SEMI-ANNUAL REPORT TO SHAREHOLDERS
[LOGO]
GUARDIAN
SEMI-ANNUAL
REPORT TO
SHAREHOLDERS
June 30, 2000
THE PARK AVENUE Portfolio
The Guardian Park Avenue Fund(R)
The Guardian Park Avenue
Small Cap Fund(SM)
The Guardian Asset
Allocation Fund(SM)
The Guardian Baillie Gifford
International Fund(SM)
The Guardian Baillie Gifford
Emerging Markets Fund(SM)
The Guardian Investment
Quality Bond Fund(SM)
The Guardian High Yield
Bond Fund(SM)
The Guardian
Tax-Exempt Fund(SM)
The Guardian Cash
Management Fund(SM)
<PAGE>
--------------------------------------------------------------------------------
DEAR SHAREHOLDER:
-----------------
SOFT AND HARD LANDINGS:
THE ECONOMY AND THE STOCK MARKET
[PHOTO OMITTED]
Frank J. Jones, Ph.D
Chief Investment Officer
The current economic expansion, which began during March 1991, is the longest
post-war expansion. Within this sustained economic expansion, there have been
mini-economic cycles. At times, the economy grew at a rate that was thought to
be unsustainable without causing inflation. During those times, Federal Reserve
Bank (Fed) Chairman Alan Greenspan was able to moderate economic growth without
stopping it--that is, execute a "soft landing." At other times, for example
during the fall of 1998 due to the financial problems in Asia, Greenspan relaxed
monetary policy to avert a recession. Overall, during strong and weak times,
Maestro Greenspan has conducted the economy well and continued the long
expansion.
Recently, during late 1999 and early 2000, there was concern about economic
growth, which was considered too rapid and, thus, inflation-inducing. As a
result, Greenspan raised interest rates, referred to as "tightening," six times
since June 30, 1999 by a total of 1.75% (from 4.75% to 6.50%). The economic
reports for the second quarter support the conclusion that the economy has begun
another soft landing. If this proves to be so, the Fed tightenings could be
complete or almost so. There is some risk, however, that the recent economic
softening is a "head fake" and that the economy will restrengthen and require
further Fed tightenings. Currently, though, the markets are performing on the
basis of an expected soft landing.
How does this economic performance relate to the stock market? The S&P 500
Index(1) has returned over 20% per year for five consecutive years. Why the
incredible strength in the stock market? The answer to this question is the old
saying, "It's the economy, stupid." In addition, more recently, the technology
sector has not only supported the economy, including labor productivity, but
also the stock market.
During 1999, the S&P 500 returned 21.04%, and the NASDAQ(2) returned 86.13%.
The stock market strength continued through early 2000, following the strong
economy. To better analyze the first half of 2000, divide it into sub-periods,
segregated by beginning/high/low/end, instead of two quarters, as summarized
below.
--------------------------------------------------------------------------------
PERIOD S&P 500 NASDAQ DJIA
--------------------------------------------------------------------------------
1/1 to High 4.25%(3/24) 24.10%(3/10) 1.99%(1/14)
--------------------------------------------------------------------------------
High to Low -11.14%(4/14) -37.30%(5/23) -16.23%(3/7)
--------------------------------------------------------------------------------
Low to 6/30 7.49% 25.36% 7.16%
--------------------------------------------------------------------------------
1/1 to 6/30 -0.42% -2.46% -8.45%
--------------------------------------------------------------------------------
To illustrate the results in the sub-periods summarized in the chart, the
S&P 500 returned 4.25% through its high on March 24 and the NASDAQ returned a
remarkable 24.10% through March 10.
What is remarkable, however, is that on March 10 the NASDAQ achieved its
high of 5,049 and by May 23, had declined by 37.30% (during the week ending
April 14th alone, the NASDAQ had declined by 25.30%). This 37% decrease
represented a correction by any standard--thus, a hard landing. The S&P 500,
-11.14%, and the DJIA(3), -16.23% were also very weak during this period.
From their respective lows (April 14 for the S&P 500 and on May 23 for
NASDAQ), through the end of the second quarter, the markets recovered strongly:
the S&P 500 returned 7.49%, and the NASDAQ returned a very strong 25.36%. The
DJIA also recovered well, +7.16%, from its low.
Focus back on the stock market as of March 10--the economy was very strong,
the Fed had tightened five times by a total of 1.25%, and the tightening was
perceived to be far from over. The broad stock market, as measured by the S&P
500, and more so the NASDAQ, was "pricey" by any standards. With all of these
considerations, would a stock market correction at this time have been
surprising? Certainly not, and perhaps it was even inevitable. In fact, a stock
market correction could have happened earlier. That is the problem with trying
to time the market.
In retrospect, sanity may have hit the Internet sector late in the first
quarter of 2000. Internet company layoffs received more press coverage than
IPOs. The Superbowl on January 30 may have been the best leading indicator of
the correction in internet stocks. No, not the actual game, but the plethora of
very expensive advertising by previously unheard of internet companies (some of
which have not been heard from since).
How have the individual components of the stock market performed during the
second quarter of this year? During 1998 and 1999 and even during the first
quarter of 2000, the stock market investment themes were simple. Buy big stocks
--------------------------------------------------------------------------------
(1) The S&P 500 Index is an unmanaged index of 500 large-cap U.S. stocks that
is generally considered to be representative of U.S. stock market activity.
(2) The NASDAQ Composite Index is a broad-based capitalization-weighted index
of all NASDAQ National Market stocks.
(3) The Dow Jones Industrial Average (DJIA) is an unmanaged index of 30
industrial stocks listed on the New York Stock Exchange that is generally
considered to be representative of U.S. stock market activity.
--------------------------------------------------------------------------------
<PAGE>
(large capitalization); buy growth stocks; and buy technology stocks. During
this year's second quarter, however, these themes became ineffectual. Rather,
during this time:
-- Mid cap stocks outperformed both large cap and small cap stocks;
-- Value mutual funds outperformed growth funds in all the capitalization
categories;
-- Healthcare and Real Estate Investment Trust (REIT) stocks were the
strongest performing sectors, outperforming technology and industrial
stocks;
-- The DJIA, composed primarily of large cap cyclical industrials,
significantly underperformed; and
-- Bond funds performed well relative to stock funds.
Does this seem like a confused stock market? It does to the author. More on
this below:
Overall during the first half of 2000, the S&P 500 broke just about even,
-0.42%, and the NASDAQ was slightly negative, -2.46%. In retrospect, this
outcome does not seem too meager during a period of several Fed tightenings with
very high valuations at the beginning. As a frame of reference, during the last
year of multiple Fed tightenings, which was in 1994, the S&P 500 returned 1.31%
and the NASDAQ -3.20%. However, during 1995 (the last tightening occurring on
February 1, 1995), the S&P 500 returned 37.43% and the NASDAQ 40.99%.
The S&P 500 is flat to slightly down for 2000 after losing 11.10% from its
high to its low. The NASDAQ experienced a hard landing, a decline of 37.30% from
its high on March 10 to its low on May 23. During the second quarter, checking
accounts were a good investment. Thus, those watching for a stock market
correction should be looking in the rear view mirror.
There are reasons to believe the stock market correction is basically over,
and that while the market is not likely to return to "exuberance," there will be
moderate returns during the second half of 2000. First, the economy has slowed,
and another soft landing may have begun. This softening will be supported by the
consumer wealth effect resulting from the weakness of the stock market during
the second quarter of 2000. In this case, the Fed tightening period is almost
complete.
With the worst for the stock market likely over and corporate profits
likely to be moderately strong for the rest of the year, the last half of 2000
should show modest returns although perhaps not up to the standards of the last
five years. With respect to the technology sector, there will be a moderate
performance although the NASDAQ is unlikely to achieve its March 10 high (5,049)
by year-end. With respect to picking sectors, market capitalization and style,
it will be a good period for diversification.
While the overall market appears confused, as indicated above, individual
investors should not be. I submit that no investor, no matter how expert, could
have predicted the actual results for the first half of 2000. The appropriate
investment strategy, thus, is to maintain a stable (although not constant),
diversified, moderate risk portfolio. The results for the first half of 2000
show that a diversified portfolio of Guardian funds would have been a strong
strategy during that period.
Regards,
/s/ FRANK J. JONES, Ph.D.
------------------------------------
Frank J. Jones, Ph.D.
President, The Park Avenue Portfolio
<PAGE>
THE PARK AVENUE PORTFOLIO
--------------------------------------------------------------------------------
TABLE OF CONTENTS
-----------------
PORTFOLIO SCHEDULE
MANAGER OF
INTERVIEW INVESTMENTS
--------------------------------------------------------------------------
THE GUARDIAN PARK AVENUE FUND 2 21
--------------------------------------------------------------------------
THE GUARDIAN PARK AVENUE SMALL CAP FUND 6 24
--------------------------------------------------------------------------
THE GUARDIAN ASSET ALLOCATION FUND 8 27
--------------------------------------------------------------------------
THE GUARDIAN BAILLIE GIFFORD INTERNATIONAL FUND 10 28
--------------------------------------------------------------------------
THE GUARDIAN BAILLIE GIFFORD EMERGING MARKETS FUND 12 30
--------------------------------------------------------------------------
THE GUARDIAN INVESTMENT QUALITY BOND FUND 14 33
--------------------------------------------------------------------------
THE GUARDIAN HIGH YIELD BOND FUND 16 35
--------------------------------------------------------------------------
THE GUARDIAN TAX-EXEMPT FUND 18 38
--------------------------------------------------------------------------
THE GUARDIAN CASH MANAGEMENT FUND 20 41
--------------------------------------------------------------------------
FINANCIAL STATEMENTS 42
--------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 50
--------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS 60
--------------------------------------------------------------------------
<PAGE>
--------------------------------------------------------------------------------
THE GUARDIAN PARK AVENUE FUND
-----------------------------
[PHOTOS OMITTED]
Larry Luxenberg, C.F.A.
Co-Portfolio Manager
John B. Murphy, C.F.A.
Co-Portfolio Manager
Mark Dunetz
Co-Portfolio Manager
OBJECTIVE: Long-term growth of capital
PORTFOLIO: At least 80% common stocks and securities convertible into common
stocks
INCEPTION: June 1, 1972
NET ASSETS AT JUNE 30, 2000: $3,952,489,952
Q. HOW HAS THE FUND PERFORMED DURING THE FIRST HALF OF 2000?
A. By any standard, this has been a tumultuous year for the stock market. After
the first two weeks of January, veteran stock market analysts were already
asserting that this was one of the most volatile periods in stock market
history. The rest of the first half has done nothing to change this view. Given
such volatility, any tally of performance can quickly change. Nonetheless, over
the six months, The Guardian Park Avenue Fund was up 2.88%(1) while the S&P 500
Index(2) was down 0.42%. While the absolute returns are low by recent
standards--both the Fund and the S&P 500 Index have returned more than 20
percent annually for an unprecedented five consecutive years--they are still
impressive in relative terms.
Q. WHAT WAS YOUR INVESTMENT STRATEGY DURING THIS TIME?
A. The volatility of the first half of the year strengthened our beliefs in
three things. First, it is important to take a long-term outlook. Second, timing
the market is exceedingly difficult. Third, investing in good companies pays off
eventually.
In a fickle market, it's easy to get caught up in the almost daily mood
swings and give up too quickly on sound investment ideas. Moreover, many studies
have shown that missing just a few days during strong market rallies greatly
diminishes long-term returns. To cite just two examples: a study by Sanford
Bernstein & Co. showed that if investors were out of the market for the ten best
days from 1980 to 1994, they missed more than one-quarter of the total S&P 500
returns. If they missed only forty days (fewer than three per year) during that
period, they lost nearly two-thirds of total returns. In a more recent example,
April was the third worst month in the entire history of the NASDAQ Composite
Index(3) while June was the third best month.
--------------------------------------------------------------------------------
"The volatility of the first half of the year strengthened our beliefs in three
things. First, it is important to take a long-term outlook. Second, timing the
market is exceedingly difficult. Third, investing in good companies pays off
eventually."
--------------------------------------------------------------------------------
Our portfolio continues to emphasize large-cap growth stocks, although over
the last year, we have added to our weightings in mid- and small-cap stocks. We
plan to continue adding selected small and mid-cap companies with promising
fundamentals.
Q. WHAT IS YOUR OUTLOOK FOR THE SECOND HALF OF 2000?
A. Despite the market's first-half gyrations, we believe that the outlook for
stocks is still positive. Most importantly, the domestic and global economies
remain sound. At year-end, central banks eased monetary conditions to
accommodate concerns about Y2K disruptions. This interrupted a period of global
tightening and may have contributed to an unusually strong first quarter.
Concerns about the economy overheating and rising inflation have been put to
rest, at least temporarily. Now, with the central banks relegated to the
sidelines and growth still solid but slowing, it looks promising for stocks. As
recent actions show, policy errors have not been banished from Washington but
with only one short recession in eighteen years, somebody is doing something
right.
--------------------------------------------------------------------------------
(1) Total return figures are historical and assume the reinvestment of
dividends and distributions and the deduction of all Fund expenses. Total
return figures for Class A shares do not take into account the current
maximum sales charge of 4.5% except where noted. Total return figures for
Class B shares do not take into account the contingent deferred sales
charge applicable to such shares (maximum of 3%), except where noted.
Returns represent past performance and are not a guarantee of future
results. Investment return and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than the
original cost. Prior to August 25, 1988, Class A shares of the Fund were
offered at a higher sales charge, so that actual returns would have been
somewhat lower.
(2) The S&P 500 Index is an unmanaged index of 500 large-cap U.S. stocks that
is generally considered to be representative of U.S. stock market activity.
The S&P 500 Index is not available for direct investment and its returns do
not reflect the fees and expenses that have been deducted from the Fund.
Likewise, return figures for the S&P 500 Index do not reflect any sales
charges that an investor may have to pay when purchasing or redeeming
shares of the Fund.
(3) The NASDAQ Composite Index is a broad-based capitalization-weighted index
of all NASDAQ National Market stocks.
--------------------------------------------------------------------------------
2
<PAGE>
Meanwhile, technological change around the globe is, if anything,
accelerating. Mobile communications, both voice and data, are proliferating.
Internet traffic is doubling every quarter. The completion of the mapping of the
human genome is characteristic of great strides being made in the life sciences.
Corporations, freed from the drag of Y2K spending, can now update their internal
systems and plenty of innovative software and hardware is available. Companies
such as Cisco and Microsoft have converted most of their internal systems to
digital ones and realized tremendous efficiences as well as greatly improved
access to timely information.
While the short-term outlook is always difficult to gauge, the long-term view
still looks good. In our view, it would be premature to sound the death knell
for the longest-running bull market of our lifetimes.
--------------------------------------------------------------------------------
THE GUARDIAN PARK AVENUE FUND
-----------------------------
--------------------------------------------------------------------------------
TOP TEN HOLDINGS AS OF JUNE 30, 2000
COMPANY PERCENT OF TOTAL NET ASSETS
--------------------------------------------------------------------------------
1. Microsoft Corp. 3.94%
--------------------------------------------------------------------------------
2. Intel Corp. 3.87%
--------------------------------------------------------------------------------
3. Cisco Systems, Inc. 3.48%
--------------------------------------------------------------------------------
4. General Electric Co. 3.45%
--------------------------------------------------------------------------------
5. Citigroup, Inc. 2.92%
--------------------------------------------------------------------------------
6. Nortel Networks Corp 2.67%
--------------------------------------------------------------------------------
7. Oracle Corp. 2.12%
--------------------------------------------------------------------------------
8. EMC Corp. 2.05%
--------------------------------------------------------------------------------
9. Int'l. Business Machines 2.05%
--------------------------------------------------------------------------------
10. Xilinx, Inc. 1.48%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
3
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
THE GUARDIAN PARK AVENUE FUND
-----------------------------
SECTOR WEIGHTINGS OF
COMMON STOCKS HELD
BY THE FUND ON JUNE 30, 2000
[GRAPHIC OMITTED]
[The following table was depicted as a pie chart in the printed material.]
UTILITIES 0.21%
CONSUMER CYCLICALS 2.52%
CASH 2.58%
CONSUMER SERVICES 3.36%
CAPITAL GOODS 4.82%
CONSUMER STAPLES 5.47%
ENERGY 7.79%
FINANCIALS 10.66%
TELECOMMUNICATIONS 18.04%
TECHNOLOGY 44.55%
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS(1) FOR PERIODS ENDED JUNE 30, 2000
Inception Since
Date 1 Year 5 Years 10 Years Inception
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A Shares (with sales charge) 6/1/72 18.36% 24.15% 19.75% 17.07%
At Net Asset Value (without sales charge) 23.93% 25.30% 20.30% 17.27%
-----------------------------------------------------------------------------------------------------------------------------------
Class B Shares (with sales charge) 5/1/96 19.12% N/A N/A 23.62%
At Net Asset Value (without sales charge) 22.70% N/A N/A 24.50%
-----------------------------------------------------------------------------------------------------------------------------------
S&P 500 Index 7.24% 23.78% 17.75% 13.55%
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Total return figures are historical and assume the reinvestment of
dividends and distributions and the deduction of all Fund expenses. Total
return figures for Class A shares do not take into account the current
maximum sales charge of 4.5%, except where indicated. Prior to August 25,
1988, Class A shares of the Fund were offered at a higher sales charge, so
actual returns would have been somewhat lower. Total return figures for
Class B shares do not take into account the contingent deferred sales
charge applicable to such shares (maximum of 3%), except where noted.
Returns represent past performance and are not a guarantee of future
results. Investment return and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than the
original cost.
--------------------------------------------------------------------------------
4
<PAGE>
--------------------------------------------------------------------------------
THE GUARDIAN PARK AVENUE FUND
-----------------------------
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
[GRAPHIC OMITTED]
[The following table was depicted as a pie chart in the printed material.]
1999
--------
The Guardian Park Avenue Fund (Class A) $876,333
S&P 500 Index $354,761
Cost of Living $ 41,204
PERFORMANCE FOR CLASS B SHARES, WHICH WERE FIRST OFFERED ON MAY 1, 1996, WILL
VARY DUE TO DIFFERENCES IN SALES LOAD AND OTHER EXPENSES CHARGED TO SUCH SHARE
CLASS.
A hypothetical $10,000 investment in Class A shares made at the inception of The
Guardian Park Avenue Fund on June 1, 1972 has a starting point of $9,550, which
reflects the current maximum sales charge for Class A shares of 4.5%. This
investment would have grown to $876,333 on June 30, 2000. We compare our
performance to that of the S&P 500 Index, which is an unmanaged index that is
generally considered the performance benchmark of the U.S. stock market. While
you cannot invest directly in the S&P Index, a similar hypothetical investment
would now be worth $354,761. The Cost of Living, as measured by the Consumer
Price Index, which is generally representative of the level of U.S. inflation,
is also provided to lend a more complete understanding of the investment's real
worth.
--------------------------------------------------------------------------------
5
<PAGE>
--------------------------------------------------------------------------------
THE GUARDIAN PARK AVENUE SMALL CAP FUND
---------------------------------------
[PHOTO OMITTED]
Catherine McRae
Portfolio Manager
OBJECTIVE: Long-term growth of capital
PORTFOLIO: At least 85% in a diversified portfolio of common stocks and
convertible securities issued by companies with small market
capitalization
INCEPTION: May 1, 1997
NET ASSETS AT JUNE 30, 2000: $185,542,845
Q. HOW DID THE GUARDIAN PARK AVENUE SMALL CAP FUND PERFORM DURING THE FIRST
HALF OF 2000?
A. June 30, 2000 marked the end of six tumultuous months. Performance was quite
mixed, with mid-caps leading the way, large-caps lagging, and small-caps
sandwiched in-between. The S&P 500 Index(1) declined 0.42% for the six months,
while the S&P 400 Mid-Cap Index(2) achieved an 8.98% gain and the Russell
2000(3) advanced 3.04%. Technology, telecommunications, and biotechnology
stocks--which could do no wrong at the start of 2000--could do nothing right
between April and June. Abrupt sentiment swings were compounded by unprecedented
trading volatility. Against this difficult backdrop, the Fund managed to
outperform its benchmark, the Russell 2000 by 850 basis points (8.50%), posting
a total return of 11.56%.(4)
Q. WHAT WAS YOUR INVESTMENT STRATEGY DURING THIS TIME?
A. Throughout the turbulence, we tried to stay focused. We entered the year
over-weighted in technology and telecommunications, positions that continued to
grow as the NASDAQ Composite(5) traded toward its 5000 peak in early March.
During the market's first attempt to rally after the mid-March correction, we
trimmed these holdings. We then re-deployed the cash in several sectors that had
been under-weighted. We raised our exposure to financials from 9% to 11% of
assets by adding to regional banks, thrifts, and asset managers. We increased
our healthcare weighting from approximately 5% to 11% by broadening our
portfolio of specialty drug companies, biotechnology companies, and service
providers. We also added selected names in capital goods--quality companies with
above-average long-term growth records. We held our combined
technology/telecommunications weighting to about 50%, based on excellent
near-term fundamentals and the belief that the Federal Reserve Bank's interest
rate hikes would slow but not stop the economy. Also, we tried to upgrade our
holdings whenever possible. In our judgment, the portfolio was more broadly
diversified and solidly positioned entering July.
--------------------------------------------------------------------------------
"We also believe that the small-cap universe will continue to provide new and
exciting ways to participate in the `New Economy,' the worldwide build-out of
the communications infrastructure."
--------------------------------------------------------------------------------
Q. WHAT IS YOUR OUTLOOK FOR THE SECOND HALF OF 2000?
A. We remain cautious but constructive about the second half of the year. If the
economic data released over the next month brings an end to Fed tightening, we
see positive implications for Gross Domestic Product growth and the stock market
overall. Other potential market catalysts could be the continuing global
economic recovery and upcoming U.S. presidential elections. In this environment,
we continue to favor technology, telecommunications, and healthcare stocks. We
also believe that the small-cap universe will continue to provide new and
exciting ways to participate in the "New Economy," the worldwide build-out of
the communications infrastructure.
--------------
(1) The S&P 500 Index is an unmanaged index of 500 large-cap U.S. stocks that
is generally considered to be representative of U.S. stock market activity.
The S&P 500 Index is not available for direct investment.
(2) The S&P 400 Mid-Cap Index is an unmanaged index of 400 middle
capitalization U.S. stocks that is generally considered to be
representative of the returns of the mid-size company segment of the U.S.
Market. The S&P 400 Mid Cap Index is not available for direct investment.
(3) The Russell 2000 Index is generally considered to be representative of
small-capitalization issues in the U.S. stock market. The returns for the
Russell 2000 do not reflect expenses that are deducted from the Fund's
returns. Likewise, return figures for the Russell 2000 index do not reflect
any sales charges that an investor may have to pay when purchasing or
redeeming shares of the Fund.
(4) Total return figures are historical and assume the reinvestment of
dividends and distributions and the deduction of all Fund expenses. Total
return represents return for Class A shares and does not take into account
the current maximum sales charge of 4.5%, except where noted. Total return
figures for Class B shares do not take into account the contingent deferred
sales charge applicable to such shares (maximum of 3%) except where noted.
Returns represent past performance and are not a guarantee of future
results. Investment return and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than the
original cost.
(5) The NASDAQ Composite Index is a broad-based capitalization-weighted index
of all NASDAQ National Market stocks.
--------------------------------------------------------------------------------
6
<PAGE>
--------------------------------------------------------------------------------
THE GUARDIAN PARK AVENUE SMALL CAP FUND
---------------------------------------
--------------------------------------------------------------------------------
TOP TEN HOLDINGS AS OF JUNE 30, 2000
COMPANY PERCENT OF TOTAL NET ASSETS
--------------------------------------------------------------------------------
1. Xilinx, Inc. 1.26%
--------------------------------------------------------------------------------
2. VeriSign, Inc. 1.26%
--------------------------------------------------------------------------------
3. Plexus Corp. 1.18%
--------------------------------------------------------------------------------
4. Flextronics Int'l. 1.00%
--------------------------------------------------------------------------------
5. E Tek Dynamics, Inc. 0.98%
--------------------------------------------------------------------------------
6. Applied Micro Circuits Corp. 0.97%
--------------------------------------------------------------------------------
7. Metromedia Fiber Network, Inc. 0.96%
--------------------------------------------------------------------------------
8. Network Appliance, Inc. 0.92%
--------------------------------------------------------------------------------
9. Exodus Comm., Inc. 0.92%
--------------------------------------------------------------------------------
10. Macromedia, Inc. 0.90%
--------------------------------------------------------------------------------
SECTOR WEIGHTINGS OF COMMON STOCKS
HELD BY THE FUND AS OF JUNE 30, 2000
[GRAPHIC OMITTED[
[The following table was represented as a pie chart in the printed materials.]
CREDIT CYCLICALS 0.55%
UTILITIES 1.38%
BASIC MATERIALS 1.77%
CONSUMER CYCLICALS 2.24%
ENERGY 3.54%
CAPITAL GOODS 6.10%
CONSUMER SERVICES 6.43%
FINANCIALS 9.48%
CONSUMER STAPLES 10.91%
CASH 11.37%
TELECOMMUNICATIONS 19.25%
TECHNOLOGY 26.98%
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS(4) FOR PERIODS ENDED JUNE 30, 2000
Inception Since
Date 1 Year 3 Years Inception
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Shares (with sales charge) 5/1/97 47.80% 17.26% 21.59%
At Net Asset Value (without sales charge) 54.76% 19.08% 23.39%
-------------------------------------------------------------------------------------------------------------
Class B Shares (with sales charge) 5/6/97 48.85% 16.86% 19.81%
At Net Asset Value (without sales charge) 53.32% 18.02% 20.89%
-------------------------------------------------------------------------------------------------------------
</TABLE>
--------------------------------------------------------------------------------
7
<PAGE>
--------------------------------------------------------------------------------
THE GUARDIAN ASSET ALLOCATION FUND
----------------------------------
[GRAPHIC OMITTED]
Jonathan C. Jankus, C.F.A.
Portfolio Manager
OBJECTIVE: Long-term total investment return consistent with moderate risk
PORTFOLIO: A mixture of equity securities, debt obligations and money market
instruments; purchases shares of The Guardian Park Avenue, The
Guardian Investment Quality Bond and The Guardian Cash Management
Funds
INCEPTION: February 16, 1993
NET ASSETS AT JUNE 30, 2000: $286,663,172
Q. THIS HAS BEEN AN UNIMPRESSIVE YEAR FOR THE FINANCIAL MARKETS. HOW HAS THE
FUND PERFORMED?
A. In the first half of this year, the total return on stocks, as measured by
the S&P 500 Index,(1) was -0.42% and the total return on bonds, as measured by
the Lehman Aggregate Bond Index,(2) was 3.99%. Our theoretical benchmark, a
portfolio created to hold 60% of its value in the S&P 500 and 40% in the Lehman
Aggregate, would have returned 1.45%. The Fund's return over the period was
4.60%.(3)
Our good results relative to our benchmark were also reflected in our
performance relative to our peers, and we outperformed the median return of
0.48% produced by Morningstar's(4) universe of asset allocation funds.
Q. WHAT STRATEGIES WERE USED BY THE FUND AND HOW DID THEY AFFECT PERFORMANCE?
A. The Fund is managed using proprietary quantitative models that attempt to
judge the relative risk-adjusted attractiveness of the stock, bond and cash
markets. While interest rates are the operative variables in the fixed income
markets, corporate profitability and growth are added to the mix for the equity
markets.
In general, a rising interest rate environment and a healthy but slowing
economy led us to reduce our equity exposure relative to cash and bonds.
Specifically, our stock/bond/cash mix at year-end was 20/45/35 and has remained
in that area. These weightings should be compared to the completely neutral
60/40/0 mix that we would expect to own when the markets were all fairly valued
relative to one another.
Our performance was positively affected by both our asset allocation
(which, since year-end has proved to be appropriately conservative) and the fact
that the stocks that we have owned have outperformed the S&P 500 (for further
information on this aspect of Fund performance, please see the section devoted
to The Guardian Park Avenue Fund.)
--------------------------------------------------------------------------------
"Our performance was positively affected by both our asset allocation and the
fact that the stocks that we have owned have outperformed the S&P 500."
--------------------------------------------------------------------------------
Q. WHAT ARE YOUR EXPECTATIONS FOR THE FUTURE AND HOW ARE YOU POSITIONING THE
FUND TO TAKE ADVANTAGE OF THOSE EXPECTATIONS?
A. We continue to be very conservatively positioned, and we will maintain this
stance until either interest rates decline sufficiently or corporate
profitability rebounds in spite of a slowing economy. Neither of these events
seem very likely over the near term.
-------------------------
(1) The S&P 500 Index is an unmanaged index of 500 large-cap U.S. stocks that
is generally considered to be representative of U.S. stock market activity.
The S&P 500 Index is not available for direct investment and its returns do
not reflect the fees and expenses that have been deducted from the Fund's
return.
(2) The Lehman Aggregate Bond Index is an unmanaged index that is generally
considered to be representative of U.S. bond market activity. The Lehman
Aggregate Bond Index is not available for direct investment, and the
returns do not reflect the fees and expenses that have been deducted from
the Fund.
(3) Total return figures are historical and assume the reinvestment of
dividends and distributions and the deduction of all Fund expenses. Total
return figures for Class A shares do not take into account the current
maximum sales charge of 4.5% except where noted. Total return figures for
Class B shares do not take into account the contingent deferred sales
charge applicable to such shares (maximum of 3%) except where noted.
Returns represent past performance and are not a guarantee of future
results. Investment return and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than the
original cost.
(4) Morningstar, Inc. is an independent mutual fund monitoring and rating
service, and its database of performance information is based on historical
total returns, which assumes the reinvestment of dividends and
distributions, and the deduction of all fund expenses.
--------------------------------------------------------------------------------
8
<PAGE>
--------------------------------------------------------------------------------
THE GUARDIAN ASSET ALLOCATION FUND
----------------------------------
PORTFOLIO COMPOSITION BY
ASSET CLASS AS OF JUNE 30, 2000
[GRAPHIC OMITTED]
[The following table was represented as a pie chart in the printed material.]
COMMON STOCKS 20%
CASH 35%
BONDS 45%
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS(3) FOR PERIODS ENDED JUNE 30, 2000
Inception Since
Date 1 Year 3 Years 5 Years Inception
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A Shares (with sales charge) 2/16/93 8.51% 13.64% 16.74% 14.54%
At Net Asset Value (without sales charge) 13.62% 15.40% 17.82% 15.26%
--------------------------------------------------------------------------------------------------------------
Class B Shares (with sales charge) 5/1/96 9.42% 13.28% N/A 22.73%
At Net Asset Value (without sales charge) 12.70% 14.40% N/A 23.61%
--------------------------------------------------------------------------------------------------------------
</TABLE>
--------------------------------------------------------------------------------
9
<PAGE>
--------------------------------------------------------------------------------
THE GUARDIAN BAILLIE GIFFORD INTERNATIONAL
------------------------------------------
[PHOTO OMITTED]
R. Robin Menzies
Portfolio Manager
OBJECTIVE: Long-term growth of capital
PORTFOLIO: At least 80% in a diversified portfolio of common stocks of companies
domiciled outside of the United States
INCEPTION: February 16, 1993
NET ASSETS AT JUNE 30, 2000: $152,734,844
Q. HOW DID THE FUND PERFORM FOR THE FIRST SIX MONTHS OF 2000?
A. The Fund had a return of -9.72%(1) in the six months ending June 30,
2000. This compares with the total return of -3.95% for the Morgan Stanley
Capital International (MSCI) Europe, Australia, and Far East (EAFE) Index(2).
International markets were weak during the period, except those within
Continental Europe. The MSCI UK Index had a total return of -11.72%, the MSCI
Pacific ex-Japan returned -9.11%, and MSCI Japan Index returned -5.32%, while
MSCI Europe ex-UK was up by only 0.56%. Part of the weakness in this region was
attributable to currency factors. The total return of the MSCI Europe ex-UK
Index was a positive 4.69% in local currency terms, but the region's currencies,
predominantly the Euro, were weak against the Dollar.(3)
Q. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
A. The main reason that the Fund's performance was behind that of the MSCI EAFE
Index was that some of the stocks the Fund held in Japan and in the telephone
services industries around the world performed poorly. This is in contrast to
those stocks' 1999 performance. In addition, the Fund had a greater amount
invested in the relatively weak Pacific ex-Japan region than the EAFE Index.
During the course of the period, it became apparent that economic growth in
Continental Europe was accelerating, particularly in the core countries of
France and Germany. This acceleration was assisted by the continuing strength of
the Dollar (or weakness of the Euro), which improved the competitive position of
European exporting companies. While Japan showed very strong growth in its GDP
in the first quarter, there are lingering doubts about the strength and
coherence of its economic and fiscal policies. In contrast, economic activity in
many other Asian economies was strong, helped by burgeoning growth in exports to
the USA.
The changes in activity in the various international economies led to
changes in our evaluation of the prospects for the companies in the different
regions, and consequently, we decreased the Fund's exposure in Japan and
increased it in Europe.
--------------------------------------------------------------------------------
"The changes in activity in the various international economies led to changes
in our evaluation of the prospects for the companies in the different regions,
and consequently, we decreased the Fund's exposure in Japan and increased it in
Europe."
--------------------------------------------------------------------------------
Q. WHAT IS YOUR OUTLOOK FOR THE REMAINDER OF THE YEAR?
A. Our investment strategy continues to be one of identifying individually
attractive companies domiciled in developed markets outside North America. Our
analysts conduct disciplined research on the universe of stocks available for
investment, looking at the prospects of the industries in which the companies
operate, the companies' competitive positions, profitability, and management
strategies. This involves many meetings and much travel from our offices in
Edinburgh.
Looking forward, we expect growth to remain strong in Europe and Asia
ex-Japan, but the latter area is particularly sensitive to developments in the
US economy. We will continue to follow our strategy of investing in
fundamentally attractive businesses, wherever they are based internationally.
--------------------------------------------------------------------------------
(1) Total return figures are historical and assume the reinvestment of
dividends and distributions and the deduction of all Fund expenses. Total
return figures for Class A shares do not take into account the current
maximum sales charge of 4.5% except where noted. Total return figures for
Class B shares do not take into account the contingent deferred sales
charge applicable to such shares (maximum of 3%) except where noted.
