<PAGE>
As filed with the Securities and Exchange Commission
on November 30, 1999
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
Pre-Effective Amendment No.__
Post-Effective Amendment No.5_ /X/
-
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
-
Amendment No.6
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HOLLAND SERIES FUND, INC.
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(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
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TANA TSELEPIS, Secretary and Treasurer
Holland Series Fund, Inc.
375 Park Avenue
New York, New York 10152
________________________________________________________________________________
(Name and Address of Agent for Service)
Copies to:
Cynthia Cobden, Esq.
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
________________________________________________________________________________
It is proposed that this filing will become effective (check appropriate
box)
// immediately upon filing pursuant to paragraph (b)
// on (date) pursuant to paragraph (b)
/X/ 60 days after filing pursuant to paragraph (a)(1)
// on (date) pursuant to paragraph (a)(1)
// 75 days after filing pursuant to paragraph (a)(2)
// on (date) pursuant to paragraph (a)(2) 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 completed its
fiscal year ended September 30, 1999, and filed the notice under Rule 24f-2 on
November ___, 1999 for such fiscal year.
<PAGE>
Prospectus
--------------------------------
HOLLAND BALANCED FUND
--------------------------------
These securities have not been approved
or disapproved by the Securities and
Exchange Commission nor has the
Commission passed upon the accuracy or
adequacy of this prospectus. Any
representation to the contrary is a
criminal offense.
January ___, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
A Summary of the Fund................................................................................................ 3
Strategies and Risks............................................................................................ 3
Bar Chart (Performance History)................................................................................. 4
Performance Comparison Table.................................................................................... 5
Fee Table....................................................................................................... 5
Cost Example.................................................................................................... 6
More About the Fund - Investment Details............................................................................. 7
Investment Objective............................................................................................ 7
Principal Investment Strategies................................................................................. 7
Principal Investments........................................................................................... 7
Portfolio Manager............................................................................................... 7
More Information About Investment Strategies and Risks............................................................... 8
Your Account......................................................................................................... 9
Types of Accounts............................................................................................... 9
Shareholder Services............................................................................................ 9
Purchasing Shares............................................................................................... 10
Redeeming Shares................................................................................................ 11
How to Reach the Fund........................................................................................... 13
Pricing Of Fund Shares............................................................................................... 14
Distributions........................................................................................................ 14
Federal Tax Considerations........................................................................................... 15
Taxes on Distributions.......................................................................................... 15
Taxes on Sales.................................................................................................. 15
Taxes on Dividends.............................................................................................. 15
Tax Withholding................................................................................................. 15
Management........................................................................................................... 16
Investment Adviser.............................................................................................. 16
Other Service Providers......................................................................................... 16
Financial Highlights................................................................................................. 17
</TABLE>
<PAGE>
A SUMMARY OF THE FUND - Strategies and Risks
This section briefly describes the Holland Balanced Fund's goals, principal
investment strategies, risks, expenses and performance. For further information
on how this Fund is managed, please read the section entitled "Fund Details."
Investment Objective
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The objective of the Holland Balanced Fund is to provide a high total investment
return. The total investment return is the combination of 1) income from
dividends and interest on securities owned by the Fund, and 2) capital gains and
losses on securities owned by the Fund.
Principal Investment Strategies
- -------------------------------
The Fund seeks to achieve its objective through a combined portfolio of equities
and investment grade fixed-income securities. Holland & Company L.L.C., the
Fund's investment adviser (the "Adviser"), has discretion to determine the
proportion of the Fund's portfolio that will be invested in equities and fixed-
income securities at any given time depending on the Adviser's perception of
existing and anticipated market and economic conditions. The Adviser seeks to
identify asset classes or individual securities that it believes have been
fundamentally mispriced by the market and which have minimal inherent investment
risk .
Principal Risks
- ---------------
The Fund is subject to the following principal risks:
. Market Risk: Stock and bond markets are volatile, and there is a risk that
the price of a security will rise or fall due to changing economic, political
or market conditions, as well as company-specific factors (see "Issuer-
Specific Risk" and "Risks of Investing in Debt Securities" below).
Consequently, the value of your investment in the Fund will increase and
decrease, which means that you could lose money.
. Issuer-Specific Risk: The price of an individual security or a particular
type of security can be more volatile than the market as a whole and can
fluctuate differently than the market as a whole. An individual issuer's
securities can rise or fall dramatically with little or no warning based upon
such things as a better (or worse) than expected earnings report, news about
the development of a promising product, distribution difficulties or the loss
of key management personnel. There is also a risk that the price of a
security may never reach a level that the Adviser believes is representative
of its full value or that it may go down in price.
. Risks of Investing in Debt Securities: Investments in debt securities are
subject to several significant risks. These include:
. Interest rate risk, which is the chance that bond prices overall will
decline over short or even long periods due to rising interest rates. In
general, interest rate risk should be least for shorter-term bonds and
greatest for longer-term bonds. High quality corporate and U.S.
Government debt securities are not immune to interest rate risk.
---
. Income risk, which is the chance that falling interest rates will cause
the Fund's income to decline. Income risk is generally higher for
short-term bonds and lower for long-term bonds.
. Credit risk, which is the chance that a bond issuer will fail to pay
interest and principal in a timely manner, thereby reducing the Fund's
return. Credit risk should be low for the Fund , since it invests in
high-quality debt securities, including U.S. Government bonds.
Prospectus - 3
<PAGE>
A SUMMARY OF THE FUND - Bar Chart (Performance History)
Performance and Volatility
The bar chart below shows the performance of the Holland Balanced Fund during
the last several years. The chart provides some indication of the risks of
investing in the Fund by showing changes in the Fund's performance from year to
year. Please keep in mind that past performance does not necessarily indicate
how the Fund will perform in the future.
The returns in the chart reflect the effect of voluntary fee waivers and expense
reimbursements by the Adviser. If fee waivers and expense reimbursements had not
been in effect, returns would have been lower than those shown.
HOLLAND BALANCED FUND
Total Return for the year Ended December 31
1996 1997 1998 1999
16.51% 12.12% 16.40% 0.00%
During the period shown in the bar chart, the highest return for a quarter was
10.56% (quarter ended 12/31/98) and the lowest return for a quarter was (3.31)%
(quarter ended 9/30/98).
Prospectus - 4
<PAGE>
A SUMMARY OF THE FUND - (Performance Comparison Table)
AVERAGE ANNUAL TOTAL RETURN (for the period ending December 31, 1999)
The information in the following table gives some indication of the risks of an
investment in the Fund by comparing the Fund's performance with a broad measure
of market performance. The returns in the table reflect the effect of voluntary
fee waivers and expense reimbursements by the Adviser. If those waivers and
reimbursements had not been in effect, the returns would have been lower than
those shown.
<TABLE>
<CAPTION>
Past 1 Year Since the Inception Date of the
Fund (October 2, 1995)
<S> <C> <C>
Holland Balanced Fund __% __%
Lipper Balanced Fund Index ___% __%
Composite Index* ___% __%
</TABLE>
* The Composite Index return is a blended return composed of 60% of the
Standard & Poor's 500 Index, 30% of the Salomon 10 Year Government Bond Index,
and 10% of the 90 Day US Treasury Bill rate of return.
A SUMMARY OF THE FUND - Fee Table
Investor Expenses
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Holland Balanced Fund.
<TABLE>
<CAPTION>
<S> <C>
Shareholder Fees (fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases (as a % of offering price) None
Maximum Deferred Sales Charge (Load) None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends and other Distributions None
Redemption Fee None
Exchange Fee None
Annual Fund Operating Expenses (expenses that are deducted from Fund assets)
Management Fees 0.75
Distribution and/or Service Fees None
Other Expenses 0.88
Total Annual Operating Expenses ** 1.63
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</TABLE>
** The Adviser has voluntarily agreed to cap the total annual operating expenses
of the Fund at 1.50% (on an annualized basis) of the Fund's average daily net
assets. The Adviser may discontinue this cap on total expenses at any time, at
its sole discretion.
Prospectus - 5
<PAGE>
A SUMMARY OF THE FUND - (Cost Example)
This example is intended to help you compare the cost of investing in the
Holland Balanced Fund with the cost of investing in other mutual funds. The
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year, that you
reinvest all dividends and distributions, and that the Fund's operating expenses
remain the same. Although your actual costs and the return on your investment
may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
$ 167 $ 518 $ 893 $ 1,945
Prospectus - 6
<PAGE>
MORE ABOUT THE FUND - Investment Details
INVESTMENT DETAILS OF THE HOLLAND BALANCED FUND
This Section provides additional information regarding the Fund's principal
investment strategies, investments and risks.
Investment Objective
The Fund seeks to provide a high total investment return.
Principal Investment Strategies
The Fund pursues its investment objective by investing primarily in equity
securities. Under ordinary market conditions, the Fund will invest at least 50%
of its total assets in equity securities, at least 25% of its total assets in
investment grade fixed-income securities, including U.S. Government securities,
and may invest up to 25% of its total assets in high quality money market
securities. However, the Adviser has discretion to determine the proportion of
the Fund's Portfolio that will be invested in equity and fixed-income securities
at any given time depending on the Adviser's perception of existing and
anticipated market and economic conditions.
A key component of the 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
Adviser believes such opportunities exist, the Fund's assets will be
positioned in an effort to produce long-term price performance. The Adviser
seeks to make the fund tax efficient by offsetting portfolio gains with losses
when such action is consistent with the Fund's primary investment objective.
Principal Investments
The Fund may invest in equity securities and debt securities. 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 an
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 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 Services, Inc. or BBB or
better by Standard & Poor's Corporation, or which are determined by the Fund's
Adviser to be of quality comparable to instruments so rated.
Portfolio Manager
Michael Holland is the portfolio manager for the Holland Balanced Fund.
Mr. 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 Mr. Holland was Chairman and 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 approximately $6 billion under his leadership.
A graduate of Harvard College and Columbia University Graduate School of
Business Administration, Mr. Holland began his career at J.P. Morgan & Co. in
1968.
Mr. 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.
Prospectus - 7
<PAGE>
MORE INFORMATION ABOUT INVESTMENT STRATEGIES AND RISKS
Many factors affect the Fund's performance. The Fund's share prices change daily
based on changes in market conditions in response to economic, political and
financial developments. The direction and extent of those price changes will be
affected by the financial condition, industry and economic sector, and
geographic location of the companies in which the Fund invests, and the Fund's
level of investment in the securities of those companies. WHEN YOU REDEEM YOUR
SHARES OF THE FUND, THEY COULD BE WORTH MORE OR LESS THAN WHAT YOU PAID FOR
THEM.
The Fund's Statement of Additional Information includes additional information
regarding the risks associated with the Fund's investments.
The following discussion is intended to supplement the discussion of risk in the
section entitled, "A Summary of the Fund - Strategies and Risks":
Stock Market Volatility: The value of equity securities fluctuates in response
to issuer, political, market and economic developments. Equity prices can
fluctuate dramatically in response to these developments. Political or economic
developments can affect a single issuer, issuers within an industry or economic
sector or geographic region, or the market as a whole.
Interest Rate Changes: Debt securities have varying levels of sensitivity to
changes in interest rates. In general, the price of a debt security may fall
when interest rates rise and may rise when interest rates fall. Securities with
longer maturities may be more sensitive to interest rate changes.
Defensive Strategies: In response to market, economic, political or other
conditions, the Adviser may temporarily use a different investment strategy for
the Fund for defensive purposes. Such a strategy could include investing up to
100% of the Fund's assets in cash or high-quality money market securities. If
the Adviser does so, it could affect the Fund's performance and the Fund might
not achieve its investment objective.
Lower-Quality Debt Securities: The Fund may invest in debt securities rated Baa
or better by Moody's Investors Service, Inc. or BBB or better by Standard &
Poor's Corporation, or which are determined by the Adviser to be of comparable
quality. Bonds rated Aa or below, or AA or below are generally considered to be
more speculative than the highest rated bonds and involve greater risk of loss
or price changes due to changes in the issuer's capacity to pay.
Risks of Foreign Securities: Although the Adviser currently does not intend to
emphasize foreign securities in the Fund, it reserves the right to invest as
much as one third of the Fund's total assets in foreign securities. Foreign
securities may be riskier than U.S. investments because of factors such as
unstable international political and economic conditions, currency fluctuations,
foreign controls on investment and currency exchange, withholding taxes, a lack
of adequate company information, less liquid and more volatile markets, and a
lack of governmental regulation.
Dependence on Certain Individual: 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 for Michael
Holland could be found.
Portfolio Turnover Rates: The portfolio turnover rate for the Fund for fiscal
year ending September 30, 1999, was 15.76%. This turnover rate is significantly
lower than that of many comparable mutual funds. However, there can be no
assurance that the Fund's portfolio turnover rate will not increase.
Low portfolio turnover results in lower brokerage expense and may decrease
realized capital gains distributions, with favorable tax consequences for the
Fund's shareholders. See "Federal Tax Considerations" below.
Prospectus - 8
<PAGE>
YOUR ACCOUNT
This section describes the services that are available to shareholders.
Types Of Accounts
If you are making an initial investment in the Fund, you will need to open an
account. You may establish the following types of accounts:
. Individual or Joint Ownership. One person owns an individual account while
two or more people own a joint account. We will treat each individual owner
of a joint account as authorized to give instructions on purchases, sales and
exchanges of shares without notice to the other owners. However, we will
require each owner's signature guarantee for any transaction requiring a
signature guarantee.
. Gift or Transfer to Minors. A Custodian maintains a Uniform Gifts to Minors
Act (UGMA) or Uniform Transfers to Minors Act (UTMA) account for the benefit
of a minor. To open an UGMA or UTMA account, you must include the minor's
social security number on the application.
. Trust. A trust can open an account. You must include the name of each
trustee, the name of the trust and the date of the trust agreement on the
application.
. Corporations, Partnerships and Other Legal Entities. Corporations,
partnerships and other legal entities may also open an account. A general
partner of the partnership or an authorized officer of the corporation or
other legal entity must sign the application and resolution form.
. Retirement. If you are eligible, you may set up your account under a
tax-sheltered retirement plan, such as an Individual Retirement Account. Your
financial consultant can help you determine if you are eligible.
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
various services or plans, or how to change options with respect thereto, can be
obtained from the Fund or the Distributor.
. Automatic Investment Plan. An investor who opens an account and wants to
make subsequent, periodic investments in the 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 ($50 or more).
. Automatic Clearing House Purchases. An investor may, at his or her request,
make additional investments in the Fund by giving his or her bank a voided
check with pre-arranged instructions to withdraw funds from his or her bank
account and deposit such funds into his or her 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 may inquire about their Fund accounts by calling the Transfer Agent
at (800) 249-0763. Also, shareholders can receive the net asset value per share
of the Fund by calling the toll-free number.
Prospectus - 9
<PAGE>
Purchasing Shares
Shares of the Fund are available to investors making a minimum initial
investment of $1,000. The minimum for subsequent investments is $500.
The Fund or the Adviser may waive or lower these minimums in certain cases. You
must complete and sign an application for each account you open with the Fund.
The price for Fund shares is the Fund's net asset value per share (NAV). We
determine the NAV as of the close of trading on the New York Stock Exchange
(normally 4:00 p.m. Eastern time) every day that the Exchange is open. We will
price your order at the next NAV calculated after the Fund accepts your order.
For more information on how we price shares, see "Pricing of Fund Shares" on
page 14.
The Fund and the Distributor each reserve the right to reject any purchase for
any reason and to cancel any purchase due to non-payment. You must make all
purchases in United States dollars and draw all checks on United States banks.
If we cancel your purchase due to non-payment, you will be responsible for any
loss the Fund incurs. We will not accept cash or third-party checks for the
purchase of shares.
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Method Of Purchase Procedures
Purchase
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Through a Contact your financial consultant.
Financial
Professional
[PICTURE]
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- --------------------------------------------------------------------------------
Through Selling ALPS Mutual Fund Services, Inc. authorizes certain
Group Members securities dealers, banks or other financial service firms
[PICTURE] (collectively, "Selling Group Members") to redeem your
shares. To receive that day's share price:
. you must place your order with the Selling Group Member
before the close of regular trading on the New York Stock
Exchange (normally 4:00 p.m. Eastern time); and
. the Selling Group Member must transmit the order to the
Fund before 5:00 p.m. Eastern time on that same day.
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- --------------------------------------------------------------------------------
By Mail To purchase Shares of the Fund, send your completed
[PICTURE] application to:
Holland Balanced Fund
c/o Unified Advisers, Inc.
P.O. Box 6110
Indianapolis, IN 46206-6110
Include with your application your check, payable to
"Holland Balanced Fund".
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- --------------------------------------------------------------------------------
By Wire . Initial Purchase: You will need to instruct a Federal
[PICTURE] Reserve System member bank to wire Funds to:
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)
. Subsequent Purchase: Wire Funds to the designated bank
account for the Fund.
You may wire funds between 8:00 a.m. and 4:00 p.m. Eastern
time. To make a same-day wire investment, please call the
Transfer Agent at (800) 249-0763 to notify us of your
intention to wire Funds, and make sure your wire arrives by
4:00 p.m. Eastern time. Please note that your bank may
charge a fee for the wire.
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Prospectus - 10
<PAGE>
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Subsequent The minimum subsequent purchase is $500.
Purchases
[PICTURE]
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Important You can redeem shares that you purchased by check. However,
Note while we will process your redemption request at the next -
determined net asset value after we receive it, your
redemption proceeds will be not available until your check
clears. This could take up to ten calendar days.
- --------------------------------------------------------------------------------
Redeeming Shares
You have the right to sell ("redeem") all or any part of your shares subject to
certain restrictions. Selling your shares in the Fund is referred to as a
"redemption" because the Fund buys back its shares. We will redeem your shares
at the net asset value next computed following receipt of your redemption
request in good order. See "Redemption Procedures - Request in `Good Order'" on
page 12.
We will mail your redemption proceeds to your current address or transmit them
electronically to your designated bank account. Under normal circumstances, we
will send your redemption to you within seven days after we receive your
redemption request.
We will not process your redemption request if it is not in proper form (see
chart below). We will notify you if your redemption request is not in proper
form.
If, as a result of your redemption, your account value drops below $500, we may
redeem the remaining shares in your account. We will notify you in writing of
our intent to redeem your shares. We will allow at least thirty days thereafter
for you to make an additional investment to avoid liquidation of the account.
Signature Guarantees
Your redemption request must be accompanied by a "signature guarantee" by a
national bank or other bank that is a member of the Federal Reserve System (not
a savings bank) or by a member firm of any national or regional securities
exchange or other eligible guarantor institution. Notarized signatures are not
sufficient.
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Method of Redemption Procedures
Redemption
- --------------------------------------------------------------------------------
By Telephone You may authorize redemption of some or all shares in your
[PICTURE] account by telephoning the Transfer Agent at (800) 249-0763
or the Distributor at 1-800-30-HOLLAND (or selected dealers
at their respective numbers) between 8:30 a.m. and 4:00 p.m.
Eastern time on any day the Fund is open.
For our mutual protection, all redemption requests must
include the information listed in "Request in `Good Order'",
below.
You will not be eligible to use the telephone redemption
service if you have declined or canceled your telephone
investment privilege.
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- --------------------------------------------------------------------------------
By Mail You may send your redemption request to:
[PICTURE]
Holland Balanced Fund
c/o Unified Advisers, Inc.
P.O. Box 6110
Indianapolis, IN 46206-6110
For our mutual protection, all redemption requests must
include the information listed in "Request in `Good Order'",
below.
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Prospectus - 11
<PAGE>
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By Wire You may request your redemption proceeds be wired directly
[PICTURE] to the bank account designated on your application. Your
bank may impose a fee for the incoming wire.
For our mutual protection, all redemption requests must
include the information listed in "Request in `Good Order'",
below.
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- --------------------------------------------------------------------------------
Request in "Good For our mutual protection, all redemption requests must
Order" include:
. your account number
. the amount of the transaction
. for mail request, signatures of all owners exactly as
registered on the account
. signature guarantees (Signature guarantees can be
obtained at most banks, credit unions, and licensed
brokers.)
. any supporting legal documentation that may be required
Your redemption request will be processed at the next-
determined share price after we have received all required
information.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Important Once we have processed your redemption request, and a
Note confirmation number has been given, the transaction cannot
be revoked.
- --------------------------------------------------------------------------------
Options for Redemption Proceeds
You may receive your redemption proceeds by check or by wire.
Check Redemptions. Normally we will mail your check within two business days of
a redemption.
Wire Redemptions. Before you can receive redemption proceeds by wire, you must
establish this option by completing a special form or the appropriate section of
your account application.
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 of your
request.
Telephone Redemptions. Telephone redemption is made available to shareholders of
the Fund on the Account Application Form. Telephone redemptions are easy and
convenient, but this account option involves a risk of loss from unauthorized or
fraudulent transactions. We will take reasonable precautions to protect your
account from fraud. You should do the same by keeping your account information
private and by reviewing immediately any account statements and confirmations
that you receive. Please contact us immediately about any transaction you
believe to be unauthorized.
The Fund reserves the right to refuse a telephone redemption if it is believed
advisable to do so.
We may also require a personal identification code from the caller.
The Fund and/or the Transfer Agent will not be responsible for any account
losses due to telephone fraud, as long as we have taken reasonable steps to
verify the caller's identity. If you wish to cancel the telephone redemption
feature for your account, please notify us in writing.
Prospectus - 12
<PAGE>
HOW TO REACH THE FUND
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We are available to answer your questions about the Fund or your account by
telephone or by mail Monday through Friday 9:00 a.m. to 5:00 p.m. Eastern time.
Please note, however, that purchase or redemption requests must be received by
4:00 p.m. Eastern time on a day the Fund is open for business. Purchase or
redemption requests received after 4:00 p.m. Eastern time will be executed on
the next day that the Fund is open for business.
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By telephone 1-800-30-HOLLAND [1-800-304-6552]
[PICTURE] Call for account or Fund information
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- --------------------------------------------------------------------------------
By regular, express or registered Holland Balanced Fund
mail c/o ALPS Mutual Fund Services, Inc.
[PICTURE] 370 17th Street
Suite 3100
Denver, Colorado 80202
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Prospectus - 13
<PAGE>
PRICING OF FUND SHARES
The Fund's net asset value per share or NAV is calculated on each day that the
New York Stock Exchange is open. The NAV is the value of a single share of a
Fund. The administrators calculate the NAV for each Fund they administer at the
close of business of the New York Stock Exchange, normally 4:00 p.m. Eastern
time. The NAV is determined by subtracting the total of the Fund's liabilities
from its total assets and dividing the remainder by the number of shares
outstanding. The value of the Fund's total assets is generally based on the
market value of the securities that the Fund holds. If market values are not
available, we will determine the fair value of securities using procedures that
the Board of Directors has approved. We will also determine the fair value
of securities whose values are materially affected by events occurring after the
closing of a foreign market. In those circumstances in which a security's price
is not considered to be market indicative, the security's valuation may differ
from an available market quotation. Foreign securities may be traded in their
primary markets on weekends or other days when the Fund does not price its
shares. Therefore, if the Fund holds foreign securities, the Fund's NAV may
change on days when shareholders will not be able to buy or redeem their Fund
shares.
DISTRIBUTIONS
As a shareholder, you are entitled to your share of the Fund's net income and
capital gains on its investments. The Fund passes substantially all of its
earnings along to its investors as distributions. When a Fund earns dividends
from stocks and interest from bonds and other debt securities and distributes
these earnings to shareholders, it is called a dividend distribution. A Fund
realizes capital gains when it sells securities for a higher price than it paid.
When net long-term capital gains are distributed to shareholders, it is called a
capital gain distribution. Net short-term capital gains are considered ordinary
income and are included in dividend distributions.
- --------------------------------------------------------------------------------
Long-term vs. Short-term capital gains:
- ----------------------------------------
. Long-term capital gains are realized on securities held for more than one
year and are part of your capital gain distribution.
. Short-term capital gains are realized on securities held less then one year
and are part of your dividend distributions.
- --------------------------------------------------------------------------------
The Fund distributes dividends quarterly and capital gains annually. Capital
gains distributions will typically be declared and paid in December.
You will receive distributions from the Fund in additional shares of the Fund
unless you choose to receive your distributions in cash. If you choose the
reinvestment option, dividend and capital gains distributions will be reinvested
automatically in shares of the Fund, without a sales charge, at the net asset
value per share next determined on the ex-dividend date of such distribution. If
you wish to change the way in which you receive distributions, you should call
1-800-30-HOLLAND for instructions.
If you have elected to receive distributions in cash, and the postal or other
delivery service returns your check to the Funds as undeliverable, you will not
receive interest on amounts represented by the uncashed checks.
Prospectus - 14
<PAGE>
FEDERAL TAX CONSIDERATIONS
Your investment may have tax consequences that you should consider. If your
account is a tax-deferred or tax-exempt account (for example, an IRA or an
employee benefit plan account), the following tax discussion does not apply.
