GREENSPRING FUND,
INCORPORATED
[LOGO]
ANNUAL REPORT
DECEMBER 31, 1997
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 1998
Dear Shareholder:
During 1997, for the second year in a row, the Greenspring Fund had its
best performance year ever. The Fund gained 23.9% during the year, after the
reinvestment of all dividends and distributions. The Greenspring Fund rose
steadily during the first few months of the year, declined during March and
April, rebounded to new highs during mid-October, only to drop during the
next month and a half, before coming on strong at the very end of the year to
finish near its all-time high level.
The Fund achieved this return, not because of outstanding performances by
one or two securities, but due to a proliferation of strong gains by many
different securities, combined with the presence of only one loss of
significance. Both the equities and the fixed income securities posted
positive performances, although the return on the equity portfolio (more than
30%) was significantly stronger than the fixed income returns. The non-
convertible bonds in the portfolio served their purpose well, meeting the
expectations that we have for the bond portion of our "balanced" fund, i.e.,
to generate solid double-digit returns regardless of the direction of the stock
and bond markets and to serve as a source of liquidity if cash is needed to
purchase a more attractive equity investment. The convertible bonds posted a
slightly negative performance due entirely to the disappointing performance
of the Fund's holdings in Physicians Resource Group.
Throughout the years, the Greenspring Fund has provided shareholders with
steadier and more consistent performance than most funds due in part to our
determination to avoid volatile sectors of the financial markets, as well as
significant "losers." Although this sounds like an obvious goal to pursue,
many investors seek "safety in numbers" by investing in popular, trendy
investments and market sectors without fully understanding the merits or risks
associated with these investments. This herd mentality negatively affected the
1997 performance of some investors who had become overly enamored with certain
sectors of the market, without realizing the volatility and risk to which they
were subjecting themselves. These sectors included small-cap growth stocks,
Far East and emerging markets, and gold-related securities.
Many mutual funds specializing in such investments had attracted a great
deal of money from investors in search of the glittery gains that had been
realized during previous years. Unfortunately, many of these new investors
<PAGE>
were quickly subjected to extreme volatility, as the validity of the frequently-
used disclaimer, "past performance is no guarantee of future returns," was
painfully proven. During the early part of the year, investors in many small-
cap growth funds saw their investments decline by more than 20% from recent
highs. Although the performance of these funds improved as the year progressed,
their performance lagged most indices for the year. Then, during the last
several months of 1997, investors in gold-related securities and emerging
equity markets such as Thailand, Malaysia, Korea, and Brazil experienced market
declines of 50-60% or more.
During the last several years, many financial advisors have suggested that
investors allocate some portion of their investment portfolio to alternative
investments such as securities of emerging markets (countries with developing
economies). In some cases, their reasoning was not based upon an opinion that
these markets were "cheap" as much as that such investments would provide one's
portfolio with performance that is not correlated with U.S. securities. The
economies of the emerging markets, as the theory goes, will grow faster over
time than already developed markets, although this growth will be more erratic
than the generally smooth growth of the well-developed countries. We agree
that a place in the portfolio exists for this kind of investment for certain
investors. We feel that such investments, however, should be left to highly
sophisticated investors who are willing to accept extreme volatility and have
very extended investment horizons. One's willingness to accept volatility
was severely tested during the Fall of 1997 when dramatic currency
devaluations in the Far East triggered devastating declines in most of the
emerging markets.
Securities of companies that are in the gold mining business have also come
under severe pressure during the last several months. The sharp currency
devaluations in the Far East Asian markets have promulgated a deflationary
wave that is instilling fear in the hearts of those investors who have been
predicting a resurgence of inflation. Ironically, many investors holding
gold or related securities are long time "bears" on the equity markets who
have positioned their portfolios to benefit from declining equity markets,
rising interest rates, and an uptick in inflation. During the market sell-off
in October and November, these supposed safe havens declined significantly at a
time when their stockholders were expecting them to shine.
