CRABBE HUSON SMALL CAP FUND, 497, 1996-10-01

CRABBE HUSON SMALL CAP FUND
497, 1996-10-01

Previous: CRABBE HUSON SMALL CAP FUND, 485BPOS, 1996-10-01

Next: L&B FINANCIAL INC, NT 10-K, 1996-10-01

<PAGE>
[logo]

CRABBE HUSON FUNDS

PROSPECTUS

OCT. 1, 1996

THE CRABBE HUSON
SPECIAL FUND, INC.

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

CRABBE HUSON
SMALL CAP FUND - PRIMARY CLASS

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

CRABBE HUSON
REAL ESTATE INVESTMENT FUND - PRIMARY CLASS

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

CRABBE HUSON
EQUITY FUND - PRIMARY CLASS

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

CRABBE HUSON
ASSET ALLOCATION FUND - PRIMARY CLASS

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

CRABBE HUSON
OREGON TAX-FREE FUND - PRIMARY CLASS

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

CRABBE HUSON
INCOME FUND - PRIMARY CLASS

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

CRABBE HUSON
U.S. GOVERNMENT INCOME FUND - PRIMARY CLASS

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

CRABBE HUSON
U.S. GOVERNMENT MONEY MARKET FUND - PRIMARY CLASS

<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE STATEMENT OF
ADDITIONAL INFORMATION INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH THE
OFFERING MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUNDS OR THEIR
DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE FUNDS OR BY
THEIR DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE
MADE.

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

TABLE OF CONTENTS
----------------------------------

<TABLE>
<CAPTION>
PAGE
<S> <C>
Summary of Key Information................................................... 4
Expense Data................................................................. 7
Financial Highlights......................................................... 10
Investment Objective and Policies............................................ 24
Fundamental Policies......................................................... 31
Characteristics, Risks of Securities and Investment Techniques............... 34
Management of the Funds...................................................... 46
Control Persons.............................................................. 50
Net Asset Value.............................................................. 51
Performance Comparisons...................................................... 51
Allocation of Brokerage...................................................... 53
Capital Structure............................................................ 53
Yield........................................................................ 55
Investor Services............................................................ 55
How to Purchase Your Shares.................................................. 56
How to Redeem Your Shares.................................................... 59
How to Exchange Your Shares.................................................. 62
When Transactions are Recorded in Your Account............................... 63
Statements................................................................... 63
Special Situations........................................................... 64
Special Services............................................................. 65
Dividends, Capital Gains, Taxes.............................................. 66
Oregon Tax-Free Fund......................................................... 68
Appendix A................................................................... 69
Appendix B................................................................... 72
</TABLE>

2
<PAGE>
------------------------------------------

PROSPECTUS
OCTOBER 1, 1996

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

Shares of the Primary class of the following nine mutual funds
(individually, a "Fund" and, collectively, the "Funds") are offered in this
Prospectus:

- CRABBE HUSON SPECIAL FUND
- CRABBE HUSON SMALL CAP FUND
- CRABBE HUSON REAL ESTATE INVESTMENT FUND
- CRABBE HUSON EQUITY FUND
- CRABBE HUSON ASSET ALLOCATION FUND
- CRABBE HUSON OREGON TAX-FREE FUND
- CRABBE HUSON INCOME FUND
- CRABBE HUSON U.S. GOVERNMENT INCOME FUND
- CRABBE HUSON U.S. GOVERNMENT MONEY MARKET FUND

Each Fund's shares offered in this Prospectus are sold at net asset value
with no sales load.

This Prospectus concisely sets forth information about the Funds you should
consider before investing, including information about the investment objective
of each Fund, along with a detailed description of the types of securities in
which each Fund may invest, and of investment policies and restrictions
applicable to each Fund. Please read it carefully and keep it for future
reference.

Additional information about each Fund contained in a Statement of
Additional Information dated October 1, 1996 has been filed with the Securities
and Exchange Commission (the "SEC"). It may be obtained free of charge by
calling Crabbe Huson Funds at (800) 541-9732. The Statement of Additional
Information, as it may be supplemented from time to time, is incorporated by
reference in this Prospectus.

SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY FINANCIAL INSTITUTION, AND THE SHARES ARE NOT FEDERALLY INSURED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY
OTHER AGENCY.
- --------------------------------------------------------------------------------

AN INVESTMENT IN THE U.S. GOVERNMENT MONEY MARKET FUND (OR IN ANY OTHER FUND) IS
NEITHER INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT, AND THERE CAN BE NO
ASSURANCE THAT THE U.S. GOVERNMENT MONEY MARKET FUND WILL BE ABLE TO MAINTAIN A
STABLE NET ASSET VALUE OF $1.00 PER SHARE.
- --------------------------------------------------------------------------------

THE SPECIAL FUND CAN ENTER INTO LEVERAGE TRANSACTIONS. THIS ACTIVITY COULD BE
CONSIDERED SPECULATIVE AND COULD RESULT IN GREATER COST TO THE FUND. SEE PAGE
35.

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

3
<PAGE>
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------

A COPY OF THIS PROSPECTUS MUST BE DELIVERED TO RESIDENTS OF CERTAIN STATES PRIOR
TO CONSUMMATION OF A SALE OF SHARES IN THE FUND.
- --------------------------------------------------------------------------------

SHARES OF THE OREGON TAX-FREE FUND ARE ONLY AVAILABLE FOR SALE TO RESIDENTS OF
OREGON.

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

SUMMARY OF KEY INFORMATION
----------------------------------

The information below is qualified in its entirety by the detailed
information appearing elsewhere in this Prospectus and in the Funds' Statement
of Additional Information.

CRABBE HUSON SPECIAL FUND

(the "Special Fund") seeks to provide significant long-term capital
appreciation. It pursues this objective through a flexible policy of investing
in a diversified portfolio of carefully selected stocks that have small to
medium market capitalization.

CRABBE HUSON SMALL CAP FUND

(the "Small Cap Fund") seeks to provide long-term capital appreciation. It
pursues this objective by investing in a diversified portfolio of carefully
selected stocks that have small market capitalization.

CRABBE HUSON REAL ESTATE INVESTMENT FUND

(the "Real Estate Fund") seeks to provide growth of capital and current income.
It pursues this objective by investing primarily in equity securities of real
estate investment trusts ("REITs") and other real estate industry companies.

CRABBE HUSON EQUITY FUND

(the "Equity Fund") seeks to provide long-term capital appreciation. It pursues
this objective by investing in a diversified portfolio of common stocks which
are widely and actively traded and that have large market capitalizations.

4
<PAGE>
CRABBE HUSON ASSET ALLOCATION FUND

(the "Asset Allocation Fund") seeks preservation of capital, capital
appreciation and income. It pursues these objectives by investing in stocks,
fixed income securities, cash and cash equivalents.

CRABBE HUSON OREGON TAX-FREE FUND

(the "Oregon Tax-Free Fund") seeks to provide as high a level of income exempt
from federal and Oregon income taxes as is consistent with prudent investment
management and the preservation of capital. It pursues this objective by
investing at least 80% of its assets in tax-exempt municipal bonds issued by the
State of Oregon and its political subdivisions.

CRABBE HUSON INCOME FUND

(the "Income Fund") seeks to provide the highest level of current income that is
consistent with preservation of capital. It pursues this objective by investing
primarily in a diversified portfolio of fixed income securities, including
convertible bonds and debentures.

CRABBE HUSON U.S. GOVERNMENT INCOME FUND

(the "U.S. Government Income Fund") seeks to provide a high level of current
income and the preservation of capital. It pursues this objective by investing
substantially all of its assets in short- and intermediate-term debt obligations
of the United States Government and its agencies or instrumentalities.

CRABBE HUSON U.S. GOVERNMENT MONEY MARKET FUND

(the "U.S. Government Money Market Fund") seeks to provide a high level of
current income and preservation of capital while maintaining shareholder
liquidity. It pursues this objective by investing in short-term money market
instruments that are direct or indirect obligations of the United States
Government or its agencies or instrumentalities, and repurchase agreements with
respect to such obligations.

Each of the Funds (other than the Special Fund) is a separate series of the
Crabbe Huson Funds, a Delaware business trust operating as an open-end
management investment company. The Special Fund is an Oregon corporation. Each
Fund operates as a diversified fund, with the exception of the Oregon Tax-Free
Fund, which is non-diversified. The Funds are managed by The Crabbe Huson Group,
Inc. (the "Adviser").

Shares of the Funds are distributed by Crabbe Huson Securities, Inc., an
affiliate of the Adviser. There is no sales load payable in connection with the
sale of shares of any of the Funds. Additionally, certain broker-dealers,
financial

5
<PAGE>
institutions, depository institutions, and other financial intermediaries
(individually, a "Financial Intermediary" and collectively, "Financial
Intermediaries") have entered into agreements with the Distributor of the Funds
to purchase shares on behalf of their customers. For information about how to
purchase, redeem or exchange shares of the Funds, see "INVESTOR SERVICES" in
this Prospectus.

The Primary Class of shares of each Fund is offered pursuant to this
Prospectus. Some of the Funds offer or intend to offer additional classes of
shares to investors eligible to purchase those shares, including shares of an
Institutional Class to be offered by the Small Cap, Equity and Asset Allocation
Fund. Each class of shares has or will have different fees and expenses than the
class of shares offered by this Prospectus and those different fees and expenses
may affect performance. To obtain information concerning the other class of
shares not offered in this Prospectus, call (800) 541-9732 or contact your
Financial Intermediary.

Because the Funds have the same adviser, officers and directors or trustees
and have similar investment privileges, the Funds believe you will find this
combined Prospectus useful and informative in understanding the important
features of the Funds and their similarities and differences. Although each Fund
is offering only its own shares and is not participating in the sale of the
shares of the other Funds, it is possible that a Fund might become liable for
any misstatement, inaccuracy or incomplete disclosure in the Prospectus
concerning the Funds.

The Special, Small Cap, Equity and Asset Allocation Funds are subject to the
risks of investments in common stock, principally that the prices of stocks can
fluctuate dramatically in response to company, market, or economic news. The
Special, Equity, Asset Allocation, Income and U.S. Government Income Funds
historically have had turnover rates in their portfolios in excess of 75% per
year, resulting in potentially higher brokerage costs and the potential loss of
advantageous long-term capital gain treatment for tax purposes. See "Taxes" and
"Allocation of Brokerage." In addition, the Special, Small Cap, Equity, Asset
Allocation and Income Funds may each invest up to 35% of its total assets in
securities issued by foreign issuers. Both the Small Cap Fund and Real Estate
Fund have a limited operating history. In addition, the Real Estate Fund invests
primarily in real estate equity securities, and investments in that Fund are
subject to certain risks associated with the direct ownership of real estate. A
significant risk associated with investments in the Oregon Tax-Free, Income and
U.S. Government Income Funds is that of increasing interest rates causing a
decline in the net asset value of the Fund. The Oregon Tax-Free Fund may be
subject to greater risks resulting from economic difficulties unique to the
State of Oregon, where most of its securities are originated. The Special Fund
may, from time to time, leverage its assets by using borrowed money to increase
its

6
<PAGE>
portfolio positions. For additional information about specific risk factors
associated with an investment in each of the Funds, see "CHARACTERISTICS AND
RISKS OF SECURITIES AND INVESTMENT TECHNIQUES."

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

EXPENSE DATA
----------------------------------

The following information is provided in order to help you understand the
various costs and expenses that you as an investor in the Funds, will bear,
directly or indirectly.

---------------------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSES

<TABLE>
<S> <C>
Maximum Sales Load Imposed on Purchases.................... NONE
Maximum Sales Load Imposed on Reinvested Dividends......... NONE
Deferred Sales Load........................................ NONE
Redemption Fees............................................ NONE
Exchange Fees.............................................. NONE
</TABLE>

---------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES(1)
(AS A PERCENTAGE OF AVERAGE NET ASSETS)

<TABLE>
<CAPTION>
SMALL REAL ASSET
SPECIAL CAP ESTATE EQUITY ALLOCATION
FUND FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C>
-------------------------------------------------------
Management Fees (after waiver)(2)...... .79% .75% .61% .90% .96%
12b-1 Fees(3).......................... .25% .25% .25% .23% .25%
Other Expenses (after
reimbursement)(4)..................... .36% .50% .64% .27% .27%
TOTAL FUND OPERATING EXPENSES (AFTER
REIMBURSEMENT OR WAIVER)(5)........... 1.40% 1.50% 1.50% 1.40% 1.48%

U.S.
U.S. GOVERNMENT
OREGON GOVERNMENT MONEY
TAX-FREE INCOME INCOME MARKET
FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C>
------------------------------------------------
Management Fees (after waiver)(2)...... .42% 0% 0% .05%
12b-1 Fees(3).......................... .23% .25% .25% .25%
Other Expenses (after
reimbursement)(4)..................... .33% .55% .50% .40%
TOTAL FUND OPERATING EXPENSES (AFTER
REIMBURSEMENT OR WAIVER)(5)........... .98% .80% .75% .70%
</TABLE>

7
<PAGE>
EXAMPLE ---------------------------------------------------------------------
Assuming, hypothetically, that each Fund's annual return is 5% and that its
operating expenses are as set forth above, an investor buying $1,000 of a Fund's
shares would have paid the following total expenses upon redeeming such
shares:(6)

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
--------------------------------------------------
Special Fund.................................... $ 14 $ 45 $ 77 $ 169
Small Cap Fund.................................. 15 48 82 180
Real Estate Fund................................ 15 48 82 180
Equity Fund..................................... 14 45 77 169
Asset Allocation Fund........................... 15 47 81 177
Oregon Tax-Free Fund............................ 10 31 54 121
Income Fund..................................... 8 26 45 99
U.S. Government Income Fund..................... 8 24 42 93
U.S. Government Money Market Fund............... 7 22 39 87
</TABLE>

The purpose of the above table is to assist the investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly. Certain broker dealers, financial institutions and financial
advisers also may charge their clients fees in connection with investment in the
Funds, which fees are not reflected in the above table. A long-term shareholder
may pay more than the economic equivalent of the maximum front-end sales charge
permitted by the rules and regulations of the National Association of Securities
Dealers due to 12b-1 fees. See "Distribution Expenses" in this Prospectus.

(1) Except for the Small Cap Fund, the expenses specified in the table above
are based on actual expenses incurred for the year ended October 31, 1995.
Since the Small Cap Fund is new and did not commence operations until
February 16, 1996, "Other Expenses" have been estimated.

(2) Reflects a waiver of fees by the Adviser of $697; $75,190; $14,567;
$20,866; $49,011; $43,576; and $230,305 for the Special Fund, the Real
Estate Fund, the Asset Allocation Fund, the Oregon Tax-Free Fund, the
Income Fund, the U.S. Government Income Fund, and the U.S. Government Money
Market Fund, respectively. If the waiver had not been made these
percentages would have been .79%, 1.00%, .97%, .50%, .75%, .50%, and .50%,
respectively. With respect to the Small Cap Fund, for the fiscal period
ending October 31, 1996, the Adviser has agreed to waive its advisory fee
to the extent that Total Fund Operating Expenses exceed 1.50%. Under this
arrangement, the Adviser will not impose any management fee in order to
limit Total Fund Operating Expenses to 1.50% of the Fund's average daily
net assets. If the Adviser did not agree to limit its fee, the Total Fund
Operating Expenses are estimated to be 1.75%, of which the management fee
would be 1.00%.

8
<PAGE>
(3) The maximum 12b-1 distribution fee that can be charged is .25% of a Fund's
average annual net assets.

(4) Reflects a reimbursement of Fund expenses by the Adviser of $33,287 and
$26,493 for the Income and the U.S. Government Income Funds, respectively.
If the reimbursement had not been made, these percentages would have been
1.06% and .80%, respectively.

(5) As noted in footnote 2, the Adviser voluntarily waived its fees and/or
reimbursed the Funds' expenses to the extent total operating expenses
exceeded 1.50% for the Special, Real Estate, Equity and Asset Allocation
Funds, .98% for the Oregon Tax-Free Fund, .80% for the Income Fund, .75%
for the U.S. Government Income Fund and .70% for the U.S. Government Money
Market Fund per annum of the Fund's net asset value. If the waivers had not
been made, total fund operating expenses would have been 1.40%, 1.89%,
1.40%, 1.49%, 1.08%, 2.06%, 1.55% and 1.16% for the Special Fund, the Real
Estate Fund, the Equity Fund, the Asset Allocation Fund, the Oregon
Tax-Free Fund, the Income Fund, the U.S. Government Income Fund and the
U.S. Government Money Market Fund, respectively. For all Funds other than
the Small Cap Fund, the Adviser has terminated its agreement to waive its
advisory fee or reimburse Fund expenses. From time to time the Adviser may
voluntarily waive its advisory fees or reimburse a Fund's expenses, but it
is under no legal obligation to do so.

(6) THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
FUND EXPENSES OR PERFORMANCE. ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN
THOSE SHOWN. MOREOVER, WHILE THE TABLE ASSUMES A 5% ANNUAL RETURN, THE
FUNDS' ACTUAL PERFORMANCE WILL VARY AND MAY RESULT IN AN ACTUAL RETURN
GREATER OR LESSER THAN 5%.

9
<PAGE>
OREGON MUNICIPAL BOND FUND - PRIMARY CLASS

FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)

The following information (other than for the six-month period ending April 30,
1996) has been audited by KPMG Peat Marwick LLP, independent auditors, whose
report dated December 8, 1995 appears in the Funds' Statement of Additional
Information. The financial statements for the six month period ending April 30,
1996 are unaudited. The calculations contained herein are based on average
number of shares outstanding for such period. Further information about the
performance of the Funds is contained in the Funds annual report, dated October
31, 1995 and the Funds semi-annual report dated April 30, 1996, copies of which
may be obtained free of charge by calling (800) 541-9732.

<TABLE>
<CAPTION>
(UNAUDITED)
PERIOD ENDED YEAR ENDED
---------------- ----------------------------------------------------------
4/30/96 10/31/95 10/31/94 10/31/93 10/31/92 10/31/91
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD......... $12.62 $11.99 $12.80 $12.20 $12.14 $11.74
INCOME FROM INVESTMENT OPERATIONS
Net investment income........................ 0.2688 0.5480 0.5418 0.5683 0.6168 0.6385
Net realized & unrealized gain (loss) on
securities.................................. (0.2287 ) 0.6998 (0.8001 ) 0.6880 0.1521 0.4831
----------------------------------------------------------------------------
Total from investment operations......... 0.0401 1.2478 (0.2583 ) 1.2563 0.7689 1.1216
LESS DISTRIBUTIONS
Distributions from net investment income..... 0.2688 0.5480 0.5419 0.5647 0.6168 0.6562
Distributions in Excess of Net Investment
Income...................................... 0.0000 0.0000 0.0003 0.0000 0.0000 0.0000
Distributions from capital gains............. 0.0013 0.0698 0.0090 0.0916 0.0921 0.0654
----------------------------------------------------------------------------
Total distributions...................... 0.2701 0.0698 0.0093 0.0916 0.7089 0.7216
NET ASSET VALUE, END OF PERIOD............... $12.39 $12.62 $11.99 $12.80 $12.20 $12.14
TOTAL RETURN................................. 0.29% 10.66% -2.06% 10.71% 6.51% 9.85%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period.................... $28,475 $28,070 $29,046 $29,408 $20,296 $18,383
Ratio of expenses to average net assets...... 0.98%(c)(d) 0.98% 0.98% 1.05% 1.11% 1.21%
Ratio of net investment income to average net
assets...................................... 4.28%(c)(d) 4.45% 4.37% 4.51% 5.04% 5.36%
Portfolio turnover rate...................... 8.28% 22.91% 20.58% 11.62% 25.30% 53.40%
</TABLE>

<PAGE>
OREGON MUNICIPAL BOND FUND - PRIMARY CLASS

FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)

<PAGE>
OREGON MUNICIPAL BOND FUND - PRIMARY CLASS

FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED
----------------------------------------------------------------------
10/31/90 10/31/89 10/31/88 10/31/87 9/30/87 7/30/86
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD......... $11.72 $11.72 $11.08 $12.15 $11.93 $10.43
INCOME FROM INVESTMENT OPERATIONS
Net investment income........................ 0.6316 0.6794 0.6386 0.7311 0.7319 0.7720
Net realized & unrealized
Gain (loss) on securities.................... 0.0522 0.0842 0.6411 (0.9983 ) (0.8051 ) 1.5265
----------------------------------------------------------------------
Total from investment operations......... 0.6838 0.7636 1.2797 (0.2672 ) (0.0732 ) 2.2985
LESS DISTRIBUTIONS
Distributions from net investment income..... 0.6401 0.6711 0.6386 0.7311 0.7319 0.7720
Distributions in excess of net investment
income...................................... 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
Distributions from capital gains............. 0.0237 0.0925 0.0000 0.0760 0.0760 0.0255
----------------------------------------------------------------------
Total distributions...................... 0.6638 0.7636 0.6386 0.8071 0.8079 0.7975
NET ASSET VALUE, END OF PERIOD............... $11.74 $11.72 $11.72 $11.08 $11.05 $11.93
TOTAL RETURN................................. 6.00% 6.67% 12.02% -1.95% -0.95% 22.83%
</TABLE>

<PAGE>
OREGON MUNICIPAL BOND FUND - PRIMARY CLASS

FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED
----------------------------------------------------------------------
10/30/90 10/31/89 10/31/88 10/31/87 9/30/87 7/30/86
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period.................... $18,766 $19,173 $20,058 $14,277 $14,165 $8,861
Ratio of expenses to average net assets...... 1.38% 1.04% 1.21% 1.14% 1.31% 1.06%
Ratio of net investment income to average net
assets...................................... 5.41% 5.82% 5.53% 5.66% 6.43% 6.34%
Portfolio turnover rate...................... 58.52% 45.25% 31.44% 19.18% 18.73% 24.20%
RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
Ratio of expenses to average net assets...... 1.55% 1.16% 1.32% -- -- --
Ratio of Net Investment Income to Average Net
Assets...................................... 5.23% 5.71% 5.42% -- -- --
RATIOS NET OF EXPENSES PAID INDIRECTLY
Ratio of Expenses to Average Net Assets...... -- -- -- -- -- --
Ratio of Net Investment Income to Average Net
Assets...................................... -- -- -- -- -- --
</TABLE>

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

(a) The Fund's Fiscal Year was changed from 9/30 to 10/31, effective
10/31/87, which represents a conformed 12 month period.
(b) Disclosure of the average commission rate paid relates to the purchase
and sale of investment securities and is required for Funds that
invest greater than 10% of average net assets in equity transactions.
This disclosure is required for fiscal periods beginning on or after
September 1, 1995.
(c) Ratios include expenses paid indirectly through directed brokerage &
certain expense offset arrangements.
(d) Computed on an annualized basis.
(e) Commencement of operations - 4/9/87.
(f) Commencement of operations - 1/31/89.
(g) Commencement of operations - 4/4/94.
(h) Commencement of operations - 2/20/96.

<PAGE>
THE CRABBE HUSON SPECIAL FUND, INC.

FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
(UNAUDITED)
PERIOD ENDED YEAR ENDED
---------------- ----------------------------------------------------------------
4/30/96 10/31/95 10/31/94 10/31/93 10/31/92 10/31/91 10/31/90
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD............................... $13.80 $14.08 $11.82 $8.36 $12.05 $8.78 $11.49
INCOME FROM INVESTMENT OPERATIONS
Net investment income................. 0.0611 0.2704 0.0513 (0.0774) (0.0211) 0.0353 0.1546
Net realized & unrealized gain (loss)
on securities........................ 1.5866 (0.2894) 2.3026 3.5374 (1.6211) 4.0155 (1.4317)
----------------------------------------------------------------------------------
Total from investment
operations....................... 1.6477 (0.0190) 2.3539 3.4600 (1.6422) 4.0508 (1.2771)
LESS DISTRIBUTIONS
Distributions from net investment
income............................... 0.0611 0.0226 0.0000 0.0000 0.0260 0.1453 0.2240
Distributions in excess of net
investment income.................... 0.1589 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
Distributions from capital gains...... 0.5977 0.2384 0.0892 0.0000 2.0218 0.6355 1.2089
----------------------------------------------------------------------------------
Total distributions............... 0.8177 0.2610 0.0892 0.0000 2.0478 0.7808 1.4329
NET ASSET VALUE, END OF PERIOD........ $14.63 $13.80 $14.08 $11.82 $8.36 $12.05 $8.78
TOTAL RETURN.......................... 12.08% 1.78% 22.40% 41.39% 8.11% 49.58% (10.90)%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period............. $777,488 $878,560 $319,811 $238,167 $5,857 $3,542 $2,926
Ratio of expenses to average net
assets............................... 1.35%(c)(d) 1.40% 1.44% 1.57% 1.74% 1.92% 2.00%
Ratio of net investment income to
average net assets................... 0.85%(c)(d) 1.95% 0.39% (0.73)% (0.25)% 0.32% 1.55%
Portfolio turnover rate............... 24.53% 122.97% 146.44% 73.29% 102.27% 256.68% 314.73%
Average commission rate............... $0.0367 (b) -- -- -- -- -- --

<CAPTION>
PERIOD
ENDED
----------
10/31/89 10/31/88 10/31/87(E)

<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD............................... $9.69 $8.13 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income................. 0.2100 (0.0515) (0.0409 )
Net realized & unrealized gain (loss)
on securities........................ 1.5900 1.6115 (1.8300 )

Total from investment
operations....................... 1.8000 1.5600 (1.8709 )
LESS DISTRIBUTIONS
Distributions from net investment
income............................... 0.0000 0.0000 0.0000
Distributions in excess of net
investment income.................... 0.0000 0.0000 0.0000
Distributions from capital gains...... 0.0000 0.0000 0.0000

Total distributions............... 0.0000 0.0000 0.0000
NET ASSET VALUE, END OF PERIOD........ $11.49 $9.69 $8.13
TOTAL RETURN.......................... 18.68% 19.63% (30.32 )%(d)
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period............. $3,356 $4,393 $1,892
Ratio of expenses to average net
assets............................... 2.00% 3.94% 2.60%(d)
Ratio of net investment income to
average net assets................... 1.96% 3.34% 0.05%(d)
Portfolio turnover rate............... 275.62% 155.12% 3.90%
Average commission rate............... -- -- --
</TABLE>

<PAGE>
THE CRABBE HUSON SPECIAL FUND, INC.

FINANCIAL HIGHLIGHTS (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
PERIOD ENDED YEAR ENDED
---------------- ----------------------------------------------------------------
4/30/96 10/31/95 10/31/94 10/31/93 10/31/92 10/31/91 10/31/90
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
Ratio of expenses to average net
assets............................... 1.35%(c)(d) 1.40% 1.54% 1.59% 2.18% 2.40% 2.86%
Ratio of net investment income to
average net assets................... 0.85%(c)(d) 1.95% 0.29% (0.75)% (0.69)% (0.15)% 0.70%
RATIOS NET OF EXPENSES PAID INDIRECTLY
Ratio of expenses to average net
assets............................... 1.35%(d) -- -- -- -- -- --
Ratio of net investment income to
average net assets................... 0.86%(d) -- -- -- -- -- --

<CAPTION>
PERIOD
ENDED
----------
10/31/89 10/31/88 10/31/87(E)

<S> <C> <C> <C>
RATIOS IF FEES HAD NOT BEEN WAIVED AND
Ratio of expenses to average net
assets............................... 2.44%(d) -- --
Ratio of net investment income to
average net assets................... 1.53%(d) -- --
RATIOS NET OF EXPENSES PAID INDIRECTLY
Ratio of expenses to average net
assets............................... -- -- --
Ratio of net investment income to
average net assets................... -- -- --
</TABLE>

<PAGE>
CRABBE HUSON ASSET ALLOCATION FUND - PRIMARY CLASS

FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
(UNAUDITED)
PERIOD ENDED
-----------------
4/30/96
-----------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.... $13.64
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income................... 0.1498
Net Realized & Unrealized Gain (Loss) on
Securities............................. 0.6839
-----------------
Total from Investment Operations.... 0.8337
LESS DISTRIBUTIONS
Distributions from Net Investment
Income................................. 0.1483
Distributions in Excess of Net
Investment Income...................... 0.0000
Distributions from Capital Gains........ 0.5039
Distributions in excess of Capital
Gains.................................. 0.5415
-----------------
Total Distributions................. 1.1937
NET ASSET VALUE, END OF PERIOD.......... $13.28
TOTAL RETURN............................ 6.85%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period............... $149,085
Ratio of Expenses to Average Net
Assets................................. 1.49%(c)(d)
Ratio of Net Investment Income to
Average Net Assets..................... 2.26%(c)(d)
Portfolio Turnover Rate................. 157.62%
Average Commission Rate................. $0.0461(b)

YEAR ENDED
------------------------------------------------------------------------------------
10/31/95 10/31/94 10/31/93 10/31/92 10/31/91 10/31/90

<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.... $12.87 $13.52 $11.68 $11.00 $9.24 $10.69
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income................... 0.3361 0.2990 0.2323 0.3468 0.4143 0.4561
Net Realized & Unrealized Gain (Loss) on
Securities............................. 1.2090 (0.0817) 2.0889 0.8175 1.8208 (1.1200)

Total from Investment Operations.... 1.5451 0.2173 2.3212 1.1643 2.2351 (0.6639)
LESS DISTRIBUTIONS
Distributions from Net Investment
Income................................. 0.3321 0.2879 0.2373 0.3463 0.4335 0.7159
Distributions in Excess of Net
Investment Income...................... 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
Distributions from Capital Gains........ 0.4430 0.5829 0.2439 0.1380 0.0415 0.0702
Distributions in excess of Capital
Gains.................................. 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000

Total Distributions................. 0.7751 0.8708 0.4812 0.4843 0.4750 0.7861
NET ASSET VALUE, END OF PERIOD.......... $13.64 $12.87 $13.52 $11.68 $11.00 $9.24
TOTAL RETURN............................ 13.00% 2.66% 20.93% 11.25% 24.55% -6.40%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period............... $136,530 $110,152 $85,390 $55,099 $23,893 $13,174
Ratio of Expenses to Average Net
Assets................................. 1.48% 1.44% 1.46% 1.52% 1.76% 1.90%
Ratio of Net Investment Income to
Average Net Assets..................... 2.57% 2.30% 1.85% 3.02% 3.97% 4.51%
Portfolio Turnover Rate................. 225.70% 149.19% 116.10% 155.26% 157.89% 161.72%
Average Commission Rate................. -- -- -- -- -- --

<CAPTION>
PERIOD
ENDED
-----------
10/31/89(F)

NET ASSET VALUE, BEGINNING OF PERIOD.... $10.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income................... 0.3990
Net Realized & Unrealized Gain (Loss) on
Securities............................. 0.2910

Total from Investment Operations.... 0.6900
LESS DISTRIBUTIONS
Distributions from Net Investment
Income................................. 0.0000
Distributions in Excess of Net
Investment Income...................... 0.0000
Distributions from Capital Gains........ 0.0000
Distributions in excess of Capital
Gains.................................. 0.0000

Total Distributions................. 0.0000
NET ASSET VALUE, END OF PERIOD.......... $10.69
TOTAL RETURN............................ 9.30%(d)
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period............... $12,578
Ratio of Expenses to Average Net
Assets................................. 1.91%(d)
Ratio of Net Investment Income to
Average Net Assets..................... 5.02%(d)
Portfolio Turnover Rate................. 88.14%
Average Commission Rate................. --
</TABLE>

<PAGE>
CRABBE HUSON ASSET ALLOCATION FUND - PRIMARY CLASS

FINANCIAL HIGHLIGHTS (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
PERIOD ENDED
-----------------
4/30/96
-----------------
<S> <C>
RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
Ratio of Expenses to Average Net
Assets................................. 1.49%(c)(d)
Ratio of Net Investment Income to
Average Net Assets..................... 2.26%(c)(d)
RATIOS NET OF EXPENSES PAID INDIRECTLY
Ratio of Expenses to Average Net
Assets................................. 1.48%(d)
Ratio of Net Investment Income to
Average Net Assets..................... 2.27%(d)

YEAR ENDED
------------------------------------------------------------------------------------
10/31/95 10/31/94 10/31/93 10/31/92 10/31/91 10/31/90

<S> <C>
RATIOS IF FEES HAD NOT BEEN WAIVED AND/O
Ratio of Expenses to Average Net
Assets................................. 1.49% 1.52% 1.54% 1.62% 1.79% 1.93%
Ratio of Net Investment Income to
Average Net Assets..................... 2.56% 2.22% 1.77% 2.92% 3.94% 4.49%
RATIOS NET OF EXPENSES PAID INDIRECTLY
Ratio of Expenses to Average Net
Assets................................. -- -- -- -- -- --
Ratio of Net Investment Income to
Average Net Assets..................... -- -- -- -- -- --

<CAPTION>
PERIOD
ENDED
-----------
10/31/89(F)

RATIOS IF FEES HAD NOT BEEN WAIVED AND/O
Ratio of Expenses to Average Net
Assets................................. 1.93%(d)
Ratio of Net Investment Income to
Average Net Assets..................... 5.00%(d)
RATIOS NET OF EXPENSES PAID INDIRECTLY
Ratio of Expenses to Average Net
Assets................................. --
Ratio of Net Investment Income to
Average Net Assets..................... --
</TABLE>

<PAGE>
CRABBE HUSON EQUITY FUND - PRIMARY CLASS

FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
(UNAUDITED)
PERIOD ENDED YEAR ENDED
---------------- -------------------------------------------------------
4-30-96 10-31-95 10-31-94 10-31-93 10-31-92 10-31-91
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD................. $18.17 $16.44 $16.08 $13.03 $12.57 $8.54
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income................................ 0.0656 0.2223 0.1900 0.0981 0.1980 0.1861
Net Realized & Unrealized Gain (Loss) on
Securities.......................................... 2.3018 1.7438 0.5668 3.4476 0.9186 4.1511
-------------------------------------------------------------------------
Total from investment operations................. 2.3674 1.9661 0.7568 3.5457 1.1166 4.3372
LESS DISTRIBUTIONS
Distributions from Net Investment Income............. 0.0656 0.0880 0.0344 0.1099 0.0937 0.3072
Distributions in Excess of Net Investment Income..... 0.0876 0.0000 0.0000 0.0000 0.0000 0.0000
Distributions from Capital Gains..................... 0.8542 0.1481 0.3638 O.3858 0.5629 0.0000
-------------------------------------------------------------------------
Total distributions.............................. 1.0074 0.2361 0.3982 0.4957 0.6566 0.3072
NET ASSET VALUE, END OF PERIOD....................... $19.53 $18.17 $16.44 $16.08 $13.03 $12.57
TOTAL RETURN......................................... 13.96% 13.37% 7.89% 29.90% 12.48% 52.44%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period............................ $491,009 $387,184 $153,105 $34,520 $13,429 $5,930
Ratio of Expenses to Average Net Assets.............. 1.39%(c)(d) 1.40% 1.45% 1.49% 1.55% 1.84%
Ratio of Net Investment Income to Average Net
Assets.............................................. 0.70%(c)(d) 1.30% 1.18% 0.67% 1.57% 1.60%
Portfolio Turnover Rate.............................. 47.06% 92.43% 106.49% 114.38% 180.72% 171.82%
Average Commission Rate.............................. $0.0464(b ) -- -- -- -- --
RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
Ratio of Expenses to Average Net Assets.............. 1.39% 1.40% 1.56% 1.64% 1.93% 2.41%
Ratio of Net Investment Income to Average Net
Assets.............................................. 0.70%(c)(d) 1.30% 1.06% 0.52% 1.18% 1.03%
RATIOS NET OF EXPENSES PAID INDIRECTLY
Ratio of Expenses to Average Net Assets.............. 1.38%(d) -- -- -- -- --
Ratio of Net Investment Income to Average Net
Assets.............................................. 0.71%(d) -- -- -- -- --

<CAPTION>
PERIOD
ENDED
----------
10-31-90 10-31-89(F)

<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD................. $10.50 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income................................ 0.2533 0.3146
Net Realized & Unrealized Gain (Loss) on
Securities.......................................... (1.6764 ) 0.1854

Total from investment operations................. (1.4231 ) 0.5000
LESS DISTRIBUTIONS
Distributions from Net Investment Income............. 0.3918 0.0000
Distributions in Excess of Net Investment Income..... 0.0000 0.0000
Distributions from Capital Gains..................... 0.1451 0.0000

Total distributions.............................. 0.5369 0.0000
NET ASSET VALUE, END OF PERIOD....................... $8.54 $10.50
TOTAL RETURN......................................... -14.97% 6.72%(d)
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period............................ $2,944 $5,018
Ratio of Expenses to Average Net Assets.............. 1.93% 1.69%(d)
Ratio of Net Investment Income to Average Net
Assets.............................................. 2.56% 3.98%(d)
Portfolio Turnover Rate.............................. 265.25% 90.54%
Average Commission Rate.............................. -- --
RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
Ratio of Expenses to Average Net Assets.............. 2.66% 1.97%(d)
Ratio of Net Investment Income to Average Net
Assets.............................................. 1.83% 3.68%(d)
RATIOS NET OF EXPENSES PAID INDIRECTLY
Ratio of Expenses to Average Net Assets.............. -- --
Ratio of Net Investment Income to Average Net
Assets.............................................. -- --
</TABLE>

<PAGE>
CRABBE HUSON INCOME FUND - PRIMARY CLASS

FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
(UNAUDITED)
PERIOD
ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
4/30/96 10/31/95 10/31/94 10/31/93 10/31/92 10/31/91
<S> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD...... $10.26 $9.71 $10.75 $10.90 $10.63 $10.01
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income..................... 0.2687 0.5329 0.4995 0.4637 0.6583 0.7038
Net Realized & Unrealized
Gain (Loss) on Securities................. (0.2736) 0.5754 (0.7669) 0.3265 0.3569 0.6218
------------------------------------------------------------------------------
Total from Investment Operations...... (0.0049 ) 1.1083 (0.2674) 0.7902 1.0152 1.3256
LESS DISTRIBUTIONS
Distributions from Net Investment
Income................................... 0.2651 0.5329 0.4995 0.4879 0.6588 0.7056
Distributions in Excess of Net Investment
Income................................... 0.0000 0.0254 0.0080 0.0000 0.0000 0.0000
Distributions from Capital Gains.......... 0.0000 0.0000 0.2710 0.4523 0.0864 0.0000
------------------------------------------------------------------------------
Total Distributions................... 0.2651 0.5583 0.7785 0.9402 0.7452 0.7056
NET ASSET VALUE, END OF PERIOD............ $9.99 $10.26 $9.71 $10.75 $10.90 $10.63
TOTAL RETURN.............................. -0.10% 11.92% -2.71% 7.73% 9.74% 13.51%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period................. $5,785 $7,190 $5,273 $5,697 $5,634 $5,486
Ratio of Expenses to Average Net Assets... 0.80%(c)(d) 0.80% 0.80% 0.81% 0.90% 0.98%
Ratio of Net Investment Income to Average
Net Assets............................... 5.13%(c)(d) 5.47% 4.92% 4.34% 6.09% 6.82%
Portfolio Turnover Rate................... 341.85% 543.15% 306.79% 260.22% 227.45% 115.76%
RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
Ratio of Expenses to Average Net Assets... 2.44%(c)(d) 1.95% 2.16% 1.96% 1.94% 2.42%
Ratio of Net Investment Income to Average
Net Assets............................... 3.49%(c)(d) 4.32% 3.56% 3.19% 5.06% 5.38%
RATIOS NET OF EXPENSES PAID INDIRECTLY
Ratio of Expenses to Average Net Assets... 0.80%(d) -- -- -- -- --
Ratio of Net Investment Income to Average
Net Assets............................... 5.13%(d) -- -- -- -- --

PERIOD
YEAR ENDED ENDED
10/31/90 10/31/89(F)
<S> <C> <C>

NET ASSET VALUE, BEGINNING OF PERIOD...... $10.27 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income..................... 0.6869 0.5545
Net Realized & Unrealized
Gain (Loss) on Securities................. (0.2407) 0.2761

Total from Investment Operations...... 0.4462 0.8306
LESS DISTRIBUTIONS
Distributions from Net Investment
Income................................... 0.6840 0.5606
Distributions in Excess of Net Investment
Income................................... 0.0000 0.0000
Distributions from Capital Gains.......... 0.0222 0.0000

Total Distributions................... 0.7062 0.5606
NET ASSET VALUE, END OF PERIOD............ $10.01 $10.27
TOTAL RETURN.............................. 4.43% 10.43%(d)
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period................. $2,123 $1,356
Ratio of Expenses to Average Net Assets... 1.51% 1.15%(d)
Ratio of Net Investment Income to Average
Net Assets............................... 6.89% 7.23%(d)
Portfolio Turnover Rate................... 73.76% 86.60%
RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR
Ratio of Expenses to Average Net Assets... 3.07% 4.56%(d)
Ratio of Net Investment Income to Average
Net Assets............................... 5.33% 3.81%(d)
RATIOS NET OF EXPENSES PAID INDIRECTLY
Ratio of Expenses to Average Net Assets... -- --
Ratio of Net Investment Income to Average
Net Assets............................... -- --
</TABLE>

<PAGE>
CRABBE HUSON U.S. GOVERNMENT INCOME FUND - PRIMARY CLASS

FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
(UNAUDITED)
PERIOD
ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
4/30/96 10/31/95 10/31/94 10/31/93 10/31/92 10/31/91
<S> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD...... $10.66 $10.27 $11.04 $10.91 $10.69 $10.24
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income..................... 0.2462 0.5097 0.4648 0.4755 0.5801 0.6722
Net Realized & Unrealized Gain (Loss) on
Securities............................... (0.1192) 0.4013 (0.6515) 0.2159 0.2921 0.4542
------------------------------------------------------------------------------
Total from Investment Operations...... 0.1270 0.9110 (0.1867) 0.6914 0.8722 1.1264
LESS DISTRIBUTIONS
Distributions from Net Investment
Income................................... 0.2462 0.5097 0.4647 0.4848 0.5839 0.6746
Distributions in Excess of Net Investment
Income................................... 0.0008 0.0113 0.0035 0.0000 0.0000 0.0000
Distributions from Capital Gains.......... 0.0000 0.0000 0.1120 0.0766 0.0683 0.0018
------------------------------------------------------------------------------
Total Distributions................... 0.2470 0.5210 0.5802 0.5614 0.6522 0.6764
NET ASSET VALUE, END OF PERIOD............ $10.54 $10.66 $10.27 $11.04 $10.91 $10.69
TOTAL RETURN.............................. 1.14% 9.12% -1.78% 6.71%(d) 8.70% 11.17%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period................. $7,907 $8,426 $9,249 $11,218 $8,959 $3,748
Ratio of Expenses to Average Net Assets... 0.75%(c)(d) 0.75% 0.75% 0.75% 0.80% 0.96%
Ratio of Net Investment Income to Average
Net Assets............................... 4.53%(c)(d) 4.85% 4.39% 4.33% 5.35% 6.44%
Portfolio Turnover Rate................... 198.14% 230.43% 76.09% 81.74% 105.52% 114.81%
RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
Ratio of Expenses to Average Net Assets... 1.81%(c)(d) 1.46% 1.47% 1.26% 1.52% 2.15%
Ratio of Net Investment Income to Average
Net Assets............................... 3.47%(c)(d) 4.14% 3.66% 3.81% 4.63% 5.25%
RATIOS NET OF EXPENSES PAID INDIRECTLY
Ratio of Expenses to Average Net Assets... 0.75%(d) -- -- -- -- --
Ratio of Net Investment Income to Average
Net Assets............................... 4.53%(d) -- -- -- -- --

PERIOD
YEAR ENDED ENDED
10/31/90 10/31/89(F)
<S> <C> <C>

NET ASSET VALUE, BEGINNING OF PERIOD...... $10.28 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income..................... 0.6768 0.5637
Net Realized & Unrealized Gain (Loss) on
Securities............................... (0.0326) 0.2852

Total from Investment Operations...... 0.6442 0.8489
LESS DISTRIBUTIONS
Distributions from Net Investment
Income................................... 0.6736 0.5689
Distributions in Excess of Net Investment
Income................................... 0.0000 0.0000
Distributions from Capital Gains.......... 0.0106 0.0000

Total Distributions................... 0.6842 0.5689
NET ASSET VALUE, END OF PERIOD............ $10.24 $10.28
TOTAL RETURN.............................. 6.40% 11.15%(d)
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period................. $2,069 $1,717
Ratio of Expenses to Average Net Assets... 1.42% 1.14%(d)
Ratio of Net Investment Income to Average
Net Assets............................... 6.72% 7.35%(d)
Portfolio Turnover Rate................... 87.71% 40.42%
RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR
Ratio of Expenses to Average Net Assets... 2.84% 3.40%(d)
Ratio of Net Investment Income to Average
Net Assets............................... 5.31% 5.09%(d)
RATIOS NET OF EXPENSES PAID INDIRECTLY
Ratio of Expenses to Average Net Assets... -- --
Ratio of Net Investment Income to Average
Net Assets............................... -- --
</TABLE>

<PAGE>
CRABBE HUSON U.S. GOVERNMENT MONEY MARKET FUND - PRIMARY CLASS

FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
(UNAUDITED)
PERIOD ENDED YEAR ENDED
---------------- ----------------------------------------------------------
4/30/96 10/31/95 10/31/94 10/31/93 10/31/92 10/31/91
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.................. $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income................................. 0.0240 0.0521 0.0339 0.0250 0.0332 0.0576
Net realized & unrealized gain (loss) on securities... 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
----------------------------------------------------------------------------
Total from Investment Operations.................. 0.0240 0.0521 0.0339 0.0250 0.0332 0.0576
LESS DISTRIBUTIONS
Distributions from Net Investment Income.............. 0.0240 0.0521 0.0339 0.0250 0.0332 0.0576
Distributions in Excess of Net Investment Income...... 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
----------------------------------------------------------------------------
Total Distributions............................... .0240 0.0521 0.0339 0.0250 0.0332 0.0576
NET ASSET VALUE, END OF PERIOD........................ $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
----------------------------------------------------------------------------
Total Return...................................... 2.41% 5.30% 3.28% 2.53% 3.36% 13.76%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period............................. $41,061 $54,714 $32,383 $14,784 $12,395 $14,907
Ratio of Expenses to Average Net Assets............... 0.70%(c)(d) 0.70% 0.70% 0.70% 0.75% 0.81%
Ratio of Net Investment Income to Average Net
Assets............................................... 4.82%(c)(d) 5.21% 3.39% 2.51% 3.32% 5.76%
RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
Ratio of Expenses to Average Net Assets............... 1.21%(c)(d) 1.16% 1.29% 1.32% 1.09% 1.18%
Ratio of Net Investment Income to Average Net
Assets............................................... 4.30%(c)(d) 4.75% 2.81% 1.88% 2.98% 5.38%
RATIOS NET OF EXPENSES PAID INDIRECTLY
Ratio of Expenses to Average Net Assets............... 0.70%(d) -- -- -- -- --
Ratio of Net Investment Income to Average Net
Assets............................................... 4.82%(d) -- -- -- -- --

<CAPTION>
PERIOD
ENDED
----------
10/31/90 10/31/89(F)

<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.................. $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income................................. 0.0737 0.0633
Net realized & unrealized gain (loss) on securities... 0.0000 0.0000

Total from Investment Operations.................. 0.0737 0.0633
LESS DISTRIBUTIONS
Distributions from Net Investment Income.............. 0.0737 0.0633
Distributions in Excess of Net Investment Income...... 0.0000 0.0000

Total Distributions............................... 0.0737 0.0633
NET ASSET VALUE, END OF PERIOD........................ $1.00 $1.00

Total Return...................................... 7.62% 10.05%(d)
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period............................. $21,406 $10,735
Ratio of Expenses to Average Net Assets............... 0.80% 0.60%(d)
Ratio of Net Investment Income to Average Net
Assets............................................... 7.57% 8.43%(d)
RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
Ratio of Expenses to Average Net Assets............... 1.33% 1.34%(d)
Ratio of Net Investment Income to Average Net
Assets............................................... 7.04% 7.69%(d)
RATIOS NET OF EXPENSES PAID INDIRECTLY
Ratio of Expenses to Average Net Assets............... -- --
Ratio of Net Investment Income to Average Net
Assets............................................... -- --
</TABLE>

<PAGE>
CRABBE HUSON REAL ESTATE INVESTMENT FUND - PRIMARY CLASS

FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)

<TABLE>
<CAPTION>
(UNAUDITED) PERIOD YEAR ENDED PERIOD ENDED
ENDED 4/30/96 10/31/95 10/31/94(G)
<S> <C> <C> <C>
----------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD......... $9.69 $9.50 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income........................ 0.1897 0.4436 0.3664
Net Realized & Unrealized Gain (Loss) on
Securities.................................. 0.8619 0.3065 (0.6394)
----------------------------------------------------------------
Total from Investment Operations......... 1.0516 0.7501 (0.2730)
LESS DISTRIBUTIONS
Distributions from Net Investment Income..... 0.1996 0.4379 0.2287
Distributions in Excess of Net Investment
Income...................................... 0.0000 0.0000 0.0000
Distributions from Capital Gains............. 0.1320 0.1222 0.0000
----------------------------------------------------------------
Total Distributions...................... 0.3316 0.5601 0.2287
NET ASSET VALUE, END OF PERIOD............... $10.41 $9.69 $9.50
TOTAL RETURN................................. 10.93% 8.31% -3.25%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period.................... $17,082 $18,986 $18,280
Ratio of Expenses to Average Net Assets...... 1.50%(c)(d) 1.50% 1.01%(b)(d)
Ratio of Net Investment Income to Average Net
Assets...................................... 3.72%(c)(d) 4.59% 6.30%(b)(d)
Portfolio Turnover Rate...................... 50.07% 59.53% 43.30%
Average Commission Rate...................... $0.0518(b) -- --
RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
Ratio of Expenses to Average Net Assets...... 1.77%(c)(d) 1.89% 2.03%(b)(d)
Ratio of Net Investment Income to Average Net
Assets...................................... 3.45%(c)(d) 4.20% 5.28%(b)(d)
RATIOS NET OF EXPENSES PAID INDIRECTLY
Ratio of Expenses to Average Net Assets...... 1.50%(d) -- --
Ratio of Net Investment Income to Average Net
Assets...................................... 3.72%(d) -- --
</TABLE>

<PAGE>
CRABBE HUSON SMALL CAP FUND - PRIMARY CLASS

FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)

<TABLE>
<CAPTION>
(UNAUDITED)
PERIOD ENDED
4/30/96(H)
<S> <C>
----------------
NET ASSET VALUE, BEGINNING OF PERIOD......... $10.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income........................ 0.0138
Net Realized & Unrealized Gain (Loss) on
Securities.................................. 1.0562
----------------
Total from Investment Operations......... 1.0700
LESS DISTRIBUTIONS
Distributions from Net Investment Income..... 0.0000
Distributions in Excess of Net Investment
Income...................................... 0.0000
Distributions from Capital Gains............. 0.0000
----------------
Total Distributions...................... 0.0000
Net Asset Value, End of Period............... $11.07
Total Return................................. 10.70%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period.................... $6,290
Ratio of Expenses to Average Net Assets...... 1.64% (c)(d)
Ratio of Net Investment Income to Average Net
Assets...................................... 0.56% (c)(d)
Portfolio Turnover Rate...................... 40.65%
Average Commission Rate...................... $0.0369 (b)
RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
Ratio of Expenses to Average Net Assets...... 2.46% (c)(d)
Ratio of Net Investment Income to Average Net
Assets...................................... -0.26% (c)(d)
RATIOS NET OF EXPENSES PAID INDIRECTLY
Ratio of Expenses to Average Net Assets...... 1.50% (d)
Ratio of Net Investment Income to Average Net
Assets...................................... 0.70% (d)
</TABLE>
<PAGE>
------------------------------------------

INVESTMENT OBJECTIVE AND POLICIES
----------------------------------

Each Fund's investment objective is discussed below in connection with the
Fund's investment policies. The descriptions are designed to help you choose the
Fund that best fits your investment objective. You may want to pursue more than
one objective by investing in more than one of the Funds. Because of the risks
inherent in all investments, there can be no assurance that the Funds will meet
their objectives.

Each Fund that invests in stock and preferred stock (the Equity, Small Cap,
Special and Asset Allocation Funds) follows a basic value, contrarian approach
in selecting stocks for its portfolio. This approach puts primary emphasis on
balance sheet and cash flow analysis and on the relationship between the market
price of a security and its value as a share of an ongoing business. These
investments represent situations or opportunities that arise when companies,
whose long-term financial structure is intact, run into short-term difficulties
that present an opportunity to buy these companies' stocks at substantial
discounts. The basic value approach is based on the Adviser's belief that the
securities of many companies often sell at a discount from the securities'
estimated theoretical (intrinsic) value. These Funds attempt to identify and
invest in such undervalued securities, anticipating that capital appreciation
will be realized as the securities' prices rise to their estimated intrinsic
value. This approach, while not unique, contrasts with certain other methods of
investment analysis, which rely upon market timing, technical analysis, earnings
forecasts, or economic predictions.

CRABBE HUSON SPECIAL FUND seeks significant long-term growth of capital
through a flexible policy of investing in a diversified portfolio of selected
domestic and foreign securities (principally, common stocks and, secondarily,
preferred stocks and bonds) that represent more aggressive investments than the
market as a whole (as measured by the S&P 500 Stock Index). The production of
current income is secondary to the primary objective. The Fund seeks to invest
up to 100%, and under normal conditions at least 75%, of its assets in
securities of companies that have small (under $1,000,000,000) to medium (from
$1,000,000,000 to $3,000,000,000) market capitalization.

The Fund's investment policies are adapted to changing market conditions.
The Adviser believes that common stock will generally, over the long-term, offer
the greatest potential for capital appreciation and preservation of purchasing
power, and common stocks will usually constitute at least 75% of the Fund's
investment portfolio.

24
<PAGE>
By itself, the Fund does not constitute a balanced investment plan.
Securities that the Adviser believes have the greatest growth potential may be
regarded as speculative, and an investment in the Fund may involve greater risk
than is inherent in other mutual funds. The Fund's focus on small to medium
market capitalization stocks may cause it to be more volatile than other funds
with different strategies. Because the Fund invests primarily in common stocks,
it may be appropriate only for investors who have a longer term investment
horizon or perspective. For a further description of the risks associated with
an investment in the Fund, see "CHARACTERISTICS AND RISKS OF SECURITIES AND
INVESTMENT TECHNIQUES."

The Special Fund also intends to sell securities "short." The technique of
selling short is subject to certain restrictions, and involves certain risks.
See "CHARACTERISTICS AND RISKS OF SECURITIES AND INVESTMENT TECHNIQUES--Short
Sales."

CRABBE HUSON SMALL CAP FUND seeks to provide its investors long-term growth
of capital by investing in a diversified portfolio of selected domestic and
foreign securities. The Fund will invest principally in common stocks and,
secondarily, preferred stocks and bonds. The production of current income is
secondary to the primary objective. The Fund seeks to invest up to 100%, and
under normal conditions at least 65%, of its total assets in securities of
companies that have small market capitalization (under $1,000,000,000).

The Adviser believes that common stock will generally, over the long-term,
offer the greatest potential for capital appreciation and preservation of
purchasing power. Investments in small growth companies may involve greater
risks and volatility than more traditional equity investments due to some of
these companies potentially having limited product lines, reduced market
liquidity for the trading of their shares and less depth in management than more
established companies. For this reason, the Small Cap Fund is not intended as a
complete investment vehicle, but rather as an investment for persons who are in
a financial position to assume above average risk and share price volatility
over time. The Small Cap Fund may be appropriate only for investors who have a
longer term investment horizon or perspective. For a further description of the
risks associated with an investment in the Fund, see "CHARACTERISTICS AND RISKS
OF SECURITIES AND INVESTMENT TECHNIQUES."

CRABBE HUSON REAL ESTATE INVESTMENT FUND seeks to provide for its
shareholders capital appreciation and income. The Fund seeks to achieve this
objective through a policy of investing in a diversified portfolio consisting
primarily of equity securities of REITs and other real estate industry
companies, in mortgage-backed securities and, to a lesser extent, in debt
securities of such companies.

25
<PAGE>
The Fund's investment policies will be adapted to changing market
conditions, but under normal circumstances, at least 75% of the Real Estate
Fund's total assets will be invested in equity securities of REITs and other
real estate industry companies. For purposes of the Fund's investments, a "real
estate industry company" is a company that derives at least 50% of its gross
revenues or net profits from either (a) the ownership, development,
construction, financing, management or sale of commercial, industrial or
residential real estate or (b) products or services related to the real estate
industry, like building supplies or mortgage servicing. The equity securities of
real estate industry companies in which the Fund will invest consist of common
stock, shares of beneficial interests of real estate investment trusts and
securities with common stock characteristics, such as preferred stock and debt
securities convertible into common stock ("Real Estate Equity Securities"). Real
Estate Equity Securities are subject to unique risks. See "CHARACTERISTICS AND
RISKS OF SECURITIES AND INVESTMENT TECHNIQUES" for a discussion of these risks.

The Fund may also invest up to 25% of its total assets in (a) debt
securities of real estate industry companies, (b) mortgage-backed securities,
such as mortgage pass-through certificates, real estate mortgage investment
conduit ("REMIC") certificates and collateralized mortgage obligations ("CMOs"),
and (c) short-term investments (as defined below). Investing in mortgage-backed
securities involves certain unique risks in addition to those associated with
investing in the real estate industry in general. For a more complete discussion
concerning the risks of investing in mortgage-backed securities, see
"CHARACTERISTICS AND RISKS OF SECURITIES AND INVESTMENT TECHNIQUES."

Short-term investments that the Fund may invest in consist of the following:
(1) corporate commercial paper and other short-term commercial obligations, in
each case rated or issued by companies with similar securities outstanding that
are rated Prime-1, Aa or better by Moody's or A-1, AA or better by S&P; (2)
obligations (including certificates of deposit, time deposits, demand deposits
and banker's acceptances) of banks with securities outstanding that are rated
Prime-1, Aa or better by Moody's, or A-1, AA or better by S&P; (3) obligations
issued or guaranteed by the U.S. Government or its agencies or instrumentalities
with remaining maturities not exceeding 18 months; and (4) repurchase
agreements.

A more complete discussion concerning the investment objectives and policies
of the Fund is included under "CHARACTERISTICS AND RISKS OF SECURITIES AND
INVESTMENT TECHNIQUES" and in the Statement of Additional Information.

CRABBE HUSON EQUITY FUND seeks long-term capital appreciation. The Fund will
seek to achieve this objective by investing in a carefully chosen

26
<PAGE>
portfolio consisting primarily of common stock. It will focus its investments in
widely and actively traded stocks with medium (from $1,000,000,000 to
$3,000,000,000) and large market capitalizations (in excess of $3,000,000,000).

Under normal market conditions, the Fund intends to have at least 65% of its
total assets invested in common stock. The Fund will purchase and hold for
investment common stock, and may also purchase convertible and nonconvertible
preferred stocks and bonds or debentures. The Fund may invest up to 35% of its
total assets in foreign securities. Although the Fund intends to adapt to
changing market conditions, the Adviser believes that common stock will
generally, over the long-term, offer the greatest potential for capital
appreciation. Therefore, the Fund may be appropriate for investors who have a
longer term investment horizon or perspective.

CRABBE HUSON ASSET ALLOCATION FUND seeks to provide for its shareholders
preservation of capital, capital appreciation and income. The Fund seeks to
achieve these objectives by a flexible policy of investing in a select portfolio
of common stocks, fixed income securities, cash or cash equivalents. Depending
upon economic and market conditions, the Fund may invest as little as 20%, or as
much as 75%, of its entire portfolio in common stocks. The Adviser will purchase
common stocks which, in its opinion, have the greatest potential for capital
appreciation. The remaining portion of the portfolio will be invested in fixed
income securities, cash or cash equivalents. The fixed income securities that
the Fund will invest in consist of corporate debt securities (bonds, debentures
and notes), asset-backed securities, bank obligations, collateralized bonds,
loan and mortgage obligations, commercial paper, preferred stocks, repurchase
agreements, savings and loan obligations and U.S. Government and agency
obligations. There are no limitations on the average maturity of the Fund's
portfolio of fixed income securities. Securities will be selected on the basis
of the Adviser's assessment of interest rate trends and the liquidity of various
instruments under prevailing market conditions. For a discussion of the ratings
of the fixed income securities to be held by the Fund see "CHARACTERISTICS AND
RISKS OF SECURITIES AND INVESTMENT TECHNIQUES."

Many factors will be considered in determining what portion of the portfolio
will be invested in stocks, fixed income securities, or cash and cash
equivalents. The Adviser will constantly monitor and adjust its weighting of
investments in any particular area to adapt to changing market and economic
conditions. Since its inception, the Fund has generally invested its net assets
45% to 55% in fixed income securities, 25% to 55% in common stocks, and 5% to
30% in cash, cash equivalents or other money market instruments. Furthermore,
the Fund may take advantage of opportunities to earn short-term profits if the
Adviser believes that such a strategy will benefit the Fund's overall objective
in light of the increased tax and brokerage expenses associated with such a
strategy.

27
<PAGE>
CRABBE HUSON OREGON TAX-FREE FUND seeks to provide its shareholders with as
high a level of income exempt from federal and Oregon income taxes as is
consistent with prudent investment management and preservation of capital. The
Fund seeks to achieve this objective by investing primarily in a portfolio of
municipal securities (including private activity bonds), the interest on which,
in the opinion of counsel for the issuer, is exempt from federal and Oregon
income taxes. It is the Fund's general policy to avoid purchasing bonds on which
the interest is subject to the federal alternative minimum tax. The Fund may,
however, purchase such bonds when their yield is sufficiently above the yield on
bonds not so taxed to compensate for the adverse tax consequences. For purposes
of its investment policy, the Fund considers a "bond" to be any municipal debt
security.

Under normal market conditions, at least 80% of the Fund's total assets will
be invested in municipal securities, and at least 65% of its total assets will
be invested in municipal bonds issued by the State of Oregon and its political
subdivisions, agencies, authorities and instrumentalities. Securities that are
subject to the federal alternative minimum tax will not be included in this
calculation.

Municipal securities purchased for the Fund's portfolio must, at the time of
purchase, be "investment-grade" municipal securities, rated no lower than Baa by
Moody's or BBB by S&P, or unrated municipal securities which management believes
to be comparable in quality to investment-grade municipal securities. If any of
the Fund's securities fall below "investment grade," the Fund will typically
dispose of such securities, but it is not required to do so. For a discussion
concerning the risk factors associated with municipal securities to be purchased
by the Fund, see "CHARACTERISTICS AND RISKS OF SECURITIES AND INVESTMENT
TECHNIQUES" in this Prospectus.

Under normal market conditions, the Oregon Tax-Free Fund may invest up to
20% of its net assets in the following categories of investments:

1. Municipal securities issued by entities other than the State of Oregon or
its political subdivisions, agencies, authorities, and instrumentalities.

2. Notes of municipal issuers which have, at the time of purchase, an issue of
outstanding municipal bonds rated within the four highest grades by Moody's
or S&P and which are, if unrated, in the opinion of the Adviser, of a
quality comparable to municipal bonds rated in one of the four highest
categories by Moody's or S&P.

3. Temporary investments in fixed income obligations, the interest on which is
subject to federal income tax and which may be subject to Oregon income tax.
Investments in such taxable obligations will be in short-term (less than one
year) securities and may consist of obligations issued or guaranteed by

28
<PAGE>
the United States Government, its agencies, instrumentalities or
authorities; commercial paper rated Prime-1 by Moody's; certificates of
deposit of United States banks (including commercial banks and savings and
loan associations) with assets of at least $1 billion or more; and
repurchase agreements in respect of any of the foregoing with securities
dealers or banks.

Where market conditions, due to rising interest rates or other adverse
factors, would cause serious erosion of portfolio value, the Fund's assets may,
on a temporary basis, as a defensive measure to preserve net asset value, be
substantially invested in temporary investments of the types described above.
There are specific risks involved in investments in municipal securities,
particularly those concentrated among issuers in a specific geographic location.
See "CHARACTERISTICS AND RISKS OF SECURITIES AND INVESTMENT TECHNIQUES" in this
Prospectus and "ADDITIONAL INFORMATION REGARDING CERTAIN INVESTMENTS BY THE
FUNDS" in the Statement of Additional Information.

In the last fiscal year, the average percentage of the Fund's assets
invested in bonds of each rating was:

<TABLE>
<S> <C> <C> <C>
AAA.................... 58.74% Non-rated.............. 14.60%
AA..................... 18.77% Cash................... 1.37%
A...................... 6.52%
</TABLE>

CRABBE HUSON INCOME FUND seeks to provide shareholders a high level of
current income by investing in a diversified portfolio of fixed income
securities (such as bonds and notes of corporate and government issuers) and
preferred or convertible preferred stock while, at the same time, attempting to
preserve capital by varying the overall average maturity of the Fund's
portfolio.

There are no limitations on the average maturity of the Fund's portfolio. In
general, the Fund will seek to lengthen the average maturity of its portfolio as
interest rates rise, and will shorten the average maturity as interest rates
decline.

The Income Fund invests in a variety of fixed income securities, including
domestic and foreign corporate bonds, debentures, convertible bonds and
debentures, foreign and U.S. Government securities, preferred and convertible
preferred stock, and short-term money market instruments.

At least 80% of the Fund's total assets must be invested in (1) debt
securities issued or guaranteed by the U.S. Government or its agencies or
instrumentalities; (2) investment-grade debt securities, including convertible
securities and preferred or convertible preferred stock, which are rated "A" or
higher by the major recognized bond services (for a description of ratings, see

29
<PAGE>
Appendix A); or (3) cash and cash equivalents (such as certificates of deposit,
repurchase agreements maturing in one week or less, and bankers' acceptances).

For a discussion of the fixed income securities and convertible securities
to be held by the Income Fund and the risks associated with holding these
securities, see "CHARACTERISTICS AND RISKS OF SECURITIES AND INVESTMENT
TECHNIQUES" in this Prospectus.

CRABBE HUSON U.S. GOVERNMENT INCOME FUND seeks to provide shareholders with
a high level of current income and safety of principal. Shares of the Fund are
not issued or guaranteed by the U.S. Government.

The Fund intends to concentrate its investments in direct obligations of the
U.S. Government (treasury bills, treasury notes and treasury bonds), which are
supported by the full faith and credit of the United States. The Fund may also
invest in indirect obligations of the U.S. Government which are debt obligations
of various agencies or instrumentalities of the U.S. Government, such as debt
obligations issued by the Government National Mortgage Association ("GNMA"),
which are supported by the full faith and credit of the United States, or debt
obligations issued by the Federal National Mortgage Association ("FNMA"), which
are supported only by the credit of the issuing agency or instrumentality. Under
normal circumstances, at least 65% of the value of the Fund's assets will be
invested in these U.S. Government securities. The Fund may invest up to 10% of
its total assets in repurchase agreements whereby the Fund acquires a U.S.
Government security from a financial institution that simultaneously agrees to
repurchase the same security at a specified time and price.

The Fund may not invest more than 25% of its total assets in U.S. Government
securities with maturities in excess of five years. The Fund will purchase
securities based generally on the Adviser's assessment of interest rate trends.
If the Adviser expects interest rates to rise, the Fund may purchase securities
with shorter maturities. Conversely, if interest rates are expected to decline,
the Fund may purchase securities with longer maturities.

CRABBE HUSON U.S. GOVERNMENT MONEY MARKET FUND seeks to provide investors
with a high level of current income while, at the same time, preserving capital
and allowing liquidity by investing in obligations of the United States
Government, or its agencies or instrumentalities, and repurchase agreements with
respect to those obligations. Shares of the Fund are not issued or guaranteed by
the U.S. Government. It is the Fund's intent to maintain a constant one dollar
per share net asset value, but there is no assurance the Fund will be able to do
so.

The dollar weighted, average maturity of the Fund's portfolio may not exceed
90 days and the Fund will not purchase any security with a maturity in

30
<PAGE>
excess of one year from the date of purchase. The Fund intends to hold most of
the securities in its portfolio until maturity. However, securities may be
traded if, in the opinion of the Adviser, increases in current income can be
achieved consistent with the objectives and restrictions of the Fund.

Due to its nature of maintaining a stable net asset value, the fixed income
securities selected by the U.S. Government Money Market Fund must be deemed to
be of the highest quality. An instrument will be considered to be highest
quality (1) if rated in the highest rating category (i) by any two nationally
recognized statistical rating organizations (NRSROs) (e.g., Aaa or Prime-1 by
Moody's, AAA or A-1 by S&P) or (ii) if rated by only one NRSRO, by that NRSRO,
and whose acquisition is approved or ratified by the Board of Trustees; (2) if
unrated but issued by an issuer that has short-term debt obligations of
comparable, priority, and security, and that are rated in the highest rating
category by (i) any two NRSROs or (ii) if rated by only one NRSRO, by that
NRSRO, and whose acquisition is approved or ratified by the Board of Trustees;
or (3) an unrated security that is of comparable quality to a security rated in
the highest rating category as determined by the Adviser and whose acquisition
is approved or ratified by the Board of Trustees. A description of the ratings
assigned to securities by Moody's and S&P is included in Appendix A to this
Prospectus.

