N-CSR
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED
SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-23148
Guardian Variable Products Trust
(Exact name of registrant as specified in charter)
10 Hudson
Yards New York , N.Y. 10001
(Address of principal executive offices) (Zip code)
Dominique Baede
President
Guardian
Variable Products Trust
10 Hudson Yards
New York, N.Y. 10001
(Name and address of agent for service)
Registrant’s telephone number, including area code: 212-598-8000
Date of fiscal year end: December 31
Date of reporting period: December 31, 2019
| Item 1. |
Reports to Stockholders. |
Guardian Variable
Products Trust
2019
Annual Report
All Data as of December 31, 2019
Guardian Large Cap
Fundamental Growth VIP Fund
Important Notice
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund’s shareholder reports will no
longer be sent by mail from The Guardian Insurance & Annuity Company, Inc. (“GIAC”). Instead, GIAC will mail you a notice when copies of the shareholder reports are made available on a website. You will be notified by mail each time a
report is posted and provided with a website link to access the report.
If you have already elected to receive shareholder reports electronically, you will not be
affected by this change and you need not take any action. If you have not yet elected electronic delivery, at any time, you may elect to receive the Fund’s shareholder reports and certain other communications from GIAC electronically, by going
to www.guardianlife.com and registering for e-delivery.
You may instead elect to receive all future shareholder reports in paper free of charge. If you wish to
receive paper copies of your shareholder reports, please call GIAC’s Customer Service Office Contact Center at 1-888-GUARDIAN (1-888-482-7342). Your election to receive reports in paper will apply to all the underlying funds available.
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| Not FDIC insured. May lose value. No bank guarantee. |
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www.guardianlife.com |
TABLE OF CONTENTS
Guardian Large Cap Fundamental Growth VIP Fund
Except as otherwise specifically stated, all information, including portfolio security positions, is as of
December 31, 2019. The views expressed in the Fund Commentary are those of the Fund’s portfolio manager(s) as of the date of this report and are subject to change without notice. They do not necessarily represent the views of Park Avenue
Institutional Advisers LLC or a sub-adviser. The Fund Commentary may contain some forward-looking statements providing expectations or forecasts of future events as of the date of this report; they do not
necessarily relate to historical or current facts. There can be no guarantee that any forward-looking statement will be realized. We undertake no obligation to update forward-looking statements, whether as a result of new information, future events,
or otherwise. Any discussions of specific securities should not be considered a recommendation to buy or sell those securities. Fund holdings will vary. Information contained herein has been obtained from sources believed reliable, but is not
guaranteed.
GUARDIAN LARGE CAP FUNDAMENTAL GROWTH VIP FUND
FUND COMMENTARY OF CLEARBRIDGE INVESTMENTS LLC, SUB-ADVISER (unaudited)
Highlights
| • |
|
Guardian Large Cap Fundamental Growth VIP Fund (the “Fund”) returned 31.89%, underperforming its benchmark, the Russell 1000® Growth Index1 (the “Index”), for the 12 months ended December 31, 2019. The Fund’s underperformance relative to the Index was primarily due to stock selection in the information technology
(“IT”) sector. |
| • |
|
The Index delivered a 36.39% return for the period, its best performance since the initial recovery from the global financial crisis in 2009. This performance was largely due to strength in the IT sector, which returned
51.81% for the period. Communication services and financials were the only sectors that came close to matching the benchmark’s overall return. |
Market Overview
U.S. equities delivered outsized gains for the year. The
large cap Standard & Poor’s 500® Index2 gained 31.49% for the 12-month period as
easing monetary policy supported strong multiple expansions and a thawing of U.S.-China trade tensions encouraged risk taking in equities. Growth stocks continued their dominance over value stocks, with the Index outperforming the Russell 1000® Value Index3 by 975 basis points for the year. Stocks started 2019 in a strong upswing, with the market producing its best start to a year
since 1998. Stocks were boosted by signals that the U.S. Federal Reserve (the “Fed”) was winding down its tightening program, better than expected fourth-quarter corporate earnings results and a positive outlook on the resolution of
U.S.-China trade tensions. Equities endured a roller coaster ride during the second quarter, with the largest growth stocks leading the market to new record highs. The Fed jumpstarted the latest up leg for equity markets as June remarks by Fed
Chairman
Jerome Powell hinted at future interest rate cuts. The Fed followed through in July with its first rate cut in more than a decade and made additional 0.25% cuts in September and October. A
suddenly accommodative Fed helped offset volatility caused by renewed trade tensions between the U.S. and China in the third quarter and increasing signs of a slowing global economy. Positive feedback from the Fed on the state of the U.S. economy as
well as signs of a phase one trade deal with China caused stocks to resume their positive momentum in the fourth quarter, with strong bids for health care and energy as well as IT and communication services.
Portfolio Review
Stock selection in the health care, real estate,
communication services and consumer staples sectors contributed to relative performance. On the negative side, stock selection in the IT, industrials and financials sectors, an underweight to the IT sector, an overweight to the energy sector and the
portfolio’s cash position in a strong up market negatively impacted relative returns.
Outlook
As we enter the new year, equity markets are in a strange place. Valuations are stretched nearly everywhere we look, with any stock that appears cheap likely saddled
with serious problems. The global economy is getting better but we are by no means off to the races in terms of robust growth and end demand. Accommodative monetary policy and a catch up from the late 2018
sell-off were the main catalysts driving global stock price appreciation, which was largely the result of P/E multiple expansion. We believe the current level of ebullience in the market reflects the strength
of the consumer rather than the economy as a whole. Unemployment remains at 50-year lows, wages are growing and consumer confidence remains near recent highs.
| 1 |
The Russell 1000® Growth Index is an unmanaged
market-capitalization-weighted index that measures the performance of those companies in the Russell 1000® Index (which consists of the
1.000 largest U.S. companies based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values. Index results assume the
reinvestment of dividends paid on the stocks constituting the Index. You may not invest in the Index, and, unlike the Fund, the Index does not incur fees or expenses. Russell Investment Group is the source and owner of the trademarks, service marks
and copyrights related to the Russell Indexes. Russell® is a trademark of Russell Investment Group. |
| 2 |
The Standard & Poor’s 500® Index (the “S&P
500 Index”) is an unmanaged market-capitalization-weighted index generally considered to be representative of U.S. equity market activity. The S&P 500 Index consists of 500 stocks representing leading industries of the U.S. economy. Index
results assume the reinvestment of dividends paid on the stocks constituting the Index. You may not invest in the S&P 500 Index, and, unlike the fund, the S&P 500 Index does not incur fees or expenses. |
| 3 |
The Russell 1000® Value Index (the “Index”) is an
unmanaged market-capitalization-weighted index that measures the performance of those companies in the Russell 1000® Index (which consists
of the 1,000 largest U.S. companies based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values. Index results assume the
reinvestment of dividends paid on the stocks constituting the Index. You may not invest in the Index, and, unlike the Fund, the Index does not incur fees and expenses. Russell Investment Group is the source and owner of the trademarks, service marks
and copyrights related to the Russell Indexes. Russell® is a trademark of Russell Investment Group. |
GUARDIAN LARGE CAP FUNDAMENTAL GROWTH VIP FUND
Funds in the Guardian Variable Products Trust are sold by prospectus only. You should carefully
consider the investment objectives, risks, charges and expenses of the Funds before making an investment decision. The prospectus contains this and other important information. Please read it carefully before investing or sending money. Please visit
our website at http://guardianvpt.onlineprospectus.net/GuardianVPT/ Prospectuses or to obtain a printed copy, call 1-888-GUARDIAN (1-888-482-7342).
As with all mutual funds, the value of an investment in the
Fund could decline, and you could lose money. Diversification does not guarantee profit or protect against loss, and there can be no assurance that the Fund will achieve its investment objective. The Fund invests primarily in equity securities and
therefore exposes you to the general risks of investing in stock markets. Investing in large-capitalization companies involves risks such as having low growth rates, and slow responsiveness to competitive challenges or opportunities than in the case
of smaller companies. Investments in growth companies may be highly volatile. Growth stocks may not realize their perceived growth potential and during certain periods the Fund may underperform other equity funds that employ a different style.
International investing involves special risks, which include changes in currency rates, foreign taxation and differences in auditing standards and securities regulations, political uncertainty and greater volatility. Foreign securities are subject
to political, regulatory, economic, and exchange-rate risks not present in domestic investments. Investing in a more limited number of issuers and sectors can be subject to greater market fluctuation. Any discussions of specific securities should
not be considered a recommendation to buy or sell those securities. Fund holdings will vary.
GUARDIAN LARGE CAP FUNDAMENTAL GROWTH VIP FUND
Fund Characteristics (unaudited)
Total Net Assets: $349,920,608
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Sector Allocation1
As of December 31, 2019 |
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| Top Ten Holdings2 As of December 31, 2019 |
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| Holding |
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% of Total
Net Assets |
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| Amazon.com, Inc. |
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6.85% |
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| Microsoft Corp. |
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5.26% |
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| Facebook, Inc., Class A |
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5.19% |
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| Visa, Inc., Class A |
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4.45% |
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| Apple, Inc. |
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3.54% |
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| UnitedHealth Group, Inc. |
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3.46% |
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| Alphabet, Inc., Class C |
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3.09% |
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| Adobe, Inc. |
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3.05% |
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| Zoetis, Inc. |
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2.66% |
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| Thermo Fisher Scientific, Inc. |
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2.63% |
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| Total |
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40.18% |
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| 1 |
The Fund’s holdings are allocated to each sector based on the MSCI Global Industry Classification Standard (GICS®). Cash includes short-term investments and net other assets and liabilities. |
| 2 |
Portfolio holdings are subject to change and should not be considered a recommendation to buy or sell individual
securities. |
GUARDIAN LARGE CAP FUNDAMENTAL GROWTH VIP FUND
Fund Performance (unaudited)
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| Average Annual Total Returns
As of December 31, 2019 |
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Inception Date |
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1 Year |
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5 Year |
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10 Year |
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Since Inception |
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| Guardian Large Cap Fundamental Growth VIP Fund |
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9/1/2016 |
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31.89% |
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— |
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— |
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16.21% |
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| Russell 1000® Growth Index |
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36.39% |
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— |
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— |
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18.72% |
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Results of a Hypothetical $10,000 Investment As of December 31,
2019 |
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The chart above shows the performance of a hypothetical $10,000 investment made on inception date in Guardian Large Cap Fundamental Growth
VIP Fund and the Russell 1000® Growth Index. Index returns do not include the fees and expenses of the Fund, but do include reinvestment of dividends, if any.
Performance quoted represents past performance and does not guarantee or predict future results. Investment return and principal value will fluctuate, so shares, when
redeemed, may be worth more or less than their original cost. The Fund’s fees and expenses are detailed in the Financial Highlights section of this report. Fees and expenses are factored into the net asset value of Fund shares and any
performance numbers we release. Total return figures include the effect of expense limitations in effect during the periods shown, if applicable; without such limitations, the performance shown would have been lower. Performance results assume the
reinvestment of dividends and capital gains. The return figures shown do not reflect the deduction of taxes that a contract owner/policyholder may pay on redemption units. The actual total returns for owners of variable annuity contracts or variable
life insurance policies that provide for investment in the Fund will be lower to reflect separate account and contract/policy charges. Current and month-end performance information, which may be lower or
higher than that cited, is available by calling 1-888-GUARDIAN
(1-888-482-7342) and is periodically updated on our website: http://guardianlife.com.
UNDERSTANDING YOUR FUND’S EXPENSES (UNAUDITED)
By investing in the Fund, you incur two types of costs: (1) transaction costs and (2) ongoing costs, including,
as applicable, investment advisory fees, distribution and/or service (12b-1) fees and other Fund expenses. The example below is intended to help you understand your ongoing costs (in dollars) of investing in
the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the
beginning of the period and held for the entire period from July 1, 2019 to December 31, 2019. The table below shows the Fund’s expenses in two ways:
Expenses based on actual return
This section of the table provides
information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for
example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the section under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this
period.
Expenses based on hypothetical 5% return for comparison purposes
This section of the table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund with the cost of investing in other mutual funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the
other funds.
Note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads), redemption fees, or exchange fees. Therefore the second section is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. If these transactional costs were
included, your costs would have been higher. Charges and expenses at the insurance company separate account level are not reflected in the table.
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Beginning
Account Value
7/1/19 |
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Ending
Account Value
12/31/19 |
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Expenses Paid
During Period* 7/1/19-12/31/19 |
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Expense Ratio
During Period
7/1/19-12/31/19 |
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| Based on Actual Return |
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$1,000.00 |
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$1,081.30 |
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$5.25 |
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1.00% |
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| Based on Hypothetical Return (5% Return Before Expenses) |
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$1,000.00 |
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$1,020.16 |
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$5.09 |
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1.00% |
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| * |
Expenses are equal to the Fund’s annualized expense ratio as indicated, multiplied by the average account value over
the period, multiplied by 184/365 (to reflect the one-half year period). |
SCHEDULE OF INVESTMENTS — GUARDIAN LARGE CAP FUNDAMENTAL GROWTH VIP
FUND
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| December 31, 2019 |
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Shares |
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Value |
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| Common Stocks – 99.0% |
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| Air Freight & Logistics – 2.9% |
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| CH Robinson Worldwide, Inc. |
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31,344 |
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$ |
2,451,101 |
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| United Parcel Service, Inc., Class B |
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66,396 |
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7,772,316 |
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10,223,417 |
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| Beverages – 1.6% |
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| Anheuser-Busch InBev S.A., ADR |
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70,298 |
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5,767,248 |
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5,767,248 |
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| Biotechnology – 2.4% |
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| Alexion Pharmaceuticals, Inc.(1) |
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45,018 |
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4,868,697 |
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| BioMarin Pharmaceutical, Inc.(1) |
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43,041 |
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3,639,116 |
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8,507,813 |
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| Capital Markets – 2.4% |
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| BlackRock, Inc. |
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3,472 |
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1,745,375 |
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| The Charles Schwab Corp. |
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138,979 |
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6,609,841 |
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8,355,216 |
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| Chemicals – 3.2% |
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| Ecolab, Inc. |
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29,841 |
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5,759,015 |
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| Linde PLC |
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24,779 |
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5,275,449 |
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11,034,464 |
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| Consumer Finance – 2.0% |
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| American Express Co. |
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55,423 |
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6,899,609 |
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6,899,609 |
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| Entertainment – 2.6% |
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| The Walt Disney Co. |
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62,779 |
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9,079,727 |
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9,079,727 |
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| Equity Real Estate Investment – 1.7% |
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| Equinix, Inc. REIT |
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10,497 |
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6,127,099 |
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6,127,099 |
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| Food & Staples Retailing – 1.7% |
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| Costco Wholesale Corp. |
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20,039 |
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5,889,863 |
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5,889,863 |
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| Food Products – 1.0% |
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| McCormick & Co., Inc. |
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20,945 |
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3,554,995 |
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3,554,995 |
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| Health Care Providers & Services – 3.5% |
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| UnitedHealth Group, Inc. |
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41,227 |
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12,119,914 |
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12,119,914 |
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| Industrial Conglomerates – 2.1% |
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| Honeywell International, Inc. |
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40,828 |
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7,226,556 |
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7,226,556 |
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| Interactive Media & Services – 9.5% |
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| Alphabet, Inc., Class A(1) |
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3,204 |
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4,291,406 |
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| Alphabet, Inc., Class C(1) |
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8,073 |
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10,793,762 |
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| Facebook, Inc., Class A(1) |
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88,513 |
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18,167,293 |
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33,252,461 |
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| Internet & Direct Marketing Retail – 10.0% |
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| Alibaba Group Holding Ltd., ADR(1) |
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31,856 |
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6,756,657 |
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| Amazon.com, Inc.(1) |
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12,976 |
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23,977,572 |
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| Booking Holdings, Inc.(1) |
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2,056 |
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4,222,469 |
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34,956,698 |
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| December 31, 2019 |
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Shares |
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Value |
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| Common Stocks (continued) |
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| IT Services – 7.9% |
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| Akamai Technologies, Inc.(1) |
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78,085 |
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$ |
6,744,982 |
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| Fidelity National Information Services, Inc. |
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37,297 |
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5,187,640 |
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| Visa, Inc., Class A |
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82,847 |
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15,566,951 |
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27,499,573 |
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| Life Sciences Tools & Services – 2.6% |
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| Thermo Fisher Scientific, Inc. |
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28,312 |
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9,197,719 |
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9,197,719 |
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| Media – 2.0% |
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| Comcast Corp., Class A |
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152,142 |
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6,841,826 |
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6,841,826 |
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| Oil, Gas & Consumable Fuels – 1.2% |
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| Pioneer Natural Resources Co. |
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|
27,725 |
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|
4,196,733 |
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4,196,733 |
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| Pharmaceuticals – 4.5% |
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| Johnson & Johnson |
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43,369 |
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|
|
6,326,236 |
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| |
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| Zoetis, Inc. |
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|
70,261 |
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9,299,043 |
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15,625,279 |
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| Professional Services – 1.8% |
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| |
|
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| IHS Markit Ltd.(1) |
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|
85,427 |
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|
|
6,436,924 |
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6,436,924 |
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| Road & Rail – 1.2% |
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| |
|
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| Uber Technologies, Inc.(1) |
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|
144,752 |
|
|
|
4,304,925 |
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| |
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4,304,925 |
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| Semiconductors & Semiconductor Equipment – 5.1% |
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| |
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| NVIDIA Corp. |
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|
27,353 |
|
|
|
6,436,161 |
|
| |
|
|
| QUALCOMM, Inc. |
|
|
74,971 |
|
|
|
6,614,691 |
|
| |
|
|
| Texas Instruments, Inc. |
|
|
37,372 |
|
|
|
4,794,454 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
17,845,306 |
|
| Software – 17.1% |
|
| |
|
|
| Adobe, Inc.(1) |
|
|
32,360 |
|
|
|
10,672,652 |
|
| |
|
|
| Microsoft Corp. |
|
|
116,724 |
|
|
|
18,407,375 |
|
| |
|
|
| Nutanix, Inc., Class A(1) |
|
|
90,902 |
|
|
|
2,841,597 |
|
| |
|
|
| Oracle Corp. |
|
|
125,589 |
|
|
|
6,653,705 |
|
| |
|
|
| Palo Alto Networks, Inc.(1) |
|
|
23,764 |
|
|
|
5,495,425 |
|
| |
|
|
| salesforce.com, Inc.(1) |
|
|
27,400 |
|
|
|
4,456,336 |
|
| |
|
|
| Splunk, Inc.(1) |
|
|
40,611 |
|
|
|
6,082,309 |
|
| |
|
|
| VMware, Inc., Class A(1) |
|
|
33,590 |
|
|
|
5,098,626 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
59,708,025 |
|
| Specialty Retail – 3.5% |
|
| |
|
|
| Advance Auto Parts, Inc. |
|
|
34,470 |
|
|
|
5,520,715 |
|
| |
|
|
| The Home Depot, Inc. |
|
|
30,263 |
|
|
|
6,608,834 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
12,129,549 |
|
| Technology Hardware, Storage & Peripherals – 3.5% |
|
| |
|
|
| Apple, Inc. |
|
|
42,176 |
|
|
|
12,384,982 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
12,384,982 |
|
| Trading Companies & Distributors – 2.0% |
|
| |
|
|
| WW Grainger, Inc. |
|
|
20,979 |
|
|
|
7,101,811 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
7,101,811 |
|
| |
|
Total Common Stocks
(Cost $288,615,160) |
|
|
|
346,267,732 |
|
|
|
|
|
|
| 6 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
SCHEDULE OF INVESTMENTS — GUARDIAN LARGE CAP FUNDAMENTAL GROWTH VIP FUND
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Principal
Amount |
|
|
Value |
|
| Short–Term Investment – 1.1% |
|
| |
| Repurchase Agreements – 1.1% |
|
| |
|
|
| Fixed Income
Clearing Corp.,
0.12%, dated 12/31/2019,
proceeds at maturity value of
$3,863,026, due 1/2/2020(2) |
|
$ |
3,863,000 |
|
|
$ |
3,863,000 |
|
| |
|
Total Repurchase Agreements
(Cost $3,863,000) |
|
|
|
3,863,000 |
|
| |
|
Total Investments – 100.1%
(Cost $292,478,160) |
|
|
|
350,130,732 |
|
| |
|
| Liabilities in excess of other assets – (0.1)% |
|
|
|
(210,124 |
) |
| |
|
| Total Net Assets – 100.0% |
|
|
$ |
349,920,608 |
|
| (1) |
Non–income–producing security. |
| (2) |
The table below presents collateral for repurchase agreements. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Security |
|
Coupon |
|
|
Maturity
Date |
|
|
Principal
Amount |
|
|
Value |
|
| U.S. Treasury Note |
|
|
2.75% |
|
|
|
9/15/2021 |
|
|
$ |
3,840,000 |
|
|
$ |
3,944,456 |
|
Legend:
ADR — American
Depositary Receipt
REIT — Real Estate Investment Trust
The following is a summary of the inputs used as of
December 31, 2019 in valuing the Fund’s investments. For more information on valuation inputs, please refer to Note 2a of the accompanying Notes to Financial Statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Valuation Inputs |
|
|
|
|
| Investments in Securities |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
| Common Stocks |
|
$ |
346,267,732 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
346,267,732 |
|
| Repurchase Agreements |
|
|
— |
|
|
|
3,863,000 |
|
|
|
— |
|
|
|
3,863,000 |
|
| Total |
|
$ |
346,267,732 |
|
|
$ |
3,863,000 |
|
|
$ |
— |
|
|
$ |
350,130,732 |
|
|
|
|
|
|
| The accompanying notes are an integral part of these financial statements. |
|
|
|
7 |
FINANCIAL INFORMATION — GUARDIAN LARGE CAP FUNDAMENTAL GROWTH VIP FUND
|
|
|
|
|
|
Statement of Assets and Liabilities As of December 31, 2019 |
|
|
|
| Assets |
|
|
|
|
| |
|
| Investments, at value |
|
$ |
350,130,732 |
|
| |
|
| Cash |
|
|
43,271 |
|
| |
|
| Dividends/interest receivable |
|
|
102,939 |
|
| |
|
| Foreign tax reclaims receivable |
|
|
38,859 |
|
| |
|
| Prepaid expenses |
|
|
16,126 |
|
| |
|
|
|
|
| |
|
| Total Assets |
|
|
350,331,927 |
|
| |
|
|
|
|
| |
|
| Liabilities |
|
|
|
|
| |
|
| Investment advisory fees payable |
|
|
191,216 |
|
| |
|
| Distribution fees payable |
|
|
73,642 |
|
| |
|
| Payable for fund shares redeemed |
|
|
71,599 |
|
| |
|
| Accrued audit fees |
|
|
22,105 |
|
| |
|
| Accrued custodian and accounting fees |
|
|
10,702 |
|
| |
|
| Accrued trustees’ and officers’
fees |
|
|
1,058 |
|
| |
|
| Accrued expenses and other liabilities |
|
|
40,997 |
|
| |
|
|
|
|
| |
|
| Total Liabilities |
|
|
411,319 |
|
| |
|
|
|
|
| |
|
| Total Net Assets |
|
$ |
349,920,608 |
|
| |
|
|
|
|
| |
|
| Net Assets Consist of: |
|
|
|
|
| |
|
| Paid-in
capital |
|
$ |
273,674,811 |
|
| |
|
| Distributable earnings |
|
|
76,245,797 |
|
| |
|
|
|
|
| |
|
| Total Net Assets |
|
$ |
349,920,608 |
|
| |
|
|
|
|
| Investments, at Cost |
|
$ |
292,478,160 |
|
| |
|
|
|
|
| |
|
| Pricing of Shares |
|
|
|
|
| |
|
|
Shares of Beneficial Interest Outstanding with
No Par Value |
|
|
21,204,902 |
|
| |
|
| Net Asset Value Per Share |
|
|
$16.50 |
|
| |
|
|
|
|
|
|
|
|
|
|
Statement of Operations For the Year Ended December 31, 2019 |
|
|
|
| Investment Income |
|
|
|
|
| |
|
| Dividends |
|
$ |
2,634,296 |
|
| |
|
| Interest |
|
|
21,970 |
|
| |
|
| Withholding taxes on foreign dividends |
|
|
(7,901 |
) |
| |
|
|
|
|
| |
|
| Total Investment Income |
|
|
2,648,365 |
|
| |
|
|
|
|
| |
|
| Expenses |
|
|
|
|
| |
|
| Investment advisory fees |
|
|
1,541,593 |
|
| |
|
| Distribution fees |
|
|
656,006 |
|
| |
|
| Trustees’ and officers’ fees |
|
|
103,776 |
|
| |
|
| Professional fees |
|
|
81,076 |
|
| |
|
| Shareholder reports |
|
|
47,555 |
|
| |
|
| Administrative fees |
|
|
47,460 |
|
| |
|
| Custodian and accounting fees |
|
|
42,707 |
|
| |
|
| Transfer agent fees |
|
|
20,051 |
|
| |
|
| Other expenses |
|
|
29,715 |
|
| |
|
|
|
|
| |
|
| Total Expenses |
|
|
2,569,939 |
|
| |
|
| Expenses recouped by Adviser |
|
|
54,085 |
|
| |
|
|
|
|
| |
|
| Total Expenses |
|
|
2,624,024 |
|
| |
|
|
|
|
| |
|
| Net Investment Income/(Loss) |
|
|
24,341 |
|
| |
|
|
|
|
| |
|
| Realized Gain/(Loss) and Change in Unrealized
Appreciation/(Depreciation) on Investments |
|
|
|
|
| |
|
| Net realized gain/(loss) from investments |
|
|
10,072,295 |
|
| |
|
| Net change in unrealized appreciation/(depreciation)
on investments |
|
|
64,386,434 |
|
| |
|
|
|
|
| |
|
| Net Gain on Investments |
|
|
74,458,729 |
|
| |
|
|
|
|
| |
|
| Net Increase in Net Assets Resulting From
Operations |
|
$ |
74,483,070 |
|
| |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| 8 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
FINANCIAL INFORMATION — GUARDIAN LARGE CAP FUNDAMENTAL GROWTH VIP FUND
|
|
|
|
|
|
|
|
|
|
Statements of Changes in Net Assets |
|
|
|
|
|
|
| |
|
|
| |
|
For the
Year Ended
12/31/19 |
|
|
For the
Year Ended
12/31/18 |
|
| |
|
|
|
| Operations |
|
| |
|
|
| Net investment income/(loss) |
|
$ |
24,341 |
|
|
$ |
490,568 |
|
| |
|
|
| Net realized gain/(loss) from investments |
|
|
10,072,295 |
|
|
|
6,619,884 |
|
| |
|
|
| Net change in unrealized appreciation/(depreciation)
on investments |
|
|
64,386,434 |
|
|
|
(8,867,885 |
) |
| |
|
|
|
|
|
|
|
|
| |
|
|
| Net Increase/(Decrease) in Net Assets Resulting
from Operations |
|
|
74,483,070 |
|
|
|
(1,757,433 |
) |
| |
|
|
|
|
|
|
|
|
| |
| Capital Share
Transactions |
|
| |
|
|
| Proceeds from sales of shares |
|
|
100,269,388 |
1 |
|
|
246,910,584 |
|
| |
|
|
| Cost of shares redeemed |
|
|
(48,096,100 |
) |
|
|
(33,834,722 |
) |
| |
|
|
|
|
|
|
|
|
| |
|
|
| Net Increase in Net Assets Resulting from Capital
Share Transactions |
|
|
52,173,288 |
|
|
|
213,075,862 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| Net Increase in Net Assets |
|
|
126,656,358 |
|
|
|
211,318,429 |
|
| |
|
|
|
|
|
|
|
|
| |
| Net Assets |
|
| |
|
|
| Beginning of year |
|
|
223,264,250 |
|
|
|
11,945,821 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| End of year |
|
$ |
349,920,608 |
|
|
$ |
223,264,250 |
|
| |
|
|
|
|
|
|
|
|
| |
| Other Information: |
|
| |
|
|
| Shares |
|
|
|
|
|
|
|
|
| |
|
|
| Sold |
|
|
6,537,264 |
|
|
|
19,371,482 |
|
| |
|
|
| Redeemed |
|
|
(3,176,006 |
) |
|
|
(2,465,268 |
) |
| |
|
|
|
|
|
|
|
|
| |
|
|
| Net Increase |
|
|
3,361,258 |
|
|
|
16,906,214 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| 1 |
Includes in-kind subscriptions of $90,000,216. The cost basis of the contributed securities is equal to the market value
of the securities on the date of the subscription. |
|
|
|
|
|
| The accompanying notes are an integral part of these financial statements. |
|
|
|
9 |
FINANCIAL INFORMATION — GUARDIAN LARGE CAP FUNDAMENTAL GROWTH VIP FUND
The Financial Highlights table is intended to help you understand the Fund’s financial
performance for the past five years (or, if shorter, the period since inception). Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost)
on an investment in the Fund.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Highlights |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Per Share Operating Performance |
|
|
|
|
| |
|
Net Asset Value,
Beginning of
Period |
|
|
Net Investment
Income(1) |
|
|
Net Realized
and Unrealized
Gain/(Loss) |
|
|
Total
Operations |
|
|
Net Asset
Value, End of
Period |
|
|
Total
Return(2) |
|
| |
|
|
|
|
|
|
| Year Ended 12/31/19 |
|
$ |
12.51 |
|
|
$ |
0.00 |
(4) |
|
$ |
3.99 |
|
|
$ |
3.99 |
|
|
$ |
16.50 |
|
|
|
31.89% |
|
| |
|
|
|
|
|
|
| Year Ended 12/31/18 |
|
|
12.74 |
|
|
|
0.03 |
|
|
|
(0.26 |
) |
|
|
(0.23 |
) |
|
|
12.51 |
|
|
|
(1.81)% |
|
| |
|
|
|
|
|
|
| Year Ended 12/31/17 |
|
|
10.19 |
|
|
|
0.01 |
|
|
|
2.54 |
|
|
|
2.55 |
|
|
|
12.74 |
|
|
|
25.02% |
|
| |
|
|
|
|
|
|
| Period Ended
12/31/16(5) |
|
|
10.00 |
|
|
|
0.01 |
|
|
|
0.18 |
|
|
|
0.19 |
|
|
|
10.19 |
|
|
|
1.90% |
(6) |
|
|
|
|
|
| 10 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
FINANCIAL INFORMATION — GUARDIAN LARGE CAP FUNDAMENTAL GROWTH VIP FUND
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Ratios/Supplemental Data |
|
Net Assets, End
of Period (000s) |
|
|
Net Ratio of
Expenses to
Average
Net Assets(3) |
|
|
Gross Ratio of
Expenses to
Average Net
Assets |
|
|
Net Ratio of Net
Investment Income
to Average
Net Assets(3) |
|
|
Gross Ratio of Net
Investment Income/
(Loss) to Average
Net Assets |
|
|
Portfolio
Turnover Rate |
|
|
|
|
|
|
|
| $ |
349,921 |
|
|
|
1.00% |
|
|
|
1.00% |
|
|
|
0.01% |
|
|
|
0.01% |
|
|
|
44% |
|
|
|
|
|
|
|
| |
223,264 |
|
|
|
1.00% |
|
|
|
1.02% |
|
|
|
0.26% |
|
|
|
0.24% |
|
|
|
33% |
|
|
|
|
|
|
|
| |
11,946 |
|
|
|
1.00% |
|
|
|
1.95% |
|
|
|
0.09% |
|
|
|
(0.86)% |
|
|
|
51% |
|
|
|
|
|
|
|
| |
9,778 |
|
|
|
1.00% |
(6) |
|
|
3.08% |
(6) |
|
|
0.26% |
(6) |
|
|
(1.82)% |
(6) |
|
|
4% |
(6) |
| (1) |
Calculated based on the average shares outstanding during the period. |
| (2) |
Total returns do not reflect the effects of charges deducted pursuant to the terms of The Guardian Insurance &
Annuity Company, Inc.’s variable contracts. Inclusion of such charges would reduce the total returns for all periods shown. |
| (3) |
Net Ratio of Expenses to Average Net Assets and Net Ratio of Net Investment Income to Average Net Assets include the
effect of fee waivers, expense limitations, and recoupments. |
| (4) |
Rounds to $0.00 per share. |
| (5) |
Commenced operations on September 1, 2016. |
| (6) |
Ratios for periods less than one year have been annualized, except for total return and portfolio turnover rate. For the
period ended December 31, 2016, certain non-recurring fees (i.e., audit fees) are not annualized. |
|
|
|
|
|
| The accompanying notes are an integral part of these financial statements. |
|
|
|
11 |
NOTES TO FINANCIAL STATEMENTS — GUARDIAN LARGE CAP FUNDAMENTAL
GROWTH VIP FUND
December 31, 2019
1.
Organization
Guardian Variable Products Trust (the “Trust”), a Delaware statutory trust organized on January 12, 2016, is registered under the
Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Trust currently has sixteen series. Guardian Large Cap Fundamental Growth VIP Fund (the
“Fund”) is a series of the Trust. The Fund is a diversified fund and commenced operations on September 1, 2016. The financial statements for other series of the Trust are presented in separate reports.
The Trust has authorized an unlimited number of shares of beneficial interest with no par value. Shares are bought and sold at closing net asset value (“NAV”).
Shares of the Fund are only sold to certain separate accounts of The Guardian Insurance & Annuity Company, Inc. (“GIAC”) that fund certain variable annuity contracts and variable life insurance policies issued by GIAC. GIAC is a
wholly-owned subsidiary of The Guardian Life Insurance Company of America (“Guardian Life”).
The Fund seeks long-term growth of capital.
2. Significant Accounting Policies
The following is a summary of significant
accounting policies followed by the Fund in the preparation of its financial statements. The Fund follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards
Codification Topic 946 Financial Services — Investment Companies. The following policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements
in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.
a. Investment Valuations Equity securities traded on an exchange other than NASDAQ Stock Market, LLC (“NASDAQ”) are valued at the last reported sale
price on the principal exchange or market on which they are traded; or, if there were no sales that day, at the mean between the closing bid and ask prices. Securities traded on the NASDAQ are generally valued at the NASDAQ official closing price,
which may not be the last sale price. If the NASDAQ official closing price is not available
for a security, that security is generally valued at the mean between the closing bid and ask prices. Repurchase agreements are carried at cost, which approximates fair value (see Note 5d).
Foreign securities are valued in the currencies of the markets in which they trade and then converted to U.S. dollars by the application of foreign exchange rates at the close of the New York Stock Exchange (“NYSE”). Forward foreign
currency contracts, if any, are valued at the mean between the bid and ask rates for the specified time interpolated from rates for proximate time periods. Securities for which market quotations are not readily available or for which market
quotations may be considered unreliable are valued at their fair values as determined in accordance with policies and procedures adopted by the Board of Trustees.
Under the policies and procedures approved by the Board of Trustees, Park Avenue Institutional Advisers LLC (“Park Avenue”), the Fund’s investment
adviser, has established a Fair Valuation Committee to assist the Board of Trustees with the oversight and monitoring of the valuation of the Fund’s investments. This includes monitoring the appropriateness of fair values based on results of
ongoing valuation oversight, including but not limited to consideration of security specific events, market events, and pricing vendor and broker-dealer due diligence. The Fair Valuation Committee oversees and carries out the policies for the
valuation of investments held in the Fund. The Fair Valuation Committee is responsible for discussing and assessing the potential impacts to the fair values on an ongoing basis, and at least on a quarterly basis with the Board of Trustees.
Securities whose values have been materially affected by events occurring before the Fund’s valuation time but after the close of the securities’ principal
exchange or market may be fair valued in accordance with policies and procedures adopted by the Board of Trustees. In addition, the values of the Fund’s investments in foreign securities are generally determined by a pricing service using
pricing models designed to estimate likely changes in the values of those securities. Certain foreign equity instruments are valued by applying international fair value factors provided by approved pricing services. The factors seek to adjust the
local closing price for movements of local markets post closing, but prior to the time the NAVs are calculated. Valuations reflected in this report are as of the report date. As a result, changes in valuation due to market events and/or issuer
related events after the report date and prior to issuance of the report are not reflected herein.
NOTES TO FINANCIAL STATEMENTS — GUARDIAN LARGE CAP FUNDAMENTAL GROWTH VIP FUND
Various inputs are used in determining the valuation of the Fund’s investments. These inputs are summarized in three
broad levels listed below.
| • |
|
Level 1 — unadjusted inputs using quoted prices in active markets for identical investments. |
| • |
|
Level 2 — other significant observable inputs, including, but not limited to, quoted prices for similar investments, inputs other than quoted prices that are observable for investments (such as interest
rates, prepayment speeds, credit risks, etc.) or other market corroborated inputs. |
| • |
|
Level 3 — significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments) |
Inputs may include price information, volatility statistics, specific and broad credit data, liquidity statistics, and other factors. A financial instrument’s level
within the fair value hierarchy is based on the lowest level of any input; both individually and in aggregate, that is significant to the fair value measurement. However, the determination of what constitutes “observable” requires
significant judgment by the Trust. The Trust considers observable data to be that market data which is readily available, regularly distributed or updated, reliable and verifiable, and provided by independent sources that are actively involved in
the relevant market. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. Changes in valuation techniques may result in transfers into or out of a
financial instrument’s assigned level within the hierarchy.
The FASB requires reporting entities to make disclosures about purchases, sales, issuances and
settlements of Level 3 securities on a gross basis. For the year ended December 31, 2019, there were no transfers into or out of Level 3 of the fair value hierarchy.
In determining a financial instrument’s placement within the hierarchy, the Trust separates the Fund’s investment portfolio into two categories: investments
and derivatives (e.g., futures). A summary of inputs used to value the Fund’s assets and liabilities carried at fair value as of December 31, 2019 is included in the Schedule of Investments.
Investments Investments whose values are based on quoted market prices in active markets, and are therefore classified within Level 1, include active
listed equities. Investments that trade in markets that are not considered to be active, but are valued based on quoted
market prices, dealer quotations or alternative pricing sources supported by observable inputs are classified within Level 2. These include certain U.S. government and sovereign obligations,
most government agency securities, investment-grade corporate bonds, certain mortgage products, state, municipal and provincial obligations, and certain foreign equity securities, including securities whose prices may have been affected by events
occurring after the close of trading on their principal exchange or market and, as a result, whose values are determined by a pricing service as described above, or securities whose values are otherwise determined using fair valuation methods
approved by the Fund’s Board of Trustees.
Investments classified within Level 3 have significant unobservable inputs, as they trade infrequently or not at
all. Level 3 investments include, among others, private placement securities. When observable prices are not available for these securities, the Trust uses one or more valuation techniques for which sufficient and reliable data is available.
The inputs used by the Trust in estimating the value of Level 3 investments include, for example, the original transaction price, recent transactions in the same or similar instruments, completed or pending third-party transactions in the
underlying investment or comparable issuers, subsequent rounds of financing, recapitalizations, and other transactions across the capital structure. Level 3 investments may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the Trust in the absence of market information. Assumptions used by the Trust due to the lack of observable inputs may significantly impact the
resulting fair value and therefore the Fund’s results of operations. As of December 31, 2019, the Fund had no securities classified as Level 3.
Derivatives Exchange-traded derivatives, such as futures contracts, exchange-traded option contracts and certain swaps, are typically classified within
Level 1 or Level 2 of the fair value hierarchy depending on whether or not they are deemed to be actively traded. Certain non-exchange-traded derivatives, such as generic forwards, certain swaps and
options, have inputs which can generally be corroborated by market data and are therefore classified within Level 2. During the year ended December 31, 2019, the Fund did not hold any derivatives.
b. Securities Transactions Securities transactions are accounted for on the date securities are purchased or sold (trade date). Realized gains or losses on
securities transactions are determined on the basis of specific identification.
NOTES TO FINANCIAL STATEMENTS — GUARDIAN LARGE CAP FUNDAMENTAL GROWTH VIP FUND
c. Foreign Currency Translation The accounting records of the Fund are maintained in U.S. dollars. Investment
securities and all other assets and liabilities of the Fund denominated in a foreign currency are generally translated into U.S. dollars at the exchange rates quoted at the close of the NYSE on each business day. The market value of investment
securities and other assets and liabilities are translated at the exchange rate as of the valuation date. Purchases and sales of securities, income receipts, and expense payments are translated into U.S. dollars at the exchange rates in effect on
the dates of the respective transactions. The Fund does not isolate the portion of the fluctuations on investments resulting from changes in foreign currency exchange rates from the fluctuations in market prices of investments held. Such
fluctuations are included in the Net change in net realized and unrealized gain/(loss) from investments on the Statement of Operations.
Reported realized foreign
currency gains and losses arise from the disposition of foreign currency, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest and foreign
withholding taxes recorded on the Fund’s books on the transaction date and the U.S. dollar equivalent of the amounts actually received or paid. These reported realized foreign currency gains and losses, if any, are included in Net realized
gain/(loss) from foreign currency transactions on the Statement of Operations. Unrealized foreign currency gains and losses arise from changes (due to changes in exchange rates) in the value of foreign currency and other assets and liabilities
denominated in foreign currencies, which are held at period end, if any, and are included in Net change in unrealized appreciation/(depreciation) on translation of assets and liabilities in foreign currencies on the Statement of Operations.
d. Foreign Capital Gains Tax The Fund may be subject to foreign taxes on income, gains on investments or currency purchases/repatriation, a portion of which may
be recoverable. The Fund will accrue such taxes and recoveries as applicable, based upon their current interpretation of tax rules and regulations that exist in the markets in which they invest.
e. Investment Income Dividend income net of foreign taxes withheld, if any, is generally recorded on the ex-dividend date.
Interest income, which includes amortization/accretion of premium/discount, is determined using the interest income accrual method, and is accrued and recorded daily.
f. Allocation of Income and Expenses Many of the expenses of the Trust can be directly attributed to a specific
series of the Trust. Expenses that cannot be directly attributed to a specific series of the Trust are generally apportioned among all the series in the Trust, based on relative net assets. In calculating net asset value per share for each series of
the Trust, investment income, realized and unrealized gains and losses, and expenses other than series-specific expenses are allocated daily to each series based upon the proportion of net assets attributable to each series.
3. Transactions with Affiliates
a. Investment Advisory Fee and Expense
Limitation Under the terms of the advisory agreement, which, after its two year initial term, is reviewed and approved annually by the Board of Trustees, the Fund pays an investment advisory fee to Park Avenue. Park Avenue is a wholly-owned
subsidiary of Guardian Life and receives an investment advisory fee at an annual rate of 0.62% up to $100 million, 0.57% up to $300 million, 0.52% up to $500 million, and 0.50% in excess of $500 million of the Fund’s average
daily net assets. The fee is accrued daily and paid monthly.
Park Avenue has contractually agreed through April 30, 2020 to waive certain fees and/or reimburse
certain expenses incurred by the Fund to the extent necessary to limit the Fund’s total annual operating expenses after fee waiver and/or expense reimbursement to 1.01% of the Fund’s average daily net assets (excluding, if applicable, any
acquired fund fees and expenses, taxes, interest, transaction costs and brokerage commissions, litigation and extraordinary expenses). The limitation may not be increased or terminated prior to this time without action by the Board of Trustees, may
be terminated only upon approval of the Board of Trustees, and is subject to Park Avenue’s recoupment rights.
Park Avenue may be entitled to recoupment of
previously waived fees and reimbursed expenses from the Fund for three years from the date of the waiver or reimbursement, subject to the expense limitation in effect at the time of the waiver or reimbursement and at the time of the recoupment, if
any. Amounts waived or reimbursed by Park Avenue pursuant to any expense limitation after April 9, 2018 are not subject to Park Avenue’s recoupment rights. During the year ended December 31, 2019, Park Avenue recouped previously
waived or reimbursed expenses in the amount of $54,085. The amount available for potential future recoupment by Park Avenue from the Fund under the
NOTES TO FINANCIAL STATEMENTS — GUARDIAN LARGE CAP FUNDAMENTAL GROWTH VIP FUND
Expense Limitation Agreement and the expiration schedule at December 31, 2019 are as follows:
|
|
|
|
|
| |
|
| |
|
Potential Recoupment Amounts
Expiring |
| Total Potential
Recoupment
Amounts |
|
2021 |
|
2020 |
| $184,913 |
|
$47,223 |
|
$137,690 |
Park Avenue has entered into a Sub-Advisory Agreement with ClearBridge Investments LLC
(“ClearBridge”). ClearBridge is responsible for providing day-to-day investment advisory services to the Fund, subject to the supervision of Park Avenue and
the oversight of the Board of Trustees. Sub-advisory fees are paid by Park Avenue and do not represent a separate or additional expense to the Fund.
b. Compensation of Trustees and Officers Trustees and officers who are interested persons of the Trust, as defined in the 1940 Act, receive no compensation from
the Fund, except for the Chief Compliance Officer of the Trust. Trustees of the Trust who are not interested persons of the Trust, and the Chief Compliance Officer, receive compensation and reimbursement of expenses from the Trust.
c. Distribution Fees Park Avenue Securities LLC (“PAS”), a wholly-owned subsidiary of Guardian Life, is the principal underwriter of Fund shares. The
Trust has entered into a distribution and service agreement with PAS, which governs the sale and distribution of shares of the Fund. Under a distribution and service plan adopted by the Trust (“12b-1
plan”), PAS is compensated for services in such capacity, including its expenses in connection with the promotion and distribution of shares of the Fund, at an annual rate of 0.25% of the Fund’s average daily net assets. For the year ended
December 31, 2019, the Fund paid distribution fees in the amount of $656,006 to PAS.
PAS has directed that certain payments under the 12b-1 plan be used to compensate GIAC for shareholder services provided to contract owners.
4. Federal Income Taxes
a. Distributions to Shareholders For federal income tax purposes, the Fund is treated as a disregarded entity (“DRE”). As a DRE, the Fund is not subject
to an entity-level income tax; and any income, gains, losses, deductions, taxes, and credits of the Fund would instead be “passed through” directly to the separate accounts of GIAC that invest in the Fund and retain the same
character for U.S. federal income tax purposes. In addition, the Fund is not required to distribute taxable income and capital gains for U.S. federal income tax purposes. Therefore, no dividends
and capital gains distributions were paid by the Fund.
5. Investments
a. Investment Purchases and Sales The cost of investments purchased and the proceeds from investments sold (excluding short-term investments and in-kind
transactions) amounted to $114,078,533 and $151,452,293, respectively, for the year ended December 31, 2019. During the year ended December 31, 2019, there were no purchases or sales of U.S. government securities.
b. Foreign Securities Foreign securities investments involve special risks and considerations not typically associated with U.S. investments. These risks include,
but are not limited to, currency risk; adverse political, regulatory, social, and economic developments; and less reliable information about issuers. Moreover, securities of some foreign issuers may be less liquid and their prices more volatile than
those of comparable U.S. issuers.
c. Industry or Sector Concentration In its normal course of business, the Fund may invest a significant portion of its
assets in companies within a limited number of industries or sectors. As a result, the Fund may be subject to a greater risk of loss than that of a fund invested in a wider spectrum of industries or sectors because the stocks of many or all of the
companies in the industry, group of industries, sector, or sectors may decline in value due to developments adversely affecting the industry, group of industries, sector, or sectors.
d. Repurchase Agreements The Fund may invest in repurchase agreements to maintain liquidity and earn income over periods of time as short as overnight. The
collateral for repurchase agreements is either cash or fully negotiable U.S. government securities (including U.S. government agency securities). Repurchase agreements are fully collateralized (including the interest accrued thereon) and such
collateral is marked to market daily while the agreements remain in force. If the value of the collateral falls below the repurchase price plus accrued interest, the Fund will typically require the seller to deposit additional collateral by the next
business day. If the request for additional collateral is not met, or the seller defaults, the Fund maintains the right to sell the collateral (although it may be prevented or delayed from doing so in certain circumstances) and may be required to
claim any resulting loss against the
NOTES TO FINANCIAL STATEMENTS — GUARDIAN LARGE CAP FUNDAMENTAL GROWTH VIP FUND
seller. Park Avenue monitors the creditworthiness of the seller with which the Fund enters into repurchase agreements.
6. Temporary Borrowings
The Fund, with other funds managed by Park
Avenue, is party to a $10 million committed revolving credit facility from State Street Bank and Trust Company for temporary borrowing purposes, including the meeting of redemption requests that otherwise might require the untimely disposition
of securities. Interest is calculated based on the higher of the daily one-month LIBOR rate and the Federal Funds rate plus 1.25% at the time of borrowing. In addition to the interest charged on any borrowings
by the Fund, each fund pays a commitment fee of 0.30% per annum on its share of the unused portion of the credit facility. The agreement is in
place until December 9, 2020. The Fund did not utilize the credit facility during the year ended December 31, 2019.
7. Indemnifications
Under the Trust’s organizational documents and, in
some cases, by contract, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Fund. In addition, in the normal course of business, the Fund enters into contracts with its vendors
and others that provide general indemnifications. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. However, based on experience,
the Fund expects the risk of loss to be remote.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees of Guardian Variable Products Trust and Shareholders of
Guardian Large Cap Fundamental Growth VIP Fund
Opinion on the
Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Guardian Large
Cap Fundamental Growth VIP Fund (one of the funds constituting Guardian Variable Products Trust, referred to hereafter as the “Fund”) as of December 31, 2019, the related statement of operations for the year ended
December 31, 2019, the statement of changes in net assets for each of the two years in the period ended December 31, 2019, including the related notes, and the financial highlights for each of the periods indicated therein
(collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2019, the results of its operations for
the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2019 and the financial highlights for each of the periods indicated therein in conformity with accounting principles generally
accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements
based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in
accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing
procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2019 by correspondence with the custodian. We
believe that our audits provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
New York, New York
February 20, 2020
We have served as the auditor of one or more investment companies in Guardian Variable Products Trust since 2016.
SUPPLEMENTAL INFORMATION (UNAUDITED)
Trustees and Officers Information Table
The following table provides information about the Trustees of the Trust.
|
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| |
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Name and
Year of Birth |
|
Term of Office,
Position(s) Held and Length of
Service1 |
|
Principal
Occupation(s) During Past Five Years |
|
Number of
Funds
in Fund
Complex Overseen
by Trustees2 |
|
Other Directorships
Held by Trustee |
| Independent Trustees |
| |
|
|
|
|
| Bruce W. Ferris3 (born 1955) |
|
Trustee |
|
Retired (since 2015); President and CEO, Prudential Annuities Distributors, Inc. (2013–2015); Director/Trustee, Advanced Series Trust, The Prudential Series Fund and Prudential’s
Gibraltar Fund, Inc. (2013–2015); Senior Vice President, Prudential Annuities (2008–2015). |
|
16 |
|
None. |
| |
|
|
|
|
| Theda R. Haber3 (born 1954) |
|
Trustee |
|
Adjunct Assistant Professor of Law, UC Hastings College of Law (since 2013); Member of the Board of Directors, Fairholme Trust Company, LLC (2015–2019); Attorney, Law Office of Theda R.
Haber (since 2014); Visiting Professor of Law, UC Davis School of Law (since 2014); Consultant, Haber & Associates LLC (financial services industry), (2012–2017); Advisory Council Chair, Vice Chair, and Member, Advisory Council on
Employee Welfare and Pension Benefit Plans (ERISA Advisory Council), U.S. Department of Labor (2009–2011); Managing Director and General Counsel, BlackRock Institutional Trust Company, N.A. (2009–2011); Deputy Global General Counsel,
Barclays Global Investors (2006–2009); Managing Director, Barclays Global Investors (1998–2006). |
|
16 |
|
None. |
| |
|
|
|
|
| Marshall
Lux3 (born 1960) |
|
Trustee |
|
Senior Advisor, The Boston Consulting Group (since 2014); Senior Partner and Managing Director, The Boston Consulting Group (2009–2014). |
|
16 |
|
None. |
| |
|
|
|
|
| Lisa K.
Polsky3 (born 1956) |
|
Trustee |
|
Board Member, MFA Financial, Inc. (real estate investment trust) (since 2020); Advisor, SMBC Americas (financial services) (since 2020); Senior Risk Advisor, AQR (investment management)
(2016–2019); Senior Risk Advisor, Ultra Capital (venture capital) (2016–2019); Board Member, DB USA Corporation (Deutsche Bank Intermediate Holding Company) (financial services) (since 2016); Chief Risk Officer, CIT Group Inc. (financial
services) (2010–2015); Board Member and Chair of Audit Committee, Piper Jaffray (investment bank) (2007–2016). |
|
16 |
|
None. |
| |
|
|
|
|
| John
Walters3 (born 1962) |
|
Lead Independent
Trustee |
|
Board Member, Amerilife Holdings LLC (insurance distribution) (since 2015); Board Member, Stadion Money Management LLC (investment adviser) (since 2011); President and Chief Operating Officer,
Hartford Life Insurance Company (2000–2010). |
|
16 |
|
Trustee, USAA Mutual Funds Trust, (One registered investment company offering 47 individual funds) (since
2019). |
SUPPLEMENTAL INFORMATION (UNAUDITED)
|
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| |
|
|
|
|
Name and
Year of Birth |
|
Term of Office,
Position(s) Held and Length of
Service1 |
|
Principal
Occupation(s) During Past Five Years |
|
Number of
Funds
in Fund
Complex Overseen
by Trustees2 |
|
Other Directorships
Held by Trustee |
| Interested Trustees |
| |
|
|
|
|
| Dominique Baede4 (born 1970) |
|
Trustee (Since
January 2020) |
|
Vice President, Head of Product, Life, Annuity and Inforce, The Guardian Life Insurance Company of America (since 2019); Managing Director, Product Management Group, AXA Equitable (insurance
company) prior thereto. |
|
16 |
|
None. |
| |
|
|
|
|
| Michael
Ferik4 (born 1972) |
|
Chairman and Trustee (Since
December 2019) |
|
Executive Vice President, Individual Markets, The Guardian Life Insurance Company of America (since 2020); Executive Vice President and Chief Financial Officer, The Guardian Life Insurance
Company of America (2017–2019); Executive Vice President, Individual Markets, The Guardian Life Insurance Company of America prior thereto. |
|
16 |
|
None. |
| 1 |
Except as otherwise noted, each Trustee began service in such capacity in 2016 and serves until his or her successor is
elected and qualified or until his or her resignation, death or removal. The business address of each Trustee is 10 Hudson Yards, New York, New York 10001. |
| 2 |
The Trust currently consists of 16 separate Funds. |
| 3 |
Member of the Audit Committee of the Trust. |
| 4 |
Each of Dominique Baede and Michael Ferik is considered to be an “interested person” of the Trust within the
meaning of the 1940 Act because of their affiliation with The Guardian Life Insurance Company of America and/or its affiliates. |
|
|
|
|
|
| |
|
|
| Name and Year of Birth |
|
Position(s) Held and
Length of Service5 |
|
Principal Occupation(s)
During Past Five Years |
| |
|
|
| Dominique Baede
(born 1970) |
|
President and Principal Executive Officer (Since January 2020) |
|
Vice President, Head of Product, Life, Annuity and Inforce, The Guardian Life Insurance Company of America (since 2019); Managing Director,
Product Management Group, AXA Equitable (insurance company) prior. |
| |
|
|
John H. Walter
(born 1962) |
|
Senior Vice President, Treasurer, and Principal Financial and Accounting Officer |
|
Vice President, Director of Finance, Corporate Finance, The Guardian Life Insurance Company of America. |
| |
|
|
Harris Oliner
(born 1971) |
|
Senior Vice President and Secretary |
|
Senior Vice President, Corporate Secretary, The Guardian Life Insurance Company of America (since 2015); Senior Vice President, Deputy
General Counsel, Corporate Secretary, Voya Financial, Inc. prior thereto. |
| |
|
|
Richard T. Potter
(born 1954) |
|
Senior Vice President and Chief Legal Officer |
|
Vice President and Equity Counsel, The Guardian Life Insurance Company of America. |
| |
|
|
Philip Stack
(born 1964) |
|
Chief Compliance Officer
(Since September 2017) |
|
Second Vice President, Mutual Fund Chief Compliance Officer, The Guardian Life Insurance Company of America (since 2017); Executive Director,
Chief Compliance Officer, Morgan Stanley (2015–2017); Vice President, Morgan Stanley prior thereto. |
| |
|
|
Brian Hagan
(born 1984) |
|
Anti-Money Laundering Officer (Since March 2019) |
|
Assistant Vice President (since 2019), Anti-Money Laundering Compliance, The Guardian Life Insurance Company of America/Park Avenue
Securities LLC; Vice President, Head of Financial Intelligence Unit, Brown Brothers Harriman & Co. (2014–2019); Assistant Vice President, AML Compliance Manager, JPMorgan Chase & Co. (2011–2014). |
| |
|
|
Kathleen M. Moynihan
(born 1966) |
|
Senior Counsel |
|
Second Vice President, Counsel (since 2019), The Guardian Life Insurance Company of America; Senior Counsel prior thereto. |
| |
|
|
Maria Nydia Morrison
(born 1958) |
|
Fund Controller |
|
Mutual Fund Controller, The Guardian Life Insurance Company of America (since 2015); Chief Financial Officer/Assistant Operating Officer, St.
Francis De Assisi Montessori School (Plaridel, Bulacan), Inc. (Philippines) prior thereto. |
| |
|
|
Sonya L. Crosswell
(born 1977) |
|
Assistant Secretary |
|
Assistant Vice President, Assistant Corporate Secretary and Secretary Pro Tem, The Guardian Life Insurance Company of America. |
| 5 |
Unless otherwise indicated, the Officers each began service in such capacity in 2016 and hold office for an indefinite
term or until their successors shall have been elected and qualified. The business address of each Officer is 10 Hudson Yards, New York, New York 10001. |
SUPPLEMENTAL INFORMATION (UNAUDITED)
The Statement of Additional Information (“SAI”) includes additional information about
the Trust’s Trustees and Officers and is available, without charge, upon request by calling toll-free 1-888-GUARDIAN (1-888-482-7342) or by visiting our website at http://guardianvpt.onlineprospectus.net/GuardianVPT/Prospectuses.
Portfolio Holdings and Proxy Voting Procedures
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year as an exhibit
to its reports on Form N-PORT. The Fund’s Form N-PORT reports are available on the Securities and Exchange Commission’s website at https://www.sec.gov. The
Fund’s Form N-PORT information is also available, without charge, upon request, by calling toll-free 1-888-GUARDIAN (1-888-482-7342) or by visiting our website at http://guardianvpt.onlineprospectus.net/
GuardianVPT/Prospectuses.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio
securities is included in the SAI. The SAI and information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 may be obtained
(i) without charge, upon request, by calling toll-free 1-888-GUARDIAN (1-888-482-7342) or by visiting our website at http://guardianvpt.onlineprospectus.net/
GuardianVPT/Prospectuses; and (ii) on the Securities and Exchange Commission’s website at
https://www.sec.gov.
This report is transmitted to shareholders only. It is not authorized for use as an offer of sale or a solicitation of an offer to buy shares of the Fund unless
accompanied or preceded by the Fund’s current prospectus. Past performance results shown in this report should not be considered a representation of future performance. Investment returns and principal value of shares will fluctuate so that
shares, when redeemed, may be worth more or less than their original cost. Statements and other information herein are as dated and are subject to change.
The Guardian Life Insurance Company of America New York, NY 10001-2159
PUB8175
Guardian Variable
Products Trust
2019
Annual Report
All Data as of December 31, 2019
Guardian Large Cap Disciplined Growth VIP Fund
Important Notice
Beginning on January 1, 2021, as permitted
by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund’s shareholder reports will no longer be sent by mail from The Guardian Insurance & Annuity Company, Inc. (“GIAC”). Instead, GIAC will mail
you a notice when copies of the shareholder reports are made available on a website. You will be notified by mail each time a report is posted and provided with a website link to access the report.
If you have already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. If you have not yet
elected electronic delivery, at any time, you may elect to receive the Fund’s shareholder reports and certain other communications from GIAC electronically, by going to www.guardianlife.com and registering for e-delivery.
You may instead elect to receive all future shareholder reports in paper free of charge. If you wish to receive paper copies of your shareholder reports, please call
GIAC’s Customer Service Office Contact Center at 1-888-GUARDIAN (1-888-482-7342). Your election to receive reports in paper will apply to all the underlying funds available.
|
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| Not FDIC insured. May lose value. No bank guarantee. |
|
www.guardianlife.com |
TABLE OF CONTENTS
Guardian Large Cap Disciplined Growth VIP Fund
Except as otherwise specifically stated, all information, including portfolio security positions, is as of
December 31, 2019. The views expressed in the Fund Commentary are those of the Fund’s portfolio manager(s) as of the date of this report and are subject to change without notice. They do not necessarily represent the views of Park Avenue
Institutional Advisers LLC or a sub-adviser. The Fund Commentary may contain some forward-looking statements providing expectations or forecasts of future events as of the date of this report; they do not
necessarily relate to historical or current facts. There can be no guarantee that any forward-looking statement will be realized. We undertake no obligation to update forward-looking statements, whether as a result of new information, future events,
or otherwise. Any discussions of specific securities should not be considered a recommendation to buy or sell those securities. Fund holdings will vary. Information contained herein has been obtained from sources believed reliable, but is not
guaranteed.
GUARDIAN LARGE CAP DISCIPLINED GROWTH VIP FUND
FUND COMMENTARY OF WELLINGTON MANAGEMENT COMPANY LLP,
SUB-ADVISER (unaudited)
Highlights
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Guardian Large Cap Disciplined Growth VIP Fund (the “Fund”) returned 39.54% for the 12 months ended December 31, 2019, outperforming its benchmark, the Russell 1000® Growth Index1 (the “Index”). The Fund’s relative outperformance was primarily due to security selection in the industrials and
health care sectors. |
| • |
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The Index returned 36.39% for the period. Within the Index, the energy, health care, and industrials sectors declined the most during the period. |
Market Overview
U.S. equities, as measured by the Standard &
Poor’s 500® Index2, posted positive results over the 12-month period ended December 31,
2019. During the first quarter of 2019, U.S. equities rallied to their largest quarterly gain since 2009, buoyed by a dovish shift in the U.S. Federal Reserve (the “Fed”) policy and guidance, optimism for a U.S.-China trade deal,
relatively strong fourth-quarter earnings, and corporate buybacks. By the summer of 2019, unresolved U.S. trade frictions with China, Mexico, Japan, and the European Union (EU) unsettled markets and raised concerns about the potential risks to U.S.
economic growth from increasing cost pressures, supply chain disruptions, and waning business confidence and investment plans. In the third quarter of 2019, U.S. equities rose for the third consecutive quarter with the U.S. economy remaining
resilient despite elevated geopolitical uncertainties and slowing global growth. U.S.-China trade relations were particularly volatile in the absence of meaningful compromises on key structural issues, and expectations for a protracted trade war and
the potential for a longer-term decoupling of the world’s two largest economies eroded consumer and business confidence and curtailed capital spending. The Fed lowered its benchmark interest rate in July and September by a combined 0.50% in
effort to sustain economic expansion and mitigate the risks of moderating growth and trade frictions. U.S. equities surged in the fourth quarter, as
stocks benefitted from waning recession fears, improved trade sentiment, and accommodative Fed policies. In October, the Fed lowered interest rates for the final time in 2019 by 0.25%. Trade
tensions were volatile during the fourth quarter but eased in December after the U.S. and China reached a phase one trade agreement. The U.S. House of Representatives voted to impeach President Trump; however, markets were unaffected given that the Republican-led Senate is unlikely to support his impeachment.
Portfolio Review
Stock selection was the primary driver of relative outperformance during the period. Strong selections in the industrials, health care and information technology sectors
were partially offset by weak selections in the financials, energy and communication services sectors. Sector allocation, a residual of the Fund’s bottom-up stock selection process, was slightly negative
as frictional cash reserves dragged in a strong market. This was partially offset by the Fund’s underweight allocation to the health care sector. During the period there were no derivatives used in the portfolio.
Outlook
As we look into 2020, we believe that many of the constructive
fundamental drivers of U.S. economic growth in 2019 persist. Labor markets remain healthy — wage gains continue to bolster consumer confidence, but should not trigger outsized inflation due to continued productivity improvements. The U.S.
housing market has turned the corner after six quarters of negative growth, responding to rate cuts by the Fed. Moving forward, Fed action is likely to be more gradual, having now achieved targeted levels of inflation. This should also result
in less volatility for the U.S. dollar.
Trade negotiations between the U.S. and China will remain vitally important to markets. The year ended with encouraging
progress — the “List 4” tariffs slated for December implementation were delayed, and indications that forward progress for a “Phase 1” agreement were in place. Additionally, we are of the view
| 1 |
The Russell 1000® Growth Index is an unmanaged
market-capitalization-weighted index that measures the performance of those companies in the Russell 1000® Index (which consists of the
1.000 largest U.S. companies based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values. Index results assume the
reinvestment of dividends paid on the stocks constituting the Index. You may not invest in the Index, and, unlike the Fund, the Index does not incur fees or expenses. Russell Investment Group is the source and owner of the trademarks, service marks
and copyrights related to the Russell Indexes. Russell® is a trademark of Russell Investment Group. |
| 2 |
The Standard & Poor’s 500® Index (the “S&P
500 Index”) is an unmanaged market-capitalization-weighted index generally considered to be representative of U.S. equity market activity. The S&P 500 Index consists of 500 stocks representing leading industries of the U.S. economy. Index
results assume the reinvestment of dividends paid on the stocks constituting the Index. You may not invest in the S&P 500 Index, and, unlike the fund, the S&P 500 Index does not incur fees or expenses. |
GUARDIAN LARGE CAP DISCIPLINED GROWTH VIP FUND
that the passage of the tri-party United States-Mexico-Canada Agreement (a
replacement for NAFTA) may provide important certainty to North American supply chains.
As the new year begins, U.S. politics will first be dominated by a historic
presidential impeachment trial in the U.S. Senate, before yielding to a rapid succession of Democratic Party primaries that will provide more certainty into both the eventual Democratic candidate as well as the main platform issues to be put forward
by that
party in the U.S. presidential election. The outcome at the ballot box could warrant future action in the Fund, but given the wide range of possible outcomes at this point, this bears more
monitoring than action at this time.
We remain consistent in adhering to our disciplined portfolio construction process that allows us to assess risk, weight
individual positions accordingly, and in the process build a portfolio that focuses largely on stock selection for generating potential returns.
Funds in the Guardian Variable Products Trust are
sold by prospectus only. You should carefully consider the investment objectives, risks, charges and expenses of the Funds before making an investment decision. The prospectus contains this and other important information. Please read it carefully
before investing or sending money. Please visit our website at http://guardianvpt.onlineprospectus.net/GuardianVPT/ Prospectuses or to obtain a printed copy, call
1-888-GUARDIAN (1-888-482-7342).
As with all mutual funds, the value of an investment in the Fund could decline, and you could lose money. Diversification does not guarantee profit or protect against
loss, and there can be no assurance that the Fund will achieve its investment objective. The Fund invests primarily in equity securities and therefore exposes you to the general risks of investing in stock markets. Investing in
large-capitalization companies involves risks such as having low growth rates, and slow responsiveness to competitive challenges or opportunities than in the case of smaller companies. Investments in growth companies may be highly volatile.
Growth stocks may not realize their perceived growth potential and during certain periods the Fund may underperform other equity funds that employ a different style. International investing involves special risks, which include changes in currency
rates, foreign taxation and differences in auditing standards and securities regulations, political uncertainty and greater volatility. Foreign securities are subject to political, regulatory, economic, and exchange-rate risks not present in
domestic investments. Investing in a more limited number of issuers and sectors can be subject to greater market fluctuation. Any discussions of specific securities should not be considered a recommendation to buy or sell those securities. Fund
holdings will vary.
GUARDIAN LARGE CAP DISCIPLINED GROWTH VIP FUND
Fund Characteristics (unaudited)
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| Total Net Assets: $625,754,751 |
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Sector Allocation1 As of
December 31, 2019 |
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| Top Ten Holdings2 As of December 31, 2019 |
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% of Total
Net Assets |
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| Apple, Inc. |
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7.44% |
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| Microsoft Corp. |
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6.50% |
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| Alphabet, Inc., Class A |
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4.71% |
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| Amazon.com, Inc. |
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4.59% |
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| Facebook, Inc., Class A |
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3.74% |
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| MasterCard, Inc., Class A |
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3.01% |
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| UnitedHealth Group, Inc. |
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2.52% |
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| salesforce.com, Inc. |
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1.97% |
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| Adobe, Inc. |
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1.88% |
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| NIKE, Inc., Class B |
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1.81% |
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| Total |
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38.17% |
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| 1 |
The Fund’s holdings are allocated to each sector based on the MSCI Global Industry Classification Standard (GICS®). Cash includes short-term investments and net other assets and liabilities. |
| 2 |
Portfolio holdings are subject to change and should not be considered a recommendation to buy or sell individual
securities. |
GUARDIAN LARGE CAP DISCIPLINED GROWTH VIP FUND
Fund Performance (unaudited)
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| Average Annual Total Returns
As of December 31, 2019 |
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Inception Date |
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1 Year |
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5 Year |
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10 Year |
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Since Inception |
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| Guardian Large Cap Disciplined Growth VIP Fund |
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9/1/2016 |
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39.54% |
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— |
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— |
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18.21% |
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| Russell 1000® Growth Index |
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36.39% |
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— |
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18.72% |
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Results of a Hypothetical $10,000 Investment As of December 31,
2019 |
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The chart above shows the performance of a hypothetical $10,000 investment made on inception date in Guardian Large Cap Disciplined Growth
VIP Fund and the Russell 1000® Growth Index. Index returns do not include the fees and expenses of the Fund, but do include reinvestment of dividends, if any.
Performance quoted represents past performance and does not guarantee or predict future results. Investment return and principal value will fluctuate, so shares, when
redeemed, may be worth more or less than their original cost. The Fund’s fees and expenses are detailed in the Financial Highlights section of this report. Fees and expenses are factored into the net asset value of Fund shares and any
performance numbers we release. Total return figures include the effect of expense limitations in effect during the periods shown, if applicable; without such limitations, the performance shown would have been lower. Performance results assume the
reinvestment of dividends and capital gains. The return figures shown do not reflect the deduction of taxes that a contract owner/policyholder may pay on redemption units. The actual total returns for owners of variable annuity contracts or variable
life insurance policies that provide for investment in the Fund will be lower to reflect separate account and contract/policy charges. Current and month-end performance information, which may be lower or
higher than that cited, is available by calling 1-888-GUARDIAN
(1-888-482-7342) and is periodically updated on our website: http://guardianlife.com.
UNDERSTANDING YOUR FUND’S EXPENSES (UNAUDITED)
By investing in the Fund, you incur two types of costs: (1) transaction costs and (2) ongoing costs, including,
as applicable, investment advisory fees, distribution and/or service (12b-1) fees and other Fund expenses. The example below is intended to help you understand your ongoing costs (in dollars) of investing in
the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the
beginning of the period and held for the entire period from July 1, 2019 to December 31, 2019. The table below shows the Fund’s expenses in two ways:
Expenses based on actual return
This section of the table provides
information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for
example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the section under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this
period.
Expenses based on hypothetical 5% return for comparison purposes
This section of the table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund with the cost of investing in other mutual funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the
other funds.
Note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads), redemption fees, or exchange fees. Therefore the second section is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. If these transactional costs were
included, your costs would have been higher. Charges and expenses at the insurance company separate account level are not reflected in the table.
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Beginning
Account Value
7/1/19 |
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Ending
Account Value
12/31/19 |
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Expenses Paid
During Period* 7/1/19-12/31/19 |
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Expense Ratio
During Period
7/1/19-12/31/19 |
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| Based on Actual Return |
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$1,000.00 |
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$1,126.40 |
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$4.66 |
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0.87% |
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| Based on Hypothetical Return (5% Return Before Expenses) |
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$1,000.00 |
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$1,020.82 |
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$4.43 |
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0.87% |
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| * |
Expenses are equal to the Fund’s annualized expense ratio as indicated, multiplied by the average account value over
the period, multiplied by 184/365 (to reflect the one-half year period). |
SCHEDULE OF INVESTMENTS — GUARDIAN LARGE CAP DISCIPLINED GROWTH VIP
FUND
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| December 31, 2019 |
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Shares |
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Value |
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| Common Stocks – 99.5% |
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| Aerospace & Defense – 1.4% |
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| Raytheon Co. |
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39,705 |
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$ |
8,724,777 |
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8,724,777 |
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| Beverages – 2.3% |
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| Constellation Brands, Inc., Class A |
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35,373 |
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6,712,027 |
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| Monster Beverage Corp.(1) |
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115,742 |
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7,355,404 |
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14,067,431 |
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| Biotechnology – 2.8% |
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| Biogen, Inc.(1) |
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10,337 |
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3,067,298 |
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| Sarepta Therapeutics, Inc.(1) |
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24,717 |
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3,189,482 |
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| Seattle Genetics, Inc.(1) |
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40,076 |
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4,579,084 |
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| Vertex Pharmaceuticals, Inc.(1) |
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31,669 |
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6,933,927 |
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17,769,791 |
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| Building Products – 1.1% |
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| Fortune Brands Home & Security,
Inc. |
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101,498 |
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6,631,879 |
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6,631,879 |
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| Capital Markets – 0.9% |
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| Intercontinental Exchange, Inc. |
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63,708 |
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5,896,175 |
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5,896,175 |
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| Chemicals – 1.8% |
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| PPG Industries, Inc. |
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51,703 |
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6,901,833 |
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| The Sherwin-Williams Co. |
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7,107 |
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4,147,219 |
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11,049,052 |
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| Commercial Services & Supplies – 0.9% |
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| Copart, Inc.(1) |
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58,671 |
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5,335,541 |
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5,335,541 |
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| Consumer Finance – 1.8% |
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| American Express Co. |
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52,824 |
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6,576,060 |
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| Capital One Financial Corp. |
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47,917 |
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4,931,138 |
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11,507,198 |
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| Diversified Telecommunication Services – 0.8% |
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| Verizon Communications, Inc. |
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75,760 |
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4,651,664 |
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4,651,664 |
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| Electrical Equipment – 1.9% |
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| AMETEK, Inc. |
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62,951 |
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6,278,733 |
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| Eaton Corp. PLC |
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57,616 |
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5,457,387 |
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11,736,120 |
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| Electronic Equipment, Instruments & Components – 1.6% |
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| CDW Corp. |
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42,876 |
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6,124,408 |
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| Zebra Technologies Corp., Class A(1) |
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15,585 |
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3,981,032 |
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10,105,440 |
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| Entertainment – 2.1% |
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| Activision Blizzard, Inc. |
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109,757 |
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6,521,761 |
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| The Walt Disney Co. |
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46,106 |
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6,668,311 |
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13,190,072 |
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| Equity Real Estate Investment – 1.2% |
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| American Tower Corp. REIT |
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33,358 |
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7,666,336 |
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7,666,336 |
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| December 31, 2019 |
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Shares |
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Value |
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| Food & Staples Retailing – 1.6% |
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| Costco Wholesale Corp. |
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34,342 |
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$ |
10,093,801 |
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10,093,801 |
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| Health Care Equipment & Supplies – 4.1% |
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| Baxter International, Inc. |
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104,174 |
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8,711,030 |
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| Becton Dickinson and Co. |
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17,545 |
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4,771,714 |
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| Edwards Lifesciences Corp.(1) |
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25,225 |
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5,884,740 |
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| Teleflex, Inc. |
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17,183 |
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6,468,368 |
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25,835,852 |
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| Health Care Providers & Services – 2.5% |
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| UnitedHealth Group, Inc. |
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53,604 |
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15,758,504 |
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15,758,504 |
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| Hotels, Restaurants & Leisure – 2.2% |
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| Hilton Worldwide Holdings, Inc. |
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71,077 |
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7,883,150 |
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| McDonald’s Corp. |
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28,736 |
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5,678,521 |
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13,561,671 |
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| Household Products – 2.0% |
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| Colgate-Palmolive Co. |
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107,092 |
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7,372,213 |
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| The Procter & Gamble Co. |
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41,780 |
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5,218,322 |
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12,590,535 |
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| Insurance – 0.8% |
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| The Allstate Corp. |
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46,130 |
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5,187,319 |
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5,187,319 |
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| Interactive Media & Services – 9.8% |
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| Alphabet, Inc., Class A(1) |
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22,008 |
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29,477,295 |
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| Alphabet, Inc., Class C(1) |
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6,121 |
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8,183,899 |
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| Facebook, Inc., Class A(1) |
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113,923 |
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23,382,696 |
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|
|
| |
|
|
| |
|
|
|
|
|
|
61,043,890 |
|
| Internet & Direct Marketing Retail – 4.6% |
|
|
|
|
|
| |
|
|
| Amazon.com, Inc.(1) |
|
|
15,544 |
|
|
|
28,722,825 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
28,722,825 |
|
| IT Services – 9.1% |
|
|
|
|
|
| |
|
|
| EPAM Systems, Inc.(1) |
|
|
21,374 |
|
|
|
4,534,708 |
|
| |
|
|
| FleetCor Technologies, Inc.(1) |
|
|
30,434 |
|
|
|
8,756,470 |
|
| |
|
|
| Global Payments, Inc. |
|
|
55,683 |
|
|
|
10,165,488 |
|
| |
|
|
| GoDaddy, Inc., Class A(1) |
|
|
91,213 |
|
|
|
6,195,187 |
|
| |
|
|
| MasterCard, Inc., Class A |
|
|
63,096 |
|
|
|
18,839,835 |
|
| |
|
|
| PayPal Holdings, Inc.(1) |
|
|
79,545 |
|
|
|
8,604,383 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
57,096,071 |
|
| Life Sciences Tools & Services – 1.5% |
|
|
|
|
|
| |
|
|
| Thermo Fisher Scientific, Inc. |
|
|
29,615 |
|
|
|
9,621,025 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
9,621,025 |
|
| Machinery – 3.0% |
|
|
|
|
|
| |
|
|
| Illinois Tool Works, Inc. |
|
|
47,523 |
|
|
|
8,536,556 |
|
| |
|
|
| Nordson Corp. |
|
|
34,777 |
|
|
|
5,663,087 |
|
| |
|
|
| Snap-on,
Inc. |
|
|
25,213 |
|
|
|
4,271,082 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
18,470,725 |
|
| Oil, Gas & Consumable Fuels – 0.4% |
|
|
|
|
|
| |
|
|
| Continental Resources, Inc. |
|
|
74,263 |
|
|
|
2,547,221 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
2,547,221 |
|
|
|
|
|
|
| 6 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
SCHEDULE OF INVESTMENTS — GUARDIAN LARGE CAP DISCIPLINED GROWTH VIP FUND
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Shares |
|
|
Value |
|
| Pharmaceuticals – 2.2% |
|
|
|
|
|
| |
|
|
| Allergan PLC |
|
|
27,254 |
|
|
$ |
5,210,147 |
|
| |
|
|
| Eli Lilly & Co. |
|
|
65,645 |
|
|
|
8,627,723 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
13,837,870 |
|
| |
| Professional Services – 1.3% |
|
| |
|
|
| Equifax, Inc. |
|
|
28,202 |
|
|
|
3,951,664 |
|
| |
|
|
| IHS Markit Ltd.(1) |
|
|
58,452 |
|
|
|
4,404,358 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
8,356,022 |
|
| Road & Rail – 1.3% |
|
|
|
|
|
| |
|
|
| Norfolk Southern Corp. |
|
|
25,790 |
|
|
|
5,006,613 |
|
| |
|
|
| Uber Technologies, Inc.(1) |
|
|
112,461 |
|
|
|
3,344,590 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
8,351,203 |
|
| Semiconductors & Semiconductor Equipment – 3.7% |
|
| |
|
|
| Advanced Micro Devices,
Inc.(1) |
|
|
149,185 |
|
|
|
6,841,624 |
|
| |
|
|
| Marvell Technology Group Ltd. |
|
|
235,067 |
|
|
|
6,243,380 |
|
| |
|
|
| Micron Technology, Inc.(1) |
|
|
94,757 |
|
|
|
5,096,032 |
|
| |
|
|
| ON Semiconductor Corp.(1) |
|
|
198,559 |
|
|
|
4,840,868 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
23,021,904 |
|
| Software – 14.8% |
|
|
|
|
|
| |
|
|
| Adobe, Inc.(1) |
|
|
35,682 |
|
|
|
11,768,280 |
|
| |
|
|
| DocuSign, Inc.(1) |
|
|
62,086 |
|
|
|
4,601,193 |
|
| |
|
|
| Guidewire Software, Inc.(1) |
|
|
42,824 |
|
|
|
4,700,791 |
|
| |
|
|
| Microsoft Corp. |
|
|
257,838 |
|
|
|
40,661,053 |
|
| |
|
|
| salesforce.com, Inc.(1) |
|
|
76,034 |
|
|
|
12,366,170 |
|
| |
|
|
| ServiceNow, Inc.(1) |
|
|
25,435 |
|
|
|
7,180,809 |
|
| |
|
|
| SS&C Technologies Holdings, Inc. |
|
|
92,409 |
|
|
|
5,673,913 |
|
| |
|
|
| Workday, Inc., Class A(1) |
|
|
33,852 |
|
|
|
5,566,961 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
92,519,170 |
|
| Specialty Retail – 1.5% |
|
|
|
|
|
| |
|
|
| The TJX Cos., Inc. |
|
|
156,904 |
|
|
|
9,580,558 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
9,580,558 |
|
| Technology Hardware, Storage & Peripherals – 7.5% |
|
| |
|
|
| Apple, Inc. |
|
|
158,648 |
|
|
|
46,586,985 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
46,586,985 |
|
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Shares |
|
|
Value |
|
| Textiles, Apparel & Luxury Goods – 5.0% |
|
| |
|
|
| NIKE, Inc., Class B |
|
|
111,629 |
|
|
$ |
11,309,134 |
|
| |
|
|
| PVH Corp. |
|
|
58,969 |
|
|
|
6,200,590 |
|
| |
|
|
| Under Armour, Inc., Class C(1) |
|
|
318,587 |
|
|
|
6,110,499 |
|
| |
|
|
| VF Corp. |
|
|
77,025 |
|
|
|
7,676,312 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
31,296,535 |
|
| |
|
Total Common Stocks
(Cost $540,134,457) |
|
|
|
622,411,162 |
|
|
|
|
|
|
|
|
|
|
| |
|
Principal
Amount |
|
|
Value |
|
| Short–Term Investment – 0.6% |
|
| |
| Repurchase Agreements – 0.6% |
|
| |
|
|
| Fixed Income
Clearing Corp., 0.12%, dated 12/31/2019, proceeds at maturity value of $3,712,025, due
1/2/2020(2) |
|
$ |
3,712,000 |
|
|
|
3,712,000 |
|
| |
|
Total Repurchase Agreements
(Cost $3,712,000) |
|
|
|
3,712,000 |
|
| |
|
Total Investments – 100.1%
(Cost $543,846,457) |
|
|
|
626,123,162 |
|
| |
|
| Liabilities in excess of other assets – (0.1)% |
|
|
|
(368,411 |
) |
| |
|
| Total Net Assets – 100.0% |
|
|
$ |
625,754,751 |
|
| (1) |
Non–income–producing security. |
| (2) |
The table below presents collateral for repurchase agreements. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Security |
|
Coupon |
|
|
Maturity
Date |
|
|
Principal
Amount |
|
|
Value |
|
| U.S. Treasury Note |
|
|
2.75% |
|
|
|
9/15/2021 |
|
|
$ |
3,690,000 |
|
|
$ |
3,790,375 |
|
Legend:
REIT — Real Estate Investment Trust
The following is a summary of the inputs used as of December 31, 2019 in valuing the Fund’s investments. For
more information on valuation inputs, please refer to Note 2a of the accompanying Notes to Financial Statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Valuation Inputs |
|
|
|
|
| Investments in Securities |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
| Common Stocks |
|
$ |
622,411,162 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
622,411,162 |
|
| Repurchase Agreements |
|
|
— |
|
|
|
3,712,000 |
|
|
|
— |
|
|
|
3,712,000 |
|
| Total |
|
$ |
622,411,162 |
|
|
$ |
3,712,000 |
|
|
$ |
— |
|
|
$ |
626,123,162 |
|
|
|
|
|
|
| The accompanying notes are an integral part of these financial statements. |
|
|
|
7 |
FINANCIAL INFORMATION — GUARDIAN LARGE CAP DISCIPLINED GROWTH VIP FUND
|
|
|
|
|
|
Statement of Assets and Liabilities As of December 31, 2019 |
|
| Assets |
|
|
|
|
| |
|
| Investments, at value |
|
$ |
626,123,162 |
|
| |
|
| Cash |
|
|
35,158 |
|
| |
|
| Dividends/interest receivable |
|
|
234,136 |
|
| |
|
| Reimbursement receivable from adviser |
|
|
6,680 |
|
| |
|
| Prepaid expenses |
|
|
29,892 |
|
| |
|
|
|
|
| |
|
| Total Assets |
|
|
626,429,028 |
|
| |
|
|
|
|
| |
|
| Liabilities |
|
|
|
|
| |
|
| Investment advisory fees payable |
|
|
288,574 |
|
| |
|
| Payable for fund shares redeemed |
|
|
170,950 |
|
| |
|
| Distribution fees payable |
|
|
131,547 |
|
| |
|
| Accrued audit fees |
|
|
22,105 |
|
| |
|
| Accrued custodian and accounting fees |
|
|
10,942 |
|
| |
|
| Accrued trustees’ and officers’
fees |
|
|
192 |
|
| |
|
| Accrued expenses and other liabilities |
|
|
49,967 |
|
| |
|
|
|
|
| |
|
| Total Liabilities |
|
|
674,277 |
|
| |
|
|
|
|
| |
|
| Total Net Assets |
|
$ |
625,754,751 |
|
| |
|
|
|
|
| |
|
| Net Assets Consist of: |
|
|
|
|
| |
|
| Paid-in
capital |
|
$ |
517,805,557 |
|
| |
|
| Distributable earnings |
|
|
107,949,194 |
|
| |
|
|
|
|
| |
|
| Total Net Assets |
|
$ |
625,754,751 |
|
| |
|
|
|
|
| |
|
| Investments, at Cost |
|
$ |
543,846,457 |
|
| |
|
|
|
|
| |
|
| Pricing of Shares |
|
|
|
|
| |
|
|
Shares of Beneficial Interest Outstanding with
No Par Value |
|
|
35,820,230 |
|
| |
|
| Net Asset Value Per Share |
|
|
$17.47 |
|
| |
|
|
|
|
|
|
|
|
|
|
Statement of Operations For the Year Ended December 31, 2019 |
|
|
|
| Investment Income |
|
|
|
|
| |
|
| Dividends |
|
$ |
2,367,023 |
|
| |
|
| Interest |
|
|
6,988 |
|
| |
|
|
|
|
| |
|
| Total Investment Income |
|
|
2,374,011 |
|
| |
|
|
|
|
| |
|
| Expenses |
|
|
|
|
| |
|
| Investment advisory fees |
|
|
1,586,536 |
|
| |
|
| Distribution fees |
|
|
689,102 |
|
| |
|
| Trustees’ and officers’ fees |
|
|
99,695 |
|
| |
|
| Professional fees |
|
|
80,982 |
|
| |
|
| Shareholder reports |
|
|
59,834 |
|
| |
|
| Administrative fees |
|
|
47,460 |
|
| |
|
| Custodian and accounting fees |
|
|
43,710 |
|
| |
|
| Transfer agent fees |
|
|
18,130 |
|
| |
|
| Other expenses |
|
|
30,957 |
|
| |
|
|
|
|
| |
|
| Total Expenses |
|
|
2,656,406 |
|
| |
|
| Less: Fees waived |
|
|
(258,331 |
) |
| |
|
|
|
|
| |
|
| Total Expenses, Net |
|
|
2,398,075 |
|
| |
|
|
|
|
| |
|
| Net Investment Income/(Loss) |
|
|
(24,064 |
) |
| |
|
|
|
|
| |
|
| Realized Gain/(Loss) and Change in Unrealized
Appreciation/(Depreciation) on Investments |
|
|
|
|
| |
|
| Net realized gain/(loss) from investments |
|
|
19,546,771 |
|
| |
|
| Net change in unrealized appreciation/(depreciation)
on investments |
|
|
86,374,561 |
|
| |
|
|
|
|
| |
|
| Net Gain on Investments |
|
|
105,921,332 |
|
| |
|
|
|
|
| |
|
| Net Increase in Net Assets Resulting From
Operations |
|
$ |
105,897,268 |
|
| |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| 8 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
FINANCIAL INFORMATION — GUARDIAN LARGE CAP DISCIPLINED GROWTH VIP FUND
|
|
|
|
|
|
|
|
|
|
Statements of Changes in Net Assets |
|
| |
|
|
| |
|
For the
Year Ended
12/31/19 |
|
|
For the
Year Ended
12/31/18 |
|
| |
|
|
|
| Operations |
|
|
|
|
|
|
|
|
| |
|
|
| Net investment income/(loss) |
|
$ |
(24,064 |
) |
|
$ |
(78,248 |
) |
| |
|
|
| Net realized gain/(loss) from investments |
|
|
19,546,771 |
|
|
|
4,802,346 |
|
| |
|
|
| Net change in unrealized appreciation/(depreciation)
on investments |
|
|
86,374,561 |
|
|
|
(5,628,435 |
) |
| |
|
|
|
|
|
|
|
|
| |
|
|
| Net Increase/(Decrease) in Net Assets Resulting
from Operations |
|
|
105,897,268 |
|
|
|
(904,337 |
) |
| |
|
|
|
|
|
|
|
|
| |
|
|
| Capital Share Transactions |
|
|
|
|
|
|
|
|
| |
|
|
| Proceeds from sales of shares |
|
|
403,864,159 |
1 |
|
|
215,934,389 |
|
| |
|
|
| Cost of shares redeemed |
|
|
(65,150,899 |
) |
|
|
(42,406,621 |
) |
| |
|
|
|
|
|
|
|
|
| |
|
|
| Net Increase in Net Assets Resulting from Capital
Share Transactions |
|
|
338,713,260 |
|
|
|
173,527,768 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| Net Increase in Net Assets |
|
|
444,610,528 |
|
|
|
172,623,431 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| Net Assets |
|
|
|
|
|
|
|
|
| |
|
|
| Beginning of year |
|
|
181,144,223 |
|
|
|
8,520,792 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| End of year |
|
$ |
625,754,751 |
|
|
$ |
181,144,223 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| Other Information: |
|
|
|
|
|
|
|
|
| |
|
|
| Shares |
|
|
|
|
|
|
|
|
| |
|
|
| Sold |
|
|
25,527,981 |
|
|
|
16,846,940 |
|
| |
|
|
| Redeemed |
|
|
(4,177,591 |
) |
|
|
(3,049,778 |
) |
| |
|
|
|
|
|
|
|
|
| |
|
|
| Net Increase |
|
|
21,350,390 |
|
|
|
13,797,162 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| 1 |
Includes in-kind subscriptions of $352,026,598. The cost basis of the contributed securities is equal to the market value
of the securities on the date of the subscription. |
|
|
|
|
|
| The accompanying notes are an integral part of these financial statements. |
|
|
|
9 |
FINANCIAL INFORMATION — GUARDIAN LARGE CAP DISCIPLINED GROWTH VIP
FUND
The Financial Highlights table is intended to help you understand the Fund’s
financial performance for the past five years (or, if shorter, the period since inception). Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned
(or lost) on an investment in the Fund.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Highlights |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Per Share Operating Performance |
|
|
|
|
| |
|
Net Asset Value,
Beginning of
Period |
|
|
Net Investment
Income/(Loss)(1) |
|
|
Net Realized
and Unrealized
Gain/(Loss) |
|
|
Total
Operations |
|
|
Net Asset
Value, End of
Period |
|
|
Total
Return(2) |
|
| |
|
|
|
|
|
|
| Year Ended 12/31/19 |
|
$ |
12.52 |
|
|
$ |
(0.00 |
)(4) |
|
$ |
4.95 |
|
|
$ |
4.95 |
|
|
$ |
17.47 |
|
|
|
39.54% |
|
| |
|
|
|
|
|
|
| Year Ended 12/31/18 |
|
|
12.67 |
|
|
|
(0.01 |
) |
|
|
(0.14 |
) |
|
|
(0.15 |
) |
|
|
12.52 |
|
|
|
(1.18)% |
|
| |
|
|
|
|
|
|
| Year Ended 12/31/17 |
|
|
9.85 |
|
|
|
0.03 |
|
|
|
2.79 |
|
|
|
2.82 |
|
|
|
12.67 |
|
|
|
28.63% |
|
| |
|
|
|
|
|
|
| Period Ended
12/31/16(5) |
|
|
10.00 |
|
|
|
0.01 |
|
|
|
(0.16 |
) |
|
|
(0.15 |
) |
|
|
9.85 |
|
|
|
(1.50)% |
(6) |
|
|
|
|
|
| 10 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
FINANCIAL INFORMATION — GUARDIAN LARGE CAP DISCIPLINED GROWTH VIP FUND
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Ratios/Supplemental Data |
|
Net Assets, End
of Period (000s) |
|
|
Net Ratio of
Expenses to
Average
Net Assets(3) |
|
|
Gross Ratio of
Expenses to
Average Net
Assets |
|
|
Net Ratio of Net
Investment Income/
(Loss) to Average
Net Assets(3) |
|
|
Gross Ratio of Net
Investment Loss
to Average
Net Assets |
|
|
Portfolio
Turnover Rate |
|
|
|
|
|
|
|
| $ |
625,755 |
|
|
|
0.87% |
|
|
|
0.96% |
|
|
|
(0.01)% |
|
|
|
(0.10)% |
|
|
|
116% |
|
|
|
|
|
|
|
| |
181,144 |
|
|
|
0.87% |
|
|
|
1.04% |
|
|
|
(0.05)% |
|
|
|
(0.22)% |
|
|
|
47% |
|
|
|
|
|
|
|
| |
8,521 |
|
|
|
1.00% |
|
|
|
2.08% |
|
|
|
0.27% |
|
|
|
(0.81)% |
|
|
|
77% |
|
|
|
|
|
|
|
| |
8,165 |
|
|
|
1.00% |
(6) |
|
|
3.16% |
(6) |
|
|
0.39% |
(6) |
|
|
(1.77)% |
(6) |
|
|
42% |
(6) |
| (1) |
Calculated based on the average shares outstanding during the period. |
| (2) |
Total returns do not reflect the effects of charges deducted pursuant to the terms of The Guardian Insurance &
Annuity Company, Inc.’s variable contracts. Inclusion of such charges would reduce the total returns for all periods shown. |
| (3) |
Net Ratio of Expenses to Average Net Assets and Net Ratio of Net Investment Income/(Loss) to Average Net Assets include
the effect of fee waivers and expense limitations. |
| (4) |
Rounds to $(0.00) per share. |
| (5) |
Commenced operations on September 1, 2016. |
| (6) |
Ratios for periods less than one year have been annualized, except for total return and portfolio turnover rate. For the
period ended December 31, 2016, certain non-recurring fees (i.e., audit fees) are not annualized. |
|
|
|
|
|
| The accompanying notes are an integral part of these financial statements. |
|
|
|
11 |
NOTES TO FINANCIAL STATEMENTS — GUARDIAN LARGE CAP DISCIPLINED
GROWTH VIP FUND
December 31, 2019
1.
Organization
Guardian Variable Products Trust (the “Trust”), a Delaware statutory trust organized on January 12, 2016, is registered under the
Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Trust currently has sixteen series. Guardian Large Cap Disciplined Growth VIP Fund (the
“Fund”) is a series of the Trust. The Fund is a diversified fund and commenced operations on September 1, 2016. The financial statements for other series of the Trust are presented in separate reports.
The Trust has authorized an unlimited number of shares of beneficial interest with no par value. Shares are bought and sold at closing net asset value (“NAV”).
Shares of the Fund are only sold to certain separate accounts of The Guardian Insurance & Annuity Company, Inc. (“GIAC”) that fund certain variable annuity contracts and variable life insurance policies issued by GIAC. GIAC is a
wholly-owned subsidiary of The Guardian Life Insurance Company of America (“Guardian Life”).
The Fund seeks to maximize long-term growth.
2. Significant Accounting Policies
The following is a summary of significant
accounting policies followed by the Fund in the preparation of its financial statements. The Fund follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards
Codification Topic 946 Financial Services — Investment Companies. The following policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements
in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.
a. Investment Valuations Equity securities traded on an exchange other than NASDAQ Stock Market, LLC (“NASDAQ”) are valued at the last reported sale
price on the principal exchange or market on which they are traded; or, if there were no sales that day, at the mean between the closing bid and ask prices. Securities traded on the NASDAQ are generally valued at the NASDAQ official closing price,
which may not be the last sale price. If the NASDAQ official closing price is not available
for a security, that security is generally valued at the mean between the closing bid and ask prices. Repurchase agreements are carried at cost, which approximates fair value (see Note 5d).
Foreign securities are valued in the currencies of the markets in which they trade and then converted to U.S. dollars by the application of foreign exchange rates at the close of the New York Stock Exchange (“NYSE”). Forward foreign
currency contracts, if any, are valued at the mean between the bid and ask rates for the specified time interpolated from rates for proximate time periods. Securities for which market quotations are not readily available or for which market
quotations may be considered unreliable are valued at their fair values as determined in accordance with policies and procedures adopted by the Board of Trustees.
Under the policies and procedures approved by the Board of Trustees, Park Avenue Institutional Advisers LLC (“Park Avenue”), the Fund’s investment
adviser, has established a Fair Valuation Committee to assist the Board of Trustees with the oversight and monitoring of the valuation of the Fund’s investments. This includes monitoring the appropriateness of fair values based on results of
ongoing valuation oversight, including but not limited to consideration of security specific events, market events, and pricing vendor and broker-dealer due diligence. The Fair Valuation Committee oversees and carries out the policies for the
valuation of investments held in the Fund. The Fair Valuation Committee is responsible for discussing and assessing the potential impacts to the fair values on an ongoing basis, and at least on a quarterly basis with the Board of Trustees.
Securities whose values have been materially affected by events occurring before the Fund’s valuation time but after the close of the securities’ principal
exchange or market may be fair valued in accordance with policies and procedures adopted by the Board of Trustees. In addition, the values of the Fund’s investments in foreign securities are generally determined by a pricing service using
pricing models designed to estimate likely changes in the values of those securities. Certain foreign equity instruments are valued by applying international fair value factors provided by approved pricing services. The factors seek to adjust the
local closing price for movements of local markets post closing, but prior to the time the NAVs are calculated. Valuations reflected in this report are as of the report date. As a result, changes in valuation due to market events and/or issuer
related events after the report date and prior to issuance of the report are not reflected herein.
NOTES TO FINANCIAL STATEMENTS — GUARDIAN LARGE CAP DISCIPLINED GROWTH VIP FUND
Various inputs are used in determining the valuation of the Fund’s investments. These inputs are summarized in three
broad levels listed below.
| • |
|
Level 1 — unadjusted inputs using quoted prices in active markets for identical investments. |
| • |
|
Level 2 — other significant observable inputs, including, but not limited to, quoted prices for similar investments, inputs other than quoted prices that are observable for investments (such as interest
rates, prepayment speeds, credit risks, etc.) or other market corroborated inputs. |
| • |
|
Level 3 — significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments) |
Inputs may include price information, volatility statistics, specific and broad credit data, liquidity statistics, and other factors. A financial instrument’s level
within the fair value hierarchy is based on the lowest level of any input; both individually and in aggregate, that is significant to the fair value measurement. However, the determination of what constitutes “observable” requires
significant judgment by the Trust. The Trust considers observable data to be that market data which is readily available, regularly distributed or updated, reliable and verifiable, and provided by independent sources that are actively involved in
the relevant market. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. Changes in valuation techniques may result in transfers into or out of a
financial instrument’s assigned level within the hierarchy.
The FASB requires reporting entities to make disclosures about purchases, sales, issuances and
settlements of Level 3 securities on a gross basis. For the year ended December 31, 2019, there were no transfers into or out of Level 3 of the fair value hierarchy.
In determining a financial instrument’s placement within the hierarchy, the Trust separates the Fund’s investment portfolio into two categories: investments
and derivatives (e.g., futures). A summary of inputs used to value the Fund’s assets and liabilities carried at fair value as of December 31, 2019 is included in the Schedule of Investments.
Investments Investments whose values are based on quoted market prices in active markets, and are therefore classified within Level 1, include active
listed equities. Investments that trade in markets that are not considered to be active, but are valued based on quoted market prices, dealer quotations or alternative pricing
sources supported by observable inputs are classified within Level 2. These include certain U.S. government and sovereign obligations, most government agency securities, investment-grade
corporate bonds, certain mortgage products, state, municipal and provincial obligations, and certain foreign equity securities, including securities whose prices may have been affected by events occurring after the close of trading on their
principal exchange or market and, as a result, whose values are determined by a pricing service as described above, or securities whose values are otherwise determined using fair valuation methods approved by the Fund’s Board of Trustees.
Investments classified within Level 3 have significant unobservable inputs, as they trade infrequently or not at all. Level 3 investments include, among
others, private placement securities. When observable prices are not available for these securities, the Trust uses one or more valuation techniques for which sufficient and reliable data is available. The inputs used by the Trust in estimating the
value of Level 3 investments include, for example, the original transaction price, recent transactions in the same or similar instruments, completed or pending third-party transactions in the underlying investment or comparable issuers,
subsequent rounds of financing, recapitalizations, and other transactions across the capital structure. Level 3 investments may also be adjusted to reflect illiquidity and/or non-transferability, with the
amount of such discount estimated by the Trust in the absence of market information. Assumptions used by the Trust due to the lack of observable inputs may significantly impact the resulting fair value and therefore the Fund’s results of
operations. As of December 31, 2019, the Fund had no securities classified as Level 3.
Derivatives Exchange-traded derivatives, such as
futures contracts, exchange-traded option contracts and certain swaps, are typically classified within Level 1 or Level 2 of the fair value hierarchy depending on whether or not they are deemed to be actively traded. Certain non-exchange-traded derivatives, such as generic forwards, certain swaps and options, have inputs which can generally be corroborated by market data and are therefore classified within Level 2. During the year
ended December 31, 2019, the Fund did not hold any derivatives.
b. Securities Transactions Securities transactions are accounted for on the date
securities are purchased or sold (trade date). Realized gains or losses on securities transactions are determined on the basis of specific identification.
NOTES TO FINANCIAL STATEMENTS — GUARDIAN LARGE CAP DISCIPLINED GROWTH VIP FUND
c. Foreign Currency Translation The accounting records of the Fund are maintained in U.S. dollars. Investment
securities and all other assets and liabilities of the Fund denominated in a foreign currency are generally translated into U.S. dollars at the exchange rates quoted at the close of the NYSE on each business day. The market value of investment
securities and other assets and liabilities are translated at the exchange rate as of the valuation date. Purchases and sales of securities, income receipts, and expense payments are translated into U.S. dollars at the exchange rates in effect on
the dates of the respective transactions. The Fund does not isolate the portion of the fluctuations on investments resulting from changes in foreign currency exchange rates from the fluctuations in market prices of investments held. Such
fluctuations are included in the Net change in net realized and unrealized gain/(loss) from investments on the Statement of Operations.
Reported realized foreign
currency gains and losses arise from the disposition of foreign currency, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest and foreign
withholding taxes recorded on the Fund’s books on the transaction date and the U.S. dollar equivalent of the amounts actually received or paid. These reported realized foreign currency gains and losses, if any, are included in Net realized
gain/(loss) from foreign currency transactions on the Statement of Operations. Unrealized foreign currency gains and losses arise from changes (due to changes in exchange rates) in the value of foreign currency and other assets and liabilities
denominated in foreign currencies, which are held at period end, if any, and are included in Net change in unrealized appreciation/(depreciation) on translation of assets and liabilities in foreign currencies on the Statement of Operations.
d. Foreign Capital Gains Tax The Fund may be subject to foreign taxes on income, gains on investments or currency purchases/repatriation, a portion of which may
be recoverable. The Fund will accrue such taxes and recoveries as applicable, based upon their current interpretation of tax rules and regulations that exist in the markets in which they invest.
e. Investment Income Dividend income net of foreign taxes withheld, if any, is generally recorded on the ex-dividend date.
Interest income, which includes amortization/accretion of premium/discount, is determined using the interest income accrual method, and is accrued and recorded daily.
f. Allocation of Income and Expenses Many of the expenses of the Trust can be directly attributed to a specific
series of the Trust. Expenses that cannot be directly attributed to a specific series of the Trust are generally apportioned among all the series in the Trust, based on relative net assets. In calculating net asset value per share for each series of
the Trust, investment income, realized and unrealized gains and losses, and expenses other than series-specific expenses are allocated daily to each series based upon the proportion of net assets attributable to each series.
3. Transactions with Affiliates
a. Investment Advisory Fee and Expense
Limitation Under the terms of the advisory agreement, which, after its two year initial term, is reviewed and approved annually by the Board of Trustees, the Fund pays an investment advisory fee to Park Avenue. Park Avenue is a wholly-owned
subsidiary of Guardian Life and receives an investment advisory fee at an annual rate of 0.62% up to $100 million, 0.57% up to $300 million, 0.52% up to $500 million, and 0.50% in excess of $500 million of the Fund’s average
daily net assets. The fee is accrued daily and paid monthly.
Park Avenue has contractually agreed through April 30, 2020 to waive certain fees and/or reimburse
certain expenses incurred by the Fund to the extent necessary to limit the Fund’s total annual operating expenses after fee waiver and/or expense reimbursement to 0.87% of the Fund’s average daily net assets (excluding, if applicable, any
acquired fund fees and expenses, taxes, interest, transaction costs and brokerage commissions, litigation and extraordinary expenses). The limitation may not be increased or terminated prior to this time without action by the Board of Trustees, may
be terminated only upon approval of the Board of Trustees, and is subject to Park Avenue’s recoupment rights. For the year ended December 31, 2019, Park Avenue waived fees and/or paid Fund expenses in the amount of $258,331.
Park Avenue may be entitled to recoupment of previously waived fees and reimbursed expenses from the Fund for three years from the date of the waiver or reimbursement,
subject to the expense limitation in effect at the time of the waiver or reimbursement and at the time of the recoupment, if any. Amounts waived or reimbursed by Park Avenue pursuant to any expense limitation after April 9, 2018 are not subject
to Park Avenue’s recoupment rights. The amount available for potential future recoupment by Park Avenue from the
NOTES TO FINANCIAL STATEMENTS — GUARDIAN LARGE CAP DISCIPLINED GROWTH VIP FUND
Fund under the Expense Limitation Agreement and the expiration schedule at December 31, 2019 are as follows:
|
|
|
|
|
| |
|
| |
|
Potential Recoupment Amounts
Expiring |
| Total Potential
Recoupment
Amounts |
|
2021 |
|
2020 |
| $173,165 |
|
$38,387 |
|
$134,778 |
Park Avenue has entered into a Sub-Advisory Agreement with Wellington Management Company LLP
(“Wellington”). Wellington is responsible for providing day-to-day investment advisory services to the Fund, subject to the supervision of Park Avenue and the
oversight of the Board of Trustees. Sub-advisory fees are paid by Park Avenue and do not represent a separate or additional expense to the Fund.
b. Compensation of Trustees and Officers Trustees and officers who are interested persons of the Trust, as defined in the 1940 Act, receive no compensation from
the Fund, except for the Chief Compliance Officer of the Trust. Trustees of the Trust who are not interested persons of the Trust, and the Chief Compliance Officer, receive compensation and reimbursement of expenses from the Trust.
c. Distribution Fees Park Avenue Securities LLC (“PAS”), a wholly-owned subsidiary of Guardian Life, is the principal underwriter of Fund shares. The
Trust has entered into a distribution and service agreement with PAS, which governs the sale and distribution of shares of the Fund. Under a distribution and service plan adopted by the Trust (“12b-1
plan”), PAS is compensated for services in such capacity, including its expenses in connection with the promotion and distribution of shares of the Fund, at an annual rate of 0.25% of the Fund’s average daily net assets. For the year ended
December 31, 2019, the Fund paid distribution fees in the amount of $689,102 to PAS.
PAS has directed that certain payments under the 12b-1 plan be used to compensate GIAC for shareholder services provided to contract owners.
4. Federal Income Taxes
a. Distributions to Shareholders For federal income tax purposes, the Fund is treated as a disregarded entity (“DRE”). As a DRE, the Fund is not subject
to an entity-level income tax; and any income, gains, losses, deductions, taxes, and credits of the Fund would instead be “passed through” directly to the separate accounts
of GIAC that invest in the Fund and retain the same character for U.S. federal income tax purposes. In addition, the Fund is not required to distribute taxable income and capital gains for U.S.
federal income tax purposes. Therefore, no dividends and capital gains distributions were paid by the Fund.
5. Investments
a. Investment Purchases and Sales The cost of investments purchased and the proceeds from investments sold (excluding short-term investments and in-kind
transactions) amounted to $333,587,310 and $349,893,660, respectively, for the year ended December 31, 2019. During the year ended December 31, 2019, there were no purchases or sales of U.S. government securities.
b. Foreign Securities Foreign securities investments involve special risks and considerations not typically associated with U.S. investments. These risks include,
but are not limited to, currency risk; adverse political, regulatory, social, and economic developments; and less reliable information about issuers. Moreover, securities of some foreign issuers may be less liquid and their prices more volatile than
those of comparable U.S. issuers.
c. Industry or Sector Concentration In its normal course of business, the Fund may invest a significant portion of its
assets in companies within a limited number of industries or sectors. As a result, the Fund may be subject to a greater risk of loss than that of a fund invested in a wider spectrum of industries or sectors because the stocks of many or all of the
companies in the industry, group of industries, sector, or sectors may decline in value due to developments adversely affecting the industry, group of industries, sector, or sectors.
d. Repurchase Agreements The Fund may invest in repurchase agreements to maintain liquidity and earn income over periods of time as short as overnight. The
collateral for repurchase agreements is either cash or fully negotiable U.S. government securities (including U.S. government agency securities). Repurchase agreements are fully collateralized (including the interest accrued thereon) and such
collateral is marked to market daily while the agreements remain in force. If the value of the collateral falls below the repurchase price plus accrued interest, the Fund will typically require the seller to deposit additional collateral by the next
business day. If the request for additional collateral is not met, or the seller defaults, the Fund maintains the right to sell the collateral (although it may be prevented
NOTES TO FINANCIAL STATEMENTS — GUARDIAN LARGE CAP DISCIPLINED GROWTH VIP FUND
or delayed from doing so in certain circumstances) and may be required to claim any resulting loss against the seller.
Park Avenue monitors the creditworthiness of the seller with which the Fund enters into repurchase agreements.
6. Temporary Borrowings
The Fund, with other funds managed by Park Avenue, is party to a $10 million committed revolving credit facility from State Street Bank and Trust Company for
temporary borrowing purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of securities. Interest is calculated based on the higher of the daily one-month
LIBOR rate and the Federal Funds rate plus 1.25% at the time of borrowing. In addition to the interest charged on any borrowings by the Fund, each fund pays a commitment fee of 0.30% per annum on its share of the
unused portion of the credit facility. The agreement is in place until December 9, 2020. The Fund did not utilize the credit facility during the year ended December 31, 2019.
7. Indemnifications
Under the Trust’s organizational documents and, in
some cases, by contract, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Fund. In addition, in the normal course of business, the Fund enters into contracts with its vendors
and others that provide general indemnifications. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. However, based on experience,
the Fund expects the risk of loss to be remote.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees of Guardian Variable Products Trust and Shareholders of
Guardian Large Cap Disciplined Growth VIP Fund
Opinion on the
Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Guardian Large
Cap Disciplined Growth VIP Fund (one of the funds constituting Guardian Variable Products Trust, referred to hereafter as the “Fund”) as of December 31, 2019, the related statement of operations for the year ended
December 31, 2019, the statement of changes in net assets for each of the two years in the period ended December 31, 2019, including the related notes, and the financial highlights for each of the periods indicated therein
(collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2019, the results of its operations for
the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2019 and the financial highlights for each of the periods indicated therein in conformity with accounting principles generally
accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements
based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in
accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing
procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2019 by correspondence with the custodian. We
believe that our audits provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
New York, New York
February 20, 2020
We have served as the auditor of one or more investment companies in Guardian Variable Products Trust since 2016.
SUPPLEMENTAL INFORMATION (UNAUDITED)
Trustees and Officers Information Table
The following table provides information about the Trustees of the Trust.
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
Name and
Year of Birth |
|
Term of Office,
Position(s) Held and Length of
Service1 |
|
Principal
Occupation(s) During Past Five Years |
|
Number of
Funds
in Fund
Complex Overseen
by Trustees2 |
|
Other Directorships
Held by Trustee |
| Independent Trustees |
| |
|
|
|
|
| Bruce W. Ferris3 (born 1955) |
|
Trustee |
|
Retired (since 2015); President and CEO, Prudential Annuities Distributors, Inc. (2013–2015); Director/Trustee, Advanced Series Trust, The Prudential Series Fund and Prudential’s
Gibraltar Fund, Inc. (2013–2015); Senior Vice President, Prudential Annuities (2008–2015). |
|
16 |
|
None. |
| |
|
|
|
|
| Theda R. Haber3 (born 1954) |
|
Trustee |
|
Adjunct Assistant Professor of Law, UC Hastings College of Law (since 2013); Member of the Board of Directors, Fairholme Trust Company, LLC (2015–2019); Attorney, Law Office of Theda R.
Haber (since 2014); Visiting Professor of Law, UC Davis School of Law (since 2014); Consultant, Haber & Associates LLC (financial services industry), (2012–2017); Advisory Council Chair, Vice Chair, and Member, Advisory Council on
Employee Welfare and Pension Benefit Plans (ERISA Advisory Council), U.S. Department of Labor (2009-2011); Managing Director and General Counsel, BlackRock Institutional Trust Company, N.A. (2009–2011); Deputy Global General Counsel,
Barclays Global Investors (2006–2009); Managing Director, Barclays Global Investors (1998–2006). |
|
16 |
|
None. |
| |
|
|
|
|
| Marshall
Lux3 (born 1960) |
|
Trustee |
|
Senior Advisor, The Boston Consulting Group (since 2014); Senior Partner and Managing Director, The Boston Consulting Group (2009–2014). |
|
16 |
|
None. |
| |
|
|
|
|
| Lisa K.
Polsky3 (born 1956) |
|
Trustee |
|
Board Member, MFA Financial, Inc. (real estate investment trust) (since 2020); Advisor, SMBC Americas (financial services) (since 2020); Senior Risk Advisor, AQR (investment management)
(2016–2019); Senior Risk Advisor, Ultra Capital (venture capital) (2016–2019); Board Member, DB USA Corporation (Deutsche Bank Intermediate Holding Company) (financial services) (since 2016); Chief Risk Officer, CIT Group Inc.
(financial services) (2010–2015); Board Member and Chair of Audit Committee, Piper Jaffray (investment bank) (2007–2016). |
|
16 |
|
None. |
| |
|
|
|
|
| John
Walters3 (born 1962) |
|
Lead Independent
Trustee |
|
Board Member, Amerilife Holdings LLC (insurance distribution) (since 2015); Board Member, Stadion Money Management LLC (investment adviser) (since 2011); President and Chief Operating Officer,
Hartford Life Insurance Company (2000–2010). |
|
16 |
|
Trustee, USAA Mutual Funds Trust, (One registered investment company offering 47 individual funds) (since
2019). |
SUPPLEMENTAL INFORMATION (UNAUDITED)
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
Name and
Year of Birth |
|
Term of Office,
Position(s) Held and Length of
Service1 |
|
Principal
Occupation(s) During Past Five Years |
|
Number of
Funds
in Fund
Complex Overseen
by Trustees2 |
|
Other Directorships
Held by Trustee |
| Interested Trustees |
| |
|
|
|
|
| Dominique Baede4 (born 1970) |
|
Trustee
(Since
January 2020) |
|
Vice President, Head of Product, Life, Annuity and Inforce, The Guardian Life Insurance Company of America (since 2019); Managing Director, Product Management Group, AXA Equitable (insurance
company) prior thereto. |
|
16 |
|
None. |
| |
|
|
|
|
| Michael
Ferik4 (born 1972) |
|
Chairman and Trustee (Since
December 2019) |
|
Executive Vice President, Individual Markets, The Guardian Life Insurance Company of America (since 2020); Executive Vice President and Chief Financial Officer, The Guardian Life Insurance
Company of America (2017–2019); Executive Vice President, Individual Markets, The Guardian Life Insurance Company of America prior thereto. |
|
16 |
|
None. |
| 1 |
Except as otherwise noted, each Trustee began service in such capacity in 2016 and serves until his or her successor is
elected and qualified or until his or her resignation, death or removal. The business address of each Trustee is 10 Hudson Yards, New York, New York 10001. |
| 2 |
The Trust currently consists of 16 separate Funds. |
| 3 |
Member of the Audit Committee of the Trust. |
| 4 |
Each of Dominique Baede and Michael Ferik is considered to be an “interested person” of the Trust within the
meaning of the 1940 Act because of their affiliation with The Guardian Life Insurance Company of America and/or its affiliates. |
|
|
|
|
|
| |
|
|
| Name and Year of Birth |
|
Position(s) Held and
Length of Service5 |
|
Principal Occupation(s)
During Past Five Years |
| |
|
|
Dominique Baede
(born 1970) |
|
President and Principal Executive Officer (Since January 2020) |
|
Vice President, Head of Product, Life, Annuity and Inforce, The Guardian Life Insurance Company of America (since 2019); Managing Director,
Product Management Group, AXA Equitable (insurance company) prior. |
| |
|
|
| John H. Walter
(born 1962) |
|
Senior Vice President, Treasurer, and Principal Financial and Accounting Officer |
|
Vice President, Director of Finance, Corporate Finance, The Guardian Life Insurance Company of America. |
| |
|
|
| Harris Oliner
(born 1971) |
|
Senior Vice President and Secretary |
|
Senior Vice President, Corporate Secretary, The Guardian Life Insurance Company of America (since 2015); Senior Vice President, Deputy
General Counsel, Corporate Secretary, Voya Financial, Inc. prior thereto. |
| |
|
|
| Richard T. Potter
(born 1954) |
|
Senior Vice President and Chief Legal Officer |
|
Vice President and Equity Counsel, The Guardian Life Insurance Company of America. |
| |
|
|
| Philip Stack
(born 1964) |
|
Chief Compliance Officer
(Since September 2017) |
|
Second Vice President, Mutual Fund Chief Compliance Officer, The Guardian Life Insurance Company of America (since 2017); Executive Director,
Chief Compliance Officer, Morgan Stanley (2015–2017); Vice President, Morgan Stanley prior thereto. |
| |
|
|
| Brian Hagan
(born 1984) |
|
Anti-Money Laundering Officer (Since March 2019) |
|
Assistant Vice President (since 2019), Anti-Money Laundering Compliance, The Guardian Life Insurance Company of America/Park Avenue
Securities LLC; Vice President, Head of Financial Intelligence Unit, Brown Brothers Harriman & Co. (2014-2019); Assistant Vice President, AML Compliance Manager, JPMorgan Chase & Co.
(2011–2014). |
| |
|
|
| Kathleen M. Moynihan
(born 1966) |
|
Senior Counsel |
|
Second Vice President, Counsel (since 2019), The Guardian Life Insurance Company of America; Senior Counsel prior thereto. |
| |
|
|
| Maria Nydia Morrison
(born 1958) |
|
Fund Controller |
|
Mutual Fund Controller, The Guardian Life Insurance Company of America (since 2015); Chief Financial Officer/Assistant Operating Officer, St.
Francis De Assisi Montessori School (Plaridel, Bulacan), Inc. (Philippines) prior thereto. |
| |
|
|
| Sonya L. Crosswell
(born 1977) |
|
Assistant Secretary |
|
Assistant Vice President, Assistant Corporate Secretary and Secretary Pro Tem, The Guardian Life Insurance Company of America. |
| 5 |
Unless otherwise indicated, the Officers each began service in such capacity in 2016 and hold office for an indefinite
term or until their successors shall have been elected and qualified. The business address of each Officer is 10 Hudson Yards, New York, New York 10001. |
SUPPLEMENTAL INFORMATION (UNAUDITED)
The Statement of Additional Information (“SAI”) includes additional information about
the Trust’s Trustees and Officers and is available, without charge, upon request by calling toll-free 1-888-GUARDIAN (1-888-482-7342) or by visiting our website at http://guardianvpt.onlineprospectus.net/GuardianVPT/Prospectuses.
Portfolio Holdings and Proxy Voting Procedures
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year as an exhibit
to its reports on Form N-PORT. The Fund’s Form N-PORT reports are available on the Securities and Exchange Commission’s website at https://www.sec.gov. The
Fund’s Form N-PORT information is also available, without charge, upon request, by calling toll-free 1-888-GUARDIAN (1-888-482-7342) or by visiting our website at http://guardianvpt.onlineprospectus.net/
GuardianVPT/Prospectuses.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio
securities is included in the SAI. The SAI and information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 may be obtained
(i) without charge, upon request, by calling toll-free 1-888-GUARDIAN (1-888-482-7342) or by visiting our website at http://guardianvpt.onlineprospectus.net/
GuardianVPT/Prospectuses; and (ii) on the Securities and Exchange Commission’s website at
https://www.sec.gov.
This report is transmitted to shareholders only. It is not authorized for use as an offer of sale or a solicitation of an offer to buy shares of the Fund unless
accompanied or preceded by the Fund’s current prospectus. Past performance results shown in this report should not be considered a representation of future performance. Investment returns and principal value of shares will fluctuate so that
shares, when redeemed, may be worth more or less than their original cost. Statements and other information herein are as dated and are subject to change.
The Guardian Life Insurance Company of America New York, NY 10001-2159
PUB8173
Guardian Variable
Products Trust
2019
Annual Report
All Data as of December 31, 2019
Guardian Integrated
Research VIP Fund
Important Notice
Beginning on
January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund’s shareholder reports will no longer be sent by mail from The Guardian Insurance & Annuity Company, Inc.
(“GIAC”). Instead, GIAC will mail you a notice when copies of the shareholder reports are made available on a website. You will be notified by mail each time a report is posted and provided with a website link to access the report.
If you have already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. If you have not yet
elected electronic delivery, at any time, you may elect to receive the Fund’s shareholder reports and certain other communications from GIAC electronically, by going to www.guardianlife.com and registering for e-delivery.
You may instead elect to receive all future shareholder reports in paper free of charge. If you wish to receive paper copies of your shareholder reports, please call
GIAC’s Customer Service Office Contact Center at 1-888-GUARDIAN (1-888-482-7342). Your election to receive reports in paper will apply to all the underlying funds available.
|
|
|
| Not FDIC insured. May lose value. No bank guarantee. |
|
www.guardianlife.com |
TABLE OF CONTENTS
Guardian Integrated Research VIP Fund
Except as otherwise specifically stated, all information, including portfolio security positions, is as of
December 31, 2019. The views expressed in the Fund Commentary are those of the Fund’s portfolio manager(s) as of the date of this report and are subject to change without notice. They do not necessarily represent the views of Park Avenue
Institutional Advisers LLC or a sub-adviser. The Fund Commentary may contain some forward-looking statements providing expectations or forecasts of future events as of the date of this report; they do not
necessarily relate to historical or current facts. There can be no guarantee that any forward-looking statement will be realized. We undertake no obligation to update forward-looking statements, whether as a result of new information, future events,
or otherwise. Any discussions of specific securities should not be considered a recommendation to buy or sell those securities. Fund holdings will vary. Information contained herein has been obtained from sources believed reliable, but is not
guaranteed.
GUARDIAN INTEGRATED RESEARCH VIP FUND
FUND COMMENTARY OF COLUMBIA MANAGEMENT INVESTMENT ADVISERS, LLC, SUB-ADVISER (unaudited)
Highlights
| • |
|
Guardian Integrated Research VIP Fund (the “Fund”) returned 27.09% for the 12 months ended December 31, 2019. The Fund’s benchmark, the Standard & Poor’s 500® Index1 (the “Index”), returned 31.49% over the same period. |
| • |
|
Stock selection, especially in the industrials and health care sectors, generally accounted for the Fund’s modest shortfall relative to its benchmark. |
Sub-adviser Change
Columbia
Management Investment Advisers, LLC (“CMIA”) assumed management of the Fund on October 1, 2019. Prior to that time, the Fund was sub-advised by Massachusetts Financial Services Company (d/b/a
MFS Investments). For the period prior to October 1, 2019, the Fund’s investments in the energy, financials and communication services sectors contributed to relative performance, while investments in health care, utilities, real estate
and consumer staples detracted.
Market overview
Optimism prevailed
early in 2019, as positive global economic conditions, the impact of broad U.S. corporate tax cuts and moves to reduce regulation in a number of industries buoyed confidence. The labor markets added 184,000 jobs monthly, on average and unemployment
fell to 3.5%.
As the year wore on, U.S. growth slowed from 3.1% in the first quarter to an estimated 2.1% for the year overall, as manufacturing activity edged
lower. European economies transitioned to a slower pace of growth, struggling with rising interest rates, trade tensions and uncertainty surrounding the UK’s departure from the European Union. At the same time, China’s economic conditions
weakened and emerging markets came under pressure, driven by trade and tariff concerns.
Despite these global uncertainties, the U.S. stock market rose strongly in 2019, as the U.S. Federal Reserve
(“Fed”) reduced short-term interest rates three times during the second half of the year, then announced during its December meeting that it would hold the federal funds rate between 1.50% to 1.75%, judging its current monetary policy
appropriate to support economic expansion, a strong labor market and inflation approximating its 2.0% target. Central banks in major foreign economies followed the Fed’s lead with stimulus efforts.
Stocks outperformed bonds for the 12-month period. The Standard & Poor’s 500 Index, a broad measure of U.S. stock
returns, gained 31.49% while the Bloomberg Barclays US Aggregate Bond Index, a broad measure of investment grade bonds, returned 8.72%.
Portfolio Review
Stock selection was mixed for the period from October 1, 2019 (when CMIA assumed management of the Fund) through December 31, 2019. Positive results
from financials and communication services were offset by disappointments in industrials and health care.
Outlook
As we look ahead to an election year, we expect market volatility to remain elevated. Geopolitical uncertainty remains high and economic data has been increasingly
mixed. After three recent short-term interest rate cuts, the Fed remains on hold. Against this backdrop, we continue to aim to deliver long-term capital appreciation by focusing mainly on individual stock selection. We believe a combination of
certain characteristics has the potential to outperform throughout a market cycle. We emphasize companies that have strong free cash flow generation potential, improving revenue and earnings trends, high or rising returns on invested capital and
sound or improving balance sheets.
| 1 |
The Standard & Poor’s 500® Index (the “S&P
500 Index”) is an unmanaged market-capitalization-weighted index generally considered to be representative of U.S. equity market activity. The S&P 500 Index consists of 500 stocks representing leading industries of the U.S. economy. Index
results assume the reinvestment of dividends paid on the stocks constituting the Index. You may not invest in the S&P 500 Index, and, unlike the fund, the S&P 500 Index does not incur fees or expenses. |
GUARDIAN INTEGRATED RESEARCH VIP FUND
Funds in the Guardian Variable Products Trust are sold by prospectus only. You should carefully
consider the investment objectives, risks, charges and expenses of the Funds before making an investment decision. The prospectus contains this and other important information. Please read it carefully before investing or sending money. Please visit
our website at http://guardianvpt.onlineprospectus.net/GuardianVPT/Prospectuses or to obtain a printed copy, call 1-888-GUARDIAN (1-888-482-7342).
As with all mutual funds, the value of an investment in the
Fund could decline, and you could lose money. Diversification does not guarantee profit or protect against loss, and there can be no assurance that the Fund will achieve its investment objective. The Fund invests primarily in equity securities and
therefore exposes you to the general risks of investing in stock markets. Investing in large-capitalization companies involves risks such as having low growth rates, and slow responsiveness to competitive challenges or opportunities than
in the case of smaller companies. Investments in growth companies may be highly volatile. Growth stocks may not realize their perceived growth potential and during certain periods the Fund may underperform other equity funds that employ a different
style. Value stocks may not realize their perceived value and during certain periods the Fund may underperform other equity funds that employ a different style. International investing involves special risks, which include changes in currency rates,
foreign taxation and differences in auditing standards and securities regulations, political uncertainty and greater volatility. Foreign securities are subject to political, regulatory, economic, and exchange-rate risks not present in
domestic investments. Investing in a more limited number of issuers and sectors can be subject to greater market fluctuation. Any discussions of specific securities should not be considered a recommendation to buy or sell those securities. Fund
holdings will vary.
GUARDIAN INTEGRATED RESEARCH VIP FUND
Fund Characteristics (unaudited)
|
|
|
| Total Net Assets: $ 11,852,382 |
|
|
|
| |
|
Sector Allocation1
As of December 31, 2019 |
|
|
|
|
|
|
| |
| Top Ten Holdings2 As of December 31, 2019 |
|
| |
|
| Holding |
|
% of Total
Net Assets |
|
| Microsoft Corp. |
|
|
5.78% |
|
| Alphabet, Inc., Class C |
|
|
4.58% |
|
| Amazon.com, Inc. |
|
|
4.15% |
|
| Apple, Inc. |
|
|
3.31% |
|
| JPMorgan Chase & Co. |
|
|
2.74% |
|
| Bank of America Corp. |
|
|
2.66% |
|
| MasterCard, Inc., Class A |
|
|
2.63% |
|
| Citigroup, Inc. |
|
|
2.23% |
|
| Cisco Systems, Inc. |
|
|
2.11% |
|
| Adobe, Inc. |
|
|
2.09% |
|
| Total |
|
|
32.28% |
|
| 1 |
The Fund’s holdings are allocated to each sector based on the MSCI Global Industry Classification Standard (GICS®). Cash includes short-term investments and net other assets and liabilities. |
| 2 |
Portfolio holdings are subject to change and should not be considered a recommendation to buy or sell individual
securities. |
GUARDIAN INTEGRATED RESEARCH VIP FUND
Fund Performance (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
| Average Annual Total Returns
As of December 31, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
| |
|
Inception Date |
|
|
1 Year |
|
|
5 Year |
|
|
10 Year |
|
|
Since Inception |
|
| Guardian Integrated Research VIP Fund |
|
|
9/1/2016 |
|
|
|
27.09% |
|
|
|
— |
|
|
|
— |
|
|
|
11.35% |
|
| Standard & Poor’s 500® Index |
|
|
|
|
|
|
31.49% |
|
|
|
— |
|
|
|
— |
|
|
|
14.96% |
|
|
| |
|
Results of a Hypothetical $10,000 Investment As of December 31,
2019 |
|
The chart above shows the performance of a hypothetical $10,000 investment made on inception date in Guardian Integrated Research VIP Fund
and the Standard & Poor’s 500® Index. Index returns do not include the fees and expenses of the Fund, but do include reinvestment of dividends, if any. The Fund replaced its
sub-adviser and modified its principal investment strategies as of October 1, 2019. The performance shown in the chart above prior to that date reflects the performance of the Fund’s prior sub-adviser and principal investment strategies.
Performance quoted represents past performance and does not guarantee or predict future results. Investment return and principal value will fluctuate, so shares,
when redeemed, may be worth more or less than their original cost. The Fund’s fees and expenses are detailed in the Financial Highlights section of this report. Fees and expenses are factored into the net asset value of Fund shares and any
performance numbers we release. Total return figures include the effect of expense limitations in effect during the periods shown, if applicable; without such limitations, the performance shown would have been lower. Performance results assume the
reinvestment of dividends and capital gains. The return figures shown do not reflect the deduction of taxes that a contract owner/policyholder may pay on redemption units. The actual total returns for owners of variable annuity contracts or variable
life insurance policies that provide for investment in the Fund will be lower to reflect separate account and contract/policy charges. Current and month-end performance information, which may be lower or
higher than that cited, is available by calling 1-888-GUARDIAN
(1-888-482-7342) and is periodically updated on our website: http://guardianlife.com.
UNDERSTANDING YOUR FUND’S EXPENSES (UNAUDITED)
By investing in the Fund, you incur two types of costs: (1) transaction costs and (2) ongoing costs, including,
as applicable, investment advisory fees, distribution and/or service (12b-1) fees and other Fund expenses. The example below is intended to help you understand your ongoing costs (in dollars) of investing in
the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the
beginning of the period and held for the entire period from July 1, 2019 to December 31, 2019. The table below shows the Fund’s expenses in two ways:
Expenses based on actual return
This section of the table provides
information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for
example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the section under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this
period.
Expenses based on hypothetical 5% return for comparison purposes
This section of the table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund with the cost of investing in other mutual funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the
other funds.
Note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads), redemption fees, or exchange fees. Therefore the second section is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. If these transactional costs were
included, your costs would have been higher. Charges and expenses at the insurance company separate account level are not reflected in the table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
| |
|
Beginning
Account Value
7/1/19 |
|
Ending
Account Value
12/31/19 |
|
|
Expenses Paid
During Period* 7/1/19-12/31/19 |
|
|
Expense Ratio
During Period
7/1/19-12/31/19 |
|
| Based on Actual Return |
|
$ 1,000.00 |
|
|
$1,101.60 |
|
|
|
$5.09 |
|
|
|
0.96% |
|
| Based on Hypothetical Return (5% Return Before Expenses) |
|
$ 1,000.00 |
|
|
$1,020.37 |
|
|
|
$4.89 |
|
|
|
0.96% |
|
| * |
Expenses are equal to the Fund’s annualized expense ratio as indicated, multiplied by the average account value over
the period, multiplied by 184/365 (to reflect the one-half year period). |
SCHEDULE OF INVESTMENTS — GUARDIAN INTEGRATED RESEARCH VIP FUND
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Shares |
|
|
Value |
|
| Common Stocks – 98.5% |
|
| |
| Aerospace & Defense – 3.4% |
|
| |
|
|
| L3Harris Technologies, Inc. |
|
|
758 |
|
|
$ |
149,985 |
|
| |
|
|
| Northrop Grumman Corp. |
|
|
510 |
|
|
|
175,425 |
|
| |
|
|
| Spirit AeroSystems Holdings, Inc.,
Class A |
|
|
1,157 |
|
|
|
84,322 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
409,732 |
|
| Airlines – 1.3% |
|
| |
|
|
| Delta Air Lines, Inc. |
|
|
2,729 |
|
|
|
159,592 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
159,592 |
|
| Automobiles – 1.3% |
|
| |
|
|
| General Motors Co. |
|
|
4,164 |
|
|
|
152,402 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
152,402 |
|
| Banks – 9.9% |
|
| |
|
|
| Bank of America Corp. |
|
|
8,956 |
|
|
|
315,430 |
|
| |
|
|
| Citigroup, Inc. |
|
|
3,304 |
|
|
|
263,957 |
|
| |
|
|
| JPMorgan Chase & Co. |
|
|
2,327 |
|
|
|
324,384 |
|
| |
|
|
| KeyCorp |
|
|
8,831 |
|
|
|
178,739 |
|
| |
|
|
| Popular, Inc. |
|
|
1,488 |
|
|
|
87,420 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
1,169,930 |
|
| Beverages – 1.7% |
|
| |
|
|
| PepsiCo, Inc. |
|
|
1,460 |
|
|
|
199,538 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
199,538 |
|
| Biotechnology – 2.5% |
|
| |
|
|
| Alexion Pharmaceuticals, Inc.(1) |
|
|
666 |
|
|
|
72,028 |
|
| |
|
|
| BioMarin Pharmaceutical, Inc.(1) |
|
|
864 |
|
|
|
73,051 |
|
| |
|
|
| Exact Sciences Corp.(1) |
|
|
671 |
|
|
|
62,054 |
|
| |
|
|
| Vertex Pharmaceuticals, Inc.(1) |
|
|
425 |
|
|
|
93,054 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
300,187 |
|
| Building Products – 1.2% |
|
| |
|
|
| Masco Corp. |
|
|
2,944 |
|
|
|
141,283 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
141,283 |
|
| Communications Equipment – 2.1% |
|
| |
|
|
| Cisco Systems, Inc. |
|
|
5,228 |
|
|
|
250,735 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
250,735 |
|
| Electric Utilities – 2.5% |
|
| |
|
|
| American Electric Power Co., Inc. |
|
|
1,663 |
|
|
|
157,170 |
|
| |
|
|
| Xcel Energy, Inc. |
|
|
2,120 |
|
|
|
134,599 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
291,769 |
|
| Energy Equipment & Services – 0.5% |
|
| |
|
|
| TechnipFMC PLC |
|
|
2,648 |
|
|
|
56,773 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
56,773 |
|
| Entertainment – 3.4% |
|
| |
|
|
| Electronic Arts, Inc.(1) |
|
|
1,601 |
|
|
|
172,124 |
|
| |
|
|
| The Walt Disney Co. |
|
|
1,597 |
|
|
|
230,974 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
403,098 |
|
| Equity Real Estate Investment – 3.2% |
|
| |
|
|
| American Tower Corp. REIT |
|
|
747 |
|
|
|
171,675 |
|
| |
|
|
| Equity LifeStyle Properties, Inc. REIT |
|
|
1,536 |
|
|
|
108,119 |
|
| |
|
|
| Medical Properties Trust, Inc. REIT |
|
|
4,652 |
|
|
|
98,204 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
377,998 |
|
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Shares |
|
|
Value |
|
| Food Products – 1.3% |
|
| |
|
|
| Mondelez International, Inc., Class A |
|
|
2,831 |
|
|
$ |
155,931 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
155,931 |
|
| Health Care Equipment & Supplies – 5.3% |
|
| |
|
|
| Abbott Laboratories |
|
|
2,762 |
|
|
|
239,907 |
|
| |
|
|
| Baxter International, Inc. |
|
|
1,812 |
|
|
|
151,519 |
|
| |
|
|
| Medtronic PLC |
|
|
2,115 |
|
|
|
239,947 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
631,373 |
|
| Health Care Providers & Services – 1.6% |
|
| |
|
|
| Cigna Corp. |
|
|
950 |
|
|
|
194,265 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
194,265 |
|
| Household Products – 1.5% |
|
| |
|
|
| Kimberly-Clark Corp. |
|
|
1,281 |
|
|
|
176,202 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
176,202 |
|
| Insurance – 3.0% |
|
| |
|
|
| Lincoln National Corp. |
|
|
2,503 |
|
|
|
147,702 |
|
| |
|
|
| The Allstate Corp. |
|
|
1,868 |
|
|
|
210,057 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
357,759 |
|
| Interactive Media & Services – 4.6% |
|
| |
|
|
| Alphabet, Inc., Class C(1) |
|
|
406 |
|
|
|
542,830 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
542,830 |
|
| Internet & Direct Marketing Retail – 4.6% |
|
| |
|
|
| Amazon.com, Inc.(1) |
|
|
266 |
|
|
|
491,525 |
|
| |
|
|
| Chewy, Inc., Class A(1) |
|
|
1,958 |
|
|
|
56,782 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
548,307 |
|
| IT Services – 4.5% |
|
| |
|
|
| International Business Machines Corp. |
|
|
1,635 |
|
|
|
219,156 |
|
| |
|
|
| MasterCard, Inc., Class A |
|
|
1,043 |
|
|
|
311,429 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
530,585 |
|
| Machinery – 2.3% |
|
| |
|
|
| Ingersoll-Rand PLC |
|
|
1,028 |
|
|
|
136,642 |
|
| |
|
|
| Stanley Black & Decker, Inc. |
|
|
792 |
|
|
|
131,266 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
267,908 |
|
| Media – 3.6% |
|
| |
|
|
| Comcast Corp., Class A |
|
|
5,199 |
|
|
|
233,799 |
|
| |
|
|
| Discovery, Inc., Class A(1) |
|
|
4,361 |
|
|
|
142,779 |
|
| |
|
|
| DISH Network Corp., Class A(1) |
|
|
1,574 |
|
|
|
55,830 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
432,408 |
|
| Metals & Mining – 1.1% |
|
| |
|
|
| Barrick Gold Corp. |
|
|
6,752 |
|
|
|
125,520 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
125,520 |
|
| Multi-Utilities – 1.1% |
|
| |
|
|
| Ameren Corp. |
|
|
1,747 |
|
|
|
134,170 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
134,170 |
|
| Multiline Retail – 1.3% |
|
| |
|
|
| Target Corp. |
|
|
1,174 |
|
|
|
150,519 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
150,519 |
|
| Oil, Gas & Consumable Fuels – 2.5% |
|
| |
|
|
| Chevron Corp. |
|
|
1,797 |
|
|
|
216,556 |
|
| |
|
|
| EOG Resources, Inc. |
|
|
934 |
|
|
|
78,232 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
294,788 |
|
|
|
|
|
|
| 6 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
SCHEDULE OF INVESTMENTS — GUARDIAN INTEGRATED RESEARCH VIP FUND
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Shares |
|
|
Value |
|
| Pharmaceuticals – 2.6% |
|
| |
|
|
| Bristol-Myers Squibb Co. |
|
|
1,876 |
|
|
$ |
120,421 |
|
| |
|
|
| Eli Lilly & Co. |
|
|
1,419 |
|
|
|
186,499 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
306,920 |
|
| Road & Rail – 2.7% |
|
| |
|
|
| Norfolk Southern Corp. |
|
|
720 |
|
|
|
139,774 |
|
| |
|
|
| Union Pacific Corp. |
|
|
985 |
|
|
|
178,078 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
317,852 |
|
| Semiconductors & Semiconductor Equipment – 5.1% |
|
| |
|
|
| Broadcom, Inc. |
|
|
750 |
|
|
|
237,015 |
|
| |
|
|
| NVIDIA Corp. |
|
|
549 |
|
|
|
129,180 |
|
| |
|
|
| NXP Semiconductors N.V. |
|
|
1,180 |
|
|
|
150,167 |
|
| |
|
|
| Qorvo, Inc.(1) |
|
|
767 |
|
|
|
89,148 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
605,510 |
|
| Software – 8.8% |
|
| |
|
|
| Adobe, Inc.(1) |
|
|
752 |
|
|
|
248,017 |
|
| |
|
|
| Microsoft Corp. |
|
|
4,347 |
|
|
|
685,522 |
|
| |
|
|
| NortonLifeLock, Inc. |
|
|
4,329 |
|
|
|
110,476 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
1,044,015 |
|
| Specialty Retail – 2.0% |
|
| |
|
|
| The Home Depot, Inc. |
|
|
1,071 |
|
|
|
233,885 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
233,885 |
|
| Technology Hardware, Storage & Peripherals – 3.3% |
|
| |
|
|
| Apple, Inc. |
|
|
1,337 |
|
|
|
392,610 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
392,610 |
|
| Tobacco – 1.6% |
|
| |
|
|
| Philip Morris International, Inc. |
|
|
2,193 |
|
|
|
186,602 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
186,602 |
|
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Shares |
|
|
Value |
|
| Wireless Telecommunication Services – 1.1% |
|
| |
|
|
| T-Mobile
U.S., Inc.(1) |
|
|
1,717 |
|
|
$ |
134,647 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
134,647 |
|
| |
|
Total Common Stocks
(Cost $10,046,861) |
|
|
|
11,677,643 |
|
|
|
|
|
|
|
|
|
|
| |
|
Principal
Amount |
|
|
Value |
|
| Short–Term Investment – 1.8% |
|
| Repurchase Agreements – 1.8% |
|
| |
|
|
| Fixed Income
Clearing Corp., 0.12%, dated 12/31/2019, proceeds at maturity value of $211,001, due 1/2/2020(2) |
|
$ |
211,000 |
|
|
|
211,000 |
|
| |
|
Total Repurchase Agreements
(Cost $211,000) |
|
|
|
211,000 |
|
| |
|
Total Investments – 100.3%
(Cost $10,257,861) |
|
|
|
11,888,643 |
|
| |
|
| Liabilities in excess of other assets – (0.3)% |
|
|
|
(36,261 |
) |
| |
|
| Total Net Assets – 100.0% |
|
|
$ |
11,852,382 |
|
| (1) |
Non–income–producing security. |
| (2) |
The table below presents collateral for repurchase agreements. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Security |
|
Coupon |
|
|
Maturity
Date |
|
|
Principal
Amount |
|
|
Value |
|
| U.S. Treasury Note |
|
|
2.75% |
|
|
|
9/15/2021 |
|
|
$ |
210,000 |
|
|
$ |
215,712 |
|
Legend:
REIT — Real Estate
Investment Trust
The following is a summary of the inputs used as of December 31, 2019 in valuing the Fund’s investments. For
more information on valuation inputs, please refer to Note 2a of the accompanying Notes to Financial Statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Valuation
Inputs |
|
|
|
|
| Investments in Securities |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
| Common Stocks |
|
$ |
11,677,643 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
11,677,643 |
|
| Repurchase Agreements |
|
|
— |
|
|
|
211,000 |
|
|
|
— |
|
|
|
211,000 |
|
| Total |
|
$ |
11,677,643 |
|
|
$ |
211,000 |
|
|
$ |
— |
|
|
$ |
11,888,643 |
|
|
|
|
|
|
| The accompanying notes are an integral part of these financial statements. |
|
|
|
7 |
FINANCIAL INFORMATION — GUARDIAN INTEGRATED RESEARCH VIP FUND
|
|
|
|
|
|
Statement of Assets and Liabilities As of December 31, 2019 |
|
|
|
| Assets |
|
|
|
|
| |
|
| Investments, at value |
|
$ |
11,888,643 |
|
| |
|
| Cash |
|
|
5,545 |
|
| |
|
| Dividends/interest receivable |
|
|
14,419 |
|
| |
|
| Reimbursement receivable from adviser |
|
|
11,179 |
|
| |
|
| Prepaid expenses |
|
|
559 |
|
| |
|
|
|
|
| |
|
| Total Assets |
|
|
11,920,345 |
|
| |
|
|
|
|
| |
|
| Liabilities |
|
|
|
|
| |
|
| Accrued audit fees |
|
|
22,105 |
|
| |
|
| Accrued custodian and accounting fees |
|
|
11,871 |
|
| |
|
| Accrued administrative fees |
|
|
11,865 |
|
| |
|
| Accrued shareholder reports fees |
|
|
7,818 |
|
| |
|
| Investment advisory fees payable |
|
|
5,477 |
|
| |
|
| Distribution fees payable |
|
|
2,490 |
|
| |
|
| Accrued trustees’ and officers’
fees |
|
|
64 |
|
| |
|
| Accrued expenses and other liabilities |
|
|
6,273 |
|
| |
|
|
|
|
| |
|
| Total Liabilities |
|
|
67,963 |
|
| |
|
|
|
|
| |
|
| Total Net Assets |
|
$ |
11,852,382 |
|
| |
|
|
|
|
| |
|
| Net Assets Consist of: |
|
|
|
|
| |
|
| Paid-in
capital |
|
$ |
6,077,870 |
|
| |
|
| Distributable earnings |
|
|
5,774,512 |
|
| |
|
|
|
|
| |
|
| Total Net Assets |
|
$ |
11,852,382 |
|
| |
|
|
|
|
| Investments, at Cost |
|
$ |
10,257,861 |
|
| |
|
|
|
|
| |
|
| Pricing of Shares |
|
|
|
|
| |
|
|
Shares of Beneficial Interest Outstanding with
No Par Value |
|
|
828,389 |
|
| |
|
| Net Asset Value Per Share |
|
|
$14.31 |
|
| |
|
|
|
|
|
|
|
|
|
|
Statement of Operations For the Year Ended December 31, 2019 |
|
|
|
| Investment Income |
|
|
|
|
| |
|
| Dividends |
|
$ |
227,003 |
|
| |
|
| Interest |
|
|
200 |
|
| |
|
| Withholding taxes on foreign dividends |
|
|
(165 |
) |
| |
|
|
|
|
| |
|
| Total Investment Income |
|
|
227,038 |
|
| |
|
|
|
|
| |
|
| Expenses |
|
|
|
|
| |
|
| Investment advisory fees |
|
|
61,290 |
|
| |
|
| Custodian and accounting fees |
|
|
47,530 |
|
| |
|
| Administrative fees |
|
|
47,460 |
|
| |
|
| Professional fees |
|
|
30,294 |
|
| |
|
| Distribution fees |
|
|
27,859 |
|
| |
|
| Shareholder reports |
|
|
21,324 |
|
| |
|
| Transfer agent fees |
|
|
12,253 |
|
| |
|
| Trustees’ and officers’ fees |
|
|
4,495 |
|
| |
|
| Other expenses |
|
|
3,865 |
|
| |
|
|
|
|
| |
|
| Total Expenses |
|
|
256,370 |
|
| |
|
| Less: Fees waived |
|
|
(149,391 |
) |
| |
|
|
|
|
| |
|
| Total Expenses, Net |
|
|
106,979 |
|
| |
|
|
|
|
| |
|
| Net Investment Income/(Loss) |
|
|
120,059 |
|
| |
|
|
|
|
| |
|
| Realized Gain/(Loss) and Change in Unrealized
Appreciation/(Depreciation) on Investments |
|
|
|
|
| |
|
| Net realized gain/(loss) from investments |
|
|
932,990 |
|
| |
|
| Net change in unrealized appreciation/(depreciation)
on investments |
|
|
1,577,603 |
|
| |
|
|
|
|
| |
|
| Net Gain on Investments |
|
|
2,510,593 |
|
| |
|
|
|
|
| |
|
| Net Increase in Net Assets Resulting From
Operations |
|
$ |
2,630,652 |
|
| |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| 8 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
FINANCIAL INFORMATION — GUARDIAN INTEGRATED RESEARCH VIP FUND
|
|
|
|
|
|
|
|
|
|
Statements of Changes in Net Assets |
|
|
|
|
|
|
| |
|
|
| |
|
For the
Year Ended
12/31/19 |
|
|
For the
Year Ended
12/31/18 |
|
| |
|
|
|
| Operations |
|
|
|
|
|
|
|
|
| |
|
|
| Net investment income/(loss) |
|
$ |
120,059 |
|
|
$ |
106,317 |
|
| |
|
|
| Net realized gain/(loss) from investments |
|
|
932,990 |
|
|
|
538,433 |
|
| |
|
|
| Net change in unrealized appreciation/(depreciation)
on investments |
|
|
1,577,603 |
|
|
|
(1,521,435 |
) |
| |
|
|
|
|
|
|
|
|
| |
|
|
| Net Increase/(Decrease) in Net Assets Resulting
from Operations |
|
|
2,630,652 |
|
|
|
(876,685 |
) |
| |
|
|
|
|
|
|
|
|
| |
| Capital Share
Transactions |
|
| |
|
|
| Proceeds from sales of shares |
|
|
403,248 |
|
|
|
258,696 |
|
| |
|
|
| Cost of shares redeemed |
|
|
(995,721 |
) |
|
|
(1,738,400 |
) |
| |
|
|
|
|
|
|
|
|
| |
|
|
| Net Decrease in Net Assets Resulting from Capital
Share Transactions |
|
|
(592,473 |
) |
|
|
(1,479,704 |
) |
| |
|
|
|
|
|
|
|
|
| |
|
|
| Net Increase/(Decrease) in Net Assets |
|
|
2,038,179 |
|
|
|
(2,356,389 |
) |
| |
|
|
|
|
|
|
|
|
| |
| Net Assets |
|
| |
|
|
| Beginning of year |
|
|
9,814,203 |
|
|
|
12,170,592 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| End of year |
|
$ |
11,852,382 |
|
|
$ |
9,814,203 |
|
| |
|
|
|
|
|
|
|
|
| |
| Other Information: |
|
| |
|
|
| Shares |
|
|
|
|
|
|
|
|
| |
|
|
| Sold |
|
|
32,023 |
|
|
|
21,136 |
|
| |
|
|
| Redeemed |
|
|
(75,608 |
) |
|
|
(140,091 |
) |
| |
|
|
|
|
|
|
|
|
| |
|
|
| Net Decrease |
|
|
(43,585 |
) |
|
|
(118,955 |
) |
| |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| The accompanying notes are an integral part of these financial statements. |
|
|
|
9 |
FINANCIAL INFORMATION — GUARDIAN INTEGRATED RESEARCH VIP FUND
The Financial Highlights table is intended to help you understand the Fund’s
financial performance for the past five years (or, if shorter, the period since inception). Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned
(or lost) on an investment in the Fund.
