HOLLAND BALANCED FUND
Semi-Annual Report - March 31, 1996
(Unaudited)
Market Comments and Outlook........................................1
Statement of Net Assets............................................2
Statement of Operations............................................4
Statement of Changes in Net Assets.................................5
FinancialHighlights................................................6
Notes to Financial Statements......................................7
HOLLAND BALANCED FUND
May 25, 1996
To My Fellow Shareholders:
While earlier good fortunes continue in the Holland Balanced
Fund, I continue to caution against extrapolating our initial results.
The Fund's net investment return for the first six months ended March
31, 1996 was 9.9%.
The Fund industry regulations require that we include
comparisons of our Fund's results against market indices. While the
enclosed comparisons are obviously quite favorable to our Fund, the
management of the Holland Balanced Fund is solely focused on the
achievement of the best possible real rate of investment return
without taking undue risk.
Our Fund's long-term investment strategy of investing 60% in
"blue chip" equities, 30% in U.S. Treasury fixed income securities and
10% in money market instruments, has been rewarded in the short-term.
There will be periods in the future that are less rewarding, but our
long-term potential returns are more than satisfactory.
With Bullish Regards,
/s/Michael F. Holland
Michael F. Holland
President and Chairman
Investment Performance (For Period Ended March 31, 1996)
Total Return
---------------------------------------------------------
Since Inception
(10/25/95)
Holland Balanced Fund 9.9%
Benchmark Index * 7.8%
Lipper Balanced Fund Index ** 7.1%
---------------------------------------------------------
* Composed of 60% S&P 500 Index; 30% Merill Lynch 7-10 Year U.S. Gov't Index;
and 10% IBC/Donoghue Money Market Average.
** The Lipper Balanced Fund Index is composed of 30 funds all having a primary
objective of conserving principal by maintaining a balanced portfolio
of stocks and bonds.
Holland Series Fund, Inc.
Holland Balanced Fund - Statement of Net Assets
March 31,1996 (Unaudited)
Shares Value +
Common Stocks - 55.1%
Autos - 8.3%
Chrysler Corp. 3,900 $ 242,775
General Motors Corp. 4,400 234,300
Total 477,075
Banks - 3.9%
J. P. Morgan & Company, Inc. 2,700 224,100
Chemicals - 8.1%
du Pont (E.I.) de Nemours 3,000 249,000
Eastman Kodak Co. 3,100 220,100
Total 469,100
Electronics - 2.8%
Motorola, Inc. 3,000 159,000
Food & Tobacco - 3.5%
Philip Morris Companies, Inc. 2,300 201,825
Oil/Gas - 12.1%
Chevron Corp. 4,100 230,113
Exxon Corp. 2,800 228,550
Texaco, Inc. 2,800 240,800
Total 699,463
Paper - 3.9%
International Paper Co. 5,700 224,438
Producer Goods - 7.9%
General Electric Co. 3,000 233,625
Minnesota Mining & Manufacturing Co. 3,400 220,575
Total 454,200
Retail - 4.6%
Sears, Roebuck & Company 5,400 263,250
Total Common Stocks (Cost - $2,899,728) 3,172,451
Face Amount Value+
U.S. Government Securities - 30.1%
U.S. Treasury Bill, 5.030% due 12/12/96 # $ 300,000 $ 289,162
U.S. Treasury Note, 5.750% due 9/30/97 400,000 400,250
U.S. Treasury Note, 5.625% due 10/31/97 300,000 300,092
U.S. Treasury Note, 5.000% due 1/31/98 250,000 246,797
U.S. Treasury Note, 5.500% due 11/15/98 500,000 495,000
Total U.S. Government Securities (Cost - $1,729,721) 1,731,301
Repurchase Agreements - 10.2%
Prudential Bache Repurchase Agreement,
4.800% due 4/1/96;Issued 3/29/96
(Collateralized by $720,305 FNMA Note
9.500% due 4/1/25 with a market value
of $601,800)
(Cost - $590,000) 590,000 590,000
Total Investments - 95.4% (Cost - $5,219,449) 5,493,752
Other Assets and Liabilities - 4.6%
Receivable from investment adviser 79,367
Other assets 207,241
Accrued expenses and other liabilities (21,564)
Other assets and liabilities, net 265,044
Net Assets - 100.0%
Applicable to 527,289 outstanding $0.01
par value shares (authorized 1,000,000,000) $5,758,796
Net asset value per share $ 10.92
Components of Net Assets as of March 31, 1996:
Capital stock at par value ($.01) $ 5,273
Capital stock in excess of par value 5,455,797
Undistributed net investment income 23,423
Net unrealized appreciation on investments 274,303
$5,758,796
# Interest rate shown represents the yield to maturity at the time of purchase.
+ See Note 2 to Financial Statements
See Notes to the Financial Statements
Holland Series Fund, Inc.