Some of the more common federal tax consequences are described here but you
should consult your tax consultant about your particular situation. Although it
is not an investment objective, the Fund's Adviser will attempt to take into
account the tax consequences of its investment decisions. However, there may be
occasions when the Adviser's investment decisions will result in a negative tax
consequence for the Fund's shareholders.
Taxes on Distributions
You will generally be subject to federal income tax and possibly state taxes on
all Fund distributions. Your distributions will be taxed in the same manner
whether you receive the distributions in cash or additional shares of the Fund.
Distributions that are derived from the Fund's net investment income are
designated by the Fund as "ordinary income dividends" and generally will be
taxable to you as ordinary income. Distributions that are derived from the
Fund's net capital gains are designated by the Fund as "capital gains dividends"
and generally will be taxable to you as long-term capital gains, regardless of
the length of time you have owned Fund shares. If you receive distributions in
the form of additional shares, you 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 distribution.
Taxes on Sales
If you redeem your shares of the Fund, you will be subject to tax on any taxable
gain. Your taxable gain or loss is computed by subtracting your tax basis in the
shares from the redemption proceeds. Because your tax basis depends on the
original purchase price and on the price at which any dividends may have been
reinvested, you should keep your account statements so that you or your tax
preparer will be able to determine whether a sale or exchange will result in a
taxable gain or loss.
Generally, your gain or loss will be a long-term gain or loss if you have held
the shares for more than one year. The maximum tax rate on any long-term capital
gain is 20%. If you sell or otherwise dispose 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 you received 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.
Taxes on Dividends
Dividend and capital gains distributions by the Fund generally are taxable to
you at the time the dividend or distribution is made. However, any dividend that
is declared in October, November or December of any year and is payable to
shareholders of record on a specified date in such months will be deemed to have
been received by 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.
Unless your investment is in a tax-deferred account, you may want to avoid
investing in the Fund close to the date of a distribution because you pay the
full pre-distribution price for your shares and then receive part of your
investment back as a taxable distribution.
Tax Withholding
The Fund may be required to withhold U.S. federal income tax at the rate of 31%
("backup withholding") from dividends and redemption proceeds payable to non-
corporate shareholders who fail to provide the Fund with their correct taxpayer
identification numbers or fail to make required certifications, or who have been
notified by the IRS that they are subject to backup withholding. Any such
withheld amounts may be credited against the shareholder's U.S. federal income
tax liability.
Prospectus - 15
<PAGE>
MANAGEMENT
Investment Adviser
Holland & Company L.L.C., is the Fund's investment adviser. The
Adviser's address is 375 Park Avenue, New York, NY 10152. The Adviser also
offers portfolio management and portfolio analysis services to individuals and
institutions.
Under the terms of an investment advisory agreement, subject to the direction of
the Board of Directors of the Fund, the Adviser is responsible for making
day-to-day investment decisions and engaging in portfolio transactions. The
Adviser provides office space, facilities, equipment and personnel necessary
to perform its duties under the Investment Advisory Agreement.
As compensation for its services, the Fund pays the Adviser a fee at the annual
rate of 0.75% of average daily net assets of the Fund. For the fiscal years
ended September 30, 1997, 1998 and 1999, the advisory fee, net of waivers, was
$0, $122,972 and $255,017, respectively.
The 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 Adviser for any advisory fees waived.
In addition, the Adviser has voluntarily agreed to cap total operating expenses
at 1.50% (on an annualized basis) of the Fund's average daily net assets. The
Adviser may discontinue this cap on total expenses at any time, at its sole
discretion.
Other Service Providers
The Fund relies on other companies to provide necessary services for its day-to-
day operations. Below is a list of these service providers.
Administrator and Custodian
- ---------------------------
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
Distributor
- -----------
ALPS Mutual Funds Services, Inc.
370 17th Street
Suite 3100
Denver, Colorado 80202
Transfer Agent
- --------------
Unified Advisers, Inc.
P.O. Box 6110
Indianapolis, Indiana 46206-6110
Counsel
- -------
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Independent Accountants
- -----------------------
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
Prospectus - 16
<PAGE>
FINANCIAL HIGHLIGHTS
Financial Highlights
The Financial Highlights table is intended to help you understand the Fund's
financial performance for the fiscal year ended September 30, 1999. Certain
information reflects financial results for a single Fund share. The total
returns in the table represent the rate that an investor would have earned or
lost on an investment in the Fund (assuming reinvestment of all dividends and
distributions). This information has been audited by PricewaterhouseCoopers LLP,
whose report, along with the Fund's financial statements, are included in the
Fund's annual report, which is available upon request.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Period
For the Year Ended 10/2/95*
For a capital share outstanding throughout the period 9/30/99 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
------- ------- ------- ------
Increase/Decrease from Investment
Operations
Net investment income 0.23 0.28 0.26 0.23
Net realized and unrealized gain on
investment 1.66 0.05 2.30 1.33
------- ------- ------- ------
Total from investment operations 1.89 0.33 2.56 1.56
------- ------- ------- ------
Less Dividends and Distributions From:
Net investment income (0.28) (0.29) (0.25) (0.17)
Net realized gain on investments (0.08) - (0.00)# -
------- ------- ------- ------
Total dividends and distributions (0.36) (0.29) (0.25) (0.17)
------- ------- ------- ------
Net asset value, end of period $ 15.27 $ 13.74 $ 13.70 $11.39
======= ======= ======= ======
Total Return(c) 13.87% 2.43% 22.71% 15.65%(a)
Ratios/Supplemental Data
Net assets, end of period (000's) $45,344 $30,041 $26,788 $7,606
Ratio of expenses to average net assets
after fee waivers and reimbursement of
other expenses 1.50% 1.50% 1.50% 1.50%(b)
Ratio of expenses to average net assets
before fee waivers and reimbursement
of other expenses 1.62% 1.83% 2.55% 4.81%(b)
Ratio of net investment income to
average net assets after fee waivers
and reimbursement of other expenses 1.59% 2.05% 2.31% 2.36%(b)
Ratio of net investment income to
average net assets before fee waivers
and reimbursement of other expenses 1.47% 1.72% 0.31% 0.96%(b)
Portfolio turnover 15.76% 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
Prospectus - 17
<PAGE>
[This page intentionally left blank]
Prospectus - 18
<PAGE>
Where to find more information:
You will find more information about the Holland Balanced Fund in the following
documents:
. Annual and semi-annual reports: Our annual and semi-annual reports
list the holdings in the Fund, describe the Fund's performance,
include financial statements for the Fund, and discuss the market
conditions and strategies that significantly affected the Fund's
performance during their last fiscal year.
. Statement of Additional Information ("SAI"): The Statement of
Additional Information contains additional and more detailed
information about the Fund.
The SAI and the financial statements included in the current annual and semi-
annual reports are incorporated by reference into (and are thus a part of) this
Prospectus.
There are four ways to get copies of these documents:
1. Call or write for one, and a copy will be sent without charge.
Holland Balanced Fund
c/o ALPS Mutual Funds Services, Inc.
370 17th Street
Suite 3100
Denver, Colorado 80202
1-800-30-HOLLAND (or 1-800-304-6552)
2. Go to the Fund's website (www.thehollandfund.com) and download a free
copy.
3. Call or write the Public Reference Room of the Securities and Exchange
Commission ("SEC") and ask them to mail you a copy. The SEC charges a fee
for this service. You can also go to the Public Reference Room and copy the
documents while you are there. Information about the Public Reference Room
may be obtained by calling the number below.
Public Reference Room of the SEC
Washington, D.C. 20549-6009
1-800-SEC-0330
4. Go to the SEC's website (www.sec.gov) and download a free text-only
version.
If you are a current Fund shareholder who would like information about your
account, account transactions, or account statements, please call us at
1-800-30-HOLLAND (or 1-800-304-6552).
If you purchased your shares through a financial institution, you may contact
that institution for more information.
The Holland Balanced Fund's Investment Company Act File Number is 811-9060.
Prospectus - 19
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
-----------------------------------
HOLLAND BALANCED FUND
375 Park Avenue, New York, New York 10152 . Phone No.(800) 30-HOLLAND
[800-304-6552]
________________
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 January __, 2000 (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
ALPS Mutual Funds Services, Inc.- Distributor
________________
The date of this Statement of Additional Information is January __, 2000.
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C>
ADDITIONAL INFORMATION ON PORTFOLIO INSTRUMENTS AND INVESTMENT POLICIES.. 3
INVESTMENT RESTRICTIONS.................................................. 4
MANAGEMENT OF THE FUND................................................... 6
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES...................... 8
REDEMPTION OF SHARES..................................................... 8
PORTFOLIO TRANSACTIONS AND BROKERAGE..................................... 9
DETERMINATION OF NET ASSET VALUE......................................... 10
PERFORMANCE DATA......................................................... 10
SHAREHOLDER SERVICES..................................................... 11
DIVIDENDS AND DISTRIBUTIONS.............................................. 12
TAXATION................................................................. 12
ADDITIONAL INFORMATION................................................... 16
FINANCIAL STATEMENTS..................................................... 17
</TABLE>
2
<PAGE>
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 (the "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.
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. If the Fund has a substantial position in
securities with limited trading markets, its activities could have an adverse
effect upon the liquidity and marketability of those securities. 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.
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.
3
<PAGE>
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. Brokerage commissions and other transaction costs on foreign
securities exchanges are generally higher than in the United States. 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 Investment Company Act of 1940, as amended (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, as amended
(the "Securities Act") 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
4
<PAGE>
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 Securities 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 the 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 the 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 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. Whenever an investment policy or limitation states a maximum
percentage of the Fund's assets in any security or other asset, such percentage
limitation shall be determined immediately after and as a result of the Fund's
acquisition of such security or other asset. Accordingly, any later increase or
decrease in a percentage resulting from a change in values, net assets or other
circumstances will not be considered when determining whether that investment
complies with the Fund's investment policies and limitations.
5
<PAGE>
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.
<TABLE>
<CAPTION>
Principal Occupation
Name and Address Position with the Company During Past Five Years
- ---------------- ------------------------- ----------------------
<S> <C> <C>
Michael F. Holland*/ Director and President Holland & Company L.L.C., Chairman,
Age: 55 6/95 - present; The Blackstone
Group, general partner, 1/94 - 5/95;
Oppenheimer & Co., 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, Chairman Union Bancaire Privee International,
Age: 63 Inc., Chairman 9/96 - Present;
Blackstone Alternative Asset
Union Bancaire Privee Management L.P., Chairman 1/93 -
International Holdings 9/96; The Blackstone Group, general
630 Fifth Avenue partner 4/91 - 5/95; Blackstone
New York, NY 10111 Europe, Chairman, 4/91 - 6/93;
Stamford Capital Group, Inc.,
Chairman and Chief Executive
Officer, 1/85 - 8/90.
Herbert S. Winokur, Jr. Director Chairman and Chief Executive Officer,
Age: 55 Capricorn Holdings, Inc., Managing
General Partner, Capricorn Investors, L.P.,
Capricorn Holdings, Inc. Capricorn Investors II, L.P.,
30 East Elm Street Capricorn Investors III, L.P.,
Greenwich, CT 06902 9/87 - present.
Desmond G. FitzGerald Director North American Properties Group,
Age: 55 Chairman, 1/87 - present; North
American Housing Corp., Chairman,
North American Properties Group 12/86 - 8/93.
2015 West Main Street
Stamford, CT 06902
Jeff Tarr Director Junction Advisors, Chairman, 1/81 -
Age: 55 present.
Junction Advisers, Inc.
9 West 57th Street, Suite 4650
New York, NY 10019
</TABLE>
_________________________
*/ interested person as defined in the 1940 Act.
6
<PAGE>
<TABLE>
<S> <C> <C>
Tana Tselepis Secretary and Treasurer Salomon Brothers Asset Management,
Age: 64 Vice President and Chief Compliance
Officer, 1995 - 1997; Consultant to
Holland & Company, LLC, 1997 - 1999;
Secretary and Treasurer, June 1999 -
present.
</TABLE>
Pursuant to the terms of the Fund's investment advisory agreement and
administration agreement, the Investment Adviser or State Street Bank and Trust
Company (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. The Fund does not provide any pension or retirement
benefits to its Directors.
Director's Compensation Table for the Year Ended September 30, 1999
-------------------------------------------------------------------
<TABLE>
<CAPTION>
Director Aggregate Pension or Retirement Total Compensation
Compensation from Benefits Accrued as From Registrant and
Registrant Part of Fund Expenses Fund Complex Paid to
Directors
<S> <C> <C> <C>
Michael F. Holland $ 0 $ 0 $ 0
Sheldon S. Gordon $4,750 $ 0 $4,750
Herbert S. Winokur, Jr. $4,250 $ 0 $4,250
Desmond FitzGerald $4,250 $ 0 $4,250
Jeff C. Tarr $4,750 $ 0 $4,750
</TABLE>
Management and Advisory Arrangements
Reference is made to "Management - Investment Adviser" 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. For the year ended
September 30, 1999, the Investment Adviser received net fees of $255,017 after
voluntary fee waivers of $51,042. For the year ended September 30, 1998, the
Investment Adviser received net fees of $122,972 after voluntary fee waivers of
$92,289. For the year ended September 30, 1997, the Investment Adviser
voluntarily waived all fees payable to it by the Fund, totaling $118,211 and
reimbursed $46,628 of expenses of the Fund. For the period from October 2, 1995
(commencement of operations) to September 30, 1996, the Investment Adviser
waived all fees payable to it by the Fund, totaling $38,075 and reimbursed
$131,302 of expenses 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
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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 or sold.
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 (the "Commission") 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 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 continuation of the Investment Advisory Agreement
was most recently approved by the Board of Directors on September 16, 1999, and
by the sole shareholder, Michael F. Holland, on June 28, 1995.
The Investment Adviser is controlled by Michael Holland, its managing
member and owner of a 99% interest in the limited liability company.
Administrator
State Street Bank and Trust Company (the "Administrator") acts as the
Fund's administrator pursuant to an administration agreement (the
"Administration Agreement"). Pursuant to the Administration Agreement, dated
June 1, 1999, the Administrator is responsible for providing certain
administrative and accounting 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
maintaining the books and records of the Fund, and preparing certain reports and
other documents required by federal and/or state laws and regulations. The Fund
pays the Administrator a monthly fee at the annual rate of 0.10% of the Fund's
average daily net assets up to $100 million, 0.08% of the next $100 million, and
0.06% of those assets in excess of $200 million, 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 $5,000 per month for the first year and a minimum fee of $7,000 per month
thereafter for services provided to the Fund.
Codes of Ethics
The Fund and the Investment Adviser have adopted codes of ethics that are
designed to ensure that the interests of Fund Shareholders come before the
interests of those involved in managing the Fund. The codes of ethics, among
other things, prohibit management personnel from investing in an initial
public offering and require pre-approval for investments in private placements.
The Fund's Independent Directors are prohibited from purchasing or selling any
security if they know or reasonably should have known at the time of the
transaction that, within the most recent 15 days, the security is being or has
been considered for purchase or sale by the Fund, or is being purchased or sold
by the Fund.
CONTROL PERSONS and PRINCIPAL HOLDERS OF SECURITIES
As of October 31, 1999, the following person held 5 percent or more
of the outstanding shares of the Holland Balanced Fund: Donaldson, Lufkin and
Jenrette - 6.52%.
As of October 31, 1999, the officers and directors of the Fund as a
group owned percent of the outstanding shares of the Holland Balanced Fund.
REDEMPTION OF SHARES
Reference is made to "Redeeming 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
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the Commission or such Exchange is closed (other than customary weekend and
holiday closings), for any period during which an emergency exists as defined by
the Commission 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 Commission 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%. The actual
portfolio turnover for the years ended September 30, 1999, 1998, 1997 and 1996
were 15.76%, 16.49%, 5.07% and 5.04%, respectively.
Fixed-income securities, 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. For the
years ended September 30, 1999, 1998, 1997 and 1996, the Fund paid brokerage
commissions of $13,106, $9,911, $6,846, and $3,976, respectively. 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 and stability 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 (as
described below), 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, as amended, 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.
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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 regularly scheduled 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, Martin
Luther King 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
Commission. 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 for the 12 month
periods ended September 30, 1999, 1998 and 1997, was 13.9%, 2.43% and 22.71%,
respectively. The total return from the Fund's commencement of investment
operations (October 2, 1995) through September 30, 1996 was 15.65% (not
annualized).
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[(cd+1) /6/ - 1 ]
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.
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d = the maximum offering price per share on the last day of the
period.
For the purpose of determining the interest earned (variable "a" in
the formula) on debt obligations that were purchased by the 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.
The Fund's performance will vary from time to time depending on market
conditions, the composition of its portfolio and operating expenses.
Consequently, any given performance quotation should not be considered
representative of the performance of the Fund for any specified period in the
future. Because performance will vary, it may not provide a basis for comparing
an investment in shares of the Fund with certain bank deposits or other
investments that may pay a fixed return for a stated period of time. Investors
comparing the Fund's performance with that of other mutual funds should give
consideration to the nature, quality and maturity of the respective investment
companies' portfolio securities and market conditions. An investor's principal
is not guaranteed by the Fund.
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 ALPS Mutual Funds Services, Inc. (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.
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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 $50. 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 or her request, make additional investments
into the Fund by giving his or her bank a voided check with pre-arranged
instructions to withdraw funds from his or her bank account and deposit such
funds into his or her 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.
Individual 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.
State Street Bank & Trust Company (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-term 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.
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The Fund
The Fund has qualified and intends to continue to qualify 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); and (b) 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 income (i.e.,
its investment company taxable income as that term is defined in the Code
without regard to the deductions for dividends paid), then the Fund will not be
subject to federal income tax on its net investment income and net capital gain
(i.e., the excess of the Fund's net long-term capital gain over its short-term
capital loss) if any, that it distributes to its shareholders in each taxable
year. However, the Fund would be subject to corporate income tax (currently at a
rate of 35%) on any undistributed net investment income, and net capital gain.
If the Fund retains amounts attributable to its net capital gain, the Fund
expects to designate such retained amounts as undistributed capital gain 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 gain, 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.
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 qualify for the dividends-received
deduction available to corporate shareholders. Distributions in excess of
earnings and profits would 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.
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
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<PAGE>
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 its investors.
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 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.
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. 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.
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.
Alternatively, the Fund may elect to be governed by Section 1296 of
the Code. If the election is made, the Fund includes in income each year an
amount equal to the excess, if any, of the fair value of the PFIC stock as of
the close of taxable year over the Fund's adjusted basis in such stock. The Fund
is allowed a deduction for the excess, if any, of the adjusted basis of the PFIC
stock over its fair market value as of the close of the taxable year. However,
such deductions are allowable only to the extent of any net mark-to-market gains
with respect to the stock included by the Fund for prior taxable years. The tax
basis of PFIC stock is adjusted by the income and deductions recognized. Mark-
to-market gains and the allowable deductions will get ordinary gain/loss
treatment. Additionally, the holding period of PFIC stock will be deemed to
begin on the first day of the following tax year after making the election. For
purposes of RIC qualification, mark-to-market gain is treated as a dividend. Any
income or loss recognized under Section 1296 is treated as U.S. source. 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.
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,
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referred to under the Code as "section 988" gains or losses, increase or
decrease the amount of a Fund's net investment income available to be
distributed to its shareholders as ordinary income, rather than increasing or
decreasing the amount of 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
distributions 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 gain dividends", will be taxable as long-term capital
gain, 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 currently imposed on individuals with respect to long-term capital gain is
20%, whereas the maximum federal income tax rate currently imposed on
individuals with respect to ordinary income (and short-term capital gain, which
are taxed at the same rates as ordinary income) is 39.6%. With respect to
corporate taxpayers, generally long-term capital gain is taxed at the same
federal income tax rate as ordinary income and short-term capital gain.
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 gain would first reduce a shareholder's
basis in his shares and, after the shareholder's basis is reduced to zero, would
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.
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<PAGE>
_____________________________
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 diversification to an investor whose assets
are primarily invested in stocks or bonds alone. 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; and (iii) investors building capital for
education or retirement who are looking for a core investment vehicle.
Independent Accountants
PricewaterhouseCoopers LLP (the "Independent Accountants"), 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
State Street Bank & Trust Company (the "Custodian" and the "Fund
Accounting Agent"), 225 Franklin Street, Boston, Massachusetts 02110 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. (the "Transfer Agent"), 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.
16
<PAGE>
Legal Counsel
Simpson Thacher & Bartlett, New York, New York, is counsel for the
Fund.
Reports to Shareholders
The fiscal year of the Fund ends on September 30 of each year. The
Fund sends to its shareholders at least semi-annually reports showing the Fund's
portfolio and other information. An annual report, containing financial
statements audited by independent accountants, is sent to shareholders each
year. At the end of each calendar year, shareholders will receive Federal income
tax information regarding dividends and capital gains distributions.
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 Securities and Exchange
Commission, under the Securities Act and the 1940 Act, to which reference is
hereby made. Information about the Fund can be reviewed and copied at the
Commission's Public Reference Room in Washington, D.C. Information on the
operation of the public reference room may be obtained by calling the Commission
at 1-800-SEC-0330. Reports and other information about the Fund are also
available on the Commission's internet site at http://www.sec.gov and copies of
this information may be obtained, upon payment of a duplicating fee, by writing
the Public Reference Section of the Commission, Washington, D.C.
20549-6009.
DISTRIBUTOR
ALPS Mutual Funds Services, Inc., serves as Distributor (the
"Distributor") pursuant to the Distribution Agreement dated June 1, 1999.
Pursuant to the Distribution Agreement, the Fund pays the Distributor an annual
distribution fee of $12,000 plus certain out-of-pocket expenses. The Distributor
is not obligated to sell any specific number of shares and will sell shares of
the Fund on a continuous basis only against orders to purchase shares.
FINANCIAL STATEMENTS
The Fund's annual Financial Statements for the year ended September
30, 1999 are hereby incorporated by reference in this Statement of Additional
Information from the Fund's Annual Report filed with the Commission on November
__, 1999. The Fund's annual report and semi-annual report can be obtained
without charge by calling the Fund at (800) 30-HOLLAND [800-304-6552].
17
<PAGE>
PART C
OTHER INFORMATION
<TABLE>
<CAPTION>
Item 23. Exhibits:
<S> <C>
(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.
(b) By-Laws, filed as Exhibit 2 to Registrant's Registration
Statement on Form N-1A and is incorporated by reference herein.
(c) None.
(d) 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.
(e) (1) 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.
(e) (2) Distribution Agreement between Registrant and AMT Capital
Securities, L.L.C., dated September 28, 1998, filed as Exhibit
6(b) to Post-Effective Amendment No. 4 to Registrant's
Registration Statement on Form N-1A and is incorporated by
reference herein.
(e) (3) Distribution Agreement between Registrant and ALPS Mutual Funds
Services, Inc., dated June 1, 1999 (filed herewith).
(f) None.
(g) (1) 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.
(g) (2) Custodian Agreement between Registrant and State Street Bank &
Trust Company, dated June 1, 1999 (filed herewith).
(h) (1) 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.
(h) (2) 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.
</TABLE>
C-1
<PAGE>
<TABLE>
<S> <C>
(h) (3) Transfer Agent Agreement between Registrant and Unified Advisers,
Inc., dated February 9, 1996 filed as Exhibit 9(c) to
Post-Effective Amendment No. 1 to Registrant's registration
statement on Form N-1A and is incorporated by reference herein.
(h) (4) Administration Agreement between Registrant and Investors Capital
Services, Inc., dated September 28, 1998, filed as Exhibit 9(d)
to Post-Effective Amendment No. 4 to Registrant's registration
statement on Form N-1A and is incorporated by reference herein.
(h) (5) Administration Agreement between Registrant and State Street Bank
and Trust Company, dated June 1, 1999 (filed herewith).
(i) (1) 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.
(i) (2) Opinion and Consent of Simpson Thacher & Bartlett (to be filed by
subsequent amendment).
(j) (1) Consent of PricewaterhouseCoopers LLP (to be filed by subsequent
amendment).
(j) (2) Power of Attorney dated September 16, 1999 (filed herewith).
(k) None.
(l) 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.
(m) None.
(n) Financial Data Schedule (to be filed by subsequent amendment).
(o) None.
</TABLE>
24. Persons Controlled by or under Common Control with Registrant.
-------------------------------------------------------------
As of October 31, 1999, no shareholder is deemed a control
person: as such term is defined in the Investment Company Act of
1940, as amended (the "1940 Act").
