As filed with the Securities and Exchange Commission on February 15, 1996
File Nos. 33-95026, 811-9060
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
Pre-Effective Amendment No.
Post-Effective Amendment No. 1 /X/
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 3 /X/
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)
Registrant's Telephone Number: (800) 304-6552
WILLIAM E. VASTARDIS, Secretary and Treasurer
AMT Capital Services, Inc. c/o Holland Series Fund, Inc.
600 Fifth Avenue, 26th Floor
New York, New York 10020
(Name and Address of Agent for Service)
Copies to:
Gary Schpero, Esq.
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
It is proposed that this filing will become effective (check appropriate box)
/ X/ immediately upon filing pursuant to paragraph (b) of Rule 485.
/ / on _______ (date) pursuant to paragraph (b) of Rule 485.
/ / 75 days after filing pursuant to paragraph (a) of Rule 485.
/ / on _______ (date) pursuant to paragraph (a) of Rule 485.
Registrant has registered an indefinite number of shares pursuant to Rule 24f-2
under the Investment Company Act of 1940. The Registrant is newly organized
and has not yet completed a fiscal year, but will file the notice required
thereunder for the fiscal year ended September 30, 1996 at the appropriate time.
HOLLAND SERIES FUND, INC.
Registration Statement on Form N-1A
CROSS REFERENCE SHEET
Pursuant to Rule 481(a)
Under the Securities Act of 1933
Location in Prospectus and
N-1A Item No. Statement of Additional
Information
Item 1. Cover Page......................... Cover Page of Prospectus
Item 2. Synopsis ........................... Prospectus Summary, The Fund's
Expenses (in Prospectus)
Item 3. Condensed Financial
Information........................ Financial Highlights (in
Prospectus), Financial Statements,
(in Statement of Additional
Information)
Item 4. General Description of
Registrant ......................... Investment Objectives and Policies;
Investment Limitations; Risk
Factors; Appendix (in Prospectus)
Additional Information on Portfolio
Instruments and Investment
Policies, Investment Restrictions
(in Statement of Additional
Information),
Item 5. Management of the Fund............. Management of the Fund (in
Prospectus and Statement of
Additional Information)
Item 5A. Management's Discussion
of Fund Performance................ Not Applicable
Item 6. Capital Stock and Other
Securities ........................ Additional Information- Dividends
and Distributions; Taxes,
Organization of the Fund (in
Prospectus), Shareholder Inquiries
(in Prospectus) Additional
Information--Description of Shares
(Statement of Additional
Information)
Item 7. Purchase of Securities
Being Offered...................... Purchase of Shares, Shareholder
Services, Determination of
Net Asset Value
Item 8. Redemption or Repurchase........... Redemption of Shares (in
Prospectus)
Item 9. Legal Proceedings.................. Not Applicable
Location in
Part B Statement of Additional Information
Item 10. Cover Page ........................ Cover Page of Statement of
Additional Information
Item 11. Table of Contents.................. Table of Contents of Statement
of Additional Information
Item 12. General Information and
History ............................ Not Applicable
Item 13. Investment Objectives and
Policies ........................... Additional Information on
Portfolio Instruments and
Investment Policies; Investment
Restrictions
Item 14. Management of the
Registrant......................... Management of the Fund
Item 15. Control Persons and
Principal Holders of
Securities ........................ Control Persons, Principal Holder
of Securities
Item 16. Investment Advisory and
Other Services..................... Management of the Fund, Additional
Information
Item 17. Brokerage Allocation............... Portfolio Transactions and
Brokerage
Item 18. Capital Stock and Other
Securities......................... Not Applicable
Item 19. Purchase, Redemption and
Pricing of Securities
Being Offered...................... Purchase of Shares; Determination
of Net Asset Value
Item 20. Tax Status......................... Taxation
Item 21. Underwriters....................... Purchase of Shares
Item 22. Calculation of
Performance Data................... Performance Data
Item 23. Financial Statements............... Financial Statements
HOLLAND BALANCED FUND
Holland Balanced Fund (the "Fund") is a no-load diversified portfolio of
Holland Series Fund, Inc., an open-end management investment company. 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.
There can be no assurance that the Fund will achieve its investment objective.
See "Risk Factors".
Shares may be purchased directly from AMT Capital Services, Inc. (the
"Distributor"), 600 Fifth Avenue, New York, NY 10020 (800) 30-HOLLAND
[800-304-6553] or from securities dealers which have entered into selected
dealer agreements with the Distributor. The minimum initial purchase is $1,000
and the minimum subsequent purchase is $500. See "Purchase of Shares". A
shareholder may redeem his or her shares at any time at their net asset
value. See "Redemption of Shares".
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
This Prospectus is a concise statement of information about the Fund that is
relevant to making an investment in the Fund. This Prospectus should be
retained for future reference. A statement containing additional information
about the Fund, dated February 15, 1996 (the "Statement of Additional
Information"), has been filed with the Securities and Exchange Commission and
can be obtained, without charge, by calling or by writing the Distributor at
the above telephone number or address. The Statement of Additional Information
is hereby incorporated by reference into this Prospectus.
HOLLAND & COMPANY L.L.C.--INVESTMENT ADVISER
AMT CAPITAL SERVICES, INC.--DISTRIBUTOR
The date of this Prospectus is February 15, 1996.
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by detailed information
appearing elsewhere in this Prospectus and in the Statement of Additional
Information.
The Fund and Its Investment Objective
The Fund is a no-load diversified investment portfolio of the Holland
Series Fund, Inc., an open-end management investment company incorporated
in Maryland on June 27, 1995. 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. There can be no assurance that the
Fund will achieve its investment objective. See "Investment Objective and
Policies."
The Investment Adviser
Holland & Company L.L.C. (the "Investment Adviser") serves as the Fund's
investment adviser. For its services as investment adviser, the Fund pays the
Investment Adviser a monthly fee at an annual rate of 0.75% of the Fund's
average daily net assets. While the advisory fee is higher than that paid
by most investment companies (which includes money market funds) the Investment
Adviser believes the advisory fee is comparable to that of other investment
companies with similar investment objectives. See "Management of the Fund."
Purchasing Shares
Shares of the Fund may be purchased without any sales charges at its
net asset value next determined after receipt of the order by submitting an
Account Application to the Distributor and either wiring federal funds to the
Distributor's "Fund Purchase Account" at Unified Advisers, Inc. (the "Transfer
Agent") or mailing a check or money order to the Transfer Agent to be deposited
in such account. Shares may be purchased directly from the Distributor or from
other securities dealers with whom the Distributor has entered into selected
dealer agreements. The Fund is available for sale in all 50 states. For
information about the Fund's availability, contact an account representative
at AMT Capital.
The minimum initial investment is $1,000 although this minimum may be waived
from time to time at the discretion of the Fund. The minimum amount for
subsequent investment is $500 and may be waived from time to time at the
discretion of the Fund. There are no sales commissions (loads) or 12b-1 fees.
For more information, refer to "Purchase of Shares."
Redemption of Shares
Shares of the Fund may be redeemed, without charge, at the next determined
net asset value after receipt by either the Transfer Agent or AMT Capital of
the redemption request. There is no redemption fee. For more information,
refer to "Redemption of Shares."
Dividends and Distributions
The Fund intends to distribute its income quarterly and capital gains
annually. All distributions are reinvested automatically, unless otherwise
specified in writing by the investor, in shares of the Fund. See "Additional
Information" and "Shareholder Services."
Risk Factors
Prospective Investors should consider certain risks associated with an
investment in the Fund. See "Risk Factors."
THE FUND'S EXPENSES
The following expense table is provided to assist investors in understanding
the various costs and expenses that an investor will incur, either directly or
indirectly, as a shareholder in the Fund, which are calculated as a percentage
of average daily net assets. These are the only fund related expenses that
an investor bears.
Management fees 0.75%
Other expenses (after reimbursement) 0.75%
Total Fund operating expenses 1.50%
(after reimbursement)
"Management fees" in the above table represents investment advisory fees
due to be paid rothe Investment Adviser, which were however waived. See
"Management of the Fund." As of the date of this prospectus, the the Fund has
only recently commenced investment operations. The amount set forth in "Other
expenses" is, therefore, based on estimated amounts for the current fiscal year.
"Other expenses" includes fees for shareholder services, custodial,
administration, dividend disbursing and transfer agency fees, legal and
accounting fees, printing costs and registration fees. The Investment Adviser
has voluntarily agreed to cap the total annual operating expenses at 1.50% (on
an annualized basis) of the Fund's average daily net assets. Without such cap,
the total annual operating expenses(on an annualized basis) for the fiscal year
ended September 30, 1996 (on an annualized basis are expected to be
approximately 2.50%. See "Management of the Fund."
Example: The following example demonstrates the projected dollar amount of total
cumulative expenses that would be incurred over various periods with respect to
a hypothetical investment in the Fund. These amounts are based upon payments by
the Fund of operating expenses set forth in the table above, and are also based
upon the following assumptions:
A shareholder would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return and (2) redemption at the end of each time
period:
After 1 year $15.00
After 3 years $47.00
This example should not be considered a representation of future expenses and
actual expenses may be greater or less than those shown. Moreover, while the
example assumes a 5% annual return, the Fund's performance will vary and may
result in a return greater or less than 5%.
FINANCIAL HIGHLIGHTS
The financial information for the period from October 2, 1995 (commencement
of investment operations) and ending on December 31, 1995 in the following
table has not been audited by the Fund's independent accountants.
For a share outstanding throughout For the Period from
the period October 2, 1995 * to
December 31, 1995 (Unaudited)
Per Share Data
Net asset value, beginning of period $10.00
Increase From Investment Operations:
Investment income, net 0.06
Net realized and unrealized gain on investments 0.51
Total from investment operations 0.57
Less Distributions From:
Investment income, net 0.07
Net realized gain on investments 0.00
Total Distributions 0.07
Net asset value, end of period $10.50
Total Return (a) 5.70%
Ratios/Supplemental Data
Net assets, end of period $3,408,916
Ratio of expenses to average net assets (b) 1.50%
Ratio of expenses to average net assets (b) 4.60%
before expense waivers and
reimbursements of other expenses
Ratio of net investment income to (b) 4.45%
average net assets
Portfolio turnover 0.00%
* Commencement of operations
(a) Not annualized
(b) Annualized (Fund expenses are capped at 1.50%).
INVESTMENT OBJECTIVE AND POLICIES
The Fund is designed to provide investors with a convenient
and professionally managed vehicle for seeking a high total investment return.
This is a fundamental investment objective and may not be changed without the
affirmative vote of the holders of a majority of the Fund's outstanding voting
securities, as defined in the Investment Company Act of 1940, as amended (the
"1940 Act"). 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. The Investment Adviser will have discretion to
determine the proportion of the Fund's portfolio that will be invested in equity
and investment grade fixed-income securities at any particular time, depending
on the Investment Adviser's view of existing and anticipated market and
economic conditions. The Investment Adviser will seek to identify promising
markets, asset classes and securities which it believes have better than average
potential for price appreciation and minimal inherent risk. A key component of
the Investment Adviser's approach is seeking to recognize investment situations
in which asset classes or individual securities have been fundamentally
mispriced by investor sentiment or other market forces. Where the Investment
Adviser believes such opportunities exist, the Fund's assets will be positioned
in an effort to produce long-term price performance. Under ordinary market
conditions, the Fund will have at least 50% of its total assets invested in
equity securities, at least 25% of its total assets invested in investment grade
fixed-income securities and may invest up to 25% of its total assets in high
quality money market securities. No assurance can be given that the Fund
will be able to achieve its investment objective.
Equity securities consist of common and preferred stock (including
convertible preferred stock), bonds, notes and debentures convertible
into common or preferred stock, stock purchases warrants and rights, equity
interests in trusts, partnerships, joint ventures or similar enterprises and
American, Global or other types of depositary receipts. Most of the equity
securities purchased by the Fund are expected to be traded on a domestic or
international stock exchange or in a over-the-counter market. Fixed-income
securities in which the Fund may invest consist of U.S. government securities,
U.S. and non-U.S. corporate debt obligations and sovereign debt obligations
issued by governments and governmental entities, including supranational
organizations such as the World Bank. The Investment Adviser will have
discretion to invest in the full range of maturities of fixed-income securities.
The Fund will invest only in instruments which are rated Baa or better by
Moody's Investors Service, Inc. ("Moody's") or BBB or better by Standard &
Poor's Corporation ("S&P"), or which are determined by the Fund's investment
adviser to be of quality comparable to instruments so rated. See Appendix A for
a description of bond ratings. The Fund may invest up to one-third of its total
assets in foreign securities. The Fund also may purchase securities on a when-
issued or delayed delivery basis. The Fund attempts to reduce overall exposure
to risk from declines in securities prices by spreading its investments over
many different companies in a variety of industries.
The Fund also reserves the right to invest a portion of its
assets in high quality money market securities, for cash management purposes,
pending investment in accordance with the Fund's investment objective and
policies, to meet operating expenses and redemption requests and to meet its
obligations pursuant to its investment activities. When the Investment Adviser
determines that market conditions so warrant, the Fund may invest all of its
assets in high quality money market securities for temporary defensive purposes.
Money market securities in which the Fund may invest include obligations
issued or guaranteed by the U.S. government, its agencies or instrumentalities,
obligations (including certificates of deposit, time deposits, demand deposits
and bankers' acceptances) of banks, commercial paper and repurchase agreements
with respect to securities in which the Fund may invest. The Fund will invest
only in commercial paper that is rated A-1 or A-2 by S&P, or P-1 or P-2 by
Moody's or, if not rated, issued by companies having an outstanding debt issue
rated BBB or better by S&P, or Baa or better by Moody's. The proportion of the
Fund's assets that is invested in money market securities will vary from time
to time.
The Fund's investment policies (other than its investment objective) are not
fundamental and may be changed by the Board of Directors of the Fund without
the approval of shareholders.
INVESTMENT LIMITATIONS
The Fund may not:
(1) purchase the securities of any one issuer, other than securities issued
or guaranteed by the U.S. government, its agencies or instrumentalities, if
immediately after such purchase, more than 5% of the value of the Fund's total
assets would be invested in such issuer or the Fund would own more than 10%
of the outstanding voting securities of such issuer, except that up to 25% of
the value of the Fund's total assets may be invested without regard to this
restriction.
(2) borrow money (including entering into reverse repurchase agreements)
except as a temporary measure for extraordinary or emergency purposes, and in
no event in excess of 15% of the value of the Fund's total assets at the time
the borrowing is made, except that for the purpose of this restriction, short-
term credits necessary for settlement of securities transactions are not
considered borrowings (the Fund will not purchase any securities at any time
while such borrowings exceed 5% of the value of its total assets);
(3) invest more than 25% of the total assets of the Fund in the securities of
issuers having their principal activities in any particular industry, except for
obligations issued or guaranteed by the U.S. government, its agencies or
instrumentalities or by any state, territory or any possession of the United
States or any of their authorities, agencies, instrumentalities or political
subdivisions, or with respect to repurchase agreements collateralized by any
of such obligations (for purposes of this restriction, supranational issuers
will be considered to comprise an industry as will each foreign government that
issues securities purchased by the Fund);
The limitations contained above may be changed only with
the affirmative vote of the holders of a majority of the Fund's outstanding
voting securities, as defined in the 1940 Act. The percentage limitations
contained above as well as elsewhere in this Prospectus and in the Statement of
Additional Information apply only at the time of purchase and the Fund will not
be required to dispose of securities upon subsequent fluctuations in market
value.
RISK FACTORS
Changes in Interest Rates
The market value of the Fund's fixed-income securities and the portion
of the Fund's net asset value attributable to fixed-income securities will
generally fall when interest rates rise and rise when interest rates fall. In
general, fixed-income securities with longer maturities will be subject to
greater volatility resulting from interest rate fluctuations than will fixed-
income securities with shorter maturities.
Foreign Securities
Investment in securities of foreign issuers may involve risks
arising from non-U.S. accounting, auditing and financial reporting standards
and less publicly available information about issuers, from restrictions on
foreign investment and repatriation of capital, from differences between U.S.
and foreign securities markets, including less volume, much greater price
volatility in and relative illiquidity of foreign securities markets, different
trading and settlement practices and less government supervision and regulation,
from changes in currency exchange rates, from economic, social and political
conditions and, as with domestic multinational corporations, from fluctuating
interest rates. Additionally, certain amounts of the Fund's income may be
subject to withholding taxes in the foreign countries in which it invests.
Repurchase Agreements
The Fund may invest in repurchase agreements. Repurchase
agreements are short-term investments which are used from time to time to
obtain a return on available cash. Entering into a repurchase agreement
involves the acquisition by the Fund from a broker-dealer or bank of an
underlying security, most typically a debt instrument, subject to the obligation
of the seller to repurchase, and the Fund to resell, usually not more than one
week after its purchase, the instrument at a fixed price in excess of the Fund's
purchase price, such excess representing the Fund's return on the repurchase
agreement. Transaction costs may be incurred by the Fund in connection with
the sale of the securities if the seller does not repurchase them in accordance
with the repurchase agreement. In addition, if bankruptcy proceedings are
commenced with respect to the seller of the securities, realization on the
securities by the Fund may be delayed or limited and the Fund could experience
a loss.
Securities with Limited Trading Market
The Fund may invest up to 15% of the value of its total assets
in illiquid securities, such as "restricted securities" which are illiquid, and
securities that are not readily marketable. Investments in securities which are
"restricted" may involve added expenses should the Fund be required to bear
registration costs with respect to such securities and could involve delays in
disposing of such securities which might have an adverse effect upon the price
and timing of sales of such securities and the liquidity of the Fund with
respect to redemptions. Restricted securities and securities for which there
is a limited trading market may be significantly more difficult to value due
to the unavailability of reliable market quotations for such securities, and
investment in such securities may have an adverse impact on net asset value.
