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 Copy to:
Service)
Michael Holland State Street Bank and Trust Company
President and Treasurer Julie Tedesco, Esq.
Holland Series Fund, Inc. 2 Avenue de Lafayette, 6th Floor
375 Park Avenue Boston, Massachusetts 02111
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, 2006
ITEM 1: SHAREHOLDER REPORT
HOLLAND BALANCED FUND
Annual Report
September 30, 2006
(COVER IMAGE)
- ------------------------------------------------
<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............................ 16
Unaudited Information........................ 17
Directors and Officers....................... 22
</Table>
Holland Series Fund, Inc.
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Holland Balanced Fund - LETTER FROM THE PRESIDENT (UNAUDITED)
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September 30, 2006
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(M. HOLLAND PHOTO)
Dear Fellow Shareholder:
Our Fund's cumulative total return
since inception (October 2, 1995
through September 30, 2006) is
98.22%. For the twelve months ended
September 30, 2006, our Fund's
total return is 7.90%.
Our positive returns this past year
have validated our position that
excellent profit performance of our blue chip companies would be rewarded
eventually in the market.
As our Fund's largest individual shareholder, I welcome the market's "new found"
appreciation of our companies' prospects!
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 (UNAUDITED)
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September 30, 2006
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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 & 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
9/97 14192.00 13758.00 16209.00 11618.00 11067.00
9/98 14537.00 14442.00 17402.00 14153.00 11628.00
9/99 16554.00 16390.00 21949.00 13060.00 12167.00
9/00 18976.30 18215.00 24580.00 14310.00 12874.00
9/01 15981.00 16333.00 17812.00 16350.00 13453.00
9/02 14561.60 14725.00 13951.00 18776.00 13405.00
9/03 16727.50 17256.00 17042.00 19509.00 13826.00
9/04 17583.00 19033.00 19073.00 20504.00 13979.00
9/05 18371.00 20945.00 21027.00 21993.00 14369.00
9/06 19822.00 22625.00 22858.00 22518.00 15025.00
</Table>
INVESTMENT PERFORMANCE
For the Periods Ended September, 2006
- --------------------------------------------------------------------------------
<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) 7.90% 4.40% 5.54% 71.39% 6.42% 98.22%
Lipper Balanced Fund
Index (b) 8.02% 6.79% 7.49% 105.89% 7.70% 126.25%
Standard & Poor's 500
Index (b) 8.71% 5.11% 6.87% 94.36% 7.80% 128.58%
Salomon 10 Year Gov't
Bond Index (b) 2.38% 6.61% 8.18% 119.64% 7.66% 125.18%
90 Day U.S. Treasury
Bill Rate (b) 4.57% 2.24% 3.62% 42.79% 3.77% 50.25%
</Table>
2
Holland Series Fund, Inc.
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Holland Balanced Fund - MANAGEMENT DISCUSSION OF
FUND PERFORMANCE (UNAUDITED)
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September 30, 2006
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Since inception (October 2, 1995 through September 30, 2006), our Fund's total
return was 98.22% compared to 126.25% for the Lipper Balanced Fund Index, which
is an unmanaged index. The performance of the Lipper Balanced Fund Index, which
is not a broad-based securities index, includes expenses associated with mutual
funds, such as investment management fees. These expenses are not identical to
the expenses paid by the Fund. For the past twelve months ended September 30,
2006, our Fund's total return was 7.90% compared to 8.02% for the Lipper Index.
Our Fund's concentration in the equities of the large, high quality companies
was rewarded during the period. Our higher quality fixed income holdings (U.S.
Treasurys) continued to underperform some riskier portions of the bond market.
Our portfolio composition by sector, which is detailed below, was positively
affected by our Finance exposure, as well as our Technology investments. In
fact, we experienced positive results in most sectors for the year.
Portfolio composition by sector
(AS A % OF TOTAL NET ASSETS)
- --------------------------------------------------------------------------------
[PIE CHART]
<Table>
U.S. Government 29.1
Energy 10.3
Diversified Manufacturing 13.3
Finance 10.6
Technology 7.6
Repurchase Agreement 6.2
Multi Media 8.7
Consumer Basics 6.4
Food & Beverages 4.0
Retail 3.8
</Table>
3
Holland Series Fund, Inc.
