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: 811-9060
HOLLAND SERIES FUND, INC.
(Exact name of registrant as specified in charter)
375 PARK AVENUE
NEW YORK, NEW YORK 10152
(Address of principal executive offices)(Zip code)
(Name and Address of Agent for Service) Copy to:
Michael Holland State Street Bank and Trust Company
President and Treasurer Julie Tedesco, Esq.
Holland Series Fund, Inc. 4 Copley Place, 5th Floor
375 Park Avenue Boston, Massachusetts 02116
New York, New York 10152
and
Timothy Diggins, Esq.
Ropes & Gray
One International Place
Boston, Massachusetts 02110
Registrant's telephone number, including area code: (800) 304-6552
Date of fiscal year end: September 30th
Date of reporting period: September 30, 2009
ITEM 1: SHAREHOLDER REPORT
(GRAPHIC)
HOLLAND BALANCED FUND
Annual Report
September 30, 2009
- ----------------------------
<Table>
CONTENTS
Letter from the President.. 1
Cumulative Performance..... 2
Management Discussion of
Fund Performance and
Notes to Performance..... 3
Statement of Net Assets.... 5
Statement of Operations.... 8
Statements of Changes in
Net Assets............... 9
Financial Highlights....... 10
Notes to Financial
Statements............... 11
Report of Independent
Registered Public
Accounting Firm.......... 17
Unaudited Information...... 18
Directors and Officers..... 23
</Table>
Holland Series Fund, Inc.
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Holland Balanced Fund - LETTER FROM THE PRESIDENT
- --------------------------------------------------------------------------------
September 30, 2009
- --------------------------------------------------------------------------------
Dear Fellow Shareholders:
When Charles Dickens wrote "It was the best of times, it was the worst of
times," he could have been describing the period since our Fund was founded in
1995.
We have been fortunate to have a portfolio that has weathered the period's ups
and downs with its common sense holdings of U.S. Treasury obligations and
equities of some of the world's strongest companies.
(M. HOLLAND PHOTO)
Our Fund's cumulative total return since inception (October 2, 1995 through
September 30, 2009) is 96.20%. For the twelve months ended September 30, 2009,
our Fund's total return was -3.97%.
As our Fund's largest individual shareholder since the Fund began, I have been
pleased by our Fund's performance during some of the most demanding and
challenging periods in recent memory.
With Bullish Regards,
/s/ Michael F. Holland
Michael F. Holland
President and Founder
Performance data quoted represents past performance. Past performance does not
guarantee future results. All performance assumes reinvestment of dividends and
capital gains. The investment return and principal value of an investment will
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than their original cost. Current performance may be lower or higher than the
performance data quoted. Performance data current to the most recent month-end
may be obtained by calling: 1-800-304-6552.
1
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - CUMULATIVE PERFORMANCE
- --------------------------------------------------------------------------------
September 30, 2009
- --------------------------------------------------------------------------------
Set forth below are the cumulative total return figures for the periods
indicated and a graph showing a hypothetical $10,000 investment made in the
Holland Balanced Fund, Standard & Poors 500 Index, 90 Day US Treasury Bill and
the Lipper Balanced Fund Index on October 2, 1995. The cumulative and annualized
total return figures and the information in the graph represent past performance
and are not indicative of future results. The total returns reflect changes in
price of the Fund's shares and assume that any income dividends and/or capital
gain distributions made by the Fund during the period were reinvested in
additional shares of the Fund. Investment return and principal value of an
investment will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. Fund annual operating expense ratio
net of Advisory Fee waivers as of September 30, 2009 is 1.50%.
(LINE GRAPH)
<Table>
<Caption>
LIPPER BALANCED STANDARD & 90 DAY
HOLLAND BALANCED FUND INDEX POOR'S 500 US TREASURY
FUND (A) (B) INDEX (B) BILL (B)
---------------- --------------- ---------- -----------
Inception 10000.00 10000.00 10000.00 10000.00
9/97 14192.00 13758.00 16209.00 11067.00
9/98 14537.00 14442.00 17402.00 11628.00
9/99 16554.00 16390.00 21949.00 12167.00
9/00 18976.30 18214.80 24580.00 12874.00
9/01 15981.00 16333.00 17812.00 13453.00
9/02 14561.60 14725.30 13950.60 13405.40
9/03 16727.50 17256.00 17042.50 13826.40
9/04 17583.00 19033.40 19073.00 13978.90
9/05 18371.00 20945.00 21027.00 14369.00
9/06 19822.00 22625.00 22858.00 15025.00
9/07 22068.00 25616.00 26125.00 15745.00
9/08 20430.70 21745.00 19958.00 16079.00
9/09 19620.00 22255.00 17954.00 16110.00
</Table>
INVESTMENT PERFORMANCE
For the Periods Ended September 30, 2009
<Table>
<Caption>
Average Total Return
Annualized Cumulative
Average Average Total Return SINCE SINCE
Annualized Annualized Cumulative INCEPTION INCEPTION
Return over the period One Year Five Year Ten Year Ten Year (10/2/95) (10/2/95)
- ------------------------------------------------------------------------------------------------------------
HOLLAND BALANCED FUND
(A) -3.97% 2.22% 1.71% 18.53% 4.93% 96.20%
Lipper Balanced Fund
Index (b) 2.34% 3.17% 3.13% 36.09% 6.01% 126.45%
Standard & Poor's 500
Index (b) -10.04% -1.20% -1.99% -18.20% 4.27% 79.54%
90 Day US Treasury Bill
(b) 0.19% 2.88% 2.84% 32.40% 3.46% 61.10%
- ------------------------------------------------------------------------------------------------------------
</Table>
2
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - MANAGEMENT DISCUSSION OF
FUND PERFORMANCE
- --------------------------------------------------------------------------------
September 30, 2009
- --------------------------------------------------------------------------------
Since inception (October 2, 1995 through September 30, 2009), our Fund's total
return was 96.20% compared to 79.54% for the S&P 500 and 126.45% for the Lipper
Balanced Fund Index, each of which is an unmanaged index. For the past twelve
months ended September 30, 2009, our Fund's total return was -3.97% compared to
- -10.04% for the S&P 500 and 2.34% for the Lipper Index.
Our Fund's holding of U.S. Treasury debt obligations, mostly U.S. Treasury TIPS
(Treasury Inflation Protection Securities), have proved a rewarding investment.
Likewise our investments in some of the strongest and most successful companies
have performed admirably in a very volatile environment.
Our portfolio composition by sector, which is detailed below, was favored in
part by the performance of the strong technology companies. Our large
capitalization equities have also been relatively less volatile during this very
volatile period.
