GREENSPRING FUND,
INCORPORATED
ANNUAL REPORT
DECEMBER 31, 1996
This report is authorized for distribution
only to shareholders who have received a
copy of the official Prospectus of the
Greenspring Fund, Incorporated.
<PAGE>
January 1997
Dear Shareholder:
The Greenspring Fund had a very successful year in 1996,
aided by a strong fourth quarter finish. On a total return
basis, the Fund gained 22.7% for the year and 8.9% during the
fourth quarter. We are pleased to report that 1996's performance
was Greenspring Fund's strongest since its inception on July 1,
1983. Since then, the Fund, with its low-risk approach,
has achieved an average annualized total return of 13.5%.
The primary reason for Greenspring Fund's successful
performance during 1996 was the proliferation of solid gainers,
combined with the absence of any significant disappointments.
Much like a sports team that enjoys a successful season due to
the less heralded contributions from each team member rather than
relying upon the individual performance of a well-known,
"marquee" player, almost every security in the Fund contributed
positively to the year's performance. Continuing with
another sports analogy, like a tennis match that is won, not so
much by hitting "winners," but by playing consistently and
minimizing unforced errors, the Greenspring Fund avoided making
costly mistakes that would have significantly hindered its
performance. The Fund attempts to reduce risk by investing
only in areas that we understand well, and not venturing
into alluring, but potentially risky, arenas.
In seeking its investment objective of steady, consistent
performance, the Greenspring Fund utilized a balanced approach
throughout the year, investing in both equities and fixed income
securities. Performance of each asset class was strong, roughly
28% for equities and 19% for fixed income assets, on an unaudited
basis. On a combined total-return basis, the Greenspring Fund's
22.7% return compared very well to funds with similar objectives,
especially considering our below-average risk profile. According
to Lipper Analytical Services, "Balanced" and "Growth and Income"
funds rose 13.0% and 20.7%, respectively, during 1996.
As previously noted, the Fund's strong performance was more
of a group effort than one based upon the contribution of any
single, or even a handful of, securities. Nevertheless, it may
be useful to highlight several of 1996's most significant
holdings and to discuss some of the factors that contributed
to their success or lack thereof. The only negative
influence of significance was the performance of ATC Group
Services. The three largest contributors to the Fund's
performance during the year were US Industries, Griffon Corp.,
and Town & Country Trust.
<PAGE>
ATC Group Services ("ATC" or the "Company"), declined from
an average cost of $10.50 per share to $9.25 per share at the end
of the year. ATC is a consulting and engineering company
specializing in environmental and information technology
services. For several years prior to 1996, its stock price had
performed very well, as the Company experienced rapid growth in
its revenues and earnings. Consequently, ATC was a darling of
growth stock investors. During 1996, the Company made
two large acquisitions, which, although successful, have required
a considerable amount of management's time, slowing the pace of
further acquisitions. As earnings estimates were adjusted
downward, growth and "momentum" investors sold their ATC shares,
causing substantial downward pressure on the stock.
In reflecting upon what has happened to ATC since our
initial investment in September of 1996, we are left with the
conclusion that, operationally, ATC has not fared as well as we
had expected, but the shortfall versus our expectations has not
been that severe. We misjudged the amount of time it would take
to transform the investor profile of an ATC shareholder from a
"growth stock" investor to a "value investor." Being hard-core
value investors, we were surprised at the degree to which
growth stock investors disposed of their disappointing
investments. The selling has continued into this year and, as
this letter is being written, ATC's stock is selling at $7.50 per
share, even though the Company is on track to earn at least $.80
per share in the year ending February 1997 and should easily earn
over $1.00 the following year. ATC has a strong balance
sheet, shareholder-oriented management, and an acquisition
strategy that, combined with its internal growth rate, should
allow the company to grow at least 20% a year during the next
several years. As the remaining growth/momentum investors exit
the stock and other value investors become aware of the strong
fundamentals, ATC's common stock should rebound significantly.
Meanwhile, we benefit from being able to add to the Fund's
position at lower prices, while also suffering from the
frustration of being "too early" with our initial ATC purchases.
US Industries provided the largest contribution to
Greenspring Fund's performance during 1996. US Industries'
common stock was first purchased in June of 1995, just after
it was spun-off from its previous corporate parent, Hanson plc.
