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.
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(Exact name of registrant as specified in charter)
375 PARK AVENUE
NEW YORK, NEW YORK 10152
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(Address of principal executive offices)(Zip code)
(Name and Address of Agent for Copy to:
Service)
Michael Holland State Street Bank and Trust Company
President and Treasurer Julie Tedesco, Esq.
Holland Series Fund, Inc. One Federal Street, 9th Floor
375 Park Avenue Boston, Massachusetts 02110
New York, New York 10152
and
Brynn Peltz, Esq.
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Registrant's telephone number, including area code: (800) 304-6552
Date of fiscal year end: September 30, 2003
Date of reporting period: September 30, 2003
ITEM 1: SHAREHOLDER REPORT
HOLLAND BALANCED FUND
ANNUAL REPORT
SEPTEMBER 30, 2003
(HANDSHAKE GRAPHIC)
- ------------------------------------------------
<Table>
CONTENTS
Letter from the President.................... 1
Cumulative Performance....................... 2
Management Discussion of Fund Performance and
Notes to Performance....................... 3
Statement of Net Assets...................... 4
Statement of Operations...................... 7
Statements of Changes in Net Assets.......... 8
Financial Highlights......................... 9
Notes to Financial Statements................ 10
Report of Independent Auditors............... 14
General Information.......................... 15
Directors and Officers....................... 16
</Table>
Holland Series Fund, Inc.
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Holland Balanced Fund - LETTER FROM THE PRESIDENT
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September 30, 2003
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(M. HOLLAND PHOTO)
Dear Fellow Shareholder:
Our Fund's cumulative total return
since inception (October 2, 1995
through September 30, 2003) was
67.28%. The total return for the
twelve months ended September 30,
2003 was 14.87%.
As we emerged from the three year bear market, our commitment to a major
position in blue chip U.S. equities was rewarded during the past year. The bull
market in U.S. Treasury notes and bonds appears to have seen its peak, and our
Fund's holdings are appropriately in shorter maturities.
As the largest individual investor in our Fund, I am pleased with the manner in
which our Fund performed in a challenging market and believe that, for many of
our holdings, the best is yet to come.
With Bullish Regards,
- -s- Michael F. Holland
Michael F. Holland
President and Founder
1
Holland Series Fund, Inc.
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Holland Balanced Fund - CUMULATIVE PERFORMANCE
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September 30, 2003
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Set forth below are the cumulative total return figures for the periods
indicated and a graph showing the hypothetical $10,000 investment made in the
Holland Balanced Fund, Standard & Poor's 500 Index, Salomon 10 Year Government
Bond Index, 90 Day U.S. Treasury Bill and the Lipper Balanced Fund Index on
October 2, 1995. The cumulative and average 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.
<Table>
<Caption>
SALOMON 10 YEAR 90 DAY U.S.
HOLLAND BALANCED LIPPER BALANCED STANDARD & POOR'S GOVERNMENT TREASURY BILL
FUND(A) FUND INDEX(B) 500 INDEX(B) BOND INDEX(B) RATE(B)
---------------- --------------- ----------------- --------------- -------------
Inception 10000 10000 10000 10000 10000
3/97 12582 11703 12955 10412 10790
9/97 14192 13758 16209 11618 11067
3/98 14772 15037 18852 12562 11351
9/98 14537 14442 17402 14153 11628
3/99 16417 16363 22011 13431 11887
9/99 16554 16390 21949 13060 12167
3/00 19373 18076 25643 13757 12500
9/00 18976.3 18215 24580 14310 12874
3/01 16823 17074 19855 15592 13226
9/01 15981 16333 17812 16350 13453
3/02 17024 17496 19633 15788 13545
9/02 14561.6 14725 13951 18776 13405
3/03 15385.5 15246 14514 19069 13760
9/03 16727.5 17256 17042 19509 13826
</Table>
INVESTMENT PERFORMANCE
For the Periods Ended September, 2003
- --------------------------------------------------------------------------------
<Table>
<Caption>
Total Return
Average Cumulative
AVERAGE SINCE INCEPTION SINCE INCEPTION
Return over the period One Year Five Year (10/2/95) (10/2/95)
- -------------------------------------------------------------------------------------
HOLLAND BALANCED FUND
(a) 14.87% 2.85% 6.65% 67.28%
Lipper Balanced Fund
Index (b) 17.19% 3.62% 7.06% 72.56%
Standard & Poor's 500
Index (b) 22.16% -0.42% 6.89% 70.42%
Salomon 10 Year
Government Bond Index
(b) 3.90% 6.62% 8.71% 95.09%
90 Day U.S. Treasury
Bill (b) 1.08% 3.52% 4.13% 38.26%
</Table>
2
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - MANAGEMENT DISCUSSION OF FUND PERFORMANCE
- --------------------------------------------------------------------------------
September 30, 2003
- --------------------------------------------------------------------------------
Since inception (October 2, 1995 through September 30, 2003), our Fund's total
return was 67.28% compared to 72.56% for the Lipper Balanced Fund Index, which
is an unmanaged index with no actual investment costs.
