The font description file for URW-Garamond provided by mathdesign is wrong; here's a fixed version, where the erroneous lines have been commented out (for reference):
%Filename: t1mdugm.fd
%Created by: tex makevp
%Created using fontinst v1.933
%THIS FILE SHOULD BE PUT IN A TEX INPUTS DIRECTORY
\ProvidesFile{t1mdugm.fd}
[2013/08/29 Fontinst v1.933 font definitions for T1/mdugm.]
\DeclareFontFamily{T1}{mdugm}{}
\DeclareFontShape{T1}{mdugm}{m}{it}{
<-> mdugmri8t
}{}
\DeclareFontShape{T1}{mdugm}{m}{fic}{
<-> mdugmrifc8t
}{}
\DeclareFontShape{T1}{mdugm}{m}{n}{
<-> mdugmr8t
}{}
\DeclareFontShape{T1}{mdugm}{m}{fsc}{
<-> mdugmrfc8t
% <-> mdugmrofc8t%<<<<<<<<<<<<<<<<<<< WRONG!
}{}
\DeclareFontShape{T1}{mdugm}{m}{sl}{
<-> mdugmro8t
}{}
\DeclareFontShape{T1}{mdugm}{mb}{sl}{
<-> mdugmmo8t
}{}
\DeclareFontShape{T1}{mdugm}{mb}{fsc}{
% <-> mdugmmofc8t%<<<<<<<<<<<<<<<<<<<<<<<< WRONG!
<-> mdugmmfc8t
}{}
\DeclareFontShape{T1}{mdugm}{mb}{n}{
<-> mdugmm8t
}{}
\DeclareFontShape{T1}{mdugm}{mb}{it}{
<-> mdugmmi8t
}{}
\DeclareFontShape{T1}{mdugm}{mb}{fic}{
<-> mdugmmifc8t
}{}
\DeclareFontShape{T1}{mdugm}{bx}{sl}{<->ssub * mdugm/mb/sl}{}
\DeclareFontShape{T1}{mdugm}{b}{sl}{<->ssub * mdugm/bx/sl}{}
\DeclareFontShape{T1}{mdugm}{bx}{fsc}{<->ssub * mdugm/mb/fsc}{}
\DeclareFontShape{T1}{mdugm}{b}{fsc}{<->ssub * mdugm/bx/fsc}{}
\DeclareFontShape{T1}{mdugm}{bx}{n}{<->ssub * mdugm/mb/n}{}
\DeclareFontShape{T1}{mdugm}{b}{n}{<->ssub * mdugm/bx/n}{}
\DeclareFontShape{T1}{mdugm}{bx}{it}{<->ssub * mdugm/mb/it}{}
\DeclareFontShape{T1}{mdugm}{b}{it}{<->ssub * mdugm/bx/it}{}
\DeclareFontShape{T1}{mdugm}{bx}{fic}{<->ssub * mdugm/mb/fic}{}
\DeclareFontShape{T1}{mdugm}{b}{fic}{<->ssub * mdugm/bx/fic}{}
\endinput
If I make a copy of the file in the working directory and fix the erroneous lines, the output is as expected:
