GREENSPRING FUND,
INCORPORATED
<LOGO>
ANNUAL REPORT
DECEMBER 31, 1999
This report is authorized for distribution
only to shareholders who have received a
copy of the official Prospectus of the
Greenspring Fund, Incorporated.
January 2000
Dear Fellow Shareholders:
As the financial press has trumpeted very clearly, the fourth
quarter of 1999 capped off a strong year for some in the investment
community. During the last several weeks of the year, in particular,
investors herded into a small number of common stocks, pushing some of the
indices to record levels. The traditional adage of "buy low, sell high"
seemingly was replaced by "buy high, sell higher." The narrowness of this
advance has also received a great deal of attention, as well as the growing
dichotomy between "value" style of investing and the "growth" style.
Most value investors were greeting the "New Millennium" with a feeling
of good riddance after a period of sharp relative underperformance during the
last two years. Former value investing stars and organizations, such as
Warren Buffett, Mutual Shares, and the Oakmark Funds, fell from grace as
"New Era" investors dominated the investment scene. Warren Buffett's Berkshire
Hathaway suffered its first ever decline during 1999. The same happened with
Vanguard's highly successful Windsor II Fund, Vanguard's largest actively
managed fund, which lost 6%. The Oakmark Fund had its first ever decline,
dropping 11%. The Yachtman Fund fell 18%, as did the Strong Shafer Value
Fund. As Charles Royce, the venerable manager of the value-oriented Royce
Funds, put it, "it feels like we took stupid pills all year long."
During this challenging environment, the Greenspring Fund performed
in line with many other value investors. For the year, the Greenspring Fund
gained 2.64%. We did quite a bit of repositioning in the portfolio during
the year, especially in the early months, in an effort to structure the
portfolio to fare well even if the recovery in value investing takes longer
than we expect. In fact, after a very slow start during the first quarter of
1999 (down 5.7%), the Greenspring Fund performed very well compared with other
value managers. From the end of the first quarter, the Greenspring Fund
gained 8.9%
1
The disparity between growth and value was most pronounced in the
small and mid cap sectors. The growth stock sector of the Russell 2000 was
up 40% during the year, while the value sector declined 3% - the widest
spread in 20 years! The previously used analogy of a pendulum being pulled
farther and farther in the direction of the growth style is still quite
fitting. Although the pendulum started to swing back towards value several
times during 1999, these swings were short-lived and each time the pendulum
ended up being pulled even farther in the direction of growth.
Such periods of relative underperformance are not unprecedented, although
the magnitude of the current discrepancy is totally unprecedented. The last
two periods of significant relative underperformance were in 1980 during the
oil crisis, and in 1990 after the banking crisis. In both cases, the value
style snapped back into favor during the following year. We strongly believe
that this time will be no exception.
Nothing is more deleterious to one's long term wealth accumulation
than chasing last year's winners and dumping stocks or styles recently out of
favor. Investors who fled the emerging markets after several years of sharp
declines missed gains of 60% or more during last year. Small cap growth
investors who dumped their discipline a year ago to chase large caps also
would not have participated in the large rebounds enjoyed by small cap growth
investors last year. The same is true with investors in Japan who may have
thrown in the towel and capitulated a year ago, thus eliminating the
possibility of recovering a significant amount of the losses they had
endured during the preceding several years of disappointing performance. As
history points out time and time again, out of favor investment philosophies
do not remain out of favor forever.
Value investing will have its "day in the sun" again, and we believe
it will be in the near future. Although it is quite early in the year, several
chinks in the armor of the current growth stock mania have developed. Tech
investing favorites, such as Lucent Technologies, Gateway, and America Online,
have made announcements during 2000 that have caused investors to question the
sustainability of their recent growth rates. Whether the reason for this
re-examination of the investment merits is driven by earnings disappointments,
as in the case of Lucent and Gateway, or the realization of what the
acquisition of a large, established company would do to the continuation of
its meteoric growth rate, as in the case of America Online, investors seemed
to have begun to question the validity of the rationale for owning some of
the high flyers.
