Greenspring Fund,
Incorporated
<LOGO>
SEMI-ANNUAL REPORT
JUNE 30, 2000
This report is authorized for distribution
only to shareholders who have received a
copy of the official Prospectus of the
Greenspring Fund, Incorporated.
Greenspring Fund, Incorporated
July 2000
Dear Fellow Shareholders:
As managers of value-oriented mutual funds throughout the country sit down
to write their shareholder letters this quarter, the experience is far more
pleasant than during many of the past several quarters. The strong
outperformance by "value" funds as compared with "growth" funds, which had
just begun before the end of the last quarter, has continued throughout the
second quarter. From its peak on March 10, through June 30, the NASDAQ index
declined more than 21%. Value managers, on the other hand, have fared
significantly better, as indicated by the S&P Barra Value Index, which gained
more than 4%. The more speculative areas of the NASDAQ, which had led the
charge upward during the previous two years, fared even worse, with Internet
companies dropping more than 43%, as measured by the Dow Jones Internet Index.
During this period, the Greenspring Fund has generated strong positive results,
gaining more than 11%.
For the second quarter ended June 30, 2000, the Greenspring Fund rose
6.2%. The Fund has acted and reacted in a manner much more in line with the
steady, risk-averse performance achieved during most of the Fund's seventeen
year history, as opposed to the very difficult period from early-1998 through
early-2000. During that traumatic period for value investors, the historic,
mania-like outperformance by technology and telecommunications stocks confounded
and frustrated many value investors with heretofore stellar investment records.
However, aided in part by the continuation of merger and corporate
restructuring activities about which we wrote in the last letter, stocks favored
by value investors generally performed well during the last several months.
Investors once again focused more on fundamentals and less on the "story of the
day." In this environment, the Greenspring Fund performed very well, both on
an absolute basis and relative to other value managers.
1
The stock market has continued to be volatile, but stocks seem to have
more logical and explainable reasons for their movements, both upward and
downward. While it can be argued that many of the "high-fliers" are still
preposterously priced, this is not without precedent. Fast growing companies
with solid fundamentals have frequently been richly valued throughout market
history. During the last several months, however, investors became more
realistic, understanding that all the trees (in the technology world) would
not grow to the sky. During the mania period, investors were generously
bestowing the benefit of the doubt and enormous stock market valuations upon
just about all fast growing companies that had a remotely interesting concept.
As venture capitalist Jim Breyer of Accel Partners said, "People overlooked
almost all business fundamentals and drove valuations into the stratosphere."
The stock market valuations accorded many of these companies assumed that they
would achieve every inch of their ambitious business plans. To use an anology
from the world of sports, it was as if each of the National Football League
teams decided to reward every one of their draftees, even those drafted in
the late rounds, with huge multi-million dollar, guaranteed contracts on the
assumption that each and every one would one day achieve stardom. What has
happened during the last several months, however, is that "training camp"
began and, as the players showed up and exhibited their true skills and
weaknesses, the fact that many of the players were being grossly overpaid
became apparent. With many new owners knowing very little about football other
than what they saw on ESPN (substitute CNBC in the investment world), their
opinions were shallowly-based and without conviction. After realizing the
error of their ways, they decided to trade some of these players to other teams
who were willing to take the players off their hands, but only by paying lower
(and lower) salaries, resulting in losses to the original owners. Certain
players, including some of the obvious first round choices as well as some
less heralded sleepers, may turn out to be stars and eventually justify the
high prices paid; but many, if not most, will prove to have been overpaid
in the long run.
At the same time that many of the formerly high-flying stocks returned
to reality, the investment community began once again to appreciate the "Old
Economy" companies that are involved in the more basic aspects of the economy.
Becoming suddenly attracted again to "old-fashioned" concepts, such as profits
and positive cash flow, investors stopped totally neglecting these companies.
Encouraged in part by the increasing amount of takeover activity (including two
Greenspring Fund holdings, ReliaStar Financial and Shared Medical Systems) and
continued, favorable earnings reports, investors have begun to devote more
money to these grossly undervalued and recently ignored securities. To return
to the football analogy, it was as if most of the contract money had formerly
flowed principally to the glamour positions (quarterback, running back, wide
receivers), but now began to be redirected towards some of the less glamorous
positions, such as linemen, after it became obvious that these players had
significant, but previously overlooked, value.