Returns represent past performance and are not a guarantee of future
results. Investment return and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than the
original cost.
(2) The Morgan Stanley Capital International (MSCI) Europe, Australia and Far
East (EAFE) Index is an unmanaged index that is generally considered to be
representative of international stock market activity. The MSCI EAFE Index
is not available for direct investment and the returns do not reflect the
fees and expenses that have been deducted from the Fund's return.
(3 These indexes are all unmanaged indexes generally considered to be
representative of their covered region. The MSCI UK is generally considered
to be representative of market activity in the United Kingdom. The MSCI
Pacific ex-Japan is generally considered to be representative of the stock
market activity of Australia, Singapore, Hong Kong, and New Zealand. The
MSCI Japan Index is generally considered to be representative of Japanese
stock market activity. The MSCI Europe Ex-UK Index is generally considered
to be representative of European stock market activity, excluding the
United Kingdom. The returns for these indices do not reflect expenses that
are deducted from the Fund's return.
--------------------------------------------------------------------------------
10
<PAGE>
--------------------------------------------------------------------------------
THE GUARDIAN BAILLE GIFFORD INTERNATIONAL FUND
----------------------------------------------
SECTOR WEIGHTINGS OF COMMON STOCKS
HELD BY THE FUND AS OF JUNE 30, 2000
[GRAPHIC OMITTED]
[The following table was represented as a pie chart in the printed material.]
Cash 2.56%
Pacific ex Japan 8.12%
UK 18.30%
Japan 22.32%
Europe ex UK 48.7%
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
TOP TEN HOLDINGS AS OF JUNE 30, 2000
COMPANY PERCENT OF TOTAL NET ASSETS INDUSTRY COUNTRY
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Nokia OYJ 4.51% Telecommunications Finland
-----------------------------------------------------------------------------------------------------------------------------------
2. LM Ericsson 3.74% Telecommunications Sweden
-----------------------------------------------------------------------------------------------------------------------------------
3. Vodafone Airtouch PLC 3.23% Telecommunications United Kingdom
-----------------------------------------------------------------------------------------------------------------------------------
4. Total Fina Elf. S.A. 2.79% Oil and Gas Producing France
-----------------------------------------------------------------------------------------------------------------------------------
5. Philips Electronics (KON) 2.79% Electronics and Instruments Netherlands
-----------------------------------------------------------------------------------------------------------------------------------
6. Ver Ned Uitgevers 2.23% Broadcasting and Publishing Netherlands
-----------------------------------------------------------------------------------------------------------------------------------
7. BP Amoco PLC 2.13% Oil-Integrated-International United Kingdom
-----------------------------------------------------------------------------------------------------------------------------------
8. San Paolo IMI SPA 2.11% Financial-Banks Italy
-----------------------------------------------------------------------------------------------------------------------------------
9. NTT DoCoMo, Inc 2.04% Telecommunications Japan
-----------------------------------------------------------------------------------------------------------------------------------
10. Intershop Comm. 1.96% Business Services Germany
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS(1) FOR PERIODS ENDED JUNE 30, 2000
Inception Since
Date 1 Year 3 Year 5 Year Inception
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A Shares (with sales charge) 2/16/93 14.64% 11.38% 14.70% 13.65%
At Net Asset Value (without sales charge) 20.05% 13.10% 15.76% 14.37%
------------------------------------------------------------------------------------------------------------------------------------
Class B Shares (with sales charge) 5/1/96 15.65% 10.86% N/A 12.00%
At Net Asset Value (without sales charge) 19.12% 11.96% N/A 12.80%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
--------------------------------------------------------------------------------
11
<PAGE>
--------------------------------------------------------------------------------
THE GUARDIAN BAILLIE GIFFORD EMERGING MARKETS FUND
--------------------------------------------------
[PHOTO OMITTED]
Edward H. Hocknell
Portfolio Manager
OBJECTIVE: Long-term capital appreciation
PORTFOLIO: At least 65% in a portfolio of common stocks issued by emerging
market companies
INCEPTION: May 1, 1997 NET ASSETS AT JUNE 30, 2000: $41,209,595
Q. HOW DID THE FUND PERFORM DURING THE FIRST HALF OF 2000?
A. In the first half of 2000, the Morgan Stanley Capital International (MSCI)
Emerging Markets Free Index (EMF)(1) returned -5.00%, while The Guardian Baillie
Gifford Emerging Markets Fund returned -0.27%(2) in U.S. Dollar terms.
Q. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE AND WHAT WAS YOUR STRATEGY?
A. The quarter has been marked by market volatility, as the correction in the
NASDAQ Composite(3) has had varying effects in emerging markets. No one region
performed significantly better or worse than the others during the period;
indeed in both the first and second quarters their progress was remarkably
uniform. As it turned out, the decline in MSCI Latin America Free Index, at
5.1%, was less than the falls in the MSCI Asia Free Index and the MSCI Emerging
Europe Index although the differences were marginal.(4) Significant currency
moves, with one or two minor exceptions, were notable by their absence.
Not surprisingly, the Asian markets, which were the greatest beneficiaries
of growth in technology and the Internet, were the ones that displayed the most
nervousness. In Asia, we managed to sell many of our internet-related holdings
before they suffered the worst of the sell-off, but most of our more solid
technology holdings also ran into heavy selling and some saw sharp falls in
price. Allied to these concerns over momentum and valuation was the prospect of
a sharp rise in U.S. interest rates, a hard landing for the economy there, and
shrinking demand for the goods supplied by emerging markets. More recently, as
the signs of overheating have abated, the markets have recovered some of their
poise. Most markets retraced their losses, but India remains almost 20% lower,
with software stocks well off their highs. There were also politically induced
falls in Indonesia and Thailand (where the Fund has limited exposure).
Latin American growth continues to improve after a difficult 1999. In
recent months, we have been encouraged by the steady stream of purchases of
Latin American businesses by multinationals. The multinationals are attracted by
the strong market positions and cash flow characteristics of many of these
companies. We, like the multinationals, think that corporate valuations are
relatively low in the region. This provides an encouraging environment for all
equity investors.
--------------------------------------------------------------------------------
"The short term outlook for emerging markets is likely to be dictated by the
economic signals emanating from the U.S., as many countries' economies and many
companies' profits are currently direct beneficiaries of the strength of US
growth."
--------------------------------------------------------------------------------
In line with trends elsewhere, emerging European equities have been
trending downwards over the quarter, hit by weakness in technology, multimedia,
and telecom (TMT) stocks. Although the major eastern European countries tended
to fall in unison, Hungary and the Czech Republic continued to benefit from
strong export demand, improving external balances and controlled inflation. This
was in contrast with Poland, which is still suffering from a burgeoning current
account deficit, rising inflation and interest rates, and a deteriorating
political situation, which has seen the disintegration of the government
coalition.
One of the causes of the Fund's outperformance was its very heavy weighting
in these outperforming sectors in the first calendar quarter, and the timely
reduction of that overweight position before all the previous gains had been
wiped out. The country bets that added most value for the Fund were its extreme
underweight in Greece and its overweight in Turkey.
Q. WHAT IS YOUR OUTLOOK FOR THE FUTURE?
A. The short term outlook for emerging markets is likely to be dictated by the
economic signals emanating from the U.S., as many countries' economies and many
companies' profits are currently direct beneficiaries of the strength of
--------------------------------------------------------------------------------
(1) The Morgan Stanley Capital International (MSCI) Emerging Markets Free (EMF)
Index is an unmanaged index that is generally considered to be
representative of the stock market activity of emerging markets. The Index
is a market capitalization weighted index composed of companies
representative of the market structure of 22 emerging market countries in
Europe, Latin America, and the Pacific Basin. The MSCI EMF Index excludes
closed markets and those shares in otherwise free markets that may not be
purchased by foreigners. The MSCI EMF Index is not available for direct
investment, and the returns do not reflect the fees and expenses that have
been deducted from the Fund's return.
(2) Total return figures are historical and assume the reinvestment of
dividends and distributions and the deduction of all Fund expenses. Total
return figures for Class A shares do not take into account the current
maximum sales charge of 4.5% except where noted. Total return figures for
Class B shares do not take into account the contingent deferred sales
charge applicable to such shares (maximum of 3%) except where noted.
Returns represent past performance and are not a guarantee of future
results. Investment return and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than the
original cost.
(3) The NASDAQ Composite Index is a broad-based capitalization-weighted index
of all NASDAQ National Market stocks.
(4) The Morgan Stanley Capital International (MSCI) Latin America Free Index is
an unmanaged index that is generally considered to be representative of the
stock market activity of Latin America. The Morgan Stanley Capital
International (MSCI) Asia Free Index is an unmanaged index that is
generally considered to be representative of the stock market activity of
Asia. The MSCI Latin America Free and Asia Free Indices exclude closed
markets and those shares in otherwise free markets that may not be
purchased by foreigners. The Morgan Stanley Capital International (MSCI)
Emerging Europe Index is an unmanaged index that is generally considered to
be representative of the stock market activity of emerging markets in
Europe. The MSCI Latin America Free, Asia Free and Emerging Europe indices
are not available for direct investment, and the returns do not reflect the
fees and expenses that have been deducted from the Fund's return.
--------------------------------------------------------------------------------
12
<PAGE>
U.S. growth. A mild deceleration there, without sharp rises in interest rates,
would be the most benign scenario. Sectoral themes still seem to be dominant,
particularly in Asia, again following the lead of U.S. markets. A cooling of
activity in the U.S. is now a given, but the key will be the speed at which it
cools. There seems little doubt that a gentle deceleration would provide the
best backdrop for emerging markets investment. At the corporate level,
opportunities abound. It is becoming easier to find companies whose business
models and ethics come up to Western standards, and the recent price falls have
been providing chances to pick up bargains.
Important themes over the next six months may be the progress of China,
both in terms of its economic recovery and in terms of the introduction of more
new and significant companies to the stock market, and the depth of ongoing
reforms in Latin America.
--------------------------------------------------------------------------------
THE GUARDIAN BAILLIE GIFFORD EMERGING MARKETS FUND
--------------------------------------------------
PORTFOLIO COMPOSITION BY GEOGRAPHIC LOCATION
AS OF JUNE 30, 2000
[GRAPHIC OMITTED]
[The following table was represented as a pie chart in the printed material.]
Other 4.93%
Cash 8.26%
Europe 15.60%
Latin America 23.82%
Pacific ex Japan 47.39%
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
TOP TEN HOLDINGS AS OF JUNE 30, 2000
COMPANY PERCENT OF TOTAL NET ASSETS INDUSTRY COUNTRY
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Samsung Electronics 5.78% Semi-Conductors South Korea
------------------------------------------------------------------------------------------------------------------------------------
2. UTI Fund Int'l Ltd 4.02% Mutual Funds India
------------------------------------------------------------------------------------------------------------------------------------
3. Telefonos de Mexico S.A. ADR 2.68% Telecommunications Mexico
------------------------------------------------------------------------------------------------------------------------------------
4. China Mobile (Hong Kong) 2.35% Telecommunications Hong Kong
------------------------------------------------------------------------------------------------------------------------------------
5. Legend Hldgs. Ltd. 1.95% Computer Systems Hong Kong
------------------------------------------------------------------------------------------------------------------------------------
6. BATM Advanced Comm. Ltd. 1.81% Business Services Israel
------------------------------------------------------------------------------------------------------------------------------------
7. Winbond Electronic Corp. GDR 1.78% Electronics and Instruments Taiwan
------------------------------------------------------------------------------------------------------------------------------------
8. Korea Electric Power Corp. ADR 1.73% Utilities-Electric South Korea
------------------------------------------------------------------------------------------------------------------------------------
9. China Unicom Ltd. 1.73% Telecommunications Hong Kong
------------------------------------------------------------------------------------------------------------------------------------
10. Total Access Comm. Public Co. 1.64% Telecommunications Thailand
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
------------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS(2) FOR PERIODS ENDED JUNE 30, 2000
<CAPTION>
Inception Since
Date 1 Year 3 Years Inception
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Shares (with sales charge) 5/1/97 29.54% -0.96% 1.79%
At Net Asset Value (without sales charge) 35.64% 0.57% 3.28%
------------------------------------------------------------------------------------------------------------------------------------
Class B Shares (with sales charge) 5/6/97 28.80% -2.79% -0.27%
At Net Asset Value (without sales charge) 32.66% -1.83% 0.67%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
--------------------------------------------------------------------------------
13
<PAGE>
--------------------------------------------------------------------------------
THE GUARDIAN INVESTMENT QUALITY BOND FUND
-----------------------------------------
[PHOTO OMITTED] [PHOTO OMITTED]
Thomas G. Sorell, C.F.A. Howard W. Chin
Co-Portfolio Manager Co-Portfolio Manager
NET ASSETS AT JUNE 30, 2000: $138,009,598
Q. HOW DID THE FUND PERFORM DURING DURING THE FIRST HALF OF 2000?
A. The Fund had a total return of 3.51%(1) for the six months ended June 30,
2000, outperforming the average fund in our Lipper Intermediate Investment Grade
peer group(2), which returned 3.19% for the same period. The group consists of
other mutual funds that invest primarily in investment grade debt with average
maturities of 5-10 years. Another commonly used benchmark, the Lehman Aggregate
Bond Index,(3) returned 3.99% for the first half of 2000.
Q. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
A. During the first half of 2000, the Federal Reserve remained concerned that
rapid U.S. economic growth would result in increased inflationary pressures
given tight labor markets and other capacity constraints. Consequently, the
Federal Reserve Open Market Committee followed last year's round of tightening,
initiated in June 1999, with three additional moves, increasing the Fed Funds
rate by a total of 1.0% to 6.50%. As a result, interest rates rose early in the
first quarter with the 5-, 10-, and 30-year Treasury rates all peaking near
6.75% and then declining steadily in March as the Treasury announced new
projections of large Federal surpluses and its intent to start retiring
government debt.
In addition, turbulence in the equity markets, in March and April, lent
support to the Treasury market as investors sought a safe haven from equity
volatility. By mid-April, 10- and 30-year Treasury rates had declined by
approximately 1.0% to 5.75%. However, as interest rates rose again, approaching
first quarter highs of 6.75% in mid-May and then proceeded to decline when
evidence appeared that the Federal Reserve's efforts to slow the economy might
be succeeding.
--------------------------------------------------------------------------------
"The net result of these events was that on a nominal basis the investment grade
fixed income asset class outperformed most equity indices during the first half
of the year . . ."
--------------------------------------------------------------------------------
The first half of 2000 came to a close with long-term interest rates
approximately 0.40% to 0.60% lower than they were when the year began, while
shorter maturities (under 5 years) were little changed. This phenomenon,
referred to as a yield curve inversion, where long-term rates yield less than
short-term rates, was in part responsible for the poor performance of
non-Treasury securities (spread assets) in the fixed income markets during the
first half of 2000.
Once again we find ourselves recounting the disparate performance between
Treasury securities and the other fixed income asset classes: corporate,
mortgage-backed, and asset-backed securities. The market for spread assets in
many respects resembled the fall of 1998 and performed as poorly, but without a
visible financial crisis like the Russian default or the collapse of a
well-known hedge fund. While the Lehman Aggregate Bond Index returned 3.99%
during the first six months of 2000, the Treasury component of this index earned
5.37%. These returns far exceeded what was earned by similar duration spread
assets. By many measures, corporate bonds in the first half of 2000 not only
performed more poorly than in 1998 but also actually approached levels not seen
since the recession of 1990. The Lehman Corporate Bond Index(4) underperformed
Treasuries for the first five months of the year by 3.30%, and not until June
did corporate bonds provide a return advantage over similar duration Treasuries.
Still, overall, the Lehman Corporate Bond Index returned approximately 2.70%
less than similar duration Treasuries.
This abysmal performance of corporate bonds was due to a combination of
factors. The first and most obvious factor was the fear that the Federal
Reserve, intent on slowing economic growth, would not succeed in orchestrating a
"soft landing" but would instead push the economy into recession or a "hard
landing." A second factor was the increasing dichotomy in the equity market with
respect to valuations between "old" and "new" economy credits. A majority of the
corporate bond market is comprised of traditional "Blue Chip" companies that
were experiencing weak stock prices. These companies came under increasing
pressure to repurchase stock at the expense of overall creditworthiness. This,
in conjunction with increased fears of "event risk," such as leveraged
--------------------------------------------------------------------------------
(1) Total return figures are historical and assume the reinvestment of
dividends and distributions and the deduction of all Fund expenses. Total
return figures for Class A shares do not take into account the current
maximum sales charge of 4.50%, except where noted. Returns represent past
performance and are not a guarantee of future results. Investment return
and principal value will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than the original cost.
(2) Lipper Analytical Services, Inc. is an independent mutual fund monitoring
and rating service. Its database of performance information is based on
historical total returns, which assume the reinvestment of dividends and
distributions, and the deduction of all fund expenses.
(3) The Lehman Aggregate Bond Index is an unmanaged index that is generally
considered to be representative of U.S. bond market activity. The Lehman
Aggregate Bond Index is not available for direct investment and the returns
do not reflect the fees and expenses that have been deducted from the Fund.
Likewise, return figures for the Lehman Aggregate Bond Index do not reflect
any sales charges that an investor may have to pay when purchasing or
selling shares of the Fund.
(4) The Lehman Corporate Bond Index is an unmanaged index that is generally
considered to be representative of corporate bond market activity. The
Index is not available for direct investment.
--------------------------------------------------------------------------------
14
<PAGE>
--------------------------------------------------------------------------------
buyouts for these undervalued companies, led to heightened credit risk. A third
factor discussed earlier was the inversion of the Treasury curve, which caused
further widening of long corporate spreads.
Much like the experience of the corporate sector, securitized products
(mortgage-backed [MBS], asset-backed [ABS], and commercial mortgage-backed
securities [CMBS]) suffered through five months of anemic performance only to
regain some ground in June as market participants became more confident that the
Fed may be nearing the end of its tightening efforts. For the first half of
2000, the Lehman MBS, ABS and CMBS indices showed positive returns of 3.67%,
3.35% and 3.66% respectively. On the surface, the spread sectors appeared to
perform reasonably in line with the overall Lehman Aggregate Bond Index, but
when their returns are compared relative to similar-duration Treasuries, their
weak showings become apparent. Specifically, the MBS, ABS and CMBS sectors
underperformed by -0.51%, -0.26, and -1.22%, respectively.
The weakness of the securitized products sector in the first half can be
attributed to two primary factors: the inversion of the yield curve and the
potential for increased regulatory scrutiny of the housing agencies that issue
MBS. Since MBS cashflows are spread out all along the curve, they were
particularly vulnerable to the effects of a reshaping of the yield curve.
Futhermore, as the Treasury buyback program increased concerns over the
impending prospects of illiquidity in Treasuries, investors became increasingly
doubtful about the validity of using the Treasury curve as the primary benchmark
of value and analytical framework for determining relative value. As a result,
investors came to expect some premium as compensation for these increased risks.
On the regulatory front, the debentures and MBS issued by the housing
agencies, Fannie Mae and Freddie Mac, came under intense pressure as both
Treasury officials, and members of Congress emphasized that the Agency issues
did not have the full-faith-and-credit guarantee of the U.S. government and
indicated the likelihood of greater scrutiny and regulation. As a result of all
the uncertainty, yield spreads on both agency debt and MBS widened sharply.
The net result of these events was that on a nominal basis the investment
grade fixed income asset class outperformed most equity indices during the first
half of the year, and did so without the full benefit of the traditional "yield"
advantage it enjoys.
Q. WHAT WAS YOUR INVESTMENT STRATEGY DURING THIS PERIOD?
A. The Fund employed a very defensive credit strategy throughout the first half
of the year. Concerned about increasing credit risk in a Fed tightening
environment, the portfolio reduced its exposure to 30-year corporate bonds and
increased its exposure to the triple-A rated MBS sector. Corporate credit risk
was limited to shorter maturities with more attractive risk/return profiles. The
Fund also tended to favor a combination of very short and long duration
securities and underweight the intermediate part of the yield curve. As the
yield curve inverted, this strategy proved to be successful. While the
mortgage-backed sector outperformed corporate bonds, it still underperformed
Treasuries; therefore, while the Fund performed well, the overweight in high
quality spread assets still reduced the Fund's overall return.
Q. WHAT IS YOUR OUTLOOK FOR THE REMAINDER OF THE YEAR?
A. It now appears that the Federal Reserve is succeeding in slowing the economy
and that it may be near the end of the monetary tightening process. However, the
risk remains that after the economy slows, inflation trends will require several
additional Fed moves which could push the economy into recession. Although this
risk seems small and unlikely, it is nonetheless one that would adversely affect
the spread asset classes and therefore must be watched. If in fact the Federal
Reserve is almost done raising interest rates, we would expect spread assets to
once again outperform Treasuries, and fixed income Securities to generally
perform well. As the year progresses, our strategy will continue to focus on
monitoring and balancing these risks by actively adjusting our asset allocation
to reflect changes in sector valuations and continuing to identify attractive
investment opportunities within these sectors.
--------------------------------------------------------------------------------
THE GUARDIAN INVESTMENT QUALITY BOND FUND
-----------------------------------------
<TABLE>
------------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS(1) FOR PERIODS ENDED JUNE 30, 2000
<CAPTION>
Inception Since
Date 1 Year 3 Years 5 Years Inception
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A Shares (with sales charge) 2/16/93 -0.75% 3.54% 4.46% 4.41%
At Net Asset Value (without sales charge) 3.93% 5.14% 5.42% 5.06%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
--------------------------------------------------------------------------------
15
<PAGE>
--------------------------------------------------------------------------------
THE GUARDIAN HIGH YIELD BOND FUND
---------------------------------
[PHOTO OMITTED] [PHOTO OMITTED]
Peter J. Liebst Thomas G. Sorell C.F.A.
Co-Portfolio Manager Co-Portfolio Manager
NET ASSETS AT JUNE 30, 2000: $56,935,924
Q. HOW DID THE FUND PERFORM DURING THE FIRST HALF OF THE YEAR 2000?
A. The Guardian High Yield Bond Fund posted a -0.77% return(1) for the first six
months of calendar year 2000. This compared favorably to a -1.66% return for the
high current yield funds tracked by Lipper Analytical Services.(2) As a measure
of the overall high yield market, the Donaldson, Lufkin & Jenrette High Yield
Index(3) posted a -1.19% return for the first six months of 2000.
Q. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
A. The fixed income markets were negatively impacted over the first half of 2000
by several factors, including rate actions by the Federal Reserve, volatility in
the equity markets, rising default rates and the lack of fund flows into the
fixed income market. The cumulative effect was a disappointing performance by
the overall fixed income market and specifically the high yield asset class.
The year began with a continuation of the Federal Reserve's concern over
signs of inflation developing in the U.S. economy. Addressing these concerns,
the Federal Reserve made a series of three rate increases over the first half of
2000, which raised the Fed Funds rate a total of 1.0% during this six month
period. These actions resulted in the yield on short-term rates (i.e., 5-year
Treasury bonds) rising above the yields on the long-term bond rates (i.e.,
30-year Treasury bonds) in January and maintaining this inverted relationship
throughout the first half of 2000. This inversion of the yield curve directly
impacted the performance of the high yield market, which is characterized by
securities maturing within 10 years.
Compounding the effect of a rising interest rate environment was a highly
volatile equity market throughout the second quarter of 2000. The equity market,
particularly NASDAQ Securities, is a major component in meeting the capital
needs of many issuers in the high yield market. As the equity market traded off
in April, investors adjusted their risk/return parameters and began to demand a
higher premium over the return on Treasuries for the credit risk inherent in the
high yield market. Combined with the lack of positive fund flows into the high
yield market and a rising default rate in the second quarter of the year, these
market events drove the average yield in the high yield market from 11.91% at
the beginning of the year to 13.17% at the end of June 2000. For the first half
of 2000, high yield securities under-performed all fixed income asset classes
but outperformed the bulk of the equity asset classes.
--------------------------------------------------------------------------------
"The Fund's emphasis on higher quality obligors and limited exposure to issuers
operating in cyclical industries contributed to an above-average performance
compared to the overall high yield market and the Lipper peer group."
--------------------------------------------------------------------------------
Q. WHAT WAS YOUR INVESTMENT STRATEGY DURING THIS PERIOD?
A. The Fund's overall strategy was to maximize the total return of a diversified
fixed income portfolio principally composed of below investment grade securities
with up to 25% invested in convertible securities. Specifically, we sought to
identify attractive asset allocation weightings based on analysis of industry
fundamentals, issuer creditworthiness and risk/return profile, and individual
issue relative value. Throughout the first half of 2000, stronger credit quality
and larger, more liquid issues were overweighted with an underweighting in
issuers operating in cyclical industries. The Fund's emphasis on higher quality
obligors and limited exposure to issuers operating in cyclical industries
contributed to an above-average performance compared to the overall high yield
market and the Lipper peer group. At mid-year, the Fund remains cautious with
regard to credit quality and liquidity and therefore, is overweighted in
higher-rated issuers while continuing to emphasize issues of larger size. The
strategy of underweighting cyclical industries will continue into the
----------------
(1) Total return figures are historical and assume the reinvestment of dividends
and distributions and the deduction of all Fund expenses. Total figures for
Class A shares do not take into account the current maximum sales charge of
4.5%, except where noted. Total returns for Class B shares do not take into
account the contingent deferred sales charge applicable to such shares (maximum
of 3% except where noted). Since inception, the investment adviser for the Fund
has assumed certain ordinary operating expenses for the Fund. Returns represent
past performance and are not a guarantee of future results. Investment returns
and principal value will fluctuate so that an investor's shares, when redeemed,
may be worth more or less than the original cost.
(2)( Lipper Analytical Services, Inc. is an independent mutual fund monitoring
and rating service. Its database of performance information is based on
historical total returns, which assume the reinvestment of dividends and
distributions, and the deduction of all fund expenses. Lipper returns do not
reflect the deduction of sales loads, and performance would be different if
sales loads were deducted.
(3) The DLJ High Yield Index is an unmanaged index that is generally considered
to be representative of the investable universe of the US-dominated high yield
debt market. The DLJ High Yield Index is not available for direct investment,
and the returns do not reflect the fees and expenses that have been deducted
from the Fund. The Index is not available for direct investment, and its returns
do not reflect the fees and expenses that have been deducted from the Fund.
-------------------------------------------------------------------------------
16
<PAGE>
second half of 2000 while we regularly review and estimate each industry's total
return potential.
Q. WHAT IS YOUR OUTLOOK FOR THE FUTURE?
A. Recent economic indicators appear to suggest that the economy may be slowing
and that the Federal Reserve may, in turn be nearing the end of the monetary
tightening process. However, the risk still exists that inflationary trends will
persist, requiring further actions by the Fed which may threaten to push the
economy into a recession. While this threat appears unlikely at this time, such
a sequence of events would negatively affect the performance of the high yield
market and, therefore, must be monitored closely. Currently, we continue to
favor higher-quality, larger issuers within the high yield market that have
demonstrated an ability to access several avenues within the capital markets. We
continue to emphasize companies operating in growth industries. If the Federal
Reserve is in fact nearing an end to its series of rate increases and the equity
markets exhibit stability, we would expect the high yield market to perform
well. We will continue to closely monitor the market's many influencing factors
and adjust our industry allocations and individual security selections to
capture attractive total return opportunities.
--------------------------------------------------------------------------------
THE GUARDIAN HIGH YIELD BOND FUND
---------------------------------
--------------------------------------------------------------------------------
TOP TEN HOLDINGS AS OF JUNE 30, 2000
PERCENT
OF
COMPANY TOTAL NET ASSETS
--------------------------------------------------------------------------------
1. Spectrasite Hldgs., Inc. 2.23%
--------------------------------------------------------------------------------
2. Clearnet Comm., Inc. 2.18%
--------------------------------------------------------------------------------
3. Orius Capital Corp. 2.12%
--------------------------------------------------------------------------------
4. Leap Wireless Int'l., Inc. 2.04%
--------------------------------------------------------------------------------
5. Adelphia Comm. Corp. 1.94%
--------------------------------------------------------------------------------
6. Focal Comm. Corp. 1.85%
--------------------------------------------------------------------------------
7. Exodus Comm., Inc. 1.83%
--------------------------------------------------------------------------------
8. Pierce Leahy Corp 1.81%
--------------------------------------------------------------------------------
9. Hollywood Casino Corp. 1.80%
--------------------------------------------------------------------------------
10. Globenet Comm. Group Ltd. 1.77%
--------------------------------------------------------------------------------
CREDIT QUALITY
AS OF JUNE 30, 2000
[GRAPHIC OMITTED[
[The following table was represented as a pie chart in the printed materials.]
CC 0.85%
BB 6.42%
SHORT-TERM 9.20%
CCC 12.53%
B 71.00%
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED JUNE 30, 2000
Inception Since
Date 1 Year Inception
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Class A Shares (with sales charge) 9/1/98 -5.44% 1.51%
At Net Asset Value (without sales charge) -0.98% 4.09%
------------------------------------------------------------------------------------------------------------------------------------
Class B Shares (with sales charge) 9/1/98 -4.76% 1.72%
At Net Asset Value (without sales charge) -1.90% 3.29%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
--------------------------------------------------------------------------------
17
<PAGE>
--------------------------------------------------------------------------------
THE GUARDIAN TAX-EXEMPT FUND
----------------------------
[PHOTO OMITTED]
Alexander M. Grant, Jr.
Portfolio Manager
OBJECTIVE: Maximum current income exempt from federal taxes, consistent with
preservation of capital
PORTFOLIO: At least 80% investment-grade debt obligations issued by state and
local authorities
INCEPTION: February 16, 1993
NET ASSETS AT JUNE 30, 2000: $101,599,852
Q. HOW DID THE GUARDIAN TAX-EXEMPT FUND PERFORM DURING THE FIRST SIX MONTHS OF
2000?
A. The Fund produced a total return of 4.75%(1) for the six month period ending
June 30, 2000. This is compared to The Lehman Municipal Bond Index,(2) the
Fund's benchmark, which produced a total return of 4.48% for the same period.
Another important comparison that should be used when measuring the Fund's
performance is how does it stack up to its peers? Lipper Analytical Services(3)
is a good source of this information. The Fund's Lipper peer group of general
municipal bond funds returned 4.03% for the six months ended June 30, 2000. In
early June, Morningstar(4) placed the Fund in the top 5% of all 273 funds in
Morningstar's Municipal National Long category based on its 3-year annualized
return as of June 30, 2000.
As of June 30, 2000, the Fund's 30-day yield was 4.63%. That grosses up to
a 7.67% taxable equivalent yield for a person in the highest federal income tax
bracket.
Q. WHAT STRATEGIES DID YOU USE TO MANAGE THE FUND?
A. Long-term bond issuance for the first half of 2000 was considerably below the
comparable period in the year before. New issue volume through June 30 was
$92.24 billion versus $118.75 billion for the same period last year. This was
caused by a significant drop-off in refundings. While supply declined, retail
investors, traditional institutional buyers and crossover buyers (drawn by the
attractiveness of this asset class as compared to other fixed income products)
were active in the market. Our strategy was to buy good quality, attractively
structured national market names and stay away from "hot" deals where the yield
pick up may be at most 0.05%, but the credit quality spread differential was
significantly more. On the sell side, we selectively sold retail and
institutional blocks when the bids were right in terms of the spread off our
benchmarks.
--------------------------------------------------------------------------------
"Long-term bond issuance for the first half of 2000 was considerably below the
comparable period in the year before. New issue volume through June 30 was
$92.24 billion versus $118.75 billion for the same period last year."
--------------------------------------------------------------------------------
Q. WHAT IS YOUR OUTLOOK FOR THE FUTURE?
A. Since we expect the new issue supply to continue to be subdued, with largely
the same pool of buyers, our strategy will continue to be to buy good quality
national market names, focusing on structure and credit quality.
--------------------------------------------------------------------------------
(1) Total return figures are historical and assume the reinvestment of
dividends and distributions and the deduction of all Fund expenses. Total
return figures for Class A shares do not take into account the current
maximum sales charge of 4.5%, except where noted. Returns represent past
performance and are not a guarantee of future results. Investment return
and principal value will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than the original cost.
(2) The Lehman Municipal Bond Index is an unmanaged index that is generally
considered to be representative of U.S. municipal bond market activity. The
Lehman Municipal Bond Index is not available for direct investment and its
return does not reflect the expenses that have been deducted from the
Fund's return. Likewise, return figures for the Lehman Municipal Bond Index
do not reflect any sales charges that an investor may have to pay when
purchasing shares of the Fund.
(3) Lipper Analytical Services, Inc. is an independent mutual fund monitoring
and rating service. Its database of performance information is based on
historical total returns, which assume the reinvestment of dividends and
distributions, and the deduction of all fund expenses. Lipper returns do
not reflect the deduction of sales loads, and performance would be
different if sales loads were deducted.
(4) Morningstar, Inc. is an independent mutual fund monitoring and rating
service, and its database of performance information is based on historical
total returns, which assumes the reinvestment of dividends and
distributions, and the deduction of all fund expenses. Morningstar's
proprietary ratings reflect historical risk-adjusted performance as of
6/30/00. The ratings are subject to change every month. Morningstar ratings
are calculated from the Fund's three-, five- and ten-year average annual
returns in excess of 90-day T-bill returns with appropriate fee adjustments
and a risk factor that reflects Fund performance below 90-day T-bill
returns.
--------------------------------------------------------------------------------
18
<PAGE>
--------------------------------------------------------------------------------
THE GUARDIAN TAX-EXEMPT FUND
----------------------------
PORTFOLIO COMPOSITION BY SECTOR ALLOCATION
AS OF JUNE 30, 2000
[GRAPHIC OMITTED]
[The following table was depicted as a pie chart in the printed material.]
OTHER BONDS 1.83%
SHORT-TERM 4.90%
STATE GENERAL OBLIGATION BONDS 7.09%
LOCAL GENERAL OBLIGATION BONDS 21.78%
INSURED BONDS 31.16%
REVENUE BONDS 33.24%
CREDIT QUALITY
AS OF JUNE 30, 2000
[GRAPHIC OMITTED]
[The following table was depicted as a pie chart in the printed material.]