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

FUNDAMENTAL POLICIES
----------------------------------

Unless set forth below as a "Fundamental Policy," each Fund's investment
policies, including its investment objective discussed previously, may be
changed without shareholder approval. A Fundamental Policy may not be changed
without a vote of the holders of "a majority of the outstanding voting
securities" of the Fund, as such term is defined in the 1940 Act. For further
discussion concerning these Fundamental Policies, see "INVESTMENT RESTRICTIONS"
in the Statement of Additional Information.

ISSUER AND INDUSTRY RESTRICTIONS. Each Funds' investment restrictions
(other than those of the Real Estate Fund and the Oregon Tax-Free Fund) include
a prohibition on it investing more than 5% of its total assets (at the time of
the purchase) in the securities of any one issuer. This policy, however, does
not include investments in U.S. Government securities. The Real Estate Fund's
investment restrictions prohibit the Fund, with respect to at least 75% of its
total assets, from investing more than 5% of its total assets in a single
issuer. Each Fund (other than the Real Estate Fund) is also prohibited from
investing more than 25% of its total assets in any one industry.

31
<PAGE>
BORROWING RESTRICTIONS. Each Fund may borrow up to one-third of the value
of its total assets, although each Fund, other than the Special and the Small
Cap Funds, can only borrow in the case of an emergency. If, for any reason, the
current value of the Fund's total assets falls below an amount equal to three
times the amount of its indebtedness from money borrowed, the Fund will, within
three days (not including Saturdays, Sundays and holidays), reduce its
indebtedness to the extent necessary to satisfy the one-third test. Further,
each Fund (except the Special and Small Cap Fund) is prohibited from purchasing
securities when the total borrowings of the Fund exceed 5% of its total assets.

FIXED INCOME SECURITIES. The Real Estate Fund may not invest in debt
securities that are unrated or that are rated below Baa by Moody's or BBB by
S&P. In the event a debt security purchased by the Real Estate Fund is
subsequently downgraded below Baa by Moody's or BBB by S&P, the Adviser will
consider whether the Fund should continue to hold the security. The Special,
Small Cap, Equity, Asset Allocation, Income, U.S. Government Income and U.S.
Government Money Market Funds may each invest up to 20% of its total assets in
fixed income securities that are either unrated or are rated less than Baa by
Moody's or BBB by S&P, or in commercial paper that is rated less than B-1 by
Moody's or A- by S&P. However, not more than 5% of these Fund's total assets may
be invested in fixed income securities that are unrated (including convertible
stock). The Oregon Tax-Free Fund may invest in fixed income securities that are
rated Baa and above by Moody's or BBB and above by S&P and in unrated securities
which the Adviser believes to be of comparable investment quality. See
"CHARACTERISTICS AND RISKS OF SECURITIES AND INVESTMENT TECHNIQUES" for a
discussion concerning the purchase of below investment grade securities.

Funds that are permitted to purchase cash equivalents, bank obligations, and
money market instruments will apply the same investment criteria to these
instruments as are applied to fixed income securities. Bank obligations will be
purchased only with respect to banks: (1) that have total assets in excess of
one billion dollars; (2) that are rated A or better by either Moody's or S&P (AA
or better with respect to purchases made by the U.S. Government Money Market
Fund; or (3) whose deposits are insured by the Federal Depository Insurance
Corporation. Each Fund will only invest in securities permitted by the SEC.

ILLIQUID SECURITIES/UNSEASONED ISSUERS. Each of the Special, Equity, Asset
Allocation, Oregon Tax-Free, Income, U.S. Government Income and U.S. Government
Money Market Funds may not invest more than 10% of its net assets in illiquid
securities. The Real Estate Fund may not invest more than 15% of its net assets
in such securities. The Small Cap Fund may not invest more than 5% of its total
assets in a combination of illiquid securities and/or securities of issuers,
including their predecessors, which have been in existence less than

32
<PAGE>
three years. Finally, the Oregon Tax-Free Fund may not invest more than 10% of
its total assets in the securities of issuers, including their predecessors,
which have been in existence less than three years.

The following securities in which a Fund may invest will be considered
illiquid: (1) repurchase agreements maturing in more than seven days; (2)
restricted securities (securities whose public resale is subject to legal
restrictions); (3) any other securities in which a Fund may invest that are not
readily marketable. Within the 15% limitation set for the Real Estate Fund, no
more than 5% of such securities may be restricted securities. The Board of
Trustees may adopt guidelines and delegate to the Adviser the daily function of
determining and monitoring the liquidity of securities. The Board, however, will
retain sufficient oversight and be ultimately responsible for the
determinations. In determining whether a security is liquid, the Board shall
consider whether the security can be disposed of promptly in the ordinary course
of business at a value reasonably close to that used in the calculation of the
net asset value per share.

Securities eligible for resale to certain institutional investors pursuant
to Rule 144A of the Securities Act of 1933 shall not be considered illiquid.
Since it is not possible to predict with assurance how the market for restricted
securities sold and offered under Rule 144A will develop, the Board will
carefully monitor a Fund's investments in these securities, focusing on such
important factors, among others, as valuation, liquidity, and availability of
information. This practice could have the effect of increasing the level of
illiquidity in a Fund to the extent that qualified institutional buyers become
for a time uninterested in purchasing these restricted securities.

OPTIONS AND FUTURES TRANSACTIONS. Each of the Special, Small Cap, Real
Estate, Equity, Asset Allocation and Income Funds may invest up to 10% of its
total assets in both put or call options and futures contracts.

FUNDAMENTAL INVESTMENT POLICY OF REAL ESTATE FUND. Under normal
circumstances, the Real Estate Fund intends to invest at least 75% of its total
assets in equity securities of REITs and other real estate industry companies;
under all circumstances, at least 25% of the Fund's total assets will be
invested in such securities.

INVESTMENT IN ISSUERS OF WHICH SHAREHOLDERS AND DIRECTORS OWN SHARES. The
Small Cap and Oregon Tax-Free Funds may not invest in securities of issuers of
which the officers and Trustees of the Fund, as a group, own beneficially more
than five percent of the securities of that issuer.

OTHER INVESTMENT COMPANIES. Each of the Funds (other than the U.S.
Government Income Fund and the U.S. Government Money Market Fund) may invest in
the securities of other registered investment companies under the circumstances
described under "SECURITIES OF OTHER INVESTMENT COMPANIES" in the Statement of
Additional Information, and to the extent

33
<PAGE>
permitted under Section 12 of the 1940 Act (currently, no more than 10% of the
total assets of a Fund may be so invested, no more than 5% of total assets of a
Fund may be invested in the securities of any other single investment company,
and no more than 3% of the total outstanding voting stock of an investment
company may be purchased). Investments in the securities of other registered
investment companies are or may be subject to duplicate expenses resulting from
the management of the portfolio investment company as well as those of the Fund.

FUNDAMENTAL INVESTMENT OBJECTIVE OF REAL ESTATE FUND. The Real Estate
Fund's investment objective is to provide for its shareholders capital
appreciation and income.

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

CHARACTERISTICS, RISKS OF SECURITIES AND
INVESTMENT TECHNIQUES
----------------------------------

The following describes in greater detail different types of securities and
investment techniques used by the Funds, and discusses certain concepts relevant
to the investment policies of the Funds. Additional information about the Funds'
investments and investment practices may be found in the Statement of Additional
Information.

FOREIGN SECURITIES. Each of the Special, Small Cap, Equity, Asset
Allocation and Income Funds may invest up to 35% of its total assets in foreign
securities, which may or may not be traded on an exchange. The Funds may
purchase securities issued by issuers in any country. Securities of foreign
companies are frequently denominated in foreign currencies, and the Funds may
temporarily hold uninvested reserves in bank deposits in foreign currencies. As
a result, the Funds will be affected favorably or unfavorably by changes in
currency rates and in exchange control regulations, and they may incur expenses
in connection with conversion between various currencies. Subject to its
investment restrictions, the Funds may invest in other investment companies that
invest in foreign securities.

Foreign securities may be subject to foreign government taxes that would
reduce the income yield on such securities. Certain foreign governments levy
withholding taxes against dividend and interest income. Although in some

34
<PAGE>
countries a portion of these taxes is recoverable, the non-recovered portion of
any foreign withholding taxes would reduce the income a Fund received from any
foreign investments.

Foreign investments involve certain risks, such as political or economic
instability of the issuer or of the country of the issuer, difficulty of
predicting international trade patterns, and the possibility of imposition of
exchange controls. Such securities may also be subject to greater fluctuations
in price than securities of domestic corporations or of the United States
government. In addition, the net asset value of a Fund is determined and shares
of a Fund can be redeemed only on days during which securities are traded on the
New York Stock Exchange ("NYSE"). However, foreign securities held by a Fund may
be traded on Saturdays or other holidays when the NYSE is closed. Accordingly,
the net asset value of a Fund may be significantly affected on days when an
investor has no access to the Fund.

In addition, there may be less publicly available information about a
foreign company than about a domestic company. Foreign companies generally are
not subject to uniform accounting, auditing and financial reporting standards
comparable to those applicable to domestic companies. There is generally less
government regulation of stock exchanges, brokers and listed companies abroad
than in the United States, and the absence of negotiated brokerage commissions
in certain countries may result in higher brokerage fees. With respect to
certain foreign countries, there is a possibility of expropriation,
nationalization, or confiscatory taxation, which could affect investment in
those countries.

Each of the Funds may invest a portion of its assets in developing countries
or in countries with new or developing capital markets, such as countries in
Eastern Europe and the Pacific Rim. The considerations noted above regarding the
risks of investing in foreign securities are generally more significant for
these investments. These countries may have relatively unstable governments and
securities markets in which only a small number of securities trade. Markets of
developing countries may be more volatile than markets of developed countries.
Investments in these markets may involve significantly greater risks, as well as
the potential for greater gains.

STRIPPED SECURITIES. The U.S. Government Money Market Fund may invest in
"Stripped Securities." A Stripped Security is a security consisting of the
separate income or principal components of a debt security. Stripped Securities
are issued at a discount to their face value and generally experience greater
price volatility than ordinary debt securities because of the manner in which
the principal and interest components of the underlying U.S. Government
obligation are separated.

35
<PAGE>
LEVERAGE. The Special Fund may, from time to time, use borrowed money to
increase its portfolio positions. This practice is known as leverage. Investment
gains realized with borrowed funds that exceed the cost of such borrowings
(including interest costs) will cause the net asset value of Fund shares to
increase more dramatically than would otherwise be the case. On the other hand,
leverage can cause the net asset value of Fund shares to decrease more rapidly
than normal if the securities purchased with borrowed money decline in value or
if the investment performance of such securities does not cover the cost of
borrowing.

PUT, CALL OPTIONS, FUTURES CONTRACTS. The Special, Small Cap, Real Estate,
Equity, Asset Allocation, Oregon Tax-Free and Income Funds may use options and
futures contracts to attempt to enhance income, and to reduce the overall risk
of its investments ("hedge"). These instruments are commonly referred to as
"derivative instruments" due to the fact that their value is derived from or
related to the value of some other instrument or asset. Each Fund's ability to
use these strategies may be limited by market conditions, regulatory limits, and
tax considerations. Appendix B to this prospectus describes the instruments that
the Funds may use and the way the Funds may use the instruments for hedging
purposes.

Each of these Funds (other than the Oregon Tax-Free Fund) may invest up to
10% of its total assets in premiums on put and call options, both exchange-
traded and over-the-counter, and write call options on securities the Fund owns
or has a right to acquire. Each of these Funds may also purchase options on
securities indices, foreign currencies, and futures contracts. Besides
exercising its option or permitting the option to expire, prior to expiration of
the option, a Fund may sell the option in a closing transaction. Other than the
Special Fund, the Funds may only write call options that are covered. A call
option is covered if written on a security a Fund already owns.

The Special, Small Cap, Real Estate, Equity, Asset Allocation, Oregon Tax-
Free and Income Funds may invest in interest rate futures contracts and the
Special, Small Cap, Real Estate, Equity and Asset Allocation may invest in stock
index futures provided that the aggregate initial margin of all futures
contracts in which the Fund invests shall not exceed 10% of the total assets of
the Fund after taking into account unrealized profits and unrealized losses on
any such transactions it has entered into. Upon entering into a futures
contract, the Fund will set aside liquid assets, such as cash, U.S. Government
securities, or other high grade debt obligations in a segregated account with
the Fund's custodian to secure its potential obligation under such contract.

The principal risks of options and futures transactions are: (a) imperfect
correlation between movements in the prices of options or futures contracts and
movements in the prices of the securities hedged or used for cover; (b) lack of
assurance that a liquid secondary market will exist for any particular option or

36
<PAGE>
futures contract at any particular time; (c) the need for additional skills and
techniques beyond those required for normal portfolio management; (d) losses on
futures contracts, which may be unlimited, from market movements not anticipated
by the Adviser; (e) possible need to defer closing out certain options or future
contracts in order to continue to qualify for beneficial tax treatment afforded
"regulated investment companies"under the Internal Revenue Code of 1986, as
amended (the "Code"). For a further discussion of put and call options and
futures contracts, see the Statement of Additional Information.

FIXED INCOME SECURITIES. Each of the Special, Small Cap, Equity, Asset
Allocation, Income, and U.S. Government Income Funds may invest up to 20% of its
total assets in fixed income securities, including convertible securities, that
are either unrated or rated below the fourth highest category by Moody's or S&P,
although not more than 5% of the Fund's total assets may be invested in fixed
income securities that are unrated. The Oregon Tax-Free Fund may invest an
unlimited amount in unrated fixed income securities, provided the Adviser
believes such securities to be comparable in quality to investment-grade
securities (securities rated in the fourth highest category or better by Moody's
or S&P). Securities rated below the fourth highest category are commonly
referred to as "junk bonds." Such securities are predominantly speculative with
respect to the issuer's capacity to pay interest and repay principal. Investment
in such securities normally involves a greater degree of investment and credit
risk than does investment in a high-rated security. In addition, the market for
such securities is usually less broad than the market for higher-rated
securities, which could affect their marketability. The market prices of such
securities may fluctuate more than the market prices of higher-rated securities
in response to changes in interest rates and economic conditions. Moreover, with
such securities, there is a greater possibility that an adverse change in the
financial condition of the issuer, particularly a highly leveraged issuer, may
affect its ability to make payments of principal and interest.

INVESTMENT IN REITS. Each of the Special, Small Cap, Real Estate, Equity
and Asset Allocation Funds may invest in real estate investment trusts
("REITs"). For the Special, Small Cap, Equity and Asset Allocation Funds, such
investment may not exceed 25% of the Fund's total assets. The Real Estate Fund
may invest without limitation in shares of REITs. REITs are pooled investment
vehicles that invest primarily in income producing real estate or real estate
related loans or interests. REITs are generally classified as equity REITs,
mortgage REITs or a combination of equity and mortgage REITs. Equity REITs
invest the majority of their assets directly in real property and derive income
primarily from the collection of rents. Equity REITs can also realize capital
gains by selling properties that have appreciated in value. Mortgage REITs
invest the majority of their assets in real estate mortgages and derive income
from the collection of interest payments. For federal income tax purposes, REITs
qualify for beneficial tax treatment by distributing 95% of their taxable

37
<PAGE>
income. If a REIT is unable to qualify for such beneficial tax treatment, it
would be taxed as a corporation and distributions to its shareholders would
therefore be reduced.

Investing in REITs involves certain unique risks in addition to those risks
associated with investing in the real estate industry in general. Equity REITs
may be affected by changes in the value of the underlying property owned by the
REITs, while mortgage REITs may be affected by the quality of any credit
extended. All REITs are dependent upon management skills, are not diversified,
and are subject to the risks of financing projects. REITs are subject to heavy
cash flow dependency, default by borrowers, self-liquidation, and the
possibilities of failing to qualify for the exemption from tax for distributed
income under the Code and failing to maintain their exemptions from the 1940
Act.

INVESTMENTS IN REAL ESTATE EQUITY SECURITIES. The Real Estate Fund does not
invest directly in real estate, but does invest primarily in Real Estate Equity
Securities. Therefore, an investment in the Fund may be subject to certain risks
associated with the direct ownership of real estate. These risks include, among
others: possible declines in the value of real estate; risks related to general
and local economic conditions; possible lack of availability of mortgage funds;
overbuilding, extended vacancies of properties; increases in competition;
property taxes and operating expenses; changes in zoning laws; costs resulting
from the clean-up of, and liability to third parties for damages resulting from
environmental problems; casualty or condemnation losses, uninsured damages from
floods, earthquakes or other natural disasters; limitations on and variations in
rents; and changes in interest rates.

REPURCHASE AGREEMENTS. Each of the Funds may engage in repurchase
agreements. Repurchase agreements are agreements under which a person purchases
a security and simultaneously commits to resell that security to the seller (a
commercial bank or recognized securities dealer) at an agreed upon price on an
agreed upon date within a number of days (usually not more than seven) from the
date of purchase. The resale price reflects the purchase price plus an agreed
upon market rate of interest that is unrelated to the coupon rate or maturity of
the purchased security. A Fund will engage in repurchase agreements only with
banks or broker-dealers whose obligations would qualify for direct purchase by
that Fund. A repurchase agreement involves the obligation of the seller to pay
an agreed-upon price, which obligation is, in effect, secured by the value of
the underlying security. All repurchase agreements are fully collateralized and
marked to market daily, and may therefore be viewed by the SEC or the courts as
loans collateralized by the underlying security. There are some risks associated
with repurchase agreements. For instance, in the case of

38
<PAGE>
default by the seller, a Fund could incur a loss or, if bankruptcy proceedings
are commenced against the seller, the Fund could incur costs and delays in
realizing upon the collateral.

MORTGAGE-BACKED SECURITIES. The Real Estate, Asset Allocation and Income
Funds may invest in mortgage pass-through certificates and multiple-class
pass-through securities, such as Collateralized Mortgage Obligations ("CMOs")
and Stripped Mortgage Back Securities ("SMBS"), and other types of
mortgage-backed securities that may be available in the future (collectively,
"Mortgage-Backed Securities").

Mortgage pass-through securities represent participation interests in pools
of mortgage loans secured by residential or commercial real property in which
payments of both interest and principal on the securities are generally made
monthly, in effect "passing through" monthly payments made by the individual
borrowers on the mortgage loans which underlie the securities (net of fees paid
to the issuer or guarantor of the securities).

Payment of principal and interest on some mortgage pass-through securities,
but not the market value of the securities themselves) may be guaranteed by the
full faith and credit of the U.S. Government (in the case of securities
guaranteed by GNMA); or guaranteed by the agency or instrumentality of the U.S.
Government issuing the security (in the case of securities guaranteed by FNMA or
the Federal Home Loan Mortgage Corporation ("FHLMC"), which are supported only
by the discretionary authority of the U.S. Government to purchase the agencies'
obligations). Mortgage pass-through securities created by non-governmental
issuers (such as commercial banks, savings and loan institutions, private
mortgage insurance companies, mortgage bankers and other secondary market
issuers) may be supported by various forms of insurance or guarantees, including
individual loan, title, pool and hazard insurance and letters of credit, which
may be issued by governmental entities, private insurers or the mortgage
poolers.

CMOs are hybrid mortgage related instruments. Similar to a bond, interest
and prepaid principal on a CMO are paid, in most cases, semi-annually. CMOs may
be collateralized by whole mortgage loans but are more typically collateralized
by portfolios of mortgage pass-through securities guaranteed by GNMA, FHLMC or
FNMA. CMOs are structured into multiple classes, with each class bearing a
different stated maturity. Monthly payments of principal, including prepayments,
are first returned to investors holding the shortest maturity class and
investors holding the longer maturity classes receive principal only after the
first class has been retired. CMOs that are issued or guaranteed by the U.S.
Government or by any of its agencies or instrumentalities will be considered
U.S. Government securities by the Fund, while other CMOs, even if collateralized
by U.S. Government securities, will have the same status as other privately
issued securities for purposes of applying the Fund's diversification test.

39
<PAGE>
SMBS are derivative multiple-class mortgage-backed securities usually
structured with two classes that receive different proportions of interest and
principal distributions on a pool of mortgage assets. A typical SMBS will have
one class receiving some of the interest and most of the principal, while the
other class will receive most of the interest and the remaining principal. In
the most extreme case, one class will receive all of the interest (the "interest
only" class), while the other class will receive all of the principal (the
"principal only" class).

Investing in Mortgage-Backed Securities involves certain unique risks in
addition to those risks associated with investing in the real estate industry in
general. These risks include the failure of a counter-party to meet its
commitments, adverse interest rate changes and the effects of prepayment on
mortgage cash flows. In addition, investing in the lowest tranche of CMOs
involves risks similar to those associated with investing in equity securities.

Further, the yield characteristics of Mortgage-Backed Securities differ from
those of traditional fixed income securities. The major differences typically
include more frequent interest and principal payments (usually monthly), the
adjustability of interest rates, and the possibility that prepayments of
principal may be made substantially earlier than their final distribution dates.

If the Mortgage-Backed Security is a fixed-income security, when interest
rates decline, the value of an investment in fixed rate obligations can be
expected to rise. Conversely, when interest rates rise, the value of an
investment in fixed rate obligations can be expected to decline. In contrast, if
the Mortgage-Backed Security represents an interest in a pool of loans with
adjustable interest rates, as interest rates on adjustable rate mortgage loans
are reset periodically, yields on investments in such loans will gradually align
themselves to reflect changes in market interest rates, causing the value of
such investments to fluctuate less dramatically in response to interest rate
fluctuations than would investments in fixed rate obligations.

If a security subject to prepayment has been purchased at a premium, in the
event of prepayment the value of the premium would be lost. Prepayment rates are
influenced by changes in current interest rates and a variety of economic,
geographic, social and other factors, and cannot be predicted with certainty.
Both adjustable rate mortgage loans and fixed rate mortgage loans may be subject
to a greater rate of principal prepayments in a declining interest rate
environment, and to a lesser rate of principal prepayments in an increasing
interest rate environment. Under certain interest rate and prepayment rate
scenarios, the Fund may fail to recoup fully its investment in Mortgage-Backed
Securities, notwithstanding any direct or indirect governmental or agency
guarantee. When the Fund reinvests amounts representing payments and unscheduled
prepayments of principal, it may receive a rate of interest that is lower than
the rate on existing adjustable rate mortgage pass-through securities.

40
<PAGE>
Thus, Mortgage-Backed Securities, and adjustable rate mortgage pass-through
securities in particular, may be less effective than other types of U.S.
Government securities as a means of "locking in" interest rates.

SHORT SALES. The Special Fund intends from time to time to sell securities
short. A short sale is effected when it is believed that the price of a
particular security will decline, and involves the sale of a security which the
Fund does not own in the hope of purchasing the same security at a later date at
a lower price. To make delivery to the buyer, the Special Fund must borrow the
security. The Fund is then obligated to return the security to the lender, and
therefore it must subsequently purchase the same security.

When the Special Fund makes a short sale, it must leave the proceeds from
the short sale with the broker, and it must deposit with the broker a certain
amount of cash or government securities to collateralize its obligation to
replace the borrowed securities which have been sold. In addition, the Fund must
put in a segregated account (with the Fund's custodian) an amount of cash or
U.S. Government securities equal to the difference between the market value of
the securities sold short at the time they were sold short and any cash or
government securities deposited as collateral with the broker in connection with
the short sale (not including the proceeds from the short sale). Furthermore,
until the Fund replaces the borrowed security, it must daily maintain the
segregated account at a level so that (1) the amount deposited in it plus the
amount deposited with the broker (not including the proceeds from the short
sale) will equal the current market value of the securities sold short, and (2)
the amount deposited in it plus the amount deposited with the broker (not
including the proceeds from the short sale) will not be less than the market
value of the securities at the time they were sold short. As a result of these
requirements, the Special Fund will not gain any leverage merely by selling
short, except to the extent that it earns interest on the immobilized cash or
government securities while also being subject to the possibility of gain or
loss from the securities sold short. The amount of the Fund's net assets that
will at any time be in the type of deposits described above (that is, collateral
deposits or segregated accounts) will not exceed 25%. These deposits do not have
the effect of limiting the amount of money that the Fund may lose on a short
sale, as the Fund's possible losses may exceed the total amount of deposits.

The Special Fund will realize a gain if the price of a security declines
between the date of the short sale and the date on which the Fund purchases a
security to replace the borrowed security. On the other hand, the Special Fund
will incur a loss if the price of the security increases between those dates.
The amount of any gain will be decreased and the amount of any loss increased by
any premium or interest that the Fund may be required to pay in connection with
a short sale. It should be noted that possible losses from short sales differ
from those that could arise from a cash investment in a security in that the

41
<PAGE>
former may be limitless, while the latter cannot exceed the total amount of the
Fund's investment in the security. For example, if the Fund purchases a $10
security, potential loss is limited to $10. However, if the Fund sells a $10
security short, it may have to purchase the security for return to the lender
when the market value of that security is $50, thereby incurring a loss of $40.

The Special, Small Cap, Real Estate, Equity, and Asset Allocation Fund may
also engage in short sales "against the box." While a short sale is made by
selling a security the Fund does not own, a short sale is "against the box" to
the extent that the Fund contemporaneously owns or has the right to obtain at no
added cost securities identical to those sold short.

MUNICIPAL SECURITIES. Because the Oregon Tax-Free Fund intends to focus its
investments in Oregon municipal securities, the Fund and the value of its shares
will be significantly affected by any economic, political, or regulatory
developments that affect the ability of Oregon issuers to pay interest or repay
principal on their obligations.

Certain municipal securities purchased by the Oregon Tax-Free Fund from
Oregon issuers may rely in whole or in part on ad valorem real property taxes as
a source of revenue for the payment of principal and interest. There are
constitutional and statutory limitations on the issuance of securities payable
from tax revenues. In 1990, a voter initiative in Oregon was passed which
restricts the ability of taxing entities to increase real property taxes by
placing a limit on the property tax rate. This initiative did, however, exempt
from the property tax rate limit assessments to pay bonded indebtedness.
However, implementation of this limit has adversely affected the property tax
revenues of certain issuers of Oregon municipal securities.

NONDIVERSIFIED PORTFOLIO; TRADING MARKET FOR PORTFOLIO SECURITIES. The
Oregon Tax-Free Fund is a nondiversified investment company, meaning that it is
not subject to the provisions of the 1940 Act with respect to diversification of
its investments. However, as a matter of fundamental policy, the Fund will not
(1) invest more than 25% of its total assets in the securities of any one
issuer, or (2) with respect to at least 50% of its total assets, invest in
individual issuers (excluding United States Government securities) in which it
has invested 5% of the value of its total assets. For purposes of these
limitations, each governmental subdivision (i.e., state, territory or possession
of the United States or any political subdivision of any of the foregoing,
including agencies, authorities, instrumentalities or similar entities) will be
considered a separate issuer if its assets and revenues are separate from those
of the government body creating it and if the securities are backed only by its
own assets and revenues. In the case of a private activity bond, if the security
is backed only by the assets and revenues of a nongovernmental user, then such
nongovernmental user will be

42
<PAGE>
deemed to be the sole issuer. However, if a private activity bond or
governmental issue is guaranteed by a governmental or some other entity, such
guarantee will be considered a separate security issued by the guarantor as well
as the nongovernmental user, subject to limited exclusions allowed by the 1940
Act.

Because the Fund's "nondiversified status" permits the investment of a
greater portion of the Fund's assets in the securities of individual issuers
than would be permissible under a "diversified status," the Fund's shareholders
are considered to be subject to a greater degree of risk. The Fund reserves the
right to operate as a diversified investment company if such a course appears
desirable in the opinion of the Board of Directors; in that event, 75% of the
Fund's total assets would have to be invested in securities issued by entities
in which the Fund had not invested 5% or more of its total assets.

With the exception of general obligation securities issued by the State of
Oregon, most issues of municipal securities in Oregon are relatively small in
size. Due to the small size of some issues, only a limited trading market in the
securities develops following their issuance. When there is only a limited
trading market for a particular security, a small change in the supply of or
demand for that security can result in a relatively large change in the market
price of the security. If the Oregon Tax-Free Fund is required to sell portfolio
securities for which there is only a limited trading market, the market value of
such securities (and of securities which are part of the same issue which are
retained in the Fund's portfolio) could be adversely affected, which could
result in a decrease in the net asset value of the Fund's shares. In order to
enhance the liquidity of the Fund's portfolio, a portion of its assets will be
maintained in general obligation securities of the state of Oregon and in other
issues for which an active trading market is expected to be maintained. The Fund
expects that approximately 25% of its net assets will normally be invested in
general obligation securities of the state of Oregon. A portion of the Oregon
Tax-Free Fund's assets may also be invested, on a temporary basis, in assets
other than municipal securities in order to increase the liquidity of the Fund's
portfolio. However, there is no assurance that these strategies will completely
eliminate the risks associated with investing in municipal securities for which
only a limited trading market exists.

WHEN ISSUED AND/OR DELAYED DELIVERY. Each of the Funds may purchase and
sell securities on a when-issued or delayed-delivery basis. When-issued or
delayed-delivery transactions arise when securities are purchased or sold by the
Fund, with payment and delivery taking place in the future in order to secure
what is considered to be an advantageous price and yield to the Fund at the time
of entering into the transaction. Such securities are subject to market
fluctuations, and no interest accrues to a Fund until the time of delivery. The
value of the securities may be less at the time of delivery than the value of
the securities when the commitment was made. When a Fund engages in when-issued
and delayed-delivery transactions, it relies on the buyer or seller, as the case
may be,

43
<PAGE>
to consummate the sale. Failure to do so may result in the Fund missing the
opportunity of obtaining a price or yield considered to be advantageous. To the
extent any Fund engages in when-issued and delayed-delivery transactions, it
will do so for the purpose of acquiring portfolio securities consistent with its
investment objective and policies, and not for the purpose of investment
leverage. No Fund may commit more than 25% of its total assets to the purchase
of when-issued and delayed-delivery securities. A separate account of liquid
assets consisting of cash, U.S. Government securities or other high grade debt
obligations equal to the value of any purchase commitment of a Fund shall be
maintained by the Fund's custodian until payment is made.

ILLIQUID SECURITIES. The Funds may invest in illiquid securities, which may
be difficult to sell promptly at an acceptable price. This difficulty may result
in a loss or be costly to a Fund.

INTEREST RATES. Each Fund may invest in debt securities. The market value
of debt securities that are sensitive to prevailing interest rates is inversely
related to actual changes in interest rates. That is, an interest rate decline
produces an increase in a security's market value and an interest rate increase
produces a decrease in value. The longer the remaining maturity of a security,
the greater the effect of an interest rate change. Changes in the ability of an
issuer to make payments of interest and principal and in the market's perception
of its creditworthiness also affect the market value of that issuer's debt
securities.

U.S. GOVERNMENT SECURITIES. Although U.S. Government securities and
high-quality debt securities are issued or guaranteed by the U.S. Treasury or an
agency or instrumentality of the U.S. Government, not all U.S. Government
securities are backed by the full faith and credit of the United States. For
example, securities issued by the General Farm Credit Bank or by the Federal
National Mortgage Association are supported by the instrumentality's right to
borrow money from the U.S. Treasury under certain circumstances. On the other
hand, securities issued by the Student Loan Marketing Association are supported
only by the credit of the instrumentality.

LIMITED OPERATING HISTORY OF FUND. The Small Cap Fund commenced operations
on February 16, 1996 and the Real Estate Fund commenced operations April 4, 1994
and thus have limited operating histories.

SMALL COMPANIES. Both the Special and Small Cap Fund intend to invest in
small market capitalization companies. Investing in such securities may involve
greater risks since these securities may have limited marketability and, thus,
may be more volatile. Because small-sized companies normally have fewer
outstanding shares than larger companies, it may be difficult for a Fund to buy
or sell significant amounts of such shares without an unfavorable impact on

44
<PAGE>
prevailing prices. In addition, small companies are typically subject to a
greater degree of changes in earnings and business prospects than are larger,
more established companies.

LENDING OF PORTFOLIO SECURITIES. The Funds may loan portfolio securities to
broker-dealers or other institutional investors if at least 100% cash (or cash
equivalent) collateral is pledged and maintained by the borrower. The Funds
believe that the cash collateral minimizes the risk of lending their portfolio
securities. Such loans of portfolio securities may not be made if the aggregate
of such loans would exceed 20% (10% in the case of the Oregon Tax-Free Fund) of
the value of a Fund's total assets. If the borrower defaults, there may be
delays in recovery of loaned securities or even a loss of the securities loaned,
in which case the Fund would pursue the cash (or cash equivalent) collateral.
While there is some risk in loaning portfolio securities, loans will be made
only to firms or broker-dealers deemed by the Adviser to be of good standing and
will not be made unless, in the judgment of the Adviser, the consideration to be
earned from such loans would justify the risk. For additional disclosure, see
"INVESTMENT RESTRICTIONS--LOANS OF PORTFOLIO SECURITIES" in the Statement of
Additional Information.

PORTFOLIO TURNOVER. The Funds generally do not trade in securities with the
goal of obtaining short-term profits, but when circumstances warrant, securities
will be sold without regard to the length of time the security has been held. A
higher portfolio turnover rate may involve correspondingly greater transaction
costs, which will be borne directly by the Funds, as well as additional realized
gains and/or losses to shareholders. See "ALLOCATION OF BROKERAGE," and "TAXES"
in the Prospectus. The annual portfolio turnover rate of the Funds may at times
exceed 100%. The portfolio turnover rates are shown in the Condensed Financial
Information section of this Prospectus.

TEMPORARY DEFENSIVE INVESTMENTS. For temporary defensive purposes, the
Special, Small Cap, Real Estate, Equity and Asset Allocation Funds may invest up
to 100% of their assets in fixed income securities, cash and cash equivalents.
The fixed income securities in which each Fund will invest in such a situation
shall consist of corporate debt securities (bonds, debentures and notes),
asset-backed securities, bank obligations, collateralized bonds, loan and
mortgage obligations, commercial paper, preferred stocks, repurchase agreements,
savings and loan obligations, and U.S. Government and agency obligations. The
fixed income securities will be rated investment grade or higher (BBB by S&P and
Baa by Moody's) and will have maturities of three years or less. When the Fund
assumes a temporary defensive position, it may not be investing in securities
designed to achieve its investment objective.

45
<PAGE>
--------------------------------------

MANAGEMENT OF THE FUNDS
----------------------------------

The Funds (other than the Special Fund) are managed by the Trust's Board of
Trustees, and all powers and authorities are exercised by or under the direction
of the Board of Trustees. The Special Fund is managed by its Board of Directors,
and all powers and authorities are exercised by or under the direction of the
Board of Directors.

ADVISER. Subject to the policies of, review by, and overall control of the
Board of Trustees of the Trust, and the Board of Directors of the Special Fund,
the Adviser has been retained by each Fund to act as its manager and investment
adviser pursuant to investment advisory agreements.

The Adviser was incorporated in 1980 and has been engaged in the business of
providing investment advice since July 1, 1980 to individual and institutional
accounts, such as corporate pension and profit sharing plans, as well as mutual
funds. The Adviser currently has over $4 billion in assets under management. The
address of the Adviser is 121 S.W. Morrison, Suite 1400, Portland, Oregon 97204.

James E. Crabbe and Richard S. Huson are controlling shareholders of the
Adviser. In addition, together they own 100% of the stock of the Distributor for
the Funds. Mr. Crabbe and Mr. Huson are primarily responsible for the day-to-day
management of the Adviser. Mr. Crabbe is President and a Director of the Adviser
and Mr. Huson is Vice President, Secretary and a Director.

Each Fund pays the Adviser a fee for its services that accrues daily and is
payable bi-monthly. Fees are based on a percentage of the average daily net
assets of each Fund, as set forth below:

SPECIAL FUND
SMALL CAP FUND
REAL ESTATE FUND
EQUITY FUND
ASSET ALLOCATION FUND

<TABLE>
<CAPTION>
NET ASSET VALUE ANNUAL RATE
- -------------------------------------------------- ---------------
<S> <C>
First $100 million................................ 1.00%
Next $400 million................................. 0.85%
Amounts over $500 million......................... 0.60%
</TABLE>

46
<PAGE>
<TABLE>
<S> <C>
INCOME FUND
<CAPTION>

NET ASSET VALUE ANNUAL RATE
- -------------------------------------------------- ---------------
<S> <C>
First $100 million................................ 0.75%
Next $400 million................................. 0.60%
Amounts over $500 million......................... 0.50%

OREGON TAX-FREE FUND
U.S. GOVERNMENT INCOME FUND
U.S. GOVERNMENT MONEY MARKET FUND

First $100 million................................ 0.50%
Next $400 million................................. 0.45%
Amounts over $500 million......................... 0.40%
</TABLE>

Fees paid by the Special, Small Cap, Real Estate, Equity, Asset Allocation
and Income Funds are higher than those paid by most other mutual funds, although
the fees paid by these Funds are comparable to mutual funds with similar
objectives and policies. From time to time, the Adviser may voluntarily waive
all or a portion of its management fee and/or reimburse a Fund for certain
expenses without further notification of the commencement or termination of such
waiver or reimbursement. Any such waiver or reimbursement will temporarily lower
a Fund's overall expense ratio and increase a Fund's overall return to
investors. Additionally, many states require that mutual funds meet certain
expense limitations. The Funds, their Adviser, Distributor, and Transfer Agent
intend to qualify, meet, or conform to any individual state requirements while
the Funds are registered in that state.

The Real Estate Fund has entered into a Subadvisory Agreement with the
Adviser and Aldrich, Eastman & Waltch, L.P. ("AEW"). Pursuant to the Subadvisory
Agreement, AEW is responsible for the day-to-day investment management of the
Real Estate Fund, subject to the overall supervision of the Adviser and the
Board of Trustees.

AEW is a registered investment adviser founded in 1981. AEW is dedicated to
managing real estate investment portfolios for institutional investors. AEW
currently manages approximately $4.4 billion in assets.

The general partner of AEW is AEW Holdings L.P. ("AEW Holdings"). The
general partner of AEW Holdings is Aldrich, Eastman & Waltch, Inc. ("AEW INC").
The Shareholders of AEW INC include certain current and former executive
employees of AEW. AEW's business address is 225 Franklin Street, Boston, MA
02110-2803.

As compensation for its services, the Adviser will pay to AEW, at the end of
each calendar month, a annualized fee equal to the greater of (a) 37.5% of one
percent of the average daily net asset value of the Fund (the "ADNAV") up to the
first $100 million of net asset value, 31.88% of one percent of the ADNAV

47
<PAGE>
for the next $400 million of net asset value, and 22.5% of one percent of the
ADNAV for amounts in excess of $500 million of net asset value, or (b) 50% of
the actual fees paid by the Fund to the Adviser. The fee paid by the Adviser
will not increase any of the fees incurred by the Fund.

The Funds' Distributor pays the marketing expenses of the Funds. A certain
portion of these expenses may be borne by the Funds under a distribution plan
adopted pursuant to Rule 12b-1 under the 1940 Act. See "DISTRIBUTION EXPENSES"
in this Prospectus. The Funds bear all other expenses incurred in their
operation as they are incurred, other than those assumed by the Adviser or
Distributor.

Management of the Special and Small Cap Fund portfolios is handled on a
day-to-day basis by a team consisting of Mr. Crabbe and John W. Johnson. Mr.
Crabbe is coordinator of the team. Mr. Crabbe has served in various management
positions with the Adviser since 1980 and has managed the Special Fund's
portfolio since January 1, 1990. Prior to joining the Adviser, Mr. Johnson was a
private investment banker from November, 1991 to May, 1995. Between August, 1988
and November, 1991, Mr. Johnson was Director of Equity Investments for Kennedy
Associates.

Management of the Real Estate Fund is handled on a day to day basis by Jay
Willoughby, who is currently a Director and real estate securities portfolio
manager for AEW. Prior to joining AEW in January, 1995, Mr. Willoughby was a
portfolio manager for the Adviser.

The Oregon Tax-Free, Income, U.S. Government Income and U.S. Government
Money Market Funds are managed on a day to day basis by a team consisting of Mr.
Huson and Garth R. Nisbet. Mr. Huson is coordinator of the team. Mr. Huson has
served in various management positions with the Adviser since 1980. Mr. Nisbet
joined the Adviser in April, 1995. Between February, 1993 and March, 1995 Mr.
Nisbet worked for Capital Consultants, Inc. as a portfolio manager of its fixed
income portfolio. Prior to joining Capital Consultants, Inc., Mr. Nisbet was a
Vice President and the fixed income portfolio manager at Lincoln National
Investment Management.

The portfolios of the Equity and Asset Allocation Funds are managed on a
day-to-day basis by a team consisting of John E. Maack, Jr., Marian L. Kessler,
Robert E. Anton, Mr. Nisbet and Mr. Huson. Mr. Huson is coordinator of the team.
Mr. Maack has been employed as a portfolio manager and securities analyst by the
Adviser since 1988. Ms. Kessler joined the Adviser in August, 1995. From
September, 1993 until July, 1995, Ms. Kessler was a portfolio manager with
Safeco Asset Management. Between August, 1986 and June, 1993, Ms. Kessler was an
equity analyst for IDS Financial Services. Mr. Anton

48
<PAGE>
joined the Adviser in June, 1995. Prior to joining the Adviser, Mr. Anton served
17 years as Chief Investment Officer, portfolio manager at Financial Aims
Corporation.

ADMINISTRATORS. The Funds have retained State Street Bank and Trust Company
("State Street") to provide administrative services to the Funds. Such services
relate to administration, operations and compliance. For such services, the
Funds have agreed to pay State Street a fee based on the total assets of the
Funds managed by the Adviser. The fee shall be as follows: first $500 million
managed by Adviser--.06%; next $500 million--.03%; thereafter--.01%. Each Fund
pays its pro rata share of such fee.

CUSTODIAN, TRANSFER AGENT, DIVIDEND DISBURSING AGENT AND SHAREHOLDER
SERVICING. Investors Fiduciary Trust Company, 127 West 10th Street, Kansas
City, Missouri 64105, acts as Custodian of the cash and securities of each Fund.

State Street Bank and Trust Company, 225 Franklin Street, Boston, MA 02110,
800-541-9732, acts as Transfer Agent and Dividend Disbursing Agent for the Fund.
The Transfer Agent uses Boston Financial Data Services, a 50% owned subsidiary,
as its servicing agent in carrying out the Transfer Agent's responsibilities to
the Fund and accounting agent.

The Funds and Crabbe Huson Securities, Inc., the Funds Distributor, have
also entered into agreements with various Financial Intermediaries, whereby the
Financial Intermediary agrees to perform various sub-transfer agency services,
subaccounting services and administrative services for their clients and
customers who may be deemed to be beneficial owners of the Funds' shares. The
Financial Intermediaries may also perform ongoing servicing and maintenance
tasks. Fees paid by a Fund vary depending upon the level of services provided.

DISTRIBUTOR. The class of shares of each Fund sold pursuant to this
Prospectus has adopted a distribution plan pursuant to rule 12b-1 under the 1940
Act (the "Plan"). Under the Plan, the Distributor is entitled to reimbursement
for its actual expenses incurred in the distribution and promotion of the shares
of each Fund. Total reimbursement by the Fund to the Distributor pursuant to the
Plan may not exceed an annual rate of .25% of such class average daily net
assets. These expenses include, but are not limited to, expenses incurred in the
printing of the Funds' prospectuses and statements of additional information for
persons other than then-current shareholders, expenses related to preparation
and printing of sales literature, and other distribution-related expenses. A
portion of the expenses reimbursed and paid to the Distributor will be paid by
the Distributor on a quarterly basis to broker-dealers, financial institutions,
depository institutions, retirement plans, and financial intermediaries
(collectively, "Financial Intermediaries") that have entered into sales
agreements with the Distributor to actively promote the sale of the shares, and
may be paid to

49
<PAGE>
investment executives of the Distributor. Each Fund will participate in joint
distribution activities with other funds managed by the Adviser. Distribution
expenses that are not allocable to a specific Fund are allocated to a fund on
the basis of their respective net assets.

In the event distribution expenses for any Fund in any one year exceed the
maximum reimbursable under the Plan, such expenses may not be carried forward to
the following year. The Funds will not be charged for any financing charges on
any unreimbursed expenses payable pursuant to the Plan.

The Adviser may, at its own expense, make payments from its management fee
revenue, past profits, or other resources to Financial Intermediaries who
promote the sale of the Funds' shares.

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

CONTROL PERSONS
----------------------------------

On or about September 30, 1996, the Equity Fund, Asset Allocation Fund, Real
Estate Investment Fund, Tax-Free Fund, Income Fund, U.S. Government Income Fund
and the U.S. Government Money Market Fund (the "Reorganized Funds") intend to
complete a reorganization with the Crabbe Huson Equity Fund, Inc., The Crabbe
Huson Asset Allocation Fund, Inc., The Crabbe Huson Real Estate Investment Trust
Fund, Inc. The Oregon Municipal Bond Fund, Inc., the Crabbe Huson Income Fund,
Inc., the Crabbe Huson U.S. Government Income Fund, Inc., the Crabbe Huson U.S.
goverment Money Market Fund, Inc. (the "Corporate Funds"), in which each of the
Corporate Funds will become a separate series of the Trust. As of September 20,
1996, the only shareholders in each of the Reorganized Funds is the
Corresponding Corporate Fund. Upon completion of the reorganization, however,
all the shareholders in the Corporate Funds will become shareholders in the
corresponding Reorganized Fund. Therefore, for purposes herein, shareholdings
for each of the Reorganized Funds will be given by reference to the
shareholdings of its corresponding Corporate Fund. As of September 20, 1996,
Charles Schwab & Co., Inc. owned 30.03% of the Special Fund and 25.80% of the
Equity Fund. Enele Co. owned 33.93% of the U.S. Government Income Fund, 33.44%
of the Real Estate Investment Fund and 29.33% of the Small Cap Fund. No person
owned, directly or indirectly, 25% or more of the outstanding shares of any
other Corporate Fund or Funds. Enele Co. and Charles Schwab & Co., Inc. hold
these shares as nominees for independent investors. These independent investors,
who are the beneficial owners of the shares, exercise complete voting control
over the shares. The Corporate Funds and the Funds have no record concerning the
actual beneficial share ownership of these shares.

50
<PAGE>
--------------------------------------

NET ASSET VALUE
----------------------------------

The net asset value ("NAV") of a share is determined as of 4 p.m. Eastern
Time, or the close of the NYSE, whichever is earlier, on each day during which
securities are traded on the NYSE. A class's NAV is the value of a single share.
The value of a single share of a class is computed by adding that class's pro
rata share of the value of the applicable Fund's investments, cash and other
assets, subtracting that class's pro rata share of the value of the applicable
Fund's liabilities, subtracting the liabilities allocated to that class, and
dividing the result by the number of shares of that class that are outstanding.

Each Fund's assets are valued on the basis of market quotations, if
available. Foreign securities are valued on the basis of quotations from the
primary market in which they are traded, and are translated from the local
currency into U.S. dollars using current exchange rates. If quotations are not
readily available, or if the values have been materially affected by events
occurring after the closing of a foreign market, assets are valued by a method
that the Board of Trustees believes accurately reflects fair value.

The U.S. Government Money Market Fund will value its assets using the
amortized cost method by adjusting the cost of each debt security for
amortization of discount or premium and accrued interest (unless unusual
circumstances indicate that another method of determining fair value should be
considered by the Trustees.) The Trustees have established procedures designed
to stabilize, to the extent reasonably possible, the net asset value of the
shares of the U.S. Government Money Market Fund at one dollar per share. There
is no assurance that the Fund will be able to maintain a constant one dollar per
share value. See "U.S. GOVERNMENT MONEY MARKET FUND" in the Statement of
Conditional Information.

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

PERFORMANCE COMPARISONS
----------------------------------

The Funds may compare their performance to other mutual funds with similar
investment objectives and to the mutual fund industry as a whole, as quoted by
ranking services and publications of general interest. For example, these
services or publications may include Lipper Analytical Services, Inc.,
Schabacker's Total Investment Service, CDA Technologies, SEI, Frank Russell
Trust, BARRON'S BUSINESS WEEK, CHANGING TIMES, THE FINANCIAL TIMES, FINANCIAL
WORLD, FORBES, INVESTOR'S DAILY, MONEY, MORNINGSTAR MUTUAL FUNDS, PERSONAL
INVESTOR, THE ECONOMIST, THE WALL STREET JOURNAL, INDIVIDUAL INVESTOR, LOUIS
RUKEYSER'S

51
<PAGE>
WALL STREET, FINANCIAL WORLD, and USA TODAY. These ranking services and
publications rank the performance of the Funds against all other funds over
specified periods and against funds in specified categories. The Funds may also
either include presentations of, or may compare their performance or the
performance of the Funds' Adviser to a recognized stock or bond index, including
the Standard & Poor's 500, Standard & Poor's Mid-Cap 400 Index, Value Line
Composite Index, Dow Jones Industrial Average, NASDAQ/OTC Price Index, Russell
2000 Index, Wilshire 5000 Equity Index, Morgan Stanley REIT Index, the Lehman
Brothers Government/Corporate Bond Index and Salomon Bond indices. The
comparative material found in advertisements, sales literature, or in reports to
shareholders may contain past or present performance ratings. This is not to be
considered representative or indicative of future results or future performance.

The Funds may also compare their performance to other income-producing
securities such as (i) money market funds; (ii) various bank products (based on
average rates of bank and thrift institution certificates of deposit, money
market deposit accounts, and NOW accounts as reported by the Bank Rate Monitor
and other financial reporting services, including newspapers); and (iii) U.S.
treasury bills or notes.

The performance of a specific Fund will be calculated as required by the
rules of the SEC. Current yield for the U.S. Government Money Market Fund is
calculated by dividing the net change in the value of an account of one share
during an identified seven-calendar day period by the value of the one share
account at the beginning of the same period and multiplying that base return by
365/7. Current yield for the Real Estate, Income, U.S. Government Income and
Oregon Tax-Free Funds is calculated by dividing the net investment income per
share earned during an identified 30-day period by the maximum offering price
per share on the last day of the same period. The Funds may also publish average
annual total return quotations for recent one, five and ten-year periods and
will, at times, graphically portray the redeemable value of an initial
investment over an established period of time. These standardized calculations
do not reflect the impact of federal or state income taxes. Such performance
data will include the effect of any sales or distribution charges.

The yields of each of the Funds are not fixed and will fluctuate. The
principal value of an investment in each Fund (except, under normal
circumstances, the U.S. Government Money Market Fund) at redemption may be more
or less than its original cost. In addition, investments in the Funds are not
insured and an investor's yield is not guaranteed.

The Fund's investment results will vary from time to time depending on
market conditions, the composition of the Fund's portfolio, and operating
expenses of the Fund. These factors and possible differences in the methods used
in calculating investment results should be considered when comparing

52
<PAGE>
performance information regarding the Fund to information published for other
investment companies and other investment vehicles. You should also consider
return quotations relative to changes in the value of the Fund's shares and the
risks associated with the Fund's investment objectives and policies. At any time
in the future, return quotations may be higher or lower than past return
quotations, and there may be no assurance that any historical return-quotation
will continue in the future.

For more information about the calculation methods used to compute the
Fund's investment results, see "YIELD AND PERFORMANCE" in the Statement of
Additional Information. The annual report for the Funds contains information
about the performance of the Funds, and is available upon request, without
charge, by calling Investor Services at (800) 541-9732.

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

ALLOCATION OF BROKERAGE
----------------------------------

The Adviser is responsible for the overall management of the portfolio of
each Fund and determines which brokers will execute the purchase and sale of the
portfolio securities. The Adviser's foremost objective is to place orders so as
to achieve prompt execution at the most favorable price. However, the Adviser is
authorized, in recognition of the value of brokerage and research services
provided, to pay commissions to a broker in excess of the amounts which another
broker might have charged for effecting the same transaction. The Adviser may
also execute Fund portfolio transactions with broker-dealers that provide
services to the Funds pursuant to a written agreement. Under these arrangements,
participating Funds direct the Adviser to execute a portion of the Funds
transactions to a broker-dealer in return for a credit which represents a
percentage of the total commissions generated through the broker dealer. The
Fund uses the credit to reduce transfer agent, custodian, shareholder servicing
and other expenses of the Fund. Provided the Funds receive prompt execution at
competitive prices, the Adviser may execute portfolio transactions through
broker-dealers who also sell the Funds' shares. Additional information about
portfolio brokerage is included in the Statement of Additional Information.

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

CAPITAL STRUCTURE
----------------------------------

Beneficial interests in the Trust are divided into shares, all without par
value. The shares may be divided in separate series, with each series
representing investments in a particular portfolio and sub-series (classes) of
each series,

53
<PAGE>
all at the discretion of the Board of Trustees. Shareholders of each of the
Funds are entitled to one vote for each dollar of net asset value held.
Shareholders shall have the power to vote only on the following matters: (1) the
election of the initial trustees of the Trust, the removal of trustees, and to
the extent required by the 1940 Act, the subsequent election of any trustee to
fill any vacancy (although trustees may be elected to fill vacancies or be
removed by the Board of Trustees without a vote of Shareholders, subject to
certain restrictions in the 1940 Act); (2) any contract entered into by the
Trust to the extent Shareholders' approval is required by the 1940 Act; (3) with
respect to any termination or reorganization of the Trust or any series thereof
to the extent and as provided in the Declaration of Trust; (4) with respect to
any amendment of the Declaration of Trust that adversely affects the rights of
the shareholder; (5) with respect to derivative actions whether or not a court
action, proceeding or claim should or should not be brought or maintained
derivatively or as a class action on behalf of the Trust or any series of the
Trust or the Trust shareholders; (6) an amendment of the Fund's Fundamental
Policies as set forth in the Trust's By-laws; and (7) with respect to such
additional matters relating to the Trust as may be required by the 1940 Act, the
Declaration of Trust, the By-laws of the Trust, any registration of the Trust
with the SEC (or any successor agency) or any state, or as the Trustees may
consider necessary or desirable. Separate votes are taken by each class of
shares, fund or trust, if a matter affects that class of shares, the Fund or the
Trust, respectively. Shares issued are fully paid and nonassessable and have no
preemptive or conversion rights. Each share is entitled to participate equally
in dividends and distributions declared by its respective Fund and in the net
assets of that Fund upon liquidation or dissolution after satisfaction of
outstanding liabilities. Amendment to the Declaration of Trust may be made upon
approval by shareholders holding the lesser of (i) 67% or more of the shares
entitled to vote on the matter, present in person at the meeting or represented
by proxy, if holders of more than 50% of the shares entitled to vote on the
matter are present, in person or by proxy, or (ii) a majority of the shares
issued and outstanding.

The Special Fund has an authorized capital of 100 million shares of common
stock. All shares of the Special Fund are of the same class, although for
purposes of this Prospectus shares offered by the Special Fund are referred to
as Primary Class shares. Shareholders of the Special Fund are entitled to one
vote for each full share held and fractional votes for fractional shares held.
Shareholders of the Special Fund vote on the election of directors and any other
matter submitted to a shareholder vote. Shares issued are fully paid and
nonassessable, and have no preemptive or conversion rights. Each share is
entitled to participate equally in dividends and distributions declared, and in
the net assets upon liquidation or dissolution, after satisfaction of
outstanding liabilities.

54
<PAGE>
--------------------------------------

YIELD
----------------------------------

The SEC has imposed a number of rules and policies regarding the calculation
of yield. The Fund intends to continually comply with these rules and policies
in their quotation of yield. For an explanation of the method of yield
calculation, see "CALCULATION OF PERFORMANCE DATA" in the Statement of
Additional Information.

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

INVESTOR SERVICES
----------------------------------

INFORMATION YOU NEED TO KNOW TO PURCHASE, REDEEM OR EXCHANGE SHARES

<TABLE>
<S> <C> <C>
Investor Services Telephone: (800)
541-9732
Mail: Crabbe Huson Funds
P.O. Box 8413
Boston, MA 02266-8413

Crabbe Huson "Instant Access": (800)
235-2442
Express Mail: Crabbe Huson Funds
Two Heritage Drive
Quincy, MA 02171

Internet: http://www.contrarian.com
</TABLE>

The Fund's shares are offered to the public with no sales load. Crabbe Huson
Securities, Inc. (the "Distributor"), Portland, Oregon, an affiliate of the
Adviser and a corporation organized under the laws of Oregon, is the distributor
of the Fund's shares. The shares are offered by the Distributor directly to the
public or through Financial Intermediaries who have entered into sales
agreements with the Distributor.

If there is no account application accompanying this Prospectus, you may
obtain one by calling your Financial Intermediary or by calling Investor
Services. If you are investing through a tax-sheltered retirement plan, such as
an IRA, for the first time, you will need a special application. Contact
Investor Services for more information on retirement accounts.

55
<PAGE>
TYPES OF ACCOUNTS AVAILABLE:

- Individual, Joint Tenants, Tenants in Common

- Trusts

- Businesses or Organizations (corporations, partnerships or other groups)

- Gifts or Transfers to Minors

- Retirement Accounts (Individual Retirement Accounts (IRA), Spousal IRA,
Simplified Employee Pension

- IRA (SEP-IRA), Salary Reduction-SEP IRA (SAR-SEPIRA) or 403(b) Tax
Sheltered Accounts)

- Others (contact Investor Services for information regarding other
accounts)

Retirement accounts are not available to those investing in the Oregon Tax-
Free Fund. Note, if you are considering adopting any type of retirement plan,
you should consult with your own legal or tax adviser, with respect to the
establishment and maintenance of such a plan.

MINIMUM INVESTMENTS. The minimum investment in any Fund is $2,000.
Additional Investments in any Fund must be in amounts of at least $500, unless
you are enrolled in the Invest-O-Matic program described below in "SPECIAL
SERVICES." Investments as small as $100 can be accepted from investors
participating in the Invest-O-Matic program. The Adviser, in its sole
discretion, may waive any minimum purchase requirements. The Funds reserve the
right to vary the initial and subsequent investment minimums at any time. The
Funds will provide you with written notice of any such change.

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

HOW TO PURCHASE
YOUR SHARES
----------------------------------

HOW TO OPEN AN ACCOUNT:

<TABLE>
<S> <C> <C>
- - Mail: Complete and sign the account application,
indicating the Fund, class and dollar amount
you want to invest. Mail or express mail your
check with your completed application to the
appropriate address listed above under
"INFORMATION YOU NEED TO KNOW TO PURCHASE,
REDEEM OR EXCHANGE SHARES."
</TABLE>

56
<PAGE>
<TABLE>
<S> <C> <C>
- - Exchange: You may exchange your shares for shares of
another Crabbe Huson Fund, provided the
dollar value of the shares you desire to
exchange meet the minimum investment
requirement of the new Fund. Call Investor
Services for more information about this
option.

- - Financial
Intermediaries: You may purchase shares in a Fund by
contacting your Financial Intermediary. See
"WHAT YOU SHOULD KNOW ABOUT BUYING SHARES
THROUGH A FINANCIAL INTERMEDIARY."
</TABLE>

HOW TO PURCHASE ADDITIONAL SHARES:

<TABLE>
<S> <C> <C>
- - Mail: Detach and complete the stub attached to your
statement. Make a check payable to Crabbe
Huson Funds, write your shareholder account
number on your check, and include your
investment stub(s) or a note designating how
the amount of your check is to be invested by
Fund and class. Mail or express mail the
above to the appropriate address listed above
under "INFORMATION YOU NEED TO KNOW TO PUR-
CHASE, REDEEM OR EXCHANGE SHARES."

- - Telephone: As an existing shareholder, you may purchase
additional shares by calling (800) 235-2442
and using the Funds' Crabbe Huson "Instant
Access" System. See "Special Investor
Services--Crabbe Huson "Instant Access." "
You may also purchase shares by calling
Investor Services at the telephone number
listed above under "INFORMATION YOU NEED TO
KNOW TO PURCHASE, REDEEM OR EXCHANGE SHARES."
</TABLE>

57
<PAGE>
<TABLE>
<S> <C> <C>
- - Wire: You may purchase shares by wiring funds from
your bank account. In order to purchase
additional shares by wire transfer, you need
to call Investor Services to place your order
and then wire transfer your funds to the
following wire transfer address: State Street
Bank & Trust Co., 225 Franklin Street,
Boston, MA 02110, ABA No. 011 000 28, FOR
CREDIT: Crabbe Huson, DDA No. 99051039,
Shareholder Name, Name of Fund and Class,
Shareholder Account Number.
</TABLE>

WHAT YOU SHOULD KNOW ABOUT BUYING SHARES BY MAIL:

If payment and an account application is received in proper form by the
close of regular trading on the NYSE (currently 4:00 p.m., Eastern Time) on a
day that the Fund calculates its net asset value (a "business day"), the
purchase will be made at the Fund's net asset value calculated at the end of
that day. If payment is received after the close of regular trading on the NYSE,
the purchase will be effected at the Fund's net asset value determined for the
next business day after payment has been received.

Make all checks or money orders payable to Crabbe Huson Funds. The Funds
will not accept purchases made by cash or credit card. Checks payable to the
investor and endorsed to the order of the Fund will not be accepted as payment
and will be returned to the sender. If a check used for purchase does not clear,
the Fund will cancel the purchase and the investor may be liable for any losses
or fees incurred. In order to prevent lengthy processing delays caused by the
clearing of foreign checks, the Funds will only accept a foreign check drawn in
U.S. dollars issued by a foreign bank with a U.S. correspondent bank. The name
of the U.S. correspondent bank must be printed on the face of the check. Further
documentation may be requested from corporations, executors, administrators,
trustees, guardians, agents, or attorneys in fact.

WHAT YOU SHOULD KNOW ABOUT BUYING ADDITIONAL SHARES BY TELEPHONE:

The Funds may, at their discretion, accept purchase orders from existing
shareholders by telephone, although the order is not accompanied by payment for
the shares being purchased. To receive the net asset value for a specific day, a
telephone purchase request must be received before the close of the NYSE on that
day. Payment for shares ordered in this way must be received by the Funds'
Transfer Agent within three business days after acceptance of the order. If
payment is not received on time, a Fund may cancel the order and redeem the
shares held in the shareholder's account to compensate the Fund for any decline
in the value of the purchased shares.

58
<PAGE>
WHAT YOU SHOULD KNOW ABOUT BUYING SHARES THROUGH A FINANCIAL INTERMEDIARY:

Shares of each Fund are offered through Financial Intermediaries, including
the following broker dealers: Charles Schwab & Company, Inc. Mutual Fund
OneSource-TM- Program; Fidelity Brokerage Services, Inc.
Funds-Network-TM-Program; Jack White & Company, Inc.; and Waterhouse Securities,
Inc. Some of the programs offered by these Financial Intermediaries may impose
certain conditions on your investment in the Funds which are in addition to or
different than those in this Prospectus, and may charge you direct fees. Certain
features described in this Prospectus, such as initial and subsequent investment
minimums, redemption fees and certain trading restrictions, may be modified or
waived in these programs, and administrative charges may be imposed for the
services rendered. Therefore, you should contact your Financial Intermediary
concerning the fees (if any) charged in connection with a purchase or redemption
of Fund shares and should read this prospectus in light of the terms governing
your account with the Financial Intermediary.
Financial Intermediaries that have entered into agreements with the Fund
and/or its Distributor may enter confirmed purchase orders on behalf of clients
and customers, with payment to follow no later than the Funds' pricing on the
following business day. If payment is not received by such time, the Financial
Intermediary could be held liable for resulting fees and losses.

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

HOW TO REDEEM
YOUR SHARES
----------------------------------

You may arrange to take money out of your account at any time by selling
(redeeming) some or all of your shares. Shares may be redeemed at any time,
without charge, at the net asset value per share next determined after receipt
by the Transfer Agent of a redemption request in proper form from the investor.
Payment for all shares redeemed will be made within three business days after
receipt of a redemption request in proper form except (as outlined by the 1940
Act) during a period when 1) trading on the NYSE is restricted or the NYSE is
closed for other than customary weekends and holidays, 2) the SEC has by order
permitted such suspension for the protection of the Fund's shareholders, or 3)
an emergency exists making disposal of portfolio securities or valuation of net
assets of the applicable class not reasonably practicable.

When a request for redemption is made shortly after the purchase of shares,
you will not receive the redemption proceeds until the check(s) received for the
shares purchased has cleared. Under such circumstances, it may take as

59
<PAGE>
long as 15 days for a shareholder to receive the proceeds of a redemption. You
may avoid such delays by purchasing shares with a certified or cashier's check,
or by federal funds wire.

To redeem your shares in a non-retirement account, you may use any of the
methods described below. To sell shares in a retirement account, you should
contact Investor Services or your Financial Intermediary for special
instructions. For your protection, certain redemption requests may require a
signature guarantee. See "Special Situations-Signature Guarantee." You may
redeem shares in the following ways:

<TABLE>
<S> <C> <C>
- - Mail: To be in proper form, written requests for
redemption must include 1) the total dollar
value of shares or the total number of shares
to be redeemed, 2) the investor's account
number, 3) the Fund's name and applicable
class name, and 4) the signature of each
registered owner exactly as the shares are
registered, and 5) in certain situations, a
signature guarantee. See "Special
Situations-Signature Guarantee." The Transfer
Agent may require additional supporting
documents for redemptions made by
corporations, executors, administrators,
trustees, or guardians. A redemption request
will not be deemed to have been submitted
until the Transfer Agent receives
all required documents in proper form. All
documents and correspondence concerning
redemptions should be sent to Investor
Services at the address listed above under
"INFORMATION YOU NEED TO KNOW TO PURCHASE,
REDEEM OR EXCHANGE SHARES."

- - Telephone: Telephone redemptions may be made by calling
the Crabbe Huson "Instant Access" number,
(800) 235-2442. See "Special Investor
Services-Crabbe Huson 'Instant Access."' You
may also redeem shares by calling Investor
Services at the telephone number listed above
under "INFORMATION YOU NEED TO KNOW TO
PURCHASE, REDEEM OR EXCHANGE SHARES."

- - Wire: Should you wish to receive instructions on
how to obtain your funds by wire, please call
Investor Services. At the present time there
is no fee
</TABLE>

60
<PAGE>

<TABLE>
<S> <C> <C>
charged for redemptions by wire transfer.
However, in the future the Funds may elect to
impose such a fee.

- - Financial
Intermediaries: Shares may also be redeemed by telephone from
Financial Intermediaries who have entered
into sales agreements with the Distributor
and/or the Funds. Such redemption orders
should be placed by the Financial
Intermediary with the Transfer Agent. Shares
will be redeemed at the net asset value
determined on a shareholder's trade date. The
three-day period within which the proceeds of
the redemption will be sent to the
shareholder or shareholder's Financial
Intermediary will begin on the day of the net
asset value calculation, unless the Transfer
Agent has not received a written request in
proper form from the Financial Intermediary
by the third day. In that event, the proceeds
of the redemption will be sent to the
shareholder or the shareholder's Financial
Intermediary immediately upon the Transfer
Agent's receipt of the written request in
proper form. Financial Intermediaries are
responsible for the prompt transmittal of
redemption orders to the Transfer Agent.
Financial Intermediaries not affiliated with
a Fund may charge a fee for handling
redemptions.

- - Check Writing: If you have a checkbook for your account in
the U.S. Government Money Market Fund, you
may write checks on your account. The minimum
amount of a check is $500. Be sure that the
check is signed by all required signatures as
noted on the signature card on file with the
Transfer Agent.
</TABLE>

If you are selling some but not all of your account shares, leave at least
$2,000 worth of shares in the account to keep it open (account minimums do not
apply to retirement accounts). See "Special Situations" in this prospectus.

61
<PAGE>
--------------------------------------

HOW TO EXCHANGE
YOUR SHARES
----------------------------------

BEFORE MAKING AN EXCHANGE TO ANOTHER FUND, THE INVESTOR SHOULD READ THE
PROSPECTUS RELATING TO THE FUND OR FUNDS INTO WHICH SHARES ARE BEING EXCHANGED.

The proceeds from the redemption of your shares may be used to purchase
shares of any other Fund in every state in which the exchange may be made
legally, provided you may only exchange if the dollar value of the exchange is
sufficient to satisfy any minimum investment requirements in the new Fund. You
may only exchange between accounts that are registered in the same name,
address, and taxpayer identification number. The exchange privilege is a
standard option on all accounts. If you do not want this option, please mark the
appropriate box on the application. You may exchange shares in the following
ways:

<TABLE>
<S> <C> <C>
- - Exchange by
Mail: Any written exchange request, in proper form,
may be mailed or express mailed to the
Transfer Agent to the appropriate address
listed above under "INFORMATION YOU NEED TO
KNOW TO PURCHASE, REDEEM OR EXCHANGE YOUR
SHARES."