Limited Operating History and Dependence on Certain Individual
The Fund is recently formed and has a limited operating
history. In addition, the Investment Adviser is a recently formed limited
liability company and has not previously served as an investment adviser to a
registered investment company. Michael Holland is primarily responsible for
the day-to-day management of the Fund's portfolio. The loss of Michael
Holland's services (due to termination of employment, death, disability or
otherwise) could adversely affect the conduct of the Fund's business and its
prospects for the future. There can be no assurance that a suitable replacement
could be found for Michael Holland.
Borrowing
The Fund may borrow up to 15% of the value of its total assets in certain
limited circumstances. Borrowing can increase the opportunity for capital
appreciation when security prices rise and increase the risk of loss when prices
decline. Interest costs of borrowing are an expense that otherwise would not be
incurred and this could reduce the net investment income of the Fund.
MANAGEMENT OF THE FUND
Board of Directors
The Board of Directors of the Fund consists of five individuals, three of
whom are not "interested persons" of the Fund as defined in the Investment
Company Act of 1940. The Investment Adviser is controlled by Michael Holland,
its managing member and owner of a 99% interest in the limited liability
company. The Directors of the Fund are responsible for the overall supervision
of the operations of the Fund and perform the various duties imposed on the
directors of investment companies by the Investment Company Act of 1940.
Advisory Arrangements
The Investment Adviser acts as the investment adviser to the Fund and provides
the Fund with management and investment advisory services. The Investment
Adviser also offers portfolio management and portfolio analysis services to
individuals and institutions.
The investment advisory agreement with the Investment Adviser (the "Investment
Advisory Agreement") provides that, subject to the direction of the Board of
Directors of the Fund, the Investment Adviser is responsible for the actual
management of the Fund's portfolio. The responsibility for making decisions
to buy, sell or hold a particular security rests with the Investment Adviser,
subject to review by the Board of Directors. The Investment Adviser also is
obligated to provide all the office space, facilities, equipment and personnel
necessary to perform its duties under the Investment Advisory Agreement.
The Investment Adviser receives monthly compensation at the annual
rate of 0.75% of the average daily net assets of the Fund. The Investment
Adviser may waive all or part of its fee from time to time in order to
increase the Fund's net income available for distribution to shareholders. The
Fund will not be required to reimburse the Investment Adviser for any advisory
fees waived. In addition, the Investment Adviser has voluntarily agreed to cap
total operating expenses at 1.5% (on an annualized basis) of the Fund's average
daily net assets. The Investment Adviser may from time to time, at its own
expense, provide compensation to certain selected dealers for performing
administrative services for their customers. These services include maintaining
account records, processing orders to purchase and redeem Fund shares and
responding to certain customer inquiries. The amount of such compensation
may be up to 0.25% annually of the average net assets attributable to shares of
the Fund held by customers of such selected dealers. Such compensation does
not represent an additional expense to the Fund or its shareholders, since it
will be paid from the assets of the Investment Adviser.
The Fund is responsible for paying certain expenses incurred
in its operations including, among other things, the investment advisory and
administrative fees, legal and audit fees, unaffiliated Directors' fees and
expenses, custodian and transfer agency fees, certain insurance premiums,
accounting and pricing costs, federal and state registration fees, the costs of
issuing and redeeming shares, costs of shareholder meetings, any extraordinary
expenses and certain of the costs of printing proxies, shareholders reports,
prospectuses and statements of additional information. The Fund also pays for
brokerage fees and commissions in connection with the purchase and sale of
portfolio securities.
The Investment Adviser is a recently formed limited liability
company organized under the laws of New York State and it is a registered
investment adviser under the Investment Advisers Act of 1940. The Investment
Adviser is controlled by Michael Holland, its managing member and owner of a
99% interest in the limited liability company. Michael Holland is primarily
responsible for the day-to-day management of the Fund's portfolio. Michael
Holland's money management and entrepreneurial skills have been employed
on behalf of a number of leading asset management and investment banking
companies. At The Blackstone Group from January 1994 through June 1995,
he was a General Partner and Chief Executive Officer of Blackstone Alternative
Asset Management, where he supervised the management of the firm's
partnership investment fund. Prior to that, he served as Vice Chairman at
Oppenheimer & Co., from March 1992 through January 1994, where he helped
launch and manage a number of closed-end mutual funds.
From 1989 to 1992 Michael Holland was Chairman & Chief Executive Officer of
Salomon Brothers Asset Management Inc. Before that he was President and Chief
Executive Officer of First Boston Asset Management Corporation, where client
assets grew to some $6 billion under his leadership. A graduate of Harvard
College and Columbia University Graduate School of Business Administration,
Michael Holland began his career at J.P. Morgan & Co. in 1968.
Michael Holland makes frequent appearances on television programs such
as Moneyline with Lou Dobbs, CNN, Bloomberg Business News and CNBC and is
perhaps best known as a regular panelist on Wall $treet Week with Louis
Rukeyser.
Administrator
AMT Capital Services, Inc., (in its capacity as administrator,
the "Administrator") acts as the Fund's administrator pursuant to an
administration agreement (the "Administration Agreement"). Pursuant to the
Administration Agreement, the Administrator is responsible for providing
administrative services to the Fund and assists in managing and supervising all
aspects of the general day-to-day business activities and operations of the Fund
other than investment advisory activities, including certain accounting,
auditing, clerical, bookkeeping, custodial, transfer agency, dividend
disbursing, compliance and related services, Blue Sky compliance, corporate
secretarial services and assistance in the preparation and filing of tax
returns and reports to shareholders and the SEC. The Fund pays the
Administrator a monthly fee at the annual rate of 0.15% of the Fund's average
daily net assets and the Administrator is entitled to reimbursement from the
Fund for its out-of-pocket expenses incurred under the Administration Agreement.
Pursuant to the Administration Agreement, the Administrator will be paid a
minimum fee of $25,000 for services provided to the Fund during its first year
of operation and a minimum fee of $50,000 for the second and third years of the
Fund's operation.
Transfer Agent
Unified Advisers, Inc. (in its capacity as Transfer Agent, the
"Transfer Agent") acts as the Fund's Transfer Agent pursuant to a transfer
agency, dividend disbursing agency and shareholder servicing agency
agreement (the "Transfer Agency and Service Agreement"). Pursuant to the
Transfer Agency and Service Agreement, the Transfer Agent is responsible for
the issuance, transfer and redemption of shares and the opening and
maintenance of shareholder accounts. The Fund pays the Transfer Agent a
monthly fee of $1.30 per shareholder account subject to a minimum of $1,500
per month and the Transfer Agent is entitled to reimbursement from the Fund
for out-of-pocket expenses incurred by the Transfer Agent under the Transfer
Agency Agreement.
PURCHASE OF SHARES
The Fund is offering its shares at a public offering price equal to the
net asset value. The Fund has no sales charge for purchases of its shares.
Shares may be purchased directly from the Distributor or from other securities
dealers with whom the Distributor has entered into selected dealer agreements.
The minimum initial investment of the Fund is $1,000. The minimum
subsequent purchase is $500. The Fund reserves the right to waive the
minimum initial investment amount, and minimum subsequent purchase amount.
The offering of shares of the Fund is continuous and purchases of shares of
the Fund may be made on any day the New York Stock Exchange is open for business
(a "Business Day"). The Fund offers shares at a public offering price equal
to the net asset value next determined after receipt of a purchase order by
the Distributor. Any order may be rejected by the Distributor or the Fund.
Neither the Distributor nor the selected dealers are permitted to withhold
placing orders to benefit themselves by a price change. The Fund reserves the
right to suspend the sale of its shares to the public in response to conditions
in the securities market or otherwise, and may thereafter resume the sale of
its shares from time to time. Shares purchased will be held in the
shareholder's account by the Transfer Agent. Share certificates will not be
issued by the Transfer Agent.
Purchases of shares can be made by wire transfer, check or money
order. Share purchase orders are effective on the date Federal funds become
available to the Fund in the Fund's account with the Transfer Agent as set forth
below. The trade date assigned to the Shareholder's transaction will be the day
Federal funds become available (typically two business days after the
completed Account Application and check are received by the Transfer Agent).
The shareholder's bank may impose a charge to execute a wire transfer. The
wiring instructions for purchasing shares of the Fund are:
Fifth Third Bank
Cincinnati, OH
ABA # 042000314
Attn: Fifth Third - Central Indiana
Acct: 747-88013
Benf: Holland Balanced Fund
F/F/C (Shareholder's Account at Fund)
Share purchase orders made with a check or money order should be mailed to
the following address:
Holland Balanced Fund
c/o Unified Advisers, Inc.
P.O. Box 6110
Indianapolis, IN 46206-6110
For a share purchase order to become effective on a particular Business Day,
prior to the close of the New York Stock Exchange (normally 4:00 p.m. Eastern
time), (i) in the case of a wire transfer payment, a purchaser must call AMT
Capital at (800) 30-HOLLAND [1-800-304-6553] to inform the Fund of the
incoming wire transfer or (ii) in the case of payment by check or money order, a
complete share purchase order must be actually received by the Transfer Agent,
and, in either case, Federal funds must be received by the Fund. If Federal
funds are received by the Fund that same day, the order will be effective on
that day. If the Fund receives notification of a wire transfer or a complete
share purchase order after the close of the New York Stock Exchange, or if
Federal funds are not received by the Transfer Agent, such purchase order shall
be executed as of the date that Federal funds are actually received.
REDEMPTION OF SHARES
The Fund will redeem all full and fractional shares of the Fund upon request
of shareholders. The redemption price is the net asset value per share next
determined after receipt by the Transfer Agent or Distributor (or selected
dealers) of proper notice of redemption as described below. Shareholders
liquidating their holdings will receive upon redemption all dividends reinvested
through the date of redemption. If notice of redemption is received by the
Transfer Agent or Distributor (or selected dealers) on any Business Day, the
redemption will be effective on the date of receipt. Payment will ordinarily
be made by wire on the next Business Day, but, in any case, within no more than
seven business days from the date of receipt. If the notice is received on a
day that is not a Business Day or after the close of the New York Stock
Exchange, the redemption notice will be deemed received as of the next Business
Day. The value of shares at the time of redemption may be more or less than the
shareholder's cost depending on the market value of the securities held by
the Fund at such time.
A shareholder may elect to receive payment upon redemption
of their shares in the form of a wire or check. There is no charge imposed by
the Fund to redeem shares of the Fund; however, in the case of a redemption by
wire, a shareholder's bank may impose its own wire transfer fee for receipt of
the wire. Redemptions may be executed in any amount requested by the
shareholder up to the amount such shareholder has invested in the Fund.
A shareholder wishing to redeem shares may do so by mailing
proper notice of redemption directly to the Transfer Agent, Unified Advisers,
Inc. P.O. Box 6110, Indianapolis, IN 46206-6110. Proper notice of
redemption may be accomplished by a written letter requesting redemption.
The notice requires the signature of all persons in whose names the shares are
registered, signed exactly as their names appear on the Transfer Agent's
register. The signatures on the notice must be guaranteed by a national bank
or other bank which is a member of the Federal Reserve System (not a savings
bank) or by a member firm of any national or regional securities exchange.
Notarized signatures are not sufficient. In certain instances, the Transfer
Agent may require additional documents such as, but not limited to, trust
instruments, death certificates, appointments as executor or administrator or
certificates of corporate authority. For shareholders redeeming directly with
the Transfer Agent, payment will be mailed within seven days of receipt of a
proper notice of redemption. The Fund reserves the right to reject any order
for redemption.
Redemption by Wire
To redeem shares, a shareholder or any authorized agent (so
designated on the Account Application Form) must provide the Transfer Agent
or Distributor (or selected dealers) with the dollar or share amount to be
redeemed, the account to which the redemption proceeds should be wired
(which account shall have been previously designated by the shareholder on its
Account Application Form), the name of the shareholder and the shareholder's
account number.
A shareholder may change its authorized agent or the account
designated to receive redemption proceeds at any time by writing to the
Transfer Agent or Distributor (or selected dealers) with an appropriate
signature guarantee. Further documentation may be required when deemed
appropriate by the Transfer Agent.
Telephone Redemption
A shareholder may request redemption by calling the Transfer Agent at
(800) 249-0763 or the Distributor at (800) 30-HOLLAND [1-800-304-6553] (or
selected dealers at their number). Telephone redemption is made available to
shareholders of the Fund on the Account Application Form. Shareholders should
realize that by making redemption requests by telephone, they may be giving up
a measure of security that they may have if they were to redeem their shares
in writing. The Fund reserves the right to refuse a telephone request for
redemption if it is believed advisable to do so. Procedures for redeeming
shares by telephone may be modified or terminated at any time by the Fund.
Neither the Fund nor the Transfer Agent will be liable for following redemption
instructions received by telephone, which are reasonably believed to be
genuine, and the shareholder will bear the risk of loss in the event of
unauthorized or fraudulent telephone instructions. The Fund and the Transfer
Agent will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine. The Fund and/or the Transfer Agent
may be liable for any losses due to unauthorized or fraudulent instructions in
the absence of following these procedures. The Fund or the Transfer Agent
may require personal identification codes. Checks will be made payable to the
registered shareholders and sent to the address of record on file with the
Transfer Agent. Payments by wire will only be made to the registered holders
through pre-existing bank account instructions. No bank instruction changes
will be accepted via telephone.
Small Accounts
Under the Fund's present policy, it reserves the right to redeem upon not
less than 30 days' notice, the shares in an account which has a value of $500
or less if the reduction in value is the result of shareholder redemptions or
transfers and not as a result of a decline in the net asset value. However, any
shareholder affected by the exercise of this right will be allowed to make
additional investments prior to the date fixed for redemption to avoid
liquidation of the account.
THE FUND'S PERFORMANCE
Total Return
From time to time, the Fund may advertise certain information about
its performance. The Fund may present its "average annual total return" over
various periods of time. Such total return figures show the average annual
percentage change in value of an investment in the Fund from the beginning
date of the measuring period to the end of the measuring period. These figures
reflect changes in the price of the Fund's shares and assume that any income
dividends and/or capital gains distributions made by the Fund during the period
were reinvested in shares of the Fund. Figures may be given for the most
current one-, three- and five-year periods and may be given for other periods as
well. When considering "average" total return figures for periods longer than
one year, it is important to note that the Fund's annual total return for any
one year in the period might have been greater or less than the average for the
entire period. In addition, the Fund may make available information as to its
respective "yield" and "effective yield" over a thirty-day period, as calculated
in accordance with the Commission's prescribed formula. The "effective yield"
assumes that the income earned by an investment in the Fund is reinvested, and
will therefore be slightly higher than the yield because of the compounding
effect of this assumed reinvestment.
Furthermore, in reports or other communications to shareholders or in
advertising material, the Fund may compare its performance with that of other
mutual funds as listed in the rankings prepared by Lipper Analytical Services,
Inc. or similar independent services which monitor the performance of mutual
funds, other industry or financial publications or financial indices such as the
Standard & Poor's Composite Index of 500 Stocks. It is important to note that
the total return figures are based on historical earnings and are not intended
to indicate future performance.
SHAREHOLDER SERVICES
The Fund offers a number of shareholder services designed to
facilitate investment in its shares. Full details as to each of such services,
copies of the various plans described below and instructions as to how to
participate in the various services or plans, or how to change options with
respect thereto, can be obtained from the Fund or the Distributor.
Investment Account. Each shareholder whose account is maintained at
the Transfer Agent has an Investment Account and will receive statements from
the Transfer Agent after each share transaction, including reinvestment of
dividends and capital gains distributions, showing the activity in the account
since the beginning of the year. Shareholders may make additions to their
Investment Account at any time by mailing a check directly to the Transfer
Agent.
Automatic Investment Plan. An investor who opens an account and
wishes to make subsequent, periodic investments in a Fund by electronic funds
transfer from a bank account may establish an Automatic Investment Plan on the
account. The investor specifies the frequency (monthly, quarterly or yearly)
and the automatic investment amount ($100 or more).
Automatic Clearing House Purchases. An investor may, athis request, make
additional investments into the Fund by givimg his bank a voided check with pre-
arranged instructions to withdraw funds from his Bank Account and deposit such
funds into his Holland Balanced Fund Account.
Automatic Reinvestment of Dividends and Capital Gains Distributions. All
dividends and capital gains distributions are reinvested automatically in full
and fractional shares of the Fund, without sales charge, at the net asset value
per share next determined on the ex-dividend date of such distribution. A
shareholder may at any time, by written notification to the Transfer Agent,
elect to have subsequent dividends or both dividends and capital gains paid
in cash rather than reinvested, in which event payment will be mailed on the
payment date.
IRAs. A prototype IRA is available generally for all working
individuals who receive compensation (which for self-employed individuals
includes earned income) for services rendered and for all individuals who
receive alimony or separate maintenance payments pursuant to a divorce or
separation instrument. Contributions to an IRA made available by the Fund
may be invested in shares of the Fund. Shareholders should consult with a
financial adviser regarding an IRA.
Shareholders will be able to inquire about their Fund accounts by
calling the Transfer Agent at (800) 249-0763. Also, shareholders can receive
Fund's net asset value per share information by calling the toll-free number.
ADDITIONAL INFORMATION
Dividends and Distributions
It is the Fund's intention to distribute all its net investment income, if
any. Dividends from such net investment income are paid quarterly. All net
realized long- or short-term capital gains, if any, are distributed to the
Fund's shareholders at least annually. Dividends and distributions will be
reinvested automatically in shares of the Fund at net asset value on the ex-
dividend date. Shareholders may elect in writing to receive any such dividends
or distributions, or both, in cash. Dividends and distributions are taxable to
shareholders as discussed below whether they are reinvested in shares of the
Fund or received in cash.
