<PAGE>
HOLLAND BALANCED FUND
Semi-Annual Report
March 31, 1999 (Unaudited)
<PAGE>
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Contents
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
<PAGE>
Holland Series Fund, Inc.
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Holland Balanced Fund . Letter from the President
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April 20, 1999
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Dear Fellow Shareholder: [PHOTO]
For the six months ended March 31, 1999 our Fund achieved a positive return of
13.0% (and a return of 11.2% for the past 12 months). The Fund's total return
since its inception (10/2/95) has been 64.3%, which is incidentally a 15.3%
annualized return.
Our investment portfolio of approximately 60% top quality "blue chip" stocks,
30% U.S. Treasury notes and bonds, and 10% cash equivalents has produced a more
than satisfactory return to date, with much less volatility than a lot of other
things.
With Bullish Regards,
/s/ Michael F. Holland
Michael F. Holland
President and Founder
1
<PAGE>
]
Holland Series Fund, Inc.
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Holland Balanced Fund . Cumulative Performance
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March 31, 1999
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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.
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Comparison of Change in Value of $10,000 Investment
in the Holland Balanced Fund and the Lipper Balanced Fund Index
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Holland Balanced Fund Lipper Balanced Fund Index
--------------------- --------------------------
10/2/95 10,000 10,000
10/31/95 10,010 10,001
11/30/95 10,340 10,312
12/31/95 10,570 10,474
1/31/96 10,781 10,630
2/29/96 10,781 10,635
3/31/96 10,993 10,675
4/30/96 11,149 10,678
5/31/96 11,401 10,807
6/30/96 11,331 10,843
7/31/96 11,139 10,523
8/31/96 11,302 10,667
9/30/96 11,566 11,040
10/31/96 11,890 11,274
11/30/96 12,411 11,800
12/31/96 12,315 11,653
1/31/97 12,829 12,009
2/28/97 12,818 12,054
3/31/97 12,582 11,703
4/30/97 12,819 12,055
5/31/97 13,149 12,549
6/30/97 13,541 12,923
7/31/97 14,254 13,664
8/31/97 13,767 13,230
9/30/97 14,192 13,758
10/31/97 13,578 13,508
11/30/97 13,849 13,757
12/31/97 13,808 13,958
1/31/98 13,923 14,055
2/28/98 14,499 14,613
3/31/98 14,772 15,037
4/30/98 14,971 15,165
5/31/98 15,002 15,051
6/30/98 15,034 15,324
7/31/98 15,076 15,150
8/31/98 13,902 13,844
9/30/98 14,537 14,442
10/31/98 15,067 14,982
11/30/98 15,736 15,530
12/31/98 16,072 16,103
1/31/99 16,695 16,361
2/28/99 16,029 15,968
3/31/99 16,426 16,362
(Past performance is not predictive of future performance)
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Investment Performance
(For the Periods Ended March 31, 1999)
Total Return
Cumulative Since Average 12 months
Inception (10/2/95) Annualized Ended
Holland Balanced Fund(a) 64.26% 15.25% 11.20%
Lipper Balanced Fund Index 63.62% 15.12% 8.81%
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(a) Reflects waiver of fees and reimbursement of expenses by the investment
advisor. Absent such waiver and reimbursement, the Fund's total return
would have been lower.
2
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Holland Series Fund, Inc
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Holland Balanced Fund.
Statement of Net Assets
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<TABLE>
<CAPTION>
March 31, 1999 (unaudited) Shares Value*
- --------------------------------------------------------
<S> <C> <C>
Common Stocks-58.2%
Autos-6.3%
DaimlerChrysler 16,460 $1,412,474
General Motors Corp. 14,400 1,251,000
----------
2,663,474
----------
Banks-3.5%
J.P. Morgan & Company, Inc. 12,200 1,505,175
----------
Chemicals-2.9%
DuPont (E.I.) de Nemours & Company 21,100 1,225,119
----------
Computers-6.5%
Compaq Computer Corp. 37,000 1,172,437
International Business Machines Corp. 8,900 1,577,525
----------
2,749,962
----------
Electronics-6.5%
Hewlett-Packard Co. 14,600 1,274,875
Intel Corp. 12,700 1,512,887
----------
2,787,762
----------
Entertainment & Leisure-2.1%
Walt Disney Co. 29,000 902,625
----------
Financial-3.8%
Merrill Lynch & Company 18,500 1,636,094
----------
Insurance-2.6%
Chubb Corp. 18,800 1,100,975
----------
Oil/Gas-8.3%
Exxon Corp. 14,300 1,009,044
Schlumberger, Ltd. 24,500 1,474,594
Texaco, Inc. 18,700 1,061,225
----------
3,544,863
----------
Pharmaceuticals-6.6%
Johnson & Johnson 14,600 1,367,837
Merck & Company, Inc. 18,000 1,443,375
----------
2,811,212
----------
Producer Goods-6.0%
General Electric Co. 12,700 1,404,937
Minnesota Mining & Manufacturing Co. 16,300 1,153,225
----------
2,558,162
----------
Telecommunications-3.1%
AT&T Corp. 16,700 1,332,869
----------
Total Common Stocks
(Cost-$18,238,998) 24,818,292
----------
- --------------------------------------------------------
</TABLE>
See Notes to the Financial Statements
3
<PAGE>
Holland Series Fund, Inc
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Holland Balanced Fund.
