.16 Proper Instructions. Proper Instructions as used throughout this Article 2
means a writing signed or initialled by one or more person or persons as
the Board of Directors shall have from time to time authorized. Each such
writing shall set forth the specific transaction or type of transaction
involved, including a specific statement of the purpose for which such
action is requested. Oral instructions will be considered Proper
Instructions if the Custodian reasonably believes them to have been given
by a person authorized to give such instructions with respect to the
transaction involved. The Fund shall cause all oral instructions to be
confirmed in writing. Upon receipt of a certificate of the Secretary or an
Assistant Secretary as to the
-17-
<PAGE>
authorization by the Board of Directors of the Fund accompanied by a
detailed description of procedures approved by the Board of Directors,
Proper Instructions may include communications effected directly between
electro-mechanical or electronic devices provided that the Board of
Directors and the Custodian are satisfied that such procedures afford
adequate safeguards for the Fund's assets.
2.17 Actions Permitted without Express Authority. The Custodian may in its
discretion, without express authority from the Fund:
1) make payments to itself or others for minor expenses of
handling securities or other similar items relating to its
duties under this Contract, provided that all such payments
shall be accounted for to the Fund;
2) surrender securities in temporary form for securities in
definitive form;
3) endorse for collection, in the name of the Fund, checks,
drafts and other negotiable instruments; and
4) in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase,
transfer and other dealings with the securities and property
of the Fund except as otherwise
-18-
<PAGE>
directed by the Board of Directors of the Fund.
2.18 Evidence of Authority. The Custodian shall be protected in acting upon any
instructions, notice, request, consent, certificate or other instrument or
paper believed by it to be genuine and to have been properly executed by
or on behalf of the Fund. The Custodian may receive and accept a certified
copy of a vote of the Board of Directors of the Fund as conclusive
evidence (a) of the authority of any person to act in accordance with such
vote or (b) of any determination or of any action by the Board of
Directors pursuant to the Articles of Incorporation as described in such
vote, and such vote may be considered as in full force and effect until
receipt by the Custodian of written notice to the contrary.
3. Duties of Custodian with Respect to the Books of Account and Calculation
of Net Asset Value and Net Income.
The Custodian shall cooperate with and supply necessary information to the
entity or entities appointed by the Board of Directors of the Fund to keep the
books of account of the Fund and/or compute the net asset value per share of the
outstanding shares of the Fund or, if directed in writing to do so by the Fund,
shall itself keep such books of account and/or compute such net asset value per
share. If so directed, the Custodian shall also calculate daily the net income
of the Fund as described in
-19-
<PAGE>
the Fund's currently effective prospectus and shall advise the Fund and the
Transfer Agent daily of the total amounts of such net income and, if instructed
in writing by an officer of the Fund to do so, shall advise the Transfer Agent
periodically of the division of such net income among its various components.
The calculations of the net asset value per share and the daily income of the
Fund shall be made at the time or times described from time to time in the
Fund's currently effective prospectus.
4. Records
The Custodian shall create and maintain all records relating to its
activities and obligations under this Contract in such manner as will meet the
obligations of the Fund under the Investment Company Act of 1940, with
particular attention to Section 31 thereof and Rules 31a-l and 31a-2
thereunder, applicable federal and state tax laws and any other law or
administrative rules or procedures which may be applicable to the Fund. All such
records shall be the property of the Fund and shall at all times during the
regular business hours of the Custodian be open for inspection by duly
authorized officers, employees or agents of the Fund and employees and agents of
the Securities and Exchange Commission. The Custodian shall, at the Fund's
request, supply the Fund with a tabulation of securities owned by the Fund and
held by the Custodian and shall, when requested to do so by the Fund and for
such compensation as shall be agreed upon between the Fund and the Custodian,
include certificate numbers in such tabulations.
-20-
<PAGE>
5. Opinion of Fund's Independent Accountant
The Custodian shall take all reasonable action, as the Fund may from time
to time request, to obtain from year to year favorable opinions from the Fund's
independent accountants with respect to its activities hereunder in connection
with the preparation of the Fund's Form N-l, and Form N-lR or other annual
reports to the Securities and Exchange Commission and with respect to any other
requirements of such Commission.
6. Reports to Fund by Independent Public Accountants
The Custodian shall provide the Fund, at such times as the Fund may
reasonably require, with reports by independent public accountants on the
accounting system, internal accounting control and procedures for safeguarding
securities, including securities deposited and/or maintained in a Securities
System, relating to the services provided by the Custodian under this Contract;
such reports, which shall be of sufficient scope and in sufficient detail, as
may reasonably be required by the Fund, to provide reasonable assurance that any
material inadequacies would be disclosed by such examination, and, if there are
no such inadequacies, shall so state.
7. Compensation of Custodian
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time between the
Fund and the Custodian.
8. Responsibility of Custodian
So long as and to the extent that it is in the exercise
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<PAGE>
of reasonable care, the Custodian shall not be responsible for the title,
validity or genuineness of any property or evidence of title thereto received by
it or delivered by it pursuant to this Contract and shall be held harmless in
acting upon any notice, request, consent, certificate or other instrument
reasonably believed by it to be genuine and to be signed by the proper party or
parties. The Custodian shall be held to the exercise of reasonable care in
carrying out the provisions of this Contract, but shall be kept indemnified by
and shall be without liability to the Fund for any action taken or omitted by it
in good faith without negligence. It shall be entitled to rely on and may act
upon advice of counsel (who may be counsel for the Fund) on all matters, and
shall be without liability for any action reasonably taken or omitted pursuant
to such advice. Notwithstanding the foregoing, the responsibility of the
Custodian with respect to redemptions effected by check shall be in accordance
with a separate Agreement entered into between the Custodian and the Fund.
If the Fund requires the Custodian to take any action with respect to
securities, which action involves the payment of money or which action may, in
the opinion of the Custodian, result in the Custodian or its nominee assigned to
the Fund being liable for the payment of money or incurring liability of some
other form, the Fund, as a prerequisite to requiring the Custodian to take such
action, shall provide indemnity to the Custodian in an amount and form
satisfactory to it.
-22-
<PAGE>
9. Effective Period, Termination and Amendment
This Contract shall become effective as of its execution, shall continue
in full force and effect until terminated as hereinafter provided, may be
amended at any time by mutual agreement of the parties hereto and may be
terminated by either party by an instrument in writing delivered or mailed,
postage prepaid to the other party, such termination to take effect not sooner
than thirty (30) days after the date of such delivery or mailing; provided,
however that the Custodian shall not act under Section 2.12 hereof in the
absence of receipt of an initial certificate of the Secretary or an Assistant
Secretary that the Board of Directors of the Fund have approved the initial use
of a particular Securities System and the receipt of an annual certificate of
the Secretary or an Assistant Secretary that the Board of Directors have
reviewed the use by the Fund of such Securities System, as required in each case
by Rule 17f-4 under the Investment Company Act of 1940, as amended; provided
further, however, that the Fund shall not amend or terminate this Contract in
contravention of any applicable federal or state regulations, or any provision
of the Articles of Incorporation, and further provided, that the Fund may at any
time by action of its Board of Directors (i) substitute another bank or trust
company for the Custodian by giving notice as described above to the Custodian,
or (ii) immediately terminate this Contract in the event of the appointment of a
conservator or receiver for the Custodian by the Comptroller of the Currency or
upon the happening of a like event
-23-
<PAGE>
at the direction of an appropriate regulatory agency or court of competent
jurisdiction.
