SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. __)
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[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section (240.14a-11(c)
or Section (240.14a-12
The Park Avenue Portfolio
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(Name of Registrant as Specified In Its Charter)
Board of Trustees of The Park Avenue Portfolio
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(Name of Person(s) Filing Proxy Statement)
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THE PARK AVENUE PORTFOLIO
The Guardian Asset Allocation Fund
201 Park Avenue South, New York, New York 10003
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Notice of Special Meeting of Shareholders
April 8, 1997
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A special meeting of the shareholders of THE GUARDIAN ASSET ALLOCATION FUND
(the "Fund"), a series of THE PARK AVENUE PORTFOLIO, will be held on Tuesday,
April 8, 1997, at 9:30 a.m., New York time, for the following purposes:
1. To consider a proposal to amend the Fund's fundamental investment
restriction with respect to issuer diversification;
2. To consider a proposal to amend the Fund's fundamental investment
restriction with respect to investment in other investment companies;
and
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The meeting will be held at the offices of The Guardian Life Insurance
Company of America, 201 Park Avenue South, Mezzanine Floor, New York, New York
10003.
You are entitled to notice of and to vote at the meeting, and any
adjournments thereof, if you owned or had a voting interest in shares of the
Fund at the close of business on January 31, 1997.
By order of the Board of Trustees,
Joseph A. Caruso, Secretary
February 10, 1997
YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU OWN
Please indicate your voting instructions on the enclosed proxy card,
date and sign the proxy card, and return it in the accompanying postage-paid
envelope. If you sign and date your proxy card but do not provide voting
instructions, your shares will be voted FOR all of the proposals. If you are
entitled to vote the shares in more than one shareholder account, to vote all
your shares you must complete and return a separate proxy card for each account
in which you have an interest.
Please help us to avoid unnecessary expense by completing and mailing your
proxy card promptly.
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THE PARK AVENUE PORTFOLIO
The Guardian Asset Allocation Fund
201 Park Avenue South, New York, New York 10003
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Proxy Statement for Special Meeting of Shareholders
April 8, 1997
TO THE SHAREHOLDERS:
A special meeting of shareholders of The Guardian Asset Allocation Fund
(the "Fund") will be held on April 8, 1997 at 9:30 a.m., New York time, at 201
Park Avenue South, Mezzanine Floor, New York, New York 10003, to consider the
proposals listed below. This Proxy Statement describes the proposals to be
considered and voted upon at the Special Meeting or any adjournment thereof, and
will be first mailed to shareholders on or about February 10, 1997.
You are entitled to notice of and to vote at the Special Meeting, and any
adjournments thereof, if you owned or had a voting interest in shares of the
Fund at the close of business on January 31, 1997 (the "Record Date"). Class A
shares and Class B shares of the Fund will be voted together as one class.
Please indicate your voting instructions on the enclosed proxy card, date
and sign the proxy card, and return it in the accompanying postage-paid
envelope. If you sign and date your proxy card but do not provide voting
instructions, your shares will be voted FOR each of the proposals. If you are
entitled to vote the shares in more than one shareholder account, in order to
vote all your shares you must complete and return a separate proxy card for each
account in which you have an interest. You may revoke a proxy card by submitting
a subsequent proxy card before the Meeting, by timely written notice, or by
attending and voting at the Meeting.
As of the Record Date, there were 6,853,238 Class A shares and 417,074
Class B shares of the Fund outstanding. Each full share of the Fund is entitled
to one vote and fractional shares are entitled to proportionate fractional
votes.
As of the Record Date, Guardian Investor Services Corporation ("GISC"), the
Fund's investment adviser, owned 132,829 Class B shares of the Fund and The
Guardian Life Insurance Company of America ("Guardian Life"), GISC's indirect
parent, owned 1,260,193 Class A shares. Together, such parties owned 19% of the
Fund's shares and intend to vote such shares FOR the proposals presented.
Management does not know of any other person who beneficially owned 5% or more
of the Fund's shares as of the Record Date.
The presence in person or by proxy of the holders of a majority of the
shares of the Fund entitled to be voted at the Meeting is required to establish
a quorum at the Meeting. If sufficient votes have not been received FOR either
proposal, an adjournment of the Meeting may be proposed to permit further
solicitation of proxies. The persons named as proxies will vote those shares
which they are entitled to vote in their best judgment on the issue of
adjournment.