- - Exchange by
Telephone: Telephone exchanges may be made by calling
the Crabbe Huson "Instant Access" number,
(800) 235-2442. See "Special Investor
Services-Crabbe Huson 'Instant Access.' " You
may also exchange shares by telephone by
contacting Investor Services at the number
listed above under "INFORMATION YOU NEED TO
KNOW TO PURCHASE, REDEEM OR EXCHANGE YOUR
SHARES."
</TABLE>

The exchange of shares of the Fund for shares of another fund is treated for
federal and state income tax purposes as a sale on which an investor may realize
a capital gain or loss.

62
<PAGE>
Excessive trading can hurt Fund performance. Each Fund reserves the right to
terminate or modify the exchange privilege applicable to all shareholders at any
time upon 60 days' notice. This exchange privilege may be temporarily or
permanently suspended with respect to any shareholder that engages in more than
ten exchanges in any 12-month period.

WHAT YOU SHOULD KNOW ABOUT TELEPHONE TRANSACTIONS:

Each Fund, the Adviser and the Transfer Agent will employ reasonable
procedures to confirm that instructions communicated by telephone are properly
authorized. The failure of a Fund to do so may result in the Fund being liable
for losses due to unauthorized or fraudulent telephone transactions. However, a
Fund, the Adviser and the Transfer Agent will not be liable for executing
telephonic instructions that are deemed to be authorized after following
reasonable procedures. Such reasonable procedures include providing written
confirmation of telephone transactions, tape recording telephone instructions,
and requiring specific personal information prior to acting upon telephone
instructions. Furthermore, in order to use the Instant Access Automated
Information Service instituted by the Funds you must provide a 4-digit Personal
Identification Number.

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

WHEN TRANSACTIONS
ARE RECORDED
IN YOUR ACCOUNT
----------------------------------

Your trade date is the date when transactions are recorded in your account.
Your shares are purchased, redeemed or exchanged at the net asset value
determined on your trade date.

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

STATEMENTS
----------------------------------

You will receive a quarterly summary of all account activity for the most
recent calendar quarter and an annual statement which includes all activity
during the most recent year. You will also receive a statement of account after
any transaction that affects your share balance or share registration, other
than for the reinvestment of dividends or distributions or investments made
through the Systematic Exchange or Invest-O-Matic programs discussed below. See

63
<PAGE>
"SPECIAL SERVICES." These transactions will be included in your next quarterly
or annual statement. In addition to the annual statement, you will also receive,
in January, a full report of your account activity during the prior year for tax
reporting purposes.

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

SPECIAL SITUATIONS
----------------------------------

SIGNATURE GUARANTEE. A signature guarantee is designed to protect you and
the Funds from fraudulent transactions by unauthorized persons. In the following
instances, the Funds will require a signature guarantee for all authorized
owners of an account:

- you wish to redeem more than $15,000 worth of shares;

- the redemption proceeds are to be sent to a different name or address
than is registered on your account;

- you wish to add the check writing feature, the Systematic Withdrawal
program or make a change in your bank information after you have opened
an account;

- you wish to change your name or add/remove an owner on your account; or

- you wish to add/change a beneficiary on your transfer-on-death account or
retirement account.

A signature guarantee may be obtained from any eligible guarantor
institution, as defined by the SEC. These institutions include banks, savings
associations, credit unions, brokerage firms and others. A notary public stamp
or seal is not acceptable.

INVOLUNTARY REDEMPTIONS. In order to reduce expenses, if the shares in your
account other than a tax-deferred retirement account, are worth less than $2,000
as a result of shareholder redemptions, the Fund may elect to redeem such shares
and close the account. You will receive 60 days' prior written notice in which
to purchase additional shares to avoid such redemption. Additionally, any Fund
may compel the redemption of shares if, in its opinion, such action would
prevent the fund from becoming a personal holding company, as defined by the
Code.

64
<PAGE>
--------------------------------------

SPECIAL SERVICES
----------------------------------

INVEST-O-MATIC. With Invest-O-Matic, you may make regular monthly purchases
of shares in amounts as little as $100 via an automatic debit to a bank account.
Invest-O-Matic accounts may be modified or terminated by you at any time.

SYSTEMATIC EXCHANGE. Systematic Exchange allows you to make regular,
systematic exchanges of at least $100 from one Crabbe Huson Fund into another
Crabbe Huson account. When you establish a systematic exchange program, you
authorize the Fund, the Transfer Agent and their agents to sell shares at a set
dollar amount or number of shares from the first account and purchase shares of
a second Crabbe Huson Fund. An exchange transaction is a sale and purchase of
shares for federal income tax purposes and may result in a gain or loss. To
establish this program, you may call your Financial Intermediary or Investor
Services at (800) 541-9732. For further details concerning this program, see the
Statement of Additional Information.

CRABBE HUSON "INSTANT ACCESS". By calling (800) 235-2442, you can receive
account information, purchase, redeem and exchange Fund Shares. If you desire to
purchase additional shares or to redeem through the "Instant Access" system, you
must provide the Fund with current A.C.H. (automated clearing house)
information. The daily maximum redemption through use of the "Instant Access"
system is $100,000. If you purchase shares through the "Instant Access" system
and your purchase is made prior to 4:00 p.m. Eastern time, your purchase shall
take place on the following business day at the net asset value as determined on
that day. If your purchase occurs after 4:00 p.m. Eastern time, your purchase
shall take place on the second business day at the net asset value as determined
on that day.

SYSTEMATIC WITHDRAWAL PLAN. If you own shares with a total value of not
less than $5,000 you may participate in a systematic withdrawal plan providing
for fixed payments to you of $100 or more at regular monthly intervals (the
"Systematic Withdrawal Plan"). You may realize a capital gain or loss on each
fixed-amount payment. Additional information concerning the Systematic
Withdrawal Plan is set forth in the Statement of Additional Information. If you
desire to participate in the Systematic Withdrawal Plan, you may do so by
completing and submitting the appropriate application to the Transfer Agent. The
Systematic Withdrawal Plan is voluntary and may be terminated at any time by the
shareholder.

CHECK WRITING. The U.S. Government Money Market Fund offers check writing.
You may write checks of not less than $500 per check. A check must be signed by
all parties listed on the signature card as required signatures.

65
<PAGE>
--------------------------------------

DIVIDENDS, CAPITAL GAINS, TAXES
----------------------------------

Each Fund distributes substantially all of its net investment income and
capital gains (if any) to shareholders each year. Each Fund declares and
distributes realized capital gains, if any, to shareholders in December.
Dividends for the Special, Small Cap, and Equity Funds are distributed in
December. Dividends for the Real Estate and Asset Allocation Funds are
distributed on the last business day of each fiscal quarter. Dividends for the
Income and U.S. Government Income Funds are distributed on the last business day
of each month. Dividends on the Oregon Tax-Free and U.S. Government Money Market
Funds are declared daily and paid monthly. With respect to the Oregon Tax-Free
Fund and the U.S. Government Money Market Fund, when the last day of the month
occurs on a Saturday, Sunday or holiday, dividends are accrued through the last
day of the month and paid on the last business day of the month.

On the date the dividends or capital gains are declared, they will
automatically be reinvested in additional shares of the same class of your Fund
unless you have elected to receive payments in cash. You may elect the option to
receive your distributions in cash by so specifying on your application.

Each Fund intends to qualify each year as a "regulated investment company"
under the Code so it will not pay federal taxes on either income or capital
gains distributed to shareholders, although there can be no assurance that they
will so qualify.

Each Fund will be subject to a 4% excise tax on a portion of its
undistributed income if they fail to meet certain annual distribution
requirements. Each Fund intends to make distributions in a timely manner and,
accordingly, does not expect to be subject to the excise tax.

For federal income tax purposes, all distributions are reportable as taxable
income whether a shareholder elects to take them in cash or reinvest them in
additional shares of a Fund.

Distributions representing net investment income (including short-term
capital gains) are taxable as ordinary income. Distributions derived from net
long-term capital gains that are properly designated by a Fund as such will be
taxable to shareholders as long-term capital gains, regardless of how long the
shareholder has held the shares.

Under the Revenue Reconciliation Act of 1993 (the "Act"), potentially
favorable income tax treatment on distributions representing long-term capital
gains has been restored, effective for tax years beginning after 1992. Under the
Act, ordinary income may be taxed at marginal rates significantly (up to 11.6%)

66
<PAGE>
higher than the marginal rate at which long-term capital gains are taxed.
Accordingly, distributions representing net long-term capital gains may be
subject to a reduced rate of tax to shareholders.

The Special Fund may engage in short sales of securities. In general, a
short sale is a contract for the sale of a security that the seller does not own
or does not desire to transfer. The seller, therefore, borrows the security to
be delivered to the buyer. At a later date, the seller either (i) purchases an
identical quantity of the same security previously sold by him so that he can
"cover" the sale and delivers the security to the lender or (ii) delivers the
security which he already held but did not desire to transfer at the earlier
date. A short sale is consummated, or closed, upon the seller's delivery of the
security to the lender. The seller's gain or loss will be measured by the
difference between the amount he received upon his short sale of the security
and the amount he paid for the security ultimately used to cover the sale. The
seller's gain/loss will be realized when the short sale is closed, not when the
seller sells short and is paid by the purchaser of the security. The Code
contains various provisions governing, among other things, the characterization
of short sale gain/loss as ordinary gain/ loss or capital gain/loss and the
treatment of short sale capital gain/loss as long-term gain/loss or short-term
gain/loss. The Special Fund will annually provide shareholders with a statement
concerning the appropriate characterization of any distributions of gains or
losses. Shareholders are therefore urged to consult their own tax advisers.

Shareholders may be subject to a $50 penalty under the Internal Revenue Code
and the Funds may be required to withhold and remit to the U.S. Treasury a
portion (31%) of any redemption or repurchase proceeds (including the value of
shares exchanged into another fund for whom the Adviser acts as Adviser) and of
any dividend or distribution on any account, where the shareholder failed to
provide a correct taxpayer identification number or to make certain required
certifications.

The foregoing relates only to federal income tax consequences for
shareholders who are U.S. citizens or corporations. Shareholders should consult
their own tax advisers regarding these matters, and regarding state, local, and
other applicable tax laws.

Each Fund will issue annually, in January, a full report to each shareholder
detailing the tax status of each distribution to the shareholder during the
calendar year. The Funds do not assume any responsibility for the calculation of
any taxable gain (or loss) from the purchase and sale of Fund shares, including
purchases made with reinvested dividends and/or capital gains. Every shareholder
should consult with their tax adviser concerning such calculations and tax
consequences.

67
<PAGE>
Each Fund will be treated as a separate entity and thus the provisions of
the Code applicable to registered investment companies generally will be applied
to each fund separately instead of the Trust as a whole. Net capital gains, net
investment income and operating expenses will be determined separately for each
Fund.

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

OREGON TAX-FREE FUND
----------------------------------

The Oregon Tax-Free Fund intends to qualify under Subchapter M of the Code
each fiscal year to allow it to pay "exempt interest dividends" to its
shareholders. Shareholders receiving distributions properly designated by the
Oregon Tax-Free Fund as exempt interest dividends representing net tax-exempt
interest received on municipal securities will not be required to include such
distributions in their gross income for federal income tax purposes. However, a
portion of the interest dividends earned by the Oregon Tax-Free Fund may be
subject to the federal alternative minimum tax. Distributions representing net
taxable income of the Oregon Tax-Free Fund from sources other than municipal
securities, such as temporary investments and income from securities loans, or
capital gains, will be taxable to shareholders as ordinary income.

The Oregon Tax-Free Fund anticipates that distributions which represent
tax-exempt interest on municipal securities issued by the state of Oregon and
its political subdivisions, agencies, authorities and instrumentalities will not
be subject to the Oregon personal income tax. However, it is expected that other
types of income received from the Oregon Tax-Free Fund will be subject to the
Oregon personal income tax. The Oregon Tax-Free Fund anticipates that
corporations which are subject to the Oregon corporation excise tax will be
subject to that tax on all income from the Oregon Tax-Free Fund, including
income that is exempt from federal income taxes.

Shareholders of the Oregon Tax-Free Fund that are obligated to pay state or
local taxes outside Oregon may be required to pay such taxes on distributions
from the Oregon Tax-Free Fund, even if such distributions are exempt from
federal and Oregon income taxes.

Statements regarding the federal income tax status of each shareholder's
dividends and distributions will be mailed annually.

Interest on indebtedness incurred or continued by a shareholder to purchase
or carry shares of the Oregon Tax-Free Fund will not be deductible for federal
income tax purposes.

68
<PAGE>
------------------------------------------

APPENDIX A
----------------------------------

BOND RATING AGENCIES:

The following is a description of the bond ratings employed by Moody's
Investors Service, Inc. ("Moody's").

Aaa: Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt edge."
Interest payments are protected by a large or exceptionally stable margin, and
principal is secure. While the various protective elements are likely to change,
such changes as can be visualized are unlikely to impair the fundamentally
strong position of such issues.

Aa: Bonds rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as high-
grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present that
make the long-term risks appear somewhat larger than in Aaa securities.

A: Bonds rated A possess many favorable investment attributes and are to
be considered as upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present that
suggest a susceptibility to impairment sometime in the future.

Baa: Bonds rated Baa are considered as medium-grade obligations (i.e., they
are neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and, in
fact, have speculative characteristics as well.

Ba: Bonds rated Ba are judged to have speculative elements; their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.

B: Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

Caa: Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.

69
<PAGE>
Ca: Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.

C: Bonds rated C are the lowest rated class of bonds and issues so rated
can be regarded as having extremely poor prospects of ever attaining any real
investment standing.

Moody's applies the numerical modifiers "1", "2", and "3" in each generic
rating classification from Aa through B. The modifier "1" indicates that the
security ranks in the higher end of its generic rating category; the modifier
"2" indicates a mid-range ranking; and the modifier "3" indicates that the issue
ranks in the lower end of its generic rating category.

The following is a description of the bond ratings employed by Standards &
Poor's Corporation ("S&P").

AAA: Bonds rated AAA are highest-grade obligations. Capacity to pay
interest and repay principal is extremely strong.

AA: Bonds rated AA have a very strong capacity to pay interest and repay
principal, and differ from the highest rated issues only in small degree.

A: Bonds rated A have a strong capacity to pay interest and repay
principal, although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.

BBB: Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds in
this category than for bonds in higher rated categories.

BB, B, CCC, CC, C: Debt rated BB, B, CCC, CC, and C is regarded, on
balance, as predominantly speculative with respect to capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB indicates
the lowest degree of speculation and C the highest degree of speculation. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.

BB: Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB- rating.

70
<PAGE>
B: Debt rated B has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The B rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
BB or BB-rating.

CCC: Debt rated CCC has a currently identifiable vulnerability to default,
and is dependent upon favorable business, financial and economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business, financial, or economic conditions, it is not likely to have
the capacity to pay interest and repay principal. The CCC rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied B or B- rating.

CC: The rating CC is typically applied to debt subordinated to senior debt
that is assigned an actual or implied CCC rating.

C: The rating C is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC- debt rating. The C rating may be
used to cover a situation where a bankruptcy petition has been filed, but debt
service payments are continued.

C1: The rating C1 is reserved for income bonds on which no interest is
being paid.

D: Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The D rating also will be used upon the
filing of a bankruptcy petition if debt service payments are jeopardized.

C: Bonds which are rated C are the lowest rated class of bonds, and issues
so rated can be regarding as having extremely poor prospects of ever attaining
any real investment standing.

The S&P letter rating may be modified by the addition of a plus (+) or minus
sign (-), which is used to show relative standing within rating categories
between AA to CCC.

From time to time a bond rating agency may adjust its rating of a particular
bond issue. Subsequent to a Fund's purchase of a bond, such a bond may have its
rating reduced (down graded) to a category not permitted to be owned by that
Fund, or it may cease to be rated. Neither case would require that a Fund
eliminate such a bond from its portfolio. However, the Fund's Adviser will
consider such an event in determining whether or not the Fund should continue to
hold such a security.

71
<PAGE>
------------------------------------------

APPENDIX B
----------------------------------

HEDGING INSTRUMENTS:

OPTIONS ON EQUITY AND DEBT SECURITIES--A call option is a short-term
contract pursuant to which the purchaser of the option, in return for a premium,
has the right to buy the security underlying the option at a specified price at
any time during the term of the option. The writer of the call option, who
receives the premium, has the obligation, upon exercise of the option during the
option term, to deliver the underlying security against payment of the exercise
price. A put option is a similar contract that gives its purchaser, in return
for a premium, the right to sell the underlying security at a specified price
during the option term. The writer of the put option, who receives the premium,
has the obligation, upon exercise of the option during the option term, to buy
the underlying security at the exercise price.

OPTIONS ON SECURITIES INDICES--A securities index assigns relative values to
the securities included in the index and fluctuates with changes in the market
values of those securities. An index option operates in the same way as a more
traditional stock option, except that exercise of an index option is effected
with cash payment and does not involve delivery of securities. Thus, upon
exercise of an index option, the purchase will realize, and the writer will pay,
an amount based on the difference between the exercise price and the closing
price of the index.

STOCK INDEX FUTURES CONTRACTS--A stock index futures contract is a bilateral
agreement pursuant to which one party agrees to accept, and the other party
agrees to make, delivery of an amount of cash equal to a specified dollar amount
times the difference between the stock index value at the close of trading of
the contract and the price at which the futures contract is originally struck.
No physical delivery of the stocks comprising the index is made. Generally,
contracts are closed out prior to the expiration date of the contract.

INTEREST RATE FUTURES CONTRACTS--Interest rate futures contracts are
bilateral agreements pursuant to which one party agrees to make, and the other
party agrees to accept, delivery of a specified type of debt security at a
specified future time and at a specified price. Although such futures contracts
by their terms call for actual delivery or acceptance of debt securities, in
most cases the contracts are closed out before the settlement date without the
making or taking of delivery.

OPTIONS ON FUTURES CONTRACTS--Options on futures contracts are similar to
options on securities or currency, except that an option on a futures contract
gives the purchaser the right, in return for the premium, to assume a position
in a futures contract (a long position if the option is a call and a short
position if

72
<PAGE>
the option is a put), rather than to purchase or sell a security or currency, at
a specified price at any time during the option term. Upon exercise of the
option, the delivery of the futures position to the holder of the option will be
accompanied by delivery of the accumulated balance that represents the amount by
which the market price of the futures contract exceeds, in the case of a call,
or is less than, in the case of a put, the exercise price of the option on the
future. The writer of an option, upon exercise, will assume a short position in
the case of a call and a long position in the case of a put.

Purchase of these financial instruments allows the Adviser to hedge against
changes in market conditions. For example, the Adviser may purchase a put option
in a securities index or when it believes that the stock prices will decline.
Conversely, the Adviser may purchase a call option in a securities index when it
anticipates that stock prices will increase.

73
<PAGE>
MAILING ADDRESS

CRABBE HUSON FUNDS
P.O. BOX 8413
BOSTON, MA 02266-8413

INVESTMENT ADVISER

THE CRABBE HUSON GROUP, INC.
121 S.W. MORRISON, SUITE 1400
PORTLAND, OR 97204

DISTRIBUTOR

CRABBE HUSON SECURITIES, INC.
121 S.W. MORRISON, SUITE 1400
PORTLAND, OR 97204

LEGAL COUNSEL

DAVIS WRIGHT TREMAINE
1300 S.W. FIFTH AVENUE, SUITE 2300
PORTLAND, OR 97201

INDEPENDENT AUDITORS

KPMG PEAT MARWICK LLP
1211 S.W. FIFTH AVENUE, SUITE 2000
PORTLAND, OR 97204

TRANSFER AGENT &
INVESTOR SERVICES

STATE STREET BANK AND TRUST COMPANY
P.O. BOX 8413
BOSTON, MA 02266-8413

FUND TRUSTEES

GARY L. CAPPS
JAMES E. CRABBE
RICHARD S. HUSON
LOUIS SCHERZER
BOB L. SMITH
CRAIG P. STUVLAND
RICHARD P. WOLLENBERG
WILLIAM W. WYATT, JR.

<PAGE>

------------------
CRABBE HUSON FUNDS
------------------

Crabbe Huson Special Fund, Inc.
Crabbe Huson Small Cap Fund
Crabbe Huson Real Estate Investment Fund
Crabbe Huson Equity Fund
Crabbe Huson Asset Allocation Fund
Crabbe Huson Oregon Tax-Free Fund
Crabbe Huson Income Fund
Crabbe Huson U.S. Government Income Fund
Crabbe Huson U.S. Government Money Market Fund

(collectively, the "Funds")

-----------------------------------
STATEMENT OF ADDITIONAL INFORMATION
-----------------------------------

October 1, 1996

This Statement of Additional Information is meant to be read in
conjunction with the combined Prospectus for the Primary Class of
Shares of the Funds, the combined Prospectus of the Institutional
Class of shares of the Crabbe Huson Small Cap Fund, the Crabbe Huson
Equity Fund and the Crabbe Huson Asset Allocation Fund, each
dated October 1, 1996, as amended or supplemented from time to
time, and is incorporated by reference in its entirety into those
Prospectuses. Because this Statement of Additional Information is not
itself a prospectus, no investment in shares of any of the Funds
should be made solely upon the information contained herein. Copies
of each Prospectus may be obtained by calling (800) 541-9732 or
writing the Funds at the Crabbe Huson Funds, P.O. Box 8413, Boston, MA
02266-8413.

<PAGE>

-----------------
TABLE OF CONTENTS
-----------------

Page
----

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

TRUSTEES, DIRECTORS AND OFFICERS OF THE FUNDS. . . . . . . . . . . . . . . . 3

SERVICES PROVIDED BY THE ADVISER . . . . . . . . . . . . . . . . . . . . . . 6

ADMINISTRATIVE SERVICES. . . . . . . . . . . . . . . . . . . . . . . . . . . 8

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES. . . . . . . . . . . . . 9

DISTRIBUTION PLAN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

PORTFOLIO TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

INVESTMENT RESTRICTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 18

LOANS OF PORTFOLIO SECURITIES. . . . . . . . . . . . . . . . . . . . . . . . 34

PURCHASE AND REDEMPTION OF FUND SHARES . . . . . . . . . . . . . . . . . . . 35

U.S. GOVERNMENT MONEY MARKET FUND. . . . . . . . . . . . . . . . . . . . . . 35

PRICING OF SECURITIES BEING OFFERED. . . . . . . . . . . . . . . . . . . . . 36

YIELD AND PERFORMANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

DIVIDENDS, DISTRIBUTIONS AND TAXES . . . . . . . . . . . . . . . . . . . . . 43

SPECIAL INVESTOR SERVICES. . . . . . . . . . . . . . . . . . . . . . . . . . 48

GENERAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

COUNSEL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

AUDITORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

CUSTODIAN, TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT. . . . . . . . . . . 51

ADDITIONAL INFORMATION REGARDING
CERTAIN INVESTMENTS BY THE FUNDS. . . . . . . . . . . . . . . . . . . . 52

SPECIAL INVESTMENT RISKS . . . . . . . . . . . . . . . . . . . . . . . . . . 53

FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

<PAGE>

------------
INTRODUCTION
------------

This Statement of Additional Information sets forth information
concerning the Funds, including information regarding the Funds' Primary
Class and the Institutional Class offered by certain Funds. Information
concerning each class is also set forth in the Prospectus for each class.

----------
MANAGEMENT
----------

The Trustees, Directors and officers of the Funds are listed below,
together with information about their principal business occupations during
the last five years.

TRUSTEES, DIRECTORS AND OFFICERS OF THE FUNDS
- ---------------------------------------------

RICHARD S. HUSON,* 56, is a Trustee or Director and President of each
----------------
of the Funds. Mr. Huson is a chartered financial analyst. Mr. Huson is a
director and Secretary of the Crabbe Huson Group, Inc., the Funds' Adviser (the
"Adviser"). Mr. Huson has, since 1980, served in various positions with the
Adviser, and is currently its Vice President/Secretary and is a portfolio
managers. His business address is 121 S.W. Morrison, Suite 1400, Portland,
Oregon 97204.

JAMES E. CRABBE,* 50, is a Trustee or Director and Vice President of each
---------------
of the Funds. He is a director and President of the Adviser. Mr. Crabbe has,
since 1980, served in various positions with the Adviser, and is currently it
President and a portfolio manager. His business address is 121 SW Morrison,
Suite 1400, Portland, Oregon 97204.

GARY L. CAPPS, 60, is a Trustee or Director of each of the Funds. Mr.
-------------
Capps has been the Executive Director of the Bend Chamber of Commerce since July
1992. Mr. Capps was the owner and Chief Executive Officer of ten radio stations
in Oregon, Idaho and Washington from 1964 until 1986. He has been a director of
Bank of the Cascades in Bend, Oregon since 1980, and has served as Chairman
since 1983. His business address is 63085 N. Hwy 97, Bend, Oregon 97701.

CHERYL BURGERMEISTER,* 45, is Treasurer of the Funds. Ms. Burgermeister
--------------------
has been employed by the Adviser for the past nine years, and has been the chief
financial officer of the Adviser since 1989. Ms. Burgermeister's business
address is 121 SW Morrison, Suite 1400, Portland, Oregon 97204. Ms.

- ------------------------------
*The persons indicated are "interested persons" of the Fund, as defined in the
Investment Company Act of 1940 (the "1940 Act") as amended. They receive no
trustees' or directors' fees or salaries from any of the Funds.

<PAGE>

Burgermeister is Treasurer of Crabbe Huson Securities, Inc., the Funds'
Distributor.

LOUIS SCHERZER, 75, is a Trustee or Director of each of the Funds. Mr.
--------------
Scherzer is an officer of Scherzer Partners, Inc., a real estate development
and management firm located at 5440 SW Westgate Drive, Suite 222, Portland,
Oregon 97221. Mr. Scherzer has been an independent real estate developer and
manager for more than 10 years.

BOB L. SMITH, 57, is a Trustee or Director of each of the Funds. Mr.
------------
Smith has been President of VIP's Industries since 1968, and has been a
Director of Western Security Bank since 1980, a Director of KeyCorp since
1988 and a Director of Blue Cross/Blue Shield of Oregon since 1984. His
business address is 280 Liberty Street S.E., Salem, Oregon 97301.

CRAIG P. STUVLAND,* 40, is a Trustee or Director and Secretary of each
-----------------
of the Funds. Mr. Stuvland has been employed by the Adviser since June,
1987; he is currently an Executive Vice President and a Director. Mr.
Stuvland's business address is 121 S.W. Morrison, Suite 1400, Portland,
Oregon 97204. Mr. Stuvland is President and a director of the Funds'
Distributor.

RICHARD P. WOLLENBERG, 79, is a Trustee or Director of each of the
---------------------
Funds. Mr. Wollenberg has been Chairman and Chief Executive Officer of
Longview Fibre Company since 1978, and a Trustee of Reed College since 1962.
His business address is Longview Fibre Company, P.O. Box 606, Longview,
Washington 98632.

WILLIAM WENDELL WYATT, JR., 45, is a Trustee or Director of each of the
-------------------------
Funds. Mr. Wyatt has been Chief of Staff, Office of the Governor, State of
Oregon, since April, 1995. From 1987 to 1995, he was President of the Oregon
Business Council. His business address is 254 State Capitol, Salem, Oregon
97310-0370.

All funds (other than the Special Fund) are separate series of Crabbe Huson
Funds, a Delaware Business Trust (the "Trust"). The Special Fund is an Oregon
corporation. In this Statement of Additional Information, a reference to
"Board" shall be to each Fund's Board of Trustees or Board of Directors, as the
case may be. For all Funds (other than the Special Fund), no annual or regular
meeting is required. Thus, there will not ordinarily be an annual shareholder's
meeting (including a meeting for the purpose of electing trustees) unless
holding a meeting is required by the Investment Company Act of 1940, as amended
(the "Act"), or unless a request to hold a meeting is properly made by at least
10 percent of the shareholders of the Trust if all shareholders of the Trust are
entitled to vote on the matter or 10 percent of the affected series or class of
a series if such vote is on a series by series or class by class basis.

<PAGE>

In the case of the Special Fund, the Board is elected annually by the Fund's
shareholders.

Each Fund's Board is responsible for the overall management of the Fund,
including general supervision and review of their investment policies and
activities. The Board of the Trust and the Board of the Special Fund elect
the officers who are responsible for supervising and administering the Funds'
day-to-day operations. The Funds have an audit committee that reviews the
auditor's report and management letters, reviews the terms of the auditor's
engagement and makes recommendations to the Boards concerning the terms of
the auditor's engagements. The audit committees currently consist of Messrs.
Scherzer, Smith and Wyatt.

COMPENSATION OF OFFICERS AND DIRECTORS

The following table sets forth compensation received by the
disinterested directors of the Funds during the fiscal year ended October 31,
1995. No officer of any of the Funds received compensation in excess of
$60,000.

COMPENSATION TABLE
------------------

Total
Compensation
From Fund
Complex Paid
Aggregate Compensation from to Each
Name of Person, Position Fund, per Director Trustee/Director
- ------------------------ --------------------------- ----------------
<S> <C> <C>

Wollenberg, Smith, Special Fund - $1,800 $7,200
Capps, Scherzer, Real Estate Fund - $600
Directors Equity Fund - $1,600
Asset Allocation Fund -$1,600
Oregon Tax-Free Fund - $600
Income Fund - $200
U.S. Government Income
Fund - $200
U.S. Government Money
Market Fund - $600
Small Cap Fund*

Wyatt, Director Special Fund - $1,400 $5,450
Real Estate Fund - $450
Equity Fund - $1,200
Asset Allocation Fund - $1,200
Oregon Tax-Free Fund - $450
Income Fund - $150
U.S. Government Income
Fund - $150
U.S. Government Money Fund - $450
Small Cap Fund*

* The Small Cap fund commenced operations February 16, 1996. For the
current fiscal year, each Trustee has received $100 as their pro rata
share of trustee fees

<PAGE>

for the Small Cap Fund and would expect to receive $200 for
the remainder of the fiscal year.

</TABLE>

The Funds also reimburse trustees/directors' expenses for attending
shareholder and director meetings for directors who are not officers,
directors, or employees of the Adviser or the Distributor.

See "Control Persons and Principal Holders of Securities" in this
Statement of Additional Information.

--------------------------------
SERVICES PROVIDED BY THE ADVISER
--------------------------------

Each Fund employs the Adviser to furnish investment advice and other
services pursuant to advisory agreements (the "Advisory Agreements"). The
Adviser was incorporated in 1980 and has been engaged in the business of
providing investment advice since July 1, 1980. The address of the Adviser
is 121 SW Morrison, Suite 1400, Portland, Oregon 97204, mailing address:
P.O. Box 6559, Portland, Oregon 97228-6559. Crabbe Huson Securities, Inc.,
the Distributor of the Funds, is affiliated with the Adviser.

James E. Crabbe and Richard S. Huson are controlling shareholders of the
Adviser and together own 100% of the stock of the Distributor of the Funds.

James E. Crabbe and Richard S. Huson are primarily responsible for the
day-to-day management of the Adviser. Mr. Crabbe is President and a Director
of the Adviser and Mr. Huson is Vice President/Secretary and a Director. Mr.
Crabbe and Mr. Huson have been primarily responsible since the inception of
the Adviser. Both Mr. Crabbe and Mr. Huson have served in various management
positions with the Adviser since 1980.

The Adviser may, from time to time, voluntarily waive its fee and or
reimburse each Fund for certain expenses incurred by the Fund. While the
Adviser has in the past and may in the future determine to waive its fee
and/or reimburse Fund expenses, it is not obligated to waive fees and/or
reimburse expenses. Even in the event of discontinuance of this agreement,
the Funds may still be subject to the laws of certain states, which require
that if a mutual fund's expenses (including advisory fees but excluding
interest, taxes, brokerage commissions and extraordinary expenses) exceed
certain percentages of average net assets, the Fund must be reimbursed for
such excess expenses.

Under the Advisory Agreements, the Adviser determines the structure of the
Funds' portfolios, the nature and timing of the changes in it, and the manner of
implementing such changes (subject to any directions it may receive from the
Funds' Board); provides the Funds with investment advisory

<PAGE>

research and related services for the investment of assets; furnishes
(without expense to the Funds) the services of such members of its
organization as may be duly elected officers or directors of the Funds; and
pays all executive officers' salaries and expenses. Additional information
about the services provided by the Adviser is described under "MANAGEMENT OF
THE FUNDS" in the Prospectus.

As compensation for its services under the Advisory Agreements, the Adviser
receives a bi-monthly fee based on the annual schedule of fees outlined in the
Prospectus. For the year ended October 31, 1993, the Funds paid the following
investment advisory fees to the Adviser:

Amount
Fee Waived Total
--- ------ -----

Special Fund $ 129,227 $ 2,238 $ 126,989
Equity Fund 217,212 32,826 184,386
Asset Allocation Fund 683,280 54,592 628,688
Oregon Tax-Free Fund 120,660 11,421 109,239
Income Fund 40,195 40,195 -0-
U.S. Government
Income Fund 54,023 54,023 -0-
U.S. Government
Money Market Fund 53,882 53,882 -0-

For the year ended October 31, 1994, the Funds paid the following
investment advisory fees to the Adviser:

Amount
Fee Waived Total
--- ------ -----
Special Fund $ 963,723 $ 85,038 $878,685
Real Estate Fund 94,916 50,426 44,490
Equity Fund 782,419 68,033 714,386
Asset Allocation Fund 1,034,183 53,227 980,956
Oregon Tax-Free Fund 152,868 31,708 121,160
Income Fund 43,957 43,957 -0-
U.S. Government
Income Fund 51,245 51,245 -0-
U.S. Government
Money Market Fund 107,853 107,853 -0-

For the year ended October 31, 1995, the Funds paid the following
investment advisory fees to the Adviser:

<PAGE>

Amount
Fee Waived Total
--- ------ -----
Special Fund $5,398,048 $ 697 $5,397,351
Real Estate Fund 190,619 75,190 115,429
Equity Fund 2,471,465 -0- 2,471,465
Asset Allocation Fund 1,183,215 14,567 1,168,648
Oregon Tax-Free Fund 134,042 20,866 113,176
Income Fund 49,011 49,011 -0-
U.S. Government
Income Fund 43,576 43,576 -0-
U.S. Government
Money Market Fund 253,198 230,305 22,893

The Real Estate Fund entered into a subadvisory agreement with Aldrich
Eastman Waltch, L.P. on September 6, 1995, and in the year ending October 31,
1995, paid advisory fees of $11,560.07 out of the advisory fees collected
from that Fund.

-----------------------
ADMINISTRATIVE SERVICES
-----------------------

State Street Bank and Trust Company has been hired by the Funds to
provide a number of administrative and compliance services to the Funds,
including maintenance of certain Fund books and records, preparation of Fund
tax returns, expense allocation and payment of expenses, preparation of
reports to shareholders, preparation of Fund financial statements,
preparation of reports to the directors of the Funds, maintaining state
registration of Fund shares, and monitoring compliance with investment
restrictions and Internal Revenue Code requirements for registered investment
company status. The Funds paid State Street Bank and Trust Company the
following fees under the Administration Agreement during the fiscal year
ended October 31, 1995:

Special Fund $ 62,430
Equity Fund $ 26,144
Asset Allocation Fund $ 9,297
Real Estate Fund $ 1,353
Oregon Tax-Free Fund $ 1,889
Income Fund $ 482
U.S. Government Income Fund $ 569
U.S. Government Money Market Fund $ 3,767
--------

Total: $105,935

Additionally, the Adviser receives a fee for certain shareholder liaison
services it provides to the Funds, including responding to shareholder
inquiries, providing information on shareholder investments and performing
certain clerical tasks. In the last three years, for such services, the
Adviser has been paid by the Funds $100,000 a year. The Funds paid their pro
rata share of such fee based upon their net asset value.

<PAGE>

In future years, the Adviser intends to charge the Funds a fee
calculated at an annual rate of .10% of a Fund's average daily net assets.

---------------------------------------------------
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
---------------------------------------------------

On or about September 30, 1996, the Equity Fund, Real Estate Investment
Fund, Asset Allocation Fund, Tax-Free Fund, Income Fund, U.S. Government Income
Fund and U.S. Government Money Market Fund (the "Reorganizaed Funds") intend to
complete a reorganization with The Crabbe Huson Equity Fund, Inc., The Crabbe
Huson Asset Allocation Fund, Inc., The Crabbe Huson Income Fund, Inc., The
Oregon Municipal Bond Fund, Inc., The Crabbe Huson U.S. Government Income Fund,
Inc. and The Crabbe Huson U.S. Government Money Market Fund, Inc. (the
"Corporate Funds") in which each of the Corporate Funds will become a series of
the Trust. The shareholders in the Corporate Funds will become shareholders in
the corresponding Fund of the Trust. The following table shows the persons
known by the Reorganized Funds, the Special Fund and the Small Cap Fund to
beneficially own 5% or more of the shares of the corresponding Corporate
Fund's, Special Fund's and Small Cap Fund's voting securities, respectively.
Those shareholders marked with an asterisk are nominees holding shares for
beneficial owners and the Corporate Funds, Special Fund and Small Cap Fund have
no records concerning the actual beneficial owners. The Oregon Municipal Bond
Fund, Inc. has no shareholders of record owning more than 5% of the outstanding
Shares of that Fund. On September 20, 1996, the trustees, directors and
officers owned in the aggregate less than 1% of each Corporate Fund's
outstanding shares and owned less than 1% of the Special Fund's and Small Cap
Fund's outstanding shares.

SPECIAL FUND

Approximate Approximate
Number of Shares Percent of
Beneficial Owners Beneficially Owned Shares
- ----------------- ------------------ ----------
<S> <C> <C>
Charles Schwab 11,898,523 30.03%
& Co. Inc.*
Special Custody A/C
Attn: Mutual Funds
101 Montgomery Street
San Francisco, California 94104-4122

National Financial
Services Corp.* 2,177,429 5.50%
Attn: Mutual Funds
200 Liberty Street, 5th Floor
One World Financial Center
New York, New York 10281-0095

</TABLE>

<PAGE>

SMALL CAP FUND

Approximate Approximate
Number of Shares Percent of
Beneficial Owners Beneficially Owned Shares
- ----------------- ------------------ -----------
<S> <C> <C>

Enele Co.* 393,736 29.33%
Dividend Reinvestment
1211 S.W. Fifth Avenue, Suite 1900
Portland, Oregon 97204-3713

Colorado National Bank of 184,772 13.76%
Denver C/F ILIFF School
of Theology*
Mutual Funds a/c 89589810
P.O. Box 64010
St. Paul, Minnesota 55164-0010

U.S National Bank of Oregon* 161,752 12.05%
Cust. for Oregon Shakespearean
Festival Endowment
P.O. Box 3168
Portland, Oregon 97208-3168

The Northern Trust Company TTE* 137,488 10.24%
Bandag, Inc. Master Retirement
D/T/D 05-20-1993
2905 Highway 61
Muscatine, IA 52761-1386

</TABLE>

REAL ESTATE INVESTMENT FUND

Approximate Approximate
Number of Shares Percent of
Beneficial Owners Beneficially Owned Shares
- ----------------- ------------------ -----------
<S> <C> <C>

Enele Co.* 431,756 33.44%
Dividend Reinvestment
1211 S.W. Fifth Avenue, Suite 1900
Portland, Oregon 97204

Charles Schwab 288,288 22.33%
& Co., Inc.*
Special Custody A/C
for Benefit CU
Attn: Mutual Funds
101 Montgomery Street
San Francisco, California 94104-4122

Enele & Co.* 162,182 12.56%
Cash Dividend Acct
121 S.W. Morrison Street
Suite 1450
Portland, Oregon 97204-3144

</TABLE>

<PAGE>

EQUITY FUND
<TABLE>
<CAPTION>
Approximate Approximate
Number of Shares Percent of
Beneficial Owners Beneficially Owned Shares
- ----------------- ------------------ -----------
<S> <C> <C>

Charles Schwab 6,005,712 25.80%
& Co., Inc.*
Special Custody A/C
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104-4122

National Financial Services 1,197,604 5.15%
Corp.*
FBO Our Customers
Attn: Mutual Funds
200 Liberty Street, 5th Floor
One World Financial Center
New York, New York 10281-0095

</TABLE>

ASSET ALLOCATION FUND

Approximate Approximate
Number of Shares Percent of
Beneficial Owners Beneficially Owned Shares
- ----------------- ------------------ -----------
<S> <C> <C>

Enele & Co.* 976,352 9.85%
Cash Dividend Account
121 S.W. Morrison
Suite 1450
Portland, Oregon 97204-3144

Enele Co.* 761,636 7.68%
FBO Wealthtrack Operations
Attn: Wealthtrack Opers.
1211 S.W. Fifth Avenue, Suite 1900
Portland, Oregon 97204-3713

Enele Co.* 643,810 6.49%
Dividend Reinvestment
1211 S.W. Fifth Avenue, Suite 1900
Portland, Oregon 97204-3713

</TABLE>

INCOME FUND

Approximate Approximate
Number of Shares Percent of
Beneficial Owners Beneficially Owned Shares
- ----------------- ------------------ -----------
<S> <C> <C>

Enele & Co.* 94,586 20.33%
Dividend Reinvestment
1211 S.W. Fifth Avenue, Suite 1900
Portland, Oregon 97204-3713

<PAGE>

Enele Co.* 81,319 17.48%
FBO Wealthtrack Operations
Attn: Wealthtrack Opers.
1211 S.W. Fifth Avenue, Suite 1900
Portland, Oregon 97204-3713

Klamath Medical Service Bureau* 38,461 8.27%
2500 Daggett Street
P.O. Box 5016
Klamath Falls, Oregon 97601

Enele Co.* 37,483 8.06%
Cash Dividend Acct.
1211 S.W. Fifth Avenue, Suite 1900
Portland, Oregon 97204-3713

</TABLE>

U.S. GOVERNMENT INCOME FUND

Approximate Approximate
Number of Shares Percent of
Beneficial Owners Beneficially Owned Shares
- ----------------- ------------------ -----------
<S> <C> <C>

Enele Co. C/F* 277,716 33.93%
Dividend Reinvestment
121 S.W. Morrison
Suite 1450
Portland, Oregon 97204

Enele Co.* 74,157 9.06%
FBO Wealthtrack Operations
Attn: Wealthtrack Opers.
121 S.W. Fifth Avenue, Suite 1900
Portland, Oregon 97204-3713

State Street Bank and Trust Co. 53,554 6.54%
C/F Beverly M. Hodge
369 Kubli Road
Grants Pass, Oregon 97527

Klamath Medical Service 53,512 6.54%
Bureau
2500 Daggett Street
P.O. Box 5016
Klamath Falls, Oregon 97601

Enele Co.* 51,675 6.31%
Cash Dividend Acct.
1211 S.W. Fifth Avenue, Suite 1900
Portland, Oregon 97204-3713

Tillamook County 41,537 5.07%
Smoker, Inc.
P.O. Box 3120
Bay City, Oregon 97107-9708

</TABLE>

<PAGE>

U.S. GOVERNMENT MONEY MARKET FUND

Approximate Approximate
Number of Shares Percent of
Beneficial Owners Beneficially Owned Shares
- ----------------- ------------------ -----------
<S> <C> <C>

Enele Co.* 9,907,312 23.52%
c/o Pacific Northwest
Trust Company
121 S.W. Morrison
Suite 1450
Portland, Oregon 97204-3144

Verbrugge Farms, Inc. 2,611,954 6.16%
12 Hoffer Road
Wapato, Washington 98951-9519

</TABLE>

-----------------
DISTRIBUTION PLAN
-----------------

The Primary Class of each of the Funds and the Special Fund have adopted a
Rule 12b-1 Plan under the Investment Company Act of 1940 (the "1940 Act").
Under Rule 12b-1, any payments made by the Funds in connection with financing
the distribution of their shares may only be made pursuant to a written plan
describing all aspects of the proposed financing of distribution, and also
requires that all agreements with any person relating to the implementation of
the plan must be in writing. Because some of the payments described below to
be made by the Funds are distribution expenses within the meaning of Rule
12b-1, the Funds have entered into distribution agreements with Crabbe Huson
Securities, Inc. (the "Distributor") that provides for certain payments to the
Distributor pursuant to a distribution plan (the "Plan") adopted in accordance
with such Rule.

Rule 12b-1 requires that the Plan be approved by a majority of each
Fund's outstanding Primary Class shares, or, in the case of the Special Fund,
the Special Fund's outstanding shares, and requires that the Plan, together
with any related agreements, be approved by a vote of the Trustees/Directors
of the Funds who are not interested persons of the Funds and who have no
direct or indirect financial interest in the operation of the Plan or in the
agreements related to the Plan, cast in person at a meeting called for the
purpose of voting on such plan or agreement. The Plan and any agreement
related to it must provide, in substance:

(a) that it shall continue in effect for a period of more
than one year from the date of its execution or adoption only
so long as such continuance is specifically approved at least
annually in the manner described in the Rule;

(b) that any person authorized to direct the disposition
of moneys paid or payable by the Funds pursuant to the Plan or
any related agreement shall provide to the Funds' Board of
Trustees/Directors, and the Trustees/Directors shall review, at
least quarterly, a written report of the amounts so expended
and the purposes for which such expenditures were made; and

(c) in the case of the Plan, that it may be terminated at
any time by a vote of a majority of the members of the Board of
Trustees/Directors of the Fund who are not interested persons
of the Fund and who have no Direct or indirect financial
interest in the operation of the Plan or in any agreements
related to the Plan, or by a vote of a majority of the
outstanding Primary Class voting securities of a Fund.

The Plan may not be amended to increase materially the amount
to be spent for distribution without shareholder approval, and all material
amendments to the Plan must be approved in the manner described in the Rule.

<PAGE>

The Funds may rely upon Rule 12b-1 only if the selection and nomination
of the Funds' disinterested Trustees/Directors is committed to the discretion
of the disinterested Trustees/Directors. Each Fund may implement or continue
a plan pursuant to Rule 12b-1 only if the Trustee/Directors who vote to
approve such implementation or continuation conclude, in the exercise of
reasonable business judgment and in light of their fiduciary duties under
state law, and under Sections 36(a) and (b) of the 1940 Act, that there is a
reasonable likelihood that the plan will benefit the Fund and its
shareholders. The Board of Trustees and the Board of Directors have concluded
that there is a reasonable likelihood that a distribution plan will benefit
each Fund.

Pursuant to the provisions of the Plan, each participating Fund may pay
up to .25% of the average daily net assets of its Primary Class to the
Distributor to reimburse the Distributor for actual expenses incurred in the
distribution and promotion of such Fund's shares.

Expenses for which the Distributor will be reimbursed under the Plan
include, but are not limited to, expenses incurred in the printing of
prospectuses and statements of additional information for persons other than
then-current shareholders, expenses related to preparation and printing of
sales literature, and other distribution-related expenses. Compensation will
be paid out as incurred, on a monthly basis, to the Distributor, and to
broker-dealers, investment advisers, and other financial institutions that
have entered into sales agreements with the Distributor to actively promote
the sale of the Funds shares, and may be paid to investment executives of the
Distributor.

Pursuant to Rule 12b-1 of the Plan, the Funds have entered into
distribution agreements with the Distributor. These agreements obligate the
Distributor to pay certain expenses in connection with the offering of shares
of the Funds, including expenses related to the printing of prospectuses and
statements of additional information, the preparation and printing of sales
literature, and other distribution-related expenses. Shares of the Funds are
offered continuously to the public by the Distributor and broker-dealers who
enter into sales agreements with the Distributor.

During the fiscal year ended October 31, 1995, the Funds paid the
following amounts under the Funds' 12b-1 plan:

<PAGE>

Financial To Adviser for
Printing/Mailing Broker/Dealer Salesperson Institution Literature
Fund Total Advertising Prospectus Payments Payments Payments Expenses
---- ----- ----------- ---------------- ------------ ----------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>

Special Fund $1,701,991 $ 68,080 $919,075 $612,717 $17,020 $85,100 $ --

Real Estate 47,655 1,430 19,539 24,781 -- -- 1,906
Fund

Equity Fund 621,908 18,657 242,544 323,392 12,438 -- 24,876

Asset 303,887 3,039 51,661 243,110 -- -- 6,078
Allocation
Fund

Oregon Tax- 61,567 616 6,772 53,563 -- -- 616
Free Fund

Income Fund 16,337 163 9,475 6,698 -- -- --

U.S. 21,788 654 8,933 11,330 -- -- 872
Government
Income Fund

U.S. 126,599 5,064 63,300 51,906 -- -- 6,330
Government
Money Market
Fund

</TABLE>

----------------------
PORTFOLIO TRANSACTIONS
----------------------

GENERAL CONSIDERATIONS
- ----------------------

The Adviser is responsible for decisions to buy and sell securities for
the Funds, the selection of brokers and dealers to effect the transactions
and the negotiation of brokerage commissions, if any. Purchases and sales of
securities on a securities exchange are effected through brokers who charge a
negotiated commission for their services. Orders may be directed to any
broker. If the Adviser grants investment management authority to a
sub-adviser, the sub-advisers are authorized to place orders for the purchase
and sale of portfolio securities, and will do so in accordance with the
policies described below.

In the over-the-counter market, debt securities are generally traded on
a "net" basis with dealers acting as principal for their own accounts without
a stated commission, although the price of a security usually includes a
profit to the dealer. A Fund may also pay a mark-up (sometimes referred to
as a dealer's "turn") in principal transactions and in transactions in the
over-the-counter market. In underwritten offerings, securities are purchased
at a fixed price which includes an amount of compensation to the underwriter,
generally referred to as the underwriter's concession or discount. On
occasion, certain money market instruments may be purchased directly from an
issuer, in which case no commissions or discounts are paid.

15
<PAGE>

The primary considerations in the selection of a broker or dealer for
portfolio transactions, subject to applicable limitations of the federal
securities laws, are (1) the availability of the desired security, (2) the
prompt execution of orders in an effective manner at the most favorable
prices, (3) the financial condition of the broker-dealer firm and (4)
arrangements for payment of Fund expenses. Subject to those considerations,
dealers that provide supplemental investment research and statistical or
other services to the Adviser may receive orders for portfolio transactions
by the Funds. Such services may include advice concerning the value of
securities; the advisability of purchasing or selling securities; the
availability of securities; purchasers or sellers of securities; and the
furnishing of analysis and reports concerning industries, economic facts and
trends, and portfolio strategies. There is no formula for such allocation.
The research information received from brokers or dealers may or may not be
useful to the Funds and the Adviser in a number of ways. The information may
be in written form or may be obtained through direct contact with
individuals, and may include information on particular issuers as well as
market and general economic information. The Adviser will not be deemed to
have breached its obligations to the Funds solely by reason of having caused
the Funds to pay a broker or dealer an amount of commission for effecting a
securities transaction in excess of the amount of commission another broker
or dealer could have charged for effecting that transaction, if the Adviser
has determined in good faith that such amount of commission was reasonable in
relation to the value of the brokerage and research services provided to the
Funds and to other accounts of the Adviser.

In addition to placing the Funds' brokerage business with firms that
provide the above research, market and statistical services to the Adviser,
the Funds' brokerage business may also be placed with firms that agree to pay
a portion of certain Fund expenses, consistent with achieving the best price
and execution. On November 29, 1995, the Special, Equity, Asset Allocation
and Real Estate Funds entered into an arrangement with State Street Brokerage
Services, Inc. ("SSBSI"), in which these Funds will receive credits to offset
transfer agency, administration and accounting fees by using SSBSI in their
portfolio transactions.

In the fiscal year ended October 31, 1993, the Special Fund paid $113,857,
the Equity Fund paid $115,701, the Asset Allocation Fund paid $225,228, the
Income Fund paid $603, and the U.S. Government Income Fund paid $384 in
brokerage commissions. None of these commissions were paid to the Funds'
Distributor. The Oregon Tax-Free Fund and the U.S. Government Money Market Fund
did not pay any brokerage commissions during the year ended October 31, 1993, as
these Funds executed all portfolio transactions on a principal

<PAGE>

basis. The Real Estate Fund began operations in 1994 and the Small Cap Fund
began operations in 1996.

In the fiscal year ended October 31, 1994, the Special Fund paid
$766,879, the Equity Fund paid $444,904, the Asset Allocation Fund paid
$309,181, the Income Fund paid $3,407, the U.S. Government Income Fund paid
$318, and the Real Estate Fund paid $71,851 in brokerage commissions. None
of these commissions were paid to the Funds' Distributor. The Oregon
Tax-Free Fund and the U.S. Government Money Market Fund did not pay any
brokerage commissions in the year ended October 31, 1994, as these Funds
executed all portfolio transactions on a principal basis. Of the commissions
paid in the fiscal year ending October 31, 1994 the Special Fund paid
$550,799, the Equity Fund paid $253,908, the Asset Allocation Fund paid
$183,915, and the Real Estate Fund paid $60,795 in commissions as a result of
research provided by the brokers. None of the other Funds directed brokerage
on the basis of research provided by a broker. The Small Cap Fund began
operations in 1996.

In the fiscal year ended October 31, 1995, the Special Fund paid
$4,610,652, the Equity Fund paid $1,228,492, the Asset Allocation Fund paid
$279,948, the Income Fund paid $416, the U.S. Government Fund paid $144, and
the Real Estate Fund paid $60,139 in brokerage commissions. None of these
commissions were paid to the Funds' Distributor. The Oregon Tax-Free Fund
and the U.S. Government Money Market Fund did not pay any brokerage
commissions in the year ended October 31, 1995, as these Funds executed all
portfolio transactions on a principal basis. Of the commissions paid in the
fiscal year ending October 31, 1995, the Special Fund paid $1,594,562, the
Equity Fund paid $754,846, the Asset Allocation Fund paid $180,671, and the
Real Estate Fund paid $44,614 in commissions as a result of research provided
by the brokers. None of the other Funds directed brokerage on the basis of
research provided by a broker. The Small Cap Fund began operations in 1996.

Under the 1940 Act, persons affiliated with the Funds are prohibited
from dealing with the Funds as principals in the purchase or sale of
securities. The Funds or broker-dealers affiliated with the Adviser will not
deal with affiliated parties, including the Distributor, in connection with
principal transactions.

The SEC has the authority to issue and amend regulations involving
transactions with affiliates of the Funds. The Funds' Boards of
Trustees/Directors will review all transactions with affiliates at least
quarterly and determine the overall reasonableness of any brokerage
commissions paid.

Even though investment decisions for the Funds are made independently from
those of the other accounts managed by the Adviser or its affiliates, securities
of the same issuer may

<PAGE>

be purchased, held, or sold by the Funds and the other accounts, because the
same security may be suitable for all of them. When the Funds and such other
accounts are simultaneously engaged in purchase or sale of the same security,
efforts will be made to allocate price and amounts in an equitable manner.
In some cases, this procedure may adversely affect the price paid or received
by the Funds or the size of the position purchased or sold by the Funds.

PORTFOLIO TURNOVER
- ------------------

The Funds generally do not trade in securities with the goal of
obtaining short-term profits, but when circumstances warrant, securities will
be sold without regard to the length of time the security has been held.

The Funds anticipate that, except in periods of unusual market
conditions, their annual portfolio turnover rate (the lesser of purchase or
sales of portfolio securities for the year divided by the monthly average of
the value of the portfolio securities owned by the Funds during the year)
will generally range between 20% and 150%, although Funds with smaller
portfolios may have portfolio turnover in excess of this range. However, the
rate of turnover will not be a limiting factor when the Funds deem it
desirable to purchase or sell securities. A higher portfolio turnover rate
may involve correspondingly greater transaction costs, which would be borne
directly by the Funds, as well as additional realized gains and/or losses to
shareholders. The portfolio turnover rates are shown in the financial
statements which are part of this Statement of Additional Information.

--------------------------------------------
INVESTMENT RESTRICTIONS/FUNDAMENTAL POLICIES
--------------------------------------------

The investment restrictions described below and in the Prospectus have
been adopted by the Funds as fundamental investment policies. These
fundamental investment policies may not be changed without the approval of
the holders of the lesser of a majority of a Fund's outstanding shares or 67%
of the shares represented at a meeting of shareholders at which the holders
of more than 50% of the shares are represented.

If a percentage restriction is adhered to at the time of investment, a
later increase or decrease in percentage beyond the specified limit resulting
from a change in values of assets will not be considered a violation of the
investment restrictions relating to purchases of portfolio securities.

Each Fund, except the Special Fund and the Small Cap Fund, is prohibited
from purchasing securities when the total borrowings of that Fund exceed 5%
of its total assets.

The Special, Small Cap, Real Estate, Equity, Asset Allocation, Income and
the U.S. Government Income Funds are

<PAGE>

each prohibited from investing more than 20% of its total assets in fixed
income securities, including convertible stock, that are rated less than
Moody's Baa or S&P BBB, or in commercial paper that is rated less than B-1 by
Moody's or A- by S&P; not more than 5% of each of these Fund's total assets
may be invested in fixed income securities that are unrated. Securities rated
below the fourth highest grade and unrated fixed income securities have
speculative characteristics and additional risks. These are described in
"SPECIAL RISK FACTORS TO BE CONSIDERED" in the Prospectus. The Real Estate
Fund may not invest in securities unrated or rated below the fourth highest
grade. The Oregon Tax-Free Fund may invest in securities rated in the fourth
highest category and above and in unrated securities the Adviser believes to
be similar in investment quality to securities rated in the fourth category
and above.

SPECIAL FUND
- ------------
EQUITY FUND
- -----------
ASSET ALLOCATION FUND
- ---------------------

These Funds may not:

1. Invest an amount that exceeds 5% of the value of a Fund's total
assets in the securities of any one issuer. This restriction
does not apply to holdings of U.S. Government securities.

2. Invest more than 25% of their total assets in any one industry.
This restriction does not apply to holdings of U.S. Government
securities.

3. Issue any senior securities, as defined in the 1940 Act.

4. Purchase the securities of any issuer for the purpose of
exercising control of management, and a Fund may not acquire or
own more than 10% of any class of the securities of any issuer.

5. Sell securities short, except in the case of the Special Fund, as
permitted in the Prospectus.

6. Invest in any security that would subject a Fund to unlimited
liability, although the Special Fund may sell securities short
and the Special, Equity and Asset Allocation may invest in
interest rate and stock market futures.

<PAGE>

7. Underwrite the securities of other issuers or invest more than
10% of net assets in illiquid securities, such as repurchase
agreements with a maturity in excess of seven days.
Notwithstanding the above, these Funds may not invest in
restricted securities (including, but not limited to, nonpublicly
traded debt securities).

8. Invest in securities of other investment companies, except as set
forth in the Statement of Additional Information under
"SECURITIES OF OTHER INVESTMENT COMPANIES."

9. Purchase securities on margin.

10. Write uncovered put or uncovered call options.

11. Purchase portfolio securities from or sell securities directly to
any of a Fund's, or the Adviser's, officers, directors, or
employees as a principal for their own account.

12. Purchase or sell commodities or commodity contracts (stock index
and interest rate futures will not be considered commodity
contracts).

13. Purchase or sell real estate or real estate mortgages, provided
that the Fund may invest in marketable securities, such as
obligations of the Government National Mortgage Association, that
are secured by real estate or interests therein or are issued by
companies which invest in real estate or interests therein, such
as publicly traded real estate investment trusts.

14. Purchase or sell interests in oil, gas, or other mineral
exploration or development programs.

15. Lend portfolio securities, except as described in the Statement
of Additional Information under "LOANS OF PORTFOLIO SECURITIES."

16. Make loans to other persons, provided that, for purposes of this
restriction, the acquisition of bonds, debentures, or other
corporate debt securities and investment in government
obligations, short-term commercial paper, certificates of
deposit, bankers' acceptances, and repurchase agreements will not
be deemed to be the making of a loan.

<PAGE>

17. Borrow money, except in the case of an emergency or as set forth
in the Funds' Prospectus. In no case will a Fund's borrowing
exceed one-third of the value of a Fund's total assets
immediately after any such borrowing. If, for any reason, the
current value of a Fund's total assets falls below an amount
equal to three times the amount of its indebtedness for money
borrowed, a Fund will, within three days (not including
Saturdays, Sundays and holidays), reduce its indebtedness to the
extent necessary to satisfy the one-third test.

18. Invest more than 10% of a Fund's total assets in put or call
options.

19. Invest more than 35% of a Fund's total assets in foreign
securities.

20. Invest more than 10% of a Fund's total assets in stock index
futures.

21. Invest more than 10% of its total assets in interest rate futures
contracts.

SMALL CAP FUND
- --------------

The Fund may not:

1. Invest an amount that exceeds 5% of the value of the Fund's total
assets in the securities of any one issuer. This restriction
does not apply to holdings of U.S. Government securities.

2. Invest more than 25% of its total assets in any one industry.
This restriction does not apply to holdings of U.S. Government
securities.

3. Issue any senior securities, as defined in the 1940 Act.

4. Purchase the securities of any issuer for the purpose of
exercising control of management, and a Fund may not acquire or
own more than 10% of any class of the securities of any issuer.

5. Invest in any security that would subject the Fund to unlimited
liability, although the Fund may invest in interest rate and
stock market futures.

<PAGE>

6. Underwrite the securities of other issuers.

7. Invest more than 5% of its total assets in a combination of
illiquid securities and securities of issuers, including their
predecessors, which have been in existence less than three years.

8. Invest in securities of other investment companies, except as set
forth in the Statement of Additional Information under
"SECURITIES OF OTHER INVESTMENT COMPANIES."

9. Purchase securities on margin.

10. Write uncovered put or uncovered call options.

11. Purchase portfolio securities from or sell securities directly to
any of a Fund's or the Adviser's, officers, directors, or
employees as a principal for their own account.

12. Purchase or sell commodities or commodity contracts (stock index
and interest rate futures will not be considered commodity
contracts).

14. Purchase or sell interests in oil, gas, or other mineral
exploration or development programs.

15. Lend portfolio securities, except as described in the Statement
of Additional Information under "LOANS OF PORTFOLIO SECURITIES."

16. Make loans to other persons, provided that, for purposes of this
restriction, the acquisition of bonds, debentures, or other
corporate debt securities and investment in government
obligations, short-term commercial paper, certificates of deposit
and bankers' acceptances will not be deemed to be the making of a
loan.

<PAGE>

17. Borrow money, except as set forth in the Fund's Prospectus. In
no case will borrowing exceed one-third of the value of the
Fund's total assets immediately after any such borrowing. If,
for any reason, the current value of the Fund's total assets
falls below an amount equal to three times the amount of its
indebtedness for money borrowed, the Fund will, within three days
(not including Saturdays, Sundays and holidays), reduce its
indebtedness to the extent necessary to satisfy the one-third
test.

18. Invest more than 10% of the Fund's total assets in put or call
options.

19. Invest more than 35% of the Fund's total assets in foreign
securities.

20. Invest more than 10% of the Fund's total assets in any
combination of stock index futures and interest rate futures
contracts.

21. Sell securities short, unless such sales are made "against the
box."

22. Purchase or retain the securities of any issuer if the officers
or trustees of the Fund, its advisers or managers, owning
beneficially more than one-half of 1% of the securities of an
issuer together own beneficially more than 5% of the securities
of that issuer.

REAL ESTATE INVESTMENT FUND
- ---------------------------

This Fund may not:

1. With respect to at least 75% of the Fund's total assets, invest
an amount that exceeds 5% of the value of the Fund's total assets
in the securities of any one issuer or invest in more than 10% of
the outstanding voting securities of any one issuer. This
restriction does not apply to holdings of government securities.

2. Issue any senior securities, except as permitted by paragraph 13
below. For purposes of this restriction, the issuance of shares
of stock in multiple classes or series, the purchase or sale of
options, future contracts and options on future contracts,
forward commitments and repurchase agreements entered into in
accordance with the Fund's investment

<PAGE>

policy and the rules and regulations of the SEC, and the pledge,
mortgage or hypothecation of the Fund's assets within the meaning
of paragraph 18 below, are not deemed to be senior securities.

3. Purchase the securities of any issuer for the purpose of
exercising control of management, and the Fund may not acquire
or own more than 10% of any class of the securities of any
company.

4. Sell securities short, unless such sale are made "against the
box."

5. Invest in any security that would subject the Fund to unlimited
liability, although the Fund may invest in interest rate and
stock market futures.

6. Purchase securities on margin.

7. Write uncovered put or uncovered call options.

8. Purchase portfolio securities from or sell securities directly to
any of a Fund's or the Adviser's, officers, directors, or
employees as a principal for their own account.

9. Purchase or sell commodities or commodity contracts (stock index
and interest rate futures will not be considered commodity
contracts).

10. Purchase or sell real estate, real estate limited partnership
interests, or real estate mortgages, provided that the Fund may
invest in securities that are secured by real estate or interests
therein and may purchase and sell mortgage-related securities and
may hold and sell real estate acquired by the Fund as a result of
the ownership of securities.

11. Purchase or sell interests in oil, gas, or other mineral
exploration or development programs.

12. Make loans to other persons, other than loans resulting from the
acquisition of bonds, debentures, or other corporate debt
securities and investment in government obligations, short-term
commercial paper, certificates of deposit, bankers' acceptances,
repurchase agreements (in conformance with the Fund's investment
policy and the rules and

<PAGE>

regulations of the SEC) and the lendingof portfolio
securities, as described under "Loans of Portfolio
Securities" in the Statement of Additional Information as set
forth on the effective date of the Registration Statement.

13. Borrow money, except as set forth below. The Fund may borrow
money from a bank as a temporary measure for extraordinary
defensive purposes in amounts not to exceed 33-1/3% of the Fund's
total assets (including the amount borrowed) taken at market
value. The Fund shall not use leverage to increase income and
will not purchase securities while outstanding borrowings exceed
5% of the Fund's total assets. If, for any reason, the current
value of the Fund's total assets falls below an amount equal to
three times the amount of its indebtedness for money borrowed,
the Fund will, within three days (not including Saturdays,
Sundays and holidays), reduce its indebtedness to the extent
necessary to satisfy the one-third test.

14. Invest more than 10% of its total assets in put or call options.

15. Invest more than 10% of its total assets in stock index or
interest rate futures.

16. Pledge, mortgage or hypothecate its assets, except to secure
indebtedness permitted by paragraph 13, and then only if such
pledging, mortgaging or hypothecating does not exceed 33-1/3% of
the Fund's total assets taken at market value.

17. Invest more than 5% of its total assets in "restricted
securities" (I.E., securities that would be required to be
registered prior to distribution to the public), excluding
restricted securities eligible for resale to certain
institutional investors pursuant to Rule 144A of the Securities
Act of 1933; provided, however, that no more than 15% of the
Fund's total assets may be invested in restricted securities,
including securities eligible for resale under Rule 144A. In
addition, the Fund may invest up to 15% of its net assets in
illiquid investments, which includes securities that are not
readily marketable, repurchase agreements maturing in more than
seven days and privately issued SMBS, based upon a determination
by the Board

<PAGE>
that the SMBS is illiquid. The Board of Directors
shall adopt guidelines and delegate to the Adviser the daily
function of determining and monitoring the liquidity of its
investments. The Board, however, will retain sufficient
oversight and will be ultimately responsible for the
determinations.

18. Invest more than 25% of its total asset value in the purchase of
when-issued and delayed-delivery securities.

OREGON TAX-FREE FUND

This Fund may not:

1. Purchase common stocks, preferred stocks, warrants, or other
equity securities.

2. Purchase securities of any issuer (other than obligations of, or
guaranteed by, the United States Government, its agencies, or
instrumentalities) if, as a result, more than 25% of the value of
the Fund's total assets would be invested in securities of that
issuer. For purposes of this limitation, each governmental
subdivision (I.E., state, territory, possession of the United
States, or any political subdivision of any of the foregoing,
including agencies, authorities, instrumentalities, or similar
entities) will be considered a separate issuer if its assets and
revenues are separate from those of the government body creating
it and the securities are backed only by its own assets and
revenues. In the case of an industrial development bond, if the
security is backed only by the assets and revenues of a
nongovernmental user, then such nongovernmental user will be
deemed to be the sole issuer. However, if an industrial
development bond or governmental issue is guaranteed by a
governmental or some other entity, such guaranty shall be
considered a separate security issued by the guarantor as well as
the nongovernmental user, subject to limited exclusions allowed
by the 1940 Act.

3. With respect to at least 50% of the Fund's total assets, purchase
securities of any issuer (except securities issued or guaranteed
by the United States government or its agencies or
instrumentalities) if, as a result, more than 5% of the value of
the

<PAGE>

Fund's total assets would be invested in securities of that
issuer.

4. Invest more than 10% of the Fund's total assets in securities of
issuers that, with their predecessors, have a record of less than
3 years of continuous operation.

5. Lend its funds or other assets to others (except through the
purchase of debt obligations or repurchase agreements in
accordance with its investment objectives and policies).
Although such loans are not presently intended, this prohibition
will not preclude the Fund from loaning securities to broker-
dealers or other institutional investors if at least 100% cash
collateral is pledged and maintained by the borrower, provided
such security loans may not be made if, as a result, the
aggregate of such loans exceeds 10% of the value of the Fund's
total assets.

