HOLLAND BALANCED FUND
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Semi-Annual Report - March 31, 1998
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(Unaudited)
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Contents
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Letter from the President....................................................1
Cumulative Performance.......................................................2
Statement of Net Assets .....................................................3
Statement of Operations .....................................................5
Statement of Changes in Net Assets ..........................................6
Financial Highlights.........................................................7
Notes to Financial Statements ...............................................8
May 18, 1998
To My Fellow Shareholders:
Our Fund's annualized net investment return from inception (October 2, 1995)
through March 31, 1998, is 16.9%. The cumulative return from inception is 47.7%
vs. 50.6% for the Lipper Balanced Fund Index.
The equity market's recent move upward is a pleasant confirmation of the common
sense basis for having at least a portion of one's investments balanced by
long-term portfolio of "blue chip" equities combined with U.S. Treasury fixed
income securities and money market instruments. Nevertheless, history is a guide
that such positive returns can be elusive.
With Bullish Regards,
Michael F. Holland
President & Founder
Holland Series Fund, Inc.
Holland Balanced Fund
March 31, 1998
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Set forth below is the cumulative total return figure for the period indicated
and a graph showing the hypothetical $10,000 investment made in the Holland
Balanced Fund on October 2, 1995. The cumulative total return figures and the
information in the graph represent past performance; they reflect changes in the
price of the Fund's shares and assume that any income dividends and/or capital
gain distributions made by the Fund during the period were reinvested in
additional shares of the Fund.
Investment Performance (For Period Ended March 31, 1998)
<TABLE>
<S> <C> <C> <C>
-------------------------
Total Return
-------------------------
12 Months Average Cumulative Since
Ended Annualized Inception (10/2/95)
Holland Balanced Fund 17.4% 16.9% 47.7%
Lipper Balanced Fund Index 28.7% 17.8% 50.6%
</TABLE>
(a) Reflects waiver of fees and reimbursement of expenses by the investment
advisor. Adsent such waiver and reimbursement, the Fund's total return would
have been lower.
Holland Series Fund, Inc.
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Holland Balanced Fund - Statement of Net Assets
Six Months Ended March 31, 1998 (Unaudited)
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<TABLE>
<S> <C> <C>
Shares Value +
Common Stocks - 60.6%
Autos - 7.2%
Chrysler Corp. 26,400 $ 1,097,250
General Motors Corp. 14,400 971,100
--------------------
2,068,350
--------------------
Banks - 4.1%
J.P. Morgan & Company, Inc. 8,800 1,181,950
--------------------
Chemicals - 4.1%
DuPont (E.I.) de Nemours & Company 17,300 1,176,400
--------------------
Computers - 3.2%
International Business Machines Corp. 8,900 924,488
--------------------
Electronics -9.9%
Hewlett-Packard Co. 13,300 842,888
Intel Corp. 12,700 991,394
Motorola, Inc. 16,400 994,250
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2,828,532
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Insurance -3.8%
Chubb Corp. 13,800 1,081,575
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Oil/Gas - 10.0%
Exxon Corp. 14,300 967,038
Schlumberger, Ltd. 12,000 909,000
Texaco, Inc. 16,700 1,006,175
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2,882,213
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Pharmaceuticals- 7.8%
Johnson & Johnson 14,600 1,070,362
Merck & Company, Inc. 9,000 1,155,375
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2,225,737
--------------------
Producer Goods - 6.7%
General Electric Co. 12,700 1,094,580
Minnesota Mining & Manufacturing Co. 9,000 820,687
--------------------
1,915,267
--------------------
Telecommunications - 3.8%
AT & T Corp. 16,700 1,095,938
--------------------
Total Common Stocks (Cost-$13,696,871) 17,380,450
--------------------
</TABLE>
Holland Series Fund, Inc.