C-2
<PAGE>
25. Indemnification.
---------------
Reference is made to Article VII of Registrant's Articles of
Incorporation (Exhibit (a) filed previously), Article VI of
Registrant's By-laws, as amended (Exhibit (b) filed previously),
Paragraph 5 of the Distribution Agreement between Registrant and
AMT Capital Securities, L.L.C. (Exhibit (e)(1) filed previously),
Paragraph 14 of the Distribution Agreement between Registrant and
ALPS Mutual Funds Services, Inc. (filed herewith), Article 13 of
the Custodian Agreement between Registrant and Investors Bank &
Trust Company (Exhibit (g)(1) filed previously), Section 14 of
the Custodian Agreement between Registrant and State Street Bank
and Trust Company (filed herewith), Paragraph 6 of the
Administration Agreement between Registrant and Investors Capital
Services, Inc. (filed herewith), Section 8 of the Administration
Agreement between Registrant and State Street Bank and Trust
Company (filed herewith), and Article VI, Section 8 of the
Transfer Agent Agreement between Registrant and Unified Advisers,
Inc. (Exhibit (h)(1) filed previously).
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.
26. Business and Other Connections of Investment Adviser.
----------------------------------------------------
Holland & Company L.L.C. (the "Investment Adviser") is a 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, in the past two fiscal years, served as an
investment adviser to any registered investment company other
than the Registrant.
The list required by this Item 26 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 herein 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).
C-3
<PAGE>
27. Principal Underwriter.
---------------------
(a) In addition to the Registrant, ALPS Mutual Funds Services, Inc.,
currently acts as distributor to Diamonds Trust, Financial
Investors Trust, First Funds Trust, SPDR Trust, MidCap SPDR
Trust, Select Sector SPDR Trust, Stonebridge Funds Trust and
Westcore Funds Trust. ALPS Mutual Funds 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) For each director or officer of ALPS Mutual Funds Services,
Inc.
<TABLE>
<CAPTION>
Name and Principal Business
Address Positions & Offices Positions & Offices
with Underwriter with Distributor with Registrant
<S> <C> <C>
W. Robert Alexander Chairman and None
370 Seventeenth Street Secretary
Suite 3100
Denver, Colorado 80202
Arthur J. Lucey President and Director None
370 Seventeenth Street
Suite 3100
Denver, Colorado 80202
Edmund J. Burke Executive Vice President None
370 Seventeenth Street
Suite 3100
Denver, Colorado 80202
Thomas A. Carter Chief Financial Officer None
370 Seventeenth Street
Suite 3100
Denver, Colorado 80202
Russell Burk General Counsel None
370 Seventeenth Street
Suite 3100
Denver, Colorado 80202
Jeremy O. May Vice President None
370 Seventeenth Street
Suite 3100
Denver, Colorado 80202
Robert J. Szydlowski Vice President None
370 Seventeenth Street
Suite 3100
Denver, Colorado 80202
</TABLE>
C-4
<PAGE>
<TABLE>
<S> <C> <C>
Rick A. Pederson Director None
370 Seventeenth Street
Suite 3100
Denver, Colorado 80202
Chris Woessner Director None
370 Seventeenth Street
Suite 3100
Denver, Colorado 80202
</TABLE>
(c) Not applicable.
28. Location of Accounts and Records.
--------------------------------
All accounts, books and other documents required to be maintained
by Section 31(a) of the 1940 Act, and the rules thereunder will
be maintained at the offices of the Investment Adviser, State
Street Bank and Trust Company (the "Custodian" and the
"Administrator"), and Unified Advisers, Inc. (the "Transfer
Agent").
Holland & Company L.L.C.
375 Park Avenue
New York, New York 10152
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
Unified Advisers, Inc.
P.O. Box 6110
Indianapolis, Indiana 46206-6110
29. Management Services.
-------------------
Not applicable.
30. Undertakings.
------------
Not applicable.
C-5
<PAGE>
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 Malden and Commonwealth of Massachusetts on the 30th day of November,
1999.
HOLLAND SERIES FUND, INC.
/s/ Tana Tselepis
By: __________________________________
Tana Tselepis
Secretary and Treasurer
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 30th day of November, 1999.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
*
_____________________________ Director and President (Principal Executive
Michael F. Holland Officer)
*
_____________________________ Director
Sheldon S. Gordon
*
________________________ Director
Herbert S. Winokur, Jr.
*
_______________________ Director
Desmond G. FitzGerald
*
________________________ Director
Jeff Tarr
/s/ Tana Tselepis Secretary and Treasurer (Principal
- ------------------------
Tana Tselepis Financial and Accounting Officer)
</TABLE>
* Attorney-in-fact Tana Tselepis
------------------------------
C-6
<PAGE>
==========================================
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.
==========================================
<PAGE>
HOLLAND SERIES FUND, INC.
INDEX TO EXHIBITS
<TABLE>
Exhibit
Number Description of Exhibit
- ------- ----------------------
<S> <C>
99(e)(3) Distribution Agreement between Registrant and ALPS Mutual Funds
Services, Inc., dated June 1, 1999
99(g)(2) Custodian Agreement between Registrant and State Street Bank and
Trust Company, dated June 1, 1999
99(h)(5) Administration Agreement between Registrant and State Street Bank
and Trust Company, dated June 1, 1999
99(j)(2) Power of Attorney dated September 16, 1999
</TABLE>
<PAGE>
EXHIBIT 99.(e)(3)
DISTRIBUTION AGREEMENT
AGREEMENT dated as of June 1, 1999 between Holland Series Fund, Inc. (the
"Fund"), an open-end, management investment company organized as a corporation
under the laws of the State of Maryland and ALPS Mutual Funds Services, Inc., a
Colorado corporation and a registered broker-dealer under the Securities
Exchange Act of 1934, having its principal place of business in Denver, Colorado
(the "Distributor").
WHEREAS, the Fund wishes to employ the services of the Distributor in
connection with the promotion and distribution of the shares of each series of
the Fund (the "Shares"); and
NOW, THEREFORE, in consideration of the mutual promises and undertakings
herein contained, the parties agree as follows:
1. Documents - The Fund has furnished the Distributor with copies of the
Fund's Certificate of Incorporation, advisory agreement, custodian agreement,
transfer agency agreement, administration agreement, current prospectuses and
statement of additional information, and all forms relating to any plan, program
or service offered by the Fund. The Fund shall furnish promptly to the
Distributor a copy of any amendment or supplement to any of the above-mentioned
documents. The Fund shall furnish promptly to the Distributor any additional
documents necessary or advisable to perform its functions hereunder. As used in
this Agreement the terms "registration statement", "prospectus" and "statement
of additional information" shall mean any registration statement, prospectus and
statement of additional information filed by the Fund with the Securities and
Exchange Commission ("SEC") and any amendments and supplements thereto which at
any time shall have been filed with the SEC.
2. Sale of Shares - The Fund grants to the Distributor the right to sell the
Shares as agent on behalf of the Fund, during the term of this Agreement,
subject to the registration requirements of the Securities Act of 1933, as
amended (the "1933 Act"), the Investment Company Act of 1940 (the "1940 Act")
and of the laws governing the sale of securities in the various states ("Blue
Sky Laws"), under the terms and conditions set forth in this Agreement. The
Distributor shall have the right to sell, as agent on behalf of the Fund, the
Shares covered by the registration statement, prospectus and statement of
additional information for the Fund then in effect under the 1933 Act and the
1940 Act.
3. Sale of Shares by the Fund - The rights granted to the Distributor shall be
nonexclusive in that the Fund reserves the right to sell Shares to investors on
applications received and accepted by the Fund.
1
<PAGE>
4. Public Offering Price - Except as otherwise noted in the Fund's current
prospectuses and/or statement of additional information, all Shares sold to
investors by the Distributor or the Fund will be sold at the public offering
price. The public offering price for all accepted subscriptions will be the net
asset value per Share, as determined in the manner described in the Fund's
current prospectuses and/or statement of additional information.
5. Suspension of Sales - The Fund reserves the right to suspend sales and the
Distributor's authority to process orders for Shares on behalf of the Fund if,
in the judgment of the Fund, it is in the best interests of the Fund to do so.
Suspension will continue for such period as may be determined by the Fund.
6. Solicitation of Sales - In consideration of these rights granted to the
Distributor, the Distributor agrees to use its best efforts to solicit orders
for the sale of Shares at the public offering price and will undertake such
advertising and promotion as it believes is reasonable in connection with such
solicitation. The Distributor shall review and file such materials with the SEC
and the National Association of Securities, Inc. (the "NASD") to the extent
required by the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the 1940 Act and the rules and regulations thereunder, and by the
rules of the NASD. This shall not prevent the Distributor from entering into
like arrangements (including arrangements involving the payment of underwriting
commissions) with other issuers. The Distributor will act only on its own behalf
as principal should it choose to enter into selling agreements with selected
dealers or others.
7. Authorized Representations - The Distributor is not authorized by the Fund
to give any information or to make any representations other than those
contained in the registration statement or prospectus and statement of
additional information, or contained in the shareholder reports or other
material that may be prepared by or on behalf of the Fund for the Distributor's
use. Consistent with the foregoing, the Distributor may prepare and distribute
sales literature or other material as it may deem appropriate in consultation
with the Fund, provided such sales literature complies with applicable law and
regulation.
8. Registration of Shares - The Fund agrees it will take all action necessary
to register the Shares under the 1933 Act and the 1940 Act (subject to the
necessary approval of its shareholders). The Fund shall make available to the
Distributor, at the Distributor's expense such number of copies of its
prospectus and statement of additional information as the Distributor may
reasonably request. The Fund shall furnish to the Distributor copies of all
information, financial statements and other papers which the Distributor may
reasonably request for use in connection with the distribution of Shares of the
Fund.
9. Distribution Fees and Expenses - The Distributor shall furnish, at its
expense and without cost to the Fund, the services of personnel to the extent
that such services are required to carry out its obligations under this
Agreement. Such personnel shall consist of one or more persons, during normal
business hours (7:00 a.m. to 6:00 p.m. mountain time), to respond to telephone
questions with respect to the Fund.
2
<PAGE>
10. Fund Expenses - Unless otherwise agreed to by the parties hereto in writing
or by the Fund and the Fund's other agents, the Distributor shall not be
responsible for fees and expenses in connection with (a) filing of any
registration statement, printing and the distribution of any prospectus and
statement of additional information under the 1933 Act and/or the 1940 Act and
amendments prepared for use in connection with the offering of Shares for sale
to the public, preparing, setting in type, printing and mailing the prospectus,
statement of additional information and any supplements thereto sent to existing
shareholders, (b) preparing, setting in type, printing and mailing any report
(including annual and semi-annual reports) or other communication to
shareholders of the Fund, and (c) with the Blue Sky registration and
qualification of Shares for sale in the various states in which the officers of
the Fund shall determine it advisable to qualify such Shares for sale (including
registering the Fund as a broker or dealer or any officer of the Fund as agent
or salesman in any state).
11. Use of the Distributor's Name - The Fund shall not use the name of the
Distributor, or any of its affiliates, in any prospectus or statement of
additional information, sales literature, and other material relating to the
Fund in any manner without the prior written consent of the Distributor (which
shall not be unreasonably withheld); provided, however, that the Distributor
hereby approves all lawful uses of the names of the Distributor and its
affiliates in the prospectus and statement of additional information of the Fund
and in all other materials which merely refer in accurate terms to their
appointments hereunder or which are required by the SEC, NASD or OCC or any
state securities authority.
12. Use of the Fund's Name - Neither the Distributor nor any of its affiliates
shall use the name of the Fund in any publicly disseminated materials, including
sales literature in any manner without the prior consent of the Fund (which
shall not be unreasonably withheld); provided, however, that the Fund hereby
approves all lawful uses of its name in any required regulatory filings of the
Distributor which merely refer in accurate terms to the appointment of the
Distributor hereunder, or which are required by the SEC, NASD, OCC or any state
securities authority.
13. Insurance - The Distributor agrees to maintain fidelity bond and liability
insurance coverages which are, in scope and amount, consistent with coverages
customary for distribution activities. The Distributor shall notify the Fund
upon receipt of any notice of material, adverse change in the terms or
provisions of its insurance coverage. Such notification shall include the date
of change and the reason or reasons therefor. The Distributor shall notify the
Fund of any material claim against it, whether or not covered by insurance, and
shall notify the Fund from time to time as may be appropriate of the total
outstanding claims made by it under its insurance coverage.
14. Indemnification - The Fund agrees to indemnify and hold harmless the
Distributor and each of its directors and officers and each person, if any, who
controls the Distributor within the meaning of Section 15 of the 1933 Act,
against any loss, liability, claim, damages or expenses (including the
reasonable cost of investigating or defending any alleged loss, liability,
claim, damages or expense and reasonable counsel fees incurred in connection
therewith) arising by
3
<PAGE>
reason of any person acquiring any Shares, based upon the ground that the
registration statement, prospectus, statement of additional information,
shareholder reports or other information filed or made public by the Fund (as
from time to time amended) included an untrue statement of a material fact or
omitted to state a material fact required to be stated or necessary in order to
make the statements not misleading under the 1933 Act, the 1940 Act or any other
statute or the common law. However, the Fund does not agree to indemnify the
Distributor or hold it harmless to the extent that the statement or omission was
made in reliance upon, and in conformity with, information furnished to the Fund
by or on behalf of the Distributor. In no case (i) is the indemnity of the Fund
in favor of the Distributor or any person indemnified to be deemed to protect
the Distributor or such person against any liability to the Fund or its security
holders to which the Distributor or any person would otherwise be subject by
reason of willful misfeasance, bad faith or negligence in the performance of its
duties or by reason of its reckless disregard of its obligations and duties
under this Agreement, or (ii) is the Fund to be liable under its indemnity
agreement contained in this paragraph with respect to any claim made against the
Distributor or any person indemnified unless the Distributor or person, as the
case may be, shall have notified the Fund in writing of the claim promptly after
the summons or other first written notification giving information of the nature
of the claim shall have been served upon the Distributor or any such person (or
after the Distributor or such person shall have received notice of service on
any designated agent). However, failure to notify the Fund of any claim shall
not relieve the Fund from any liability which it may have to the any person
against whom such action is brought otherwise than on account of its indemnity
agreement contained in this paragraph. The Fund shall be entitled to participate
at its own expense in the defense, or, if it so elects, to assume the defense of
any suit brought to enforce any claims, and if the Fund elects to assume the
defense, the defense shall be conducted by counsel chosen by the Fund. In the
event the Fund elects to assume the defense of any suit and retain counsel, the
Distributor, officers or directors or controlling person or persons, defendant
or defendants in the suit, shall bear the fees and expenses of any additional
counsel retained by them. If the Fund does not elect to assume the defense of
any suit, it will reimburse the Distributor, officers or directors or
controlling person or persons, defendant or defendants in the suit for the
reasonable fees and expenses of any counsel retained by them. The Fund agrees to
notify the Distributor promptly of the commencement of any litigation or
proceedings against it or any of its officers in connection with the issuance or
sale of any of the Shares.
The Distributor also covenants and agrees that it will indemnify and hold
harmless the Fund and each of its officers and each person, if any, who controls
the Fund within the meaning of Section 15 of the 1933 Act, against any loss,
liability, damages, claims or expense (including the reasonable cost of
investigating or defending any alleged loss, liability, damages, claim or
expense and reasonable counsel fees incurred in connection therewith) arising by
reason of any person acquiring any Shares, based upon the 1933 Act, the 1940 Act
or any other statute or common law, alleging (a) any wrongful act of the
Distributor or any of its employees or (b) that any sales literature,
advertisements, information, statements or representations used or made by the
Distributor or any of its affiliates or employees or that the registration
statement, prospectus, statement of additional information, (as from time to
time amended) included an untrue statement of a material fact or omitted to
state a material fact required to be stated or necessary in
4
<PAGE>
order to make the statements not misleading, insofar as the statement or
omission was made in reliance upon, and in conformity with, information
furnished to the Fund by or on behalf of the Distributor. In no case (i) is the
indemnity of the Distributor in favor of the Fund or any person indemnified to
be deemed to protect the Fund or any person against any liability to which the
Fund or such person would otherwise be subject by reason of willful misfeasance,
bad faith or negligence in the performance of its duties or by reason of its
reckless disregard of its obligations and duties under this Agreement, or (ii)
is the Distributor to be liable under its indemnity agreement contained in this
paragraph with respect to any claim made against the Fund or any person
indemnified unless the Fund or person, as the case may be, shall have notified
the Distributor in writing of the claim promptly after the summons or other
first written notification giving information of the nature of the claim shall
have been served upon the Fund or any such person (or after the Fund or such
person shall have received notice of service on any designated agent). However,
failure to notify the Distributor of any claim shall not relieve the Distributor
from any liability which it may have to the Fund or any person against whom the
action is brought otherwise than on account of its indemnity agreement contained
in this paragraph. In the case of any notice to the Distributor, it shall be
entitled to participate, at its own expense, in the defense or, if it so elects,
to assume the defense of any suit brought to enforce the claim, and if the
Distributor elects to assume the defense, the defense shall be conducted by
counsel chosen by it and satisfactory to the Fund, to its officers and to any
controlling person or persons, defendant or defendants in the suit. In the event
that the Distributor elects to assume the defense of any suit and retain
counsel, the Fund or controlling persons, defendant or defendants in the suit,
shall bear the fees and expense of any additional counsel retained by them. If
the Distributor does not elect to assume the defense of any suit, it will
reimburse the Fund, officers or controlling person or persons, defendant or
defendants in the suit, for the reasonable fees and expenses of any counsel
retained by them. The Distributor agrees to notify the Fund promptly of the
commencement of any litigation or proceedings against it in connection with the
Fund and sale of any of the Shares.
15. Supplemental Information - The Distributor and the Fund shall regularly
consult with each other regarding the Distributor's performance of its
obligations under this Agreement. In connection therewith, the Fund shall submit
to the Distributor at a reasonable time in advance of filing with the SEC copies
of any amended or supplemented registration statement (including exhibits) under
the 1933 Act and the 1940 Act; provided, however, that nothing contained in this
Agreement shall in any way limit the Fund's right to file at any time such
amendments to any registration statement and/or supplements to any prospectus or
statement of additional information, of whatever character, as the Fund may deem
advisable, such right being in all respects absolute and unconditional.
The Distributor acknowledges that the only information provided to it by the
Fund is that contained in the registration statement, the prospectus, the
statement of additional information and reports and financial information
referred to herein. Neither the Distributor nor any other person is authorized
by the Fund to give any information or to make any representations, other than
those contained in such documents and any sales literature or advertisements
specifically approved by appropriate representatives of the Fund.
5
<PAGE>
16. Term - This Agreement shall become effective as of June 1, 1999 and shall
continue until two years from such date and thereafter shall continue
automatically for successive annual periods, provided such continuance is
specifically approved at least annually (i) by the Fund's Board of Directors or
(ii) by a vote of a majority of the outstanding voting securities of the
relevant Portfolios of the Fund (as defined in the 1940 Act), provided that in
either event the continuance is also approved by the majority of the Directors
of the Fund who are not interested persons (as defined in the 1940 Act) of any
party to this Agreement, by vote cast in person at a meeting called for the
purpose of voting on such approval. This Agreement is terminable without penalty
on sixty days' notice by the Fund's Board of Directors, by vote of the holders
of a majority of the Fund's outstanding Shares or by the Distributor. This
Agreement shall automatically terminate in the event of its assignment (as
defined in the 1940 Act).
Upon the termination of this Agreement, the Distributor, at the Fund's expense
and direction, shall transfer to such successor as the Fund shall specify all
relevant books, records and other data established or maintained by the
Distributor under this Agreement.
17. Notice - Any notice required or permitted to be given by either party to
the other shall be deemed sufficient if sent by (i) telex, (ii) telecopier, or
(iii) registered or certified mail, postage prepaid, addressed by the party
giving notice to the other party of the last address furnished by the other
party to the party giving notice: if to the Fund at Holland Series Fund, Inc.,
c/o Holland & Company, L.L.C., 375 Park Avenue, New York, New York, 10152,
Attention: Michael F. Holland, with a copy to: Simpson Thacher & Bartlett, 425
Lexington Avenue, New York, New York, 10017, Attention: Gary S. Schpero; and if
to the Distributor, at 370 17th Street, Suite 3100, Denver, Colorado, 80202,
Attn: Russell C. Burk, or such other telex number or address as may be furnished
by one party to the other.
18. Confidential Information - The Distributor, its officers, directors,
employees and agents will treat confidentially and as proprietary information of
the Fund all records and other information relative to the Fund and to prior or
present shareholders or to those persons or entities who respond to the
Distributor's inquiries concerning investment in the Fund, and will not use such
records and information for any purposes other than performance of its
responsibilities and duties hereunder. If Distributor is requested or required
by, but not limited to, oral questions, interrogatories, request for information
or documents, subpoena, civil investigations, demand or other action, proceeding
or process or as otherwise required by law, statute, regulation, writ, decree or
the like to disclose such information, Distributor will provide Fund with prompt
written notice of any such request or requirement so that Fund may seek an
appropriate protective order or other appropriate remedy and/or waive compliance
with this provision. If such order or other remedy is not sought, or obtained,
or waiver not received, Distributor may without liability hereunder, disclose to
the person entity or agency requesting or requiring the information, that
portion of the information that is legally required in the opinion of
Distributor's counsel.
6
<PAGE>
19. Limitation of Liability - The Distributor is expressly put on notice of the
limitation of shareholder, officer and Director liability as set forth in the
Certificate of Incorporation of the Fund and agrees that the obligations assumed
by the Fund under this contract shall be limited in all cases to the Fund and
its assets. The Distributor agrees that it shall not seek satisfaction of any
such obligation from the shareholders or any individual shareholder of the Fund.
Nor shall the Distributor seek satisfaction of any such obligation from the
Directors, officers or any individual Director or officer of the Fund. The
Distributor understands that the rights and obligations of each series of Shares
of the Fund under the Fund's Certificate of Incorporation are separate and
distinct from those of any and all other series.
Any obligations of the Fund entered into in the name or on behalf thereof by any
of the Directors or officers, representatives or agents are made not
individually, but in such capacities, and are not binding upon any of the
Directors or officers, shareholders, or representatives of the Fund personally,
but bind only the Fund property, and all persons dealing with any class of
Shares of the Fund must look solely to the Fund property belonging to such class
for the enforcement of any claims against the Fund.
20. Miscellaneous - Each party agrees to perform such further acts and execute
such further documents as are necessary to effectuate the purposes hereof. This
Agreement shall be construed and enforced in accordance with and governed by,
and construed and interpreted in accordance with, the laws of the State of New
York. The captions in this Agreement are included for convenience of reference
only and in no way define or delimit any of the provisions hereof or otherwise
affect their construction or effect. This Agreement may not be changed, waived,
discharged or amended except by written instrument which shall make specific
reference to this Agreement and which shall be signed by the party against which
enforcement of such change, waiver, discharge or amendment is sought. This
Agreement may be executed simultaneously in two or more counterparts, each of
which taken together shall constitute one and the same instrument.
All activities by Distributor and its agents and employees as distributor of the
Shares shall comply with all applicable laws, rules and regulations, including,
without limitation, all rules and regulations made or adopted by the SEC or any
securities association registered under the Exchange Act.
Distributor will promptly transmit any orders received by it for purchase,
redemption or exchange of the Shares to the Fund's transfer agent.
7
<PAGE>
IN WITNESS WHEREOF, the Fund has executed this instrument in its name and
behalf, and the Distributor has executed this instrument in its name and behalf,
as of the day and year first above written.
HOLLAND SERIES FUND, INC. ALPS MUTUAL FUNDS SERVICES, INC.
/s/ Michael F. Holland /s/ Thomas A. Carter
By:_______________________ By:_____________________________
Michael F. Holland Tom Carter
Title: President Title: Chief Financial Officer
8
<PAGE>
EXHIBIT 99.(G)(2)
Custodian Agreement
-------------------
This Agreement between Holland Series Fund, Inc. a corporation organized
and existing under the laws of Maryland (the "Fund"), and State Street Bank and
Trust Company, a Massachusetts trust company (the "Custodian"),
Witnesseth:
Whereas, the Fund is authorized to issue shares in separate series, with
each such series representing interests in a separate portfolio of securities
and other assets; and
Whereas, the Fund intends that this Agreement be applicable to one series,
Holland Balanced Fund (such series together with all other series subsequently
established by the Fund and made subject to this Agreement in accordance with
Section 18, be referred to herein as the "Portfolio(s)");
Now Therefore, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
Section 1. Employment Of Custodian And Property To Be Held By It
-----------------------------------------------------
The Fund hereby employs the Custodian as the custodian of the assets of the
Portfolios of the Fund, including securities which the Fund, on behalf of the
applicable Portfolio desires to be held in places within the United States
("domestic securities") and securities it desires to be held outside the United
States ("foreign securities"). The Fund on behalf of the Portfolio(s) agrees to
deliver to the Custodian all securities and cash of the Portfolios, and all
payments of income, payments of principal or capital distributions received by
it with respect to all securities owned by the Portfolio(s) from time to time,
and the cash consideration received by it for such new or treasury shares of
beneficial interest of the Fund representing interests in the Portfolios
("Shares") as may be issued or sold from time to time. The Custodian shall not
be responsible for any property of a Portfolio held or received by the Portfolio
and not delivered to the Custodian.