Upon termination of the Contract, the Fund shall pay to the Custodian such
compensation as may be due as of the date of such termination and shall likewise
reimburse the Custodian for its costs, expenses and disbursements.
10. Successor Custodian
If a successor custodian shall be appointed by the Board of Directors of
the Fund, the Custodian shall, upon termination, deliver to such successor
custodian at the office of the Custodian, duly endorsed and in the form for
transfer, all securities then held by it hereunder and shall transfer to an
account of the successor custodian all of the Fund's securities held in a
Securities System.
If no such successor custodian shall be appointed, the Custodian shall, in
like manner, upon receipt of a certified copy of a vote of the Board of
Directors of the Fund, deliver at the office of the Custodian and transfer such
securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Directors shall have been delivered to
the Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank or trust
company, which is a "bank" as defined in the Investment Company Act of 1940,
doing business in Boston, Massachusetts, of its own
-24-
<PAGE>
selection, having an aggregate capital, surplus, and undivided profits, as shown
by its last published report, of not less than $25,000,000, all securities,
funds and other properties held by the Custodian and all instruments held by the
Custodian relative thereto and all other property held by it under this Contract
and to transfer to an account of such successor custodian all of the Fund's
securities held in any Securities System. Thereafter, such bank or trust company
shall be the successor of the Custodian under this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of vote referred to or of the
Board of Directors to appoint a successor custodian, the Custodian shall be
entitled to fair compensation for its services during such period as the
Custodian retains possession of such securities, funds and other properties and
the provisions of this Contract relating to the duties and obligations of the
Custodian shall remain in full force and effect.
11. Interpretive and Additional Provisions
In connection with the operation of this Contract, the Custodian and the
Fund may from time to time agree on such provisions interpretive of or in
addition to the provisions of this Contract as may in their joint opinion be
consistent with the general tenor of this Contract. Any such interpretive or
additional provisions shall be in a writing signed by both
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<PAGE>
parties and shall be annexed hereto, provided that no such interpretive or
additional provisions shall contravene any applicable federal or state
regulations or any provision of the Articles of Incorporation of the Fund. No
interpretive or additional provisions made as provided in the preceding sentence
shall be deemed to be an amendment of this Contract.
12. Massachusetts Law to Apply
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of The Commonwealth of Massachusetts.
13. Prior Contracts
This Contract supersedes and terminates, as of the date hereof, all prior
contracts between the Fund and the Custodian relating to the custody of the
Fund's assets.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the 4th day of April , 1983.
SEAL
ATTEST THE GUARDIAN STOCK FUND, INC.
By /s/ [ILLEGIBLE]
- -------------------------------- ----------------------------------------
SEAL STATE STREET BANK AND TRUST COMPANY
ATTEST
By /s/ [ILLEGIBLE]
- -------------------------------- ----------------------------------------
Assistant Secretary Vice President
-26-
<PAGE>
AMENDMENT TO CUSTODIAN CONTRACT
AGREEMENT made this 25th day of March, 1987 by and between THE GUARDIAN
STOCK FUND (the "Fund") and STATE STREET BANK AND TRUST COMPANY (the
"Custodian");
WHEREAS, the Fund and the Custodian have entered into a Custodian Contract
dated April 4, 1983 (the "Custodian Contract") pursuant to which the Custodian
was appointed custodian of the Fund's assets;
WHEREAS, the Fund and State Street desire to amend the Custodian Contract
to comply with certain regulatory requirements of the California Insurance
Department;
NOW, THEREFORE, in consideration of the mutual agreements contained in the
Custodian Contract and herein, the Fund and State Street hereby agree as
follows:
1. The Custodian Contract shall be amended in the following respects:
a. The following sentence shall be added as the last sentence in
Article 1:
"Notwithstanding any provision contained herein to the contrary, the
Fund retains the ultimate responsibility and authority for direction
and control for the services provided pursuant to this Contract."
b. The existing Section 2.1 shall be renumbered as Section 2.1(a) and
the following subsections shall be inserted thereafter.
"(b) The Custodian shall be strictly liable for all losses to the
property of the Fund held by the Custodian due to fire,
burglary, robbery, theft, and mysterious disappearance,
whether such a loss occurred while the property was in the
possession of the Custodian or any nominee or depository of
the Custodian at the time of loss.
(c) The Custodian shall be liable for losses resulting from any
cause or causes other than those specified in Section 2.1(b)
above unless the Custodian itself can establish that the loss
was not due to any dishonesty, negligence or misconduct by its
officers, employees or agents (including any nominee or
depository of the Custodian).
-1-
<PAGE>
(d) In the event of loss, damage or injury to the securities held
on deposit for the Fund with the Custodian or its nominee or
depository, the Custodian shall promptly, upon demand of the
Fund, cause such securities to be replaced by securities of
like kind and quality, together with all rights and privileges
pertaining thereto, or, if acceptable to the Fund, remit cash
equal to the fair market value of said securities. (Fair
market value shall be determined as of the date such
securities suffered the loss, damage or injury.)
(e) Notwithstanding the provisions of Sections 2.1(a), (b), (c)
and (d) above, the Custodian shall not be liable for any loss,
damage or injury resulting from nuclear contamination (other
than by industrial use of nuclear energy), expropriation by
government order, war, insurrection or revolution."
c. The following sentence shall be added as the last sentence of
Section 2.7:
"In connection with collection or notices respecting
securities of foreign issue, the Custodian shall not be
absolved of responsibilities if the failure or delay in
effecting collection or giving notice is due to the negligence
or misconduct of the Custodian."
d. The existing subsection (1) of Section 2.17 shall be deleted and
subsections (2), (3) and (4) shall be renumbered accordingly.
e. The following language shall be inserted as the end of Article 4:
"The Custodian shall submit to all regulatory and administrative
bodies having jurisdiction over the services provided pursuant to
this Contract, present or future, any information, reports, or other
materials which any such body by reason of this Contract may request
or require pursuant to applicable laws and regulations. The
Custodian shall not disclose or use any record it has prepared by
reason of this Contract in any manner except as expressly authorized
herein or directed by the Fund and shall keep confidential any
information obtained by reason of this Contract."
f. The following language shall be inserted at the end of Article 7:
"The Custodian shall not charge the custodied assets of the Fund or
withhold delivery of any such asset, in full or in part, for the
Custodian's compensation or expenses, it being understood that the
Fund will make timely payment of all compensation due to the
Custodian. To secure any advances of cash or securities made by the
Custodian to or for the benefit of the Fund for any purpose which
results in the Fund incurring an overdraft at the end of any
business day or for extraordinary or emergency purposes during any
business day, the Fund hereby grants to the Custodian a security
interest in and pledges to the Custodian securities held for it by
the Custodian, the specific securities to be designated in writing
from time to time by the Fund or its investment adviser. Should the
-2-
<PAGE>
Fund fail to make such designation, the Fund hereby agrees that the
Custodian shall have a security interest in all securities or other
property purchased with the advances by the Custodian, which
securities or property shall be deemed to be pledged to the
Custodian, and the written instructions of the Fund instructing
their purchase shall be considered the requisite description and
designation of the property so pledged for purposes of the
requirements of the Uniform Commercial Code. Should the Fund fail to
repay promptly any such advances of cash or securities, the
Custodian shall be entitled to use available cash and to dispose of
pledged securities and property as is necessary to repay any such
advances."
g. The clause "Except as otherwise provided in Article 2" shall be
inserted at the beginning of the second sentence of Article 8.
h. The following language shall be inserted following Article 12 as a
new Article 13 and the existing Article 13 shall be renumbered
Article 14:
"13. Except as otherwise specifically provided in this Contract, the
rights, obligations, and interests of the Fund and the Custodian
under this Contract shall not be assignable in whole or in part."