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| Financial
Highlights |
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Per Share Operating Performance |
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Net Asset Value,
Beginning of
Period |
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Net Investment
Income(1) |
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Net Realized
and Unrealized
Gain/(Loss) |
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Total
Operations |
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Net Asset
Value, End of
Period |
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Total
Return(2) |
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| Year Ended 12/31/19 |
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$ |
11.26 |
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$ |
0.14 |
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$ |
2.91 |
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$ |
3.05 |
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$ |
14.31 |
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27.09 |
% |
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| Year Ended 12/31/18 |
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12.28 |
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0.12 |
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(1.14 |
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(1.02 |
) |
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11.26 |
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(8.31) |
% |
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| Year Ended 12/31/17 |
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10.24 |
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0.09 |
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1.95 |
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2.04 |
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12.28 |
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19.92 |
% |
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| Period Ended
12/31/16(4) |
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10.00 |
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0.03 |
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0.21 |
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0.24 |
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10.24 |
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2.40 |
%(5) |
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| 10 |
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The accompanying notes are an integral part of these financial statements. |
FINANCIAL INFORMATION — GUARDIAN INTEGRATED RESEARCH VIP FUND
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| Ratios/Supplemental Data |
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Net Assets, End
of Period (000s) |
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Net Ratio of
Expenses to
Average
Net Assets(3) |
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Gross Ratio of
Expenses to
Average Net
Assets |
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Net Ratio of Net
Investment Income
to Average
Net Assets(3) |
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Gross Ratio of Net
Investment Loss
to Average
Net Assets |
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Portfolio
Turnover Rate |
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| $ |
11,852 |
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0.96% |
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2.30% |
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1.08% |
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(0.26)% |
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117% |
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9,814 |
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0.96% |
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2.39% |
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0.93% |
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(0.50)% |
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58% |
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12,171 |
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0.96% |
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1.91% |
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0.84% |
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(0.11)% |
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80% |
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14,915 |
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0.96% |
(5) |
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2.65% |
(5) |
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0.92% |
(5) |
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(0.77)% |
(5) |
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15% |
(5) |
| (1) |
Calculated based on the average shares outstanding during the period. |
| (2) |
Total returns do not reflect the effects of charges deducted pursuant to the terms of The Guardian Insurance &
Annuity Company, Inc.’s variable contracts. Inclusion of such charges would reduce the total returns for all periods shown. |
| (3) |
Net Ratio of Expenses to Average Net Assets and Net Ratio of Net Investment Income to Average Net Assets include the
effect of fee waivers and expense limitations. |
| (4) |
Commenced operations on September 1, 2016. |
| (5) |
Ratios for periods less than one year have been annualized, except for total return and portfolio turnover rate. For the
period ended December 31, 2016, certain non-recurring fees (i.e., audit fees) are not annualized. |
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| The accompanying notes are an integral part of these financial statements. |
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11 |
NOTES TO FINANCIAL STATEMENTS — GUARDIAN INTEGRATED RESEARCH VIP
FUND
December 31, 2019
1.
Organization
Guardian Variable Products Trust (the “Trust”), a Delaware statutory trust organized on January 12, 2016, is registered under the
Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Trust currently has sixteen series. Guardian Integrated Research VIP Fund (the
“Fund”) is a series of the Trust. The Fund is a diversified fund and commenced operations on September 1, 2016. The financial statements for other series of the Trust are presented in separate reports.
The Trust has authorized an unlimited number of shares of beneficial interest with no par value. Shares are bought and sold at closing net asset value (“NAV”).
Shares of the Fund are only sold to certain separate accounts of The Guardian Insurance & Annuity Company, Inc. (“GIAC”) that fund certain variable annuity contracts and variable life insurance policies issued by GIAC. GIAC is a
wholly-owned subsidiary of The Guardian Life Insurance Company of America (“Guardian Life”).
The Fund seeks capital appreciation.
2. Significant Accounting Policies
The following is a summary of significant
accounting policies followed by the Fund in the preparation of its financial statements. The Fund follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards
Codification Topic 946 Financial Services — Investment Companies. The following policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements
in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.
a. Investment Valuations Equity securities traded on an exchange other than NASDAQ Stock Market, LLC (“NASDAQ”) are valued at the last reported sale
price on the principal exchange or market on which they are traded; or, if there were no sales that day, at the mean between the closing bid and ask prices. Securities traded on the NASDAQ are generally valued at the NASDAQ official closing price,
which may not be the last sale price. If the NASDAQ official closing price is not available for a security, that security is generally valued at the
mean between the closing bid and ask prices. Repurchase agreements are carried at cost, which approximates fair value (see Note 5d). Foreign securities are valued in the currencies of the markets
in which they trade and then converted to U.S. dollars by the application of foreign exchange rates at the close of the New York Stock Exchange (“NYSE”). Forward foreign currency contracts, if any, are valued at the mean between the bid
and ask rates for the specified time interpolated from rates for proximate time periods. Securities for which market quotations are not readily available or for which market quotations may be considered unreliable are valued at their fair values as
determined in accordance with policies and procedures adopted by the Board of Trustees.
Under the policies and procedures approved by the Board of Trustees, Park
Avenue Institutional Advisers LLC (“Park Avenue”), the Fund’s investment adviser, has established a Fair Valuation Committee to assist the Board of Trustees with the oversight and monitoring of the valuation of the Fund’s
investments. This includes monitoring the appropriateness of fair values based on results of ongoing valuation oversight, including but not limited to consideration of security specific events, market events, and pricing vendor and broker-dealer due
diligence. The Fair Valuation Committee oversees and carries out the policies for the valuation of investments held in the Fund. The Fair Valuation Committee is responsible for discussing and assessing the potential impacts to the fair values on an
ongoing basis, and at least on a quarterly basis with the Board of Trustees.
Securities whose values have been materially affected by events occurring before the
Fund’s valuation time but after the close of the securities’ principal exchange or market may be fair valued in accordance with policies and procedures adopted by the Board of Trustees. In addition, the values of the Fund’s
investments in foreign securities are generally determined by a pricing service using pricing models designed to estimate likely changes in the values of those securities. Certain foreign equity instruments are valued by applying international fair
value factors provided by approved pricing services. The factors seek to adjust the local closing price for movements of local markets post closing, but prior to the time the NAVs are calculated. Valuations reflected in this report are as of the
report date. As a result, changes in valuation due to market events and/or issuer related events after the report date and prior to issuance of the report are not reflected herein.
NOTES TO FINANCIAL STATEMENTS — GUARDIAN INTEGRATED RESEARCH VIP FUND
Various inputs are used in determining the valuation of the Fund’s investments. These inputs are summarized in three
broad levels listed below.
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Level 1 — unadjusted inputs using quoted prices in active markets for identical investments. |
| • |
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Level 2 — other significant observable inputs, including, but not limited to, quoted prices for similar investments, inputs other than quoted prices that are observable for investments (such as interest
rates, prepayment speeds, credit risks, etc.) or other market corroborated inputs. |
| • |
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Level 3 — significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments) |
Inputs may include price information, volatility statistics, specific and broad credit data, liquidity statistics, and other factors. A financial instrument’s level
within the fair value hierarchy is based on the lowest level of any input; both individually and in aggregate, that is significant to the fair value measurement. However, the determination of what constitutes “observable” requires
significant judgment by the Trust. The Trust considers observable data to be that market data which is readily available, regularly distributed or updated, reliable and verifiable, and provided by independent sources that are actively involved in
the relevant market. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. Changes in valuation techniques may result in transfers into or out of a
financial instrument’s assigned level within the hierarchy.
The FASB requires reporting entities to make disclosures about purchases, sales, issuances and
settlements of Level 3 securities on a gross basis. For the year ended December 31, 2019, there were no transfers into or out of Level 3 of the fair value hierarchy.
In determining a financial instrument’s placement within the hierarchy, the Trust separates the Fund’s investment portfolio into two categories: investments
and derivatives (e.g., futures). A summary of inputs used to value the Fund’s assets and liabilities carried at fair value as of December 31, 2019 is included in the Schedule of Investments.
Investments Investments whose values are based on quoted market prices in active markets, and are therefore classified within Level 1, include active
listed equities. Investments that trade in markets that are not considered to be active, but are valued based on quoted market prices, dealer quotations or alternative pricing
sources supported by observable inputs are classified within Level 2. These include certain U.S. government and sovereign obligations, most government agency securities, investment-grade
corporate bonds, certain mortgage products, state, municipal and provincial obligations, and certain foreign equity securities, including securities whose prices may have been affected by events occurring after the close of trading on their
principal exchange or market and, as a result, whose values are determined by a pricing service as described above, or securities whose values are otherwise determined using fair valuation methods approved by the Fund’s Board of Trustees.
Investments classified within Level 3 have significant unobservable inputs, as they trade infrequently or not at all. Level 3 investments include, among
others, private placement securities. When observable prices are not available for these securities, the Trust uses one or more valuation techniques for which sufficient and reliable data is available. The inputs used by the Trust in estimating the
value of Level 3 investments include, for example, the original transaction price, recent transactions in the same or similar instruments, completed or pending third-party transactions in the underlying investment or comparable issuers,
subsequent rounds of financing, recapitalizations, and other transactions across the capital structure. Level 3 investments may also be adjusted to reflect illiquidity and/or non-transferability, with the
amount of such discount estimated by the Trust in the absence of market information. Assumptions used by the Trust due to the lack of observable inputs may significantly impact the resulting fair value and therefore the Fund’s results of
operations. As of December 31, 2019, the Fund had no securities classified as Level 3.
Derivatives Exchange-traded derivatives, such as
futures contracts, exchange-traded option contracts and certain swaps, are typically classified within Level 1 or Level 2 of the fair value hierarchy depending on whether or not they are deemed to be actively traded. Certain non-exchange-traded derivatives, such as generic forwards, certain swaps and options, have inputs which can generally be corroborated by market data and are therefore classified within Level 2. During the year
ended December 31, 2019, the Fund did not hold any derivatives.
b. Securities Transactions Securities transactions are accounted for on the date
securities are purchased or sold (trade date). Realized gains or losses on securities transactions are determined on the basis of specific identification.
NOTES TO FINANCIAL STATEMENTS — GUARDIAN INTEGRATED RESEARCH VIP FUND
c. Foreign Currency Translation The accounting records of the Fund are maintained in U.S. dollars. Investment
securities and all other assets and liabilities of the Fund denominated in a foreign currency are generally translated into U.S. dollars at the exchange rates quoted at the close of the NYSE on each business day. The market value of investment
securities and other assets and liabilities are translated at the exchange rate as of the valuation date. Purchases and sales of securities, income receipts, and expense payments are translated into U.S. dollars at the exchange rates in effect on
the dates of the respective transactions. The Fund does not isolate the portion of the fluctuations on investments resulting from changes in foreign currency exchange rates from the fluctuations in market prices of investments held. Such
fluctuations are included in the Net change in net realized and unrealized gain/(loss) from investments on the Statement of Operations.
Reported realized foreign
currency gains and losses arise from the disposition of foreign currency, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest and foreign
withholding taxes recorded on the Fund’s books on the transaction date and the U.S. dollar equivalent of the amounts actually received or paid. These reported realized foreign currency gains and losses, if any, are included in Net realized
gain/(loss) from foreign currency transactions on the Statement of Operations. Unrealized foreign currency gains and losses arise from changes (due to changes in exchange rates) in the value of foreign currency and other assets and liabilities
denominated in foreign currencies, which are held at period end, if any, and are included in Net change in unrealized appreciation/(depreciation) on translation of assets and liabilities in foreign currencies on the Statement of Operations.
d. Foreign Capital Gains Tax The Fund may be subject to foreign taxes on income, gains on investments or currency purchases/repatriation, a portion of which may
be recoverable. The Fund will accrue such taxes and recoveries as applicable, based upon their current interpretation of tax rules and regulations that exist in the markets in which they invest.
e. Investment Income Dividend income net of foreign taxes withheld, if any, is generally recorded on the ex-dividend date.
Interest income, which includes amortization/accretion of premium/discount, is determined using the interest income accrual method, and is accrued and recorded daily.
f. Allocation of Income and Expenses Many of the expenses of the Trust can be directly attributed to a specific
series of the Trust. Expenses that cannot be directly attributed to a specific series of the Trust are generally apportioned among all the series in the Trust, based on relative net assets. In calculating net asset value per share for each series of
the Trust, investment income, realized and unrealized gains and losses, and expenses other than series-specific expenses are allocated daily to each series based upon the proportion of net assets attributable to each series.
3. Transactions with Affiliates
a. Investment Advisory Fee and Expense
Limitation Under the terms of the advisory agreement, which, after its two year initial term, is reviewed and approved annually by the Board of Trustees, the Fund pays an investment advisory fee to Park Avenue. Park Avenue is a wholly-owned
subsidiary of Guardian Life and receives an investment advisory fee at an annual rate of 0.55% up to $100 million, 0.50% up to $300 million, and 0.40% in excess of $300 million of the Fund’s average daily net assets. The fee is
accrued daily and paid monthly.
Park Avenue has contractually agreed through April 30, 2020 to waive certain fees and/or reimburse certain expenses incurred by
the Fund to the extent necessary to limit the Fund’s total annual operating expenses after fee waiver and/or expense reimbursement to 0.96% of the Fund’s average daily net assets (excluding, if applicable, any acquired fund fees and
expenses, taxes, interest, transaction costs and brokerage commissions, litigation and extraordinary expenses). The limitation may not be increased or terminated prior to this time without action by the Board of Trustees, may be terminated only upon
approval of the Board of Trustees, and is subject to Park Avenue’s recoupment rights. For the year ended December 31, 2019, Park Avenue waived fees and/or paid Fund expenses in the amount of $149,391.
Park Avenue may be entitled to recoupment of previously waived fees and reimbursed expenses from the Fund for three years from the date of the waiver or reimbursement,
subject to the expense limitation in effect at the time of the waiver or reimbursement and at the time of the recoupment, if any. The amount available for potential future recoupment by Park Avenue from the Fund under the Expense Limitation
Agreement and the expiration schedule at December 31, 2019 are as follows:
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Potential Recoupment Amounts
Expiring |
| Total Potential
Recoupment
Amounts |
|
2022 |
|
2021 |
|
2020 |
| $507,014 |
|
$149,391 |
|
$162,831 |
|
$194,792 |
NOTES TO FINANCIAL STATEMENTS — GUARDIAN INTEGRATED RESEARCH VIP FUND
Park Avenue has entered into a Sub-Advisory Agreement with Columbia Management
Investment Advisers LLC (“CMIA”). CMIA is responsible for providing day-to-day investment advisory services to the Fund, subject to the supervision of Park
Avenue and the oversight of the Board of Trustees. Sub-advisory fees are paid by Park Avenue and do not represent a separate or additional expense to the Fund.
b. Compensation of Trustees and Officers Trustees and officers who are interested persons of the Trust, as defined in the 1940 Act, receive no compensation from
the Fund, except for the Chief Compliance Officer of the Trust. Trustees of the Trust who are not interested persons of the Trust, and the Chief Compliance Officer, receive compensation and reimbursement of expenses from the Trust.
c. Distribution Fees Park Avenue Securities LLC (“PAS”), a wholly-owned subsidiary of Guardian Life, is the principal underwriter of Fund shares. The
Trust has entered into a distribution and service agreement with PAS, which governs the sale and distribution of shares of the Fund. Under a distribution and service plan adopted by the Trust (“12b-1
plan”), PAS is compensated for services in such capacity, including its expenses in connection with the promotion and distribution of shares of the Fund, at an annual rate of 0.25% of the Fund’s average daily net assets. For the year ended
December 31, 2019, the Fund paid distribution fees in the amount of $27,859 to PAS.
PAS has directed that certain payments under the 12b-1 plan be used to compensate GIAC for shareholder services provided to contract owners.
4. Federal Income Taxes
a. Distributions to Shareholders For federal income tax purposes, the Fund is treated as a disregarded entity (“DRE”). As a DRE, the Fund is not subject
to an entity-level income tax; and any income, gains, losses, deductions, taxes, and credits of the Fund would instead be “passed through” directly to the separate accounts of GIAC that invest in the Fund and retain the same character for
U.S. federal income tax purposes. In addition, the Fund is not required to distribute taxable income and capital gains for U.S. federal income tax purposes. Therefore, no dividends and capital gains distributions were paid by the Fund.
5. Investments
a. Investment Purchases and Sales The cost of
investments purchased and the proceeds from
investments sold (excluding short-term investments) amounted to $12,903,686 and $13,462,328, respectively, for the year ended December 31, 2019. During the year ended December 31, 2019,
there were no purchases or sales of U.S. government securities.
b. Foreign Securities Foreign securities investments involve special risks and considerations
not typically associated with U.S. investments. These risks include, but are not limited to, currency risk; adverse political, regulatory, social, and economic developments; and less reliable information about issuers. Moreover, securities of some
foreign issuers may be less liquid and their prices more volatile than those of comparable U.S. issuers.
c. Industry or Sector Concentration In its normal
course of business, the Fund may invest a significant portion of its assets in companies within a limited number of industries or sectors. As a result, the Fund may be subject to a greater risk of loss than that of a fund invested in a wider
spectrum of industries or sectors because the stocks of many or all of the companies in the industry, group of industries, sector, or sectors may decline in value due to developments adversely affecting the industry, group of industries, sector, or
sectors.
d. Repurchase Agreements The Fund may invest in repurchase agreements to maintain liquidity and earn income over periods of time as short as
overnight. The collateral for repurchase agreements is either cash or fully negotiable U.S. government securities (including U.S. government agency securities). Repurchase agreements are fully collateralized (including the interest accrued thereon)
and such collateral is marked to market daily while the agreements remain in force. If the value of the collateral falls below the repurchase price plus accrued interest, the Fund will typically require the seller to deposit additional collateral by
the next business day. If the request for additional collateral is not met, or the seller defaults, the Fund maintains the right to sell the collateral (although it may be prevented or delayed from doing so in certain circumstances) and may be
required to claim any resulting loss against the seller. Park Avenue monitors the creditworthiness of the seller with which the Fund enters into repurchase agreements.
6. Temporary Borrowings
The Fund, with other funds managed by Park Avenue,
is party to a $10 million committed revolving credit facility from State Street Bank and Trust Company for temporary borrowing purposes, including the meeting
NOTES TO FINANCIAL STATEMENTS — GUARDIAN INTEGRATED RESEARCH VIP FUND
of redemption requests that otherwise might require the untimely disposition of securities. Interest is calculated based
on the higher of the daily one-month LIBOR rate and the Federal Funds rate plus 1.25% at the time of borrowing. In addition to the interest charged on any borrowings by the Fund, each fund pays a commitment
fee of 0.30% per annum on its share of the unused portion of the credit facility. The agreement is in place until December 9, 2020. The Fund did not utilize the credit facility during the year ended December 31, 2019.
7. Indemnifications
Under the
Trust’s organizational documents and, in some cases, by contract, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Fund. In addition, in the normal course of business,
the Fund enters into contracts with its vendors and others that provide general indemnifications. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have
not yet occurred. However, based on experience, the Fund expects the risk of loss to be remote.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees of Guardian Variable Products Trust and Shareholders of
Guardian Integrated Research VIP Fund
Opinion on the
Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Guardian Integrated
Research VIP Fund (one of the funds constituting Guardian Variable Products Trust, referred to hereafter as the “Fund”) as of December 31, 2019, the related statement of operations for the year ended December 31, 2019, the statement of
changes in net assets for each of the two years in the period ended December 31, 2019, including the related notes, and the financial highlights for each of the periods indicated therein (collectively referred to as the “financial
statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2019, the results of its operations for the year then ended, the changes in its net assets
for each of the two years in the period ended December 31, 2019 and the financial highlights for each of the periods indicated therein in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility
of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States)
(PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing
procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the
amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our
procedures included confirmation of securities owned as of December 31, 2019 by correspondence with the custodian. We believe that our audits provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
New York, New York
February 20, 2020
We have served as the auditor of one or more investment companies
in Guardian Variable Products Trust since 2016.
SUPPLEMENTAL INFORMATION (UNAUDITED)
Approval of Investment Advisory and Sub-advisory
Agreements
Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), requires that a fund’s investment advisory and
sub-advisory agreements be approved initially by the fund’s board of trustees. Section 15(c) also requires that the continuation of these agreements, after an initial term of up to two years, be annually reviewed and approved by the board.
Any such agreement must be approved by a vote of a majority of the trustees who are not parties to the agreement or “interested persons” (as defined in the 1940 Act) of a party to the agreement at an
in-person meeting of the board called for the purpose of voting on such approval.
At a meeting of the Board of Trustees (the
“Board”) of Guardian Variable Products Trust (the “Trust”) held on September 4-5, 2019 (the “Meeting”), the Board considered and approved the proposed sub-advisory agreement (the
“Sub-advisory Agreement”) between Park Avenue Institutional Advisers LLC (the “Manager”) and Columbia Management Investment Advisers, LLC (the “Sub-adviser”) engaged to serve as Sub-adviser to Guardian Integrated
Research VIP Fund (the “Fund”). The Trustees who are not parties to the Sub-advisory Agreement or “interested persons” (as defined in the 1940 Act) of a party to the Sub-advisory Agreement (the “Independent Trustees”)
unanimously approved the Sub-advisory Agreement for an initial term of two years.
The Board is responsible for overseeing the management of the Fund. In determining
whether to approve the Sub-advisory Agreement, the Trustees evaluated information and factors that they considered to be relevant and appropriate through the exercise of their own business judgment. The Trustees considered certain information and
factors in light of advice furnished to them by legal counsel to the Trust and, in the case of the Independent Trustees, their independent legal counsel. In advance of the Meeting, the Trustees received materials and information designed to assist
their consideration of the Sub-advisory Agreement. At the Meeting, the Board received a presentation from the Sub-adviser regarding the services to be rendered to the Fund. The Manager also discussed proposed
changes to the Fund’s principal investment strategies. The Trustees received written responses from the Sub-adviser to a series of questions and requests for information covering a wide variety of topics provided by independent counsel on
behalf of the Independent Trustees. The Trustees also received materials and information regarding the legal standards applicable to their consideration of the Sub-advisory
Agreement and the process and criteria used by the Manager to identify and select the Sub-adviser.
During the
course of their deliberations, the Independent Trustees met to discuss and evaluate the Sub-advisory Agreement in executive session with their independent legal counsel, outside of the presence of the Trustees who are not Independent Trustees and
representatives from Fund management, the Manager or the Sub-adviser.
In reaching its decision to approve the Sub-advisory Agreement, the Board took into account
the materials and information described above as well as other materials and information provided to the Board and discussed with and among the Trustees. Individual Trustees may have given different weight to different factors and information with
respect to the Sub-advisory Agreement, and the Trustees did not identify any single factor or information that, in isolation, would be controlling in deciding to approve the
Sub-advisory Agreement. The discussion below is intended to summarize the broad factors that figured prominently in the Board’s decisions to approve the Sub-advisory Agreement rather than to be all-inclusive. These broad factors included: (i) the nature, extent and quality of the services to be provided to the Fund by the Sub-adviser; (ii) the investment performance of accounts managed by the
Sub-adviser with strategies similar to the Fund; (iii) the fees to be charged and estimated profitability; (iv) the extent to which economies of scale may in the future exist for the Fund, and the extent to which the Fund may benefit from
future economies of scale; and (v) any other benefits anticipated to be derived by the Sub-adviser (or its affiliates) from its relationships with the Fund.
Nature, Extent and Quality of Services
The
Trustees considered information regarding the nature, extent and quality of services to be provided to the Fund by the Sub-adviser. The Trustees also considered, among other things, the terms of the
Sub-advisory Agreement and the range of investment advisory services to be provided by the Sub-adviser under the oversight of the Manager. In evaluating the investment advisory services, the Trustees
considered, among other things, the Sub-adviser’s investment philosophy, style and process and approach to managing risk. The Trustees also considered information regarding funds or accounts managed by the Sub-adviser with similar strategies as
the Fund, including performance and portfolio characteristics. The Trustees received and evaluated information regarding the background, education, expertise and/or experience
SUPPLEMENTAL INFORMATION (UNAUDITED)
of the investment professionals that would serve as portfolio managers for the Fund and the capabilities, resources and
reputation of the Sub-adviser.
Based upon these considerations, the Board concluded, within the context of their full deliberations, that the nature, extent and
quality of services to be provided to the Fund by the Sub-adviser were appropriate.
Investment Performance
Because the Sub-adviser is new to the Fund, the Board was not able to evaluate an investment performance record for the Fund with respect to the Sub-adviser. The Board
did consider the Sub-adviser’s performance history with respect to similarly-managed investment accounts. While there was no historical Sub-adviser performance information with respect to the Fund for review, the Board noted that it would have
an opportunity to review such information in connection with future annual reviews of the Sub-advisory Agreement.
Costs and
Profitability
The Trustees considered the proposed sub-advisory fees to be paid under the Sub-advisory Agreement and evaluated the reasonableness
of the fees. The Trustees considered information regarding the fees charged to funds and accounts managed by the Sub-adviser with similar strategies as the Fund. The Trustees also considered that the fees to be paid to the Sub-adviser would be paid
by the Manager and not the Fund and that the Manager had negotiated the fees with the Sub-adviser at arm’s-length.
The Trustees did not request or consider any projected profitability information from the Sub-adviser because the Manager would be responsible for payment of the
sub-advisory fees and had negotiated the fees with the Sub-adviser at arm’s-length.
Based on the consideration of the information and factors summarized above, as well as other relevant information and
factors, the Trustees concluded that the proposed sub-advisory fees were reasonable in light of the nature, extent and quality of services expected to be rendered to the Fund by the Sub-adviser.
Economies of Scale
The Board considered that the
sub-advisory fee schedule offered breakpoints. The Trustees concluded that it was appropriate to revisit potential economies of scale in connection with future reviews of the Sub-advisory Agreement or earlier,
if appropriate, and that they were satisfied with the extent to which economies of scale would be shared for the benefit of shareholders based on anticipated asset levels.
Ancillary Benefits
The Trustees considered the
potential benefits, other than the sub-advisory fee, that the Sub-adviser and its affiliates may receive because of their relationships with the Fund, including the ability to use soft dollars consistent with Trust policies and other benefits from
increases in assets under management. The Trustees concluded that the benefits that may accrue to the Sub-adviser and its affiliates are consistent with those expected for a sub-adviser to a mutual fund such
as the Fund.
Conclusion
Based on a
comprehensive consideration and evaluation of all of the information and factors summarized above, among others, the Board as a whole, including the Independent Trustees, approved the Sub-advisory Agreement.
SUPPLEMENTAL INFORMATION (UNAUDITED)
Trustees and Officers Information Table
The following table provides information about the Trustees of the Trust.
|
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| |
|
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| Name and
Year of Birth |
|
Term of Office,
Position(s) Held and Length of
Service1 |
|
Principal
Occupation(s) During Past Five Years |
|
Number of
Funds
in Fund
Complex Overseen
by Trustees2 |
|
Other Directorships
Held by Trustee |
| Independent Trustees |
| |
|
|
|
|
| Bruce W. Ferris3 (born 1955) |
|
Trustee |
|
Retired (since 2015); President and CEO, Prudential Annuities Distributors, Inc. (2013–2015); Director/Trustee, Advanced Series Trust, The Prudential Series Fund and Prudential’s
Gibraltar Fund, Inc. (2013–2015); Senior Vice President, Prudential Annuities (2008–2015). |
|
16 |
|
None. |
| |
|
|
|
|
| Theda R. Haber3 (born 1954) |
|
Trustee |
|
Adjunct Assistant Professor of Law, UC Hastings College of Law (since 2013); Member of the Board of Directors, Fairholme Trust Company, LLC (2015–2019); Attorney, Law Office of Theda R.
Haber (since 2014); Visiting Professor of Law, UC Davis School of Law (since 2014); Consultant, Haber & Associates LLC (financial services industry), (2012–2017); Advisory Council Chair, Vice Chair, and Member, Advisory Council on
Employee Welfare and Pension Benefit Plans (ERISA Advisory Council), U.S. Department of Labor (2009–2011); Managing Director and General Counsel, BlackRock Institutional Trust Company, N.A. (2009–2011); Deputy Global General Counsel,
Barclays Global Investors (2006–2009); Managing Director, Barclays Global Investors (1998–2006). |
|
16 |
|
None. |
| |
|
|
|
|
| Marshall
Lux3 (born 1960) |
|
Trustee |
|
Senior Advisor, The Boston Consulting Group (since 2014); Senior Partner and Managing Director, The Boston Consulting Group (2009–2014). |
|
16 |
|
None. |
| |
|
|
|
|
| Lisa K.
Polsky3 (born 1956) |
|
Trustee |
|
Board Member, MFA Financial, Inc. (real estate investment trust) (since 2020); Advisor, SMBC Americas (financial services) (since 2020); Senior Risk Advisor, AQR (investment management)
(2016–2019); Senior Risk Advisor, Ultra Capital (venture capital) (2016–2019); Board Member, DB USA Corporation (Deutsche Bank Intermediate Holding Company) (financial services) (since 2016); Chief Risk Officer, CIT Group Inc. (financial
services) (2010–2015); Board Member and Chair of Audit Committee, Piper Jaffray (investment bank) (2007–2016). |
|
16 |
|
None. |
| |
|
|
|
|
| John
Walters3 (born 1962) |
|
Lead Independent
Trustee |
|
Board Member, Amerilife Holdings LLC (insurance distribution) (since 2015); Board Member, Stadion Money Management LLC (investment adviser) (since 2011); President and Chief Operating Officer,
Hartford Life Insurance Company (2000–2010). |
|
16 |
|
Trustee, USAA Mutual Funds Trust, (One registered investment company offering 47 individual funds) (since
2019). |
SUPPLEMENTAL INFORMATION (UNAUDITED)
|
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| |
|
|
|
|
| Name and
Year of Birth |
|
Term of Office,
Position(s) Held and Length of
Service1 |
|
Principal
Occupation(s) During Past Five Years |
|
Number of
Funds
in Fund
Complex Overseen
by Trustees2 |
|
Other Directorships
Held by Trustee |
| Interested Trustees |
| |
|
|
|
|
| Dominique Baede4 (born 1970) |
|
Trustee (Since
January 2020) |
|
Vice President, Head of Product, Life, Annuity and Inforce, The Guardian Life Insurance Company of America (since 2019); Managing Director, Product Management Group, AXA Equitable (insurance
company) prior thereto. |
|
16 |
|
None. |
| |
|
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|
| Michael
Ferik4 (born 1972) |
|
Chairman and Trustee (Since
December 2019) |
|
Executive Vice President, Individual Markets, The Guardian Life Insurance Company of America (since 2020); Executive Vice President and Chief Financial Officer, The Guardian Life Insurance
Company of America (2017–2019); Executive Vice President, Individual Markets, The Guardian Life Insurance Company of America prior thereto. |
|
16 |
|
None. |
| 1 |
Except as otherwise noted, each Trustee began service in such capacity in 2016 and serves until his or her successor is
elected and qualified or until his or her resignation, death or removal. The business address of each Trustee is 10 Hudson Yards, New York, New York 10001. |
| 2 |
The Trust currently consists of 16 separate Funds. |
| 3 |
Member of the Audit Committee of the Trust. |
| 4 |
Each of Dominique Baede and Michael Ferik is considered to be an “interested person” of the Trust within the
meaning of the 1940 Act because of their affiliation with The Guardian Life Insurance Company of America and/or its affiliates. |
|
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|
|
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| |
|
|
| Name and Year of Birth |
|
Position(s) Held and
Length of Service5 |
|
Principal Occupation(s)
During Past Five Years |
| |
|
|
Dominique Baede
(born 1970) |
|
President and Principal Executive Officer (Since January 2020) |
|
Vice President, Head of Product, Life, Annuity and Inforce, The Guardian Life Insurance Company of America (since 2019); Managing Director,
Product Management Group, AXA Equitable (insurance company) prior thereto. |
| |
|
|
| John H. Walter
(born 1962) |
|
Senior Vice President, Treasurer, and Principal Financial and Accounting Officer |
|
Vice President, Director of Finance, Corporate Finance, The Guardian Life Insurance Company of America. |
| |
|
|
| Harris Oliner
(born 1971) |
|
Senior Vice President and Secretary |
|
Senior Vice President, Corporate Secretary, The Guardian Life Insurance Company of America (since 2015); Senior Vice President, Deputy
General Counsel, Corporate Secretary, Voya Financial, Inc. prior thereto. |
| |
|
|
| Richard T. Potter
(born 1954) |
|
Senior Vice President and Chief Legal Officer |
|
Vice President and Equity Counsel, The Guardian Life Insurance Company of America. |
| |
|
|
| Philip Stack
(born 1964) |
|
Chief Compliance Officer
(Since September 2017) |
|
Second Vice President, Mutual Fund Chief Compliance Officer, The Guardian Life Insurance Company of America (since 2017); Executive Director,
Chief Compliance Officer, Morgan Stanley (2015–2017); Vice President, Morgan Stanley prior thereto. |
| |
|
|
| Brian Hagan
(born 1984) |
|
Anti-Money Laundering Officer (Since March 2019) |
|
Assistant Vice President (since 2019), Anti-Money Laundering Compliance, The Guardian Life Insurance Company of America/Park Avenue
Securities LLC; Vice President, Head of Financial Intelligence Unit, Brown Brothers Harriman & Co. (2014–2019); Assistant Vice President, AML Compliance Manager, JPMorgan Chase & Co. (2011–2014). |
| |
|
|
| Kathleen M. Moynihan
(born 1966) |
|
Senior Counsel |
|
Second Vice President, Counsel (since 2019), The Guardian Life Insurance Company of America; Senior Counsel prior thereto. |
| |
|
|
| Maria Nydia Morrison
(born 1958) |
|
Fund Controller |
|
Mutual Fund Controller, The Guardian Life Insurance Company of America (since 2015); Chief Financial Officer/Assistant Operating Officer, St.
Francis De Assisi Montessori School (Plaridel, Bulacan), Inc. (Philippines) prior thereto. |
| |
|
|
| Sonya L. Crosswell
(born 1977) |
|
Assistant Secretary |
|
Assistant Vice President, Assistant Corporate Secretary and Secretary Pro Tem, The Guardian Life Insurance Company of America. |
| 5 |
Unless otherwise indicated, the Officers each began service in such capacity in 2016 and hold office for an indefinite
term or until their successors shall have been elected and qualified. The business address of each Officer is 10 Hudson Yards, New York, New York 10001. |
SUPPLEMENTAL INFORMATION (UNAUDITED)
The Statement of Additional Information (“SAI”) includes additional information about
the Trust’s Trustees and Officers and is available, without charge, upon request by calling toll-free 1-888-GUARDIAN (1-888-482-7342) or by visiting our website at http://guardianvpt.onlineprospectus.net/GuardianVPT/Prospectuses.
Portfolio Holdings and Proxy Voting Procedures
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year as an exhibit
to its reports on Form N-PORT. The Fund’s Form N-PORT reports are available on the Securities and Exchange Commission’s website at https://www.sec.gov. The
Fund’s Form N-PORT information is also available, without charge, upon request, by calling toll-free 1-888-GUARDIAN (1-888-482-7342) or by visiting our website at http://guardianvpt.onlineprospectus.net/
GuardianVPT/Prospectuses.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio
securities is included in the SAI. The SAI and information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 may be obtained
(i) without charge, upon request, by calling toll-free 1-888-GUARDIAN (1-888-482-7342) or by visiting our website at http://guardianvpt.onlineprospectus.net/
GuardianVPT/Prospectuses; and (ii) on the Securities and Exchange Commission’s website at
https://www.sec.gov.
This report is transmitted to shareholders only. It is not authorized for use as an offer of sale or a solicitation of an offer to buy shares of the Fund unless
accompanied or preceded by the Fund’s current prospectus. Past performance results shown in this report should not be considered a representation of future performance. Investment returns and principal value of shares will fluctuate so that
shares, when redeemed, may be worth more or less than their original cost. Statements and other information herein are as dated and are subject to change.
The Guardian Life Insurance Company of America New York, NY 10001-2159
PUB8170
Guardian Variable
Products Trust
2019
Annual Report
All Data as of December 31, 2019
Guardian Diversified
Research VIP Fund
Important Notice
Beginning on
January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund’s shareholder reports will no longer be sent by mail from The Guardian Insurance & Annuity Company, Inc.
(“GIAC”). Instead, GIAC will mail you a notice when copies of the shareholder reports are made available on a website. You will be notified by mail each time a report is posted and provided with a website link to access the report.
If you have already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. If you have not yet
elected electronic delivery, at any time, you may elect to receive the Fund’s shareholder reports and certain other communications from GIAC electronically, by going to www.guardianlife.com and registering for
e-delivery.
You may instead elect to receive all future shareholder reports in paper free of charge. If you wish to receive
paper copies of your shareholder reports, please call GIAC’s Customer Service Office Contact Center at 1-888-GUARDIAN (1-888-482-7342). Your election to receive reports in paper will apply to all the underlying funds available.
|
|
|
| Not FDIC insured. May lose value. No bank guarantee. |
|
www.guardianlife.com |
TABLE OF CONTENTS
Guardian Diversified Research VIP Fund
Except as otherwise specifically stated, all information, including portfolio security positions, is as of
December 31, 2019. The views expressed in the Fund Commentary are those of the Fund’s portfolio manager(s) as of the date of this report and are subject to change without notice. They do not necessarily represent the views of Park Avenue
Institutional Advisers LLC or a sub-adviser. The Fund Commentary may contain some forward-looking statements providing expectations or forecasts of future events as of the date of this report; they do not
necessarily relate to historical or current facts. There can be no guarantee that any forward-looking statement will be realized. We undertake no obligation to update forward-looking statements, whether as a result of new information, future events,
or otherwise. Any discussions of specific securities should not be considered a recommendation to buy or sell those securities. Fund holdings will vary. Information contained herein has been obtained from sources believed reliable, but is not
guaranteed.
GUARDIAN DIVERSIFIED RESEARCH VIP FUND
FUND COMMENTARY OF PUTNAM INVESTMENT
MANAGEMENT, LLC, SUB-ADVISER (unaudited)
Highlights
| • |
|
Guardian Diversified Research VIP Fund (the “Fund”) returned 33.87%, outperforming its benchmark, the Standard & Poor’s 500® Index1 (the “Index”), for the 12 months ended December 31, 2019. The Fund’s outperformance relative to the Index was due to positive security selection across all sectors but
utilities. Sector allocation effect had minimal impact on relative performance but was slightly negative in the period. |
| • |
|
The Index returned 31.49% for the period. The strong return can primarily be attributed to the information technology sector which contributed roughly one-third of the Index
performance. Other sectors with meaningful contributions were financials, communication services, health care, consumer discretionary, industrials, and consumer staples. |
Market Overview
U.S. equities started 2019 on a strong note following the
fourth quarter sell-off in 2018. The first quarter return of the Index was its best quarterly performance in nearly 10 years and set the stage for the best calendar year performance since 1997. Equities
were supported throughout the year by solid corporate earnings, broadly positive economic data and the U.S. Federal Reserve’s (the “Fed”) interest rate policy. However, volatility spiked several times as global trade conflict and
tensions between the U.S. and China, a U.S. Treasury yield curve inversion in the first quarter, and mixed economic data in the third and fourth quarters weighed on markets.
In the first quarter, stocks were boosted by positive corporate earnings, a vote by the Fed to hold interest rates steady, positive economic data, and increased optimism
about a resolution to the U.S.-China trade conflict. However, stocks tumbled briefly in the quarter after the U.S. Treasury yield curve inverted for the first time since 2007 — historically an indicator of an impending recession.
Strength continued in the second quarter on the back of corporate earnings reports and better than expected economic growth. Data from the Institute for Supply
Management showed that manufacturing had rebounded in March. However, volatility spiked once
again in May as U.S.-China trade talks stalled and the nations’ leaders engaged in retaliatory tariff increases.
Equity markets pushed higher in the third quarter with the Index posting gains for the third consecutive quarter. However, the global trade conflict continued to weigh
on markets. In August, stocks struggled as the U.S. and China engaged in back-and forth exchanges of tariff threats. The Chinese government devalued the yuan to fall below a 7-to-1 ratio versus the U.S. dollar. Also weighing on stocks was mixed economic data as job growth slowed, but wage growth supported an increase in consumer spending. By the end of the quarter, U.S. and China
officials had agreed to hold more trade talks and the Fed cut short-term interest rates for the second time in the year. This helped to move stocks higher to end the quarter.
U.S. equities posted strong gains in the fourth quarter, despite continued U.S. and China trade concerns and market volatility. All three major U.S. stock indexes
recorded solid gains. Stocks tumbled briefly following a report that manufacturing activity contracted for the fourth straight month in November. Other economic data was positive. The consumer sector remained strong, with increased retail sales,
including record holiday spending. The Fed reduced its target range for the federal funds rate by another 25 basis points at its October meeting. Following the rate cut, the Index closed at a record high. In December the Fed held rates steady and
noted a favorable economic outlook for 2020. The U.S.-China trade conflict continued to spark volatility throughout the quarter. Stocks and bonds both suffered after President Trump said that a trade deal with China was not likely to be signed until
after the 2020 election. However, subsequent reports that the two nations were approaching a preliminary “phase 1” agreement lifted stocks.
Portfolio
Review
The Fund’s outperformance relative to the Index was due to positive security selection across all sectors but utilities. Sector allocation effects
had minimal impact on relative performance but were slightly negative in the period. The strongest relative performing sectors within the portfolio were industrials, health care, financials, and energy. Relative underperformance within the utilities
and information technology sectors was a result of
| 1 |
The Standard & Poor’s 500® Index (the “S&P
500 Index”) is an unmanaged market-capitalization-weighted index generally considered to be representative of U.S. equity market activity. The S&P 500 Index consists of 500 stocks representing leading industries of the U.S. economy. Index
results assume the reinvestment of dividends paid on the stocks constituting the Index. You may not invest in the S&P 500 Index, and, unlike the fund, the S&P 500 Index does not incur fees or expenses. |
GUARDIAN DIVERSIFIED RESEARCH VIP FUND
unfavorable security selection within the utilities sector and an underweight to the information technology sector.
Outlook
The U.S. equity market continued to rally and reach new highs in the
closing months of 2019. This was despite many developments that could have sent investors fleeing from stocks. The year also saw its share of volatility, and many issues for investors remain unresolved. Many people are concerned about China’s
slowing economy and its impact on global economic growth. Also, nearly two years after the start of the U.S.-China trade conflict, we have yet to see a meaningful resolution, and we do not believe we are
likely to see one any time soon. A look across global markets features a host of additional uncertainties, such as the seemingly endless challenges of Brexit, Italian debt, and anemic growth in Europe overall.
What has received much less attention are the factors that could drive equity markets meaningfully higher from here. Many market observers believe equities today are
overpriced and therefore are not a risk worth taking given their limited upside potential. The reality is that price/earnings (“P/E”) multiples are in line with their average in recent decades.
We believe there is a reasonable case to be made that P/E multiples will expand from current levels. This could be fueled by historically low long-term bond yields. In
fact, for much of the second half of 2019, the dividend
yield on the Index was higher than the U.S. 10-year U.S. Treasury yield. Also, the earnings yield of stocks has been higher than the U.S. 10-year U.S. Treasury bond yield since the turn of the century. The difference between them has been near an extreme recently, which makes equities arguably undervalued. When comparing stocks with bonds, stocks have
almost never been cheaper.
What might prevent multiple expansion? One issue is concern about economic growth and how a slowdown, or even a recession, might lead to
downward earnings revisions. However, stock market valuations could move higher in an environment where some pressures are alleviated — a trade deal with China coupled with a slight acceleration in global growth, for example.
High-quality companies with durable profit streams and dividends have been strong performers and have benefited via multiple expansion from low interest rates. This
“bond proxy” cohort is expensive as compared to historical measures and the valuations would likely contract, with stock prices falling in the event that bond yields were to rise. Growth stocks and technology stocks in particular, have
powered the market over the past five years. Yet, in our view, valuations for many of the large- and mega-cap technology stocks remain attractive. At the same time, a number of undervalued sectors, such as
financials, energy, and basic materials, are priced well below historical averages and we believe could help drive equity market gains in the years ahead.
Funds in the Guardian Variable Products Trust are
sold by prospectus only. You should carefully consider the investment objectives, risks, charges and expenses of the Funds before making an investment decision. The prospectus contains this and other important information. Please read it carefully
before investing or sending money. Please visit our website at http://guardianvpt.onlineprospectus.net/GuardianVPT/ Prospectuses or to obtain a printed copy, call
1-888-GUARDIAN (1-888-482-7342).
As with all mutual funds, the value of an investment in the Fund could decline, and you could lose money. Diversification does not guarantee profit or protect against
loss, and there can be no assurance that the Fund will achieve its investment objective. The Fund invests primarily in equity securities and therefore exposes you to the general risks of investing in stock markets. Investing in large-capitalization
companies involves risks such as having low growth rates, and slow responsiveness to competitive challenges or opportunities than in the case of smaller companies. Investments in growth companies may be highly volatile. Growth stocks may not realize
their perceived growth potential and during certain periods the Fund may underperform other equity funds that employ a different style. Value stocks may not realize their perceived value and during certain periods the Fund may underperform other
equity funds that employ a different style. Investing in a more limited number of issuers and sectors can be subject to greater market fluctuation. Any discussions of specific securities should not be considered a recommendation to buy or sell those
securities. Fund holdings will vary.
GUARDIAN DIVERSIFIED RESEARCH VIP FUND
Fund Characteristics (unaudited)
|
|
|
| Total Net Assets: $196,049,973 |
|
|
|
| |
|
Sector Allocation1
As of December 31, 2019 |
|
|
|
|
|
|
| |
| Top Ten Holdings2 As of December 31, 2019 |
|
| |
|
| Holding |
|
% of Total
Net Assets |
|
| Microsoft Corp. |
|
|
4.73% |
|
| Apple, Inc. |
|
|
3.13% |
|
| Alphabet, Inc., Class A |
|
|
3.00% |
|
| Amazon.com, Inc. |
|
|
2.76% |
|
| BP PLC |
|
|
1.98% |
|
| The Procter & Gamble Co. |
|
|
1.93% |
|
| Bank of America Corp. |
|
|
1.90% |
|
| Facebook, Inc., Class A |
|
|
1.87% |
|
| Fidelity National Information Services, Inc. |
|
|
1.79% |
|
| Activision Blizzard, Inc. |
|
|
1.78% |
|
| Total |
|
|
24.87% |
|
| 1 |
The Fund’s holdings are allocated to each sector based on the MSCI Global Industry Classification Standard (GICS®). Cash includes short-term investments and net other assets and liabilities. |
| 2 |
Portfolio holdings are subject to change and should not be considered a recommendation to buy or sell individual
securities. |
GUARDIAN DIVERSIFIED RESEARCH VIP FUND
Fund Performance (unaudited)
|
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|
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|
| Average Annual Total Returns
As of December 31, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
| |
|
Inception Date |
|
|
1 Year |
|
|
5 Year |
|
|
10 Year |
|
|
Since Inception |
|
| Guardian Diversified Research VIP Fund |
|
|
9/1/2016 |
|
|
|
33.87% |
|
|
|
— |
|
|
|
— |
|
|
|
14.81% |
|
| Standard & Poor’s 500® Index |
|
|
|
|
|
|
31.49% |
|
|
|
— |
|
|
|
— |
|
|
|
14.96% |
|
|
| |
|
Results of a Hypothetical $10,000 Investment As of December 31,
2019 |
|
The chart above shows the performance of a hypothetical $10,000 investment made on inception date in Guardian Diversified Research VIP
Fund and the Standard & Poor’s 500® Index. Index returns do not include the fees and expenses of the Fund, but do include reinvestment of dividends, if any.
Performance quoted represents past performance and does not guarantee or predict future results. Investment return and principal value will fluctuate, so shares, when
redeemed, may be worth more or less than their original cost. The Fund’s fees and expenses are detailed in the Financial Highlights section of this report. Fees and expenses are factored into the net asset value of Fund shares and any
performance numbers we release. Total return figures include the effect of expense limitations in effect during the periods shown, if applicable; without such limitations, the performance shown would have been lower. Performance results assume the
reinvestment of dividends and capital gains. The return figures shown do not reflect the deduction of taxes that a contract owner/policyholder may pay on redemption units. The actual total returns for owners of variable annuity contracts or variable
life insurance policies that provide for investment in the Fund will be lower to reflect separate account and contract/policy charges. Current and month-end performance information, which may be lower or
higher than that cited, is available by calling 1-888-GUARDIAN
(1-888-482-7342) and is periodically updated on our website: http://guardianlife.com.
UNDERSTANDING YOUR FUND’S EXPENSES (UNAUDITED)
By investing in the Fund, you incur two types of costs: (1) transaction costs and (2) ongoing costs, including,
as applicable, investment advisory fees, distribution and/or service (12b-1) fees and other Fund expenses. The example below is intended to help you understand your ongoing costs (in dollars) of investing in
the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the
beginning of the period and held for the entire period from July 1, 2019 to December 31, 2019. The table below shows the Fund’s expenses in two ways:
Expenses based on actual return
This section of the table provides
information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for
example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the section under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this
period.
Expenses based on hypothetical 5% return for comparison purposes
This section of the table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund with the cost of investing in other mutual funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the
other funds.
Note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads), redemption fees, or exchange fees. Therefore the second section is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. If these transactional costs were
included, your costs would have been higher. Charges and expenses at the insurance company separate account level are not reflected in the table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
| |
|
Beginning
Account Value
7/1/19 |
|
Ending
Account Value
12/31/19 |
|
|
Expenses Paid
During Period* 7/1/19-12/31/19 |
|
|
Expense Ratio
During Period
7/1/19-12/31/19 |
|
| Based on Actual Return |
|
$1,000.00 |
|
|
$1,113.80 |
|
|
|
$5.38 |
|
|
|
1.01% |
|
| Based on Hypothetical Return (5% Return Before Expenses) |
|
$1,000.00 |
|
|
$1,020.11 |
|
|
|
$5.14 |
|
|
|
1.01% |
|
| * |
Expenses are equal to the Fund’s annualized expense ratio as indicated, multiplied by the average account value over
the period, multiplied by 184/365 (to reflect the one-half year period). |
SCHEDULE OF INVESTMENTS — GUARDIAN DIVERSIFIED RESEARCH VIP FUND
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Shares |
|
|
Value |
|
| Common Stocks – 98.0% |
|
| |
| Aerospace & Defense – 2.4% |
|
| |
|
|
| General Dynamics Corp. |
|
|
3,913 |
|
|
$ |
690,057 |
|
| |
|
|
| Northrop Grumman Corp. |
|
|
2,500 |
|
|
|
859,925 |
|
| |
|
|
| Raytheon Co. |
|
|
4,250 |
|
|
|
933,895 |
|
| |
|
|
| The Boeing Co. |
|
|
2,430 |
|
|
|
791,597 |
|
| |
|
|
| TransDigm Group, Inc. |
|
|
887 |
|
|
|
496,720 |
|
| |
|
|
| United Technologies Corp. |
|
|
6,254 |
|
|
|
936,599 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
4,708,793 |
|
| Airlines – 0.3% |
|
| |
|
|
| Air Canada (Canada)(1) |
|
|
14,999 |
|
|
|
560,318 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
560,318 |
|
| Automobiles – 1.1% |
|
| |
|
|
| General Motors Co. |
|
|
58,914 |
|
|
|
2,156,252 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
2,156,252 |
|
| Banks – 6.2% |
|
| |
|
|
| Bank of America Corp. |
|
|
105,937 |
|
|
|
3,731,101 |
|
| |
|
|
| Citigroup, Inc. |
|
|
43,035 |
|
|
|
3,438,066 |
|
| |
|
|
| JPMorgan Chase & Co. |
|
|
16,809 |
|
|
|
2,343,175 |
|
| |
|
|
| The PNC Financial Services Group, Inc. |
|
|
11,007 |
|
|
|
1,757,047 |
|
| |
|
|
| Wells Fargo & Co. |
|
|
15,737 |
|
|
|
846,651 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
12,116,040 |
|
| Beverages – 2.1% |
|
| |
|
|
| PepsiCo, Inc. |
|
|
5,322 |
|
|
|
727,358 |
|
| |
|
|
| The Coca-Cola Co. |
|
|
60,788 |
|
|
|
3,364,616 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
4,091,974 |
|
| Biotechnology – 2.6% |
|
| |
|
|
| AbbVie, Inc. |
|
|
20,098 |
|
|
|
1,779,477 |
|
| |
|
|
| Amgen, Inc. |
|
|
5,538 |
|
|
|
1,335,046 |
|
| |
|
|
| Biogen, Inc.(1) |
|
|
1,618 |
|
|
|
480,109 |
|
| |
|
|
| Gilead Sciences, Inc. |
|
|
5,967 |
|
|
|
387,736 |
|
| |
|
|
| Regeneron Pharmaceuticals, Inc.(1) |
|
|
1,118 |
|
|
|
419,786 |
|
| |
|
|
| Vertex Pharmaceuticals, Inc.(1) |
|
|
2,943 |
|
|
|
644,370 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
5,046,524 |
|
| Building Products – 1.0% |
|
| |
|
|
| Fortune Brands Home & Security,
Inc. |
|
|
18,986 |
|
|
|
1,240,545 |
|
| |
|
|
| Johnson Controls International PLC |
|
|
16,948 |
|
|
|
689,953 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
1,930,498 |
|
| Capital Markets – 4.1% |
|
| |
|
|
| Apollo Global Management, Inc. |
|
|
21,180 |
|
|
|
1,010,498 |
|
| |
|
|
| BlackRock, Inc. |
|
|
2,361 |
|
|
|
1,186,875 |
|
| |
|
|
| E*TRADE Financial Corp. |
|
|
17,712 |
|
|
|
803,593 |
|
| |
|
|
| Intercontinental Exchange, Inc. |
|
|
10,171 |
|
|
|
941,326 |
|
| |
|
|
| KKR & Co., Inc., Class A |
|
|
25,813 |
|
|
|
752,965 |
|
| |
|
|
| Quilter PLC (United Kingdom)(2) |
|
|
97,281 |
|
|
|
208,063 |
|
| |
|
|
| Raymond James Financial, Inc. |
|
|
10,401 |
|
|
|
930,473 |
|
| |
|
|
| The Goldman Sachs Group, Inc. |
|
|
9,199 |
|
|
|
2,115,126 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
7,948,919 |
|
| Chemicals – 1.6% |
|
| |
|
|
| Albemarle Corp. |
|
|
2,060 |
|
|
|
150,463 |
|
| |
|
|
| Dow, Inc. |
|
|
10,381 |
|
|
|
568,152 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Shares |
|
|
Value |
|
| Chemicals (continued) |
|
| |
|
|
| DuPont de Nemours, Inc. |
|
|
4,438 |
|
|
$ |
284,920 |
|
| |
|
|
| Eastman Chemical Co. |
|
|
3,211 |
|
|
|
254,504 |
|
| |
|
|
| Ecolab, Inc. |
|
|
1,266 |
|
|
|
244,325 |
|
| |
|
|
| Linde PLC |
|
|
1,947 |
|
|
|
414,516 |
|
| |
|
|
| The Sherwin-Williams Co. |
|
|
1,913 |
|
|
|
1,116,312 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
3,033,192 |
|
| |
| Commercial Services & Supplies – 0.2% |
|
| |
|
|
| Waste Connections, Inc. |
|
|
3,580 |
|
|
|
325,028 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
325,028 |
|
| Construction Materials – 0.1% |
|
| |
|
|
| Summit Materials, Inc., Class A(1) |
|
|
5,959 |
|
|
|
142,420 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
142,420 |
|
| Containers & Packaging – 0.5% |
|
| |
|
|
| Avery Dennison Corp. |
|
|
2,136 |
|
|
|
279,431 |
|
| |
|
|
| Ball Corp. |
|
|
5,855 |
|
|
|
378,643 |
|
| |
|
|
| Packaging Corp. of America |
|
|
2,624 |
|
|
|
293,862 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
951,936 |
|
| Diversified Financial Services – 0.4% |
|
| |
|
|
| Berkshire Hathaway, Inc., Class B(1) |
|
|
3,517 |
|
|
|
796,601 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
796,601 |
|
| Diversified Telecommunication Services – 0.8% |
|
| |
|
|
| Verizon Communications, Inc. |
|
|
26,620 |
|
|
|
1,634,468 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
1,634,468 |
|
| Electric Utilities – 2.3% |
|
| |
|
|
| American Electric Power Co., Inc. |
|
|
18,392 |
|
|
|
1,738,228 |
|
| |
|
|
| Exelon Corp. |
|
|
14,195 |
|
|
|
647,150 |
|
| |
|
|
| NextEra Energy, Inc. |
|
|
5,346 |
|
|
|
1,294,588 |
|
| |
|
|
| The Southern Co. |
|
|
12,719 |
|
|
|
810,200 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
4,490,166 |
|
| Electrical Equipment – 0.8% |
|
| |
|
|
| Eaton Corp. PLC |
|
|
16,696 |
|
|
|
1,581,445 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
1,581,445 |
|
| Entertainment – 4.4% |
|
| |
|
|
| Activision Blizzard, Inc. |
|
|
58,715 |
|
|
|
3,488,845 |
|
| |
|
|
| Live Nation Entertainment, Inc.(1) |
|
|
23,146 |
|
|
|
1,654,245 |
|
| |
|
|
| Netflix, Inc.(1) |
|
|
5,288 |
|
|
|
1,711,038 |
|
| |
|
|
| World Wrestling Entertainment, Inc.,
Class A |
|
|
26,143 |
|
|
|
1,695,896 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
8,550,024 |
|
| Equity Real Estate Investment – 1.0% |
|
| |
|
|
| Gaming and Leisure Properties, Inc. REIT |
|
|
43,508 |
|
|
|
1,873,019 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
1,873,019 |
|
| Food & Staples Retailing – 1.8% |
|
| |
|
|
| BJ’s Wholesale Club Holdings, Inc.(1) |
|
|
14,914 |
|
|
|
339,144 |
|
| |
|
|
| Costco Wholesale Corp. |
|
|
3,008 |
|
|
|
884,111 |
|
| |
|
|
| Walmart, Inc. |
|
|
19,829 |
|
|
|
2,356,479 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
3,579,734 |
|
| Food Products – 1.4% |
|
| |
|
|
| Kellogg Co. |
|
|
4,122 |
|
|
|
285,078 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 6 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
SCHEDULE OF INVESTMENTS — GUARDIAN DIVERSIFIED RESEARCH VIP FUND
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Shares |
|
|
Value |
|
| Food Products (continued) |
|
| |
|
|
| McCormick & Co., Inc. |
|
|
4,845 |
|
|
$ |
822,342 |
|
| |
|
|
| The Hershey Co. |
|
|
6,080 |
|
|
|
893,638 |
|
| |
|
|
| Tyson Foods, Inc., Class A |
|
|
7,735 |
|
|
|
704,194 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
2,705,252 |
|
| Health Care Equipment & Supplies – 3.3% |
|
| |
|
|
| Abbott Laboratories |
|
|
17,402 |
|
|
|
1,511,538 |
|
| |
|
|
| Baxter International, Inc. |
|
|
12,949 |
|
|
|
1,082,795 |
|
| |
|
|
| Boston Scientific Corp.(1) |
|
|
20,413 |
|
|
|
923,076 |
|
| |
|
|
| Danaher Corp. |
|
|
6,399 |
|
|
|
982,119 |
|
| |
|
|
| Intuitive Surgical, Inc.(1) |
|
|
1,313 |
|
|
|
776,180 |
|
| |
|
|
| Medtronic PLC |
|
|
11,230 |
|
|
|
1,274,043 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
6,549,751 |
|
| Health Care Providers & Services – 2.3% |
|
| |
|
|
| Cigna Corp. |
|
|
13,838 |
|
|
|
2,829,733 |
|
| |
|
|
| CVS Health Corp. |
|
|
6,059 |
|
|
|
450,123 |
|
| |
|
|
| UnitedHealth Group, Inc. |
|
|
4,390 |
|
|
|
1,290,572 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
4,570,428 |
|
| Hotels, Restaurants & Leisure – 2.1% |
|
| |
|
|
| Aramark |
|
|
8,792 |
|
|
|
381,573 |
|
| |
|
|
| Chipotle Mexican Grill, Inc.(1) |
|
|
1,129 |
|
|
|
945,097 |
|
| |
|
|
| Hilton Worldwide Holdings, Inc. |
|
|
9,329 |
|
|
|
1,034,679 |
|
| |
|
|
| Wynn Resorts Ltd. |
|
|
7,412 |
|
|
|
1,029,305 |
|
| |
|
|
| Yum China Holdings, Inc. |
|
|
14,781 |
|
|
|
709,636 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
4,100,290 |
|
| Household Products – 1.9% |
|
| |
|
|
| The Procter & Gamble Co. |
|
|
30,279 |
|
|
|
3,781,847 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
3,781,847 |
|
| Independent Power and Renewable Electricity Producers – 0.9% |
|
| |
|
|
| NRG Energy, Inc. |
|
|
42,912 |
|
|
|
1,705,752 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
1,705,752 |
|
| Industrial Conglomerates – 1.9% |
|
| |
|
|
| 3M Co. |
|
|
2,705 |
|
|
|
477,216 |
|
| |
|
|
| General Electric Co. |
|
|
58,034 |
|
|
|
647,660 |
|
| |
|
|
| Honeywell International, Inc. |
|
|
11,915 |
|
|
|
2,108,955 |
|
| |
|
|
| Roper Technologies, Inc. |
|
|
1,613 |
|
|
|
571,373 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
3,805,204 |
|
| Insurance – 3.3% |
|
| |
|
|
| American International Group, Inc. |
|
|
37,297 |
|
|
|
1,914,455 |
|
| |
|
|
| Assured Guaranty Ltd. |
|
|
52,085 |
|
|
|
2,553,207 |
|
| |
|
|
| AXA S.A. (France) |
|
|
12,915 |
|
|
|
364,365 |
|
| |
|
|
| Prudential PLC (United Kingdom) |
|
|
88,588 |
|
|
|
1,704,560 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
6,536,587 |
|
| Interactive Media & Services – 4.9% |
|
| |
|
|
| Alphabet, Inc., Class A(1) |
|
|
4,390 |
|
|
|
5,879,922 |
|
| |
|
|
| Facebook, Inc., Class A(1) |
|
|
17,848 |
|
|
|
3,663,302 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
9,543,224 |
|
| Internet & Direct Marketing Retail – 3.5% |
|
| |
|
|
| Amazon.com, Inc.(1) |
|
|
2,928 |
|
|
|
5,410,476 |
|
| |
|
|
| Booking Holdings, Inc.(1) |
|
|
718 |
|
|
|
1,474,578 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
6,885,054 |
|
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Shares |
|
|
Value |
|
| IT Services – 5.6% |
|
| |
|
|
| Fidelity National Information Services, Inc. |
|
|
25,328 |
|
|
$ |
3,522,871 |
|
| |
|
|
| Fiserv, Inc.(1) |
|
|
17,918 |
|
|
|
2,071,858 |
|
| |
|
|
| MasterCard, Inc., Class A |
|
|
8,776 |
|
|
|
2,620,426 |
|
| |
|
|
| Visa, Inc., Class A |
|
|
15,024 |
|
|
|
2,823,010 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
11,038,165 |
|
| Leisure Products – 0.4% |
|
| |
|
|
| Hasbro, Inc. |
|
|
7,364 |
|
|
|
777,712 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
777,712 |
|
| Life Sciences Tools & Services – 0.9% |
|
| |
|
|
| Mettler-Toledo International, Inc.(1) |
|
|
494 |
|
|
|
391,880 |
|
| |
|
|
| Thermo Fisher Scientific, Inc. |
|
|
4,170 |
|
|
|
1,354,708 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
1,746,588 |
|
| Machinery – 0.6% |
|
| |
|
|
| Deere & Co. |
|
|
3,380 |
|
|
|
585,619 |
|
| |
|
|
| Stanley Black & Decker, Inc. |
|
|
3,943 |
|
|
|
653,513 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
1,239,132 |
|
| Media – 1.1% |
|
| |
|
|
| Charter Communications, Inc., Class A(1) |
|
|
4,550 |
|
|
|
2,207,114 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
2,207,114 |
|
| Metals & Mining – 1.0% |
|
| |
|
|
| Anglo American PLC (United Kingdom) |
|
|
27,181 |
|
|
|
784,494 |
|
| |
|
|
| Freeport-McMoRan, Inc. |
|
|
87,296 |
|
|
|
1,145,323 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
1,929,817 |
|
| Multi-Utilities – 0.3% |
|
| |
|
|
| Ameren Corp. |
|
|
8,826 |
|
|
|
677,837 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
677,837 |
|
| Oil, Gas & Consumable Fuels – 4.4% |
|
| |
|
|
| BP PLC (United Kingdom) |
|
|
617,819 |
|
|
|
3,878,264 |
|
| |
|
|
| Cairn Energy PLC (United Kingdom)(1) |
|
|
209,358 |
|
|
|
571,264 |
|
| |
|
|
| Cenovus Energy, Inc. (Canada) |
|
|
147,996 |
|
|
|
1,504,406 |
|
| |
|
|
| Encana Corp. (Canada) |
|
|
119,639 |
|
|
|
560,167 |
|
| |
|
|
| Enterprise Products Partners LP |
|
|
56,592 |
|
|
|
1,593,631 |
|
| |
|
|
| Kosmos Energy Ltd. |
|
|
74,301 |
|
|
|
423,516 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
8,531,248 |
|
| Pharmaceuticals – 4.0% |
|
| |
|
|
| Bristol-Myers Squibb Co. |
|
|
11,436 |
|
|
|
734,077 |
|
| |
|
|
| Eli Lilly & Co. |
|
|
7,149 |
|
|
|
939,593 |
|
| |
|
|
| Johnson & Johnson |
|
|
13,966 |
|
|
|
2,037,221 |
|
| |
|
|
| Merck & Co., Inc. |
|
|
24,064 |
|
|
|
2,188,621 |
|
| |
|
|
| Pfizer, Inc. |
|
|
31,062 |
|
|
|
1,217,009 |
|
| |
|
|
| Zoetis, Inc. |
|
|
5,938 |
|
|
|
785,894 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
7,902,415 |
|
| Professional Services – 0.2% |
|
| |
|
|
| CoStar Group, Inc.(1) |
|
|
640 |
|
|
|
382,912 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
382,912 |
|
| Road & Rail – 1.2% |
|
| |
|
|
| Norfolk Southern Corp. |
|
|
4,340 |
|
|
|
842,524 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| The accompanying notes are an integral part of these financial statements. |
|
|
|
7 |
SCHEDULE OF INVESTMENTS — GUARDIAN DIVERSIFIED RESEARCH VIP FUND
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Shares |
|
|
Value |
|
| Road & Rail (continued) |
|
| |
|
|
| Union Pacific Corp. |
|
|
8,563 |
|
|
$ |
1,548,105 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
2,390,629 |
|
| Semiconductors & Semiconductor Equipment – 4.3% |
|
| |
|
|
| Cree, Inc.(1) |
|
|
19,328 |
|
|
|
891,987 |
|
| |
|
|
| NVIDIA Corp. |
|
|
7,397 |
|
|
|
1,740,514 |
|
| |
|
|
| NXP Semiconductors N.V. |
|
|
16,128 |
|
|
|
2,052,449 |
|
| |
|
|
| ON Semiconductor Corp.(1) |
|
|
67,543 |
|
|
|
1,646,699 |
|
| |
|
|
| Texas Instruments, Inc. |
|
|
15,992 |
|
|
|
2,051,614 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
8,383,263 |
|
| Software – 7.2% |
|
| |
|
|
| Adobe, Inc.(1) |
|
|
8,964 |
|
|
|
2,956,417 |
|
| |
|
|
| Dassault Systemes SE (France) |
|
|
6,364 |
|
|
|
1,049,712 |
|
| |
|
|
| Microsoft Corp. |
|
|
58,766 |
|
|
|
9,267,398 |
|
| |
|
|
| salesforce.com, Inc.(1) |
|
|
5,733 |
|
|
|
932,415 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
14,205,942 |
|
| |
| Specialty Retail – 2.8% |
|
| |
|
|
| Advance Auto Parts, Inc. |
|
|
2,061 |
|
|
|
330,090 |
|
| |
|
|
| Burlington Stores, Inc.(1) |
|
|
1,293 |
|
|
|
294,843 |
|
| |
|
|
| CarMax, Inc.(1) |
|
|
9,104 |
|
|
|
798,147 |
|
| |
|
|
| The Home Depot, Inc. |
|
|
14,153 |
|
|
|
3,090,732 |
|
| |
|
|
| The TJX Cos., Inc. |
|
|
12,987 |
|
|
|
792,986 |
|
| |
|
|
| Ulta Beauty, Inc.(1) |
|
|
756 |
|
|
|
191,374 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
5,498,172 |
|
| Technology Hardware, Storage & Peripherals – 3.1% |
|
| |
|
|
| Apple, Inc. |
|
|
20,913 |
|
|
|
6,141,102 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
6,141,102 |
|
| Textiles, Apparel & Luxury Goods – 0.9% |
|
| |
|
|
| Levi Strauss & Co., Class A |
|
|
23,265 |
|
|
|
448,782 |
|
| |
|
|
| NIKE, Inc., Class B |
|
|
12,836 |
|
|
|
1,300,415 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
1,749,197 |
|
| Trading Companies & Distributors – 0.8% |
|
| |
|
|
| Fastenal Co. |
|
|
7,635 |
|
|
|
282,113 |
|
| |
|
|
| United Rentals, Inc.(1) |
|
|
4,639 |
|
|
|
773,646 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Shares |
|
|
Value |
|
| Trading Companies & Distributors (continued) |
|
| |
|
|
| Yellow Cake PLC
(United Kingdom)(1)(2) |
|
|
188,828 |
|
|
$ |
503,235 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
1,558,994 |
|
| |
|
Total Common Stocks
(Cost $162,987,293) |
|
|
|
192,060,979 |
|
|
|
|
|
|
|
| |
|
Principal
Amount |
|
|
Value |
|
| Short-Term Investment – 1.7% |
|
| |
| Repurchase Agreements – 1.7% |
|
| |
|
|
| Fixed Income
Clearing Corp., 0.12%, dated 12/31/2019, proceeds at maturity value of $3,360,022, due 1/2/2020(3) |
|
$ |
3,360,000 |
|
|
|
3,360,000 |
|
| |
|
Total Repurchase Agreements
(Cost $3,360,000) |
|
|
|
3,360,000 |
|
| |
|
Total Investments – 99.7%
(Cost $166,347,293) |
|
|
|
195,420,979 |
|
| |
|
| Assets in excess of other liabilities – 0.3% |
|
|
|
628,994 |
|
| |
|
| Total Net Assets – 100.0% |
|
|
$ |
196,049,973 |
|
| (1) |
Non-income–producing security. |
| (2) |
Securities that may be resold in transactions, exempt from registration under Rule 144A of the Securities Act of 1933, as
amended, normally to certain qualified buyers. At December 31, 2019, the aggregate market value of these securities amounted to $711,298, representing 0.4% of net assets. These securities have been deemed liquid by the investment adviser
pursuant to the Fund’s liquidity procedures approved by the Board of Trustees. |
| (3) |
The table below presents collateral for repurchase agreements. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Security |
|
Coupon |
|
|
Maturity
Date |
|
|
Principal
Amount |
|
|
Value |
|
| U.S. Treasury Note |
|
|
2.75% |
|
|
|
9/15/2021 |
|
|
$ |
3,340,000 |
|
|
$ |
3,430,855 |
|
Legend:
REIT — Real
Estate Investment Trust
The following is a summary of the inputs used as
of December 31, 2019 in valuing the Fund’s investments. For more information on valuation inputs, please refer to Note 2a of the accompanying Notes to Financial Statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Valuation Inputs |
|
|
|
|
| Investments in Securities |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
| Common Stocks |
|
$ |
182,997,022 |
|
|
$ |
9,063,957 |
* |
|
$ |
— |
|
|
$ |
192,060,979 |
|
| Repurchase Agreements |
|
|
— |
|
|
|
3,360,000 |
|
|
|
— |
|
|
|
3,360,000 |
|
| Total |
|
$ |
182,997,022 |
|
|
$ |
12,423,957 |
|
|
$ |
— |
|
|
$ |
195,420,979 |
|
| * |
Consists of certain foreign securities whose values were determined by a pricing service using pricing models (See Note 2a
in Notes to Financial Statements). These investments in securities were classified as Level 2 rather than Level 1. |
|
|
|
|
|
| 8 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
FINANCIAL INFORMATION — GUARDIAN DIVERSIFIED RESEARCH
VIP FUND
|
|
|
|
|
|
Statement of Assets and Liabilities As of December 31, 2019 |
|
|
|
| Assets |
|
|
|
|
| |
|
| Investments, at value |
|
$ |
195,420,979 |
|
| |
|
| Cash |
|
|
30,476 |
|
| |
|
| Foreign currency, at value |
|
|
753 |
|
| |
|
| Receivable for investments sold |
|
|
1,298,349 |
|
| |
|
| Dividends/interest receivable |
|
|
107,895 |
|
| |
|
| Foreign tax reclaims receivable |
|
|
1,400 |
|
| |
|
| Prepaid expenses |
|
|
8,943 |
|
| |
|
|
|
|
| |
|
| Total Assets |
|
|
196,868,795 |
|
| |
|
|
|
|
| |
|
| Liabilities |
|
|
|
|
| |
|
| Payable for investments purchased |
|
|
481,817 |
|
| |
|
| Payable for fund shares redeemed |
|
|
126,020 |
|
| |
|
| Investment advisory fees payable |
|
|
98,841 |
|
| |
|
| Distribution fees payable |
|
|
41,184 |
|
| |
|
| Accrued audit fees |
|
|
22,105 |
|
| |
|
| Accrued custodian and accounting fees |
|
|
13,775 |
|
| |
|
| Accrued trustees’ and officers’
fees |
|
|
895 |
|
| |
|
| Accrued expenses and other liabilities |
|
|
34,185 |
|
| |
|
|
|
|
| |
|
| Total Liabilities |
|
|
818,822 |
|
| |
|
|
|
|
| |
|
| Total Net Assets |
|
$ |
196,049,973 |
|
| |
|
|
|
|
| |
|
| Net Assets Consist of: |
|
|
|
|
| |
|
| Paid-in
capital |
|
$ |
150,435,866 |
|
| |
|
| Distributable earnings |
|
|
45,614,107 |
|
| |
|
|
|
|
| |
|
| Total Net Assets |
|
$ |
196,049,973 |
|
| |
|
|
|
|
| Investments, at Cost |
|
$ |
166,347,293 |
|
| |
|
|
|
|
| Foreign Currency, at Cost |
|
$ |
747 |
|
| |
|
|
|
|
| |
|
| Pricing of Shares |
|
|
|
|
| |
|
| Shares of Beneficial Interest Outstanding with No
Par Value |
|
|
12,372,835 |
|
| |
|
| Net Asset Value Per Share |
|
|
$15.85 |
|
| |
|
|
|
|
|
|
|
|
|
|
Statement of Operations For the Year Ended December 31, 2019 |
|
|
|
| Investment Income |
|
|
|
|
| |
|
| Dividends |
|
$ |
3,010,994 |
|
| |
|
| Interest |
|
|
6,648 |
|
| |
|
| Withholding taxes on foreign dividends |
|
|
(11,962 |
) |
| |
|
|
|
|
| |
|
| Total Investment Income |
|
|
3,005,680 |
|
| |
|
|
|
|
| |
|
| Expenses |
|
|
|
|
| |
|
| Investment advisory fees |
|
|
1,011,701 |
|
| |
|
| Distribution fees |
|
|
421,542 |
|
| |
|
| Trustees’ and officers’ fees |
|
|
67,604 |
|
| |
|
| Professional fees |
|
|
62,489 |
|
| |
|
| Custodian and accounting fees |
|
|
59,970 |
|
| |
|
| Administrative fees |
|
|
47,460 |
|
| |
|
| Shareholder reports |
|
|
25,409 |
|
| |
|
| Transfer agent fees |
|
|
18,710 |
|
| |
|
| Other expenses |
|
|
19,995 |
|
| |
|
|
|
|
| |
|
| Total Expenses |
|
|
1,734,880 |
|
| |
|
| Less: Fees waived |
|
|
(27,756 |
) |
| |
|
|
|
|
| |
|
| Total Expenses, Net |
|
|
1,707,124 |
|
| |
|
|
|
|
| |
|
| Net Investment Income/(Loss) |
|
|
1,298,556 |
|
| |
|
|
|
|
| |
|
| Realized Gain/(Loss) and Change in Unrealized
Appreciation/(Depreciation) on Investments and Foreign Currency Transactions |
|
|
|
|
| |
|
| Net realized gain/(loss) from investments |
|
|
10,510,483 |
|
| |
|
| Net realized gain/(loss) from foreign currency
transactions |
|
|
(6,744 |
) |
| |
|
| Net change in unrealized appreciation/(depreciation)
on investments |
|
|
37,626,311 |
|
| |
|
| Net change in unrealized appreciation/(depreciation)
on translation of assets and liabilities in foreign currencies |
|
|
11 |
|
| |
|
|
|
|
| |
|
| Net Gain on Investments and Foreign Currency
Transactions |
|
|
48,130,061 |
|
| |
|
|
|
|
| |
|
| Net Increase in Net Assets Resulting From
Operations |
|
$ |
49,428,617 |
|
| |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| The accompanying notes are an integral part of these financial statements. |
|
|
|
9 |
FINANCIAL INFORMATION — GUARDIAN DIVERSIFIED RESEARCH VIP FUND
|
|
|
|
|
|
|
|
|
| Statements of Changes in Net Assets |
|
| |
|
| |
|
|
| |
|
For the
Year Ended
12/31/19 |
|
|
For the
Year Ended
12/31/18 |
|
| |
|
|
|
| Operations |
|
| |
|
|
| Net investment income/(loss) |
|
$ |
1,298,556 |
|
|
$ |
865,646 |
|
| |
|
|
| Net realized gain/(loss) from investments and foreign
currency transactions |
|
|
10,503,739 |
|
|
|
2,286,862 |
|
| |
|
|
| Net change in unrealized appreciation/(depreciation)
on investments and translation of assets and liabilities in foreign currencies |
|
|
37,626,322 |
|
|
|
(10,289,156 |
) |
| |
|
|
|
|
|
|
|
|
| |
|
|
| Net Increase/(Decrease) in Net Assets Resulting
from Operations |
|
|
49,428,617 |
|
|
|
(7,136,648 |
) |
| |
|
|
|
|
|
|
|
|
| |
| Capital Share
Transactions |
|
| |
|
|
| Proceeds from sales of shares |
|
|
25,656,494 |
1 |
|
|
159,081,293 |
|
| |
|
|
| Cost of shares redeemed |
|
|
(27,228,367 |
) |
|
|
(15,880,682 |
) |
| |
|
|
|
|
|
|
|
|
| |
|
|
| Net Increase/(Decrease) in Net Assets Resulting
from Capital Share Transactions |
|
|
(1,571,873 |
) |
|
|
143,200,611 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| Net Increase in Net Assets |
|
|
47,856,744 |
|
|
|
136,063,963 |
|
| |
|
|
|
|
|
|
|
|
| |
| Net Assets |
|
| |
|
|
| Beginning of year |
|
|
148,193,229 |
|
|
|
12,129,266 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| End of year |
|
$ |
196,049,973 |
|
|
$ |
148,193,229 |
|
| |
|
|
|
|
|
|
|
|
| |
| Other Information: |
|
| |
|
|
| Shares |
|
|
|
|
|
|
|
|
| |
|
|
| Sold |
|
|
1,773,980 |
|
|
|
12,769,094 |
|
| |
|
|
| Redeemed |
|
|
(1,914,785 |
) |
|
|
(1,214,013 |
) |
| |
|
|
|
|
|
|
|
|
| |
|
|
| Net Increase/(Decrease) |
|
|
(140,805 |
) |
|
|
11,555,081 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| 1 |
Includes in-kind subscriptions of $22,345,743. The cost basis of the contributed securities is equal to the market value
of the securities on the date of the subscription. |
|
|
|
|
|
| 10 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
This Page Intentionally Left Blank
FINANCIAL INFORMATION — GUARDIAN DIVERSIFIED RESEARCH VIP FUND
The Financial Highlights table is intended to help you understand the Fund’s financial
performance for the past five years (or, if shorter, the period since inception). Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost)
on an investment in the Fund.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Highlights |
|
| |
|
Per Share Operating Performance |
|
|
|
|
| |
|
Net Asset Value,
Beginning of
Period |
|
|
Net Investment
Income(1) |
|
|
Net Realized
and Unrealized
Gain/(Loss) |
|
|
Total
Operations |
|
|
Net Asset
Value, End of
Period |
|
|
Total
Return(2) |
|
| |
|
|
|
|
|
|
| Year Ended 12/31/19 |
|
$ |
11.84 |
|
|
$ |
0.11 |
|
|
$ |
3.90 |
|
|
$ |
4.01 |
|
|
$ |
15.85 |
|
|
|
33.87% |
|
| |
|
|
|
|
|
|
| Year Ended 12/31/18 |
|
|
12.65 |
|
|
|
0.09 |
|
|
|
(0.90 |
) |
|
|
(0.81 |
) |
|
|
11.84 |
|
|
|
(6.40)% |
|
| |
|
|
|
|
|
|
| Year Ended 12/31/17 |
|
|
10.37 |
|
|
|
0.08 |
|
|
|
2.20 |
|
|
|
2.28 |
|
|
|
12.65 |
|
|
|
21.99% |
|
| |
|
|
|
|
|
|
| Period Ended
12/31/16(4) |
|
|
10.00 |
|
|
|
0.04 |
|
|
|
0.33 |
|
|
|
0.37 |
|
|
|
10.37 |
|
|
|
3.70% |
(5) |
|
|
|
|
|
| 12 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
FINANCIAL INFORMATION — GUARDIAN DIVERSIFIED RESEARCH VIP FUND
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Ratios/Supplemental Data |
|
Net Assets, End
of Period (000s) |
|
|
Net Ratio of
Expenses to
Average
Net Assets(3) |
|
|
Gross Ratio of
Expenses to
Average Net
Assets |
|
|
Net Ratio of Net
Investment Income
to Average
Net Assets(3) |
|
|
Gross Ratio of Net
Investment Income/
(Loss) to Average
Net Assets |
|
|
Portfolio
Turnover Rate |
|
|
|
|
|
|
|
| $ |
196,050 |
|
|
|
1.01% |
|
|
|
1.03% |
|
|
|
0.77% |
|
|
|
0.75% |
|
|
|
88% |
|
|
|
|
|
|
|
| |
148,193 |
|
|
|
1.02% |
|
|
|
1.09% |
|
|
|
0.68% |
|
|
|
0.61% |
|
|
|
88% |
|
|
|
|
|
|
|
| |
12,129 |
|
|
|
0.96% |
|
|
|
2.43% |
|
|
|
0.67% |
|
|
|
(0.80)% |
|
|
|
154% |
|
|
|
|
|
|
|
| |
10,139 |
|
|
|
0.96% |
(5) |
|
|
3.07% |
(5) |
|
|
1.12% |
(5) |
|
|
(0.99)% |
(5) |
|
|
61% |
(5) |
| (1) |
Calculated based on the average shares outstanding during the period. |
| (2) |
Total returns do not reflect the effects of charges deducted pursuant to the terms of The Guardian Insurance &
Annuity Company, Inc.’s variable contracts. Inclusion of such charges would reduce the total returns for all periods shown. |
| (3) |
Net Ratio of Expenses to Average Net Assets and Net Ratio of Net Investment Income to Average Net Assets include the
effect of fee waivers and expense limitations. |
| (4) |
Commenced operations on September 1, 2016. |
| (5) |
Ratios for periods less than one year have been annualized, except for total return and portfolio turnover rate. For the
period ended December 31, 2016, certain non-recurring fees (i.e., audit fees) are not annualized. |
|
|
|
|
|
| The accompanying notes are an integral part of these financial statements. |
|
|
|
13 |
NOTES TO FINANCIAL STATEMENTS — GUARDIAN DIVERSIFIED RESEARCH VIP
FUND
December 31, 2019
1.
Organization
Guardian Variable Products Trust (the “Trust”), a Delaware statutory trust organized on January 12, 2016, is registered under the
Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Trust currently has sixteen series. Guardian Diversified Research VIP Fund (the
“Fund”) is a series of the Trust. The Fund is a diversified fund and commenced operations on September 1, 2016. The financial statements for other series of the Trust are presented in separate reports.
The Trust has authorized an unlimited number of shares of beneficial interest with no par value. Shares are bought and sold at closing net asset value (“NAV”).
Shares of the Fund are only sold to certain separate accounts of The Guardian Insurance & Annuity Company, Inc. (“GIAC”) that fund certain variable annuity contracts and variable life insurance policies issued by GIAC. GIAC is a
wholly-owned subsidiary of The Guardian Life Insurance Company of America (“Guardian Life”).
The Fund seeks capital appreciation.
2. Significant Accounting Policies
The following is a summary of significant
accounting policies followed by the Fund in the preparation of its financial statements. The Fund follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards
Codification Topic 946 Financial Services — Investment Companies. The following policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements
in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.
a. Investment Valuations Equity securities traded on an exchange other than NASDAQ Stock Market, LLC (“NASDAQ”) are valued at the last reported sale
price on the principal exchange or market on which they are traded; or, if there were no sales that day, at the mean between the closing bid and ask prices. Securities traded on the NASDAQ are generally valued at the NASDAQ official closing price,
which may not be the last sale price. If the NASDAQ official closing price is not available for a security, that security is generally valued at the
mean between the closing bid and ask prices. Repurchase agreements are carried at cost, which approximates fair value (see Note 5d). Foreign securities are valued in the currencies of the markets
in which they trade and then converted to U.S. dollars by the application of foreign exchange rates at the close of the New York Stock Exchange (“NYSE”). Forward foreign currency contracts, if any, are valued at the mean between the bid
and ask rates for the specified time interpolated from rates for proximate time periods. Securities for which market quotations are not readily available or for which market quotations may be considered unreliable are valued at their fair values as
determined in accordance with policies and procedures adopted by the Board of Trustees.
Under the policies and procedures approved by the Board of Trustees, Park
Avenue Institutional Advisers LLC (“Park Avenue”), the Fund’s investment adviser, has established a Fair Valuation Committee to assist the Board of Trustees with the oversight and monitoring of the valuation of the Fund’s
investments. This includes monitoring the appropriateness of fair values based on results of ongoing valuation oversight, including but not limited to consideration of security specific events, market events, and pricing vendor and broker-dealer due
diligence. The Fair Valuation Committee oversees and carries out the policies for the valuation of investments held in the Fund. The Fair Valuation Committee is responsible for discussing and assessing the potential impacts to the fair values on an
ongoing basis, and at least on a quarterly basis with the Board of Trustees.
Securities whose values have been materially affected by events occurring before the
Fund’s valuation time but after the close of the securities’ principal exchange or market may be fair valued in accordance with policies and procedures adopted by the Board of Trustees. In addition, the values of the Fund’s
investments in foreign securities are generally determined by a pricing service using pricing models designed to estimate likely changes in the values of those securities. Certain foreign equity instruments are valued by applying international fair
value factors provided by approved pricing services. The factors seek to adjust the local closing price for movements of local markets post closing, but prior to the time the NAVs are calculated. Valuations reflected in this report are as of the
report date. As a result, changes in valuation due to market events and/or issuer related events after the report date and prior to issuance of the report are not reflected herein.
NOTES TO FINANCIAL STATEMENTS — GUARDIAN DIVERSIFIED RESEARCH VIP FUND
Various inputs are used in determining the valuation of the Fund’s investments. These inputs are summarized in three
broad levels listed below.
| • |
|
Level 1 — unadjusted inputs using quoted prices in active markets for identical investments. |
| • |
|
Level 2 — other significant observable inputs, including, but not limited to, quoted prices for similar investments, inputs other than quoted prices that are observable for investments (such as interest
rates, prepayment speeds, credit risks, etc.) or other market corroborated inputs. |
| • |
|
Level 3 — significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments) |
Inputs may include price information, volatility statistics, specific and broad credit data, liquidity statistics, and other factors. A financial instrument’s level
within the fair value hierarchy is based on the lowest level of any input; both individually and in aggregate, that is significant to the fair value measurement. However, the determination of what constitutes “observable” requires
significant judgment by the Trust. The Trust considers observable data to be that market data which is readily available, regularly distributed or updated, reliable and verifiable, and provided by independent sources that are actively involved in
the relevant market. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. Changes in valuation techniques may result in transfers into or out of a
financial instrument’s assigned level within the hierarchy.
The FASB requires reporting entities to make disclosures about purchases, sales, issuances and
settlements of Level 3 securities on a gross basis. For the year ended December 31, 2019, there were no transfers into or out of Level 3 of the fair value hierarchy.
In determining a financial instrument’s placement within the hierarchy, the Trust separates the Fund’s investment portfolio into two categories: investments
and derivatives (e.g., futures). A summary of inputs used to value the Fund’s assets and liabilities carried at fair value as of December 31, 2019 is included in the Schedule of Investments.
Investments Investments whose values are based on quoted market prices in active markets, and are therefore classified within Level 1, include active
listed equities. Investments that trade in markets that are not considered to be active, but are valued based on quoted market prices, dealer quotations or alternative pricing
sources supported by observable inputs are classified within Level 2. These include certain U.S. government and sovereign obligations, most government agency securities, investment-grade
corporate bonds, certain mortgage products, state, municipal and provincial obligations, and certain foreign equity securities, including securities whose prices may have been affected by events occurring after the close of trading on their
principal exchange or market and, as a result, whose values are determined by a pricing service as described above, or securities whose values are otherwise determined using fair valuation methods approved by the Fund’s Board of Trustees.
Investments classified within Level 3 have significant unobservable inputs, as they trade infrequently or not at all. Level 3 investments include, among
others, private placement securities. When observable prices are not available for these securities, the Trust uses one or more valuation techniques for which sufficient and reliable data is available. The inputs used by the Trust in estimating the
value of Level 3 investments include, for example, the original transaction price, recent transactions in the same or similar instruments, completed or pending third-party transactions in the underlying investment or comparable issuers,
subsequent rounds of financing, recapitalizations, and other transactions across the capital structure. Level 3 investments may also be adjusted to reflect illiquidity and/or non-transferability, with the
amount of such discount estimated by the Trust in the absence of market information. Assumptions used by the Trust due to the lack of observable inputs may significantly impact the resulting fair value and therefore the Fund’s results of
operations. As of December 31, 2019, the Fund had no securities classified as Level 3.
Derivatives Exchange-traded derivatives, such as
futures contracts, exchange-traded option contracts and certain swaps, are typically classified within Level 1 or Level 2 of the fair value hierarchy depending on whether or not they are deemed to be actively traded. Certain non-exchange-traded derivatives, such as generic forwards, certain swaps and options, have inputs which can generally be corroborated by market data and are therefore classified within Level 2. During the year
ended December 31, 2019, the Fund did not hold any derivatives.
b. Securities Transactions Securities transactions are accounted for on the date
securities are purchased or sold (trade date). Realized gains or losses on securities transactions are determined on the basis of specific identification.
NOTES TO FINANCIAL STATEMENTS — GUARDIAN DIVERSIFIED RESEARCH VIP FUND
c. Foreign Currency Translation The accounting records of the Fund are maintained in U.S. dollars. Investment
securities and all other assets and liabilities of the Fund denominated in a foreign currency are generally translated into U.S. dollars at the exchange rates quoted at the close of the NYSE on each business day. The market value of investment
securities and other assets and liabilities are translated at the exchange rate as of the valuation date. Purchases and sales of securities, income receipts, and expense payments are translated into U.S. dollars at the exchange rates in effect on
the dates of the respective transactions. The Fund does not isolate the portion of the fluctuations on investments resulting from changes in foreign currency exchange rates from the fluctuations in market prices of investments held. Such
fluctuations are included in the Net change in net realized and unrealized gain/(loss) from investments on the Statement of Operations.
Reported realized foreign
currency gains and losses arise from the disposition of foreign currency, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest and foreign
withholding taxes recorded on the Fund’s books on the transaction date and the U.S. dollar equivalent of the amounts actually received or paid. These reported realized foreign currency gains and losses, if any, are included in Net realized
gain/(loss) from foreign currency transactions on the Statement of Operations. Unrealized foreign currency gains and losses arise from changes (due to changes in exchange rates) in the value of foreign currency and other assets and liabilities
denominated in foreign currencies, which are held at period end, if any, and are included in Net change in unrealized appreciation/(depreciation) on translation of assets and liabilities in foreign currencies on the Statement of Operations.
d. Foreign Capital Gains Tax The Fund may be subject to foreign taxes on income, gains on investments or currency purchases/repatriation, a portion of which may
be recoverable. The Fund will accrue such taxes and recoveries as applicable, based upon their current interpretation of tax rules and regulations that exist in the markets in which they invest.
e. Investment Income Dividend income net of foreign taxes withheld, if any, is generally recorded on the ex-dividend date.
Interest income, which includes amortization/accretion of premium/discount, is
determined using the interest income accrual method, and is accrued and recorded daily.
f. Allocation of
Income and Expenses Many of the expenses of the Trust can be directly attributed to a specific series of the Trust. Expenses that cannot be directly attributed to a specific series of the Trust are generally apportioned among all the series in
the Trust, based on relative net assets. In calculating net asset value per share for each series of the Trust, investment income, realized and unrealized gains and losses, and expenses other than series-specific expenses are allocated daily to each
series based upon the proportion of net assets attributable to each series.
3. Transactions with Affiliates
a. Investment Advisory Fee and Expense Limitation Under the terms of the advisory agreement, which, after its two year initial term, is reviewed and approved
annually by the Board of Trustees, the Fund pays an investment advisory fee to Park Avenue. Park Avenue is a wholly-owned subsidiary of Guardian Life and receives an investment advisory fee at an annual rate of 0.60% of the Fund’s average daily
net assets. The fee is accrued daily and paid monthly.
Park Avenue has contractually agreed through April 30, 2020 to waive certain fees and/or reimburse
certain expenses incurred by the Fund to the extent necessary to limit the Fund’s total annual operating expenses after fee waiver and/or expense reimbursement to 1.02% of the Fund’s average daily net assets (excluding, if applicable, any
acquired fund fees and expenses, taxes, interest, transaction costs and brokerage commissions, litigation and extraordinary expenses). The limitation may not be increased or terminated prior to this time without action by the Board of Trustees, may
be terminated only upon approval of the Board of Trustees, and is subject to Park Avenue’s recoupment rights. For the year ended December 31, 2019, Park Avenue waived fees and/or paid Fund expenses in the amount of $27,756.
Park Avenue may be entitled to recoupment of previously waived fees and reimbursed expenses from the Fund for three years from the date of the waiver or reimbursement,
subject to the expense limitation in effect at the time of the waiver or reimbursement and at the time of the recoupment, if any. Amounts waived or reimbursed by Park Avenue pursuant to any expense limitation after April 9, 2018 are not subject
to Park Avenue’s recoupment rights. The amount available for potential future recoupment by Park Avenue from the
NOTES TO FINANCIAL STATEMENTS — GUARDIAN DIVERSIFIED RESEARCH VIP FUND
Fund under the Expense Limitation Agreement and the expiration schedule at December 31, 2019 are as follows:
|
|
|
|
|
| |
|
| |
|
Potential Recoupment Amounts
Expiring |
| Total Potential
Recoupment
Amounts |
|
2021 |
|
2020 |
| $293,198 |
|
$60,975 |
|
$232,223 |
Park Avenue has entered into a Sub-Advisory Agreement with Putnam Investment Management LLC
(“Putnam”). Putnam is responsible for providing day-to-day investment advisory services to the Fund, subject to the supervision of Park Avenue and the
oversight of the Board of Trustees. Sub-advisory fees are paid by Park Avenue and do not represent a separate or additional expense to the Fund.
b. Compensation of Trustees and Officers Trustees and officers who are interested persons of the Trust, as defined in the 1940 Act, receive no compensation from
the Fund, except for the Chief Compliance Officer of the Trust. Trustees of the Trust who are not interested persons of the Trust, and the Chief Compliance Officer, receive compensation and reimbursement of expenses from the Trust.
c. Distribution Fees Park Avenue Securities LLC (“PAS”), a wholly-owned subsidiary of Guardian Life, is the principal underwriter of Fund shares. The
Trust has entered into a distribution and service agreement with PAS, which governs the sale and distribution of shares of the Fund. Under a distribution and service plan adopted by the Trust (“12b-1
plan”), PAS is compensated for services in such capacity, including its expenses in connection with the promotion and distribution of shares of the Fund, at an annual rate of 0.25% of the Fund’s average daily net assets. For the year ended
December 31, 2019, the Fund paid distribution fees in the amount of $421,542 to PAS.
PAS has directed that certain payments under the 12b-1 plan be used to compensate GIAC for shareholder services provided to contract owners.
4. Federal Income Taxes
a. Distributions to Shareholders For federal income tax purposes, the Fund is treated as a disregarded entity (“DRE”). As a DRE, the Fund is not subject
to an entity-level income tax; and any income, gains, losses, deductions, taxes, and credits of the Fund would instead be “passed through” directly to the separate accounts of GIAC that invest in the Fund and retain the same
character for U.S. federal income tax purposes. In addition, the Fund is not required to distribute taxable income and capital gains for U.S. federal income tax purposes. Therefore, no dividends
and capital gains distributions were paid by the Fund.
5. Investments
a. Investment Purchases and Sales The cost of investments purchased and the proceeds from investments sold (excluding short-term investments and in-kind
transactions) amounted to $147,293,950 and $172,588,879, respectively, for the year ended December 31, 2019. During the year ended December 31, 2019, there were no purchases or sales of U.S. government securities.
b. Foreign Securities Foreign securities investments involve special risks and considerations not typically associated with U.S. investments. These risks include,
but are not limited to, currency risk; adverse political, regulatory, social, and economic developments; and less reliable information about issuers. Moreover, securities of some foreign issuers may be less liquid and their prices more volatile than
those of comparable U.S. issuers.
c. Industry or Sector Concentration In its normal course of business, the Fund may invest a significant portion of its
assets in companies within a limited number of industries or sectors. As a result, the Fund may be subject to a greater risk of loss than that of a fund invested in a wider spectrum of industries or sectors because the stocks of many or all of the
companies in the industry, group of industries, sector, or sectors may decline in value due to developments adversely affecting the industry, group of industries, sector, or sectors.
d. Repurchase Agreements The Fund may invest in repurchase agreements to maintain liquidity and earn income over periods of time as short as overnight. The
collateral for repurchase agreements is either cash or fully negotiable U.S. government securities (including U.S. government agency securities). Repurchase agreements are fully collateralized (including the interest accrued thereon) and such
collateral is marked to market daily while the agreements remain in force. If the value of the collateral falls below the repurchase price plus accrued interest, the Fund will typically require the seller to deposit additional collateral by the next
business day. If the request for additional collateral is not met, or the seller defaults, the Fund maintains the right to sell the collateral (although it may be prevented or delayed from doing so in certain circumstances) and may be required to
claim any resulting loss against the
NOTES TO FINANCIAL STATEMENTS — GUARDIAN DIVERSIFIED RESEARCH VIP FUND
seller. Park Avenue monitors the creditworthiness of the seller with which the Fund enters into repurchase agreements.
6. Temporary Borrowings
The Fund, with other funds managed by Park
Avenue, is party to a $10 million committed revolving credit facility from State Street Bank and Trust Company for temporary borrowing purposes, including the meeting of redemption requests that otherwise might require the untimely disposition
of securities. Interest is calculated based on the higher of the daily one-month LIBOR rate and the Federal Funds rate plus 1.25% at the time of borrowing. In addition to the interest charged on any borrowings
by the Fund, each fund pays a commitment fee of 0.30% per annum on its share of the unused portion of the credit facility. The agreement is in
place until December 9, 2020. The Fund did not utilize the credit facility during the year ended December 31, 2019.
7. Indemnifications
Under the Trust’s organizational documents and, in
some cases, by contract, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Fund. In addition, in the normal course of business, the Fund enters into contracts with its vendors
and others that provide general indemnifications. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. However, based on experience,
the Fund expects the risk of loss to be remote.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees of Guardian Variable Products Trust and Shareholders of
Guardian Diversified Research VIP Fund
Opinion on the
Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Guardian
Diversified Research VIP Fund (one of the funds constituting Guardian Variable Products Trust, referred to hereafter as the “Fund”) as of December 31, 2019, the related statement of operations for the year ended December 31,
2019, the statement of changes in net assets for each of the two years in the period ended December 31, 2019, including the related notes, and the financial highlights for each of the periods indicated therein (collectively referred to
as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2019, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period ended December 31, 2019 and the financial highlights for each of the periods indicated therein in conformity with accounting principles generally accepted in the United States of
America.
Basis for Opinion
These financial statements are the
responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board
(United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing
procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the
amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our
procedures included confirmation of securities owned as of December 31, 2019 by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits
provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
New
York, New York
February 20, 2020
We have served as the auditor of one or
more investment companies in Guardian Variable Products Trust since 2016.
SUPPLEMENTAL INFORMATION (UNAUDITED)
Trustees and Officers Information Table
The following table provides information about the Trustees of the Trust.
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
| Name and
Year of Birth |
|
Term of Office,
Position(s) Held and Length of
Service1 |
|
Principal
Occupation(s) During Past Five Years |
|
Number of
Funds
in Fund
Complex Overseen
by Trustees2 |
|
Other Directorships
Held by Trustee |
| Independent Trustees |
| |
|
|
|
|
| Bruce W. Ferris3 (born 1955) |
|
Trustee |
|
Retired (since 2015); President and CEO, Prudential Annuities Distributors, Inc. (2013–2015); Director/Trustee, Advanced Series Trust, The Prudential Series Fund and Prudential’s
Gibraltar Fund, Inc. (2013–2015); Senior Vice President, Prudential Annuities (2008–2015). |
|
16 |
|
None. |
| |
|
|
|
|
| Theda R. Haber3 (born 1954) |
|
Trustee |
|
Adjunct Assistant Professor of Law, UC Hastings College of Law (since 2013); Member of the Board of Directors, Fairholme Trust Company, LLC (2015–2019); Attorney, Law Office of Theda R.
Haber (since 2014); Visiting Professor of Law, UC Davis School of Law (since 2014); Consultant, Haber & Associates LLC (financial services industry), (2012–2017); Advisory Council Chair, Vice Chair, and Member, Advisory Council on
Employee Welfare and Pension Benefit Plans (ERISA Advisory Council), U.S. Department of Labor (2009–2011); Managing Director and General Counsel, BlackRock Institutional Trust Company, N.A. (2009–2011); Deputy Global General Counsel,
Barclays Global Investors (2006–2009); Managing Director, Barclays Global Investors (1998–2006). |
|
16 |
|
None. |
| |
|
|
|
|
| Marshall
Lux3 (born 1960) |
|
Trustee |
|
Senior Advisor, The Boston Consulting Group (since 2014); Senior Partner and Managing Director, The Boston Consulting Group (2009–2014). |
|
16 |
|
None. |
| |
|
|
|
|
| Lisa K.
Polsky3 (born 1956) |
|
Trustee |
|
Board Member, MFA Financial, Inc. (real estate investment trust) (since 2020); Advisor, SMBC Americas (financial services) (since 2020); Senior Risk Advisor, AQR (investment management)
(2016–2019); Senior Risk Advisor, Ultra Capital (venture capital) (2016–2019); Board Member, DB USA Corporation (Deutsche Bank Intermediate Holding Company) (financial services) (since 2016); Chief Risk Officer, CIT Group Inc.
(financial services) (2010–2015); Board Member and Chair of Audit Committee, Piper Jaffray (investment bank) (2007–2016). |
|
16 |
|
None. |
| |
|
|
|
|
| John
Walters3 (born 1962) |
|
Lead Independent
Trustee |
|
Board Member, Amerilife Holdings LLC (insurance distribution) (since 2015); Board Member, Stadion Money Management LLC (investment adviser) (since 2011); President and Chief Operating Officer,
Hartford Life Insurance Company (2000–2010). |
|
16 |
|
Trustee, USAA Mutual Funds Trust, (One registered investment company offering 47 individual funds) (since
2019). |
SUPPLEMENTAL INFORMATION (UNAUDITED)
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
| Name and
Year of Birth |
|
Term of Office,
Position(s) Held and Length of
Service1 |
|
Principal
Occupation(s) During Past Five Years |
|
Number of
Funds
in Fund
Complex Overseen
by Trustees2 |
|
Other Directorships
Held by Trustee |
| Interested Trustees |
| |
|
|
|
|
| Dominique Baede4 (born 1970) |
|
Trustee (Since
January 2020) |
|
Vice President, Head of Product, Life, Annuity and Inforce, The Guardian Life Insurance Company of America (since 2019); Managing Director, Product Management Group, AXA Equitable (insurance
company) prior thereto. |
|
16 |
|
None. |
| |
|
|
|
|
| Michael
Ferik4 (born 1972) |
|
Chairman and Trustee
(Since December 2019) |
|
Executive Vice President, Individual Markets, The Guardian Life Insurance Company of America (since 2020); Executive Vice President and Chief Financial Officer, The Guardian Life Insurance
Company of America (2017–2019); Executive Vice President, Individual Markets, The Guardian Life Insurance Company of America prior thereto. |
|
16 |
|
None. |
| 1 |
Except as otherwise noted, each Trustee began service in such capacity in 2016 and serves until his or her successor is
elected and qualified or until his or her resignation, death or removal. The business address of each Trustee is 10 Hudson Yards, New York, New York 10001. |
| 2 |
The Trust currently consists of 16 separate Funds. |
| 3 |
Member of the Audit Committe of the Trust. |
| 4 |
Each of Dominique Baede and Michael Ferik is considered to be an “interested person” of the Trust within the
meaning of the 1940 Act because of their affiliation with The Guardian Life Insurance Company of America and/or its affiliates. |
|
|
|
|
|
| |
|
|
| Name and Year of Birth |
|
Position(s) Held and
Length of Service5 |
|
Principal Occupation(s)
During Past Five Years |
| |
|
|
Dominique Baede
(born 1970) |
|
President and Principal Executive Officer (Since January 2020) |
|
Vice President, Head of Product, Life, Annuity and Inforce, The Guardian Life Insurance Company of America (since 2019); Managing Director,
Product Management Group, AXA Equitable (insurance company) prior. |
| |
|
|
| John H. Walter
(born 1962) |
|
Senior Vice President, Treasurer, and Principal Financial and Accounting Officer |
|
Vice President, Director of Finance, Corporate Finance, The Guardian Life Insurance Company of America. |
| |
|
|
| Harris Oliner
(born 1971) |
|
Senior Vice President and Secretary |
|
Senior Vice President, Corporate Secretary, The Guardian Life Insurance Company of America (since 2015); Senior Vice President, Deputy
General Counsel, Corporate Secretary, Voya Financial, Inc. prior thereto. |
| |
|
|
| Richard T. Potter
(born 1954) |
|
Senior Vice President and Chief Legal Officer |
|
Vice President and Equity Counsel, The Guardian Life Insurance Company of America. |
| |
|
|
| Philip Stack
(born 1964) |
|
Chief Compliance Officer
(Since September 2017) |
|
Second Vice President, Mutual Fund Chief Compliance Officer, The Guardian Life Insurance Company of America (since 2017); Executive Director,
Chief Compliance Officer, Morgan Stanley (2015–2017); Vice President, Morgan Stanley prior thereto. |
| |
|
|
| Brian Hagan
(born 1984) |
|
Anti-Money Laundering Officer (Since March 2019) |
|
Assistant Vice President (since 2019), Anti-Money Laundering Compliance, The Guardian Life Insurance Company of America/Park Avenue
Securities LLC; Vice President, Head of Financial Intelligence Unit, Brown Brothers Harriman & Co. (2014–2019); Assistant Vice President, AML Compliance Manager, JPMorgan Chase & Co. (2011–2014). |
| |
|
|
| Kathleen M. Moynihan
(born 1966) |
|
Senior Counsel |
|
Second Vice President, Counsel (since 2019), The Guardian Life Insurance Company of America; Senior Counsel prior thereto. |
| |
|
|
| Maria Nydia Morrison
(born 1958) |
|
Fund Controller |
|
Mutual Fund Controller, The Guardian Life Insurance Company of America (since 2015); Chief Financial Officer/Assistant Operating
Officer, St. Francis De Assisi Montessori School (Plaridel, Bulacan), Inc. (Philippines) prior thereto. |
| |
|
|
| Sonya L. Crosswell
(born 1977) |
|
Assistant Secretary |
|
Assistant Vice President, Assistant Corporate Secretary and Secretary Pro Tem, The Guardian Life Insurance Company of America. |
| 5 |
Unless otherwise indicated, the Officers each began service in such capacity in 2016 and hold office for an indefinite
term or until their successors shall have been elected and qualified. The business address of each Officer is 10 Hudson Yards, New York, New York 10001. |
SUPPLEMENTAL INFORMATION (UNAUDITED)
The Statement of Additional Information (“SAI”) includes additional information about
the Trust’s Trustees and Officers and is available, without charge, upon request by calling toll-free 1-888-GUARDIAN (1-888-482-7342) or by visiting our website at http://guardianvpt.onlineprospectus.net/GuardianVPT/Prospectuses.
Portfolio Holdings and Proxy Voting Procedures
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year as an exhibit
to its reports on Form N-PORT. The Fund’s Form N-PORT reports are available on the Securities and Exchange Commission’s website at https://www.sec.gov. The
Fund’s Form N-PORT information is also available, without charge, upon request, by calling toll-free 1-888-GUARDIAN (1-888-482-7342) or by visiting our website at http://guardianvpt.onlineprospectus.net/
GuardianVPT/Prospectuses.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio
securities is included in the SAI. The SAI and information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 may be obtained
(i) without charge, upon request, by calling toll-free 1-888-GUARDIAN (1-888-482-7342) or by visiting our website at http://guardianvpt.onlineprospectus.net/
GuardianVPT/Prospectuses; and (ii) on the Securities and Exchange Commission’s website at
https://www.sec.gov.
This report is transmitted to shareholders only. It is not authorized for use as an offer of sale or a solicitation of an offer to buy shares of the Fund unless
accompanied or preceded by the Fund’s current prospectus. Past performance results shown in this report should not be considered a representation of future performance. Investment returns and principal value of shares will fluctuate so that
shares, when redeemed, may be worth more or less than their original cost. Statements and other information herein are as dated and are subject to change.
The Guardian Life Insurance Company of America New York, NY 10001-2159
PUB8168
Guardian Variable
Products Trust
2019
Annual Report
All Data as of December 31, 2019
Guardian Large Cap
Disciplined Value VIP Fund
Important Notice
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund’s shareholder reports
will no longer be sent by mail from The Guardian Insurance & Annuity Company, Inc. (“GIAC”). Instead, GIAC will mail you a notice when copies of the shareholder reports are made available on a website. You will be notified by mail
each time a report is posted and provided with a website link to access the report.
If you have already elected to receive shareholder reports electronically, you
will not be affected by this change and you need not take any action. If you have not yet elected electronic delivery, at any time, you may elect to receive the Fund’s shareholder reports and certain other communications from GIAC
electronically, by going to www.guardianlife.com and registering for e-delivery.
You may instead elect to receive all
future shareholder reports in paper free of charge. If you wish to receive paper copies of your shareholder reports, please call GIAC’s Customer Service Office Contact Center at
1-888-GUARDIAN (1-888-482-7342). Your election to
receive reports in paper will apply to all the underlying funds available.
|
|
|
| Not FDIC insured. May lose value. No bank guarantee. |
|
www.guardianlife.com |
TABLE OF CONTENTS
Guardian Large Cap Disciplined Value VIP Fund
Except as otherwise specifically stated, all
information, including portfolio security positions, is as of December 31, 2019. The views expressed in the Fund Commentary are those of the Fund’s portfolio manager(s) as of the date of this report and are subject to change without
notice. They do not necessarily represent the views of Park Avenue Institutional Advisers LLC or a sub-adviser. The Fund Commentary may contain some forward-looking
statements providing expectations or forecasts of future events as of the date of this report; they do not necessarily relate to historical or current facts. There can be no guarantee that any forward-looking statement will be realized. We undertake
no obligation to update forward-looking statements, whether as a result of new information, future events, or otherwise. Any discussions of specific securities should not be considered a recommendation to buy or sell those securities. Fund holdings
will vary. Information contained herein has been obtained from sources believed reliable, but is not guaranteed.
GUARDIAN LARGE CAP DISCIPLINED VALUE VIP FUND
FUND COMMENTARY OF BOSTON PARTNERS GLOBAL INVESTORS, INC.,
SUB-ADVISER (unaudited)
Highlights
| • |
|
Guardian Large Cap Disciplined Value VIP Fund (the “Fund”) returned 23.41%, underperforming its benchmark, the Russell 1000® Value Index1 (the “Index”), for the 12 months ended December 31, 2019. The Fund’s underperformance relative to the Index was primarily due to stock selection in the information technology and
health care sectors. Conversely, sector allocation was positive in the industrials sector due to our overweight positioning. |
| • |
|
The Index returned 26.54% for the period. The financials and information technology sectors were two of the largest contributors to performance for the Index during the period. |
Market Overview
It is understandable that many investors may cringe at
recalling the final quarter of 2018 when the Standard & Poor’s 500® Index2 fell by
-13.52%, which dragged the Index to a negative total return for the year. Then the backdrop was harsh: the implementation of a third round of tariffs on Chinese imports, a partial government shutdown, White
House staff resignations and firings, 4 interest rate hikes in the year, the U.S. Federal Reserve (the “Fed”) statement that its balance sheet reduction “was on autopilot”, and a bank liquidity crunch which saw short-term funding
rates gap to upwards of 10% and percolated recession fears.
Fast forward to 2019’s backdrop: the December
13th completion of a preliminary Phase 1 U.S./China trade deal, a resounding victory for Boris Johnson and his U.K. Brexit initiatives, three cumulative interest rate cuts by the Fed, a reversal
of the Fed’s quantitative tightening program, the return of a positive slope to the U.S. Treasury yield curve, the bipartisan passing of a $1.4 trillion spending bill, the signing of the USMCA trade agreement between the U.S., Mexico, and
Canada and record-breaking holiday retail sales. Given this positive backdrop, the Standard & Poor’s 500® Index responded correspondingly, gaining +3.02% in December,
+9.07% during the quarter, and a resounding 31.49% for the year (its best since 2013), while hitting 35 record closes along the way.
Portfolio Review
For the 12
months ended December 2019, stock selection lagged in the health care, information technology, and communication services sectors. The health care sector underperformed during the first nine months of the year due to merger integration concerns and
fear of nationalized health care, and rebounded in the fourth quarter as companies continued to exceed earnings expectations and the prospects for a “Medicare for All” health insurance plan diminished. Sector allocation in the industrials
and information technology sectors offset the detrimental effect of the stock selections in the health care and energy sectors. Stock selections in consumer discretionary, financials, and consumer staples sectors aided performance this year.
Investors are also attracted to the non-cyclicality of the property and casualty business in an uncertain economic environment.
Outlook
While geopolitics and monetary policies had an outsized impact on
the markets in 2019, we believe economics and fundamentals should play a larger role in determining outcomes in 2020. The consensus estimate for U.S. GDP growth for the year is +1.9% but could exceed expectations if China follows through on its
Phase 1 promise. Global GDP is expected to grow at a +3.4% pace, led by a +4.6% advance in emerging markets and a +1.7% gain for developed markets. These figures could also have upside potential if the economic drag imposed by the
trade war is alleviated, which we believe would most likely prompt an increase in business investment. Though economics and fundamentals should play a larger role for returns in 2020, that does not imply that geopolitics will have little influence
on what transpires during the course of the year, as a confluence of potential market moving events sit on the horizon: the presidential impeachment proceedings, the Democratic Party nomination and the 2020 general election, as well as the recent
escalation of tensions between the U.S., Iran, and North Korea.
Given the expectation of only a modest increase in inflation over the year, and with 2020 being an
election year, we expect the Fed to remain on the sidelines with
| 1 |
The Russell 1000® Value Index (the “Index”) is an
unmanaged market-capitalization-weighted index that measures the performance of those companies in the Russell 1000® Index (which consists
of the 1,000 largest U.S. companies based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values. Index results assume the
reinvestment of dividends paid on the stocks constituting the Index. You may not invest in the Index, and, unlike the Fund, the Index does not incur fees and expenses. Russell Investment Group is the source and owner of the trademarks, service marks
and copyrights related to the Russell Indexes. Russell® is a trademark of Russell Investment Group. |
| 2 |
The Standard & Poor’s 500® Index (the “S&P
500 Index”) is an unmanaged market-capitalization-weighted index generally considered to be representative of U.S. equity market activity. The S&P 500 Index consists of 500 stocks representing leading industries of the U.S. economy. Index
results assume the reinvestment of dividends paid on the stocks constituting the Index. You may not invest in the S&P 500 Index, and, unlike the Fund, the S&P 500 Index does not incur fees or expenses. |
GUARDIAN LARGE CAP DISCIPLINED VALUE VIP FUND
regards to rate hikes/cuts. Currently, Fed fund futures are showing less than a 50% chance of one additional rate cut
during the year. The current expansion of the Fed’s balance sheet should continue to put marginal pressure on the dollar, which in turn would benefit the results posted by both multi-national and emerging market companies. While the “Fed
put” of supporting the stock market with interest rate cuts and changes to
monetary policies seems to be firmly in place, we believe it is highly unlikely that the dramatic P/E rerating that occurred in 2019 will be repeated in 2020. Earnings for the Standard &
Poor’s 500® Index are forecasted to grow by about 10% in 2020, though, with history as a guide, we believe that number should be revised down to something closer to 5% as the year
progresses.
Funds in the Guardian Variable Products Trust are
sold by prospectus only. You should carefully consider the investment objectives, risks, charges and expenses of the Funds before making an investment decision. The prospectus contains this and other important information. Please read it carefully
before investing or sending money. Please visit our website at http://guardianvpt.onlineprospectus.net/GuardianVPT/ Prospectuses or to obtain a printed copy, call
1-888-GUARDIAN (1-888-482-7342).
As with all mutual funds, the value of an investment in the Fund could decline, and you could lose money. Diversification does not guarantee profit or protect against
loss, and there can be no assurance that the Fund will achieve its investment objective. The Fund invests primarily in equity securities and therefore exposes you to the general risks of investing in stock markets. Investing in large-capitalization
companies involves risks such as having low growth rates, and slow responsiveness to competitive challenges or opportunities than in the case of smaller companies. Value stocks may not realize their perceived value and during certain periods the
Fund may underperform other equity funds that employ a different style. International investing involves special risks, which include changes in currency rates, foreign taxation and differences in auditing standards and securities regulations,
political uncertainty and greater volatility. Foreign securities are subject to political, regulatory, economic, and exchange-rate risks not present in domestic investments. Investing in a more limited number of issuers and sectors can be subject to
greater market fluctuation. Any discussions of specific securities should not be considered a recommendation to buy or sell those securities. Fund holdings will vary.
GUARDIAN LARGE CAP DISCIPLINED VALUE VIP FUND
Fund Characteristics (unaudited)
|
|
|
| Total Net Assets: $213,249,474 |
|
|
|
| |
|
Sector Allocation1 As of
December 31, 2019 |
|
|
| |
|
Top Ten Holdings2 As of
December 31, 2019 |
|
|
|
|
|
| |
|
| Holding |
|
% of Total
Net Assets |
|
| Berkshire Hathaway, Inc., Class B |
|
|
4.60% |
|
| Bank of America Corp. |
|
|
4.52% |
|
| JPMorgan Chase & Co. |
|
|
3.53% |
|
| Citigroup, Inc. |
|
|
2.71% |
|
| Wells Fargo & Co. |
|
|
2.55% |
|
| The Procter & Gamble Co. |
|
|
2.50% |
|
| Cigna Corp. |
|
|
2.48% |
|
| Comcast Corp., Class A |
|
|
2.34% |
|
| Chubb Ltd. |
|
|
2.31% |
|
| Verizon Communications, Inc. |
|
|
2.31% |
|
| Total |
|
|
29.85% |
|
| 1 |
The Fund’s holdings are allocated to each sector based on the MSCI Global Industry Classification Standard (GICS®). Cash includes short-term investments and net other assets and liabilities. |
| 2 |
Portfolio holdings are subject to change and should not be considered a recommendation to buy or sell individual
securities. |
GUARDIAN LARGE CAP DISCIPLINED VALUE VIP FUND
Fund Performance (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
| Average Annual Total Returns
As of December 31, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
| |
|
Inception Date |
|
|
1 Year |
|
|
5 Year |
|
|
10 Year |
|
|
Since Inception |
|
| Guardian Large Cap Disciplined Value VIP Fund |
|
|
9/1/2016 |
|
|
|
23.41% |
|
|
|
— |
|
|
|
— |
|
|
|
10.93% |
|
| Russell 1000® Value Index |
|
|
|
|
|
|
26.54% |
|
|
|
— |
|
|
|
— |
|
|
|
10.78% |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Results of a Hypothetical $10,000 Investment As of December 31,
2019 |
|
The chart above shows the performance of a hypothetical $10,000 investment made on inception date in Guardian Large Cap Disciplined Value
VIP Fund and the Russell 1000® Value Index. Index returns do not include the fees and expenses of the Fund, but do include reinvestment of dividends, if any.
Performance quoted represents past performance and does not guarantee or predict future results. Investment return and principal value will fluctuate, so shares, when
redeemed, may be worth more or less than their original cost. The Fund’s fees and expenses are detailed in the Financial Highlights section of this report. Fees and expenses are factored into the net asset value of Fund shares and any
performance numbers we release. Total return figures include the effect of expense limitations in effect during the periods shown, if applicable; without such limitations, the performance shown would have been lower. Performance results assume the
reinvestment of dividends and capital gains. The return figures shown do not reflect the deduction of taxes that a contract owner/policyholder may pay on redemption units. The actual total returns for owners of variable annuity contracts or variable
life insurance policies that provide for investment in the Fund will be lower to reflect separate account and contract/policy charges. Current and month-end performance information, which may be lower or
higher than that cited, is available by calling 1-888-GUARDIAN
(1-888-482-7342) and is periodically updated on our website: http://guardianlife.com.
UNDERSTANDING YOUR FUND’S EXPENSES (UNAUDITED)
By investing in the Fund, you incur two types of costs: (1) transaction costs and (2) ongoing costs, including,
as applicable, investment advisory fees, distribution and/or service (12b-1) fees and other Fund expenses. The example below is intended to help you understand your ongoing costs (in dollars) of investing in
the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the
beginning of the period and held for the entire period from July 1, 2019 to December 31, 2019. The table below shows the Fund’s expenses in two ways:
Expenses based on actual return
This section of the table provides
information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for
example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the section under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this
period.
Expenses based on hypothetical 5% return for comparison purposes
This section of the table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund with the cost of investing in other mutual funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the
other funds.
Note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads), redemption fees, or exchange fees. Therefore the second section is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. If these transactional costs were
included, your costs would have been higher. Charges and expenses at the insurance company separate account level are not reflected in the table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
| |
|
Beginning
Account Value
7/1/19 |
|
Ending
Account Value
12/31/19 |
|
|
Expenses Paid
During Period* 7/1/19-12/31/19 |
|
|
Expense Ratio
During Period
7/1/19-12/31/19 |
|
| Based on Actual Return |
|
$1,000.00 |
|
|
$1,097.00 |
|
|
|
$5.13 |
|
|
|
0.97% |
|
| Based on Hypothetical Return (5% Return Before Expenses) |
|
$1,000.00 |
|
|
$1,020.32 |
|
|
|
$4.94 |
|
|
|
0.97% |
|
| * |
Expenses are equal to the Fund’s annualized expense ratio as indicated, multiplied by the average account value over
the period, multiplied by 184/365 (to reflect the one-half year period). |
SCHEDULE OF INVESTMENTS — GUARDIAN LARGE CAP DISCIPLINED VALUE VIP
FUND
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Shares |
|
|
Value |
|
| Common Stocks – 98.0% |
|
| |
| Aerospace & Defense – 2.2% |
|
| |
|
|
| United Technologies Corp. |
|
|
31,891 |
|
|
$ |
4,775,996 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
4,775,996 |
|
| Air Freight & Logistics – 2.1% |
|
| |
|
|
| CH Robinson Worldwide, Inc. |
|
|
12,003 |
|
|
|
938,635 |
|
| |
|
|
| United Parcel Service, Inc., Class B |
|
|
29,568 |
|
|
|
3,461,230 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
4,399,865 |
|
| Airlines – 0.7% |
|
| |
|
|
| Southwest Airlines Co. |
|
|
28,367 |
|
|
|
1,531,251 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
1,531,251 |
|
| Banks – 14.9% |
|
| |
|
|
| Bank of America Corp. |
|
|
273,889 |
|
|
|
9,646,371 |
|
| |
|
|
| Citigroup, Inc. |
|
|
72,307 |
|
|
|
5,776,606 |
|
| |
|
|
| ING Groep N.V., ADR |
|
|
129,972 |
|
|
|
1,566,163 |
|
| |
|
|
| JPMorgan Chase & Co. |
|
|
54,021 |
|
|
|
7,530,527 |
|
| |
|
|
| Truist Financial Corp. |
|
|
30,911 |
|
|
|
1,740,907 |
|
| |
|
|
| Wells Fargo & Co. |
|
|
100,986 |
|
|
|
5,433,047 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
31,693,621 |
|
| Biotechnology – 0.8% |
|
| |
|
|
| Biogen, Inc.(1) |
|
|
5,950 |
|
|
|
1,765,543 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
1,765,543 |
|
| Building Products – 0.8% |
|
| |
|
|
| Owens Corning |
|
|
25,116 |
|
|
|
1,635,554 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
1,635,554 |
|
| Chemicals – 3.5% |
|
| |
|
|
| Corteva, Inc. |
|
|
52,794 |
|
|
|
1,560,591 |
|
| |
|
|
| DuPont de Nemours, Inc. |
|
|
49,181 |
|
|
|
3,157,420 |
|
| |
|
|
| FMC Corp. |
|
|
12,438 |
|
|
|
1,241,561 |
|
| |
|
|
| The Mosaic Co. |
|
|
65,410 |
|
|
|
1,415,472 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
7,375,044 |
|
| Construction Materials – 1.1% |
|
| |
|
|
| CRH PLC, ADR |
|
|
58,796 |
|
|
|
2,371,243 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
2,371,243 |
|
| Consumer Finance – 0.6% |
|
| |
|
|
| Discover Financial Services |
|
|
14,941 |
|
|
|
1,267,296 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
1,267,296 |
|
| Diversified Financial Services – 4.6% |
|
| |
|
|
| Berkshire Hathaway, Inc., Class B(1) |
|
|
43,343 |
|
|
|
9,817,189 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
9,817,189 |
|
| Diversified Telecommunication Services – 2.3% |
|
| |
|
|
| Verizon Communications, Inc. |
|
|
80,031 |
|
|
|
4,913,903 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
4,913,903 |
|
| Electric Utilities – 1.4% |
|
| |
|
|
| Edison International |
|
|
38,538 |
|
|
|
2,906,151 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
2,906,151 |
|
| Electrical Equipment – 0.8% |
|
| |
|
|
| Eaton Corp. PLC |
|
|
17,911 |
|
|
|
1,696,530 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
1,696,530 |
|
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Shares |
|
|
Value |
|
| Equity Real Estate Investment – 0.6% |
|
| |
|
|
| Equity Residential REIT |
|
|
15,862 |
|
|
$ |
1,283,553 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
1,283,553 |
|
| Food Products – 1.2% |
|
| |
|
|
| Mondelez International, Inc., Class A |
|
|
29,716 |
|
|
|
1,636,757 |
|
| |
|
|
| Tyson Foods, Inc., Class A |
|
|
9,780 |
|
|
|
890,371 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
2,527,128 |
|
| Health Care Equipment & Supplies – 3.0% |
|
| |
|
|
| Medtronic PLC |
|
|
38,432 |
|
|
|
4,360,110 |
|
| |
|
|
| Zimmer Biomet Holdings, Inc. |
|
|
14,139 |
|
|
|
2,116,326 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
6,476,436 |
|
| Health Care Providers & Services – 10.4% |
|
| |
|
|
| Anthem, Inc. |
|
|
10,590 |
|
|
|
3,198,498 |
|
| |
|
|
| Cigna Corp. |
|
|
25,827 |
|
|
|
5,281,363 |
|
| |
|
|
| CVS Health Corp. |
|
|
38,646 |
|
|
|
2,871,011 |
|
| |
|
|
| Humana, Inc. |
|
|
4,964 |
|
|
|
1,819,405 |
|
| |
|
|
| McKesson Corp. |
|
|
16,977 |
|
|
|
2,348,259 |
|
| |
|
|
| Quest Diagnostics, Inc. |
|
|
13,920 |
|
|
|
1,486,517 |
|
| |
|
|
| UnitedHealth Group, Inc. |
|
|
11,533 |
|
|
|
3,390,471 |
|
| |
|
|
| Universal Health Services, Inc.,
Class B |
|
|
12,053 |
|
|
|
1,729,124 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
22,124,648 |
|
| Hotels, Restaurants & Leisure – 1.6% |
|
| |
|
|
| Las Vegas Sands Corp. |
|
|
37,925 |
|
|
|
2,618,342 |
|
| |
|
|
| Wyndham Destinations, Inc. |
|
|
17,094 |
|
|
|
883,589 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
3,501,931 |
|
| Household Durables – 2.3% |
|
| |
|
|
| Lennar Corp., Class A |
|
|
29,771 |
|
|
|
1,660,924 |
|
| |
|
|
| Mohawk Industries, Inc.(1) |
|
|
9,206 |
|
|
|
1,255,514 |
|
| |
|
|
| Toll Brothers, Inc. |
|
|
24,379 |
|
|
|
963,215 |
|
| |
|
|
| Whirlpool Corp. |
|
|
7,145 |
|
|
|
1,054,102 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
4,933,755 |
|
| Household Products – 2.5% |
|
| |
|
|
| The Procter & Gamble Co. |
|
|
42,665 |
|
|
|
5,328,858 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
5,328,858 |
|
| Insurance – 6.6% |
|
| |
|
|
| American International Group, Inc. |
|
|
78,767 |
|
|
|
4,043,110 |
|
| |
|
|
| Aon PLC |
|
|
3,592 |
|
|
|
748,178 |
|
| |
|
|
| Chubb Ltd. |
|
|
31,692 |
|
|
|
4,933,177 |
|
| |
|
|
| Everest Re Group Ltd. |
|
|
7,866 |
|
|
|
2,177,623 |
|
| |
|
|
| The Travelers Cos., Inc. |
|
|
15,123 |
|
|
|
2,071,095 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
13,973,183 |
|
| Interactive Media & Services – 2.2% |
|
| |
|
|
| Alphabet, Inc., Class A(1) |
|
|
3,494 |
|
|
|
4,679,829 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
4,679,829 |
|
| Internet & Direct Marketing Retail – 0.4% |
|
| |
|
|
| Booking Holdings, Inc.(1) |
|
|
452 |
|
|
|
928,286 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
928,286 |
|
| Machinery – 1.1% |
|
| |
|
|
| Dover Corp. |
|
|
19,466 |
|
|
|
2,243,651 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
2,243,651 |
|
|
|
|
|
|
| 6 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
SCHEDULE OF INVESTMENTS — GUARDIAN LARGE CAP DISCIPLINED VALUE VIP FUND
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Shares |
|
|
Value |
|
| Media – 4.5% |
|
| |
|
|
| Altice USA, Inc., Class A(1) |
|
|
32,998 |
|
|
$ |
902,166 |
|
| |
|
|
| Comcast Corp., Class A |
|
|
110,958 |
|
|
|
4,989,781 |
|
| |
|
|
| Discovery, Inc., Class A(1) |
|
|
32,026 |
|
|
|
1,048,531 |
|
| |
|
|
| FOX Corp., Class A |
|
|
73,500 |
|
|
|
2,724,645 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
9,665,123 |
|
| Metals & Mining – 1.5% |
|
| |
|
|
| Barrick Gold Corp. |
|
|
176,216 |
|
|
|
3,275,855 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
3,275,855 |
|
| Oil, Gas & Consumable Fuels – 9.4% |
|
| |
|
|
| Cimarex Energy Co. |
|
|
34,143 |
|
|
|
1,792,166 |
|
| |
|
|
| ConocoPhillips |
|
|
65,000 |
|
|
|
4,226,950 |
|
| |
|
|
| Marathon Petroleum Corp. |
|
|
68,730 |
|
|
|
4,140,982 |
|
| |
|
|
| Noble Energy, Inc. |
|
|
95,807 |
|
|
|
2,379,846 |
|
| |
|
|
| TOTAL S.A., ADR |
|
|
58,390 |
|
|
|
3,228,967 |
|
| |
|
|
| Valero Energy Corp. |
|
|
45,526 |
|
|
|
4,263,510 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
20,032,421 |
|
| Pharmaceuticals – 3.5% |
|
| |
|
|
| GlaxoSmithKline PLC, ADR |
|
|
46,548 |
|
|
|
2,187,291 |
|
| |
|
|
| Novo Nordisk A/S, ADR |
|
|
14,206 |
|
|
|
822,243 |
|
| |
|
|
| Pfizer, Inc. |
|
|
112,357 |
|
|
|
4,402,147 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
7,411,681 |
|
| Road & Rail – 2.2% |
|
| |
|
|
| Kansas City Southern |
|
|
17,957 |
|
|
|
2,750,294 |
|
| |
|
|
| Union Pacific Corp. |
|
|
10,100 |
|
|
|
1,825,979 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
4,576,273 |
|
| Semiconductors & Semiconductor Equipment – 4.4% |
|
| |
|
|
| KLA Corp. |
|
|
10,803 |
|
|
|
1,924,771 |
|
| |
|
|
| Lam Research Corp. |
|
|
6,955 |
|
|
|
2,033,642 |
|
| |
|
|
| Micron Technology, Inc.(1) |
|
|
49,141 |
|
|
|
2,642,803 |
|
| |
|
|
| NXP Semiconductors N.V. |
|
|
21,513 |
|
|
|
2,737,744 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
9,338,960 |
|
| Software – 2.3% |
|
| |
|
|
| Microsoft Corp. |
|
|
8,240 |
|
|
|
1,299,448 |
|
| |
|
|
| NortonLifeLock, Inc. |
|
|
60,908 |
|
|
|
1,554,372 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Shares |
|
|
Value |
|
| Software (continued) |
|
| |
|
|
| Oracle Corp. |
|
|
38,248 |
|
|
$ |
2,026,379 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
4,880,199 |
|
| Specialty Retail – 2.2% |
|
| |
|
|
| AutoZone, Inc.(1) |
|
|
2,757 |
|
|
|
3,284,442 |
|
| |
|
|
| Best Buy Co., Inc. |
|
|
16,979 |
|
|
|
1,490,756 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
4,775,198 |
|
| Textiles, Apparel & Luxury Goods – 0.3% |
|
| |
|
|
| PVH Corp. |
|
|
8,572 |
|
|
|
901,346 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
901,346 |
|
| |
|
Total Common Stocks
(Cost $184,920,156) |
|
|
|
209,007,500 |
|
|
|
|
|
|
|
|
|
|
| |
|
Principal
Amount |
|
|
Value |
|
| Short–Term Investment – 2.0% |
|
| |
| Repurchase Agreements – 2.0% |
|
| |
|
|
| Fixed Income
Clearing Corp., 0.12%, dated 12/31/2019, proceeds at maturity value of $4,284,029, due 1/2/2020(2) |
|
$ |
4,284,000 |
|
|
|
4,284,000 |
|
| |
|
Total Repurchase Agreements
(Cost $4,284,000) |
|
|
|
4,284,000 |
|
| |
|
Total Investments – 100.0%
(Cost $189,204,156) |
|
|
|
213,291,500 |
|
| |
|
| Liabilities in excess of other assets – (0.0)% |
|
|
|
(42,026 |
) |
| |
|
| Total Net Assets – 100.0% |
|
|
$ |
213,249,474 |
|
| (1) |
Non–income–producing security. |
| (2) |
The table below presents collateral for repurchase agreements. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Security |
|
Coupon |
|
|
Maturity
Date |
|
|
Principal
Amount |
|
|
Value |
|
| U.S. Treasury Note |
|
|
2.75% |
|
|
|
9/15/2021 |
|
|
$ |
4,255,000 |
|
|
$ |
4,370,745 |
|
Legend:
ADR — American
Depositary Receipt
REIT — Real Estate Investment Trust
The following is a summary of the inputs used as
of December 31, 2019 in valuing the Fund’s investments. For more information on valuation inputs, please refer to Note 2a of the accompanying Notes to Financial Statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Valuation Inputs |
|
|
|
|
| Investments in Securities |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
| Common Stocks |
|
$ |
209,007,500 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
209,007,500 |
|
| Repurchase Agreements |
|
|
— |
|
|
|
4,284,000 |
|
|
|
— |
|
|
|
4,284,000 |
|
| Total |
|
$ |
209,007,500 |
|
|
$ |
4,284,000 |
|
|
$ |
— |
|
|
$ |
213,291,500 |
|
|
|
|
|
|
| The accompanying notes are an integral part of these financial statements. |
|
|
|
7 |
FINANCIAL INFORMATION — GUARDIAN LARGE CAP DISCIPLINED VALUE VIP FUND
|
|
|
|
|
|
Statement of Assets and Liabilities As of December 31, 2019 |
|
|
|
| Assets |
|
|
|
|
| |
|
| Investments, at value |
|
$ |
213,291,500 |
|
| |
|
| Cash |
|
|
38,476 |
|
| |
|
| Dividends/interest receivable |
|
|
147,666 |
|
| |
|
| Reimbursement receivable from adviser |
|
|
6,314 |
|
| |
|
| Foreign tax reclaims receivable |
|
|
3,393 |
|
| |
|
| Prepaid expenses |
|
|
9,722 |
|
| |
|
|
|
|
| |
|
| Total Assets |
|
|
213,497,071 |
|
| |
|
|
|
|
| |
|
| Liabilities |
|
|
|
|
| |
|
| Investment advisory fees payable |
|
|
111,933 |
|
| |
|
| Distribution fees payable |
|
|
44,869 |
|
| |
|
| Accrued audit fees |
|
|
22,105 |
|
| |
|
| Payable for fund shares redeemed |
|
|
16,385 |
|
| |
|
| Accrued shareholder reports fees |
|
|
14,523 |
|
| |
|
| Accrued custodian and accounting fees |
|
|
13,191 |
|
| |
|
| Accrued trustees’ and officers’
fees |
|
|
1,299 |
|
| |
|
| Accrued expenses and other liabilities |
|
|
23,292 |
|
| |
|
|
|
|
| |
|
| Total Liabilities |
|
|
247,597 |
|
| |
|
|
|
|
| |
|
| Total Net Assets |
|
$ |
213,249,474 |
|
| |
|
|
|
|
| |
|
| Net Assets Consist of: |
|
|
|
|
| |
|
| Paid-in
capital |
|
$ |
182,728,811 |
|
| |
|
| Distributable earnings |
|
|
30,520,663 |
|
| |
|
|
|
|
| |
|
| Total Net Assets |
|
$ |
213,249,474 |
|
| |
|
|
|
|
| Investments, at Cost |
|
$ |
189,204,156 |
|
| |
|
|
|
|
| |
|
| Pricing of Shares |
|
|
|
|
| |
|
| Shares of Beneficial Interest Outstanding with No
Par Value |
|
|
15,086,648 |
|
| |
|
| Net Asset Value Per Share |
|
|
$14.13 |
|
| |
|
|
|
|
|
|
|
|
|
|
Statement of Operations For the Year Ended December 31, 2019 |
|
|
|
| Investment Income |
|
|
|
|
| |
|
| Dividends |
|
$ |
4,548,999 |
|
| |
|
| Interest |
|
|
13,665 |
|
| |
|
| Withholding taxes on foreign dividends |
|
|
(57,092 |
) |
| |
|
|
|
|
| |
|
| Total Investment Income |
|
|
4,505,572 |
|
| |
|
|
|
|
| |
|
| Expenses |
|
|
|
|
| |
|
| Investment advisory fees |
|
|
1,285,187 |
|
| |
|
| Distribution fees |
|
|
514,661 |
|
| |
|
| Trustees’ and officers’ fees |
|
|
83,764 |
|
| |
|
| Professional fees |
|
|
72,831 |
|
| |
|
| Custodian and accounting fees |
|
|
52,077 |
|
| |
|
| Administrative fees |
|
|
47,460 |
|
| |
|
| Shareholder reports |
|
|
30,991 |
|
| |
|
| Transfer agent fees |
|
|
14,646 |
|
| |
|
| Other expenses |
|
|
24,670 |
|
| |
|
|
|
|
| |
|
| Total Expenses |
|
|
2,126,287 |
|
| |
|
| Less: Fees waived |
|
|
(129,401 |
) |
| |
|
|
|
|
| |
|
| Total Expenses, Net |
|
|
1,996,886 |
|
| |
|
|
|
|
| |
|
| Net Investment Income/(Loss) |
|
|
2,508,686 |
|
| |
|
|
|
|
| |
|
| Realized Gain/(Loss) and Change in Unrealized
Appreciation/(Depreciation) on Investments and Foreign Currency Transactions |
|
|
|
|
| |
|
| Net realized gain/(loss) from investments |
|
|
(1,102,304 |
) |
| |
|
| Net realized gain/(loss) from foreign currency
transactions |
|
|
227 |
|
| |
|
| Net change in unrealized appreciation/(depreciation)
on investments |
|
|
41,059,881 |
|
| |
|
|
|
|
| |
|
| Net Gain on Investments and Foreign Currency
Transactions |
|
|
39,957,804 |
|
| |
|
|
|
|
| |
|
| Net Increase in Net Assets Resulting From
Operations |
|
$ |
42,466,490 |
|
| |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| 8 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
FINANCIAL INFORMATION — GUARDIAN LARGE CAP DISCIPLINED VALUE VIP FUND
|
|
|
|
|
|
|
|
|
|
Statements of Changes in Net Assets |
|
| |
|
|
| |
|
For the
Year Ended
12/31/19 |
|
|
For the
Year Ended
12/31/18 |
|
| |
|
|
|
| Operations |
|
| |
|
|
| Net investment income/(loss) |
|
$ |
2,508,686 |
|
|
$ |
1,842,916 |
|
| |
|
|
| Net realized gain/(loss) from investments and foreign
currency transactions |
|
|
(1,102,077 |
) |
|
|
530,348 |
|
| |
|
|
| Net change in unrealized appreciation/(depreciation)
on investments |
|
|
41,059,881 |
|
|
|
(19,482,381 |
) |
| |
|
|
|
|
|
|
|
|
| |
|
|
| Net Increase/(Decrease) in Net Assets Resulting
from Operations |
|
|
42,466,490 |
|
|
|
(17,109,117 |
) |
| |
|
|
|
|
|
|
|
|
| |
| Capital Share
Transactions |
|
| |
|
|
| Proceeds from sales of shares |
|
|
9,894,910 |
|
|
|
204,091,727 |
|
| |
|
|
| Cost of shares redeemed |
|
|
(24,475,346 |
) |
|
|
(17,523,968 |
) |
| |
|
|
|
|
|
|
|
|
| |
|
|
| Net Increase/(Decrease) in Net Assets Resulting
from Capital Share Transactions |
|
|
(14,580,436 |
) |
|
|
186,567,759 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| Net Increase in Net Assets |
|
|
27,886,054 |
|
|
|
169,458,642 |
|
| |
|
|
|
|
|
|
|
|
| |
| Net Assets |
|
| |
|
|
| Beginning of year |
|
|
185,363,420 |
|
|
|
15,904,778 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| End of year |
|
$ |
213,249,474 |
|
|
$ |
185,363,420 |
|
| |
|
|
|
|
|
|
|
|
| |
| Other Information: |
|
| |
|
|
| Shares |
|
|
|
|
|
|
|
|
| |
|
|
| Sold |
|
|
779,521 |
|
|
|
16,317,390 |
|
| |
|
|
| Redeemed |
|
|
(1,876,554 |
) |
|
|
(1,371,590 |
) |
| |
|
|
|
|
|
|
|
|
| |
|
|
| Net Increase/(Decrease) |
|
|
(1,097,033 |
) |
|
|
14,945,800 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| The accompanying notes are an integral part of these financial statements. |
|
|
|
9 |
FINANCIAL INFORMATION — GUARDIAN LARGE CAP DISCIPLINED VALUE VIP FUND
The Financial Highlights table is intended to help you understand the Fund’s financial
performance for the past five years (or, if shorter, the period since inception). Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost)
on an investment in the Fund.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Highlights |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Per Share Operating Performance |
|
|
|
|
| |
|
Net Asset Value,
Beginning of
Period |
|
|
Net Investment
Income(1) |
|
|
Net Realized
and Unrealized
Gain/(Loss) |
|
|
Total
Operations |
|
|
Net Asset
Value, End of
Period |
|
|
Total
Return(2) |
|
| |
|
|
|
|
|
|
| Year Ended 12/31/19 |
|
$ |
11.45 |
|
|
$ |
0.16 |
|
|
$ |
2.52 |
|
|
$ |
2.68 |
|
|
$ |
14.13 |
|
|
|
23.41% |
|
| |
|
|
|
|
|
|
| Year Ended 12/31/18 |
|
|
12.85 |
|
|
|
0.15 |
|
|
|
(1.55 |
) |
|
|
(1.40 |
) |
|
|
11.45 |
|
|
|
(10.89)% |
|
| |
|
|
|
|
|
|
| Year Ended 12/31/17 |
|
|
10.78 |
|
|
|
0.10 |
|
|
|
1.97 |
|
|
|
2.07 |
|
|
|
12.85 |
|
|
|
19.20% |
|
| |
|
|
|
|
|
|
| Period Ended
12/31/16(4) |
|
|
10.00 |
|
|
|
0.03 |
|
|
|
0.75 |
|
|
|
0.78 |
|
|
|
10.78 |
|
|
|
7.80% |
(5) |
|
|
|
|
|
| 10 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
FINANCIAL INFORMATION — GUARDIAN LARGE CAP DISCIPLINED VALUE VIP FUND
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Ratios/Supplemental Data |
|
Net Assets, End
of Period (000s) |
|
|
Net Ratio of
Expenses to
Average
Net Assets(3) |
|
|
Gross Ratio of
Expenses to
Average Net
Assets |
|
|
Net Ratio of Net
Investment Income
to Average
Net Assets(3) |
|
|
Gross Ratio of Net
Investment Income/
(Loss) to Average
Net Assets |
|
|
Portfolio
Turnover Rate |
|
|
|
|
|
|
|
| $ |
213,249 |
|
|
|
0.97% |
|
|
|
1.03% |
|
|
|
1.22% |
|
|
|
1.16% |
|
|
|
66% |
|
|
|
|
|
|
|
| |
185,363 |
|
|
|
0.97% |
|
|
|
1.08% |
|
|
|
1.16% |
|
|
|
1.05% |
|
|
|
56% |
|
|
|
|
|
|
|
| |
15,905 |
|
|
|
0.98% |
|
|
|
1.91% |
|
|
|
0.89% |
|
|
|
(0.04)% |
|
|
|
71% |
|
|
|
|
|
|
|
| |
17,081 |
|
|
|
0.98% |
(5) |
|
|
2.70% |
(5) |
|
|
0.88% |
(5) |
|
|
(0.84)% |
(5) |
|
|
19% |
(5) |
| (1) |
Calculated based on the average shares outstanding during the period. |
| (2) |
Total returns do not reflect the effects of charges deducted pursuant to the terms of The Guardian Insurance &
Annuity Company, Inc.’s variable contracts. Inclusion of such charges would reduce the total returns for all periods shown. |
| (3) |
Net Ratio of Expenses to Average Net Assets and Net Ratio of Net Investment Income to Average Net Assets include the
effect of fee waivers and expense limitations. |
| (4) |
Commenced operations on September 1, 2016. |
| (5) |
Ratios for periods less than one year have been annualized, except for total return and portfolio turnover rate. For the
period ended December 31, 2016, certain non-recurring fees (i.e., audit fees) are not annualized. |
|
|
|
|
|
| The accompanying notes are an integral part of these financial statements. |
|
|
|
11 |
NOTES TO FINANCIAL STATEMENTS — GUARDIAN LARGE CAP DISCIPLINED
VALUE VIP FUND
December 31, 2019
1.
Organization
Guardian Variable Products Trust (the “Trust”), a Delaware statutory trust organized on January 12, 2016, is registered under the
Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Trust currently has sixteen series. Guardian Large Cap Disciplined Value VIP Fund (the
“Fund”) is a series of the Trust. The Fund is a diversified fund and commenced operations on September 1, 2016. The financial statements for other series of the Trust are presented in separate reports.
The Trust has authorized an unlimited number of shares of beneficial interest with no par value. Shares are bought and sold at closing net asset value (“NAV”).
Shares of the Fund are only sold to certain separate accounts of The Guardian Insurance & Annuity Company, Inc. (“GIAC”) that fund certain variable annuity contracts and variable life insurance policies issued by GIAC. GIAC is a
wholly-owned subsidiary of The Guardian Life Insurance Company of America (“Guardian Life”).
The Fund seeks to provide long-term growth of capital
primarily through investment in equity securities. Current income is a secondary objective.
2. Significant Accounting Policies
The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The Fund follows the investment
company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 946 Financial Services — Investment Companies. The following policies are in conformity with
accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts and
disclosures in the financial statements. Actual results could differ from those estimates.
a. Investment Valuations Equity securities traded on an exchange
other than NASDAQ Stock Market, LLC (“NASDAQ”) are valued at the last reported sale price on the principal exchange or market on which they are traded; or, if there were no sales that day, at the mean between the closing bid and ask
prices. Securities traded on the NASDAQ are generally valued at the NASDAQ official closing price, which may not be the last sale price. If the NASDAQ official closing price is
not available for a security, that security is generally valued at the mean between the closing bid and ask prices. Repurchase agreements are carried at cost, which approximates fair value (see
Note 5d). Foreign securities are valued in the currencies of the markets in which they trade and then converted to U.S. dollars by the application of foreign exchange rates at the close of the New York Stock Exchange (“NYSE”). Forward
foreign currency contracts, if any, are valued at the mean between the bid and ask rates for the specified time interpolated from rates for proximate time periods. Securities for which market quotations are not readily available or for which market
quotations may be considered unreliable are valued at their fair values as determined in accordance with policies and procedures adopted by the Board of Trustees.
Under the policies and procedures approved by the Board of Trustees, Park Avenue Institutional Advisers LLC (“Park Avenue”), the Fund’s investment
adviser, has established a Fair Valuation Committee to assist the Board of Trustees with the oversight and monitoring of the valuation of the Fund’s investments. This includes monitoring the appropriateness of fair values based on results of
ongoing valuation oversight, including but not limited to consideration of security specific events, market events, and pricing vendor and broker-dealer due diligence. The Fair Valuation Committee oversees and carries out the policies for the
valuation of investments held in the Fund. The Fair Valuation Committee is responsible for discussing and assessing the potential impacts to the fair values on an ongoing basis, and at least on a quarterly basis with the Board of Trustees.
Securities whose values have been materially affected by events occurring before the Fund’s valuation time but after the close of the securities’ principal
exchange or market may be fair valued in accordance with policies and procedures adopted by the Board of Trustees. In addition, the values of the Fund’s investments in foreign securities are generally determined by a pricing service using
pricing models designed to estimate likely changes in the values of those securities. Certain foreign equity instruments are valued by applying international fair value factors provided by approved pricing services. The factors seek to adjust the
local closing price for movements of local markets post closing, but prior to the time the NAVs are calculated. Valuations reflected in this report are as of the report date. As a result, changes in valuation due to market events and/or issuer
related events after the report date and prior to issuance of the report are not reflected herein.
NOTES TO FINANCIAL STATEMENTS — GUARDIAN LARGE CAP DISCIPLINED VALUE VIP FUND
Various inputs are used in determining the valuation of the Fund’s investments. These inputs are summarized in three
broad levels listed below.
| • |
|
Level 1 — unadjusted inputs using quoted prices in active markets for identical investments. |
| • |
|
Level 2 — other significant observable inputs, including, but not limited to, quoted prices for similar investments, inputs other than quoted prices that are observable for investments (such as interest
rates, prepayment speeds, credit risks, etc.) or other market corroborated inputs. |
| • |
|
Level 3 — significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments) |
Inputs may include price information, volatility statistics, specific and broad credit data, liquidity statistics, and other factors. A financial instrument’s level
within the fair value hierarchy is based on the lowest level of any input; both individually and in aggregate, that is significant to the fair value measurement. However, the determination of what constitutes “observable” requires
significant judgment by the Trust. The Trust considers observable data to be that market data which is readily available, regularly distributed or updated, reliable and verifiable, and provided by independent sources that are actively involved in
the relevant market. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. Changes in valuation techniques may result in transfers into or out of a
financial instrument’s assigned level within the hierarchy.
The FASB requires reporting entities to make disclosures about purchases, sales, issuances and
settlements of Level 3 securities on a gross basis. For the year ended December 31, 2019, there were no transfers into or out of Level 3 of the fair value hierarchy.
In determining a financial instrument’s placement within the hierarchy, the Trust separates the Fund’s investment portfolio into two categories: investments
and derivatives (e.g., futures). A summary of inputs used to value the Fund’s assets and liabilities carried at fair value as of December 31, 2019 is included in the Schedule of Investments.
Investments Investments whose values are based on quoted market prices in active markets, and are therefore classified within Level 1, include active
listed equities. Investments that trade in markets that are not considered to be active, but are valued based on quoted
market prices, dealer quotations or alternative pricing sources supported by observable inputs are classified within Level 2. These include certain U.S. government and sovereign obligations,
most government agency securities, investment-grade corporate bonds, certain mortgage products, state, municipal and provincial obligations, and certain foreign equity securities, including securities whose prices may have been affected by events
occurring after the close of trading on their principal exchange or market and, as a result, whose values are determined by a pricing service as described above, or securities whose values are otherwise determined using fair valuation methods
approved by the Fund’s Board of Trustees.
Investments classified within Level 3 have significant unobservable inputs, as they trade infrequently or not at
all. Level 3 investments include, among others, private placement securities. When observable prices are not available for these securities, the Trust uses one or more valuation techniques for which sufficient and reliable data is available.
