FORM N-CSR
CERTIFIED SHAREHOLDER REPORT
OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-3627
Greenspring Fund, Incorporated
(Exact Name of Registrant as Specified in Charter)
2330 West Joppa Road, Suite 110
Lutherville, Maryland 21093-4641
(Address of Principal Executive Offices)(Zip Code)
Registrant's Telephone Number, including Area Code: (410)823-5353
Mr. Charles vK. Carlson, President
2330 West Joppa Road, Suite 110
Lutherville, Maryland 21093-4641
(Name and address of Agent for Service)
Date of fiscal year end: December 31, 2004
Date of reporting period: December 31, 2004
Form N-CSR is to be used by management investment companies to file reports
with the Commission not later than 10 days after the transmission to
stockholders of any report that is required to be transmitted to stockholders
under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1).
The Commission may use the information provided on Form N-CSR in its
regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form
N-CSR unless the Form displays a currently valid Office of Management and
Budget ("OMB") control number. Please direct comments concerning the
accuracy of the information collection burden estimate and any suggestions
for reducing the burden to Secretary, Securities and Exchange Commission,
450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this
collection of information under the clearance requirements of 44 U.S.C. ss 3507.
Item 1. Reports to Stockholders.
The Greenspring Fund's Annual Report as transmitted to stockholders pursuant
to Rule 30e-1 under the Act (17 CFR 270.30e-1) is as follows:
GREENSPRING
FUND
(LOGO)
ANNUAL REPORT
DECEMBER 31, 2004
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
January 2005
Dear Fellow Shareholders:
We are pleased to report that for 2004 the Greenspring Fund had positive
performance of 8.7%, including the reinvestment of all dividends and
distributions. This gain was achieved in a steady, positive manner
through the year with less volatility than the major stock market averages.
This consistency is illustrated by the monthly performance of the
Greenspring Fund, when compared with various well-known indices.
The Greenspring Fund rose in ten out of the twelve months of 2004,
as compared with the Dow Jones Industrial Average, which rose in only
six of the months, the Standard & Poor's 500 Index (S&P 500), which rose
in nine of the twelve months, and the NASDAQ Composite, which gained in
just seven months of the year. The pursuit of steady, consistent gains that
are less dependent upon strong stock or bond markets has always been one of
the main tenets of Greenspring Fund's investment philosophy.
Thanks to a surprisingly strong post-election rally in the fourth quarter,
most of the major stock market averages had positive performances for 2004,
posting back-to-back yearly gains for the first time since 1999. For the year,
the Dow Jones Industrial Average rose a little over 5%, the S&P 500 gained
more than 10%, and the NASDAQ increased over 8%. The stock market faced many
obstacles during the year, including the anxieties created by the war in Iraq,
continuing fears of terrorism, the ebbs and flows in the Presidential
campaign, rising short-term interest rates, and a sharp decline in the value
of the dollar relative to foreign currencies. Surprisingly, the stock market
took most of these events in stride with the major averages experiencing less
price volatility than that seen over the last few years.
The Greenspring Fund is designed for long-term investors; therefore, it is
important to examine our longer-term performance record also. The Greenspring
Fund's three-year, five-year, ten-year, and since inception (July 1, 1983)
average annual returns for the periods ended December 31, 2004 are 10.3%,
11.3%, 10.3%, and 11.4%, respectively. All figures assume the reinvestment of
all dividends and distributions. The achievement of steady, consistent gains
over the long term, throughout market cycles that may include significant
volatility, has always been, and continues to be, the prime objective of the
Greenspring Fund. Of course, past performance does not guarantee future results.
During 2004, the equities in the Greenspring Fund performed far stronger than
did the fixed income securities, although the performance of individual
securities was not as consistently positive in the stock portion of the Fund.
However, the vast majority of the equities owned by the Fund had gains during
the year, while every convertible bond held in the Fund had positive total
return performance during 2004.
1
Our investment in Energen Corporation had the largest individual impact
on the Greenspring Fund's performance. Energen owns a natural gas utility,
Alabama Gas Corporation, that distributes gas throughout northern and central
Alabama, but it also has a growing portfolio of domestic oil and natural
gas properties. With the increase in the price of both commodities during
the year, Energen's oil and gas operations produced a significant amount
of earnings and cash flow for the Company. The Fund purchased Energen shares
in May of 2004 in the $40-$41 range; Energen's stock ended the year at a
price of almost $59 per share and also paid us a dividend along the way.
The security with the second largest impact on the Fund's performance during
the year was the common stock of Michael Baker Corporation. The Fund purchased
the majority of its shares of Michael Baker in 2000, with incremental
additions to our position in 2001, 2003, and 2004. The common stock increased
from $10.35 per share at the beginning of 2004 to a price of $20.44 at the
end of the year. These gains were spurred by greater recognition in the
investment community resulting from reported earnings that were better than
expected, sharp improvements in the Company's balance sheet, and a growing
backlog of orders.
The common stock of Suncor Energy, a Canadian energy company that mines and
produces oil from the oil sands in Northern Alberta, as well as natural gas
in Western Canada, had the third largest impact on the Fund's performance.
After purchasing our shares in early June of 2004 around the $24 level,
Suncor's stock rose to almost $34 per share by the end of the year. The sharp
increase in the price of oil and natural gas greatly aided Suncor. The Company
was able to use the greater-than-anticipated cash flow to finance the
construction of new facilities to increase oil production from its vast
reserves of oil sands. Instead of leveraging the Company's balance sheet to
pay for these investments, Suncor was able to keep its finances in excellent
shape by using its current cash flow to pay for much of these expenditures.