Determination of Net Asset Value
The net asset value of the shares of the Fund is determined once daily
as of the time of the close of trading on the New York Stock Exchange on each
day which such Exchange is open for trading. The net asset value per share is
computed by dividing the sum of the value of the securities held by the Fund
plus any cash or other assets (including interest and dividends accrued but not
yet received) minus all liabilities (including accrued expenses) by the total
number of shares outstanding at such time, rounded to the nearest cent.
Expenses, including the investment advisory fees payable to the Investment
Adviser, are accrued daily.
Portfolio securities which are traded on stock exchanges are valued at the
last sale price as of the close of business on the day the securities are being
valued, or, lacking any sales, at the mean between closing bid and asked prices.
Securities traded in the over-the-counter market, including money market
securities, are valued at the most recent bid prices as obtained from one or
more dealers that make markets in the securities. Money market securities also
may be valued at amortized cost which approximates market value. Portfolio
securities which are traded both in the over-the-counter market and on a stock
exchange are valued according to the broadest and most representative market.
Securities that are primarily traded on foreign exchanges generally are valued
at the preceding closing values of such securities on their respective
exchanges, except that when an occurrence subsequent to the time a value was so
established is likely to have changed such value, then the fair value of those
securities will be determined by consideration of other factors or under the
direction of the Board of Directors. Securities may be valued by independent
pricing services which use prices provided by market-makers or estimates of
market values obtained from yield data relating to instruments or securities
with similar characteristics. Securities and assets 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 Board of Directors of the Fund.
Taxes
The following discussion is only a brief summary of some of the important
tax considerations affecting the Fund and its shareholders. No attempt is made
to present a detailed explanation of all federal, state, local and foreign
income tax considerations, and this discussion is not intended as a substitute
for careful tax planning. Accordingly, potential investors are urged to consult
their own tax advisers with specific reference to their own tax situation.
The Fund intends to qualify and elect to be treated as a "regulated
investment company" for federal income tax purposes under Subchapter M of
the Internal Revenue Code of 1986, as amended (the "Code"). If so qualified,
the Fund will not be subject to federal income taxes on its investment company
taxable income (as that term is defined in the Code, determined without regard
to the deduction for dividends paid) and net capital gain (the excess of the
Fund's net long-term capital gain over its net short-term capital loss), if any,
that it distributes to its shareholders in each taxable year. To qualify as a
regulated investment company, the Fund must, among other things, distribute to
its shareholders at least 90% of its net investment company taxable income for
such taxable year, and at least 90% of its net tax-exempt interest income, if
any, for such taxable year. However, the Fund would be subject to corporate
federal income tax at a rate of 35% on any undistributed income or net capital
gain. The Fund must also derive less than 30% of its gross income in each
taxable year from the sale or other disposition of certain securities held
for less than three months (the "30% limitation"). The Fund will be subject
to a 4% nondeductible excise tax on its taxable income to the extent it does
not meet certain distribution requirements. If in any year the Fund should
fail to qualify as a regulated investment company, the Fund would be subject
to federal income tax in the same manner as an ordinary corporation and
distributions to shareholders would be taxable to such holders as ordinary
income to the extent of the earnings and profits of the Fund. Such
distributions would qualify for the dividends-received deduction available to
corporate shareholders. Distributions in excess of earnings and profits will
be treated as a tax-free return of capital, to the extent of a holder's basis
in its shares, and any excess, as a long- or short-term capital gain.
Distributions paid by the Fund from net investment income including any
short-term capital gain but not "net capital gain" (defined as the excess of net
long-term capital gains over short term capital losses) are designated by the
Fund as "ordinary income dividends" and, whether in cash or reinvested in
additional shares, will be taxable to Fund shareholders that are otherwise
subject to tax as ordinary income. A portion of the Fund's ordinary income
dividends may be eligible for the dividends-received deduction for corporations
if certain requirements are met. Distributions made from the Fund's net capital
gain which are designated by the Fund as "capital gains" dividends are taxable
to shareholders as long-term capital gains, regardless of the length of time the
shareholder has owned Fund shares. Shareholders receiving distributions from
the Fund in the form of additional shares will be treated for federal income tax
purposes as receiving a distribution in an amount equal to the net asset value
of the additional shares on the date of such a distribution.
Gain or loss, if any, recognized on the sale or other disposition of shares
of the Fund will be taxed as capital gain or loss if the shares are capital
assets in the shareholder's hands. Generally, a shareholder's gain or loss will
be a long-term gain or loss if the shares have been held for more than one year.
If a shareholder sells or otherwise disposes of a share of the Fund before
holding it for more than six months, any loss on the sale or other disposition
of such share shall be treated as a long-term capital loss to the extent of any
capital gain dividends received by the shareholder with respect to such share. A
loss realized on a sale or exchange of shares may be disallowed if other shares
are acquired within a 61-day period beginning 30 days before and ending 30 days
after the date that the shares are disposed of.
Dividends and distributions by the Fund are generally taxable to the
shareholders at the time the dividend or distribution is made. Any dividend
declared in October, November or December of any year, however, that is
payable to shareholders of record on a specified date in such months will be
deemed to have been received by the shareholders and paid by the Fund on
December 31 of such year in the event such dividends are actually paid during
January of the following year.
The Fund may be required to withhold federal income tax at a rate of
31% ("backup withholding") from dividends and redemption proceeds paid to
non-corporate shareholders. This tax may be withheld from dividends if (i) the
shareholder fails to furnish the Fund with the shareholder's correct taxpayer
identification number, (ii) the Internal Revenue Service ("IRS") notifies the
Fund that the shareholder has failed to report properly certain interest and
dividend income to the IRS and to respond to notices to that effect, or (iii)
when required to do so, the shareholder fails to certify that he or she is not
subject to backup withholding.
Organization of the Fund
The Fund is a diversified portfolio of Holland Series Fund, Inc. (the
"Series Fund"), an open-end management investment company, which was
incorporated under Maryland law on June 27, 1995. The Series Fund has an
authorized capital of 1,000,000,000 shares of Common Stock, par value $0.01
per share. Holland Balanced Fund currently is the only organized portfolio.
The Board of Directors may, in the future, authorize the issuance of additional
classes of capital stock representing shares of additional investment
portfolios. All shares of each fund will have equal voting rights and each
shareholder is entitled to one vote for each full share held and fractional
votes for fractional shares held and will vote on the election of Directors and
any other matter submitted to a shareholder vote. The Series Fund is not
required and does not intend to hold meetings of shareholders. The Fund has
undertaken to call a meeting of shareholders upon a written request of 10% of
the Fund's outstanding shares, for the purpose of voting on removal of one or
more directors and the Fund will assist shareholder communications with regard
to such a meeting, as provided under Section 16(c) of the 1940 Act. Shares of
the Fund are issued are fully paid and non-assessable and have no preemptive or
conversion rights. Each share is entitled to participate equally in dividends
and distributions declared by the Fund and in the net assets of the Fund on
liquidation or dissolution after satisfaction of outstanding liabilities.
Shareholder Inquiries
Shareholder inquiries may be addressed to the Fund or the Distributor
at the addresses or telephone numbers set forth on the cover page of this
Prospectus.
APPENDIX A
Description of Bond Ratings*
Moody's Investors Service, Inc.
Aaa: Bonds which are rated Aaa are judged to be of the best quality
and carry the smallest degree of investment risk. Interest payments are
protected by a large or by an exceptionally stable margin and principal is
secure. While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the fundamentally
strong position of such issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what generally are known
as high grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.
A: Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may
be present which suggest a susceptibility to impairment sometime in the future.
Baa: Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and
in fact have speculative characteristics as well.
Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking and the modifier 3
indicates that the issue ranks in the lower end of its generic rating category.
Standard & Poor's Corporation
AAA: Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.
AA: Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
A: Debt rated A has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.
BBB: Debt rated BBB is regarded as having an adequate capacity to
pay interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to pay interest and repay
principal for debt in this category than in higher rated categories.
* As described by the rating companies themselves.
APPENDIX B
Description of Commercial Paper Ratings
Moody's Investors Service, Inc.
Prime-1 Issuers (or related supporting institutions) rated "Prime-1"
have a superior ability for repayment of senior short-term debt obligations.
"Prime-1" repayment ability will often be evidenced by many of the following
characteristics: leading market positions in well-established industries, high
rates of return on funds employed, conservative capitalization structures with
moderate reliance on debt and ample asset protection, broad margins in
earnings coverage of fixed financial charges and high internal cash generation,
and well-established access to a range of financial markets and assured sources
of alternate liquidity.
Prime-2 Issuers (or related supporting institutions) rated "Prime-2" have
a strong ability for repayment of senior short-term debt obligations. This
will normally be evidenced by many of the characteristics cited above but to a
lesser degree. Earnings trends and coverage ratios, while sound, will be more
subject to variation. Capitalization characteristics, while still appropriate,
may be more affected by external conditions. Ample alternative liquidity is
maintained.
Standard & Poor's Corporation
A-1 This highest category indicates that the degree of safety
regarding timely payment is strong. Those issues determined to possess
extremely strong safety characteristics are denoted with a plus (+) sign
designation.
A-2 Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated "A-1".
Table of Contents
Page
PROSPECTUS SUMMARY 2
THE FUND'S EXPENSES 3
INVESTMENT OBJECTIVE AND POLICIES 5
INVESTMENT LIMITATIONS 6
RISK FACTORS 6
MANAGEMENT OF THE FUND 7
PURCHASE OF SHARES 9
REDEMPTION OF SHARES 10
THE FUND'S PERFORMANCE 11
SHAREHOLDER SERVICES 12
ADDITIONAL INFORMATION 12
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED
IN THIS PROSPECTUS, IN CONNECTION WITH THE OFFER CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY A FUND, THE DISTRIBUTOR
OR THE INVESTMENT ADVISER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING
IN ANY STATE IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE.
STATEMENT OF ADDITIONAL INFORMATION
HOLLAND BALANCED FUND
600 Fifth Avenue, New York, New York 10020 Phone No. (800) 30-HOLLAND
[800-304-6553]
Holland Balanced Fund (the "Fund") is a no-load diversified portfolio of
Holland Series Fund, Inc., an open-end management investment company. 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 high total investment return
from a combined portfolio of equity and investment grade fixed-income
securities. There can be no assurance that the Fund's objective will be
attained.
This Statement of Additional Information of the Fund is not a
prospectus and should be read in conjunction with the prospectus of the Fund,
dated February 15, 1996 (the "Prospectus"), which has been filed with the
Securities and Exchange Commission and can be obtained, without charge, by
calling or by writing the Fund at the above telephone number or address. This
Statement of Additional Information has been incorporated by reference into
the Prospectus.
Holland & Company L.L.C.--Investment Adviser
AMT Capital Services, Inc.--Distributor
The date of this Statement of Additional Information is February 15, 1996.
ADDITIONAL INFORMATION ON PORTFOLIO INSTRUMENTS AND INVESTMENT POLICIES
Repurchase Agreements
The Fund may enter into repurchase agreements. A repurchase agreement is a
transaction in which the seller of a security commits itself at the time of
the sale to repurchase that security from the buyer at a mutually agreed upon
time and price. Repurchase agreements may be characterized as loans which are
collateralized by the underlying securities. The Fund will enter into repurchase
agreements only with respect to obligations that could otherwise be purchased
by the Fund. The Fund will enter into repurchase agreements only with dealers,
domestic banks or recognized financial institutions which, in the opinion of
the investment adviser, Holland & Company, L.L.C. (the "Investment Adviser")
based on guidelines established by the Fund's Board of Directors, are deemed
creditworthy. The Investment Adviser will monitor the value of the securities
underlying the repurchase agreement at the time the transaction is entered
into and at all times during the term of the repurchase agreement to ensure
that the value of the securities always equals or exceeds the repurchase price.
The Fund requires that additional securities be deposited if the value of the
securities purchased decreases below their resale price and does not bear the
risk of a decline in the value of the underlying security unless the seller
defaults under the repurchase obligation. In the event of default by the seller
under the repurchase agreement, the Fund could experience losses that include:
(i) possible decline in the value of the underlying security during the period
while the Fund seeks to enforce its rights thereto; (ii) additional expenses to
the Fund for enforcing those rights; (iii) possible loss of all or part of the
income or proceeds of the repurchase agreement; and (iv) possible delay in the
disposition of the underlying security pending court action or possible loss of
rights in such securities. Repurchase agreements with maturities of more than
seven days will be treated as illiquid securities by the Fund.
Firm Commitments and When-Issued Securities
The Fund may purchase securities on a firm commitment basis, including when-
issued securities. Securities purchased on a firm commitment basis are
purchased for delivery beyond the normal settlement date at a stated price and
yield. No income accrues to the purchaser of a security on a firm commitment
basis prior to delivery. Such securities are recorded as an asset and are
subject to changes in value based upon changes in the general level of interest
rates. Purchasing a security on a firm commitment basis can involve a risk
that the market price at the time of delivery may be lower than the agreed upon
purchase price, in which case there could be an unrealized loss at the time of
delivery. The Fund will only make commitments to purchase securities on a firm
commitment basis with the intention of actually acquiring the securities, but
may sell them before the settlement date if it is deemed advisable. The Fund
will establish a segregated account in which it will maintain liquid assets in
an amount at least equal in value to the Fund's commitments to purchase
securities on a firm commitment basis. If the value of these assets declines,
the Fund will place additional liquid assets in the account on a daily basis so
that the value of the assets in the account is equal to the amount of such
commitments.
Borrowing
The Fund may borrow in certain limited circumstances. See "Investment
Limitations." Borrowing creates an opportunity for increased return, but, at
the same time, creates special risks. For example, borrowing may exaggerate
changes in the net asset value of the Fund's portfolio. Although the principal
of any borrowing will be fixed, the Fund's assets may change in value during the
time the borrowing is outstanding. The Fund may be required to liquidate
portfolio securities at a time when it would be disadvantageous to do so in
order to make payments with respect to any borrowing, which could affect the
investment manager's strategy and the ability of the fund to comply with certain
provisions of the Internal Revenue Code of 1986, as amended (the "Code") in
order to provide "pass-though" tax treatment to shareholders. Furthermore, if
the Fund were to engage in borrowing, an increase in interest rates could
reduce the value of the Fund's shares by increasing the Fund's interest
expense.
Warrants
The Fund may invest in warrants, which are securities permitting, but not
obligating, their holder to subscribe for other securities. Warrants do not
carry the right to dividends or voting rights with respect to their underlying
securities, and they do not represent any rights in assets of the issuer. An
investment in warrants may be considered speculative. In addition, the value
of a warrant does not necessarily change with the value of the underlying
securities and a warrant ceases to have value if it is not exercised prior to
its expiration date.
Foreign Securities
In addition to risks identified in the Prospectus, other investment risks
associated with foreign securities include the possible seizure or
nationalization of foreign assets and the possible establishment of exchange
controls, expropriation, confiscatory taxation, other foreign governmental laws
or restrictions which might affect adversely payments due on securities held by
the Fund, the lack of extensive operating experience of eligible foreign
subcustodians and legal limitations on the ability of the Fund to recover assets
held in custody by a foreign subcustodian in the event of the subcustodian's
bankruptcy. Finally, in the event of a default in any such foreign obligations,
it may be more difficult for the Fund to obtain or enforce a judgment against
the issuers of such obligations.
Sovereign Debt
Investment in certain debt obligations issued or guaranteed by
a government, its agencies or instrumentalities ("Sovereign Debt") involves a
high degree of risk. The governmental entity that controls the repayment of
Sovereign Debt may not be willing or able to repay the principal and/or interest
when due in accordance with the terms of such debt. Holders of Sovereign
Debt, including the Fund, may be requested to participate in the rescheduling of
such debt and to extend further loans to governmental entities. A foreign
sovereign itself would not be subject to traditional bankruptcy proceedings by
which Sovereign Debt on which it has defaulted may be collected in whole or in
part, and certain sovereign entities may not be subject to such proceedings.
Further, the Fund may have difficulty disposing of certain Sovereign Debt
obligations, as there may be a thin trading market for such securities.
INVESTMENT RESTRICTIONS
In addition to the investment restrictions set forth in the Prospectus, the
Fund has adopted the following restrictions and policies relating to the
investment of its assets and its activities. The Fund may not:
1. Make investments for the purpose of exercising control or management.
2. Purchase securities of other investment companies except as permitted under
the 1940 Act or in connection with a merger, consolidation, acquisition or
reorganization.
3. Purchase or sell real estate, provided that the Fund may invest in
securities secured by real estate or interests therein or issued by
companies which invest in real estate or interests therein.
4. Purchase or sell commodities or commodity contracts.
5. Underwrite securities of other issuers except insofar as the Fund may be
deemed an underwriter under the Securities Act of 1933 in selling portfolio
securities.
6. Make loans, except that (a) the Fund may purchase and hold debt securities
in accordance with its investment objective(s) and policies, (b) the Fund
may enter into repurchase agreements with respect to portfolio securities,
subject to applicable limitations of its investment policies, and (c) delays
in the settlement of securities transactions will not be considered loans.
7. Purchase any securities on margin, except that the Fund may (i) purchase
delayed delivery or when issued securities, and (ii) obtain such short-term
credits as may be necessary for the clearance of purchases and sales of
portfolio securities.
8. Sell securities short.
9. Purchase securities of issuers which it is restricted from selling to the
public without registration under the 1933 Act if by reason thereof the
value of its aggregate investment in such securities will exceed 10% of its
total assets.
10. Write, purchase or sell puts, calls, straddles, spreads or combinations
thereof.
11. Purchase or sell interests in oil, gas or other mineral exploration or
development programs provided, however, that this shall not prohibit a
Fund from purchasing publicly traded securities of companies engaging in
whole or in part in such activities.
12. Purchase or retain any securities of an issuer if one or more persons
affiliated with a Fund owns beneficially more than 1/2 of 1% of the
outstanding securities of such issuer and such affiliated persons so
owning 1/2 of 1% together own beneficially more than 5% of such securities.