The inputs used by the Trust in estimating the value of Level 3 investments include, for example, the original transaction price, recent transactions in the same or similar instruments, completed or pending third-party transactions in the
underlying investment or comparable issuers, subsequent rounds of financing, recapitalizations, and other transactions across the capital structure. Level 3 investments may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the Trust in the absence of market information. Assumptions used by the Trust due to the lack of observable inputs may significantly impact the
resulting fair value and therefore the Fund’s results of operations. As of December 31, 2019, the Fund had no securities classified as Level 3.
Derivatives Exchange-traded derivatives, such as futures contracts, exchange-traded option contracts and certain swaps, are typically classified within
Level 1 or Level 2 of the fair value hierarchy depending on whether or not they are deemed to be actively traded. Certain non-exchange-traded derivatives, such as generic forwards, certain swaps and
options, have inputs which can generally be corroborated by market data and are therefore classified within Level 2. During the year ended December 31, 2019, the Fund did not hold any derivatives.
b. Securities Transactions Securities transactions are accounted for on the date securities are purchased or sold (trade date). Realized gains or losses on
securities transactions are determined on the basis of specific identification.
NOTES TO FINANCIAL STATEMENTS — GUARDIAN LARGE CAP DISCIPLINED VALUE VIP FUND
c. Foreign Currency Translation The accounting records of the Fund are maintained in U.S. dollars. Investment
securities and all other assets and liabilities of the Fund denominated in a foreign currency are generally translated into U.S. dollars at the exchange rates quoted at the close of the NYSE on each business day. The market value of investment
securities and other assets and liabilities are translated at the exchange rate as of the valuation date. Purchases and sales of securities, income receipts, and expense payments are translated into U.S. dollars at the exchange rates in effect on
the dates of the respective transactions. The Fund does not isolate the portion of the fluctuations on investments resulting from changes in foreign currency exchange rates from the fluctuations in market prices of investments held. Such
fluctuations are included in the Net change in net realized and unrealized gain/(loss) from investments on the Statement of Operations.
Reported realized foreign
currency gains and losses arise from the disposition of foreign currency, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest and foreign
withholding taxes recorded on the Fund’s books on the transaction date and the U.S. dollar equivalent of the amounts actually received or paid. These reported realized foreign currency gains and losses, if any, are included in Net realized
gain/(loss) from foreign currency transactions on the Statement of Operations. Unrealized foreign currency gains and losses arise from changes (due to changes in exchange rates) in the value of foreign currency and other assets and liabilities
denominated in foreign currencies, which are held at period end, if any, and are included in Net change in unrealized appreciation/(depreciation) on translation of assets and liabilities in foreign currencies on the Statement of Operations.
d. Foreign Capital Gains Tax The Fund may be subject to foreign taxes on income, gains on investments or currency purchases/repatriation, a portion of which may
be recoverable. The Fund will accrue such taxes and recoveries as applicable, based upon their current interpretation of tax rules and regulations that exist in the markets in which they invest.
e. Investment Income Dividend income net of foreign taxes withheld, if any, is generally recorded on the ex-dividend date.
Interest income, which includes amortization/accretion of premium/discount, is determined using the interest income accrual method, and is accrued and recorded daily.
f. Allocation of Income and Expenses Many of the expenses of the Trust can be directly attributed to a specific
series of the Trust. Expenses that cannot be directly attributed to a specific series of the Trust are generally apportioned among all the series in the Trust, based on relative net assets. In calculating net asset value per share for each series of
the Trust, investment income, realized and unrealized gains and losses, and expenses other than series-specific expenses are allocated daily to each series based upon the proportion of net assets attributable to each series.
3. Transactions with Affiliates
a. Investment Advisory Fee and Expense
Limitation Under the terms of the advisory agreement, which, after its two year initial term, is reviewed and approved annually by the Board of Trustees, the Fund pays an investment advisory fee to Park Avenue. Park Avenue is a wholly-owned
subsidiary of Guardian Life and receives an investment advisory fee at an annual rate of 0.65% up to $100 million, 0.60% up to $300 million, 0.55% up to $500 million, and 0.53% in excess of $500 million of the Fund’s average
daily net assets. The fee is accrued daily and paid monthly.
Park Avenue has contractually agreed through April 30, 2020 to waive certain fees and/or reimburse
certain expenses incurred by the Fund to the extent necessary to limit the Fund’s total annual operating expenses after fee waiver and/or expense reimbursement to 0.97% of the Fund’s average daily net assets (excluding, if applicable, any
acquired fund fees and expenses, taxes, interest, transaction costs and brokerage commissions, litigation and extraordinary expenses). The limitation may not be increased or terminated prior to this time without action by the Board of Trustees, may
be terminated only upon approval of the Board of Trustees, and is subject to Park Avenue’s recoupment rights. For the year ended December 31, 2019, Park Avenue waived fees and/or paid Fund expenses in the amount of $129,401.
Park Avenue may be entitled to recoupment of previously waived fees and reimbursed expenses from the Fund for three years from the date of the waiver or reimbursement,
subject to the expense limitation in effect at the time of the waiver or reimbursement and at the time of the recoupment, if any. Amounts waived or reimbursed by Park Avenue pursuant to any expense limitation after April 9, 2018 are not subject
to Park Avenue’s recoupment rights. The amount available for potential future recoupment by Park Avenue from the
NOTES TO FINANCIAL STATEMENTS — GUARDIAN LARGE CAP DISCIPLINED VALUE VIP FUND
Fund under the Expense Limitation Agreement and the expiration schedule at December 31, 2019 are as follows:
|
|
|
|
|
| |
|
| |
|
Potential Recoupment Amounts
Expiring |
| Total Potential
Recoupment
Amounts |
|
2021 |
|
2020 |
| $284,909 |
|
$62,448 |
|
$222,461 |
Park Avenue has entered into a Sub-Advisory Agreement with Boston Partners Global Investors, Inc.
(“Boston Partners”). Boston Partners is responsible for providing day-to-day investment advisory services to the Fund, subject to the supervision of Park
Avenue and the oversight of the Board of Trustees. Sub-advisory fees are paid by Park Avenue and do not represent a separate or additional expense to the Fund.
b. Compensation of Trustees and Officers Trustees and officers who are interested persons of the Trust, as defined in the 1940 Act, receive no compensation from
the Fund, except for the Chief Compliance Officer of the Trust. Trustees of the Trust who are not interested persons of the Trust, and the Chief Compliance Officer, receive compensation and reimbursement of expenses from the Trust.
c. Distribution Fees Park Avenue Securities LLC (“PAS”), a wholly-owned subsidiary of Guardian Life, is the principal underwriter of Fund shares. The
Trust has entered into a distribution and service agreement with PAS, which governs the sale and distribution of shares of the Fund. Under a distribution and service plan adopted by the Trust (“12b-1
plan”), PAS is compensated for services in such capacity, including its expenses in connection with the promotion and distribution of shares of the Fund, at an annual rate of 0.25% of the Fund’s average daily net assets. For the year ended
December 31, 2019, the Fund paid distribution fees in the amount of $514,661 to PAS.
PAS has directed that certain payments under the 12b-1 plan be used to compensate GIAC for shareholder services provided to contract owners.
4. Federal Income Taxes
a. Distributions to Shareholders For federal income tax purposes, the Fund is treated as a disregarded entity (“DRE”). As a DRE, the Fund is not subject
to an entity-level income tax; and any income, gains, losses, deductions, taxes, and credits of the Fund would instead be “passed through” directly to the separate accounts of GIAC that invest in the Fund and retain the same
character for U.S. federal income tax purposes. In addition, the Fund is not required to distribute taxable income and capital gains for U.S. federal income tax purposes. Therefore, no dividends
and capital gains distributions were paid by the Fund.
5. Investments
a. Investment Purchases and Sales The cost of investments purchased and the proceeds from investments sold (excluding short-term investments) amounted to
$133,090,849 and $148,595,124, respectively, for the year ended December 31, 2019. During the year ended December 31, 2019, there were no purchases or sales of U.S. government securities.
b. Foreign Securities Foreign securities investments involve special risks and considerations not typically associated with U.S. investments. These risks include,
but are not limited to, currency risk; adverse political, regulatory, social, and economic developments; and less reliable information about issuers. Moreover, securities of some foreign issuers may be less liquid and their prices more volatile than
those of comparable U.S. issuers.
c. Industry or Sector Concentration In its normal course of business, the Fund may invest a significant portion of its
assets in companies within a limited number of industries or sectors. As a result, the Fund may be subject to a greater risk of loss than that of a fund invested in a wider spectrum of industries or sectors because the stocks of many or all of the
companies in the industry, group of industries, sector, or sectors may decline in value due to developments adversely affecting the industry, group of industries, sector, or sectors.
d. Repurchase Agreements The Fund may invest in repurchase agreements to maintain liquidity and earn income over periods of time as short as overnight. The
collateral for repurchase agreements is either cash or fully negotiable U.S. government securities (including U.S. government agency securities). Repurchase agreements are fully collateralized (including the interest accrued thereon) and such
collateral is marked to market daily while the agreements remain in force. If the value of the collateral falls below the repurchase price plus accrued interest, the Fund will typically require the seller to deposit additional collateral by the next
business day. If the request for additional collateral is not met, or the seller defaults, the Fund maintains the right to sell the collateral (although it may be prevented or delayed from doing so in certain circumstances) and may be required to
claim any resulting loss against the
NOTES TO FINANCIAL STATEMENTS — GUARDIAN LARGE CAP DISCIPLINED VALUE VIP FUND
seller. Park Avenue monitors the creditworthiness of the seller with which the Fund enters into repurchase agreements.
6. Temporary Borrowings
The Fund, with other funds managed by Park
Avenue, is party to a $10 million committed revolving credit facility from State Street Bank and Trust Company for temporary borrowing purposes, including the meeting of redemption requests that otherwise might require the untimely disposition
of securities. Interest is calculated based on the higher of the daily one-month LIBOR rate and the Federal Funds rate plus 1.25% at the time of borrowing. In addition to the interest charged on any borrowings
by the Fund, each fund pays a commitment fee of 0.30% per annum on its share of the unused portion of the credit facility. The agreement is in
place until December 9, 2020. The Fund did not utilize the credit facility during the year ended December 31, 2019.
7. Indemnifications
Under the Trust’s organizational documents and, in
some cases, by contract, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Fund. In addition, in the normal course of business, the Fund enters into contracts with its vendors
and others that provide general indemnifications. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. However, based on experience,
the Fund expects the risk of loss to be remote.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees of Guardian Variable Products Trust and Shareholders of
Guardian Large Cap Disciplined Value VIP Fund
Opinion on the
Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Guardian Large
Cap Disciplined Value VIP Fund (one of the funds constituting Guardian Variable Products Trust, referred to hereafter as the “Fund”) as of December 31, 2019, the related statement of operations for the year ended December 31,
2019, the statement of changes in net assets for each of the two years in the period ended December 31, 2019, including the related notes, and the financial highlights for each of the periods indicated therein (collectively referred to
as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2019, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period ended December 31, 2019 and the financial highlights for each of the periods indicated therein in conformity with accounting principles generally accepted in the United States of
America.
Basis for Opinion
These financial statements are the
responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board
(United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing
procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the
amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our
procedures included confirmation of securities owned as of December 31, 2019 by correspondence with the custodian. We believe that our audits provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
New York, New York
February 20, 2020
We have served as the auditor of one or more investment
companies in Guardian Variable Products Trust since 2016.
SUPPLEMENTAL INFORMATION (UNAUDITED)
Trustees and Officers Information Table
The following table provides information about the Trustees of the Trust.
|
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|
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|
|
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| |
|
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|
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Name and
Year of Birth |
|
Term of Office,
Position(s) Held and Length of
Service1 |
|
Principal
Occupation(s) During Past Five Years |
|
Number of
Funds in Fund
Complex Overseen
by Trustees2 |
|
Other Directorships
Held by Trustee |
| Independent Trustees |
| |
|
|
|
|
| Bruce W. Ferris3
(born 1955) |
|
Trustee |
|
Retired (since 2015); President and CEO, Prudential Annuities Distributors, Inc. (2013–2015); Director/Trustee, Advanced Series Trust, The Prudential Series Fund and Prudential’s
Gibraltar Fund, Inc. (2013–2015); Senior Vice President, Prudential Annuities (2008–2015). |
|
16 |
|
None. |
| |
|
|
|
|
| Theda R. Haber3
(born 1954) |
|
Trustee |
|
Adjunct Assistant Professor of Law, UC Hastings College of Law (since 2013); Member of the Board of Directors, Fairholme Trust Company, LLC (2015–2019); Attorney, Law Office of Theda R.
Haber (since 2014); Visiting Professor of Law, UC Davis School of Law (since 2014); Consultant, Haber & Associates LLC (financial services industry), (2012–2017); Advisory Council Chair, Vice Chair, and Member, Advisory Council on
Employee Welfare and Pension Benefit Plans (ERISA Advisory Council), U.S. Department of Labor (2009–2011); Managing Director and General Counsel, BlackRock Institutional Trust Company, N.A. (2009–2011); Deputy Global General Counsel,
Barclays Global Investors (2006–2009); Managing Director, Barclays Global Investors (1998–2006). |
|
16 |
|
None. |
| |
|
|
|
|
| Marshall
Lux3
(born 1960) |
|
Trustee |
|
Senior Advisor, The Boston Consulting Group (since 2014); Senior Partner and Managing Director, The Boston Consulting Group (2009–2014). |
|
16 |
|
None. |
| |
|
|
|
|
| Lisa K.
Polsky3
(born 1956) |
|
Trustee |
|
Board Member, MFA Financial, Inc. (real estate investment trust) (since 2020); Advisor, SMBC Americas (financial services) (since 2020); Senior Risk Advisor, AQR (investment management)
(2016–2019); Senior Risk Advisor, Ultra Capital (venture capital) (2016–2019); Board Member, DB USA Corporation (Deutsche Bank Intermediate Holding Company) (financial services) (since 2016); Chief Risk Officer, CIT Group Inc. (financial
services) (2010–2015); Board Member and Chair of Audit Committee, Piper Jaffray (investment bank) (2007–2016). |
|
16 |
|
None. |
| |
|
|
|
|
| John
Walters3
(born 1962) |
|
Lead
Independent Trustee |
|
Board Member, Amerilife Holdings LLC (insurance distribution) (since 2015); Board Member, Stadion Money Management LLC (investment adviser) (since 2011); President and Chief Operating Officer,
Hartford Life Insurance Company (2000–2010). |
|
16 |
|
Trustee, USAA Mutual Funds Trust, (One registered investment company offering 47 individual funds) (since
2019). |
SUPPLEMENTAL INFORMATION (UNAUDITED)
|
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|
|
| |
|
|
|
|
Name and
Year of Birth |
|
Term of Office,
Position(s) Held and Length of
Service1 |
|
Principal
Occupation(s) During Past Five Years |
|
Number of
Funds in Fund
Complex Overseen
by Trustees2 |
|
Other Directorships
Held by Trustee |
| Interested Trustees |
| |
|
|
|
|
| Dominique Baede4
(born 1970) |
|
Trustee
(Since January 2020) |
|
Vice President, Head of Product, Life, Annuity and Inforce, The Guardian Life Insurance Company of America (since 2019); Managing Director, Product Management Group, AXA Equitable (insurance
company) prior thereto. |
|
16 |
|
None. |
| |
|
|
|
|
| Michael
Ferik4
(born 1972) |
|
Chairman and Trustee
(Since December 2019) |
|
Executive Vice President, Individual Markets, The Guardian Life Insurance Company of America (since 2020); Executive Vice President and Chief Financial Officer, The Guardian Life Insurance
Company of America (2017–2019); Executive Vice President, Individual Markets, The Guardian Life Insurance Company of America prior thereto. |
|
16 |
|
None. |
| 1 |
Except as otherwise noted, each Trustee began service in such capacity in 2016 and serves until his or her successor is
elected and qualified or until his or her resignation, death or removal. The business address of each Trustee is 10 Hudson Yards, New York, New York 10001. |
| 2 |
The Trust currently consists of 16 separate Funds. |
| 3 |
Member of the Audit Committee of the Trust. |
| 4 |
Each of Dominique Baede and Michael Ferik is considered to be an “interested person” of the Trust within the
meaning of the 1940 Act because of their affiliation with The Guardian Life Insurance Company of America and/or its affiliates. |
|
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|
|
|
| |
|
|
| Name and Year of Birth |
|
Position(s) Held and
Length of Service5 |
|
Principal Occupation(s)
During Past Five Years |
| |
|
|
Dominique Baede
(born 1970) |
|
President and Principal Executive Officer (Since January 2020) |
|
Vice President, Head of Product, Life, Annuity and Inforce, The Guardian Life Insurance Company of America (since 2019); Managing Director,
Product Management Group, AXA Equitable (insurance company) prior. |
| |
|
|
| John H. Walter
(born 1962) |
|
Senior Vice President, Treasurer, and Principal Financial and Accounting Officer |
|
Vice President, Director of Finance, Corporate Finance, The Guardian Life Insurance Company of America. |
| |
|
|
| Harris Oliner
(born 1971) |
|
Senior Vice President and Secretary |
|
Senior Vice President, Corporate Secretary, The Guardian Life Insurance Company of America (since 2015); Senior Vice President, Deputy
General Counsel, Corporate Secretary, Voya Financial, Inc. prior thereto. |
| |
|
|
| Richard T. Potter
(born 1954) |
|
Senior Vice President and Chief Legal Officer |
|
Vice President and Equity Counsel, The Guardian Life Insurance Company of America. |
| |
|
|
| Philip Stack
(born 1964) |
|
Chief Compliance Officer
(Since September 2017) |
|
Second Vice President, Mutual Fund Chief Compliance Officer, The Guardian Life Insurance Company of America (since 2017); Executive Director,
Chief Compliance Officer, Morgan Stanley (2015–2017); Vice President, Morgan Stanley prior thereto. |
| |
|
|
| Brian Hagan
(born 1984) |
|
Anti-Money Laundering Officer (Since March 2019) |
|
Assistant Vice President (since 2019), Anti-Money Laundering Compliance, The Guardian Life Insurance Company of America/Park Avenue
Securities LLC; Vice President, Head of Financial Intelligence Unit, Brown Brothers Harriman & Co. (2014–2019); Assistant Vice President, AML Compliance Manager, JPMorgan Chase & Co. (2011–2014). |
| |
|
|
| Kathleen M. Moynihan
(born 1966) |
|
Senior Counsel |
|
Second Vice President, Counsel (since 2019), The Guardian Life Insurance Company of America; Senior Counsel prior thereto. |
| |
|
|
| Maria Nydia Morrison
(born 1958) |
|
Fund Controller |
|
Mutual Fund Controller, The Guardian Life Insurance Company of America (since 2015); Chief Financial Officer/Assistant Operating Officer, St.
Francis De Assisi Montessori School (Plaridel, Bulacan), Inc. (Philippines) prior thereto. |
| |
|
|
| Sonya L. Crosswell
(born 1977) |
|
Assistant Secretary |
|
Assistant Vice President, Assistant Corporate Secretary and Secretary Pro Tem, The Guardian Life Insurance Company of America. |
| 5 |
Unless otherwise indicated, the Officers each began service in such capacity in 2016 and hold office for an indefinite
term or until their successors shall have been elected and qualified. The business address of each Officer is 10 Hudson Yards, New York, New York 10001. |
SUPPLEMENTAL INFORMATION (UNAUDITED)
The Statement of Additional Information (“SAI”) includes additional information about
the Trust’s Trustees and Officers and is available, without charge, upon request by calling toll-free 1-888-GUARDIAN (1-888-482-7342) or by visiting our website at http://guardianvpt.onlineprospectus.net/GuardianVPT/Prospectuses.
Portfolio Holdings and Proxy Voting Procedures
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year as an exhibit
to its reports on Form N-PORT. The Fund’s Form N-PORT reports are available on the Securities and Exchange Commission’s website at https://www.sec.gov. The
Fund’s Form N-PORT information is also available, without charge, upon request, by calling toll-free 1-888-GUARDIAN (1-888-482-7342) or by visiting our website at http://guardianvpt.onlineprospectus.net/GuardianVPT/
Prospectuses.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio
securities is included in the SAI. The SAI and information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 may be
obtained (i) without charge, upon request, by calling toll-free 1-888-GUARDIAN (1-888-482-7342) or by visiting our website at http://guardianvpt.onlineprospectus.net/
GuardianVPT/Prospectuses; and (ii) on the Securities and Exchange Commission’s website at
https://www.sec.gov.
This report is transmitted to shareholders only. It is not authorized for use as an offer of sale or a solicitation of an offer to buy shares of the Fund unless
accompanied or preceded by the Fund’s current prospectus. Past performance results shown in this report should not be considered a representation of future performance. Investment returns and principal value of shares will fluctuate so that
shares, when redeemed, may be worth more or less than their original cost. Statements and other information herein are as dated and are subject to change.
The Guardian Life Insurance Company of America New York, NY 10001-2159
PUB8174
Guardian Variable
Products Trust
2019
Annual Report
All Data as of December 31, 2019
Guardian Growth &
Income VIP Fund
Important Notice
Beginning on
January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund’s shareholder reports will no longer be sent by mail from The Guardian Insurance & Annuity Company, Inc.
(“GIAC”). Instead, GIAC will mail you a notice when copies of the shareholder reports are made available on a website. You will be notified by mail each time a report is posted and provided with a website link to access the report.
If you have already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. If you have not yet
elected electronic delivery, at any time, you may elect to receive the Fund’s shareholder reports and certain other communications from GIAC electronically, by going to www.guardianlife.com and registering for
e-delivery.
You may instead elect to receive all future shareholder reports in paper free of charge. If you wish to receive
paper copies of your shareholder reports, please call GIAC’s Customer Service Office Contact Center at 1-888-GUARDIAN (1-888-482-7342). Your election to receive reports in paper will apply to all the underlying funds available.
|
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| Not FDIC insured. May lose value. No bank guarantee. |
|
www.guardianlife.com |
TABLE OF CONTENTS
Guardian Growth & Income VIP Fund
Except as otherwise specifically stated, all information, including portfolio security positions, is as of
December 31, 2019. The views expressed in the Fund Commentary are those of the Fund’s portfolio manager(s) as of the date of this report and are subject to change without notice. They do not necessarily represent the views of Park Avenue
Institutional Advisers LLC or a sub-adviser. The Fund Commentary may contain some forward-looking statements providing expectations or forecasts of future events as of the date of this report; they do not
necessarily relate to historical or current facts. There can be no guarantee that any forward-looking statement will be realized. We undertake no obligation to update forward-looking statements, whether as a result of new information, future events,
or otherwise. Any discussions of specific securities should not be considered a recommendation to buy or sell those securities. Fund holdings will vary. Information contained herein has been obtained from sources believed reliable, but is not
guaranteed.
GUARDIAN GROWTH & INCOME VIP FUND
FUND COMMENTARY OF ALLIANCEBERNSTEIN L.P. (unaudited)
Highlights
| • |
|
Guardian Growth & Income VIP Fund returned 23.96%, underperforming the Russell 1000® Value Index1
(the “Index”), which is the Fund’s benchmark, for the 12 months ended December 31, 2019. Stock selection drove the majority of the Fund’s underperformance relative to the Index for the period, especially in the health care
sector. |
| • |
|
The Index returned 26.54% for the year. For the period, growth stocks generally outperformed their value counterparts and high beta stocks outperformed low beta stocks. |
Market Overview
U.S. markets advanced in 2019, as it looked increasingly
likely that a phase-one trade deal between the U.S. and China was on the horizon and as monetary policy remained supportive. While investors remained concerned about slow economic and corporate profit growth
and elevated equity valuations, there were signs late in the year that growth might be stabilizing in the U.S. and globally. The Index ended the year up 26.54%.
Capital markets were supported by accommodative monetary policy put in place by the U.S. Federal Reserve and the world’s central banks to offset the effects of the
ongoing trade war and counteract restrained business spending and rising tariffs. Towards the end of the period, continued improvement in industrial survey data suggested a stabilization in the manufacturing sector, as well as moderating, but
positive earnings growth.
After months of fitful negotiation, the U.S. and China appeared to reach a preliminary phase-one
trade agreement. Although the details remain unclear, the announcement of an immediate elimination, or reduction, of many tariffs was greeted with relief by global equity markets. Ongoing negotiations are expected to lead to a signed trade deal
early in 2020. As the year concluded, diminishing trade war headwinds, increased industrial production and favorable monetary policy drove U.S. and global equity markets higher.
Portfolio Review
While the
Fund’s portfolio continues to hold shares of high quality companies with strong fundamental prospects, the strong risk-on market resulted in the Fund underperforming the Index due to the defensive nature
of its holdings.
Stock selection within the health care sector was particularly challenging in 2019 as political risk from the upcoming 2020 U.S. presidential
election resulted in broad sector underperformance and investor concerns grew throughout the year due to possible implications of health care reform took hold. While we believe there will be reform, we do not believe the “healthcare for
all” plan offered by the Democratic Party candidates will become law. We believe that private insurance companies will remain relevant in the marketplace. As such, the Fund continues to overweight the sector as company fundamentals remain
strong for our health care positions and trade at attractive valuations.
Outlook
Strong absolute market returns without corresponding fundamental profit growth concern us, especially with many valuation measures at or above prior market peaks. In
addition to uncertainty surrounding U.S.-China trade negotiations, the 2020 U.S. presidential campaign and impeachment proceedings may sour investor sentiment and cloud the planning horizon for corporate capital expenditure. Given this backdrop, the
markets could become more challenging, creating opportunities for those willing to be liquidity providers in times of stress.
We continue to evaluate at the company
level, watching for signs of precipitous demand change. In terms of late-cycle dynamics, we rigorously assess companies’ abilities to manage cost pressures, such as labor. We seek to own attractively valued companies that are good businesses
and exhibit signs of improving success. The Fund’s portfolio’s holdings have attractive fundamentals that are consistent with our philosophy — high free-cash-flow yields, low earnings variability and low leverage. These well-managed
companies deploy capital wisely, allowing them to grow dividends and enhance the long-term value potential of their shares.
| 1 |
The Russell 1000® Value Index (the “Index”) is an
unmanaged market-capitalization-weighted index that measures the performance of those companies in the Russell 1000® Index (which consists
of the 1,000 largest U.S. companies based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values. Index results assume the
reinvestment of dividends paid on the stocks constituting the Index. You may not invest in the Index, and, unlike the Fund, the Index does not incur fees and expenses. Russell Investment Group is the source and owner of the trademarks, service marks
and copyrights related to the Russell Indexes. Russell® is a trademark of Russell Investment Group. |
GUARDIAN GROWTH & INCOME VIP FUND
Funds in the Guardian Variable Products Trust are sold by prospectus only. You should carefully
consider the investment objectives, risks, charges and expenses of the Funds before making an investment decision. The prospectus contains this and other important information. Please read it carefully before investing or sending money. Please visit
our website at http://guardianvpt.onlineprospectus.net/GuardianVPT/Prospectuses or to obtain a printed copy, call 1-888-GUARDIAN (1-888-482-7342).
As with all mutual funds, the value of an investment in the
Fund could decline, and you could lose money. Diversification does not guarantee profit or protect against loss, and there can be no assurance that the Fund will achieve its investment objective. The Fund invests primarily in equity securities and
therefore exposes you to the general risks of investing in stock markets. Investing in large-capitalization companies involves risks such as having low growth rates, and slow responsiveness to competitive challenges or opportunities than in the case
of smaller companies. Overweighting investments in certain sectors or industries increases the risk of loss due to general declines in the prices of stocks in those sectors or industries. Investing in a more limited number of issuers and sectors can
be subject to greater market fluctuation. Value stocks may not realize their perceived value and during certain periods the Fund may underperform other equity funds that employ a different style. International investing involves special risks, which
include changes in currency rates, foreign taxation and differences in auditing standards and securities regulations, political uncertainty and greater volatility. Foreign securities are subject to political, regulatory, economic, and exchange-rate
risks not present in domestic investments. Any discussions of specific securities should not be considered a recommendation to buy or sell those securities. Fund holdings will vary.
GUARDIAN GROWTH & INCOME VIP FUND
Fund Characteristics (unaudited)
|
|
|
| Total Net Assets: $ 187,172,481 |
|
|
|
| |
|
Sector Allocation1 As of
December 31, 2019 |
|
|
| |
| Top Ten Holdings2 As of December 31, 2019 |
|
|
|
|
|
| |
|
| Holding |
|
% of Total
Net Assets |
|
| Berkshire Hathaway, Inc., Class B |
|
|
3.89% |
|
| Pfizer, Inc. |
|
|
3.86% |
|
| Verizon Communications, Inc. |
|
|
3.81% |
|
| Walmart, Inc. |
|
|
3.66% |
|
| JPMorgan Chase & Co. |
|
|
3.50% |
|
| Comcast Corp., Class A |
|
|
3.21% |
|
| Roche Holding AG, ADR |
|
|
3.18% |
|
| Raytheon Co. |
|
|
3.01% |
|
| Wells Fargo & Co. |
|
|
2.89% |
|
| The Allstate Corp. |
|
|
2.72% |
|
| Total |
|
|
33.73% |
|
| 1 |
The Fund’s holdings are allocated to each sector based on the MSCI Global Industry Classification Standard (GICS®). Cash includes short-term investments and net other assets and liabilities. |
| 2 |
Portfolio holdings are subject to change and should not be considered a recommendation to buy or sell individual
securities. |
GUARDIAN GROWTH & INCOME VIP FUND
Fund Performance (unaudited)
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| Average Annual Total Returns
As of December 31, 2019 |
|
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| |
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| |
|
Inception Date |
|
|
1 Year |
|
|
5 Year |
|
|
10 Year |
|
|
Since Inception |
|
| Guardian Growth & Income VIP Fund |
|
|
9/1/2016 |
|
|
|
23.96% |
|
|
|
— |
|
|
|
— |
|
|
|
12.11% |
|
| Russell 1000® Value Index |
|
|
|
|
|
|
26.54% |
|
|
|
— |
|
|
|
— |
|
|
|
10.78% |
|
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| |
|
Results of a Hypothetical $10,000 Investment As of December 31,
2019 |
|
The chart above shows the performance of a hypothetical $10,000 investment made on inception date in Guardian Growth & Income VIP
Fund and the Russell 1000® Value Index. Index returns do not include the fees and expenses of the Fund, but do include reinvestment of dividends, if any.
Performance quoted represents past performance and does not guarantee or predict future results. Investment return and principal value will fluctuate, so shares, when
redeemed, may be worth more or less than their original cost. The Fund’s fees and expenses are detailed in the Financial Highlights section of this report. Fees and expenses are factored into the net asset value of Fund shares and any
performance numbers we release. Total return figures include the effect of expense limitations in effect during the periods shown, if applicable; without such limitations, the performance shown would have been lower. Performance results assume the
reinvestment of dividends and capital gains. The return figures shown do not reflect the deduction of taxes that a contract owner/policyholder may pay on redemption units. The actual total returns for owners of variable annuity contracts or variable
life insurance policies that provide for investment in the Fund will be lower to reflect separate account and contract/policy charges. Current and month-end performance information, which may be lower or
higher than that cited, is available by calling 1-888-GUARDIAN
(1-888-482-7342) and is periodically updated on our website: http://guardianlife.com.
UNDERSTANDING YOUR FUND’S EXPENSES (UNAUDITED)
By investing in the Fund, you incur two types of costs: (1) transaction costs and (2) ongoing costs, including,
as applicable, investment advisory fees, distribution and/or service (12b-1) fees and other Fund expenses. The example below is intended to help you understand your ongoing costs (in dollars) of investing in
the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the
beginning of the period and held for the entire period from July 1, 2019 to December 31, 2019. The table below shows the Fund’s expenses in two ways:
Expenses based on actual return
This section of the table provides
information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for
example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the section under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this
period.
Expenses based on hypothetical 5% return for comparison purposes
This section of the table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund with the cost of investing in other mutual funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the
other funds.
Note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads), redemption fees, or exchange fees. Therefore the second section is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. If these transactional costs were
included, your costs would have been higher. Charges and expenses at the insurance company separate account level are not reflected in the table.
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Beginning
Account Value
7/1/19 |
|
Ending
Account Value
12/31/19 |
|
|
Expenses Paid
During Period* 7/1/19-12/31/19 |
|
|
Expense Ratio
During Period
7/1/19-12/31/19 |
|
| Based on Actual Return |
|
$1,000.00 |
|
|
$1,087.70 |
|
|
|
$5.31 |
|
|
|
1.01% |
|
| Based on Hypothetical Return (5% Return Before Expenses) |
|
$1,000.00 |
|
|
$1,020.11 |
|
|
|
$5.14 |
|
|
|
1.01% |
|
| * |
Expenses are equal to the Fund’s annualized expense ratio as indicated, multiplied by the average account value over
the period, multiplied by 184/365 (to reflect the one-half year period). |
SCHEDULE OF INVESTMENTS — GUARDIAN GROWTH & INCOME VIP FUND
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Shares |
|
|
Value |
|
| Common Stocks – 95.9% |
|
| |
| Aerospace & Defense – 4.1% |
|
| |
|
|
| Curtiss-Wright Corp. |
|
|
7,330 |
|
|
$ |
1,032,724 |
|
| |
|
|
| Hexcel Corp. |
|
|
14,256 |
|
|
|
1,045,107 |
|
| |
|
|
| Raytheon Co. |
|
|
25,613 |
|
|
|
5,628,201 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
7,706,032 |
|
| Airlines – 2.3% |
|
| |
|
|
| Alaska Air Group, Inc. |
|
|
15,338 |
|
|
|
1,039,150 |
|
| |
|
|
| Delta Air Lines, Inc. |
|
|
23,794 |
|
|
|
1,391,473 |
|
| |
|
|
| Southwest Airlines Co. |
|
|
35,039 |
|
|
|
1,891,405 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
4,322,028 |
|
| Auto Components – 1.7% |
|
| |
|
|
| BorgWarner, Inc. |
|
|
43,364 |
|
|
|
1,881,130 |
|
| |
|
|
| Gentex Corp. |
|
|
45,406 |
|
|
|
1,315,866 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
3,196,996 |
|
| Banks – 9.0% |
|
| |
|
|
| Citigroup, Inc. |
|
|
60,900 |
|
|
|
4,865,301 |
|
| |
|
|
| JPMorgan Chase & Co. |
|
|
47,048 |
|
|
|
6,558,491 |
|
| |
|
|
| Wells Fargo & Co. |
|
|
100,498 |
|
|
|
5,406,793 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
16,830,585 |
|
| Biotechnology – 4.0% |
|
| |
|
|
| Alexion Pharmaceuticals, Inc.(1) |
|
|
21,426 |
|
|
|
2,317,222 |
|
| |
|
|
| Amgen, Inc. |
|
|
7,659 |
|
|
|
1,846,355 |
|
| |
|
|
| Gilead Sciences, Inc. |
|
|
51,191 |
|
|
|
3,326,391 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
7,489,968 |
|
| Capital Markets – 2.8% |
|
| |
|
|
| Northern Trust Corp. |
|
|
17,430 |
|
|
|
1,851,763 |
|
| |
|
|
| The Goldman Sachs Group, Inc. |
|
|
15,054 |
|
|
|
3,461,366 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
5,313,129 |
|
| Chemicals – 0.6% |
|
| |
|
|
| LyondellBasell Industries N.V., Class A |
|
|
10,802 |
|
|
|
1,020,573 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
1,020,573 |
|
| Communications Equipment – 2.5% |
|
| |
|
|
| Cisco Systems, Inc. |
|
|
49,901 |
|
|
|
2,393,252 |
|
| |
|
|
| F5 Networks, Inc.(1) |
|
|
15,861 |
|
|
|
2,214,989 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
4,608,241 |
|
| Construction & Engineering – 0.8% |
|
| |
|
|
| EMCOR Group, Inc. |
|
|
16,688 |
|
|
|
1,440,174 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
1,440,174 |
|
| Consumer Finance – 2.6% |
|
| |
|
|
| Capital One Financial Corp. |
|
|
47,262 |
|
|
|
4,863,732 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
4,863,732 |
|
| Diversified Financial Services – 3.9% |
|
| |
|
|
| Berkshire Hathaway, Inc.,
Class B(1) |
|
|
32,137 |
|
|
|
7,279,030 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
7,279,030 |
|
| Diversified Telecommunication Services – 4.3% |
|
| |
|
|
| AT&T, Inc. |
|
|
25,002 |
|
|
|
977,078 |
|
| |
|
|
| Verizon Communications, Inc. |
|
|
116,184 |
|
|
|
7,133,698 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
8,110,776 |
|
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Shares |
|
|
Value |
|
| Electrical Equipment – 0.5% |
|
| |
|
|
| Hubbell, Inc. |
|
|
6,503 |
|
|
$ |
961,273 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
961,273 |
|
| Electronic Equipment, Instruments & Components – 1.9% |
|
| |
|
|
| Dolby Laboratories, Inc., Class A |
|
|
37,585 |
|
|
|
2,585,848 |
|
| |
|
|
| Littelfuse, Inc. |
|
|
5,389 |
|
|
|
1,030,916 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
3,616,764 |
|
| Energy Equipment & Services – 0.3% |
|
| |
|
|
| Dril-Quip, Inc.(1) |
|
|
13,760 |
|
|
|
645,482 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
645,482 |
|
| Equity Real Estate Investment – 2.8% |
|
| |
|
|
| Mid-America
Apartment Communities, Inc. REIT |
|
|
9,930 |
|
|
|
1,309,370 |
|
| |
|
|
| Regency Centers Corp. REIT |
|
|
62,610 |
|
|
|
3,950,065 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
5,259,435 |
|
| Food & Staples Retailing – 3.7% |
|
| |
|
|
| Walmart, Inc. |
|
|
57,589 |
|
|
|
6,843,877 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
6,843,877 |
|
| Health Care Providers & Services – 5.2% |
|
| |
|
|
| Anthem, Inc. |
|
|
10,071 |
|
|
|
3,041,744 |
|
| |
|
|
| Cigna Corp. |
|
|
19,052 |
|
|
|
3,895,943 |
|
| |
|
|
| Quest Diagnostics, Inc. |
|
|
26,592 |
|
|
|
2,839,760 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
9,777,447 |
|
| Household Durables – 2.3% |
|
| |
|
|
| D.R. Horton, Inc. |
|
|
55,433 |
|
|
|
2,924,091 |
|
| |
|
|
| Garmin Ltd. |
|
|
14,252 |
|
|
|
1,390,425 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
4,314,516 |
|
| Insurance – 6.4% |
|
| |
|
|
| Aflac, Inc. |
|
|
35,112 |
|
|
|
1,857,425 |
|
| |
|
|
| Fidelity National Financial, Inc. |
|
|
57,564 |
|
|
|
2,610,527 |
|
| |
|
|
| Reinsurance Group of America, Inc. |
|
|
14,642 |
|
|
|
2,387,524 |
|
| |
|
|
| The Allstate Corp. |
|
|
45,239 |
|
|
|
5,087,126 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
11,942,602 |
|
| Internet & Direct Marketing Retail – 0.4% |
|
| |
|
|
| Expedia Group, Inc. |
|
|
7,127 |
|
|
|
770,714 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
770,714 |
|
| IT Services – 2.7% |
|
| |
|
|
| Akamai Technologies, Inc.(1) |
|
|
17,925 |
|
|
|
1,548,362 |
|
| |
|
|
| Cognizant Technology Solutions Corp.,
Class A |
|
|
24,873 |
|
|
|
1,542,623 |
|
| |
|
|
| Leidos Holdings, Inc. |
|
|
7,933 |
|
|
|
776,561 |
|
| |
|
|
| MAXIMUS, Inc. |
|
|
14,903 |
|
|
|
1,108,634 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
4,976,180 |
|
| Machinery – 2.3% |
|
| |
|
|
| Altra Industrial Motion Corp. |
|
|
26,080 |
|
|
|
944,357 |
|
| |
|
|
| Crane Co. |
|
|
28,446 |
|
|
|
2,457,165 |
|
| |
|
|
| Parker-Hannifin Corp. |
|
|
4,668 |
|
|
|
960,768 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
4,362,290 |
|
| Media – 5.0% |
|
| |
|
|
| Comcast Corp., Class A |
|
|
133,837 |
|
|
|
6,018,650 |
|
| |
|
|
| Discovery, Inc., Class A(1) |
|
|
99,947 |
|
|
|
3,272,265 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
9,290,915 |
|
|
|
|
|
|
| 6 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
SCHEDULE OF INVESTMENTS — GUARDIAN GROWTH & INCOME VIP FUND
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Shares |
|
|
Value |
|
| Metals & Mining – 0.3% |
|
| |
|
|
| BHP Group Ltd., ADR |
|
|
10,450 |
|
|
$ |
571,719 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
571,719 |
|
| Oil, Gas & Consumable Fuels – 7.2% |
|
| |
|
|
| Chevron Corp. |
|
|
11,171 |
|
|
|
1,346,217 |
|
| |
|
|
| ConocoPhillips |
|
|
73,301 |
|
|
|
4,766,764 |
|
| |
|
|
| Exxon Mobil Corp. |
|
|
36,337 |
|
|
|
2,535,596 |
|
| |
|
|
| Phillips 66 |
|
|
44,089 |
|
|
|
4,911,955 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
13,560,532 |
|
| Pharmaceuticals – 7.0% |
|
| |
|
|
| Pfizer, Inc. |
|
|
184,378 |
|
|
|
7,223,930 |
|
| |
|
|
| Roche Holding AG, ADR |
|
|
146,360 |
|
|
|
5,950,998 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
13,174,928 |
|
| Professional Services – 0.8% |
|
| |
|
|
| Robert Half International, Inc. |
|
|
22,405 |
|
|
|
1,414,876 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
1,414,876 |
|
| Real Estate Management & Development – 2.2% |
|
| |
|
|
| CBRE Group, Inc., Class A(1) |
|
|
65,562 |
|
|
|
4,018,295 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
4,018,295 |
|
| Road & Rail – 1.3% |
|
| |
|
|
| Kansas City Southern |
|
|
6,987 |
|
|
|
1,070,129 |
|
| |
|
|
| Norfolk Southern Corp. |
|
|
7,337 |
|
|
|
1,424,332 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
2,494,461 |
|
| Specialty Retail – 2.5% |
|
| |
|
|
| Advance Auto Parts, Inc. |
|
|
11,862 |
|
|
|
1,899,818 |
|
| |
|
|
| Murphy USA, Inc.(1) |
|
|
23,733 |
|
|
|
2,776,761 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
4,676,579 |
|
| Technology Hardware, Storage & Peripherals – 0.6% |
|
| |
|
|
| Apple, Inc. |
|
|
3,889 |
|
|
|
1,142,005 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
1,142,005 |
|
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Shares |
|
|
Value |
|
| Tobacco – 1.9% |
|
| |
|
|
| Philip Morris International, Inc. |
|
|
41,112 |
|
|
$ |
3,498,220 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
3,498,220 |
|
| |
|
Total Common Stocks
(Cost $157,052,995) |
|
|
|
179,494,374 |
|
|
|
|
|
|
|
|
|
|
| |
|
Principal
Amount |
|
|
Value |
|
| Short–Term Investment – 4.2% |
|
| |
| Repurchase Agreements – 4.2% |
|
| |
|
|
| Fixed Income
Clearing Corp., 0.12%, dated 12/31/2019, proceeds at maturity value of $7,790,052, due 1/2/2020(2) |
|
$ |
7,790,000 |
|
|
|
7,790,000 |
|
| |
|
Total Repurchase Agreements
(Cost $7,790,000) |
|
|
|
7,790,000 |
|
| |
|
Total Investments – 100.1%
(Cost $164,842,995) |
|
|
|
187,284,374 |
|
| |
|
| Liabilities in excess of other assets – (0.1)% |
|
|
|
(111,893 |
) |
| |
|
| Total Net Assets – 100.0% |
|
|
$ |
187,172,481 |
|
| (1) |
Non–income–producing security. |
| (2) |
The table below presents collateral for repurchase agreements. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Security |
|
Coupon |
|
|
Maturity
Date |
|
|
Principal
Amount |
|
|
Value |
|
| U.S. Treasury Note |
|
|
2.75% |
|
|
|
9/15/2021 |
|
|
$ |
7,740,000 |
|
|
$ |
7,950,543 |
|
Legend:
ADR — American
Depositary Receipt
REIT — Real Estate Investment Trust
The following is a summary of the inputs used as of December 31, 2019 in valuing the Fund’s investments. For
more information on valuation inputs, please refer to Note 2a of the accompanying Notes to Financial Statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Valuation Inputs |
|
|
|
|
| Investments in Securities |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
| Common Stocks |
|
$ |
179,494,374 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
179,494,374 |
|
| Repurchase Agreements |
|
|
— |
|
|
|
7,790,000 |
|
|
|
— |
|
|
|
7,790,000 |
|
| Total |
|
$ |
179,494,374 |
|
|
$ |
7,790,000 |
|
|
$ |
— |
|
|
$ |
187,284,374 |
|
|
|
|
|
|
| The accompanying notes are an integral part of these financial statements. |
|
|
|
7 |
FINANCIAL INFORMATION — GUARDIAN GROWTH & INCOME VIP FUND
|
|
|
|
|
|
Statement of Assets and Liabilities As of December 31, 2019 |
|
|
|
| Assets |
|
|
|
|
| |
|
| Investments, at value |
|
$ |
187,284,374 |
|
| |
|
| Cash |
|
|
34,178 |
|
| |
|
| Dividends/interest receivable |
|
|
127,717 |
|
| |
|
| Foreign tax reclaims receivable |
|
|
32,192 |
|
| |
|
| Receivable for fund shares subscribed |
|
|
12,380 |
|
| |
|
| Reimbursement receivable from adviser |
|
|
616 |
|
| |
|
| Prepaid expenses |
|
|
8,666 |
|
| |
|
|
|
|
| |
|
| Total Assets |
|
|
187,500,123 |
|
| |
|
|
|
|
| |
|
| Liabilities |
|
|
|
|
| |
|
| Payable for fund shares redeemed |
|
|
118,166 |
|
| |
|
| Investment advisory fees payable |
|
|
99,463 |
|
| |
|
| Distribution fees payable |
|
|
39,674 |
|
| |
|
| Accrued audit fees |
|
|
22,105 |
|
| |
|
| Accrued custodian and accounting fees |
|
|
10,353 |
|
| |
|
| Accrued trustees’ and officers’
fees |
|
|
1,131 |
|
| |
|
| Accrued expenses and other liabilities |
|
|
36,750 |
|
| |
|
|
|
|
| |
|
| Total Liabilities |
|
|
327,642 |
|
| |
|
|
|
|
| |
|
| Total Net Assets |
|
$ |
187,172,481 |
|
| |
|
|
|
|
| |
|
| Net Assets Consist of: |
|
|
|
|
| |
|
| Paid-in
capital |
|
$ |
154,471,652 |
|
| |
|
| Distributable earnings |
|
|
32,700,829 |
|
| |
|
|
|
|
| |
|
| Total Net Assets |
|
$ |
187,172,481 |
|
| |
|
|
|
|
| Investments, at Cost |
|
$ |
164,842,995 |
|
| |
|
|
|
|
| |
|
| Pricing of Shares |
|
|
|
|
| |
|
| Shares of Beneficial Interest Outstanding with No
Par Value |
|
|
12,784,355 |
|
| |
|
| Net Asset Value Per Share |
|
|
$14.64 |
|
| |
|
|
|
|
|
|
|
|
|
|
Statement of Operations For the Year Ended December 31, 2019 |
|
|
|
| Investment Income |
|
|
|
|
| |
|
| Dividends |
|
$ |
3,689,820 |
|
| |
|
| Interest |
|
|
32,073 |
|
| |
|
| Withholding taxes on foreign dividends |
|
|
(24,144 |
) |
| |
|
|
|
|
| |
|
| Total Investment Income |
|
|
3,697,749 |
|
| |
|
|
|
|
| |
|
| Expenses |
|
|
|
|
| |
|
| Investment advisory fees |
|
|
1,146,179 |
|
| |
|
| Distribution fees |
|
|
456,741 |
|
| |
|
| Trustees’ and officers’ fees |
|
|
74,366 |
|
| |
|
| Professional fees |
|
|
67,798 |
|
| |
|
| Administrative fees |
|
|
47,460 |
|
| |
|
| Custodian and accounting fees |
|
|
44,935 |
|
| |
|
| Shareholder reports |
|
|
25,639 |
|
| |
|
| Transfer agent fees |
|
|
19,525 |
|
| |
|
| Other expenses |
|
|
21,576 |
|
| |
|
|
|
|
| |
|
| Total Expenses |
|
|
1,904,219 |
|
| |
|
| Less: Fees waived |
|
|
(58,984 |
) |
| |
|
|
|
|
| |
|
| Total Expenses, Net |
|
|
1,845,235 |
|
| |
|
|
|
|
| |
|
| Net Investment Income/(Loss) |
|
|
1,852,514 |
|
| |
|
|
|
|
| |
|
| Realized Gain/(Loss) and Change in Unrealized
Appreciation/(Depreciation) on Investments |
|
|
|
|
| |
|
| Net realized gain/(loss) from investments |
|
|
2,160,236 |
|
| |
|
| Net change in unrealized appreciation/(depreciation)
on investments |
|
|
34,541,886 |
|
| |
|
|
|
|
| |
|
| Net Gain on Investments |
|
|
36,702,122 |
|
| |
|
|
|
|
| |
|
| Net Increase in Net Assets Resulting From
Operations |
|
$ |
38,554,636 |
|
| |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| 8 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
FINANCIAL INFORMATION — GUARDIAN GROWTH & INCOME VIP FUND
|
|
|
|
|
|
|
|
|
|
Statements of Changes in Net Assets |
|
|
|
|
|
|
| |
|
|
| |
|
For the
Year Ended
12/31/19 |
|
|
For the
Year Ended
12/31/18 |
|
| |
|
|
|
| Operations |
|
|
|
|
|
|
|
|
| |
|
|
| Net investment income/(loss) |
|
$ |
1,852,514 |
|
|
$ |
1,336,466 |
|
| |
|
|
| Net realized gain/(loss) from investments |
|
|
2,160,236 |
|
|
|
3,393,124 |
|
| |
|
|
| Net change in unrealized appreciation/(depreciation)
on investments |
|
|
34,541,886 |
|
|
|
(13,699,311 |
) |
| |
|
|
|
|
|
|
|
|
| |
|
|
| Net Increase/(Decrease) in Net Assets Resulting
from Operations |
|
|
38,554,636 |
|
|
|
(8,969,721 |
) |
| |
|
|
|
|
|
|
|
|
| |
|
|
| Capital Share Transactions |
|
|
|
|
|
|
|
|
| |
|
|
| Proceeds from sales of shares |
|
|
8,957,181 |
|
|
|
183,635,093 |
|
| |
|
|
| Cost of shares redeemed |
|
|
(25,200,352 |
) |
|
|
(20,346,714 |
) |
| |
|
|
|
|
|
|
|
|
| |
|
|
| Net Increase/(Decrease) in Net Assets Resulting
from Capital Share Transactions |
|
|
(16,243,171 |
) |
|
|
163,288,379 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| Net Increase in Net Assets |
|
|
22,311,465 |
|
|
|
154,318,658 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| Net Assets |
|
|
|
|
|
|
|
|
| |
|
|
| Beginning of year |
|
|
164,861,016 |
|
|
|
10,542,358 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| End of year |
|
$ |
187,172,481 |
|
|
$ |
164,861,016 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| Other Information: |
|
|
|
|
|
|
|
|
| |
|
|
| Shares |
|
|
|
|
|
|
|
|
| |
|
|
| Sold |
|
|
683,179 |
|
|
|
14,707,417 |
|
| |
|
|
| Redeemed |
|
|
(1,860,190 |
) |
|
|
(1,566,707 |
) |
| |
|
|
|
|
|
|
|
|
| |
|
|
| Net Increase/(Decrease) |
|
|
(1,177,011 |
) |
|
|
13,140,710 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| The accompanying notes are an integral part of these financial statements. |
|
|
|
9 |
FINANCIAL INFORMATION — GUARDIAN GROWTH & INCOME VIP FUND
The Financial Highlights table is intended to help you understand the Fund’s
financial performance for the past five years (or, if shorter, the period since inception). Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned
(or lost) on an investment in the Fund.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Financial
Highlights |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Per Share Operating Performance |
|
|
|
|
| |
|
Net Asset Value,
Beginning of
Period |
|
|
Net Investment
Income(1) |
|
|
Net Realized
and Unrealized
Gain/(Loss) |
|
|
Total
Operations |
|
|
Net Asset
Value, End of
Period |
|
|
Total
Return(2) |
|
| |
|
|
|
|
|
|
| Year Ended 12/31/19 |
|
$ |
11.81 |
|
|
$ |
0.14 |
|
|
$ |
2.69 |
|
|
$ |
2.83 |
|
|
$ |
14.64 |
|
|
|
23.96% |
|
| |
|
|
|
|
|
|
| Year Ended 12/31/18 |
|
|
12.85 |
|
|
|
0.12 |
|
|
|
(1.16 |
) |
|
|
(1.04 |
) |
|
|
11.81 |
|
|
|
(8.09)% |
|
| |
|
|
|
|
|
|
| Year Ended 12/31/17 |
|
|
10.70 |
|
|
|
0.09 |
|
|
|
2.06 |
|
|
|
2.15 |
|
|
|
12.85 |
|
|
|
20.09% |
|
| |
|
|
|
|
|
|
| Period Ended
12/31/16(4) |
|
|
10.00 |
|
|
|
0.04 |
|
|
|
0.66 |
|
|
|
0.70 |
|
|
|
10.70 |
|
|
|
7.00% |
(5) |
|
|
|
|
|
| 10 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
FINANCIAL INFORMATION — GUARDIAN GROWTH & INCOME VIP FUND
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Ratios/Supplemental Data |
|
Net Assets, End
of Period (000s) |
|
|
Net Ratio of
Expenses to
Average
Net Assets(3) |
|
|
Gross Ratio of
Expenses to
Average Net
Assets |
|
|
Net Ratio of Net
Investment Income
to Average
Net Assets(3) |
|
|
Gross Ratio of Net
Investment Income/
(Loss) to Average
Net Assets |
|
|
Portfolio
Turnover Rate |
|
|
|
|
|
|
|
| $ |
187,172 |
|
|
|
1.01% |
|
|
|
1.04% |
|
|
|
1.01% |
|
|
|
0.98% |
|
|
|
36% |
|
|
|
|
|
|
|
| |
164,861 |
|
|
|
1.01% |
|
|
|
1.08% |
|
|
|
0.94% |
|
|
|
0.87% |
|
|
|
58% |
|
|
|
|
|
|
|
| |
10,542 |
|
|
|
0.98% |
|
|
|
2.04% |
|
|
|
0.81% |
|
|
|
(0.25)% |
|
|
|
85% |
|
|
|
|
|
|
|
| |
9,457 |
|
|
|
0.98% |
(5) |
|
|
3.11% |
(5) |
|
|
1.20% |
(5) |
|
|
(0.93)% |
(5) |
|
|
11% |
(5) |
| (1) |
Calculated based on the average shares outstanding during the period. |
| (2) |
Total returns do not reflect the effects of charges deducted pursuant to the terms of The Guardian Insurance &
Annuity Company, Inc.’s variable contracts. Inclusion of such charges would reduce the total returns for all periods shown. |
| (3) |
Net Ratio of Expenses to Average Net Assets and Net Ratio of Net Investment Income to Average Net Assets include the
effect of fee waivers and expense limitations. |
| (4) |
Commenced operations on September 1, 2016. |
| (5) |
Ratios for periods less than one year have been annualized, except for total return and portfolio turnover rate. For the
period ended December 31, 2016, certain non-recurring fees (i.e., audit fees) are not annualized. |
|
|
|
|
|
| The accompanying notes are an integral part of these financial statements. |
|
|
|
11 |
NOTES TO FINANCIAL STATEMENTS — GUARDIAN GROWTH & INCOME VIP
FUND
December 31, 2019
1.
Organization
Guardian Variable Products Trust (the “Trust”), a Delaware statutory trust organized on January 12, 2016, is registered under the
Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Trust currently has sixteen series. Guardian Growth & Income VIP Fund (the
“Fund”) is a series of the Trust. The Fund is a diversified fund and commenced operations on September 1, 2016. The financial statements for other series of the Trust are presented in separate reports.
The Trust has authorized an unlimited number of shares of beneficial interest with no par value. Shares are bought and sold at closing net asset value (“NAV”).
Shares of the Fund are only sold to certain separate accounts of The Guardian Insurance & Annuity Company, Inc. (“GIAC”) that fund certain variable annuity contracts and variable life insurance policies issued by GIAC. GIAC is a
wholly-owned subsidiary of The Guardian Life Insurance Company of America (“Guardian Life”).
The Fund seeks long-term growth of capital.
2. Significant Accounting Policies
The following is a summary of significant
accounting policies followed by the Fund in the preparation of its financial statements. The Fund follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards
Codification Topic 946 Financial Services — Investment Companies. The following policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements
in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.
a. Investment Valuations Equity securities traded on an exchange other than NASDAQ Stock Market, LLC (“NASDAQ”) are valued at the last reported sale
price on the principal exchange or market on which they are traded; or, if there were no sales that day, at the mean between the closing bid and ask prices. Securities traded on the NASDAQ are generally valued at the NASDAQ official closing price,
which may not be the last sale price. If the NASDAQ official closing price is not available for a security, that security is generally valued at the
mean between the closing bid and ask prices. Repurchase agreements are carried at cost, which approximates fair value (see Note 5d). Foreign securities are valued in the currencies of the markets
in which they trade and then converted to U.S. dollars by the application of foreign exchange rates at the close of the New York Stock Exchange (“NYSE”). Forward foreign currency contracts, if any, are valued at the mean between the bid
and ask rates for the specified time interpolated from rates for proximate time periods. Securities for which market quotations are not readily available or for which market quotations may be considered unreliable are valued at their fair values as
determined in accordance with policies and procedures adopted by the Board of Trustees.
Under the policies and procedures approved by the Board of Trustees, Park
Avenue Institutional Advisers LLC (“Park Avenue”), the Fund’s investment adviser, has established a Fair Valuation Committee to assist the Board of Trustees with the oversight and monitoring of the valuation of the Fund’s
investments. This includes monitoring the appropriateness of fair values based on results of ongoing valuation oversight, including but not limited to consideration of security specific events, market events, and pricing vendor and broker-dealer due
diligence. The Fair Valuation Committee oversees and carries out the policies for the valuation of investments held in the Fund. The Fair Valuation Committee is responsible for discussing and assessing the potential impacts to the fair values on an
ongoing basis, and at least on a quarterly basis with the Board of Trustees.
Securities whose values have been materially affected by events occurring before the
Fund’s valuation time but after the close of the securities’ principal exchange or market may be fair valued in accordance with policies and procedures adopted by the Board of Trustees. In addition, the values of the Fund’s
investments in foreign securities are generally determined by a pricing service using pricing models designed to estimate likely changes in the values of those securities. Certain foreign equity instruments are valued by applying international fair
value factors provided by approved pricing services. The factors seek to adjust the local closing price for movements of local markets post closing, but prior to the time the NAVs are calculated. Valuations reflected in this report are as of the
report date. As a result, changes in valuation due to market events and/or issuer related events after the report date and prior to issuance of the report are not reflected herein.
NOTES TO FINANCIAL STATEMENTS — GUARDIAN GROWTH & INCOME VIP FUND
Various inputs are used in determining the valuation of the Fund’s investments. These inputs are summarized in three
broad levels listed below.
| • |
|
Level 1 — unadjusted inputs using quoted prices in active markets for identical investments. |
| • |
|
Level 2 — other significant observable inputs, including, but not limited to, quoted prices for similar investments, inputs other than quoted prices that are observable for investments (such as interest
rates, prepayment speeds, credit risks, etc.) or other market corroborated inputs. |
| • |
|
Level 3 — significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments) |
Inputs may include price information, volatility statistics, specific and broad credit data, liquidity statistics, and other factors. A financial instrument’s level
within the fair value hierarchy is based on the lowest level of any input; both individually and in aggregate, that is significant to the fair value measurement. However, the determination of what constitutes “observable” requires
significant judgment by the Trust. The Trust considers observable data to be that market data which is readily available, regularly distributed or updated, reliable and verifiable, and provided by independent sources that are actively involved in
the relevant market. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. Changes in valuation techniques may result in transfers into or out of a
financial instrument’s assigned level within the hierarchy.
The FASB requires reporting entities to make disclosures about purchases, sales, issuances and
settlements of Level 3 securities on a gross basis. For the year ended December 31, 2019, there were no transfers into or out of Level 3 of the fair value hierarchy.
In determining a financial instrument’s placement within the hierarchy, the Trust separates the Fund’s investment portfolio into two categories: investments
and derivatives (e.g., futures). A summary of inputs used to value the Fund’s assets and liabilities carried at fair value as of December 31, 2019 is included in the Schedule of Investments.
Investments Investments whose values are based on quoted market prices in active markets, and are therefore classified within Level 1, include active
listed equities. Investments that trade in markets that are not considered to be active, but are valued based on quoted market prices, dealer quotations or alternative pricing
sources supported by observable inputs are classified within Level 2. These include certain U.S. government and sovereign obligations, most government agency securities, investment-grade
corporate bonds, certain mortgage products, state, municipal and provincial obligations, and certain foreign equity securities, including securities whose prices may have been affected by events occurring after the close of trading on their
principal exchange or market and, as a result, whose values are determined by a pricing service as described above, or securities whose values are otherwise determined using fair valuation methods approved by the Fund’s Board of Trustees.
Investments classified within Level 3 have significant unobservable inputs, as they trade infrequently or not at all. Level 3 investments include, among
others, private placement securities. When observable prices are not available for these securities, the Trust uses one or more valuation techniques for which sufficient and reliable data is available. The inputs used by the Trust in estimating the
value of Level 3 investments include, for example, the original transaction price, recent transactions in the same or similar instruments, completed or pending third-party transactions in the underlying investment or comparable issuers,
subsequent rounds of financing, recapitalizations, and other transactions across the capital structure. Level 3 investments may also be adjusted to reflect illiquidity and/or non-transferability, with the
amount of such discount estimated by the Trust in the absence of market information. Assumptions used by the Trust due to the lack of observable inputs may significantly impact the resulting fair value and therefore the Fund’s results of
operations. As of December 31, 2019, the Fund had no securities classified as Level 3.
Derivatives Exchange-traded derivatives, such as
futures contracts, exchange-traded option contracts and certain swaps, are typically classified within Level 1 or Level 2 of the fair value hierarchy depending on whether or not they are deemed to be actively traded. Certain non-exchange-traded derivatives, such as generic forwards, certain swaps and options, have inputs which can generally be corroborated by market data and are therefore classified within Level 2. During the year
ended December 31, 2019, the Fund did not hold any derivatives.
b. Securities Transactions Securities transactions are accounted for on the date
securities are purchased or sold (trade date). Realized gains or losses on securities transactions are determined on the basis of specific identification.
NOTES TO FINANCIAL STATEMENTS — GUARDIAN GROWTH & INCOME VIP FUND
c. Foreign Currency Translation The accounting records of the Fund are maintained in U.S. dollars. Investment
securities and all other assets and liabilities of the Fund denominated in a foreign currency are generally translated into U.S. dollars at the exchange rates quoted at the close of the NYSE on each business day. The market value of investment
securities and other assets and liabilities are translated at the exchange rate as of the valuation date. Purchases and sales of securities, income receipts, and expense payments are translated into U.S. dollars at the exchange rates in effect on
the dates of the respective transactions. The Fund does not isolate the portion of the fluctuations on investments resulting from changes in foreign currency exchange rates from the fluctuations in market prices of investments held. Such
fluctuations are included in the Net change in net realized and unrealized gain/(loss) from investments on the Statement of Operations.
Reported realized foreign
currency gains and losses arise from the disposition of foreign currency, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest and foreign
withholding taxes recorded on the Fund’s books on the transaction date and the U.S. dollar equivalent of the amounts actually received or paid. These reported realized foreign currency gains and losses, if any, are included in Net realized
gain/(loss) from foreign currency transactions on the Statement of Operations. Unrealized foreign currency gains and losses arise from changes (due to changes in exchange rates) in the value of foreign currency and other assets and liabilities
denominated in foreign currencies, which are held at period end, if any, and are included in Net change in unrealized appreciation/(depreciation) on translation of assets and liabilities in foreign currencies on the Statement of Operations.
d. Foreign Capital Gains Tax The Fund may be subject to foreign taxes on income, gains on investments or currency purchases/repatriation, a portion of which may
be recoverable. The Fund will accrue such taxes and recoveries as applicable, based upon their current interpretation of tax rules and regulations that exist in the markets in which they invest.
e. Investment Income Dividend income net of foreign taxes withheld, if any, is generally recorded on the ex-dividend date.
Interest income, which includes amortization/accretion of premium/discount, is determined using the interest income accrual method, and is accrued and recorded daily.
f. Allocation of Income and Expenses Many of the expenses of the Trust can be directly attributed to a specific
series of the Trust. Expenses that cannot be directly attributed to a specific series of the Trust are generally apportioned among all the series in the Trust, based on relative net assets. In calculating net asset value per share for each series of
the Trust, investment income, realized and unrealized gains and losses, and expenses other than series-specific expenses are allocated daily to each series based upon the proportion of net assets attributable to each series.
3. Transactions with Affiliates
a. Investment Advisory Fee and Expense
Limitation Under the terms of the advisory agreement, which, after its two year initial term, is reviewed and approved annually by the Board of Trustees, the Fund pays an investment advisory fee to Park Avenue. Park Avenue is a wholly-owned
subsidiary of Guardian Life and receives an investment advisory fee at an annual rate of 0.65% up to $100 million, 0.60% up to $300 million, 0.55% up to $500 million, and 0.53% in excess of $500 million of the Fund’s average
daily net assets. The fee is accrued daily and paid monthly.
Park Avenue has contractually agreed through April 30, 2020 to waive certain fees and/or reimburse
certain expenses incurred by the Fund to the extent necessary to limit the Fund’s total annual operating expenses after fee waiver and/or expense reimbursement to 1.01% of the Fund’s average daily net assets (excluding, if applicable, any
acquired fund fees and expenses, taxes, interest, transaction costs and brokerage commissions, litigation and extraordinary expenses). The limitation may not be increased or terminated prior to this time without action by the Board of Trustees, may
be terminated only upon approval of the Board of Trustees, and is subject to Park Avenue’s recoupment rights. For the year ended December 31, 2019, Park Avenue waived fees and/or paid Fund expenses in the amount of $58,984.
Park Avenue may be entitled to recoupment of previously waived fees and reimbursed expenses from the Fund for three years from the date of the waiver or reimbursement,
subject to the expense limitation in effect at the time of the waiver or reimbursement and at the time of the recoupment, if any. Amounts waived or reimbursed by Park Avenue pursuant to any expense limitation after April 9, 2018 are not subject
to Park Avenue’s recoupment rights. The amount available for potential future recoupment by Park Avenue from the
NOTES TO FINANCIAL STATEMENTS — GUARDIAN GROWTH & INCOME VIP FUND
Fund under the Expense Limitation Agreement and the expiration schedule at December 31, 2019 are as follows:
|
|
|
|
|
| |
|
| |
|
Potential Recoupment Amounts
Expiring |
| Total Potential
Recoupment
Amounts |
|
2021 |
|
2020 |
| $192,471 |
|
$45,009 |
|
$147,462 |
Park Avenue has entered into a Sub-Advisory Agreement with AllianceBernstein L.P.
(“AllianceBernstein”). AllianceBernstein is responsible for providing day-to-day investment advisory services to the Fund, subject to the supervision of Park
Avenue and the oversight of the Board of Trustees. Sub-advisory fees are paid by Park Avenue and do not represent a separate or additional expense to the Fund.
b. Compensation of Trustees and Officers Trustees and officers who are interested persons of the Trust, as defined in the 1940 Act, receive no compensation from
the Fund, except for the Chief Compliance Officer of the Trust. Trustees of the Trust who are not interested persons of the Trust, and the Chief Compliance Officer, receive compensation and reimbursement of expenses from the Trust.
c. Distribution Fees Park Avenue Securities LLC (“PAS”), a wholly-owned subsidiary of Guardian Life, is the principal underwriter of Fund shares. The
Trust has entered into a distribution and service agreement with PAS, which governs the sale and distribution of shares of the Fund. Under a distribution and service plan adopted by the Trust (“12b-1
plan”), PAS is compensated for services in such capacity, including its expenses in connection with the promotion and distribution of shares of the Fund, at an annual rate of 0.25% of the Fund’s average daily net assets. For the year ended
December 31, 2019, the Fund paid distribution fees in the amount of $456,741 to PAS.
PAS has directed that certain payments under the 12b-1 plan be used to compensate GIAC for shareholder services provided to contract owners.
4. Federal Income Taxes
a. Distributions to Shareholders For federal income tax purposes, the Fund is treated as a disregarded entity (“DRE”). As a DRE, the Fund is not subject
to an entity-level income tax; and any income, gains, losses, deductions, taxes, and credits of the Fund would instead be “passed through” directly to the separate accounts of GIAC that invest in the Fund and retain the same
character for U.S. federal income tax purposes. In addition, the Fund is not required to distribute taxable income and capital gains for U.S. federal income tax purposes. Therefore, no dividends
and capital gains distributions were paid by the Fund.
5. Investments
a. Investment Purchases and Sales The cost of investments purchased and the proceeds from investments sold (excluding short-term investments) amounted to
$62,292,806 and $76,534,448, respectively, for the year ended December 31, 2019. During the year ended December 31, 2019, there were no purchases or sales of U.S. government securities.
b. Foreign Securities Foreign securities investments involve special risks and considerations not typically associated with U.S. investments. These risks include,
but are not limited to, currency risk; adverse political, regulatory, social, and economic developments; and less reliable information about issuers. Moreover, securities of some foreign issuers may be less liquid and their prices more volatile than
those of comparable U.S. issuers.
c. Industry or Sector Concentration In its normal course of business, the Fund may invest a significant portion of its
assets in companies within a limited number of industries or sectors. As a result, the Fund may be subject to a greater risk of loss than that of a fund invested in a wider spectrum of industries or sectors because the stocks of many or all of the
companies in the industry, group of industries, sector, or sectors may decline in value due to developments adversely affecting the industry, group of industries, sector, or sectors.
d. Repurchase Agreements The Fund may invest in repurchase agreements to maintain liquidity and earn income over periods of time as short as overnight. The
collateral for repurchase agreements is either cash or fully negotiable U.S. government securities (including U.S. government agency securities). Repurchase agreements are fully collateralized (including the interest accrued thereon) and such
collateral is marked to market daily while the agreements remain in force. If the value of the collateral falls below the repurchase price plus accrued interest, the Fund will typically require the seller to deposit additional collateral by the next
business day. If the request for additional collateral is not met, or the seller defaults, the Fund maintains the right to sell the collateral (although it may be prevented or delayed from doing so in certain circumstances) and may be required to
claim any resulting loss against the
NOTES TO FINANCIAL STATEMENTS — GUARDIAN GROWTH & INCOME VIP FUND
seller. Park Avenue monitors the creditworthiness of the seller with which the Fund enters into repurchase agreements.
6. Temporary Borrowings
The Fund, with other funds managed by Park
Avenue, is party to a $10 million committed revolving credit facility from State Street Bank and Trust Company for temporary borrowing purposes, including the meeting of redemption requests that otherwise might require the untimely disposition
of securities. Interest is calculated based on the higher of the daily one-month LIBOR rate and the Federal Funds rate plus 1.25% at the time of borrowing. In addition to the interest charged on any borrowings
by the Fund, each fund pays a commitment fee of 0.30% per annum on its share of the unused portion of the credit facility. The agreement is in place
until December 9, 2020. The Fund did not utilize the credit facility during the year ended December 31, 2019.
7. Indemnifications
Under the Trust’s organizational documents and, in
some cases, by contract, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Fund. In addition, in the normal course of business, the Fund enters into contracts with its vendors
and others that provide general indemnifications. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. However, based on experience,
the Fund expects the risk of loss to be remote.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees of Guardian Variable Products Trust and Shareholders of
Guardian Growth & Income VIP Fund
Opinion on the
Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Guardian
Growth & Income VIP Fund (one of the funds constituting Guardian Variable Products Trust, referred to hereafter as the “Fund”) as of December 31, 2019, the related statement of operations for the year ended December 31,
2019, the statement of changes in net assets for each of the two years in the period ended December 31, 2019, including the related notes, and the financial highlights for each of the periods indicated therein (collectively referred to
as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2019, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period ended December 31, 2019 and the financial highlights for each of the periods indicated therein in conformity with accounting principles generally accepted in the United States of
America.
Basis for Opinion
These financial statements are the
responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board
(United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing
procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the
amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our
procedures included confirmation of securities owned as of December 31, 2019 by correspondence with the custodian. We believe that our audits provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
New York, New York
February 20, 2020
We have served as the auditor of one or more investment
companies in Guardian Variable Products Trust since 2016.
SUPPLEMENTAL INFORMATION (UNAUDITED)
Trustees and Officers Information Table
The following table provides information about the Trustees of the Trust.
|
|
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|
|
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| |
|
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|
|
Name and
Year of Birth |
|
Term of Office,
Position(s) Held and Length of
Service1 |
|
Principal
Occupation(s) During Past Five Years |
|
Number of
Funds
in Fund
Complex Overseen
by Trustees2 |
|
Other Directorships
Held by Trustee |
| Independent Trustees |
| |
|
|
|
|
| Bruce W. Ferris3 (born 1955) |
|
Trustee |
|
Retired (since 2015); President and CEO, Prudential Annuities Distributors, Inc. (2013–2015); Director/Trustee, Advanced Series Trust, The Prudential Series Fund and Prudential’s
Gibraltar Fund, Inc. (2013–2015); Senior Vice President, Prudential Annuities (2008–2015). |
|
16 |
|
None. |
| |
|
|
|
|
| Theda R. Haber3 (born 1954) |
|
Trustee |
|
Adjunct Assistant Professor of Law, UC Hastings College of Law (since 2013); Member of the Board of Directors, Fairholme Trust Company, LLC (2015–2019); Attorney, Law Office of Theda R.
Haber (since 2014); Visiting Professor of Law, UC Davis School of Law (since 2014); Consultant, Haber & Associates LLC (financial services industry), (2012–2017); Advisory Council Chair, Vice Chair, and Member, Advisory Council on
Employee Welfare and Pension Benefit Plans (ERISA Advisory Council), U.S. Department of Labor (2009–2011); Managing Director and General Counsel, BlackRock Institutional Trust Company, N.A. (2009–2011); Deputy Global General Counsel,
Barclays Global Investors (2006–2009); Managing Director, Barclays Global Investors (1998–2006). |
|
16 |
|
None. |
| |
|
|
|
|
| Marshall
Lux3 (born 1960) |
|
Trustee |
|
Senior Advisor, The Boston Consulting Group (since 2014); Senior Partner and Managing Director, The Boston Consulting Group (2009–2014). |
|
16 |
|
None. |
| |
|
|
|
|
| Lisa K.
Polsky3 (born 1956) |
|
Trustee |
|
Board Member, MFA Financial, Inc. (real estate investment trust) (since 2020); Advisor, SMBC Americas (financial services) (since 2020); Senior Risk Advisor, AQR (investment management)
(2016–2019); Senior Risk Advisor, Ultra Capital (venture capital) (2016–2019); Board Member, DB USA Corporation (Deutsche Bank Intermediate Holding Company) (financial services) (since 2016); Chief Risk Officer, CIT Group Inc. (financial
services) (2010–2015); Board Member and Chair of Audit Committee, Piper Jaffray (investment bank) (2007–2016). |
|
16 |
|
None. |
| |
|
|
|
|
| John
Walters3 (born 1962) |
|
Lead Independent
Trustee |
|
Board Member, Amerilife Holdings LLC (insurance distribution) (since 2015); Board Member, Stadion Money Management LLC (investment adviser) (since 2011); President and Chief Operating Officer,
Hartford Life Insurance Company (2000–2010). |
|
16 |
|
Trustee, USAA Mutual Funds Trust, (One registered investment company offering 47 individual funds) (since
2019). |
SUPPLEMENTAL INFORMATION (UNAUDITED)
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
Name and
Year of Birth |
|
Term of Office,
Position(s) Held and Length of
Service1 |
|
Principal
Occupation(s) During Past Five Years |
|
Number of
Funds
in Fund
Complex Overseen
by Trustees2 |
|
Other Directorships
Held by Trustee |
| Interested Trustees |
| |
|
|
|
|
| Dominique Baede4 (born 1970) |
|
Trustee
(Since
January 2020) |
|
Vice President, Head of Product, Life, Annuity and Inforce, The Guardian Life Insurance Company of America (since 2019); Managing Director, Product Management Group, AXA Equitable (insurance
company) prior thereto. |
|
16 |
|
None. |
| |
|
|
|
|
| Michael
Ferik4 (born 1972) |
|
Chairman and Trustee (Since
December 2019) |
|
Executive Vice President, Individual Markets, The Guardian Life Insurance Company of America (since 2020); Executive Vice President and Chief Financial Officer, The Guardian Life Insurance
Company of America (2017–2019); Executive Vice President, Individual Markets, The Guardian Life Insurance Company of America prior thereto. |
|
16 |
|
None. |
| 1 |
Except as otherwise noted, each Trustee began service in such capacity in 2016 and serves until his or her successor is
elected and qualified or until his or her resignation, death or removal. The business address of each Trustee is 10 Hudson Yards, New York, New York 10001. |
| 2 |
The Trust currently consists of 16 separate Funds. |
| 3 |
Member of the Audit Committee of the Trust. |
| 4 |
Each of Dominique Baede and Michael Ferik is considered to be an “interested person” of the Trust within the
meaning of the 1940 Act because of their affiliation with The Guardian Life Insurance Company of America and/or its affiliates. |
|
|
|
|
|
| |
|
|
| Name and Year of Birth |
|
Position(s) Held and
Length of Service5 |
|
Principal Occupation(s)
During Past Five Years |
| |
|
|
Dominique Baede
(born 1970) |
|
President and Principal Executive Officer (Since January 2020) |
|
Vice President, Head of Product, Life, Annuity and Inforce, The Guardian Life Insurance Company of America (since 2019); Managing Director,
Product Management Group, AXA Equitable (insurance company) prior. |
| |
|
|
| John H. Walter
(born 1962) |
|
Senior Vice President, Treasurer, and Principal Financial and Accounting Officer |
|
Vice President, Director of Finance, Corporate Finance, The Guardian Life Insurance Company of America. |
| |
|
|
| Harris Oliner
(born 1971) |
|
Senior Vice President and Secretary |
|
Senior Vice President, Corporate Secretary, The Guardian Life Insurance Company of America (since 2015); Senior Vice President, Deputy
General Counsel, Corporate Secretary, Voya Financial, Inc. prior thereto. |
| |
|
|
| Richard T. Potter
(born 1954) |
|
Senior Vice President and Chief Legal Officer |
|
Vice President and Equity Counsel, The Guardian Life Insurance Company of America. |
| |
|
|
| Philip Stack
(born 1964) |
|
Chief Compliance Officer
(Since September 2017) |
|
Second Vice President, Mutual Fund Chief Compliance Officer, The Guardian Life Insurance Company of America (since 2017); Executive Director,
Chief Compliance Officer, Morgan Stanley (2015–2017); Vice President, Morgan Stanley prior thereto. |
| |
|
|
| Brian Hagan
(born 1984) |
|
Anti-Money Laundering Officer (Since March 2019) |
|
Assistant Vice President (since 2019), Anti-Money Laundering Compliance, The Guardian Life Insurance Company of America/Park Avenue
Securities LLC; Vice President, Head of Financial Intelligence Unit, Brown Brothers Harriman & Co. (2014–2019); Assistant Vice President, AML Compliance Manager, JPMorgan Chase & Co. (2011–2014). |
| |
|
|
| Kathleen M. Moynihan
(born 1966) |
|
Senior Counsel |
|
Second Vice President, Counsel (since 2019), The Guardian Life Insurance Company of America; Senior Counsel prior thereto. |
| |
|
|
| Maria Nydia Morrison
(born 1958) |
|
Fund Controller |
|
Mutual Fund Controller, The Guardian Life Insurance Company of America (since 2015); Chief Financial Officer/Assistant Operating Officer, St.
Francis De Assisi Montessori School (Plaridel, Bulacan), Inc. (Philippines) prior thereto. |
| |
|
|
| Sonya L. Crosswell
(born 1977) |
|
Assistant Secretary |
|
Assistant Vice President, Assistant Corporate Secretary and Secretary Pro Tem, The Guardian Life Insurance Company of America. |
| 5 |
Unless otherwise indicated, the Officers each began service in such capacity in 2016 and hold office for an indefinite
term or until their successors shall have been elected and qualified. The business address of each Officer is 10 Hudson Yards, New York, New York 10001. |
SUPPLEMENTAL INFORMATION (UNAUDITED)
The Statement of Additional Information (“SAI”) includes additional information
about the Trust’s Trustees and Officers and is available, without charge, upon request by calling toll-free 1-888-GUARDIAN (1-888-482-7342) or by visiting our website at http://guardianvpt.onlineprospectus.net/GuardianVPT/Prospectuses.
Portfolio Holdings and Proxy Voting Procedures
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year as an exhibit
to its reports on Form N-PORT. The Fund’s Form N-PORT reports are available on the Securities and Exchange Commission’s website at https://www.sec.gov. The
Fund’s Form N-PORT information is also available, without charge, upon request, by calling toll-free 1-888-GUARDIAN (1-888-482-7342) or by visiting our website at http://guardianvpt.onlineprospectus.net/
GuardianVPT/Prospectuses.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio
securities is included in the SAI. The SAI and information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 may be obtained
(i) without charge, upon request, by calling toll-free 1-888-GUARDIAN (1-888-482-7342) or by visiting our website at http://guardianvpt.onlineprospectus.net/
GuardianVPT/Prospectuses; and (ii) on the Securities and Exchange Commission’s website at
https://www.sec.gov.
This report is transmitted to shareholders only. It is not authorized for use as an offer of sale or a solicitation of an offer to buy shares of the Fund unless
accompanied or preceded by the Fund’s current prospectus. Past performance results shown in this report should not be considered a representation of future performance. Investment returns and principal value of shares will fluctuate so that
shares, when redeemed, may be worth more or less than their original cost. Statements and other information herein are as dated and are subject to change.
The Guardian Life Insurance Company of America New York, NY 10001-2159
PUB8169
Guardian Variable
Products Trust
2019
Annual Report
All Data as of December 31, 2019
Guardian Mid Cap
Traditional Growth VIP Fund
Important Notice
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund’s shareholder reports
will no longer be sent by mail from The Guardian Insurance & Annuity Company, Inc. (“GIAC”). Instead, GIAC will mail you a notice when copies of the shareholder reports are made available on a website. You will be notified by mail
each time a report is posted and provided with a website link to access the report.
If you have already elected to receive shareholder reports electronically, you
will not be affected by this change and you need not take any action. If you have not yet elected electronic delivery, at any time, you may elect to receive the Fund’s shareholder reports and certain other communications from GIAC
electronically, by going to www.guardianlife.com and registering for e-delivery.
You may instead elect to receive all
future shareholder reports in paper free of charge. If you wish to receive paper copies of your shareholder reports, please call GIAC’s Customer Service Office Contact Center at
1-888-GUARDIAN (1-888-482-7342). Your election to
receive reports in paper will apply to all the underlying funds available.
|
|
|
| Not FDIC insured. May lose value. No bank guarantee. |
|
www.guardianlife.com |
TABLE OF CONTENTS
Guardian Mid Cap Traditional Growth VIP Fund
Except as otherwise specifically stated, all
information, including portfolio security positions, is as of December 31, 2019. The views expressed in the Fund Commentary are those of the Fund’s portfolio manager(s) as of the date of this report and are subject to change without
notice. They do not necessarily represent the views of Park Avenue Institutional Advisers LLC or a sub-adviser. The Fund Commentary may contain some forward-looking statements providing expectations or
forecasts of future events as of the date of this report; they do not necessarily relate to historical or current facts. There can be no guarantee that any forward-looking statement will be realized. We undertake no obligation to update
forward-looking statements, whether as a result of new information, future events, or otherwise. Any discussions of specific securities should not be considered a recommendation to buy or sell those securities. Fund holdings will vary. Information
contained herein has been obtained from sources believed reliable, but is not guaranteed.
GUARDIAN MID CAP TRADITIONAL GROWTH VIP FUND
FUND COMMENTARY OF JANUS CAPITAL MANAGEMENT LLC,
SUB-ADVISER (unaudited)
Highlights
| • |
|
Guardian Mid Cap Traditional Growth VIP Fund (the “Fund”) returned 36.19% for the 12 months ended December 31, 2019, outperforming its benchmark, the Russell Midcap® Growth Index1 (the “Index”). Stock selection in the industrials sector was a notable contributor to relative performance. Stock
selection in the consumer discretionary sector detracted. |
| • |
|
The Index returned 35.47% and delivered strong gains for 2019, led by stocks in the information technology sector. Energy stocks had the weakest performance for the Index over the period. |
Market Overview
Mid-cap stocks ended
the year with strong gains despite periods of volatility sparked by uncertainty over the global economic outlook and trade policy. Corporate earnings growth was solid, though it slowed somewhat from the 2018 pace. Despite resilience in the U.S.
economy, especially in the consumer sector, the U.S. Federal Reserve responded to global economic risks with three interest rate cuts. Stocks ended the year on a strong note, supported by positive economic news and reports that the U.S. and China
made progress toward an initial trade deal.
Portfolio Review
The Fund
outperformed the Index during the period. Stock selection in the industrials sector contributed to relative performance. Stock selection in the consumer discretionary sector detracted from relative performance.
Outlook
While 2019 was a
strong year for market performance, we would caution that such returns are not the norm and, as we look ahead to 2020, we remain cognizant of risks posed by global economic uncertainty, ongoing U.S. and China trade negotiations and the resulting
reconfiguration of global supplier relationships. As we enter an election cycle, we also acknowledge that populist rhetoric from both sides of the political spectrum may create uncertainty for certain economic sectors, such as health care.
Additionally, we continue to see excessive valuations in certain high-growth stocks and sectors of the market. Our valuation discipline had led us to reduce holdings and
move to underweights in such sectors, even in cases where we like the management teams and business models. We are not, on the other hand, turning our attention to value stocks, where technological change is increasingly disrupting established
profit pools. We continue to pursue a middle way as we seek growth companies with sustainable competitive advantages, strong earnings growth potential and experienced, forward-looking management teams. And while we will not sacrifice these criteria
in pursuit of attractive valuations, we also will not pay an excessive price for growth. In our current view, this middle way represents the most prudent strategy for seeking positive long-term performance.
| 1 |
The Russell
Midcap® Growth Index (the “Index”) is an unmanaged market-capitalization-weighted index that measures the performance of those
companies in the Russell Midcap® Index with higher
price-to-book ratios and higher forecasted growth values. (The Russell Midcap® Index measures the performance of the 800 smallest companies in the Russell 1000® Index, which consists of the 1,000 largest U.S. companies
based on total market capitalization.) Index results assume the reinvestment of dividends paid on the stocks constituting the Index. You may not invest in the Index, and, unlike the Fund, the Index does not incur fees or expenses. Russell Investment
Group is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell® is a trademark of Russell Investment Group. |
GUARDIAN MID CAP TRADITIONAL GROWTH VIP FUND
Funds in the Guardian Variable Products Trust are sold by prospectus only. You should carefully
consider the investment objectives, risks, charges and expenses of the Funds before making an investment decision. The prospectus contains this and other important information. Please read it carefully before investing or sending money. Please visit
our website at http://guardianvpt.onlineprospectus.net/GuardianVPT/ Prospectuses or to obtain a printed copy, call 1-888-GUARDIAN (1-888-482-7342).
As with all mutual funds, the value of an investment in the
Fund could decline, and you could lose money. Diversification does not guarantee profit or protect against loss, and there can be no assurance that the Fund will achieve its investment objective. The Fund invests primarily in equity securities and
therefore exposes you to the general risks of investing in stock markets. Investing in mid-size companies involves risks such as having less publicly available information, higher volatility, and less liquidity than in the case of larger companies.
Investments in growth companies may be highly volatile. Growth stocks may not realize their perceived growth potential and during certain periods the Fund may underperform other equity funds that employ a different style. International investing
involves special risks, which include changes in currency rates, foreign taxation and differences in auditing standards and securities regulations, political uncertainty and greater volatility. Foreign securities are subject to political,
regulatory, economic, and exchange-rate risks not present in domestic investments. Investing in a more limited number of issuers and sectors can be subject to greater market fluctuation. Any discussions of specific securities should not be
considered a recommendation to buy or sell those securities. Fund holdings will vary.
GUARDIAN MID CAP TRADITIONAL GROWTH VIP FUND
Fund Characteristics (unaudited)
Total Net Assets: $ 125,058,476
|
| |
|
Sector Allocation1
As of December 31, 2019 |
|
|
|
|
|
|
|
| |
| Top Ten Holdings2 As of December 31, 2019 |
|
| |
|
| Holding |
|
% of Total
Net Assets |
|
| Sensata Technologies Holding PLC |
|
|
2.59% |
|
| WEX, Inc. |
|
|
2.55% |
|
| Constellation Software, Inc. (Canada) |
|
|
2.54% |
|
| Microchip Technology, Inc. |
|
|
2.41% |
|
| LPL Financial Holdings, Inc. |
|
|
2.33% |
|
| Lamar Advertising Co., Class A REIT |
|
|
2.24% |
|
| Aon PLC |
|
|
2.22% |
|
| SS&C Technologies Holdings, Inc. |
|
|
2.22% |
|
| TE Connectivity Ltd. |
|
|
2.18% |
|
| TD Ameritrade Holding Corp. |
|
|
2.17% |
|
| Total |
|
|
23.45% |
|
| 1 |
The Fund’s holdings are allocated to each sector based on the MSCI Global Industry Classification Standard (GICS®). Cash includes short-term investments and net other assets and liabilities. |
| 2 |
Portfolio holdings are subject to change and should not be considered a recommendation to buy or sell individual
securities. |
GUARDIAN MID CAP TRADITIONAL GROWTH VIP FUND
Fund Performance (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Average Annual Total Returns
As of December 31, 2019 |
|
| |
|
|
|
|
|
| |
|
Inception Date |
|
|
1 Year |
|
|
5 Year |
|
|
10 Year |
|
|
Since Inception |
|
| Guardian Mid Cap Traditional Growth VIP Fund |
|
|
9/1/2016 |
|
|
|
36.19% |
|
|
|
— |
|
|
|
— |
|
|
|
16.65% |
|
| Russell Midcap® Growth Index |
|
|
|
|
|
|
35.47% |
|
|
|
— |
|
|
|
— |
|
|
|
15.58% |
|
|
| |
|
Results of a Hypothetical $10,000 Investment As of December 31,
2019 |
|
|
The chart above shows the performance of a hypothetical $10,000 investment made on inception date in Guardian Mid Cap Traditional Growth
VIP Fund and the Russell Midcap® Growth Index. Index returns do not include the fees and expenses of the Fund, but do include reinvestment of dividends, if any.
Performance quoted represents past performance and does not guarantee or predict future results. Investment return and principal value will fluctuate, so shares, when
redeemed, may be worth more or less than their original cost. The Fund’s fees and expenses are detailed in the Financial Highlights section of this report. Fees and expenses are factored into the net asset value of Fund shares and any
performance numbers we release. Total return figures include the effect of expense limitations in effect during the periods shown, if applicable; without such limitations, the performance shown would have been lower. Performance results assume the
reinvestment of dividends and capital gains. The return figures shown do not reflect the deduction of taxes that a contract owner/policyholder may pay on redemption units. The actual total returns for owners of variable annuity contracts or variable
life insurance policies that provide for investment in the Fund will be lower to reflect separate account and contract/policy charges. Current and month-end performance information, which may be lower or
higher than that cited, is available by calling 1-888-GUARDIAN
(1-888-482-7342) and is periodically updated on our website: http://guardianlife.com.
UNDERSTANDING YOUR FUND’S EXPENSES (UNAUDITED)
By investing in the Fund, you incur two types of costs: (1) transaction costs and (2) ongoing costs, including,
as applicable, investment advisory fees, distribution and/or service (12b-1) fees and other Fund expenses. The example below is intended to help you understand your ongoing costs (in dollars) of investing in
the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the
beginning of the period and held for the entire period from July 1, 2019 to December 31, 2019. The table below shows the Fund’s expenses in two ways:
Expenses based on actual return
This section of the table provides
information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for
example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the section under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this
period.
Expenses based on hypothetical 5% return for comparison purposes
This section of the table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund with the cost of investing in other mutual funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the
other funds.
Note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads), redemption fees, or exchange fees. Therefore the second section is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. If these transactional costs were
included, your costs would have been higher. Charges and expenses at the insurance company separate account level are not reflected in the table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
| |
|
Beginning
Account Value
7/1/19 |
|
Ending
Account Value
12/31/19 |
|
|
Expenses Paid
During Period* 7/1/19-12/31/19 |
|
|
Expense Ratio
During Period
7/1/19-12/31/19 |
|
| Based on Actual Return |
|
$1,000.00 |
|
|
$1,074.60 |
|
|
|
$5.75 |
|
|
|
1.10% |
|
| Based on Hypothetical Return (5% Return Before Expenses) |
|
$1,000.00 |
|
|
$1,019.66 |
|
|
|
$5.60 |
|
|
|
1.10% |
|
| * |
Expenses are equal to the Fund’s annualized expense ratio as indicated, multiplied by the average account value over
the period, multiplied by 184/365 (to reflect the one-half year period). |
SCHEDULE OF INVESTMENTS — GUARDIAN MID CAP
TRADITIONAL GROWTH VIP FUND
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Shares |
|
|
Value |
|
| Common Stocks – 97.9% |
|
| |
| Aerospace & Defense – 2.8% |
|
| |
|
|
| L3Harris Technologies, Inc. |
|
|
8,350 |
|
|
$ |
1,652,214 |
|
| |
|
|
| Teledyne Technologies, Inc.(1) |
|
|
5,427 |
|
|
|
1,880,673 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
3,532,887 |
|
| Airlines – 1.4% |
|
| |
|
|
| Ryanair Holdings PLC, ADR(1) |
|
|
12,366 |
|
|
|
1,083,385 |
|
| |
|
|
| Southwest Airlines Co. |
|
|
11,635 |
|
|
|
628,058 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
1,711,443 |
|
| Auto Components – 0.5% |
|
| |
|
|
| Visteon Corp.(1) |
|
|
7,010 |
|
|
|
606,996 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
606,996 |
|
| Banks – 0.6% |
|
| |
|
|
| SVB Financial Group(1) |
|
|
2,793 |
|
|
|
701,155 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
701,155 |
|
| Biotechnology – 1.3% |
|
| |
|
|
| Neurocrine Biosciences, Inc.(1) |
|
|
8,011 |
|
|
|
861,102 |
|
| |
|
|
| Sage Therapeutics, Inc.(1) |
|
|
2,551 |
|
|
|
184,157 |
|
| |
|
|
| Sarepta Therapeutics, Inc.(1) |
|
|
4,229 |
|
|
|
545,710 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
1,590,969 |
|
| Capital Markets – 5.9% |
|
| |
|
|
| Cboe Global Markets, Inc. |
|
|
7,221 |
|
|
|
866,520 |
|
| |
|
|
| LPL Financial Holdings, Inc. |
|
|
31,618 |
|
|
|
2,916,760 |
|
| |
|
|
| MSCI, Inc. |
|
|
3,176 |
|
|
|
819,980 |
|
| |
|
|
| TD Ameritrade Holding Corp. |
|
|
54,568 |
|
|
|
2,712,030 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
7,315,290 |
|
| Commercial Services & Supplies – 3.3% |
|
| |
|
|
| Cimpress PLC(1) |
|
|
12,886 |
|
|
|
1,620,672 |
|
| |
|
|
| Edenred (France) |
|
|
18,748 |
|
|
|
970,115 |
|
| |
|
|
| Ritchie Bros Auctioneers, Inc. |
|
|
35,417 |
|
|
|
1,521,160 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
4,111,947 |
|
| Consumer Finance – 0.6% |
|
| |
|
|
| Synchrony Financial |
|
|
21,642 |
|
|
|
779,328 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
779,328 |
|
| Containers & Packaging – 1.3% |
|
| |
|
|
| Sealed Air Corp. |
|
|
42,128 |
|
|
|
1,677,958 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
1,677,958 |
|
| Diversified Consumer Services – 1.4% |
|
| |
|
|
| frontdoor, Inc.(1) |
|
|
13,918 |
|
|
|
659,992 |
|
| |
|
|
| ServiceMaster Global Holdings, Inc.(1) |
|
|
27,843 |
|
|
|
1,076,410 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
1,736,402 |
|
| Electrical Equipment – 2.6% |
|
| |
|
|
| Sensata Technologies Holding PLC(1) |
|
|
60,189 |
|
|
|
3,242,382 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
3,242,382 |
|
| Electronic Equipment, Instruments & Components – 6.1% |
|
| |
|
|
| Belden, Inc. |
|
|
13,374 |
|
|
|
735,570 |
|
| |
|
|
| Dolby Laboratories, Inc., Class A |
|
|
19,082 |
|
|
|
1,312,842 |
|
| |
|
|
| Flex Ltd.(1) |
|
|
106,571 |
|
|
|
1,344,926 |
|
| |
|
|
| National Instruments Corp. |
|
|
34,962 |
|
|
|
1,480,291 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Shares |
|
|
Value |
|
| Electronic Equipment, Instruments & Components (continued) |
|
| |
|
|
| TE Connectivity Ltd. |
|
|
28,469 |
|
|
$
|
2,728,469 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
7,602,098 |
|
| Entertainment – 0.6% |
|
| |
|
|
| Liberty Media Corp-Liberty Formula One, Class C(1) |
|
|
15,874 |
|
|
|
729,648 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
729,648 |
|
| Equity Real Estate Investment – 4.4% |
|
| |
|
|
| Crown Castle International Corp. REIT |
|
|
18,675 |
|
|
|
2,654,651 |
|
| |
|
|
| Lamar Advertising Co., Class A REIT |
|
|
31,371 |
|
|
|
2,800,176 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
5,454,827 |
|
| Health Care Equipment & Supplies – 7.0% |
|
| |
|
|
| Boston Scientific Corp.(1) |
|
|
58,390 |
|
|
|
2,640,396 |
|
| |
|
|
| Dentsply Sirona, Inc. |
|
|
14,599 |
|
|
|
826,157 |
|
| |
|
|
| ICU Medical, Inc.(1) |
|
|
3,989 |
|
|
|
746,422 |
|
| |
|
|
| STERIS PLC |
|
|
1,815 |
|
|
|
276,642 |
|
| |
|
|
| Teleflex, Inc. |
|
|
3,043 |
|
|
|
1,145,507 |
|
| |
|
|
| The Cooper Cos., Inc. |
|
|
7,271 |
|
|
|
2,336,100 |
|
| |
|
|
| Varian Medical Systems, Inc.(1) |
|
|
5,850 |
|
|
|
830,758 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
8,801,982 |
|
| Hotels, Restaurants & Leisure – 3.2% |
|
| |
|
|
| Aramark |
|
|
27,620 |
|
|
|
1,198,708 |
|
| |
|
|
| Dunkin’ Brands Group, Inc. |
|
|
22,271 |
|
|
|
1,682,351 |
|
| |
|
|
| Norwegian Cruise Line Holdings Ltd.(1) |
|
|
20,150 |
|
|
|
1,176,962 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
4,058,021 |
|
| Industrial Conglomerates – 0.9% |
|
| |
|
|
| Carlisle Cos., Inc. |
|
|
7,263 |
|
|
|
1,175,444 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
1,175,444 |
|
| Insurance – 6.4% |
|
| |
|
|
| Aon PLC |
|
|
13,349 |
|
|
|
2,780,463 |
|
| |
|
|
| Intact Financial Corp. (Canada) |
|
|
18,931 |
|
|
|
2,047,123 |
|
| |
|
|
| Willis Towers Watson PLC |
|
|
5,264 |
|
|
|
1,063,012 |
|
| |
|
|
| WR Berkley Corp. |
|
|
31,114 |
|
|
|
2,149,977 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
8,040,575 |
|
| Internet & Direct Marketing Retail – 0.3% |
|
| |
|
|
| Wayfair, Inc., Class A(1) |
|
|
4,333 |
|
|
|
391,573 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
391,573 |
|
| IT Services – 11.9% |
|
| |
|
|
| Amdocs Ltd. |
|
|
27,943 |
|
|
|
2,017,205 |
|
| |
|
|
| Broadridge Financial Solutions, Inc. |
|
|
16,843 |
|
|
|
2,080,784 |
|
| |
|
|
| Euronet Worldwide, Inc.(1) |
|
|
4,335 |
|
|
|
683,023 |
|
| |
|
|
| Fidelity National Information Services, Inc. |
|
|
14,319 |
|
|
|
1,991,630 |
|
| |
|
|
| Gartner, Inc.(1) |
|
|
1,391 |
|
|
|
214,353 |
|
| |
|
|
| Global Payments, Inc. |
|
|
14,418 |
|
|
|
2,632,150 |
|
| |
|
|
| GoDaddy, Inc., Class A(1) |
|
|
30,087 |
|
|
|
2,043,509 |
|
| |
|
|
| WEX, Inc.(1) |
|
|
15,219 |
|
|
|
3,187,772 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
14,850,426 |
|
| Life Sciences Tools & Services – 5.5% |
|
| |
|
|
| IQVIA Holdings, Inc.(1) |
|
|
11,257 |
|
|
|
1,739,319 |
|
| |
|
|
| PerkinElmer, Inc. |
|
|
26,589 |
|
|
|
2,581,792 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 6 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
SCHEDULE OF INVESTMENTS — GUARDIAN MID CAP TRADITIONAL GROWTH VIP FUND
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Shares |
|
|
Value |
|
| Life Sciences Tools & Services (continued) |
|
| |
|
|
| PRA Health Sciences, Inc.(1) |
|
|
8,394 |
|
|
$
|
932,993 |
|
| |
|
|
| Waters Corp.(1) |
|
|
7,079 |
|
|
|
1,654,008 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
6,908,112 |
|
| Machinery – 3.5% |
|
| |
|
|
| Ingersoll-Rand PLC |
|
|
5,569 |
|
|
|
740,231 |
|
| |
|
|
| Rexnord Corp.(1) |
|
|
43,576 |
|
|
|
1,421,449 |
|
| |
|
|
| The Middleby Corp.(1) |
|
|
6,732 |
|
|
|
737,289 |
|
| |
|
|
| Westinghouse Air Brake Technologies Corp. |
|
|
18,620 |
|
|
|
1,448,636 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
4,347,605 |
|
| Media – 0.7% |
|
| |
|
|
| Omnicom Group, Inc. |
|
|
11,061 |
|
|
|
896,162 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
896,162 |
|
| Pharmaceuticals – 2.1% |
|
| |
|
|
| Bristol-Myers Squibb Co. |
|
|
10,177 |
|
|
|
653,262 |
|
| |
|
|
| Catalent, Inc.(1) |
|
|
25,789 |
|
|
|
1,451,921 |
|
| |
|
|
| Elanco Animal Health, Inc.(1) |
|
|
17,639 |
|
|
|
519,468 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
2,624,651 |
|
| Professional Services – 3.7% |
|
| |
|
|
| CoStar Group, Inc.(1) |
|
|
2,104 |
|
|
|
1,258,823 |
|
| |
|
|
| IHS Markit Ltd.(1) |
|
|
18,354 |
|
|
|
1,382,974 |
|
| |
|
|
| Verisk Analytics, Inc. |
|
|
13,100 |
|
|
|
1,956,354 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
4,598,151 |
|
| Road & Rail – 0.5% |
|
| |
|
|
| Old Dominion Freight Line, Inc. |
|
|
2,970 |
|
|
|
563,647 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
563,647 |
|
| Semiconductors & Semiconductor Equipment – 7.9% |
|
| |
|
|
| KLA Corp. |
|
|
11,747 |
|
|
|
2,092,963 |
|
| |
|
|
| Lam Research Corp. |
|
|
6,902 |
|
|
|
2,018,145 |
|
| |
|
|
| Microchip Technology, Inc. |
|
|
28,720 |
|
|
|
3,007,558 |
|
| |
|
|
| ON Semiconductor Corp.(1) |
|
|
86,357 |
|
|
|
2,105,384 |
|
| |
|
|
| Xilinx, Inc. |
|
|
6,737 |
|
|
|
658,676 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
9,882,726 |
|
| Software – 8.3% |
|
| |
|
|
| Atlassian Corp. PLC, Class A(1) |
|
|
9,516 |
|
|
|
1,145,156 |
|
| |
|
|
| Constellation Software, Inc. (Canada) |
|
|
3,271 |
|
|
|
3,176,816 |
|
| |
|
|
| Intuit, Inc. |
|
|
2,447 |
|
|
|
640,943 |
|
| |
|
|
| Nice Ltd., ADR(1) |
|
|
16,982 |
|
|
|
2,634,757 |
|
| |
|
|
| SS&C Technologies Holdings, Inc. |
|
|
45,103 |
|
|
|
2,769,324 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
10,366,996 |
|
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Shares |
|
|
Value |
|
| Specialty Retail – 1.2% |
|
| |
|
|
| CarMax, Inc.(1) |
|
|
9,706 |
|
|
$
|
850,925 |
|
| |
|
|
| Williams-Sonoma, Inc. |
|
|
9,421 |
|
|
|
691,878 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
1,542,803 |
|
| Textiles, Apparel & Luxury Goods – 1.3% |
|
| |
|
|
| Gildan Activewear, Inc. |
|
|
55,778 |
|
|
|
1,647,124 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
1,647,124 |
|
| Trading Companies & Distributors – 0.7% |
|
| |
|
|
| Ferguson PLC (United Kingdom) |
|
|
9,629 |
|
|
|
874,858 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
874,858 |
|
| |
|
Total Common Stocks
(Cost $100,155,228) |
|
|
|
122,364,186 |
|
| Rights – 0.0% |
|
| |
| Pharmaceuticals – 0.0% |
|
| |
|
|
| Bristol-Myers Squibb
Co., expiring 3/31/2021(1) |
|
|
10,177 |
|
|
|
30,633 |
|
| |
|
Total Rights
(Cost $21,677) |
|
|
|
30,633 |
|
|
|
|
|
|
|
|
|
|
| |
|
Principal
Amount |
|
|
Value |
|
| Short–Term Investment – 2.2% |
|
| |
| Repurchase Agreements – 2.2% |
|
| |
|
|
| Fixed Income
Clearing Corp., 0.12%, dated 12/31/2019, proceeds at maturity value of $2,774,018, due 1/2/2020(2) |
|
$ |
2,774,000 |
|
|
|
2,774,000 |
|
| |
|
|
Total Repurchase Agreements
(Cost $2,774,000) |
|
|
|
|
|
|
2,774,000 |
|
| |
|
|
Total Investments – 100.1%
(Cost $102,950,905) |
|
|
|
|
|
|
125,168,819 |
|
| |
|
| Liabilities in excess of other assets – (0.1)% |
|
|
|
(110,343 |
) |
| |
|
| Total Net Assets – 100.0% |
|
|
$ |
125,058,476 |
|
| (1) |
Non–income–producing security. |
| (2) |
The table below presents collateral for repurchase agreements. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Security |
|
Coupon |
|
|
Maturity
Date |
|
|
Principal
Amount |
|
|
Value |
|
| U.S. Treasury Note |
|
|
2.75% |
|
|
|
9/15/2021 |
|
|
$ |
2,755,000 |
|
|
$ |
2,829,942 |
|
Legend:
ADR — American
Depositary Receipt
REIT — Real Estate Investment Trust
The following is a summary of the inputs used as
of December 31, 2019 in valuing the Fund’s investments. For more information on valuation inputs, please refer to Note 2a of the accompanying Notes to Financial Statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Valuation
Inputs |
|
|
|
|
| Investments in Securities |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
| Common Stocks |
|
$ |
120,519,213 |
|
|
$ |
1,844,973 |
* |
|
$ |
— |
|
|
$ |
122,364,186 |
|
| Rights |
|
|
30,633 |
|
|
|
— |
|
|
|
— |
|
|
|
30,633 |
|
| Repurchase Agreements |
|
|
— |
|
|
|
2,774,000 |
|
|
|
— |
|
|
|
2,774,000 |
|
| Total |
|
$ |
120,549,846 |
|
|
$ |
4,618,973 |
|
|
$ |
— |
|
|
$ |
125,168,819 |
|
| * |
Consists of certain foreign securities whose values were determined by a pricing service using pricing models (See Note 2a
in Notes to Financial Statements). These investments in securities were classified as Level 2 rather than Level 1. |
|
|
|
|
|
| The accompanying notes are an integral part of these financial statements. |
|
|
|
7 |
FINANCIAL INFORMATION — GUARDIAN MID CAP TRADITIONAL GROWTH VIP FUND
|
|
|
|
|
|
Statement of Assets and Liabilities As of December 31, 2019 |
|
| Assets |
|
|
|
|
| |
|
| Investments, at value |
|
$ |
125,168,819 |
|
| |
|
| Cash |
|
|
23,385 |
|
| |
|
| Foreign currency, at value |
|
|
9,586 |
|
| |
|
| Dividends/interest receivable |
|
|
41,022 |
|
| |
|
| Receivable for investments sold |
|
|
33,050 |
|
| |
|
| Reimbursement receivable from adviser |
|
|
11,199 |
|
| |
|
| Prepaid expenses |
|
|
5,632 |
|
| |
|
|
|
|
| |
|
| Total Assets |
|
|
125,292,693 |
|
| |
|
|
|
|
| |
|
| Liabilities |
|
|
|
|
| |
|
| Investment advisory fees payable |
|
|
83,357 |
|
| |
|
| Payable for fund shares redeemed |
|
|
57,914 |
|
| |
|
| Distribution fees payable |
|
|
26,370 |
|
| |
|
| Accrued audit fees |
|
|
22,105 |
|
| |
|
| Accrued administrative fees |
|
|
11,865 |
|
| |
|
| Accrued shareholder reports fees |
|
|
11,855 |
|
| |
|
| Accrued custodian and accounting fees |
|
|
10,585 |
|
| |
|
| Accrued trustees’ and officers’
fees |
|
|
780 |
|
| |
|
| Accrued expenses and other liabilities |
|
|
9,386 |
|
| |
|
|
|
|
| |
|
| Total Liabilities |
|
|
234,217 |
|
| |
|
|
|
|
| |
|
| Total Net Assets |
|
$ |
125,058,476 |
|
| |
|
|
|
|
| |
|
| Net Assets Consist of: |
|
|
|
|
| |
|
| Paid-in
capital |
|
$ |
89,278,796 |
|
| |
|
| Distributable earnings |
|
|
35,779,680 |
|
| |
|
|
|
|
| |
|
| Total Net Assets |
|
$ |
125,058,476 |
|
| |
|
|
|
|
| Investments, at Cost |
|
$ |
102,950,905 |
|
| |
|
|
|
|
| Foreign Currency, at Cost |
|
$ |
9,532 |
|
| |
|
|
|
|
| |
|
| Pricing of Shares |
|
|
|
|
| |
|
| Shares of Beneficial Interest Outstanding with
No Par Value |
|
|
7,485,932 |
|
| |
|
| Net Asset Value Per Share |
|
|
$16.71 |
|
| |
|
|
|
|
|
|
|
|
|
|
Statement of Operations For the Year Ended December 31, 2019 |
|
| Investment Income |
|
|
|
|
| |
|
| Dividends |
|
$ |
1,270,836 |
|
| |
|
| Interest |
|
|
11,685 |
|
| |
|
| Withholding taxes on foreign dividends |
|
|
(31,126 |
) |
| |
|
|
|
|
| |
|
| Total Investment Income |
|
|
1,251,395 |
|
| |
|
|
|
|
| |
|
| Expenses |
|
|
|
|
| |
|
| Investment advisory fees |
|
|
969,875 |
|
| |
|
| Distribution fees |
|
|
306,625 |
|
| |
|
| Professional fees |
|
|
54,740 |
|
| |
|
| Custodian and accounting fees |
|
|
50,594 |
|
| |
|
| Trustees’ and officers’ fees |
|
|
50,026 |
|
| |
|
| Administrative fees |
|
|
47,460 |
|
| |
|
| Shareholder reports |
|
|
30,349 |
|
| |
|
| Transfer agent fees |
|
|
13,660 |
|
| |
|
| Other expenses |
|
|
15,463 |
|
| |
|
|
|
|
| |
|
| Total Expenses |
|
|
1,538,792 |
|
| |
|
| Less: Fees waived |
|
|
(189,643 |
) |
| |
|
|
|
|
| |
|
| Total Expenses, Net |
|
|
1,349,149 |
|
| |
|
|
|
|
| |
|
| Net Investment Income/(Loss) |
|
|
(97,754 |
) |
| |
|
|
|
|
| |
|
| Realized Gain/(Loss) and Change in Unrealized
Appreciation/(Depreciation) on Investments and Foreign Currency Transactions |
|
|
|
|
| |
|
| Net realized gain/(loss) from investments |
|
|
6,801,698 |
|
| |
|
| Net realized gain/(loss) from foreign currency
transactions |
|
|
57 |
|
| |
|
| Net change in unrealized appreciation/(depreciation)
on investments |
|
|
30,649,001 |
|
| |
|
| Net change in unrealized appreciation/(depreciation)
on translation of assets and liabilities in foreign currencies |
|
|
41 |
|
| |
|
|
|
|
| |
|
| Net Gain on Investments and Foreign Currency
Transactions |
|
|
37,450,797 |
|
| |
|
|
|
|
| |
|
| Net Increase in Net Assets Resulting From
Operations |
|
$ |
37,353,043 |
|
| |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| 8 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
FINANCIAL INFORMATION — GUARDIAN MID CAP TRADITIONAL GROWTH VIP FUND
|
|
|
|
|
|
|
|
|
|
Statements of Changes in Net Assets |
|
| |
|
|
| |
|
For the
Year Ended
12/31/19 |
|
|
For the
Year Ended
12/31/18 |
|
| |
|
|
|
| Operations |
|
| |
|
|
| Net investment income/(loss) |
|
$ |
(97,754 |
) |
|
$ |
(70,021 |
) |
| |
|
|
| Net realized gain/(loss) from investments and foreign
currency transactions |
|
|
6,801,755 |
|
|
|
5,091,851 |
|
| |
|
|
| Net change in unrealized appreciation/(depreciation)
on investments and
translation of assets and liabilities in foreign currencies |
|
|
30,649,042 |
|
|
|
(10,889,842 |
) |
| |
|
|
|
|
|
|
|
|
| |
|
|
| Net Increase/(Decrease) in Net Assets Resulting
from Operations |
|
|
37,353,043 |
|
|
|
(5,868,012 |
) |
| |
|
|
|
|
|
|
|
|
| |
| Capital Share
Transactions |
|
| |
|
|
| Proceeds from sales of shares |
|
|
1,287,937 |
|
|
|
120,913,855 |
|
| |
|
|
| Cost of shares redeemed |
|
|
(23,647,691 |
) |
|
|
(17,662,081 |
) |
| |
|
|
|
|
|
|
|
|
| |
|
|
| Net Increase/(Decrease) in Net Assets Resulting
from Capital Share Transactions |
|
|
(22,359,754 |
) |
|
|
103,251,774 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| Net Increase in Net Assets |
|
|
14,993,289 |
|
|
|
97,383,762 |
|
| |
|
|
|
|
|
|
|
|
| |
| Net Assets |
|
| |
|
|
| Beginning of year |
|
|
110,065,187 |
|
|
|
12,681,425 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| End of year |
|
$ |
125,058,476 |
|
|
$ |
110,065,187 |
|
| |
|
|
|
|
|
|
|
|
| |
| Other Information: |
|
| |
|
|
| Shares |
|
|
|
|
|
|
|
|
| |
|
|
| Sold |
|
|
81,649 |
|
|
|
9,277,053 |
|
| |
|
|
| Redeemed |
|
|
(1,564,608 |
) |
|
|
(1,305,053 |
) |
| |
|
|
|
|
|
|
|
|
| |
|
|
| Net Increase/(Decrease) |
|
|
(1,482,959 |
) |
|
|
7,972,000 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| The accompanying notes are an integral part of these financial statements. |
|
|
|
9 |
FINANCIAL INFORMATION — GUARDIAN MID CAP TRADITIONAL GROWTH VIP
FUND
The Financial Highlights table is intended to help you understand the Fund’s
financial performance for the past five years (or, if shorter, the period since inception). Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned
(or lost) on an investment in the Fund.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Financial
Highlights |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Per Share Operating Performance |
|
|
|
|
| |
|
Net Asset Value,
Beginning of
Period |
|
|
Net Investment
Income/(Loss)(1) |
|
|
Net Realized
and Unrealized
Gain/(Loss) |
|
|
Total
Operations |
|
|
Net Asset
Value, End of
Period |
|
|
Total
Return(2) |
|
| |
|
|
|
|
|
|
| Year Ended 12/31/19 |
|
$ |
12.27 |
|
|
$ |
(0.01 |
) |
|
$ |
4.45 |
|
|
$ |
4.44 |
|
|
$ |
16.71 |
|
|
|
36.19% |
|
| |
|
|
|
|
|
|
| Year Ended 12/31/18 |
|
|
12.72 |
|
|
|
(0.01 |
) |
|
|
(0.44 |
) |
|
|
(0.45 |
) |
|
|
12.27 |
|
|
|
(3.54)% |
|
| |
|
|
|
|
|
|
| Year Ended 12/31/17 |
|
|
9.99 |
|
|
|
(0.02 |
) |
|
|
2.75 |
|
|
|
2.73 |
|
|
|
12.72 |
|
|
|
27.33% |
|
| |
|
|
|
|
|
|
| Period Ended
12/31/16(4) |
|
|
10.00 |
|
|
|
0.00 |
(5) |
|
|
(0.01 |
) |
|
|
(0.01 |
) |
|
|
9.99 |
|
|
|
(0.10)% |
(6) |
|
|
|
|
|
| 10 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
FINANCIAL INFORMATION — GUARDIAN MID CAP TRADITIONAL GROWTH VIP FUND
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Ratios/Supplemental Data |
|
Net Assets, End
of Period (000s) |
|
|
Net Ratio of
Expenses to
Average
Net Assets(3) |
|
|
Gross Ratio of
Expenses to
Average Net
Assets |
|
|
Net Ratio of Net
Investment Income/
(Loss) to Average
Net
Assets(3) |
|
|
Gross Ratio of Net
Investment Loss
to Average
Net Assets |
|
|
Portfolio
Turnover Rate |
|
|
|
|
|
|
|
| $ |
125,058 |
|
|
|
1.10% |
|
|
|
1.26% |
|
|
|
(0.07)% |
|
|
|
(0.23)% |
|
|
|
10% |
|
|
|
|
|
|
|
| |
110,065 |
|
|
|
1.10% |
|
|
|
1.31% |
|
|
|
(0.07)% |
|
|
|
(0.28)% |
|
|
|
30% |
|
|
|
|
|
|
|
| |
12,681 |
|
|
|
1.09% |
|
|
|
2.15% |
|
|
|
(0.20)% |
|
|
|
(1.26)% |
|
|
|
35% |
|
|
|
|
|
|
|
| |
13,272 |
|
|
|
1.09% |
(6) |
|
|
2.93% |
(6) |
|
|
0.14% |
(6) |
|
|
(1.70)% |
(6) |
|
|
5% |
(6) |
| (1) |
Calculated based on the average shares outstanding during the period. |
| (2) |
Total returns do not reflect the effects of charges deducted pursuant to the terms of The Guardian Insurance &
Annuity Company, Inc.’s variable contracts. Inclusion of such charges would reduce the total returns for all periods shown. |
| (3) |
Net Ratio of Expenses to Average Net Assets and Net Ratio of Net Investment Income/(Loss) to Average Net Assets include
the effect of fee waivers and expense limitations. |
| (4) |
Commenced operations on September 1, 2016. |
| (5) |
Rounds to $0.00 per share. |
| (6) |
Ratios for periods less than one year have been annualized, except for total return and portfolio turnover rate. For the
period ended December 31, 2016, certain non-recurring fees (i.e., audit fees) are not annualized. |
|
|
|
|
|
| The accompanying notes are an integral part of these financial statements. |
|
|
|
11 |
NOTES TO FINANCIAL STATEMENTS — GUARDIAN MID CAP TRADITIONAL GROWTH
VIP FUND
December 31, 2019
1.
Organization
Guardian Variable Products Trust (the “Trust”), a Delaware statutory trust organized on January 12, 2016, is registered under the
Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Trust currently has sixteen series. Guardian Mid Cap Traditional Growth VIP Fund (the
“Fund”) is a series of the Trust. The Fund is a diversified fund and commenced operations on September 1, 2016. The financial statements for other series of the Trust are presented in separate reports.
The Trust has authorized an unlimited number of shares of beneficial interest with no par value. Shares are bought and sold at closing net asset value (“NAV”).
Shares of the Fund are only sold to certain separate accounts of The Guardian Insurance & Annuity Company, Inc. (“GIAC”) that fund certain variable annuity contracts and variable life insurance policies issued by GIAC. GIAC is a
wholly-owned subsidiary of The Guardian Life Insurance Company of America (“Guardian Life”).
The Fund seeks long-term growth of capital.
2. Significant Accounting Policies
The following is a summary of significant
accounting policies followed by the Fund in the preparation of its financial statements. The Fund follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards
Codification Topic 946 Financial Services — Investment Companies. The following policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements
in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.
a. Investment Valuations Equity securities traded on an exchange other than NASDAQ Stock Market, LLC (“NASDAQ”) are valued at the last reported sale
price on the principal exchange or market on which they are traded; or, if there were no sales that day, at the mean between the closing bid and ask prices. Securities traded on the NASDAQ are generally valued at the NASDAQ official closing price,
which may not be the last sale price. If the NASDAQ official closing price is not available for a security, that security is generally valued at the
mean between the closing bid and ask prices. Repurchase agreements are carried at cost, which approximates fair value (see Note 5d). Foreign securities are valued in the currencies of the markets
in which they trade and then converted to U.S. dollars by the application of foreign exchange rates at the close of the New York Stock Exchange (“NYSE”). Forward foreign currency contracts, if any, are valued at the mean between the bid
and ask rates for the specified time interpolated from rates for proximate time periods. Securities for which market quotations are not readily available or for which market quotations may be considered unreliable are valued at their fair values as
determined in accordance with policies and procedures adopted by the Board of Trustees.
Under the policies and procedures approved by the Board of Trustees, Park
Avenue Institutional Advisers LLC (“Park Avenue”), the Fund’s investment adviser, has established a Fair Valuation Committee to assist the Board of Trustees with the oversight and monitoring of the valuation of the Fund’s
investments. This includes monitoring the appropriateness of fair values based on results of ongoing valuation oversight, including but not limited to consideration of security specific events, market events, and pricing vendor and broker-dealer due
diligence. The Fair Valuation Committee oversees and carries out the policies for the valuation of investments held in the Fund. The Fair Valuation Committee is responsible for discussing and assessing the potential impacts to the fair values on an
ongoing basis, and at least on a quarterly basis with the Board of Trustees.
Securities whose values have been materially affected by events occurring before the
Fund’s valuation time but after the close of the securities’ principal exchange or market may be fair valued in accordance with policies and procedures adopted by the Board of Trustees. In addition, the values of the Fund’s
investments in foreign securities are generally determined by a pricing service using pricing models designed to estimate likely changes in the values of those securities. Certain foreign equity instruments are valued by applying international fair
value factors provided by approved pricing services. The factors seek to adjust the local closing price for movements of local markets post closing, but prior to the time the NAVs are calculated. Valuations reflected in this report are as of the
report date. As a result, changes in valuation due to market events and/or issuer related events after the report date and prior to issuance of the report are not reflected herein.
NOTES TO FINANCIAL STATEMENTS — GUARDIAN MID CAP TRADITIONAL GROWTH VIP FUND
Various inputs are used in determining the valuation of the Fund’s investments. These inputs are summarized in three
broad levels listed below.
| • |
|
Level 1 — unadjusted inputs using quoted prices in active markets for identical investments. |
| • |
|
Level 2 — other significant observable inputs, including, but not limited to, quoted prices for similar investments, inputs other than quoted prices that are observable for investments (such as interest
rates, prepayment speeds, credit risks, etc.) or other market corroborated inputs. |
| • |
|
Level 3 — significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments) |
Inputs may include price information, volatility statistics, specific and broad credit data, liquidity statistics, and other factors. A financial instrument’s level
within the fair value hierarchy is based on the lowest level of any input; both individually and in aggregate, that is significant to the fair value measurement. However, the determination of what constitutes “observable” requires
significant judgment by the Trust. The Trust considers observable data to be that market data which is readily available, regularly distributed or updated, reliable and verifiable, and provided by independent sources that are actively involved in
the relevant market. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. Changes in valuation techniques may result in transfers into or out of a
financial instrument’s assigned level within the hierarchy.
The FASB requires reporting entities to make disclosures about purchases, sales, issuances and
settlements of Level 3 securities on a gross basis. For the year ended December 31, 2019, there were no transfers into or out of Level 3 of the fair value hierarchy.
In determining a financial instrument’s placement within the hierarchy, the Trust separates the Fund’s investment portfolio into two categories: investments
and derivatives (e.g., futures). A summary of inputs used to value the Fund’s assets and liabilities carried at fair value as of December 31, 2019 is included in the Schedule of Investments.
Investments Investments whose values are based on quoted market prices in active markets, and are therefore classified within Level 1, include active
listed equities. Investments that trade in markets that are not considered to be active, but are valued based on quoted market prices, dealer quotations or alternative pricing
sources supported by observable inputs are classified within Level 2. These include certain U.S. government and sovereign obligations, most government agency securities, investment-grade
corporate bonds, certain mortgage products, state, municipal and provincial obligations, and certain foreign equity securities, including securities whose prices may have been affected by events occurring after the close of trading on their
principal exchange or market and, as a result, whose values are determined by a pricing service as described above, or securities whose values are otherwise determined using fair valuation methods approved by the Fund’s Board of Trustees.
Investments classified within Level 3 have significant unobservable inputs, as they trade infrequently or not at all. Level 3 investments include, among
others, private placement securities. When observable prices are not available for these securities, the Trust uses one or more valuation techniques for which sufficient and reliable data is available. The inputs used by the Trust in estimating the
value of Level 3 investments include, for example, the original transaction price, recent transactions in the same or similar instruments, completed or pending third-party transactions in the underlying investment or comparable issuers,
subsequent rounds of financing, recapitalizations, and other transactions across the capital structure. Level 3 investments may also be adjusted to reflect illiquidity and/or non-transferability, with the
amount of such discount estimated by the Trust in the absence of market information. Assumptions used by the Trust due to the lack of observable inputs may significantly impact the resulting fair value and therefore the Fund’s results of
operations. As of December 31, 2019, the Fund had no securities classified as Level 3.
Derivatives Exchange-traded derivatives, such as
futures contracts, exchange-traded option contracts and certain swaps, are typically classified within Level 1 or Level 2 of the fair value hierarchy depending on whether or not they are deemed to be actively traded. Certain non-exchange-traded derivatives, such as generic forwards, certain swaps and options, have inputs which can generally be corroborated by market data and are therefore classified within Level 2. During the year
ended December 31, 2019, the Fund did not hold any derivatives.
b. Securities Transactions Securities transactions are accounted for on the date
securities are purchased or sold (trade date). Realized gains or losses on securities transactions are determined on the basis of specific identification.
NOTES TO FINANCIAL STATEMENTS — GUARDIAN MID CAP TRADITIONAL GROWTH VIP FUND
c. Foreign Currency Translation The accounting records of the Fund are maintained in U.S. dollars. Investment
securities and all other assets and liabilities of the Fund denominated in a foreign currency are generally translated into U.S. dollars at the exchange rates quoted at the close of the NYSE on each business day. The market value of investment
securities and other assets and liabilities are translated at the exchange rate as of the valuation date. Purchases and sales of securities, income receipts, and expense payments are translated into U.S. dollars at the exchange rates in effect on
the dates of the respective transactions. The Fund does not isolate the portion of the fluctuations on investments resulting from changes in foreign currency exchange rates from the fluctuations in market prices of investments held. Such
fluctuations are included in the Net change in net realized and unrealized gain/(loss) from investments on the Statement of Operations.
Reported realized foreign
currency gains and losses arise from the disposition of foreign currency, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest and foreign
withholding taxes recorded on the Fund’s books on the transaction date and the U.S. dollar equivalent of the amounts actually received or paid. These reported realized foreign currency gains and losses, if any, are included in Net realized
gain/(loss) from foreign currency transactions on the Statement of Operations. Unrealized foreign currency gains and losses arise from changes (due to changes in exchange rates) in the value of foreign currency and other assets and liabilities
denominated in foreign currencies, which are held at period end, if any, and are included in Net change in unrealized appreciation/(depreciation) on translation of assets and liabilities in foreign currencies on the Statement of Operations.
d. Foreign Capital Gains Tax The Fund may be subject to foreign taxes on income, gains on investments or currency purchases/repatriation, a portion of which may
be recoverable. The Fund will accrue such taxes and recoveries as applicable, based upon their current interpretation of tax rules and regulations that exist in the markets in which they invest.
e. Investment Income Dividend income net of foreign taxes withheld, if any, is generally recorded on the ex-dividend date.
Interest income, which includes amortization/accretion of premium/discount, is determined using the interest income accrual method, and is accrued and recorded daily.
f. Allocation of Income and Expenses Many of the expenses of the Trust can be directly attributed to a specific
series of the Trust. Expenses that cannot be directly attributed to a specific series of the Trust are generally apportioned among all the series in the Trust, based on relative net assets. In calculating net asset value per share for each series of
the Trust, investment income, realized and unrealized gains and losses, and expenses other than series-specific expenses are allocated daily to each series based upon the proportion of net assets attributable to each series.
3. Transactions with Affiliates
a. Investment Advisory Fee and Expense
Limitation Under the terms of the advisory agreement, which, after its two year initial term, is reviewed and approved annually by the Board of Trustees, the Fund pays an investment advisory fee to Park Avenue. Park Avenue is a wholly-owned
subsidiary of Guardian Life and receives an investment advisory fee at an annual rate of 0.80% up to $100 million, 0.75% up to $300 million, and 0.73% in excess of $300 million of the Fund’s average daily net assets. The fee is
accrued daily and paid monthly.
Park Avenue has contractually agreed through April 30, 2020 to waive certain fees and/or reimburse certain expenses incurred by
the Fund to the extent necessary to limit the Fund’s total annual operating expenses after fee waiver and/or expense reimbursement to 1.10% of the Fund’s average daily net assets (excluding, if applicable, any acquired fund fees and
expenses, taxes, interest, transaction costs and brokerage commissions, litigation and extraordinary expenses). The limitation may not be increased or terminated prior to this time without action by the Board of Trustees, may be terminated only upon
approval of the Board of Trustees, and is subject to Park Avenue’s recoupment rights. For the year ended December 31, 2019, Park Avenue waived fees and/or paid Fund expenses in the amount of $189,643.
Park Avenue may be entitled to recoupment of previously waived fees and reimbursed expenses from the Fund for three years from the date of the waiver or reimbursement,
subject to the expense limitation in effect at the time of the waiver or reimbursement and at the time of the recoupment, if any. Amounts waived or reimbursed by Park Avenue pursuant to any expense limitation after April 9, 2018 are not subject
to Park Avenue’s recoupment rights. The amount available for potential future recoupment by Park Avenue from the
NOTES TO FINANCIAL STATEMENTS — GUARDIAN MID CAP TRADITIONAL GROWTH VIP FUND
Fund under the Expense Limitation Agreement and the expiration schedule at December 31, 2019 are as follows:
|
|
|
|
|
| |
|
| |
|
Potential Recoupment Amounts
Expiring |
|
Total Potential
Recoupment
Amounts |
|
2021 |
|
2020 |
| $247,059 |
|
$54,113 |
|
$192,946 |
Park Avenue has entered into a Sub-Advisory Agreement with Janus Capital Management LLC
(“Janus Capital”). Janus Capital is responsible for providing day-to-day investment advisory services to the Fund, subject to the supervision of Park Avenue
and the oversight of the Board of Trustees. Sub-advisory fees are paid by Park Avenue and do not represent a separate or additional expense to the Fund.
b. Compensation of Trustees and Officers Trustees and officers who are interested persons of the Trust, as defined in the 1940 Act, receive no compensation from
the Fund, except for the Chief Compliance Officer of the Trust. Trustees of the Trust who are not interested persons of the Trust, and the Chief Compliance Officer, receive compensation and reimbursement of expenses from the Trust.
c. Distribution Fees Park Avenue Securities LLC (“PAS”), a wholly-owned subsidiary of Guardian Life, is the principal underwriter of Fund shares. The
Trust has entered into a distribution and service agreement with PAS, which governs the sale and distribution of shares of the Fund. Under a distribution and service plan adopted by the Trust (“12b-1
plan”), PAS is compensated for services in such capacity, including its expenses in connection with the promotion and distribution of shares of the Fund, at an annual rate of 0.25% of the Fund’s average daily net assets. For the year ended
December 31, 2019, the Fund paid distribution fees in the amount of $306,625 to PAS.
PAS has directed that certain payments under the 12b-1 plan be used to compensate GIAC for shareholder services provided to contract owners.
4. Federal Income Taxes
a. Distributions to Shareholders For federal income tax purposes, the Fund is treated as a disregarded entity (“DRE”). As a DRE, the Fund is not subject
to an entity-level income tax; and any income, gains, losses, deductions, taxes, and credits of the Fund would instead be “passed through” directly to the separate accounts
of GIAC that invest in the Fund and retain the same character for U.S. federal income tax purposes. In addition, the Fund is not required to distribute taxable income and capital gains for U.S.
federal income tax purposes. Therefore, no dividends and capital gains distributions were paid by the Fund.
5. Investments
a. Investment Purchases and Sales The cost of investments purchased and the proceeds from investments sold (excluding short-term investments) amounted to
$12,269,881 and $34,795,176, respectively, for the year ended December 31, 2019. During the year ended December 31, 2019, there were no purchases or sales of U.S. government securities.
b. Foreign Securities Foreign securities investments involve special risks and considerations not typically associated with U.S. investments. These risks include,
but are not limited to, currency risk; adverse political, regulatory, social, and economic developments; and less reliable information about issuers. Moreover, securities of some foreign issuers may be less liquid and their prices more volatile than
those of comparable U.S. issuers.
c. Industry or Sector Concentration In its normal course of business, the Fund may invest a significant portion of its
assets in companies within a limited number of industries or sectors. As a result, the Fund may be subject to a greater risk of loss than that of a fund invested in a wider spectrum of industries or sectors because the stocks of many or all of the
companies in the industry, group of industries, sector, or sectors may decline in value due to developments adversely affecting the industry, group of industries, sector, or sectors.
d. Repurchase Agreements The Fund may invest in repurchase agreements to maintain liquidity and earn income over periods of time as short as overnight. The
collateral for repurchase agreements is either cash or fully negotiable U.S. government securities (including U.S. government agency securities). Repurchase agreements are fully collateralized (including the interest accrued thereon) and such
collateral is marked to market daily while the agreements remain in force. If the value of the collateral falls below the repurchase price plus accrued interest, the Fund will typically require the seller to deposit additional collateral by the next
business day. If the request for additional collateral is not met, or the seller defaults, the Fund maintains the right to sell the collateral (although it may be prevented or delayed from doing so in certain circumstances) and
NOTES TO FINANCIAL STATEMENTS — GUARDIAN MID CAP TRADITIONAL GROWTH VIP FUND
may be required to claim any resulting loss against the seller. Park Avenue monitors the creditworthiness of the seller
with which the Fund enters into repurchase agreements.
6. Temporary Borrowings
The Fund, with other funds managed by Park Avenue, is party to a $10 million committed revolving credit facility from State Street Bank and Trust Company for
temporary borrowing purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of securities. Interest is calculated based on the higher of the daily one-month
LIBOR rate and the Federal Funds rate plus 1.25% at the time of borrowing. In addition to the interest charged on any borrowings by the Fund, each fund pays a commitment fee of 0.30% per annum on its share of the
unused portion of the credit facility. The agreement is in place until December 9, 2020. The Fund did not utilize the credit facility during the year ended December 31, 2019.
7. Indemnifications
Under the Trust’s organizational documents and, in
some cases, by contract, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Fund. In addition, in the normal course of business, the Fund enters into contracts with its vendors
and others that provide general indemnifications. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. However, based on experience,
the Fund expects the risk of loss to be remote.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees of Guardian Variable Products Trust and Shareholders of
Guardian Mid Cap Traditional Growth VIP Fund
Opinion on the
Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Guardian Mid
Cap Traditional Growth VIP Fund (one of the funds constituting Guardian Variable Products Trust, referred to hereafter as the “Fund”) as of December 31, 2019, the related statement of operations for the year ended December 31,
2019, the statement of changes in net assets for each of the two years in the period ended December 31, 2019, including the related notes, and the financial highlights for each of the periods indicated therein (collectively referred to
as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2019, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period ended December 31, 2019 and the financial highlights for each of the periods indicated therein in conformity with accounting principles generally accepted in the United States of
America.
Basis for Opinion
These financial statements are the
responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board
(United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing
procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the
amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our
procedures included confirmation of securities owned as of December 31, 2019 by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits
provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
New
York, New York
February 20, 2020
We have served as the auditor of one or
more investment companies in Guardian Variable Products Trust since 2016.
SUPPLEMENTAL INFORMATION (UNAUDITED)
Trustees and Officers Information Table
The following table provides information about the Trustees of the Trust.
|
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| |
|
|
|
|
Name and
Year of Birth |
|
Term of Office,
Position(s) Held and Length of
Service1 |
|
Principal
Occupation(s) During Past Five Years |
|
Number of
Funds
in Fund
Complex Overseen
by Trustees2 |
|
Other Directorships
Held by Trustee |
| Independent Trustees |
| |
|
|
|
|
| Bruce W. Ferris3 (born 1955) |
|
Trustee |
|
Retired (since 2015); President and CEO, Prudential Annuities Distributors, Inc. (2013–2015); Director/Trustee, Advanced Series Trust, The Prudential Series Fund and Prudential’s
Gibraltar Fund, Inc. (2013–2015); Senior Vice President, Prudential Annuities (2008–2015). |
|
16 |
|
None. |
| |
|
|
|
|
| Theda R. Haber3 (born 1954) |
|
Trustee |
|
Adjunct Assistant Professor of Law, UC Hastings College of Law (since 2013); Member of the Board of Directors, Fairholme Trust Company, LLC (2015–2019); Attorney, Law Office of Theda R.
Haber (since 2014); Visiting Professor of Law, UC Davis School of Law (since 2014); Consultant, Haber & Associates LLC (financial services industry), (2012–2017); Advisory Council Chair, Vice Chair, and Member, Advisory Council on
Employee Welfare and Pension Benefit Plans (ERISA Advisory Council), U.S. Department of Labor (2009–2011); Managing Director and General Counsel, BlackRock Institutional Trust Company, N.A. (2009–2011); Deputy Global General Counsel,
Barclays Global Investors (2006–2009); Managing Director, Barclays Global Investors (1998–2006). |
|
16 |
|
None. |
| |
|
|
|
|
| Marshall
Lux3 (born 1960) |
|
Trustee |
|
Senior Advisor, The Boston Consulting Group (since 2014); Senior Partner and Managing Director, The Boston Consulting Group (2009–2014). |
|
16 |
|
None. |
| |
|
|
|
|
| Lisa K.
Polsky3 (born 1956) |
|
Trustee |
|
Board Member, MFA Financial, Inc. (real estate investment trust) (since 2020); Advisor, SMBC Americas (financial services) (since 2020); Senior Risk Advisor, AQR (investment management)
(2016–2019); Senior Risk Advisor, Ultra Capital (venture capital) (2016–2019); Board Member, DB USA Corporation (Deutsche Bank Intermediate Holding Company) (financial services) (since 2016); Chief Risk Officer, CIT Group Inc. (financial
services) (2010–2015); Board Member and Chair of Audit Committee, Piper Jaffray (investment bank) (2007–2016). |
|
16 |
|
None. |
| |
|
|
|
|
| John
Walters3 (born 1962) |
|
Lead Independent
Trustee |
|
Board Member, Amerilife Holdings LLC (insurance distribution) (since 2015); Board Member, Stadion Money Management LLC (investment adviser) (since 2011); President and Chief Operating Officer,
Hartford Life Insurance Company (2000–2010). |
|
16 |
|
Trustee, USAA Mutual Funds Trust, (One registered investment company offering 47 individual funds) (since
2019). |
SUPPLEMENTAL INFORMATION (UNAUDITED)
|
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|
|
| |
|
|
|
|
Name and
Year of Birth |
|
Term of Office,
Position(s) Held and Length of
Service1 |
|
Principal
Occupation(s) During Past Five Years |
|
Number of
Funds
in Fund
Complex Overseen
by Trustees2 |
|
Other Directorships
Held by Trustee |
| Interested Trustees |
| |
|
|
|
|
| Dominique Baede4 (born 1970) |
|
Trustee (Since
January 2020) |
|
Vice President, Head of Product, Life, Annuity and Inforce, The Guardian Life Insurance Company of America (since 2019); Managing Director, Product Management Group, AXA Equitable (insurance
company) prior thereto. |
|
16 |
|
None. |
| |
|
|
|
|
| Michael
Ferik4 (born 1972) |
|
Chairman and Trustee (Since
December 2019) |
|
Executive Vice President, Individual Markets, The Guardian Life Insurance Company of America (since 2020); Executive Vice President and Chief Financial Officer, The Guardian Life Insurance
Company of America (2017–2019); Executive Vice President, Individual Markets, The Guardian Life Insurance Company of America prior thereto. |
|
16 |
|
None. |
| 1 |
Except as otherwise noted, each Trustee began service in such capacity in 2016 and serves until his or her successor is
elected and qualified or until his or her resignation, death or removal. The business address of each Trustee is 10 Hudson Yards, New York, New York 10001. |
| 2 |
The Trust currently consists of 16 separate Funds. |
| 3 |
Member of the Audit Committee of the Trust. |
| 4 |
Each of Dominique Baede and Michael Ferik is considered to be an “interested person” of the Trust within the
meaning of the 1940 Act because of their affiliation with The Guardian Life Insurance Company of America and/or its affiliates. |
|
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|
|
|
| |
|
|
| Name and Year of Birth |
|
Position(s) Held and
Length of Service5 |
|
Principal Occupation(s)
During Past Five Years |
| |
|
|
| Dominique Baede
(born 1970) |
|
President and Principal Executive Officer (Since January 2020) |
|
Vice President, Head of Product, Life, Annuity and Inforce, The Guardian Life Insurance Company of America (since 2019); Managing Director,
Product Management Group, AXA Equitable (insurance company) prior. |
| |
|
|
| John H. Walter
(born 1962) |
|
Senior Vice President, Treasurer, and Principal Financial and Accounting Officer |
|
Vice President, Director of Finance, Corporate Finance, The Guardian Life Insurance Company of America. |
| |
|
|
| Harris Oliner
(born 1971) |
|
Senior Vice President and Secretary |
|
Senior Vice President, Corporate Secretary, The Guardian Life Insurance Company of America (since 2015); Senior Vice President, Deputy
General Counsel, Corporate Secretary, Voya Financial, Inc. prior thereto. |
| |
|
|
| Richard T. Potter
(born 1954) |
|
Senior Vice President and Chief Legal Officer |
|
Vice President and Equity Counsel, The Guardian Life Insurance Company of America. |
| |
|
|
| Philip Stack
(born 1964) |
|
Chief Compliance Officer
(Since September 2017) |
|
Second Vice President, Mutual Fund Chief Compliance Officer, The Guardian Life Insurance Company of America (since 2017); Executive Director,
Chief Compliance Officer, Morgan Stanley (2015–2017); Vice President, Morgan Stanley prior thereto. |
| |
|
|
| Brian Hagan
(born 1984) |
|
Anti-Money Laundering Officer (Since March 2019) |
|
Assistant Vice President (since 2019), Anti-Money Laundering Compliance, The Guardian Life Insurance Company of America/Park Avenue
Securities LLC; Vice President, Head of Financial Intelligence Unit, Brown Brothers Harriman & Co. (2014–2019); Assistant Vice President, AML Compliance Manager, JPMorgan Chase & Co. (2011–2014). |
| |
|
|
| Kathleen M. Moynihan
(born 1966) |
|
Senior Counsel |
|
Second Vice President, Counsel (since 2019), The Guardian Life Insurance Company of America; Senior Counsel prior thereto. |
| |
|
|
| Maria Nydia Morrison
(born 1958) |
|
Fund Controller |
|
Mutual Fund Controller, The Guardian Life Insurance Company of America (since 2015); Chief Financial Officer/Assistant Operating Officer, St.
Francis De Assisi Montessori School (Plaridel, Bulacan), Inc. (Philippines) prior thereto. |
| |
|
|
| Sonya L. Crosswell
(born 1977) |
|
Assistant Secretary |
|
Assistant Vice President, Assistant Corporate Secretary and Secretary Pro Tem, The Guardian Life Insurance Company of America. |
| 5 |
Unless otherwise indicated, the Officers each began service in such capacity in 2016 and hold office for an indefinite
term or until their successors shall have been elected and qualified. The business address of each Officer is 10 Hudson Yards, New York, New York 10001. |
SUPPLEMENTAL INFORMATION (UNAUDITED)
The Statement of Additional Information (“SAI”) includes additional information about
the Trust’s Trustees and Officers and is available, without charge, upon request by calling toll-free 1-888-GUARDIAN (1-888-482-7342) or by visiting our website at http://guardianvpt.onlineprospectus.net/GuardianVPT/Prospectuses.
Portfolio Holdings and Proxy Voting Procedures
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year as an exhibit
to its reports on Form N-PORT. The Fund’s Form N-PORT reports are available on the Securities and Exchange Commission’s website at https://www.sec.gov. The
Fund’s Form N-PORT information is also available, without charge, upon request, by calling toll-free 1-888-GUARDIAN (1-888-482-7342) or by visiting our website at http://guardianvpt.onlineprospectus.net/
GuardianVPT/Prospectuses.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio
securities is included in the SAI. The SAI and information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 may be obtained
(i) without charge, upon request, by calling toll-free 1-888-GUARDIAN (1-888-482-7342) or by visiting our website at http://guardianvpt.onlineprospectus.net/
GuardianVPT/Prospectuses; and (ii) on the Securities and Exchange Commission’s website at
https://www.sec.gov.
This report is transmitted to shareholders only. It is not authorized for use as an offer of sale or a solicitation of an offer to buy shares of the Fund unless
accompanied or preceded by the Fund’s current prospectus. Past performance results shown in this report should not be considered a representation of future performance. Investment returns and principal value of shares will fluctuate so that
shares, when redeemed, may be worth more or less than their original cost. Statements and other information herein are as dated and are subject to change.
The Guardian Life Insurance Company of America New York, NY 10001-2159
PUB8177
Guardian Variable
Products Trust
2019
Annual Report
All Data as of December 31, 2019
Guardian Mid Cap
Relative Value VIP Fund
Important Notice
Beginning
on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund’s shareholder reports will no longer be sent by mail from The Guardian Insurance & Annuity Company, Inc.
(“GIAC”). Instead, GIAC will mail you a notice when copies of the shareholder reports are made available on a website. You will be notified by mail each time a report is posted and provided with a website link to access the report.
If you have already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. If you have not yet
elected electronic delivery, at any time, you may elect to receive the Fund’s shareholder reports and certain other communications from GIAC electronically, by going to www.guardianlife.com and registering for e-delivery.
You may instead elect to receive all future shareholder reports in paper free of charge. If you wish to receive paper copies of your shareholder reports, please call
GIAC’s Customer Service Office Contact Center at 1-888-GUARDIAN (1-888-482-7342). Your election to receive reports in paper will apply to all the underlying funds available.
|
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| Not FDIC insured. May lose value. No bank guarantee. |
|
www.guardianlife.com |
TABLE OF CONTENTS
Except as otherwise specifically stated, all information, including portfolio security positions, is as of
December 31, 2019. The views expressed in the Fund Commentary are those of the Fund’s portfolio manager(s) as of the date of this report and are subject to change without notice. They do not necessarily represent the views of Park Avenue
Institutional Advisers LLC or a sub-adviser. The Fund Commentary may contain some forward-looking statements providing expectations or forecasts of future events as of the date of this report; they do not
necessarily relate to historical or current facts. There can be no guarantee that any forward-looking statement will be realized. We undertake no obligation to update forward-looking statements, whether as a result of new information, future events,
or otherwise. Any discussions of specific securities should not be considered a recommendation to buy or sell those securities. Fund holdings will vary. Information contained herein has been obtained from sources believed reliable, but is not
guaranteed.
GUARDIAN MID CAP RELATIVE VALUE VIP FUND
FUND COMMENTARY OF WELLS CAPITAL MANAGEMENT INCORPORATED,
SUB-ADVISER (unaudited)
Highlights
| • |
|
Guardian Mid Cap Relative Value VIP Fund (the “Fund”) returned 35.51% for the 12 months ended December 31, 2019, and outperformed its benchmark, the Russell Midcap® Value Index1 (the “Index”). The Fund’s outperformance relative to the Index was primarily due to security selection in the
industrials, real estate, energy, and financials sectors. The Fund’s exposure to cash was the largest detractor to relative performance. In addition, overweights to the materials and health care sectors were minor detractors. |
| • |
|
The Index delivered a positive return of 27.06% in 2019. The market appreciation was broad across the Index, with all sectors except energy advancing double digit returns. |
Market Overview
Equity markets rallied for much of 2019, primarily driven by
a change in direction from central bank policies across the globe and optimism around a potential resolution to the U.S./China trade dispute. The December 2018 sell-off was quickly erased as the U.S. Federal
Reserve (the “Fed”) signaled a more accommodative policy and the fear of a policy induced recession was greatly reduced. The Fed’s decision to hold, ease and hold again was viewed favorably by the equity markets. Growth continued its
outperformance over value, although value saw a short resurgence later in the year as investors began to price in a softer economic landing and cyclical stocks rallied.
The Index sharply advanced during the period. The information technology, industrials, and financials sectors advanced the most, although the strength was broad based
across the Index with all sectors posting positive double-digit returns with the exception of the energy sector.
Portfolio Review
The Fund’s laudable relative performance premium was driven largely by stock selection during the period although relative sector weight allocation differences
also added value. Notably, stock selection in the industrials, real estate, materials, energy, and financials sectors were the largest contributors to relative performance. The Fund benefited as
many of its industrial and materials holdings recovered from the input cost pressures they faced in 2018, leading to strong margin recovery in 2019. The Fund’s exposure to cash was the largest detractor, although the Fund was also negatively
impacted by its overweight to the materials and health care sectors.
Outlook
Global financial markets across asset classes have rallied around a consensus view of a broad economic and inflationary recovery in 2020. Rather than try to predict
economic indicators, we take confidence in our modeling process’s ability to pick up how changes in interests rates affect discount rates and borrowing costs as well as if future risks are accurately being reflected in a company’s current
stock price.
We continue to maintain a favorable outlook for the Fund but believe any hiccup in economic data, the U.S. and China trade negotiations, and headlines
around the 2020 U.S. presidential election could produce increased volatility. We will continue to monitor and be opportunistic with any volatility that is created from these headlines. We are not experts in forecasting macro or political events;
however, it is commonly the macro-driven volatility that creates inefficiencies in individual stock prices.
We will continue to execute our process to identify and
capitalize on the mispricing of stocks. We invest in companies that we believe control their own destiny via durable asset bases that provide distinct long-term competitive advantages; flexible balance sheets; and strong, sustainable free cash flow
generation. We believe our strong fundamental analysis, risk management, and active investment process are well suited for taking advantage of new opportunities as the equity market evolves. While volatility may return, the strong balance sheets and
stable cash flows of the companies in our portfolio should support consistent long-term performance.
| 1 |
The Russell Midcap® Value Index (the “Index”) is an
unmanaged market-capitalization-weighted index that measures the performance of those companies in the Russell Midcap® Index with lower price-to-book ratios and lower forecasted growth values. (The Russell Midcap® Index measures the performance of the 800 smallest companies in the
Russell 1000® Index, which consists of the 1,000 largest U.S. companies based on total market capitalization.) Index results assume the reinvestment of dividends paid on the stocks
constituting the Index. You may not invest in the Index, and, unlike the Fund, the Index does not incur fees or expenses. Russell Investment Group is the source and owner of the trademarks, service marks and copyrights related to the Russell
Indexes. Russell® is a trademark of Russell Investment Group. |
GUARDIAN MID CAP RELATIVE VALUE VIP FUND
Funds in the Guardian Variable Products Trust are sold by prospectus only. You should carefully
consider the investment objectives, risks, charges and expenses of the Funds before making an investment decision. The prospectus contains this and other important information. Please read it carefully before investing or sending money. Please visit
our website at http://guardianvpt.onlineprospectus.net/GuardianVPT/ Prospectuses or to obtain a printed copy, call 1-888-GUARDIAN (1-888-482-7342).