Upon receipt of "Proper Instructions" (as such term is defined in Section 6
hereof), the Custodian shall on behalf of the applicable Portfolio(s) from time
to time employ one or more sub-custodians located in the United States, but only
in accordance with an applicable vote by the Board of Directors of the Fund (the
"Board") on behalf of the applicable Portfolio(s), and provided that the
Custodian shall have no more or less responsibility or liability to the Fund on
account of any actions or omissions of any sub-custodian so employed than any
such sub-custodian has to the Custodian. The Custodian may employ as sub-
custodian for the Fund's foreign securities on behalf of the applicable
Portfolio(s) the foreign banking institutions and foreign securities
depositories designated in Schedules A and B hereto but only in accordance with
the applicable provisions of Sections 3 and 4.
<PAGE>
Section 2. Duties of the Custodian with Respect to Property of the Fund Held By
--------------------------------------------------------------------
the Custodian in the United States
----------------------------------
Section 2.1 Holding Securities. The Custodian shall hold and physically
------------------
segregate for the account of each Portfolio all non-cash property, to be held by
it in the United States including all domestic securities owned by such
Portfolio, other than (a) securities which are maintained pursuant to Section
2.8 in a clearing agency which acts as a securities depository or in a book-
entry system authorized by the U.S. Department of the Treasury (each, a "U.S.
Securities System") and (b) commercial paper of an issuer for which State Street
Bank and Trust Company acts as issuing and paying agent ("Direct Paper") which
is deposited and/or maintained in the Direct Paper System of the Custodian (the
"Direct Paper System") pursuant to Section 2.9.
Section 2.2 Delivery of Securities. The Custodian shall release and
----------------------
deliver domestic securities owned by a Portfolio held by the Custodian or in a
U.S. Securities System account of the Custodian or in the Custodian's Direct
Paper book entry system account ("Direct Paper System Account") only upon
receipt of Proper Instructions on behalf of the applicable Portfolio, which may
be continuing instructions when deemed appropriate by the parties, and only in
the following cases:
1) Upon sale of such securities for the account of the Portfolio and
receipt of payment therefor;
2) Upon the receipt of payment in connection with any repurchase agreement
related to such securities entered into by the Portfolio;
3) In the case of a sale effected through a U.S. Securities System, in
accordance with the provisions of Section 2.8 hereof;
4) To the depository agent in connection with tender or other similar
offers for securities of the Portfolio;
5) To the issuer thereof or its agent when such securities are called,
redeemed, retired or otherwise become payable; provided that, in any
such case, the cash or other consideration is to be delivered to the
Custodian;
6) To the issuer thereof, or its agent, for transfer into the name of the
Portfolio or into the name of any nominee or nominees of the Custodian
or into the name or nominee name of any agent appointed pursuant to
Section 2.7 or into the name or nominee name of any sub-custodian
appointed pursuant to Section 1; or for exchange for a different
number of bonds, certificates or other evidence representing the same
aggregate face amount or number of units; provided that, in
--------
2
<PAGE>
any such case, the new securities are to be delivered to the Custodian;
7) Upon the sale of such securities for the account of the Portfolio, to
the broker or its clearing agent, against a receipt, for examination
in accordance with "street delivery" custom; provided that, in any
--------
such case, the Custodian shall have no responsibility or liability for
any loss arising from the delivery of such securities prior to
receiving payment for such securities except as may arise from the
Custodian's own negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of the
securities of the issuer of such securities, or pursuant to provisions
for conversion contained in such securities, or pursuant to any
deposit agreement; provided that, in any such case, the new securities
--------
and cash, if any, are to be delivered to the Custodian;
9) In the case of warrants, rights or similar securities, the surrender
thereof in the exercise of such warrants, rights or similar securities
or the surrender of interim receipts or temporary securities for
definitive securities; provided that, in any such case, the new
--------
securities and cash, if any, are to be delivered to the Custodian;
10) For delivery in connection with any loans of securities made by the
Portfolio, but only against receipt of adequate collateral as agreed
--- ----
upon from time to time by the Custodian and the Fund on behalf of the
Portfolio, which may be in the form of cash or obligations issued by
the United States government, its agencies or instrumentalities, except
that in connection with any loans for which collateral is to be
credited to the Custodian's account in the book-entry system authorized
by the U.S. Department of the Treasury, the Custodian will not be held
liable or responsible for the delivery of securities owned by the
Portfolio prior to the receipt of such collateral;
11) For delivery as security in connection with any borrowing by the Fund
on behalf of the Portfolio requiring a pledge of assets by the Fund on
behalf of the Portfolio, but only against receipt of amounts borrowed;
--- ----
12) For delivery in accordance with the provisions of any agreement among
the Fund on behalf of the Portfolio, the Custodian and a broker-dealer
registered under the Securities Exchange Act of 1934 (the "Exchange
Act") and a member of The National Association of Securities Dealers,
Inc. ("NASD"), relating to compliance with the rules of The Options
Clearing Corporation and of any registered national securities
exchange, or of any similar organization or organizations, regarding
escrow or other arrangements in connection with transactions by the
Portfolio of
3
<PAGE>
the Fund;
13) For delivery in accordance with the provisions of any agreement among
the Fund on behalf of the Portfolio, the Custodian, and a futures
commission merchant registered under the Commodity Exchange Act,
relating to compliance with the rules of the Commodity Futures Trading
Commission ("CFTC") and/or any contract market, or any similar
organization or organizations, regarding account deposits in connection
with transactions by the Portfolio of the Fund;
14) Upon receipt of instructions from the transfer agent for the Fund (the
"Transfer Agent") for delivery to such Transfer Agent or to the holders
of Shares in connection with distributions in kind, as may be described
from time to time in the currently effective prospectus and statement
of additional information of the Fund related to the Portfolio (the
"Prospectus"), in satisfaction of requests by holders of Shares for
repurchase or redemption; and
15) For any other proper purpose, but only upon receipt of Proper
--- ----
Instructions from the Fund on behalf of the applicable Portfolio
specifying the securities of the Portfolio to be delivered, setting
forth the purpose for which such delivery is to be made, declaring such
purpose to be a proper corporate purpose, and naming the person or
persons to whom delivery of such securities shall be made.
Section 2.3 Registration of Securities. Domestic securities held by the
--------------------------
Custodian (other than bearer securities) shall be registered in the name of the
Portfolio or in the name of any nominee of the Fund on behalf of the Portfolio
or of any nominee of the Custodian which nominee shall be assigned exclusively
to the Portfolio, unless the Fund has authorized in writing the appointment of a
------
nominee to be used in common with other registered investment companies having
the same investment adviser as the Portfolio, or in the name or nominee name of
any agent appointed pursuant to Section 2.7 or in the name or nominee name of
any sub-custodian appointed pursuant to Section 1. All securities accepted by
the Custodian on behalf of the Portfolio under the terms of this Agreement shall
be in "street name" or other good delivery form. If, however, the Fund directs
the Custodian to maintain securities in "street name", the Custodian shall
utilize its best efforts only to timely collect income due the Fund on such
securities and to notify the Fund on a best efforts basis only of relevant
corporate actions, including, without limitation, pendency of calls, maturities,
tender or exchange offers.
Section 2.4 Bank Accounts. The Custodian shall open and maintain a
-------------
separate bank account or accounts in the United States in the name of each
Portfolio of the Fund, subject only to draft or order by the Custodian acting
pursuant to the terms of this Agreement, and shall hold in such account or
accounts, subject to the provisions hereof, all cash received by it from or for
the account of the Portfolio, other than cash maintained by the Portfolio in a
bank account established and used in accordance with Rule 17f-3 under the
Investment Company Act of 1940, as amended (the "1940 Act"). Funds held by the
Custodian for a Portfolio may be deposited by it
4
<PAGE>
to its credit as Custodian in the Banking Department of the Custodian or in such
other banks or trust companies as it may in its discretion deem necessary or
desirable; provided, however, that every such bank or trust company shall be
-------- -------
qualified to act as a custodian under the 1940 Act and that each such bank or
trust company and the funds to be deposited with each such bank or trust company
shall on behalf of each applicable Portfolio be approved by vote of a majority
of the Board. Such funds shall be deposited by the Custodian in its capacity as
Custodian and shall be withdrawable by the Custodian only in that capacity.
Section 2.5 Collection of Income. Subject to the provisions of Section
--------------------
2.3, the Custodian shall collect on a timely basis all income and other payments
with respect to registered domestic securities held hereunder to which each
Portfolio shall be entitled either by law or pursuant to custom in the
securities business, and shall collect on a timely basis all income and other
payments with respect to bearer domestic securities if, on the date of payment
by the issuer, such securities are held by the Custodian or its agent thereof
and shall credit such income, as collected, to such Portfolio's custodian
account. Without limiting the generality of the foregoing, the Custodian shall
detach and present for payment all coupons and other income items requiring
presentation as and when they become due and shall collect interest when due on
securities held hereunder. Income due each Portfolio on securities loaned
pursuant to the provisions of Section 2.2 (10) shall be the responsibility of
the Fund. The Custodian will have no duty or responsibility in connection
therewith, other than to provide the Fund with such information or data as may
be necessary to assist the Fund in arranging for the timely delivery to the
Custodian of the income to which the Portfolio is properly entitled.
Section 2.6 Payment of Fund Monies. Upon receipt of Proper Instructions
----------------------
on behalf of the applicable Portfolio, which may be continuing instructions when
deemed appropriate by the parties, the Custodian shall pay out monies of a
Portfolio in the following cases only:
1) Upon the purchase of domestic securities, options, futures contracts
or options on futures contracts for the account of the Portfolio but
only (a) against the delivery of such securities or evidence of title
to such options, futures contracts or options on futures contracts to
the Custodian (or any bank, banking firm or trust company doing
business in the United States or abroad which is qualified under the
1940 Act to act as a custodian and has been designated by the
Custodian as its agent for this purpose) registered in the name of the
Portfolio or in the name of a nominee of the Custodian referred to in
Section 2.3 hereof or in proper form for transfer; (b) in the case of
a purchase effected through a U.S. Securities System, in accordance
with the conditions set forth in Section 2.8 hereof; (c) in the case
of a purchase involving the Direct Paper System, in accordance with
the conditions set forth in Section 2.9; (d) in the case of repurchase
agreements entered into between the Fund on behalf of the Portfolio
and the Custodian, or another bank, or a broker-dealer which is a
member of NASD, (i) against delivery of the securities
5
<PAGE>
either in certificate form or through an entry crediting the
Custodian's account at the Federal Reserve Bank with such securities
or (ii) against delivery of the receipt evidencing purchase by the
Portfolio of securities owned by the Custodian along with written
evidence of the agreement by the Custodian to repurchase such
securities from the Portfolio or (e) for transfer to a time deposit
account of the Fund in any bank, whether domestic or foreign; such
transfer may be effected prior to receipt of a confirmation from a
broker and/or the applicable bank pursuant to Proper Instructions from
the Fund as defined herein;
2) In connection with conversion, exchange or surrender of securities
owned by the Portfolio as set forth in Section 2.2 hereof;
3) For the redemption or repurchase of Shares issued as set forth in
Section 5 hereof;
4) For the payment of any expense or liability incurred by the Portfolio,
including, but not limited to, the following payments for the account
of the Portfolio: interest, taxes, management, accounting, transfer
agent and legal fees, and operating expenses of the Fund whether or
not such expenses are to be in whole or part capitalized or treated as
deferred expenses;
5) For the payment of any dividends on Shares declared pursuant to the
governing documents of the Fund;
6) For payment of the amount of dividends received in respect of
securities sold short;
7) For any other proper purpose, but only upon receipt of Proper
--- ----
Instructions from the Fund on behalf of the Portfolio specifying the
amount of such payment, setting forth the purpose for which such
payment is to be made, declaring such purpose to be a proper corporate
purpose, and naming the person or persons to whom such payment is to
be made.
Section 2.7 Appointment of Agents. The Custodian may at any time or times
---------------------
in its discretion appoint (and may at any time remove) any other bank or trust
company which is itself qualified under the 1940 Act to act as a custodian, as
its agent to carry out such of the provisions of this Section 2 as the Custodian
may from time to time direct; provided, however, that the appointment of any
--------
agent shall not relieve the Custodian of its responsibilities or liabilities
hereunder.
Section 2.8 Deposit of Fund Assets in U.S. Securities Systems. The
-------------------------------------------------
Custodian may deposit and/or maintain securities owned by a Portfolio in a U.S.
Securities System in accordance with applicable rules and regulations of the
Federal Reserve Board and the Securities
6
<PAGE>
and Exchange Commission and subject to the following provisions:
1) The Custodian may keep securities of the Portfolio in a U.S.
Securities System provided that such securities are represented in an
account of the Custodian in the U.S. Securities System (the "U.S.
Securities System Account") which account shall not include any assets
of the Custodian other than assets held as a fiduciary, custodian or
otherwise for customers;
2) The records of the Custodian with respect to securities of the
Portfolio which are maintained in a U.S. Securities System shall
identify by book-entry those securities belonging to the Portfolio;
3) The Custodian shall pay for securities purchased for the account of
the Portfolio upon (i) receipt of advice from the U.S. Securities
System that such securities have been transferred to the U.S.
Securities System Account, and (ii) the making of an entry on the
records of the Custodian to reflect such payment and transfer for the
account of the Portfolio. The Custodian shall transfer securities sold
for the account of the Portfolio upon (i) receipt of advice from the
U.S. Securities System that payment for such securities has been
transferred to the U.S. Securities System Account, and (ii) the making
of an entry on the records of the Custodian to reflect such transfer
and payment for the account of the Portfolio. Copies of all advices
from the U.S. Securities System of transfers of securities for the
account of the Portfolio shall identify the Portfolio, be maintained
for the Portfolio by the Custodian and be provided to the Fund at its
request. Upon request, the Custodian shall furnish the Fund on behalf
of the Portfolio confirmation of each transfer to or from the account
of the Portfolio in the form of a written advice or notice and shall
furnish to the Fund on behalf of the Portfolio copies of daily
transaction sheets reflecting each day's transactions in the U.S.
Securities System for the account of the Portfolio;
4) The Custodian shall provide the Fund with any report obtained by the
Custodian on the U.S. Securities System's accounting system, internal
accounting control and procedures for safeguarding securities
deposited in the U.S. Securities System;
5) Anything to the contrary in this Agreement notwithstanding, the
Custodian shall be liable to the Fund for the benefit of the Portfolio
for any loss or damage to the Portfolio resulting from use of the U.S.
Securities System by reason of any negligence, misfeasance or
misconduct of the Custodian or any of its agents or of any of its or
their employees or from failure of the Custodian or any such agent to
enforce effectively such rights as it may have against the U.S.
Securities System;
7
<PAGE>
at the election of the Fund, it shall be entitled to be subrogated to
the rights of the Custodian with respect to any claim against the U.S.
Securities System or any other person which the Custodian may have as
a consequence of any such loss or damage if and to the extent that the
Portfolio has not been made whole for any such loss or damage.
Section 2.9 Fund Assets Held in the Custodian's Direct Paper System. The
-------------------------------------------------------
Custodian may deposit and/or maintain securities owned by a Portfolio in the
Direct Paper System of the Custodian subject to the following provisions:
1) No transaction relating to securities in the Direct Paper System will
be effected in the absence of Proper Instructions from the Fund on
behalf of the Portfolio;
2) The Custodian may keep securities of the Portfolio in the Direct Paper
System only if such securities are represented in the Direct Paper
System Account, which account shall not include any assets of the
Custodian other than assets held as a fiduciary, custodian or
otherwise for customers;
3) The records of the Custodian with respect to securities of the
Portfolio which are maintained in the Direct Paper System shall
identify by book-entry those securities belonging to the Portfolio;
4) The Custodian shall pay for securities purchased for the account of
the Portfolio upon the making of an entry on the records of the
Custodian to reflect such payment and transfer of securities to the
account of the Portfolio. The Custodian shall transfer securities sold
for the account of the Portfolio upon the making of an entry on the
records of the Custodian to reflect such transfer and receipt of
payment for the account of the Portfolio;
5) The Custodian shall furnish the Fund on behalf of the Portfolio
confirmation of each transfer to or from the account of the Portfolio,
in the form of a written advice or notice, of Direct Paper on the next
business day following such transfer and shall furnish to the Fund on
behalf of the Portfolio copies of daily transaction sheets reflecting
each day's transaction in the Direct Paper System for the account of
the Portfolio;
6) The Custodian shall provide the Fund on behalf of the Portfolio with
any report on its system of internal accounting control as the Fund
may reasonably request from time to time.
Section 2.10 Segregated Account. The Custodian shall upon receipt of
------------------
Proper Instructions on behalf of each applicable Portfolio establish and
maintain a segregated account or accounts for and on behalf of each such
Portfolio, into which account or accounts may be
8
<PAGE>
transferred cash and/or securities, including securities maintained in an
account by the Custodian pursuant to Section 2.8 hereof, (i) in accordance with
the provisions of any agreement among the Fund on behalf of the Portfolio, the
Custodian and a broker-dealer registered under the Exchange Act and a member of
the NASD (or any futures commission merchant registered under the Commodity
Exchange Act), relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities exchange (or the CFTC or
any registered contract market), or of any similar organization or
organizations, regarding escrow or other arrangements in connection with
transactions by the Portfolio, (ii) for purposes of segregating cash or
government securities in connection with options purchased, sold or written by
the Portfolio or commodity futures contracts or options thereon purchased or
sold by the Portfolio, (iii) for the purposes of compliance by the Portfolio
with the procedures required by Investment Company Act Release No. 10666, or any
subsequent release of the SEC, or interpretative opinion of the staff of the
SEC, relating to the maintenance of segregated accounts by registered investment
companies and (iv) for other proper corporate purposes, but only, in the case of
--- ----
clause (iv), upon receipt of Proper Instructions from the Fund on behalf of the
applicable Portfolio, setting forth the purpose or purposes of such segregated
account and declaring such purpose(s) to be a proper corporate purpose.
Section 2.11 Ownership Certificates for Tax Purposes. The Custodian shall
---------------------------------------
execute ownership and other certificates and affidavits for all federal and
state tax purposes in connection with receipt of income or other payments with
respect to domestic securities of each Portfolio held by it and in connection
with transfers of securities.
Section 2.12 Proxies. The Custodian shall, with respect to the domestic
-------
securities held hereunder, cause to be promptly executed by the registered
holder of such securities, if the securities are registered otherwise than in
the name of the Portfolio or a nominee of the Portfolio, all proxies, without
indication of the manner in which such proxies are to be voted, and shall
promptly deliver to the Portfolio such proxies, all proxy soliciting materials
and all notices relating to such securities.
Section 2.13 Communications Relating to Portfolio Securities. Subject to
-----------------------------------------------
the provisions of Section 2.3, the Custodian shall transmit promptly to the Fund
for each Portfolio all written information (including, without limitation,
pendency of calls and maturities of domestic securities and expirations of
rights in connection therewith and notices of exercise of call and put options
written by the Fund on behalf of the Portfolio and the maturity of futures
contracts purchased or sold by the Portfolio) received by the Custodian from
issuers of the securities being held for the Portfolio. With respect to tender
or exchange offers, the Custodian shall transmit promptly to the Portfolio all
written information received by the Custodian from issuers of the securities
whose tender or exchange is sought and from the party (or his agents) making the
tender or exchange offer. If the Portfolio desires to take action with respect
to any tender offer, exchange offer or any other similar transaction, the
Portfolio shall notify the Custodian at least
9
<PAGE>
three business days prior to the date on which the Custodian is to take such
action.
Section 3. The Custodian as Foreign Custody Manager of the Portfolios
----------------------------------------------------------
Section 3.1 Definitions. The following capitalized terms shall have the
-----------
indicated meanings:
"Country Risk" means all factors reasonably related to the systemic risk of
holding Foreign Assets in a particular country, including, but not limited to,
such country's political environment; economic and financial infrastructure
(including any Mandatory Securities Depositories operating in the country);
prevailing or developing custody and settlement practices; and laws and
regulations applicable to the safekeeping and recovery of Foreign Assets held in
custody in that country.
"Eligible Foreign Custodian" has the meaning set forth in section (a)(1) of Rule
17f-5, including a majority-owned or indirect subsidiary of a U.S. Bank (as
defined in Rule 17f-5), a bank holding company meeting the requirements of an
Eligible Foreign Custodian (as set forth in Rule 17f-5 or by other appropriate
action of the SEC), or a foreign branch of a Bank (as defined in Section 2(a)(5)
of the 1940 Act) meeting the requirements of a custodian under Section 17(f) of
the 1940 Act, except that the term does not include Mandatory Securities
Depositories.
"Foreign Assets" means any of the Portfolios' investments (including foreign
currencies) for which the primary market is outside the United States and such
cash and cash equivalents as are reasonably necessary to effect the Portfolios'
transactions in such investments.
"Foreign Custody Manager" has the meaning set forth in section (a)(2) of Rule
17f-5.
"Mandatory Securities Depository" means a foreign securities depository or
clearing agency that, either as a legal or practical matter, must be used if the
Fund, on the Portfolios' behalf, determines to place Foreign Assets in a country
outside the United States because (i) such is required by law or regulation;
(ii) securities cannot be withdrawn from such foreign securities depository or
clearing agency; or (iii) maintaining or effecting trades in securities outside
the foreign securities depository or clearing agency is not consistent with
prevailing or developing custodial or market practices.
Section 3.2 Delegation to the Custodian as Foreign Custody Manager. The
------------------------------------------------------
Fund, by resolution adopted by the Board, hereby delegates to the Custodian with
respect to the Portfolios, subject to Section (b) of Rule 17f-5, the
responsibilities set forth in this Section 3 with respect to Foreign Assets of
the Portfolios held outside the United States, and the Custodian hereby accepts
such delegation, as Foreign Custody Manager with respect to the Portfolios.
Section 3.3 Countries Covered. The Foreign Custody Manager shall be
-----------------
responsible
10
<PAGE>
for performing the delegated responsibilities defined below only with respect to
the countries and custody arrangements for each such country listed on Schedule
A to this Agreement, which list of countries may be amended from time to time by
the Fund with the Agreement of the Foreign Custody Manager. The Foreign Custody
Manager shall list on Schedule A the Eligible Foreign Custodians selected by the
Foreign Custody Manager to maintain the assets of the Portfolios, which list of
Eligible Foreign Custodians may be amended from time to time in the sole
discretion of the Foreign Custody Manager. Mandatory Securities Depositories are
listed on Schedule B to this Contract, which Schedule B may be amended from time
to time by the Foreign Custody Manager. The Foreign Custody Manager will provide
amended versions of Schedules A and B in accordance with Section 3.7 hereof.
Upon the receipt by the Foreign Custody Manager of Proper Instructions to
open an account or to place or maintain Foreign Assets in a country listed on
Schedule A, and the fulfillment by the Fund on behalf of the Portfolios of the
applicable account opening requirements for such country, the Foreign Custody
Manager shall be deemed to have been delegated by the Board on behalf of the
Portfolios responsibility as Foreign Custody Manager with respect to that
country and to have accepted such delegation. Following the receipt of Proper
Instructions directing the Foreign Custody Manager to close the account of a
Portfolio with the Eligible Foreign Custodian selected by the Foreign Custody
Manager in a designated country, the delegation by the Board on behalf of the
Portfolios to the Custodian as Foreign Custody Manager for that country shall be
deemed to have been withdrawn and the Custodian shall immediately cease to be
the Foreign Custody Manager of the Portfolios with respect to that country.
The Foreign Custody Manager may withdraw its acceptance of delegated
responsibilities with respect to a designated country upon no less than 30 days
prior written notice to the Fund. Thirty days (or such longer period as to which
the parties agree in writing) after receipt of any such notice by the Fund, the
Custodian shall have no further responsibility as Foreign Custody Manager to the
Fund with respect to the country as to which the Custodian's acceptance of
delegation is withdrawn.
Section 3.4 Scope of Delegated Responsibilities.
-----------------------------------
3.4.1. Selection of Eligible Foreign Custodians. Subject to the
----------------------------------------
provisions of this Section 3, the Portfolios' Foreign Custody Manager may place
and maintain the Foreign Assets in the care of the Eligible Foreign Custodian
selected by the Foreign Custody Manager in each country listed on Schedule A, as
amended from time to time. In performing its delegated responsibilities as
Foreign Custody Manager to place or maintain Foreign Assets with an Eligible
Foreign Custodian, the Foreign Custody Manager shall determine that the Foreign
Assets will be subject to reasonable care, based on the standards applicable to
custodians in the country in which the Foreign Assets will be held by that
Eligible Foreign Custodian, after considering all factors
11
<PAGE>
relevant to the safekeeping of such assets, including, without limitation, the
factors specified in Rule 17f-5(c)(1).
3.4.2. Contracts With Eligible Foreign Custodians. The Foreign Custody
------------------------------------------
Manager shall determine that the contract (or the rules or established practices
or procedures in the case of an Eligible Foreign Custodian that is a foreign
securities depository or clearing agency) governing the foreign custody
arrangements with each Eligible Foreign Custodian selected by the Foreign
Custody Manager will satisfy the requirements of Rule 17f-5(c)(2).
