Greenspring Fund Inc – ‘PRER14A’ on 1/28/98

As of:  Wednesday, 1/28/98   ·   Accession #:  711322-98-3   ·   File #:  811-03627

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Revised Preliminary Proxy Solicitation Material   —   Schedule 14A
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: PRER14A     Revised Preliminary Proxy Solicitation Material       45    156K 

Document Table of Contents

PRER14A
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DE MARTINO FINKELSTEIN ROSEN & VIRGA                
A PARTNERSHIP CONSISTING OF PROFESSIONAL CORPORATIONS                 
1818 N STREET, N.W., SUITE 400                
WASHINGTON, D.C.  20036-2492                
___                 

TELEPHONE (202) 659-0494 * TELECOPIER (202) 659-1290                
E-MAIL ADDRESS: BUSLAW@MAIL.DFRV.COM                

NEIL R.E. CARR                                         NEW YORK OFFICE          
RALPH V. DE MARTINO                                                             
STEVEN R. FINKELSTEIN*                          90 BROAD STREET, SUITE 1700     
ANNE J. FLETCHER*                               NEW YORK, NEW YORK 10004-2205   
KEITH H. PETERSON*                              TELEPHONE (212) 363-2500        
JEFFREY S. ROSEN                                TELECOPIER (212) 363-2723       
GERARD A. VIRGA*                                                                

*NOT ADMITTED TO DISTRICT OF COLUMBIA BAR                                       

                  January 20, 1998

U.S. Securities and Exchange Commission                                         
450 Fifth Street, N.W.                                                          
Washington, D.C.  20549                                                         

Attention:  Division of Investment Management                                   

Re:  Greenspring Fund, Incorporated, File No. 811-3627                          

To Whom It May Concern:                                                         

  This firm serves as securities counsel to Greenspring Fund, Incorporated
(the "Company"). Transmitted herewith for staff review, pursuant to Rule 20a-1  
of the Investment Company Act of 1940, is the Company's Revised Preliminary     
Proxy Statement on Schedule 14A, together with attachments and a form of proxy. 
The filed materials are fully responsive to the comments provided by the staff  
to the undersigned on January 5, 1998.                                          

 This is to confirm that the Company structures its Board of Directors
in accordance with Section 10(d) of the Act.  The Company was last inspected by 
staff of the Securities and Exchange Commission in September, 1996, at which    
time this issue was fully examined.                                             

  We very much appreciate your prompt response to the Company's filing and
we look forward to hearing from you concerning the enclosed.  Please address    
your comments to the undersigned.                                               

                 Yours very truly,

                   Ralph V. De Martino

RVD/hlk                                                                         
Attachments                                                                     
04130001.028.doc                                                                
cc:  Mr. Michael Fusting                                                        
Ms. Elizabeth Agresta                                                 
Mr. Kevin Rupert                                                      

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SCHEDULE 14A INFORMATION          

Proxy Statement Pursuant to Section 14(a) of the Securities       
Exchange Act of 1934 (Amendment No. 1)            

Filed by the Registrant [X]                       

Filed by a Party other than the Registrant [_]    

Check the appropriate box:                        

[X]  Preliminary Proxy Statement                  

   [_]  CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS
                    PERMITTED BY RULE 14A-6(E)(2))

[_]  Definitive Proxy Statement                   

[_]  Definitive Additional Materials              

           [_]  Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12                    

                    Greenspring Fund, Incorporated
                    (Name of Registrant as Specified In Its Charter)

           -------------------------------------------------------------------
        (Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X]  No fee required                              

[_]  Fee computed on table below per Exchange Act 
Rules 14a-6(i)(4) and 0-11.         

                   (1)  Title of each class of securities to which transaction
applies:            

                   -----------------------------------------------------------

                (2)  Aggregate number of securities to which transaction
applies:            

                   -----------------------------------------------------------

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                    (3)  Per unit price or other underlying value of transaction
                       computed pursuant to Exchange Act Rule 0-11
                         (Set forth the amount on which the filing fee
                           is calculated and state how it was determined):

                   -----------------------------------------------------------

             (4)  Proposed maximum aggregate value of transaction:

                   -----------------------------------------------------------

(5)  Total fee paid:                    

                   -----------------------------------------------------------

  [_]  Fee paid previously with preliminary materials.

            [_]  Check box if any part of the fee is offset as provided by
                         Exchange Act Rule 0-11(a)(2) and identify the
                        filing for which the offsetting fee was paid
                        previously.  Identify the previous filing by
                         registration statement number, or the Form or
                Schedule and the date of its filing.

(1)  Amount Previously Paid:            

                    ------------------------------------------------------------

          (2)  Form, Schedule or Registration Statement No.:

                    ------------------------------------------------------------

(3)  Filing Party:                      

                   -----------------------------------------------------------

(4)  Date Filed:                        

                    ------------------------------------------------------------

Notes:                                            

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    GREENSPRING FUND, INCORPORATED
   2330 WEST JOPPA ROAD, SUITE 110
   LUTHERVILLE, MARYLAND 21093

                                   February 27, 1998

Dear Shareholder:                                                               

The Board of Directors of the Greenspring Fund (the "Fund")  is asking          
you to approve several proposals that after careful consideration, it has       
unanimously agreed are in the best interests of shareholders.  The Board of     
Directors is attempting to update and improve both the Fund's advisory          
agreement and its fundamental investment policies.                              

The enclosed proxy statement describes these proposed changes in                
greater detail.  Some of the important facts about the proposals are outlined   
below:                                                                          

   Advisory fees charged to the Fund will decline as the Fund's assets
 grow.  Under the old agreement the advisory fee was fixed at .75%
 regardless of the size of the Fund.  Under the new agreement, the
       advisory fee will drop to .70% if assets reach $250 million and .65% if
    assets reach $500 million.  The Fund will no longer be subject to an
 overall expense limitation.  The Fund's advisory fee has not been
        reduced due to this limitation since 1984, the Fund's first full year of
existence.                                                      

 The proposed changes to the Fund's fundamental policies eliminate
      certain existing ambiguities and will afford the Fund greater latitude
    in pursuing its objective of providing steady consistent performance
to its shareholders.                                            

Most importantly, Greenspring Fund's investment philosophy  will not            
change.  The goal of the Board of Directors is to update and improve the Fund's 
advisory agreement and fundamental policies, documents that have changed very   
little since the Fund's inception in 1983.  Investing has evolved considerably  
since then and the Board of Directors believes these modifications will allow   
the Fund to compete more effectively in today's investment environment.         

Your vote is important!  Your timely response will reduce the expenses          
incurred by all shareholders.  Please sign and return the enclosed proxy card as
soon as possible.  If we have not received your proxy card after a reasonable   
amount of time, our proxy solicitor, Shareholder Communications Corporation,    
may call you.  If you have any questions about the voting procedure, you may    
call them at 1-800-733-8481, Ext. 429.                                          

Thank you very much for your cooperation and continued support.                 

Sincerely,

            /s/Charles vK. Carlson
           Chairman of the Board

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    GREENSPRING FUND, INCORPORATED
    2330 WEST JOPPA ROAD
    LUTHERVILLE, MARYLAND  21093

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS 
  ________________, 1998

A special meeting of shareholders of Greenspring Fund, Incorporated   
(the "Fund") will be held at 2330 W. Joppa Road, Suite 110, Lutherville,        
Maryland 21093 at 9:00 a.m., Eastern Time, on Monday, ________________, 1998.   
At the meeting, shareholders will be asked to consider and act upon the         
following proposals:                                                            

1.   To approve a new Investment Advisory Agreement between 
       the Fund and Key Equity Management Corporation.

   2.   To ratify the selection of Coopers & Lybrand L.L.P. as the
                 Fund's independent public accountants for the fiscal year
ending December 31, 1998.               

3.   The following five proposals, which will be voted on   
              individually, concern the Fund's fundamental policies:

a.   To modify the Fund's fundamental policies    
               relating to the diversification of the Fund's
assets.                       

b.   To modify the fundamental policy relating to 
                investments in real estate to provide that the
                  Fund may not purchase or sell real estate, other
                than securities representing interests in real
                 estate and fixed income obligations directly or
    indirectly secured by real estate.

  c.   To eliminate the fundamental policy relating to
            the purchase of shares of other investment
companies.                    

d.   To modify the fundamental policy relating to 
           the purchase and sale of debt securities.

  e.   To eliminate the fundamental policy restricting
             the purchase of securities if an officer or
              director of the Fund owns certain securities
issued by the same issuer.    

    4.   To elect six directors to serve until their successors have
been duly elected and shall qualify.    

  5.   To amend the Certificate of Incorporation to increase the
      authorized number of shares of Common Stock to
60,000,000.                             

  6.   To transact any other business that properly comes before
the meeting.                            

  Shareholders of record as of the close of business on  ________________,
1998 are entitled to vote at the meeting (or any adjournments of the meeting).  
This proxy statement and proxy card are being mailed to shareholders on or      
about ________________, 1998.                                                   

By Order of the Board of Directors,     

/s/ Michael T. Godack                   
Michael T. Godack                       
Senior Vice President and Secretary     

________________, 1998                                                          
Lutherville, Maryland                                                           

WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING,               
PLEASE COMPLETE AND RETURN THE ENCLOSED PROXY CARD(S).                
YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING.               

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    GREENSPRING FUND, INCORPORATED
   2330 WEST JOPPA ROAD, SUITE 110
    LUTHERVILLE, MARYLAND  21093

   PROXY STATEMENT

 SPECIAL MEETING OF SHAREHOLDERS

   _____________, 1998

This proxy statement is being sent to you by the Board of Directors of
Greenspring Fund, Incorporated (the "Fund").  The Board is asking you to        
complete and return the enclosed proxy card(s), permitting your shares of the   
Fund to be voted at the meeting, even if you cannot attend the meeting in       
person.                                                                         

 The meeting will be held at 2330 W. Joppa Road, Suite 110, Lutherville,
Maryland  21093, at 9:00 a.m. Eastern time, on Monday,________________, 1998.   

Shareholders of record at the close of business on ________________,  
1998 (called the "record date") are entitled to vote at the meeting.            

You should also have already received the Fund's Annual Report  to    
shareholders for the fiscal year ended December 31, 1997. IF YOU WOULD LIKE     
ANOTHER COPY OF THE ANNUAL REPORT, PLEASE WRITE TO THE FUND AT THE ADDRESS      
SHOWN AT THE TOP OF THIS PAGE OR TELEPHONE (800) 366-3863.  THE REPORT WILL     
BE SENT TO YOU WITHOUT CHARGE.                                                  

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INTRODUCTION    

 Since its inception in July 1983, the basic philosophy and structure of
Greenspring Fund have remained intact.  In that time however, securities markets
in which the Fund operates have evolved significantly.  There are many financial
products available in the markets today that were either unknown or rarities in 
1983, and the fundamental and general operating policies of investment companies
of all types have evolved to accommodate such market developments.              

These broad, general developments, along with the Fund's significant  
growth over the last 14-1/2 years, have led the Board of Directors to the       
conclusion that it is advisable to present to the Fund's shareholders the       
following nine proposals relating to the Fund's investment policies, operations,
fee structures and capitalization.  The Board of Directors is of the view that  
none of the proposed changes will constitute a significant or substantive change
from the current conduct of the Fund's business.  However, the Board of         
Directors believes these modifications are essential in order to keep the Fund  
consistent with current industry practices and regulatory allowances.           

In summary, the proposals which are presented for your consideration
are not intended to alter the basic nature of the Fund, but are necessary to    
allow the Fund to minimize future operating expenses, increase the Fund's       
flexibility in pursuing its investment objective, and bring the fund in line    
with current industry practices.  For the reasons stated below, the Board of    
Directors urges you to vote in favor of each of the nine proposals presented.   
PLEASE READ THIS PROXY STATEMENT CAREFULLY AND THOROUGHLY.                      

PROPOSAL 1        

APPROVAL OF A NEW INVESTMENT ADVISORY AGREEMENT       

Summary                                                                         

The Fund's Board of Directors has unanimously approved a new        
Investment Advisory Agreement ("New Agreement") for the Fund.  As described     
in more detail under the heading "Factors Considered by the Board of Directors, 
"this recommendation is the result of evaluation by the Board of Directors of a 
substantial amount of information, including information prepared by independent
sources and by Key Equity Management Corporation ("Key Equity"), over a period  
of several months. The New Agreement makes one principal change from the old    
agreement.  The basic advisory fee would change from a flat fee of 0.75% of     
average daily net assets to a breakpoint fee equal to 0.75% of average daily net
assets, up to $250 million, 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.                                                                   

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   THE BOARD OF DIRECTORS URGES YOU TO VOTE IN FAVOR OF THE NEW AGREEMENT.
The changes are explained in the discussion below and the reasons for the       
Board's decision are also set forth below.  The terms of the New Agreement      
are summarized and compared to the old agreement (and a complete copy of the    
New Agreement is attached as Exhibit A to this proxy statement).  Finally, more 
information about Key Equity is provided.                                       

   Change in the Rate of Fee.  Key Equity has served as investment advisor
to the Fund since July 1, 1983.  The current fee schedule for the Fund was      
established effective July 1, 1983.                                             

The following table summarizes the rate of compensation currently   
payable to Key Equity by the Fund and the annual rate of compensation that will 
be paid by the Fund if the New Agreement is approved by shareholders:           

ANNUAL ADVISORY FEE RATES, AS A PERCENTAGE      
OF AVERAGE DAILY NET ASSETS         

OLD AGREEMENT                                                         
0.75% of average daily net assets                                     
(computed and paid at the end of each                                 
month)                                                      

NEW AGREEMENT                                                         
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 (computed daily and paid                                 
monthly)                                                    

Change in Timing of Calculation of Advisory Fee.  Under the old     
advisory agreement, the Fund's fees paid to Key Equity are calculated monthly,  
at the end of each month, and paid in monthly installments.  This method of     
calculation has been unchanged since the Fund began operations in 1983, and is a
reflection of the manual accounting systems that were then in place. It is now  
customary (because of computerized accounting systems) to calculate mutual fund 
expenses daily and to pay them monthly.  Under the New Agreement, the advisory  
fee would be calculated daily and paid monthly.                                 