It was an amalgamation of Hanson's noncore businesses that were
placed into a new company headed by a highly experienced and
motivated management team. At the time of our purchase, US
Industries was a relatively unknown company, and we felt the
stock was undervalued compared to its breakup value and cash flow
generating ability. Since our investment, the Company has sold
several businesses, reduced debt considerably, and boosted its
profile on Wall Street. As a result of the increased sponsorship
in the investment community, and the positive developments at the
<PAGE>
Company, US Industries' common stock has performed very well,
rising from just over $18 per share to $34 during 1996.
Griffon Corporation, the Fund's second largest contributor
to performance during 1996, was originally purchased in May of
1994. It was, and still is, a good example of our "free cash
flow" investments. Griffon is a small, multi-industry company
that at times has had the enviable problem of having a surplus
of cash at its disposal. As a result, the Company has
historically repurchased its shares in an aggressive manner,
either through Dutch tender offers or on the open market.
Griffon has a strong balance sheet and a management team that has
acted in the shareholders' best interests. The Company
experienced strong earnings growth during 1996 and management
is very optimistic about its prospects for the current year.
These factors help to explain why Griffon's stock
moved from $9 per share to $12.25 during the year.
Town and Country Trust was the third largest contributor to
the Greenspring Fund's performance during 1996. The Fund
initially invested in Town and Country in August of 1993. Its
subsequent performance has been disappointing to us, although
1996's excellent showing helped to ease some of the past
disappointment. During the year, Town and Country's
fundamentals changed very little; however, investors bid its
stock price up as they became increasingly comfortable with the
Company's prospects. In combination with a very attractive $1.60
per share dividend, the capital appreciation in Town and
Country's stock produced a very strong total return of almost
25% during 1996.
We are very happy to be able to report on an excellent year
in 1996. We are quick to recognize, however, that in the
investment business those who rest on last year's laurels often
get left behind the following year. Every day Greenspring Fund's
shares are valued, new investors become shareholders, and the
quest for performance begins anew. We look forward to facing the
challenges that undoubtedly will confront investors in 1997.
The Greenspring Fund will continue to strive to provide
strong performance, while subjecting shareholders to below-
average volatility and risk. We look forward to reporting on the
Fund's progress as the year unfolds and wish each of our fellow
shareholders a successful and healthy 1997.
Respectfully,
Charles vK. Carlson
President
<PAGE>
GREENSPRING FUND, INCORPORATED
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
COMMON STOCKS (63.40%)
Shares Value
Banking (11.90%)
500 *Avondale Financial Corp. $ 8,562
600 *Bank Plus 6,900
31,000 BostonFed Bancorp, Inc. 457,250
49,400 Charter Financial, Inc. 617,500
18,000 Chase Manhattan Corp. 1,606,500
15,000 *Coast Savings Financial, Inc. 549,375
25,000 Columbia Bancorp, Inc. 531,250
44,864 Crestar Financial Corp. 3,336,760
50,000 *Dime Bancorp, Inc. 737,500
34,000 GA Financial, Inc. 514,250
30,000 *Imperial Thrift & Loan 450,000
10,000 Mercantile Bankshares Corp. 320,000
33,000 *PFF Bancorp, Inc. 490,875
21,100 *PS Financial, Inc. 247,925
44,760 Patriot Bank Corp. 604,260
28,600 Statewide Financial Corp. 411,125
10,890,032
Consumer Products/Services (7.34%)
52,400 *American Safety Razor 733,600
20,000 *Credit Management Solutions, Inc. 290,000
36,600 First Brands Corporation 1,038,525