Portfolio composition by sector
(AS A % OF TOTAL NET ASSETS) - UNAUDITED
- --------------------------------------------------------------------------------
(LINE GRAPH)
<Table>
U.S. Government 29.5
Finance 13.3
Diversified Manufacturing 12.7
Technology 9.6
Energy 9.0
Multi Media 8.8
Consumer Basics 6.0
Retail 4.9
Food & Beverages 4.2
Repurchase Agreement 2.0
Liabilities in Excess of Other
Assets 0.0
</Table>
++ Percentage is less than 0.01%
3
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - MANAGEMENT DISCUSSION OF
FUND PERFORMANCE (continued)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO PERFORMANCE
- --------------------------------------------------------------------------------
(a) Reflects waiver of fees and reimbursement of expenses by investment adviser.
Absent such waiver and reimbursement, the Fund's total return would have
been lower.
(b) The Lipper Balanced Fund Index, an unmanaged index, is an index whose
primary objective is to conserve principal by maintaining at all times a
balanced portfolio of both stocks and bonds. Typically, the stock/bond ratio
ranges around 60%/40%. The Standard & Poors 500 Index is a capitalization-
weighted index of 500 widely held stocks recognized by investors to be
representative of the stock market in general. The 90-Day U.S. Treasury Bill
rate is the average return on three month U.S. Treasury Bills. The Standard
& Poors 500 Index is unmanaged and does not reflect the actual cost of
investing in the instruments that comprise each index. You cannot invest
directly in an index.
4
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
<Table>
<Caption>
September 30, 2009 Shares Value(+)
- -----------------------------------------------------------------------
COMMON STOCKS-68.5%
COMPUTERS-4.9%
International Business Machines Corp. 12,800 $ 1,531,008
----- -----
ELECTRONICS-9.9%
3M Co. 21,200 1,564,560
Intel Corp. 77,800 1,522,546
----- -----
3,087,106
----- -----
ENTERTAINMENT & LEISURE-4.8%
The Walt Disney Co. 55,000 1,510,300
----- -----
FINANCIAL-6.0%
American Express Co. 30,000 1,017,000
JPMorgan Chase & Co. 20,000 876,400
----- -----
1,893,400
----- -----
FOOD & BEVERAGES-4.2%
PepsiCo, Inc. 22,500 1,319,850
----- -----
INSURANCE-7.3%
Berkshire Hathaway, Inc. Class A* 11 1,111,000
Chubb Corp 23,000 1,159,430
----- -----
2,270,430
----- -----
OIL/GAS-9.0%
Exxon Mobil Corp. 19,000 1,303,590
Schlumberger, Ltd. 25,200 1,501,920
----- -----
2,805,510
----- -----
PHARMACEUTICALS-6.0%
Johnson & Johnson 25,500 1,552,695
Pfizer, Inc. 20,000 331,000
----- -----
1,883,695
----- -----
PRODUCER GOODS-2.8%
General Electric Co. 52,900 868,618
----- -----
RETAIL-4.9%
Home Depot, Inc. 21,000 559,440
Wal-Mart Stores, Inc. 20,000 981,800
----- -----
1,541,240
----- -----
SOFTWARE-4.7%
Microsoft Corp. 56,400 1,460,196
----- -----
TELECOMMUNICATIONS-4.0%
Comcast Corp. Class A 75,000 1,266,750
----- -----
Total Common Stocks
(Cost-$20,333,785) 21,438,103
----- -----
</Table>
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
5
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - STATEMENT OF NET ASSETS (continued)
- --------------------------------------------------------------------------------
<Table>
<Caption>
September 30, 2009 Principal Value(+)
- -----------------------------------------------------------------------
U.S. GOVERNMENT SECURITIES-29.5%
U.S. TREASURY NOTES-29.5%
United States Treasury Note, 5.000%
due 2/15/11 $ 500,000 $ 530,137
United States Treasury Note**, 3.500%
due 1/15/11 8,352,383 8,694,312
----- -----
Total U.S. Government Securities
(Cost-$8,901,122) 9,224,449
----- -----
REPURCHASE AGREEMENT-2.0%
State Street Bank and Trust Co.
Repurchase Agreement, 0.01% due
10/01/09 in the amount $646,000;
issued 09/30/09 (Collateralized by
$660,000, FHLMC, 0.35% due
04/01/11 with a market
value of $660,825)
(Cost $646,000) 646,000 646,000
----- -----
Total Investments-100.0%
(Cost-$29,880,907) 31,308,552
----- -----
LIABILITIES IN EXCESS OF OTHER
ASSETS-0.0%++ (12,964)
----- -----
NET ASSETS-100%
Applicable to 2,209,690 outstanding
$0.01 par value shares (authorized
1,000,000,000) $31,295,588
===== =====
Net asset value, offering price and
redemption price per share $ 14.16
===== =====
</Table>
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
6
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - STATEMENT OF NET ASSETS (concluded)
- --------------------------------------------------------------------------------
<Table>
<Caption>
September 30, 2009
- ----------------------------------------------------------------
COMPONENTS OF NET ASSETS AS OF SEPTEMBER 30, 2009
Capital stock at par value ($0.01) $ 22,097
Capital stock in excess of par value 29,415,354
Undistributed net investment income 133,277
Net accumulated realized gain on investments in
securities 297,215
Net unrealized appreciation on investments in
securities 1,427,645
-----------
Net Assets $31,295,588
===========
</Table>
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
* Non-income producing
** Treasury Inflation-Protection Security (TIPS)
+ See Note 2 to Financial Statements
++ Percentage is less than 0.01%
7
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
<Table>
<Caption>
Year Ended September 30, 2009
- -----------------------------------------------------------------
INVESTMENT INCOME:
Dividends $ 490,713
Interest income (Note 2) 167,639
-----------
Total investment income 658,352
-----------
EXPENSES:
Investment advisory fees (Note 3) 225,290
Administration and custody fees (Note 4) 139,827
Transfer agent fees 67,333
Shareholder reports 50,065
Audit fees 22,499
Insurance fees 19,165
Registration fees 19,105
Directors' fees 14,301
Legal fees 3,500
Miscellaneous expenses 2,181
-----------
Total operating expenses 563,266
Waiver of investment advisory fee (Note 3) (112,687)
-----------
Net Expenses 450,579
-----------
Net investment income 207,773
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain on investments 322,878
Net change in unrealized appreciation (2,448,944)
-----------
Net realized and unrealized loss on investments (2,126,066)
-----------
Net decrease in net assets resulting from
operations $(1,918,293)
===========
</Table>
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
8
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<Table>
<Caption>
Year Ended Year Ended
September 30, September 30,
2009 2008
- -------------------------------------------------------------------------
NET INCREASE/(DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS:
Net investment income $ 207,773 $ 836,602
Net realized gain 322,878 1,178,153
Net change in unrealized appreciation on
investments (2,448,944) (5,117,934)
----------- -----------
Decrease in net assets from operations (1,918,293) (3,103,179)
----------- -----------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income (307,600) (713,371)
Net realized gains (796,209) (1,394,825)
----------- -----------
Total distributions (1,103,809) (2,108,196)
----------- -----------
CAPITAL SHARE TRANSACTIONS, NET (NOTE 9) (2,649,067) (2,169,437)
----------- -----------
Decrease in Net Assets (5,671,169) (7,380,812)
----------- -----------
NET ASSETS:
Beginning of year 36,966,757 44,347,569
----------- -----------
End of year $31,295,588 $36,966,757
=========== ===========
UNDISTRIBUTED NET INVESTMENT INCOME, END
