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)
<Table>
<Caption>
(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. One Federal Street, 9th Floor
375 Park Avenue Boston, Massachusetts 02110
New York, New York 10152
and
Timothy Diggins, Esq.
Ropes & Gray
One International Place
Boston, Massachusetts 02110
</Table>
Registrant's telephone number, including area code: (800) 304-6552
Date of fiscal year end: September 30th
Date of reporting period: March 31, 2005
Item 1. SHAREHOLDER REPORT
HOLLAND BALANCED FUND
SEMI-ANNUAL REPORT
MARCH 31, 2005 (UNAUDITED)
- ------------------------------------------------
<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
</Table>
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - LETTER FROM THE PRESIDENT
- --------------------------------------------------------------------------------
March 31, 2005
- --------------------------------------------------------------------------------
[Michael Holland photo]
Dear Fellow Shareholder:
As our Fund's largest individual
shareholder, I have been pleased to
have many of you join me for the
past ten years since our Fund was
launched. An original $10,000
investment at the Fund's birth has
grown to $18,136. As we set out
with our balanced approach of 60% in the strongest blue-chip equities and 40% in
Treasury's, we have experienced an annualized return of 6.47% with significantly
less volatility during the incredible events of the past decade.
Our Fund's cumulative total return since inception (October 2, 1995 through
March 31, 2005) is 81.36%. For the twelve months ended March 31, 2005, our
Fund's total return is 1.30%.
As of this writing, our Fund's blue-chip equity holdings have begun to perform
better than other sectors and in a manner that has historically marked a change
(positive) in the market cycle.
With Bullish Regards,
/s/ Michael F. Holland
Michael F. Holland
President and Founder
1
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - CUMULATIVE PERFORMANCE (UNAUDITED)
- --------------------------------------------------------------------------------
March 31, 2005
- --------------------------------------------------------------------------------
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 & Poors 500 Index, Salomon 10 Year Government
Bond 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.
[LINE GRAPH]
<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 10000.00 10000.00 10000.00 10000.00 10000.00
3/97 12582.00 11703.00 12955.00 10412.00 10790.00
9/97 14192.00 13758.00 16209.00 11618.00 11067.00
3/98 14772.00 15037.00 18852.00 12562.00 11351.00
9/98 14537.00 14442.00 17402.00 14153.00 11628.00
3/99 16417.00 16363.00 22011.00 13431.00 11887.00
9/99 16554.00 16390.00 21949.00 13060.00 12167.00
3/00 19373.00 18076.00 25643.00 13757.00 12500.00
9/00 18976.30 18215.00 24580.00 14310.00 12874.00
3/01 16823.00 17074.00 19855.00 15592.00 13226.00
9/01 15981.00 16333.00 17812.00 16350.00 13453.00
3/02 17024.00 17496.00 19633.00 15788.00 13545.00
9/02 14561.60 14725.00 13951.00 18776.00 13405.00
3/03 15385.50 15246.00 14514.00 19069.00 13760.00
9/03 16727.50 17256.00 17042.00 19509.00 13826.00
3/04 17902.00 19076.00 19271.00 20331.00 13889.00
9/04 17583.00 19033.00 19073.00 20504.00 13979.00
3/05 18136.00 19991.00 20202.00 20957.00 14144.00
</Table>
INVESTMENT PERFORMANCE
For the Periods Ended March, 2005
- --------------------------------------------------------------------------------
<Table>
<Caption>
Average Total Return
Average Annualized Cumulative
Annualized Since Inception Since Inception
One Year Five Year (10/2/95) (10/2/95)
- ----------------------------------------------------------------------------------------------
HOLLAND BALANCED FUND
(a) 1.30% -1.32% 6.47% 81.36%
Lipper Balanced Fund
Index (b) 5.10% 2.09% 7.58% 99.91%
Standard & Poor's 500
Index (b) 4.83% -4.67% 7.70% 102.02%
Salomon 10 Year Gov't
Bond Index (b) 3.08% 8.80% 8.12% 109.57%
90 Day US Treasury Bill
(b) 1.84% 2.51% 3.73% 41.44%
</Table>
2
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - MANAGEMENT DISCUSSION OF FUND PERFORMANCE (UNAUDITED)
- --------------------------------------------------------------------------------
March 31, 2005
- --------------------------------------------------------------------------------
Since inception (October 2, 1995 through March 31, 2005), our Fund's total
return was 81.36% compared to 99.91% for the Lipper Balanced Fund Index, which
is an unmanaged index with no direct investment costs. For the past six months
ended March 31, 2005, our Fund's total return was 3.14% compared to 5.04% for
the Lipper Index.