 The table below shows the total advisory fees paid by the Fund during
1997, 1996 and 1995, and the advisory fees that would have been paid if the New 
Agreement had been in place throughout those periods:                           

            ACTUAL ADVISORY FEE        PRO FORMA FEES: NEW AGREEMENT
1997             $                               $                    
1996              581,258                         572,848             
1995              494,166                         489,929             

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During 1995, 1996 and 1997, the Fund's net assets increased from                
$50,322,214  to $_____________.  As the above information reflects, the         
calculation of the advisory fee under the New Agreement tends to result in a    
slightly lower fee during periods characterized by rising total net assets; and 
the opposite holds true during periods of falling total net assets.             

   The next table shows the actual operating expenses incurred by the Fund
during 1997, and the expenses that would have been incurred had the new fee     
arrangement been in place throughout the periods expressed as a percentage of   
the Fund's average daily net assets:                                            

                      1997
                          ACTUAL                   PRO FORMA
Advisory fees                  0.75%*                     0.75%**     
12b-1 fee                       NONE                       NONE       
Other expenses                  ____%                      ____%      

Total Fund Operating Expenses   ____%                      ____%      
_______________________                                               

*Assessed monthly and paid monthly.                                   
**Assessed daily and paid monthly.                                    

Factors Considered By The Board Of Directors                                    

The Board of Directors met on June 19, 1997 and October 9, 1997 to  
discuss the advisability of the proposed changes to the old advisory agreement. 
The proposals set forth in this proxy statement were approved by the Board of   
Directors on December 15, 1997.                                                 

     The directors requested and received substantial information to assist in
their decision. The directors used publicly available information prepared by   
Lipper Analytical Services, Inc. and Morningstar, Inc., both well-recognized    
independent services that monitor mutual fund expenses and performance, as well 
as information compiled by the Investment Company Institute ("ICI"), an         
association that represents the interests of the investment company industry,   
and significant amounts of information furnished by Key Equity.                 

The Board of Directors reviewed a variety of factors relating to the
nature, quality and scope of the services provided by Key Equity, the           
performance of the Fund compared to relevant benchmarks, the Fund's historical  
fees and expenses compared to similar mutual funds, and the reasonableness of   
the proposed changes, again when compared to similar mutual funds.              

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Investment Performance.  In considering the New Agreement, the Board
of Directors also considered the short- and long-term performance of the Fund   
compared to the performance of other funds with comparable objectives and       
policies.  Specifically, the investment performance of the Fund was compared to 
mutual funds tracked by Lipper and by Morningstar with comparable investment    
objectives.                                                                     

The directors noted that during 1997 Morningstar classified the Fund
as a Domestic Hybrid Fund, and gave the Fund a four-star (out of five) or "above
average" return rating and rating of "below average" risk.  On a three-year,    
five-year and ten-year basis, respectively, Morningstar gave the Fund four-,    
five- and four-star risk-adjusted ratings.  The directors also noted that       
Lipper characterized the Fund as a Growth and Income Fund.  Several of the      
directors noted their view that the Fund might better be characterized as a     
Balanced Fund.                                                                  

   The following table shows the Fund's investment performance for various
periods ended December 31, 1996 compared to various indexes:                    

                                        AVERAGE ANNUAL TOTAL RETURNS

                                       1 YEAR      5 YEARS    10 YEARS

The Fund                               22.65%      14.89%      12.08% 

Lipper Balanced Fund Index             13.01%      10.71%      11.31% 

Lipper Growth & Income Fund Index      20.69%      14.65%      13.59% 

 The Lipper Balanced Fund Index is composed of the 30 largest (at year
end) Balanced Funds tracked by Lipper.  A Balanced Fund is defined by Lipper as 
"[a] fund whose primary objective is to conserve principal by maintaining at all
times a balanced portfolio of stocks and bonds.  Typically, the stock/bond ratio
ranges around 60%/40%."  The Lipper Growth & Income Fund Index is composed      
of the 30 largest (at year end) Growth & Income Funds tracked by Lipper.  A     
Growth & Income Fund is defined by Lipper as "[a] fund which combines a growth  
of earnings orientation and an income requirement for level and/or rising       
dividends."  All indexes are unmanaged and returns include reinvested dividends.
All performance information shown for periods longer than one year is           
annualized.  For the Fund, the information shown is "average annual total       
return" calculated as described in the prospectus.                              

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 Comparative Fees and Expense Ratios.  The directors also compared the
Fund's advisory fees and total expense ratios to similar mutual funds.          

The directors examined an ICI expense survey which provided data on 
total expense ratios of  mutual funds participating in  the ICI survey for the  
period ended December 31, 1996.  The table below shows the average advisory fee 
and total expense ratio of certain groups of mutual funds as of December 31,    
1996.                                                                           

                   AGGRESSIVE             FLEXIBLE     GROWTH/
                    GROWTH    BALANCED   PORTFOLIO    INCOME
Advisory Fee                                                          
High                   1.4023      1.1909     1.2028      1.4372    
Median                 0.7111      0.7261     0.7455      0.6079    
Low                    0.0441      0.0316     0.0696      0.0669    

Total Expense Ratio                                                   
High                   5.5762      4.3588     4.4345      5.2045    
Median                 1.3863      1.2271     1.3430      1.1721    
Low                    0.0996      0.4078     0.2819      0.1148    

No. of funds             237         151         66          293      

The Fund's pro forma management (advisory) fee, total expense ratio 
and pro forma total expense ratio for the twelve months ended December 31,      
1997 (assuming that the New Agreement was in effect throughout such period)     
would be ___%, ____% and ____%, respectively.                                   

Impact of the Proposed Advisory Fees on Performance.  The directors 
also reviewed information on the impact on the Fund's performance of the        
proposed new advisory fees.  The following table compares the Fund's actual     
average annual total return and cumulative total return (both calculated as     
described in the Fund's prospectus) to what those returns would have been if the
new advisory fee arrangement had been in place throughout the Fund's life.  As  
shown in the chart below, the new advisory fee arrangement would not have       
resulted in a significant change in the Fund's average annual total return over 
the periods shown:                                                              

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                 PERIODS ENDED DECEMBER 31, 1997
                  1 YEAR           3 YEARS

Average annual total return                                                     
Actual                                                            
Pro forma - proposed                                              
advisory fee                                                  

Cumulative total return                                                         
Actual                                                            
Pro forma - proposed                                            
advisory fee                                      

Key Equity's Operations.  Key Equity provided to the Board of       
Directors information on Key Equity's revenues and expenses in connection with  
its services to the Fund.  In considering that information, the directors       
considered the indirect benefits that Key Equity might realize from its         
relationship to the Fund.  The directors also considered the ownership and      
governance structure of Key Equity.  See "Information About Key Equity--        
Ownership and Management of Key Equity."                                        

 The directors noted that the investment style that Key Equity uses in
managing the Fund is labor intensive.  Key Equity attempts to add value by      
researching and investing in undervalued securities which often are not well    
covered by Wall Street analysts.  The directors noted that the market for       
talented investment personnel has become fiercely competitive in recent years as
a result of the growth in the investment management industry.  The directors    
recognized that Key Equity must be able to attract and retain highly qualified  
portfolio managers and analysts.                                                

    Conclusion of the Board Of Directors.  The Board of Directors considered
all of the factors referenced above, and placed particular emphasis on the      
reasonableness of the advisory fee and the Fund's investment performance.       
After considering all of the factors and information described above, the       
Board of Directors concluded that the New Agreement is fair and reasonable.     
THE DIRECTORS, INCLUDING THE DIRECTOR WHO IS NOT AN "INTERESTED PERSON" OF      
KEY EQUITY, UNANIMOUSLY VOTED TO APPROVE THE NEW AGREEMENT AND RECOMMEND THAT   
THE SHAREHOLDERS OF THE FUND VOTE FOR ITS APPROVAL.                             

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INFORMATION ABOUT KEY EQUITY                                                    

 Key Equity serves as the investment advisor for the Fund.  Key Equity
was organized in October 1982 solely to act as investment advisor to the Fund   
and commenced operation in July 1983.  The Fund is Key Equity's only client.    
Key Equity is a wholly-owned subsidiary of Corbyn Investment Management, Inc.   
("Corbyn").  The executive officers and directors of Key Equity, as well as     
their addresses and principal occupations are included under "More Information  
About Key Equity--Organization and Management of the Fund," below.  Key Equity  
and Corbyn are located at 2330 West Joppa Road, Suite 108, Lutherville, Maryland
21093.                                                                          

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DESCRIPTION OF THE NEW AGREEMENT                                                

The proposed New Agreement is attached to this proxy statement as   
Exhibit A.  The discussion here is only a summary and for more details you      
should refer to the New Agreement.                                              

   Under the New Agreement, subject to the overall supervision and control
of the Board of Directors, Key Equity will have supervisory responsibility for  
the general management and investment of the Fund's assets, just as it does     
under the old agreement.  Key Equity is authorized to make the decisions to buy 
and sell securities and other assets for the Fund, to place the Fund's portfolio
transactions with broker-dealers, and to negotiate the terms of such            
transactions, including brokerage commissions, on behalf of the Fund.  Key      
Equity is authorized to exercise discretion within the Fund's policy concerning 
allocation of portfolio brokerage, as permitted by law, including but not       
limited to Section 28(e) of the Securities Exchange Act of 1934, and in so doing
shall not be required to make any reduction in its investment advisory fees.    
The New Agreement also provides that Key Equity shall furnish to the Fund at Key
Equity's own expense, office space and all necessary office facilities,         
equipment and personnel required to provide its services.  These provisions     
are essentially unchanged from the old agreements.                              

Like the old agreement, the New Agreement provides that the Fund is 
obligated to pay all of its expenses other than those paid by Key Equity as set 
forth above, including taxes and charges for auditing and legal services,       
custodian and transfer agent fees, registration, filing and other fees in       
connection with requirements of regulatory authorities, and the printing and    
mailing of reports to shareholders.                                             

   Like the old agreement, the New Agreement further provides that neither
Key Equity nor any of its partners, officers, agents or employees shall be      
liable to the Fund or its shareholders for any loss suffered by the Fund or     
its shareholders as a result of any error of judgment, or any loss arising out  
of any investment, or as a consequence of any other act or omission of Key      
Equity in the performance of its duties, except for liability resulting from    
willful misfeasance, bad faith or gross negligence on the part of Key Equity,   
or by reason of reckless disregard by Key Equity of its obligations and duties. 

If approved by shareholders, the New Agreement will be signed and   
become effective on May 1, 1998.  It will continue in effect through May 1,     
2000, and thereafter from year to year so long as its continuance as to the     
Fund is approved at least annually (i) by the Board of Directors or by the      
holders of a "majority of the Fund's outstanding voting securities" as defined  
in the Investment Company Act of 1940; and (ii) by a majority of the members of 
the Fund's Board of Directors who are not otherwise affiliated with Key Equity  
or Corbyn, cast in person at a meeting called for that purpose.  Any amendment  
to the New Agreement must be approved in the same manner. The New Agreement may 
be terminated without penalty by the vote of the Board of Directors or the      
shareholders of the Fund (by a majority as defined in the Investment Company    
Act) on sixty days' written notice to Key Equity or by Key Equity on sixty      
days' written notice to the Fund, and will terminate automatically in the       
event of its assignment.                                                        

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The New Agreement provides that in the event that Key Equity's      
compensation thereunder shall, when added to the other expenses of the Fund,    
cause the Fund's aggregate expenses to exceed the maximum amount permitted under
the lowest applicable expense limitation established by applicable law, the     
total compensation paid or payable to Key Equity shall be reduced to the extent 
necessary for the Fund not to exceed such limitation.  This provision differs   
from that set forth in the old agreement, in that the old agreement provided    
that the advisory fee would be reduced to the extent that the Fund's annual     
expenses exceed, in any fiscal year, 1.50% of the average daily net assets up to
$30,000,000 and 1.0% of the average daily net assets over $30,000,000.  These   
expense limits have not been exceeded since 1984 and no reductions in the fees  
paid to Key Equity have been necessary since then.  As a result of recent       
federal legislation, no such expense limitations are currently applicable to    
the Fund.                                                                       

DETAILS ABOUT THE OLD INVESTMENT ADVISORY AGREEMENT                             

  Key Equity currently serves as investment advisor to the Fund under an
investment advisory agreement dated February 28, 1986. The agreement was last   
approved by shareholders at a meeting held on May 8, 1990.  The old investment  
advisory agreement has been continued annually by the Board of Directors, most  
recently, at a meeting held February 13, 1997.  The old investment advisory     
agreement will be terminated upon the effectiveness of the New Agreement.       