One of the reasons for the consistent progression of our gains throughout the
year is our emphasis on total return investing. The Greenspring Fund has
historically devoted a significant portion of its portfolio to special
situation bonds that emphasize a total return approach. Over the last several
years, we have uncovered many attractive total return opportunities in
convertible bonds, principally "busted" convertible bonds, i.e. convertible
bonds whose attractiveness is derived more from its qualities as a fixed
income investment than from the ability of the holder to convert the bond
into stock.
In addition to attractive current yields, these convertible bonds have offered
the opportunity for capital gains. Capital gains can be realized when bonds
are called for redemption, typically at a premium to par. Additionally,
upward price pressure in convertible bonds can occur when the price of the
underlying stock increases, or when the investment community's perception of
the issuing company's financial strength improves, and/or when the issuing
company repurchases bonds in the open market. This capital appreciation, when
2
combined with the receipt of interest payments, has allowed the fixed income
portion of the Greenspring Fund to generate returns in some years that have
been close to that realized by equities, with the returns having been attained
with far less volatility and risk. Such increase in principal value is the
reason that the returns achieved in our fixed income investments during 2004
were superior to the yield-to-maturity present in the investments at the
beginning of the year. These incremental gains are especially valuable in the
current low interest rate environment.
Within the fixed income securities portion of the Greenspring Fund, our
investment in the convertible bonds of Curagen Corporation had the largest
impact on performance. The bond rose in price from just over 88% of par to
almost 100% of par during the year, and we also collected an attractive
current yield of more than 6.5% based upon the price at the beginning of
the year. During the year, Curagen repurchased $20 million out of $150 million
bonds originally issued, sending a message of confidence to the investment
community, as well as putting upward price pressure on the bonds.
Additionally, the Company raised an additional $110 million in a separate
convertible bond issue, thus significantly improving the perception in the
investment community of its ability to retire the 6% converts at their
maturity in early 2007. We believe that it is likely that Curagen will call
these 6% bonds for redemption, at a premium, sometime in 2005.
The duration, or expected holding period, of our fixed income investments
remains quite short (approximately two years). We have specifically designed a
relatively short duration for our bond investments to shield the Greenspring
Fund from the negative impact on longer-term bond prices that would result
from rising interest rates. In the current low interest rate environment, we
believe that careful, thorough credit analysis should continue to be done. It
is important to avoid the temptation to loosen standards and "stretch" for
higher yields by investing in bonds of companies with less-than-stellar
finances. We will remain disciplined, focusing on bonds of those companies
that have solid balance sheets, with a combination of current cash holdings
and/or anticipated future cash flow that we believe is adequate to easily
retire its debt at maturity.
Looking at the stock market, we remain somewhat cautious in our outlook for
2005. It seems that quite a bit of good news has already been priced into
current valuations, or at least, valuations seem to assume that many of
today's looming problems will be resolved benignly. While the situation in
Iraq and concerns about terrorism seem to be producing less anxiety
domestically, the problems are far from resolved. Additionally, the economy
is still adjusting to rising short-term interest rates, persistent weakness
in the dollar, and expanding trade and budget deficits. Recently, investors
have ignored these economic concerns and have purchased stocks
enthusiastically. However, the general stock market has again risen to lofty
valuations and may be susceptible to a sharp fall if triggered by an
unexpected negative development.
While we are somewhat frustrated that more stocks are not available at what we
consider satisfactory valuations, we remain patient and will wait for
acceptable entry points provided by market fluctuations. We have targeted
3
several promising stocks with attractive prospects, but we are waiting to
purchase them at prices that are more favorable. In the meantime, our
convertible bond investments continue to generate above-average short-term
returns. These bonds are easily traded, and will be sold to raise cash for
the purchase of promising equities or other bonds as they become available
at better prices. We believe that careful stock and bond selection will be
particularly important in 2005.
All of us at the Greenspring Fund wish you a healthy and prosperous New Year,
and we look forward to reporting on our progress during 2005. Complete 2004
distribution information, performance charts, top ten holdings and other data
may be found on our web site at www.greenspringfund.com. As always, we invite
our shareholders to contact us with questions or comments relating to the Fund.
Respectfully,
/s/Charles vK. Carlson
Charles vK. Carlson
President
4
Security Diversification*
(Pie Chart)
Common Stock 45%
Preferred Stock 1%
Bonds 49%
Cash 4%
Other 1%
Equity and Bond Industries*
(Table)
Semiconductor Equipment 8.9%
Financial Services 7.7%
Telecommunications 6.8%
Software 6.4%
Construction Services 6.3%
Semiconductors 6.2%
Insurance 5.9%
Biotechnology 5.2%
Transportation 4.4%
Solid Waste Services 4.1%
Oil and Gas Exploration/Production 3.4%
Insurance - Brokerage 3.4%
Manufacturing 3.3%
Business and Professional Services 2.6%
Diversified Natural Gas 2.4%
Engineering Services 2.3%
Utilites - Electric 2.0%
Communication Equipment 1.9%
Healthcare 1.8%
Banks - Regional 1.7%
Real Estate 1.5%
Multi-Industry 1.4%
Computer Storage Devices 1.3%
Oil and Gas Services 1.0%
Savings Institutions 1.0%
Utilities - Natural Gas 0.7%
Pharmaceuticals 0.7%
Registered Investment Company 0.5%
Electrical Equipment 0.5%
-----
Total 95.3%
*as a percentage of net assets as of December 31, 2004.
5
Expense Example
(Unaudited)
As a shareholder of the Fund, you incur two types of costs:
(1) redemptions fees if you redeem within 60 days of purchase; and
(2) ongoing costs, including management fees and other Fund expenses.
This example is intended to help you understand your ongoing costs
(in dollars) of investing in the Fund and to compare these costs with
the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested for the six
month period ending December 31, 2004.
