UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-9060
----------
HOLLAND SERIES FUND, INC.
(Exact name of registrant as specified in charter)
375 PARK AVENUE
NEW YORK, NEW YORK 10152
(Address of principal executive offices)(Zip code)
(Name and Address of Agent for Service) Copy to:
Michael Holland State Street Bank and Trust Company
President and Treasurer Julie Tedesco, Esq.
Holland Series Fund, Inc. 4 Copley Place, 5th Floor
375 Park Avenue Boston, Massachusetts 02116
New York, New York 10152
and
Timothy Diggins, Esq.
Ropes & Gray
One International Place
Boston, Massachusetts 02110
Registrant's telephone number, including area code: (800) 304-6552
Date of fiscal year end: September 30th
Date of reporting period: March 31, 2009
ITEM 1: SHAREHOLDER REPORT
HOLLAND BALANCED FUND
[PICTURE GRAPHIC]
S e m i - A n n u a l R e p o r t
March 31, 2009 (Unaudited)
- ----------------------------
<Table>
CONTENTS
Letter from the President.. 1
Cumulative Performance..... 2
Management Discussion of
Fund Performance and
Notes to Performance..... 3
Statement of Net Assets.... 5
Statement of Operations.... 8
Statements of Changes in
Net Assets............... 9
Financial Highlights....... 10
Notes to Financial
Statements............... 11
</Table>
Holland Series Fund, Inc.
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Holland Balanced Fund - LETTER FROM THE PRESIDENT
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March 31, 2009
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(M. HOLLAND PHOTO)
Dear Fellow Shareholder:
Our Fund's mission to invest exclusively in the highest quality fixed income
securities and highest quality companies' equities has continued to be a source
of relative calm in the recent stormy financial environment. Our U.S. Treasury
holdings (primarily U.S. Treasury inflation-protected notes) and blue chip
company equities have provided a sensibleinvestment posture for our challenging
and changing time.
Our Fund's cumulative total return since inception (October 2, 1995 through
March 31, 2009) is 64.80%. For the twelve months ended March 31, 2009, our
Fund's total return is -22.33%, compared to -26.60% for the Lipper Balanced Fund
Index and -39.68% for the S&P 500 Index, a period during which many of the world
markets experienced major setbacks.
With Bullish Regards,
/s/ Michael F. Holland
Michael F. Holland
President and Founder
Performance data quoted represents past performance. Past performance does not
guarantee future results. All performance assumes reinvestment of dividends and
capital gains. The investment return and principal value of an investment will
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than their original cost. Current performance may be lower or higher than the
performance data quoted. Performance data current to the most recent month-end
may be obtained by calling: 1-800-304-6552.
1
Holland Series Fund, Inc.
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Holland Balanced Fund - CUMULATIVE PERFORMANCE (UNAUDITED)
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March 31, 2009
- --------------------------------------------------------------------------------
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 March 31, 2009 is 1.94%.
(LINE GRAPH)
INVESTMENT PERFORMANCE
For the Periods Ended March 31, 2009
<Table>
<Caption>
Average Total Return
Annualized Cumulative
Average Average SINCE SINCE
Annualized Annualized INCEPTION INCEPTION
Return over the period One Year Five Year Ten Year (10/2/95) (10/2/95)
- --------------------------------------------------------------------------------------------------
HOLLAND BALANCED FUND (a) -22.33% -1.64% 0.03% 3.77% 64.80%
Lipper Balanced Fund Index (b) -26.60% -1.54% 0.76% 4.41% 79.17%
Standard & Poor's 500 Index
(b) -39.68% -6.66% -4.66% 2.33% 36.53%
90 Day US Treasury Bill (b) 1.39% 3.10% 3.13% 3.63% 61.79%
- --------------------------------------------------------------------------------------------------
</Table>
2
Holland Series Fund, Inc.
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Holland Balanced Fund - MANAGEMENT DISCUSSION OF
FUND PERFORMANCE (UNAUDITED)
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March 31, 2009
- --------------------------------------------------------------------------------
Since inception (October 2, 1995 through March 31, 2009), our Fund's cumulative
total return was 64.80% compared to 79.17% for the Lipper Balanced Fund Index,
which is an unmanaged index. For the past six months ended March 31, 2009, our
Fund's total return was -19.34% compared to -19.02% for the Lipper Index.