VOTING                                                                          

The shareholders of the Fund will vote on approval of the New       
Agreement.  Approval of the New Agreement requires the approval of the lesser of
(a) 67 percent or more of the voting shares of the Fund present at the meeting, 
if the holders of more than 50 percent of the outstanding shares of the Fund are
present or represented by proxy, or (b) more than 50 percent of the outstanding 
shares of the Fund.                                                             

   If the New Agreement is not approved by the shareholders, the Fund will
continue to operate under the old agreement.  However, the Board of Directors   
would consider whether any other action should be taken, which might include    
submission of another proposed agreement for approval by shareholders.          

THE BOARD OF DIRECTORS, INCLUDING ALL OF THE DIRECTORS WHO ARE NOT  
AFFILIATED WITH KEY EQUITY, RECOMMENDS THAT SHAREHOLDERS VOTE FOR PROPOSAL 1.   

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PROPOSAL 2    

RATIFICATION OF SELECTION OF AUDITORS     

The Board of Directors recommends that the shareholders ratify the  
Board of Directors' selection of Coopers & Lybrand, L.L.P. as independent public
accountants for the Fund for the fiscal year ending December 31, 1998.          

For the year ending December 31, 1998, Coopers & Lybrand, L.L.P.    
will examine the financial statements of the Fund and will provide consultation 
on financial accounting, reporting and tax matters.  Representatives of Coopers 
& Lybrand, L.L.P. will be present at the meeting and will have an opportunity to
make a statement if they desire to do so. They also will be available to respond
to appropriate questions presented at the meeting.                              

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    Approval of the selection of auditors requires the affirmative vote of a
majority of the shares of the Fund represented at the meeting in person or by   
proxy, if a quorum is present.                                                  

    THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR PROPOSAL 2.

PROPOSAL 3a   

MODIFICATION OF THE FUND'S FUNDAMENTAL POLICIES 
RELATING TO THE DIVERSIFICATION OF THE FUND'S ASSETS  

 One of the Fund's diversification policies provides that the Fund may
not "purchase any securities which would cause more than 5% of its total assets 
at the time of purchase to be invested in the securities of any issuer except   
the U.S. Government."  While the foregoing policy tracks the diversification    
requirement of the Investment Company Act of 1940 (the "ICA"), it is more       
restrictive in that the ICA excludes up to 25% of the Fund's total assets from  
the requirement. The other of the Fund's diversification policies relating to   
investments in a particular class of securities provides that the Fund may not  
"purchase any securities which would cause the Fund at the time of such purchase
to own more than 10% of the outstanding securities of any class of issuer."     
This requirement is more burdensome than that imposed by ICA, as the ICA        
restriction relates to voting securities.  This current restriction occasionally
imposes an unnecessary limitation on the Fund's ability to make investments in  
the debt securities of an issuer.  On occasion, the Fund may encounter a class  
of securities in which it would like to invest which is relatively small or     
which differs from other classes of debt issued by the same issuer with respect 
to maturity, yield or some other term of the security.  In such a circumstance, 
the current restriction can have the effect of being arbitrary and              
without benefit to the Fund.  Therefore, it is proposed that the Fund's         
fundamental policy be amended solely to limit the restriction to voting         
securities.  Finally, it is proposed that the two policies be combined because  
both of them relate to diversification.  The Fund proposes that shareholders    
approve the foregoing changes so that the policies more closely reflect the     
requirement set forth in the ICA.  Such changes will allow the Fund more        
flexibility than it enjoys today; however, it is not expected that the change   
will have a significant effect on the Fund.  This proposal, if approved, will   
become effective at the close of business on April 30, 1998.                    

  The text of the proposed policy is as follows (the underscored portion
represents new text):                                                           

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    The Fund (i) may not purchase any securities which would cause more than
     5% of its total assets at the time of such purchase to be invested in the
  securities of any issuer, except the U.S. Government,    provided that
up to 25% of its total assets may be invested without regard to such
  limitation; and (ii) may not purchase any securities which would cause
the Fund at the time of purchase to own more than 10 percent of the 
outstanding voting securities of any class of an issuer.            

     THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR PROPOSAL 3a.

PROPOSAL 3b   

MODIFICATION OF THE FUNDAMENTAL POLICY    
RELATING TO INVESTMENTS IN REAL ESTATE    

The Fund's fundamental policy relating to investments in real estate
provides that the Fund may not "purchase or sell real estate, although it may   
invest in the securities of companies whose business involves the purchase or   
sale of real estate."  Since the time of adoption of this policy, many new types
of securities have been created representing derivative interests in real estate
or in the cash flow or residual value generated by real estate, and fixed income
securities directly or indirectly secured by real estate.  While the Fund does  
not propose to change the essential nature of its operations, it does propose   
that this policy be modified so as to allow the Fund the flexibility to invest  
in these new instruments.  This proposal, if approved, will become effective    
at the close of business on April 30, 1998.                                     

  The text of the proposed policy is as follows (the underscored portion
represents new text):                                                           

 The Fund may not purchase or sell real estate, although it may invest
  in    securities representing interests in real estate or fixed income
 obligations directly or indirectly secured by real estate     and the
   securities of companies whose business involves the purchase or sale of
real estate;                                                        

     THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR PROPOSAL 3b.

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PROPOSAL 3c   

ELIMINATION OF THE FUNDAMENTAL POLICY RELATING TO THE   
PURCHASE OF SHARES OF OTHER INVESTMENT COMPANIES    

 One of the Fund's current fundamental policies provides that the Fund
may not "purchase the securities of any other investment company except in the  
open market in a transaction involving no commission or profit to a sponsor or  
dealer (other than a customary sales load or broker's commission, if            
applicable), or as a part of a merger consolidation or acquisition."  Current   
law is broader than the Fund's policy and allows investment companies to        
invest in the securities of other investment companies provided that            
restrictions imposed by law are honored.  In order to be able to take advantage 
of the flexibility of current law and such changes to the law as may be adopted 
in the future, it is proposed that the subject fundamental policy be revoked.   
It is the intention of the Fund's management to adhere to the proscriptions     
relating to investments in other investment companies set forth in the ICA,     
following the elimination of the subject fundamental policy.  The ICA provides  
in general that a registered investment company (the"Acquiring Company") may not
acquire any security issued by another investment company (the "Acquired        
Company") if the Acquiring Company immediately after the acquisition owns in    
the aggregate: (a) more than 3% of the total outstanding voting stock of the    
Acquired Company; (b) securities of the Acquired Company having an aggregate    
value in excess of 5% of the value of the total assets of the Acquiring         
Company; or (c) securities issued by all investment companies having an         
aggregate value in excess of 10% of the total assets of the Acquiring Company.  
Investors may incur duplicate fees to the extent that the Fund invests in other 
investment companies.                                                           

      This proposal, if approved, will become effective at the close of business
on April 30, 1998.                                                              

     THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR PROPOSAL 3c.

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PROPOSAL 3d   

MODIFICATION OF THE FUNDAMENTAL POLICY RELATING   
TO THE PURCHASE AND SALE OF DEBT SECURITIES   

   One of the Fund's current fundamental policies restricts the ability of
the Fund to "make loans, except that it may acquire publicly distributed bonds, 
debentures, notes and other securities."  Since the time that this policy was   
adopted, the investment environment has changed radically.  For instance, Rule  
144A, allowing the large scale private placement of designated securities to    
qualified institutional investors, and the advent of the PORTAL system          
established by the National Association of Securities Dealers, Inc., which      
provides a market for domestic and foreign designated securities that           
facilitates private offerings, resales, trading, clearance and settlement       
of transactions.  Rule 144A and PORTAL have changed the                         
liquidity implications of certain privately distributed securities.  It is      
proposed that the Fund's fundamental policy be amended to clarify that the Fund 
may invest in securities that are distributed pursuant to Rule 144A or related  
or similar rules or are traded in the PORTAL system or similar systems.         
The determination whether a security that is a restricted security but that is  
otherwise eligible for sale (such as a Rule 144A designated security) is liquid 
is a question of fact that will be addressed pursuant to such policies and      
guidelines as may be established from time to time by the Board of Directors    
of the Fund.  Generally, a security is deemed to be illiquid if it can not      
be disposed of promptly in the ordinary course of business at a value reasonably
close to that utilized in the calculation of net asset per share.  The liquidity
of a security may change in a relatively short period of time; and the Fund is  
subject to the risk that a security that is liquid at the time of purchase      
may thereafter become illiquid.                                                 

      This proposal, if approved, will become effective at the close of business
on April 30, 1998.                                                              

  The text of the proposed policy is as follows (the underscored portion
represents new text):                                                           

     The Fund may not make loans, except that it may acquire debentures, notes
  and other debt    securities that are traded, or are able to be traded
pursuant to legal provisions allowing for the resale of securities. 

     THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR PROPOSAL 3d.

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PROPOSAL 3e   

ELIMINATION OF THE FUNDAMENTAL POLICY RESTRICTING THE   
PURCHASE OF SECURITIES IF AN OFFICER OR DIRECTOR OF THE   
FUND OWNS CERTAIN SECURITIES ISSUED BY THE SAME ISSUER    

 One of the Fund's fundamental policies provides that the Fund may not
"purchase or obtain the securities of any issuer if any officer or director of  
the Fund owns more than .5% or if all officers and directors of the Fund        
together own more than 5% of the securities of such issuer, provided that as    
a matter of operating policy the Fund has determined that such limitations will 
also apply to the officers and directors of its investment advisor."  Subsequent
to the adoption of the foregoing policy by the Fund, Rule 17j-1 was adopted by  
the SEC.  That rule requires the adoption by an investment company of a Code of 
Ethics, the periodic reporting of securities transactions by affiliates of      
investment companies such as the Fund and of its investment advisor, and the    
review of the same by such an investment company's Board of Directors.  The Fund
fully complies with Rule 17j-1.  In view of the Code of Ethics and related      
reporting that is in place, the Board of Directors believes that this policy is 
unduly restrictive and serves no valid purpose.  This proposal, if approved,    
will become effective at the close of business on April 30, 1998.               

     THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR PROPOSAL 3e.

A COPY OF THE FUND'S INVESTMENT POLICIES EFFECTIVE MAY 1, 1998 AND  
ASSUMING ADOPTION OF PROPOSALS 3a, 3b, 3c, 3d AND 3e ARE SET FORTH ON EXHIBIT C.

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PROPOSAL 4    

TO ELECT SIX DIRECTORS TO SERVE UNTIL THEIR SUCCESSORS  
HAVE BEEN DULY ELECTED AND SHALL QUALIFY  

  The Board has set the number of persons who serve on the Board at six.
Each Board member will serve until the next shareholders' meeting.  The Fund is 
not required to have annual meetings of shareholders.  The Fund's last          
shareholder meeting was in 1990.                                                

  In voting for Board members, you may vote for or against all nominees,
or you can elect to withhold authority for one or more nominees.  By completing 
the proxy card, you give the proxies the right to vote for the persons named    
below.  If you elect to withhold authority for any individual nominee or        
nominees, you may do so by striking the name of any excepted nominee, as is     
further explained on the card itself.  If you do withhold authority, the proxies
will not vote shares equivalent to the proportionate number applicable to the   
names for which authority is withheld.                                          

The persons nominated to serve on the Board are:                    

Charles vK. Carlson                                                 
William E. Carlson                                                  
David T. Fu                                                         
Michael J. Fusting                                                  
Michael T. Godack                                                   
Richard Hynson, Jr.                                                 

 For information regarding the nominees, see "Management of the Fund."

All of the nominees have agreed to serve.  If an unforeseen event   
prevents a nominee from serving, your votes will be cast for the election of a  
substitute selected by the Board.  Information about each nominee is provided   
below.  Election requires a vote by a majority of the shares present or         
represented at the meeting.                                                     

THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR EACH OF
THE DIRECTOR NOMINEES SET FORTH IN PROPOSAL 4.                                  

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PROPOSAL 5    

AMENDMENT OF CERTIFICATE OF INCORPORATION TO INCREASE   
THE AUTHORIZED NUMBER OF SHARES TO 60,000,000   

  The Board of Directors has adopted a resolution declaring it advisable
and in the best interest of the Fund and its shareholders that the Fund's       
Articles of Incorporation be amended to provide for an increase in the          
authorized number of shares of the Fund from 30 million shares to 60 million    
shares of Common Stock.  Such resolution also recommends that such amendment    
be approved and adopted by the Fund's shareholders and directs that such        
proposal be submitted to the Fund's shareholders at the Annual Meeting.         

