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.
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(Exact name of registrant as specified in charter)
375 PARK AVENUE
NEW YORK, NEW YORK 10152
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(Address of principal executive offices)(Zip code)
(Name and Address of Agent for Service) Copy to:
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, 2007
ITEM 1: SHAREHOLDER REPORT
[PICTURE]
- ----------------------------
<Table>
CONTENTS
Letter from the President.. 2
Cumulative Performance..... 3
Management Discussion of
Fund Performance and
Notes to Performance..... 4
Statement of Net Assets.... 6
Statement of Operations.... 9
Statements of Changes in
Net Assets............... 10
Financial Highlights....... 11
Notes to Financial
Statements............... 12
Report of Independent
Registered Public
Accounting Firm.......... 18
Unaudited Information...... 19
Directors and Officers..... 24
</Table>
Holland Series Fund, Inc.
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Holland Balanced Fund - LETTER FROM THE PRESIDENT
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September 30, 2007
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Dear Fellow Shareholders:
Our Fund's cumulative total return since inception (October 2, 1995 through
September 30, 2007) is 120.68%. For the twelve months ended September 30, 2007,
our Fund's total return is 11.33%.
We have continued to enjoy a more positive environment for our blue chip
companies-both in their profit results and in the stock market. Furthermore, our
investee companies' managements are acknowledging a continuing positive outlook
as worldwide economic growth persists.
(M. HOLLAND PHOTO)
As our Fund's largest individual shareholder, I have been pleased by our Fund's
performance during the recent challenging period.
With Bullish Regards,
/s/ Michael F. Holland
Michael F. Holland
President and Founder
Performance data quoted represents past performance. Past performance does not
guarantee future results. All performance assumes reinvestment of dividends and
capital gains. The investment return and principal value of an investment will
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than their original cost. Current performance may be lower or higher than the
performance data quoted. Performance data current to the most recent month-end
may be obtained by calling: 1-800-304-6552.
Holland Series Fund, Inc.
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Holland Balanced Fund - CUMULATIVE PERFORMANCE
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September 30, 2007
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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, 90 Day US Treasury Bill and
the Lipper Balanced Fund Index on October 2, 1995. The cumulative and annualized
total return figures and the information in the graph represent past performance
and are not indicative of future results. The total returns reflect changes in
price of the Fund's shares and assume that any income dividends and/or capital
gain distributions made by the Fund during the period were reinvested in
additional shares of the Fund. Investment return and principal value of an
investment will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. FUND ANNUAL OPERATING EXPENSES
GROSS OF ADVISORY FEE WAIVERS AS OF OCTOBER 31, 2007 IS 1.66%.
(LINE GRAPH)
INVESTMENT PERFORMANCE
For the Periods Ended September 30, 2007
<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) 11.33% 8.67% 4.51% 55.50% 6.82% 120.68%
Lipper Balanced Fund
Index (b) 13.19% 11.76% 6.42% 86.32% 8.31% 160.64%
Standard & Poor's 500
Index (b) 14.29% 13.36% 4.89% 61.17% 8.33% 161.25%
90 Day US Treasury Bill
(b) 4.79% 2.85% 3.59% 42.27% 3.85% 57.45%
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</Table>
3
Holland Series Fund, Inc.
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Holland Balanced Fund - MANAGEMENT DISCUSSION OF
FUND PERFORMANCE
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September 30, 2007
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Since inception (October 2, 1995 through September 30, 2007), our Fund's total
return was 120.68% compared to 160.64% 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,
2007, our Fund's total return was 11.33% compared to 13.19% for the Lipper
Index.
Our Fund's concentration in the equities of the largest and highest quality
companies continued to be rewarded during the period. Our higher quality fixed
income holdings (U.S. Treasury's) have begun to outperform some riskier portions
of the bond market.
Our portfolio composition by sector, which is detailed below, was positively
affected by our Energy exposure, as well as our Technology investments. We
experienced positive results in our large capitalization holdings compared with
small and medium sized companies, the first time that has occurred in several
years.
Portfolio composition by sector
(AS A % OF TOTAL NET ASSETS) - UNAUDITED
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(LINE GRAPH)
4
Holland Series Fund, Inc.
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Holland Balanced Fund - MANAGEMENT DISCUSSION OF
FUND PERFORMANCE (continued)
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NOTES TO PERFORMANCE
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(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 90-Day U.S. Treasury Bill rate is the average return on
three month U.S. Treasury Bills. The Standard & Poor's 500 Index is
unmanaged and does not reflect the actual cost of investing in the
instruments that comprise each index.