Our Fund's concentration in the equities of the largest and highest quality
companies was outperformed by the stock price increases of smaller companies
which make up a large part of the S&P 500 marketplace. This disparity in price
performance, which worked in favor of the large blue-chip companies a few years
ago, has historically reverted and has recently shown signs of doing so.
Our portfolio composition by sector, which is detailed below, was a positive
offset in two significant areas: our large position in U.S. Treasury
inflation-indexed securities, and our investment in the Energy sector, which was
over weighted compared to the S&P 500 index. Nevertheless, the out performance
of small and medium sized companies' equities, versus the performance of the
large blue-chip companies, was the most significant recent factor, (And one
which history would indicate normally reverses itself.)
PORTFOLIO COMPOSITION BY SECTOR
(AS A % OF TOTAL NET ASSETS)
- --------------------------------------------------------------------------------
[PIE CHART]
<Table>
U.S. Government 37.5
Energy 14.6
Diversified Manufacturing 12.1
Finance 9.2
Technology 7.9
Consumer Basics 6.7
Multi Media 4.3
Retail 4.0
Food & Beverages 2.7
</Table>
3
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - MANAGEMENT DISCUSSION OF FUND PERFORMANCE (UNAUDITED)
(concluded)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 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 Salomon 10 Year Government Bond Index 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 U.S. Treasury Bill rate is the
average return 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.
4
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
<Table>
<Caption>
March 31, 2005 (Unaudited) Shares Value(+)
- ----------------------------------------------------------------------
COMMON STOCKS-61.5%
COMPUTERS-4.0%
International Business Machines Corp. 24,800 $ 2,266,224
-----------
ELECTRONICS-7.5%
3M Co. 26,200 2,245,078
Intel Corp. 83,800 1,946,674
-----------
4,191,752
-----------
ENTERTAINMENT & LEISURE-2.3%
The Walt Disney Co. 46,000 1,321,580
-----------
FINANCIAL-7.5%
American Express Co. 35,000 1,797,950
Citigroup, Inc. 29,000 1,303,260
JPMorgan Chase & Co. 32,000 1,107,200
-----------
4,208,410
-----------
FOOD & BEVERAGES-2.7%
PepsiCo, Inc. 28,500 1,511,355
-----------
INSURANCE-1.7%
Berkshire Hathaway, Inc. Class A* 11 957,000
-----------
OIL/GAS-14.6%
Burlington Resources Inc 22,000 1,101,540
ChevronTexaco Corp. 23,000 1,341,130
Exxon Mobil Corp. 49,400 2,944,240
Schlumberger, Ltd. 39,500 2,783,960
-----------
8,170,870
-----------
PHARMACEUTICALS-6.7%
Johnson & Johnson 32,500 2,182,700
Pfizer, Inc. 60,000 1,576,200
-----------
3,758,900
-----------
PRODUCER GOODS-4.6%
General Electric Co. 71,100 2,563,866
-----------
RETAIL TRADE-4.0%
Wal-Mart Stores, Inc. 45,000 2,254,950
-----------
SOFTWARE-3.9%
Microsoft Corp. 91,000 2,199,470
-----------
TELECOMMUNICATIONS-2.0%
Comcast Corp. Class A* 33,000 1,114,740
-----------
Total Common Stocks (Cost-$29,548,358) 34,519,117
-----------
</Table>
- --------------------------------------------------------------------------------
See Notes to the Financial Statements
5
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - STATEMENT OF NET ASSETS (continued)
- --------------------------------------------------------------------------------
<Table>
<Caption>
March 31, 2005 (Unaudited) Principal Value(+)
- ----------------------------------------------------------------------
U.S. GOVERNMENT SECURITIES-37.5%
U.S. TREASURY NOTES-37.5%
United States Treasury Note, 5.000%
due 2/15/11 $ 4,000,000 $ 4,154,532
United States Treasury Note, 6.500%
due 5/15/05 2,000,000 2,008,906
United States Treasury Note**, 3.500%
due 1/15/11 10,682,295 11,933,160
United States Treasury Note, 2.000%
due 5/15/06 3,000,000 2,950,314
-----------
Total U.S. Government Securities
(Cost-$19,928,181) 21,046,912
-----------
Total Investments-99.0%
(Cost-$49,476,539) 55,566,029