Holland Balanced Fund - Statement of Operations
Period from October 2, 1995* to March 31, 1996 (Unaudited)
Investment Income
Interest $ 40,138
Dividends 32,214
Total investment income 72,352
Expenses
Investment advisory fees 13,035
Administration fees 12,500
Custodian fees 7,898
Shareholder account maintenance 18,692
Audit fees 7,500
Legal fees 12,500
Shareholder communication expenses 17,176
Insurance expense 5,670
Amortization of organizational costs 16,726
State registration fees 35
Directors fees and expenses 6,500
Miscellaneous fees and expenses 368
Total operating expenses 118,600
Waiver of investment advisory fees and
reimbursement of other expenses (92,402)
Net expenses 26,198
Net investment income 46,154
Net Realized and Unrealized Gain on Investments
Net realized gain on investments -
Net unrealized appreciation on investments 274,303
Net realized and unrealized gain on investments 274,303
Net increase in net assets resulting from operations $ 320,457
* Commencement of Operations See Notes to Financial Statements
Holland Series Fund, Inc.
Holland Balanced Fund - Statement of Changes in Net Assets
Period from October 2, 1995* to March 31, 1996 (Unaudited)
Net Increase in Net Assets Resulting from Operations
Investment income, net $ 46,154
Net realized gain from investments -
Net unrealized appreciation on investments 274,303
Net increase in net assets resulting from operations 320,457
Distributions to Shareholders From
Net investment income 22,731
Net realized gain on investments -
Total distributions 22,731
Capital Share Transactions, Net (Note 6) 5,361,070
Total increase in net assets 5,658,796
Net Assets
Beginning of period 100,000
End of period $5,758,796
Undistributed net investment income, end of period $ 23,423
* Commencement of Operations
See Notes to the Financial Statements
Holland Series Fund, Inc.
Holland Balanced Fund - Financial Highlights
Period from October 2, 1995* to March 31, 1996 (Unaudited)
For a share outstanding
throughout the period
Per Share Data
Net asset value, beginning of period $10.00
Increases From Investment Operations
Net investment income 0.11
Net realized and unrealized gain on investments 0.88
Total from investment operations 0.99
Less Distributions From:
Net investment income 0.07
Net realized gain on investments 0.00
Total distributions 0.07
Net asset value, end of period $10.92
Total Return (c) (a) 9.93%
Ratios/Supplemental Data
Net assets, end of period $5,758,796
Ratio of expenses to average net assets (b) 1.50%
Ratio of expenses to average net assets before
expense waivers and reimbursement of other expenses (b) 6.79%
Ratio of net investment income to average net assets (b) 2.66%
Portfolio turnover 0.00%
Average commission rate per share (d) $0.060
(a) Not annualized
(b) Annualized (Fund expenses are capped at 1.50%)
(c) Total return would have been lower had certain expenses not been
waived or reimbursed.
(d) Represents total commissions paid on portfolio securities divided
by the total number of shares purchased or sold on which commissions
were charged. This disclosure is required by the SEC beginning in
1996.
* Commencement of Operations
See Notes to Financial Statements
HOLLAND SERIES FUND, INC.
HOLLAND BALANCED FUND
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996 (UNAUDITED)
1. Organization
The Holland Series Fund, Inc. (the "Company") was organized as a
Maryland corporation on June 26, 1995 and is registered under the
Investment Company Act of 1940, as amended, as an open-end, management
investment company. The Fund currently has one portfolio, the Holland
Balanced Fund (the "Fund"). The costs incurred by the Fund in connection
with the organization and initial registration of shares are being
amortized on a straight-line basis in the Fund over a sixty-month period.
The unamortized balance of organizational expenses at March 31, 1996
was $150,537.
Investment Objectives
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 value changes.
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 generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reported period. Actual results could differ
from those estimates.
Securities
Securities transactions are recorded on a trade date basis. 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 less than
six months at the time 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.
Income Tax
There is no provision for Federal income or excise tax since the Fund
intends to elect to be taxed 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 all of its
taxable income.