5
Holland Series Fund, Inc.
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Holland Balanced Fund - STATEMENT OF NET ASSETS
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<Table>
<Caption>
September 30, 2007 Shares Value(+)
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COMMON STOCKS-67.4%
COMPUTERS-3.4%
International Business Machines Corp. 12,800 $ 1,507,840
----- -----
ELECTRONICS-9.9%
3M Co. 23,700 2,217,846
Intel Corp. 83,800 2,167,068
----- -----
4,384,914
----- -----
ENTERTAINMENT & LEISURE-4.7%
The Walt Disney Co. 61,000 2,097,790
----- -----
FINANCIAL-8.8%
American Express Co. 35,000 2,077,950
Citigroup, Inc. 22,500 1,050,075
JPMorgan Chase & Co. 17,000 778,940
----- -----
3,906,965
----- -----
FOOD & BEVERAGES-4.7%
PepsiCo, Inc. 28,500 2,087,910
----- -----
INSURANCE-2.9%
Berkshire Hathaway, Inc. Class A* 11 1,303,610
----- -----
OIL/GAS-10.2%
Exxon Mobil Corp. 24,300 2,249,208
Schlumberger, Ltd. 21,700 2,278,500
----- -----
4,527,708
----- -----
PHARMACEUTICALS-5.3%
Johnson & Johnson 28,500 1,872,450
Pfizer, Inc. 20,000 488,600
----- -----
2,361,050
----- -----
PRODUCER GOODS-5.3%
General Electric Co. 56,900 2,355,660
----- -----
RETAIL-3.5%
Home Depot, Inc. 21,000 681,240
Wal-Mart Stores, Inc. 20,000 873,000
----- -----
1,554,240
----- -----
SOFTWARE-4.6%
Microsoft Corp. 68,400 2,015,064
----- -----
TELECOMMUNICATIONS-4.1%
Comcast Corp. Class A* 75,000 1,813,500
----- -----
Total Common Stocks
(Cost-$21,306,921) 29,916,251
----- -----
</Table>
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See Accompanying Notes to Financial Statements
6
Holland Series Fund, Inc.
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Holland Balanced Fund - STATEMENT OF NET ASSETS (continued)
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<Table>
<Caption>
September 30, 2007 Principal Value(+)
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U.S. GOVERNMENT SECURITIES-28.3%
U.S. TREASURY NOTES-28.3%
United States Treasury Note, 5.000%
due 2/15/11 $4,000,000 $ 4,120,312
United States Treasury Note**, 3.500%
due 1/15/11 8,078,535 8,430,711
----- -----
Total U.S. Government Securities
(Cost-$12,165,830) 12,551,023
----- -----
REPURCHASE AGREEMENT-4.2%
State Street Bank and Trust Co.
Repurchase Agreement, 2.10% due
10/01/07 in the amount of
$1,858,325; issued 9/28/07
(Collateralized by $1,840,000,
FNMA, 6.00% due 5/15/08 with a
market value of $1,897,748)
(Cost $-1,858,000) 1,858,000 1,858,000
----- -----
Total Investments-99.9%
(Cost-$35,330,751) 44,325,274
----- -----
OTHER ASSETS IN EXCESS OF
LIABILITIES-0.1% 22,295
----- -----
NET ASSETS-100%
Applicable to 2,550,004 outstanding
$0.01 par value shares (authorized
1,000,000,000) $44,347,569
===== =====
Net asset value, offering price and
redemption price per share $ 17.39
===== =====
</Table>
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See Accompanying Notes to Financial Statements
7
Holland Series Fund, Inc.
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Holland Balanced Fund - STATEMENT OF NET ASSETS (concluded)
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<Table>
<Caption>
September 30, 2007
- ----------------------------------------------------------------
COMPONENTS OF NET ASSETS AS OF SEPTEMBER 30, 2007
Capital stock at par value ($0.01) $ 25,500
Capital stock in excess of par value 34,230,455
Undistributed net investment income 109,873
Net accumulated realized gain on investments in
securities 987,218
Net unrealized appreciation on investments in
securities 8,994,523
-----------
Net Assets $44,347,569
===========
</Table>
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See Accompanying Notes to Financial Statements.