Actual Expenses
The first line of the table below provides information about actual
account values and actual expenses. You may use the information in
this line, together with the amount you invested, to estimate the
expenses that you paid over the period. Simply divide your account
value by $1,000 (for example, an $8,600 account value divided by
$1,000 = 8.6), then multiply the result by the number in the first
line under the heading entitled "Expenses Paid During Six Months
Ending 12/31/04" to estimate the expenses you paid on your account
during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual
expense ratio and an assumed rate of return of 5% per year before expenses,
which is not the Fund's actual return. The hypothetical account values
and expenses may not be used to estimate the actual ending account
balance or expenses you paid for the period. You may use this
information to compare the ongoing costs of investing in the Fund and
other funds. To do so, compare this 5% hypothetical example with the 5%
hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight
your ongoing costs only and do not reflect any transactional costs, such as
redemption fees. Therefore, the hypothetical information is useful in
comparing ongoing costs only, and will not help you determine the relative
total costs of owning different funds. In addition, if these transactional
costs were included, your costs would have been higher.
6
Expense Table
(Unaudited)
Expenses
Paid During
Beginning Ending Six Month Period
Account Value Account Value Ending
7/1/04 12/31/04 12/31/04*
------ -------- --------
Actual $1,000.00 $1,058.30 $5.48
Hypothetical
(5% return before expenses)$1,000.00 $1,019.81 $5.38
*Expenses are equal to the Fund's annualized expense ratio of 1.06%,
multiplied by the average account value over the period, multiplied by 184
(days in most recent fiscal half-year)/366 (to reflect the one-half year
period).
7
Growth of a $10,000 Investment in the Greenspring Fund
Over the Last Ten Years
(Line Chart)
Morningstar Morningstar
Greenspring Russell Moderate High Yield
Fund 3000 Allocation Bond
----- ------ ---------- ------
12/94 $10,000 $10,000 $10,000 $10,000
12/95 11,879 13,680 12,573 11,667
12/96 14,570 16,665 14,347 13,257
12/97 18,059 21,961 17,128 14,959
12/98 15,175 27,263 19,397 14,936
12/99 15,576 32,960 21,428 15,658
12/00 18,012 30,502 21,794 14,426
12/01 19,854 27,006 20,783 14,674
12/02 18,665 21,189 18,407 14,397
12/03 24,515 27,770 22,100 17,862
12/04 26,645 31,089 24,005 19,627
Greenspring Fund's Average Annual Total Returns
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
8.69% 10.30% 11,34% 10.30%
Past performance does not guarantee future results. Performance data
quoted represents past performance. Investment return and principal
value of an investment will fluctuate so that an investor's shares,
when redeemed, will be worth more or less than their original cost. The
graph and table above do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund shares.
8
GREENSPRING FUND, INCORPORATED
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 2004
COMMON STOCKS (45.2%)
Shares Value
------ -----
Banks - Regional (1.7%)
6,100 Columbia Bancorp $ 208,559
26,190 Provident Bankshares Corporation 952,530
14,476 SunTrust Banks 1,069,487
------------
2,230,576
------------
Business and Professional Services (2.6%)
165,450 *FTI Consulting 3,486,032
------------
3,486,032
------------
Communication Equipment (1.9%)
339,870 *Radyne ComStream Inc. 2,538,829
------------
2,538,829
------------
Computer Storage Devices (1.3%)
55,000 Imation Corporation 1,750,650
------------
1,750,650
------------
Construction Services (2.4%)
44,700 *Emcor Group 2,019,546
185,194 *U.S. Home Systems 1,138,943
------------
3,158,489
------------
Diversifed Natural Gas (2.4%)
54,200 Energen Corp. 3,195,090
------------
3,195,090
------------
Electrical Equipment (0.5%)
8,700 Emerson Electric Co. 609,870
------------
609,870
------------
9
GREENSPRING FUND, INCORPORATED
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 2004
COMMON STOCKS (CON'T)
Shares Value
------ -----
Engineering Services (2.3%)
155,525 *Michael Baker Corporation $ 3,048,290
------------
3,048,290
------------
Financial Services (0.8%)
23,000 CIT Group Inc. 1,053,860
------------
1,053,860
------------
Healthcare (1.8%)
165,600 *Nabi Biopharmaceuticals 2,426,040
------------
2,426,040
------------
Insurance (5.9%)
11,300 Assurant, Inc. 345,215
25,250 *KMG America Corporation 277,750
34,450 PartnerRe, Ltd. 2,133,833
209,000 *United National Group Ltd. 3,891,580
24,700 W.R. Berkley Corporation 1,165,099
------------
7,813,477
------------
Insurance - Brokerage (3.4%)
389,600 *USI Holdings Corp. 4,507,672
------------
4,507,672
------------
Manufacturing (0.2%)
13,600 Tredegar Corporation 274,856
------------
274,856
------------
10
GREENSPRING FUND, INCORPORATED
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 2004
COMMON STOCKS (CON'T)
Shares Value
------ -----
Multi-Industry (1.4%)
38,400 *Griffon Corporation $ 1,036,800
20,000 Pentair, Inc. 871,200
------------
1,908,000
------------
Oil and Gas Exploration/Production (3.4%)
7,800 Burlington Resources Inc. 339,300
11,140 EOG Resources 794,950
96,000 Suncor Energy 3,398,400
------------
4,532,650