3.4.3. Monitoring. In each case in which the Foreign Custody Manager
----------
maintains Foreign Assets with an Eligible Foreign Custodian selected by the
Foreign Custody Manager, the Foreign Custody Manager shall establish a system to
monitor (i) the appropriateness of maintaining the Foreign Assets with such
Eligible Foreign Custodian and (ii) the contract governing the custody
arrangements established by the Foreign Custody Manager with the Eligible
Foreign Custodian (or the rules or established practices and procedures in the
case of an Eligible Foreign Custodian selected by the Foreign Custody Manager
which is a foreign securities depository or clearing agency that is not a
Mandatory Securities Depository). In the event the Foreign Custody Manager
determines that the custody arrangements with an Eligible Foreign Custodian it
has selected are no longer appropriate, the Foreign Custody Manager shall notify
the Board in accordance with Section 3.7 hereunder.
Section 3.5 Guidelines for the Exercise of Delegated Authority. For
--------------------------------------------------
purposes of this Section 3, the Board shall be deemed to have considered and
determined to accept such Country Risk as is incurred by placing and maintaining
the Foreign Assets in each country for which the Custodian is serving as Foreign
Custody Manager of the Portfolios. The Fund, on behalf of the Portfolios, and
the Board shall be deemed to be monitoring on a continuing basis such Country
Risk to the extent that the Board considers necessary or appropriate. The Fund
and the Custodian each expressly acknowledge that the Foreign Custody Manager
shall not be delegated any responsibilities under this Section 3 with respect to
Mandatory Securities Depositories.
Section 3.6 Standard of Care as Foreign Custody Manager of the Portfolios.
-------------------------------------------------------------
In performing the responsibilities delegated to it, the Foreign Custody Manager
agrees to exercise reasonable care, prudence and diligence such as a person
having responsibility for the safekeeping of assets of management investment
companies registered under the 1940 Act would exercise.
Section 3.7 Reporting Requirements. The Foreign Custody Manager shall
----------------------
report the withdrawal of the Foreign Assets from an Eligible Foreign Custodian
and the placement of such Foreign Assets with another Eligible Foreign Custodian
by providing to the Board amended Schedules A or B at the end of the calendar
quarter in which an amendment to either Schedule has occurred. The Foreign
Custody Manager shall make written reports notifying the Board of any other
material change in the foreign custody arrangements of the Portfolios described
in this
12
<PAGE>
Section 3 after the occurrence of the material change.
Section 3.8 Representations with Respect to Rule 17f-5. The Foreign
------------------------------------------
Custody Manager represents to the Fund that it is a U.S. Bank as defined in
section (a)(7) of Rule 17f-5. The Fund represents to the Custodian that the
Board has determined that it is reasonable for the Board to rely on the
Custodian to perform the responsibilities delegated pursuant to this Agreement
to the Custodian as the Foreign Custody Manager of the Portfolios.
Section 3.9 Effective Date and Termination of the Custodian as Foreign
----------------------------------------------------------
Custody Manager. The Board's delegation to the Custodian as Foreign Custody
- ---------------
Manager of the Portfolios shall be effective as of the date of execution of this
Agreement and shall remain in effect until terminated at any time, without
penalty, by written notice from the terminating party to the non-terminating
party. Termination will become effective thirty (30) days after receipt by the
non-terminating party of such notice. The provisions of Section 3.3 hereof
shall govern the delegation to and termination of the Custodian as Foreign
Custody Manager of the Portfolios with respect to designated countries.
Section 4. Duties of the Custodian with Respect to Property of the Portfolios
------------------------------------------------------------------
Held Outside of the United States
---------------------------------
Section 4.1 Definitions. Capitalized terms in this Section 4 shall have
-----------
the following meanings:
"Foreign Securities System" means either a clearing agency or a securities
depository listed on Schedule A hereto or a Mandatory Securities Depository
listed on Schedule B hereto.
"Foreign Sub-Custodian" means a foreign banking institution serving as an
Eligible Foreign Custodian.
Section 4.2 Holding Securities. The Custodian shall identify on its books
------------------
as belonging to the Portfolios the foreign securities held by each Foreign Sub-
Custodian or Foreign Securities System. The Custodian may hold foreign
securities for all of its customers, including the Portfolios, with any Foreign
Sub-Custodian in an account that is identified as belonging to the Custodian for
the benefit of its customers, provided, however, that (i) the records of the
-------- -------
Custodian with respect to foreign securities of the Portfolios which are
maintained in such account shall identify those securities as belonging to the
Portfolios and (ii), to the extent permitted and customary in the market in
which the account is maintained, the Custodian shall require that securities so
held by the Foreign Sub-Custodian be held separately from any assets of such
Foreign Sub-Custodian or of other customers of such Foreign Sub-Custodian.
Section 4.3 Foreign Securities Systems. Foreign securities shall be
--------------------------
maintained in a
13
<PAGE>
Foreign Securities System in a designated country only through arrangements
implemented by the Foreign Sub-Custodian in such country pursuant to the terms
of this Agreement.
Section 4.4 Transactions in Foreign Custody Account.
---------------------------------------
4.4.1. Delivery of Foreign Securities. The Custodian or a Foreign Sub-
------------------------------
Custodian shall release and deliver foreign securities of the Portfolios held by
such Foreign Sub-Custodian, or in a Foreign Securities System account, only upon
receipt of Proper Instructions, which may be continuing instructions when deemed
appropriate by the parties, and only in the following cases:
(i) upon the sale of such foreign securities for the Portfolios in
accordance with commercially reasonable market practice in the
country where such foreign securities are held or traded,
including, without limitation: (A) delivery against expectation of
receiving later payment; or (B) in the case of a sale effected
through a Foreign Securities System in accordance with the rules
governing the operation of the Foreign Securities System;
(ii) in connection with any repurchase agreement related to foreign
securities;
(iii) to the depository agent in connection with tender or other similar
offers for foreign securities of the Portfolios;
(iv) to the issuer thereof or its agent when such foreign securities are
called, redeemed, retired or otherwise become payable;
(v) to the issuer thereof, or its agent, for transfer into the name of
the Custodian (or the name of the respective Foreign Sub-Custodian
or of any nominee of the Custodian or such Foreign Sub-Custodian)
or for exchange for a different number of bonds, certificates or
other evidence representing the same aggregate face amount or
number of units;
(vi) to brokers, clearing banks or other clearing agents for examination
or trade execution in accordance with market custom; provided that
--------
in any such case the Foreign Sub-Custodian shall have no
responsibility or liability for any loss arising from the delivery
of such securities prior to receiving payment for such securities
except as may arise from the Foreign Sub-Custodian's own negligence
or willful misconduct;
(vii) for exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of
the securities of the issuer of such securities, or pursuant to
provisions for conversion contained in such securities, or pursuant
to any deposit agreement;
14
<PAGE>
(viii) in the case of warrants, rights or similar foreign securities, the
surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or
temporary securities for definitive securities;
(ix) for delivery as security in connection with any borrowing by the
Portfolios requiring a pledge of assets by the Portfolios;
(x) in connection with trading in options and futures contracts,
including delivery as original margin and variation margin;
(xi) in connection with the lending of foreign securities; and
(xii) for any other proper purpose, but only upon receipt of Proper
--- ----
Instructions specifying the foreign securities to be delivered,
setting forth the purpose for which such delivery is to be made,
declaring such purpose to be a proper corporate purpose, and naming
the person or persons to whom delivery of such securities shall be
made.
4.4.2. Payment of Portfolio Monies. Upon receipt of Proper Instructions,
---------------------------
which may be continuing instructions when deemed appropriate by the parties, the
Custodian shall pay out, or direct the respective Foreign Sub-Custodian or the
respective Foreign Securities System to pay out, monies of a Portfolio in the
following cases only:
(i) upon the purchase of foreign securities for the Portfolio, unless
otherwise directed by Proper Instructions, by (A) delivering money
to the seller thereof or to a dealer therefor (or an agent for such
seller or dealer) against expectation of receiving later delivery
of such foreign securities; or (B) in the case of a purchase
effected through a Foreign Securities System, in accordance with
the rules governing the operation of such Foreign Securities
System;
(ii) in connection with the conversion, exchange or surrender of foreign
securities of the Portfolio;
(iii) for the payment of any expense or liability of the Portfolio,
including, but not limited to, the following payments: interest,
taxes, investment advisory fees, transfer agency fees, fees under
this Agreement, legal fees, accounting fees, and other operating
expenses;
(iv) for the purchase or sale of foreign exchange or foreign exchange
contracts for the Portfolio, including transactions executed with
or through the Custodian or its Foreign Sub-Custodians;
15
<PAGE>
(v) in connection with trading in options and futures contracts,
including delivery as original margin and variation margin;
(vii) in connection with the borrowing or lending of foreign securities;
and
(viii) for any other proper purpose, but only upon receipt of Proper
--- ----
Instructions specifying the amount of such payment, setting forth
the purpose for which such payment is to be made, declaring such
purpose to be a proper corporate purpose, and naming the person or
persons to whom such payment is to be made.
4.4.3. Market Conditions. Notwithstanding any provision of this Agreement
-----------------
to the contrary, settlement and payment for Foreign Assets received for the
account of the Portfolios and delivery of Foreign Assets maintained for the
account of the Portfolios may be effected in accordance with the customary
established securities trading or processing practices and procedures in the
country or market in which the transaction occurs, including, without
limitation, delivering Foreign Assets to the purchaser thereof or to a dealer
therefor (or an agent for such purchaser or dealer) with the expectation of
receiving later payment for such Foreign Assets from such purchaser or dealer.
The Custodian shall provide to the Board the information with respect to
custody and settlement practices in countries in which the Custodian employs a
Foreign Sub-Custodian, including, without limitation, information relating to
Foreign Securities Systems, described on Schedule C hereto at the time or times
set forth on such Schedule. The Custodian may revise Schedule C from time to
time, provided that no such revision shall result in the Board being provided
with substantively less information than had been previously provided hereunder.
Section 4.5 Registration of Foreign Securities. The foreign securities
----------------------------------
maintained in the custody of a Foreign Sub-Custodian (other than bearer
securities) shall be registered in the name of the applicable Portfolio or in
the name of the Custodian or in the name of any Foreign Sub-Custodian or in the
name of any nominee of the foregoing, and the Fund on behalf of such Portfolio
agrees to hold any such nominee harmless from any liability as a holder of
record of such foreign securities. The Custodian or a Foreign Sub-Custodian
shall not be obligated to accept securities on behalf of a Portfolio under the
terms of this Agreement unless the form of such securities and the manner in
which they are delivered are in accordance with reasonable market practice.
Section 4.6 Bank Accounts. The Custodian shall identify on its books as
-------------
belonging to the Fund cash (including cash denominated in foreign currencies)
deposited with the Custodian. Where the Custodian is unable to maintain, or
market practice does not facilitate the maintenance of, cash on the books of the
Custodian, a bank account or bank accounts opened and maintained outside the
United States on behalf of a Portfolio with a Foreign Sub-Custodian shall be
subject only to draft or order by the Custodian or such Foreign Sub-Custodian,
acting pursuant to the terms of this Agreement to hold cash received by or from
or for the account of the
16
<PAGE>
Portfolio.
Section 4.7 Collection of Income. The Custodian shall use reasonable
--------------------
commercial efforts to collect all income and other payments with respect to the
Foreign Assets held hereunder to which the Portfolios shall be entitled and
shall credit such income, as collected, to the applicable Portfolio. In the
event that extraordinary measures are required to collect such income, the Fund
and the Custodian shall consult as to such measures and as to the compensation
and expenses of the Custodian relating to such measures.
Section 4.8 Shareholder Rights. With respect to the foreign securities
------------------
held pursuant to this Agreement, the Custodian will use reasonable commercial
efforts to facilitate the exercise of voting and other shareholder rights,
subject always to the laws, regulations and practical constraints that may exist
in the country where such securities are issued. The Fund acknowledges that
local conditions, including lack of regulation, onerous procedural obligations,
lack of notice and other factors, may have the effect of severely limiting the
ability of the Fund to exercise shareholder rights.
Section 4.9 Communications Relating to Foreign Securities. The Custodian
---------------------------------------------
shall transmit promptly to the Fund written information (including, without
limitation, pendency of calls and maturities of foreign securities and
expirations of rights in connection therewith) received by the Custodian via the
Foreign Sub-Custodians from issuers of the foreign securities being held for the
account of the Portfolios. With respect to tender or exchange offers, the
Custodian shall transmit promptly to the Fund written information so received by
the Custodian from issuers of the foreign securities whose tender or exchange is
sought or from the party (or its agents) making the tender or exchange offer.
The Custodian shall not be liable for any untimely exercise of any tender,
exchange or other right or power in connection with foreign securities or other
property of the Portfolios at any time held by it unless (i) the Custodian or
the respective Foreign Sub-Custodian is in actual possession of such foreign
securities or property and (ii) the Custodian receives Proper Instructions with
regard to the exercise of any such right or power, and both (i) and (ii) occur
at least three business days prior to the date on which the Custodian is to take
action to exercise such right or power
Section 4.10 Liability of Foreign Sub-Custodians and Foreign Securities
----------------------------------------------------------
Systems. Each agreement pursuant to which the Custodian employs a Foreign Sub-
- -------
Custodian shall, to the extent possible, require the Foreign Sub-Custodian to
exercise reasonable care in the performance of its duties and, to the extent
possible, to indemnify, and hold harmless, the Custodian from and against any
loss, damage, cost, expense, liability or claim arising out of or in connection
with the Foreign Sub-Custodian's performance of such obligations. At the Fund's
election, the Portfolios shall be entitled to be subrogated to the rights of the
Custodian with respect to any claims against a Foreign Sub-Custodian as a
consequence of any such loss, damage, cost, expense, liability or claim if and
to the extent that the Portfolios have not been
17
<PAGE>
made whole for any such loss, damage, cost, expense, liability or claim.
Section 4.11 Tax Law. The Custodian shall have no responsibility or
-------
liability for any obligations now or hereafter imposed on the Fund, the
Portfolios or the Custodian as custodian of the Portfolios by the tax law of the
United States or of any state or political subdivision thereof. It shall be the
responsibility of the Fund to notify the Custodian of the obligations imposed on
the Fund with respect to the Portfolios or the Custodian as custodian of the
Portfolios by the tax law of countries other than those mentioned in the above
sentence, including responsibility for withholding and other taxes, assessments
or other governmental charges, certifications and governmental reporting. The
sole responsibility of the Custodian with regard to such tax law shall be to use
reasonable efforts to assist the Fund with respect to any claim for exemption or
refund under the tax law of countries for which the Fund has provided such
information.
Section 4.12 Conflict. If the Custodian is delegated the responsibilities
--------
of Foreign Custody Manager pursuant to the terms of Section 3 hereof, in the
event of any conflict between the provisions of Sections 3 and 4 hereof, the
provisions of Section 3 shall prevail.
Section 5. Payments for Sales or Repurchases or Redemptions of Shares
----------------------------------------------------------
The Custodian shall receive from the distributor for the Shares or from the
Transfer Agent and deposit into the account of the appropriate Portfolio such
payments as are received for Shares thereof issued or sold from time to time by
the Fund. The Custodian will provide timely notification to the Fund on behalf
of each such Portfolio and the Transfer Agent of any receipt by it of payments
for Shares of such Portfolio.
From such funds as may be available for the purpose, the Custodian shall,
upon receipt of instructions from the Transfer Agent, make funds available for
payment to holders of Shares who have delivered to the Transfer Agent a request
for redemption or repurchase of their Shares. In connection with the redemption
or repurchase of Shares, the Custodian is authorized upon receipt of
instructions from the Transfer Agent to wire funds to or through a commercial
bank designated by the redeeming shareholders. In connection with the
redemption or repurchase of Shares, the Custodian shall honor checks drawn on
the Custodian by a holder of Shares, which checks have been furnished by the
Fund to the holder of Shares, when presented to the Custodian in accordance
with such procedures and controls as are mutually agreed upon from time to time
between the Fund and the Custodian.
Section 6. Proper Instructions
-------------------
Proper Instructions as used throughout this Agreement means a writing
signed or initialed by one or more person or persons as the Board shall have
from time to time authorized. Each such writing shall set forth the specific
transaction or type of transaction involved, including a specific statement of
the purpose for which such action is requested. Oral instructions will be
considered Proper Instructions if the Custodian reasonably believes them to have
been given by a
18
<PAGE>
person authorized to give such instructions with respect to the transaction
involved. The Fund shall cause all oral instructions to be confirmed in writing.
Proper Instructions may include communications effected directly between
electro-mechanical or electronic devices provided that the Fund and the
Custodian agree to security procedures, including but not limited to, the
security procedures selected by the Fund in the Funds Transfer Addendum
attached hereto. For purposes of this Section, Proper Instructions shall
include instructions received by the Custodian pursuant to any three-party
agreement which requires a segregated asset account in accordance with
Section 2.10.
Section 7. Actions Permitted without Express Authority
-------------------------------------------
The Custodian may in its discretion, without express authority from the
Fund on behalf of each applicable Portfolio:
1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under
this Agreement, provided that all such payments shall be
--------
accounted for to the Fund on behalf of the Portfolio;
2) surrender securities in temporary form for securities in definitive
form;
3) endorse for collection, in the name of the Portfolio, checks, drafts
and other negotiable instruments; and
4) in general, attend to all non-discretionary details in connection
with the sale, exchange, substitution, purchase, transfer and other
dealings with the securities and property of the Portfolio except as
otherwise directed by the Board.
Section 8. Evidence of Authority
---------------------
The Custodian shall be protected in acting upon any instructions, notice,
request, consent, certificate or other instrument or paper reasonably believed
by it to be genuine and to have been properly executed by or on behalf of the
Fund. The Custodian may receive and accept a copy of a resolution certified by
the Secretary or an Assistant Secretary of the Fund ("Certified Resolution") as
conclusive evidence (a) of the authority of any person to act in accordance with
such resolution or (b) of any determination or of any action by the Board as
described in such resolution, and such resolution may be considered as in full
force and effect until receipt by the Custodian of written notice to the
contrary.
Section 9. Duties of Custodian with Respect to the Books of Account and
------------------------------------------------------------
Calculation of Net Asset Value and Net Income
---------------------------------------------
19
<PAGE>
The Custodian shall cooperate with and supply necessary information to the
entity or entities appointed by the Board to keep the books of account of each
Portfolio and/or compute the net asset value per Share of the outstanding Shares
or, if directed in writing to do so by the Fund on behalf of the Portfolio,
shall itself keep such books of account and/or compute such net asset value per
Share. If so directed, the Custodian shall also calculate daily the net income
of the Portfolio as described in the Prospectus and shall advise the Fund and
the Transfer Agent daily of the total amounts of such net income and, if
instructed in writing by an officer of the Fund to do so, shall advise the
Transfer Agent periodically of the division of such net income among its various
components. The calculations of the net asset value per Share and the daily
income of each Portfolio shall be made at the time or times described from time
to time in the Prospectus.
Section 10. Records
-------
The Custodian shall with respect to each Portfolio create and maintain all
records relating to its activities and obligations under this Agreement in such
manner as will meet the obligations of the Fund under the 1940 Act, with
particular attention to Section 31 thereof and Rules 31a-1 and 31a-2 thereunder.
All such records shall be the property of the Fund and shall at all times during
the regular business hours of the Custodian be open for inspection by duly
authorized officers, employees or agents of the Fund and employees and agents of
the SEC. The Custodian shall, at the Fund's request, supply the Fund with a
tabulation of securities owned by each Portfolio and held by the Custodian and
shall, when requested to do so by the Fund and for such compensation as shall be
agreed upon between the Fund and the Custodian, include certificate numbers in
such tabulations.
Section 11. Opinion of Fund's Independent Accountant
----------------------------------------
The Custodian shall take all reasonable action, as the Fund on behalf of
each applicable Portfolio may from time to time request, to obtain from year to
year favorable opinions from the Fund's independent accountants with respect to
its activities hereunder in connection with the preparation of the Fund's Form
N-1A, and Form N-SAR or other annual reports to the SEC and with respect to any
other requirements thereof.
Section 12. Reports to Fund by Independent Public Accountants
-------------------------------------------------
The Custodian shall provide the Fund, on behalf of each of the Portfolios
at such times as the Fund may reasonably require, with reports by independent
public accountants on the accounting system, internal accounting control and
procedures for safeguarding securities, futures contracts and options on futures
contracts, including securities deposited and/or maintained in a U.S. Securities
System or a Foreign Securities System, relating to the services provided by the
Custodian under this Agreement. Such reports and the examinations providing the
basis for such reports, shall be of sufficient scope and in sufficient detail,
as may reasonably be required by the Fund, to provide reasonable assurance that
any material inadequacies would
20
<PAGE>
be disclosed in such reprots and discovered in such reports and discovered by
such examination, and, if there are no such inadequacies, the reports shall so
state.
Section 13. Compensation of Custodian
-------------------------
The Custodian shall be entitled to reasonable compensation for its services
and expenses as Custodian, as agreed upon from time to time between the Fund on
behalf of each applicable Portfolio and the Custodian.
Section 14. Responsibility of Custodian
---------------------------
So long as and to the extent that it is in the exercise of reasonable care,
the Custodian shall not be responsible for the title, validity or genuineness of
any property or evidence of title thereto received by it or delivered by it
pursuant to this Agreement and shall be held harmless in acting upon any notice,
request, consent, certificate or other instrument reasonably believed by it to
be genuine and to be signed by the proper party or parties, including any
futures commission merchant acting pursuant to the terms of a three-party
futures or options agreement. The Custodian shall be held to the exercise of
reasonable care in carrying out the provisions of this Agreement, but shall be
kept indemnified by and shall be without liability to the Fund for any action
taken or omitted by it in good faith without negligence. It shall be entitled
to rely on and may act upon advice of counsel (who may be counsel for the Fund)
on all matters, and shall be without liability for any action reasonably taken
or omitted pursuant to such advice. The Custodian shall be without liability to
the Fund and the Portfolios for any loss, liability, claim or expense resulting
from or caused by anything which is (A) part of Country Risk (as defined in
Section 3 hereof), including, without limitation, nationalization,
expropriation, currency restrictions, or acts of war, revolution, riots or
terrorism, or (B) part of the "prevailing country risk" of the Portfolios, as
such term is used in SEC Release Nos. IC-22658; IS-1080 (May 12, 1997) or as
such term or other similar terms are now or in the future interpreted by the SEC
or by the staff of the Division of Investment Management thereof.
Except as may arise from the Custodian's own negligence or willful
misconduct or the negligence or willful misconduct of a sub-custodian or agent,
the Custodian shall be without liability to the Fund for any loss, liability,
claim or expense resulting from or caused by; (i) events or circumstances beyond
the reasonable control of the Custodian or any sub-custodian or Securities
System or any agent or nominee of any of the foregoing, including, without
limitation, the interruption, suspension or restriction of trading on or the
closure of any securities market, power or other mechanical or technological
failures or interruptions, computer viruses or communications disruptions, work
stoppages, natural disasters, or other similar events or acts; (ii) errors by
the Fund or the Investment Advisor in their instructions to the Custodian
provided such instructions have been in accordance with this Agreement; (iii)
the insolvency of or acts or omissions by a U.S. Securities System or a Foreign
Securities System; (iv) any delay or failure of
21
<PAGE>
any broker, agent or intermediary, central bank or other commercially
prevalent payment or clearing system to deliver to the Custodian's sub-custodian
or agent securities purchased or in the remittance or payment made in connection
with securities sold; (v) any delay or failure of any company, corporation, or
other body in charge of registering or transferring securities in the name of
the Custodian, the Fund, the Custodian's sub-custodians, nominees or agents or
any consequential losses arising out of such delay or failure to transfer such
securities including non-receipt of bonus, dividends and rights and other
accretions or benefits; (vi) delays or inability to perform its duties due to
any disorder in market infrastructure with respect to any particular security or
Securities System; and (vii) any provision of any present or future law or
regulation or order of the United States of America, or any state thereof, or
any other country, or political subdivision thereof or of any court of competent
jurisdiction.
The Custodian shall be liable for the acts or omissions of a Foreign Sub-
Custodian (as defined in Section 4 hereof) to the same extent as set forth with
respect to sub-custodians generally in this Agreement.
If the Fund on behalf of a Portfolio requires the Custodian to take any
action with respect to securities, which action involves the payment of money or
which action may, in the opinion of the Custodian, result in the Custodian or
its nominee assigned to the Fund or the Portfolio being liable for the payment
of money or incurring liability of some other form, the Fund on behalf of the
Portfolio, as a prerequisite to requiring the Custodian to take such action,
shall provide indemnity to the Custodian in an amount and form satisfactory to
it.