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Holland Balanced Fund - MANAGEMENT DISCUSSION OF
FUND PERFORMANCE (continued)(unaudited)
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- --------------------------------------------------------------------------------
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 tracks funds 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. The Standard & Poor's 500
Index and the Salomon 10 Year Government Bond Index are unmanaged and do not
reflect the actual cost of investing in the instruments that comprise each
index.
4
Holland Series Fund, Inc.
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Holland Balanced Fund - STATEMENT OF NET ASSETS
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<Table>
<Caption>
September 30, 2006 Shares Value(+)
- ----------------------------------------------------------------------
COMMON STOCKS-64.7%
COMPUTERS-2.3%
International Business Machines Corp. 12,800 $ 1,048,832
-----------
ELECTRONICS-7.9%
3M Co. 26,200 1,949,804
Intel Corp. 83,800 1,723,766
-----------
3,673,570
-----------
ENTERTAINMENT & LEISURE-4.0%
The Walt Disney Co. 61,000 1,885,510
-----------
FINANCIAL-8.3%
American Express Co. 35,000 1,962,800
Citigroup, Inc. 22,500 1,117,575
JPMorgan Chase & Co. 17,000 798,320
-----------
3,878,695
-----------
FOOD & BEVERAGES-4.0%
PepsiCo, Inc. 28,500 1,859,910
-----------
INSURANCE-2.3%
Berkshire Hathaway, Inc. Class A* 11 1,053,800
-----------
OIL/GAS-10.3%
ConocoPhillips 15,870 944,741
Exxon Mobil Corp. 26,600 1,784,860
Schlumberger, Ltd. 33,400 2,071,802
-----------
4,801,403
-----------
PHARMACEUTICALS-6.4%
Johnson & Johnson 28,500 1,850,790
Pfizer, Inc. 40,000 1,134,400
-----------
2,985,190
-----------
PRODUCER GOODS-5.4%
General Electric Co. 71,100 2,509,830
-----------
RETAIL-3.8%
Home Depot Inc 21,000 761,670
Wal-Mart Stores, Inc. 20,000 986,400
-----------
1,748,070
-----------
SOFTWARE-5.3%
Microsoft Corp. 91,000 2,487,030
-----------
TELECOMMUNICATIONS-4.7%
Comcast Corp. Class A* 60,000 2,211,000
-----------
Total Common Stocks (Cost-$24,729,494) 30,142,840
-----------
</Table>
- --------------------------------------------------------------------------------
See Notes to the Financial Statements
5
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balance Fund - STATEMENT OF NET ASSETS (continued)
- --------------------------------------------------------------------------------
<Table>
<Caption>
September 30, 2006 Principal Value(+)
- ----------------------------------------------------------------------
U.S. GOVERNMENT SECURITIES-29.1%
U.S. TREASURY NOTES-29.1%
United States Treasury Note, 5.000%
due 2/15/11 $4,000,000 $ 4,070,780
United States Treasury Note**, 3.500%
due 1/15/11 9,060,680 9,490,356
-----------
Total U.S. Government Securities
(Cost-$13,197,625) 13,561,136
-----------
REPURCHASE AGREEMENT-6.2%
State Street Bank and Trust Co. Repurchase
Agreement 2.50% due 10/02/06 in the
amount of $2,875,599; issued 9/29/06
(Collateralized by $2,890,000, FNMA,
5.75% due 2/15/08 with a market
value of $2,936,954)
(Cost-$2,875,000) 2,875,000 2,875,000
-----------
Total Investments-100.0%
(Cost-$40,802,119) 46,578,976
-----------
OTHER ASSETS IN EXCESS OF LIABILITIES-0.0% 11,633
-----------
NET ASSETS-100%
Applicable to 2,844,207 outstanding $0.01
par value shares (authorized
1,000,000,000) $46,590,609
===========
Net asset value, offering price and
redemption price per share $ 16.38
===========
</Table>
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See Notes to the Financial Statements
6
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - STATEMENT OF NET ASSETS (concluded)
- --------------------------------------------------------------------------------
<Table>
<Caption>
September 30, 2006
- ---------------------------------------------------------------------
COMPONENTS OF NET ASSETS AS OF SEPTEMBER 30, 2006
Capital stock at par value ($0.01) $ 28,442
Capital stock in excess of par value 39,146,789
Undistributed net investment income 156,350
Net accumulated realized gain on investments 1,482,171
Net unrealized appreciation on investments 5,776,857
-----------
Net Assets $46,590,609
===========
</Table>
- --------------------------------------------------------------------------------
See Notes to the Financial Statements
* Non-income producing