  The Fund is currently authorized to issue up to 30 million shares.  As
of the Record Date, there were __________ shares issued and outstanding.    If  
the proposal of the Board of Directors is approved by the Fund's shareholders,  
the Fund would have authority to issue up to 60 million shares of voting stock  
without further action by the shareholders except as may be required by law.    

The text of the proposed amendment to the first paragraph of Article
Fifth of the Fund's Articles of Incorporation is as follows (the underscored    
portion represents new language; the text with a line through it represents     
language to be deleted):                                                        

 FIFTH:  The total number of shares of stock which the Corporation has
authority to issue is    sixty million (60,000,000) thirty million  
  (30,000,000) shares    , of the par value of one cent ($0.01) a share,
      all of one class, having an aggregate par value of    six hundred thousand
dollars ($600,000.00) three hundred thousand dollars ($300,000.00). 

The amendment to the Articles of Incorporation will become effective
upon approval by the shareholders and the filing of the Articles of Amendment to
the Articles of Incorporation containing such amendment with the Secretary of   
State of Maryland.  If approved by the shareholders, the Fund anticipates that  
such Articles of Amendment to the Articles of Incorporation will be filed as    
soon as practicable.                                                            

    THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR PROPOSAL 5.

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   MORE INFORMATION ABOUT THE FUND

ORGANIZATION AND MANAGEMENT                                                     

The Fund is a no-load, open-end, diversified management investment  
company.  It was incorporated under the laws of the State of Maryland on October
21, 1982 and it commenced operations on July 1, 1983.                           

  The Fund is governed by a Board of Directors, which is responsible for
protecting the interests of the shareholders of the Fund.                       

MANAGEMENT OF THE FUND                                                          

      The following is a list of the officers and directors of the Fund, a brief
statement of their present positions and principal occupations during the last  
five years, and a recital of the number of shares owned by each of them as of   
the Record Date.  Unless otherwise noted, the address of each is 2330 West      
Joppa Road, Suite 110, Lutherville, Maryland 21093-4641. The Fund's directors   
who are considered "interested persons" as that term is defined under Section   
2(a)(19) of the Investment Company Act of 1940 are noted with an asterisk (*).  
The individuals so noted are "interested persons" on the basis of their         
positions with the Fund's investment advisor, Key Equity Management             
Corporation and the Advisor's parent company, Corbyn Investment Management,     
Inc. except that Mr. William E. Carlson is an "interested person" by virtue     
of his familial relationship with Charles vK. Carlson (brothers).               

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                SHARES
                OWNED AS
BOARD           OF THE
NAME, AGE, ADDRESS AND       MEMBER          RECORD       PRINCIPAL OCCUPATION  
POSITION(S) WITH THE FUND    SINCE            DATE       DURING LAST FIVE YEARS 

Charles vK. Carlson, CFA*    3/18/87         _____       President and Director 
Age 38                                                   of the Fund's Advisor  
President, Chairman of the                               and Corbyn Investment  
Board and Chief Executive                                Management, Inc.       
Officer                                                                         

William E. Carlson*          2/14/94         _____       Partner of Shapiro     
Age 40                                                   and Olander (a law     
36 S. Charles Street                                     firm) from February    
20th Fl.                                                 1990 to present.       
Baltimore, MD 21201                                      Appointed and commenced
                                                       service as a director
                                                      on February 15, 1994
                                                         to fill vacancy left by
                                                         Daniel R. Long, III who
                                                      resigned due to com-
                                                 peting personal
                                                   responsibilities.

David T. Fu                  5/8/90          _____       Managing Director of   
Age 41                                                   Galway Partners L.L.C. 
1246 Harbour Glen Court                                  (a merchant bank) from 
Arnold, MD 21212                                         January 1995 to        
                                                       present.  Director of
                                               Bell Atlantic
                                                         Information Services (a
                                                  division of Bell
                                                Atlantic) from
                                                   September 1993 to
                                                     January 1995.  Vice
                                                      President of Network
                                                     Management, Inc. (a
                                                 data processing
                                                       professional services
                                                        company) from February
                                                         1992 to September 1993.

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Michael J. Fusting*          3/24/92         _____       Vice President,        
Age 37                                                   Treasurer and Director 
Vice President,                                          of the Fund's Advisor. 
Treasurer and                                            Managing Director of   
Chief Financial                                          Corbyn Investment      
Officer                                                  Management, Inc.       

Michael T. Godack*           10/20/82        _____       Director and Vice      
Age 44                                                   President of the Fund's
Senior Vice President                                    Advisor.  Managing     
and Secretary                                            Director of Corbyn     
                                            Investment
                                                  Management, Inc.

Richard Hynson, Jr.*         3/18/85         _____       Sr. Vice President and 
Age 54                                                   Managing Director of   
                                                   Corbyn Investment
                                                  Management, Inc.

COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS                                

   The following table sets forth the aggregate cash compensation paid for
services rendered to the Fund during the last three fiscal years by its Chief   
Executive Officer and by any executive officer whose compensation from the      
Fund was in excess of $100,000.*                                                

                                                        [Enlarge/Download Table]

                                                                                       Long-Term Compensation<F1>                
                                 Annual Compensation<F1>                           Awards                       Payouts          

                                                                                                                                 
Name and                                                               Restricted    Securities                                  
Principal                                              Other Annual      Stock       Underlying         LTIP        All other    
Position                  Year    Salary($)  Bonus($) Compensation($)    Awards    Options/SARs(#)   Payouts(S)  Compensations($)

Charles vK. Carlson, CFA  1997       0          0          0                0            0               0           0           
President & CEO,          1996       0          0          0                0            0               0           0           
Chairman of the Board     1995       0          0          0                0            0               0           0           

<FN>                                                                                                                             
<F1>                                                                                                                             
*Officers of the Fund do not receive remuneration from the Fund but may receive remuneration from Corbyn.                        
</F1>                                                                                                                            

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Remuneration and Shareholdings of Directors.  Directors who are not 
employees of the Fund or companies affiliated with the Fund will receive a      
fee of $1,000 for attending the Fund's annual Board of Director's meeting       
plus $350 for each other meeting attended and reasonable out-of-pocket expenses 
incurred in connection with attending such meetings.  Such fees are subject     
to adjustment in the future upon appropriate action by the                      
Board of Directors.  Directors, as well as officers, who are employees of the   
Fund do not receive remuneration from the Fund or from its Advisor, but may     
receive remuneration from Corbyn.  As of February 17, 1998, no officer or       
director of the Fund owned beneficially greater than 1% of the outstanding      
shares of the Fund.                                                             

    During the last fiscal year, the Board of Directors held seven meetings.
Average attendance at the Board Meetings was 98%.  No nominee attended less than
75% of the Board Meetings.                                                      

MORE INFORMATION ABOUT THE SHAREHOLDER MEETING    

Date Of Mailing.  This proxy statement and enclosed proxy are being 
mailed to shareholders on or about ________________, 1998.                      

Shareholders.  At the record date, the Fund had ____________ shares 
outstanding.  Of those shares, _____________ held ___% (___ shares);            
______________ held ___% (___ shares) and ___% was held by various private      
counsel clients of Corbyn, as to which Corbyn has discretionary authority.  Such
shares will be voted at the direction of their beneficial owners.  No           
individual is known to the management to beneficially own 5% or more of the     
outstanding shares of the Fund at the record date.                              

How Proxies Will Be Voted.  All proxies solicited by the Board of   
Directors that are properly executed and received prior to the meeting, and     
which are not revoked, will be voted at the meeting.  Shares represented by     
those proxies will be voted in accordance with the instructions marked on the   
proxy.  If no instructions are specified, shares will be voted for all          
proposals.                                                                      

 How Proxies Are Being Solicited.  Solicitation of proxies by personal
interview, mail, telephone and electronic mail may be made by officers and      
directors of the Fund and employees of Key Equity and Corbyn, none of whom will 
receive any additional compensation for such service, and third-party           
solicitation agents.  All costs incurred in connection with the Meeting         
(including the cost of solicitation of proxies) will be paid by the Fund.  The  
Fund has engaged Shareholder Communications Corporation (referred to below as   
the "Solicitor") to assist in the solicitation of proxies, for a fee not to     
exceed $6,500 plus reasonable out-of-pocket expenses for mailing and telephone  
costs.                                                                          

 When soliciting a proxy by telephone, the Solicitor representative is
required to ask you for your full name, address, social security or employer    
identification number, title (if the person giving the proxy is authorized to   
act for an entity, such as a corporation), the number of shares of the Fund     
owned and to confirm that you have received the proxy statement in the mail.    
The Solicitor representative will then explain the voting process.  The         
Solicitor is not permitted to recommend to you how to vote, other than to       
read any recommendation included in the proxy statement.                        

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      If you wish to participate in the Meeting, but do not wish to give a proxy
by telephone, you can still submit the proxy card received with the proxy       
statement or attend in person. You can revoke any proxy, whether given in       
writing or by telephone, in accordance with the procedures outlined below under 
"Revoking a Proxy."                                                             

Revoking A Proxy.  At any time before it has been voted, you may    
revoke your proxy by: (1) sending a letter saying that you are revoking your    
proxy to the Solicitor at _____________, Shareholder Communications Corporation,
17 State Street, New York, New York 10004 Attention:  Paul Torre; (2) properly  
executing a later-dated proxy; (3) attending the meeting, requesting return of  
any previously delivered proxy and voting in person; or (4) sending a letter    
saying that you are revoking your proxy to the Senior Vice President and        
Secretary of the Fund, 2330 West Joppa Road, Suite 110, Lutherville, Maryland   
21093.                                                                          

Quorum, Voting At The Meeting And Adjournment.  Approval of         
Proposals 1, 3a, 3b, 3c, 3d and 3e will require the affirmative vote of the     
lesser of (a) 67 percent or more of the voting shares of the Fund present at    
the meeting, if the holders of more than 50 percent of the outstanding voting   
shares of the Fund are present or represented by proxy, or (b) more than 50     
percent of the outstanding voting shares of the Fund.  Abstentions and broker   
non-votes will have the practical effect of a "No" vote if adoption of Proposals
1, 3a, 3b, 3c, 3d and 3e is to be determined pursuant to item (a) and will have 
no effect on the outcome of the vote if adoption of Proposals 1, 3a,3b, 3c, 3d  
and 3e is to be determined pursuant to item (b).                                

Approval of Proposals 2 and 4 will require the affirmative vote of a
majority of the shares of that Fund represented at the Meeting in person or by  
proxy, if a quorum is present.  Abstentions and broker non-votes will have the  
practical effect of a "No" vote on Proposals 2 and 4.                           

  Approval of Proposal 5 will require the affirmative vote of a majority
of the outstanding shares of the Fund.  Abstentions and broker non-votes will   
have the practical effect of a "No" vote on Proposal 5.                         

Fifty percent of the shares entitled to vote present in person or   
represented by proxy constitutes a quorum for the transaction of business at the
meeting.  For purposes of determining the presence or absence of a quorum and   
for determining whether sufficient votes have been received for approval of any 
matter to be acted upon at the meeting, abstentions and broker non-votes will   
be treated as shares that are present at the meeting but have not been voted.   

    If a quorum is not present in person or by proxy at the meeting, or if a
quorum is present at the meeting but not enough votes to approve a proposal are 
received, the persons named as proxies may propose one or more adjournments of  
the meeting to permit further solicitation of proxies.  Any proposal for        
adjournment for a Fund will require the vote of a majority of the shares of that
Fund represented at the meeting in person or by proxy.  A vote may be taken     
on one of the proposals in this proxy statement before adjournment if a quorum  
is present and sufficient votes have been received for approval.                

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OTHER MATTERS       

Adoption of the Administrative Services Agreement.  Currently, the  
Fund's administrative functions are performed by personnel employed by the Fund.
As a result of the growth of the Fund's total net assets over the course of     
recent years, the Fund's administrative burden has increased, and the Fund      
either must expand its existing systems and hire additional personnel or retain 
a third party to provide such services.  After careful consideration, the       
directors have concluded that contracting for the services of a third-party     
provider is in the best interest of the Fund and its shareholders.  That        
decision was based in large part on the extent of additional resources that     
would have to be committed by the Fund to expand its internal administrative    
systems and staff.  The directors concluded that the Fund should hire Corbyn    
to perform those services, given that Corbyn has already established the        
necessary infrastructure, is physically proximate to the Fund's operations      
and is fully familiar with the Fund's current operations; and that the          
Fund would benefit from contracting for Corbyn to provide those services.  The  
Fund and Corbyn have executed an Administrative Services Agreement, which will  
be effective May 1, 1998.  The form of the Administrative Services Agreement is 
attached to this proxy statement as Exhibit B and you should refer to Exhibit B 
for more information than can be provided in this summary.                      