OF YEAR $ 133,277 $ 233,104
=========== ===========
</Table>
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
9
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<Table>
<Caption>
For a capital share Year Ended Year Ended Year Ended Year Ended Year Ended
outstanding September 30, September 30, September 30, September 30, September 30,
throughout each year 2009 2008 2007 2006 2005
- -----------------------------------------------------------------------------------------------------------
PER SHARE DATA
Net asset value, beginning
of year $ 15.29 $ 17.39 $ 16.38 $ 15.41 $ 15.04
------- ------- ------- ------- -------
INCREASE/DECREASE FROM
INVESTMENT OPERATIONS:
Net investment income 0.09 0.35 0.23 0.25 0.29
Net realized and unrealized
gain (loss) on investments (0.76) (1.60) 1.58 0.95 0.38
------- ------- ------- ------- -------
Total income (loss)
from operations (0.67) (1.25) 1.81 1.20 0.67
------- ------- ------- ------- -------
LESS DIVIDENDS AND
DISTRIBUTIONS FROM:
Net investment income (0.13) (0.29) (0.24) (0.23) (0.30)
Net realized gain on
investments (0.33) (0.56) (0.56) -- --
------- ------- ------- ------- -------
Total dividends and
distributions (0.46) (0.85) (0.80) (0.23) (0.30)
------- ------- ------- ------- -------
Net asset value, end of year $ 14.16 $ 15.29 $ 17.39 $ 16.38 $ 15.41
======= ======= ======= ======= =======
TOTAL RETURN (3.97)%(a) (7.42)%(a) 11.33%(a) 7.90%(a) 4.48%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year
(000's) $31,296 $36,975 $44,348 $46,591 $50,454
Ratio of expenses to average
net assets before fee
waivers and reimbursement
of other expenses 1.88% 1.63% 1.66% 1.71% 1.45%
Ratio of expenses to average
net assets after fee
waivers and reimbursement
of other expenses 1.50% 1.50% 1.50% 1.50% 1.45%
Ratio of net investment
income to average net
assets after fee waivers
and reimbursement of other
expenses 0.69% 2.09% 1.34% 1.57% 1.89%
Portfolio turnover 2.54% 1.96% 1.22% 2.94% 7.60%
</Table>
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
(a) Total return would have been lower had certain expenses not been waived or
reimbursed.
10
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
September 30, 2009
- --------------------------------------------------------------------------------
1. ORGANIZATION
The Holland Series Fund, Inc. (the "Company") was organized as a Maryland
corporation on June 26, 1995 and is registered under the Investment Company Act
of 1940, as amended (the "1940 Act"), as an open-end, management investment
company. The Company currently has one portfolio, the Holland Balanced Fund (the
"Fund").
Investment Objective
The Fund is designed to provide investors with a convenient and professionally
managed vehicle for seeking a high total investment return. Total investment
return is the aggregate of dividend and interest income and realized and
unrealized capital gains/losses on investments, less expenses. The Fund seeks to
achieve its objective through a combined portfolio of equity and investment
grade fixed-income securities.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
In preparing financial statements in conformity with generally accepted
accounting principals in the United States of America, management makes
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the disclosure of
contingent assets and liabilities at the date of the financial statements as
well as the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
Securities
Securities transactions are accounted for as of the trade date. Interest income
and expenses are recorded on an accrual basis. The Fund amortizes discount or
premium using the yield-to-maturity method on a daily basis, except for
securities having a maturity date of sixty days or less at the time of
acquisition which are amortized on a straight-line basis. Dividend income is
recorded on the ex-dividend date. The Fund uses the specific identification
method for determining gain or loss on sales of securities.
The Fund may invest in Treasury Inflation-Protection Securities (TIPS). The
principal value and interest payout of TIPS are periodically adjusted according
to the rate of inflation based on the Consumer Price Index. The adjustments for
interest income due to inflation are reflected in interest income in the
Statement of Operations.
Indemnifications
Under the Fund's organizational documents, its Officers and Directors 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 that provide general indemnifications to other parties.
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.
Income Tax
There is no provision for federal income or excise tax since the Fund continues
to qualify as a regulated investment company ("RIC") and intends to comply with
the requirements of Subchapter M of the Internal Revenue Code applicable to RICs
and to distribute substantially all of its taxable income and realized gains.
11
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
September 30, 2009
- --------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Valuation
Securities traded on an exchange are valued at their last sales price on that
exchange. Securities for which over-the-counter market quotations are available
are valued at the latest bid price. The Fund uses the NASDAQ Official Closing
Price, when available. Debt securities purchased with sixty days or less
remaining to maturity are valued at amortized cost which approximates fair
value.
Securities for which market quotations are not readily available are valued at
fair value as determined in good faith by or under the direction of the
Directors of the Fund.
The Fund began using Financial Accounting Standards Board ("FASB") Accounting
Standards Codification No. 820, Fair Value Measurements ("ASC 820"), effective
October 1, 2008. In accordance with ASC 820, fair value is defined as the price
that a Fund would receive upon selling an investment in a timely transaction to
an independent buyer in the principal or most advantageous market of the
investment. ASC 820 established a three-tier hierarchy to maximize the use of
observable market data and minimize the use of unobservable inputs and to
establish classification of fair value measurements for disclosure purposes.
Inputs refer broadly to the assumptions that market participants would use in
pricing the asset or liability, including assumptions about risk, for example,
the risk inherent in a particular valuation technique used to measure fair value
including such a pricing model and/or the risk inherent in the inputs to the
valuation technique. Inputs may be observable or unobservable. Observable inputs
are inputs that reflect the assumptions market participants would use in pricing
the asset or liability based on market data obtained from sources independent of
the reporting entity. Unobservable inputs are inputs that reflect the reporting
entity's own assumptions about the assumptions market participants would use in
pricing the asset or liability based on the best information available in the
circumstances.
The three-tier hierarchy of inputs is summarized in the three broad levels
listed below.
- Level 1 -- quoted prices in active markets for identical investments
- Level 2 -- other significant observable inputs (including quoted prices
for similar investments, interest rates, prepayment speeds, credit risk,
etc.)