19,900 Genesee Corporation Class B 840,775
50,000 *Host Marriott Services 456,250
180,880 *Seven-Up/RC Bottling Company of
Southern California 1,786,190
79,000 *The Scotts Company 1,570,125
6,715,465
Defense (1.10%)
11,000 Lockheed Martin Corp. 1,006,500
1,006,500
<PAGE>
GREENSPRING FUND, INCORPORATED
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
COMMON STOCKS (CON'T)
Shares Value
Environmental Services (5.05%)
121,100 Alliance Global Environmental Fund $ 1,513,750
335,874 *ATC Group Services, Inc. 3,106,835
4,620,585
Healthcare Products/Services (.60%)
62,500 *Mediq, Inc. 398,437
14,000 *Universal Hospital Systems 150,500
548,937
Industrial Services (.40%)
92,500 General Physics Corp. 370,000
370,000
Insurance (6.02%)
75,000 PartnerRe Holdings, Ltd. 2,550,000
51,208 Reliastar Financial Corp. 2,957,262
5,507,262
Manufacturing (15.09%)
11,300 Charter Power Systems 344,650
41,000 *Electro Scientific Industries, Inc. 1,066,000
383,100 *Griffon Corporation 4,692,975
37,200 *Middleby Corp. 237,150
421,000 UNR Industries, Inc. 2,526,000
110,000 U.S. Industries, Inc. 3,781,250
8,750 Woodward Governor Company 1,155,000
13,803,025
<PAGE>
GREENSPRING FUND, INCORPORATED
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
COMMON STOCKS (CON'T)
Shares Value
Media (2.02%)
100,000 *US West Media Group $ 1,850,000
1,850,000
Natural Resources (3.46%)
242,600 *Castle Energy Corp. 2,607,950
8,300 *Norex Industries, Inc. 290,500
4,865 Penn Virginia Corp. 227,439
3,900 United States Lime & Minerals 34,125
3,160,014
Real Estate (7.69%)
295,000 Mark Centers Trust 2,986,875
277,045 The Town and Country Trust 4,051,783
7,038,658
Companies in Liquidation (2.73%)
4,700 *Aerospace Creditors Liquidating Trust 17,038
20,561 *Atlantic Realty Trust 208,180
481,000 *EQK Realty Investors 1 661,375
613,400 *Hi Shear Industries, Inc. 1,610,175
2,496,768
Total Common Stocks
(Cost $43,072,277) 58,007,246
<PAGE>
GREENSPRING FUND, INCORPORATED
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
PREFERRED STOCKS (5.60%)
Shares/
Principal
Amount Value
Convertible Pfd. Stock (1.30%)
54,500 Prime Retail, Inc. $ 1,185,375
Total Convertible Pfd. Stock 1,185,375
Non-Convertible Pfd. Stocks (4.30%)
1,000 Bank United Capital, 10.25%, Series A 1,005,000
14,500 Illinois Power Company, Adj. Rate Pfd., 659,750
Series A
94,500 *River Bank America $3.75, Series A 2,268,000
Total Non-Convertible Pfd. Stocks 3,932,750
Total Preferred Stocks
(Cost $4,499,228) 5,118,125
BONDS (23.37%)
Convertible Bonds (7.76%)
$ 1,500,000 Alexander Haagen Properties, Inc.,
7.50%, 1/15/01 1,406,250
1,978,000 Audiovox Corp., 6.25%, 3/15/01 1,639,267
2,000,000 Bell Sports Corp., 4.25%, 11/15/00 1,551,666
1,176,000 Kelley Oil & Gas Partners, Ltd.,
8.50%, 4/1/00 1,117,200
685,000 Kelley Oil & Gas Partners, Ltd.,
7.875%, 12/15/99 648,609
500,000 Liberty Properties Limited Partnership,
8.00%, 7/1/01 638,750
101,000 Mediq, Inc., 7.25%, 6/1/06 98,349
Total Convertible Bonds 7,100,091
<PAGE>
GREENSPRING FUND, INCORPORATED
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
BONDS (CON'T)
Principal
Amount Value
Non-Convertible Bonds (13.10%)
$ 1,500,000 B.F. Saul Real Estate Investment Trust,
11.625%, 4/1/02 $ 1,608,750
400,000 Ocwen Financial, 11.875%, 10/1/03 433,500
3,000,000 Revlon Worldwide, 0.00%, 3/15/98 2,587,500
1,904,000 Tyco Toys, Inc., 10.125%, 8/15/02 1,999,200
1,840,000 UNC Inc., 9.125%, 7/15/03 1,849,200
1,000,000 U.S. Treasury, 7.125%, 9/30/99 1,028,125
2,419,000 Zapata Corp., 10.25%, 3/15/97 2,481,744
Total Non-Convertible Bonds 11,988,019
Bonds in Reorganization (2.51%)
3,500,000 *Lomas Mortgage, 10.25%, 10/1/02 2,294,688
Total Bonds in Reorganization 2,294,688
Total Bonds (Cost $19,698,877) 21,382,798
SHORT-TERM INVESTMENTS (5.87%)
3,000,000 Commercial Paper (3.28%)
General Electric Corp.,
5.42%, 1/10/97 3,000,000
Total Commercial Paper 3,000,000