 Corbyn will provide administrative and clerical services to the Fund,
including, among others, recordkeeping, compliance with and reporting under     
federal and state securities laws, financial and accounting services and        
corporate secretarial services to the Fund.  Corbyn will assume the expenses    
of maintaining personnel and providing other facilities necessary to perform    
its obligations under the Administrative Services Agreement (but not office     
space, which will be provided by Key Equity pursuant to the New Agreement).     
Pursuant to the Administrative Services Agreement, Corbyn will provide services 
and incur costs previously directly borne by the Fund and effected by Fund      
personnel, or, from time to time, provided by Corbyn directly as a courtesy     
to the Fund when Fund resources or personnel were overburdened.  Consequently,  
there will be a reduction in Fund personnel and a corresponding reduction in    
payroll and other expenses of the Fund.  The Fund will continue to pay the      
fees and expenses of its lawyers, auditors, transfer agent and custodian.       

Under the Administrative Services Agreement, the Fund will pay a fee
of $2,500 per month plus 0.04% of the average daily net assets up to $250       
million, 0.03% of the average daily net assets between $250 million and $500    
million, and 0.025% of the average daily net assets in excess of $500 million,  
computed daily and paid monthly.                                                

Corbyn may enter into agreements with one or more other persons to  
provide services under the Administrative Services Agreement, provided that     
those agreements have been approved by the Board of Directors.  Corbyn will     
be as fully responsible to the Fund for the acts or omissions of any such       
service providers as it would be for its own acts or omissions.  Corbyn will    
not be liable to the Fund for any error of judgment or mistake of law or for    
any loss arising out of any act or omission by Corbyn or any of its officers,   
agents, employees or affiliates, or any service providers except by reason of   
willful misfeasance, bad faith, or gross negligence in the performance of its   
duties, or reckless disregard of its obligations and duties under the           
Administrative Services Agreement.                                              

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The total expenses paid by the Fund during 1997, 1996 and 1995, and 
the total expenses that would have been paid if the Administrative Services     
Agreement had been in place throughout those periods, presented on a pro forma  
basis (i.e., reducing expenses by costs that the Fund would not have had to     
incur if the Administrative Services Agreement had been in place), are as       
follows:                                                                        

  TOTAL EXPENSES              PRO FORMA TOTAL EXPENSES
1997            $__________                      $__________                    
1996               795,202                          797,816                     
1995               693,136                          697,752                     

The Board of Directors of the Fund knows of no other matters that   
are intended to be brought before the meeting.  If other matters are presented  
for action, the proxies named in the enclosed form of proxy will vote on those  
matters in their sole discretion.                                               

SHAREHOLDER PROPOSALS     

     The Fund is not required, and does not intend, to hold annual meetings of
shareholders. Therefore, no date can be given by which a proposal by a share-   
holder for consideration at such a meeting must be submitted.  Any such proposal
should be submitted in writing to the Secretary of the Fund at its principal    
offices at 2330 West Joppa Road, Suite 110, Lutherville, Maryland  21093.       
Upon submitting a proposal, the shareholder shall provide the Fund with a       
written notice which includes the shareholder's name and address, the number    
of shares that such shareholder holds of record or beneficially, the dates upon 
which such shares were acquired, documentary support for a claim of beneficial  
ownership, and any other information that may be required by applicable law.    

     By order of the Board of Directors,

/s/ Michael T. Godack         
Michael T. Godack             
     Senior Vice President and Secretary

________________, 1998                                                          

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EXHIBIT A:      

FORM OF NEW ADVISORY SERVICES AGREEMENT       

INVESTMENT ADVISORY AGREEMENT         

    AGREEMENT, effective commencing on __________________, 1998, between Key
Equity Management Corporation, a Maryland corporation (the "Advisor") and       
Greenspring Fund, Incorporated, a Maryland corporation (the "Fund").            

WHEREAS, the Fund is a Maryland corporation organized under         
Articles of Incorporation dated October 21, 1982 (the "Articles") and is        
registered under the Investment Company Act of 1940, as amended (the "1940      
Act"), as an open-end, diversified management investment company; and           

WHEREAS, the Fund wishes to retain the Advisor to render investment 
advisory services to the Fund and the Advisor is willing to furnish such        
services to the Fund; and                                                       

WHEREAS, the Advisor is registered as an investment advisor under   
the Investment Advisers Act of 1940, as amended (the "Advisers Act");           

NOW, THEREFORE, in consideration of the premises and mutual         
covenants herein contained, it is agreed between the Fund and the Advisor as    
follows:                                                                        

1.  APPOINTMENT.  The Fund hereby appoints the Advisor to act as    
investment advisor to the Fund for the periods and on the terms set forth in    
this Agreement.  The Advisor accepts such appointment and agrees to furnish the 
services herein set forth, for the compensation herein provided. The Advisor    
will furnish, without cost to the Fund, or provide and pay the cost of, such    
office facilities, furnishings, and office equipment as may be required by      
the Fund.                                                                       

2.  INVESTMENT ADVISORY DUTIES.                                     

      (A)    Subject to the supervision of the Board of Directors of the
Fund, the Advisor will (i) provide a program of continuous investment           
management for the Fund in accordance with the 1940 Act, the Fund's investment  
objectives, policies and limitations as stated in the Fund's Prospectus (the    
"Prospectus") and Statement of Additional Information included as part of the   
Fund's Registration Statement filed with the Securities and Exchange Commission,
as they may be amended from time to time, copies of which shall be provided     
to the Advisor by the Fund; (ii) make investment decisions for the Fund; and    
(iii) place orders to purchase and sell for the Fund.                           

       (B)    In performing its investment management services to the Fund
hereunder, the Advisor will provide the Fund with ongoing investment guidance   
and policy direction, including oral and/or written research, analysis, advice, 
statistical and economic data and judgments regarding individual investments,   
general economic conditions and trends and long-range investment policy.  The   
Advisor will determine the securities, instruments, repurchase agreements,      
options, futures and other investments and techniques that the Fund will        
purchase, sell, enter into or use, and will provide an ongoing evaluation of the
Fund's investments.  The Advisor will determine what portion of the Fund's      
investments shall be invested in securities and other assets, and what          
portion, if any, should be held invested in money market equivalents or held    
in cash reserves.  Subject to the approval of the Board of Directors (including 
a majority of the Fund's Directors who are not "interested persons" of the Fund 
as defined in the 1940 Act) and of the shareholders of the Fund, the Advisor    
may delegate to a sub-advisor its duties enumerated in Section 2 hereof.  The   
Advisor shall continue to supervise the performance of any such sub-advisor     
and shall report regularly thereon to the Fund's Board of Directors.            

(C)    The Advisor shall be responsible for selecting members of
securities exchanges, brokers and dealers (such members, brokers and dealers    
being hereinafter referred to as "brokers") for the execution of the Fund's     
portfolio transactions consistent with the Fund's brokerage policy and, when    
applicable, the negotiation of commissions in connection therewith.  All        
decisions and placements shall be made in accordance with the following         
principles:                                                                     

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         (i)    Purchase and sale orders will usually be placed with
brokers that are selected by the Advisor as able to achieve "best execution" of 
such orders.  "Best execution" shall mean prompt and reliable execution at the  
most favorable securities price, taking into account the other provisions       
hereinafter set forth.  The determination of what may constitute best execution 
and price in the execution of a securities transaction by a broker involves a   
number of considerations, including, without limitation, the overall direct net 
economic result to the Fund (involving both price paid or received and any      
commissions and other costs paid), the efficiency with which the transaction is 
executed, the ability to effect the transaction at all where a large block is   
involved, availability of the broker to stand ready to execute possibly         
difficult transactions in the future, and the financial strength and stability  
of the broker.  Such considerations are judgmental and are weighed by the       
Advisor in determining the overall reasonableness of brokerage commissions.     

          (ii)    In selecting brokers for portfolio transactions, the
Advisor shall take into account its past experience as to brokers qualified     
to achieve "best execution," including brokers who specialize in any foreign    
securities held by the Fund.                                                    

              (iii)   If the Board of Directors so authorizes the Advisor, the
Advisor may allocate brokerage business to brokers who have provided            
brokerage and research services, as such services are defined in Section 28(e)  
of the Securities Exchange Act of 1934, as amended (the "1934 Act") for the Fund
and/or other accounts, if any, for which the Advisor exercises investment       
discretion (as defined in Section 3(a)(35) of the 1934 Act) and, as to          
transactions for which fixed minimum commission rates are not applicable, to    
pay a commission for effecting a securities transaction in excess of the        
amount another broker would have charged for effecting that transaction, if     
the Advisor determines in good faith that such amount of commission is          
reasonable in relation to the value of the brokerage and research services      
provided by such broker, viewed in terms of either that particular transaction  
or the Advisor's overall responsibilities with respect to the Fund and the      
other accounts, if any, as to which it exercises investment discretion.  In     
reaching such determination, the Advisor will not be required to place or       
attempt to place a specific dollar value on the research or execution services  
of a broker or on the portion of any commission reflecting either of said       
services.  In demonstrating that such determinations were made in good faith,   
the Advisor shall be prepared to show that all commissions were allocated and   
paid for purposes contemplated by the Fund's brokerage policy; that the         
research services provide lawful and appropriate assistance to the Advisor in   
the performance of its investment decision-making responsibilities, and that    
the commissions were within a reasonable range.  Whether commissions were within
a reasonable range shall be based on any available information as to the level  
of commissions known to be charged by other brokers on comparable transactions, 
but there shall be taken into account the Fund's policies that (a) obtaining    
a low commission is deemed secondary to obtaining a favorable securities price, 
since it is recognized that usually it is more beneficial to the Fund to obtain 
a favorable price than to pay the lowest commission; and (b) the quality,       
comprehensiveness and frequency of research studies which are provided for the  
Advisor are useful to the Advisor in performing its advisory services under     
this Agreement.  Research services provided by brokers to the Advisor are       
considered to be in addition to, and not in lieu of, services required to be    
performed by the Advisor under this Agreement.  Research furnished by brokers   
through which the Fund effects securities transactions may be used by the       
Advisor for any of its accounts, and not all such research may be used by the   
Advisor for the Fund.  When execution of portfolio transactions is allocated    
to brokers trading on exchanges with fixed brokerage commission rates,          
account may be taken of various services provided by the broker.                

            (iv)    Purchases and sales of portfolio securities within the
United States other than on a securities exchange shall be executed with primary
market makers acting as principal, except where, in the judgment of the Advisor,
better prices and execution may be obtained on a commission basis or from other 
sources.                                                                        

(D)    The Advisor further agrees that, in performing its duties
hereunder, it will:                                                             

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            (i)     comply with the 1940 Act and all rules and regulations
thereunder, the Advisers Act, the Internal Revenue Code (the "Code") and all    
other applicable federal and state laws and regulations, and with any applicable
procedures adopted by the Directors;                                            

               (ii)    use reasonable efforts to manage the Fund so that it will
qualify, and continue to qualify, as a regulated investment company under       
Subchapter M of the Code and regulations issued thereunder;                     

            (iii)   place orders pursuant to its investment determinations
for the Fund directly with the issuer, or with any broker or dealer, in         
accordance with applicable policies expressed in the Fund's Prospectus and/or   
Statement of Additional Information and/or in this Agreement and in accordance  
with applicable legal requirements;                                             

              (iv)    furnish to the Fund whatever statistical information the
Fund may reasonably request with respect to the Fund's assets or contemplated   
investments.  In addition, the Advisor will keep the Fund and its Directors     
informed of developments materially affecting the Fund's investments and shall, 
on the Advisor's own initiative, furnish to the Fund from time to time whatever 
information the Advisor believes appropriate for this purpose;                  

            (v)     make available to the Fund, promptly upon its request,
such copies of the Advisor's investment records and ledgers with respect to the 
Fund as may be required to assist the Fund in its compliance with applicable    
laws and regulations.  The Advisor will furnish the Directors with such periodic
and special reports regarding the Fund as they may reasonably request; and      

               (vi)    immediately notify the Fund in the event that the Advisor
or any of its affiliates (a) becomes aware that it is subject to a statutory    
disqualification that prevents the Advisor from serving as investment advisor   
pursuant to this Agreement; or (b) becomes aware that it is the subject of an   
administrative inquiry, proceeding or enforcement action by the Securities and  
Exchange Commission ("SEC") or other regulatory authority.  The Advisor         
further agrees to notify the Fund immediately of any material fact known to the 
Advisor respecting or relating to the Advisor that is not contained in the      
Fund's Registration Statement, or any amendment or supplement thereto that may  
reasonably be required to be disclosed therein, and of any statement contained  
therein that becomes untrue in any material respect.                            

      3.   ALLOCATION OF CHARGES AND EXPENSES.  Except as otherwise specifically
provided in this Section 3, the Advisor shall pay the compensation and expenses 
of all of its directors, officers and employees who serve as officers and       
executive employees of the Fund (including the Fund's share of payroll taxes    
for such persons), and the Advisor shall make available, without expenses to    
the Fund, the service of its directors, officers and employees who may          
be duly-elected officers of the Fund, subject to their individual consent to    
serve and to any limitations imposed by law.                                    