- Level 3 -- significant unobservable inputs (including the Fund's own
assumptions in determining the fair value of investments)
The inputs or methodology used for valuing securities are not necessarily an
indication of the risk associated with investing in those securities.
12
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
September 30, 2009
- --------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
The following is a summary of the inputs used as of September 30, 2009 in
valuing the Fund's investments:
<Table>
<Caption>
- ------------------------------------------------------------------------------
Level 1 Level 2 Level 3 Total
- ------------------------------------------------------------------------------
Investments in Securities
Common Stocks $21,438,103 $ -- $-- $21,438,103
Repurchase Agreement -- 646,000 -- 646,000
U.S. Government Securities -- 9,224,449 -- 9,224,449
----------- ---------- --- -----------
Total $21,438,103 $9,870,449 $-- $31,308,552
=========== ========== === ===========
- ------------------------------------------------------------------------------
</Table>
Distributions to Shareholders
The Fund distributes income quarterly and capital gains annually. Distributions
from net short-term capital gains and net long-term capital gains, if any, will
typically be declared and paid in December. To the extent that a net realized
capital gain can be reduced by a capital loss carryover, such gain will not be
distributed.
Distributions to shareholders are recorded on the ex-date of the dividend or the
distribution. Distributions from net investment income and net realized capital
gains are determined in accordance with federal income tax regulations, which
may differ from those amounts determined under accounting principles generally
accepted in the United States of America. These book/tax differences are either
temporary or permanent in nature. To the extent these differences are permanent
in nature, such amounts are reclassified within the capital accounts based on
their federal tax-basis treatment; temporary differences do not require
reclassification. Distributions that exceed net investment income or net
realized capital gains for financial reporting purposes, but not for tax
purposes, are reported as distributions in excess of net investment income or
distributions in excess of net realized gains on investments. To the extent they
exceed net investment income or net realized gains for tax purposes, they are
reported as distributions of capital.
3. INVESTMENT ADVISORY AGREEMENT
The Company's Board of Directors has approved an investment advisory agreement
with Holland & Company L.L.C. (the "Investment Adviser"). For its services as
Investment Adviser, the Company pays the Investment Adviser a monthly fee at an
annual rate of 0.75% of the Fund's average daily net assets. The Investment
Adviser has agreed to voluntarily waive its fee and to reimburse the Fund for
expenses exceeding 1.50% of average daily net assets. The advisor may
discontinue this cap on total expenses at any time in its sole discretion.
During the year ended September 30, 2009, the Investment Adviser waived $112,687
in advisory fees. The Investment Adviser is controlled by Michael F. Holland,
its managing member and owner of 99% interest in the Investment Adviser.
13
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
September 30, 2009
- --------------------------------------------------------------------------------
3. INVESTMENT ADVISORY AGREEMENT (continued)
As of September 30, 2009, Michael F. Holland and affiliates owned 117,932 shares
(5.34% of the shares outstanding) of the Fund.
4. ACCOUNTING, CUSTODY,
ADMINISTRATION AND DISTRIBUTION AGREEMENTS
State Street Bank and Trust Company ("State Street"), pursuant to its
Administration Agreement, provides or arranges for the provision of, certain
administrative and accounting services for the Company, including maintaining
the books and records of the Company, and preparing certain reports and other
documents required by federal and/or state laws and regulations.
For these services, the Company pays State Street a fee at the annual rate of
0.10% of the Fund's average daily net assets up to $100 million, 0.08% of the
next $100 million, and 0.06% of those assets in excess of $200 million, subject
to certain minimum requirements, and reimbursement for out-of-pocket expenses
pursuant to the Administration Agreement. Pursuant to the Administration
Agreement, the Administrator is entitled to a minimum fee of $7,500 per month
unless waived by the Administrator. State Street also serves as the Fund's
custodian and accounting agent. Fees paid for custody and accounting services
rendered by State Street are based upon assets of the Fund and on transactions
entered into by the Fund during the period and are included in the
administration and custody fees in the Statement of Operations.
Alps Distributors Inc. pursuant to a distribution agreement with the Fund
provides distribution of the Fund's shares. The Investment Adviser bears the
distribution cost.
5. DIRECTORS' FEES
The Fund pays each Independent Director an annual fee, paid quarterly, of $3,000
plus $500 per meeting attended and pays all Directors' actual out-of-pocket
expenses relating to attendance at meetings. The Fund does not provide any
pension or retirement benefits to its Directors or Officers.
6. LIABILITIES
At September 30, 2009, the Fund had the following liabilities:
<Table>
Payable for Capital Shares repurchased......... $ 13,212
Investment Advisory fee payable................ 30,921
Directors fee payable.......................... 378
Administration and custody fees payable........ 13,064
Other payable and accrued expenses............. 45,380
--------
Total liabilities............................ $102,955
========
</Table>
14
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
September 30, 2009
- --------------------------------------------------------------------------------
7. INVESTMENT TRANSACTIONS
Purchases and sales of investment securities, other than short-term investments
and U.S. Government Securities, for the year ended September 30, 2009 aggregated
$742,373 and $0 respectively. Purchases and sales of U.S. Government Securities
for the year ended September 30, 2009 aggregated $0 and $3,802,031.
8. REPURCHASE AGREEMENTS
The Fund may enter into repurchase agreements under which a bank or securities
firm agrees, upon entering into a contract, to sell U.S. Government securities
to the Fund and repurchase such securities from the Fund at a mutually agreed
upon price and date. The Fund will engage in repurchase transactions with
parties selected on the basis of such party's creditworthiness. The collateral
on repurchase agreements must have an aggregate market value greater than or
equal to the repurchase price plus accrued interest at all times. If the value
of the underlying securities falls below the value of the repurchase price plus
accrued interest, the Fund will require the seller to deposit additional
collateral by the next business day. If the request for additional collateral is
not met, or the seller defaults on its repurchase obligation, the Fund maintains
the right to sell the underlying securities at market value and may claim any
resulting loss against the seller. However, in the event of default or
bankruptcy by the counterparty to the agreement, realization and/or retention of
the collateral may be subject to legal proceedings.