2. Except as expressly modified and amended herein, the Custodian Contract
shall remain in full force and effect.
THE GUARDIAN STOCK FUND
By: /s/ John M. Smith
------------------------------------
STATE STREET BANK AND TRUST COMPANY
By: /s/ [ILLEGIBLE]
------------------------------------
Vice President
-3-
<PAGE>
[Letterhead of The Guardian]
March 25, 1987
State Street Bank and Trust Company
P.O. Box 351
Boston, Massachusetts 02101
Re: Amendments to Custodian Contracts -
The Guardian Bond Fund
The Guardian Cash Fund
The Guardian Stock Fund
Gentlemen:
In connection with the execution of Amendments dated March 25, 1987 to the
Custodian Contract between State Street Bank and Trust Company (the "Bank") and
each of the above-referenced funds (referred to herein individually as "Fund"),
The Guardian Insurance & Annuity Company, Inc. ("GIAC") hereby confirms to the
Bank that certain state insurance laws and regulations to which the Fund is
subject, by virtue of being an investment vehicle for variable life insurance
policies issued by GIAC, prohibit the Fund from agreeing to any rights of
set-off for any reason with another party with respect to any of the Fund's
assets which may be held in custody by the other party. Accordingly, it is
GIAC's opinion that the Fund is legally prohibited from permitting the Bank to
use Fund assets (which are held by the Bank in its capacity as custodian) as a
set-off against any amounts otherwise due the Bank on account of cash or
securities which the Bank advances to the Fund or for any liabilities
(including, but not limited to, any taxes, expenses, assessments, claims or
charges) incurred by the Bank on behalf of the Fund in connection with the
above-referenced Custodian Contract and Amendments. Should the Bank incur any
such liabilities on behalf of the Fund, GIAC hereby agrees to reimburse the Bank
promptly for such amounts provided neither the Bank nor any nominee or
depository of the Bank has acted negligently or negligently failed to act or
engaged in willful misconduct in connection with any such liability.
Very truly yours,
THE GUARDIAN INSURANCE & ANNUITY COMPANY, INC.
By /s/ John M. Smith
--------------------------
John M. Smith
Executive Vice President
A wholly owned subsidiary
of The Guardian Life Insurance
Company of America
<PAGE>
AMENDMENT TO THE
CUSTODIAN CONTRACT
AGREEMENT made this 11th day of July 1989 by and between STATE STREET BANK
AND TRUST COMPANY ("Custodian") and THE GUARDIAN STOCK FUND, INC. (the "Fund").
WITNESSETH THAT:
WHEREAS, the Custodian and the Fund are parties to a Custodian Contract
dated April 4, 1983 (as amended to date, the "Contract") which governs the terms
and conditions under which the Custodian maintains custody of the securities and
other assets of the Fund:
NOW THEREFORE, the Custodian and the Fund hereby amend the terms of the
Custodian Contract and mutually agree to the following:
Replace subsection 7) of Section 2.2 Delivery of Securities with the
following new subsection 7):
7) Upon the sale of such securities for the account of the Fund, to
the broker or its clearing agent, against a receipt, for examination
in accordance with "street delivery" custom; provided that in any
such case, the Custodian shall have no responsibility or liability
for any loss arising from the delivery of such securities prior to
receiving payment for such securities except as may arise from the
Custodian's own negligence or willful misconduct;
IN WITNESS WHEREOF, each of the parties has caused this Amendment to be
executed in its name and on its behalf by a duly authorized officer as of the
day and year first above written.
ATTEST THE GUARDIAN STOCK FUND, INC.
/s/ [ILLEGIBLE] /s/ [ILLEGIBLE]
- -------------------------------- -----------------------------------
Vice President
ATTEST STATE STREET BANK AND TRUST COMPANY
/s/ [ILLEGIBLE] /s/ [ILLEGIBLE]
- -------------------------------- -----------------------------------
Assistant Secretary Vice President
<PAGE>
AMENDMENT TO THE CUSTODIAN CONTRACT
AGREEMENT made by and between State Street Bank and Trust Company (the
"Custodian") and The Guardian Stock Fund, Inc. (the "Fund").
WHEREAS, the Custodian and the Fund are parties to a custodian contract
dated April 4, 1983 (the "Custodian Contract") governing the terms and
conditions under which the Custodian maintains custody of the securities and
other assets of the Fund; and
WHEREAS, the Custodian and the Fund desire to amend the Custodian Contract
to provide for the maintenance of the Fund's foreign securities, and cash
incidental to transactions in such securities, in the custody of certain foreign
banking institutions and foreign securities depositories acting as
sub-custodians in conformity with the requirements of Rule 17f-5 under the
Investment Company Act of 1940;
NOW THEREFORE, in consideration of the premises and covenants contained
herein, the Custodian and the Fund hereby amend the Custodian Contract by the
addition of the following terms and conditions;
1. Appointment of Foreign Sub-Custodians
The Fund hereby authorizes and instructs the Custodian to employ as
sub-custodians for the Fund's securities and other assets maintained outside
the United States the foreign banking institutions and foreign securities
depositories designated on Schedule A hereto ("foreign sub-custodians"). Upon
receipt of "Proper Instructions", as defined in Section 2.16 of the Custodian
Contract, together with a certified resolution of the Fund's Board of Directors,
the Custodian and the Fund may agree to amend Schedule A hereto from time to
time to designate additional foreign banking institutions and foreign securities
depositories to act as sub-custodian. Upon receipt of Proper Instructions, the
Fund may instruct the Custodian to cease the employment of any one or more of
such sub-custodians for maintaining custody of the Fund's assets.
2. Assets to be Held
The Custodian shall limit the securities and other assets maintained
in the custody of the foreign sub-custodians to: (a) "foreign securities", as
defined in paragraph (c)(l) of Rule 17f-5 under the Investment Company Act of
1940, and (b) cash and cash equivalents in such amounts as the Custodian or the
Fund may determine to be reasonably necessary to effect the Fund's foreign
securities transactions.
<PAGE>
3. Foreign Securities Depositories
Except as may otherwise be agreed upon in writing by the Custodian
and the Fund, assets of the Fund shall be maintained in foreign securities
depositories only through arrangements implemented by the foreign banking
institutions serving as sub-custodians pursuant to the terms hereof. Where
possible, such arrangements shall include entry into agreements containing the
provisions set forth in Section 5 hereof.
4. Segregation of Securities
The Custodian shall identify on its books as belonging to the Fund,
the foreign securities of the Fund held by each foreign sub-custodian. Each
agreement pursuant to which the Custodian employs a foreign banking institution
shall require that such institution establish a custody account for the
Custodian on behalf of the Fund and physically segregate in that account,
securities and other assets of the Fund, and, in the event that such institution
deposits the Fund's securities in a foreign securities depository, that it shall
identify on its books as belonging to the Custodian, as agent for the Fund, the
securities so deposited.