2
* * *
One theme upon which we have increasingly focused while structuring
Greenspring Fund's portfolio is our expectation that the price of natural gas,
which is already significantly higher than last year at this time, will continue
its strength for the foreseeable future. While at the beginning of the second
quarter the Fund already had a significant position in natural gas and natural
gas-related securities (Columbia Energy, Mitchell Energy, and Union Pacific
Resources, among others), we increased our position in companies involved in the
exploration for and production of natural gas, purchasing shares in
Burlington Resources, Chieftan International, EOG Resources, HS Resources, and
Louis Dreyfus Natural Gas. Instead of selecting one or two securities to play
this theme, we have spread our investment across several securities in order
to diminish the impact of any company-specific problems, which could occur
even if our industry thesis proves correct.
Natural gas is currently benefiting from very favorable supply and
demand trends. Natural gas is a commodity and, like any commodity, its price
will rise and fall as supply and demand characteristics change. In fact, today's
high natural gas prices will cause additional capital to be directed towards
finding more supply, which will ultimately force the price lower. However, there
are certain characteristics of the current cycle that lead us to believe that
prices will remain strong for some time. Due to the long time required to
discover and then deliver significant new sources of supply of natural gas
into the marketplace, it will take the market some time to react to the
current high prices and complete the projects that will eventually lead to a
higher supply of natural gas. In the meantime, the price of natural gas will
remain strong and be susceptible to sharp near-term shifts in supply or demand.
Demand for natural gas is increasing at rates above the level of the
last decade. Space heating has traditionally been the principal driving force
behind natural gas demand, and residential and commercial demand are expected
to increase by 2-3% annually, driven in part by the fact that natural gas
continues to capture much of the new housing construction market. An important
source of strong incremental demand for natural gas, however, is the growing
demand for electricity, which has been increasing during the 1990's, at a much
faster rate than the increase in electric generation capacity (as evidenced
by the brownouts experienced in many parts of the country earlier this summer).
The booming high-tech environment has driven this strong demand for electricity.
Most parts of the country need additional electric power, and for the first
time in many years, significant additional electric capacity is being built,
largely in the form of peak power generating plants built by independent power
producers. Natural gas will fuel almost all of these new power plants, due to
the efficiency of new gas turbines and the relatively low cost and favorable
environmental characteristics of natural gas.
3
At the same time that demand for natural gas has been increasing,
supply of the fuel is tight. Reserves at the end of 1998 were at the same level
as twelve years ago. However, consumption and well depletion are both higher
so that the reserve-to-production ratio is low and falling. Low oil and natural
gas prices during the mid-1990's, combined with the highly leveraged balance
sheets of many oil and natural gas-producing companies, caused many companies to
cut back on drilling during the last several years. These events have
significantly curtailed the ability of companies to deliver gas currently.
Many companies devoted their reduced capital expenditures toward exploiting
low risk wells in already discovered fields, projects with low marginal costs,
as opposed to undertaking high-risk, high-reward searches for new deposits of
natural gas. Major new sources of natural gas will eventually be found, but
they take time to drill and additional time to build out the infrastructure
(gathering and pipeline properties) necessary to transport the gas to major
processing facilities. Managements which had invested large amounts of money
into oil and gas assets in the early 1990's came under a lot of criticism
when the high commodity prices dropped, forcing significant asset writedowns.
Current management teams remember this and are reacting more slowly to today's
high prices.