Statement of Net Assets (continued)
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<TABLE>
<CAPTION>
March 31, 1999 (unaudited) Principal Value*
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<S> <C> <C>
U.S. Government Securities-27.1%
U.S. Treasury Note, 6.000% due 8/15/99 $ 500,000 $ 502,344
U.S. Treasury Note, 5.625% due 11/30/00 1,000,000 1,009,375
U.S. Treasury Note, 5.625% due 02/28/01 1,000,000 1,010,938
U.S. Treasury Note, 6.375% due 8/15/02 1,000,000 1,036,250
U.S. Treasury Note, 5.250% due 8/15/03 2,800,000 2,806,126
U.S. Treasury Note, 5.875% due 02/15/04 3,500,000 3,602,813
U.S. Treasury Bond, 6.250% due 8/15/23 1,500,000 1,570,313
-----------
Total U.S. Government Securities
(Cost-$11,201,812) 11,538,159
-----------
Repurchase Agreements-14.3%
Investors Bank & Trust Co. Repurchase Agreement, 4.400%
due 4/01/99 in the amount of $6,085,848; Issued
3/31/99 (Collaterized by $6,431,615, FHR, 6.000% due
10/25/21 with a market value of $6,389,359) (Cost-
$6,085,104) 6,085,104 6,085,104
-----------
Total Investments-99.6%
(Cost-$35,525,914) 42,441,555
Other assets in excess of liabilities-0.4% 158,318
-----------
Net Assets-100.0%
Applicable to 2,786,853 outstanding $0.01 par value
shares (authorized 1,000,000,000) $42,599,873
===========
Net asset value, offering price and redemption price per
share $ 15.29
===========
Components of Net Assets as of March 31, 1999
Capital stock at par value ($0.01) $ 27,869
Capital stock in excess of par value 35,494,952
Undistributed net investment income 161,372
Net accumulated realized gain on investments 39
Net unrealized appreciation on investments 6,915,641
-----------
Net Assets $42,599,873
===========
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</TABLE>
See Notes to the Financial Statements
*See Note 2 to Financial Statements
4
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Holland Series Fund, Inc
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Holland Balanced Fund.
Statement of Operations
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Six Months Ended March 31, 1999 (Unaudited)
<TABLE>
- -----------------------------------------
<S> <C>
Investment Income
Interest $ 376,716
Dividends 166,032
----------
Total investment income 542,748
----------
Expenses
Investment advisory fees
(Note 3) 134,095
Shareholder account
maintenance 35,028
Administration fees (Note
3) 26,819
Audit fees 25,000
Registration fees 18,127
Amortization of
organizational costs 16,726
Legal fees 15,291
Shareholder reports 13,392
Custodian fees 6,936
Insurance expense 6,835
Directors fees 6,500
Miscellaneous expense 7,042
----------
Total operating expenses 311,791
Waiver of investment
advisory fees (Note 3) (43,600)
----------
Net expenses 268,191
----------
Net investment income 274,557
----------
Net Realized and Unrealized
Gain (Loss) on Investments
Net realized gain on
investments 17
Net change in unrealized
appreciation/(depreciation)
on investments 3,714,430
----------
Net realized and
unrealized gain on
investments 3,714,447
----------
Net increase in net
assets resulting from
operations $3,989,004
==========
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</TABLE>
See Notes to the Financial Statements
5
<PAGE>
Holland Series Fund, Inc.
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Holland Balanced Fund.