-----------
OTHER ASSETS IN EXCESS OF LIABILITIES-1.0% 553,583
-----------
NET ASSETS-100%
Applicable to 3,657,335 outstanding $0.01
par value shares (authorized
1,000,000,000) $56,119,612
===========
Net asset value, offering price and
redemption price per share $ 15.34
===========
</Table>
- --------------------------------------------------------------------------------
See Notes to the Financial Statements
6
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - STATEMENT OF NET ASSETS (concluded)
- --------------------------------------------------------------------------------
<Table>
<Caption>
March 31, 2005 (Unaudited)
- ---------------------------------------------------------------------
COMPONENTS OF NET ASSETS AS OF MARCH 31, 2005
Capital stock at par value ($0.01) $ 36,574
Capital stock in excess of par value 51,834,827
Undistributed net investment income 134,593
Net accumulated realized loss on investments (1,975,872)
Net unrealized appreciation on investments 6,089,490
-----------
Net Assets $56,119,612
===========
</Table>
- --------------------------------------------------------------------------------
See Notes to the Financial Statements
* Non-income producing
** Treasury Inflation-Protection Security (TIPS)
+ See Note 2 to Financial Statements
7
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
<Table>
<Caption>
Six Months Ended March 31, 2005 (Unaudited)
- ---------------------------------------------------------------------
INTEREST INCOME:
Interest $ 461,282
Dividends 596,836
----------
Total investment income 1,058,118
----------
EXPENSES:
Investment advisory fees (Note 3) 224,435
Administration and custody fees (Note 4) 68,417
Transfer agent fees 38,220
Shareholder reports 36,400
Audit fees 17,214
Directors fees 10,010
Insurance fees 9,828
Legal fees 8,372
Registration fees 6,370
Miscellaneous expense 2,486
----------
Total operating expenses 421,752
----------
Net investment income 636,366
----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investments 1,727,478
Net change in unrealized depreciation on investments (412,406)
----------
Net realized and unrealized gain on investments 1,315,072
----------
Net increase in net assets resulting from operations $1,951,438
==========
</Table>
- --------------------------------------------------------------------------------
See Notes to the Financial Statements
8
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<Table>
<Caption>
Six Months
Ended
March 31, Year Ended
2005 September 30,
(Unaudited) 2004
- ------------------------------------------------------------------------
NET INCREASE/(DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS:
Net investment income $ 636,366 $ 896,533
Net realized gain/(loss) on investments 1,727,478 (632,157)
Net change in unrealized
appreciation/(depreciation) on
investments (412,406) 2,800,628
----------- -----------
Net increase in net assets resulting from
operations 1,951,438 3,065,004
----------- -----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
FROM
Net investment income (678,699) (836,153)
CAPITAL SHARE TRANSACTIONS, NET (NOTE 7) (7,575,391) (735,053)
----------- -----------
Total increase/(decrease) in net assets (6,302,652) 1,493,798
NET ASSETS
Beginning of year 62,422,264 60,928,466
----------- -----------
End of year $56,119,612 $62,422,264
=========== ===========
UNDISTRIBUTED NET INVESTMENT INCOME, END OF
YEAR $ 134,593 $ 176,926
=========== ===========
</Table>
- --------------------------------------------------------------------------------
See Notes to the Financial Statements
9
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<Table>
<Caption>
Six Months Ended
For a capital share outstanding 3/31/05 For the Year Ended
throughout the period (Unaudited) 9/30/04 9/30/03 9/30/02 9/30/01 9/30/00
- -----------------------------------------------------------------------------------------------------------
PER SHARE DATA
Net asset value, beginning of
period $ 15.04 $ 14.50 $ 12.78 $ 14.21 $ 17.19 $ 15.27