BBB 0.50%
SHORT-TERM 4.90%
A 7.29%
AA 36.69%
AAA 50.62%
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS(1) FOR PERIODS ENDED JUNE 30, 2000
Inception Since
Date 1 Year 3 Years 5 Years Inception
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A Shares (with sales charge) 2/16/93 -1.49% 2.78% 4.34% 3.54%
At Net Asset Value (without sales charge) 3.14% 4.37% 5.30% 4.17%
----------------------------------------------------------------------------------------------------------------
</TABLE>
--------------------------------------------------------------------------------
19
<PAGE>
--------------------------------------------------------------------------------
THE GUARDIAN CASH MANAGEMENT FUND
---------------------------------
[PHOTO OMITTED]
Alexander M. Grant Jr.
Portfolio Manager
OBJECTIVE: As high a level of current income as is consistent with preservation
of capital and liquidity
PORTFOLIO: Short-term money market instruments
INCEPTION: November 3, 1982
NET ASSETS AT JUNE 30, 2000: $384,760,026
Q. HOW DID THE GUARDIAN CASH MANAGEMENT FUND PERFORM DURING THE FIRST SIX
MONTHS OF 2000?
A. As of June 27, 2000, the effective 7-day annualized yield for The Guardian
Cash Management Fund was 6.06%.(1) The Fund produced an annualized total return
of 5.30%(2) for the half-year ended June 30, 2000. In contrast, the effective
7-day annualized yield of Tier One money market funds as measured by iMoneyNet,
Inc. was 6.08%; total return for the same category was 5.43%. iMoneyNet, Inc.
(formerly IBC Financial Data, Inc.) is a research firm that tracks money market
funds.
Q. WHAT WAS YOUR INVESTMENT STRATEGY DURING THE YEAR?
A. The Guardian Cash Fund is a place for our investors to put their money while
they determine their preferred long-term investment vehicle, be it stocks or
bonds. Also, some of our investors prefer the relative stability of the money
markets. To best accommodate all our investors, we will continue to try to
provide a strong 7-day yield, while offering safety and liquidity. Our
investment strategy was to create a diversified portfolio of money market
instruments that presents minimal credit risks according to our criteria.
As always, we only purchased securities from issuers that had received ratings
in the two highest credit quality categories established by nationally
recognized statistical ratings organizations like Moody's Investors Service Inc.
and Standard & Poor's Corporation for the Fund's portfolio. Most of the
portfolio (95.0%) was invested in commercial paper; the balance (5.0%) was
invested in repurchase agreements.
Q. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
A. Money market funds are directly affected by the actions of the Federal
Reserve Board (Fed). Over the last twelve months, the Fed's policy-making Open
Market Committee (FOMC) raised the Fed Funds target rate six times, a combined
1.75%, to a nine year-high of 6.50%. The Fed Funds target is the rate at which
banks can borrow from each other overnight. While the Federal Reserve Board does
not set this rate, it can establish a target rate and, through open market
operations, the Fed can move member banks in the direction of that target rate.
The Discount Rate is the rate at which banks can borrow directly from the
Federal Reserve. Another factor affecting performance was the portfolio's
average maturity of 25 days as of June 27, 2000. The average Tier One money
market fund as measured by iMoneyNet, Inc. had an average maturity of 56 days.
--------------------------------------------------------------------------------
"Money market funds are directly affected by the actions of the
Federal Reserve Board. Over the last twelve months, the Fed's policy-making Open
Market Committee (FOMC) raised the Fed Funds target rate six times, a combined
175 basis points, to a nine year-high of 6.50%."
--------------------------------------------------------------------------------
Q. WHAT IS YOUR OUTLOOK FOR THE REMAINDER OF THE YEAR?
A. Uncertainty with the direction of the stock market contributes to large daily
inflows and outflows of funds in the Cash Fund. As the stock market rallies, our
investors typically transferred cash to equity funds. During those times when
the stock market stalls, we see cash inflows. Due to the relatively short
average days-to-maturity, these daily fluctuations have little effect on the
Fund.
--------------------------------------------------------------------------------
(1) Yields are annualized historical figures. Effective yield assumes
reinvested income. Yields will vary as interest rates change. Past
performance is not a guarantee of future results.
(2) Total return figures are historical and assume the reinvestment of
dividends and distributions and the deduction of all Fund expenses. From
June 1, 1994 to June 30, 2000, the investment adviser for the Fund has
assumed a portion of the operating expenses of the Fund (both Class A and B
shares) to the extent they exceeded 0.85% of the Fund's average daily net
assets. For the year ending December 31, 2000, the adviser has agreed to
assume the ordinary operating expenses of the Fund to the extent the
expenses exceed 0.85% and 1.60% of the average daily net assets of the
Fund's Class A and Class B shares, respectively. Without these expense
reimbursements, the performance figures would have been lower. The total
return and yield figures cited represent total return and yield for both
Class A and Class B shares. Total return figures do not take into account
the current maximum sales charge except where noted. Returns represent past
performance and are not a guarantee of future results. Investment return
and principal value will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than the original cost.
--------------------------------------------------------------------------------
AN INVESTMENT IN THE FUND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY. ALTHOUGH THE FUND SEEKS
TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO
LOSE MONEY IN THE FUND.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
20
<PAGE>
-------------------------------------------------------------------------------
SCHEDULE OF INVESMENTS
-------------------------------------------------------------------------------
June 30, 2000 (Unaudited)
O THE GUARDIAN PARK AVENUE FUND
-------------------------------------------------------------------------------
COMMON STOCKS -- 96.2%
-------------------------------------------------------------------------------
Shares Value
-------------------------------------------------------------------------------
APPLIANCE AND FURNITURE -- 1.3%
195,800 Corning, Inc. $ 52,841,525
-------------------------------------------------------------------------------
BIOTECHNOLOGY -- 4.1%
89,500 Affymetrix, Inc.* 14,778,688
309,400 Amgen, Inc.* 21,735,350
191,000 Cephalon, Inc.* 11,436,125
265,300 Enzon, Inc.* 11,275,250
72,700 Genentech, Inc.* 12,504,400
188,200 Human Genome Sciences, Inc.* 25,101,175
120,900 Immunex Corp.* 5,976,994
164,800 MedImmune, Inc.* 12,195,200
193,000 Millenium Pharmaceuticals, Inc.* 21,591,875
35,700 Myriad Genetics, Inc.* 5,286,389
121,000 Sepracor, Inc.* 14,595,625
64,300 Vertex Pharmaceuticals, Inc.* 6,775,613
--------------
163,252,684
-------------------------------------------------------------------------------
BROADCASTING -- 0.3%
306,500 Infinity Broadcasting Corp.* 11,168,094
-------------------------------------------------------------------------------
CAPITAL GOODS-MISCELLANEOUS TECHNOLOGY -- 0.3%
74,600 Amdocs Ltd.* 5,725,550
137,800 Amkor Technology, Inc.* 4,866,062
--------------
10,591,612
-------------------------------------------------------------------------------
COMPUTER SOFTWARE -- 12.7%
125,000 Adobe Systems, Inc. 16,250,000
105,600 Advent Software, Inc.* 6,811,200
433,000 BEA Systems, Inc.* 21,406,438
229,300 BroadVision, Inc.* 11,651,306
44,400 Check Point Software Technologies Ltd.* 9,401,700
104,800 Computer Associates Int'l., Inc. 5,364,450
44,500 i2 Technologies, Inc.* 4,639,820
176,600 Inktomi Corp.* 20,882,950
119,500 Mercator Software, Inc.* 8,215,625
186,000 Mercury Interactive Corp.* 17,995,500
102,000 Micromuse, Inc.* 16,879,406
1,946,545 Microsoft Corp.* 155,723,600
995,000 Oracle Corp.* 83,642,188
101,000 Rational Software Corp.* 9,386,688
322,300 Saga Systems, Inc.* 4,008,606
174,900 Siebel Systems, Inc.* 28,607,081
254,200 Symantec Corp.* 13,710,912
149,700 TIBCO Software, Inc.* 16,052,986
178,530 VeriSign, Inc.* 31,510,545
90,525 VERITAS Software Corp.* 10,230,739
188,400 Vitria Technology, Inc.* 11,515,950
--------------
503,887,690
-------------------------------------------------------------------------------
COMPUTER SYSTEMS -- 9.7%
304,200 Apple Computer, Inc.* 15,932,475
598,100 Compaq Computer Corp. 15,288,931
89,400 Comverse Technology, Inc.* 8,314,200
930,700 Dell Computer Corp.* 45,895,144
144,800 Efficient Networks, Inc.* 10,651,850
1,053,600 EMC Corp.* 81,061,350
375,300 Hewlett Packard Co. 46,865,587
739,000 Int'l. Business Machines 80,966,688
70,400 Network Appliance, Inc.* 5,667,200
214,000 NVIDIA Corp.* 13,602,375
55,900 QLogic Corp.* 3,692,894
77,600 SanDisk Corp.* 4,748,150
564,800 Sun Microsystems, Inc.* 51,361,500
--------------
384,048,344
-------------------------------------------------------------------------------
DRUGS AND HOSPITALS -- 0.9%
265,800 Andrx Corp.* 16,990,434
206,300 Regeneron Pharmaceuticals, Inc.* 6,150,319
517,200 Tenet Healthcare Corp. 13,964,400
--------------
37,105,153
-------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT -- 4.8%
164,800 American Power Conversion Corp.* 6,725,900
185,900 Arrow Electronics, Inc.* 5,762,900
127,000 Avnet, Inc. 7,524,750
195,480 Flextronics Int'l. Ltd.* 13,427,033
2,571,900 General Electric Co. 136,310,700
487,400 SCI Systems, Inc.* 19,099,987
--------------
188,851,270
-------------------------------------------------------------------------------
ELECTRONICS AND INSTRUMENTS -- 0.5%
99,800 Jabil Circuit, Inc.* 4,952,575
41,500 PerkinElmer, Inc.* 2,676,966
131,400 Sanmina Corp.* 11,234,700
--------------
18,864,241
-------------------------------------------------------------------------------
ELECTRONICS-SEMICONDUCTORS -- 8.5%
354,000 Analog Devices, Inc.* 26,904,000
331,400 Atmel Corp.* 12,220,375
232,000 AVX Corp. 5,321,500
161,400 Burr-Brown Corp.* 13,991,363
85,500 Chartered Semiconductor Mfg. Ltd.* 7,695,000
54,300 Cree, Inc.* 7,249,050
43,000 EPCOS AG* 4,235,500
166,300 Integrated Device Technology, Inc.* 9,957,213
1,142,800 Intel Corp. 152,778,075
36,900 Intersil Hldgs. Corp.* 1,994,906
240,000 Int'l. Rectifier Corp.* 13,440,000
846,600 LSI Logic Corp.* 45,822,225
139,500 LTX Corp.* 4,873,781
145,500 Microchip Technology, Inc.* 8,477,648
124,200 Palm, Inc.* 4,145,175
143,400 STMicroelectronics N.V. 9,204,488
177,792 Taiwan Semiconductor Mfg. Co.
Ltd. ADS* 6,889,440
62,500 Taiwan Semiconductor Mfg. Co. Ltd.
ADS (new)* 2,425,781
--------------
337,625,520
-------------------------------------------------------------------------------
ENERGY-MISCELLANEOUS -- 0.1%
166,700 Tosco Corp. 4,719,694
-------------------------------------------------------------------------------
ENTERTAINMENT AND LEISURE -- 2.4%
1,276,700 Walt Disney Co.* 49,551,919
209,800 Time Warner, Inc. 13,505,875
453,976 Viacom, Inc.* 30,955,488
--------------
94,013,282
-------------------------------------------------------------------------------
FINANCIAL-BANKS -- 3.8%
325,300 Bank of New York, Inc.* 15,126,450
1,916,000 Citigroup, Inc. 115,439,000
414,900 Mellon Financial Corp.* 15,117,919
173,019 Premier National Bancorp, Inc. 2,249,247
--------------
147,932,616
-------------------------------------------------------------------------------
FINANCIAL-OTHER -- 4.6%
463,500 American Express Co. 24,159,937
280,000 Countrywide Credit Industries, Inc.* 8,487,500
218,666 Legg Mason, Inc. 10,933,300
394,700 Lehman Brothers Hldgs., Inc. 37,323,819
295,500 Merrill Lynch & Co., Inc. 33,982,500
615,400 Morgan Stanley Dean Witter & Co. 51,232,050
466,357 Charles Schwab Corp. 15,681,271
--------------
181,800,377
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
See notes to financial statements. * Non-income producing security.
21
<PAGE>
THE GUARDIAN PARK AVENUE FUND
Schedule of Investments (Continued)
-------------------------------------------------------------------------------
Shares Value
-------------------------------------------------------------------------------
FINANCIAL-THRIFT -- 0.8%
347,400 Charter One Financial, Inc. $ 7,990,200
380,100 Golden West Financial Corp.* 15,512,831
248,800 Washington Mutual, Inc.* 7,184,100
--------------
30,687,131
-------------------------------------------------------------------------------
MERCHANDISING-SPECIAL -- 0.8%
140,500 Best Buy, Inc.* 8,886,625
28,200 Borders Group, Inc.* 438,862
300,000 Starbucks Corp.* 11,456,250
273,000 United Stationers, Inc.* 8,838,375
--------------
29,620,112
-------------------------------------------------------------------------------
MISCELLANEOUS-CONSUMER GROWTH STAPLES -- 0.2%
91,300 Omnicom Group, Inc. 8,131,406
-------------------------------------------------------------------------------
NATURAL GAS-DIVERSIFIED -- 0.3%
165,900 Coastal Corp. 10,099,163
-------------------------------------------------------------------------------
OIL AND GAS PRODUCING -- 1.9%
309,200 Apache Corp. 18,184,825
232,600 Burlington Resources, Inc. 8,896,950
225,400 EOG Resources, Inc.* 7,550,900
241,200 Newfield Exploration Co.* 9,436,950
501,200 Talisman Energy, Inc.* 16,602,250
152,100 Vastar Resources, Inc. 12,491,213
--------------
73,163,088
-------------------------------------------------------------------------------
OIL AND GAS SERVICES -- 2.7%
160,900 B.J. Svcs. Co.* 10,056,250
172,300 Cooper Cameron Corp.* 11,371,800
203,600 Global Marine, Inc.* 5,738,975
289,800 Halliburton Co. 13,674,938
281,200 Noble Drilling Corp.* 11,581,925
395,400 Santa Fe Int'l. Corp. 13,814,287
268,200 Schlumberger Ltd. 20,014,425
152,609 Transocean Sedco Forex, Inc. 8,155,043
305,500 Weatherford Int'l., Inc.* 12,162,719
--------------
106,570,362
-------------------------------------------------------------------------------
OIL-INTEGRATED-DOMESTIC -- 0.2%
165,000 Kerr-McGee Corp. 9,724,688
-------------------------------------------------------------------------------
OIL-INTEGRATED-INTERNATIONAL -- 2.6%
699,700 Exxon Mobil Corp. 54,926,450
799,200 Royal Dutch Petroleum Co. 49,200,750
--------------
104,127,200
-------------------------------------------------------------------------------
PUBLISHING-NEWS -- 0.2%
128,500 Dow Jones & Co., Inc.* 9,412,625
-------------------------------------------------------------------------------
SEMICONDUCTORS -- 3.6%
529,400 Advanced Micro Devices, Inc.* 40,896,150
475,800 Kemet Corp.* 11,924,737
480,200 Micron Technology, Inc.* 42,287,612
444,900 National Semiconductor Corp.* 25,248,075
516,450 Vishay Intertechnology, Inc.* 19,592,822
--------------
139,949,396
-------------------------------------------------------------------------------
SEMICONDUCTORS-COMMUNICATIONS -- 6.8%
298,300 Altera Corp.* 30,407,956
193,100 Applied Micro Circuits Corp.* 19,068,625
85,900 Conexant Systems, Inc.* 4,176,888
507,600 Cypress Semiconductor Corp.* 21,446,100
407,000 Micrel, Inc.* 17,679,062
100,700 PMC-Sierra, Inc.* 17,893,131
48,600 RF Micro Devices, Inc.* 4,258,575
217,800 Semtech Corp.* 16,658,297
772,800 Texas Instruments, Inc. 53,081,700
159,450 Transwitch Corp.* 12,307,547
56,600 TriQuint Semiconductor, Inc.* 5,415,912
134,200 Vitesse Semiconductor Corp.* 9,872,088
706,200 Xilinx, Inc.* 58,305,637
--------------
270,571,518
-------------------------------------------------------------------------------
SEMICONDUCTORS-EQUIPMENT -- 3.2%
58,200 Advanced Energy Industries, Inc.* 3,430,163
318,839 Agilent Technologies, Inc.* 23,514,376
387,400 Applied Materials, Inc.* 35,108,125
267,600 Credence Systems Corp.* 14,768,175
221,800 KLA-Tencor Corp.* 12,989,163
289,800 Lam Research Corp.* 10,867,500
89,600 Novellus Systems, Inc.* 5,068,000
277,500 Teradyne, Inc.* 20,396,250
--------------
126,141,752
-------------------------------------------------------------------------------
TELECOMMUNICATIONS -- 1.8%
198,075 AT & T Corp. 6,264,122
191,400 AT & T Wireless Group* 5,335,275
216,000 McLeodUSA, Inc.* 4,468,500
822,300 Qwest Comm. Int'l., Inc.* 40,858,031
153,700 U S West, Inc. 13,179,775
--------------
70,105,703
-------------------------------------------------------------------------------
TELECOMMUNICATIONS-EQUIPMENT -- 13.1%
234,500 American Tower Corp.* 9,775,719
112,000 Bookham Technology PLC* 6,636,000
66,700 Brocade Comm. Systems, Inc.* 12,238,408
110,400 Ciena Corp.* 18,402,300
2,164,000 Cisco Systems, Inc.* 137,549,250
74,500 Copper Mountain Networks, Inc.* 6,565,312
209,300 Crown Castle Corp.* 7,639,450
86,800 GlobeSpan, Inc.* 10,596,381
404,568 JDS Uniphase Corp.* 48,497,589
85,800 Juniper Networks, Inc.* 12,489,262
665,500 Nokia Corp. 33,233,406
1,548,600 Nortel Networks Corp. 105,691,950
227,700 Paradyne Networks, Inc.* 7,414,481
95,000 Pinnacle Hldgs., Inc.* 5,130,000
146,600 Proxim, Inc.* 14,508,819
271,600 QUALCOMM, Inc.* 16,296,000
51,200 Redback Networks, Inc.* 9,113,600
405,300 Scientific Atlanta, Inc. 30,194,850
72,000 SDL, Inc.* 20,533,500
122,400 Silicon Image, Inc.* 6,104,700
--------------
518,610,977
-------------------------------------------------------------------------------
TELECOMMUNICATIONS-SPECIALTY -- 3.9%
125,500 Advanced Fibre Comm., Inc.* 5,686,719
730,400 Exodus Comm., Inc.* 33,644,050
83,600 InfoSpace, Inc.* 4,618,900
184,800 Level 3 Comm., Inc.* 16,262,400
243,800 Nextel Comm., Inc.* 14,917,513
337,900 Nextel Partners, Inc.* 11,002,869
222,200 NEXTLINK Comm., Inc.* 8,429,712
42,000 Phone.com, Inc.* 2,735,250
242,400 Primus Telecomm. Group, Inc.* 6,029,700
347,200 Sprint Corp. 20,658,400
106,000 Triton PCS Hldgs., Inc.* 6,121,500
42,000 Williams Comm. Group* 1,393,875
192,600 Yahoo, Inc.* 23,858,325
--------------
155,359,213
-------------------------------------------------------------------------------
UTILITIES-ELECTRIC -- 0.1%
55,200 Calpine Corp.* 3,629,400
-------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(COST $2,510,434,127) 3,802,605,836
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
* Non-income producing security. See notes to financial statements.
22
<PAGE>
THE GUARDIAN PARK AVENUE FUND
Schedule of Investments (Continued)
-------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS -- 1.5%
-------------------------------------------------------------------------------
Principal
Amount Value
-------------------------------------------------------------------------------
$29,000,000 Duke Capital Corp.
7.00%, due 7/5/00 $ 28,977,444
32,000,000 UBS Fin. (Delaware), Inc.
6.92%, due 7/5/00 31,975,396
-------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS
(COST $60,952,840) 60,952,840
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 1.9%
-------------------------------------------------------------------------------
$74,368,000 State Street Bank & Trust Co.
repurchase agreement, dated
6/30/00, maturity value $74,408,593
at 6.55% due 7/3/00(1)
(COST $74,368,000) $ 74,368,000
-------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 99.6%
(COST $2,645,754,967) 3,937,926,676
CASH, RECEIVABLES AND OTHER ASSETS
LESS LIABILITIES -- 0.4% 14,563,276
-------------------------------------------------------------------------------
NET ASSETS -- 100% $3,952,489,952
-------------------------------------------------------------------------------
(1) The repurchase agreement is fully collateralized by U.S. Government and/or
agency obligations based on market prices at the date of the portfolio.
-------------------------------------------------------------------------------
See notes to financial statements. * Non-income producing security.
23
<PAGE>
O THE GUARDIAN PARK AVENUE SMALL CAP FUND
-------------------------------------------------------------------------------
COMMON STOCKS -- 90.9%
-------------------------------------------------------------------------------
Shares Value
-------------------------------------------------------------------------------
AEROSPACE AND DEFENSE -- 0.3%
13,200 Newport News Shipbuilding Corp. $ 485,100
-------------------------------------------------------------------------------
AIR TRANSPORTATION -- 0.5%
14,100 Atlantic Coast Airlines Hldgs.* 447,675
11,400 SkyWest, Inc. 422,513
------------
870,188
-------------------------------------------------------------------------------
AUTO-REPLACEMENT PARTS -- 0.2%
8,200 Danaher Corp. 405,388
-------------------------------------------------------------------------------
BIOTECHNOLOGY -- 3.6%
2,300 Affymetrix, Inc.* 379,788
8,600 Alkermes, Inc.* 405,275
10,400 Celgene Corp.* 612,300
8,400 Cephalon, Inc.* 502,950
13,300 Enzon, Inc.* 565,250
47,200 Genomic Solutions, Inc.* 690,300
4,000 Human Genome Sciences, Inc.* 533,500
6,800 Millenium Pharmaceuticals, Inc.* 760,750
15,900 Pharmacopeia, Inc.* 737,363
19,000 PRAECIS Pharmaceuticals, Inc.* 529,625
4,600 Sepracor, Inc.* 554,875
10,600 SuperGen, Inc.* 384,250
------------
6,656,226
-------------------------------------------------------------------------------
BROADCASTING -- 4.2%
14,800 Adelphia Comm. Corp.* 693,750
43,000 Charter Comm., Inc.* 706,812
37,200 Citadel Comm. Corp.* 1,299,675
22,105 Cox Comm., Inc.* 1,007,159
30,600 Cox Radio, Inc.* 856,800
14,800 Entercom Comm. Corp.* 721,500
18,900 Hispanic Broadcasting Corp.* 626,063
10,800 OpenTV Corp.* 484,650
30,700 Radio One, Inc.* 907,569
27,200 Spanish Broadcasting Systems, Inc.* 559,300
------------
7,863,278
-------------------------------------------------------------------------------
BUILDING MATERIALS AND HOMEBUILDERS -- 0.5%
12,400 Martin Marietta Materials, Inc. 501,425
8,600 Southdown, Inc. 496,650
------------
998,075
-------------------------------------------------------------------------------
CHEMICALS -- 1.7%
30,900 Cabot Corp. 842,025
11,600 Cabot Microelectronics Corp.* 530,700
45,000 Cadiz, Inc.* 360,000
22,000 Lubrizol Corp.* 462,000
17,200 Spartech Corp. 464,400
11,400 Symyx Technologies, Inc.* 485,747
------------
3,144,872
-------------------------------------------------------------------------------
COMPUTER SOFTWARE -- 10.0%
10,900 Agile Software Corp.* 770,494
7,400 Akamai Technologies, Inc.* 878,634
14,400 BEA Systems, Inc.* 711,900
18,600 BroadVision, Inc.* 945,112
11,400 Inet Technologies, Inc.* 618,450
6,200 Inktomi Corp.* 733,150
22,600 Intertrust Technologies Corp.* 464,713
7,900 Interwoven, Inc.* 868,877
12,550 Kana Comm., Inc.* 776,531
17,300 Macromedia, Inc.* 1,672,694
7,000 Mercury Interactive Corp.* 677,250
5,100 Micromuse, Inc.* 843,970
14,100 Portal Software, Inc.* 900,637
6,000 Rational Software Corp.* 557,625
12,000 RealNetworks, Inc.* 606,750
11,000 Remedy Corp.* 615,484
10,500 Selectica, Inc.* 735,656
7,900 TIBCO Software, Inc.* 847,152
21,800 Ulticom, Inc.* 523,541
13,200 VeriSign, Inc.* 2,329,800
13,600 Vitria Technology, Inc.* 831,300
4,300 webMethods, Inc.* 675,906
------------
18,585,626
-------------------------------------------------------------------------------
COMPUTER SYSTEMS -- 5.1%
6,000 Comverse Technology, Inc. 558,000
10,000 Entrust Technologies, Inc.* 827,500
29,600 Finisar Corp.* 775,150
20,200 Henry Jack & Associates, Inc. 1,012,525
8,800 M-Systems Flash Disk Pioneers Ltd.* 685,300
21,200 Network Appliance, Inc.* 1,706,600
12,600 NVIDIA Corp.* 800,887
23,600 QLogic Corp.* 1,559,075
9,900 SanDisk Corp.* 605,756
15,100 WatchGuard Technologies, Inc.* 829,556
------------
9,360,349
-------------------------------------------------------------------------------
DRUGS AND HOSPITALS -- 6.9%
8,000 Allergan, Inc. 596,000
13,700 Alpharma, Inc. 852,825
13,300 Andrx Corp.* 850,161
13,500 Biovail Corp.* 748,406
20,100 First Health Group Corp.* 659,531
6,000 IDEC Pharmaceuticals Corp.* 703,875
35,850 IVAX Corp.* 1,487,775
29,350 Jones Pharma, Inc. 1,172,166
16,350 King Pharmaceuticals, Inc.* 717,356
19,900 K-V Pharmaceutical Co.* 527,350
10,140 Laboratory Corp. of America Hldgs.* 782,048
10,600 Medicis Pharmaceutical Corp.* 604,200
38,800 Mylan Laboratories, Inc. 708,100
21,000 Tenet Healthcare Corp. 567,000
20,600 Teva Pharmaceutical Industries Ltd. 1,142,012
4,700 Waters Corp.* 586,619
------------
12,705,424
-------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT -- 3.9%
36,500 DDi Corp.* 1,040,250
27,012 Flextronics Int'l.* 1,855,387
19,400 Plexus Corp.* 2,192,200
11,000 RadiSys Corp.* 634,791
9,800 Sanmina Corp.* 837,900
18,000 SCI Systems, Inc.* 705,375
------------
7,265,903
-------------------------------------------------------------------------------
ELECTRONICS-SEMICONDUCTORS -- 4.2%
18,400 Advanced Micro Devices, Inc.* 1,421,400
8,250 Burr-Brown Corp.* 715,172
4,000 Cree, Inc.* 534,000
13,100 Integrated Device Technology, Inc.* 784,363
19,000 Intersil Hldg. Corp.* 1,027,187
12,000 Int'l. Rectifier Co.* 672,000
12,900 Quantum Effect Devices, Inc.* 735,300
27,000 SCG Hldg. Corp.* 590,625
10,900 Silicon Laboratories, Inc.* 579,063
8,400 Silicon Storage Technology, Inc.* 741,825
------------
7,800,935
-------------------------------------------------------------------------------
FINANCIAL-BANKS -- 3.8%
33,200 BB&T Corp. 792,650
15,800 City Nat'l. Corp. 549,050
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
* Non-income producing security. See notes to financial statements.
24
<PAGE>
THE GUARDIAN PARK AVENUE SMALL CAP FUND
Schedule of Investments (Continued)
-------------------------------------------------------------------------------
Shares Value
-------------------------------------------------------------------------------
16,600 Comerica, Inc. $ 744,925
17,140 Commerce Bancorp, Inc. 788,440
34,400 Compass Bancshares, Inc. 586,950
41,500 Hibernia Corp.* 451,312
14,700 Hudson United Bancorp 329,831
16,700 Silicon Valley Bancshares* 711,837
18,200 Southtrust Corp. 411,775
29,200 Southwest Bancorp of Texas, Inc.* 605,900
22,400 TCF Financial Corp. 575,400
25,500 Wintrust Financial Corp.* 393,656
------------
6,941,726
-------------------------------------------------------------------------------
FINANCIAL-OTHER -- 3.2%
36,600 American Capital Strategies Ltd. 873,825
21,500 BlackRock, Inc.* 623,500
24,900 Countrywide Credit Industries, Inc.* 754,781
19,900 InterCept Group, Inc.* 338,300
7,100 Investment Technology Group, Inc.* 280,450
12,500 Legg Mason, Inc. 625,000
24,700 Metris Cos., Inc. 620,587
14,000 Neuberger Berman, Inc. 651,000
25,700 Raymond James Financial, Inc.* 578,250
19,800 Waddell & Reed Financial, Inc.* 649,688
------------
5,995,381
-------------------------------------------------------------------------------
FINANCIAL-THRIFT -- 1.9%
14,100 Bank United Corp. 496,144
34,000 Banknorth Group, Inc. 520,625
21,100 Charter One Financial, Inc.* 485,300
24,100 Dime Bancorp, Inc. 379,575
32,700 Golden State Bancorp, Inc.* 588,600
16,800 Golden West Financial Corp. 685,650
18,400 Richmond County Financial Corp. 351,900
------------
3,507,794
-------------------------------------------------------------------------------
FOOD, BEVERAGE AND TOBACCO -- 0.8%
16,500 Adolph Coors Co. 998,250
16,000 McCormick & Co., Inc. 520,000
------------
1,518,250
-------------------------------------------------------------------------------
INSURANCE -- 0.5%
8,600 Allmerica Financial Corp.* 450,425
14,600 Protective Life Corp.* 388,725
------------
839,150
-------------------------------------------------------------------------------
MACHINERY AND EQUIPMENT -- 0.5%
7,100 Eaton Corp. 475,700
14,100 Fluor Corp. 445,913
------------
921,613
-------------------------------------------------------------------------------
MERCHANDISING-SPECIAL -- 1.5%
29,200 BJ's Wholesale Club, Inc.* 963,600
28,800 United Stationers, Inc.* 932,400
24,700 Zale Corp.* 901,550
------------
2,797,550
-------------------------------------------------------------------------------
MISCELLANEOUS-CAPITAL GOODS -- 1.5%
11,200 American Standards Cos., Inc.* 459,200
11,000 Amphenol Corp.* 728,062
16,800 Mettler-Toledo Int'l., Inc.* 672,000
7,800 Millipore Corp. 587,925
4,200 PerkinElmer, Inc.* 270,922
------------
2,718,109
-------------------------------------------------------------------------------
MISCELLANEOUS-CONSUMER GROWTH CYCLICAL -- 0.7%
6,900 Diamond Technology Partners, Inc.* 607,200
24,500 NetRatings, Inc.* 627,813
------------
1,235,013
-------------------------------------------------------------------------------
MISCELLANEOUS-CONSUMER GROWTH STAPLES -- 1.3%
14,700 Lamar Advertising Co.* 636,694
7,700 Learning Tree Int'l.* 471,625
35,000 Optimal Robotics Corp.* 1,343,125
------------
2,451,444
-------------------------------------------------------------------------------
OIL AND GAS PRODUCING -- 1.0%
20,000 Burlington Resources, Inc. 765,000
18,500 Louis Dreyfus Natural Gas Corp.* 579,281
9,300 Stone Energy Corp.* 555,675
------------
1,899,956
-------------------------------------------------------------------------------
OIL AND GAS SERVICES -- 2.7%
25,700 B.J. Svcs. Co.* 1,606,250
9,900 Cooper Cameron Corp.* 653,400
13,800 Maverick Tube Corp.* 401,925
16,600 Santa Fe Int'l. Corp. 579,963
7,000 Smith Int'l., Inc.* 509,687
22,800 Veritas DGC, Inc.* 592,800
16,600 Weatherford Int'l., Inc.* 660,887
------------
5,004,912
-------------------------------------------------------------------------------
PUBLISHING-NEWS -- 0.3%
9,600 Central Newspapers, Inc.* 607,200
-------------------------------------------------------------------------------
SEMICONDUCTORS -- 0.9%
25,300 AVX Corp. 580,319
21,900 Kemet Corp.* 548,869
16,200 Vishay Intertechnology, Inc.* 614,588
------------
1,743,776
-------------------------------------------------------------------------------
SEMICONDUCTORS-COMMUNICATIONS -- 8.2%
18,100 Applied Micro Circuits Corp.* 1,787,375
7,700 AudioCodes Ltd.* 924,000
13,400 Centillium Comm., Inc.* 924,600
15,600 Cypress Semiconductor Corp.* 659,100
11,550 Exar Corp.* 1,007,016
5,700 GlobeSpan, Inc.* 695,845
11,100 Marvell Technology Group Ltd.* 632,700
14,600 Metalink Ltd.* 432,525
12,600 Micrel, Inc.* 547,313
7,900 RF Micro Devices, Inc.* 692,237
8,300 Semtech Corp.* 634,820
15,000 Silicon Image, Inc.* 748,125
15,900 Transwitch Corp.* 1,227,281
5,800 TriQuint Semiconductor, Inc.* 554,987
25,200 Virata Corp.* 1,502,550
28,300 Xilinx, Inc.* 2,336,519
------------
15,306,993
-------------------------------------------------------------------------------
SEMICONDUCTORS-EQUIPMENT -- 2.2%
11,000 Advanced Energy Industries, Inc.* 648,312
11,200 Credence Systems Corp.* 618,100
11,900 Helix Technology Corp. 464,100
21,600 KLA-Tencor Corp.* 1,264,950
14,600 Lam Research Corp.* 547,500
12,700 Numerical Technologies, Inc.* 617,538
------------
4,160,500
-------------------------------------------------------------------------------
TELECOMMUNICATIONS-EQUIPMENT -- 10.7%
13,900 Accelerated Networks, Inc.* 586,406
7,500 Aether Systems, Inc.* 1,537,500
12,500 American Tower Corp.* 521,094
5,400 Avanex Corp.* 515,700
12,600 Bookham Technology PLC* 746,550
9,548 Cisco Systems, Inc.* 606,901
26,000 CommScope, Inc.* 1,066,000
6,200 Copper Mountain Networks, Inc.* 546,375
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
See notes to financial statements. * Non-income producing security.