* Non-income producing
** Treasury Inflation-Protection Security (TIPS)
+ See Note 2 to Financial Statements
FNMA-Federal National Mortgage Association
8
Holland Series Fund, Inc.
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Holland Balanced Fund - STATEMENT OF OPERATIONS
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<Table>
<Caption>
Year Ended September 30, 2007
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INVESTMENT INCOME:
Interest $ 751,056
Dividends 538,776
Other income 5,085
----------
Total investment income 1,294,917
----------
EXPENSES:
Investment advisory fees (Note 3) 342,238
Administration and custody fees (Note 4) 144,266
Transfer agent fees 89,246
Audit fees 46,599
Shareholder reports 44,543
Directors' fees 31,337
Insurance fees 22,886
Registration fees 21,586
Legal fees 8,306
Miscellaneous expenses 5,618
----------
Total operating expenses 756,625
Waiver of investment advisory fee (Note 3) (72,150)
----------
Net Expenses 684,475
----------
Net investment income 610,442
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments 1,064,205
Net change in unrealized appreciation 3,217,666
----------
Net realized and unrealized gain on investments 4,281,871
----------
Net increase in net assets resulting from
operations $4,892,313
==========
</Table>
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See Accompanying Notes to Financial Statements.
9
Holland Series Fund, Inc.
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Holland Balanced Fund - STATEMENTS OF CHANGES IN NET ASSETS
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<Table>
<Caption>
Year Ended Year Ended
September 30, September 30,
2007 2006
- -------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS:
Net investment income $ 610,442 $ 748,349
Net realized gain 1,064,205 2,892,473
Net change in unrealized appreciation on
investments 3,217,666 28,331
----------- -----------
Increase in net assets from operations 4,892,313 3,669,153
----------- -----------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income (656,920) (714,372)
Net realized gains (1,559,157) -
CAPITAL SHARE TRANSACTIONS, NET (NOTE 9) (4,919,276) (6,818,113)
----------- -----------
Decrease in net assets (2,243,040) (3,863,332)
----------- -----------
NET ASSETS:
Beginning of year 46,590,609 50,453,941
----------- -----------
End of year $44,347,569 $46,590,609
=========== ===========
UNDISTRIBUTED NET INVESTMENT INCOME, END
OF YEAR $ 109,873 $ 156,350
=========== ===========
</Table>
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See Accompanying Notes to Financial Statements.
10
Holland Series Fund, Inc.
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Holland Balanced Fund - FINANCIAL HIGHLIGHTS
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<Table>
<Caption>
For a capital share Year Ended Year Ended Year Ended Year Ended Year Ended
outstanding September 30, September 30, September 30, September 30, September 30,
throughout each year 2007 2006 2005 2004 2003
- -----------------------------------------------------------------------------------------------------------
PER SHARE DATA
Net asset value, beginning
of year $ 16.38 $ 15.41 $ 15.04 $ 14.50 $ 12.78
------- ------- ------- ------- -------
INCREASE FROM INVESTMENT
OPERATIONS:
Net investment income 0.23 0.25 0.29 0.21 0.17
Net realized and unrealized
gain on investments 1.58 0.95 0.38 0.53 1.72
------- ------- ------- ------- -------
Total income from
operations 1.81 1.20 0.67 0.74 1.89
------- ------- ------- ------- -------
LESS DIVIDENDS AND
DISTRIBUTIONS FROM:
Net investment income (0.24) (0.23) (0.30) (0.20) (0.17)
Net realized gain on
investments (0.56) -- -- -- --
------- ------- ------- ------- -------
Total dividends and
distributions (0.80) (0.23) (0.30) (0.20) (0.17)
------- ------- ------- ------- -------
Net asset value, end of year $ 17.39 $ 16.38 $ 15.41 $ 15.04 $ 14.50
======= ======= ======= ======= =======
TOTAL RETURN 11.33%(a) 7.90%(a) 4.48% 5.12% 14.87%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year
(000's) $44,348 $46,591 $50,454 $62,422 $60,928
Ratio of expenses to average
net assets before fee
waivers and reimbursement
of other expenses 1.66% 1.71% 1.45% 1.33% 1.46%
Ratio of expenses to average
net assets after fee
waivers and reimbursement
of other expenses 1.50% 1.50% 1.45% 1.33% 1.46%
Ratio of net investment
income to average net
assets after fee waivers
and reimbursement of other
expenses 1.34% 1.57% 1.89% 1.42% 1.21%
Portfolio turnover 1.22% 2.94% 7.60% 8.89% 9.92%
</Table>
- --------------------------------------------------------------------------------
See Acoompanying Notes to Financial Statements
(a) Total return would have been lower had certain expenses not been waived or
reimbursed.