13. Invest more than 5% of its total assets in securities of unseasoned issuers
(other than securities issued or guaranteed by U.S. federal or state or
foreign governments or agencies, instrumentalities or political
subdivisions thereof) which, including their predecessors, have been in
operation for less than three years.
14. Invest in warrants (other than warrants acquired by the Fund as part of a
unit or attached to securities at the time of purchase) if, as a result,
the investments (valued at the lower of cost or market) would exceed 5% of
the value of the Fund's net assets or if, as a result, more than 2% of the
Fund's net assets would be invested in warrants that are not listed on the
American Stock Exchange or the New York Stock Exchange.
Investment restrictions (1) through (6) described above and the
restrictions discussed under "Investment Limitations" in the Prospectus are
fundamental policies of the Fund and may be changed only with the affirmative
vote of the holders of a majority of the Fund's outstanding voting securities,
as defined in the Investment Company Act of 1940, as amended (the "1940 Act").
Restrictions (7) through (14) are non-fundamental policies of the Fund and
may be changed by a majority of the Board of Directors of the Fund.
MANAGEMENT OF THE FUND
Directors and Officers
The Directors and executive officers of the Fund and their principal
occupations for at least the last five years are set forth below. Unless
otherwise noted, the address of each executive officer and Director is 375
Park Ave., New York, New York 10152.
Name, Address and Age Position with the Company Principal Occupation
Michael F. Holland*/ Director and President During Past Five Years
Age: 51 Holland & Company
L.L.C., Chairman,
6/95 - present; The
Blackstone Group,
general partner, 1/84 -
5/95; Oppenheimer &
Company Inc., Vice
Chairman, 3/92 - 1/94;
Salomon Brothers Asset
Management Inc.,
Chairman and Chief
Executive Officer,
5/89 - 3/92; Salomon
Brothers Inc., Managing
Director 5/89 - 3/92.
Sheldon S. Gordon*/ Director Blackstone Alternative
Age: 59 Asset Management L.P.,
Chairman 1/93 - present;
The Blackstone Group,
general partner 4/91 -
5/95; Blackstone Europe,
Chairman, 4/91 - 6/93;
Stamford Capital Group,
Inc., Chairman and Chief
Executive Officer, 1/85
-8/90.
Herbert S. Winokur, Jr. Director Capricorn Investors,L.P.
Age: 52 Managing General Partner
9/87 - present
Capricorn Management
72 Cummings Point Road
Stamford, CT 06902
Desmond G. FitzGerald Director North American
Age: 52 Properties Group,
Chairman, 1/87 - present
American Housing Corp.,
Chairman, 12/86 - 8/93
North American
Properties Group
2015 West Main Street
Stamford, CT 06902
Jeff Tarr Director Junction Advisors,
Age: 51 Chairman, 1/81 - present
Junction Advisors, Inc.
9 West 57th Street,
Suite 4650
New York, NY 10019
William E. Vastardis Secretary and Treasurer AMT Capital Services,
Age: 40 Inc.,Senior Vice
President 7/92 - present
Vanguard Group Inc., Vice
President, 1/87 - 4/92
AMT Capital,Inc.
600 Fifth Avenue,
26th Floor
New York, NY 10020
Carla E. Dearing Assistant Treasurer AMT Capital Services,
Age: 33 Inc., Managing Director,
Principal, and Director,
1/92 - present; AMT
Capital Advisers, Inc.,
Principal and Senior
Vice President, 1/92 -
present; Morgan Stanley
& Co., Vice President,
11/88 - 1/92.
AMT Capital, Inc.
600 Fifth Avenue
26th Floor
New York, NY 10020
*/ interested person as defined in the 1940 Act
Pursuant to the terms of the Fund's investment advisory agreement and
administration agreement, the Investment Adviser or AMT Capital Services, Inc.
(the "Administrator") pays all compensation of officers and employees of the
Fund and the Investment Adviser pays the fees of all Directors of the Fund who
are affiliated persons of the Investment Adviser. The Fund pays each
unaffiliated 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.
Management and Advisory Arrangements
Reference is made to "Management of the Fund--Management and Advisory
Arrangements" in the Prospectus for certain information concerning the
management and advisory arrangements of the Fund.
The investment advisory agreement dated September 28, 1995 with the
Investment Adviser (the "Investment Advisory Agreement") provides that, subject
to the direction of the Board of Directors of the Fund, the Investment Adviser
is responsible for the actual management of the Fund's portfolio. The
responsibility for making decisions to buy, sell or hold a particular security
rests with the Investment Adviser, subject to review by the Board of Directors.
The Investment Adviser provides the portfolio manager for the Fund, who
considers analyses from various sources, makes the necessary investment
decisions and places transactions accordingly. As compensation for its services
to the Fund, the Investment Adviser receives monthly compensation at the annual
rate of 0.75% of the average daily net assets of the Fund.
Investment decisions for the Fund are made independently from those of
other accounts managed by the Investment Adviser. Securities held by the Fund
also may be held by, or be appropriate investments for, other investment
advisory clients of the Investment Adviser. Because of different objectives or
other factors, a particular security may be bought for one or more clients when
one or more clients are selling the same security. If purchases or sales of
securities for the Fund or other advisory clients of the Investment Adviser
arise for consideration at or about the same time, transactions in such
securities will be made, insofar as feasible, for the respective funds and
clients in a manner deemed equitable to all. To the extent that transactions
on behalf of more than one client of the Investment Adviser during the same
period may increase the demand for securities being purchased or the supply of
securities being sold, there may be an adverse effect on price or the size of
the position obtained.
The Investment Advisory Agreement obligates the Investment Adviser to
provide investment advisory services and all the office space, facilities,
equipment and personnel necessary to perform its duties under the Investment
Advisory Agreement. The Fund pays all other expenses incurred in the operation
of the Fund including, among other things, taxes, expenses for legal and
auditing services, costs of printing proxies, stock certificates, shareholder
reports, prospectuses and statements of additional information, charges of the
custodian and the transfer agent, expenses of redemption of shares, Securities
and Exchange Commission ("SEC") fees, expenses of registering the shares under
Federal and state securities laws, fees and expenses of unaffiliated Directors,
accounting and pricing costs (including the daily calculation of net asset
value), insurance, interest, brokerage costs, litigation and other extraordinary
or non-recurring expenses, and other expenses properly payable by the Fund.
Unless earlier terminated as described below, the Investment Advisory
Agreement will remain in effect for two years and thereafter, from year to year
if approved annually (a) by the Board of Directors of the Fund or by a majority
of the outstanding shares of the Fund and (b) by a majority of the Directors
who are not parties to such contract or interested persons (as defined in the
1940 Act) of any such party. Such contract is not assignable and may be
terminated without penalty on 60 days' written notice at the option of either
party thereto or by the vote of the shareholders of the Fund.
The Investment Adviser is controlled by Michael Holland, its managing
member and owner of a 99% interest in the limited liability company.
Additionally, as of January 31, 1996, Michael Holland owned 26.17% of the
outstanding shares of the Fund and consequently is a controlling person in
the Fund.
Administrator
AMT Capital Services, Inc. (the "Administrator") acts as the Fund's
administrator pursuant to an administration agreement (the "Administration
Agreement"). Pursuant to the Administration Agreement dated September 28, 1995,
the Administrator is responsible for providing administrative services to the
Fund, and assists in managing and supervising all aspects of the general day-to-
day business activities and operations of the Fund other than investment
advisory activities including certain accounting, auditing, clerical,
bookkeeping, custodial, transfer agency, dividend disbursing, compliance and
related services, Blue Sky compliance, corporate secretarial services and
assistance in the preparation and filing of tax returns and reports to
shareholders and the SEC. The Fund pays the Administrator a monthly fee at the
annual rate of 0.15% of the Fund's average daily net assets and the
Administrator is entitled to reimbursement from the Fund for its out-of-pocket
expenses incurred under the Administration Agreement. The Administrator will
be paid a minimum fee of $25,000 for services provided to the Fund during its
first year of operation and a minimum fee of $50,000 for the second and third
years of the Fund's operations.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of January 31, 1996, the following persons held 5 percent or more of the
outstanding shares of the Holland Balanced Fund:
Name and Address Amount and Nature of Percent
Title of Class of Beneficial Owner Beneficial Ownership of Ownership
Commom Stock Michael F. Holland* Direct Ownership 26.17%
$.01 per Share One Greenley Road
New Canaan,
CT 06840
Common Stock Fredrick Marcus Direct Ownership 6.54%
$.01 per Share Trace Int'l Holdings
Inc.
375 Park Avenue
New York, NY 10152
Common Stock The Ramsdell Family Direct Ownership 5.16%
$.01 per Share Trust
474 Paseo Micainer
Pacific Palisades,
CA 90272
* As of January 31, 1996, the following shareholder is deemed a "control
person": as such term is defined in the 1940 Act due to his holdings of 26.17%
of the outstanding shares of the Common Stock ($.01 par value of the Fund).
REDEMPTION OF SHARES
Reference is made to "Redemption of Shares" in the Prospectus for certain
information as to the redemption and repurchase of Fund shares.
The right to redeem shares or to receive payment with respect
to any such redemption may only be suspended for any period during which
trading on the New York Stock Exchange is restricted as determined by the
SEC or such Exchange is closed (other than customary weekend and holiday
closings), for any period during which an emergency exists as defined by the
SEC as a result of which disposal of portfolio securities or determination of
the net asset value of the Fund is not reasonably practicable, and for such
other periods as the SEC may by order permit for the protection of shareholders
of the Fund.
Shares are redeemable at the option of the Fund at net asset value if, in
the opinion of the Fund, ownership of the shares has or may become concentrated
to an extent which would cause the Fund to be deemed a personal holding company
within the meaning of the Code.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to policy established by the Board of Directors, the Investment
Adviser is primarily responsible for the Fund's portfolio decisions and the
placing of the Fund's portfolio transactions. The Fund anticipates that its
annual portfolio turnover rate generally will not exceed 100%.
Fixed-income, certain short-term securities and certain equities normally
will be purchased or sold from or to issuers directly or to dealers serving as
market makers for the securities at a net price, which may include dealer
spreads and underwriting commissions. Equity securities may also be purchased
or sold through brokers who will be paid on commission. In selecting brokers
and dealers, it is the policy of the Fund to obtain the best results taking into
account factors such as the general execution and operational facilities of the
brokers or dealer, the type and size of transaction involved, the
creditworthiness of the broker or dealer, execution and settlement capabilities,
time required to negotiate and execute the trade, research services and the
Investment Adviser's arrangements related thereto, overall performance, the
dealer's risk in positioning the securities involved and the broker's
commissions and dealer's spread or mark-up. While the Investment Adviser
generally seeks the best price in placing its orders, the Fund may not
necessarily be paying the lowest price available.
Notwithstanding the above, in compliance with Section 28(e) of the
Securities Exchange Act of 1934, the Investment Adviser may select brokers who
charge a commission in excess of that charged by other brokers if the Investment
Adviser determines in good faith that the commission to be charged is reasonable
in relation to the brokerage and research services provided to the Investment
Adviser by such brokers. Research services generally consist of research and
statistical reports or oral advice from brokers regarding particular companies,
industries or general economic conditions. The Investment Adviser may also, in
compliance with applicable law, enter into arrangements with brokers pursuant
to which such brokers provide research in exchange for a certain volume of
brokerage transactions to be executed through such broker. While the payment
of higher commissions increases the Fund's costs, the Investment Adviser does
not believe that the receipt of such brokerage and research services
significantly reduces its expenses as the Fund's investment manager. The
Investment Adviser's arrangements for the receipt of research services from
brokers may create conflicts of interest.
Research services furnished to the Investment Adviser by brokers who
effect securities transactions for a Fund may be used by the Investment Adviser
in servicing other investment companies and accounts which it manages.
Similarly, research services furnished to the Investment Adviser by brokers who
effect securities transactions for other investment companies and accounts which
the Investment Adviser manages may be used by the Investment Adviser in
servicing the Fund. Not all of these research services are used by the
Investment Adviser in managing any particular account, including the Fund.
DETERMINATION OF NET ASSET VALUE
The net asset value of the shares of the Fund is determined once daily
Monday through Friday as of the time of the close of trading on the New York
Stock Exchange on each day during which such Exchange is open for trading. The
New York Stock Exchange is not open on New Year's Day, President's Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. The net asset value per share is computed by dividing the sum of
the value of the securities held by Fund plus any cash or other assets
(including interest and dividends accrued but not yet received) minus all
liabilities (including accrued expenses) by the total number of shares
outstanding at such time, rounded to the nearest cent. Expenses, including the
investment advisory fees payable to the Investment Adviser, are accrued daily.
Securities and assets 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 Board of Directors of the Fund.
PERFORMANCE DATA
The Fund's "average annual total return" figures described and shown
in the Prospectus are computed according to a formula prescribed by the SEC.
The formula can be expressed as follows:
P(1+T)n=ERV
Where:
P = a hypothetical initial payment of $1000
T = average annual total return
n = number of years
ERV = Ending Redeemable Value of a hypothetical $1,000 payment made at
the
beginning of the 1, 5, or 10 year periods at the end of such periods,
assuming reinvestment of all dividends and distributions.
The total return as defined above for the Fund from its commencement of
investment operations (October 2, 1995) through December 31, 1995 was 5.70%.
In addition to total return, the Fund may quote performance in terms of
a 30-day yield. The yield figures provided will be calculated according to a
formula prescribed by the Commission and can be expressed as follows:
a-b
Yield = 2 [ (----- + 1)^6 - 1 ]
cd
Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the period
that were entitled to receive dividends.
d = the maximum offering price per share on the last day of the period.
The yield as defined above for the Fund for the 30-day period ended
December 31, 1995 was 3.73%.
For the purpose of determining the interest earned (variable "a" in the
formula) on debt obligations that were purchased by a Fund at a discount or
premium, the formula generally calls for amortization of the discount or
premium; the amortization schedule will be adjusted monthly to reflect changes
in the market value of the debt obligations.
Under this formula, interest earned on debt obligations for purposes
of "a" above, is calculated by (1) computing the yield to maturity of each
obligation held by the Fund based on the market value of the obligation
(including actual accrued interest) at the close of business on the last day of
each month, or, with respect to obligations purchased during the month, the
purchase price (plus actual accrued interest), (2) dividing that figure by 360
and multiplying the quotient by the market value of the obligation (including
actual accrued interest as referred to above) to determine the interest income
on the obligation in the Fund's portfolio (assuming a month of 30 days) and (3)
computing the total of the interest earned on all debt obligations during the
30-day or one month period. Undeclared earned income, computed in accordance
with generally accepted accounting principles, may be subtracted from the
maximum offering price calculation required pursuant to "d" above.
SHAREHOLDER SERVICES
The Fund offers a number of shareholder services described below which
are designed to facilitate investment in its shares. Full details as to
each of such services and copies of the various plans described below can be
obtained from the Fund or the Distributor.
Investment Account
Each shareholder whose account is maintained at Unified Advisers, Inc.
(the "Transfer Agent"), P.O. Box 6110, Indianapolis, IN 46206-6110, has an
Investment Account and will receive statements from the Transfer Agent after
each share transaction, including reinvestment of dividends and capital gains
distributions, showing the activity in the account since the beginning of the
year. Shareholders may make additions to their Investment Account at any time
by mailing a check directly to the Transfer Agent. Share certificates will not
be issued by the Transfer Agent.
Automatic Investment Plan
A shareholder may elect to establish an Automatic Investment Plan
pursuant to which funds will automatically be transferred from a bank account
to be invested in the Fund. The bank at which the bank account is maintained
must be a member of the Automated Clearing House. Automatic investments can be
no more frequent than monthly and must be a minimum of $100. The Fund will
debit the specified amount from the account and the proceeds will be invested
at the Fund's offering price determined on the date of the debit.
Automatic Clearing House Purchases.
An investor may, at his request, make additional investments into the
Fund by giving his bank a voided check with pre-arranged instructions to
funds from his from his bank account and deposit such funds into
his Holland Balanced Fund account.
Automatic Reinvestment of Dividends and Capital Gains Distributions
Unless specific instructions are given as to the method of payment of
dividends and capital gains distributions, dividends and distributions will
be reinvested automatically in additional shares of the Fund. Such reinvestment
will be at the net asset value of shares of the Fund, without sales charge, as
of the close of business on the ex-dividend date of the dividend or
distribution. Shareholders may elect in writing to receive either their
dividends or capital gains distributions, or both, in cash, in which event
payment will be mailed on the payment date.
Shareholders may, at any time, notify the Transfer Agent in writing that
they no longer wish to have their dividends and/or capital gains distributions
reinvested in shares of the Fund or vice versa and, commencing ten days after
receipt by the Transfer Agent of such notice, those instructions will be
effected.
Indidual Retirement Accounts (IRA)
A prototype IRA is available, which has been approved as to form by the
Internal Revenue Service ("IRS"). Contributions to an IRA made available by
the Fund may be invested in shares of the Fund.
The Custodian has agreed to serve as custodian of the IRA and furnish
the services provided for in the Custodial Agreement. The Custodian will charge
each IRA an application fee as well as certain additional fees for its services
under the Custodial Agreement. In accordance with IRS regulations, an
individual may revoke an IRA within seven calendar days after it is established.
Contributions in excess of the allowable limits, premature distributions
to an individual who is not disabled before age 59-1/2 or insufficient
distributions after age 70-1/2 will generally result in substantial adverse
tax consequences.
For information required for adopting an IRA, including information on
fees, obtain the form of Custodial Agreement and related materials, including
disclosure materials, available from the Fund. Consultation with a financial
adviser regarding an IRA is recommended.
DIVIDENDS AND DISTRIBUTIONS
The Fund intends to distribute all its net investment income, if any.