9. CAPITAL SHARE TRANSACTIONS
As of September 30, 2009, there were 1,000,000,000 shares of $.01 par value
capital stock authorized. Transactions in capital stock were as follows:
<Table>
<Caption>
- ----------------------------------------------------------------------------
Year Ended Year Ended
9/30/09 9/30/08
- ----------------------------------------------------------------------------
Shares Amount Shares Amount
- ----------------------------------------------------------------------------
Shares Sold 76,148 $ 978,120 62,953 $ 1,016,663
Shares Reinvested 79,415 1,001,351 114,277 1,863,405
-------- ----------- -------- -----------
155,563 1,979,471 177,230 2,880,068
Shares Redeemed (364,001) (4,628,538) (309,106) (5,049,505)
-------- ----------- -------- -----------
NET DECREASE (208,438) $(2,649,067) (131,876) $(2,169,437)
======== =========== ======== ===========
- ----------------------------------------------------------------------------
</Table>
15
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
September 30, 2009
- --------------------------------------------------------------------------------
10. INCOME TAXES
The components of net unrealized appreciation/(depreciation) of investments
based on federal tax cost at September 30, 2009 for the Fund were as follows:
<Table>
<Caption>
- ---------------------------------------------------------------------
Cost for Federal
Appreciation Depreciation Net Appreciation Tax Purposes
- ---------------------------------------------------------------------
$3,590,899 $2,188,916 $1,401,983 $29,906,569
</Table>
As of September 30, 2009 the components of distributable earnings on a tax basis
were $133,277, for undistributed ordinary income and $322,877 of undistributed
long term capital gains.
The tax character of distributions paid during the year ended September 30, 2009
was $307,600 for distributions paid from ordinary income and $796,209 for long
term capital gains. The tax character of distributions paid during the year
ended September 30, 2008 was $713,371 for distributions paid from ordinary
income and $1,394,825 for long term capital gains.
On October 23, 2009, the Holland Balanced Fund paid a distribution of $0.0635
per share in net investment income related to the period ended September 30,
2009.
The Fund recognizes the tax benefits of uncertain tax positions only where the
position is "more likely than not" to be sustained assuming examination by tax
authorities. Management has analyzed the Fund's tax positions, and has concluded
that no liability for unrecognized tax benefits should be recorded related to
uncertain tax positions taken on returns filed for open tax years (2006-2008),
or expected to be taken in the Fund's 2009 tax returns. The Fund identifies its
major tax jurisdictions as the United States and Maryland.
11. SUBSEQUENT EVENTS
In accordance with the provisions set forth in FASB Accounting Standards
Codification No. 855, "Subsequent Events," adopted by the Fund as of September
30, 2009, management has evaluated the possibility of subsequent events existing
in the Funds' financial statements through November 23, 2009. Management has
determined that there are no material events that would require disclosure in
the Fund's financial statement through this date.
16
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
- --------------------------------------------------------------------------------
(BRIGGS, BUNTING & DOUGHERTY, LLP)
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE BOARD OF DIRECTORS OF HOLLAND SERIES FUND, INC. AND THE SHAREHOLDERS OF
HOLLAND BALANCED FUND
We have audited the accompanying statement of net assets of the Holland Balanced
Fund, a series of shares of Holland Series Fund, Inc., as of September 30, 2009,
and the related statement of operations for the year then ended and the
statement of changes in net assets for each of the years in the two-year period
then ended and the financial highlights for each of the years in the three-year
period then ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits. The financial highlights for each of the years through September 30,
2006 were audited by other auditors whose report dated November 6, 2006
expressed an unqualified opinion on such financial highlights.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of September 30, 2009 by correspondence with
the custodian. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Holland Balanced Fund as of September 30, 2009, the results of its operations
for the year then ended, the changes in its net assets for each of the years in
the two-year period then ended and its financial highlights for each of the
years in the three-year period then ended, in conformity with accounting
principles generally accepted in the United States of America.
(BRIGGS, BUNTING & DOUGHERTY, LLP)
BRIGGS, BUNTING & DOUGHERTY, LLP
PHILADELPHIA, PENNSYLVANIA
NOVEMBER 23, 2009
17
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - UNAUDITED INFORMATION
- --------------------------------------------------------------------------------
PROXY VOTING POLICIES
The Fund has filed with the Securities and Exchange Commission its proxy voting
record for the 12-month period ending June 30, 2009 on Form N-PX, which must be
filed each year by August 31. Once filed, the most recent Form N-PX will be
available without charge, upon request, by calling 1-800-30-HOLLAND or on the
Securities and Exchange Commission's website at http://www.sec.gov.
QUARTERLY PORTFOLIO OF INVESTMENTS
A Portfolio of Investments is filed as of the end of the first and third quarter
of each fiscal year on Form N-Q and is available on the Security Exchange
Commission's website at http://www.sec.gov. Additionally, the Portfolio of
Investments may be reviewed and copied at the Commission's Public Reference Room
in Washington, DC. Information on the operation of the Public Reference Room may
be obtained by calling 1.800.SEC.0330. The quarterly Portfolio of Investments is
available without charge, upon request, by calling 1-800-30-HOLLAND.
APPROVAL OF CONTINUATION OF INVESTMENT ADVISORY AGREEMENT
General Background. On May 6, 2009, the Board of Directors, including all of
the Independent Directors, approved renewal of the Fund's Advisory Agreement
with Holland & Company L.L.C. (the "Adviser") for an additional one-year term.
During the course of each year, the Directors receive a wide variety of
materials relating to the services provided by the Adviser, including reports on
the Fund's investment results, portfolio composition, compliance with applicable
regulations, portfolio trading practices, and shareholder services. In
determining whether to renew the Advisory Agreement, the Board also reviewed
additional information provided by the Adviser in accordance with Section 15(c)
of the Investment Company Act of 1940, as amended.
The information below summarizes the Board's considerations and conclusions in
connection with its approving the renewal of the Advisory Agreement. In
considering the continuation of the Agreement, the Directors did not identify
any particular information that was all-important or controlling and each
Director attributed different weights to various factors. In considering these
matters, the Directors were advised with respect to relevant legal standards by
counsel to the Fund.
Quality of Services. In reviewing the services that the Adviser provides to the
Fund, the Directors considered Michael Holland's extensive experience in the
securities and investment management industries. They noted that Mr. Holland is
the largest shareholder of the Fund. The Directors also noted that the Adviser
has no clients other than the Fund and thus devotes all its research and energy
to managing the Fund.
In reviewing the quality of services provided to the Fund, the Directors
reviewed the performance of the Fund compared with the returns of the S&P 500
Index, the 90 Day US Treasury Bill, the Lipper Balanced Fund Index and the
average returns of all funds in the balanced funds category of Lipper Inc. (the
"Lipper Performance Universe") and of a group of balanced funds considered to be
comparable to the Fund by Lipper Inc. (the "Lipper Performance Group"). The
funds comprising the Lipper Performance Universe and the Lipper Performance
Group had been selected
18
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - UNAUDITED INFORMATION (continued)
- --------------------------------------------------------------------------------
APPROVAL OF CONTINUATION OF INVESTMENT ADVISORY AGREEMENT (continued)
by Lipper Inc. with no input from the Adviser. The Directors observed that the
Fund's returns for the one- and three-year periods ended March 31, 2009 exceeded
the return of the other indexes and the average returns of the universes and
peer groups. The Directors noted that the Fund has historically been positioned
for a market that favors large capitalization growth stocks, and considered that
such stocks had relatively underperformed over the past ten years, a period of
underperformance for the Fund (noting that the Fund's relative performance over
the past three years had been good). They observed that the Fund appeared
unusual among balanced funds because the allocation of assets among asset
categories (equity securities vs. investment grade fixed-income securities and
money market instruments) is fixed under ordinary market conditions thereby
limiting the Adviser's ability to take advantage of outperformance, or to avoid
underperformance, in a particular asset category. They noted that such an
approach might generally be expected to lead to periods of underperformance and
that the Fund is intended as a long-term investment.