------------
Oil and Gas Service (1.0%)
109,300 *Key Energy Services 1,289,740
------------
1,289,740
------------
Real Estate (0.9%)
28,600 Gladstone Commercial Corporation 489,060
9,300 First Potomac Realty Trust 212,040
6,353 !*Nomas Corp. 635
27,500 Urstadt Biddle Properties Inc., Class A 468,875
------------
1,170,610
------------
Savings Institutions (1.0%)
30,000 Washington Mutual 1,268,400
------------
1,268,400
------------
Solid Waste Services (3.2%)
313,000 *Allied Waste Industries 2,904,640
108,500 Waste Industries USA 1,345,400
-------------
4,250,040
-------------
11
GREENSPRING FUND, INCORPORATED
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 2004
COMMON STOCKS (CON'T)
Shares Value
------ -----
Transportation (4.4%)
33,200 *Celadon Group $ 738,700
28,200 *SCS Transportation 659,034
163,500 *Wabash National Corp. 4,403,055
------------
5,800,789
------------
Utilities - Electric (2.0%)
49,500 PPL Corporation 2,637,360
------------
2,637,360
------------
Utilities - Natural Gas (0.7%)
42,000 NiSource Inc. 956,760
------------
956,760
------------
Total Common Stocks (Cost $43,002,209) 59,908,080
============
INVESTMENT IN REGISTERED INVESTMENT
COMPANY (0.5%)
57,400 John Hancock Bank & Thrift
Opportunity Fund 619,346
------------
Total Investment in Registered Investment
Company (Cost $412,008) 619,346
============
12
GREENSPRING FUND, INCORPORATED
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 2004
PREFERRED STOCK (0.6%)
Shares/
Principal
Amount Value
------ -----
30,600 Corporate Office Properties Trust 10.25% $ 826,200
------------
Total Preferred Stock (Cost $844,382) 826,200
============
CONVERTIBLE BONDS (49.0%)
Biotechnology (5.2%)
$4,058,000 CuraGen Corporation, 6%, 2/2/07 4,047,855
74,000 Human Genome Sciences, 3.75%, 3/15/07 71,595
2,821,000 Human Genome Sciences, 5%, 2/1/07 2,815,711
------------
6,935,161
------------
Construction Services (3.9%)
5,367,000 Quanta Services, 4%, 7/1/07 5,105,359
------------
5,105,359
------------
Financial Services (6.9%)
6,186,000 BISYS Group, 4%, 3/15/06 6,174,401
2,966,000 E*Trade Financial Corp., 6%, 2/1/07 3,038,296
------------
9,212,697
------------
Manufacturing (3.1%)
7,628,000 Sanmina Corporation, 0%, 9/12/20 4,097,670
------------
4,097,670
------------
Pharmaceuticals (0.7%)
425,000 Nektar Therapeutics, 3.5%, 10/17/07 411,719
453,000 Nektar Therapeutics, 5%, 2/8/07 459,229
------------
870,948
------------
13
GREENSPRING FUND, INCORPORATED
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 2004
CONVERTIBLE BONDS (CON'T)
Principal
Amount Value
------ -----
Semiconductors (6.2%)
$5,868,000 Atmel Corp., 0%, 5/23/21 $ 2,688,277
3,486,000 Brocade Communications, 2%, 1/1/07 3,326,951
2,038,000 Emulex Corporation, .25%, 12/15/23 1,902,982
280,000 PMC-Sierra, Inc., 3.75%, 8/15/06 284,375
------------
8,202,585
------------
Semiconductor Equipment (8.9%)
4,646,000 Amkor Technology, 5.75%, 6/1/06 4,558,887
5,953,000 Brooks Automation, 4.75%, 6/1/08 5,833,940
1,419,000 Photronics, Inc., 4.75%, 12/15/06 1,435,851
------------
11,828,678
------------
Software (6.4%)
1,167,000 Aspen Technology, 5.25%, 6/15/05 1,173,564
420,000 BEA Systems, Inc., 4%, 12/15/06 423,019
3,933,000 Mercury Interactive Corp., 4.75%, 7/1/07 3,987,079
2,827,000 Wind River Systems, 3.75%, 12/15/06 2,830,534
------------
8,414,196
------------
Solid Waste Services (0.9%)
1,387,000 Allied Waste Industries, 4.25%, 4/15/34 1,226,628
------------
1,226,628
------------
Telecommunications (6.8%)
5,485,000 Akamai Technologies, 5.5%, 7/1/07 5,587,844
3,817,000 Ciena Corporation, 3.75%, 2/1/08 3,397,130
------------
8,984,974
------------
Total Convertible Bonds (Cost $63,617,652) 64,878,896
============
14
GREENSPRING FUND, INCORPORATED
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 2004
SHORT-TERM INVESTMENTS (4.1%)
Shares Value
------ -----
5,502,080 Temporary Investment Fund, Inc. $ 5,502,080
------------
Total Short-Term Investments
(Cost $5,502,080) 5,502,080
============
Total Investments (99.4%)
(Cost $113,378,331) 131,734,602
Other Assets less Liabilities (0.6%) 752,030
------------
Total Net Assets (100%) $132,486,632
============
* Non-income producing securities
! Illiquid, valued by the Board of Directors
The accompanying notes are an integral part of these financial statements.
15
GREENSPRING FUND, INCORPORATED
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2004
ASSETS
Investments, at market value (Cost $113,378,331) $131,734,602
Interest receivable 738,417
Receivable for Fund shares 230,510
Dividends receivable 46,265
Other assets 9,537
------------
132,759,331
------------
LIABILITIES
Due to investment adviser 95,279
Payable for Fund shares 92,107
Accrued expenses 85,313
------------
272,699
------------
NET ASSETS
Capital stock, $.01 par value, authorized
60,000,000 shares, issued and outstanding,
6,336,745 $132,486,632
============
NET ASSETS CONSIST OF:
Capital stock at par value $ 63,367
Paid in capital 112,432,759
Undistributed net investment income 32,829
Accumulated net realized gains 1,601,406
Unrealized appreciation of investments 18,356,271
------------
$132,486,632
============
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE $ 20.91
============
The accompanying notes are an integral part of these financial statements.