<PAGE>
GREENSPRING FUND, INCORPORATED
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
SHORT-TERM INVESTMENTS (CON'T)
Value
Other Short-Term Investments (2.59%)
Rodney Square Money Market $ 2,369,603
Total Other Short-Term Investments 2,369,603
Total Short-Term Investments
(Cost $5,369,603) 5,369,603
Total Investments in Securities (98.24%) 89,877,772
(Cost $72,639,985)
Other Assets Less Liabilities (1.76%) 1,607,882
Total Net Assets (100%) $ 91,491,654
*Non-income producing securities
<PAGE>
GREENSPRING FUND, INCORPORATED
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
ASSETS
Investments, at market value
(Cost $72,639,985) $ 89,877,772
Cash 1,197,781
Interest receivable 374,169
Dividends receivable 266,919
Receivable for securities sold 248,392
Receivable for Fund shares sold 126,123
Purchased interest 19,650
Prepaid expense 634
Total Assets 92,111,440
LIABILITIES
Payable for securities purchased 462,184
Payable for Fund shares repurchased 59,285
Due to investment advisor 57,139
Accrued expenses 41,178
Total Liabilities 619,786
NET ASSETS
Capital stock, $.01 par value; authorized
30,000,000 shares; outstanding, 5,308,459 $ 91,491,654
NET ASSETS CONSIST OF:
Capital stock at par value $ 53,085
Paid in capital 73,558,842
Undistributed net investment income 183,071
Undistributed net realized gains 458,869
Net unrealized appreciation of investments 17,237,787
Net Assets $ 91,491,654
NET ASSET VALUE PER SHARE $ 17.24
The accompanying notes are an integral part of these financial statements.
<PAGE>
GREENSPRING FUND, INCORPORATED
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
INVESTMENT INCOME
Interest $ 2,181,637
Dividend 1,440,255
Other income 36,845
Total Income $ 3,658,737
Expenses
Investment advisory fees 581,258
Administrative 88,800
Transfer agent fees 39,444
Registration fees 28,470
Custodian fees 20,825
Professional fees 19,823
Reports to shareholders 7,799
Directors fees 4,800
Fidelity bond 2,604
Filing fees 1,379
Total Expenses 795,202
Net Investment Income 2,863,535
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments 3,697,949
Net change in unrealized appreciation of investments 9,422,762
Net Realized and Unrealized Gain
on Investments 13,120,711
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 15,984,246
The accompanying notes are an integral part of these financial statements.
<PAGE>
GREENSPRING FUND, INCORPORATED
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
INCREASE IN NET ASSETS
1996 1995
<S> <C> <C>
OPERATIONS:
Net investment income $ 2,863,535 $ 3,249,208
Net realized gain/(loss) from investments 3,697,949 ( 127,537)
Net change in unrealized appreciation of
investments 9,422,762 7,706,761
Net increase in net assets resulting from
operations 15,984,246 10,828,432
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income ( 2,789,842) ( 3,139,831)
Net realized gain on investments ( 2,752,675) ( 289,108)
Distributions in excess of net realized gains - ( 358,868)
Net decrease in net assets from distributions
to shareholders ( 5,542,517) ( 3,787,807)
CAPITAL STOCK TRANSACTIONS:
Sale of 1,319,471 and 1,664,602 shares 21,518,835 24,026,990
Distributions reinvested of 317,469 and
232,278 shares 5,231,782 3,419,563
Redemptions of 1,102,859 and 881,936
shares ( 17,539,787) ( 12,970,297)
Increase in net assets from capital stock
stock transactions 9,210,830 14,476,256
TOTAL INCREASE IN NET ASSETS 19,652,559 21,516,881
NET ASSETS AT BEGINNING OF PERIOD 71,839,095 50,322,214
NET ASSETS AT END OF PERIOD $ 91,491,654 71,839,095
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
GREENSPRING FUND, INCORPORATED
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
Note 1 - Significant Accounting Policies
Greenspring Fund, Incorporated ("the Fund") is a diversified open-end
management investment company registered under the Investment
Company Act of 1940, as amended.