25
<PAGE>
THE GUARDIAN PARK AVENUE SMALL CAP FUND
Schedule of Investments (Continued)
-------------------------------------------------------------------------------
Shares Value
-------------------------------------------------------------------------------
14,400 Crown Castle Corp. Int'l.* $ 525,600
21,000 Dycom Industries, Inc.* 966,000
6,900 E Tek Dynamics, Inc.* 1,820,306
3,700 EXFO Electro-Optical Engr., Inc.* 96,200
9,280 JDS Uniphase Corp.* 1,112,440
6,600 Juniper Networks, Inc.* 960,712
10,100 Metasolv Software, Inc.* 444,400
16,800 Netro Corp.* 963,900
8,700 New Focus, Inc.* 714,487
10,000 Pinnacle Hldgs., Inc.* 540,000
11,100 Powerwave Technologies, Inc.* 488,400
7,300 Redback Networks, Inc.* 1,299,400
10,400 Scientific Atlanta, Inc. 774,800
4,600 SDL, Inc.* 1,311,863
12,500 Spectrasite Hldgs., Inc.* 354,688
18,200 Stratos Lightwave, Inc.* 507,325
5,000 Turnstone Systems, Inc.* 828,359
------------
19,835,406
-------------------------------------------------------------------------------
TELECOMMUNICATIONS-SPECIALTY -- 6.5%
15,400 Critical Path, Inc.* 898,013
18,500 CTC Comm. Group, Inc.* 666,000
37,000 Exodus Comm., Inc.* 1,704,312
8,200 InfoSpace, Inc.* 453,050
44,884 Metromedia Fiber Network, Inc.* 1,781,334
12,800 Next Level Comm., Inc.* 1,097,600
21,600 Nextel Partners, Inc.* 703,350
11,700 PanAmSat Corp.* 511,144
6,600 Phone.com, Inc.* 429,825
19,000 Primus Telecomm. Group, Inc.* 472,625
12,000 Sycamore Networks, Inc.* 1,324,500
13,800 Telecorp PCS, Inc.* 556,312
8,000 Time Warner Telecom, Inc. 515,000
14,500 Triton PCS Hldgs., Inc.* 837,375
------------
11,950,440
-------------------------------------------------------------------------------
TRUCKERS -- 0.2%
28,400 Swift Transportation, Inc.* 397,600
-------------------------------------------------------------------------------
UTILITIES-ELECTRIC -- 1.0%
14,800 Calpine Corp.* 973,100
17,700 Energy East Corp. 337,406
24,000 Philadelphia Subn. Corp. 492,000
------------
1,802,506
-------------------------------------------------------------------------------
UTILITIES-GAS AND PIPELINE -- 0.4%
9,300 Equitable Res., Inc. 448,725
7,400 National Fuel Gas Co. 360,750
------------
809,475
-------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(COST $111,320,213) 168,586,158
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 11.2%
-------------------------------------------------------------------------------
Principal
Amount Value
-------------------------------------------------------------------------------
$20,820,000 State Street Bank & Trust Co.
repurchase agreement, dated
6/30/00, maturity value $20,831,364
at 6.55% due 7/3/00(1)
(COST $20,820,000) $ 20,820,000
-------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 102.1%
(COST $132,140,213) 189,406,158
LIABILITIES IN EXCESS OF CASH, RECEIVABLES
AND OTHER ASSETS -- (2.1)% (3,863,313)
-------------------------------------------------------------------------------
NET ASSETS -- 100% $185,542,845
-------------------------------------------------------------------------------
(1) The repurchase agreement is fully collateralized by U.S. Government and/or
agency obligations based on market prices at the date of the portfolio.
-------------------------------------------------------------------------------
* Non-income producing security. See notes to financial statements.
26
<PAGE>
O THE GUARDIAN ASSET ALLOCATION FUND
-------------------------------------------------------------------------------
MUTUAL FUNDS -- 64.0%
-------------------------------------------------------------------------------
Shares Value
-------------------------------------------------------------------------------
EQUITY -- 48.0%
2,251,544 The Guardian Park Avenue
Fund, Class A $137,636,887
FIXED INCOME -- 16.0%
4,909,404 The Guardian Investment Quality
Bond Fund, Class A 45,952,019
-------------------------------------------------------------------------------
TOTAL MUTUAL FUNDS
(COST $160,989,539) 183,588,906
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
U.S. GOVERNMENT -- 1.4%
-------------------------------------------------------------------------------
Principal
Amount Value
-------------------------------------------------------------------------------
U.S. Treasury Bill
$ 1,000,000 5.702% due 9/21/00 $ 987,011
500,000 5.802% due 9/21/00 493,391
1,500,000 5.86% due 9/21/00 1,479,978
1,000,000 6.15% due 11/9/00 977,621
-------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT SECURITIES
(COST $3,938,001) 3,938,001
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
OPTIONS -- 1.0%
-------------------------------------------------------------------------------
Number of
Contracts Value
-------------------------------------------------------------------------------
800 U.S. Treasury Bond Futures
Expires August, 2000
Exercise price $94
(COST $1,464,012) $ 2,937,500
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS -- 23.3%
-------------------------------------------------------------------------------
Principal
Amount Value
-------------------------------------------------------------------------------
$ 7,000,000 Associates First Capital BV
6.54% due 7/24/00 $ 6,970,752
6,000,000 BankAmerica Corp.
6.64% due 10/10/00 5,888,227
7,000,000 Equilon Enterprises LLC
6.58% due 8/29/00 6,924,513
7,000,000 Ford Motor Credit Co.
6.53% due 7/20/00 6,975,875
7,000,000 General Electric Capital Corp.
6.54% due 8/18/00 6,938,960
7,000,000 General Motors Acceptance Corp.
6.57% due 9/5/00 6,915,685
7,000,000 Govco, Inc.
6.70% due 8/24/00 6,929,650
5,300,000 H.J. Heinz Co.
6.54% due 8/11/00 5,260,524
7,000,000 Invensys PLC
6.58% due 7/25/00 6,969,293
7,000,000 Private Export Funding Corp.
6.58% due 10/12/00 6,868,217
-------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS
(COST $66,641,696) 66,641,696
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 10.4%
-------------------------------------------------------------------------------
Principal
Amount Value
-------------------------------------------------------------------------------
$29,675,000 State Street Bank & Trust Co.
repurchase agreement, dated
6/30/00, maturity value
$29,691,198 at 6.55%
due 7/3/00(1)
(COST $29,675,000) $ 29,675,000
-------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100.1%
(COST $262,708,248) 286,781,103
LIABILITIES IN EXCESS OF CASH, RECEIVABLES
AND OTHER ASSETS -- (0.1)% (117,931)
-------------------------------------------------------------------------------
NET ASSETS -- 100.0% $286,663,172
-------------------------------------------------------------------------------
(1) The repurchase agreement is fully collateralized by U.S. Government and/or
agency obligations based on market prices at the date of the portfolio.
-------------------------------------------------------------------------------
SOLD FUTURES CONTRACTS
-------------------------------------------------------------------------------
Unrealized
Contracts Description Expiration Appreciation
-------------------------------------------------------------------------------
216 S&P 500 Stock Index September, 2000 $ 867,221
At June 30, 2000 The Guardian Asset Allocation Fund had sufficient cash and/or
securities to cover margin requirements on open futures contracts.
-------------------------------------------------------------------------------
See notes to financial statements.
27
<PAGE>
O THE GUARDIAN BAILLIE GIFFORD INTERNATIONAL FUND
-------------------------------------------------------------------------------
COMMON STOCKS -- 97.5%
-------------------------------------------------------------------------------
Shares Value
-------------------------------------------------------------------------------
AUSTRALIA -- 2.3%
BUSINESS SERVICES -- 0.7%
33,460 Brambles Industries Ltd. $ 1,027,272
ENERGY-MISCELLANEOUS -- 0.6%
74,300 Broken Hill Ppty. 877,594
FINANCIAL-BANKS -- 0.3%
28,070 National Australia Bank 468,331
FOOD, BEVERAGE AND TOBACCO -- 0.3%
177,300 Fosters Brewing Group 498,361
MERCHANDISING-MASS -- 0.4%
181,000 Woolworths Ltd.* 667,343
------------
3,538,901
-------------------------------------------------------------------------------
FINLAND -- 5.5%
TELECOMMUNICATIONS -- 5.5%
135,001 Nokia OYJ 6,888,933
33,870 Sonera OYJ 1,544,030
------------
8,432,963
-------------------------------------------------------------------------------
FRANCE -- 10.5%
ELECTRONICS AND INSTRUMENTS -- 1.2%
8,230 Legrand 1,846,438
FINANCIAL-BANKS -- 1.1%
16,560 BNP Paribas 1,593,631
INSURANCE -- 1.7%
16,960 AXA UAP 2,671,633
MEDIA AND ENTERTAINMENT -- 1.6%
35,200 Societe Television Francaise 1 2,453,198
OIL AND GAS PRODUCING -- 2.8%
27,810 Total Fina Elf S.A. 4,263,965
RETAIL-FOOD AND DRUG -- 2.1%
24,280 Aventis S.A.* 1,772,120
20,660 Carrefour 1,412,246
------------
16,013,231
-------------------------------------------------------------------------------
GERMANY -- 6.2%
BUSINESS SERVICES -- 2.3%
6,630 Intershop Comm.* 2,993,931
16,600 T Online* 538,051
CHEMICALS-MISCELLANEOUS -- 1.0%
37,790 BASF AG 1,518,889
COMPUTER SOFTWARE -- 1.6%
16,416 SAP AG 2,437,052
DRUGS AND HOSPITALS -- 0.3%
13,590 GEHE AG 447,616
ELECTRONICS AND INSTRUMENTS -- 1.0%
14,629 Epcos AG* 1,459,340
------------
9,394,879
-------------------------------------------------------------------------------
HONG KONG -- 3.4%
COMPUTER SYSTEMS -- 0.3%
462,000 Legend Hldgs. Ltd. 447,450
CONGLOMERATES -- 0.7%
77,000 Hutchison Whampoa 967,994
FINANCIAL-BANKS -- 0.5%
358,600 Bank of East Asia Ltd. 837,216
REAL ESTATE -- 1.1%
156,000 Cheung Kong Hldgs. 1,715,990
TELECOMMUNICATIONS -- 0.6%
58,000 China Mobile* 511,513
148,000 China Unicom Ltd.* 312,308
UTILITIES-ELECTRIC -- 0.2%
110,500 Hong Kong Electric 355,788
------------
5,148,259
-------------------------------------------------------------------------------
IRELAND -- 1.5%
CONSTRUCTION MATERIALS -- 1.5%
130,800 CRH PLC 2,360,134
-------------------------------------------------------------------------------
ITALY -- 4.4%
FINANCIAL-BANKS -- 3.0%
178,700 Bipop-Carire SPA 1,405,785
181,460 San Paolo IMI SPA 3,220,530
TELECOMMUNICATIONS -- 1.4%
206,060 Telecom Italia SPA 2,104,963
------------
6,731,278
-------------------------------------------------------------------------------
JAPAN -- 22.3%
AUTOMOTIVE -- 1.2%
40,000 Toyota Motor Corp. 1,820,838
CHEMICALS -- 1.1%
282,000 Sumitomo Chemical 1,695,641
COMMERCIAL SERVICES -- 0.3%
5,800 Benesse Corp. 401,772
COMPUTER SOFTWARE AND TECHNOLOGY -- 0.4%
4,200 Softbank Corp. 570,001
COMPUTER SYSTEMS -- 1.4%
60,000 Fujitsu Ltd. 2,075,303
DRUGS AND HOSPITALS -- 1.4%
32,000 Takeda Chemical Industries Ltd. 2,099,053
ELECTRONICS AND INSTRUMENTS -- 5.2%
6,200 Hirose Electric Co. Ltd.* 964,724
120,000 Hitachi 1,730,362
11,000 Kyocera Corp. 1,865,034
5,800 Rohm Co. 1,694,548
19,800 Sony Corp. 1,847,415
ENGINEERING AND MACHINERIES -- 1.3%
10,700 SMC Corp. 2,011,828
FINANCIAL-OTHER -- 4.2%
160,000 Mitsubishi Trading & Brokerage 1,241,035
69,000 Nomura Securities Co. Ltd. 1,687,527
24,600 Promise Co. 1,942,868
126,000,000 Sanwa Int'l. Financial Ltd.* 1,196,409
66,000 Sumitomo Marine & Fire Insurance* 383,789
HOUSEHOLD PRODUCTS -- 1.2%
62,000 Kao Corp. 1,893,219
RETAIL TRADE -- 1.1%
4,000 Fast Retailing Co. Ltd.* 1,673,814
TELECOMMUNICATIONS -- 3.5%
165 Nippon Tele. & Tel. Corp. 2,192,639
115 NTT DoCoMo, Inc. 3,110,598
------------
34,098,417
-------------------------------------------------------------------------------
NETHERLANDS -- 7.8%
BROADCASTING AND PUBLISHING -- 2.2%
65,800 Ver Ned Uitgevers* 3,398,523
COMPUTER SERVICES -- 0.6%
66,040 CMG PLC 933,117
COMPUTER SYSTEMS -- 1.1%
39,000 ASM Lithography Hldg. NV* 1,676,244
ELECTRONICS AND INSTRUMENTS -- 2.8%
90,380 Philips Electronics (KON) 4,262,520
INSURANCE --1.1%
48,060 Aegon NV 1,710,056
------------
11,980,460
-------------------------------------------------------------------------------
NEW ZEALAND -- 0.4%
TELECOMMUNICATIONS -- 0.4%
183,810 Telecom. Corp. of New Zealand 642,378
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
* Non-income producing security. See notes to financial statements.
28
<PAGE>
THE GUARDIAN BAILLIE GIFFORD INTERNATIONAL FUND
Schedule of Investments (Continued)
-------------------------------------------------------------------------------
Shares Value
-------------------------------------------------------------------------------
PORTUGAL -- 1.7%
BUSINESS SERVICES -- 0.8%
PT Multimedia SGPS
20,760 Common* $ 1,030,618
16,660 Rights* 127,720
TRANSPORTATION -- 0.9%
163,680 Brisa (Auto Estrada) 1,409,514
------------
2,567,852
-------------------------------------------------------------------------------
SINGAPORE -- 0.6%
PUBLISHING AND PRINTING -- 0.6%
59,197 Singapore Press Hldgs. 925,489
-------------------------------------------------------------------------------
SOUTH KOREA -- 1.0%
ELECTRONICS AND INSTRUMENTS -- 0.5%
3,500 Samsung Electronics GDR* 686,000
UTILITIES-ELECTRIC -- 0.5%
40,082 Korea Electric Power Corp. ADR* 739,012
------------
1,425,012
-------------------------------------------------------------------------------
SPAIN -- 3.0%
FINANCIAL-BANKS -- 1.1%
158,500 Banco Santander Central Hispano S.A.* 1,672,086
TELECOMMUNICATIONS -- 1.9%
131,570 Telefonica S.A.* 2,826,224
------------
4,498,310
-------------------------------------------------------------------------------
SWEDEN -- 4.6%
CONSTRUCTION AND MINING EQUIPMENTS -- 0.5%
44,970 Atlas Copco AB 841,275
RETAIL-GENERAL -- 0.4%
25,710 Hennes & Mauritz 536,354
TELECOMMUNICATIONS -- 3.7%
288,560 LM Ericsson 5,709,039
------------
7,086,668
-------------------------------------------------------------------------------
SWITZERLAND -- 4.1%
BUSINESS SERVICES -- 1.6%
2,930 Adecco S.A. 2,489,413
DRUGS AND HOSPITALS -- 0.9%
133 Roche Hldgs. AG 1,294,697
FINANCIAL-BANKS -- 1.6%
12,070 Credit Suisse Group 2,400,977
------------
6,185,087
-------------------------------------------------------------------------------
TAIWAN -- 0.5%
ELECTRONICS AND INSTRUMENTS -- 0.5%
25,530 Winbond Electronics Corp. GDR 733,987
-------------------------------------------------------------------------------
UNITED KINGDOM -- 17.7%
CAPITAL EQUIPMENT -- 0.1%
7,200 Psion PLC 69,614
COMPUTER SOFTWARE -- 0.5%
100,000 Sage Group 809,508
CONGLOMERATES -- 0.4%
43,000 Smiths Industries PLC 559,544
CONSTRUCTIONS -- 0.9%
189,000 Hanson PLC 1,335,507
DRUGS AND HOSPITALS -- 2.4%
85,000 Glaxo Wellcome 2,478,381
92,000 Smithkline Beecham 1,204,125
ELECTRONICS -- 0.6%
35,500 ARM Hldgs. PLC* 380,302
52,000 Electrocomponents 531,098
FINANCIAL-BANKS -- 2.8%
36,000 Barclays 894,968
45,325 Halifax PLC 434,805
108,000 HSBC Hldgs. 1,234,598
84,000 Lloyds TSB Group PLC 793,106
58,564 Royal Bank of Scotland* 980,061
FINANCIAL SERVICES -- 1.2%
70,000 Amvescap PLC 1,122,720
43,000 CGU PLC* 715,696
FOOD, BEVERAGE AND TOBACCO -- 1.0%
132,800 Imperial Tobacco* 1,271,948
22,929 Whitbread 206,428
INSURANCE -- 0.3%
33,000 Prudential Corp. 483,344
LEISURE PRODUCTS -- 0.2%
38,000 Granada Group 379,485
OIL AND GAS -- 0.5%
96,000 Shell Transport & Trading* 801,095
OIL-INTEGRATED-INTERNATIONAL -- 2.1%
338,760 BP Amoco PLC 3,249,742
TELECOMMUNICATIONS -- 4.7%
90,000 British Telecom. 1,162,968
24,685 Cable & Wireless Co. 417,965
17,000 Energis PLC* 637,408
1,223,650 Vodafone Airtouch PLC 4,943,516
------------
27,097,932
-------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(COST $118,128,743) 148,861,237
-------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 1.5%
-------------------------------------------------------------------------------
Principal
Amount Value
-------------------------------------------------------------------------------
$ 2,403,000 State Street Bank & Trust Co.
repurchase agreement,
dated 6/30/00, maturity
value $2,404,051 at 5.25%
due 7/3/00(1)
(COST $2,403,000) $ 2,403,000
-------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 99.0%
(COST $120,531,743) 151,264,237
CASH, RECEIVABLES AND OTHER ASSETS
LESS LIABILITIES -- 1.0% 1,470,607
-------------------------------------------------------------------------------
NET ASSETS -- 100% $152,734,844
-------------------------------------------------------------------------------
(1) The repurchase agreement is fully collateralized by U.S. Government and/or
agency obligations based on market prices at the date of the portfolio.
GLOSSARY OF TERMS:
ADR -- American Depositary Receipt.
GDR -- Global Depositary Receipt.
-------------------------------------------------------------------------------
See notes to financial statements. * Non-income producing security.
29
<PAGE>
O THE GUARDIAN BAILLE GIFFORD EMERGING MARKETS FUND
-------------------------------------------------------------------------------
COMMON STOCKS -- 90.9%
-------------------------------------------------------------------------------
Shares Value
-------------------------------------------------------------------------------
ARGENTINA -- 0.8%
RETAIL-FOOD -- 0.4%
19,480 Imp. Y Exp. Patagonia* $ 175,415
TELECOMMUNICATIONS -- 0.4%
5,800 Telecom. Argentina Stet-France
Telecom. S.A. ADR 159,500
------------
334,915
-------------------------------------------------------------------------------
BRAZIL -- 8.2%
FINANCIAL-BANKS -- 0.4%
1,700,000 Banco Itau S.A. 149,404
FOOD, BEVERAGE AND TOBACCO -- 1.2%
8,168 Comp. Brasileiras de Dist. ADR 262,397
13,000 Comp. Cervejaria Brahma ADR* 221,000
GAS DISTRIBUTION -- 0.2%
6,361 Ultrapar Participacoes S.A. ADR 63,212
PAPER PRODUCTS -- 0.6%
5,600 Aracruz Celulose S.A. ADR 108,150
8,884 Votorantim Celulose e Papel S.A. ADR 163,244
PETROLEUM SERVICES -- 1.6%
22,000 Petroleo Brasileiro S.A. ADR 654,758
REAL ESTATE -- 0.2%
6,500 Brazil Realty S.A. GDR 97,311
RETAIL-APPLIANCES -- 0.6%
24,500 Globex Utilidades 232,842
TELECOMMUNICATIONS -- 2.0%
16,000,000 Embratel Participacoes S.A. 298,087
5,469 Embratel Participacoes S.A. ADR 129,205
5,290 Telecom. Centro Sul Participacoes ADR 167,356
10,500 Telecom. Norte Leste Participacoes ADR 248,063
1,501 Telecom. Sudeste Celular
Participacoes S.A. 27
TEXTILE-APPAREL AND PRODUCTION -- 0.6%
83,700 Confeccoes Guararapes S.A. 232,049
UTILITIES-ELECTRIC AND WATER -- 0.8%
9,000,000 Centrais Electricas Brasileiras S.A.* 199,113
8,600 Comp. Energetica de Minas ADR 149,425
------------
3,375,643
-------------------------------------------------------------------------------
CHILE -- 1.8%
CHEMICALS -- 0.1%
2,100 Sociedad Quimica Y Minera
de Chile S.A. ADR 46,725
FINANCIAL-BANKS -- 0.5%
14,000 Banco Santander Chile ADR 224,000
MINING -- 0.8%
60,840 Antofagasta Hldgs. 326,802
MUTUAL FUNDS -- 0.2%
2,800 Genesis Chile Fund* 79,100
TELECOMMUNICATIONS -- 0.2%
3,500 Comp. de Telecom. de Chile ADR* 63,438
------------
740,065
-------------------------------------------------------------------------------
CZECH REPUBLIC -- 0.4%
TELECOMMUNICATIONS -- 0.4%
9,000 Cesky Telecom. A.S.* 152,191
-------------------------------------------------------------------------------
EGYPT -- 1.0%
FOOD, BEVERAGE AND TOBACCO -- 1.0%
25,000 Al Ahram Beverages Co. S.A.E. GDR* 429,375
-------------------------------------------------------------------------------
GREECE -- 2.3%
BROADCASTING AND PUBLISHING -- 0.7%
8,830 Lambrakis Press S.A. 258,771
FINANCIAL-BANKS -- 0.2%
2,362 Alpha Bank 93,187
-------------------------------------------------------------------------------
TELECOMMUNICATIONS -- 1.4%
11,500 Hellenic Telecom.
Organization S.A. (OTE) 281,772
26,600 Panafon Hellenic Telecom. S.A.* 301,562
------------
935,292
-------------------------------------------------------------------------------
HONG KONG -- 7.7%
COMPUTER SYSTEMS -- 1.9%
830,000 Legend Hldgs. Ltd. 803,861
CONGLOMERATES -- 0.2%
300,000 First Pacific Co. Ltd. 101,982
ELECTRICAL EQUIPMENT -- 0.5%
1,500,000 Yixing Xinwei Hldgs. Ltd.* 188,570
FINANCIAL-BANKS -- 0.3%
56,000 Guoco Group 112,424
REAL ESTATE -- 0.7%
26,000 Cheung Kong Hldgs. 285,998
TELECOMMUNICATIONS -- 4.1%
110,000 China Mobile (Hong Kong) Ltd.* 970,111
338,000 China Unicom Ltd.* 713,245
------------
3,176,191
-------------------------------------------------------------------------------
HUNGARY -- 2.9%
CHEMICALS -- 0.3%
4,100 BorsodChem RT* 126,623
FINANCIAL-BANKS -- 1.0%
8,250 OTP Bank 429,948
PHARMACEUTICALS -- 0.8%
6,000 Richter Gedeon VEG 323,479
TELECOMMUNICATIONS -- 0.8%
46,700 Matav RT 324,788
------------
1,204,838
-------------------------------------------------------------------------------
INDIA -- 7.0%
CAPITAL GOODS-MISCELLANEOUS TECHNOLOGY -- 0.4%
10,700 Rediff.com India Ltd. ADR* 149,800
FINANCIAL-BANKS -- 0.9%
25,559 ICICI Bank Ltd.* 370,605
MUTUAL FUNDS -- 4.0%
23,500 UTI Int'l. Ltd.* 1,656,750
TELECOMMUNICATIONS -- 1.1%
44,000 Mahanagar Telephone Nigam
Ltd. GDR* 462,000
TELECOMMUNICATIONS-SPECIALTY -- 0.6%
11,000 Satyam Infoway Ltd. ADR* 244,750
------------
2,883,905
-------------------------------------------------------------------------------
ISRAEL -- 3.5%
BUSINESS SERVICES -- 1.9%
8,600 BATM Advanced Comm. Ltd. 746,927
COMPUTER SOFTWARE -- 0.7%
1,400 Check Point Software Technologies Ltd.* 296,450
CONGLOMERATES -- 0.4%
14,000 Clal Industries* 167,191
ELECTRONICS AND INSTRUMENTS -- 0.5%
7,500 Visionix Ltd.* 214,808
------------
1,425,376
-------------------------------------------------------------------------------
MALAYSIA -- 4.2%
FINANCIAL-BANKS -- 2.0%
62,000 Commerce Asset-Hldg. Berhad 179,474
162,600 Malayan Banking Berhad 658,958
FOOD, BEVERAGE AND TOBACCO -- 0.1%
22,000 JT Int'l. Berhad 25,126
TELECOMMUNICATIONS -- 1.6%
615,000 Technology Resources Inds. Berhad* 653,842
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
* Non-income producing security. See notes to financial statements.
30
<PAGE>
THE GUARDIAN BAILLE GIFFORD EMERGING MARKETS FUND
Schedule of Investments (Continued)
-------------------------------------------------------------------------------
Shares Value
-------------------------------------------------------------------------------
UTILITIES -- 0.5%
60,000 Tenaga Nasional $ 195,789
------------
1,713,189
-------------------------------------------------------------------------------
MEXICO -- 10.7%
CONGLOMERATES -- 0.7%
44,000 Alfa S.A. 100,548
4,000 Fomento Economico Mexicano ADR* 172,250
CONSTRUCTION MATERIALS -- 0.7%
11,512 Cemex S.A. de C.V. ADR 269,093
CONSTRUCTIONS -- 0.2%
79,800 Consorcio Ara S.A. de C.V.* 94,016
FINANCIAL-BANKS -- 0.6%
60,000 Grupo Financiero Banamex Accival
S.A. de C.V.* 252,285
FINANCIAL SERVICES -- 0.2%
69,400 Grupo Financiero Banorte* 95,860
FOOD, BEVERAGE AND TOBACCO -- 0.7%
115,000 Grupo Bimbo S.A. de C.V. 181,038
93,100 Grupo Continental 94,556
MEDIA AND ENTERTAINMENT -- 2.1%
130,000 Corp. Interamericana Entretenimiento* 508,328
5,000 Grupo Television S.A. de C.V. ADR* 344,688
METALS -- 0.6%
16,600 Tubos de Acero 229,291
PAPER PRODUCTS -- 0.5%
77,000 Kimberly Clark Mexico 218,972
REAL ESTATE -- 0.1%
33,100 Corp. Geo S.A. de C.V.* 54,124
RETAIL TRADE -- 0.5%
21,500 Grupo Elektra S.A. de C.V. GDR 220,375
TELECOMMUNICATIONS -- 3.8%
168,000 Grupo Carso Global Telecom.* 479,464
19,300 Telefonos de Mexico S.A. ADR 1,102,512
------------
4,417,400
-------------------------------------------------------------------------------
PANAMA -- 0.3%
FINANCIAL-BANKS -- 0.3%
4,800 Banco Latinoamericano de
Exportaciones S.A. 132,900
-------------------------------------------------------------------------------
PERU -- 0.5%
FINANCIAL-BANKS -- 0.2%
11,600 Credicorp Ltd. 104,400
MINING -- 0.3%
7,100 Comp. de Minas Buenaventura ADR 122,919
------------
227,319
-------------------------------------------------------------------------------
POLAND -- 0.9%
BROADCASTING AND PUBLISHING -- 0.9%
14,330 Agora S.A.* 378,456
-------------------------------------------------------------------------------
RUSSIA -- 1.1%
OIL-INTEGRATED-INTERNATIONAL -- 1.1%
9,100 Lukoil Hldg. ADR* 450,450
-------------------------------------------------------------------------------
SOUTH AFRICA -- 3.9%
FOOD, BEVERAGE AND TOBACCO -- 1.4%
21,000 Comp. Financiere Richemont AG* 563,301
METALS -- 1.6%
93,000 Kroondal Platinum* 212,454
400,000 Northam Platinum* 459,838
MINING -- 0.9%
47,600 Anglovaal Mining Ltd.* 364,805
------------
1,600,398
-------------------------------------------------------------------------------
SOUTH KOREA -- 12.9%
CONSTRUCTIONS -- 0.8%
12,788 Tae Young Corp. 333,742
ELECTRONIC EQUIPMENT -- 7.6%
23,577 Sam Hwa Electronics Co. 256,909
8,000 Samsung Electro-Mechanics Co.* 501,513
7,200 Samsung Electronics 2,382,727
FINANCIAL-BANKS -- 0.4%
14,305 Kookmin Bank GDR* 182,746
FINANCIAL SERVICES -- 0.5%
24,896 Daishin Securities 221,045
METALS -- 0.6%
9,700 Pohang Iron & Steel Co. Ltd. ADR 232,800
TELECOMMUNICATIONS -- 1.2%
13,000 SK Telecom Ltd. ADR* 472,062
UTILITIES-ELECTRIC -- 1.8%
23,000 Korea Electric Power Corp. ADR* 713,706
------------
5,297,250
-------------------------------------------------------------------------------
TAIWAN -- 14.0%
COMPUTER SERVICES -- 1.6%
10,000 Acer Peripherals, Inc. GDR* 287,000
39,000 Trident Microsystems, Inc.* 351,000
ELECTRONICS AND INSTRUMENTS -- 10.6%
123,061 Accton Technology Corp. GDR* 541,470
57,120 Asustek Computer, Inc. 472,204
51,800 Hon Hai Precision* 468,687
95,659 Taiwan Secom 146,018
133,260 Taiwan Semiconductor* 633,229
197,040 United Micro Electronic* 548,313
24,000 Via Technologies, Inc.* 371,033
25,530 Winbond Electronic Corp. GDR* 733,988
57,000 Yageo Corp. GDR* 467,400
FINANCIAL SERVICES -- 0.8%
254,400 China Development Industrial Bank* 339,476
TRANSPORTATION -- 1.0%
42,000 Evergreen Marine Corp. GDR* 412,650
------------
5,772,468
-------------------------------------------------------------------------------
THAILAND -- 1.8%
REAL ESTATE -- 0.2%
528,000 Golden Land Ppty.* 80,868
TELECOMMUNICATIONS -- 1.6%
168,000 Total Access Comm. Public Co.* 675,360
------------
756,228
-------------------------------------------------------------------------------
TURKEY -- 4.5%
BROADCASTING AND PUBLISHING -- 1.6%
21,250,000 Dogan Yayin Hldg. A.S.* 359,638
32,470,000 Hurriyet Gazetecilik ve
Matbaacilik A.S.* 314,016
ELECTRONIC EQUIPMENT -- 1.0%
1,374,000 Vestel Elektronik Sanayi ve
Ticaret A.S.* 415,246
FINANCIAL-BANKS -- 0.9%
121,400 Haci Omer Sabanci Hldgs. S.A. ADR 355,095
RETAIL-APPLIANCES -- 1.0%
8,025,000 Arcelik A.S. 394,514
------------
1,838,509
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
See notes to financial statements. * Non-income producing security.
31
<PAGE>
THE GUARDIAN BAILLE GIFFORD EMERGING MARKETS FUND
Schedule of Investments (Continued)
-------------------------------------------------------------------------------
Shares Value
-------------------------------------------------------------------------------
VENEZUELA -- 0.5%
TELECOMMUNICATIONS -- 0.5%
8,000 Comp. Anonima Nacional Telefonos
de Venezuela ADR $ 217,500
-------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(COST $32,787,581) 37,459,858
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
PREFERRED STOCKS -- 0.9%
-------------------------------------------------------------------------------
3,800 Comp. Vale do Rio Doce* $ 107,247
288,978 Itausa - Investimentos Itau S.A. 280,406
-------------------------------------------------------------------------------
TOTAL PREFERRED STOCKS
(COST $234,346) 387,653
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 6.2%
-------------------------------------------------------------------------------
Principal
Amount Value
-------------------------------------------------------------------------------
$ 2,545,000 State Street Bank & Trust Co.
repurchase agreement,
dated 6/30/00, maturity
value $2,546,113 at 5.25%
due 7/3/00(1)
(COST $2,545,000) $ 2,545,000
-------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 98.0%
(COST $35,566,927) 40,392,511
CASH, RECEIVABLES AND OTHER ASSETS
LESS LIABILITIES -- 2.0% 817,084
-------------------------------------------------------------------------------
NET ASSETS -- 100.0% $ 41,209,595
-------------------------------------------------------------------------------
(1) The repurchase agreement is fully collateralized by U.S. Government and/or
agency obligations based on market prices at the date of the portfolio.
GLOSSARY OF TERMS:
ADR -- American Depositary Receipt.
GDR -- Global Depositary Receipt.
-------------------------------------------------------------------------------
* Non-income producing security. See notes to financial statements.
32
<PAGE>
O THE GUARDIAN INVESTMENT QUALITY BOND FUND
-------------------------------------------------------------------------------
ASSET BACKED -- 4.6%
-------------------------------------------------------------------------------
Principal
Amount Value
-------------------------------------------------------------------------------
$ 2,000,000 Advanta Mortgage Loan Tr.
1997-2 A5
7.25% due 6/25/27 $ 1,960,800
405,767 Amresco 1997-1 M1F
7.42% due 3/25/27 393,322
1,300,000 Centex Home Equity Loan Tr.