5. Agreements with Foreign Banking Institutions
Each agreement with a foreign banking institution shall be
substantially in the form set forth in Exhibit 1 hereto and shall provide that:
(a) the Fund's assets will not be subject to any right, charge, security
interest, lien or claim of any kind in favor of the foreign banking institution
or its creditors or agents, except a claim of payment for their safe custody or
administration; (b) beneficial ownership for the Fund's assets will be freely
transferable without the payment of money or value other than for custody or
administration; (c) adequate records will be maintained identifying the assets
as belonging to the Fund; (d) officers of or auditors employed by, or other
representatives of the Custodian, including to the extent permitted under
applicable law the independent public accountants for the Fund, will be given
access to the books and records of the foreign banking institution relating to
its actions under its agreement with the Custodian; and (e) assets of the Fund
held by the foreign sub-custodian will be subject only to the instructions of
the Custodian or its agents.
6. Access of Independent Accountants of the Fund
Upon request of the Fund, the Custodian will use its best efforts to
arrange for the independent accountants of the Fund to be afforded access to the
books and records of any foreign banking institution employed as a foreign
sub-custodian insofar as such books and records relate to the performance of
such foreign banking institution under its agreement with the Custodian.
-2-
<PAGE>
7. Reports by Custodian
The Custodian will supply to the Fund from time to time, as mutually
agreed upon, statements in respect of the securities and other assets of the
Fund held by foreign sub-custodians, including but not limited to an
identification of entities having possession of the Fund's securities and other
assets and advices or notifications of any transfers of securities to or from
each custodial account maintained by a foreign banking institution for the
Custodian on behalf of the Fund indicating, as to securities acquired for the
Fund, the identity of the entity having physical possession of such securities.
8. Transactions in Foreign Custody Account
(a) Except as otherwise provided in paragraph (b) of this Section 8,
the provisions of Sections 2.2 and 2.8 of the Custodian Contract shall apply,
mutatis mutandis to the foreign securities of the Fund held outside the United
States by foreign sub-custodians.
(b) Notwithstanding any provision of the Custodian Contract to the
contrary, settlement and payment for securities received for the account of the
Fund and delivery of securities maintained for the account of the Fund may be
effected in accordance with the customary established securities trading or
securities processing practices and procedures in the jurisdiction or market in
which the transaction occurs, including, without limitation, delivering
securities to the purchaser thereof or to a dealer therefor (or an agent for
such purchaser or dealer) against a receipt with the expectation of receiving
later payment for such securities from such purchaser or dealer.
(c) Securities maintained in the custody of a foreign sub-custodian
may be maintained in the name of such entity's nominee to the same extent as set
forth in Section 2.3 of the Custodian Contract, and the Fund agrees to hold any
such nominee harmless from any liability as a holder of record of such
securities.
9. Liability of Foreign Sub-Custodians
Each agreement pursuant to which the Custodian employs a foreign
banking institution as a foreign sub-custodian shall require the institution to
exercise reasonable care in the performance of its duties and to indemnify, and
hold harmless, the Custodian and each Fund from and against any loss, damage,
cost, expense, liability or claim arising out of or in connection with the
institution's performance of such obligations. At the election of the Fund, it
shall be entitled to be subrogated to the rights of the Custodian with respect
to
-3-
<PAGE>
any claims against a foreign banking institution as a consequence of any such
loss, damage, cost, expense, liability or claim if and to the extent that the
Fund has not been made whole for any such loss, damage, cost, expense, liability
or claim.
10. Liability of Custodian
The Custodian shall be liable for the acts or omissions of a foreign
banking institution to the same extent as set forth with respect to
sub-custodians generally in the Custodian Contract and, regardless of whether
assets are maintained in the custody of a foreign banking institution, a foreign
securities depository or a branch of a U.S. bank as contemplated by paragraph 13
hereof, the Custodian shall not be liable for any loss, damage, cost, expense,
liability or claim resulting from nationalization, expropriation, currency
restrictions, or acts of war or terrorism or any loss where the sub-custodian
has otherwise exercised reasonable care. Notwithstanding the foregoing
provisions of this paragraph 10, in delegating custody duties to State Street
London Ltd., the Custodian shall not be relieved of any responsibility to the
Fund for any loss due to such delegation, except such loss as may result from
(a) political risk (including, but not limited to, exchange control
restrictions, confiscation, expropriation, nationalization, insurrection, civil
strife or armed hostilities) or (b) other losses (excluding a bankruptcy or
insolvency of State Street London Ltd. not caused by political risk) due to Acts
of God, nuclear incident or other losses under circumstances where the Custodian
and State Street London Ltd. have exercised reasonable care.
11. Reimbursement for Advances
If the Fund requires the Custodian to advance cash or securities for
any purpose including the purchase or sale of foreign exchange or of contracts
for foreign exchange, or in the event that the Custodian or its nominee shall
incur or be assessed any taxes, charges, expenses, assessments, claims or
liabilities in connection with the performance of this Contract, except such as
may arise from its or its nominee's own negligent action, negligent failure to
act or willful misconduct, any property at any time held for the account of the
Fund shall be security therefor and should the Fund fail to repay the Custodian
promptly, the Custodian shall be entitled to utilize available cash and to
dispose of the Fund assets to the extent necessary to obtain reimbursement.
12. Monitoring Responsibilities
The Custodian shall furnish annually to the Fund, during the month
of June, information concerning the foreign sub-custodians employed by the
Custodian. Such information
-4-
<PAGE>
shall be similar in kind and scope to that furnished to the Fund in connection
with the initial approval of this amendment to the Custodian Contract. In
addition, the Custodian will promptly inform the Fund in the event that the
Custodian learns of a material adverse change in the financial condition of a
foreign sub-custodian or any material loss of the assets of the Fund or in the
case of any foreign sub-custodian not the subject of an exemptive order from
the Securities and Exchange Commission is notified by such foreign
sub-custodian that there appears to be a substantial likelihood that its
shareholders' equity will decline below $200 million (U.S. dollars or the
equivalent thereof) or that its shareholders' equity has declined below $200
million (in each case computed in accordance with generally accepted U.S.
accounting principles).
13. Branches of U.S. Banks
(a) Except as otherwise set forth in this amendment to the Custodian
Contract, the provisions hereof shall not apply where the custody of the Fund
assets is maintained in a foreign branch of a banking institution which is a
"bank" as defined by Section 2(a)(5) of the Investment Company Act of 1940
meeting the qualification set forth in Section 26(a) of said Act. The
appointment of any such branch as a sub-custodian shall be governed by paragraph
1 of the Custodian Contract.
(b) Cash held for the Fund in the United Kingdom shall be maintained
in an interest bearing account established for the Fund with the Custodian's
London Branch, which account shall be subject to the direction of the Custodian,
State Street London Ltd. or both.
14. Applicability of Custodian Contract
Except as specifically superseded or modified herein, the terms and
provisions of the Custodian Contract shall continue to apply with full force and
effect.
-5-
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the 27th day of January, 1992.
ATTEST: THE GUARDIAN STOCK FUND, INC.