The preparation of the financial statements in accordance with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts and
disclosures in the financial statements. Actual results could differ
from those estimates.
Investment transactions and related investment income - Investment
transactions are recorded on the trade date. Dividend income is
recorded on the ex-dividend date and interest income is recorded
on the accrual basis. Dividends determined to be a return of capital
are recorded as a reduction of the cost basis of the security.
Realized gains and losses from investment transactions and unrealized
appreciation and depreciation of investments are reported on an
identified cost basis.
Valuation of investments - Securities listed on a national securities
exchange or the NASDAQ National Market are valued at the last
reported sale price on the exchange of major listing as of the close
of the regular session of the New York Stock Exchange (currently 4:00
P.M. Eastern Standard Time).
Securities which are traded principally in the over-the-counter
market, listed securities for which no sale was reported on the day
of valuation, listed securities for which the last reported sale
price is not in the context of the highest closing bid price and the
lowest closing offering price, and listed securities whose primary
market is believed by the Advisor to be over-the-counter are valued
at the mean of the closing bid and asked prices obtained from sources
that the Advisor deems appropriate.
Short-term investments are valued at amortized cost which
approximates fair market value. The value of securities that mature,
or have an announced call, within 60 days will be amortized on a
straightline basis from the market value one day preceding the
beginning of the amortization period.
Securities for which market quotations are not readily available are
valued at fair value as determined in good faith by the Advisor as
directed by the Board of Directors.
<PAGE>
GREENSPRING FUND, INCORPORATED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996
Note 1 - Significant Accounting Policies (Con't)
Income Taxes - It is the policy of the Fund to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies. Accordingly, the Fund intends to distribute
substantially all of its taxable income. Therefore, no federal
income tax provision is required.
Dividends and distributions to stockholders - The Fund records
dividends and distributions to stockholders on the ex-dividend date.
Redemption of capital stock - A stockholder may request redemption of
some or all of his shares on any day that the New York Stock Exchange
is open for business. The redemption price per share is the net
asset value per share as of the close of business on the day that the
redemption request is received by the Fund. Payment for shares will
be made within seven days after receipt of the redemption request.
Note 2 - Dividends and Distributions of 1996 Taxable Earnings
It is the Fund's policy to declare dividends from net investment
income and distributions from net realized gains as determined in
accordance with income tax regulations which may differ from
generally accepted accounting principles.
On July 18, 1996, the Board of Directors declared an income dividend
and a short-term capital gains distribution of $.37 and $.002 per
share, respectively, payable on July 19, 1996, to shareholders of
record on July 17, 1996. Additionally, on December 19, 1996, the
Board of Directors declared an income dividend, a short-term capital
gains distribution and a long-term capital gains distribution of
$.22, $.184 and $.369 per share, respectively, payable on December
20, 1996, to shareholders of record on December 18, 1996.
These dividends are either distributed to shareholders or reinvested
by the Fund in additional shares of common stock, which are issued to
stockholders. For those reinvesting the dividend, the number of
shares issued is based on the net asset value per share as of the
close of business on the business day previous to the payment date.
<PAGE>
GREENSPRING FUND, INCORPORATED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996
Note 3 - Purchases and Sales of Investments
For the year ended December 31, 1996, purchases and sales of
investments, other than short-term investments, aggregated
$48,051,412 and $43,563,110, respectively.
For federal income tax purposes, the cost of investments owned at
December 31, 1996 was $72,639,985. Net unrealized appreciation of
such investments aggregated $17,237,787, which was composed of
appreciation of $18,861,981 for those securities having an excess
of value over cost, and depreciation of $1,624,194 for those
securities having an excess of cost over value.