Dividends from such net investment income will be paid quarterly. All net
realized long- or short-term capital gains, if any, will be distributed to the
Fund's shareholders at least annually. See "Shareholder Services-automatic
Reinvestment of Dividends and Capital Gains Distributions" for information
concerning the manner in which dividends and distribution may be reinvested
automatically in shares of the Fund.
TAXATION
The following is a general summary of certain federal income tax
considerations affecting the Fund and its shareholders and, except as otherwise
indicated, reflects provisions of the Code as of the date of this Prospectus.
No attempt is made to present a detailed explanation of all federal, state,
local and foreign income tax considerations, and this discussion is not intended
as a substitute for careful tax planning. Accordingly, potential investors
are urged to consult their own tax advisors regarding an investment in the
Fund.
The Fund
The Fund intends to qualify and elect to be treated as a "regulated
investment company" for federal income tax purposes under Subchapter M of the
Code. In order to so qualify, the Fund must, among other things, (a) derive
in each taxable year at least 90% of its gross income from dividends, interest,
payments with respect to loans of securities, gains from the sale or other
disposition of stock or securities, or foreign currencies, or other income
derived with respect to its business of investing in such stock, securities
or currencies (including, but not limited to, gains from options, futures or
forward contracts); (b) derive in each taxable year less than 30% of its gross
income from the sale or other disposition of any of the following held for less
than three months (the "30% limitation"): (i) stock or securities, (ii)
options, futures or forward contracts (other than options, futures or forward
contracts on foreign currencies), or (iii) foreign currencies (or foreign
currency options, futures or forward contracts) that are not directly related
to its principal business of investing in stock or securities (or options and
futures with respect to stocks or securities); and (c) diversify its holdings
so that, at the end of each quarter of each taxable year, (i) at least 50% of
the value of the Fund's assets is represented by cash, cash items, U.S.
Government securities, securities of other regulated investment companies, and
other securities which, with respect to any one issuer, do not represent more
than 5% of the value of the Fund's assets nor more than 10% of the voting
securities of such issuer, and (ii) not more than 25% of the value of the Fund's
assets is invested in the securities of any issuer (other than U.S. Government
securities or the securities of other regulated investment companies) or of any
two or more issuers that the Fund controls and that are engaged in the same,
similar or related trades or businesses.
If the Fund qualifies as a regulated investment company and distributes
to its shareholders at least 90% of its net investment company taxable income
(including any short-term capital gain but not net capital gain, which is the
excess of net long-term capital gains over net short-term capital losses), then
the Fund will not be subject to federal income tax on the income so distributed.
However, the Fund would be subject to corporate income tax (currently at a rate
of 35%) on any undistributed income. The Fund will also not be subject to
federal income tax on any net capital gains distributed to its shareholders.
The Fund currently expects to distribute any such amounts at least annually.
If the Fund retains amounts attributable to its net capital gain, it will be
subject to a corporate tax (currently at a rate of 35%) on the amount retained.
In that event, the Fund expects to designate such retained amounts as
undistributed capital gains in a notice to its shareholders who (i) will be
required to include in income for United States federal income tax purposes, as
long-term capital gains, their proportionate shares of the undistributed amount,
(ii) will be entitled to credit their proportionate shares of the 35% tax paid
by the Fund on the undistributed amounts against their federal income tax
liabilities and to claim refunds to the extent such credits exceed their
liabilities and (iii) will be entitled to increase their tax basis, for federal
income tax purposes, in their shares by an amount equal to 65% of the amount of
undistributed capital gains included in the shareholder's income.
In addition, the Fund will be subject to a nondeductible 4% excise tax
on the amount by which the aggregate income it distributes in any calendar year
is less than the sum of: (a) 98% of the Fund's ordinary income for such calendar
year; (b) 98% of the excess of capital gains over capital losses (both long-
and short-term) for the one-year period ending on October 31 of each year; and
(c) 100% of the undistributed ordinary income and gains from prior years. For
this purpose, any income or gain retained by the Fund that is subject to
corporate tax will be considered to have been distributed by year-end.
The Fund intends to distribute sufficient income so as to avoid both
corporate federal income tax and the excise tax.
The Fund may make investments that produce income that is not matched
by a corresponding cash distribution to the Fund, such as investments in pay-
in-kind bonds or in obligations such as certain Brady Bonds or zero coupon
securities having original issue discount (i.e., an amount equal to the excess
of the stated redemption price of the security at maturity over its issue
price), or market discount (i.e., an amount equal to the excess of the stated
redemption price of the security at maturity over its basis immediately after it
was acquired) if the Fund elects as it intends to accrue market discount on a
current basis. In addition, income may continue to accrue for federal income
tax purposes with respect to a non-performing investment. Any of the
foregoing income would be treated as income earned by the Fund and therefore
would be subject to the distribution requirements of the Code. Because such
income may not be matched by a corresponding cash distribution to the Fund,
the Fund may be required to dispose of other securities to be able to make
distributions to it investors. The extent to which the Fund may liquidate
securities at a gain may be limited by the 30% limitation discussed above.
Income received by the Fund from sources outside the United States may
be subject to withholding and other taxes imposed by countries other than the
United States. The Fund is not likely to realize any substantial United States
tax benefits with respect to such foreign taxes. Because the Fund's investments
in foreign securities will be limited, the Fund will not be eligible to elect to
"pass-through" to its shareholders any tax benefits associated with any foreign
income taxes paid by the Fund.
The Fund's taxable income will in most cases be determined on the
basis of reports made to the Fund by the issuers of the securities in which the
Fund invests. The tax treatment of certain securities in which the Fund may
invest is not free from doubt and it is possible that an IRS ("IRS") examination
of the issuers of such securities or of the Fund could result in adjustments to
the income of the Fund. An upward adjustment by the IRS to the income of the
Fund may result in the failure of the Fund to satisfy the 90% distribution
requirement described herein necessary for the Fund to maintain its status as a
regulated investment company under the Code. In such event, the Fund may be
able to make a "deficiency dividend" distribution to its shareholders with
respect to the year under examination to satisfy this requirement. Such
distribution will be taxable as a dividend to the shareholders receiving the
distribution (whether or not the Fund has sufficient current or accumulated
earnings and profits for the year in which such distribution is made). A
downward adjustment by the IRS to the income of the Fund may cause a
portion of the previously made distribution with respect to the year under
examination not to be treated as a dividend. In such event, the portion of
distributions to each shareholder not treated as a dividend would be
recharacterized as a return of capital and reduce the shareholder's basis in the
shares held at the time of the previously made distributions. Accordingly, this
reduction in basis could cause a shareholder to recognize additional gain upon
the sale of such shareholder's shares.
Certain of a Fund's investments in structured products may, for federal
income tax purposes, constitute investments in shares of foreign corporations.
If a Fund purchases shares in certain foreign investment entities, called
"passive foreign investment companies" ("PFICs"), the Fund may be subject to
U.S. federal income tax on a portion of any "excess distribution" or gain from
the disposition of the shares even if the income is distributed as a taxable
dividend by the Fund to its shareholders. Additional charges in the nature
of interest may be imposed on either a Fund or its shareholders with respect
to deferred taxes arising from the distributions or gains. If a Fund were to
invest in a PFIC and (if the Fund received the necessary information available
from the PFIC, which may be difficult to obtain) elected to treat the PFIC as
a "qualified electing fund" under the Code, in lieu of the foregoing
requirements, the Fund might be required to include in income each year a
portion of the ordinary earnings and net capital gains of the PFIC, even if not
distributed to the Fund, and the amounts would be subject to the 90% and
excise tax distribution requirements described above. Because of the expansive
definition of a PFIC, it is possible that a Fund may invest a portion of its
assets in PFICS. It is not anticipated, however, that the portion of such
Fund's assets invested in PFICs will be material.
In the case of PFIC stock owned by a RIC, H.R. 2491, as passed by
Congress and vetoed by President Clinton, contained a provision that would
have permitted a RIC to elect a mark-to-market stock in the PFIC annually and
thereby avoid the need for a RIC to make a QEF election. It is unclear whether
similar legislation will be included as part of the 1996 budget compromise.
Moreover, on April 1, 1992 the Internal Revenue Service proposed regulations
providing a mark-to market election for RICs that would have effects similar to
the proposed legislation. These regulations would be effective for taxable
years ending after promulgation of the regulations as final regulations.
Under the Code, gains or losses attributable to fluctuations in
exchange rates which occur between the time a Fund accrues interest or other
receivables or accrues expenses or other liabilities denominated in a foreign
currency and the time a Fund actually collects such receivables or pays such
liabilities are treated as ordinary income or ordinary loss. Similarly, gains
or losses from the disposition of foreign currencies, from the disposition of
debt securities denominated in a foreign currency, or from the disposition of
a forward contract denominated in a foreign currency which are attributable to
fluctuations in the value of the foreign currency between the date of
acquisition of the asset and the date of disposition also are treated as
ordinary gain or loss. These gains or losses, referred to under the Code as
"section 988" gains or losses, increase or decrease the amount of a Fund's
investment company taxable income available to be distributed to its
shareholders as ordinary income, rather than increasing or decreasing the
amount a Fund's net capital gain. Because section 988 losses reduce the amount
of ordinary dividends a Fund will be allowed to distribute for a taxable year,
such section 988 losses may result in all or a portion of prior dividends
distributions for such year being recharacterized as a non-taxable return of
capital to shareholders, rather than as ordinary dividend, reducing each
shareholder's basis in his Fund shares. To the extent that such distribution
exceed such shareholder's basis, each distribution will be treated as a gain
from the sale of shares.
Shareholders
Distributions. Distributions to shareholders of ordinary income dividends
will be taxable as ordinary income whether paid in cash or reinvested in
additional shares. It is anticipated that a portion of such dividends will
qualify for the dividends received deduction generally available for corporate
shareholders under the Code. Shareholders receiving distributions from the
fund in the form of additional shares will be treated for federal income tax
purposes as receiving a distribution in an amount equal to the fair market
value of the additional shares on the date of such distribution. Consequently,
if the number of Shares distributed reflects a market premium, the amount
distributed to shareholders would exceed the amount of the cash distributed to
nonparticipating shareholders.
Distributions to shareholders of net capital gain that are designated
by the fund as "capital gains dividends", will be taxable as long-term capital
gains, whether paid in cash or additional shares, regardless of how long the
shares have been held by such shareholders. These distributions will not be
eligible for the dividends-received deduction. The maximum federal income
tax rate imposed on individuals with respect to long-term capital gains is
limited to 28%, whereas the maximum federal income tax rate imposed on
individuals with respect to ordinary income (and short-term capital gains, which
are taxed at the same rates as ordinary income) is 39.6%. With respect to
corporate taxpayers, long-term capital gains are taxed at the same federal
income tax rates as ordinary income and short-term capital gains.
Note that under H.R. 2491, as passed by Congress and voted by President
Clinton, individual taxpayers would have been permitted a 50 percent deduction
for any capital gains that they recognized, and corporations would have been
taxed at a 28% rate. The provisions generally were to have retroactive effect
to January 1, 1995. It is unclear whether similar legislation will be included
as part of the 1996 budget compromise and, if so, what the effective date will
be.
Investors considering buying shares just prior to a dividend or capital
gain distribution should be aware that, although the price of shares purchased
at that time may reflect the amount of the forthcoming distribution, those who
purchase just prior to a distribution will receive a distribution which will
nevertheless be taxable to them.
Dividends and distributions by the Fund are generally taxable to the
shareholders at the time the dividend or distribution is made (even if paid
or reinvested in additional shares). Any dividend declared by the Fund in
October, November or December of any calendar year, however, which is payable
to shareholders of record on a specified date in such a month and which is not
paid on or before December 31 of such year will be treated as received by the
shareholders as of December 31 of such year, provided that the dividend is paid
during January of the following year. Any distribution in excess of the Fund's
net investment income and net capital gains would first reduce a shareholder's
basis in his shares and, after the shareholder's basis is reduced to zero, will
constitute capital gains to a shareholder who holds his shares as capital
assets.
A notice detailing the tax status of dividends and distributions
paid by the Fund will be mailed annually to the shareholders of the Fund.
Dispositions and Redemptions. Gain or loss, if any, recognized on the
sale or other disposition of shares of the Fund will be taxed as capital gain
or loss if the shares are capital assets in the shareholder's hands. Generally,
a shareholder's gain or loss will be a long-term gain or loss if the shares
have been held for more than one year. If a shareholder sells or otherwise
disposes of a share of the Fund before holding it for more than six months,
any loss on the sale or other disposition of such share shall be treated as a
long-term capital loss to the extent of any capital gain dividends received
by the shareholder with respect to such share. A loss realized on a sale or
exchange of shares may be disallowed if other shares are acquired within a 61-
day period beginning 30 days before and ending 30 days after the date that the
shares are disposed of. If disallowed, the loss will be reflected by an upward
adjustment to the basis of the shares acquired.
A redemption by the Fund of shares generally will be treated as a sale
of the shares by a shareholder provided that after the redemption the
shareholder does not own, either directly or by attribution under Section 318 of
the Code, any shares. If after a redemption a shareholder continues to own,
directly or by attribution, any shares, it is possible that any amounts received
in the redemption by such shareholder will be taxable as a dividend to such
shareholder, and there is a risk that shareholders who do not have any of their
shares redeemed would be treated as having received a dividend distribution as
a result of their proportionate increase in the ownership of the Fund.
Investors should consult their own tax advisors regarding specific
questions as to the federal, state, local and foreign tax consequence of
ownership of shares in the Fund.
ADDITIONAL INFORMATION
Description of Shares
Holland Series Fund, Inc. was incorporated under Maryland Law on June 27,
1995. The Fund currently is the only organized portfolio of Holland Series
Fund, Inc. Holland Series Fund, Inc. has an authorized capital of 1,000,000,000
shares of Common Stock, par value $0.01 per share. All shares are of the same
class. Shareholders of the Fund are entitled to one vote for each full share
held and fractional votes for fractional shares held and will vote on the
election of Directors and any other matter submitted to a shareholder vote.
Voting rights for Directors are not cumulative. Shares of the Fund issued are
fully paid and non-assessable and have no preemptive or conversion rights.
Redemption rights are discussed elsewhere herein and in the Prospectus. Each
share is entitled to participate equally in dividends and distributions declared
by the Fund and in the net assets of the Fund upon liquidation or dissolution
after satisfaction of outstanding liabilities. Stock certificates will not be
issued by the Transfer Agent.
Appropriate Investors
Investors should carefully consider the Prospectus and Statement of
Additional Information when determining whether the Fund is an appropriate
investment given their particular investment needs and preferences. An
investment in the Fund may provide significant diversification to an investor
whose assets are primarily invested in stocks or bonds alone or in a single
geographic region. The Fund may be an appropriate choice for conservative
investors seeking to build wealth over time. The Fund may also be an
appropriate choice for: (i) those who want to leave the all-important asset
allocation decision to a professional manager; (ii) investors who want to
capture some of the stock market's growth potential but with less risk than an
all-equity portfolio; (iii) investors building capital for education or
retirement who are looking for a core investment vehicle; and (iv) anyone who
appreciates Michael Holland's approach to portfolio management.
Independent Accountants
Price Waterhouse LLP, 1177 Avenue of the Americas, New York, New York
10036 has been selected as the independent accountants of the Fund. The
selection of independent accountants is subject to ratification by the Fund's
shareholders at any annual meeting of shareholders held by the Fund. The
independent accountants are responsible for auditing the financial statements
of the Fund.
Custodian and Fund Accounting Agent
Investors Bank & Trust Company, P.O. Box 1537, Boston, Massachusetts
02205 acts as custodian and fund accounting agent of the Fund's assets. The
custodian is responsible for safeguarding and controlling the Fund's cash and
securities, handling the delivery of securities and collecting interest and
dividends on the Fund's investments. The fund accounting agent is responsible
for maintaining the books and records and calculating the daily net asset value
of the Fund.
Transfer Agent
Unified Advisers, Inc., P.O. Box 6110, Indianapolis, IN 46206-6110
acts as the Fund's transfer agent. The transfer agent is responsible for the
issuance, transfer and redemption of shares and the opening, maintenance and
servicing of shareholder accounts.
Legal Counsel
Simpson Thacher & Bartlett (a partnership which includes professional
corporations), New York, New York, is counsel for the Fund.
Reports to Shareholders
Additional Information
The prospectus and this Statement of Additional Information do not
contain all the information set forth in the Registration Statement and the
exhibits thereto, which the Fund has filed with the SEC, Washington, D.C.,
under the Securities Act of 1933 and the 1940 Act, to which reference is hereby
made.
The Fund's audited Financial Statement as of September 19, 1995 appearing
therein is hereby incorporated by reference in this Statement of Additional
Information. The Fund's unaudited Financial Statements for the three months
ended December 31, 1995 appearing therein are hereby incorporated by reference
in this Statement of Additional Information.
Table of Contents
Page
ADDITIONAL INFORMATION OF PORTFOLIO INSTRUMENTS AND INVESTMENT POLICIES 3
INVESTMENT RESTRICTIONS 4
MANAGEMENT OF THE FUND 6
REDEMPTION OF SHARES 8
PORTFOLIO TRANSACTIONS AND BROKERAGE 8
DETERMINATION OF NET ASSET VALUE 9
PERFORMANCE DATA 10
SHAREHOLDER SERVICES 11
DIVIDENDS AND DISTRIBUTIONS 12
TAXATION 12
ADDITIONAL INFORMATION 13
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Shareholder
Holland Series Fund, Inc.
We have audited the accompanying statement of assets and liabilities of Holland
Ballanced Fund (the "Fund") as of September 19, 1995. This financial statement
is the responsibility of the Fund's management. Our responsibility is to
express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of assets and liabilities is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the statement of assets and
liabilities. 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 statement of assets and liabilities referred to above
presents fairly, in all material respects, the financial position of Holland
Balanced Fund at September 19, 1995, in conformity with generally accepted
accounting principles.