At the current time, the Greenspring Fund has a large number of
well-managed companies in strong competitive industry positions at valuation
levels that have not been this attractive in years. The Fund remains true to
its value-investing heritage, not chasing those stocks that we believe have
unsustainably high multiples. However, we have increasingly focused on those
2
value stocks that have more clearly visible catalysts that will result in
investor interest, even if value investing should remain out of vogue. Also,
as volatility continues to roil the stock market, and different sectors
become out of favor, we plan to be opportunistic about making investments in
areas that may not have been typical value-investing favorites. For example,
due to concerns about the effects of Y2K on information technology companies,
we were able to purchase stocks (CIBER, Complete Business Solutions, Mastech,
Modis Professional Services) and convertible bonds (Data Processing Resources,
Metamor Worldwide, Personnel Group of America) in a formerly high-flying
sector that historically was not in the realm of value investors.
A number of the companies (including Columbia Energy, Corporate
Express, CTG Resources, Data Processing Resources, Host Marriott Services,
Imperial Credit Commercial Mortgage, Long Beach Financial, MCN Energy,
Pharmaceutical Marketing) whose securities were held by the Greenspring Fund
during 1999 were the recipients of takeover proposals. This is clearly a sign
that "Corporate America" perceives significant value in the ever-growing
neglected part of the investment world. We believe that several of our current
holdings will be the subjects of merger offers during 2000. Although we never
buy a stock solely because of its takeover possibilities, this is a catalyst
that should shift more attention to many of the stocks in the value universe.
As discussed in the previous quarterly letter, our fixed income
investments were very successful during 1999, especially considering how
difficult the environment was for fixed income investors. In the worst year
ever for the 30-year U.S. Treasury bond (down 14.4% on a total return basis),
Greenspring Fund's bond investments had solid double-digit returns. Many
opportunities still exist in special situation bonds and they will continue
to be an important part of our investment strategy going forward. As we have
stated previously, an advantage of buying an undervalued bond, as compared
with an undervalued stock, is that while a stock could theoretically remain
undervalued forever, the return on an undervalued bond is guaranteed, as
long as the issuing company meets its obligations. Success does not depend
on others in the investment community agreeing with your analysis that a
particular security is undervalued, and then purchasing it. Rather, the
receipt of interest payments and the payment of the bond's principal at
maturity ensures the success of the investment.
We would once again urge caution about allocating an increasing
portion of one's assets to the headline-grabbing, high-tech sector of the
market. The "buy-growth-at-any-price/valuation-doesn't-matter" mentality
that was prevalent during 1999 is a classic late stage bull market sentiment.
It was seen during the U.S. market of the 1920's and the late 1960's, and in
Japan in the late 1980's. During each of these dangerous times, the
"old rules" were widely disparaged and publicly ridiculed as hopelessly
out-of-date. As the recent performance of many former high fliers, such as
3
Lucent Technologies (down 40% from its recent high to its recent low),
America Online (down 42%), Amazon (down 47%), and Qualcomm (down 47%)
illustrates, once one of these companies stumbles, no margin of error exists.
Lofty expectations leave little room for disappointments even for excellent,
well-run companies. The explosion of technological advances during recent
years is exciting and beneficial to our economy. We would caution, however,
against necessarily equating a good company with being a good investment.
The Greenspring Fund's goal is to buy good companies at good prices, not to
buy good companies at any price.
We wish to thank each of our shareholders for their understanding
and loyalty during this trying period for all value investors. We look
forward to the time in the not-too-distant future when the value investment
style enters another of its characteristic periods of superb relative
outperformance. We believe the year 2000 will be such a year. In the meantime,
we remain confident that the Greenspring Fund is well situated to achieve
strong investment performance this year regardless of the investment
environment.