11
Holland Series Fund, Inc.
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Holland Balanced Fund - NOTES TO FINANCIAL STATEMENTS
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September 30, 2007
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1. ORGANIZATION
The Holland Series Fund, Inc. (the "Company") was organized as a Maryland
corporation on June 26, 1995 and is registered under the Investment Company Act
of 1940, as amended (the "1940 Act"), as an open-end, management investment
company. The Company currently has one portfolio, the Holland Balanced Fund (the
"Fund").
Investment Objective
The Fund is designed to provide investors with a convenient and professionally
managed vehicle for seeking a high total investment return. Total investment
return is the aggregate of dividend and interest income and realized and
unrealized capital gains/losses on investments, less expenses. The Fund seeks to
achieve its objective through a combined portfolio of equity and investment
grade fixed-income securities.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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.
12
Holland Series Fund, Inc.
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Holland Balanced Fund - NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
September 30, 2007
- --------------------------------------------------------------------------------
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 by or under the direction of 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, 2007, the Investment Adviser waived $72,150 in advisory fees. The
Investment Advisor is voluntarily waiving a portion of its fee. The Investment
Adviser is controlled by Michael F. Holland, its managing member and owner of
99% interest in the Investment Adviser.
13
Holland Series Fund, Inc.
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Holland Balanced Fund - NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
September 30, 2007
- --------------------------------------------------------------------------------
3. INVESTMENT ADVISORY AGREEMENT (continued)
As of September 30, 2007, Michael F. Holland and affiliates owned 108,010 shares
(4.24% of the shares outstanding) of the Fund.
4. ACCOUNTING, CUSTODY,
ADMINISTRATION AND DISTRIBUTION AGREEMENTS
State Street Bank and Trust Company ("State Street"), pursuant to its
Administration Agreement, provides or arranges for the provision of, certain
administrative and accounting services for the Company, including maintaining
the books and records of the Company, and preparing certain reports and other
documents required by federal and /or state laws and regulations. For these
services, the Company pays State Street a fee at the annual rate of 0.10% of the
Fund's average daily net assets up to $100 million, 0.08% of the next $100
million, and 0.06% of those assets in excess of $200 million, subject to certain
minimum requirements, and reimbursement for out-of-pocket expenses pursuant to
the Administration Agreement. Pursuant to the Administration Agreement, the
Administrator is entitled to a minimum fee of $7,500 per month unless waived by
the Administrator. State Street also serves as the Fund's custodian and
accounting agent. Fees paid for custody and accounting services rendered by
State Street are based upon assets of the Fund and on transactions entered into
by the Fund during the period and are included in the administration and custody
fees in the Statement of Operations.
Alps Distributors Inc. pursuant to a distribution agreement with the Fund
provides distribution of the Fund's shares. The Investment 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, 2007, the Fund had the following liabilities:
<Table>
Payable for Capital Shares repurchased.......... $ 8,306
Investment Advisory fee payable................. 21,277
Directors fee payable........................... 4,846
Administration and custody fees payable......... 17,353
Other payable and accrued expenses.............. 46,467
-------
Total liabilities............................. 98,249
=======
</Table>
14
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
September 30, 2007
- --------------------------------------------------------------------------------
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, 2007 aggregated
$529,810 and $5,039,314 respectively. Purchases and sales of U.S. Government
Securities, for the year ended September 30, 2007 aggregated $0 and $1,208,077
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, 2007, 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
9/30/07 9/30/06
- -----------------------------------------------------------------------------
Shares Amount Shares Amount
- -----------------------------------------------------------------------------
Shares Sold 116,494 $ 1,937,924 240,919 $ 3,709,697
Shares Reinvested 114,317 1,906,912 39,458 612,233
-------- ----------- -------- ------------
230,811 3,844,836 280,377 4,321,930
Shares Redeemed (525,014) (8,764,112) (710,431) (11,140,043)
-------- ----------- -------- ------------
NET DECREASE (294,203) $(4,919,276) (430,054) $ (6,818,113)
======== =========== ======== ============
- -----------------------------------------------------------------------------
</Table>
15
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
September 30, 2007
- --------------------------------------------------------------------------------
10. INCOME TAXES
The components of net unrealized appreciation/ (depreciation) of investments
based on federal tax cost at September 30, 2007 for the Fund were as follows:
<Table>
<Caption>
- ---------------------------------------------------------------------
Cost for Federal
Appreciation Depreciation Net Appreciation Tax Purposes
- ---------------------------------------------------------------------
$9,560,332 $591,471 $8,968,861 $35,356,413
</Table>
As of September 30, 2007 the components of distributable earnings on a tax basis
were $109,873 for undistributed ordinary income and $1,012,881 of undistributed
long term gain.