---------------- ------- ------- -------- --------- ----------
INCREASE/DECREASE FROM
INVESTMENT OPERATIONS
Net investment income 0.17 0.21 0.17 0.17 0.24 0.24
Net realized and unrealized
gain (loss) on investments 0.30 0.53 1.72 (1.42) (2.92) 2.00
---------------- ------- ------- -------- --------- ----------
Total from investment
operations 0.47 0.74 1.89 (1.25) (2.68) 2.24
---------------- ------- ------- -------- --------- ----------
LESS DIVIDENDS AND
DISTRIBUTIONS FROM:
Net investment income (0.17) (0.20) (0.17) (0.18) (0.25) (0.26)
Net realized gain on
investments -- -- -- -- (0.05) (0.06)
---------------- ------- ------- -------- --------- ----------
Total dividends and
distributions (0.17) (0.20) (0.17) (0.18) (0.30) (0.32)
---------------- ------- ------- -------- --------- ----------
Net asset value, end of period $ 15.34 $ 15.04 $ 14.50 $ 12.78 $ 14.21 $ 17.19
================ ======= ======= ======== ========= ==========
TOTAL RETURN(a) 3.14% 5.12% 14.87% (8.88)% (15.78)% 14.63%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000's) $ 56,120 $62,422 $60,928 $ 49,322 $ 59,728 $ 68,298
Ratio of expenses to average
net assets after fee waivers
and reimbursement of other
expenses 1.41%(b) 1.33% 1.46% 1.50% 1.50% 1.50%
Ratio of expenses to average
net assets before fee waivers
and reimbursement of other
expenses 1.41%(b) 1.33% 1.46% 1.53% 1.59% 1.56%
Ratio of net investment income
to average net assets after
fee waivers and reimbursement
of other expenses 2.13%(b) 1.42% 1.21% 1.17% 1.49% 1.46%
Ratio of net investment income
to average net assets before
fee waivers and reimbursement
of other expenses 2.13%(b) 1.42% 1.21% 1.14% 1.40% 1.40%
Portfolio turnover 5.60% 8.89% 9.92% 39.86% 19.63% 17.99%
</Table>
- --------------------------------------------------------------------------------
See Notes to the Financial Statements
<Table>
(a) Total return would have been lower had certain expenses not
been waived or reimbursed.
(b) Annualized
</Table>
10
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
March 31, 2005 (Unaudited)
- --------------------------------------------------------------------------------
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.
Indemnifications
Under the Fund's organizational documents, its Officers and Trustees are
indemnified against certain liabilities arising out of the performance of their
duties to the Fund. In addition, in the normal course of business the Fund
enters into contracts 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.
As of September 30, 2004 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
11
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
March 31, 2005 (Unaudited)
- --------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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. The Fund is using the NASDAQ Official
Closing Price. 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.
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 six months ended March 31, 2005, 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.
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
12
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
March 31, 2005 (Unaudited)
- --------------------------------------------------------------------------------
3 INVESTMENT ADVISORY AGREEMENT (continued)
Michael F. Holland, its managing member and owner of 99% interest in the
Investment Adviser.
As of March 31, 2005, Michael F. Holland and affiliates owned 100,625 shares
(2.8%) 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 $7,500 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 at no cost to the Fund or its
shareholders. The Investment Advisor 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. INVESTMENT TRANSACTIONS
Purchases and sales of investment securities, other than short-term investments
and U.S. Government Securities, for the six months ended March 31, 2005
aggregated $3,289,809 and $7,836,170, respectively. Purchases and sales of U.S.