       The Advisor shall not be required to pay any expenses of the Fund
other than those specifically allocated to the Advisor in this Section 3.  In   
particular, but without limiting the generality of the foregoing, the Advisor   
shall not be responsible, except to the extent of the reasonable compensation of
such of the Fund's employees as are officers or employees of the Advisor whose  
services may be involved, for the following expenses of the Fund; organization  
and certain offering expenses of the Fund (including out-of-pocket expenses,    
but not including the Advisor's overhead and employee costs); fees payable to   
the Advisor and to any other Fund advisors or consultants; legal expenses;      
auditing and accounting expenses; interest expenses; telephone, telex,          
facsimile, postage and other communications expenses; taxes and governmental    
fees; fees, dues and expenses incurred by or with respect to the Fund in        
connection with membership in investment company trade organizations; costs     
of insurance relating to fidelity coverage for the Fund's officers and          
employees; fees and expenses of the Fund's custodian, any sub-custodian,        
transfer agent, registrar, or dividend disbursing agent; payments to the        
Advisor for maintaining the Fund's financial books and records and calculating  
the daily net asset value pursuant to Section 4 hereof, other payments for      
portfolio pricing or valuation services to pricing agents, accountants, bankers 
and other specialists, if any; expenses of preparing share certificates; other  
expenses in connection with the issuance, offering, distribution, sale or       
redemption of securities issued by the Fund; expenses relating to investor      
relations; expenses of registering and qualifying shares of the Fund for sale;  
freight, insurance and other charges in connection with the shipment of the     
Fund's portfolio securities; brokerage commissions or other costs of acquiring  
or disposing of any portfolio securities or other assets of the Fund or of      

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entering into other transactions or engaging in any investment practices with   
respect to the Fund; expenses of printing and distributing Prospectuses,        
Statements of Additional Information, reports, notices and dividends to         
stockholders; costs of stationery; any litigation expenses; costs of            
stockholders' meetings; the compensation and all expenses (specifically         
including travel expenses relating to the Fund's business) of officers,         
directors and employees of the Fund who are not officers or employees of the    
Advisor, and travel expenses (or an appropriate portion thereof) of officers    
or directors of the Fund who are officers, directors or employees of the Advisor
to the extent that such expenses relate to attendance at meetings of the Board  
of Directors of the Fund with respect to matters concerning the Fund, or any    
committees thereof or advisors thereto.                                         

4.   COMPENSATION.    As compensation for the services provided and 
expenses assumed by the Advisor under this Agreement, the Fund will pay the     
Advisor at the end of each calendar month an advisory fee as set forth in       
Schedule A hereto.  The advisory fee is computed daily as a percentage of the   
Fund's net assets.  The "net assets" of the Fund shall mean the average of      
the values placed on the Fund's net assets as of 4:00 p.m. (Eastern time) on    
each day on which the net asset value of the Fund is determined consistent      
with the provisions of Rule 22c-1 under the 1940 Act or, if the Fund lawfully   
determines the value of its net assets as of some other time on each business   
day, as of such other time.  The value of net assets of the Fund shall always   
be determined pursuant to the applicable provisions of the articles and the     
Registration Statement.  If, pursuant to such provisions, the determination of  
net asset value is suspended for any particular business day, then              
for the purposes of this Section 4, the value of the net assets of the Fund     
as last determined shall be deemed to be the value of its net assets as of      
the close of regular trading on the New York Stock Exchange, or as of such      
other time as the value of the net assets of the Fund's securities may lawfully 
be determined, on that day.  If the determination of the net asset value of     
the shares of the Fund has been so suspended for a period including any month   
when the Advisor's compensation is payable at the end of such month, then       
such value shall be computed on the basis of the value of the net assets of     
the Fund as last determined (whether during or prior to such month).  If the    
Fund determines the value of the net assets more than once on any day, then the 
last such determination thereof on that day shall be deemed to be the sole      
determination thereof on that day for the purposes of this Section 4.           

In the event that the Advisor's gross compensation hereunder shall, 
when added to the other expenses of the Fund, cause the aggregate expenses of   
the Fund to exceed the maximum expenses permitted under the lowest applicable   
expense limitation established pursuant to the statutes or regulations of any   
jurisdiction in which the shares of the Fund may be qualified for offer and     
sale, the total compensation paid or payable to the Advisor shall be reduced    
(but not below zero), to the extent necessary to cause the Fund not to exceed   
such expense limitation.  Except to the extent that such reduction has been     
reflected in lowered monthly payments to the Advisor, the Advisor shall refund  
to the Fund the amount by which the total of payments received by the Advisor   
are in excess of such expense limitation as promptly as practicable after the   
end of such fiscal year, provided that the Advisor shall not be required to     
pay the Fund an amount greater than the fee otherwise payable to the Advisor    
in respect of such year.  As used in this Section 4, "expenses" shall mean      
those expenses included in the applicable expense limitation having the broadest
specifications thereof and "expense limitation" shall mean a limitation on      
the maximum annual expenses which may be incurred by an investment company as   
determined by applicable law.  The words "lowest applicable expense limitation" 
shall be deemed to be that which results in the largest reduction of the        
Advisor's compensation for any fiscal year of the Fund; provided, however,      
that nothing in this Agreement shall limit the Advisor's fees if not required   
by an applicable statute or regulation referred to above in this Section 4.     

5.  BOOKS AND RECORDS.  The Advisor agrees to maintain such         
books and records with respect to its services to the Fund as are required by   
Section 31 of the 1940 Act, and rules adopted thereunder, and by other          
applicable legal provisions, and to preserve such records for the periods and   
in the manner required by that Section, and those rules and legal provisions.   
The Advisor also agrees that records it maintains and preserves pursuant to     
Rules 31a-1 and 31a-2 under the 1940 Act in connection with its services        
hereunder are the property of the Fund and will be surrendered promptly to      
the Fund upon its request.  The Advisor further agrees that it will furnish to  
regulatory authorities having the requisite authority any information or        
reports in connection with its services hereunder which may be requested in     
order to determine whether the operations of the Fund are being conducted in    
accordance with applicable law and regulations.                                 

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6.  STANDARD OF CARE AND LIMITATION OF LIABILITY.  The Advisor shall
exercise its best judgment in rendering the services provided by                
it under this Agreement.  The Advisor shall not be liable for any error of      
judgment or mistake of law or for any loss suffered by the Fund or the holders  
of the Fund's shares in connection with the matters to which this Agreement     
relates, provided that nothing in this Agreement shall be deemed to protect     
or purport to protect the Advisor against any liability to the Fund or to       
holders of the Fund's shares to which the Advisor would otherwise be subject    
by reason of willful misfeasance, bad faith or gross negligence on its part     
in the performance of its duties or by reason of the Advisor's directors,       
employees or other affiliates of the Advisor performing services with respect   
to the Fund.                                                                    

7.   SERVICES NOT EXCLUSIVE.  It is understood that the services    
of the Advisor are not exclusive, and that nothing in this Agreement shall      
prevent the Advisor from providing similar services to other investment         
companies or to other series of investment companies, or from engaging in       
other activities, provided such other services and activities do not, during    
the term of the Agreement, interfere in a material manner with the Advisor's    
ability to meet its obligations to the Fund hereunder.  When the Advisor        
recommends the purchase or sale of the same security for the Fund, it is        
understood that in light of its fiduciary duty to the Fund, such transactions   
will be executed on a basis that is fair and equitable to the Fund.  In         
connection with purchases or sales of portfolio securities for the account of   
the Fund, neither the Advisor nor any of its directors, officers or employees   
shall act as a principal or agent or receive any commission, provided that      
portfolio transactions for the Fund may be executed through firms affiliated    
with the Advisor, in accordance with applicable legal requirements.  If the     
Advisor provides any advice to its clients concerning the shares of the Fund,   
the Advisor shall act solely as investment counsel for such clients and not     
in any way on behalf of the Fund.                                               

8.  DURATION AND TERMINATION.  This Agreement shall continue until  
May 1, 2000, and thereafter shall continue automatically for                    
successive annual periods, provided such continuance is specifically approved   
at least annually by (a) the Directors or (b) a vote of a "majority" (as        
defined in the 1940 Act) of the Fund's outstanding voting securities            
(as defined in the 1940 Act), provided that in either event the continuance     
is also approved by a majority of the Directors who are not "interested persons"
(as defined in the 1940 Act) of any party to this Agreement, by vote cast in    
person at a meeting called for the purpose of voting on such approval.          
Notwithstanding the foregoing, this Agreement may be terminated (a) at any      
time without penalty by the Fund upon the vote of a majority of the Directors   
or by vote of the majority of the Fund's outstanding voting securities, upon    
sixty (60) days written notice to the Advisor or (b) by the Advisor at any      
time without penalty, upon sixty (60) days written notice to the Fund.          
Notwithstanding the foregoing, this Agreement will terminate automatically in   
the event of its assignment (as defined in the 1940 Act).                       

9.   AMENDMENTS.  No provision of this Agreement may be changed,    
waived, discharged, or terminated orally, but only by an instrument in writing  
signed by the party against which enforcement of the change, waiver, discharge  
or termination is sought, and no amendment of this Agreement shall be effective 
until approved by an affirmative vote of (a) a majority of the outstanding      
voting securities of the Fund, and (b) a majority of the Directors, including a 
majority of Directors who are not interested persons of any party to this       
Agreement, cast in person at a meeting called for the purpose of voting on      
such approval, if such approval is required by applicable law.                  

10.   MISCELLANEOUS.                                                

          A.    This Agreement shall be governed by the laws of the State of
Maryland, provided that nothing herein shall be construed in a manner           
inconsistent with the 1940 Act, the Advisers Act, or rules, regulations or      
orders of the SEC thereunder.                                                   

         B.    The captions of this Agreement are included for convenience
only and in no way define or limit any of the provisions hereof or otherwise    
affect their construction or effect.                                            

       C.     If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this  
Agreement shall not be affected hereby and, to this extent, the provisions of   
this Agreement shall be deemed to be severable.                                 

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           D.    Nothing herein shall be construed as constituting the Advisor
as an agent of the Fund.                                                        

   IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of ____________________, 1998.   

                              GREENSPRING FUND, INCORPORATED

                                        By:  ___________________________________
                                        Its: ___________________________________

                                 KEY EQUITY MANAGEMENT CORPORATION

                                        By:  ___________________________________
                                        Its: ___________________________________

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SCHEDULE A    
TO THE INVESTMENT ADVISORY AGREEMENT    
DATED ___________________, 1998 BETWEEN     
GREENSPRING FUND, INCORPORATED AND    
KEY EQUITY MANAGEMENT CORPORATION     

    Pursuant to Section 4 of this Agreement, the Fund shall pay the Advisor,
at the end of each calendar month, compensation computed daily at an annual rate
of the Fund's average daily net assets as follows:                              

AVERAGE DAILY NET ASSETS                FEE       

$0 to $250,000,000                     0.75%      
$250,000,000 to $500,000,000           0.70%      
in excess of $500,000,000              0.65%      

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EXHIBIT B         
FORM OF ADMINISTRATIVE SERVICES AGREEMENT       

ADMINISTRATIVE SERVICES AGREEMENT     

    ADMINISTRATIVE SERVICES AGREEMENT ("Agreement") made as of the _____ day
of ________________, 1998, by and between Greenspring Fund, Incorporated, a     
Maryland corporation (the "Fund"), and Corbyn Investment Management, Inc., a    
Maryland corporation (the "Administrator").                                     

WHEREAS, the Fund is engaged in business as an open-end             
management investment company and registered as such under the Investment       
Company Act of 1940, as amended (the "1940 Act"); and                           

WHEREAS, the Fund desires to retain the Administrator to provide    
administrative services to the Fund in the manner and on the terms and          
conditions hereinafter set forth;                                               

NOW, THEREFORE, in consideration of the premises and the            
mutual covenants and agreements hereinafter set forth, the parties hereto,      
intending to be legally bound, do hereby agree as follows:                      

1.  DUTIES AND RESPONSIBILITIES OF THE ADMINISTRATOR.               

    The Administrator shall oversee the administration of the Fund's
business and affairs set forth herein and shall provide certain services        
required for effective administration of the Fund.  In connection therewith,    
the Administrator shall:                                                        

     (a)     PERSONNEL.  Provide, without additional remuneration from
or other cost to the Fund, the services of individuals competent to perform     
all of the Administrator's obligations under this Agreement.                    

   (b)     AGENTS.  Assist the Fund in selecting, coordinating the
activities of, supervising and acting as liaison with any other person or agent 
engaged by the Fund, including the Fund's depository agent or custodian,        
consultants, transfer agents, intermediaries with respect to mutual fund        
alliance programs, dividend disbursing agent, sub-administrator, independent    
accountants, and independent legal counsel.  The Administrator shall also       
monitor the functions of such persons and agents, including without limitation  
the compliance of the Fund and the Fund's custodians with Rule 17f-5 under the  
1940 Act, if appropriate.                                                       

(c)     DIRECTORS AND OFFICERS.  Authorize and permit the   
Administrator's directors, officers and employees that may be elected or        
appointed as directors or officers of the Fund to serve in such capacities,     
without remuneration from or additional cost to the Fund.                       