/s/ [ILLEGIBLE] By: /s/ [ILLEGIBLE]
- --------------------------- ----------------------------------
(Title) Attorney (Title) Vice President
ATTEST: STATE STREET BANK AND TRUST COMPANY
/s/ [ILLEGIBLE] By: /s/ [ILLEGIBLE]
- --------------------------- ----------------------------------
Assistant Secretary Vice President
-6-
<PAGE>
SCHEDULE A
17f-5 APPROVAL
The Board of Directors of The Guardian Stock Fund, Inc. has approved certain
foreign banking institutions and foreign securities depositories within State
Street's Global Custody Network for use as subcustodians for the Fund's
securities, cash and cash equivalents held outside of the United States. Board
approval is as indicated by the Fund's Authorized Officer:
Fund
Officer
Initials Country Subcustodian Central Depository
________ Argentina Citibank, N.A. Caja de Valores S.A.
________ Australia Westpac Banking Austraclear Limited;
Corporation
Reserve Bank Information and
Transfer System (RITS)
________ Austria GiroCredit Bank Oesterreichische
Aktiengesellschaft Kontrollbank AG
der Sparkassen
________ Bangladesh Standard Chartered Bank None
________ Belgium Generale Bank Caisse Interprofessionnelle
de Depots et de Virements
de Titres S.A. (CIK);
Banque Nationale de Belgique
________ Brazil Citibank, N.A. Bolsa de Valores de Sao
Paulo (Bovespa);
Banco Central do Brasil,
Systema Especial de
Liquidacao e Custodia
(SELIC)
________ Canada Canada Trustco The Canadian Depository
Mortgage Company for Securities Limited (CDS)
________ Chile Citibank, N.A. None
[Logo] State Street
<PAGE>
SCHEDULE A
17f-5 APPROVAL
Fund
Officer
Initials Country Subcustodian Central Depository
________ China The Hongkong and Shanghai Securities Central
Shanghai Banking Clearing and Registration
Corporation Limited Corporation (SSCCRC);
Shenzhen Securities
Registrars Co., Ltd. and its
designated agent banks
________ Colombia Cititrust Colombia S.A. None
Sociedad Fiduciaria
________ Cyprus Barclays Bank PLC None
________ Denmark Den Danske Bank Vaerdipapircentralen --
The Danish Securities
Center (VP)
________ Finland Kansallis-Osake-Pankki The Central Share Register
of Finland
________ France Banque Paribas Societe Interprofessionnelle
pour la Compensation des
Valeurs Mobilieres
(SICOVAM);
Banque de France,
Saturne System
________ Germany Berliner Handels- The Deutscher Kassenverein
und Frankfurter Bank AG
________ Greece National Bank of The Central Depository
Greece S.A. (Apothetirio Titlon A.E.)
________ Hong Kong Standard Chartered Bank The Central Clearing and
Settlement System (CCASS)
Page Two
[Logo] State Street
<PAGE>
SCHEDULE A
17f-5 APPROVAL
Fund
Officer
Initials Country Subcustodian Central Depository
________ Hungary Citibank Budapest Rt. None
________ India The Hongkong and None
Shanghai Banking
Corporation Limited
________ Indonesia Standard Chartered Bank None
________ Ireland Bank of Ireland None;
The Central Bank of Ireland,
The Gilt Settlement Office
(GSO)
________ Israel Bank Hapoalim B.M. The Clearing House of the
Tel Aviv Stock Exchange
________ Italy Morgan Guaranty Monte Titoli S.p.A.;
Trust Company
Banca d'Italia
________ Japan Sumitomo Trust None;
& Banking Co., Ltd.
Bank of Japan Net System
________ Korea Bank of Seoul None
________ Malaysia Standard Chartered Bank None
________ Mexico Citibank, N.A. S.D. INDEVAL, S.A. de C.V.
(Instituto para el Deposito
de Valores);
Banco de Mexico
Page Three
[Logo] State Street
<PAGE>
SCHEDULE A
17f-5 APPROVAL
Fund
Officer
Initials Country Subcustodian Central Depository
________ Netherlands MeesPierson N.V. Nederlands Centraal
Instituut voor Giraal
Effectenverkeer B.V.
(NECIGEF)
________ New Zealand ANZ Banking Group None;
(New Zealand) Limited
The Reserve Bank of
New Zealand,
Austraclear NZ
________ Norway Christiania Bank og Verdipapirsentralen -
Kreditkasse The Norwegian Registry
of Securities (VPS)
________ Pakistan Deutsche Bank AG None
________ Peru Citibank, N.A. Caja de Valores (CAVAL)
________ Philippines Standard Chartered Bank None
________ Portugal Banco Comercial Portugues Central de Valores
Mobiliarios (Central)
________ Singapore The Development Bank The Central Depository
of Singapore Ltd. (Pte) Limited (CDP)
________ Spain Banco Santander, S.A. Servicio de Compensacion y
Liquidacion de Valores
(SCLV);
Banco de Espana,
Anotaciones en Cuenta
________ Sri Lanka The Hongkong and The Central Depository
Shanghai Banking System (Pvt) Limited
Corporation Limited
Page Four
[Logo] State Street
<PAGE>
SCHEDULE A
17f-5 APPROVAL
Fund
Officer
Initials Country Subcustodian Central Depository
________ Sweden Skandinaviska Enskilda Vardepapperscentralen -
Banken The Swedish Securities
Register Center (VPC)
________ Switzerland Union Bank of Switzerland Schweizerische Effekten -
Giro AG (SEGA)
________ Taiwan Central Trust of China The Taiwan Securities
Central Depository
Company, Ltd. (TSCD)
________ Thailand Standard Chartered Bank The Share Depository Center
(SDC)
________ Turkey Citibank, N.A. None
RTP United State Street Bank and None;
Kingdom Trust Company
The Bank of England,
The Central Gilts Office
(CGO); The Central
Moneymarkets Office (CMO)
________ Uruguay Citibank, N.A. None
________ Venezuela Citibank, N.A. None
RTP Euroclear / State Street London Limited
RTP Cedel / State Street London Limited
Certified by:
/s/ Richard T. Potter, Jr.
Richard T. Potter, Jr., Counsel September 15, 1993
- -------------------------------------- ------------------
Fund's Authorized Officer Date
Page Five
[Logo] State Street
<PAGE>
EXHIBIT 1
CUSTODIAN AGREEMENT
TO:
Gentlemen:
The undersigned ("State Street") hereby requests that you (the "Bank")
establish a custody account and a cash account for each State Street client
whose account is identified to this Agreement. Each such custody or cash account
as applicable will be referred to herein as the "Account" and will be subject to
the following terms and conditions:
1. The Bank shall hold as agent for State Street and shall physically
segregate in the Account such cash, bullion, coin, stocks, shares, bonds,
debentures, notes and other securities and other property which is delivered to
the Bank for that State Street Account (the "Property").
2. (a) Without the prior approval of State Street it will not deposit
securities in any securities depository or utilize a clearing agency,
incorporated or organized under the laws of a country other than the United
States, unless such depository or clearing house operates the central system for
handling of securities or equivalent book-entries in that country or operates a
transnational system for the central handling of securities or equivalent
book-entries.
(b) When Securities held for an Account are deposited in a securities
depository or clearing agency by the Bank, the Bank shall identify on its books
as belonging to State Street as agent for such Account, the Securities so
deposited.