The rise and fall in the price of natural gas used to be a seasonal
phenomenon, with prices increasing in the winter months in response to increased
demand for space heating, then declining as natural gas usage dropped off with
the end of winter. Recently, however, with the increasing use of natural gas
turbines to produce electricity, demand for natural gas has sharply increased
during the summer months. The price of natural gas is currently more than $4.00
per mmBTU (million British Thermal Units), as compared with less than $2.50 per
mmBTU during the last several years at this time of year. Natural gas companies
traditionally inject gas into storage facilities during the summer months
because the nation's production and transportation system cannot meet the
winter peak demand on a daily basis. The supply shortfall in the winter is then
made up from gas in storage. Current storage levels are significantly less than
where the industry would like them to be (20% lower than a year ago and 11%
lower than the five year average at this point in the year), which should keep
the price of natural gas firm during this summer as companies continue to
build storage inventories. If the upcoming winter has normal temperature levels,
as opposed to the very warm weather of the last two winters, gas supplies in
storage could drop to very low levels and gas prices could rise sharply.
* * *
While natural gas producers are a sector about whose prospects we are
very excited, there are many other individual securities - both equities and
bonds - that we believe will generate strong performance for the Greenspring
Fund during the coming months. Although a renewed appreciation of "value"
securities has begun, a large number of sharply undervalued securities are still
4
available in the marketplace. Additionally, while we remain firmly rooted in a
value philosophy, we have made a more concentrated effort to keep our investment
horizon as broad as possible, while remaining within our realm of understanding.
We have selectively added both equities and convertible bonds of some
companies that are involved in the faster growing, high technology part of the
economy - but only if they meet our value-based criteria.
We are truly excited and very optimistic about the Greenspring Fund's
prospects to continue to provide solid positive performance in this kind of
market environment. As always, we thank you for your investment in the Fund
and encourage you to contact us should you desire a further understanding of
our current investment strategies.
Respectfully,
/s/Charles vK. Carlson
Charles vK. Carlson
President
5
GREENSPRING FUND, INCORPORATED
PORTFOLIO OF INVESTMENTS
JUNE 30, 2000
(UNAUDITED)
COMMON STOCKS (54.56%)
Shares Value
Banks - Regional (2.97%)
67,400 John Hancock Bank & Thrift Opportunity Fund $ 450,738
9,000 Mercantile Bankshares Corp. 268,312
14,476 SunTrust Banks, Inc. 661,372
-----------
1,380,422
-----------
Building Materials (1.36%)
10,300 Martin Marietta Materials, Inc. 416,506
3,700 Southdown, Inc. 213,675
-----------
630,181
-----------
Business and Public Services (5.62%)
87,600 *Barnett Inc. 897,900
10,100 *Cendant Corporation 141,400
7,100 *Right Management Consultants 74,550
67,700 *Sylvan Learning Systems, Inc. 930,875
51,900 *Waste Industries, Inc. 567,656
-----------
2,612,381
-----------
Chemicals (.56%)
6,000 E. I. DuPont de Nemours 262,500
-----------
262,500
-----------
Diversified Natural Gas (7.01%)
17,000 Columbia Energy Group 1,115,625
3,600 El Paso Natural Gas Corporation 183,375
2,700 Equitable Resources, Inc. 130,275
33,700 Kinder Morgan, Inc. 1,164,756
34,300 Questar Corp. 664,563
-----------
3,258,594
-----------
6
GREENSPRING FUND, INCORPORATED
PORTFOLIO OF INVESTMENTS
JUNE 30, 2000
(UNAUDITED)
COMMON STOCKS (CON'T)
Shares Value
Electrical Equipment (1.13%)
8,700 Emerson Electric Co. $ 525,263
-----------