/s/Price Waterhouse LLP
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York
September 19, 1995
HOLLAND BALANCED FUND (Note 1)
STATEMENT OF ASSETS AND LIABILITIES
September 19, 1995
Assets:
Cash ............................................................$100,000
Deferred organizational expenses (Note 2) ........................ 116,685
Total Assets............................................ 216,865
Liabilities
Accrued organizational expenses (Note 2).......................... 116,685
Commitments (Notes 2 and 3)....................................... 0
Total Liabilities....................................... 116,685
Net Assets (applicable to 10,000 shares of $.01 par
value of common stock issued and outstanding; 1,000,000,000
shares authorized)................................................. $100,000
Net asset value, offering price and redemption price, per share...... $10.00
NOTES TO FINANCIAL STATEMENT
NOTE 1
Holland Series Fund, Inc. (the "Series Fund") was incorporated as a Maryland
corporation on June 27, 1995 and has had no operations to date other than
matters relating to its organization and registration as a diversified, open-
end management company under the Investment Company Act of 1940, as amended,
and the sale and issuance to Michael F. Holland of 10,000 shares of its common
stock relating to Holland Balanced Fund (the "Fund") for an aggregate purchase
price of $100,000.
NOTE 2
Organization expenses relating to the Series Fund incurred and to be incurred
by the Investment Adviser will be reimbursed by the Fund. Such expenses,
estimated at $116,625, will be deferred and amortized on a straight-line basis
for a five year period beginning at the commencement of operations of the Fund.
In the event that any of the initial 10,000 shares (the "Initial Shares")
purchased by Michael F. Holland are redeemed during the amortization period,
the Fund will be reimbursed by Michael F. Holland for any remaining unamortized
costs in the same proportion as the number of Initial Shares redeemed bears to
the total number of Initial Shares outstanding at the time of redemption.
NOTE 3
The Series Fund will enter into an advisory agteement with Holland & Company
L.L.C. (the "Investment Adviser") pursuant to which the Investment Adviser will
provide investment advisory services to the Fund and will be responsible for the
management of the Fund's portfolio in accordance with the Fund's investment
policies for making decisions to buy, sell, or hold particular securities. AMT
Capital Services, Inc. will serve as the Series Fund's administrator (the
"Administrator") pursuant to an administration agreement to be entered into
between the Series Fund and the Administrator.
The Fund will pay the Investment Adviser a monthly fee for its advisory
services at an annual rate of 0.75% of the Fund's average daily net assets.
The Fund will pay the Administrator a monthly fee for its administration
services at an annual rate of 0.15% of the Fund's average daily net assets. The
Administrator will be paid a minimum of $25,000 for services provided to the
Fund during it's first year of operation.
Michael F. Holland, an officer and director of the Series Fund is an officer
of the Investment Adviser.
Holland Balanced Fund - Statement of Net Assets
December 31, 1995 (Unaudited)
Shares
Value
Common Stocks - 52.4%
Agriculture - 3.7%
Philip Morris Companies, Inc. 1,400 $ 126,700
Autos - 7.6%
Chrysler Corp. 2,400 132,900
General Motors Corp. 2,400 126,900
Total 259,800
Banks - 3.8%
J.P. Morgan & Company, Inc. 1,600 128,400
Chemicals - 7.2%
du Pont (E.I.) de Nemour 1,800 125,775
Eastman Kodak Co. 1,800 120,600
Total 246,375
Electronics - 3.0%
Motorola, Inc. 1,800 102,600
Oil/Gas - 11.6%
Chevron Corp. 2,400 126,000
Exxon Corp. 1,600 128,200
Texaco, Inc. 1,800 141,300
Total 395,500
Paper - 3.9%
International Paper Co. 3,500 132,563
Producer Goods - 7.7%
General Electric Co. 1,800 129,600
Minnesota Mining & Manufacturing Co. 2,000 132,500
Total 262,100
Retail - 3.9%
Sears, Roebuck & Company 3,400 132,600
Total Common Stocks (Cost - $1,686,434) 1,786,638
Face
Amount
U.S. Government Securities - 29.1%
U.S. Treasury Bill, 5.030% due 12/12/96 # $ 300,000 $ 286,055
U.S. Treasury Note, 5.750% due 9/30/97 400,000 403,750
U.S. Treasury Note, 5.625% due 10/31/97 300,000 302,344
Total U.S. Government Securities
(Cost - $985,821) 992,149
Repurchase Agreements - 17.6%
Prudential Bache Repurchase Agreement,
5.390% due 1/2/96; Issued 12/29/95
(Collateralized by $2,818,420 FNMA
Note 0.000% due 9/1/22 with a market
value of $610,394) $ 598,424 $ 598,424
Total Repurchase
Agreements (Cost - $598,424) 598,424
Total Investments - 99.1%
(Cost - $3,270,679) 3,377,211
Other Assets and Liabilities - 0.9%
Receivable from investment adviser 34,913
Other assets 182,557
Payable for securities purchased (149,575)
Other accrued expenses and liabilities (36,190)
Other assets and liabilities, net 31,705
Net Assets - 100.0%
Applicable to 324,729 outstanding $0.01
par value shares (authorized 1,000,000,000) $ 3,408,916
Net asset value per share $ 10.50
Components of Net Assets as of December 31, 1995:
Capital stock at par value ($.01) $ 3,247
Capital stock in excess of par value 3,302,350
Temporary overdistribution of net investment income (3,213)
Net unrealized appreciation on investments 106,532
$ 3,408,916
# Interest rate shown represents the yield to maturity at the time of purchase
Holland Balanced Fund - Statement of Operations
For the Period from
10/2/95 * to 12/31/95 (Unaudited)
Investment Income
Interest $ 15,123
Dividends 8,957
Total investment income 24,080
Expenses
Investment advisory fees 3,743
Administration fees 6,250
Custodian fees 712
Shareholder account maintenance 1,153
Audit fees 3,750
Legal fees 6,249
Marketing and distribution 4,127
Insurance expense 2,850
Amortization or organizational costs 8,034
Directors fees and expenses 2,750
Miscellaneous fees and expenses 189
Total operating expenses 39,807
Waiver of investment advisory fees and
reimbursement of other expenses (34,913)
Net expenses 4,894
Investment income, net 19,186
Net Realized and Unrealized Gain on Investments
Net realized gain on investments -
Net unrealized appreciation on investments 106,532
Net realized and unrealized gain on investments 106,532
Net increase in net assets resulting from operations 125,718
* Commencement of Investment Operations
Holland Balanced Fund - Statement of Changes in Net Assets
For the Period from
10/2/95 * to 12/31/95
(Unaudited)
Increase in Net Assets from Operations
Investment income, net $19,186
Net realized gain from investments -
Net unrealized appreaciation on investments 106,532
Net increase in net assets resulting from operations 125,718
Distributions to Shareholders From
Investment income, net 22,399
Net realized gain on investments
-
Total distributions 22,399
Capital Share Transactions, Net 3,205,597
Total increase in net assets 3,308,916
Net Assets
Beginning of period 100,000
End of period 3,408,916
Temporary overdistribution of net investment income (3,213)
* Commencement of Investment Operations
Holland Balanced Fund - Financial Highlights
For the Period from
10/2/95 * to 12/31/95
(Unaudited)
For a share outstanding
throughout the period
Per Share Data
Net asset value, beginning of period $ 10.00
Increases From Investment Operations
Investment income, net 0.06
Net realized and unrealized gain on investments 0.51
__________
Total from investment operations 0.57
__________
Less Distributions From:
Investment income, net 0.07
Net realized gain on investments 0.00
__________
Total Distributions 0.07
__________
Net asset value, end of period $ 10.50
Total Return (a) 5.70%
Ratios/Supplemental Data
Net assets, end of period $3,408,916
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) 4.60%
Ratio of net investment income to
average net assets (b) 4.45%
Portfolio turnover 0.00%
* Commencement of Investment operations
(a) Not annualized
(b) Annualized (Fund expenses are capped at 1.50%)
Part C
Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Registration Statement.
PART C. OTHER INFORMATION
24. Financial Statements and Exhibits.
(a) Financial Statements included in Part A:
Holland Balanced Fund
Selected Per-Share Data and Ratios for the period ended December 31,
1995 are presented under the heading "Financial Highlights" in the
Prospectus.
(b) Financial Statements included in Part B:
Holland Balanced Fund
Statement of Assets and Liabilities
dated September 19, 1995
Independent Auditors' Report dated
September 19, 1995
Statement of Net Assets dated December 31, 1995 (unaudited)
Statement of Operations for the period from October 2, 1995
(commencement of investment operations) to December 31, 1995 (unaudited)
Statement of Changes in Net Assets for the period from October 2, 1995
(commencement of investment operations) to December 31, 1995 (unaudited)
Statement of Financial Highlights for the period from October 2, 1995
(commencement of investment operations) to December 31, 1995 (unaudited)
(c) Exhibits:
Exhibit
Number Description
1(a) -- Registrant's Articles of Incorporation filed as Exhibit 1(a) to
Registrant's Registration Statement on Form N-1A and is incorporated
by reference herein.
2 -- By-Laws, filed as Exhibit 2 to Registrant's Registration Statement
on Form N-1A.
3 -- None.
4(a) -- None.
5(a) -- Advisory Agreement between Registrant and Holland & Company
L.L.C.,
dated September 28, 1995, filed as Exhibit 5(a) to Pre-Effective
Amendment No. 1 to Registrant's Registration Statement on Form N-1A
and is incorporated by reference herein.
6(a) -- Distribution Agreement between Registrant and AMT Capital Services,
Inc., dated September 28, 1995, filed as Exhibit 6(a) to Pre-Effective
Amendment No. 1 to Registrant's Registration Statement on Form N-1A
and is incorporated by reference herein.
7 -- None.
8 -- Custodian Agreement between Registrant and Investors Bank & Trust
Company, dated September 28, 1995, filed as Exhibit 8 to Pre-Effective
Amendment No. 1 to Registrant's Registration Statement on Form N-1A
and is incorporated by reference herein.
9(a) -- Administration Agreement between Registrant and AMT Capital Services,
Inc., dated September 28, 1995, filed as Exhibit 9(a) to Pre-Effective
Amendment No. 1 to Registrant's Registration Statement on Form N-1A
and is incorporated by reference herein.
9(b) -- Transfer Agency and Service Agreement between Registrant and Investors
Bank & Trust Company, dated September 28, 1995, filed as Exhibit 9(b)
to Pre-Effective Amendment No. 1 to Registrant's Registration
Statement on Form N-1A and is incorporated by reference herein.
9(c) -- Transfer Agent Agreement between Registrant and Unified Advisers,
Inc., dated February 9, 1996 (filed herewith).
10 -- Opinion and Consent of Piper & Marbury, filed as Exhibit 10 to Pre-
Effective Amendment No. 1 to Registrant's Registration Statement on
Form N-1A and is incorporated by reference herein.
11(a) -- Consent of Price Waterhouse LLP (filed herewith).
11(b) -- None.
12 -- None.
13(a) -- Share Purchase Agreement between Registrant and Holland &
Company
L.L.C. dated September 19, 1995, filed as Exhibit 13(a) to Pre-
Effective Amendment No. 1 to Registrant's Registration Statement
on Form N-1A and is incorporated by reference herein.
14 -- None.
15 -- None.
16 -- None.
17 -- None.
25. Persons Controlled by or under
Common Control with Registrant
As of January 31, 1996, the following shareholder is deemed a "control
person": as such term is defined in the 1940 Act and held 26.17% of the
outstanding shares of the Common Stock ($.01 par value of the Fund):
Michael F. Holland
One Greenley Road
New Canaan, CT 06840
26. Number of Holders of Securities
Title of Class Number of Record
Holders at January 31,1996
Shares of Holland Balanced Fund, Inc. 242
27. Indemnification.
Reference is made to Article VII of Registrant's Articles of
Incorporation (Exhibit 1(a) filed previously), Article VI of Registrant's By-
laws, as amended (Exhibit 2 filed previously), Paragraph 5 of the Distribution
Agreement between Registrant and AMT Capital Services, Inc. (Exhibit 6 filed
previously), Article 13 of the Custodian Agreement between Registrant and
Investors Bank & Trust Company (Exhibit 8 filed previously), Paragraph 6 of the
Administration Agreement between Registrant and AMT Capital Services, Inc.
(Exhibit 9(a) filed previously), and Article 14 of the Transfer Agency Agreement
between Registrant and Investors Bank and Trust Company (Exhibit 9(b) filed
previously), and Section 8 of the Transfer Agent Agreement between Registrant
and Unified Advisers, Inc. (Exhibit 9(c) filed herewith.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "Securities Act"), may be permitted to directors,
officers and controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, Registrant understands that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by Registrant of expenses incurred or paid by a director, officer
or controlling person of Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
28. Business and Other Connections of Investment Adviser.
Holland & Company L.L.C. (the "Investment Adviser") is a recently formed
limited liability company organized under the laws of New York State and it is
an investment adviser registered under the Investment Advisers Act of 1940 (the
"Advisers Act"). The Investment Adviser has not previously served as an
investment adviser to a registered investment company.
The list required by this Item 28 of officers and directors of the
Investment Adviser, together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by such
officers and directors during the past two years, is incorporated by reference
to Schedules A and D of Form ADV filed by the Investment Adviser pursuant to the
Advisers Act (SEC File No. 801-49394).
29. Principal Underwriter.
(a) In addition to Registrant, AMT Capital Services, Inc. currently acts as
distributor to AMT Capital Fund, Inc., FFFW Funds, Inc. and TIFF Investment
Program, Inc. AMT Capital Services, Inc. is registered with the Securities and
Exchange Commission as a broker/dealer and is a member of the National
Association of Securities Dealers, Inc.
(b)The information required by this Item 29(b) with respect to each director,
officer or partner of AMT Capital Services, Inc. is incorporated by reference to
Schedule A of Form BD filed by AMT Capital Services, Inc. pursuant to the
Securities Act of 1934 (SEC File No.8-44718).
(c) Not applicable.
30. Location of Accounts and Records.
All accounts, books and other documents required to be maintained by Section
31(a) of the Investment Company Act of 1940, as amended (the "1940 Act"), and
the rules thereunder will be maintained at the offices of the Investment
Adviser, Administrator, Transfer Agent and Custodian.
Holland & Company L.L.C.
375 Park Avenue
New York, New York 10152
AMT Capital Services, Inc.
600 Fifth Avenue, 26th Floor
New York, New York 10020
Unified Advisers, Inc.
P.O. Box 6110
Indianapolis, IN 46206-6110
Investors Bank & Trust Company
89 South Street
Boston, MA 02111
31. Management Services.
Not applicable.
32. Undertakings.
(a) not applicable
(b) not applicable
(c) Registrant hereby undertakes to call a meeting of shareholders for the
purpose of voting upon the question of removal of one or more of Holland
Balanced Fund's directors when requested in writing to do so by the holders
of at least 10% of Holland Balanced Fund's outstanding shares of common stock
and, in connection with such meeting, to assist in communications with other
shareholders in this regard, as provided under Section 16(c) of the 1940 Act.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
and the Investment Company Act of 1940, as amended, the Registrant certifies
that it has duly caused this amendment to the Registration Statement to be
signed on its behalf by the undersigned thereto duly authorized, in the City of
New York and State of New York on the 14th day of February, 1996.
HOLLAND SERIES FUND, INC.
By: /s/ Michael F. Holland
Michael F. Holland
President
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed below by the following person in the
capacities indicated on the 14th day of February, 1996.
Signature Title
/s/ Michael F. Holland Director and President
Michael F. Holland (Principal Executive Officer)
/s/ Sheldon S. Gordon Director
Sheldon S. Gordon
_________________________ Director
Herbert S. Winokur, Jr.
________________________ Director
Desmond G. FitzGerald
/s/ Jeff Tarr Director
Jeff Tarr
/s/ William E. Vastardis Secretary and Treasurer
William E. Vastardis (Principal Financial and Accounting
Officer)
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
TO
FORM N-1A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
AND THE
INVESTMENT COMPANY ACT OF 1940
HOLLAND SERIES FUND, INC.
HOLLAND SERIES FUND, INC.
INDEX TO EXHIBITS
Exhibit
Number Description of Exhibit
9(c) Transfer Agent Agreement dated February 9, 1996
11(a) Consent of Price Waterhouse dated February 13, 1996
TRANSFER AGENT AGREEMENT
This Agreement, made this the 9th day of February, 1996 to be effective as
of February 9, 1996, by and between the Holland Series Fund, Inc. (the "Fund"),
an open-end investment company duly organized and existing under the laws of
the State of Maryland, and Unified Advisers, Inc. (the "Transfer Agent"),
which is a duly-registered transfer agent. The Transfer Agent is duly
organized and existing under the laws of the State of Indiana.
Article I.
Section 1. The Fund hereby appoints the Transfer Agent as its Transfer,
Registrar, Redemption and Dividend Disbursing Agent with respect to each
series of the Fund listed on Schedule B to this Agreement, and the Transfer
Agent accepts such appointments and agrees to act in such capacities upon the
terms set forth in this Agreement.
Section 2. The Transfer Agent agrees to comply with all relevant provisions
of the Investment Company Act of 1940 (the "Act"), the Internal Revenue Code,
other applicable laws and all applicable rules and regulations thereunder.