In tallying shareholder votes, abstentions and broker non-votes (i.e.,
proxies sent in by brokers and other nominees which cannot be voted because
instructions have not been received from the beneficial owners) will be
considered to be entitled to
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be voted on both proposals, but will not be counted as affirmative votes for the
purposes of determining the requisite number of votes for approval; in effect,
they will be counted as votes against each proposal.
The expenses of this proxy solicitation will be paid by GISC. The
solicitation of proxies will be made primarily by mail, but also may include
telephone or oral communication by officers of the Fund or GISC, or by regular
employees of Guardian Life, none of whom will receive compensation from the Fund
for their participation in the solicitation. GISC has retained the services of
Management Information Services Corporation to mail the proxy materials and
tabulate the votes received for the Fund. The expenses associated with using the
services of this firm cannot be reasonably estimated at this time. However, any
such expenses will be paid by GISC. Failure of a quorum to be present in person
or by proxy at the Meeting will result in additional expenses to GISC.
The annual report of The Park Avenue Portfolio (the "Portfolio") for the
year ended December 31, 1995, and the semi-annual report for the six months
ended June 30, 1996, contain the financial statements of the Fund and can be
obtained without charge by calling GISC at 1-800-221-3253 or by writing to GISC
at 201 Park Avenue South, New York, New York 10003. The annual report of the
Portfolio for the year ended December 31, 1996 will be available on or about
February 28, 1997, and will be mailed to all shareholders who continue to own
shares on that date.
THE "FUND OF FUNDS" ARRANGEMENT
Introduction
The purpose of the Special Meeting is to seek your approval to amend two of
the fundamental investment policies of the Fund, in order to allow the Fund to
invest directly in other mutual funds for which GISC (or an affiliate of GISC)
serves as investment adviser. Each of the proposals you will consider is
related. If shareholders do not approve both of the proposals described in this
Proxy Statement, the proposed changes to the Fund's operations will not take
place and the Fund will not be able to invest in these other mutual funds as
proposed.
The Fund allocates its investments among three sectors: stocks, bonds and
money market instruments. Currently, the Fund purchases individual securities
within each sector. The Board of Trustees has approved a change in the
operations of the Fund so that, instead of purchasing individual securities, the
Fund would invest its assets in three other mutual funds managed by GISC that in
turn invest in the types of stocks, bonds and money market securities that the
Fund currently purchases directly. This arrangement is known as a "fund of
funds." For the reasons set forth under "Reasons for the Proposed Fund of Funds
Arrangement" below, the Trustees have determined that this structure will
benefit shareholders of the Fund. If, in the future, the Trustees determine that
the fund of funds arrangement is no longer in the best interests of shareholders
of the Fund, the Trustees may terminate the arrangement without shareholder
approval.
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The conversion of the Fund to a fund of funds is contingent upon your
approval of the proposals presented below, because the Fund currently has in
place certain fundamental investment restrictions which limit its ability to act
as a fund of funds. In addition, the conversion is contingent upon receipt of an
order of exemption from the Securities and Exchange Commission (the "SEC") from
certain provisions of the Investment Company Act of 1940 (the "1940 Act"), the
principal federal statute that governs the operation of the Portfolio and the
Fund. The order of exemption, if granted, would enable the Fund to operate as a
fund of funds as described in this proxy statement. The Fund and GISC have
applied for an order of exemption, which is described in more detail below in
"Requirement for Exemptive Relief from the SEC." Fund management anticipates
that the SEC will issue an order which permits the arrangements described in
this proxy statement. However, there is no assurance that the order will be
granted, and if the SEC fails to grant the exemption, the Fund will retain its
current operational structure.
Structure of the Fund of Funds
How the Fund Will Operate as a Fund of Funds
If the Fund operates as a fund of funds as proposed, the Fund intends to
invest in three mutual funds that are also series of the Portfolio, namely, The
Guardian Park Avenue Fund (the "Park Avenue Fund"), The Guardian Investment
Quality Bond Fund (the "Bond Fund") and The Guardian Cash Management Fund (the
"Cash Fund"). Each of these funds invests in the types of securities that the
Fund currently purchases--the Park Avenue Fund invests in equity securities, the
Bond Fund invests in debt securities and the Cash Fund invests in money market
instruments. In addition, Charles E. Albers, the portfolio manager of the Fund's
equity investments, also manages the Park Avenue Fund.