6. Borrow money, except from banks as a temporary measure for
extraordinary or emergency purposes, and then only in an amount
up to one-third of the value of its total assets, in order to
meet redemption requests without immediately selling any
portfolio securities. If, for any reason, the current value of
the Fund's total assets falls below an amount equal to three
times the amount of its indebtedness from money borrowed, the
Fund will, within three days (not including Saturdays, Sundays,
and holidays), reduce its indebtedness to the extent necessary to
satisfy the one-third test. The Fund will not borrow for
leverage purposes and will not make any additional investments
while borrowings exceed 5% of the value of its total assets.

7. Pledge, mortgage, or hypothecate its assets, except that, to
secure borrowing permitted by paragraph six above, the Fund may
pledge up to 10% of the value of its total assets.

8. Make short sales of securities, or purchase any securities on
margin except to obtain such short-term credits as may be
necessary for the clearance of transactions.

9. Write, purchase, or sell puts, calls, or combinations thereof,
except rights to resell municipal securities to the persons from
whom they are purchased.

<PAGE>

10. Concentrate more than 25% of the value of its total assets in any
one industry; PROVIDED HOWEVER, that, for purposes of this
limitation, tax-exempt municipal securities and United States
Government obligations are not considered to be part of any
industry. For purposes of this restriction, industrial
development bonds, where the payment of principal and interest is
the ultimate responsibility of companies within the same
industry, are grouped together as one "industry."

11. Purchase or retain the securities of any issuer if those
individual officers or directors of the Fund, the Adviser, each
owning beneficially more than 1/2 of 1% of the securities of such
issuer, together own more than 5% of the securities of such
issuer.

12. Invest in securities subject to legal or contractual restrictions
on resale or in repurchase agreements maturing in more than seven
days if, as a result of such investment, more than 10% of the net
assets of the Fund would be invested in such securities.

13. Invest in companies for the purpose of exercising control or
management.

14. Invest in commodities or commodity futures contracts or oil, gas,
or other mineral exploration or development programs or in real
estate or interests therein.

15. Invest in securities of other investment companies, except as set
forth in the Statement of Additional Information under
"Securities of Other Investment Companies."

16. Underwrite securities issued by others, except to the extent the
Fund may be deemed to be an underwriter under the federal
securities laws, in connection with the disposition of portfolio
securities.

17. Issue senior securities, as defined in the 1940 Act.

INCOME FUND

This Fund may not:

1. Buy or sell common stock.

<PAGE>

2. Issue any senior securities, as defined in the 1940 Act.

3. Sell securities short.

4. Purchase securities on margin.

5. Purchase or sell commodities or commodity contracts (except
interest rate futures contracts as defined in the Statement of
Additional Information).

6. Invest an amount that exceeds 5% of the value of the Fund's total
assets in the securities of any one issuer. This restriction
does not apply to holdings of U.S. Government securities.

7. Invest more than 25% of its total assets in any one industry
(except U.S. Government securities).

8. Purchase the securities of any issuer for the purpose of
exercising control of management, and the Fund may not acquire or
own more than 10% of any class of the securities of any issuer.

9. Invest in any security that would subject the Fund to unlimited
liability.

10. Underwrite the securities of other issuers or invest more than
10% of its net assets in illiquid securities, such as repurchase
agreements with a maturity in excess of seven days.
Notwithstanding the above, the Fund may not invest in restricted
securities (including, but not limited to, nonpublicly traded
debt securities).

11. Invest in securities of other investment companies, except as set
forth in the Statement of Additional Information under the
heading "SECURITIES OF OTHER INVESTMENT COMPANIES."

12. Write uncovered put or uncovered call options.

13. Purchase portfolio securities from or sell securities directly to
any of the Funds', or the Adviser's, officers, directors, or
employees as principal for their own account.

14. Purchase or sell real estate or real estate mortgages, provided
that the Fund may invest

<PAGE>

in marketable fixed income securities
that are secured by real estate or interests therein.

15. Purchase or sell interests in oil, gas, or other mineral
exploration or development programs.

16. Lend portfolio securities, except as described in the Statement
of Additional Information under "LOANS OF PORTFOLIO SECURITIES."

17. Make loans to other persons, provided that, for purposes of this
restriction, the acquisition of bonds, debentures, or other
corporate debt securities and investment in government
obligations, short-term commercial paper, certificates of
deposit, bankers' acceptances, and repurchase agreements will not
be deemed to be the making of a loan.

18. Invest more than 10% of the Fund's total assets in interest rate
futures.

19. Borrow money, except in an emergency. In no case will borrowing
exceed one-third of the value of the Fund's total assets
immediately after any such borrowing. If, for any reason, the
current value of a Fund's total assets falls below an amount
equal to 3 times the amount of its indebtedness for money
borrowed, a Fund will, within 3 days (not including Saturdays,
Sundays and holidays), reduce its indebtedness to the extent
necessary to satisfy the one-third test.

20. Invest more than 35% of the Fund's total assets in foreign
securities.

U.S. GOVERNMENT INCOME FUND

This Fund may not:

1. Buy or sell common stock.

2. Issue any senior securities, as defined in the 1940 Act.

3. Sell securities short.

4. Purchase securities on margin.

5. Invest in any security that would subject the Fund to unlimited
liability.

<PAGE>

6. Underwrite the securities of other issuers or invest more than
10% of its net assets in illiquid securities, such as repurchase
agreements with a maturity in excess of seven days.
Notwithstanding the above, the Fund may not invest in restricted
securities (including, but not limited to, nonpublicly traded
debt securities).

7. Invest in securities of other investment companies.

8. Write uncovered put or uncovered call options.

9. Purchase securities that are other than direct or indirect
obligations of the United States Government or its agencies or
instrumentalities and repurchase agreements with respect to those
obligations.

10. Borrow money, except in an emergency. In no case will borrowing
exceed one-third of the value of a Fund's total assets
immediately after any such borrowing. If, for any reason, the
current value of a Fund's total assets falls below an amount
equal to three times the amount of its indebtedness of money
borrowed, a Fund will, within three days (not including
Saturdays, Sundays and holidays), reduce its indebtedness to the
extent necessary to satisfy the one-third test.

11. Purchase portfolio securities from or sell securities directly to
any of the Funds', or the Adviser's, officers, directors, or
employees as principal for their own account.

12. Purchase or sell commodities or commodity contracts.

13. Lend portfolio securities, except as described in the Statement
of Additional Information under "Loans of Portfolio Securities."

14. Invest more than 10% of the Fund's total assets in repurchase
agreements.

15. Invest more than 25% of the Fund's total assets in government
securities maturing in more than five years.

16. Purchase or sell real estate or real estate mortgages, provided
that the Fund may invest in marketable fixed income securities
that are secured by real estate or interests therein.

<PAGE>

U.S. GOVERNMENT MONEY MARKET FUND

This Fund may not:

1. Buy or sell common stock.

2. Issue any senior securities, as defined in the 1940 Act.

3. Sell securities short.

4. Purchase securities on margin.

5. Purchase or sell commodities or commodity contracts.

6. Invest an amount that exceeds 5% of the value of the Fund's total
assets in the securities of any one issuer (excluding U.S.
Government securities).

7. Invest more than 25% of its total assets in any one industry
(excluding U.S. Government securities).

8. Purchase securities that are other than direct or indirect
obligations of the United States Government or its agencies or
instrumentalities and repurchase agreements with respect to those
obligations.

9. Purchase the securities of any issuer for the purpose of
exercising control of management, and the Fund may not acquire or
own more than 10% of any class of the securities of any issuer.

10. Invest in any security that would subject the Fund to unlimited
liability.

11. Underwrite the securities of other issuers or invest more than
10% of its net assets in illiquid securities, such as repurchase
agreements with a maturity in excess of seven days.
Notwithstanding the above, the Fund may not invest in restricted
securities (including, but not limited to, nonpublicly traded
debt securities).

12. Invest in securities of other investment companies.

13. Write uncovered put or uncovered call options.

<PAGE>

14. Purchase portfolio securities from or sell securities directly to
any of the Funds', or the Adviser's, officers, directors, or
employees as principal for their own account.

15. Purchase or sell real estate or real estate mortgages, provided
that the Fund may invest in marketable securities that are
secured by real estate or interests therein or are issued by
companies which invest in real estate or interests therein, such
as publicly traded real estate investment trusts.

16. Purchase or sell interests in oil, gas, or other mineral
exploration or development programs.

17. Lend portfolio securities, except as described in the Statement
of Additional Information under "LOANS OF PORTFOLIO SECURITIES."

18. Make loans to other persons, provided that, for purposes of this
restriction, the acquisition of bonds, debentures, or other
corporate debt securities and investment in government
obligations, short-term commercial paper, certificates of
deposit, bankers' acceptances, and repurchase agreements will not
be deemed to be the making of a loan.

19. Borrow money, except as set forth in the Funds' Prospectus. In
no case will borrowing exceed one third of the value of a Fund's
total assets immediately after any such borrowing. If, for any
reason, the current value of a Fund's total assets falls below an
amount equal to three times the amount of its indebtedness of
money borrowed, a Fund will, within three days (not including
Saturdays, Sundays and holidays), reduce its indebtedness to the
extent necessary to satisfy the one-third test.

20. Purchase any corporate debt security rated less than AA by S&P or
Aa by Moody's.

21. Purchase any debt security with a maturity in excess of one year
from the date of purchase.

22. Purchase any short-term, unsecured promissory notes of
corporations, including variable amount master demand notes,
which at the date of investment are rated less than A-1 by S&P or
B-1 by Moody's or, if not so rated, which

<PAGE>

the Board has determined are of comparable quality to such rated
securities.

SECURITIES OF OTHER INVESTMENT COMPANIES

The Funds (other than the U.S. Government Income Fund and the U.S.
Government Money Market Fund) may invest in securities of other investment
companies (I.E., mutual funds), provided such investment is in connection with a
merger, consolidation, reorganization, or acquisition of assets, and is
permitted by Section 12 of the 1940 Act (which currently provides that no more
than 10% of the total assets of a Fund may be invested in securities of other
investment companies, no more than 5% of the total assets of a Fund may be
invested in securities of any other single investment company, and no more than
3% of total outstanding voting stock of any one investment company may be
purchased). All such securities must be acquired by a Fund in the open market
in transactions involving no commissions or discounts to a sponsor or dealer
(other than customary brokerage commissions). The issuers of investment company
securities acquired by a Fund are not required to redeem such securities in an
amount exceeding 1% of such issuers' total outstanding securities during any
period of less than 30 days, and a Fund will vote all proxies with respect to
such securities in the same proportion as the vote of all other holders of such
securities.

LOANS OF PORTFOLIO SECURITIES

Loan transactions involve the lending of securities to a broker-dealer or
institutional investor for its use in connection with short sales, arbitrage or
other securities transactions. Loans of portfolio securities of the Funds will
be made, if at all, in strict conformity with applicable federal and state rules
and regulations. The term of any such loans will generally not exceed nine
months.

The Funds will engage in loan transactions only if the following conditions
are met: (1) a Fund must receive at least 100% collateral in the form of cash
or cash equivalents (e.g., U.S. Treasury bills or notes) from the borrower; (2)
the borrower must increase the collateral whenever the market value of the
securities loaned (determined on a daily basis) rises above the level of the
collateral; (3) a Fund must be able to terminate the loan after notice at any
time; (4) a Fund must receive reasonable interest on the loan or a flat fee from
the borrower, as well as amounts equivalent to any dividends, interest or other
distributions on the securities loaned and any increase in the market value of
the securities; (5) a Fund may pay only reasonable custodian fees in connection
with the loan; and (6) voting rights on the securities loaned may pass to the
borrower. If a material event affecting the investment occurs, the directors or

<PAGE>

trustees of a Fund must be able to terminate the loan and vote proxies or enter
into an alternative arrangement with the borrower to enable the directors or
trustees to vote proxies. Excluding items (1) and (2), these practices may be
amended from time to time as regulatory provisions dictate.

While there may be delays in recovery of loaned securities or even a loss
of the securities loaned should the borrower default, loans will be made only to
firms or broker-dealers deemed by the Adviser to be of good standing and will
not be made unless, in the judgment of the Adviser, the consideration to be
earned from such loans would justify the risk. Such loan transactions are
referred to in this section as "qualified loan transactions."

The purpose of a qualified loan transaction is to afford a Fund the
opportunity to continue to earn income on the securities loaned and, at the same
time, to earn income on the collateral held by it. In furtherance of this
purpose, the cash collateral acquired through qualified loan transactions may be
invested in any obligation in which a Fund is authorized to invest in accordance
with its investment objectives. The investment of the cash collateral in other
obligations subjects that investment, as well as the security loaned, to market
forces, I.E., capital appreciation or depreciation, just like any other
portfolio security.

PURCHASE AND REDEMPTION OF FUND SHARES

Information concerning the purchase and redemption of each Fund's shares is
set forth under "INVESTOR SERVICES" in the Funds' Prospectus. Each Fund is
authorized to effect specific redemptions by distributing assets of the
applicable Fund other than cash upon a determination by the Trustees or
Directors that redemption in kind would prevent harm to the Fund as a whole or
that an emergency situation is present.

U.S. GOVERNMENT MONEY MARKET FUND

The U.S. Government Money Market Fund uses the amortized cost method of
valuing its investments, which facilitates the maintenance of the Fund's per
share net asset value at $1.00. The U.S. Government Money Market Fund intends
to maintain its net asset value at a constant one dollar per share, although
there is no assurance that it will be able to do so.

The extent of deviation between the U.S. Government Money Market Fund's net
asset value based upon available market quotations or market equivalents and
$1.00 per share based on amortized cost will be periodically examined by the
Trustees. If such deviation exceeds 1/2 of 1%, the Trustees will promptly
consider what action, if any, will be initiated. In the event the Trustees
determine that a

<PAGE>

deviation exists which may result in material dilution or other unfair
results to investors or existing shareholders, they will cause the U.S.
Government Money Market Fund to take such corrective action as they regard to
be necessary and appropriate to eliminate or reduce to the extent reasonably
practicable such dilution or unfair results. Such action may include the
sale of U.S. Government Money Market Fund instruments prior to maturity to
realize capital gains or losses or to shorten average portfolio maturity;
withholding part or all of dividends or payment of distributions from capital
or capital gains; redemptions of shares in kind; or establishing a net asset
value per share by using available market quotations or equivalents. In
addition, in order to stabilize the net asset value per share at $1.00, the
Trustees have the authority (i) to reduce or increase the number of shares
outstanding on a pro rata basis, and (ii) to offset each shareholder's pro
rata portion of the deviation between the net asset value per share and $1.00
from the shareholder's accrued dividend account or from future dividends.

PRICING OF SECURITIES BEING OFFERED

The Funds are open for business each day the New York Stock Exchange is
open. Each class's offering price and net asset value ("NAV") is normally
calculated as of 4:00 p.m. Eastern Time.

A class's NAV is the value of a single share. The value of a single
share of a class is computed by adding that class's pro rata share of the
value of the applicable Fund's investments, cash and other assets,
subtracting that class's pro rata share of the value of the applicable Fund's
liabilities (including accrued expenses), subtracting the liabilities
allocated to that class, and dividing the result by the number of shares of
that class that are outstanding.

Dividends receivable are treated as assets from the date on which
securities go ex-dividend and interest on bonds is accrued daily.

The value of securities listed or traded on a registered securities
exchange are valued at the last sale price on the day of the computation. This
includes over-the-counter securities for which last sale information is
available. Where last sale information is not available, the best bid price
will be used. Foreign securities are valued on the basis of quotations from the
primary market in which they are traded, and are translated from the local
currency into U.S. Dollars using current exchange rates. Securities and assets
for which market quotations are not readily available are valued at fair value
as determined in good faith by or under the direction of the Board of the Fund.
Such valuations and

<PAGE>

procedures will be reviewed periodically by the Board of the Fund. Each Fund
may retain the services of an outside pricing service to value its portfolio
securities.

YIELD AND PERFORMANCE

The Funds will from time to time advertise or quote their respective yields
and total return performance. These figures are calculated according to SEC
rules standardizing such computations and represent historical data. The
investment return and principal value (except for the U.S. Government Money
Market Fund) will fluctuate so that shares when redeemed may be worth more or
less than their original cost.

The Funds may, from time to time, include in such advertisements or quotes
comparisons of a Fund's yield or total return performance against one or more
indices of stock or bond performance. Such indices include, for example, the
Standard & Poor's 500 Stock Index, Dow Jones Industrial, Value Line Rates, and
the Shearson Lehman Government/Corporate Bond Index.

U.S. GOVERNMENT MONEY MARKET FUND

Current yield is calculated by dividing the net change in the value of an
account of one share during an identified seven calendar-day period by the value
of the one share account at the beginning of the same period ($1.00) and
multiplying that base period return by 365/7, I.E.:

net change in value of account with one share x 365 = Current
- --------------------------------------------- --- Yield
value of account at beginning of period 7

Compounded effective yield is calculated by daily compounding of the base
period return referred to above. This calculation is made by adding 1 to the
base period return, raising the sum to a number equal to 365 divided by 7, and
subtracting 1 from the result, I.E.:

[(base period return + 1) 365/7] -1 = Compounded Effective Yield

The determination of net change in the value of an account for purposes of
the U.S. Government Money Market Fund yield calculations reflects the value of
additional shares purchased with income dividends from the original share, and
income dividends declared on both the original share and such additional shares.
The determination of net change does not reflect realized gains or losses from
the sale of securities or realized appreciation or depreciation. The U.S.
Government Money Market Fund includes unrealized appreciation or depreciation,
as well as unrealized gains or losses, in the determination of actual daily
dividends. Therefore, the

<PAGE>

quoted yields as calculated above may differ from the actual dividends paid.

The U.S. Government Money Market Fund's seven-day yield and effective yield
as of the date of the most recent statement of assets and liabilities included
in this registration statement is 4.98% and 5.11%, respectively.

YIELD

Current yield of the Oregon Tax-Free Fund, the Income Fund and the U.S.
Government Income Fund is calculated by dividing the net investment income per
share earned during an identified 30-day period by the maximum offering price
per share on the last day of the same period, according to the following
formula:

YIELD = 2 [( a-b + 1)6 -1]
---
cd

Where: a = dividends and interest earned during the period.

b = expenses accrued for the period (net of
reimbursements).

c = the average daily number of shares outstanding during
the period that were entitled to receive dividends.

d = the maximum offering price per share on the last day of
the period.

The Funds use generally accepted accounting principles in determining
actual income paid, which differ in some instances from SEC rules for computing
income for the above yield calculations. Therefore, the quoted yields as
calculated above may differ from the actual dividends paid.

The Oregon Tax-Free, Income and U.S. Government Income Funds' yields for
the 30-day period ended the date of the most recent statement of assets and
liabilities included in this registration statement were 7.41%, 5.60%, and
5.17%, respectively.

The Real Estate Fund's yield is computed by dividing the Fund's net
investment income per share during a base period of 30 days, or one month, by
the maximum offering price per share of the Fund on the last day of such base
period in accordance with the following formula:

<PAGE>

YIELD = 2 [( a-b + 1)6 -1]
---
cd

Where: a = interest earned during the period

b = net expenses accrued for the period
c = the average daily number of shares outstanding during
the period that were entitled to receive dividends

d = the maximum offering price per share on the last day of
the period

For purposes of calculating interest earned on debt obligations as provided
in item "a" above:

(i) The yield to maturity of each obligation held by the Fund is computed
based on the market value of the obligation (including actual accrued interest,
if any) at the close of business each day during the 30-day base period, or,
with respect to obligations purchased during the month, the purchase price (plus
actual accrued interest, if any) on settlement date, and with respect to
obligations sold during the month the sale price (plus actual accrued interest,
if any) between the trade and settlement dates.

(ii) The yield to maturity of each obligation is then divided by 360 and
the resulting quotient is multiplied by the market value of the obligation
(including actual accrued interest, if any) to determine the interest income on
the obligation for each day. The yield to maturity calculation has been made on
each obligation during the 30-day base period.

(iii) Interest earned on all debt obligations during the 30-day or one
month period is then totaled.

(iv) The maturity of an obligation with a call provision(s) is the next
call date on which the obligation reasonably may be expected to be called or, if
none, the maturity date.

With respect to the treatment of discount and premium on mortgage or other
receivables-backed obligations which are expected to be subject to monthly
payments of principal and interest ("pay downs"), the Fund accounts for gain or
loss attributable to actual monthly pay downs as an increase or decrease to
interest income during the period. In addition, the Fund may elect (i) to
amortize the discount or premium remaining on a security, based on the cost of
the security, to the weighted average maturity date, if such information is
available, or to the remaining term of the security, if the weighted average
maturity date is not available, or (ii) not to amortize the remaining discount
or premium on a security.

<PAGE>

The Fund's yield for the 30-day period ended the date of the most recent
statement of assets and liabilities included in this registration statement was
4.15%.

The Oregon Tax-Free Fund may publish a tax equivalent yield for Oregon
shareholders that represents the yield that an investor would have to receive on
a fully taxable investment to achieve the same after-tax results at the highest
then- existing marginal combined Oregon and Federal income tax rates, calculated
according to the following formula:

Tax Equivalent Yield = a + c + e + g
--- --- ---
1-b 1-d 1-f

Where: a = that portion of the current yield of the Fund that is exempt
from Federal and Oregon income tax.

b = highest then-existing marginal combined Federal and Oregon
income tax rate.

c = that portion of the current yield of the Fund that is only
exempt from Federal gross income tax.

d = highest then-existing Federal income tax rate.

e = that portion of the current yield of the Fund that is only
exempt from Oregon gross income tax.

f = highest then-existing Oregon income tax rate.

g = that portion of the current yield of the Fund that is not
tax exempt.

The tax equivalent yield for the 30-day period ended the date of the most
recent statement of assets and liabilities included in this registration
statement was 3.83%.

The Oregon Tax-Free Fund may also publish a tax equivalent yield for
residents of Oregon that represents the yield that an investor would have to
receive on a fully taxable investment to achieve the same after-tax results of
the highest then-existing marginal Federal income tax rate, calculated according
to the following formula:

<PAGE>

Tax Equivalent Yield = a + c
---
1-b

Where: a = that portion of the current yield of the Fund that is exempt
from Federal income tax.

b = highest then-existing marginal Federal income tax rate

c = that portion of the current yield of the Fund that is not
tax exempt.

The tax equivalent yield for the Oregon Tax-Free Fund, calculated according
to the above formula, for the 30-day period ended the date of the most recent
statement of assets and liabilities included in this registration statement was
6.34%.

The U.S. Government Income Fund may publish a tax equivalent yield for
residents of Oregon that represents the yield that an investor would have to
receive on a fully taxable investment to achieve the same after-tax results
of the highest then-existing marginal Oregon income tax rate, calculated
according to the following formula:

Tax Equivalent Yield = a + c
---
1-b

Where: a = that portion of the current yield of the Fund that is exempt
from Federal income tax.

b = highest then-existing marginal Oregon income tax rate

c = that portion of the current yield of the Fund that is not
tax exempt.

The tax equivalent yield for the U.S. Government Income Fund, calculated
according to the above formula, for the 30-day period ended October 31, 1995 was
5.17%.

TOTAL RETURN

Each class of the Funds may also publish average annual total return
quotations for recent one, five and ten year periods computed by finding the
average annual compounded rates of return over the one, five and ten year
periods that would equate the initial amount invested to the ending redeemable
value, according to the following formula:

<PAGE>

P(1+T)n = ERV

Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of the 1, 5 or 10 year
periods (or fractional portion thereof)

Total return figures may also be published for recent one, five and ten
year periods where the total return figures represent the percentage return for
the one, five and ten year periods that would equate the initial amount invested
to the ending redeemable value. Total return percentages for periods of less
than one year are usually annualized.

If a class of a Fund has been in effect less than one, five or ten years,
the time period during which the registration statement has been in effect will
be substituted for the period stated.

The average annual total return for the one- and five-year periods and for
the life of the class ended the date of the most recent statement of assets and
liabilities included in this statement was, for the Special Fund, 1.78%, and
23.29%, respectively; for the Equity Fund, 13.37%, and 22.19%, respectively; for
the Asset Allocation Fund, 13.0% and 14.22%, respectively; for the Oregon Tax-
Free Fund, 10.66% and 7.02%, respectively; for the Income Fund, 11.92% and
7.88%, respectively; for the U.S. Government Income Fund, 9.12% and 6.68%,
respectively; and for the U.S. Government Money Market Fund, 5.30% and 4.03%,
respectively. The average annual total return for the Special Fund for the
seven year period ended on the same date was 17.06%. The average annual total
return for the Oregon Tax-Free Fund for the ten-year period ended on the same
date was 7.87%. The average annualized total return for the Real Estate Fund
for the one-year period ended on the same date was 8.31%.

The Small Cap Fund has been in existence less than one year. The
Institutional Class shares of each of the applicable Funds have not yet
advertised total return calculations.

OTHER QUOTATIONS, COMPARISONS AND GENERAL INFORMATION

From time to time, in advertisements, in sales literature, or in reports to
shareholders, the past performance of the Funds may be illustrated and/or
compared with that of other mutual funds with similar investment objectives, and
to stock or other relevant indices. For example, a Fund's total return may be
compared to averages or

<PAGE>

rankings prepared by LIPPER ANALYTICAL SERVICES, INC., a widely recognized
independent service which monitors mutual fund performance; the STANDARD &
POOR'S 500 STOCK INDEX, an unmanaged index of common stocks; or the DOW JONES
INDUSTRIAL AVERAGE, a recognized unmanaged index of common stock of 30
industrial companies listed on the New York Stock Exchange (the "NYSE").
Additional index which a Fund's performance may be compared include Standard
& Poors Mid-Cap 400 Index, Russell 2000 Index, Wilshire 5000 Equity Index,
Morgan Stanley REIT Index and the Lehman Brothers Government/Corporate Bond
Index and the Saloman Bond Indices.

In addition, the performance of the Funds may be compared to alternative
investment or savings vehicles and/or to indexes or indicators of economic
activity, e.g., inflation or interest rates. Performance rankings and
listings reported in newspapers or national business and financial
publications, such as BARRON'S, BUSINESS WEEK, CONSUMER'S DIGEST, CONSUMER'S
REPORT, FINANCIAL WORLD, FORBES, FORTUNE, INVESTOR'S BUSINESS DAILY,
KIPLINGER'S, PERSONAL FINANCE MAGAZINE, MONEY MAGAZINE, the NEW YORK TIMES,
SMART MONEY, USA TODAY, U.S. NEWS AND WORLD REPORT, THE WALL STREET JOURNAL
and WORTH may also be cited (if the Fund is listed in any such publication)
or used for comparison, as well as performance listings and rankings from
various other sources, including BLOOMBERG FINANCIAL SYSTEMS,
CDA/WIESENBERGER INVESTMENT COMPANIES SERVICE, DONOGHUE'S MUTUAL FUND
ALMANAC, INVESTMENT COMPANY DATA, INC., JOHNSON'S CHARTS, KANON BLOCH CARRE &
CO., MICROPAL, INC., MORNINGSTAR, INC., SCHABACKER INVESTMENT MANAGEMENT,
TOWERS DATA SYSTEMS and WEISENBERGER INVESTMENT COMPANIES SERVICE.

In addition, from time to time, quotations from articles from financial
publications, such as those listed above, may be used in advertisements, in
sales literature or in reports to shareholders of the Funds.

DIVIDENDS, DISTRIBUTIONS AND TAXES

GENERAL

Each of the Funds intends to qualify as a regulated investment company
under Part I of Subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code"), but there is no assurance that they will be able to do so. In
other words, each Fund is treated as a separate entity from the other Funds in
the Trust for tax purposes. In general, to qualify for this treatment, the Fund
must, among other things, derive at least 90% of its gross income from
dividends, interest, gains from the sale of securities, and certain related
income; derive less than 30% of its gross income from the sale of securities
held less than three months; invest in securities within certain statutory
limits; and distribute to its shareholders at least 90% of its

<PAGE>

taxable income and 90% of its net exempt interest income, if any, for the
taxable year. If the Fund does not so qualify, it will be treated for tax
purposes as an ordinary corporation and will receive no tax deduction for
payments made to shareholders.

As regulated investment companies, the Funds will be taxed at regular
corporate rates only on the undistributed portion of their net income and
capital gains.

If a Fund is required to pay federal income taxes on any retained Net
Capital Gain (I.E., the excess of net long-term capital gains over net short-
term capital losses and any capital loss carryover), that Fund may elect to
treat such gain as having been distributed to its shareholders. The election
will cause such amounts to be taxed to the shareholders. Each shareholder may
claim a credit against his income taxes equal to such shareholder's
proportionate share of the federal income tax liability that is paid by that
Fund, and will generally be entitled to increase the adjusted tax basis of his
shares in that Fund by the difference between his pro rata share of such gains
and his tax credit.

The Code requires a regulated investment company to pay a nondeductible 4%
excise tax if such company does not distribute at least 98% of its ordinary
income, determined on a calendar year basis, and 98% of its capital gains,
determined, in general, on an October 31 year-end. The tax is generally applied
against the excess of this required distribution over the amount actually
distributed. The Funds intend to distribute an amount of income and capital
gains that is sufficient to avoid imposition of the 4% excise tax.

The value of any shares redeemed by the Funds or repurchased or otherwise
sold may be more or less than the shareholder's tax basis in the shares at the
time the redemption, repurchase or sale is made. Any gain or loss will
generally be taxable for federal income tax purposes. Any loss realized on the
sale, redemption or repurchase of shares of the Funds that have been held by the
shareholder for six months or less will be treated for tax purposes as a long-
term capital loss to the extent of any net long-term capital gains distributions
received by the shareholder with respect to such shares. Losses on the
redemption or on the sale of shares of the Funds are not deductible if, and to
the extent that, within a period beginning 30 days before the date of the
redemption or sale and ending 30 days after such date, the taxpayer acquires
other Fund shares.

The writing of call options and other investment techniques and practices
which some Funds may utilize, as described in the Prospectus under "Fundamental
Policies," may create "straddles" for United States federal income tax purposes
and may affect the character and timing of the

<PAGE>

recognition of gains and losses by such Funds. Such transactions may increase
the amount of short-term capital gain realized by such Funds, which is taxed as
ordinary income when distributed to shareholders.

Dividends paid by the Funds will qualify for the dividends-received
deductions for corporations to the extent they are derived from dividends paid
by domestic corporations.

Distributions, if any, of net long-term capital gains from the sale of the
Funds' securities are taxable to shareholders of the Funds at capital gains
rates, regardless of the length of time the shareholder has owned shares of the
Funds and regardless of whether the distributions are reinvested in shares of
the Funds.

The Funds are required by federal law to obtain from each of their
shareholders certification of the shareholder's correct taxpayer identification
number and certain other information. If a shareholder fails to certify such
number or to provide the necessary information to the Funds, or if the Funds
receive certain notices from the Internal Revenue Service, the Funds will be
required to withhold and pay to the United States Treasury 31% of any
reportable dividends or interest paid to such shareholder.

OREGON TAX-FREE FUND

If the Oregon Tax-Free Fund does not qualify as a regulated investment
company under the Code, it will be treated for tax purposes as an ordinary
corporation and will receive no tax deduction for payments made to shareholders
and will be unable to pay "exempt interest dividends," as discussed in the
Prospectus.

From time to time, proposals have been introduced before Congress and the
Internal Revenue Service for the purpose of restricting or eliminating the
federal income tax exemption for interest on municipal securities, including
private activity bonds. It is likely that similar proposals will be introduced
in the future. If such a proposal were enacted, the availability of municipal
securities for investment by the Fund and the value of the Fund's portfolio
could be adversely affected. In such event, the Fund would re-evaluate its
investment objectives and policies and consider recommending to its
shareholders changes in the structure of the Fund.

Section 147 of the Code prohibits exemption from taxation of interest on
certain governmental obligations paid to persons who are "substantial users"
(or persons related thereto) of facilities financed by such obligations.
"Substantial user" is generally defined to include a "nonexempt person" who is
entitled to use more than 5% of a

<PAGE>

facility financed from the proceeds of industrial development bonds. No
investigation as to the substantial users of the facilities financed by bonds
in the Fund's portfolio will be made by the Fund. Potential investors who may
be, or may be related to, substantial users of such facilities should consult
their tax advisors before purchasing shares of the Fund.

Each distribution is accompanied by a brief explanation of the form and
character of the distribution. The Fund provides each shareholder with an
annual statement of the federal income tax status of all distributions,
including a statement of percentage of the prior year's distributions
designated by the Fund to be treated as tax-exempt interest or long-term
capital gain. The dollar amounts of tax-exempt and taxable dividends and
distributions paid by the Fund that are reported annually to shareholders will
vary for each shareholder, depending upon the size and duration of the
shareholder's investment in the Fund. To the extent that the Fund derives
investment income from taxable interest, it intends to designate as the actual
taxable income the same percentage of each day's dividend as the actual taxable
income bears to the total investment income earned on that day. The percentage
of the dividend designated as taxable (if any), therefore, may vary from day to
day.

Individuals, trusts, and estates who or which are residents of the state
of Oregon will not be subject to the Oregon personal income tax on
distributions from the Fund representing tax-exempt interest paid on municipal
securities issued by the State of Oregon and its political subdivisions.
Distributions to Oregon residents representing earnings of the Fund from
sources other than such tax-exempt interest will be subject to the Oregon
personal income tax. In addition, the Fund anticipates that all distributions
from the Fund, from any source, to corporations subject to the Oregon
Corporation excise tax will be subject to that tax. For purposes of the Oregon
personal income tax and the Oregon corporate excise tax, income from Fund
distributions of interest paid on municipal securities issued by a state, other
than Oregon, and its political subdivisions will be reduced by interest on
indebtedness incurred to carry such securities and expenses incurred to produce
such income.

The Oregon Corporate Excise Tax Act generally taxes corporations on income
received from municipal securities, including those issued by the state of
Oregon and its political subdivisions. Since this Fund is a trust, it would
generally be subject to such a tax. However, the Oregon Department of Revenue
has adopted an administrative rule (Oregon Administrative Rule 150.317,010(10))
which provides that a registered investment company may deduct from its income
an amount equal to the exempt interest dividends paid to its shareholders. The
Fund expects to distribute substantially all of its interest income as dividends
to its

<PAGE>

shareholders and, therefore, does not expect to be liable for Oregon Corporate
Excise tax.

Under the Code, interest on indebtedness incurred or continued to purchase
or carry shares of an investment company paying "exempt interest dividends,"
such as the Fund, is not deductible by the investor. Under rules used by the
Internal Revenue Service, the purchase of shares may be considered to have been
made with borrowed funds even though the borrowed funds are not directly
traceable to the purchase of shares. In addition, under Sections 265 and 291
of the Code, certain financial institutions acquiring shares may be subject to
a reduction in the amount of interest expense that would otherwise be allowable
as a deduction for federal income tax purposes.

FOREIGN TAXES

Certain Funds may be subject to foreign withholding taxes which would
reduce the yield on their investments. Tax treaties between certain countries
and the United States may reduce or eliminate such taxes. It is expected that
shareholders of the Funds who are subject to United States federal income tax
will not be entitled to claim a federal income tax credit or deduction for
foreign taxes paid by the Funds.

Gains and losses realized by any of the Funds on certain transactions,
including sales of foreign debt securities and certain transactions involving
foreign currency, will be treated as ordinary income or loss for federal income
tax purposes to the extent, if any, that such gains or losses are attributable
to changes in exchange rates for foreign currencies. Accordingly,
distributions taxable as ordinary income will include the net amount, if any,
of such foreign exchange gains and will be reduced by the net amount, if any,
of such foreign exchange losses.

If any of the Funds purchases shares in certain foreign investment
entities, called "passive foreign investment companies", it may be subject to
United States federal income tax on a portion of any "excess distribution" or
gain from the disposition of such share, even if such income is distributed as
a taxable dividend by such Fund to its shareholders. Additional charges in the
nature of interest may be imposed on either the Fund or its shareholders in
respect of deferred taxes arising from such distributions or gains.

If any of the Funds were to invest in a passive foreign investment company
with respect to which the Fund elected to make a "qualified electing fund"
election, in lieu of the foregoing requirement, such Fund might be required to
include in income each year a portion of the ordinary earnings and

<PAGE>

net capital gains of the qualified electing fund, even if such amount were not
distributed to such Fund.

OTHER TAX INFORMATION

The information above is only a summary of some of the tax consequences
generally affecting each Fund and its shareholders, and no attempt has been
made to discuss individual tax consequences. In addition to federal income
taxes, shareholders of a Fund may be subject to state and local personal
property taxes. Investors should consult their tax advisors to determine
whether a Fund is suitable for their particular tax situation.

_________________________
SPECIAL INVESTOR SERVICES
_________________________

SYSTEMATIC WITHDRAWAL PLAN. A shareholder owning or purchasing shares of
any Fund having a total value of $5,000 or more may participate in a systematic
withdrawal plan providing regular monthly payments in the amount of $100 or
more (the "Systematic Withdrawal Plan"). An application form containing
details of the Systematic Withdrawal Plan is available upon request from State
Street Bank and Trust Company (the "Transfer Agent"), the Funds' transfer
agent. The Plan is voluntary and may be terminated at any time by the
shareholders.

Income dividends and capital gain distributions on shares of the Funds
held in a Systematic Withdrawal Plan are automatically reinvested in additional
shares of the relevant Fund at net asset value. A Systematic Withdrawal Plan
is not an annuity and does not and cannot protect against loss in declining
markets. Amounts paid to a shareholder from the Systematic Withdrawal Plan
represent the proceeds from redemptions of Fund shares, and the value of the
shareholder's investment in a Fund will be reduced to the extent that the
payments exceed any increase in the aggregate value of the shareholder's shares
(including shares purchased through reinvestment of dividends and
distributions). If a shareholder receives payments that are greater than the
appreciation in value of his or her shares, plus the income earned on the
shares, the shareholder may eventually withdraw his or her entire account
balance. This will occur more rapidly in a declining market. For tax
purposes, depending upon the shareholder's cost basis and date of purchase,
each withdrawal will result in a capital gain or loss. See "DIVIDENDS,
DISTRIBUTIONS AND TAXES" in this Statement of Additional Information and
"TAXES" in the Funds' Prospectus.

The Funds offer certain shareholder services, which are designed to
facilitate investment in their shares. Each of the options is described in the
Funds' Prospectus. All of these special services may be terminated by either
the Funds or the shareholder without any prior written notice.

<PAGE>

SYSTEMATIC EXCHANGE PLAN. The Systematic Exchange Plan allows you to make
regular, systematic exchanges of at least $100 from one Crabbe Huson Fund
account into another Crabbe Huson Fund account. By setting up the plan, you
authorize the Fund and its agents to redeem a set dollar amount or number of
shares from the first account and purchase shares of a second Crabbe Huson
Fund. An exchange transaction is a sale and a purchase of shares for federal
income tax purposes and may result in a capital gain or loss.

To participate in the Systematic Exchange Plan, you must have an initial
account balance of $2,000 in the first account and at least $2,000 in the
second account. Exchanges may be made on any day or days of your choice. If
the amount remaining in the first account is less than the exchange amount you
requested, then the remaining amount will be exchanged. At such time as the
first account has a zero balance, your participation in the plan will be
terminated. You may also terminate the plan by calling or writing the Fund.
Once participation in the plan has been terminated for any reason, to reinstate
the plan you must do so in writing; simply investing additional funds will not
reinstate the plan.

___________________
GENERAL INFORMATION
___________________

Each of the Funds (other than the Special Fund) is a series of Crabbe
Huson Funds, an open-end management investment company organized as a Delaware
business trust by a Declaration of Trust dated October 14, 1995. On November
28, 1995, its name was changed by an amendment to the Declaration of Trust from
the Crabbe Huson Mutual Funds Group to Crabbe Huson Funds. The Small Cap Fund
commenced business as part of the trust in February, 1996. The remainder of
the Funds were Oregon corporations prior to a reorganization which was
completed September 30, 1996. The Special Fund was incorporated under Oregon
law on January 29, 1987. Prior to February 23, 1993, the Special Fund was
called the "Crabbe Huson Growth Fund." Prior to May 28, 1996, the Oregon
Tax-Free Fund was called the "Crabbe Huson Oregon Bond Fund."

The beneficial interests in the Trust are divided into shares, all without
par value of one class. The Trustees have the authority from time to time to
divide the shares into two or more series and further into sub-series or
classes. The Trust currently has eight series: Small Cap Fund; Real Estate
Investment Fund; Equity Fund; Asset Allocation Fund; Oregon Tax-Free Fund;
Income Fund; U.S. Government Income Fund and U.S. Government Money Market Fund.
The Small Cap Fund, Equity Fund and Asset Allocation Fund are further divided
into classes: the Primary Class, the Adviser Class and the Institutional
Class. Only the Primary Class

<PAGE>

and the Institutional Class are currently being offered for sale to the public.

The assets of the Trust received from the sale or issue of shares of each
Fund and all income, earnings, profits and proceeds thereof, subject only to
the rights of creditors, are especially allocated to such Fund, and constitute
the underlying assets of such Fund. The underlying assets of each Fund are
segregated on the books of account, and are to be charged with the liabilities
with respect to such Fund and with a share of the general expenses of the
Trust. Expenses with respect to the Trust are to be allocated in proportion to
the asset value of the respective Fund, except where allocations of direct
expense can otherwise be fairly made. The Board of Trustees has the power to
determine which expenses are allocable to all of the Funds. Expenses of the
Small Cap, Equity and Asset Allocation Funds are further allocated among the
Primary Class and the Institutional Class pursuant to a Rule 18f-3 Plan adopted
by the Trustees. In the event of the dissolution or liquidation of the Trust,
shareholders of each Fund are entitled to receive as a class the underlying
assets of such Fund available for distribution.

In each matter submitted to a vote of the shareholders of the Trust, each
shareholder shall be entitled to one vote for each dollar of net asset value
held by the shareholder. Each series will vote separate from another series,
except as required by the 1940 Act, in which case the series may vote together.
As to a matter which does not affect the interests of a particular series or
class, only the holders of shares of the one or more affected series or class
shall be entitled to vote. Dividends, distributions and redemptions of shares
of the Trust are to be paid as set forth in the Prospectus. Shareholders do
not have preemptive rights or any conversion rights. Liquidation of a Fund
must be approved by two-thirds of the outstanding voting securities of that
Fund.

The Special Fund has an authorized capital of 100 million shares of common
stock. All shares of the Special Fund are of the same class. Shareholders of
the Special Fund are entitled to one vote for each full share held and
fractional votes for fractional shares held. Shareholders of the Special Fund
vote on the election of directors and any other matter submitted to a
shareholder vote. Shares issued are fully paid and nonassessable, and have no
preemptive or conversion rights. Each share is entitled to participate equally
in dividends and distributions declared, and in the net assets upon liquidation
or dissolution after satisfaction of outstanding liabilities.

<PAGE>

_______
COUNSEL
_______

The law firm of Davis Wright Tremaine, Portland, Oregon, will pass on
certain legal matters in connection with the issuance of shares of the Funds
and will also act as counsel to the Funds and as counsel to the Adviser and the
Distributor in connection with their relationship with the Funds and certain
matters.

________
AUDITORS
________

KPMG Peat Marwick LLP, Portland, Oregon, acts as the Funds' independent
auditors. In such capacity, KPMG Peat Marwick LLP performs the annual audit of
each Fund's financial statements and assists in the preparation of tax returns.

_______________________________________________________
CUSTODIAN, TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT
_______________________________________________________

Investors Fiduciary Trust Co. serves as the custodian (the "Custodian") of
the Funds' cash and securities. State Street Bank and Trust Company serves as
the Funds' transfer agent and dividend-disbursing agent (the "Transfer Agent").
Boston Financial Data Services serves as the Transfer Agent's Servicing Agent
in carrying out the Transfer Agent's responsibilities to the Funds. The
Transfer Agent processes requests for the purchase or redemption of a Fund's
shares, sends statements of ownership to shareholders, and performs other
administrative duties on behalf of the Funds. Neither the Custodian nor the
Transfer Agent plays any role in establishing the investment policies of the
Funds or in determining which securities are to be purchased or sold by the
Funds. All fees and expenses of the Custodian and the Transfer Agent are paid
by the Funds. For its custodial services to the Funds, the Custodian receives
monthly fees based upon the Funds' month-end, aggregate net asset value, plus
certain charges for securities transactions. For its services as transfer
agent and dividend-disbursing agent, the Transfer Agent receives fees from the
Funds based upon the number of shareholder accounts maintained and the number
of transactions effected. The Custodian and the Transfer Agent are also
reimbursed by the Funds for out-of-pocket expenses, including the expense of
clerical and administrative services provided to the Funds.

The Distributor and the Funds have also entered into various shareholder
servicing agreements in which certain broker-dealers, financial institutions,
depository institutions, and other financial intermediaries (collectively,
"Financial Intermediaries") have agreed to perform certain sub-transfer agent
and shareholder servicing functions on behalf of the Funds for clients and
customers of

<PAGE>

such Financial Intermediaries who beneficially own shares in the Funds. The
fees paid to such Financial Intermediaries will vary depending upon the
services provided.

________________________________
ADDITIONAL INFORMATION REGARDING
CERTAIN INVESTMENTS BY THE FUNDS
________________________________

GOVERNMENT SECURITIES

The taxable fixed-income obligations in which the Funds may invest on a
short-term basis may include obligations issued or guaranteed by the United
States government, its agencies, instrumentalities, or authorities. Any such
obligations in which the Funds invest will consist of bills, notes, and bonds
issued by the United States Treasury or obligations issued by other agencies of
the United States Government. Examples of other government agencies in whose
obligations the Funds may invest include Federal Home Loan Intermediate Credit
banks, Federal Land Banks, Federal Home Loan Banks, and the Federal National
Mortgage Association. Obligations issued by the United States Treasury are
guaranteed by the full faith and credit of the United States Government.
Obligations issued by other federal agencies are direct obligations of such
agencies and are not guaranteed by the United States Government.

MUNICIPAL SECURITIES (Oregon Tax-Free Fund)

The term "municipal securities," as used in this Statement of Additional
Information, means obligations issued by or on behalf of states, territories
and possessions of the United States and the District of Columbia and their
political subdivisions, agencies, or instrumentalities or multi-state agencies,
or authorities. These obligations are issued to fund various public projects
(such as construction of airports, highways, bridges, schools, and housing),
refund outstanding municipal obligations, obtain funds for general operating
expenses, and for loans to other public institutions and facilities. Municipal
securities are of varying maturities and differ in investment quality,
depending upon the credit worthiness of the obligation's issuer.

The two principal classifications of municipal securities are "general
obligation bonds" and "revenue bonds." General obligation bonds are secured by
the issuer's pledge of its full credit and taxing power for the payment of
principal and interest. Revenue bonds are payable only from the revenues
derived from a particular facility or class of facilities or project or, in a
few cases, from the proceeds of a special excise or other tax, but are not
supported by the issuer's power to levy general taxes.

<PAGE>

One type of revenue bond is the "private activity bond" (formerly referred
to as "industrial development bonds"). These obligations are issued by a
governmental or quasi-governmental issuer, but all or a major portion of the
proceeds realized upon the sale of these obligations are used, directly or
indirectly, to fund the trade or business of a private enterprise, generally by
financing the acquisition of a facility to be used by that enterprise. The
payment of principal and interest on private activity bonds is dependent on the
ability of the private enterprise to meet those obligations and is usually
secured by an interest in the financed facility or in payments, such as lease
payments, received with respect to that property. The issuer of the bonds does
not pledge its full credit and taxing power for the payment of principal and
interest. Under current federal income laws, the interest received on certain
small issues and obligations used to finance certain exempt facilities which
may be leased to or used by persons other than the issuer is exempt from
federal income tax. The Oregon Tax-Free Fund intends to purchase tax-exempt
private activity bonds if, in the opinion of the Adviser, such obligations are
appropriate for the Fund's securities portfolios. No limit has been placed
upon the amount of private activity bonds that may be purchased by the Oregon
Tax-Free Fund, and a significant percentage of the Oregon Tax-Free Fund's total
assets may be invested in such obligations. However, no more than 25% of the
Oregon Tax-Free Fund's total assets may be invested in private activity bonds
where the payment of principal and interest is the ultimate responsibility of
companies within the same industry.

________________________
SPECIAL INVESTMENT RISKS
________________________

FOREIGN SECURITIES. The Special, Small Cap, Equity, Asset Allocation and
Income Funds may invest up to 35% of their total assets in foreign securities,
which may or may not be traded on an exchange. These Funds may purchase
securities issued by issuers in any country. Securities of foreign companies
are frequently denominated in foreign currencies, and these Funds may
temporarily hold uninvested reserves in bank deposits in foreign currencies.
As a result, these Funds will be affected favorably or unfavorably by changes
in currency rates and in exchange control regulations, and they may incur
expenses in connection with conversion between various currencies. Subject to
their investment restrictions, these Funds may invest in other investment
companies that invest in foreign securities. These Funds do not expect to
invest more than 5% of their respective assets in such investment companies.

<PAGE>

portion of these taxes is recoverable, the non-recovered portion of any foreign
withholding taxes would reduce the income the affected Fund received from any
foreign investments.

Foreign investments involve certain risks, such as political or economic
instability of the issuer or of the country of the issuer, difficulty of
predicting international trade patterns, and the possibility of imposition of
exchange controls. Such securities may also be subject to greater fluctuations
in price than securities of domestic corporations or of the United States
Government. In addition, the net asset value of these Funds is determined and
shares of these Funds can be redeemed only on days during which securities are
traded on the NYSE. However, foreign securities held by these Funds may be
traded on Saturdays or other holidays when the NYSE is closed. Accordingly,
the net asset value of these Funds may be significantly affected on days when
an investor has no access to these Funds.

FUTURES CONTRACTS. When a Fund purchases a futures contract, it agrees to
purchase a specified underlying instrument at a specified future date. When a
Fund sells a futures contract, it agrees to sell the underlying instrument at a
specified future date. The price at which the purchase and sale will take
place is fixed when a Fund enters into the contract. Some currently available
futures contracts are based on specific securities, such as U.S. Treasury bonds
or notes, and some are based on indices of securities prices, such as the
Standard & Poor's Composite Index of 500 Stocks (S&P 500) or the Bond Buyer
Municipal Bond Index. Futures can be held until their delivery dates, or can
be closed out before then if a liquid secondary market is available.

The value of a futures contract tends to increase and decrease in tandem
with the value of its underlying instrument. Therefore, purchasing futures
contracts will tend to increase a Fund's exposure to positive and negative
price fluctuations in the underlying instrument, much as if it had purchased
the underlying instrument directly. When a Fund sells a futures contract, by
contrast, the value of its

<PAGE>

futures position will tend to move in a direction contrary to the market.
Selling futures contracts, therefore, will tend to offset both positive and
negative market price changes, much as if the underlying instrument had been
sold.

PURCHASE PUT AND CALL OPTIONS. By purchasing a put option, a Fund obtains
the right (but not the obligation) to sell the option's underlying instrument
at a fixed strike price. In return for this right, the Fund pays the current
market price for the option (known as the option premium). Options have
various types of underlying instruments, including specific securities, indices
of securities prices, and futures contracts. A Fund may terminate its position
in a put option it has purchased by allowing it to expire or by exercising the
option. If the option is allowed to expire, the fund will lose the entire
premium it paid. If the fund exercises the option, it completes the sale of
the underlying instrument at the strike price. A Fund may also terminate a put
option position by closing it out in the secondary market at its current price,
if a liquid secondary market exists.

The buyer of a typical put option can expect to realize a gain if the
price of the underlying security falls substantially. However, if the
underlying instrument's price does not fall enough to offset the cost of
purchasing the option, a put buyer can expect to suffer a loss (limited to the
amount of the premium paid, plus related transaction costs).

The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right to
purchase, rather than sell, the underlying instrument at the option's strike
price. A call buyer typically attempts to participate in potential price
increases of the underlying instrument with risk limited to the cost of the
option if security prices fall. At the same time, the buyer can expect to
suffer a loss if security prices do not rise sufficiently to offset the cost of
the option.

WRITING PUT AND CALL OPTIONS. When a Fund writes a put option, it takes
the opposite side of the transaction from the option's purchaser. In return
for receipt of the premium, the Fund assumes the obligation to pay the strike
price for the option's underlying instrument if the other party to the option
chooses to exercise it. A Fund may seek to terminate its position in a put
option it writes before exercise by closing out the option in the secondary
market at its current price. If the secondary market is not liquid for a put
option a Fund has written, however, the Fund must continue to be prepared to
pay the strike price while the option is outstanding, regardless of price
changes, and must continue to set aside assets to cover its position.

<PAGE>

If security prices rise, a put writer would generally expect to profit,
although its gain would be limited to the amount of the premium it received.
If security prices remain the same over time, it is likely that the writer will
also profit, because it should be able to close out the option at a lower price.
If security prices fall, the put writer would expect to suffer a loss. This
loss should be less than the loss from purchasing the underlying instrument
directly, however, because the premium received for writing the option should
mitigate the effects of the decline.

Writing a call option obligates a Fund to sell or deliver the option's
underlying instrument, in return for the strike price, upon exercise of the
option. The characteristics of writing call options are similar to those of
writing put options, except that writing calls generally is a profitable
strategy, if prices remain the same or fall. Through receipt of the option
premium, a call writer mitigates the effects of a price decline. At the same
time, because a call writer must be prepared to deliver the underlying
instrument in return for the strike price, even if its current value is
greater, a call writer gives up some ability to participate in security price
increases.

COMBINED POSITIONS. A Fund may purchase and write options in combination
with each other, or in combination with futures or forward contracts, to adjust
the risk and return characteristics of the overall position. For example, a
fund may purchase a put option and write a call option on the same underlying
instrument, in order to construct a combined position whose risk and return
characteristics are similar to selling a futures contract. Another possible
combined position would involve writing a call option at one strike price and
buying a call option at a lower price, in order to reduce the risk of the
written call option in the event of a substantial price increase. Because
combined options positions involve multiple trades, they result in higher
transaction costs and may be difficult to open and close out.

CORRELATION OF PRICE CHANGES. Because there are a limited number of types
of exchange-traded options and futures contracts, it is likely that the
standardized contracts available will not match a Fund's current or anticipated
investments exactly. A Fund may invest in options and futures contracts based
on securities with different issuers, maturities, or other characteristics from
the securities in which it typically invests, which involves a risk that the
options or futures position will not track the performance of a fund's other
investments.

Options and futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments match a Fund's
investments well. Options and futures prices are affected by such factors as

<PAGE>

current and anticipated short-term interest rates, changes in volatility of the
underlying instrument, and the time remaining until expiration of the contract,
which may not affect security prices the same way. Imperfect correlation may
also result from differing levels of demand in the options and futures markets
and the securities markets, from structural differences in how options and
futures and securities are traded, or from imposition of daily price
fluctuation limits or trading halts. A Fund may purchase or sell options and
futures contracts with a greater or lesser value than the securities it wishes
to hedge or intends to purchase in order to attempt to compensate for
differences in volatility between the contract and the securities, although
this may not be successful in all cases. If price changes in a Fund's options
or futures positions are poorly correlated with its other investments, the
positions may fail to produce anticipated gains or result in losses that are
not offset by gains in other investments.

LIQUIDITY OF OPTIONS AND FUTURES CONTRACTS. There is no assurance a
liquid secondary market will exist for any particular options or futures
contract at any particular time. Options may have relatively low trading
volume and liquidity if their strike prices are not close to the underlying
instrument's current price. In addition, exchanges may establish daily price
fluctuation limits for options and futures contracts, and may halt trading if a
contract's price moves up or down more than the limit in a given day. On
volatile trading days when the price fluctuation limit is reached or a trading
halt is imposed, it may be impossible for a Fund to enter into new positions or
close out existing positions. If the secondary market for a contract is not
liquid because of price fluctuation limits or otherwise, it could prevent
prompt liquidation of unfavorable positions, and potentially could require a
fund to continue to hold a position until delivery or expiration regardless of
changes in its value. As a result, a fund's access to other assets held to
cover its options or futures positions could also be impaired.

OTC OPTIONS. Unlike exchange-traded options, which are standardized with
respect to the underlying instrument, expiration date, contract size, and
strike price, the terms of over-the-counter options (OTC) (options not traded
on exchanges) generally are established through negotiation with the other
party to the option contract. While this type of arrangement allows a fund
greater flexibility to tailor an option to its needs, OTC options generally
involve greater credit risk than exchange-traded options, which are guaranteed
by the clearing organization of the exchanges where they are traded.

ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS. A fund will comply with
guidelines established by the SEC with respect to coverage of options and
futures strategies by

<PAGE>

mutual funds, and if the guidelines so require will set aside appropriate
liquid assets in a segregated custodial account in the amount prescribed.
Securities held in a segregated account cannot be sold while the futures or
option strategy is outstanding, unless they are replaced with other suitable
assets. As a result, there is a possibility that segregation of a large
percentage of a fund's assets could impede portfolio management or the fund's
ability to meet redemption requests or other current obligations.

____________________
FINANCIAL STATEMENTS
____________________

Following are the financial statements for the Funds.

<PAGE>

THE CRABBE HUSON SPECIAL FUND, INC.

SCHEDULE OF INVESTMENTS

April 30, 1996
(Unaudited)

SHARES OR
FACE VALUE SECURITIES DESCRIPTION MARKET VALUE
- ----------- ---------------------- ------------
COMMON STOCK - 67.4%
COMMON STOCK - 87.7%
BASIC MATERIALS - 6.8%
791,600 Battle Mountain Gold .............................. $ 7,025,450
182,200* Pegasus Gold, Inc ................................. 2,596,350
5,133,800* Rollins Environmental Services .................... 13,476,225
2,021,000* Sante Fe Pacific Gold Co .......................... 30,062,375
------------
53,160,400
------------
CONSUMER CYCLICALS - 14.4%
1,462,000* Ann Taylor ......................................... 25,036,750
2,307,800* Bombay Co, Inc .................................... 26,828,176
1,272,900* Burlington Coat Factory ........................... 13,842,788
1,407,600 Cato Corp - Class A ............................... 13,372,200
24,000* Dress Barn, Inc .................................... 261,000
2,379,700* Payless Cashways, Inc ............................. 9,816,264
1,692,600 Phillips-Van Heusen ............................... 22,426,950
------------
111,584,128
------------
CONSUMER STAPLES - 5.9%
963,200 Fleming Companies .................................. 13,244,000
352,400* Fred Meyer, Inc ................................... 10,131,500
679,200 Hudson Foods Inc - Class A ........................ 8,999,400
592,400* Paragon Trade Brands, Inc ......................... 13,847,350
------------
46,222,250
------------
ENERGY - 11.1%
243,500* Falcon Drilling Company, Inc ....................... 6,544,062
916,900* Forcenergy Gas Exploration ........................ 12,836,600
931,800* Forest Oil Corp .................................... 11,239,838
588,700 Holly Corp ........................................ 15,894,900
1,372,200* Oryx Energy Co .................................... 21,955,200
1,979,800 Snyder Oil Corp ................................... 17,818,200
------------
86,288,800
------------
FINANCIAL - 4.0%
397,100* Citation Insurance Group .......................... 1,638,037
620,700* Risk Capital Holdings, Inc ........................ 12,336,412
581,900* Zurich Reinsurance Centre ......................... 17,529,738
------------
31,504,187
------------
HEALTHCARE - 12.0%
1,452,800* Coventry Corp ..................................... 28,148,000
347,600* Grancare, Inc ..................................... 6,256,800
373,100* Horizon/CMS Healthcare Corp ........................ 4,943,575
1,145,500 Integrated Health Services ........................ 31,501,250
1,473,800* Sun Healthcare Group, Inc ........................ 22,291,225
------------
93,140,850
------------

*Non-income producing security.

See accompanying notes to financial statements.

59
<PAGE>

THE CRABBE HUSON SPECIAL FUND, INC.

SCHEDULE OF INVESTMENTS

April 30, 1996
(Unaudited)

SHARES OR
FACE VALUE SECURITIES DESCRIPTION MARKET VALUE
- ----------- ---------------------- ------------
COMMON STOCK - (continued)
INDUSTRIALS - 19.2%
851,800* Century Aluminum Co ............................... $ 12,564,050
1,032,500 Crompton & Knowles Corp ........................... 15,874,688
810,800 Giddings & Lewis, Inc ............................. 15,050,475
509,600 Huntco, Inc ....................................... 8,981,700
749,300 Longview Fibre Co ................................. 13,206,412
2,331,800* Lytton Minerals, Ltd ............................... 6,795,057
1,557,000* MK Rail Corp ...................................... 7,785,000
1,465,100* Morrison Knudsen Corp ............................. 2,014,513
1,103,100 Oregon Steel Mills, Inc ........................... 17,511,713
635,500 Stewart & Stevenson Services ....................... 18,667,812
332,800 TJ International, Inc ............................. 5,740,800
1,246,300 Wabash National Corp .............................. 24,614,424
------------
148,806,644
------------
REAL ESTATE INVESTMENT TRUST - 2.4%
1,626,600* Catellus Development Corp ......................... 14,842,725
321,200 Crown American Realty ............................. 2,409,000
92,000 Prime Retail, Inc ................................. 1,035,000
------------
18,286,725
------------
TECHNOLOGY - 0.8%
58,600* Sequent Computer Systems ........................... 857,025
589,388* Zenith Electronics Corp ........................... 5,525,512
------------
6,382,537
------------
TRANSPORTATION - 11.1%
1,154,300 Airborne Freight Corp ............................. 30,444,662
707,100 Hunt (JB) Transportation Services, Inc ............ 14,407,163
620,800* Landstar System, Inc .............................. 17,072,000
308,900 Teekay Shipping Corp .............................. 8,571,975
115,900 TNT Freightways Corp .............................. 2,622,237
1,077,200* Yellow Corp ....................................... 13,195,700
------------
86,313,737
------------

Total Common Stocks 681,690,258
------------

OPTIONS - 1.0%
PUT OPTIONS - 1.0%
14,269,406 Morgan Stanley High Tech Index @ 350,
expiring 6/21/96................................... 2,278,824
15,804,779 Morgan Stanley High Tech Index @ 316,
expiring 6/21/96................................... 728,600
15,384,615 Morgan Stanley High Tech Index @ 325,
expiring 6/21/96................................... 1,089,231
45,839,300 Morgan Stanley High Tech Index @ 327,
expiring 6/21/96................................... 3,465,451
------------
7,562,106
------------

*Non-income producing security.

See accompanying notes to financial statements.

60
<PAGE>

THE CRABBE HUSON SPECIAL FUND, INC.

SCHEDULE OF INVESTMENTS

April 30, 1996
(Unaudited)

SHARES OR
FACE VALUE SECURITIES DESCRIPTION MARKET VALUE
- ----------- ---------------------- ------------
SHORT TERM INVESTMENTS - 3.2%
DISCOUNT NOTE - 1.7%
$ 13,325,000 Federal Home Loan Bank 5.300%** 5/01/96 ............ $ 13,325,000
------------

INVESTMENT COMPANY - 1.5%
11,620,043 Seven Seas Money Market Fund 5.040%*** ............. 11,620,043
------------

Total Short Term Investments 24,945,043
------------

Total Investments - 91.9% 714,197,407
(Cost $684,495,304)
Cash - 0% 7,202
------------

SECURITIES SOLD SHORT - (12.8%)
COMMON STOCKS
TECHNOLOGY - (12.8%)
72,900 Micro Warehouse, Inc .............................. (3,134,700)
163,900 Sun Microsystems, Inc ............................. (8,891,575)
138,600 America Online, Inc ................................ (8,870,400)
203,900 Compaq Computers, Corp ............................. (9,506,838)
584,800 Cypress Semiconductor ............................. (8,260,300)
62,000 Microchip Technology, Inc ......................... (1,581,000)
695,800 Gartner Group, Inc - Class A ...................... (23,831,150)
636,700 Tellabs, Inc ...................................... (35,177,675)
------------
(99,253,638)
------------

Total Securities Sold Short - (12.8%) (99,253,638)
------------
(Proceeds $70,381,440)

Other Assets and (Liabilities), Net - 20.9% 162,537,517
------------
TOTAL NET ASSETS - 100.0% $777,488,488
------------
------------

**Rate reflects purchase yield to maturity
***Rate reflects 7 day yield as of April 30, 1996.

See accompanying notes to financial statements.

<PAGE>

CRABBE HUSON SMALL CAP FUND

SCHEDULE OF INVESTMENTS

April 30, 1996
(Unaudited)

SHARES OR
FACE VALUE SECURITIES DESCRIPTION MARKET VALUE
- ---------- ---------------------- ------------
COMMON STOCK - 67.4%
BASIC MATERIALS - 3.6%
10,000* Battle Mountain Gold ................................ $ 88,750
3,300* Pegasus Gold, Inc ................................... 47,025
34,000* Rollins Environmental Services ...................... 89,250
------------
225,025
------------
CONSUMER CYCLICALS - 11.4%
16,000* Bombay Co, Inc ...................................... 186,000
7,400* Burlington Coat Factory ............................. 80,475
12,300 Cato Corp - Class A ................................. 116,850
4,800* Dress Barn, Inc ..................................... 52,200
28,100* Payless Cashways, Inc ............................... 115,913
12,600 Phillips-Van Heusen ................................. 166,950
------------
718,388
------------
CONSUMER STAPLES - 6.6%
14,500 Fleming Companies ................................... 199,375
6,500 Hudson Foods Inc - Class A ......................... 86,125
9,100* Suiza Foods Corp .................................... 129,675
------------
415,175
------------
ENERGY - 8.7%
8,400* Forcenergy Gas Exploration .......................... 117,600
8,500 Forest Oil Corp ..................................... 102,531
3,900 Holly Corp .......................................... 105,300
7,300* Oryx Energy Co ...................................... 116,800
11,900 Snyder Oil Corp ..................................... 107,100
------------
549,331
------------
FINANCIAL - 2.9%
4,600* Risk Capital Holdings, Inc ......................... 91,425
3,000* Zurich Reinsurance Centre .......................... 90,375
------------
181,800
------------
HEALTHCARE - 15.0%
5,700* Coventry Corp....................................... 110,438
5,700* Grancare, Inc ...................................... 102,600
15,500* Horizon/CMS Healthcare Corp ........................ 205,375
10,400* Integrated Health Services ......................... 286,000
15,800* Sun Healthcare Group, Inc ......................... 238,975
------------
943,388
------------

*Non-income producing security.

See accompanying notes to financial statements.

<PAGE>

CRABBE HUSON SMALL CAP FUND

SCHEDULE OF INVESTMENTS

April 30, 1996
(Unaudited)

SHARES OR
FACE VALUE SECURITIES DESCRIPTION MARKET VALUE
- ---------- ---------------------- ------------
COMMON STOCK - (continued)
INDUSTRIALS - 11.5%
4,600* Century Aluminum Co................................. $ 67,850
6,600 Crompton & Knowles Corp ............................ 101,475
5,300 Giddings & Lewis, Inc .............................. 98,381
7,200 Oregon Steel Mills, Inc ............................ 114,300
3,400 Stewart & Stevenson Services ....................... 99,875
5,500 TJ International, Inc .............................. 94,875
7,300 Wabash National Corp ............................... 144,175
------------
720,931
------------
TECHNOLOGY - 3.2%
6,000* Sequent Computer Systems ........................... 87,750
12,200* Zenith Electronics Corp ............................ 114,375
------------
202,125
------------
TRANSPORTATION - 4.6%
4,600 Hunt (JB) Transportation Services., Inc ............ 93,725
3,600* Landstar System, Inc ............................... 99,000
300 TNT Freightways Corp ............................... 6,787
7,100* Yellow Corp......................................... 86,975
------------
286,487
------------

Total Common Stocks 4,242,650
------------

SHORT TERM INVESTMENTS - 27.0%
DISCOUNT NOTE - 26.6%
$1,675,000 Federal Home Loan Bank 5.300%** 5/01/96 ............ 1,675,000
------------

INVESTMENT COMPANY - 0.3%
19,468 Seven Seas Money Market Fund 5.040%*** ............. 19,468
------------

Total Short Term Investments 1,694,468
------------

Total Investments - 94.4% 5,937,118
(Cost $5,469,127)
Cash - 4.4% 275,474
Other Assets and (Liabilities), Net - 1.2% 77,539
------------

TOTAL NET ASSETS - 100.0% $ 6,290,131
------------
------------

*Non-income producing security.
**Rate reflects purchase yield to maturity.
***Rate reflects 7 day yield as of April 30, 1996.

See accompanying notes to financial statements.