Our confidence in our blue chip equity holdings has been rewarded after the
prolonged stock market downturn. Large U.S. companies' stocks have participated
in the past year's recovery in a less ebullient way than a number of small and
mid-sized companies' stocks, and they have the potential for outperformance as a
new bull market moves forward.
- --------------------------------------------------------------------------------
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 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 S&P
500 is a capitalization-weighted index of 500 widely held stocks recognized
by investors to be representative of the stock market in general. The
Salomon 10 Year Government Bond is a subsector of the Broad Investment-Grade
(BIG) Index. At present, this sector contains U.S. Treasury securities with
at least $1 billion public amount outstanding and U.S. Agency and
supranational issues with at least $100 million outstanding. All securities
in this index have a remaining maturity of at least 10 years and carry a
fixed rate coupon. The 90-Day T-Bill is the average yield on three month
U.S. Treasury Bills. These indices are unmanaged and do not reflect the
actual cost of investing in the instruments that comprise each index.
3
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
<Table>
<Caption>
September 30, 2003 Shares Value(+)
- ----------------------------------------------------------------------
COMMON STOCKS-58.2%
BANKS-2.2%
The Bank of New York Co., Inc. 45,000 $ 1,309,950
-----------
COMPUTERS-3.6%
International Business Machines Corp. 24,800 2,190,584
-----------
ELECTRONICS-8.3%
3M Co. 39,600 2,735,172
Intel Corp. 83,800 2,305,338
-----------
5,040,510
-----------
FOOD & BEVERAGES-2.5%
Coca Cola Co. 35,900 1,542,264
-----------
FINANCIAL-6.9%
American Express Co. 50,000 2,253,000
Citigroup, Inc. 43,000 1,956,930
-----------
4,209,930
-----------
INSURANCE-6.1%
American International Group, Inc. 32,000 1,846,400
Berkshire Hathaway, Inc. Class A* 25 1,875,000
-----------
3,721,400
-----------
OIL/GAS-6.3%
Exxon Mobil Corp. 52,600 1,925,160
Schlumberger, Ltd. 39,500 1,911,800
-----------
3,836,960
-----------
PHARMACEUTICALS-10.5%
Johnson & Johnson 41,000 2,030,320
Medco Health Solutions, Inc.* 5,089 131,958
Merck & Co., Inc. 42,200 2,136,164
Pfizer, Inc. 70,000 2,126,600
-----------
6,425,042
-----------
PRODUCER GOODS-3.5%
General Electric Co. 71,100 2,119,491
-----------
RETAIL TRADE-4.1%
Wal-Mart Stores, Inc. 45,000 2,513,250
-----------
SOFTWARE-4.2%
Microsoft Corp. 91,000 2,528,890
-----------
Total Common Stocks (Cost-$33,488,377) 35,438,271
-----------
</Table>
- --------------------------------------------------------------------------------
See Notes to the Financial Statements
4
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - STATEMENT OF NET ASSETS (continued)
- --------------------------------------------------------------------------------
<Table>
<Caption>
September 30, 2003 Principal Value(+)
- ----------------------------------------------------------------------
U.S. GOVERNMENT SECURITIES-38.3%
United States Treasury Note, 6.50%
due 5/15/05 $ 2,000,000 $ 2,168,124
United States Treasury Note, 2.00%
due 5/15/06 4,000,000 4,027,656
United States Treasury Note, 3.50%
due 1/15/11** 10,301,655 11,656,961
United States Treasury Note, 5.00%
due 2/15/11 5,000,000 5,482,810
-----------
Total U.S. Government Securities
(Cost-$21,584,177) 23,335,551
-----------
REPURCHASE AGREEMENT-3.2%
State Street Bank and Trust Co. Repurchase
Agreement 0.350% due 10/1/03 in the
amount of $1,975,019; issued 9/30/03
(Collateralized by $2,015,000, FHLMC,
1.310% due 8/30/04 with a market
value of $2,018,959)
(Cost-$1,975,000) 1,975,000 1,975,000
-----------
Total Investments-99.7%
(Cost-$57,047,554) 60,748,822
-----------
OTHER ASSETS IN EXCESS OF LIABILITIES-0.3% 179,644
-----------
NET ASSETS-100%
Applicable to 4,202,574 outstanding $0.01
par value shares (authorized
1,000,000,000) $60,928,466
===========
Net asset value, offering price and
redemption price per share $ 14.50
===========
</Table>
- --------------------------------------------------------------------------------
See Notes to the Financial Statements
5
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - STATEMENT OF NET ASSETS (concluded)
- --------------------------------------------------------------------------------