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Holland Balanced Fund - Statement of Net Assets (continued)
Six Months Ended March 31, 1998 (Unaudited)
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<TABLE>
<S> <C> <C>
Face
Amount Value +
U.S. Government Securities - 31.7%
U.S. Treasury Bond, 6.250% due 8/15/23 $ 1,500,000 $ 1,545,468
U.S. Treasury Note, 6.375% due 8/15/02 1,000,000 1,026,562
U.S. Treasury Note, 5.875% due 2/15/04 3,500,000 3,535,000
U.S. Treasury Note, 5.500% due 11/15/98 500,000 499,688
U.S. Treasury Note, 5.625% due 11/30/00 1,000,000 999,687
U.S. Treasury Note, 5.625% due 2/28/01 1,000,000 999,062
U.S. Treasury Note, 6.000% due 8/15/99 500,000 502,500
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Total U.S. Government Securities (Cost-$8,853,853) 9,107,967
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Repurchase Agreements - 7.1%
Investors Bank & Trust Co. Repurchase
Agreement, 5.43% due 4/1/98 in the amount of 2,047,311; Issued 3/31/98
(Collateralized by $2,079,340, FNMA ARM, 7.618% due 1/1/23
with a market value of $2,149,722) 2,047,311 2,047,311
--------------------
(Cost - $2,047,311)
Total Investments - 99.4% (Cost $24,598,034) 28,535,728
--------------------
Other Assets and Liabilities - 0.6% 167,823
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Net Assets-100.0%
Applicable to 2,036,505 outstanding $0.01 par value $28,703,551
====================
shares (authorized 1,000,000,000)
Net asset value, offering price & redemption price per share
$ 14.09
====================
Components of Net Assets as of March 31, 1998
Capital stock @ par value ($0.01) $ 20,365
Capital stock in excess of par value 24,326,648
Undistributed net investment income 168,707
Net accumulated realized gain on investments 250,138
Net unrealized appreciation on investments 3,937,693
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Net Assets $28,703,551
====================
</TABLE>
See Notes to the Financial Statements
+ See Note 2 to the Financial Statements
ARM Adjustable Rate Mortgage
Holland Series Fund, Inc.
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Holland Balanced Fund - Statement of Operations
Six Months Ended March 31, 1998 (Unaudited)
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<TABLE>
<S> <C>
Investment Income
Interest $337,988
Dividends 163,227
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Total investment income 501,215
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Expenses
Investment advisory fees (Note 2) 101,703
Administration fees 25,000
Custodian fees 6,275
Shareholder account maintenance 25,885
Audit fees 9,500
Legal fees 13,200
Shareholder reports 3,812
Insurance expense 6,966
Amortization of organizational costs 16,726
Registration fees 23,268
Directors fees 9,500
Miscellaneous fees and expenses 8,924
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Total operating expenses 250,759
Waiver of investment advisory fees (Note 2) (47,352)
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Net expenses 203,407
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Net investment income 297,808
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Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on investments 362,867
Net change in unrealized appreciation on investments 503,521
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Net realized and unrealized gain on investments 866,388
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Net increase in net assets resulting from operations $ 1,164,196
========================
</TABLE>
See Notes to Financial Statements
Holland Series Fund, Inc.
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Holland Balanced Fund - Statement of Changes in Net Assets
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<TABLE>
<S> <C> <C>
Six Months Ended Year Ended
3/31/98 (Unaudited) 9/30/97
Net Increase in Net Assets Resulting from Operations
Net investment income $ 297,808 $ 364,765
Net realized gain (loss) on investments 362,867 (112,729)
Net change in unrealized appreciation on investments 503,521 2,896,694
----------------------------- ----------------------------
Net increase in net assets resulting from operations 1,164,196 3,148,730
----------------------------- ----------------------------
Distributions to Shareholders From
Net investment income 318,396 258,314
Net realized gain on investments 0 447
----------------------------- ----------------------------
Total distributions 318,396 258,761
----------------------------- ----------------------------
Capital Share Transactions, Net (Note 6) 1,069,895 16,292,039
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Total increase in net assets 1,915,695 19,182,008
Net Assets
Beginning of period 26,787,856 7,605,848
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End of period $ 28,703,551 $ 26,787,856
============================= ============================
Undistributed net investment income, end of period $ 168,707 $ 189,295
============================= ============================
</TABLE>
See Notes to the Financial Statements
Holland Series Fund, Inc.
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Holland Balanced Fund - Financial Highlights
<TABLE>
<S> <C> <C> <C>
===============================================================================
For a share outstanding Six Months Ended Year Ended Period From 10/2/95*
throughout the period 3/31/98 9/30/97 To 9/30/96
- ----------------------------------------------------------------------------------------------------------------------------------
Per Share Data
Net asset value, beginning of period $13.70 $11.39 $10.00
Increases From Investment Operations
Net investment income 0.15 0.26 0.23
Net realized and unrealized gain on investments 0.40 2.30 1.33
------------------- ------------------------- ---------------------------
Total from investment operations 0.55 2.56 1.56
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Less Distributions From:
Net investment income (0.16) (0.25) (0.17)
Net realized gain on investments 0.00 0.00 # 0.00
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Total distributions (0.16) (0.25) (0.17)
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Net asset value, end of period $14.09 $13.70 $11.39
=================== ========================= ===========================
Total Return (c) 16.92% (a) 22.71% 15.65% (a)
Ratios/Supplemental Data
Net assets, end of period (000's) $28,704 $26,788 $7,606
Ratio of expenses to average net assets 1.50% (b) 1.50% 1.50% (b)
Ratio of expenses to average net assets before
expense waivers and reimbursement of
of other expenses 1.84% (b) 2.55% 4.81% (b)
Ratio of net investment income to average net
Assets 2.19% (b) 2.31% 2.36% (b)
Portfolio turnover 11.56% 5.07% 5.04%
Average commission rate per share (d) $0.05 $0.05 $0.06
</TABLE>
(a) Not annualized
(b) Annualized
(c) Total return would have been lower had certain expenses not been
waived or reimbursed.