As with all mutual funds, the value of an investment in the
Fund could decline, and you could lose money. Diversification does not guarantee profit or protect against loss, and there can be no assurance that the Fund will achieve its investment objective. The Fund invests primarily in equity securities and
therefore exposes you to the general risks of investing in stock markets. Investing in mid-size companies involves risks such as having less publicly available information, higher volatility, and less liquidity than in the case of larger companies.
Value stocks may not realize their perceived value and during certain periods the Fund may underperform other equity funds that employ a different style. Investing in a more limited number of issuers and sectors can be subject to greater market
fluctuation. Any discussions of specific securities should not be considered a recommendation to buy or sell those securities. Fund holdings will vary.
GUARDIAN MID CAP RELATIVE VALUE VIP FUND
Fund Characteristics (unaudited)
|
|
|
| Total Net Assets: $235,341,508 |
|
|
|
| |
|
Sector Allocation1 As of
December 31, 2019 |
|
|
|
|
| |
|
| Top Ten Holdings2 As of December 31, 2019 |
|
|
|
|
|
|
|
| |
|
| Holding |
|
% of Total
Net Assets |
|
| Amdocs Ltd. |
|
|
2.84% |
|
| Brown & Brown, Inc. |
|
|
2.81% |
|
| CBRE Group, Inc., Class A |
|
|
2.31% |
|
| Alcon, Inc. |
|
|
2.22% |
|
| Humana, Inc. |
|
|
2.21% |
|
| Varian Medical Systems, Inc. |
|
|
2.18% |
|
| Arch Capital Group Ltd. |
|
|
2.16% |
|
| Kansas City Southern |
|
|
2.13% |
|
| Stanley Black & Decker, Inc. |
|
|
2.12% |
|
| Jacobs Engineering Group, Inc. |
|
|
2.10% |
|
| Total |
|
|
23.08% |
|
| 1 |
The Fund’s holdings are allocated to each sector based on the MSCI Global Industry Classification Standard (GICS®). Cash includes short-term investments and net other assets and liabilities. |
| 2 |
Portfolio holdings are subject to change and should not be considered a recommendation to buy or sell individual
securities. |
GUARDIAN MID CAP RELATIVE VALUE VIP FUND
Fund Performance (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
| Average Annual Total Returns
As of December 31, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
| |
|
Inception Date |
|
|
1 Year |
|
|
5 Year |
|
|
10 Year |
|
|
Since Inception |
|
| Guardian Mid Cap Relative Value VIP Fund |
|
|
9/1/2016 |
|
|
|
35.51% |
|
|
|
— |
|
|
|
— |
|
|
|
10.45% |
|
| Russell Midcap® Value Index |
|
|
|
|
|
|
27.06% |
|
|
|
— |
|
|
|
— |
|
|
|
9.21% |
|
|
| |
|
Results of a Hypothetical $10,000 Investment As of December 31,
2019 |
|
The chart above shows the performance of a hypothetical $10,000 investment made on inception date in Guardian Mid Cap Relative Value VIP
Fund and the Russell Midcap® Value Index. Index returns do not include the fees and expenses of the Fund, but do include reinvestment of dividends, if any.
Performance quoted represents past performance and does not guarantee or predict future results. Investment return and principal value will fluctuate, so shares, when
redeemed, may be worth more or less than their original cost. The Fund’s fees and expenses are detailed in the Financial Highlights section of this report. Fees and expenses are factored into the net asset value of Fund shares and any
performance numbers we release. Total return figures include the effect of expense limitations in effect during the periods shown, if applicable; without such limitations, the performance shown would have been lower. Performance results assume the
reinvestment of dividends and capital gains. The return figures shown do not reflect the deduction of taxes that a contract owner/policyholder may pay on redemption units. The actual total returns for owners of variable annuity contracts or variable
life insurance policies that provide for investment in the Fund will be lower to reflect separate account and contract/policy charges. Current and month-end performance information, which may be lower or
higher than that cited, is available by calling 1-888-GUARDIAN
(1-888-482-7342) and is periodically updated on our website: http://guardianlife.com.
UNDERSTANDING YOUR FUND’S EXPENSES (UNAUDITED)
By investing in the Fund, you incur two types of costs: (1) transaction costs and (2) ongoing costs, including,
as applicable, investment advisory fees, distribution and/or service (12b-1) fees and other Fund expenses. The example below is intended to help you understand your ongoing costs (in dollars) of investing in
the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the
beginning of the period and held for the entire period from July 1, 2019 to December 31, 2019. The table below shows the Fund’s expenses in two ways:
Expenses based on actual return
This section of the table provides
information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for
example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the section under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this
period.
Expenses based on hypothetical 5% return for comparison purposes
This section of the table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund with the cost of investing in other mutual funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the
other funds.
Note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads), redemption fees, or exchange fees. Therefore the second section is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. If these transactional costs were
included, your costs would have been higher. Charges and expenses at the insurance company separate account level are not reflected in the table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
| |
|
Beginning
Account Value
7/1/19 |
|
Ending
Account Value
12/31/19 |
|
|
Expenses Paid
During Period* 7/1/19-12/31/19 |
|
|
Expense Ratio
During Period
7/1/19-12/31/19 |
|
| Based on Actual Return |
|
$1,000.00 |
|
|
$1,109.10 |
|
|
|
$5.32 |
|
|
|
1.00% |
|
| Based on Hypothetical Return (5% Return Before Expenses) |
|
$1,000.00 |
|
|
$1,020.16 |
|
|
|
$5.09 |
|
|
|
1.00% |
|
| * |
Expenses are equal to the Fund’s annualized expense ratio as indicated, multiplied by the average account value over
the period, multiplied by 184/365 (to reflect the one-half year period). |
SCHEDULE OF INVESTMENTS — GUARDIAN MID CAP RELATIVE VALUE VIP FUND
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Shares |
|
|
Value |
|
| Common Stocks – 96.1% |
|
| |
| Auto Components – 1.2% |
|
| |
|
|
| Aptiv PLC |
|
|
30,200 |
|
|
$ |
2,868,094 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
2,868,094 |
|
| Banks – 6.5% |
|
| |
|
|
| Fifth Third Bancorp |
|
|
142,312 |
|
|
|
4,374,671 |
|
| |
|
|
| PacWest Bancorp |
|
|
83,044 |
|
|
|
3,178,094 |
|
| |
|
|
| Regions Financial Corp. |
|
|
271,082 |
|
|
|
4,651,767 |
|
| |
|
|
| Zions Bancorporation N.A. |
|
|
59,100 |
|
|
|
3,068,472 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
15,273,004 |
|
| Beverages – 1.8% |
|
| |
|
|
| Molson Coors Beverage Co., Class B |
|
|
78,689 |
|
|
|
4,241,337 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
4,241,337 |
|
| Building Products – 2.1% |
|
| |
|
|
| AO Smith Corp. |
|
|
51,223 |
|
|
|
2,440,264 |
|
| |
|
|
| Masco Corp. |
|
|
53,328 |
|
|
|
2,559,210 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
4,999,474 |
|
| Capital Markets – 2.2% |
|
| |
|
|
| Cboe Global Markets, Inc. |
|
|
21,848 |
|
|
|
2,621,760 |
|
| |
|
|
| Northern Trust Corp. |
|
|
23,312 |
|
|
|
2,476,667 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
5,098,427 |
|
| Chemicals – 2.0% |
|
| |
|
|
| PPG Industries, Inc. |
|
|
34,480 |
|
|
|
4,602,735 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
4,602,735 |
|
| Commercial Services & Supplies – 2.1% |
|
| |
|
|
| Republic Services, Inc. |
|
|
54,802 |
|
|
|
4,911,903 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
4,911,903 |
|
| Construction & Engineering – 2.1% |
|
| |
|
|
| Jacobs Engineering Group, Inc. |
|
|
55,060 |
|
|
|
4,946,040 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
4,946,040 |
|
| Containers & Packaging – 3.4% |
|
| |
|
|
| International Paper Co. |
|
|
57,568 |
|
|
|
2,651,006 |
|
| |
|
|
| Packaging Corp. of America |
|
|
27,144 |
|
|
|
3,039,857 |
|
| |
|
|
| Sealed Air Corp. |
|
|
60,161 |
|
|
|
2,396,213 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
8,087,076 |
|
| Electric Utilities – 3.6% |
|
| |
|
|
| American Electric Power Co., Inc. |
|
|
43,016 |
|
|
|
4,065,442 |
|
| |
|
|
| FirstEnergy Corp. |
|
|
92,455 |
|
|
|
4,493,313 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
8,558,755 |
|
| Energy Equipment & Services – 1.9% |
|
| |
|
|
| Baker Hughes Co. |
|
|
76,019 |
|
|
|
1,948,367 |
|
| |
|
|
| National Oilwell Varco, Inc. |
|
|
98,012 |
|
|
|
2,455,201 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
4,403,568 |
|
| Equity Real Estate Investment – 5.5% |
|
| |
|
|
| American Campus Communities, Inc. REIT |
|
|
76,999 |
|
|
|
3,621,263 |
|
| |
|
|
| Invitation Homes, Inc. REIT |
|
|
152,409 |
|
|
|
4,567,698 |
|
| |
|
|
| Mid-America
Apartment Communities, Inc. REIT |
|
|
24,900 |
|
|
|
3,283,314 |
|
| |
|
|
| Park Hotels & Resorts, Inc. REIT |
|
|
55,954 |
|
|
|
1,447,530 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
12,919,805 |
|
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Shares |
|
|
Value |
|
| Food Products – 0.6% |
|
| |
|
|
| Lamb Weston Holdings, Inc. |
|
|
17,532 |
|
|
$ |
1,508,278 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
1,508,278 |
|
| Health Care Equipment & Supplies – 7.1% |
|
| |
|
|
| Alcon, Inc.(1) |
|
|
92,560 |
|
|
|
5,236,119 |
|
| |
|
|
| STERIS PLC |
|
|
14,655 |
|
|
|
2,233,715 |
|
| |
|
|
| Varian Medical Systems, Inc.(1) |
|
|
36,125 |
|
|
|
5,130,111 |
|
| |
|
|
| Zimmer Biomet Holdings, Inc. |
|
|
26,870 |
|
|
|
4,021,902 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
16,621,847 |
|
| Health Care Providers & Services – 3.1% |
|
| |
|
|
| Humana, Inc. |
|
|
14,158 |
|
|
|
5,189,190 |
|
| |
|
|
| Universal Health Services, Inc.,
Class B |
|
|
15,396 |
|
|
|
2,208,710 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
7,397,900 |
|
| Hotels, Restaurants & Leisure – 3.0% |
|
| |
|
|
| Vail Resorts, Inc. |
|
|
13,034 |
|
|
|
3,125,944 |
|
| |
|
|
| Yum China Holdings, Inc. |
|
|
79,847 |
|
|
|
3,833,455 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
6,959,399 |
|
| Household Durables – 2.7% |
|
| |
|
|
| D.R. Horton, Inc. |
|
|
55,571 |
|
|
|
2,931,370 |
|
| |
|
|
| Mohawk Industries, Inc.(1) |
|
|
25,487 |
|
|
|
3,475,917 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
6,407,287 |
|
| Household Products – 0.4% |
|
| |
|
|
| Church & Dwight Co., Inc. |
|
|
14,948 |
|
|
|
1,051,442 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
1,051,442 |
|
| Industrial Conglomerates – 1.9% |
|
| |
|
|
| Carlisle Cos., Inc. |
|
|
27,927 |
|
|
|
4,519,706 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
4,519,706 |
|
| Insurance – 11.3% |
|
| |
|
|
| Arch Capital Group Ltd.(1) |
|
|
118,297 |
|
|
|
5,073,759 |
|
| |
|
|
| Brown & Brown, Inc. |
|
|
167,248 |
|
|
|
6,602,951 |
|
| |
|
|
| Fidelity National Financial, Inc. |
|
|
79,842 |
|
|
|
3,620,835 |
|
| |
|
|
| Loews Corp. |
|
|
84,178 |
|
|
|
4,418,503 |
|
| |
|
|
| The Allstate Corp. |
|
|
40,778 |
|
|
|
4,585,486 |
|
| |
|
|
| Willis Towers Watson PLC |
|
|
11,046 |
|
|
|
2,230,629 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
26,532,163 |
|
| IT Services – 4.1% |
|
| |
|
|
| Amdocs Ltd. |
|
|
92,578 |
|
|
|
6,683,206 |
|
| |
|
|
| Euronet Worldwide, Inc.(1) |
|
|
19,624 |
|
|
|
3,091,957 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
9,775,163 |
|
| Life Sciences Tools & Services – 1.2% |
|
| |
|
|
| Charles River Laboratories International, Inc.(1) |
|
|
18,113 |
|
|
|
2,766,942 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
2,766,942 |
|
| Machinery – 2.8% |
|
| |
|
|
| Cummins, Inc. |
|
|
9,134 |
|
|
|
1,634,621 |
|
| |
|
|
| Stanley Black & Decker, Inc. |
|
|
30,091 |
|
|
|
4,987,282 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
6,621,903 |
|
| Media – 2.0% |
|
| |
|
|
| Discovery, Inc., Class C(1) |
|
|
157,950 |
|
|
|
4,815,895 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
4,815,895 |
|
|
|
|
|
|
| 6 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
SCHEDULE OF INVESTMENTS — GUARDIAN MID CAP RELATIVE VALUE VIP FUND
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Shares |
|
|
Value |
|
| Metals & Mining – 1.1% |
|
| |
|
|
| Barrick Gold Corp. |
|
|
133,501 |
|
|
$ |
2,481,784 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
2,481,784 |
|
| Mortgage Real Estate Investment – 1.5% |
|
| |
|
|
| Annaly Capital Management, Inc. REIT |
|
|
373,242 |
|
|
|
3,515,940 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
3,515,940 |
|
| Multiline Retail – 1.2% |
|
| |
|
|
| Kohl’s Corp. |
|
|
56,369 |
|
|
|
2,872,001 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
2,872,001 |
|
| Oil, Gas & Consumable Fuels – 4.1% |
|
| |
|
|
| Cimarex Energy Co. |
|
|
36,393 |
|
|
|
1,910,268 |
|
| |
|
|
| Devon Energy Corp. |
|
|
61,131 |
|
|
|
1,587,572 |
|
| |
|
|
| Hess Corp. |
|
|
30,459 |
|
|
|
2,034,966 |
|
| |
|
|
| Valero Energy Corp. |
|
|
19,418 |
|
|
|
1,818,496 |
|
| |
|
|
| WPX Energy, Inc.(1) |
|
|
170,030 |
|
|
|
2,336,212 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
9,687,514 |
|
| Real Estate Management & Development – 2.3% |
|
| |
|
|
| CBRE Group, Inc., Class A(1) |
|
|
88,875 |
|
|
|
5,447,149 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
5,447,149 |
|
| Road & Rail – 2.1% |
|
| |
|
|
| Kansas City Southern |
|
|
32,730 |
|
|
|
5,012,927 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
5,012,927 |
|
| Semiconductors & Semiconductor Equipment – 1.2% |
|
| |
|
|
| Analog Devices, Inc. |
|
|
22,980 |
|
|
|
2,730,943 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
2,730,943 |
|
| Software – 0.5% |
|
| |
|
|
| Check Point Software Technologies Ltd.(1) |
|
|
10,351 |
|
|
|
1,148,547 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
1,148,547 |
|
| Technology Hardware, Storage & Peripherals – 1.8% |
|
| |
|
|
| NCR Corp.(1) |
|
|
117,558 |
|
|
|
4,133,339 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
4,133,339 |
|
| Textiles, Apparel & Luxury Goods – 1.2% |
|
| |
|
|
| Carter’s, Inc. |
|
|
4,780 |
|
|
|
522,645 |
|
| |
|
|
| PVH Corp. |
|
|
22,288 |
|
|
|
2,343,583 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
2,866,228 |
|
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Shares |
|
|
Value |
|
| Trading Companies & Distributors – 2.9% |
|
| |
|
|
| AerCap Holdings N.V.(1) |
|
|
58,960 |
|
|
$ |
3,624,271 |
|
| |
|
|
| United Rentals, Inc.(1) |
|
|
18,724 |
|
|
|
3,122,602 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
6,746,873 |
|
| Water Utilities – 1.6% |
|
| |
|
|
| American Water Works Co., Inc. |
|
|
29,870 |
|
|
|
3,669,529 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
3,669,529 |
|
| |
|
Total Common Stocks
(Cost $195,928,488) |
|
|
|
226,200,917 |
|
|
|
|
|
|
|
|
|
|
| |
|
Principal
Amount |
|
|
Value |
|
| Short-Term Investment – 4.2% |
|
| Repurchase Agreements – 4.2% |
|
| |
|
|
| Fixed Income
Clearing Corp., 0.12%, dated 12/31/2019, proceeds at maturity value of $9,936,066, due 1/2/2020(2) |
|
$ |
9,936,000 |
|
|
$ |
9,936,000 |
|
| |
|
Total Repurchase Agreements
(Cost $9,936,000) |
|
|
|
9,936,000 |
|
| |
|
Total Investments – 100.3%
(Cost $205,864,488) |
|
|
|
236,136,917 |
|
| |
|
| Liabilities in excess of other assets – (0.3)% |
|
|
|
(795,409 |
) |
| |
|
| Total Net Assets – 100.0% |
|
|
$ |
235,341,508 |
|
| (1) |
Non–income–producing security. |
| (2) |
The table below presents collateral for repurchase agreements. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Security |
|
Coupon |
|
|
Maturity
Date |
|
|
Principal
Amount |
|
|
Value |
|
| U.S. Treasury Note |
|
|
2.75% |
|
|
|
9/15/2021 |
|
|
$ |
9,870,000 |
|
|
$ |
10,138,484 |
|
Legend:
REIT — Real
Estate Investment Trust
The following is a summary of the inputs used as
of December 31, 2019 in valuing the Fund’s investments. For more information on valuation inputs, please refer to Note 2a of the accompanying Notes to Financial Statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Valuation Inputs |
|
|
|
|
| Investments in Securities |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
| Common Stocks |
|
$ |
226,200,917 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
226,200,917 |
|
| Repurchase Agreements |
|
|
— |
|
|
|
9,936,000 |
|
|
|
— |
|
|
|
9,936,000 |
|
| Total |
|
$ |
226,200,917 |
|
|
$ |
9,936,000 |
|
|
$ |
— |
|
|
$ |
236,136,917 |
|
|
|
|
|
|
| The accompanying notes are an integral part of these financial statements. |
|
|
|
7 |
FINANCIAL INFORMATION — GUARDIAN MID CAP RELATIVE VALUE VIP FUND
|
|
|
|
|
|
Statement of Assets and Liabilities As of December 31, 2019 |
|
|
|
| Assets |
|
|
|
|
| |
|
| Investments, at value |
|
$ |
236,136,917 |
|
| |
|
| Cash |
|
|
41,091 |
|
| |
|
| Dividends/interest receivable |
|
|
363,278 |
|
| |
|
| Reimbursement receivable from adviser |
|
|
13,886 |
|
| |
|
| Prepaid expenses |
|
|
10,681 |
|
| |
|
|
|
|
| |
|
| Total Assets |
|
|
236,565,853 |
|
| |
|
|
|
|
| |
|
| Liabilities |
|
|
|
|
| |
|
| Payable for investments purchased |
|
|
883,428 |
|
| |
|
| Investment advisory fees payable |
|
|
136,889 |
|
| |
|
| Payable for fund shares redeemed |
|
|
77,967 |
|
| |
|
| Distribution fees payable |
|
|
49,494 |
|
| |
|
| Accrued audit fees |
|
|
22,105 |
|
| |
|
| Accrued custodian and accounting fees |
|
|
13,449 |
|
| |
|
| Accrued trustees’ and officers’
fees |
|
|
1,454 |
|
| |
|
| Accrued expenses and other liabilities |
|
|
39,559 |
|
| |
|
|
|
|
| |
|
| Total Liabilities |
|
|
1,224,345 |
|
| |
|
|
|
|
| |
|
| Total Net Assets |
|
$ |
235,341,508 |
|
| |
|
|
|
|
| |
|
| Net Assets Consist of: |
|
|
|
|
| |
|
| Paid-in
capital |
|
$ |
188,672,937 |
|
| |
|
| Distributable earnings |
|
|
46,668,571 |
|
| |
|
|
|
|
| |
|
| Total Net Assets |
|
$ |
235,341,508 |
|
| |
|
|
|
|
| Investments, at Cost |
|
$ |
205,864,488 |
|
| |
|
|
|
|
| |
|
| Pricing of Shares |
|
|
|
|
| |
|
|
Shares of Beneficial Interest Outstanding with
No Par Value |
|
|
16,897,481 |
|
| |
|
| Net Asset Value Per Share |
|
|
$13.93 |
|
| |
|
|
|
|
|
|
|
|
|
|
Statement of Operations For the Year Ended December 31, 2019 |
|
|
|
| Investment Income |
|
|
|
|
| |
|
| Dividends |
|
$ |
4,144,645 |
|
| |
|
| Interest |
|
|
32,393 |
|
| |
|
| Withholding taxes on foreign dividends |
|
|
(970 |
) |
| |
|
|
|
|
| |
|
| Total Investment Income |
|
|
4,176,068 |
|
| |
|
|
|
|
| |
|
| Expenses |
|
|
|
|
| |
|
| Investment advisory fees |
|
|
1,576,944 |
|
| |
|
| Distribution fees |
|
|
569,755 |
|
| |
|
| Trustees’ and officers’ fees |
|
|
92,881 |
|
| |
|
| Professional fees |
|
|
77,607 |
|
| |
|
| Custodian and accounting fees |
|
|
53,714 |
|
| |
|
| Administrative fees |
|
|
47,460 |
|
| |
|
| Shareholder reports |
|
|
34,995 |
|
| |
|
| Transfer agent fees |
|
|
19,123 |
|
| |
|
| Other expenses |
|
|
26,207 |
|
| |
|
|
|
|
| |
|
| Total Expenses |
|
|
2,498,686 |
|
| |
|
| Less: Fees waived |
|
|
(219,666 |
) |
| |
|
|
|
|
| |
|
| Total Expenses, Net |
|
|
2,279,020 |
|
| |
|
|
|
|
| |
|
| Net Investment Income/(Loss) |
|
|
1,897,048 |
|
| |
|
|
|
|
| |
|
| Realized Gain/(Loss) and Change in Unrealized
Appreciation/(Depreciation) on Investments |
|
|
|
|
| |
|
| Net realized gain/(loss) from investments |
|
|
10,568,878 |
|
| |
|
| Net change in unrealized appreciation/(depreciation)
on investments |
|
|
55,598,138 |
|
| |
|
|
|
|
| |
|
| Net Gain on Investments |
|
|
66,167,016 |
|
| |
|
|
|
|
| |
|
| Net Increase in Net Assets Resulting From
Operations |
|
$ |
68,064,064 |
|
| |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| 8 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
FINANCIAL INFORMATION — GUARDIAN MID CAP RELATIVE VALUE VIP FUND
|
|
|
|
|
|
|
|
|
|
Statements of Changes in Net Assets |
|
| |
|
|
| |
|
For the
Year Ended
12/31/19 |
|
|
For the
Year Ended
12/31/18 |
|
| |
|
|
|
| Operations |
|
| |
|
|
| Net investment income/(loss) |
|
$ |
1,897,048 |
|
|
$ |
1,132,362 |
|
| |
|
|
| Net realized gain/(loss) from investments |
|
|
10,568,878 |
|
|
|
1,377,970 |
|
| |
|
|
| Net change in unrealized appreciation/(depreciation)
on investments |
|
|
55,598,138 |
|
|
|
(26,909,351 |
) |
| |
|
|
|
|
|
|
|
|
| |
|
|
| Net Increase/(Decrease) in Net Assets Resulting
from Operations |
|
|
68,064,064 |
|
|
|
(24,399,019 |
) |
| |
|
|
|
|
|
|
|
|
| |
| Capital Share
Transactions |
|
| |
|
|
| Proceeds from sales of shares |
|
|
358,860 |
|
|
|
233,892,549 |
|
| |
|
|
| Cost of shares redeemed |
|
|
(37,266,799 |
) |
|
|
(18,104,929 |
) |
| |
|
|
|
|
|
|
|
|
| |
|
|
| Net Increase/(Decrease) in Net Assets Resulting
from Capital Share Transactions |
|
|
(36,907,939 |
) |
|
|
215,787,620 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| Net Increase in Net Assets |
|
|
31,156,125 |
|
|
|
191,388,601 |
|
| |
|
|
|
|
|
|
|
|
| |
| Net Assets |
|
| |
|
|
| Beginning of year |
|
|
204,185,383 |
|
|
|
12,796,782 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| End of year |
|
$ |
235,341,508 |
|
|
$ |
204,185,383 |
|
| |
|
|
|
|
|
|
|
|
| |
| Other Information: |
|
| |
|
|
| Shares |
|
|
|
|
|
|
|
|
| |
|
|
| Sold |
|
|
28,354 |
|
|
|
20,351,298 |
|
| |
|
|
| Redeemed |
|
|
(2,984,859 |
) |
|
|
(1,562,377 |
) |
| |
|
|
|
|
|
|
|
|
| |
|
|
| Net Increase/(Decrease) |
|
|
(2,956,505 |
) |
|
|
18,788,921 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| The accompanying notes are an integral part of these financial statements. |
|
|
|
9 |
FINANCIAL INFORMATION — GUARDIAN MID CAP RELATIVE VALUE VIP FUND
The Financial Highlights table is intended to help you understand the Fund’s financial
performance for the past five years (or, if shorter, the period since inception). Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost)
on an investment in the Fund.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Highlights Per Share Operating Performance |
|
|
|
|
|
|
| |
|
Per Share Operating Performance |
|
|
|
|
| |
|
Net Asset Value,
Beginning of
Period |
|
|
Net Investment
Income(1) |
|
|
Net Realized
and Unrealized
Gain/(Loss) |
|
|
Total
Operations |
|
|
Net Asset
Value, End of
Period |
|
|
Total
Return(2) |
|
| |
|
|
|
|
|
|
| Year Ended 12/31/19 |
|
$ |
10.28 |
|
|
$ |
0.10 |
|
|
$ |
3.55 |
|
|
$ |
3.65 |
|
|
$ |
13.93 |
|
|
|
35.51% |
|
| |
|
|
|
|
|
|
| Year Ended 12/31/18 |
|
|
12.02 |
|
|
|
0.08 |
|
|
|
(1.82 |
) |
|
|
(1.74 |
) |
|
|
10.28 |
|
|
|
(14.48)% |
|
| |
|
|
|
|
|
|
| Year Ended 12/31/17 |
|
|
10.81 |
|
|
|
0.10 |
|
|
|
1.11 |
|
|
|
1.21 |
|
|
|
12.02 |
|
|
|
11.19% |
|
| |
|
|
|
|
|
|
| Period Ended
12/31/16(4) |
|
|
10.00 |
|
|
|
0.03 |
|
|
|
0.78 |
|
|
|
0.81 |
|
|
|
10.81 |
|
|
|
8.10% |
(5) |
|
|
|
|
|
| 10 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
FINANCIAL INFORMATION — GUARDIAN MID CAP RELATIVE VALUE VIP FUND
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Ratios/Supplemental Data |
|
Net Assets, End
of Period (000s) |
|
|
Net Ratio of
Expenses to
Average
Net Assets(3) |
|
|
Gross Ratio of
Expenses to
Average Net
Assets |
|
|
Net Ratio of Net
Investment Income
to Average
Net Assets(3) |
|
|
Gross Ratio of Net
Investment Income/
(Loss) to Average
Net Assets |
|
|
Portfolio
Turnover Rate |
|
|
|
|
|
|
|
| $ |
235,342 |
|
|
|
1.00% |
|
|
|
1.10% |
|
|
|
0.83% |
|
|
|
0.73% |
|
|
|
37% |
|
|
|
|
|
|
|
| |
204,185 |
|
|
|
1.00% |
|
|
|
1.14% |
|
|
|
0.66% |
|
|
|
0.52% |
|
|
|
31% |
|
|
|
|
|
|
|
| |
12,797 |
|
|
|
1.09% |
|
|
|
2.09% |
|
|
|
0.87% |
|
|
|
(0.13)% |
|
|
|
76% |
|
|
|
|
|
|
|
| |
14,921 |
|
|
|
1.09% |
(5) |
|
|
2.80% |
(5) |
|
|
0.93% |
(5) |
|
|
(0.76)% |
(5) |
|
|
14% |
(5) |
| (1) |
Calculated based on the average shares outstanding during the period. |
| (2) |
Total returns do not reflect the effects of charges deducted pursuant to the terms of The Guardian Insurance &
Annuity Company, Inc.’s variable contracts. Inclusion of such charges would reduce the total returns for all periods shown. |
| (3) |
Net Ratio of Expenses to Average Net Assets and Net Ratio of Net Investment Income to Average Net Assets include the
effect of fee waivers and expense limitations. |
| (4) |
Commenced operations on September 1, 2016. |
| (5) |
Ratios for periods less than one year have been annualized, except for total return and portfolio turnover rate. For the
period ended December 31, 2016, certain non-recurring fees (i.e., audit fees) are not annualized. |
|
|
|
|
|
| The accompanying notes are an integral part of these financial statements. |
|
|
|
11 |
NOTES TO FINANCIAL STATEMENTS — GUARDIAN MID CAP RELATIVE VALUE VIP
FUND
December 31, 2019
1.
Organization
Guardian Variable Products Trust (the “Trust”), a Delaware statutory trust organized on January 12, 2016, is registered under the
Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Trust currently has sixteen series. Guardian Mid Cap Relative Value VIP Fund (the
“Fund”) is a series of the Trust. The Fund is a diversified fund and commenced operations on September 1, 2016. The financial statements for other series of the Trust are presented in separate reports.
The Trust has authorized an unlimited number of shares of beneficial interest with no par value. Shares are bought and sold at closing net asset value (“NAV”).
Shares of the Fund are only sold to certain separate accounts of The Guardian Insurance & Annuity Company, Inc. (“GIAC”) that fund certain variable annuity contracts and variable life insurance policies issued by GIAC. GIAC is a
wholly-owned subsidiary of The Guardian Life Insurance Company of America (“Guardian Life”).
The Fund seeks long-term capital appreciation.
2. Significant Accounting Policies
The following is a summary of significant
accounting policies followed by the Fund in the preparation of its financial statements. The Fund follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards
Codification Topic 946 Financial Services – Investment Companies. The following policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements
in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.
a. Investment Valuations Equity securities traded on an exchange other than NASDAQ Stock Market, LLC (“NASDAQ”) are valued at the last reported sale
price on the principal exchange or market on which they are traded; or, if there were no sales that day, at the mean between the closing bid and ask prices. Securities traded on the NASDAQ are generally valued at the NASDAQ official closing price,
which may not be the last sale price. If the NASDAQ official closing price is not available for a security, that security is generally valued at the
mean between the closing bid and ask prices. Repurchase agreements are carried at cost, which approximates fair value (see Note 5d). Foreign securities are valued in the currencies of the markets
in which they trade and then converted to U.S. dollars by the application of foreign exchange rates at the close of the New York Stock Exchange (“NYSE”). Forward foreign currency contracts, if any, are valued at the mean between the bid
and ask rates for the specified time interpolated from rates for proximate time periods. Securities for which market quotations are not readily available or for which market quotations may be considered unreliable are valued at their fair values as
determined in accordance with policies and procedures adopted by the Board of Trustees.
Under the policies and procedures approved by the Board of Trustees, Park
Avenue Institutional Advisers LLC (“Park Avenue”), the Fund’s investment adviser, has established a Fair Valuation Committee to assist the Board of Trustees with the oversight and monitoring of the valuation of the Fund’s
investments. This includes monitoring the appropriateness of fair values based on results of ongoing valuation oversight, including but not limited to consideration of security specific events, market events, and pricing vendor and broker-dealer due
diligence. The Fair Valuation Committee oversees and carries out the policies for the valuation of investments held in the Fund. The Fair Valuation Committee is responsible for discussing and assessing the potential impacts to the fair values on an
ongoing basis, and at least on a quarterly basis with the Board of Trustees.
Securities whose values have been materially affected by events occurring before the
Fund’s valuation time but after the close of the securities’ principal exchange or market may be fair valued in accordance with policies and procedures adopted by the Board of Trustees. In addition, the values of the Fund’s
investments in foreign securities are generally determined by a pricing service using pricing models designed to estimate likely changes in the values of those securities. Certain foreign equity instruments are valued by applying international fair
value factors provided by approved pricing services. The factors seek to adjust the local closing price for movements of local markets post closing, but prior to the time the NAVs are calculated. Valuations reflected in this report are as of the
report date. As a result, changes in valuation due to market events and/or issuer related events after the report date and prior to issuance of the report are not reflected herein.
NOTES TO FINANCIAL STATEMENTS — GUARDIAN MID CAP RELATIVE VALUE VIP FUND
Various inputs are used in determining the valuation of the Fund’s investments. These inputs are summarized in three
broad levels listed below.
| • |
|
Level 1 — unadjusted inputs using quoted prices in active markets for identical investments. |
| • |
|
Level 2 — other significant observable inputs, including, but not limited to, quoted prices for similar investments, inputs other than quoted prices that are observable for investments (such as interest
rates, prepayment speeds, credit risks, etc.) or other market corroborated inputs. |
| • |
|
Level 3 — significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments) |
Inputs may include price information, volatility statistics, specific and broad credit data, liquidity statistics, and other factors. A financial instrument’s level
within the fair value hierarchy is based on the lowest level of any input; both individually and in aggregate, that is significant to the fair value measurement. However, the determination of what constitutes “observable” requires
significant judgment by the Trust. The Trust considers observable data to be that market data which is readily available, regularly distributed or updated, reliable and verifiable, and provided by independent sources that are actively involved in
the relevant market. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. Changes in valuation techniques may result in transfers into or out of a
financial instrument’s assigned level within the hierarchy.
The FASB requires reporting entities to make disclosures about purchases, sales, issuances and
settlements of Level 3 securities on a gross basis. For the year ended December 31, 2019, there were no transfers into or out of Level 3 of the fair value hierarchy.
In determining a financial instrument’s placement within the hierarchy, the Trust separates the Fund’s investment portfolio into two categories: investments
and derivatives (e.g., futures). A summary of inputs used to value the Fund’s assets and liabilities carried at fair value as of December 31, 2019 is included in the Schedule of Investments.
Investments Investments whose values are based on quoted market prices in active markets, and are therefore classified within Level 1, include active
listed equities. Investments that trade in markets that are not considered to be active, but are valued based on quoted market prices, dealer quotations or alternative pricing
sources supported by observable inputs are classified within Level 2. These include certain U.S. government and sovereign obligations, most government agency securities, investment-grade
corporate bonds, certain mortgage products, state, municipal and provincial obligations, and certain foreign equity securities, including securities whose prices may have been affected by events occurring after the close of trading on their
principal exchange or market and, as a result, whose values are determined by a pricing service as described above, or securities whose values are otherwise determined using fair valuation methods approved by the Fund’s Board of Trustees.
Investments classified within Level 3 have significant unobservable inputs, as they trade infrequently or not at all. Level 3 investments include, among
others, private placement securities. When observable prices are not available for these securities, the Trust uses one or more valuation techniques for which sufficient and reliable data is available. The inputs used by the Trust in estimating the
value of Level 3 investments include, for example, the original transaction price, recent transactions in the same or similar instruments, completed or pending third-party transactions in the underlying investment or comparable issuers,
subsequent rounds of financing, recapitalizations, and other transactions across the capital structure. Level 3 investments may also be adjusted to reflect illiquidity and/or non-transferability, with the
amount of such discount estimated by the Trust in the absence of market information. Assumptions used by the Trust due to the lack of observable inputs may significantly impact the resulting fair value and therefore the Fund’s results of
operations. As of December 31, 2019, the Fund had no securities classified as Level 3.
Derivatives Exchange-traded derivatives, such as
futures contracts, exchange-traded option contracts and certain swaps, are typically classified within Level 1 or Level 2 of the fair value hierarchy depending on whether or not they are deemed to be actively traded. Certain non-exchange-traded derivatives, such as generic forwards, certain swaps and options, have inputs which can generally be corroborated by market data and are therefore classified within Level 2. During the year
ended December 31, 2019, the Fund did not hold any derivatives.
b. Securities Transactions Securities transactions are accounted for on the date
securities are purchased or sold (trade date). Realized gains or losses on securities transactions are determined on the basis of specific identification.
NOTES TO FINANCIAL STATEMENTS — GUARDIAN MID CAP RELATIVE VALUE VIP FUND
c. Foreign Currency Translation The accounting records of the Fund are maintained in U.S. dollars. Investment
securities and all other assets and liabilities of the Fund denominated in a foreign currency are generally translated into U.S. dollars at the exchange rates quoted at the close of the NYSE on each business day. The market value of investment
securities and other assets and liabilities are translated at the exchange rate as of the valuation date. Purchases and sales of securities, income receipts, and expense payments are translated into U.S. dollars at the exchange rates in effect on
the dates of the respective transactions. The Fund does not isolate the portion of the fluctuations on investments resulting from changes in foreign currency exchange rates from the fluctuations in market prices of investments held. Such
fluctuations are included in the Net change in net realized and unrealized gain/(loss) from investments on the Statement of Operations.
Reported realized foreign
currency gains and losses arise from the disposition of foreign currency, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest and foreign
withholding taxes recorded on the Fund’s books on the transaction date and the U.S. dollar equivalent of the amounts actually received or paid. These reported realized foreign currency gains and losses, if any, are included in Net realized
gain/(loss) from foreign currency transactions on the Statement of Operations. Unrealized foreign currency gains and losses arise from changes (due to changes in exchange rates) in the value of foreign currency and other assets and liabilities
denominated in foreign currencies, which are held at period end, if any, and are included in Net change in unrealized appreciation/(depreciation) on translation of assets and liabilities in foreign currencies on the Statement of Operations.
d. Foreign Capital Gains Tax The Fund may be subject to foreign taxes on income, gains on investments or currency purchases/repatriation, a portion of which may
be recoverable. The Fund will accrue such taxes and recoveries as applicable, based upon their current interpretation of tax rules and regulations that exist in the markets in which they invest.
e. Investment Income Dividend income net of foreign taxes withheld, if any, is generally recorded on the ex-dividend date.
Interest income, which includes amortization/accretion of premium/discount, is determined using the interest income accrual method, and is accrued and recorded daily.
f. Allocation of Income and Expenses Many of the expenses of the Trust can be directly attributed to a specific
series of the Trust. Expenses that cannot be directly attributed to a specific series of the Trust are generally apportioned among all the series in the Trust, based on relative net assets. In calculating net asset value per share for each series of
the Trust, investment income, realized and unrealized gains and losses, and expenses other than series-specific expenses are allocated daily to each series based upon the proportion of net assets attributable to each series.
3. Transactions with Affiliates
a. Investment Advisory Fee and Expense
Limitation Under the terms of the advisory agreement, which, after its two year initial term, is reviewed and approved annually by the Board of Trustees, the Fund pays an investment advisory fee to Park Avenue. Park Avenue is a wholly-owned
subsidiary of Guardian Life and receives an investment advisory fee at an annual rate of 0.72% up to $100 million, 0.67% up to $300 million, 0.62% up to $500 million, and 0.60% in excess of $500 million of the Fund’s average
daily net assets. The fee is accrued daily and paid monthly.
Park Avenue has contractually agreed through April 30, 2020 to waive certain fees and/or reimburse
certain expenses incurred by the Fund to the extent necessary to limit the Fund’s total annual operating expenses after fee waiver and/or expense reimbursement to 1.00% of the Fund’s average daily net assets (excluding, if applicable, any
acquired fund fees and expenses, taxes, interest, transaction costs and brokerage commissions, litigation and extraordinary expenses). The limitation may not be increased or terminated prior to this time without action by the Board of Trustees, may
be terminated only upon approval of the Board of Trustees, and is subject to Park Avenue’s recoupment rights. For the year ended December 31, 2019, Park Avenue waived fees and/or paid Fund expenses in the amount of $219,666.
Park Avenue may be entitled to recoupment of previously waived fees and reimbursed expenses from the Fund for three years from the date of the waiver or reimbursement,
subject to the expense limitation in effect at the time of the waiver or reimbursement and at the time of the recoupment, if any. Amounts waived or reimbursed by Park Avenue pursuant to any expense limitation after April 9, 2018 are not subject
to Park Avenue’s recoupment rights. The amount available for potential future recoupment by Park Avenue from the
NOTES TO FINANCIAL STATEMENTS — GUARDIAN MID CAP RELATIVE VALUE VIP FUND
Fund under the Expense Limitation Agreement and the expiration schedule at December 31, 2019 are as follows:
|
|
|
|
|
| |
|
| |
|
Potential Recoupment Amounts
Expiring |
|
Total Potential
Recoupment
Amounts |
|
2021 |
|
2020 |
| $244,076 |
|
$52,843 |
|
$191,233 |
Park Avenue has entered into a Sub-Advisory Agreement with Wells Capital Management Incorporated
(“Wells Capital”). Wells Capital is responsible for providing day-to-day investment advisory services to the Fund, subject to the supervision of Park Avenue
and the oversight of the Board of Trustees. Sub-advisory fees are paid by Park Avenue and do not represent a separate or additional expense to the Fund.
b. Compensation of Trustees and Officers Trustees and officers who are interested persons of the Trust, as defined in the 1940 Act, receive no compensation from
the Fund, except for the Chief Compliance Officer of the Trust. Trustees of the Trust who are not interested persons of the Trust, and the Chief Compliance Officer, receive compensation and reimbursement of expenses from the Trust.
c. Distribution Fees Park Avenue Securities LLC (“PAS”), a wholly-owned subsidiary of Guardian Life, is the principal underwriter of Fund shares. The
Trust has entered into a distribution and service agreement with PAS, which governs the sale and distribution of shares of the Fund. Under a distribution and service plan adopted by the Trust (“12b-1
plan”), PAS is compensated for services in such capacity, including its expenses in connection with the promotion and distribution of shares of the Fund, at an annual rate of 0.25% of the Fund’s average daily net assets. For the year ended
December 31, 2019, the Fund paid distribution fees in the amount of $569,755 to PAS.
PAS has directed that certain payments under the 12b-1 plan be used to compensate GIAC for shareholder services provided to contract owners.
4. Federal Income Taxes
a. Distributions to Shareholders For federal income tax purposes, the Fund is treated as a disregarded entity (“DRE”). As a DRE, the Fund is not subject
to an entity-level income tax; and any income, gains, losses, deductions, taxes, and credits of the Fund would instead be “passed through” directly to the separate accounts
of GIAC that invest in the Fund and retain the same character for U.S. federal income tax purposes. In addition, the Fund is not required to distribute taxable income and capital gains for U.S.
federal income tax purposes. Therefore, no dividends and capital gains distributions were paid by the Fund.
5. Investments
a. Investment Purchases and Sales The cost of investments purchased and the proceeds from investments sold (excluding short-term investments) amounted to
$81,217,403 and $120,535,826, respectively, for the year ended December 31, 2019. During the year ended December 31, 2019, there were no purchases or sales of U.S. government securities.
b. Foreign Securities Foreign securities investments involve special risks and considerations not typically associated with U.S. investments. These risks include,
but are not limited to, currency risk; adverse political, regulatory, social, and economic developments; and less reliable information about issuers. Moreover, securities of some foreign issuers may be less liquid and their prices more volatile than
those of comparable U.S. issuers.
c. Industry or Sector Concentration In its normal course of business, the Fund may invest a significant portion of its
assets in companies within a limited number of industries or sectors. As a result, the Fund may be subject to a greater risk of loss than that of a fund invested in a wider spectrum of industries or sectors because the stocks of many or all of the
companies in the industry, group of industries, sector, or sectors may decline in value due to developments adversely affecting the industry, group of industries, sector, or sectors.
d. Repurchase Agreements The Fund may invest in repurchase agreements to maintain liquidity and earn income over periods of time as short as overnight. The
collateral for repurchase agreements is either cash or fully negotiable U.S. government securities (including U.S. government agency securities). Repurchase agreements are fully collateralized (including the interest accrued thereon) and such
collateral is marked to market daily while the agreements remain in force. If the value of the collateral falls below the repurchase price plus accrued interest, the Fund will typically require the seller to deposit additional collateral by the next
business day. If the request for additional collateral is not met, or the seller defaults, the Fund maintains the right to sell the collateral (although it may be prevented or delayed from doing so in certain circumstances) and
NOTES TO FINANCIAL STATEMENTS — GUARDIAN MID CAP RELATIVE VALUE VIP FUND
may be required to claim any resulting loss against the seller. Park Avenue monitors the creditworthiness of the seller
with which the Fund enters into repurchase agreements.
6. Temporary Borrowings
The Fund, with other funds managed by Park Avenue, is party to a $10 million committed revolving credit facility from State Street Bank and Trust Company for
temporary borrowing purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of securities. Interest is calculated based on the higher of the daily one-month
LIBOR rate and the Federal Funds rate plus 1.25% at the time of borrowing. In addition to the interest charged on any borrowings by the Fund, each fund pays a commitment fee of 0.30% per annum on its share of the unused portion of the credit
facility. The agreement is in
place until December 9, 2020. The Fund did not utilize the credit facility during the year ended December 31, 2019.
7. Indemnifications
Under the Trust’s organizational documents and, in
some cases, by contract, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Fund. In addition, in the normal course of business, the Fund enters into contracts with its vendors
and others that provide general indemnifications. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. However, based on experience,
the Fund expects the risk of loss to be remote.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees of Guardian Variable Products Trust and Shareholders of
Guardian Mid Cap Relative Value VIP Fund
Opinion on the
Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Guardian Mid
Cap Relative Value VIP Fund (one of the funds constituting Guardian Variable Products Trust, referred to hereafter as the “Fund”) as of December 31, 2019, the related statement of operations for the year ended December 31, 2019,
the statement of changes in net assets for each of the two years in the period ended December 31, 2019, including the related notes, and the financial highlights for each of the periods indicated therein (collectively referred to as the
“financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2019, the results of its operations for the year then ended, the changes
in its net assets for each of the two years in the period ended December 31, 2019 and the financial highlights for each of the periods indicated therein in conformity with accounting principles generally accepted in the United States of
America.
Basis for Opinion
These financial statements are the
responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board
(United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing
procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the
amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our
procedures included confirmation of securities owned as of December 31, 2019 by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits
provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
New
York, New York
February 20, 2020
We have served as the auditor of one or
more investment companies in Guardian Variable Products Trust since 2016.
SUPPLEMENTAL INFORMATION (UNAUDITED)
Trustees and Officers Information Table
The following table provides information about the Trustees of the Trust.
|
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| |
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Name and
Year of Birth |
|
Term of Office,
Position(s) Held and Length of
Service1 |
|
Principal
Occupation(s) During Past Five Years |
|
Number of
Funds in Fund
Complex Overseen
by Trustees2 |
|
Other Directorships
Held by Trustee |
| Independent Trustees |
| |
|
|
|
|
| Bruce W. Ferris3 (born 1955) |
|
Trustee |
|
Retired (since 2015); President and CEO, Prudential Annuities Distributors, Inc. (2013–2015); Director/Trustee, Advanced Series Trust, The Prudential Series Fund and Prudential’s
Gibraltar Fund, Inc. (2013–2015); Senior Vice President, Prudential Annuities (2008–2015). |
|
16 |
|
None. |
| |
|
|
|
|
| Theda R. Haber3 (born 1954) |
|
Trustee |
|
Adjunct Assistant Professor of Law, UC Hastings College of Law (since 2013); Member of the Board of Directors, Fairholme Trust Company, LLC (2015–2019); Attorney, Law Office of Theda R.
Haber (since 2014); Visiting Professor of Law, UC Davis School of Law (since 2014); Consultant, Haber & Associates LLC (financial services industry), (2012–2017); Advisory Council Chair, Vice Chair, and Member, Advisory Council on
Employee Welfare and Pension Benefit Plans (ERISA Advisory Council), U.S. Department of Labor (2009–2011); Managing Director and General Counsel, BlackRock Institutional Trust Company, N.A. (2009–2011); Deputy Global General Counsel,
Barclays Global Investors (2006–2009); Managing Director, Barclays Global Investors (1998–2006). |
|
16 |
|
None. |
| |
|
|
|
|
| Marshall
Lux3 (born 1960) |
|
Trustee |
|
Senior Advisor, The Boston Consulting Group (since 2014); Senior Partner and Managing Director, The Boston Consulting Group (2009–2014). |
|
16 |
|
None. |
| |
|
|
|
|
| Lisa K.
Polsky3 (born 1956) |
|
Trustee |
|
Board Member, MFA Financial, Inc. (real estate investment trust) (since 2020); Advisor, SMBC Americas (financial services) (since 2020); Senior Risk Advisor, AQR (investment management)
(2016–2019); Senior Risk Advisor, Ultra Capital (venture capital) (2016–2019); Board Member, DB USA Corporation (Deutsche Bank Intermediate Holding Company) (financial services) (since 2016); Chief Risk Officer, CIT Group Inc. (financial
services) (2010–2015); Board Member and Chair of Audit Committee, Piper Jaffray (investment bank) (2007–2016). |
|
16 |
|
None. |
| |
|
|
|
|
| John
Walters3 (born 1962) |
|
Lead Independent
Trustee |
|
Board Member, Amerilife Holdings LLC (insurance distribution) (since 2015); Board Member, Stadion Money Management LLC (investment adviser) (since 2011); President and Chief Operating Officer,
Hartford Life Insurance Company (2000–2010). |
|
16 |
|
Trustee, USAA Mutual Funds Trust, (One registered investment company offering 47 individual funds) (since
2019). |
SUPPLEMENTAL INFORMATION (UNAUDITED)
|
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| |
|
|
|
|
Name and
Year of Birth |
|
Term of Office,
Position(s) Held and Length of
Service1 |
|
Principal
Occupation(s) During Past Five Years |
|
Number of
Funds in Fund
Complex Overseen
by Trustees2 |
|
Other Directorships
Held by Trustee |
| Interested Trustees |
| |
|
|
|
|
| Dominique Baede4 (born 1970) |
|
Trustee
(Since
January 2020) |
|
Vice President, Head of Product, Life, Annuity and Inforce, The Guardian Life Insurance Company of America (since 2019); Managing Director, Product Management Group, AXA Equitable (insurance
company) prior thereto. |
|
16 |
|
None. |
| |
|
|
|
|
| Michael
Ferik4 (born 1972) |
|
Chairman and Trustee (Since
December 2019) |
|
Executive Vice President, Individual Markets, The Guardian Life Insurance Company of America (since 2020); Executive Vice President and Chief Financial Officer, The Guardian Life Insurance
Company of America (2017–2019); Executive Vice President, Individual Markets, The Guardian Life Insurance Company of America prior thereto. |
|
16 |
|
None. |
| 1 |
Except as otherwise noted, each Trustee began service in such capacity in 2016 and serves until his or her successor is
elected and qualified or until his or her resignation, death or removal. The business address of each Trustee is 10 Hudson Yards, New York, New York 10001. |
| 2 |
The Trust currently consists of 16 separate Funds. |
| 3 |
Member of the Audit Committee of the Trust. |
| 4 |
Each of Dominique Baede and Michael Ferik is considered to be an “interested person” of the Trust within the
meaning of the 1940 Act because of their affiliation with The Guardian Life Insurance Company of America and/or its affiliates. |
|
|
|
|
|
| |
|
|
| Name and Year of Birth |
|
Position(s) Held and
Length of Service5 |
|
Principal Occupation(s)
During Past Five Years |
| |
|
|
| Dominique Baede
(born 1970) |
|
President and Principal Executive Officer (Since January 2020) |
|
Vice President, Head of Product, Life, Annuity and Inforce, The Guardian Life Insurance Company of America (since 2019); Managing Director,
Product Management Group, AXA Equitable (insurance company) prior. |
| |
|
|
| John H. Walter
(bornd 1962) |
|
Senior Vice President, Treasurer, and Principal Financial and Accounting Officer |
|
Vice President, Director of Finance, Corporate Finance, The Guardian Life Insurance Company of America. |
| |
|
|
| Harris Oliner
(born 1971) |
|
Senior Vice President and Secretary |
|
Senior Vice President, Corporate Secretary, The Guardian Life Insurance Company of America (since 2015); Senior Vice President, Deputy
General Counsel, Corporate Secretary, Voya Financial, Inc. prior thereto. |
| |
|
|
| Richard T. Potter
(born 1954) |
|
Senior Vice President and Chief Legal Officer |
|
Vice President and Equity Counsel, The Guardian Life Insurance Company of America. |
| |
|
|
| Philip Stack
(born 1964) |
|
Chief Compliance Officer
(Since September 2017) |
|
Second Vice President, Mutual Fund Chief Compliance Officer, The Guardian Life Insurance Company of America (since 2017); Executive Director,
Chief Compliance Officer, Morgan Stanley (2015–2017); Vice President, Morgan Stanley prior thereto. |
| |
|
|
| Brian Hagan
(born 1984) |
|
Anti-Money Laundering Officer
(Since March 2019) |
|
Assistant Vice President (since 2019), Anti-Money Laundering Compliance, The Guardian Life Insurance
Company of America/Park Avenue Securities LLC; Vice President, Head of Financial Intelligence Unit, Brown Brothers Harriman & Co. (2014–2019); Assistant Vice President, AML Compliance Manager, JPMorgan Chase & Co.
(2011–2014). |
| |
|
|
| Kathleen M. Moynihan
(born 1966) |
|
Senior Counsel |
|
Second Vice President, Counsel (since 2019), The Guardian Life Insurance Company of America; Senior Counsel prior thereto. |
| |
|
|
| Maria Nydia Morrison
(born 1958) |
|
Fund Controller |
|
Mutual Fund Controller, The Guardian Life Insurance Company of America (since 2015); Chief Financial Officer/Assistant Operating Officer, St.
Francis De Assisi Montessori School (Plaridel, Bulacan), Inc. (Philippines) prior thereto. |
| |
|
|
| Sonya L. Crosswell
(born 1977) |
|
Assistant Secretary |
|
Assistant Vice President, Assistant Corporate Secretary and Secretary Pro Tem, The Guardian Life Insurance Company of America. |
| 5 |
Unless otherwise indicated, the Officers each began service in such capacity in 2016 and hold office for an indefinite
term or until their successors shall have been elected and qualified. The business address of each Officer is 10 Hudson Yards, New York, New York 10001. |
SUPPLEMENTAL INFORMATION (UNAUDITED)
The Statement of Additional Information (“SAI”) includes additional information about
the Trust’s Trustees and Officers and is available, without charge, upon request by calling toll-free 1-888-GUARDIAN (1-888-482-7342) or by visiting our website at http://guardianvpt.onlineprospectus.net/GuardianVPT/Prospectuses.
Portfolio Holdings and Proxy Voting Procedures
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year as an
exhibit to its reports on Form N-PORT. The Fund’s Form N-PORT reports are available on the Securities and Exchange Commission’s website at
https://www.sec.gov. The Fund’s Form N-PORT information is also available, without charge, upon request, by calling toll-free
1-888-GUARDIAN (1-888-482-7342) or by visiting
our website at http://guardianvpt.onlineprospectus.net/
GuardianVPT/Prospectuses.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to
portfolio securities is included in the SAI. The SAI and information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended
June 30 may be obtained (i) without charge, upon request, by calling toll-free 1-888-GUARDIAN (1-888-482-7342) or by visiting our website at http://guardianvpt.onlineprospectus.net/
GuardianVPT/Prospectuses; and (ii) on the Securities and Exchange
Commission’s website at https://www.sec.gov.
This report is transmitted to shareholders only. It is not authorized for use as an offer of sale or a solicitation of an offer to buy shares of the Fund unless
accompanied or preceded by the Fund’s current prospectus. Past performance results shown in this report should not be considered a representation of future performance. Investment returns and principal value of shares will fluctuate so that
shares, when redeemed, may be worth more or less than their original cost. Statements and other information herein are as dated and are subject to change.
The Guardian Life Insurance Company of America New York, NY 10001-2159
PUB8176
Guardian Variable
Products Trust
2019
Annual Report
All Data as of December 31, 2019
Guardian
International Growth VIP Fund
Important Notice
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund’s shareholder reports
will no longer be sent by mail from The Guardian Insurance & Annuity Company, Inc. (“GIAC”). Instead, GIAC will mail you a notice when copies of the shareholder reports are made available on a website. You will be notified by mail
each time a report is posted and provided with a website link to access the report.
If you have already elected to receive shareholder reports electronically, you
will not be affected by this change and you need not take any action. If you have not yet elected electronic delivery, at any time, you may elect to receive the Fund’s shareholder reports and certain other communications from GIAC
electronically, by going to www.guardianlife.com and registering for e-delivery.
You may instead elect to receive all
future shareholder reports in paper free of charge. If you wish to receive paper copies of your shareholder reports, please call GIAC’s Customer Service Office Contact Center at
1-888-GUARDIAN (1-888-482-7342). Your election to
receive reports in paper will apply to all the underlying funds available.
|
|
|
| Not FDIC insured. May lose value. No bank guarantee. |
|
www.guardianlife.com |
TABLE OF CONTENTS
Guardian International Growth VIP Fund
Except as otherwise specifically stated, all information, including portfolio security positions, is as of
December 31, 2019. The views expressed in the Fund Commentary are those of the Fund’s portfolio manager(s) as of the date of this report and are subject to change without notice. They do not necessarily represent the views of Park Avenue
Institutional Advisers LLC or a sub-adviser. The Fund Commentary may contain some forward-looking statements providing expectations or forecasts of future events as of the date of this report; they do not
necessarily relate to historical or current facts. There can be no guarantee that any forward-looking statement will be realized. We undertake no obligation to update forward-looking statements, whether as a result of new information, future events,
or otherwise. Any discussions of specific securities should not be considered a recommendation to buy or sell those securities. Fund holdings will vary. Information contained herein has been obtained from sources believed reliable, but is not
guaranteed.
GUARDIAN INTERNATIONAL GROWTH VIP FUND
FUND COMMENTARY BY J.P. MORGAN INVESTMENT MANAGEMENT INC.,
SUB-ADVISER
Highlights
| • |
|
Guardian International Growth VIP Fund (the “Fund”) returned 32.13%, outperforming its benchmark, the MSCI® EAFE® Growth Index1 (the “Index”), for the 12 months ended December 31, 2019. The Fund’s outperformance relative to the
Index was primarily due to security selection, especially in consumer discretionary and industrials sectors. Stock selection in health care was the sole detractor to Fund’s performance. |
| • |
|
The Index returned 27.90% for the year. This performance was contributed by information technology, health care and materials sectors. |
Market Overview
Global equity markets rallied strongly in 2019, with the
MSCI® World Index2 rising 27.3% in local currency terms. Despite the generally unpredictable political environment, the end of the year saw
a reduction in uncertainty around global trade and British politics, largely encouraging U.S. economic and corporate data and rising crude oil prices. Stocks rallied on a breakthrough in U.S.-China trade talks as the U.S. decided against proceeding
with a planned tariff hike on consumer goods imported from China and the two countries entered into the first phase of a trade deal. Elsewhere, the victory of the Conservative party in the UK general election uplifted investor sentiment as the
chances of a no-deal Brexit diminished. Corporate profits largely beat market expectations in both the U.S. and Europe; however, earnings forecasts continued to be lowered.
In terms of economic data, the manufacturing Purchasing Managers’ Index3 in Europe continued to be soft,
dragged down by weakness in German output but activity data in the U.S. and China was more encouraging. U.S. labour markets and housing sales also showed resilience. Additionally, crude oil prices rallied as the Organization of the Petroleum
Exporting Countries announced steep production cuts for 2020. Major central banks continued to take accommodative policy positions. In terms of sector performance, information technology, healthcare and materials rallied the most this year while the
real estate and communication services sectors saw more muted gains.
Portfolio Review
In a positive
performance period for international equities, the Fund’s outperformance was driven primarily by stock selection. The Fund’s stock selection in consumer discretionary and industrials contributed to performance. Stock selection in the
health care sector detracted from performance.
Throughout the period, we maintained a preference for more cyclical sectors such as consumer discretionary and
financials, where we found individual stocks with attractive valuations and strong earnings growth on a forward-looking basis.
Outlook
2019 was a year of very strong equity market returns against a backdrop of deteriorating economic data, particularly in the manufacturing sector. Investors instead
focused on robust services data, strong labor markets, consumer confidence and easing monetary policy conditions. From here, we expect returns to be much more modest and dependent on the path of economic growth. For now, with signs that economic
data may have bottomed, supportive central banks and easing trade tensions, the path looks positive. However, we expect investors to be looking for signs of slowing economic growth and its impact on corporate profits and hiring. Valuations remain
reasonable, and we still expect positive earnings growth ahead and see ample opportunity for active investors within sectors. However, consensus earnings expectations for 2020 still appear too high and investors should be wary of this as these
numbers start to be used in calculating forward valuation multiples. In recent years, investors have had a clear preference for both perceived long-term structural winners and defensive stocks, coupled with an aversion to companies seen as more
economically sensitive or vulnerable to disruption. These trends have resulted in historically wide valuation spreads (the gap between the most expensive and cheapest stocks) within both sectors and countries, while international and emerging market
stocks have been at an unusually wide discount to U.S. equities. For the rest of the year, investors are likely to continue to focus on U.S. and China trade negotiations, the path of economic growth and monetary policy conditions and begin to focus
more on the 2020 U.S. presidential election as we move through the year.
| 1 |
MSCI®
EAFE® Growth Index (the “Index”) is a subset of the MSCI® EAFE®
Index. The MSCI® EAFE® Index (Europe, Australasia, and Far East) is a free float-adjusted market capitalization index that is designed
to measure the equity market performance of developed markets, excluding the U.S. and Canada. Index results assume the reinvestment of dividends paid on the stocks constituting the Index. You may not invest in the Index and, unlike the Fund, the
Index does not incur fees or expenses. |
| 2 |
The MSCI® World Index is a broad global equity index that
represents large and mid-cap equity performance across 23 developed markets countries. It covers approximately 85% of the free float-adjusted market capitalization in each country and does not offer exposure
to emerging markets. Index results assume the reinvestment of dividends paid on the stocks constituting the Index. You may not invest in the Index and, unlike the Fund, the Index does not incur fees or expenses. |
| 3 |
The Purchasing Managers’ Index (PMI) is an index of the prevailing direction of economic trends in the manufacturing
and service sectors. You may not invest in the Index and, unlike the Fund, the Index does not incur fees or expenses. |
GUARDIAN INTERNATIONAL GROWTH VIP FUND
Funds in the Guardian Variable Products Trust are sold by prospectus only. You should carefully
consider the investment objectives, risks, charges and expenses of the Funds before making an investment decision. The prospectus contains this and other important information. Please read it carefully before investing or sending money. Please visit
our website at http://guardianvpt.onlineprospectus.net/GuardianVPT/ Prospectuses or to obtain a printed copy, call 1-888-GUARDIAN (1-888-482-7342).
As with all mutual funds, the value of an investment in the
Fund could decline, and you could lose money. Diversification does not guarantee profit or protect against loss, and there can be no assurance that the Fund will achieve its investment objective. The Fund invests primarily in equity securities and
therefore exposes you to the general risks of investing in stock markets. Investments in growth companies may be highly volatile. Growth stocks may not realize their perceived growth potential and during certain periods the Fund may underperform
other equity funds that employ a different style. Investing in large-capitalization companies involves risks such as having low growth rates, and slow responsiveness to competitive challenges or opportunities than in the case of smaller companies.
International investing involves special risks, which include changes in currency rates, foreign taxation and differences in auditing standards and securities regulations, political uncertainty and greater volatility. Foreign securities are subject
to political, regulatory, economic, and exchange-rate risks not present in domestic investments. These risks are even greater when investing in emerging markets. Derivative transactions can create leverage and may be highly volatile. It is possible
that a derivative transaction will result in a loss greater than the principal amount invested and the Fund may not be able to close out a derivative transaction at a favorable time or price. Investing in a more limited number of issuers and sectors
can be subject to greater market fluctuation. Any discussions of specific securities should not be considered a recommendation to buy or sell those securities. Fund holdings will vary.
GUARDIAN INTERNATIONAL GROWTH VIP FUND
Fund Characteristics (unaudited)
|
|
|
| Total Net Assets: $146,554,757 |
|
|
|
| |
|
Geographic Region Allocation1
As of December 31, 2019 |
|
| |
|
Sector Allocation2 As of
December 31, 2019 |
|
GUARDIAN INTERNATIONAL GROWTH VIP FUND
|
|
|
|
|
|
|
| |
| Top Ten Holdings1 As of December 31, 2019 |
|
| |
|
|
| Holding |
|
Country |
|
% of Total
Net Assets |
|
| Nestle S.A. (Reg S) |
|
Switzerland |
|
|
5.68% |
|
| Roche Holding AG |
|
Switzerland |
|
|
4.24% |
|
| ASML Holding N.V. |
|
Netherlands |
|
|
3.37% |
|
| AIA Group Ltd. |
|
Hong Kong |
|
|
3.15% |
|
| LVMH Moet Hennessy Louis Vuitton SE |
|
France |
|
|
3.02% |
|
| SAP SE |
|
Germany |
|
|
2.97% |
|
| Unilever PLC |
|
United Kingdom |
|
|
2.71% |
|
| Diageo PLC |
|
United Kingdom |
|
|
2.69% |
|
| Novo Nordisk A/S, Class B |
|
Denmark |
|
|
2.65% |
|
| Novartis AG (Reg S) |
|
Switzerland |
|
|
2.49% |
|
| Total |
|
|
32.97% |
|
| 1 |
Portfolio holdings are subject to change and should not be considered a recommendation to buy or sell individual
securities. Cash includes short-term investments and net other assets and liabilities. |
| 2 |
The Fund’s holdings are allocated to each sector based on the MSCI Global Industry Classification Standard (GICS®). Cash includes short-term investments and net other assets and liabilities. |
Fund Performance (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
| Average Annual Total Returns
As of December 31, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
| |
|
Inception Date |
|
|
1 Year |
|
|
5 Year |
|
|
10 Year |
|
|
Since Inception |
|
| Guardian International Growth VIP Fund |
|
|
9/1/2016 |
|
|
|
32.13% |
|
|
|
— |
|
|
|
— |
|
|
|
9.49% |
|
| MSCI® EAFE® Growth Index |
|
|
|
|
|
|
27.90% |
|
|
|
— |
|
|
|
— |
|
|
|
9.93% |
|
GUARDIAN INTERNATIONAL GROWTH VIP FUND
|
|
|
|
|
|
|
|
|
|
|
| |
|
Results of a Hypothetical $10,000 Investment As of December 31,
2019 |
|
The chart above shows the performance of a hypothetical $10,000 investment made on inception date in Guardian International Growth VIP
Fund and the MSCI® EAFE® Growth Index. Index returns do not include the fees and expenses of the Fund, but do include reinvestment of
dividends, if any.
Performance quoted represents past performance and does not guarantee or predict future results. Investment return and principal value will
fluctuate, so shares, when redeemed, may be worth more or less than their original cost. The Fund’s fees and expenses are detailed in the Financial Highlights section of this report. Fees and expenses are factored into the net asset value of
Fund shares and any performance numbers we release. Total return figures include the effect of expense limitations in effect during the periods shown, if applicable; without such limitations, the performance shown would have been lower. Performance
results assume the reinvestment of dividends and capital gains. The return figures shown do not reflect the deduction of taxes that a contract owner/policyholder may pay on redemption units. The actual total returns for owners of variable annuity
contracts or variable life insurance policies that provide for investment in the Fund will be lower to reflect separate account and contract/policy charges. Current and month-end performance information, which
may be lower or higher than that cited, is available by calling 1-888-GUARDIAN (1-888-482-7342) and is periodically updated on our website: http://guardianlife.com.
UNDERSTANDING YOUR FUND’S EXPENSES (UNAUDITED)
By investing in the Fund, you incur two types of costs: (1) transaction costs and (2) ongoing costs, including,
as applicable, investment advisory fees, distribution and/or service (12b-1) fees and other Fund expenses. The example below is intended to help you understand your ongoing costs (in dollars) of investing in
the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the
beginning of the period and held for the entire period from July 1, 2019 to December 31, 2019. The table below shows the Fund’s expenses in two ways:
Expenses based on actual return
This section of the table provides
information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for
example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the section under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this
period.
Expenses based on hypothetical 5% return for comparison purposes
This section of the table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund with the cost of investing in other mutual funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the
other funds.
Note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads), redemption fees, or exchange fees. Therefore the second section is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. If these transactional costs were
included, your costs would have been higher. Charges and expenses at the insurance company separate account level are not reflected in the table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
| |
|
Beginning
Account Value
7/1/19 |
|
Ending
Account Value
12/31/19 |
|
|
Expenses Paid
During Period* 7/1/19-12/31/19 |
|
|
Expense Ratio
During Period
7/1/19-12/31/19 |
|
| Based on Actual Return |
|
$1,000.00 |
|
|
$1,091.10 |
|
|
|
$6.22 |
|
|
|
1.18% |
|
| Based on Hypothetical Return (5% Return Before Expenses) |
|
$1,000.00 |
|
|
$1,019.26 |
|
|
|
$6.01 |
|
|
|
1.18% |
|
| * |
Expenses are equal to the Fund’s annualized expense ratio as indicated, multiplied by the average account value over
the period, multiplied by 184/365 (to reflect the one-half year period). |
SCHEDULE OF INVESTMENTS — GUARDIAN INTERNATIONAL
GROWTH VIP FUND
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Shares |
|
|
Value |
|
| Common Stocks – 98.9% |
|
| |
| Cayman Islands – 3.0% |
|
| |
|
|
| Alibaba Group Holding Ltd., ADR(1) |
|
|
11,268 |
|
|
$ |
2,389,943 |
|
| |
|
|
| Tencent Holdings Ltd. |
|
|
42,000 |
|
|
|
2,026,019 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
4,415,962 |
|
| China – 1.3% |
|
| |
|
|
| Ping An Insurance Group Co. of China Ltd.,
Class H |
|
|
155,000 |
|
|
|
1,836,170 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
1,836,170 |
|
| Denmark – 4.0% |
|
| |
|
|
| Genmab A/S(1) |
|
|
8,543 |
|
|
|
1,901,524 |
|
| |
|
|
| Novo Nordisk A/S, Class B |
|
|
67,054 |
|
|
|
3,889,110 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
5,790,634 |
|
| France – 9.0% |
|
| |
|
|
| EssilorLuxottica S.A. |
|
|
17,873 |
|
|
|
2,730,237 |
|
| |
|
|
| L’Oreal S.A. |
|
|
11,615 |
|
|
|
3,449,352 |
|
| |
|
|
| LVMH Moet Hennessy Louis Vuitton SE |
|
|
9,491 |
|
|
|
4,420,254 |
|
| |
|
|
| Safran S.A. |
|
|
16,498 |
|
|
|
2,557,427 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
13,157,270 |
|
| Germany – 15.2% |
|
| |
|
|
| adidas AG |
|
|
9,224 |
|
|
|
2,997,863 |
|
| |
|
|
| Beiersdorf AG |
|
|
18,166 |
|
|
|
2,173,712 |
|
| |
|
|
| Continental AG |
|
|
10,649 |
|
|
|
1,382,863 |
|
| |
|
|
| Delivery Hero SE(1)(2) |
|
|
39,001 |
|
|
|
3,086,877 |
|
| |
|
|
| Deutsche Boerse AG |
|
|
14,005 |
|
|
|
2,202,541 |
|
| |
|
|
| Muenchener Rueckversicherungs-Gesellschaft AG in
Muenchen (Reg S) |
|
|
7,961 |
|
|
|
2,348,610 |
|
| |
|
|
| SAP SE |
|
|
32,339 |
|
|
|
4,358,321 |
|
| |
|
|
| Symrise AG |
|
|
17,743 |
|
|
|
1,866,631 |
|
| |
|
|
| Zalando SE(1)(2) |
|
|
36,869 |
|
|
|
1,868,159 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
22,285,577 |
|
| Hong Kong – 4.9% |
|
| |
|
|
| AIA Group Ltd. |
|
|
438,400 |
|
|
|
4,612,694 |
|
| |
|
|
| Hong Kong Exchanges & Clearing Ltd. |
|
|
78,900 |
|
|
|
2,557,271 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
7,169,965 |
|
| India – 1.5% |
|
| |
|
|
| HDFC Bank Ltd., ADR |
|
|
34,693 |
|
|
|
2,198,495 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
2,198,495 |
|
| Ireland – 1.5% |
|
| |
|
|
| Linde PLC |
|
|
10,221 |
|
|
|
2,194,135 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
2,194,135 |
|
| Japan – 12.1% |
|
| |
|
|
| Daikin Industries Ltd. |
|
|
18,100 |
|
|
|
2,545,414 |
|
| |
|
|
| Keyence Corp. |
|
|
9,600 |
|
|
|
3,397,951 |
|
| |
|
|
| Makita Corp. |
|
|
56,400 |
|
|
|
1,952,515 |
|
| |
|
|
| Nidec Corp. |
|
|
16,500 |
|
|
|
2,253,968 |
|
| |
|
|
| Shimano, Inc. |
|
|
12,100 |
|
|
|
1,964,557 |
|
| |
|
|
| SMC Corp. |
|
|
5,400 |
|
|
|
2,468,385 |
|
| |
|
|
| Sony Corp. |
|
|
47,300 |
|
|
|
3,219,559 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
17,802,349 |
|
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Shares |
|
|
Value |
|
| Luxembourg – 1.2% |
|
| |
|
|
| Spotify Technology S.A.(1) |
|
|
11,740 |
|
|
$
|
1,755,717 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
1,755,717 |
|
| Netherlands – 7.1% |
|
| |
|
|
| Adyen N.V.(1)(2) |
|
|
2,206 |
|
|
|
1,815,214 |
|
| |
|
|
| Airbus SE |
|
|
24,534 |
|
|
|
3,599,572 |
|
| |
|
|
| ASML Holding N.V. |
|
|
16,573 |
|
|
|
4,935,608 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
10,350,394 |
|
| Spain – 1.6% |
|
| |
|
|
| Industria de Diseno Textil S.A. |
|
|
67,193 |
|
|
|
2,380,174 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
2,380,174 |
|
| Sweden – 3.3% |
|
| |
|
|
| Assa Abloy AB, Class B |
|
|
100,414 |
|
|
|
2,346,459 |
|
| |
|
|
| Atlas Copco AB, Class A |
|
|
64,060 |
|
|
|
2,553,597 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
4,900,056 |
|
| Switzerland – 16.6% |
|
| |
|
|
| Alcon, Inc.(1) |
|
|
35,528 |
|
|
|
2,012,651 |
|
| |
|
|
| Lonza Group AG (Reg S)(1) |
|
|
6,294 |
|
|
|
2,295,516 |
|
| |
|
|
| Nestle S.A. (Reg S) |
|
|
76,763 |
|
|
|
8,316,238 |
|
| |
|
|
| Novartis AG (Reg S) |
|
|
38,508 |
|
|
|
3,648,339 |
|
| |
|
|
| Partners Group Holding AG |
|
|
2,040 |
|
|
|
1,869,595 |
|
| |
|
|
| Roche Holding AG |
|
|
19,177 |
|
|
|
6,218,297 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
24,360,636 |
|
| Taiwan – 1.6% |
|
| |
|
|
| Taiwan Semiconductor Manufacturing Co. Ltd.,
ADR |
|
|
40,483 |
|
|
|
2,352,062 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
2,352,062 |
|
| United Kingdom – 15.0% |
|
| |
|
|
| Burberry Group PLC |
|
|
63,512 |
|
|
|
1,858,723 |
|
| |
|
|
| Diageo PLC |
|
|
93,677 |
|
|
|
3,947,518 |
|
| |
|
|
| InterContinental Hotels Group PLC |
|
|
28,025 |
|
|
|
1,930,477 |
|
| |
|
|
| Intertek Group PLC |
|
|
33,031 |
|
|
|
2,563,625 |
|
| |
|
|
| London Stock Exchange Group PLC |
|
|
27,094 |
|
|
|
2,798,597 |
|
| |
|
|
| RELX PLC |
|
|
105,611 |
|
|
|
2,666,413 |
|
| |
|
|
| Smith & Nephew PLC |
|
|
91,129 |
|
|
|
2,201,363 |
|
| |
|
|
| Unilever PLC |
|
|
69,478 |
|
|
|
3,977,564 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
21,944,280 |
|
| |
|
Total Common Stocks
(Cost $119,904,285) |
|
|
|
144,893,876 |
|
|
|
|
|
|
| The accompanying notes are an integral part of these financial statements. |
|
|
|
7 |
SCHEDULE OF INVESTMENTS — GUARDIAN INTERNATIONAL GROWTH VIP FUND
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Principal
Amount |
|
|
Value |
|
| Short-Term Investment – 1.1% |
|
| |
| Repurchase Agreements – 1.1% |
|
| |
|
|
| Fixed Income
Clearing Corp.,
0.12%, dated 12/31/2019,
proceeds at maturity value of
$1,631,011, due 1/2/2020(3) |
|
$ |
1,631,000 |
|
|
$
|
1,631,000 |
|
| |
|
Total Repurchase Agreements
(Cost $1,631,000) |
|
|
|
1,631,000 |
|
| |
|
Total Investments – 100.0%
(Cost $121,535,285) |
|
|
|
146,524,876 |
|
| |
|
| Assets in excess of other liabilities – 0.0% |
|
|
|
29,881 |
|
| |
|
| Total Net Assets – 100.0% |
|
|
$ |
146,554,757 |
|
| (1) |
Non–income–producing security. |
| (2) |
Securities that may be resold in transactions, exempt from registration under Rule 144A of the Securities Act of 1933, as
amended, normally to certain qualified buyers. At December 31, 2019, the aggregate market value of these securities amounted to $6,770,250, representing 4.6% of net assets. These securities have been deemed liquid by the investment adviser
pursuant to the Fund’s liquidity procedures approved by the Board of Trustees. |
| (3) |
The table below presents collateral for repurchase agreements. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Security |
|
Coupon |
|
|
Maturity
Date |
|
|
Principal
Amount |
|
|
Value |
|
| U.S. Treasury Note |
|
|
2.75% |
|
|
|
9/15/2021 |
|
|
$ |
1,620,000 |
|
|
$ |
1,664,067 |
|
Legend:
ADR — American
Depositary Receipt
The following is a summary of the inputs used as
of December 31, 2019 in valuing the Fund’s investments. For more information on valuation inputs, please refer to Note 2a of the accompanying Notes to Financial Statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Valuation Inputs
|
|
|
|
|
| Investments in Securities |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
| Common Stocks |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cayman Islands |
|
$ |
2,389,943 |
|
|
$ |
2,026,019 |
* |
|
$ |
— |
|
|
$ |
4,415,962 |
|
| China |
|
|
— |
|
|
|
1,836,170 |
* |
|
|
— |
|
|
|
1,836,170 |
|
| Denmark |
|
|
— |
|
|
|
5,790,634 |
* |
|
|
— |
|
|
|
5,790,634 |
|
| France |
|
|
— |
|
|
|
13,157,270 |
* |
|
|
— |
|
|
|
13,157,270 |
|
| Germany |
|
|
— |
|
|
|
22,285,577 |
* |
|
|
— |
|
|
|
22,285,577 |
|
| Hong Kong |
|
|
— |
|
|
|
7,169,965 |
* |
|
|
— |
|
|
|
7,169,965 |
|
| India |
|
|
2,198,495 |
|
|
|
— |
|
|
|
— |
|
|
|
2,198,495 |
|
| Ireland |
|
|
— |
|
|
|
2,194,135 |
* |
|
|
— |
|
|
|
2,194,135 |
|
| Japan |
|
|
— |
|
|
|
17,802,349 |
* |
|
|
— |
|
|
|
17,802,349 |
|
| Luxembourg |
|
|
1,755,717 |
|
|
|
— |
|
|
|
— |
|
|
|
1,755,717 |
|
| Netherlands |
|
|
— |
|
|
|
10,350,394 |
* |
|
|
— |
|
|
|
10,350,394 |
|
| Spain |
|
|
— |
|
|
|
2,380,174 |
* |
|
|
— |
|
|
|
2,380,174 |
|
| Sweden |
|
|
— |
|
|
|
4,900,056 |
* |
|
|
— |
|
|
|
4,900,056 |
|
| Switzerland |
|
|
— |
|
|
|
24,360,636 |
* |
|
|
— |
|
|
|
24,360,636 |
|
| Taiwan |
|
|
2,352,062 |
|
|
|
— |
|
|
|
— |
|
|
|
2,352,062 |
|
| United Kingdom |
|
|
— |
|
|
|
21,944,280 |
* |
|
|
— |
|
|
|
21,944,280 |
|
| Repurchase Agreements |
|
|
— |
|
|
|
1,631,000 |
|
|
|
— |
|
|
|
1,631,000 |
|
| Total |
|
$ |
8,696,217 |
|
|
$ |
137,828,659 |
|
|
$ |
— |
|
|
$ |
146,524,876 |
|
| * |
Consists of certain foreign securities whose values were determined by a pricing service using pricing models (See Note 2a
in Notes to Financial Statements). These investments in securities were classified as Level 2 rather than Level 1. |
|
|
|
|
|
| 8 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
FINANCIAL INFORMATION — GUARDIAN INTERNATIONAL GROWTH VIP FUND
|
|
|
|
|
|
Statement of Assets and Liabilities As of December 31, 2019 |
|
|
|
| Assets |
|
|
|
|
| |
|
| Investments, at value |
|
$ |
146,524,876 |
|
| |
|
| Cash |
|
|
27,651 |
|
| |
|
| Foreign tax reclaims receivable |
|
|
222,514 |
|
| |
|
| Dividends/interest receivable |
|
|
30,901 |
|
| |
|
| Reimbursement receivable from adviser |
|
|
5,283 |
|
| |
|
| Prepaid expenses |
|
|
6,639 |
|
| |
|
|
|
|
| |
|
| Total Assets |
|
|
146,817,864 |
|
| |
|
|
|
|
| |
|
| Liabilities |
|
|
|
|
| |
|
| Investment advisory fees payable |
|
|
96,258 |
|
| |
|
| Payable for fund shares redeemed |
|
|
58,233 |
|
| |
|
| Distribution fees payable |
|
|
30,670 |
|
| |
|
| Accrued audit fees |
|
|
23,684 |
|
| |
|
| Accrued custodian and accounting fees |
|
|
18,637 |
|
| |
|
| Accrued shareholder reports fees |
|
|
13,162 |
|
| |
|
| Accrued trustees’ and officers’
fees |
|
|
913 |
|
| |
|
| Accrued expenses and other liabilities |
|
|
21,550 |
|
| |
|
|
|
|
| |
|
| Total Liabilities |
|
|
263,107 |
|
| |
|
|
|
|
| |
|
| Total Net Assets |
|
$ |
146,554,757 |
|
| |
|
|
|
|
| |
|
| Net Assets Consist of: |
|
|
|
|
| |
|
| Paid-in
capital |
|
$ |
130,823,597 |
|
| |
|
| Distributable earnings |
|
|
15,731,160 |
|
| |
|
|
|
|
| |
|
| Total Net Assets |
|
$ |
146,554,757 |
|
| |
|
|
|
|
| Investments, at Cost |
|
$ |
121,535,285 |
|
| |
|
|
|
|
| |
|
| Pricing of Shares |
|
|
|
|
| |
|
|
Shares of Beneficial Interest Outstanding with
No Par Value |
|
|
10,832,066 |
|
| |
|
| Net Asset Value Per Share |
|
|
$13.53 |
|
| |
|
|
|
|
|
|
|
|
|
|
Statement of Operations For the Year Ended December 31, 2019 |
|
|
|
| Investment Income |
|
|
|
|
| |
|
| Dividends |
|
$ |
2,725,133 |
|
| |
|
| Interest |
|
|
8,463 |
|
| |
|
| Withholding taxes on foreign dividends |
|
|
(256,564 |
) |
| |
|
|
|
|
| |
|
| Total Investment Income |
|
|
2,477,032 |
|
| |
|
|
|
|
| |
|
| Expenses |
|
|
|
|
| |
|
| Investment advisory fees |
|
|
1,120,606 |
|
| |
|
| Distribution fees |
|
|
356,869 |
|
| |
|
| Custodian and accounting fees |
|
|
79,279 |
|
| |
|
| Professional fees |
|
|
62,618 |
|
| |
|
| Trustees’ and officers’ fees |
|
|
58,250 |
|
| |
|
| Administrative fees |
|
|
47,460 |
|
| |
|
| Shareholder reports |
|
|
43,893 |
|
| |
|
| Transfer agent fees |
|
|
15,227 |
|
| |
|
| Other expenses |
|
|
17,207 |
|
| |
|
|
|
|
| |
|
| Total Expenses |
|
|
1,801,409 |
|
| |
|
| Less: Fees waived |
|
|
(116,989 |
) |
| |
|
|
|
|
| |
|
| Total Expenses, Net |
|
|
1,684,420 |
|
| |
|
|
|
|
| |
|
| Net Investment Income/(Loss) |
|
|
792,612 |
|
| |
|
|
|
|
| |
|
| Realized Gain/(Loss) and Change in Unrealized
Appreciation/(Depreciation) on Investments and Foreign Currency Transactions |
|
|
|
|
| |
|
| Net realized gain/(loss) from investments |
|
|
(3,730,651 |
) |
| |
|
| Net realized gain/(loss) from foreign currency
transactions |
|
|
5,332 |
|
| |
|
| Net change in unrealized appreciation/(depreciation)
on investments |
|
|
42,749,754 |
|
| |
|
| Net change in unrealized appreciation/(depreciation)
on translation of assets and liabilities in foreign currencies |
|
|
2,846 |
|
| |
|
|
|
|
| |
|
| Net Gain on Investments and Foreign Currency
Transactions |
|
|
39,027,281 |
|
| |
|
|
|
|
| |
|
| Net Increase in Net Assets Resulting From
Operations |
|
$ |
39,819,893 |
|
| |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| The accompanying notes are an integral part of these financial statements. |
|
|
|
9 |
FINANCIAL INFORMATION — GUARDIAN INTERNATIONAL GROWTH VIP FUND
|
|
|
|
|
|
|
|
|
|
Statements of Changes in Net Assets |
|
|
|
|
|
|
| |
|
|
| |
|
For the
Year Ended
12/31/19 |
|
|
For the
Year Ended
12/31/18 |
|
| |
|
|
|
| Operations |
|
|
|
|
|
|
|
|
| |
|
|
| Net investment income/(loss) |
|
$ |
792,612 |
|
|
$ |
1,153,053 |
|
| |
|
|
| Net realized gain/(loss) from investments and foreign
currency transactions |
|
|
(3,725,319 |
) |
|
|
(8,649,086 |
) |
| |
|
|
| Net change in unrealized appreciation/(depreciation)
on investments and
translation of assets and liabilities in foreign currencies |
|
|
42,752,600 |
|
|
|
(19,844,261 |
) |
| |
|
|
|
|
|
|
|
|
| |
|
|
| Net Increase/(Decrease) in Net Assets Resulting
from Operations |
|
|
39,819,893 |
|
|
|
(27,340,294 |
) |
| |
|
|
|
|
|
|
|
|
| |
|
|
| Capital Share Transactions |
|
|
|
|
|
|
|
|
| |
|
|
| Proceeds from sales of shares |
|
|
3,516,589 |
|
|
|
163,773,670 |
|
| |
|
|
| Cost of shares redeemed |
|
|
(27,918,350 |
) |
|
|
(15,932,351 |
) |
| |
|
|
|
|
|
|
|
|
| |
|
|
| Net Increase/(Decrease) in Net Assets Resulting
from Capital Share Transactions |
|
|
(24,401,761 |
) |
|
|
147,841,319 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| Net Increase in Net Assets |
|
|
15,418,132 |
|
|
|
120,501,025 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| Net Assets |
|
|
|
|
|
|
|
|
| |
|
|
| Beginning of year |
|
|
131,136,625 |
|
|
|
10,635,600 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| End of year |
|
$ |
146,554,757 |
|
|
$ |
131,136,625 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| Other Information: |
|
|
|
|
|
|
|
|
| |
|
|
| Shares |
|
|
|
|
|
|
|
|
| |
|
|
| Sold |
|
|
311,020 |
|
|
|
13,300,264 |
|
| |
|
|
| Redeemed |
|
|
(2,289,980 |
) |
|
|
(1,332,858 |
) |
| |
|
|
|
|
|
|
|
|
| |
|
|
| Net Increase/(Decrease) |
|
|
(1,978,960 |
) |
|
|
11,967,406 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 10 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
This Page Intentionally Left Blank
FINANCIAL INFORMATION — GUARDIAN INTERNATIONAL GROWTH VIP FUND
The Financial Highlights table is intended to help you understand the Fund’s financial
performance for the past five years (or, if shorter, the period since inception). Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost)
on an investment in the Fund.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Highlights |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Per Share Operating Performance |
|
|
|
|
| |
|
Net Asset Value,
Beginning of
Period |
|
|
Net Investment
Income/(Loss)(1) |
|
|
Net Realized
and Unrealized
Gain/(Loss) |
|
|
Total
Operations |
|
|
Net Asset
Value, End of
Period |
|
|
Total
Return(2) |
|
| |
|
|
|
|
|
|
| Year Ended 12/31/19 |
|
$ |
10.24 |
|
|
$ |
0.07 |
|
|
$ |
3.22 |
|
|
$ |
3.29 |
|
|
$ |
13.53 |
|
|
|
32.13% |
|
| |
|
|
|
|
|
|
| Year Ended 12/31/18 |
|
|
12.61 |
|
|
|
0.12 |
|
|
|
(2.49 |
) |
|
|
(2.37 |
) |
|
|
10.24 |
|
|
|
(18.79)% |
|
| |
|
|
|
|
|
|
| Year Ended 12/31/17 |
|
|
9.62 |
|
|
|
0.09 |
|
|
|
2.90 |
|
|
|
2.99 |
|
|
|
12.61 |
|
|
|
31.08% |
|
| |
|
|
|
|
|
|
| Period Ended
12/31/16(4) |
|
|
10.00 |
|
|
|
(0.00 |
)(5) |
|
|
(0.38 |
) |
|
|
(0.38 |
) |
|
|
9.62 |
|
|
|
(3.80)% |
(6) |
|
|
|
|
|
| 12 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
FINANCIAL INFORMATION — GUARDIAN INTERNATIONAL GROWTH VIP FUND
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Ratios/Supplemental Data |
|
Net Assets, End
of Period (000s) |
|
|
Net Ratio of
Expenses to
Average
Net Assets(3) |
|
|
Gross Ratio of
Expenses to
Average Net
Assets |
|
|
Net Ratio of Net
Investment
Income/(Loss)
to Average
Net
Assets(3) |
|
|
Gross Ratio of Net
Investment
Income/(Loss)
to Average
Net Assets |
|
|
Portfolio
Turnover Rate |
|
|
|
|
|
|
|
| $ |
146,555 |
|
|
|
1.18% |
|
|
|
1.26% |
|
|
|
0.56% |
|
|
|
0.48% |
|
|
|
25% |
|
|
|
|
|
|
|
| |
131,137 |
|
|
|
1.18% |
|
|
|
1.32% |
|
|
|
1.07% |
|
|
|
0.93% |
|
|
|
61% |
|
|
|
|
|
|
|
| |
10,636 |
|
|
|
1.22% |
|
|
|
2.49% |
|
|
|
0.79% |
|
|
|
(0.48)% |
|
|
|
32% |
|
|
|
|
|
|
|
| |
10,980 |
|
|
|
1.22% |
(6) |
|
|
3.20% |
(6) |
|
|
(0.06)% |
(6) |
|
|
(2.04)% |
(6) |
|
|
8% |
(6) |
| (1) |
Calculated based on the average shares outstanding during the period. |
| (2) |
Total returns do not reflect the effects of charges deducted pursuant to the terms of The Guardian Insurance &
Annuity Company, Inc.’s variable contracts. Inclusion of such charges would reduce the total returns for all periods shown. |
| (3) |
Net Ratio of Expenses to Average Net Assets and Net Ratio of Net Investment Income/(Loss) to Average Net Assets include
the effect of fee waivers and expense limitations. |
| (4) |
Commenced operations on September 1, 2016. |
| (5) |
Rounds to $(0.00) per share. |
| (6) |
Ratios for periods less than one year have been annualized, except for total return and portfolio turnover rate. For the
period ended December 31, 2016, certain non-recurring fees (i.e., audit fees) are not annualized. |
|
|
|
|
|
| The accompanying notes are an integral part of these financial statements. |
|
|
|
13 |
NOTES TO FINANCIAL STATEMENTS — GUARDIAN INTERNATIONAL GROWTH VIP
FUND
December 31, 2019
1.
Organization
Guardian Variable Products Trust (the “Trust”), a Delaware statutory trust organized on January 12, 2016, is registered under the
Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Trust currently has sixteen series. Guardian International Growth VIP Fund (the
“Fund”) is a series of the Trust. The Fund is a diversified fund and commenced operations on September 1, 2016. The financial statements for other series of the Trust are presented in separate reports.
The Trust has authorized an unlimited number of shares of beneficial interest with no par value. Shares are bought and sold at closing net asset value (“NAV”).
Shares of the Fund are only sold to certain separate accounts of The Guardian Insurance & Annuity Company, Inc. (“GIAC”) that fund certain variable annuity contracts and variable life insurance policies issued by GIAC. GIAC is a
wholly-owned subsidiary of The Guardian Life Insurance Company of America (“Guardian Life”).
The Fund seeks total return consisting of long-term capital
growth and current income.
2. Significant Accounting Policies
The
following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The Fund follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board
(“FASB”) Accounting Standards Codification Topic 946 Financial Services — Investment Companies. The following policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”).
The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.
a. Investment Valuations Equity securities traded on an exchange other than NASDAQ Stock Market, LLC (“NASDAQ”) are valued at the last reported
sale price on the principal exchange or market on which they are traded; or, if there were no sales that day, at the mean between the closing bid and ask prices. Securities traded on the NASDAQ are generally valued at the NASDAQ official closing
price, which may not be the last sale price. If the NASDAQ official closing price is not available
for a security, that security is generally valued at the mean between the closing bid and ask prices. Repurchase agreements are carried at cost, which approximates fair value (see Note 5d).
Foreign securities are valued in the currencies of the markets in which they trade and then converted to U.S. dollars by the application of foreign exchange rates at the close of the New York Stock Exchange (“NYSE”). Forward foreign
currency contracts, if any, are valued at the mean between the bid and ask rates for the specified time interpolated from rates for proximate time periods. Securities for which market quotations are not readily available or for which market
quotations may be considered unreliable are valued at their fair values as determined in accordance with policies and procedures adopted by the Board of Trustees.
Under the policies and procedures approved by the Board of Trustees, Park Avenue Institutional Advisers LLC (“Park Avenue”), the Fund’s investment
adviser, has established a Fair Valuation Committee to assist the Board of Trustees with the oversight and monitoring of the valuation of the Fund’s investments. This includes monitoring the appropriateness of fair values based on results of
ongoing valuation oversight, including but not limited to consideration of security specific events, market events, and pricing vendor and broker-dealer due diligence. The Fair Valuation Committee oversees and carries out the policies for the
valuation of investments held in the Fund. The Fair Valuation Committee is responsible for discussing and assessing the potential impacts to the fair values on an ongoing basis, and at least on a quarterly basis with the Board of Trustees.
Securities whose values have been materially affected by events occurring before the Fund’s valuation time but after the close of the securities’ principal
exchange or market may be fair valued in accordance with policies and procedures adopted by the Board of Trustees. In addition, the values of the Fund’s investments in foreign securities are generally determined by a pricing service using
pricing models designed to estimate likely changes in the values of those securities. Certain foreign equity instruments are valued by applying international fair value factors provided by approved pricing services. The factors seek to adjust the
local closing price for movements of local markets post closing, but prior to the time the NAVs are calculated. Valuations reflected in this report are as of the report date. As a result, changes in valuation due to market events and/or issuer
related events after the report date and prior to issuance of the report are not reflected herein.
NOTES TO FINANCIAL STATEMENTS — GUARDIAN INTERNATIONAL GROWTH VIP FUND
Various inputs are used in determining the valuation of the Fund’s investments. These inputs are summarized in three
broad levels listed below.
| • |
|
Level 1 — unadjusted inputs using quoted prices in active markets for identical investments. |
| • |
|
Level 2 — other significant observable inputs, including, but not limited to, quoted prices for similar investments, inputs other than quoted prices that are observable for investments (such as interest
rates, prepayment speeds, credit risks, etc.) or other market corroborated inputs. |
| • |
|
Level 3 — significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments) |
Inputs may include price information, volatility statistics, specific and broad credit data, liquidity statistics, and other factors. A financial instrument’s level
within the fair value hierarchy is based on the lowest level of any input; both individually and in aggregate, that is significant to the fair value measurement. However, the determination of what constitutes “observable” requires
significant judgment by the Trust. The Trust considers observable data to be that market data which is readily available, regularly distributed or updated, reliable and verifiable, and provided by independent sources that are actively involved in
the relevant market. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. Changes in valuation techniques may result in transfers into or out of a
financial instrument’s assigned level within the hierarchy.
The FASB requires reporting entities to make disclosures about purchases, sales, issuances and
settlements of Level 3 securities on a gross basis. For the year ended December 31, 2019, there were no transfers into or out of Level 3 of the fair value hierarchy.
In determining a financial instrument’s placement within the hierarchy, the Trust separates the Fund’s investment portfolio into two categories: investments
and derivatives (e.g., futures). A summary of inputs used to value the Fund’s assets and liabilities carried at fair value as of December 31, 2019 is included in the Schedule of Investments.
Investments Investments whose values are based on quoted market prices in active markets, and are therefore classified within Level 1, include active
listed equities. Investments that trade in markets that are not considered to be active, but are valued based on quoted
market prices, dealer quotations or alternative pricing sources supported by observable inputs are classified within Level 2. These include certain U.S. government and sovereign obligations,
most government agency securities, investment-grade corporate bonds, certain mortgage products, state, municipal and provincial obligations, and certain foreign equity securities, including securities whose prices may have been affected by events
occurring after the close of trading on their principal exchange or market and, as a result, whose values are determined by a pricing service as described above, or securities whose values are otherwise determined using fair valuation methods
approved by the Fund’s Board of Trustees.
Investments classified within Level 3 have significant unobservable inputs, as they trade infrequently or not at
all. Level 3 investments include, among others, private placement securities. When observable prices are not available for these securities, the Trust uses one or more valuation techniques for which sufficient and reliable data is available.
The inputs used by the Trust in estimating the value of Level 3 investments include, for example, the original transaction price, recent transactions in the same or similar instruments, completed or pending third-party transactions in the
underlying investment or comparable issuers, subsequent rounds of financing, recapitalizations, and other transactions across the capital structure. Level 3 investments may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the Trust in the absence of market information. Assumptions used by the Trust due to the lack of observable inputs may significantly impact the
resulting fair value and therefore the Fund’s results of operations. As of December 31, 2019, the Fund had no securities classified as Level 3.
Derivatives Exchange-traded derivatives, such as futures contracts, exchange-traded option contracts and certain swaps, are typically classified within
Level 1 or Level 2 of the fair value hierarchy depending on whether or not they are deemed to be actively traded. Certain non-exchange-traded derivatives, such as generic forwards, certain swaps and
options, have inputs which can generally be corroborated by market data and are therefore classified within Level 2. During the year ended December 31, 2019, the Fund did not hold any derivatives.
b. Securities Transactions Securities transactions are accounted for on the date securities are purchased or sold (trade date). Realized gains or losses on
securities transactions are determined on the basis of specific identification.
NOTES TO FINANCIAL STATEMENTS — GUARDIAN INTERNATIONAL GROWTH VIP FUND
c. Futures Contracts The Fund may enter into financial futures contracts. In entering into such contracts, the Fund
is required to deposit with the counterparty, either in cash or securities, an amount equal to a certain percentage of the face value of the contract. Subsequent payments are received or made by the Fund each day, depending on the daily fluctuations
in the values of the contracts, and are recorded for financial statement purposes as variation margin received or paid by the Fund. Daily changes in variation margin are recognized as unrealized gains or losses by the Fund. The Fund may not achieve
the anticipated benefits of the financial futures contracts and may realize a loss.
d. Foreign Currency Translation The accounting records of the Fund are
maintained in U.S. dollars. Investment securities and all other assets and liabilities of the Fund denominated in a foreign currency are generally translated into U.S. dollars at the exchange rates quoted at the close of the NYSE on each business
day. The market value of investment securities and other assets and liabilities are translated at the exchange rate as of the valuation date. Purchases and sales of securities, income receipts, and expense payments are translated into U.S. dollars
at the exchange rates in effect on the dates of the respective transactions. The Fund does not isolate the portion of the fluctuations on investments resulting from changes in foreign currency exchange rates from the fluctuations in market prices of
investments held. Such fluctuations are included in the Net change in net realized and unrealized gain/(loss) from investments on the Statement of Operations.
Reported realized foreign currency gains and losses arise from the disposition of foreign currency, currency gains or losses realized between the trade and settlement
dates on securities transactions, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Fund’s books on the transaction date and the U.S. dollar equivalent of the amounts actually received
or paid. These reported realized foreign currency gains and losses, if any, are included in Net realized gain/(loss) from foreign currency transactions on the Statement of Operations. Unrealized foreign currency gains and losses arise from changes
(due to changes in exchange rates) in the value of foreign currency and other assets and liabilities denominated in foreign currencies, which are held at period end, if any, and are included in Net change in unrealized appreciation/(depreciation) on
translation of assets and liabilities in foreign currencies on the Statement of Operations.
e. Foreign Capital Gains Tax The Fund may be subject to foreign taxes on income, gains on investments or currency
purchases/repatriation, a portion of which may be recoverable. The Fund will accrue such taxes and recoveries as applicable, based upon their current interpretation of tax rules and regulations that exist in the markets in which they invest.
f. Investment Income Dividend income net of foreign taxes withheld, if any, is generally recorded on the ex-dividend date.
Interest income, which includes amortization/accretion of premium/discount, is determined using the interest income accrual method, and is accrued and recorded daily.
g. Allocation of Income and Expenses Many of the expenses of the Trust can be directly attributed to a specific series of the Trust. Expenses that cannot be
directly attributed to a specific series of the Trust are generally apportioned among all the series in the Trust, based on relative net assets. In calculating net asset value per share for each series of the Trust, investment income, realized and
unrealized gains and losses, and expenses other than series-specific expenses are allocated daily to each series based upon the proportion of net assets attributable to each series.
3. Transactions with Affiliates
a. Investment Advisory Fee and Expense
Limitation Under the terms of the advisory agreement, which, after its two year initial term, is reviewed and approved annually by the Board of Trustees, the Fund pays an investment advisory fee to Park Avenue. Park Avenue is a wholly-owned
subsidiary of Guardian Life and receives an investment advisory fee at an annual rate of 0.80% of the first $100 million, and 0.75% in excess of $100 million of the Fund’s average daily net assets. The fee is accrued daily and paid
monthly.
Park Avenue has contractually agreed through April 30, 2020 to waive certain fees and/or reimburse certain expenses incurred by the Fund to the extent
necessary to limit the Fund’s total annual operating expenses after fee waiver and/or expense reimbursement to 1.18% of the Fund’s average daily net assets (excluding, if applicable, any acquired fund fees and expenses, taxes, interest,
transaction costs and brokerage commissions, litigation and extraordinary expenses). The limitation may not be increased or terminated prior to this time without action by the Board of Trustees, may be terminated only upon approval of the Board of
Trustees, and is subject to Park Avenue’s recoupment rights. For the year ended December 31, 2019, Park Avenue waived fees and/or paid Fund expenses in the amount of $116,989.
NOTES TO FINANCIAL STATEMENTS — GUARDIAN INTERNATIONAL GROWTH VIP FUND
Park Avenue may be entitled to recoupment of previously waived fees and reimbursed expenses from the Fund for three years
from the date of the waiver or reimbursement, subject to the expense limitation in effect at the time of the waiver or reimbursement and at the time of the recoupment, if any. Amounts waived or reimbursed by Park Avenue pursuant to any expense
limitation after April 9, 2018 are not subject to Park Avenue’s recoupment rights. The amount available for potential future recoupment by Park Avenue from the Fund under the Expense Limitation Agreement and the expiration schedule at
December 31, 2019 are as follows:
|
|
|
|
|
| |
|
| |
|
Potential Recoupment Amounts
Expiring |
|
Total Potential
Recoupment
Amounts |
|
2021 |
|
2020 |
| $223,235 |
|
$48,645 |
|
$174,590 |
Park Avenue has entered into a Sub-Advisory Agreement with J.P. Morgan Investment Management Inc.
(“J.P. Morgan”). J.P. Morgan is responsible for providing day-to-day investment advisory services to the Fund, subject to the supervision of Park Avenue and
the oversight of the Board of Trustees. Sub-advisory fees are paid by Park Avenue and do not represent a separate or additional expense to the Fund.
b. Compensation of Trustees and Officers Trustees and officers who are interested persons of the Trust, as defined in the 1940 Act, receive no compensation from
the Fund, except for the Chief Compliance Officer of the Trust. Trustees of the Trust who are not interested persons of the Trust, and the Chief Compliance Officer, receive compensation and reimbursement of expenses from the Trust.
c. Distribution Fees Park Avenue Securities LLC (“PAS”), a wholly-owned subsidiary of Guardian Life, is the principal underwriter of Fund shares. The
Trust has entered into a distribution and service agreement with PAS, which governs the sale and distribution of shares of the Fund. Under a distribution and service plan adopted by the Trust (“12b-1
plan”), PAS is compensated for services in such capacity, including its expenses in connection with the promotion and distribution of shares of the Fund, at an annual rate of 0.25% of the Fund’s average daily net assets. For the year ended
December 31, 2019, the Fund paid distribution fees in the amount of $356,869 to PAS.
PAS has directed that certain payments under the 12b-1 plan be used to compensate GIAC for shareholder services provided to contract owners.
4. Federal Income Taxes
a.
Distributions to Shareholders For federal income tax purposes, the Fund is treated as a disregarded entity (“DRE”). As a DRE, the Fund is not subject to an entity-level income tax; and any income, gains, losses, deductions, taxes, and
credits of the Fund would instead be “passed through” directly to the separate accounts of GIAC that invest in the Fund and retain the same character for U.S. federal income tax purposes. In addition, the Fund is not required to distribute
taxable income and capital gains for U.S. federal income tax purposes. Therefore, no dividends and capital gains distributions were paid by the Fund.
5.
Investments
a. Investment Purchases and Sales The cost of investments purchased and the proceeds from investments sold (excluding short-term investments)
amounted to $35,508,538 and $58,801,277, respectively, for the year ended December 31, 2019. During the year ended December 31, 2019, there were no purchases or sales of U.S. government securities.
b. Foreign Securities Foreign securities investments involve special risks and considerations not typically associated with U.S. investments. These risks include,
but are not limited to, currency risk; adverse political, regulatory, social, and economic developments; and less reliable information about issuers. Moreover, securities of some foreign issuers may be less liquid and their prices more volatile than
those of comparable U.S. issuers.
c. Industry or Sector Concentration In its normal course of business, the Fund may invest a significant portion of its
assets in companies within a limited number of industries or sectors. As a result, the Fund may be subject to a greater risk of loss than that of a fund invested in a wider spectrum of industries or sectors because the stocks of many or all of the
companies in the industry, group of industries, sector, or sectors may decline in value due to developments adversely affecting the industry, group of industries, sector, or sectors.
d. Repurchase Agreements The Fund may invest in repurchase agreements to maintain liquidity and earn income over periods of time as short as overnight. The
collateral for repurchase agreements is either cash or fully negotiable U.S. government securities (including U.S. government agency securities). Repurchase agreements are fully collateralized (including the interest accrued thereon) and such
collateral is marked
NOTES TO FINANCIAL STATEMENTS — GUARDIAN INTERNATIONAL GROWTH VIP FUND
to market daily while the agreements remain in force. If the value of the collateral falls below the repurchase price plus
accrued interest, the Fund will typically require the seller to deposit additional collateral by the next business day. If the request for additional collateral is not met, or the seller defaults, the Fund maintains the right to sell the collateral
(although it may be prevented or delayed from doing so in certain circumstances) and may be required to claim any resulting loss against the seller. Park Avenue monitors the creditworthiness of the seller with which the Fund enters into repurchase
agreements.
6. Temporary Borrowings
The Fund, with other funds managed
by Park Avenue, is party to a $10 million committed revolving credit facility from State Street Bank and Trust Company for temporary borrowing purposes, including the meeting of redemption requests that otherwise might require the untimely
disposition of securities. Interest is calculated based on the higher of the daily one-month
LIBOR rate and the Federal Funds rate plus 1.25% at the time of borrowing. In addition to the interest charged on any borrowings by the Fund, each fund pays a commitment fee of 0.30% per annum on
its share of the unused portion of the credit facility. The agreement is in place until December 9, 2020. The Fund did not utilize the credit facility during the year ended December 31, 2019.
7. Indemnifications
Under the Trust’s organizational documents and, in
some cases, by contract, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Fund. In addition, in the normal course of business, the Fund enters into contracts with its vendors
and others that provide general indemnifications. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. However, based on experience,
the Fund expects the risk of loss to be remote.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees of Guardian Variable Products Trust and Shareholders of
Guardian International Growth VIP Fund
Opinion on the
Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Guardian
International Growth VIP Fund (one of the funds constituting Guardian Variable Products Trust, referred to hereafter as the “Fund”) as of December 31, 2019, the related statement of operations for the year ended December 31,
2019, the statement of changes in net assets for each of the two years in the period ended December 31, 2019, including the related notes, and the financial highlights for each of the periods indicated therein (collectively referred to
as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2019, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period ended December 31, 2019 and the financial highlights for each of the periods indicated therein in conformity with accounting principles generally accepted in the United States of
America.
Basis for Opinion
These financial statements are the
responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board
(United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing
procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the
amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our
procedures included confirmation of securities owned as of December 31, 2019 by correspondence with the custodian. We believe that our audits provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
New York, New York
February 20, 2020
We have served as the auditor of one or more investment
companies in Guardian Variable Products Trust since 2016.
SUPPLEMENTAL INFORMATION (UNAUDITED)
Trustees and Officers Information Table
The following table provides information about the Trustees of the Trust.
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
Name and
Year of Birth |
|
Term of Office,
Position(s) Held and Length of
Service1 |
|
Principal
Occupation(s) During Past Five Years |
|
Number of
Funds
in Fund
Complex Overseen
by Trustees2 |
|
Other Directorships
Held by Trustee |
| Independent Trustees |
| |
|
|
|
|
| Bruce W. Ferris3 (born 1955) |
|
Trustee |
|
Retired (since 2015); President and CEO, Prudential Annuities Distributors, Inc. (2013–2015); Director/Trustee, Advanced Series Trust, The Prudential Series Fund and Prudential’s
Gibraltar Fund, Inc. (2013–2015); Senior Vice President, Prudential Annuities (2008–2015). |
|
16 |
|
None. |
| |
|
|
|
|
| Theda R. Haber3
(born 1954) |
|
Trustee |
|
Adjunct Assistant Professor of Law, UC Hastings College of Law (since 2013); Member of the Board of Directors, Fairholme Trust Company, LLC (2015–2019); Attorney, Law Office of Theda R.
Haber (since 2014); Visiting Professor of Law, UC Davis School of Law (since 2014); Consultant, Haber & Associates LLC (financial services industry), (2012–2017); Advisory Council Chair, Vice Chair, and Member, Advisory Council on
Employee Welfare and Pension Benefit Plans (ERISA Advisory Council), U.S. Department of Labor (2009–2011); Managing Director and General Counsel, BlackRock Institutional Trust Company, N.A. (2009–2011); Deputy Global General Counsel,
Barclays Global Investors (2006–2009); Managing Director, Barclays Global Investors (1998–2006). |
|
16 |
|
None. |
| |
|
|
|
|
| Marshall
Lux3 (born 1960) |
|
Trustee |
|
Senior Advisor, The Boston Consulting Group (since 2014); Senior Partner and Managing Director, The Boston Consulting Group (2009–2014). |
|
16 |
|
None. |
| |
|
|
|
|
| Lisa K.
Polsky3 (born 1956) |
|
Trustee |
|
Board Member, MFA Financial, Inc. (real estate investment trust) (since 2020); Advisor, SMBC Americas (financial services) (since 2020); Senior Risk Advisor, AQR (investment management)
(2016–2019); Senior Risk Advisor, Ultra Capital (venture capital) (2016–2019); Board Member, DB USA Corporation (Deutsche Bank Intermediate Holding Company) (financial services) (since 2016); Chief Risk Officer, CIT Group Inc. (financial
services) (2010–2015); Board Member and Chair of Audit Committee, Piper Jaffray (investment bank) (2007–2016). |
|
16 |
|
None. |
| |
|
|
|
|
| John
Walters3 (born 1962) |
|
Lead Independent
Trustee |
|
Board Member, Amerilife Holdings LLC (insurance distribution) (since 2015); Board Member, Stadion Money Management LLC (investment adviser) (since 2011); President and Chief Operating Officer,
Hartford Life Insurance Company (2000–2010). |
|
16 |
|
Trustee, USAA Mutual Funds Trust, (One registered investment company offering 47 individual funds) (since
2019). |
SUPPLEMENTAL INFORMATION (UNAUDITED)
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
Name and
Year of Birth |
|
Term of Office,
Position(s) Held and Length of
Service1 |
|
Principal
Occupation(s) During Past Five Years |
|
Number of
Funds
in Fund
Complex Overseen
by Trustees2 |
|
Other Directorships
Held by Trustee |
| Interested Trustees |
| |
|
|
|
|
| Dominique Baede4 (born 1970) |
|
Trustee
(Since
January 2020) |
|
Vice President, Head of Product, Life, Annuity and Inforce, The Guardian Life Insurance Company of America (since 2019); Managing Director, Product Management Group, AXA Equitable (insurance
company) prior thereto. |
|
16 |
|
None. |
| |
|
|
|
|
| Michael
Ferik4 (born 1972) |
|
Chairman and Trustee (Since
December 2019) |
|
Executive Vice President, Individual Markets, The Guardian Life Insurance Company of America (since 2020); Executive Vice President and Chief Financial Officer, The Guardian Life Insurance
Company of America (2017–2019); Executive Vice President, Individual Markets, The Guardian Life Insurance Company of America prior thereto. |
|
16 |
|
None. |
| 1 |
Except as otherwise noted, each Trustee began service in such capacity in 2016 and serves until his or her successor is
elected and qualified or until his or her resignation, death or removal. The business address of each Trustee is 10 Hudson Yards, New York, New York 10001. |
| 2 |
The Trust currently consists of 16 separate Funds. |
| 3 |
Member of the Audit Committee of the Trust. |
| 4 |
Each of Dominique Baede and Michael Ferik is considered to be an “interested person” of the Trust within the
meaning of the 1940 Act because of their affiliation with The Guardian Life Insurance Company of America and/or its affiliates. |
|
|
|
|
|
| |
|
|
| Name and Year of Birth |
|
Position(s) Held and
Length of Service5 |
|
Principal Occupation(s)
During Past Five Years |
| |
|
|
| Dominique Baede
(born 1970) |
|
President and Principal Executive Officer (Since January 2020) |
|
Vice President, Head of Product, Life, Annuity and Inforce, The Guardian Life Insurance Company of America (since 2019); Managing Director,
Product Management Group, AXA Equitable (insurance company) prior thereto. |
| |
|
|
| John H. Walter
(born 1962) |
|
Senior Vice President, Treasurer, and Principal Financial and Accounting Officer |
|
Vice President, Director of Finance, Corporate Finance, The Guardian Life Insurance Company of America. |
| |
|
|
| Harris Oliner
(born 1971) |
|
Senior Vice President and Secretary |
|
Senior Vice President, Corporate Secretary, The Guardian Life Insurance Company of America (since 2015); Senior Vice President, Deputy
General Counsel, Corporate Secretary, Voya Financial, Inc. prior thereto. |
| |
|
|
| Richard T. Potter
(born 1954) |
|
Senior Vice President and Chief Legal Officer |
|
Vice President and Equity Counsel, The Guardian Life Insurance Company of America. |
| |
|
|
| Philip Stack
(born 1964) |
|
Chief Compliance Officer (Since September 2017) |
|
Second Vice President, Mutual Fund Chief Compliance Officer, The Guardian Life Insurance Company of America (since 2017); Executive Director,
Chief Compliance Officer, Morgan Stanley (2015–2017); Vice President, Morgan Stanley prior thereto. |
| |
|
|
| Brian Hagan
(born 1984) |
|
Anti-Money Laundering Officer (Since March 2019) |
|
Assistant Vice President (since 2019), Anti-Money Laundering Compliance, The Guardian Life Insurance Company of America/Park Avenue
Securities LLC; Vice President, Head of Financial Intelligence Unit, Brown Brothers Harriman & Co. (2014–2019); Assistant Vice President, AML Compliance Manager, JPMorgan Chase & Co. (2011–2014). |
| |
|
|
| Kathleen M. Moynihan
(born 1966) |
|
Senior Counsel |
|
Second Vice President, Counsel (since 2019), The Guardian Life Insurance Company of America; Senior Counsel prior thereto. |
| |
|
|
| Maria Nydia Morrison
(born 1958) |
|
Fund Controller |
|
Mutual Fund Controller, The Guardian Life Insurance Company of America (since 2015); Chief Financial Officer/Assistant Operating Officer, St.
Francis De Assisi Montessori School (Plaridel, Bulacan), Inc. (Philippines) prior thereto. |
| |
|
|
| Sonya L. Crosswell
(born 1977) |
|
Assistant Secretary |
|
Assistant Vice President, Assistant Corporate Secretary and Secretary Pro Tem, The Guardian Life Insurance Company of America. |
| 5 |
Unless otherwise indicated, the Officers each began service in such capacity in 2016 and hold office for an indefinite
term or until their successors shall have been elected and qualified. The business address of each Officer is 10 Hudson Yards, New York, New York 10001. |
SUPPLEMENTAL INFORMATION (UNAUDITED)
The Statement of Additional Information (“SAI”) includes additional information about
the Trust’s Trustees and Officers and is available, without charge, upon request by calling toll-free 1-888-GUARDIAN (1-888-482-7342) or by visiting our website at http://guardianvpt.onlineprospectus.net/GuardianVPT/Prospectuses.
Portfolio Holdings and Proxy Voting Procedures
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for
the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The Fund’s Form N-PORT reports are available on the Securities and
Exchange Commission’s website at https://www.sec.gov. The Fund’s Form N-PORT information is also available, without charge, upon request, by calling toll-free 1-888-GUARDIAN (1-888-482-7342) or by visiting our website at
http://guardianvpt.onlineprospectus.net/GuardianVPT/
Prospectuses.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio
securities is included in the SAI. The SAI and information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 may be obtained
(i) without charge, upon request, by calling toll-free 1-888-GUARDIAN (1-888-482-7342) or by visiting our website at http://guardianvpt.onlineprospectus.net/GuardianVPT/
Prospectuses; and (ii) on the Securities and Exchange Commission’s website at
https://www.sec.gov.
This report is transmitted to shareholders only. It is not authorized for use as an offer of sale or a solicitation of an offer to buy shares of the Fund unless
accompanied or preceded by the Fund’s current prospectus. Past performance results shown in this report should not be considered a representation of future performance. Investment returns and principal value of shares will fluctuate so that
shares, when redeemed, may be worth more or less than their original cost. Statements and other information herein are as dated and are subject to change.
The Guardian Life Insurance Company of America New York, NY 10001-2159
PUB8171
Guardian Variable
Products Trust
2019
Annual Report
All Data as of December 31, 2019
Guardian International
Value VIP Fund
Important Notice
Beginning on
January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund’s shareholder reports will no longer be sent by mail from The Guardian Insurance & Annuity Company, Inc.
(“GIAC”). Instead, GIAC will mail you a notice when copies of the shareholder reports are made available on a website. You will be notified by mail each time a report is posted and provided with a website link to access the report.
If you have already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. If you have not yet
elected electronic delivery, at any time, you may elect to receive the Fund’s shareholder reports and certain other communications from GIAC electronically, by going to www.guardianlife.com and registering for
e-delivery.
You may instead elect to receive all future shareholder reports in paper free of charge. If you wish to receive
paper copies of your shareholder reports, please call GIAC’s Customer Service Office Contact Center at 1-888-GUARDIAN (1-888-482-7342). Your election to receive reports in paper will apply to all the underlying funds available.
|
|
|
| Not FDIC insured. May lose value. No bank guarantee. |
|
www.guardianlife.com |
TABLE OF CONTENTS
Guardian International Value VIP Fund
Except as otherwise specifically stated, all information, including portfolio security positions, is as of December 31, 2019. The views expressed in the Fund
Commentary are those of the Fund’s portfolio manager(s) as of the date of this report and are subject to change without notice. They do not necessarily represent the views of Park Avenue Institutional Advisers LLC or a sub-adviser. The Fund Commentary may contain some forward-looking statements providing expectations or forecasts of future events as of the date of this report; they do not necessarily relate to historical or
current facts. There can be no guarantee that any forward-looking statement will be realized. We undertake no obligation to update forward-looking statements, whether as a result of new information, future events, or otherwise. Any discussions of
specific securities should not be considered a recommendation to buy or sell those securities. Fund holdings will vary. Information contained herein has been obtained from sources believed reliable, but is not guaranteed.
GUARDIAN INTERNATIONAL VALUE VIP FUND
FUND COMMENTARY OF LAZARD ASSET MANAGEMENT LLC,
SUB-ADVISER (unaudited)
Highlights
| • |
|
Guardian International Value VIP Fund (the “Fund”) returned 21.38%, underperforming its benchmark, the MSCI® EAFE® Index (Europe, Australasia, and Far East)1 (the “Index”), for the 12 months ended December 31, 2019. The Index returned 22.01%
for the year. |
| • |
|
The Fund’s underperformance relative to the Index was primarily due to stock selection, especially in the financials, materials, and consumer staples sectors. Positioning in emerging markets and
greater-than-benchmark weight in the industrials sector also contributed to the Fund’s relative performance. Stock selection in the consumer discretionary and real estate sectors, and a cash position and an underweight in the consumer
discretionary and health care sectors were detractors from the Fund’s performance. |
Market Overview
The year 2019 was a big one for equities, and international equities were no exception. The Index rose 22.01% over the course of the year, while the MSCI® ACWI ex USA Index2, rose 21.5%. The fourth quarter was particularly strong, as markets anticipated a cyclical upturn in both the global
economy and corporate profits. However, the nature of the gains was as important as the raw numbers. We entered the year feeling cautious about corporate fundamentals and that stance turned out to be justified. Equity returns were driven by multiple
expansion rather than earnings, which came in much lower than expected across regions. In the first three quarters of the year, the shift in policy from monetary tightening to easing from the U.S. Federal Reserve (the “Fed”), as well as
the European Central Bank’s (the “ECB”) return to quantitative easing, drove asset prices higher. Equities owed their strong rise in the fourth quarter, equivalent to 40% on an annualized basis, to a turn in risk sentiment, thanks to
a preliminary agreement on a trade deal between the U.S. and China and a decisive election in the United Kingdom. A market that reacted with a loud, long sigh of relief at every sign of stabilization and largely ignored fundamentals posed challenges
for stock pickers, even as stocks overall enjoyed good returns.
Behind the impressive performance stocks enjoyed in most regions, the prevailing mood for 2019 was
one of anxiety. U.S. and China trade tensions, a global manufacturing slowdown, and pessimism around global growth prospects were all at the top of investors’ minds.
We believe that it is telling that the three major developments that boosted international equities in 2019 all made an
uncertain world feel a bit more certain. The Fed’s about-face on monetary tightening, which was followed by easing from the ECB and many emerging markets central banks, made fears of rising interest rates a moot point. British voters ushered in
some clarity around Brexit by delivering a decisive victory to Prime Minister Boris Johnson’s Conservative Party in the fourth quarter. And finally, the U.S. and China announced in December that they had reached an agreement on a Phase 1 trade
deal.
Given the underlying uncertainty, we are not surprised that high-quality stocks fared particularly well in 2019. Within the high-quality world, those with the
highest growth and valuations, climbed 39% in the year and were particularly strong in the fourth quarter. As we enter 2020, the expectations for this group are high, with a nearly 8-point valuation premium
versus the Index (23.7x vs. 15.8x on a price-to-earnings basis).
That is not to say
value didn’t have its moments in 2019. For a short period of time, global value stocks started to outpace global growth stocks late in the third quarter, as fears of a recession began to subside, a trade deal began to seem more possible,
sentiment improved, and investors hoped weak global manufacturing activity would bottom. Armed with renewed confidence, we believe investors felt comfortable, at least for a short period of time, taking advantage of an unusually wide valuation gap
between value and growth stocks. The appetite for value began to flag as the third-quarter earnings season got underway, however, and wasn’t ultimately strong enough to compete with demand for growth stocks.
The growth stock versus value stock paradigm held right down to the sector and region level. Technology stocks, a classic growth sector, soared. Energy stocks lagged, as
investors worried about the potential for depressed prices in the face of abundant oil supplies and a global manufacturing slowdown.
Portfolio Review
The Fund slightly underperformed the Index for the year. Stock selection in the financials sector helped relative returns. Stock selection in the materials sector
also drove positive relative returns. Lastly, positioning in emerging markets was additive to relative returns.
In contrast, a lower-than-benchmark weight and stock
selection in the consumer discretionary sector detracted from relative returns. Elsewhere, strategy
GUARDIAN INTERNATIONAL VALUE VIP FUND
returns were hurt by stock selection in the real estate sector. Lastly, cash was the largest detractor from performance.
Cash is a residual of our process, not a strategic asset in the portfolio. Corporate fundamentals weakened throughout the year, while increasingly positive sentiment drove valuations higher. As a result, stocks in our portfolio reached target
valuations faster than we could find high-quality relative value investments to replace them with. This resulted in slightly elevated cash levels, which weighed down performance relative to the Index.
Outlook
Entering 2020, the question we think investors must ask
themselves is whether corporate earnings and monetary stimulus can continue to offset geopolitical and economic uncertainty. We believe such optimism may have powered markets through 2019, but could fade in 2020 unless corporate fundamentals
improve. U.S. markets in particular have largely priced in both the return to global monetary stimulus, which drove expectations for improvement in corporate profits, and some short-term positive geopolitical developments, such as the Phase 1 trade
deal between the U.S. and China and Brexit. International equities, however, have not priced in these developments to the same degree. Partly as a result, the United States is trading at a higher premium to international equities than it has in two
decades. Should the U.S. market’s high hopes for increasing stability and a pickup in economic growth fail to materialize, the discount on international stocks could provide more of a cushion for investors relative to the U.S. should valuations
fall.
On the monetary front, interest rates are already extremely low relative to history, while central bank balance sheets remain elevated. We think it is
significant that both the Fed and ECB are set to engage in a series
of discussions this year about how they would counteract a financial crisis, given their limited firepower. We believe the bar for further meaningful stimulus in developed markets is relatively
high. What’s more, we do not expect additional monetary stimulus to provide the same relief to markets as the Fed’s about-face on tightening did in late 2018 and early 2019.
In terms of the global economy, an upturn in growth that seemed imminent entering the fourth quarter of 2019 faded a bit by the end. While manufacturing activity seemed
to stabilize early in the second half of 2019, purchasing managers’ indices dipped downward again at the very end of the year — even after the announcement of the Phase 1 trade deal the absence of which had supposedly been weighing on
manufacturing activity.
That dip begs a bigger question: will the geopolitical events that gave investors comfort in 2019 translate into a stronger economy, and
therefore, stronger corporate profits? While it’s true that the UK election and U.S.-China trade deal seemed to create a bit more certainty in the world, we believe that certainty is, to some degree, an illusion. The UK must still negotiate
crucial trade agreements with the European Union before a self-imposed December 2020 deadline. Similarly, it remains to be seen what Phase 2 trade negotiations between the U.S. and China will look like, or if they will materialize at all. Finally,
it is an election year in the U.S., which could have unpredictable consequences for both volatility and performance.
With the factors that drove stock prices in
2019 seemingly running out of steam and the stocks that powered 2019 trading at very high valuations, another year of rapid multiple expansion looks unlikely. In that environment, we believe stock picking will become increasingly important.
| 1 |
The MSCI®
EAFE® Index (Europe, Australasia, and Far East) (the “Index”) is a free float-adjusted market capitalization index that is designed to measure the equity market performance of
developed markets, excluding the U.S. and Canada. Index results assume the reinvestment of dividends paid on the stocks constituting the Index. You may not invest in the Index and, unlike the Fund, the Index does not incur fees or expenses.
|
| 2 |
The MSCI® ACWI ex USA Index (the “ACWI Index”) tracks
the performance of publicly traded large- and mid-cap stocks of companies in 22 of 23 developed markets and 26 emerging markets. You may not invest in the ACWI Index and, unlike the Fund, the ACWI Index
does not incur fees or expenses. |
GUARDIAN INTERNATIONAL VALUE VIP FUND
Funds in the Guardian Variable Products Trust are sold by prospectus only. You should carefully
consider the investment objectives, risks, charges and expenses of the Funds before making an investment decision. The prospectus contains this and other important information. Please read it carefully before investing or sending money. Please visit
our website at http://guardianvpt.onlineprospectus.net/GuardianVPT/Prospectuses or to obtain a printed copy, call 1-888-GUARDIAN (1-888-482-7342).
As with all
mutual funds, the value of an investment in the Fund could decline, and you could lose money. Diversification does not guarantee profit or protect against loss, and there can be no assurance that the Fund will achieve its investment objective. The
Fund invests primarily in equity securities and therefore exposes you to the general risks of investing in stock markets. Investing in large-capitalization companies involves risks such as having low growth rates, and slow responsiveness to
competitive challenges or opportunities than in the case of smaller companies. International investing involves special risks, which include changes in currency rates, foreign taxation and differences in auditing standards and securities
regulations, political uncertainty and greater volatility. Foreign securities are subject to political, regulatory, economic, and exchange-rate risks not present in domestic investments. These risks are even greater when investing in emerging
markets. Value stocks may not realize their perceived value and during certain periods the Fund may underperform other equity funds that employ a different style. Investing in a more limited number of issuers and sectors can be subject to greater
market fluctuation. Any discussions of specific securities should not be considered a recommendation to buy or sell those securities. Fund holdings will vary.
GUARDIAN INTERNATIONAL VALUE VIP FUND
Fund Characteristics (unaudited)
Total Net Assets: $220,988,948
|
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|
Geographic Region Allocation1
As of December 31, 2019 |
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| |
|
Sector Allocation2 As of
December 31, 2019 |
|
GUARDIAN INTERNATIONAL VALUE VIP FUND
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|
|
| Top Ten Holdings1 As of December 31, 2019 |
|
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|
|
| Holding |
|
Country |
|
% of Total
Net Assets |
|
| Novartis AG (Reg S) |
|
Switzerland |
|
|
3.18% |
|
| SAP SE |
|
Germany |
|
|
3.15% |
|
| Medtronic PLC |
|
Ireland |
|
|
3.07% |
|
| Royal Dutch Shell PLC, Class A |
|
United Kingdom |
|
|
2.96% |
|
| Sanofi |
|
France |
|
|
2.76% |
|
| RELX PLC |
|
United Kingdom |
|
|
2.62% |
|
| Volkswagen AG |
|
Germany |
|
|
2.55% |
|
| Samsung Electronics Co. Ltd. |
|
Republic of Korea |
|
|
2.55% |
|
| Safran S.A. |
|
France |
|
|
2.39% |
|
| Assa Abloy AB, Class B |
|
Sweden |
|
|
2.21% |
|
| Total |
|
|
|
|
27.44% |
|
| 1 |
Portfolio holdings are subject to change and should not be considered a recommendation to buy or sell individual
securities. Cash includes short-term investments and net other assets and liabilities. |
| 2 |
The Fund’s holdings are allocated to each sector based on the MSCI Global Industry Classification Standard (GICS®). Cash includes short-term investments and net other assets and liabilities. |
Fund Performance (unaudited)
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| |
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|
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| Average Annual Total Returns
As of December 31, 2019 |
|
|
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|
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| |
|
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| |
|
Inception Date |
|
|
1 Year |
|
|
5 Year |
|
|
10 Year |
|
|
Since Inception |
|
| Guardian International Value VIP Fund |
|
|
9/1/2016 |
|
|
|
21.38% |
|
|
|
— |
|
|
|
— |
|
|
|
6.01% |
|
| MSCI® EAFE® Index |
|
|
|
|
|
|
22.01% |
|
|
|
— |
|
|
|
— |
|
|
|
8.57% |
|
GUARDIAN INTERNATIONAL VALUE VIP FUND
|
| |
|
Results of a Hypothetical $10,000 Investment As of December 31,
2019 |
|
The chart above shows the performance of a hypothetical $10,000 investment made on inception date in Guardian International Value VIP Fund
and the MSCI® EAFE® Index. Index returns do not include the fees and expenses of the Fund, but do include reinvestment of dividends, if
any.
Performance quoted represents past performance and does not guarantee or predict future results. Investment return and principal value will fluctuate, so
shares, when redeemed, may be worth more or less than their original cost. The Fund’s fees and expenses are detailed in the Financial Highlights section of this report. Fees and expenses are factored into the net asset value of Fund shares and
any performance numbers we release. Total return figures include the effect of expense limitations in effect during the periods shown, if applicable; without such limitations, the performance shown would have been lower. Performance results assume
the reinvestment of dividends and capital gains. The return figures shown do not reflect the deduction of taxes that a contract owner/policyholder may pay on redemption units. The actual total returns for owners of variable annuity contracts or
variable life insurance policies that provide for investment in the Fund will be lower to reflect separate account and contract/policy charges. Current and month-end performance information, which may be lower
or higher than that cited, is available by calling 1-888-GUARDIAN
(1-888-482-7342) and is periodically updated on our website: http://guardianlife.com.
UNDERSTANDING YOUR FUND’S EXPENSES (UNAUDITED)
By investing in the Fund, you incur two types of costs: (1) transaction costs and (2) ongoing costs, including,
as applicable, investment advisory fees, distribution and/or service (12b-1) fees and other Fund expenses. The example below is intended to help you understand your ongoing costs (in dollars) of investing in
the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the
beginning of the period and held for the entire period from July 1, 2019 to December 31, 2019. The table below shows the Fund’s expenses in two ways:
Expenses based on actual return
This section of the table provides
information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for
example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the section under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this
period.
Expenses based on hypothetical 5% return for comparison purposes
This section of the table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund with the cost of investing in other mutual funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the
other funds.
Note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads), redemption fees, or exchange fees. Therefore the second section is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. If these transactional costs were
included, your costs would have been higher. Charges and expenses at the insurance company separate account level are not reflected in the table.
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Beginning
Account Value
7/1/19 |
|
Ending
Account Value
12/31/19 |
|
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Expenses Paid
During Period* 7/1/19-12/31/19 |
|
|
Expense Ratio
During Period
7/1/19-12/31/19 |
|
| Based on Actual Return |
|
$1,000.00 |
|
|
$1,049.20 |
|
|
|
$4.86 |
|
|
|
0.94% |
|
| Based on Hypothetical Return (5% Return Before Expenses) |
|
$1,000.00 |
|
|
$1,020.47 |
|
|
|
$4.79 |
|
|
|
0.94% |
|
| * |
Expenses are equal to the Fund’s annualized expense ratio as indicated, multiplied by the average account value over
the period, multiplied by 184/365 (to reflect the one-half year period). |
SCHEDULE OF INVESTMENTS — GUARDIAN
INTERNATIONAL VALUE VIP FUND
|
|
|
|
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|
|
|
| December 31, 2019 |
|
Shares |
|
|
Value |
|
| Common Stocks – 95.6% |
|
| |
| Canada – 5.5% |
|
| |
|
|
| Canadian National Railway Co. |
|
|
26,247 |
|
|
$ |
2,374,367 |
|
| |
|
|
| National Bank of Canada |
|
|
53,949 |
|
|
|
2,994,605 |
|
| |
|
|
| Suncor Energy, Inc. |
|
|
134,610 |
|
|
|
4,411,845 |
|
| |
|
|
| TMX Group Ltd. |
|
|
28,200 |
|
|
|
2,442,024 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
12,222,841 |
|
| Cayman Islands – 0.4% |
|
| |
|
|
| ESR Cayman Ltd.(1)(2) |
|
|
384,400 |
|
|
|
868,221 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
868,221 |
|
| China – 1.6% |
|
| |
|
|
| Ping An Insurance Group Co. of China Ltd.,
Class H |
|
|
300,000 |
|
|
|
3,553,878 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
3,553,878 |
|
| Denmark – 1.5% |
|
| |
|
|
| Carlsberg A/S, Class B |
|
|
22,638 |
|
|
|
3,377,043 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
3,377,043 |
|
| Finland – 2.4% |
|
| |
|
|
| Nordea Bank Abp |
|
|
317,856 |
|
|
|
2,571,210 |
|
| |
|
|
| Sampo OYJ, Class A |
|
|
64,144 |
|
|
|
2,798,641 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
5,369,851 |
|
| France – 13.3% |
|
| |
|
|
| Air Liquide S.A. |
|
|
26,198 |
|
|
|
3,723,433 |
|
| |
|
|
| BNP Paribas S.A. |
|
|
38,024 |
|
|
|
2,263,462 |
|
| |
|
|
| Engie S.A. |
|
|
286,320 |
|
|
|
4,626,928 |
|
| |
|
|
| Safran S.A. |
|
|
34,033 |
|
|
|
5,275,604 |
|
| |
|
|
| Sanofi |
|
|
60,842 |
|
|
|
6,110,799 |
|
| |
|
|
| Vinci S.A. |
|
|
23,200 |
|
|
|
2,577,413 |
|
| |
|
|
| Vivendi S.A. |
|
|
165,546 |
|
|
|
4,798,365 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
29,376,004 |
|
| Germany – 5.3% |
|
| |
|
|
| Fresenius Medical Care AG & Co.
KGaA |
|
|
20,687 |
|
|
|
1,534,312 |
|
| |
|
|
| Fresenius SE & Co. KGaA |
|
|
28,283 |
|
|
|
1,596,466 |
|
| |
|
|
| SAP SE |
|
|
51,724 |
|
|
|
6,970,834 |
|
| |
|
|
| Vonovia SE |
|
|
28,391 |
|
|
|
1,528,461 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
11,630,073 |
|
| Indonesia – 0.4% |
|
| |
|
|
| Bank Mandiri Persero Tbk PT |
|
|
1,531,300 |
|
|
|
846,586 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
846,586 |
|
| Ireland – 4.5% |
|
| |
|
|
| Medtronic PLC |
|
|
59,779 |
|
|
|
6,781,928 |
|
| |
|
|
| Ryanair Holdings PLC, ADR(2) |
|
|
36,194 |
|
|
|
3,170,956 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
9,952,884 |
|
| Israel – 1.2% |
|
| |
|
|
| Bank Leumi
Le-Israel BM |
|
|
349,650 |
|
|
|
2,548,178 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
2,548,178 |
|
| Japan – 16.2% |
|
| |
|
|
| Asahi Group Holdings Ltd. |
|
|
46,200 |
|
|
|
2,110,402 |
|
| |
|
|
| Daiwa House Industry Co. Ltd. |
|
|
129,812 |
|
|
|
4,021,773 |
|
| |
|
|
| Hitachi Ltd. |
|
|
107,400 |
|
|
|
4,523,907 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Shares |
|
|
Value |
|
| Japan (continued) |
|
| |
|
|
| Kao Corp. |
|
|
40,630 |
|
|
$
|
3,351,080 |
|
| |
|
|
| Makita Corp. |
|
|
72,600 |
|
|
|
2,513,343 |
|
| |
|
|
| Nexon Co. Ltd.(2) |
|
|
201,900 |
|
|
|
2,670,522 |
|
| |
|
|
| Nintendo Co. Ltd. |
|
|
10,100 |
|
|
|
4,076,827 |
|
| |
|
|
| Pan Pacific International Holdings Corp. |
|
|
124,328 |
|
|
|
2,063,585 |
|
| |
|
|
| Shin-Etsu Chemical Co. Ltd. |
|
|
27,200 |
|
|
|
2,982,092 |
|
| |
|
|
| Sumitomo Mitsui Financial Group, Inc. |
|
|
92,800 |
|
|
|
3,416,172 |
|
| |
|
|
| Suzuki Motor Corp. |
|
|
46,200 |
|
|
|
1,935,163 |
|
| |
|
|
| Yamaha Corp. |
|
|
40,700 |
|
|
|
2,243,538 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
35,908,404 |
|
| Luxembourg – 0.7% |
|
| |
|
|
| ArcelorMittal S.A. |
|
|
85,725 |
|
|
|
1,514,276 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
1,514,276 |
|
| Mexico – 0.4% |
|
| |
|
|
| Arca Continental S.A.B. de C.V. |
|
|
182,600 |
|
|
|
965,851 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
965,851 |
|
| Netherlands – 3.7% |
|
| |
|
|
| ABN AMRO Bank N.V.(1) |
|
|
115,769 |
|
|
|
2,114,536 |
|
| |
|
|
| Koninklijke DSM N.V. |
|
|
27,802 |
|
|
|
3,629,174 |
|
| |
|
|
| Wolters Kluwer N.V. |
|
|
32,435 |
|
|
|
2,370,777 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
8,114,487 |
|
| Norway – 3.6% |
|
| |
|
|
| Equinor ASA |
|
|
130,038 |
|
|
|
2,600,565 |
|
| |
|
|
| Mowi ASA |
|
|
105,660 |
|
|
|
2,748,078 |
|
| |
|
|
| Telenor ASA |
|
|
141,641 |
|
|
|
2,540,405 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
7,889,048 |
|
| Republic of Korea – 2.5% |
|
| |
|
|
| Samsung Electronics Co. Ltd. |
|
|
116,856 |
|
|
|
5,630,628 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
5,630,628 |
|
| Singapore – 2.7% |
|
| |
|
|
| DBS Group Holdings Ltd. |
|
|
206,480 |
|
|
|
3,979,955 |
|
| |
|
|
| NetLink NBN Trust |
|
|
2,682,500 |
|
|
|
1,884,950 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
5,864,905 |
|
| Spain – 0.8% |
|
| |
|
|
| Red Electrica Corp. S.A. |
|
|
92,905 |
|
|
|
1,868,804 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
1,868,804 |
|
| Sweden – 3.7% |
|
| |
|
|
| Assa Abloy AB, Class B |
|
|
209,092 |
|
|
|
4,886,030 |
|
| |
|
|
| Epiroc AB, Class A |
|
|
276,211 |
|
|
|
3,375,599 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
8,261,629 |
|
| Switzerland – 5.3% |
|
| |
|
|
| ABB Ltd. (Reg S) |
|
|
190,603 |
|
|
|
4,601,325 |
|
| |
|
|
| Novartis AG (Reg S) |
|
|
74,076 |
|
|
|
7,018,136 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
11,619,461 |
|
| United Kingdom – 19.9% |
|
| |
|
|
| Aon PLC |
|
|
19,974 |
|
|
|
4,160,384 |
|
| |
|
|
| BHP Group PLC |
|
|
123,061 |
|
|
|
2,906,693 |
|
| |
|
|
| Compass Group PLC |
|
|
77,662 |
|
|
|
1,945,500 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 8 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
SCHEDULE OF INVESTMENTS — GUARDIAN INTERNATIONAL VALUE VIP FUND
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Shares |
|
|
Value |
|
| United Kingdom (continued) |
|
| |
|
|
| Ferguson PLC |
|
|
29,998 |
|
|
$
|
2,725,516 |
|
| |
|
|
| Howden Joinery Group PLC |
|
|
153,925 |
|
|
|
1,379,614 |
|
| |
|
|
| Informa PLC |
|
|
270,755 |
|
|
|
3,077,766 |
|
| |
|
|
| Network International Holdings PLC(1)(2) |
|
|
145,982 |
|
|
|
1,239,015 |
|
| |
|
|
| Prudential PLC |
|
|
232,283 |
|
|
|
4,469,458 |
|
| |
|
|
| RELX PLC |
|
|
229,435 |
|
|
|
5,787,997 |
|
| |
|
|
| Royal Dutch Shell PLC, Class A |
|
|
220,202 |
|
|
|
6,545,394 |
|
| |
|
|
| RSA Insurance Group PLC |
|
|
288,736 |
|
|
|
2,179,510 |
|
| |
|
|
| Tesco PLC |
|
|
1,105,471 |
|
|
|
3,744,802 |
|
| |
|
|
| The Weir Group PLC |
|
|
70,566 |
|
|
|
1,412,025 |
|
| |
|
|
| Unilever PLC |
|
|
41,029 |
|
|
|
2,348,880 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
43,922,554 |
|
| |
|
Total Common Stocks
(Cost $196,712,593) |
|
|
|
211,305,606 |
|
| Preferred Stocks – 2.5% |
|
| |
| Germany – 2.5% |
|
| |
|
|
| Volkswagen AG, 3.00% |
|
|
28,506 |
|
|
|
5,635,120 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
5,635,120 |
|
| |
|
Total Preferred Stocks
(Cost $5,235,355) |
|
|
|
5,635,120 |
|
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Principal
Amount |
|
|
Value |
|
| Short-Term Investment – 2.2% |
|
| |
| Repurchase Agreements – 2.2% |
|
| |
|
|
| Fixed Income
Clearing Corp.,
0.12%, dated 12/31/2019,
proceeds at maturity value of
$4,821,032, due 1/2/2020(3) |
|
$ |
4,821,000 |
|
|
$
|
4,821,000 |
|
| |
|
Total Repurchase Agreements
(Cost $4,821,000) |
|
|
|
4,821,000 |
|
| |
|
Total Investments – 100.3%
(Cost $206,768,948) |
|
|
|
221,761,726 |
|
| |
|
| Liabilities in excess of other assets – (0.3)% |
|
|
|
(772,778 |
) |
| |
|
| Total Net Assets – 100.0% |
|
|
$ |
220,988,948 |
|
| (1) |
Securities that may be resold in transactions, exempt from registration under Rule 144A of the Securities Act of 1933, as
amended, normally to certain qualified buyers. At December 31, 2019, the aggregate market value of these securities amounted to $4,221,772, representing 1.9% of net assets. These securities have been deemed liquid by the investment adviser
pursuant to the Fund’s liquidity procedures approved by the Board of Trustees. |
| (2) |
Non–income–producing security. |
| (3) |
The table below presents collateral for repurchase agreements. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Security |
|
Coupon |
|
|
Maturity
Date |
|
|
Principal
Amount |
|
|
Value |
|
| U.S. Treasury Note |
|
|
2.75% |
|
|
|
9/15/2021 |
|
|
$ |
4,790,000 |
|
|
$ |
4,920,298 |
|
Legend:
ADR — American
Depositary Receipt
|
|
|
|
|
| The accompanying notes are an integral part of these financial statements. |
|
|
|
9 |
SCHEDULE OF INVESTMENTS — GUARDIAN INTERNATIONAL VALUE VIP FUND
The following is a summary of the inputs used as of December 31, 2019 in valuing the
Fund’s investments. For more information on valuation inputs, please refer to Note 2a of the accompanying Notes to Financial Statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Valuation
Inputs |
|
|
|
|
| Investments in Securities |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
| Common Stocks |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Canada |
|
$ |
12,222,841 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
12,222,841 |
|
| Cayman Islands |
|
|
868,221 |
|
|
|
— |
|
|
|
— |
|
|
|
868,221 |
|
| China |
|
|
— |
|
|
|
3,553,878 |
* |
|
|
— |
|
|
|
3,553,878 |
|
| Denmark |
|
|
— |
|
|
|
3,377,043 |
* |
|
|
— |
|
|
|
3,377,043 |
|
| Finland |
|
|
— |
|
|
|
5,369,851 |
* |
|
|
— |
|
|
|
5,369,851 |
|
| France |
|
|
— |
|
|
|
29,376,004 |
* |
|
|
— |
|
|
|
29,376,004 |
|
| Germany |
|
|
— |
|
|
|
11,630,073 |
* |
|
|
— |
|
|
|
11,630,073 |
|
| Indonesia |
|
|
— |
|
|
|
846,586 |
* |
|
|
— |
|
|
|
846,586 |
|
| Ireland |
|
|
9,952,884 |
|
|
|
— |
|
|
|
— |
|
|
|
9,952,884 |
|
| Israel |
|
|
— |
|
|
|
2,548,178 |
* |
|
|
— |
|
|
|
2,548,178 |
|
| Japan |
|
|
— |
|
|
|
35,908,404 |
* |
|
|
— |
|
|
|
35,908,404 |
|
| Luxembourg |
|
|
— |
|
|
|
1,514,276 |
* |
|
|
— |
|
|
|
1,514,276 |
|
| Mexico |
|
|
965,851 |
|
|
|
— |
|
|
|
— |
|
|
|
965,851 |
|
| Netherlands |
|
|
— |
|
|
|
8,114,487 |
* |
|
|
— |
|
|
|
8,114,487 |
|
| Norway |
|
|
— |
|
|
|
7,889,048 |
* |
|
|
— |
|
|
|
7,889,048 |
|
| Republic of Korea |
|
|
— |
|
|
|
5,630,628 |
* |
|
|
— |
|
|
|
5,630,628 |
|
| Singapore |
|
|
— |
|
|
|
5,864,905 |
* |
|
|
— |
|
|
|
5,864,905 |
|
| Spain |
|
|
— |
|
|
|
1,868,804 |
* |
|
|
— |
|
|
|
1,868,804 |
|
| Sweden |
|
|
— |
|
|
|
8,261,629 |
* |
|
|
— |
|
|
|
8,261,629 |
|
| Switzerland |
|
|
— |
|
|
|
11,619,461 |
* |
|
|
— |
|
|
|
11,619,461 |
|
| United Kingdom |
|
|
4,160,384 |
|
|
|
39,762,170 |
* |
|
|
— |
|
|
|
43,922,554 |
|
| Preferred Stocks |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Germany |
|
|
— |
|
|
|
5,635,120 |
* |
|
|
— |
|
|
|
5,635,120 |
|
| Repurchase Agreements |
|
|
— |
|
|
|
4,821,000 |
|
|
|
— |
|
|
|
4,821,000 |
|
| Total |
|
$ |
28,170,181 |
|
|
$ |
193,591,545 |
|
|
$ |
— |
|
|
$ |
221,761,726 |
|
| * |
Consists of certain foreign securities whose values were determined by a pricing service using pricing models (See Note 2a
in Notes to Financial Statements). These investments in securities were classified as Level 2 rather than Level 1. |
|
|
|
|
|
| 10 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
FINANCIAL INFORMATION — GUARDIAN INTERNATIONAL VALUE VIP FUND
|
|
|
|
|
|
Statement of Assets and Liabilities As of December 31, 2019 |
|
|
|
| Assets |
|
|
|
|
| |
|
| Investments, at value |
|
$ |
221,761,726 |
|
| |
|
| Cash |
|
|
39,863 |
|
| |
|
| Foreign currency, at value |
|
|
393,217 |
|
| |
|
| Foreign tax reclaims receivable |
|
|
134,228 |
|
| |
|
| Dividends/interest receivable |
|
|
100,187 |
|
| |
|
| Reimbursement receivable from adviser |
|
|
44,408 |
|
| |
|
| Receivable for investments sold |
|
|
28,093 |
|
| |
|
| Prepaid expenses |
|
|
10,146 |
|
| |
|
|
|
|
| |
|
| Total Assets |
|
|
222,511,868 |
|
| |
|
|
|
|
| |
|
| Liabilities |
|
|
|
|
| |
|
| Payable for investments purchased |
|
|
1,206,425 |
|
| |
|
| Investment advisory fees payable |
|
|
143,885 |
|
| |
|
| Distribution fees payable |
|
|
46,546 |
|
| |
|
| Payable for fund shares redeemed |
|
|
35,980 |
|
| |
|
| Accrued audit fees |
|
|
24,868 |
|
| |
|
| Accrued custodian and accounting fees |
|
|
23,591 |
|
| |
|
| Accrued trustees’ and officers’
fees |
|
|
1,475 |
|
| |
|
| Accrued expenses and other liabilities |
|
|
40,150 |
|
| |
|
|
|
|
| |
|
| Total Liabilities |
|
|
1,522,920 |
|
| |
|
|
|
|
| |
|
| Total Net Assets |
|
$ |
220,988,948 |
|
| |
|
|
|
|
| |
|
| Net Assets Consist of: |
|
|
|
|
| |
|
| Paid-in
capital |
|
$ |
210,447,837 |
|
| |
|
| Distributable earnings |
|
|
10,541,111 |
|
| |
|
|
|
|
| |
|
| Total Net Assets |
|
$ |
220,988,948 |
|
| |
|
|
|
|
| Investments, at Cost |
|
$ |
206,768,948 |
|
| |
|
|
|
|
| Foreign Currency, at Cost |
|
$ |
392,029 |
|
| |
|
|
|
|
| |
|
| Pricing of Shares |
|
|
|
|
| |
|
|
Shares of Beneficial Interest Outstanding with
No Par Value |
|
|
18,189,276 |
|
| |
|
| Net Asset Value Per Share |
|
|
$12.15 |
|
| |
|
|
|
|
|
|
|
|
|
|
Statement of Operations For the Year Ended December 31, 2019 |
|
| Investment Income |
|
|
|
|
| |
|
| Dividends |
|
$ |
7,237,620 |
|
| |
|
| Interest |
|
|
23,289 |
|
| |
|
| Withholding taxes on foreign dividends |
|
|
(778,616 |
) |
| |
|
|
|
|
| |
|
| Total Investment Income |
|
|
6,482,293 |
|
| |
|
|
|
|
| |
|
| Expenses |
|
|
|
|
| |
|
| Investment advisory fees |
|
|
1,707,773 |
|
| |
|
| Distribution fees |
|
|
552,591 |
|
| |
|
| Trustees’ and officers’ fees |
|
|
90,759 |
|
| |
|
| Custodian and accounting fees |
|
|
90,045 |
|
| |
|
| Professional fees |
|
|
79,979 |
|
| |
|
| Administrative fees |
|
|
47,460 |
|
| |
|
| Shareholder reports |
|
|
38,665 |
|
| |
|
| Transfer agent fees |
|
|
17,635 |
|
| |
|
| Other expenses |
|
|
26,416 |
|
| |
|
|
|
|
| |
|
| Total Expenses |
|
|
2,651,323 |
|
| |
|
| Less: Fees waived |
|
|
(573,580 |
) |
| |
|
|
|
|
| |
|
| Total Expenses, Net |
|
|
2,077,743 |
|
| |
|
|
|
|
| |
|
| Net Investment Income/(Loss) |
|
|
4,404,550 |
|
| |
|
|
|
|
| |
|
| Realized Gain/(Loss) and Change in Unrealized
Appreciation/(Depreciation) on Investments and Foreign Currency Transactions |
|
|
|
|
| |
|
| Net realized gain/(loss) from investments |
|
|
(4,729,241 |
) |
| |
|
| Net realized gain/(loss) from foreign currency
transactions |
|
|
(17,846 |
) |
| |
|
| Net change in unrealized appreciation/(depreciation)
on investments |
|
|
42,865,902 |
|
| |
|
| Net change in unrealized appreciation/(depreciation)
on translation of assets and liabilities in foreign currencies |
|
|
(898 |
) |
| |
|
|
|
|
| |
|
| Net Gain on Investments and Foreign Currency
Transactions |
|
|
38,117,917 |
|
| |
|
|
|
|
| |
|
| Net Increase in Net Assets Resulting From
Operations |
|
$ |
42,522,467 |
|
| |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| The accompanying notes are an integral part of these financial statements. |
|
|
|
11 |
FINANCIAL INFORMATION — GUARDIAN INTERNATIONAL VALUE VIP FUND
|
|
|
|
|
|
|
|
|
| Statements of Changes in Net Assets |
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
For the
Year Ended
12/31/19 |
|
|
For the
Year Ended
12/31/18 |
|
| |
|
|
|
| Operations |
|
|
|
|
|
|
|
|
| |
|
|
| Net investment income/(loss) |
|
$ |
4,404,550 |
|
|
$ |
3,066,124 |
|
| |
|
|
| Net realized gain/(loss) from investments and foreign
currency transactions |
|
|
(4,747,087 |
) |
|
|
(8,714,525 |
) |
| |
|
|
| Net change in unrealized appreciation/(depreciation)
on investments and translation of assets and liabilities in foreign currencies |
|
|
42,865,004 |
|
|
|
(29,759,290 |
) |
| |
|
|
|
|
|
|
|
|
| |
|
|
| Net Increase/(Decrease) in Net Assets Resulting
from Operations |
|
|
42,522,467 |
|
|
|
(35,407,691 |
) |
| |
|
|
|
|
|
|
|
|
| |
|
|
| Capital Share Transactions |
|
|
|
|
|
|
|
|
| |
|
|
| Proceeds from sales of shares |
|
|
5,539,328 |
|
|
|
252,164,387 |
|
| |
|
|
| Cost of shares redeemed |
|
|
(35,254,386 |
) |
|
|
(19,708,380 |
) |
| |
|
|
|
|
|
|
|
|
| |
|
|
| Net Increase/(Decrease) in Net Assets Resulting
from Capital Share Transactions |
|
|
(29,715,058 |
) |
|
|
232,456,007 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| Net Increase in Net Assets |
|
|
12,807,409 |
|
|
|
197,048,316 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| Net Assets |
|
|
|
|
|
|
|
|
| |
|
|
| Beginning of year |
|
|
208,181,539 |
|
|
|
11,133,223 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| End of year |
|
$ |
220,988,948 |
|
|
$ |
208,181,539 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| Other Information: |
|
|
|
|
|
|
|
|
| |
|
|
| Shares |
|
|
|
|
|
|
|
|
| |
|
|
| Sold |
|
|
507,283 |
|
|
|
21,623,258 |
|
| |
|
|
| Redeemed |
|
|
(3,110,014 |
) |
|
|
(1,774,536 |
) |
| |
|
|
|
|
|
|
|
|
| |
|
|
| Net Increase/(Decrease) |
|
|
(2,602,731 |
) |
|
|
19,848,722 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 12 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
This Page Intentionally Left Blank
FINANCIAL INFORMATION — GUARDIAN INTERNATIONAL VALUE VIP FUND
The Financial Highlights table is intended to help you understand the Fund’s
financial performance for the past five years (or, if shorter, the period since inception). Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned
(or lost) on an investment in the Fund.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Highlights |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Per Share Operating Performance |
|
|
|
|
| |
|
Net Asset Value,
Beginning of
Period |
|
|
Net Investment
Income(1) |
|
|
Net Realized
and Unrealized
Gain/(Loss) |
|
|
Total
Operations |
|
|
Net Asset
Value, End of
Period |
|
|
Total
Return(2) |
|
| |
|
|
|
|
|
|
| Year Ended 12/31/19 |
|
$ |
10.01 |
|
|
$ |
0.22 |
|
|
$ |
1.92 |
|
|
$ |
2.14 |
|
|
$ |
12.15 |
|
|
|
21.38% |
|
| |
|
|
|
|
|
|
| Year Ended 12/31/18 |
|
|
11.80 |
|
|
|
0.20 |
|
|
|
(1.99 |
) |
|
|
(1.79 |
) |
|
|
10.01 |
|
|
|
(15.17)% |
|
| |
|
|
|
|
|
|
| Year Ended 12/31/17 |
|
|
9.63 |
|
|
|
0.15 |
|
|
|
2.02 |
|
|
|
2.17 |
|
|
|
11.80 |
|
|
|
22.53% |
|
| |
|
|
|
|
|
|
| Period Ended
12/31/16(4) |
|
|
10.00 |
|
|
|
0.01 |
|
|
|
(0.38 |
) |
|
|
(0.37 |
) |
|
|
9.63 |
|
|
|
(3.70)% |
(5) |
|
|
|
|
|
| 14 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
FINANCIAL INFORMATION — GUARDIAN INTERNATIONAL VALUE VIP FUND
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Ratios/Supplemental Data |
|
Net Assets, End
of Period (000s) |
|
|
Net Ratio of
Expenses to
Average
Net Assets(3) |
|
|
Gross Ratio of
Expenses to
Average Net
Assets |
|
|
Net Ratio of Net
Investment Income
to Average
Net Assets(3) |
|
|
Gross Ratio of Net
Investment
Income/(Loss)
to Average
Net Assets |
|
|
Portfolio
Turnover Rate |
|
|
|
|
|
|
|
| $ |
220,989 |
|
|
|
0.94% |
|
|
|
1.20% |
|
|
|
1.99% |
|
|
|
1.73% |
|
|
|
32% |
|
|
|
|
|
|
|
| |
208,182 |
|
|
|
0.94% |
|
|
|
1.23% |
|
|
|
1.79% |
|
|
|
1.50% |
|
|
|
74% |
|
|
|
|
|
|
|
| |
11,133 |
|
|
|
1.11% |
|
|
|
2.39% |
|
|
|
1.40% |
|
|
|
0.12% |
|
|
|
61% |
|
|
|
|
|
|
|
| |
14,100 |
|
|
|
1.11% |
(5) |
|
|
3.11% |
(5) |
|
|
0.42% |
(5) |
|
|
(1.58)% |
(5) |
|
|
8% |
(5) |
| (1) |
Calculated based on the average shares outstanding during the period. |
| (2) |
Total returns do not reflect the effects of charges deducted pursuant to the terms of The Guardian Insurance &
Annuity Company, Inc.’s variable contracts. Inclusion of such charges would reduce the total returns for all periods shown. |
| (3) |
Net Ratio of Expenses to Average Net Assets and Net Ratio of Net Investment Income to Average Net Assets include the
effect of fee waivers and expense limitations. |
| (4) |
Commenced operations on September 1, 2016. |
| (5) |
Ratios for periods less than one year have been annualized, except for total return and portfolio turnover rate. For the
period ended December 31, 2016, certain non-recurring fees (i.e., audit fees) are not annualized. |
|
|
|
|
|
| The accompanying notes are an integral part of these financial statements. |
|
|
|
15 |
NOTES TO FINANCIAL STATEMENTS — GUARDIAN INTERNATIONAL VALUE VIP
FUND
December 31, 2019
1.