Respectfully,
/s/ Charles vK. Carlson
Charles vK. Carlson
President
4
GREENSPRING FUND, INCORPORATED
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1999
COMMON STOCKS (57.19%)
Shares Value
Banks - Regional (3.02%)
10,000 Mercantile Bankshares Corp. $ 319,375
22,076 SunTrust Banks, Inc. 1,519,105
-----------
1,838,480
-----------
Building Materials (1.15%)
17,000 Martin Marietta Materials, Inc. 697,000
-----------
697,000
-----------
Business and Public Services (2.60%)
58,900 *Barnett Inc. 622,131
12,200 *GP Strategies Corporation 74,725
6,000 *NCO Group Inc. 179,063
27,100 *Right Management Consultants Inc. 311,650
19,600 *Waste Industries, Inc. 221,725
10,000 Waste Management, Inc. 171,875
-----------
1,581,169
-----------
Energy (4.46%)
5,800 Anadarko Petroleum Corp. 197,925
8,400 Apache Corp. 310,275
10,800 Burlington Resources, Inc. 357,075
34,600 Mitchell Energy Class A 763,363
30,850 Mitchell Energy Class B 665,203
9,730 Penn Virginia Corp. 162,978
20,000 Union Pacific Resources Group, Inc. 255,000
-----------
2,711,819
-----------
Energy Services (.32%)
25,500 *NS Group 194,438
-----------
194,438
-----------
5
GREENSPRING FUND, INCORPORATED
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1999
COMMON STOCKS (CON'T)
Shares Value
Financial Services (4.94%)
122,500 AMRESCO Capital Trust $ 1,041,250
100,289 Imperial Credit Commercial Mortgage 1,140,787
75,925 Resource Asset Investment Trust 820,939
-----------
3,002,976
-----------
Gold and Silver Mining (.67%)
10,000 Newmont Mining Corp. 245,000
15,000 Placer Dome Inc. 161,250
-----------
406,250
-----------
Healthcare (2.00%)
35,100 *Alza Corp. 1,215,338
-----------
1,215,338
-----------
Industrial Gases (.04%)
7,200 *Valley National Gases 22,950
-----------
22,950
-----------
Information Technology Services (2.87%)
6,800 *Alternative Resources Corporation 37,400
19,000 *CIBER, Inc. 522,500
41,800 *Condor Technology Solutions, Inc. 57,475
9,200 *Mastech Corp. 227,700
63,300 *Modis Professional Services, Inc. 902,025
-----------
1,747,100
-----------
6
GREENSPRING FUND, INCORPORATED
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1999
COMMON STOCKS (CON'T)
Shares Value
Insurance (9.49%)
55,000 PartnerRe, Ltd. $ 1,784,063
44,900 Reliastar Financial Corp. 1,759,519
69,500 UnumProvident Corp. 2,228,344
-----------
5,771,926
-----------
Leisure and Entertainment (1.48%)
20,000 The Seagram Company Ltd. 898,750
-----------
898,750
-----------
Manufacturing (3.07%)
22,000 Federal-Mogul Corporation 442,750
10,000 *The Middleby Corp. 56,250
34,350 *Transportation Technologies Industries, Inc. 616,153
27,275 Woodward Governor Company 750,062
-----------
1,865,215
-----------
Multi-Industry (2.94%)
1,000 *PICO Holdings 12,312
126,925 U.S. Industries, Inc. 1,776,950
-----------
1,789,262
-----------
7
GREENSPRING FUND, INCORPORATED
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1999
COMMON STOCKS (CON'T)
Shares Value
Natural Gas Transmission/Distribution (9.05%)
1,800 Chesapeake Utilities Corporation $ 33,075
21,000 Columbia Energy Group 1,328,250
2,100 CTG Resources, Inc. 72,975
35,500 Kinder Morgan, Inc. 716,656
35,500 MCN Energy Group, Inc. 843,125
37,400 Nicor, Inc. 1,215,500
8,800 NUI Corp. 232,100
16,200 Piedmont Natural Gas Company, Inc. 490,050
38,300 Questar Corp. 574,500
-----------
5,506,231
-----------
Real Estate (.28%)
23,000 Captec Net Lease Realty, Inc. 172,500
-----------
172,500
-----------
Retail - Specialty (2.20%)
28,500 *Payless ShoeSource 1,339,500
-----------
1,339,500
-----------
Savings Institutions (2.19%)
13,500 BostonFed Bancorp, Inc. 214,313
3,500 Coastal Bancorp, Inc. 61,250
45,000 Dime Bancorp, Inc. 680,625