<Table>
<Caption>
September 30, 2003
- ---------------------------------------------------------------------
COMPONENTS OF NET ASSETS AS OF SEPTEMBER 30, 2003
Capital stock at par value ($0.01) $ 42,026
Capital stock in excess of par value 60,139,819
Undistributed net investment income 116,546
Net accumulated realized loss on investments (3,071,193)
Net unrealized appreciation on investments 3,701,268
-----------
Net Assets $60,928,466
===========
</Table>
- --------------------------------------------------------------------------------
See Notes to the Financial Statements
+ See Note 2 to Financial Statements
* Non-income producing
** Treasury Inflation-Protection Security (TIPS)
FHLMC Federal Home Loan Mortgage Corp.
6
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
<Table>
<Caption>
Year Ended September 30, 2003
- ----------------------------------------------------------------------
INTEREST INCOME:
Interest $ 930,140
Dividends 496,160
-----------
Total investment income 1,426,300
-----------
EXPENSES:
Investment advisory fees (Note 3) 400,378
Administration and custody fees (Note 4) 137,545
Shareholder account maintenance 76,650
Shareholder reports 40,150
Audit fees 32,999
Directors fees 25,167
Registration fees 22,709
Insurance expense 19,410
Legal fees 7,000
Miscellaneous expense 16,369
-----------
Total operating expenses 778,397
Net investment income 647,903
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on investments (1,312,967)
Net increase in unrealized appreciation on investments 7,920,643
-----------
Net realized and unrealized gain on investments 6,607,676
-----------
Net increase in net assets resulting from operations $ 7,255,579
===========
</Table>
- --------------------------------------------------------------------------------
See Notes to the Financial Statements
7
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<Table>
<Caption>
Year Ended Year Ended
9/30/03 9/30/02
- -----------------------------------------------------------------------
NET INCREASE/(DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS:
Net investment income $ 647,903 $ 689,585
Net realized loss on investments (1,312,967) (655,538)
Unrealized appreciation/(depreciation) on
investments 7,920,643 (4,764,391)
----------- -----------
Net increase/(decrease) in net assets
resulting from operations 7,255,579 (4,730,344)
----------- -----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
FROM
Net investment income (650,886) (738,266)
CAPITAL SHARE TRANSACTIONS, NET (NOTE 7) 5,002,197 (4,937,791)
----------- -----------
Total increase/(decrease) in net assets 11,606,890 (10,406,401)
NET ASSETS
Beginning of year 49,321,576 59,727,977
----------- -----------
End of year $60,928,466 $49,321,576
=========== ===========
UNDISTRIBUTED NET INVESTMENT INCOME, END OF
YEAR $ 116,546 $ 119,529
=========== ===========
</Table>
- --------------------------------------------------------------------------------
See Notes to the Financial Statements
8
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<Table>
<Caption>
For a capital share outstanding For the Year Ended
throughout the year 9/30/03 9/30/02 9/30/01 9/30/00 9/30/99
- -------------------------------------------------------------------------------------------------
PER SHARE DATA
Net asset value, beginning of year $ 12.78 $ 14.21 $ 17.19 $ 15.27 $ 13.74
------- -------- --------- ------- ----------
INCREASE/DECREASE FROM INVESTMENT
OPERATIONS
Net investment income 0.17 0.17 0.24 0.24 0.23
Net realized and unrealized gain (loss) on
investments 1.72 (1.42) (2.92) 2.00 1.66
------- -------- --------- ------- ----------
Total from investment operations 1.89 (1.25) (2.68) 2.24 1.89
------- -------- --------- ------- ----------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income (0.17) (0.18) (0.25) (0.26) (0.28)
Net realized gain on investments -- -- (0.05) (0.06) (0.08)
------- -------- --------- ------- ----------
Total dividends and distributions (0.17) (0.18) (0.30) (0.32) (0.36)
------- -------- --------- ------- ----------
Net asset value, end of year $ 14.50 $ 12.78 $ 14.21 $ 17.19 $ 15.27
======= ======== ========= ======= ==========
TOTAL RETURN(a) 14.87% (8.88)% (15.78)% 14.63% 13.87%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) $60,928 $ 49,322 $ 59,728 $68,298 $ 45,344
Ratio of expenses to average net assets