Organization
Guardian Variable Products Trust (the “Trust”), a Delaware statutory trust organized on January 12, 2016, is registered under the
Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Trust currently has sixteen series. Guardian International Value VIP Fund (the
“Fund”) is a series of the Trust. The Fund is a diversified fund and commenced operations on September 1, 2016. The financial statements for other series of the Trust are presented in separate reports.
The Trust has authorized an unlimited number of shares of beneficial interest with no par value. Shares are bought and sold at closing net asset value (“NAV”).
Shares of the Fund are only sold to certain separate accounts of The Guardian Insurance & Annuity Company, Inc. (“GIAC”) that fund certain variable annuity contracts and variable life insurance policies issued by GIAC. GIAC is a
wholly-owned subsidiary of The Guardian Life Insurance Company of America (“Guardian Life”).
The Fund seeks long-term capital appreciation.
2. Significant Accounting Policies
The following is a summary of significant
accounting policies followed by the Fund in the preparation of its financial statements. The Fund follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards
Codification Topic 946 Financial Services – Investment Companies. The following policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements
in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.
a. Investment Valuations Equity securities traded on an exchange other than NASDAQ Stock Market, LLC (“NASDAQ”) are valued at the last reported sale
price on the principal exchange or market on which they are traded; or, if there were no sales that day, at the mean between the closing bid and ask prices. Securities traded on the NASDAQ are generally valued at the NASDAQ official closing price,
which may not be the last sale price. If the NASDAQ official closing price is not available for a security, that security is generally valued at the
mean between the closing bid and ask prices. Repurchase agreements are carried at cost, which approximates fair value (see Note 5d). Foreign securities are valued in the currencies of the markets
in which they trade and then converted to U.S. dollars by the application of foreign exchange rates at the close of the New York Stock Exchange (“NYSE”). Forward foreign currency contracts, if any, are valued at the mean between the bid
and ask rates for the specified time interpolated from rates for proximate time periods. Securities for which market quotations are not readily available or for which market quotations may be considered unreliable are valued at their fair values as
determined in accordance with policies and procedures adopted by the Board of Trustees.
Under the policies and procedures approved by the Board of Trustees, Park
Avenue Institutional Advisers LLC (“Park Avenue”), the Fund’s investment adviser, has established a Fair Valuation Committee to assist the Board of Trustees with the oversight and monitoring of the valuation of the Fund’s
investments. This includes monitoring the appropriateness of fair values based on results of ongoing valuation oversight, including but not limited to consideration of security specific events, market events, and pricing vendor and broker-dealer due
diligence. The Fair Valuation Committee oversees and carries out the policies for the valuation of investments held in the Fund. The Fair Valuation Committee is responsible for discussing and assessing the potential impacts to the fair values on an
ongoing basis, and at least on a quarterly basis with the Board of Trustees.
Securities whose values have been materially affected by events occurring before the
Fund’s valuation time but after the close of the securities’ principal exchange or market may be fair valued in accordance with policies and procedures adopted by the Board of Trustees. In addition, the values of the Fund’s
investments in foreign securities are generally determined by a pricing service using pricing models designed to estimate likely changes in the values of those securities. Certain foreign equity instruments are valued by applying international fair
value factors provided by approved pricing services. The factors seek to adjust the local closing price for movements of local markets post closing, but prior to the time the NAVs are calculated. Valuations reflected in this report are as of the
report date. As a result, changes in valuation due to market events and/or issuer related events after the report date and prior to issuance of the report are not reflected herein.
NOTES TO FINANCIAL STATEMENTS — GUARDIAN INTERNATIONAL VALUE VIP FUND
Various inputs are used in determining the valuation of the Fund’s investments. These inputs are summarized in three
broad levels listed below.
| • |
|
Level 1 — unadjusted inputs using quoted prices in active markets for identical investments. |
| • |
|
Level 2 — other significant observable inputs, including, but not limited to, quoted prices for similar investments, inputs other than quoted prices that are observable for investments (such as interest
rates, prepayment speeds, credit risks, etc.) or other market corroborated inputs. |
| • |
|
Level 3 — significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments) |
Inputs may include price information, volatility statistics, specific and broad credit data, liquidity statistics, and other factors. A financial instrument’s level
within the fair value hierarchy is based on the lowest level of any input; both individually and in aggregate, that is significant to the fair value measurement. However, the determination of what constitutes “observable” requires
significant judgment by the Trust. The Trust considers observable data to be that market data which is readily available, regularly distributed or updated, reliable and verifiable, and provided by independent sources that are actively involved in
the relevant market. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. Changes in valuation techniques may result in transfers into or out of a
financial instrument’s assigned level within the hierarchy.
The FASB requires reporting entities to make disclosures about purchases, sales, issuances and
settlements of Level 3 securities on a gross basis. For the year ended December 31, 2019, there were no transfers into or out of Level 3 of the fair value hierarchy.
In determining a financial instrument’s placement within the hierarchy, the Trust separates the Fund’s investment portfolio into two categories: investments
and derivatives (e.g., futures). A summary of inputs used to value the Fund’s assets and liabilities carried at fair value as of December 31, 2019 is included in the Schedule of Investments.
Investments Investments whose values are based on quoted market prices in active markets, and are therefore classified within Level 1, include active
listed equities. Investments that trade in markets that are not considered to be active, but are valued based on quoted market prices, dealer quotations or alternative pricing
sources supported by observable inputs are classified within Level 2. These include certain U.S. government and sovereign obligations, most government agency securities, investment-grade
corporate bonds, certain mortgage products, state, municipal and provincial obligations, and certain foreign equity securities, including securities whose prices may have been affected by events occurring after the close of trading on their
principal exchange or market and, as a result, whose values are determined by a pricing service as described above, or securities whose values are otherwise determined using fair valuation methods approved by the Fund’s Board of Trustees.
Investments classified within Level 3 have significant unobservable inputs, as they trade infrequently or not at all. Level 3 investments include, among
others, private placement securities. When observable prices are not available for these securities, the Trust uses one or more valuation techniques for which sufficient and reliable data is available. The inputs used by the Trust in estimating the
value of Level 3 investments include, for example, the original transaction price, recent transactions in the same or similar instruments, completed or pending third-party transactions in the underlying investment or comparable issuers,
subsequent rounds of financing, recapitalizations, and other transactions across the capital structure. Level 3 investments may also be adjusted to reflect illiquidity and/or non-transferability, with the
amount of such discount estimated by the Trust in the absence of market information. Assumptions used by the Trust due to the lack of observable inputs may significantly impact the resulting fair value and therefore the Fund’s results of
operations. As of December 31, 2019, the Fund had no securities classified as Level 3.
Derivatives Exchange-traded derivatives, such as
futures contracts, exchange-traded option contracts and certain swaps, are typically classified within Level 1 or Level 2 of the fair value hierarchy depending on whether or not they are deemed to be actively traded. Certain non-exchange-traded derivatives, such as generic forwards, certain swaps and options, have inputs which can generally be corroborated by market data and are therefore classified within Level 2. During the year
ended December 31, 2019, the Fund did not hold any derivatives.
b. Securities Transactions Securities transactions are accounted for on the date
securities are purchased or sold (trade date). Realized gains or losses on securities transactions are determined on the basis of specific identification.
NOTES TO FINANCIAL STATEMENTS — GUARDIAN INTERNATIONAL VALUE VIP FUND
c. Futures Contracts The Fund may enter into financial futures contracts. In entering into such contracts, the Fund
is required to deposit with the counterparty, either in cash or securities, an amount equal to a certain percentage of the face value of the contract. Subsequent payments are received or made by the Fund each day, depending on the daily fluctuations
in the values of the contracts, and are recorded for financial statement purposes as variation margin received or paid by the Fund. Daily changes in variation margin are recognized as unrealized gains or losses by the Fund. The Fund may not achieve
the anticipated benefits of the financial futures contracts and may realize a loss.
d. Foreign Currency Translation The accounting records of the Fund are
maintained in U.S. dollars. Investment securities and all other assets and liabilities of the Fund denominated in a foreign currency are generally translated into U.S. dollars at the exchange rates quoted at the close of the NYSE on each business
day. The market value of investment securities and other assets and liabilities are translated at the exchange rate as of the valuation date. Purchases and sales of securities, income receipts, and expense payments are translated into U.S. dollars
at the exchange rates in effect on the dates of the respective transactions. The Fund does not isolate the portion of the fluctuations on investments resulting from changes in foreign currency exchange rates from the fluctuations in market prices of
investments held. Such fluctuations are included in the Net change in net realized and unrealized gain/(loss) from investments on the Statement of Operations.
Reported realized foreign currency gains and losses arise from the disposition of foreign currency, currency gains or losses realized between the trade and settlement
dates on securities transactions, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Fund’s books on the transaction date and the U.S. dollar equivalent of the amounts actually received
or paid. These reported realized foreign currency gains and losses, if any, are included in Net realized gain/(loss) from foreign currency transactions on the Statement of Operations. Unrealized foreign currency gains and losses arise from changes
(due to changes in exchange rates) in the value of foreign currency and other assets and liabilities denominated in foreign currencies, which are held at period end, if any, and are included in Net change in unrealized appreciation/(depreciation) on
translation of assets and liabilities in foreign currencies on the Statement of Operations.
e. Foreign Capital Gains Tax The Fund may be subject to foreign taxes on income, gains on investments or currency
purchases/repatriation, a portion of which may be recoverable. The Fund will accrue such taxes and recoveries as applicable, based upon their current interpretation of tax rules and regulations that exist in the markets in which they invest.
f. Investment Income Dividend income net of foreign taxes withheld, if any, is generally recorded on the ex-dividend date.
Interest income, which includes amortization/accretion of premium/discount, is determined using the interest income accrual method, and is accrued and recorded daily.
g. Allocation of Income and Expenses Many of the expenses of the Trust can be directly attributed to a specific series of the Trust. Expenses that cannot be
directly attributed to a specific series of the Trust are generally apportioned among all the series in the Trust, based on relative net assets. In calculating net asset value per share for each series of the Trust, investment income, realized and
unrealized gains and losses, and expenses other than series-specific expenses are allocated daily to each series based upon the proportion of net assets attributable to each series.
3. Transactions with Affiliates
a. Investment Advisory Fee and Expense
Limitation Under the terms of the advisory agreement, which, after its two year initial term, is reviewed and approved annually by the Board of Trustees, the Fund pays an investment advisory fee to Park Avenue. Park Avenue is a wholly-owned
subsidiary of Guardian Life and receives an investment advisory fee at an annual rate of 0.80% of the first $100 million, and 0.75% in excess of $100 million of the Fund’s average daily net assets. The fee is accrued daily and paid
monthly.
Park Avenue has contractually agreed through April 30, 2020 to waive certain fees and/or reimburse certain expenses incurred by the Fund to the extent
necessary to limit the Fund’s total annual operating expenses after fee waiver and/or expense reimbursement to 0.94% of the Fund’s average daily net assets (excluding, if applicable, any acquired fund fees and expenses, taxes, interest,
transaction costs and brokerage commissions, litigation and extraordinary expenses). The limitation may not be increased or terminated prior to this time without action by the Board of Trustees, may be terminated only upon approval of the Board of
Trustees, and is subject to Park Avenue’s recoupment rights. For the year ended December 31, 2019, Park Avenue waived fees and/or paid Fund expenses in the amount of $573,580.
NOTES TO FINANCIAL STATEMENTS — GUARDIAN INTERNATIONAL VALUE VIP FUND
Park Avenue may be entitled to recoupment of previously waived fees and reimbursed expenses from the Fund for three years
from the date of the waiver or reimbursement, subject to the expense limitation in effect at the time of the waiver or reimbursement and at the time of the recoupment, if any. Amounts waived or reimbursed by Park Avenue pursuant to any expense
limitation after April 9, 2018 are not subject to Park Avenue’s recoupment rights. The amount available for potential future recoupment by Park Avenue from the Fund under the Expense Limitation Agreement and the expiration schedule at
December 31, 2019 are as follows:
|
|
|
|
|
| |
|
| |
|
Potential Recoupment Amounts
Expiring |
| Total Potential
Recoupment
Amounts |
|
2021 |
|
2020 |
| $298,992 |
|
$58,226 |
|
$240,766 |
Park Avenue has entered into a Sub-Advisory Agreement with Lazard Asset Management LLC
(“Lazard”). Lazard is responsible for providing day-to-day investment advisory services to the Fund, subject to the supervision of Park Avenue and the
oversight of the Board of Trustees. Sub-advisory fees are paid by Park Avenue and do not represent a separate or additional expense to the Fund.
b. Compensation of Trustees and Officers Trustees and officers who are interested persons of the Trust, as defined in the 1940 Act, receive no compensation from
the Fund, except for the Chief Compliance Officer of the Trust. Trustees of the Trust who are not interested persons of the Trust, and the Chief Compliance Officer, receive compensation and reimbursement of expenses from the Trust.
c. Distribution Fees Park Avenue Securities LLC (“PAS”), a wholly-owned subsidiary of Guardian Life, is the principal underwriter of Fund shares. The
Trust has entered into a distribution and service agreement with PAS, which governs the sale and distribution of shares of the Fund. Under a distribution and service plan adopted by the Trust (“12b-1
plan”), PAS is compensated for services in such capacity, including its expenses in connection with the promotion and distribution of shares of the Fund, at an annual rate of 0.25% of the Fund’s average daily net assets. For the year ended
December 31, 2019, the Fund paid distribution fees in the amount of $552,591 to PAS.
PAS has directed that certain payments under the 12b-1 plan be used to compensate
GIAC for shareholder services provided to contract owners.
4. Federal Income Taxes
a. Distributions to Shareholders For federal income tax purposes, the Fund is treated as a disregarded entity (“DRE”). As a DRE, the Fund is not subject
to an entity-level income tax; and any income, gains, losses, deductions, taxes, and credits of the Fund would instead be “passed through” directly to the separate accounts of GIAC that invest in the Fund and retain the same character for
U.S. federal income tax purposes. In addition, the Fund is not required to distribute taxable income and capital gains for U.S. federal income tax purposes. Therefore, no dividends and capital gains distributions were paid by the Fund.
5. Investments
a. Investment Purchases and Sales The cost of
investments purchased and the proceeds from investments sold (excluding short-term investments) amounted to $69,334,653 and $90,582,797, respectively, for the year ended December 31, 2019. During the year ended December 31, 2019, there
were no purchases or sales of U.S. government securities.
b. Foreign Securities Foreign securities investments involve special risks and considerations not
typically associated with U.S. investments. These risks include, but are not limited to, currency risk; adverse political, regulatory, social, and economic developments; and less reliable information about issuers. Moreover, securities of some
foreign issuers may be less liquid and their prices more volatile than those of comparable U.S. issuers.
c. Industry or Sector Concentration In its normal
course of business, the Fund may invest a significant portion of its assets in companies within a limited number of industries or sectors. As a result, the Fund may be subject to a greater risk of loss than that of a fund invested in a wider
spectrum of industries or sectors because the stocks of many or all of the companies in the industry, group of industries, sector, or sectors may decline in value due to developments adversely affecting the industry, group of industries, sector, or
sectors.
d. Repurchase Agreements The Fund may invest in repurchase agreements to maintain liquidity and earn income over periods of time as short as
overnight. The collateral for repurchase agreements is either cash or
NOTES TO FINANCIAL STATEMENTS — GUARDIAN INTERNATIONAL VALUE VIP FUND
fully negotiable U.S. government securities (including U.S. government agency securities). Repurchase agreements are fully
collateralized (including the interest accrued thereon) and such collateral is marked to market daily while the agreements remain in force. If the value of the collateral falls below the repurchase price plus accrued interest, the Fund will
typically require the seller to deposit additional collateral by the next business day. If the request for additional collateral is not met, or the seller defaults, the Fund maintains the right to sell the collateral (although it may be prevented or
delayed from doing so in certain circumstances) and may be required to claim any resulting loss against the seller. Park Avenue monitors the creditworthiness of the seller with which the Fund enters into repurchase agreements.
6. Temporary Borrowings
The Fund, with other funds managed by Park Avenue,
is party to a $10 million committed revolving credit facility from State Street Bank and Trust Company for temporary borrowing purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of
securities. Interest is
calculated based on the higher of the daily one-month LIBOR rate and the Federal Funds rate plus 1.25% at the time of borrowing. In addition to the
interest charged on any borrowings by the Fund, each fund pays a commitment fee of 0.30% per annum on its share of the unused portion of the credit facility. The agreement is in place until December 9, 2020. The Fund did not utilize the credit
facility during the year ended December 31, 2019.
7. Indemnifications
Under the Trust’s organizational documents and, in some cases, by contract, its officers and trustees are indemnified against certain liabilities arising out of the
performance of their duties to the Fund. In addition, in the normal course of business, the Fund enters into contracts with its vendors and others that provide general indemnifications. The Fund’s maximum exposure under these arrangements is
unknown as this would involve future claims that may be made against the Fund that have not yet occurred. However, based on experience, the Fund expects the risk of loss to be remote.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees of Guardian Variable Products Trust and Shareholders of
Guardian International Value VIP Fund
Opinion on the
Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Guardian
International Value VIP Fund (one of the funds constituting Guardian Variable Products Trust, referred to hereafter as the “Fund”) as of December 31, 2019, the related statement of operations for the year ended December 31, 2019,
the statement of changes in net assets for each of the two years in the period ended December 31, 2019, including the related notes, and the financial highlights for each of the periods indicated therein (collectively referred to as the
“financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2019, the results of its operations for the year then ended, the changes
in its net assets for each of the two years in the period ended December 31, 2019 and the financial highlights for each of the periods indicated therein in conformity with accounting principles generally accepted in the United States of
America.
Basis for Opinion
These financial statements are the
responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board
(United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing
procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the
amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our
procedures included confirmation of securities owned as of December 31, 2019 by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits
provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
New
York, New York
February 20, 2020
We have served as the auditor of one or
more investment companies in Guardian Variable Products Trust since 2016.
SUPPLEMENTAL INFORMATION (UNAUDITED)
Trustees and Officers Information Table
The following table provides information about the Trustees of the Trust.
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
Name and
Year of Birth |
|
Term of Office,
Position(s) Held
and Length of
Service1 |
|
Principal
Occupation(s)
During Past Five Years |
|
Number of
Funds
in Fund
Complex
Overseen
by Trustees2 |
|
Other Directorships
Held by Trustee |
| Independent Trustees |
| |
|
|
|
|
| Bruce W. Ferris3 (born 1955) |
|
Trustee |
|
Retired (since 2015); President and CEO, Prudential Annuities Distributors, Inc. (2013–2015); Director/Trustee, Advanced Series Trust, The Prudential Series Fund and Prudential’s
Gibraltar Fund, Inc. (2013–2015); Senior Vice President, Prudential Annuities (2008–2015). |
|
16 |
|
None. |
| |
|
|
|
|
| Theda R. Haber3 (born 1954) |
|
Trustee |
|
Adjunct Assistant Professor of Law, UC Hastings College of Law (since 2013); Member of the Board of Directors, Fairholme Trust Company, LLC (2015–2019); Attorney, Law Office of Theda R.
Haber (since 2014); Visiting Professor of Law, UC Davis School of Law (since 2014); Consultant, Haber & Associates LLC (financial services industry), (2012–2017); Advisory Council Chair, Vice Chair, and Member, Advisory Council on
Employee Welfare and Pension Benefit Plans (ERISA Advisory Council), U.S. Department of Labor (2009–2011); Managing Director and General Counsel, BlackRock Institutional Trust Company, N.A. (2009–2011); Deputy Global General Counsel,
Barclays Global Investors (2006–2009); Managing Director, Barclays Global Investors (1998–2006). |
|
16 |
|
None. |
| |
|
|
|
|
| Marshall
Lux3 (born 1960) |
|
Trustee |
|
Senior Advisor, The Boston Consulting Group (since 2014); Senior Partner and Managing Director, The Boston Consulting Group (2009–2014). |
|
16 |
|
None. |
| |
|
|
|
|
| Lisa K.
Polsky3 (born 1956) |
|
Trustee |
|
Board Member, MFA Financial, Inc. (real estate investment trust) (since 2020); Advisor, SMBC Americas (financial services) (since 2020); Senior Risk Advisor, AQR (investment management)
(2016–2019); Senior Risk Advisor, Ultra Capital (venture capital) (2016–2019); Board Member, DB USA Corporation (Deutsche Bank Intermediate Holding Company) (financial services) (since 2016); Chief Risk Officer, CIT Group Inc. (financial
services) (2010–2015); Board Member and Chair of Audit Committee, Piper Jaffray (investment bank) (2007–2016). |
|
16 |
|
None. |
| |
|
|
|
|
| John
Walters3 (born 1962) |
|
Lead Independent
Trustee |
|
Board Member, Amerilife Holdings LLC (insurance distribution) (since 2015); Board Member, Stadion Money Management LLC (investment adviser) (since 2011); President and Chief Operating Officer,
Hartford Life Insurance Company (2000–2010). |
|
16 |
|
Trustee, USAA Mutual Funds Trust, (One registered investment company offering 47 individual funds) (since
2019). |
SUPPLEMENTAL INFORMATION (UNAUDITED)
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
Name and
Year of Birth |
|
Term of Office,
Position(s) Held
and Length of
Service1 |
|
Principal
Occupation(s)
During Past Five Years |
|
Number of
Funds
in Fund
Complex
Overseen
by Trustees2 |
|
Other Directorships
Held by Trustee |
| Interested Trustees |
| |
|
|
|
|
| Dominique Baede4 (born 1970) |
|
Trustee (Since January
2020) |
|
Vice President, Head of Product, Life, Annuity and Inforce, The Guardian Life Insurance Company of America (since 2019); Managing Director, Product Management Group, AXA Equitable (insurance
company) prior thereto. |
|
16 |
|
None. |
| |
|
|
|
|
| Michael
Ferik4 (born 1972) |
|
Chairman and Trustee (Since
December 2019) |
|
Executive Vice President, Individual Markets, The Guardian Life Insurance Company of America (since 2020); Executive Vice President and Chief Financial Officer, The Guardian Life Insurance
Company of America (2017–2019); Executive Vice President, Individual Markets, The Guardian Life Insurance Company of America prior thereto. |
|
16 |
|
None. |
| 1 |
Except as otherwise noted, each Trustee began service in such capacity in 2016 and serves until his or her successor is
elected and qualified or until his or her resignation, death or removal. The business address of each Trustee is 10 Hudson Yards, New York, New York 10001. |
| 2 |
The Trust currently consists of 16 separate Funds. |
| 3 |
Member of the Audit Committee of the Trust. |
| 4 |
Each of Dominique Baede and Michael Ferik is considered to be an “interested person” of the Trust within the
meaning of the 1940 Act because of their affiliation with The Guardian Life Insurance Company of America and/or its affiliates. |
|
|
|
|
|
| |
|
|
| Name and Year of Birth |
|
Position(s) Held and
Length of Service5 |
|
Principal Occupation(s)
During Past Five Years |
| |
|
|
Dominique Baede
(born 1970) |
|
President and Principal Executive Officer (Since January 2020) |
|
Vice President, Head of Product, Life, Annuity and Inforce, The Guardian Life Insurance Company of America (since 2019); Managing Director,
Product Management Group, AXA Equitable (insurance company) prior thereto. |
| |
|
|
| John H. Walter
(born 1962) |
|
Senior Vice President, Treasurer, and Principal Financial and Accounting Officer |
|
Vice President, Director of Finance, Corporate Finance, The Guardian Life Insurance Company of America. |
| |
|
|
| Harris Oliner
(born 1971) |
|
Senior Vice President and Secretary |
|
Senior Vice President, Corporate Secretary, The Guardian Life Insurance Company of America (since 2015); Senior Vice President, Deputy
General Counsel, Corporate Secretary, Voya Financial, Inc. prior thereto. |
| |
|
|
| Richard T. Potter
(born 1954) |
|
Senior Vice President and Chief Legal Officer |
|
Vice President and Equity Counsel, The Guardian Life Insurance Company of America. |
| |
|
|
| Philip Stack
(born 1964) |
|
Chief Compliance Officer
(Since September 2017) |
|
Second Vice President, Mutual Fund Chief Compliance Officer, The Guardian Life Insurance Company of America (since 2017); Executive Director,
Chief Compliance Officer, Morgan Stanley (2015–2017); Vice President, Morgan Stanley prior thereto. |
| |
|
|
| Brian Hagan
(born 1984) |
|
Anti-Money Laundering Officer (Since March 2019) |
|
Assistant Vice President (since 2019), Anti-Money Laundering Compliance, The Guardian Life Insurance Company of America/Park Avenue
Securities LLC; Vice President, Head of Financial Intelligence Unit, Brown Brothers Harriman & Co. (2014–2019); Assistant Vice President, AML Compliance Manager, JPMorgan Chase & Co. (2011–2014). |
| |
|
|
| Kathleen M. Moynihan
(born 1966) |
|
Senior Counsel |
|
Second Vice President, Counsel (since 2019), The Guardian Life Insurance Company of America; Senior Counsel prior thereto. |
| |
|
|
| Maria Nydia Morrison
(born 1958) |
|
Fund Controller |
|
Mutual Fund Controller, The Guardian Life Insurance Company of America (since 2015); Chief Financial Officer/Assistant Operating Officer, St.
Francis De Assisi Montessori School (Plaridel, Bulacan), Inc. (Philippines) prior thereto. |
| |
|
|
| Sonya L. Crosswell
(born 1977) |
|
Assistant Secretary |
|
Assistant Vice President, Assistant Corporate Secretary and Secretary Pro Tem, The Guardian Life Insurance Company of America. |
| 5 |
Unless otherwise indicated, the Officers each began service in such capacity in 2016 and hold office for an indefinite
term or until their successors shall have been elected and qualified. The business address of each Officer is 10 Hudson Yards, New York, New York 10001. |
SUPPLEMENTAL INFORMATION (UNAUDITED)
The Statement of Additional Information (“SAI”) includes additional information about
the Trust’s Trustees and Officers and is available, without charge, upon request by calling toll-free 1-888-GUARDIAN (1-888-482-7342) or by visiting our website at http://guardianvpt.onlineprospectus.net/GuardianVPT/Prospectuses.
Portfolio Holdings and Proxy Voting Procedures
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year as an exhibit
to its reports on Form N-PORT. The Fund’s Form N-PORT reports are available on the Securities and Exchange Commission’s website at https://www.sec.gov. The
Fund’s Form N-PORT information is also available, without charge, upon request, by calling toll-free 1-888-GUARDIAN (1-888-482-7342) or by visiting our website at http://guardianvpt.onlineprospectus.net/
GuardianVPT/Prospectuses.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio
securities is included in the SAI. The SAI and information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 may be obtained
(i) without charge, upon request, by calling toll-free 1-888-GUARDIAN (1-888-482-7342) or by visiting our website at http://guardianvpt.onlineprospectus.net/
GuardianVPT/Prospectuses; and (ii) on the Securities and Exchange Commission’s website at
https://www.sec.gov.
This report is transmitted to shareholders
only. It is not authorized for use as an offer of sale or a solicitation of an offer to buy shares of the Fund unless accompanied or preceded by the Fund’s current prospectus. Past performance results shown in this report should not be
considered a representation of future performance. Investment returns and principal value of shares will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Statements and other information herein are as
dated and are subject to change.
The Guardian Life Insurance Company of America New York, NY 10001-2159
PUB8172
Guardian Variable
Products Trust
2019
Annual Report
All Data as of December 31, 2019
Guardian Core Plus
Fixed Income VIP Fund
Important Notice
Beginning on
January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund’s shareholder reports will no longer be sent by mail from The Guardian Insurance & Annuity Company, Inc.
(“GIAC”). Instead, GIAC will mail you a notice when copies of the shareholder reports are made available on a website. You will be notified by mail each time a report is posted and provided with a website link to access the report.
If you have already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. If you have not yet
elected electronic delivery, at any time, you may elect to receive the Fund’s shareholder reports and certain other communications from GIAC electronically, by going to www.guardianlife.com and registering for
e-delivery.
You may instead elect to receive all future shareholder reports in paper free of charge. If you wish to receive
paper copies of your shareholder reports, please call GIAC’s Customer Service Office Contact Center at 1-888-GUARDIAN (1-888-482-7342). Your election to receive reports in paper will apply to all the underlying funds available.
|
|
|
| Not FDIC insured. May lose value. No bank guarantee. |
|
www.guardianlife.com |
TABLE OF CONTENTS
Guardian Core Plus Fixed Income VIP Fund
Except as otherwise specifically stated, all information, including portfolio security positions, is as of
December 31, 2019. The views expressed in the Fund Commentary are those of the Fund’s portfolio manager(s) as of the date of this report and are subject to change without notice. They do not necessarily represent the views of Park Avenue
Institutional Advisers LLC or a sub-adviser. The Fund Commentary may contain some forward-looking statements providing expectations or forecasts of future events as of the date of this report; they do not
necessarily relate to historical or current facts. There can be no guarantee that any forward-looking statement will be realized. We undertake no obligation to update forward-looking statements, whether as a result of new information, future events,
or otherwise. Any discussions of specific securities should not be considered a recommendation to buy or sell those securities. Fund holdings will vary. Information contained herein has been obtained from sources believed reliable, but is not
guaranteed.
GUARDIAN CORE PLUS FIXED INCOME VIP FUND
FUND COMMENTARY OF LORD, ABBETT & CO. LLC,
SUB-ADVISER (unaudited)
Highlights
| • |
|
Guardian Core Plus Fixed Income VIP Fund (the “Fund”) returned 8.34%, slightly underperforming its benchmark, the Bloomberg Barclays U.S. Aggregate Bond Index1
(the “Index”), for the 12 months ended December 31, 2019. |
| • |
|
The Index returned 8.72% for the period. |
Market Overview
Following a tumultuous fourth quarter of 2018, during which trade tensions and monetary policy uncertainty sent many investors toward safety, the market staged a strong
recovery. After the worst December since 1931, the Standard & Poor’s 500® Index2 posted its best January since 1987. Trade
tensions continued to dominate headlines throughout the period, as trade negotiations between the U.S. and China remained volatile. Since the beginning of 2019, the U.S. and China have imposed tariffs on each other’s products of roughly
$550 billion and $185 billion, respectively. One of the more notable shifts over the year was the U.S. Federal Reserve’s (the “Fed”) transition to a more dovish policy stance, with the Fed Chairman Jerome Powell stating that
the Fed will act appropriately to sustain economic growth. Given an uncertain market outlook and muted inflation pressures, the Fed announced its decision to cut interest rates by 25 basis points on July 31, 2019 to a range of 2.00-2.25%. This was the first time that the Fed cut interest rates since December 2008. The Fed followed that decision with two more 25 basis point interest rate cuts in September and October, citing
“implications of global developments for the economic outlook as well as muted inflation pressures”. After the October interest rate cut, Fed Chairman Powell signaled a likely pause on future rate cuts, resulting in the market-based
probability of a fourth interest rate cut dipping below 0.25%.
The combination of a dovish Fed, trade pressures, and slowing economic growth resulted in falling
rates across the U.S. Treasury yield curve. In fact, in July, the yield on the U.S. 10-year Treasury note fell to its lowest level since 2016. After July, bond yields continued to fall, and in August, the
spread between the yield on the U.S. 10-year Treasury note and that of the U.S. 2-year
Treasury note temporarily inverted. In September, a large rotation from growth into value took place and continued through November. Geopolitics also contributed to market volatility. Following a
coordinated drone strike on Saudi Arabia in the third quarter, Brent crude oil prices increased 20% in one trading session. Despite the record increase, oil prices retracted their gains within weeks. Investor sentiment was buoyed in November as the
market grew optimistic about the possibility of a “Phase 1” trade deal between the U.S. and China, which was ultimately reached in December. The agreement included structural reforms to China’s trade regime in areas such as
intellectual property and agriculture as well as a commitment from China to make additional purchases of U.S. goods and services moving forward. In return, the U.S. agreed not to proceed with tariffs that were scheduled to go into effect in December
on nearly $160 billion worth of Chinese goods and to cut the tariff rate imposed on September 1, 2019 on $120 billion worth of Chinese goods to 7.5%.
Portfolio Review
For the 12-month
period ended December 2019, the portfolio’s overweight to high yield corporate bonds was the largest contributor to relative performance. Below investment-grade corporate credit experienced significant spread tightening during the year,
alongside the U.S. equity market rally. Security selection in investment-grade corporate bonds also acted as a contributor to relative performance over the period. Specifically, selection within the financials sector contributed to performance. We
remain attracted to select securities within the financials sector due to strict regulations, strong balance sheets, more conservative management teams, and improved quality relative to the pre-crisis period.
The largest detractor to the portfolio’s relative performance over the period was driven by an overweight to asset-backed securities (“ABS”). ABS
underperformed relative to other spread products as the asset class did not drawdown as much in the fourth quarter of 2018, and therefore did not participate as much in the 2019 market rebound. Also detracting from relative performance was an
underweight to investment-grade corporate bonds. An underweight to the asset class partially off-set the positive contribution from security selection within investment-grade corporate bonds.
| 1 |
The Bloomberg Barclays U.S. Aggregate Bond Index (the “Index”) is an index of U.S dollar-denominated,
investment-grade U.S. government and corporate securities, and mortgage pass-through securities, and asset-backed securities. You may not invest in the Index and, unlike the Fund, the Index does not incur fees or expenses. |
| 2 |
The Standard & Poor’s 500® Index (the “S&P
500 Index”) is an unmanaged market-capitalization-weighted index generally considered to be representative of U.S. equity market activity. The S&P 500 Index consists of 500 stocks representing leading industries of the U.S. economy. Index
results assume the reinvestment of dividends paid on the stocks constituting the Index. You may not invest in the S&P 500 Index, and, unlike the fund, the S&P 500 Index does not incur fees or expenses. |
GUARDIAN CORE PLUS FIXED INCOME VIP FUND
Outlook
Given the explicit
transparency from the Fed after the three rates cuts in 2019, we do not anticipate much interest rate movement heading into 2020. While we continue to closely monitor monetary policy, we think the current economic environment will support risk
assets and that there will be a high bar needed for any
further rate action. We believe the market has already priced in the positive resolution to global trade and geopolitical tensions with China and consider valuations to be full relative to
domestic economic data. However, continued positive global momentum and improvements in domestic economic data may result in further compression of credit spreads.
Funds in the Guardian Variable Products Trust are
sold by prospectus only. You should carefully consider the investment objectives, risks, charges and expenses of the Funds before making an investment decision. The prospectus contains this and other important information. Please read it carefully
before investing or sending money. Please visit our website at http://guardianvpt.onlineprospectus.net/GuardianVPT/ Prospectuses or to obtain a printed copy, call
1-888-GUARDIAN (1-888-482-7342).
As with all mutual funds, the value of an investment in the Fund could decline, and you could lose money. Diversification does not guarantee profit or protect against
loss, and there can be no assurance that the Fund will achieve its investment objective. Bond funds are subject to interest rate risk, credit risk, and prepayment risk. When interest rates rise, bond prices generally fall, and when interest rates
fall, bond prices generally rise. In a lower interest rate environment, the risk that bond prices may fall when interest rates rise is potentially greater. Derivative transactions can create leverage and may be highly volatile. It is possible that a
derivative transaction will result in a loss greater than the principal amount invested and the Fund may not be able to close out a derivative transaction at a favorable time or price. International investing involves special risks, which include
changes in currency rates, foreign taxation and differences in auditing standards and securities regulations, political uncertainty and greater volatility. Foreign securities are subject to political, regulatory, economic, and exchange-rate risks
not present in domestic investments. These risks are even greater when investing in emerging markets. The value of a debt security is affected by changes in interest rates and is subject to any credit risk of the issuer or guarantor of the security.
Any discussions of specific securities should not be considered a recommendation to buy or sell those securities. Fund holdings will vary.
GUARDIAN CORE PLUS FIXED INCOME VIP FUND
Fund Characteristics (unaudited)
|
|
|
| Total Net Assets: $350,048,722 |
|
|
|
| |
|
Bond Sector Allocation1 As
of December 31, 2019 |
|
| |
|
Bond Quality Allocation2 As
of December 31, 2019 |
|
GUARDIAN CORE PLUS FIXED INCOME VIP FUND
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Top Ten Holdings1 As of December 31, 2019 |
|
| |
|
|
|
| Holding |
|
Coupon Rate |
|
|
Maturity Date |
|
|
% of Total
Net Assets |
|
| Uniform Mortgage-Backed Security |
|
|
3.500% |
|
|
|
1/1/2050 |
|
|
|
24.30% |
|
| U.S. Treasury Bill |
|
|
1.387% |
|
|
|
1/30/2020 |
|
|
|
13.38% |
|
| Uniform Mortgage-Backed Security |
|
|
3.000% |
|
|
|
1/1/2050 |
|
|
|
6.43% |
|
| U.S. Treasury Bill |
|
|
1.537% |
|
|
|
5/7/2020 |
|
|
|
6.07% |
|
| U.S. Treasury Note Inflation Protected Security |
|
|
0.625% |
|
|
|
4/15/2023 |
|
|
|
5.02% |
|
| U.S. Treasury Bond |
|
|
2.750% |
|
|
|
11/15/2047 |
|
|
|
3.03% |
|
| U.S. Treasury Bill |
|
|
1.507% |
|
|
|
3/26/2020 |
|
|
|
2.82% |
|
| U.S. Treasury Note |
|
|
1.750% |
|
|
|
11/15/2029 |
|
|
|
1.97% |
|
| U.S. Treasury Note |
|
|
1.750% |
|
|
|
12/31/2024 |
|
|
|
1.82% |
|
| U.S. Treasury Bond |
|
|
3.625% |
|
|
|
8/15/2043 |
|
|
|
1.77% |
|
| Total |
|
|
|
|
|
|
|
66.61% |
|
| 1 |
Portfolio holdings are subject to change and should not be considered a recommendation to buy or sell individual
securities. Cash includes short-term investments and net other assets and liabilities. |
| 2 |
The Bond Quality Allocation chart displays the percentage of fund assets allocated to each rating. Rating
agencies’ independent ratings of individual securities are aggregated by Barclays, and market weights are reported using Standard & Poor’s letter rating conventions. Rating methodology uses the middle rating of Moody’s
Investors Service, Inc., Standard & Poor’s Ratings Services, and Fitch Ratings. When a rating from only two of the rating agencies is available, the lower rating is used. Credit quality ratings assigned by a rating agency are subject
to change periodically and are not absolute standards of credit quality. Rating agencies may fail to make timely changes in credit ratings, and an issuer’s current financial condition may be better or worse than a rating indicates. In
formulating investment decisions for the Fund, Lord, Abbett & Co. LLC develops its own analysis of the credit quality and risks associated with individual debt instruments, rather than relying exclusively on rating agency ratings.
|
Fund Performance (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
| Average Annual Total Returns
As of December 31, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
| |
|
Inception Date |
|
|
1 Year |
|
|
5 Year |
|
|
10 Year |
|
|
Since Inception |
|
| Guardian Core Plus Fixed Income VIP Fund |
|
|
9/1/2016 |
|
|
|
8.34% |
|
|
|
— |
|
|
|
— |
|
|
|
2.28% |
|
| Bloomberg Barclays U.S. Aggregate Bond Index |
|
|
|
|
|
|
8.72% |
|
|
|
— |
|
|
|
— |
|
|
|
2.68% |
|
GUARDIAN CORE PLUS FIXED INCOME VIP FUND
|
|
|
|
|
|
|
|
|
|
|
| |
|
Results of a Hypothetical $10,000 Investment As of December 31,
2019 |
|
The chart above shows the performance of a hypothetical $10,000 investment made on inception date in Guardian Core Plus Fixed Income VIP
Fund and the Bloomberg Barclays U.S. Aggregate Bond Index. Index returns do not include the fees and expenses of the Fund, but do include reinvestment of dividends, if any.
Performance quoted represents past performance and does not guarantee or predict future results. Investment return and principal value will fluctuate, so shares, when
redeemed, may be worth more or less than their original cost. The Fund’s fees and expenses are detailed in the Financial Highlights section of this report. Fees and expenses are factored into the net asset value of Fund shares and any
performance numbers we release. Total return figures include the effect of expense limitations in effect during the periods shown, if applicable; without such limitations, the performance shown would have been lower. Performance results assume the
reinvestment of dividends and capital gains. The return figures shown do not reflect the deduction of taxes that a contract owner/policyholder may pay on redemption units. The actual total returns for owners of variable annuity contracts or variable
life insurance policies that provide for investment in the Fund will be lower to reflect separate account and contract/policy charges. Current and month-end performance information, which may be lower or
higher than that cited, is available by calling 1-888-GUARDIAN
(1-888-482-7342) and is periodically updated on our website: http://guardianlife.com.
UNDERSTANDING YOUR FUND’S EXPENSES (UNAUDITED)
By investing in the Fund, you incur two types of costs: (1) transaction costs and (2) ongoing costs, including,
as applicable, investment advisory fees, distribution and/or service (12b-1) fees and other Fund expenses. The example below is intended to help you understand your ongoing costs (in dollars) of investing in
the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the
beginning of the period and held for the entire period from July 1, 2019 to December 31, 2019. The table below shows the Fund’s expenses in two ways:
Expenses based on actual return
This section of the table provides
information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for
example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the section under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this
period.
Expenses based on hypothetical 5% return for comparison purposes
This section of the table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund with the cost of investing in other mutual funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the
other funds.
Note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads), redemption fees, or exchange fees. Therefore the second section is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. If these transactional costs were
included, your costs would have been higher. Charges and expenses at the insurance company separate account level are not reflected in the table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
| |
|
Beginning
Account Value
7/1/19 |
|
Ending
Account Value
12/31/19 |
|
|
Expenses Paid
During Period* 7/1/19-12/31/19 |
|
|
Expense Ratio
During Period
7/1/19-12/31/19 |
|
| Based on Actual Return |
|
$1,000.00 |
|
|
$1,018.90 |
|
|
|
$4.02 |
|
|
|
0.79% |
|
| Based on Hypothetical Return (5% Return Before Expenses) |
|
$1,000.00 |
|
|
$1,021.22 |
|
|
|
$4.02 |
|
|
|
0.79% |
|
| * |
Expenses are equal to the Fund’s annualized expense ratio as indicated, multiplied by the average account value over
the period, multiplied by 184/365 (to reflect the one-half year period). |
SCHEDULE OF INVESTMENTS — GUARDIAN CORE PLUS FIXED
INCOME VIP FUND
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Principal
Amount |
|
|
Value |
|
| Agency Mortgage–Backed Securities – 33.1% |
|
| |
|
|
| Federal Home Loan Mortgage Corp.
4.00% due
10/1/2049 |
|
$ |
864,063 |
|
|
$ |
940,179 |
|
| |
|
|
| Federal National Mortgage Association
4.00% due
1/1/2048 |
|
|
1,062,349 |
|
|
|
1,161,610 |
|
| |
|
|
| Government National Mortgage Association
2017-168 AS
2.70% due 8/16/2058 |
|
|
94,470 |
|
|
|
94,862 |
|
| 2017-41 AS
2.60% due
6/16/2057 |
|
|
80,933 |
|
|
|
80,956 |
|
| 2017-69 AS
2.75% due
2/16/2058 |
|
|
43,607 |
|
|
|
43,881 |
|
| 2017-71 AS
2.70% due
4/16/2057 |
|
|
28,212 |
|
|
|
28,324 |
|
| 2017-89 AB
2.60% due
7/16/2058 |
|
|
27,866 |
|
|
|
27,885 |
|
| 2017-90 AS
2.70% due
7/16/2057 |
|
|
38,563 |
|
|
|
38,716 |
|
| |
|
|
| Uniform Mortgage-Backed Security
3.00% due
1/1/2050(1) |
|
|
22,200,000 |
|
|
|
22,515,656 |
|
| 3.50% due
1/1/2050(1) |
|
|
82,700,000 |
|
|
|
85,074,394 |
|
| 4.00% due
1/1/2050(1) |
|
|
5,600,000 |
|
|
|
5,824,438 |
|
| |
|
|
|
|
|
|
|
|
| |
|
Total Agency Mortgage–Backed Securities
(Cost $115,601,124) |
|
|
|
115,830,901 |
|
| Asset–Backed Securities – 21.3% |
|
| |
|
|
| ACC
Trust
2018-1 B
4.82% due 5/20/2021(2) |
|
|
230,000 |
|
|
|
230,989 |
|
| 2019-1 B
4.47% due 10/20/2022(2) |
|
|
294,000 |
|
|
|
297,698 |
|
| 2019-1 C
6.41% due 2/20/2024(2) |
|
|
500,000 |
|
|
|
506,418 |
|
| |
|
|
| ALM VII Ltd.
2012-7A A2R2
3.851% (LIBOR 3 Month +
1.85%) due 7/15/2029(2)(3) |
|
|
908,000 |
|
|
|
907,324 |
|
| |
|
|
| American Credit Acceptance Receivables Trust
2016-2 C
6.09% due 5/12/2022(2) |
|
|
4,342 |
|
|
|
4,341 |
|
| 2018-4 A
3.38% due 12/13/2021(2) |
|
|
173,602 |
|
|
|
173,765 |
|
| 2019-2 B
3.05% due 5/12/2023(2) |
|
|
674,000 |
|
|
|
678,640 |
|
| |
|
|
| American Express Credit Account Master Trust
2017-1 A
1.93% due 9/15/2022 |
|
|
1,000,000 |
|
|
|
999,955 |
|
| 2017-3 A
1.77% due
11/15/2022 |
|
|
2,296,000 |
|
|
|
2,295,153 |
|
| |
|
|
| AmeriCredit Automobile Receivables Trust
2016-3 C
2.24% due 4/8/2022 |
|
|
2,097,000 |
|
|
|
2,097,609 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Principal
Amount |
|
|
Value |
|
| Asset–Backed Securities (continued) |
|
| 2018-3 A2A
3.11% due
1/18/2022 |
|
$
|
202,877 |
|
|
$
|
203,356 |
|
| 2018-3 A2B
1.995% (LIBOR 1
Month +
0.25%) due 1/18/2022(3) |
|
|
202,877 |
|
|
|
202,789 |
|
| 2019-1 A2A
2.93% due
6/20/2022 |
|
|
384,484 |
|
|
|
385,791 |
|
| 2019-1 A2B
2.005% (LIBOR 1
Month +
0.26%) due 6/20/2022(3) |
|
|
425,343 |
|
|
|
425,366 |
|
| |
|
|
| Ares XLI CLO
Ltd.
2016-41A AR
3.201% (LIBOR 3 Month +
1.20%) due 1/15/2029(2)(3) |
|
|
1,450,000 |
|
|
|
1,448,767 |
|
| 2016-41A B
3.801% (LIBOR 3
Month +
1.80%) due 1/15/2029(2)(3) |
|
|
500,000 |
|
|
|
499,503 |
|
| |
|
|
| Ascentium Equipment Receivables Trust
2016-2A B
2.50% due 9/12/2022(2) |
|
|
2,521 |
|
|
|
2,521 |
|
| 2017-1A A3
2.29% due 6/10/2021(2) |
|
|
5,295 |
|
|
|
5,299 |
|
| |
|
|
| Avery Point VII CLO Ltd.
2015-7A BR
3.751% (LIBOR 3 Month +
1.75%) due 1/15/2028(2)(3) |
|
|
400,000 |
|
|
|
400,507 |
|
| 2015-7A CR
4.451% (LIBOR 3
Month +
2.45%) due 1/15/2028(2)(3) |
|
|
250,000 |
|
|
|
249,500 |
|
| |
|
|
| Avid Automobile Receivables Trust
2019-1 A
2.62% due 2/15/2024(2) |
|
|
467,273 |
|
|
|
467,305 |
|
| 2019-1 B
2.82% due 7/15/2026(2) |
|
|
500,000 |
|
|
|
498,849 |
|
| |
|
|
| Avis Budget Rental Car Funding AESOP LLC
2015-2A A
2.63% due 12/20/2021(2) |
|
|
826,000 |
|
|
|
828,587 |
|
| |
|
|
| Benefit Street Partners CLO IV Ltd.
2014-IVA A1RR
3.216% (LIBOR 3 Month +
1.25%) due 1/20/2029(2)(3) |
|
|
1,000,000 |
|
|
|
1,000,502 |
|
| |
|
|
| Benefit Street Partners CLO XIX Ltd. 2019-19A C
1.00% (LIBOR 3 Month +
2.60%) due 1/15/2033(2)(3) |
|
|
250,000 |
|
|
|
250,000 |
|
| 2019-19A D
1.00% (LIBOR 3
Month +
3.80%) due 1/15/2033(2)(3) |
|
|
250,000 |
|
|
|
250,000 |
|
| |
|
|
| BlueMountain CLO Ltd.
2016-1A BR
3.316% (LIBOR 3 Month +
1.35%) due 4/20/2027(2)(3) |
|
|
822,000 |
|
|
|
808,458 |
|
| |
|
|
| BMW Vehicle Lease Trust
2019-1 A2
2.79% due 3/22/2021 |
|
|
532,214 |
|
|
|
533,754 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| The accompanying notes are an integral part of these financial statements. |
|
|
|
7 |
SCHEDULE OF INVESTMENTS — GUARDIAN CORE PLUS FIXED INCOME VIP FUND
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Principal
Amount |
|
|
Value |
|
| Asset–Backed Securities (continued) |
|
| |
|
|
| BSPRT Issuer Ltd.
2018-FL4 A
2.79% (LIBOR 3 Month +
1.05%) due 9/15/2035(2)(3) |
|
$
|
522,000 |
|
|
$
|
521,833 |
|
| |
|
|
| California Republic Auto Receivables Trust
2015-3 A4
2.13% due 5/17/2021 |
|
|
1,646 |
|
|
|
1,645 |
|
| 2015-4 A4
2.58% due 6/15/2021(2) |
|
|
7,427 |
|
|
|
7,429 |
|
| |
|
|
| Capital Auto Receivables Asset Trust
2018-1 A3
2.79% due 1/20/2022(2) |
|
|
785,665 |
|
|
|
787,464 |
|
| |
|
|
| Capital One Multi-Asset Execution Trust
2017-A1 A1
2.00% due 1/17/2023 |
|
|
1,000,000 |
|
|
|
1,000,121 |
|
| |
|
|
| Carlyle Global Market Strategies CLO Ltd.
2019-4A C
1.00% (LIBOR 3 Month +
4.00%) due 1/15/2033(2)(3) |
|
|
264,480 |
|
|
|
264,480 |
|
| |
|
|
| CarMax Auto Owner Trust
2018-3 A2A
2.88% due 10/15/2021 |
|
|
183,839 |
|
|
|
184,195 |
|
| 2019-4 C
2.60% due
9/15/2025 |
|
|
196,000 |
|
|
|
194,850 |
|
| |
|
|
| Carvana Auto Receivables Trust
2019-1A E
5.64% due 1/15/2026(2) |
|
|
500,000 |
|
|
|
514,861 |
|
| |
|
|
| Cedar Funding VI CLO Ltd.
2016-6A BR
3.566% (LIBOR 3 Month +
1.60%) due 10/20/2028(2)(3) |
|
|
400,000 |
|
|
|
396,936 |
|
| |
|
|
| Chesapeake Funding II LLC
2017-2A A1
1.99% due 5/15/2029(2) |
|
|
179,990 |
|
|
|
179,842 |
|
| 2017-3A A1
1.91% due 8/15/2029(2) |
|
|
851,144 |
|
|
|
850,294 |
|
| |
|
|
| Chrysler Capital Auto Receivables Trust
2016-AA C
3.25% due 6/15/2022(2) |
|
|
2,224 |
|
|
|
2,226 |
|
| |
|
|
| CIFC Funding Ltd.
2019-6A D
1.00% (LIBOR 3 Month +
3.95%) due 1/16/2033(2)(3) |
|
|
250,000 |
|
|
|
250,000 |
|
| |
|
|
| Clear Creek CLO
2015-1A DR
4.916% (LIBOR 3 Month +
2.95%) due 10/20/2030(2)(3) |
|
|
250,000 |
|
|
|
240,650 |
|
| |
|
|
| CPS Auto Receivables Trust
2017-D B
2.43% due 1/18/2022(2) |
|
|
335,024 |
|
|
|
335,095 |
|
| 2018-B A
2.72% due 9/15/2021(2) |
|
|
42,290 |
|
|
|
42,298 |
|
| 2018-B B
3.23% due 7/15/2022(2) |
|
|
1,509,000 |
|
|
|
1,514,122 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Principal
Amount |
|
|
Value |
|
| Asset–Backed Securities (continued) |
|
| 2018-B D
4.26% due 3/15/2024(2) |
|
$
|
750,000 |
|
|
$
|
769,064 |
|
| |
|
|
| CPS Auto
Trust
2018-C A
2.87% due 9/15/2021(2) |
|
|
76,709 |
|
|
|
76,743 |
|
| 2018-C B
3.43% due 7/15/2022(2) |
|
|
212,000 |
|
|
|
213,018 |
|
| |
|
|
| Credit Acceptance Auto Loan Trust
2019-3A B
2.86% due 1/16/2029(2) |
|
|
1,029,000 |
|
|
|
1,027,094 |
|
| |
|
|
| Discover Card Execution Note Trust
2017-A2 A2
2.39% due 7/15/2024 |
|
|
1,277,000 |
|
|
|
1,289,622 |
|
| |
|
|
| DLL Securitization Trust
2017-A A3
2.14% due 12/15/2021(2) |
|
|
528,497 |
|
|
|
528,593 |
|
| |
|
|
| DRB Prime Student Loan Trust
2015-D A2
3.20% due 1/25/2040(2) |
|
|
168,749 |
|
|
|
170,048 |
|
| |
|
|
| Drive Auto Receivables Trust
2016-BA D
4.53% due 8/15/2023(2) |
|
|
918,290 |
|
|
|
927,668 |
|
| 2016-CA D
4.18% due 3/15/2024(2) |
|
|
13,256 |
|
|
|
13,416 |
|
| 2017-1 D
3.84% due
3/15/2023 |
|
|
3,156,000 |
|
|
|
3,188,067 |
|
| 2017-3 C
2.80% due
7/15/2022 |
|
|
12,299 |
|
|
|
12,303 |
|
| 2017-AA D
4.16% due 5/15/2024(2) |
|
|
26,000 |
|
|
|
26,354 |
|
| 2017-BA D
3.72% due 10/17/2022(2) |
|
|
942,698 |
|
|
|
946,585 |
|
| 2017-BA E
5.30% due 7/15/2024(2) |
|
|
2,100,000 |
|
|
|
2,157,760 |
|
| 2018-3 B
3.37% due
9/15/2022 |
|
|
100,858 |
|
|
|
100,950 |
|
| 2019-2 A2A
2.93% due
3/15/2022 |
|
|
279,121 |
|
|
|
279,419 |
|
| |
|
|
| Enterprise Fleet Financing LLC
2018-1 A2
2.87% due 10/20/2023(2) |
|
|
172,369 |
|
|
|
173,097 |
|
| |
|
|
| First Investors Auto Owner Trust
2017-3A A2
2.41% due 12/15/2022(2) |
|
|
20,511 |
|
|
|
20,521 |
|
| 2019-2A C
2.71% due 12/15/2025(2) |
|
|
392,000 |
|
|
|
390,691 |
|
| |
|
|
| Flagship Credit Auto Trust
2017-3 A
1.88% due 10/15/2021(2) |
|
|
1,382 |
|
|
|
1,381 |
|
| 2017-3 B
2.59% due 7/15/2022(2) |
|
|
20,000 |
|
|
|
20,017 |
|
| 2017-4 A
2.07% due 4/15/2022(2) |
|
|
4,593 |
|
|
|
4,590 |
|
| 2018-1 A
2.59% due 6/15/2022(2) |
|
|
9,976 |
|
|
|
9,983 |
|
| 2018-3 A
3.07% due 2/15/2023(2) |
|
|
737,142 |
|
|
|
741,121 |
|
| 2018-3 B
3.59% due 12/16/2024(2) |
|
|
479,000 |
|
|
|
486,248 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 8 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
SCHEDULE OF INVESTMENTS — GUARDIAN CORE PLUS FIXED INCOME VIP FUND
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Principal
Amount |
|
|
Value |
|
| Asset–Backed Securities (continued) |
|
| |
|
|
| Ford Credit Auto Owner Trust 2015-1 A
2.12% due 7/15/2026(2) |
|
$
|
1,758,000 |
|
|
$
|
1,757,896 |
|
| 2016-2 A
2.03% due 12/15/2027(2) |
|
|
2,000,000 |
|
|
|
2,000,324 |
|
| 2017-B A3
1.69% due
11/15/2021 |
|
|
653,521 |
|
|
|
652,878 |
|
| |
|
|
| Ford Credit Floorplan Master Owner Trust
2015-5 A
2.42% due 8/15/2022 |
|
|
697,000 |
|
|
|
698,579 |
|
| |
|
|
| Foursight Capital Automobile Receivables Trust
2016-1 A2
2.87% due 10/15/2021(2) |
|
|
4,026 |
|
|
|
4,028 |
|
| 2018-1 B
3.53% due 4/17/2023(2) |
|
|
100,000 |
|
|
|
100,919 |
|
| |
|
|
| Golden Credit Card Trust
2018-1A A
2.62% due 1/15/2023(2) |
|
|
2,015,000 |
|
|
|
2,028,876 |
|
| |
|
|
| Halcyon Loan Advisors Funding Ltd.
2015-2A CR
4.09% (LIBOR 3 Month +
2.15%) due 7/25/2027(2)(3) |
|
|
250,000 |
|
|
|
248,618 |
|
| |
|
|
| Hardee’s Funding LLC
2018-1A A23
5.71% due 6/20/2048(2) |
|
|
410,555 |
|
|
|
431,428 |
|
| 2018-1A A2II
4.959% due
6/20/2048(2) |
|
|
758,400 |
|
|
|
775,299 |
|
| |
|
|
| Honda Auto Receivables Owner Trust
2019-1 A2
2.75% due 9/20/2021 |
|
|
1,191,402 |
|
|
|
1,195,910 |
|
| |
|
|
| Hyundai Auto Lease Securitization Trust
2017-C A3
2.12% due 2/16/2021(2) |
|
|
190,376 |
|
|
|
190,374 |
|
| |
|
|
| Jamestown CLO IX Ltd.
2016-9A BR
4.616% (LIBOR 3 Month +
2.65%) due 10/20/2028(2)(3) |
|
|
500,000 |
|
|
|
499,384 |
|
| |
|
|
| KKR CLO 18 Ltd.
18 B
3.703% (LIBOR 3 Month
+
1.70%) due 7/18/2030(2)(3) |
|
|
526,000 |
|
|
|
518,534 |
|
| |
|
|
| KVK CLO Ltd.
2016-1A C
5.151% (LIBOR 3 Month +
3.15%) due 1/15/2029(2)(3) |
|
|
483,000 |
|
|
|
482,090 |
|
| |
|
|
| LCM XXIV Ltd.
24A A
3.276% (LIBOR 3 Month
+
1.31%) due 3/20/2030(2)(3) |
|
|
439,000 |
|
|
|
439,112 |
|
| |
|
|
| Longtrain Leasing III LLC
2015-1A A2
4.06% due 1/15/2045(2) |
|
|
464,000 |
|
|
|
477,435 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Principal
Amount |
|
|
Value |
|
| Asset–Backed Securities (continued) |
|
| |
|
|
| Madison Park Funding XXXVI Ltd.
2019-36A C
2.60% (LIBOR 3 Month +
2.60%) due 1/15/2033(2)(3) |
|
$ |
277,545 |
|
|
$ |
277,545 |
|
| 2019-36A D
3.75% (LIBOR 3
Month +
3.75%) due 1/15/2033(2)(3) |
|
|
467,877 |
|
|
|
467,877 |
|
| |
|
|
| Master Credit Card Trust II Series
2018-1A A
2.275% (LIBOR 1 Month +
0.49%) due 7/21/2024(2)(3) |
|
|
100,000 |
|
|
|
99,970 |
|
| |
|
|
| ME Funding LLC
2019-1 A2
6.448% due 7/30/2049(2) |
|
|
470,820 |
|
|
|
485,905 |
|
| |
|
|
| Mercedes-Benz
Auto Lease Trust
2018-B A2
3.04% due 12/15/2020 |
|
|
581,475 |
|
|
|
582,228 |
|
| |
|
|
| Mercedes-Benz
Auto Receivables Trust
2016-1 A3
1.26% due 2/16/2021 |
|
|
575 |
|
|
|
575 |
|
| |
|
|
| MMAF Equipment Finance LLC
2017-AA A3
2.04% due 2/16/2022(2) |
|
|
832,926 |
|
|
|
832,823 |
|
| |
|
|
| Navient Private Education Refi Loan Trust
2018-DA A2A
4.00% due 12/15/2059(2) |
|
|
368,000 |
|
|
|
375,685 |
|
| |
|
|
| Neuberger Berman Loan Advisers CLO 35 Ltd.
2019-35A D
5.603% (LIBOR 3 Month +
3.70%) due 1/19/2033(2)(3) |
|
|
250,000 |
|
|
|
249,357 |
|
| |
|
|
| Nissan Auto Receivables Owner Trust
2016-A A4
1.59% due 7/15/2022 |
|
|
672,980 |
|
|
|
672,243 |
|
| |
|
|
| Northwoods Capital Ltd.
2019-20A C
4.701% (LIBOR 3 Month +
2.80%) due 1/25/2030(2)(3) |
|
|
334,659 |
|
|
|
333,971 |
|
| 2019-20A D
6.151% (LIBOR 3
Month +
4.25%) due 1/25/2030(2)(3) |
|
|
387,446 |
|
|
|
386,440 |
|
| |
|
|
| OHA Loan Funding Ltd.
2015-1A CR2
4.501% (LIBOR 3 Month +
2.65%) due 11/15/2032(2)(3) |
|
|
250,000 |
|
|
|
249,514 |
|
| 2016-1A B1
3.766% (LIBOR 3
Month +
1.80%) due 1/20/2028(2)(3) |
|
|
542,000 |
|
|
|
541,450 |
|
| |
|
|
| Orec Ltd.
2018-CRE1 A
2.92% (LIBOR 1 Month
+
1.18%) due 6/15/2036(2)(3) |
|
|
645,000 |
|
|
|
644,596 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| The accompanying notes are an integral part of these financial statements. |
|
|
|
9 |
SCHEDULE OF INVESTMENTS — GUARDIAN CORE PLUS FIXED INCOME VIP FUND
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Principal
Amount |
|
|
Value |
|
| Asset–Backed Securities (continued) |
|
| |
|
|
| Palmer Square Loan Funding Ltd.
2018-5A A2
3.366% (LIBOR 3 Month +
1.40%) due 1/20/2027(2)(3) |
|
$
|
250,000 |
|
|
$
|
249,254 |
|
| |
|
|
| Pennsylvania Higher Education Assistance Agency
2006-1 B
2.21% (LIBOR 3 Month +
0.27%) due 4/25/2038(3) |
|
|
37,630 |
|
|
|
35,003 |
|
| |
|
|
| Planet Fitness Master Issuer LLC
2019-1A A2
3.858% due 12/5/2049(2) |
|
|
342,000 |
|
|
|
340,944 |
|
| |
|
|
| Regatta VI Funding Ltd.
2016-1A CR
4.016% (LIBOR 3 Month +
2.05%) due 7/20/2028(2)(3) |
|
|
314,000 |
|
|
|
310,414 |
|
| |
|
|
| Regatta XVI Funding Ltd.
2019-2A C
4.603% (LIBOR 3 Month +
2.70%) due 1/15/2033(2)(3) |
|
|
250,000 |
|
|
|
249,489 |
|
| 2019-2A D
5.803% (LIBOR 3
Month +
3.90%) due 1/15/2033(2)(3) |
|
|
250,000 |
|
|
|
249,357 |
|
| |
|
|
| Santander Drive Auto Receivables Trust
2017-3 C
2.76% due 12/15/2022 |
|
|
12,000 |
|
|
|
12,038 |
|
| 2018-1 B
2.63% due
7/15/2022 |
|
|
625,075 |
|
|
|
625,480 |
|
| 2018-1 D
3.32% due
3/15/2024 |
|
|
35,000 |
|
|
|
35,366 |
|
| |
|
|
| SCF Equipment Leasing LLC
2018-1A A2
3.63% due 10/20/2024(2) |
|
|
479,635 |
|
|
|
479,975 |
|
| 2019-1A C
3.92% due 11/20/2026(2) |
|
|
1,298,000 |
|
|
|
1,299,523 |
|
| 2019-2A B
2.76% due 8/20/2026(2) |
|
|
797,000 |
|
|
|
790,765 |
|
| 2019-2A C
3.11% due 6/21/2027(2) |
|
|
579,000 |
|
|
|
576,620 |
|
| |
|
|
| Shackleton CLO Ltd.
2019-14A A2
4.178% (LIBOR 3 Month +
1.90%) due 7/20/2030(2)(3) |
|
|
1,042,000 |
|
|
|
1,038,124 |
|
| |
|
|
| SLC Student Loan Trust
2008-1 A4A
3.494% (LIBOR 3 Month +
1.60%) due 12/15/2032(3) |
|
|
158,627 |
|
|
|
160,687 |
|
| |
|
|
| SoFi Professional Loan Program Trust
2017-F A1FX
2.05% due 1/25/2041(2) |
|
|
442,671 |
|
|
|
442,353 |
|
| 2018-A A2A
2.39% due 2/25/2042(2) |
|
|
223,810 |
|
|
|
224,254 |
|
| 2018-B A1FX
2.64% due
8/25/2047(2) |
|
|
240,201 |
|
|
|
240,558 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Principal
Amount |
|
|
Value |
|
| Asset–Backed Securities (continued) |
|
| |
|
|
| Sound Point CLO XI Ltd.
2016-1A AR
3.066% (LIBOR 3 Month +
1.10%) due 7/20/2028(2)(3) |
|
$
|
370,000 |
|
|
$
|
369,976 |
|
| |
|
|
| Sound Point CLO XII Ltd.
2016-2A CR
4.566% (LIBOR 3 Month +
2.60%) due 10/20/2028(2)(3) |
|
|
504,000 |
|
|
|
503,131 |
|
| |
|
|
| Sound Point CLO XV Ltd.
2017-1A C
4.434% (LIBOR 3 Month +
2.50%) due 1/23/2029(2)(3) |
|
|
343,000 |
|
|
|
339,695 |
|
| |
|
|
| Sound Point CLO XVII Ltd.
2017-3A A2
3.566% (LIBOR 3 Month +
1.60%) due 10/20/2030(2)(3) |
|
|
1,036,000 |
|
|
|
1,026,355 |
|
| |
|
|
| Synchrony Credit Card Master Note Trust
2015-1 A
2.37% due 3/15/2023 |
|
|
1,649,000 |
|
|
|
1,650,284 |
|
| 2017-1 A
1.93% due
6/15/2023 |
|
|
1,873,000 |
|
|
|
1,872,614 |
|
| |
|
|
| TCF Auto Receivables Owner Trust
2015-2A C
3.75% due 12/15/2021(2) |
|
|
1,049,000 |
|
|
|
1,049,427 |
|
| 2016-1A B
2.32% due 6/15/2022(2) |
|
|
69,000 |
|
|
|
68,952 |
|
| 2016-PT1A B
2.92% due 10/17/2022(2) |
|
|
30,000 |
|
|
|
30,151 |
|
| |
|
|
| Textainer Marine Containers VII Ltd.
2019-1A A
3.96% due 4/20/2044(2) |
|
|
372,987 |
|
|
|
376,220 |
|
| |
|
|
| Towd Point Asset Trust
2018-SL1 A
2.308% (LIBOR 1 Month +
0.60%) due 1/25/2046(2)(3) |
|
|
499,801 |
|
|
|
492,729 |
|
| |
|
|
| Towd Point Mortgage Trust
2019-HY2 A1
2.792% (LIBOR 1 Month +
1.00%) due 5/25/2058(2)(3) |
|
|
444,239 |
|
|
|
446,149 |
|
| |
|
|
| TPG Real Estate Finance Issuer Ltd.
2018-FL2 A
2.867% (LIBOR 1 Month +
1.13%) due 11/15/2037(2)(3) |
|
|
658,000 |
|
|
|
657,589 |
|
| |
|
|
| Voya CLO Ltd.
2019-1A D
5.301% (LIBOR 3 Month +
3.30%) due 4/15/2029(2)(3) |
|
|
100,000 |
|
|
|
99,991 |
|
| |
|
|
| Westgate Resorts LLC
2018-1A A
3.38% due 12/20/2031(2) |
|
|
209,394 |
|
|
|
211,785 |
|
| |
|
|
| Westlake Automobile Receivables Trust
2018-1A B
2.67% due 5/17/2021(2) |
|
|
142,790 |
|
|
|
142,824 |
|
| 2019-2A D
3.20% due 11/15/2024(2) |
|
|
356,000 |
|
|
|
360,881 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 10 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
SCHEDULE OF INVESTMENTS — GUARDIAN CORE PLUS FIXED INCOME VIP FUND
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Principal
Amount |
|
|
Value |
|
| Asset–Backed Securities (continued) |
|
| |
|
|
| Wheels SPV 2 LLC
2018-1A A2
3.06% due 4/20/2027(2) |
|
$
|
212,010 |
|
|
$
|
213,084 |
|
| |
|
|
| Wingstop Funding LLC
2018-1 A2
4.97% due 12/5/2048(2) |
|
|
528,010 |
|
|
|
543,067 |
|
| |
|
|
| World Financial Network Credit Card Master Trust
2017-C M
2.66% due 8/15/2024 |
|
|
40,000 |
|
|
|
39,942 |
|
| |
|
|
| World Omni Auto Receivables Trust
2018-D A2A
3.01% due 4/15/2022 |
|
|
509,074 |
|
|
|
510,537 |
|
| |
|
|
|
|
|
|
|
|
| |
|
Total Asset–Backed Securities
(Cost $74,300,845) |
|
|
|
74,582,890 |
|
| Corporate Bonds & Notes – 27.5% |
|
| |
| Aerospace & Defense – 0.3% |
|
| |
|
|
| Kratos Defense & Security Solutions, Inc.
6.50% due 11/30/2025(2) |
|
|
169,000 |
|
|
|
180,830 |
|
| |
|
|
| Signature Aviation U.S. Holdings, Inc.
4.00% due
3/1/2028(2) |
|
|
256,000 |
|
|
|
252,493 |
|
| |
|
|
| TransDigm, Inc.
6.375% due 6/15/2026 |
|
|
681,000 |
|
|
|
722,275 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
1,155,598 |
|
| Agriculture – 0.5% |
|
| |
|
|
| BAT Capital Corp.
4.39% due 8/15/2037 |
|
|
1,199,000 |
|
|
|
1,214,180 |
|
| |
|
|
| MHP Lux S.A.
6.25% due 9/19/2029(2) |
|
|
375,000 |
|
|
|
367,496 |
|
| 6.95% due
4/3/2026(2) |
|
|
230,000 |
|
|
|
240,838 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
1,822,514 |
|
| Auto Manufacturers – 0.8% |
|
| |
|
|
| Ford Motor Co.
7.45% due 7/16/2031 |
|
|
1,065,000 |
|
|
|
1,265,707 |
|
| |
|
|
| General Motors Co.
6.60% due 4/1/2036 |
|
|
50,000 |
|
|
|
59,015 |
|
| 6.75% due 4/1/2046 |
|
|
850,000 |
|
|
|
997,158 |
|
| |
|
|
| Tesla, Inc.
5.30% due 8/15/2025(2) |
|
|
608,000 |
|
|
|
589,760 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
2,911,640 |
|
| Auto Parts & Equipment – 0.2% |
|
| |
|
|
| Panther BF Aggregator 2 LP / Panther Finance Co.,
Inc.
8.50% due 5/15/2027(2) |
|
|
338,000 |
|
|
|
359,125 |
|
| |
|
|
| ZF North America Capital, Inc.
4.75% due
4/29/2025(2) |
|
|
319,000 |
|
|
|
335,651 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
694,776 |
|
| Beverages – 0.4% |
|
| |
|
|
| Anheuser-Busch Cos. LLC / Anheuser-Busch InBev
Worldwide, Inc.
4.70% due 2/1/2036 |
|
|
926,000 |
|
|
|
1,073,006 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Principal
Amount |
|
|
Value |
|
| Beverages (continued) |
|
| |
|
|
| Becle S.A.B. de C.V.
3.75% due 5/13/2025(2) |
|
$
|
150,000 |
|
|
$
|
153,774 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
1,226,780 |
|
| Chemicals – 0.7% |
|
| |
|
|
| CF Industries, Inc.
4.95% due 6/1/2043 |
|
|
351,000 |
|
|
|
365,917 |
|
| |
|
|
| CNAC HK Finbridge Co. Ltd.
3.50% due
7/19/2022 |
|
|
380,000 |
|
|
|
386,319 |
|
| 4.125% due 7/19/2027 |
|
|
790,000 |
|
|
|
828,909 |
|
| |
|
|
| Orbia Advance Corp. S.A.B. de C.V.
4.875% due
9/19/2022(2) |
|
|
250,000 |
|
|
|
263,128 |
|
| |
|
|
| Phosagro OAO Via Phosagro Bond Funding DAC
3.949%
due 4/24/2023(2) |
|
|
300,000 |
|
|
|
308,850 |
|
| |
|
|
| Tronox, Inc.
6.50% due 4/15/2026(2) |
|
|
180,000 |
|
|
|
185,436 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
2,338,559 |
|
| Coal – 0.2% |
|
| |
|
|
| Indika Energy Capital III Pte Ltd.
5.875% due
11/9/2024(2) |
|
|
410,000 |
|
|
|
393,779 |
|
| |
|
|
| Warrior Met Coal, Inc.
8.00% due 11/1/2024(2) |
|
|
336,000 |
|
|
|
341,040 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
734,819 |
|
| Commercial Banks – 5.6% |
|
| |
|
|
| Akbank T.A.S.
5.00% due 10/24/2022(2) |
|
|
215,000 |
|
|
|
216,075 |
|
| |
|
|
| Banco de Credito e Inversiones S.A.
3.50% due
10/12/2027(2) |
|
|
420,000 |
|
|
|
429,378 |
|
| |
|
|
| Bank of America Corp.
3.593% (3.593% fixed rate
until
7/21/2027; LIBOR 3 Month +
1.37% thereafter) due 7/21/2028(3) |
|
|
2,084,000 |
|
|
|
2,209,202 |
|
| 3.95% due 4/21/2025 |
|
|
25,000 |
|
|
|
26,699 |
|
| 4.00% due 1/22/2025 |
|
|
577,000 |
|
|
|
615,484 |
|
| 4.45% due 3/3/2026 |
|
|
250,000 |
|
|
|
274,577 |
|
| |
|
|
| Citigroup, Inc.
3.887% (3.887% fixed rate
until
1/10/2027; LIBOR 3 Month +
1.563% thereafter) due
1/10/2028(3) |
|
|
1,016,000 |
|
|
|
1,094,956 |
|
| 3.98% (3.98% fixed rate until
3/20/2029; LIBOR
3 Month +
1.338% thereafter) due
3/20/2030(3) |
|
|
803,000 |
|
|
|
879,133 |
|
| 4.45% due 9/29/2027 |
|
|
361,000 |
|
|
|
397,743 |
|
| |
|
|
| JPMorgan Chase & Co.
3.782% (3.782%
fixed rate until
2/1/2027; LIBOR 3 Month +
1.337% thereafter) due
2/1/2028(3) |
|
|
2,344,000 |
|
|
|
2,527,734 |
|
| |
|
|
| Macquarie Group Ltd.
4.654% (4.654% fixed rate
until
3/27/2028; LIBOR 3 Month +
1.727% thereafter) due
3/27/2029(2)(3) |
|
|
963,000 |
|
|
|
1,061,465 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| The accompanying notes are an integral part of these financial statements. |
|
|
|
11 |
SCHEDULE OF INVESTMENTS — GUARDIAN CORE PLUS FIXED INCOME VIP FUND
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Principal
Amount |
|
|
Value |
|
| Commercial Banks (continued) |
|
| |
|
|
| Morgan Stanley
3.625% due 1/20/2027 |
|
$
|
795,000 |
|
|
$
|
846,527 |
|
| 3.875% due 1/27/2026 |
|
|
328,000 |
|
|
|
352,303 |
|
| 4.00% due 7/23/2025 |
|
|
1,404,000 |
|
|
|
1,519,218 |
|
| |
|
|
| Popular, Inc.
6.125% due 9/14/2023 |
|
|
361,000 |
|
|
|
388,526 |
|
| |
|
|
| Santander U.K. PLC
7.95% due 10/26/2029 |
|
|
87,000 |
|
|
|
111,321 |
|
| |
|
|
| The Goldman Sachs Group, Inc.
6.25% due
2/1/2041 |
|
|
405,000 |
|
|
|
566,335 |
|
| |
|
|
| The Toronto-Dominion Bank
3.625% (3.625% fixed
rate until
9/15/2026; 5 Year USD Swap +
2.205% thereafter) due
9/15/2031(3) |
|
|
1,537,000 |
|
|
|
1,607,541 |
|
| |
|
|
| Turkiye Garanti Bankasi A/S
5.875% due 3/16/2023(2) |
|
|
400,000 |
|
|
|
411,000 |
|
| |
|
|
| UBS AG
5.125% due 5/15/2024 |
|
|
872,000 |
|
|
|
938,490 |
|
| 7.625% due 8/17/2022 |
|
|
900,000 |
|
|
|
1,014,579 |
|
| |
|
|
| Wachovia Corp.
7.574% due 8/1/2026(3) |
|
|
151,000 |
|
|
|
191,077 |
|
| |
|
|
| Wells Fargo Bank N.A.
6.60% due
1/15/2038 |
|
|
1,250,000 |
|
|
|
1,809,294 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
19,488,657 |
|
| Commercial Services – 0.4% |
|
| |
|
|
| Adani Ports & Special Economic Zone Ltd.
4.00% due 7/30/2027(2) |
|
|
200,000 |
|
|
|
202,214 |
|
| |
|
|
| Ahern Rentals, Inc.
7.375% due 5/15/2023(2) |
|
|
389,000 |
|
|
|
308,283 |
|
| |
|
|
| Ashtead Capital, Inc.
4.25% due 11/1/2029(2) |
|
|
253,000 |
|
|
|
258,376 |
|
| |
|
|
| PayPal Holdings, Inc.
2.85% due
10/1/2029 |
|
|
354,000 |
|
|
|
357,288 |
|
| |
|
|
| United Rentals North America, Inc.
4.875% due
1/15/2028 |
|
|
335,000 |
|
|
|
348,812 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
1,474,973 |
|
| Computers – 0.3% |
|
| |
|
|
| Dell International LLC / EMC Corp.
5.45% due
6/15/2023(2) |
|
|
141,000 |
|
|
|
152,948 |
|
| 8.35% due
7/15/2046(2) |
|
|
623,000 |
|
|
|
858,455 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
1,011,403 |
|
| |
| Diversified Financial Services – 1.5% |
|
| |
|
|
| AerCap Ireland Capital DAC / AerCap Global Aviation
Trust
3.50% due 1/15/2025 |
|
|
872,000 |
|
|
|
899,057 |
|
| 3.875% due 1/23/2028 |
|
|
567,000 |
|
|
|
588,904 |
|
| |
|
|
| Affiliated Managers Group, Inc.
3.50% due
8/1/2025 |
|
|
500,000 |
|
|
|
522,677 |
|
| 4.25% due 2/15/2024 |
|
|
25,000 |
|
|
|
26,778 |
|
| |
|
|
| Ally Financial, Inc.
8.00% due 11/1/2031 |
|
|
573,000 |
|
|
|
795,381 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Principal
Amount |
|
|
Value |
|
| Diversified Financial Services (continued) |
|
| |
|
|
| Brightsphere Investment Group, Inc.
4.80% due
7/27/2026 |
|
$
|
315,000 |
|
|
$
|
328,031 |
|
| |
|
|
| Global Aircraft Leasing Co. Ltd.
6.50% due
9/15/2024, Toggle PIK
(6.50% Cash or 7.25% PIK)(2)(4) |
|
|
544,000 |
|
|
|
567,637 |
|
| |
|
|
| International Lease Finance Corp.
5.875% due
8/15/2022 |
|
|
112,000 |
|
|
|
122,026 |
|
| |
|
|
| Navient Corp.
6.75% due 6/25/2025 |
|
|
334,000 |
|
|
|
368,736 |
|
| |
|
|
| Neuberger Berman Group LLC / Neuberger Berman Finance
Corp.
4.50% due 3/15/2027(2) |
|
|
380,000 |
|
|
|
405,297 |
|
| 4.875% due
4/15/2045(2) |
|
|
198,000 |
|
|
|
204,107 |
|
| |
|
|
| SURA Asset Management S.A.
4.375% due 4/11/2027(2) |
|
|
400,000 |
|
|
|
428,004 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
5,256,635 |
|
| Electric – 2.0% |
|
| |
|
|
| Ausgrid Finance Pty. Ltd.
4.35% due 8/1/2028(2) |
|
|
486,000 |
|
|
|
529,602 |
|
| |
|
|
| Berkshire Hathaway Energy Co.
3.80% due
7/15/2048 |
|
|
653,000 |
|
|
|
702,834 |
|
| |
|
|
| Calpine Corp.
5.75% due 1/15/2025 |
|
|
170,000 |
|
|
|
174,462 |
|
| |
|
|
| Cleco Corporate Holdings LLC
3.375% due 9/15/2029(2) |
|
|
273,000 |
|
|
|
274,176 |
|
| 4.973% due 5/1/2046 |
|
|
258,000 |
|
|
|
286,320 |
|
| |
|
|
| Dominion Energy South Carolina, Inc.
6.05% due
1/15/2038 |
|
|
343,000 |
|
|
|
467,162 |
|
| 6.625% due 2/1/2032 |
|
|
15,000 |
|
|
|
20,347 |
|
| |
|
|
| Electricite de France S.A.
5.00% due 9/21/2048(2) |
|
|
318,000 |
|
|
|
379,337 |
|
| |
|
|
| Empresas Publicas de Medellin ESP
4.25% due
7/18/2029(2) |
|
|
200,000 |
|
|
|
207,841 |
|
| |
|
|
| Entergy Arkansas LLC
4.20% due 4/1/2049 |
|
|
452,000 |
|
|
|
526,129 |
|
| |
|
|
| Entergy Louisiana LLC
4.00% due
3/15/2033 |
|
|
674,000 |
|
|
|
762,734 |
|
| |
|
|
| Exelon Generation Co. LLC
5.60% due
6/15/2042 |
|
|
49,000 |
|
|
|
56,063 |
|
| 5.75% due 10/1/2041 |
|
|
449,000 |
|
|
|
518,636 |
|
| |
|
|
| FirstEnergy Transmission LLC
4.55% due 4/1/2049(2) |
|
|
448,000 |
|
|
|
513,600 |
|
| |
|
|
| Massachusetts Electric Co.
4.004% due 8/15/2046(2) |
|
|
370,000 |
|
|
|
394,438 |
|
| |
|
|
| Minejesa Capital B.V.
4.625% due 8/10/2030(2) |
|
|
200,000 |
|
|
|
207,006 |
|
| |
|
|
| Pennsylvania Electric Co.
3.60% due 6/1/2029(2) |
|
|
370,000 |
|
|
|
389,742 |
|
| |
|
|
| PSEG Power LLC
8.625% due 4/15/2031 |
|
|
228,000 |
|
|
|
318,579 |
|
| |
|
|
| Vistra Operations Co. LLC
4.30% due 7/15/2029(2) |
|
|
274,000 |
|
|
|
279,532 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
7,008,540 |
|
|
|
|
|
|
| 12 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
SCHEDULE OF INVESTMENTS — GUARDIAN CORE PLUS FIXED INCOME VIP FUND
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Principal
Amount |
|
|
Value |
|
| Electronics – 0.2% |
|
| |
|
|
| PerkinElmer, Inc.
3.30% due 9/15/2029 |
|
$
|
520,000 |
|
|
$
|
531,187 |
|
| |
|
|
| Trimble, Inc.
4.90% due 6/15/2028 |
|
|
18,000 |
|
|
|
19,664 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
550,851 |
|
| Energy–Alternate Sources – 0.1% |
|
| |
|
|
| Enviva Partners LP / Enviva Partners Finance Corp.
6.50% due 1/15/2026(2) |
|
|
324,000 |
|
|
|
346,884 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
346,884 |
|
| Engineering & Construction – 0.2% |
|
| |
|
|
| China Railway Resources Huitung Ltd.
3.85% due
2/5/2023 |
|
|
581,000 |
|
|
|
600,963 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
600,963 |
|
| Entertainment – 0.2% |
|
| |
|
|
| Penn National Gaming, Inc.
5.625% due 1/15/2027(2) |
|
|
337,000 |
|
|
|
356,143 |
|
| |
|
|
| Stars Group Holdings B.V. / Stars Group U.S. Co-Borrower LLC
7.00% due 7/15/2026(2) |
|
|
159,000 |
|
|
|
172,118 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
528,261 |
|
| Food – 0.3% |
|
| |
|
|
| Arcor SAIC
6.00% due 7/6/2023(2) |
|
|
13,000 |
|
|
|
12,545 |
|
| |
|
|
| JBS USA LUX S.A. / JBS USA Food Co. / JBS USA
Finance, Inc.
6.50% due 4/15/2029(2) |
|
|
620,000 |
|
|
|
688,994 |
|
| |
|
|
| Minerva Luxembourg S.A.
5.875% due 1/19/2028(2) |
|
|
288,000 |
|
|
|
302,403 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
1,003,942 |
|
| Forest Products & Paper – 0.1% |
|
| |
|
|
| Fibria Overseas Finance Ltd.
4.00% due
1/14/2025 |
|
|
390,000 |
|
|
|
402,971 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
402,971 |
|
| Gas – 0.2% |
|
| |
|
|
| Dominion Energy Gas Holdings LLC
4.60% due
12/15/2044 |
|
|
708,000 |
|
|
|
790,256 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
790,256 |
|
| Hand & Machine Tools – 0.1% |
|
| |
|
|
| Kennametal, Inc.
4.625% due 6/15/2028 |
|
|
360,000 |
|
|
|
381,849 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
381,849 |
|
| Healthcare – Services – 0.9% |
|
| |
|
|
| Acadia Healthcare Co., Inc.
6.50% due
3/1/2024 |
|
|
341,000 |
|
|
|
353,361 |
|
| |
|
|
| Adventist Health System
2.952% due
3/1/2029 |
|
|
197,000 |
|
|
|
194,890 |
|
| |
|
|
| Advocate Health & Hospitals Corp.
3.387%
due 10/15/2049 |
|
|
346,000 |
|
|
|
346,703 |
|
| |
|
|
| Centene Corp.
4.625% due 12/15/2029(2) |
|
|
356,000 |
|
|
|
374,280 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Principal
Amount |
|
|
Value |
|
| Healthcare–Services (continued) |
|
| |
|
|
| CommonSpirit Health
3.347% due 10/1/2029 |
|
$
|
1,114,000 |
|
|
$
|
1,120,837 |
|
| |
|
|
| HCA, Inc.
5.25% due 6/15/2026 |
|
|
473,000 |
|
|
|
529,917 |
|
| |
|
|
| Tenet Healthcare Corp.
6.25% due 2/1/2027(2) |
|
|
173,000 |
|
|
|
186,191 |
|
| |
|
|
| The New York and Presbyterian Hospital
3.954% due
8/1/2119 |
|
|
103,000 |
|
|
|
103,968 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
3,210,147 |
|
| Home Builders – 0.4% |
|
| |
|
|
| Century Communities, Inc.
6.75% due 6/1/2027(2) |
|
|
319,000 |
|
|
|
342,032 |
|
| |
|
|
| Toll Brothers Finance Corp.
4.35% due
2/15/2028 |
|
|
363,000 |
|
|
|
378,427 |
|
| |
|
|
| TRI Pointe Group, Inc.
5.25% due
6/1/2027 |
|
|
377,000 |
|
|
|
393,965 |
|
| |
|
|
| Williams Scotsman International, Inc.
6.875% due
8/15/2023(2) |
|
|
182,000 |
|
|
|
191,555 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
1,305,979 |
|
| Household Products & Wares – 0.0% |
|
| |
|
|
| Kimberly-Clark de Mexico S.A.B. de C.V.
3.80% due
4/8/2024(2) |
|
|
100,000 |
|
|
|
102,000 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
102,000 |
|
| Insurance – 0.4% |
|
| |
|
|
| Radian Group, Inc.
4.875% due 3/15/2027 |
|
|
526,000 |
|
|
|
553,615 |
|
| |
|
|
| Teachers Insurance & Annuity Association of
America
4.90% due 9/15/2044(2) |
|
|
697,000 |
|
|
|
856,197 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
1,409,812 |
|
| Internet – 0.6% |
|
| |
|
|
| Match Group, Inc.
5.625% due 2/15/2029(2) |
|
|
160,000 |
|
|
|
170,400 |
|
| |
|
|
| Netflix, Inc.
6.375% due 5/15/2029 |
|
|
606,000 |
|
|
|
690,082 |
|
| |
|
|
| Prosus N.V.
5.50% due 7/21/2025(2) |
|
|
540,000 |
|
|
|
599,452 |
|
| |
|
|
| Tencent Holdings Ltd.
3.595% due 1/19/2028(2) |
|
|
630,000 |
|
|
|
658,588 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
2,118,522 |
|
| Leisure Time – 0.4% |
|
| |
|
|
| Carnival PLC
7.875% due 6/1/2027 |
|
|
525,000 |
|
|
|
685,914 |
|
| |
|
|
| Royal Caribbean Cruises Ltd.
3.70% due
3/15/2028 |
|
|
799,000 |
|
|
|
822,248 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
1,508,162 |
|
|
|
|
|
|
| The accompanying notes are an integral part of these financial statements. |
|
|
|
13 |
SCHEDULE OF INVESTMENTS — GUARDIAN CORE PLUS FIXED INCOME VIP FUND
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Principal
Amount |
|
|
Value |
|
| Lodging – 0.2% |
|
| |
|
|
| Wyndham Destinations, Inc.
5.75% due
4/1/2027 |
|
$
|
660,000 |
|
|
$
|
716,100 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
716,100 |
|
| Machinery – Diversified – 0.4% |
|
| |
|
|
| Nvent Finance Sarl
4.55% due 4/15/2028 |
|
|
1,237,000 |
|
|
|
1,284,092 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
1,284,092 |
|
| Media – 1.3% |
|
| |
|
|
| AMC Networks, Inc.
4.75% due 8/1/2025 |
|
|
701,000 |
|
|
|
703,629 |
|
| |
|
|
| CCO Holdings LLC / CCO Holdings Capital Corp.
5.00% due 2/1/2028(2) |
|
|
338,000 |
|
|
|
354,670 |
|
| |
|
|
| Cox Communications, Inc.
4.50% due 6/30/2043(2) |
|
|
539,000 |
|
|
|
561,461 |
|
| 4.70% due
12/15/2042(2) |
|
|
496,000 |
|
|
|
537,783 |
|
| 8.375% due
3/1/2039(2) |
|
|
63,000 |
|
|
|
94,743 |
|
| |
|
|
| DISH DBS Corp.
7.75% due 7/1/2026 |
|
|
366,000 |
|
|
|
387,737 |
|
| |
|
|
| Gray Television, Inc.
7.00% due 5/15/2027(2) |
|
|
646,000 |
|
|
|
717,867 |
|
| |
|
|
| Scripps Escrow, Inc.
5.875% due 7/15/2027(2) |
|
|
527,000 |
|
|
|
552,033 |
|
| |
|
|
| Time Warner Cable LLC
7.30% due 7/1/2038 |
|
|
274,000 |
|
|
|
357,429 |
|
| |
|
|
| Time Warner Entertainment Co. LP
8.375% due
7/15/2033 |
|
|
282,000 |
|
|
|
395,551 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
4,662,903 |
|
| Mining – 0.9% |
|
| |
|
|
| Anglo American Capital PLC
4.00% due 9/11/2027(2) |
|
|
800,000 |
|
|
|
838,358 |
|
| 4.75% due
4/10/2027(2) |
|
|
978,000 |
|
|
|
1,069,815 |
|
| |
|
|
| Corp. Nacional del Cobre de Chile
4.50% due
9/16/2025(2) |
|
|
450,000 |
|
|
|
486,283 |
|
| |
|
|
| Freeport-McMoRan, Inc.
3.875% due
3/15/2023 |
|
|
172,000 |
|
|
|
175,136 |
|
| |
|
|
| Glencore Finance Canada Ltd.
5.55% due 10/25/2042(2) |
|
|
705,000 |
|
|
|
747,437 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
3,317,029 |
|
| Miscellaneous Manufacturing – 0.2% |
|
| |
|
|
| General Electric Co.
2.271% (LIBOR 3 Month
+
0.38%) due 5/5/2026(3) |
|
|
448,000 |
|
|
|
425,420 |
|
| 6.15% due 8/7/2037 |
|
|
324,000 |
|
|
|
402,920 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
828,340 |
|
| Oil & Gas – 2.9% |
|
| |
|
|
| Berry Petroleum Co. LLC
7.00% due 2/15/2026(2) |
|
|
262,000 |
|
|
|
242,677 |
|
| |
|
|
| Centennial Resource Production LLC
6.875% due
4/1/2027(2) |
|
|
524,000 |
|
|
|
544,960 |
|
| |
|
|
| Ecopetrol S.A.
4.125% due 1/16/2025 |
|
|
870,000 |
|
|
|
913,509 |
|
| 5.875% due 5/28/2045 |
|
|
190,000 |
|
|
|
223,963 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Principal
Amount |
|
|
Value |
|
| Oil & Gas (continued) |
|
| |
|
|
| Eni S.p.A.
5.70% due 10/1/2040(2) |
|
$
|
850,000 |
|
|
$
|
1,026,884 |
|
| |
|
|
| Equinor ASA
7.15% due 11/15/2025 |
|
|
700,000 |
|
|
|
876,442 |
|
| |
|
|
| Gazprom PJSC Via Gaz Capital S.A.
4.95% due
2/6/2028(2) |
|
|
200,000 |
|
|
|
222,846 |
|
| |
|
|
| MEG Energy Corp.
7.00% due 3/31/2024(2) |
|
|
548,000 |
|
|
|
551,425 |
|
| |
|
|
| Oasis Petroleum, Inc.
6.875% due
3/15/2022 |
|
|
428,000 |
|
|
|
411,950 |
|
| |
|
|
| Pertamina Persero PT
4.70% due 7/30/2049(2) |
|
|
200,000 |
|
|
|
212,742 |
|
| |
|
|
| Petrobras Global Finance B.V.
5.093% due
1/15/2030(2) |
|
|
400,000 |
|
|
|
428,604 |
|
| |
|
|
| Petroleos Mexicanos
4.50% due 1/23/2026 |
|
|
803,000 |
|
|
|
799,627 |
|
| 5.35% due 2/12/2028 |
|
|
800,000 |
|
|
|
796,000 |
|
| |
|
|
| QEP Resources, Inc.
5.625% due 3/1/2026 |
|
|
201,000 |
|
|
|
196,025 |
|
| |
|
|
| Saudi Arabian Oil Co.
2.875% due 4/16/2024(2) |
|
|
570,000 |
|
|
|
578,607 |
|
| |
|
|
| Sinopec Group Overseas Development Ltd.
4.375%
due 10/17/2023(2) |
|
|
200,000 |
|
|
|
213,923 |
|
| |
|
|
| SM Energy Co.
6.75% due 9/15/2026 |
|
|
414,000 |
|
|
|
405,720 |
|
| |
|
|
| Transocean, Inc.
7.25% due 11/1/2025(2) |
|
|
158,000 |
|
|
|
154,840 |
|
| |
|
|
| Valero Energy Corp.
10.50% due 3/15/2039 |
|
|
486,000 |
|
|
|
819,139 |
|
| |
|
|
| YPF S.A.
8.50% due 7/28/2025(2) |
|
|
415,000 |
|
|
|
392,175 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
10,012,058 |
|
| Oil & Gas Services – 0.4% |
|
| |
|
|
| Baker Hughes a GE Co. LLC / Baker Hughes Co-Obligor, Inc.
4.08% due 12/15/2047 |
|
|
864,000 |
|
|
|
886,038 |
|
| |
|
|
| Nine Energy Service, Inc.
8.75% due 11/1/2023(2) |
|
|
499,000 |
|
|
|
404,190 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
1,290,228 |
|
| Pharmaceuticals – 0.4% |
|
| |
|
|
| AbbVie, Inc.
4.25% due 11/21/2049(2) |
|
|
227,000 |
|
|
|
241,033 |
|
| |
|
|
| Bausch Health Americas, Inc.
9.25% due 4/1/2026(2) |
|
|
319,000 |
|
|
|
366,403 |
|
| |
|
|
| Bausch Health Cos., Inc.
5.00% due 1/30/2028(2) |
|
|
177,000 |
|
|
|
181,671 |
|
| |
|
|
| Bayer Corp.
6.65% due 2/15/2028(2) |
|
|
11,000 |
|
|
|
13,529 |
|
| |
|
|
| CVS Health Corp.
5.05% due 3/25/2048 |
|
|
613,000 |
|
|
|
726,421 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
1,529,057 |
|
|
|
|
|
|
| 14 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
SCHEDULE OF INVESTMENTS — GUARDIAN CORE PLUS FIXED INCOME VIP FUND
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Principal
Amount |
|
|
Value |
|
| Pipelines – 0.5% |
|
| |
|
|
| Abu Dhabi Crude Oil Pipeline LLC
4.60% due
11/2/2047(2) |
|
$
|
200,000 |
|
|
$
|
231,000 |
|
| |
|
|
| Buckeye Partners LP
6.375% (6.375% fixed rate
until
1/22/2023; LIBOR 3 Month +
4.02% thereafter) due
1/22/2078(3) |
|
|
472,000 |
|
|
|
347,038 |
|
| |
|
|
| Cheniere Corpus Christi Holdings LLC
3.70% due
11/15/2029(2) |
|
|
215,000 |
|
|
|
219,562 |
|
| |
|
|
| Northern Natural Gas Co.
4.30% due 1/15/2049(2) |
|
|
238,000 |
|
|
|
268,464 |
|
| |
|
|
| Sabine Pass Liquefaction LLC
5.875% due
6/30/2026 |
|
|
565,000 |
|
|
|
649,481 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
1,715,545 |
|
| Real Estate – 0.4% |
|
| |
|
|
| China Evergrande Group
10.00% due
4/11/2023 |
|
|
700,000 |
|
|
|
663,168 |
|
| |
|
|
| Country Garden Holdings Co. Ltd.
4.75% due
1/17/2023 |
|
|
200,000 |
|
|
|
201,476 |
|
| 4.75% due 9/28/2023 |
|
|
200,000 |
|
|
|
200,722 |
|
| |
|
|
| Shimao Property Holdings Ltd.
4.75% due
7/3/2022 |
|
|
320,000 |
|
|
|
326,384 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
1,391,750 |
|
| Real Estate Investment Trusts – 1.1% |
|
| |
|
|
| EPR Properties
4.95% due 4/15/2028 |
|
|
777,000 |
|
|
|
849,062 |
|
| |
|
|
| Healthcare Trust of America Holdings LP
3.10% due
2/15/2030 |
|
|
510,000 |
|
|
|
506,507 |
|
| |
|
|
| Spirit Realty LP
3.40% due 1/15/2030 |
|
|
488,000 |
|
|
|
490,568 |
|
| |
|
|
| VEREIT Operating Partnership LP
4.875% due
6/1/2026 |
|
|
1,300,000 |
|
|
|
1,440,384 |
|
| |
|
|
| WEA Finance LLC
3.50% due 6/15/2029(2) |
|
|
520,000 |
|
|
|
539,097 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
3,825,618 |
|
| Retail – 0.0% |
|
| |
|
|
| Lithia Motors, Inc.
4.625% due 12/15/2027(2) |
|
|
158,000 |
|
|
|
162,402 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
162,402 |
|
| Semiconductors – 0.5% |
|
| |
|
|
| Broadcom Corp. / Broadcom Cayman Finance Ltd.
3.625% due 1/15/2024 |
|
|
151,000 |
|
|
|
156,500 |
|
| |
|
|
| Broadcom, Inc.
3.625% due 10/15/2024(2) |
|
|
1,505,000 |
|
|
|
1,565,033 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
1,721,533 |
|
| Software – 0.2% |
|
| |
|
|
| Oracle Corp.
6.125% due 7/8/2039 |
|
|
497,000 |
|
|
|
701,112 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
701,112 |
|
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Principal
Amount |
|
|
Value |
|
| Sovereign – 0.1% |
|
| |
|
|
| CBB International Sukuk Co. 6 S.P.C.
5.25%
due 3/20/2025(2) |
|
$
|
410,000 |
|
|
$
|
441,775 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
441,775 |
|
| Telecommunications – 0.7% |
|
| |
|
|
| AT&T, Inc.
6.25% due 3/29/2041 |
|
|
835,000 |
|
|
|
1,087,371 |
|
| |
|
|
| Ooredoo International Finance Ltd.
3.75% due
6/22/2026(2) |
|
|
200,000 |
|
|
|
210,834 |
|
| |
|
|
| Sprint Capital Corp.
6.875% due
11/15/2028 |
|
|
324,000 |
|
|
|
349,110 |
|
| |
|
|
| Verizon Communications, Inc.
3.01% (LIBOR 3 Month
+
1.10%) due 5/15/2025(3) |
|
|
297,000 |
|
|
|
303,807 |
|
| |
|
|
| ViaSat, Inc.
5.625% due 4/15/2027(2) |
|
|
332,000 |
|
|
|
355,240 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
2,306,362 |
|
| Toys, Games & Hobbies – 0.2% |
|
| |
|
|
| Mattel, Inc.
6.75% due 12/31/2025(2) |
|
|
522,000 |
|
|
|
561,046 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
561,046 |
|
| Water – 0.1% |
|
| |
|
|
| Aqua America, Inc.
3.566% due 5/1/2029 |
|
|
400,000 |
|
|
|
420,813 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
420,813 |
|
| |
|
Total Corporate Bonds & Notes
(Cost $90,997,539) |
|
|
|
96,273,256 |
|
| Municipals – 0.7% |
|
| |
|
|
| California Health Facilities Financing Authority
3.034% due 6/1/2034 |
|
|
195,000 |
|
|
|
193,333 |
|
| |
|
|
| Foothill-Eastern Transportation Corridor Agency
Series A
4.094% due 1/15/2049 |
|
|
354,000 |
|
|
|
353,416 |
|
| |
|
|
| Massachusetts School Building Authority
Series B
3.395% due 10/15/2040 |
|
|
490,000 |
|
|
|
489,853 |
|
| |
|
|
| Michigan Finance Authority
3.084% due
12/1/2034 |
|
|
515,000 |
|
|
|
513,053 |
|
| |
|
|
| Permanent University Fund–Texas A&M
University System
Series B
3.66% due 7/1/2047 |
|
|
375,000 |
|
|
|
383,595 |
|
| |
|
|
| State of California
7.625% due 3/1/2040 |
|
|
190,000 |
|
|
|
304,234 |
|
| 7.30% due 10/1/2039 |
|
|
130,000 |
|
|
|
198,512 |
|
| |
|
|
|
|
|
|
|
|
| |
|
Total Municipals
(Cost $2,459,293) |
|
|
|
2,435,996 |
|
| Non–Agency Mortgage–Backed Securities – 6.2% |
|
| |
|
|
| Atrium Hotel Portfolio Trust
2018-ATRM A
2.69% due 6/15/2035(2)(3)(5) |
|
|
349,000 |
|
|
|
347,691 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| The accompanying notes are an integral part of these financial statements. |
|
|
|
15 |
SCHEDULE OF INVESTMENTS — GUARDIAN CORE PLUS FIXED INCOME VIP FUND
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Principal
Amount |
|
|
Value |
|
| Non–Agency Mortgage–Backed Securities (continued) |
|
| |
|
|
| BAMLL Commercial Mortgage Securities Trust
2013-WBRK A
3.534% due 3/10/2037(2)(3)(5) |
|
$
|
3,900,000 |
|
|
$
|
4,032,153 |
|
| |
|
|
| BBCMS Mortgage Trust
2019-BWAY A
2.696% due
11/25/2034(2)(3)(5) |
|
|
365,000 |
|
|
|
363,173 |
|
| 2019-BWAY B
3.05% due 11/25/2034(2)(3)(5) |
|
|
160,000 |
|
|
|
159,199 |
|
| |
|
|
| BX
Trust
2018-GW A
2.54% due 5/15/2035(2)(3)(5) |
|
|
987,000 |
|
|
|
981,570 |
|
| 2019-OC11 A
3.202% due 12/9/2041(2) |
|
|
688,000 |
|
|
|
705,352 |
|
| |
|
|
| Citigroup Commercial Mortgage Trust
2016-GC36 D
2.85% due 2/10/2049(2) |
|
|
1,685,000 |
|
|
|
1,454,235 |
|
| |
|
|
| Commercial Mortgage Trust
2015-PC1 AM
4.29% due 7/10/2050(3)(5) |
|
|
310,000 |
|
|
|
332,628 |
|
| 2015-PC1 B
4.436% due
7/10/2050(3)(5) |
|
|
100,000 |
|
|
|
106,170 |
|
| 2015-PC1 D
4.436% due
7/10/2050(3)(5) |
|
|
33,000 |
|
|
|
31,003 |
|
| 2016-COR1 AM
3.494% due 10/10/2049 |
|
|
167,000 |
|
|
|
172,858 |
|
| |
|
|
| Credit Suisse Mortgage Trust
2019-UVIL A
3.16% due 12/15/2041(2) |
|
|
337,000 |
|
|
|
342,054 |
|
| |
|
|
| CSAIL Commercial Mortgage Trust
2019-C18 AS
3.321% due 12/15/2052 |
|
|
394,045 |
|
|
|
397,409 |
|
| |
|
|
| DBWF Mortgage Trust
2018-GLKS A
2.794% due
11/19/2035(2)(3)(5) |
|
|
630,000 |
|
|
|
629,219 |
|
| |
|
|
| Great Wolf Trust
2019-WOLF A
2.756% due
12/15/2029(2)(3)(5) |
|
|
878,000 |
|
|
|
874,389 |
|
| 2019-WOLF E
4.454% due 12/15/2029(2)(3)(5) |
|
|
342,000 |
|
|
|
341,454 |
|
| |
|
|
| GS Mortgage Securities Corp. Trust
2012-BWTR A
2.954% due 11/5/2034(2) |
|
|
1,273,000 |
|
|
|
1,289,738 |
|
| 2018-RIVR A
2.69% due 7/15/2035(2)(3)(5) |
|
|
438,000 |
|
|
|
437,881 |
|
| |
|
|
| JP Morgan Chase Commercial Mortgage Securities
Trust
2018-LAQ A
2.74% due 6/15/2032(2)(3)(5) |
|
|
930,021 |
|
|
|
929,439 |
|
| 2018-LAQ B
3.04% due 6/15/2032(2)(3)(5) |
|
|
622,709 |
|
|
|
622,707 |
|
| 2018-LAQ D
3.84% due 6/15/2032(2)(3)(5) |
|
|
464,561 |
|
|
|
464,434 |
|
| 2018-MINN A
2.786% due 11/15/2035(2)(3)(5) |
|
|
339,000 |
|
|
|
336,437 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Principal
Amount |
|
|
Value |
|
| Non–Agency Mortgage–Backed Securities (continued) |
|
| 2018-WPT AFL
2.654% due
7/5/2033(2)(3)(5) |
|
$
|
242,000 |
|
|
$
|
242,000 |
|
| 2018-WPT BFL
2.954% due
7/5/2033(2)(3)(5) |
|
|
724,000 |
|
|
|
724,000 |
|
| 2018-WPT BFX
4.549% due
7/5/2033(2) |
|
|
218,000 |
|
|
|
231,837 |
|
| 2018-WPT CFX
4.95% due
7/5/2033(2) |
|
|
290,000 |
|
|
|
309,109 |
|
| |
|
|
| JPMBB Commercial Mortgage Securities Trust
2015-C30 C
4.268% due 7/15/2048(3)(5) |
|
|
13,000 |
|
|
|
13,365 |
|
| |
|
|
| Morgan Stanley Capital Barclays Bank Trust
2016-MART C
2.817% due 9/13/2031(2) |
|
|
100,000 |
|
|
|
99,756 |
|
| |
|
|
| PFP Ltd.
2019-6 A
2.964% due 4/14/2037(2)(3)(5) |
|
|
416,000 |
|
|
|
416,000 |
|
| |
|
|
| ReadyCap Commercial Mortgage Trust
2019-6 A
2.832% due 10/25/2052(2) |
|
|
323,339 |
|
|
|
322,953 |
|
| |
|
|
| The Bancorp Commercial Mortgage Trust
2018-CR3 A
2.59% due 1/15/2033(2)(3)(5) |
|
|
12,755 |
|
|
|
12,742 |
|
| |
|
|
| Wells Fargo Commercial Mortgage Trust
2015-C28 D
4.113% due 5/15/2048(3)(5) |
|
|
1,500,000 |
|
|
|
1,408,848 |
|
| 2016-C35 C
4.176% due
7/15/2048(3)(5) |
|
|
131,000 |
|
|
|
134,231 |
|
| 2017-C41 AS
3.785% due
11/15/2050(3)(5) |
|
|
279,000 |
|
|
|
295,605 |
|
| |
|
|
| WFLD Mortgage Trust
2014-MONT A
3.755% due
8/10/2031(2)(3)(5) |
|
|
2,000,000 |
|
|
|
2,088,420 |
|
| |
|
|
|
|
|
| |
|
Total Non–Agency Mortgage–Backed Securities
(Cost $21,160,856) |
|
|
|
21,650,059 |
|
| Foreign Government – 3.2% |
|
| |
|
|
| Angolan Government International Bond
8.25% due
5/9/2028(2) |
|
USD |
320,000 |
|
|
|
345,021 |
|
| 9.50% due
11/12/2025(2) |
|
USD |
200,000 |
|
|
|
233,775 |
|
| |
|
|
| Bahamas Government International Bond
6.00% due
11/21/2028(2) |
|
USD |
400,000 |
|
|
|
446,000 |
|
| |
|
|
| Bermuda Government International Bond
3.717% due
1/25/2027(2) |
|
USD |
400,000 |
|
|
|
420,004 |
|
| |
|
|
| Dominican Republic International Bond
6.40% due
6/5/2049(2) |
|
USD |
290,000 |
|
|
|
317,912 |
|
| |
|
|
| Egypt Government International Bond
6.588% due
2/21/2028(2) |
|
USD |
350,000 |
|
|
|
364,875 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 16 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
SCHEDULE OF INVESTMENTS — GUARDIAN CORE PLUS FIXED INCOME VIP FUND
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Principal
Amount |
|
|
Value |
|
| Foreign Government (continued) |
|
| 7.903% due
2/21/2048(2) |
|
USD |
200,000 |
|
|
$
|
209,659 |
|
| 4.55% due
11/20/2023(2) |
|
USD |
200,000 |
|
|
|
204,187 |
|
| |
|
|
| Export Credit Bank of Turkey
8.25% due 1/24/2024(2) |
|
USD |
250,000 |
|
|
|
271,850 |
|
| |
|
|
| Ghana Government International Bond
8.125% due
3/26/2032(2) |
|
USD |
320,000 |
|
|
|
325,634 |
|
| |
|
|
| Indonesia Government International Bond
3.40% due
9/18/2029 |
|
USD |
925,000 |
|
|
|
962,654 |
|
| |
|
|
| Japan Bank for International Cooperation
2.125%
due 2/10/2025 |
|
USD |
1,936,000 |
|
|
|
1,940,851 |
|
| 2.50% due 5/23/2024 |
|
USD |
1,590,000 |
|
|
|
1,622,592 |
|
| |
|
|
| Kenya Government International Bond
7.00% due
5/22/2027(2) |
|
USD |
520,000 |
|
|
|
553,329 |
|
| |
|
|
| Mexico Government International Bond
3.75% due
1/11/2028 |
|
USD |
395,000 |
|
|
|
410,405 |
|
| 4.00% due 10/2/2023 |
|
USD |
560,000 |
|
|
|
589,641 |
|
| |
|
|
| Nigeria Government International Bond
7.143% due
2/23/2030(2) |
|
USD |
200,000 |
|
|
|
203,566 |
|
| |
|
|
| Provincia de Mendoza Argentina
8.375% due
5/19/2024(6)(7) |
|
USD |
300,000 |
|
|
|
223,500 |
|
| |
|
|
| Qatar Government International Bond
3.25% due
6/2/2026(2) |
|
USD |
555,000 |
|
|
|
584,053 |
|
| 5.103% due
4/23/2048(2) |
|
USD |
210,000 |
|
|
|
269,660 |
|
| |
|
|
| Romanian Government International Bond
6.125% due
1/22/2044(2) |
|
USD |
8,000 |
|
|
|
10,353 |
|
| |
|
|
| Turkey Government International Bond
5.625% due
3/30/2021 |
|
USD |
530,000 |
|
|
|
545,498 |
|
| 5.75% due 3/22/2024 |
|
USD |
200,000 |
|
|
|
204,409 |
|
| |
|
|
|
|
|
|
|
|
| |
|
Total Foreign Government
(Cost $10,954,165) |
|
|
|
11,259,428 |
|
| U.S. Government Securities – 38.8% |
|
| |
|
|
| U.S. Treasury Bill
1.387% due 1/30/2020(8) |
|
$ |
46,874,000 |
|
|
|
46,820,948 |
|
| 1.507% due
3/26/2020(8) |
|
|
9,917,100 |
|
|
|
9,882,211 |
|
| 1.537% due
5/7/2020(8) |
|
|
21,360,000 |
|
|
|
21,246,084 |
|
| |
|
|
| U.S. Treasury Bond
2.25% due 8/15/2049 |
|
|
3,004,000 |
|
|
|
2,922,329 |
|
| 2.375% due 11/15/2049 |
|
|
2,926,000 |
|
|
|
2,924,514 |
|
| 2.75% due 11/15/2047 |
|
|
9,882,000 |
|
|
|
10,624,308 |
|
| 3.625% due 8/15/2043 |
|
|
5,029,000 |
|
|
|
6,179,777 |
|
| |
|
|
| U.S. Treasury Note
1.50% due 11/30/2024 |
|
|
3,867,000 |
|
|
|
3,835,732 |
|
| 1.75% due 12/31/2024 |
|
|
6,340,000 |
|
|
|
6,360,060 |
|
| 1.75% due 11/15/2029 |
|
|
6,988,000 |
|
|
|
6,888,093 |
|
| 2.875% due 10/31/2020 |
|
|
406,000 |
|
|
|
410,044 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Principal
Amount |
|
|
Value |
|
| U.S. Government Securities (continued) |
|
| |
|
|
| U.S. Treasury Note Inflation Protected Security
0.625% due 4/15/2023 |
|
$
|
17,321,418 |
|
|
$
|
17,589,487 |
|
| |
|
|
|
|
|
|
|
|
| |
|
Total U.S. Government Securities
(Cost $134,277,371) |
|
|
|
135,683,587 |
|
| Short–Term Investment – 1.2% |
|
| |
| Repurchase Agreements – 1.2% |
|
| |
|
|
| Fixed Income
Clearing Corp., 0.12%, dated 12/31/2019, proceeds at maturity value of $4,362,029, due 1/2/2020(9) |
|
|
4,362,000 |
|
|
|
4,362,000 |
|
| |
|
Total Repurchase Agreements
(Cost $4,362,000) |
|
|
|
4,362,000 |
|
| |
|
Total Investments(10) – 132.0%
(Cost $454,113,193) |
|
|
|
462,078,117 |
|
| |
|
| Liabilities in excess of other assets(11) – (32.0)% |
|
|
|
(112,029,395 |
) |
| |
|
| Total Net Assets – 100.0% |
|
|
$ |
350,048,722 |
|
| (1) |
TBA — To be announced. |
| (2) |
Securities that may be resold in transactions, exempt from registration under Rule 144A of the Securities Act of 1933, as
amended, normally to certain qualified buyers. At December 31, 2019, the aggregate market value of these securities amounted to $110,263,308, representing 31.5% of net assets. These securities have been deemed liquid by the investment adviser
pursuant to the Fund’s liquidity procedures approved by the Board of Trustees. |
| (3) |
Variable rate securities, which may include step-up bonds or adjustable rate
mortgages. The rate shown is the rate in effect at December 31, 2019. |
| (4) |
Payment–in–kind security, for which interest payments may be made in additional principal ranging from 0% to
100% of the full stated interest rate. As of December 31, 2019, interest payments had been made in cash. |
| (5) |
Variable coupon rate based on weighted average interest rate of underlying mortgages. |
| (6) |
Security that may be resold in transactions, exempt from registration under Rule 144A of the Securities Act of 1933, as
amended, normally to certain qualified buyers. At December 31, 2019, the aggregate market value of this security amounted to $223,500, representing 0.1% of net assets. This security has been deemed illiquid by the investment adviser pursuant to
the Fund’s liquidity procedures approved by the Board of Trustees. |
| (7) |
The table below presents securities deemed illiquid by the investment adviser. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Security |
|
Shares |
|
|
Cost |
|
|
Value |
|
|
Acquisition
Date |
|
|
% of Fund’s
Net Assets |
|
| Provincia de Mendoza Argentina |
|
|
300,000 |
|
|
$ |
317,021 |
|
|
$ |
223,500 |
|
|
|
4/9/2018 –
4/18/2018 |
|
|
|
0.06% |
|
| (8) |
Interest rate shown reflects the discount rate at time of purchase. |
| (9) |
The table below presents collateral for repurchase agreements. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Security |
|
Coupon |
|
|
Maturity
Date |
|
|
Principal
Amount |
|
|
Value |
|
| U.S. Treasury Note |
|
|
2.75% |
|
|
|
9/15/2021 |
|
|
$ |
4,335,000 |
|
|
$ |
4,452,921 |
|
|
|
|
|
|
| The accompanying notes are an integral part of these financial statements. |
|
|
|
17 |
SCHEDULE OF INVESTMENTS — GUARDIAN CORE PLUS FIXED INCOME VIP FUND
| (10) |
Securities are segregated to cover anticipated or existing derivative positions or to be announced securities (TBA).
|
| (11) |
Liabilities in excess of other assets include net unrealized depreciation on futures contracts as follows:
|
Open futures contracts at December 31, 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Type |
|
Expiration |
|
|
Contracts |
|
|
Position |
|
|
Notional
Amount |
|
|
Notional
Value |
|
|
Unrealized
Depreciation |
|
| U.S. 2-Year Treasury Note |
|
|
March 2020 |
|
|
|
208 |
|
|
|
Long |
|
|
$ |
44,857,519 |
|
|
$ |
44,824,000 |
|
|
$ |
(33,519 |
) |
| U.S. 5-Year Treasury Note |
|
|
March 2020 |
|
|
|
117 |
|
|
|
Long |
|
|
|
13,928,695 |
|
|
|
13,877,297 |
|
|
|
(51,398 |
) |
| U.S. Long Bond |
|
|
March 2020 |
|
|
|
240 |
|
|
|
Long |
|
|
|
38,385,449 |
|
|
|
37,417,500 |
|
|
|
(967,949 |
) |
| Total |
|
|
$ |
97,171,663 |
|
|
$ |
96,118,797 |
|
|
$ |
(1,052,866 |
) |
| |
|
|
|
|
|
|
| Type |
|
Expiration |
|
|
Contracts |
|
|
Position |
|
|
Notional
Amount |
|
|
Notional
Value |
|
|
Unrealized
Appreciation |
|
| U.S. Ultra 10-Year Treasury Note |
|
|
March 2020 |
|
|
|
208 |
|
|
|
Short |
|
|
$ |
(29,595,642 |
) |
|
$ |
(29,266,250 |
) |
|
$ |
329,392 |
|
| U.S. Ultra Long Bond |
|
|
March 2020 |
|
|
|
57 |
|
|
|
Short |
|
|
|
(10,727,254 |
) |
|
|
(10,354,406 |
) |
|
|
372,848 |
|
| Total |
|
|
$ |
(40,322,896 |
) |
|
$ |
(39,620,656 |
) |
|
$ |
702,240 |
|
Legend:
CLO —
Collateralized Loan Obligation
LIBOR — London Interbank Offered Rate
PIK — Payment–In–Kind
USD — United
States Dollar
The following is a summary of the inputs used as of December 31, 2019 in valuing the Fund’s investments. For more information on
valuation inputs, please refer to Note 2a of the accompanying Notes to Financial Statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Valuation Inputs |
|
|
|
|
| Investments in Securities |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
| Agency Mortgage–Backed Securities |
|
$ |
— |
|
|
$ |
115,830,901 |
|
|
$ |
— |
|
|
$ |
115,830,901 |
|
| Asset–Backed Securities |
|
|
— |
|
|
|
74,582,890 |
|
|
|
— |
|
|
|
74,582,890 |
|
| Corporate Bonds & Notes |
|
|
— |
|
|
|
96,273,256 |
|
|
|
— |
|
|
|
96,273,256 |
|
| Municipals |
|
|
— |
|
|
|
2,435,996 |
|
|
|
— |
|
|
|
2,435,996 |
|
| Non–Agency Mortgage–Backed Securities |
|
|
— |
|
|
|
21,650,059 |
|
|
|
— |
|
|
|
21,650,059 |
|
| Foreign Government |
|
|
— |
|
|
|
11,259,428 |
|
|
|
— |
|
|
|
11,259,428 |
|
| U.S. Government Securities |
|
|
— |
|
|
|
135,683,587 |
|
|
|
— |
|
|
|
135,683,587 |
|
| Repurchase Agreements |
|
|
— |
|
|
|
4,362,000 |
|
|
|
— |
|
|
|
4,362,000 |
|
| Total |
|
$ |
— |
|
|
$ |
462,078,117 |
|
|
$ |
— |
|
|
$ |
462,078,117 |
|
| Other Financial Instruments |
|
|
|
|
|
|
|
|
|
|
|
|
| Futures Contracts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Assets |
|
$ |
702,240 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
702,240 |
|
| Liabilities |
|
|
(1,052,866 |
) |
|
|
— |
|
|
|
— |
|
|
|
(1,052,866 |
) |
| Total |
|
$ |
(350,626 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(350,626 |
) |
|
|
|
|
|
| 18 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
FINANCIAL INFORMATION — GUARDIAN CORE PLUS FIXED INCOME VIP FUND
|
|
|
|
|
|
Statement of Assets and Liabilities As of December 31, 2019 |
|
|
|
| Assets |
|
|
|
|
| |
|
| Investments, at value |
|
$ |
462,078,117 |
|
| |
|
| Cash |
|
|
62,034 |
|
| |
|
| Interest receivable |
|
|
1,886,825 |
|
| |
|
| Cash deposits with brokers for futures
contracts |
|
|
442,176 |
|
| |
|
| Reimbursement receivable from adviser |
|
|
12,702 |
|
| |
|
| Receivable for variation margin on futures
contracts |
|
|
4,725 |
|
| |
|
| Receivable for fund shares subscribed |
|
|
1,372 |
|
| |
|
| Prepaid expenses |
|
|
16,236 |
|
| |
|
|
|
|
| |
|
| Total Assets |
|
|
464,504,187 |
|
| |
|
|
|
|
| |
|
| Liabilities |
|
|
|
|
| |
|
| Payable for investments purchased |
|
|
113,973,193 |
|
| |
|
| Payable for fund shares redeemed |
|
|
172,579 |
|
| |
|
| Investment advisory fees payable |
|
|
132,516 |
|
| |
|
| Distribution fees payable |
|
|
74,860 |
|
| |
|
| Accrued audit fees |
|
|
26,842 |
|
| |
|
| Accrued custodian and accounting fees |
|
|
26,151 |
|
| |
|
| Accrued trustees’ and officers’
fees |
|
|
2,490 |
|
| |
|
| Accrued expenses and other liabilities |
|
|
46,834 |
|
| |
|
|
|
|
| |
|
| Total Liabilities |
|
|
114,455,465 |
|
| |
|
|
|
|
| |
|
| Total Net Assets |
|
$ |
350,048,722 |
|
| |
|
|
|
|
| |
|
| Net Assets Consist of: |
|
|
|
|
| |
|
| Paid-in
capital |
|
$ |
320,815,149 |
|
| |
|
| Distributable earnings |
|
|
29,233,573 |
|
| |
|
|
|
|
| |
|
| Total Net Assets |
|
$ |
350,048,722 |
|
| |
|
|
|
|
| Investments, at Cost |
|
$ |
454,113,193 |
|
| |
|
|
|
|
| |
|
| Pricing of Shares |
|
|
|
|
| |
|
|
Shares of Beneficial Interest Outstanding with
No Par Value |
|
|
32,479,284 |
|
| |
|
| Net Asset Value Per Share |
|
|
$10.78 |
|
| |
|
|
|
|
|
|
|
|
|
|
Statement of Operations For the Year Ended December 31, 2019 |
|
|
|
| Investment Income |
|
|
|
|
| |
|
| Interest |
|
$ |
11,817,390 |
|
| |
|
|
|
|
| |
|
| Total Investment Income |
|
|
11,817,390 |
|
| |
|
|
|
|
| |
|
| Expenses |
|
|
|
|
| |
|
| Investment advisory fees |
|
|
1,575,578 |
|
| |
|
| Distribution fees |
|
|
890,987 |
|
| |
|
| Trustees’ and officers’ fees |
|
|
146,705 |
|
| |
|
| Professional fees |
|
|
114,014 |
|
| |
|
| Custodian and accounting fees |
|
|
103,143 |
|
| |
|
| Shareholder reports |
|
|
67,542 |
|
| |
|
| Administrative fees |
|
|
47,460 |
|
| |
|
| Transfer agent fees |
|
|
19,890 |
|
| |
|
| Other expenses |
|
|
39,132 |
|
| |
|
|
|
|
| |
|
| Total Expenses |
|
|
3,004,451 |
|
| |
|
| Less: Fees waived |
|
|
(188,933 |
) |
| |
|
|
|
|
| |
|
| Total Expenses, Net |
|
|
2,815,518 |
|
| |
|
|
|
|
| |
|
| Net Investment Income/(Loss) |
|
|
9,001,872 |
|
| |
|
|
|
|
| |
|
| Realized Gain/(Loss) and Change in Unrealized
Appreciation/(Depreciation) on Investments and Derivative Contracts |
|
|
|
|
| |
|
| Net realized gain/(loss) from investments |
|
|
6,748,672 |
|
| |
|
| Net realized gain/(loss) from futures
contracts |
|
|
2,864,137 |
|
| |
|
| Net change in unrealized appreciation/(depreciation)
on investments |
|
|
11,002,890 |
|
| |
|
| Net change in unrealized appreciation/(depreciation)
on futures contracts |
|
|
(740,607 |
) |
| |
|
|
|
|
| |
|
| Net Gain on Investments and Derivative
Contracts |
|
|
19,875,092 |
|
| |
|
|
|
|
| |
|
| Net Increase in Net Assets Resulting From
Operations |
|
$ |
28,876,964 |
|
| |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| The accompanying notes are an integral part of these financial statements. |
|
|
|
19 |
FINANCIAL INFORMATION — GUARDIAN CORE PLUS FIXED INCOME VIP FUND
|
|
|
|
|
|
|
|
|
|
Statements of Changes in Net Assets |
|
|
|
|
|
|
| |
|
|
| |
|
For the
Year Ended
12/31/19 |
|
|
For the
Year Ended
12/31/18 |
|
| |
|
|
|
| Operations |
|
|
|
|
|
|
|
|
| |
|
|
| Net investment income/(loss) |
|
$ |
9,001,872 |
|
|
$ |
7,136,517 |
|
| |
|
|
| Net realized gain/(loss) from investments and
derivative contracts |
|
|
9,612,809 |
|
|
|
(4,534,096 |
) |
| |
|
|
| Net change in unrealized appreciation/(depreciation)
on investments and derivative contracts |
|
|
10,262,283 |
|
|
|
(2,733,566 |
) |
| |
|
|
|
|
|
|
|
|
| |
|
|
| Net Increase/(Decrease) in Net Assets Resulting
from Operations |
|
|
28,876,964 |
|
|
|
(131,145 |
) |
| |
|
|
|
|
|
|
|
|
| |
|
|
| Capital Share Transactions |
|
|
|
|
|
|
|
|
| |
|
|
| Proceeds from sales of shares |
|
|
23,766,078 |
|
|
|
381,440,464 |
|
| |
|
|
| Cost of shares redeemed |
|
|
(57,663,884 |
) |
|
|
(49,335,564 |
) |
| |
|
|
|
|
|
|
|
|
| |
|
|
| Net Increase/(Decrease) in Net Assets Resulting
from Capital Share Transactions |
|
|
(33,897,806 |
) |
|
|
332,104,900 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| Net Increase/(Decrease) in Net Assets |
|
|
(5,020,842 |
) |
|
|
331,973,755 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| Net Assets |
|
|
|
|
|
|
|
|
| |
|
|
| Beginning of year |
|
|
355,069,564 |
|
|
|
23,095,809 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| End of year |
|
$ |
350,048,722 |
|
|
$ |
355,069,564 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| Other Information: |
|
|
|
|
|
|
|
|
| |
|
|
| Shares |
|
|
|
|
|
|
|
|
| |
|
|
| Sold |
|
|
2,270,849 |
|
|
|
38,416,835 |
|
| |
|
|
| Redeemed |
|
|
(5,493,029 |
) |
|
|
(5,007,402 |
) |
| |
|
|
|
|
|
|
|
|
| |
|
|
| Net Increase/(Decrease) |
|
|
(3,222,180 |
) |
|
|
33,409,433 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 20 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
This Page Intentionally Left Blank
FINANCIAL INFORMATION — GUARDIAN CORE PLUS FIXED INCOME VIP FUND
The Financial Highlights table is intended to help you understand the Fund’s financial
performance for the past five years (or, if shorter, the period since inception). Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost)
on an investment in the Fund.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Highlights |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Per Share Operating Performance |
|
|
|
|
| |
|
Net Asset Value,
Beginning of
Period |
|
|
Net Investment
Income(1) |
|
|
Net Realized
and Unrealized
Gain/(Loss) |
|
|
Total
Operations |
|
|
Net Asset
Value, End of
Period |
|
|
Total
Return(2) |
|
| |
|
|
|
|
|
|
| Year Ended 12/31/19 |
|
$ |
9.95 |
|
|
$ |
0.26 |
|
|
$ |
0.57 |
|
|
$ |
0.83 |
|
|
$ |
10.78 |
|
|
|
8.34% |
|
| |
|
|
|
|
|
|
| Year Ended 12/31/18 |
|
|
10.08 |
|
|
|
0.26 |
|
|
|
(0.39 |
) |
|
|
(0.13 |
) |
|
|
9.95 |
|
|
|
(1.29)% |
|
| |
|
|
|
|
|
|
| Year Ended 12/31/17 |
|
|
9.73 |
|
|
|
0.17 |
|
|
|
0.18 |
|
|
|
0.35 |
|
|
|
10.08 |
|
|
|
3.60% |
|
| |
|
|
|
|
|
|
| Period Ended
12/31/16(4) |
|
|
10.00 |
|
|
|
0.04 |
|
|
|
(0.31 |
) |
|
|
(0.27 |
) |
|
|
9.73 |
|
|
|
(2.70)% |
(5) |
|
|
|
|
|
| 22 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
FINANCIAL INFORMATION — GUARDIAN CORE PLUS FIXED INCOME VIP FUND
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Ratios/Supplemental Data |
|
Net Assets, End
of Period (000s) |
|
|
Net Ratio of
Expenses to
Average
Net Assets(3) |
|
|
Gross Ratio of
Expenses to
Average Net
Assets |
|
|
Net Ratio of Net
Investment
Income
to Average
Net Assets(3) |
|
|
Gross Ratio of Net
Investment
Income/(Loss)
to Average
Net Assets |
|
|
Portfolio
Turnover Rate |
|
|
|
|
|
|
|
| $ |
350,049 |
|
|
|
0.79% |
|
|
|
0.84% |
|
|
|
2.53% |
|
|
|
2.48% |
|
|
|
211% |
|
|
|
|
|
|
|
| |
355,070 |
|
|
|
0.79% |
|
|
|
0.87% |
|
|
|
2.60% |
|
|
|
2.52% |
|
|
|
543% |
|
|
|
|
|
|
|
| |
23,096 |
|
|
|
0.81% |
|
|
|
1.77% |
|
|
|
1.69% |
|
|
|
0.73% |
|
|
|
409% |
|
|
|
|
|
|
|
| |
24,888 |
|
|
|
0.81% |
(5) |
|
|
2.54% |
(5) |
|
|
1.18% |
(5) |
|
|
(0.55)% |
(5) |
|
|
107% |
(5) |
| (1) |
Calculated based on the average shares outstanding during the period. |
| (2) |
Total returns do not reflect the effects of charges deducted pursuant to the terms of The Guardian Insurance &
Annuity Company, Inc.’s variable contracts. Inclusion of such charges would reduce the total returns for all periods shown. |
| (3) |
Net Ratio of Expenses to Average Net Assets and Net Ratio of Net Investment Income to Average Net Assets include the
effect of fee waivers and expense limitations. |
| (4) |
Commenced operations on September 1, 2016. |
| (5) |
Ratios for periods less than one year have been annualized, except for total return and portfolio turnover rate. For the
period ended December 31, 2016, certain non-recurring fees (i.e., audit fees) are not annualized. |
|
|
|
|
|
| The accompanying notes are an integral part of these financial statements. |
|
|
|
23 |
NOTES TO FINANCIAL STATEMENTS — GUARDIAN CORE PLUS FIXED INCOME VIP
FUND
December 31, 2019
1.
Organization
Guardian Variable Products Trust (the “Trust”), a Delaware statutory trust organized on January 12, 2016, is registered under the
Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Trust currently has sixteen series. Guardian Core Plus Fixed Income VIP Fund (the
“Fund”) is a series of the Trust. The Fund is a diversified fund and commenced operations on September 1, 2016. The financial statements for other series of the Trust are presented in separate reports.
The Trust has authorized an unlimited number of shares of beneficial interest with no par value. Shares are bought and sold at closing net asset value (“NAV”).
Shares of the Fund are only sold to certain separate accounts of The Guardian Insurance & Annuity Company, Inc. (“GIAC”) that fund certain variable annuity contracts and variable life insurance policies issued by GIAC. GIAC is a
wholly-owned subsidiary of The Guardian Life Insurance Company of America (“Guardian Life”).
The Fund seeks income and capital appreciation to produce a
high total return.
2. Significant Accounting Policies
The following is
a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The Fund follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board
(“FASB”) Accounting Standards Codification Topic 946 Financial Services — Investment Companies. The following policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”).
The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.
a. Investment Valuations The valuations of debt securities for which quoted bid prices are readily available are valued at the bid price by independent
pricing services (each, a “Service”). Debt securities for which quoted bid prices are not readily available are valued by a Service at the evaluated bid price provided by the Service or the bid price provided by an independent
broker-dealer or at a calculated price based on the spread to an appropriate benchmark
provided by such broker-dealer. Securities for which market quotations are not readily available or for which market quotations may be considered unreliable or for which a Service or independent
broker-dealer does not provide a valuation are valued at their fair values as determined in accordance with policies and procedures adopted by the Board of Trustees.
Under the policies and procedures approved by the Board of Trustees, Park Avenue Institutional Advisers LLC (“Park Avenue”), the Fund’s investment
adviser, has established a Fair Valuation Committee to assist the Board of Trustees with the oversight and monitoring of the valuation of the Fund’s investments. This includes monitoring the appropriateness of fair values based on results of
ongoing valuation oversight, including but not limited to consideration of security specific events, market events, and pricing vendor and broker-dealer due diligence. The Fair Valuation Committee oversees and carries out the policies for the
valuation of investments held in the Fund. The Fair Valuation Committee is responsible for discussing and assessing the potential impacts to the fair values on an ongoing basis, and at least on a quarterly basis with the Board of Trustees.
Equity securities traded on an exchange other than NASDAQ Stock Market, LLC (“NASDAQ”) are valued at the last reported sale price on the principal exchange or
market on which they are traded; or, if there were no sales that day, at the mean between the closing bid and ask prices. Securities traded on the NASDAQ are generally valued at the NASDAQ official closing price, which may not be the last sale
price. If the NASDAQ official closing price is not available for a security, that security is generally valued at the mean between the closing bid and ask prices. Repurchase agreements are carried at cost, which approximates fair value (see
Note 5d). Foreign securities are valued in the currencies of the markets in which they trade and then converted to U.S. dollars by the application of foreign exchange rates at the close of the New York Stock Exchange (“NYSE”).
Securities whose values have been materially affected by events occurring before the Fund’s valuation time but after the close of the securities’ principal
exchange or market may be fair valued in accordance with policies and procedures adopted by the Board of Trustees. Valuations reflected in this report are as of the report date. As a result, changes in valuation due to market events and/or issuer
related events after the report date and prior to issuance of the report are not reflected herein.
NOTES TO FINANCIAL STATEMENTS — GUARDIAN CORE PLUS FIXED INCOME VIP FUND
Various inputs are used in determining the valuation of the Fund’s investments. These inputs are summarized in three
broad levels listed below.
| • |
|
Level 1 — unadjusted inputs using quoted prices in active markets for identical investments. |
| • |
|
Level 2 — other significant observable inputs, including, but not limited to, quoted prices for similar investments, inputs other than quoted prices that are observable for investments
(such as interest rates, prepayment speeds, credit risks, etc.) or other market corroborated inputs. |
| • |
|
Level 3 — significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments) |
Inputs may include price information, volatility statistics, specific and broad credit data, liquidity statistics, and other factors. A financial instrument’s level
within the fair value hierarchy is based on the lowest level of any input; both individually and in aggregate, that is significant to the fair value measurement. However, the determination of what constitutes “observable” requires
significant judgment by the Trust. The Trust considers observable data to be that market data which is readily available, regularly distributed or updated, reliable and verifiable, and provided by independent sources that are actively involved in
the relevant market. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. Changes in valuation techniques may result in transfers into or out of a
financial instrument’s assigned level within the hierarchy.
The FASB requires reporting entities to make disclosures about purchases, sales, issuances and
settlements of Level 3 securities on a gross basis. For the year ended December 31, 2019, there were no transfers into or out of Level 3 of the fair value hierarchy.
In determining a financial instrument’s placement within the hierarchy, the Trust separates the Fund’s investment portfolio into two categories: investments
and derivatives (e.g., futures). A summary of inputs used to value the Fund’s assets and liabilities carried at fair value as of December 31, 2019 is included in the Schedule of Investments.
Investments Investments whose values are based on quoted market prices in active markets, and are therefore classified within Level 1, include active
listed equities. Investments that trade in markets that are not considered to be active, but are valued based on quoted
market prices, dealer quotations or alternative pricing sources supported by observable inputs are classified within Level 2. These include certain U.S. government and sovereign obligations,
most government agency securities, investment-grade corporate bonds, certain mortgage products, state, municipal and provincial obligations, and certain foreign equity securities, including securities whose prices may have been affected by events
occurring after the close of trading on their principal exchange or market and, as a result, whose values are determined by a pricing service as described above, or securities whose values are otherwise determined using fair valuation methods
approved by the Fund’s Board of Trustees.
Investments classified within Level 3 have significant unobservable inputs, as they trade infrequently or not at
all. Level 3 investments include, among others, private placement securities. When observable prices are not available for these securities, the Trust uses one or more valuation techniques for which sufficient and reliable data is available.
The inputs used by the Trust in estimating the value of Level 3 investments include, for example, the original transaction price, recent transactions in the same or similar instruments, completed or pending third-party transactions in the
underlying investment or comparable issuers, subsequent rounds of financing, recapitalizations, and other transactions across the capital structure. Level 3 investments may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the Trust in the absence of market information. Assumptions used by the Trust due to the lack of observable inputs may significantly impact the
resulting fair value and therefore the Fund’s results of operations. As of December 31, 2019, the Fund had no securities classified as Level 3.
Derivatives Exchange-traded derivatives, such as futures contracts, exchange-traded option contracts and certain swaps, are typically classified within
Level 1 or Level 2 of the fair value hierarchy depending on whether or not they are deemed to be actively traded. Certain non-exchange-traded derivatives, such as generic forwards, certain swaps and
options, have inputs which can generally be corroborated by market data and are therefore classified within Level 2.
b. Securities Transactions
Securities transactions are accounted for on the date securities are purchased or sold (trade date). Realized gains or losses on securities transactions are determined on the basis of specific identification.
NOTES TO FINANCIAL STATEMENTS — GUARDIAN CORE PLUS FIXED INCOME VIP FUND
c. Futures Contracts The Fund may enter into financial futures contracts. In entering into such contracts, the Fund
is required to deposit with the counterparty, either in cash or securities, an amount equal to a certain percentage of the face value of the contract. Subsequent payments are received or made by the Fund each day, depending on the daily fluctuations
in the values of the contracts, and are recorded for financial statement purposes as variation margin received or paid by the Fund. Daily changes in variation margin are recognized as unrealized gains or losses by the Fund. The Fund may not achieve
the anticipated benefits of the financial futures contracts and may realize a loss.
d. Credit Derivatives The Fund may enter into credit derivatives,
including credit default swaps on individual obligations or credit indices. The Fund may use these investments (i) as alternatives to direct long or short investment in a particular security or securities, (ii) to adjust the Fund’s
asset allocation or risk exposure, or (iii) for hedging purposes. The use by the Fund of credit default swaps may have the effect of creating a short position in a security. Credit derivatives can create investment leverage and may create
additional investment risks that may subject the Fund to greater volatility than investments in more traditional securities, as described in the Statement of Additional Information.
The Fund may enter into credit default swap agreements either as a buyer or seller. The Fund may buy protection under a credit default swap to attempt to mitigate the
risk of default or credit quality deterioration in one or more individual holdings or in a segment of the fixed income securities market. The Fund may sell protection under a credit default swap in an attempt to gain exposure to an underlying
issuer’s credit quality characteristics without investing directly in that issuer.
For swaps entered with an individual counterparty, the Fund bears the risk
of loss of the uncollateralized amount expected to be received under a credit default swap agreement in the event of the default or bankruptcy of the counterparty. Credit default swap agreements are generally valued at a price at which the
counterparty to such agreement would terminate the agreement. The Fund may also enter into cleared swaps.
In entering into swap contracts, the Fund is required to
deposit with the broker (or for the benefit of the broker), either in cash or securities, an amount equal to a percentage of the notional value of the contract. Subsequent payments are received or made by the Fund each day, depending on the daily
fluctuations in the values of the contracts, and are recorded for financial
statement purposes as variation margin received or paid by the Fund. Daily changes in variation margin are recognized as unrealized gains or losses by the Fund. The Fund may not achieve the
anticipated benefits of the swap contracts and may realize a loss.
The Fund enters into credit default swaps primarily for asset allocation and risk exposure
management. There were no credit default swaps held as of December 31, 2019.
e. Options Transactions The Fund can write (sell) put and call options on
securities and indexes to earn premiums, for hedging purposes, for risk management purposes or otherwise as part of its investment strategies. In writing options, the Fund is required to deposit with the broker or counterparty, either in cash or
securities, an amount equal to a percentage of the face value of the options. When an option is written, the premium received is recorded as an asset with an equal liability that is subsequently marked to market to reflect the market value of the
written option. These liabilities, if any, are reflected as written options, at value, in the Fund’s Statement of Assets and Liabilities. Premiums received from writing options which expire unexercised are recorded on the expiration date as a
realized gain. The difference between the premium received and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is also treated as a realized gain, or if the premium is less than the amount paid for the
closing purchased transactions, as a realized loss. If a written call option is exercised, the premium is added to the proceeds from the sale of the underlying security in determining whether there has been a realized gain or loss. If a written put
option is exercised, the premium reduces the cost basis of the security. In writing an option, the Fund bears the market risk of an unfavorable change in the price of the security underlying the written option. Exercise of a written option could
result in the Fund purchasing or selling a security at a price different from its current market value. There were no options transactions as of December 31, 2019.
f. Investment Income Dividend income net of foreign taxes withheld, if any, is generally recorded on the ex-dividend date.
Interest income, which includes amortization/accretion of premium/discount, is determined using the interest income accrual method, and is accrued and recorded daily.
g. Allocation of Income and Expenses Many of the expenses of the Trust can be directly attributed to a specific series of the Trust. Expenses that cannot be
NOTES TO FINANCIAL STATEMENTS — GUARDIAN CORE PLUS FIXED INCOME VIP FUND
directly attributed to a specific series of the Trust are generally apportioned among all the series in the Trust, based
on relative net assets. In calculating net asset value per share for each series of the Trust, investment income, realized and unrealized gains and losses, and expenses other than series-specific expenses are allocated daily to each series based
upon the proportion of net assets attributable to each series.