(d) Computed by dividing the total amount of brokerage commissions paid on
equity securities by the total number of shares of equity securities
purchased or sold.
# Rounds to less than $0.01
* Commencement of Investment Operations
See Notes to the Financial Statements
Holland Series Fund, Inc.
Holland Balanced Fund - Notes to Financial Statements
March 31, 1998 (Unaudited)
1. Organization
The Holland Series Fund, Inc. (the "Company") was organized as a Maryland
corporation on June 26, 1995 and is registered under the Investment Company Act
of 1940, as amended, as an open-end, management investment company. The Company
currently has one portfolio, the Holland Balanced Fund (the "Fund"). The costs
incurred by the Company in connection with the organization and initial
registration of shares are being amortized on a straight-line basis by the Fund
over a sixty-month period beginning with commencement of its operations. The
unamortized balance of organizational expenses at March 31, 1998 was $84,332.
Investment Objective
The Fund is designed to provide investors with a convenient and professionally
managed vehicle for seeking a high total investment return. Total investment
return is the aggregate of dividend and interest income and realized and
unrealized capital gains/losses on investments. The Fund seeks to achieve its
objective through a combined portfolio of equity and investment grade
fixed-income securities.
2. Summary of Significant Accounting Policies
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates.
Securities
Securities transactions are recorded on a trade date basis. Interest income and
expenses are recorded on an accrual basis. The Fund amortizes discount or
premium using the yield-to-maturity method on a daily basis, except for
securities having a maturity date of less than sixty days at the time of
acquisition which are amortized on a straight-line basis. Dividend income is
recorded on the ex-dividend date. The Fund uses the specific identification
method for determining gain or loss on sales of securities.
Income Tax
There is no provision for Federal income or excise tax since the Fund intends to
continue to qualify as a regulated investment company ("RIC") and intends to
comply with the requirements of Subchapter M of the Internal Revenue Code
applicable to RICs and to distribute all of its taxable income.
Valuation
Securities traded on an exchange are valued at their last sales price on that
exchange. Securities for which over-the-counter market quotations are available
are valued at the latest bid price. Securities purchased with sixty days or less
remaining to maturity are valued at amortized cost which approximates fair
value.
Expenses
Holland & Company L.L.C. (the "Investment Adviser") has agreed to voluntarily
waive its fee and to reimburse the Fund for expenses exceeding 1.50% of average
daily net assets. During the period ended March 31, 1998, the Investment
Adviser, net of partial fee waivers, collected $47,352 of advisory fees.
2. Summary of Significant Accounting Policies (continued)
Dividends to Shareholders
It is the policy of the Fund to declare dividends according to the following
schedule:
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Dividends from Net Investment Income Capital Gain
Distributions
------------------------------------ --------------------------
Quarterly Annually
April, July, October and December December
Dividends from net short-term capital gains and net long-term capital gains, if
any, are normally declared and paid annually, but the Fund may make
distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code. To the extent that a net realized
capital gain can be reduced by a capital loss carryover, such gain will not be
distributed.
Income and capital gain distributions are determined in accordance with federal
tax regulations and may differ from those determined in accordance with
generally accepted accounting principles. Permanent book and tax differences
relating to shareholder distributions will result in reclassifications to
paid-in capital and may affect the distributable amount of net investment income
per share. Undistributed net investment income, accumulated net investment loss,
or distributions in excess of net investment income may include temporary book
and tax differences which may reverse in a subsequent period.
3. Investment Advisory Agreement and Administration Agreement
The Company's Board of Directors has approved an investment advisory agreement
with the Investment Adviser. For its services as investment adviser, the Company
pays the Investment Adviser a monthly fee at an annual rate of 0.75% of the
Fund's average daily net assets. Currently, the Investment Adviser is waiving
all of its fee. The Investment Adviser is controlled by Michael F. Holland, its
managing member and owner of 99% interest in the limited liability company.
Pursuant to its Administration Agreement, AMT Capital Services, Inc. (the
"Administrator"), three employees of which serve as officers of the Company,
earns a fee for providing fund administration services to the Company. The
Company pays the Administrator a monthly fee at the annual rate of 0.15% of the
Fund's average daily net assets and reimbursement for out-of-pocket expenses
pursuant to the Administration Agreement. Pursuant to the Administration
Agreement, the Administrator will be paid a minimum fee of $50,000 for services
provided to the Company.