       (d)     BOOKS AND RECORDS.  Maintain customary records, on behalf .
of the Fund, in connection with the performance of the Administrator's duties   
under this Agreement.  The Administrator also will monitor and oversee the      
performance of the agents specified in Section 1(b) above, to ensure that all   
financial, accounting, corporate, and other records required to be maintained   
and preserved by the Fund or on its behalf will be maintained in accordance     
with applicable laws and regulations.                                           

(e)     COST OVERSIGHT.  Monitor and review activities and  
procedures of the Fund and its agents identified in Section 1(b) above, in      
order to identify and seek to obtain possible service improvements and cost     
reductions.  In connection therewith, the Administrator shall, on a quarterly   
basis, prepare and submit to the Fund a pro forma budget or similar document    
concerning the estimated costs of providing the services to the Fund and shall  
monitor and periodically report to the Fund's Board of Directors information    
and analysis about the actual expenses incurred in providing such services.     

    (f)      FUND ACCOUNTING AND COMPLIANCE POLICIES AND PROCEDURES.
Developing, reviewing, maintaining, and monitoring the effectiveness of Fund    
accounting, pricing, bonding and compliance, including portfolio valuation      
procedures, expense allocation procedures, and personal trading procedures      
and the Fund's Code of Ethics.  The Administrator also will assist and          
coordinate participation by the Fund and its agents in any audit by its         
outside auditors or any examination by federal or state regulatory authorities  

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or any self-regulatory organization.  The Administrator also will oversee and   
coordinate the activities of Fund accountants, outside counsel, and other       
experts in these audits or examinations.                                        

       (g)     FUND SYSTEMS.  The Administrator will assist in developing,
implementing, and monitoring the Fund's use of automated communications         
systems with brokers, dealers, custodians, and other service providers,         
including without limitation trade clearance systems.                           

      (h)     REPORTS  TO THE FUND.  Furnish to or place at the disposal
of the Fund such information, reports, evaluations, analysis, and opinions      
relating to its administrative functions, as the Fund may, at any time or       
from time to time, reasonably request or as the Administrator may deem helpful  
to the Fund.  The Administrator also will assist in the preparation of agendas  
and other materials for meetings of the Fund's Board of Directors and will      
attend such meetings.                                                           

(i)     REPORTS AND FILINGS.  Provide appropriate assistance
in the development and/or preparation of all reports and communications by the  
Fund to Fund shareholders and all reports and filings necessary to maintain the 
registrations and qualifications of the Fund's shares under applicable          
securities law.                                                                 

(j)     SHAREHOLDER INQUIRIES.  Respond to all inquiries      
from Fund shareholders or otherwise answer communications from Fund             
shareholders if such inquiries or communications are directed to the            
Administrator.  If any such inquiry or communication would be more properly     
answered by one of the agents listed in Sections 1(b) above, the Administrator  
will coordinate, as needed, the provision of their response.                    

2.    ALLOCATION OF EXPENSES.                                           

(a)     EXPENSES PAID BY THE ADMINISTRATOR.                 

                (i)     In General.  The Administrator shall bear all of its
own expenses in connection with the performance of its duties under this        
Agreement.                                                                      

              (ii)     Salaries and Fees of Directors and Officers.  The
Administrator shall pay all salaries, expenses and fees, if any, of the         
directors, officers and employees of the Administrator who are directors,       
officers or employees of the Fund.                                              

      (iii)    Waiver or Assumption and Reimbursement of
Fund Expenses by the Administrator.  The waiver or assumption and               
reimbursement by the Administrator of any expense of the Fund that the          
Administrator is not required by this Agreement to waive, assume or reimburse,  
shall not obligate the Administrator to waive, assume, or reimburse the same or 
any similar expense of the Fund on any subsequent occasion, unless so required  
pursuant to a separate agreement between the Fund and the Administrator.        

(b)       EXPENSES PAID BY THE FUND.  The Fund shall        
bear all expenses of its organization, operation and business not specifically  
waived, assumed or agreed to be paid by the Administrator as provided in this   
Agreement or any other agreement between the Fund and the Administrator, and    
as described in the Fund's then-current Prospectus and Statement of Additional  
Information.                                                                    

3.  FEES.                                                           

(a)     COMPENSATION RATE.  As compensation for all         
services rendered, facilities provided, and expenses paid and any expense waived
or assumed and reimbursed by the Administrator, the Fund shall pay the          
Administrator a fee, payable each month, as follows:  Two Thousand Five         
Hundred Dollars ($2,500) plus a fraction of the Average Daily Net Assets        
("ADNA") computed as follows:  four (4) basis points of that portion of ADNA    
up to $250 million, three (3) basis points of that portion of ADNA between $250 
million to $500 million, and two and one-half(2.5) basis points of that portion 
of ADNA in excess of $500 million.                                              

(b)     METHOD OF COMPUTATION.  The Administrator's         
fee shall accrue on each calendar day and the sum of the daily fee accruals     
shall be paid monthly to the Administrator by the fifth (5th) business day of   
the next                                                                        

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calendar month.  The daily fee accruals shall be computed by multiplying the    
fraction of one (1) over the number of calendar days in the year by the         
applicable rates described in Section 3(a) above, and multiplying this product  
by the net assets of the fund, as determined in accordance with the current     
Prospectus of the Fund and applicable law, as of the close of business on the   
last preceding business day on which the Fund was open for business.            

(c)      PRORATION OF FEE.  If this Agreement becomes       
effective or terminates before the end of any month, the fee for the period from
the effective date to the end of such month or from the beginning of such month 
to the date of termination, as the case may be, shall be prorated according to  
the proportion which such period bears to the full month in which such          
effectiveness or termination occurs.                                            

  4.   ADMINISTRATOR'S USE OF THE SERVICES OF OTHERS.  The Administrator
may, at its own cost, employ, retain or otherwise avail itself of               
the services or facilities of other persons or organizations for the purpose of 
providing the Administrator or the Fund with such information, advice or        
assistance as the Administrator may deem necessary, appropriate or convenient   
for the discharge of its obligations hereunder or otherwise helpful to the      
Administrator including consulting, monitoring and evaluating services          
concerning the Fund.                                                            

   5.   OWNERSHIP AND CONFIDENTIALITY OF RECORDS.  All records required to
be maintained and preserved by the Fund, pursuant to rules or regulations of    
the Securities and Exchange Commission under Section 31(a) of the 1940 Act,     
and maintained and preserved by the Administrator on behalf of the Fund, are    
the property of the Fund and shall be surrendered by the Administrator promptly 
on request by the Fund.  The Administrator shall not disclose or use any        
record or information obtained pursuant to this Agreement in any manner         
whatsoever except as expressly authorized by this Agreement and                 
applicable law.  The Administrator shall keep confidential any information      
obtained in connection with its duties hereunder and shall disclose such        
information only if the Fund has authorized such disclosure or if               
such disclosure is expressly required by applicable law or federal or state     
regulatory authorities.                                                         

6.   REPORTS TO THE ADMINISTRATOR.  The Fund shall                  
furnish or otherwise make available to the Administrator such Prospectuses,     
Statements of Additional Information, financial statements, proxy statements,   
reports and other information relating to the business and affairs of the Fund, 
as the Administrator may, at any time or from time to time, reasonably require  
in order to discharge its obligations under this Agreement.                     

7.   SERVICES TO OTHER CLIENTS.  Nothing herein contained           
shall limit the freedom of the Administrator or any affiliated person of the    
Administrator to render corporate administrative services to other investment   
companies or to engage in other business activities; however, so long as this   
Agreement or any extension, renewal or amendment hereof shall remain in effect  
or until the Administrator shall otherwise consent, the Administrator shall be  
the only administrator to the Fund.                                             

   8.  LIMITATION OF LIABILITY OF THE ADMINISTRATOR AND INDEMNIFICATION BY
THE FUND.                                                                       

(a)     LIMITATION OF LIABILITY OF THE ADMINISTRATOR.       

               (i)     Neither the Administrator nor any of its directors,
officer, employees or agents performing services for the Fund, at the direction 
or request of the Administrator in connection with the Administrator's          
discharge of its obligations undertaken or reasonably assumed with respect to   
this Agreement, shall be liable for any act or omission in the course of or     
in connection with the Administrator's services hereunder, including any        
error of judgment or mistake of law or for any loss suffered by the Fund, in    
connection with the matters to which this Agreement relates; provided that      
nothing herein contained shall be construed to protect the Administrator or     
any such person against any liability to the Fund or its shareholders to which  
the Administrator or such person would otherwise be subject by reason of        
willful misfeasance, bad faith or negligence in the performance of its or       
their duties on behalf of the Fund.                                             

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            (ii)     The Administrator may apply to the Board of
Directors of the Fund at any time for instructions and may consult counsel      
for the Fund or its own counsel and with accountants and other experts with     
respect to any matter arising in connection with the Administrator's duties,    
and the Administrator shall not be liable or accountable for any action taken   
or omitted by it in good faith in accordance with such instruction or with      
the opinion of such counsel, accountants or other experts.                      

               (iii)     The Administrator shall at all times have the
right to mitigate or cure any and all losses, damages, costs, charges, fees,    
disbursements, payments and liabilities to the Fund and its shareholders.       

(b)      INDEMNIFICATION BY THE FUND.                     

                   (i)     As long as the Administrator acts in good faith and
with due diligence and without negligence, the Fund shall indemnify the         
Administrator and hold it harmless from and against any and all actions, suits  
and claims, whether groundless or otherwise, and from and against any and all   
losses, damages (excluding consequential, punitive or other indirect damages),  
costs, charges, reasonable counsel fees and disbursements, payments, expenses   
and liabilities (including reasonable investigation expenses) arising directly  
or indirectly out of the administrative services or any other services rendered 
to the Fund hereunder.  The indemnity and defense provisions set forth herein   
shall indefinitely survive the termination of this Agreement.                   

                 (ii)      The rights hereunder shall include the right to
reasonable advances of defense expenses in the event of any pending or          
threatened litigation with respect to which indemnification hereunder may       
ultimately be merited.  In order that the indemnification provision contained   
herein shall apply, however, it is understood that if in any case the Fund may  
be asked to indemnify or hold the Administrator harmless, the Board of Directors
of the Fund shall be fully and promptly advised of all pertinent facts          
concerning the situation in question; and it is further understood that the     
Administrator will use all reasonable care to identify and notify the Board of  
Directors of the Fund promptly concerning any situation which presents or       
appears likely to present the probability of such a claim for indemnification   
against the Fund, but failure to do so in good faith shall not affect the       
rights hereunder.                                                               

           (iii) The Administrator shall secure and maintain a
fidelity bond, or be covered by an affiliate's blanket fidelity bond, in at     
least the amount required by Rule 17g-1 under the 1940 Act for joint insurance  
bonds of investment companies.                                                  

9.  INDEMNIFICATION BY THE ADMINISTRATOR.                           

    (a)     The Administrator shall indemnify the Fund, its officers
and directors and hold them harmless from and against any and all actions, suits
and claims, whether groundless or otherwise, and from and against any and all   
losses, damages (excluding consequential, punitive or other indirect damages),  
costs, charges, reasonable counsel fees and disbursements, payments, expenses   
and liabilities (including reasonable investigation expenses) arising directly  
or indirectly out of the administrative services or any other services          
rendered to the Fund hereunder and arising or based upon the willful            
misfeasance, bad faith or negligence of the Administrator, its directors,       
officers, employees and agents in the performance of its or their duties on     
behalf of the Fund.  The indemnity and defense provisions set forth herein      
shall indefinitely survive the termination of this Agreement.                   

      (b)     The rights hereunder shall include the right to reasonable
advances of defense expenses in the event of any pending or threatened          
litigation with respect to which indemnification hereunder may ultimately be    
merited.  In order that the indemnification provision contained herein shall    
apply, however, it is understood that if in any case the Administrator may be   
asked to indemnify or hold the Fund, its officers and directors harmless, the   
Administrator shall be fully and promptly advised of all pertinent facts        
concerning the situation in question; and it is further understood that the     
Fund will use all reasonable care to identify and notify the Administrator      
promptly concerning any situation which presents or appears likely to present   
the probability of such a claim for indemnification against the Administrator,  
but failure to do so in good faith shall not affect the rights hereunder.       

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10.  FORCE MAJEURE.  In the event the Administrator is unable to    
perform its obligations or duties under the terms of this Agreement because of  
any act of God, strike, riot, act of war, equipment failure, power failure or   
damage or other causes reasonably beyond its control, the Administrator shall   
not be liable for any and all losses, damages, costs, charges, counsel fees,    
payments, expenses or liability to any other party (whether or not a party to   
this Agreement) resulting from such failure to perform its obligations or       
duties under this Agreement or otherwise from such causes.  This provision,     
however, shall in no way excuse the Administrator from being liable to the      
Fund for any and all losses, damages, costs, charges, counsel fees, payments    
and expenses incurred by the Fund due to the non-performance or delay in        
performance by the Administrator of its duties and obligation under this        
Agreement if such non-performance or delay in performance could reasonably      
have been prevented by the Administrator through back-up systems and other      
procedures commonly employed by other administrators in the mutual fund         
industry, provided that the Administrator shall have the right, at all times,   
to mitigate or cure any losses, including by making adjustments or corrections  
to any current or former shareholder accounts.                                  