3. Transactions with Affiliates
a. Investment Advisory Fee and Expense Limitation Under the terms of the advisory agreement, which, after its two year initial term, is reviewed and
approved annually by the Board of Trustees, the Fund pays an investment advisory fee to Park Avenue. Park Avenue is a wholly-owned subsidiary of Guardian Life and receives an investment advisory fee at an annual rate of 0.45% of the first
$300 million, and 0.40% in excess of $300 million of the Fund’s average daily net assets. The fee is accrued daily and paid monthly.
Park Avenue has
contractually agreed through April 30, 2020 to waive certain fees and/or reimburse certain expenses incurred by the Fund to the extent necessary to limit the Fund’s total annual operating expenses after fee waiver and/or expense
reimbursement to 0.79% of the Fund’s average daily net assets (excluding, if applicable, any acquired fund fees and expenses, taxes, interest, transaction costs and brokerage commissions, litigation and extraordinary expenses). The limitation
may not be increased or terminated prior to this time without action by the Board of Trustees, may be terminated only upon approval of the Board of Trustees, and is subject to Park Avenue’s recoupment rights. For the year ended
December 31, 2019, Park Avenue waived fees and/or paid Fund expenses in the amount of $188,933.
Park Avenue may be entitled to recoupment of previously waived
fees and reimbursed expenses from the Fund for three years from the date of the waiver or reimbursement, subject to the expense limitation in effect at the time of the waiver or reimbursement and at the time of the recoupment, if any. Amounts waived
or reimbursed by Park Avenue pursuant to any expense limitation after April 9, 2018 are not subject to Park Avenue’s recoupment rights. The amount available for potential future recoupment by Park Avenue from the
Fund under the Expense Limitation Agreement and the expiration schedule at December 31, 2019 are as follows:
|
|
|
|
|
| |
|
| |
|
Potential Recoupment Amounts
Expiring |
| Total Potential
Recoupment
Amounts |
|
2021 |
|
2020 |
| $370,663 |
|
$86,166 |
|
$284,497 |
Park Avenue has entered into a Sub-Advisory Agreement with Lord, Abbett & Co. LLC
(“Lord Abbett”). Lord Abbett is responsible for providing day-to-day investment advisory services to the Fund, subject to the supervision of Park Avenue and
the oversight of the Board of Trustees. Sub-advisory fees are paid by Park Avenue and do not represent a separate or additional expense to the Fund.
b. Compensation of Trustees and Officers Trustees and officers who are interested persons of the Trust, as defined in the 1940 Act, receive no compensation from
the Fund, except for the Chief Compliance Officer of the Trust. Trustees of the Trust who are not interested persons of the Trust, and the Chief Compliance Officer, receive compensation and reimbursement of expenses from the Trust.
c. Distribution Fees Park Avenue Securities LLC (“PAS”), a wholly-owned subsidiary of Guardian Life, is the principal underwriter of Fund shares. The
Trust has entered into a distribution and service agreement with PAS, which governs the sale and distribution of shares of the Fund. Under a distribution and service plan adopted by the Trust (“12b-1
plan”), PAS is compensated for services in such capacity, including its expenses in connection with the promotion and distribution of shares of the Fund, at an annual rate of 0.25% of the Fund’s average daily net assets. For the year ended
December 31, 2019, the Fund paid distribution fees in the amount of $890,987 to PAS.
PAS has directed that certain payments under the 12b-1 plan be used to compensate GIAC for shareholder services provided to contract owners.
4. Federal Income Taxes
a. Distributions to Shareholders For federal income tax purposes, the Fund is treated as a disregarded entity
NOTES TO FINANCIAL STATEMENTS — GUARDIAN CORE PLUS FIXED INCOME VIP FUND
(“DRE”). As a DRE, the Fund is not subject to an entity-level income tax; and any income, gains, losses,
deductions, taxes, and credits of the Fund would instead be “passed through” directly to the separate accounts of GIAC that invest in the Fund and retain the same character for U.S. federal income tax purposes. In addition, the Fund is not
required to distribute taxable income and capital gains for U.S. federal income tax purposes. Therefore, no dividends and capital gains distributions were paid by the Fund.
5. Investments
a. Investment Purchases and Sales The cost of
investments and U.S. government agency obligations purchased and the proceeds from U.S. government agency obligations and other investments sold (excluding short-term investments and to be announced (TBA) securities) for the year ended
December 31, 2019, were as follows:
|
|
|
|
|
|
|
|
|
| |
|
|
| |
|
Other
Investments |
|
|
U.S.
Government and
Agency
Obligations |
|
| Purchases |
|
$ |
156,609,001 |
|
|
$ |
407,981,131 |
|
| Sales |
|
|
150,358,106 |
|
|
|
411,045,835 |
|
b. Foreign Securities Foreign securities investments involve special risks and considerations not typically associated with U.S.
investments. These risks include, but are not limited to, currency risk; adverse political, regulatory, social, and economic developments; and less reliable information about issuers. Moreover, securities of some foreign issuers may be less liquid
and their prices more volatile than those of comparable U.S. issuers.
c. Repurchase Agreements The Fund may invest in repurchase agreements to maintain
liquidity and earn income over periods of time as short as overnight. The collateral for repurchase agreements is either cash or fully negotiable U.S. government securities (including U.S. government agency securities). Repurchase agreements are
fully collateralized (including the interest accrued thereon) and such collateral is marked to market daily while the agreements remain in force. If the value of the collateral falls below the repurchase price plus accrued interest, the Fund will
typically require the seller to deposit additional collateral by the next business day. If the request for additional collateral is not met, or the seller defaults, the Fund maintains the right to sell the collateral (although it may be prevented or
delayed from doing so in certain circumstances) and may be required to claim any resulting loss against the
seller. Park Avenue monitors the creditworthiness of the seller with which the Fund enters into repurchase agreements.
d. Securities Purchased on a When-Issued or Delayed-Delivery Basis The Fund may purchase securities on a when-issued or delayed-delivery basis, with payment and
delivery scheduled for a future date. These transactions are subject to market fluctuations and are subject to the risk that the value at delivery may be more or less than at the trade date purchase price. Although the Fund will generally enter into
these transactions with the intention of taking delivery of the securities, it may sell the securities before the settlement date. Assets will be segregated when a fund agrees to purchase on a when-issued or delayed-delivery basis. These
transactions may create investment leverage.
e. Restricted and Illiquid Securities A restricted security cannot be resold to the general public without prior
registration under the Securities Act of 1933, as amended (except pursuant to an applicable exemption). The values of these securities may be highly volatile. If the security is subsequently registered and resold, the issuer would typically bear the
expense of all registrations at no cost to the Fund. Restricted and illiquid securities are valued according to the policies and procedures adopted by the Trust’s Board of Trustees and are noted, if any, in the Fund’s Schedule of
Investments. As of December 31, 2019, Guardian Core Plus Fixed Income VIP Fund held one illiquid security.
f. Below Investment Grade Securities The Fund
may invest in below investment grade securities (i.e. lower-quality, “junk” debt), which are subject to various risks. Lower-quality debt is considered to be speculative because it is less certain that the issuer will be able to pay
interest or repay the principal than in the case of investment grade debt. These securities can involve a substantially greater risk of default than higher-rated securities, and their values can decline significantly over short periods of time.
Lower-quality debt securities tend to be more sensitive to adverse news about their issuers, the market and the economy in general, than higher-quality debt securities. The market for these securities can be less liquid, especially during periods of
recession or general market decline.
g. Mortgage- and Asset-Backed Securities The values of some mortgage-related or asset-backed securities may be
particularly sensitive to changes in prevailing interest rates. Early repayment of principal on some mortgage-related securities may expose the Fund to a lower rate of return upon reinvestment of principal. The
NOTES TO FINANCIAL STATEMENTS — GUARDIAN CORE PLUS FIXED INCOME VIP FUND
values of mortgage- and asset-backed securities depend in part on the credit quality and adequacy of the underlying assets
or collateral and may fluctuate in response to the market’s perception of these factors as well as current and future repayment rates. Some mortgage-backed securities are backed by the full faith and credit of the U.S. government (e.g.,
mortgage-backed securities issued by the Government National Mortgage Association, commonly known as “Ginnie Mae”), while other mortgage-backed securities (e.g., mortgage-backed securities issued by the Federal National Mortgage
Association and the Federal Home Loan Mortgage Corporation, commonly known as “Fannie Mae” and “Freddie Mac”), are backed only by the credit of the government entity issuing them. In addition, some mortgage-backed securities are
issued by private entities and, as such, are not guaranteed by the U.S. government or any agency or instrumentality of the U.S. government.
h. Treasury Inflation
Protected Securities Treasury inflation protected securities (“TIPS”) are debt securities issued by the U.S. Treasury whose principal and/or interest payments are adjusted for inflation, unlike debt securities that make fixed principal
and interest payments. The interest rate paid by the TIPS is fixed, while the principal value rises or falls based on changes in a published Consumer Price Index (“CPI”). Thus, if inflation occurs, the principal and interest payments on
TIPS are adjusted accordingly to protect investors from inflationary loss. During a deflationary period, the principal and interest payments decrease, although the TIPS principal amounts will not drop below their face amounts at maturity. In
exchange for the inflation protection, the TIPS generally pay lower interest rates than typical U.S. Treasury securities. Only if inflation occurs will TIPS offer a higher real yield than a conventional Treasury bond of the same maturity.
i. LIBOR Risk Many financial instruments may be tied to the London Interbank Offered Rate, or “LIBOR,” to determine payment obligations, financing
terms, hedging strategies, or investment value. LIBOR is the offered rate for short-term Eurodollar deposits between major international banks. On July 27, 2017, the head of the UK Financial Conduct Authority announced a desire to phase out the
use of LIBOR by the end of 2021. Regulators and industry working groups have suggested alternative reference rates, but global consensus is lacking and the process for amending existing contracts or instruments to transition away from LIBOR remains
unclear. There also remains uncertainty and risk regarding the willingness and ability of issuers to include enhanced provisions in new and existing contracts or
instruments. As such, the transition away from LIBOR may lead to increased volatility and illiquidity in markets that are tied to LIBOR, reduced values of LIBOR related investments, and reduced
effectiveness of hedging strategies, adversely affecting the Fund’s performance or NAV. In addition, the alternative reference rate may be an ineffective substitute resulting in prolonged adverse market conditions for the Fund.
j. Disclosures About Derivative Instruments and Hedging Activities The Fund entered into U.S. Treasury futures contracts for the year ended December 31, 2019
to manage portfolio duration. The Fund bears the risk of interest rates moving unexpectedly, in which case the Fund may not achieve the anticipated benefits of the futures contracts and realize a loss. There is minimal counterparty credit risk to
the Funds since futures are exchange traded and the exchange’s clearinghouse, as counterparty to all exchange traded futures, guarantees futures against default.
As of December 31, 2019, the Fund had the following derivatives at fair value, grouped into appropriate risk categories that illustrate the Fund’s use of
derivative instruments:
|
|
|
|
|
| |
|
| |
|
Interest Rate
Contracts |
|
| |
|
| Asset Derivatives |
|
|
|
|
| Futures Contracts1 |
|
$ |
702,240 |
|
| |
| Liability Derivatives |
|
| Futures Contracts1 |
|
$ |
(1,052,866 |
) |
| 1 |
Statement of Assets and Liabilities location: Includes cumulative unrealized appreciation/(depreciation) of futures
contracts as reported in the Schedule of Investments. Only current day’s variation margin is reported within the Statements of Assets and Liabilities. |
Transactions in derivative investments for the year ended December 31, 2019 were as follows:
|
|
|
|
|
| |
|
| |
|
Interest Rate
Contracts |
|
| |
|
| Net Realized Gain (Loss) |
|
|
|
|
| Futures Contracts1 |
|
$ |
2,864,137 |
|
| |
| Net Change in Unrealized
Appreciation/(Depreciation) |
|
| Futures Contracts2 |
|
$ |
(740,607 |
) |
| |
|
| Average Number of Notional Amounts |
|
|
|
|
| Futures Contracts3 |
|
|
884 |
|
| 1 |
Statement of Operations location: Net realized gain/(loss) from futures contracts. |
| 2 |
Statement of Operations location: Net change in unrealized appreciation/(depreciation) on futures contracts.
|
| 3 |
Amount represents number of contracts.
|
NOTES TO FINANCIAL STATEMENTS — GUARDIAN CORE PLUS FIXED INCOME VIP FUND
6. Temporary Borrowings
The
Fund, with other funds managed by Park Avenue, is party to a $10 million committed revolving credit facility from State Street Bank and Trust Company for temporary borrowing purposes, including the meeting of redemption requests that otherwise
might require the untimely disposition of securities. Interest is calculated based on the higher of the daily one-month LIBOR rate and the Federal Funds rate plus 1.25% at the time of borrowing. In addition to
the interest charged on any borrowings by the Fund, each fund pays a commitment fee of 0.30% per annum on its share of the unused portion of the credit facility. The agreement is in place until December 9, 2020. The Fund did not utilize the
credit facility during the year ended December 31, 2019.
7. Indemnifications
Under the Trust’s organizational documents and, in some cases, by contract, its officers and trustees are indemnified against certain liabilities arising out of the
performance of their duties to the Fund. In addition, in the normal course of business, the Fund enters into contracts with its vendors and others that provide
general indemnifications. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred.
However, based on experience, the Fund expects the risk of loss to be remote.
8. Recent Accounting Pronouncement
In March 2017, the FASB issued Accounting Standards Update 2017-08, Receivables — Nonrefundable Fees and Other Costs
(Subtopic 310-20): “Premium Amortization on Purchased Callable Debt Securities” (“ASU 2017-18”). ASU
2017-08 provides guidance related to the amortization period for certain purchased callable debt securities held at a premium. ASU 2017-08 is effective for annual
periods, and interim periods within those annual periods, that begin after December 15, 2018. As such, the Schedule of Investments and financial statements herein have been updated to conform with ASU
2017-08. The amortized cost was reduced and unrealized appreciation of investments was increased by immaterial amounts, and had no impact on net assets or overall results of operations.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees of Guardian Variable Products Trust and Shareholders of
Guardian Core Plus Fixed Income VIP Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Guardian Core Plus Fixed Income VIP Fund (one of
the funds constituting Guardian Variable Products Trust, referred to hereafter as the “Fund”) as of December 31, 2019, and the related statement of operations for the year ended December 31, 2019, the statement of changes in net
assets for each of the two years in the period ended December 31, 2019, including the related notes, and the financial highlights for each of the periods indicated therein (collectively referred to as the “financial
statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2019, the results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period ended December 31, 2019 and the financial highlights for each of the periods indicated therein in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility
of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States)
(PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing
procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the
amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our
procedures included confirmation of securities owned as of December 31, 2019 by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits
provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
New
York, New York
February 20, 2020
We have served as the auditor of one or
more investment companies in Guardian Variable Products Trust since 2016.
SUPPLEMENTAL INFORMATION (UNAUDITED)
Trustees and Officers Information Table
The following table provides information about the Trustees of the Trust.
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
Name and
Year of Birth |
|
Term of Office,
Position(s) Held and Length of
Service1 |
|
Principal
Occupation(s) During Past Five Years |
|
Number of
Funds
in Fund
Complex Overseen
by Trustees2 |
|
Other Directorships
Held by Trustee |
| Independent Trustees |
| |
|
|
|
|
| Bruce W. Ferris3
(born 1955) |
|
Trustee |
|
Retired (since 2015); President and CEO, Prudential Annuities Distributors, Inc. (2013–2015); Director/Trustee, Advanced Series Trust, The Prudential Series Fund and Prudential’s
Gibraltar Fund, Inc. (2013–2015); Senior Vice President, Prudential Annuities (2008-2015). |
|
16 |
|
None. |
| |
|
|
|
|
| Theda R. Haber3
(born 1954) |
|
Trustee |
|
Adjunct Assistant Professor of Law, UC Hastings College of Law (since 2013); Member of the Board of Directors, Fairholme Trust Company, LLC (2015–2019); Attorney, Law Office of Theda R.
Haber (since 2014); Visiting Professor of Law, UC Davis School of Law (since 2014); Consultant, Haber & Associates LLC (financial services industry), (2012–2017); Advisory Council Chair, Vice Chair, and Member, Advisory Council on
Employee Welfare and Pension Benefit Plans (ERISA Advisory Council), U.S. Department of Labor (2009–2011); Managing Director and General Counsel, BlackRock Institutional Trust Company, N.A. (2009–2011); Deputy Global General Counsel,
Barclays Global Investors (2006–2009); Managing Director, Barclays Global Investors (1998-2006). |
|
16 |
|
None. |
| |
|
|
|
|
| Marshall
Lux3 (born 1960) |
|
Trustee |
|
Senior Advisor, The Boston Consulting Group (since 2014); Senior Partner and Managing Director, The Boston Consulting Group (2009–2014). |
|
16 |
|
None. |
| |
|
|
|
|
| Lisa K.
Polsky3 (born 1956) |
|
Trustee |
|
Board Member, MFA Financial, Inc. (real estate investment trust) (since 2020); Advisor, SMBC Americas (financial services) (since 2020); Senior Risk Advisor, AQR (investment management)
(2016–2019); Senior Risk Advisor, Ultra Capital (venture capital) (2016–2019); Board Member, DB USA Corporation (Deutsche Bank Intermediate Holding Company) (financial services) (since 2016); Chief Risk Officer, CIT Group Inc. (financial
services) (2010–2015); Board Member and Chair of Audit Committee, Piper Jaffray (investment bank) (2007–2016). |
|
16 |
|
None. |
| |
|
|
|
|
| John
Walters3 (born 1962) |
|
Lead Independent
Trustee |
|
Board Member, Amerilife Holdings LLC (insurance distribution) (since 2015); Board Member, Stadion Money Management LLC (investment adviser) (since 2011); President and Chief Operating Officer,
Hartford Life Insurance Company (2000–2010). |
|
16 |
|
Trustee, USAA Mutual Funds Trust, (One registered investment company offering 47 individual funds) (since
2019). |
SUPPLEMENTAL INFORMATION (UNAUDITED)
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
Name and
Year of Birth |
|
Term of Office,
Position(s) Held and Length of
Service1 |
|
Principal
Occupation(s) During Past Five Years |
|
Number of
Funds
in Fund
Complex Overseen
by Trustees2 |
|
Other Directorships
Held by Trustee |
| Interested Trustees |
| |
|
|
|
|
| Dominique Baede4 (born 1970) |
|
Trustee
(Since
January 2020) |
|
Vice President, Head of Product, Life, Annuity and Inforce, The Guardian Life Insurance Company of America (since 2019); Managing Director, Product Management Group, AXA Equitable (insurance
company) prior thereto. |
|
16 |
|
None. |
| |
|
|
|
|
| Michael
Ferik4 (born 1972) |
|
Chairman and Trustee (Since
December 2019) |
|
Executive Vice President, Individual Markets, The Guardian Life Insurance Company of America (since 2020); Executive Vice President and Chief Financial Officer, The Guardian Life Insurance
Company of America (2017–2019); Executive Vice President, Individual Markets, The Guardian Life Insurance Company of America prior thereto. |
|
16 |
|
None. |
| 1 |
Except as otherwise noted, each Trustee began service in such capacity in 2016 and serves until his or her successor is
elected and qualified or until his or her resignation, death or removal. The business address of each Trustee is 10 Hudson Yards, New York, New York 10001. |
| 2 |
The Trust currently consists of 16 separate Funds. |
| 3 |
Member of the Audit Committee of the Trust. |
| 4 |
Each of Dominique Baede and Michael Ferik is considered to be an “interested person” of the Trust within the
meaning of the 1940 Act because of their affiliation with The Guardian Life Insurance Company of America and/or its affiliates. |
|
|
|
|
|
| |
|
|
| Name and Year of Birth |
|
Position(s) Held and
Length of Service5 |
|
Principal Occupation(s)
During Past Five Years |
| |
|
|
| Dominique Baede
(born 1970) |
|
President and Principal Executive Officer (Since January 2020) |
|
Vice President, Head of Product, Life, Annuity and Inforce, The Guardian Life Insurance Company of America (since 2019); Managing Director,
Product Management Group, AXA Equitable (insurance company) prior thereto. |
| |
|
|
| John H. Walter
(born 1962) |
|
Senior Vice President, Treasurer, and Principal Financial and Accounting Officer |
|
Vice President, Director of Finance, Corporate Finance, The Guardian Life Insurance Company of America. |
| |
|
|
| Harris Oliner
(born 1971) |
|
Senior Vice President and Secretary |
|
Senior Vice President, Corporate Secretary, The Guardian Life Insurance Company of America (since 2015); Senior Vice President, Deputy
General Counsel, Corporate Secretary, Voya Financial, Inc. prior thereto. |
| |
|
|
| Richard T. Potter
(born 1954) |
|
Senior Vice President and Chief Legal Officer |
|
Vice President and Equity Counsel, The Guardian Life Insurance Company of America. |
| |
|
|
| Philip Stack
(born 1964) |
|
Chief Compliance Officer
(Since September 2017) |
|
Second Vice President, Mutual Fund Chief Compliance Officer, The Guardian Life Insurance Company of America (since 2017); Executive Director,
Chief Compliance Officer, Morgan Stanley (2015–2017); Vice President, Morgan Stanley prior thereto. |
| |
|
|
| Brian Hagan
(born 1984) |
|
Anti-Money Laundering Officer (Since March 2019) |
|
Assistant Vice President (since 2019), Anti-Money Laundering Compliance, The Guardian Life Insurance Company of America/Park Avenue
Securities LLC; Vice President, Head of Financial Intelligence Unit, Brown Brothers Harriman & Co. (2014–2019); Assistant Vice President, AML Compliance Manager, JPMorgan Chase & Co. (2011–2014). |
| |
|
|
| Kathleen M. Moynihan
(born 1966) |
|
Senior Counsel |
|
Second Vice President, Counsel (since 2019), The Guardian Life Insurance Company of America; Senior Counsel prior thereto. |
| |
|
|
| Maria Nydia Morrison
(born 1958) |
|
Fund Controller |
|
Mutual Fund Controller, The Guardian Life Insurance Company of America (since 2015); Chief Financial Officer/Assistant Operating Officer, St.
Francis De Assisi Montessori School (Plaridel, Bulacan), Inc. (Philippines) prior thereto. |
| |
|
|
| Sonya L. Crosswell
(born 1977) |
|
Assistant Secretary |
|
Assistant Vice President, Assistant Corporate Secretary and Secretary Pro Tem, The Guardian Life Insurance Company of America. |
| 5 |
Unless otherwise indicated, the Officers each began service in such capacity in 2016 and hold office for an indefinite
term or until their successors shall have been elected and qualified. The business address of each Officer is 10 Hudson Yards, New York, New York 10001. |
SUPPLEMENTAL INFORMATION (UNAUDITED)
The Statement of Additional Information (“SAI”) includes additional information about
the Trust’s Trustees and Officers and is available, without charge, upon request by calling toll-free 1-888-GUARDIAN (1-888-482-7342) or by visiting our website at http://guardianvpt.onlineprospectus.net/GuardianVPT/Prospectuses.
Portfolio Holdings and Proxy Voting Procedures
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year as an exhibit
to its reports on Form N-PORT. The Fund’s Form N-PORT reports are available on the Securities and Exchange Commission’s website at https://www.sec.gov. The
Fund’s Form N-PORT information is also available, without charge, upon request, by calling toll-free 1-888-GUARDIAN (1-888-482-7342) or by visiting our website at http://guardianvpt.onlineprospectus.net/GuardianVPT/
Prospectuses.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio
securities is included in the SAI. The SAI and information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 may be obtained
(i) without charge, upon request, by calling toll-free 1-888-GUARDIAN (1-888-482-7342) or by visiting our website at http://guardianvpt.onlineprospectus.net/GuardianVPT/
Prospectuses; and (ii) on the Securities and Exchange Commission’s website at
https://www.sec.gov.
This report is transmitted to shareholders only. It is not authorized for use as an offer of sale or a solicitation of an offer to buy shares of the Fund unless
accompanied or preceded by the Fund’s current prospectus. Past performance results shown in this report should not be considered a representation of future performance. Investment returns and principal value of shares will fluctuate so that
shares, when redeemed, may be worth more or less than their original cost. Statements and other information herein are as dated and are subject to change.
The Guardian Life Insurance Company of America New York, NY 10001-2159
PUB8167
Guardian Variable
Products Trust
2019
Annual Report
All Data as of December 31, 2019
Guardian Multi-Sector
Bond VIP Fund
Important Notice
Beginning on January
1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund’s shareholder reports will no longer be sent by mail from The Guardian Insurance & Annuity Company, Inc. (“GIAC”).
Instead, GIAC will mail you a notice when copies of the shareholder reports are made available on a website. You will be notified by mail each time a report is posted and provided with a website link to access the report.
If you have already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. If you have not yet
elected electronic delivery, at any time, you may elect to receive the Fund’s shareholder reports and certain other communications from GIAC electronically, by going to www.guardianlife.com and registering for e-delivery.
You may instead elect to receive all future shareholder reports in paper free of charge. If you wish to receive paper copies of your shareholder reports, please call
GIAC’s Customer Service Office Contact Center at 1-888-GUARDIAN (1-888-482-7342). Your election to receive reports in paper will apply to all the underlying funds available.
|
|
|
| Not FDIC insured. May lose value. No bank guarantee. |
|
www.guardianlife.com |
TABLE OF CONTENTS
Guardian Multi-Sector Bond VIP Fund
Except as otherwise specifically stated, all information, including portfolio security positions, is as of
December 31, 2019. The views expressed in the Fund Commentary are those of the Fund’s portfolio manager(s) as of the date of this report and are subject to change without notice. They do not necessarily represent the views of Park Avenue
Institutional Advisers LLC or a sub-adviser. The Fund Commentary may contain some forward-looking statements providing expectations or forecasts of future events as of the date of this report; they do not
necessarily relate to historical or current facts. There can be no guarantee that any forward-looking statement will be realized. We undertake no obligation to update forward-looking statements, whether as a result of new information, future events,
or otherwise. Any discussions of specific securities should not be considered a recommendation to buy or sell those securities. Fund holdings will vary. Information contained herein has been obtained from sources believed reliable, but is not
guaranteed.
GUARDIAN MULTI-SECTOR BOND VIP FUND
FUND COMMENTARY OF PARK AVENUE INSTITUTIONAL ADVISERS LLC, INVESTMENT ADVISER (unaudited)
Highlights
| • |
|
Guardian Multi-Sector Bond VIP Fund (the “Fund”) returned 0.30%, underperforming its benchmark, the Bloomberg Barclays U.S. Aggregate Bond Index1 (the
“Index”), for the period between its inception on October 21, 2019 and December 31, 2019. The Index returned 0.35% for the period. |
| • |
|
The Fund’s underperformance relative to the Index was primarily due to its underweight allocation to agency residential mortgage-backed securities (“RMBS”). |
Market Overview
After a woeful 2018, securities markets roared back in 2019.
Returns of 25% or more were commonplace among major equity indexes and returns for traditionally riskier fixed income asset classes also broke into the double digits as the U.S. Federal Reserve (the “Fed”) and other central banks around
the world reassured investors and encouraged risk taking by cutting interest rates.
The rally defied a daunting array of real and potential threats at home and
abroad: cooling economies and heated politics; trade disputes; volatile energy prices; Brexit drama; the impeachment of President Trump; high valuations for many asset classes; and potential early warning signs of recession in the Treasury market.
While these concerns caused bursts of anxiety, investors mostly took comfort from central bank support, steady (if lackluster) economic growth, extremely low unemployment, and strong consumer spending.
The Standard & Poor’s 500® Index2
returned 31.49% for the year. In fixed income, the U.S. 10-year Treasury returned 8.9%.
The market’s momentum was
firmly established by the potent rally in the first quarter after the Fed dramatically reversed its formerly bullish tone on the U.S. economy and indicated it could soon switch from raising interest rates to cutting them, which it did three times
during the
year. The cuts came amid diminishing expectations for economic growth, escalating trade tensions, and a persistent inversion of the U.S. Treasury yield curve. In such yield curve inversions,
which have been a reliable sign that a recession was coming within a year or two, yields on certain shorter-term U.S. Treasurys exceed yields on longer-term notes.
Despite the inversion of the U.S. Treasury yield curve, which has since resolved, most economists are not forecasting a recession within the year given the very low
unemployment rate and generally positive, if diminished, economic momentum. The Fed is estimating 2020 economic growth at, or slightly below, 2.0% and inflation slightly below its 2.0% target. Unemployment, most recently at 3.5%, is expected to
remain below 4.0%.
Portfolio Review
The Fund’s underweights in
RMBS and AAA- through A-rated corporate bonds with maturities over 25 years detracted from relative performance. We viewed an emphasis on less volatile bonds as prudent,
and this also detracted from relative performance given the risk-on market during the period.
In a period when
longer-maturity securities outperformed, the Fund benefitted from having a duration longer than the Index. The Fund’s overweight in BBB-rated corporate bonds with maturities of 3 to 10 years was the
largest contributor to performance relative to the Index. An out-of-Index allocation to high-yield corporate bonds also contributed to relative performance as riskier
assets outperformed in the period.
Outlook
We believe that while the
Fed’s renewed focus on supporting economic growth may bear fruit slowly for the U.S. economy, it had a soothing impact on securities markets throughout 2019. We believe that much will continue to depend on whether investors view central banks
as both committed to supporting growth and capable of doing so.
| 1 |
The Bloomberg Barclays U.S. Aggregate Bond Index (the “Index”) is an index of U.S dollar-denominated,
investment-grade U.S. government and corporate securities, and mortgage pass-through securities, and asset-backed securities. You may not invest in the Index and, unlike the Fund, the Index does not incur fees or expenses. |
| 2 |
The Standard & Poor’s 500® Index (the “S&P
500 Index”) is an unmanaged market-capitalization-weighted index generally considered to be representative of U.S. equity market activity. The S&P 500 Index consists of 500 stocks representing leading industries of the U.S. economy. Index
results assume the reinvestment of dividends paid on the stocks constituting the Index. You may not invest in the S&P 500 Index, and, unlike the fund, the S&P 500 Index does not incur fees or expenses. |
GUARDIAN MULTI-SECTOR BOND VIP FUND
However, risks appear to be growing as valuations and corporate debt levels increase while the current expansion, already
the longest ever, continues to age. We would note that a market leaning too heavily on central bank support could be fragile if the Fed proves unwilling or unable to prevent a downturn. We continue to view global growth concerns, domestic politics,
trade tensions, and energy prices as key potential catalysts for shifts in risk.
As we attempt to balance the genuine benefit of current Fed policy and the minimal risk of imminent recession with the
fact that the economy is decelerating and there are few obvious catalysts to boost returns, we believe it is important to take a disciplined approach to risk. We are not counting on broad-based spread tightening or short-term trading. We currently
see the greatest potential benefit in generating carry, which means holding investments for yield where we believe that the yield compensates properly for risk.
Funds in the Guardian Variable Products Trust are
sold by prospectus only. You should carefully consider the investment objectives, risks, charges and expenses of the Funds before making an investment decision. The prospectus contains this and other important information. Please read it carefully
before investing or sending money. Please visit our website at http://guardianvpt.onlineprospectus.net/GuardianVPT/ Prospectuses or to obtain a printed copy, call
1-888-GUARDIAN (1-888-482-7342).
As with all mutual funds, the value of an investment in the Fund could decline, and you could lose money. Diversification does not guarantee profit or protect against
loss, and there can be no assurance that the Fund will achieve its investment objective. Bond funds are subject to interest rate risk, credit risk, and prepayment risk. When interest rates rise, bond prices generally fall, and when interest rates
fall, bond prices generally rise. In a lower interest rate environment, the risk that bond prices may fall when interest rates rise is potentially greater. Derivative transactions can create leverage and may be highly volatile. It is possible that a
derivative transaction will result in a loss greater than the principal amount invested and the Fund may not be able to close out a derivative transaction at a favorable time or price. International investing involves special risks, which include
changes in currency rates, foreign taxation and differences in auditing standards and securities regulations, political uncertainty and greater volatility. Foreign securities are subject to political, regulatory, economic, and exchange-rate risks
not present in domestic investments. These risks are even greater when investing in emerging markets. The value of a debt security is affected by changes in interest rates and is subject to any credit risk of the issuer or guarantor of the security.
Any discussions of specific securities should not be considered a recommendation to buy or sell those securities. Fund holdings will vary.
GUARDIAN MULTI-SECTOR BOND VIP FUND
Fund Characteristics (unaudited)
|
|
|
| Total Net Assets: $309,876,941 |
|
|
|
| |
|
Bond Sector Allocation1
As of December 31, 2019 |
|
| |
|
Bond Quality Allocation2
As of December 31, 2019 |
|
GUARDIAN MULTI-SECTOR BOND VIP FUND
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
| Top Ten Holdings1 As of December 31, 2019 |
|
|
|
|
|
|
|
|
|
| |
|
|
|
| Holding |
|
Coupon Rate |
|
|
Maturity Date |
|
|
% of Total
Net Assets |
|
| U.S. Treasury Note |
|
|
1.500% |
|
|
|
9/30/2024 |
|
|
|
19.68% |
|
| U.S. Treasury Note |
|
|
1.500% |
|
|
|
9/30/2021 |
|
|
|
12.91% |
|
| U.S. Treasury Bond |
|
|
2.250% |
|
|
|
8/15/2049 |
|
|
|
3.14% |
|
| Comcast Corp. |
|
|
4.150% |
|
|
|
10/15/2028 |
|
|
|
1.63% |
|
| Citigroup, Inc. |
|
|
4.075% |
|
|
|
4/23/2029 |
|
|
|
1.41% |
|
| WRKCo, Inc. |
|
|
4.900% |
|
|
|
3/15/2029 |
|
|
|
1.10% |
|
| The Kroger Co. |
|
|
4.500% |
|
|
|
1/15/2029 |
|
|
|
1.09% |
|
| AT&T, Inc. |
|
|
4.350% |
|
|
|
3/1/2029 |
|
|
|
1.08% |
|
| Verizon Communications, Inc. |
|
|
5.150% |
|
|
|
9/15/2023 |
|
|
|
1.08% |
|
| MPLX LP |
|
|
4.800% |
|
|
|
2/15/2029 |
|
|
|
1.06% |
|
| Total |
|
|
|
|
|
|
|
|
|
|
44.18% |
|
| 1 |
Portfolio holdings are subject to change and should not be considered a recommendation to buy or sell individual
securities. Cash includes short-term investments and net other assets and liabilities. |
| 2 |
The Bond Quality Allocation chart displays the percentage of fund assets allocated to each rating. Rating
agencies’ independent ratings of individual securities are aggregated by Barclays, and market weights are reported using Standard & Poor’s letter rating conventions. Rating methodology uses the middle rating of Moody’s
Investors Service, Inc., Standard & Poor’s Ratings Services, and Fitch Ratings. When a rating from only two of the rating agencies is available, the lower rating is used. Credit quality ratings assigned by a rating agency are subject
to change periodically and are not absolute standards of credit quality. Rating agencies may fail to make timely changes in credit ratings, and an issuer’s current financial condition may be better or worse than a rating indicates. In
formulating investment decisions for the Fund, Park Avenue Institutional Advisers LLC develops its own analysis of the credit quality and risks associated with individual debt instruments, rather than relying exclusively on rating agency ratings.
|
Fund Performance (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
| Average Annual Total Returns
As of December 31, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
| |
|
Inception Date |
|
|
1 Year |
|
|
5 Year |
|
|
10 Year |
|
|
Since Inception* |
|
| Guardian Multi-Sector Bond VIP Fund |
|
|
10/21/2019 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.30% |
|
| Bloomberg Barclays U.S. Aggregate Bond Index |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.35% |
|
| * |
Since inception returns are not annualized and represent cumulative total returns. |
Performance quoted represents past performance and does not guarantee or predict future results. Investment return and principal value will fluctuate, so shares, when
redeemed, may be worth more or less than their original cost. The Fund’s fees and expenses are detailed in the Financial Highlights section of this report. Fees and expenses are factored into the net asset value of Fund shares and any
performance numbers we release. Total return figures include the effect of expense limitations in effect during the periods shown, if applicable; without such limitations, the performance shown would have been lower. Performance results assume the
reinvestment of dividends and capital gains. The return figures shown do not reflect the deduction of taxes that a contract owner/policyholder may pay on redemption units. The actual total returns for owners of variable annuity contracts or variable
life insurance policies that provide for investment in the Fund will be lower to reflect separate account and contract/policy charges. Current and month-end performance information, which may be lower or
higher than that cited, is available by calling 1-888-GUARDIAN
(1-888-482-7342) and is periodically updated on our website: http://guardianlife.com.
UNDERSTANDING YOUR FUND’S EXPENSES (UNAUDITED)
By investing in the Fund, you incur two types of costs: (1) transaction costs and (2) ongoing costs, including, as
applicable, investment advisory fees, distribution and/or service (12b-1) fees and other Fund expenses. The example below is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the
ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire
period from October 21, 2019 (commencement of operations), to December 31, 2019. The table below shows the Fund’s expenses in two ways:
Expenses
based on actual return
This section of the table provides information about actual account values and actual expenses. You may use the information in this
section, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the
number in the section under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Expenses based on hypothetical 5% return for comparison purposes
This section of the table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund with the cost of investing in other mutual funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the
other funds.
Note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads), redemption fees, or exchange fees. Therefore the second section is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. If these transactional costs were
included, your costs would have been higher. Charges and expenses at the insurance company separate account level are not reflected in the table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
| |
|
Beginning
Account Value
7/1/19 |
|
Ending
Account Value
12/31/19 |
|
|
Expenses Paid
During Period
7/1/19-12/31/19 |
|
|
Expense Ratio
During Period
7/1/19-12/31/19 |
|
| Based on Actual Return* |
|
$1,000.00 |
|
|
$1,003.00 |
|
|
|
$1.94 |
|
|
|
0.98% |
|
| Based on Hypothetical Return (5% Return Before Expenses)** |
|
$1,000.00 |
|
|
$1,020.27 |
|
|
|
$4.99 |
|
|
|
0.98% |
|
| * |
Expenses are equal to the Fund’s annualized expense ratio as indicated, multiplied by the average account value over
the period, multiplied by 72/365 (to reflect the period from October 21, 2019 (commencement of operations) through December 31, 2019). |
| ** |
Expenses (hypothetical expenses if the Fund had been in existence from 7/1/2019) are equal to the Fund’s annualized
expense ratio as indicated, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). |
SCHEDULE OF INVESTMENTS — GUARDIAN MULTI-SECTOR BOND VIP FUND
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Principal
Amount |
|
|
Value |
|
| Agency Mortgage–Backed Securities – 1.7% |
|
| |
|
|
| Freddie Mac Multifamily Structured Pass-Through
Certificates |
|
|
|
|
|
|
|
|
| K035 A2
3.458% due 8/25/2023(1)(2) |
|
$ |
1,000,000 |
|
|
$ |
1,046,925 |
|
| K054 A2
2.745% due 1/25/2026 |
|
|
1,000,000 |
|
|
|
1,029,509 |
|
| K058 A2
2.653% due 8/25/2026 |
|
|
2,000,000 |
|
|
|
2,049,335 |
|
| K064 A2
3.224% due 3/25/2027 |
|
|
1,200,000 |
|
|
|
1,269,972 |
|
| |
|
|
|
|
|
|
|
|
| |
|
Total Agency Mortgage–Backed Securities
(Cost $5,434,114) |
|
|
|
5,395,741 |
|
| Asset–Backed Securities – 9.4% |
|
| |
|
|
| Ally Master Owner Trust
2017-3 A2
2.04% due 6/15/2022 |
|
|
800,000 |
|
|
|
799,872 |
|
| |
|
|
| American Express Credit Account Master Trust
2019-1 A
2.87% due 10/15/2024 |
|
|
3,000,000 |
|
|
|
3,065,167 |
|
| |
|
|
| AmeriCredit Automobile Receivables Trust
2017-1 C
2.71% due 8/18/2022 |
|
|
1,500,000 |
|
|
|
1,509,061 |
|
| |
|
|
| Avis Budget Rental Car Funding AESOP LLC
2015-2A A
2.63% due 12/20/2021(3) |
|
|
1,500,000 |
|
|
|
1,504,697 |
|
| |
|
|
| BlueMountain CLO Ltd.
2014-2A BR2
3.716% (LIBOR 3 Month + |
|
|
|
|
|
|
|
|
| 1.75%)
due
10/20/2030(1)(3) |
|
|
600,000 |
|
|
|
597,155 |
|
| |
|
|
| CarMax Auto Owner Trust
2016-3 A4
1.60% due 1/18/2022 |
|
|
1,500,000 |
|
|
|
1,496,542 |
|
| |
|
|
| Citibank Credit Card Issuance Trust
2014-A1 A1
2.88% due 1/23/2023 |
|
|
2,300,000 |
|
|
|
2,323,526 |
|
| |
|
|
| CNH Equipment Trust
2017-B A4
2.17% due 4/17/2023 |
|
|
1,500,000 |
|
|
|
1,502,548 |
|
| |
|
|
| Discover Card Execution Note Trust
2015-A4 A4
2.19% due 4/17/2023 |
|
|
1,000,000 |
|
|
|
1,002,781 |
|
| |
|
|
| Enterprise Fleet Financing LLC
2019-1 A2
2.98% due 10/20/2024(3) |
|
|
1,500,000 |
|
|
|
1,514,431 |
|
| |
|
|
| Ford Credit Auto Owner Trust
2016-2 A
2.03% due 12/15/2027(3) |
|
|
1,000,000 |
|
|
|
1,000,162 |
|
| |
|
|
| GM Financial Automobile Leasing Trust
2019-1 A3
2.98% due 12/20/2021 |
|
|
1,000,000 |
|
|
|
1,008,819 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Principal
Amount |
|
|
Value |
|
| Asset–Backed Securities (continued) |
|
| |
|
|
| GM Financial Consumer Automobile Receivables Trust 2018-2 B
3.12% due 12/18/2023 |
|
$
|
1,500,000 |
|
|
$
|
1,530,281 |
|
| |
|
|
| Hyundai Auto Receivables Trust
2019-A A3
2.66% due 6/15/2023 |
|
|
1,275,000 |
|
|
|
1,288,695 |
|
| |
|
|
| ICG U.S. CLO Ltd.
2018-2A B
3.703% (LIBOR 3 Month + |
|
|
|
|
|
|
|
|
| 1.75%) due
7/22/2031(1)(3) |
|
|
1,500,000 |
|
|
|
1,475,306 |
|
| |
|
|
| John Deere Owner Trust
2018-A A3
2.66% due 4/18/2022 |
|
|
830,741 |
|
|
|
833,871 |
|
| |
|
|
| Santander Drive Auto Receivables Trust
2016-3 D
2.80% due 8/15/2022 |
|
|
1,500,000 |
|
|
|
1,509,266 |
|
| |
|
|
| Verizon Owner Trust
2019-A A1A
2.93% due 9/20/2023 |
|
|
1,000,000 |
|
|
|
1,016,353 |
|
| |
|
|
| Volkswagen Auto Loan Enhanced Trust
2018-1 A4
3.15% due 7/22/2024 |
|
|
1,000,000 |
|
|
|
1,021,974 |
|
| |
|
|
| Voya CLO Ltd.
2016-3A A3R
3.753% (LIBOR 3 Month + |
|
|
|
|
|
|
|
|
| 1.75%) due
10/18/2031(1)(3) |
|
|
1,200,000 |
|
|
|
1,195,128 |
|
| |
|
|
| Wendy’s Funding LLC
2018-1A A2I
3.573% due 3/15/2048(3) |
|
|
980,000 |
|
|
|
990,241 |
|
| |
|
|
| World Omni Auto Receivables Trust
2017-A A4
2.24% due 6/15/2023 |
|
|
918,000 |
|
|
|
920,838 |
|
| |
|
|
|
|
|
|
|
|
| |
|
Total Asset–Backed Securities
(Cost $29,089,578) |
|
|
|
29,106,714 |
|
| Corporate Bonds & Notes – 48.4% |
|
| |
| Aerospace & Defense – 2.6% |
|
| |
|
|
| Northrop Grumman Corp.
3.20% due
2/1/2027 |
|
|
3,000,000 |
|
|
|
3,122,308 |
|
| |
| United Technologies Corp. |
|
| 3.75% due 11/1/2046 |
|
|
2,000,000 |
|
|
|
2,179,530 |
|
| 4.125% due 11/16/2028 |
|
|
2,500,000 |
|
|
|
2,812,735 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
8,114,573 |
|
| Agriculture – 1.0% |
|
| |
|
|
| BAT Capital Corp.
3.462% due 9/6/2029 |
|
|
2,000,000 |
|
|
|
2,023,319 |
|
| |
|
|
| Philip Morris International, Inc.
4.25% due
11/10/2044 |
|
|
1,000,000 |
|
|
|
1,105,719 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
3,129,038 |
|
| Beverages – 2.9% |
|
| |
|
|
| Anheuser-Busch InBev Worldwide, Inc.
4.75% due
1/23/2029 |
|
|
2,500,000 |
|
|
|
2,897,924 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 6 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
SCHEDULE OF INVESTMENTS — GUARDIAN MULTI-SECTOR BOND VIP FUND
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Principal
Amount |
|
|
Value |
|
| Beverages (continued) |
|
| |
|
|
| Constellation Brands, Inc.
3.70% due
12/6/2026 |
|
$
|
3,000,000 |
|
|
$
|
3,185,773 |
|
| |
|
|
| Diageo Capital PLC
2.125% due 10/24/2024 |
|
|
3,000,000 |
|
|
|
3,000,701 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
9,084,398 |
|
| Biotechnology – 0.7% |
|
|
|
|
|
|
|
|
| |
|
|
| Gilead Sciences, Inc.
3.70% due 4/1/2024 |
|
|
2,000,000 |
|
|
|
2,121,057 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
2,121,057 |
|
| Commercial Banks – 3.1% |
|
| |
|
|
| Citigroup, Inc.
4.075% (4.075% fixed
rate |
|
|
|
|
|
|
|
|
| until 4/23/2028; LIBOR
3 Month + 1.192%
thereafter)
due 4/23/2029(1) |
|
|
4,000,000 |
|
|
|
4,378,714 |
|
| |
|
|
| Credit Suisse Group AG
3.869% (3.869% fixed
rate |
|
|
|
|
|
|
|
|
| until 1/12/2028; LIBOR
3 Month + 1.41%
thereafter)
due 1/12/2029(1)(3) |
|
|
3,000,000 |
|
|
|
3,196,723 |
|
| |
|
|
| JPMorgan Chase & Co.
4.25% due
10/15/2020 |
|
|
2,000,000 |
|
|
|
2,035,545 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
9,610,982 |
|
| Commercial Services – 0.7% |
|
| |
|
|
| Nielsen Finance LLC / Nielsen Finance Co.
5.00%
due 4/15/2022(3) |
|
|
1,000,000 |
|
|
|
1,003,750 |
|
| |
|
|
| United Rentals North America, Inc. 6.50% due
12/15/2026 |
|
|
1,000,000 |
|
|
|
1,099,063 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
2,102,813 |
|
| Diversified Financial Services – 1.1% |
|
| |
|
|
| Apollo Management Holdings LP 4.872% due 2/15/2029(3) |
|
|
2,000,000 |
|
|
|
2,246,603 |
|
| |
|
|
| Jefferies Group LLC / Jefferies Group Capital
Finance, Inc.
4.15% due 1/23/2030 |
|
|
1,000,000 |
|
|
|
1,060,480 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
3,307,083 |
|
| Electric – 1.5% |
|
| |
|
|
| CenterPoint Energy, Inc.
2.95% due
3/1/2030 |
|
|
2,500,000 |
|
|
|
2,464,947 |
|
| |
|
|
| FirstEnergy Corp.
3.90% due 7/15/2027 |
|
|
2,000,000 |
|
|
|
2,139,348 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
4,604,295 |
|
| Environmental Control – 0.7% |
|
| |
|
|
| Waste Management, Inc.
3.45% due
6/15/2029 |
|
|
2,000,000 |
|
|
|
2,141,912 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
2,141,912 |
|
| Food – 2.2% |
|
| |
|
|
| Post Holdings, Inc.
5.00% due 8/15/2026(3) |
|
|
1,000,000 |
|
|
|
1,056,250 |
|
| |
|
|
| The Kroger Co.
4.50% due 1/15/2029 |
|
|
3,000,000 |
|
|
|
3,375,434 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Principal
Amount |
|
|
Value |
|
| Food (continued) |
|
|
|
|
|
|
|
|
| |
|
|
| Tyson Foods, Inc.
4.35% due 3/1/2029 |
|
$
|
2,000,000 |
|
|
$
|
2,267,208 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
6,698,892 |
|
| Healthcare – Services – 1.4% |
|
| |
|
|
| HCA, Inc.
5.375% due 2/1/2025 |
|
|
1,000,000 |
|
|
|
1,105,830 |
|
| |
|
|
| Tenet Healthcare Corp.
6.75% due
6/15/2023 |
|
|
1,000,000 |
|
|
|
1,098,710 |
|
| |
|
|
| UnitedHealth Group, Inc.
3.875% due
12/15/2028 |
|
|
2,000,000 |
|
|
|
2,214,555 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
4,419,095 |
|
| Insurance – 1.5% |
|
| |
|
|
| American International Group, Inc.
4.75% due
4/1/2048 |
|
|
2,000,000 |
|
|
|
2,411,635 |
|
| |
|
|
| Aon PLC
3.875% due 12/15/2025 |
|
|
2,000,000 |
|
|
|
2,152,732 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
4,564,367 |
|
| Iron & Steel – 0.3% |
|
| |
|
|
| Steel Dynamics, Inc.
3.45% due 4/15/2030 |
|
|
1,000,000 |
|
|
|
1,011,879 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
1,011,879 |
|
| Lodging – 0.4% |
|
| |
|
|
| MGM Resorts International
5.50% due
4/15/2027 |
|
|
1,000,000 |
|
|
|
1,110,000 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
1,110,000 |
|
| Media – 3.0% |
|
| |
|
|
| Altice Financing S.A.
7.50% due 5/15/2026(3) |
|
|
1,000,000 |
|
|
|
1,075,000 |
|
| |
|
|
| CCO Holdings LLC / CCO Holdings Capital Corp.
5.00% due 2/1/2028(3) |
|
|
1,000,000 |
|
|
|
1,049,320 |
|
| |
|
|
| Charter Communications Operating LLC / Charter
Communications Operating Capital
5.05% due 3/30/2029 |
|
|
1,000,000 |
|
|
|
1,134,657 |
|
| |
|
|
| Comcast Corp.
4.15% due 10/15/2028 |
|
|
4,500,000 |
|
|
|
5,068,548 |
|
| |
|
|
| Discovery Communications LLC 4.125% due
5/15/2029 |
|
|
1,000,000 |
|
|
|
1,080,853 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
9,408,378 |
|
| Oil & Gas – 4.0% |
|
| |
|
|
| BP Capital Markets PLC
3.535% due
11/4/2024 |
|
|
3,000,000 |
|
|
|
3,195,252 |
|
| |
|
|
| Hess Corp.
4.30% due 4/1/2027 |
|
|
2,000,000 |
|
|
|
2,132,847 |
|
| |
|
|
| Marathon Petroleum Corp.
3.80% due
4/1/2028 |
|
|
2,000,000 |
|
|
|
2,105,381 |
|
| |
|
|
| Newfield Exploration Co.
5.375% due
1/1/2026 |
|
|
2,000,000 |
|
|
|
2,169,228 |
|
| |
|
|
| Noble Energy, Inc.
3.85% due 1/15/2028 |
|
|
2,500,000 |
|
|
|
2,641,740 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
12,244,448 |
|
|
|
|
|
|
| The accompanying notes are an integral part of these financial statements. |
|
|
|
7 |
SCHEDULE OF INVESTMENTS — GUARDIAN MULTI-SECTOR BOND VIP FUND
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Principal
Amount |
|
|
Value |
|
| Packaging & Containers – 1.1% |
|
| |
|
|
| WRKCo, Inc.
4.90% due 3/15/2029 |
|
$
|
3,000,000 |
|
|
$
|
3,414,569 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
3,414,569 |
|
| Pharmaceuticals – 3.5% |
|
|
|
|
|
|
|
|
| |
|
|
| AbbVie, Inc.
3.20% due 11/21/2029(3) |
|
|
2,500,000 |
|
|
|
2,543,386 |
|
| |
|
|
| AstraZeneca PLC
3.375% due 11/16/2025 |
|
|
2,000,000 |
|
|
|
2,125,705 |
|
| |
|
|
| Bausch Health Cos., Inc.
6.125% due 4/15/2025(3) |
|
|
1,000,000 |
|
|
|
1,033,230 |
|
| |
|
|
| Becton Dickinson and Co.
3.363% due
6/6/2024 |
|
|
2,000,000 |
|
|
|
2,083,083 |
|
| |
|
|
| CVS Health Corp.
3.25% due 8/15/2029 |
|
|
3,000,000 |
|
|
|
3,049,024 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
10,834,428 |
|
| Pipelines – 2.4% |
|
|
|
|
|
|
|
|
| |
|
|
| Energy Transfer Operating LP
4.95% due
6/15/2028 |
|
|
2,000,000 |
|
|
|
2,191,630 |
|
| |
|
|
| MPLX LP
4.80% due 2/15/2029 |
|
|
3,000,000 |
|
|
|
3,292,804 |
|
| |
|
|
| The Williams Cos., Inc.
3.75% due
6/15/2027 |
|
|
2,000,000 |
|
|
|
2,086,120 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
7,570,554 |
|
| Real Estate Investment Trusts – 4.0% |
|
| |
|
|
| Alexandria Real Estate Equities, Inc.
3.375% due
8/15/2031 |
|
|
3,000,000 |
|
|
|
3,118,487 |
|
| |
|
|
| American Tower Corp.
3.00% due 6/15/2023 |
|
|
3,000,000 |
|
|
|
3,066,354 |
|
| |
|
|
| Brixmor Operating Partnership LP
4.125% due
5/15/2029 |
|
|
2,000,000 |
|
|
|
2,148,764 |
|
| |
|
|
| ERP Operating LP
2.50% due 2/15/2030 |
|
|
2,000,000 |
|
|
|
1,985,888 |
|
| |
|
|
| Mid-America
Apartments LP
3.95% due 3/15/2029 |
|
|
2,000,000 |
|
|
|
2,182,687 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
12,502,180 |
|
| Retail – 2.1% |
|
|
|
|
|
|
|
|
| |
| McDonald’s Corp. |
|
| 2.625% due 9/1/2029 |
|
|
2,000,000 |
|
|
|
2,002,848 |
|
| 4.45% due 9/1/2048 |
|
|
2,000,000 |
|
|
|
2,292,299 |
|
| |
|
|
| Target Corp.
3.375% due 4/15/2029 |
|
|
2,000,000 |
|
|
|
2,174,303 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
6,469,450 |
|
| Semiconductors – 0.7% |
|
|
|
|
|
|
|
|
| |
|
|
| Broadcom, Inc.
4.75% due 4/15/2029(3) |
|
|
2,000,000 |
|
|
|
2,186,966 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
2,186,966 |
|
| Software – 1.3% |
|
|
|
|
|
|
|
|
| |
|
|
| Broadridge Financial Solutions, Inc.
2.90% due
12/1/2029 |
|
|
1,000,000 |
|
|
|
999,085 |
|
| |
|
|
| Microsoft Corp.
2.875% due 2/6/2024 |
|
|
3,000,000 |
|
|
|
3,112,979 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
4,112,064 |
|
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Principal
Amount |
|
|
Value |
|
| Telecommunications – 4.7% |
|
|
|
|
|
|
|
|
| |
|
|
| AT&T, Inc.
4.35% due 3/1/2029 |
|
$
|
3,000,000 |
|
|
$
|
3,337,538 |
|
| |
|
|
| Rogers Communications, Inc.
3.70% due
11/15/2049 |
|
|
1,000,000 |
|
|
|
1,009,503 |
|
| |
|
|
| T-Mobile USA,
Inc.
4.75% due 2/1/2028 |
|
|
1,000,000 |
|
|
|
1,047,810 |
|
| |
|
|
| Verizon Communications, Inc. |
|
|
|
|
|
|
|
|
| 4.329% due 9/21/2028 |
|
|
2,000,000 |
|
|
|
2,269,938 |
|
| 4.522% due 9/15/2048 |
|
|
1,000,000 |
|
|
|
1,199,945 |
|
| 5.15% due 9/15/2023 |
|
|
3,000,000 |
|
|
|
3,335,733 |
|
| |
|
|
| Vodafone Group PLC
4.375% due 5/30/2028 |
|
|
2,000,000 |
|
|
|
2,217,516 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
14,417,983 |
|
| Toys, Games & Hobbies – 0.3% |
|
| |
|
|
| Hasbro, Inc.
3.90% due 11/19/2029 |
|
|
1,000,000 |
|
|
|
1,007,254 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
1,007,254 |
|
| Transportation – 1.2% |
|
|
|
|
|
|
|
|
| |
|
|
| CSX Corp.
3.80% due 3/1/2028 |
|
|
2,500,000 |
|
|
|
2,728,431 |
|
| |
|
|
| Union Pacific Corp.
3.70% due 3/1/2029 |
|
|
900,000 |
|
|
|
983,906 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
3,712,337 |
|
| |
|
Total Corporate Bonds & Notes
(Cost $149,068,303) |
|
|
|
149,900,995 |
|
| Non–Agency Mortgage–Backed Securities – 3.3% |
|
| |
|
|
| BANK
2019-BN24 AS
3.283% due
11/15/2062 |
|
|
1,250,000 |
|
|
|
1,280,705 |
|
| |
|
|
| Citigroup Commercial Mortgage Trust
2016-C3 AS
3.366% due 11/15/2049(1)(2) |
|
|
1,000,000 |
|
|
|
1,027,300 |
|
| |
|
|
| GS Mortgage Securities Corp. Trust
2017-485L A
3.721% due 2/10/2037(3) |
|
|
1,500,000 |
|
|
|
1,595,203 |
|
| |
|
|
| GS Mortgage Securities Trust
2017-FARM A
3.541% due 1/10/2043(1)(2)(3) |
|
|
1,300,000 |
|
|
|
1,377,203 |
|
| |
|
|
| Jackson Park Trust
2019-LIC B
2.914% due 10/14/2039(3) |
|
|
640,000 |
|
|
|
632,158 |
|
| |
|
|
| OBP Depositor LLC Trust
2010-OBP A
4.646% due 7/15/2045(3) |
|
|
1,000,000 |
|
|
|
999,159 |
|
| |
|
|
| UBS Commercial Mortgage Trust
2017-C2 A4
3.487% due 8/15/2050 |
|
|
1,500,000 |
|
|
|
1,588,677 |
|
| |
|
|
| WFRBS Commercial Mortgage Trust
2014-C19 AS
4.271% due 3/15/2047 |
|
|
1,500,000 |
|
|
|
1,598,298 |
|
| |
|
|
|
|
|
|
|
|
| |
|
Total Non–Agency Mortgage–Backed Securities
(Cost $10,157,353) |
|
|
|
10,098,703 |
|
|
|
|
|
|
| 8 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
SCHEDULE OF INVESTMENTS — GUARDIAN MULTI-SECTOR BOND VIP FUND
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Principal
Amount |
|
|
Value |
|
| U.S. Government Securities – 36.5% |
|
| |
|
|
| U.S. Treasury Bond
2.25% due 8/15/2049 |
|
$
|
10,000,000 |
|
|
$
|
9,728,125 |
|
| |
| U.S. Treasury Note |
|
| 1.50% due 9/30/2021 |
|
|
40,055,000 |
|
|
|
39,993,978 |
|
| 1.50% due 9/30/2024 |
|
|
61,500,000 |
|
|
|
60,988,301 |
|
| 1.625% due 8/15/2029 |
|
|
2,330,000 |
|
|
|
2,271,659 |
|
| |
|
|
|
|
|
|
|
|
| |
|
Total U.S. Government Securities
(Cost $113,452,385) |
|
|
|
112,982,063 |
|
| Short–Term Investment – 0.0% |
|
| |
| Repurchase Agreements – 0.0% |
|
| |
|
|
| Fixed Income
Clearing Corp.,
0.12%, dated 12/31/2019,
proceeds at maturity value
of $142,001, due 1/2/2020(4) |
|
|
142,000 |
|
|
|
142,000 |
|
| |
|
Total Repurchase Agreements
(Cost $142,000) |
|
|
|
142,000 |
|
| |
|
Total Investments(5) – 99.3%
(Cost $307,343,733) |
|
|
|
307,626,216 |
|
| |
|
| Assets in excess of other liabilities(6) – 0.7% |
|
|
|
2,250,725 |
|
| |
|
| Total Net Assets – 100.0% |
|
|
$ |
309,876,941 |
|
| (1) |
Variable rate securities, which may include step-up bonds or adjustable rate
mortgages. The rate shown is the rate in effect at December 31, 2019. |
| (2) |
Variable coupon rate based on weighted average interest rate of underlying mortgages. |
| (3) |
Securities that may be resold in transactions, exempt from registration under Rule 144A of the Securities Act of 1933, as
amended, normally to certain qualified buyers. At December 31, 2019, the aggregate market value of these securities amounted to $28,272,071, representing 9.1% of net assets. These securities have been deemed liquid by the investment adviser
pursuant to the Fund’s liquidity procedures approved by the Board of Trustees. |
| (4) |
The table below presents collateral for repurchase agreements. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Security |
|
Coupon |
|
|
Maturity
Date |
|
|
Principal
Amount |
|
|
Value |
|
| U.S. Treasury Note |
|
|
2.75% |
|
|
|
9/15/2021 |
|
|
$ |
145,000 |
|
|
$ |
148,944 |
|
| (5) |
Securities are segregated to cover anticipated or existing derivative positions or to be announced securities (TBA).
|
|
|
|
|
|
| The accompanying notes are an integral part of these financial statements. |
|
|
|
9 |
SCHEDULE OF INVESTMENTS — GUARDIAN MULTI-SECTOR BOND VIP FUND
| (6) |
Assets in excess of other liabilities include net unrealized depreciation on futures contracts as follows:
|
Open futures contracts at December 31, 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Type |
|
Expiration |
|
|
Contracts |
|
|
Position |
|
|
Notional
Amount |
|
|
Notional
Value |
|
|
Unrealized
Depreciation |
|
| U.S. 2-Year
Treasury Note |
|
|
March 2020 |
|
|
|
110 |
|
|
|
Long |
|
|
$ |
23,739,765 |
|
|
$ |
23,705,000 |
|
|
$ |
(34,765 |
) |
| U.S. Long Bond |
|
|
March 2020 |
|
|
|
200 |
|
|
|
Long |
|
|
|
31,931,212 |
|
|
|
31,181,250 |
|
|
|
(749,962 |
) |
| U.S. Ultra Long Bond |
|
|
March 2020 |
|
|
|
56 |
|
|
|
Long |
|
|
|
10,519,460 |
|
|
|
10,172,750 |
|
|
|
(346,710 |
) |
| Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
66,190,437 |
|
|
$ |
65,059,000 |
|
|
$ |
(1,131,437 |
) |
| |
|
|
|
|
|
|
| Type |
|
Expiration |
|
|
Contracts |
|
|
Position |
|
|
Notional
Amount |
|
|
Notional
Value |
|
|
Unrealized
Appreciation
(Depreciation) |
|
| U.S. 5-Year
Treasury Note |
|
|
March 2020 |
|
|
|
85 |
|
|
|
Short |
|
|
$ |
(10,070,231 |
) |
|
$ |
(10,081,797 |
) |
|
$ |
(11,566 |
) |
| U.S. 10-Year
Treasury Note |
|
|
March 2020 |
|
|
|
268 |
|
|
|
Short |
|
|
|
(34,801,305 |
) |
|
|
(34,417,063 |
) |
|
|
384,242 |
|
| U.S. Ultra 10-Year Treasury Note |
|
|
March 2020 |
|
|
|
159 |
|
|
|
Short |
|
|
|
(22,710,952 |
) |
|
|
(22,371,797 |
) |
|
|
339,155 |
|
| Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(67,582,488 |
) |
|
$ |
(66,870,657 |
) |
|
$ |
711,831 |
|
Legend:
CLO —
Collateralized Loan Obligation
LIBOR — London Interbank Offered Rate
The following is a summary of the inputs used as of December 31, 2019 in valuing the Fund’s investments. For more information on valuation inputs, please
refer to Note 2a of the accompanying Notes to Financial Statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Valuation Inputs |
|
|
|
|
| Investments in Securities |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
| Agency Mortgage–Backed Securities |
|
$ |
— |
|
|
$ |
5,395,741 |
|
|
$ |
— |
|
|
$ |
5,395,741 |
|
| Asset–Backed Securities |
|
|
— |
|
|
|
29,106,714 |
|
|
|
— |
|
|
|
29,106,714 |
|
| Corporate Bonds & Notes |
|
|
— |
|
|
|
149,900,995 |
|
|
|
— |
|
|
|
149,900,995 |
|
| Non–Agency Mortgage–Backed Securities |
|
|
— |
|
|
|
10,098,703 |
|
|
|
— |
|
|
|
10,098,703 |
|
| U.S. Government Securities |
|
|
— |
|
|
|
112,982,063 |
|
|
|
— |
|
|
|
112,982,063 |
|
| Repurchase Agreements |
|
|
— |
|
|
|
142,000 |
|
|
|
— |
|
|
|
142,000 |
|
| Total |
|
$ |
— |
|
|
$ |
307,626,216 |
|
|
$ |
— |
|
|
$ |
307,626,216 |
|
| Other Financial Instruments |
|
|
|
|
|
|
|
|
|
|
|
|
| Futures Contracts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Assets |
|
$ |
723,397 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
723,397 |
|
| Liabilities |
|
|
(1,143,003 |
) |
|
|
— |
|
|
|
— |
|
|
|
(1,143,003 |
) |
| Total |
|
$ |
(419,606 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(419,606 |
) |
|
|
|
|
|
| 10 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
FINANCIAL INFORMATION — GUARDIAN MULTI-SECTOR BOND VIP FUND
|
|
|
|
|
|
Statement of Assets and Liabilities As of December 31, 2019 |
|
|
|
| Assets |
|
|
|
|
| |
|
| Investments, at value |
|
$ |
307,626,216 |
|
| |
|
| Interest receivable |
|
|
2,087,739 |
|
| |
|
| Cash deposits with brokers for futures
contracts |
|
|
452,943 |
|
| |
|
| Receivable for variation margin on futures
contracts |
|
|
142,616 |
|
| |
|
| Prepaid expenses |
|
|
14,755 |
|
| |
|
|
|
|
| |
|
| Total Assets |
|
|
310,324,269 |
|
| |
|
|
|
|
| |
|
| Liabilities |
|
|
|
|
| |
|
| Investment advisory fees payable |
|
|
137,879 |
|
| |
|
| Due to custodian |
|
|
104,371 |
|
| |
|
| Distribution fees payable |
|
|
66,288 |
|
| |
|
| Payable for fund shares redeemed |
|
|
53,396 |
|
| |
|
| Accrued audit fees |
|
|
25,659 |
|
| |
|
| Accrued custodian and accounting fees |
|
|
17,768 |
|
| |
|
| Accrued trustees’ and officers’
fees |
|
|
3,244 |
|
| |
|
| Accrued expenses and other liabilities |
|
|
38,723 |
|
| |
|
|
|
|
| |
|
| Total Liabilities |
|
|
447,328 |
|
| |
|
|
|
|
| |
|
| Total Net Assets |
|
$ |
309,876,941 |
|
| |
|
|
|
|
| |
|
| Net Assets Consist of: |
|
|
|
|
| |
|
| Paid-in
capital |
|
$ |
308,973,389 |
|
| |
|
| Distributable earnings |
|
|
903,552 |
|
| |
|
|
|
|
| |
|
| Total Net Assets |
|
$ |
309,876,941 |
|
| |
|
|
|
|
| Investments, at Cost |
|
$ |
307,343,733 |
|
| |
|
|
|
|
| |
|
| Pricing of Shares |
|
|
|
|
| |
|
| Shares of Beneficial Interest Outstanding with No
Par Value |
|
|
30,895,943 |
|
| |
|
| Net Asset Value Per Share |
|
|
$10.03 |
|
| |
|
|
|
|
|
|
|
|
|
Statement of Operations
For the Period Ended December 31, 20191 |
|
|
|
| Investment Income |
|
|
|
|
| |
|
| Interest |
|
$ |
1,395,625 |
|
| |
|
|
|
|
| |
|
| Total Investment Income |
|
|
1,395,625 |
|
| |
|
|
|
|
| |
|
| Expenses |
|
|
|
|
| |
|
| Investment advisory fees |
|
|
320,561 |
|
| |
|
| Distribution fees |
|
|
154,116 |
|
| |
|
| Professional fees |
|
|
44,880 |
|
| |
|
| Shareholder reports |
|
|
22,088 |
|
| |
|
| Trustees’ and officers’ fees |
|
|
19,924 |
|
| |
|
| Custodian and accounting fees |
|
|
17,768 |
|
| |
|
| Administrative fees |
|
|
11,865 |
|
| |
|
| Transfer agent fees |
|
|
3,241 |
|
| |
|
| Other expenses |
|
|
7,017 |
|
| |
|
|
|
|
| |
|
| Total Expenses |
|
|
601,460 |
|
| |
|
|
|
|
| |
|
| Net Investment Income/(Loss) |
|
|
794,165 |
|
| |
|
|
|
|
| |
|
| Realized Gain/(Loss) and Change in Unrealized
Appreciation/(Depreciation) on Investments and Derivative Contracts |
|
|
|
|
| |
|
| Net realized gain/(loss) from investments |
|
|
(98,388 |
) |
| |
|
| Net realized gain/(loss) from futures
contracts |
|
|
344,898 |
|
| |
|
| Net change in unrealized appreciation/(depreciation)
on investments |
|
|
282,483 |
|
| |
|
| Net change in unrealized appreciation/(depreciation)
on futures contracts |
|
|
(419,606 |
) |
| |
|
|
|
|
| |
|
| Net Gain on Investments and Derivative
Contracts |
|
|
109,387 |
|
| |
|
|
|
|
| |
|
| Net Increase in Net Assets Resulting From
Operations |
|
$ |
903,552 |
|
| |
|
|
|
|
| |
|
|
|
|
| 1 |
Commenced operations on October 21, 2019.
|
|
|
|
|
|
| The accompanying notes are an integral part of these financial statements. |
|
|
|
11 |
FINANCIAL INFORMATION — GUARDIAN MULTI-SECTOR BOND VIP FUND
|
|
|
|
|
|
Statement of Changes in Net Assets |
|
|
|
| |
|
| |
|
For the
Period Ended
12/31/191 |
|
| |
|
|
|
| Operations |
|
| |
|
| Net investment income/(loss) |
|
$ |
794,165 |
|
| |
|
| Net realized gain/(loss) from investments and
derivative contracts |
|
|
246,510 |
|
| |
|
| Net change in unrealized appreciation/(depreciation)
on investments and derivative contracts |
|
|
(137,123 |
) |
| |
|
|
|
|
| |
|
| Net Increase in Net Assets Resulting from
Operations |
|
|
903,552 |
|
| |
|
|
|
|
| |
| Capital Share
Transactions |
|
| |
|
| Proceeds from sales of shares |
|
|
317,902,380 |
|
| |
|
| Cost of shares redeemed |
|
|
(8,928,991 |
) |
| |
|
|
|
|
| |
|
| Net Increase in Net Assets Resulting from Capital
Share Transactions |
|
|
308,973,389 |
|
| |
|
|
|
|
| |
|
| Net Increase in Net Assets |
|
|
309,876,941 |
|
| |
|
|
|
|
| |
| Net Assets |
|
| |
|
| Beginning of period |
|
|
— |
|
| |
|
|
|
|
| |
|
| End of period |
|
$ |
309,876,941 |
|
| |
|
|
|
|
| |
| Other Information: |
|
| |
|
| Shares |
|
|
|
|
| |
|
| Sold |
|
|
31,787,842 |
|
| |
|
| Redeemed |
|
|
(891,899 |
) |
| |
|
|
|
|
| |
|
| Net Increase |
|
|
30,895,943 |
|
| |
|
|
|
|
| |
|
|
|
|
| 1 |
Commenced operations on October 21, 2019. |
|
|
|
|
|
| 12 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
This Page Intentionally Left Blank
FINANCIAL INFORMATION — GUARDIAN MULTI-SECTOR BOND VIP FUND
The Financial Highlights table is intended to help you understand the Fund’s financial
performance for the past five years (or, if shorter, the period since inception). Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost)
on an investment in the Fund.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Highlights |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Per Share Operating Performance |
|
|
|
|
| |
|
Net Asset Value,
Beginning of
Period |
|
|
Net Investment
Income(1) |
|
|
Net Realized
and Unrealized
Gain |
|
|
Total
Operations |
|
|
Net Asset
Value, End of
Period |
|
|
Total
Return(2),(3) |
|
| |
|
|
|
|
|
|
| Period
Ended 12/31/19(5) |
|
$ |
10.00 |
|
|
$ |
0.03 |
|
|
$ |
0.00 |
(6) |
|
$ |
0.03 |
|
|
$ |
10.03 |
|
|
|
0.30% |
|
|
|
|
|
|
| 14 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
FINANCIAL INFORMATION — GUARDIAN MULTI-SECTOR BOND VIP FUND
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Ratios/Supplemental Data |
|
Net Assets, End
of Period (000s) |
|
|
Net Ratio of
Expenses to
Average
Net Assets(3),(4) |
|
|
Gross Ratio of
Expenses to
Average Net
Assets(3) |
|
|
Net Ratio of Net
Investment Income
to Average
Net
Assets(3),(4) |
|
|
Gross Ratio of Net
Investment Income
to Average
Net
Assets(3) |
|
|
Portfolio
Turnover Rate(3) |
|
|
|
|
|
|
|
| $ |
309,877 |
|
|
|
0.93% |
|
|
|
0.93% |
|
|
|
1.33% |
|
|
|
1.33% |
|
|
|
27% |
|
| (1) |
Calculated based on the average shares outstanding during the period. |
| (2) |
Total returns do not reflect the effects of charges deducted pursuant to the terms of The Guardian Insurance &
Annuity Company, Inc.’s variable contracts. Inclusion of such charges would reduce the total returns for all periods shown. |
| (3) |
Ratios for periods less than one year have been annualized, except for total return and portfolio turnover rate. Certain non-recurring fees (i.e., audit fees) are not annualized. |
| (4) |
Net Ratio of Expenses to Average Net Assets and Net Ratio of Net Investment Income to Average Net Assets include the
effect of fee waivers and expense limitations. |
| (5) |
Commenced operations on October 21, 2019. |
| (6) |
Rounds to $0.00 per share. |
|
|
|
|
|
| The accompanying notes are an integral part of these financial statements. |
|
|
|
15 |
NOTES TO FINANCIAL STATEMENTS — GUARDIAN MULTI-SECTOR BOND VIP FUND
December 31, 2019
1.
Organization
Guardian Variable Products Trust (the “Trust”), a Delaware statutory trust organized on January 12, 2016, is registered under the
Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Trust currently has sixteen series. Guardian Multi-Sector Bond VIP Fund (the
“Fund”) is a series of the Trust. The Fund is a diversified fund and commenced operations on October 21, 2019. The financial statements for other series of the Trust are presented in separate reports.
The Trust has authorized an unlimited number of shares of beneficial interest with no par value. Shares are bought and sold at closing net asset value (“NAV”).
Shares of the Fund are only sold to certain separate accounts of The Guardian Insurance & Annuity Company, Inc. (“GIAC”) that fund certain variable annuity contracts and variable life insurance policies issued by GIAC. GIAC is a
wholly-owned subsidiary of The Guardian Life Insurance Company of America (“Guardian Life”).
The Fund seeks to provide a high current income with a
secondary objective of capital appreciation.
2. Significant Accounting Policies
The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The Fund follows the investment
company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 946 Financial Services — Investment Companies. The following policies are in conformity with
accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts and
disclosures in the financial statements. Actual results could differ from those estimates.
a. Investment Valuations The valuations of debt securities for
which quoted bid prices are readily available are valued at the bid price by independent pricing services (each, a “Service”). Debt securities for which quoted bid prices are not readily available are valued by a Service at the evaluated
bid price provided by the Service or the bid price provided by an independent broker-dealer or at a calculated price based on the spread to an appropriate benchmark
provided by such broker-dealer. Securities for which market quotations are not readily available or for which market quotations may be considered unreliable or for which a Service or independent
broker-dealer does not provide a valuation are valued at their fair values as determined in accordance with policies and procedures adopted by the Board of Trustees.
Under the policies and procedures approved by the Board of Trustees, Park Avenue Institutional Advisers LLC (“Park Avenue”), the Fund’s investment
adviser, has established a Fair Valuation Committee to assist the Board of Trustees with the oversight and monitoring of the valuation of the Fund’s investments. This includes monitoring the appropriateness of fair values based on results of
ongoing valuation oversight, including but not limited to consideration of security specific events, market events, and pricing vendor and broker-dealer due diligence. The Fair Valuation Committee oversees and carries out the policies for the
valuation of investments held in the Fund. The Fair Valuation Committee is responsible for discussing and assessing the potential impacts to the fair values on an ongoing basis, and at least on a quarterly basis with the Board of Trustees.
Equity securities traded on an exchange other than NASDAQ Stock Market, LLC (“NASDAQ”) are valued at the last reported sale price on the principal exchange or
market on which they are traded; or, if there were no sales that day, at the mean between the closing bid and ask prices. Securities traded on the NASDAQ are generally valued at the NASDAQ official closing price, which may not be the last sale
price. If the NASDAQ official closing price is not available for a security, that security is generally valued at the mean between the closing bid and ask prices. Repurchase agreements are carried at cost, which approximates fair value (see Note
5d). Foreign securities are valued in the currencies of the markets in which they trade and then converted to U.S. dollars by the application of foreign exchange rates at the close of the New York Stock Exchange (“NYSE”).
Securities whose values have been materially affected by events occurring before the Fund’s valuation time but after the close of the securities’ principal
exchange or market may be fair valued in accordance with policies and procedures adopted by the Board of Trustees. Valuations reflected in this report are as of the report date. As a result, changes in valuation due to market events and/or issuer
related events after the report date and prior to issuance of the report are not reflected herein.
NOTES TO FINANCIAL STATEMENTS — GUARDIAN MULTI-SECTOR BOND VIP FUND
Various inputs are used in determining the valuation of the Fund’s investments. These inputs are summarized in three
broad levels listed below.
| • |
|
Level 1 — unadjusted inputs using quoted prices in active markets for identical investments. |
| • |
|
Level 2 — other significant observable inputs, including, but not limited to, quoted prices for similar investments, inputs other than quoted prices that are observable for investments (such as interest
rates, prepayment speeds, credit risks, etc.) or other market corroborated inputs. |
| • |
|
Level 3 — significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments) |
Inputs may include price information, volatility statistics, specific and broad credit data, liquidity statistics, and other factors. A financial instrument’s level
within the fair value hierarchy is based on the lowest level of any input; both individually and in aggregate, that is significant to the fair value measurement. However, the determination of what constitutes “observable” requires
significant judgment by the Trust. The Trust considers observable data to be that market data which is readily available, regularly distributed or updated, reliable and verifiable, and provided by independent sources that are actively involved in
the relevant market. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. Changes in valuation techniques may result in transfers into or out of a
financial instrument’s assigned level within the hierarchy.
The FASB requires reporting entities to make disclosures about purchases, sales, issuances and
settlements of Level 3 securities on a gross basis. For the period ended December 31, 2019, there were no transfers into or out of Level 3 of the fair value hierarchy.
In determining a financial instrument’s placement within the hierarchy, the Trust separates the Fund’s investment portfolio into two categories: investments
and derivatives (e.g., futures). A summary of inputs used to value the Fund’s assets and liabilities carried at fair value as of December 31, 2019 is included in the Schedule of Investments.
Investments Investments whose values are based on quoted market prices in active markets, and are therefore classified within Level 1, include active
listed equities. Investments that trade in markets that are not considered to be active, but are valued based on quoted
market prices, dealer quotations or alternative pricing sources supported by observable inputs are classified within Level 2. These include certain U.S. government and sovereign obligations,
most government agency securities, investment-grade corporate bonds, certain mortgage products, state, municipal and provincial obligations, and certain foreign equity securities, including securities whose prices may have been affected by events
occurring after the close of trading on their principal exchange or market and, as a result, whose values are determined by a pricing service as described above, or securities whose values are otherwise determined using fair valuation methods
approved by the Fund’s Board of Trustees.
Investments classified within Level 3 have significant unobservable inputs, as they trade infrequently or not at
all. Level 3 investments include, among others, private placement securities. When observable prices are not available for these securities, the Trust uses one or more valuation techniques for which sufficient and reliable data is available.
The inputs used by the Trust in estimating the value of Level 3 investments include, for example, the original transaction price, recent transactions in the same or similar instruments, completed or pending third-party transactions in the
underlying investment or comparable issuers, subsequent rounds of financing, recapitalizations, and other transactions across the capital structure. Level 3 investments may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the Trust in the absence of market information. Assumptions used by the Trust due to the lack of observable inputs may significantly impact the
resulting fair value and therefore the Fund’s results of operations. As of December 31, 2019, the Fund had no securities classified as Level 3.
Derivatives Exchange-traded derivatives, such as futures contracts, exchange-traded option contracts and certain swaps, are typically classified within
Level 1 or Level 2 of the fair value hierarchy depending on whether or not they are deemed to be actively traded. Certain non-exchange-traded derivatives, such as generic forwards, certain swaps and
options, have inputs which can generally be corroborated by market data and are therefore classified within Level 2.
b. Securities Transactions
Securities transactions are accounted for on the date securities are purchased or sold (trade date). Realized gains or losses on securities transactions are determined on the basis of specific identification.
NOTES TO FINANCIAL STATEMENTS — GUARDIAN MULTI-SECTOR BOND VIP FUND
c. Futures Contracts The Fund may enter into financial futures contracts. In entering into such contracts, the Fund
is required to deposit with the counterparty, either in cash or securities, an amount equal to a certain percentage of the face value of the contract. Subsequent payments are received or made by the Fund each day, depending on the daily fluctuations
in the values of the contracts, and are recorded for financial statement purposes as variation margin received or paid by the Fund. Daily changes in variation margin are recognized as unrealized gains or losses by the Fund. The Fund may not achieve
the anticipated benefits of the financial futures contracts and may realize a loss.
d. Credit Derivatives The Fund may enter into credit derivatives,
including credit default swaps on individual obligations or credit indices. The Fund may use these investments (i) as alternatives to direct long or short investment in a particular security or securities, (ii) to adjust the Fund’s
asset allocation or risk exposure, or (iii) for hedging purposes. The use by the Fund of credit default swaps may have the effect of creating a short position in a security. Credit derivatives can create investment leverage and may create
additional investment risks that may subject the Fund to greater volatility than investments in more traditional securities, as described in the Statement of Additional Information.
The Fund may enter into credit default swap agreements either as a buyer or seller. The Fund may buy protection under a credit default swap to attempt to mitigate the
risk of default or credit quality deterioration in one or more individual holdings or in a segment of the fixed income securities market. The Fund may sell protection under a credit default swap in an attempt to gain exposure to an underlying
issuer’s credit quality characteristics without investing directly in that issuer.
For swaps entered with an individual counterparty, the Fund bears the risk
of loss of the uncollateralized amount expected to be received under a credit default swap agreement in the event of the default or bankruptcy of the counterparty. Credit default swap agreements are generally valued at a price at which the
counterparty to such agreement would terminate the agreement. The Fund may also enter into cleared swaps.
In entering into swap contracts, the Fund is required to
deposit with the broker (or for the benefit of the broker), either in cash or securities, an amount equal to a percentage of the notional value of the contract. Subsequent payments are received or made by the Fund each day, depending on the daily
fluctuations in the values of the contracts, and are recorded for financial
statement purposes as variation margin received or paid by the Fund. Daily changes in variation margin are recognized as unrealized gains or losses by the Fund. The Fund may not achieve the
anticipated benefits of the swap contracts and may realize a loss.
The Fund enters into credit default swaps primarily for asset allocation and risk exposure
management. There were no credit default swaps held as of December 31, 2019.
e. Options Transactions The Fund can write (sell) put and call options on
securities and indexes to earn premiums, for hedging purposes, for risk management purposes or otherwise as part of its investment strategies. In writing options, the Fund is required to deposit with the broker or counterparty, either in cash or
securities, an amount equal to a percentage of the face value of the options. When an option is written, the premium received is recorded as an asset with an equal liability that is subsequently marked to market to reflect the market value of the
written option. These liabilities, if any, are reflected as written options, at value, in the Fund’s Statement of Assets and Liabilities. Premiums received from writing options which expire unexercised are recorded on the expiration date as a
realized gain. The difference between the premium received and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is also treated as a realized gain, or if the premium is less than the amount paid for the
closing purchased transactions, as a realized loss. If a written call option is exercised, the premium is added to the proceeds from the sale of the underlying security in determining whether there has been a realized gain or loss. If a written put
option is exercised, the premium reduces the cost basis of the security. In writing an option, the Fund bears the market risk of an unfavorable change in the price of the security underlying the written option. Exercise of a written option could
result in the Fund purchasing or selling a security at a price different from its current market value. There were no options transactions as of December 31, 2019.
f. Investment Income Dividend income net of foreign taxes withheld, if any, is generally recorded on the ex-dividend date.
Interest income, which includes amortization/accretion of premium/discount, is determined using the interest income accrual method, and is accrued and recorded daily.
g. Allocation of Income and Expenses Many of the expenses of the Trust can be directly attributed to a specific series of the Trust. Expenses that cannot be
NOTES TO FINANCIAL STATEMENTS — GUARDIAN MULTI-SECTOR BOND VIP FUND
directly attributed to a specific series of the Trust are generally apportioned among all the series in the Trust, based
on relative net assets. In calculating net asset value per share for each series of the Trust, investment income, realized and unrealized gains and losses, and expenses other than series-specific expenses are allocated daily to each series based
upon the proportion of net assets attributable to each series.
3. Transactions with Affiliates
a. Investment Advisory Fee and Expense Limitation Under the terms of the advisory agreement, which, after its two year initial term, is reviewed and approved
annually by the Board of Trustees, the Fund pays an investment advisory fee to Park Avenue. Park Avenue is a wholly-owned subsidiary of Guardian Life and receives an investment advisory fee at an annual rate of 0.52% of the Fund’s average daily
net assets. The fee is accrued daily and paid monthly.
Park Avenue has contractually agreed through April 30, 2020 to waive certain fees and/or reimburse
certain expenses incurred by the Fund to the extent necessary to limit the Fund’s total annual operating expenses after fee waiver and/or expense reimbursement to 1.00% of the Fund’s average daily net assets (excluding, if applicable, any
acquired fund fees and expenses, taxes, interest, transaction costs and brokerage commissions, litigation and extraordinary expenses). The limitation may not be increased or terminated prior to this time without action by the Board of Trustees and
may be terminated only upon approval of the Board of Trustees. Amounts waived or reimbursed by Park Avenue pursuant to any expense limitation will not be subject to Park Avenue’s recoupment rights. For the period ended December 31, 2019,
Park Avenue did not waive any fees or pay any Fund expenses.
b. Compensation of Trustees and Officers Trustees and officers who are interested persons of the
Trust, as defined in the 1940 Act, receive no compensation from the Fund, except for the Chief Compliance Officer of the Trust. Trustees of the Trust who are not interested persons of the Trust, and the Chief Compliance Officer, receive compensation
and reimbursement of expenses from the Trust.
c. Distribution Fees Park Avenue Securities LLC (“PAS”), a wholly-owned subsidiary of Guardian Life,
is the principal underwriter of Fund shares. The Trust has entered into a distribution and service agreement with PAS, which governs the sale and distribution of shares of the Fund. Under a distribution and service plan adopted by the Trust (“12b-1 plan”), PAS is compensated for
services in such capacity, including its expenses in connection with the promotion and distribution of shares of the Fund, at an annual rate of 0.25% of the Fund’s average daily net assets.
For the period ended December 31, 2019, the Fund paid distribution fees in the amount of $154,116 to PAS.
PAS has directed that certain payments under the 12b-1 plan be used to compensate GIAC for shareholder services provided to contract owners.
4. Federal Income Taxes
a. Distributions to Shareholders For federal income tax purposes, the Fund is treated as a disregarded entity (“DRE”). As a DRE, the Fund is not subject
to an entity-level income tax; and any income, gains, losses, deductions, taxes, and credits of the Fund would instead be “passed through” directly to the separate accounts of GIAC that invest in the Fund and retain the same character for
U.S. federal income tax purposes. In addition, the Fund is not required to distribute taxable income and capital gains for U.S. federal income tax purposes. Therefore, no dividends and capital gains distributions were paid by the Fund.
5. Investments
a. Investment Purchases and Sales The cost of
investments and U.S. government agency obligations purchased and the proceeds from U.S. government agency obligations and other investments sold (excluding short-term investments and to be announced (TBA) securities) for the period ended
December 31, 2019, were as follows:
|
|
|
|
|
|
|
|
|
| |
|
|
| |
|
Other
Investments |
|
|
U.S.
Government and
Agency
Obligations |
|
| Purchases |
|
$ |
209,303,214 |
|
|
$ |
180,422,536 |
|
| Sales |
|
|
22,610,494 |
|
|
|
61,441,976 |
|
b. Foreign Securities Foreign securities investments involve special risks and considerations not typically associated with U.S.
investments. These risks include, but are not limited to, currency risk; adverse political, regulatory, social, and economic developments; and less reliable information about issuers. Moreover, securities of some foreign issuers may be less liquid
and their prices more volatile than those of comparable U.S. issuers.
c. Repurchase Agreements The Fund may invest in repurchase agreements to maintain
liquidity and earn income over periods of time as short as overnight. The collateral for repurchase agreements is either cash or
NOTES TO FINANCIAL STATEMENTS — GUARDIAN MULTI-SECTOR BOND VIP FUND
fully negotiable U.S. government securities (including U.S. government agency securities). Repurchase agreements are fully
collateralized (including the interest accrued thereon) and such collateral is marked to market daily while the agreements remain in force. If the value of the collateral falls below the repurchase price plus accrued interest, the Fund will
typically require the seller to deposit additional collateral by the next business day. If the request for additional collateral is not met, or the seller defaults, the Fund maintains the right to sell the collateral (although it may be prevented or
delayed from doing so in certain circumstances) and may be required to claim any resulting loss against the seller. Park Avenue monitors the creditworthiness of the seller with which the Fund enters into repurchase agreements.
d. Securities Purchased on a When-Issued or Delayed-Delivery Basis The Fund may purchase securities on a when-issued or delayed-delivery basis, with payment and
delivery scheduled for a future date. These transactions are subject to market fluctuations and are subject to the risk that the value at delivery may be more or less than at the trade date purchase price. Although the Fund will generally enter into
these transactions with the intention of taking delivery of the securities, it may sell the securities before the settlement date. Assets will be segregated when a fund agrees to purchase on a when-issued or delayed-delivery basis. These
transactions may create investment leverage.
e. Restricted and Illiquid Securities A restricted security cannot be resold to the general public without prior
registration under the Securities Act of 1933, as amended (except pursuant to an applicable exemption). The values of these securities may be highly volatile. If the security is subsequently registered and resold, the issuer would typically bear the
expense of all registrations at no cost to the Fund. Restricted and illiquid securities are valued according to the policies and procedures adopted by the Trust’s Board of Trustees and are noted, if any, in the Fund’s Schedule of
Investments. As of December 31, 2019, the Fund did not hold any restricted, other than 144A restricted securities, or illiquid securities.
f. Below
Investment Grade Securities The Fund may invest in below investment grade securities (i.e. lower-quality, “junk” debt), which are subject to various risks. Lower-quality debt is considered to be speculative because it is less certain
that the issuer will be able to pay interest or repay the principal than in the case of investment grade debt. These securities can involve a substantially greater risk of default than higher-rated securities, and their values can decline
significantly over short periods of time. Lower-quality debt securities
tend to be more sensitive to adverse news about their issuers, the market and the economy in general, than higher-quality debt securities. The market for these securities can be less liquid,
especially during periods of recession or general market decline.
g. Mortgage- and Asset-Backed Securities The values of some mortgage-related or
asset-backed securities may be particularly sensitive to changes in prevailing interest rates. Early repayment of principal on some mortgage-related securities may expose the Fund to a lower rate of return upon reinvestment of principal. The values
of mortgage- and asset-backed securities depend in part on the credit quality and adequacy of the underlying assets or collateral and may fluctuate in response to the market’s perception of these factors as well as current and future repayment
rates. Some mortgage-backed securities are backed by the full faith and credit of the U.S. government (e.g., mortgage-backed securities issued by the Government National Mortgage Association, commonly known as “Ginnie Mae”), while other
mortgage-backed securities (e.g., mortgage-backed securities issued by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation, commonly known as “Fannie Mae” and “Freddie Mac”), are backed only
by the credit of the government entity issuing them. In addition, some mortgage-backed securities are issued by private entities and, as such, are not guaranteed by the U.S. government or any agency or instrumentality of the U.S. government.
h. Treasury Inflation Protected Securities Treasury inflation protected securities (“TIPS”) are debt securities issued by the U.S. Treasury whose
principal and/or interest payments are adjusted for inflation, unlike debt securities that make fixed principal and interest payments. The interest rate paid by the TIPS is fixed, while the principal value rises or falls based on changes in a
published Consumer Price Index (“CPI”). Thus, if inflation occurs, the principal and interest payments on TIPS are adjusted accordingly to protect investors from inflationary loss. During a deflationary period, the principal and interest
payments decrease, although the TIPS principal amounts will not drop below their face amounts at maturity. In exchange for the inflation protection, the TIPS generally pay lower interest rates than typical U.S. Treasury securities. Only if inflation
occurs will TIPS offer a higher real yield than a conventional Treasury bond of the same maturity.
i. LIBOR Risk Many financial instruments may be tied to
the London Interbank Offered Rate, or “LIBOR,” to determine payment obligations, financing terms,
NOTES TO FINANCIAL STATEMENTS — GUARDIAN MULTI-SECTOR BOND VIP FUND
hedging strategies, or investment value. LIBOR is the offered rate for short-term Eurodollar deposits between major
international banks. On July 27, 2017, the head of the UK Financial Conduct Authority announced a desire to phase out the use of LIBOR by the end of 2021. Regulators and industry working groups have suggested alternative reference rates, but
global consensus is lacking and the process for amending existing contracts or instruments to transition away from LIBOR remains unclear. There also remains uncertainty and risk regarding the willingness and ability of issuers to include enhanced
provisions in new and existing contracts or instruments. As such, the transition away from LIBOR may lead to increased volatility and illiquidity in markets that are tied to LIBOR, reduced values of LIBOR related investments, and reduced
effectiveness of hedging strategies, adversely affecting the Fund’s performance or NAV. In addition, the alternative reference rate may be an ineffective substitute resulting in prolonged adverse market conditions for the Fund.
j. Disclosures About Derivative Instruments and Hedging Activities The Fund entered into U.S. Treasury futures contracts for the period ended December 31,
2019 to manage portfolio duration. The Fund bears the risk of interest rates moving unexpectedly, in which case the Fund may not achieve the anticipated benefits of the futures contracts and realize a loss. There is minimal counterparty credit risk
to the Funds since futures are exchange traded and the exchange’s clearinghouse, as counterparty to all exchange traded futures, guarantees futures against default.
As of December 31, 2019, the Fund had the following derivatives at fair value, grouped into appropriate risk categories that illustrate the Fund’s use of
derivative instruments:
|
|
|
|
|
| |
|
| |
|
Interest Rate
Contracts |
|
| |
|
| Asset Derivatives |
|
|
|
|
| Futures Contracts1 |
|
$ |
723,397 |
|
| |
| Liability Derivatives |
|
| Futures Contracts1 |
|
$ |
(1,143,003 |
) |
| 1 |
Statement of Assets and Liabilities location: Includes cumulative unrealized appreciation/(depreciation) of futures
contracts as reported in the Schedule of Investments. Only current day’s variation margin is reported within the Statements of Assets and Liabilities.
|
Transactions in derivative investments for the period ended December 31, 2019 were as follows:
|
|
|
|
|
| |
|
| |
|
Interest Rate
Contracts |
|
| |
|
| Net Realized Gain (Loss) |
|
|
|
|
| Futures Contracts1 |
|
$ |
344,898 |
|
| |
| Net Change in Unrealized
Appreciation/(Depreciation) |
|
| Futures Contracts2 |
|
$ |
(419,606 |
) |
| |
|
| Average Number of Notional Amounts |
|
|
|
|
| Futures Contracts3 |
|
|
890 |
|
| 1 |
Statement of Operations location: Net realized gain/(loss) from futures contracts. |
| 2 |
Statement of Operations location: Net change in unrealized appreciation/(depreciation) on futures contracts.
|
| 3 |
Amount represents number of contracts. |
6. Temporary Borrowings
The Fund, with other funds managed by Park Avenue,
is party to a $10 million committed revolving credit facility from State Street Bank and Trust Company for temporary borrowing purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of
securities. Interest is calculated based on the higher of the daily one-month LIBOR rate and the Federal Funds rate plus 1.25% at the time of borrowing. In addition to the interest charged on any borrowings by
the Fund, each fund pays a commitment fee of 0.30% per annum on its share of the unused portion of the credit facility. The agreement is in place until December 9, 2020. The Fund did not utilize the credit facility during the period ended
December 31, 2019.
7. Indemnifications
Under the Trust’s
organizational documents and, in some cases, by contract, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Fund. In addition, in the normal course of business, the Fund
enters into contracts with its vendors and others that provide general indemnifications. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet
occurred. However, based on experience, the Fund expects the risk of loss to be remote.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees of Guardian Variable Products Trust and Shareholders of
Guardian Multi-Sector Bond VIP Fund
Opinion on the Financial
Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Guardian Multi-Sector Bond VIP
Fund (one of the funds constituting Guardian Variable Products Trust, referred to hereafter as the “Fund”) as of December 31, 2019, and the related statements of operations and changes in net assets, including the related notes, and
the financial highlights for the period October 21, 2019 (commencement of operations) through December 31, 2019 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in
all material respects, the financial position of the Fund as of December 31, 2019, and the results of its operations, changes in its net assets, and the financial highlights for the period from October 21, 2019 (commencement of operations)
through December 31, 2019 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements
based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws
and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit of these financial statements in accordance
with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing
procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2019 by correspondence with the custodian and
brokers. We believe that our audit provides a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
New York, New York
February 20, 2020
We have served as the auditor of one or more investment companies in Guardian Variable Products Trust since 2016.
SUPPLEMENTAL INFORMATION (UNAUDITED)
Approval of Investment Advisory and Sub-advisory
Agreements
Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), requires that a fund’s investment advisory and sub-advisory agreements be approved initially by the fund’s board of trustees. Section 15(c) also requires that the continuation of these agreements, after an initial term of up to two years, be annually
reviewed and approved by the board. Any such agreement must be approved by a vote of a majority of the trustees who are not parties to the agreement or “interested persons” (as defined in the 1940 Act) of a party to the agreement at an in-person meeting of the board called for the purpose of voting on such approval.
At a meeting of the Board of Trustees (the
“Board”) of Guardian Variable Products Trust (the “Trust”) held on March 27-28, 2018 (the “Meeting”), the Board considered and approved the proposed investment management
agreement (the “Management Agreement”) between the Trust, on behalf of Guardian Small Cap Core VIP Fund, Guardian Global Utilities VIP Fund, Guardian Multi-Sector Bond VIP Fund, Guardian Total Return Bond VIP Fund, and Guardian U.S.
Government Securities VIP Fund (the “New Funds”), and Park Avenue Institutional Advisers LLC (the “Manager”). The Board also considered and approved the proposed sub-advisory agreements
(the “Sub-advisory Agreements,” collectively with the Management Agreement, the “Agreements”) between the Manager and ClearBridge Investments LLC and Wellington Management Company LLP (the “Sub-advisers”), investment advisory firms engaged to serve as sub-advisers to Guardian Small Cap Core VIP Fund and Guardian Global Utilities VIP Fund, respectively.
The Trustees who are not parties to the Agreements or “interested persons” (as defined in the 1940 Act) of a party to the Agreements (the “Independent Trustees”) unanimously approved the Agreements for an initial term of two
years.
The Board is responsible for overseeing the management of each Fund. In determining whether to approve the Agreements, the Trustees evaluated information and
factors that they considered to be relevant and appropriate through the exercise of their own business judgment. The Trustees considered certain information and factors in light of advice furnished to them by legal counsel to the Trust and, in the
case of the Independent Trustees, their independent legal counsel. In advance of the Meeting, the Trustees received materials and information designed to assist their consideration of the
Agreements. At a Board meeting held on November 28-29, 2017, the Trustees received presentations from the Manager and each
Sub-adviser regarding the services to be rendered to, and the proposed investment strategies for, the New Funds. The Trustees received written responses from the Manager and each
Sub-adviser to a series of questions and requests for information covering a wide variety of topics provided by independent legal counsel on behalf of the Independent Trustees. The Trustees also received
presentations and discussed the New Funds at a special telephonic Board meeting held on February 12, 2018, and the Independent Trustees discussed the New Funds with independent legal counsel in advance of the Meeting. The Trustees also received
materials and information regarding the legal standards applicable to their consideration of the Agreements and the process and criteria used by the Manager to identify and select the Sub-advisers for approval
by the Board and to propose that Guardian Multi-Sector Bond VIP Fund, Guardian Total Return Bond VIP Fund, and Guardian U.S. Government Securities VIP Fund would be managed directly by the Manager without a
sub-adviser.
During the course of their deliberations, the Independent Trustees met to discuss and evaluate the Agreements
in executive session with their independent legal counsel, outside of the presence of the Trustees who are not Independent Trustees and representatives from Fund management, the Manager or either Sub-adviser.
In reaching its decisions to approve the Agreements, the Board took into account the materials and information described above as well as other materials and
information provided to the Board and discussed with and among the Trustees, including information furnished to the Board by the Manager throughout the year regarding other series of the Trust, including series
sub-advised by the Sub-advisers. Individual Trustees may have given different weight to different factors and information with respect to each Agreement, and the
Trustees did not identify any single factor or information that, in isolation, would be controlling in deciding to approve the Agreements. The discussion below is intended to summarize the broad factors that figured prominently in the Board’s
decisions to approve the Agreements rather than to be all-inclusive. These broad factors included: (i) the nature, extent and quality of the services to be provided to the New Funds by the Manager and the
Sub-advisers; (ii) the investment performance of funds and accounts managed by the Manager and each Sub-adviser with strategies similar to the applicable New Fund;
(iii) the fees to be charged and
SUPPLEMENTAL INFORMATION (UNAUDITED)
estimated profitability; (iv) the extent to which economies of scale may in the future exist for a New Fund, and the
extent to which a New Fund may benefit from future economies of scale; and (v) any other benefits anticipated to be derived by the Manager or the Sub-advisers (or their respective affiliates) from their
relationships with the New Funds.
Nature, Extent and Quality of Services
The Trustees considered information regarding the nature, extent and quality of services to be provided to the New Funds by the Manager. The Trustees also considered,
among other things, the terms of the Management Agreement and the range of investment advisory services to be provided by the Manager. In addition, the Trustees reviewed the range of non-investment advisory
services to be provided by the Manager consistent with the terms of the Management Agreement, notably coordinating the preparation and filing of various regulatory documents, coordinating the preparation and assembly of Board meeting materials and
assisting the Board with certain valuation matters.
The Trustees considered that Guardian Small Cap Core VIP Fund and Guardian Global Utilities VIP Fund would
operate in a “manager-of-managers” structure and reviewed the responsibilities that the Manager would have under this structure, including monitoring and
evaluating the performance of the Sub-advisers, monitoring the Sub-advisers for adherence to the stated investment objectives, strategies, policies and restrictions of
the Funds and supervising the Sub-advisers with respect to the services that the Sub-advisers would provide under the
Sub-advisory Agreements. The Trustees also considered the process used by the Manager, consistent with this structure, to identify and recommend sub-advisers, and its
ability to monitor and oversee sub-advisers and recommend replacement sub-advisers, when necessary, and provide other services under the Management Agreement. The
Trustees reviewed information regarding the experience and background of the Manager’s key personnel and the Manager’s organizational structure and resources, including investment, legal and administrative capabilities of the Manager. In
this regard, the Trustees recognized that the New Funds may benefit from the Manager’s ability to use similar resources and capabilities of its affiliates in providing services to the New Funds.
The Trustees considered information regarding the nature, extent and quality of services to be provided to Guardian Small Cap Core VIP Fund and Guardian Global Utilities
VIP Fund by the Sub-advisers. The Trustees also
considered, among other things, the terms of the Sub-advisory Agreements and the range of investment advisory services to be provided by the Sub-advisers under the oversight of the Manager and the Sub-advisers’ experience with managing other funds that are series of the Trust. In evaluating these investment
advisory services, the Trustees considered, among other things, the Sub-advisers’ investment philosophies, styles and/or processes and approach to managing risk. The Trustees also considered information
regarding funds or accounts managed by the Sub-advisers with similar strategies as the applicable New Fund, including performance and portfolio characteristics, when available. The Trustees received and
evaluated information regarding the background, education, expertise and/or experience of the investment professionals that would serve as portfolio managers for these New Funds and the capabilities, resources and reputations of the Sub-advisers.
The Trustees considered that Guardian Multi-Sector Bond VIP Fund, Guardian Total Return Bond VIP Fund and Guardian
U.S. Government Securities VIP Fund would be managed without a sub-adviser by the Manager. In evaluating the investment advisory services to be provided by the Manager with respect to these New Funds, the
Trustees considered, among other things, the Manager’s investment philosophies, styles and/or processes and approach to managing risk. The Trustees also considered information regarding funds or accounts managed by the Manager or its affiliates
with similar strategies as the applicable New Fund, including performance and portfolio characteristics, when available, as well as the Manager’s experience investing in asset classes that would comprise the investment portfolios of these New
Funds. The Trustees received and evaluated information regarding the background, education, expertise and/or experience of the investment professionals that would serve as portfolio managers for these New Funds and the capabilities, resources and
reputations of the Manager and its affiliates.
Based upon these considerations, the Trustees concluded, within the context of their full deliberations and in light
of the New Funds’ anticipated operations, that the nature, extent and quality of services to be provided to the New Funds by the Manager and each Sub-adviser were appropriate.
Investment Performance
The New Funds had not commenced
operations prior to the Meeting. Accordingly, the New Funds did not yet
SUPPLEMENTAL INFORMATION (UNAUDITED)
have an investment performance record. The Board considered historical performance information with respect to funds or
accounts managed by the Manager and Sub-advisers (or their affiliates) with similar investment strategies as the New Funds, and comparisons to relevant benchmarks and peer groups, when available. The Trustees
concluded that the historical performance records available, viewed together with the other relevant factors and information considered by the Trustees, supported a decision to approve each Agreement. The Trustees also concluded that it was
appropriate to revisit the New Funds’ investment performance in connection with future reviews of the Agreements.
Costs and Profitability
The Trustees considered the proposed management fees to be paid by the Funds to the Manager under the Management Agreement and evaluated the reasonableness of
these fees. The Trustees received and reviewed comparative information with respect to the proposed management fees, including the management fees paid by other funds offered as investment options underlying variable contracts within the applicable
peer group based on data obtained from Broadridge Financial Solutions, Inc., an independent provider of industry data, which showed that the New Funds’ proposed contractual management fees fell within the following quintiles: the first quintile
for Guardian Small Cap Core VIP Fund, Guardian Total Return Bond VIP Fund and Guardian Multi-Sector Bond VIP Fund; the second quintile for Guardian Global Utilities VIP Fund; and the third quintile for Guardian U.S. Government Securities VIP Fund.
The Trustees considered the proposed sub-advisory fees to be paid under the
Sub-advisory Agreements and evaluated the reasonableness of those fees. The Trustees also considered that the fees to be paid to the Sub-advisers would be paid by the
Manager and not the New Funds and that the Manager had negotiated the fees with the Sub-advisers at arm’s-length. In addition, the Trustees considered the portion
of the management fees proposed to be paid to each Sub-adviser as compared to the portion proposed to be retained by the Manager.
The Trustees received comparative information relating to each New Fund’s anticipated operating expense ratios and the actual operating expense ratios of a peer
group of funds. In this regard, the Board noted that the New Funds’ anticipated operating expense ratios within the following quintiles: the first quintile for Guardian
Small Cap Core VIP Fund and Guardian Global Utilities VIP Fund; and the second quintile for Guardian U.S. Government Securities VIP Fund, Guardian Total Return Bond VIP Fund and Guardian
Multi-Sector Bond VIP Fund. The Trustees considered estimates of the New Funds’ projected asset levels and the Manager’s commitment to initially limit each New Fund’s operating expenses through an expense limitation agreement with the
Trust. Although the Board recognized that the comparisons between the proposed management fees and anticipated operating expenses of the New Funds and those of identified peer funds are imprecise, given different terms of agreements and variations
in fund strategies, the Trustees found that the comparative information supported their consideration and approval of the proposed management fees and evaluation of the anticipated operating expenses.
The Trustees reviewed information regarding the Manager’s projected costs of sponsoring the New Funds and projected profitability of the New Funds to the Manager
based on the anticipated assets and expenses of the New Funds. The Trustees noted that the information, including with respect to revenues and expenses, contained estimates because the New Funds had not yet commenced operations at the time of the
Meeting. The Trustees did not consider any projected profitability information from the Sub-advisers because the Manager would be responsible for payment of the
sub-advisory fees and had negotiated the fees with the Sub-advisers at arm’s-length.
Based on the consideration of the information and factors summarized above, as well as other information and factors deemed relevant by the Trustees, the Trustees
concluded that the proposed management and sub-advisory fees were reasonable in light of the nature, extent and quality of services expected to be rendered to the New Funds by the Manager and the Sub-advisers. The Trustees also concluded that the projected profitability of the New Funds to the Manager was acceptable and the Trustees determined it was appropriate to revisit this information in connection with
future reviews of the Agreements.
Economies of Scale
The
New Funds had not commenced operations prior to the Meeting. As a result, no specific information was available concerning the possible effect that asset growth and economies of scale would have on a New Fund’s expenses. The Trustees concluded
that it was appropriate to revisit potential economies of scale in connection with future reviews of the Agreements or
SUPPLEMENTAL INFORMATION (UNAUDITED)
earlier, if appropriate, and that they were satisfied with the extent to which economies of scale would be shared for the
benefit of shareholders based on anticipated asset levels.
Ancillary Benefits
The Trustees considered the potential benefits, other than management fees, that the Manager and/or its affiliates may receive because of the Manager’s relationship
with the New Funds. The Trustees acknowledged that the New Funds were designed to serve as investment options under variable contracts issued by an affiliate of the Manager that would receive fees under those contracts and that Park Avenue
Securities LLC, an affiliate of the Manager and principal underwriter of the Funds, and an insurance company affiliated with the Manager would be entitled to receive fees from the New Funds under a plan of distribution adopted pursuant to Rule 12b-1 under the 1940 Act. The Trustees considered the benefits to the Manager from increased assets under management. The Trustees considered that the Manager and its affiliates may benefit from (i) greater
efficiencies in annuity administration and operations and potential cost
savings due to a reduction in the number of unaffiliated funds available as annuity contract investment options, and (ii) increased dividends-received deductions due to the Funds’
status under the tax laws as disregarded entities. In addition, the Trustees considered the potential benefits, other than sub-advisory fees, that the Sub-advisers and
their affiliates may receive because of their relationships with the New Funds, including the potential increased ability to use soft dollars consistent with Trust policies and other benefits from increases in assets under management. The Trustees
concluded that benefits that may accrue to the Manager and its affiliates are reasonable and the benefits that may accrue to the Sub-advisers and their affiliates are consistent with those expected for a sub-adviser to a mutual fund such as the applicable New Fund.
Conclusion
Based on a comprehensive consideration and evaluation of all of the information and factors summarized above, among others, the Board voting as a whole, including the
Independent Trustees voting separately, unanimously approved the Agreements.
SUPPLEMENTAL INFORMATION (UNAUDITED)
Trustees and Officers Information Table
The following table provides information about the Trustees of the Trust.
|
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| |
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Name and
Year of Birth |
|
Term of Office,
Position(s) Held and Length of
Service1 |
|
Principal
Occupation(s) During Past Five Years |
|
Number of
Funds in Fund
Complex Overseen
by Trustees2 |
|
Other Directorships
Held by Trustee |
| Independent Trustees |
| |
|
|
|
|
| Bruce W. Ferris3 (born 1955) |
|
Trustee |
|
Retired (since 2015); President and CEO, Prudential Annuities Distributors, Inc. (2013–2015); Director/Trustee, Advanced Series Trust, The Prudential Series Fund and Prudential’s
Gibraltar Fund, Inc. (2013–2015); Senior Vice President, Prudential Annuities (2008–2015). |
|
16 |
|
None. |
| |
|
|
|
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| Theda R. Haber3
(born 1954) |
|
Trustee |
|
Adjunct Assistant Professor of Law, UC Hastings College of Law (since 2013); Member of the Board of Directors, Fairholme Trust Company, LLC (2015–2019); Attorney, Law Office of Theda R.
Haber (since 2014); Visiting Professor of Law, UC Davis School of Law (since 2014); Consultant, Haber & Associates LLC (financial services industry), (2012–2017); Advisory Council Chair, Vice Chair, and Member, Advisory Council on
Employee Welfare and Pension Benefit Plans (ERISA Advisory Council), U.S. Department of Labor (2009–2011); Managing Director and General Counsel, BlackRock Institutional Trust Company, N.A. (2009–2011); Deputy Global General Counsel,
Barclays Global Investors (2006–2009); Managing Director, Barclays Global Investors (1998–2006). |
|
16 |
|
None. |
| |
|
|
|
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| Marshall
Lux3
(born 1960) |
|
Trustee |
|
Senior Advisor, The Boston Consulting Group (since 2014); Senior Partner and Managing Director, The Boston Consulting Group (2009–2014). |
|
16 |
|
None. |
| |
|
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| Lisa K.
Polsky3 (born 1956) |
|
Trustee |
|
Board Member, MFA Financial, Inc. (real estate investment trust) (since 2020); Advisor, SMBC Americas (financial services) (since 2020); Senior Risk Advisor, AQR (investment management)
(2016–2019); Senior Risk Advisor, Ultra Capital (venture capital) (2016–2019); Board Member, DB USA Corporation (Deutsche Bank Intermediate Holding Company) (financial services) (since 2016); Chief Risk Officer, CIT Group Inc. (financial
services) (2010–2015); Board Member and Chair of Audit Committee, Piper Jaffray (investment bank) (2007–2016). |
|
16 |
|
None. |
| |
|
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|
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| John
Walters3 (born 1962) |
|
Lead Independent
Trustee |
|
Board Member, Amerilife Holdings LLC (insurance distribution) (since 2015); Board Member, Stadion Money Management LLC (investment adviser) (since 2011); President and Chief Operating Officer,
Hartford Life Insurance Company (2000–2010). |
|
16 |
|
Trustee, USAA Mutual Funds Trust, (One registered investment company offering 47 individual funds) (since
2019). |
SUPPLEMENTAL INFORMATION (UNAUDITED)
|
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| |
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Name and
Year of Birth |
|
Term of Office,
Position(s) Held and Length of
Service1 |
|
Principal
Occupation(s) During Past Five Years |
|
Number of
Funds in Fund
Complex Overseen
by Trustees2 |
|
Other Directorships
Held by Trustee |
| Interested Trustees |
| |
|
|
|
|
| Dominique Baede4 (born 1970) |
|
Trustee (Since
January 2020) |
|
Vice President, Head of Product, Life, Annuity and Inforce, The Guardian Life Insurance Company of America (since 2019); Managing Director, Product Management Group, AXA Equitable (insurance
company) prior thereto. |
|
16 |
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None. |
| |
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| Michael
Ferik4 (born 1972) |
|
Chairman and Trustee
(Since December 2019) |
|
Executive Vice President, Individual Markets, The Guardian Life Insurance Company of America (since 2020); Executive Vice President and Chief Financial Officer, The Guardian Life Insurance
Company of America (2017–2019); Executive Vice President, Individual Markets, The Guardian Life Insurance Company of America prior thereto. |
|
16 |
|
None. |
| 1 |
Except as otherwise noted, each Trustee began service in such capacity in 2016 and serves until his or her successor is
elected and qualified or until his or her resignation, death or removal. The business address of each Trustee is 10 Hudson Yards, New York, New York 10001. |
| 2 |
The Trust currently consists of 16 separate Funds. |
| 3 |
Member of the Audit Committee of the Trust. |
| 4 |
Each of Dominique Baede and Michael Ferik is considered to be an “interested person” of the Trust within the
meaning of the 1940 Act because of their affiliation with The Guardian Life Insurance Company of America and/or its affiliates. |
|
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| |
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| Name and Year of Birth |
|
Position(s) Held and
Length of Service5 |
|
Principal Occupation(s)
During Past Five Years |
| |
|
|
| Dominique Baede
(born 1970) |
|
President and Principal Executive Officer (Since January 2020) |
|
Vice President, Head of Product, Life, Annuity and Inforce, The Guardian Life Insurance Company of America (since 2019); Managing Director,
Product Management Group, AXA Equitable (insurance company) prior thereto. |
| |
|
|
| John H. Walter
(born 1962) |
|
Senior Vice President, Treasurer, and Principal Financial and Accounting Officer |
|
Vice President, Director of Finance, Corporate Finance, The Guardian Life Insurance Company of America. |
| |
|
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| Harris Oliner
(born 1971) |
|
Senior Vice President and Secretary |
|
Senior Vice President, Corporate Secretary, The Guardian Life Insurance Company of America (since 2015); Senior Vice President, Deputy
General Counsel, Corporate Secretary, Voya Financial, Inc. prior thereto. |
| |
|
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| Richard T. Potter
(born 1954) |
|
Senior Vice President and Chief Legal Officer |
|
Vice President and Equity Counsel, The Guardian Life Insurance Company of America. |
| |
|
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| Philip Stack
(born 1964) |
|
Chief Compliance Officer
(Since September 2017) |
|
Second Vice President, Mutual Fund Chief Compliance Officer, The Guardian Life Insurance Company of America (since 2017); Executive Director,
Chief Compliance Officer, Morgan Stanley (2015–2017); Vice President, Morgan Stanley prior thereto. |
| |
|
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| Brian Hagan
(born 1984) |
|
Anti-Money Laundering Officer (Since March 2019) |
|
Assistant Vice President (since 2019), Anti-Money Laundering Compliance, The Guardian Life Insurance Company of America/Park Avenue
Securities LLC; Vice President, Head of Financial Intelligence Unit, Brown Brothers Harriman & Co. (2014–2019); Assistant Vice President, AML Compliance Manager, JPMorgan Chase & Co. (2011–2014). |
| |
|
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| Kathleen M. Moynihan
(born 1966) |
|
Senior Counsel |
|
Second Vice President, Counsel (since 2019), The Guardian Life Insurance Company of America; Senior Counsel prior thereto. |
| |
|
|
| Maria Nydia Morrison
(born 1958) |
|
Fund Controller |
|
Mutual Fund Controller, The Guardian Life Insurance Company of America (since 2015); Chief Financial Officer/Assistant Operating Officer, St.
Francis De Assisi Montessori School (Plaridel, Bulacan), Inc. (Philippines) prior thereto. |
| |
|
|
| Sonya L. Crosswell
(born 1977) |
|
Assistant Secretary |
|
Assistant Vice President, Assistant Corporate Secretary and Secretary Pro Tem, The Guardian Life Insurance Company of America. |
| 5 |
Unless otherwise indicated, the Officers each began service in such capacity in 2016 and hold office for an indefinite
term or until their successors shall have been elected and qualified. The business address of each Officer is 10 Hudson Yards, New York, New York 10001. |
SUPPLEMENTAL INFORMATION (UNAUDITED)
The Statement of Additional Information (“SAI”) includes additional information about
the Trust’s Trustees and Officers and is available, without charge, upon request by calling toll-free 1-888-GUARDIAN (1-888-482-7342) or by visiting our website at http://guardianvpt.onlineprospectus.net/GuardianVPT/Prospectuses.
Portfolio Holdings and Proxy Voting Procedures
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year as an exhibit
to its reports on Form N-PORT. The Fund’s Form N-PORT reports are available on the Securities and Exchange Commission’s website at https://www.sec.gov. The
Fund’s Form N-PORT information is also available, without charge, upon request, by calling toll-free 1-888-GUARDIAN (1-888-482-7342) or by visiting our website at http://guardianvpt.onlineprospectus.net/
GuardianVPT/Prospectuses.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio
securities is included in the SAI. The SAI and information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 may be obtained
(i) without charge, upon request, by calling toll-free 1-888-GUARDIAN (1-888-482-7342) or by visiting our website at http://guardianvpt.onlineprospectus.net/
GuardianVPT/Prospectuses; and (ii) on the Securities and Exchange Commission’s website at
https://www.sec.gov.
This report is transmitted to shareholders only. It is not authorized for use as an offer of sale or a solicitation of an offer to buy shares of the Fund unless
accompanied or preceded by the Fund’s current prospectus. Past performance results shown in this report should not be considered a representation of future performance. Investment returns and principal value of shares will fluctuate so that
shares, when redeemed, may be worth more or less than their original cost. Statements and other information herein are as dated and are subject to change.
The Guardian Life Insurance Company of America New York, NY 10001-2159
PUB10525
Guardian Variable
Products Trust
2019
Annual Report
All Data as of December 31, 2019
Guardian Total Return
Bond VIP Fund
Important Notice
Beginning on January
1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund’s shareholder reports will no longer be sent by mail from The Guardian Insurance & Annuity Company, Inc. (“GIAC”).
Instead, GIAC will mail you a notice when copies of the shareholder reports are made available on a website. You will be notified by mail each time a report is posted and provided with a website link to access the report.
If you have already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. If you have not yet
elected electronic delivery, at any time, you may elect to receive the Fund’s shareholder reports and certain other communications from GIAC electronically, by going to www.guardianlife.com and registering for e-delivery.
You may instead elect to receive all future shareholder reports in paper free of charge. If you wish to receive paper copies of your shareholder reports, please call
GIAC’s Customer Service Office Contact Center at 1-888-GUARDIAN (1-888-482-7342). Your election to receive reports in paper will apply to all the underlying funds available.
|
|
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| Not FDIC insured. May lose value. No bank guarantee. |
|
www.guardianlife.com |
TABLE OF CONTENTS
Guardian Total Return Bond VIP Fund
Except as otherwise specifically stated, all information, including portfolio security positions, is as of
December 31, 2019. The views expressed in the Fund Commentary are those of the Fund’s portfolio manager(s) as of the date of this report and are subject to change without notice. They do not necessarily represent the views of Park Avenue
Institutional Advisers LLC or a sub-adviser. The Fund Commentary may contain some forward-looking statements providing expectations or forecasts of future events as of the date of this report; they do not
necessarily relate to historical or current facts. There can be no guarantee that any forward-looking statement will be realized. We undertake no obligation to update forward-looking statements, whether as a result of new information, future events,
or otherwise. Any discussions of specific securities should not be considered a recommendation to buy or sell those securities. Fund holdings will vary. Information contained herein has been obtained from sources believed reliable, but is not
guaranteed.
GUARDIAN TOTAL RETURN BOND VIP FUND
FUND COMMENTARY OF PARK AVENUE INSTITUTIONAL ADVISERS LLC, INVESTMENT ADVISER (unaudited)
Highlights
| • |
|
Guardian Total Return Bond VIP (the “Fund”) returned 0.30%, underperforming its benchmark, the Bloomberg Barclays U.S. Aggregate Bond Index1 (the “Index”), for the period between its inception on October 21, 2019 and December 31, 2019. The Index returned 0.35% for the period. |
| • |
|
The Fund’s underperformance was primarily due to its underweight allocation to agency residential mortgage-backed securities (“RMBS”). |
Market Overview
After a woeful 2018, securities markets roared back in 2019.
Returns of 25% or more were commonplace among major equity indexes and returns for traditionally riskier fixed income asset classes also broke into the double digits as the U.S. Federal Reserve (the “Fed”) and other central banks around
the world reassured investors and encouraged risk taking by cutting interest rates.
The rally defied a daunting array of real and potential threats at home and
abroad: cooling economies and heated politics; trade disputes; volatile energy prices; Brexit drama; the impeachment of President Trump; high valuations for many asset classes; and potential early warning signs of recession in the Treasury market.
While these concerns caused bursts of anxiety, investors mostly took comfort from central bank support, steady (if lackluster) economic growth, extremely low unemployment, and strong consumer spending.
The Standard & Poor’s 500 Index2 returned 31.49% for the year. In fixed income, the U.S. 10-year Treasury returned 8.9%.
The market’s momentum was firmly established by the potent rally in the first quarter after
the Fed dramatically reversed its formerly bullish tone on the U.S. economy and indicated it could soon switch from raising interest rates to cutting them, which it did three times during the year. The cuts came amid diminishing expectations for
economic growth, escalating trade tensions, and a persistent inversion of the U.S. Treasury yield curve. In such yield curve inversions, which have been a reliable sign that a recession was coming within a year or two, yields on certain shorter-term
U.S. Treasurys exceed yields on longer-term notes.
Despite the inversion of the U.S. Treasury yield curve, which has since resolved, most economists are not
forecasting a recession within the year given the very low unemployment rate and generally positive, if diminished, economic momentum. The Fed is estimating 2020 economic growth at or slightly
below 2.0% and inflation slightly below its 2.0% target. Unemployment, most recently at 3.5%, is expected to remain below 4.0%.
Portfolio Review
The Fund’s underweights in RMBS and AAA- through A-rated corporate bonds with
maturities over 10 years detracted from relative performance. We viewed an emphasis on less volatile bonds as prudent, and this also detracted from relative performance given the risk-on market during the
period.
In a period when longer-maturity securities outperformed, the VIP benefitted from having a duration longer than the Index. The Fund’s overweight in BBB-rated corporate bonds with maturities of 3 to 10 years was the largest contributor to performance relative to the Index. An
out-of-Index allocation to high yield corporate bonds also contributed to relative performance as riskier assets outperformed in the period.
Outlook
We believe that while the Fed’s renewed focus on supporting
economic growth may bear fruit slowly for the U.S. economy, it had a soothing impact on securities markets throughout 2019. We believe that much will continue to depend on whether investors view central banks as both committed to supporting growth
and capable of doing so.
However, risks appear to be growing as valuations and corporate debt levels increase while the current expansion, already the longest ever,
continues to age. We would note that a market leaning too heavily on central bank support could be fragile if the Fed proves unwilling or unable to prevent a downturn. We continue to view global growth concerns, domestic politics, trade tensions,
and energy prices as key potential catalysts for shifts in risk.
As we attempt to balance the genuine benefit of current Fed policy and the minimal risk of imminent
recession with the fact that the economy is decelerating and there are few obvious catalysts to boost returns, we believe it is important to take a disciplined approach to risk. We are not counting on broad-based spread tightening or short-term
trading. We currently see the greatest potential benefit in generating carry, which means holding investments for yield where we believe that the yield compensates properly for risk.
| 1 |
The Bloomberg Barclays U.S. Aggregate Bond Index (the “Index”) is an index of U.S dollar-denominated,
investment-grade U.S. government and corporate securities, and mortgage pass-through securities, and asset-backed securities. You may not invest in the Index and, unlike the Fund, the Index does not incur fees or expenses. |
| 2 |
The Standard & Poor’s 500® Index (the “S&P
500 Index”) is an unmanaged market-capitalization-weighted index generally considered to be representative of U.S. equity market activity. The S&P 500 Index consists of 500 stocks representing leading industries of the U.S. economy. Index
results assume the reinvestment of dividends paid on the stocks constituting the Index. You may not invest in the S&P 500 Index, and, unlike the fund, the S&P 500 Index does not incur fees or expenses. |
GUARDIAN TOTAL RETURN BOND VIP FUND
Funds in the Guardian Variable Products Trust are sold by prospectus only. You should carefully
consider the investment objectives, risks, charges and expenses of the Funds before making an investment decision. The prospectus contains this and other important information. Please read it carefully before investing or sending money. Please visit
our website at http://guardianvpt.onlineprospectus.net/GuardianVPT/ Prospectuses or to obtain a printed copy, call 1-888-GUARDIAN (1-888-482-7342).
As with all mutual funds, the value of an investment in the
Fund could decline, and you could lose money. Diversification does not guarantee profit or protect against loss, and there can be no assurance that the Fund will achieve its investment objective. Bond funds are subject to interest rate risk, credit
risk, and prepayment risk. When interest rates rise, bond prices generally fall, and when interest rates fall, bond prices generally rise. In a lower interest rate environment, the risk that bond prices may fall when interest rates rise is
potentially greater. Derivative transactions can create leverage and may be highly volatile. It is possible that a derivative transaction will result in a loss greater than the principal amount invested and the Fund may not be able to close out a
derivative transaction at a favorable time or price. International investing involves special risks, which include changes in currency rates, foreign taxation and differences in auditing standards and securities regulations, political uncertainty
and greater volatility. Foreign securities are subject to political, regulatory, economic, and exchange-rate risks not present in domestic investments. These risks are even greater when investing in emerging markets. The value of a debt security is
affected by changes in interest rates and is subject to any credit risk of the issuer or guarantor of the security. Any discussions of specific securities should not be considered a recommendation to buy or sell those securities. Fund holdings will
vary.
GUARDIAN TOTAL RETURN BOND VIP FUND
Fund Characteristics (unaudited)
Total Net Assets: $337,312,094
|
| |
|
Bond Sector Allocation1 As
of December 31, 2019 |
|
| |
|
Bond Quality Allocation2 As
of December 31, 2019 |
|
|
GUARDIAN TOTAL RETURN BOND VIP FUND
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Top Ten Holdings1 As of December 31, 2019 |
|
| |
|
|
|
| Holding |
|
Coupon Rate |
|
|
Maturity Date |
|
|
% of Total
Net Assets |
|
| U.S. Treasury Note |
|
|
1.500% |
|
|
|
9/30/2024 |
|
|
|
16.37% |
|
| U.S. Treasury Note |
|
|
1.500% |
|
|
|
9/30/2021 |
|
|
|
5.65% |
|
| U.S. Treasury Note |
|
|
1.625% |
|
|
|
8/15/2029 |
|
|
|
4.28% |
|
| U.S. Treasury Bond |
|
|
2.250% |
|
|
|
8/15/2049 |
|
|
|
4.21% |
|
| Federal National Mortgage Association |
|
|
3.500% |
|
|
|
7/1/2049 |
|
|
|
3.15% |
|
| Federal National Mortgage Association |
|
|
3.000% |
|
|
|
9/1/2049 |
|
|
|
2.91% |
|
| Federal National Mortgage Association |
|
|
3.500% |
|
|
|
3/1/2034 |
|
|
|
2.49% |
|
| Federal National Mortgage Association |
|
|
3.000% |
|
|
|
11/1/2049 |
|
|
|
2.39% |
|
| Federal National Mortgage Association |
|
|
3.500% |
|
|
|
8/1/2049 |
|
|
|
2.33% |
|
| Federal National Mortgage Association |
|
|
4.000% |
|
|
|
5/1/2049 |
|
|
|
1.91% |
|
| Total |
|
|
|
45.69% |
|
| 1 |
Portfolio holdings are subject to change and should not be considered a recommendation to buy or sell individual
securities. Cash includes short-term investments and net other assets and liabilities. |
| 2 |
The Bond Quality Allocation chart displays the percentage of fund assets allocated to each rating. Rating
agencies’ independent ratings of individual securities are aggregated by Barclays, and market weights are reported using Standard & Poor’s letter rating conventions. Rating methodology uses the middle rating of Moody’s
Investors Service, Inc., Standard & Poor’s Ratings Services, and Fitch Ratings. When a rating from only two of the rating agencies is available, the lower rating is used. Credit quality ratings assigned by a rating agency are subject
to change periodically and are not absolute standards of credit quality. Rating agencies may fail to make timely changes in credit ratings, and an issuer’s current financial condition may be better or worse than a rating indicates. In
formulating investment decisions for the Fund, Park Avenue Institutional Advisers LLC develops its own analysis of the credit quality and risks associated with individual debt instruments, rather than relying exclusively on rating agency ratings.
|
Fund Performance (unaudited)
|
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| |
|
|
|
|
|
| Average Annual Total Returns
As of December 31, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
| |
|
Inception Date |
|
|
1 Year |
|
|
5 Year |
|
|
10 Year |
|
|
Since Inception* |
|
| Guardian Total Return Bond VIP Fund |
|
|
10/21/2019 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.30% |
|
| Bloomberg Barclays U.S. Aggregate Bond Index |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.35% |
|
| * |
Since inception returns are not annualized and represent cumulative total returns. |
Performance quoted represents past performance and does not guarantee or predict future results. Investment return and principal value will fluctuate, so shares, when
redeemed, may be worth more or less than their original cost. The Fund’s fees and expenses are detailed in the Financial Highlights section of this report. Fees and expenses are factored into the net asset value of Fund shares and any
performance numbers we release. Total return figures include the effect of expense limitations in effect during the periods shown, if applicable; without such limitations, the performance shown would have been lower. Performance results assume the
reinvestment of dividends and capital gains. The return figures shown do not reflect the deduction of taxes that a contract owner/policyholder may pay on redemption units. The actual total returns for owners of variable annuity contracts or variable
life insurance policies that provide for investment in the Fund will be lower to reflect separate account and contract/policy charges. Current and month-end performance information, which may be lower or
higher than that cited, is available by calling 1-888-GUARDIAN
(1-888-482-7342) and is periodically updated on our website: http://guardianlife.com.
UNDERSTANDING YOUR FUND’S EXPENSES (UNAUDITED)
By investing in the Fund, you incur two types of costs:
(1) transaction costs and (2) ongoing costs, including, as applicable, investment advisory fees, distribution and/or service (12b-1) fees and other Fund expenses. The
example below is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from October 21, 2019 (commencement of
operations), to December 31, 2019. The table below shows the Fund’s expenses in two ways:
Expenses based on actual return
This section of the table provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you
invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the section under the heading
entitled “Expenses Paid
During Period” to estimate the expenses you paid on your account during this period.
Expenses based on hypothetical 5% return for comparison purposes
This section of the table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund with the cost of investing in other mutual funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the
other funds.
Note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads), redemption fees, or exchange fees. Therefore the second section is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. If these transactional costs were
included, your costs would have been higher. Charges and expenses at the insurance company separate account level are not reflected in the table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
| |
|
Beginning
Account Value
7/1/19 |
|
Ending
Account Value
12/31/19 |
|
|
Expenses Paid
During Period
7/1/19-12/31/19 |
|
|
Expense Ratio
During Period
7/1/19-12/31/19 |
|
| Based on Actual Return* |
|
$1,000.00 |
|
|
$1,003.00 |
|
|
|
$1.56 |
|
|
|
0.79% |
|
| Based on Hypothetical Return (5% Return Before Expenses)** |
|
$1,000.00 |
|
|
$1,021.22 |
|
|
|
$4.02 |
|
|
|
0.79% |
|
| * |
Expenses are equal to the Fund’s annualized expense ratio as indicated, multiplied by the average account value over
the period, multiplied by 72/365 (to reflect the period from October 21, 2019 (commencement of operations) through December 31, 2019). |
| ** |
Expenses (hypothetical expenses if the Fund had been in existence from 7/1/2019) are equal to the Fund’s annualized
expense ratio as indicated, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). |
SCHEDULE OF INVESTMENTS — GUARDIAN TOTAL RETURN BOND VIP FUND
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Principal
Amount |
|
|
Value |
|
| Agency Mortgage–Backed Securities – 17.2% |
|
| |
| Federal National Mortgage
Association |
|
| 3.00% due 9/1/2049 |
|
$ |
9,663,161 |
|
|
$ |
9,803,436 |
|
| 3.00% due 11/1/2049 |
|
|
7,944,827 |
|
|
|
8,059,787 |
|
| 3.50% due 3/1/2034 |
|
|
8,125,242 |
|
|
|
8,416,297 |
|
| 3.50% due 7/1/2049 |
|
|
10,327,635 |
|
|
|
10,615,181 |
|
| 3.50% due 8/1/2049 |
|
|
7,631,878 |
|
|
|
7,847,802 |
|
| 4.00% due 12/1/2048 |
|
|
4,955,004 |
|
|
|
5,154,879 |
|
| 4.00% due 5/1/2049 |
|
|
6,192,188 |
|
|
|
6,434,348 |
|
| |
|
|
| Freddie Mac Multifamily Structured Pass-Through
Certificates |
|
|
|
|
|
|
|
|
| K054 A2
2.745% due 1/25/2026 |
|
|
762,259 |
|
|
|
784,752 |
|
| K064 A2
3.224% due 3/25/2027 |
|
|
1,000,000 |
|
|
|
1,058,310 |
|
| |
|
|
|
|
|
|
|
|
| |
|
Total Agency Mortgage–Backed Securities
(Cost $58,026,377) |
|
|
|
58,174,792 |
|
| Asset–Backed Securities – 5.6% |
|
| |
|
|
| Ally Master Owner Trust
2017-3 A2
2.04% due 6/15/2022 |
|
|
900,000 |
|
|
|
899,856 |
|
| |
|
|
| American Express Credit Account Master Trust
2019-1 A
2.87% due 10/15/2024 |
|
|
1,000,000 |
|
|
|
1,021,722 |
|
| |
|
|
| Avis Budget Rental Car Funding AESOP LLC
2015-2A A
2.63% due 12/20/2021(1) |
|
|
1,500,000 |
|
|
|
1,504,697 |
|
| |
|
|
| BlueMountain CLO Ltd.
2014-2A BR2
3.716% (LIBOR 3 Month + |
|
|
|
|
|
|
|
|
| 1.75%) due
10/20/2030(1)(2) |
|
|
800,000 |
|
|
|
796,207 |
|
| |
|
|
| Citibank Credit Card Issuance Trust
2014-A1 A1
2.88% due 1/23/2023 |
|
|
2,150,000 |
|
|
|
2,171,992 |
|
| |
|
|
| Discover Card Execution Note Trust
2015-A4 A4
2.19% due 4/17/2023 |
|
|
1,000,000 |
|
|
|
1,002,781 |
|
| |
|
|
| Ford Credit Auto Owner Trust
2016-2 A
2.03% due 12/15/2027(1) |
|
|
1,000,000 |
|
|
|
1,000,162 |
|
| |
|
|
| GM Financial Automobile Leasing Trust
2019-1 A3
2.98% due 12/20/2021 |
|
|
1,000,000 |
|
|
|
1,008,819 |
|
| |
|
|
| ICG U.S. CLO
Ltd.
2018-2A B
3.703% (LIBOR 3 Month + |
|
|
|
|
|
|
|
|
| 1.75%) due
7/22/2031(1)(2) |
|
|
2,500,000 |
|
|
|
2,458,843 |
|
| |
|
|
| Santander Drive Auto Receivables Trust
2016-3 D
2.80% due 8/15/2022 |
|
|
1,500,000 |
|
|
|
1,509,266 |
|
| |
|
|
| Verizon Owner
Trust
2019-A A1A
2.93% due 9/20/2023 |
|
|
1,000,000 |
|
|
|
1,016,353 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Principal
Amount |
|
|
Value |
|
| Asset–Backed Securities (continued) |
|
| |
|
|
| Volkswagen Auto Loan Enhanced Trust
2018-1 A4
3.15% due 7/22/2024 |
|
$ |
1,000,000 |
|
|
$ |
1,021,974 |
|
| |
|
|
| Voya CLO
Ltd.
2016-3A A3R
3.753% (LIBOR 3 Month + |
|
|
|
|
|
|
|
|
| 1.75%) due
10/18/2031(1)(2) |
|
|
1,600,000 |
|
|
|
1,593,504 |
|
| |
|
|
| Wendy’s Funding LLC
2018-1A A2I
3.573% due 3/15/2048(1) |
|
|
980,000 |
|
|
|
990,241 |
|
| |
|
|
| World Omni Auto Receivables Trust
2017-A A4
2.24% due 6/15/2023 |
|
|
1,000,000 |
|
|
|
1,003,092 |
|
| |
|
|
|
|
|
|
|
|
| |
|
Total Asset–Backed Securities
(Cost $18,964,451) |
|
|
|
18,999,509 |
|
| Corporate Bonds & Notes – 41.6% |
|
| |
| Aerospace & Defense – 1.9% |
|
| |
|
|
| Northrop Grumman Corp.
3.20% due 2/1/2027 |
|
|
2,000,000 |
|
|
|
2,081,539 |
|
| |
|
|
| United Technologies Corp. |
|
|
|
|
|
|
|
|
| 3.75% due 11/1/2046 |
|
|
2,000,000 |
|
|
|
2,179,530 |
|
| 4.125% due 11/16/2028 |
|
|
2,000,000 |
|
|
|
2,250,188 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
6,511,257 |
|
| Agriculture – 0.9% |
|
| |
|
|
| BAT Capital Corp.
3.462% due 9/6/2029 |
|
|
2,000,000 |
|
|
|
2,023,319 |
|
| |
|
|
| Philip Morris International, Inc.
4.25% due
11/10/2044 |
|
|
1,000,000 |
|
|
|
1,105,719 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
3,129,038 |
|
| Beverages – 2.7% |
|
| |
|
|
| Anheuser-Busch InBev Worldwide, Inc.
4.75% due
1/23/2029 |
|
|
3,000,000 |
|
|
|
3,477,509 |
|
| |
|
|
| Constellation Brands, Inc.
3.70% due
12/6/2026 |
|
|
3,500,000 |
|
|
|
3,716,735 |
|
| |
|
|
| Diageo Capital PLC
2.125% due 10/24/2024 |
|
|
2,000,000 |
|
|
|
2,000,467 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
9,194,711 |
|
| Biotechnology – 0.6% |
|
| |
|
|
| Gilead Sciences, Inc.
3.70% due 4/1/2024 |
|
|
2,000,000 |
|
|
|
2,121,057 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
2,121,057 |
|
| Commercial Banks – 2.9% |
|
| |
|
|
| Citigroup, Inc.
4.075% (4.075% fixed rate |
|
|
|
|
|
|
|
|
| until 4/23/2028; LIBOR
3 Month + 1.192%
thereafter)
due 4/23/2029(2) |
|
|
3,750,000 |
|
|
|
4,105,044 |
|
| |
|
|
| Credit Suisse Group AG
3.869% (3.869% fixed
rate |
|
|
|
|
|
|
|
|
| until 1/12/2028; LIBOR
3 Month + 1.41%
thereafter)
due 1/12/2029(1)(2) |
|
|
3,500,000 |
|
|
|
3,729,510 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 6 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
SCHEDULE OF INVESTMENTS — GUARDIAN TOTAL RETURN BOND VIP FUND
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Principal
Amount |
|
|
Value |
|
| Commercial Banks (continued) |
|
| |
|
|
| JPMorgan Chase & Co.
4.25% due
10/15/2020 |
|
$ |
2,000,000 |
|
|
$ |
2,035,545 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
9,870,099 |
|
| Commercial Services – 1.0% |
|
| |
|
|
| Nielsen Finance LLC / Nielsen Finance Co.
5.00%
due 4/15/2022(1) |
|
|
1,650,000 |
|
|
|
1,656,188 |
|
| |
|
|
| United Rentals North America, Inc.
6.50% due
12/15/2026 |
|
|
1,650,000 |
|
|
|
1,813,453 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
3,469,641 |
|
| Diversified Financial Services – 1.3% |
|
| |
|
|
| Apollo Management Holdings LP
4.872% due 2/15/2029(1) |
|
|
2,000,000 |
|
|
|
2,246,603 |
|
| |
|
|
| Jefferies Group LLC / Jefferies Group Capital
Finance, Inc.
4.15% due 1/23/2030 |
|
|
2,000,000 |
|
|
|
2,120,960 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
4,367,563 |
|
| Electric – 1.5% |
|
| |
|
|
| CenterPoint Energy, Inc.
2.95% due
3/1/2030 |
|
|
2,000,000 |
|
|
|
1,971,958 |
|
| |
|
|
| FirstEnergy Corp.
3.90% due 7/15/2027 |
|
|
3,000,000 |
|
|
|
3,209,021 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
5,180,979 |
|
| Environmental Control – 0.6% |
|
| |
|
|
| Waste Management, Inc.
3.45% due
6/15/2029 |
|
|
2,000,000 |
|
|
|
2,141,912 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
2,141,912 |
|
| Food – 2.2% |
|
| |
|
|
| Post Holdings, Inc.
5.00% due 8/15/2026(1) |
|
|
1,650,000 |
|
|
|
1,742,812 |
|
| |
|
|
| The Kroger Co.
4.50% due 1/15/2029 |
|
|
3,000,000 |
|
|
|
3,375,434 |
|
| |
|
|
| Tyson Foods, Inc.
4.35% due 3/1/2029 |
|
|
2,000,000 |
|
|
|
2,267,209 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
7,385,455 |
|
| Healthcare – Services – 1.4% |
|
| |
|
|
| HCA, Inc.
5.375% due 2/1/2025 |
|
|
1,650,000 |
|
|
|
1,824,619 |
|
| |
|
|
| Tenet Healthcare Corp.
6.75% due
6/15/2023 |
|
|
1,650,000 |
|
|
|
1,812,872 |
|
| |
|
|
| UnitedHealth Group, Inc.
3.875% due
12/15/2028 |
|
|
1,000,000 |
|
|
|
1,107,278 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
4,744,769 |
|
| Insurance – 1.0% |
|
| |
|
|
| American International Group, Inc.
4.75% due
4/1/2048 |
|
|
1,000,000 |
|
|
|
1,205,818 |
|
| |
|
|
| Aon PLC
3.875% due 12/15/2025 |
|
|
2,000,000 |
|
|
|
2,152,731 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
3,358,549 |
|
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Principal
Amount |
|
|
Value |
|
| Iron & Steel – 0.3% |
|
| |
|
|
| Steel Dynamics, Inc.
3.45% due 4/15/2030 |
|
$ |
1,000,000 |
|
|
$ |
1,011,879 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
1,011,879 |
|
| Lodging – 0.6% |
|
| |
|
|
| MGM Resorts International
5.50% due
4/15/2027 |
|
|
1,650,000 |
|
|
|
1,831,500 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
1,831,500 |
|
| Media – 2.7% |
|
| |
|
|
| Altice Financing S.A.
7.50% due 5/15/2026(1) |
|
|
1,650,000 |
|
|
|
1,773,750 |
|
| |
|
|
| CCO Holdings LLC / CCO Holdings Capital
Corp.
5.00% due 2/1/2028(1) |
|
|
1,650,000 |
|
|
|
1,731,378 |
|
| |
|
|
| Charter Communications Operating LLC / Charter
Communications Operating Capital
5.05% due 3/30/2029 |
|
|
1,000,000 |
|
|
|
1,134,657 |
|
| |
|
|
| Comcast Corp.
4.15% due 10/15/2028 |
|
|
4,000,000 |
|
|
|
4,505,376 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
9,145,161 |
|
| Oil & Gas – 2.9% |
|
| |
|
|
| BP Capital Markets PLC
3.535% due
11/4/2024 |
|
|
2,000,000 |
|
|
|
2,130,168 |
|
| |
|
|
| Hess Corp.
4.30% due 4/1/2027 |
|
|
2,000,000 |
|
|
|
2,132,847 |
|
| |
|
|
| Marathon Petroleum Corp.
3.80% due
4/1/2028 |
|
|
1,500,000 |
|
|
|
1,579,036 |
|
| |
|
|
| Newfield Exploration Co.
5.375% due
1/1/2026 |
|
|
1,500,000 |
|
|
|
1,626,921 |
|
| |
|
|
| Noble Energy, Inc.
3.85% due 1/15/2028 |
|
|
2,000,000 |
|
|
|
2,113,392 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
9,582,364 |
|
| |
| Packaging & Containers – 0.5% |
|
| |
|
|
| WRKCo, Inc.
4.90% due 3/15/2029 |
|
|
1,500,000 |
|
|
|
1,707,284 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
1,707,284 |
|
| Pharmaceuticals – 2.5% |
|
| |
|
|
| AstraZeneca PLC
3.375% due 11/16/2025 |
|
|
2,000,000 |
|
|
|
2,125,705 |
|
| |
|
|
| Bausch Health Cos., Inc.
6.125% due 4/15/2025(1) |
|
|
1,650,000 |
|
|
|
1,704,830 |
|
| |
|
|
| Becton Dickinson and Co.
3.363% due
6/6/2024 |
|
|
2,000,000 |
|
|
|
2,083,083 |
|
| |
|
|
| CVS Health Corp.
3.25% due 8/15/2029 |
|
|
2,500,000 |
|
|
|
2,540,853 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
8,454,471 |
|
| Pipelines – 1.3% |
|
| |
|
|
| Energy Transfer Operating LP
4.95% due
6/15/2028 |
|
|
1,000,000 |
|
|
|
1,095,815 |
|
| |
|
|
| MPLX LP
4.80% due 2/15/2029 |
|
|
1,500,000 |
|
|
|
1,646,402 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| The accompanying notes are an integral part of these financial statements. |
|
|
|
7 |
SCHEDULE OF INVESTMENTS — GUARDIAN TOTAL RETURN BOND VIP FUND
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Principal
Amount |
|
|
Value |
|
| Pipelines (continued) |
|
| |
|
|
| The Williams Cos., Inc.
3.75% due
6/15/2027 |
|
$ |
1,500,000 |
|
|
$ |
1,564,590 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
4,306,807 |
|
| Real Estate Investment Trusts – 3.4% |
|
| |
|
|
| Alexandria Real Estate Equities, Inc.
3.375% due
8/15/2031 |
|
|
3,000,000 |
|
|
|
3,118,487 |
|
| |
|
|
| American Tower Corp.
3.00% due 6/15/2023 |
|
|
2,000,000 |
|
|
|
2,044,236 |
|
| |
|
|
| Brixmor Operating Partnership LP
4.125% due
5/15/2029 |
|
|
2,000,000 |
|
|
|
2,148,764 |
|
| |
|
|
| ERP Operating LP
2.50% due 2/15/2030 |
|
|
2,000,000 |
|
|
|
1,985,888 |
|
| |
|
|
| Mid-America
Apartments LP
3.95% due 3/15/2029 |
|
|
2,000,000 |
|
|
|
2,182,687 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
11,480,062 |
|
| Retail – 1.6% |
|
| |
| McDonald’s Corp. |
|
| 2.625% due 9/1/2029 |
|
|
1,500,000 |
|
|
|
1,502,136 |
|
| 4.45% due 9/1/2048 |
|
|
1,500,000 |
|
|
|
1,719,224 |
|
| |
|
|
| Target Corp.
3.375% due 4/15/2029 |
|
|
2,000,000 |
|
|
|
2,174,303 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
5,395,663 |
|
| Semiconductors – 0.7% |
|
| |
|
|
| Broadcom, Inc.
4.75% due 4/15/2029(1) |
|
|
2,000,000 |
|
|
|
2,186,966 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
2,186,966 |
|
| Software – 1.1% |
|
| |
|
|
| Broadridge Financial Solutions, Inc.
2.90% due
12/1/2029 |
|
|
1,000,000 |
|
|
|
999,084 |
|
| |
|
|
| Microsoft Corp.
2.875% due 2/6/2024 |
|
|
2,500,000 |
|
|
|
2,594,150 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
3,593,234 |
|
| Telecommunications – 4.2% |
|
| |
|
|
| AT&T, Inc.
4.35% due 3/1/2029 |
|
|
3,000,000 |
|
|
|
3,337,538 |
|
| |
|
|
| Rogers Communications, Inc.
3.70% due
11/15/2049 |
|
|
750,000 |
|
|
|
757,127 |
|
| |
|
|
| T-Mobile USA,
Inc.
4.75% due 2/1/2028 |
|
|
1,650,000 |
|
|
|
1,728,887 |
|
| |
| Verizon Communications, Inc. |
|
| 4.329% due 9/21/2028 |
|
|
2,000,000 |
|
|
|
2,269,938 |
|
| 4.522% due 9/15/2048 |
|
|
750,000 |
|
|
|
899,959 |
|
| 5.15% due 9/15/2023 |
|
|
2,000,000 |
|
|
|
2,223,822 |
|
| |
|
|
| Vodafone Group PLC
4.375% due 5/30/2028 |
|
|
2,500,000 |
|
|
|
2,771,895 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
13,989,166 |
|
| Toys, Games & Hobbies – 0.3% |
|
| |
|
|
| Hasbro, Inc.
3.90% due 11/19/2029 |
|
|
1,000,000 |
|
|
|
1,007,254 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
1,007,254 |
|
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Principal
Amount |
|
|
Value |
|
| Transportation – 1.5% |
|
| |
|
|
| CSX Corp.
3.80% due 3/1/2028 |
|
$ |
3,000,000 |
|
|
$ |
3,274,117 |
|
| |
|
|
| Union Pacific Corp.