525,263
-----------
Electric Power Generation (.27%)
7,000 *NRG Energy Inc. 127,750
-----------
127,750
-----------
Engineering Services (.21%)
15,000 *Baker (Michael) Corporation 97,500
-----------
97,500
-----------
Financial Services (1.52%)
69,950 AMRESCO Capital Trust 708,244
-----------
708,244
-----------
Healthcare (3.32%)
29,000 *Aquila Biopharmaceuticals 85,188
10,000 *Dura Pharmaceuticals, Inc. 143,750
90,000 *HEALTHSOUTH Corporation 646,875
44,900 *Spiros Development Corp. 667,887
-----------
1,543,700
-----------
Information Technology Services (2.12%)
110,000 *Modis Professional Services, Inc. 838,750
50,000 *Personnel Group of America 146,875
-----------
985,625
-----------
7
GREENSPRING FUND, INCORPORATED
PORTFOLIO OF INVESTMENTS
JUNE 30, 2000
(UNAUDITED)
COMMON STOCKS (CON'T)
Shares Value
Industrial Gas (.49%)
40,000 *Airgas, Inc. $ 227,500
-----------
227,500
-----------
Insurance (6.76%)
44,750 PartnerRe, Ltd. 1,585,828
77,800 UnumProvident Corp. 1,560,863
-----------
3,146,691
-----------
Manufacturing (2.48%)
52,200 *Middleby Corporation 382,527
27,275 Woodward Governor Company 772,223
-----------
1,154,750
-----------
Multi-Industry (2.30%)
4,000 Honeywell International 134,750
77,000 U.S. Industries, Inc. 933,625
-----------
1,068,375
-----------
Natural Gas Transmission/Distribution (4.32%)
5,500 Chesapeake Utilities Corporation 97,625
2,000 New Jersey Resources 76,125
28,600 Nicor, Inc. 933,075
34,000 Piedmont Natural Gas Company, Inc. 903,125
-----------
2,009,950
-----------
8
GREENSPRING FUND, INCORPORATED
PORTFOLIO OF INVESTMENTS
JUNE 30, 2000
(UNAUDITED)
COMMON STOCKS (CON'T)
Shares Value
Oil and Gas Exploration and Production (7.42%)
3,900 Burlington Resources, Inc. $ 149,175
5,300 *Chieftan International 101,031
15,600 EOG Resources, Inc. 522,600
5,000 *HS Resources, Inc. 150,000
12,300 *Louis Dreyfus Natural Gas 385,144
54,350 Mitchell Energy & Development Corp. 1,745,994
18,000 Union Pacific Resources Group, Inc. 396,000
-----------
3,449,944
-----------
Savings Institutions (1.21%)
9,000 Coastal Bancorp, Inc. 129,375
30,000 *ITLA Capital Corp. 435,000
-----------
564,375
-----------
Semiconductor (1.94%)
46,925 *S3 Incorporated 687,747
11,800 *Speedfam - IPEC, Inc. 214,612
-----------
902,359
-----------
Software and Services (1.21%)
35,000 *Sequoia Software Corporation 564,375
-----------
564,375
-----------
Telecommunications (.34%)
5,000 AT & T Corp. 158,125
-----------
158,125
-----------
Total Common Stocks (Cost $21,253,061) 25,378,604
===========
9
GREENSPRING FUND, INCORPORATED
PORTFOLIO OF INVESTMENTS
JUNE 30, 2000
(UNAUDITED)
PREFERRED STOCK (4.73%)
Principal
Amount/
Shares Value
314,629 *Prime Retail, Inc., 8.50% Pfd. B $ 2,202,403
-----------
Total Pfd. Stock (Cost $4,889,830) 2,202,403
===========
BONDS (29.93%)
Convertible Bonds (25.60%)
$ 250,000 Adaptec, Inc., 4.75%, 2/1/04 212,031
500,000 Cellstar Corp., 5.00%, 10/15/02 236,875
1,268,000 Center Trust Inc., 7.50%, 1/15/01 1,224,809
1,050,000 Dura Pharmaceuticals, 3.50%, 7/15/02 878,719
1,625,000 HEALTHSOUTH Corp., 3.25%, 4/1/03 1,298,984
1,500,000 Kellstrom Industries, 5.50%, 6/15/03 627,500
2,402,000 Kellstrom Industries, 5.75%, 10/15/02 1,032,860
1,120,000 Lechters, Inc., 5.00%, 9/27/01 940,800
4,320,000 Network Associates, 0.00%, 2/18/18 1,554,301
3,885,000 Personnel Group of America, 5.75%, 7/1/04 1,694,831
500,000 Speedfam - IPEC, Inc., 6.25%, 9/15/04 393,125
1,951,000 Waste Management, 4.00%, 2/1/02 1,812,805
-----------
11,907,640
-----------
Non-Convertible Bonds (4.33%)
250,000 Anacomp, Inc., 10.875%, 4/1/04 163,750
2,382,000 Bay View Capital Corp., 9.125%, 8/15/07 1,852,005
-----------
2,015,755
-----------
Total Bonds (Cost $16,174,715) 13,923,395
===========
10
GREENSPRING FUND, INCORPORATED
PORTFOLIO OF INVESTMENTS
JUNE 30, 2000
(UNAUDITED)
COMPANIES IN LIQUIDATION (3.20%)
Principal
Amount/
Shares Value