Although the kind of decimation that took place in the small-cap growth,
Far East, emerging markets, and gold-related securities does pique the curiosity
of committed value investors such as ourselves, the Greenspring Fund will
continue to adhere to its disciplines and limit its investing to those areas we
thoroughly understand. We have learned from experience that just because a
market or individual security has declined by 50%, it does not necessarily
make it a bargain. Specialized investment areas and alternative asset classes,
from time to time, produce eye-catching returns that can be tempting to
investors. We, however, prefer to maintain our discipline and stick with
<PAGE>
investments that may not be as spectacular and may not make lively cocktail
party conversation, but are able to provide steady, low-risk gains to the
Fund. In the investment business, you learn very quickly that you cannot
"bluff" your knowledge or hide your losses. Investors could prevent many of
their losses if they paid attention to noted economist John Kenneth Galbraith's
observation that "one of the greatest pieces of economic wisdom is to know
what you do not know" and avoid investing in those areas. Savvy investors are
very willing to take advantage of any neophyte who is attempting to "play" in a
market in which he does not belong.
Looking to 1998, the financial markets are beginning the year differently
than in recent years. The typical January rally has been slow to develop, with
the "Asian flu" putting a damper on the U.S. and world markets. The resulting
volatility has allowed us to purchase securities that have been unjustifiably
marked down in price, just as market declines during the Spring and Fall of
1997 presented some good buying opportunities. The deflationary effects of
the Far East devaluations will be felt in the U.S., with the economy growing
slower than economists were predicting several months ago. Consequently, we
have become more positive toward fixed income investments and have begun to
more actively seek out both equities and bonds that generate significant yields.
As for equities, we are sticking to our investment philosophy and purchasing
hard core value investments that will fare better than most equities during
difficult market environments. The Greenspring Fund is more fully
invested than it typically is, a fact that should not be construed as a sign
of strong bullishness about the market, but as an indication that our research
efforts have uncovered quite a few securities that meet our criteria. We hope
1998 brings health, happiness, and prosperity to each of our fellow shareholders
and we look forward to reporting on the performance of the Greenspring Fund as
the year progresses.
Respectfully,
Charles vK. Carlson
President
<PAGE>
GREENSPRING FUND, INCORPORATED
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
COMMON STOCKS (67.64%)
Shares Value
Aerospace (.60%)
11,000 Lockheed Martin Corp. $ 1,083,500
1,083,500
Banking (10.31%)
600 *Bank Plus Corp. 7,575
18,200 *BankUnited Financial Corp. 280,395
15,000 Bayview Capital Corp. 543,750
31,000 BostonFed Bancorp, Inc. 678,125
49,400 Charter Financial, Inc. 1,241,175
18,000 Chase Manhattan Corp. 1,971,000
25,000 Columbia Bancorp, Inc. 860,158
89,728 Crestar Financial Corp. 5,114,496
50,000 Dime Bancorp, Inc. 1,512,500
34,000 GA Financial, Inc. 641,750
15,000 Mercantile Bankshares Corp. 586,875
33,000 *PFF Bancorp, Inc. 655,875
21,100 PS Financial, Inc. 472,113
53,712 Patriot Bank Corp. 1,141,380
16,500 *Rocky Ford Financial Corp. 240,281
28,600 Statewide Financial Corp. 686,400
36,500 *Sun Bancorp, Inc. 1,195,375
2,500 Wells Fargo & Company 848,594