3.70% due 3/1/2029 |
|
|
1,750,000 |
|
|
|
1,913,150 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
5,187,267 |
|
| |
|
Total Corporate Bonds & Notes
(Cost $139,573,469) |
|
|
|
140,354,108 |
|
| Non–Agency Mortgage–Backed Securities – 3.0% |
|
| |
|
|
| BANK
2019-BN24 AS
3.283% due
11/15/2062 |
|
|
1,250,000 |
|
|
|
1,280,705 |
|
| |
|
|
| Citigroup Commercial Mortgage Trust
2016-C3 AS
3.366% due 11/15/2049(2)(3) |
|
|
1,125,000 |
|
|
|
1,155,713 |
|
| |
|
|
| GS Mortgage Securities Corp. Trust
2017-485L
A
3.721% due 2/10/2037(1) |
|
|
1,500,000 |
|
|
|
1,595,203 |
|
| |
| GS Mortgage Securities Trust |
|
| 2013-GC16 A4
4.271% due 11/10/2046 |
|
|
750,000 |
|
|
|
799,674 |
|
| 2017-FARM A
3.541% due 1/10/2043(1)(2)(3) |
|
|
1,200,000 |
|
|
|
1,271,264 |
|
| |
|
|
| Jackson Park
Trust
2019-LIC B
2.914% due 10/14/2039(1) |
|
|
680,000 |
|
|
|
671,668 |
|
| |
|
|
| UBS Commercial Mortgage Trust
2017-C2 A4
3.487% due 8/15/2050 |
|
|
1,500,000 |
|
|
|
1,588,677 |
|
| |
|
|
| WFRBS Commercial Mortgage Trust
2014-C19 AS
4.271% due 3/15/2047 |
|
|
1,500,000 |
|
|
|
1,598,298 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| Total Non–Agency Mortgage–Backed Securities (Cost $10,023,839) |
|
|
|
9,961,202 |
|
| U.S. Government Securities – 31.1% |
|
| |
|
|
| U.S. Treasury Bond
2.25% due 8/15/2049 |
|
|
14,600,000 |
|
|
|
14,203,062 |
|
| |
| U.S. Treasury Note |
|
| 1.50% due 9/30/2021 |
|
|
19,100,000 |
|
|
|
19,070,902 |
|
| 1.50% due 9/30/2024 |
|
|
55,700,000 |
|
|
|
55,236,559 |
|
| 1.625% due 10/31/2026 |
|
|
1,500,000 |
|
|
|
1,481,309 |
|
| 1.625% due 8/15/2029 |
|
|
14,810,000 |
|
|
|
14,439,171 |
|
| 1.75% due 11/15/2029 |
|
|
500,000 |
|
|
|
492,852 |
|
| |
|
|
|
|
|
|
|
|
| |
|
Total U.S. Government Securities
(Cost $105,627,519) |
|
|
|
104,923,855 |
|
|
|
|
|
|
| 8 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
SCHEDULE OF INVESTMENTS — GUARDIAN TOTAL RETURN BOND VIP FUND
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Principal
Amount |
|
|
Value |
|
| Short–Term Investment – 0.7% |
|
| |
| Repurchase Agreements – 0.7% |
|
| |
|
|
| Fixed Income Clearing Corp.,
0.12%, dated
12/31/2019,
proceeds at maturity value of
$2,246,015, due 1/2/2020(4) |
|
$ |
2,246,000 |
|
|
$ |
2,246,000 |
|
| |
|
|
|
|
|
|
|
|
| |
|
Total Repurchase Agreements
(Cost $2,246,000) |
|
|
|
2,246,000 |
|
| |
|
Total Investments(5) – 99.2%
(Cost $334,461,655) |
|
|
|
334,659,466 |
|
| |
|
| Assets in excess of other liabilities(6) – 0.8% |
|
|
|
2,652,628 |
|
| |
|
| Total Net Assets – 100.0% |
|
|
$ |
337,312,094 |
|
| (1) |
Securities that may be resold in transactions, exempt from registration under Rule 144A of the Securities Act of 1933, as
amended, normally to certain qualified buyers. At December 31, 2019, the aggregate market value of these securities amounted to $28,653,826, representing 8.5% of net assets. These securities have been deemed liquid by the investment adviser
pursuant to the Fund’s liquidity procedures approved by the Board of Trustees. |
| (2) |
Variable rate securities, which may include step-up bonds or adjustable rate
mortgages. The rate shown is the rate in effect at December 31, 2019. |
| (3) |
Variable coupon rate based on weighted average interest rate of underlying mortgages. |
| (4) |
The table below presents collateral for repurchase agreements. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Security |
|
Coupon |
|
|
Maturity
Date |
|
|
Principal
Amount |
|
|
Value |
|
| U.S. Treasury Note |
|
|
2.75% |
|
|
|
9/15/2021 |
|
|
$ |
2,235,000 |
|
|
$ |
2,295,796 |
|
| (5) |
Securities are segregated to cover anticipated or existing derivative positions or to be announced securities (TBA).
|
| (6) |
Assets in excess of other liabilities include net unrealized depreciation on futures contracts and centrally cleared swap
contracts as follows: |
Open futures contracts at December 31, 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Type |
|
Expiration |
|
|
Contracts |
|
|
Position |
|
|
Notional
Amount |
|
|
Notional
Value |
|
|
Unrealized
Depreciation |
|
| U.S. 2-Year Treasury Note |
|
|
March 2020 |
|
|
|
170 |
|
|
|
Long |
|
|
$ |
36,688,733 |
|
|
$ |
36,635,000 |
|
|
$ |
(53,733 |
) |
| U.S. Long Bond |
|
|
March 2020 |
|
|
|
265 |
|
|
|
Long |
|
|
|
42,306,212 |
|
|
|
41,315,156 |
|
|
|
(991,056 |
) |
| U.S. Ultra Long Bond |
|
|
March 2020 |
|
|
|
26 |
|
|
|
Long |
|
|
|
4,884,035 |
|
|
|
4,723,062 |
|
|
|
(160,973 |
) |
| Total |
|
|
$ |
83,878,980 |
|
|
$ |
82,673,218 |
|
|
$ |
(1,205,762 |
) |
| |
|
|
|
|
|
|
| Type |
|
Expiration |
|
|
Contracts |
|
|
Position |
|
|
Notional
Amount |
|
|
Notional
Value |
|
|
Unrealized
Appreciation |
|
| U.S. 5-Year Treasury Note |
|
|
March 2020 |
|
|
|
50 |
|
|
|
Short |
|
|
$ |
(5,958,228 |
) |
|
$ |
(5,930,469 |
) |
|
$ |
27,759 |
|
| U.S. 10-Year Treasury Note |
|
|
March 2020 |
|
|
|
200 |
|
|
|
Short |
|
|
|
(25,966,333 |
) |
|
|
(25,684,375 |
) |
|
|
281,958 |
|
| U.S. Ultra 10-Year Treasury Note |
|
|
March 2020 |
|
|
|
280 |
|
|
|
Short |
|
|
|
(39,994,609 |
) |
|
|
(39,396,875 |
) |
|
|
597,734 |
|
| Total |
|
|
$ |
(71,919,170 |
) |
|
$ |
(71,011,719 |
) |
|
$ |
907,451 |
|
|
|
|
|
|
| The accompanying notes are an integral part of these financial statements. |
|
|
|
9 |
SCHEDULE OF INVESTMENTS — GUARDIAN TOTAL RETURN BOND VIP FUND
Centrally cleared credit default swap agreements — sell protection(7):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Reference Entity |
|
Implied
Credit Spread
at 12/31/19(8) |
|
|
Notional
Amount(9) |
|
|
Maturity |
|
|
(Pay)/Receive
Fixed Rate |
|
|
Periodic
Payment
Frequency |
|
|
Upfront
Payments
Made |
|
|
Value |
|
|
Unrealized
Depreciation |
|
| CDX.NA.HY.33 |
|
|
2.80% |
|
|
|
USD 3,366,000 |
|
|
|
12/20/2024 |
|
|
|
5.00% |
|
|
|
Quarterly |
|
|
$ |
325,323 |
|
|
$ |
324,355 |
|
|
$ |
(968 |
) |
| (7) |
When a credit event occurs as defined under the terms of the swap agreement, the Fund as a seller of credit protection
will either (i) pay to the buyer of protection an amount equal to the par value of the defaulted reference entity and take delivery of the reference entity or (ii) pay a net amount equal to the par value of the defaulted reference entity less its
recovery value. |
| (8) |
Implied credit spread, represented in absolute terms, utilized in determining the value of the credit default swap
agreements as of period end will serve as an indicator of the current status of the payment/performance risk and represent the likelihood or risk of default for the credit derivative. The implied credit spread of a referenced entity reflects the
cost of buying/selling protection and may include payments required to be made to enter into the agreement. Generally, wider credit spreads represent a perceived deterioration of the referenced entity’s credit soundness and a greater likelihood
or risk of default or other credit event occurring as defined under the terms of the swap agreement. |
| (9) |
The notional amount represents the maximum potential amount the Fund could be required to pay as a seller of credit
protection if a credit event occurs, as defined under the terms of the swap agreement, for each security included in the CDX North America High Yield Index. |
Legend:
CLO — Collateralized Loan Obligation
LIBOR — London Interbank Offered Rate
USD —
United States Dollar
The following is a summary of the inputs used as of December 31, 2019 in valuing the Fund’s investments. For more information on
valuation inputs, please refer to Note 2a of the accompanying Notes to Financial Statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Valuation Inputs |
|
|
|
|
| Investments in Securities |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
| Agency Mortgage–Backed Securities |
|
$ |
— |
|
|
$ |
58,174,792 |
|
|
$ |
— |
|
|
$ |
58,174,792 |
|
| Asset–Backed Securities |
|
|
— |
|
|
|
18,999,509 |
|
|
|
— |
|
|
|
18,999,509 |
|
| Corporate Bonds & Notes |
|
|
— |
|
|
|
140,354,108 |
|
|
|
— |
|
|
|
140,354,108 |
|
| Non–Agency Mortgage–Backed Securities |
|
|
— |
|
|
|
9,961,202 |
|
|
|
— |
|
|
|
9,961,202 |
|
| U.S. Government Securities |
|
|
— |
|
|
|
104,923,855 |
|
|
|
— |
|
|
|
104,923,855 |
|
| Repurchase Agreements |
|
|
— |
|
|
|
2,246,000 |
|
|
|
— |
|
|
|
2,246,000 |
|
| Total |
|
$ |
— |
|
|
$ |
334,659,466 |
|
|
$ |
— |
|
|
$ |
334,659,466 |
|
| Other Financial Instruments |
|
| Futures Contracts |
|
|
|
|
|
|
|
|
|
| Assets |
|
$ |
907,451 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
907,451 |
|
| Liabilities |
|
|
(1,205,762 |
) |
|
|
— |
|
|
|
— |
|
|
|
(1,205,762 |
) |
| Swap Contracts |
|
|
|
|
|
|
|
|
|
| Liabilities |
|
|
— |
|
|
|
(968 |
) |
|
|
— |
|
|
|
(968 |
) |
| Total |
|
$ |
(298,311 |
) |
|
$ |
(968 |
) |
|
$ |
— |
|
|
$ |
(299,279 |
) |
|
|
|
|
|
| 10 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
FINANCIAL INFORMATION — GUARDIAN TOTAL RETURN BOND
VIP FUND
|
|
|
|
|
|
Statement of Assets and Liabilities As of December 31, 2019 |
|
|
|
| Assets |
|
|
|
|
| |
|
| Investments, at value |
|
$ |
334,659,466 |
|
| |
|
| Interest receivable |
|
|
2,245,263 |
|
| |
|
| Cash deposits with brokers for futures
contracts |
|
|
467,214 |
|
| |
|
| Receivable for variation margin on centrally cleared
swap contracts |
|
|
324,355 |
|
| |
|
| Receivable for variation margin on futures
contracts |
|
|
317,983 |
|
| |
|
| Reimbursement receivable from adviser |
|
|
29,152 |
|
| |
|
| Prepaid expenses |
|
|
18,658 |
|
| |
|
|
|
|
| |
|
| Total Assets |
|
|
338,062,091 |
|
| |
|
|
|
|
| |
|
| Liabilities |
|
|
|
|
| |
|
| Payable for investments purchased |
|
|
330,933 |
|
| |
|
| Investment advisory fees payable |
|
|
128,138 |
|
| |
|
| Due to custodian |
|
|
89,703 |
|
| |
|
| Distribution fees payable |
|
|
72,124 |
|
| |
|
| Payable for fund shares redeemed |
|
|
41,281 |
|
| |
|
| Accrued audit fees |
|
|
25,659 |
|
| |
|
| Accrued custodian and accounting fees |
|
|
17,768 |
|
| |
|
| Accrued trustees’ and officers’
fees |
|
|
3,865 |
|
| |
|
| Accrued expenses and other liabilities |
|
|
40,526 |
|
| |
|
|
|
|
| |
|
| Total Liabilities |
|
|
749,997 |
|
| |
|
|
|
|
| |
|
| Total Net Assets |
|
$ |
337,312,094 |
|
| |
|
|
|
|
| |
|
| Net Assets Consist of: |
|
|
|
|
| |
|
| Paid-in
capital |
|
$ |
336,282,527 |
|
| |
|
| Distributable earnings |
|
|
1,029,567 |
|
| |
|
|
|
|
| |
|
| Total Net Assets |
|
$ |
337,312,094 |
|
| |
|
|
|
|
| Investments, at Cost |
|
$ |
334,461,655 |
|
| |
|
|
|
|
| |
|
| Pricing of Shares |
|
|
|
|
| |
|
|
Shares of Beneficial Interest Outstanding with
No Par Value |
|
|
33,627,628 |
|
| |
|
| Net Asset Value Per Share |
|
|
$10.03 |
|
| |
|
|
|
|
|
|
|
|
|
|
Statement of Operations For the Period Ended December 31, 20191 |
|
|
|
| Investment Income |
|
|
|
|
| |
|
| Interest |
|
$ |
1,554,703 |
|
| |
|
|
|
|
| |
|
| Total Investment Income |
|
|
1,554,703 |
|
| |
|
|
|
|
| |
|
| Expenses |
|
|
|
|
| |
|
| Investment advisory fees |
|
|
298,307 |
|
| |
|
| Distribution fees |
|
|
167,949 |
|
| |
|
| Professional fees |
|
|
46,191 |
|
| |
|
| Shareholder reports |
|
|
23,050 |
|
| |
|
| Trustees’ and officers’ fees |
|
|
22,033 |
|
| |
|
| Custodian and accounting fees |
|
|
17,768 |
|
| |
|
| Administrative fees |
|
|
11,865 |
|
| |
|
| Transfer agent fees |
|
|
3,260 |
|
| |
|
| Other expenses |
|
|
7,761 |
|
| |
|
|
|
|
| |
|
| Total Expenses |
|
|
598,184 |
|
| |
|
| Less: Fees waived |
|
|
(67,465 |
) |
| |
|
|
|
|
| |
|
| Total Expenses, Net |
|
|
530,719 |
|
| |
|
|
|
|
| |
|
| Net Investment Income/(Loss) |
|
|
1,023,984 |
|
| |
|
|
|
|
| |
|
| Realized Gain/(Loss) and Change in Unrealized
Appreciation/(Depreciation) on Investments and Derivative Contracts |
|
|
|
|
| |
|
| Net realized gain/(loss) from investments |
|
|
(45,558 |
) |
| |
|
| Net realized gain/(loss) from futures
contracts |
|
|
152,609 |
|
| |
|
| Net change in unrealized appreciation/(depreciation)
on investments |
|
|
197,811 |
|
| |
|
| Net change in unrealized appreciation/(depreciation)
on futures contracts |
|
|
(298,311 |
) |
| |
|
| Net change in unrealized appreciation/(depreciation)
on swap contracts |
|
|
(968 |
) |
| |
|
|
|
|
| |
|
| Net Gain on Investments and Derivative
Contracts |
|
|
5,583 |
|
| |
|
|
|
|
| |
|
| Net Increase in Net Assets Resulting From
Operations |
|
$ |
1,029,567 |
|
| |
|
|
|
|
| |
|
|
|
|
| 1 |
Commenced operations on October 21, 2019.
|
|
|
|
|
|
| The accompanying notes are an integral part of these financial statements. |
|
|
|
11 |
FINANCIAL INFORMATION — GUARDIAN TOTAL RETURN BOND VIP FUND
|
|
|
|
|
|
Statement of Changes in Net Assets |
|
|
|
| |
|
| |
|
For the
Period Ended
12/31/191 |
|
| |
|
|
|
|
| Operations |
|
| |
|
| Net investment income/(loss) |
|
$ |
1,023,984 |
|
| |
|
| Net realized gain/(loss) from investments and
derivative contracts |
|
|
107,051 |
|
| |
|
| Net change in unrealized appreciation/(depreciation)
on investments and derivative contracts |
|
|
(101,468 |
) |
| |
|
|
|
|
| |
|
| Net Increase in Net Assets Resulting from
Operations |
|
|
1,029,567 |
|
| |
|
|
|
|
| |
| Capital Share
Transactions |
|
| |
|
| Proceeds from sales of shares |
|
|
345,857,787 |
|
| |
|
| Cost of shares redeemed |
|
|
(9,575,260 |
) |
| |
|
|
|
|
| |
|
| Net Increase in Net Assets Resulting from Capital
Share Transactions |
|
|
336,282,527 |
|
| |
|
|
|
|
| |
|
| Net Increase in Net Assets |
|
|
337,312,094 |
|
| |
|
|
|
|
| |
| Net Assets |
|
| |
|
| Beginning of period |
|
|
— |
|
| |
|
|
|
|
| |
|
| End of period |
|
$ |
337,312,094 |
|
| |
|
|
|
|
| |
| Other Information: |
|
| |
|
| Shares |
|
|
|
|
| |
|
| Sold |
|
|
34,584,186 |
|
| |
|
| Redeemed |
|
|
(956,558 |
) |
| |
|
|
|
|
| |
|
| Net Increase |
|
|
33,627,628 |
|
| |
|
|
|
|
| |
|
|
|
|
| 1 |
Commenced operations on October 21, 2019. |
|
|
|
|
|
| 12 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
This Page Intentionally Left Blank
FINANCIAL INFORMATION — GUARDIAN TOTAL RETURN BOND VIP FUND
The Financial Highlights table is intended to help you understand the Fund’s financial
performance for the past five years (or, if shorter, the period since inception). Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost)
on an investment in the Fund.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Highlights |
|
| |
|
Per Share Operating Performance |
|
|
|
|
| |
|
Net Asset Value,
Beginning of
Period |
|
|
Net Investment
Income(1) |
|
|
Net Realized
and Unrealized
Gain |
|
|
Total
Operations |
|
|
Net Asset
Value, End of
Period |
|
|
Total
Return(2),(3) |
|
| |
|
|
|
|
|
|
| Period
Ended 12/31/19(5) |
|
$ |
10.00 |
|
|
$ |
0.03 |
|
|
$ |
0.00 |
(6) |
|
$ |
0.03 |
|
|
$ |
10.03 |
|
|
|
0.30% |
|
|
|
|
|
|
| 14 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
FINANCIAL INFORMATION — GUARDIAN TOTAL RETURN BOND VIP FUND
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Ratios/Supplemental Data |
|
Net Assets, End
of Period (000s) |
|
|
Net Ratio of
Expenses to
Average
Net Assets(2),(4) |
|
|
Gross Ratio of
Expenses to
Average Net Assets(2) |
|
|
Net Ratio of Net
Investment Income to Average
Net Assets(2),(4) |
|
|
Gross Ratio of Net
Investment Income
to Average Net Assets(2) |
|
|
Portfolio
Turnover Rate(2) |
|
|
|
|
|
|
|
| $ |
337,312 |
|
|
|
0.75% |
|
|
|
0.85% |
|
|
|
1.56% |
|
|
|
1.46% |
|
|
|
18% |
|
| (1) |
Calculated based on the average shares outstanding during the period. |
| (2) |
Ratios for periods less than one year have been annualized, except for total return and portfolio turnover rate. Certain non-recurring fees (i.e., audit fees) are not annualized. |
| (3) |
Total returns do not reflect the effects of charges deducted pursuant to the terms of The Guardian Insurance &
Annuity Company, Inc.’s variable contracts. Inclusion of such charges would reduce the total returns for all periods shown. |
| (4) |
Net Ratio of Expenses to Average Net Assets and Net Ratio of Net Investment Income to Average Net Assets include the
effect of fee waivers and expense limitations. |
| (5) |
Commenced operations on October 21, 2019. |
| (6) |
Rounds to $0.00 per share. |
|
|
|
|
|
| The accompanying notes are an integral part of these financial statements. |
|
|
|
15 |
NOTES TO FINANCIAL STATEMENTS — GUARDIAN TOTAL RETURN BOND VIP FUND
December 31, 2019
1.
Organization
Guardian Variable Products Trust (the “Trust”), a Delaware statutory trust organized on January 12, 2016, is registered under the
Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Trust currently has sixteen series. Guardian Total Return Bond VIP Fund (the
“Fund”) is a series of the Trust. The Fund is a diversified fund and commenced operations on October 21, 2019. The financial statements for other series of the Trust are presented in separate reports.
The Trust has authorized an unlimited number of shares of beneficial interest with no par value. Shares are bought and sold at closing net asset value (“NAV”).
Shares of the Fund are only sold to certain separate accounts of The Guardian Insurance & Annuity Company, Inc. (“GIAC”) that fund certain variable annuity contracts and variable life insurance policies issued by GIAC. GIAC is a
wholly-owned subsidiary of The Guardian Life Insurance Company of America (“Guardian Life”).
The Fund seeks total return with an emphasis on current
income as well as capital appreciation.
2. Significant Accounting Policies
The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The Fund follows the investment
company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 946 Financial Services — Investment Companies. The following policies are in conformity with
accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts and
disclosures in the financial statements. Actual results could differ from those estimates.
a. Investment Valuations The valuations of debt securities for
which quoted bid prices are readily available are valued at the bid price by independent pricing services (each, a “Service”). Debt securities for which quoted bid prices are not readily available are valued by a Service at the evaluated
bid price provided by the Service or the bid price provided by an independent broker-dealer or at a calculated price based on the spread to an appropriate benchmark
provided by such broker-dealer. Securities for which market quotations are not readily available or for which market quotations may be considered unreliable or for which a Service or independent
broker-dealer does not provide a valuation are valued at their fair values as determined in accordance with policies and procedures adopted by the Board of Trustees.
Under the policies and procedures approved by the Board of Trustees, Park Avenue Institutional Advisers LLC (“Park Avenue”), the Fund’s investment
adviser, has established a Fair Valuation Committee to assist the Board of Trustees with the oversight and monitoring of the valuation of the Fund’s investments. This includes monitoring the appropriateness of fair values based on results of
ongoing valuation oversight, including but not limited to consideration of security specific events, market events, and pricing vendor and broker-dealer due diligence. The Fair Valuation Committee oversees and carries out the policies for the
valuation of investments held in the Fund. The Fair Valuation Committee is responsible for discussing and assessing the potential impacts to the fair values on an ongoing basis, and at least on a quarterly basis with the Board of Trustees.
Equity securities traded on an exchange other than NASDAQ Stock Market, LLC (“NASDAQ”) are valued at the last reported sale price on the principal exchange or
market on which they are traded; or, if there were no sales that day, at the mean between the closing bid and ask prices. Securities traded on the NASDAQ are generally valued at the NASDAQ official closing price, which may not be the last sale
price. If the NASDAQ official closing price is not available for a security, that security is generally valued at the mean between the closing bid and ask prices. Repurchase agreements are carried at cost, which approximates fair value (see Note
5d). Foreign securities are valued in the currencies of the markets in which they trade and then converted to U.S. dollars by the application of foreign exchange rates at the close of the New York Stock Exchange (“NYSE”).
Securities whose values have been materially affected by events occurring before the Fund’s valuation time but after the close of the securities’ principal
exchange or market may be fair valued in accordance with policies and procedures adopted by the Board of Trustees. Valuations reflected in this report are as of the report date. As a result, changes in valuation due to market events and/or issuer
related events after the report date and prior to issuance of the report are not reflected herein.
NOTES TO FINANCIAL STATEMENTS — GUARDIAN TOTAL RETURN BOND VIP FUND
Various inputs are used in determining the valuation of the Fund’s investments. These inputs are summarized in three
broad levels listed below.
| • |
|
Level 1 — unadjusted inputs using quoted prices in active markets for identical investments. |
| • |
|
Level 2 — other significant observable inputs, including, but not limited to, quoted prices for similar investments, inputs other than quoted prices that are observable for investments (such as interest
rates, prepayment speeds, credit risks, etc.) or other market corroborated inputs. |
| • |
|
Level 3 — significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments) |
Inputs may include price information, volatility statistics, specific and broad credit data, liquidity statistics, and other factors. A financial instrument’s level
within the fair value hierarchy is based on the lowest level of any input; both individually and in aggregate, that is significant to the fair value measurement. However, the determination of what constitutes “observable” requires
significant judgment by the Trust. The Trust considers observable data to be that market data which is readily available, regularly distributed or updated, reliable and verifiable, and provided by independent sources that are actively involved in
the relevant market. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. Changes in valuation techniques may result in transfers into or out of a
financial instrument’s assigned level within the hierarchy.
The FASB requires reporting entities to make disclosures about purchases, sales, issuances and
settlements of Level 3 securities on a gross basis. For the period ended December 31, 2019, there were no transfers into or out of Level 3 of the fair value hierarchy.
In determining a financial instrument’s placement within the hierarchy, the Trust separates the Fund’s investment portfolio into two categories: investments
and derivatives (e.g., futures). A summary of inputs used to value the Fund’s assets and liabilities carried at fair value as of December 31, 2019 is included in the Schedule of Investments.
Investments Investments whose values are based on quoted market prices in active markets, and are therefore classified within Level 1, include active
listed equities. Investments that trade in markets that are not considered to be active, but are valued based on quoted market prices, dealer quotations or alternative pricing
sources supported by observable inputs are classified within Level 2. These include certain U.S. government and sovereign obligations, most government agency securities, investment-grade
corporate bonds, certain mortgage products, state, municipal and provincial obligations, and certain foreign equity securities, including securities whose prices may have been affected by events occurring after the close of trading on their
principal exchange or market and, as a result, whose values are determined by a pricing service as described above, or securities whose values are otherwise determined using fair valuation methods approved by the Fund’s Board of Trustees.
Investments classified within Level 3 have significant unobservable inputs, as they trade infrequently or not at all. Level 3 investments include, among
others, private placement securities. When observable prices are not available for these securities, the Trust uses one or more valuation techniques for which sufficient and reliable data is available. The inputs used by the Trust in estimating the
value of Level 3 investments include, for example, the original transaction price, recent transactions in the same or similar instruments, completed or pending third-party transactions in the underlying investment or comparable issuers,
subsequent rounds of financing, recapitalizations, and other transactions across the capital structure. Level 3 investments may also be adjusted to reflect illiquidity and/or non-transferability, with the
amount of such discount estimated by the Trust in the absence of market information. Assumptions used by the Trust due to the lack of observable inputs may significantly impact the resulting fair value and therefore the Fund’s results of
operations. As of December 31, 2019, the Fund had no securities classified as Level 3.
Derivatives Exchange-traded derivatives, such as
futures contracts, exchange-traded option contracts and certain swaps, are typically classified within Level 1 or Level 2 of the fair value hierarchy depending on whether or not they are deemed to be actively traded. Certain non-exchange-traded derivatives, such as generic forwards, certain swaps and options, have inputs which can generally be corroborated by market data and are therefore classified within Level 2.
b. Securities Transactions Securities transactions are accounted for on the date securities are purchased or sold (trade date). Realized gains or losses on
securities transactions are determined on the basis of specific identification.
c. Futures Contracts The Fund may enter into financial futures contracts. In
entering into such contracts, the
NOTES TO FINANCIAL STATEMENTS — GUARDIAN TOTAL RETURN BOND VIP FUND
Fund is required to deposit with the counterparty, either in cash or securities, an amount equal to a certain percentage
of the face value of the contract. Subsequent payments are received or made by the Fund each day, depending on the daily fluctuations in the values of the contracts, and are recorded for financial statement purposes as variation margin received or
paid by the Fund. Daily changes in variation margin are recognized as unrealized gains or losses by the Fund. The Fund may not achieve the anticipated benefits of the financial futures contracts and may realize a loss.
d. Credit Derivatives The Fund may enter into credit derivatives, including credit default swaps on individual obligations or credit indices. The Fund may use
these investments (i) as alternatives to direct long or short investment in a particular security or securities, (ii) to adjust the Fund’s asset allocation or risk exposure, (iii) to enhance potential return, or (iv) for hedging
purposes. The use by the Fund of credit default swaps may have the effect of creating a short position in a security. Credit derivatives can create investment leverage and may create additional investment risks that may subject the Fund to greater
volatility than investments in more traditional securities.
The Fund may enter into credit default swap agreements either as a buyer or seller. The Fund may buy
protection under a credit default swap to attempt to mitigate the risk of default or credit quality deterioration in one or more individual holdings or in a segment of the fixed income securities market. The Fund may sell protection under a credit
default swap in an attempt to gain exposure to an underlying issuer’s credit quality characteristics without investing directly in that issuer.
For swaps
entered with an individual counterparty, the Fund bears the risk of loss of the uncollateralized amount expected to be received under a credit default swap agreement in the event of the default or bankruptcy of the counterparty. Credit default swap
agreements are generally valued at a price at which the counterparty to such agreement would terminate the agreement. The Fund may also enter into cleared swaps.
In
entering into swap contracts, the Fund is required to deposit with the broker (or for the benefit of the broker), either in cash or securities, an amount equal to a percentage of the notional value of the contract. Subsequent payments are received
or made by the Fund each day, depending on the daily fluctuations in the values of the contracts, and are recorded for financial statement purposes as variation margin received or paid by the Fund. Daily changes in variation margin are
recognized as unrealized gains or losses by the Fund. The Fund may not achieve the anticipated benefits of the swap contracts and may realize a loss.
During the period ended December 31, 2019, the Fund entered into credit default swaps for risk exposure management and to enhance potential return.
e. Options Transactions The Fund can write (sell) put and call options on securities and indexes to earn premiums, for hedging purposes, for risk management
purposes or otherwise as part of its investment strategies. In writing options, the Fund is required to deposit with the broker or counterparty, either in cash or securities, an amount equal to a percentage of the face value of the options. When an
option is written, the premium received is recorded as an asset with an equal liability that is subsequently marked to market to reflect the market value of the written option. These liabilities, if any, are reflected as written options, at value,
in the Fund’s Statement of Assets and Liabilities. Premiums received from writing options which expire unexercised are recorded on the expiration date as a realized gain. The difference between the premium received and the amount paid on
effecting a closing purchase transaction, including brokerage commissions, is also treated as a realized gain, or if the premium is less than the amount paid for the closing purchased transactions, as a realized loss. If a written call option is
exercised, the premium is added to the proceeds from the sale of the underlying security in determining whether there has been a realized gain or loss. If a written put option is exercised, the premium reduces the cost basis of the security. In
writing an option, the Fund bears the market risk of an unfavorable change in the price of the security underlying the written option. Exercise of a written option could result in the Fund purchasing or selling a security at a price different from
its current market value. There were no options transactions as of December 31, 2019.
f. Investment Income Dividend income net of foreign taxes
withheld, if any, is generally recorded on the ex-dividend date. Interest income, which includes amortization/accretion of premium/discount, is determined using the interest income accrual method, and is
accrued and recorded daily.
g. Allocation of Income and Expenses Many of the expenses of the Trust can be directly attributed to a specific series of the
Trust. Expenses that cannot be directly attributed to a specific series of the Trust are generally apportioned among all the series in the Trust, based on relative net assets. In calculating net asset
NOTES TO FINANCIAL STATEMENTS — GUARDIAN TOTAL RETURN BOND VIP FUND
value per share for each series of the Trust, investment income, realized and unrealized gains and losses, and expenses
other than series-specific expenses are allocated daily to each series based upon the proportion of net assets attributable to each series.
3. Transactions with
Affiliates
a. Investment Advisory Fee and Expense Limitation Under the terms of the advisory agreement, which, after its two year initial term, is
reviewed and approved annually by the Board of Trustees, the Fund pays an investment advisory fee to Park Avenue. Park Avenue is a wholly-owned subsidiary of Guardian Life and receives an investment advisory fee at an annual rate of 0.45% of the
first $300 million, and 0.40% in excess of $300 million of the Fund’s average daily net assets. The fee is accrued daily and paid monthly.
Park Avenue has
contractually agreed through April 30, 2020 to waive certain fees and/or reimburse certain expenses incurred by the Fund to the extent necessary to limit the Fund’s total annual operating expenses after fee waiver and/or expense
reimbursement to 0.79% of the Fund’s average daily net assets (excluding, if applicable, any acquired fund fees and expenses, taxes, interest, transaction costs and brokerage commissions, litigation and extraordinary expenses). The limitation
may not be increased or terminated prior to this time without action by the Board of Trustees and may be terminated only upon approval of the Board of Trustees. Amounts waived or reimbursed by Park Avenue pursuant to any expense limitation will not
be subject to Park Avenue’s recoupment rights. For the period ended December 31, 2019, Park Avenue waived fees and/or paid Fund expenses in the amount of $67,465.
b. Compensation of Trustees and Officers Trustees and officers who are interested persons of the Trust, as defined in the 1940 Act, receive no compensation from
the Fund, except for the Chief Compliance Officer of the Trust. Trustees of the Trust who are not interested persons of the Trust, and the Chief Compliance Officer, receive compensation and reimbursement of expenses from the Trust.
c. Distribution Fees Park Avenue Securities LLC (“PAS”), a wholly-owned subsidiary of Guardian Life, is the principal underwriter of Fund shares. The
Trust has entered into a distribution and service agreement with PAS, which governs the sale and distribution of shares of the Fund. Under a distribution and service plan adopted by the Trust (“12b-1
plan”), PAS is compensated for services in such capacity, including its expenses in
connection with the promotion and distribution of shares of the Fund, at an annual rate of 0.25% of the Fund’s average daily net assets. For the period ended December 31, 2019, the Fund
paid distribution fees in the amount of $167,949 to PAS.
PAS has directed that certain payments under the 12b-1 plan be used
to compensate GIAC for shareholder services provided to contract owners.
4. Federal Income Taxes
a. Distributions to Shareholders For federal income tax purposes, the Fund is treated as a disregarded entity (“DRE”). As a DRE, the Fund is not subject
to an entity-level income tax; and any income, gains, losses, deductions, taxes, and credits of the Fund would instead be “passed through” directly to the separate accounts of GIAC that invest in the Fund and retain the same character for
U.S. federal income tax purposes. In addition, the Fund is not required to distribute taxable income and capital gains for U.S. federal income tax purposes. Therefore, no dividends and capital gains distributions were paid by the Fund.
5. Investments
a. Investment Purchases and Sales The cost of
investments and U.S. government agency obligations purchased and the proceeds from U.S. government agency obligations and other investments sold (excluding short-term investments and to be announced (TBA) securities) for the period ended
December 31, 2019, were as follows:
|
|
|
|
|
|
|
|
|
| |
|
|
| |
|
Other
Investments |
|
|
U.S. Government and
Agency Obligations |
|
| Purchases |
|
$ |
192,062,256 |
|
|
$ |
201,960,346 |
|
| Sales |
|
|
25,279,953 |
|
|
|
35,400,210 |
|
b. Foreign Securities Foreign securities investments involve special risks and considerations not typically associated with U.S.
investments. These risks include, but are not limited to, currency risk; adverse political, regulatory, social, and economic developments; and less reliable information about issuers. Moreover, securities of some foreign issuers may be less liquid
and their prices more volatile than those of comparable U.S. issuers.
c. Repurchase Agreements The Fund may invest in repurchase agreements to maintain
liquidity and earn income over periods of time as short as overnight. The collateral for repurchase agreements is either cash or fully negotiable U.S. government securities (including
NOTES TO FINANCIAL STATEMENTS — GUARDIAN TOTAL RETURN BOND VIP FUND
U.S. government agency securities). Repurchase agreements are fully collateralized (including the interest accrued
thereon) and such collateral is marked to market daily while the agreements remain in force. If the value of the collateral falls below the repurchase price plus accrued interest, the Fund will typically require the seller to deposit additional
collateral by the next business day. If the request for additional collateral is not met, or the seller defaults, the Fund maintains the right to sell the collateral (although it may be prevented or delayed from doing so in certain circumstances)
and may be required to claim any resulting loss against the seller. Park Avenue monitors the creditworthiness of the seller with which the Fund enters into repurchase agreements.
d. Securities Purchased on a When-Issued or Delayed-Delivery Basis The Fund may purchase securities on a when-issued or delayed-delivery basis, with payment and
delivery scheduled for a future date. These transactions are subject to market fluctuations and are subject to the risk that the value at delivery may be more or less than at the trade date purchase price. Although the Fund will generally enter into
these transactions with the intention of taking delivery of the securities, it may sell the securities before the settlement date. Assets will be segregated when a fund agrees to purchase on a when-issued or delayed-delivery basis. These
transactions may create investment leverage.
e. Restricted and Illiquid Securities A restricted security cannot be resold to the general public without prior
registration under the Securities Act of 1933, as amended (except pursuant to an applicable exemption). The values of these securities may be highly volatile. If the security is subsequently registered and resold, the issuer would typically bear the
expense of all registrations at no cost to the Fund. Restricted and illiquid securities are valued according to the policies and procedures adopted by the Trust’s Board of Trustees and are noted, if any, in the Fund’s Schedule of
Investments. As of December 31, 2019, the Fund did not hold any restricted, other than 144A restricted securities, or illiquid securities.
f. Below
Investment Grade Securities The Fund may invest in below investment grade securities (i.e. lower-quality, “junk” debt), which are subject to various risks. Lower-quality debt is considered to be speculative because it is less certain
that the issuer will be able to pay interest or repay the principal than in the case of investment grade debt. These securities can involve a substantially greater risk of default than higher-rated securities, and their values can decline
significantly over short periods of time. Lower-quality debt securities
tend to be more sensitive to adverse news about their issuers, the market and the economy in general, than higher-quality debt securities. The market for these securities can be less liquid,
especially during periods of recession or general market decline.
g. Mortgage- and Asset-Backed Securities The values of some mortgage-related or
asset-backed securities may be particularly sensitive to changes in prevailing interest rates. Early repayment of principal on some mortgage-related securities may expose the Fund to a lower rate of return upon reinvestment of principal. The values
of mortgage- and asset-backed securities depend in part on the credit quality and adequacy of the underlying assets or collateral and may fluctuate in response to the market’s perception of these factors as well as current and future repayment
rates. Some mortgage-backed securities are backed by the full faith and credit of the U.S. government (e.g., mortgage-backed securities issued by the Government National Mortgage Association, commonly known as “Ginnie Mae”), while other
mortgage-backed securities (e.g., mortgage-backed securities issued by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation, commonly known as “Fannie Mae” and “Freddie Mac”), are backed only
by the credit of the government entity issuing them. In addition, some mortgage-backed securities are issued by private entities and, as such, are not guaranteed by the U.S. government or any agency or instrumentality of the U.S. government.
h. Treasury Inflation Protected Securities Treasury inflation protected securities (“TIPS”) are debt securities issued by the U.S. Treasury whose
principal and/or interest payments are adjusted for inflation, unlike debt securities that make fixed principal and interest payments. The interest rate paid by the TIPS is fixed, while the principal value rises or falls based on changes in a
published Consumer Price Index (“CPI”). Thus, if inflation occurs, the principal and interest payments on TIPS are adjusted accordingly to protect investors from inflationary loss. During a deflationary period, the principal and interest
payments decrease, although the TIPS principal amounts will not drop below their face amounts at maturity. In exchange for the inflation protection, the TIPS generally pay lower interest rates than typical U.S. Treasury securities. Only if inflation
occurs will TIPS offer a higher real yield than a conventional Treasury bond of the same maturity.
i. LIBOR Risk Many financial instruments may be tied to
the London Interbank Offered Rate, or “LIBOR,” to determine payment obligations, financing terms,
NOTES TO FINANCIAL STATEMENTS — GUARDIAN TOTAL RETURN BOND VIP FUND
hedging strategies, or investment value. LIBOR is the offered rate for short-term Eurodollar deposits between major
international banks. On July 27, 2017, the head of the UK Financial Conduct Authority announced a desire to phase out the use of LIBOR by the end of 2021. Regulators and industry working groups have suggested alternative reference rates, but
global consensus is lacking and the process for amending existing contracts or instruments to transition away from LIBOR remains unclear. There also remains uncertainty and risk regarding the willingness and ability of issuers to include enhanced
provisions in new and existing contracts or instruments. As such, the transition away from LIBOR may lead to increased volatility and illiquidity in markets that are tied to LIBOR, reduced values of LIBOR related investments, and reduced
effectiveness of hedging strategies, adversely affecting the Fund’s performance or NAV. In addition, the alternative reference rate may be an ineffective substitute resulting in prolonged adverse market conditions for the Fund.
j. Disclosures About Derivative Instruments and Hedging Activities The Fund entered into U.S. Treasury futures contracts for the period ended December 31,
2019 to manage portfolio duration. The Fund bears the risk of interest rates moving unexpectedly, in which case the Fund may not achieve the anticipated benefits of the futures contracts and realize a loss. There is minimal counterparty credit risk
to the Funds since futures are exchange traded and the exchange’s clearinghouse, as counterparty to all exchange traded futures, guarantees futures against default.
Under certain market conditions, the Fund may use credit default swaps to seek to (i) hedge various investments, (ii) manage or adjust duration and yield curve exposure,
(iii) manage risk, (iv) enhance returns, or (v) as substitutes for permitted Fund investments. Credit default swaps involve the exchange of a floating or fixed rate payment in return for assuming potential credit losses of an underlying security or
pool of securities.
The gross returns to be exchanged or “swapped” between the parties are generally calculated with respect to a “notional
amount,” i.e., the return on or increase in value of a particular dollar amount invested at a particular interest rate, in a particular foreign currency or security, or in a “basket” of securities representing a particular
index. Cleared swaps are transacted through futures commission merchants (“FCM”s) that are members of central clearinghouses with the clearinghouse serving as a central counterparty
similar to transactions in futures contracts. Funds post initial and variation margin by making payments to their clearing member FCMs.
Generally, the Fund will enter into credit default swaps on a net basis, which means that the two payment streams are netted out, with a Fund receiving or paying, as the
case may be, only the net amount of the two payments. Credit default swaps do not normally involve the delivery of securities, other underlying assets or principal. Accordingly, the risk of loss with respect to credit default swaps is normally
limited to the net amount of payments that a Fund is contractually obligated to make. If the other party to a credit default swap defaults, a Fund’s risk of loss consists of the net amount of payments that the Fund is contractually entitled to
receive, if any.
In addition to the risks generally applicable to derivatives, risks associated with credit default swap agreements include adverse changes in the
returns of the underlying instruments, failure of the counterparties to perform under the agreement’s terms and the possible lack of liquidity with respect to the agreements.
As of December 31, 2019, the Fund had the following derivatives at fair value, grouped into appropriate risk categories that illustrate the Fund’s use of
derivative instruments:
|
|
|
|
|
|
|
|
|
| |
|
|
| |
|
Interest Rate
Contracts |
|
|
Credit Default
Contracts |
|
| |
|
|
| Asset Derivatives |
|
|
|
|
|
|
|
|
| Futures Contracts1 |
|
$ |
907,451 |
|
|
$ |
— |
|
| |
|
|
| Liability Derivatives |
|
|
|
|
|
|
|
|
| Futures Contracts1 |
|
$ |
(1,205,762 |
) |
|
$ |
— |
|
| Swap Contracts2 |
|
|
— |
|
|
|
(968 |
) |
| 1 |
Statement of Assets and Liabilities location: Includes cumulative unrealized appreciation/(depreciation) of futures
contracts as reported in the Schedule of Investments. Only current day’s variation margin is reported within the Statements of Assets and Liabilities. |
| 2 |
Statement of Assets and Liabilities location: Includes the fair value of centrally cleared swap contracts as reported in
the Schedule of Investments. Only current day’s variation margin is reported within the Statements of Assets and Liabilities.
|
NOTES TO FINANCIAL STATEMENTS — GUARDIAN TOTAL RETURN BOND VIP FUND
Transactions in derivative investments for the period ended December 31, 2019 were as follows:
|
|
|
|
|
|
|
|
|
| |
|
|
| |
|
Interest Rate
Contracts |
|
|
Credit Default
Contracts |
|
| |
|
|
| Net Realized Gain (Loss) |
|
|
|
|
|
|
|
|
| Futures Contracts1 |
|
$ |
152,609 |
|
|
$ |
— |
|
| |
|
|
| Net Change in Unrealized
Appreciation/(Depreciation) |
|
|
|
|
|
|
|
|
| Futures Contracts2 |
|
$ |
(298,311 |
) |
|
$ |
— |
|
| Swap Contracts3 |
|
|
— |
|
|
|
(968 |
) |
| |
|
|
| Average Number of Notional Amounts |
|
|
|
|
|
|
|
|
| Futures Contracts4 |
|
|
989 |
|
|
|
— |
|
| Swap Contracts — Sell Protection |
|
$ |
— |
|
|
$ |
1,122,000 |
|
| 1 |
Statement of Operations location: Net realized gain/(loss) from futures contracts. |
| 2 |
Statement of Operations location: Net change in unrealized appreciation/(depreciation) on futures contracts.
|
| 3 |
Statement of Operations location: Net change in unrealized appreciation/(depreciation) on swap contracts.
|
| 4 |
Amount represents number of contracts. |
6. Temporary Borrowings
The Fund, with other funds managed by Park Avenue,
is party to a $10 million committed revolving credit facility from State Street Bank and Trust Company for temporary borrowing purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of
securities. Interest is calculated based on the higher of the daily one-month LIBOR rate and the Federal Funds rate plus 1.25% at the
time of borrowing. In addition to the interest charged on any borrowings by the Fund, each fund pays a commitment fee of 0.30% per annum on its share of the unused portion of the credit facility.
The agreement is in place until December 9, 2020. The Fund did not utilize the credit facility during the period ended December 31, 2019.
7.
Indemnifications
Under the Trust’s organizational documents and, in some cases, by contract, its officers and trustees are indemnified against certain
liabilities arising out of the performance of their duties to the Fund. In addition, in the normal course of business, the Fund enters into contracts with its vendors and others that provide general indemnifications. The Fund’s maximum exposure
under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. However, based on experience, the Fund expects the risk of loss to be remote.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees of Guardian Variable Products Trust and Shareholders of
Guardian Total Return Bond VIP Fund
Opinion on the Financial
Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Guardian Total Return Bond VIP
Fund (one of the funds constituting Guardian Variable Products Trust, referred to hereafter as the “Fund”) as of December 31, 2019, and the related statements of operations and changes in net assets, including the related notes, and
the financial highlights for the period October 21, 2019 (commencement of operations) through December 31, 2019 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in
all material respects, the financial position of the Fund as of December 31, 2019, and the results of its operations, changes in its net assets, and the financial highlights for the period from October 21, 2019 (commencement of operations)
through December 31, 2019 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements
based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws
and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit of these financial statements in accordance
with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing
procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2019 by correspondence with the custodian and
brokers. We believe that our audit provides a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
New York, New York
February 20, 2020
We have served as the auditor of one or more investment companies in Guardian Variable Products Trust since 2016.
SUPPLEMENTAL INFORMATION (UNAUDITED)
Approval of Investment Advisory and Sub-advisory
Agreements
Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), requires that a fund’s investment advisory and sub-advisory agreements be approved initially by the fund’s board of trustees. Section 15(c) also requires that the continuation of these agreements, after an initial term of up to two years, be annually
reviewed and approved by the board. Any such agreement must be approved by a vote of a majority of the trustees who are not parties to the agreement or “interested persons” (as defined in the 1940 Act) of a party to the agreement at an in-person meeting of the board called for the purpose of voting on such approval.
At a meeting of the Board of Trustees (the
“Board”) of Guardian Variable Products Trust (the “Trust”) held on March 27-28, 2018 (the “Meeting”), the Board considered and approved the proposed investment management
agreement (the “Management Agreement”) between the Trust, on behalf of Guardian Small Cap Core VIP Fund, Guardian Global Utilities VIP Fund, Guardian Multi-Sector Bond VIP Fund, Guardian Total Return Bond VIP Fund, and Guardian U.S.
Government Securities VIP Fund (the “New Funds”), and Park Avenue Institutional Advisers LLC (the “Manager”). The Board also considered and approved the proposed sub-advisory agreements
(the “Sub-advisory Agreements,” collectively with the Management Agreement, the “Agreements”) between the Manager and ClearBridge Investments LLC and Wellington Management Company LLP (the “Sub-advisers”), investment advisory firms engaged to serve as sub-advisers to Guardian Small Cap Core VIP Fund and Guardian Global Utilities VIP Fund, respectively.
The Trustees who are not parties to the Agreements or “interested persons” (as defined in the 1940 Act) of a party to the Agreements (the “Independent Trustees”) unanimously approved the Agreements for an initial term of two
years.
The Board is responsible for overseeing the management of each Fund. In determining whether to approve the Agreements, the Trustees evaluated information and
factors that they considered to be relevant and appropriate through the exercise of their own business judgment. The Trustees considered certain information and factors in light of advice furnished to them by legal counsel to the Trust and, in the
case of the Independent Trustees, their independent legal counsel. In advance of the Meeting, the Trustees received materials and information
designed to assist their consideration of the Agreements. At a Board meeting held on November 28-29, 2017, the Trustees received presentations from the
Manager and each Sub-adviser regarding the services to be rendered to, and the proposed investment strategies for, the New Funds. The Trustees received written responses from the Manager and each Sub-adviser to a series of questions and requests for information covering a wide variety of topics provided by independent legal counsel on behalf of the Independent Trustees. The Trustees also received
presentations and discussed the New Funds at a special telephonic Board meeting held on February 12, 2018, and the Independent Trustees discussed the New Funds with independent legal counsel in advance of the Meeting. The Trustees also received
materials and information regarding the legal standards applicable to their consideration of the Agreements and the process and criteria used by the Manager to identify and select the Sub-advisers for approval
by the Board and to propose that Guardian Multi-Sector Bond VIP Fund, Guardian Total Return Bond VIP Fund, and Guardian U.S. Government Securities VIP Fund would be managed directly by the Manager without a
sub-adviser.
During the course of their deliberations, the Independent Trustees met to discuss and evaluate the Agreements
in executive session with their independent legal counsel, outside of the presence of the Trustees who are not Independent Trustees and representatives from Fund management, the Manager or either Sub-adviser.
In reaching its decisions to approve the Agreements, the Board took into account the materials and information described above as well as other materials and
information provided to the Board and discussed with and among the Trustees, including information furnished to the Board by the Manager throughout the year regarding other series of the Trust, including series
sub-advised by the Sub-advisers. Individual Trustees may have given different weight to different factors and information with respect to each Agreement, and the
Trustees did not identify any single factor or information that, in isolation, would be controlling in deciding to approve the Agreements. The discussion below is intended to summarize the broad factors that figured prominently in the Board’s
decisions to approve the Agreements rather than to be all-inclusive. These broad factors included: (i) the nature, extent and quality of the services to be provided to the New Funds by the Manager and the
Sub-advisers; (ii) the investment performance of funds and accounts managed by the Manager and each Sub-adviser with strategies similar to
SUPPLEMENTAL INFORMATION (UNAUDITED)
the applicable New Fund; (iii) the fees to be charged and estimated profitability; (iv) the extent to which
economies of scale may in the future exist for a New Fund, and the extent to which a New Fund may benefit from future economies of scale; and (v) any other benefits anticipated to be derived by the Manager or the
Sub-advisers (or their respective affiliates) from their relationships with the New Funds.
Nature, Extent and
Quality of Services
The Trustees considered information regarding the nature, extent and quality of services to be provided to the New Funds by the
Manager. The Trustees also considered, among other things, the terms of the Management Agreement and the range of investment advisory services to be provided by the Manager. In addition, the Trustees reviewed the range of non-investment advisory services to be provided by the Manager consistent with the terms of the Management Agreement, notably coordinating the preparation and filing of various regulatory documents, coordinating the
preparation and assembly of Board meeting materials and assisting the Board with certain valuation matters.
The Trustees considered that Guardian Small Cap Core VIP
Fund and Guardian Global Utilities VIP Fund would operate in a “manager-of-managers” structure and reviewed the responsibilities that the Manager would have
under this structure, including monitoring and evaluating the performance of the Sub-advisers, monitoring the Sub-advisers for adherence to the stated investment
objectives, strategies, policies and restrictions of the Funds and supervising the Sub-advisers with respect to the services that the Sub-advisers would provide under
the Sub-advisory Agreements. The Trustees also considered the process used by the Manager, consistent with this structure, to identify and recommend sub-advisers, and
its ability to monitor and oversee sub-advisers and recommend replacement sub-advisers, when necessary, and provide other services under the Management Agreement. The
Trustees reviewed information regarding the experience and background of the Manager’s key personnel and the Manager’s organizational structure and resources, including investment, legal and administrative capabilities of the Manager. In
this regard, the Trustees recognized that the New Funds may benefit from the Manager’s ability to use similar resources and capabilities of its affiliates in providing services to the New Funds.
The Trustees considered information regarding the nature, extent and quality of services to be provided to
Guardian Small Cap Core VIP Fund and Guardian Global Utilities VIP Fund by the Sub-advisers. The Trustees also considered, among other things, the terms of
the Sub-advisory Agreements and the range of investment advisory services to be provided by the Sub-advisers under the oversight of the Manager and the Sub-advisers’ experience with managing other funds that are series of the Trust. In evaluating these investment advisory services, the Trustees considered, among other things, the
Sub-advisers’ investment philosophies, styles and/or processes and approach to managing risk. The Trustees also considered information regarding funds or accounts managed by the Sub-advisers with similar strategies as the applicable New Fund, including performance and portfolio characteristics, when available. The Trustees received and evaluated information regarding the background,
education, expertise and/or experience of the investment professionals that would serve as portfolio managers for these New Funds and the capabilities, resources and reputations of the Sub-advisers.
The Trustees considered that Guardian Multi-Sector Bond VIP Fund, Guardian Total Return Bond VIP Fund and Guardian U.S. Government Securities VIP Fund would be managed
without a sub-adviser by the Manager. In evaluating the investment advisory services to be provided by the Manager with respect to these New Funds, the Trustees considered, among other things, the
Manager’s investment philosophies, styles and/or processes and approach to managing risk. The Trustees also considered information regarding funds or accounts managed by the Manager or its affiliates with similar strategies as the applicable
New Fund, including performance and portfolio characteristics, when available, as well as the Manager’s experience investing in asset classes that would comprise the investment portfolios of these New Funds. The Trustees received and evaluated
information regarding the background, education, expertise and/or experience of the investment professionals that would serve as portfolio managers for these New Funds and the capabilities, resources and reputations of the Manager and its
affiliates.
Based upon these considerations, the Trustees concluded, within the context of their full deliberations and in light of the New Funds’ anticipated
operations, that the nature, extent and quality of services to be provided to the New Funds by the Manager and each Sub-adviser were appropriate.
SUPPLEMENTAL INFORMATION (UNAUDITED)
Investment Performance
The New Funds had not commenced operations prior to the Meeting. Accordingly, the New Funds did not yet have an investment performance record. The Board considered
historical performance information with respect to funds or accounts managed by the Manager and Sub-advisers (or their affiliates) with similar investment strategies as the New Funds, and comparisons to
relevant benchmarks and peer groups, when available. The Trustees concluded that the historical performance records available, viewed together with the other relevant factors and information considered by the Trustees, supported a decision to
approve each Agreement. The Trustees also concluded that it was appropriate to revisit the New Funds’ investment performance in connection with future reviews of the Agreements.
Costs and Profitability
The Trustees considered the proposed
management fees to be paid by the Funds to the Manager under the Management Agreement and evaluated the reasonableness of these fees. The Trustees received and reviewed comparative information with respect to the proposed management fees, including
the management fees paid by other funds offered as investment options underlying variable contracts within the applicable peer group based on data obtained from Broadridge Financial Solutions, Inc., an independent provider of industry data, which
showed that the New Funds’ proposed contractual management fees fell within the following quintiles: the first quintile for Guardian Small Cap Core VIP Fund, Guardian Total Return Bond VIP Fund and Guardian Multi-Sector Bond VIP Fund; the
second quintile for Guardian Global Utilities VIP Fund; and the third quintile for Guardian U.S. Government Securities VIP Fund.
The Trustees considered the
proposed sub-advisory fees to be paid under the Sub-advisory Agreements and evaluated the reasonableness of those fees. The Trustees also considered that the fees to be
paid to the Sub-advisers would be paid by the Manager and not the New Funds and that the Manager had negotiated the fees with the Sub-advisers at arm’s-length. In addition, the Trustees considered the portion of the management fees proposed to be paid to each Sub-adviser as compared to the portion proposed to be
retained by the Manager.
The Trustees received comparative information relating to each New Fund’s anticipated operating expense ratios and the actual
operating expense ratios of a peer
group of funds. In this regard, the Board noted that the New Funds’ anticipated operating expense ratios within the following quintiles: the first quintile for Guardian Small Cap Core VIP
Fund and Guardian Global Utilities VIP Fund; and the second quintile for Guardian U.S. Government Securities VIP Fund, Guardian Total Return Bond VIP Fund and Guardian Multi-Sector Bond VIP Fund. The Trustees considered estimates of the New
Funds’ projected asset levels and the Manager’s commitment to initially limit each New Fund’s operating expenses through an expense limitation agreement with the Trust. Although the Board recognized that the comparisons between the
proposed management fees and anticipated operating expenses of the New Funds and those of identified peer funds are imprecise, given different terms of agreements and variations in fund strategies, the Trustees found that the comparative information
supported their consideration and approval of the proposed management fees and evaluation of the anticipated operating expenses.
The Trustees reviewed information
regarding the Manager’s projected costs of sponsoring the New Funds and projected profitability of the New Funds to the Manager based on the anticipated assets and expenses of the New Funds. The Trustees noted that the information, including
with respect to revenues and expenses, contained estimates because the New Funds had not yet commenced operations at the time of the Meeting. The Trustees did not consider any projected profitability information from the Sub-advisers because the Manager would be responsible for payment of the sub-advisory fees and had negotiated the fees with the
Sub-advisers at arm’s-length.
Based on the consideration of the information and
factors summarized above, as well as other information and factors deemed relevant by the Trustees, the Trustees concluded that the proposed management and sub-advisory fees were reasonable in light of the
nature, extent and quality of services expected to be rendered to the New Funds by the Manager and the Sub-advisers. The Trustees also concluded that the projected profitability of the New Funds to the Manager
was acceptable and the Trustees determined it was appropriate to revisit this information in connection with future reviews of the Agreements.
Economies
of Scale
The New Funds had not commenced operations prior to the Meeting. As a result, no specific information was available concerning the possible
effect that asset growth and economies of scale would have on a New
SUPPLEMENTAL INFORMATION (UNAUDITED)
Fund’s expenses. The Trustees concluded that it was appropriate to revisit potential economies of scale in connection
with future reviews of the Agreements or earlier, if appropriate, and that they were satisfied with the extent to which economies of scale would be shared for the benefit of shareholders based on anticipated asset levels.
Ancillary Benefits
The Trustees considered the potential
benefits, other than management fees, that the Manager and/or its affiliates may receive because of the Manager’s relationship with the New Funds. The Trustees acknowledged that the New Funds were designed to serve as investment options under
variable contracts issued by an affiliate of the Manager that would receive fees under those contracts and that Park Avenue Securities LLC, an affiliate of the Manager and principal underwriter of the Funds, and an insurance company affiliated with
the Manager would be entitled to receive fees from the New Funds under a plan of distribution adopted pursuant to Rule 12b-1 under the 1940 Act. The Trustees considered the benefits to the Manager from
increased assets under management. The Trustees considered that the Manager and its affiliates may benefit from (i) greater efficiencies in annuity
administration and operations and potential cost savings due to a reduction in the number of unaffiliated funds available as annuity contract investment options, and (ii) increased
dividends-received deductions due to the Funds’ status under the tax laws as disregarded entities. In addition, the Trustees considered the potential benefits, other than sub-advisory fees, that the Sub-advisers and their affiliates may receive because of their relationships with the New Funds, including the potential increased ability to use soft dollars consistent with Trust policies and other benefits from
increases in assets under management. The Trustees concluded that benefits that may accrue to the Manager and its affiliates are reasonable and the benefits that may accrue to the Sub-advisers and their
affiliates are consistent with those expected for a sub-adviser to a mutual fund such as the applicable New Fund.
Conclusion
Based on a comprehensive consideration and
evaluation of all of the information and factors summarized above, among others, the Board voting as a whole, including the Independent Trustees voting separately, unanimously approved the Agreements.
SUPPLEMENTAL INFORMATION (UNAUDITED)
Trustees and Officers Information Table
The following table provides information about the Trustees of the Trust.
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
| Name and
Year of Birth |
|
Term of Office,
Position(s) Held and Length of
Service1 |
|
Principal
Occupation(s) During Past Five Years |
|
Number of
Funds
in Fund
Complex Overseen
by Trustees2 |
|
Other Directorships
Held by Trustee |
| Independent Trustees |
| |
|
|
|
|
| Bruce W. Ferris3 (born 1955) |
|
Trustee |
|
Retired (since 2015); President and CEO, Prudential Annuities Distributors, Inc. (2013–2015); Director/Trustee, Advanced Series Trust, The Prudential Series Fund and Prudential’s
Gibraltar Fund, Inc. (2013–2015); Senior Vice President, Prudential Annuities (2008–2015). |
|
16 |
|
None. |
| |
|
|
|
|
| Theda R. Haber3 (born 1954) |
|
Trustee |
|
Adjunct Assistant Professor of Law, UC Hastings College of Law (since 2013); Member of the Board of Directors, Fairholme Trust Company, LLC (2015–2019); Attorney, Law Office of Theda R.
Haber (since 2014); Visiting Professor of Law, UC Davis School of Law (since 2014); Consultant, Haber & Associates LLC (financial services industry), (2012–2017); Advisory Council Chair, Vice Chair, and Member, Advisory Council on
Employee Welfare and Pension Benefit Plans (ERISA Advisory Council), U.S. Department of Labor (2009–2011); Managing Director and General Counsel, BlackRock Institutional Trust Company, N.A. (2009–2011); Deputy Global General Counsel,
Barclays Global Investors (2006–2009); Managing Director, Barclays Global Investors (1998–2006). |
|
16 |
|
None. |
| |
|
|
|
|
| Marshall
Lux3 (born 1960) |
|
Trustee |
|
Senior Advisor, The Boston Consulting Group (since 2014); Senior Partner and Managing Director, The Boston Consulting Group (2009–2014). |
|
16 |
|
None. |
| |
|
|
|
|
| Lisa K.
Polsky3 (born 1956) |
|
Trustee |
|
Board Member, MFA Financial, Inc. (real estate investment trust) (since 2020); Advisor, SMBC Americas (financial services) (since 2020); Senior Risk Advisor, AQR (investment management)
(2016–2019); Senior Risk Advisor, Ultra Capital (venture capital) (2016–2019); Board Member, DB USA Corporation (Deutsche Bank Intermediate Holding Company) (financial services) (since 2016); Chief Risk Officer, CIT Group Inc. (financial
services) (2010–2015); Board Member and Chair of Audit Committee, Piper Jaffray (investment bank) (2007–2016). |
|
16 |
|
None. |
| |
|
|
|
|
| John
Walters3 (born 1962) |
|
Lead Independent
Trustee |
|
Board Member, Amerilife Holdings LLC (insurance distribution) (since 2015); Board Member, Stadion Money Management LLC (investment adviser) (since 2011); President and Chief Operating Officer,
Hartford Life Insurance Company (2000–2010). |
|
16 |
|
Trustee, USAA Mutual Funds Trust, (One registered investment company offering 47 individual funds) (since
2019). |
SUPPLEMENTAL INFORMATION (UNAUDITED)
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
| Name and
Year of Birth |
|
Term of Office,
Position(s) Held and Length of
Service1 |
|
Principal
Occupation(s) During Past Five Years |
|
Number of
Funds
in Fund
Complex Overseen
by Trustees2 |
|
Other Directorships
Held by Trustee |
| Interested Trustees |
| |
|
|
|
|
| Dominique Baede4 (born 1970) |
|
Trustee (Since
January 2020) |
|
Vice President, Head of Product, Life, Annuity and Inforce, The Guardian Life Insurance Company of America (since 2019); Managing Director, Product Management Group, AXA Equitable (insurance
company) prior thereto. |
|
16 |
|
None. |
| |
|
|
|
|
| Michael
Ferik4 (born 1972) |
|
Chairman and Trustee
(Since December 2019) |
|
Executive Vice President, Individual Markets, The Guardian Life Insurance Company of America (since 2020); Executive Vice President and Chief Financial Officer, The Guardian Life Insurance
Company of America (2017–2019); Executive Vice President, Individual Markets, The Guardian Life Insurance Company of America prior thereto. |
|
16 |
|
None. |
| 1 |
Except as otherwise noted, each Trustee began service in such capacity in 2016 and serves until his or her successor is
elected and qualified or until his or her resignation, death or removal. The business address of each Trustee is 10 Hudson Yards, New York, New York 10001. |
| 2 |
The Trust currently consists of 16 separate Funds. |
| 3 |
Member of the Audit Committee of the Trust. |
| 4 |
Each of Dominique Baede and Michael Ferik is considered to be an “interested person” of the Trust within the
meaning of the 1940 Act because of their affiliation with The Guardian Life Insurance Company of America and/or its affiliates. |
|
|
|
|
|
| |
|
|
| Name and Year of Birth |
|
Position(s) Held and
Length of Service5 |
|
Principal Occupation(s)
During Past Five Years |
| |
|
|
Dominique Baede
(born 1970) |
|
President and Principal Executive Officer (Since January 2020) |
|
Vice President, Head of Product, Life, Annuity and Inforce, The Guardian Life Insurance Company of America (since 2019); Managing Director,
Product Management Group, AXA Equitable (insurance company) prior thereto. |
| |
|
|
| John H. Walter
(born 1962) |
|
Senior Vice President, Treasurer, and Principal Financial and Accounting Officer |
|
Vice President, Director of Finance, Corporate Finance, The Guardian Life Insurance Company of America. |
| |
|
|
| Harris Oliner
(born 1971) |
|
Senior Vice President and Secretary |
|
Senior Vice President, Corporate Secretary, The Guardian Life Insurance Company of America (since 2015); Senior Vice President, Deputy
General Counsel, Corporate Secretary, Voya Financial, Inc. prior thereto. |
| |
|
|
| Richard T. Potter
(born 1954) |
|
Senior Vice President and Chief Legal Officer |
|
Vice President and Equity Counsel, The Guardian Life Insurance Company of America. |
| |
|
|
| Philip Stack
(born 1964) |
|
Chief Compliance Officer
(Since September 2017) |
|
Second Vice President, Mutual Fund Chief Compliance Officer, The Guardian Life Insurance Company of America (since 2017); Executive Director,
Chief Compliance Officer, Morgan Stanley (2015–2017); Vice President, Morgan Stanley prior thereto. |
| |
|
|
| Brian Hagan
(born 1984) |
|
Anti-Money Laundering Officer (Since March 2019) |
|
Assistant Vice President (since 2019), Anti-Money Laundering Compliance, The Guardian Life Insurance Company of America/Park Avenue
Securities LLC; Vice President, Head of Financial Intelligence Unit, Brown Brothers Harriman & Co. (2014–2019); Assistant Vice President, AML Compliance Manager, JPMorgan Chase & Co. (2011–2014). |
| |
|
|
| Kathleen M. Moynihan
(born 1966) |
|
Senior Counsel |
|
Second Vice President, Counsel (since 2019), The Guardian Life Insurance Company of America; Senior Counsel prior thereto. |
| |
|
|
| Maria Nydia Morrison
(born 1958) |
|
Fund Controller |
|
Mutual Fund Controller, The Guardian Life Insurance Company of America (since 2015); Chief Financial Officer/Assistant Operating
Officer, St. Francis De Assisi Montessori School (Plaridel, Bulacan), Inc. (Philippines) prior thereto. |
| |
|
|
| Sonya L. Crosswell
(born 1977) |
|
Assistant Secretary |
|
Assistant Vice President, Assistant Corporate Secretary and Secretary Pro Tem, The Guardian Life Insurance Company of America. |
| 5 |
Unless otherwise indicated, the Officers each began service in such capacity in 2016 and hold office for an indefinite
term or until their successors shall have been elected and qualified. The business address of each Officer is 10 Hudson Yards, New York, New York 10001. |
SUPPLEMENTAL INFORMATION (UNAUDITED)
The Statement of Additional Information (“SAI”) includes additional information about
the Trust’s Trustees and Officers and is available, without charge, upon request by calling toll-free 1-888-GUARDIAN (1-888-482-7342) or by visiting our website at http://guardianvpt.onlineprospectus.net/GuardianVPT/Prospectuses.
Portfolio Holdings and Proxy Voting Procedures
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year as an exhibit
to its reports on Form N-PORT. The Fund’s Form N-PORT reports are available on the Securities and Exchange Commission’s website at https://www.sec.gov.
The Fund’s Form N-PORT information is also available, without charge, upon request, by calling toll-free 1-888-GUARDIAN (1-888-482-7342) or by visiting our website at http://guardianvpt.onlineprospectus.net/
GuardianVPT/Prospectuses.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio
securities is included in the SAI. The SAI and information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 may be obtained
(i) without charge, upon request, by calling toll-free 1-888-GUARDIAN (1-888-482-7342) or by visiting our website at http://guardianvpt.onlineprospectus.net/
GuardianVPT/Prospectuses; and (ii) on the Securities and Exchange Commission’s website at
https://www.sec.gov.
This report is transmitted to shareholders only. It is not authorized for use as an offer of sale or a solicitation of an offer to buy shares of the Fund unless
accompanied or preceded by the Fund’s current prospectus. Past performance results shown in this report should not be considered a representation of future performance. Investment returns and principal value of shares will fluctuate so that
shares, when redeemed, may be worth more or less than their original cost. Statements and other information herein are as dated and are subject to change.
The Guardian Life Insurance Company of America New York, NY 10001-2159
PUB10524
Guardian Variable
Products Trust
2019
Annual Report
All Data as of December 31, 2019
Guardian Small Cap Core
VIP Fund
Important Notice
Beginning on January 1,
2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund’s shareholder reports will no longer be sent by mail from The Guardian Insurance & Annuity Company, Inc. (“GIAC”).
Instead, GIAC will mail you a notice when copies of the shareholder reports are made available on a website. You will be notified by mail each time a report is posted and provided with a website link to access the report.
If you have already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. If you have not yet
elected electronic delivery, at any time, you may elect to receive the Fund’s shareholder reports and certain other communications from GIAC electronically, by going to www.guardianlife.com and registering for e-delivery.
You may instead elect to receive all future shareholder reports in paper free of charge. If you wish to receive paper copies of your shareholder reports, please call
GIAC’s Customer Service Office Contact Center at 1-888-GUARDIAN (1-888-482-7342). Your election to receive reports in paper will apply to all the underlying funds available.
|
|
|
| Not FDIC insured. May lose value. No bank guarantee. |
|
www.guardianlife.com |
TABLE OF CONTENTS
Guardian Small Cap Core VIP Fund
Except as otherwise specifically stated, all information, including portfolio security positions, is as of
December 31, 2019. The views expressed in the Fund Commentary are those of the Fund’s portfolio manager(s) as of the date of this report and are subject to change without notice. They do not necessarily represent the views of Park Avenue
Institutional Advisers LLC or a sub-adviser. The Fund Commentary may contain some forward-looking statements providing expectations or forecasts of future events as of the date of this report; they do not
necessarily relate to historical or current facts. There can be no guarantee that any forward-looking statement will be realized. We undertake no obligation to update forward-looking statements, whether as a result of new information, future events,
or otherwise. Any discussions of specific securities should not be considered a recommendation to buy or sell those securities. Fund holdings will vary. Information contained herein has been obtained from sources believed reliable, but is not
guaranteed.
GUARDIAN SMALL CAP CORE VIP FUND
FUND COMMENTARY OF CLEARBRIDGE INVESTMENTS LLC,
SUB-ADVISER (unaudited)
Highlights
| • |
|
Guardian Small Cap Core VIP Fund (the “Fund”) returned 11.30%, outperforming its benchmark, the Russell 2000® Index1 (the “Index”), between its inception on October 21, 2019 and December 31, 2019. The Fund’s outperformance relative to the Index was primarily due to stock selection in the
health care sector. |
| • |
|
The Index delivered a 9.03% return for the period, October 21, 2019 through December 31, 2019, driven by strength in the health care sector, which returned 19% for the period, far outpacing all other sectors.
The second-strongest performer in the benchmark was energy, at nearly 600 basis points behind health care. In a fourth quarter that was driven by growth stocks and that saw longer-term rates rise, the yield-sensitive utilities sector had a negative
return. |
Market Overview
U.S. equities delivered outsized
gains for the year. Easing monetary policy supported strong multiple expansions and a thawing of U.S.-China trade tensions encouraged risk taking in equities. Stocks started 2019 in a strong upswing, boosted by signals that the U.S. Federal Reserve
(“Fed”) was winding down its tightening program, better than expected fourth-quarter corporate earnings results and a positive outlook on the resolution of U.S.-China trade tensions. Equities endured a roller coaster ride during the second
quarter before the Fed jumpstarted the latest up leg for equity markets as June remarks by Fed Chairman Jerome Powell hinted at future interest rate cuts. The Fed followed through in July with its first rate cut in more than a decade and made two
additional 0.25% cuts by October. A suddenly accommodative Fed helped offset volatility caused by renewed trade tensions between the U.S. and China in the third quarter and increasing signs of a slowing global economy. Positive feedback from the Fed
on the state of the U.S. economy as well as signs of a phase one trade deal with China caused stocks to resume their positive momentum in the fourth quarter,
with strong bids for health care, materials and information technology (“IT”).
The Index rose 25.5%
in 2019 with dividends reinvested. It has now risen 12.2% annually since 2012. The small cap Russell 2000® Growth Index2 has outperformed
the Russell 2000® Value Index3 in six of those eight years, including each of the last three years, during which growth outperformed by
more than 27 percentage points. The Russell 2000® Growth Index is now near its highest forward P/E multiple since the dot-com bubble, while the value
multiple is near its 20-year average. As the narrative of slow, steady economic growth has taken hold, growth has been valued at a premium and momentum has outperformed valuation significantly. That means
expectations — how a company must perform in the future to be worth what it’s trading for now — have risen most in those areas, primarily IT and health care.
Portfolio Review
Stock selection in the health care, communication services,
real estate and IT sectors contributed to relative performance. On the negative side, stock selection in the consumer discretionary and materials sectors and an underweight to health care negatively impacted relative returns.
Outlook
We are optimistic about the outlook for U.S. small cap companies. We
are monitoring changing economic conditions, but still observe that operating conditions for most industries are positive, encouraging investments in innovation as well as capital expenditures. The counterbalance is that expectations are also high,
as reflected in the relatively high accounting factor multiples. We have become less comfortable with the current expectations for future returns embedded in many IT and health care stocks, which is a change from previous years. We are still finding
unique investment opportunities where expectations embedded in the price of the stock are lower than the value of the corporation under a wide range of scenarios, and we continue to be optimistic about the companies that the Fund holds.
| 1 |
The Russell 2000® Index (the “Index”) measures the
performance of the small-cap segment of the US equity universe. It is a subset of the Russell 3000® Index and includes approximately 2000 of the
smallest securities based on a combination of their market cap and current index membership. You may not invest in the Index and, unlike the Fund, the Index does not incur fees or expenses. Russell Investment Group is the source and owner of the
trademarks, service marks and copyrights related to the Russell Indexes. Russell® is a trademark of Russell Investment Group. |
| 2 |
The Russell 2000® Growth Index (the “Growth Index”) is
designed to measure the performance of small-capitalization growth stocks in the United States. It includes those Russell 2000® companies with higher price-to-value ratios and higher
forecasted growth values. You may not invest in the Growth Index and, unlike the Fund, the Growth Index does not incur fees or expenses. Russell Investment Group is the source and owner of the trademarks, service marks and copyrights related to the
Russell Indexes. Russell® is a trademark of Russell Investment Group. |
| 3 |
The Russell 2000® Value Index (the “Value Index”) is
designed to measure the performance of small-capitalization value stocks in the United States. It includes those Russell 2000® companies with lower price-to-book ratios and lower forecasted
growth values. You may not invest in the Value Index and, unlike the Fund, the Value Index does not incur fees or expenses. Russell Investment Group is the source and owner of the trademarks, service marks and copyrights related to the Russell
Indexes. Russell® is a trademark of Russell Investment Group. |
GUARDIAN SMALL CAP CORE VIP FUND
Funds in the Guardian Variable Products Trust are sold by prospectus only. You should carefully
consider the investment objectives, risks, charges and expenses of the Funds before making an investment decision. The prospectus contains this and other important information. Please read it carefully before investing or sending money. Please visit
our website at http://guardianvpt.onlineprospectus.net/GuardianVPT/ Prospectuses or to obtain a printed copy, call 1-888-GUARDIAN (1-888-482-7342).
As with all
mutual funds, the value of an investment in the Fund could decline, and you could lose money. Diversification does not guarantee profit or protect against loss, and there can be no assurance that the Fund will achieve its investment objective. The
Fund invests primarily in equity securities and therefore exposes you to the general risks of investing in stock markets. Investing in small-capitalization companies may involve greater risks than those associated with mid- or
large-capitalization companies. The securities issued by small-capitalization companies may be more speculative, less liquid, more volatile, and more vulnerable to economic, market and industry changes than mid- or large-capitalization
companies and may have more limited financial and human resources, relatively short operating histories and limited product lines. Growth stocks may not realize their perceived growth potential and during certain periods the Fund may underperform
other equity funds that employ a different style. Value stocks may not realize their perceived value and during certain periods the Fund may underperform other equity funds that employ a different style. International investing involves special
risks, which include changes in currency rates, foreign taxation and differences in auditing standards and securities regulations, political uncertainty and greater volatility. Foreign securities are subject to political, regulatory, economic, and
exchange-rate risks not present in domestic investments. Any discussions of specific securities should not be considered a recommendation to buy or sell those securities. Fund holdings will vary.
GUARDIAN SMALL CAP CORE VIP FUND
Fund Characteristics (unaudited)
Total Net Assets: $310,451,491
|
|
|
| |
|
| Sector Allocation1 As of December 31, 2019 |
|
|
|
|
|
|
|
|
|
|
| |
|
| Top Ten Holdings2 As of December 31, 2019 |
|
|
|
| |
|
| Holding |
|
% of Total
Net Assets |
|
| Gray Television, Inc. |
|
|
2.13% |
|
| Amarin Corp. PLC, ADR |
|
|
1.98% |
|
| SkyWest, Inc. |
|
|
1.85% |
|
| HealthEquity, Inc. |
|
|
1.77% |
|
| Advanced Energy Industries, Inc. |
|
|
1.69% |
|
| Summit Hotel Properties, Inc. REIT |
|
|
1.67% |
|
| Triton International Ltd. |
|
|
1.66% |
|
| Aaron’s, Inc. |
|
|
1.63% |
|
| Acadia Healthcare Co., Inc. |
|
|
1.62% |
|
| Quotient Ltd. |
|
|
1.59% |
|
| Total |
|
|
17.59% |
|
| 1 |
The Fund’s holdings are allocated to each sector based on the MSCI Global Industry Classification Standard (GICS®). Cash includes short-term investments and net other assets and liabilities. |
| 2 |
Portfolio holdings are subject to change and should not be considered a recommendation to buy or sell individual
securities. |
GUARDIAN SMALL CAP CORE VIP FUND
Fund Performance (unaudited)
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| Average Annual Total Returns
As of December 31, 2019 |
|
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| |
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| |
|
Inception Date |
|
|
1 Year |
|
|
5 Year |
|
|
10 Year |
|
|
Since Inception* |
|
| Guardian Small Cap Core VIP Fund |
|
|
10/21/2019 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
11.30% |
|
| Russell 2000® Index |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
9.03% |
|
| * |
Since inception returns are not annualized and represent cumulative total returns. |
Performance quoted represents past performance and does not guarantee or predict future results. Investment return and principal value will fluctuate, so shares, when
redeemed, may be worth more or less than their original cost. The Fund’s fees and expenses are detailed in the Financial Highlights section of this report. Fees and expenses are factored into the net asset value of Fund shares and any
performance numbers we release. Total return figures include the effect of expense limitations in effect during the periods shown, if applicable; without such limitations, the performance shown would have been lower. Performance results assume the
reinvestment of dividends and capital gains. The return figures shown do not reflect the deduction of taxes that a contract owner/policyholder may pay on redemption units. The actual total returns for owners of variable annuity contracts or variable
life insurance policies that provide for investment in the Fund will be lower to reflect separate account and contract/policy charges. Current and month-end performance information, which may be lower or
higher than that cited, is available by calling 1-888-GUARDIAN
(1-888-482-7342) and is periodically updated on our website: http://guardianlife.com.
UNDERSTANDING YOUR FUND’S EXPENSES (UNAUDITED)
By investing in the Fund, you incur two types of costs: (1) transaction costs and (2) ongoing costs, including, as
applicable, investment advisory fees, distribution and/or service (12b-1) fees and other Fund expenses. The example below is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the
ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire
period from October 21, 2019 (commencement of operations), to December 31, 2019. The table below shows the Fund’s expenses in two ways:
Expenses
based on actual return
This section of the table provides information about actual account values and actual expenses. You may use the information in this
section, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the
number in the section under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Expenses based on hypothetical 5% return for comparison purposes
This section of the table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund with the cost of investing in other mutual funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the
other funds.
Note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads), redemption fees, or exchange fees. Therefore the second section is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. If these transactional costs were
included, your costs would have been higher. Charges and expenses at the insurance company separate account level are not reflected in the table.
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|
Beginning
Account Value
7/1/19 |
|
Ending
Account Value
12/31/19 |
|
|
Expenses Paid
During Period
7/1/19-12/31/19 |
|
|
Expense Ratio
During Period
7/1/19-12/31/19 |
|
| Based on Actual Return* |
|
$1,000.00 |
|
|
$1,113.00 |
|
|
|
$2.19 |
|
|
|
1.05% |
|
| Based on Hypothetical Return (5% Return Before Expenses)** |
|
$1,000.00 |
|
|
$1,019.91 |
|
|
|
$5.35 |
|
|
|
1.05% |
|
| * |
Expenses are equal to the Fund’s annualized expense ratio as indicated, multiplied by the average account value over
the period, multiplied by 72/365 (to reflect the period from October 21, 2019 (commencement of operations) through December 31, 2019). |
| ** |
Expenses (hypothetical expenses if the Fund had been in existence from 7/1/2019) are equal to the Fund’s annualized
expense ratio as indicated, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). |
SCHEDULE OF INVESTMENTS — GUARDIAN SMALL CAP CORE VIP FUND
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Shares |
|
|
Value |
|
| Common Stocks – 98.4% |
|
|
|
|
|
|
|
|
| |
|
|
| Airlines – 1.9% |
|
|
|
|
|
|
|
|
| |
|
|
| SkyWest, Inc. |
|
|
88,993 |
|
|
$ |
5,751,618 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
5,751,618 |
|
| |
| Banks – 8.7% |
|
| |
|
|
| Bank OZK |
|
|
117,655 |
|
|
|
3,589,066 |
|
| |
|
|
| Cadence BanCorp |
|
|
261,312 |
|
|
|
4,737,586 |
|
| |
|
|
| First Interstate BancSystem, Inc.,
Class A |
|
|
81,905 |
|
|
|
3,433,458 |
|
| |
|
|
| Great Western Bancorp, Inc. |
|
|
124,128 |
|
|
|
4,312,207 |
|
| |
|
|
| TriState Capital Holdings, Inc.(1) |
|
|
149,930 |
|
|
|
3,916,172 |
|
| |
|
|
| WesBanco, Inc. |
|
|
89,271 |
|
|
|
3,373,551 |
|
| |
|
|
| Wintrust Financial Corp. |
|
|
52,159 |
|
|
|
3,698,073 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
27,060,113 |
|
| |
| Biotechnology – 2.6% |
|
| |
|
|
| Akebia Therapeutics, Inc.(1) |
|
|
298,387 |
|
|
|
1,885,806 |
|
| |
|
|
| Amarin Corp. PLC, ADR(1) |
|
|
287,146 |
|
|
|
6,156,410 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
8,042,216 |
|
| |
| Capital Markets – 2.9% |
|
| |
|
|
| Blucora, Inc.(1) |
|
|
175,227 |
|
|
|
4,580,434 |
|
| |
|
|
| Main Street Capital Corp. |
|
|
57,157 |
|
|
|
2,464,038 |
|
| |
|
|
| PennantPark Investment Corp. |
|
|
316,591 |
|
|
|
2,067,339 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
9,111,811 |
|
| |
| Chemicals – 0.6% |
|
| |
|
|
| Venator Materials PLC(1) |
|
|
521,635 |
|
|
|
1,997,862 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
1,997,862 |
|
| |
| Construction & Engineering – 0.7% |
|
| |
|
|
| Dycom Industries, Inc.(1) |
|
|
48,542 |
|
|
|
2,288,755 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
2,288,755 |
|
| |
| Construction Materials – 1.0% |
|
| |
|
|
| U.S. Concrete, Inc.(1) |
|
|
75,526 |
|
|
|
3,146,413 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
3,146,413 |
|
| |
| Consumer Finance – 3.2% |
|
| |
|
|
| Encore Capital Group, Inc.(1) |
|
|
112,615 |
|
|
|
3,982,067 |
|
| |
|
|
| OneMain Holdings, Inc. |
|
|
67,715 |
|
|
|
2,854,187 |
|
| |
|
|
| Oportun Financial Corp.(1) |
|
|
130,174 |
|
|
|
3,098,141 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
9,934,395 |
|
| |
| Containers & Packaging – 1.4% |
|
| |
|
|
| Silgan Holdings, Inc. |
|
|
136,492 |
|
|
|
4,242,171 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
4,242,171 |
|
| |
| Diversified Consumer Services – 2.8% |
|
| |
|
|
| K12, Inc.(1) |
|
|
174,854 |
|
|
|
3,558,279 |
|
| |
|
|
| OneSpaWorld Holdings Ltd.(1) |
|
|
151,307 |
|
|
|
2,548,010 |
|
| |
|
|
| Service Corp. International |
|
|
54,750 |
|
|
|
2,520,142 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
8,626,431 |
|
| |
| Electric Utilities – 0.9% |
|
| |
|
|
| PNM Resources, Inc. |
|
|
52,608 |
|
|
|
2,667,752 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
2,667,752 |
|
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Shares |
|
|
Value |
|
| |
| Electronic Equipment, Instruments & Components – 2.7% |
|
| |
|
|
| Itron, Inc.(1) |
|
|
57,221 |
|
|
$ |
4,803,703 |
|
| |
|
|
| nLight, Inc.(1) |
|
|
169,376 |
|
|
|
3,434,945 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
8,238,648 |
|
| |
| Energy Equipment & Services – 1.6% |
|
| |
|
|
| Patterson-UTI
Energy, Inc. |
|
|
239,246 |
|
|
|
2,512,083 |
|
| |
|
|
| Smart Sand, Inc.(1) |
|
|
392,505 |
|
|
|
989,112 |
|
| |
|
|
| U.S. Silica Holdings, Inc. |
|
|
213,085 |
|
|
|
1,310,473 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
4,811,668 |
|
| |
| Equity Real Estate Investment – 7.9% |
|
| |
|
|
| Brandywine Realty Trust REIT |
|
|
246,818 |
|
|
|
3,887,383 |
|
| |
|
|
| Kite Realty Group Trust REIT |
|
|
231,592 |
|
|
|
4,522,992 |
|
| |
|
|
| Lexington Realty Trust REIT |
|
|
366,154 |
|
|
|
3,888,555 |
|
| |
|
|
| Outfront Media, Inc. REIT |
|
|
113,017 |
|
|
|
3,031,116 |
|
| |
|
|
| PotlatchDeltic Corp. REIT |
|
|
90,808 |
|
|
|
3,929,262 |
|
| |
|
|
| Summit Hotel Properties, Inc. REIT |
|
|
419,281 |
|
|
|
5,173,928 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
24,433,236 |
|
| |
| Food & Staples Retailing – 1.5% |
|
| |
|
|
| Sprouts Farmers Market, Inc.(1) |
|
|
246,023 |
|
|
|
4,760,545 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
4,760,545 |
|
| |
| Food Products – 1.0% |
|
| |
|
|
| Sanderson Farms, Inc. |
|
|
17,270 |
|
|
|
3,043,319 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
3,043,319 |
|
| |
| Health Care Equipment & Supplies – 1.6% |
|
| |
|
|
| Quotient Ltd.(1) |
|
|
518,905 |
|
|
|
4,934,787 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
4,934,787 |
|
| |
| Health Care Providers & Services – 7.4% |
|
| |
|
|
| Acadia Healthcare Co., Inc.(1) |
|
|
151,291 |
|
|
|
5,025,887 |
|
| |
|
|
| Covetrus, Inc.(1) |
|
|
262,010 |
|
|
|
3,458,532 |
|
| |
|
|
| Encompass Health Corp. |
|
|
63,763 |
|
|
|
4,416,863 |
|
| |
|
|
| HealthEquity, Inc.(1) |
|
|
74,289 |
|
|
|
5,502,586 |
|
| |
|
|
| R1 RCM, Inc.(1) |
|
|
341,886 |
|
|
|
4,437,681 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
22,841,549 |
|
| |
| Hotels, Restaurants & Leisure – 2.4% |
|
| |
|
|
| Chuy’s Holdings, Inc.(1) |
|
|
108,888 |
|
|
|
2,822,377 |
|
| |
|
|
| Everi Holdings, Inc.(1) |
|
|
177,750 |
|
|
|
2,387,183 |
|
| |
|
|
| Twin River Worldwide Holdings, Inc. |
|
|
85,983 |
|
|
|
2,205,464 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
7,415,024 |
|
| |
Independent Power and Renewable Electricity
Producers – 1.2% |
|
| |
|
|
| NextEra Energy Partners LP |
|
|
72,689 |
|
|
|
3,827,076 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
3,827,076 |
|
| |
| Insurance – 2.6% |
|
| |
|
|
| Assured Guaranty Ltd. |
|
|
92,149 |
|
|
|
4,517,144 |
|
| |
|
|
| ProAssurance Corp. |
|
|
102,523 |
|
|
|
3,705,181 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
8,222,325 |
|
| |
| Interactive Media & Services – 1.4% |
|
| |
|
|
| QuinStreet, Inc.(1) |
|
|
288,879 |
|
|
|
4,422,738 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
4,422,738 |
|
|
|
|
|
|
| 6 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
SCHEDULE OF INVESTMENTS — GUARDIAN SMALL CAP CORE VIP FUND
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Shares |
|
|
Value |
|
| |
| IT Services – 2.6% |
|
| |
|
|
| EVERTEC, Inc. |
|
|
117,693 |
|
|
$ |
4,006,270 |
|
| |
|
|
| WNS Holdings Ltd., ADR(1) |
|
|
62,535 |
|
|
|
4,136,690 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
8,142,960 |
|
| |
| Life Sciences Tools & Services – 1.5% |
|
| |
|
|
| Syneos Health, Inc.(1) |
|
|
79,466 |
|
|
|
4,726,240 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
4,726,240 |
|
| |
| Machinery – 1.2% |
|
| |
|
|
| EnPro Industries, Inc. |
|
|
54,125 |
|
|
|
3,619,880 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
3,619,880 |
|
| |
| Media – 2.1% |
|
| |
|
|
| Gray Television, Inc.(1) |
|
|
308,746 |
|
|
|
6,619,514 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
6,619,514 |
|
| |
| Metals & Mining – 1.4% |
|
| |
|
|
| Commercial Metals Co. |
|
|
196,594 |
|
|
|
4,378,148 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
4,378,148 |
|
| |
| Multi-Utilities – 1.5% |
|
| |
|
|
| Black Hills Corp. |
|
|
60,033 |
|
|
|
4,714,992 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
4,714,992 |
|
| |
| Oil, Gas & Consumable Fuels – 1.9% |
|
| |
|
|
| Brigham Minerals, Inc., Class A |
|
|
129,400 |
|
|
|
2,774,336 |
|
| |
|
|
| Matador Resources Co.(1) |
|
|
180,807 |
|
|
|
3,249,102 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
6,023,438 |
|
| |
| Personal Products – 0.7% |
|
| |
|
|
| Inter Parfums, Inc. |
|
|
29,699 |
|
|
|
2,159,414 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
2,159,414 |
|
| |
| Pharmaceuticals – 1.4% |
|
| |
|
|
| Aerie Pharmaceuticals, Inc.(1) |
|
|
110,734 |
|
|
|
2,676,441 |
|
| |
|
|
| Intra-Cellular Therapies, Inc.(1) |
|
|
52,144 |
|
|
|
1,789,061 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
4,465,502 |
|
| |
| Professional Services – 1.0% |
|
| |
|
|
| ICF International, Inc. |
|
|
32,186 |
|
|
|
2,948,881 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
2,948,881 |
|
| |
| Road & Rail – 2.2% |
|
| |
|
|
| Landstar System, Inc. |
|
|
31,995 |
|
|
|
3,643,271 |
|
| |
|
|
| Marten Transport Ltd. |
|
|
149,940 |
|
|
|
3,222,210 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
6,865,481 |
|
| |
| Semiconductors & Semiconductor Equipment – 4.1% |
|
| |
|
|
| Advanced Energy Industries, Inc.(1) |
|
|
73,460 |
|
|
|
5,230,352 |
|
| |
|
|
| Semtech Corp.(1) |
|
|
52,952 |
|
|
|
2,801,161 |
|
| |
|
|
| Tower Semiconductor Ltd.(1) |
|
|
193,638 |
|
|
|
4,658,930 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
12,690,443 |
|
| |
| Software – 3.0% |
|
| |
|
|
| 2U,
Inc.(1) |
|
|
94,404 |
|
|
|
2,264,752 |
|
| |
|
|
| CommVault Systems, Inc.(1) |
|
|
92,559 |
|
|
|
4,131,834 |
|
| |
|
|
| Rapid7, Inc.(1) |
|
|
50,844 |
|
|
|
2,848,281 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
9,244,867 |
|
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Shares |
|
|
Value |
|
| |
| Specialty Retail – 5.8% |
|
| |
|
|
| Aaron’s, Inc. |
|
|
88,586 |
|
|
$ |
5,059,146 |
|
| |
|
|
| Hudson Ltd., , Class A(1) |
|
|
262,840 |
|
|
|
4,031,966 |
|
| |
|
|
| Lithia Motors, Inc., Class A |
|
|
17,941 |
|
|
|
2,637,327 |
|
| |
|
|
| Monro, Inc. |
|
|
36,125 |
|
|
|
2,824,975 |
|
| |
|
|
| Murphy USA, Inc.(1) |
|
|
30,122 |
|
|
|
3,524,274 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
18,077,688 |
|
| |
| Textiles, Apparel & Luxury Goods – 0.8% |
|
| |
|
|
| Oxford Industries, Inc. |
|
|
32,500 |
|
|
|
2,451,150 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
2,451,150 |
|
| |
| Thrifts & Mortgage Finance – 2.3% |
|
| |
|
|
| Essent Group Ltd. |
|
|
59,212 |
|
|
|
3,078,432 |
|
| |
|
|
| Washington Federal, Inc. |
|
|
109,050 |
|
|
|
3,996,682 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
7,075,114 |
|
| |
| Trading Companies & Distributors – 6.9% |
|
| |
|
|
| Foundation Building Materials, Inc.(1) |
|
|
149,583 |
|
|
|
2,894,431 |
|
| |
|
|
| GATX Corp. |
|
|
42,850 |
|
|
|
3,550,123 |
|
| |
|
|
| MRC Global, Inc.(1) |
|
|
216,922 |
|
|
|
2,958,816 |
|
| |
|
|
| Rush Enterprises, Inc., Class A |
|
|
101,775 |
|
|
|
4,732,538 |
|
| |
|
|
| Textainer Group Holdings
Ltd.(1) |
|
|
204,561 |
|
|
|
2,190,848 |
|
| |
|
|
| Triton International Ltd. |
|
|
127,941 |
|
|
|
5,143,228 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
21,469,984 |
|
| |
|
Total Common Stocks
(Cost $281,457,252) |
|
|
|
305,494,148 |
|
|
|
|
|
|
|
|
|
|
| |
|
Principal
Amount |
|
|
Value |
|
| Short–Term Investment – 1.6% |
|
| |
| Repurchase Agreements – 1.6% |
|
| |
|
|
| Fixed Income
Clearing Corp., 0.12%, dated 12/31/2019, proceeds at maturity value of $5,069,034, due 1/2/2020(2) |
|
$ |
5,069,000 |
|
|
|
5,069,000 |
|
| |
|
|
Total Repurchase Agreements
(Cost $5,069,000) |
|
|
|
|
|
|
5,069,000 |
|
| |
|
|
Total Investments – 100.0%
(Cost $286,526,252) |
|
|
|
|
|
|
310,563,148 |
|
| |
|
| Liabilities in excess of other assets – (0.0)% |
|
|
|
(111,657 |
) |
| |
|
|
| Total Net Assets – 100.0% |
|
|
|
|
|
$ |
310,451,491 |
|
| (1) |
Non–income–producing security. |
| (2) |
The table below presents collateral for repurchase agreements. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Security |
|
Coupon |
|
|
Maturity
Date |
|
|
Principal
Amount |
|
|
Value |
|
| U.S. Treasury Note |
|
|
2.75% |
|
|
|
9/15/2021 |
|
|
$ |
5,035,000 |
|
|
$ |
5,171,962 |
|
Legend:
ADR — American
Depositary Receipt
REIT — Real Estate Investment Trust
|
|
|
|
|
| The accompanying notes are an integral part of these financial statements. |
|
|
|
7 |
SCHEDULE OF INVESTMENTS — GUARDIAN SMALL CAP CORE VIP FUND
The following is a summary of the inputs used as of December 31, 2019 in valuing the
Fund’s investments. For more information on valuation inputs, please refer to Note 2a of the accompanying Notes to Financial Statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Valuation Inputs |
|
|
|
|
| Investments in Securities |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
| Common Stocks |
|
$ |
305,494,148 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
305,494,148 |
|
| Repurchase Agreements |
|
|
— |
|
|
|
5,069,000 |
|
|
|
— |
|
|
|
5,069,000 |
|
| Total |
|
$ |
305,494,148 |
|
|
$ |
5,069,000 |
|
|
$ |
— |
|
|
$ |
310,563,148 |
|
|
|
|
|
|
| 8 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
FINANCIAL INFORMATION — GUARDIAN SMALL CAP CORE VIP FUND
|
|
|
|
|
|
Statement of Assets and Liabilities As of December 31, 2019 |
|
|
|
| Assets |
|
|
|
|
| |
|
| Investments, at value |
|
$ |
310,563,148 |
|
| |
|
| Cash |
|
|
13,681 |
|
| |
|
| Dividends/interest receivable |
|
|
226,475 |
|
| |
|
| Reimbursement receivable from adviser |
|
|
18,608 |
|
| |
|
| Prepaid expenses |
|
|
14,015 |
|
| |
|
|
|
|
| |
|
| Total Assets |
|
|
310,835,927 |
|
| |
|
|
|
|
| |
|
| Liabilities |
|
|
|
|
| |
|
| Investment advisory fees payable |
|
|
178,847 |
|
| |
|
| Payable for fund shares redeemed |
|
|
69,887 |
|
| |
|
| Distribution fees payable |
|
|
64,800 |
|
| |
|
| Accrued audit fees |
|
|
22,105 |
|
| |
|
| Accrued custodian and accounting fees |
|
|
9,321 |
|
| |
|
| Accrued trustees’ and officers’
fees |
|
|
2,429 |
|
| |
|
| Accrued expenses and other liabilities |
|
|
37,047 |
|
| |
|
|
|
|
| |
|
| Total Liabilities |
|
|
384,436 |
|
| |
|
|
|
|
| |
|
| Total Net Assets |
|
$ |
310,451,491 |
|
| |
|
|
|
|
| |
|
| Net Assets Consist of: |
|
|
|
|
| |
|
| Paid-in
capital |
|
$ |
278,485,629 |
|
| |
|
| Distributable earnings |
|
|
31,965,862 |
|
| |
|
|
|
|
| |
|
| Total Net Assets |
|
$ |
310,451,491 |
|
| |
|
|
|
|
| |
|
| Investments, at Cost |
|
$ |
286,526,252 |
|
| |
|
|
|
|
| |
|
| Pricing of Shares |
|
|
|
|
| |
|
| Shares of Beneficial Interest Outstanding with No
Par Value |
|
|
27,895,381 |
|
| |
|
| Net Asset Value Per Share |
|
|
$11.13 |
|
| |
|
|
|
|
|
|
|
|
|
|
Statement of Operations For the Period Ended December 31, 20191 |
|
|
|
| Investment Income |
|
|
|
|
| |
|
| Dividends |
|
$ |
932,503 |
|
| |
|
| Interest |
|
|
1,623 |
|
| |
|
|
|
|
| |
|
| Total Investment Income |
|
|
934,126 |
|
| |
|
|
|
|
| |
|
| Expenses |
|
|
|
|
| |
|
| Investment advisory fees |
|
|
406,664 |
|
| |
|
| Distribution fees |
|
|
147,329 |
|
| |
|
| Professional fees |
|
|
39,262 |
|
| |
|
| Shareholder reports |
|
|
21,269 |
|
| |
|
| Trustees’ and officers’ fees |
|
|
18,125 |
|
| |
|
| Administrative fees |
|
|
11,865 |
|
| |
|
| Custodian and accounting fees |
|
|
9,321 |
|
| |
|
| Transfer agent fees |
|
|
3,215 |
|
| |
|
| Other expenses |
|
|
6,384 |
|
| |
|
|
|
|
| |
|
| Total Expenses |
|
|
663,434 |
|
| |
|
| Less: Fees waived |
|
|
(44,610 |
) |
| |
|
|
|
|
| |
|
| Total Expenses, Net |
|
|
618,824 |
|
| |
|
|
|
|
| |
|
| Net Investment Income/(Loss) |
|
|
315,302 |
|
| |
|
|
|
|
| |
|
| Realized Gain/(Loss) and Change in Unrealized
Appreciation/(Depreciation) on Investments and Foreign Currency Transactions |
|
|
|
|
| |
|
| Net realized gain/(loss) from investments |
|
|
7,613,408 |
|
| |
|
| Net realized gain/(loss) from foreign
currency transactions |
|
|
256 |
|
| |
|
| Net change in unrealized appreciation/(depreciation)
on investments |
|
|
24,036,896 |
|
| |
|
|
|
|
| |
|
| Net Gain on Investments and Foreign Currency
Transactions |
|
|
31,650,560 |
|
| |
|
|
|
|
| |
|
| Net Increase in Net Assets Resulting From
Operations |
|
$ |
31,965,862 |
|
| |
|
|
|
|
| |
|
|
|
|
| 1 |
Commenced operations on October 21, 2019.
|
|
|
|
|
|
| The accompanying notes are an integral part of these financial statements. |
|
|
|
9 |
FINANCIAL INFORMATION — GUARDIAN SMALL CAP CORE VIP FUND
|
|
|
|
|
|
Statement of Changes in Net Assets |
|
| |
|
| |
|
For the
Period Ended
12/31/191 |
|
| |
|
|
|
| Operations |
|
|
|
|
| |
|
| Net investment income/(loss) |
|
$ |
315,302 |
|
| |
|
| Net realized gain/(loss) from investments and foreign
currency transactions |
|
|
7,613,664 |
|
| |
|
| Net change in unrealized appreciation/(depreciation)
on investments |
|
|
24,036,896 |
|
| |
|
|
|
|
| |
|
| Net Increase in Net Assets Resulting from
Operations |
|
|
31,965,862 |
|
| |
|
|
|
|
| |
|
| Capital Share Transactions |
|
|
|
|
| |
|
| Proceeds from sales of shares2 |
|
|
287,630,010 |
|
| |
|
| Cost of shares redeemed |
|
|
(9,144,381 |
) |
| |
|
|
|
|
| |
|
| Net Increase in Net Assets Resulting from Capital
Share Transactions |
|
|
278,485,629 |
|
| |
|
|
|
|
| |
|
| Net Increase in Net Assets |
|
|
310,451,491 |
|
| |
|
|
|
|
| |
|
| Net Assets |
|
|
|
|
| |
|
| Beginning of period |
|
|
— |
|
| |
|
|
|
|
| |
|
| End of period |
|
$ |
310,451,491 |
|
| |
|
|
|
|
| |
|
| Other Information: |
|
|
|
|
| |
|
| Shares |
|
|
|
|
| |
|
| Sold |
|
|
28,762,967 |
|
| |
|
| Redeemed |
|
|
(867,586 |
) |
| |
|
|
|
|
| |
|
| Net Increase |
|
|
27,895,381 |
|
| |
|
|
|
|
| |
|
|
|
|
| 1 |
Commenced operations on October 21, 2019. |
| 2 |
Includes in-kind subscriptions of $279,131,185. The cost basis of the contributed securities is equal to the market value
of the securities on the date of the subscription. |
|
|
|
|
|
| 10 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
This Page Intentionally Left Blank
FINANCIAL INFORMATION — GUARDIAN SMALL CAP CORE VIP FUND
The Financial Highlights table is intended to help you understand the Fund’s financial
performance for the past five years (or, if shorter, the period since inception). Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost)
on an investment in the Fund.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Financial
Highlights |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Per Share Operating Performance |
|
|
|
|
| |
|
Net Asset Value,
Beginning of
Period |
|
|
Net Investment
Income(1) |
|
|
Net Realized
and Unrealized
Gain |
|
|
Total
Operations |
|
|
Net Asset
Value, End of
Period |
|
|
Total
Return(2),(3) |
|
| |
|
|
|
|
|
|
| Period Ended
12/31/19(5) |
|
$ |
10.00 |
|
|
$ |
0.01 |
|
|
$ |
1.12 |
|
|
$ |
1.13 |
|
|
$ |
11.13 |
|
|
|
11.30% |
|
|
|
|
|
|
| 12 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
FINANCIAL INFORMATION — GUARDIAN SMALL CAP CORE VIP FUND
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Ratios/Supplemental Data |
|
Net Assets, End
of Period (000s) |
|
|
Net Ratio of
Expenses to
Average
Net Assets(3),(4) |
|
|
Gross Ratio of
Expenses to
Average Net
Assets(3) |
|
|
Net Ratio of Net
Investment Income
to Average
Net Assets(3),(4) |
|
|
Gross Ratio of Net
Investment
Income
to Average
Net Assets(3) |
|
|
Portfolio
Turnover Rate(3) |
|
|
|
|
|
|
|
| $ |
310,451 |
|
|
|
1.01% |
|
|
|
1.09% |
|
|
|
0.57% |
|
|
|
0.49% |
|
|
|
98% |
|
| (1) |
Calculated based on the average shares outstanding during the period. |
| (2) |
Total returns do not reflect the effects of charges deducted pursuant to the terms of The Guardian Insurance &
Annuity Company, Inc.’s variable contracts. Inclusion of such charges would reduce the total returns for all periods shown. |
| (3) |
Ratios for periods less than one year have been annualized, except for total return and portfolio turnover rate. Certain non-recurring fees (i.e., audit fees) are not annualized. |
| (4) |
Net Ratio of Expenses to Average Net Assets and Net Ratio of Net Investment Income to Average Net Assets include the
effect of fee waivers and expense limitations. |
| (5) |
Commenced operations on October 21, 2019. |
|
|
|
|
|
| The accompanying notes are an integral part of these financial statements. |
|
|
|
13 |
NOTES TO FINANCIAL STATEMENTS — GUARDIAN SMALL CAP CORE VIP FUND
December 31, 2019
1.
Organization
Guardian Variable Products Trust (the “Trust”), a Delaware statutory trust organized on January 12, 2016, is registered under the
Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Trust currently has sixteen series. Guardian Small Cap Core VIP Fund (the
“Fund”) is a series of the Trust. The Fund is a diversified fund and commenced operations on October 21, 2019. The financial statements for other series of the Trust are presented in separate reports.
The Trust has authorized an unlimited number of shares of beneficial interest with no par value. Shares are bought and sold at closing net asset value (“NAV”).
Shares of the Fund are only sold to certain separate accounts of The Guardian Insurance & Annuity Company, Inc. (“GIAC”) that fund certain variable annuity contracts and variable life insurance policies issued by GIAC. GIAC is a
wholly-owned subsidiary of The Guardian Life Insurance Company of America (“Guardian Life”).
The Fund seeks capital appreciation.
2. Significant Accounting Policies
The following is a summary of significant
accounting policies followed by the Fund in the preparation of its financial statements. The Fund follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards
Codification Topic 946 Financial Services — Investment Companies. The following policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements
in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.
a. Investment Valuations Equity securities traded on an exchange other than NASDAQ Stock Market, LLC (“NASDAQ”) are valued at the last reported sale
price on the principal exchange or market on which they are traded; or, if there were no sales that day, at the mean between the closing bid and ask prices. Securities traded on the NASDAQ are generally valued at the NASDAQ official closing price,
which may not be the last sale price. If the NASDAQ official closing price is not available for a security, that security is generally valued at the
mean between the closing bid and ask prices. Repurchase agreements are carried at cost, which approximates fair value (see Note 5d). Foreign securities are valued in the currencies of the markets
in which they trade and then converted to U.S. dollars by the application of foreign exchange rates at the close of the New York Stock Exchange (“NYSE”). Forward foreign currency contracts, if any, are valued at the mean between the bid
and ask rates for the specified time interpolated from rates for proximate time periods. Securities for which market quotations are not readily available or for which market quotations may be considered unreliable are valued at their fair values as
determined in accordance with policies and procedures adopted by the Board of Trustees.
Under the policies and procedures approved by the Board of Trustees, Park
Avenue Institutional Advisers LLC (“Park Avenue”), the Fund’s investment adviser, has established a Fair Valuation Committee to assist the Board of Trustees with the oversight and monitoring of the valuation of the Fund’s
investments. This includes monitoring the appropriateness of fair values based on results of ongoing valuation oversight, including but not limited to consideration of security specific events, market events, and pricing vendor and broker-dealer due
diligence. The Fair Valuation Committee oversees and carries out the policies for the valuation of investments held in the Fund. The Fair Valuation Committee is responsible for discussing and assessing the potential impacts to the fair values on an
ongoing basis, and at least on a quarterly basis with the Board of Trustees.
Securities whose values have been materially affected by events occurring before the
Fund’s valuation time but after the close of the securities’ principal exchange or market may be fair valued in accordance with policies and procedures adopted by the Board of Trustees. In addition, the values of the Fund’s
investments in foreign securities are generally determined by a pricing service using pricing models designed to estimate likely changes in the values of those securities. Certain foreign equity instruments are valued by applying international fair
value factors provided by approved pricing services. The factors seek to adjust the local closing price for movements of local markets post closing, but prior to the time the NAVs are calculated. Valuations reflected in this report are as of the
report date. As a result, changes in valuation due to market events and/or issuer related events after the report date and prior to issuance of the report are not reflected herein.
NOTES TO FINANCIAL STATEMENTS — GUARDIAN SMALL CAP CORE VIP FUND
Various inputs are used in determining the valuation of the Fund’s investments. These inputs are summarized in three
broad levels listed below.
| • |
|
Level 1 — unadjusted inputs using quoted prices in active markets for identical investments. |
| • |
|
Level 2 — other significant observable inputs, including, but not limited to, quoted prices for similar investments, inputs other than quoted prices that are observable for investments
(such as interest rates, prepayment speeds, credit risks, etc.) or other market corroborated inputs. |
| • |
|
Level 3 — significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments) |
Inputs may include price information, volatility statistics, specific and broad credit data, liquidity statistics, and other factors. A financial instrument’s level
within the fair value hierarchy is based on the lowest level of any input; both individually and in aggregate, that is significant to the fair value measurement. However, the determination of what constitutes “observable” requires
significant judgment by the Trust. The Trust considers observable data to be that market data which is readily available, regularly distributed or updated, reliable and verifiable, and provided by independent sources that are actively involved in
the relevant market. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. Changes in valuation techniques may result in transfers into or out of a
financial instrument’s assigned level within the hierarchy.
The FASB requires reporting entities to make disclosures about purchases, sales, issuances and
settlements of Level 3 securities on a gross basis. For the period ended December 31, 2019, there were no transfers into or out of Level 3 of the fair value hierarchy.
In determining a financial instrument’s placement within the hierarchy, the Trust separates the Fund’s investment portfolio into two categories: investments
and derivatives (e.g., futures). A summary of inputs used to value the Fund’s assets and liabilities carried at fair value as of December 31, 2019 is included in the Schedule of Investments.
Investments Investments whose values are based on quoted market prices in active markets, and are therefore classified within Level 1, include active
listed equities. Investments that trade in markets that are not considered to be active, but are valued based on quoted
market prices, dealer quotations or alternative pricing sources supported by observable inputs are classified within Level 2. These include certain U.S. government and sovereign obligations,
most government agency securities, investment-grade corporate bonds, certain mortgage products, state, municipal and provincial obligations, and certain foreign equity securities, including securities whose prices may have been affected by events
occurring after the close of trading on their principal exchange or market and, as a result, whose values are determined by a pricing service as described above, or securities whose values are otherwise determined using fair valuation methods
approved by the Fund’s Board of Trustees.
Investments classified within Level 3 have significant unobservable inputs, as they trade infrequently or not at
all. Level 3 investments include, among others, private placement securities. When observable prices are not available for these securities, the Trust uses one or more valuation techniques for which sufficient and reliable data is available.
The inputs used by the Trust in estimating the value of Level 3 investments include, for example, the original transaction price, recent transactions in the same or similar instruments, completed or pending third-party transactions in the
underlying investment or comparable issuers, subsequent rounds of financing, recapitalizations, and other transactions across the capital structure. Level 3 investments may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the Trust in the absence of market information. Assumptions used by the Trust due to the lack of observable inputs may significantly impact the
resulting fair value and therefore the Fund’s results of operations. As of December 31, 2019, the Fund had no securities classified as Level 3.
Derivatives Exchange-traded derivatives, such as futures contracts, exchange-traded option contracts and certain swaps, are typically classified within
Level 1 or Level 2 of the fair value hierarchy depending on whether or not they are deemed to be actively traded. Certain non-exchange-traded derivatives, such as generic forwards, certain swaps and
options, have inputs which can generally be corroborated by market data and are therefore classified within Level 2. During the period ended December 31, 2019, the Fund did not hold any derivatives.
b. Securities Transactions Securities transactions are accounted for on the date securities are purchased or sold (trade date). Realized gains or losses on
securities transactions are determined on the basis of specific identification.
NOTES TO FINANCIAL STATEMENTS — GUARDIAN SMALL CAP CORE VIP FUND
c. Foreign Currency Translation The accounting records of the Fund are maintained in U.S. dollars. Investment
securities and all other assets and liabilities of the Fund denominated in a foreign currency are generally translated into U.S. dollars at the exchange rates quoted at the close of the NYSE on each business day. The market value of investment
securities and other assets and liabilities are translated at the exchange rate as of the valuation date. Purchases and sales of securities, income receipts, and expense payments are translated into U.S. dollars at the exchange rates in effect on
the dates of the respective transactions. The Fund does not isolate the portion of the fluctuations on investments resulting from changes in foreign currency exchange rates from the fluctuations in market prices of investments held. Such
fluctuations are included in the Net change in net realized and unrealized gain/(loss) from investments on the Statement of Operations.
Reported realized foreign
currency gains and losses arise from the disposition of foreign currency, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest and foreign
withholding taxes recorded on the Fund’s books on the transaction date and the U.S. dollar equivalent of the amounts actually received or paid. These reported realized foreign currency gains and losses, if any, are included in Net realized
gain/(loss) from foreign currency transactions on the Statement of Operations. Unrealized foreign currency gains and losses arise from changes (due to changes in exchange rates) in the value of foreign currency and other assets and liabilities
denominated in foreign currencies, which are held at period end, if any, and are included in Net change in unrealized appreciation/(depreciation) on translation of assets and liabilities in foreign currencies on the Statement of Operations.
d. Foreign Capital Gains Tax The Fund may be subject to foreign taxes on income, gains on investments or currency purchases/repatriation, a portion of which may
be recoverable. The Fund will accrue such taxes and recoveries as applicable, based upon their current interpretation of tax rules and regulations that exist in the markets in which they invest.
e. Investment Income Dividend income net of foreign taxes withheld, if any, is generally recorded on the ex-dividend date.
Interest income, which includes amortization/accretion of premium/discount, is determined using the interest income accrual method, and is accrued and recorded daily.
f. Allocation of Income and Expenses Many of the expenses of the Trust can be directly attributed to a specific
series of the Trust. Expenses that cannot be directly attributed to a specific series of the Trust are generally apportioned among all the series in the Trust, based on relative net assets. In calculating net asset value per share for each series of
the Trust, investment income, realized and unrealized gains and losses, and expenses other than series-specific expenses are allocated daily to each series based upon the proportion of net assets attributable to each series.
3. Transactions with Affiliates
a. Investment Advisory Fee and
Expense Limitation Under the terms of the advisory agreement, which, after its two year initial term, is reviewed and approved annually by the Board of Trustees, the Fund pays an investment advisory fee to Park Avenue. Park Avenue is a
wholly-owned subsidiary of Guardian Life and receives an investment advisory fee at an annual rate of 0.69% of the Fund’s average daily net assets. The fee is accrued daily and paid monthly.
Park Avenue has contractually agreed through April 30, 2020 to waive certain fees and/or reimburse certain expenses incurred by the Fund to the extent necessary to
limit the Fund’s total annual operating expenses after fee waiver and/or expense reimbursement to 1.05% of the Fund’s average daily net assets (excluding, if applicable, any acquired fund fees and expenses, taxes, interest, transaction
costs and brokerage commissions, litigation and extraordinary expenses). The limitation may not be increased or terminated prior to this time without action by the Board of Trustees and may be terminated only upon approval of the Board of Trustees.
Amounts waived or reimbursed by Park Avenue pursuant to any expense limitation will not be subject to Park Avenue’s recoupment rights. For the period ended December 31, 2019, Park Avenue waived fees and/or paid Fund expenses in the amount
of $44,610.
Park Avenue has entered into a Sub-Advisory Agreement with ClearBridge Investments LLC
(“ClearBridge”). ClearBridge is responsible for providing day-to-day investment advisory services to the Fund, subject to the supervision of Park Avenue and
the oversight of the Board of Trustees. Sub-advisory fees are paid by Park Avenue and do not represent a separate or additional expense to the Fund.
b. Compensation of Trustees and Officers Trustees and officers who are interested persons of the Trust, as defined in the 1940 Act, receive no compensation from
the Fund, except for the Chief Compliance Officer of the
NOTES TO FINANCIAL STATEMENTS — GUARDIAN SMALL CAP CORE VIP FUND
Trust. Trustees of the Trust who are not interested persons of the Trust, and the Chief Compliance Officer, receive
compensation and reimbursement of expenses from the Trust.
c. Distribution Fees Park Avenue Securities LLC (“PAS”), a wholly-owned subsidiary of
Guardian Life, is the principal underwriter of Fund shares. The Trust has entered into a distribution and service agreement with PAS, which governs the sale and distribution of shares of the Fund. Under a distribution and service plan adopted by the
Trust (“12b-1 plan”), PAS is compensated for services in such capacity, including its expenses in connection with the promotion and distribution of shares of the Fund, at an annual rate of 0.25% of
the Fund’s average daily net assets. For the period ended December 31, 2019, the Fund paid distribution fees in the amount of $147,329 to PAS.
PAS has
directed that certain payments under the 12b-1 plan be used to compensate GIAC for shareholder services provided to contract owners.
4. Federal Income Taxes
a. Distributions to Shareholders For federal
income tax purposes, the Fund is treated as a disregarded entity (“DRE”). As a DRE, the Fund is not subject to an entity-level income tax; and any income, gains, losses, deductions, taxes, and credits of the Fund would instead be
“passed through” directly to the separate accounts of GIAC that invest in the Fund and retain the same character for U.S. federal income tax purposes. In addition, the Fund is not required to distribute taxable income and capital gains for
U.S. federal income tax purposes. Therefore, no dividends and capital gains distributions were paid by the Fund.
5. Investments
a. Investment Purchases and Sales The cost of investments purchased and the proceeds from investments sold (excluding short-term investments and in-kind
transactions) amounted to $288,404,197 and $293,560,406, respectively, for the period ended December 31, 2019. During the period ended December 31, 2019, there were no purchases or sales of U.S. government securities.
b. Foreign Securities Foreign securities investments involve special risks and considerations not typically associated with U.S. investments. These risks include,
but are not limited to, currency risk; adverse political, regulatory, social, and economic developments; and less reliable information about issuers. Moreover, securities
of some foreign issuers may be less liquid and their prices more volatile than those of comparable U.S. issuers.
c. Industry or Sector Concentration In its normal course of business, the Fund may invest a significant portion of its assets in companies within a limited number
of industries or sectors. As a result, the Fund may be subject to a greater risk of loss than that of a fund invested in a wider spectrum of industries or sectors because the stocks of many or all of the companies in the industry, group of
industries, sector, or sectors may decline in value due to developments adversely affecting the industry, group of industries, sector, or sectors.
d. Repurchase
Agreements The Fund may invest in repurchase agreements to maintain liquidity and earn income over periods of time as short as overnight. The collateral for repurchase agreements is either cash or fully negotiable U.S. government securities
(including U.S. government agency securities). Repurchase agreements are fully collateralized (including the interest accrued thereon) and such collateral is marked to market daily while the agreements remain in force. If the value of the collateral
falls below the repurchase price plus accrued interest, the Fund will typically require the seller to deposit additional collateral by the next business day. If the request for additional collateral is not met, or the seller defaults, the Fund
maintains the right to sell the collateral (although it may be prevented or delayed from doing so in certain circumstances) and may be required to claim any resulting loss against the seller. Park Avenue monitors the creditworthiness of the seller
with which the Fund enters into repurchase agreements.
6. Temporary Borrowings
The Fund, with other funds managed by Park Avenue, is party to a $10 million committed revolving credit facility from State Street Bank and Trust Company for
temporary borrowing purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of securities. Interest is calculated based on the higher of the daily one-month
LIBOR rate and the Federal Funds rate plus 1.25% at the time of borrowing. In addition to the interest charged on any borrowings by the Fund, each fund pays a commitment fee of 0.30% per annum on its share of the unused portion of the credit
facility. The agreement is in place until December 9, 2020. The Fund did not utilize the credit facility during the period ended December 31, 2019.
7.
Indemnifications
Under the Trust’s organizational documents and, in some cases, by contract, its officers and trustees are
NOTES TO FINANCIAL STATEMENTS — GUARDIAN SMALL CAP CORE VIP FUND
indemnified against certain liabilities arising out of the performance of their duties to the Fund. In addition, in the
normal course of business, the Fund enters into contracts with its vendors and others that provide general indemnifications. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made
against the Fund that have not yet occurred. However, based on experience, the Fund expects the risk of loss to be remote.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees of Guardian Variable Products Trust and Shareholders of
Guardian Small Cap Core VIP Fund
Opinion on the Financial
Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Guardian Small Cap Core VIP Fund
(one of the funds constituting Guardian Variable Products Trust, referred to hereafter as the “Fund”) as of December 31, 2019, and the related statements of operations and changes in net assets, including the related notes, and the
financial highlights for the period October 21, 2019 (commencement of operations) through December 31, 2019 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material
respects, the financial position of the Fund as of December 31, 2019, and the results of its operations, changes in its net assets, and the financial highlights for the period from October 21, 2019 (commencement of operations) through December 31,
2019 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements
based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws
and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit of these financial statements in accordance
with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing
procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2019 by correspondence with the custodian. We believe
that our audit provides a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
New York, New York
February 20, 2020
We have served as the auditor of one or more investment companies in Guardian Variable Products Trust since 2016.
SUPPLEMENTAL INFORMATION (UNAUDITED)
Approval of Investment Advisory and Sub-advisory
Agreements
Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), requires that a fund’s investment advisory and
sub-advisory agreements be approved initially by the fund’s board of trustees. Section 15(c) also requires that the continuation of these agreements, after an initial term of up to two years, be annually reviewed and approved by the board.
Any such agreement must be approved by a vote of a majority of the trustees who are not parties to the agreement or “interested persons” (as defined in the 1940 Act) of a party to the agreement at an in-person meeting of the board called
for the purpose of voting on such approval.
At a meeting of the Board of Trustees (the “Board”) of Guardian Variable Products Trust (the
“Trust”) held on March 27-28, 2018 (the “Meeting”), the Board considered and approved the proposed investment management agreement (the “Management Agreement”) between the Trust, on behalf of Guardian Small Cap
Core VIP Fund, Guardian Global Utilities VIP Fund, Guardian Multi-Sector Bond VIP Fund, Guardian Total Return Bond VIP Fund, and Guardian U.S. Government Securities VIP Fund (the “New Funds”), and Park Avenue Institutional Advisers LLC
(the “Manager”). The Board also considered and approved the proposed sub-advisory agreements (the “Sub-advisory Agreements,” collectively with the Management Agreement, the “Agreements”) between the Manager and
ClearBridge Investments LLC and Wellington Management Company LLP (the “Sub-advisers”), investment advisory firms engaged to serve as sub-advisers to Guardian Small Cap Core VIP Fund and Guardian Global Utilities VIP Fund, respectively.
The Trustees who are not parties to the Agreements or “interested persons” (as defined in the 1940 Act) of a party to the Agreements (the “Independent Trustees”) unanimously approved the Agreements for an initial term of two
years.
The Board is responsible for overseeing the management of each Fund. In determining whether to approve the Agreements, the Trustees evaluated information and
factors that they considered to be relevant and appropriate through the exercise of their own business judgment. The Trustees considered certain information and factors in light of advice furnished to them by legal counsel to the Trust and, in the
case of the Independent Trustees, their independent legal counsel. In advance of the Meeting, the Trustees received materials and information designed to assist their consideration of the
Agreements. At a Board meeting held on November 28-29, 2017, the Trustees received presentations from the Manager and each Sub-adviser regarding the services to be rendered to, and the
proposed investment strategies for, the New Funds. The Trustees received written responses from the Manager and each Sub-adviser to a series of questions and requests for information covering a wide variety of topics provided by independent legal
counsel on behalf of the Independent Trustees. The Trustees also received presentations and discussed the New Funds at a special telephonic Board meeting held on February 12, 2018, and the Independent Trustees discussed the New Funds with
independent legal counsel in advance of the Meeting. The Trustees also received materials and information regarding the legal standards applicable to their consideration of the Agreements and the process and criteria used by the Manager to identify
and select the Sub-advisers for approval by the Board and to propose that Guardian Multi-Sector Bond VIP Fund, Guardian Total Return Bond VIP Fund, and Guardian U.S. Government Securities VIP Fund would be managed directly by the Manager without a
sub-adviser.
During the course of their deliberations, the Independent Trustees met to discuss and evaluate the Agreements in executive session with their
independent legal counsel, outside of the presence of the Trustees who are not Independent Trustees and representatives from Fund management, the Manager or either Sub-adviser.
In reaching its decisions to approve the Agreements, the Board took into account the materials and information described above as well as other materials and information
provided to the Board and discussed with and among the Trustees, including information furnished to the Board by the Manager throughout the year regarding other series of the Trust, including series sub-advised by the Sub-advisers. Individual
Trustees may have given different weight to different factors and information with respect to each Agreement, and the Trustees did not identify any single factor or information that, in isolation, would be controlling in deciding to approve the
Agreements. The discussion below is intended to summarize the broad factors that figured prominently in the Board’s decisions to approve the Agreements rather than to be all-inclusive. These broad factors included: (i) the nature, extent
and quality of the services to be provided to the New Funds by the Manager and the Sub-advisers; (ii) the investment performance of funds and accounts managed by the Manager and each Sub-adviser with strategies similar to the applicable New
Fund; (iii) the fees to be charged and
SUPPLEMENTAL INFORMATION (UNAUDITED)
estimated profitability; (iv) the extent to which economies of scale may in the future exist for a New Fund, and the
extent to which a New Fund may benefit from future economies of scale; and (v) any other benefits anticipated to be derived by the Manager or the Sub-advisers (or their respective affiliates) from their relationships with the New Funds.
Nature, Extent and Quality of Services
The Trustees considered
information regarding the nature, extent and quality of services to be provided to the New Funds by the Manager. The Trustees also considered, among other things, the terms of the Management Agreement and the range of investment advisory services to
be provided by the Manager. In addition, the Trustees reviewed the range of non-investment advisory services to be provided by the Manager consistent with the terms of the Management Agreement, notably coordinating the preparation and filing of
various regulatory documents, coordinating the preparation and assembly of Board meeting materials and assisting the Board with certain valuation matters.
The
Trustees considered that Guardian Small Cap Core VIP Fund and Guardian Global Utilities VIP Fund would operate in a “manager-of-managers” structure and reviewed the responsibilities that the Manager would have under this structure,
including monitoring and evaluating the performance of the Sub-advisers, monitoring the Sub-advisers for adherence to the stated investment objectives, strategies, policies and restrictions of the Funds and supervising the Sub-advisers with respect
to the services that the Sub-advisers would provide under the Sub-advisory Agreements. The Trustees also considered the process used by the Manager, consistent with this structure, to identify and recommend sub-advisers, and its ability to monitor
and oversee sub-advisers and recommend replacement sub-advisers, when necessary, and provide other services under the Management Agreement. The Trustees reviewed information regarding the experience and background of the Manager’s key personnel
and the Manager’s organizational structure and resources, including investment, legal and administrative capabilities of the Manager. In this regard, the Trustees recognized that the New Funds may benefit from the Manager’s ability to use
similar resources and capabilities of its affiliates in providing services to the New Funds.
The Trustees considered information regarding the nature, extent and
quality of services to be provided to Guardian Small Cap Core VIP Fund and Guardian Global Utilities VIP Fund by the Sub-advisers. The Trustees also
considered, among other things, the terms of the Sub-advisory Agreements and the range of investment advisory services to be provided by the Sub-advisers under the oversight of the Manager and
the Sub-advisers’ experience with managing other funds that are series of the Trust. In evaluating these investment advisory services, the Trustees considered, among other things, the Sub-advisers’ investment philosophies, styles and/or
processes and approach to managing risk. The Trustees also considered information regarding funds or accounts managed by the Sub-advisers with similar strategies as the applicable New Fund, including performance and portfolio characteristics, when
available. The Trustees received and evaluated information regarding the background, education, expertise and/or experience of the investment professionals that would serve as portfolio managers for these New Funds and the capabilities, resources
and reputations of the Sub-advisers.
The Trustees considered that Guardian Multi-Sector Bond VIP Fund, Guardian Total Return Bond VIP Fund and Guardian U.S.
Government Securities VIP Fund would be managed without a sub-adviser by the Manager. In evaluating the investment advisory services to be provided by the Manager with respect to these New Funds, the Trustees considered, among other things, the
Manager’s investment philosophies, styles and/or processes and approach to managing risk. The Trustees also considered information regarding funds or accounts managed by the Manager or its affiliates with similar strategies as the applicable
New Fund, including performance and portfolio characteristics, when available, as well as the Manager’s experience investing in asset classes that would comprise the investment portfolios of these New Funds. The Trustees received and evaluated
information regarding the background, education, expertise and/or experience of the investment professionals that would serve as portfolio managers for these New Funds and the capabilities, resources and reputations of the Manager and its
affiliates.
Based upon these considerations, the Trustees concluded, within the context of their full deliberations and in light of the New Funds’ anticipated
operations, that the nature, extent and quality of services to be provided to the New Funds by the Manager and each Sub-adviser were appropriate.
Investment Performance
The New Funds had not commenced
operations prior to the Meeting. Accordingly, the New Funds did not yet
SUPPLEMENTAL INFORMATION (UNAUDITED)
have an investment performance record. The Board considered historical performance information with respect to funds or
accounts managed by the Manager and Sub-advisers (or their affiliates) with similar investment strategies as the New Funds, and comparisons to relevant benchmarks and peer groups, when available. The Trustees concluded that the historical
performance records available, viewed together with the other relevant factors and information considered by the Trustees, supported a decision to approve each Agreement. The Trustees also concluded that it was appropriate to revisit the New
Funds’ investment performance in connection with future reviews of the Agreements.
Costs and Profitability
The Trustees considered the proposed management fees to be paid by the Funds to the Manager under the Management Agreement and evaluated the reasonableness of these
fees. The Trustees received and reviewed comparative information with respect to the proposed management fees, including the management fees paid by other funds offered as investment options underlying variable contracts within the applicable peer
group based on data obtained from Broadridge Financial Solutions, Inc., an independent provider of industry data, which showed that the New Funds’ proposed contractual management fees fell within the following quintiles: the first quintile for
Guardian Small Cap Core VIP Fund, Guardian Total Return Bond VIP Fund and Guardian Multi-Sector Bond VIP Fund; the second quintile for Guardian Global Utilities VIP Fund; and the third quintile for Guardian U.S. Government Securities VIP Fund.
The Trustees considered the proposed sub-advisory fees to be paid under the Sub-advisory Agreements and evaluated the reasonableness of those fees. The Trustees also
considered that the fees to be paid to the Sub-advisers would be paid by the Manager and not the New Funds and that the Manager had negotiated the fees with the Sub-advisers at arm’s-length. In addition, the Trustees considered the portion of
the management fees proposed to be paid to each Sub-adviser as compared to the portion proposed to be retained by the Manager.
The Trustees received comparative
information relating to each New Fund’s anticipated operating expense ratios and the actual operating expense ratios of a peer group of funds. In this regard, the Board noted that the New Funds’ anticipated operating expense ratios within
the following quintiles: the first quintile for Guardian
Small Cap Core VIP Fund and Guardian Global Utilities VIP Fund; and the second quintile for Guardian U.S. Government Securities VIP Fund, Guardian Total Return Bond VIP Fund and Guardian
Multi-Sector Bond VIP Fund. The Trustees considered estimates of the New Funds’ projected asset levels and the Manager’s commitment to initially limit each New Fund’s operating expenses through an expense limitation agreement with the
Trust. Although the Board recognized that the comparisons between the proposed management fees and anticipated operating expenses of the New Funds and those of identified peer funds are imprecise, given different terms of agreements and variations
in fund strategies, the Trustees found that the comparative information supported their consideration and approval of the proposed management fees and evaluation of the anticipated operating expenses.
The Trustees reviewed information regarding the Manager’s projected costs of sponsoring the New Funds and projected profitability of the New Funds to the Manager
based on the anticipated assets and expenses of the New Funds. The Trustees noted that the information, including with respect to revenues and expenses, contained estimates because the New Funds had not yet commenced operations at the time of the
Meeting. The Trustees did not consider any projected profitability information from the Sub-advisers because the Manager would be responsible for payment of the sub-advisory fees and had negotiated the fees with the Sub-advisers at
arm’s-length.
Based on the consideration of the information and factors summarized above, as well as other information and factors deemed relevant by the
Trustees, the Trustees concluded that the proposed management and sub-advisory fees were reasonable in light of the nature, extent and quality of services expected to be rendered to the New Funds by the Manager and the Sub-advisers. The Trustees
also concluded that the projected profitability of the New Funds to the Manager was acceptable and the Trustees determined it was appropriate to revisit this information in connection with future reviews of the Agreements.
Economies of Scale
The New Funds had not commenced operations
prior to the Meeting. As a result, no specific information was available concerning the possible effect that asset growth and economies of scale would have on a New Fund’s expenses. The Trustees concluded that it was appropriate to revisit
potential economies of scale in connection with future reviews of the Agreements or
SUPPLEMENTAL INFORMATION (UNAUDITED)
earlier, if appropriate, and that they were satisfied with the extent to which economies of scale would be shared for the
benefit of shareholders based on anticipated asset levels.
Ancillary Benefits
The Trustees considered the potential benefits, other than management fees, that the Manager and/or its affiliates may receive because of the Manager’s relationship
with the New Funds. The Trustees acknowledged that the New Funds were designed to serve as investment options under variable contracts issued by an affiliate of the Manager that would receive fees under those contracts and that Park Avenue
Securities LLC, an affiliate of the Manager and principal underwriter of the Funds, and an insurance company affiliated with the Manager would be entitled to receive fees from the New Funds under a plan of distribution adopted pursuant to Rule 12b-1
under the 1940 Act. The Trustees considered the benefits to the Manager from increased assets under management. The Trustees considered that the Manager and its affiliates may benefit from (i) greater efficiencies in annuity administration and
operations and potential cost
savings due to a reduction in the number of unaffiliated funds available as annuity contract investment options, and (ii) increased dividends-received deductions due to the Funds’
status under the tax laws as disregarded entities. In addition, the Trustees considered the potential benefits, other than sub-advisory fees, that the Sub-advisers and their affiliates may receive because of their relationships with the New Funds,
including the potential increased ability to use soft dollars consistent with Trust policies and other benefits from increases in assets under management. The Trustees concluded that benefits that may accrue to the Manager and its affiliates are
reasonable and the benefits that may accrue to the Sub-advisers and their affiliates are consistent with those expected for a sub-adviser to a mutual fund such as the applicable New Fund.
Conclusion
Based on a comprehensive consideration and
evaluation of all of the information and factors summarized above, among others, the Board voting as a whole, including the Independent Trustees voting separately, unanimously approved the Agreements.
SUPPLEMENTAL INFORMATION (UNAUDITED)
Trustees and Officers Information Table
The following table provides information about the Trustees of the Trust.
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
Name and
Year of Birth |
|
Term of Office,
Position(s) Held
and Length of
Service1 |
|
Principal
Occupation(s)
During Past Five Years |
|
Number of
Funds
in Fund
Complex
Overseen
by Trustees2 |
|
Other Directorships
Held by Trustee |
| Independent Trustees |
| |
|
|
|
|
| Bruce W. Ferris3 (born 1955) |
|
Trustee |
|
Retired (since 2015); President and CEO, Prudential Annuities Distributors, Inc. (2013-2015); Director/Trustee, Advanced Series Trust, The Prudential Series Fund and Prudential’s
Gibraltar Fund, Inc. (2013-2015); Senior Vice President, Prudential Annuities (2008-2015). |
|
16 |
|
None. |
| |
|
|
|
|
| Theda R. Haber3 (born 1954) |
|
Trustee |
|
Adjunct Assistant Professor of Law, UC Hastings College of Law (since 2013); Member of the Board of Directors, Fairholme Trust Company, LLC (2015–2019); Attorney, Law Office of Theda R.
Haber (since 2014); Visiting Professor of Law, UC Davis School of Law (since 2014); Consultant, Haber & Associates LLC (financial services industry), (2012-2017); Advisory Council Chair, Vice Chair,
and Member, Advisory Council on Employee Welfare and Pension Benefit Plans (ERISA Advisory Council), U.S. Department of Labor (2009-2011); Managing Director and General Counsel, BlackRock Institutional Trust Company, N.A. (2009-2011);
Deputy Global General Counsel, Barclays Global Investors (2006-2009); Managing Director, Barclays Global Investors (1998-2006). |
|
16 |
|
None. |
| |
|
|
|
|
| Marshall
Lux3 (born 1960) |
|
Trustee |
|
Senior Advisor, The Boston Consulting Group (since 2014); Senior Partner and Managing Director, The Boston Consulting Group (2009-2014). |
|
16 |
|
None. |
| |
|
|
|
|
| Lisa K.
Polsky3 (born 1956) |
|
Trustee |
|
Board Member, MFA Financial, Inc. (real estate investment trust) (since 2020); Advisor, SMBC Americas (financial services) (since 2020); Senior Risk Advisor, AQR (investment management)
(2016–2019); Senior Risk Advisor, Ultra Capital (venture capital) (2016–2019); Board Member, DB USA Corporation (Deutsche Bank Intermediate Holding Company) (financial services) (since 2016); Chief Risk Officer, CIT Group Inc. (financial
services) (2010-2015); Board Member and Chair of Audit Committee, Piper Jaffray (investment bank) (2007-2016). |
|
16 |
|
None. |
| |
|
|
|
|
| John
Walters3 (born 1962) |
|
Lead Independent
Trustee |
|
Board Member, Amerilife Holdings LLC (insurance distribution) (since 2015); Board Member, Stadion Money Management LLC (investment adviser) (since 2011); President and Chief Operating Officer,
Hartford Life Insurance Company (2000-2010). |
|
16 |
|
Trustee, USAA Mutual Funds Trust, (One registered investment company offering 47 individual funds)
(since 2019). |
SUPPLEMENTAL INFORMATION (UNAUDITED)
|
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|
|
|
|
|
|
|
| |
|
|
|
|
Name and
Year of Birth |
|
Term of Office,
Position(s) Held
and Length of
Service1 |
|
Principal
Occupation(s)
During Past Five Years |
|
Number of
Funds
in Fund
Complex
Overseen
by Trustees2 |
|
Other Directorships
Held by Trustee |
| Interested Trustees |
| |
|
|
|
|
| Dominique Baede4 (born 1970) |
|
Trustee
(Since
January 2020) |
|
Vice President, Head of Product, Life, Annuity and Inforce, The Guardian Life Insurance Company of America (since 2019); Managing Director, Product Management Group, AXA Equitable (insurance
company) prior thereto. |
|
16 |
|
None. |
| |
|
|
|
|
| Michael
Ferik4 (born 1972) |
|
Chairman and Trustee
(Since December 2019) |
|
Executive Vice President, Individual Markets, The Guardian Life Insurance Company of America (since 2020); Executive Vice President and Chief Financial Officer, The Guardian Life Insurance
Company of America (2017–2019); Executive Vice President, Individual Markets, The Guardian Life Insurance Company of America prior thereto. |
|
16 |
|
None. |
| 1 |
Except as otherwise noted, each Trustee began service in such capacity in 2016 and serves until his or her successor is
elected and qualified or until his or her resignation, death or removal. The business address of each Trustee is 10 Hudson Yards, New York, New York 10001. |
| 2 |
The Trust currently consists of 16 separate Funds. |
| 3 |
Member of the Audit Committee of the Trust. |
| 4 |
Each of Dominique Baede and Michael Ferik is considered to be an “interested person” of the Trust within the
meaning of the 1940 Act because of their affiliation with The Guardian Life Insurance Company of America and/or its affiliates. |
|
|
|
|
|
| |
|
|
| Name and Year of Birth |
|
Position(s) Held and
Length of Service5 |
|
Principal Occupation(s)
During Past Five Years |
| |
|
|
| Dominique Baede
(born 1970) |
|
President and Principal Executive Officer (Since January 2020) |
|
Vice President, Head of Product, Life, Annuity and Inforce, The Guardian Life Insurance Company of America (since 2019); Managing Director,
Product Management Group, AXA Equitable (insurance company) prior thereto. |
| |
|
|
| John H. Walter
(born 1962) |
|
Senior Vice President, Treasurer, and Principal Financial and Accounting Officer |
|
Vice President, Director of Finance, Corporate Finance, The Guardian Life Insurance Company of America. |
| |
|
|
| Harris Oliner
(born 1971) |
|
Senior Vice President and Secretary |
|
Senior Vice President, Corporate Secretary, The Guardian Life Insurance Company of America (since 2015); Senior Vice President, Deputy
General Counsel, Corporate Secretary, Voya Financial, Inc. prior thereto. |
| |
|
|
| Richard T. Potter
(born 1954) |
|
Senior Vice President and Chief Legal Officer |
|
Vice President and Equity Counsel, The Guardian Life Insurance Company of America. |
| |
|
|
| Philip Stack
(born 1964) |
|
Chief Compliance Officer
(Since September 2017) |
|
Second Vice President, Mutual Fund Chief Compliance Officer, The Guardian Life Insurance Company of America (since 2017); Executive Director,
Chief Compliance Officer, Morgan Stanley (2015–2017); Vice President, Morgan Stanley prior thereto. |
| |
|
|
| Brian Hagan
(born 1984) |
|
Anti-Money Laundering Officer (Since March 2019) |
|
Assistant Vice President (since 2019), Anti-Money Laundering Compliance, The Guardian Life Insurance Company of America/Park Avenue
Securities LLC; Vice President, Head of Financial Intelligence Unit, Brown Brothers Harriman & Co. (2014–2019); Assistant Vice President, AML Compliance Manager, JPMorgan Chase & Co. (2011–2014). |
| |
|
|
| Kathleen M. Moynihan
(born 1966) |
|
Senior Counsel |
|
Second Vice President, Counsel (since 2019), The Guardian Life Insurance Company of America; Senior Counsel prior thereto. |
| |
|
|
| Maria Nydia Morrison
(born 1958) |
|
Fund Controller |
|
Mutual Fund Controller, The Guardian Life Insurance Company of America (since 2015); Chief Financial Officer/Assistant Operating Officer, St.
Francis De Assisi Montessori School (Plaridel, Bulacan), Inc. (Philippines) prior thereto. |
SUPPLEMENTAL INFORMATION (UNAUDITED)
|
|
|
|
|
| |
|
|
| Name and Year of Birth |
|
Position(s) Held and
Length of Service* |
|
Principal Occupation(s)
During Past Five Years |
| |
|
|
| Sonya L. Crosswell
(born 1977) |
|
Assistant Secretary |
|
Assistant Vice President, Assistant Corporate Secretary and Secretary Pro Tem, The Guardian Life Insurance Company of America. |
| 5 |
Unless otherwise indicated, the Officers each began service in such capacity in 2016 and hold office for an indefinite
term or until their successors shall have been elected and qualified. The business address of each Officer is 10 Hudson Yards, New York, New York 10001. |
SUPPLEMENTAL INFORMATION (UNAUDITED)
The Statement of Additional Information (“SAI”) includes additional information about
the Trust’s Trustees and Officers and is available, without charge, upon request by calling toll-free 1-888-GUARDIAN (1-888-482-7342) or by visiting our website at http://guardianvpt.onlineprospectus.net/GuardianVPT/Prospectuses.
Portfolio Holdings and Proxy Voting
Procedures
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each
fiscal year as an exhibit to its reports on Form N-PORT. The Fund’s Form N-PORT reports are available on the Securities and Exchange Commission’s website at
https://www.sec.gov. The Fund’s Form N-PORT information is also available, without charge, upon request, by calling toll-free
1-888-GUARDIAN (1-888-482-7342) or by visiting
our website at http://guardianvpt.onlineprospectus.net/
GuardianVPT/Prospectuses.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio
securities is included in the SAI. The SAI and information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 may be obtained
(i) without charge, upon request, by calling toll-free 1-888-GUARDIAN (1-888-482-7342) or by visiting our website at http://guardianvpt.onlineprospectus.net/
GuardianVPT/Prospectuses; and (ii) on the Securities and Exchange Commission’s website at
https://www.sec.gov.
This report is transmitted to shareholders only. It is not authorized for use as an offer of sale or a solicitation of an offer to buy shares of the Fund unless
accompanied or preceded by the Fund’s current prospectus. Past performance results shown in this report should not be considered a representation of future performance. Investment returns and principal value of shares will fluctuate so that
shares, when redeemed, may be worth more or less than their original cost. Statements and other information herein are as dated and are subject to change.
The Guardian Life Insurance Company of America New York, NY 10001-2159
PUB10526
Guardian Variable
Products Trust
2019
Annual Report
All Data as of December 31, 2019
Guardian Global
Utilities VIP Fund
Important Notice
Beginning on
January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund’s shareholder reports will no longer be sent by mail from The Guardian Insurance & Annuity Company, Inc.
(“GIAC”). Instead, GIAC will mail you a notice when copies of the shareholder reports are made available on a website. You will be notified by mail each time a report is posted and provided with a website link to access the report.
If you have already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. If you have not yet
elected electronic delivery, at any time, you may elect to receive the Fund’s shareholder reports and certain other communications from GIAC electronically, by going to www.guardianlife.com and registering for e-delivery.
You may instead elect to receive all future shareholder reports in paper free of charge. If you wish to receive paper copies of your shareholder reports, please call
GIAC’s Customer Service Office Contact Center at 1-888-GUARDIAN (1-888-482-7342). Your election to receive reports in paper will apply to all the underlying funds available.
|
|
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| Not FDIC insured. May lose value. No bank guarantee. |
|
www.guardianlife.com |
TABLE OF CONTENTS
Guardian Global Utilities VIP Fund
Except as otherwise specifically stated, all
information, including portfolio security positions, is as of December 31, 2019. The views expressed in the Fund Commentary are those of the Fund’s portfolio manager(s) as of the date of this report and are subject to change without
notice. They do not necessarily represent the views of Park Avenue Institutional Advisers LLC or a sub-adviser. The Fund Commentary may contain some forward-looking statements providing expectations or
forecasts of future events as of the date of this report; they do not necessarily relate to historical or current facts. There can be no guarantee that any forward-looking statement will be realized. We undertake no obligation to update
forward-looking statements, whether as a result of new information, future events, or otherwise. Any discussions of specific securities should not be considered a recommendation to buy or sell those securities. Fund holdings will vary. Information
contained herein has been obtained from sources believed reliable, but is not guaranteed.
GUARDIAN GLOBAL UTILITIES VIP FUND
FUND COMMENTARY OF WELLINGTON MANAGEMENT COMPANY LLP,
SUB-ADVISER (unaudited)
Highlights
| • |
|
Guardian Global Utilities VIP Fund (the “Fund”) returned 2.70% for the period between its inception on October 21, 2019 and December 31, 2019, outperforming its benchmark, the MSCI® ACWI Utilities Index1 (the “Index”). The Fund’s relative outperformance was driven by strong security selection in the
renewable electricity, multi-utilities and independent power producers’ sub-industries. |
| • |
|
The Index returned 2.49% for the period. Within the Index, the water utilities and renewable electricity sub-industries had the strongest absolute performance with only the gas
utilities sub-industry posting negative returns during the period. |
Market Overview
Global equities (+9.1%) rose for the fourth straight quarter, closing out 2019 with a gain of 27.3% as measured by the MSCI® All Country World Index.2 Waning recession fears and forecasts for improving global growth in 2020 helped to bolster risk sentiment, while
geopolitics and trade disputes continued to be major drivers of market volatility. The United States (U.S.) canceled tariffs that were scheduled to take effect on December 15th in an effort to secure a Phase 1 trade deal with China. U.S. President
Donald Trump subsequently announced that the first phase of a trade agreement would be signed on January 15, 2020, providing significant relief to global markets. United Kingdom (UK) equities surged after the Conservative Party’s victory
in the general election lifted the uncertainty about the country’s departure from the European Union (EU) and eliminated concerns about the Labor Party’s plans to nationalize large swaths of the nation’s economy. During the period,
Hong Kong was mired in its worst recession since 2008, as escalating protests caused a sharp deterioration in private sector activity.
Portfolio Review
Stock selection was the primary driver of relative outperformance during the period. Strong selections in the independent power producers and energy traders,
renewable electricity, and multi-utilities sub-industries were only partially offset by weaker selections in electric utilities and gas utilities. Sector
allocation, a fall out of the Fund’s bottom-up stock selection process, marginally detracted from relative results. An overweight allocation to the renewable electricity
sub-industry contributed positively to relative performance during the period. However, this positive contribution was offset by negative results from an overweight to the independent power producers and
energy traders sub-industry and underweight to the water utilities and gas utilities sub-industries. During the period there were no derivatives used in the portfolio.
Outlook
As we look into 2020, trade negotiations between the U.S. and
China will remain vitally important to markets. Hopefully a satisfactory agreement will be reached, but some supply chain disruption and temporary pauses in capital investment may still occur. Brexit has
re-emerged as another near-term uncertainty that the team will be monitoring. On the flip side, the strong employment situation bodes well for the consumer and so far, the U.S. government shutdown has had
little economic impact.
The U.S. economy remains healthy, though leading indicators are suggesting some moderation in growth later in 2020. The team continues to
expect growth within the U.S. utility sector, especially within renewables and electrics where the team has seen companies building out wind and solar capabilities, as well as transforming the electric grid. In Europe, the team feels that valuations
generally look more attractive and are well positioned to participate if general economic growth returns. Additionally, the team believes that emerging markets will offer the best combination of attractive valuations and strong growth in 2020.
We remain consistent in adhering to our disciplined portfolio construction process that allows us to assess risk, weight individual positions accordingly, and in the
process build a portfolio that focuses largely on stock selection for generating returns.
| 1 |
The MSCI® ACWI Utilities Index measures the performance of large-
and mid-cap global equities across 23 developed and 26 emerging markets that are classified as falling within the utilities sector as per the Global Industry Classification Standard (GICS). Index results
assume the reinvestment of dividends paid on the stocks constituting the Index. You may not invest in the Index and, unlike the Fund, the Index does not incur fees or expenses. |
| 2 |
The MSCI® World Index is a broad global equity index that
represents large and mid-cap equity performance across 23 developed markets countries. It covers approximately 85% of the free float-adjusted market capitalization in each country and does not offer exposure
to emerging markets. Index results assume the reinvestment of dividends paid on the stocks constituting the Index. You may not invest in the Index and, unlike the Fund, the Index does not incur fees or expenses. |
GUARDIAN GLOBAL UTILITIES VIP FUND
Funds in the Guardian Variable Products Trust are sold by prospectus only. You should carefully
consider the investment objectives, risks, charges and expenses of the Funds before making an investment decision. The prospectus contains this and other important information. Please read it carefully before investing or sending money. Please visit
our website at http://guardianvpt.onlineprospectus.net/GuardianVPT/ Prospectuses or to obtain a printed copy, call 1-888-GUARDIAN (1-888-482-7342).