581,450 *!Hi Shear Industries, Inc. $ 1,489,966
-----------
Total Companies in Liquidation
(Cost $1,308,195) $ 1,489,966
===========
SHORT-TERM INVESTMENTS (10.20%)
Commercial Paper (6.02%)
$1,500,000 American Express, 6.79%, 7/5/00 1,500,000
1,300,000 Ford Motor Credit Corp., 6.72%, 7/7/00 1,300,000
-----------
2,800,000
-----------
Other Short-Term Investments (4.18%)
1,942,517 Temporary Investment Fund, Inc. 1,942,517
-----------
1,942,517
-----------
Total Short-Term Investments
(Cost $4,742,517) 4,742,517
===========
Total Investments (102.62%)
(Cost $48,368,318) 47,736,885
Other Assets Less Liabilities ((2.62%)) (1,221,771)
-----------
Total Net Assets (100%) $46,515,114
===========
*Non-income producing securities
!Non-controlled affiliated issuer
11
GREENSPRING FUND, INCORPORATED
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000
(UNAUDITED)
ASSETS
Investments, at market value (Cost $48,368,318) $47,736,885
Interest receivable 410,514
Receivable for securities sold 373,366
Dividends receivable 52,114
Prepaid expense 1,327
-----------
48,574,206
-----------
LIABILITIES
Payable for Fund shares 1,504,224
Payable for securities purchased 488,739
Accrued expenses 36,149
Due to investment adviser 29,980
-----------
2,059,092
-----------
NET ASSETS
Capital stock, $.01 par value, authorized 60,000,000 shares,
outstanding, 2,870,292 $46,515,114
===========
NET ASSETS CONSIST OF:
Capital stock at par value 28,703
Paid in capital 47,870,925
Undistributed net investment income 1,231,551
Accumulated net realized losses (1,984,632)
Unrealized depreciation of investments (631,433)
-----------
$46,515,114
===========
NET ASSET VALUE PER SHARE $ 16.21
===========
The accompanying notes are an integral part of these financial statements.
12
GREENSPRING FUND, INCORPORATED
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2000
(UNAUDITED)
NET INVESTMENT INCOME
Income
Interest $ 1,018,710
Dividend (net of foreign taxes withheld of $619) 328,759
-----------
Total Income 1,347,469
-----------
Expenses
Investment advisory fees 187,763
Professional fees 30,659
Administrative fees 25,014
Transfer agent fees 20,793
Custody fees 12,934
Registration fees 11,780
Miscellaneous fees 11,211
Reports to shareholders 8,646
Directors fees 3,400
-----------
Total Expenses 312,200
-----------
Net Investment Income 1,035,269
-----------
REALIZED AND UNREALIZED GAIN/LOSS ON INVESTMENTS
Net realized gains on investments 4,220,943
Net change in unrealized appreciation/
depreciation of investments (3,450,718)
-----------
770,225
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 1,805,494
===========
The accompanying notes are an integral part of these financial statements.
13
GREENSPRING FUND, INCORPORATED
STATEMENT OF CHANGES IN NET ASSETS
(UNAUDITED)
Six Months
Ended Year Ended
June 30, December 31,
2000 1999
---- ----
OPERATIONS:
Net investment income $ 1,035,269 $ 4,991,515
Net realized gains/(losses) from investments 4,220,943 (2,522,354)
Net change in unrealized appreciation/
depreciation of investments (3,450,718) (1,179,305)
----------- ------------
1,805,494 1,289,856
----------- ------------
DISTRIBUTION TO SHAREHOLDERS:
Net investment income - (4,860,044)
Net realized gain on investments - -
----------- ------------
- (4,860,044)
----------- ------------
CAPITAL STOCK TRANSACTIONS:
Sale of 361,296 and 482,067 shares 5,724,440 7,846,583
Distributions reinvested of 0 and
289,400 shares - 4,578,721
Redemption of 1,437,379 and 3,897,102
shares (21,827,519) (61,926,876)
------------ ------------
(16,103,079) (49,501,572)
------------ ------------
TOTAL DECREASE IN NET ASSETS (14,297,585) (53,071,760)
NET ASSETS AT BEGINNING OF PERIOD 60,812,699 113,884,459
----------- ------------
NET ASSETS AT END OF PERIOD $46,515,114 $60,812,699
=========== ============
The accompanying notes are an integral part of these financial statements.