Note 4 - Investment Advisory Agreement and Related Party Transactions
The Fund's investment advisor, Key Equity Management Corporation
("Key Equity"), is a wholly-owned subsidiary of Corbyn Investment
Management. Under an agreement between the Fund and Key Equity, the
Fund pays Key Equity a monthly fee at an annual rate of .75% of the
Fund's month-end net assets. The Fund's total expenses, excluding
interest, taxes, brokerage commissions and extraordinary expenses,
may not exceed 1.5% of average daily net assets (1% of average
daily net assets in excess of $30,000,000). Investment advisory
fees incurred for the year ended December 31, 1996 were $581,258. At
December 31, 1996, investment advisory fees payable amounted to
$57,139.
Certain of the Fund's officers and directors are also officers and
directors of Key Equity and Corbyn Investment Management. At
December 31, 1996, investors for whom Corbyn Investment Management
was investment advisor held 1,190,415 shares of the Fund's common
stock.
<PAGE>
GREENSPRING FUND, INCORPORATED
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
Year Ended December 31,
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 15.05 $ 13.39 $ 13.96 $ 13.78 $ 12.91
Income From Investment Operations
Net Investment Income 0.60 0.70 0.51 0.40 0.51
Net Realized and Unrealized
Gain/Loss on Investments 2.74 1.78 ( 0.12) 1.59 1.59
Total From Investment Operations 3.34 2.48 0.39 1.99 2.10
Less Distributions
Net Investment Income ( 0.59) ( 0.68) ( 0.51) ( 0.40) ( 0.51)
Net Realized Gain on Investments ( 0.56) ( 0.07) ( 0.45) ( 1.41) ( 0.72)
Distributions in Excess of Net
Realized Gains ( - ) ( 0.07) ( - ) ( - ) ( - )
Total Distributions ( 1.15) ( 0.82) ( 0.96) ( 1.81) ( 1.23)
Net Asset Value, End of Period $ 17.24 $ 15.05 $ 13.39 $ 13.96 $ 13.78
Total Return 22.65% 18.79% 2.83% 14.65% 16.52%
Ratios/Supplemental Data
Net Assets, End of Period (000's) $ 91,492 $ 71,839 $ 50,322 $ 29,885 $ 20,004
Ratio of Expenses to Average Net Assets 1.04% 1.06% 1.27% 1.31% 1.48%
Ratio of Net Investment Income to
Average Net Assets 3.74% 4.97% 4.03% 2.78% 3.68%
Portfolio Turnover 60.74% 65.19% 76.55% 121.79% 100.17%
Average Commission Paid Per Share $ 0.0477 - - - -
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of
Directors of Greenspring Fund, Incorporated
We have audited the accompanying statement of assets and
liabilities of Greenspring Fund, Incorporated, including the schedule
of portfolio of investments, as of December 31, 1996, and the related
statement of operations for the year then ended, the statement of
changes in net assets for each of the two years in the period then
ended and the financial highlights for the five years in the period
then ended. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is
to express an opinion on these financial statements and financial
highlights based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether
the financial statements and financial highlights are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned
as of December 31, 1996, by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all material
respects, the financial position of Greenspring Fund, Incorporated as
of December 31, 1996, the results of its operations, the changes in
its net assets and the financial highlights for the periods stated in
the first paragraph, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
Baltimore, Maryland
January 31, 1997
<PAGE>
Greenspring Fund, Incorporated
2330 West Joppa Road, Suite 110
Lutherville, MD 21093
(410) 823-5353
(800) 366-3863
DIRECTORS
Charles vK. Carlson, Chairman
William E. Carlson
David T. Fu
Michael J. Fusting
Michael T. Godack
Richard Hynson, Jr.
OFFICERS
Charles vK. Carlson
President and Chief Executive Office
Michael T. Godack
Sr. Vice President and Secretary
Michael J. Fusting
Vice President, Treasurer, and Chief
Financial Officer
INVESTMENT ADVISOR
Key Equity Management Corporation
2330 West Joppa Road, Suite 108
Lutherville, MD 21093-7207
TRANSFER AGENT
Rodney Square Management Corporation
105 North Market Street, Third Floor
Wilmington, DE 19890
(800) 576-7498
CUSTODIAN
Wilmington Trust Company
1100 North Market Street
Wilmington, DE 19890
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
217 East Redwood Street
Baltimore, MD 21202-3316
LEGAL COUNSEL
DeMartino Finkelstein Rosen & Virga
1818 N Street, N.W.
Washington, DC 20036-2492
</TABLE>