18,677,817
Business Services (2.63%)
124,500 *Consolidation Capital Corp. 2,528,906
64,400 Standard Register Company 2,237,900
4,766,806
<PAGE>
GREENSPRING FUND, INCORPORATED
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
COMMON STOCKS (CON'T)
Shares Value
Construction (1.11%)
68,000 *Emcor Group, Inc. $ 1,394,000
26,800 *Shaw Group Inc. 616,400
2,010,400
Consumer Products/Services (2.74%)
52,400 *American Safety Razor 1,038,175
310,800 *Eagle Food Centers, Inc. 1,243,200
36,600 First Brands Corporation 985,913
19,900 Genesee Corporation Class B 805,950
60,000 *Host Marriott Services 892,500
4,965,738
Electric Power (.28%)
25,150 *NRG Generating, Inc. 499,856
499,856
Environmental Services (4.08%)
636,674 *!ATC Group Services, Inc. 7,401,335
7,401,335
<PAGE>
GREENSPRING FUND, INCORPORATED
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
COMMON STOCKS (CON'T)
Shares Value
Financial Services (11.85%)
273,800 Criimi Mae Inc. $ 4,107,000
68,500 *ITLA Capital Corp. 1,318,625
251,300 Imperial Credit Commercial Mortgage 3,675,262
332,400 *Long Beach Financial Corp. 3,864,150
231,200 Ocwen Asset Investment Corp. 4,739,600
70,000 *Ocwen Financial, Inc. 1,780,625
232,900 *Ugly Duckling Corp. 1,979,650
21,464,912
Healthcare Products/Services (.66%)
69,700 *Mediq, Inc. 775,412
15,071 *VWR Scientific Products Corp. 425,756
1,201,168
Instrumentation (3.09%)
347,500 *!Barringer Technologies 4,995,313
48,800 *OSI Systems, Inc. 597,800
5,593,113
Insurance (4.25%)
75,000 PartnerRe Holdings, Ltd. 3,478,125
102,416 Reliastar Financial Corp. 4,218,259
7,696,384
Investment Companies (.04%)
15,000 *Corporate Renaissance 86,250
86,250
<PAGE>
GREENSPRING FUND, INCORPORATED
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
COMMON STOCKS (CON'T)
Shares Value
Manufacturing (8.13%)
11,300 C & D Technologies, Inc. $ 545,225
148,147 *Figgie International 1,796,282
69,600 *Figgie International Class A 913,500
278,300 *Griffon Corporation 4,070,138
55,200 *Middleby Corp. 431,250
171,000 Rohn Industries, Inc. 881,727
165,000 U.S. Industries, Inc. 4,970,625
35,000 Woodward Governor Company 1,133,125
14,741,872
Media (1.59%)
100,000 *U.S. West Media Group 2,887,500
2,887,500
Natural Resources (5.30%)
339,917 !Castle Energy Corp. 4,737,593
32,500 Mitchell Energy & Development Corp. Cl. A 954,687
47,300 *Norex Industries, Inc. 969,650
98,730 Penn Virginia Corp. 2,912,535
3,900 United States Lime & Minerals 28,763
9,603,228
<PAGE>
GREENSPRING FUND, INCORPORATED
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
COMMON STOCKS (CON'T)
Shares Value
Optical Products (3.20%)
537,200 *BEC Group, Inc. $ 3,189,625
179,500 *ILC Technology Inc. 2,608,368
5,797,993
Real Estate (4.98%)
171,400 Mark Centers Trust 1,542,600
307,800 Prime Retail Inc. 4,366,913
175,945 The Town and Country Trust 3,112,027
9,021,540
Companies in Liquidation (2.80%)
271,496 *!Atlantic Realty Trust 3,291,889
583,800 *!EQK Realty Investors 1 583,800
581,450 *!Hi Shear Industries, Inc. 1,199,240
5,074,929
Total Common Stocks
(Cost $87,179,568) 122,574,341
PREFERRED STOCKS (3.36%)
Convertible Pfd. Stock (1.55%)
117,000 Prime Retail, Inc., 8.50% Pfd. B 2,808,000
Total Convertible Pfd. Stock 2,808,000
<PAGE>
GREENSPRING FUND, INCORPORATED
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
PREFERRED STOCKS (CON'T)
Shares/
Principal
Amount Value
Non-Convertible Pfd. Stocks (1.81%)
1,000 BankUnited Capital Trust,
10.25%, Series A $ 1,035,000
94,500 *River Bank America $3.75, Series A 2,250,281
Total Non-Convertible Pfd. Stocks 3,285,281
Total Pfd. Stocks (Cost $5,605,246) 6,093,281
BONDS (22.88%)
Convertible Bonds (10.82%)
$ 1,500,000 Alexander Haagen Properties, Inc.