30,000 *ITLA Capital Corp. 376,875
-----------
1,333,063
-----------
Software and Services (.88%)
11,100 *Network Associates, Inc. 296,231
7,500 *Unisys Corp. 239,531
-----------
535,762
-----------
8
GREENSPRING FUND, INCORPORATED
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1999
COMMON STOCKS (CON'T)
Shares Value
Telecommunications (1.34%)
16,000 AT & T Corp. $ 812,000
-----------
812,000
-----------
Utilities - Electric and Gas (2.20%)
11,000 Carolina Power & Light Company 334,812
13,700 Constellation Energy Group 397,300
34,000 NiSource, Inc. 607,750
-----------
1,339,862
-----------
Total Common Stocks (Cost $30,283,664) 34,781,591
===========
PREFERRED STOCK (5.16%)
265,829 Prime Retail, Inc., 8.50% Pfd. B 3,140,105
-----------
Total Pfd. Stock (Cost $4,583,896) 3,140,105
===========
9
GREENSPRING FUND, INCORPORATED
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1999
BONDS (32.49%)
Principal
Amount/
Shares Value
Convertible Bonds (22.87%)
$ 500,000 Cellstar Corp., 5.00%, 10/15/02 $ 384,063
1,268,000 Center Trust Inc., 7.50%, 1/15/01 1,201,034
1,050,000 Dura Pharmaceuticals, 3.50%, 7/15/02 847,875
1,000,000 HEALTHSOUTH Corp., 3.25%, 4/1/03 781,875
1,500,000 Kellstrom Industries, 5.50%, 6/15/03 997,500
2,863,000 Kellstrom Industries, 5.75%, 10/15/02 1,961,155
2,000,000 Metamor Worldwide, 2.94%, 8/15/04 1,718,334
3,320,000 Network Associates, 0.00%, 2/18/18 1,245,000
500,000 Personnel Group of America, 5.75%, 7/1/04 409,375
900,000 Quintiles Transnational, 4.25%, 5/31/00 876,375
4,000,000 Waste Management, 4.00%, 2/1/02 3,482,500
-----------
13,905,086
-----------
Non-Convertible Bonds (9.62%)
2,445,000 Bay View Capital Corp., 9.125%, 8/15/07 2,059,912
1,917,000 Host Marriott Travel Plaza, 9.50%, 5/15/05 1,974,510
1,830,000 Woolworth Corporation, 7.00%, 6/1/00 1,818,563
-----------
5,852,985
-----------
Total Bonds (Cost $20,062,970) 19,758,071
===========
COMPANIES IN LIQUIDATION (2.27%)
581,450 *!Hi Shear Industries, Inc. 1,344,603
2,900,000 $*Lomas Mortgage USA, Class 3 Claim 33,640
-----------
Total Companies in Liquidation
(Cost $1,308,195) 1,378,243
===========
10
GREENSPRING FUND, INCORPORATED
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1999
SHORT-TERM INVESTMENTS (3.08%)
Principal
Amount Value
$ 1,873,254 Temporary Investment Fund, Inc. $ 1,873,254
-----------
Total Short-Term Investments
(Cost $1,873,254) 1,873,254
===========
Total Investments (100.19%)
(Cost $58,111,979) 60,931,264
Other Assets Less Liabilities (.19%) ( 118,565)
------------
Total Net Assets (100%) $60,812,699
============
* Non-income producing securities
$ Illiquid, Board-valued
! Non-controlled affiliated issuer
11
GREENSPRING FUND, INCORPORATED
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
ASSETS
Investments, at market value (Cost $58,111,979) $60,931,264
Interest receivable 345,910
Dividends receivable 135,462
Receivable for securities sold 60,507
Prepaid Expense 8,297
-----------
61,481,440
-----------
LIABILITIES
Payable for securities purchased 519,672
Accrued expenses 68,128
Payable for Fund shares 41,333
Due to investment advisor 39,608
-----------
668,741
-----------
NET ASSETS
Capital stock, $.01 par value, authorized
60,000,000 shares, outstanding, 3,946,375 $60,812,699
===========
NET ASSETS CONSIST OF:
Capital stock at par value 39,464
Paid in capital 63,963,243
Undistributed net investment income 196,282
Accumulated net realized losses (6,205,575)
Unrealized appreciation of investments 2,819,285
-----------
$60,812,699
===========
NET ASSET VALUE PER SHARE $ 15.41
===========
The accompanying notes are an integral part of these financial statements.