after fee waivers and reimbursement of
other expenses 1.46% 1.50% 1.50% 1.50% 1.50%
Ratio of expenses to average net assets
before fee waivers and reimbursement of
other expenses 1.46% 1.53% 1.59% 1.56% 1.62%
Ratio of net investment income to average
net assets after fee waivers and
reimbursement of other expenses 1.21% 1.17% 1.49% 1.46% 1.59%
Ratio of net investment income to average
net assets before fee waivers and
reimbursement of other expenses 1.21% 1.14% 1.40% 1.40% 1.47%
Portfolio turnover 9.92% 39.86% 19.63% 17.99% 15.76%
</Table>
- --------------------------------------------------------------------------------
See Notes to the Financial Statements
<Table>
(a) Total return would have been lower had certain expenses not
been waived or reimbursed.
</Table>
9
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
September 30, 2003
- --------------------------------------------------------------------------------
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, 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. 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
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America 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.
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 the inflation is reflected in the interest income in the
statement of operations.
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.
As of September 30, 2003, the Fund had a net tax basis capital loss
carryforward, for federal income tax purposes of $1,102,688 and $1,891,518, that
may be applied against future taxable capital gains until its expiration date on
September 30, 2010 and September 30, 2011, respectively.
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. Debt securities purchased with sixty days or
less remaining to maturity are valued at amortized cost which approximates
market value.
10
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
September 30, 2003
- --------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Expenses
Holland & Company L.L.C. (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. During the year ended September 30, 2003, the Investment
Adviser did not waive any portion of the advisory fees.
Dividends and Distributions to Shareholders
The Fund distributes dividends 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, but the Fund may make
distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code. To the extent that a net realized
capital gain can be reduced by a capital loss carryover, such gain will not be
distributed.
Dividends and 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. Dividends and 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.
The tax character of distributions paid during the year ended September 30, 2003
was $650,886 for distributions paid from ordinary income. The tax character of
distributions paid during the year ended September 30, 2002 was $738,266 for
distributions paid from ordinary income.
As of September 30, 2003 the components of distributable earnings on a tax basis
were $116,546 for undistributed ordinary income and $3,624,281 for unrealized
appreciation.
3. INVESTMENT ADVISORY AGREEMENT
The Company's Board of Directors has approved an investment advisory agreement
with 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 is controlled by Michael
F. Holland, its managing member and owner of 99% interest in the Investment
Adviser. As of September 30, 2003, the Fund had a payable to the Investment
Adviser of $37,563.
11
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
September 30, 2003
- --------------------------------------------------------------------------------
3. INVESTMENT ADVISORY AGREEMENT (continued)
As of September 30, 2003, Michael F. Holland and affiliates owned 98,187 shares
(2.3% of the shares outstanding) of the Fund.
4. ACCOUNTING, CUSTODY AND
ADMINISTRATION 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 $7,000 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.
5. INVESTMENT TRANSACTIONS
Purchases and sales of investment securities, other than short-term investments
and U.S. Government Securities, for the year ended September 30, 2003 aggregated
$5,723,688 and $5,059,750, respectively. Purchases and sales of U.S. Government
Securities, for the year ended September 30, 2003 aggregated $4,002,500 and $0,
respectively.