7.50%, 1/15/01 1,512,657
2,000,000 Bell Sports Corp., 4.25%, 11/15/00 1,712,500
270,000 Computervision Corporation,
8.00%, 12/1/09 264,600
6,215,000 Corporate Express, Inc., 4.50%, 7/1/00 5,632,344
1,176,000 Kelley Oil & Gas Partners, Ltd.,
8.50%, 4/1/00 1,164,975
946,000 Kelley Oil & Gas Partners, Ltd.,
7.875%, 12/15/99 930,628
500,000 Liberty Properties Limited Partnership,
8.00%, 7/1/01 709,687
9,600,000 +Physicians Resource Group,
6.00%, 12/1/01 6,624,000
1,185,000 The Learning Company, 5.50%, 11/1/00 1,056,131
Total Convertible Bonds 19,607,522
<PAGE>
GREENSPRING FUND, INCORPORATED
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
BONDS (CON'T)
Principal
Amount Value
Non-Convertible Bonds (11.92%)
$4,499,000 Americold Corp., 12.875%, 5/1/08 $ 5,750,284
2,445,000 Bayview Capital Corp., 9.125%, 8/15/07 2,518,350
1,500,000 B.F. Saul Real Estate Investment Trust,
11.625%, 4/1/02 1,595,625
5,700,000 Computervision Corporation,
11.375%, 8/15/99 5,742,750
1,000,000 Figgie International, 9.875%, 10/1/99 1,041,250
2,701,000 Homeland Stores, 10.00%, 8/1/03 2,481,544
1,000,000 +Life Savings Bank, 13.50%, 3/15/04 1,001,250
400,000 Ocwen Financial, 11.875%, 10/1/03 452,500
1,000,000 U.S. Treasury, 7.125%, 9/30/99 1,023,906
Total Non-Convertible Bonds 21,607,459
Bonds in Reorganization (.14%)
2,900,000 #Lomas Mortgage, 10.25%, 10/1/02 251,720
Total Bonds in Reorganization 251,720
Total Bonds (Cost $41,636,649) 41,466,701
<PAGE>
GREENSPRING FUND, INCORPORATED
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
SHORT-TERM INVESTMENTS (5.79%)
Principal
Amount Value
Commercial Paper (3.86%)
$7,000,000 General Electric Credit Corp.,
5.838%, 1/14/98 $ 7,000,000
Total Commercial Paper 7,000,000
Other Short-Term Investments (1.93%)
Rodney Square Money Market 3,501,016
Total Other Short-Term Investments 3,501,016
Total Short-Term Investments
(Cost $10,501,016) 10,501,016
Total Investments in Securities (99.67%)
(Cost $144,922,479) 180,635,339
Other Assets Less Liabilities (.33%) 578,991
Total Net Assets (100%) $181,214,330
*Non-income producing securities
+144A securities, representing 4.21% of net assets
#Non-income producing, Board valued illiquid security, representing .14% of net
assets
!Non-controlled affiliated issuer
The accompanying notes are an integral part of these financial statements
<PAGE>
GREENSPRING FUND, INCORPORATED
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
ASSETS
Investments, at market value (Cost $144,922,479) $180,635,339
Cash 1,027,178
Interest receivable 777,124
Receivable for Fund shares sold 580,579
Purchased interest 229,297
Dividends receivable 161,212
Prepaid expense 26,944
Total Assets 183,437,673
LIABILITIES
Payable for securities purchased 1,778,990
Payable for Fund shares repurchased 272,611
Due to investment advisor 90,792
Accrued expenses 80,950
Total Liabilities 2,223,343
NET ASSETS
Capital stock, $.01 par value, authorized
30,000,000 shares, outstanding, 9,044,450 $181,214,330
NET ASSETS CONSIST OF:
Capital stock at par value 90,445
Paid in capital 145,034,760
Undistributed net realized gains 376,265
Net unrealized appreciation of investments 35,712,860
Net Assets $181,214,330
NET ASSET VALUE PER SHARE $ 20.04
The accompanying notes are an integral part of these financial statements.