Our Fund's exclusive investment in the largest and highest quality companies and
U.S. Treasury securities has performed relatively well in a difficult market
environment.
Our portfolio composition by sector, which is detailed below, was helpful in two
respects: Our large position in U.S. Treasury inflation-indexed securities and
our exposure to companies of the highest financial strength provided relative
safety in a very challenging environment. The relative performance of the large
company sector compared to small and medium sized company equities was likewise
a positive factor.
Portfolio composition by sector
(AS A % OF TOTAL NET ASSETS) - UNAUDITED
- --------------------------------------------------------------------------------
(PIE CHART)
<Table>
<Caption>
DESCRIPTION % OF NET ASSETS
- --------------------------------------------------------------------
Other Assets 0.2%
U.S. Government 33.0
Finance 10.4
Diversified Manufacturing 10.0
Energy 8.4
Technology 8.3
Multi Media 7.3
Repurchase Agreement 6.7
Consumer Basics 5.9
Retail 5.6
Food & Beverages 4.2
- --------------------------------------------------------------------
</Table>
3
Holland Series Fund, Inc.
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Holland Balanced Fund - MANAGEMENT DISCUSSION OF
FUND PERFORMANCE (UNAUDITED) (concluded)
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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 is an index whose primary objective is to
conserve principal by maintaining at all times a balanced portfolio of both
stocks and bonds. Typically, the stock/bond ratio ranges around 60%/40%. The
Standard & Poors 500 Index is a capitalization-weighted index of 500 widely
held stocks recognized by investors to be representative of the stock market
in general. The 90-Day U.S. Treasury Bill rate is the average return on
three month U.S. Treasury Bills. The Standard & Poors 500 Index is unmanaged
and does not reflect the actual cost of investing in the instruments that
comprise each index. You cannot invest directly in an index.
4
Holland Series Fund, Inc.
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Holland Balanced Fund - STATEMENT OF NET ASSETS
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<Table>
<Caption>
March 31,2009 (Unaudited) Shares Value(+)
- -----------------------------------------------------------------------
COMMON STOCKS-60.1%
COMPUTERS-4.5%
International Business Machines Corp. 12,800 $ 1,240,192
-----------
ELECTRONICS-8.1%
3M Co. 21,200 1,054,064
Intel Corp. 77,800 1,170,890
-----------
2,224,954
-----------
ENTERTAINMENT & LEISURE-3.6%
The Walt Disney Co. 55,000 998,800
-----------
FINANCIAL-3.4%
American Express Co. 30,000 408,900
JPMorgan Chase & Co. 20,000 531,600
-----------
940,500
-----------
FOOD & BEVERAGES-4.2%
PepsiCo, Inc. 22,500 1,158,300
-----------
INSURANCE-7.0%
Berkshire Hathaway, Inc. Class A* 11 953,700
Chubb Corp 23,000 973,360
-----------
1,927,060
-----------
OIL/GAS-8.4%
Exxon Mobil Corp. 19,000 1,293,900
Schlumberger, Ltd. 25,200 1,023,624
-----------
2,317,524
-----------
PHARMACEUTICALS-5.9%
Johnson & Johnson 25,500 1,341,300
Pfizer, Inc. 20,000 272,400
-----------
1,613,700
-----------
PRODUCER GOODS-1.9%
General Electric Co. 52,900 534,819
-----------
RETAIL-5.6%
Home Depot, Inc. 21,000 494,760
Wal-Mart Stores, Inc. 20,000 1,042,000
-----------
1,536,760
-----------
SOFTWARE-3.8%
Microsoft Corp. 56,400 1,036,068
-----------
TELECOMMUNICATIONS-3.7%
Comcast Corp. Class A 75,000 1,023,000
-----------
Total Common Stocks
(Cost-$20,333,786) 16,551,677
-----------
</Table>
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See Accompanying Notes to the Financial Statements.
5
Holland Series Fund, Inc.