<PAGE>

THE CRABBE HUSON ASSET ALLOCATION FUND, INC.
SCHEDULE OF INVESTMENTS
April 30, 1996
(UNAUDITED)

SHARES OR MARKET
FACE VALUE SECURITIES DESCRIPTION VALUE
- ---------- ----------------------------------------- -------
FIXED INCOME SECURITIES - 38.8%
AGENCIES - 5.5%
$ 420,000 International Bank For Reconstruction &
Development Floater 5.890%** 8/07/97................... $ 387,853
------------
1,500,000 Student Loan Marketing Association Treasury
Floater 3.840% 2/11/98 ............................... 1,469,985
900,000 Federal National Mortgage Association 6.080% 9/25/00... 883,179
1,200,000 Federal National Mortgage Association 8.250% 12/18/00.. 1,277,220
550,000 Tennessee Valley Authority 6.125% 7/15/03.............. 530,062
1,000,000 Federal Home Loan Bank 7.590% 3/10/05.................. 1,039,070
1,000,000 Federal National Mortgage Association 7.375% 3/28/05... 1,025,190
925,000 Federal National Mortgage Association 5.875% 2/02/06... 851,056
800,000 Interamerican Development Bank 6.125% 3/08/06.......... 751,000
------------
8,214,615
------------
CMO - 0.8%
1,324,091 Greenwich Capital Acceptance Inc. 1993 - PO1- B........ 1,230,577
------------
CORPORATE BONDS - 8.8%
600,000 Baxter International 7.500% 5/01/97.................... 606,000
500,000 Hertz Corp 8.300% 2/02/98.............................. 514,375
500,000 GMAC 8.000% 10/01/99................................... 519,375
550,000 Upjohn Co 5.875% 4/15/00............................... 533,500
550,000 Pepsico, Inc 5.875% 6/01/00............................ 533,500
400,000 American Express Credit 6.500% 8/01/00................. 393,500
700,000 Ford Motor Credit 6.250% 11/08/00...................... 683,375
725,000 GMAC 9.000% 10/15/02................................... 797,500
550,000 IBM Corp 7.250% 11/01/02............................... 559,625
550,000 JP Morgan & Company 7.625% 9/15/04..................... 564,438
550,000 Pacific Bell 6.250% 3/01/05............................ 519,750
550,000 Anheuser Busch 7.000% 9/01/05.......................... 544,500
700,000 US West Communications 6.625% 9/15/05.................. 676,375
550,000 Bear Stearns Co. 6.875% 10/01/05....................... 530,750
600,000 Snap-on, Inc 6.625% 10/01/05........................... 582,750
900,000 Walt Disney Company Global 6.750% 3/30/06.............. 876,375
550,000 Sysco Corp 7.000% 5/01/06.............................. 546,562
770,000 Dupont 8.250% 9/15/06.................................. 833,525
600,000 Wal-Mart Stores 8.000% 9/15/06 ........................ 636,000
550,000 Eli Lilly 8.375% 12/01/06.............................. 602,938
600,000 AT&T Corp 7.750% 3/01/07............................... 626,250
550,000 GTE South 6.000% 2/15/08............................... 496,375
------------
13,177,338
------------

**Zero-coupon bond rate reflects purchase yield to maturity.

See accompanying notes to financial statements.

<PAGE>

THE CRABBE HUSON ASSET ALLOCATION FUND, INC.
SCHEDULE OF INVESTMENTS
April 30, 1996
(UNAUDITED)

SHARES OR MARKET
FACE VALUE SECURITIES DESCRIPTION VALUE
- ---------- ----------------------------------------- -------
FIXED INCOME SECURITIES - (CONTINUED)
FHLMC - 2.6%

$ 108,325 FHLMC Pool #281037 9.250% 11/01/16 .................... $ 114,077
988,377 FHLMC Pool #303033 9.000% 4/01/17 ..................... 1,032,904
1,376,268 FHLMC Pool #D65456 7.000% 11/01/25 .................... 1,329,172
1,336,751 FHLMC Pool #C80344 7.500% 9/01/25 ..................... 1,322,916
------------
3,799,069
------------
GOVERNMENT BONDS - 21.1%
2,430,000 U.S. Treasury Note 5.000% 1/31/98 ..................... 2,388,787
9,790,000 U.S. Treasury Note 5.125% 2/28/98 ..................... 9,634,731
4,380,000 U.S. Treasury Note 6.125% 3/31/98 ..................... 4,385,519
2,340,000 U.S. Treasury Note 6.250% 8/31/00 ..................... 2,325,141
4,600,000 U.S. Treasury Note 5.625% 2/28/01 ..................... 4,448,706
1,660,000 U.S. Treasury Note 6.500% 8/15/05 ..................... 1,636,063
725,000 U.S. Treasury Note 6.875% 8/15/25 ..................... 715,872
6,750,000 U.S. Treasury Note 6.000% 2/15/26 ..................... 5,996,565
------------
31,531,384
------------
Total Fixed Income Securities 57,952,983
------------

COMMON STOCK - 55.0%
BASIC MATERIALS - 4.7%

30,800 Browning-Ferris Industries ............................ 993,300
81,000 Hanson PLC, ADR ....................................... 1,225,125
65,300 Homestake Mining ...................................... 1,314,163
82,500 Laidlaw, Inc. - Class B .............................. 866,250
48,600* Methanex Corp ......................................... 384,243
65,900 WMX Technologies, Inc ................................. 2,290,025
------------
7,073,106
------------
CONSUMER CYCLICALS - 6.2%
9,800 Dayton-Hudson Corp ..................................... 935,900
39,000 General Motors Corp .................................... 2,115,750
41,400 Liz Claiborne, Inc ..................................... 1,505,925
6,900 Lowe's Companies ....................................... 223,388
81,900* Price/Costco, Inc ...................................... 1,556,100
2,000 Reebok International LTD ............................... 58,000
6,500 Singer Co .............................................. 168,188
72,800 Sunbeam Corp ........................................... 1,010,100
67,700 Wal-Mart Stores, Inc ................................... 1,616,337
------------
9,189,688
------------
CONSUMER STAPLES - 2.2%
53,900 American Greetings Corp - Class A ...................... 1,488,988
19,600 Dean Foods ............................................. 458,150
36,700 Quaker Oats ............................................ 1,261,562
------------
3,208,700
------------
ADR - American Depositary Receipt.
*Non-income producing security.
See accompanying notes to financial statements.

<PAGE>

THE CRABBE HUSON ASSET ALLOCATION FUND, INC.
SCHEDULE OF INVESTMENTS
April 30, 1996
(UNAUDITED)

SHARES OR MARKET
FACE VALUE SECURITIES DESCRIPTION VALUE
- ---------- ----------------------------------------- -------
COMMON STOCK - (CONTINUED)
ENERGY - 9.7%
31,900 Apache Corp ........................................... $ 925,100
77,800 Burlington Resources, Inc ............................. 2,898,050
44,000 Dresser Industries, Inc ............................... 1,402,500
33,700 Enron Oil & Gas ....................................... 893,050
76,500 Enserch Corp .......................................... 1,644,750
105,600* Enserch Exploration ................................... 1,148,400
103,700 Occidental Petroleum Corp ............................. 2,670,275
26,600 Tenneco, Inc .......................................... 1,459,675
52,300 Union Texas Petroleum Holdings, Inc ................... 1,013,313
9,800 Unocal Corp ........................................... 314,825
------------
14,369,938
------------
FINANCIAL - 4.3%
109,000 Equitable Companies ................................... 2,575,125
24,648* ITT Hartford Group, Inc ............................... 1,202,325
35,800 Salomon, Inc .......................................... 1,454,375
38,100 U.S. Bancorp .......................................... 1,233,487
------------
6,465,312
------------
HEALTHCARE - 1.1%
66,700* Humana, Inc ........................................... 1,642,488
------------
INDUSTRIALS - 12.2%
188,500* Bethlehem Steel Corp .................................. 2,568,312
18,400 Champion International Corp ........................... 887,800
60,200* Detroit Diesel Corp ................................... 1,151,325
165,700 Domtar, Inc ........................................... 1,263,463
50,000 J & L Specialty Steel ................................. 906,250
103,400 Louisiana Pacific Corp ................................ 2,597,925
31,900 Lubrizol Corp ......................................... 925,100
135,600* National Steel Corp - Class B ......................... 1,847,550
31,700 Nucor Corp ............................................ 1,783,125
26,100 Trinova Corp .......................................... 920,025
130,200* USG Corp .............................................. 3,401,475
------------
18,252,350
------------
REAL ESTATE INVESTMENT TRUST - 1.1%
38,200 First Industrial Realty Trust ......................... 912,025
31,100 Spieker Properties .................................... 808,600
------------
1,720,625
------------
TECHNOLOGY - 7.0%
72,200 Apple Computers, Inc .................................. 1,759,875
20,800* Dell Computer Corp .................................... 954,200
24,700 Intel Corp ............................................ 1,673,425
56,600* Silicon Graphics ...................................... 1,676,775
180,400* Tandem Computers, Inc ................................. 2,300,100

*Non-income producing security.
See accompanying notes to financial statements.

<PAGE>

THE CRABBE HUSON ASSET ALLOCATION FUND, INC.
SCHEDULE OF INVESTMENTS
April 30, 1996
(UNAUDITED)

SHARES OR MARKET
FACE VALUE SECURITIES DESCRIPTION VALUE
- ---------- ----------------------------------------- -------
COMMON STOCK - (CONTINUED)
TECHNOLOGY - (CONTINUED)
33,500 Texas Instruments ..................................... $ 1,892,750
26,165* Zenith Electronics Corp ............................... 245,297
------------
10,502,422
------------
TELECOMMUNICATIONS - 3.3%
11,300 Comcast Corp Special - Class A ........................ 197,750
51,703* Cox Communications, Inc - Class A ..................... 1,059,911
110,800* U.S. West Media Group ................................. 2,160,600
80,700 Westinghouse Electric Corp ............................ 1,523,212
------------
4,941,473
------------
TRANSPORTATION - 2.2%
7,000 Burlington Northern Santa Fe .......................... 612,500
101,900 Consolidated Freightways .............................. 2,662,138
------------
3,274,638
------------
UTILITIES - 1.0%
68,800 Pacificorp ............................................ 1,376,000
------------
Total Common Stocks 82,016,740
------------
SHORT TERM INVESTMENTS - 5.2%
AGENCY - 0.7%
$1,000,000 Federal Home Loan Bank 5.180%*** 5/24/96............... 996,703
------------
INVESTMENT COMPANY - 3.8%
5,707,648 Seven Seas Money Market Fund 5.040%**** ............... 5,707,648
------------
TREASURY BILLS - 0.7%
1,000,000 U.S. Treasury Bill 5.050%*** 10/17/96.................. 975,960
------------
Total Short Term Investments 7,680,311
------------
Total Investments - 99.0% 147,650,034
(Cost $140,507,606)
Cash - 0.9% 1,332,715
Other Assets and (Liabilities), Net - 0.1% 102,002
------------

TOTAL NET ASSETS - 100.0% $149,084,751
------------
------------
*Non-income producing security.
***Rates reflect purchase yield to maturity.
****Rate reflects 7 day yield as of April 30, 1996.
See accompanying notes to financial statements.

<PAGE>
THE CRABBE HUSON EQUITY FUND, INC.
SCHEDULE OF INVESTMENTS
April 30, 1996
(Unaudited)

FACE VALUE
OR SHARES SECURITIES DESCRIPTION MARKET VALUE
- ---------- ----------------------------------------------------- ------------
COMMON STOCK - 90.7%
BASIC MATERIALS - 7.8%
166,300 Browning-Ferris Industries .......................... $ 5,363,175
423,500 Hanson PLC, ADR ..................................... 6,405,438
356,100 Homestake Mining .................................... 7,166,513
477,300 Laidlaw, Inc - Class B .............................. 5,011,650
265,800 * Methanex Corp ....................................... 2,101,481
354,900 WMX Technologies, Inc ............................... 12,332,775
-----------
38,381,032
-----------
CONSUMER CYCLICALS - 10.1%
53,600 Dayton-Hudson Corp .................................. 5,118,800
213,300 General Motors Corp ................................. 11,571,525
239,000 Liz Claiborne, Inc .................................. 8,693,625
44,300 Lowe's Companies .................................... 1,434,212
419,100 * Price/Costco, Inc ................................... 7,962,900
9,000 Reebok International Ltd ............................ 261,000
35,400 Singer Co ........................................... 915,975
375,500 Sunbeam Corp ........................................ 5,210,063
343,200 Wal-Mart Stores, Inc ................................ 8,193,900
-----------
49,362,000
-----------
CONSUMER STAPLES - 3.4%
283,900 American Greetings Corp - Class A ................... 7,842,738
113,600 Dean Foods Co ....................................... 2,655,400
187,000 Quaker Oats ......................................... 6,428,125
-----------
16,926,263
-----------
ENERGY - 15.6%
151,400 Apache Corp ......................................... 4,390,600
413,100 Burlington Resources, Inc ........................... 15,387,975
241,600 Dresser Industries, Inc ............................. 7,701,000
176,800 Enron Oil & Gas ..................................... 4,685,200
594,100 Enserch Corp ........................................ 6,460,837
347,000 * Enserch Exploration ................................. 7,460,500
508,400 Occidental Petroleum Corp ........................... 13,091,300
160,900 Tenneco, Inc ........................................ 8,829,387
359,000 Union Texas Petroleum Holdings, Inc ................. 6,955,625
49,300 Unocal Corp ......................................... 1,583,762
-----------
76,546,186
-----------
FINANCIAL - 7.9%
588,200 Equitable Companies ................................. 13,896,225
151,900 * ITT Hartford Group, Inc ............................. 7,424,112
239,600 Salomon, Inc ........................................ 9,733,750
244,300 U.S. Bancorp ........................................ 7,909,213
-----------
38,963,300
-----------

ADR - American Depositary Receipt
*Non-income producing security.
See accompanying notes to financial statements.

<PAGE>

THE CRABBE HUSON EQUITY FUND, INC.
SCHEDULE OF INVESTMENTS
April 30, 1996
(Unaudited)
FACE VALUE
OR SHARES SECURITIES DESCRIPTION MARKET VALUE
- ---------- ----------------------------------------------------- ------------
COMMON STOCK - (continued)
HEALTHCARE - 1.7%
330,900 * Humana, Inc ......................................... $ 8,148,413
-----------
INDUSTRIALS - 19.3%
1,026,000 * Bethlehem Steel Corp ................................ 13,979,250
101,500 Champion International Corp ......................... 4,897,375
310,900 * Detroit Diesel Corp ................................. 5,945,962
889,000 Domtar, Inc ......................................... 6,778,625
277,400 J & L Specialty Steel ............................... 5,027,875
556,700 Louisiana Pacific Corp .............................. 13,987,087
73,000 Lubrizol Corp ....................................... 2,117,000
660,400 * National Steel Corp - Class B ....................... 8,997,950
164,100 Nucor Corp .......................................... 9,230,625
150,000 Trinova Corp ........................................ 5,287,500
700,000 * USG Corp ............................................ 18,287,500
-----------
94,536,749
-----------
REAL ESTATE INVESTMENT TRUST - 2.1%
169,300 First Industrial Realty Trust ....................... 4,042,038
248,100 Spieker Properties .................................. 6,450,600
-----------
10,492,638
-----------
TECHNOLOGY- 11.6%
387,600 Apple Computers, Inc ................................ 9,447,750
112,400 * Dell Computer Corp .................................. 5,156,350
139,600 Intel Corp .......................................... 9,457,900
287,800 * Silicon Graphics .................................... 8,526,075
983,900 * Tandem Computers, Inc ............................... 12,544,725
184,400 Texas Instruments ................................... 10,418,600
134,265 * Zenith Electronics Corp ............................. 1,258,734
-----------
56,810,134
-----------
TELECOMMUNICATIONS - 6.3%
92,000 BCE, Inc ............................................ 3,622,500
138,700 Comcast Corp Special - Class A ...................... 2,427,250
264,219 * Cox Communications, Inc - Class A ................... 5,416,490
596,200 * US West Media Group ................................. 11,625,900
406,800 Westinghouse Electric Corp .......................... 7,678,350
-----------
30,770,490
-----------
TRANSPORTATION - 5.0%
58,600 * AMR Corp ............................................ 5,230,050
51,700 Burlington Northern Santa Fe ........................ 4,523,750
553,200 Consolidated Freightways ............................ 14,452,350
-----------
24,206,150
-----------
Total Common Stocks 445,143,355
-----------

*Non-income producing security.
See accompanying notes to financial statements.

<PAGE>
THE CRABBE HUSON EQUITY FUND, INC.
SCHEDULE OF INVESTMENTS
April 30, 1996
(Unaudited)

FACE VALUE
OR SHARES SECURITIES DESCRIPTION MARKET VALUE
- ---------- ----------------------------------------------------- ------------
SHORT TERM INVESTMENTS - 8.9%%
DISCOUNT NOTES** - 7.2%
FEDERAL FARM CREDIT - 0.3%
$1,545,000 5.190% 5/30/96 ...................................... $ 1,538,541
-----------
FEDERAL HOME LOAN - 6.9%
5,820,000 5.300% 5/01/96 ...................................... 5,820,000
2,210,000 5.170% 5/02/96 ...................................... 2,209,683
100,000 5.180% 5/03/96 ...................................... 99,971
120,000 4.930% 5/07/96 ...................................... 119,901
960,000 5.240% 5/08/96 ...................................... 959,022
4,000,000 5.160% 5/09/96 ...................................... 3,995,413
705,000 4.960% 5/10/96 ....................................... 704,098
5,340,000 5.150% 5/13/96 ...................................... 5,330,789
5,000,000 5.180% 5/14/96 ...................................... 4,990,647
2,635,000 5.170% 5/15/96 ...................................... 2,629,651
255,000 4.980% 5/20/96 ...................................... 254,330
1,545,000 5.180% 5/24/96 ...................................... 1,539,907
885,000 5.060% 5/28/96 ...................................... 881,641
55,000 4.910% 6/03/96 ...................................... 54,753
1,370,000 5.560% 6/10/96 ...................................... 1,362,602
375,000 5.100% 7/01/96 ...................................... 371,759
290,000 5.150% 7/15/96 ...................................... 286,889
260,000 5.150% 7/17/96 ...................................... 257,136
180,000 4.890% 7/19/96 ...................................... 178,069
905,000 4.990% 7/22/96 ...................................... 894,714
625,000 4.850% 7/23/96 ...................................... 618,011
250,000 5.190% 8/12/96 ...................................... 246,288
230,000 5.180% 8/14/96 ...................................... 226,525
80,000 5.120% 9/18/96 ...................................... 78,407
-----------
34,110,206
-----------
INVESTMENT COMPANY - 1.6%
7,780,434 Seven Seas Money Market Fund 5.040%*** .............. 7,780,434
-----------
TREASURY BILLS & NOTES** - 0.0%
U. S. TREASURY BILL
175,000 5.260% 10/17/96 ..................................... 170,793
-----------
Total Short Term Investments 43,599,974
-----------
Total Investments - 99.6% 488,743,329
(Cost $441,995,516)
Cash - 0.3% 1,405,102
Other Assets and (Liabilities), Net - 0.1% 860,173
-----------

TOTAL NET ASSETS - 100.0% $491,008,604
-----------
-----------

**Rates reflect purchase yield to maturity.
***Rate reflects 7 day yield as of April 30, 1996.
See accompanying notes to financial statements.

<PAGE>

THE CRABBE HUSON REAL ESTATE INVESTMENT FUND, INC.
SCHEDULE OF INVESTMENTS
April 30, 1996
(Unaudited)

SHARES OR
FACE VALUE SECURITIES DESCRIPTION MARKET VALUE
- ---------- -------------------------------------------------------------------------------- ------------
<C> <S> <C>
COMMON STOCK - 89.7%
REAL ESTATE INVESTMENT TRUST - 89.7%
APARTMENT - 32.2%
4,400 AMLI Residential Properties..................................................... $ 87,450
15,000 Camden Property Trust........................................................... 356,250
23,500 Columbus Realty Trust........................................................... 461,188
25,000 Equity Residential Properties Trust............................................. 806,250
8,500 Mid-America Apartment Communities............................................... 224,187
15,000 Oasis Residential, Inc.......................................................... 337,500
30,000 Pacific Gulf Properties, Inc.................................................... 525,000
22,500 Paragon Group, Inc.............................................................. 399,375
37,500 Prime Residential, Inc.......................................................... 679,688
21,000 Smith Charles Residential....................................................... 488,250
43,500 SouthWest Property Trust........................................................ 592,687
38,500 Town & Country Trust............................................................ 539,000
------------
5,496,825
------------
INDUSTRIAL - 12.7%
15,900 Carramerica Realty Corp......................................................... 385,575
5,000 Colonial Properties Trust....................................................... 120,000
15,500 Duke Realty Investments......................................................... 459,188
25,400 Security Capital Industrial..................................................... 438,150
5,000 Storage USA, Inc................................................................ 165,625
6,000 Trinet Corporate Realty Trust .................................................. 171,750
17,800 Weeks Corp...................................................................... 433,875
------------
2,174,163
------------
LODGING - 6.4%
23,150 Felcor Suite Hotels, Inc........................................................ 674,243
12,500 Starwood Lodging Trust.......................................................... 414,062
------------
MALLS - 9.7%
------------
62,800 DeBartolo Realty Corp........................................................... 973,400
15,000 General Growth Properties....................................................... 350,625
32,750 Taubman Centers, Inc............................................................ 323,406
------------
1,647,431
------------

OUTLET CENTERS - 8.2%
22,000 HGI Realty, Inc................................................................. 451,000
63,000 Prime Retail, Inc............................................................... 708,750
10,000 Tanger Factory Outlet Center.................................................... 245,000
------------
1,404,750
------------
</TABLE>

See accompanying notes to financial statements.

<PAGE>
THE CRABBE HUSON REAL ESTATE INVESTMENT FUND, INC.
SCHEDULE OF INVESTMENTS
April 30, 1996
(Unaudited)

Total Common Stock 15,316,206
------------

SHORT TERM INVESTMENTS - 8.5%
INVESTMENT COMPANY - 5.0%
$ 852,963 Seven Seas Money Market Fund 5.04%* ............................................ 852,963
------------

REPURCHASE AGREEMENT - 3.5%
603,906 State Street Bank & Trust Company** 4.00% 5/1/96 ............................... 603,906
------------

Total Short Term Investments 1,456,869
------------

Total Investments - 98.2% 16,773,075
(Cost $15,763,542)
Cash - 0% 4,179
Other Assets and (Liabilities), Net - 1.8% 304,601
------------

TOTAL NET ASSETS - 100.0% $ 17,081,855
------------
------------
</TABLE>

*Rate reflects 7 day yield as of April 30, 1996.
**The repurchase agreement, dated 4/30/96, $603,972 due 5/1/96 is collateralized
by $600,000 Federal Farm Credit Note, 6.64%, 5/18/98.
See accompanying notes to financial statements.

<PAGE>

THE CRABBE HUSON INCOME FUND, INC.
SCHEDULE OF INVESTMENTS
April 30, 1996
(Unaudited)

<TABLE>
<CAPTION>
FACE VALUE SECURITIES DESCRIPTION MARKET VALUE
- ---------- -------------------------------------------------------------------------------- ------------
<S> <C> <C>
FIXED INCOME SECURITIES - 99.0%
AGENCIES - 14.9%
$ 320,000 International Bank For Reconstruction & Development Floater
6.170%* 8/7/97.................................................................. $ 295,507
300,000 FHLMC Strips 11/15/99 .......................................................... 238,815
100,000 Tennessee Valley Authority 6.125% 7/15/03 ...................................... 96,375
200,000 FNMA 5.875% 2/02/06 ............................................................ 184,012
50,000 Interamerican Development Bank 6.125% 3/08/06................................... 46,937
------------
861,646
------------

CORPORATE BONDS - 29.3%
100,000 Baxter International 7.500% 5/01/97 ........................................... 101,000
100,000 GMAC 8.000% 10/01/99 .......................................................... 103,875
100,000 Upjohn Company 5.875% 4/15/00 .................................................. 97,000
100,000 Pepsico, Inc 5.875% 6/01/00 .................................................... 97,000
100,000 American Express Credit 6.500% 8/01/00 ......................................... 98,375
100,000 IBM Corp 7.250% 11/01/02 ....................................................... 101,750
100,000 JP Morgan & Company 7.625% 9/15/04 ............................................. 102,625
100,000 Pacific Bell 6.250% 3/01/05 .................................................... 94,500
100,000 Anheuser Busch 7.000% 9/01/05 .................................................. 99,000
100,000 Bear Stearns Co 6.875% 10/01/05 ............................................... 96,500
100,000 Snap-on, Inc 6.625% 10/01/05 .................................................. 97,125
100,000 Walt Disney Company Global 6.750% 3/30/06....................................... 97,375
100,000 Sysco Corp 7.000% 5/01/06....................................................... 99,375
100,000 Wal-Mart Stores 8.000% 9/15/06 ................................................. 106,000
100,000 Eli Lilly 8.375% 12/01/06 ...................................................... 109,625
100,000 AT&T Corp 7.750% 3/01/07 ...................................................... 104,375
100,000 GTE South 6.000% 2/15/08 ....................................................... 90,250
------------
1,695,750
------------
GOVERNMENT BONDS - 36.0%
130,000 U.S. Treasury Note 5.000% 1/31/98 .............................................. 127,795
820,000 U.S. Treasury Note 5.125% 2/28/98 .............................................. 806,995
280,000 U.S. Treasury Note 6.125% 3/31/98 .............................................. 280,353
150,000 U.S. Treasury Note 5.625% 2/28/01 .............................................. 145,067
810,000 U.S. Treasury Note 6.000% 2/15/26 .............................................. 719,588
------------
2,079,798
------------
INSURED BONDS - 2.7%
160,000 City of Lincoln Oregon 5.800% 6/01/97 (AMBAC) ................................. 159,584
------------
</TABLE>

*Zero-coupon bond rate reflects purchase yield to maturity.
See accompanying notes to financial statements.

<PAGE>

THE CRABBE HUSON INCOME FUND, INC.
SCHEDULE OF INVESTMENTS
April 30, 1996
(Unaudited)

<TABLE>
<CAPTION>
FACE VALUE SECURITIES DESCRIPTION MARKET VALUE
- ---------- -------------------------------------------------------------------------------- ------------
<S> <C> <C>
FIXED INCOME SECURITIES - (CONTINUED)
MORTGAGE PASS-THROUGH SECURITIES - 16.1%
$ 79,665 FNMA Pool #30333 9.250% 9/01/16 ............................................... $ 83,621
119,133 FHLMC Pool #302029 9.500% 10/01/16 ............................................ 126,516
169,497 FHLMC Pool #303033 9.000% 4/01/17 ............................................. 177,134
239,866 FHLMC Pool #301538 10.000% 7/01/17 ............................................ 261,032
142,630 FHLMC Pool #C80344 7.500% 09/01/25 ............................................ 141,155
147,457 FHLMC Pool #D65456 7.000% 11/01/25 ............................................ 142,411
------------
931,869
------------

Total Fixed Income Securities 5,728,647
------------

SHORT TERM INVESTMENTS - 1.9%
INVESTMENT COMPANY - 1.9%
108,115 Seven Seas U.S. Government Money Market Fund
4.980%** ....................................................................... 108,115
------------

Total Investments - 100.9% 5,836,762
(Cost $5,832,291)
Cash - 0% 402
Other Assets and (Liabilities), Net - (0.9)% (52,313)
------------

TOTAL NET ASSETS - 100.0% $ 5,784,851
------------
------------
</TABLE>

**Rate reflects 7 day yield as of April 30, 1996.
See accompanying notes to financial statements.

<PAGE>

THE OREGON MUNICIPAL BOND FUND, INC.
SCHEDULE OF INVESTMENTS
April 30, 1996
(Unaudited)
<TABLE>
<CAPTION>

FACE VALUE SECURITIES DESCRIPTION MARKET VALUE
- ------------ -------------------------------------------------------------- ---------------
<C> <S> <C>
FIXED INCOME SECURITIES - 98.2%
CERTIFICATE OF PARTICIPATION BONDS - 1.0%
$ 250,000 City of Portland 6.950% 4/01/99. . . . . . . . . . . . . . . . $ 267,813
---------------
INSURED BONDS - 47.1%
200,000 Jackson County Oregon School District 6.000% 6/01/01 (FSA) . . 212,000
250,000 Clackamas County Hospital Facility Revenue
5.800% 3/01/02 (MBIA) . . . . . . . . . . . . . . . . . . . 260,937
1,000,000 Portland Hospital Facility Legacy Health System
6.400% 5/01/02 (AMBAC) . . . . . . . . . . . . . . . . . . 1,078,750
200,000 Yamhill County School District #29J
4.800% 6/01/02 (FSA) . . . . . . . . . . . . . . . . . . . 198,750
1,240,000 Hood River County Oregon School District
6.000% 6/01/03 (AMBAC). . . . . . . . . . . . . . . . . . . 1,323,700
250,000 Emerald Peoples Utility District 5.450% 11/01/03 (AMBAC) . . . 257,500
500,000 Deschutes/Jefferson County School District
5.300% 6/01/04 (MBIA) . . . . . . . . . . . . . . . . . . . 508,750
260,000 Hood River County Oregon School District
6.000% 6/01/04 (AMBAC) . . . . . . . . . . . . . . . . . . 277,225
545,000 Jefferson County School District #509J 6.500% 6/15/04 (FSA). . 597,456
400,000 University Puerto Rico 5.100% 6/01/05 (MBIA) . . . . . . . . . 403,000
350,000 Portland Oregon Sewer System 5.750% 10/01/05 (FGIC). . . . . . 367,500
500,000 Washington County Sewer System 5.800% 10/01/05 (AMBAC) . . . . 525,625
125,000 Marion County Oregon School District 6.000% 11/01/05 (FGIC). . 133,125
1,015,000 Crook County Oregon School District 4.700% 2/01/06 (FSA) . . . 969,325
435,000 Jefferson County Oregon School District 5.400% 6/15/06 (FSA) . 438,806
400,000 Oregon State Facility - Series A 6.100% 9/01/06 (AMBAC). . . . 421,000
350,000 Washington County Sewer System 5.900% 10/01/06 (AMBAC) . . . . 367,938
940,000 McMinnville Sewer System 4.700% 2/01/07 (FGIC) . . . . . . . . 900,050
335,000 Jackson County Oregon School District 5.200% 6/01/07 (FSA) . . 334,581
450,000 Josephine County Oregon School District 5.750% 6/01/07 (FGIC). 467,438
1,000,000 Salem Keizer School District #24-J 5.500% 6/01/07 (FGIC) . . . 1,012,500
1,100,000 Multnomah County School District 5.600% 12/01/07 (FGIC). . . . 1,134,375
160,000 Marion County Oregon School District 4.850% 6/01/08 (AMBAC). . 152,000
135,000 Bend County Library 5.375% 6/01/11 (AMBAC) . . . . . . . . . . 131,794
100,000 Washington County School District 6.100% 6/01/12 (FSA) . . . . 103,250
350,000 Portland Oregon Sewer System 6.000% 10/01/12 (FGIC). . . . . . 358,313
500,000 McMinnville Sewer System 5.000% 2/01/14 (FGIC) . . . . . . . . 461,875
---------------
13,397,563
---------------
</TABLE>

See accompanying notes to financial statements.

<PAGE>

THE OREGON MUNICIPAL BOND FUND, INC.
SCHEDULE OF INVESTMENTS
April 30, 1996
(Unaudited)
<TABLE>
<CAPTION>

FACE VALUE SECURITIES DESCRIPTION MARKET VALUE
- ------------ -------------------------------------------------------------- ---------------
<C> <S> <C>
FIXED INCOME SECURITIES - (continued)
STATE OF OREGON
GENERAL OBLIGATION - 9.3%
$ 240,000 State of Oregon G.O. 7.700% 3/01/02. . . . . . . . . . . . . . $ 249,893
100,000 State of Oregon G.O. 9.000% 4/01/03. . . . . . . . . . . . . . 123,500
205,000 State of Oregon G.O. 8.200% 7/01/04. . . . . . . . . . . . . . 248,819
150,000 State of Oregon G.O. 7.200% 7/01/04. . . . . . . . . . . . . . 172,125
110,000 State of Oregon G.O. 6.000% 8/01/04. . . . . . . . . . . . . . 117,563
200,000 State of Oregon G.O. 9.000% 10/01/04 . . . . . . . . . . . . . 225,250
355,000 State of Oregon G.O. 6.750% 5/01/05. . . . . . . . . . . . . . 397,600
250,000 State of Oregon G.O. (Veterans) 7.250% 7/01/06 . . . . . . . . 291,875
200,000 State of Oregon G.O. 7.250% 1/01/07. . . . . . . . . . . . . . 233,750
200,000 State of Oregon G.O. (Veterans) 8.250% 1/01/07 . . . . . . . . 247,500
100,000 State of Oregon G.O. (Alt Energy) 6.400% 1/01/08 . . . . . . . 104,500
180,000 State of Oregon G.O. 9.200% 4/01/08. . . . . . . . . . . . . . 240,300
---------------
2,652,675
---------------

PRE-REFUNDED BONDS* - 2.1%
250,000 Oregon State Revenue - Series B 6.250% 1/01/08. . . . . . . . 271,250
185,000 Oregon Economic Development Dept-Series B 6.350% 1/01/13 . . . 201,419
100,000 Oregon State Department General Services 7.200% 1/15/15. . . . 110,750
---------------
583,419
---------------

REVENUE BONDS - 4.7%
545,000 Oregon State Light Rail 7.000% 6/01/04 . . . . . . . . . . . . 610,400
220,000 Portland Oregon Sewer System Revenue 5.550% 6/01/04. . . . . . 227,700
125,000 Oregon State Fair & Expo Revenue 7.375% 10/01/06 . . . . . . . 126,323
100,000 Portland Oregon Sewer System Revenue 5.150% 3/01/08. . . . . . 97,750
160,000 Portland Oregon Building Service 4.750% 4/01/08. . . . . . . . 150,800
150,000 Metro Oregon Regional Center 5.000% 8/01/10. . . . . . . . . . 138,375
---------------
1,351,348
---------------

OTHER BONDS
GENERAL OBLIGATION - 13.3%
5,000 City of Portland Water G.O. 3.700% 12/01/00. . . . . . . . . . 4,854
330,000 Puerto Rico G.O. 7.125% 7/01/02. . . . . . . . . . . . . . . . 346,088
200,000 Multnomah County Oregon School District 4.250% 6/01/03 . . . . 191,250
210,000 Washington & Clackamas School District 5.250% 6/01/03. . . . . 212,362
300,000 Deschutes G.O. School District #1 5.800% 2/01/04 . . . . . . . 313,500
15,000 Washington & Clackamas School District 5.000% 1/01/05. . . . . 14,718
410,000 Washington & Clackamas School District 5.250% 6/01/05. . . . . 409,487
200,000 Clackamas Community College 5.100% 12/01/05. . . . . . . . . . 199,750
135,000 Portland Oregon Community College 5.800% 7/01/06 . . . . . . . 139,387
1,000,000 Tri-Met Light Rail 5.900% 7/01/06. . . . . . . . . . . . . . . 1,036,250
300,000 Salem Oregon - Series A 5.875% 1/01/07 . . . . . . . . . . . . 307,125
400,000 Metro Oregon Open Spaces Program 4.900% 9/01/07. . . . . . . . 386,500
240,000 Lane County Area Education District 4.850% 6/01/08 . . . . . . 229,800
---------------
3,791,071
---------------
</TABLE>

*Dates reflect pre-refunded dates.
See accompanying notes to financial statements.

<PAGE>

THE OREGON MUNICIPAL BOND FUND, INC.
SCHEDULE OF INVESTMENTS
April 30, 1996
(Unaudited)
<TABLE>
<CAPTION>

FACE VALUE SECURITIES DESCRIPTION MARKET VALUE
- ------------ -------------------------------------------------------------- ---------------
<C> <S> <C>
FIXED INCOME SECURITIES - (continued)
REVENUE BONDS - 9.3%
$ 335,000 Central Lincoln PUD 6.500% 1/01/02 . . . . . . . . . . . . . . $ 360,962
600,000 Clackamas County Hospital (Sisters of Providence)
6.200% 10/01/02. . . . . . . . . . . . . . . . . . . . . . . 633,000
350,000 City of Portland (Urban Renewal) 5.700% 6/01/04. . . . . . . . 362,686
435,000 Multnomah County School District 5.000% 3/01/07. . . . . . . . 421,950
100,000 Portland Oregon Water System 5.100% 8/01/08. . . . . . . . . . 97,750
765,000 Salem Educational Facility (Revenue) 6.000% 4/01/10. . . . . . 784,125
---------------
2,660,473
---------------

PRE-REFUNDED BONDS* - 11.4%
250,000 Clackamas & Washington County School
District #003 7.200% 10/01/99 . . . . . . . . . . . . . . 271,563
200,000 Clackamas & Washington County School
District #003 7.250% 10/01/99 . . . . . . . . . . . . . . 217,500
310,000 Emerald Peoples Utility District 6.300% 11/01/00 . . . . . . . 335,188
400,000 Metropolitan Service District 7.000% 7/01/01 . . . . . . . . . 439,500
250,000 Emerald Peoples Utility District 6.500% 11/01/03 . . . . . . . 272,812
250,000 Washington County School District 6.200% 9/01/04 . . . . . . . 268,750
125,000 Marion & Polk County School District 5.700% 10/01/05 . . . . . 131,875
328,000 Deschutes County (St. Charles Medical Center) 6.750% 1/01/06 . 354,240
150,000 Marion & Polk County Oregon School District 4.750% 10/01/06. . 141,938
270,000 Port of Morrow (Pollution Control) 6.375% 4/01/08. . . . . . . 292,950
225,000 Marion & Polk County School District #24-J 6.000% 10/01/10 . . 241,031
270,000 Metropolitan Service District 6.600% 7/01/11 . . . . . . . . . 292,613
---------------
3,259,960
---------------

Total Fixed Income Securities 27,964,322
---------------
</TABLE>

*Dates reflect pre-refunded dates.
See accompanying notes to financial statements.

<PAGE>

THE OREGON MUNICIPAL BOND FUND, INC.
SCHEDULE OF INVESTMENTS
April 30, 1996
(Unaudited)
<TABLE>
<CAPTION>

FACE VALUE SECURITIES DESCRIPTION MARKET VALUE
- ------------ -------------------------------------------------------------- ---------------
<C> <S> <C>
SHORT TERM INVESTMENTS - 0.7%
INVESTMENT COMPANY - 0.7%
$ 212,459 Dreyfus Tax-Exempt Cash Management Fund 3.710%** . . . . . . . $ 212,459
-----------

Total Investments - 98.9% 28,176,781
(Cost $27,392,239)
Cash - 0% 150
Other Assets and (Liabilities), Net - 1.1% 298,494
----------
TOTAL NET ASSETS - 100.0% $28,475,425
-----------
-----------

----------------------------------------------------------------------------------
Portfolio Allocation Table:

Education. . . . . . . . . . . . . . . . . . . . . . . . . . . 38.0%
Refunding Bonds. . . . . . . . . . . . . . . . . . . . . . . . 22.1
Sewer & Water. . . . . . . . . . . . . . . . . . . . . . . . . 11.9
Transportation . . . . . . . . . . . . . . . . . . . . . . . . 5.9
Health & Hospital. . . . . . . . . . . . . . . . . . . . . . . 3.6
Public Improvements. . . . . . . . . . . . . . . . . . . . . . 2.4
Electric Utility . . . . . . . . . . . . . . . . . . . . . . . 2.3
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . 12.7

Total Investments. . . . . . . . . . . . . . . . . . . . . . . 98.9%
----------------------------------------------------------------------------------
</TABLE>

AMBAC - American Municipal Bond Assurance Corp.
FGIC - Financial Guaranty Insurance Corp.
FSA - Financial Security Assurance
G.O. - Government Obligation
MBIA - Municipal Bond Insurance Assoc.
PUD - Public Utility District

**Rate reflects 7 day yield as of April 30, 1996.
See accompanying notes to financial statements.

<PAGE>

THE CRABBE HUSON U.S. GOVERNMENT INCOME FUND, INC.
SCHEDULE OF INVESTMENTS
April 30, 1996
(Unaudited)

FACE VALUE SECURITIES DESCRIPTION MARKET VALUE
- ------------ ----------------------------------------------------- ------------
FIXED INCOME SECURITIES - 98.0%
AGENCIES - 11.3%
$ 255,000 International Bank For Reconstruction & Development
Floater 5.390%* 08/07/97 ........................... $ 235,482
150,000 Federal National Mortgage 4.950% 9/30/98............. 145,683
120,000 Federal National Mortgage 6.080% 9/25/00............. 117,757
100,000 Federal National Mortgage 8.250% 12/18/00............ 106,435
50,000 Federal Home Loan Bank 7.590% 3/28/05................ 51,953
50,000 Federal National Mortgage 7.375% 3/28/05............. 51,261
200,000 Federal National Mortgage 5.875% 2/02/06............. 184,012
---------
892,583
---------
GOVERNMENT BONDS - 86.7%
5,765,000 U.S. Treasury Note 5.000% 1/31/98.................... 5,667,226
30,000 U.S. Treasury Note 5.125% 2/28/98.................... 29,524
585,000 U.S. Treasury Note 6.250% 8/31/00.................... 581,285
100,000 U.S. Treasury Note 5.625% 11/30/00.................. 96,894
500,000 U.S. Treasury Note 5.625% 2/28/01.................... 483,555
---------
6,858,484
---------
Total Fixed Income 7,751,067
---------
SHORT TERM INVESTMENTS - 1.0%
REPURCHASE AGREEMENT - 1.0%
78,873 State Street Bank and Trust Company** 4.00% 5/01/96.. 78,873
---------
Total Investments - 99.0% 7,829,940
(Cost $7,938,284)
Other Assets and (Liabilities), Net - 1.0% 76,733
---------
TOTAL NET ASSETS - 100.0% $7,906,673
---------
---------
*Zero-coupon bond-rate reflects purchase yield to maturity.
**The repurchase agreement, dated 4/30/96, $78,882 due 5/1/96, is
collateralized by $79,000 Federal Farm Credit Note, 6.640%, 5/18/98.

See accompanying notes to financial statements.

<PAGE>

THE CRABBE HUSON U.S. GOVERNMENT MONEY MARKET FUND, INC.

SCHEDULE OF INVESTMENTS

April 30, 1996
(Unaudited)

FACE VALUE SECURITIES DESCRIPTION MARKET VALUE
- ---------- ---------------------- ------------
FIXED INCOME SECURITIES* - 101.5%
U.S. GOVERNMENT & AGENCY - 101.5%
TREASURY BILLS - 20.2%
$ 1,000,000 5.000% 7/25/96 ...................................... $ 986,919
3,000,000 4.780% 8/29/96 ...................................... 2,952,200
4,500,000 5.025% 12/12/96 ..................................... 4,358,672
-----------
8,297,791
-----------
DISCOUNT NOTES - 81.3%
FEDERAL FARM CREDIT
1,000,000 4.970% 5/06/96 ...................................... 999,310
455,000 5.190% 5/30/96 ...................................... 453,098
1,000,000 5.290% 5/31/96 ...................................... 995,592
FEDERAL HOME LOAN BANK
180,000 5.160% 5/01/96 ...................................... 180,000
1,095,000 5.170% 5/02/96 ...................................... 1,094,843
400,000 5.180% 5/03/96 ...................................... 399,885
500,000 5.210% 5/06/96 ...................................... 499,638
1,880,000 4.930% 5/07/96 ...................................... 1,878,455
1,040,000 5.240% 5/08/96 ...................................... 1,038,941
795,000 4.960% 5/10/96 ...................................... 794,014
660,000 5.150% 5/13/96 ...................................... 658,867
1,475,000 5.170% 5/15/96 ...................................... 1,472,027
745,000 4.980% 5/20/96 ...................................... 743,042
1,000,000 5.330% 5/21/96 ...................................... 997,039
455,000 5.180% 5/24/96 ...................................... 453,500
115,000 5.060% 5/28/96 ...................................... 114,564
845,000 4.910% 6/03/96 ...................................... 841,197
1,000,000 5.090% 6/04/96 ...................................... 995,193
630,000 4.860% 6/10/96 ...................................... 626,598
1,000,000 5.000% 6/17/96 ...................................... 993,472
2,000,000 5.170% 6/19/96 ...................................... 1,985,926
625,000 5.100% 7/01/96 ...................................... 619,598
2,710,000 5.150% 7/15/96 ...................................... 2,680,924
1,490,000 5.150% 7/17/96 ...................................... 1,473,587
1,420,000 4.890% 7/19/96 ...................................... 1,404,762
1,095,000 4.990% 7/22/96 ...................................... 1,082,554
125,000 4.850% 7/23/96 ...................................... 123,602
2,250,000 5.190% 8/12/96 ...................................... 2,216,589
770,000 5.180% 8/14/96 ...................................... 758,367
2,000,000 4.880% 9/04/96 ...................................... 1,965,840
920,000 5.120% 9/18/96 ...................................... 901,682
2,000,000 5.150% 10/21/96 ..................................... 1,950,503
-----------
33,393,209
-----------

*Rates reflect purchase yield to maturity.

See accompanying notes to financial statements.

<PAGE>

THE CRABBE HUSON U.S. GOVERNMENT MONEY MARKET FUND, INC.

SCHEDULE OF INVESTMENTS

April 30, 1996
(Unaudited)

FACE VALUE SECURITIES DESCRIPTION MARKET VALUE
- ---------- ---------------------- ------------
FIXED INCOME SECURITIES* - (continued)
REPURCHASE AGREEMENT - 0.0%
$ 3,899 State Street Bank and Trust Company** 4.000% 5/1/96... $ 3,899
-----------
Total Investments - 101.5% 41,694,899
(Cost $41,694,899)
Cash - 0% 2,797
Other Assets and (Liabilities), Net - (1.5%) (636,621)
-----------

TOTAL NET ASSETS - 100.0% $41,061,075
-----------
-----------

*Rates reflect purchase yield to maturity.
**The repurchase agreement, dated 4/30/96, $3,899 due 5/1/96, is collateralized
by $4,000 Federal Farm Credit Note, 6.640%, 5/18/98.

See accompanying notes to financial statements.

<PAGE>

CRABBE HUSON FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
April 30, 1996
(Unaudited)

THE THE CRABBE HUSON
THE CRABBE CRABBE HUSON CRABBE HUSON THE CRABBE REAL ESTATE
HUSON SPECIAL SMALL CAP ASSET ALLOCATION HUSON EQUITY INVESTMENT
FUND, INC. FUND FUND, INC. FUND, INC. FUND, INC.
--------------- --------------- ----------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
ASSETS:

Investment securities, at market (Note 6) $ 714,197,407 $ 5,937,118 $ 147,650,034 $488,743,329 $ 16,773,075

Cash 7,202 275,474 1,332,715 1,405,102 4,179

Deposits with brokers for securities sold short 100,785,425 -- -- -- --

Receivables:

Dividends and Interest 340,266 275 683,356 161,636 30,928

Fund shares sold 906,814 78,705 147,162 1,446,609 30,045

Investment securities sold 1,022,592 -- 514,173 1,905,624 239,392

Proceeds from securities sold short 70,381,440 -- -- -- --

Organization expenses (Note 1) 89,941 107,131 15,474 44,889 83,715

Prepaid Expenses 32,921 97 6,437 16,148 900
--------------- --------------- ----------------- -------------- --------------
$ 887,764,008 $ 6,398,800 $ 150,349,351 $ 493,723,337 $ 17,162,234
--------------- --------------- ----------------- -------------- --------------
LIABILITIES:

Securities sold short, at market
(proceeds $70,381,440) 99,253,638 -- -- -- --

Payables:

Investment securities payable 6,407,206 -- 922,320 1,956,329 --
Fund shares redeemed 4,121,176 -- 196,420 613,548 13,176
Payable to affiliates and directors (Note 2) 6,803 279 1,909 3,733 417
Income dividend -- -- 87,363 -- 64,993

Accrued liabilities 486,697 108,390 56,588 141,123 1,793
--------------- --------------- ----------------- -------------- --------------
110,275,520 108,669 1,264,600 2,714,733 80,379
--------------- --------------- ----------------- -------------- --------------
NET ASSETS: $ 777,488,488 $ 6,290,131 $ 149,084,751 $ 491,008,604 $17,081,855
--------------- --------------- ----------------- -------------- --------------
--------------- --------------- ----------------- -------------- --------------
NET ASSETS CONSIST OF:

Capital shares 53,160 568 11,225 25,142 1,640

Capital paid in 725,718,242 5,776,865 36,386,044 419,956,606 16,172,432

Undistributed accumulated net investment income 2,135,669 6,345 16,834 556,336 236,054

Undistributed accumulated net
realized gain (loss) on investments 48,751,512 38,362 5,528,220 23,722,707 (337,804)

Net unrealized appreciation (depreciation)
on investments and short sales (Note 6) 829,905 467,991 7,142,428 46,747,813 1,009,533
--------------- --------------- ----------------- -------------- --------------
$ 777,488,488 $ 6,290,131 $ 149,084,751 $ 491,008,604 $ 17,081,855
--------------- --------------- ----------------- -------------- --------------
--------------- --------------- ----------------- -------------- --------------
CAPITAL SHARES, PAR VALUE $.001

Authorized 100,000,000 1,000,000,000 100,000,000 100,000,000 1,000,000,000

Outstanding (Note 5) 53,160,298 568,155 11,225,021 25,141,606 1,640,148
--------------- --------------- ----------------- -------------- --------------
--------------- --------------- ----------------- -------------- --------------
NET ASSET VALUE PER SHARE $ 14.63 $ 11.07 $ 13.28 $ 19.53 $ 10.41
--------------- --------------- ----------------- -------------- --------------
--------------- --------------- ----------------- -------------- --------------
</TABLE>

See accompanying notes to financial statements.

<PAGE>

CRABBE HUSON FUNDS
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
April 30, 1996
(Unaudited)

<TABLE>
<CAPTION>
THE CRABBE HUSON
THE OREGON THE CRABBE THE CRABBE HUSON U.S. GOVERNMENT
MUNICIPAL BOND HUSON INCOME U.S. GOVERNMENT MONEY MARKET
FUND, INC. FUND, INC. INCOME FUND, INC. FUND, INC.
--------------- --------------- ----------------- ---------------
<S> <C> <C> <C> <C>
ASSETS:

Investment securities, at market (Note 6) $ 28,176,781 $ 5,836,762 $ 7,829,940 $ 41,694,899

Cash 150 402 -- 2,797

Receivables:

Dividends and Interest 476,273 65,350 93,752 --

Fund shares sold -- 13,999 176 908,146

Investment securities sold -- 2,113 -- --

Organization expenses 3,123 780 943 11,568

Prepaid Expenses 1,358 222 394 1,951
-------------- --------------- ----------------- ---------------
$ 28,657,685 $ 5,919,628 $ 7,925,205 $ 42,619,361
-------------- --------------- ----------------- ---------------
LIABILITIES:

Payables:

Investment securities payable 133,401 100,000 -- --

Fund shares redeemed 7,804 20,986 4,784 1,467,037

Payable to affiliates and directors (Note 2) 574 134 154 685

Income dividend 21,720 1,412 4,294 53,834

Accrued liabilities 18,761 12,245 9,300 36,730
-------------- --------------- ----------------- ---------------
182,260 134,777 18,532 1,558,286
-------------- --------------- ----------------- ---------------
NET ASSETS: $ 28,475,425 $ 5,784,851 $ 7,906,673 $ 41,061,075
-------------- --------------- ----------------- ---------------
-------------- --------------- ----------------- ---------------
NET ASSETS CONSIST OF:

Capital shares 2,298 580 750 41,060

Capital paid in 27,627,403 5,879,975 8,043,898 41,020,015

Undistributed accumulated net investment income -- 2,342 91 --

Undistributed accumulated net
realized gain (loss) on investments 61,182 (102,517) (29,722) --

Net unrealized appreciation (depreciation)
on investments and short sales (Note 6) 784,542 4,471 (108,344) --
-------------- --------------- ----------------- ---------------
$ 28,475,425 $ 5,784,851 $ 7,906,673 $ 41,061,075
-------------- --------------- ----------------- ---------------
-------------- --------------- ----------------- ---------------
CAPITAL SHARES, PAR VALUE $.001

Authorized 10,000,000 100,000,000 100,000,000 2,000,000,000

Outstanding (Note 5) 2,297,781 578,884 749,945 41,061,075
-------------- --------------- ----------------- ---------------
-------------- --------------- ----------------- ---------------
NET ASSET VALUE PER SHARE $ 12.39 $ 9.99 $ 10.54 $ 1.00
-------------- --------------- ----------------- ---------------
-------------- --------------- ----------------- ---------------

</TABLE>

See accompanying notes to financial statements.

<PAGE>

CRABBE HUSON FUNDS
STATEMENTS OF OPERATIONS
For the six months ended April 30, 1996
(Unaudited)

<TABLE>
<CAPTION>
THE CRABBE CRABBE HUSON CRABBE HUSON THE CRABBE REAL ESTATE
HUSON SPECIAL SMALL CAP ASSET ALLOCATION HUSON EQUITY INVESTMENT
FUND, INC. FUND* FUND, INC. FUND, INC. FUND, INC.
------------- ------------ ---------------- ------------ -----------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Interest $ 6,634,552 $ 16,849 $ 2,083,796 $ 1,241,376 $ 17,907
Dividends (net of foreign taxes withheld of
$0; $0; $1,238; $20,378; and $0 respectively) 2,904,330 3,163 622,732 3,410,278 462,736
------------- ------------ ---------------- ------------ -----------
9,538,882 20,012 2,706,528 4,651,654 480,643
------------- ------------ ---------------- ------------ -----------
EXPENSES
Investment advisory fees (Note 2) 3,290,248 9,112 688,613 1,969,696 92,079
Transfer agent 570,330 2,910 71,032 164,291 14,318
Printing 133,744 264 15,633 37,351 2,438
Postage 105,547 481 16,210 32,279 2,527
Custody 153,602 2,707 31,589 71,629 5,827
Legal 40,449 121 5,428 16,961 749
Auditing 23,635 143 4,302 11,368 1,333
Insurance 13,716 43 1,921 5,993 239
Directors' fees 10,185 279 3,973 5,928 1,176
Registration fees 171,764 1,973 17,409 118,510 6,560
Amortization of organization expenses -- 1,319 -- -- 7,369
Miscellaneous 94,429 213 15,142 40,636 2,132
Distribution fees (Note 2) 1,080,864 2,278 180,595 557,384 23,020
Administration (Note 2) 146,554 582 21,479 65,240 2,779
Short sales dividends 22,649 -- -- -- --
------------- ------------ ---------------- ------------ -----------
5,857,716 22,425 1,073,326 3,097,266 162,546
Fees waived by investment advisor (Note 2) -- (7,506) -- -- (24,313)
Expenses reimbursed by investment advisor (Note 2) -- -- -- -- --
Fees paid indirectly (Note 2) (16,151) (1,252) (6,075) (27,477) (114)
------------- ------------ ---------------- ------------ -----------
NET EXPENSES 5,841,565 13,667 1,067,251 3,069,789 138,119
------------- ------------ ---------------- ------------ -----------
NET INVESTMENT INCOME 3,697,317 6,345 1,639,277 1,581,865 342,524
------------- ------------ ---------------- ------------ -----------
REALIZED AND UNREALIZED GAIN:
Net realized gain (loss) on investments 53,098,349 38,362 5,513,546 24,381,209 (332,627)
Net change in unrealized appreciation
or depreciation of investments and short sales 40,035,575 467,991 2,316,135 31,637,490 1,986,637
------------- ------------ ---------------- ------------ -----------
NET GAIN (LOSS) ON INVESTMENTS 93,133,924 506,353 7,829,681 56,018,699 1,654,010
------------- ------------ ---------------- ------------ -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 96,831,241 $ 512,698 $ 9,468,958 $ 57,600,564 $1,996,534
------------- ------------ ---------------- ------------ -----------
------------- ------------ ---------------- ------------ -----------
</TABLE>

* For the period from February 20, 1996 (commencement of operations)
to April 30, 1996.

See accompanying notes to financial statements.

<PAGE>

CRABBE HUSON FUNDS
STATEMENTS OF OPERATIONS (continued)
For the six months ended April 30, 1996
(Unaudited)

<TABLE>
<CAPTION>
THE CRABBE HUSON
THE OREGON THE CRABBE THE CRABBE HUSON U.S. GOVERNMENT
MUNICIPAL BOND HUSON INCOME U.S. GOVERNMENT MONEY MARKET
FUND, INC. FUND, INC. INCOME FUND, INC. FUND, INC.
-------------- ------------ ---------------- ----------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Interest $ 748,555 $ 200,626 $ 221,433 $ 1,387,848
-------------- ------------ ---------------- ----------------

EXPENSES
Investment advisory fees (Note 2) 71,190 25,377 20,964 125,786
Transfer agent 14,466 14,073 13,119 42,591
Printing 3,189 2,165 2,165 7,928
Postage 4,382 2,007 2,007 11,231
Custody 8,815 4,907 4,553 14,558
Legal 1,158 589 609 2,520
Auditing 1,500 1,178 1,196 2,355
Insurance 472 226 230 931
Directors' fees 1,337 388 408 1,457
Registration fees 319 20,067 17,050 17,242
Miscellaneous 3,465 1,178 1,333 6,489
Distribution fees (Note 2) 35,595 8,459 10,482 62,893
Administration (Note 2) 4,749 1,807 1,942 9,527
-------------- ------------ ---------------- ----------------
150,637 82,421 76,058 305,508
Fees waived by investment advisor (Note 2) (11,106) (25,377) (20,964) (125,786)
Expenses reimbursed by investment advisor (Note 2) -- (29,870) (23,600) (3,471)
Fees paid indirectly (Note 2) -- (106) (48) (151)
-------------- ------------ ---------------- ----------------
NET EXPENSES 139,531 27,068 31,446 176,100
-------------- ------------ ---------------- ----------------
NET INVESTMENT INCOME 609,024 173,558 189,987 1,211,748
-------------- ------------ ---------------- ----------------
REALIZED AND UNREALIZED GAIN:
Net realized gain (loss) on investments 61,182 78,194 117,587 1,382
Net change in unrealized appreciation
or depreciation of investments and short sales (581,212) (218,839) (211,823) --
-------------- ------------ ---------------- ----------------
NET GAIN (LOSS) ON INVESTMENTS (520,030) (140,645) (94,236) 1,382
-------------- ------------ ---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 88,994 $ 32,913 $ 95,751 $ 1,213,130
-------------- ------------ ---------------- ----------------
-------------- ------------ ---------------- ----------------
</TABLE>
See accompanying notes to financial statements.

<PAGE>

CRABBE HUSON FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
(Unaudited)

THE CRABBE HUSON CRABBE HUSON THE CRABBE HUSON
SPECIAL FUND, INC. SMALL CAP FUND ASSET ALLOCATION FUND, INC.
---------------------------------- -------------------------------- ---------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1996 OCTOBER 31, 1995 APRIL 30, 1996* APRIL 30, 1996 OCTOBER 31, 1995
---------------------------------- --------------------------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C>

INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS:
Net investment income $ 3,697,317 $ 13,282,908 $ 6,345 $ 1,639,277 $ 3,127,152
Net realized gain (loss)
on investments 53,098,349 31,170,355 38,362 5,513,546 11,435,123
Net change in unrealized
appreciation or depreciation
of investments and short
sales 40,035,575 (51,415,104) 467,991 2,316,135 20,021
--------------------------------- --------------------------------- ---------------- ----------------
Increase (decrease) in net
assets resulting from
operations 96,831,241 (6,961,841) 512,698 9,468,958 14,582,296
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (3,697,317) (1,107,597) -- (1,622,443) (3,090,031)
In excess of net investment
income (9,612,161) -- -- -- --
From net realized gain on
investments (36,164,306) (11,710,943) -- (5,513,546) (4,120,955)
In excess of net realized
gain on investments -- -- -- (5,924,875) --
CAPITAL SHARE TRANSACTIONS,
NET (Note 5) (148,428,803) 578,529,362 5,677,433 16,146,600 19,006,962
--------------------------------- --------------------------------- ---------------- ----------------
Total increase (decrease)
in net assets (101,071,346) 558,748,981 6,190,131 12,554,695 26,378,272
FUND NET ASSETS, BEGINNING
OF PERIOD 878,559,834 319,810,853 100,000 136,530,057 110,151,785
--------------------------------- --------------------------------- ---------------- ----------------
FUND NET ASSETS, END OF
PERIOD $777,488,488 $878,559,834 $6,290,131 $ 149,084,752 $ 136,530,057
--------------------------------- --------------------------------- ---------------- ----------------
--------------------------------- --------------------------------- ---------------- ----------------

THE CRABBE HUSON THE CRABBE HUSON
EQUITY FUND, INC. ESTATE INVESTMENT FUND, INC.
---------------------------------- -----------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1996 OCTOBER 31, 1995 APRIL 30, 1996 OCTOBER 31, 1995
-----------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS:
Net investment income $ 1,581,865 $ 3,567,282 $ 342,524 $ 874,136
Net realized gain (loss)
on investments 24,381,209 19,596,449 (332,627) 51,165
Net change in unrealized
appreciation or
depreciation of investments 31,637,490 9,278,013 1,986,637 565,011
---------------------------------- ---------------------------------
Increase (decrease) in net
assets resulting from
operations 57,600,564 32,441,744 1,996,534 1,490,312

DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (1,581,865) (1,413,080) (360,448) (862,995)
In excess of net investment
income (2,110,214) -- -- --
From net realized gain
on investments (20,585,296) (2,376,723) (238,357) (240,802)
In excess of net realized
gain on investments -- -- -- --
CAPITAL SHARE TRANSACTIONS,
NET (Note 5) 70,501,335 205,426,843 (3,301,388) 319,499
---------------------------------- ---------------------------------
Total increase (decrease)
in net assets 103,824,524 234,078,784 (1,903,659) 706,014
FUND NET ASSETS,
BEGINNING OF PERIOD 387,184,080 153,105,296 18,985,514 18,279,500
---------------------------------- ---------------------------------
FUND NET ASSETS,
END OF PERIOD $491,008,604 $387,184,080 $17,081,855 $18,985,514
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
* For the period from February 20, 1996
(commencement of operations) to April 30, 1996.
See accompanying notes to financial statements.

</TABLE>

<PAGE>

CRABBE HUSON FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
(Unaudited)

THE OREGON THE CRABBE HUSON THE CRABBE HUSON U.S.
MUNICIPAL BOND FUND, INC. INCOME FUND, INC. GOVERNMENT INCOME FUND, INC.
--------------------------------- ----------------------------------- ---------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1996 OCTOBER 31, 1995 APRIL 30, 1996 OCTOBER 31, 1995 APRIL 30, 1996 OCTOBER 31, 1995
---------------------------------- ----------------------------------- ---------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS:
Net investment income $ 609,024 $ 1,192,507 $ 173,558 $ 357,527 $ 189,987 $ 422,501
Net realized gain (loss)
on investments 61,182 3,019 78,194 108,710 117,587 7,624
Net change in unrealized
appreciation or depreciation
of investments (581,212) 1,454,370 (218,839) 304,184 (211,823) 324,469
----------------------------- ------------------------------ --------------------------
Increase (decrease) in net
assets resulting from
operations 88,994 2,649,896 32,913 770,421 95,751 754,594
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (609,024) (1,192,507) (171,216) (357,527) (189,987) (422,501)
In excess of net investment
income -- -- -- (17,066) (599) (9,331)
From net realized gain on
investments (3,019) (151,835) -- -- -- --
In excess of net realized
gain on investments -- -- -- -- -- --
CAPITAL SHARE TRANSACTIONS,
NET (Note 5) 928,103 (2,280,911) (1,266,971) 1,520,890 (424,691) (1,145,775)
----------------------------- ----------------------------- ---------------------------
Total increase (decrease)
in net assets 405,054 (975,357) (1,405,274) 1,916,718 (519,526) (823,013)
FUND NET ASSETS, BEGINNING
OF PERIOD $28,070,371 29,045,728 7,190,125 5,273,407 8,426,199 9,249,212
----------------------------- ------------------------------ --------------------------
FUND NET ASSETS,
END OF PERIOD $28,475,425 $28,070,371 $ 5,784,851 $7,190,125 $7,906,673 $8,426,199
----------------------------- ------------------------------ ---------------------------
----------------------------- ------------------------------ ---------------------------

THE CRABBE HUSON U.S. GOVERNMENT
MONEY MARKET FUND, INC.
---------------------------------------
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1996 OCTOBER 31, 1995
---------------------------------------
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS:
Net investment income $ 1,211,748 $ 2,635,831
Net realized gain (loss)
on investments 1,382 --
Net change in unrealized
appreciation or
depreciation of investments -- --
---------------------------------------
Increase (decrease) in net
assets resulting from
operations 1,213,130 2,635,831
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (1,211,748) (2,635,831)
In excess of net investment
income -- --
From net realized gain on
investments (1,382) --
In excess of net realized
gain on investments -- --
CAPITAL SHARE TRANSACTIONS,
NET (Note 5) (13,653,144) 22,331,667
---------------------------------------
Total increase (decrease)
in net assets (13,653,144) 22,331,667
FUND NET ASSETS, BEGINNING
OF PERIOD 54,714,219 32,382,552
---------------------------------------
FUND NET ASSETS, END
OF PERIOD $ 41,061,075 $54,714,219
---------------------------------------
---------------------------------------

See accompanying notes to financial statements.

</TABLE>

<PAGE>

THIS PAGE IS LEFT BLANK INTENTIONALLY.

<PAGE>

CRABBE HUSON FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
April 30, 1996
(Unaudited)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION: The Oregon Municipal Bond Fund,
Inc. is registered under the Investment Company
Act of 1940, as amended, as an open-end non-
diversified investment company. The Crabbe
Huson Special Fund, Inc., Crabbe Huson Small Cap
Fund, The Crabbe Huson Asset Allocation Fund,
Inc., The Crabbe Huson Equity Fund, Inc., The
Crabbe Huson Income Fund, Inc., The Crabbe Huson
U.S. Government Income Fund, Inc., The Crabbe
Huson U.S. Government Money Market Fund, Inc.
and The Crabbe Huson Real Estate Investment
Fund, Inc. are registered under the Investment
Company Act of 1940, as amended, as open-end
diversified investment companies.

The following is a summary of significant
accounting policies consistently followed by the
Funds in preparation of financial statements.

SECURITY VALUATION--THE CRABBE HUSON U.S.
GOVERNMENT MONEY MARKET FUND, INC.: The Fund
seeks to maintain a constant net asset value of
$1.00 and values its assets using the amortized
cost method by adjusting the cost of each
security for accretion of discount or
amortization of premium.

SECURITY VALUATION--OTHER FUNDS: Securities
listed or traded on a registered securities
exchange are valued at the last price on the
date of the computation. This includes over-the-
counter securities for which last sale
information is available. Where last sale
information is not available, the best bid price
is used. Securities and assets for which market
quotations are not readily available are valued
at fair market value as determined in good faith
by or under the direction of the Board of
Directors of the Funds. Cash equivalents
relating to Firm Commitment Purchase Agreements
are segregated by the custodian and may not be
sold while the current commitment is
outstanding.

SECURITY TRANSACTIONS AND INVESTMENT INCOME:
Security transactions are accounted for on the
trade date, the date the order to buy or sell is
executed. Interest income is recorded daily on
the accrual basis. Interest income consists of
interest accrued plus the accretion of original
issue discount and minus the amortization of
investment premium, both calculated on an
effective interest basis. Dividend income and
distributions to shareholders are recorded on
the ex-dividend date. Net realized gains and
losses on investments are computed on the first-
in, first-out, method.

DIVIDENDS AND DISTRIBUTIONS: The Oregon
Municipal Bond Fund, Inc. declares dividends
from its net investment income each business
day. The net investment income for Saturdays,
Sundays and holidays is declared as a dividend
on the next business day. Declared dividends
are accrued through the last business day of
each month and are distributed on that date.
Net capital gains realized by the Fund, if any,
are declared and distributed on an annual basis,
usually in December.

The Crabbe Huson Special Fund, Inc., Crabbe
Huson Small Cap Fund and The Crabbe Huson Equity
Fund, Inc. expect to declare and distribute to
shareholders, in December, substantially all of
the net investment income and net realized
capital gains, if any.

<PAGE>

Dividends and Distributions - (continued): The
Crabbe Huson Asset Allocation Fund, Inc.
dividends from net investment income on the last
business day of each fiscal quarter. Net
capital gains realized by the Funds, if any, are
declared and distributed on an annual basis,
usually in December.

The Crabbe Huson Income Fund, Inc. and The
Crabbe Huson U.S. Government Income Fund, Inc.
declare and distribute dividends from net
investment income on the last business day of
each month. Net capital gains realized by the
Funds, if any, are declared and distributed on
an annual basis, usually in December.

The Crabbe Huson U.S. Government Money Market
Fund, Inc. declares dividends from its net
investment income each business day. The net
investment income for Saturdays, Sundays and
holidays is declared as a dividend on the prior
business day. Declared dividends are accrued
through the last business day of each month and
are distributed on that date. Net capital gains
realized by the Fund, if any, are declared and
distributed on an annual basis, usually in
December.