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. Time
deposits and repurchase agreements are generally valued at their cost
plus accrued interest. Securities purchased with sixty days or less
remaining to maturity are priced at amortized cost which approximates
fair value.
Expenses
Holland & Company L.L.C. (the "Investment Adviser") has agreed to
voluntarily waive its fee and to reimburse the Fund for expenses
exceeding 1.50% of average daily net assets. During the period ended
March 31, 1996, the Investment Adviser voluntarily waived $13,035 of
advisory fees and reimbursed $79,367 of other expenses.
Dividends to Shareholders
It is the policy of the Fund to declare dividends according to the
following schedule:
Dividends from Net Capital Gain
Investment Income Dividends
--------------------------------------------------------
Quarterly Annually
April, July, October and December December
Dividends from net short-term capital gains and net long-term capital
gains, if any, are normally declared and paid annually, 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.
The classification of income and capital gains distributions is
determined in accordance with income tax regulations. Permanent book
and tax differences relating to shareholder distributions will result
in reclassifications to paid-in capital and may affect net investment
income per share. Undistributed net investment income, accumulated
net investment loss, or distributions in excess of net investment
income may include temporary book and tax differences which will
reverse in a subsequent period.
3. Investment Advisory Agreement and Administration 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.
Currently, the Investment Adviser is waiving all of its fee.
Pursuant to its Administration Agreement, AMT Capital Services, Inc.
(the "Administrator"), two employees of which serve as officers of the
Company, earns a fee for providing fund administration services to the
Company. The Company pays the Administrator a monthly fee at the
annual rate of 0.15% of the Fund's average daily net assets and
reimbursement for out-of-pocket expenses pursuant to the
Administration Agreement. Pursuant to the Administration Agreement,
the Administrator will be paid a minimum fee of $25,000 for services
provided to the Company during its first year of operation and a
minimum fee of $50,000 for the second and third years of the Company's
operation.
4. Investment Transactions
Purchase cost and proceeds from sales of investment securities, other
than short-term investments, for the period from October 2, 1995
(commencement of operations) to March 31, 1996 were as follows:
Purchases Purchases Sales Sales
U.S. Government Other Securities U.S. Government Other Securities
$ 1,729,861 $ 2,899,728 $ - $ -
The components of net unrealized appreciation (depreciation) of
investments based on Federal tax cost at March 31, 1996 for the Fund
were as follows:
Cost for Federal
Appreciation Depreciation Net Appreciation Tax Purposes
$ 294,251 $ (19,948) $ 274,303 $ 5,219,449
5. 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.
6. Capital Share Transactions
As of March 31, 1996, there were 1,000,000,000 shares of $0.01 par
value capital stock authorized. Transactions in capital stock for the
period from October 2, 1995 (commencement of operations) to March 31,
1996 were as follows:
Shares Amount
- --------------------------------------------------------------------------
Shares Sold 524,793 $ 5,442,607
Shares Reinvested 2,132 22,381
---------------------------------------------------
526,925 5,464,988
Shares Redeemed (9,636) (103,918)
---------------------------------------------------
Net Increase 517,289 $ 5,361,070
---------------------------------------------------
HOLLAND SERIES FUND, INC.
BOARD OF DIRECTORS ADVISER
Michael F. Holland * Holland & Company L.L.C. *
Director and President 375 Park Avenue
Chairman, New York, NY 10152
Holland & Company L.L.C. phone (212) 486-2058
fax (212) 486-0744
Sheldon S. Gordon *
Director FUND ADMINISTRATOR *
Chairman, AND DISTRIBUTOR
Blackstone Alternative Asset Management L.P AMT Capital Services, Inc.
600 Fifth Avenue, 26th Floor
New York, NY 10020
Herbert S. Winokur, Jr.
Director
Managing General Partner, CUSTODIAN
Capricorn Investors, L.P. FUND ACCOUNTING AGENT
Investors Bank & Trust Company
P.O. Box 1537
Desmond G. FitzGerald Boston, MA 02205
Director
Chairman,
North American Properties Group TRANSFER AGENT
DIVIDEND DISBURSING AGENT
Unified Advisers, Inc.
Jeff C. Tarr 429 N. Pennsylvania Street
Director Indianapolis, IN 46204
Chairman,
Junction Advisors
LEGAL COUNSEL
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
* interested person as defined in
the Investment Company Act of 1940 INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, NY 10036
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