16
GREENSPRING FUND, INCORPORATED
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2004
NET INVESTMENT INCOME
Income
Interest $ 3,813,490
Dividend (net of taxes of $3,720) 582,152
------------
Total Income 4,395,642
------------
Expenses
Investment advisory fees 903,010
Transfer agent fees 102,216
Administrative fees 92,666
Professional fees 50,681
Registration fees 35,889
Reports to shareholders 26,880
Miscellaneous fees 24,281
Custody fees 22,418
Directors fees 17,500
------------
Total Expenses 1,275,541
------------
Net Investment Income 3,120,101
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments 2,611,166
Capital gain distribution from regulated investment
company 54,744
Net change in unrealized appreciation/depreciation
of investments 4,596,801
------------
7,262,711
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 10,382,812
============
The accompanying notes are an integral part of these financial statements.
17
GREENSPRING FUND, INCORPORATED
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended Year Ended
December 31, December 31,
2004 2003
---- ----
OPERATIONS:
Net investment income $ 3,120,101 $ 2,522,694
Net realized gain from investments 2,611,166 8,198,186
Capital gain distribution from regulated
investment company 54,744 -
Net change in unrealized appreciation/
depreciation of investments 4,596,801 9,884,421
------------ ------------
10,382,812 20,605,301
------------ ------------
DISTRIBUTION TO SHAREHOLDERS:
Net investment income (3,378,779) (2,903,784)
Net realized gain on investments (1,186,604) -
------------- -------------
(4,565,383) (2,903,784)
------------- -------------
CAPITAL STOCK TRANSACTIONS:
Sale of shares 48,385,098 56,144,899
Distributions reinvested 4,297,481 2,665,219
Redemption of shares* (35,356,381) (18,421,198)
------------- -------------
17,326,198 40,388,920
------------- -------------
TOTAL INCREASE IN NET ASSETS 23,143,627 58,090,437
NET ASSETS AT BEGINNING OF PERIOD 109,343,005 51,252,568
------------- -------------
NET ASSETS AT END OF PERIOD** $132,486,632 $109,343,005
============= =============
*Net of redemption fees of $10,318 and $10,788 in 2004 and 2003,
respectively.
**Includes (over)/under distributed net investment income of $32,829 and
($180,524) in 2004 and 2003, respectively.
The accompanying notes are an integral part of these financial statements.
18
GREENSPRING FUND, INCORPORATED
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2004
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 accounting
principles generally accepted in the United States of America 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, including amortization of
premiums and accretion of discounts, 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 or
the official closing price for certain markets on the exchange of major
listing as of the close of the regular session of the New York Stock Exchange.
Securities that are traded principally in the over-the-counter market, listed
securities for which no sale was reported on the day of valuation, and listed
securities whose primary market is believed by Corbyn Investment Management
(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 may 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.
19
GREENSPRING FUND, INCORPORATED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2004
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.
Dividends and distributions to stockholders - The Fund records dividends and
distributions to stockholders on the ex-dividend date.
Redemption fees - The Fund is intended for long-term investors.
"Market-timers" who engage in frequent purchases and redemptions over a short
period can disrupt the Fund's investment program and create additional
transaction costs that are borne by all shareholders. Therefore, the Fund
imposes a 2% redemption fee for shares held 60 days or less. The fee is
deducted from the seller's redemption proceeds and deposited into the Fund to
help offset brokerage commissions, market impact, and other costs associated
with fluctuations in Fund asset levels and cash flow caused by short-term
trading.
The "first-in, first-out" method is used to determine the holding period.
Under this method, the date of redemption will be compared with the earliest
purchase date of shares held in the account. If the holding period for shares
purchased is 60 days or less, the fee will be charged. The redemption fee may
be modified or discontinued at any time, in which case shareholders will be
notified.
The fee does not apply to shares acquired through the reinvestment of
dividends or distributions, or shares redeemed pursuant to a systematic
withdrawal plan or a mandatory taxable distribution.
Risk of loss arising from indemnifications - In the normal course of business,
the Fund enters into contracts that contain a variety of representations,
which provide general indemnifications. The Fund's maximum exposure under
these arrangements is unknown as this would involve future claims that may
be made against the Fund that have not yet occurred. However, based on
experience, the Fund expects the risk of loss to be remote.
20
GREENSPRING FUND, INCORPORATED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2004
Note 2 - Dividends and Distributions
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 accounting principles generally accepted
in the United States of America. 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 21, 2004, the Board of Directors declared an income dividend of $.30
per share and a long-term capital gain distribution of $.099661 per share
payable on July 22, 2004 to shareholders of record on July 20, 2004.
Additionally, on December 15, 2004, the Board of Directors declared an income
dividend of $.255 per share and a long-term capital gain distribution of $.095
per share payable on December 16, 2004 to shareholders of record on December
14, 2004. Also, on December 31, 2004, the Board of Directors declared a
long-term capital gain distribution of $.15 per share payable on January 4,
2005 to shareholders of record on December 31, 2004.
These dividends are either distributed to shareholders or reinvested by the
Fund in additional shares of common stock, which are issued to shareholders.
For those shareholders reinvesting the dividends, 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, 2004, purchases and sales of investments,
other than short-term investments, aggregated $67,195,566 and $39,757,340,
respectively.
Note 4 - Federal 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.
Required Fund distributions are based on income and capital gain amounts
determined in accordance with federal income tax regulations, which differ
from net investment income and realized gains recognized for financial
reporting purposes.
21
GREENSPRING FUND, INCORPORATED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2004
Note 4 - Federal Income Taxes (Con't)
Accordingly, the composition of net assets and distributions on a tax basis
may differ from those reflected in the accompanying financial statements.
For tax purposes, net assets at December 31, 2004 consist of:
Unrealized appreciation $ 19,447,802
Unrealized depreciation (1,091,531)
-------------
Net unrealized appreciation 18,356,271
Undistributed ordinary income 32,829
Accumulated long-term capital gains 1,601,406
Paid-in capital and capital stock 112,496,126
-------------
Net assets $132,486,632
=============
Accounting principles generally accepted in the United States of America
require certain components of net assets to be reclassified between financial
and tax reporting. For the year ended December 31, 2004, the Fund increased
undistributed net investment income by $472,031 and decreased accumulated net
realized gains by $472,031. This reclassification has no effect on the net
assets or net asset value per share.