1999-2 A4
6.60% due 1/25/28 1,219,036
1,400,000 Contimortgage Home Equity Loan Tr.
1999-1 A3
6.17% due 5/25/21 1,328,866
1,400,000 Countrywide 2000-1 AF3
7.83% due 7/25/25 1,402,618
-------------------------------------------------------------------------------
TOTAL ASSET BACKED
(COST $6,421,536) 6,304,642
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
COMMERCIAL MORTGAGE BACKED -- 3.0%
-------------------------------------------------------------------------------
$ 1,400,000 Prudential Securities Secd. Fin. Corp.
2000-Cl A1
7.617% due 6/15/09 $ 1,408,805
2,836,086 TIAA Retail Comm'l. Mortgage Tr.
1999-Cl A
7.17% due 10/15/07+ 2,798,706
-------------------------------------------------------------------------------
TOTAL COMMERCIAL MORTGAGE BACKED
(COST $4,177,772) 4,207,511
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
CORPORATE BONDS -- 23.7% AEROSPACE AND DEFENSE -- 1.0%
-------------------------------------------------------------------------------
$ 1,400,000 Raytheon Co.
8.20% due 3/1/06+ $ 1,421,729
-------------------------------------------------------------------------------
ELECTRONICS AND INSTRUMENTS -- 2.0%
2,800,000 Limestone Electronics Tr.
8.625% due 3/15/03+ 2,822,722
-------------------------------------------------------------------------------
ENERGY -- 1.7%
1,000,000 Occidental Petroleum Corp.
7.65% due 2/15/06 994,373
1,300,000 Phillips Petroleum Co.
8.75% due 5/25/10 1,376,513
------------
2,370,886
-------------------------------------------------------------------------------
ENTERTAINMENT-CABLE-MEDIA -- 3.6%
1,000,000 Cox Comm., Inc.
7.875% due 8/15/09 997,937
1,400,000 CSC Hldgs., Inc.
8.125% due 7/15/09 1,362,438
1,325,000 Time Warner Entertainment Co.
7.25% due 9/1/08 1,279,782
1,325,000 Time Warner, Inc.
7.48% due 1/15/08 1,294,322
------------
4,934,479
-------------------------------------------------------------------------------
FINANCIAL-OTHER -- 1.0%
1,400,000 Lehman Brothers Hldgs., Inc.
6.50% due 10/1/02 1,366,064
-------------------------------------------------------------------------------
MACHINERY-INDUSTRIAL SPECIALTY -- 1.1%
1,600,000 Mallinckrodt, Inc.
6.30% due 3/15/11+ 1,578,565
-------------------------------------------------------------------------------
MERCHANDISING-DEPARTMENT STORES -- 1.8% Saks, Inc.
1,400,000 7.00% due 7/15/04 1,256,678
1,400,000 7.25% due 12/1/04 1,257,778
------------
2,514,456
-------------------------------------------------------------------------------
MERCHANDISING-FOOD -- 0.9%
1,250,000 Aramark Svcs., Inc.
6.75% due 8/1/04 1,184,725
-------------------------------------------------------------------------------
MISCELLANEOUS-CAPITAL GOODS -- 0.9%
1,250,000 Ikon Capital, Inc.
6.73% due 6/15/01 1,228,442
-------------------------------------------------------------------------------
OIL-INTEGRATED-INTERNATIONAL -- 2.0%
2,800,000 YPF Sociedad Anonima
7.25% due 3/15/03 2,716,000
-------------------------------------------------------------------------------
PAPER AND FOREST PRODUCTS -- 1.0%
1,325,000 Int'l. Paper Co.
8.125% due 7/8/05+ 1,336,689
-------------------------------------------------------------------------------
TELECOMMUNICATIONS -- 5.6%
Deutsche Telekom Int'l. Finance BV
1,400,000 8.00% due 6/15/10 1,414,322
1,400,000 8.25% due 6/15/30 1,421,813
GTE Corp.
1,400,000 6.94% due 4/15/28 1,378,412
1,300,000 7.51% due 4/1/09 1,148,081
1,400,000 Vodafone Airtouch PLC
7.75% due 2/15/10+ 1,388,033
950,000 Williams Comm. Group
10.875% due 10/1/09 928,625
------------
7,679,286
-------------------------------------------------------------------------------
WASTE SERVICES -- 1.1%
1,600,000 USA Waste Svcs., Inc.
6.125% due 7/15/01 1,549,274
-------------------------------------------------------------------------------
TOTAL CORPORATE BONDS
(COST $32,999,064) 32,703,317
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS -- 3.9%
-------------------------------------------------------------------------------
$ 1,412,019 GE Capital Mortgage Svcs., Inc.
1996-3 A7 7.00% due 3/25/26 $ 1,340,091
2,614,347 Norwest Asset Securities
2000-2 A1 2,591,498
1,483,162 PNC Mortgage Securities Corp.
1998-10 A17 1,423,672
-------------------------------------------------------------------------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(COST $5,424,342) 5,355,261
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
MORTGAGE PASS-THROUGHS -- 38.2%
-------------------------------------------------------------------------------
FHLMC
$ 3,100,000 7.00%, (30 yr. TBA)(a) $ 2,993,438
979,085 6.50% due 5/1/29 924,853
1,201,712 6.50% due 8/1/29 1,134,680
75,476 7.00% due 8/1/08 74,532
FNMA
1,800,000 6.00%, (15 yr. TBA)(a) 1,702,125
1,800,000 7.00%, (15 yr. TBA)(a) 1,765,125
10,700,000 7.00%, (30 yr. TBA)(a) 10,322,162
9,250,000 7.50%, (30 yr. TBA)(a) 9,110,898
6,350,000 8.00%, (30 yr. TBA)(a) 6,373,813
3,500,000 8.50%, (30 yr. TBA)(a) 3,562,342
547,519 6.50% due 7/1/11 530,179
1,839,412 6.50% due 11/1/28 1,735,670
50,282 7.00% due 2/1/09 49,628
20,585 7.00% due 6/1/12 20,218
20,111 7.00% due 7/1/12 19,752
269,109 7.00% due 12/1/12 264,314
26,637 7.00% due 8/1/23 25,870
27,015 7.00% due 10/1/27 26,116
440,116 7.00% due 12/1/28 425,064
3,803 7.50% due 5/1/27 3,757
-------------------------------------------------------------------------------
+ Rule 144A restricted security.
-------------------------------------------------------------------------------
See notes to financial statements.
33
<PAGE>
THE GUARDIAN INVESTMENT QUALITY BOND FUND
Schedule of Investments (Continued)
-------------------------------------------------------------------------------
Principal
Amount Value
-------------------------------------------------------------------------------
GNMA
$ 9,800,000 8.00%, (30 yr. TBA)(a) $ 9,901,058
1,910,389 6.50% due 4/15/29 1,813,112
-------------------------------------------------------------------------------
TOTAL MORTGAGE PASS-THROUGHS
(COST $52,793,993) 52,778,706
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
SOVEREIGN DEBT -- 1.0%
-------------------------------------------------------------------------------
$ 1,400,000 Quebec Province CDA
7.50% due 9/15/29
(COST $1,347,721) $ 1,372,823
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
U.S. GOVERNMENT AND AGENCIES -- 20.6%
-------------------------------------------------------------------------------
FNMA
$ 5,050,000 7.25% due 1/15/10 $ 5,091,228
1,350,000 7.25% due 5/15/30 1,374,424
U.S. Treasury Bonds
1,825,000 5.25% due 2/15/29 1,619,118
1,500,000 6.00% due 2/15/26 1,466,250
1,540,000 6.125% due 11/15/27 1,535,188
3,400,000 6.125% due 8/15/29 3,436,125
1,500,000 6.25% due 2/15/16 1,943,437
1,250,000 6.625% due 2/15/27 1,325,391
U.S. Treasury Notes
1,750,000 4.25% due 11/15/03 1,641,719
950,000 5.50% due 2/15/08 909,625
1,350,000 6.50% due 8/15/05 1,364,344
2,105,000 6.50% due 2/15/10 2,176,703
1,400,000 6.625% due 5/15/07 1,428,875
3,000,000 6.75% due 5/15/05 3,070,315
-------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT AND AGENCIES
(COST $27,949,221) 28,382,742
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
COMMERCIAL PAPER -- 33.3%
-------------------------------------------------------------------------------
AEROSPACE AND DEFENSE -- 0.6%
$ 748,000 British Aerospace
6.60% due 8/6/00(a) $ 741,692
-------------------------------------------------------------------------------
BUILDING MATERIALS AND HOMEBUILDERS -- 3.6%
5,000,000 Martin Marietta Materials, Inc.
6.57% due 7/17/00(a) 4,985,400
-------------------------------------------------------------------------------
COMPUTER SYSTEMS -- 1.5%
2,000,000 Xerox Corp.
6.72% due 7/20/00(a) 1,992,907
-------------------------------------------------------------------------------
CONGLOMERATES -- 2.5%
3,500,000 Invensys PLC
6.63% due 7/17/00(a) 3,489,687
-------------------------------------------------------------------------------
FINANCIAL-BANKS -- 3.6%
5,000,000 Baus Funding LLC
6.52% due 7/17/00(a) 4,985,511
-------------------------------------------------------------------------------
FINANCIAL-OTHER -- 13.6%
5,015,000 Amsterdam Funding Corp.
6.59% due 7/24/00(a) 4,993,885
5,000,000 Duke Capital Corp.
6.59% due 7/24/00(a) 4,978,949
1,500,000 General Electric Capital Corp.
6.54% due 7/20/00(a) 1,494,822
2,320,000 John Deere Capital Corp.
6.54% due 7/17/00(a) 2,313,256
5,000,000 Textron Fin. Corp.
6.57% due 7/17/00(a) 4,985,400
------------
18,766,312
-------------------------------------------------------------------------------
MERCHANDISING-DEPARTMENT STORES -- 3.6%
5,000,000 Target Corp.
6.57% due 7/17/00(a) 4,985,400
-------------------------------------------------------------------------------
TELECOMMUNICATIONS -- 4.3%
6,000,000 AT & T Capital Corp.
6.50% due 7/17/00(a) 5,982,667
-------------------------------------------------------------------------------
TOTAL COMMERCIAL PAPER
(COST $45,929,576) 45,929,576
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 4.1%
-------------------------------------------------------------------------------
$ 5,667,000 State Street Bank & Trust Co.
repurchase agreement,
dated 6/30/00, maturity
value $5,670,093 at 6.55%
due 7/3/00(1)
(COST $5,667,000) $ 5,667,000
-------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 132.4%
(COST $182,710,225) 182,701,578
PAYABLES FOR MORTGAGE PASS-THROUGHS
DELAYED DELIVERY SECURITIES(A) -- (33.0)% (45,582,041)
CASH, RECEIVABLES AND OTHER
ASSETS LESS LIABILITIES -- 0.6% 890,061
-------------------------------------------------------------------------------
NET ASSETS -- 100.0% $138,009,598
-------------------------------------------------------------------------------
(1) The repurchase agreement is fully collateralized by U.S. Government and/or
agency obligations based on market prices at the date of the portfolio.
(a) Commercial paper and repurchase agreement are segregated to cover forward
mortgage purchases.
-------------------------------------------------------------------------------
See notes to financial statements.
34
<PAGE>
O THE GUARDIAN HIGH YIELD BOND FUND
-------------------------------------------------------------------------------
CORPORATE BONDS -- 91.2%
-------------------------------------------------------------------------------
Rating
Principal Moody's/
Amount S&P* Value
-------------------------------------------------------------------------------
AEROSPACE AND DEFENSE -- 1.1%
$ 670,000 K & F Ind., Inc.
Sr. Sub. Nt. Ser. B
9.25% due 10/15/07 B3/B- $ 633,150
-------------------------------------------------------------------------------
BROADCASTING AND PUBLISHING -- 2.2%
350,000 CD Radio, Inc.
Secd. Nt.
14.50% due 5/15/09 NR/CCC+ 322,000
670,000 Spanish Broadcasting Sys., Inc.
Sr. Sub. Nt.
9.625% due 11/1/09 B3/B- 666,650
330,000 XM Satellite Radio, Inc.
Sr. Secd. Nt.
14.00% due 3/15/10 NR/NR 290,400
-----------
1,279,050
-------------------------------------------------------------------------------
CABLE AND WIRELESS VIDEO -- 9.1%
470,000 Adelphia Comm. Corp.
Sr. Nt.
9.375% due 11/15/09 B1/B+ 434,750
670,000 Adelphia Comm. Corp.
Sr. Nt. Ser. B
10.50% due 7/15/04 B1/B+ 670,000
670,000 Charter Comm. Hldgs. LLC
Sr. Nt.
10.25% due 1/15/10 B2/B+ 648,225
1,050,000 Classic Cable, Inc.
Sr. Sub. Nt.
10.50% due 3/1/10 B3/B- 968,625
700,000 Echostar Comm. Corp.
Conv.+
4.875% due 1/1/07 NR/NR 661,500
500,000 Echostar DBS Corp.
Sr. Nt.
9.375% due 2/1/09 B2/B 480,000
1,000,000 Pegasus Comm. Corp.
Sr. Nt. Ser. B
9.625% due 10/15/05 B3/CCC+ 965,000
440,000 United Pan-Europe Comm.
Sr. Nt. Ser. B
11.50% due 2/1/10 B2/B 391,600
-----------
5,219,700
-------------------------------------------------------------------------------
CONSUMER NON-DURABLES -- 5.1%
1,000,000 Bell Sports, Inc.
Sr. Sub. Nt. Ser. B
11.00% due 8/15/08 B3/B- 995,000
500,000 Pillowtex Corp.
Sr. Sub. Nt.
10.00% due 11/15/06 B2/CC 175,000
750,000 St. John Knits Int'l., Inc.
Sr. Sub. Nt.+
12.50% due 7/1/09 B3/B- 714,375
1,000,000 Twin Laboratories, Inc.
Sr. Sub. Nt.
10.25% due 5/15/06 B3/B+ 995,000
-----------
2,879,375
-------------------------------------------------------------------------------
DIVERSIFIED MEDIA -- 3.1%
1,000,000 American Media Operations
Sr. Sub. Nt.
10.25% due 5/1/09 B2/B- 980,000
1,000,000 Cinemark USA, Inc.
Sr. Sub. Nt. Ser. B
9.625% due 8/1/08 B2/B 520,000
1,000,000 Regal Cinemas, Inc.
Sr. Sub. Nt.
9.50% due 6/1/08 Ca/B- 240,000
-----------
1,740,000
-------------------------------------------------------------------------------
EXPLORATION AND PRODUCTION -- 5.0%
670,000 Belco Oil & Gas Corp.
Sr. Sub. Nt. Ser. B
8.875% due 9/15/07 B1/B 619,750
350,000 Belden & Blake Corp.
Sr. Sub. Nt. Ser. B
9.875% due 6/15/07 Caa3/CCC- 254,625
660,000 Chesapeake Energy Corp.
Sr. Nt. Ser. B
9.625% due 5/1/05 B2/B 640,200
670,000 Cliffs Drilling Co.
Sr. Sub. Nt. Ser. B
10.25% due 5/15/03 Ba3/BB- 671,675
670,000 Swift Energy Co.
Sr. Sub. Nt.
10.25% due 8/1/09 B2/B- 678,375
-----------
2,864,625
-------------------------------------------------------------------------------
FINANCIAL-OTHERS -- 1.1%
670,000 Americredit Corp.
Sr. Sub. Nt.
9.875% due 4/15/06 Ba1/BB- 649,900
-------------------------------------------------------------------------------
FOOD, BEVERAGE AND TOBACCO -- 1.2%
670,000 Del Monte Corp.
Sr. Sub. Nt. Ser. B
12.25% due 4/15/07 B3/B- 703,500
-------------------------------------------------------------------------------
FOREST PRODUCTS AND CONTAINERS -- 4.1%
670,000 Kappa Beheer BV
Sr. Sub. Nt.+
10.625% due 7/15/09 B2/B 680,050
670,000 Packaging Corp. of America
Sr. Sub. Nt.
9.625% due 4/1/09 B2/B+ 664,975
1,000,000 Stone Container Corp.
Sr. Sub. Deb.
12.25% due 4/1/02 B3/B- 1,000,000
-----------
2,345,025
-------------------------------------------------------------------------------
HEALTH CARE -- 6.7%
1,000,000 Fisher Scientific Int'l., Inc.
Sr. Sub. Nt.
9.00% due 2/01/08 B3/B- 915,000
1,000,000 Fresenius Medical Care
Capital Tr.
9.00% due 12/01/06 Ba3/B+ 950,000
670,000 Insight Health Svcs. Corp.
Sr. Sub. Nt.
9.625% due 6/15/08 B3/B- 603,000
700,000 Tenet Health Care Corp.
Sr. Sub. Nt.
8.625% due 1/15/07 Ba3/BB- 668,500
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
See notes to financial statements. * Unaudited.
35
<PAGE>
THE GUARDIAN HIGH YIELD BOND FUND
Schedule of Investments (Continued)
-------------------------------------------------------------------------------
Rating
Principal Moody's/
Amount S&P* Value
-------------------------------------------------------------------------------
$ 670,000 Triad Hospitals Hldgs., Inc.
Sr. Sub. Nt. Ser. B
11.00% due 5/15/09 B3/B- $ 685,075
-----------
3,821,575
-------------------------------------------------------------------------------
HOUSING -- 0.7%
500,000 Building Materials Corp.
Sr. Nt. Ser. B
7.75% due 7/15/05 Ba3/BB 411,250
-------------------------------------------------------------------------------
INFORMATION TECHNOLOGY -- 3.1%
700,000 Flextronics Int'l. Ltd.
Sr. Sub. Nt.+
9.875% due 7/1/10 Ba3/B+ 705,250
1,000,000 Pierce Leahy Corp.
Sr. Sub. Nt.
11.125% due 7/15/06 B3/B 1,032,500
-----------
1,737,750
-------------------------------------------------------------------------------
LEISURE AND OTHER -- 6.3%
1,000,000 Hollywood Casino Corp.
Sr. Nt.
11.25% due 5/1/07 B3/B 1,022,500
670,000 Intrawest Corp.
Sr. Nt.
9.75% due 8/15/08 B1/B+ 663,300
1,000,000 Premier Parks, Inc.
Sr. Nt.
9.75% due 6/15/07 B3/B- 966,250
959,000 Waterford Gaming LLC
Sr. Nt.+
9.50% due 3/15/10 B1/B+ 920,640
-----------
3,572,690
-------------------------------------------------------------------------------
MANUFACTURING -- 0.6%
330,000 Int'l. Wire Group, Inc.
Sr. Sub. Nt.
11.75% due 6/1/05 B3/B- 331,650
-------------------------------------------------------------------------------
SERVICES -- 6.8%
700,000 Allied Waste NA, Inc.
Sr. Sub. Nt. Ser. B
10.00% due 8/1/09 B2/B+ 584,500
1,000,000 Building One Services
Sr. Sub. Nt.
10.50% due 5/1/09 B3/B- 850,000
700,000 Newpark Resources, Inc.
Sr. Sub. Nt. Ser. B
8.625% due 12/15/07 B2/B+ 610,750
1,170,000 Orius Capital Corp.
Sr. Sub. Nt.+
12.75% due 2/1/10 B3/B- 1,205,100
670,000 United Rentals, Inc.
Sr. Sub. Nt. Ser. B
9.00% due 4/1/09 B1/BB- 592,950
-----------
3,843,300
-------------------------------------------------------------------------------
TELECOMMUNICATIONS -- 19.2%
700,000 360Networks, Inc.
Sr. Nt.+
13.00% due 5/1/08 B3/B+ 700,000
330,000 Exodus Comm., Inc.
Sr. Nt.
10.75% due 12/15/09 NR/B- 318,450
720,000 Exodus Comm., Inc.
Sr. Nt.+
11.625% due 7/15/10 NR/B 721,800
700,000 Flag Telecomm. Hldg. Ltd.
Sr. Nt.+
11.625% due 3/30/10 B2/B 679,000
1,050,000 Focal Comm. Corp.
Sr. Nt.+
11.875% due 1/15/10 B3/B 1,055,250
1,000,000 Globenet Comm. Group Ltd.
Sr. Nt. Ser. B
13.00% due 7/15/07 Caa1/B 1,008,750
1,000,000 Globix Corp.
Sr. Nt.
12.50% due 2/1/10 NR/B- 820,000
1,425,000 GT Group Telecomm., Inc.
Sr. Disc. Nt.+
13.25% due 2/1/10 Caa1/A-1 790,875
700,000 Intermedia Comm., Inc.
Sr. Nt. Ser. B
9.50% due 3/1/09 B2/B 665,000
670,000 Int'l. Cabletel, Inc.
Sr. Nt. Ser. B
11.50% due 2/1/06 B3/B- 618,075
330,000 Level 3 Comm., Inc.
Sr. Nt. Conv.
6.00% due 3/15/10 Caa1/CCC+ 297,000
700,000 Level 3 Comm., Inc.
Sr. Nt.+
11.25% due 3/15/10 B3/B 689,500
350,000 Nextlink Comm., Inc.
Sr. Nt.
10.75% due 6/1/09 B2/B 344,750
330,000 NTL, Inc.
Sr. Nt. Conv.+
5.75% due 12/15/09 Caa1/CCC+ 259,050
670,000 Pac-West Telecomm., Inc.
Sr. Nt.
13.50% due 2/1/09 B3/B 676,700
1,000,000 Telewest Comm. PLC
Sr. Disc. Deb.
11.00% due 10/1/07 B1/B+ 947,500
350,000 Williams Comm. Group, Inc.
Sr. Nt.
10.875% due 10/1/09 B2/BB- 342,125
-----------
10,933,825
-------------------------------------------------------------------------------
UTILITIES -- 0.6%
330,000 Azurix Corp.
Sr. Nt.+
10.75% due 2/15/10 Ba3/BB 317,625
-------------------------------------------------------------------------------
WIRELESS COMMUNICATIONS -- 15.2%
1,500,000 Airgate PCS, Inc.
Sr. Sub. Disc. Nt.
13.50% due 10/1/09 Caa1/CCC 858,750
350,000 Clearnet Comm., Inc.
Sr. Disc. Nt.
10.125% due 5/1/09 B3/B 210,000
1,000,000 Clearnet Comm., Inc.
Sr. Disc. Nt.
14.75% due 12/15/05 B3/NR 1,032,500
-------------------------------------------------------------------------------
+ Rule 144A restricted security.
-------------------------------------------------------------------------------
* Unaudited See notes to financial statements.
36
<PAGE>
THE GUARDIAN HIGH YIELD BOND FUND
Schedule of Investments (Continued)
-------------------------------------------------------------------------------
Rating
Principal Moody's/
Amount S&P* Value
-------------------------------------------------------------------------------
$ 700,000 Crown Castle Int'l. Corp.
Sr. Nt.
10.75% due 8/1/11 B3/B $ 709,625
1,000,000 Leap Wireless Int'l., Inc.
Sr. Nt.+
12.50% due 4/15/10 Caa2/CCC 880,000
670,000 Leap Wireless Int'l., Inc.
Sr. Nt.+
14.50% due 4/15/10 Caa2/CCC 281,400
700,000 Microcell Telecomm.
Sr. Disc. Nt. Ser. B
14.00% due 6/1/09 B3/B- 460,250
350,000 Nextel Comm., Inc.
Sr. Nt. Conv.+
5.25% due 1/15/10 B1/B 353,500
579,000 Nextel Partners, Inc.
Sr. Disc. Nt.
14.00% due 2/1/09 B3/CCC+ 399,510
350,000 Pinnacle Hldgs., Inc.
Conv.+
5.50% due 9/15/07 NR/NR 292,687
1,340,000 Spectrasite Hldgs., Inc.
Sr. Disc. Nt.
11.25% due 4/15/09 B3/NR 783,900
890,000 Spectrasite Hldgs., Inc.
Sr. Disc. Nt.+
12.875% due 3/15/10 B3/B- 485,050
350,000 Telecorp PCS, Inc.
Sr. Sub. Disc. Nt.
11.625% due 4/15/09 B3/NR 228,375
1,000,000 Triton PCS, Inc.
Sr. Sub. Disc. Nt.
11.00% due 5/1/08 B3/CCC+ 725,000
230,000 Ubiquitel Operating Co.
Sr. Disc. Nt.+
14.00% due 4/15/10 Caa1/CCC 133,113
1,500,000 U.S. Unwired, Inc.
Sr. Sub. Disc. Nt. Ser. B
13.375% due 11/1/09 Caa1/CCC+ 813,750
-----------
8,647,410
-------------------------------------------------------------------------------
TOTAL CORPORATE BONDS
(COST $54,289,917) 51,931,400
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 9.5%
-------------------------------------------------------------------------------
$ 5,392,000 State Street Bank & Trust Co.
repurchase agreement,
dated 6/30/00, maturity
value $5,394,943 at 6.55%
due 7/3/00(1)
(COST $5,392,000) $ 5,392,000
-------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100.7%
(COST $59,681,917) 57,323,400
LIABILITIES IN EXCESS OF CASH, RECEIVABLES
AND OTHER ASSETS -- (0.7)% (387,476)
--------------------------------------------------------------------------------
NET ASSETS-- 100.0% $56,935,924
-------------------------------------------------------------------------------
+ Rule 144A restricted security.
(1) The repurchase agreement is fully collateralized by U.S. Government and/or
agency obligations based on market prices at the date of the portfolio.
-------------------------------------------------------------------------------
See notes to financial statements. * Unaudited.
37
<PAGE>
O THE GUARDIAN TAX-EXEMPT FUND
-------------------------------------------------------------------------------
MUNICIPAL BONDS -- 97.7%
-------------------------------------------------------------------------------
Rating
Principal Moody's/
Amount S&P* Value
-------------------------------------------------------------------------------
ARIZONA -- 3.9%
$ 1,300,000 Arizona St. Trans.
Brd. Hwy. Rev.,
5.75% due 7/1/19 Aa1/AAA $ 1,307,228
1,700,000 Maricopa Cnty, AZ
Sch. Dist. Proj., Ser. D,
5.125% due 7/1/15 Aa2/AA 1,645,583
1,000,000 Phoenix, AZ
Indl. Dev. Auth., Ser. 1A,
5.875% due 6/1/16 NR/AAA 1,006,320
------------
3,959,131
--------------------------------------------------------------------------------
CALIFORNIA -- 4.9%
1,000,000 California St. G.O.,
5.00% due 2/1/17 Aa3/AA- 940,570
2,000,000 Northern CA
Transmission Rev.,
6.50% due 5/1/16 Aaa/AAA 2,095,080
2,000,000 San Francisco, CA
City & Cnty. Swr. Rev.,
5.375% due 10/1/22 Aaa/AAA 1,935,580
------------
4,971,230
--------------------------------------------------------------------------------
COLORADO -- 3.0%
1,000,000 Boulder Valley, CO
Sch. Dist. G.O.,
5.125% due 12/1/17 Aa3/AA 935,730
2,000,000 Pueblo Cnty., CO
Sch. Dist. G.O.,
6.00% due 12/1/17 Aaa/AAA 2,069,560
------------
3,005,290
--------------------------------------------------------------------------------
CONNECTICUT -- 1.0%
1,000,000 Connecticut St., GO
Ser. B,
5.875% due 11/1/14 Aa3/AA 1,050,170
--------------------------------------------------------------------------------
FLORIDA -- 7.4%
2,100,000 Collier Cnty., FL
Hlth. Facs. Auth. Hosp. Rev.(1),
4.50% due 1/1/33 VMIG1/A1 2,100,000
800,000 Florida St. Board of Ed.
Cap. Outlay Ser. A,
5.50% due 1/1/16 Aa2/AA+ 801,888
2,000,000 Florida St. Board of Ed.
Lottery Rev. Ser. A,
5.50% due 7/1/17 Aaa/AAA 1,993,420
2,350,000 Florida St. Board of Ed.
Preref. Cap. Outlay Ser. C,
5.60% due 6/1/10 Aaa/AAA 2,428,490
150,000 Jacksonville, FL
Elec. Auth. Rev.,
5.50% due 10/1/14 Aa2/AA 150,735
------------
7,474,533
--------------------------------------------------------------------------------
GEORGIA -- 1.9%
2,000,000 Atlanta, GA
Arpt. Rev.,
5.50% due 1/1/21 Aaa/AAA 1,949,640
--------------------------------------------------------------------------------
IDAHO -- 1.6%
1,625,000 Boise City, ID Urban
Renewal Agy. Lease,
6.00% due 8/15/23 Aaa/AAA 1,668,631
--------------------------------------------------------------------------------
IOWA -- 1.3%
1,255,000 Iowa Fin. Auth.
Single Fam. Rev.,
6.25% due 7/1/18 Aaa/AAA 1,283,526
--------------------------------------------------------------------------------
KANSAS -- 1.7%
1,780,000 Kansas St. Dept. Trans.
Hwy. Rev.,
5.25% due 9/1/13 Aa2/AA+ 1,776,529
--------------------------------------------------------------------------------
MAINE -- 1.4%
1,375,000 Maine St. Hsg. Auth.,
5.85% due 11/15/20 Aa2/AA 1,376,842
--------------------------------------------------------------------------------
MASSACHUSETTS -- 3.8%
2,000,000 Massachusetts St.
Hlth. & Ed. Facs. Auth. Rev.
5.50% due 10/1/17 Aaa/AAA 1,977,880
2,000,000 Massachusetts St.
Hsg. Fin. Agy. Ser. D,
5.40% due 6/1/20 Aaa/AAA 1,847,200
------------
3,825,080
--------------------------------------------------------------------------------
MICHIGAN -- 2.7%
1,420,000 Michigan Mun. Bd.
Auth. Rev.,
5.25% due 10/1/16 Aa1/AA+ 1,374,674
1,500,000 Wayne St. Univ., MI,
5.25% due 11/15/19 Aaa/AAA 1,423,050
------------
2,797,724
--------------------------------------------------------------------------------
MINNESOTA -- 2.6%
750,000 Minnesota Pub. Facs.
Water Poll. Control Rev.,
5.00% due 3/1/12 Aaa/AAA 736,965
2,000,000 Minnesota Pub. Facs.
Water Poll. Control Rev.,
5.125% due 3/1/15 Aaa/AAA 1,938,760
------------
2,675,725
--------------------------------------------------------------------------------
MISSOURI -- 3.9%
1,750,000 Clay Cnty., MO
Pub. Sch. Dist. G.O.,
6.125% due 3/1/16 NR/AA+ 1,820,280
2,420,000 Missouri St. Environmental
Energy Rev.,
5.00% due 1/1/20 Aaa/NR 2,189,785
------------
4,010,065
--------------------------------------------------------------------------------
NEBRASKA -- 1.0%
1,000,000 Nebraska Pub. Pwr.
Preref. Ser. A,
5.25% due 1/1/22 Aaa/AAA 1,026,040
--------------------------------------------------------------------------------
NEW JERSEY -- 5.7%
1,500,000 New Jersey St., G.O.,
6.00% due 5/1/16 Aa1/AA+ 1,561,965
1,500,000 New Jersey St. Transit
Auth. Ser. A,
6.00% due 6/15/04 Aaa/AAA 1,567,725
500,000 New Jersey St. Transit
Auth. Ser. A,
6.50% due 6/15/05 Aaa/AAA 537,435
2,000,000 New Jersey St. Transit
Corp. Ser. A,
6.125% due 9/15/14 Aaa/AAA 2,109,720
------------
5,776,845
--------------------------------------------------------------------------------
(1) Variable rate demand notes.
--------------------------------------------------------------------------------
* Unaudited. See notes to financial statements.
38
<PAGE>
THE GUARDIAN TAX-EXEMPT FUND
Schedule of Investments (Continued)
--------------------------------------------------------------------------------
Rating
Principal Moody's/
Amount S&P* Value
--------------------------------------------------------------------------------
NEW MEXICO -- 2.2%
$ 1,250,000 Albuquerque, NM
Gross Rcpts Tax Rev.,
5.25% due 7/1/16 A1/AA $ 1,184,688
1,000,000 New Mexico St. Hwy.
Community Tax Rev.,
6.00% due 6/15/10 Aa2/AA+ 1,063,940
------------
2,248,628
--------------------------------------------------------------------------------
NEW YORK -- 14.4%
1,000,000 Long Island Power Auth., NY
Elec. System Rev.,
5.125% due 4/1/12 Aaa/AAA 986,490
1,800,000 Long Island Power Auth., NY
Elec. System Rev. Ser. 6(1),
4.45% due 5/1/33 VMIG1/A1+ 1,800,000
1,000,000 New York, NY
G.O. Ser. F,
5.125% due 8/1/11 A3/A- 982,160
2,000,000 New York City Mun.
Wtr. Fin. Auth.,
5.50% due 6/15/20 Aaa/AAA 1,945,660
2,000,000 New York City Mun.
Wtr. Fin. Auth.,
5.625% due 6/15/19 Aaa/AAA 1,991,840
500,000 New York St.
Ctfs. Partn.,
4.25% due 9/1/01 Baa1/A 497,385
1,500,000 New York St. Dorm.
Auth. Lease Rev.,
6.25% due 7/1/20 NR/A 1,555,095
1,500,000 New York St. Dorm.
Auth. Rev. St. Univ. Ed. Facs.,
5.00% due 5/15/15 A3/A 1,405,605
1,000,000 New York St. Dorm.
Auth. Rev. St. Univ. Ed. Facs.,
5.00% due 5/15/17 A3/A 916,620
1,000,000 New York St. Dorm.
Auth. Rev. St. Univ. Ed. Facs.,
5.75% due 7/1/12 Aaa/AAA 1,054,070
500,000 New York St. Ser. A,
5.875% due 3/15/15 A2/A+ 511,455
1,000,000 New York St. Thruway
Auth. Svc. Contract,
5.75% due 4/1/16 Baa1/A 1,004,850
------------
14,651,230
--------------------------------------------------------------------------------
NORTH DAKOTA -- 1.0%
1,000,000 North Dakota St.