Section 3. If the Fund is a series company for purposes of Rule 18f-2
under the Act, the term "Fund" as used in this Agreement and Fee Schedule shall
be deemed to refer to each series listed in Schedule B to this Agreement as a
separate portfolio unless the context otherwise requires. In performing its
functions hereunder, the Transfer Agent shall in all cases comply with the
procedures and conditions set forth in the Fund's then current Prospectus and
Statement of Additional Information ("SAI"), as prov
Article II. ISSUANCE OF SHARES
Section 1. The Transfer Agent shall register shares of the Fund ("Shares")
in accordance with Sections 3 and 4 below and with the Fund's then currently
effective Prospectus, SAI and account application upon being furnished with
(i) a certified copy of a resolution or resolutions of the Board of Directors of
the Fund authorizing such issuance and (ii) necessary funds for the payment of
any original issue tax applicable to such Shares. If requested, a copy of the
opinion of counsel as to the validity of such Shares shall be furnished to the
Transfer Agent upon the Fund's filing of its Rule 24f-2 Notice under the Act
with the Securities and Exchange Commission.
The Transfer Agent will maintain mutual fund account records in the usual
form in which, among other details, it will note the issuance, transfer and
redemption of Shares, whether certificated or not. The Transfer Agent will keep
account records, in which it will note the names and registered addresses of
shareholders of the Fund ("Shareholders") and the number of full and fractional
Shares owned by them.
Section 2. In case of any request or demand for the inspection of the share
records of the Fund, the Transfer Agent shall endeavor to notify the Fund and
to secure instructions as to permitting or refusing such inspection. However,
the Transfer Agent may exhibit such records to any person in any case where it
is advised by its counsel that it may be held liable for failure to do so,
unless indemnified against such liability by the Fund.
Section 3. For the purposes of this Section, the Fund hereby instructs the
Transfer Agent to consider payments for Shares as available for investment in
accordance with the policies and procedures set forth in the Fund's then current
Prospectus and SAI. Immediately after the time or times and on each day on
which the Fund's then current Prospectus or SAI states that its net asset value
per share shall be determined, the Transfer Agent shall obtain from the Fund or
its designated agent a quotation of the net asset value per share determined
as of such time on such day. The Transfer Agent reserves the right to charge
the Fund and the Fund agrees to pay the reasonable costs of making corrections
to Shareholder records if it is later determined that the Fund or its agent(s)
supplied an inaccurate net asset value.
The Transfer Agent shall, on the same business day on which any order for
the purchase of Shares is received and utilizing the net asset value per share
next determined after the receipt of such order, determine the amount to be
invested and the number of Shares and fractional Shares (rounded to three
decimal places) to be purchased. The Transfer Agent shall thereupon as agent
for the Shareholders place a purchase order with the Fund for the proper number
of Shares and fractional Shares to be purchased an the Fund in writing. The
Transfer Agent shall total the amount available for investment in Shares at
the net asset value determined by the Fund or its designated agent at each
Fund pricing time.
The Transfer Agent shall pay over to the Custodian Bank the net asset
value of Shares and fractional Shares purchased immediately upon receipt of the
consideration therefor.
In the event that any check or other order for the payment of money is
returned unpaid for any reason, the Transfer Agent shall give prompt
notification to the Fund of the non-payment of said check and take such action
as the Fund may authorize.
Any profit on the liquidation of unpaid Shares accrues to the Fund. In
the event of a loss upon the liquidation of unpaid shares, other than as a
result of an error or mistake of the Transfer Agent, the Transfer Agent will
charge the purchaser's account for the amount of such loss. If the loss can't
be recovered from the Shareholder, the Fund will be liable for the loss. In the
event of a loss or gain due to an incorrect adjustment to the Shareholder's
account by the Fund's agent(s) (other than the Transfer Agent), the loss or
gain will be netted on the books of the Fund and settled monthly. If the loss
is a result of an error or mistake of the Transfer Agent it will be covered by
the Transfer Agent.
Section 4. The Transfer Agent, in making the calculations provided for in
Section 3, of this Article II shall rely on its record of available investment
funds. The proper number of Shares and fractional Shares shall then be issued
daily and credited by the Transfer Agent to the Shareholder accounts. The
Transfer Agent shall furnish each Shareholder with a confirmation of each
purchase of Fund Shares. For equity and bond funds, the Transfer Agent shall
mail to each Shareholder a confirmation of each purchase (if provided under
the provisions of the Shareholder's account) with copies to interested parties
if requested. For money market funds, such confirmations will, among other
details, show the prior Share balance, the new Share balance, the dollar value,
the Shares for which stock certificates are outstanding (if any), the amount
invested and the price paid for the newly-purchased Shares.
The Transfer Agent shall send a copy of the Fund's then current Prospectus
with the confirmation of the first purchase by any new account opened through
an exchange without an application.
The Fund agrees to provide the Transfer Agent with an adequate supply
of its prospectus, as in effect from time to time, to fulfill its obligations
under this Section. Transfer Agent shall not be responsible for any negative
circumstances arising from the Fund's and/or its Agent's failure to supply
sufficient prospectuses on a timely basis.
The Transfer Agent shall provide the Fund with the total number of
shares issued by the Fund each day.
Article III. REDEMPTIONS
Section 1. The Transfer Agent shall process, in accordance with the Fund's
Prospectus, SAI and account application, all requests from Shareholders to
redeem Shares and determine the number of Shares required to be redeemed to
make monthly payments, automatic payments or the like and advise the Fund, on
the same business day that the request for redemption was received, of the total
number of Shares and fractional Shares (rounded to three decimal places) to be
redeemed. The Fund or its designated agent shall then quote the Transfer
Agent the applicable net asset value whereupon the Transfer Agent shall furnish
the Fund with an appropriate confirmation of the redemption and process the
redemption, at the net asset value per share next computed after receipt of the
order for redemption, by filing with the Custodian Bank an appropriate
statement and making the proper distribution and application of the redemption
proceeds in accordance with the Fund's Prospectus or SAI. The stock registry
books recording outstanding Shares and the individual account of the Shareholder
shall be properly debited. If provided for under the provisions of the
shareholder's account, the Transfer Agent shall mail to each Shareholder a
confirmation of each redemption with a copy to an interested person if
requested. Such confirmation shall among other details show the prior Share
balance, the new Share balance and total dollar value thereof, the Shares for
which stock certificates are outstanding (if any), the amount redeemed and the
price received for the redeemed Shares.
Section 2. The proceeds of a redemption shall be remitted by the Transfer
Agent, in each case by check or other instrument drawn against funds held by
the Fund in the Custodian Bank, in accordance with the Fund's then currently
effective Prospectus, SAI and account application, including, to the extent
consistent therewith, as follows:
(a) By check drawn to the order of and mailed to the Shareholder at the
address of record not later than three business days after the redemption
request is received.
(b) By wire to a previously designated bank or broker upon telephone
request, without signature guarantee, if such redemption procedure has been
elected by the Shareholder.
(c) By Automated Clearing House transfers payable to the Shareholder of
record and transmitted for deposit to the bank account previously designated
in the application form or by written authorization, in the case of an
expedited telephone redemption.
(d) In accordance with the order of the Shareholder in the case of
redemptions by draft.
(e) To a person other than the Shareholder or to an address other than the
Shareholder's registered address only if instructions are received in writing
with signature guaranteed in accordance with the Fund's Prospectus. Qualified
Plan holders transferring to another Qualified Plan custodian are required to
obtain written signature guarantees and are required to obtain the written
acceptance of the new custodian.
(f) By other procedures commonly followed by mutual funds and mutually
agreed upon by the Fund and the Transfer Agent prior to the request(s).
If required by the Fund's then current Prospectus or SAI, the request and
stock certificates, if any, for Shares being redeemed, must have the owner's
signature guaranteed by a domestic commercial bank or trust company, savings
and loan association, credit union, or a member firm of a national securities
exchange or the National Association of Security Dealers ("NASD"). If Share
certificates have not been issued to the redeeming Shareholder, the signature of
the Shareholder on the redemption request must be similarly guaranteed. If the
Fund authorizes the Transfer Agent by written instructions to waive the
signature guarantee in certain instances and if the Transfer Agent has used
reasonable efforts to establish the authority of the person receiving the
redemption proceeds in accordance with procedures mutually agreed upon between
the Fund and the Transfer Agent, the Fund holds the Transfer Agent harmless in
the event that an unauthorized person withdraws funds. Whenever a signature
guarantee is required hereunder, it will be satisfied by a domestic commercial
bank or trust company, savings and loan association, credit union, or a member
firm of a national securities exchange or the NASD.
For the purposes of redemption of Shares which have been purchased by
check within 15 calendar days of a receipt of the redemption request for such
shares, the Fund shall provide the Transfer Agent, from time to time, with
written instructions concerning the time within which such requests may be
honored. The Transfer Agent will rely on the last written instruction received.
The Transfer Agent has no responsibility to determine if any investment payment
will be reversed for any reason and is not responsible in any way for the
failure of any investment to be collected.
The authority of the Transfer Agent to perform its responsibilities under
Article III, Sections 1 and 2 shall be suspended upon the Transfer Agent's
receipt of notification of the suspension of the determination of the Fund's net
asset value.
Article IV. DIVIDENDS
Section 1 . Upon the declaration of each dividend and each capital gains
distribution by the Board of Directors of the Fund, the Fund shall notify the
Transfer Agent by written instructions no later than record date of such
declaration, the amount payable per share, the sources from which such dividend
or distribution is made, and, unless such dividend is a regular daily or monthly
dividend payable by a money market or other fund, the record date for
determining the Shareholders entitled to payment. The Transfer Agent shall
withhold such sums as may be required to be withheld under applicable income
tax laws, rules and regulations.
Section 2 . Upon the payment date of a dividend or distribution declared by
the Fund's Board of Directors, the Fund or its agent will cause the Custodian
Bank to transfer to the disbursement account maintained by the Custodian Bank in
the name of the Fund the total amount of such dividends or distributions payable
in cash to those Shareholders electing to receive such dividends or
distributions in cash. On payment date, the Transfer Agent shall prepare a
check in the appropriate amount and mail it not later than the second business
day after the payment date to such Shareholder at his address of record or to
such other address as the Shareholder may have designated. If provided in the
Prospectus, at the Shareholder's option, payment may be made via Automated
Clearing House transfer to a bank account specified by the Shareholder in
writing.
With regard to Shareholders not electing to receive such dividends or
distributions in cash, the Transfer Agent will automatically reinvest all
dividends and other such distributions in additional Shares at the net asset
value per Share on payment date. When provided by the provisions of the
Shareholder's account, the Transfer Agent will promptly mail to each Shareholder
at his address of record or such other address as the Shareholder may have
designated a statement showing the number of full and fractional Shares (rounded
to three decimal places) currently owned by the Shareholder and the net asset
value of the Shares so credited to the Shareholder's account.
The Transfer Agent's dividend statement meets the requirements of the
Act and Rule 19a-1 thereunder for notification as to the source(s) of dividend
payment(s).
Article V. CERTIFICATES
Section 1. The Fund shall furnish to the Transfer Agent a sufficient supply
of blank Share certificates and from time to time will renew such supply upon
the request of the Transfer Agent. Such blank Share certificates shall be
signed manually or by facsimile signatures of officers of the Fund authorized by
law or the by-laws of the Fund to sign Share certificates and, if required,
shall bear the Fund's seal or facsimile thereof. In case any officer of the
Fund who shall have signed manually or whose facsimile signature shall have been
affixed to blank Share certificates shall die, resign or be removed prior to the
issuance of such Share certificates, the Transfer Agent may issue or register
such Share certificates as the Share certificates of the Fund notwithstanding
such death, resignation or removal until otherwise directed by the Fund; and
the Fund shall file promptly with the Transfer Agent such approval, adoption or
ratification as may be required by law.
Section 2. The Transfer Agent shall issue Share certificates for Shares only
to the extent provided in the Fund's current Prospectus and SAI and only upon
receipt of a written request from a Shareholder or from a dealer. In all other
cases, the Transfer Agent shall dispense with the issuance and counter signature
of Share certificates whenever Shares are purchased. The Transfer Agent shall
process purchase and redemption transactions by making appropriate entries in
the Fund's account records. The Transfer Agent may issue new full Share
certificates in place of Share certificates represented to have been lost,
destroyed or stolen, upon receiving indemnity satisfactory to the Transfer Agent
and the Fund and may issue new Share certificates in exchange for, and upon
surrender of, mutilated Share certificates. Prior to the replacement of a lost
or stolen certificate, a surety bond is required and is at the Shareholder's
expense. When mail is used for delivery of Share certificates the Transfer
Agent shall forward Share certificates in "non-negotiable" form by first-class
mail, and Share certificates in "negotiable" form by registered mail, return
receipt requested.
Whenever a Shareholder deposits Shares represented by Share certificates
in an account, the Transfer Agent, upon receipt of the Share certificates
registered in the name of the Shareholder (or if not so registered, in proper
form for transfer), shall cancel such Share certificates and make appropriate
entries in its stock transfer records.
The Transfer Agent shall retain all canceled certificates for redemption
or transfer for a period of time as set by regulations promulgated by the
Securities and Exchange Commission ("SEC") during which time it shall be able
to produce said certificates upon appropriate notice from the Fund.
Article VI. GENERAL PROVISIONS
Section 1. The Transfer Agent will furnish balance services via toll-free
telephone, fund account confirmations with each transaction, and account
confirmation statements as of December 31 of each year which include a listing
of all transactions in the account during the calendar year then ended, plus
income tax reporting information. The Transfer Agent may provide to the
Shareholders 24-hour account transaction services and agency consolidated
statements.
Section 2. The Transfer Agent shall report daily the sales and redemptions
in each state in a manner suitable for state "blue-sky" reporting by the Fund
and will not accept any purchase order in excess of the amount available for
sale as provided by the Fund or its agent. The Transfer Agent has no further
responsibility as to controlling sales of Shares of the Fund or maintaining the
various registrations required under state "blue sky" laws and regulations. The
Fund or its designated agent is responsible for updating the system and halting
Share sales in all states where the Fund's registration is not effective.
Maintaining current registration information on-line is the responsibility of
the Fund, or its designated agent.
Section 3. The Transfer Agent shall maintain records (which may be part of
the stock transfer records) in connection with the issuance and redemption of
Shares and dividend reinvestments, in which will be noted the transactions
effected for each Shareholder and the number of Shares and fractional Shares
(rounded to three decimal places) owned by each for which no Share certificates
are outstanding. The Transfer Agent shall create and maintain all necessary
records including, but not limited, to records required by Section 31(a) of the
Act and Section 17(A) of the Securities and Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder. The Transfer Agent agrees
to make available upon request and to preserve for the periods prescribed in
Section 31(a) under the Act and Section 17(A) of the Securities and Exchange Act
of 1934, as amended, and the rules and regulations thereunder, any records
relating to services provided under this Agreement or maintained by it on behalf
of the Fund. All such records shall be the property of the Fund.
The Transfer Agent shall also maintain the following records for each
Shareholder's account: name, address, and tax identification number; number of
Shares held and specific form of holding, including numbers and denominations
of certificates, if any; historical information regarding the account of each
Shareholder, including dividends paid, distributions made and date and price for
all transactions in a Shareholder's account; any stop or restraining order
placed against a Shareholder's account; any dividend reinvestment order,
address change and correspondence relating to the maintenance of a Shareholder's
account; all tax and withholding information relating to a Shareholder's
account; information with respect to withholding on foreign accounts.
The Transfer Agent shall maintain records for all accounts opened by
entities assigned an institution number ("i.e. different distributors") so that
where required the aggregate average daily value of all of an institution's
accounts can be determined and a record of such values maintained, and so that
duplicate statements for the accounts can be prepared and sent to each
institution. A representative file is available for each institution. It is
the responsibility of the Fund to update and maintain information on such file.
Section 4. The Transfer Agent shall cooperate with the Fund's independent
public accountants and shall take all reasonable action in the performance of
its obligations under this Agreement to assure that the necessary information
is made available to such accountants for the expression of their opinion,
including but not limited to the opinion included in the Fund's annual or semi-
annual reports on Form N-SAR, or of any successor annual report required by
the Act or rules thereunder to be filed by the Fund.
Section 5. In addition to the services as Transfer Agent and as above set
forth, the Transfer Agent will perform other services for the Fund as agreed
from time to time, including but not limited to, preparation and filing with the
Internal Revenue Service and mailing to Shareholders such federal tax
information forms as are required to be so prepared, filed and mailed by
applicable laws, rules and regulations, mailing periodic reports of the Fund,
and mailing initial notices of Shareholders' meetings, proxies, proxy
statements, and preparation of proxy voting reports for the Fund.
The Transfer Agent agrees to follow-up on missing TINs by sending a letter
and Form W-9 to the Shareholder. If the Transfer Agent does not receive TIN
verification within 60 days of the acknowledgment of the missing TINs, back-up
withholding will begin. Upon receipt of a B-Notice from the IRS, the Transfer
Agent will research the accounts and send out additional Form W-9's as
necessary. The Transfer Agent will not be held liable for any penalties
associated with B-Notices served where a Shareholder has failed to return a
TIN or signed W-9. If B-Notices are not promptly delivered to the Transfer
Agent once received by the Fund, the Transfer Agent will not be held liable
for any penalties associated with late processing.
The Transfer Agent will provide the Fund with a list of all accounts subject
to back-up withholding annually.
The Transfer Agent shall answer telephone calls and correspondence from
Shareholders relating to their Share accounts during the Transfer Agent's
normal business hours. The Transfer Agent shall respond to all telephonic or
written inquiries from Shareholders relating to the administration of their
accounts within three (3) business days or as soon as reasonably practical
thereafter. Copies of all correspondence from Shareholders involving complaints
about the management of the Fund, the services provided by or for the Fund, the
Transfer Agent or others, or concerning complaints relating to the Fund shall be
retained for review by the Fund. Such copies will be sent immediately to the
Fund upon the Fund's written request.
Telephone calls and correspondence on other matters will be referred to
the Fund.
The Transfer Agent shall keep records of Shareholder substantive telephone
calls and correspondence and replies thereto. The Transfer Agent shall make
and retain for a reasonable time (not to exceed 3 months) tape recordings of
all telephone calls from Shareholders.