** Treasury Inflation-Protection Security (TIPS)
+ See Note 2 to Financial Statements
FNMA-Federal National Mortgage Association
7
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
<Table>
<Caption>
Year Ended September 30, 2006
- ---------------------------------------------------------------------
INTEREST INCOME:
Interest $ 911,510
Dividends 553,608
----------
Total investment income 1,465,118
----------
EXPENSES:
Investment advisory fees (Note 3) 358,600
Administration and custody fees (Note 4) 144,905
Transfer agent fees 94,201
Shareholder reports 65,774
Audit fees 39,448
Registration fees 31,507
Insurance fees 28,460
Directors' fees 27,073
Legal fees 20,400
Miscellaneous expense 5,692
----------
Total operating expenses 816,060
----------
Waiver of investment advisory fee and reimbursements
of other expenses (Note 3) (99,291)
----------
Net expenses 716,769
----------
Net investment income 748,349
----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investments 2,892,473
Net change in unrealized appreciation on investments 28,331
----------
Net realized and unrealized gain on investments 2,920,804
----------
Net increase in net assets resulting from operations $3,669,153
==========
</Table>
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See Notes to the Financial Statements
8
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<Table>
<Caption>
Year Ended Year Ended
9/30/06 9/30/05
- -----------------------------------------------------------------------
NET INCREASE/(DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS:
Net investment income $ 748,349 $ 1,070,457
Net realized gain on investments 2,892,473 2,293,048
Net change in unrealized
appreciation/(depreciation) on investments 28,331 (753,370)
----------- -----------
Net increase in net assets resulting from
operations 3,669,153 2,610,135
----------- -----------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM
Net investment income (714,372) (1,125,010)
CAPITAL SHARE TRANSACTIONS, NET (NOTE 9) (6,818,113) (13,453,448)
----------- -----------
Total increase/decrease in net assets (3,863,332) (11,968,323)
NET ASSETS
Beginning of year 50,453,941 62,422,264
----------- -----------
End of year $46,590,609 $50,453,941
=========== ===========
UNDISTRIBUTED NET INVESTMENT INCOME, END
OF YEAR $ 156,350 $ 122,373
=========== ===========
</Table>
- --------------------------------------------------------------------------------
See Notes to the Financial Statements
9
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<Table>
<Caption>
For a capital share outstanding For the Year Ended
throughout each year 9/30/06 9/30/05 9/30/04 9/30/03 9/30/02
- ----------------------------------------------------------------------------------------------
PER SHARE DATA
Net asset value, beginning of year $ 15.41 $ 15.04 $ 14.50 $ 12.78 $ 14.21
------- ------- ------- ------- -------
INCREASE/DECREASE FROM INVESTMENT
OPERATIONS
Net investment income 0.25 0.29 0.21 0.17 0.17
Net realized and unrealized gain
(loss) on investments 0.95 0.38 0.53 1.72 (1.42)
------- ------- ------- ------- -------
Total from investment operations 1.20 0.67 0.74 1.89 (1.25)
------- ------- ------- ------- -------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income (0.23) (0.30) (0.20) (0.17) (0.18)
Net realized gain on investments -- -- -- -- --
------- ------- ------- ------- -------
Total dividends and distributions (0.23) (0.30) (0.20) (0.17) (0.18)
------- ------- ------- ------- -------
Net asset value, end of year $ 16.38 15.41 $ 15.04 $ 14.50 $ 12.78
======= ======= ======= ======= =======
TOTAL RETURN 7.90%(a) 4.48% 5.12% 14.87% (8.88)%(a)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) $46,591 $50,454 $62,422 $60,928 $49,322
Ratio of expenses to average net assets
after fee waivers and reimbursement of
other expenses 1.50% 1.45% 1.33% 1.46% 1.50%
Ratio of expenses to average net assets
before fee waivers and reimbursement of
other expenses 1.71% 1.45% 1.33% 1.46% 1.53%
Ratio of net investment income to average
net assets after fee waivers and
reimbursement of other expenses 1.57% 1.89% 1.42% 1.21% 1.17%
Portfolio turnover 2.94% 7.60% 8.89% 9.92% 39.86%
</Table>
- --------------------------------------------------------------------------------
See Notes to the Financial Statements
<Table>
(a) Total return would have been lower had certain expenses not
been waived or reimbursed.