The Fund is currently permitted to engage in futures and options
transactions, as described in its prospectus, and would continue to be able to
do so as a fund of funds. In addition, the Fund will retain the ability to
invest in individual securities when GISC believes it would be advantageous to
do so. It is anticipated that the Fund would use this ability primarily to
purchase individual money market instruments, but the Fund could also purchase
other types of securities. Although it does not currently anticipate doing so,
the Fund also would be permitted to invest in any mutual fund currently in
existence or created in the future that is managed by GISC or an affiliate of
GISC, as long as that other fund would be an appropriate investment given the
Fund's investment objective and policies.
Expense Information
If the Fund converts to a fund of funds, it is anticipated that the level
of total annual expenses to be borne by shareholders will be less than the
current level, as explained below. Currently, the Fund pays an investment
advisory fee to GISC at the annual rate of 0.65% of the Fund's average daily net
assets, and an annual administrative services fee of 0.25% of average daily net
assets. Shareholders who own Class B shares of the Fund also pay an annual
distribution fee under a plan adopted pursuant to Rule 12b-1 under the 1940 Act
equal to 0.75% of the average daily net assets of the Class B shares.
Shareholders of the Fund also pay ongoing custodial, transfer agency and other
operating expenses.
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No additional sales charges. Normally, when an investor purchases shares of
any mutual fund in the Portfolio, including the Fund, the investor incurs sales
charges which may be imposed at the time of purchase (Class A shares) or upon
redemption (Class B shares). Purchasers of the Fund's shares will continue to be
subject to these sales charges. However, if the Fund invests in other mutual
funds managed by GISC or an affiliate of GISC, it will be exempt from paying any
sales charges normally charged to investors in those funds. Instead, the Fund
would purchase Class A shares of the other funds with a waiver of any applicable
sales charge. As a result, shareholders would not pay additional sales charges
when the Fund acts as a fund of funds.
Advisory fee. Under the proposed arrangement, the advisory fee of the Fund
would be structured differently during any period when the Fund is operated as a
fund of funds. As a fund of funds, the Fund's advisory fee will have two
components. It is anticipated that when the two components are combined, based
on the current fee structure of the underlying funds, the effective annual fee
payable by shareholders of the Fund for advisory services will be 0.50% of
average daily net assets, or 0.15% less than the annual advisory fee of 0.65%
currently in effect, as a result of certain undertakings by GISC.
The two components of the advisory fee under the fund of funds structure
are as follows: First, the portion of the Fund's assets invested in other mutual
funds will be subject to a proportionate share of the advisory fee paid by each
mutual fund in which the Fund invests. The Fund will not impose any additional
advisory fees for the portion of its assets invested in other mutual funds.
Under this first component, for the portion of assets invested in another
fund, the shareholders of the Fund will be subject to the advisory fees paid by
that fund. Since the Fund's current intention is to invest its assets
exclusively in the Park Avenue Fund, the Bond Fund and the Cash Fund, each of
which pays an annual advisory fee of 0.50% of average daily net assets,
shareholders of the Fund would bear an effective annual fee of 0.50% for assets
invested in those funds. If, in the future, the advisory fee rates of those
funds change, or if a new mutual fund is added to the list of funds in which the
Fund may invest, the effective annual rate of the advisory fee may change.
Management currently does not intend to propose any changes to any other fund's
advisory fees, or to add any other funds to the list of funds in which the Fund
may invest as a fund of funds. However, either event could occur without the
approval of the Fund's shareholders.
The second component of the advisory fee applies to the Fund's assets that
are not invested in other mutual funds but, instead, are invested by GISC on
behalf of the Fund directly in individual securities, such as money market
securities. The Fund will pay GISC a fee of 0.50% annually for the portion of
the Fund's assets that are invested in individual securities.
In total, it is anticipated that Fund shareholders would be subject to
advisory fees at an overall annual rate of 0.50%. This fee structure is made
possible because GISC has agreed, while the Fund operates as a fund of funds, to
waive a portion of the annual advisory fee which it is authorized to charge the
Fund. GISC would continue to have the right to impose a fee for services
relating to the ongoing reallocation of the Fund's assets among the stock, bond
and cash sectors. This portion of the advisory fee would be, on an annual basis,
up to 0.15% of average daily net assets of the Fund. GISC may discontinue this
waiver, subject to the approval of the Fund's Trustees. It is not anticipated
that GISC will seek the Trustees' approval for discontinuance of all or any
portion of this waiver unless it can successfully demonstrate that the costs of
the allocation services provided by GISC exceed those currently anticipated.