Government Securities, for the six months ended March 31, 2005 aggregated $0 and
$2,546,250, respectively.
13
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - NOTES TO FINANCIAL STATEMENTS (concluded)
- --------------------------------------------------------------------------------
March 31, 2005 (Unaudited)
- --------------------------------------------------------------------------------
6. INVESTMENT TRANSACTIONS (continued)
The components of net unrealized appreciation/ (depreciation) of investments
based on federal tax cost at March 31, 2005 for the Fund were as follows:
<Table>
<Caption>
- -----------------------------------------------------------------
Cost for Federal
Appreciation Depreciation Net Appreciation Tax Purposes
- -----------------------------------------------------------------
$7,281,745 $1,192,256 $6,089,490 $49,476,539
</Table>
7. 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 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.
8. CAPITAL SHARE TRANSACTIONS
As of March 31, 2005, there were 1,000,000,000 shares of $.01 par value capital
stock authorized. Transactions in capital stock were as follows:
<Table>
<Caption>
- ---------------------------------------------------------------------------
Six Months Year Ended
Ended 3/31/05 9/30/04
- ---------------------------------------------------------------------------
Shares Amount Shares Amount
- ---------------------------------------------------------------------------
Shares Sold 107,598 $ 1,646,800 575,194 $ 8,742,625
Shares Reinvested 34,960 532,737 43,101 646,181
-------- ----------- -------- ------------
142,558 2,179,537 618,295 9,388,806
Shares Redeemed (636,463) (9,754,928) (669,629) (10,123,859)
-------- ----------- -------- ------------
NET INCREASE/(DECREASE) (493,905) $(7,575,391) (51,334) $ (735,053)
======== =========== ======== ============
- ---------------------------------------------------------------------------
</Table>
14
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - UNAUDITED INFORMATION
- --------------------------------------------------------------------------------
PROXY VOTING PROCEDURES
The Fund's Board of Directors have adopted proxy voting policies and procedures
for the Fund. On August 31 of each year, the Fund will be required to file with
the Securities and Exchange Commission its proxy voting record for the 12-month
period ending June 30, 2005 on Form N-PX. The fund's proxy voting and policy
procedure and the most recent Form N-PX are 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
Beginning December 31, 2004, the Fund will file a Portfolio of Investments as of
the end of the first and third quarter of each fiscal year on Form N-Q which
will be 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 Commissions 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 will be made
available without charge, upon request, by calling 1-800-30-HOLLAND.
SHAREHOLDER EXPENSES
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments and redemption fees
and (2) ongoing costs, including management fees, shareholder services 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, 2004.
ACTUAL EXPENSES
The first table below provides information about actual account values and
actual expenses. You may use the information in this table, 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 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 Funds and 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.
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - UNAUDITED INFORMATION (concluded)
- --------------------------------------------------------------------------------
Expenses paid during the period include amounts reflected in the Fund's
Statement of Operations.
<Table>
<Caption>
- -------------------------------------------------------------------------
For the Six Months Ended
March 31, 2005
- -------------------------------------------------------------------------
Value of a
$1,000 Expenses
Investment at Paid During
Actual End of Period the Period
- -------------------------------------------------------------------------
$1,031.43 $7.14
</Table>
<Table>
<Caption>
- ------------------------------------------------------------------------------
For the Six Months Ended
March 31, 2005
- ------------------------------------------------------------------------------
Value of a
$1,000 Expenses
Hypothetical (assuming a 5% return Investment at Paid During
before expenses) End of Period the Period
- ------------------------------------------------------------------------------
$1,017.97 $7.04
</Table>
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.
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
Ropes & Gray
One International Place
Boston, MA 02110
INDEPENDENT ACCOUNTANTS
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
Not required for this filing.
ITEM 3. CODE OF ETHICS
Not required for this filing.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Not required for this filing.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS
Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT
INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
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
(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: June 2, 2005
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: June 2, 2005