</Table>
10
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
September 30, 2006
- --------------------------------------------------------------------------------
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 are reflected in 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.
11
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
September 30, 2006
- --------------------------------------------------------------------------------
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 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 in accordance with procedures approved by
the Directors of the Fund.
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. 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, 2006, the Investment Adviser waived $99,291 in advisory fees. The
Investment Adviser is controlled by Michael F. Holland, its managing member and
owner of 99% interest in the Investment Adviser.
12
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
September 30, 2006
- --------------------------------------------------------------------------------
3. INVESTMENT ADVISORY AGREEMENT (continued)
As of September 30, 2006, Michael F. Holland and affiliates owned 103,158 shares
(3.6% 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 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. LIABILITIES
At September 30, 2006, the Fund had the following liabilities:
<Table>
Payable for capital shares repurchased............ $ 34,076
Investment Advisory fee payable................... 16,555
Directors' fee payable............................ 2,863
Administration fees payable....................... 8,278
Other payable and accrued expenses................ 42,045
--------
Total liabilities............................... $103,817
========
</Table>
13
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
September 30, 2006
- --------------------------------------------------------------------------------
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, 2006 aggregated
$1,338,704 and $5,571,579 respectively. Purchases and sales of U.S. Government
Securities, for the year ended September 30, 2006 aggregated $0 and $0
respectively.
8. 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.
9. CAPITAL SHARE TRANSACTIONS
As of September 30, 2006, 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
9/30/06 9/30/05
- -------------------------------------------------------------------------------
Shares Amount Shares Amount
- -------------------------------------------------------------------------------
Shares Sold 240,919 $ 3,709,697 184,026 $ 2,817,694
Shares Reinvested 39,458 612,233 59,640 909,358
-------- ------------ ---------- ------------
280,377 4,321,930 243,666 3,727,052
Shares Redeemed (710,431) (11,140,043) (1,120,645) (17,180,500)
-------- ------------ ---------- ------------
NET INCREASE/(DECREASE) (430,054) $ (6,818,113) (876,979) $(13,453,448)
======== ============ ========== ============
- -------------------------------------------------------------------------------
</Table>
10. INCOME TAXES
During the year ended September 30, 2006, the Fund utilized $1,333,315 of prior
year capital loss carry-forwards against net taxable capital gains. As of
September 30, 2006, the Fund has utilized all of its capital loss
carry-forwards.
14
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
September 30, 2006
- --------------------------------------------------------------------------------
10. INCOME TAXES (continued)
The components of net unrealized appreciation/ (depreciation) of investments
based on federal tax cost at September 30, 2006 for the Fund were as follows:
<Table>
<Caption>
- -----------------------------------------------------------------
Cost for Federal
Appreciation Depreciation Net Appreciation Tax Purposes
- -----------------------------------------------------------------
$6,854,337 $1,154,467 $5,699,870 $40,879,106
</Table>
As of September 30, 2006 the components of distributable earnings on a tax basis
were $156,350 for undistributed ordinary income and $1,559,158 of undistributed
long term gain.
The tax character of distributions paid during the year ended September 30, 2006
was $714,372 for distributions paid for ordinary income. The tax character of
distributions paid during the year ended September 30, 2005 of $1,125,010 was
distributions paid from ordinary income.
11. RECENT ACCOUNTING PRONOUNCEMENTS
In July 2006, the Financial Accounting Standards Board issued Interpretation No.
48, "Accounting for Uncertainty in Income Taxes -- an Interpretation of FASB
Statement No. 109" (the "Interpretation"). The Interpretation establishes for
all entities, including pass-through entities such as the Funds, a minimum
threshold for financial statement recognition of the benefit of positions taken
in filing tax returns (including whether an entity is taxable in a particular
jurisdiction), and requires certain expanded tax disclosures. The Interpretation
is effective for fiscal years beginning after December 15, 2006, and is to be
applied to all open tax years as of the date of effectiveness. Management has
recently begun to evaluate the application of the Interpretation to the Fund,
and is not in a position at this time to estimate the significance of its
impact, if any, on the Fund's financial statements.