The tax character of distributions paid during the year ended September 30, 2007
was $656,919 for distributions paid for ordinary income and $1,559,158 for long
term capital gains. The tax character of distributions paid during the year
ended September 30, 2006 of $714,372 was for 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. Recent SEC
guidance allows implementing FIN 48 in fund NAV calculations as late as the
Fund's NAV calculation in the first required financial statement reporting
period. As a result, the Fund will adopt FIN 48 in it's semi-annual report on
March 31, 2008. 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 to 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 the
process of reviewing the Standard against its current valuation policies to
determine future applicability.
16
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
September 30, 2007
- --------------------------------------------------------------------------------
12. CHANGE IN INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
On February 7, 2007, Pricewaterhouse Coopers ("PwC") was replaced as independent
registered public accounting firm of the Fund, and Briggs, Bunting and
Dougherty, LLP was selected as the Fund's new registered public accounting firm.
The Fund's selection of Briggs, Bunting and Dougherty, LLP as its registered
public accounting firm was approved by the Fund's Audit Committee and by the
Fund's Board of Directors.
PwC's reports on the Fund's financial statements for the fiscal years ended
September 30, 2006 and 2005 did not contain an adverse opinion or a disclaimer
of opinion, and were not qualified or modified as to uncertainty, audit scope or
accounting principles. During such fiscal years, and through the date of PwC's
replacement, there were no disagreements, between the Fund and PwC on any matter
of accounting principles or practices, financial statement disclosure, or
auditing scope or procedures, which disagreements, if not resolved to the
satisfaction of PwC, would have caused it to make reference to the subject
matter of the disagreements in connection with its reports on the financial
statements for such years.
17
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE BOARD OF DIRECTORS OF HOLLAND SERIES FUND, INC. AND THE SHAREHOLDERS OF
HOLLAND BALANCED FUND
We have audited the accompanying statement of net assets of the Holland Balanced
Fund, a series of share of Holland Series Fund, Inc., as of September 30, 2007,
and the related statements of operations and changes in net assets and the
financial highlights for the year then ended. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit. The statement of changes in net assets
for the year ended September 30, 2006 and the financial highlights for each of
the four years through September 30, 2006 were audited by other auditors whose
report dated November 6, 2006 expressed an unqualified opinion on such financial
statement and financial highlights.
We conducted our audit 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 and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of September 30, 2007 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Holland Balanced Fund as of September 30, 2007, the results of its operations,
changes in its net assets and its financial highlights for the year then ended,
in conformity with accounting principles generally accepted in the United States
of America.
/s/ BRIGGS, BUNTING & DOUGHERTY, LLP
BRIGGS, BUNTING & DOUGHERTY, LLP
PHILADELPHIA, PENNSYLVANIA
OCTOBER 30, 2007
18
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, 2007 on Form N-PX, which
must be filed each year by August 31. Once filed, the most recent Form N-PX will
be available without charge, upon request, by calling 1-800-30-HOLLAND or on the
Securities and Exchange Commission's website at http://www.sec.gov.
QUARTERLY PORTFOLIO OF INVESTMENTS
A Portfolio of Investments is filed as of the end of the first and third quarter
of each fiscal year on Form N-Q and is available on the Security Exchange
Commission's website at http://www.sec.gov. Additionally, the Portfolio of
Investments may be reviewed and copied at the 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 21, 2007, the Board of Directors, including all 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 1940 Act 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
does not provide asset management services to any other clients other than the
Fund and thus devotes substantially all of its research and resources to
managing the Fund.