<PAGE>
GREENSPRING FUND, INCORPORATED
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
INVESTMENT INCOME
Income
Interest $ 3,806,231
Dividend from non-affiliated issuers 1,682,095
Dividend from non-controlled affiliated issuers 101,975
Other Income 34,170
Total Income $ 5,624,471
Expenses
Investment advisory fees 1,028,465
Administrative 128,674
Transfer agent fees 57,690
Registration fees 39,226
Professional fees 35,907
Custodian fees 35,814
Filing fees 22,453
Reports to shareholders 15,109
Directors fees 6,200
Fidelity bond 3,013
Total Expenses 1,372,551
Net Investment Income 4,251,920
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments 5,155,949
Net change in unrealized appreciation of investments 19,033,538
Net Realized and Unrealized Gain on Investments 24,189,487
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 28,441,407
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,
1997 1996
OPERATIONS:
Net investment income $ 4,251,920 $ 3,593,335
Net realized gain from investments 5,155,949 3,526,614
Net change in unrealized appreciation of
investments 19,033,538 8,864,297
Net increase in net assets resulting from
operations 28,441,407 15,984,246
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income (5,151,311) (2,789,842)
Net realized gain on investments (5,054,261) (2,752,675)
Distributions in excess of net
investment income (127,012) -
Net decrease in net assets from
distributions to shareholders (10,332,584) (5,542,517)
CAPITAL STOCK TRANSACTIONS:
Sale of 4,683,274 and 1,319,471 shares 89,108,348 21,518,835
Distributions reinvested of 486,121 and
317,469 shares 9,527,618 5,231,782
Redemptions of 1,433,404 and
1,102,859 shares (27,022,113) (17,539,787)
Increase in net assets from capital stock
transactions 71,613,853 9,210,830
TOTAL INCREASE IN NET ASSETS 89,722,676 19,652,559
NET ASSETS AT BEGINNING OF PERIOD 91,491,654 71,839,095
NET ASSETS AT END OF PERIOD $181,214,330 $91,491,654
The accompanying notes are an integral part of these financial statements.
<PAGE>
GREENSPRING FUND, INCORPORATED
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
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 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 straight line 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, 1997
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. In order for
the Fund's capital accounts and distributions to shareholders to reflect the
tax character of certain transactions, reclassifications were made during the
period. The net results of operations and net assets were not affected by the
reclassifications.
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.
Reclassifications - Certain 1996 amounts have been reclassified to conform
with the 1997 presentation. The net results of operations and net assets were
not affected by the reclassifications.
Note 2 - Dividends and Distributions of 1997 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 17, 1997, the Board of Directors declared an income dividend , a
short-term capital gains distribution and a long-term capital gains distribution
of $.40000, $.02012 and $.02035 per share, respectively, payable on July 18,
1997 to shareholders of record on July 16, 1997. Additionally, on December 24,
1997, the Board of Directors declared an income dividend, a short-term capital
gains distribution and a long-term capital gains distribution of $.28300,
$.30410 and $.25230 per share, respectively, payable on December 26, 1997 to
shareholders of record on December 23, 1997.
<PAGE>
GREENSPRING FUND, INCORPORATED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
Note 2 - Dividends and Distributions of 1997 Taxable Earnings (Con't)
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.
Note 3 - Purchases and Sales of Investments
For the year ended December 31, 1997, purchases and sales of investments,
other than short-term investments, aggregated $118,631,561 and $55,844,188,
respectively.
For federal income tax purposes, the cost of investments owned at December 31,
1997 was $144,922,479. Net unrealized appreciation of such investments
aggregated $35,712,860, which was composed of appreciation of $39,532,735 for
those securities having an excess of value over cost, and depreciation of
$3,819,875 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. Key Equity
will waive advisory fees if total expenses, excluding interest, taxes, brokerage
commissions and extraordinary expenses, exceed 1.50% of average daily net
assets up to $30,000,000 and 1.00% of average daily net assets in excess of
$30,000,000. Investment advisory fees incurred for the year ended December 31,
1997 were $1,028,465. At December 31, 1997, investment advisory fees payable
amounted to $90,792.