In September 2006, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") 157, Fair Value Measurements, which
clarifies the definition of fair value and requires companies to expand their
disclosure about the use of fair value to measure assets and liabilities in
interim and annual periods subsequent to initial recognition. Adoption of SFAS
157 requires the use of the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction between market
participants at the measurement date. SFAS 157 is effective for financial
statements issued for fiscal years beginning after November 15, 2007, and
interim periods within those fiscal years. At this time, management is in the
process of reviewing the Standard against its current valuation policies to
determine future applicability.
15
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
- --------------------------------------------------------------------------------
To the Board of Directors
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") at September 30, 2006, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period 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 financial statements in accordance with the
standards of the Public Company Accounting Oversight Board (United States).
Those standards 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, 2006 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.
PricewaterhouseCoopers LLP
New York, New York
November 6, 2006
16
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - UNAUDITED INFORMATION
- --------------------------------------------------------------------------------
PROXY VOTING POLICIES
The Funds have filed with the Securities and Exchange Commission their proxy
voting records for the 12-month period ending June 30, 2006 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
Beginning December 31, 2004, a Portfolio of Investments will be 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
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
with out charge, upon request, by calling 1-800-30-HOLLAND.
APPROVAL OF CONTINUATION OF INVESTMENT ADVISORY AGREEMENT
GENERAL BACKGROUND. On May 11, 2006, the Board of Directors, including a
majority of the Independent Directors, approved renewal of the Fund's Advisory
Agreement with Holland and Company LLC (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 and the Salomon 10-Year Government Bond Index and the average returns of
all funds in the balanced funds category of Lipper Inc. (the "Lipper Performance
Universe") and of a group 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
17
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - UNAUDITED INFORMATION (continued)
- --------------------------------------------------------------------------------
selected by Lipper Inc with no input from the Adviser. The Directors also
reviewed a chart showing the large cap growth stock performance for the past
five years.
The Directors observed that the Fund's returns for the one-, three- and
five-year periods ended March 31, 2006 were less favorable than the returns of
these indexes and the average returns of these universes and peer groups.
However, 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 performed poorly in the past five-years, a period of
underperformance for the Fund. 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 redemption 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 1.5%. 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.
18
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - UNAUDITED INFORMATION (continued)
- --------------------------------------------------------------------------------
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
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) although the
Fund's advisory fee is higher than that paid by many other comparable funds, the
Fund's overall expense ratio is generally comparable to those of other funds
with similar investment objectives and similar asset sizes, and the investment
limitation appeared adequate to maintain that comparability; (v) the Fund's
performance appears unfavorable when compared to its relevant benchmarks and
other funds with similar investment objectives and similar asset sizes
reflecting the fact that the Fund's assets are concentrated in stocks that are
currently out of favor in the marketplace, but the Directors noted that the
performance of stock sectors is cyclical and that the Fund's investments may
return to favor in the future; (vi) the profitability of the Adviser for
providing services to the Fund appears reasonable; (vii) the Fund's expense
ratios 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; (viii) the Fund's small asset size limits the Fund's
potential to generate economies of scale; (ix) the lack of breakpoints in the
Fund's advisory fees is reasonable given the Fund's anticipated continued small
asset size; and (x) although the Fund has experienced substantial redemptions,
there remains a substantial core of investors who wish to remain with the Fund
and the Adviser.
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
19
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - UNAUDITED INFORMATION (continued)
- --------------------------------------------------------------------------------
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, 2006. The amounts shown may differ from those elsewhere in this
report due to differences between tax and financial reporting requirements. In
January 2007, shareholders will receive Form 1099-DIV which will include their
share of qualified dividends, and capital gains distributed during the calendar
year 2006. 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 72.10% of ordinary income dividends as
income qualifying for dividends received deduction for the fiscal year ended
September 30, 2006.
Under Section 854(b)(2) of the Internal Revenue Code, the Holland Balanced Fund
designates $533,235 as qualified dividends received by the Fund for the fiscal
year ended September 30, 2006.
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, distribution (12b-1) 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, 2006.