 11.   RETENTION OF SUB-ADMINISTRATOR.  The Administrator may retain a
sub-administrator to perform corporate administrative services to the Fund      
upon sixty (60) days prior written notice to the Fund.  The retention of a      
sub-administrator shall be at the cost and expense of the Administrator.        
The Administrator shall pay and shall be solely responsible for the payment     
of the fees of the sub-administrator for the performance of its services for    
the Fund.                                                                       

12.   TERM OF AGREEMENT.  The term of this Agreement shall          
begin on the day and year first written above and, unless sooner terminated as  
hereinafter provided, shall continue in effect for an initial period that will  
expire on _________________, 1999.  Thereafter, this Agreement shall continue   
in effect from year to year, subject to the termination provisions and all      
other terms and conditions hereof.  The Administrator shall furnish to the      
Fund, promptly upon its request, such information as may be reasonably          
necessary to evaluate the terms of this Agreement or any extension, renewal     
or amendment thereof.                                                           

           The assignment (as that term is defined in Section 2(a)(4) of the
1940 Act and rules thereunder) of this Agreement or any rights or obligations   
thereunder by either party shall be prohibited and, of no force or effect,      
without the written consent of the other party.  This Agreement shall inure     
to the benefit of and be binding upon the parties and their respected           
permitted successors and assigns.                                               

13.   TERMINATION OF AGREEMENT.  This Agreement may be              
terminated by any of the parties hereto, without the payment of any penalty:    

     (a)     for a material breach of this Agreement, upon thirty (30)
days prior written notice to the other parties; provided, that this Agreement   
shall not terminate if such material breach is cured within such thirty (30)    
day period.                                                                     

 (b)     following the initial term of this Agreement, for any
reason, upon ninety (90) days prior written notice to the other parties;        
provided, that in the case of termination by the Fund such action shall have    
been authorized by resolution of the Board of Directors of the Fund or by a     
vote of a majority of the outstanding voting securities of the Fund.  In the    
case of termination by the Administrator, such termination shall not be         
effective until the Fund and the Administrator shall have contracted with one   
or more persons to serve as successor administrator(s) for the Fund and such    
person(s) shall have assumed such position.                                     

14.   AMENDMENT OF AGREEMENT.  Any amendment to this                
Agreement shall be in writing and signed by the parties hereto; provided, that  
no material amendment shall be effective unless authorized by resolution of the 
Board of Directors of the Fund or by a majority of the outstanding voting       
securities of the Fund.                                                         

15.  MISCELLANEOUS.                                                 

(a)     NOTICES.  Any notice under this Agreement shall be  
given in writing, addressed and delivered, or mailed postpaid (i) if to the     
Administrator, to Corbyn Investment Management, Inc., 2330 West Joppa Road,     
Suite 108, Lutherville, Maryland 21093-7207, Attention:  ____________; and      
(ii) if to the Fund, to Greenspring Fund, Incorporated, 2330 West Joppa Road,   

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Suite 110, Lutherville, Maryland 21093-4641, Attention:                         
_________________, with a copy delivered by like means to De Martino            
Finkelstein Rosen & Virga, 1818 N Street, N.W., Suite 400, Washington, D.C.     
20036, Attention:  Ralph V. De Martino.                                         

(b)     CAPTIONS.  The captions contained in this Agreement 
are included for convenience of reference only and in no way define or delineate
any of the provisions hereof or otherwise affect their construction or effect.  

(c)     INTERPRETATION.  Nothing herein contained shall     
be deemed to require the Fund to take any action contrary to its Articles of    
Incorporation or By-Laws, or any applicable statutory or regulatory requirement 
to which it is subject or by which it is bound, or to relieve or deprive the    
Board of Directors of its responsibility for and control of the conduct of the  
affairs of the Fund.                                                            

(d)      DEFINITIONS.  Any question of interpretation of any
term or provision of this Agreement having a counterpart in or otherwise derived
from a term or provision of the 1940 Act shall be resolved by reference to such 
term or provision of the 1940 Act and to interpretations thereof, if any, by the
United States courts or, in the absence of any controlling decision of any such 
court, by rules, regulations or orders of the Securities and Exchange Commission
validly issued pursuant to the 1940 Act.  In addition, where the effect of a    
requirement of the 1940 Act reflected in any provision of this Agreement is     
relaxed by a rule, regulation or order of the Securities and Exchange           
Commission, whether of special or of general application, such provision shall  
be deemed to incorporate the effect of such rule, regulation or order.          

(e)     SEVERABILITY.  If any provision of this Agreement   

shall be held or made invalid by a court decision, statute, rule or otherwise,  
the remainder of this Agreement shall not be affected thereby.                  

(f)      GOVERNING LAW.  Except insofar as the 1940 Act or  
other federal laws and regulations may be controlling, this Agreement shall be  
governed by, and construed and enforced in accordance with, the laws of the     
State of Maryland.                                                              

IN WITNESS WHEREOF, the parties have caused this Agreement          
to be signed by their respective officers thereunto duly authorized and their   
respective corporate seals to be hereunto affixed, as of the day and year first 
above written.                                                                  

ATTEST:                    GREENSPRING FUND, INCORPORATED     

_________________          By: _________________________      

Title:___________          Title:_______________________      

ATTEST:                     CORBYN INVESTMENT MANAGEMENT, INC.

_________________           By: ________________________      

Title: __________           Title: _____________________      

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EXHIBIT C         

INVESTMENT POLICIES         
[Effective the close of business April 30, 1998 assuming approval of proposals  
3a, 3b, 3c, 3d and 3e.]   

Fundamental Policies                                                            

Fundamental policies of the Fund may not be changed without the approval of the 
lesser of (1) 67% of the Fund's shares present at a meeting of shareholders if  
the holders of more than 50% of the outstanding shares are present in person or 
by proxy or (2) more than 50% of the Fund's outstanding shares.                 

The Fund may not:                                                               

  1)  purchase any securities which would cause more than 5% of its total assets
at the time of such purchase to be invested in the securities of any
    issuer, except the U.S. Government, provided that up to 25% of its total
  assets may be invested without regard to such limitation; and the Fund
  may not purchase any securities which would cause the Fund at the time
      of such purchase to own more than 10% of the outstanding voting securities
of the issuer;                                                      

2)  purchase any securities which would cause more than 25% of its total    
assets at the time of purchase to be concentrated in the securities 
of issuers engaged in any one industry;                             

3)  invest in companies for the purpose of exercising management or control;

4)  purchase or sell real estate, although it may invest in securities      
      representing interests in real estate or fixed income obligations directly
    or indirectly secured by real estate, and in the securities of companies
whose business involves the purchase or sale of real estate;        

5)  purchase or sell commodities or commodity contracts;                    

6)  purchase securities on margin or effect short sales of securities;      

7)  make loans, except that it may acquire debentures, notes and other debt 
   securities that are traded, or are able to be traded, pursuant to legal
provisions allowing for the resale of securities;                   

8)  borrow money, except for temporary emergency purposes, and then only in 
      amounts not exceeding the lesser of 10% of its total assets valued at cost
or 5% of its total assets valued at market;                         

9)  mortgage, pledge or hypothecate securities;                             

10)  act as securities underwriter, except to the extent that it may be       
regarded as a statutory underwriter upon disposition of any of its  
securities for purposes of the Securities Act of 1933;              

11)  deal with any of its officers or directors or with any firm of which     
 any of its officers or directors is an officer, director or member as
  principal in the purchase of portfolio securities; or effect portfolio
transactions through any such officer, director or firm as agent or 
   broker unless the Fund pays no more than the customary charges for such
services;                                                           

12)  issue any obligations, bonds, notes or other senior securities, except   
as otherwise allowed by the foregoing restrictions.                 

Operating Policies                                                              

Effective the close of business on April 30, 1998, the Fund will not have any   
operationg policies.  Operating policies are investment policies which are      
subject to change by the Board of Directors without shareholder approval.       

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   PROXY
 ANNUAL MEETING OF SHAREHOLDERS OF
GREENSPRING FUND, INCORPORATED
   ON ____________, 1998

 This Proxy is Solicited on Behalf of the Board of Directors

The undersigned hereby appoints Charles vK. Carlson, Michael T.     
Godack, Michael J. Fusting, Richard Hynson, Jr., David T. Fu and William E.     
Carlson and each or any of them proxies, with power of substitution, to vote all
shares of the undersigned at the Annual Meeting of Shareholders to be held on   
____________, 1998, at [____] a.m. at [_________________________], or at        
any adjournment thereof, upon the matters set forth in the Proxy Statement for  
such meeting, and in their discretion, on such other business as may properly   
come before the meeting.                                                        

1.  TO APPROVE A NEW INVESTMENT ADVISORY AGREEMENT BETWEEN THE FUND 
AND KEY EQUITY MANAGEMENT CORPORATION.                      

    FOR                      AGAINST                         ABSTAIN

 2.  TO RATIFY THE SELECTION OF COOPERS & LYBRAND L.L.P. AS THE FUND'S
      INDEPENDENT PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR ENDING DECEMBER
31, 1998.                                                   

    FOR                      AGAINST                         ABSTAIN

3.  THE FOLLOWING FIVE PROPOSALS, WHICH WILL BE                     
VOTED ON INDIVIDUALLY, CONCERN THE FUND'S FUNDAMENTAL       
POLICIES:                                                   

A.   TO MODIFY THE FUND'S FUNDAMENTAL             
POLICIES RELATING TO THE DIVERSIFICATION
OF THE FUND'S ASSETS:                   

FOR            AGAINST         ABSTAIN  

B.   TO MODIFY THE FUNDAMENTAL POLICY             
 RELATING TO INVESTMENTS IN REAL ESTATE TO
PROVIDE THAT THE FUND MAY NOT PURCHASE  
  OR SELL REAL ESTATE, OTHER THAN SECURITIES
 REPRESENTING INTERESTS IN REAL ESTATE AND
FIXED INCOME OBLIGATIONS DIRECTLY OR    
INDIRECTLY SECURED BY REAL ESTATE.      

FOR            AGAINST         ABSTAIN  

C.   TO ELIMINATE THE FUNDAMENTAL POLICY          
RELATING TO THE PURCHASE OF SHARES OF   
OTHER INVESTMENT COMPANIES.             

FOR            AGAINST         ABSTAIN  

D.   TO MODIFY THE FUNDAMENTAL POLICY             
RELATING TO THE PURCHASE AND SALE OF    
DEBT SECURITIES.                        

FOR            AGAINST         ABSTAIN  

E.   TO ELIMINATE THE FUNDAMENTAL POLICY          
 RESTRICTING THE PURCHASE OF SECURITIES IF
AN OFFICER OR DIRECTOR OF THE FUND OWNS 
CERTAIN SECURITIES ISSUED BY THE SAME   
ISSUER.                                 

FOR            AGAINST         ABSTAIN  

4.   TO ELECT SIX DIRECTORS TO SERVE UNTIL THEIR                    
SUCCESSORS HAVE BEEN DULY ELECTED AND SHALL               
QUALIFY.                                                  

FOR THE NOMINEES LISTED BELOW                             

EXCEPTION                                                 

      (INSTRUCTION: To withhold authority to vote for the nominee strike
a line through the nominee's name below:)             

       Charles vK. Carlson                Michael J. Fusting
      William E. Carlson                 Michael T. Godack
        David T. Fu                        Richard Hynson, Jr.

5.   TO AMEND THE COMPANY'S CERTIFICATE OF                          
INCORPORATION TO INCREASE THE NUMBER                      
OF AUTHORIZED SHARES OF COMMON STOCK FROM 30              
MILLION SHARES OF COMMON STOCK, $.01 PAR VALUE,           
TO 60 MILLION SHARES OF COMMON STOCK, $.01 PAR            
VALUE.                                                    

     FOR                       AGAINST                       ABSTAIN

6.   TO TRANSACT ANY OTHER BUSINESS THAT PROPERLY                   
COMES BEFORE THE MEETING.                                 

     FOR                       AGAINST                       ABSTAIN

Dated:                             _______________________________              
Signature 

                     _______________________________
               Signature if held jointly

NOTE:  When shares are held by joint tenants, both should sign.  Persons        
signing as Executor, Administrator, Trustee, etc. should so indicate.  Please   
sign exactly as the name appears on the proxy.                                  

IF NO CONTRARY SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR    
PROPOSALS 1, 2, 3a, 3b AND 3c.                              

PLEASE MARK, SIGN AND RETURN THIS PROXY CARD PROMPTLY USING           
THE ENCLOSED ENVELOPE.                                      

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘PRER14A’ Filing		Date		First		Last			Other Filings
		5/1/00		14		35
		12/31/98		5		45			N-30D,  NSAR-B
		5/1/98		14		29
		4/30/98		17		44			485BPOS
		2/27/98		4					24F-2NT
		2/17/98		27
Filed on:		1/28/98
		1/20/98		1
		1/5/98		1
		12/31/97		6		12			24F-2NT,  N-30D,  NSAR-B
		12/15/97		9
		10/9/97		9
		6/19/97		9
		2/13/97		15
		12/31/96		10		11			24F-2NT,  ARS,  NSAR-B
		2/15/94		25
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