The Bank represents that either:
3. (a) It currently has stockholders' equity in excess of $200 million (US
dollars or the equivalent of US dollars computed in accordance with generally
accepted US accounting principles) and will promptly inform State Street in the
event that there appears to be a substantial likelihood that its stockholders'
equity will decline below $200 million, or in any event, at such time as its
stockholders' equity in fact declines below $200 million; or
(b) It is the subject of an exemptive order issued by the United
States Securities and Exchange Commission, which such order permits State Street
to employ the Bank as a subcustodian, notwithstanding the fact that the Bank's
stockholders' equity is currently below $200 million or may in the future
decline below $200 million due to currency fluctuation;
4. Upon the written instructions of State Street as permitted by Section
8, the Bank is authorized to pay out cash from the Account and to sell, assign,
transfer, deliver or exchange, or to purchase for the Account,
<PAGE>
any and all stocks, shares, bonds, debentures, notes and other securities
("Securities"), bullion, coin and other property, but only as provided in such
written instructions. The Bank shall not be held liable for any act or omission
to act on instructions given or purported to be given should there be any error
in such instructions.
5. Unless the Bank receives written instructions of State Street to the
contrary, the Bank is authorized:
a. To promptly receive and collect all income and principal with
respect to the Property and to credit cash receipts to the Account;
b. To promptly exchange Securities where the exchange is purely
ministerial (including, without limitation, the exchange of
temporary Securities for those in definitive form and the exchange
of warrants, or other documents of entitlement to Securities, for
the Securities themselves);
c. To promptly surrender Securities at maturity or when called for
redemption upon receiving payment therefor;
d. Whenever notification of a rights entitlement or a fractional
interest resulting from a rights issue, stock dividend or stock
split is received for the Account and such rights entitlement or
fractional interest bears an expiration date, the Bank will endeavor
to obtain State Street's instructions, but should these not be
received in time for the Bank to take timely action, the Bank is
authorized to sell such rights entitlement or fractional interest
and to credit the Account;
e. To hold registered in the name of the nominee of the Bank or its
agents such Securities as are ordinarily held in registered form;
f. To execute in State Street's name for the Account, whenever the Bank
deems it appropriate, such ownership and other certificates as may
be required to obtain the payment of income from the Property; and
g. To pay or cause to be paid from the Account any and all taxes and
levies in the nature of taxes imposed on such assets by any
governmental authority, and shall use reasonable efforts to promptly
reclaim any foreign withholding tax relating to the Account.
6. If the Bank shall receive any proxies, notices, reports, or other
communications relative to any of the Securities of the Account in connection
with tender offers; reorganizations, mergers, consolidations, or similar events
which may have an impact upon the issuer thereof, the Bank shall promptly
transmit any such communication to State Street by means as will permit State
Street to take timely action with respect thereto.
7. The Bank is authorized in its discretion to appoint brokers and agents
in connection with the Bank's handling of transactions relating to the Property
provided that any such appointment shall not relieve the Bank of any of its
responsibilities or liabilities hereunder.
<PAGE>
8. Written instructions shall include (i) instructions in writing signed
by such persons as are designated in writing by State Street (ii) telex or
tested telex instructions of State Street, (iii) other forms of instruction in
computer readable form as shall be customarily utilized for the transmission of
like information and (iv) such other forms of communication as from time to time
shall be agreed upon by State Street and the Bank.
9. The Bank shall supply periodic reports with respect to the safekeeping
of assets held by it under this Agreement. The content of such reports shall
include but not be limited to any transfer to or from any Account held by the
Bank hereunder and such other information as State Street may reasonably
request.
10. In addition to its obligations under Section 2 hereof, the Bank shall
maintain such other records as may be necessary to identify the assets hereunder
as belonging to each State Street client identified to this Agreement from time
to time.
1l. The Bank agrees that its books and records relating to its actions
under this Agreement shall be opened to the physical, on-premises inspection and
audit at reasonable times by officers of, auditors employed by or other
representatives of State Street (including to the extent permitted under
___________ law the independent public accountants for any entity whose Property
is being held hereunder) and shall be retained for such period as shall be
agreed by State Street and the Bank.
12. The Bank shall be entitled to reasonable compensation for its services
and expenses as custodian under this Agreement, as agreed upon from time to time
by the Bank and State Street.
13. The Bank shall exercise reasonable care in the performance of its
duties as are set forth or contemplated herein or contained in instructions
given to the Bank which are not contrary to this Agreement, and shall maintain
adequate insurance and agrees to indemnify and hold State Street and each
Account from and against any loss, damage, cost, expense, liability or claim
arising out of or in connection with the Bank's performance of its obligations
hereunder.
14. The Bank agrees that (i) the Property is not subject to any right,
charge, security interest, lien or claim of any kind in favor of the Bank or any
of its agents or its creditors except a claim of payment for their safe custody
and administration and (ii) the beneficial ownership of the Property shall be
freely transferable without the payment of money or other value other than for
safe custody or administration.
15. This Agreement may be terminated by the Bank or State Street by at
least 60 days' written notice to the other, sent by registered mail or express
courier. The Bank, upon the date this Agreement terminates pursuant to notice
which has been given in a timely fashion, shall deliver the Property in
accordance with written issnstructions of State Street specifying the name(s) of
the person(s) to whom the Property shall be delivered.
<PAGE>
16. The Bank and State Street shall each use its best efforts to maintain
the confidentiality of the Property in each Account, subject, however, to the
provisions of any laws requiring the disclosure of the Property.
17. The Bank agrees to follow such Operating Requirements as State Street
may require from time to time. A copy of the current State Street Operating
Requirements is attached as an exhibit to this Agreement.
18. Unless otherwise specified in this Agreement, all notices with respect
to matters contemplated by this Agreement shall be deemed duly given when
received in writing or by tested telex by the Bank or State Street at their
respective addresses set forth below, or at such other address as specified in
each case in a notice similarly given:
To State Street: Global Custody Services Division
STATE STREET BANK AND TRUST
COMPANY
P. 0. Box 470
Boston, Massachusetts 02102
To the Bank:
19. This Agreement shall be governed by and construed in accordance with
the laws of ________.
Please acknowledge your agreement to the foregoing by executing a copy of
this letter.
Very truly yours,
STATE STREET BANK AND TRUST
COMPANY
By
----------------------------
Agreed to by :
By
----------------------------
Date
--------------------------
TRANSFER AGENCY AND SERVICE AGREEMENT
between
THE GUARDIAN STOCK FUND, INC,
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
Page
----
Article 1 Terms of Appointment; Duties of the Bank .........................1
Article 2 Fees and Expenses ................................................4
Article 3 Representations and Warranties of the Bank .......................5
Article 4 Representations and Warranties of the Fund .......................6
Article 5 Indemnification ..................................................6
Article 6 Covenants of the Fund and the Bank ...............................9
Article 7 Termination of Agreement ........................................11
Article 8 Assignment ......................................................11
Article 9 Amendment .......................................................12
Article 10 Massachusetts Law to Apply ......................................12
Article 11 Merger of Agreement .............................................12
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the 2nd day of January, 1987, by and between THE
GUARDIAN STOCK FUND, INC., a Maryland corporation, having its principal office
and place of business at 201 Park Avenue South, New York, New York 10003 (the
"Fund"), and STATE STREET BANK AND TRUST COMPANY, a Massachusetts corporation
having its principal office and place of business at 225 Franklin Street,
Boston, Massachusetts 02110 (the "Bank").
WHEREAS, the Fund desires to appoint the Bank as its transfer agent,
dividend disbursing agent and agent in connection with certain other activities,
and the Bank desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
Article 1 Terms of Appointment; Duties of the Bank
1.01 Subject to the terms and conditions set forth in this
Agreement, the Fund hereby employs and appoints the Bank to act as, and the Bank
agrees to act as its transfer agent for the Fund's authorized and issued shares
of its common stock, $.10 par value, ("Shares"), dividend disbursing agent and
agent in connection with any accumulation, open-account or similar plans
provided to the shareholders of the Fund ("Shareholders") and set out in the
currently effective prospectus and statement of additional information
("prospectus") of the Fund, including without limitation any periodic investment
plan or periodic withdrawal program.