If the Fund requires the Custodian, its affiliates, subsidiaries or agents,
to advance cash or securities for any purpose (including but not limited to
securities settlements, foreign exchange contracts and assumed settlement) or in
the event that the Custodian or its nominee shall incur or be assessed any
taxes, charges, expenses, assessments, claims or liabilities in connection with
the performance of this Agreement, except such as may arise from its or its
nominee's own negligent action, negligent failure to act or willful misconduct,
any property at any time held for the account of the applicable Portfolio shall
be security therefor and should the Fund fail to repay the Custodian promptly,
the Custodian shall be entitled to utilize available cash and to dispose of such
Portfolio's assets to the extent necessary to obtain reimbursement.
In no event shall the Custodian be liable for indirect, special or
consequential damages.
Section 15. Effective Period, Termination and Amendment
-------------------------------------------
This Agreement shall become effective as of its execution, shall continue
in full force and effect until terminated as hereinafter provided, may be
amended at any time by mutual agreement of the parties hereto and may be
terminated by either party by an instrument in writing delivered or mailed,
postage prepaid to the other party, such termination to take effect not sooner
than sixty (60) days after the date of such delivery or mailing; provided,
--------
however, that the Fund shall not amend or terminate this Agreement in
contravention of any applicable federal or state
22
<PAGE>
regulations, or any provision of the Fund's Articles of Incorporation, and
further provided, that the Fund on behalf of one or more of the Portfolios may
at any time by action of its Board (i) substitute another bank or trust company
for the Custodian by giving notice as described above to the Custodian, or (ii)
immediately terminate this Agreement in the event of the appointment of a
conservator or receiver for the Custodian by the Comptroller of the Currency or
upon the happening of a like event at the direction of an appropriate regulatory
agency or court of competent jurisdiction.
Upon termination of the Agreement, the Fund on behalf of each applicable
Portfolio shall pay to the Custodian such compensation as may be due as of the
date of such termination and shall likewise reimburse the Custodian for its
costs, expenses and disbursements.
Section 16. Successor Custodian
-------------------
If a successor custodian for one or more Portfolios shall be appointed by
the Board, the Custodian shall, upon termination, deliver to such successor
custodian at the office of the Custodian, duly endorsed and in the form for
transfer, all securities of each applicable Portfolio then held by it hereunder
and shall transfer to an account of the successor custodian all of the
securities of each such Portfolio held in a Securities System.
If no such successor custodian shall be appointed, the Custodian shall, in
like manner, upon receipt of a Certified Resolution, deliver at the office of
the Custodian and transfer such securities, funds and other properties in
accordance with such resolution.
In the event that no written order designating a successor custodian or
Certified Resolution shall have been delivered to the Custodian on or before the
date when such termination shall become effective, then the Custodian shall have
the right to deliver to a bank or trust company, which is a "bank" as defined in
the 1940 Act, doing business in Boston, Massachusetts, or New York, New York, of
its own selection, having an aggregate capital, surplus, and undivided profits,
as shown by its last published report, of not less than $25,000,000, all
securities, funds and other properties held by the Custodian on behalf of each
applicable Portfolio and all instruments held by the Custodian relative thereto
and all other property held by it under this Agreement on behalf of each
applicable Portfolio, and to transfer to an account of such successor custodian
all of the securities of each such Portfolio held in any Securities System.
Thereafter, such bank or trust company shall be the successor of the Custodian
under this Agreement.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to the
failure of the Fund to procure the Certified Resolution to appoint a successor
custodian, the Custodian shall be entitled to fair compensation for its services
during such period as the Custodian retains possession of such
23
<PAGE>
securities, funds and other properties and the provisions of this Agreement
relating to the duties and obligations of the Custodian shall remain in full
force and effect.
Section 17. Interpretive And Additional Provisions
--------------------------------------
In connection with the operation of this Agreement, the Custodian and the
Fund on behalf of each of the Portfolios, may from time to time agree on such
provisions interpretive of or in addition to the provisions of this Agreement as
may in their joint opinion be consistent with the general tenor of this
Agreement. Any such interpretive or additional provisions shall be in a
writing signed by both parties and shall be annexed hereto, provided that no
--------
such interpretive or additional provisions shall contravene any applicable
federal or state regulations or any provision of the Fund's Articles of
Incorporation/other governing documents. No interpretive or additional
provisions made as provided in the preceding sentence shall be deemed to be an
amendment of this Agreement.
Section 18. Additional Funds
----------------
In the event that the Fund establishes one or more series of Shares in
addition to Holland Balanced Fund with respect to which it desires to have the
Custodian render services as custodian under the terms hereof, it shall so
notify the Custodian in writing, and if the Custodian agrees in writing to
provide such services, such series of Shares shall become a Portfolio hereunder.
Section 19. New York Law To Apply
---------------------
This Agreement shall be construed and the provisions thereof interpreted
under and in accordance with laws of the State of New York.
Section 20. Prior Agreements
----------------
This Agreement supersedes and terminates, as of the date hereof, all prior
Agreements between the Fund on behalf of each of the Portfolios and the
Custodian relating to the custody of the Fund's assets.
Section 21. Notices.
-------
Any notice, instruction or other instrument required to be given hereunder
may be delivered in person to the offices of the parties as set forth herein
during normal business hours or delivered prepaid registered mail or by telex,
cable or telecopy to the parties at the following addresses or such other
addresses as may be notified by any party from time to time.
To the Fund: Holland Series Fund, Inc.
c/o Holland & Company, LLC
24
<PAGE>
375 Park Avenue
New York, NY 10152
Attention: Michael J. Holland
Telephone: 212-486-2002
Telecopy: 212-486-0744
To the Custodian: State Street Bank And Trust Company
Allan Forbes Building
150 Newport Avenue, 4th Floor
North Quincy, Massachusetts 02171
Attention: Frank J. Sidoti, Jr.
Telephone: 617-985-5262
Telecopy: 617-985-6130
Such notice, instruction or other instrument shall be deemed to have been
served in the case of a registered letter at the expiration of five business
days after posting, in the case of cable twenty-four hours after dispatch and,
in the case of telex, immediately on dispatch and if delivered outside normal
business hours it shall be deemed to have been received at the next time after
delivery when normal business hours commence and in the case of cable, telex or
telecopy on the business day after the receipt thereof. Evidence that the
notice was properly addressed, stamped and put into the post shall be conclusive
evidence of posting.
Section 22. Reproduction Of Documents
-------------------------
This Agreement and all schedules, addenda, exhibits, attachments and
amendments hereto may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. Each of the
parties hereto agrees that any such reproduction shall be admissible in evidence
as the original itself in any judicial or administrative proceeding, whether or
not the original is in existence and whether or not such reproduction was made
by a party in the regular course of business, and that any enlargement,
facsimile or further reproduction of such reproduction shall likewise be
admissible in evidence.
Section 23. Data Access Services Addendum
-----------------------------
The Custodian and the Fund agree to be bound by the terms of the Data
Access Services Addendum attached hereto.
Section 24. Shareholder Communications Election
-----------------------------------
25
<PAGE>
SEC Rule 14b-2 requires banks which hold securities for the account of
customers to respond to requests by issuers of securities for the names,
addresses and holdings of beneficial owners of securities of that issuer held by
the bank unless the beneficial owner has expressly objected to disclosure of
this information. In order to comply with the rule, the Custodian needs the
Fund to indicate whether it authorizes the Custodian to provide the Fund's name,
address, and share position to requesting companies whose securities the Fund
owns. If the Fund tells the Custodian "no", the Custodian will not provide this
information to requesting companies. If the Fund tells the Custodian "yes" or
does not check either "yes" or "no" below, the Custodian is required by the rule
to treat the Fund as consenting to disclosure of this information for all
securities owned by the Fund or any funds or accounts established by the Fund.
For the Fund's protection, the Rule prohibits the requesting company from using
the Fund's name and address for any purpose other than corporate communications.
Please indicate below whether the Fund consents or objects by checking one of
the alternatives below.
YES [ ] The Custodian is authorized to release the Fund's name,
address, and share positions.
NO [ ] The Custodian is not authorized to release the Fund's name,
address, and share positions.
26
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of June 1, 1999.
Holland Series Fund, Inc. Fund Signature Attested To
By: /s/ Michael Holland By: /s/ David J. Kendall
---------------------- --------------------
Name: Michael J. Holland Name:
---------------------- --------------------
Title: President Title:
---------------------- --------------------
State Street Bank And Trust Company Signature Attested To By:
By: /s/ Ronald E. Logue By: /s/ Marc L. Parsons
------------------------ -------------------
Name: Ronald E. Logue Name: Marc L. Parsons
------------------------ -------------------
Title: Executive Vice President Title: Associate Counsel
------------------------ -------------------
27
<PAGE>
STATE STREET SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
Country Subcustodian Non-Mandatory Depositories
Argentina Citibank, N.A. --
Australia Westpac Banking Corporation --
Austria Erste Bank der Oesterreichischen --
Sparkassen AG
Bahrain British Bank of the Middle East --
(as delegate of The Hongkong and
Shanghai Banking Corporation Limited)
Bangladesh Standard Chartered Bank --
Belgium Generale de Banque --
Bermuda The Bank of Bermuda Limited --
Bolivia Banco Boliviano Americano S.A. --
Botswana Barclays Bank of Botswana Limited --
Brazil Citibank, N.A. --
Bulgaria ING Bank N.V. --
Canada State Street Trust Company Canada --
Chile Citibank, N.A. Deposito Central de
Valores S.A.
People's The Hongkong and Shanghai --
Republic Banking Corporation Limited,
of China Shanghai and Shenzhen branches
Colombia Cititrust Colombia S.A. --
Sociedad Fiduciaria
28
<PAGE>
STATE STREET SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
Country Subcustodian Non-Mandatory Depositories
Costa Rica Banco BCT S.A. --
Croatia Privredna Banka Zagreb d.d --
Cyprus The Cyprus Popular Bank Ltd. --
Czech Ceskoslovenska Obchodni --
Republic Banka, A.S.
Denmark Den Danske Bank --
Ecuador Citibank, N.A. --
Egypt National Bank of Egypt --
Estonia Hansabank --
Finland Merita Bank Limited --
France Banque Paribas --
Germany Dresdner Bank AG --
Ghana Barclays Bank of Ghana Limited --
Greece National Bank of Greece S.A. The Bank of Greece,
System for Monitoring
Transactions in
Hong Kong Standard Chartered Bank --
Hungary Citibank Budapest Rt. --
29
<PAGE>
STATE STREET SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
Country Subcustodian Non-Mandatory Depositories
Iceland Icebank Ltd.
India Deutsche Bank AG --
The Hongkong and Shanghai
Banking Corporation Limited
Indonesia Standard Chartered Bank --
Ireland Bank of Ireland --
Israel Bank Hapoalim B.M. --
Italy Banque Paribas --
Ivory Coast Societe Generale de Banques --
en Cote d'Ivoire
Jamaica Scotiabank Jamaica Trust and Merchant --
Bank Ltd.
Japan The Fuji Bank, Limited Japan Securities
Depository
Center
Sumitomo Bank, Ltd.
Jordan British Bank of the Middle East --
(as delegate of The Hongkong and
Shanghai Banking Corporation Limited)
Kenya Barclays Bank of Kenya Limited --
Republic of The Hongkong and Shanghai Banking
Korea Corporation Limited
Latvia JSC Hansabank-Latvija --
30
<PAGE>
STATE STREET SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
Country Subcustodian Non-Mandatory Depositories
Lebanon British Bank of the Middle East
(as delegate of The Hongkong and
Shanghai Banking Corporation Limited)
Lithuania Vilniaus Bankas AB --
Malaysia Standard Chartered Bank --
Malaysia Berhad
Mauritius The Hongkong and Shanghai --
Banking Corporation Limited
Mexico Citibank Mexico, S.A. --
Morocco Banque Commerciale du Maroc --
Namibia (via) Standard Bank of South Africa --
The MeesPierson N.V. --
Netherlands
New Zealand ANZ Banking Group --
(New Zealand) Limited
Norway Christiania Bank og --
Kreditkasse
Oman British Bank of the Middle East --
(as delegate of The Hongkong and
Shanghai Banking Corporation Limited)
Pakistan Deutsche Bank AG --
Peru Citibank, N.A. --
Philippines Standard Chartered Bank --
31
<PAGE>
STATE STREET SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
Country Subcustodians Non-Mandatory Depositories
Poland Citibank (Poland) S.A. --
Bank Polska Kasa Opieki S.A.
Portugal Banco Comercial Portugues --
Romania ING Bank N.V. --
Russia Credit Suisse First Boston AO, Moscow --
(as delegate of Credit Suisse
First Boston, Zurich)
Singapore The Development Bank --
of Singapore Limited
Slovak Republic Ceskoslovenska Obchodni Banka, A.S. --
Slovenia Bank Austria d.d. Ljubljana --
South Africa Standard Bank of South Africa Limited --
Spain Banco Santander, S.A. --
Sri Lanka The Hongkong and Shanghai --
Banking Corporation Limited
Swaziland Standard Bank Swaziland Limited --
Sweden Skandinaviska Enskilda Banken --
Switzerland UBS AG --
Taiwan - R.O.C. Central Trust of China --
Thailand Standard Chartered Bank --
<PAGE>
STATE STREET SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
Country Subcustodians Non-Mandatory Depositories
Trinidad & Tobago Republic Bank Limited --
Tunisia Banque Internationale Arabe de Tunisie --
Turkey Citibank, N.A. --
Ottoman Bank
Ukraine ING Bank, Ukraine --
United Kingdom State Street Bank and Trust Company, --
London Branch
Uruguay Citibank, N.A. --
Venezuela Citibank, N.A. --
Zambia Barclays Bank of Zambia Limited --
Zimbabwe Barclays Bank of Zimbabwe Limited --
Euroclear (The Euroclear System)/State Street London Limited
Cedel, S.A. (Cedel Bank, societe anonyme)/State Street London Limited
INTERSETTLE (for EASDAQ Securities)
<PAGE>
STATE STREET SCHEDULE B
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
Country Mandatory Depositories
Argentina Caja de Valores S.A.
Australia Austraclear Limited
Reserve Bank Information and
Transfer System
Austria Oesterreichische Kontrollbank AG
(Wertpapiersammelbank Division)
Belgium Caisse Interprofessionnelle de Depot et
de Virement de Titres S.A.
Banque Nationale de Belgique
Brazil Companhia Brasileira de Liquidacao e
Custodia (CBLC)
Bolsa de Valores de Rio de Janeiro
All SSB clients presently use CBLC
Central de Custodia e de Liquidacao
Financeira de Titulos
Bulgaria Central Depository AD
Bulgarian National Bank
Canada The Canadian Depository
for Securities Limited
People's Republic Shanghai Securities Central Clearing and
of China Registration Corporation
Shenzhen Securities Central Clearing
Costa Rica Central de Valores S.A. (CEVAL)
* Mandatory depositories include entities for which use is mandatory as a
matter of law or effectively mandatory as a matter of market practice.
<PAGE>
STATE STREET SCHEDULE B
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
Country Mandatory Depositories
Croatia Ministry of Finance
National Bank of Croatia
Czech Republic Stredisko cennych papiru
Czech National Bank
Denmark Vaerdipapircentralen (the Danish
Securities Center)
Egypt Misr Company for Clearing, Settlement,
and Central Depository
Estonia Eesti Vaartpaberite Keskdepositoorium
Finland The Finnish Central Securities
Depository
France Societe Interprofessionnelle
pour la Compensation des
Valeurs Mobilieres (SICOVAM)
Germany Deutsche Borse Clearing AG
Greece The Central Securities Depository
(Apothetirion Titlon AE)
Hong Kong The Central Clearing and
Settlement System
Central Money Markets Unit
Hungary The Central Depository and Clearing
House (Budapest) Ltd. (KELER)
[Mandatory for Gov't Bonds only;
SSB does not use for other securities]
* Mandatory depositories include entities for which use is mandatory as a
matter of law or effectively mandatory as a matter of market practice.
<PAGE>
STATE STREET SCHEDULE B
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
Country Mandatory Depositories
India The National Securities Depository Limited
Indonesia Bank Indonesia
Ireland Central Bank of Ireland
Securities Settlement Office
Israel The Tel Aviv Stock Exchange Clearing
House Ltd.
Bank of Israel
Italy Monte Titoli S.p.A.
Banca d'Italia
Ivory Coast Depositaire Central - Banque de Reglement
Jamaica The Jamaican Central Securities Depository
Japan Bank of Japan Net System
Kenya Central Bank of Kenya
Republic of Korea Korea Securities Depository Corporation
Latvia The Latvian Central Depository
Lebanon The Custodian and Clearing Center of
Financial Instruments for Lebanon
and the Middle East (MIDCLEAR) S.A.L.
* Mandatory depositories include entities for which user is mandatory as a
matter of law or effectively mandatory as a matter of market practice.
<PAGE>
STATE STREET SCHEDULE B
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
Country Mandatory Depositories
The Central Bank of Lebanon
Lithuania The Central Securities Depository of
Lithuania
Malaysia The Malaysian Central Depository Sdn. Bhd.
Bank Negara Malaysia,
Scripless Securities Trading and
Safekeeping
Mauritius The Central Depository & Settlement
Co. Ltd.
Mexico S.D. INDEVAL, S.A. de C.V.
(Instituto para el Deposito de
Valores)
Morocco Maroclear
The Netherlands Nederlands Centraal Instituut voor
Giraal Effectenverkeer B.V. (NECIGEF)
De Nederlandsche Bank N.V.
New Zealand New Zealand Central Securities
Depository Limited
Norway Verdipapirsentralen (the Norwegian
Registry of Securities)
Oman Muscat Securities Market
Pakistan Central Depository Company of Pakistan
Limited
Peru Caja de Valores y Liquidaciones S.A.
* Mandatory depositories include entities for which use is mandatory as a
matter of law or effectively mandatory as a matter of market practice.
<PAGE>
STATE STREET SCHEDULE B
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
Country Mandatory Depositories
(CAVALI)
Philippines The Philippines Central Depository, Inc.
The Registry of Scripless Securities
(ROSS) of the Bureau of the Treasury
Poland The National Depository of Securities
(Krajowy Depozyt Papierow Wartos'ciowych)
Central Treasury Bills Registrar
Portugal Central de Valores Mobiliarios (Central)
Romania National Securities Clearing, Settlement and
Depository Co.
Bucharest Stock Exchange Registry Division
Singapore The Central Depository (Pte)
Limited
Monetary Authority of Singapore
Slovak Republic Stredisko Cennych Papierov
National Bank of Slovakia
Slovenia Klirinsko Depotna Druzba d.d.
South Africa The Central Depository Limited
Spain Servicio de Compensacion y
Liquidacion de Valores, S.A.
* Mandatory depositories include entities for which use is mandatory as a
matter of law or effectively mandatory as a matter of market practice.
<PAGE>
STATE STREET SCHEDULE B
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
Country Mandatory Depositories
Banco de Espana,
Central de Anotaciones en Cuenta
Sri Lanka Central Depository System
(Pvt) Limited
Sweden Vardepapperscentralen AB
(the Swedish Central Securities Depository)
Switzerland Schweizerische Effekten - Giro AG
Taiwan - R.O.C. The Taiwan Securities Central
Depository Co., Ltd.
Thailand Thailand Securities Depository
Company Limited
Tunisia Societe Tunisienne Interprofessionelle de
Compensation et de Depot de
Valeurs Mobilieres
Central Bank of Tunisia
Tunisian Treasury
Turkey Takas ve Saklama Bankasi A.S.
(TAKASBANK)
Central Bank of Turkey
Ukraine The National Bank of Ukraine
United Kingdom The Bank of England,
The Central Gilts Office and
The Central Moneymarkets Office
* Mandatory depositories include entities for which use is mandatory as a
matter of law or effectively mandatory as a matter of market practice.
<PAGE>
STATE STREET SCHEDULE B
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
Country Mandatory Depositories
Uruguay Central Bank of Uruguay
Venezuela Central Bank of Venezuela
Zambia Lusaka Central Depository Limited
Bank of Zambia
* Mandatory depositories include entities for which use is mandatory as a
matter of law or effectively mandatory as a matter of market practice.
<PAGE>
SCHEDULE C
MARKET INFORMATION
Publication/Type of Information Brief Description
------------------------------- -----------------
(Frequency)
The Guide to Custody in World Markets An overview of safekeeping and
-------------------------------------
(annually) settlement practices and
procedures in each market in
which State Street Bank and Trust
Company offers custodial
services.
Global Custody Network Review Information relating to the
----------------------------- operating history and structure
(annually) of depositories and subcustodians
located in the markets in which
State Street Bank and Trust
Company offers custodial
services, including transnational
depositories.
Global Legal Survey With respect to each market in
------------------- which State Street Bank and
(annually) Trust Company offers custodial
services, opinions relating to
whether local law restricts (i)
access of a fund's independent
public accountants to books and
records of a Foreign Sub-
Custodian or Foreign Securities
System, (ii) the Fund's ability
to recover in the event of
bankruptcy or insolvency of a
Foreign Sub-Custodian or Foreign
Securities System, (iii) the
Fund's ability to recover in the
event of a loss by a Foreign Sub-
Custodian or Foreign Securities
System, and (iv) the ability of a
foreign investor to convert cash
and cash equivalents to U.S.
dollars.
Subcustodian Agreements Copies of the subcustodian
----------------------- contracts State Street Bank and
(annually) Trust Company has entered into
with each subcustodian in the
markets in which State Street
Bank and Trust Company offers
subcustody services to its US
mutual fund clients.
Network Bulletins (weekly): Developments of interest to
investors in the markets in which
State Street Bank and Trust
Company offers custodial
services.
Foreign Custody Advisories (as
necessary): With respect to markets in which
State Street Bank and Trust
Company offers custodial services
which exhibit special custody
risks, developments which may
impact State Street's ability to
deliver expected levels of
service.
<PAGE>
DATA ACCESS SERVICES ADDENDUM
-----------------------------
AGREEMENT between Holland Series Fund, Inc. (the "Customer") and State
Street Bank and Trust Company ("State Street").
PREAMBLE
WHEREAS, State Street has been appointed as custodian of certain assets of
the Customer pursuant to a certain Custodian Agreement (the "Custodian
Agreement") dated as of *[date of custodian agreement];
WHEREAS, State Street has developed and utilizes proprietary accounting and
other systems, including State Street's proprietary Multicurrency HORIZON(SM)
Accounting System, in its role as custodian of the Customer, and maintains
certain Customer-related data ("Customer Data") in databases under the control
and ownership of State Street (the "Data Access Services"); and
WHEREAS, State Street makes available to the Customer certain Data Access
Services solely for the benefit of the Customer, and intends to provide
additional services, consistent with the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, and for other good and valuable consideration, the parties
agree as follows:
1. SYSTEM AND DATA ACCESS SERVICES
(a) System. Subject to the terms and conditions of this Agreement, State
------
Street hereby agrees to provide the Customer with access to State Street's
Multicurrency HORIZON(SM) Accounting System and the other information systems
(collectively, the "System") as described in Attachment A, on a remote basis for
the purpose of obtaining reports and information, solely on computer hardware,
system software and telecommunication links as listed in Attachment B (the
"Designated Configuration") of the Customer, or certain third parties approved
by State Street that serve as investment advisors or investment managers of the
Customer or other third parties, such as the Customer's independent auditors,
which serve as service providers to the Customer (each, an "Investment
Advisor"), solely with respect to the Customer or on any designated substitute
or back-up equipment configuration with State Street's written consent, such
consent not to be unreasonably withheld.
(b) Data Access Services. State Street agrees to make available to the
--------------------
Customer the Data Access Services subject to the terms and conditions of this
Agreement and data access operating standards and procedures as may be issued by
State Street from time to time. The ability of the Customer to originate
electronic instructions to State Street on behalf of the Customer in order to
(i) effect the transfer or movement of cash or securities held under custody by
State Street or (ii) transmit accounting or other information (such transactions
are referred to herein as "Client Originated Electronic Financial
Instructions"), and (iii) access data for the purpose of reporting and analysis,
shall be deemed to be Data Access Services for purposes of this Agreement.
(c) Additional Services. State Street may from time to time agree to make
-------------------
available to the Customer additional Systems that are not described in the
attachments to this Agreement. In the absence of any other written agreement
concerning such additional systems, the term "System" shall include, and this
Agreement shall govern, the Customer's access to and use of any additional
System made available by State Street and/or accessed by the Customer.
2. NO USE OF THIRD PARTY SYSTEMS-LEVEL SOFTWARE
State Street and the Customer acknowledge that in connection with the Data
Access Services provided under this Agreement, the Customer will have access,
through the Data Access Services, to Customer Data and to functions of State
Street's proprietary systems; provided, however that in no event will the
Customer have direct access to any third party systems-level software that
retrieves data for, stores data from, or otherwise supports the System.
3. LIMITATION ON SCOPE OF USE
a. Designated Equipment; Designated Location. The System and the Data Access
-----------------------------------------
Services shall be used and accessed solely on and through the Designated
Configuration at the offices of the Customer or the Investment Advisor located
in New York, New York ("Designated Location").