Wtr. Comm. Rev.,
5.75% due 8/1/20 Aaa/AAA 1,002,980
--------------------------------------------------------------------------------
OHIO -- 5.8%
1,000,000 Cleveland, OH
Parking Fac. Rev.,
5.50% due 9/15/16 Aaa/AAA 998,850
500,000 Columbus, OH
Water System Rev.,
6.10% due 11/1/03 Aa2/AA 519,005
1,210,000 Ohio Hsg. Fin. Agy.
Mtg. Rev.,
5.70% due 3/1/17 Aaa/NR 1,203,466
1,000,000 Ohio St. Bldg. Auth. Disalle
Gov't. Center Ser. A,
6.00% due 10/1/05 Aa2/AA 1,056,790
2,000,000 Ohio St. Tpk. Community
Preref. Tpk. Rev. Ser. A,
5.50% due 2/15/26 Aaa/AAA 2,092,620
------------
5,870,731
--------------------------------------------------------------------------------
OKLAHOMA -- 1.4%
1,400,000 Oklahoma St. Tpk.
Second Sr. Ser. B,
5.25% due 1/1/11 Aaa/AAA 1,409,520
--------------------------------------------------------------------------------
OREGON -- 6.1%
2,000,000 Clackamas Cnty., OR
Sch. Dist. G.O.,
5.375% due 6/15/19 Aa2/AA 1,938,720
1,000,000 Lane & Douglas Cntys., OR
Sch. Dist. G.O.,
5.50% due 6/15/25 NR/AA 969,630
1,690,000 Lane & Douglas Cntys., OR
Sch. Dist. G.O.,
6.00% due 6/15/19 NR/AA 1,737,033
1,530,000 Lane Cnty., OR
Sch. Dist. G.O.,
5.625% due 6/15/20 Aa2/NR 1,518,173
------------
6,163,556
--------------------------------------------------------------------------------
PENNSYLVANIA -- 2.4%
1,000,000 Delaware River Port
Auth. PA & NJ Rev.,
6.00% due 1/1/17 Aaa/AAA 1,035,070
500,000 Pennsylvania St.
Tpk. Commn. Ser. B,
5.25% due 12/1/15 Aaa/AAA 486,595
1,000,000 Southeastern, PA
Transit Auth. Ser. B,
5.00% due 3/1/20 Aaa/AAA 907,210
------------
2,428,875
--------------------------------------------------------------------------------
SOUTH CAROLINA -- 0.3%
300,000 South Carolina Trans.
Infrastructure Ser. A,
5.00% due 10/1/03 Aaa/AAA 301,935
--------------------------------------------------------------------------------
SOUTH DAKOTA -- 2.0%
2,000,000 South Dakota
Hsg. Dev. Auth.,
6.00% due 5/1/21 Aa1/AAA 2,006,420
--------------------------------------------------------------------------------
TENNESSEE -- 3.3%
1,425,000 Knox Cnty., TN
Pub. Impt.,
5.375% due 5/1/20 Aa2/AA 1,373,572
2,000,000 Tennessee Hsg. Dev. Agy.
Home Ownership Prog.,
5.50% due 7/1/20 Aa2/AA 1,952,620
------------
3,326,192
--------------------------------------------------------------------------------
TEXAS -- 6.5%
2,000,000 Brazos River Auth.
TX Rev.(1),
5.125% due 11/1/20 Aaa/AAA 1,824,800
2,000,000 Harris Cnty., TX Health
Fac. Rev.(1),
4.55% due 2/15/27 NR/A1 2,000,000
1,000,000 Houston, TX Preref.
Wtr. & Swr. Sys. Ser. A,
6.20% due 12/1/23 Aaa/AAA 1,065,880
--------------------------------------------------------------------------------
(1) Variable rate demand notes.
--------------------------------------------------------------------------------
See notes to financial statements. * Unaudited.
39
<PAGE>
THE GUARDIAN TAX-EXEMPT FUND
Schedule of Investments (Continued)
--------------------------------------------------------------------------------
Rating
Principal Moody's/
Amount S&P* Value
--------------------------------------------------------------------------------
$ 1,150,000 San Antonio, TX
Elec. & Gas Rev. Ser. A,
5.25% due 2/1/16 Aa1/AA $ 1,110,808
405,000 Texas St. G.O.
Water Dev. Brd.,
6.50% due 8/1/05 Aa1/AA 435,262
150,000 Texas St. G.O. Preref.
Water Dev. Brd.,
6.50% due 8/1/05 NR/AA 161,347
------------
6,598,097
--------------------------------------------------------------------------------
VIRGINIA -- 1.1%
1,085,000 Fairfax Cnty., VA
Ref. Ser. C.,
5.25% due 5/1/07 Aaa/AAA 1,102,913
--------------------------------------------------------------------------------
WASHINGTON -- 3.4%
1,475,000 Douglas Cnty., WA
Sch. Dist. G.O.,
5.75% due 12/1/15 Aa1/NR 1,502,656
2,000,000 King Cnty., WA G.O.,
5.00% due 12/1/11 Aa1/AA+ 1,960,760
------------
3,463,416
--------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS
(COST $99,569,057) 99,201,494
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 1.1%
--------------------------------------------------------------------------------
Principal
Amount Value
--------------------------------------------------------------------------------
$ 1,149,000 State Street Bank & Trust Co.
repurchase agreement, dated
6/30/00, maturity value
$1,149,627 at 6.55% due
7/3/00(a)
(COST $1,149,000) $ 1,149,000
--------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 98.8%
(COST $100,718,057) 100,350,494
CASH, RECEIVABLES AND OTHER ASSETS
LESS LIABILITIES -- 1.2% 1,249,358
--------------------------------------------------------------------------------
NET ASSETS -- 100.0% $101,599,852
--------------------------------------------------------------------------------
(a) The repurchase agreement is fully collateralized by U.S. Government and/or
agency obligations based on market prices at the date of the portfolio.
GLOSSARY:
G.O.-- General Obligation.
--------------------------------------------------------------------------------
* Unaudited. See notes to financial statements.
40
<PAGE>
O THE GUARDIAN CASH MANAGEMENT FUND
-------------------------------------------------------------------------------
COMMERCIAL PAPER -- 96.4%
-------------------------------------------------------------------------------
Principal Maturity
Amount Date Value
-------------------------------------------------------------------------------
FINANCIAL -- 52.2%
ASSET BACKED SECURITIES-OTHER -- 12.3%
$ 17,000,000 Clipper Receivables Corp.
6.57% 7/21/00 $ 16,937,950
12,500,000 Govco, Inc.
6.56% 8/21/00 12,383,833
18,000,000 Variable Funding Capital
6.57% 7/5/00 17,986,860
------------
47,308,643
-------------------------------------------------------------------------------
BANKS -- 16.8%
16,000,000 Bank of America Corp.
6.64% 10/10/00 15,701,938
15,000,000 Deutsche Bank
6.22% 7/10/00 15,000,000
17,000,000 Dresdner U.S. Fin.
6.54% 7/3/00 16,993,823
17,000,000 UBS Fin. (Delaware), Inc.
6.92% 7/5/00 16,986,929
------------
64,682,690
-------------------------------------------------------------------------------
FINANCE COMPANIES -- 18.4%
17,000,000 Associates First Capital
6.54% 7/24/00 16,928,968
7,000,000 California Housing Fin.
6.80% 7/5/00 7,000,000
16,000,000 Goldman Sachs Group, Inc.
6.54% 7/11/00 15,970,933
16,000,000 Household Fin. Corp.
6.55% 7/5/00 15,988,356
15,000,000 Private Export Funding Corp.
6.10% 7/6/00 14,987,292
------------
70,875,549
-------------------------------------------------------------------------------
UTILITIES-ELECTRIC AND WATER -- 4.7%
18,000,000 Nat'l. Rural Utils. Coop. Fin.
Corp., 5.97% 7/6/00 17,985,075
-------------------------------------------------------------------------------
TOTAL FINANCIAL 200,851,957
-------------------------------------------------------------------------------
INDUSTRIAL -- 44.2%
AUTOMOTIVE -- 13.5%
18,000,000 DaimlerChrysler NA Hldg. Corp.
6.53% 7/17/00 17,947,760
18,000,000 Ford Motor Co.
6.54% 7/7/00 17,980,380
16,000,000 General Motors Acceptance Corp.
6.53% 7/18/00 15,950,662
------------
51,878,802
-------------------------------------------------------------------------------
CONGLOMERATES -- 8.3%
17,000,000 General Electric Capital Corp.
6.58% 8/15/00 16,819,238
14,909,000 Invensys PLC
6.90% 7/6/00 14,894,712
------------
31,713,950
-------------------------------------------------------------------------------
FOOD, BEVERAGE AND TOBACCO -- 4.6%
18,000,000 Heinz (H.J.) Co.
6.54% 8/11/00 17,865,930
-------------------------------------------------------------------------------
OIL AND GAS SERVICES -- 4.4%
17,000,000 Equilon Enterprises LLC
6.53% 8/4/00 16,895,157
-------------------------------------------------------------------------------
OIL-INTEGRATED-INTERNATIONAL -- 4.4%
17,000,000 Exxon Mobil Corp.
6.80% 7/5/00 16,987,156
-------------------------------------------------------------------------------
TELECOMMUNICATIONS -- 4.6%
18,000,000 AT & T Corp.
6.54% 8/8/00 17,875,740
-------------------------------------------------------------------------------
UTILITIES-ELECTRIC AND WATER -- 4.4%
17,000,000 Duke Capital Corp.
7.00% 7/5/00 16,986,778
-------------------------------------------------------------------------------
TOTAL INDUSTRIAL 170,203,513
-------------------------------------------------------------------------------
TOTAL COMMERCIAL PAPER
(COST $371,055,470) 371,055,470
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 5.1%
-------------------------------------------------------------------------------
$ 19,363,000 State Street Bank & Trust Co.
repurchase agreement,
dated 6/30/00, maturity
value $19,373,569 at 6.55%
due 7/3/00(1)
(COST $19,363,000) $ 19,363,000
-------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 101.5%
(COST $390,418,470) 390,418,470
LIABILITIES IN EXCESS OF CASH, RECEIVABLES
AND OTHER ASSETS -- (1.5)% (5,658,444)
-------------------------------------------------------------------------------
NET ASSETS -- 100.0% $384,760,026
-------------------------------------------------------------------------------
(1) The repurchase agreement is fully collateralized by U.S. Government and/or
agency obligations based on market prices at the date of the portfolio.
-------------------------------------------------------------------------------
See notes to financial statements.
41
<PAGE>
--------------------
FINANCIAL STATEMENTS
--------------------
o THE PARK AVENUE PORTFOLIO
--------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
--------------------------------------------------------------------------------
June 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THE GUARDIAN THE GUARDIAN THE GUARDIAN THE GUARDIAN
PARK AVENUE PARK AVENUE ASSET BAILLIE GIFFORD
FUND SMALL CAP ALLOCATION INTERNATIONAL
FUND FUND FUND
------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investments, at identified cost* ....................... $2,645,754,967 $132,140,213 $262,708,248 $120,531,743
========================================================================
Investments, at market ................................. 3,863,558,676 168,586,158 257,106,103 148,861,237
Repurchase agreements .................................. 74,368,000 20,820,000 29,675,000 2,403,000
------------------------------------------------------------------------
TOTAL INVESTMENTS .............................. 3,937,926,676 189,406,158 286,781,103 151,264,237
Cash ................................................... -- 655 359 447
Foreign Currency (cost $886,403 GBGIF and $1,245,510
GBGEMF, respectively) ................................ -- -- -- 872,332
Receivable for securities sold ......................... 64,948,647 2,972,014 -- 113,575
Receivable for fund shares sold ........................ 8,803,964 197,537 465,019 1,732,506
Dividends receivable ................................... 428,991 42,293 246,303 52,325
Interest receivable .................................... 13,785 3,788 5,399 350
Deferred organization expenses-- Note 8 ................ -- 18,158 -- --
Dividend reclaim receivable ............................ -- -- -- 102,494
Other assets ........................................... 4,582 157 328 165
------------------------------------------------------------------------
TOTAL ASSETS ................................... 4,012,126,645 192,640,760 287,498,511 154,138,431
------------------------------------------------------------------------
LIABILITIES
Payable for securities purchased ....................... 45,234,931 6,864,365 -- 991,870
Due to custodian ....................................... 6,825,067 -- -- --
Payable for fund shares redeemed ....................... 4,626,730 40,956 188,381 216,455
Accrued expenses ....................................... 351,829 31,842 9,512 136,773
Accrued capital gains tax .............................. -- -- -- 16,788
Payable for margin variation ........................... -- -- 545,400 --
Payable for forward mortgage securities-- Note 7 ....... -- -- -- --
Distributions payable .................................. -- -- -- --
Due to affiliates ...................................... 2,598,136 160,752 92,046 41,701
------------------------------------------------------------------------
TOTAL LIABILITIES .............................. 59,636,693 7,097,915 835,339 1,403,587
------------------------------------------------------------------------
NET ASSETS ..................................... $3,952,489,952 $185,542,845 $286,663,172 $152,734,844
========================================================================
<CAPTION>
THE GUARDIAN THE GUARDIAN THE GUARDIAN
BAILLIE GIFFORD INVESTMENT HIGH YIELD
EMERGING QUALITY BOND
MARKETS FUND BOND FUND FUND
--------------------------------------------------
<S> <C> <C> <C>
Investments, at identified cost* ....................... $ 35,566,927 $182,710,225 $59,681,917
==================================================
Investments, at market ................................. 37,847,511 177,034,578 51,931,400
Repurchase agreements .................................. 2,545,000 5,667,000 5,392,000
--------------------------------------------------
TOTAL INVESTMENTS .............................. 40,392,511 182,701,578 57,323,400
Cash ................................................... 777 -- 47,846
Foreign Currency (cost $886,403 GBGIF and $1,245,510
GBGEMF, respectively) ................................ 1,261,102 -- --
Receivable for securities sold ......................... 313,500 12,999,656 1,206,678
Receivable for fund shares sold ........................ 1,043 709,282 1,923
Dividends receivable ................................... 74,992 -- --
Interest receivable .................................... 371 1,584,073 1,275,308
Deferred organization expenses-- Note 8 ................ 9,584 -- --
Dividend reclaim receivable ............................ 2,498 -- --
Other assets ........................................... 29 190 75
--------------------------------------------------
TOTAL ASSETS ................................... 42,056,407 197,994,779 59,855,230
--------------------------------------------------
LIABILITIES
Payable for securities purchased ....................... 517,125 8,296,006 2,126,913
Due to custodian ....................................... -- 1,367,456 --
Payable for fund shares redeemed ....................... 134,556 3,264 746,013
Accrued expenses ....................................... 23,917 20,091 5,040
Accrued capital gains tax .............................. 161,223 -- --
Payable for margin variation ........................... -- -- --
Payable for forward mortgage securities-- Note 7 ....... -- 50,123,634 --
Distributions payable .................................. -- 90,933 2,372
Due to affiliates ...................................... 9,991 83,797 38,968
--------------------------------------------------
TOTAL LIABILITIES .............................. 846,812 59,985,181 2,919,306
--------------------------------------------------
NET ASSETS ..................................... $ 41,209,595 $138,009,598 $56,935,924
==================================================
<CAPTION>
THE GUARDIAN THE GUARDIAN
TAX-EXEMPT CASH
FUND MANAGEMENT
FUND
-----------------------------
<S> <C> <C>
Investments, at identified cost* ....................... $100,718,057 $390,418,470
=============================
Investments, at market ................................. 99,201,494 371,055,470
Repurchase agreements .................................. 1,149,000 19,363,000
-----------------------------
TOTAL INVESTMENTS .............................. 100,350,494 390,418,470
Cash ................................................... 20,103 80,381
Foreign Currency (cost $886,403 GBGIF and $1,245,510
GBGEMF, respectively) ................................ -- --
Receivable for securities sold ......................... -- --
Receivable for fund shares sold ........................ 150 5,611,863
Dividends receivable -- --
Interest receivable .................................... 1,341,520 400,442
Deferred organization expenses-- Note 8 ................ -- --
Dividend reclaim receivable ............................ -- --
Other assets ........................................... 120 409
-----------------------------
TOTAL ASSETS ................................... 101,712,387 396,511,565
-----------------------------
LIABILITIES
Payable for securities purchased ....................... -- --
Due to custodian ....................................... -- --
Payable for fund shares redeemed ....................... -- 11,464,609
Accrued expenses ....................................... 47,850 12,986
Accrued capital gains tax .............................. -- --
Payable for margin variation ........................... -- --
Payable for forward mortgage securities-- Note 7 ....... -- --
Distributions payable .................................. 2,908 40,011
Due to affiliates ...................................... 61,777 233,933
-----------------------------
TOTAL LIABILITIES .............................. 112,535 11,751,539
-----------------------------
NET ASSETS ..................................... $101,599,852 $384,760,026
=============================
</TABLE>
* Includes repurchase agreements.
See notes to financial statements.
42 & 43
<PAGE>
o THE PARK AVENUE PORTFOLIO
--------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
--------------------------------------------------------------------------------
June 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THE GUARDIAN THE GUARDIAN THE GUARDIAN
PARK AVENUE PARK AVENUE ASSET
FUND SMALL CAP ALLOCATION
FUND FUND
---------------------------------------------------------
<S> <C> <C> <C>
COMPONENTS OF NET ASSETS
Shares of beneficial interest, at par ................................ $ 648,249 $ 95,436 $ 185,792
Additional paid-in capital ........................................... 2,319,184,573 131,889,438 245,166,013
Undistributed/(overdistributed) net investment income ................ (6,049,525) (473,683) 3,538,068
Accumulated net realized gain/(loss) on investments and foreign
currency related transactions ...................................... 346,534,946 (3,234,291) 12,833,224
Net unrealized appreciation/(depreciation) of investments
and foreign currency related transactions .......................... 1,292,171,709 57,265,945 24,940,075
---------------------------------------------------------
NET ASSETS ..................................................... $3,952,489,952 $185,542,845 $286,663,172
=========================================================
NET ASSETS
Class A ............................................................ $3,402,685,471 $158,774,309 $239,257,893
Class B ............................................................ $ 549,804,481 $ 26,768,536 $ 47,405,279
SHARES OF BENEFICIAL INTEREST OUTSTANDING -- $0.01 PAR VALUE
Class A ............................................................ 55,661,460 8,133,262 15,488,285
Class B ............................................................ 9,163,471 1,410,340 3,090,918
NET ASSET VALUE PER SHARE
Class A ............................................................ $ 61.13 $ 19.52 $ 15.45
Class B ............................................................ $ 60.00 $ 18.98 $ 15.34
MAXIMUM OFFERING PRICE PER SHARE
Class A Only (Net Asset Value x 104.71%)* .......................... $ 64.01 $ 20.44 $ 16.18
<CAPTION>
THE GUARDIAN THE GUARDIAN THE GUARDIAN
BAILLIE GIFFORD BAILLIE GIFFORD INVESTMENT
INTERNATIONAL EMERGING QUALITY
FUND MARKETS FUND BOND FUND
----------------------------------------------------------
<S> <C> <C> <C>
COMPONENTS OF NET ASSETS
Shares of beneficial interest, at par ................................ $ 72,713 $ 37,272 $ 147,510
Additional paid-in capital ........................................... 107,838,142 37,695,513 145,810,012
Undistributed/(overdistributed) net investment income ................ (433,606) (1,009,199) --
Accumulated net realized gain/(loss) on investments and foreign
currency related transactions ...................................... 14,541,700 (334,424) (7,939,277)
Net unrealized appreciation/(depreciation) of investments
and foreign currency related transactions .......................... 30,715,895 4,820,433 (8,647)
----------------------------------------------------------
NET ASSETS ..................................................... $152,734,844 $41,209,595 $138,009,598
==========================================================
NET ASSETS
Class A ............................................................ $137,338,164 $38,539,908 $138,009,598
Class B ............................................................ $ 15,396,680 $ 2,669,687 --
SHARES OF BENEFICIAL INTEREST OUTSTANDING -- $0.01 PAR VALUE
Class A ............................................................ 6,512,753 3,473,309 14,751,008
Class B ............................................................ 758,561 253,848 --
NET ASSET VALUE PER SHARE
Class A ............................................................ $ 21.09 $ 11.10 $ 9.36
Class B ............................................................ $ 20.30 $ 10.52 --
MAXIMUM OFFERING PRICE PER SHARE
Class A Only (Net Asset Value x 104.71%)* .......................... $ 22.08 $ 11.62 $ 9.80
<CAPTION>
THE GUARDIAN THE GUARDIAN THE GUARDIAN
HIGH YIELD TAX-EXEMPT CASH
BOND FUND MANAGEMENT
FUND FUND
-----------------------------------------------------------
<S> <C> <C> <C>
COMPONENTS OF NET ASSETS
Shares of beneficial interest, at par ................................ $ 66,729 $ 105,506 $ 3,847,600
Additional paid-in capital ........................................... 64,494,314 104,275,999 380,912,426
Undistributed/(overdistributed) net investment income ................ -- -- --
Accumulated net realized gain/(loss) on investments and foreign
currency related transactions ...................................... (5,266,602) (2,414,090) --
Net unrealized appreciation/(depreciation) of investments
and foreign currency related transactions .......................... (2,358,517) (367,563) --
-----------------------------------------------------------
NET ASSETS ..................................................... $56,935,924 $101,599,852 $384,760,026
===========================================================
NET ASSETS
Class A ............................................................ $53,837,237 $101,599,852 $374,476,597
Class B ............................................................ $ 3,098,687 -- $ 10,283,429
SHARES OF BENEFICIAL INTEREST OUTSTANDING -- $0.01 PAR VALUE
Class A ............................................................ 6,309,546 10,550,607 374,476,597
Class B ............................................................ 363,387 -- 10,283,429
NET ASSET VALUE PER SHARE
Class A ............................................................ $ 8.53 $ 9.63 $ 1.00
Class B ............................................................ $ 8.53 -- $ 1.00
MAXIMUM OFFERING PRICE PER SHARE
Class A Only (Net Asset Value x 104.71%)* .......................... $ 8.93 $ 10.08 N/A**
</TABLE>
* Based on sale of less than $100,000. On sale of $100,000 or more,
the offering price is reduced.
** No load is charged on Class A shares.
See notes to financial statements.
44 & 45
<PAGE>
o THE PARK AVENUE PORTFOLIO
--------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------
Six Months Ended June 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THE GUARDIAN THE GUARDIAN HE GUARDIAN
PARK AVENUE PARK AVENUE ASSET
FUND SMALL CAP ALLOCATION
FUND FUND
----------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Dividends ............................................................ $ 6,182,998 $ 235,384 $ 1,423,242
Interest ............................................................. 5,040,103 413,222 2,822,204
Less: Foreign tax withheld ........................................... (79,965) (566) --
----------------------------------------------------
Total Income ..................................................... 11,143,136 648,040 4,245,446
----------------------------------------------------
Expenses:
Investment advisory fees-- Note 2 .................................... 9,762,615 609,457 899,661
Administrative fees -- Class A -- Note 2 ............................. 3,232,928 172,425 290,929
Administrative fees -- Class B -- Note 2 ............................. 660,775 30,727 55,094
12b-1 fees -- Class B -- Note 3 ...................................... 1,982,324 92,182 165,283
Transfer agent fees -- Class A ....................................... 1,040,031 80,118 93,044
Transfer agent fees -- Class B ....................................... 304,211 28,221 28,591
Custodian fees ....................................................... 206,144 47,801 19,113
Printing expense ..................................................... 173,913 7,743 11,210
Registration fees .................................................... 44,809 27,532 29,909
Legal fees ........................................................... 23,990 994 1,312
Audit fees ........................................................... 11,373 9,883 9,633
Trustees' fees -- Note 2 ............................................. 9,448 9,448 9,448
Loan commitment fees -- Note 10 ...................................... 5,407 202 322
Insurance expense .................................................... 3,761 128 270
Other ................................................................ 350 350 350
Deferred organization expense -- Note 8 .............................. -- 4,512 --
---------------------------------------------------
Total Expenses before Reimbursement .......................... 17,462,079 1,121,723 1,614,169
Less: Expenses assumed by investment adviser -- Note 2 ............. -- -- (877,868)
---------------------------------------------------
Expenses Net of Reimbursement ................................ 17,462,079 1,121,723 736,301
---------------------------------------------------
Net Investment Income/(Loss) ............................................. (6,318,943) (473,683) 3,509,145
---------------------------------------------------
REALIZED AND UNREALIZED GAIN/(LOSS) ON
INVESTMENTS AND FOREIGN CURRENCIES -- NOTE 4
Net realized gain/(loss) on investments -- Note 1 .................... 210,295,489 7,765,917 (694,709)
Net realized gain/(loss) on foreign currencies -- Note 1 ............. -- -- --
Foreign capital gains tax ............................................ -- -- --
Net change in unrealized appreciation/(depreciation)
on investments -- NOTE 4 ........................................... (92,122,693) 9,645,025 9,382,656
Net change in unrealized depreciation from translation of
other assets and liabilities denominated in foreign
currencies -- Note 4 ............................................... -- -- --
----------------------------------------------------
Net Realized and Unrealized Gain/(Loss) on Investments
and Foreign Currencies ................................................. 118,172,796 17,410,942 8,687,947
----------------------------------------------------
NET INCREASE/(DECREASE) IN NET ASSETS
FROM OPERATIONS .................................................. $111,853,853 $16,937,259 $12,197,092
====================================================
<CAPTION>
THE GUARDIAN THE GUARDIAN THE GUARDIAN
BAILLIE GIFFORD BAILLIE GIFFORD INVESTMENT
INTERNATIONAL EMERGING QUALITY
FUND MARKETS FUND BOND FUND
----------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Dividends ............................................................ $ 1,174,452 $ 283,047 $ --
Interest ............................................................. 101,851 58,246 4,880,978
Less: Foreign tax withheld ........................................... (182,856) (28,356) --
----------------------------------------------------
Total Income ..................................................... 1,093,447 312,937 4,880,978
----------------------------------------------------
Expenses:
Investment advisory fees -- Note 2 ................................... 635,888 204,393 339,502
Administrative fees -- Class A -- Note 2 ............................. 179,327 47,816 169,751
Administrative fees -- Class B -- Note 2 ............................. 19,388 3,282 --
12b-1 fees -- Class B -- Note 3 ...................................... 58,164 9,846 --
Transfer agent fees -- Class A ....................................... 65,458 18,717 36,225
Transfer agent fees -- Class B ....................................... 22,179 16,720 --
Custodian fees ....................................................... 126,799 69,486 40,144
Printing expense ..................................................... 5,199 1,244 5,852
Registration fees .................................................... 24,634 31,883 19,882
Legal fees ........................................................... 994 994 1,269
Audit fees ........................................................... 11,623 11,623 9,883
Trustees' fees -- Note 2 ............................................. 9,448 9,448 9,448
Loan commitment fees -- Note 10 ...................................... 152 32 129
Insurance expense .................................................... 135 26 157
Other ................................................................ 350 350 350
Deferred organization expense -- Note 8 .............................. -- 2,657 --
----------------------------------------------------
Total Expenses before Reimbursement .......................... 1,159,738 428,517 632,592
Less: Expenses assumed by investment adviser -- Note 2 ............. -- -- (54,206)
----------------------------------------------------
Expenses Net of Reimbursement ................................ 1,159,738 428,517 578,386
----------------------------------------------------
Net Investment Income/(Loss) ............................................. (66,291) (115,580) 4,302,592
----------------------------------------------------
REALIZED AND UNREALIZED GAIN/(LOSS) ON
INVESTMENTS AND FOREIGN CURRENCIES -- NOTE 4
Net realized gain/(loss) on investments -- Note 1 .................... 13,838,556 5,141,839 (4,301,347)
Net realized gain/(loss) on foreign currencies -- Note 1 ............. (385,126) 3,464 --
Foreign capital gains tax ............................................ -- (6,289) --
Net change in unrealized appreciation/(depreciation)
on investments -- Note 4 ........................................... (27,355,325) (5,736,005) 4,642,577
Net change in unrealized depreciation from translation of
other assets and liabilities denominated in foreign
currencies -- Note 4 ............................................... 3,909 (1,418) --
----------------------------------------------------
Net Realized and Unrealized Gain/(Loss) on Investments
and Foreign Currencies ................................................. (13,897,986) (598,409) 341,230
----------------------------------------------------
NET INCREASE/(DECREASE) IN NET ASSETS
FROM OPERATIONS .................................................. $(13,964,277) $ (713,989) $ 4,643,822
====================================================
<CAPTION>
THE GUARDIAN THE GUARDIAN THE GUARDIAN
HIGH YIELD TAX-EXEMPT CASH
BOND FUND MANAGEMENT
FUND FUND
------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Dividends ............................................................ $ -- $ -- $ --
Interest ............................................................. 2,693,731 2,618,217 11,863,112
Less: Foreign tax withheld ........................................... -- -- --
------------------------------------------------
Total Income ..................................................... 2,693,731 2,618,217 11,863,112
------------------------------------------------
Expenses:
Investment advisory fees -- Note 2 ................................... 168,275 245,419 965,697
Administrative fees -- Class A -- Note 2 ............................. 66,209 122,709 469,145
Administrative fees -- Class B -- Note 2 ............................. 3,906 -- 13,704
12b-1 fees -- Class B -- Note 3 ...................................... 11,719 -- 41,111
Transfer agent fees -- Class A ....................................... 17,424 17,792 180,358
Transfer agent fees -- Class B ....................................... 16,925 -- 13,412
Custodian fees ....................................................... 30,011 27,332 42,086
Printing expense ..................................................... 4,165 3,811 11,969
Registration fees .................................................... 20,000 14,111 33,224
Legal fees ........................................................... 1,000 1,194 1,441
Audit fees ........................................................... 11,436 9,633 9,633
Trustees' fees -- Note 2 ............................................. 9,448 9,448 9,448
Loan commitment fees -- Note 10 ...................................... 52 89 231
Insurance expense .................................................... 75 100 336
Other ................................................................ 350 350 350
Deferred organization expense -- Note 8 .............................. -- -- --
------------------------------------------------
Total Expenses before Reimbursement .......................... 360,995 451,988 1,792,145
Less: Expenses assumed by investment adviser -- Note 2 ............. (105,309) (33,698) (144,613)
------------------------------------------------
Expenses Net of Reimbursement ................................ 255,686 418,290 1,647,532
------------------------------------------------
Net Investment Income/(Loss) ............................................. 2,438,045 2,199,927 10,215,580
------------------------------------------------
REALIZED AND UNREALIZED GAIN/(LOSS) ON
INVESTMENTS AND FOREIGN CURRENCIES -- NOTE 4
Net realized gain/(loss) on investments -- Note 1 .................... (1,061,883) (602,007) --
Net realized gain/(loss) on foreign currencies -- Note 1 ............. -- -- --
Foreign capital gains tax ............................................ -- -- --
Net change in unrealized appreciation/(depreciation)
on investments -- Note 4 ........................................... (1,812,179) 3,032,643 --
Net change in unrealized depreciation from translation of
other assets and liabilities denominated in foreign
currencies -- Note 4 ............................................... -- -- --
------------------------------------------------
Net Realized and Unrealized Gain/(Loss) on Investments
and Foreign Currencies ................................................. (2,874,062) 2,430,636 --
------------------------------------------------
NET INCREASE/(DECREASE) IN NET ASSETS
FROM OPERATIONS .................................................. $ (436,017) $4,630,563 $10,215,580
================================================
</TABLE>
* Net of accrued capital gains tax of $8,628 GBGIF and $76,196 GBGEMF.
See notes to financial statements.
