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THE CRABBE HUSON SPECIAL FUND, INC. (THE "SPECIAL FUND")
THE CRABBE HUSON REAL ESTATE INVESTMENT FUND, INC. (THE "REAL ESTATE FUND")
THE CRABBE HUSON EQUITY FUND, INC. (THE "EQUITY FUND")
THE CRABBE HUSON ASSET ALLOCATION FUND, INC. (THE "ASSET ALLOCATION FUND")
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. GOVERNMENT MONEY MARKET FUND, INC.
(COLLECTIVELY, THE "FUNDS")
SEPTEMBER 25, 1995
PORTFOLIO MANAGERS
The Crabbe Huson Group, Inc. (the "Adviser") has added the following
portfolio managers to the Equity, Asset Allocation and Special Fund.
Marian Kessler and Robert W. Anton have joined the team of Richard S.
Huson and John E. Maack, Jr. to manage the Equity and Asset Allocation Funds.
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. She brings more than 10 years of experience to the team.
Mr. Anton joined the Adviser in June, 1995. Prior to joining the Adviser,
Mr. Anton served seven years as Chief Investment Officer, Portfolio Manager at
Financial Aims Corporation. Mr. Huson will continue to coordinate the Team.
Mr. John W. Johnson joined the Adviser in May, 1995 to assist James E.
Crabbe in management of the Special Fund Portfolio. 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. Information concerning Mr. Crabbe
may be found under "MANAGEMENT OF THE FUNDS" in the Prospectus. Mr. Crabbe will
continue to coordinate the team. Mr. Kinnucan is no longer a manager of the
Special Fund Portfolio.
SUBADVISORY CONTRACT
On September 6, 1995, the shareholders of the Real Estate Fund
approved a Subadvisory Agreement among the Adviser, the Real Estate Fund and
Aldrich, Eastman & Waltch, L.P. ("AEW"). Pursuant to the Subadvisory Agreement,
AEW will be responsible for the day-to-day investment management of the Real
Estate Fund, subject to the overall supervision of the Adviser and the Real
Estate Fund's Board of Directors.
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AEW is a registered investment adviser founded in 1981. AEW is
dedicated exclusively to building and managing real estate investment portfolio
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 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 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, and will not affect the
Adviser's agreement, terminable on 30 days' notice, to waive certain of its fees
and/or reimburse expenses.
ADMINISTRATION AGREEMENT
The Funds have retained State Street Bank and Trust Company ("State
Street") to provide administrative services to the Fund. Such services relate
to accounting, compliance and operations. For such services, the Funds have
agreed to pay State Street a fee based on the total assets 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 will pay its pro
rata share of such fee.