<PAGE>
1.02 The Bank agrees that it will perform the following services:
(a) In accordance with procedures established from time to time by
agreement between the Fund and the Bank, the Bank shall:
(i) Receive for acceptance, orders for the purchase of Shares, and
promptly deliver payment and appropriate documentation
therefor to the Custodian of the Fund authorized pursuant to
the Articles of Incorporation of the Fund (the "Custodian");
(ii) Pursuant to purchase orders, issue the appropriate number of
Shares and hold such Shares in the appropriate Shareholder
account;
(iii) Receive for acceptance redemption requests and redemption
directions and deliver the appropriate documentation therefor
to the Custodian;
(iv) At the appropriate time as and when it receives monies paid to
it by the Custodian with respect to any redemption, pay over
or cause to be paid over in the appropriate manner such monies
as instructed by the redeeming Shareholders;
(v) Effect transfers of Shares by the registered owners thereof
upon receipt of appropriate instructions;
(vi) Prepare and transmit payments for dividends and distributions
declared by the Fund;
-2-
<PAGE>
(vii) Maintain records of account for and advise the Fund and its
Shareholders as to the foregoing; and
(viii) Record the issuance of shares of the Fund and maintain
pursuant to SEC Rule l7Ad-l0(e) a record of the total number
of shares of the Fund which are authorized, based upon data
provided to it by the Fund, and issued and outstanding. Bank
shall also provide the Fund on a regular basis with the total
number of shares which are authorized and issued and
outstanding and shall have no obligation, when recording the
issuance of shares, to monitor the issuance of such shares or
to take cognizance of any laws relating to the issue or sale
of such shares, which functions shall be the sole
responsibility of the Fund.
(b) In addition to and not in lieu of the services set forth in the
above paragraph (a), the Bank shall: (i) perform all of the customary services
of a transfer agent, dividend disbursing agent and, as relevant, agent in
connection with accumulation, open-account or similar plans (including without
limitation any periodic investment plan or periodic withdrawal program),
including but not limited to: maintaining all Shareholder accounts, preparing
Shareholder meeting lists, mailing proxies, receiving and tabulating proxies,
mailing Shareholder reports and prospectuses to current Shareholders,
withholding taxes on non-resident alien accounts, preparing and filing U.S.
Treasury Department Forms 1099 and other appropriate
-3-
<PAGE>
forms required with respect to dividends and distributions by federal
authorities for all Shareholders, preparing and mailing confirmation forms and
statements of account to Shareholders for all purchases and redemptions of
Shares and other confirmable transactions in Shareholder accounts, preparing and
mailing activity statements for Shareholders, and providing Shareholder account
information and (ii) provide a system which will enable the Fund to monitor the
total number of Shares sold in each State. The Fund shall (i) identify to the
Bank in writing those transactions and assets to be treated as exempt from blue
sky reporting for each State and (ii) verify the establishment of transactions
for each State on the system prior to activation and thereafter monitor the
daily activity for each State. The responsibility of the Bank for the Fund's
blue sky State registration status is solely limited to the initial
establishment of transactions subject to blue sky compliance by the Fund and the
reporting of such transactions to the Fund as provided above.
Procedures applicable to certain of these services may be established from
time to time by agreement between the Fund and the Bank.
Article 2 Fees and Expenses
2.01 For performance by the Bank pursuant to this Agreement, the
Fund agrees to pay the Bank an annual maintenance fee for each Shareholder
account as set out in the initial fee schedule attached hereto. Such fees and
out-of-pocket expenses and advances identified under Section 2.02 below may be
changed
-4-
<PAGE>
from time to time subject to mutual written agreement between the Fund and the
Bank.
2.02 In addition to the fee paid under Section 2.01 above, the Fund
agrees to reimburse the Bank for out-of-pocket expenses or advances incurred by
the Bank for the items set out in the fee schedule attached hereto. In addition,
any other expenses incurred by the Bank at the request or with the consent of
the Fund, will be reimbursed by the Fund.
2.03 The Fund agrees to pay all fees and reimbursable expenses
within five days following the mailing of the respective billing notice. Postage
for mailing of dividends, proxies, Fund reports and other mailings to all
shareholder accounts shall be advanced to the Bank by the Fund at least seven
(7) days prior to the mailing date of such materials.
Article 3 Representations and Warranties of the Bank
The Bank represents and warrants to the Fund that:
3.01 It is a corporation duly organized and existing and in good
standing under the laws of The Commonwealth of Massachusetts.
3.02 It is duly qualified to carry on its business in The
Commonwealth of Massachusetts.
3.03 It is empowered under applicable laws and by its charter and
by-laws to enter into and perform this Agreement.
3.04 All requisite corporate proceedings have been taken to
authorize it to enter into and perform this Agreement.
3.05 It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its
-5-
<PAGE>
duties and obligations under this Agreement.
Article 4 Representations and Warranties of the Fund
The Fund represents and warrants to the Bank that;
4.01 It is a corporation duly organized and existing and in good
standing under the laws of Maryland.
4.02 It is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into and perform this Agreement.
4.03 All corporate proceedings required by said Articles of
Incorporation and By-Laws have been taken to authorize it to enter into and
perform this Agreement.
4.04 It is an open-end and diversified management investment company
registered under the Investment Company Act of 1940.
4.05 A registration statement under the Securities Act of 1933 is
currently effective and will remain effective, and appropriate state securities
law filings have been made and will continue to be made, with respect to all
Shares of the Fund being offered for sale.
Article 5 Indemnification
5.01 The Bank shall not be responsible for, and the Fund shall
indemnify and hold the Bank harmless from and against, any and all losses,
damages, costs, charges, counsel fees, payments, expenses and liability arising
out of or attributable to:
(a) All actions of the Bank or its agent or subcontractors required
to be taken pursuant to this Agreement,
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<PAGE>
provided that such actions are taken in good faith and without negligence or
willful misconduct.
(b) The Fund's refusal or failure to comply with the terms of this
Agreement, or which arise out of the Fund's lack of good faith, negligence or
willful misconduct or which arise out of the breach of any representation or
warranty of the Fund hereunder.
(c) The reliance on or use by the Bank or its agents or
subcontractors of information, records and documents which (i) are received by
the Bank or its agents or subcontractors and furnished to it by or on behalf of
the Fund, and (ii) have been prepared and/or maintained by the Fund or any other
person or firm on behalf of the Fund.
(d) The reliance on, or the carrying out by the Bank or its agents
or subcontractors of any instructions or requests of the Fund.
(e) The offer or sale of Shares in violation of any requirement
under the federal securities laws or regulations or the securities laws or
regulations of any state that such Shares be registered in such state or in
violation of any stop order or other determination or ruling by any federal
agency or any state with respect to the offer or sale of such Shares in such
state.
5.02 The Bank shall indemnify and hold the Fund harmless from and
against any and all losses, damages, costs, charges, counsel fees, payments,
expenses and liability arising out of or attributable to any action or failure
or omission to act by the Bank as a result of the Bank's lack of good faith,
negligence or willful misconduct.