14
GREENSPRING FUND, INCORPORATED
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
(UNAUDITED)
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.
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 Adviser to be over-the-
counter are valued at the mean of the closing bid and asked prices obtained
from sources that the Adviser 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 Adviser as directed by the
Board of Directors.
15
GREENSPRING FUND, INCORPORATED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2000
(UNAUDITED)
Note 1 - Significant Accounting Policies (Con't)
In determining fair value, the Adviser, as directed by the Board of Directors,
considers all relevant qualitative and quantitative information available.
These factors are subject to change over time and are reviewed periodically.
The values assigned to fair value investments are based on available information
and do not necessarily represent amounts that might ultimately be realized,
since such amounts depend on future developments inherent in long-term
investments. Further, because of the inherent uncertainty of valuation, those
estimated values may differ significantly from the values that would have been
used had a ready market of the investments existed, and the differences could
be material.
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.
Note 2 - Dividends and Distributions of 2000 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.
Accordingly, periodic reclassifications are made within the portfolio's capital
accounts to reflect income and gains available for distribution under income
tax regulations.
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.
As of December 31, 1999, the Fund had capital loss carryforwards of $5,172,914
for federal income tax purposes which may be applied against future net taxable
realized gains of each succeeding year until the earlier of their utilization or
expiration beginning in 2006.
16
GREENSPRING FUND, INCORPORATED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2000
(UNAUDITED)
Note 3 - Purchases and Sales of Investments
For the year ended June 30, 2000, purchases and sales of investments, other
than short-term investments, aggregated $28,507,469 and $45,807,877,
respectively.
For federal income tax purposes, the cost of investments owned at June 30, 2000
was $48,368,318. Net unrealized depreciation of such investments aggregated
$631,433 which was composed of appreciation of $5,740,677 for those securities
having an excess of value over cost, and depreciation of $6,372,110 for those
securities having an excess of cost over value.
Note 4 - Transactions with Related Parties
Corbyn Investment Management, Inc. ("Corbyn") serves as the Fund's investment
adviser. Under an agreement between the Fund and Corbyn, the Fund pays Corbyn a
fee of 0.75% of the first $250 million of average daily net assets, 0.70% of
average daily net assets between $250 million and $500 million and 0.65% of
average daily net assets in excess of $500 million, which is computed daily and
paid monthly. At June 30, 2000, investment advisory fees payable amounted to
$29,980.
Corbyn Investment Management, Inc. also serves as the Fund's administrator.
As administrator, Corbyn provides administrative services and personnel for
fund accounting, regulatory reporting and other administrative matters. As
compensation, the Fund pays Corbyn a fee of $2,500 a month plus 0.04% of average
daily net assets up to $250 million, 0.03% of average daily net assets between
$250 million and $500 million and 0.025% of average daily net assets in excess
of $500 million, which is computed daily and paid monthly. At June 30, 2000,
administrative fees payable amounted to $4,099.
As of June 30, 2000, investors for whom Corbyn Investment Management was
investment adviser held 594,762 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.