The Directors noted that, although there had been a number of redemptions in the
recent periods, the shareholder base appeared generally to be made up of people
who desire Mr. Holland's expertise and judgment and are committed to the Fund's
investment mandate.
Advisory Fees and Total Expenses. In reviewing the advisory fees borne by the
Fund, the Directors reviewed information regarding the advisory fees of funds
included in a group of balanced funds considered to be comparable to the Fund by
Lipper Inc. (the "Lipper Expense Group"), and all funds in the retail no-load
balanced fund category of Lipper Inc. (the "Lipper Expense Universe"). They
noted that the Fund's advisory fees were greater than the average fees of the
Lipper Expense Group and the Lipper Expense Universe and that the total expenses
were greater than the average expense ratios of the other funds in the Lipper
Expense Group and the Lipper Expense Universe.
The Directors observed that in the interest of limiting the expenses of the
Fund, the Adviser had voluntarily capped the Fund's total expenses at 1.50% of
the Fund's average daily net assets since the Fund's inception. Under the
voluntary cap, the Adviser reimburses the Fund when the actual expenses of the
Fund exceed this cap and thus, so long as the voluntary cap remains in place,
the total expenses paid by the Fund's shareholders never exceed 1.50%. They
noted that the Fund's total expense ratio was comparable to the total expense
ratios of other similar funds.
Profitability and Economies of Scale. The Directors considered information
prepared by the Adviser with respect to the profitability of its relationship
with the Fund, the extent to which economies of scale are realized by the
Adviser in managing the Fund, and whether the Fund should implement advisory fee
breakpoints to reflect any such economies of scale.
The Directors discussed in detail the analysis presented regarding the Adviser's
profitability. The Directors determined that the Adviser's profitability
appeared reasonable.
The Directors agreed that due to the Fund's small asset size and the fact that
the Adviser only manages the Fund, the Fund has not to date realized appreciable
19
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - UNAUDITED INFORMATION (continued)
- --------------------------------------------------------------------------------
APPROVAL OF CONTINUATION OF INVESTMENT ADVISORY AGREEMENT (continued)
economies of scale. They agreed generally with the Adviser's views that (i)
while there is no uniformity or pattern in the fees and asset levels at which
breakpoints occur, the first breakpoint is generally at an asset level higher
than that of the Fund; (ii) it is unlikely that the Fund's assets will grow to a
level at which economies of scale would be realized; and (iii) unlike the
Adviser, a substantial number of the advisers of competing products manage
assets across a variety of products and services, resulting in potential
economies of scale to an adviser from non-mutual fund products. On that basis,
the Directors determined not to require implementation of breakpoint at this
time.
Ancillary Benefits and Other Factors. The Directors also considered that the
Adviser and its affiliates appear to receive no significant benefits other than
investment advisory fees as a result of the Adviser's relationship with the
Fund. The Directors observed that the Adviser had never entered into soft
dollar, revenue sharing or directed brokerage arrangements.
Conclusions. After reviewing various materials and reports provided, the
Directors concluded that (i) the Adviser and Mr. Holland were sufficiently
experienced and qualified to provide investment advisory services for the Fund;
(ii) the Adviser is committed to the Fund, as evidenced by the fee cap and the
fact that the Fund is the Adviser's sole client; (iii) Mr. Holland is committed
to the Fund, as evidenced by his large ownership in the Fund; (iv) the
profitability of the Adviser for providing services to the Fund appears
reasonable; (v) the Fund's expenses and performance are disclosed in the Fund's
registration statement and/or reports to shareholders, allowing investors to
make informed decisions about investment in the Fund; (vi) the Fund's small
asset size limits the Fund's potential to generate economies of scale; (vii) the
lack of breakpoints in the Fund's advisory fees is reasonable given the Fund's
anticipated continued small asset size; and (viii) although the Fund has a
relatively high expense ratio and has experienced relatively unfavorable
performance over various periods, it appears that there remains a substantial
core of investors who wish to remain with the Fund and the Adviser
notwithstanding those factors.
The Directors also noted generally that the Fund had been in existence for a
substantial period of time, that investors in the Fund appear to appreciate the
expertise and judgment Mr. Holland brings to the Fund from his long experience
in the securities and investment management industries, and that, from their
apparent commitment to the Fund, shareholders appear satisfied with the level of
fees charged by the Adviser to access Mr. Holland's expertise and judgment.
In light of the information presented to them and the other factors described
above, the Directors concluded, in the exercise of their business judgment, that
the fee paid by the Fund under the Advisory Agreement generally appeared
reasonable and voted to approve the continuation of the Agreement for the coming
year.
FEDERAL TAX INFORMATION
Certain tax information for the Fund is required to be provided to shareholders
based on the Fund's income and distributions for the taxable year ended
September 30, 2009. The amounts shown may differ from those elsewhere in this
report due to differences between tax and financial reporting requirements. In
20
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - UNAUDITED INFORMATION (continued)
- --------------------------------------------------------------------------------
FEDERAL TAX INFORMATION (continued)
January 2010, shareholders will receive Form 1099-DIV which will include their
share of qualified dividends, and capital gains distributed during the calendar
year 2009. Shareholders are advised to check with their tax advisors for
information on the treatment of these amounts on their individual income tax
returns.
The Holland Balanced Fund designated 68.72% of ordinary income dividends as
income qualifying for dividends received deduction for the fiscal year ended
September 30, 2009.
Under Section 854(b)(2) of the Internal Revenue Code, the Holland Balanced Fund
designates $490,713 as qualified dividends received by the Fund and $796,209 for
long term capital gains, for the fiscal year ended September 30, 2009.
SHAREHOLDER EXPENSES
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs and (2) ongoing costs, including management fees and other Fund expenses.
This example is intended to help you understand your ongoing costs of investing
in the Fund and to compare these costs with the ongoing costs of investing in
other mutual funds. It is based on an investment of $1,000 invested at the
beginning of the period and held for the entire six-month period ended September
30, 2009.
ACTUAL EXPENSES
The first table below provides information about actual account values and
actual expenses. You may use the information in this line, together with the
amount you invested, to estimate the expenses that you incurred over the period.