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Holland Balanced Fund - STATEMENT OF NET ASSETS (continued)
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<Table>
<Caption>
March 31,2009 (Unaudited) Principal Value(+)
- -----------------------------------------------------------------------
U.S. GOVERNMENT SECURITIES-33.0%
U.S. TREASURY NOTES-33.0%
United States Treasury Note, 5.00%
due 2/15/11 $ 500,000 $ 539,922
United States Treasury Note**, 3.50%
due 1/15/11 8,187,615 8,548,378
-----------
Total U.S. Government Securities
(Cost-$8,754,900) 9,088,300
-----------
REPURCHASE AGREEMENT-6.7%
State Street Bank and Trust Co.
Repurchase Agreement, 0.01% due
04/01/09 in the amount of
$1,860,001; issued 03/31/09
(Collateralized by $1,900,000
U.S. Treasury Bill, 0.26% due
08/13/09 with a market value of
$1,898,100)
(Cost $1,860,000) 1,860,000 1,860,000
-----------
Total Investments-99.8%
(Cost-$30,948,686) 27,499,977
-----------
OTHER ASSETS IN EXCESS OF
LIABILITIES-0.2% 52,585
-----------
NET ASSETS-100%
Applicable to 2,310,687 outstanding
$0.01 par value shares (authorized
1,000,000,000) $27,552,562
===========
Net asset value, offering price and
redemption price per share $ 11.92
===========
</Table>
- --------------------------------------------------------------------------------
See Accompanying Notes to the Financial Statements.
6
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - STATEMENT OF NET ASSETS (concluded)
- --------------------------------------------------------------------------------
<Table>
<Caption>
March 31, 2009 (Unaudited)
- ----------------------------------------------------------------
COMPONENTS OF NET ASSETS AS OF MARCH 31, 2009
Capital stock at par value ($0.01)................. $ 23,107
Capital stock in excess of par value............... 30,786,218
Undistributed net investment loss.................. (105,269)
Net accumulated realized gain on investments in
securities....................................... 297,215
Net unrealized depreciation on investments in
securities....................................... (3,448,709)
-----------
Net Assets.................................... $27,552,562
===========
</Table>
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
* Non-income producing
** Treasury Inflation-Protection Security (TIPS)
+ See Note 2 to Financial Statements
7
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
<Table>
<Caption>
Six Months Ended March 31, 2009 (Unaudited)
- -----------------------------------------------------------------
INTEREST INCOME:
Dividends........................................... $ 265,022
Interest (Note 2)................................... (138,376)
-----------
Total investment income........................ 126,646
-----------
EXPENSES:
Investment advisory fees (Note 3)................... 112,492
Administration and custody fees (Note 4)............ 70,723
Transfer agent fees................................. 32,689
Shareholder reports................................. 27,701
Registration fees................................... 12,845
Audit fees.......................................... 12,248
Directors' fees..................................... 9,696
Insurance fees...................................... 9,640
Legal fees.......................................... 1,745
Miscellaneous expenses.............................. 1,416
-----------
Total operating expenses....................... 291,195
Waiver of investment advisory fee (Note 3)..... (66,211)
-----------
Net Expenses................................... 224,984
-----------
Net investment loss................................. (98,338)
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain on investments.................... 322,878
Net change in unrealized appreciation............... (7,325,298)
-----------
Net realized and unrealized loss on
investments.................................. (7,002,420)
-----------
Net decrease in net assets resulting from
operations................................... $(7,100,758)
===========
</Table>
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
8
Holland Series Fund, Inc.
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Holland Balanced Fund - STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<Table>
<Caption>
Six Months Ended
March 31, Year Ended
2009 September 30,
(Unaudited) 2008
- --------------------------------------------------------------------------
NET INCREASE/(DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS:
Net investment income (loss)............ $ (98,338) $ 836,602
Net realized gain....................... 322,878 1,178,153
Net change in unrealized
appreciation/(depreciation) on
investments........................... (7,325,298) (5,117,934)
----------- -----------
Decrease in net assets from operations.. (7,100,758) (3,103,179)
----------- -----------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income................... (240,035) (713,371)
Net realized gains...................... (796,209) (1,394,825)
CAPITAL SHARE TRANSACTIONS, NET (NOTE
9).................................... (1,277,193) (2,169,437)
----------- -----------
Decrease in Net Assets.................. (9,414,195) (7,380,812)
----------- -----------
NET ASSETS:
Beginning of period................ 36,966,757 44,347,569
----------- -----------
End of period...................... $27,552,562 $36,966,757
=========== ===========
UNDISTRIBUTED NET INVESTMENT INCOME
(LOSS)/INCOME, END OF YEAR............ $ (105,269) $ 233,104
=========== ===========
</Table>
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See Accompanying Notes to Financial Statements.