For tax purposes, distributions from the Fund during the year ended December
31, 2004 were classified as follows:
Ordinary income $ 3,378,779
Long-term capital gains 1,186,604
Return of capital -
------------
Total distributions $ 4,565,383
============
Tax cost basis of securities: $113,378,331
============
Unaudited - For taxable non-corporate shareholders, the distributed income
representing qualified dividend income subject to the 15% rate category as of
December 31, 2004 is 12.56%.
22
GREENSPRING FUND, INCORPORATED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2004
Note 5 - Transactions with Related Parties
Corbyn Investment Management 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 December 31, 2004, investment advisory fees
payable amounted to $83,379.
Corbyn 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 0.10% of average daily net assets up to
$50 million, 0.075% of average daily net assets between $50 million and $200
million and 0.05% of average daily net assets in excess of $200 million,
which is computed daily and paid monthly. At December 31, 2004,
administrative fees payable amounted to $11,900.
As of December 31, 2004, investors for whom Corbyn Investment Management was
investment adviser held 643,153 shares of the Fund's common stock.
Note 6 - Capital Stock Transactions
Proceeds and payments on capital shares as shown in the Statement of Changes
in Net Assets are the result of the following capital share transactions:
For the Year For the Year
Ended Ended
12/31/04 12/31/03
-------- --------
Sale of shares 2,390,115 3,135,756
Distributions reinvested 212,946 142,432
Redemption of shares (1,743,851) (1,065,597)
----------- -----------
Net increase of shares outstanding 859,210 2,212,591
Shares outstanding - Beginning of year 5,477,535 3,264,944
----------- -----------
Shares outstanding - End of year 6,336,745 5,477,535
=========== ===========
23
GREENSPRING FUND, INCORPORATED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2004
Note 7 - Change in Auditors
On October 29, 2004, PricewaterhouseCoopers LLP ("PwC") resigned as the
independent auditor for the Greenspring Fund (the "Fund"). On October
29, 2004, the Fund retained Tait, Weller and Baker ("Tait") as the
independent auditor for the Fund. The retention of Tait as the
independent auditor of the Fund has been approved by the Fund's Audit
Committee and Board of Directors.
The reports of PwC on the financial statements of the Fund for the fiscal
years prior to October 29, 2004 contained no adverse opinion or disclaimer
of opinion, and were not qualified or modified as to uncertainty, audit scope
or accounting principles.
In connection with its audits for the periods prior to October 29, 2004,
there have been no disagreements with PwC on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure, which disagreements, if not resolved to the satisfaction of PwC
would have caused them to make reference thereto in their report on the
financial statements for such years.
24
GREENSPRING FUND, INCORPORATED
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
12/31/04 12/31/03 12/31/02 12/31/01 12/31/00
-------- -------- -------- -------- --------
Net Asset Value,
Beginning of Period $19.96 $15.70 $17.74 $16.98 $15.41
------ ------ ------ ------ ------
Income From Investment Operations
Net Investment Income 0.52 0.53 0.88 0.93 0.85
Net Realized and Unrealized
Gain/(Loss) on Investments 1.18 4.34 (1.98) 0.79 1.51
------ ------ ------- ------ ------
Total From Investment Operations 1.70 4.87 (1.10) 1.72 2.36
------ ------ ------- ------ ------
Less Distributions
Net Investment Income ( 0.56) ( 0.61) (0.94) (0.96) (0.79)
Net Realized Gain on Investments ( 0.19) ( - ) ( - ) ( - ) ( - )
------- ------- ------- ------- ------
Total Distributions ( 0.75) ( 0.61) (0.94) (0.96) (0.79)
------- ------- ------- ------- ------
Net Asset Value,
End of Period $20.91 $19.96 $15.70 $17.74 $16.98
====== ====== ======= ====== ======
Total Return 8.69% 31.34% (5.99%) 10.23% 15.64%
====== ====== ======= ====== ======
Ratios/Supplemental Data
- ------------------------
Net Assets,
End of Period (000's) $132,487 $109,343 $51,253 $50,692 $46,717
======== ======== ======= ======= =======
Ratio of Expenses to
Average Net Assets 1.06% 1.14% 1.19% 1.19% 1.24%
====== ======= ======= ======= =====
Ratio of Net Investment
Income to Average Net Assets 2.60% 3.44% 5.33% 5.04% 4.83%
====== ======= ======= ======= =======
Portfolio Turnover 35.21% 102.43% 78.58% 89.41% 100.78%
====== ======= ======= ======= =======
25
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Board of Directors and Shareholders
Greenspring Fund, Incorporated
Lutherville, Maryland
We have audited the accompanying statement of assets and liabilities of
Greenspring Fund, Incorporated ("Fund"), including the portfolio of
investments, as of December 31, 2004, and the related statement of
operations, the statement of changes in net assets and the financial
highlights for the year 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 audit. The statement of changes
in net assets for the year ended December 31, 2003, and the financial
highlights for each of the four years in the period ended December 31,
2003 were audited by other auditors whose report dated January 21, 2004
expressed an unqualified opinion on such financial statement and financial
highlights.
We conducted our audit in accordance with the standards of the Public
Company Accounting Oversight Board (United States). 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,
2004 by correspondence with the custodian. 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 audit provides 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
the Fund as of December 31, 2004, the results of its operations, the changes
in its net assets and the financial highlights for the year then ended, in
conformity with accounting principles generally accepted in the United States
of America.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
January 12, 2005
26
Basic Information About Fund Directors and Officers
(Unaudited)
The Board of Directors supervises the management of the Fund. The following
list summarizes information on the Directors and Officers of the Fund for the
past five years. The address of each is 2330 West Joppa Road, Suite 110,
Lutherville, MD 21093. The Fund's Statement of Additional Information
contains additional information about Fund directors and is available,
without charge, upon request, by calling the Fund at (800)366-3863 or by
e-mailing the Fund at greenspring@greenspringfund.com.