In reviewing the quality of services provided to the Fund, the Directors
reviewed the performance of the Fund compared with the returns of the S&P 500
Index, the Citigroup Treasury and Government 10+Year Sector Index, the Lipper
Balanced Fund Index and the average returns of all funds in the balanced funds
category of Lipper Inc. (the "Lipper Performance Universe") and of a group
balanced funds
19
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - UNAUDITED INFORMATION (continued)
- --------------------------------------------------------------------------------
APPROVAL OF CONTINUATION OF INVESTMENT ADVISORY AGREEMENT (continued)
considered to be comparable to the Fund by Lipper Inc. (the "Lipper Performance
Group"). The funds comprising the Lipper Performance Universe and the Lipper
Performance Group had been selected by Lipper Inc. with no input from the
Adviser. The Directors observed that the Fund's returns for the one- and three-
year periods ended March 31, 2007 exceeded the return of the Citigroup Treasury
and Government 10+ Year Sector Index while its returns for the one-, three- and
five-year periods ended March 31, 2007 were less favorable than the returns of
the other indices and the average returns of the 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 six-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 out-performance, or to avoid
underperformance, in a particular asset category. They noted that such an
approach might generally be expected to lead to periods of underperformance and
that the Fund is intended as a long-term investment.
The Directors noted that, although there had been a number of redemptions in
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, after expense limitation, 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.
20
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - UNAUDITED INFORMATION (continued)
- --------------------------------------------------------------------------------
APPROVAL OF CONTINUATION OF INVESTMENT ADVISORY AGREEMENT (continued)
The Directors discussed in detail the analysis presented regarding the Adviser's
profitability. The Directors determined that the Adviser's profitability
appeared reasonable.
The Directors observed 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 net 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, at least in part, the fact that the Fund's assets are concentrated
in stocks have been 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 the
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
21
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - UNAUDITED INFORMATION (continued)
- --------------------------------------------------------------------------------
APPROVAL OF CONTINUATION OF INVESTMENT ADVISORY AGREEMENT (continued)
apparent commitment to the Fund, shareholders appear satisfied with the level of
fees charged by the Adviser to access Mr. Holland's expertise and judgment.
In light of the information presented to them and the other factors described
above, the Directors concluded, in the exercise of their business judgment, that
the fee paid by the Fund under the Advisory Agreement generally appeared
reasonable and voted to approve the continuation of the Agreement for the coming
year.
FEDERAL TAX INFORMATION
Certain tax information for the Fund is required to be provided to shareholders
based on the Fund's income and distributions for the taxable year ended
September 30, 2007. The amounts shown may differ from those elsewhere in this
report due to differences between tax and financial reporting requirements. In
January 2008, shareholders will receive Form 1099-DIV which will include their
share of qualified dividends, and capital gains distributed during the calendar
year 2007. 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 81.73% of ordinary income dividends as
income qualifying for dividends received deduction for the fiscal year ended
September 30, 2007.
Under Section 854(b)(2) of the Internal Revenue Code, the Holland Balanced Fund
designates $518,851 as qualified dividends received by the Fund and $1,559,158
for long term capital gains, for the fiscal year ended September 30, 2007.
SHAREHOLDER EXPENSES
As a shareholder of the Fund, you incur ongoing costs, including management
fees, and other Fund expenses. This example is intended to help you understand
your ongoing costs of investing in the Fund and to compare these costs with the
ongoing costs of investing in other mutual funds. It is based on an investment
of $1,000 invested at the beginning of the period and held for the entire six-
month period ended September 30, 2007.
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
22
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - UNAUDITED INFORMATION (continued)
- --------------------------------------------------------------------------------
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES (continued)
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.
<Table>
<Caption>
- --------------------------------------------------------
For the Six Months Ended September 30, 2007
- --------------------------------------------------------
Value of a
$1,000 Expenses*
Investment at Paid During
Actual End of Period the Period
- --------------------------------------------------------
$1,089.56 $7.86
</Table>
<Table>
<Caption>
- --------------------------------------------------------
For the Six Months Ended September 30, 2007
- --------------------------------------------------------
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.
23
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - DIRECTORS AND OFFICERS (UNAUDITED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
NUMBER OF
PORTFOLIOS IN OTHER
NAME, POSITION(S) TERM OF OFFICE FUND COMPLEX DIRECTORSHIPS
ADDRESS, HELD WITH AND LENGTH OF PRINCIPAL OCCUPATION OVERSEEN BY HELD BY
AND AGE FUND TIME SERVED DURING PAST FIVE YEARS DIRECTOR DIRECTOR
- ----------------------------------------------------------------------------------------------------------
INTERESTED DIRECTOR:
Michael F. Director, Term: Unlimited Holland & Company 1 Chairman and
Holland Chairman of the Elected: 9/95 L.L.C., Chairman, 1995 - Trustee,
375 Park Board, President present. Scottish Widows
Avenue and Treasurer Investment
New York, Partnership
NY 10152 Trust; Trustee,
Age: 63 State Street
Master Funds and
State Street
Institutional
Investment
Trust; and
Director, The
China Fund,
Inc., The Taiwan
Fund, Inc. and
Reaves Utility
Income Fund.