9
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<Table>
<Caption>
Six Months
For a capital share Ended March 31, Year Ended Year Ended Year Ended Year Ended Year Ended
outstanding 2009 September 30, September 30, September 30, September 30, September 30,
throughout each period (Unaudited) 2008 2007 2006 2005 2004
- -----------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA
Net asset value,
beginning of period $ 15.29 $ 17.39 $ 16.38 $ 15.41 $ 15.04 $ 14.50
------- ------- ------- ------- ------- -------
INCREASE/ DECREASE FROM
INVESTMENT OPERATIONS:
Net investment income
(loss) (0.04) 0.35 0.23 0.25 0.29 0.21
Net realized and
unrealized gain (loss)
on investments (2.90) (1.60) 1.58 0.95 0.38 0.53
------- ------- ------- ------- ------- -------
Total income (loss)
from operations (2.94) (1.25) 1.81 1.20 0.67 0.74
------- ------- ------- ------- ------- -------
LESS DIVIDENDS AND
DISTRIBUTIONS FROM:
Net investment income (0.10) (0.29) (0.24) (0.23) (0.30) (0.20)
Net realized gain on
investments (0.33) (0.56) (0.56) -- -- --
------- ------- ------- ------- ------- -------
Total dividends and
distributions (0.43) (0.85) (0.80) (0.23) (0.30) (0.20)
------- ------- ------- ------- ------- -------
Net asset value, end of
period $ 11.92 $ 15.29 $ 17.39 $ 16.38 $ 15.41 $ 15.04
======= ======= ======= ======= ======= =======
Total return (19.34)%(a),(b) (7.42)%(a) 11.33%(a) 7.90%(a) 4.48% 5.12%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of
period (000's) $27,553 $36,967 $44,348 $46,591 $50,454 $62,422
Ratio of expenses to
average net assets
before fee waivers and
reimbursement of other
expenses 1.94%(c) 1.63% 1.66% 1.71% 1.45% 1.33%
Ratio of expenses to
average net assets
after fee waivers and
reimbursement of other
expenses 1.50%(c) 1.50% 1.50% 1.50% 1.45% 1.33%
Ratio of net investment
income to average net
assets after fee
waivers and
reimbursement of other
expenses (0.66)%(c) 2.09% 1.34% 1.57% 1.89% 1.42%
Portfolio turnover 2.51%(b) 1.96% 1.22% 2.94% 7.60% 8.89%
</Table>
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
(a) Total return would have been lower had certain expenses not been waived or
reimbursed.
(b) Not annualized
(c) Annualized
10
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
March 31, 2009 (Unaudited)
- --------------------------------------------------------------------------------
1. ORGANIZATION
The Holland Series Fund, Inc. (the "Company") was organized as a Maryland
corporation on June 26, 1995 and is registered under the Investment Company Act
of 1940, as amended (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 expense. 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 Directors are
indemnified against certain liabilities arising out of the performance of their
duties to the Fund. In addition, in the normal course of business the Fund
enters into contracts that provide general indemnifications to other parties.
The Fund's maximum exposure under these arrangements is unknown as this would
involve future claims that may be made against the Fund that have not yet
occurred.
Income Tax
There is no provision for federal income or excise tax since the Fund continues
to qualify as a regulated investment company ("RIC") and intends to comply with
the requirements of Subchapter M of the Internal Revenue Code applicable to RICs
and to distribute substantially all of its taxable income and realized gains.
11
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
March 31, 2009 (Unaudited)
- --------------------------------------------------------------------------------
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.