<PAGE>
b. Designated Configuration; Trained Personnel. State Street shall be
-------------------------------------------
responsible for supplying, installing and maintaining the Designated
Configuration at the Designated Location. State Street and the Customer agree
that each will engage or retain the services of trained personnel to enable both
parties to perform their respective obligations under this Agreement. State
Street agrees to use commercially reasonable efforts to maintain the System so
that it remains serviceable, provided, however, that State Street does not
guarantee or assure uninterrupted remote access use of the System.
c. Scope of Use. The Customer will use the System and the Data Access Services
------------
only for the processing of securities transactions, the keeping of books of
account for the Customer and accessing data for purposes of reporting and
analysis. The Customer shall not, and shall cause its employees and agents not
to (i) permit any third party to use the System or the Data Access Services,
(ii) sell, rent, license or otherwise use the System or the Data Access Services
in the operation of a service bureau or for any purpose other than as expressly
authorized under this Agreement, (iii) use the System or the Data Access
Services for any fund, trust or other investment vehicle without the prior
written consent of State Street, (iv) allow access to the System or the Data
Access Services through terminals or any other computer or telecommunications
facilities located outside the Designated Locations, (v) allow or cause any
information (other than portfolio holdings, valuations of portfolio holdings,
and other information reasonably necessary for the management or distribution of
the assets of the Customer) transmitted from State Street's databases, including
data from third party sources, available through use of the System or the Data
Access Services to be redistributed or retransmitted to another computer,
terminal or other device for other than use for or on behalf of the Customer or
(vi) modify the System in any way, including without limitation, developing any
software for or attaching any devices or computer programs to any equipment,
system, software or database which forms a part of or is resident on the
Designated Configuration.
d. Other Locations. Except in the event of an emergency or of a planned System
---------------
shutdown, the Customer's access to services performed by the System or to Data
Access Services at the Designated Location may be transferred to a different
location only upon the prior written consent of State Street. In the event of an
emergency or System shutdown, the Customer may use any back-up site included in
the Designated Configuration or any other back-up site agreed to by State
Street, which agreement will not be unreasonably withheld. The Customer may
secure from State Street the right to access the System or the Data Access
Services through computer and telecommunications facilities or devices complying
with the Designated Configuration at additional locations only upon the prior
written consent of State Street and on terms to be mutually agreed upon by the
parties.
e. Title. Title and all ownership and proprietary rights to the System,
-----
including any enhancements or modifications thereto, whether or not made by
State Street, are and shall remain with State Street.
f. No Modification. Without the prior written consent of State Street, the
---------------
Customer shall not modify, enhance or otherwise create derivative works based
upon the System, nor shall the Customer reverse engineer, decompile or otherwise
attempt to secure the source code for all or any part of the System.
g. Security Procedures. The Customer shall comply with data access operating
-------------------
standards and procedures and with user identification or other password control
requirements and other security procedures as may be issued from time to time by
State Street for use of the System on a remote basis and to access the Data
Access Services. The Customer shall have access only to the Customer Data and
authorized transactions agreed upon from time to time by State Street and, upon
notice from State Street, the Customer shall discontinue remote use of the
System and access to Data Access Services for any security reasons cited by
State Street; provided, that, in such event, State Street shall, for a period
not less than 180 days (or such other shorter period specified by the Customer)
after such discontinuance, assume responsibility to provide accounting services
under the terms of the Custodian Agreement.
h. Inspections. State Street shall have the right to inspect the use of the
-----------
System and the Data Access Services by the Customer and the Investment Advisor
to ensure compliance with this Agreement. The on-site inspections shall be upon
prior written notice to the Customer and the Investment Advisor and at
reasonably convenient times and frequencies so as not to result in an
unreasonable disruption of the Customer's or the Investment Advisor's business.
4. PROPRIETARY INFORMATION
a. Proprietary Information. The Customer acknowledges and State Street
-----------------------
represents that the System and the databases, computer programs, screen formats,
report formats, interactive design techniques, documentation and other
information made available to the Customer by State Street as part of the Data
Access Services and through the use of the System constitute copyrighted, trade
secret, or other proprietary information of substantial value to State Street.
Any and all such information provided by State Street to the Customer shall be
deemed proprietary and confidential information of State Street (hereinafter
"Proprietary Information"). The Customer agrees that it will hold such
Proprietary Information in the strictest confidence and secure and protect it in
a manner consistent with its own procedures for the protection of its own
confidential information and to take appropriate action by instruction or
agreement with its employees who are permitted access to the Proprietary
Information
<PAGE>
to satisfy its obligations hereunder. The Customer further acknowledges that
State Street shall not be required to provide the Investment Advisor with access
to the System unless it has first received from the Investment Advisor an
undertaking with respect to State Street's Proprietary Information in the form
of Attachment C to this Agreement. The Customer shall use all commercially
reasonable efforts to assist State Street in identifying and preventing any
unauthorized use, copying or disclosure of the Proprietary Information or any
portions thereof or any of the logic, formats or designs contained therein.
b. Cooperation. Without limitation of the foregoing, the Customer shall
-----------
advise State Street immediately in the event the Customer learns or has reason
to believe that any person to whom the Customer has given access to the
Proprietary Information, or any portion thereof, has violated or intends to
violate the terms of this Agreement, and the Customer will, at its expense,
co-operate with State Street in seeking injunctive or other equitable relief in
the name of the Customer or State Street against any such person.
c. Injunctive Relief. The Customer acknowledges that the disclosure of
-----------------
any Proprietary Information, or of any information which at law or equity ought
to remain confidential, will immediately give rise to continuing irreparable
injury to State Street inadequately compensable in damages at law. In addition,
State Street shall be entitled to obtain immediate injunctive relief against the
breach or threatened breach of any of the foregoing undertakings, in addition to
any other legal remedies which may be available.
d. Survival. The provisions of this Section 4 shall survive the
--------
termination of this Agreement.
5. LIMITATION ON LIABILITY
a. Limitation on Amount and Time for Bringing Action. The Customer agrees
-------------------------------------------------
that any liability of State Street to the Customer or any third party arising
out of State Street's provision of Data Access Services or the System under this
Agreement shall be limited to the amount paid by the Customer for the preceding
24 months for such services. In no event shall State Street be liable to the
Customer or any other party for any special, indirect, punitive or consequential
damages even if advised of the possibility of such damages. No action,
regardless of form, arising out of this Agreement may be brought by the Customer
more than two years after the Customer has knowledge that the cause of action
has arisen.
b. Limited Warranties. NO OTHER WARRANTIES, WHETHER EXPRESS OR IMPLIED,
------------------
INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE, ARE MADE BY STATE STREET.
c. Third-Party Data. Organizations from which State Street may obtain
----------------
certain data included in the System or the Data Access Services are solely
responsible for the contents of such data, and State Street shall have no
liability for claims arising out of the contents of such third-party data,
including, but not limited to, the accuracy thereof.
d. Regulatory Requirements. As between State Street and the Customer, the
----------------------
Customer shall be solely responsible for the accuracy of any accounting
statements or reports produced using the Data Access Services and the System and
the conformity thereof with any requirements of law.
e. Force Majeure. Neither party shall be liable for any costs or damages
-------------
due to delay or nonperformance under this Agreement arising out of any cause or
event beyond such party's control, including without limitation, cessation of
services hereunder or any damages resulting therefrom to the other party, or the
Customer as a result of work stoppage, power or other mechanical failure,
computer virus, natural disaster, governmental action, or communication
disruption.
6. INDEMNIFICATION
The Customer agrees to indemnify and hold State Street harmless from any loss,
damage or expense including reasonable attorney's fees, (a "loss") suffered by
State Street arising from (i) the negligence or willful misconduct in the use by
the Customer of the Data Access Services or the System, including any loss
incurred by State Street resulting from a security breach at the Designated
Location or committed by the Customer's employees or agents or the Investment
Advisor and (ii) any loss resulting from incorrect Client Originated Electronic
Financial Instructions. State Street shall be entitled to rely on the validity
and authenticity of Client Originated Electronic Financial Instructions without
undertaking any further inquiry as long as such instruction is undertaken in
conformity with security procedures established by State Street from time to
time.
7. FEES
Fees and charges for the use of the System and the Data Access Services and
related payment terms shall be as set forth in the Custody Fee Schedule in
effect from time to time between the parties (the "Fee Schedule"). Any tariffs,
duties or taxes imposed or levied by any government or governmental agency by
reason of the transactions contemplated by this Agreement, including,
<PAGE>
without limitation, federal, state and local taxes, use, value added and
personal property taxes (other than income, franchise or similar taxes which may
be imposed or assessed against State Street) shall be borne by the Customer. Any
claimed exemption from such tariffs, duties or taxes shall be supported by
proper documentary evidence delivered to State Street.
8. TRAINING, IMPLEMENTATION AND CONVERSION
a. Training. State Street agrees to provide training, at a designated
--------
State Street training facility or at the Designated Location, to the Customer's
personnel in connection with the use of the System on the Designated
Configuration. The Customer agrees that it will set aside, during regular
business hours or at other times agreed upon by both parties, sufficient time to
enable all operators of the System and the Data Access Services, designated by
the Customer, to receive the training offered by State Street pursuant to this
Agreement.
b. Installation and Conversion. State Street shall be responsible for the
---------------------------
technical installation and conversion ("Installation and Conversion") of the
Designated Configuration. The Customer shall have the following responsibilities
in connection with Installation and Conversion of the System:
(i) The Customer shall be solely responsible for the timely acquisition
and maintenance of the hardware and software that attach to the
Designated Configuration in order to use the Data Access Services at
the Designated Location.
(ii) State Street and the Customer each agree that they will assign
qualified personnel to actively participate during the Installation
and Conversion phase of the System implementation to enable both
parties to perform their respective obligations under this Agreement.
9. SUPPORT
During the term of this Agreement, State Street agrees to provide the
support services set out in Attachment D to this Agreement.
10. TERM OF AGREEMENT
a. Term of Agreement. This Agreement shall become effective on the date
-----------------
of its execution by State Street and shall remain in full force and effect until
terminated as herein provided.
b. Termination of Agreement. Either party may terminate this Agreement
------------------------
(i) for any reason by giving the other party at least one-hundred and eighty
days' prior written notice in the case of notice of termination by State Street
to the Customer or thirty days' notice in the case of notice from the Customer
to State Street of termination; or (ii) immediately for failure of the other
party to comply with any material term and condition of the Agreement by giving
the other party written notice of termination. In the event the Customer shall
cease doing business, shall become subject to proceedings under the bankruptcy
laws (other than a petition for reorganization or similar proceeding) or shall
be adjudicated bankrupt, this Agreement and the rights granted hereunder shall,
at the option of State Street, immediately terminate with notice to the
Customer. This Agreement shall in any event terminate as to any Customer within
90 days after the termination of the Custodian Agreement applicable to such
Customer.
c. Termination of the Right to Use. Upon termination of this Agreement
-------------------------------
for any reany right to use the System and access to the Data Access Services
shall terminate and the Customer shall immediately cease use of the System and
the Data Access Services. Immediately upon termination of this Agreement for any
reason, the Customer shall return to State Street all copies of documentation
and other Proprietary Information in its possession; provided, however, that in
the event that either party terminates this Agreement or the Custodian Agreement
for any reason other than the Customer's breach, State Street shall provide the
Data Access Services for a period of time and at a price to be agreed upon by
the parties.
11. MISCELLANEOUS
a. Assignment; Successors. This Agreement and the rights and obligations
----------------------
of the Customer and State Street hereunder shall not be assigned by either party
without the prior written consent of the other party, except that State Street
may assign this Agreement to a successor of all or a substantial portion of its
business, or to a party controlling, controlled by, or under common control with
State Street.
b. Survival. All provisions regarding indemnification, warranty,
--------
liability and limits thereon, and confidentiality and/or protection of
proprietary rights and trade secrets shall survive the termination of this
Agreement.
<PAGE>
c. Entire Agreement. This Agreement and the attachments hereto constitute
----------------
the entire understanding of the parties hereto with respect to the Data Access
Services and the use of the System and supersedes any and all prior or
contemporaneous representations or agreements, whether oral or written, between
the parties as such may relate to the Data Access Services or the System, and
cannot be modified or altered except in a writing duly executed by the parties.
This Agreement is not intended to supersede or modify the duties and liabilities
of the parties hereto under the Custodian Agreement or any other agreement
between the parties hereto except to the extent that any such agreement
specifically refers to the Data Access Services or the System. No single waiver
of any right hereunder shall be deemed to be a continuing waiver.
d. Severability. If any provision or provisions of this Agreement shall
------------
be held to be invalid, unlawful, or unenforceable, the validity, legality, and
enforceability of the remaining provisions shall not in any way be affected or
impaired.
e. Governing Law. This Agreement shall be interpreted and construed in
-------------
accordance with the internal laws of The Commonwealth of Massachusetts without
regard to the conflict of laws provisions thereof.
<PAGE>
ATTACHMENT A*
Multicurrency HORIZON(SM) Accounting System
System Product Description
--------------------------
I. The Multicurrency HORIZON(SM) Accounting System is designed to provide lot
level portfolio and general ledger accounting for SEC and ERISA type
requirements and includes the following services: 1) recording of general ledger
entries; 2) calculation of daily income and expense; 3) reconciliation of daily
activity with the trial balance, and 4) appropriate automated feeding mechanisms
to (i) domestic and international settlement systems, (ii) daily, weekly and
monthly evaluation services, (iii) portfolio performance and analytic services,
(iv) customer's internal computing systems and (v) various State Street provided
information services products.
II. GlobalQuest(R) is designed to provide customer access to the following
information maintained on The Multicurrency HORIZON(SM) Accounting System: 1)
cash transactions and balances; 2) purchases and sales; 3) income receivables;
4) tax refund receivables; 5) daily priced positions; 6) open trades; 7)
settlement status; 8) foreign exchange transactions; 9) trade history, and 10)
daily, weekly and monthly evaluation services.
III. HORIZON(R) Gateway. HORIZON(R) Gateway provides customers with the ability
------------------
to (i) generate reports using information maintained on the Multicurrency
HORIZON(R) Accounting System which may be viewed or printed at the customer's
location; (ii) extract and download data from the Multicurrency HORIZON(R)
Accounting System; and (iii) access previous day and historical data. The
following information which may be accessed for these purposes: 1) holdings; 2)
holdings pricing; 3) transactions, 4) open trades; 5) income; 6) general ledger
and 7) cash.
IV. SaFiRe(SM). SaFiRe(SM) is designed to provide the customer with the ability
------
to prepare its own financial reports by permitting the customer to access
customer information maintained on the Multicurrency HORIZON(R) Accounting
System, to organize such information in a flexible reporting format and to have
such reports printed on the customer's desktop or by its printing provider.
V. State Street Interchange. State Street Interchange is an open information
------------------------
delivery architecture wherein proprietary communication products, data formats
and workstation tools are replaced by industry standards and is designed to
enable the connection of State Street's network to customer networks, thereby
facilitating the sharing of information.
____________________
* Select systems
<PAGE>
ATTACHMENT B
*Designated Configuration
<PAGE>
ATTACHMENT C
Undertaking
The Undersigned understands that in the course of its employment as
Investment Advisor to Holland Series Fund, Inc. (the "Customer") it will have
access to State Street Bank and Trust Company's ("State Street") Multicurrency
HORIZON(SM) Accounting System and other information systems (collectively, the
"System").
The Undersigned acknowledges that the System and the databases, computer
programs, screen formats, report formats, interactive design techniques,
documentation and other information made available to the Undersigned by State
Street as part of the Data Access Services provided to the Customer and through
the use of the System constitute copyrighted, trade secret, or other proprietary
information of substantial value to State Street. Any and all such information
provided by State Street to the Undersigned shall be deemed proprietary and
confidential information of State Street (hereinafter "Proprietary
Information"). The Undersigned agrees that it will hold such Proprietary
Information in confidence and secure and protect it in a manner consistent with
its own procedures for the protection of its own confidential information and to
take appropriate action by instruction or agreement with its employees who are
permitted access to the Proprietary Information to satisfy its obligations
hereunder.
The Undersigned will not attempt to intercept data, gain access to data in
transmission, or attempt entry into any system or files for which it is not
authorized. It will not intentionally adversely affect the integrity of the
System through the introduction of unauthorized code or data, or through
unauthorized deletion.
Upon notice by State Street for any reason, any right to use the System and
access to the Data Access Services shall terminate and the Undersigned shall
immediately cease use of the System and the Data Access Services. Immediately
upon notice by State Street for any reason, the Undersigned shall return to
State Street all copies of documentation and other Proprietary Information in
its possession.
HOLLAND & COMPANY, L.L.C.
By:________________________________
Title:_____________________________
Date:______________________________
<PAGE>
Undertaking
The Undersigned understands that in the course of its employment as *[list
service provider role, for example, independent auditor] to Holland Series Fund,
Inc. (the "Customer") it will have access to State Street Bank and Trust
Company's ("State Street") Multicurrency HORIZON(SM) Accounting System and other
information systems (collectively, the "System").
The Undersigned acknowledges that the System and the databases, computer
programs, screen formats, report formats, interactive design techniques,
documentation and other information made available to the Undersigned by State
Street as part of the Data Access Services provided to the Customer and through
the use of the System constitute copyrighted, trade secret, or other proprietary
information of substantial value to State Street. Any and all such information
provided by State Street to the Undersigned shall be deemed proprietary and
confidential information of State Street (hereinafter "Proprietary
Information"). The Undersigned agrees that it will hold such Proprietary
Information in confidence and secure and protect it in a manner consistent with
its own procedures for the protection of its own confidential information and to
take appropriate action by instruction or agreement with its employees who are
permitted access to the Proprietary Information to satisfy its obligations
hereunder.
The Undersigned will not attempt to intercept data, gain access to data in
transmission, or attempt entry into any system or files for which it is not
authorized. It will not intentionally adversely affect the integrity of the
System through the introduction of unauthorized code or data, or through
unauthorized deletion.
Upon notice by State Street for any reason, any right to use the System and
access to the Data Access Services shall terminate and the Undersigned shall
immediately cease use of the System and the Data Access Services. Immediately
upon notice by State Street for any reason, the Undersigned shall return to
State Street all copies of documentation and other Proprietary Information in
its possession.
*[NAME OF SERVICE PROVIDER]
By:________________________________
Title:_____________________________
Date:______________________________
<PAGE>
ATTACHMENT D
Support
During the term of this Agreement, State Street agrees to provide the
following on-going support services:
a. Telephone Support. The Customer Designated Persons may contact State
-----------------
Street's Multicurrency HORIZON(SM) Help Desk and Customer Assistance Center
between the hours of 8 a.m. and 6 p.m. (Eastern time) on all business days for
the purpose of obtaining answers to questions about the use of the System, or to
report apparent problems with the System. From time to time, the Customer shall
provide to State Street a list of persons, not to exceed five in number, who
shall be permitted to contact State Street for assistance (such persons being
referred to as "the Customer Designated Persons").
b. Technical Support. State Street will provide technical support to
-----------------
assist the Customer in using the System and the Data Access Services. The total
amount of technical support provided by State Street shall not exceed 10
resource days per year. State Street shall provide such additional technical
support as is expressly set forth in the fee schedule in effect from time to
time between the parties (the "Fee Schedule"). Technical support, including
during installation and testing, is subject to the fees and other terms set
forth in the Fee Schedule.
c. Maintenance Support. State Street shall use commercially reasonable
-------------------
efforts to correct system functions that do not work according to the System
Product Description as set forth on Attachment A in priority order in the next
scheduled delivery release or otherwise as soon as is practicable.
d. System Enhancements. State Street will provide to the Customer any
-------------------
enhancements to the System developed by State Street and made a part of the
System; provided that, sixty (60) days prior to installing any such enhancement,
State Street shall notify the Customer and shall offer the Customer reasonable
training on the enhancement. Charges for system enhancements shall be as
provided in the Fee Schedule. State Street retains the right to charge for
related systems or products that may be developed and separately made available
for use other than through the System.
e. Custom Modifications. In the event the Customer desires custom
--------------------
modifications in connection with its use of the System, the Customer shall make
a written request to State Street providing specifications for the desired
modification. Any custom modifications may be undertaken by State Street in its
sole discretion in accordance with the Fee Schedule.
f. Limitation on Support. State Street shall have no obligation to
---------------------
support the Customer's use of the System: (i) for use on any computer equipment
or telecommunication facilities which does not conform to the Designated
Configuration or (ii) in the event the Customer has modified the System in
breach of this Agreement.
<PAGE>
EXHIBIT 99.(H)(5)
ADMINISTRATION AGREEMENT
Agreement dated as of June 1, 1999 by and between State Street Bank
and Trust Company, a Massachusetts trust company (the "Administrator"), and
Holland Series Fund, Inc., a Maryland corporation (the "Company").
WHEREAS, the Company is registered as an open-end, management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Company desires to retain the Administrator to furnish
certain administrative services to the Company, and the Administrator is willing
to furnish such services, on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto agree as follows:
1. Appointment of Administrator
The Company hereby appoints the Administrator to act as administrator
with respect to the Company for purposes of providing certain administrative
services for the period and on the terms set forth in this Agreement. The
Administrator accepts such appointment and agrees to render the services stated
herein for the compensation stated herein.
The Company offers shares of one series of its common stock and will
initially consist of the portfolio (an "Investment Fund") listed in Schedule A
to this Agreement. In the event that the Company establishes one or more
additional Investment Funds with respect to which it wishes to retain the
Administrator to act as administrator hereunder, the Company shall notify the
Administrator in writing. Upon written acceptance by the Administrator, such
Investment Fund shall become subject to the provisions of this Agreement to the
same extent as the existing Investment Funds, except to the extent that such
provisions (including those relating to the compensation and expenses payable by
the Company and its Investment Funds) may be modified with respect to each
additional Investment Fund in writing by the Company and the Administrator at
the time of the addition of the Investment Fund.
2. Delivery of Documents
The Company will promptly deliver to the Administrator copies of each
of the following documents and all future amendments and supplements, if any:
a. The Company's Articles of Incorporation and by-laws;
b. The Company's currently effective registration statement under
the Securities Act of 1933, as amended (the "1933 Act"), and the
1940 Act and the Company's Prospectus(es) and Statement(s) of
Additional Information relating to all Investment Funds and all
amendments and supplements thereto as in effect from time to
time;
<PAGE>
c. Certified copies of the resolutions of the Board of Directors of
the Company (the "Board") authorizing (1) the Company to enter
into this Agreement and (2) certain individuals on behalf of the
Company to (a) give instructions to the Administrator pursuant to
this Agreement and (b) sign checks and pay expenses;
d. A copy of the investment advisory agreement between the Company
and its investment adviser; and
e. Such other certificates, documents or opinions which the
Administrator may, in its reasonable discretion, deem necessary
or appropriate in the proper performance of its duties.
3. Representations and Warranties of the Administrator
The Administrator represents and warrants to the Company that:
a. It is a Massachusetts trust company, duly organized and existing
under the laws of The Commonwealth of Massachusetts;
b. It has the corporate power and authority to carry on its business
in The Commonwealth of Massachusetts;
c. All requisite corporate proceedings have been taken to authorize
it to enter into and perform this Agreement;
d. No legal or administrative proceedings have been instituted or
threatened which would impair the Administrator's ability to
perform its duties and obligations under this Agreement; and
e. Its entrance into this Agreement shall not cause a material
breach or be in material conflict with any other agreement or
obligation of the Administrator or any law or regulation
applicable to it.
4. Representations and Warranties of the Company
The Company represents and warrants to the Administrator that:
a. It is a corporation, duly organized, existing and in good
standing under the laws of State of Maryland
b. It has the corporate power and authority under applicable laws
and by its charter and by-laws to enter into and perform this
Agreement;
c. All requisite proceedings have been taken to authorize it to
enter into and perform this Agreement;
2
<PAGE>
d. It is an investment company properly registered under the 1940
Act;
e. A registration statement under the 1933 Act and the 1940 Act has
been filed and will be effective and remain effective during the
term of this Agreement. The Company also warrants to the
Administrator that as of the effective date of this Agreement,
all necessary filings under the securities laws of the states in
which the Company offers or sells its shares have been made;
f. No legal or administrative proceedings have been instituted or
threatened which would impair the Company's ability to perform
its duties and obligations under this Agreement;
g. Its entrance into this Agreement will not cause a material breach
or be in material conflict with any other agreement or obligation
of the Company or any law or regulation applicable to it; and
h. As of the close of business on the date of this Agreement, the
Company is authorized to issue shares of its common stock, par
value $0.01 per share, and it will initially offer shares, in the
authorized amounts as set forth in Schedule A to this Agreement.