Position Held Term of Office and Principal Occupation(s) Other
Name, Address and Age with the Fund Length of Time Served During the Past Five Years Directorships
- --------------------- ------------- --------------------- -------------------------- -------------
Term of Director
----------------
Until next Annual
Meeting of
Stockholders and
thereafter until a
successor is elected.
Term of Officer
---------------
One year
Interested Directors
and Officers
- ------------
Charles vK. Carlson President From March 1993 to present. President and Director of None
Date of Birth 11/30/59 Chairman of the Board From January 1994 to present. the Fund's Adviser.
Chief Executive Officer From February 1994 to present.
William E. Carlson Director From February 1994 to present. President of Shapiro None
Date of Birth 7/23/57 Sher Guinot & Sandler
(a law firm) from
February 1999 to
present. Partner
of Shapiro Sher Guinot
& Sandler from February
1990 to present.
Michael J. Fusting Sr. Vice President From May 1998 to present. Managing Director of the None
Date of Birth 1/12/61 Chief Financial Officer From February 1994 to present. Fund's Adviser.
Director From March 1992 to present.
Michael T. Godack Sr. Vice President From March 1991 to present. Managing Director of the None
Date of Birth 1/24/54 Director From May 1998 to present. Fund's Adviser.
From October 1982 to present.
Richard Hynson, Jr. Director From March 1985 to present. Sr. Vice President and None
Date of Birth 2/16/44 Managing Director of the
Fund's Adviser.
27
Position Held Term of Office and Principal Occupation(s) Other
Name, Address and Age with the Fund Length of Time Served During the Past Five Years Directorships
- --------------------- ------------- --------------------- -------------------------- -------------
Term of Director
----------------
Until next Annual
Meeting of
Stockholders and
thereafter until a
successor is elected.
Term of Officer
---------------
One year
Disinterested Directors
- -----------------------
David T. Fu Director From May 1990 to present. Managing Director of None
Date of Birth 6/2/56 Galway Partners L.L.C.
(a merchant bank) from
May 2001 to present.
President of Telecom
Practice (provides
information technology
services to the
telecommunications
industry and is a
subsidiary of Iconixx
Corp.) from November
2000 to May 2001. Vice
President of Business
Development of Iconixx
Corp. (a web strategy,
design and development
firm)(formerly known as
Empyrean Group, a
consolidator of
information technology
service companies) from
November 1998 to
November 2000.
Sean T. Furlong Director From March 2003 to present. Director of Finance and
Date of Birth 11/2/65 Administration at the
Gilman School from June
2003 to present. Director
of Strategic Planning of
Newell-Rubbermaid
(marketer of consumer products)
from August 2002 to May 2003.
Division Controller of Cisco
Systems (networking for the
Internet) from August 2000
to August 2002.
28
Position Held Term of Office and Principal Occupation(s) Other
Name, Address and Age with the Fund Length of Time Served During the Past Five Years Directorships
- --------------------- ------------- --------------------- -------------------------- -------------
Term of Director
----------------
Until next Annual
Meeting of
Stockholders and
thereafter until a
successor is elected.
Term of Officer
---------------
One year
Disinterested Directors
- -----------------------
Sean T. Furlong (con't) Various Controllers
positions of Black and
Decker Corporation
(global manufacturer)
from December 1997 to
July 2000.
Michael P. O'Boyle Director From July 2000 to present. Chief Financial Officer None
Date of Birth 5/20/56 of The Cleveland Clinic
Foundation (provides
patient care within a
setting of education and
research) from October
2001 to present.
Executive Vice President
and Chief Financial
Officer of MedStar
Health (a non-profit,
community-based health
care organization serving
the Baltimore-
Washington region) from
April 1999 to October
2001.
Officers
- --------
Elizabeth Agresta Swam Secretary and Treasurer From May 1998 to present. Employee of the Fund's None
Date of Birth 5/13/67 Chief Compliance Officer From July 2004 to present. Adviser from May 1998 to
present.
29
GREENSPRING FUND, INCORPORATED
PERFORMANCE SINCE INCEPTION
(CHART)
7/1/83 $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
12/31/00 68,354
12/31/01 75,345
12/31/02 70,835
12/31/03 93,036
12/31/04 101,120
*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, three, five and ten year
periods ended December 31, 2004 were 8.69%, 10.30%, 11.34% and 10.30%,
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. Returns do not reflect taxes
that shareholders may pay on Fund distributions or redemptions of Fund
shares.
30
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31
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32
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33
Greenspring Fund, Incorporated
2330 West Joppa Road, Suite 110
Lutherville, MD 21093
(410) 823-5353
(800) 366-3863
www.greenspringfund.com
The Fund's proxy voting policies and procedures, as well as its proxy
voting record for the most recent 12 months ended June 30, 2004,
are available without charge, upon request, by contacting the Fund at
(800) 366-3863 or greenspring@greenspringfund.com. The Fund will send
the information within three business days of receipt of the request,
by first class mail or other means designed to ensure equally prompt
delivery. The Fund's proxy voting record is also available on the
Commission's website at http://www.sec.gov. The Fund files its complete
schedule of portfolio holdings with the Commission for the first and third
quarters of each fiscal year on Form N-Q. The Fund's Forms N-Q are
available on the Commissions website may be reviewed and copied at the
Commission's Public Reference Room in Washington, DC. Information on the
operation of the Public Reference Room may be obtained by calling
(800) SEC-0330.The Fund's first and third quarter reports are available
on its website at www.greenspringfund.com.