The Fund adopted Financial Accounting Standards Board Statement of Financial
Accounting Standards No. 157, Fair Value Measurements ("FAS 157"), effective
October 1, 2008. In accordance with FAS 157, fair value is defined as the price
that the Fund would receive upon selling an investment in a timely transaction
to an independent buyer in the principal or most advantageous market of the
investment. FAS 157 established a three-tier hierarchy to maximize the use of
observable market data and minimize the use of unobservable inputs and to
establish classification of fair value measurements for disclosure purposes.
Inputs refer broadly to the assumptions that market participants would use in
pricing the asset or liability, including assumptions about risk, for example,
the risk inherent in a particular valuation technique used to measure fair value
including such a pricing model and/or the risk inherent in the inputs to the
valuation technique. Inputs may be observable or unobservable. Observable inputs
are inputs that reflect the assumptions market participants would use in pricing
the asset or liability developed based on market data obtained from sources
independent of the reporting entity. Unobservable inputs are inputs that reflect
the reporting entity's own assumptions about the assumptions market participants
would use in pricing the asset or liability developed based on the best
information available in the circumstances.
The three-tier hierarchy of inputs is summarized in the three broad levels
listed below.
- Level 1 - quoted prices in active markets for identical investments
- Level 2 - other significant observable inputs (including quoted prices
for similar investments, interest rates, prepayment speeds, credit risk,
etc.)
- Level 3 - significant unobservable inputs (including the Fund's own
assumptions in determining the fair value of investments)
The inputs or methodology used for valuing securities are not necessarily an
indication of the risk associated with investing in those securities.
12
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
March 31, 2009 (Unaudited)
- --------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
The following is a summary of the inputs used as of March 31, 2009 in valuing
the Fund's investments carried at value:
<Table>
<Caption>
- -------------------------------------------------------------------
Investments in
Valuation Inputs Securities
- -------------------------------------------------------------------
Level 1 - Quoted Prices $25,639,977
Level 2 - Other Significant Observable Inputs 1,860,000
Level 3 - Significant Unobservable Inputs --
-----------
TOTAL $27,499,977
===========
- -------------------------------------------------------------------
</Table>
Dividends and Distributions to Shareholders
The Fund distributes interest and 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 six months
ended March 31, 2009, the Investment Adviser waived $66,211 in advisory fees.
The Investment Adviser is controlled by Michael F. Holland, its managing member
and owner of 99% interest in the Investment Adviser.
13
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
March 31, 2009 (Unaudited)
- --------------------------------------------------------------------------------
3. INVESTMENT ADVISORY AGREEMENT (continued)
As of March 31, 2009, Michael F. Holland and affiliates owned 117,675 shares
(5.09% 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 March 31, 2009, the Fund had the following liabilities:
<Table>
Payable for Capital Shares repurchased.......... $ 2,081
Investment Advisory fee payable................. 7,712
Directors fee payable........................... 3,274
Administration fees payable..................... 7,775
Other payable and accrued expenses.............. 43,426
-------
Total liabilities............................. $64,268
=======
</Table>
14
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
March 31, 2009 (Unaudited)
- --------------------------------------------------------------------------------
7. INVESTMENT TRANSACTIONS
Purchases and sales of investment securities, other than short-term investments
and U.S. Government Securities, for the six months ended March 31, 2009
aggregated $742,373 and $0 respectively. Purchases and sales of U.S. Government
Securities, for the six months ended aggregated $0 and $3,802,031 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 March 31, 2009, there were 1,000,000,000 shares of $.01 par value capital
stock authorized. Transactions in capital stock were as follows:
<Table>
<Caption>
- ----------------------------------------------------------------------------
Six Months Ended Year Ended
3/31/09 9/30/08
- ----------------------------------------------------------------------------
Shares Amount Shares Amount
- ----------------------------------------------------------------------------
Shares Sold 60,710 $ 777,855 62,953 $ 1,016,663
Shares Reinvested 74,720 933,863 114,277 1,863,405
-------- ----------- -------- -----------
135,430 1,711,718 177,230 2,880,068
Shares Redeemed (242,871) (2,988,911) (309,106) (5,049,505)
-------- ----------- -------- -----------
NET DECREASE (107,441) $(1,277,193) (131,876) $(2,169,437)
======== =========== ======== ===========
- ----------------------------------------------------------------------------
</Table>
15
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
March 31, 2009 (Unaudited)
- --------------------------------------------------------------------------------
10. INCOME TAXES
The components of net unrealized appreciation/ (depreciation) of investments
based on federal tax cost at March 31, 2009 for the Fund were as follows:
<Table>
<Caption>
- ---------------------------------------------------------------------
Cost for Federal
Appreciation Depreciation Net Depreciation Tax Purposes
- ---------------------------------------------------------------------
$1,515,491 $(4,964,200) $(3,448,709) $30,948,686
</Table>
On July 13, 2006, the Financial Accounting Standards Board (FASB) released FASB
Interpretation No. 48, "Accounting for Uncertainty in Income Taxes" ("FIN 48").