4. Investment Transactions
Purchase cost and proceeds from sales of investment securities, other than
short-term investments, for year the ended March 31, 1998 were as follows:
<TABLE>
<S> <C> <C> <C>
- --------------------------- ------------------------- -------------------------- --------------------------
Purchases Purchases Sales Sales
U.S. Government Other Securities U.S. Government Other Securities
- --------------------------- ------------------------- -------------------------- --------------------------
$ - $4,384,098 $ - $2,796,224
</TABLE>
4. Investment Transactions (continued)
The components of net unrealized appreciation (depreciation) of investments
based on Federal tax cost at March 31, 1998 for the Fund were as follows:
<TABLE>
<S> <C> <C> <C>
-------------------------- -------------------------- ------------------------- --------------------------
Cost for Federal
Appreciation Depreciation Net Appreciation Tax Purposes
-------------------------- -------------------------- ------------------------- --------------------------
$ 3,963,793 $ (26,100) $ 3,937,693 $24,598,035
</TABLE>
5. Repurchase Agreements
The Fund may enter into repurchase agreements under which a bank or securities
firm that is a primary or reporting dealer in U.S. Government securities agrees,
upon entering into a contract, to sell U.S. Government securities to the Fund
and repurchase such securities from the Fund at a mutually agreed upon price and
date.
The Fund will engage in repurchase transactions with parties selected on the
basis of such party's creditworthiness. The collateral on repurchase agreements
must have an aggregate market value greater than or equal to the repurchase
price plus accrued interest at all times. If the value of the underlying
securities falls below the value of the repurchase price plus accrued interest,
the Fund will require the seller to deposit additional collateral by the next
business day. If the request for additional collateral is not met, or the seller
defaults on its repurchase obligation, the Fund maintains the right to sell the
underlying securities at market value and may claim any resulting loss against
the seller. However, in the event of default or bankruptcy by the counterparty
to the agreement, realization and/or retention of the collateral may be subject
to legal proceedings.
6. Capital Share Transactions
As of March 31, 1998, there were 1,000,000,000 shares of $.01 par value capital
stock authorized. Transactions in capital stock were as follows:
<TABLE>
<S> <C> <C> <C> <C>
Six Months Ended 3/31/98 Year Ended 9/30/97
-------------------------- ------------------------ ----------------------- ------------------------ -------------
Shares Amount Shares Amount
-------------------------- ------------------------ ----------------------- ------------------------ -------------
Shares Sold 268,653 $3,610,494 1,366,431 $17,319,459
Shares Reinvested 23,342 310,647 20,140 252,436
-------------------- ----------------------- ------------------------ ------------------------
291,995 3,921,141 1,386,571 17,571,895
Shares Redeemed (210,508) (2,851,247) (99,083) (1,279,856)
-------------------- ----------------------- ------------------------ ------------------------
Net Increase 81,487 $1,069,895 1,287,488 $16,292,039
==================== ======================= ======================== ========================
</TABLE>
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Holland Series Fund, Inc.
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BOARD OF DIRECTORS ADVISER
Michael F. Holland * Holland & Company L.L.C.
Director and President 375 Park Avenue
Chairman, New York, NY 10152
Holland & Company L.L.C. phone (212) 486-2002
fax (212) 486-0744
Sheldon S. Gordon
Director FUND ADMINISTRATOR
Chairman, AND DISTRIBUTOR
Union Bancaire Privee International, Inc. AMT Capital Services, Inc.
600 Fifth Avenue, 26th Floor
New York, NY 10020
Herbert S. Winokur, Jr. phone (800) 304-6552
Director
Managing General Partner, CUSTODIAN AND
Capricorn Investors, L.P. FUND ACCOUNTING AGENT
Investors Bank & Trust Company
P.O. Box 1537
Desmond G. FitzGerald Boston, MA 02205
Director
Chairman,
North
American
Properties
Group
TRANSFER
AGENT
AND
DIVIDEND
DISBURSING
AGENT
Unified
Fund
Services,
Inc.
Jeff C. Tarr 431 N. Pennsylvania Street
Director Indianapolis, IN 46204
Chairman, phone (800) 249-0763
Junction Advisors
LEGAL COUNSEL
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
* interested person as defined in the
Investment Company Act of 1940
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, NY 10036
<TABLE> <S> <C>
<ARTICLE> 6
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<NUMBER> 1
<NAME> HOLLAND BALANCED FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 24598
<INVESTMENTS-AT-VALUE> 28536
<RECEIVABLES> 126
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<SHARES-COMMON-STOCK> 2037
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</TABLE>