As with all
mutual funds, the value of an investment in the Fund could decline, and you could lose money. Diversification does not guarantee profit or protect against loss, and there can be no assurance that the Fund will achieve its investment objective. The
Fund invests primarily in equity securities and therefore exposes you to the general risks of investing in stock markets. Securities of utilities companies may be significantly affected by government regulation or deregulation, interest rate
changes, financing difficulties or costs and legal challenges, manmade or natural disasters, and supply and demand fluctuations. Other factors may adversely affect the value of these securities, including market competitiveness, technological
developments, natural resources conservation, and changes in commodity prices. The value of these securities may be particularly volatile. The Fund’s performance will be closely tied to the performance of utilities companies and, thus, can be
more volatile than the performance of a more broadly invested fund. International investing involves special risks, which include changes in currency rates, foreign taxation and differences in auditing standards and securities regulations, political
uncertainty and greater volatility. Foreign securities are subject to political, regulatory, economic, and exchange-rate risks not present in domestic investments. Investing in a more limited number of issuers and sectors can be subject to greater
market fluctuation. Any discussions of specific securities should not be considered a recommendation to buy or sell those securities. Fund holdings will vary.
GUARDIAN GLOBAL UTILITIES VIP FUND
Fund Characteristics (unaudited)
|
|
|
| Total Net Assets: $85,307,133 |
|
|
|
| |
|
Geographic Region Allocation1
As of December 31, 2019 |
|
|
|
|
|
|
|
|
| |
| Top Ten Holdings1 As of December 31, 2019 |
|
| |
|
|
| Holding |
|
Country |
|
% of Total
Net Assets |
|
| Duke Energy Corp. |
|
United States |
|
|
8.19% |
|
| Iberdrola S.A. |
|
Spain |
|
|
6.30% |
|
| China Longyuan Power Group Corp. Ltd., Class H |
|
China |
|
|
5.13% |
|
| National Grid PLC |
|
United Kingdom |
|
|
4.93% |
|
| Edison International |
|
United States |
|
|
4.90% |
|
| Enel S.p.A. |
|
Italy |
|
|
4.89% |
|
| Exelon Corp. |
|
United States |
|
|
4.84% |
|
| NRG Energy, Inc. |
|
United States |
|
|
4.65% |
|
| Engie S.A. |
|
France |
|
|
4.63% |
|
| NextEra Energy, Inc. |
|
United States |
|
|
4.60% |
|
| Total |
|
|
53.06% |
|
| 1 |
Portfolio holdings are subject to change and should not be considered a recommendation to buy or sell individual
securities. Cash includes short-term investments and net other assets and liabilities. |
GUARDIAN GLOBAL UTILITIES VIP FUND
Fund Performance (unaudited)
|
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|
|
|
|
|
|
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|
|
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| |
|
|
|
|
|
| Average Annual Total Returns
As of December 31, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
| |
|
Inception Date |
|
|
1 Year |
|
|
5 Year |
|
|
10 Year |
|
|
Since Inception* |
|
| Guardian Global Utilities VIP Fund |
|
|
10/21/2019 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2.70% |
|
| MSCI ACWI Utilities Index |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2.49% |
|
| * |
Since inception returns are not annualized and represent cumulative total returns. |
Performance quoted represents past performance and does not guarantee or predict future results. Investment return and principal value will fluctuate, so shares, when
redeemed, may be worth more or less than their original cost. The Fund’s fees and expenses are detailed in the Financial Highlights section of this report. Fees and expenses are factored into the net asset value of Fund shares and any
performance numbers we release. Total return figures include the effect of expense limitations in effect during the periods shown, if applicable; without such limitations, the performance shown would have been lower. Performance results assume the
reinvestment of dividends and capital gains. The return figures shown do not reflect the deduction of taxes that a contract owner/policyholder may pay on redemption units. The actual total returns for owners of variable annuity contracts or variable
life insurance policies that provide for investment in the Fund will be lower to reflect separate account and contract/policy charges. Current and month-end performance information, which may be lower or
higher than that cited, is available by 1-888-GUARDIAN
(1-888-482-7342) and is periodically updated on our website: http://guardianlife.com.
UNDERSTANDING YOUR FUND’S EXPENSES (UNAUDITED)
By investing in the Fund, you incur two types of costs: (1) transaction costs and (2) ongoing costs, including, as
applicable, investment advisory fees, distribution and/or service (12b-1) fees and other Fund expenses. The example below is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the
ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire
period from October 21, 2019 (commencement of operations), to December 31, 2019. The table below shows the Fund’s expenses in two ways:
Expenses
based on actual return
This section of the table provides information about actual account values and actual expenses. You may use the information in this
section, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the
number in the section under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Expenses based on hypothetical 5% return for comparison purposes
This section of the table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund with the cost of investing in other mutual funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the
other funds.
Note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads), redemption fees, or exchange fees. Therefore the second section is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. If these transactional costs were
included, your costs would have been higher. Charges and expenses at the insurance company separate account level are not reflected in the table.
|
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|
|
|
|
| |
|
|
|
|
| |
|
Beginning
Account Value
7/1/19 |
|
Ending
Account Value
12/31/19 |
|
|
Expenses Paid
During Period
7/1/19-12/31/19 |
|
|
Expense Ratio
During Period
7/1/19-12/31/19 |
|
| Based on Actual Return* |
|
$1,000.00 |
|
|
$1,027.00 |
|
|
|
$2.06 |
|
|
|
1.03% |
|
| Based on Hypothetical Return (5% Return Before Expenses)** |
|
$1,000.00 |
|
|
$1,020.01 |
|
|
|
$5.24 |
|
|
|
1.03% |
|
| * |
Expenses are equal to the Fund’s annualized expense ratio as indicated, multiplied by the average account value over
the period, multiplied by 72/365 (to reflect the period from October 21, 2019 (commencement of operations) through December 31, 2019). |
| ** |
Expenses (hypothetical expenses if the Fund had been in existence from 7/1/2019) are equal to the Fund’s annualized
expense ratio as indicated, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). |
SCHEDULE OF INVESTMENTS — GUARDIAN GLOBAL UTILITIES VIP FUND
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Shares |
|
|
Value |
|
| Common Stocks – 98.5% |
|
| |
| Bermuda – 4.6% |
|
| |
|
|
| CK Infrastructure Holdings Ltd. |
|
|
548,500 |
|
|
$ |
3,911,775 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
3,911,775 |
|
| |
| Brazil – 2.4% |
|
| |
|
|
| Cia de Saneamento do Parana |
|
|
81,800 |
|
|
|
2,064,653 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
2,064,653 |
|
| |
| Cayman Islands – 2.4% |
|
| |
|
|
| ENN Energy Holdings Ltd. |
|
|
186,900 |
|
|
|
2,043,501 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
2,043,501 |
|
| |
| China – 5.1% |
|
| |
|
|
| China Longyuan Power Group Corp. Ltd.,
Class H |
|
|
6,910,000 |
|
|
|
4,374,758 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
4,374,758 |
|
| |
| France – 4.6% |
|
| |
|
|
| Engie S.A. |
|
|
244,521 |
|
|
|
3,951,457 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
3,951,457 |
|
| |
| Germany – 2.6% |
|
| |
|
|
| E.ON SE |
|
|
204,270 |
|
|
|
2,184,644 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
2,184,644 |
|
| |
| Italy – 7.1% |
|
| |
|
|
| Enel S.p.A. |
|
|
525,083 |
|
|
|
4,177,248 |
|
| |
|
|
| Italgas S.p.A. |
|
|
306,045 |
|
|
|
1,871,862 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
6,049,110 |
|
| |
| Japan – 3.3% |
|
| |
|
|
| The Kansai Electric Power Co., Inc. |
|
|
146,400 |
|
|
|
1,692,889 |
|
| |
|
|
| Tokyo Gas Co. Ltd. |
|
|
44,100 |
|
|
|
1,069,926 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
2,762,815 |
|
| |
| Spain – 6.3% |
|
| |
|
|
| Iberdrola S.A. |
|
|
521,623 |
|
|
|
5,372,216 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
5,372,216 |
|
| |
| United Kingdom – 4.9% |
|
| |
|
|
| National Grid PLC |
|
|
334,932 |
|
|
|
4,209,068 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
4,209,068 |
|
| |
| United States – 55.2% |
|
| |
|
|
| AES Corp. |
|
|
171,067 |
|
|
|
3,404,233 |
|
| |
|
|
| Avangrid, Inc. |
|
|
26,374 |
|
|
|
1,349,294 |
|
| |
|
|
| Black Hills Corp. |
|
|
30,765 |
|
|
|
2,416,283 |
|
| |
|
|
| Duke Energy Corp. |
|
|
76,591 |
|
|
|
6,985,865 |
|
| |
|
|
| Edison International |
|
|
55,459 |
|
|
|
4,182,163 |
|
| |
|
|
| Eversource Energy |
|
|
40,421 |
|
|
|
3,438,615 |
|
| |
|
|
| Exelon Corp. |
|
|
90,515 |
|
|
|
4,126,579 |
|
| |
|
|
| FirstEnergy Corp. |
|
|
34,727 |
|
|
|
1,687,732 |
|
| |
|
|
| NextEra Energy, Inc. |
|
|
16,200 |
|
|
|
3,922,992 |
|
| |
|
|
| NRG Energy, Inc. |
|
|
99,755 |
|
|
|
3,965,261 |
|
| |
|
|
| PPL Corp. |
|
|
56,399 |
|
|
|
2,023,596 |
|
| |
|
|
| Sempra Energy |
|
|
23,980 |
|
|
|
3,632,491 |
|
| |
|
|
| UGI Corp. |
|
|
58,707 |
|
|
|
2,651,208 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Shares |
|
|
Value |
|
| |
| United States (continued) |
|
| |
|
|
| Xcel Energy, Inc. |
|
|
51,624 |
|
|
$ |
3,277,608 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
47,063,920 |
|
| |
|
Total Common Stocks
(Cost $82,045,487) |
|
|
|
83,987,917 |
|
|
|
|
|
|
|
|
|
|
| |
|
Principal
Amount |
|
|
Value |
|
| Short–Term Investment – 1.4% |
|
| Repurchase Agreements – 1.4% |
|
| |
|
|
| Fixed Income
Clearing Corp., 0.12%, dated 12/31/2019, proceeds at maturity value of $1,221,008, due 1/2/2020(1) |
|
$ |
1,221,000 |
|
|
|
1,221,000 |
|
| |
|
Total Repurchase Agreements
(Cost $1,221,000) |
|
|
|
1,221,000 |
|
| |
|
Total Investments – 99.9%
(Cost $83,266,487) |
|
|
|
85,208,917 |
|
| |
|
| Assets in excess of other liabilities – 0.1% |
|
|
|
98,216 |
|
| |
|
| Total Net Assets – 100.0% |
|
|
$ |
85,307,133 |
|
| (1) |
The table below presents collateral for repurchase agreements. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Security |
|
Coupon |
|
|
Maturity
Date |
|
|
Principal
Amount |
|
|
Value |
|
| U.S. Treasury Note |
|
|
2.75% |
|
|
|
9/15/2021 |
|
|
$ |
1,215,000 |
|
|
$ |
1,248,050 |
|
|
|
|
|
|
| 6 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
SCHEDULE OF INVESTMENTS — GUARDIAN GLOBAL UTILITIES VIP FUND
The following is a summary of the inputs used as of December 31, 2019 in valuing the
Fund’s investments. For more information on valuation inputs, please refer to Note 2a of the accompanying Notes to Financial Statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Valuation Inputs |
|
|
|
|
| Investments in Securities |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
| Common Stocks |
|
|
|
|
|
| Bermuda |
|
$ |
— |
|
|
$ |
3,911,775 |
* |
|
$ |
— |
|
|
$ |
3,911,775 |
|
| Brazil |
|
|
— |
|
|
|
2,064,653 |
* |
|
|
— |
|
|
|
2,064,653 |
|
| Cayman Islands |
|
|
— |
|
|
|
2,043,501 |
* |
|
|
— |
|
|
|
2,043,501 |
|
| China |
|
|
— |
|
|
|
4,374,758 |
* |
|
|
— |
|
|
|
4,374,758 |
|
| France |
|
|
— |
|
|
|
3,951,457 |
* |
|
|
— |
|
|
|
3,951,457 |
|
| Germany |
|
|
— |
|
|
|
2,184,644 |
* |
|
|
— |
|
|
|
2,184,644 |
|
| Italy |
|
|
— |
|
|
|
6,049,110 |
* |
|
|
— |
|
|
|
6,049,110 |
|
| Japan |
|
|
— |
|
|
|
2,762,815 |
* |
|
|
— |
|
|
|
2,762,815 |
|
| Spain |
|
|
— |
|
|
|
5,372,216 |
* |
|
|
— |
|
|
|
5,372,216 |
|
| United Kingdom |
|
|
— |
|
|
|
4,209,068 |
* |
|
|
— |
|
|
|
4,209,068 |
|
| United States |
|
|
47,063,920 |
|
|
|
— |
|
|
|
— |
|
|
|
47,063,920 |
|
| Repurchase Agreements |
|
|
— |
|
|
|
1,221,000 |
|
|
|
— |
|
|
|
1,221,000 |
|
| Total |
|
$ |
47,063,920 |
|
|
$ |
38,144,997 |
|
|
$ |
— |
|
|
$ |
85,208,917 |
|
| * |
Consists of certain foreign securities whose values were determined by a pricing service using pricing models (See Note 2a
in Notes to Financial Statements). These investments in securities were classified as Level 2 rather than Level 1. |
|
|
|
|
|
| The accompanying notes are an integral part of these financial statements. |
|
|
|
7 |
FINANCIAL INFORMATION — GUARDIAN GLOBAL UTILITIES VIP FUND
|
|
|
|
|
|
Statement of Assets and Liabilities As of December 31, 2019 |
|
|
|
| Assets |
|
|
|
|
| |
|
| Investments, at value |
|
$ |
85,208,917 |
|
| |
|
| Cash |
|
|
214 |
|
| |
|
| Dividends/interest receivable |
|
|
212,172 |
|
| |
|
| Reimbursement receivable from adviser |
|
|
34,362 |
|
| |
|
| Prepaid expenses |
|
|
3,939 |
|
| |
|
|
|
|
| |
|
| Total Assets |
|
|
85,459,604 |
|
| |
|
|
|
|
| |
|
| Liabilities |
|
|
|
|
| |
|
| Investment advisory fees payable |
|
|
52,159 |
|
| |
|
| Accrued audit fees |
|
|
23,684 |
|
| |
|
| Distribution fees payable |
|
|
17,863 |
|
| |
|
| Accrued custodian and accounting fees |
|
|
16,491 |
|
| |
|
| Payable for fund shares redeemed |
|
|
13,706 |
|
| |
|
| Accrued administrative fees |
|
|
11,865 |
|
| |
|
| Accrued shareholder reports fees |
|
|
10,008 |
|
| |
|
| Accrued trustees’ and officers’
fees |
|
|
1,156 |
|
| |
|
| Accrued expenses and other liabilities |
|
|
5,539 |
|
| |
|
|
|
|
| |
|
| Total Liabilities |
|
|
152,471 |
|
| |
|
|
|
|
| |
|
| Total Net Assets |
|
$ |
85,307,133 |
|
| |
|
|
|
|
| |
|
| Net Assets Consist of: |
|
|
|
|
| |
|
| Paid-in
capital |
|
$ |
83,102,420 |
|
| |
|
| Distributable earnings |
|
|
2,204,713 |
|
| |
|
|
|
|
| |
|
| Total Net Assets |
|
$ |
85,307,133 |
|
| |
|
|
|
|
| |
|
| Investments, at Cost |
|
$ |
83,266,487 |
|
| |
|
|
|
|
| |
|
| Pricing of Shares |
|
|
|
|
| |
|
|
Shares of Beneficial Interest Outstanding with
No Par Value |
|
|
8,309,512 |
|
| |
|
| Net Asset Value Per Share |
|
|
$10.27 |
|
| |
|
|
|
|
|
|
|
|
|
|
Statement of Operations For the Period Ended December 31, 20191 |
|
|
|
| Investment Income |
|
|
|
|
| |
|
| Dividends |
|
$ |
407,227 |
|
| |
|
| Interest |
|
|
883 |
|
| |
|
|
|
|
| |
|
| Total Investment Income |
|
|
408,110 |
|
| |
|
|
|
|
| |
|
| Expenses |
|
|
|
|
| |
|
| Investment advisory fees |
|
|
121,535 |
|
| |
|
| Distribution fees |
|
|
41,621 |
|
| |
|
| Professional fees |
|
|
33,492 |
|
| |
|
| Custodian and accounting fees |
|
|
16,491 |
|
| |
|
| Shareholder reports |
|
|
15,571 |
|
| |
|
| Administrative fees |
|
|
11,865 |
|
| |
|
| Trustees’ and officers’ fees |
|
|
5,620 |
|
| |
|
| Transfer agent fees |
|
|
3,089 |
|
| |
|
| Other expenses |
|
|
1,979 |
|
| |
|
|
|
|
| |
|
| Total Expenses |
|
|
251,263 |
|
| |
|
| Less: Fees waived |
|
|
(79,782 |
) |
| |
|
|
|
|
| |
|
| Total Expenses, Net |
|
|
171,481 |
|
| |
|
|
|
|
| |
|
| Net Investment Income/(Loss) |
|
|
236,629 |
|
| |
|
|
|
|
| |
|
| Realized Gain/(Loss) and Change in Unrealized
Appreciation/(Depreciation) on Investments and Foreign Currency Transactions |
|
|
|
|
| |
|
| Net realized gain/(loss) from investments |
|
|
88,562 |
|
| |
|
| Net realized gain/(loss) from foreign currency
transactions |
|
|
(64,919 |
) |
| |
|
| Net change in unrealized appreciation/(depreciation)
on investments |
|
|
1,942,430 |
|
| |
|
| Net change in unrealized appreciation/(depreciation)
on translation of assets and liabilities in foreign currencies |
|
|
2,011 |
|
| |
|
|
|
|
| |
|
| Net Gain on Investments and Foreign Currency
Transactions |
|
|
1,968,084 |
|
| |
|
|
|
|
| |
|
| Net Increase in Net Assets Resulting From
Operations |
|
$ |
2,204,713 |
|
| |
|
|
|
|
| |
|
|
|
|
| 1 |
Commenced operations on October 21, 2019.
|
|
|
|
|
|
| 8 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
FINANCIAL INFORMATION — GUARDIAN GLOBAL UTILITIES VIP FUND
|
|
|
|
|
|
Statement of Changes in Net Assets |
|
| |
|
| |
|
For the
Period Ended
12/31/191 |
|
| |
|
|
|
| Operations |
|
| |
|
| Net investment income/(loss) |
|
$ |
236,629 |
|
| |
|
| Net realized gain/(loss) from investments and foreign
currency transactions |
|
|
23,643 |
|
| |
|
| Net change in unrealized appreciation/(depreciation)
on investments and translation of assets and liabilities in foreign currencies |
|
|
1,944,441 |
|
| |
|
|
|
|
| |
|
| Net Increase in Net Assets Resulting from
Operations |
|
|
2,204,713 |
|
| |
|
|
|
|
| |
| Capital Share
Transactions |
|
| |
|
| Proceeds from sales of shares2 |
|
|
87,564,831 |
|
| |
|
| Cost of shares redeemed |
|
|
(4,462,411 |
) |
| |
|
|
|
|
| |
|
| Net Increase in Net Assets Resulting from Capital
Share Transactions |
|
|
83,102,420 |
|
| |
|
|
|
|
| |
|
| Net Increase in Net Assets |
|
|
85,307,133 |
|
| |
|
|
|
|
| |
| Net Assets |
|
| |
|
| Beginning of period |
|
|
— |
|
| |
|
|
|
|
| |
|
| End of period |
|
$ |
85,307,133 |
|
| |
|
|
|
|
| |
| Other Information: |
|
| |
|
| Shares |
|
|
|
|
| |
|
| Sold |
|
|
8,756,559 |
|
| |
|
| Redeemed |
|
|
(447,047 |
) |
| |
|
|
|
|
| |
|
| Net Increase |
|
|
8,309,512 |
|
| |
|
|
|
|
| |
|
|
|
|
| 1 |
Commenced operations on October 21, 2019. |
| 2 |
Includes in-kind subscriptions of $52,388,634. The cost basis of the contributed securities is equal to the market value
of the securities on the date of the subscription. |
|
|
|
|
|
| The accompanying notes are an integral part of these financial statements. |
|
|
|
9 |
FINANCIAL INFORMATION — GUARDIAN GLOBAL UTILITIES VIP FUND
The Financial Highlights table is intended to help you understand the Fund’s financial
performance for the past five years (or, if shorter, the period since inception). Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost)
on an investment in the Fund.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Highlights |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Per Share Operating Performance |
|
|
|
|
| |
|
Net Asset Value,
Beginning of
Period |
|
|
Net Investment
Income(1) |
|
|
Net Realized
and Unrealized
Gain |
|
|
Total
Operations |
|
|
Net Asset
Value, End of
Period |
|
|
Total
Return(2),(3) |
|
| |
|
|
|
|
|
|
| Period Ended
12/31/19(5) |
|
$ |
10.00 |
|
|
$ |
0.03 |
|
|
$ |
0.24 |
|
|
$ |
0.27 |
|
|
$ |
10.27 |
|
|
|
2.70% |
|
|
|
|
|
|
| 10 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
FINANCIAL INFORMATION — GUARDIAN GLOBAL UTILITIES VIP FUND
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Ratios/Supplemental Data |
|
Net Assets, End
of Period (000s) |
|
|
Net Ratio of
Expenses to
Average
Net Assets(3),(4) |
|
|
Gross Ratio of
Expenses to
Average Net
Assets(3) |
|
|
Net Ratio of Net
Investment Income
to Average
Net
Assets(3),(4) |
|
|
Gross Ratio of Net
Investment Income
to Average
Net
Assets(3) |
|
|
Portfolio
Turnover Rate(3) |
|
|
|
|
|
|
|
| $ |
85,307 |
|
|
|
0.89% |
|
|
|
1.37% |
|
|
|
1.56% |
|
|
|
1.08% |
|
|
|
50% |
|
| (1) |
Calculated based on the average shares outstanding during the period. |
| (2) |
Total returns do not reflect the effects of charges deducted pursuant to the terms of The Guardian Insurance &
Annuity Company, Inc.’s variable contracts. Inclusion of such charges would reduce the total returns for all periods shown. |
| (3) |
Ratios for periods less than one year have been annualized, except for total return and portfolio turnover rate. Certain non-recurring fees (i.e., audit fees) are not annualized. |
| (4) |
Net Ratio of Expenses to Average Net Assets and Net Ratio of Net Investment Income to Average Net Assets include the
effect of fee waivers and expense limitations. |
| (5) |
Commenced operations on October 21, 2019. |
|
|
|
|
|
| The accompanying notes are an integral part of these financial statements. |
|
|
|
11 |
NOTES TO FINANCIAL STATEMENTS — GUARDIAN GLOBAL UTILITIES VIP FUND
December 31, 2019
1.
Organization
Guardian Variable Products Trust (the “Trust”), a Delaware statutory trust organized on January 12, 2016, is registered under the
Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Trust currently has sixteen series. Guardian Global Utilities VIP Fund (the
“Fund”) is a series of the Trust. The Fund is a diversified fund and commenced operations on October 21, 2019. The financial statements for other series of the Trust are presented in separate reports.
The Trust has authorized an unlimited number of shares of beneficial interest with no par value. Shares are bought and sold at closing net asset value (“NAV”).
Shares of the Fund are only sold to certain separate accounts of The Guardian Insurance & Annuity Company, Inc. (“GIAC”) that fund certain variable annuity contracts and variable life insurance policies issued by GIAC. GIAC is a
wholly-owned subsidiary of The Guardian Life Insurance Company of America (“Guardian Life”).
The Fund seeks total return.
2. Significant Accounting Policies
The following is a summary of significant
accounting policies followed by the Fund in the preparation of its financial statements. The Fund follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards
Codification Topic 946 Financial Services — Investment Companies. The following policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements
in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.
a. Investment Valuations Equity securities traded on an exchange other than NASDAQ Stock Market, LLC (“NASDAQ”) are valued at the last reported sale
price on the principal exchange or market on which they are traded; or, if there were no sales that day, at the mean between the closing bid and ask prices. Securities traded on the NASDAQ are generally valued at the NASDAQ official closing price,
which may not be the last sale price. If the NASDAQ official closing price is not available for a security, that security is generally valued at the
mean between the closing bid and ask prices. Repurchase agreements are carried at cost, which approximates fair value (see Note 5d). Foreign securities are valued in the currencies of the markets
in which they trade and then converted to U.S. dollars by the application of foreign exchange rates at the close of the New York Stock Exchange (“NYSE”). Forward foreign currency contracts, if any, are valued at the mean between the bid
and ask rates for the specified time interpolated from rates for proximate time periods. Securities for which market quotations are not readily available or for which market quotations may be considered unreliable are valued at their fair values as
determined in accordance with policies and procedures adopted by the Board of Trustees.
Under the policies and procedures approved by the Board of Trustees, Park
Avenue Institutional Advisers LLC (“Park Avenue”), the Fund’s investment adviser, has established a Fair Valuation Committee to assist the Board of Trustees with the oversight and monitoring of the valuation of the Fund’s
investments. This includes monitoring the appropriateness of fair values based on results of ongoing valuation oversight, including but not limited to consideration of security specific events, market events, and pricing vendor and broker-dealer due
diligence. The Fair Valuation Committee oversees and carries out the policies for the valuation of investments held in the Fund. The Fair Valuation Committee is responsible for discussing and assessing the potential impacts to the fair values on an
ongoing basis, and at least on a quarterly basis with the Board of Trustees.
Securities whose values have been materially affected by events occurring before the
Fund’s valuation time but after the close of the securities’ principal exchange or market may be fair valued in accordance with policies and procedures adopted by the Board of Trustees. In addition, the values of the Fund’s
investments in foreign securities are generally determined by a pricing service using pricing models designed to estimate likely changes in the values of those securities. Certain foreign equity instruments are valued by applying international fair
value factors provided by approved pricing services. The factors seek to adjust the local closing price for movements of local markets post closing, but prior to the time the NAVs are calculated. Valuations reflected in this report are as of the
report date. As a result, changes in valuation due to market events and/or issuer related events after the report date and prior to issuance of the report are not reflected herein.
NOTES TO FINANCIAL STATEMENTS — GUARDIAN GLOBAL UTILITIES VIP FUND
Various inputs are used in determining the valuation of the Fund’s investments. These inputs are summarized in three
broad levels listed below.
| • |
|
Level 1 — unadjusted inputs using quoted prices in active markets for identical investments. |
| • |
|
Level 2 — other significant observable inputs, including, but not limited to, quoted prices for similar investments, inputs other than quoted prices that are observable for investments (such as interest
rates, prepayment speeds, credit risks, etc.) or other market corroborated inputs. |
| • |
|
Level 3 — significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments) |
Inputs may include price information, volatility statistics, specific and broad credit data, liquidity statistics, and other factors. A financial instrument’s level
within the fair value hierarchy is based on the lowest level of any input; both individually and in aggregate, that is significant to the fair value measurement. However, the determination of what constitutes “observable” requires
significant judgment by the Trust. The Trust considers observable data to be that market data which is readily available, regularly distributed or updated, reliable and verifiable, and provided by independent sources that are actively involved in
the relevant market. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. Changes in valuation techniques may result in transfers into or out of a
financial instrument’s assigned level within the hierarchy.
The FASB requires reporting entities to make disclosures about purchases, sales, issuances and
settlements of Level 3 securities on a gross basis. For the period ended December 31, 2019, there were no transfers into or out of Level 3 of the fair value hierarchy.
In determining a financial instrument’s placement within the hierarchy, the Trust separates the Fund’s investment portfolio into two categories: investments
and derivatives (e.g., futures). A summary of inputs used to value the Fund’s assets and liabilities carried at fair value as of December 31, 2019 is included in the Schedule of Investments.
Investments Investments whose values are based on quoted market prices in active markets, and are therefore classified within Level 1, include active
listed equities. Investments that trade in markets that are not considered to be active, but are valued based on quoted market prices, dealer quotations or alternative pricing
sources supported by observable inputs are classified within Level 2. These include certain U.S. government and sovereign obligations, most government agency securities, investment-grade
corporate bonds, certain mortgage products, state, municipal and provincial obligations, and certain foreign equity securities, including securities whose prices may have been affected by events occurring after the close of trading on their
principal exchange or market and, as a result, whose values are determined by a pricing service as described above, or securities whose values are otherwise determined using fair valuation methods approved by the Fund’s Board of Trustees.
Investments classified within Level 3 have significant unobservable inputs, as they trade infrequently or not at all. Level 3 investments include, among
others, private placement securities. When observable prices are not available for these securities, the Trust uses one or more valuation techniques for which sufficient and reliable data is available. The inputs used by the Trust in estimating the
value of Level 3 investments include, for example, the original transaction price, recent transactions in the same or similar instruments, completed or pending third-party transactions in the underlying investment or comparable issuers,
subsequent rounds of financing, recapitalizations, and other transactions across the capital structure. Level 3 investments may also be adjusted to reflect illiquidity and/or non-transferability, with the
amount of such discount estimated by the Trust in the absence of market information. Assumptions used by the Trust due to the lack of observable inputs may significantly impact the resulting fair value and therefore the Fund’s results of
operations. As of December 31, 2019, the Fund had no securities classified as Level 3.
Derivatives Exchange-traded derivatives, such as
futures contracts, exchange-traded option contracts and certain swaps, are typically classified within Level 1 or Level 2 of the fair value hierarchy depending on whether or not they are deemed to be actively traded. Certain non-exchange-traded derivatives, such as generic forwards, certain swaps and options, have inputs which can generally be corroborated by market data and are therefore classified within Level 2. During the
period ended December 31, 2019, the Fund did not hold any derivatives.
b. Securities Transactions Securities transactions are accounted for on the date
securities are purchased or sold (trade date). Realized gains or losses on securities transactions are determined on the basis of specific identification.
NOTES TO FINANCIAL STATEMENTS — GUARDIAN GLOBAL UTILITIES VIP FUND
c. Futures Contracts The Fund may enter into financial futures contracts. In entering into such contracts, the Fund
is required to deposit with the counterparty, either in cash or securities, an amount equal to a certain percentage of the face value of the contract. Subsequent payments are received or made by the Fund each day, depending on the daily fluctuations
in the values of the contracts, and are recorded for financial statement purposes as variation margin received or paid by the Fund. Daily changes in variation margin are recognized as unrealized gains or losses by the Fund. The Fund may not achieve
the anticipated benefits of the financial futures contracts and may realize a loss.
d. Foreign Currency Translation The accounting records of the Fund are
maintained in U.S. dollars. Investment securities and all other assets and liabilities of the Fund denominated in a foreign currency are generally translated into U.S. dollars at the exchange rates quoted at the close of the NYSE on each business
day. The market value of investment securities and other assets and liabilities are translated at the exchange rate as of the valuation date. Purchases and sales of securities, income receipts, and expense payments are translated into U.S. dollars
at the exchange rates in effect on the dates of the respective transactions. The Fund does not isolate the portion of the fluctuations on investments resulting from changes in foreign currency exchange rates from the fluctuations in market prices of
investments held. Such fluctuations are included in the Net change in net realized and unrealized gain/(loss) from investments on the Statement of Operations.
Reported realized foreign currency gains and losses arise from the disposition of foreign currency, currency gains or losses realized between the trade and settlement
dates on securities transactions, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Fund’s books on the transaction date and the U.S. dollar equivalent of the amounts actually received
or paid. These reported realized foreign currency gains and losses, if any, are included in Net realized gain/(loss) from foreign currency transactions on the Statement of Operations. Unrealized foreign currency gains and losses arise from changes
(due to changes in exchange rates) in the value of foreign currency and other assets and liabilities denominated in foreign currencies, which are held at period end, if any, and are included in Net change in unrealized appreciation/(depreciation) on
translation of assets and liabilities in foreign currencies on the Statement of Operations.
e. Foreign Capital Gains Tax The Fund may be subject to foreign taxes on income, gains on investments or currency
purchases/repatriation, a portion of which may be recoverable. The Fund will accrue such taxes and recoveries as applicable, based upon their current interpretation of tax rules and regulations that exist in the markets in which they invest.
f. Investment Income Dividend income net of foreign taxes withheld, if any, is generally recorded on the ex-dividend date.
Interest income, which includes amortization/accretion of premium/discount, is determined using the interest income accrual method, and is accrued and recorded daily.
g. Allocation of Income and Expenses Many of the expenses of the Trust can be directly attributed to a specific series of the Trust. Expenses that cannot be
directly attributed to a specific series of the Trust are generally apportioned among all the series in the Trust, based on relative net assets. In calculating net asset value per share for each series of the Trust, investment income, realized and
unrealized gains and losses, and expenses other than series-specific expenses are allocated daily to each series based upon the proportion of net assets attributable to each series.
3. Transactions with Affiliates
a. Investment Advisory Fee and Expense
Limitation Under the terms of the advisory agreement, which, after its two year initial term, is reviewed and approved annually by the Board of Trustees, the Fund pays an investment advisory fee to Park Avenue. Park Avenue is a wholly-owned
subsidiary of Guardian Life and receives an investment advisory fee at an annual rate of 0.73% of the Fund’s average daily net assets. The fee is accrued daily and paid monthly.
Park Avenue has contractually agreed through April 30, 2020 to waive certain fees and/or reimburse certain expenses incurred by the Fund to the extent necessary to
limit the Fund’s total annual operating expenses after fee waiver and/or expense reimbursement to 1.03% of the Fund’s average daily net assets (excluding, if applicable, any acquired fund fees and expenses, taxes, interest, transaction
costs and brokerage commissions, litigation and extraordinary expenses). The limitation may not be increased or terminated prior to this time without action by the Board of Trustees, may be terminated only upon approval of the Board of Trustees.
Amounts waived or reimbursed by Park Avenue pursuant to any expense limitation will not be subject to Park Avenue’s recoupment rights. For the period ended December 31, 2019, Park Avenue waived fees and/or paid Fund expenses in the amount
of $79,782.
NOTES TO FINANCIAL STATEMENTS — GUARDIAN GLOBAL UTILITIES VIP FUND
Park Avenue has entered into a Sub-Advisory Agreement with Wellington Management
Company LLP (“Wellington”). Wellington is responsible for providing day-to-day investment advisory services to the Fund, subject to the supervision of Park
Avenue and the oversight of the Board of Trustees. Sub-advisory fees are paid by Park Avenue and do not represent a separate or additional expense to the Fund.
b. Compensation of Trustees and Officers Trustees and officers who are interested persons of the Trust, as defined in the 1940 Act, receive no compensation from
the Fund, except for the Chief Compliance Officer of the Trust. Trustees of the Trust who are not interested persons of the Trust, and the Chief Compliance Officer, receive compensation and reimbursement of expenses from the Trust.
c. Distribution Fees Park Avenue Securities LLC (“PAS”), a wholly-owned subsidiary of Guardian Life, is the principal underwriter of Fund shares. The
Trust has entered into a distribution and service agreement with PAS, which governs the sale and distribution of shares of the Fund. Under a distribution and service plan adopted by the Trust (“12b-1
plan”), PAS is compensated for services in such capacity, including its expenses in connection with the promotion and distribution of shares of the Fund, at an annual rate of 0.25% of the Fund’s average daily net assets. For the period
ended December 31, 2019, the Fund paid distribution fees in the amount of $41,621 to PAS.
PAS has directed that certain payments under the 12b-1 plan be used to compensate GIAC for shareholder services provided to contract owners.
4. Federal Income Taxes
a. Distributions to Shareholders For federal income tax purposes, the Fund is treated as a disregarded entity (“DRE”). As a DRE, the Fund is not subject
to an entity-level income tax; and any income, gains, losses, deductions, taxes, and credits of the Fund would instead be “passed through” directly to the separate accounts of GIAC that invest in the Fund and retain the same character for
U.S. federal income tax purposes. In addition, the Fund is not required to distribute taxable income and capital gains for U.S. federal income tax purposes. Therefore, no dividends and capital gains distributions were paid by the Fund.
5. Investments
a. Investment Purchases and Sales The cost of
investments purchased and the proceeds from
investments sold (excluding short-term investments and in-kind transactions) amounted to $71,927,238 and $42,280,196, respectively, for the period ended December 31, 2019. During the period
ended December 31, 2019, there were no purchases or sales of U.S. government securities.
b. Foreign Securities Foreign securities investments involve
special risks and considerations not typically associated with U.S. investments. These risks include, but are not limited to, currency risk; adverse political, regulatory, social, and economic developments; and less reliable information about
issuers. Moreover, securities of some foreign issuers may be less liquid and their prices more volatile than those of comparable U.S. issuers.
c. Industry or
Sector Concentration In its normal course of business, the Fund may invest a significant portion of its assets in companies within a limited number of industries or sectors. As a result, the Fund may be subject to a greater risk of loss than
that of a fund invested in a wider spectrum of industries or sectors because the stocks of many or all of the companies in the industry, group of industries, sector, or sectors may decline in value due to developments adversely affecting the
industry, group of industries, sector, or sectors.
d. Repurchase Agreements The Fund may invest in repurchase agreements to maintain liquidity and earn
income over periods of time as short as overnight. The collateral for repurchase agreements is either cash or fully negotiable U.S. government securities (including U.S. government agency securities). Repurchase agreements are fully collateralized
(including the interest accrued thereon) and such collateral is marked to market daily while the agreements remain in force. If the value of the collateral falls below the repurchase price plus accrued interest, the Fund will typically require the
seller to deposit additional collateral by the next business day. If the request for additional collateral is not met, or the seller defaults, the Fund maintains the right to sell the collateral (although it may be prevented or delayed from doing so
in certain circumstances) and may be required to claim any resulting loss against the seller. Park Avenue monitors the creditworthiness of the seller with which the Fund enters into repurchase agreements.
6. Temporary Borrowings
The Fund, with other funds managed by Park Avenue,
is party to a $10 million committed revolving credit facility from State Street Bank and Trust Company for
NOTES TO FINANCIAL STATEMENTS — GUARDIAN GLOBAL UTILITIES VIP FUND
temporary borrowing purposes, including the meeting of redemption requests that otherwise might require the untimely
disposition of securities. Interest is calculated based on the higher of the daily one-month LIBOR rate and the Federal Funds rate plus 1.25% at the time of borrowing. In addition to the interest charged on
any borrowings by the Fund, each fund pays a commitment fee of 0.30% per annum on its share of the unused portion of the credit facility. The agreement is in place until December 9, 2020. The Fund did not utilize the credit facility during the
period ended December 31, 2019.
7. Indemnifications
Under the
Trust’s organizational documents and, in some cases, by contract, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Fund. In addition, in the normal course of business,
the Fund enters into contracts with its vendors and others that provide general indemnifications. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have
not yet occurred. However, based on experience, the Fund expects the risk of loss to be remote.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees of Guardian Variable Products Trust and Shareholders of
Guardian Global Utilities VIP Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Guardian Global Utilities VIP Fund (one of the funds
constituting Guardian Variable Products Trust, referred to hereafter as the “Fund”) as of December 31, 2019, and the related statements of operations and changes in net assets, including the related notes, and the financial highlights
for the period October 21, 2019 (commencement of operations) through December 31, 2019 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects,
the financial position of the Fund as of December 31, 2019, and the results of its operations, changes in its net assets, and the financial highlights for the period from October 21, 2019 (commencement of operations) through
December 31, 2019 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements
based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws
and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit of these financial statements in accordance
with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing
procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2019 by correspondence with the custodian. We
believe that our audit provides a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
New York, New York
February 20, 2020
We have served as the auditor of one or more investment companies in Guardian Variable Products Trust since 2016.
SUPPLEMENTAL INFORMATION (UNAUDITED)
Approval of Investment Advisory and Sub-advisory Agreements
Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), requires that a fund’s investment advisory and sub-advisory agreements be approved initially by the fund’s board of trustees. Section 15(c) also requires that the continuation of these agreements, after an initial term of up to two years, be annually
reviewed and approved by the board. Any such agreement must be approved by a vote of a majority of the trustees who are not parties to the agreement or “interested persons” (as defined in the 1940 Act) of a party to the agreement at an in-person meeting of the board called for the purpose of voting on such approval.
At a meeting of the Board of Trustees (the
“Board”) of Guardian Variable Products Trust (the “Trust”) held on March 27-28, 2018 (the “Meeting”), the Board considered and approved the proposed investment management agreement (the “Management
Agreement”) between the Trust, on behalf of Guardian Small Cap Core VIP Fund, Guardian Global Utilities VIP Fund, Guardian Multi-Sector Bond VIP Fund, Guardian Total Return Bond VIP Fund, and Guardian U.S. Government Securities VIP Fund (the
“New Funds”), and Park Avenue Institutional Advisers LLC (the “Manager”). The Board also considered and approved the proposed sub-advisory agreements (the
“Sub-advisory Agreements,” collectively with the Management Agreement, the “Agreements”) between the Manager and ClearBridge Investments LLC and Wellington Management Company LLP (the “Sub-advisers”), investment advisory firms engaged to serve as sub-advisers to Guardian Small Cap Core VIP Fund and Guardian Global Utilities VIP Fund, respectively.
The Trustees who are not parties to the Agreements or “interested persons” (as defined in the 1940 Act) of a party to the Agreements (the “Independent Trustees”) unanimously approved the Agreements for an initial term of two
years.
The Board is responsible for overseeing the management of each Fund. In determining whether to approve the Agreements, the Trustees evaluated information and
factors that they considered to be relevant and appropriate through the exercise of their own business judgment. The Trustees considered certain information and factors in light of advice furnished to them by legal counsel to the Trust and, in the
case of the Independent Trustees, their independent legal counsel. In advance of the Meeting, the Trustees received materials and information designed to assist their consideration of the Agreements. At a Board
meeting held on November 28-29, 2017, the Trustees received presentations from the Manager and each Sub-adviser regarding the services to be rendered
to, and the proposed investment strategies for, the New Funds. The Trustees received written responses from the Manager and each Sub-adviser to a series of questions and requests for information covering a
wide variety of topics provided by independent legal counsel on behalf of the Independent Trustees. The Trustees also received presentations and discussed the New Funds at a special telephonic Board meeting held on February 12, 2018, and the
Independent Trustees discussed the New Funds with independent legal counsel in advance of the Meeting. The Trustees also received materials and information regarding the legal standards applicable to their consideration of the Agreements and the
process and criteria used by the Manager to identify and select the Sub-advisers for approval by the Board and to propose that Guardian Multi-Sector Bond VIP Fund, Guardian Total Return Bond VIP Fund, and
Guardian U.S. Government Securities VIP Fund would be managed directly by the Manager without a sub-adviser.
During the
course of their deliberations, the Independent Trustees met to discuss and evaluate the Agreements in executive session with their independent legal counsel, outside of the presence of the Trustees who are not Independent Trustees and
representatives from Fund management, the Manager or either Sub-adviser.
In reaching its decisions to approve the
Agreements, the Board took into account the materials and information described above as well as other materials and information provided to the Board and discussed with and among the Trustees, including information furnished to the Board by the
Manager throughout the year regarding other series of the Trust, including series sub-advised by the Sub-advisers. Individual Trustees may have given different weight to
different factors and information with respect to each Agreement, and the Trustees did not identify any single factor or information that, in isolation, would be controlling in deciding to approve the Agreements. The discussion below is intended to
summarize the broad factors that figured prominently in the Board’s decisions to approve the Agreements rather than to be all-inclusive. These broad factors included: (i) the nature, extent and
quality of the services to be provided to the New Funds by the Manager and the Sub-advisers; (ii) the investment performance of funds and accounts managed by the Manager and each Sub-adviser with strategies similar to the applicable New Fund; (iii) the fees to be charged and estimated profitability; (iv) the extent to which
SUPPLEMENTAL INFORMATION (UNAUDITED)
economies of scale may in the future exist for a New Fund, and the extent to which a New Fund may benefit from future
economies of scale; and (v) any other benefits anticipated to be derived by the Manager or the Sub-advisers (or their respective affiliates) from their relationships with the New Funds.
Nature, Extent and Quality of Services
The Trustees considered
information regarding the nature, extent and quality of services to be provided to the New Funds by the Manager. The Trustees also considered, among other things, the terms of the Management Agreement and the range of investment advisory services to
be provided by the Manager. In addition, the Trustees reviewed the range of non-investment advisory services to be provided by the Manager consistent with the terms of the Management Agreement, notably
coordinating the preparation and filing of various regulatory documents, coordinating the preparation and assembly of Board meeting materials and assisting the Board with certain valuation matters.
The Trustees considered that Guardian Small Cap Core VIP Fund and Guardian Global Utilities VIP Fund would operate in a “manager-of-managers” structure and reviewed the responsibilities that the Manager would have under this structure, including monitoring and evaluating the performance of the Sub-advisers, monitoring the Sub-advisers for adherence to the stated investment objectives, strategies, policies and restrictions of the Funds and supervising the Sub-advisers with respect to the services that the Sub-advisers would provide under the Sub-advisory Agreements. The Trustees also
considered the process used by the Manager, consistent with this structure, to identify and recommend sub-advisers, and its ability to monitor and oversee sub-advisers
and recommend replacement sub-advisers, when necessary, and provide other services under the Management Agreement. The Trustees reviewed information regarding the experience and background of the
Manager’s key personnel and the Manager’s organizational structure and resources, including investment, legal and administrative capabilities of the Manager. In this regard, the Trustees recognized that the New Funds may benefit from the
Manager’s ability to use similar resources and capabilities of its affiliates in providing services to the New Funds.
The Trustees considered information
regarding the nature, extent and quality of services to be provided to Guardian Small Cap Core VIP Fund and Guardian Global Utilities VIP Fund by the Sub-advisers. The Trustees also
considered, among other things, the terms of the Sub-advisory Agreements and the range of investment advisory services to be provided by the Sub-advisers under the oversight of the Manager and the Sub-advisers’ experience with managing other funds that are series of the Trust. In evaluating these investment
advisory services, the Trustees considered, among other things, the Sub-advisers’ investment philosophies, styles and/or processes and approach to managing risk. The Trustees also considered information
regarding funds or accounts managed by the Sub-advisers with similar strategies as the applicable New Fund, including performance and portfolio characteristics, when available. The Trustees received and
evaluated information regarding the background, education, expertise and/or experience of the investment professionals that would serve as portfolio managers for these New Funds and the capabilities, resources and reputations of the Sub-advisers.
The Trustees considered that Guardian Multi-Sector Bond VIP Fund, Guardian Total Return Bond VIP Fund and Guardian
U.S. Government Securities VIP Fund would be managed without a sub-adviser by the Manager. In evaluating the investment advisory services to be provided by the Manager with respect to these New Funds, the
Trustees considered, among other things, the Manager’s investment philosophies, styles and/or processes and approach to managing risk. The Trustees also considered information regarding funds or accounts managed by the Manager or its affiliates
with similar strategies as the applicable New Fund, including performance and portfolio characteristics, when available, as well as the Manager’s experience investing in asset classes that would comprise the investment portfolios of these New
Funds. The Trustees received and evaluated information regarding the background, education, expertise and/or experience of the investment professionals that would serve as portfolio managers for these New Funds and the capabilities, resources and
reputations of the Manager and its affiliates.
Based upon these considerations, the Trustees concluded, within the context of their full deliberations and in light
of the New Funds’ anticipated operations, that the nature, extent and quality of services to be provided to the New Funds by the Manager and each Sub-adviser were appropriate.
Investment Performance
The New Funds had not commenced
operations prior to the Meeting. Accordingly, the New Funds did not yet
SUPPLEMENTAL INFORMATION (UNAUDITED)
have an investment performance record. The Board considered historical performance information with respect to funds or
accounts managed by the Manager and Sub-advisers (or their affiliates) with similar investment strategies as the New Funds, and comparisons to relevant benchmarks and peer groups, when available. The Trustees
concluded that the historical performance records available, viewed together with the other relevant factors and information considered by the Trustees, supported a decision to approve each Agreement. The Trustees also concluded that it was
appropriate to revisit the New Funds’ investment performance in connection with future reviews of the Agreements.
Costs and Profitability
The Trustees considered the proposed management fees to be paid by the Funds to the Manager under the Management Agreement and evaluated the reasonableness of
these fees. The Trustees received and reviewed comparative information with respect to the proposed management fees, including the management fees paid by other funds offered as investment options underlying variable contracts within the applicable
peer group based on data obtained from Broadridge Financial Solutions, Inc., an independent provider of industry data, which showed that the New Funds’ proposed contractual management fees fell within the following quintiles: the first quintile
for Guardian Small Cap Core VIP Fund, Guardian Total Return Bond VIP Fund and Guardian Multi-Sector Bond VIP Fund; the second quintile for Guardian Global Utilities VIP Fund; and the third quintile for Guardian U.S. Government Securities VIP Fund.
The Trustees considered the proposed sub-advisory fees to be paid under the
Sub-advisory Agreements and evaluated the reasonableness of those fees. The Trustees also considered that the fees to be paid to the Sub-advisers would be paid by the
Manager and not the New Funds and that the Manager had negotiated the fees with the Sub-advisers at arm’s-length. In addition, the Trustees considered the portion
of the management fees proposed to be paid to each Sub-adviser as compared to the portion proposed to be retained by the Manager.
The Trustees received comparative information relating to each New Fund’s anticipated operating expense ratios and the actual operating expense ratios of a peer
group of funds. In this regard, the Board noted that the New Funds’ anticipated operating expense ratios within the following quintiles: the first quintile for Guardian
Small Cap Core VIP Fund and Guardian Global Utilities VIP Fund; and the second quintile for Guardian U.S. Government Securities VIP Fund, Guardian Total Return Bond VIP Fund and Guardian
Multi-Sector Bond VIP Fund. The Trustees considered estimates of the New Funds’ projected asset levels and the Manager’s commitment to initially limit each New Fund’s operating expenses through an expense limitation agreement with the
Trust. Although the Board recognized that the comparisons between the proposed management fees and anticipated operating expenses of the New Funds and those of identified peer funds are imprecise, given different terms of agreements and variations
in fund strategies, the Trustees found that the comparative information supported their consideration and approval of the proposed management fees and evaluation of the anticipated operating expenses.
The Trustees reviewed information regarding the Manager’s projected costs of sponsoring the New Funds and projected profitability of the New Funds to the Manager
based on the anticipated assets and expenses of the New Funds. The Trustees noted that the information, including with respect to revenues and expenses, contained estimates because the New Funds had not yet commenced operations at the time of the
Meeting. The Trustees did not consider any projected profitability information from the Sub-advisers because the Manager would be responsible for payment of the
sub-advisory fees and had negotiated the fees with the Sub-advisers at arm’s-length.
Based on the consideration of the information and factors summarized above, as well as other information and factors deemed relevant by the Trustees, the Trustees
concluded that the proposed management and sub-advisory fees were reasonable in light of the nature, extent and quality of services expected to be rendered to the New Funds by the Manager and the Sub-advisers. The Trustees also concluded that the projected profitability of the New Funds to the Manager was acceptable and the Trustees determined it was appropriate to revisit this information in connection with
future reviews of the Agreements.
Economies of Scale
The
New Funds had not commenced operations prior to the Meeting. As a result, no specific information was available concerning the possible effect that asset growth and economies of scale would have on a New Fund’s expenses. The Trustees concluded
that it was appropriate to revisit potential economies of scale in connection with future reviews of the Agreements or
SUPPLEMENTAL INFORMATION (UNAUDITED)
earlier, if appropriate, and that they were satisfied with the extent to which economies of scale would be shared for the
benefit of shareholders based on anticipated asset levels.
Ancillary Benefits
The Trustees considered the potential benefits, other than management fees, that the Manager and/or its affiliates may receive because of the Manager’s relationship
with the New Funds. The Trustees acknowledged that the New Funds were designed to serve as investment options under variable contracts issued by an affiliate of the Manager that would receive fees under those contracts and that Park Avenue
Securities LLC, an affiliate of the Manager and principal underwriter of the Funds, and an insurance company affiliated with the Manager would be entitled to receive fees from the New Funds under a plan of distribution adopted pursuant to Rule 12b-1 under the 1940 Act. The Trustees considered the benefits to the Manager from increased assets under management. The Trustees considered that the Manager and its affiliates may benefit from (i) greater
efficiencies in annuity administration and operations and potential cost
savings due to a reduction in the number of unaffiliated funds available as annuity contract investment options, and (ii) increased dividends-received deductions due to the Funds’
status under the tax laws as disregarded entities. In addition, the Trustees considered the potential benefits, other than sub-advisory fees, that the Sub-advisers and
their affiliates may receive because of their relationships with the New Funds, including the potential increased ability to use soft dollars consistent with Trust policies and other benefits from increases in assets under management. The Trustees
concluded that benefits that may accrue to the Manager and its affiliates are reasonable and the benefits that may accrue to the Sub-advisers and their affiliates are consistent with those expected for a sub-adviser to a mutual fund such as the applicable New Fund.
Conclusion
Based on a comprehensive consideration and evaluation of all of the information and factors summarized above, among others, the Board voting as a whole, including the
Independent Trustees voting separately, unanimously approved the Agreements.
SUPPLEMENTAL INFORMATION (UNAUDITED)
Trustees and Officers Information Table
The following table provides information about the Trustees of the Trust.
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| |
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Name and
Year of Birth |
|
Term of Office,
Position(s) Held
and Length of
Service1 |
|
Principal
Occupation(s)
During Past Five Years |
|
Number of
Funds
in Fund
Complex
Overseen
by Trustees2 |
|
Other Directorships
Held by Trustee |
| Independent Trustees |
| |
|
|
|
|
| Bruce W. Ferris3 (born 1955) |
|
Trustee |
|
Retired (since 2015); President and CEO, Prudential Annuities Distributors, Inc. (2013–2015); Director/Trustee, Advanced Series Trust, The Prudential Series Fund and Prudential’s
Gibraltar Fund, Inc. (2013–2015); Senior Vice President, Prudential Annuities (2008–2015). |
|
16 |
|
None. |
| |
|
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|
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| Theda R. Haber3 (born 1954) |
|
Trustee |
|
Adjunct Assistant Professor of Law, UC Hastings College of Law (since 2013); Member of the Board of Directors, Fairholme Trust Company, LLC (2015–2019); Attorney, Law Office of Theda R.
Haber (since 2014); Visiting Professor of Law, UC Davis School of Law (since 2014); Consultant, Haber & Associates LLC (financial services industry), (2012–2017); Advisory Council Chair, Vice Chair, and Member, Advisory Council on
Employee Welfare and Pension Benefit Plans (ERISA Advisory Council), U.S. Department of Labor (2009–2011); Managing Director and General Counsel, BlackRock Institutional Trust Company, N.A. (2009–2011); Deputy Global General Counsel,
Barclays Global Investors (2006–2009); Managing Director, Barclays Global Investors (1998–2006). |
|
16 |
|
None. |
| |
|
|
|
|
| Marshall
Lux3 (born 1960) |
|
Trustee |
|
Senior Advisor, The Boston Consulting Group (since 2014); Senior Partner and Managing Director, The Boston Consulting Group (2009–2014). |
|
16 |
|
None. |
| |
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| Lisa K.
Polsky3 (born 1956) |
|
Trustee |
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Board Member, MFA Financial, Inc. (real estate investment trust) (since 2020); Advisor, SMBC Americas (financial services) (since 2020); Senior Risk Advisor, AQR (investment management)
(2016–2019); Senior Risk Advisor, Ultra Capital (venture capital) (2016–2019); Board Member, DB USA Corporation (Deutsche Bank Intermediate Holding Company) (financial services) (since 2016); Chief Risk Officer, CIT Group Inc. (financial
services) (2010–2015); Board Member and Chair of Audit Committee, Piper Jaffray (investment bank) (2007–2016). |
|
16 |
|
None. |
| |
|
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| John
Walters3 (born 1962) |
|
Lead Independent Trustee |
|
Board Member, Amerilife Holdings LLC (insurance distribution) (since 2015); Board Member, Stadion Money Management LLC (investment adviser) (since 2011); President and Chief Operating Officer,
Hartford Life Insurance Company (2000–2010). |
|
16 |
|
Trustee, USAA Mutual Funds Trust, (One registered investment company offering 47 individual funds) (since
2019). |
SUPPLEMENTAL INFORMATION (UNAUDITED)
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Name and
Year of Birth |
|
Term of Office,
Position(s) Held
and Length of
Service1 |
|
Principal
Occupation(s)
During Past Five Years |
|
Number of
Funds
in Fund
Complex
Overseen
by Trustees2 |
|
Other Directorships
Held by Trustee |
| Interested Trustees |
| |
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| Dominique Baede4 (born 1970) |
|
Trustee (Since
January 2020) |
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Vice President, Head of Product, Life, Annuity and Inforce, The Guardian Life Insurance Company of America (since 2019); Managing Director, Product Management Group, AXA Equitable (insurance
company) prior thereto. |
|
16 |
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None. |
| |
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| Michael
Ferik4 (born 1972) |
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Chairman and Trustee (Since
December 2019) |
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Executive Vice President, Individual Markets, The Guardian Life Insurance Company of America (since 2020); Executive Vice President and Chief Financial Officer, The Guardian Life Insurance
Company of America (2017–2019); Executive Vice President, Individual Markets, The Guardian Life Insurance Company of America prior thereto. |
|
16 |
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None. |
| 1 |
Except as otherwise noted, each Trustee began service in such capacity in 2016 and serves until his or her successor is
elected and qualified or until his or her resignation, death or removal. The business address of each Trustee is 10 Hudson Yards, New York, New York 10001. |
| 2 |
The Trust currently consists of 16 separate Funds. |
| 3 |
Member of the Audit Committee of the Trust. |
| 4 |
Each of Dominique Baede and Michael Ferik is considered to be an “interested person” of the Trust within the
meaning of the 1940 Act because of their affiliation with The Guardian Life Insurance Company of America and/or its affiliates. |
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| Name and Year of Birth |
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Position(s) Held and
Length of Service5 |
|
Principal Occupation(s)
During Past Five Years |
| |
|
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Dominique Baede
(born 1970) |
|
President and Principal Executive Officer (Since January 2020) |
|
Vice President, Head of Product, Life, Annuity and Inforce, The Guardian Life Insurance Company of America (since 2019); Managing Director,
Product Management Group, AXA Equitable (insurance company) prior thereto. |
| |
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| John H. Walter
(born 1962) |
|
Senior Vice President, Treasurer, and Principal Financial and Accounting Officer |
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Vice President, Director of Finance, Corporate Finance, The Guardian Life Insurance Company of America. |
| |
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| Harris Oliner
(born 1971) |
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Senior Vice President and Secretary |
|
Senior Vice President, Corporate Secretary, The Guardian Life Insurance Company of America (since 2015); Senior Vice President, Deputy
General Counsel, Corporate Secretary, Voya Financial, Inc. prior thereto. |
| |
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| Richard T. Potter
(born 1954) |
|
Senior Vice President and Chief Legal Officer |
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Vice President and Equity Counsel, The Guardian Life Insurance Company of America. |
| |
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| Philip Stack
(born 1964) |
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Chief Compliance Officer
(Since September 2017) |
|
Second Vice President, Mutual Fund Chief Compliance Officer, The Guardian Life Insurance Company of America (since 2017); Executive Director,
Chief Compliance Officer, Morgan Stanley (2015–2017); Vice President, Morgan Stanley prior thereto. |
| |
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| Brian Hagan
(born 1984) |
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Anti-Money Laundering Officer (Since March 2019) |
|
Assistant Vice President (since 2019), Anti-Money Laundering Compliance, The Guardian Life Insurance Company of America/Park Avenue
Securities LLC; Vice President, Head of Financial Intelligence Unit, Brown Brothers Harriman & Co. (2014–2019); Assistant Vice President, AML Compliance Manager, JPMorgan Chase & Co. (2011–2014). |
| |
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| Kathleen M. Moynihan
(born 1966) |
|
Senior Counsel |
|
Second Vice President, Counsel (since 2019), The Guardian Life Insurance Company of America; Senior Counsel prior thereto. |
| |
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| Maria Nydia Morrison
(born 1958) |
|
Fund Controller |
|
Mutual Fund Controller, The Guardian Life Insurance Company of America (since 2015); Chief Financial Officer/Assistant Operating Officer, St.
Francis De Assisi Montessori School (Plaridel, Bulacan), Inc. (Philippines) prior thereto. |
| |
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| Sonya L. Crosswell
(born 1977) |
|
Assistant Secretary |
|
Assistant Vice President, Assistant Corporate Secretary and Secretary Pro Tem, The Guardian Life Insurance Company of America. |
| 5 |
Unless otherwise indicated, the Officers each began service in such capacity in 2016 and hold office for an indefinite
term or until their successors shall have been elected and qualified. The business address of each Officer is 10 Hudson Yards, New York, New York 10001. |
SUPPLEMENTAL INFORMATION (UNAUDITED)
The Statement of Additional Information (“SAI”) includes additional information about
the Trust’s Trustees and Officers and is available, without charge, upon request by calling toll-free 1-888-GUARDIAN (1-888-482-7342) or by visiting our website at http://guardianvpt.onlineprospectus.net/GuardianVPT/Prospectuses.
Portfolio Holdings and Proxy Voting Procedures
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year as an exhibit
to its reports on Form N-PORT. The Fund’s Form N-PORT reports are available on the Securities and Exchange Commission’s website at https://www.sec.gov.
The Fund’s Form N-PORT information is also available, without charge, upon request, by calling toll-free 1-888-GUARDIAN (1-888-482-7342) or by visiting our website at http://guardianvpt.onlineprospectus.net/
GuardianVPT/Prospectuses.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio
securities is included in the SAI. The SAI and information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 may be obtained
(i) without charge, upon request, by calling toll-free 1-888-GUARDIAN (1-888-482-7342) or by visiting our website at http://guardianvpt.onlineprospectus.net/
GuardianVPT/Prospectuses; and (ii) on the Securities and Exchange Commission’s website at
https://www.sec.gov.
This report is transmitted to shareholders only. It is not authorized for use as an offer of sale or a solicitation of an offer to buy shares of the Fund unless
accompanied or preceded by the Fund’s current prospectus. Past performance results shown in this report should not be considered a representation of future performance. Investment returns and principal value of shares will fluctuate so that
shares, when redeemed, may be worth more or less than their original cost. Statements and other information herein are as dated and are subject to change.
The Guardian Life Insurance Company of America New York, NY 10001-2159
PUB10537
Guardian Variable
Products Trust
2019
Annual Report
All Data as of December 31, 2019
Guardian U.S.
Government Securities VIP Fund
Important Notice
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund’s shareholder reports will no
longer be sent by mail from The Guardian Insurance & Annuity Company, Inc. (“GIAC”). Instead, GIAC will mail you a notice when copies of the shareholder reports are made available on a website. You will be notified by mail each time a
report is posted and provided with a website link to access the report.
If you have already elected to receive shareholder reports electronically, you will not be
affected by this change and you need not take any action. If you have not yet elected electronic delivery, at any time, you may elect to receive the Fund’s shareholder reports and certain other communications from GIAC electronically, by going
to www.guardianlife.com and registering for e-delivery.
You may instead elect to receive all future shareholder reports in paper free of charge. If you wish to
receive paper copies of your shareholder reports, please call GIAC’s Customer Service Office Contact Center at 1-888-GUARDIAN (1-888-482-7342). Your election to receive reports in paper will apply to all the underlying funds available.
|
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| Not FDIC insured. May lose value. No bank guarantee. |
|
www.guardianlife.com |
TABLE OF CONTENTS
Guardian U.S. Government Securities VIP Fund
Except as otherwise specifically stated, all information, including portfolio security positions, is as of
December 31, 2019. The views expressed in the Fund Commentary are those of the Fund’s portfolio manager(s) as of the date of this report and are subject to change without notice. They do not necessarily represent the views of Park Avenue
Institutional Advisers LLC or a sub-adviser. The Fund Commentary may contain some forward-looking statements providing expectations or forecasts of future events as of the date of this report; they do not
necessarily relate to historical or current facts. There can be no guarantee that any forward-looking statement will be realized. We undertake no obligation to update forward-looking statements, whether as a result of new information, future events,
or otherwise. Any discussions of specific securities should not be considered a recommendation to buy or sell those securities. Fund holdings will vary. Information contained herein has been obtained from sources believed reliable, but is not
guaranteed.
GUARDIAN U.S. GOVERNMENT SECURITIES VIP FUND
FUND COMMENTARY OF PARK AVENUE INSTITUTIONAL ADVISERS LLC, INVESTMENT ADVISER (unaudited)
Highlights
| • |
|
Guardian U.S. Government Securities VIP Fund (the “Fund”) returned 0.00%, outperforming its benchmark, the Bloomberg Barclays U.S. Intermediate Government Bond Index1 (the “Index”), for the period between its inception on October 21, 2019 and December 31, 2019. The Index returned -0.05% for the period.
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| • |
|
The Fund’s outperformance relative to the Index was primarily due to its duration, which was longer than the Index’s, and its allocation to agency residential mortgage-backed securities (“RMBS”).
|
Market Overview
After a woeful 2018, securities markets
roared back in 2019. Returns of 25% or more were commonplace among major equity indexes and returns for traditionally riskier fixed income asset classes also broke into the double digits as the U.S. Federal Reserve (the “Fed”) and other
central banks around the world reassured investors and encouraged risk taking by cutting interest rates.
The rally defied a daunting array of real and potential
threats at home and abroad: cooling economies and heated politics; trade disputes; volatile energy prices; Brexit drama; the impeachment of President Trump; high valuations for many asset classes; and potential early warning signs of recession in
the Treasury market.
While these concerns caused bursts of anxiety, investors mostly took comfort from central bank support, steady (if lackluster) economic growth,
extremely low unemployment, and strong consumer spending. Extraordinary amounts of capital flowed into government bond markets, driving the global amount of negative-yielding debt to a peak of $17 trillion in May, and creating demand for assets in
any sector that offered positive nominal yields.
The Standard & Poor’s 500® Index2 returned 31.49% for the year. In fixed income, the U.S. 10-year Treasury returned 8.9%.
The market’s momentum was firmly established by the potent rally in the first quarter after the Fed dramatically
reversed its formerly bullish tone on the U.S. economy and indicated it could soon switch from raising interest rates to cutting them, which it did three times during the year. The cuts came amid diminishing expectations for economic growth,
escalating trade tensions, and a persistent inversion of the U.S. Treasury yield curve. In such yield curve inversions, which have been a reliable sign that a recession was coming within a year or two, yields on certain shorter-term U.S. Treasurys
exceed yields on longer-term notes.
Despite the inversion of the U.S. Treasury yield curve, which has since resolved, most economists are not forecasting a
recession within the year given the very low unemployment rate and generally positive, if diminished, economic momentum. The Fed is estimating 2020 economic growth at or slightly below 2.0% and inflation slightly below its 2.0% target. Unemployment,
most recently at 3.5%, is expected to remain below 4.0%.
Portfolio Review
In a period when longer-maturity securities outperformed, the Fund benefitted from having a duration longer than the Index. The Fund’s heavily overweight allocation
to non-Treasury sectors, particularly RMBS, also had a strongly positive impact on relative performance. Exposures to collateralized loan obligations and asset-backed securities contributed to relative
performance as well.
The Fund’s allocation to agency and non-agency commercial mortgage-backed securities detracted
from relative performance, as did a modest allocation to investment grade corporate bonds.
Outlook
We believe that while the Fed’s renewed focus on supporting economic growth may bear fruit slowly for the U.S. economy, it had a meaningful impact on securities
markets throughout 2019. For the time being, investors appear wary but reassured that they will be
| 1 |
The Bloomberg Barclays U.S. Intermediate Government Bond Index (the “Index”) measures the performance
of U.S. Dollar denominated U.S. Treasuries, government-related and investment grade U.S. corporate securities that have a remaining maturity of greater than one year and less than ten years. You may not invest in the Index and,
unlike the Fund, the Index does not incur fees or expenses. |
| 2 |
The Standard & Poor’s 500® Index (the “S&P
500 Index”) is an unmanaged market-capitalization-weighted index generally considered to be representative of U.S. equity market activity. The S&P 500 Index consists of 500 stocks representing leading industries of the U.S. economy. Index
results assume the reinvestment of dividends paid on the stocks constituting the Index. You may not invest in the S&P 500 Index, and, unlike the fund, the S&P 500 Index does not incur fees or expenses. |
GUARDIAN U.S. GOVERNMENT SECURITIES VIP FUND
somewhat protected by accommodative monetary policy, which helps soothe credit market volatility. We believe that much
will continue to depend on whether investors view the Fed and its peers as both committed to supporting growth and capable of doing so. However, risks appear to be growing as the current expansion, already the longest ever, continues to age. We
would
note that a market leaning too heavily on central bank support could be fragile if the Fed proves unwilling or unable to prevent a downturn. We continue to view global growth concerns, domestic
politics, trade tensions, and energy prices as key potential catalysts for shifts in risk.
Funds in the Guardian Variable Products Trust are
sold by prospectus only. You should carefully consider the investment objectives, risks, charges and expenses of the Funds before making an investment decision. The prospectus contains this and other important information. Please read it carefully
before investing or sending money. Please visit our website at http://guardianvpt.onlineprospectus.net/GuardianVPT/ Prospectuses or to obtain a printed copy, call
1-888-GUARDIAN (1-888-482-7342).
As with all mutual funds, the value of an investment in the Fund could decline, and you could lose money. Diversification does not guarantee profit or protect against
loss, and there can be no assurance that the Fund will achieve its investment objective. Bond funds are subject to interest rate risk, credit risk, and prepayment risk. When interest rates rise, bond prices generally fall, and when interest rates
fall, bond prices generally rise. In a lower interest rate environment, the risk that bond prices may fall when interest rates rise is potentially greater. U.S. government securities may or may not be backed by the full faith and credit of the U.S.
government and are subject to the risks associated with fixed income investments, particularly interest rate risk and credit risk. The Fund is subject to the risk that the U.S. government will not make timely payments on its debt or provide
financial support to U.S. government agencies, instrumentalities or sponsored enterprises if those entities are not able to meet their financial obligations. Derivative transactions can create leverage and may be highly volatile. It is possible that
a derivative transaction will result in a loss greater than the principal amount invested and the Fund may not be able to close out a derivative transaction at a favorable time or price. The value of a debt security is affected by changes in
interest rates and is subject to any credit risk of the issuer or guarantor of the security. Investing in a more limited number of issuers and sectors can be subject to greater market fluctuation. Any discussions of specific securities should not be
considered a recommendation to buy or sell those securities. Fund holdings will vary.
GUARDIAN U.S. GOVERNMENT SECURITIES VIP FUND
Fund Characteristics (unaudited)
|
|
|
| Total Net Assets: $270,003,319 |
|
|
|
| |
|
Bond Sector Allocation1
As of December 31, 2019 |
|
| |
|
Bond Quality Allocation2
As of December 31, 2019 |
|
GUARDIAN U.S. GOVERNMENT SECURITIES VIP FUND
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Top Ten Holdings1 As of December 31, 2019 |
|
| |
|
|
|
| Holding |
|
Coupon Rate |
|
|
Maturity Date |
|
|
% of Total
Net Assets |
|
| U.S. Treasury Note |
|
|
1.500% |
|
|
|
9/30/2024 |
|
|
|
22.88% |
|
| U.S. Treasury Note |
|
|
1.500% |
|
|
|
9/30/2021 |
|
|
|
7.62% |
|
| Federal Home Loan Bank |
|
|
2.375% |
|
|
|
9/10/2021 |
|
|
|
5.81% |
|
| Federal National Mortgage Association |
|
|
3.500% |
|
|
|
7/1/2049 |
|
|
|
4.69% |
|
| Freddie Mac Multifamily Structured Pass-Through Certificates |
|
|
2.745% |
|
|
|
1/25/2026 |
|
|
|
3.24% |
|
| Federal National Mortgage Association |
|
|
3.500% |
|
|
|
3/1/2034 |
|
|
|
3.20% |
|
| Federal National Mortgage Association |
|
|
3.000% |
|
|
|
9/1/2049 |
|
|
|
3.16% |
|
| Federal National Mortgage Association |
|
|
3.500% |
|
|
|
10/1/2049 |
|
|
|
2.62% |
|
| CGRBS Commercial Mortgage Trust |
|
|
3.584% |
|
|
|
3/13/2035 |
|
|
|
2.51% |
|
| Federal National Mortgage Association |
|
|
4.000% |
|
|
|
5/1/2049 |
|
|
|
2.38% |
|
| Total |
|
|
|
|
|
|
|
|
|
|
58.11% |
|
| 1 |
Portfolio holdings are subject to change and should not be considered a recommendation to buy or sell individual
securities. Cash includes short-term investments and net other assets and liabilities. |
| 2 |
The Bond Quality Allocation chart displays the percentage of fund assets allocated to each rating. Rating agencies’
independent ratings of individual securities are aggregated by Barclays, and market weights are reported using Standard & Poor’s letter rating conventions. Rating methodology uses the middle rating of Moody’s Investors Service,
Inc., Standard & Poor’s Ratings Services, and Fitch Ratings. When a rating from only two of the rating agencies is available, the lower rating is used. Credit quality ratings assigned by a rating agency are subject to change
periodically and are not absolute standards of credit quality. Rating agencies may fail to make timely changes in credit ratings, and an issuer’s current financial condition may be better or worse than a rating indicates. In formulating
investment decisions for the Fund, Park Avenue Institutional Advisers LLC develops its own analysis of the credit quality and risks associated with individual debt instruments, rather than relying exclusively on rating agency ratings.
|
Fund Performance (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Average Annual Total Returns
As of December 31, 2019 |
|
| |
|
|
|
|
|
| |
|
Inception Date |
|
|
1 Year |
|
|
5 Year |
|
|
10 Year |
|
|
Since Inception* |
|
| Guardian U.S. Government Securities VIP Fund |
|
|
10/21/2019 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.00% |
|
| Bloomberg Barclays U.S. Intermediate Government Bond Index |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
-0.05% |
|
| * |
Since inception returns are not annualized and represent cumulative total returns. |
Performance quoted represents past performance and does not guarantee or predict future results. Investment return and principal value will fluctuate, so shares, when
redeemed, may be worth more or less than their original cost. The Fund’s fees and expenses are detailed in the Financial Highlights section of this report. Fees and expenses are factored into the net asset value of Fund shares and any
performance numbers we release. Total return figures include the effect of expense limitations in effect during the periods shown, if applicable; without such limitations, the performance shown would have been lower. Performance results assume the
reinvestment of dividends and capital gains. The return figures shown do not reflect the deduction of taxes that a contract owner/policyholder may pay on redemption units. The actual total returns for owners of variable annuity contracts or variable
life insurance policies that provide for investment in the Fund will be lower to reflect separate account and contract/policy charges. Current and month-end performance information, which may be lower or
higher than that cited, is available by calling 1-888-GUARDIAN
(1-888-482-7342) and is periodically updated on our website: http://guardianlife.com.
UNDERSTANDING YOUR FUND’S EXPENSES (UNAUDITED)
By investing in the Fund, you incur two types of costs: (1) transaction costs and (2) ongoing costs, including,
as applicable, investment advisory fees, distribution and/or service (12b-1) fees and other Fund expenses. The example below is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with
the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the period and held for the
entire period from October 21, 2019 (commencement of operations), to December 31, 2019. The table below shows the Fund’s expenses in two ways:
Expenses based on actual return
This section of the table provides
information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for
example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the section under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this
period.
Expenses based on hypothetical 5% return for comparison purposes
This section of the table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund with the cost of investing in other mutual funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the
other funds.
Note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads), redemption fees, or exchange fees. Therefore the second section is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. If these transactional costs were
included, your costs would have been higher. Charges and expenses at the insurance company separate account level are not reflected in the table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
| |
|
Beginning
Account Value
7/1/19 |
|
Ending
Account Value
12/31/19 |
|
|
Expenses Paid
During Period
7/1/19-12/31/19 |
|
|
Expense Ratio
During Period
7/1/19-12/31/19 |
|
| Based on Actual Return* |
|
$ 1,000.00 |
|
|
$1,000.00 |
|
|
|
$1.48 |
|
|
|
0.75% |
|
| Based on Hypothetical Return (5% Return Before Expenses)** |
|
$ 1,000.00 |
|
|
$1,021.43 |
|
|
|
$3.82 |
|
|
|
0.75% |
|
| * |
Expenses are equal to the Fund’s annualized expense ratio as indicated, multiplied by the average account value over
the period, multiplied by 72/365 (to reflect the period from October 21, 2019 (commencement of operations) through December 31, 2019). |
| ** |
Expenses (hypothetical expenses if the Fund had been in existence from 7/1/2019) are equal to the Fund’s annualized
expense ratio as indicated, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). |
SCHEDULE OF INVESTMENTS — GUARDIAN U.S. GOVERNMENT SECURITIES VIP
FUND
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Principal
Amount |
|
|
Value |
|
| Agency Mortgage–Backed Securities – 40.2% |
|
| |
|
|
| Fannie Mae
ACES
2015-M17 A2
3.031% due 11/25/2025(1)(2) |
|
$ |
3,300,000 |
|
|
$ |
3,404,778 |
|
| |
|
|
| Federal National Mortgage Association
3.00% due
9/1/2049 |
|
|
8,399,214 |
|
|
|
8,521,575 |
|
| 3.00% due 10/1/2049 |
|
|
2,963,098 |
|
|
|
3,006,460 |
|
| 3.00% due 11/1/2049 |
|
|
5,958,620 |
|
|
|
6,044,840 |
|
| 3.50% due 3/1/2034 |
|
|
8,346,840 |
|
|
|
8,645,833 |
|
| 3.50% due 7/1/2049 |
|
|
12,311,647 |
|
|
|
12,653,933 |
|
| 3.50% due 8/1/2049 |
|
|
5,723,908 |
|
|
|
5,885,851 |
|
| 3.50% due 10/1/2049 |
|
|
6,883,553 |
|
|
|
7,084,629 |
|
| 4.00% due 12/1/2048 |
|
|
4,955,004 |
|
|
|
5,154,880 |
|
| 4.00% due 5/1/2049 |
|
|
6,192,188 |
|
|
|
6,434,348 |
|
| |
|
|
| Freddie Mac Multifamily Structured Pass-Through
Certificates
K026 A2
2.51% due 11/25/2022 |
|
|
2,865,000 |
|
|
|
2,904,683 |
|
| K030 A2
3.25% due 4/25/2023(1)(2) |
|
|
5,000,000 |
|
|
|
5,178,369 |
|
| K032 A2
3.31% due 5/25/2023(1)(2) |
|
|
2,490,000 |
|
|
|
2,590,224 |
|
| K035 A2
3.458% due 8/25/2023(1)(2) |
|
|
4,000,000 |
|
|
|
4,187,702 |
|
| K054 A2
2.745% due 1/25/2026 |
|
|
8,500,000 |
|
|
|
8,750,826 |
|
| K058 A2
2.653% due 8/25/2026 |
|
|
1,500,000 |
|
|
|
1,537,001 |
|
| K064 A2
3.224% due 3/25/2027 |
|
|
5,500,000 |
|
|
|
5,820,704 |
|
| K066 A2
3.117% due 6/25/2027 |
|
|
6,000,000 |
|
|
|
6,311,964 |
|
| K073 A2
3.35% due 1/25/2028 |
|
|
4,277,000 |
|
|
|
4,566,443 |
|
| |
|
|
|
|
|
|
|
|
| |
|
| Total Agency Mortgage–Backed Securities (Cost $108,814,702) |
|
|
|
108,685,043 |
|
| Asset–Backed Securities – 9.3% |
|
| |
|
|
| Ally Master Owner Trust
2017-3 A2
2.04% due 6/15/2022 |
|
|
740,000 |
|
|
|
739,882 |
|
| |
|
|
| American Express Credit Account Master Trust
2019-1 A
2.87% due 10/15/2024 |
|
|
2,600,000 |
|
|
|
2,656,478 |
|
| |
|
|
| AmeriCredit Automobile Receivables Trust
2017-1 C
2.71% due 8/18/2022 |
|
|
1,250,000 |
|
|
|
1,257,551 |
|
| |
|
|
| BA Credit Card Trust
2018-A1 A1
2.70% due 7/17/2023 |
|
|
2,500,000 |
|
|
|
2,524,633 |
|
| |
|
|
| BlueMountain CLO Ltd.
2014-2A BR2
3.716% (LIBOR 3 Month +
1.75%) due 10/20/2030(1)(3) |
|
|
600,000 |
|
|
|
597,155 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Principal
Amount |
|
|
Value |
|
| Asset–Backed Securities (conitinued) |
|
| |
|
|
| BMW Vehicle Lease Trust
2018-1 A4
3.36% due 3/21/2022 |
|
$ |
1,625,000 |
|
|
$ |
1,648,674 |
|
| |
|
|
| CarMax Auto Owner Trust
2016-3 A4
1.60% due 1/18/2022 |
|
|
1,250,000 |
|
|
|
1,247,118 |
|
| |
|
|
| Chase Issuance Trust
2012-A7 A7
2.16% due 9/15/2024 |
|
|
1,170,000 |
|
|
|
1,178,053 |
|
| |
|
|
| Citibank Credit Card Issuance Trust
2014-A1 A1
2.88% due 1/23/2023 |
|
|
2,050,000 |
|
|
|
2,070,969 |
|
| |
|
|
| CNH Equipment
Trust
2017-B A4
2.17% due 4/17/2023 |
|
|
1,000,000 |
|
|
|
1,001,699 |
|
| |
|
|
| Discover Card Execution Note Trust
2015-A4 A4
2.19% due 4/17/2023 |
|
|
1,000,000 |
|
|
|
1,002,781 |
|
| |
|
|
| Ford Credit Auto Owner Trust
2016-2 A
2.03% due 12/15/2027(3) |
|
|
700,000 |
|
|
|
700,113 |
|
| |
|
|
| GM Financial Automobile Leasing Trust
2019-1
A3
2.98% due 12/20/2021 |
|
|
621,000 |
|
|
|
626,477 |
|
| |
|
|
| GM Financial Consumer Automobile
2017-1A A4
2.06% due 5/16/2023(3) |
|
|
2,100,000 |
|
|
|
2,101,228 |
|
| |
|
|
| Hyundai Auto Receivables Trust
2019-A A3
2.66% due 6/15/2023 |
|
|
1,152,000 |
|
|
|
1,164,374 |
|
| |
|
|
| Toyota Auto Receivables Owner Trust
2018-A A3
2.35% due 5/16/2022 |
|
|
1,300,388 |
|
|
|
1,303,788 |
|
| |
|
|
| Verizon Owner
Trust
2019-A A1A
2.93% due 9/20/2023 |
|
|
1,345,000 |
|
|
|
1,366,994 |
|
| |
|
|
| Volkswagen Auto Loan Enhanced Trust
2018-1 A4
3.15% due 7/22/2024 |
|
|
700,000 |
|
|
|
715,382 |
|
| |
|
|
| Voya CLO
Ltd.
2016-3A A3R
3.753% (LIBOR 3 Month +
1.75%) due 10/18/2031(1)(3) |
|
|
1,200,000 |
|
|
|
1,195,128 |
|
| |
|
|
|
|
|
|
|
|
| |
|
Total Asset–Backed Securities
(Cost $25,077,825) |
|
|
|
25,098,477 |
|
| Non–Agency Mortgage–Backed Securities – 12.2% |
|
| |
|
|
| Aventura Mall
Trust
2013-AVM A
3.743% due 12/5/2032(1)(2)(3) |
|
|
1,240,000 |
|
|
|
1,248,696 |
|
| 2013-AVM B
3.743% due 12/5/2032(1)(2)(3) |
|
|
2,610,000 |
|
|
|
2,627,636 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 6 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
SCHEDULE OF INVESTMENTS — GUARDIAN U.S. GOVERNMENT SECURITIES VIP FUND
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Principal
Amount |
|
|
Value |
|
| Non–Agency Mortgage–Backed Securities (conitinued) |
|
| |
|
|
| BAMLL Commercial Mortgage Securities
Trust
2015-200P A
3.218% due 4/14/2033(3) |
|
$ |
1,450,000 |
|
|
$ |
1,503,423 |
|
| |
|
|
| CGRBS Commercial Mortgage Trust
2013-VN05
A
3.369% due 3/13/2035(3) |
|
|
2,000,000 |
|
|
|
2,067,103 |
|
| 2013-VN05 B
3.584% due 3/13/2035(1)(2)(3) |
|
|
6,500,000 |
|
|
|
6,770,010 |
|
| |
|
|
| Commercial Mortgage Trust
2013-WWP B
3.726% due 3/10/2031(3) |
|
|
3,075,000 |
|
|
|
3,219,496 |
|
| 2013-WWP D
3.898% due 3/10/2031(3) |
|
|
1,397,000 |
|
|
|
1,468,643 |
|
| |
|
|
| Four Times Square Trust Commercial Mortgage Pass-Through Certificates
2006-4TS C
5.452% due 12/13/2028(3) |
|
|
2,500,000 |
|
|
|
2,557,788 |
|
| |
|
|
| GS Mortgage Securities Trust
2013-GC16
A4
4.271% due 11/10/2046 |
|
|
1,410,000 |
|
|
|
1,503,386 |
|
| |
|
|
| Morgan Stanley Bank of America Merrill Lynch
Trust
2012-C5 AS
3.792% due 8/15/2045 |
|
|
1,000,000 |
|
|
|
1,032,616 |
|
| 2013-C9 A4
3.102% due
5/15/2046 |
|
|
791,000 |
|
|
|
810,613 |
|
| |
|
|
| OBP Depositor LLC Trust
2010-OBP A
4.646% due 7/15/2045(3) |
|
|
5,035,000 |
|
|
|
5,030,766 |
|
| |
|
|
| Vornado DP LLC Trust
2010-VNO C
5.28% due 9/13/2028(3) |
|
|
1,890,000 |
|
|
|
1,901,376 |
|
| |
|
|
| WFRBS Commercial Mortgage Trust
2014-C19 AS
4.271% due 3/15/2047 |
|
|
1,000,000 |
|
|
|
1,065,532 |
|
| |
|
|
|
|
|
|
|
|
| |
|
Total Non–Agency Mortgage–Backed Securities
(Cost $32,932,460) |
|
|
|
32,807,084 |
|
| U.S. Government Agencies – 5.8% |
|
| |
|
|
| Federal Home Loan Bank
2.375% due
9/10/2021 |
|
|
15,500,000 |
|
|
|
15,700,768 |
|
| |
|
|
|
|
|
|
|
|
| |
|
Total U.S. Government Agencies
(Cost $15,685,399) |
|
|
|
15,700,768 |
|
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
Principal
Amount |
|
|
Value |
|
| U.S. Government Securities – 31.4% |
|
| |
|
|
| U.S. Treasury Note
1.375% due 10/15/2022 |
|
$ |
2,500,000 |
|
|
$ |
2,484,765 |
|
| 1.50% due 9/30/2021 |
|
|
20,600,000 |
|
|
|
20,568,617 |
|
| 1.50% due 9/30/2024 |
|
|
62,300,000 |
|
|
|
61,781,645 |
|
| |
|
|
|
|
|
|
|
|
| |
|
Total U.S. Government Securities
(Cost $85,075,082) |
|
|
|
84,835,027 |
|
| Short–Term Investment – 0.7% |
|
| Repurchase Agreements – 0.7% |
|
| |
|
|
| Fixed Income Clearing Corp.,
0.12%, dated
12/31/2019, proceeds at maturity value of $1,909,013, due 1/2/2020(4) |
|
|
1,909,000 |
|
|
|
1,909,000 |
|
| |
|
|
|
|
|
|
|
|
| |
|
Total Repurchase Agreements
(Cost $1,909,000) |
|
|
|
1,909,000 |
|
| |
|
| Total Investments(5) – 99.6% (Cost $269,494,468) |
|
|
|
269,035,399 |
|
| |
|
| Assets in excess of other liabilities(6) – 0.4% |
|
|
|
967,920 |
|
| |
|
| Total Net Assets – 100.0% |
|
|
$ |
270,003,319 |
|
| (1) |
Variable rate securities, which may include step-up bonds or adjustable rate
mortgages. The rate shown is the rate in effect at December 31, 2019. |
| (2) |
Variable coupon rate based on weighted average interest rate of underlying mortgages. |
| (3) |
Securities that may be resold in transactions, exempt from registration under Rule 144A of the Securities Act of 1933, as
amended, normally to certain qualified buyers. At December 31, 2019, the aggregate market value of these securities amounted to $32,988,561, representing 12.2% of net assets. These securities have been deemed liquid by the investment adviser
pursuant to the Fund’s liquidity procedures approved by the Board of Trustees. |
(4) The
table below presents collateral for repurchase agreements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Security |
|
Coupon |
|
|
Maturity
Date |
|
|
Principal
Amount |
|
|
Value |
|
| U.S. Treasury Note |
|
|
2.75% |
|
|
|
9/15/2021 |
|
|
$ |
1,900,000 |
|
|
$ |
1,951,684 |
|
| (5) |
Securities are segregated to cover anticipated or existing derivative positions or to be announced securities (TBA).
|
| (6) |
Assets in excess of other liabilities include net unrealized depreciation on futures contracts as follows:
|
Open futures contracts at December 31, 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Type |
|
Expiration |
|
|
Contracts |
|
|
Position |
|
|
Notional
Amount |
|
|
Notional
Value |
|
|
Unrealized
Depreciation |
|
| U.S. 2-Year Treasury Note |
|
|
March 2020 |
|
|
|
73 |
|
|
|
Long |
|
|
$ |
15,754,571 |
|
|
$ |
15,731,500 |
|
|
$ |
(23,071 |
) |
| U.S. Ultra 10-Year Treasury Note |
|
|
March 2020 |
|
|
|
175 |
|
|
|
Long |
|
|
|
24,925,725 |
|
|
|
24,623,046 |
|
|
|
(302,679 |
) |
| Total |
|
|
$ |
40,680,296 |
|
|
$ |
40,354,546 |
|
|
$ |
(325,750 |
) |
| |
|
|
|
|
|
|
| Type |
|
Expiration |
|
|
Contracts |
|
|
Position |
|
|
Notional
Amount |
|
|
Notional
Value |
|
|
Unrealized
Appreciation |
|
| U.S. Long Bond |
|
|
March 2020 |
|
|
|
5 |
|
|
|
Short |
|
|
$ |
(797,559) |
|
|
$ |
(779,531) |
|
|
$ |
18,028 |
|
|
|
|
|
|
| The accompanying notes are an integral part of these financial statements. |
|
|
|
7 |
SCHEDULE OF INVESTMENTS — GUARDIAN U.S. GOVERNMENT SECURITIES VIP FUND
Legend:
CLO — Collateralized Loan Obligation
LIBOR —
London Interbank Offered Rate
The following is a summary of the inputs used as of December 31, 2019 in valuing the Fund’s investments. For more
information on valuation inputs, please refer to Note 2a of the accompanying Notes to Financial Statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Valuation Inputs |
|
|
|
|
| Investments in Securities |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
| Agency Mortgage–Backed Securities |
|
$ |
— |
|
|
$ |
108,685,043 |
|
|
$ |
— |
|
|
$ |
108,685,043 |
|
| Asset–Backed Securities |
|
|
— |
|
|
|
25,098,477 |
|
|
|
— |
|
|
|
25,098,477 |
|
| Non–Agency Mortgage–Backed Securities |
|
|
— |
|
|
|
32,807,084 |
|
|
|
— |
|
|
|
32,807,084 |
|
| U.S. Government Agencies |
|
|
— |
|
|
|
15,700,768 |
|
|
|
— |
|
|
|
15,700,768 |
|
| U.S. Government Securities |
|
|
— |
|
|
|
84,835,027 |
|
|
|
— |
|
|
|
84,835,027 |
|
| Repurchase Agreements |
|
|
— |
|
|
|
1,909,000 |
|
|
|
— |
|
|
|
1,909,000 |
|
| Total |
|
$ |
— |
|
|
$ |
269,035,399 |
|
|
$ |
— |
|
|
$ |
269,035,399 |
|
| Other Financial Instruments |
|
|
|
|
|
|
|
|
|
|
|
|
| Futures Contracts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Assets |
|
$ |
18,028 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
18,028 |
|
| Liabilities |
|
|
(325,750 |
) |
|
|
— |
|
|
|
— |
|
|
|
(325,750 |
) |
| Total |
|
$ |
(307,722 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(307,722 |
) |
|
|
|
|
|
| 8 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
FINANCIAL INFORMATION — GUARDIAN U.S. GOVERNMENT SECURITIES VIP FUND
|
|
|
|
|
|
Statement of Assets and Liabilities As of December 31, 2019 |
|
| Assets |
|
|
|
|
| |
|
| Investments, at value |
|
$ |
269,035,399 |
|
| |
|
| Interest receivable |
|
|
892,549 |
|
| |
|
| Cash deposits with brokers for futures
contracts |
|
|
350,889 |
|
| |
|
| Reimbursement receivable from adviser |
|
|
43,562 |
|
| |
|
| Receivable for fund shares subscribed |
|
|
2,857 |
|
| |
|
| Prepaid expenses |
|
|
31,592 |
|
| |
|
|
|
|
| |
|
| Total Assets |
|
|
270,356,848 |
|
| |
|
|
|
|
| |
|
| Liabilities |
|
|
|
|
| |
|
| Investment advisory fees payable |
|
|
108,575 |
|
| |
|
| Distribution fees payable |
|
|
57,753 |
|
| |
|
| Due to custodian |
|
|
43,598 |
|
| |
|
| Payable for fund shares redeemed |
|
|
41,575 |
|
| |
|
| Accrued audit fees |
|
|
25,659 |
|
| |
|
| Payable for variation margin on futures
contracts |
|
|
22,529 |
|
| |
|
| Accrued custodian and accounting fees |
|
|
13,814 |
|
| |
|
| Accrued trustees’ and officers’
fees |
|
|
3,046 |
|
| |
|
| Accrued expenses and other liabilities |
|
|
36,980 |
|
| |
|
|
|
|
| |
|
| Total Liabilities |
|
|
353,529 |
|
| |
|
|
|
|
| |
|
| Total Net Assets |
|
$ |
270,003,319 |
|
| |
|
|
|
|
| |
|
| Net Assets Consist of: |
|
|
|
|
| |
|
| Paid-in
capital |
|
$ |
270,057,668 |
|
| |
|
| Distributable loss |
|
|
(54,349 |
) |
| |
|
|
|
|
| |
|
| Total Net Assets |
|
$ |
270,003,319 |
|
| |
|
|
|
|
| Investments, at Cost |
|
$ |
269,494,468 |
|
| |
|
|
|
|
| |
|
| Pricing of Shares |
|
|
|
|
| |
|
| Shares of Beneficial Interest Outstanding with
No Par Value |
|
|
27,004,296 |
|
| |
|
| Net Asset Value Per Share |
|
|
$10.00 |
|
| |
|
|
|
|
|
|
|
|
|
|
Statement of Operations For the Period Ended December 31, 20191 |
|
| Investment Income |
|
|
|
|
| |
|
| Interest |
|
$ |
1,072,444 |
|
| |
|
|
|
|
| |
|
| Total Investment Income |
|
|
1,072,444 |
|
| |
|
|
|
|
| |
|
| Expenses |
|
|
|
|
| |
|
| Investment advisory fees |
|
|
253,244 |
|
| |
|
| Distribution fees |
|
|
134,704 |
|
| |
|
| Professional fees |
|
|
43,465 |
|
| |
|
| Shareholder reports |
|
|
21,051 |
|
| |
|
| Trustees’ and officers’ fees |
|
|
17,647 |
|
| |
|
| Custodian and accounting fees |
|
|
13,814 |
|
| |
|
| Administrative fees |
|
|
11,865 |
|
| |
|
| Transfer agent fees |
|
|
3,214 |
|
| |
|
| Other expenses |
|
|
6,216 |
|
| |
|
|
|
|
| |
|
| Total Expenses |
|
|
505,220 |
|
| |
|
| Less: Fees waived |
|
|
(101,107 |
) |
| |
|
|
|
|
| |
|
| Total Expenses, Net |
|
|
404,113 |
|
| |
|
|
|
|
| |
|
| Net Investment Income/(Loss) |
|
|
668,331 |
|
| |
|
|
|
|
| |
|
| Realized Gain/(Loss) and Change in Unrealized
Appreciation/(Depreciation) on Investments and Derivative Contracts |
|
|
|
|
| |
|
| Net realized gain/(loss) from investments |
|
|
78,462 |
|
| |
|
| Net realized gain/(loss) from futures
contracts |
|
|
(34,351 |
) |
| |
|
| Net change in unrealized appreciation/(depreciation)
on investments |
|
|
(459,069 |
) |
| |
|
| Net change in unrealized appreciation/(depreciation)
on futures contracts |
|
|
(307,722 |
) |
| |
|
|
|
|
| |
|
| Net Loss on Investments and Derivative
Contracts |
|
|
(722,680 |
) |
| |
|
|
|
|
| |
|
| Net Decrease in Net Assets Resulting From
Operations |
|
$ |
(54,349 |
) |
| |
|
|
|
|
| |
|
|
|
|
| 1 |
Commenced operations on October 21, 2019.
|
|
|
|
|
|
| The accompanying notes are an integral part of these financial statements. |
|
|
|
9 |
FINANCIAL INFORMATION — GUARDIAN U.S. GOVERNMENT SECURITIES VIP
FUND
|
|
|
|
|
| Statement of Changes
in Net Assets |
|
|
|
| |
|
| |
|
For the
Period Ended 12/31/191 |
|
| |
|
|
|
| Operations |
|
| |
|
| Net investment income/(loss) |
|
$ |
668,331 |
|
| |
|
| Net realized gain/(loss) from investments and
derivative contracts |
|
|
44,111 |
|
| |
|
| Net change in unrealized appreciation/(depreciation)
on investments and
derivative contracts |
|
|
(766,791 |
) |
| |
|
|
|
|
| |
|
| Net Decrease in Net Assets Resulting from
Operations |
|
|
(54,349 |
) |
| |
|
|
|
|
| |
| Capital Share
Transactions |
|
| |
|
| Proceeds from sales of shares |
|
|
278,197,027 |
|
| |
|
| Cost of shares redeemed |
|
|
(8,139,359 |
) |
| |
|
|
|
|
| |
|
| Net Increase in Net Assets Resulting from Capital
Share Transactions |
|
|
270,057,668 |
|
| |
|
|
|
|
| |
|
| Net Increase in Net Assets |
|
|
270,003,319 |
|
| |
|
|
|
|
| |
| Net Assets |
|
| |
|
| Beginning of period |
|
|
— |
|
| |
|
|
|
|
| |
|
| End of period |
|
$ |
270,003,319 |
|
| |
|
|
|
|
| |
| Other Information: |
|
| |
|
| Shares |
|
|
|
|
| |
|
| Sold |
|
|
27,818,594 |
|
| |
|
| Redeemed |
|
|
(814,298 |
) |
| |
|
|
|
|
| |
|
| Net Increase |
|
|
27,004,296 |
|
| |
|
|
|
|
| |
|
|
|
|
| 1 |
Commenced operations on October 21, 2019. |
|
|
|
|
|
| 10 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
This Page Intentionally Left Blank
FINANCIAL INFORMATION — GUARDIAN U.S. GOVERNMENT SECURITIES VIP
FUND
The Financial Highlights table is intended to help you understand the Fund’s
financial performance for the past five years (or, if shorter, the period since inception). Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned
(or lost) on an investment in the Fund.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Financial
Highlights |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Per Share Operating Performance |
|
|
|
|
| |
|
Net Asset Value,
Beginning of
Period |
|
|
Net Investment
Income(1) |
|
|
Net Realized
and Unrealized
Loss |
|
|
Total
Operations |
|
|
Net Asset
Value, End of
Period |
|
|
Total
Return(2) |
|
| |
|
|
|
|
|
|
| Period Ended
12/31/19(5) |
|
$ |
10.00 |
|
|
$ |
0.02 |
|
|
$ |
(0.02 |
) |
|
$ |
0.00 |
|
|
$ |
10.00 |
|
|
|
0.00% |
|
|
|
|
|
|
| 12 |
|
|
|
The accompanying notes are an integral part of these financial statements. |
FINANCIAL INFORMATION — GUARDIAN U.S. GOVERNMENT SECURITIES VIP FUND
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Ratios/Supplemental Data |
|
|
|
|
|
|
|
Net Assets, End
of Period (000s) |
|
|
Net Ratio of
Expenses to
Average
Net Assets(3),(4) |
|
|
Gross Ratio of
Expenses to
Average Net
Assets(3) |
|
|
Net Ratio of Net
Investment Income
to Average
Net
Assets(3),(4) |
|
|
Gross Ratio of Net
Investment Income
to Average
Net
Assets(3) |
|
|
Portfolio
Turnover Rate(3) |
|
|
|
|
|
|
|
| $ |
270,003 |
|
|
|
0.70% |
|
|
|
0.89% |
|
|
|
1.29% |
|
|
|
1.10% |
|
|
|
31% |
|
| (1) |
Calculated based on the average shares outstanding during the period. |
| (2) |
Total returns do not reflect the effects of charges deducted pursuant to the terms of The Guardian Insurance &
Annuity Company, Inc.’s variable contracts. Inclusion of such charges would reduce the total returns for all periods shown. |
| (3) |
Ratios for periods less than one year have been annualized, except for total return and portfolio turnover rate. Certain non-recurring fees (i.e., audit fees) are not annualized. |
| (4) |
Net Ratio of Expenses to Average Net Assets and Net Ratio of Net Investment Income to Average Net Assets include the
effect of fee waivers and expense limitations. |
| (5) |
Commenced operations on October 21, 2019. |
|
|
|
|
|
| The accompanying notes are an integral part of these financial statements. |
|
|
|
13 |
NOTES TO FINANCIAL STATEMENTS — GUARDIAN U.S. GOVERNMENT SECURITIES
VIP FUND
December 31, 2019
1.
Organization
Guardian Variable Products Trust (the “Trust”), a Delaware statutory trust organized on January 12, 2016, is registered under the
Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Trust currently has sixteen series. Guardian U.S. Government Securities VIP Fund (the
“Fund”) is a series of the Trust. The Fund is a diversified fund and commenced operations on October 21, 2019. The financial statements for other series of the Trust are presented in separate reports.
The Trust has authorized an unlimited number of shares of beneficial interest with no par value. Shares are bought and sold at closing net asset value (“NAV”).
Shares of the Fund are only sold to certain separate accounts of The Guardian Insurance & Annuity Company, Inc. (“GIAC”) that fund certain variable annuity contracts and variable life insurance policies issued by GIAC. GIAC is a
wholly-owned subsidiary of The Guardian Life Insurance Company of America (“Guardian Life”).
The Fund seeks total return with an emphasis on current
income as well as capital appreciation.
2. Significant Accounting Policies
The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The Fund follows the investment
company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 946 Financial Services — Investment Companies. The following policies are in conformity with
accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts and
disclosures in the financial statements. Actual results could differ from those estimates.
a. Investment Valuations The valuations of debt securities for
which quoted bid prices are readily available are valued at the bid price by independent pricing services (each, a “Service”). Debt securities for which quoted bid prices are not readily available are valued by a Service at the evaluated
bid price provided by the Service or the bid price provided by an independent broker-dealer or at a calculated price based on the spread to an appropriate benchmark
provided by such broker-dealer. Securities for which market quotations are not readily available or for which market quotations may be considered unreliable or for which a Service or independent
broker-dealer does not provide a valuation are valued at their fair values as determined in accordance with policies and procedures adopted by the Board of Trustees.
Under the policies and procedures approved by the Board of Trustees, Park Avenue Institutional Advisers LLC (“Park Avenue”), the Fund’s investment
adviser, has established a Fair Valuation Committee to assist the Board of Trustees with the oversight and monitoring of the valuation of the Fund’s investments. This includes monitoring the appropriateness of fair values based on results of
ongoing valuation oversight, including but not limited to consideration of security specific events, market events, and pricing vendor and broker-dealer due diligence. The Fair Valuation Committee oversees and carries out the policies for the
valuation of investments held in the Fund. The Fair Valuation Committee is responsible for discussing and assessing the potential impacts to the fair values on an ongoing basis, and at least on a quarterly basis with the Board of Trustees.
Equity securities traded on an exchange other than NASDAQ Stock Market, LLC (“NASDAQ”) are valued at the last reported sale price on the principal exchange or
market on which they are traded; or, if there were no sales that day, at the mean between the closing bid and ask prices. Securities traded on the NASDAQ are generally valued at the NASDAQ official closing price, which may not be the last sale
price. If the NASDAQ official closing price is not available for a security, that security is generally valued at the mean between the closing bid and ask prices. Repurchase agreements are carried at cost, which approximates fair value (see Note
5d). Foreign securities are valued in the currencies of the markets in which they trade and then converted to U.S. dollars by the application of foreign exchange rates at the close of the New York Stock Exchange (“NYSE”).
Securities whose values have been materially affected by events occurring before the Fund’s valuation time but after the close of the securities’ principal
exchange or market may be fair valued in accordance with policies and procedures adopted by the Board of Trustees. Valuations reflected in this report are as of the report date. As a result, changes in valuation due to market events and/or issuer
related events after the report date and prior to issuance of the report are not reflected herein.
NOTES TO FINANCIAL STATEMENTS — GUARDIAN U.S. GOVERNMENT SECURITIES VIP FUND
Various inputs are used in determining the valuation of the Fund’s investments. These inputs are summarized in three
broad levels listed below.
| • |
|
Level 1 — unadjusted inputs using quoted prices in active markets for identical investments. |
| • |
|
Level 2 — other significant observable inputs, including, but not limited to, quoted prices for similar investments, inputs other than quoted prices that are observable for investments (such as interest
rates, prepayment speeds, credit risks, etc.) or other market corroborated inputs. |
| • |
|
Level 3 — significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments) |
Inputs may include price information, volatility statistics, specific and broad credit data, liquidity statistics, and other factors. A financial instrument’s level
within the fair value hierarchy is based on the lowest level of any input; both individually and in aggregate, that is significant to the fair value measurement. However, the determination of what constitutes “observable” requires
significant judgment by the Trust. The Trust considers observable data to be that market data which is readily available, regularly distributed or updated, reliable and verifiable, and provided by independent sources that are actively involved in
the relevant market. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. Changes in valuation techniques may result in transfers into or out of a
financial instrument’s assigned level within the hierarchy.
The FASB requires reporting entities to make disclosures about purchases, sales, issuances and
settlements of Level 3 securities on a gross basis. For the period ended December 31, 2019, there were no transfers into or out of Level 3 of the fair value hierarchy.
In determining a financial instrument’s placement within the hierarchy, the Trust separates the Fund’s investment portfolio into two categories: investments
and derivatives (e.g., futures). A summary of inputs used to value the Fund’s assets and liabilities carried at fair value as of December 31, 2019 is included in the Schedule of Investments.
Investments Investments whose values are based on quoted market prices in active markets, and are therefore classified within Level 1, include active
listed equities. Investments that trade in markets that are not considered to be active, but are valued based on quoted
market prices, dealer quotations or alternative pricing sources supported by observable inputs are classified within Level 2. These include certain U.S. government and sovereign obligations,
most government agency securities, investment-grade corporate bonds, certain mortgage products, state, municipal and provincial obligations, and certain foreign equity securities, including securities whose prices may have been affected by events
occurring after the close of trading on their principal exchange or market and, as a result, whose values are determined by a pricing service as described above, or securities whose values are otherwise determined using fair valuation methods
approved by the Fund’s Board of Trustees.
Investments classified within Level 3 have significant unobservable inputs, as they trade infrequently or not at
all. Level 3 investments include, among others, private placement securities. When observable prices are not available for these securities, the Trust uses one or more valuation techniques for which sufficient and reliable data is available.
The inputs used by the Trust in estimating the value of Level 3 investments include, for example, the original transaction price, recent transactions in the same or similar instruments, completed or pending third-party transactions in the
underlying investment or comparable issuers, subsequent rounds of financing, recapitalizations, and other transactions across the capital structure. Level 3 investments may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the Trust in the absence of market information. Assumptions used by the Trust due to the lack of observable inputs may significantly impact the
resulting fair value and therefore the Fund’s results of operations. As of December 31, 2019, the Fund had no securities classified as Level 3.
Derivatives Exchange-traded derivatives, such as futures contracts, exchange-traded option contracts and certain swaps, are typically classified within
Level 1 or Level 2 of the fair value hierarchy depending on whether or not they are deemed to be actively traded. Certain non-exchange-traded derivatives, such as generic forwards, certain swaps and
options, have inputs which can generally be corroborated by market data and are therefore classified within Level 2.
b. Securities Transactions
Securities transactions are accounted for on the date securities are purchased or sold (trade date). Realized gains or losses on securities transactions are determined on the basis of specific identification.
NOTES TO FINANCIAL STATEMENTS — GUARDIAN U.S. GOVERNMENT SECURITIES VIP FUND
c. Futures Contracts The Fund may enter into financial futures contracts. In entering into such contracts, the Fund
is required to deposit with the counterparty, either in cash or securities, an amount equal to a certain percentage of the face value of the contract. Subsequent payments are received or made by the Fund each day, depending on the daily fluctuations
in the values of the contracts, and are recorded for financial statement purposes as variation margin received or paid by the Fund. Daily changes in variation margin are recognized as unrealized gains or losses by the Fund. The Fund may not achieve
the anticipated benefits of the financial futures contracts and may realize a loss.
d. Credit Derivatives The Fund may enter into credit derivatives,
including credit default swaps on individual obligations or credit indices. The Fund may use these investments (i) as alternatives to direct long or short investment in a particular security or securities, (ii) to adjust the Fund’s
asset allocation or risk exposure, or (iii) for hedging purposes. The use by the Fund of credit default swaps may have the effect of creating a short position in a security. Credit derivatives can create investment leverage and may create
additional investment risks that may subject the Fund to greater volatility than investments in more traditional securities, as described in the Statement of Additional Information.
The Fund may enter into credit default swap agreements either as a buyer or seller. The Fund may buy protection under a credit default swap to attempt to mitigate the
risk of default or credit quality deterioration in one or more individual holdings or in a segment of the fixed income securities market. The Fund may sell protection under a credit default swap in an attempt to gain exposure to an underlying
issuer’s credit quality characteristics without investing directly in that issuer.
For swaps entered with an individual counterparty, the Fund bears the risk
of loss of the uncollateralized amount expected to be received under a credit default swap agreement in the event of the default or bankruptcy of the counterparty. Credit default swap agreements are generally valued at a price at which the
counterparty to such agreement would terminate the agreement. The Fund may also enter into cleared swaps.
In entering into swap contracts, the Fund is required to
deposit with the broker (or for the benefit of the broker), either in cash or securities, an amount equal to a percentage of the notional value of the contract. Subsequent payments are received or made by the Fund each day, depending on the daily
fluctuations in the values of the contracts, and are recorded for financial
statement purposes as variation margin received or paid by the Fund. Daily changes in variation margin are recognized as unrealized gains or losses by the Fund. The Fund may not achieve the
anticipated benefits of the swap contracts and may realize a loss.
The Fund enters into credit default swaps primarily for asset allocation and risk exposure
management. There were no credit default swaps held as of December 31, 2019.
e. Options Transactions The Fund can write (sell) put and call options on
securities and indexes to earn premiums, for hedging purposes, for risk management purposes or otherwise as part of its investment strategies. In writing options, the Fund is required to deposit with the broker or counterparty, either in cash or
securities, an amount equal to a percentage of the face value of the options. When an option is written, the premium received is recorded as an asset with an equal liability that is subsequently marked to market to reflect the market value of the
written option. These liabilities, if any, are reflected as written options, at value, in the Fund’s Statement of Assets and Liabilities. Premiums received from writing options which expire unexercised are recorded on the expiration date as a
realized gain. The difference between the premium received and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is also treated as a realized gain, or if the premium is less than the amount paid for the
closing purchased transactions, as a realized loss. If a written call option is exercised, the premium is added to the proceeds from the sale of the underlying security in determining whether there has been a realized gain or loss. If a written put
option is exercised, the premium reduces the cost basis of the security. In writing an option, the Fund bears the market risk of an unfavorable change in the price of the security underlying the written option. Exercise of a written option could
result in the Fund purchasing or selling a security at a price different from its current market value. There were no options transactions as of December 31, 2019.
f. Investment Income Dividend income net of foreign taxes withheld, if any, is generally recorded on the ex-dividend date.
Interest income, which includes amortization/accretion of premium/discount, is determined using the interest income accrual method, and is accrued and recorded daily.
g. Allocation of Income and Expenses Many of the expenses of the Trust can be directly attributed to a specific series of the Trust. Expenses that cannot be
NOTES TO FINANCIAL STATEMENTS — GUARDIAN U.S. GOVERNMENT SECURITIES VIP FUND
directly attributed to a specific series of the Trust are generally apportioned among all the series in the Trust, based
on relative net assets. In calculating net asset value per share for each series of the Trust, investment income, realized and unrealized gains and losses, and expenses other than series-specific expenses are allocated daily to each series based
upon the proportion of net assets attributable to each series.
3. Transactions with Affiliates
a. Investment Advisory Fee and Expense Limitation Under the terms of the advisory agreement, which, after its two year initial term, is reviewed and approved
annually by the Board of Trustees, the Fund pays an investment advisory fee to Park Avenue. Park Avenue is a wholly-owned subsidiary of Guardian Life and receives an investment advisory fee at an annual rate of 0.47% of the Fund’s average daily
net assets. The fee is accrued daily and paid monthly.
Park Avenue has contractually agreed through April 30, 2020 to waive certain fees and/or reimburse
certain expenses incurred by the Fund to the extent necessary to limit the Fund’s total annual operating expenses after fee waiver and/or expense reimbursement to 0.75% of the Fund’s average daily net assets (excluding, if applicable, any
acquired fund fees and expenses, taxes, interest, transaction costs and brokerage commissions, litigation and extraordinary expenses). The limitation may not be increased or terminated prior to this time without action by the Board of Trustees and
may be terminated only upon approval of the Board of Trustees. Amounts waived or reimbursed by Park Avenue pursuant to any expense limitation will not be subject to Park Avenue’s recoupment rights. For the period ended December 31, 2019,
Park Avenue waived fees and/or paid Fund expenses in the amount of $101,107.
b. Compensation of Trustees and Officers Trustees and officers who are
interested persons of the Trust, as defined in the 1940 Act, receive no compensation from the Fund, except for the Chief Compliance Officer of the Trust. Trustees of the Trust who are not interested persons of the Trust, and the Chief Compliance
Officer, receive compensation and reimbursement of expenses from the Trust.
c. Distribution Fees Park Avenue Securities LLC (“PAS”), a wholly-owned
subsidiary of Guardian Life, is the principal underwriter of Fund shares. The Trust has entered into a distribution and service agreement with PAS, which governs the sale and distribution of shares of the Fund. Under a distribution and service plan
adopted by the Trust (“12b-1 plan”), PAS is compensated for
services in such capacity, including its expenses in connection with the promotion and distribution of shares of the Fund, at an annual rate of 0.25% of the Fund’s average daily net assets.
For the period ended December 31, 2019, the Fund paid distribution fees in the amount of $134,704 to PAS.
PAS has directed that certain payments under the 12b-1 plan be used to compensate GIAC for shareholder services provided to contract owners.
4. Federal Income Taxes
a. Distributions to Shareholders For federal income tax purposes, the Fund is treated as a disregarded entity (“DRE”). As a DRE, the Fund is
not subject to an entity-level income tax; and any income, gains, losses, deductions, taxes, and credits of the Fund would instead be “passed through” directly to the separate accounts of GIAC that invest in the Fund and retain the same
character for U.S. federal income tax purposes. In addition, the Fund is not required to distribute taxable income and capital gains for U.S. federal income tax purposes. Therefore, no dividends and capital gains distributions were paid by the Fund.
5. Investments
a. Investment Purchases and Sales The cost of
investments and U.S. government agency obligations purchased and the proceeds from U.S. government agency obligations and other investments sold (excluding short-term investments and to be announced (TBA) securities) for the period ended
December 31, 2019, were as follows:
|
|
|
|
|
|
|
|
|
| |
|
|
| |
|
Other
Investments |
|
|
U.S.
Government
and Agency
Obligations |
|
| Purchases |
|
$ |
76,279,703 |
|
|
$ |
278,490,419 |
|
| Sales |
|
|
18,214,890 |
|
|
|
65,911,756 |
|
b. Foreign Securities Foreign securities investments involve special risks and considerations not typically associated with U.S.
investments. These risks include, but are not limited to, currency risk; adverse political, regulatory, social, and economic developments; and less reliable information about issuers. Moreover, securities of some foreign issuers may be less liquid
and their prices more volatile than those of comparable U.S. issuers.
c. Industry or Sector Concentration In its normal course of business, the Fund may
invest a significant portion of its assets in companies within a limited
NOTES TO FINANCIAL STATEMENTS — GUARDIAN U.S. GOVERNMENT SECURITIES VIP FUND
number of industries or sectors. As a result, the Fund may be subject to a greater risk of loss than that of a fund
invested in a wider spectrum of industries or sectors because the stocks of many or all of the companies in the industry, group of industries, sector, or sectors may decline in value due to developments adversely affecting the industry, group of
industries, sector, or sectors.
d. Repurchase Agreements The Fund may invest in repurchase agreements to maintain liquidity and earn income over periods of
time as short as overnight. The collateral for repurchase agreements is either cash or fully negotiable U.S. government securities (including U.S. government agency securities). Repurchase agreements are fully collateralized (including the interest
accrued thereon) and such collateral is marked to market daily while the agreements remain in force. If the value of the collateral falls below the repurchase price plus accrued interest, the Fund will typically require the seller to deposit
additional collateral by the next business day. If the request for additional collateral is not met, or the seller defaults, the Fund maintains the right to sell the collateral (although it may be prevented or delayed from doing so in certain
circumstances) and may be required to claim any resulting loss against the seller. Park Avenue monitors the creditworthiness of the seller with which the Fund enters into repurchase agreements.
e. Securities Purchased on a When-Issued or Delayed-Delivery Basis The Fund may purchase securities on a when-issued or delayed-delivery basis, with payment and
delivery scheduled for a future date. These transactions are subject to market fluctuations and are subject to the risk that the value at delivery may be more or less than at the trade date purchase price. Although the Fund will generally enter into
these transactions with the intention of taking delivery of the securities, it may sell the securities before the settlement date. Assets will be segregated when a fund agrees to purchase on a when-issued or delayed-delivery basis. These
transactions may create investment leverage.
f. Restricted and Illiquid Securities A restricted security cannot be resold to the general public without prior
registration under the Securities Act of 1933, as amended (except pursuant to an applicable exemption). The values of these securities may be highly volatile. If the security is subsequently registered and resold, the issuer would typically bear the
expense of all registrations at no cost to the Fund. Restricted and illiquid securities are valued according to the policies and procedures adopted by the Trust’s Board of Trustees
and are noted, if any, in the Fund’s Schedule of Investments. As of December 31, 2019, the Fund did not hold any restricted, other than 144A restricted securities, or illiquid
securities.
g. Mortgage- and Asset-Backed Securities The values of some mortgage-related or asset-backed securities may be particularly sensitive to changes
in prevailing interest rates. Early repayment of principal on some mortgage-related securities may expose the Fund to a lower rate of return upon reinvestment of principal. The values of mortgage- and asset-backed securities depend in part on the
credit quality and adequacy of the underlying assets or collateral and may fluctuate in response to the market’s perception of these factors as well as current and future repayment rates. Some mortgage-backed securities are backed by the full
faith and credit of the U.S. government (e.g., mortgage-backed securities issued by the Government National Mortgage Association, commonly known as “Ginnie Mae”), while other mortgage-backed securities (e.g., mortgage-backed securities
issued by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation, commonly known as “Fannie Mae” and “Freddie Mac”), are backed only by the credit of the government entity issuing them. In
addition, some mortgage-backed securities are issued by private entities and, as such, are not guaranteed by the U.S. government or any agency or instrumentality of the U.S. government.
h. Treasury Inflation Protected Securities Treasury inflation protected securities (“TIPS”) are debt securities issued by the U.S. Treasury whose
principal and/or interest payments are adjusted for inflation, unlike debt securities that make fixed principal and interest payments. The interest rate paid by the TIPS is fixed, while the principal value rises or falls based on changes in a
published Consumer Price Index (“CPI”). Thus, if inflation occurs, the principal and interest payments on TIPS are adjusted accordingly to protect investors from inflationary loss. During a deflationary period, the principal and interest
payments decrease, although the TIPS principal amounts will not drop below their face amounts at maturity. In exchange for the inflation protection, the TIPS generally pay lower interest rates than typical U.S. Treasury securities. Only if inflation
occurs will TIPS offer a higher real yield than a conventional Treasury bond of the same maturity.
i. LIBOR Risk Many financial instruments may be tied to
the London Interbank Offered Rate, or “LIBOR,” to determine payment obligations, financing terms, hedging strategies, or investment value. LIBOR is the
NOTES TO FINANCIAL STATEMENTS — GUARDIAN U.S. GOVERNMENT SECURITIES VIP FUND
offered rate for short-term Eurodollar deposits between major international banks. On July 27, 2017, the head of the
UK Financial Conduct Authority announced a desire to phase out the use of LIBOR by the end of 2021. Regulators and industry working groups have suggested alternative reference rates, but global consensus is lacking and the process for amending
existing contracts or instruments to transition away from LIBOR remains unclear. There also remains uncertainty and risk regarding the willingness and ability of issuers to include enhanced provisions in new and existing contracts or instruments. As
such, the transition away from LIBOR may lead to increased volatility and illiquidity in markets that are tied to LIBOR, reduced values of LIBOR related investments, and reduced effectiveness of hedging strategies, adversely affecting the
Fund’s performance or NAV. In addition, the alternative reference rate may be an ineffective substitute resulting in prolonged adverse market conditions for the Fund.
j. Disclosures About Derivative Instruments and Hedging Activities The Fund entered into U.S. Treasury futures contracts for the period ended December 31,
2019 to manage portfolio duration. The Fund bears the risk of interest rates moving unexpectedly, in which case the Fund may not achieve the anticipated benefits of the futures contracts and realize a loss. There is minimal counterparty credit risk
to the Funds since futures are exchange traded and the exchange’s clearinghouse, as counterparty to all exchange traded futures, guarantees futures against default.
As of December 31, 2019, the Fund had the following derivatives at fair value, grouped into appropriate risk categories that illustrate the Fund’s use of
derivative instruments:
|
|
|
|
|
| |
|
| |
|
Interest Rate
Contracts |
|
| |
|
| Asset Derivatives |
|
|
|
|
| Futures Contracts1 |
|
$ |
18,028 |
|
| |
|
| Liability Derivatives |
|
|
|
|
| Futures Contracts1 |
|
$ |
(325,750 |
) |
| 1 |
Statement of Assets and Liabilities location: Includes cumulative unrealized appreciation/(depreciation) of futures
contracts as reported in the Schedule of Investments. Only current day’s variation margin is reported within the Statements of Assets and Liabilities.
|
Transactions in derivative investments for the period ended December 31, 2019 were as follows:
|
|
|
|
|
| |
|
| |
|
Interest Rate
Contracts |
|
| |
|
| Net Realized Gain (Loss) |
|
|
|
|
| Futures Contracts1 |
|
$ |
(34,351 |
) |
| |
| Net Change in Unrealized
Appreciation/(Depreciation) |
|
| Futures Contracts2 |
|
$ |
(307,722 |
) |
| |
|
| Average Number of Notional Amounts |
|
|
|
|
| Futures Contracts3 |
|
|
236 |
|
| 1 |
Statement of Operations location: Net realized gain/(loss) from futures contracts. |
| 2 |
Statement of Operations location: Net change in unrealized appreciation/(depreciation) on futures contracts.
|
| 3 |
Amount represents number of contracts. |
6. Temporary Borrowings
The Fund, with other funds managed by Park Avenue,
is party to a $10 million committed revolving credit facility from State Street Bank and Trust Company for temporary borrowing purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of
securities. Interest is calculated based on the higher of the daily one-month LIBOR rate and the Federal Funds rate plus 1.25% at the time of borrowing. In addition to the interest charged on any borrowings by
the Fund, each fund pays a commitment fee of 0.30% per annum on its share of the unused portion of the credit facility. The agreement is in place until December 9, 2020. The Fund did not utilize the credit facility during the period ended
December 31, 2019.
7. Indemnifications
Under the Trust’s
organizational documents and, in some cases, by contract, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Fund. In addition, in the normal course of business, the Fund
enters into contracts with its vendors and others that provide general indemnifications. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet
occurred. However, based on experience, the Fund expects the risk of loss to be remote.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees of Guardian Variable Products Trust and Shareholders of
Guardian U.S. Government Securities VIP Fund
Opinion on the Financial
Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Guardian U.S. Government
Securities VIP Fund (one of the funds constituting Guardian Variable Products Trust, referred to hereafter as the “Fund”) as of December 31, 2019, and the related statements of operations and changes in net assets, including the related
notes, and the financial highlights for the period October 21, 2019 (commencement of operations) through December 31, 2019 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly,
in all material respects, the financial position of the Fund as of December 31, 2019, and the results of its operations, changes in its net assets, and the financial highlights for the period from October 21, 2019 (commencement of operations)
through December 31, 2019 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements
based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws
and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit of these financial statements in accordance
with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing
procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2019 by correspondence with the custodian and brokers.
We believe that our audit provides a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
New York, New York
February 20, 2020
We have served as the auditor of one or more investment companies in Guardian Variable Products Trust since 2016.
SUPPLEMENTAL INFORMATION (UNAUDITED)
Approval of Investment Advisory and Sub-advisory
Agreements
Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), requires that a fund’s investment advisory and sub-advisory agreements be approved initially by the fund’s board of trustees. Section 15(c) also requires that the continuation of these agreements, after an initial term of up to two years, be annually
reviewed and approved by the board. Any such agreement must be approved by a vote of a majority of the trustees who are not parties to the agreement or “interested persons” (as defined in the 1940 Act) of a party to the agreement at an in-person meeting of the board called for the purpose of voting on such approval.
At a meeting of the Board of Trustees (the
“Board”) of Guardian Variable Products Trust (the “Trust”) held on March 27—28, 2018 (the “Meeting”), the Board considered and approved the proposed investment management agreement (the “Management
Agreement”) between the Trust, on behalf of Guardian Small Cap Core VIP Fund, Guardian Global Utilities VIP Fund, Guardian Multi-Sector Bond VIP Fund, Guardian Total Return Bond VIP Fund, and Guardian U.S. Government Securities VIP Fund (the
“New Funds”), and Park Avenue Institutional Advisers LLC (the “Manager”). The Board also considered and approved the proposed sub-advisory agreements (the
“Sub-advisory Agreements,” collectively with the Management Agreement, the “Agreements”) between the Manager and ClearBridge Investments LLC and Wellington Management Company LLP (the “Sub-advisers”), investment advisory firms engaged to serve as sub-advisers to Guardian Small Cap Core VIP Fund and Guardian Global Utilities VIP Fund, respectively.
The Trustees who are not parties to the Agreements or “interested persons” (as defined in the 1940 Act) of a party to the Agreements (the “Independent Trustees”) unanimously approved the Agreements for an initial term of two
years.
The Board is responsible for overseeing the management of each Fund. In determining whether to approve the Agreements, the Trustees evaluated information and
factors that they considered to be relevant and appropriate through the exercise of their own business judgment. The Trustees considered certain information and factors in light of advice furnished to them by legal counsel to the Trust and, in the
case of the Independent Trustees, their independent legal counsel. In advance of the Meeting, the Trustees received materials and information designed to assist their consideration of the
Agreements. At a Board meeting held on November 28-29, 2017, the Trustees received presentations from the Manager and each
Sub-adviser regarding the services to be rendered to, and the proposed investment strategies for, the New Funds. The Trustees received written responses from the Manager and each
Sub-adviser to a series of questions and requests for information covering a wide variety of topics provided by independent legal counsel on behalf of the Independent Trustees. The Trustees also received
presentations and discussed the New Funds at a special telephonic Board meeting held on February 12, 2018, and the Independent Trustees discussed the New Funds with independent legal counsel in advance of the Meeting. The Trustees also received
materials and information regarding the legal standards applicable to their consideration of the Agreements and the process and criteria used by the Manager to identify and select the Sub-advisers for approval
by the Board and to propose that Guardian Multi-Sector Bond VIP Fund, Guardian Total Return Bond VIP Fund, and Guardian U.S. Government Securities VIP Fund would be managed directly by the Manager without a
sub-adviser.
During the course of their deliberations, the Independent Trustees met to discuss and evaluate the Agreements
in executive session with their independent legal counsel, outside of the presence of the Trustees who are not Independent Trustees and representatives from Fund management, the Manager or either Sub-adviser.
In reaching its decisions to approve the Agreements, the Board took into account the materials and information described above as well as other materials and
information provided to the Board and discussed with and among the Trustees, including information furnished to the Board by the Manager throughout the year regarding other series of the Trust, including series
sub-advised by the Sub-advisers. Individual Trustees may have given different weight to different factors and information with respect to each Agreement, and the
Trustees did not identify any single factor or information that, in isolation, would be controlling in deciding to approve the Agreements. The discussion below is intended to summarize the broad factors that figured prominently in the Board’s
decisions to approve the Agreements rather than to be all-inclusive. These broad factors included: (i) the nature, extent and quality of the services to be provided to the New Funds by the Manager and the
Sub-advisers; (ii) the investment performance of funds and accounts managed by the Manager and each Sub-adviser with strategies similar to the applicable New Fund;
(iii) the fees to be charged and estimated profitability; (iv) the extent to which
SUPPLEMENTAL INFORMATION (UNAUDITED)
economies of scale may in the future exist for a New Fund, and the extent to which a New Fund may benefit from future
economies of scale; and (v) any other benefits anticipated to be derived by the Manager or the Sub-advisers (or their respective affiliates) from their relationships with the New Funds.
Nature, Extent and Quality of Services
The Trustees considered
information regarding the nature, extent and quality of services to be provided to the New Funds by the Manager. The Trustees also considered, among other things, the terms of the Management Agreement and the range of investment advisory services to
be provided by the Manager. In addition, the Trustees reviewed the range of non-investment advisory services to be provided by the Manager consistent with the terms of the Management Agreement, notably
coordinating the preparation and filing of various regulatory documents, coordinating the preparation and assembly of Board meeting materials and assisting the Board with certain valuation matters.
The Trustees considered that Guardian Small Cap Core VIP Fund and Guardian Global Utilities VIP Fund would operate in a “manager-of-managers” structure and reviewed the responsibilities that the Manager would have under this structure, including monitoring and evaluating the performance of the Sub-advisers, monitoring the Sub-advisers for adherence to the stated investment objectives, strategies, policies and restrictions of the Funds and supervising the Sub-advisers with respect to the services that the Sub-advisers would provide under the Sub-advisory Agreements. The Trustees also
considered the process used by the Manager, consistent with this structure, to identify and recommend sub-advisers, and its ability to monitor and oversee sub-advisers
and recommend replacement sub-advisers, when necessary, and provide other services under the Management Agreement. The Trustees reviewed information regarding the experience and background of the
Manager’s key personnel and the Manager’s organizational structure and resources, including investment, legal and administrative capabilities of the Manager. In this regard, the Trustees recognized that the New Funds may benefit from the
Manager’s ability to use similar resources and capabilities of its affiliates in providing services to the New Funds.
The Trustees considered information
regarding the nature, extent and quality of services to be provided to Guardian Small Cap Core VIP Fund and Guardian Global Utilities VIP Fund by the Sub-advisers. The Trustees also considered, among other
things, the terms of the
Sub-advisory Agreements and the range of investment advisory services to be provided by the Sub-advisers under the
oversight of the Manager and the Sub-advisers’ experience with managing other funds that are series of the Trust. In evaluating these investment advisory services, the Trustees considered, among other
things, the Sub-advisers’ investment philosophies, styles and/or processes and approach to managing risk. The Trustees also considered information regarding funds or accounts managed by the Sub-advisers with similar strategies as the applicable New Fund, including performance and portfolio characteristics, when available. The Trustees received and evaluated information regarding the background,
education, expertise and/or experience of the investment professionals that would serve as portfolio managers for these New Funds and the capabilities, resources and reputations of the Sub-advisers.
The Trustees considered that Guardian Multi-Sector Bond VIP Fund, Guardian Total Return Bond VIP Fund and Guardian U.S. Government Securities VIP Fund would be managed
without a sub-adviser by the Manager. In evaluating the investment advisory services to be provided by the Manager with respect to these New Funds, the Trustees considered, among other things, the
Manager’s investment philosophies, styles and/or processes and approach to managing risk. The Trustees also considered information regarding funds or accounts managed by the Manager or its affiliates with similar strategies as the applicable
New Fund, including performance and portfolio characteristics, when available, as well as the Manager’s experience investing in asset classes that would comprise the investment portfolios of these New Funds. The Trustees received and evaluated
information regarding the background, education, expertise and/or experience of the investment professionals that would serve as portfolio managers for these New Funds and the capabilities, resources and reputations of the Manager and its
affiliates.
Based upon these considerations, the Trustees concluded, within the context of their full deliberations and in light of the New Funds’ anticipated
operations, that the nature, extent and quality of services to be provided to the New Funds by the Manager and each Sub-adviser were appropriate.
Investment Performance
The New Funds had not commenced
operations prior to the Meeting. Accordingly, the New Funds did not yet have an investment performance record. The Board considered historical performance information with
SUPPLEMENTAL INFORMATION (UNAUDITED)
respect to funds or accounts managed by the Manager and Sub-advisers (or their
affiliates) with similar investment strategies as the New Funds, and comparisons to relevant benchmarks and peer groups, when available. The Trustees concluded that the historical performance records available, viewed together with the other
relevant factors and information considered by the Trustees, supported a decision to approve each Agreement. The Trustees also concluded that it was appropriate to revisit the New Funds’ investment performance in connection with future reviews
of the Agreements.
Costs and Profitability
The Trustees
considered the proposed management fees to be paid by the Funds to the Manager under the Management Agreement and evaluated the reasonableness of these fees. The Trustees received and reviewed comparative information with respect to the proposed
management fees, including the management fees paid by other funds offered as investment options underlying variable contracts within the applicable peer group based on data obtained from Broadridge Financial Solutions, Inc., an independent provider
of industry data, which showed that the New Funds’ proposed contractual management fees fell within the following quintiles: the first quintile for Guardian Small Cap Core VIP Fund, Guardian Total Return Bond VIP Fund and Guardian Multi-Sector
Bond VIP Fund; the second quintile for Guardian Global Utilities VIP Fund; and the third quintile for Guardian U.S. Government Securities VIP Fund.
The Trustees
considered the proposed sub-advisory fees to be paid under the Sub-advisory Agreements and evaluated the reasonableness of those fees. The Trustees also considered that
the fees to be paid to the Sub-advisers would be paid by the Manager and not the New Funds and that the Manager had negotiated the fees with the Sub-advisers at arm’s-length. In addition, the Trustees considered the portion of the management fees proposed to be paid to each Sub-adviser as compared to the portion proposed to be
retained by the Manager.
The Trustees received comparative information relating to each New Fund’s anticipated operating expense ratios and the actual
operating expense ratios of a peer group of funds. In this regard, the Board noted that the New Funds’ anticipated operating expense ratios within the following quintiles: the first quintile for Guardian Small Cap Core VIP Fund and Guardian
Global Utilities VIP Fund; and the second quintile for Guardian U.S. Government Securities VIP Fund, Guardian Total Return
Bond VIP Fund and Guardian Multi-Sector Bond VIP Fund. The Trustees considered estimates of the New Funds’ projected asset levels and the Manager’s commitment to initially limit each
New Fund’s operating expenses through an expense limitation agreement with the Trust. Although the Board recognized that the comparisons between the proposed management fees and anticipated operating expenses of the New Funds and those of
identified peer funds are imprecise, given different terms of agreements and variations in fund strategies, the Trustees found that the comparative information supported their consideration and approval of the proposed management fees and evaluation
of the anticipated operating expenses.
The Trustees reviewed information regarding the Manager’s projected costs of sponsoring the New Funds and projected
profitability of the New Funds to the Manager based on the anticipated assets and expenses of the New Funds. The Trustees noted that the information, including with respect to revenues and expenses, contained estimates because the New Funds had not
yet commenced operations at the time of the Meeting. The Trustees did not consider any projected profitability information from the Sub-advisers because the Manager would be responsible for payment of the sub-advisory fees and had negotiated the fees with the Sub-advisers at arm’s-length.
Based on the consideration of the information and factors summarized above, as well as other information and factors deemed relevant by the Trustees, the Trustees
concluded that the proposed management and sub-advisory fees were reasonable in light of the nature, extent and quality of services expected to be rendered to the New Funds by the Manager and the Sub-advisers. The Trustees also concluded that the projected profitability of the New Funds to the Manager was acceptable and the Trustees determined it was appropriate to revisit this information in connection with
future reviews of the Agreements.
Economies of Scale
The
New Funds had not commenced operations prior to the Meeting. As a result, no specific information was available concerning the possible effect that asset growth and economies of scale would have on a New Fund’s expenses. The Trustees concluded
that it was appropriate to revisit potential economies of scale in connection with future reviews of the Agreements or earlier, if appropriate, and that they were satisfied with the extent to which economies of scale would be shared for the benefit
of shareholders based on anticipated asset levels.
SUPPLEMENTAL INFORMATION (UNAUDITED)
Ancillary Benefits
The Trustees considered the potential benefits, other than management fees, that the Manager and/or its affiliates may receive because of the Manager’s relationship
with the New Funds. The Trustees acknowledged that the New Funds were designed to serve as investment options under variable contracts issued by an affiliate of the Manager that would receive fees under those contracts and that Park Avenue
Securities LLC, an affiliate of the Manager and principal underwriter of the Funds, and an insurance company affiliated with the Manager would be entitled to receive fees from the New Funds under a plan of distribution adopted pursuant to Rule 12b-1 under the 1940 Act. The Trustees considered the benefits to the Manager from increased assets under management. The Trustees considered that the Manager and its affiliates may benefit from (i) greater
efficiencies in annuity administration and operations and potential cost savings due to a reduction in the number of unaffiliated funds available as annuity contract investment options, and (ii) increased dividends-received deductions due to
the Funds’ status under the tax laws as disregarded entities. In addition, the Trustees considered the potential benefits, other than sub-advisory
fees, that the Sub-advisers and their affiliates may receive because of their relationships with the New Funds, including the potential increased ability to use soft dollars consistent with Trust policies and
other benefits from increases in assets under management. The Trustees concluded that benefits that may accrue to the Manager and its affiliates are reasonable and the benefits that may accrue to the
Sub-advisers and their affiliates are consistent with those expected for a sub-adviser to a mutual fund such as the applicable New Fund.
Conclusion
Based on a comprehensive consideration and
evaluation of all of the information and factors summarized above, among others, the Board voting as a whole, including the Independent Trustees voting separately, unanimously approved the Agreements.
SUPPLEMENTAL INFORMATION (UNAUDITED)
Trustees and Officers Information Table
The following table provides information about the Trustees of the Trust.
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
Name and
Year of Birth |
|
Term of Office,
Position(s) Held and Length of
Service1 |
|
Principal
Occupation(s) During Past Five Years |
|
Number of
Funds
in Fund
Complex Overseen
by Trustees2 |
|
Other Directorships
Held by Trustee |
| Independent Trustees |
| |
|
|
|
|
| Bruce W. Ferris3 (born 1955) |
|
Trustee |
|
Retired (since 2015); President and CEO, Prudential Annuities Distributors, Inc. (2013–2015); Director/Trustee, Advanced Series Trust, The Prudential Series Fund and Prudential’s
Gibraltar Fund, Inc. (2013–2015); Senior Vice President, Prudential Annuities (2008–2015). |
|
16 |
|
None. |
| |
|
|
|
|
| Theda R. Haber3 (born 1954) |
|
Trustee |
|
Adjunct Assistant Professor of Law, UC Hastings College of Law (since 2013); Member of the Board of Directors, Fairholme Trust Company, LLC (2015–2019); Attorney, Law Office of Theda R.
Haber (since 2014); Visiting Professor of Law, UC Davis School of Law (since 2014); Consultant, Haber & Associates LLC (financial services industry), (2012–2017); Advisory Council Chair, Vice Chair, and Member, Advisory Council on
Employee Welfare and Pension Benefit Plans (ERISA Advisory Council), U.S. Department of Labor (2009–2011); Managing Director and General Counsel, BlackRock Institutional Trust Company, N.A. (2009–2011); Deputy Global General Counsel,
Barclays Global Investors (2006–2009); Managing Director, Barclays Global Investors (1998–2006). |
|
16 |
|
None. |
| |
|
|
|
|
| Marshall
Lux3 (born 1960) |
|
Trustee |
|
Senior Advisor, The Boston Consulting Group (since 2014); Senior Partner and Managing Director, The Boston Consulting Group (2009–2014). |
|
16 |
|
None. |
| |
|
|
|
|
| Lisa K.
Polsky3 (born 1956) |
|
Trustee |
|
Board Member, MFA Financial, Inc. (real estate investment trust) (since 2020); Advisor, SMBC Americas (financial services) (since 2020); Senior Risk Advisor, AQR (investment management)
(2016–2019); Senior Risk Advisor, Ultra Capital (venture capital) (2016–2019); Board Member, DB USA Corporation (Deutsche Bank Intermediate Holding Company) (financial services) (since 2016); Chief Risk Officer, CIT Group Inc.
(financial services) (2010–2015); Board Member and Chair of Audit Committee, Piper Jaffray (investment bank) (2007–2016). |
|
16 |
|
None. |
| |
|
|
|
|
| John
Walters3 (born 1962) |
|
Lead Independent
Trustee |
|
Board Member, Amerilife Holdings LLC (insurance distribution) (since 2015); Board Member, Stadion Money Management LLC (investment adviser) (since 2011); President and Chief Operating Officer,
Hartford Life Insurance Company (2000–2010). |
|
16 |
|
Trustee, USAA Mutual Funds Trust, (One registered investment company offering 47 individual funds) (since
2019). |
SUPPLEMENTAL INFORMATION (UNAUDITED)
|
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|
|
|
| |
|
|
|
|
Name and
Year of Birth |
|
Term of Office,
Position(s) Held and Length of
Service1 |
|
Principal
Occupation(s) During Past Five Years |
|
Number of
Funds
in Fund
Complex Overseen
by Trustees2 |
|
Other Directorships
Held by Trustee |
| Interested Trustees |
| |
|
|
|
|
| Dominique Baede4 (born 1970) |
|
Trustee (Since
January 2020) |
|
Vice President, Head of Product, Life, Annuity and Inforce, The Guardian Life Insurance Company of America (since 2019); Managing Director, Product Management Group, AXA Equitable (insurance
company) prior thereto. |
|
16 |
|
None. |
| |
|
|
|
|
| Michael
Ferik4 (born 1972) |
|
Chairman and Trustee (Since
December 2019) |
|
Executive Vice President, Individual Markets, The Guardian Life Insurance Company of America (since 2020); Executive Vice President and Chief Financial Officer, The Guardian Life Insurance
Company of America (2017–2019); Executive Vice President, Individual Markets, The Guardian Life Insurance Company of America prior thereto. |
|
16 |
|
None. |
| 1 |
Except as otherwise noted, each Trustee began service in such capacity in 2016 and serves until his or her successor is
elected and qualified or until his or her resignation, death or removal. The business address of each Trustee is 10 Hudson Yards, New York, New York 10001. |
| 2 |
The Trust currently consists of 16 separate Funds. |
| 3 |
Member of the Audit Committee of the Trust. |
| 4 |
Each of Dominique Baede and Michael Ferik is considered to be an “interested person” of the Trust within the
meaning of the 1940 Act because of their affiliation with The Guardian Life Insurance Company of America and/or its affiliates. |
|
|
|
|
|
| |
|
|
| Name and Year of Birth |
|
Position(s) Held and
Length of Service5 |
|
Principal Occupation(s)
During Past Five Years |
| |
|
|
| Dominique Baede
(born 1970) |
|
President and Principal Executive Officer (Since January 2020) |
|
Vice President, Head of Product, Life, Annuity and Inforce, The Guardian Life Insurance Company of America (since 2019); Managing Director,
Product Management Group, AXA Equitable (insurance company) prior thereto. |
| |
|
|
| John H. Walter
(born 1962) |
|
Senior Vice President, Treasurer, and Principal Financial and Accounting Officer |
|
Vice President, Director of Finance, Corporate Finance, The Guardian Life Insurance Company of America. |
| |
|
|
| Harris Oliner
(born 1971) |
|
Senior Vice President and Secretary |
|
Senior Vice President, Corporate Secretary, The Guardian Life Insurance Company of America (since 2015); Senior Vice President, Deputy
General Counsel, Corporate Secretary, Voya Financial, Inc. prior thereto. |
| |
|
|
| Richard T. Potter
(born 1954) |
|
Senior Vice President and Chief Legal Officer |
|
Vice President and Equity Counsel, The Guardian Life Insurance Company of America. |
| |
|
|
| Philip Stack
(born 1964) |
|
Chief Compliance Officer
(Since September 2017) |
|
Second Vice President, Mutual Fund Chief Compliance Officer, The Guardian Life Insurance Company of America (since 2017); Executive Director,
Chief Compliance Officer, Morgan Stanley (2015–2017); Vice President, Morgan Stanley prior thereto. |
| |
|
|
| Brian Hagan
(born 1984) |
|
Anti-Money Laundering Officer (Since March 2019) |
|
Assistant Vice President (since 2019), Anti-Money Laundering Compliance, The Guardian Life Insurance Company of America/Park Avenue
Securities LLC; Vice President, Head of Financial Intelligence Unit, Brown Brothers Harriman & Co. (2014–2019); Assistant Vice President, AML Compliance Manager, JPMorgan Chase & Co. (2011–2014). |
| |
|
|
| Kathleen M. Moynihan
(born 1966) |
|
Senior Counsel |
|
Second Vice President, Counsel (since 2019), The Guardian Life Insurance Company of America; Senior Counsel prior thereto. |
| |
|
|
| Maria Nydia Morrison
(born 1958) |
|
Fund Controller |
|
Mutual Fund Controller, The Guardian Life Insurance Company of America (since 2015); Chief Financial Officer/Assistant Operating Officer, St.
Francis De Assisi Montessori School (Plaridel, Bulacan), Inc. (Philippines) prior thereto. |
| |
|
|
| Sonya L. Crosswell
(born 1977) |
|
Assistant Secretary |
|
Assistant Vice President, Assistant Corporate Secretary and Secretary Pro Tem, The Guardian Life Insurance Company of America. |
| 5 |
Unless otherwise indicated, the Officers each began service in such capacity in 2016 and hold office for an indefinite
term or until their successors shall have been elected and qualified. The business address of each Officer is 10 Hudson Yards, New York, New York 10001. |
SUPPLEMENTAL INFORMATION (UNAUDITED)
The Statement of Additional Information (“SAI”) includes additional information about
the Trust’s Trustees and Officers and is available, without charge, upon request by calling toll-free 1-888-GUARDIAN (1-888-482-7342) or by visiting our website at http://guardianvpt.onlineprospectus.net/GuardianVPT/Prospectuses.
Portfolio Holdings and Proxy Voting Procedures
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year as an exhibit
to its reports on Form N-PORT. The Fund’s Form N-PORT reports are available on the Securities and Exchange Commission’s website at https://www.sec.gov. The
Fund’s Form N-PORT information is also available, without charge, upon request, by calling toll-free 1-888-GUARDIAN (1-888-482-7342) or by visiting our website at http://guardianvpt.onlineprospectus.net/
GuardianVPT/Prospectuses.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio
securities is included in the SAI. The SAI and information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 may be obtained
(i) without charge, upon request, by calling toll-free 1-888-GUARDIAN (1-888-482-7342) or by visiting our website at http://guardianvpt.onlineprospectus.net/
GuardianVPT/Prospectuses; and (ii) on the Securities and Exchange Commission’s website at
https://www.sec.gov.
This report is transmitted to shareholders only. It is not authorized for use as an offer of sale or a solicitation of an offer to buy shares of the Fund unless
accompanied or preceded by the Fund’s current prospectus. Past performance results shown in this report should not be considered a representation of future performance. Investment returns and principal value of shares will fluctuate so that
shares, when redeemed, may be worth more or less than their original cost. Statements and other information herein are as dated and are subject to change.
The Guardian Life Insurance Company of America New York, NY 10001-2159
PUB10527
The registrant, as of the end of the period covered by this report, has adopted a code of ethics, as defined in this Item 2, that applies to
the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. There were no amendments or waivers granted with respect to the Code of Ethics
during the fiscal year ended December 31, 2019.
| Item 3. |
Audit Committee Financial Expert. |
The registrant’s board of trustees has determined that Lisa Polsky is an audit committee financial expert serving on its audit committee.
This individual is “independent,” as defined by this Item 3.
| Item 4. |
Principal Accountant Fees and Services. |
(a)-(d)
Fees for services
rendered to the registrant by its principal accountant.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
Audit- |
|
|
|
|
| Fiscal Year Ended |
|
Audit Fees* |
|
|
Related Fees |
|
|
Tax Fees |
|
|
All Other Fees |
|
| December 31, 2019 |
|
$ |
475,000 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
| December 31, 2018 |
|
$ |
341,500 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
| * |
Fees are exclusive of
out-of-pocket expenses. |
(e)(1) The
registrant’s Audit Committee is required to approve at least annually all audit and non-audit services that are required to be pre-approved under paragraph (c)(7) of Rule 2-01 of Regulation S-X. In addition, pursuant to the registrant’s Audit Committee Pre-Approval Procedures, the chair of the Audit Committee, or one or more designated members of the Audit
Committee, is authorized to pre-approve a proposed non-audit service, or a proposed material change in the nature or cost of any previously approved non-audit service, between meetings of the Audit Committee. Any such action shall be presented for ratification by the Audit Committee not later than its next regularly scheduled meeting.
(e)(2) With respect to the services described in (b) - (d) of this item relating to the Audit-Related Fees, Tax Fees and All Other Fees
disclosed above, 0% were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) Not applicable.
(g) Not
applicable.
(h) Not applicable.
| Item 5. |
Audit Committee of Listed registrants. |
Not applicable to the registrant.
(a) The Schedule of Investments in securities of unaffiliated issuers as of the close of the reporting period is included as part of the report
to shareholders filed under Item 1 of this Form.
(b) None.
| Item 7. |
Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies. |
Not applicable to the registrant.
| Item 8. |
Portfolio Managers of Closed-End Management Investment Companies.
|
Not applicable to the registrant.
| Item 9. |
Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers. |
Not applicable to the registrant.
| Item 10. |
Submission of Matters to a Vote of Security Holders. |
There have been no material changes to the procedures by which shareholders may recommend nominees to the registrant’s board of trustees,
where those changes were implemented after the registrant last provided disclosure in response to the requirements of Item 407(c) (2)(iv) of Regulation S-K (as required by Item 22(b)(15) of Schedule 14A) or
this Item.
| Item 11. |
Controls and Procedures. |
| |
(a) |
The registrant’s principal executive and principal financial officers have concluded that the
registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”) (17 CFR 270.30a-3(c)) are effective, as of a
date within 90 days of the filing date of this Form N-CSR, to provide reasonable assurance that the information required to be disclosed by the registrant on Form N-CSR
is recorded, processed, summarized, and reported within the time periods specified in the Commission’s rules and forms, based on their evaluation of these disclosure controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR
270.30a-3(b)) and Rule 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934 (17 CFR 240.13a-15(b) or 240.15d-15(b)). |
| |
(b) |
There were no changes in the registrant’s internal control over financial reporting (as defined in Rule
30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
|
| Item |
12. Disclosure of Securities Lending Activities
for Closed-End Management Investment Companies. |
Not applicable to
the registrant.
|
|
|
|
|
|
|
|
| |
|
(a)(1) |
|
Code of ethics that is the subject of disclosure required by Item 2 is attached hereto. |
|
|
|
|
|
(a)(2) |
|
Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto. |
|
|
|
|
|
(a)(3) |
|
Not applicable. |
|
|
|
|
|
(a)(4) |
|
There was no change in the registrant’s independent public accountant during the reporting period. |
|
|
|
|
|
(b) |
|
Certification pursuant to Rule 30a-2(b) under the 1940 Act and Section 906 of the Sarbanes-Oxley Act of 2002 is attached hereto. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
|
|
|
| (Registrant) |
|
Guardian Variable Products Trust |
|
|
| By (Signature and Title)* |
|
/s/ Dominique Baede |
|
|
Dominique Baede, President |
|
|
(Principal Executive Officer) |
Date: March 4, 2020
Pursuant
to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
|
|
|
| By (Signature and Title)* |
|
/s/ Dominique Baede |
|
|
Dominique Baede, President |
|
|
(Principal Executive Officer) |
Date: March 4, 2020
|
|
|
| By (Signature and Title)* |
|
/s/ John H
Walter
|
|
|
John H Walter, Treasurer |
|
|
(Principal Financial and Accounting Officer) |
Date: March 4, 2020