Simply divide your account value at the end of the period by $1,000 (for
example, an $8,600 account value divided by $1,000 = 8.6), then multiply the
result by the number under the heading entitled "Expenses Paid During the
Period" to estimate the expenses attributable to your investment during this
period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second table below provides information about hypothetical account values
and hypothetical expenses based on the Fund's actual expense ratios and an
assumed rate of return of 5% per year before expenses, which is not the Fund's
actual return. Thus, you should not use the hypothetical account values and
expenses to estimate the actual ending account balance or your expenses for the
period. Rather, these figures are provided to enable you to compare the ongoing
costs of investing in the Fund with other funds. To do so, compare the 5%
hypothetical examples with the 5% hypothetical examples that appear in the
shareholder reports of the other funds.
<Table>
<Caption>
- --------------------------------------------------------
For the Six Months Ended September 30, 2009
- --------------------------------------------------------
Value of a
$1,000 Expenses*
Investment at Paid During
Actual End of Period the Period
- --------------------------------------------------------
$1,190.50 $8.24
</Table>
21
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - UNAUDITED INFORMATION (continued)
- --------------------------------------------------------------------------------
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES (continued)
<Table>
<Caption>
- --------------------------------------------------------
For the Six Months Ended September 30, 2009
- --------------------------------------------------------
Hypothetical Value of a
(assuming a 5% $1,000 Expenses*
return before Investment at Paid During
expenses) End of Period the Period
- --------------------------------------------------------
$1,017.55 $7.59
</Table>
* Expenses are equal to the Fund's annualized net expense ratio of 1.50%
multiplied by the average account value over the period multiplied by 183/365
to reflect the one-half year period.
22
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - DIRECTORS AND OFFICERS (UNAUDITED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
NUMBER OF
PORTFOLIOS IN OTHER
NAME, POSITION(S) TERM OF OFFICE FUND COMPLEX DIRECTORSHIPS
ADDRESS, HELD WITH AND LENGTH OF PRINCIPAL OCCUPATION OVERSEEN BY HELD BY
AND AGE FUND TIME SERVED DURING PAST FIVE YEARS DIRECTOR DIRECTOR
- ----------------------------------------------------------------------------------------------------------
INTERESTED DIRECTOR:
Michael F. Director, Term: Unlimited Holland & Company 1 Trustee, State
Holland Chairman of the Elected: 9/95 L.L.C., Chairman, 1995 - Street Master
375 Park Board, President present. Funds and State
Avenue and Treasurer Street
New York, Institutional
NY 10152 Investment
Age: 65 Trust; and
Director, The
China Fund,
Inc., The Taiwan
Fund, Inc. and
Reaves Utility
Income Fund.
INDEPENDENT DIRECTORS:
Desmond G. Director Term: Unlimited Chairman, North American 1 Chairman, U.S.
FitzGerald Elected: 9/95 Properties Group (Real Guaranteed
375 Park Estate), 1987 - present. Finance Corp.;
Avenue Advisory
New York, Director, Bank
NY 10152 of New York;
Age: 65 Director,
Hilliard Farber
& Co., Inc.; and
Trustee,
Williams Capital
Management
Trust.
James Lee Director Term: Unlimited Investment Adviser, 1 Director,
900 South Elected: 5/08 James Lee Investment Scholarship Fund
Bay View Advisers LLC, 1996 - for Inner City
Avenue present. Children.
Seaside
Park, NJ
08752
Age: 68
Jeff C. Director Term: Unlimited Chairman, Junction 1 None
Tarr Elected: 9/95 Advisors (Financial
Junction Services), 1981 -
Advisors present.
Apartment
25C
145 Central
Park West
New York,
NY 10023
Age: 65
OFFICERS:
Tana Vice President Term: Unlimited Consultant to Holland & -- Member of the
Tselepis Chief Compliance Elected Vice Company, LLC, Board of
375 Park Officer President: 5/02 1997 - 1999. Governors of
Avenue Anti-Money Elected Chief Tufts Medical
New York, Laundering Compliance Center; Director
NY 10152 Compliance Officer: 9/04 and Treasurer of
Age: 74 Officers Elected Anti- YWCAMalden
Money Laundering
Compliance
Officer: 5/09
Julie A. Secretary Term: Indefinite Senior Vice President -- --
Tedesco Elected:5/02 and Senior Counsel of
4 Copley State Street Bank and
Place, 5th Trust Company 2000 -
Floor present.
Boston, MA
02116
Age: 52
William C. Assistant Term: Indefinite Vice President and -- --
Cox Treasurer Elected: 5/05 Department Head, Fund
State Administration Division,
Street Bank State Street Bank and
and Trust Company, 2003 to
Trust present.
Company
2 Avenue de
Lafayette,
4th Floor,
Boston, MA
02110
Age: 43
</Table>
* Michael F. Holland is an interested person of the Fund because of his
employment relationship with Holland & Company L.L.C., the Investment Adviser.
The Statement of Additional Information for the Fund includes additional
information about the Fund's Directors and Officers and is available without
charge, upon request, by calling 1-800-30-HOLLAND.
23
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
ADVISER
Holland & Company L.L.C.
375 Park Avenue
New York, NY 10152
email mike@thehollandfund.com
website www.thehollandfund.com
FUND ADMINISTRATOR,
CUSTODIAN AND FUND
ACCOUNTING AGENT
State Street Bank and Trust Co.
2 Lafayette Avenue
Boston, MA 02111
DISTRIBUTOR
ALPS Distributors, Inc.
1290 Broadway, Suite 1100
Denver, CO 80203
TRANSFER AGENT & DIVIDEND
DISBURSING AGENT
ALPS Mutual Fund Services, Inc.
1290 Broadway, Suite 1100
Denver, CO 80203
LEGAL COUNSEL
Ropes & Gray LLP
One International Place
Boston, MA 02110
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Briggs, Bunting & Dougherty, LLP
1835 Market St., 26th Floor
Philadelphia, PA 19103
- ---------------------
Holland & Company L.L.C.
375 Park Avenue
New York, New York 10152
Phone 800-30-HOLLAND
Email mike@thehollandfund.com
Website www.thehollandfund.com
This report has been prepared for the
Holland Balanced Fund's Shareholders
and may be distributed to others only
if preceded or accompanied by a prospectus.
ITEM 2. CODE OF ETHICS
As of September 30, 2009, Holland Series Fund, Inc. (the "Fund") has adopted a
code of ethics, as defined in Item 2(b) of Form N-CSR, that applies to the
Fund's principal executive officer and principal financial officer. The Fund has
not made any amendments to its code of ethics during the covered period. The
Fund has not granted any waivers from any provisions of the code of ethics
during the covered period. A copy of the Fund's code of ethics has been posted
on www.hollandbalancedfund.com, the Fund's website.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
The Board of Directors of the Fund has determined that the Fund has one audit
committee financial expert serving on its audit committee. The audit committee
financial expert serving on the Fund's audit committee is Desmond G. FitzGerald,
who is independent.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The Fund changed independent registered public accounting firms for the fiscal
year ended September 30, 2007.