GISC also will not impose any advisory fee on assets of the Fund that are
invested in other mutual funds, since such assets will be subject to a
proportionate share of the advisory fees payable by those funds.
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Shareholders should be aware that the Fund will continue to be authorized
by its advisory agreement with GISC to impose an investment advisory fee at the
annual rate of 0.65% of average daily net assets. If, in the future, the
Trustees determine that it is no longer in the Fund's best interests to operate
as a fund of funds and the arrangement is terminated, absent other action the
advisory fee would return to the annual rate of 0.65%. If the Trustees determine
to discontinue the fund of funds arrangement, their decision would not be
subject to a shareholder vote.
Administrative services fee. Currently, each class of shares of the Fund is
subject to an annual administrative services fee of 0.25%. Under the fund of
funds arrangement the aggregate amount of this fee would not change, but it
would be charged in a manner similar to that of the advisory fee, as described
above. The administrative services fee, which is charged to the Park Avenue
Fund, the Bond Fund and the Cash Fund at the same rate as the Fund's current
fee, would be assessed at the level of those funds to the extent that the Fund
invests in those funds, and will continue to be assessed at a rate of 0.25% of
the Fund's average daily net assets to the extent that the Fund invests in
individual securities.
Other operating expenses. Certain operating expenses currently applicable
to shareholders of the Fund, including fees for custodial services, trustees'
fees, legal and accounting services and transfer agency services, will be
incurred at two levels. Shareholders of the Fund will continue to bear these
fees, and will also be subject to their pro rata portion of the comparable fees
paid by the Park Avenue Fund, the Bond Fund and the Cash Fund. Management will
make every effort to eliminate any of these types of expenses that are
duplicative, and believes that certain of these expenses can be reduced.
However, not all duplicative expenses can be entirely eliminated. It is
anticipated that any increase in these operating expenses will not be material
to shareholders of the Fund, and are, in the aggregate, expected to be more than
offset by the expected reduction in the advisory fee described above.
The following table shows the actual annual operating expenses of the Fund
for the year ended December 31, 1996, and shows estimated annual operating
expenses following the conversion to a fund of funds:
<TABLE>
<CAPTION>
Actual Estimated Effective
Expenses Annual Expenses
-------- ---------------
Class A shares Class B shares Class A shares Class B shares
<S> <C> <C> <C> <C>
Management Fees 0.65% 0.65% 0.50%(after waiver)* 0.50%(after waiver)*
12b-1 Fees None 0.75% None 0.75%
Administrative Fees 0.25% 0.25% 0.25% 0.25%
Other Expenses 0.40% 0.75% 0.34% 0.76%
------ ------ --- ---
Total Operating
Expenses 1.30% 2.40% 1.09% 2.26%
*As described above under "Advisory Fee", absent certain fee waivers by GISC,
"Management Fees" for the Fund would continue to be 0.65%, on an annual basis,
of average daily net assets, and "Total Operating Expenses" would be 1.24% for
Class A shares and 2.41% for Class B shares.
</TABLE>
Finally, it is possible that Fund shareholders will experience a reduction
in trading costs when the Fund is operated as a fund of funds. In contrast to
securities purchases currently made directly by the
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Fund, the Park Avenue Fund and the Bond Fund may be able to spread their trading
costs over a larger asset base and to take advantage of reduced prices for
larger securities trades.
Reasons for the Proposed Fund of Funds Arrangement
The Trustees of the Portfolio believe that the proposed arrangements will
benefit the shareholders of the Fund in several respects. First, the proposed
arrangement will give the Fund a greater level of diversification in the number
and types of securities in its portfolio, which should reduce the Fund's overall
level of risk. To illustrate this point, consider the relative sizes of the
Fund's investment portfolio and the portfolios of the other mutual funds. The
current level of assets of the Fund was approximately $93.3 million as of
December 31, 1996. This amount was allocated as follows: approximately 63% was
invested in 152 different securities in the equity sector, 11% in 10 different
bond issues, and the remainder in cash equivalents and options. In comparison,
the Park Avenue Fund had assets of approximately $1.43 billion on that date
invested in 302 different securities issues, the Bond Fund had assets of
approximately $50.8 million invested in 51 different bond issues, and the Cash
Fund had approximately $90.8 million invested in money market securities.
Because of their larger proportionate size, the Park Avenue Fund, the Bond
Fund and the Cash Fund can each hold a far greater number of securities, and
will be more broadly diversified, than the Fund. If the Fund adopts a fund of
funds structure, it will receive the benefit of this greater diversification.