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 Funds and other funds. To do so, compare the 5%
20
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - UNAUDITED INFORMATION (continued)
- --------------------------------------------------------------------------------
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES (continued)
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, 2006
- ----------------------------------------------------
Value of a
$1,000 Expenses*
Investment at Paid During
Actual End of Period the Period
- ----------------------------------------------------
$1,052.47 $7.72
</Table>
<Table>
<Caption>
- ----------------------------------------------------
For the Six Months Ended September 30, 2006
- ----------------------------------------------------
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 Funds' 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.
21
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - DIRECTORS AND OFFICERS (UNAUDITED)
- --------------------------------------------------------------------------------
<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 Chairman and
375 Park Avenue Chairman of L.L.C., Chairman, Trustee,
New York, NY 10152 the Board, Elected: 9/95 1995 - present. Scottish
President and Widows
Age: 62 Treasurer Investment
Partnership
Trust;
Trustee,
State Street
Master Funds
and State
Street
Institutional
Investment
Trust; and
Director,
China Fund,
Inc. and
Reaves
Utility
Income Fund.
INDEPENDENT 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, 1996 - Offshore,
Age: 69 Present; Inc.
Herbert S. Winokur, Jr. Director Term: Unlimited Chairman and Chief 1 Director,
Capricorn Holdings, Inc. Executive Officer, Mrs. Fields
30 East Elm Street Elected: 9/95 Capricorn Holdings, Famous
Greenwich, CT 06830 Inc. (Investment Brands, Inc.;
Company), Managing Director, CCC
Age: 61 General Partner, Information
Capricorn Investors, Services
L.P., Capricorn Group, Inc.;
Investors II, L.P., and Director,
Capricorn Investors NATCO
III, L.P., Group, Inc.
1987 - present.
Desmond G. FitzGerald Director Term: Unlimited Chairman, North 1 Chairman,
375 Park Avenue American Properties U.S.
New York, NY 10152 Elected: 9/95 Group (Real Estate), Guaranteed
1987 - present. Finance
Age: 61 Corp.;
Advisory
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
Apartment 25C Elected: 9/95 Services), 1981 -
145 Central Park West present.
New York, NY 10023
Age: 61
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 Vice 1997 - 1999. Governors of
Chief President: 5/02 Tufts-New
Age: 70 Compliance England
Officer Elected Chief Medical
Compliance Center
Officer: 9/04
Julie A. Tedesco Secretary Term: Vice President and -- --
One Federal Street Indefinite Senior Counsel of
Boston, MA 02110 State Street Bank and
Elected: 5/02 Trust Company (2000 -
Age: 48 present).
</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.
22
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.
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 LLP
One International Place
Boston, MA 02110
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
PricewaterhouseCoopers LLP
300 Madison Avenue
New York, NY 10017
- ------------------------------------
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. AUDIT COMMITTEE FINANCIAL EXPERT
(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
(a) Audit Fees
For the fiscal years ending September 30, 2006 and September 30, 2005,
the aggregate audit fees billed for professional services rendered by
PricewaterhouseCoopers ("PwC"), the Fund's principal accountant, for
the audit of the Fund's annual financial statements and services
normally provided by PwC in connection with the Fund's statutory and
regulatory filings or engagement were $47,000 and $37,000,
respectively.
(b) Audit-Related Fees
For the fiscal years ending September 30, 2006 and September 30, 2005,
there were no fees for assurance and related services by PwC
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 years ending September 30, 2006 and September 30, 2005,
the aggregate tax fees billed for professional services rendered by
PwC for tax compliance, tax advice, and tax planning were $4,700 and
$3,700, respectively. Services included the review of income and
excise tax returns for the Fund.
(d) All Other Fees
For the fiscal years ending September 30, 2006 and September 30, 2005,
there were no fees billed for professional services rendered by PwC
for products and services provided by PwC, other than the services
reported in (a) through (c).
For the fiscal years ended September 30, 2006 and September 30, 2005,
there were no fees billed for professional services rendered by PwC
for products and services provided by PwC 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 years ending September 30, 2006 and September 30, 2005,
the aggregate non-audit fees billed by PwC 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, respectively.
(h) Not applicable.
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.
(a)(3) Not applicable
(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: December 6, 2006
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
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Michael Holland
President and Treasurer of
Holland Series Fund, Inc.
Date: December 6, 2006