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<PAGE>
5.03 At any time the Bank may apply to any officer of the Fund for
instructions, and may consult with legal counsel with respect to any matter
arising in connection with the services to be performed by the Bank under this
Agreement, and the Bank and its agents or subcontractors shall not be liable and
shall be indemnified by the Fund for any action taken or omitted by it in
reliance upon such instructions or upon the opinion of such counsel. The Bank,
its agents and subcontractors shall be protected and indemnified in acting upon
any paper or document furnished by or on behalf of the Fund, reasonably believed
to be genuine and to have been signed by the proper person or persons, or upon
any instruction, information, data, records or documents provided the Bank or
its agents or subcontractors by machine readable input, telex, CRT data entry or
other similar means authorized by the Fund, and shall not be held to have notice
of any change of authority of any person, until receipt of written notice
thereof from the Fund. The Bank, its agents and subcontractors shall also be
protected and indemnified in recognizing stock certificates which are reasonably
believed to bear the proper manual or facsimile signatures of the officers of
the Fund, and the proper countersignature of any former transfer agent or
registrar, or of a co-transfer agent or co-registrar.
5.04 In the event either party is unable to perform its obligations
under the terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other causes
reasonably beyond its control, such party shall not be liable for damages to the
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<PAGE>
other for any damages resulting from such failure to perform or otherwise from
such causes.
5.05 Neither party to this Agreement shall be liable to the other
party for consequential damages under any provision of this Agreement or for any
act or failure to act hereunder.
5.06 In order that the indemnification provisions contained in this
Article 5 shall apply, upon the assertion of a claim for which either party may
be required to indemnify the other, the party seeking indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The party
who may be required to indemnify shall have the option to participate with the
party seeking indemnification in the defense of such claim. The party seeking
indemnification shall in no case confess any claim or make any compromise in any
case in which the other party may be required to indemnify it except with the
other party's prior written consent.
Article 6 Covenants of the Fund and the Bank
6.01 The Fund shall promptly furnish to the Bank the following:
(a) A certified copy of the resolution of the Board of Directors of
the Fund authorizing the appointment of the Bank and the execution and delivery
of this Agreement.
(b) A copy of the Articles of Incorporation and By-Laws of the Fund
and all amendments thereto.
6.02 The Bank hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Fund for
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<PAGE>
safekeeping of stock certificates, check forms and facsimile signature
imprinting devices, if any; and for the preparation or use, and for keeping
account of, such certificates, forms and devices.
6.03 The Bank shall keep records relating to the services to be
performed hereunder, in the form and manner as it may deem advisable. To the
extent required by Section 31 of the Investment Company Act of 1940, as amended,
and the Rules thereunder, the Bank agrees that all such records prepared or
maintained by the Bank relating to the services to be performed by the Bank
hereunder are the property of the Fund and will be preserved, maintained and
made available in accordance with such Section and Rules, and will be
surrendered promptly to the Fund on and in accordance with its request.
6.04 The Bank and the Fund agree that all books, records,
information and data pertaining to the business of the other party which are
exchanged or received pursuant to the negotiation or the carrying out of this
Agreement shall remain confidential, and shall not be voluntarily disclosed to
any other person, except as may be required by law. The Bank or its agents or
subcontractors shall submit to all regulatory and administrative bodies having
jurisdiction over services provided pursuant to this Agreement, present or
future, any information, reports or other materials which any such body by
reason of this Agreement may request or require pursuant to applicable laws and
regulations.
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<PAGE>
6.05 In case of any requests or demands for the inspection of the
Shareholder records of the Fund, the Bank will endeavor to notify the Fund and
to secure instructions from an authorized officer of the Fund as to such
inspection. The Bank reserves the right, however, to exhibit the Shareholder
records to any person whenever it is advised by its counsel that it may be held
liable for the failure to exhibit the Shareholder records to such person.
6.06 Notwithstanding any provision contained herein to the contrary,
the fund retains the ultimate responsibility and authority for direction and
control of the services provided pursuant to this Agreement.
Article 7 Termination of Agreement
7.01 This Agreement may be terminated by either party upon ninety
(90) days written notice to the other.
7.02 Should the Fund exercise its right to terminate, all
out-of-pocket expenses associated with the movement of records and material will
be borne by the Fund. Additionally, the Bank reserves the right to charge for
any other reasonable expenses associated with such termination and/or a charge
equivalent to the average of three (3) months' fees.
Article 8 Assignment
8.01 Except as provided in Section 8.03 below, neither this
Agreement nor any rights or obligations hereunder may be assigned by either
party without the written consent of the other party.
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8.02 This Agreement shall inure to the benefit of and be binding
upon the parties and their respective permitted successors and assigns.
8.03 The Bank may, without further consent on the part of the Fund,
subcontract for the performance hereof with (i) Boston Financial Data Services,
Inc., a Massachusetts corporation ("BFDS") which is duly registered as a
transfer agent pursuant to Section 17A(c)(1) of the Securities Exchange Act of
1934 ("Section 17A(c)(1)"), or (ii) a BFDS subsidiary duly registered as a
transfer agent pursuant to Section 17A(c)(1); provided, however, that the Bank
shall be as fully responsible to the Fund for the acts and omissions of any
subcontractor as it is for its own acts and omissions.
Article 9 Amendment
9.01 This Agreement may be amended or modified by a written
agreement executed by both parties and authorized or approved by a resolution of
the Board of Directors of the Fund.
Article 10 Massachusetts Law to Apply
10.01 This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of The Commonwealth of
Massachusetts.
Article 11 Merger of Agreement
11.01 This Agreement constitutes the entire agreement between the
parties hereto and supersedes any prior agreement with respect to the subject
matter hereof whether oral or written.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed in their names and on their behalf under their seals by and through
their duly authorized officers, as of the day and year first above written.
THE GUARDIAN STOCK FUND, INC.
BY: /s/ John M. Smith
----------------------------
Vice President
ATTEST:
/s/ Thomas R. Hickey, Jr.
- ----------------------------
Counsel
STATE STREET BANK AND TRUST COMPANY
BY: /s/ [ILLEGIBLE]
----------------------------
Vice President
ATTEST:
/s/ [ILLEGIBLE]
- ----------------------------
Assistant Secretary
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Ex-99.10(b)
CONSENT OF COUNSEL
I hereby consent both to the reference to my name under the heading "Legal
Opinions" in the Statement of Additional Information constituting part of this
Post-Effective Amendment to the Registration Statement on Form N-1A for The
Guardian Stock Fund, Inc. and to the filing of this consent as an exhibit to
said Amendment.
/s/ RICHARD T. POTTER, JR.
---------------------------------
Richard T. Potter, Jr.
Counsel
New York, New York
February 27, 1997
Ex-99.11(b)
CONSENT OF INDEPENDENT COUNSEL
[ LETTERHEAD ]
The Guardian Stock Fund, Inc.
201 Park Avenue South
New York, New York 10003
February 27, 1998
Gentlemen and Ladies:
We hereby consent to the reference to our name under the heading "Legal
Opinions" in the Statement of Additional Information contained in Post-Effective
Amendment No. 16 to the registration statement on Form N-1A for The Guardian
Stock Fund, Inc. (File No. 2-81149) and to the filing of this consent as an
exhibit to the registration statement.
Very truly yours,
VEDDER, PRICE, KAUFMAN & KAMMHOLZ
/s/ CATHY G. O'KELLY
----------------------------------------
Cathy G. O'Kelly