With greater diversification in its investments, the Fund would be less affected
by a decline in the price of any individual security in its portfolio. It is
unlikely that, absent the use of a fund of funds arrangement, the Fund would
grow large enough to achieve this level of diversification for a considerable
period of time. GISC believes that this greater diversification could enhance
fund performance, although there is no assurance that this will occur.
The Trustees also believe that the Fund and its shareholders would benefit
from a reduced level of fees. As described above under "Structure of the Fund of
Funds--Expense Information," management expects that there will be a reduction
in the overall fee level of the Fund following the conversion to a fund of
funds. To the extent that the Fund's fees are reduced, the Fund should
experience a higher level of return, assuming the same performance results.
Although there is no assurance that the Fund's performance will be enhanced
after a conversion to a fund of funds structure, management believes that the
expected reduction in fees will benefit the Fund.
In addition, upon a conversion to a fund of funds, management believes that
the Fund will be operated more efficiently than is currently possible. Because
of the Fund's lower asset level in proportion to the Park Avenue Fund, the Bond
Fund and the Cash Fund, the Fund often trades securities in smaller amounts than
such funds. Management believes that the Fund is unable to take full advantage
of investment opportunities that are available to funds that trade in larger
blocks of securities. As a fund of funds, the Fund would be in a position to
benefit from the ability of the underlying funds to take advantage of these
opportunities, as well as the anticipated savings in trading costs described
above under "Other Operating Expenses."
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Requirement for Exemptive Relief from the SEC
The proposed change in the Fund's structure is subject to the receipt of an
order from the SEC granting an exemption from certain provisions of the 1940
Act. The 1940 Act provides, in general, that an investment company such as the
Fund may not invest more than an aggregate of 10% of its total assets in other
mutual funds and provides other limits on investments in individual mutual
funds. The 1940 Act also restricts certain transactions between affiliated
mutual funds. The Fund has filed an application for an order of exemptive relief
from these provisions of the 1940 Act to the extent that they would limit the
Fund's ability to operate as proposed. The application describes in detail the
proposed fund of funds arrangement, which has been structured to be consistent
with other fund of fund arrangements that the SEC has previously approved. In
the application, the Fund and GISC have agreed to abide by certain conditions
that the SEC has required in other fund of fund arrangements.
If granted, the order would enable the Fund to exceed the 10% aggregate
limit and certain other limitations on investing in shares of other mutual funds
provided in the 1940 Act, subject to certain conditions required by the SEC. The
order would also permit the Fund to engage in transactions with affiliated
mutual funds, to the extent necessary to operate as the proposed fund of funds
with GISC (or an affiliate of GISC) serving as adviser of each of the underlying
mutual funds. Although there can be no assurance that the SEC will grant the
order of exemption, management believes that it is likely that such an order
will be granted to allow the Fund to operate as a fund of funds. If the SEC
imposes additional restrictions as a condition to granting the exemption,
management believes that any such restrictions would not substantially affect
the description of the fund of funds arrangement set forth above.
* * * * * *
PROPOSAL NO. 1
APPROVAL OF AMENDMENT OF
FUNDAMENTAL INVESTMENT RESTRICTION
REGARDING ISSUER DIVERSIFICATION
As described above, it is necessary that shareholders of the Fund approve
changes to two of the Fund's fundamental investment restrictions in order for
the Fund to operate as a fund of funds. One limitation proposed to be amended is
the Fund's limitation with respect to the percentage of assets the Fund may
invest in the securities of any one issuer, and the percentage of assets of a
single issuer permitted to be owned by the Fund. Currently, the Fund's
fundamental investment restriction provides that:
[The Fund may not ... ] invest more than 5% of the value of its
total assets in the securities of any one issuer or purchase more
than 10% of the outstanding voting securities, or any other class
of securities, of any one issuer. ... This restriction does not
apply to obligations issued or guaranteed by the U.S. government,
its agencies or instrumentalities.
As proposed, the amended fundamental investment restriction would read
as follows:
[The Fund may not ... ] invest more than 5% of the value of its
total assets in the securities of any one issuer or purchase more
than 10% of the outstanding voting securities, or any other class
of securities, of any one issuer. ... This restriction does not
apply to obligations issued or guaranteed by the U.S. government,
its agencies or instrumentalities or to any security issued by
any investment company or series thereof. (New language is in
italics.)