46 & 47
<PAGE>
o THE PARK AVENUE PORTFOLIO
--------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THE GUARDIAN
THE GUARDIAN PARK AVENUE
PARK AVENUE FUND SMALL CAP FUND
---------------------------------- ------------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
JUNE 30, 2000 DECEMBER 31, 1999 JUNE 30, 2000 DECEMBER 31, 1999
(UNAUDITED) (AUDITED) (UNAUDITED) (AUDITED)
--------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE/(DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income/(loss) ..................... $ (6,318,943) $ 4,244,467 $ (473,683) $ (720,677)
Net realized gain/(loss) on investments
and foreign currency related
transactions .................................... 210,295,489 507,876,945 7,765,917 5,066,646
Net change in unrealized appreciation/
(depreciation) of investments and
foreign currency related
transactions .................................... (92,122,693) 419,284,130 9,645,025 30,726,523
----------------------------------------------------------------------------
NET INCREASE/(DECREASE) IN
NET ASSETS RESULTING FROM
OPERATIONS .................................... 111,853,853 931,405,542 16,937,259 35,072,492
----------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income
Class A ......................................... -- (4,338,070) -- --
Class B ......................................... -- -- -- --
In excess of net investment income
Class A ......................................... -- -- -- --
Net realized gain on investments and
foreign currency related transactions
Class A ......................................... -- (389,011,284) -- --
Class B ......................................... -- (59,152,111) -- --
----------------------------------------------------------------------------
TOTAL DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS .................................. -- (452,501,465) -- --
----------------------------------------------------------------------------
FROM CAPITAL SHARE TRANSACTIONS:
Net increase/(decrease) in net assets from
capital share transactions-- Note 9 ............. (1,849,377) (16,675,323) 27,143,851 (43,257,893)
----------------------------------------------------------------------------
NET INCREASE/(DECREASE) IN NET ASSETS ............. 110,004,476 462,228,754 44,081,110 (8,185,401)
NET ASSETS:
Beginning of period ................................ 3,842,485,476 3,380,256,722 141,461,735 149,647,136
----------------------------------------------------------------------------
End of period* ..................................... $3,952,489,952 $3,842,485,476 $185,542,845 $141,461,735
============================================================================
* Includes undistributed/(overdistributed)
net investment income of $ (6,049,525) $ 269,418 $ (473,683) $ --
<CAPTION>
THE GUARDIAN
THE GUARDIAN BAILLIE GIFFORD
ASSET ALLOCATION FUND INTERNATIONAL FUND
---------------------------------- ------------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
JUNE 30, 2000 DECEMBER 31, 1999 JUNE 30, 2000 DECEMBER 31, 1999
(UNAUDITED) (AUDITED) (UNAUDITED) (AUDITED)
--------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE/(DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income/(loss) ..................... $ 3,509,145 $ 5,773,614 $ (66,291) $ (150,787)
Net realized gain/(loss) on investments
and foreign currency related
transactions .................................... (694,709) 33,936,679 13,453,430 11,938,996
Net change in unrealized appreciation/
(depreciation) of investments and
foreign currency related
transactions .................................... 9,382,656 (8,797,339) (27,351,416) 33,878,441
----------------------------------------------------------------------------
NET INCREASE/(DECREASE) IN
NET ASSETS RESULTING FROM
OPERATIONS .................................... 12,197,092 30,912,954 (13,964,277) 45,666,650
----------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income
Class A ......................................... -- (5,299,394) -- --
Class B ......................................... -- (580,691) -- --
In excess of net investment income
Class A ......................................... -- -- -- (201,240)
Net realized gain on investments and
foreign currency related transactions
Class A ......................................... -- (20,934,692) -- (10,007,897)
Class B ......................................... -- (3,659,166) -- (1,105,637)
----------------------------------------------------------------------------
TOTAL DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS .................................. -- (30,473,943) -- (11,314,774)
----------------------------------------------------------------------------
FROM CAPITAL SHARE TRANSACTIONS:
Net increase/(decrease) in net assets from
capital share transactions-- Note 9 ............. 6,520,813 45,134,030 2,349,105 25,910,582
----------------------------------------------------------------------------
NET INCREASE/(DECREASE) IN NET ASSETS ............. 18,717,905 45,573,041 (11,615,172) 60,262,458
NET ASSETS:
Beginning of period ................................ 267,945,267 222,372,226 164,350,016 104,087,558
----------------------------------------------------------------------------
End of period* ..................................... $286,663,172 $267,945,267 $152,734,844 $164,350,016
============================================================================
* Includes undistributed/(overdistributed)
net investment income of $ 3,538,068 $ 28,923 $ (433,606) $ (367,315)
<CAPTION>
THE GUARDIAN THE GUARDIAN
BAILLIE GIFFORD EMERGING INVESTMENT QUALITY
MARKETS FUND BOND FUND
---------------------------------- ------------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
JUNE 30, 2000 DECEMBER 31, 1999 JUNE 30, 2000 DECEMBER 31, 1999
(UNAUDITED) (AUDITED) (UNAUDITED) (AUDITED)
--------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE/(DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income/(loss) ..................... $ (115,580) $ (280,547) $ 4,302,592 $ 7,775,287
Net realized gain/(loss) on investments
and foreign currency related
transactions .................................... 5,139,014 610,059 (4,301,347) (3,529,769)
Net change in unrealized appreciation/
(depreciation) of investments and
foreign currency related
transactions .................................... (5,737,423) 13,245,453 4,642,577 (5,753,145)
----------------------------------------------------------------------------
NET INCREASE/(DECREASE) IN
NET ASSETS RESULTING FROM
OPERATIONS .................................... (713,989) 13,574,965 4,643,822 (1,507,627)
----------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income
Class A ......................................... -- (513,333) (4,302,592) (7,775,287)
Class B ......................................... -- -- -- --
In excess of net investment income
Class A ......................................... -- -- -- --
Net realized gain on investments and
foreign currency related transactions
Class A ......................................... -- -- -- (429,333)
Class B ......................................... -- -- -- --
----------------------------------------------------------------------------
TOTAL DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS .................................. -- (513,333) (4,302,592) (8,204,620)
----------------------------------------------------------------------------
FROM CAPITAL SHARE TRANSACTIONS:
Net increase/(decrease) in net assets from
capital share transactions-- Note 9 ............. 6,664,090 4,489,021 (1,992,664) 7,174,645
----------------------------------------------------------------------------
NET INCREASE/(DECREASE) IN NET ASSETS ............. 5,950,101 17,550,653 (1,651,434) (2,537,602)
NET ASSETS:
Beginning of period ................................ 35,259,494 17,708,841 139,661,032 142,198,634
----------------------------------------------------------------------------
End of period* ..................................... $ 41,209,595 $ 35,259,494 $138,009,598 $139,661,032
============================================================================
* Includes undistributed/(overdistributed)
net investment income of ......................... $ (1,009,199) $ (893,619) $ -- $ --
<CAPTION>
THE GUARDIAN
HIGH YIELD THE GUARDIAN
BOND FUND TAX-EXEMPT FUND
---------------------------------- ------------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
JUNE 30, 2000 DECEMBER 31, 1999 JUNE 30, 2000 DECEMBER 31, 1999
(UNAUDITED) (AUDITED) (UNAUDITED) (AUDITED)
--------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE/(DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income/(loss) .................... $ 2,438,045 $ 4,662,120 $ 2,199,927 $ 3,685,695
Net realized gain/(loss) on investments
and foreign currency related
transactions ................................... (1,061,883) (4,204,560) (602,007) (1,812,077)
Net change in unrealized appreciation/
(depreciation) of investments and
foreign currency related
transactions ................................... (1,812,179) (825,578) 3,032,643 (5,196,861)
----------------------------------------------------------------------------
NET INCREASE/(DECREASE) IN
NET ASSETS RESULTING FROM
OPERATIONS ................................... (436,017) (368,018) 4,630,563 (3,323,243)
----------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income
Class A ........................................ (2,318,685) (4,448,296) (2,199,927) (3,685,695)
Class B ........................................ (119,360) (213,824) -- --
In excess of net investment income
Class A ........................................ -- -- -- --
Net realized gain on investments and
foreign currency related transactions
Class A ........................................ -- (87,896) -- (41,921)
Class B ........................................ -- (4,673) -- --
----------------------------------------------------------------------------
TOTAL DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS ................................. (2,438,045) (4,754,689) (2,199,927) (3,727,616)
----------------------------------------------------------------------------
FROM CAPITAL SHARE TRANSACTIONS:
Net increase/(decrease) in net assets from
capital share transactions-- Note 9 ............ 2,448,290 8,713,802 1,261,388 34,238,559
----------------------------------------------------------------------------
NET INCREASE/(DECREASE) IN NET ASSETS ............ (425,772) 3,591,095 3,692,024 27,187,700
NET ASSETS:
Beginning of period ............................... 57,361,696 53,770,601 97,907,828 70,720,128
----------------------------------------------------------------------------
End of period* .................................... $ 56,935,924 $57,361,696 $101,599,852 $97,907,828
============================================================================
* Includes undistributed/(overdistributed)
net investment income of ........................ $ -- $ -- $ -- $ --
<CAPTION>
THE GUARDIAN
CASH MANAGEMENT FUND
------------------------------------
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 2000 DECEMBER 31, 1999
(UNAUDITED) (AUDITED)
----------------- -----------------
<S> <C> <C>
INCREASE/(DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income/(loss) ....................... $ 10,215,580 $ 13,420,619
Net realized gain/(loss) on investments
and foreign currency related
transactions ...................................... -- --
Net change in unrealized appreciation/
(depreciation) of investments and
foreign currency related
transactions ...................................... -- --
--------------------------------
NET INCREASE/(DECREASE) IN
NET ASSETS RESULTING FROM
OPERATIONS ...................................... 10,215,580 13,420,619
--------------------------------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income
Class A ........................................... (9,927,618) (12,862,588)
Class B ........................................... (287,962) (558,031)
In excess of net investment income
Class A ........................................... -- --
Net realized gain on investments and
foreign currency related transactions
Class A ........................................... -- --
Class B ........................................... -- --
--------------------------------
TOTAL DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS .................................... (10,215,580) (13,420,619)
--------------------------------
FROM CAPITAL SHARE TRANSACTIONS:
Net increase/(decrease) in net assets from
capital share transactions-- Note 9 ............... (19,128,328) 165,461,754
--------------------------------
NET INCREASE/(DECREASE) IN NET ASSETS ............... (19,128,328) 165,461,754
NET ASSETS:
Beginning of period .................................. 403,888,354 238,426,600
--------------------------------
End of period* ....................................... $384,760,026 $403,888,354
================================
* Includes undistributed/(overdistributed)
net investment income of ........................... $ -- $ --
</TABLE>
See notes to financial statements.
48 & 49
<PAGE>
--------------------
NOTES TO
FINANCIAL STATEMENTS
--------------------
June 30, 2000 (Unaudited)
THE PARK AVENUE PORTFOLIO
o THE GUARDIAN PARK AVENUE FUND
o THE GUARDIAN PARK AVENUE SMALL CAP FUND
o THE GUARDIAN ASSET ALLOCATION FUND
o THE GUARDIAN BAILLIE GIFFORD INTERNATIONAL FUND
o THE GUARDIAN BAILLIE GIFFORD EMERGING MARKETS FUND
o THE GUARDIAN INVESTMENT QUALITY BOND FUND
o THE GUARDIAN HIGH YIELD BOND FUND
o THE GUARDIAN TAX-EXEMPT FUND
o THE GUARDIAN CASH MANAGEMENT FUND
NOTE 1. ORGANIZATION AND ACCOUNTING POLICIES
The Park Avenue Portfolio (the Portfolio) is a diversified open-end
management investment company registered under the Investment Company Act of
1940, as amended (the 1940 Act), which is organized as a business trust under
the laws of the Commonwealth of Massachusetts. As of June 30, 2000, the
Portfolio consists of nine series, namely: The Guardian Park Avenue Fund (GPAF);
The Guardian Park Avenue Small Cap Fund (GPASCF); The Guardian Asset Allocation
Fund (GAAF); The Guardian Baillie Gifford International Fund (GBGIF); The
Guardian Baillie Gifford Emerging Markets Fund (GBGEMF); The Guardian Investment
Quality Bond Fund (GIQBF); The Guardian High Yield Bond Fund (GHYBF); The
Guardian Tax-Exempt Fund (GTEF); and The Guardian Cash Management Fund (GCMF).
The series are collectively referred to herein as the "Funds".
As of June 30, 2000, the Funds offer up to three classes of shares:
Class A, Class B and the Institutional Class. Each of the Funds offers Class A
shares. All shares existing prior to May 1, 1996, were classified as Class A
shares. Class A shares are sold with an initial sales load of up to 4.50% and an
administrative fee of up to .25% on an annual basis of the Funds' average daily
net assets. As of June 30, 2000, Class B shares are offered by GPAF, GPASCF,
GAAF, GBGIF, GBGEMF, GHYBF and GCMF. Class B shares are sold without an initial
sales load but are subject to a 12b-1 fee of .75% and an administrative fee of
up to .25% on an annual basis of the Funds' average daily net assets, and a
contingent deferred sales load (CDSL) of up to 3% imposed on certain
redemptions. As of June 30, 2000, Institutional Class shares are offered by
GPAF, GPASCF, GAAF, GBGIF, GBGEMF, GIQBF and GHYBF. None of the Funds had issued
Institutional Class shares. Institutional Class shares are offered at net asset
value, without an initial or contingent deferred sales load. All classes of
shares for each Fund represent interests in the same portfolio of investments,
have the same rights and are generally identical in all respects except that
each class bears its separate distribution and certain class expenses, and has
exclusive voting rights with respect to any matter to which a separate vote of
any class is required.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Investments
Equity and debt securities listed on domestic or foreign securities
exchanges are valued at the last sales price of such exchanges, or if no sale
occurred, at the mean of the bid and asked prices. Securities traded in the
over-the-counter market are valued using the last sales price, when available.
Otherwise, over-the-counter securities are valued at the mean between the bid
and asked prices or yield equivalents as obtained from one or more dealers that
make a market in the securities.
50
<PAGE>
Pursuant to valuation procedures approved by the Board of Trustees,
certain debt securities may be valued each business day by an independent
pricing service (Service). Debt securities for which quoted bid prices are
readily available and representative of the bid side of the market, in the
judgement of the Service, are valued at the bid price, except for GTEF. In GTEF,
debt securities are valued at the mean between the bid and asked prices each as
obtained by the Service. Other debt securities that are valued by the Service
are carried at fair value as determined by the Service, based on methods which
include consideration of: yields or prices of securities of comparable quality,
coupon, maturity and type; indications as to values from dealers; and general
market conditions.
Other securities, including securities for which market quotations are
not readily available (such as certain mortgage-backed securities and restricted
securities) are valued at fair value as determined in good faith by or under the
direction of the Funds' Board of Trustees.
Repurchase agreements are carried at cost which approximates market
value (see Note 5). Short-term securities held by the Funds are valued on an
amortized cost basis which approximates market value but does not take into
account unrealized gains and losses. GCMF values its investments based on
amortized cost in accordance with Rule 2a-7 under the 1940 Act.
Investing outside of the U.S. may involve certain considerations and
risks not typically associated with domestic investments, including the
possibility of political and economic unrest and different levels of
governmental supervision and regulation of foreign securities markets.
Investment transactions are recorded on the date of purchase or sale.
Security gains or losses are determined on an identified cost basis. Interest
income, including amortization of premium and discount, is accrued daily.
Dividend income is recorded on the ex-dividend date.
All income, expenses (other than class-specific expenses) and realized
and unrealized gains or losses are allocated daily to each class of shares based
upon the relative value of shares of each class. Class-specific expenses, which
include distribution and service fees and any other items that are specifically
attributed to a particular class, are charged directly to such class. For the
six months ended June 30, 2000, distribution, administrative and transfer agent
fees were the only class-specific expenses.
Foreign Currency Translation
GPAF, GPASCF, GAAF, GBGIF, GBGEMF and GHYBF are permitted to buy
international securities that are not U.S. dollar denominated. Their books and
records are maintained in U.S. dollars as follows:
(1) The foreign currency market value of investment securities and
other assets and liabilities stated in foreign currencies are translated
into U.S. dollars at the current rate of exchange.
(2) Purchases, sales, income and expenses are translated at the rate
of exchange prevailing on the respective dates of such transactions. The
resulting gains and losses are included in the Statement of Operations as
follows:
The resulting gains and losses are included in the Statement of
Operations as follows:
Realized foreign exchange gains and losses, which result from changes in
foreign exchange rates between the date on which a Fund earns dividends and
interest or pays foreign withholding taxes or other expenses and the date on
which U.S. dollar equivalent amounts are actually received or paid, are included
in net realized gain or loss on foreign currencies. Realized foreign exchange
gains and losses which result from changes in foreign exchange rates between the
trade and settlement dates on security and currency transactions are also
included in net realized gains and losses on foreign currencies. Net currency
gains and losses from valuing other assets and liabilities denominated in
foreign currency as of June 30, 2000 are reflected in net change in unrealized
appreciation or depreciation from translation of assets and liabilities in
foreign currencies based on the applicable exchange rate in effect at the end of
period.
Forward Foreign Currency Contracts
GPAF, GPASCF, GAAF, GBGIF, GBGEMF and GHYBF may enter into foreign
currency contracts in connection with planned purchases or sales of securities,
or to hedge against changes in currency exchange rates affecting the values of
its investments that are denominated in a particular currency. A forward foreign
currency contract is a commitment to purchase or sell a foreign currency at a
future date at a negotiated forward exchange rate. Risks may arise from the
potential inability of a counterparty to meet the terms of a contract and from
an unanticipated movement in the value of a foreign currency relative to the
U.S. dollar. Fluctuations in the value of forward foreign currency contracts are
recorded for book purposes as unrealized gains or losses from translation of
other assets and liabilities denominated in foreign currencies by the Fund. When
a forward contract is closed, the Fund will record a realized gain or loss equal
to the difference between the value of the forward contract at the time it was
opened and the value at the time it was closed. Such amount is recorded in net
realized gain or loss on foreign currencies. The Funds will not enter into a
forward foreign currency contract if such contract would obligate the applicable
Fund to deliver an amount of foreign currency in excess of the value of its
portfolio securities or other assets denominated in that currency.
51
<PAGE>
Futures Contracts
GAAF, GBGIF, GBGEMF, GIQBF, GHYBF and GTEF may enter into financial
futures contracts for the delayed delivery of securities, currency or contracts
based on financial indices at a fixed price on a future date. In entering into
such contracts, the Funds are required to deposit either in cash or securities
an amount equal to a certain percentage of the contract amount. Subsequent
payments are made or received by the Funds each day, depending on the daily
fluctuations in the value of the underlying security, and are recorded for
financial statement purposes as unrealized gains or losses by the Funds. The
Funds' investments in financial futures contracts are designed to hedge against
anticipated future changes in interest or exchange rates or securities prices
(or for non-hedging purposes). Should interest or exchange rates or securities
prices move unexpectedly, the Funds may not achieve the anticipated benefits of
the financial futures contracts and may realize a loss.
Dividends and Distributions to Shareholders
Dividends from net investment income are declared and accrued daily and
are paid monthly for GIQBF, GHYBF and GTEF, and declared and paid semi-annually
for GPAF, GPASCF, GAAF, GBGIF and GBGEMF. Net realized short-term and long-term
capital gains for these Funds will be distributed at least annually. Dividends
from GCMF's net investment income, which includes any net realized capital gains
or losses, are declared and accrued daily and paid monthly on the last business
day of each month.
All dividends and distributions to shareholders are recorded on the
ex-dividend date. Such distributions are determined in accordance with federal
income tax regulations. Differences between the recognition of income on an
income tax basis and recognition of income based on generally accepted
accounting principles may cause temporary overdistributions of net realized
gains and net investment income.
Taxes
Each Fund qualified and intends to remain qualified to be taxed as a
"regulated investment company" under the provisions of the Internal Revenue Code
(Code), and as such will not be subject to federal income tax on taxable income
(including any realized capital gains) which is distributed in accordance with
the provisions of the Code. Therefore, no federal income tax provision is
required.
Witholding taxes on foreign interest, dividends and capital gains in
GBGIF and GBGEMF have been provided for in accordance with the applicable
country's tax rules and rates.
Reclassification of Capital Accounts
The treatment for financial statement purposes of distributions made
during the year from net investment income and net realized gains may differ
from their ultimate treatment for federal income tax purposes. These differences
primarily are caused by differences in the timing of the recognition of certain
components of income or capital gain; and the recharacterization of foreign
exchange gains or losses to either ordinary income or realized capital gains for
federal income tax purposes. Where such differences are permanent in nature,
they are reclassified in the components of net assets based on their ultimate
characterization for federal income tax purposes. Any such reclassifications
will have no effect on net assets, results of operations, or net asset value per
share of the Fund.
NOTE 2. INVESTMENT ADVISORY AGREEMENTS AND
PAYMENTS TO RELATED PARTIES
GISC provides investment advisory services to each of the Funds (except
GBGIF and GBGEMF) under an investment advisory agreement. Fees for investment
advisory services are at an annual rate of .50% of the average daily net assets
of each Fund, except for GAAF, which is subject to a contractual annual fee of
.65% of its average daily net assets, and GPASCF and GHYBF, which pay GISC an
annual rate of .75% and .60%, respectively, of their average daily net assets.
GISC has agreed to a waiver of .15% of GAAF's annual advisory fee when GAAF is
operated as a "fund of funds", so that GAAF's effective advisory fee is .50% of
its average daily net assets. During the period ended June 30, 2000, GISC
voluntarily assumed a portion of the ordinary operating expenses (excluding
interest expense associated with reverse repurchase agreements and securities
lending) that exceed .85% of the average daily net assets of GIQBF, GTEF, GCMF
and Class A shares of GHYBF; 1.00% of the average daily net assetsof GHYBF Class
B shares. As it relates to the subsidy for GHYBF, GISC subsidized .34% of the
ordinary operating expenses for both the Class A and B shares and .66% for 12b-1
fees of Class B shares. GISC subsidized .05% for Class A shares and .20% for
Class B shares of GCMF's administrative fees and .75% for 12b-1 fees of GCMF's
Class B shares. For the six months ended June 30, 2000 GISC voluntarily assumed
$54,206, $105,309, $33,698 and $144,613 of the ordinary operating expenses of
GIQBF, GHYBF, GTEF and GCMF, respectively.
There are no duplicate advisory and administrative service fees charged
to GAAF on assets invested in other Guardian Funds. Under an SEC exemptive
order, advisory and administrative fees are paid at the underlying Fund level.
The Portfolio, on behalf of GBGIF and GBGEMF, has an investment
management agreement with Guardian Baillie Gifford Limited (GBG), a Scottish
corporation formed through
52
<PAGE>
a joint venture between The Guardian Insurance & Annuity Company, Inc. (GIAC)
and Baillie Gifford Overseas Limited (BG Overseas). GBG is responsible for the
overall investment management of GBGIF and GBGEMF's portfolio, subject to the
supervision of the Portfolio's Board of Trustees. GBG has entered into a
sub-investment management agreement with BG Overseas pursuant to which BG
Overseas is responsible for the day-to-day management of GBGIF and GBGEMF. GBG
continually monitors and evaluates the performance of BG Overseas. As
compensation for its services, GBGIF and GBGEMF pay GBG annual investment
management fees of .80% and 1.00%, respectively, of their respective average
daily net assets. One half of these fees is payable by GBG to BG Overseas for
its services. Payment of the sub-investment management fee does not represent a
separate or additional expense to GBGIF or GBGEMF.
Trustees who are not deemed to be "interested persons" (as defined in
the 1940 Act) are paid $500 per Fund for each meeting of the Board of Trustees.
An annual fee of $1,000 per Fund is also paid to each such Trustee during such
period. GISC pays compensation to the Trustees who are interested persons.
Certain officers and Trustees of the Funds are affiliated with GISC.
The retail broker/dealer operation of GISC was assumed by Park Avenue
Securities LLC (PAS) on May 3, 1999. PAS is a wholly-owned subsidiary of GIAC
and an affiliate of GISC. PAS received $1,547,246 for brokerage commissions from
the Portfolio.
Administrative Services Agreement
Pursuant to the Administrative Services Agreement adopted by the Funds
on behalf of the Class A and Class B shares, each of the Funds, except GPAF,
pays GISC an administrative service fee at an annual rate of up to .25% of its
average daily net assets. GPAF pays this fee at an annual rate of up to .25% of
the average daily net assets for which a "dealer of record" has been designated.
For the six months ended June 30, 2000, GPAF Class A shares paid an annualized
rate of .19% of its average daily net assets under the Administrative Services
Agreement.
NOTE 3. UNDERWRITING AGREEMENT AND DISTRIBUTION PLAN
The Portfolio has entered into an Underwriting Agreement with GISC
pursuant to which GISC serves as the principal underwriter for shares of the
Funds.
For the six months ended June 30, 2000, aggregate front-end sales
charges for the sale of Class A shares paid to GISC were as follows:
FUND COMMISSIONS FUND COMMISSIONS
----- ----------- ---- -----------
GPAF $137,622 GBGEMF $2,042
GPASCF 8,502 GIQBF 651
GAAF 18,635 GHYBF 61
GBGIF 4,763 GTEF 8,006
Under a Distribution Plan adopted by the Portfolio pursuant to the Rule
12b-1 under the 1940 Act (the "12b-1 Plan"), each multiple class fund is
authorized to pay a monthly 12b-1 fee at an annual rate of up to .75% of average
daily net assets of the Fund's Class B shares as compensation for
distribution-related services provided to the Class B shares of those Funds.
GISC is entitled to retain any CDSL imposed on certain Class B share
redemptions. For the six months ended June 30, 2000, GISC received CDSL charges
as follows:
FUND CLASS B
------ -------
GPAF ........................................................ $376,728
GPASCF....................................................... 43,849
GAAF ........................................................ 29,484
GBGIF ....................................................... 8,496
GBGEMF ...................................................... 2,144
GHYBF ....................................................... 3,221
GCMF ........................................................ 36,520
NOTE 4. INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of securities (excluding short-term
securities) for the six months ended June 30, 2000 were as follows:
--------------------------------------------------------------------------------
GPAF GPASCF
--------------------------------------------------------------------------------
Purchases $1,904,776,427 $111,370,969
Proceeds 1,930,706,222 93,540,133
--------------------------------------------------------------------------------
GAAF GBGIF
--------------------------------------------------------------------------------
Purchases $ 1,401,225 $ 48,696,800
Proceeds -- 48,196,664
--------------------------------------------------------------------------------
GBGEMF GIQBF
--------------------------------------------------------------------------------
Purchases $ 19,787,879 $241,859,145
Proceeds 15,348,448 247,634,862
--------------------------------------------------------------------------------
GHYBF GTEF
--------------------------------------------------------------------------------
Purchases $ 39,225,215 $ 77,066,670
Proceeds 35,753,519 76,345,027
The cost of investments owned at June 30, 2000 for federal income tax
purposes was substantially the same as the cost for financial reporting purposes
for the Funds. The gross unrealized appreciation and depreciation of investments
excluding foreign currency at June 30, 2000, were as follows:
53
<PAGE>
GPAF GPASCF
------ -------
Appreciation $1,356,053,595 $ 60,774,042
(Depreciation) (63,881,886) (3,508,097)
-------------- ------------
NET UNREALIZED
APPRECIATION $1,292,171,709 $ 57,265,945
============== ============
GAAF GBGIF
------ -------
Appreciation $ 26,331,111 $ 36,738,052
(Depreciation) (2,258,256) (6,005,558)
-------------- ------------
NET UNREALIZED
APPRECIATION $ 24,072,855 $ 30,732,494
============== ============
GBGEMF GIQBF
------ -------
Appreciation $ 7,749,866 $ 1,062,030
(Depreciation) (2,924,282) (1,070,677)
-------------- ------------
NET UNREALIZED
APPRECIATION/
(DEPRECIATION) $ 4,825,584 $ (8,647)
============== ============
GHYBF GTEF
------ -------
Appreciation $ 602,206 $ 1,083,792
(Depreciation) (2,960,723) (1,451,355)
-------------- ------------
NET UNREALIZED
DEPRECIATION $ (2,358,517) $ (367,563)
============== ============
NOTE 5. REPURCHASE AGREEMENTS
The collateral for repurchase agreements is either cash or fully
negotiable U.S. government securities. Repurchase agreements are fully
collateralized (including the interest earned thereon) and such collateral is
marked-to-market daily while the agreements remain in force. If the value of the
collateral falls below the value of the repurchase price plus accrued interest,
the applicable Fund will require the seller to deposit additional collateral by
the next business day. If the request for additional collateral is not met, or
the seller defaults, the applicable Fund maintains the right to sell the
collateral and may claim any resulting loss against the seller. The Board of
Trustees has established standards to evaluate the creditworthiness of
broker-dealers and banks which engage in repurchase agreements with each Fund.
NOTE 6. REVERSE REPURCHASE AGREEMENTS
GIQBF and GHYBF may enter into reverse repurchase agreements with banks
or third party broker-dealers to borrow short term funds. Interest on the value
of reverse repurchase agreements issued and outstanding is based upon
competitive market rates at the time of issuance. At the time GIQBF and GHYBF
enter into a reverse repurchase agreement, the funds establish and maintain
cash, U.S. government securities or liquid, unencumbered securities that are
marked-to-market daily in a segregated account with the Funds' custodian. The
value of such segregated assets must be at least equal to the value of the
repurchase obligation (principal plus accrued interest), as applicable. Reverse
repurchase agreements involve the risk that the buyer of the securities sold by
GIQBF and GHYBF may be unable to deliver the securities when the Funds seek to
repurchase them.
NOTE 7. DOLLAR ROLL TRANSACTIONS
GIQBF and GHYBF may enter into dollar roll transactions with financial
institutions to take advantage of opportunities in the mortgage market. A dollar
roll transaction involves a sale by the Fund of securities that it holds with an
agreement by the Fund to repurchase similar securities at an agreed upon price
and date. The securities repurchased will bear the same interest as those sold,
but generally will be collateralized at the time of delivery by different pools
of mortgages.
NOTE 8. DEFERRED ORGANIZATION AND INITIAL OFFERING EXPENSES
GPASCF and GBGEMF incurred $45,392 and $26,758, respectively, in
connection with their organization and registration. Such expenses were advanced
by GISC and were repaid by GPASCF and GBGEMF. Organization and initial offering
expenses have been deferred and are being amortized on a straight-line method
over a five-year period, beginning with the commencement of operations of the
Funds.
54
<PAGE>
NOTE 9. SHARES OF BENEFICIAL INTEREST
There is an unlimited number of $0.01 par value shares of beneficial
interest authorized. As of June 30, 2000, such shares were divided into three
classes, designated as Class A, Class B and Institutional Class shares. As of
June 30, 2000: (i) GPAF, GPASCF, GAAF, GBGIF, GBGEMF and GHYBF offered all three
classes; (ii) GIQBF offered Class A and Institutional Class shares; (iii) GCMF
offered Class A and Class B shares; and (iv) GTEF offered Class A shares only.
Through June 30, 2000, no Institutional Class shares of the Funds were sold.
Transactions in shares of beneficial interest were as follows:
O THE GUARDIAN PARK AVENUE FUND
<TABLE>
<CAPTION>
Six Months Six Months
Ended Year Ended Ended Year Ended
June 30, 2000 December 31, 1999 June 30, 2000 December 31, 1999
(Unaudited) (Audited) (Unaudited) (Audited)
------------------------------------------------------------------------------------------------------------------------------------
Shares Amount
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold 11,051,887 27,359,054 $ 672,716,374 $ 1,374,220,548
Shares issued in reinvestment of
dividends and distributions -- 6,674,168 -- 378,300,756
Shares repurchased (11,512,581) (35,553,998) (703,880,598) (1,831,479,707)
------------------------------------------------------------------------------------------------------------------------------------
NET DECREASE (460,694) (1,520,776) $ (31,164,224) $ (78,958,403)
====================================================================================================================================
CLASS B
Shares sold 977,507 1,278,710 $ 58,229,373 $ 68,200,561
Shares issued in reinvestment of
distributions -- 1,003,393 -- 56,213,737
Shares repurchased (483,619) (1,161,774) (28,914,526) (62,131,218)
------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE 493,888 1,120,329 $ 29,314,847 $ 62,283,080
====================================================================================================================================
O THE GUARDIAN PARK AVENUE SMALL CAP FUND
<CAPTION>
Six Months Six Months
Ended Year Ended Ended Year Ended
June 30, 2000 December 31, 1999 June 30, 2000 December 31, 1999
(Unaudited) (Audited) (Unaudited) (Audited)
------------------------------------------------------------------------------------------------------------------------------------
Shares Amount
------------------------------------------------------------------------------------------------------------------------------------
CLASS A
Shares sold 2,070,737 9,334,822 $ 39,073,720 $ 112,958,085
Shares repurchased (746,663) (12,484,685) (13,693,806) (150,938,419)
------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE/(DECREASE) 1,324,074 (3,149,863) $ 25,379,914 $ (37,980,334)
====================================================================================================================================
CLASS B
Shares sold 220,683 245,785 $ 4,015,033 $ 2,980,267
Shares repurchased (125,160) (684,909) (2,251,096) (8,257,826)
------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE/(DECREASE) 95,523 (439,124) $ 1,763,937 $ (5,277,559)
====================================================================================================================================
</TABLE>
55
<PAGE>
O THE GUARDIAN ASSET ALLOCATION FUND
<TABLE>
<CAPTION>
Six Months Six Months
Ended Year Ended Ended Year Ended
June 30, 2000 December 31, 1999 June 30, 2000 December 31, 1999
(Unaudited) (Audited) (Unaudited) (Audited)
------------------------------------------------------------------------------------------------------------------------------------
Shares Amount
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold 1,530,494 3,070,497 $ 23,275,332 $ 45,774,621
Shares issued in reinvestment of
dividends and distributions -- 1,758,874 -- 25,604,469
Shares repurchased (1,408,346) (2,645,945) (21,502,106) (39,623,504)
------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE 122,148 2,183,426 $ 1,773,226 $ 31,755,586
====================================================================================================================================
CLASS B
Shares sold 524,108 916,121 $ 7,944,355 $ 13,578,716
Shares issued in reinvestment of
dividends and distributions -- 284,971 -- 4,133,852
Shares repurchased (211,936) (292,746) (3,196,768) (4,334,124)
------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE 312,172 908,346 $ 4,747,587 $ 13,378,444
====================================================================================================================================
O THE GUARDIAN BAILLIE GIFFORD INTERNATONAL FUND
<CAPTION>
Six Months Six Months
Ended Year Ended Ended Year Ended
June 30, 2000 December 31, 1999 June 30, 2000 December 31, 1999
(Unaudited) (Audited) (Unaudited) (Audited)
------------------------------------------------------------------------------------------------------------------------------------
Shares Amount
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold 6,275,526 10,792,462 $ 139,473,979 $ 208,417,549
Shares issued in reinvestment of
dividends and distributions -- 390,401 -- 8,440,016
Shares repurchased (6,128,565) (9,917,221) (138,581,098) (193,358,852)
------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE 146,961 1,265,642 $ 892,881 $ 23,498,713
====================================================================================================================================
CLASS B
Shares sold 128,550 144,386 $ 2,769,385 $ 2,718,309
Shares issued in reinvestment of
distributions -- 51,780 -- 1,086,611
Shares repurchased (61,092) (73,575) (1,313,161) (1,393,051)
------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE 67,458 122,591 $ 1,456,224 $ 2,411,869
====================================================================================================================================
</TABLE>
56
<PAGE>
O THE GUARDIAN BAILLIE GIFFORD EMERGING MARKETS FUND
<TABLE>
<CAPTION>
Six Months Six Months
Ended Year Ended Ended Year Ended
June 30, 2000 December 31, 1999 June 30, 2000 December 31, 1999
(Unaudited) (Audited) (Unaudited) (Audited)
------------------------------------------------------------------------------------------------------------------------------------
Shares Amount
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold 680,563 622,404 $ 8,190,519 $ 5,323,565
Shares issued in reinvestment of
dividends and distributions -- 47,790 -- 509,438
Shares repurchased (167,361) (165,063) (1,940,171) (1,387,933)
------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE 513,202 505,131 $ 6,250,348 $ 4,445,070
====================================================================================================================================
CLASS B
Shares sold 44,440 21,447 $ 506,430 $ 156,313
Shares repurchased (8,428) (15,854) (92,688) (112,362)
------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE 36,012 5,593 $ 413,742 $ 43,951
====================================================================================================================================
O THE GUARDIAN INVESTMENT QUALITY BOND FUND
<CAPTION>
Six Months Six Months
Ended Year Ended Ended Year Ended
June 30, 2000 December 31, 1999 June 30, 2000 December 31, 1999
(Unaudited) (Audited) (Unaudited) (Audited)
------------------------------------------------------------------------------------------------------------------------------------
Shares Amount
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold 1,849,649 4,250,553 $ 17,138,257 $ 41,150,209
Shares issued in reinvestment of
dividends and distributions 453,564 829,339 4,211,957 7,947,256
Shares repurchased (2,520,474) (4,344,851) (23,342,878) (41,922,820)
------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE/(DECREASE) (217,261) 735,041 $ (1,992,664) $ 7,174,645
====================================================================================================================================
</TABLE>
57
<PAGE>
O THE GUARDIAN HIGH YIELD BOND FUND
<TABLE>
<CAPTION>
Six Months Six Months
Ended Year Ended Ended Year Ended
June 30, 2000 December 31, 1999 June 30, 2000 December 31, 1999
(Unaudited) (Audited) (Unaudited) (Audited)
------------------------------------------------------------------------------------------------------------------------------------
Shares Amount
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold 211,867 489,330 $ 1,825,865 $ 4,666,745
Shares issued in reinvestment of
dividends and distributions 267,740 484,538 2,305,339 4,519,035
Shares repurchased (203,407) (154,332) (1,758,530) (1,441,812)
------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE 276,200 819,536 $ 2,372,674 $ 7,743,968
====================================================================================================================================
CLASS B
Shares sold 24,759 174,457 $ 216,591 $ 1,661,360
Shares issued in reinvestment of
dividends and distributions 13,414 22,890 115,415 212,678
Shares repurchased (29,589) (95,074) (256,390) (904,204)
------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE 8,584 102,273 $ 75,616 $ 969,834
====================================================================================================================================
O THE GUARDIAN TAX-EXEMPT FUND
<CAPTION>
Six Months Six Months
Ended Year Ended Ended Year Ended
June 30, 2000 December 31, 1999 June 30, 2000 December 31, 1999
(Unaudited) (Audited) (Unaudited) (Audited)
------------------------------------------------------------------------------------------------------------------------------------
Shares Amount
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold 112,436 3,625,744 $ 1,057,488 $ 36,147,415
Shares issued in reinvestment of
dividends and distributions 229,984 377,574 2,179,782 3,676,668
Shares repurchased (210,745) (562,267) (1,975,882) (5,585,524)
------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE 131,675 3,441,051 $ 1,261,388 $ 34,238,559
====================================================================================================================================
</TABLE>
58
<PAGE>
O THE GUARDIAN CASH MANAGEMENT FUND
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
June 30, 2000 December 31, 1999
(Unaudited) (Audited)
------------------------------------------------------------------------------------------------------------------------------------
Shares @ $1 per share
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CLASS A
Shares sold 906,648,729 1,842,678,716
Shares issued in reinvestment of
dividends 9,270,134 12,156,055
Shares repurchased (931,548,627) (1,690,724,975)
------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE/(DECREASE) (15,629,764) 164,109,796
====================================================================================================================================
CLASS B
Shares sold 5,641,350 17,526,854
Shares issued in reinvestment of
dividends 260,214 495,525
Shares repurchased (9,400,128) (16,670,421)
------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE/(DECREASE) (3,498,564) 1,351,958
====================================================================================================================================
</TABLE>
NOTE 10. LINE OF CREDIT
A $100,000,000 line of credit available to all of the Funds and other
related Guardian Funds has been established with State Street Bank and Trust
Company and Bank of Montreal. The rate of interest charged on any borrowing is
based upon the prevailing Federal Funds rate at the time of the loan plus .50%
calculated on a 360 day basis per annum. For the six months ended June 30, 2000,
none of the Funds borrowed against this line of credit.