FIN 48 provides guidance for how uncertain tax positions should be recognized,
measured, presented and disclosed in the financial statements. FIN 48 requires
the evaluation of tax positions taken or expected to be taken in the course of
preparing the Fund's tax returns to determine whether the tax positions are
"more-likely-than-not" of being sustained by the applicable tax authority. Tax
positions not deemed to meet the more-likely-than-not threshold would be
recorded as a tax benefit or expense in the current year. Adoption of FIN 48 is
required for fiscal years beginning after December 15, 2006 and is to be applied
to all open tax years as of the effective date. Recent SEC guidance allows
implementing FIN 48 in fund asset calculations as late as the fund's last net
asset value calculation in the first required financial statement reporting
period. Accordingly the Fund implemented FIN 48 on March 31, 2008. Management
has evaluated the application of FIN 48 and has determined there is no impact on
the Fund's financial statements.
11. NEW ACCOUNTING PRONOUNCEMENT
In March 2008, the Financial Accounting Standards board ("FASB") issued
Statement of Financial Accounting Standards No. 161, "Disclosures about
Derivative Instruments and Hedging Activities" ("SFAS 161"). SFAS 161 is
effective for fiscal years and interim periods beginning after November 15,
2008. SFAS 161 requires enhanced disclosures about the Fund's derivative and
hedging activities. Management is currently evaluating the impact the adoption
of SFAS 161 will have on the Fund's financial statement disclosures.
12. SUBSEQUENT EVENT
In April 2009, the Financial Accounting Standards Board ("FASB") issued FASB
Staff Position No. 157-4, "Determining Fair Value When the Volume and Level of
Activity for the Asset or Liability Have Significantly Decreased and Identifying
Transactions That Are Not Orderly" ("FSP 157-4"). FSP 157-4 provides additional
guidance for estimating fair value in accordance with FASB Statement of
Financial Accounting Standards No. 157, "Fair Value Measurements" ("FAS 157"),
when the volume and level of activity for the asset or liability have
significantly decreased as well as guidance on identifying circumstances that
indicate a transaction is not orderly. FSP 157-4 is effective for fiscal years
and interim periods ending after June 15, 2009. Management is currently
evaluating the impact the adoption of FSP 157-4 will have on the Funds'
financial statement disclosures.
16
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - UNAUDITED INFORMATION
- --------------------------------------------------------------------------------
PROXY VOTING POLICIES
The Fund has filed with the Securities and Exchange Commission its proxy voting
record for the 12-month period ending June 30, 2008 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
without charge, upon request, by calling 1-800-30-HOLLAND.
SHAREHOLDER EXPENSES
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs and (2) ongoing costs, including management fees and other Fund expenses.
This example is intended to help you understand your ongoing costs of investing
in the Fund and to compare these costs with the ongoing costs of investing in
other mutual funds. It is based on an investment of $1,000 invested at the
beginning of the period and held for the entire six-month period ended September
30, 2008.
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 ratio and an
assumed rate of return of 5% per year before expenses, which is not the Fund's
actual return. Thus, you should not use the hypothetical account values and
expenses to estimate the actual ending account balance or your expenses for the
period. Rather, these figures are provided to enable you to compare the ongoing
costs of investing in the Fund 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.