Section 6. Nothing contained in this Agreement is intended to or shall
require the Transfer Agent in any capacity hereunder to perform any functions or
duties on any day identified in the Prospectus and/or SAI on which the Fund is
closed. Functions or duties normally scheduled to be performed on such days
shall be performed on, and as of, the next business day on which the Transfer
Agent is open, except when the Transfer Agent is closed to observe a legal
emergency when the Fund is open and the Fund has received purchases or
redemption requests, such purchases and redemptions shall be priced and
executed "as of" such date on the business day next following such day.
Section 7. The Fund agrees to pay the Transfer Agent compensation for its
services and to reimburse it for expenses, as set forth in Schedule A attached
hereto, or as shall be set forth in amendments to such Schedule approved by the
Fund and the Transfer Agent. All such payments and reimbursements are to be
received no later than ten (10) days following the mailing of the respective
notice and shall be charged to and paid by the Fund no later than on a monthly
basis. It is understood that the Fund may, in the future, undertake to perform
certain of the services herein contemplated to be performed by the Transfer
Agent. To the extent, if any, the Fund undertakes such duties, the Transfer
Agent shall be relieved of such obligation, and the Fund and the Transfer Agent
shall mutually agree upon an appropriate reduction, if any, in the fees set
forth in Schedule A. The parties mutually agree to not unreasonably withhold
permission for amendments or modifications in the Fee Schedule should
circumstances arise, outside of the party's or parties' control, which would
materially and adversely affect the party should such request for amendment or
modification not be agreed to. In addition to any other right or remedy
available to Unified for nonpayment of any fee due hereunder this Agreement for
the services performed by it, in the event that the Fund and/or its agent shall
fail to pay the full fee within forty-five (45) days after date of invoicing,
the Fund or its agent shall pay Unified a late charge in a sum equal to the
interest rate announced by Chemical Bank (or its successor) as its prime rate
at its principal office in New York City, plus two percent per annum of the
unpaid balance.
Section 8. The Transfer Agent shall not be liable hereunder for: (a) any non-
negligent action taken in good faith and reasonably believed to be within the
powers conferred upon it by this Agreement; (b) any failure to perform its
duties hereunder to the extent the Transfer Agent is prevented from so
performing by the Fund's negligent actions or the Fund's failure to perform its
duties hereunder.
Furthermore, the Fund shall indemnify the Transfer Agent and hold it
harmless from any and against any and all actions, suits and claims, whether
groundless or otherwise, except such as shall result from its own lack of good
faith, negligent act or willful misconduct, arising directly or indirectly out
of or in connection with its performance under this Agreement from and against
any and all losses, damages, costs, charges, counsel fees, payments, expenses
and liabilities incurred by the Transfer Agent in connection with any such
action, suit, or claim relating to:
(a) The Transfer Agent's reliance upon the advice furnished to it by the Fund,
or for statements made by accountants, brokers and other persons believed by
it in good faith to be expert in the matters about which they are consulted and
for any actions taken in good faith upon such statements.
(b) The Transfer Agent's actions reasonably taken in good faith reliance upon
any written instructions or certified copy of any resolution of the Board of
Directors of the Fund, provided, however, that upon receipt of a written
instruction from the Fund countermanding a prior instruction which has been
fully executed by the Transfer Agent, the Transfer Agent shall honor, such later
instructions and rely upon the genuineness of any such document or
correspondence reasonably believed in good faith to have been validly executed.
(c) The Transfer Agent's acting upon any signature, instruction, request,
letter of transmittal, certificate, opinion of counsel, statement, instrument,
report, notice, consent, order, or other paper or document reasonably believed
by it to be genuine and to have been signed or presented by the Shareholder,
Fund or other proper party or parties.
The Transfer Agent shall not be under any obligation to prosecute or to
defend any action, suit or claim subject to the forgoing indemnity, which, in
the opinion of its counsel, may involve it in expense or liability. At its
option and upon request of the Transfer Agent, the Fund may assume the entire
defense of any action, suit, or claim subject to the foregoing indemnity. The
Transfer Agent shall promptly give the Fund notice, and reasonable opportunity
to defend, any such action, suit, or claim, in the name of the Fund or the
Transfer Agent or both. In the event the Fund assumes the defense, the Transfer
Agent shall not be responsible for its own legal fees and expenses (unless the
action, suit or claim results from its own lack of good faith, negligent act or
willful misconduct) from the date the Fund so assumes the defense, except for
such fees and expenses incurred at the request of the Fund. The Fund and the
Transfer Agent shall cooperate fully in the defense of any action, suit or
claim.
The Transfer Agent at its expense will make corrections and adjustments
as may be required, where the Transfer Agent, its officers, agents, employees or
delegates are the cause of any error made in rendering the services described in
this agreement.
Section 9. The Fund shall promptly cause to be turned over to the Transfer
Agent (i) an accurate list of Shareholders of the Fund showing the proper
registered address and number of Shares owned and whether such Shares are
represented by outstanding Share Certificates or by non-certificated Share
accounts, (ii) all records relating to retirement plans, including original
applications signed by the planholders and original plan accounts recording
payments, contributions, deductions, reinvestments, withdrawals and
liquidation's, and (iii) all Shareholder records, files, and other materials
necessary or appropriate for proper performance of the functions assumed by the
Transfer Agent under this Agreement (hereinafter called "Materials"). The Fund
agrees to indemnify and hold the Transfer Agent, its successors and assigns,
harmless of and from any and all expenses, damages, claims, suits, liabilities,
actions, demand and losses of third parties arising out of or in connection with
any error, omission, inaccuracy or other deficiency of such Materials, or out of
the failure of the Fund to provide such Materials or to provide any information
needed by the Transfer Agent to perform knowledgeably its functions. The Fund
agrees to pay reasonable compensation to the Transfer Agent to cover the
Transfer Agent's expenses in correcting any such error, omission, inaccuracy
or other deficiency of the Materials.
Section 10. The Transfer Agent acknowledges and agrees that all books and
records maintained for the Fund in any capacity under this Agreement are the
property of the Fund and may be inspected by the Fund at any reasonable time.
Such books and records will be shipped immediately to any successor transfer
agent at the fund's cost.
The Transfer Agent agrees to regard and preserve as confidential all records
and other information relative to the Fund, and will not without written
authority of the Fund disclose to others, during the term of this Agreement or
thereafter, any such records or other information.
Section 11. The following shall be a list of procedures to be taken by the
Transfer Agent should mail be returned to the Agent undeliverable:
1. The mail will be opened and the contents examined. The returned
envelope will be stapled to the back of the paperwork.
2. Using the name and social security number on the account, a system search
will be done to check for any other accounts which may have a "deliverable"
address. If a different address is found, the account with the bad address
will be corrected and the mail will be forwarded to the new address.
3. If the account search is unsuccessful, after reasonable attempts have
been made to locate the shareholder, the account will be coded as lost and the
returned mail will be stored.
4. A listing is available of all accounts coded as lost. The Fund's
management can utilize this list if they wish to research these accounts
further.
5. Upon written request from the Fund, the Transfer Agent will provide a
listing to Fund management for escheatment purposes, of all accounts that are
lost.
Section 12. In the event any party which is subject to this Agreement is
unable to perform its obligations under the terms of this Agreement because of
equipment or transmission failure or damage beyond its control, acts of God, or
other causes reasonably beyond its control, such party will not be liable to the
others for any damages resulting from such failure to perform or otherwise from
such causes.
Article VII. TERMS AND TERMINATION
Section 1. This Agreement shall remain effective until terminated by either
party. Either the Fund or the Transfer Agent may give 60 days written notice
to the other of the termination of this Agreement, such termination to take
effect at the time specified in the notice; provided, however, the obligations
set forth in Sections 8, 10 and 11 of Article VI and Sections 6 and 7 of Article
VII, and, for the fiscal year of the Fund in which termination occurs, Section 4
of Article VI, shall survive such termination, unless satisfied. Any records
remaining at the Transfer Agent which are not required to be maintained, under
any laws which affect the Transfer Agent or the Fund, will be destroyed twelve
months after the termination of this Agreement.
Section 2. Should the Fund exercise its right to terminate this Agreement
pursuant to Section 1 of this Article VII, the Fund agrees to pay a termination/
conversion fee, simultaneous with the conversion date, after the termination
date after the 60 day notice period, in an amount equal to: (a) no less than
the previous 90 days, preceding the notice date, of the total compensation
under this Agreement to compensate the Transfer Agent for the expenses incurred
in connection with the retrieval, compilation and movement of books, records and
materials; and (b) any additional reasonable and necessary out-of-pocket
expenditures incurred by the Transfer Agent for conversion/deconversion due to
the termination of this Agreement, provided that such expenditures shall be
mutually agreed upon by the parties and approved for payment prior to the
incurrence of such expenditures (such approval not to be unreasonably withheld).
No such termination/conversion fee shall be due to the Transfer Agent if the
Transfer Agent terminates this Agreement pursuant to the Article VII.
Upon the termination of this Agreement for any reason, the Transfer Agent
agrees to provide the Fund with complete and accurate records and to assist
the Fund in the orderly transfer of accounts and records. However, the Transfer
Agent shall retain all such records until the Transfer Agent receives payment of
all amounts due under this Agreement. Without limiting the generality of the
foregoing, the Transfer Agent agrees upon termination of this Agreement:
(a) to deliver to the Fund computer tapes containing the Fund's accounts and
records together with such record layouts and additional information as may
be necessary to enable the Fund to utilize the information therein;
(b) to cooperate with the Fund and any successor transfer agent in the
interpretation of the Fund's accounts and records;
(c) to forward all Shareholder calls to the new Transfer Agent upon de-
conversion; and
(d) to act in good faith, to make the conversion as smooth as possible for
the Fund.
Section 3. The Transfer Agent shall maintain a standard stockbroker's
blanket bond on all its employees, providing fidelity insurance as required by
rules of the NASD. All employees at the time of employment will have
fingerprints made and checked by the FBI.
Section 4. The practices and procedures of the Transfer Agent and the Fund
set forth in the Agreement, or any other terms or conditions of this Agreement,
may be altered or modified from time to time as may be mutually agreed by the
parties to this Agreement. In special cases the parties hereto may adopt in
writing such procedures as may be appropriate or practical under the
circumstances, and the Transfer Agent may conclusively rely on the determination
of the Fund that any special procedure which has been approved by the Fund does
not conflict with or violate any requirements of its Articles of Incorporation,
By-Laws or Prospectus, or any rule, regulation or requirement of any regulatory
body.
Section 5. This Agreement may be amended from time to time by a supplemental
agreement executed by the Fund and the Transfer Agent.
Section 6. All legal notices to be made hereunder shall be made by certified
mail, returned receipt requested, overnight mail, or any other overnight service
evidencing receipt. Official notice shall be upon receipt of notice and not
upon sending:
If to the Fund:
Holland Series Fund, Inc.
Attention: William Vastardis
600 Fifth Avenue, 26th Floor
New York, New York 10020
If to the Transfer Agent:
Unified Advisers, Inc.
Attention: President
429 N. Pennsylvania Street
Indianapolis, Indiana 46204-1897
Section 7. The Transfer Agent and the Fund each represent and warrant to the
other as to itself that all actions required by their respective Trustees or
Shareholders have been taken to authorize the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby; the
execution and delivery of this Agreement and consummation of the transactions
contemplated hereby do not contravene any provision of their respective charter
or by-laws or of any laws, regulations or orders of any government or agency
thereof to which it is subject; do not constitute the violation or breach of
any agreement or understanding to which it is a party or by which it is bound;
and upon its execution and delivery, this Agreement shall be binding and
enforceable against it in accordance with its terms.
Section 8. The Transfer Agent may from time to time, with the written consent
of the Fund, delegate some or all of its duties hereunder to others, who shall
perform such functions as the agent of the Transfer Agent. To the extent of
such delegation, the term "the Transfer Agent" in this Agreement shall be deemed
to refer to both the Transfer Agent and to its designee or to either of them, as
the context may indicate. In each provision of this Agreement fixing or
limiting the liabilities or the delegations of the Transfer Agent, or providing
for the liability indemnification or protection of the Transfer Agent, the term
"the Transfer Agent" shall include the Transfer Agent's designee. The Transfer
Agent shall not be relieved of any liabilities or obligation under the Agreement
in connection with such delegation of duties, shall be responsible to supervise
and assure that any such designee properly performs the duties delegated to it,
and shall be responsible for the performance of the designee as though the
Transfer Agent had, itself, performed the duties so delegated.
Section 9. This Agreement may be executed in two or more counterparts, each
of which when so executed shall be deemed to be an original, but such
counterparts shall together constitute but one and the same instrument, which
is only effective if three signatures are executed.
Section 10. This Agreement shall extend to and shall be binding upon the
parties hereto and their respective successors and assigns. This Agreement and
all rights and duties hereunder shall not be assigned, transferred, mortgaged
or otherwise encumbered by either party or by operation of law.
Section 11. This Agreement constitutes the full and complete agreement of
the parties hereto with respect to the subject matter hereof and supersedes all
prior agreements or understandings between the parties. The schedules attached
hereto shall be deemed to be part of this Agreement.
Section 12. Whenever pronouns are used herein, they shall be interpreted
in the neuter, masculine, feminine, singular or plural as the context
may require.
Section 13. Except where specific time limits are herein provided, no delay
on the part of any party hereto in exercising any power or right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
power or right hereunder preclude other or further exercise thereof or the
exercise of any other power or right. No waiver shall be enforceable against
any party hereto unless in writing, signed by the party against whom such waiver
is claimed, and shall be limited solely to the one event.
Section 14. This Agreement shall be governed by, and construed in accordance
with, the internal laws of the State of Indiana, without giving effect to the
principles of conflicts of law.
Article VIII. DEFAULT
If either party materially breaches, materially neglects or materially fails,
in whole or in part, to perform its duties and/or observe its obligations
hereunder (a "Default") and such Default continues unremedied for a period of
thirty (30) days following receipt by the defaulting party of written notice of
such Default from the non-defaulting party, the non-defaulting party shall have
the right to terminate this agreement immediately (notwithstanding the
provisions of Article VII hereof), provided, however, that the obligations set
forth in Sections 8, 10 and 11 of Article VI and Sections 6 and 7 of Article
VII, and, for the fiscal year of the Fund in which termination occurs, Section 4
of Article VI, shall survive such termination, unless satisfied. Any records
remaining at the Transfer Agent which are not required to be maintained, under
any laws which affect the Transfer Agent or the Fund, will be destroyed twelve
months after the termination of this Agreement.
Upon occurrence of a Default, the non-defaulting party shall have the
right to recover from the defaulting party:
(a) Any payments due hereunder; and
(b) All costs and expenses of collection of any payments due hereunder,
including reasonable attorneys' fees; and
(c) Any and all damages available under law.
Notwithstanding the foregoing, any outstanding amounts due and
payable hereunder which existed on or prior to Default shall be paid.
Article IX. ARBITRATION
Section 1. In the event of a dispute between the parties under this Agreement,
the parties shall first seek to resolve such dispute through good-faith, face-
to-face negotiations between the respective principals. If negotiations are
not successful, then the dispute shall be referred to arbitration and such
arbitration shall be conducted in accordance with the rules of the American
Arbitration Association.
Section 2. The decision rendered through arbitration shall be final and
binding upon the parties hereto, and judgment shall be entered in accordance
with applicable law in any court having jurisdiction thereof. In rendering a
decision, the arbitrators shall be governed by the terms of this Agreement.
Article X. MISCELLANEOUS
Section 1. The Transfer Agent agrees to promptly notify the Fund if for any
reason the Transfer Agent is unable to perform fully and promptly any of its
obligations under this Agreement.
Section 2. The Transfer Agent hereby represents that it does own or hold
with power to vote certain shares of the Fund which are registered in the
name of, the Transfer Agent or its affiliate Unified Management Corporation or
the name of their respective nominee.
Section 3. The provisions of the Agreement shall in no way limit the authority
of the Fund to take such action as it may deem appropriate or advisable in
connection with all matters relating to the operations of such Fund and/or sale
of its shares.
Section 4. The Transfer Agent shall indemnify and hold harmless the Fund
from and against any and all losses or liabilities, costs, charges, counsel
fees, payments, expenses and damages that the Fund may incur, arising out of or
related to the performance or non-performance of the Transfer Agent of its
responsibilities under this Agreement.
Section 5. The Transfer Agent understands and agrees that the obligations
of the Fund under this Agreement are not binding upon the shareholders of the
Fund personally, but bind the Fund and the Fund's property; the Transfer Agent
represents that it has notice of the provisions of the Articles of Incorporation
for the Fund disclaiming shareholder liability for acts or obligations of the
Fund.
Section 6. It is understood and agreed that in performing the services
under this Agreement, neither the Transfer Agent or Unified Management
Corporation shall be acting as an agent for the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this Transfer Agent
Agreement to be signed by their respective duly authorized officers as of
the day and year first above written.
HOLLAND SERIES FUND, INC.
By/s/William E. Vastardis
Date February 9, 1996
Title Treasurer
Attest_______________________________
UNIFIED ADVISERS, INC.
By_____________________________
Date_________________________
Title_____________________________
By______________________________
Date__________________________
Title_________________________________
Attest________________________________
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the
Statement of Additional Information constituting part of this Post
Effective Amendment No. 1 to the registration statement on Form
N-1A (the "Registration Statement") of our report dated September
19, 1995, relating to the Statement of Assets and Liabilities of
Holland Balanced Fund, which is incorporated by reference in such
Statement of Additional Information, and to the incorporation by
reference of our report into the Prospectus constituting part of this
Registration Statement. We also consent to the reference to us
under the heading "Independent Accountants" in such Statement of
Additional Information.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York
February 13, 1996