12
GREENSPRING FUND, INCORPORATED
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
NET INVESTMENT INCOME
Income
Interest $ 4,045,956
Dividend (net of foreign taxes withheld of $2,736) 1,825,833
-----------
Total Income 5,871,789
-----------
Expenses
Investment advisory fees 613,414
Transfer agent fees 79,207
Administrative fees 62,715
Professional fees 29,975
Custody fees 29,270
Registration fees 25,273
Reports to shareholders 17,860
Miscellaneous fees 17,760
Directors fees 4,800
-----------
Total Expenses 880,274
-----------
Net Investment Income 4,991,515
-----------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS
Net realized loss on investments (2,522,354)
Net change in unrealized depreciation of investments (1,179,305)
------------
(3,701,659)
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 1,289,856
============
The accompanying notes are an integral part of these financial statements.
13
GREENSPRING FUND, INCORPORATED
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
December 31, December 31,
1999 1998
OPERATIONS:
Net investment income $ 4,991,515 $ 6,086,473
Net realized losses from investments (2,522,354) (3,675,986)
Net change in unrealized depreciation
of investments (1,179,305) (31,714,271)
------------ -------------
1,289,856 (29,303,784)
------------ -------------
DISTRIBUTION TO SHAREHOLDERS:
Net investment income (4,860,044) (6,021,662)
Net realized gain on investments - (383,500)
------------ -------------
(4,860,044) (6,405,162)
------------ -------------
CAPITAL STOCK TRANSACTIONS:
Sale of 482,067 and 2,232,947 shares 7,846,583 43,748,839
Distributions reinvested of 289,490
and 333,475 shares 4,578,721 5,898,814
Redemption of 3,897,102 and 4,538,952
shares (61,926,876) (81,268,578)
------------ -------------
(49,501,572) (31,620,925)
------------ -------------
TOTAL DECREASE IN NET ASSETS (53,071,760) (67,329,871)
NET ASSETS AT BEGINNING OF PERIOD 113,884,459 181,214,330
----------- -------------
NET ASSETS AT END OF PERIOD $60,812,699 $113,884,459
=========== =============
The accompanying notes are an integral part of these financial statements.
14
GREENSPRING FUND, INCORPORATED
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
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 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.
15
GREENSPRING FUND, INCORPORATED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
Note 1 - Significant Accounting Policies (Con't)
In determining fair value, the Advisor, 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.
As of December 31, 1999, $33,640 or less than 1% of net assets were valued
by the Advisor.
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 1999 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.
On July 15, 1999, the Board of Directors declared an income dividend of $.54
per share payable on July 16, 1999 to shareholders of record on July 14, 1999.
Additionally, on December 17, 1999, the Board of Directors declared an income
dividend of $.58 per share payable on December 20, 1999 to shareholders of
record on December 16, 1999.
These dividends are either distributed to shareholders or reinvested by the
16
GREENSPRING FUND, INCORPORATED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
Note 2 - Dividends and Distributions of 1999 Taxable Earnings (Con't)
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.
Note 3 - Purchases and Sales of Investments
For the year ended December 31, 1999, purchases and sales of investments,
other than short-term investments, aggregated $70,932,134 and $116,095,671,
respectively.