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The current restriction limits the extent to which the Fund may invest in
any one issuer. This limitation is intended to protect the Fund's value from
excessive volatility as a result of the price fluctuations of a single security
owned by the Fund, and to prevent the Fund from acquiring control of too high a
percentage of an issuer. However, the 1940 Act explicitly states that
investments in other mutual funds need not be subject to this limitation, and
the proposed amendment would give the Fund the full flexibility afforded under
the 1940 Act. The Fund would continue to be "diversified," as that term is
defined in the 1940 Act.
If the proposed amendment is approved by shareholders, the Fund will be
able to invest in other mutual funds without regard to the limitations
applicable to investment in securities of other types of issuers. To the extent
that the Fund continues to purchase individual securities that are not U.S.
government securities, this restriction would still apply. If approved, the
amended investment restriction would permit the Fund to own more than 10% of the
securities of any mutual fund in which it invests. To the extent that the Fund
acquires this level of ownership in another mutual fund from time to time,
management does not believe that there would be any material adverse effects on
the Fund or its shareholders. As a fund of funds, the Fund should in fact
increase its level of diversification because it intends to invest in mutual
funds that themselves own a larger pool of individual securities.
The proposed amendment does not require that investments in other mutual
funds be limited to funds in the same family or group of mutual funds. However,
in order to invest more than the stated percentage of assets in unaffiliated
mutual funds, the Fund would require further exemptive relief from the SEC. The
Fund has no intention of seeking such additional relief. In addition, the
proposed amendment to the restriction in Proposal No. 2 explicitly limits the
Fund's mutual fund investments to funds advised by GISC or an affiliate of GISC.
The Trustees have approved the amendment to this investment restriction,
and recommend that shareholders approve the amendment at the Special Meeting.
The Trustees believe that adoption of this amended fundamental investment
restriction would be in the best interests of shareholders.
Required Vote
The amendment to the Fund's fundamental investment restriction regarding
investment in other issuers must be approved by the affirmative vote of a
majority of the Fund's outstanding voting shares entitled to vote at the
meeting, within the meaning of the 1940 Act. The required majority is the lesser
of (1) 67% or more of the shares present at the meeting, if at least 50% of the
outstanding shares entitled to vote are present or represented by proxy; or (2)
more than 50% of the outstanding shares of the Fund entitled to vote at the
meeting. If the proposal fails to attract the required vote for approval, the
current fundamental investment restriction will remain in effect and the Fund
will not be able to operate as a fund of funds.
THE BOARD OF TRUSTEES RECOMMENDS
THAT YOU VOTE "FOR" PROPOSAL NO. 1.
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PROPOSAL NO. 2
APPROVAL OF AMENDMENT OF
FUNDAMENTAL INVESTMENT RESTRICTION REGARDING INVESTMENT
IN OTHER INVESTMENT COMPANIES
In addition to expanding the Fund's ability to invest in a single issuer
described in Proposal No. 1, shareholders are being asked to approve an
amendment to the Fund's fundamental investment restriction that limits its
ability to invest in other mutual funds. In order to implement the fund of funds
arrangement, it is proposed that this restriction be amended to permit the Fund
to invest without limit in other mutual funds advised by GISC or an affiliate of
GISC. The Fund's current fundamental investment restriction provides that:
[The Fund may not ... ] invest in securities of other investment
companies, except that (a) the Fund may purchase such securities
in the open market, without regard to section (b) below, provided
that immediately thereafter (i) not more than 10% of the Fund's
total assets would be invested in such securities, (ii) not more
than 5% of the Fund's total assets would be invested in
securities of any one investment company, and (iii) not more
than 3% of the total outstanding voting stock of any one
investment company would be owned by the Fund; or (b) the Fund
may acquire such securities as part of a merger, consolidation,
reorganization, acquisition of assets, offer of exchange or as a
dividend.