Short Sales: The Crabbe Huson Special Fund,
Inc. during the period sold securities short.
Outstanding short sales at April 30, 1996 are
listed in the schedule of investments. A short
sale is effected when it is believed that the
price of a particular security will decline, and
involves the sale of a security which the Fund
does not own in the hope of purchasing the same
security at a later date at a lower price. To
make delivery to the buyer, the Fund must borrow
the security. The Fund is then obligated to
return the security to the lender, and therefore
it must subsequently purchase the same security.

When the Special Fund makes a short sale, it
must leave the proceeds from the short sale with
the broker, and it must deposit with the broker
a certain amount of cash or government
securities to collateralize its obligation to
replace the borrowed securities which have been
sold. In addition, the Fund must put in a
segregated account (with the Fund's custodian)
an amount of cash or U.S. Government securities
equal to the difference between the market value
of the securities sold short at the time they
were sold short and any cash or government
securities deposited as collateral with the
broker in connection with the short sale (not
including the proceeds from the short sale).
Furthermore, until the Fund replaces the
borrowed security, it must daily maintain the
segregated account at a level so that (1) the
amount deposited in it plus the amount deposited
with the broker (not including the proceeds from
the short sale) will equal the current market
value of the securities sold short, (2) the
amount deposited in it plus the amount deposited
with the broker (not including the proceeds from
the short sale) will not be less than the market
value of the securities at the time they were
sold short. As a result of these requirements,
the Special Fund will not gain any leverage
merely by selling short, except to the extent
that it earns interest on the immobilized cash
or government securities while also being
subject to the possibility of gain or loss from
the securities sold short. The amount of the
Special Fund's net assets that will at any time
be in the type of deposits described above (that
is, collateral deposits or segregated accounts)
will not exceed 25%.

<PAGE>

Options: The Special, Small Cap, Real Estate,
Equity, Asset Allocation and Income Funds may
write call options on securities they own or
have the right to acquire, and may purchase put
and call options on individual securities and
indexes written by others. The purchase of any
of these instruments can result in the entire
loss on the investment in that particular
instrument or, in the case of writing covered
options, can limit the opportunity to earn a
profit on the underlying security.

When an option is written (sold), an amount
equal to the premium received is recorded as a
liability. The amount of liability is adjusted
daily to reflect the current market value of the
option written. When an option written by the
Fund, expires on its stipulated expiration date,
the Fund realizes a gain equal to the net
premium received for the option. When the Fund
enters into a closing purchase transaction, the
Fund realizes a gain or loss equal to the
difference between the cost of a closing
purchase transaction and the premium received
when the call option was written. In the case
of either expiration of a written option or a
closing purchase transaction, the liability
related to such option is extinguished.

Call or put options purchased are accounted for
in the same manner as marketable portfolio
securities. When a call or put option is
exercised, the proceeds from the underlying
securities bought or sold are decreased by the
premium paid in determining the gain or loss.

Options on stock indexes differ from options on
securities in that the exercise of an option on
a stock index does not involve delivery of the
actual underlying security and are settled in
cash only.

During the period the Crabbe Huson Special Fund,
Inc. purchased put options. Outstanding put
options at April 30, 1996 are disclosed in the
schedule of investments.

Organization Costs: Expenses incurred in
connection with the original organization of the
Funds are amortized over a sixty-month period.
The amortization is calculated based upon the
projected growth in net assets of the Funds. As
of April 30, 1996 the initial organization costs
for all Funds except for Crabbe Huson Small Cap
Fund and The Crabbe Huson Real Estate Investment
Fund, Inc. have been fully amortized. Crabbe
Huson Small Cap Fund and The Crabbe Huson Real
Estate Investment Fund, Inc. have amortized
$1,319 and $7,369, respectively, through April
30, 1996. The Crabbe Huson Group, Inc., the
Fund's investment advisor, has agreed that, in
the event any of the initial shares are redeemed
during the 60-month period for amortizing the
Fund's organization costs, the Fund will be
reimbursed by the investment advisor for the
unamortized balances of such costs in the same
proportion as the number of shares reduced bears
to the number of initial shares outstanding at
the time of redemption.

Reorganization Costs: On February 27, 1996 at a
joint annual meeting of the shareholders of
record at the close of business on December 20,
1995, shareholders approved the reorganization
of all Funds except for The Crabbe Huson Special
Fund, Inc. into a single Delaware business trust
which will operate as a series company. Crabbe
Huson Small Cap Fund was initially organized as
a Delaware business trust and therefore was not
subject to the reorganization proposal.

<PAGE>

Reorganization Costs - (continued): All of the
expenses connected with the reorganization will
be paid by each of the respective series' of the
Trust and will be amortized over a one year
period commencing on the expected effective
Reorganization date in August, 1996.

Federal Income Taxes: It is each Fund's policy
to distribute substantially all of its taxable
income to shareholders and otherwise comply with
the provisions of the Internal Revenue Code
applicable to regulated investment companies.
Therefore, no provision has been made for
Federal income or excise taxes. Due to the
timing of dividend distributions and the
differences in accounting for income and
realized gains (losses) for financial statement
and federal income tax purposes, the fiscal year
in which amounts are distributed may differ from
the year in which the income and realized gains
(losses) are recorded by the funds. The
differences between the income or gains
distributed on a book versus tax basis are shown
as excess distributions of net investment income
and net realized gain on sales of investments in
the Statement of Changes in Net Assets.

Estimates: The preparation of financial
statements in conformity with generally accepted
accounting principles requires management to
make estimates and assumptions that affect the
reported amounts of assets and liabilities and
income and expenses at the date of the financial
statements. Actual results could differ from
these estimates.

NOTE 2. INVESTMENT ADVISOR AND OTHER
TRANSACTIONS WITH AFFILIATES

Investment Advisor: The Funds have entered into
an investment advisory agreement with The Crabbe
Huson Group, Inc. (the "Advisor"), an affiliated
company. The investment advisory fee of each
Fund is accrued daily and paid semi-monthly.
The annual investment advisory fee for each Fund
is described below:

The Crabbe Huson Asset Allocation Fund, Inc.
The Crabbe Huson Special Fund, Inc.
Crabbe Huson Small Cap Fund
The Crabbe Huson Equity Fund, Inc.
The Crabbe Huson Real Estate Investment Fund,
Inc.

1.00% of daily net assets up to $100,000,000
.85 of 1% of daily net assets between
$100,000,000 and $500,000,000
.60 of 1% of daily net assets over $500,000,000

The Crabbe Huson Income Fund, Inc.

.75 of 1% of daily net assets up to $100,000,000
.60 of 1% of daily net assets between
$100,000,000 and $500,000,000
.50 of 1% of daily nets assets over $500,000,000

<PAGE>

The Crabbe Huson U.S. Government Income Fund,
Inc.
The Crabbe Huson U.S. Government Money Market
Fund, Inc.
The Oregon Municipal Bond Fund, Inc.

.50 of 1% of daily net assets up to $500,000,000
.45 of 1% of daily net assets between
$500,000,000 and $1,000,000,000
.40 of 1% of daily net assets over
$1,000,000,000

Effective February 1, 1996 the Advisor ceased to
voluntarily waive its management fee and/or
reimburse The Crabbe Huson Special Fund, Inc.,
The Crabbe Huson Asset Allocation Fund, Inc.,
and The Crabbe Huson Equity Fund, Inc., for the
amount, if any, by which the total operating and
management expenses of each Fund (including the
Advisor's compensation and any amounts paid
pursuant to the participating Funds' Rule 12b-1
plan but excluding interest, taxes, brokerage
fees and commissions, and extraordinary
expenses) exceeded certain annual rates applied
to the average daily net assets of each Fund.

The Advisor has voluntarily agreed to waive its
management fee and/or reimburse, for each Fund
listed below for the amount, if any, by which
the total operating and management expenses of
such Fund (including the Advisor's compensation
and any amounts paid pursuant to the
participating Funds' Rule 12b-1 plan but
excluding interest, taxes, brokerage fees and
commissions, and extraordinary expenses) exceeds
its respective annual rate applied to the
average daily net assets of each Fund as
follows:

The Oregon Municipal Bond Fund, Inc.0.98%
Crabbe Huson Small Cap Fund. 1.50%
The Crabbe Huson Income Fund, Inc. 0.80%
The Crabbe Huson U.S. Government Income Fund,
Inc. 0.75%
The Crabbe Huson U.S. Government Money Market
Fund, Inc. 0.70%
The Crabbe Huson Real Estate Investment Fund,
Inc. 1.50%

Effective August 1, 1996, the Advisor will
change the way it reimburses the Fund's expenses
from an involuntary basis to a voluntary basis
by removing the annual expense limits of each
Fund. This will provide each of the Funds the
ability to reduce expenses through directed
brokerage agreements, securities lending and
other expense offset arrangements.

Distributor: The Funds have entered into a
distribution agreement with Crabbe Huson
Securities, Inc. (the "Distributor"), an
affiliated company. Under the Distribution
Plan, each of the participating Funds may pay up
to 1/4 of 1% of such Fund's average daily net
assets to the Distributor as reimbursement for
its actual expenses incurred in the distribution
and promotion of such Fund's shares.

Administrator: State Street Bank and Trust
Company (the "Administrator") serves as
administrator of the Funds. The Administrator
performs certain administrative services for the
Funds. The Funds pay the Administrator a fee at
the rate of 0.06% of the Fund's average net
assets up to $500 million, 0.03% of the next
$500 million, and 0.01% of those assets in
excess of $1 billion, plus certain out of pocket
costs.

<PAGE>

Directors/Trustees Fees: As of April 30, 1996,
fees payable to the disinterested
directors/trustees were $574, $6,803, $279,
$1,909, $3,733, $134, $154, $685 and $417 for
The Oregon Municipal Bond Fund, Inc., The Crabbe
Huson Special Fund, Inc., Crabbe Huson Small Cap
Fund, The Crabbe Huson Asset Allocation Fund,
Inc., The Crabbe Huson Equity Fund, Inc., The
Crabbe Huson Income Fund, Inc., The Crabbe Huson
U.S. Government Income Fund, Inc., The Crabbe
Huson U.S. Government Money Market Fund, Inc.
and The Crabbe Huson Real Estate Investment
Fund, Inc., respectively.

Fees Paid Indirectly: The Funds have entered
into a custodian, recordkeeping, and pricing
agreement with Investors Fiduciary Trust Company
("IFTC"). IFTC's fees for these services are
subject to reduction by credits earned by each
Fund, based on the cash balances of the Funds
held by IFTC as Custodian. As of April 30,
1996, credits earned were $0, $0, $1,252, $183,
$158, $106, $48, $151 and $114 for The Oregon
Municipal Bond Fund, Inc., The Crabbe Huson
Special Fund, Inc., Crabbe Huson Small Cap Fund,
The Crabbe Huson Asset Allocation Fund, Inc.,
The Crabbe Huson Equity Fund, Inc., The Crabbe
Huson Income Fund, Inc., The Crabbe Huson U.S.
Government Income Fund, Inc., The Crabbe Huson
U.S. Government Money Market Fund, Inc. and The
Crabbe Huson Real Estate Investment Fund, Inc.,
respectively.

The Crabbe Huson Special Fund, Inc., The Crabbe
Huson Asset Allocation Fund, Inc., The Crabbe
Huson Equity Fund, Inc., and The Crabbe Huson
Real Estate Investment Fund, Inc., have entered
into a directed brokerage agreement with State
Street Brokerage Services, Inc.("SSBSI"). Under
this arrangement, SSBSI will pay the Funds a
percentage of commissions generated as credits,
and used to offset all or a portion of certain
outside service providers fees incurred by the
Funds. For the period ended April 30, 1996
credits earned of $16,151, $5,891, $27,319 and
$0 for The Crabbe Huson Special Fund, Inc., The
Crabbe Huson Asset Allocation Fund, Inc., The
Crabbe Huson Equity Fund, Inc. and The Crabbe
Huson Real Estate Investment Fund, Inc.,
respectively, were used to offset transfer
agency fees.

<PAGE>

NOTE 3. DISTRIBUTIONS TO SHAREHOLDERS

On December 6, 1995 the following distributions
were declared from net realized capital gains
from investment transactions. The dividend was
paid on December 6, 1995, to shareholders of
record on December 5, 1995, as shown below:

PER SHARE DOLLARS
Short-TermLong-TermShort-term
Long-Term
Capital GainCapital GainCapital
Gain Capital Gain
Distribution (1)Distribution
Distribution (1) Distribution
The Oregon Municipal Bond Fund, Inc.
The Crabbe Huson Special Fund, Inc.0.37640.1983
$23,686,427 $12,479,000
Crabbe Huson Small Cap Fund (2)
The Crabbe Huson Asset Allocation
Fund, Inc. 0.5232 0.60465,306,597
6,131,818
The Crabbe Huson Equity Fund, Inc.0.60380.3385
13,191,040 7,394,039
The Crabbe Huson Income Fund, Inc.
The Crabbe Huson U.S. Government
Income Fund, Inc.
The Crabbe Huson Real Estate
Investment Fund, Inc. 0.1225 238,364

(1) Short-term capital gains are taxable to
shareholders as ordinary income dividends.
(2) Investment operations did not commence until
February 20, 1996.

NOTE 4. AGREEMENT AND PLAN OF REORGANIZATION

On February 27, 1996 at a joint annual meeting
of the shareholders of record at the close of
business on December 20, 1995, of all Funds
except for The Crabbe Huson Special Fund, Inc.,
shareholders approved an Agreement and Plan of
Reorganization and Liquidation (the
"Reorganization") in which each Fund would
become a separate series of the Crabbe Huson
Funds, a business trust organized under the laws
of the State of Delaware (the "Trust"). Crabbe
Huson Small Cap Fund was originally organized as
a series of the Delaware business trust, and was
not subject to the reorganization proposal. The
Crabbe Huson Special Fund, Inc. did not have the
required percentage of outstanding shares voted
to approve the reorganization. The Crabbe Huson
Special Fund, Inc. will remain an Oregon
corporation. The Agreement provided, among
other things, for the transfer of the assets and
liabilities of each Fund to a corresponding
series of the Trust. The Agreement provided
that in consideration thereof, the shareholders
of each Fund would receive an equal amount of
shares in the corresponding series of the Trust
in exchange for their shares of each Fund, which
would subsequently be liquidated and dissolved.
It is currently contemplated that the
Reorganization will become effective in August,
1996.

<PAGE>

CRABBE HUSON FUNDS

NOTES TO FINANCIAL STATEMENTS (continued)
April 30, 1996
(Unaudited)

NOTE 5. CAPITAL SHARE TRANSACTIONS
Transactions in capital shares of the Funds were as follows:

<TABLE>
<CAPTION>
THE CRABBE HUSON CRABBE HUSON
SPECIAL FUND, INC. SMALL CAP FUND
---------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
---------------------------------------------------------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR SIX MONTHS SIX MONTHS
ENDED ENDED ENDED ENDED ENDED ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31, APRIL 30, APRIL 30,
1996 1995 1996 1995 1996* 1996*
---------- ---------- ------------ ------------ ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 12,158,476 65,374,197 $171,600,423 $928,135,711 558,500 $5,681,055
Shares issued in
reinvestment of dividends 3,307,900 78,213 45,474,908 1,030,774 0 0
---------- ---------- ------------ ------------ ------- ----------
15,466,376 65,452,410 217,075,331 929,166,485 558,500 5,681,055
Shares redeemed (25,976,262) (24,491,886) (365,504,134) (350,637,123) (345) (3,622)
---------- ---------- ------------ ------------ ------- ----------
Net increase (decrease) (10,509,886) 40,960,524 ($148,428,803) $578,529,362 558,155 $5,677,433
---------- ---------- ------------ ------------ ------- ----------
---------- ---------- ------------ ------------ ------- ----------
</TABLE>

<TABLE>
<CAPTION>
THE CRABBE HUSON THE CRABBE HUSON
ASSET ALLOCATION FUND, INC. EQUITY FUND, INC.
--------------------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------------------------------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
1996 1995 1996 1995 1996 1995 1996 1995
--------- --------- ----------- ----------- --------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold 2,144,118 3,651,020 $28,461,808 $47,567,984 7,418,395 16,135,368 $137,761,438 $277,119,565
Shares issued in
reinvestment of
dividends 872,294 213,856 11,523,225 2,807,183 1,173,779 79,947 21,649,718 1,237,639
--------- --------- ----------- ----------- --------- ---------- ------------ ------------
3,016,412 3,864,876 39,985,033 50,375,167 8,592,174 16,215,315 159,411,156 278,357,204
Shares redeemed (1,801,516) (2,415,859) (23,838,433) (31,368,205) (4,759,759) (4,218,957) (88,909,821) (72,930,361)
--------- --------- ----------- ----------- --------- ---------- ------------ ------------
Net increase
(decrease) 1,214,896 1,449,017 $16,146,600 $19,006,962 3,832,415 11,996,358 $ 70,501,335 $205,426,843
--------- --------- ----------- ----------- --------- ---------- ------------ ------------
--------- --------- ----------- ----------- --------- ---------- ------------ ------------

</TABLE>

*For the period from February 20, 1996 (commencement of operations) to
April 30, 1996.

<PAGE>

CRABBE HUSON FUNDS

NOTES TO FINANCIAL STATEMENTS (continued)
April 30, 1996
(Unaudited)

NOTE 5. CAPITAL SHARE TRANSACTIONS (continued)
Transactions in capital shares of the Funds were as follows:

<TABLE>
<CAPTION>
THE OREGON THE CRABBE HUSON
MUNICIPAL BOND FUND, INC. INCOME FUND, INC.
--------------------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------------------------------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
1996 1995 1996 1995 1996 1995 1996 1995
--------- --------- ----------- ----------- --------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold 199,324 552,364 $2,523,909 $6,744,052 133,231 398,837 $1,372,352 $3,890,790
Shares issued in
reinvestment of
dividends 38,169 73,838 482,312 906,976 14,612 33,473 150,621 329,268
--------- --------- ----------- ----------- --------- ---------- ------------ ------------
237,493 626,202 3,006,221 7,651,028 147,843 432,310 1,522,973 4,220,058
Shares redeemed (164,722) (822,850) (2,078,118) (9,931,939) (269,851) (274,572) (2,789,944) (2,699,168)
--------- --------- ----------- ----------- --------- ---------- ------------ ------------
Net increase (decrease) 72,771 (196,648) $ 928,103 ($2,280,911) (122,008) 157,738 ($1,266,971) $1,520,890
--------- --------- ----------- ----------- --------- ---------- ------------ ------------
--------- --------- ----------- ----------- --------- ---------- ------------ ------------
</TABLE>

<TABLE>
<CAPTION>
THE CRABBE HUSON THE CRABBE HUSON
U.S. GOVERNMENT INCOME FUND, INC. U.S. GOVERNMENT MONEY MARKET FUND, INC.
--------------------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------------------------------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
1996 1995 1996 1995 1996 1995 1996 1995
--------- -------- ---------- ----------- ---------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold 73,033 320,552 $784,163 $3,315,281 60,798,145 166,147,604 $60,798,146 $166,147,604
Shares issued in
reinvestment of
dividends 14,783 33,757 158,433 351,187 803,207 1,738,682 803,207 1,738,682
--------- -------- ---------- ----------- ---------- ----------- ------------ ------------
87,816 354,309 942,596 3,666,468 61,601,352 167,886,286 61,601,353 167,886,286
Shares redeemed (128,241) (464,645) (1,367,287) (4,812,243) (75,254,496) (145,554,619) (75,254,497) (145,554,619)
--------- -------- ---------- ----------- ---------- ----------- ------------ ------------
Net increase (decrease) (40,425) (110,336) ($424,691) ($1,145,775) (13,653,144) 22,331,667 ($13,653,144) $ 22,331,667
--------- -------- ---------- ----------- ---------- ----------- ------------ ------------
--------- -------- ---------- ----------- ---------- ----------- ------------ ------------
</TABLE>

<PAGE>

CRABBE HUSON FUNDS

NOTES TO FINANCIAL STATEMENTS (continued)
April 30, 1996
(Unaudited)

NOTE 5. CAPITAL SHARE TRANSACTIONS (continued)
Transactions in capital shares of the Funds were as follows:

<TABLE>
<CAPTION>
THE CRABBE HUSON REAL
ESTATE INVESTMENT FUND, INC.
-------------------------------------------------
SHARES AMOUNT
-------------------------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
1996 1995 1996 1995
-------- ------- ---------- ----------
<S> <C> <C> <C> <C>
Shares sold 341,038 821,200 $3,484,363 $7,937,889
Shares issued in
reinvestment of dividends 30,284 36,962 302,147 357,391
-------- ------- ---------- ----------
371,322 858,162 3,786,510 8,295,280
Shares redeemed (691,105) (822,760) (7,087,898) (7,975,781)
-------- ------- ---------- ----------
Net increase (decrease) (319,783) 35,402 ($3,301,388) $ 319,499
-------- ------- ---------- ----------
-------- ------- ---------- ----------
</TABLE>

<PAGE>

THIS PAGE IS LEFT BLANK INTENTIONALLY.

<PAGE>

CRABBE HUSON FUNDS

NOTES TO FINANCIAL STATEMENTS (continued)
April 30, 1996
(Unaudited)

NOTE 6. INVESTMENT TRANSACTIONS

For the period ended April 30, 1996, The Crabbe Huson U.S. Government Money
Market Fund, Inc. had aggregate security purchases and sales (including
maturities) of $126,198,604 and $140,386,021, respectively, with an
identified cost of $41,694,899 at April 30, 1996. Aggregate purchases, sales
and maturities for the period ended April 30, 1996 (excluding short-term
securities) for the remaining Funds, are as follows:

<TABLE>
<CAPTION>
THE CRABBE THE CRABBE
THE CRABBE HUSON ASSET THE CRABBE HUSON REAL
HUSON SPECIAL CRABBE HUSON ALLOCATION HUSON EQUITY ESTATE INVESTMENT
FUND, INC. SMALL CAP FUND FUND, INC. FUND, INC. FUND, INC.
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Purchases: $171,783,069 $4,749,244 $214,737,892 $245,345,245 $ 8,538,608
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Sales and Maturities: 274,116,949 1,012,947 213,573,257 189,040,789 13,257,943
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Identified Cost and Gross Unrealized Appreciation (Depreciation) at April 30, 1996:
Identified Cost $684,495,304 $5,469,127 $140,507,606 $441,995,516 $15,763,542
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Appreciation 99,673,226 529,638 9,506,297 52,078,913 1,618,041
Depreciation (98,843,321) (61,647) (2,363,869) (5,331,100) (608,508)
-----------------------------------------------------------------------------
Net unrealized
appreciation (depreciation) $ 829,905 $ 467,991 $ 7,142,428 $ 46,747,813 $ 1,009,533
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
THE CRABBE
THE OREGON HUSON THE CRABBE HUSON
MUNICIPAL BOND INCOME U.S. GOVERNMENT
FUND, INC. FUND, INC. INCOME FUND, INC.
------------------------------------------------
<S> <C> <C> <C>
Purchases: $ 3,280,647 $22,745,309 $16,432,396
------------------------------------------------
------------------------------------------------
Sales and Maturities: 2,333,637 23,827,417 16,872,361
------------------------------------------------
------------------------------------------------
Identified Cost and Gross Unrealized Appreciation (Depreciation) at April 30, 1996:
Identified Cost $ 27,392,239 $ 5,832,291 $ 7,938,284
------------------------------------------------
------------------------------------------------
Appreciation 950,734 83,387 34,415
Depreciation (166,192) (78,916) (142,759)
------------------------------------------------

Net unrealized
appreciation (depreciation) $ 784,542 $ 4,471 ($ 108,344)
------------------------------------------------
------------------------------------------------
</TABLE>

100

<PAGE>

THE OREGON MUNICIPAL BOND FUND, INC.
FINANCIAL HIGHLIGHTS

(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
The following information should be read in conjunction with the financial
statements and notes thereto appearing elsewhere in this Annual Report.
The calculations are based on average number of shares outstanding for each
period.

(Unaudited)
PERIOD YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
4/30/96 10/31/95 10/31/94 10/31/93 10/31/92 10/31/91
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $12.62 $11.99 $12.80 $12.20 $12.14 $11.74

INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.2688 0.5480 0.5418 0.5683 0.6168 0.6385
Net Realized & Unrealized
Gain (Loss) on Securities (0.2287) 0.6998 (0.8001) 0.6880 0.1521 0.4831
--------------------------------------------------------------------------
Total from Investment Operations 0.0401 1.2478 (0.2583) 1.2563 0.7689 1.1216

LESS DISTRIBUTIONS
Distributions from Net Investment Income 0.2688 0.5480 0.5419 0.5647 0.6168 0.6562
Distributions in Excess of Net Investment Income 0.0000 0.0000 0.0003 0.0000 0.0000 0.0000
Distributions from Capital Gains 0.0013 0.0698 0.0090 0.0916 0.0921 0.0654
--------------------------------------------------------------------------
Total Distributions 0.2701 0.0698 0.0093 0.0916 0.7089 0.7216
--------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $12.39 $12.62 $11.99 $12.80 $12.20 $12.14
--------------------------------------------------------------------------
--------------------------------------------------------------------------
TOTAL RETURN 0.29% 10.66% -2.06% 10.71% 6.51% 9.85%

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period $28,475 $28,070 $29,046 $29,408 $20,296 $18,383
Ratio of Expenses to Average Net Assets 0.98%(c)(d) 0.98% 0.98% 1.05% 1.11% 1.21%
Ratio of Net Investment Income to Average Net Assets 4.28%(c)(d) 4.45% 4.37% 4.51% 5.04% 5.36%
Portfolio Turnover Rate 8.28% 22.91% 20.58% 11.62% 25.30% 53.40%

RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
Ratio of Expenses to Average Net Assets 1.06%(c)(d) 1.08% 1.08% 1.09% 1.13% 1.24%
Ratio of Net Investment Income to Average Net Assets 4.20%(c)(d) 4.35% 4.26% 4.46% 5.01% 5.34%

RATIOS NET OF EXPENSES PAID INDIRECTLY
Ratio of Expenses to Average Net Assets 0.98%(d) -- -- -- -- --
Ratio of Net Investment Income to Average Net Assets 4.28%(d) -- -- -- -- --

YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
10/31/90 10/31/89 10/31/88 10/31/87(a) 9/30/87 9/30/86
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $11.72 $11.72 $11.08 $12.15 $11.93 $10.43

INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.6316 0.6794 0.6386 0.7311 0.7319 0.7720
Net Realized & Unrealized
Gain (Loss) on Securities 0.0522 0.0842 0.6411 (0.9983) (0.8051) 1.5265
---------------------------------------------------------------------------
Total from Investment Operations 0.6838 0.7636 1.2797 (0.2672) (0.0732) 2.2985

LESS DISTRIBUTIONS
Distributions from Net Investment Income 0.6401 0.6711 0.6386 0.7311 0.7319 0.7720
Distributions in Excess of Net Investment Income 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
Distributions from Capital Gains 0.0237 0.0925 0.0000 0.0760 0.0760 0.0255
---------------------------------------------------------------------------
Total Distributions 0.6638 0.7636 0.6386 0.8071 0.8079 0.7975
---------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $11.74 $11.72 $11.72 $11.08 $11.05 $11.93
---------------------------------------------------------------------------
---------------------------------------------------------------------------
TOTAL RETURN 6.00% 6.67% 12.02% -1.95% -0.95% 22.83%

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period $18,766 $19,173 $20,058 $14,277 $14,165 $8,861
Ratio of Expenses to Average Net Assets 1.38% 1.04% 1.21% 1.14% 1.31% 1.06%
Ratio of Net Investment Income to Average Net Assets 5.41% 5.82% 5.53% 5.66% 6.43% 6.34%
Portfolio Turnover Rate 58.52% 45.25% 31.44% 19.18% 18.73% 24.20%

RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
Ratio of Expenses to Average Net Assets 1.55% 1.16% 1.32% -- -- --
Ratio of Net Investment Income to Average Net Assets 5.23% 5.71% 5.42% -- -- --

RATIOS NET OF EXPENSES PAID INDIRECTLY
Ratio of Expenses to Average Net Assets -- -- -- -- -- --
Ratio of Net Investment Income to Average Net Assets -- -- -- -- -- --
</TABLE>

- ------------------------------------
(a) The Fund's Fiscal Year was changed from 9/30 to 10/31, effective 10/31/87,
which represents a conformed 12 month period.
(b) Disclosure of the average commission rate paid relates to the purchase and
sale of investment securities and is required for Funds that invest greater than
10% of average net assets in equity transactions. This disclosure is required
for fiscal periods beginning on or after September 1, 1995.
(c) Ratios include expenses paid indirectly through directed brokerage & certain
expense offset arrangements.
(d) Computed on an annualized basis.
(e) Commencement of operations - 4/9/87.
(f) Commencement of operations - 1/31/89.
(g) Commencement of operations - 4/4/94.
(h) Commencement of operations - 2/20/96.

101

<PAGE>

THE CRABBE HUSON SPECIAL FUND, INC.
FINANCIAL HIGHLIGHTS
(Continued)

(Unaudited)
PERIOD YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
4/30/96 10/31/95 10/31/94 10/31/93 10/31/92 10/31/91
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $13.80 $14.08 $11.82 $ 8.36 $12.05 $8.78

INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.0611 0.2704 0.0513 (0.0774) (0.0211) 0.0353
Net Realized & Unrealized
Gain (Loss) on Securities 1.5866 (0.2894) 2.3026 3.5374 (1.6211) 4.0155
---------------------------------------------------------------------
Total from Investment Operations 1.6477 (0.0190) 2.3539 3.4600 (1.6422) 4.0508

LESS DISTRIBUTIONS
Distributions from Net Investment Income 0.0611 0.0226 0.0000 0.0000 0.0260 0.1453
Distributions in Excess of Net Investment Income 0.1589 0.0000 0.0000 0.0000 0.0000 0.0000
Distributions from Capital Gains 0.5977 0.2384 0.0892 0.0000 2.0218 0.6355
---------------------------------------------------------------------
Total Distributions 0.8177 0.2610 0.0892 0.0000 2.0478 0.7808

Net Asset Value, End of Period $14.63 $13.80 $14.08 $11.82 $ 8.36 $12.05
---------------------------------------------------------------------
---------------------------------------------------------------------
Total Return 12.08% 1.78% 22.40% 41.39% 8.11% 49.58%

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period $777,488 $878,560 $319,811 $238,167 $5,857 $3,542
Ratio of Expenses to Average Net Assets 1.35% (c)(d) 1.40% 1.44% 1.57% 1.74% 1.92%
Ratio of Net Investment Income to Average Net Assets 0.85% (c)(d) 1.95% 0.39% (0.73)% (0.25)% 0.32%
Portfolio Turnover Rate 24.53% 122.97% 146.44% 73.29% 102.27% 256.68%
Average Commission Rate $0.0367 (b) -- -- -- -- --

RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
Ratio of Expenses to Average Net Assets 1.35% (c)(d) 1.40% 1.54% 1.59% 2.18% 2.40%
Ratio of Net Investment Income to Average Net Assets 0.85% (c)(d) 1.95% 0.29% (0.75)% (0.69)% (0.15)%

RATIOS NET OF EXPENSES PAID INDIRECTLY
Ratio of Expenses to Average Net Assets 1.35% (d) -- -- -- -- --
Ratio of Net Investment Income to Average Net Assets 0.86% (d) -- -- -- -- --

YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED
10/31/90 10/31/89 10/31/88 10/31/87(e)
------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $11.49 $9.69 $8.13 $10.00

INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.1546 0.2100 (0.0515) (0.0409)
Net Realized & Unrealized
Gain (Loss) on Securities (1.4317) 1.5900 1.6115 (1.8300)
------------------------------------------------------
Total from Investment Operations (1.2771) 1.8000 1.5600 (1.8709)

LESS DISTRIBUTIONS
Distributions from Net Investment Income 0.2240 0.0000 0.0000 0.0000
Distributions in Excess of Net Investment Income 0.0000 0.0000 0.0000 0.0000
Distributions from Capital Gains 1.2089 0.0000 0.0000 0.0000
------------------------------------------------------
Total Distributions 1.4329 0.0000 0.0000 0.0000
------------------------------------------------------

Net Asset Value, End of Period $8.78 $11.49 $9.69 $8.13
------------------------------------------------------
------------------------------------------------------
Total Return (10.90)% 18.68% 19.63% (30.32)% (d)

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period $2,926 $3,356 $4,393 $1,892
Ratio of Expenses to Average Net Assets 2.00% 2.00% 3.94% 2.60% (d)
Ratio of Net Investment Income to Average Net Assets 1.55% 1.96% 3.34% 0.05% (d)
Portfolio Turnover Rate 314.73% 275.62% 155.12% 3.90%
Average Commission Rate -- -- -- --

RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
Ratio of Expenses to Average Net Assets 2.86% 2.44% (d) -- --
Ratio of Net Investment Income to Average Net Assets 0.70% 1.53% (d) -- --

RATIOS NET OF EXPENSES PAID INDIRECTLY
Ratio of Expenses to Average Net Assets -- -- -- --
Ratio of Net Investment Income to Average Net Assets -- -- -- --
</TABLE>

102

<PAGE>

THE CRABBE HUSON ASSET ALLOCATION FUND, INC.
FINANCIAL HIGHLIGHTS
(Continued)

(Unaudited)
PERIOD YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
4/30/96 10/31/95 10/31/94 10/31/93 10/31/92
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $13.64 $12.87 $13.52 $11.68 $11.00

INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.1498 0.3361 0.2990 0.2323 0.3468
Net Realized & Unrealized
Gain (Loss) on Securities 0.6839 1.2090 (0.0817) 2.0889 0.8175
-----------------------------------------------------------------
Total from Investment Operations 0.8337 1.5451 0.2173 2.3212 1.1643

LESS DISTRIBUTIONS
Distributions from Net Investment Income 0.1483 0.3321 0.2879 0.2373 0.3463
Distributions in Excess of Net Investment Income 0.0000 0.0000 0.0000 0.0000 0.0000
Distributions from Capital Gains 0.5039 0.4430 0.5829 0.2439 0.1380
Distributions in excess of Capital Gains 0.5415 0.0000 0.0000 0.0000 0.0000
-----------------------------------------------------------------
Total Distributions 1.1937 0.7751 0.8708 0.4812 0.4843
-----------------------------------------------------------------

Net Asset Value, End of Period $13.28 $13.64 $12.87 $13.52 $11.68
-----------------------------------------------------------------
-----------------------------------------------------------------
Total Return 6.85% 13.00% 2.66% 20.93% 11.25%

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period $149,085 $136,530 $110,152 $85,390 $55,099
Ratio of Expenses to Average Net Assets 1.49% (c)(d) 1.48% 1.44% 1.46% 1.52%
Ratio of Net Investment Income to Average Net Assets 2.26% (c)(d) 2.57% 2.30% 1.85% 3.02%
Portfolio Turnover Rate 157.62% 225.70% 149.19% 116.10% 155.26%
Average Commission Rate $0.0461 (b) -- -- -- --

RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
Ratio of Expenses to Average Net Assets 1.49% (c)(d) 1.49% 1.52% 1.54% 1.62%
Ratio of Net Investment Income to Average Net Assets 2.26% (c)(d) 2.56% 2.22% 1.77% 2.92%

RATIOS NET OF EXPENSES PAID INDIRECTLY
Ratio of Expenses to Average Net Assets 1.48% (d) -- -- -- --
Ratio of Net Investment Income to Average Net Assets 2.27% (d) -- -- -- --

YEAR YEAR PERIOD
ENDED ENDED ENDED
10/31/91 10/31/90 10/31/89(f)
-------------------------------------------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period $9.24 $10.69 $10.00

INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.4143 0.4561 0.3990
Net Realized & Unrealized
Gain (Loss) on Securities 1.8208 (1.1200) 0.2910
-------------------------------------------------
Total from Investment Operations 2.2351 (0.6639) 0.6900

LESS DISTRIBUTIONS
Distributions from Net Investment Income 0.4335 0.7159 0.0000
Distributions in Excess of Net Investment Income 0.0000 0.0000 0.0000
Distributions from Capital Gains 0.0415 0.0702 0.0000
Distributions in excess of Capital Gains 0.0000 0.0000 0.0000
-------------------------------------------------
Total Distributions 0.4750 0.7861 0.0000
-------------------------------------------------

Net Asset Value, End of Period $11.00 $9.24 $10.69
-------------------------------------------------
-------------------------------------------------
Total Return 24.55% -6.40% 9.30% (d)

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period $23,893 $13,174 $12,578
Ratio of Expenses to Average Net Assets 1.76% 1.90% 1.91% (d)
Ratio of Net Investment Income to Average Net Assets 3.97% 4.51% 5.02% (d)
Portfolio Turnover Rate 157.89% 161.72% 88.14%
Average Commission Rate -- -- --

RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
Ratio of Expenses to Average Net Assets 1.79% 1.93% 1.93% (d)
Ratio of Net Investment Income to Average Net Assets 3.94% 4.49% 5.00% (d)

RATIOS NET OF EXPENSES PAID INDIRECTLY
Ratio of Expenses to Average Net Assets -- -- --
Ratio of Net Investment Income to Average Net Assets -- -- --
</TABLE>

103

<PAGE>

THE CRABBE HUSON EQUITY FUND, INC.
FINANCIAL HIGHLIGHTS
(Continued)

(Unaudited)
PERIOD YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
4/30/96 10/31/95 10/31/94 10/31/93
------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $18.17 $16.44 $16.08 $13.03

INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.0656 0.2223 0.1900 0.0981
Net Realized & Unrealized
Gain (Loss) on Securities 2.3018 1.7438 0.5668 3.4476
------------------------------------------------------
Total from Investment Operations 2.3674 1.9661 0.7568 3.5457

LESS DISTRIBUTIONS
Distributions from Net Investment Income 0.0656 0.0880 0.0344 0.1099
Distributions in Excess of Net Investment Income 0.0876 0.0000 0.0000 0.0000
Distributions from Capital Gains 0.8542 0.1481 0.3638 0.3858
------------------------------------------------------
Total Distributions 1.0074 0.2361 0.3982 0.4957
------------------------------------------------------

Net Asset Value, End of Period $19.53 $18.17 $16.44 $16.08
------------------------------------------------------
------------------------------------------------------
Total Return 13.96% 13.37% 7.89% 29.90%

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period $491,009 $387,184 $153,105 $34,520
Ratio of Expenses to Average Net Assets 1.39% (c)(d) 1.40% 1.45% 1.49%
Ratio of Net Investment Income to Average Net Assets 0.70% (c)(d) 1.30% 1.18% 0.67%
Portfolio Turnover Rate 47.06% 92.43% 106.49% 114.38%
Average Commission Rate $0.0464 (b) -- -- --

RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
Ratio of Expenses to Average Net Assets 1.39% (c)(d) 1.40% 1.56% 1.64%
Ratio of Net Investment Income to Average Net Assets 0.70% (c)(d) 1.30% 1.06% 0.52%

RATIOS NET OF EXPENSES PAID INDIRECTLY
Ratio of Expenses to Average Net Assets 1.38% (d) -- -- --
Ratio of Net Investment Income to Average Net Assets 0.71% (d) -- -- --

YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED
10/31/92 10/31/91 10/31/90 10/31/89(f)
----------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $12.57 $8.54 $10.50 $10.00

INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.1980 0.1861 0.2533 0.3146
Net Realized & Unrealized
Gain (Loss) on Securities 0.9186 4.1511 (1.6764) 0.1854
----------------------------------------------------------
Total from Investment Operations 1.1166 4.3372 (1.4231) 0.5000

LESS DISTRIBUTIONS
Distributions from Net Investment Income 0.0937 0.3072 0.3918 0.0000
Distributions in Excess of Net Investment Income 0.0000 0.0000 0.0000 0.0000
Distributions from Capital Gains 0.5629 0.0000 0.1451 0.0000
----------------------------------------------------------
Total Distributions 0.6566 0.3072 0.5369 0.0000
----------------------------------------------------------

Net Asset Value, End of Period $13.03 $12.57 $8.54 $10.50
----------------------------------------------------------
----------------------------------------------------------
Total Return 12.48% 52.44% -14.97% 6.72% (d)

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period $13,429 $5,930 $2,944 $5,018
Ratio of Expenses to Average Net Assets 1.55% 1.84% 1.93% 1.69% (d)
Ratio of Net Investment Income to Average Net Assets 1.57% 1.60% 2.56% 3.98% (d)
Portfolio Turnover Rate 180.72% 171.82% 265.25% 90.54%
Average Commission Rate -- -- -- --

RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
Ratio of Expenses to Average Net Assets 1.93% 2.41% 2.66% 1.97% (d)
Ratio of Net Investment Income to Average Net Assets 1.18% 1.03% 1.83% 3.68% (d)

RATIOS NET OF EXPENSES PAID INDIRECTLY
Ratio of Expenses to Average Net Assets -- -- -- --
Ratio of Net Investment Income to Average Net Assets -- -- -- --
</TABLE>

104

<PAGE>

THE CRABBE HUSON INCOME FUND, INC.
FINANCIAL HIGHLIGHTS
(Continued)

(Unaudited)
PERIOD YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
4/30/96 10/31/95 10/31/94 10/31/93
------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.26 $9.71 $10.75 $10.90

INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.2687 0.5329 0.4995 0.4637
Net Realized & Unrealized
Gain (Loss) on Securities (0.2736) 0.5754 (0.7669) 0.3265
------------------------------------------------------------
Total from Investment Operations (0.0049) 1.1083 (0.2674) 0.7902

LESS DISTRIBUTIONS
Distributions from Net Investment Income 0.2651 0.5329 0.4995 0.4879
Distributions in Excess of Net Investment Income 0.0000 0.0254 0.0080 0.0000
Distributions from Capital Gains 0.0000 0.0000 0.2710 0.4523
------------------------------------------------------------
Total Distributions 0.2651 0.5583 0.7785 0.9402
------------------------------------------------------------

Net Asset Value, End of Period $9.99 $10.26 $9.71 $10.75
------------------------------------------------------------
------------------------------------------------------------
Total Return -0.10% 11.92% -2.71% 7.73%

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period $5,785 $7,190 $5,273 $5,697
Ratio of Expenses to Average Net Assets 0.80% (c)(d) 0.80% 0.80% 0.81%
Ratio of Net Investment Income to Average Net Assets 5.13% (c)(d) 5.47% 4.92% 4.34%
Portfolio Turnover Rate 341.85% 543.15% 306.79% 260.22%

RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
Ratio of Expenses to Average Net Assets 2.44% (c)(d) 1.95% 2.16% 1.96%
Ratio of Net Investment Income to Average Net Assets 3.49% (c)(d) 4.32% 3.56% 3.19%

RATIOS NET OF EXPENSES PAID INDIRECTLY
Ratio of Expenses to Average Net Assets 0.80% (d) -- -- --
Ratio of Net Investment Income to Average Net Assets 5.13% (d) -- -- --

YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED
10/31/92 10/31/91 10/31/90 10/31/89(f)
---------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.63 $10.01 $10.27 $10.00

INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.6583 0.7038 0.6869 0.5545
Net Realized & Unrealized
Gain (Loss) on Securities 0.3569 0.6218 (0.2407) 0.2761
---------------------------------------------------------------
Total from Investment Operations 1.0152 1.3256 0.4462 0.8306

LESS DISTRIBUTIONS
Distributions from Net Investment Income 0.6588 0.7056 0.6840 0.5606
Distributions in Excess of Net Investment Income 0.0000 0.0000 0.0000 0.0000
Distributions from Capital Gains 0.0864 0.0000 0.0222 0.0000
---------------------------------------------------------------
Total Distributions 0.7452 0.7056 0.7062 0.5606
---------------------------------------------------------------

Net Asset Value, End of Period $10.90 $10.63 $10.01 $10.27
---------------------------------------------------------------
---------------------------------------------------------------
Total Return 9.74% 13.51% 4.43% 10.43%(d)

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period $5,634 $5,486 $2,123 $1,356
Ratio of Expenses to Average Net Assets 0.90% 0.98% 1.51% 1.15%(d)
Ratio of Net Investment Income to Average Net Assets 6.09% 6.82% 6.89% 7.23%(d)
Portfolio Turnover Rate 227.45% 115.76% 73.76% 86.60%

RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
Ratio of Expenses to Average Net Assets 1.94% 2.42% 3.07% 4.56%(d)
Ratio of Net Investment Income to Average Net Assets 5.06% 5.38% 5.33% 3.81%(d)

RATIOS NET OF EXPENSES PAID INDIRECTLY
Ratio of Expenses to Average Net Assets -- -- -- --
Ratio of Net Investment Income to Average Net Assets -- -- -- --
</TABLE>

105

<PAGE>

THE CRABBE HUSON U.S. GOVERNMENT INCOME FUND, INC.
FINANCIAL HIGHLIGHTS
(Continued)

(Unaudited)
PERIOD YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
4/30/96 10/31/95 10/31/94 10/31/93
------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.66 $10.27 $11.04 $10.91

INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.2462 0.5097 0.4648 0.4755
Net Realized & Unrealized
Gain (Loss) on Securities (0.1192) 0.4013 (0.6515) 0.2159
------------------------------------------------
Total from Investment Operations 0.1270 0.9110 (0.1867) 0.6914

LESS DISTRIBUTIONS
Distributions from Net Investment Income 0.2462 0.5097 0.4647 0.4848
Distributions in Excess of Net Investment Income 0.0008 0.0113 0.0035 0.0000
Distributions from Capital Gains 0.0000 0.0000 0.1120 0.0766
------------------------------------------------
Total Distributions 0.2470 0.5210 0.5802 0.5614
------------------------------------------------
NET ASSET VALUE, END OF PERIOD $10.54 $10.66 $10.27 $11.04
------------------------------------------------
------------------------------------------------
TOTAL RETURN 1.14% 9.12% -1.78% 6.71%(d)

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period $7,907 $8,426 $9,249 $11,218
Ratio of Expenses to Average Net Assets 0.75% (c)(d) 0.75% 0.75% 0.75% (d)
Ratio of Net Investment Income to Average Net Assets 4.53% (c)(d) 4.85% 4.39% 4.33% (d)
Portfolio Turnover Rate 198.14% 230.43% 76.09% 81.74%

RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
Ratio of Expenses to Average Net Assets 1.81% (c)(d) 1.46% 1.47% 1.26%
Ratio of Net Investment Income to Average Net Assets 3.47% (c)(d) 4.14% 3.66% 3.81%

RATIOS NET OF EXPENSES PAID INDIRECTLY
Ratio of Expenses to Average Net Assets 0.75% (d) -- -- --
Ratio of Net Investment Income to Average Net Assets 4.53% (d) -- -- --

YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED
10/31/92 10/31/91 10/31/90 10/31/89(f)
------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.69 $10.24 $10.28 $10.00

INCOME FROM INVESTMENT OPERATIONS

Net Investment Income 0.5801 0.6722 0.6768 0.5637
Net Realized & Unrealized
Gain (Loss) on Securities 0.2921 0.4542 (0.0326) 0.2852
Total from Investment Operations 0.8722 1.1264 0.6442 0.8489

LESS DISTRIBUTIONS
Distributions from Net Investment Income 0.5839 0.6746 0.6736 0.5689
Distributions in Excess of Net Investment Income 0.0000 0.0000 0.0000 0.0000
Distributions from Capital Gains 0.0683 0.0018 0.0106 0.0000
------------------------------------------------
Total Distributions 0.6522 0.6764 0.6842 0.5689
------------------------------------------------
NET ASSET VALUE, END OF PERIOD $10.91 $10.69 $10.24 $10.28
------------------------------------------------
------------------------------------------------
TOTAL RETURN 8.70% 11.17% 6.40% 11.15% (d)

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period $8,959 $3,748 $2,069 $1,717
Ratio of Expenses to Average Net Assets 0.80% 0.96% 1.42% 1.14% (d)

Ratio of Net Investment Income to Average Net Assets 5.35% 6.44% 6.72% 7.35% (d)
Portfolio Turnover Rate 105.52% 114.81% 87.71% 40.42%

RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
Ratio of Expenses to Average Net Assets 1.52% 2.15% 2.84% 3.40% (d)
Ratio of Net Investment Income to Average Net Assets 4.63% 5.25% 5.31% 5.09% (d)

RATIOS NET OF EXPENSES PAID INDIRECTLY
Ratio of Expenses to Average Net Assets -- -- -- --
Ratio of Net Investment Income to Average Net Assets -- -- -- --
</TABLE>

106

<PAGE>

THE CRABBE HUSON U.S. GOVERNMENT MONEY MARKET FUND, INC.
FINANCIAL HIGHLIGHTS
(Continued)

INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.0240 0.0521 0.0339 0.0250
Net Realized & Unrealized
Gain (Loss) on Securities 0.0000 0.0000 0.0000 0.0000
------------------------------------------------
Total from Investment Operations 0.0240 0.0521 0.0339 0.0250

LESS DISTRIBUTIONS
Distributions from Net Investment Income 0.0240 0.0521 0.0339 0.0250
Distributions in Excess of Net Investment Income 0.0000 0.0000 0.0000 0.0000
------------------------------------------------
Total Distributions 0.0240 0.0521 0.0339 0.0250
------------------------------------------------
Net Asset Value, End of Period $1.00 $1.00 $1.00 $1.00
------------------------------------------------
------------------------------------------------
Total Return 2.41% 5.30% 3.28% 2.53%

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period $41,061 $54,714 $32,383 $14,784
Ratio of Expenses to Average Net Assets 0.70% (c)(d) 0.70% 0.70% 0.70%
Ratio of Net Investment Income to Average Net Assets 4.82% (c)(d) 5.21% 3.39% 2.51%

RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
Ratio of Expenses to Average Net Assets 1.21% (c)(d) 1.16% 1.29% 1.32%
Ratio of Net Investment Income to Average Net Assets 4.30% (c)(d) 4.75% 2.81% 1.88%

RATIOS NET OF EXPENSES PAID INDIRECTLY
Ratio of Expenses to Average Net Assets 0.70% (d) -- -- --
Ratio of Net Investment Income to Average Net Assets 4.82% (d) -- -- --

YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED
10/31/92 10/31/91 10/31/90 10/31/89(f)
-------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00

INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.0332 0.0576 0.0737 0.0633
Net Realized & Unrealized
Gain (Loss) on Securities 0.0000 0.0000 0.0000 0.0000
-------------------------------------------------
Total from Investment Operations 0.0332 0.0576 0.0737 0.0633

LESS DISTRIBUTIONS
Distributions from Net Investment Income 0.0332 0.0576 0.0737 0.0633
Distributions in Excess of Net Investment Income 0.0000 0.0000 0.0000 0.0000
-------------------------------------------------
Total Distributions 0.0332 0.0576 0.0737 0.0633
-------------------------------------------------
Net Asset Value, End of Period $1.00 $1.00 $1.00 $1.00
-------------------------------------------------
-------------------------------------------------
Total Return 3.36% 13.76% 7.62% 10.05% (d)

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period $12,395 $14,907 $21,406 $10,735
Ratio of Expenses to Average Net Assets 0.75% 0.81% 0.80% 0.60% (d)
Ratio of Net Investment Income to Average Net Assets 3.32% 5.76% 7.57% 8.43% (d)

RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
Ratio of Expenses to Average Net Assets 1.09% 1.18% 1.33% 1.34% (d)
Ratio of Net Investment Income to Average Net Assets 2.98% 5.38% 7.04% 7.69% (d)

RATIOS NET OF EXPENSES PAID INDIRECTLY
Ratio of Expenses to Average Net Assets -- -- -- --
Ratio of Net Investment Income to Average Net Assets -- -- -- --
</TABLE>

107

<PAGE>

THE CRABBE HUSON REAL ESTATE INVESTMENT FUND, INC.
FINANCIAL HIGHLIGHTS
(Continued)

(Unaudited)
PERIOD YEAR PERIOD
ENDED ENDED ENDED
4/30/96 10/31/95 10/31/94(g)
----------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $9.69 $9.50 $10.00

INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.1897 0.4436 0.3664
Net Realized & Unrealized
Gain (Loss) on Securities 0.8619 0.3065 (0.6394)
Total from Investment Operations 1.0516 0.7501 (0.2730)

LESS DISTRIBUTIONS
Distributions from Net Investment Income 0.1996 0.4379 0.2287
Distributions in Excess of Net Investment Income 0.0000 0.0000 0.0000
Distributions from Capital Gains 0.1320 0.1222 0.0000
Total Distributions 0.3316 0.5601 0.2287

Net Asset Value, End of Period $10.41 $9.69 $9.50
Total Return 10.93% 8.31% -3.25%

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period $17,082 $18,986 $18,280
Ratio of Expenses to Average Net Assets 1.50% (c)(d) 1.50% 1.01% (b)(d)
Ratio of Net Investment Income to Average Net Assets 3.72% (c)(d) 4.59% 6.30% (b)(d)
Portfolio Turnover Rate 50.07% 59.53% 43.30%
Average Commission Rate $0.0518 (b) -- --

RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
Ratio of Expenses to Average Net Assets 1.77% (c)(d) 1.89% 2.03% (b)(d)
Ratio of Net Investment Income to Average Net Assets 3.45% (c)(d) 4.20% 5.28% (b)(d)

RATIOS NET OF EXPENSES PAID INDIRECTLY
Ratio of Expenses to Average Net Assets 1.50% (d) -- --
Ratio of Net Investment Income to Average Net Assets 3.72% (d) -- --
</TABLE>

108

<PAGE>

CRABBE HUSON SMALL CAP FUND
FINANCIAL HIGHLIGHTS
(Continued)

(Unaudited)
PERIOD
ENDED
4/30/96(h)
----------
<S> <C>
Net Asset Value, Beginning of Period $10.00

INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.0138
Net Realized & Unrealized
Gain (Loss) on Securities 1.0562
--------
Total from Investment Operations 1.0700

LESS DISTRIBUTIONS
Distributions from Net Investment Income 0.0000
Distributions in Excess of Net Investment Income 0.0000
Distributions from Capital Gains 0.0000
--------
Total Distributions 0.0000

Net Asset Value, End of Period $11.07
--------
--------
Total Return 10.70%

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period $6,290
Ratio of Expenses to Average Net Assets 1.64% (c)(d)
Ratio of Net Investment Income to Average Net Assets 0.56% (c)(d)
Portfolio Turnover Rate 40.65%
Average Commission Rate $0.0369 (b)

RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
Ratio of Expenses to Average Net Assets 2.46% (c)(d)
Ratio of Net Investment Income to Average Net Assets -0.26% (c)(d)

RATIOS NET OF EXPENSES PAID INDIRECTLY
Ratio of Expenses to Average Net Assets 1.50% (d)
Ratio of Net Investment Income to Average Net Assets 0.70% (d)
</TABLE>

109

<PAGE>

CRABBE HUSON FUNDS
PROXY VOTING RESULTS

The following proposals were voted upon at a joint annual meeting of
shareholders on February 27, 1996, with results shown below for each respective
proposal.

PROPOSAL 1.
To approve or disapprove for each Fund a reorganization (the "Reorganization")
in which each Fund would become a separate series of the Crabbe Huson Funds, a
business trust organized under the laws of the state of Delaware (the "Trust"),
pursuant to an Agreement and Plan of Reorganization and Liquidation whereby: (i)
all of the assets and liabilities of each Fund will be transferred to a
corresponding series of the Trust; (ii) shareholders of each Fund will receive
an equal amount of shares in the corresponding series of the Trust in exchange
for the shares of the Fund; and (iii) each Fund will subsequently be liquidated
and dissolved. The Reorganization is contingent upon approval of Proposals 3, 4
and 5 by the shareholders of the relevant Funds.
<TABLE>
<CAPTION>

FOR AGAINST ABSTAIN
-------------- ------------- -------------
<S> <C> <C> <C>
The Oregon Municipal Bond Fund, Inc. 1,639,376.510 52,639.820 78,890.490
The Crabbe Huson Special Fund, Inc. 36,213,976.644 1,560,874.874 1,922,565.929
The Crabbe Huson Asset Allocation
Fund, Inc. 7,656,336.267 215,048.225 271,606.637
The Crabbe Huson Equity Fund, Inc. 15,614,286.884 471,674.048 616,208.445
The Crabbe Huson Income Fund, Inc. 513,477.910 56,710.950 13,164.320
The Crabbe Huson U.S. Government
Income Fund, Inc. 575,492.290 3,941.070 7,599.100
The Crabbe Huson U.S. Government
Money Market Fund, Inc. 38,537,210.420 358,839.800 1,806,243.690
The Crabbe Huson Real Estate
Investment Fund, Inc. 1,505,410.179 10,108.902 16,345.792
</TABLE>

PROPOSAL 2.
To elect a Board of Directors for each Fund for the ensuing year or portion
thereof consisting of eight Directors and to authorize each Fund, prior to the
effective time of the Reorganization, to vote its beneficial interest in the
Trust for the election of the same eight individuals to serve as Trustees of the
Trust.
<TABLE>
<CAPTION>

THE OREGON MUNICIPAL THE CRABBE HUSON
BOND FUND, INC. SPECIAL FUND, INC.
------------------------------ -------------------------------
FOR WITHHOLD FOR WITHHOLD
------------- ---------- -------------- -------------
<S> <C> <C> <C> <C>
Gary L. Capps 1,808,215.996 28,518.825 51,993,670.530 1,371,925.654
James E. Crabbe 1,808,388.704 28,346.117 51,965,047.884 1,400,548.300
Richard S. Huson 1,808,388.704 28,346.117 52,013,104.973 1,352,491.211
Louis Scherzer 1,808,215.996 28,618.825 51,954,102.610 1,411,493.574
Bob L. Smith 1,808,215.996 28,618.825 51,995,751.282 1,369,844.902
Craig P. Stuvland 1,806,208.018 30,526.802 52,007,153.037 1,358,443.147
Richard P. Wollenberg 1,808,215.996 28,618.825 51,990,867.449 1,374,728.735
William Wendell Wyatt, Jr. 1,803,543.514 33,191.307 51,961,067.511 1,404,528.673
</TABLE>

110

<PAGE>

CRABBE HUSON FUNDS
PROXY VOTING RESULTS (CONTINUED)

PROPOSAL 2 (CONTINUED).

THE CRABBE HUSON ASSET THE CRABBE HUSON
ALLOCATION FUND, INC. EQUITY FUND, INC.
------------------------------ -------------------------------
FOR WITHHOLD FOR WITHHOLD
------------- ---------- -------------- -----------
<S> <C> <C> <C> <C>
Gary L. Capps 8,308,702.965 58,781.264 19,955,693.874 259,110.503
James E. Crabbe 8,311,222.417 56,261.812 19,963,556.842 251,247.535
Richard S. Huson 8,311,222.417 56,261.812 19,970,176.858 244,627.519
Louis Scherzer 8,294,677.892 72,606.337 19,942,263.184 272,541.193
Bob L. Smith 8,295,321.061 72,163.168 19,941,024.968 273,779.409
Craig P. Stuvland 8,293,474.456 74,009.773 19,950,702.141 264,102.236
Richard P. Wollenberg 8,295,321.061 72,163.168 19,950,243.668 264,560.709
William Wendell Wyatt, Jr. 8,283,793.192 83,691.037 19,945,693.356 269,111.021
</TABLE>

THE CRABBE HUSON
THE CRABBE HUSON U.S. GOVERNMENT
INCOME FUND, INC. INCOME FUND, INC.
---------------------------- ----------------------------
FOR WITHHOLD FOR WITHHOLD
----------- --------- ----------- ---------
<S> <C> <C> <C> <C>
Gary L. Capps 578,933.153 4,686.023 590,500.413 1,897.039
James E. Crabbe 578,933.153 4,686.023 590,500.413 1,897.039
Richard S. Huson 578,933.153 4,686.023 590,500.413 1,897.039
Louis Scherzer 578,933.153 4,686.023 590,500.413 1,897.039
Bob L. Smith 578,933.153 4,686.023 590,500.413 1,897.039
Craig P. Stuvland 578,933.153 4,686.023 590,500.413 1,897.039
Richard P. Wollenberg 578,933.153 4,686.023 590,500.413 1,897.039
William Wendell Wyatt, Jr. 578,933.153 4,686.023 590,500.413 1,897.039
</TABLE>

THE CRABBE HUSON THE CRABBE HUSON
U.S. GOVERNMENT MONEY REAL ESTATE
MARKET FUND, INC. INVESTMENT FUND, INC.
------------------------------- ------------------------------
FOR WITHHOLD FOR WITHHOLD
-------------- ------------- ------------- ---------
<S> <C> <C> <C> <C>
Gary L. Capps 39,561,777.573 1,140,516.340 1,557,691.725 9,226.148
James E. Crabbe 40,503,879.313 198,414.600 1,556,970.298 9,947.575
Richard S. Huson 40,520,254.333 182,039.580 1,557,691.725 9,226.148
Louis Scherzer 39,505,430.643 1,196,863.270 1,557,691.725 9,226.148
Bob L. Smith 39,559,532.373 1,142,761.540 1,557,691.725 9,226.148
Craig P. Stuvland 39,549,273.593 1,153,020.320 1,557,471.983 9,445.890
Richard P. Wollenberg 39,557,705.673 1,144,588.240 1,557,691.725 9,226.148
William Wendell Wyatt, Jr. 39,547,587.113 1,154,706.800 1,557,691.725 9,226.148
</TABLE>

111

<PAGE>

CRABBE HUSON FUNDS
PROXY VOTING RESULTS (CONTINUED)

PROPOSAL 3.
To authorize each Fund to vote its beneficial interest in the Trust to approve a
Master Investment Advisory Agreement between the Trust and The Crabbe Huson
Group, Inc., the Funds' current investment advisor ("Crabbe Huson Group").

FOR AGAINST ABSTAIN
------------- ---------- ----------
<S> <C> <C> <C>
The Oregon Municipal Bond Fund, Inc. 1,706,973.601 50,484.120 79,277.100
The Crabbe Huson Special Fund, Inc. 49,404,939.030 1,610,909.090 2,348,792.330
The Crabbe Huson Asset Allocation
Fund, Inc. 7,829,768.130 170,777.950 366,938.150
The Crabbe Huson Equity Fund, Inc. 19,018,985.580 442,045.630 753,773.170
The Crabbe Huson Income Fund, Inc. 514,410.950 57,138.090 12,070.140
The Crabbe Huson U.S. Government
Income Fund, Inc. 581,232.250 2,237.030 8,928.170
The Crabbe Huson U.S. Government
Money Market Fund, Inc. 39,376,032.440 388,134.140 938,127.300
The Crabbe Huson Real Estate
Investment Fund, Inc. 1,535,330.740 9,868.480 21,718.650
</TABLE>

PROPOSAL 4.
To authorize the Crabbe Huson Real Estate Investment Fund, Inc. to vote its
beneficial interest in the Real Estate Series of the Trust in favor of a Sub-
advisory Agreement among the Trust (on behalf of the Real Estate Series), Crabbe
Huson Group, and Aldrich, Eastman and Waltch, L.P.

FOR AGAINST ABSTAIN
------------- ---------- ----------
The Crabbe Huson Real Estate
Investment Fund, Inc. 1,537,226.654 12,045.781 17,645.438

PROPOSAL 5.
To authorize each Fund to vote its beneficial interest in the Trust to approve a
Distribution Plan pursuant to Rule 12b-1 of the Investment Company Act of 1940
and the rules and regulations thereunder.

FOR AGAINST ABSTAIN
-------------- ------------- -------------
<S> <C> <C> <C>
The Oregon Municipal Bond Fund, Inc. 1,671,475.950 71,916.490 93,342.380
The Crabbe Huson Special Fund, Inc. 45,952,761.280 4,601,664.000 2,810,215.180
The Crabbe Huson Asset Allocation
Fund, Inc. 7,716,921.620 270,154.880 380,407.730
The Crabbe Huson Equity Fund, Inc. 18,047,142.480 1,346,025.700 821,636.200
The Crabbe Huson Income Fund, Inc. 511,552.120 59,696.550 12,370.510
The Crabbe Huson U.S. Government
Income Fund, Inc. 581,431.190 3,569.228 7,397.034
The Crabbe Huson U.S. Government
Money Market Fund, Inc. 37,445,943.850 1,165,562.850 2,090,787.210
The Crabbe Huson Real Estate
Investment Fund, Inc. 1,517,568.190 27,065.700 22,283.990

</TABLE>

112

<PAGE>

CRABBE HUSON FUNDS
PROXY VOTING RESULTS (CONTINUED)

PROPOSAL 6.
To ratify the appointment by the Board of Directors of each Fund of KPMG Peat
Marwick LLP as independent auditors of each Fund.
<TABLE>
<CAPTION>

FOR AGAINST ABSTAIN
-------------- ----------- -------------
<S> <C> <C> <C>
The Oregon Municipal Bond Fund, Inc. 1,749,442.160 26,509.960 60,782.710
The Crabbe Huson Special Fund, Inc. 50,627,446.690 855,158.160 1,882,035.600
The Crabbe Huson Asset Allocation
Fund, Inc. 7,930,368.730 148,998.350 288,117.150
The Crabbe Huson Equity Fund, Inc. 19,487,063.800 248,478.900 479,261.680
The Crabbe Huson Income Fund, Inc. 518,248.692 56,625.592 8,744.892
The Crabbe Huson U.S. Government
Income Fund, Inc. 582,880.685 2,237.026 7,279.741
The Crabbe Huson U.S. Government
Money Market Fund, Inc. 38,632,586.030 1,295,656.200 774,051.680
The Crabbe Huson Real Estate
Investment Fund, Inc. 1,539,678.750 10,793.050 16,446.070

</TABLE>

113

<PAGE>
THE OREGON MUNICIPAL BOND FUND, INC.

SCHEDULE OF INVESTMENTS
October 31, 1995
<TABLE>
<CAPTION>
Face Market
Value Securities Description Value
---------- ----------------------------------------------------- -----------
<C> <S> <C>
FIXED INCOME SECURITIES - 98.3%
PRE-REFUNDED BONDS - 18.7%*
$ 40,000 Multnomah County
School District #1
9.200% 12/15/95 .................................. $ 40,255
1,000,000 Multnomah County
School District #1
9.300% 12/15/95 .................................. 1,006,490
295,000 Metropolitan Service District
5.750% 7/01/99 ................................... 314,912
270,000 Metropolitan Service District
6.600% 7/01/99 ................................... 295,987
250,000 Clackamas & Washington County
School District #003
7.200% 10/01/99 .................................. 275,937
200,000 Clackamas & Washington County
School District #003
7.250% 10/01/99 .................................. 221,000
400,000 Metropolitan Service District
7.000% 1/01/00 ................................... 446,000
353,000 Deschutes County (St.
Charles Medical Center)
6.750% 1/01/00 ................................... 390,947
100,000 Oregon State Department
General Services
7.200% 1/15/00 ................................... 112,500
150,000 Clackamas County School
District #12 6.500%
06/01/00 .......................................... 163,312
310,000 Emerald Peoples Utility
District 6.300%
11/01/00 .......................................... 339,450
125,000 Oregon Economic Development
Dept-Ser B 6.350%
1/01/01 ........................................... 137,500
250,000 Washington County School District
# 48J 6.200% 9/01/01 ........................... 272,187
250,000 Emerald Peoples Utility
District 6.500%
11/01/01 .......................................... 276,563
270,000 Port of Morrow (Pollution
Control) 6.375%
04/01/02 .......................................... 297,000
125,000 Marion & Polk County School
District #24J 5.700% 10/01/02 .................... 133,438
225,000 Marion & Polk County
School District #24-J
6.000% 10/01/02 .................................. 244,125
250,000 Oregon State Revenue
Series B 6.250%
1/01/08 ........................................... 273,750
-----------
5,241,353
-----------
INSURED BONDS - 43.8%
200,000 Jackson County School District
6.000% 6/01/01 (FSA) ............................. 215,250
250,000 Clackamas County Hospital
Facility Revenue 5.800%
3/01/02 (MBIA) .................................... 266,563

<CAPTION>
Face Market
Value Securities Description Value
------------ --------------------------------------------------------- -----------
<C> <S> <C>
$ 1,000,000 Portland Hospital Facility
Legacy Health System
6.400% 5/01/02 (AMBAC) ............................... $1,105,000
200,000 Yamhill County
School District #29J
4.800% 6/01/02 (FSA) ................................. 201,250
1,240,000 Hood River County Oregon
School District 6.000%
6/01/03 (AMBAC)........................................ 1,346,950
250,000 Emerald Peoples Utility
District 5.450%
11/01/03 (AMBAC)....................................... 263,750
500,000 Deschutes/Jefferson County
School Dist. 5.300%
6/01/04 (MBIA)......................................... 519,375
260,000 Hood River County Oregon
School Dist. 6.000%
6/01/04 (AMBAC) ...................................... 282,100
545,000 Jefferson County School District
#509J 6.500%
6/15/04 (FSA) ........................................ 609,038
400,000 University Puerto Rico Ser
5.100% 6/01/05 (MBIA)................................... 406,500
350,000 Portland Oregon Sewer System
(Revenue) 5.750%
10/01/05 (FGIC) ...................................... 377,125
500,000 Washington County Sewer System
(Revenue) 5.800%
10/01/05 (AMBAC) ..................................... 532,500
1,015,000 Crook County Oregon School
District 4.700%
2/01/06 (FSA).......................................... 984,550
400,000 Oregon State Facility
Series A 6.100%
9/01/06 (AMBAC) ...................................... 429,500
350,000 Washington County Sewer System
(Revenue) 5.900%
10/01/06 (AMBAC) ..................................... 373,625
1,065,000 McMinnville Sewer System
(Revenue) 4.700%
2/01/07 (FGIC) ....................................... 1,043,700
335,000 Jackson County School District
5.200% 6/01/07 (FSA) ................................. 340,025
1,000,000 Salem Keizer School
District #24-J 5.500%
6/01/07 (FGIC) ....................................... 1,028,750
1,100,000 Multnomah County S.D. Park Rose
5.600% 12/01/07 (FGIC)................................ 1,153,625
350,000 Portland Sewer System
6.000% 10/01/12 (FGIC)................................ 366,188
500,000 McMinnville Sewer System
(Revenue) 5.000%
2/01/14 (FGIC) ...................................... 472,500
12,317,864
CERTIFICATE OF PARTICIPATION BONDS - 1.0%
250,000 City of Portland
6.950% 04/01/99 ...................................... 272,813
</TABLE>

*Dates reflect pre-refunded dates.
See accompanying notes to financial statements.