The Funds are obligated to pay State Street Bank and Trust Company and Bank
of Montreal a commitment fee computed at a rate of .08% per annum on the average
daily unused portion of the revolving credit.
59
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT THE PERIODS INDICATED:
<CAPTION>
NET REALIZED
& UNREALIZED
GAIN/(LOSS) ON
INVESTMENTS INCREASE/
NET ASSET NET AND FOREIGN (DECREASE) DIVIDENDS
VALUE, INVESTMENT CURRENCY FROM FROM NET
BEGINNING INCOME/ RELATED INVESTMENT INVESTMENT
OF PERIOD (LOSS) TRANSACTIONS OPERATIONS INCOME
THE GUARDIAN PARK AVENUE FUND --------------------------------------------------------------------------------
CLASS A:
<S> <C> <C> <C> <C> <C>
Six months ended 6/30/00++ $59.42 $(0.06) $ 1.77 $ 1.71 --
Year ended 12/31/99 51.88 0.13 15.04 15.17 $(0.08)
Year ended 12/31/98 46.12 0.35 9.38 9.73 (0.34)
Year ended 12/31/97 37.91 0.40 12.61 13.01 (0.39)
Year ended 12/31/96 33.97 0.42 8.41 8.83 (0.42)
Year ended 12/31/95 26.89 0.33 8.87 9.20 (0.33)
CLASS B:
Six months ended 6/30/00++ 58.57 (0.29) 1.72 1.43 --
Year ended 12/31/99 51.59 (0.31) 14.84 14.53 0.00
Year ended 12/31/98 46.02 (0.08) 9.28 9.20 0.00
Year ended 12/31/97 37.90 0.00 12.54 12.54 (0.01)
Period from 5/1/96+ to 12/31/96 36.26 0.05 6.10 6.15 (0.05)
THE GUARDIAN PARK AVENUE SMALL CAP FUND
CLASS A:
Six months ended 6/30/00++ 17.48 (0.04) 2.08 2.04 --
Year ended 12/31/99 12.80 (0.07) 4.75 4.68 --
Year ended 12/31/98 13.77 (0.03) (0.83) (0.86) --
Period from 4/2/97+ to 12/31/97 10.00 0.00 3.91 3.91 --
CLASS B:
Six months ended 6/30/00++ 17.06 (0.12) 2.04 1.92 --
Year ended 12/31/99 12.61 (0.19) 4.64 4.45 --
Year ended 12/31/98 13.67 (0.15) (0.80) (0.95) --
Period from 5/6/97+ to 12/31/97 10.57 (0.04) 3.28 3.24 --
THE GUARDIAN ASSET ALLOCATION FUND
CLASS A:
Six months ended 6/30/00++ 14.77 0.20 0.48 0.68 --
Year ended 12/31/99 14.78 0.37 1.47 1.84 (0.37)
Year ended 12/31/98 14.05 0.39 2.31 2.70 (0.43)
Year ended 12/31/97 12.96 0.34 2.77 3.11 (0.34)
Year ended 12/31/96 12.19 0.23 1.96 2.19 (0.23)
Year ended 12/31/95 10.23 0.23 2.29 2.52 (0.23)
CLASS B:
Six months ended 6/30/00++ 14.72 0.13 0.49 0.62 --
Year ended 12/31/99 14.73 0.23 1.47 1.70 (0.23)
Year ended 12/31/98 14.00 0.24 2.31 2.55 (0.28)
Year ended 12/31/97 12.92 0.17 2.77 2.94 (0.18)
Period from 5/1/96+ to 12/31/96 12.61 0.04 1.50 1.54 (0.04)
THE GUARDIAN BAILLIE GIFFORD INTERNATIONAL FUND
CLASS A:
Six months ended 6/30/00++ 23.36 -- (2.27) (2.27) --
Year ended 12/31/99 18.41 0.01 6.68 6.69 --
Year ended 12/31/98 16.08 0.02 3.13 3.15 (0.01)
Year ended 12/31/97 15.22 0.02 1.66 1.68 --
Year ended 12/31/96 13.57 0.05 1.89 1.94 (0.05)
Year ended 12/31/95 13.01 0.04 1.40 1.44 (0.04)
</TABLE>
60
<PAGE>
<TABLE>
<CAPTION>
DISTRIBUTIONS
FROM RATIOS/SUPPLEMENTAL
NET REALIZED DATA
DISTRIBUTIONS GAIN ON -------------------
IN EXCESS INVESTMENTS NET ASSET NET ASSETS,
OF NET AND FOREIGN VALUE, END OF
INVESTMENT CURRENCY RELATED END OF TOTAL PERIOD
INCOME TRANSACTIONS PERIOD RETURN* (000'S OMITTED)
THE GUARDIAN PARK AVENUE FUND --------------------------------------------------------------------------------
CLASS A:
<S> <C> <C> <C> <C> <C>
Six months ended 6/30/00++ -- -- $61.13 2.88% $3,402,685
Year ended 12/31/99 -- $(7.55) 59.42 30.25 3,334,722
Year ended 12/31/98 -- (3.63) 51.88 21.30 2,990,767
Year ended 12/31/97 -- (4.41) 46.12 34.85 2,312,632
Year ended 12/31/96 $(0.01) (4.46) 37.91 26.49 1,392,186
Year ended 12/31/95 -- (1.79) 33.97 34.28 972,275
CLASS B:
Six months ended 6/30/00++ -- -- 60.00 2.44 549,804
Year ended 12/31/99 -- (7.55) 58.57 29.13 507,764
Year ended 12/31/98 -- (3.63) 51.59 20.16 389,489
Year ended 12/31/97 -- (4.41) 46.02 33.53 201,746
Period from 5/1/96+ to 12/31/96 -- (4.46) 37.90 17.35 36,006
THE GUARDIAN PARK AVENUE SMALL CAP FUND
CLASS A:
Six months ended 6/30/00++ -- -- 19.52 11.56 158,774
Year ended 12/31/99 -- -- 17.48 36.56 119,032
Year ended 12/31/98 -- (0.11) 12.80 (6.35) 127,525
Period from 4/2/97+ to 12/31/97 -- (0.14) 13.77 39.16 101,016
CLASS B:
Six months ended 6/30/00++ -- -- 18.98 11.08 26,769
Year ended 12/31/99 -- -- 17.06 35.29 22,430
Year ended 12/31/98 -- (0.11) 12.61 (7.05) 22,122
Period from 5/6/97+ to 12/31/97 -- (0.14) 13.67 30.47 18,248
THE GUARDIAN ASSET ALLOCATION FUND
CLASS A:
Six months ended 6/30/00++ -- -- 15.45 4.60 239,258
Year ended 12/31/99 -- (1.48) 14.77 12.99 227,031
Year ended 12/31/98 -- (1.54) 14.78 19.41 194,827
Year ended 12/31/97 -- (1.68) 14.05 24.44 136,948
Year ended 12/31/96 -- (1.19) 12.96 18.74 88,190
Year ended 12/31/95 -- (0.33) 12.19 24.51 70,591
CLASS B:
Six months ended 6/30/00++ -- -- 15.34 4.21 47,405
Year ended 12/31/99 -- (1.48) 14.72 12.09 40,914
Year ended 12/31/98 -- (1.54) 14.73 18.32 27,545
Year ended 12/31/97 -- (1.68) 14.00 23.09 14,066
Period from 5/1/96+ to 12/31/96 -- (1.19) 12.92 12.07 5,075
THE GUARDIAN BAILLIE GIFFORD INTERNATIONAL FUND
CLASS A:
Six months ended 6/30/00++ -- -- 21.09 (9.72) 137,338
Year ended 12/31/99 (0.03) (1.71) 23.36 37.21 148,727
Year ended 12/31/98 -- (0.81) 18.41 19.61 93,871
Year ended 12/31/97 (0.16) (0.66) 16.08 11.07 66,999
Year ended 12/31/96 (0.05) (0.19) 15.22 14.33 57,593
Year ended 12/31/95 (0.23) (0.61) 13.57 11.14 44,546
<CAPTION>
RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------
NET
GAAF INVESTMENT
EXPENSES EXPENSES GROSS INCOME/(LOSS) PORTFOLIO
TO AVERAGE WAIVED EXPENSE TO AVERAGE TURNOVER
NET ASSETS(B) BY GISC RATIO(D) NET ASSETS RATE
THE GUARDIAN PARK AVENUE FUND --------------------------------------------------------------------------------
CLASS A:
Six months ended 6/30/00++ 0.78%(a) -- -- (0.20)%(a) 51%
Year ended 12/31/99 0.77 -- -- 0.24 74
Year ended 12/31/98 0.78 -- -- 0.72 55
Year ended 12/31/97 0.79 -- -- 0.95 50
Year ended 12/31/96 0.79 -- -- 1.19 81
Year ended 12/31/95 0.81 -- -- 1.07 78
CLASS B:
Six months ended 6/30/00++ 1.64(a) -- -- (1.06)(a) 51
Year ended 12/31/99 1.67 -- -- (0.66) 74
Year ended 12/31/98 1.70 -- -- (0.21) 55
Year ended 12/31/97 1.73 -- -- 0.00 50
Period from 5/1/96+ to 12/31/96 1.77(a) -- -- 0.04 (a) 81
THE GUARDIAN PARK AVENUE SMALL CAP FUND
CLASS A:
Six months ended 6/30/00++ 1.25(a) -- -- (0.45)(a) 62
Year ended 12/31/99 1.34 -- -- (0.48) 92
Year ended 12/31/98 1.32 -- -- (0.29) 63
Period from 4/2/97+ to 12/31/97 1.36(a) -- -- 0.04 (a) 25
CLASS B:
Six months ended 6/30/00++ 2.11(a) -- -- (1.32)(a) 62
Year ended 12/31/99 2.23 -- -- (1.36) 92
Year ended 12/31/98 2.17 -- -- (1.14) 63
Period from 5/6/97+ to 12/31/97 2.26(a) -- -- (1.01)(a) 25
THE GUARDIAN ASSET ALLOCATION FUND
CLASS A:
Six months ended 6/30/00++ 0.40(a)(c) 0.64% 1.07% 2.66 (a) 0
Year ended 12/31/99 0.48(c) 0.58 1.08 2.48 16
Year ended 12/31/98 0.60(c) 0.52 1.13 2.52 23
Year ended 12/31/97 0.95(c) 0.19 1.18 2.50 58
Year ended 12/31/96 1.30 -- -- 1.91 122
Year ended 12/31/95 1.25 -- -- 1.98 219
CLASS B:
Six months ended 6/30/00++ 1.20(a)(c) 0.64 1.87 1.87 (a) 0
Year ended 12/31/99 1.31(c) 0.58 1.91 1.66 16
Year ended 12/31/98 1.48(c) 0.52 2.02 1.70 23
Year ended 12/31/97 2.04(c) 0.19 2.21 1.50 58
Period from 5/1/96+ to 12/31/96 2.39(a) -- -- 0.70 (a) 122
THE GUARDIAN BAILLIE GIFFORD INTERNATIONAL FUND
CLASS A:
Six months ended 6/30/00++ 1.37(a) -- -- 0.01 (a) 31
Year ended 12/31/99 1.44 -- -- (0.03) 54
Year ended 12/31/98 1.56 -- -- (0.01) 44
Year ended 12/31/97 1.62 -- -- 0.07 55
Year ended 12/31/96 1.70 -- -- 0.29 39
Year ended 12/31/95 1.74 -- -- 0.19 51
</TABLE>
+ Commencement of operations.
++ Unaudited.
* Excludes the effect of sales load.
(a) Annualized.
(b) After expenses waived by GISC.
(c) Amounts do not include the expenses of the underlying Funds.
(d) Amounts include the expenses of the underlying Funds.
61
<PAGE>
--------------------
FINANCIAL HIGHLIGHTS
--------------------
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT THE
PERIODS INDICATED:
<TABLE>
<CAPTION>
NET REALIZED
& UNREALIZED
GAIN/(LOSS) ON
INVESTMENTS
NET ASSET NET AND FOREIGN
VALUE, INVESTMENT CURRENCY
BEGINNING INCOME/ RELATED
OF PERIOD (LOSS) TRANSACTIONS
------------------------------------------------------------
<S> <C> <C> <C>
THE GUARDIAN BAILLIE GIFFORD INTERNATIONAL FUND
CLASS B:
Six months ended 6/30/00++ $22.61 $(0.07) $(2.24)
Year ended 12/31/99 17.97 (0.12) 6.47
Year ended 12/31/98 15.87 (0.09) 3.00
Year ended 12/31/97 15.12 (0.11) 1.52
Period from 5/1/96+ to 12/31/96 14.71 (0.04) 0.76
THE GUARDIAN BAILLIE GIFFORD EMERGING MARKETS FUND
CLASS A:
Six months ended 6/30/00++ 11.13 0.02 (0.05)
Year ended 12/31/99 6.66 (0.07) 4.72
Year ended 12/31/98 9.38 0.01 (2.73)
Period from 4/2/97+ to 12/31/97 10.00 0.04 (0.63)
CLASS B:
Six months ended 6/30/00++ 10.65 (0.08) (0.05)
Year ended 12/31/99 6.44 (0.27) 4.48
Year ended 12/31/98 9.30 (0.18) (2.68)
Period from 5/6/97+ to 12/31/97 10.28 (0.09) (0.89)
THE GUARDIAN INVESTMENT QUALITY BOND FUND
CLASS A:
Six months ended 6/30/00++ 9.33 0.29 0.03
Year ended 12/31/99 9.99 0.53 (0.63)
Year ended 12/31/98 9.91 0.53 0.23
Year ended 12/31/97 9.70 0.58 0.21
Year ended 12/31/96 10.00 0.55 (0.30)
Year ended 12/31/95 9.12 0.59 0.88
THE GUARDIAN HIGH YIELD BOND FUND
CLASS A:
Six months ended 6/30/00++ 8.98 0.38 (0.45)
Year ended 12/31/99 9.84 0.78 (0.84)
Period from 9/1/98++++ to 12/31/98 9.26 0.38 0.58
CLASS B:
Six months ended 6/30/00++ 8.97 0.33 (0.44)
Year ended 12/31/99 9.83 0.67 (0.84)
Period from 9/1/98++++ to 12/31/98 9.26 0.31 0.57
THE GUARDIAN TAX-EXEMPT FUND
CLASS A:
Six months ended 6/30/00++ 9.40 0.21 0.23
Year ended 12/31/99 10.13 0.40 (0.73)
Year ended 12/31/98 9.99 0.43 0.17
Year ended 12/31/97 9.61 0.44 0.38
Year ended 12/31/96 9.69 0.42 (0.08)
Year ended 12/31/95 8.86 0.44 0.83
+ Commencement of operations.
++ Unaudited.
+++ Rounds to less than $0.01.
++++ Date of initial public investment.
62
<CAPTION>
INCREASE/ DISTRIBUTIONS
(DECREASE) DIVIDENDS IN EXCESS
FROM FROM NET OF NET
INVESTMENT INVESTMENT INVESTMENT
OPERATIONS INCOME INCOME
------------------------------------------------------------------
<S> <C> <C> <C>
THE GUARDIAN BAILLIE GIFFORD INTERNATIONAL FUND
CLASS B:
Six months ended 6/30/00++ $(2.31) -- --
Year ended 12/31/99 6.35 -- --
Year ended 12/31/98 2.91 -- --
Year ended 12/31/97 1.41 -- --
Period from 5/1/96+ to 12/31/96 0.72 $(0.04) $(0.08)
THE GUARDIAN BAILLIE GIFFORD EMERGING MARKETS FUND
CLASS A:
Six months ended 6/30/00++ (0.03) -- --
Year ended 12/31/99 4.65 (0.18) --
Year ended 12/31/98 (2.72) (0.00)+++ --
Period from 4/2/97+ to 12/31/97 (0.59) (0.03) --
CLASS B:
Six months ended 6/30/00++ (0.13) -- --
Year ended 12/31/99 4.21 -- --
Year ended 12/31/98 (2.86) -- --
Period from 5/6/97+ to 12/31/97 (0.98) -- --
THE GUARDIAN INVESTMENT QUALITY BOND FUND
CLASS A:
Six months ended 6/30/00++ 0.32 (0.29) --
Year ended 12/31/99 (0.10) (0.53) --
Year ended 12/31/98 0.76 (0.53) --
Year ended 12/31/97 0.79 (0.58) --
Year ended 12/31/96 0.25 (0.55) --
Year ended 12/31/95 1.47 (0.59) --
THE GUARDIAN HIGH YIELD BOND FUND
CLASS A:
Six months ended 6/30/00++ (0.07) (0.38) --
Year ended 12/31/99 (0.06) (0.78) --
Period from 9/1/98++++ to 12/31/98 0.96 (0.38) --
CLASS B:
Six months ended 6/30/00++ (0.11) (0.33) --
Year ended 12/31/99 (0.17) (0.67) --
Period from 9/1/98++++ to 12/31/98 0.88 (0.31) --
THE GUARDIAN TAX-EXEMPT FUND
CLASS A:
Six months ended 6/30/00++ 0.44 (0.21) --
Year ended 12/31/99 (0.33) (0.40) --
Year ended 12/31/98 0.60 (0.43) --
Year ended 12/31/97 0.82 (0.44) --
Year ended 12/31/96 0.34 (0.42) --
Year ended 12/31/95 1.27 (0.44) --
<CAPTION>
DISTRIBUTIONS
FROM
NET REALIZED
GAIN ON
INVESTMENTS NET ASSET
AND FOREIGN VALUE,
CURRENCY RELATED END OF TOTAL
TRANSACTIONS PERIOD RETURN*
------------------------------------------------------------------
<S> <C> <C> <C>
THE GUARDIAN BAILLIE GIFFORD INTERNATIONAL FUND
CLASS B:
Six months ended 6/30/00++ -- $20.30 (10.22)%
Year ended 12/31/99 $(1.71) 22.61 36.16
Year ended 12/31/98 (0.81) 17.97 18.36
Year ended 12/31/97 (0.66) 15.87 9.37
Period from 5/1/96+ to 12/31/96 (0.19) 15.12 4.34
THE GUARDIAN BAILLIE GIFFORD EMERGING MARKETS FUND
CLASS A:
Six months ended 6/30/00++ -- 11.10 (0.27)
Year ended 12/31/99 -- 11.13 69.91
Year ended 12/31/98 -- 6.66 (28.97)
Period from 4/2/97+ to 12/31/97 -- 9.38 (5.86)
CLASS B:
Six months ended 6/30/00++ -- 10.52 (1.22)
Year ended 12/31/99 -- 10.65 65.37
Year ended 12/31/98 -- 6.44 (30.75)
Period from 5/6/97+ to 12/31/97 -- 9.30 (9.71)
THE GUARDIAN INVESTMENT QUALITY BOND FUND
CLASS A:
Six months ended 6/30/00++ -- 9.36 3.51
Year ended 12/31/99 (0.03) 9.33 (1.02)
Year ended 12/31/98 (0.15) 9.99 7.89
Year ended 12/31/97 -- 9.91 8.43
Year ended 12/31/96 -- 9.70 2.73
Year ended 12/31/95 -- 10.00 16.64
THE GUARDIAN HIGH YIELD BOND FUND
CLASS A:
Six months ended 6/30/00++ -- 8.53 (0.77)
Year ended 12/31/99 (0.02) 8.98 (0.63)
Period from 9/1/98++++ to 12/31/98 -- 9.84 9.24
CLASS B:
Six months ended 6/30/00++ -- 8.53 (1.22)
Year ended 12/31/99 (0.02) 8.97 (1.78)
Period from 9/1/98++++ to 12/31/98 -- 9.83 8.61
THE GUARDIAN TAX-EXEMPT FUND
CLASS A:
Six months ended 6/30/00++ -- 9.63 4.75
Year ended 12/31/99 (0.00)+++ 9.40 (3.29)
Year ended 12/31/98 (0.03) 10.13 6.11
Year ended 12/31/97 -- 9.99 8.74
Year ended 12/31/96 -- 9.61 3.62
Year ended 12/31/95 -- 9.69 14.59
<CAPTION>
RATIOS/SUPPLEMENTAL DATA
------------------------------------------------------------------
EXPENSES
NET ASSETS, (EXCLUDING
END OF EXPENSES INTEREST EXPENSE)
PERIOD TO AVERAGE TO AVERAGE
(000'S OMITTED) NET ASSETS(C) NET ASSETS(B)
------------------------------------------------------------------
<S> <C> <C> <C>
THE GUARDIAN BAILLIE GIFFORD INTERNATIONAL FUND
CLASS B:
Six months ended 6/30/00++ $15,397 2.31%(a) --
Year ended 12/31/99 15,623 2.45 --
Year ended 12/31/98 10,216 2.67 --
Year ended 12/31/97 6,268 2.91 --
Period from 5/1/96+ to 12/31/96 3,313 3.05(a) --
THE GUARDIAN BAILLIE GIFFORD EMERGING MARKETS FUND
CLASS A:
Six months ended 6/30/00++ 38,540 1.97(a) --
Year ended 12/31/99 32,940 2.43 --
Year ended 12/31/98 16,342 2.55 --
Period from 4/2/97+ to 12/31/97 21,472 2.31(a) --
CLASS B:
Six months ended 6/30/00++ 2,670 3.90(a) --
Year ended 12/31/99 2,320 5.07 --
Year ended 12/31/98 1,367 5.04 --
Period from 5/6/97+ to 12/31/97 2,009 4.24(a) --
THE GUARDIAN INVESTMENT QUALITY BOND FUND
CLASS A:
Six months ended 6/30/00++ 138,010 N/A 0.85%
Year ended 12/31/99 139,661 0.81(b) 0.80
Year ended 12/31/98 142,199 0.85(b) 0.75
Year ended 12/31/97 98,935 0.75(b) --
Year ended 12/31/96 50,794 0.75(b) --
Year ended 12/31/95 53,706 0.75(b) --
THE GUARDIAN HIGH YIELD BOND FUND
CLASS A:
Six months ended 6/30/00++ 53,837 0.85(a)(b) --
Year ended 12/31/99 54,178 0.75(b) --
Period from 9/1/98++++ to 12/31/98 51,288 0.75(a)(b) --
CLASS B:
Six months ended 6/30/00++ 3,099 1.96(a)(b) --
Year ended 12/31/99 3,184 1.87(b) --
Period from 9/1/98++++ to 12/31/98 2,482 2.33(a)(b) --
THE GUARDIAN TAX-EXEMPT FUND
CLASS A:
Six months ended 6/30/00++ 101,600 0.85(a)(b) --
Year ended 12/31/99 97,908 0.86(b)(d) --
Year ended 12/31/98 70,720 0.75(b) --
Year ended 12/31/97 47,360 0.75(b) --
Year ended 12/31/96 39,185 0.75(b) --
Year ended 12/31/95 17,501 0.75(b) --
<CAPTION>
-----------------------------------------------------------------
NET
INVESTMENT
EXPENSES INCOME/(LOSS) PORTFOLIO
SUBSIDIZED TO AVERAGE TURNOVER
BY GISC NET ASSETS RATE
------------------------------------------------------------------
<S> <C> <C> <C>
THE GUARDIAN BAILLIE GIFFORD INTERNATIONAL FUND
CLASS B:
Six months ended 6/30/00++ -- (0.92)%(a) 31%
Year ended 12/31/99 -- (1.03) 54
Year ended 12/31/98 -- (1.13) 44
Year ended 12/31/97 -- (1.46) 55
Period from 5/1/96+ to 12/31/96 -- (1.47)(a) 39
THE GUARDIAN BAILLIE GIFFORD EMERGING MARKETS FUND
CLASS A:
Six months ended 6/30/00++ -- (0.44)(a) 41
Year ended 12/31/99 -- (1.07) 96
Year ended 12/31/98 -- 0.18 83
Period from 4/2/97+ to 12/31/97 -- 0.61(a) 36
CLASS B:
Six months ended 6/30/00++ -- (2.37)(a) 41
Year ended 12/31/99 -- (3.70) 96
Year ended 12/31/98 -- (2.31) 83
Period from 5/6/97+ to 12/31/97 -- (0.02)(a) 36
THE GUARDIAN INVESTMENT QUALITY BOND FUND
CLASS A:
Six months ended 6/30/00++ 0.08% 6.34 (a) 184
Year ended 12/31/99 0.13 5.49 271
Year ended 12/31/98 0.21 5.24 309
Year ended 12/31/97 0.29 5.94 313
Year ended 12/31/96 0.37 5.73 257
Year ended 12/31/95 0.39 6.11 401
THE GUARDIAN HIGH YIELD BOND FUND
CLASS A:
Six months ended 6/30/00++ 0.34 8.76 (a) 70
Year ended 12/31/99 0.40 8.34 152
Period from 9/1/98++++ to 12/31/98 0.51(a) 8.31(a) 11
CLASS B:
Six months ended 6/30/00++ 1.00 7.64(a) 70
Year ended 12/31/99 1.00 7.22 152
Period from 9/1/98++++ to 12/31/98 0.51(a) 6.85(a) 11
THE GUARDIAN TAX-EXEMPT FUND
CLASS A:
Six months ended 6/30/00++ 0.07 4.48 (a) 78
Year ended 12/31/99 0.08 4.11 144
Year ended 12/31/98 0.26 4.29 111
Year ended 12/31/97 0.31 4.51 202
Year ended 12/31/96 0.60 4.96 240
Year ended 12/31/95 0.79 4.66 194
</TABLE>
63
* Excludes the effect of sales load.
(a) Annualized. For GHYBF, ratios for 1998 are calculated from 7/7/98
(commencement of operations).
(b) After expenses subsidized by GISC.
(c) Expense ratio includes interest expense associated with reverse repurchase
agreements.
(d) Before offset of custody credits. Including the custody credits, the expense
ratio is 0.80%.
<PAGE>
--------------------
FINANCIAL HIGHLIGHTS
--------------------
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT THE
PERIODS INDICATED:
<TABLE>
<CAPTION>
NET ASSET DIVIDENDS NET ASSET
VALUE, NET FROM NET VALUE,
BEGINNING INVESTMENT INVESTMENT END OF
OF PERIOD INCOME INCOME PERIOD
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
THE GUARDIAN CASH MANAGEMENT FUND
CLASS A:
Six months ended 6/30/00++ $1.000 $0.030 $(0.030) $1.000
Year ended 12/31/99 1.000 0.044 (0.044) 1.000
Year ended 12/31/98 1.000 0.047 (0.047) 1.000
Year ended 12/31/97 1.000 0.047 (0.047) 1.000
Year ended 12/31/96 1.000 0.045 (0.045) 1.000
Year ended 12/31/95 1.000 0.051 (0.051) 1.000
CLASS B:
Six months ended 6/30/00++ 1.000 0.030 (0.030) 1.000
Year ended 12/31/99 1.000 0.044 (0.044) 1.000
Year ended 12/31/98 1.000 0.047 (0.047) 1.000
Year ended 12/31/97 1.000 0.047 (0.047) 1.000
Period from 5/1/96+ to 12/31/96 1.000 0.028 (0.028) 1.000
<CAPTION>
RATIOS/SUPPLEMENTAL DATA
-------------------------------------------------------------------
NET
NET ASSETS, INVESTMENT
END OF EXPENSES EXPENSES INCOME
TOTAL PERIOD TO AVERAGE SUBSIDIZED TO AVERAGE
RETURN* (000'S OMITTED) NET ASSETS(C) BY GISC NET ASSETS
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
THE GUARDIAN CASH MANAGEMENT FUND
CLASS A:
Six months ended 6/30/00++ 2.64% $374,477 0.85%(a) 0.05%(a) 5.29%(a)
Year ended 12/31/99 4.45 390,106 0.85 0.09 4.41
Year ended 12/31/98 4.76 225,997 0.85 0.19 4.65
Year ended 12/31/97 4.81 132,523 0.85 0.28 4.71
Year ended 12/31/96 4.62 88,217 0.90 0.30 4.62
Year ended 12/31/95 5.22 69,913 0.85 0.37 5.10
CLASS B:
Six months ended 6/30/00++ 2.64 10,283 0.85(a) 0.95(a) 5.29(a)
Year ended 12/31/99 4.45 13,782 0.85 0.93 4.41
Year ended 12/31/98 4.76 12,430 0.85 0.97 4.65
Year ended 12/31/97 4.81 5,864 0.85 1.10 4.71
Period from 5/1/96+ to 12/31/96 2.81(b) 2,583 1.16(a) 0.59(a) 4.43(a)
</TABLE>
+ Commencement of operations.
++ Unaudited.
* Excludes the effect of sales load.
(a) Annualized.
(b) Not annualized.
(c) After expenses subsidized by GISC.
64 & 65
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
o TRUSTEES
Joseph D. Sargent--Chair
John C. Angle
Frank J. Fabozzi, Ph.D.
Arthur V. Ferrara, CLU
Leo R. Futia, CLU
William W. Hewitt, Jr.
Sidney I. Lirtzman, Ph.D.
Carl W. Schafer
Robert G. Smith, Ph.D
o OFFICERS
Frank J. Jones--President
Joseph A. Caruso
Howard W. Chin
Alexander M. Grant, Jr.
Edward H. Hocknell
Jonathan C. Jankus
Ann T. Kearney
Peter J. Liebst
Larry A. Luxenberg
R. Robin Menzies
Catherine McRae
Nydia Morrison
John B. Murphy
Karen L. Olvany
Robert A. Reale
Frank L. Pepe
Richard T. Potter, Jr.
Thomas G. Sorell
Donald Sullivan, Jr.
o INVESTMENT ADVISER & DISTRIBUTOR
Guardian Investor Services Corporationr
7 Hanover Square
New York, New York 10004
o CUSTODIAN OF ASSETS
State Street Bank and Trust Company
Custody Division
1776 Heritage Drive
North Quincy, Massachusetts 02171
o SHAREHOLDER SERVICING AGENT, TRANSFER AGENT & DIVIDEND PAYING AGENT FOR STATE
STREET BANK AND TRUST COMPANY
National Financial Data Services
Post Office Box 219611
Kansas City, Missouri 64121-9611
o INDEPENDENT AUDITORS
Ernst & Young LLP
787 Seventh Avenue
New York, New York 10019
Shares of the Funds are not deposits or obligations of, or guaranteed or
endorsed by, any bank or depository institution, nor are they federally
insured by the Federal Deposit Insurance Corporation, The Federal Reserve
Board, or any other agency. They involve investment risk, including possible
loss of principal amount invested.
This report is authorized for distribution to the public only when accompanied
or preceded by a current prospectus for the funds which comprise The Park
Avenue Portfolio.
[LOGO]
Guardian Investor Services Corporationr
7 Hanover Square
New York, New York 10004
<PAGE>
[LOGO]
Guardian Investor Services Corporation(R) BULK RATE MAIL
7 Hanover Square U.S. POSTAGE PAID
New York, New York 10004 PERMIT NO. 1104
CLIFTON, NJ
EB-011566 6/00
<PAGE>
EB-011566 ADP 6/00