For federal income tax purposes, the cost of investments owned at December 31,
1999 was $58,250,371. Net unrealized appreciation of such investments
aggregated $2,680,893 which was composed of appreciation of $6,833,596 for
those securities having an excess of value over cost, and depreciation of
$4,152,703 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
advisor. 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 December 31, 1999, investment advisory fees payable
amounted to $39,608.
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
17
GREENSPRING FUND, INCORPORATED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
Note 4 - Transactions with Related Parties (Con't)
excess of $500 million, which is computed daily and paid monthly. At December
31, 1999, administrative fees payable amounted to $4,612.
As of December 31, 1999, investors for whom Corbyn Investment Management was
investment advisor held 745,055 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.
18
GREENSPRING FUND, INCORPORATED
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1999 1998 1997 1996 1995
Net Asset Value, Beginning of Period $16.10 $20.04 $17.24 $15.05 $13.39
------ ------ ------ ------ ------
Income From Investment Operations
Net Investment Income 1.16 0.76 0.50 0.74 0.70
Net Realized and Unrealized Gain/Loss on Investments (0.73) (3.91) 3.58 2.60 1.78
------ ------ ------ ------ ------
Total From Investment Operations 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 $15.41 $16.10 $20.04 $17.24 $15.05
======= ======= ======= ======= =======
Total Return 2.64% (15.97%) 23.95% 22.65% 18.79%
======= ======= ======= ======= =======
Ratios/Supplemental Data
- ------------------------
Net Assets, End of Period (000's) $60,813 $113,884$181,214 $91,492$71,839
======= ================ ==============
Ratio of Expenses to Average Net Assets 1.08% 1.01% 1.00% 1.04% 1.06%
======= ======= ====== ====== ======
Ratio of Net Investment Income to Average Net Assets 6.10% 3.77% 3.10% 4.69% 4.97%
======= ======= ====== ====== ======
Portfolio Turnover 91.27% 71.62% 46.17% 60.74% 65.19%
======= ======= ====== ====== ======
19
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders
of Greenspring Fund, Incorporated
In our opinion, the accompanying statement of assets and liabilities,
including the portfolio of investments, and the related statement of
operations, statement of changes in net assets and financial highlights
present fairly, in all material respects, the financial position of
Greenspring Fund, Incorporated (the "Fund"), at December 31, 1999, the
results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended and the financial
highlights for each of the periods indicated therein, in conformity with
accounting principles generally accepted in the United States. These financial
statements and financial highlights (hereinafter referred to as "financial
statements" are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits of these financial statements in accordance with
auditing standards generally accepted in the United States, which require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included confirmation
of securities at December 31, 1999 by correspondence with the custodian and
brokers, provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Baltimore, Maryland
January 28, 2000
20
GREENSPRING FUND, INCORPORATED
PERFORMANCE SINCE INCEPTION
<CHART>
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
*Figures include changes in principal value, reinvested dividends and capital
gains distributions. Cumulative total return represents past performance.
Past expense 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, 1999 were 2.64%, 9.27% and 9.09%, 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.
21
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 W. Joppa Road, Suite 108
Charles vK. Carlson Lutherville, MD 21093
President and
Chief Executive Officer CUSTODIAN
PFPC Trust Company
Michael T. Godack Airport Business Center
Sr. Vice President and 200 Stevens Drive, Suite 440
Chief Compliance Officer Lester, PA 19113
Michael J. Fusting INDEPENDENT ACCOUNTANTS
Sr. Vice President and PricewaterhouseCoopers LLP
Chief Financial Officer 250 W. Pratt Street
Baltimore, MD 21201-2304
Elizabeth Agresta Swam
Secretary and Treasurer
INVESTMENT ADVISOR LEGAL COUNSEL
Corbyn Investment Management, Inc. KirkpatricK & Lockhart
2330 West Joppa Road, Suite 108 1800 Massachusetts Avenue, N.W.
Lutherville, MD 21093 Washington, DC 20036-1800
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