114

<PAGE>

THE OREGON MUNICIPAL BOND FUND, INC.
SCHEDULE OF INVESTMENTS
October 31, 1995
<TABLE>
<CAPTION>
Face Market
Value Securities Description Value
----------- ---------------------------------------------------- -----------
<C> <S> <C>
STATE OF OREGON
GENERAL OBLIGATION - 9.4%
$ 240,000 State of Oregon G. O.
7.700% 03/01/02................................... $ 253,800
100,000 State of Oregon G. O.
9.000% 04/01/03 ................................. 126,750
205,000 State of Oregon G.O.
8.200% 07/01/04................................... 254,969
150,000 State of Oregon G.O.
7.200% 07/01/04................................... 176,250
110,000 State of Oregon G.O.
6.000% 08/01/04................................... 119,625
200,000 State of Oregon G. O.
9.000% 10/01/04 .................................. 230,500
345,000 State of Oregon G.O.
6.750% 05/01/05................................... 395,025
250,000 State of Oregon G. O.
(Veterans) 7.250% 07/01/06 ........................ 299,063
200,000 State of Oregon G. O.
(Veterans) 8.250% 01/01/07 ........................ 254,000
200,000 State of Oregon G. O.
(Veterans) 7.250% 01/01/07 ....................... 239,750
100,000 State of Oregon G.O. (Alt Energy)
6.400% 01/01/08 .................................. 106,125
130,000 State of Oregon G.O.
9.200% 04/01/08 .................................. 178,588
-----------
2,634,445
-----------
REVENUE BONDS - 2.7%
545,000 Oregon State Light Rail
7.000% 06/01/04 .................................. 627,431
125,000 Oregon State Fair & Expo
Revenue 7.375% 10/01/06 ........................... 128,154
-----------
755,585
-----------
OTHER BONDS
GENERAL OBLIGATION - 12.7%
225,000 City of Portland Water G.O.
3.700% 12/01/00 .................................. 230,062
330,000 Puerto Rico G.O.
7.125% 07/01/02 .................................. 350,625
445,000 Washington & Clackamas School
District 5.250% 6/01/03 .......................... 460,019
300,000 Deschutes G.O. School
District #1 5.800% 02/01/04 ...................... 316,875
400,000 Washington & Clackamas School
District 5.250 6/01/05 .......................... 407,000
200,000 Clackamas Community College
5.100% 12/01/05 ................................... 203,750
1,000,000 Tri-Met Light Rail
5.900% 07/01/06 .................................. 1,053,750
300,000 Salem Oregon Series A
5.875% 1/01/07 ................................... 310,875
230,000 Lane County Area Education District
4.850% 6/01/08 ................................... 224,825
-----------
3,557,781
-----------

<CAPTION>
Face Market
Value Securities Description Value
----------- --------------------------------------------------------- -----------
<C> <S> <C>
OTHER REVENUE BONDS - 10.0%
$ 200,000 City of Portland (Hydro Electric
Power) 6.500% 10/01/97 ............................ $ 201,780
335,000 Central Lincoln PUD
6.500% 01/01/02 .................................. 367,662
600,000 Clackamas County Hospital (Sisters
of Providence) 6.200% 10/01/02 .................... 646,500
350,000 City of Portland (Urban Renewal)
5.700% 06/01/04 .................................. 370,125
420,000 Multnomah County School District
5.000% 3/01/07 ................................... 417,375
765,000 Salem Educational Facility (Revenue)
6.000% 04/01/10 .................................. 797,512
-----------
2,800,954
-----------

Total Investments - 98.3% 27,580,795
(Cost $26,215,041)**
Other Assets and (Liabilities), Net - 1.7% 489,576
-----------

TOTAL NET ASSETS - 100.0% $28,070,371
-----------
-----------
</TABLE>

<TABLE>
<S> <C>
PORTFOLIO ALLOCATION TABLE:

Education................................................ 43.7%
General Obligation....................................... 10.6
General Services......................................... 8.2
Hospital................................................. 8.7
Public Utility........................................... 5.2
Transportation........................................... 6.0
Economic Development..................................... 3.8
Water & Sewer............................................ 12.1

Total Investments........................................ 98.3%
</TABLE>

**Aggregate cost for Federal income tax purposes is identical.
See accompanying notes to financial statements.

115

<PAGE>

THE CRABBE HUSON SPECIAL FUND, INC.

SCHEDULE OF INVESTMENTS
October 31, 1995

<TABLE>
<CAPTION>
Market
Shares Securities Description Value
- ---------------------- ----------------------------------------------- --------------
<S> <C> <C>
CONVERTIBLE PREFERRED - 0.5%
----------------------------
50,000 Olympic Financial Ltd ......................... $ 4,237,500
--------------
COMMON STOCK - 74.5%
--------------------
CONSUMER CYCLICALS
Automotive - 0.5%
91,800 Exide Corp .................................... 4,027,725
--------------
Consumer Products - 2.9%
783,100 * General Instrument Corp........................ 14,878,900
745,500 Juno Lighting, Inc ............................ 10,809,750
25,688,650
Retail - 7.6%
1,275,600 * Ann Taylor .................................... 14,031,600
1,536,900 * Bombay Co, Inc ................................ 9,029,288
1,122,100 * Burlington Coat Factory ....................... 12,483,363
753,100 Cato Corp CL A ................................ 4,612,738
1,496,000 Phillips-Van Heusen ........................... 15,147,000
631,600 Ross Stores, Inc .............................. 9,908,225
220,700 * Sports & Recreation Inc ....................... 1,627,663
--------------
66,839,877
--------------
CONSUMER STAPLES - 5.0%
771,900 * Fred Meyer Inc ................................ 14,376,638
679,200 Hudson Foods Inc CL A ......................... 9,593,700
592,400 * Paragon Trade Brands, Inc ..................... 9,404,350
1,870,400 * Payless Cashways, Inc ......................... 10,754,800
--------------
44,129,488
--------------
BASIC MATERIALS & INDUSTRIAL
Building Materials - 1.4%
164,900 Fleetwood Enterprises ......................... 3,380,450
1,393,900 Morrison Knudsen Corp ......................... 9,060,350
--------------
12,440,800
--------------
Chemicals -1.1%
781,200 Crompton & Knowles Corp ....................... 9,862,650
--------------
Equipment & Machinery - 3.4%
810,800 Giddings & Lewis, Inc ......................... 13,074,150
1,341,500 MK Rail Corp .................................. 9,558,188
213,500 Stewart & Stevenson Serv ...................... 4,857,125
89,800 Wabash National Corp .......................... 2,278,675
--------------
29,768,138
--------------
Forest Products & Packaging - 1.9%
783,900 Longview Fibre Co ............................. 11,366,550
332,800 TJ International, Inc ......................... 5,761,600
--------------
17,128,150
--------------
Metals & Mining - 5.0%
791,600 Battle Mountain Gold .......................... 6,035,950
504,600 Huntco, Inc ................................... 6,559,800
817,500 Oregon Steel Mills Inc ........................ 11,649,375
182,200 * Pegasus Gold Inc .............................. 2,004,200
1,757,500 Sante Fe Pacific Gold Co ...................... 17,355,313
--------------
43,604,638
--------------
Pollution Control - 2.0%
5,167,800 * Rollins Environmental Services ................ 17,441,325
--------------

ENERGY - 5.5%
189,600 Anadarko Petroleum Corp ....................... 8,223,900
98,400 Asarco, Inc ................................... 3,173,400
18,300 Devon Energy Corp ............................. 398,025

</TABLE>

<TABLE>
<CAPTION>
Market
Shares Securities Description Value
- ---------------------- ----------------------------------------------- --------------
<S> <C> <C>
ENERGY - (continued)
916,900 * Forcenergy Gas Exploration ..................... $ 8,939,775
589,500 Holly Corp ..................................... 12,821,625
432,500 * Oryx Energy Corp ............................... 4,973,750
983,400 Snyder Oil Corp ................................ 10,079,850
--------------
48,610,325
--------------
FINANCIAL - 8.4%
347,000 American Financial Group Inc.................... 9,716,000
544,200 * Citation Insurance Group ....................... 2,414,888
795,000 John Alden Financial Corp....................... 16,496,250
112,600 * Olympic Financial Ltd .......................... 2,054,950
620,700 * Risk Capital Holdings Inc ...................... 13,655,400
739,300 * 20th Century Industries ........................ 12,290,863
581,900 * Zurich Reinsurance Centre ...................... 16,729,625
--------------
73,357,976
--------------
HEALTHCARE - 12.7%
288,100 * Cor Therapeutices .............................. 2,989,038
1,452,800 * Coventry Corp .................................. 28,511,200
330,500 * Grancare Inc ................................... 4,833,563
291,700 Grupo Casa Autrey - ADR ........................ 3,719,175
918,100 Integrated Health Services ..................... 21,001,538
756,500 * Perrigo Co ..................................... 9,267,125
252,400 * Scherer R.P. Corp .............................. 11,231,800
720,800 * Sofamor Danek Group, Inc ....................... 17,659,600
1,073,100 * Sun Healthcare Group, Inc ...................... 12,743,063
--------------
111,956,102
--------------
REAL ESTATE INVESTMENT TRUST - 2.9%
1,626,600 * Catellus Development Corp ...................... 8,946,300
317,700 Crown American Realty .......................... 2,422,463
629,600 Prime Residential, Inc ......................... 11,018,000
217,000 Prime Retail, Inc .............................. 2,631,125
--------------
25,017,888
--------------
TECHNOLOGY - 5.1%
1,014,800 * 3D0 Co ......................................... 10,909,100
1,108,800 * Cray Research .................................. 23,007,600
1,271,700 * Zenith Electronics Corp ........................ 10,650,480
--------------
44,567,180
--------------
TRANSPORTATION - 9.1%
1,154,300 Airborne Freight Corp .......................... 30,300,375
906,600 * Alaska Air Group ............................... 13,485,675
268,600 Hunt (JB) Transportation Serv .................. 4,163,300
698,500 * Landstar System Inc ............................ 18,335,625
308,900 Teekay Shipping Corp ........................... 7,181,925
115,900 TNT Freightways Corp ........................... 2,086,200
359,900 Yellow Corp .................................... 4,723,688
--------------
80,276,788
--------------

Total Common Stocks 654,717,700
--------------
OPTIONS - 2.5%
--------------
Put Options
70,000 Cypress Semiconductor Corp
@ 45, expiring 12/15/95 ........................ 691,250
14,269,400 Morgan Stanley High Tech Index
@ 350, expiring 6/21/96 ........................ 4,913,240
15,804,800 Morgan Stanley High Tech Index
@ 316, expiring 6/21/96 ........................ 2,985,527
15,384,615 Morgan Stanley High Tech Index
@ 325, expiring 6/21/96 ........................ 3,380,000
45,839,300 Morgan Stanley High Tech Index
@ 327, expiring 6/21/96 ........................ 10,483,448
--------------
22,453,465
--------------
</TABLE>

*Non-income producing

See accompanying notes to financial statements.

116
<PAGE>
THE CRABBE HUSON SPECIAL FUND, INC.

SCHEDULE OF INVESTMENTS
October 31, 1995

<TABLE>
<CAPTION>
Shares
or face Market
Value Securities Description Value
- ---------------------- ----------------------------------------------- --------------
<S> <C> <C>
SHORT-TERM INVESTMENTS - 9.8% **
--------------------------------
Treasury Bills - 1.3%
U.S. Treasury Bill
$ 5,000,000 5.270% 11/24/95 ............................. $ 4,983,148
4,000,000 5.160% 12/21/95 ............................. 3,971,333
2,285,000 5.260% 10/17/96 ............................. 2,167,460
--------------
11,121,941
--------------
Discount Notes - 8.5%
Federal Farm Credit
3,000,000 5.480% 12/15/95 ............................. 2,979,907
3,500,000 5.500% 12/22/95 ............................. 3,472,729
865,000 5.520% 12/07/95 ............................. 860,225
500,000 5.530% 11/28/95 ............................. 497,926
1,000,000 5.550% 11/03/95 ............................. 999,692
4,010,000 5.560% 11/09/95 - 1/04/96 ................... 3,984,053
8,660,000 5.570% 11/27/95 - 1/04/96 ................... 8,615,496
1,000,000 5.590% 11/17/95 ............................. 997,516
305,000 5.610% 11/13/95 ............................. 304,430

Federal Home Loan
2,000,000 5.470% 1/22/96 .............................. 1,975,081
1,590,000 5.480% 12/28/95 ............................. 1,576,204
4,000,000 5.490% 1/30/96 .............................. 3,945,100
3,500,000 5.500% 12/29/95 ............................. 3,468,986
3,250,000 5.520% 12/08/95 - 12/13/95 .................. 3,230,028
3,155,000 5.540% 11/24/95 - 12/18/95 .................. 3,141,414
7,000,000 5.550% 1/02/96 - 1/3/96 ..................... 6,932,552
11,450,000 5.560% 11/07/95 - 1/25/96 ................... 11,347,657
6,000,000 5.570% 11/06/95 - 1/10/96 ................... 5,945,460
4,445,000 5.580% 1/05/96 - 1/08/96..................... 4,399,585
1,500,000 5.590% 11/13/95 ............................. 1,497,205
4,465,000 5.620% 11/01/95 - 11/15/95................... 4,463,984
--------------
74,635,230
--------------

Total Short-Term Investments 85,757,171
--------------

Total Investments -87.3% 767,165,836
(Cost 789,902,314)***
Cash - 0.2% 2,028,004
--------------

SECURITIES SOLD SHORT - (15.1%)
-------------------------------
COMMON STOCKS
Computers - 3.6%
180,700 Computer Associates Intl, Inc ................. (9,938,500)
107,700 Micro Warehouse Inc ........................... (4,792,650)
222,500 Sun Microsystems, Inc ......................... (17,355,000)
--------------
(32,086,150)
--------------
</TABLE>

<TABLE>
<CAPTION>
Shares
or face Market
Value Securities Description Value
- ---------------------- ----------------------------------------------- --------------
<S> <C> <C>
Semiconductors - 4.3%
408,150 Alliance Semiconductor ......................... ($12,550,611)
410,100 Cypress Semiconductor .......................... (14,456,025)
96,200 Microchip Technology Inc ....................... (3,817,938)
100,000 Micron Technology .............................. (7,062,500)
--------------
(37,887,074)
--------------
Software - 7.2%
150,000 Adobe Systems, Inc ............................. (8,550,000)
93,200 Broderbund Software ............................ (6,465,750)
431,900 Gartner Group Inc CL A ......................... (18,841,638)
854,000 Tellabs, Inc ................................... (29,036,000)
--------------
(62,893,388)
--------------

Total Securities Sold Short - (15.1%) (132,866,612)
--------------
(Proceeds $116,397,420)****
Other Assets and (Liabilities), Net - 27.6% 242,232,606
--------------
TOTAL NET ASSETS - 100.0% $878,559,834
--------------
--------------

</TABLE>

**Rates reflect purchase yield to maturity.
***Aggregate cost for Federal income tax purposes is $790,872,568.
****Aggregate proceeds for Federal income tax purposes is $119,775,124.

See accompanying notes to financial statements.

117

<PAGE>

THE CRABBE HUSON ASSET ALLOCATION FUND, INC.

SCHEDULE OF INVESTMENTS
October 31, 1995

Face Market
Value Securities Description Value
- ----------------------- ---------------------------------------- --------------
FIXED INCOME SECURITIES - 50.2%
------------------------------

GOVERNMENT BONDS - 33.2%
$ 10,765,000 U.S. Treasury Note
6.000% 8/31/97 ........................ $ 10,834,218
7,465,000 U.S. Treasury Note
6.250% 8/31/00 ........................ 7,615,046
3,870,000 U.S. Treasury Note
6.500% 8/15/05 ........................ 4,005,837
21,300,000 U.S. Treasury Bond
6.875% 8/15/25 ........................ 22,861,290
-------------
45,316,391
-------------

CORPORATE BONDS - 7.4%
600,000 Baxter International
7.500% 5/01/97 ........................ 612,000
500,000 GMAC
8.000% 10/01/99 ....................... 527,500
550,000 Upjohn Co
5.875% 4/15/00 ........................ 539,687
550,000 Pepsico, Inc
5.875% 6/01/00 ........................ 543,812
400,000 American Express Credit
6.500% 8/01/00 ........................ 404,500
700,000 Ford Motor Credit
6.250% 11/08/00 ....................... 696,500
725,000 GMAC
9.000% 10/15/02 ....................... 815,625
550,000 IBM Corp
7.250% 11/01/02 ....................... 576,812
550,000 Tennessee Valley Authority
6.125% 7/15/03 ........................ 540,375
550,000 JP Morgan & Company
7.625% 9/15/04 ........................ 585,062
550,000 Pacific Bell
6.250% 3/01/05 ........................ 539,687
550,000 Anheuser Busch
7.000% 9/01/05 ........................ 566,500
550,000 Bear Stearns Co.
6.875% 10/01/05 ...................... 549,312
600,000 Snap-on, Inc
6.625% 10/01/05 ....................... 609,000
600,000 Wal-Mart Stores
8.000% 9/15/06 ........................ 672,000
550,000 Eli Lilly
8.375% 12/01/06 ....................... 633,187
600,000 AT&T Corp
7.750 3/01/07 ......................... 653,250
-------------
10,064,809
-------------

AGENCIES - 5.6%
420,000 International Bank Recon.
& Dev. Floater 5.890%**
8/07/97 ............................... 378,415
1,400,000 Federal Home Loan Bank
8.220% 12/22/97 ...................... 1,403,430
1,500,000 SLMA Treasury Ind. Floater
(10-Year Treasury - 180 BP)
4.680% 2/11/98 ....................... 1,470,000

Shares
or Face Market
Value Securities Description Value
- ----------------------- ---------------------------------------- --------------
<S> <C> <C>
$ 900,000 Federal National Mortgage Association
6.080% 9/25/00................................. $ 902,205
1,200,000 Federal National Mortgage Association
8.25% 12/18/00................................. 1,314,960
1,000,000 Federal Home Loan Bank
7.590% 3/10/05 ................................ 1,088,060
1,000,000 Federal National Mortgage Association
7.375% 3/28/05 ................................ 1,071,160
-------------
7,628,230
-------------
FHLMC - 2.9%
109,807 FHLMC Pool #281037
9.250% 11/01/16 ............................... 114,007
1,067,640 FHLMC Pool #303033
9.000% 4/01/17 ................................ 1,103,480
1,400,000 FHLMC Pool #TBA
7.000% 10/01/25 ............................... 1,388,406
1,400,000 FHLMC Pool #TBA
7.500% 10/01/25 ............................... 1,415,093
-------------
4,020,986
-------------
CMO - 1.1%
1,645,000 GCA GNMA 1993 - PO 1 - B 1,515,970
-------------
Total Fixed Income Securities 68,546,386
-------------

CONVERTIBLE PREFERRED - 0.8%
----------------------------
20,000 Delta Air Lines ................................. 1,107,500
------------

COMMON STOCK - 45.3%
---------------------
CONSUMER CYCLICALS
Automotive - 1.5%
47,300 General Motors Corp ............................. 2,069,375
------------

Consumer Products - 2.2%
23,200 Bausch & Lomb, Inc .............................. 803,300
29,300 Brunswick Corp .................................. 571,350
5,500 Quaker Oats ..................................... 187,687
15,000 Rubbermaid, Inc ................................. 391,875
72,800 Sunbeam Corporation ............................. 1,092,000
-------------
3,046,212
-------------
Retail - 3.4%
8,500 Dayton-Hudson ................................... 584,375
27,600 Limited, Inc .................................... 507,150
41,400 Liz Claiborne, Inc .............................. 1,174,725
68,300 * Price/Costco, Inc ............................... 1,161,100
34,500 Wal-Mart Stores, Inc ............................ 746,062
34,100 Woolworth Corp .................................. 498,712
-------------
4,672,124
-------------
BASIC MATERIALS AND INDUSTRIAL
Building Materials - 2.1%
100,000 * USG Corp ........................................ 2,912,500
-------------

Chemicals -0.2%
34,600 * Uniroyal Chemical Corp .......................... 263,825
-------------

Equipment & Machinery - 0.4%
27,100 * Detroit Diesel Corp ............................. 481,025
-------------

</TABLE>

*Non-income producing
**Zero-coupon bonds- rates reflect purchase yield to maturity.
See accompanying notes to financial statements.

118

<PAGE>

THE CRABBE HUSON ASSET ALLOCATION FUND, INC.

SCHEDULE OF INVESTMENTS
October 31, 1995

Market
Shares Securities Description Value
- ----------------------- ---------------------------------------- --------------
<S> <C> <C>

COMMON STOCK - (continued)
--------------------------
BASIC MATERIALS AND INDUSTRIAL - (continued)

Forest Products & Packaging - 2.3%
56,100 * Domtar, Inc ............................. $ 511,912
111,400 Louisiana Pacific Corp .................. 2,659,675
-------------
3,171,587
-------------
Metals & Mining - 4.1%
107,200 * Bethlehem Steel Corp .................... 1,407,000
79,000 J & L Specialty Steel ................... 1,293,625
135,600 * National Steel Corp - Class B ........... 1,796,700
22,800 Nucor Corp .............................. 1,097,250
-------------
5,594,575
-------------
ENERGY - 7.1%
35,000 Apache Corp ............................. 892,500
55,900 Burlington Resources, Inc ............... 2,012,400
62,600 Dresser Industries ...................... 1,298,950
52,100 Enserch Corp ............................ 755,450
84,400 * Enserch Exploration ..................... 833,450
63,300 Occidental Petroleum Corp ............... 1,360,950
25,300 Tenneco, Inc ............................ 1,110,037
24,300 Union Texas Petro Hldgs ................. 437,400
35,300 Unocal Corp ............................. 926,625
-------------
9,627,762
-------------
FINANCIAL - 6.4%
56,700 Ahmanson (H.F.) & Co .................... 1,417,500
48,220 Bear Stearns Cos, Inc ................... 958,372
119,500 Equitable Companies ..................... 2,539,375
4,300 * Prudential Reinsurance Hlds ............. 87,612
34,600 Salomon, Inc ............................ 1,249,925
68 * Transport Holdings ...................... 2,669
13,700 Travelers, Inc .......................... 691,850
58,900 U.S. Bancorp ............................ 1,744,929
-------------
8,692,232
-------------
HEALTHCARE - 2.7%
30,500 Allergan, Inc ........................... 895,937
14,700 * Apria Healthcare Group .................. 317,887
66,700 * Humana, Inc ............................. 1,409,037
27,600 U S Healthcare .......................... 1,062,600
-------------
3,685,461
-------------
REAL ESTATE INVESTMENT TRUST - 2.0%
52,100 Debartolo Realty Corp ................... 677,300
38,200 First Industrial Realty Trust ........... 778,325
53,400 Spieker Properties ...................... 1,294,950
-------------
2,750,575
-------------
TECHNOLOGY - 1.1%
36,400 * Tandem Computers, Inc ................... 409,500
43,100 * Unisys Corp ............................. 242,437
89,900 * Zenith Electronics ...................... 752,912
-------------
1,404,849
-------------
TELECOMMUNICATIONS - 4.0%
21,800 AT&T Corp ............................... 1,395,200
65,500 Comcast Corp Special Class A ............ 1,170,812
51,703 * Cox Communications, Inc Class A ......... 969,431
22,500 Time Warner, Inc ........................ 821,250
80,700 Westinghouse Electric ................... 1,139,887
-------------
5,496,580
-------------
Shares
or Face Market
Value Securities Description Value
- ----------------------- ---------------------------------------- --------------
<S> <C> <C>

TRANSPORTATION - 5.8%
23,800 * AMR Corp ........................................ $ 1,570,800
13,800 Burlington Northern Santa Fe .................... 1,157,475
79,800 Consolidated Freightways ........................ 1,855,350
23,000 Delta Air Lines, Inc ............................ 1,509,375
38,900 Ryder System .................................... 938,462
40,707 * Southern Pacific Rail Corp ...................... 905,730
-------------
7,937,192
-------------

Total Common Stocks 61,805,874
-------------

SHORT-TERM INVESTMENTS - 0.7%
-----------------------------

TREASURY BILLS - 0.7%
1,000,000 U.S. Treasury Bill
5.070% 10/17/96 ............................... 948,560
-------------

Total Investments - 97.0% 132,408,320
(Cost $127,582,027)***
Cash - 4.6% 6,303,890
Other Assets and (Liabilities), Net - (1.6%) (2,182,153)
-------------

TOTAL NET ASSETS - 100.0% $136,530,057
-------------
-------------

</TABLE>

*Non-income producing
***Aggregate cost for Federal income tax purposes is $127,567,346.
See accompanying notes to financial statements.

119
<PAGE>

THE CRABBE HUSON EQUITY FUND, INC.
SCHEDULE OF INVESTMENTS
October 31, 1995

Market
Shares Securities Description Value
- ------------------------ -------------------------------------- --------------
<S> <C> <C>

COMMON STOCK - 84.0%
CONSUMER CYCLICALS

AUTOMOTIVE - 2.7%
240,800 General Motors Corp ................... $ 10,535,000
--------------

CONSUMER PRODUCTS - 4.2%
138,900 Bausch & Lomb, Inc .................... 4,809,413
135,300 Brunswick Corp ........................ 2,638,350
33,700 Quaker Oats ........................... 1,150,012
81,900 Rubbermaid, Inc ....................... 2,139,637
375,500 Sunbeam Corp .......................... 5,632,500
--------------
16,369,912
--------------
RETAIL - 6.5%
42,700 Dayton-Hudson Corp .................... 2,935,625
141,500 Limited, Inc .......................... 2,600,063
239,000 Liz Claiborne, Inc .................... 6,781,625
334,400 * Price/Costco, Inc ..................... 5,684,800
205,200 Wal-Mart Stores, Inc .................. 4,437,450
190,100 Woolworth Corp ........................ 2,780,212
--------------
25,219,775
--------------

BASIC MATERIALS AND INDUSTRIAL
BUILDING MATERIALS - 3.9%
523,200 * USG Corp .............................. 15,238,200
--------------

CHEMICALS - 0.3%
170,000 * Uniroyal Chemical Corp ................ 1,296,250
--------------

EQUIPMENT & MACHINERY - 0.7%
142,600 * Detroit Diesel Corp ................... 2,531,150
--------------

FOREST PRODUCTS & PACKAGING - 4.2%
288,900 * Domtar, Inc ........................... 2,636,212
562,200 Louisiana Pacific Corp ................ 13,422,525
--------------
16,058,737
--------------
METALS & MINING - 7.5%
570,500 * Bethlehem Steel Corp .................. 7,487,812
403,700 J & L Specialty Steel ................. 6,610,587
660,400 * National Steel Corp - Class B ......... 8,750,300
128,400 Nucor Corp ............................ 6,179,250
--------------
29,027,949
--------------
ENERGY - 13.8%
207,200 Apache Corp ........................... 5,283,600
282,600 Burlington Resources, Inc ............. 10,173,600
344,500 Dresser Industries, Inc ............... 7,148,375
282,100 Enserch Corp .......................... 4,090,450
472,400 * Enserch Exploration ................... 4,664,950
354,900 Occidental Petroleum Corp ............. 7,630,350
147,700 Tenneco Inc ........................... 6,480,339
151,000 Union Texas Petro Hldgs Inc ........... 2,718,000
198,200 Unocal Corp ........................... 5,202,750
--------------
53,392,414
--------------
FINANCIAL - 12.2%
337,200 Ahmanson (H.F.) & Co .................. 8,430,000
294,275 Bear Stearns Cos, Inc ................. 5,848,715
605,900 Equitable Companies ................... 12,875,375
24,500 * Prudential Reinsurance Hlds ........... 499,187
195,100 Salomon, Inc .......................... 7,047,987
327 * Transport Holdings .................... 12,834

Shares
Or Face Market
Value Securities Description Value
- ------------------------ -------------------------------------- --------------
<S> <C> <C>
FINANCIAL - (continued)
65,500 Travelers, Inc ........................ $ 3,307,750
311,400 U.S. Bancorp .......................... 9,225,225
--------------
47,247,073
--------------
HEALTHCARE - 4.8%
151,100 Allergan, Inc ......................... 4,438,563
77,000 * Apria Healthcare Group ................ 1,665,125
330,900 * Humana, Inc ........................... 6,990,263
142,500 U S Healthcare ........................ 5,486,250
--------------
18,580,201
--------------
REAL ESTATE INVESTMENT TRUST - 3.5%
255,900 DeBartolo Realty Corp ................. 3,326,700
149,300 First Industrial Realty Trust ......... 3,041,989
294,300 Spieker Properties .................... 7,136,775
--------------
13,505,464
--------------
TECHNOLOGY- 1.7%
209,600 * Tandem Computers, Inc ................. 2,358,000
216,500 * Unisys Corp ........................... 1,217,812
369,100 * Zenith Electronics Corp ............... 3,091,212
--------------
6,667,024
--------------
TELECOMMUNICATIONS - 7.6%
123,000 AT&T Corp ............................. 7,872,000
363,600 Comcast Corp Special Class A .......... 6,499,350
264,219 * Cox Communications, Inc Class A ....... 4,954,110
117,100 Time Warner, Inc ...................... 4,274,150
406,800 Westinghouse Electric Corp ............ 5,746,050
--------------
29,345,660
--------------
TRANSPORTATION - 9.6%
122,500 * AMR Corp .............................. 8,085,000
69,500 Burlington Northern RR, Inc ........... 5,829,312
413,100 Consolidated Freightways .............. 9,604,575
59,000 Delta Air Lines, Inc .................. 3,871,875
193,000 Ryder System .......................... 4,656,125
223,610 * Southern Pacific Rail Corp ............ 4,975,322
--------------
37,022,209
--------------
UTILITIES - 0.8%
94,700 BCE Inc ............................... 3,184,289
--------------

Total Common Stocks 325,221,307
--------------

CONVERTIBLE PREFERRED - 1.3%
----------------------------

92,100 Delta Air Lines ....................... 5,100,037
--------------

SHORT TERM INVESTMENTS** - 14.4%
--------------------------------

TREASURY BILLS & NOTES - 2.3%
U. S. TREASURY NOTE
$ 2,500,000 5.125% 11/15/95 ..................... $ 2,499,550
5,915,000 5.260% 10/17/96 ..................... 5,610,732
1,000,000 5.330% 12/07/95 ..................... 994,665
--------------
9,104,947
--------------

DISCOUNT NOTES - 12.1%
FEDERAL FARM CREDIT
600,000 5.510% 12/04/95 ..................... 596,970
900,000 5.520% 11/28/95 ..................... 896,274
415,000 5.530% 11/28/95 ..................... 413,279
490,000 5.540% 12/20/95 ..................... 486,305
500,000 5.500% 12/22/95 ..................... 496,104
100,000 5.560% 11/03/95 ..................... 99,969
7,945,000 5.570% 11/01/95 - 12/07/95........... 7,912,672

</TABLE>

*Non-income producing
**Rates reflect purchase yield to maturity.
See accompanying notes to financial statements.

120

<PAGE>

THE CRABBE HUSON EQUITY FUND, INC.
SCHEDULE OF INVESTMENTS
October 31, 1995

<TABLE>
<CAPTION>
Face Market
Value Securities Description Value
- ------------------------ -------------------------------------- --------------
<S> <C> <C>

DISCOUNT NOTES - (CONTINUED)
FEDERAL HOME LOAN
$ 1,250,000 5.420% 2/16/96 ...................... $ 1,229,865
250,000 5.430% 2/20/96 ...................... 245,814
700,000 5.450% 1/22/96 ...................... 691,310
250,000 5.470% 1/22/96 ...................... 246,885
1,950,000 5.480% 12/28/95 - 1/17/96 ........... 1,928,361
1,000,000 5.490% 1/16/96 ...................... 988,410
985,000 5.500% 12/29/95 - 1/10/96 ........... 975,016
675,000 5.520% 12/13/95 ..................... 670,653
480,000 5.530% 12/05/95 ..................... 477,493
3,645,000 5.540% 11/24/95 - 12/19/95 .......... 3,624,808
7,075,000 5.550% 11/02/95 - 1/29/96 ........... 7,514,523
5,695,000 5.560% 11/02/95 - 1/29/96 ........... 5,668,512
5,470,000 5.570% 11/06/95 - 1/30/96 ........... 6,419,637
500,000 5.580% 1/08/96 ...................... 494,730
2,035,000 5.590% 11/13/95 - 1/09/96 ........... 2,018,367
1,000,000 5.620% 11/15/95 ..................... 997,814
1,600,000 5.630% 11/21/95 ..................... 1,594,996
--------------
46,688,767
--------------

Total Short Term Investments 55,793,714
--------------

Total Investments - 99.7% 386,115,058
(Cost $371,004,735)***
Cash - 1.1% 4,226,599
Other Assets and (Liabilities), Net - 0.8% (3,157,577)
--------------

TOTAL NET ASSETS - 100.0% $ 387,184,080
--------------
--------------
</TABLE>

***Aggregate cost for Federal income tax purposes is $371,627,627.
See accompanying notes to financial statements.

121

<PAGE>
THE CRABBE HUSON INCOME FUND, INC.

SCHEDULE OF INVESTMENTS
October, 31 1995
<TABLE>
<CAPTION>
Face Market
Value Securities Description Value
- ------------------------- ----------------------------------------------- -------------
<S> <C> <C>
FIXED INCOME SECURITIES - 97.1%
GOVERNMENT BONDS - 52.6%

$ 1,000,000 U.S. Treasury Note 6.000%
8/31/97 ................................... $ 1,006,430
1,000,000 U.S. Treasury Bond 7.625%
2/15/25 ................................... 1,160,390
1,500,000 U.S. Treasury Bond 6.875%
8/15/25 ................................... 1,609,950
-------------
3,776,770
-------------
CORPORATE BONDS - 20.2%
100,000 Baxter International
7.500% 5/01/97 ............................ 102,000
100,000 GMAC
8.000% 10/01/99 .......................... 105,500
100,000 Upjohn Company
5.875% 4/15/00 ............................ 98,125
100,000 Pepsico, Inc
5.875% 6/01/00 ............................ 98,875
100,000 American Express Credit
6.500% 8/01/00 ............................ 101,125
100,000 IBM Corp
7.250% 11/01/02 ........................... 104,875
100,000 JP Morgan & Company
7.625% 9/15/04 ............................ 106,375
100,000 Pacific Bell
6.250% 3/01/05 ............................ 98,125
100,000 Anheuser Busch
7.000% 9/01/05 ............................ 103,000
100,000 Bear Stearns Co
6.875% 10/01/05 .......................... 99,875
100,000 Snap-on, Inc
6.625% 10/01/05 ........................... 101,500
100,000 Wal-Mart Stores
8.000% 9/15/06 ............................ 112,000
100,000 Eli Lilly
8.375% 12/01/06 ........................... 115,125
100,000 AT&T Corp
7.750% 3/01/07 ........................... 108,875
-------------
1,455,375
-------------
INSURED BONDS - 2.2%
160,000 City of Lincoln Oregon
5.800% 6/01/97
(AMBAC) .................................... 160,000
-------------

Face Market
Value Securities Description Value
- ------------------------- ----------------------------------------------- -------------
<S> <C> <C>
AGENCIES - 22.1%
$ 320,000 International Bank Recon &
Dev Floater 6.170%*
8/07/97 .................................... $ 288,317
300,000 FHLMC Strips
11/15/99 .................................. 235,905
100,000 Tennessee Valley Authority
6.125% 7/15/03 ............................ 98,250
81,539 FNMA Pool #30333
9.250% 9/01/16 ........................... 85,264
123,549 FHLMC Pool #302029
9.500% 10/01/16 .......................... 128,952
183,090 FHLMC Pool #303033
9.000% 4/01/17 ........................... 189,236
241,386 FHLMC Pool #301538
10.000% 7/01/17 .......................... 259,625
150,000 FHLMC Pool TBA
7.000% 10/01/25 .......................... 148,758
150,000 FHLMC Pool TBA
7.500% 10/01/25 .......................... 151,617
-------------
1,585,924

Total Investments - 97.1% 6,978,069
(Cost $6,754,759)**
Cash - 5.8% 417,578
Other Assets and (Liabilities), Net - (2.9)% (205,522)
-------------

TOTAL NET ASSETS - 100.0% $ 7,190,125
-------------
-------------
</TABLE>

*Zero-coupon bonds-rates reflect purchase yield to maturity.
**Aggregate cost for Federal income tax purposes is $6,774,069.
See accompanying notes to financial statements.

122

<PAGE>
THE CRABBE HUSON U.S. GOVERNMENT INCOME FUND, INC.
SCHEDULE OF INVESTMENTS
October 31, 1995
<TABLE>
<CAPTION>
Face Market
Value Securities Description Value
------------- --------------------------------------------------------- -------------
<C> <S> <C>
FIXED INCOME SECURITIES - 98.4%
U.S. GOVERNMENT AND AGENCY
$ 255,000 International Bank Recon & Dev
Floater 5.390%* 08/07/97 ............................. $ 229,752
4,655,000 U. S. Treasury Note
6.000% 8/31/97 ....................................... 4,684,932
150,000 Federal National Mortgage
Assoc. 4.950% 9/30/98 ................................ 146,148
1,045,000 U. S. Treasury Note
6.250% 8/31/00 ....................................... 1,066,005
120,000 Federal National Mortgage
Assoc. Medium Term Note
6.080% 9/25/00 ........................................ 120,294
100,000 Federal National Mortgage
Assoc. 8.250% 12/18/00 ............................... 109,580
50,000 Federal Home Loan Bank
7.590% 3/10/05 ........................................ 54,403
50,000 Federal National Mortgage
Assoc. 7.375% 3/28/05 ................................ 53,558
1,700,000 U. S. Treasury Bond
6.875% 8/15/25 ....................................... 1,824,610
-------------
8,289,282
-------------
Total Investments - 98.4% 8,289,282

(Cost $8,185,803)**
Cash - 0.4% 32,860
Other Assets and (Liabilities), Net - 1.2% 104,057
-------------
TOTAL NET ASSETS - 100.0% $ 8,426,199
-------------
-------------
</TABLE>

*Zero-coupon bond-rate reflects purchase yield to maturity.
**Aggregate cost for Federal income tax purposes is $8,186,756.
See accompanying notes to financial statements.

123
<PAGE>
THE CRABBE HUSON U.S. GOVERNMENT MONEY MARKET FUND, INC.
SCHEDULE OF INVESTMENTS
October 31, 1995

<TABLE>
<CAPTION>
Face Market
Value Securities Description Value
--------------- ------------------------------------------------ -------------
<C> <S> <C>
FIXED INCOME SECURITIES* - 99.6%
U.S. GOVERNMENT & AGENCY
Treasury Bills - 10.2%
$ 1,000,000 U. S. Treasury Bill
5.540% 7/25/96 ................................ $ 958,912
4,850,000 U. S. Treasury Bill
5.260% 10/17/96 ............................... 4,601,268
-------------
5,560,180
-------------
Discount Notes - 89.4%
Federal Farm Credit
400,000 5.510% 12/04/95 ............................... 397,980
235,000 5.520% 11/28/95 - 12/07/95 .................... 233,841
585,000 5.530% 11/28/95 ............................... 582,574
510,000 5.540% 12/20/95 ............................... 506,154
1,890,000 5.560% 11/03/95 - 1/04/96 ..................... 1,888,023
7,395,000 5.570% 11/01/95 - 1/04/96 ..................... 7,363,603
695,000 5.610% 11/13/95 ............................... 693,700
Federal Home Loan
750,000 5.420% 2/16/96 ................................ 737,918
3,250,000 5.430% 1/17/96 - 2/20/96 ...................... 3,203,279
800,000 5.450% 1/22/96 ................................ 790,069
750,000 5.470% 1/22/96 ................................ 740,655
1,460,000 5.480% 12/28/95 - 1/17/96 ..................... 1,445,962
795,000 5.490% 1/16/96 ................................ 785,786
2,515,000 5.500% 12/29/95 - 1/10/96 ..................... 2,488,470
1,075,000 5.520% 12/08/95 - 12/13/95 .................... 1,068,652
2,270,000 5.530% 12/05/95 - 1/18/96 ..................... 2,249,696
3,200,000 5.540% 11/24/95 - 12/19/95 .................... 3,179,455
7,145,000 5.550% 11/02/95 - 2/01/96 ..................... 7,077,470
5,225,000 5.560% 11/08/95 - 1/26/96 ..................... 5,183,831
3,740,000 5.570% 11/16/95 - 1/30/96 ..................... 3,707,315
2,055,000 5.580% 1/05/96 - 1/08/96 ...................... 2,033,765
650,000 5.590% 11/22/95 ............................... 647,880
535,000 5.620% 11/15/95 ............................... 533,831
1,400,000 5.630% 11/21/95 ............................... 1,395,621
-------------
48,935,530
-------------

Total Investments - 99.6% 54,495,710
(Cost $54,495,710)**
Cash - 0.4% 233,521
Other Assets and (Liabilities), Net 0.0% (15,012)
-------------
TOTAL NET ASSETS - 100.0% $ 54,714,219
-------------
-------------
</TABLE>

*Rates reflect purchase yield to maturity.
**Aggregate cost for Federal income tax purposes is identical.
See accompanying notes to financial statements.

124

<PAGE>
THE CRABBE HUSON REAL ESTATE INVESTMENT FUND, INC.

SCHEDULE OF INVESTMENTS
October 31, 1995

<TABLE>
<CAPTION>
Market
Shares Securities Description Value
---------- ------------------------------------------------- -------------
<C> <S> <C>
COMMON STOCK - 98.1%
REAL ESTATE INVESTMENT TRUST
APARTMENT - 23.5%
20,000 Camden Property Trust ........................... $ 415,000
25,000 Pacific Gulf Properties, Inc .................... 378,125
20,000 Paragon Group, Inc .............................. 345,000
15,000 Post Properties ................................. 450,000
60,000 Prime Residential, Inc .......................... 1,050,000
20,000 SouthWest Property Trust ........................ 242,500
35,000 Summit Properties, Inc .......................... 647,500
73,500 Town & Country Trust ............................ 937,125
-------------
4,465,250
-------------
INDUSTRIAL - 16.1%
10,000 Cali Realty Corp ................................ 195,000
25,900 Carr Realty Corp ................................ 492,100
33,500 First Industrial Realty Trust ................... 682,562
19,000 Liberty Property Trust .......................... 384,750
17,000 Reckson Associates Realty Corp .................. 456,875
24,000 Spieker Properties, Inc ......................... 582,000
10,000 Trinet Corp. Realty Trust ...................... 267,500
-------------
3,060,787
-------------
LODGING - 4.3%
30,000 Starwood Lodging Trust .......................... 817,500
-------------
MALLS - 12.2%
62,100 Crown American Realty ........................... 473,512
71,400 DeBartolo Realty Corp ........................... 928,200
5,000 Macerich Company ................................ 100,625
35,000 Simon Property Group Inc ........................ 813,750
-------------
2,316,087
-------------
MANUFACTURED HOUSING - 0.9%
10,000 Manufactured Home Communities.................... 165,000
-------------
OUTLET CENTERS - 10.2%
35,200 Factory Stores of America ....................... 677,600
15,000 Mills Corp ...................................... 256,875
63,000 Prime Retail, Inc ............................... 763,875
10,000 Tanger Factory Outlet Center .................... 235,000
-------------
1,933,350
-------------
SHOPPING CENTER - 30.9%
11,200 Burnham Pacific Property, Inc ................... 126,000
28,700 Commercial Net Lease Realty ..................... 365,925
12,700 Developers Diversified Realty ................... 361,950
5,000 Excel Realty Trust, Inc ......................... 94,375
36,100 Federal Realty Investment Trust ................. 731,025
44,250 Glimcher Realty Trust ........................... 796,500
43,700 JDN Realty Corp ................................. 890,387
60,000 Kranzco Realty Trust ............................ 915,000
55,000 Malan Realty Investors, Inc ..................... 770,000
28,750 Mark Centers Trust .............................. 309,064
30,000 Regency Realty Corp ............................. 510,000
-------------
5,870,226
-------------

Total Investments - 98.1% 18,628,200
(Cost $19,605,304)*
Cash - 0.5% 99,391
Other Assets and (Liabilities), Net - 1.4% 257,923
-------------
TOTAL NET ASSETS - 100.0% $ 18,985,514
-------------
-------------
</TABLE>
*Aggregate cost for Federal income tax purposes is $19,610,488.
See accompanying notes to financial statements.

125

<PAGE>
CRABBE HUSON FUNDS

STATEMENTS OF ASSETS AND LIABILITIES
October 31, 1995

<TABLE>
<CAPTION>
THE OREGON THE THE
MUNICIPAL CRABBE HUSON CRABBE HUSON
BOND SPECIAL ASSET ALLOCATION
FUND, INC. FUND, INC. FUND, INC.
--------------- ---------------- ----------------
<S> <C> <C> <C>
ASSETS:
Investment securities,
at market (cost $26,215,041; $789,902,314;
$127,582,027; $371,004,735; $6,754,759;
$8,185,803; $54,495,710 and $19,605,304
respectively) $ 27,580,795 $ 767,165,836 $ 132,408,320
Cash ---- 2,028,004 6,303,890
Deposits with brokers for securities sold short ---- 184,796,646 ----
Receivables:
Dividends and Interest 509,615 849,007 857,351
Fund shares sold 25,000 4,090,362 405,209
Investment securities sold ---- 4,355,170 920,708
Due from distributor (Note 2) ---- ---- ----
Due from investment advisor (Note 2) ---- ---- ----
Proceeds from securities sold short ---- 116,397,420 ----
Organization expenses ---- ---- ----
Prepaid Expenses 1,362 44,011 6,508
--------------- ---------------- ----------------
$ 28,116,772 $ 1,079,726,456 $ 140,901,986
--------------- ---------------- ----------------
LIABILITIES:
Securities sold short,
at market (proceeds $116,397,420) ---- 132,866,612 ----
Payables:
Investment securities payable ---- 40,952,158 4,284,356
Fund shares redeemed ---- 9,144,015 42,751
Short sales closed ---- 17,711,422 ----
Payable to affiliates and directors (Note 2) 778 1,027 2,027
Accrued liabilities 45,623 491,388 42,795
--------------- ---------------- ----------------
46,401 201,166,622 4,371,929
--------------- ---------------- ----------------
NET ASSETS: $ 28,070,371 $ 878,559,834 $ 136,530,057
--------------- ---------------- ----------------
--------------- ---------------- ----------------
NET ASSETS CONSIST OF:
Capital shares 2,225 63,670 10,010
Capital paid in 26,699,373 874,136,535 120,240,658
Undistributed accumulated net
investment income ---- 11,747,830 ----
Undistributed accumulated net
realized gain (loss) on investments 3,019 31,817,469 11,453,096
Net unrealized appreciation
(depreciation) on investments and short sales(Note 5) 1,365,754 (39,205,670) 4,826,293
--------------- ---------------- ----------------
$ 28,070,371 $ 878,559,834 $ 136,530,057
--------------- ---------------- ----------------
--------------- ---------------- ----------------
CAPITAL SHARES, PAR VALUE $.001
Authorized 10,000,000 100,000,000 100,000,000
Outstanding (Note 4) 2,225,010 63,670,184 10,010,125
--------------- ---------------- ----------------
NET ASSET VALUE PER SHARE $ 12.62 $ 13.80 $ 13.64
--------------- ---------------- ----------------
--------------- ---------------- ----------------
</TABLE>

See accompanying notes to financial statements.

126

<PAGE>

CRABBE HUSON FUNDS

STATEMENTS OF ASSETS AND LIABILITIES
October 31, 1995

<TABLE>
<CAPTION>
THE THE THE CRABBE HUSON
CRABBE HUSON CRABBE HUSON U.S. GOVERNMENT
EQUITY FUND, INC. INCOME FUND, INC. INCOME FUND, INC.
----------------- ----------------- -----------------
<S> <C> <C> <C>
ASSETS:
Investment securities,
at market (cost $26,215,041; $789,902,314;
$127,582,027; $371,004,735; $6,754,759;
$8,185,803; $54,495,710 and $19,605,304
respectively) $ 386,115,058 $ 6,978,069 $ 8,289,282
Cash 4,226,599 417,578 32,860
Deposits with brokers for securities sold short ---- ---- ----
Receivables:
Dividends and Interest 154,250 89,712 88,913
Fund shares sold 1,109,039 3,376 6,658
Investment securities sold 919,085 ---- ----
Due from distributor (Note 2) 60,875 ---- ----
Due from investment advisor (Note 2) ---- 7,411 8,384
Proceeds from securities sold short ---- ---- ----
Organization expenses ---- ---- ----
Prepaid Expenses 17,515 359 434
---------------- ----------------- -----------------
$ 392,602,421 $ 7,496,505 $ 8,426,531
---------------- ----------------- -----------------

LIABILITIES:
Securities sold short,
at market (proceeds $116,397,420) ---- ---- ----
Payables:
Investment securities payable 4,885,161 301,803 ----
Fund shares redeemed 393,222 4,253 ----
Short sales closed ---- ---- ----
Payable to affiliates and directors (Note 2) 2,027 277 277
Accrued liabilities 137,931 47 55
---------------- ----------------- -----------------
5,418,341 306,380 332
---------------- ----------------- -----------------
NET ASSETS: $ 387,184,080 $ 7,190,125 $ 8,426,199
---------------- ----------------- -----------------
---------------- ----------------- -----------------
NET ASSETS CONSIST OF:
Capital shares 21,309 702 790
Capital paid in 349,459,104 7,146,824 8,468,549
Undistributed accumulated net
investment income 2,666,550 ---- 690
Undistributed accumulated net
realized gain (loss) on investments 19,926,794 (180,711) (147,309)
Net unrealized appreciation
(depreciation) on investments and short sales(Note 5) 15,110,323 223,310 103,479
---------------- ----------------- -----------------
$ 387,184,080 $ 7,190,125 $ 8,426,199
---------------- ----------------- -----------------
---------------- ----------------- -----------------
CAPITAL SHARES, PAR VALUE $.001
Authorized 100,000,000 100,000,000 100,000,000
Outstanding (Note 4) 21,309,191 700,892 790,370
---------------- ----------------- -----------------
---------------- ----------------- -----------------
NET ASSET VALUE PER SHARE $ 18.17 $ 10.26 $ 10.66
---------------- ----------------- -----------------
---------------- ----------------- -----------------

<CAPTION>
THE CRABBE HUSON THE CRABBE HUSON
U.S. GOVERNMENT REAL ESTATE
MONEY MARKET INVESTMENT
FUND, INC. FUND, INC.
---------------- ----------------
<S> <C> <C>
ASSETS:
Investment securities,
at market (cost $26,215,041; $789,902,314;
$127,582,027; $371,004,735; $6,754,759;
$8,185,803; $54,495,710 and $19,605,304
respectively) $ 54,495,710 $ 18,628,200
Cash 233,521 99,391
Deposits with brokers for securities sold short ---- ----
Receivables:
Dividends and Interest 646 110,797
Fund shares sold ---- 7,204
Investment securities sold ---- 133,980
Due from distributor (Note 2) ---- ----
Due from investment advisor (Note 2) ---- ----
Proceeds from securities sold short ---- ----
Organization expenses ---- 89,606
Prepaid Expenses 2,612 219
---------------- ----------------
$ 54,732,489 $ 19,069,397
---------------- ----------------

LIABILITIES:
Securities sold short,
at market (proceeds $116,397,420) ---- ----
Payables:
Investment securities payable ---- 74,647
Fund shares redeemed ---- ----
Short sales closed ---- ----
Payable to affiliates and directors (Note 2) 778 778
Accrued liabilities 17,492 8,458
---------------- ----------------
18,270 83,883
---------------- ----------------
NET ASSETS: $ 54,714,219 $ 18,985,514
---------------- ----------------
---------------- ----------------
NET ASSETS CONSIST OF:
Capital shares 54,714 1,960
Capital paid in 54,659,505 19,720,169
Undistributed accumulated net
investment income ---- 7,309
Undistributed accumulated net
realized gain (loss) on investments ---- 233,180
Net unrealized appreciation
(depreciation) on investments and short sales(Note 5) ---- (977,104)
---------------- ----------------
$ 54,714,219 $ 18,985,514
---------------- ----------------
---------------- ----------------
CAPITAL SHARES, PAR VALUE $.001
Authorized 2,000,000,000 1,000,000,000
Outstanding (Note 4) 54,714,219 1,959,931
---------------- ----------------
---------------- ----------------
NET ASSET VALUE PER SHARE $ 1.00 $ 9.69
---------------- ----------------
---------------- ----------------
</TABLE>

See accompanying notes to financial statements.

127

<PAGE>

STATEMENTS OF OPERATIONS
For the year ended October 31, 1995

<TABLE>
<CAPTION>
THE OREGON THE THE
MUNICIPAL CRABBE HUSON CRABBE HUSON
BOND SPECIAL ASSET ALLOCATION
FUND, INC. FUND, INC. FUND, INC.
----------------- ----------------- -----------------
<S> <C> <C> <C>
INVESTMENT INCOME
Interest $ 1,455,231 $ 18,261,908 $ 3,701,179
Dividends (net of foreign taxes withheld of
$0; $3,347; $18,635; $55,166; $0; $0; $0; and
$0 respectively) -- 4,558,333 1,226,139
----------------- ----------------- -----------------
1,455,231 22,820,241 4,927,318
----------------- ----------------- -----------------
EXPENSES
Investment advisory fees (Note 2) 134,042 5,398,048 1,183,215
Transfer agent 32,241 953,607 115,803
Printing 10,074 269,190 35,347
Postage 7,606 200,609 25,533
Custody 2,860 54,216 18,637
Legal 3,836 140,115 26,247
Auditing 5,081 43,092 11,792
Insurance 1,254 27,016 5,467
Directors' fees 3,118 8,118 8,113
Registration fees 1,067 203,324 28,117
Amortization of organization expenses -- -- --
Miscellaneous 3,992 194,903 19,119
Distribution fees (Note 2) 61,567 1,701,991 303,887
Administration 16,852 57,617 33,456
Short sales dividends -- 286,184 --
----------------- ----------------- -----------------
283,590 9,538,030 1,814,733
Fees waived by investment advisor (Note 2) (20,866) (697) (14,567)
Expenses reimbursed by investment advisor (Note 2) -- -- --
----------------- ----------------- -----------------
NET EXPENSES 262,724 9,537,333 1,800,166
----------------- ----------------- -----------------
NET INVESTMENT INCOME 1,192,507 13,282,908 3,127,152
----------------- ----------------- -----------------
REALIZED AND UNREALIZED GAIN:
Net realized gain (loss) on investments 3,019 31,170,355 11,435,123
Net change in unrealized appreciation
or depreciation of investments and short sales 1,454,370 (51,415,104) 20,021
----------------- ----------------- -----------------
NET GAIN (LOSS) ON INVESTMENTS 1,457,389 (20,244,749) 11,455,144
----------------- ----------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 2,649,896 ($ 6,961,841) $ 14,582,296
----------------- ----------------- -----------------
----------------- ----------------- -----------------
See accompanying notes to financial statements.
</TABLE>

128

<PAGE>

<TABLE>
<CAPTION>
THE CRABBE HUSON THE CRABBE HUSON
THE THE THE CRABBE HUSON U.S. GOVERNMENT REAL ESTATE
CRABBE HUSON CRABBE HUSON U.S. GOVERNMENT MONEY MARKET INVESTMENT
EQUITY FUND, INC. INCOME FUND, INC. INCOME FUND, INC. FUND, INC. FUND, INC.
---------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Interest $ 3,253,320 $ 398,333 $ 487,929 $ 2,990,307 $ 20,613
Dividends (net of foreign taxes
withheld of $0; $3,347; $18,635;
$55,166; $0; $0; $0; and $0
respectively) 4,154,003 11,688 -- -- 1,139,451
---------------- ---------------- ---------------- ---------------- ----------------
7,407,323 410,021 487,929 2,990,307 1,160,064
---------------- ---------------- ---------------- ---------------- ----------------
EXPENSES
Investment advisory fees (Note 2) 2,471,465 49,011 43,576 253,198 190,619
Transfer agent 299,262 28,160 27,224 67,713 53,365
Printing 79,105 6,057 5,146 25,002 6,313
Postage 53,732 3,328 3,200 20,094 4,249
Custody 30,335 2,294 1,817 8,789 2,960
Legal 57,142 1,938 2,392 10,985 9,089
Auditing 19,826 3,479 3,688 6,134 4,741
Insurance 11,152 294 414 2,157 869
Directors' fees 8,118 1,118 1,118 3,118 3,118
Registration fees 84,568 19,398 20,464 37,880 20,584
Amortization of organization expenses -- -- -- -- 10,868
Miscellaneous 80,371 2,827 3,944 19,022 5,085
Distribution fees (Note 2) 621,908 16,337 21,788 126,599 47,655
Administration 23,057 551 726 4,090 1,603
Short sales dividends -- -- -- -- --
---------------- ---------------- ---------------- ---------------- ----------------
3,840,041 134,792 135,497 584,781 361,118
Fees waived by investment advisor (Note 2) -- (49,011) (43,576) (230,305) (75,190)
Expenses reimbursed by investment
advisor (Note 2) -- (33,287) (26,493) -- --
---------------- ---------------- ---------------- ---------------- ----------------
NET EXPENSES 3,840,041 52,494 65,428 354,476 285,928
---------------- ---------------- ---------------- ---------------- ----------------
NET INVESTMENT INCOME 3,567,282 357,527 422,501 2,635,831 874,136
---------------- ---------------- ---------------- ---------------- ----------------
REALIZED AND UNREALIZED GAIN:
Net realized gain (loss) on investments 19,596,449 108,710 7,624 -- 51,165
Net change in unrealized appreciation
or depreciation of investments and
short sales 9,278,013 304,184 324,469 -- 565,011
---------------- ---------------- ---------------- ---------------- ----------------
NET GAIN (LOSS) ON INVESTMENTS 28,874,462 412,894 332,093 -- 616,176
---------------- ---------------- ---------------- ---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 32,441,744 $ 770,421 $ 754,594 $ 2,635,831 $ 1,490,312
---------------- ---------------- ---------------- ---------------- ----------------
---------------- ---------------- ---------------- ---------------- ----------------
See accompanying notes to financial statements.
</TABLE>

129

<PAGE>

CRABBE HUSON FUNDS

STATEMENTS OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
THE OREGON THE CRABBE HUSON
MUNICIPAL BOND FUND, INC. SPECIAL FUND, INC.
------------------------------------ ------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994 OCTOBER 31, 1995 OCTOBER 31, 1994
------------------------------------ ------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS:
Net investment income $ 1,192,507 $ 1,335,320 $ 13,282,908 $ 396,099
Net realized gain (loss) on investments 3,019 151,835 31,170,355 11,534,530
Net change in unrealized appreciation
or depreciation of investments and short sales 1,454,370 (2,209,050) (51,415,104) 8,747,502
----------------------------------- -----------------------------------
Increase (decrease) in net assets
resulting from operations 2,649,896 (721,895) (6,961,841) 20,678,131
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (1,192,507) (1,335,320) (1,107,597) --
In excess of net investment income -- (770) -- --
From net realized gain on investments (151,835) (22,243) (11,710,943) (687,990)
In excess of net realized gain on investments -- -- -- --
CAPITAL SHARE TRANSACTIONS, NET (Note 4) (2,280,911) 1,717,846 578,529,362 276,003,800
----------------------------------- -----------------------------------
Total increase (decrease) in net assets (975,357) (362,382) 558,748,981 295,993,941
FUND NET ASSETS, BEGINNING OF PERIOD 29,045,728 29,408,110 319,810,853 23,816,912
----------------------------------- -----------------------------------
FUND NET ASSETS, END OF PERIOD $ 28,070,371 $ 29,045,728 $ 878,559,834 $ 319,810,853
----------------------------------- -----------------------------------
----------------------------------- -----------------------------------

<CAPTION>
THE CRABBE HUSON
THE CRABBE HUSON U.S. GOVERNMENT
INCOME FUND, INC. INCOME FUND, INC.
------------------------------------ ------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994 OCTOBER 31, 1995 OCTOBER 31, 1994
------------------------------------ ------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS:
Net investment income $ 357,527 $ 288,002 $ 422,501 $ 449,352
Net realized gain on investments 108,710 (283,625) 7,624 (148,628)
Net change in unnrealized appreciation
or depreciation of investments and short sales 304,184 (169,542) 324,469 (480,026)
----------------------------------- -----------------------------------
Increase (decrease) in net assets
resulting from operations 770,421 (165,165) 754,594 (179,302)
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (357,527) (288,002) (422,501) (449,352)
In excess of net investment income (17,066) (4,622) (9,331) (3,373)
From net realized gain on investments -- (156,271) -- (108,276)
In excess of net realized gain on investments -- -- -- --
CAPITAL SHARE TRANSACTIONS, NET (Note 4) 1,520,890 190,912 (1,145,775) (1,228,397)
----------------------------------- -----------------------------------
Total increase (decrease) in net assets 1,916,718 (423,148) (823,013) (1,968,700)
FUND NET ASSETS, BEGINNING OF PERIOD 5,273,407 5,696,555 9,249,212 11,217,912
----------------------------------- -----------------------------------
FUND NET ASSETS, END OF PERIOD $ 7,190,125 $ 5,273,407 $ 8,426,199 $ 9,249,212
----------------------------------- -----------------------------------
----------------------------------- -----------------------------------
</TABLE>

See accompanying notes to financial statements.

130

<PAGE>

STATEMENTS OF CHANGES IN NET ASSETS

THE CRABBE HUSON THE CRABBE HUSON
ASSET ALLOCATION FUND, INC. EQUITY FUND, INC.
------------------------------------ ------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994 OCTOBER 31, 1995 OCTOBER 31, 1994
------------------------------------ ------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS:
Net investment income $ 3,127,152 $ 2,402,334 $ 3,567,282 $ 940,474
Net realized gain (loss) on investments 11,435,123 4,008,708 19,596,449 2,406,325
Net change in unrealized appreciation
or depreciation of investments and short sales 20,021 (3,975,212) 9,278,013 1,406,726
----------------------------------- -----------------------------------
Increase (decrease) in net assets
resulting from operations 14,582,296 2,435,830 32,441,744 4,753,525
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (3,090,031) (2,313,253) (1,413,080) (170,079)
In excess of net investment income -- -- -- --
From net realized gain on investments (4,120,955) (4,683,410) (2,376,723) (1,800,301)
In excess of net realized gain on investments -- -- -- --
CAPITAL SHARE TRANSACTIONS, NET (Note 4) 19,006,962 29,322,601 205,426,843 115,801,985
----------------------------------- -----------------------------------
Total increase (decrease) in net assets 26,378,272 24,761,768 234,078,784 118,585,130
FUND NET ASSETS, BEGINNING OF PERIOD 110,151,785 85,390,017 153,105,296 34,520,166
----------------------------------- -----------------------------------
FUND NET ASSETS, END OF PERIOD $ 136,530,057 $ 110,151,785 $ 387,184,080 $ 153,105,296
----------------------------------- -----------------------------------
----------------------------------- -----------------------------------

THE CRABBE HUSON THE CRABBE HUSON
U.S. GOVERNMENT REAL ESTATE
MONEY MARKET FUND, INC. INVESTMENT FUND, INC.
------------------------------------ ------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994 OCTOBER 31, 1995 OCTOBER 31, 1994*
------------------------------------ ------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS:
Net investment income $ 2,635,831 $ 731,382 $ 874,136 $ 598,957
Net realized gain on investments -- -- 51,165 206,890
Net change in unnrealized appreciation
or depreciation of investments and short sales -- -- 565,011 (1,550,914)
----------------------------------- -----------------------------------
Increase (decrease) in net assets
resulting from operations 2,635,831 731,382 1,490,312 (745,067)
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (2,635,831) (731,382) (862,995) (373,869)
In excess of net investment income -- -- -- --
From net realized gain on investments -- -- (240,802) --
In excess of net realized gain on investments -- -- -- --
CAPITAL SHARE TRANSACTIONS, NET (Note 4) 22,331,667 17,598,059 319,499 19,298,436
----------------------------------- -----------------------------------
Total increase (decrease) in net assets 22,331,667 17,598,059 706,014 18,179,500
FUND NET ASSETS, BEGINNING OF PERIOD 32,382,552 14,784,493 18,279,500 100,000
----------------------------------- -----------------------------------
FUND NET ASSETS, END OF PERIOD $ 54,714,219 $ 32,382,552 $ 18,985,514 $ 18,279,500
----------------------------------- -----------------------------------
----------------------------------- -----------------------------------
</TABLE>

*For the period from April 4, 1994 (commencement of operations) to October 31,
1994.

131

<PAGE>

CRABBE HUSON FUNDS

NOTES TO FINANCIAL STATEMENTS
October 31, 1995

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION: The Oregon Municipal Bond Fund, Inc. is registered under the
Investment Company Act of 1940, as amended, as an open-end non-diversified
investment company. The Crabbe Huson Special Fund, Inc., The Crabbe Huson Asset
Allocation Fund, Inc., The Crabbe Huson Equity Fund, Inc., The Crabbe Huson
Income Fund, Inc., The Crabbe Huson U.S. Government Income Fund, Inc., The
Crabbe Huson U.S. Government Money Market Fund, Inc. and The Crabbe Huson Real
Estate Investment Fund, Inc. are registered under the Investment Company Act of
1940, as amended, as open-end diversified investment companies.

The following is a summary of significant accounting policies consistently
followed by the Funds in preparation of financial statements.

SECURITY VALUATION--THE CRABBE HUSON U.S. GOVERNMENT MONEY MARKET FUND, INC.:
The Fund seeks to maintain a constant net asset value of $1.00 and values its
assets using the amortized cost method by adjusting the cost of each security
for accretion of discount or amortization of premium.

SECURITY VALUATION--OTHER FUNDS: Securities listed or traded on a registered
securities exchange are valued at the last price on the date of the
computation. This includes over-the-counter securities for which last sale
information is available. Where last sale information is not available, the
best bid price is used. Securities and assets for which market quotations are
not readily available are valued at fair market value as determined in good
faith by or under the direction of the Board of Directors of the Funds. Cash
equivalents relating to Firm Commitment Purchase Agreements are segregated by
the custodian and may not be sold while the current commitment is outstanding.

SECURITY TRANSACTIONS AND INVESTMENT INCOME: Security transactions are
accounted for on the trade date, the date the order to buy or sell is executed.
Interest income is recorded daily on the accrual basis. Interest income
consists of interest accrued plus the accretion of original issue discount and
minus the amortization of investment premium, both calculated on an effective
interest basis. Dividend income and distributions to shareholders are recorded
on the ex-dividend date. Net realized gains and losses on investments are
computed on the first-in, first-out, method.

DIVIDENDS AND DISTRIBUTIONS: The Oregon Municipal Bond Fund, Inc. declares
dividends from its net investment income each business day. The net investment
income for Saturdays, Sundays and holidays is declared as a dividend on the next
business day. Declared dividends are accrued through the last business day of
each month and are distributed on that date. Net capital gains realized by the
Fund, if any, are declared and distributed on an annual basis, usually in
December.

The Crabbe Huson Special Fund, Inc. and The Crabbe Huson Equity Fund, Inc.
expect to declare and distribute to shareholders, once a year in December,
substantially all of the net investment income and net realized capital gains,
if any.