5. Administration Services
The Administrator shall provide the following services, in each case,
subject to the control, supervision and direction of the Company and the review
and comment by the Company's auditors and legal counsel and in accordance with
procedures which may be established from time to time between the Company and
the Administrator:
a. Oversee the determination and publication of the Company's net
asset value in accordance with the Company's policy as adopted
from time to time by the Board;
b. Oversee the maintenance by the Company's custodian of certain
books and records of the Company as required under Rule 31a-1(b)
of the 1940 Act;
c. Prepare the Company's federal, state and local income tax returns
for review by the Company's independent accountants and filing by
the Company's treasurer;
d. Review calculation, submit for approval by officers of the
Company and arrange for payment of the Company's expenses;
e. Prepare for review and approval by officers of the Company
financial information for the Company's semi-annual and annual
reports, proxy statements and other communications required or
otherwise to be sent to Company shareholders, and arrange for the
printing and dissemination of such reports and communications to
shareholders;
3
<PAGE>
f. Prepare for review by an officer of and legal counsel for the
Company the Company's periodic financial reports required to be
filed with the Securities and Exchange Commission ("SEC") on Form
N-SAR and financial information required by Form N-1A and such
other reports, forms or filings as may be mutually agreed upon;
g. Prepare reports relating to the business and affairs of the
Company as may be mutually agreed upon and not otherwise prepared
by the Company's investment adviser, custodian, legal counsel or
independent accountants;
h. Coordinate the reporting and other services of the Independent
Accountants and make such reports and recommendations to the
Board concerning the performance of the independent accountants
as the Board may reasonably request;
i. Coordinate the reporting of the Company's distributor and
transfer and dividend disbursing agent ("Transfer Agent");
j. Monitor the performance of the Company's custodian and make such
reports and recommendations to the Board concerning the
performance and fees of the Company's custodian as the Board may
reasonably request or deems appropriate;
k. Oversee and review calculations of fees paid to the Company's
investment adviser, custodian, distributor and Transfer Agent;
l. Consult with the Company's officers, independent accountants,
legal counsel, custodian and Transfer Agent in establishing the
accounting policies of the Company;
m. Respond to, or refer to the Company's officers, distributor or
Transfer Agent, shareholder inquiries relating to the Company;
n. Provide monitoring and periodic testing of portfolios to assist
the Company's investment adviser in complying with: Internal
Revenue Code mandatory qualification requirements, the
requirements of the 1940 Act and Company prospectus limitations
as may be mutually agreed upon;
o. Review and provide assistance on shareholder communications;
p. Maintain general corporate calendar;
q. Maintain copies of the Company's charter and by-laws;
r. File annual and semi-annual shareholder reports with the
appropriate regulatory agencies; review text of "President's
letters" to shareholders and "Management's Discussion of Company
Performance" (which shall also be subject to review by the
Company's legal counsel);
4
<PAGE>
s. Organize, attend and prepare minutes of shareholder meetings;
t. Provide consultation on regulatory matters relating to portfolio
management, Company operations and any potential changes in the
Company's investment policies, operations or structure; act as
liaison to legal counsel to the Company and, where applicable, to
legal counsel to the Company's independent Board members;
u. Maintain continuing awareness of significant emerging regulatory
and legislative developments which may affect the Company, update
the Board and the investment adviser on those developments and
provide related planning assistance where requested or
appropriate;
v. Monitor the Company's compliance program with respect to the
Internal Revenue Code, the 1940 Act and the prospectus and
develop or assist in developing guidelines and procedures to
improve overall compliance by the Company and its various agents;
w. Counsel and assist the Company in the handling of routine
regulatory examinations and work closely with the Company's legal
counsel in response to any non-routine regulatory matters;
x. Collect, review and summarize significant reports from other
service providers, prepare monthly administrative report which
will include a compliance summary and performance calculations,
prepare quarterly financial statements which will include: the
Statement of Assets and Liabilities, Statement of Operations,
Statement of Changes in Net Assets and expense and portfolio
turnover ratios and review holdings reconciliations between the
Company's custodian and fund accounting agent and promptly report
any discrepancies to the Company's officers or the Board;
y. Calculate and disseminate statistical research data to relevant
publications and media;
Subject to review and comment by the Company's legal counsel:
z. Prepare and file with the SEC amendments to the Company's
registration statement, including updating the Prospectus and
Statement of Additional Information, where applicable;
aa. Prepare and file with the SEC proxy statements; provide
consultation on proxy solicitation matters;
bb. Prepare agenda and background materials for Board meetings,
make presentations where appropriate, prepare minutes and follow-
up on matters raised at Board meetings;
5
<PAGE>
cc. Prepare and file with the SEC Rule 24f-2 notices; and
dd. Perform Blue Sky services pursuant to the specific
instructions of the Company and as detailed in Schedule B to this
Agreement.
The Administrator shall, at its own expense, provide the office facilities and,
if requested by the Company, facilities within State Street offices for meetings
of the Company's board of directors and shareholders and the personnel required
by it to perform the services contemplated herein.
6. Fees; Expenses; Expense Reimbursement
The Administrator shall receive from the Company such compensation for
the Administrator's services provided pursuant to this Agreement as may be
agreed to from time to time in a written fee schedule approved by the parties
and initially set forth in the Fee Schedule to this Agreement. The fees are
accrued daily and billed monthly and shall be due and payable upon receipt of
the invoice. Upon the termination of this Agreement before the end of any month,
the fee for the part of the month before such termination shall be prorated
according to the proportion which such part bears to the full monthly period and
shall be payable upon the date of termination of this Agreement. In addition,
the Company shall reimburse the Administrator for its reasonable out-of-pocket
costs incurred in connection with this Agreement.
The Company agrees promptly to reimburse the Administrator for any
equipment and supplies specially ordered by or for the Company through the
Administrator and for any other expenses not contemplated by this Agreement that
the Administrator may incur on the Company's behalf at the Company's request or
with the Company's consent.
The Company will bear all expenses that are incurred in its operation
and not specifically assumed by the Administrator. Expenses to be borne by the
Company, include, but are not limited to: organizational expenses; cost of
services of independent accountants and outside legal and tax counsel (including
such counsel's review of the Company's registration statement, proxy materials,
federal and state tax qualification as a regulated investment company and other
reports and materials prepared by the Administrator under this Agreement); cost
of any services contracted for by the Company directly from parties other than
the Administrator; cost of trading operations and brokerage fees, commissions
and transfer taxes in connection with the purchase and sale of securities for
the Company; investment advisory fees; taxes, insurance premiums and other fees
and expenses applicable to its operation; costs incidental to any meetings of
shareholders including, but not limited to, legal and accounting fees, proxy
filing fees and the costs of preparation, printing and mailing of any proxy
materials; costs incidental to Board meetings, including fees and expenses of
Board members; the salary and expenses of any officer, director or employee of
the Company; costs incidental to the preparation, printing and distribution of
the Company's registration statements and any amendments thereto and shareholder
reports; cost of typesetting and printing of prospectuses; cost of preparation
and filing of the Company's tax returns, Form N-1A or N-2 and Form N-SAR, and
all notices, registrations and amendments associated with applicable federal and
state tax and securities laws; all applicable registration fees and filing fees
required under federal and state securities laws; fidelity bond and directors'
and officers' liability insurance; and cost of independent pricing services used
in computing the Company's net asset value.
6
<PAGE>
The Administrator is authorized to and may employ or associate with
such person or persons as the Administrator may deem desirable to assist it in
performing its duties under this Agreement; provided, however, that the
compensation of such person or persons shall be paid by the Administrator and
that the Administrator shall be as fully responsible to the Company for the acts
and omissions of any such person or persons as it is for its own acts and
omissions.
7. Instructions and Advice
At any time, the Administrator may apply to any officer of the Company
for instructions and may consult with outside counsel for the Company or the
independent accountants for the Company at the expense of the Company, with
respect to any matter arising in connection with the services to be performed by
the Administrator under this Agreement. The Administrator shall not be liable,
and shall be indemnified by the Company, for any action taken or omitted by it
in good faith in reliance upon any such instructions or advice or upon any paper
or document reasonably believed by it to be genuine and to have been signed by
the proper person or persons. The Administrator shall not be held to have notice
of any change of authority of any person until receipt of written notice thereof
from the Company. Nothing in this paragraph shall be construed as imposing upon
the Administrator any obligation to seek such instructions or advice, or to act
in accordance with such advice when received.
8. Limitation of Liability and Indemnification
The Administrator shall be responsible for the performance of only
such duties as are set forth in this Agreement and that are mutually agreed upon
by the Company and the Administrator. Except as otherwise provided under Section
6, the Administrator shall have no responsibility for the actions or activities
of any other party, including other service providers. The Administrator shall
have no liability for any error of judgment or mistake of law or for any loss or
damage resulting from the performance or nonperformance of its duties hereunder
unless caused by or resulting from the gross negligence or willful misconduct of
the Administrator, its officers or employees. The Administrator shall not be
liable for any special, indirect, incidental, or consequential damages of any
kind whatsoever (including, without limitation, attorneys' fees) under any
provision of this Agreement or for any such damages arising out of any act or
failure to act hereunder. In any event, the Administrator's liability under this
Agreement shall be limited to its total annual compensation earned and fees paid
hereunder during the preceding twelve months for any liability or loss suffered
by the Company including, but not limited to, any liability relating to
qualification of the Company as a regulated investment company or any liability
relating to the Company's compliance with any federal or state tax or securities
statute, regulation or ruling.
The Administrator shall not be responsible or liable for any failure
or delay in performance of its obligations under this Agreement arising out of
or caused, directly or indirectly, by circumstances beyond its reasonable
control, including without limitation, work stoppage, power or other mechanical
failure, computer virus, natural disaster, governmental action or communication
disruption.
The Company shall indemnify and hold the Administrator harmless from
all loss, cost, damage and expense, including reasonable fees and expenses for
counsel, incurred by the Administrator resulting from any claim, demand, action
or suit in connection with the Administrator's acceptance of this Agreement, any
action or omission by it in the performance of its duties hereunder, or as a
result of acting upon any instructions reasonably believed by it to have been
duly authorized by the Company, provided
7
<PAGE>
that this indemnification shall not apply to actions or omissions of the
Administrator, its officers or employees in cases of its or their own gross
negligence or willful misconduct.
The Administrator shall give the Company prompt written notice of any
claim, demand, action or suit which may give rise to any indemnity obligation
under this Section 8 and the Company shall have the right to assume the defense
thereof through counsel of its choice by so notifying the Administrator,
provided that failure to give prompt notice shall not affect the indemnification
obligations of the Company except to the extent that such failure actually
prejudices the Company. The Administrator may, at its sole cost and expense,
participate in any such defense assumed by the Company. No settlement shall be
made by the Company without the prior written consent of the Administrator,
which consent shall not be unreasonably withheld or delayed, except a settlement
that involves only the payment of damages, includes an unconditional release of
the Administrator and non- disclosure agreement.
The indemnification contained herein shall survive the termination of
this Agreement.
9. Confidentiality
The Administrator agrees that, except as otherwise required by law or
in connection with any required disclosure to a banking or other regulatory
authority, it will keep confidential all records and information in its
possession relating to the Company or its shareholders or shareholder accounts
and will not disclose the same to any person except at the request or with the
written consent of the Company.
10. Compliance with Governmental Rules and Regulations; Records
The Company assumes full responsibility for complying with all
securities, tax, commodities and other laws, rules and regulations applicable to
it, except to the extent that the Administrator specifically assumes any such
obligations to take action under the terms of the Agreement.
In compliance with the requirements of Rule 31a-3 under the 1940 Act,
the Administrator agrees that all records which it maintains for the Company
shall at all times remain the property of the Company, shall be readily
accessible during normal business hours, and shall be promptly surrendered upon
the termination of the Agreement or otherwise on written request. The
Administrator further agrees that all records which it maintains for the Company
pursuant to Rule 31a-1 under the 1940 Act will be preserved for the periods
prescribed by Rule 31a-2 under the 1940 Act unless any such records are earlier
surrendered as provided above. Records shall be surrendered in usable machine-
readable form.
11. Services Not Exclusive
The services of the Administrator to the Company are not to be deemed
exclusive, and the Administrator shall be free to render similar services to
others. The Administrator shall be deemed to be an independent contractor and
shall, unless otherwise expressly provided herein or authorized by the Company
from time to time, have no authority to act or represent the Company in any way
or otherwise be deemed an agent of the Company.
8
<PAGE>
12. Term, Termination and Amendment
This Agreement shall become effective on the date of its execution and
shall remain in full force and effect for a period of two years from the
effective date and shall automatically continue in full force and effect after
such initial term unless either party terminates this Agreement by written
notice to the other party at least sixty (60) days prior to the expiration of
the initial term. Either party may terminate this Agreement at any time after
the initial term upon at least sixty (60) days' prior written notice to the
other party. Termination of this Agreement with respect to any given Investment
Fund shall in no way affect the continued validity of this Agreement with
respect to any other Investment Fund. Upon termination of this Agreement, the
Company shall pay to the Administrator such compensation and any reimbursable
expenses as may be due under the terms hereof as of the date of such
termination, including reasonable out-of-pocket expenses associated with such
termination. This Agreement may be modified or amended from time to time by
mutual written agreement of the parties hereto.
13. Notices
Any notice or other communication authorized or required by this
Agreement to be given to either party shall be in writing and deemed to have
been given when delivered in person or by confirmed facsimile, or posted by
certified mail, return receipt requested, to the following address (or such
other address as a party may specify by written notice to the other): if to the
Company: Holland Series Fund, Inc., c/o Holland & Company, L.L.C., 375 Park Ave.
New York, New York 10152, Attn: Michael Holland, fax: 212-486-0744; if to the
Administrator: State Street Bank and Trust Company, 1776 Heritage Drive, AFB-4,
North Quincy, Massachusetts 02171, Attn: Fund Administration Legal Department,
fax: 617-537-2578.
14. Non-Assignability
This Agreement shall not be assigned by either party hereto without
the prior consent in writing of the other party, except that the Administrator
may assign this Agreement to a successor of all or a substantial portion of its
business, or to a party controlling, controlled by or under common control with
the Administrator.
15. Successors
This Agreement shall be binding on and shall inure to the benefit of
the Company and the Administrator and their respective successors and permitted
assigns.
16. Entire Agreement
This Agreement contains the entire understanding between the parties
hereto with respect to the subject matter hereof and supersedes all previous
representations, warranties or commitments regarding the services to be
performed hereunder whether oral or in writing.
17. Waiver
The failure of a party to insist upon strict adherence to any term of
this Agreement on any occasion shall not be considered a waiver nor shall it
deprive such party of the right thereafter to insist
9
<PAGE>
upon strict adherence to that term or any term of this Agreement. Any waiver
must be in writing signed by the waiving party.
18. Severability
If any provision of this Agreement is invalid or unenforceable, the
balance of the Agreement shall remain in effect, and if any provision is
inapplicable to any person or circumstance it shall nevertheless remain
applicable to all other persons and circumstances.
19. Governing Law
This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of The State of New York.
20. Reproduction of Documents
This Agreement and all schedules, exhibits, attachments and amendments
hereto may be reproduced by any photographic, photostatic, microfilm, micro-
card, miniature photographic or other similar process. The parties hereto
all/each agree that any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding, whether or not the
original is in existence and whether or not such reproduction was made by a
party in the regular course of business, and that any enlargement, facsimile or
further reproduction of such reproduction shall likewise be admissible in
evidence.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the date first written above.
HOLLAND SERIES FUND, INC.
/s/ Michael Holland
By: ________________________________
Name: Michael Holland
--------------------------------
Title: President
--------------------------------
STATE STREET BANK AND TRUST COMPANY
/s/ Kathleen Cuocolo
By: ________________________________
Name: Kathleen C. Cuocolo
--------------------------------
Title: Senior Vice President
--------------------------------
10
<PAGE>
ADMINISTRATION AGREEMENT
SCHEDULE A
Listing of Investment Funds and Authorized Shares
Investment Fund Authorized Shares
Holland Balanced Fund 1,000,000,000
11
<PAGE>
ADMINISTRATION AGREEMENT
SCHEDULE B
Notice Filing with
State Securities Administrators
At the specific direction of the Company, the Administrator will prepare
required documentation and make Notice Filings in accordance with the securities
laws of each jurisdiction in which Company shares are to be offered or sold
pursuant to instructions given to the Administrator by the Company.
The Company shall be solely responsible for the determination (i) of those
jurisdictions in which Notice Filings are to be submitted and (ii) the number of
Company shares to be permitted to be sold in each such jurisdiction. In the
event that the Administrator becomes aware of (a) the sale of Company shares in
a jurisdiction in which no Notice Filing has been made or (b) the sale of
Company shares in excess of the number of Company shares permitted to be sold in
such jurisdiction, the Administrator shall report such information to the
Company, and it shall be the Company's responsibility to determine appropriate
corrective action and instruct the Administrator with respect thereto.
The Blue Sky services shall consist of the following:
1. Filing of Company's Initial Notice Filings, as directed by the
Company;
2. Filing of Company's renewals and amendments as required;
3. Filing of amendments to the Company's registration statement where
required;
4. Filing Company sales reports where required;
5. Payment at the expense of the Company of all Company Notice Filing
fees;
6. Filing the Prospectuses and Statements of Additional Information and
any amendments or supplements thereto where required;
7. Filing of annual reports and proxy statements where required; and
8. The performance of such additional services as the Administrator and
the Company may agree upon in writing.
Unless otherwise specified in writing by the Administrator, Blue Sky services by
the Administrator shall not include determining the availability of exemptions
under a jurisdiction's blue sky law. Any such determination shall be made by the
Company or its legal counsel. In connection with the services described herein,
the Company shall issue in favor of the Administrator a power of attorney to
submit Notice Filings on behalf of the Company, which power of attorney shall be
substantially in the form of Exhibit I attached hereto.
12
<PAGE>
EXHIBIT I
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, as of __________________, 1999 that the Holland
Series Fund, Inc. with principal offices at __________________ (the "Company")
makes, constitutes, and appoints STATE STREET BANK AND TRUST COMPANY (the
"Administrator") with principal offices at 225 Franklin Street, Boston,
Massachusetts its lawful attorney-in-fact for it to do as if it were itself
acting, the following:
1. REGISTRATION OF TRUST SHARES. The power to register shares of the Company
in each jurisdiction in which Company shares are offered or sold and in
connection therewith the power to prepare, execute, and deliver and file
any and all Company applications (including, without limitation,
applications to register shares), consents (including consents to service
of process), reports (including without limitation, all periodic reports),
claims for exemption, or other documents and instruments now or hereafter
required or appropriate in the judgment of the Administrator in connection
with the registration of Company shares.
2. AUTHORIZED SIGNERS. Pursuant to this Limited Power of Attorney, individuals
holding the titles of Officer, Blue Sky Manager, or Senior Blue Sky
Administrator at the Administrator shall have authority to act on behalf of
the Company with respect to item 1 above.
The execution of this limited power of attorney shall be deemed coupled with an
interest and shall be revocable only upon receipt by the Administrator of such
termination of authority. Nothing herein shall be construed to constitute the
appointment of the Administrator as or otherwise authorize the Administrator to
act as an officer, director or employee of the Company.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed in its
name and on its behalf by and through its duly authorized officer, as of the
date first written above.
HOLLAND SERIES FUND, INC.
By:__________________
Name:________________
Title:_______________
13
<PAGE>
[LOGO OF STATE STREET APPEARS HERE]
- --------------------------------------------------------------------------------
State Street Legal Entity
- --------------------------------------------------------------------------------
Holland Series Fund, Inc.
Holland Balanced Fund
U.S. Custody, Accounting and Full Administration Fee Schedule
- --------------------------------------------------------------------------------
Custody and Fund Accounting: Maintain custody of fund assets. Settle portfolio
purchases and sales. Report buy and sell fails. Determine and collect portfolio
income. Make cash disbursements and report cash transactions in local and base
currency. Withhold foreign taxes. File foreign tax reclaims. Monitor corporate
actions. Report portfolio positions. Maintain investment ledgers, provide
selected general ledger reports, provide selected portfolio transactions,
position and income reports. Maintain general ledger and capital stock
accounts. Prepare daily trial balance. Calculate net asset value daily.
- --------------------------------------------------------------------------------
<TABLE>
Asset Fee
<S> <C>
Fund Net Assets Annual Fees Per Portfolio*
--------------- --------------------------
First $100 Million 4.0 BP
Next $100 Million 3.0 BP
Excess 2.0 BP
Feeders, each/month $1,000
-------------------
Classes, each additional/month $1,000
------------------------------
Transaction Fee
Each
----
SSB repos/Euros $ 7
Book Entry $12
All other $25
FX 3/rd/ Party $50
Valuation Fee
Source: Monthly Quote Charge
------- --------------------------
Municipal Bonds via Kenny/S&P or Muller Data $16
Corporate, Municipal, Convertible, Government Bonds
And Adjustable Rate Preferred Stocks via IDSI $13
Government, Corporate Bonds via Kenny/S&P or Muller $11
Government, Corporate and Convertible Bonds via Merrill
Lynch $11
Foreign Bonds via Extel $10
Options, Futures and Private Placements $ 6
Listed Equities (including international) and OTC Equities $ 6
</TABLE>
For billing purposes, the monthly quote charge will be based on the number of
positions in each portfolio at month end.
14
<PAGE>
[LOGO OF STATE STREET APPEARS HERE]
- --------------------------------------------------------------------------------
Administration: Full administration services include legal and board support,
treasurer's office support, financial reporting, compliance, tax reporting, and
blue sky compliance support.
- --------------------------------------------------------------------------------
Fund Net Assets Annual Fees Per Portfolio
--------------- -------------------------
First $100 Million 10 BP
Next $100 Million 8 BP
Excess 6 BP
Monthly Minimum $7,000 (1)
---------------
(1) Monthly minimum is reduced to $5,000
in year 1
Feeders, each/month $2,000
-------------------
Classes, each additional/month $1,000
------------------------------
First $100 Million 4.0 BP
Next $100 Million 3.0 BP
Excess 2.0 BP
- --------------------------------------------------------------------------------
Special Services:
- --------------------------------------------------------------------------------
Fees for activities of a non-recurring nature such as fund consolidations or
reorganizations, extraordinary security shipments and the preparation of
special reports will be subject to negotiation. These services include, but
are not limited to, the following: fees for fund administration activities,
self directed securities lending, linkages/feeds with third party lending
agents, development of customized reports, financial reporting, and access to
State Street systems.
- --------------------------------------------------------------------------------
Out-of-Pocket Expenses:
- --------------------------------------------------------------------------------
A billing for the recovery of applicable out-of-pocket expenses will be made
as of the end of each month. Out-of-pocket expenses include, but are not
limited to the following:
<TABLE>
<S> <C>
. Communication costs (telephone, lease . Third-party internal control
lines, etc.) review letter
. Wire charges ($5.25 in and $5 out) . Subcustodian out-of-pocket charges (market
. Postage and insurance fees, registration fees, stamp duties, etc.)
. Courier service . SWIFT charges
. Duplicating . 17f-5 review
. Non-recurring legal fees . Travel and lodging for Board meetings
if attendance is required
</TABLE>
- --------------------------------------------------------------------------------
Payment:
- --------------------------------------------------------------------------------
The above fees will be charged monthly against the fund's custodian checking
account five (5) days after the invoice is mailed to the fund's offices. This
fee schedule is effective upon commencement of operations.
- --------------------------------------------------------------------------------
FUND NAME STATE STREET LEGAL ENTITY
By: __________________________ By: ________________________
Title: __________________________ Title: ________________________
Date: __________________________ Date: ________________________
- --------------------------------------------------------------------------------
15
<PAGE>
EXHIBIT 99.(J)(2)
POWER OF ATTORNEY
We, the undersigned Directors of Holland Series Fund, Inc. (the "Fund"),
hereby constitute and appoint Michael F. Holland and Tana Tselepis, each of them
singly, our true and lawful attorneys-in-fact, with full power of substitution,
and with full power to each of them, to sign for us and in our names in the
appropriate capacities, with authority to execute in the name of such Director
on behalf of the Fund and to file with the United States Securities & Exchange
Commission, Commodity Futures Trading Commission or any other federal or state
regulatory bodies ("Regulatory Agencies"), on behalf of the Fund any and all
regulatory materials necessary or advisable to enable the Fund to comply with
the Securities Act of 1933, as amended and/or the Investment Company Act of
1940, as amended, and any other rules, regulations and requirements of such
Regulatory Agencies. The powers of the aforesaid attorneys-in-fact are hereby
expressly limited to the execution and filing of such documents with the
appropriate Regulatory Agencies.
WITNESS our hands on this 16th day of September, 1999
/s/ Michael F. Holland
- ----------------------------
Michael F. Holland
/s/ Sheldon S. Gordon
- ----------------------------
Sheldon S. Gordon
/s/ Herbert S. Winokur, Jr.
- ----------------------------
Herbert S. Winokur, Jr.
/s/ Desmond G. FitzGerald
- ----------------------------
Desmond G. FitzGerald
/s/ Jeff Tarr
- ----------------------------
Jeff Tarr