17
GREENSPRING FUND, INCORPORATED
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C>
For the Six
Months Ended
June 30,
2000 1999 1998 1997 1996 1995
---- ---- ---- ---- ---- ----
Net Asset Value, Beginning of Period $15.41 $16.10 $20.04 $17.24 $15.05 $13.39
------ ------ ------ ------ ------ ------
Income From Investment Operations
Net Investment Income 0.38 1.16 0.76 0.50 0.74 0.70
Net Realized and Unrealized Gain/Loss on Investments 0.42 (0.73) (3.91) 3.58 2.60 1.78
------ ------- ------- ------ ------ ------
Total From Investment Operations 0.80 0.43 (3.15) 4.08 3.34 2.48
------ ------- ------- ------ ------ ------
Less Distributions
Net Investment Income ( - ) (1.12) (0.75) (0.67) (0.59) (0.68)
Net Realized Gain on Investments ( - ) ( - ) (0.04) (0.60) (0.56) (0.07)
Distributions in Excess of Net Investment Income ( - ) ( - ) ( - ) (0.01) ( - ) ( - )
Distributions in Excess of Net Realized Gains ( - ) ( - ) ( - ) ( - ) ( - ) (0.07)
------- ------- ------- ------- ------- -------
Total Distributions ( - ) (1.12) (0.79) (1.28) (1.15) (0.82)
------- ------- ------- ------- ------- -------
Net Asset Value, End of Period $16.21 $15.41 $16.10 $20.04 $17.24 $15.05
======= ======= ======= ======= ======= =======
Total Return 5.19% 2.64% (15.97%) 23.95% 22.65% 18.79%
======= ======= ======== ======= ======= =======
Ratios/Supplemental Data
Net Assets, End of Period (000's) $46,515 $60,813 $113,884 $181,214 $91,492 $71,839
======= ======= ======== ======== ======= =======
Ratio of Expenses to Average Net Assets 1.24%* 1.08% 1.01% 1.00% 1.04% 1.06%
======= ======= ======== ======== ======= =======
Ratio of Net Investment Income to Average Net Assets 4.12%* 6.10% 3.77% 3.10% 4.69% 4.97%
======= ======= ======== ======== ======= =======
Portfolio Turnover 59.57% 91.27% 71.62% 46.17% 60.74% 65.19%
======= ======= ======== ======== ======= =======
*Annualized
</TABLE>
18
GREENSPRING FUND, INCORPORATED
PERFORMANCE SINCE INCEPTION
<CHART>
HOW $10,000 INVESTED ON 7/1/83 WOULD HAVE GROWN*
7/01/83 $10,000
12/31/83 11,223
12/31/84 12,692
12/31/85 15,238
12/31/86 17,668
12/31/87 19,304
12/31/88 22,389
12/31/89 24,762
12/31/90 23,149
12/31/91 27,626
12/31/92 32,190
12/31/93 36,906
12/31/94 37,952
12/31/95 45,082
12/31/96 55,291
12/31/97 68,532
12/31/98 57,585
12/31/99 59,108
6/30/00 62,176
19
Greenspring Fund, Incorporated
2330 West Joppa Road, Suite 110
Lutherville, MD 21093
(410) 823-5353
(800) 366-3863
greenspringfund.com
DIRECTORS TRANSFER AGENT
Charles vK. Carlson, Chairman PFPC, Inc.
William E. Carlson 400 Bellevue Parkway
David T. Fu Wilmington, DE 19809
Michael J. Fusting (800) 576-7498
Michael T. Godack
Richard Hynson, Jr. ADMINISTRATOR
Corbyn Investment Management, Inc.
OFFICERS 2330 West Joppa Road, Suite 108
Charles vK. Carlson Lutherville, MD 21093
President and Chief Executive Officer
CUSTODIAN
Michael T. Godack PFPC Trust Company
Sr. Vice President and 8800 Tinicum Blvd.
Chief Compliance Officer Third Floor, Suite 200
Philadelphia, PA 19153
Michael J. Fusting
Sr. Vice President and INDEPENDENT ACCOUNTANTS
Chief Financial Officer PricewaterhouseCoopers LLP
250 W. Pratt Street
Elizabeth Agresta Swam Baltimore, MD 21201-2304
Secretary and Treasurer
INVESTMENT ADVISER LEGAL COUNSEL
Corbyn Investment Management, Inc. Kirkpatrick & Lockhart LLP
2330 West Joppa Road, Suite 108 1800 Massachusetts Avenue, N.W.
Lutherville, MD 21093 Washington, DC 20036-1800