INDEPENDENT DIRECTORS:
Sheldon S. Director Term: Unlimited Union Bancaire Privee 1 Director,
Gordon Elected: 9/95 International Holdings, Ametek, Inc. and
630 Fifth Inc. (Financial Director,
Avenue Services), Chairman, Gulfmark
Suite 2710 1996 - Present; Offshore, Inc.
New York,
NY 10111
Age: 71
Herbert S. Director Term: Unlimited Chairman and Chief 1
Winokur, Elected: 9/95 Executive Officer,
Jr. Capricorn Holdings, Inc.
Capricorn (Investment Company),
Holdings, Managing General
Inc. Partner, Capricorn
30 East Elm Investors, L.P.,
Street Capricorn Investors II,
Greenwich, L.P., Capricorn
CT 06830 Investors III, L.P.,
Age: 63 1987 - present.
Desmond G. Director Term: Unlimited Chairman, North American 1 Chairman, U.S.
FitzGerald Elected: 9/95 Properties Group (Real Guaranteed
375 Park Estate), Finance Corp.;
Avenue 1987 - present. Advisory
New York, Director, Bank
NY 10152 of New York;
Age: 63 Director,
Hilliard Farber
& Co., Inc.; and
Trustee,
Williams Capital
Management
Trust.
Jeff C. Director Term: Unlimited Chairman, Junction 1 None
Tarr Elected: 9/95 Advisors (Financial
Junction Services), 1981 -
Advisors present.
Apartment
25C
145 Central
Park West
New York,
NY 10023
Age: 63
OFFICERS:
Tana Vice President Term: Unlimited Consultant to Holland & -- Member of the
Tselepis Chief Compliance Elected Vice Company, LLC, 1997 - Board of
375 Park Officer President: 5/02 1999. Governors of
Avenue Elected Chief Tufts-New
New York, Compliance England Medical
NY 10152 Officer: 9/04 Center
Age: 72
Julie A. Secretary Term: Indefinite Vice President and -- --
Tedesco Elected: 5/02 Senior Counsel of State
One Federal Street Bank and Trust
Street Company (2000 -
Boston, MA present).
02110
Age: 50
</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.
24
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
ADVISER
Holland & Company L.L.C.
375 Park Avenue
New York, NY 10152
email mike@thehollandfund.com
website www.thehollandfund.com
FUND ADMINISTRATOR,
CUSTODIAN AND FUND
ACCOUNTING AGENT
State Street Bank and Trust Co.
2 Lafayette Avenue
Boston, MA 02111
DISTRIBUTOR
ALPS Distributors, Inc.
1290 Broadway, Suite 1100
Denver, CO 80203
TRANSFER AGENT & DIVIDEND
DISBURSING AGENT
ALPS Mutual Fund Services, Inc.
1290 Broadway, Suite 1100
Denver, CO 80203
LEGAL COUNSEL
Ropes & Gray LLP
One International Place
Boston, MA 02110
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Briggs, Bunting & Dougherty, LLP
Two Penn Center Plaza, Suite 820
Philadelphia, PA 19102
- ---------------------
Holland & Company L.L.C.
375 Park Avenue
New York, New York 10152
Phone 800-30-HOLLAND
Email mike@thehollandfund.com
Website www.thehollandfund.com
This report has been prepared for the
Holland Balanced Fund's Shareholders
and may be distributed to others only
if preceded or accompanied by a prospectus.
ITEM 2. CODE OF ETHICS
(a) Holland Series Fund, Inc. (the "Fund") adopted a Code of Ethics for
Principal Executive and Senior Financial Officers (the "Code of Ethics") on
November 6, 2003.
(c) There have been no amendments to the Fund's Code of Ethics since its
adoption.
(d) There have been no waivers granted by the Fund to individuals covered by the
Fund's Code of Ethics since its adoption.
(f) A copy of the Fund's Code of Ethics has been posted on
www.hollandbalancedfund.com, the Fund's website.