DIRECTORS
Charles vK. Carlson, Chairman
William E. Carlson
David T. Fu
Sean T. Furlong
Michael J. Fusting
Michael T. Godack
Richard Hynson, Jr.
Michael P. O'Boyle
OFFICERS
Charles vK. Carlson
President and Chief Executive Officer
Michael T. Godack
Sr. Vice President
Michael J. Fusting
Sr. Vice President and
Chief Financial Officer
Elizabeth Agresta Swam
Chief Compliance Officer
Secretary and Treasurer
INVESTMENT ADVISER
Corbyn Investment Management, Inc.
2330 West Joppa Road, Suite 108
Lutherville, MD 21093-7207
TRANSFER AGENT
PFPC Inc.
760 Moore Rd.
King of Prussia, PA 19406
(800) 576-7498
ADMINISTRATOR
Corbyn Investment Management, Inc.
2330 West Joppa Road, Suite 108
Lutherville, MD 21093-7207
CUSTODIAN
PFPC Trust Company
8800 Tinicum Blvd.
Third Floor, Suite 200
Philadelphia, PA 19153
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Tait, Weller and Baker
1818 Market Street, Suite 2400
Philadelphia, PA 19103
LEGAL COUNSEL
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
Washington, DC 20036-1800
Item 2. Code of Ethics.
(a) At December 31, 2004, the Fund has a code of ethics (the "Code of
Ethics") that applies to its principal executive officer, principal
financial officer, principal accounting officer or controller, or persons
performing similar functions.
(b) For purposes of this Item, the term "code of ethics" means written
standards that are reasonably designed to deter wrongdoing and to
promote:
(1) Honest and ethical conduct, including the ethical handling of
actual or apparent conflicts of interest between personal
and professional relationships;
(2) Full, fair, accurate, timely, and understandable disclosure
in reports and documents that a registrant files with, or
submits to, the Commission and in other public
communications made by the registrant;
(3) Compliance with applicable governmental laws, rules, and
regulations;
(4) The prompt internal reporting of violations of the code
to an appropriate person or persons identified in the
code; and
(5) Accountability of adherence to the code.
(c) Not applicable
(d) Not applicable
(e) Not applicable
(f) A copy of the Fund's Code of Ethics is attached as an exhibit
hereto.
Item 3. Audit Committee Financial Expert.
The Fund's Board of Directors has designated Sean T. Furlong, an independent
director, as the Fund's audit committee financial expert. Under applicable
securities laws, a person who is determined to be an audit committee
financial expert will not be deemed an "expert" for any purpose, including
without limitation for the purposes of Section 11 of the Securities Act of
1933, as a result of being designated or identified as an audit committee
financial expert. The designation or identification of a person as an
audit committee financial expert does not impose on such person any duties,
obligations, or liabilities that are greater than the duties, obligations,
and liabilities imposed on such person as a member of the audit committee
and Board of Directors in the absence of such designation or identification.
The designation or identification of a person as an audit committee financial
expert does not affect the duties, obligations, or liability of any other
member of the audit committee or Board of Directors.
Item 4. Principal Accountant Fees and Services.
(a) Audit Fees. The aggregate fees billed in each of the last two fiscal
years for professional services rendered by the principal accountant for
the audit of the Fund's annual financial statements were $17,000 and
$18,500 for 2004 and 2003, respectively.
(b) Not applicable.
(c) Tax Fees. The aggregate fees billed in each of the last two fiscal
years for professional services rendered by the principal accountant for
tax compliance, tax advice, and tax planning were $3,500 and $4,500 for
2004 and 2003, respectively. These services are in connection with
income and excise tax returns for the Fund.
(d) Not applicable.
(e)(1) Pursuant to paragraph (c)(7)(i)(A) of Rule 2-01 of Regulation S-X,
before the accountant is engaged by the Fund or its adviser to render
audit or non-audit services, the engagement is approved by the Fund's
audit committee.
(2) 100% of the services described in paragraph (a) and (c) were
approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of
Rule 2-01 of Regulation S-X.
(f) Not applicable.
(g) Not applicable.
(h) Not applicable.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Schedule of Investments.
Investments in unaffiliated issuers is included as part of the report
to shareholders filed under Item 1 of this Form.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management
Investment Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 11. Controls and Procedures.
(a) The Fund's principal executive and principal financial officers have
evaluated the Fund's disclosure controls and procedures within 90 days of
this filing and have concluded that the Fund's disclosure controls and
procedures were effective, as of this date, in ensuring that information
required to be disclosed by the Fund in this Form N-CSR was recorded,
processed, summarized and reported timely.
(b) The Fund's principal exective and principal financial officers are aware
of no changes in the Fund's internal control over finanical reporting that
occurred during the Fund's second fiscal half-year that has materially
affected, or is reasonably likely to materially affect, the Fund's internal
control over financial reporting.
Item 12. Exhibits.
(a)(1) Code of Ethics
(a)(2) A separate certification for each principal executive and
principal financial officer of the Fund as required by Rule 30a-2(a)
under the Act (17 CFR 270.30a-2(a)).
Signatures
Pursuant to the requirements of the Securities and Exchange Act of 1934
and the Investment Company Act of 1940, the Fund has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Greenspring Fund, Incorporated
By: /s/Charles vK. Carlson
----------------------------
Charles vK. Carlson
Principal Executive Officer
February 17, 2005
Pursuant to the requirements of the Securities and Exchange Act of 1934
and the Investment Company Act of 1940, this report has been signed below
by the following persons on behalf of the Fund and in the capacities and
on the dates indicated.
Greenspring Fund, Incorporated
By: /s/Charles vK. Carlson
----------------------------
Charles vK. Carlson
Principal Executive Officer
February 17, 2005
By: /s/ Michael J. Fusting
----------------------------
Michael J. Fusting
Chief Financial Officer
February 17, 2005