The components of net unrealized appreciation/ (depreciation) of investments
based on federal tax cost at September 30, 2003 for the Fund were as follows:
<Table>
<Caption>
- -----------------------------------------------------------------
Cost for Federal
Appreciation Depreciation Net Appreciation Tax Purposes
- -----------------------------------------------------------------
$5,560,898 $(1,936,617) $3,624,281 $57,124,541
</Table>
6. REPURCHASE AGREEMENTS
The Fund may enter into repurchase agreements under which a bank or securities
firm that is a primary or reporting dealer in U.S. Government securities 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
12
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - NOTES TO FINANCIAL STATEMENTS (concluded)
- --------------------------------------------------------------------------------
September 30, 2003
- --------------------------------------------------------------------------------
6. REPURCHASE AGREEMENTS(continued)
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.
7. CAPITAL SHARE TRANSACTIONS
As of September 30, 2003, 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
9/30/03 9/30/02
- ---------------------------------------------------------------------------
Shares Amount Shares Amount
- ---------------------------------------------------------------------------
Shares Sold 775,454 $11,014,822 734,670 $ 10,866,217
Shares Reinvested 38,491 530,809 43,029 601,508
-------- ----------- ---------- ------------
813,945 11,545,631 777,699 11,467,725
Shares Redeemed (469,383) (6,543,434) (1,123,401) (16,405,516)
-------- ----------- ---------- ------------
NET INCREASE/(DECREASE) 344,562 $ 5,002,197 (345,702) $ (4,937,791)
======== =========== ========== ============
- ---------------------------------------------------------------------------
</Table>
As of September 30, 2003, the Fund had capital stocks payable for shares
redeemed of $6,525.
13
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - REPORT OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
To the Board of Directors of Holland Series Fund, Inc.
and Shareholders of
Holland Balanced Fund
In our opinion, the accompanying statement of net assets and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
Holland Balanced Fund (the "Fund", a portfolio of Holland Series Fund, Inc.) at
September 30, 2003, the results of its operations for the year then ended, the
changes in net assets for each of the two years in the period then ended and the
financial highlights for each of the five years in the period then ended, in
conformity with accounting principles generally accepted in the United States of
America. These financial statements and financial highlights (hereafter referred
to as "financial statements") are the responsibility of the Fund's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States of America, which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at September 30, 2003 by correspondence with the
custodian, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
New York, New York
November 10, 2003
14
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - GENERAL INFORMATION
- --------------------------------------------------------------------------------
September 30, 2003 (Unaudited)
- --------------------------------------------------------------------------------
TAX INFORMATION
The following tax information represents year-end disclosures of various
benefits passed through to shareholders.
Of the distributions made by the Fund, 69.3% represent the amount of
distribution which qualifies for the dividends received deduction available to
corporate shareholders.
For the fiscal year ended September 30, 2003, certain dividends paid by the Fund
may be subject to a maximum tax rate of 15% as provided for by the Jobs and
Growth Tax Relief Reconciliation Act of 2003 ("the Act"). The Fund hereby
designates the maximum amount of such dividends allowable under the Act.
Complete information will be reported in conjunction with the 2003 form
1099-DIV.
15
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - DIRECTORS AND OFFICERS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<Table>
<Caption>
NUMBER OF
PORTFOLIOS IN OTHER
POSITION(S) TERM OF OFFICE FUND COMPLEX DIRECTORSHIPS
HELD WITH AND LENGTH OF PRINCIPAL OCCUPATION OVERSEEN BY HELD BY
NAME, ADDRESS, AND AGE FUND TIME SERVED DURING PAST FIVE YEARS DIRECTOR DIRECTOR
- ----------------------------------------------------------------------------------------------------------------------
INTERESTED DIRECTOR:
Michael F. Holland Director, Term: Unlimited Holland & Company 1 Trustee of
375 Park Avenue Chairman of L.L.C., Chairman, State Street
New York, NY 10152 the Board, Elected: 9/95 1995 - present. Master Funds,
President and State Street
Age: 59 Treasurer Institutional
Investment
Trust and China
Fund, Inc.
NON-INTERESTED DIRECTORS:
Sheldon S. Gordon Director Term: Unlimited Union Bancaire Privee 1 Director,
630 Fifth Avenue International Ametek, Inc.
Suite 2710 Elected: 9/95 Holdings, Inc. and Director,
New York, NY 10111 (Financial Services), Gulfmark
Chairman, Offshore, Inc.