The Crabbe Huson Asset Allocation Fund, Inc. and The Crabbe Huson Real Estate
Investment Fund, Inc. expect to declare and distribute dividends from net
investment income on the last business day of each fiscal quarter. Net capital
gains realized by the Funds, if any, are declared and distributed on an annual
basis, usually in December.

The Crabbe Huson Income Fund, Inc. and The Crabbe Huson U.S. Government Income
Fund, Inc. declare and distribute dividends from net investment income on the
last business day of each month. Net capital gains realized by the Funds, if
any, are declared and distributed on an annual basis, usually in December.

The Crabbe Huson U.S. Government Money Market Fund, Inc. declares dividends from
its net investment income each business day. The net investment income for
Saturdays, Sundays and holidays is declared as a dividend on the prior business
day. Declared dividends are accrued through the last business day of each month
and are distributed on that date. Net capital gains realized by the Fund, if
any, are declared and distributed on an annual basis, usually in December.

SHORT SALES: Crabbe Huson Special Fund during the year sold securities short.
A short sale is effected when it is believed that the price of a particular
security will decline, and involves the sale of a security which the Fund does
not own in the hope of purchasing the same security at a later date at a lower
price. To make delivery to the buyer, the Fund must borrow the security. The
Fund is then obligated to return the security to the lender, and therefore it
must subsequently purchase the same security.

132

<PAGE>
CRABBE HUSON FUNDS

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
October 31, 1995

SHORT SALES - (CONTINUED): In addition, the Fund must put in a segregated
account (with the Fund's custodian) an amount of cash or U.S. Government
securities equal to the difference between the market value of the securities
sold short at the time they were sold short and any cash or government
securities deposited as collateral with the broker in connection with the short
sale (not including the proceeds from the short sale). Furthermore, until the
Fund replaces the borrowed security, it must daily maintain the segregated
account at a level so that (1) the amount deposited in it plus the amount
deposited with the broker (not including the proceeds from the short sale) will
equal the current market value of the securities sold short, (2) the amount
deposited in it plus the amount deposited with the broker (not including the
proceeds from the short sale) will not be less than the market value of the
securities at the time they were sold short. As a result of these requirements,
the Special Fund will not gain any leverage merely by selling short, except to
the extent that it earns interest on the immobilized cash or government
securities while also being subject to the possibility of gain or loss from the
securities sold short. The amount of the Special Fund's net assets that will at
any time be in the type of deposits described above (that is, collateral
deposits or segregated accounts) will not exceed 25%.

OPTIONS: The Special, Real Estate, Equity, Asset Allocation and Income Funds
may write call options on securities they own or have the right to acquire, and
may purchase put and call options on individual securities and indexes written
by others. The purchase of any of these instruments can result in the entire
loss on the investment in that particular instrument or, in the case of writing
covered options, can limit the opportunity to earn a profit on the underlying
security.

When an option is written (sold), an amount equal to the premium received is
recorded as a liability. The amount of liability is adjusted daily to reflect
the current market value of the option written. When an option written by the
Fund, expires on its stipulated expiration date, the Fund realizes a gain equal
to the net premium received for the option. When the Fund enters into a closing
purchase transaction, the Fund realizes a gain or loss equal to the difference
between the cost of a closing purchase transaction and the premium received when
the call option was written. In the case of either expiration of a written
option or a closing purchase transaction, the liability related to such option
is extinguished.

Call or put options purchased are accounted for in the same manner as marketable
portfolio securities. When a call or put option is exercised, the proceeds from
the underlying securities bought or sold are decreased by the premium paid in
determining the gain or loss.

Options on stock indexes differ from options on securities in that the exercise
of an option on a stock index does not involve delivery of the actual underlying
security and are settled in cash only.

During the year the Crabbe Huson Special Fund, Inc. purchased put options.
Outstanding put options at October 31, 1995 are disclosed in the schedule of
investments.

ORGANIZATION COSTS: Expenses incurred in connection with the organization of
the Funds are amortized over a sixty-month period. The amortization is
calculated based upon the projected growth in net assets of the Funds. As of
October 31, 1995 organization costs for all Funds except for The Crabbe Huson
Real Estate Investment Fund, Inc. have been fully amortized. The Crabbe Huson
Real Estate Investment Fund, Inc. has amortized $10,868 through October 31,
1995. The Crabbe Huson Group, Inc., the Fund's investment advisor, has agreed
that, in the event any of the initial shares are redeemed during the 60-month
period for amortizing the Fund's organization costs, the Fund will be reimbursed
by the investment advisor for the unamortized balances of such costs in the same
proportion as the number of shares reduced bears to the number of initial shares
outstanding at the time of redemption.

REORGANIZATION COSTS: On July 7, 1995 the Board of Directors approved the
reorganization of the Oregon Municipal Bond Fund, Inc., The Crabbe Huson Special
Fund, Inc., The Crabbe Huson Asset Allocation Fund, Inc. The Crabbe Huson Equity
Fund, Inc., The Crabbe Huson Income Fund, Inc., The Crabbe Huson U.S. Government
Income Fund, Inc., The Crabbe Huson U.S. Government Money Market Fund, Inc. and
The Crabbe Huson Real Estate Investment Fund, Inc., ("the Fund") into a single
Delaware business trust which will operate as a series company. The record date
of this reorganization is December 20, 1995 and the costs related to the
reorganization will be incurred by the Funds.

FEDERAL INCOME TAXES: It is each Fund's policy to distribute substantially all
of its taxable income to shareholders and otherwise comply with the provisions
of the Internal Revenue Code applicable to regulated investment companies.
Therefore, no provision has been made for Federal income tax or excise taxes.

133

<PAGE>

CRABBE HUSON FUNDS

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
October 31, 1995

FEDERAL INCOME TAXES - (CONTINUED): Due to the timing of dividend distributions
and the differences in accounting for income and realized gains (losses) for
financial statement and federal income tax purposes, the fiscal year in which
amounts are distributed may differ from the year in which the income and
realized gains (losses) were recorded by the funds. The differences between the
income or gains distributed on a book versus tax basis are shown as excess
distributions of net investment income and net realized gain on sales of
investments in the Statement of Changes in Net Assets.

On the Statement of Assets and Liabilities, as a result of permanent book-to-tax
differences, reclassification adjustments have been made as shown in Table A.

NOTE 2. INVESTMENT ADVISOR AND OTHER TRANSACTIONS WITH AFFILIATES

INVESTMENT ADVISOR: The Funds have entered into an investment advisory
agreement with The Crabbe Huson Group, Inc. (the "Advisor"), an affiliated
company. The investment advisory fee of each Fund is accrued daily and paid
semi-monthly. The annual investment advisory fee for each Fund is described
below:

THE CRABBE HUSON ASSET ALLOCATION FUND, INC.
THE CRABBE HUSON SPECIAL FUND, INC.
THE CRABBE HUSON EQUITY FUND, INC.
THE CRABBE HUSON REAL ESTATE INVESTMENT FUND, INC.

1.00% of daily net assets up to $100,000,000
.85 of 1% of daily net assets between $100,000,000 and $500,000,000
.60 of 1% of daily net assets over $500,000,000

THE CRABBE HUSON INCOME FUND, INC.

.75 of 1% of daily net assets up to $100,000,000
.60 of 1% of daily net assets up to $500,000,000
.50 of 1% of daily nets assets over $500,000,000

THE CRABBE HUSON U.S. GOVERNMENT INCOME FUND, INC.
THE CRABBE HUSON U.S. GOVERNMENT MONEY MARKET FUND, INC.
THE OREGON MUNICIPAL BOND FUND, INC.

.50 of 1% of daily net assets up to $500,000,000
.45 of 1% of daily net assets between $500,000,000 and $1,000,000,000
.40 of 1% of daily net assets over $1,000,000,000

The Advisor has voluntarily agreed to waive its management fee and/or reimburse
each Fund for the amount, if any, by which the total operating and management
expenses of such Fund (including the Advisor's compensation and any amounts paid
pursuant to the participating Funds' Rule 12b-1 plan but excluding interest,
taxes, brokerage fees and commissions, and extraordinary expenses) exceed
certain annual rates applied to the average daily net assets of the Funds.

The annual expense limit for each Fund is listed below:

The Oregon Municipal Bond Fund, Inc. 0.98%
The Crabbe Huson Special Fund, Inc. 1.50%
The Crabbe Huson Asset Allocation Fund, Inc. 1.50%
The Crabbe Huson Equity Fund, Inc. 1.50%
The Crabbe Huson Income Fund, Inc. 0.80%
The Crabbe Huson U.S. Government Income Fund, Inc. 0.75%
The Crabbe Huson U.S. Government Money
Market Fund, Inc. 0.70%
The Crabbe Huson Real Estate Investment Fund, Inc. 1.50%

DISTRIBUTOR: The Funds have entered into a distribution agreement with Crabbe
Huson Securities, Inc. (the "Distributor"), an affiliated company. Under the
Distribution Plan, each of the participating Funds may pay up to 1/4 of 1% of
such Fund's average daily net assets to the Distributor as reimbursement for its
actual expenses incurred in the distribution and promotion of such Fund's
shares.

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
TABLE A UNDISTRIBUTED UNDISTRIBUTED
ACCUMULATED ACCUMULATED NET
CAPITAL NET INVESTMENT REALIZED GAIN ON
PAID IN INCOME INVESTMENTS
------------- -------------- ---------------------

<S> <C> <C> <C>
The Oregon Municipal Bond Fund, Inc. -- -- --
The Crabbe Huson Special Fund, Inc. $ 79,005 $ (726,118) $ 647,113
The Crabbe Huson Asset Allocation Fund, Inc. (108,605) (37,121) 145,726
The Oregon Equity Fund, Inc. 29,829 (360,174) 330,345
The Crabbe Huson Income Fund, Inc. 38,846 17,066 (55,912)
The Crabbe Huson U.S. Government Income Fund, Inc. (3,715) 10,021 (6,306)
The Crabbe Huson U.S. Government Money Market Fund, Inc. -- -- --
The Crabbe Huson Real Estate Investment Fund, Inc. (182,383) (3,832) 177,416
</TABLE>

134

<PAGE>

CRABBE HUSON FUNDS

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
October 31, 1995

ADMINISTRATOR: State Street Bank and Trust Company (the "Administrator") serves
as administrator of the Funds. The Administrator performs certain
administrative services for the Funds. The Funds pays the Administrator a fee
at the rate of 0.06% of the Fund's average net assets up to $500 million, 0.03%
of the next $500 million, and 0.01% of those assets in excess of $1 billion,
plus certain out of pocket costs.

DIRECTORS FEES: As of October 31, 1995, fees payable to the disinterested
directors were $778, $1,027, $2,027, $2,027, $277, $277, $778 and $778 for The
Oregon Municipal Bond Fund, Inc., The Crabbe Huson Special Fund, Inc., The
Crabbe Huson Asset Allocation Fund, Inc., The Crabbe Huson Equity Fund, Inc.,
The Crabbe Huson Income Fund, Inc., The Crabbe Huson U.S. Government Income
Fund, Inc., The Crabbe Huson U.S. Government Money Market Fund, Inc. and The
Crabbe Huson Real Estate Investment Fund, Inc., respectively.

NOTE 3. DISTRIBUTIONS TO SHAREHOLDERS (Unaudited)

THE OREGON MUNICIPAL BOND FUND, INC. Of the Fund's distributions paid to
shareholders from net investment income during the fiscal year ended October 31,
1995, 99.3% was attributable to investments in municipal bonds issued by the
state of Oregon and its political subdivisions, agencies authorities and
instrumentalities and other municipal securities.

THE CRABBE HUSON SPECIAL FUND, INC. Of the Fund's net investment income earned
during the fiscal year ended October 31, 1995, 22.6% was attributable to
investments in direct or indirect debt obligations of the United States
Government, or its agencies or instrumentalities.

THE CRABBE HUSON ASSET ALLOCATION FUND, INC. Of the Fund's net investment
income earned during the fiscal year ended October 31, 1995, 60.1% was
attributable to investments in direct or indirect debt obligations of the United
States Government, or its agencies or instrumentalities.

THE CRABBE HUSON EQUITY FUND, INC. Of the Fund's net investment income earned
during the fiscal year ended October 31, 1995, 40.9% was attributable to
investments in direct or indirect debt obligations of the United States
Government, or its agencies or instrumentalities.

THE CRABBE HUSON INCOME FUND, INC. Of the Fund's net investment income earned
during the fiscal year ended October 31, 1995, 50.4% was attributable to
investments in direct or indirect debt obligations of the United States
Government, or its agencies or instrumentalities.

THE CRABBE HUSON U.S. GOVERNMENT INCOME FUND, INC. Of the Fund's net investment
income earned during the fiscal year ended October 31, 1995, 95.8% was
attributable to investments in direct or indirect debt obligations of the United
States Government, or its agencies or instrumentalities.

THE CRABBE HUSON U.S. GOVERNMENT MONEY MARKET FUND, INC. Of the Fund's net
investment income earned during the fiscal year ended October 31, 1995, 98.2%
was attributable to investments in direct or indirect debt obligations of the
United States Government, or its agencies or instrumentalities.

THE CRABBE HUSON REAL ESTATE INVESTMENT FUND, INC. Of the Fund's net investment
income earned during the fiscal year ended October 31, 1995, none was
attributable to investments in direct or indirect debt obligations of the United
States Government, or its agencies or instrumentalities.

On December 6, 1995 the following distributions were declared from net realized
capital gains from investment transactions. The dividend was paid on December
6, 1995, to shareholders of record on December 5, 1995, as shown in Table B.

- ------------------------------------------------------------------------------------------------------------------------------------
TABLE B PER SHARE DOLLARS
-----------------------------------------------------------------------------
SHORT-TERM LONG-TERM SHORT-TERM LONG-TERM
CAPITAL GAIN CAPITAL GAIN CAPITAL GAIN CAPITAL GAIN
DISTRIBUTION (1) DISTRIBUTION DISTRIBUTION (1) DISTRIBUTION
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
The Oregon Municipal Bond Fund, Inc. -- -- -- --
The Crabbe Huson Special Fund, Inc. 0.3764 0.1983 $23,686,427 $12,479,000
The Crabbe Huson Asset Allocation Fund, Inc. 0.5232 0.6046 5,306,597 6,131,818
The Crabbe Huson Equity Fund, Inc. 0.6038 0.3385 13,191,040 7,394,039
The Crabbe Huson Income Fund, Inc. -- -- -- --
The Crabbe Huson U.S. Government Income Fund, Inc. -- -- -- --
The Crabbe Huson Real Estate Investment Fund, Inc. 0.1225 -- 238,364 --
</TABLE>

(1)Short-term capital gains are taxable to shareholders as ordinary income
dividends.

135

<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
October 31, 1995

NOTE 4. CAPITAL SHARE TRANSACTIONS
Transactions in capital shares of the Funds were as follows:
<TABLE>
<CAPTION>
THE OREGON
MUNICIPAL BOND FUND, INC.
------------------------------------------------------------------------
SHARES AMOUNT
------------------------------------------------------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1995 1994 1995 1994
------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 552,364 858,058 $ 6,744,052 $10,795,284
Shares issued in
reinvestment of dividends 73,838 85,380 906,976 1,057,544
------------------------------------------------------------------------
626,202 943,438 7,651,028 11,852,828
Shares redeemed (822,850) (818,671) (9,931,939) (10,134,982)
------------------------------------------------------------------------
Net increase (decrease) (196,648) 124,767 ($ 2,280,911) $ 1,717,846
------------------------------------------------------------------------
------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
THE CRABBE HUSON
INCOME
FUND, INC.
------------------------------------------------------------------------
SHARES AMOUNT
------------------------------------------------------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1995 1994 1995 1994
------------------------------------------------------------------------
<S> <C> <C> <C> <C>

Shares sold 398,837 323,868 $3,890,790 $3,312,857
Shares issued in
reinvestment of dividends 33,473 28,426 329,268 289,053
------------------------------------------------------------------------
432,310 352,294 4,220,058 3,601,910
Shares redeemed (274,572) (338,813) (2,699,168) (3,410,998)
------------------------------------------------------------------------
Net increase (decrease) 157,738 13,481 $1,520,890 $ 190,912
------------------------------------------------------------------------
------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
THE CRABBE HUSON
SPECIAL FUND, INC.
------------------------------------------------------------------------
SHARES AMOUNT
------------------------------------------------------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1995 1994 1995 1994
------------------------------------------------------------------------
<S> <C> <C> <C> <C>

Shares sold 65,374,197 23,946,462 $928,135,711 $318,927,086
Shares issued in
reinvestment of dividends 78,213 51,007 1,030,774 610,047
------------------------------------------------------------------------
65,452,410 23,997,469 929,166,485 319,537,133
Shares redeemed (24,491,886) (3,303,144) (350,637,123) (43,533,333)
------------------------------------------------------------------------
Net increase (decrease) 40,960,524 20,694,325 $578,529,362 $276,003,800
------------------------------------------------------------------------
------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
THE CRABBE HUSON
U.S. GOVERNMENT
INCOME FUND, INC.
------------------------------------------------------------------------
SHARES AMOUNT
------------------------------------------------------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1995 1994 1995 1994
------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 320,552 318,425 $3,315,281 $3,370,107
Shares issued in
reinvestment of dividends 33,757 46,002 351,187 488,454
------------------------------------------------------------------------
354,309 364,427 3,666,468 3,858,561
Shares redeemed (464,645) (480,229) (4,812,243) (5,086,958)
------------------------------------------------------------------------
Net increase (decrease) (110,336) (115,802) ($1,145,775) ($1,228,397)
------------------------------------------------------------------------
------------------------------------------------------------------------
</TABLE>

136

<PAGE>

THE CRABBE HUSON ASSET
ALLOCATION FUND, INC.
------------------------------------------------------------------------
SHARES AMOUNT
------------------------------------------------------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1995 1994 1995 1994
------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 3,651,020 4,625,388 $47,567,984 $60,156,367
Shares issued in
reinvestment of dividends 213,856 460,871 2,807,183 5,964,138
------------------------------------------------------------------------
3,864,876 5,086,259 50,375,167 66,120,505
Shares redeemed (2,415,859) (2,842,271) (31,368,205) (36,797,904)
------------------------------------------------------------------------
Net increase (decrease) 1,449,017 2,243,988 $19,006,962 $29,322,601
------------------------------------------------------------------------
------------------------------------------------------------------------
</TABLE>

THE CRABBE HUSON
U.S. GOVERNMENT
MONEY MARKET FUND, INC.
------------------------------------------------------------------------
SHARES AMOUNT
------------------------------------------------------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1995 1994 1995 1994
------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 166,147,604 99,391,599 $166,147,604 $99,391,599
Shares issued in
reinvestment of dividends 1,738,682 391,037 1,738,682 391,037
------------------------------------------------------------------------
167,886,286 99,782,636 167,886,286 99,782,636
Shares redeemed (145,554,619) (82,184,578) (145,554,619) (82,184,578)
------------------------------------------------------------------------
Net increase (decrease) 22,331,667 17,598,058 $ 22,331,667 $17,598,058
------------------------------------------------------------------------
------------------------------------------------------------------------

</TABLE>

<TABLE>
<CAPTION>
THE CRABBE HUSON
EQUITY FUND, INC.
------------------------------------------------------------------------
SHARES AMOUNT
------------------------------------------------------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1995 1994 1995 1994
------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 16,135,368 8,303,990 $277,119,565 $134,306,739
Shares issued in
reinvestment of dividends 79,947 105,277 1,237,639 1,635,783
------------------------------------------------------------------------
16,215,315 8,409,267 278,357,204 135,942,522
Shares redeemed (4,218,957) (1,243,034) (72,930,361) (20,140,537)
------------------------------------------------------------------------
Net increase (decrease) 11,996,358 7,166,233 $205,426,843 $115,801,985
------------------------------------------------------------------------
------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
THE CRABBE HUSON
REAL ESTATE
INVESTMENT FUND, INC.
------------------------------------------------------------------------
SHARES AMOUNT
------------------------------------------------------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1995 1994 1995 1994
------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 821,200 2,006,502 $7,937,889 $20,250,921
Shares issued in
reinvestment of dividends 36,962 33,284 357,391 323,473
------------------------------------------------------------------------
858,162 2,039,786 8,295,280 20,574,394
Shares redeemed (822,760) (125,257) (7,975,781) (1,275,958)
------------------------------------------------------------------------
Net increase (decrease) 35,402 1,914,529 $ 319,499 $19,298,436
------------------------------------------------------------------------
------------------------------------------------------------------------
</TABLE>
*For the period from April 4, 1994 (commencement of operations) to October 31,
1994.

137

<PAGE>

138

<PAGE>

CRABBE HUSON FUNDS
NOTES TO FINANCIAL STATEMENTS (continued)
October 31, 1995

NOTE 5. INVESTMENT TRANSACTIONS

For the year ended October 31, 1995, The Crabbe Huson U.S. Government Money
Market Fund, Inc. had aggregate security purchases and sales (including
maturities) of $443,976,883 and $424,658,448, respectively. Aggregate
purchases, sales and maturities for the year ended October 31, 1995
(excluding short-term securities) for the remaining funds, are as follows:

THE OREGON THE CRABBE THE CRABBE THE CRABBE
MUNICIPAL HUSON HUSON ASSET HUSON
BOND SPECIAL ALLOCATION EQUITY
FUND, INC. FUND, INC. FUND, INC. FUND, INC.
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Purchases: $5,984,368 $959,620,834 $274,278,333 $397,589,397
--------------- --------------- --------------- ---------------
--------------- --------------- --------------- ---------------

Sales and Maturities: 8,735,890 572,783,341 248,155,111 200,246,630
--------------- --------------- --------------- ---------------
--------------- --------------- --------------- ---------------

Gross unrealized appreciation and depreciation on securites held by the Funds at October 31, 1995 are as follows:

Unrealized Appreciation (Depreciation):
For book purposes
Appreciation 1,399,431 65,671,560 6,773,143 27,705,429
Depreciation (33,677) (104,877,230) (1,946,850) (12,595,106)
--------------- --------------- --------------- ---------------
Net unrealized appreciation (depreciation) $1,365,754 ($ 39,205,670) $ 4,826,293 $ 15,110,323
--------------- --------------- --------------- ---------------
--------------- --------------- --------------- ---------------

Unrealized Appreciation (Depreciation):
For Federal income tax purposes
Appreciation 1,399,431 64,232,281 6,797,897 27,259,001
Depreciation (33,677) (107,785,909) (1,956,923) (12,771,570)
--------------- --------------- --------------- ---------------
Net unrealized appreciation (depreciation) $1,365,754 ($ 43,553,628) $ 4,840,974 $ 14,487,431
--------------- --------------- --------------- ---------------
--------------- --------------- --------------- ---------------

<CAPTION>
THE CRABBE THE
THE CRABBE HUSON U.S. CRABBE HUSON
HUSON GOVERNMENT REAL ESTATE
INCOME INCOME INVESTMENT
FUND, INC. FUND, INC. FUND, INC.
--------------- --------------- ---------------
<S> <C> <C> <C>
Purchases: $34,477,754 $19,009,336 $11,936,969
--------------- --------------- ---------------
--------------- --------------- ---------------

Sales and Maturities: 32,908,584 20,219,537 10,862,375
--------------- --------------- ---------------
--------------- --------------- ---------------

Gross unrealized appreciation and depreciation on securites held by the Funds at October 31, 1995 are as follows:

Unrealized Appreciation (Depreciation):
For book purposes
Appreciation 223,991 107,717 636,791
Depreciation (681) (4,238) (1,613,895)
--------------- --------------- ---------------
Net unrealized appreciation (depreciation) $ 223,310 $ 103,479 ($977,104)
--------------- --------------- ---------------
--------------- --------------- ---------------

Unrealized Appreciation (Depreciation):
For Federal income tax purposes
Appreciation 204,681 106,764 634,056
Depreciation (681) (4,238) (1,616,344)
--------------- --------------- ---------------
Net unrealized appreciation (depreciation) $ 204,000 $ 102,526 ($982,288)
--------------- --------------- ---------------
--------------- --------------- ---------------
</TABLE>

139

<PAGE>

CRABBE HUSON FUNDS

FINANCIAL HIGHLIGHTS

(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
The following information has been derived from the Fund's financial statements
and notes included in the 1995 Annual Report. These financial statements and
the notes for the periods beginning after October 31, 1988 have been audited by
KPMG Peat Marwick, LLP, whose report thereon is included with the financial
statements in the Statement of Additional Information.

(a) The Fund's Fiscal Year was changed from 9/30 to 10/31, effective 10/31/87,
which represents a conformed 12-month period.
(b) Computed on an annualized basis.
(c) Commencement of operations - 4/9/87.
(d) Commencement of operations - 1/31/89.
(e) Commencement of operations - 4/4/94.

THE OREGON MUNICIPAL BOND FUND, INC.

<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
10/31/89 10/31/88 10/31/87(a) 9/30/87 9/30/86 10/31/90
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $11.99 $12.80 $12.20 $12.14 $11.74 $11.72

INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
NET INVESTMENT INCOME 0.5480 0.5418 0.5683 0.6168 0.6385 0.6316
NET REALIZED & UNREALIZED
GAIN (LOSS) ON SECURITIES 0.6998 (0.8001) 0.6880 0.1521 0.4831 0.0522
----------- ----------- ----------- ----------- ----------- -----------
TOTAL FROM INVESTMENT OPERATIONS 1.2478 (0.2583) 1.2563 0.7689 1.1216 0.6838

LESS DISTRIBUTIONS
- ------------------
DISTRIBUTIONS FROM NET INVESTMENT INCOME 0.5480 0.5419 0.5647 0.6168 0.6562 0.6401
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME 0.0000 0.0003 0.0000 0.0000 0.0000 0.0000
DISTRIBUTIONS FROM CAPITAL GAINS 0.0698 0.0090 0.0916 0.0921 0.0654 0.0237
----------- ----------- ----------- ----------- ----------- -----------
TOTAL DISTRIBUTIONS 0.6178 0.5512 0.6563 0.7089 0.7216 0.6638

----------- ----------- ----------- ----------- ----------- -----------
NET ASSET VALUE, END OF PERIOD $12.62 $11.99 $12.80 $12.20 $12.14 $11.74
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
TOTAL RETURN 10.66% -2.06% 10.71% 6.51% 9.85% 6.00%

RATIOS/SUPPLEMENTAL DATA
- ------------------------
NET ASSETS, END OF PERIOD $28,070,371 $29,045,728 $29,408,110 $20,295,896 $18,382,636 $18,766,449
RATIO OF EXPENSES TO AVERAGE NET ASSETS 0.98% 0.98% 1.05% 1.11% 1.21% 1.38%
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 4.45% 4.37% 4.51% 5.04% 5.36% 5.41%
PORTFOLIO TURNOVER RATE 22.91% 20.58% 11.62% 25.30% 53.40% 58.52%

RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
- ----------------------------------------------------
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.08% 1.08% 1.09% 1.13% 1.24% 1.55%
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 4.35% 4.26% 4.46% 5.01% 5.34% 5.23%

140

<PAGE>
<CAPTION>
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
10/31/89 10/31/88 10/31/87(a) 09/30/87 09/30/86
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $11.72 $11.08 $12.15 $11.93 $10.43

INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
NET INVESTMENT INCOME 0.6794 0.6386 0.7311 0.7319 0.7720
NET REALIZED & UNREALIZED ENDED
GAIN (LOSS) ON SECURITIES 0.0842 0.6411 (0.9983) (0.8051) 1.5265
----------- ----------- ----------- ----------- -----------
TOTAL FROM INVESTMENT OPERATIONS 0.7636 1.2797 (0.2672) (0.0732) 2.2985

LESS DISTRIBUTIONS
- ------------------
DISTRIBUTIONS FROM NET INVESTMENT INCOME 0.6711 0.6386 0.7311 0.7319 0.7720
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME 0.0000 0.0000 0.0000 0.0000 0.0000
DISTRIBUTIONS FROM CAPITAL GAINS 0.0925 0.0000 0.0760 0.0760 0.0255
----------- ----------- ----------- ----------- -----------
TOTAL DISTRIBUTIONS 0.7636 0.6386 0.8071 0.8079 0.7975

----------- ----------- ----------- ----------- -----------
NET ASSET VALUE, END OF PERIOD $11.72 $11.72 $11.08 $11.05 $11.93
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
TOTAL RETURN 6.67% 12.02% -1.95% -0.95% 22.83%

RATIOS/SUPPLEMENTAL DATA
- ------------------------
NET ASSETS, END OF PERIOD $19,173,145 $20,058,295 $14,276,600 $14,165,161 $8,861,258
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.04% 1.21% 1.14% 1.31% 1.06%
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 5.82% 5.53% 5.66% 6.43% 6.34%
PORTFOLIO TURNOVER RATE 45.25% 31.44% 19.18% 18.73% 24.20%

RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
- ----------------------------------------------------
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.16% 1.32% ---- ---- ----
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 5.71% 5.42% ---- ---- ----
</TABLE>

141

<PAGE>

CRABBE HUSON FUNDS

FINANCIAL HIGHLIGHTS
(Continued)

THE CRABBE HUSON SPECIAL FUND, INC.

<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
10/31/95 10/31/94 10/31/93 10/31/92
------------ ------------ ----------- ----------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $14.08 $11.82 $8.36 $12.05

INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) 0.2704 0.0513 (0.0774) (0.0211)
NET REALIZED & UNREALIZED
GAIN (LOSS) ON SECURITIES (0.2894) 2.3026 3.5374 (1.6211)
------------ ------------ ----------- ----------
TOTAL FROM INVESTMENT OPERATIONS (0.0190) 2.3539 3.4600 (1.6422)

LESS DISTRIBUTIONS
DISTRIBUTIONS FROM NET INVESTMENT INCOME 0.0226 0.0000 0.0000 0.0260
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME 0.0000 0.0892 0.0000 2.0218
DISTRIBUTIONS FROM CAPITAL GAINS 0.2384 0.0000 0.0000 0.0000
------------ ------------ ----------- ----------
TOTAL DISTRIBUTIONS 0.2610 0.0892 0.0000 2.0478

------------ ------------ ----------- ----------
NET ASSET VALUE, END OF PERIOD $13.80 $14.08 $11.82 $8.36
------------ ------------ ----------- ----------
------------ ------------ ----------- ----------
TOTAL RETURN 1.78% 22.40% 41.39% 8.11%

RATIOS/SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD $878,559,834 $319,810,853 $23,816,912 $5,857,434
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.40% 1.44% 1.57% 1.74%
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 1.95% 0.39% -0.73% -0.25%
PORTFOLIO TURNOVER RATE 122.97% 146.44% 73.29% 102.27%

RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.40% 1.54% 1.59% 2.18%
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 1.95% 0.29% -0.75% -0.69%

142

<PAGE>

<CAPTION>
YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
10/31/91 10/31/90 10/31/89 10/31/88 10/31/87(c)
------------ ------------ ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $8.78 $11.49 $9.69 $8.13 $10.00

INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) 0.0353 0.1546 0.2100 (0.0515) (0.0409)
NET REALIZED & UNREALIZED
GAIN (LOSS) ON SECURITIES 4.0155 (1.4317) 1.5900 1.6115 (1.8300)
------------ ------------ ----------- ---------- -----------
TOTAL FROM INVESTMENT OPERATIONS 4.0508 (1.2771) 1.8000 1.5600 (1.8709)

LESS DISTRIBUTIONS
DISTRIBUTIONS FROM NET INVESTMENT INCOME 0.1453 0.2240 0.0000 0.0000 0.0000
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME 0.6355 1.2089 0.0000 0.0000 0.0000
DISTRIBUTIONS FROM CAPITAL GAINS 0.0000 0.0000 0.0000 0.0000 0.0000
------------ ------------ ----------- ---------- ----------
TOTAL DISTRIBUTIONS 0.7808 1.4329 0.0000 0.0000 0.0000

------------ ------------ ----------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $12.05 $8.78 $11.49 $9.69 $8.13
------------ ------------ ----------- ---------- ----------
------------ ------------ ----------- ---------- ----------
TOTAL RETURN 49.58% -10.90% 18.68% 19.63% -30.32%(b)

RATIOS/SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD $3,541,797 $2,926,457 $3,356,417 $4,392,920 $1,892,038
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.92% 2.00% 2.00% 3.94% 2.60%(b)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 0.32% 1.55% 1.96% 3.34% 0.05%(b)
PORTFOLIO TURNOVER RATE 256.68% 314.73% 275.62% 155.12% 3.90%

RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.40% 2.86% 2.44%(b) ---- ----
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS -0.15% 0.70% 1.53%(b) ---- ----
</TABLE>

143

<PAGE>

CRABBE HUSON FUNDS

FINANCIAL HIGHLIGHTS
(Continued)

THE CRABBE HUSON ASSET ALLOCATION FUND, INC.

<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
10/31/95 10/31/94 10/31/93 10/31/92
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $12.87 $13.52 $11.68 $11.00

INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
NET INVESTMENT INCOME 0.3361 0.2990 0.2323 0.3468
NET REALIZED & UNREALIZED
GAIN (LOSS) ON SECURITIES 1.2090 (0.0817) 2.0889 0.8175
----------- ----------- ----------- -----------
TOTAL FROM INVESTMENT OPERATIONS 1.5451 0.2173 2.3212 1.1643

LESS DISTRIBUTIONS
- ------------------
DISTRIBUTIONS FROM NET INVESTMENT INCOME 0.3321 0.2879 0.2373 0.3463
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME 0.0000 0.0000 0.0000 0.0000
DISTRIBUTIONS FROM CAPITAL GAINS 0.4430 0.5829 0.2439 0.1380
----------- ----------- ----------- -----------
TOTAL DISTRIBUTIONS 0.7751 0.8708 0.4812 0.4843

----------- ----------- ----------- -----------
NET ASSET VALUE, END OF PERIOD $13.64 $12.87 $13.52 $11.68
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
TOTAL RETURN 13.00% 2.66% 20.93% 11.25%

RATIOS/SUPPLEMENTAL DATA
- ------------------------
NET ASSETS, END OF PERIOD $136,530,057 $110,151,785 $85,390,017 $55,098,981
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.48% 1.44% 1.46% 1.52%
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 2.57% 2.30% 1.85% 3.02%
PORTFOLIO TURNOVER RATE 225.70% 149.19% 116.10% 155.26%

RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
- ----------------------------------------------------
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.49% 1.52% 1.54% 1.62%
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 2.56% 2.22% 1.77% 2.92%

144

<PAGE>

<CAPTION>
YEAR YEAR PERIOD
ENDED ENDED ENDED
10/31/91 10/31/90 10/31/89 (d)
----------- ----------- -----------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $9.24 $10.69 $10.00

INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
NET INVESTMENT INCOME 0.4143 0.4561 0.3990
NET REALIZED & UNREALIZED
GAIN (LOSS) ON SECURITIES 1.8208 (1.1200) 0.2910
----------- ----------- -----------
TOTAL FROM INVESTMENT OPERATIONS 2.2351 (0.6639) 0.6900

LESS DISTRIBUTIONS
- ------------------
DISTRIBUTIONS FROM NET INVESTMENT INCOME 0.4335 0.7159 0.0000
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME 0.0000 0.0000 0.0000
DISTRIBUTIONS FROM CAPITAL GAINS 0.0415 0.0702 0.0000
----------- ----------- -----------
TOTAL DISTRIBUTIONS 0.4750 0.7861 0.0000

----------- ----------- -----------
NET ASSET VALUE, END OF PERIOD $11.00 $9.24 $10.69
----------- ----------- -----------
----------- ----------- -----------
TOTAL RETURN 24.55% -6.40% 9.30%(b)

RATIOS/SUPPLEMENTAL DATA
- ------------------------
NET ASSETS, END OF PERIOD $23,892,664 $13,173,923 $12,577,962
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.76% 1.90% 1.91%(b)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 3.97% 4.51% 5.02%(b)
PORTFOLIO TURNOVER RATE 157.89% 161.72% 88.14%

RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
- ----------------------------------------------------
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.79% 1.93% 1.93%(b)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 3.94% 4.49% 5.00%(b)
</TABLE>

145

<PAGE>

CRABBE HUSON FUNDS

FINANCIAL HIGHLIGHTS
(Continued)

THE CRABBE HUSON EQUITY FUND, INC.

<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
10/31/95 10/31/94 10/31/93 10/31/92
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $16.44 $16.08 $13.03 $12.57

INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
NET INVESTMENT INCOME 0.2223 0.1900 0.0981 0.1980
NET REALIZED & UNREALIZED
GAIN (LOSS) ON SECURITIES 1.7438 0.5668 3.4476 0.9186
------------ ------------ ----------- -----------
TOTAL FROM INVESTMENT OPERATIONS 1.9661 0.7568 3.5457 1.1166

LESS DISTRIBUTIONS
- ------------------
DISTRIBUTIONS FROM NET INVESTMENT INCOME 0.0880 0.0344 0.1099 0.0937
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME 0.0000 0.0000 0.0000 0.0000
DISTRIBUTIONS FROM CAPITAL GAINS 0.1481 0.3638 0.3858 0.5629
------------ ------------ ----------- ----------
TOTAL DISTRIBUTIONS 0.2361 0.3982 0.4957 0.6566

------------ ------------ ----------- -----------
NET ASSET VALUE, END OF PERIOD $18.17 $16.44 $16.08 $13.03
------------ ------------ ----------- -----------
------------ ------------ ----------- -----------
TOTAL RETURN 13.37% 7.89% 29.90% 12.48%

RATIOS/SUPPLEMENTAL DATA
- ------------------------
NET ASSETS, END OF PERIOD $387,184,080 $153,105,296 $34,520,166 $13,429,315
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.40% 1.45% 1.49% 1.55%
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 1.30% 1.18% 0.67% 1.57%
PORTFOLIO TURNOVER RATE 92.43% 106.49% 114.38% 180.72%

RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
- ----------------------------------------------------
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.40% 1.56% 1.64% 1.93%
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 1.28% 1.06% 0.52% 1.18%

146

<PAGE>

<CAPTION>
YEAR YEAR PERIOD
ENDED ENDED ENDED
10/31/91 10/31/90 10/31/89 (d)
------------ ------------ -----------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $8.54 $10.50 $10.00

INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
NET INVESTMENT INCOME 0.1861 0.2533 0.3146
NET REALIZED & UNREALIZED
GAIN (LOSS) ON SECURITIES 4.1511 (1.6764) 0.1854
------------ ------------ -----------
TOTAL FROM INVESTMENT OPERATIONS 4.3372 (1.4231) 0.5000

LESS DISTRIBUTIONS
- ------------------
DISTRIBUTIONS FROM NET INVESTMENT INCOME 0.3072 0.3918 0.0000
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME 0.0000 0.0000 0.0000
DISTRIBUTIONS FROM CAPITAL GAINS 0.0000 0.1451 0.0000
------------ ------------ -----------
TOTAL DISTRIBUTIONS 0.3072 0.5369 0.0000
------------ ------------ -----------
NET ASSET VALUE, END OF PERIOD $12.57 $8.54 $10.50
------------ ------------ -----------
------------ ------------ -----------
TOTAL RETURN 52.44% -14.97% 6.72%(b)

RATIOS/SUPPLEMENTAL DATA
- ------------------------
NET ASSETS, END OF PERIOD $5,929,590 $2,944,344 $5,018,337
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.84% 1.93% 1.69%(b)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 1.60% 2.56% 3.98%(b)
PORTFOLIO TURNOVER RATE 171.82% 265.25% 90.54%

RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
- ----------------------------------------------------
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.41% 2.66% 1.97%(b)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 1.03% 1.83% 3.68%(b)
</TABLE>

147

<PAGE>

CRABBE HUSON FUNDS

FINANCIAL HIGHLIGHTS
(Continued)

THE CRABBE HUSON INCOME FUND, INC.

<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
10/31/95 10/31/94 10/31/93 10/31/92
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $9.71 $10.75 $10.90 $10.63

INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
NET INVESTMENT INCOME 0.5329 0.4995 0.4637 0.6583
NET REALIZED & UNREALIZED
GAIN (LOSS) ON SECURITIES 0.5754 (0.7669) 0.3265 0.3569
------------ ------------ ------------ ------------
TOTAL FROM INVESTMENT OPERATIONS 1.1083 (0.2674) 0.7902 1.0152

LESS DISTRIBUTIONS
- ------------------
DISTRIBUTIONS FROM NET INVESTMENT INCOME 0.5329 0.4995 0.4879 0.6588
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME 0.0254 0.0080 0.0000 0.0000
DISTRIBUTIONS FROM CAPITAL GAINS 0.0000 0.2710 0.4523 0.0864
------------ ------------ ------------ ------------
TOTAL DISTRIBUTIONS 0.5583 0.7785 0.9402 0.7452

------------ ------------ ------------ ------------
NET ASSET VALUE, END OF PERIOD $10.26 $9.71 $10.75 $10.90
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
TOTAL RETURN 11.92% -2.71% 7.73% 9.74%

RATIOS/SUPPLEMENTAL DATA
- ------------------------
NET ASSETS, END OF PERIOD $7,190,125 $5,273,407 $5,696,555 $5,634,372
RATIO OF EXPENSES TO AVERAGE NET ASSETS 0.80% 0.80% 0.81% 0.90%
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 5.47% 4.92% 4.34% 6.09%
PORTFOLIO TURNOVER RATE 543.15% 306.79% 260.22% 227.45%

RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
- ----------------------------------------------------
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.95% 2.16% 1.96% 1.94%
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 4.32% 3.56% 3.19% 5.06%

148

<PAGE>

<CAPTION>
YEAR YEAR PERIOD
ENDED ENDED ENDED
10/31/91 10/31/90 10/31/89 (d)
------------ ----------- -----------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.01 $10.27 $10.00

INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
NET INVESTMENT INCOME 0.7038 0.6869 0.5545
NET REALIZED & UNREALIZED
GAIN (LOSS) ON SECURITIES 0.6218 (0.2407) 0.2761
------------ ----------- -----------
TOTAL FROM INVESTMENT OPERATIONS 1.3256 0.4462 0.8306

LESS DISTRIBUTIONS
- ------------------
DISTRIBUTIONS FROM NET INVESTMENT INCOME 0.7056 0.6840 0.5606
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME 0.0000 0.0000 0.0000
DISTRIBUTIONS FROM CAPITAL GAINS 0.0000 0.0222 0.0000
------------ ----------- -----------
TOTAL DISTRIBUTIONS 0.7056 0.7062 0.5606

------------ ----------- -----------
NET ASSET VALUE, END OF PERIOD $10.63 $10.01 $10.27
------------ ----------- -----------
------------ ----------- -----------
TOTAL RETURN 13.51% 4.43% 10.43%(b)

RATIOS/SUPPLEMENTAL DATA
- ------------------------
NET ASSETS, END OF PERIOD $5,485,830 $2,123,203 $1,356,008
RATIO OF EXPENSES TO AVERAGE NET ASSETS 0.98% 1.51% 1.15%(b)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 6.82% 6.89% 7.23%(b)
PORTFOLIO TURNOVER RATE 115.76% 73.76% 86.60%

RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
- ----------------------------------------------------
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.42% 3.07% 4.56%(b)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 5.38% 5.33% 3.81%(b)
</TABLE>

149

<PAGE>

CRABBE HUSON FUNDS

FINANCIAL HIGHLIGHTS
(Continued)

THE CRABBE HUSON U.S. GOVERNMENT INCOME FUND, INC.

<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
10/31/95 10/31/94 10/31/93 10/31/92
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.27 $11.04 $10.91 $10.69

INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
NET INVESTMENT INCOME 0.5097 0.4648 0.4755 0.5801
NET REALIZED & UNREALIZED
GAIN (LOSS) ON SECURITIES 0.4013 (0.6515) 0.2159 0.2921
------------- ------------- ------------- -------------
TOTAL FROM INVESTMENT OPERATIONS 0.9110 (0.1867) 0.6914 0.8722

LESS DISTRIBUTIONS
- ------------------
DISTRIBUTIONS FROM NET INVESTMENT INCOME 0.5097 0.4647 0.4848 0.5839
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME 0.0113 0.0035 0.0000 0.0000
DISTRIBUTIONS FROM CAPITAL GAINS 0.0000 0.1120 0.0766 0.0683
------------- ------------- ------------- -------------
TOTAL DISTRIBUTIONS 0.5210 0.5802 0.5614 0.6522

------------- ------------- ------------- -------------
NET ASSET VALUE, END OF PERIOD $10.66 $10.27 $11.04 $10.91
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
TOTAL RETURN 9.12% -1.78% 6.71% 8.70%

RATIOS/SUPPLEMENTAL DATA
- ------------------------
NET ASSETS, END OF PERIOD $8,426,199 $9,249,212 $11,217,912 $8,958,757
RATIO OF EXPENSES TO AVERAGE NET ASSETS 0.75% 0.75% 0.75% 0.80%
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 4.85% 4.39% 4.33% 5.35%
PORTFOLIO TURNOVER RATE 230.43% 76.09% 81.74% 105.52%

RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
- ----------------------------------------------------
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.46% 1.47% 1.26% 1.52%
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 4.14% 3.66% 3.81% 4.63%

150

<PAGE>

<CAPTION>
YEAR YEAR PERIOD
ENDED ENDED ENDED
10/31/91 10/31/90 10/31/89 (d)
------------- ------------- -------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.24 $10.28 $10.00

INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
NET INVESTMENT INCOME 0.6722 0.6768 0.5637
NET REALIZED & UNREALIZED
GAIN (LOSS) ON SECURITIES 0.4542 (0.0326) 0.2852

------------- ------------- -------------
TOTAL FROM INVESTMENT OPERATIONS 1.1264 0.6442 0.8489

LESS DISTRIBUTIONS
- ------------------
DISTRIBUTIONS FROM NET INVESTMENT INCOME 0.6746 0.6735 0.5689
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME 0.0000 0.0000 0.0000
DISTRIBUTIONS FROM CAPITAL GAINS 0.0018 0.0106 0.0000
------------- ------------- -------------
TOTAL DISTRIBUTIONS 0.6764 0.6842 0.5689

------------- ------------- -------------
NET ASSET VALUE, END OF PERIOD 10.69 10.24 10.28
------------- ------------- -------------
------------- ------------- -------------
TOTAL RETURN 11.17% 6.40% 11.15%(b)

RATIOS/SUPPLEMENTAL DATA
- ------------------------
NET ASSETS, END OF PERIOD $3,748,244 $2,069,435 $1,717,128
RATIO OF EXPENSES TO AVERAGE NET ASSETS 0.96% 1.42% 1.14%(b)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 6.44% 6.72% 7.35%(b)
PORTFOLIO TURNOVER RATE 114.81% 87.71% 40.42%

RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
- ----------------------------------------------------
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.15% 2.84% 3.40%(b)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 5.25% 5.31% 5.09%(b)
</TABLE>

151

<PAGE>

CRABBE HUSON FUNDS

FINANCIAL HIGHLIGHTS
(Continued)

THE CRABBE HUSON U.S. GOVERNMENT MONEY MARKET FUND, INC.

YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
10/31/95 10/31/94 10/31/93 10/31/92
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00

INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
NET INVESTMENT INCOME 0.0512 0.0339 0.0250 0.0332
NET REALIZED & UNREALIZED
GAIN (LOSS) ON SECURITIES 0.0000 0.0000 0.0000 0.0000
----------- ----------- ----------- -----------
TOTAL FROM INVESTMENT OPERATIONS 0.0512 0.0339 0.0250 0.0332

LESS DISTRIBUTIONS
- ------------------
DISTRIBUTIONS FROM NET INVESTMENT INCOME 0.0512 0.0339 0.0250 0.0332
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME 0.0000 0.0000 0.0000 0.0000
----------- ----------- ----------- -----------
TOTAL DISTRIBUTIONS 0.0512 0.0339 0.0250 0.0332

----------- ----------- ----------- -----------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
TOTAL RETURN 5.30% 3.28% 2.53% 3.36%

RATIOS/SUPPLEMENTAL DATA
- ------------------------
NET ASSETS, END OF PERIOD $54,714,219 $32,382,552 $14,784,493 $12,395,326
RATIO OF EXPENSES TO AVERAGE NET ASSETS 0.70% 0.70% 0.70% 0.75%
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 5.21% 3.39% 2.51% 3.32%

RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
- ----------------------------------------------------
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.16% 1.29% 1.32% 1.09%
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 4.75% 2.81% 1.88% 2.98%

152

<PAGE>

<CAPTION>
YEAR YEAR PERIOD
ENDED ENDED ENDED
10/31/91 10/31/90 10/31/89 (d)
----------- ----------- -----------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00

INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
NET INVESTMENT INCOME 0.0576 0.0737 0.0633
NET REALIZED & UNREALIZED
GAIN (LOSS) ON SECURITIES 0.0000 0.0000 0.0000
----------- ----------- -----------
TOTAL FROM INVESTMENT OPERATIONS 0.0576 0.0737 0.0633

LESS DISTRIBUTIONS
- ------------------
DISTRIBUTIONS FROM NET INVESTMENT INCOME 0.0576 0.0737 0.0633
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME 0.0000 0.0000 0.0000
----------- ----------- -----------
TOTAL DISTRIBUTIONS 0.0576 0.0737 0.0633

----------- ----------- -----------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00
----------- ----------- -----------
----------- ----------- -----------
TOTAL RETURN 13.76% 7.62% 10.05%(b)

RATIOS/SUPPLEMENTAL DATA
- ------------------------
NET ASSETS, END OF PERIOD $14,906,733 $21,405,713 $10,735,032
RATIO OF EXPENSES TO AVERAGE NET ASSETS 0.81% 0.80% 0.60%(b)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 5.76% 7.57% 8.43%(b)

RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
- ----------------------------------------------------
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.18% 1.33% 1.34%(b)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 5.38% 7.04% 7.69%(b)
</TABLE>

153

<PAGE>

CRABBE HUSON FUNDS

FINANCIAL HIGHLIGHTS
(Continued)

THE CRABBE HUSON REAL ESTATE INVESTMENT FUND, INC.

<TABLE>
<CAPTION>
YEAR PERIOD
ENDED ENDED
10/31/95 10/31/94 (e)
----------- -----------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $9.50 $10.00

INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
NET INVESTMENT INCOME 0.4436 0.3664
NET REALIZED & UNREALIZED
GAIN (LOSS) ON SECURITIES 0.3065 (0.6394)
----------- -----------
TOTAL FROM INVESTMENT OPERATIONS 0.7501 (0.2730)

LESS DISTRIBUTIONS
- ------------------
DISTRIBUTIONS FROM NET INVESTMENT INCOME 0.4379 0.2287
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME 0.0000 0.0000
DISTRIBUTIONS FROM CAPITAL GAINS 0.1222 0.0000
----------- -----------
TOTAL DISTRIBUTIONS 0.5601 0.2287

----------- -----------
NET ASSET VALUE, END OF PERIOD $9.69 $9.50
----------- -----------
----------- -----------
TOTAL RETURN 8.31% -3.25%

RATIOS/SUPPLEMENTAL DATA
- ------------------------
NET ASSETS, END OF PERIOD $18,985,514 $18,279,500
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.50% 1.01%(b)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 4.59% 6.30%(b)
PORTFOLIO TURNOVER RATE 59.53% 43.30%

RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
- ----------------------------------------------------
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.89% 2.03%(b)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 4.20% 5.28%(b)
</TABLE>

154

<PAGE>

INDEPENDENT AUDITORS' REPORT

The Shareholders and Boards of Directors
Crabbe Huson Funds -
The Oregon Municipal Bond Fund, Inc.
The Crabbe Huson Special Fund, Inc.
The Crabbe Huson Asset Allocation Fund, Inc.
The Crabbe Huson Equity Fund, Inc.
The Crabbe Huson Income Fund, Inc.
The Crabbe Huson U.S. Government Income Fund, Inc.
The Crabbe Huson U.S. Government Money Market Fund, Inc.
The Crabbe Huson Real Estate Investment Fund, Inc.:

We have audited the accompanying statements of assets and liabilities, including
the schedules of investments of each of the Crabbe Huson Funds, as of October
31, 1995, and the related statements of operations for the year then ended, the
statements of changes in net assets for The Oregon Municipal Bond Fund, Inc.,
The Crabbe Huson Special Fund, Inc., The Asset Allocation Fund, Inc., The Crabbe
Huson Equity Fund, Inc., The Crabbe Huson Income Fund, Inc., The Crabbe Huson
U.S. Government Fund, Inc. and The Crabbe Huson U.S. Government Money Market
Fund, Inc. for each of the two years then ended, and for The Real Estate
Investment Fund, Inc. for the year ended October 31, 1995 and for the period
from April 4, 1994 (commencement of operations) to October 31, 1994, and the
financial highlights for The Oregon Municipal Bond Fund, Inc. and The Crabbe
Huson Special Fund, Inc. for each of the seven years ended October 31, 1995, The
Crabbe Huson Asset Allocation Fund, Inc., The Crabbe Huson Equity Fund, Inc.,
The Crabbe Huson Income Fund, Inc., The Crabbe Huson U.S. Government Income
Fund, Inc. and The Crabbe Huson U.S. Government Money Market Fund, Inc. for each
of the six years ended October 31, 1995 and for the period from January 31, 1989
(commencement of operations) to October 31, 1989 and for the Crabbe Huson Real
Estate Investment Fund, Inc. for the year ended October 31, 1995 and for the
period from April 4, 1994 (commencement of operations) to October 31, 1994.
These financial statements and financial highlights are the responsibility of
the management of the Crabbe Huson Funds. Our responsibility is to express an
opinion on these financial statements and financial highlights based upon our
audits. The financial highlights for The Oregon Municipal Bond Fund, Inc. and
The Crabbe Huson Special Fund, Inc. for the periods ended October 31, 1988 and
prior were audited by other auditors whose reports expressed unqualified
opinions on the financial highlights.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included verification of
securities owned as of October 31, 1995, by examination and other appropriate
audit procedures. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the Crabbe Huson Funds as of October 31, 1995, the results of their
operations, the changes in their net assets and their financial highlights for
the periods indicated above, in conformity with generally accepted accounting
principles.

KPMG PEAT MARWICK LLP

Portland, Oregon
December 8, 1995

155

<PAGE>

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

PART C

OTHER INFORMATION
-----------------

Item 24. FINANCIAL STATEMENTS AND EXHIBITS

(a) Index to Financial Statement.

The following financial information of the Registrant is included in Part A
of the Registration Statement (the Prospectus)

Audited Condensed Financial Information as of thru 10/31/95:

Unaudited Condensed Financial Information for the six month period
ending 4/30/96

The following Financial Statements of the Registrant are included in Part B
of the Registration Statement (the Statement of Additional Information):

Unaudited Financial Statements for all Funds as of 4/30/96:

Schedule of Investments

Statements of Assets and Liabilities

Statements of Operations

Statements of Changes in Net Assets for periods ended 10/31/95 and
4/30/96

Notes to Financial Statements

Audited Financial Statements for all Funds (other than the Small Cap
Fund) as of 10/31/95

Schedule of Investments

Statements of Assets and Liabilities

Statements of Operations

Statements of Changes in Net Assets for period ended 10/31/94 and
10/31/95

Notes to Financial Statements

Independent Auditors' Report

(b) Exhibits:

1 Amended Declaration of Trust (1)

2 Amended Bylaws (1)

3 None

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

(1) Incorporated by reference from Pre-Effective Amendment No. 1 to the
Registration Statement filed with the Securities and Exchange Commission on
February 9, 1996 (File No. 33-64363).

-1-

<PAGE>

4 Copies of all instruments defining the rights of holders of the securities
being registered including, where applicable, the relevant portion of the
Declaration of Trust or bylaws of the registrant.

The Amended Declaration of Trust and Amended Bylaws of the registrant are
hereby incorporated by reference from the Pre-Effective Amendment No. 1
filed with the Securities and Exchange Commission on February 9, 1996. In
addition, attached as Exhibit 99.4 is the written instrument establishing
and designating separate classes of shares adopted by the Board of
Trustees of the Crabbe Huson Funds on May 28, 1996. (2)

5 Form of Master Investment Advisory Contract (1)

6(a) Form of Distribution Agreement (2)

6(b) Form of Selected Dealer Agreement (2)

7 None

8 Custody and Investment Accounting (1)

9(a) Administration Agreement (1)

9(b) Transfer Agency and Service Agreement (1)

10 Opinion and Consent of Davis Wright Tremaine, Counsel to Registrant (1)

11 Consent of Accountants

12 See paragraph (a) of this Item 24

13 None

14 Retirement Plans (3)

15 Distribution Plan (2)

16 Computation Schedule (4)

17 Form of Rule 483 Financial Data Schedule

(a) Fiscal Year end October 31, 1995 (2)

(b) Fiscal Period ending April 30, 1996

18 Rule 18f-3 Plan (2)

19 Power of Attorney

Item 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT

Registrant does not have any subsidiaries and does not control any other company
or person.

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

(2) Incorporated by reference from Post-Effective Amendment No. 1 filed by the
Trust, July 16, 1996, File Nos. 33-64363 and 811-5837.

(3) Incorporated by reference from the Post-Effective Amendment No. 5 filed by
the Crabbe Huson Equity Fund, Inc., File Nos. 33-25044 and 811-5837.

(4) Information regarding calculation of performance data as required by item
22 is contained in the Funds' Statement of Additional Information.

-2-

<PAGE>

Item 26. NUMBER OF HOLDERS OF SECURITIES

As of August 30, 1996, the Funds' outstanding shares were held as follows(1):

<S> <C>
Small Cap Fund
Primary Class
Institutional Class 336

The Real Estate Investment Fund, Inc.
Primary Class 1

The Equity Fund, Inc.
Primary Class 1
Institutional Class 1

Asset Allocation Fund
Primary Class 1
Institutional Class 1

The Oregon Municipal Bond Fund, Inc.
Primary Class 1

The Income Fund, Inc.
Primary Class 1

The U.S. Government Income Fund, Inc.
Primary Class 1

The U.S. Government Money Market Fund, Inc.
Primary Class 1

</TABLE>

(1) This date precedes the date of the reorganization. At the completion of
the reorganization, the Primary Class of each series will have the same
number of shareholders as its respective corporate form immediately prior
to the reorganization.

Item 27. INDEMNIFICATION

The Declaration of Trust of the Registrant contains the following provisions:

"LIMITATION OF LIABILITY. No personal liability for any debt or obligation
of the Trust shall attach to any Trustee of the Trust. Without limiting the
foregoing, a Trustee shall not be responsible for or liable in any event for
any neglect or wrongdoing of any officer, agent, employee, investment
adviser, subadviser, principal underwriter or custodian of the Trust, nor
shall any Trustee be responsible or liable for the act or omission of any
other Trustee. Nothing contained herein shall protect any Trustee against any
liability to which such Trustee would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office.

"Every note, bond, contract, instrument, certificate, Share or undertaking
and every other act or thing whatsoever executed or done by or on behalf of
the Trust or the Trustees or any of them in connection with the Trust shall
be conclusively deemed to have been executed or done only in or with respect
to their or his capacity as Trustees or Trustee and neither such Trustees or
Trustee nor the Shareholders shall be personally liable thereon.

"Every note, bond, contract, instrument, certificate or undertaking made or
issued by the Trustees or by any officers or officer shall recite that the same
was executed or made by or on behalf of

-3-

<PAGE>

the Trust by them as Trustees or Trustee or as officers or officer and not
individually and that the obligations of such instrument are not binding upon
any of them or the Shareholders individually but are binding only upon the
assets and property of the Trust, and may contain such further recitals as
they or he may deem appropriate, but the omission thereof shall not operate
to bind any Trustees or Trustee or officers or officer or Shareholders or
Shareholder individually.

"All persons extending credit to, contracting with or having any claim
against the Trust shall look only to the assets of the Trust for payment
under such credit, contract or claim; and neither the Shareholders nor the
Trustees nor any of the Trust's officers, employees or agents, whether past,
present or future, shall be personally liable therefor.

. . . . .

"INDEMNIFICATION. Subject to the exceptions and limitations contained in this
Section 4, every person who is, or has been, a Trustee,
officer, employee or agent of the Trust, including persons who serve at the
request of the Trust as directors, trustees, officers, employees or agents of
another organization in which the Trust has an interest as a shareholder,
creditor or otherwise (hereinafter referred to as a "Covered Person"), shall
be indemnified by the Trust to the fullest extent permitted by law against
liability and against all expenses reasonably incurred or paid by him in
connection with any claim, action, suit or proceeding in which he becomes
involved as a party or otherwise by virtue of his being or having been such a
Trustee, director, officer, employee or agent and against amounts paid or
incurred by him in settlement thereof.

"No indemnification shall be provided hereunder to a Covered Person:

"(1) against any liability to the Trust or its Shareholders by reason of a
final adjudication by the court or other body before which the proceeding was
brought that he engaged in willful misfeasance, bad faith, gross negligence
or reckless disregard of the duties involved in the conduct of his office;

"(2) with respect to any matter as to which he shall have been finally
adjudicated not to have acted in good faith in the reasonable belief that his
action was in the best interests of the Trust; or

"(3) in the event of a settlement or other disposition not involving a final
adjudication (as provided in paragraph (a) or (b)) and resulting in a payment
by a Covered Person, unless there has been either a determination that such
Covered Person did not engage in willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office by the court or other body approving the settlement or other
disposition, or a reasonable determination, based on a review of readily
available facts (as opposed to a full trial-type inquiry), that he did not
engage in such conduct, such determination being made by:

"(a) a vote of a majority of the Disinterested Trustees acting on the matter
(provided that a majority of the Disinterested Trustees then in office act on
the matter); or

"(b) written opinion of independent legal counsel.

"The rights of indemnification herein provided may be insured against by
policies maintained by the Trust, shall be severable, shall not affect any other
rights to which any Covered Person may now or hereafter be entitled, shall
continue as to a person who has ceased to be such a Covered Person and shall
inure to the benefit of the heirs, executors and administrators of such a
person.

-4-

<PAGE>

Nothing contained herein shall affect any rights to indemnification to which
Trust personnel other than Covered Persons may be entitled by contract or
otherwise under law.

"Expenses of preparation and presentation of a defense to any claim, action,
suit or proceeding subject to a claim for indemnification under this Section
4 shall be advanced by the Trust prior to final disposition thereof upon
receipt of an undertaking by or on behalf of the recipient to repay such
amount if it is ultimately determined that he is not entitled to
indemnification under this Section 4, provided that either:

"(a) such undertaking is secured by a surety bond or some other appropriate
security or the Trust shall be insured against losses arising out of any such
advances; or

"(b) a majority of the Disinterested Trustees acting on the matter (provided
that a majority of the Disinterested Trustees then in office act on the
matter) or independent legal counsel in a written opinion shall determine,
based upon a review of the readily available facts (as opposed to a full
trial-type inquiry), that there is reason to believe that the recipient
ultimately will be found entitled to indemnification.

"As used in this Section 4, a "Disinterested Trustee" is one (x) who is not
an Interested Person of the Trust (including anyone, as such Disinterested
Trustee, who has been exempted from being an Interested Person by any rule,
regulation or order of the Commission), and (y) against whom none of such
actions, suits or other proceedings or another action, suit or other
proceeding on the same or similar grounds is then or has been pending.

"As used in this Section 4, the words "claim," "action," "suit" or
"proceeding" shall apply to all claims, actions, suits, proceedings (civil,
criminal, administrative or other, including appeals), actual or threatened;
and the words "liability" and "expenses" shall include without limitation,
attorneys' fees, costs, judgments, amounts paid in settlement, fines,
penalties and other liabilities."

Insurance of Officers, Directors, Employers and Agents

"(k) INSURANCE. To purchase and pay for entirely out of Trust property such
insurance as they may deem necessary or appropriate for the conduct of the
business, including, without limitation, insurance policies insuring the
assets of the Trust and payment of distributions and principal on its
portfolio investments, and insurance policies insuring the Shareholders,
Trustees, officers, employees, agents, consultants, investment advisers,
managers, administrators, distributors, principal underwriters, or
independent contractors, or any thereof (or any person connected therewith),
of the Trust individually against all claims and liabilities of every nature
arising by reason of holding, being or having held any such office or
position, or by reason of any action alleged to have been taken or omitted by
any such person in any such capacity, including any action taken or omitted
that may be determined to constitute negligence, whether or not the Trust
would have the power to indemnify such person against such liability . . ."

Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provision or otherwise, the Registrant has
been advised that in the opinion of the Securities & Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liability (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the

-5-

<PAGE>

Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.

The Registrant has made application for insurance to indemnify the directors
and officers of the registrant against liabilities incurred as a result of
serving in such capacity.

Item 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER

The business and other connections of the officers, directors of the
Registrant's investment advisor, The Crabbe Huson Group, Inc., are listed on
the Form ADV of The Crabbe Huson Group, Inc. as currently on file with the
Commission (File No. 801-15154), the text of which is incorporated herein by
reference. The following sections of such Form ADV are incorporated herein
by reference: (a) Items 1 and 2 of Part 2, and (b) Section 6, Business
Background of each Schedule D.

Item 29. PRINCIPAL UNDERWRITER

(a) Registrant's Distributor, Crabbe Huson Securities, Inc., also acts as
exclusive distributor of The Crabbe Huson Special Fund, Inc., an
Oregon corporation registered under the Securities Act of 1933 and the
Investment Company Act of 1940.

b) The directors and officers of Crabbe Huson Securities, Inc., as of the
date of this Registration Statement, are as follows:

(1) (2) (3)
Name and Principal Position and Office with Position and Office
Business Address Crabbe Huson Securities, Inc. with Registrant
- ---------------- ----------------------------- ---------------
<S> <C> <C>

Thomas F. Biesiadecki Secretary and Chief
121 SW Morrison Compliance Officer
Suite 1410
Portland, OR 97204

Craig L. Kolzow Vice President Assistant
121 SW Morrison Treasurer
Suite 1410
Portland, OR 97204

Cheryl A. Burgermeister Vice President, Treasurer
121 SW Morrison Treasurer and Director
Suite 1410
Portland, OR 97204

Craig P. Stuvland President and Director Secretary and
121 SW Morrison Director
Suite 1410
Portland, OR 97204

</TABLE>

-6-

<PAGE>

Item 30. LOCATION OF ACCOUNTS AND RECORDS

The accounts, books and other documents required to be maintained by the Fund
pursuant to Section 31(a) of the Investment Company Act of 1940 and the rules
thereunder will be maintained at the offices of the Fund at 121 SW Morrison,
Suite 1415, Portland, Oregon 97204, at the offices of the Custodian,
Investors Fiduciary Trust Company, 127 West 10th Street, Kansas City,
Missouri 64105, at the offices of Davis Wright Tremaine, the Fund's legal
counsel, 1300 S.W. 5th Avenue, Suite 2300, Portland, Oregon, 97201 and at the
offices of State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts, the Fund's transfer agent and dividend disbursing agent.

Item 31. MANAGEMENT SERVICES

Not applicable.

Item 32. UNDERTAKINGS

(a) Not applicable.

(b) Not applicable.

(c) The Registrant undertakes to furnish to each person to whom a
Prospectus is delivered a copy of the Registrant's latest annual
report to shareholders, upon request and without charge.

(d) Registrant undertakes to call a shareholders meeting for the purpose
of voting upon a proposal to remove a trustee if requested to do so by
at least 10% of registrant's outstanding shares. Registrant also
undertakes to assist in communications among shareholders in
connection with such a meeting.

-7-

<PAGE>

SIGNATURES AND CERTIFICATION

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Portland, Oregon on September 30, 1996.

Registrant hereby certifies that no material event requiring
disclosure in the Prospectus, other than ones listed in Paragraph b(1) of
Rule 485 of the Securities Act of 1933 has occurred since the effective date
of the Registrants Registration Statement.

CRABBE HUSON FUNDS

By: /s/ Richard S. Huson
-------------------
Richard S. Huson, President

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on September 30, 1996, by the
following persons in the capacities indicated:

(1) Principal Executive Officers:

/s/Richard S. Huson President
----------------------------------
Richard S. Huson

(2) Principal Accounting and
Financial Officer

* Treasurer
----------------------------------
Cheryl A. Burgermeister

Page 1 - SIGNATURES AND CERTIFICATION

<PAGE>

(3) Trustees:

* Trustee
----------------------------------
Gary L. Capps

* Trustee
----------------------------------
James E. Crabbe

/s/ Richard S. Huson Trustee
----------------------------------
Richard S. Huson

* Trustee
----------------------------------
William Wendell Wyatt

* Trustee
----------------------------------
Craig P. Stuvland

* Trustee
----------------------------------
Louis Scherzer

* Trustee
----------------------------------
Bob L. Smith

* Trustee
----------------------------------
Richard P. Wollenberg

By: /s/ Richard S. Huson
----------------------------------
Richard S. Huson
Attorney in fact for the trustees
and officers identified above by
an asterisk

Page 2 - SIGNATURES AND CERTIFICATION