(a) Audit Fees
For the fiscal year ending September 30, 2009 and September 30, 2008,
the aggregate audit fees billed for professional services rendered by
Briggs, Bunting & Dougherty ("Briggs, Bunting"), the Fund's principal
accountant, for the audit of the Fund's annual financial statements
and services normally provided by Briggs, Bunting in connection with
the Fund's statutory and regulatory filings or engagement were $19,900
and $19,000.
(b) Audit-Related Fees
For the fiscal year ending September 30, 2009 and September 30, 2008,
there were no fees for assurance and related services by Briggs,
Bunting reasonably related to the performance of the audit of the
Fund's financial statements that were not reported under (a) of this
Item.
(c) Tax Fees
For the fiscal year ending September 30, 2009 and September 30, 2008,
the aggregate tax fees billed for professional services rendered by
Brigg, Bunting for
tax compliance, tax advice, and tax planning were $2,500 and $2,500.
Services included the review of income and excise tax returns for the
Fund.
(d) All Other Fees
For the fiscal year ending September 30, 2009 and September 30, 2008,
there were no fees billed for professional services rendered by
Briggs, Bunting for products and services provided by Briggs, Bunting,
other than the services reported in (a) through (c).
For the fiscal year ended September 30, 2009 and September 30, 2008,
there were no fees billed for professional services rendered by
Briggs, Bunting for products and services provided by Briggs, Bunting
to Holland & Company, L.L.C. (the "Adviser") and any entity
controlling, controlled by, or under common control with the Adviser
that provides ongoing services to the Fund that (i) relate directly to
the operations and financial reporting of the Fund and (ii) were
pre-approved by the Fund's audit committee.
(e)(1) Audit Committee Pre-Approval Policies and Procedures
The Fund's Audit Committee Charter states the following with respect
to pre-approval procedures:
Pre-Approval Requirements. Before the independent accountants are
engaged by the Fund to render audit or non-audit services,
either:
1. The Audit Committee shall pre-approve all auditing
services and permissible non-audit services (e.g., tax
services) provided to the Fund. The Audit Committee may
delegate to one or more of its members the authority to
grant pre-approvals. Any decision of any member to whom
authority is delegated under this section shall be
presented to the full Audit Committee at its next
regularly scheduled meeting;
or
2. The engagement to render the auditing service or
permissible non-audit service is entered into pursuant
to pre-approval policies and procedures established by
the Audit Committee. Any such policies and procedures
must (1) be detailed as to the particular service and
(2) not involve any delegation of the Audit Committee's
responsibilities to the investment adviser. The Audit
Committee must be informed of each service entered into
pursuant to the policies and procedures. A copy of any
such policies and procedures shall be attached as an
exhibit to the Audit Committee Charter.
De Minimis Exceptions to Pre-Approval Requirements. Pre-Approval
for a service provided to the Fund other than audit, review or
attest services is not
required if: (1) the aggregate amount of all such non-audit
services provided to the Fund constitutes not more than 5 percent
of the total amount of revenues paid by the Fund to the
independent accountants during the fiscal year in which the
non-audit services are provided; (2) such services were not
recognized by the Fund at the time of the engagement to be
non-audit services; and (3) such services are promptly brought to
the attention of the Audit Committee and are approved by the
Audit Committee or by one or more members of the Audit Committee
to whom authority to grant such approvals has been delegated by
the Audit Committee prior to the completion of the audit.
Pre-Approval of Non-Audit Services Provided to the Adviser and
Certain Control Persons. The Audit Committee shall pre-approve
any non-audit services proposed to be provided by the independent
accountants to (a) the investment adviser and (b) any entity
controlling, controlled by, or under common control with the
investment adviser that provides ongoing services to the Fund, if
the independent accountants' engagement with the investment
adviser or any such control persons relates directly to the
operations and financial reporting of the Fund. It shall be the
responsibility of the independent accountants to notify the Audit
Committee of any non-audit services that need to be pre-approved.
Application of De Minimis Exception: The De Minimis exception set
forth above applies to pre-approvals under this Section as well,
except that the "total amount of revenues" calculation is based
on the total amount of revenues paid to the independent
accountants by the Fund and any other entity that has its
services approved under this Section (i.e., the investment
adviser or any control person).
(e)(2) Percentages of Services
None of the services described in paragraphs (b) through (d) of this
Item were performed in reliance on paragraph (c)(7)(i)(C) of Rule 2-01
of Regulation S-X during the period for time for which such was
effective.
(f) Not applicable.
(g) Total Fees Paid By Adviser and Certain Affiliates
For the fiscal year ending September 30, 2009 and September 30, 2008,
the aggregate non-audit fees billed by Briggs, Bunting for services
rendered to the Fund and Holland & Company, L.L.C. (the "Adviser") and
any entity controlling, controlled by, or under common control with
the Adviser that provided ongoing services to the Fund were $0 and $0.
(h) Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not applicable to the Registrant.
ITEM 6. SCHEDULE OF INVESTMENTS
Schedule of Investments is included as part of Item 1 of the Form N-CSR.
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 were no materials changes to the procedures by which shareholders may
recommend nominees to the Fund's Board of Directors.
ITEM 11. CONTROLS AND PROCEDURES.
(a) Within 90 days of the filing date of this Form N-CSR, Michael Holland, the
Fund's President and Treasurer, reviewed the registrant's disclosure controls
and procedures (the "Procedures") and evaluated their effectiveness. Based on
his review, Mr. Holland determined that the Procedures adequately ensure that
information required to be disclosed by the Fund in its periodic reports is
recorded, processed, summarized and reported within the time periods required by
the Securities and Exchange Commission's rules and regulations.
(b) There were no significant changes in the Fund's internal controls or in
other factors that could significantly affect these controls subsequent to the
date of their evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
ITEM 12. EXHIBITS
(a)(1) Not applicable to the Filing.
(a)(2) The certifications required by Rule 30a-2 of the Investment Company Act
of 1940, as amended (the "1940 Act") are attached hereto.
(a)(3) Not applicable to the Filing.
(b) The certifications required by Rule 30a-2(b) of the 1940 Act and Sections
906 of the Sarbanes-Oxley Act of 2002 are 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.
HOLLAND SERIES FUND, INC.
By: /s/ Michael F. Holland
------------------------------------
Michael Holland
President and Treasurer of
Holland Series Fund, Inc.
Date: December 1, 2009
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: /s/ Michael F. Holland
------------------------------------
Michael Holland
President and Treasurer of
Holland Series Fund, Inc.
Date: December 1, 2009