Certain of the Fund's officers and directors are also officers and directors
of Key Equity and Corbyn Investment Management. At December 31, 1997, investors
for whom Corbyn Investment Management was investment advisor held 1,273,092
shares of the Fund's common stock.
Note 5 - Investment in Non-Controlled Affiliates
Affiliated issuers, as defined in the Investment Company Act of 1940, are
issuers in which the Fund held 5% or more of the outstanding voting securities.
<PAGE>
GREENSPRING FUND, INCORPORATED
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1997 1996 1995 1994 1993
Net Asset Value, Beginning of Period $ 17.24 $ 15.05 $ 13.39 $ 13.96 $ 13.78
Income From Investment Operations
Net Investment Income 0.50 0.74* 0.70 0.51 0.40
Net Realized and Unrealized Gain/Loss on Investments 3.58 2.60* 1.78 (0.12) 1.59
Total From Investment Operations 4.08 3.34 2.48 0.39 1.99
Less Distributions
Net Investment Income (0.67) (0.59) (0.68) (0.51) (0.40)
Net Realized Gain on Investments (0.60) (0.56) (0.07) (0.45) (1.41)
Distributions in Excess of Net Investment Income (0.01) ( - ) ( - ) ( - ) ( - )
Distributions in Excess of Net Realized Gains ( - ) ( - ) (0.07) ( - ) ( - )
Total Distributions (1.28) (1.15) (0.82) (0.96) (1.81)
Net Asset Value, End of Period $ 20.04 $ 17.24 $ 15.05 $ 13.39 $ 13.96
Total Return 23.95% 22.65% 18.79% 2.83% 14.65%
Ratios/Supplemental Data
Net Assets, End of Period (000's) $181,214 $ 91,492 $ 71,839 $ 50,322 $ 29,885
Ratio of Expenses to Average Net Assets 1.00% 1.04% 1.06% 1.27% 1.31%
Ratio of Net Investment Income to Average Net Assets 3.10% 4.69%* 4.97% 4.03% 2.78%
Portfolio Turnover 46.17% 60.74% 65.19% 76.55% 121.79%
Average Commission Paid Per Share $0.0527 $0.0477 N/A+ N/A+ N/A+
</TABLE>
*Amounts include reclassifications to conform to current year presentation.
+Disclosure not required in prior periods.
<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, 1997, 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, 1997, 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, 1997, 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.
CCOPERS & LYBRAND L.L.P.
Baltimore, MD
January 30, 1998
<PAGE>
Greenspring Fund, Incorporated
Performance Since Inception
How $10,000 invested
on 7/1/83 would have grown*
Chart
7/83 $10,000
12/83 11,223
12/84 12,692
12/85 15,238
12/86 17,668
12/87 19,304
12/88 22,389
12/89 24,762
12/90 23,149
12/91 27,626
12/92 32,190
12/93 36,906
12/94 37,952
12/95 45,082
12/96 55,291
12/97 68,532
*Figures include changes in principal value, reinvested dividends, and capital
gain distributions. Cumulative total return represents past performance. Past
expenses limitations increased the Fund's return. Investment returns and
principal value will vary and shares will be worth more or less at redemption
than at original purchase.
Average annual total returns for the one, five and ten year periods ended
December 31, 1997 were 23.95%, 16.31% and 13.51%, respectively. Average annual
returns for more than one year assume a compounded rate of return and are not
the Fund's year-by-year results, which fluctuated over the periods shown.
<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
1105 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.
250 W. Pratt Street
Baltimore, MD 21201-2304
LEGAL COUNSEL
DeMartino Finkelstein Rosen & Virga
1818 N Street, N.W.
Washington, DC 20036-2492