Age: 67 1996 - Present;
Herbert S. Winokur, Jr. Director Term: Unlimited Chairman and Chief 1 Director, Mrs.
Capricorn Holdings, Inc. Executive Officer, Fields Famous
30 East Elm Street Elected: 9/95 Capricorn Holdings, Brands, Inc.;
Greenwich, CT 06830 Inc. (Investment Director, CCC
Company), Managing Information
Age: 59 General Partner, Services Group,
Capricorn Investors, Inc.; and
L.P., Capricorn Director, NATCO
Investors II, L.P., Group, Inc.
Capricorn Investors
III, L.P.,
1987 - present.
Desmond G. FitzGerald Director Term: Unlimited Chairman, North 1 Chairman, U.S.
375 Park Avenue American Properties Guaranteed
New York, NY 10152 Elected: 9/95 Group (Real Estate), Finance Corp.;
1987 - present. Advisory
Age: 59 Director, Bank
of New York;
Director,
Hilliard Farber
& Co., Inc.;
and Trustee,
Williams
Capital
Management
Trust.
Jeff C. Tarr Director Term: Unlimited Chairman, Junction 1 None
Junction Advisors Advisors (Financial
9 West 57th Street Elected: 9/95 Services), 1981 -
Suite 4210 present.
New York, NY 10019
Age: 59
OFFICERS:
Tana Tselepis Vice Term: Unlimited Consultant to Holland -- Member of the
375 Park Avenue President & Company, LLC, Board of
New York, NY 10152 Elected: 5/02 1997 - 1999. Governors of
Tufts - New
Age: 67 England Medical
Center
K. David James Secretary Term: Counsel of State -- --
One Federal Street Indefinite Street Bank and Trust
Boston, MA 02110 Company since 2000,
Elected: 5/02 and 1998 - 1999; and
Age: 32 Paralegal Manager of
PFPC Inc., 1999 -
2000.
</Table>
16
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
ADVISER
Holland & Company L.L.C.
375 Park Avenue
New York, NY 10152
email HBFUND@aol.com
website www.thehollandfund.com
FUND ADMINISTRATOR,
CUSTODIAN AND FUND
ACCOUNTING AGENT
State Street Bank and Trust Co.
225 Franklin Street
Boston, MA 02110
DISTRIBUTOR
ALPS Distributors, Inc.
1625 Broadway, Suite 2200
Denver, CO 80202
TRANSFER AGENT & DIVIDEND
DISBURSING AGENT
ALPS Mutual Fund Services, Inc.
1625 Broadway, Suite 2200
Denver, CO 80202
LEGAL COUNSEL
Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, NY 10017
INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
- ------------------------------------
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
(a) Holland Series Fund, Inc. (the "Fund") adopted a Code of Ethics for
Principal Executive and Senior Financial Officers (the "Code of Ethics") on
November 6, 2003.
(c) There have been no amendments to the Fund's Code of Ethics since its
adoption.
(d) There have been no waivers granted by the Fund to individuals covered by the
Fund's Code of Ethics since its adoption.
(f) A copy of the Fund's Code of Ethics has been posted on
www.hollandbalancedfund.com, the Fund's website.
ITEM 3. CODE OF ETHICS
(a)(1) The Board of Directors of the Fund has determined that the Fund has one
Board member serving on the Fund's Audit Committee that possess the attributes
identified in Instructions 2(b) of Item 3 to Form N-CSR to qualify as an "audit
committee financial expert."
(2) Sheldon S. Gordon is the Fund's audit committee financial expert. The
Board also determined that Mr. Gordon was "independent" as that term is defined
in the Sarbanes-Oxley Act of 2002.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Not required.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not applicable.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable
ITEM 8. [RESERVED]
ITEM 9. 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 10. EXHIBITS
(a)(1) Not applicable
(a)(2) The certifications required by Rule 30a-2 of the Investment Company Act
of 1940, as amended (the "1940 Act") are attached hereto.
(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 Holland
------------------
Michael Holland
President and Treasurer of Holland Series Fund, Inc.
Date: November 26, 2003
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 Holland
------------------
Michael Holland
President and Treasurer of Holland Series Fund, Inc.
Date: November 26, 2003