As proposed, the amended fundamental investment restriction would read as
follows:
[The Fund may not ... ] invest in the securities of other
investment companies, except that (a) during any period in which
the Fund operates as a "fund of funds" in accordance with the
Prospectus and applicable law, and notwithstanding (b) and (c)
below, the Fund may purchase, without limit, shares of The
Guardian Park Avenue Fund, The Guardian Investment Quality Bond
Fund and The Guardian Cash Management Fund, and any other mutual
fund currently existing or hereafter created whose investment
adviser is the Fund's adviser or an affiliate thereof, or the
respective successors in interest of any such mutual fund or
adviser; (b) during any period in which the Fund does not operate
as a "fund of funds" in accordance with the Prospectus, the Fund
may purchase securities of other investment companies in the open
market, without regard to section (c) below, provided that
immediately thereafter (i) not more than 10% of the Fund's total
assets would be invested in such securities, (ii) not more than
5% of the Fund's total assets would be invested in securities of
any one investment company, and (iii) not more than 3% of the
total outstanding voting stock of any one investment company
would be owned by the Fund; or (c) the Fund may acquire
securities of other investment companies as part of a merger,
consolidation, reorganization, acquisition of assets, offer of
exchange or as a dividend. (New language is in italics.)
In its current form, this investment restriction limits the extent to which
the Fund may invest in other mutual funds, other than in relatively small
amounts. In order to operate as a fund of funds, shareholders must approve the
amended version of the restriction, which would remove these limitations during
any period in which the Fund operates as a fund of funds. If in the future it is
determined that the Fund should cease to be a fund of funds, the percentage
limitations applicable to investment in other mutual funds would apply. Under
this amended investment restriction the Fund could invest a substantial portion
of its assets only in mutual funds that are advised by GISC, or an affiliate of
GISC.
9
<PAGE>
The percentage limitations on investment in other mutual funds specified in
the current investment restriction are derived from the provisions of the 1940
Act. In order to function as a fund of funds, it will be necessary to receive an
order of exemption from the SEC, as described above under "The Fund of Funds
Arrangement--Requirement for Exemption from the SEC," in addition to securing
shareholder approval of the amended restriction. Management believes that the
exemption that the Fund is seeking is substantially similar to exemptions
obtained by other mutual fund companies that have adopted a fund of funds
arrangement.
The Trustees have approved the amendment to this investment restriction,
and recommend that shareholders approve the amendment at the Special Meeting. As
described in detail under "The Fund of Funds Arrangement" above, the Trustees
believe that to approve the proposed fundamental investment restriction
regarding investment in other mutual funds as part of the fund of funds
arrangement will be in the best interests of shareholders.
Required Vote
The amendment to the Fund's fundamental investment restriction regarding
investment in other mutual funds must be approved by the affirmative vote of a
majority of the Fund's outstanding voting shares entitled to vote at the
meeting, within the meaning of the 1940 Act. The required majority is the lesser
of (1) 67% or more of the shares present at the meeting, if at least 50% of the
outstanding shares entitled to vote are present or represented by proxy; or (2)
more than 50% of the outstanding shares of the Fund entitled to vote at the
meeting. If the proposal fails to attract the required vote for approval, the
current fundamental investment restriction will remain in effect and the Fund
will not be able to operate as a fund of funds.
THE BOARD OF TRUSTEES RECOMMENDS
THAT YOU VOTE "FOR" PROPOSAL NO. 2.
10
<PAGE>
Investment Adviser and Distributor
Guardian Investor Services Corporation ("GISC"), 201 Park Avenue South, New
York, New York 10003, serves as investment adviser and distributor for the Fund.
GISC is a wholly-owned subsidiary of The Guardian Insurance & Annuity Company,
Inc., which is a wholly-owned subsidiary of Guardian Life.
Future Meetings of Shareholders
As a Massachusetts business trust, the Portfolio is not required to hold
annual meetings of shareholders and does not plan to do so. The Board of
Trustees may call special meetings of shareholders from time to time for action
by shareholder vote as may be required by the 1940 Act or the Portfolio's
Declaration of Trust.
Other Matters
The Trustees know of no other matters to be presented at the Meeting.
However, if any other business should properly come before the Meeting, it is
intended that the persons named in the enclosed proxy will vote the shares of
the Fund with respect to such matters in their discretion.
By order of the Board of Trustees,
Joseph A. Caruso
Secretary
Dated: February 10, 1997
11
<PAGE>
THE PARK AVENUE PORTFOLIO
The Guardian Asset Allocation Fund
--------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES.
The undersigned, revoking any previously executed proxies, hereby appoints Frank
J. Jones, Thomas R. Hickey, Jr. and Frank L. Pepe as proxies, each with the
power of substitution, and hereby authorizes each of them to represent and to
vote all shares of The Guardian Asset Allocation Fund held of record by the
undersigned on January 31, 1997 on each of the proposals specified on the
reverse side, and upon any other business that may properly come before the
Special Meeting of Shareholders to be held at 201 Park Avenue South, Mezzanine
Floor, New York, NY 10003 on April 8, 1997 at 9:30 a.m. New York time and at any
adjournments thereof.