ITEM 3. CODE OF ETHICS
(a)(1) The Board of Directors of the Fund has determined that the Fund has one
Board member serving on the Fund's Audit Committee that possess the attributes
identified in Instructions 2(b) of Item 3 to Form N-CSR to qualify as an "audit
committee financial expert."
(2) Desmond G. FitzGerald 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
The Fund changed independent registered public accounting firms for the fiscal
year ended September 30, 2007.
(a) Audit Fees
For the fiscal year ending September 30, 2007, the aggregate audit
fees billed for professional services rendered by Briggs, Bunting &
Dougherty ("Briggs, Bunting"), the Fund's principal accountant, for
the audit of the Fund's annual financial statements and services
normally provided by Briggs, Bunting in connection with the Fund's
statutory and regulatory filings or engagement were $18,000.
For the fiscal year ending September 30, 2006, 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.
(b) Audit-Related Fees
For the fiscal year ending September 30, 2007, there were no fees
for assurance and related services by Briggs, Bunting reasonably
related to the performance of the audit of the Fund's financial
statements that were not reported under (a) of this Item.
For the fiscal year ending September 30, 2006, 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 year ending September 30, 2007, the aggregate tax
fees billed for professional services rendered by Brigg, Bunting for
tax compliance, tax advice, and tax planning were $2,500. Services
included the review of income and excise tax returns for the Fund.
For the fiscal year ending September 30, 2006, the aggregate tax
fees billed for professional services rendered by PwC for tax
compliance, tax advice, and tax planning were $4,700. Services
included the review of income and excise tax returns for the Fund.
(d) All Other Fees
For the fiscal year ending September 30, 2007, there were no fees
billed for professional services rendered by Briggs, Bunting for
products and services provided by Briggs, Bunting, other than the
services reported in (a) through (c).
For the fiscal year ended September 30, 2007, there were no fees
billed for professional services rendered by Briggs, Bunting for
products and services provided by Briggs, Bunting to Holland &
Company, L.L.C. (the "Adviser") and any entity controlling,
controlled by, or under common control with the Adviser that
provides ongoing services to the Fund that (i) relate directly to
the operations and financial reporting of the Fund and (ii) were
pre-approved by the Fund's audit committee.
For the fiscal year ending September 30, 2006, 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 year ended September 30, 2006, 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 year ending September 30, 2007, the aggregate
non-audit fees billed by Briggs, Bunting for services rendered to
the Fund and Holland & Company, L.L.C. (the "Adviser") and any
entity controlling, controlled by, or under common control with the
Adviser that provided ongoing services to the Fund were $0.
For the fiscal year ending September 30, 2006, 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.
(h) Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not applicable to the Registrant.
ITEM 6. SCHEDULE OF INVESTMENTS
Schedule of Investments is included as part of Item 1 of the Form N-CSR.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable to the Registrant.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable to the Registrant.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable to the Registrant.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were no materials changes to the procedures by which shareholders may
recommend nominees to the Fund's Board of Directors.
ITEM 11. CONTROLS AND PROCEDURES.
(a) Within 90 days of the filing date of this Form N-CSR, Michael Holland, the
Fund's President and Treasurer, reviewed the registrant's disclosure controls
and procedures (the "Procedures") and evaluated their effectiveness. Based on
his review, Mr. Holland determined that the Procedures adequately ensure that
information required to be disclosed by the Fund in its periodic reports is
recorded, processed, summarized and reported within the time periods required by
the Securities and Exchange Commission's rules and regulations.
(b) There were no significant changes in the Fund's internal controls or in
other factors that could significantly affect these controls subsequent to the
date of their evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
ITEM 12. EXHIBITS
(a)(1) Not applicable to the Registrant
(a)(2) The certifications required by Rule 30a-2 of the Investment Company Act
of 1940, as amended (the "1940 Act") are attached hereto.
(a)(3) Not applicable to the Registrant
(b) The certifications required by Rule 30a-2(b) of the 1940 Act and Sections
906 of the Sarbanes-Oxley Act of 2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
HOLLAND SERIES FUND, INC.
By: /s/ Michael F. Holland
--------------------------------------------
Michael Holland
President and Treasurer of Holland Series Fund, Inc.
Date: December 10, 2007
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Michael F. Holland
--------------------------------------------
Michael Holland
President and Treasurer of Holland Series Fund, Inc.
Date: December 10, 2007