Statement of Changes in Net Assets
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<TABLE>
<CAPTION>
Six Months
Ended 3/31/99 Year Ended
(Unaudited) 9/30/98
- ----------------------------------------------------------------------------
<S> <C> <C>
Net Increase in Net Assets Resulting from
Operations
Net investment income $ 274,557 $ 588,764
Net realized gain on investments 17 293,130
Net change in unrealized
appreciation/(depreciation) on investments 3,714,430 (232,961)
----------- -----------
Net increase in net assets resulting from
operations 3,989,004 648,933
----------- -----------
Dividends and Distributions to Shareholders From
Net investment income (330,216) (594,129)
Net realized gain on investments (180,379) --
----------- -----------
Total dividends and distributions (510,595) (594,129)
----------- -----------
Capital Share Transactions, Net (Note 6) 9,080,005 3,198,799
----------- -----------
Total increase in net assets 12,558,414 3,253,603
Net Assets
Beginning of period 30,041,459 26,787,856
----------- -----------
End of period $42,599,873 $30,041,459
=========== ===========
Undistributed Net Investment Income,
end of period $ 161,372 $ 217,031
=========== ===========
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</TABLE>
See Notes to the Financial Statements
6
<PAGE>
Holland Series Fund, Inc.
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Holland Balanced Fund.
Financial Highlights
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<TABLE>
<CAPTION>
Six Months Period from
Ended 3/31/99 Year Ended Year Ended 10/2/95*
For a capital share outstanding throughout the period (Unaudited) 9/30/98 9/30/97 to 9/30/96
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share Data
Net asset value, beginning of period $ 13.74 $ 13.70 $ 11.39 $ 10.00
------- ------- ------- -------
Increases From Investment Operations
Net investment income 0.11 0.28 0.26 0.23
Net realized and unrealized gains on
investments 1.67 0.05 2.30 1.33
------- ------- ------- -------
Total from investment operations 1.78 0.33 2.56 1.56
------- ------- ------- -------
Less Dividends and Distributions From:
Net investment income (0.15) (0.29) (0.25) (0.17)
Net realized gain on investments (0.08) - (0.00)# -
------- ------- ------- -------
Total dividends and distributions (0.23) (0.29) (0.25) (0.17)
------- ------- ------- -------
Net asset value, end of period $ 15.29 $ 13.74 $ 13.70 $ 11.39
======= ======= ======= =======
Total Return(c) 12.99%(a) 2.43% 22.71% 15.65%(a)
Ratios/Supplemental Data
Net assets, end of period (000's) $42,600 $30,041 $26,788 $ 7,606
Ratio of expenses to average net
assets after fee waivers and
reimbursement of other expenses 1.50%(b) 1.50% 1.50% 1.50%(b)
Ratio of expenses to average net
assets before fee waivers and
reimbursement of other expenses 1.74%(b) 1.83% 2.55% 4.81%(b)
Ratio of net investment income to
average net assets after fee waivers
and reimbursement of other expenses 1.54%(b) 2.05% 2.31% 2.36%(b)
Ratio of net investment income (loss)
to average net assets before fee
waivers and reimbursement of other
expenses 1.30%(b) 1.72% 1.26% (0.95)%(b)
Portfolio turnover 1.60% 16.49% 5.07% 5.04%
- --------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to the Financial Statements
(a)Not annualized
(b)Annualized
(c)Total return would have been lower had certain expenses not been waived or
reimbursed.
#Rounds to less than $0.01
*Commencement of Investment Operations
7
<PAGE>
Holland Series Fund, Inc.
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Holland Balanced Fund.
Notes to Financial Statements
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March 31, 1999 (Unaudited)
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1. Organization
The Holland Series Fund, Inc. (the "Company") was organized as a Maryland
corporation on June 26, 1995 and is registered under the Investment Company Act
of 1940, as amended, 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, 1999 was $50,879.
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 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. Debt 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
8
<PAGE>
Holland Series Fund, Inc.
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Holland Balanced Fund.
Notes to Financial Statements (continued)
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March 31, 1999 (Unaudited)
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2. Summary of Significant Accounting Policies (continued)
daily net assets. During the six months ended March 31, 1999, the Investment
Adviser voluntarily waived $43,600 of advisory fees.
Dividends and Distributions to Shareholders
It is the policy of the Fund to declare dividends according to the following
schedule:
<TABLE>
- --------------------------------------------------
<CAPTION>
Dividends from Net Capital Gain
Investment Income Distributions
- --------------------------------------------------
<S> <C>
Quarterly Annually
April, July, October and December December
</TABLE>
Distributions 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
voluntarily waiving a portion of its fee. The Investment Adviser is controlled
by Michael F. Holland, its managing member and owner of 99% interest in the
Investment Advisor.