Receipt of the Notice of Special Meeting and the accompanying Proxy Statement
which describes the matters to be considered and voted on is hereby
acknowledged.
PLEASE sign exactly as your name(s) appear(s)
on your account and this proxy card. When
signing as attorney, executor, trustee,
administrator, guardian, etc., please give
full title. Corporate, partnership and trust
owners should have this proxy signed by an
authorized person, and that person's title
should be given.
Date___________________________________, 1997
__________________________________________
__________________________________________
Signature(s) and, if applicable, Title(s)
PLEASE SIGN, DATE, AND RETURN PROMPTLY IN
THE ENCLOSED POSTAGE-PAID ENVELOPE.
<PAGE>
THIS PROXY, IF PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY THE
ACCOUNT HOLDER. IF YOU SIGN AND DATE THIS PROXY CARD, BUT DO NOT SPECIFY YOUR
VOTE BELOW, THE PERSONS NAMED AS PROXIES WILL VOTE YOUR SHARES FOR EACH
PROPOSAL. IF SHARES OF THE FUND ARE HELD IN MORE THAN ONE ACCOUNT IN YOUR NAME,
A SEPARATE PROXY CARD IS PROVIDED FOR EACH ACCOUNT IN WHICH YOU OWNED SHARES AS
OF JANUARY 31, 1997. PLEASE SIGN, DATE AND RETURN ALL PROXY CARDS RECEIVED IN
THE ENCLOSED POSTAGE-PAID ENVELOPE. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR EACH PROPOSAL. PLEASE REFER TO THE PROXY STATEMENT FOR A DISCUSSION OF
EACH PROPOSAL.
The proxies named herein will vote the shares of The Guardian Asset Allocation
Fund held of record by the person whose signature appears on the reverse side of
this card in accordance with the voting procedures described in the accompanying
proxy statement.
Please vote by filling in the appropriate boxes below, as shown, using blue or
black ink or dark pencil. Do not use red ink.
_____________________________________________________________________
1. To amend The Guardian Asset Allocation Fund's fundamental investment
restriction with respect to issuer diversification.
|_| FOR |_| AGAINST |_| ABSTAIN
2. To amend The Guardian Asset Allocation Fund's fundamental investment
restriction with respect to investment in other investment companies.
|_| FOR |_| AGAINST |_| ABSTAIN
Please Complete This Proxy Card Today. Your Prompt Response Will Save the
Expense of Additional Mailings.
<PAGE>
THE PARK AVENUE PORTFOLIO
201 Park Avenue South
New York, New York 10003
February 10, 1997
Dear Shareholder:
I am writing to inform you that a special meeting of shareholders of The
Guardian Asset Allocation Fund will be held on Tuesday, April 8, 1997 to vote on
two important proposals. This package contains information about the proposals
and materials for you to use when voting by mail.
The primary purpose of the special meeting is to consider and approve a change
in the structure of The Guardian Asset Allocation Fund to allow it to operate as
a "fund of funds" and to invest in certain other funds in The Park Avenue
Portfolio. This change would allow the Fund to invest directly in The Guardian
Park Avenue Fund and The Guardian Investment Quality Bond Fund rather than
purchasing individual stocks and bonds. To implement the change in structure,
your approval is required to modify two of the Fund's fundamental investment
restrictions. The proposed changes are rather technical in nature, and both must
be approved in order for the Fund to operate as a "fund of funds". These matters
are described in detail in the enclosed materials.
Please vote and return your proxy promptly. Your vote is essential, no matter
how many shares you own. Your prompt vote will eliminate the need to send
additional mailings at a later time to increase voter participation.
Your participation is important. Everything you need in order to vote by mail is
enclosed. You are entitled to one vote for each share you own. Fractional votes
will be counted. To cast your vote, simply record your instructions on the
enclosed card. If you are entitled to vote the shares in more than one
shareholder account, you must complete and return a separate card for each
account in which you have an interest. Be sure to date and sign each card before
mailing it in the enclosed postage-paid envelope. If you date, sign and return
your card, but do not record your votes, your shares will be voted FOR both
proposals.
We appreciate your careful consideration of the proposals described in the
enclosed proxy statement and thank you for your participation in this important
initiative for your Guardian fund.
Sincerely,
/s/ Joseph D. Sargent, CLU
Joseph D. Sargent, CLU
Chairman