17
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
Holland Balanced Fund - UNAUDITED INFORMATION (concluded)
- --------------------------------------------------------------------------------
<Table>
<Caption>
- --------------------------------------------------------
For the Six Months Ended March 31, 2009
- --------------------------------------------------------
Value of a
$1,000 Expenses*
Investment at Paid During
Actual End of Period the Period
- --------------------------------------------------------
$806.64 $6.76
</Table>
<Table>
<Caption>
- --------------------------------------------------------
For the Six Months Ended March 31, 2009
- --------------------------------------------------------
Hypothetical Value of a
(assuming a 5% $1,000 Expenses*
return before Investment at Paid During
expenses) End of Period the Period
- --------------------------------------------------------
$1,017.45 $7.54
</Table>
* Expenses are equal to the Fund's annualized net expense ratio of 1.50%
multiplied by the average account value over the period multiplied by 182/365
to reflect the one-half year period.
18
Holland Series Fund, Inc.
- --------------------------------------------------------------------------------
ADVISER
Holland & Company L.L.C.
375 Park Avenue
New York, NY 10152
email mike@thehollandfund.com
website www.thehollandfund.com
FUND ADMINISTRATOR,
CUSTODIAN AND FUND
ACCOUNTING AGENT
State Street Bank and Trust Co.
2 Lafayette Avenue
Boston, MA 02111
DISTRIBUTOR
ALPS Distributors, Inc.
1290 Broadway, Suite 1100
Denver, CO 80203
TRANSFER AGENT & DIVIDEND
DISBURSING AGENT
ALPS Mutual Fund Services, Inc.
1290 Broadway, Suite 1100
Denver, CO 80203
LEGAL COUNSEL
Ropes & Gray LLP
One International Place
Boston, MA 02110
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Briggs, Bunting & Dougherty, LLP
1835 Market St., 26th Floor
Philadelphia, PA 19103
- ---------------------------------
Holland & Company L.L.C.
375 Park Avenue
New York, New York 10152
Phone 800-30-HOLLAND
Email mike@thehollandfund.com
Website www.thehollandfund.com
This report has been prepared for the
Holland Balanced Fund's Shareholders
and may be distributed to others only
if preceded or accompanied by a prospectus.
ITEM 2. CODE OF ETHICS
Not required for this filing.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
Not required for this filing.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Not required for this filing.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not applicable to the Registrant.
ITEM 6. SCHEDULE OF INVESTMENTS
(a) Schedule of Investments is included as part of Item 1 of the Form N-CSR.
(b) Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable to the Registrant.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable to the Registrant.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable to the Registrant.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were no materials changes to the procedures by which shareholders may
recommend nominees to the Fund's Board of Directors.
ITEM 11. CONTROLS AND PROCEDURES.
(a) Within 90 days of the filing date of this Form N-CSR, Michael Holland, the
Fund's President and Treasurer, reviewed the registrant's disclosure controls
and procedures (the "Procedures") and evaluated their effectiveness. Based on
his review, Mr. Holland determined that the Procedures adequately ensure that
information required to be disclosed by the Fund in its
periodic reports is recorded, processed, summarized and reported within the time
periods required by the Securities and Exchange Commission's rules and
regulations.
(b) There were no significant changes in the Fund's internal controls or in
other factors that could significantly affect these controls subsequent to the
date of their evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
ITEM 12. EXHIBITS
(a)(1) Not applicable to the Filing.
(a)(2) The certifications required by Rule 30a-2 of the Investment Company Act
of 1940, as amended (the "1940 Act") are attached hereto.
(a)(3) Not applicable to the Filing.
(b) The certifications required by Rule 30a-2(b) of the 1940 Act and Sections
906 of the Sarbanes-Oxley Act of 2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
HOLLAND SERIES FUND, INC.
By: /s/ Michael F. Holland
----------------------------------
Michael Holland
President and Treasurer of Holland
Series Fund, Inc.
Date: May 27, 2009
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Michael F. Holland
----------------------------------
Michael Holland
President and Treasurer of Holland
Series Fund, Inc.
Date: May 27, 2009