Pursuant to its Administration Agreement, Investors Capital Services, Inc. (the
"Administrator"), wholly-owned subsidiary of Investors Financial Services Co.,
Inc., two employees of which serve as officers of the Company, earns a fee for
providing fund administration services to the Company. The Company pays the
Administrator a monthly fee at the annual rate of 0.15% of the Fund's average
daily net assets and reimbursement for out-of-pocket expenses pursuant to the
Administration Agreement. Pursuant to the Administration Agreement, the
Administrator will be paid a minimum fee of $50,000 for services provided to
the Company, unless otherwise waived by the Administrator. Investors Bank &
Trust Company ("IBT") which is also a wholly-owned subsidiary of Investors
Financial Services Co., Inc.,
9
<PAGE>
Holland Series Fund, Inc.
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Holland Balanced Fund.
Notes to Financial Statements (continued)
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serves as the Fund's custodian and accounting agent. Fees paid for services
rendered by IBT are based upon assets of the Fund and on transactions entered
into by the Fund during the year. Fees for such services paid to IBT by the
Fund are reflected as custodian fees in the Statement of Operations.
4. Investment Transactions
Purchase cost and proceeds from sales of investment securities, other than
short-term investments, for the six months ended March 31, 1999 were as
follows:
<TABLE>
- ---------------------------------------------------------------------------------
<CAPTION>
Purchases Purchases Sales Sales
U.S. Government Other Securities U.S. Government Other Securities
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
$2,822,750 $2,854,697 $500,000 $35
</TABLE>
The components of net unrealized appreciation (depreciation) of investments
based on Federal tax cost at March 31, 1999 for the Fund were as follows:
<TABLE>
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<CAPTION>
Cost for Federal
Appreciation Depreciation Net Appreciation Tax Purposes
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
$7,277,519 $(361,878) $6,915,641 $35,525,914
</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.
10
<PAGE>
Holland Series Fund, Inc.
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Holland Balanced Fund.
Notes to Financial Statements (concluded)
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6. Capital Share Transactions
As of March 31, 1999, there were 1,000,000,000 shares of $.01 par value capital
stock authorized. Transactions in capital stock were as follows:
<TABLE>
- ----------------------------------------------------------------------------------
<CAPTION>
Six Months Ended 3/31/99 Year Ended 9/30/98
- ----------------------------------------------------------------------------------
Shares Amount Shares Amount
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares Sold 800,542 $ 11,997,556 540,996 $ 7,471,474
Shares Reinvested 33,002 483,090 42,207 579,433
---------- ------------- -------- -----------
833,544 12,480,646 583,203 8,050,907
Shares Redeemed (233,140) (3,400,641) (351,772) (4,852,108)
---------- ------------- -------- -----------
Net Increase 600,404 $ 9,080,005 231,431 $ 3,198,799
========== ============= ======== ===========
</TABLE>
11
<PAGE>
Holland Series Fund, Inc.
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Board of Directors
Michael F. Holland*
Director and President
Chairman,
Holland & Company L.L.C.
Sheldon S. Gordon
Director
Chairman,
Union Bancaire
Privee International, Inc.
Herbert S. Winokur, Jr.
Director
Managing General Partner,
Capricorn Investors, L.P.
Desmond G. FitzGerald
Director
Chairman,
North American Properties Group
Jeff C. Tarr
Director
Chairman,
Junction Advisors
*interested person as defined in the Investment Company Act of 1940
Adviser
Holland & Company L.L.C.
375 Park Avenue
New York, NY 10152
phone(212) 486-2002
fax(212) 486-0744
Fund Administrator
Investors Capital Services, Inc.
600 Fifth Avenue
New York, NY 10020
phone(800) 304-6552
Fund Distributor
AMT Capital Securities, LLC
399 Park Avenue, 37th Floor
New York, NY 10022
Custodian and
Fund Accounting Agent
Investors Bank & Trust Company
P.O. Box 9130
Boston, MA 02117
Transfer Agent and
Dividend Disbursing Agent
Unified Advisers, Inc.
429 N. Pennsylvania Street
Indianapolis, IN 46204
phone(800) 249-0763
Legal Counsel
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Independent Accountants
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
<PAGE>
- -------------------------
Holland & Company L.L.C.
375 Park Avenue
New York, New York 10152
Phone 800-891-6181
212-486-2002
Fax 212-486-0744
