<PAGE>
OCTOBER 31, 1996
ANNUAL REPORT
THE CRABBE HUSON
SPECIAL FUND, INC.
CRABBE HUSON
SMALL CAP FUND
CRABBE HUSON
EQUITY FUND
CRABBE HUSON
REAL ESTATE
INVESTMENT FUND
CRABBE HUSON
ASSET ALLOCATION FUND
CRABBE HUSON
INCOME FUND
CRABBE HUSON
U.S. GOVERNMENT
INCOME FUND
CRABBE HUSON
U.S. GOVERNMENT
MONEY MARKET FUND
CRABBE HUSON
OREGON TAX-FREE FUND
CRABBE HUSON FUNDS
<PAGE>
THE CRABBE HUSON
TABLE OF CONTENTS
<TABLE>
<C> <S>
Page 1 To our Fellow Shareholders
Review and Schedule of Investments
Page 10 The Crabbe Huson Special Fund, Inc.
Page 14 Crabbe Huson Small Cap Fund
Page 18 Crabbe Huson Asset Allocation Fund
Page 25 Crabbe Huson Equity Fund
Page 31 Crabbe Huson Real Estate Investment Fund
Page 35 Crabbe Huson Oregon Tax-Free Fund
Page 41 Crabbe Huson Income Fund
Page 44 Crabbe Huson U.S. Government Income Fund
Page 46 Crabbe Huson U.S. Government Money Market Fund
Page 50 Statements of Assets & Liabilities
Page 54 Statements of Operations
Page 58 Statements of Changes in Net Assets
Page 62 Notes to Financial Statements
Page 74 Financial Highlights
Page 88 Independent Auditors' Report
Page 90 Distributions to Shareholders
</TABLE>
<PAGE>
[logo]
CRABBE HUSON
November 30, 1996
To Our Fellow Shareholders:
The fiscal year ending October 31, 1996, saw a continuation of the stock market
conditions present during most of the previous year, and, following an initial
period of difficulty, a recovering bond market.
Over the past year, the stock market, as measured by popular indices, has moved
aggressively upward in an unprecedented fashion. Such periods are difficult for
contrarian investors because our discipline prevents us from joining in the
buying frenzy. We have learned, however, that discomfort of the moment is a
by-product of our approach -- this is especially clear in a snapshot of a market
moving forward dynamically, without adherence to defined beginnings or ends. We
make no effort to evade this discomfort, as that would represent at least a
partial abandonment of a sound, time-proven investment strategy.
History tends to repeat itself. In the past, there have been similar up markets
(though maybe not as extreme as this one) in which our funds underperformed. As
frustrating as these markets are, we know they'll be seen again. Conversely,
we've seen lackluster markets in which our funds were well positioned and
performed extremely well. The anemic market years of 1992 and 1993 are good
examples. We believe these types of markets also will make return appearances.
On this basis, it would be inappropriate to excessively rationalize the
performance figures reported to you here. We fully accept the results and
recognize them precisely for what they are: moderate returns in a high-growth
market that doesn't favor our style.
1
<PAGE>
The numbers also indicate that we're sticking to our game plan. The contrarian
style is performing exactly as it would be expected to in an environment in
which the leaders are excessively traded, overvalued and too heavily owned. On
the risk-reward scale, we feel the status of the current market makes our funds
a good place for assets.
During these times, it's important to revisit the philosophical underpinnings of
our strategy. So, preceding the narratives on each fund is a discussion of our
philosophical position. We think you'll find it's a useful restatement of the
foundation of our model.
As always, thank you for the opportunity to be of service. Please contact us at
any time with your questions or comments.
2
<PAGE>
--------------------------------------
INVESTMENT PHILOSOPHY
----------------------------------
We are CONTRARIAN investors. Generally defined, this means that instead of
following market fads, Crabbe Huson concentrates on collecting the gems that are
unwisely ignored by the crowd as it tries to keep up with the latest hot issue.
Most investors look favorably upon appreciating stocks and reject those that are
falling in price. This "conventional wisdom" usually is correct, but it tends to
overlook a broad section of high-quality stocks. The contrarian approach
capitalizes on this inefficiency by identifying and purchasing these solid
issues at attractive prices when they are out of favor and selling them as they
return to favor and appreciate in value.
There are three main points upon which this strategy is based:
WE INVEST IN COMPANIES, NOT IN THE MARKET.
Through exhaustive research, Crabbe Huson identifies and invests in
fundamentally sound companies that are currently overlooked or are otherwise out
of favor and, therefore, priced closer to their intrinsic values. Our commitment
to this approach remains constant, regardless of market environment. The
changing market sometimes will favor other investment approaches, but our style
is time-proven and represents a valuable portion of a well-diversified mutual
fund portfolio.
WE GET MORE ASSET FOR THE MONEY.
By finding companies at good prices, Crabbe Huson delivers performance with a
possible extra measure of downside protection. This strategy also helps ensure
liquidity -- we often buy shares when there is little market interest, then sell
after the market's recognition of the company's true worth increases demand and
pushes up the price.
WE WORK AS A TEAM.
The bedrock of Crabbe Huson's effort is the team-based approach to portfolio
management. We strongly believe in the importance of more than one perspective
and the value of collective ability. Our team's strict management disciplines
help remove the inherent emotions that can sometimes affect judgment.
The nature of our approach inclines us to go against the crowd. As a result,
you'll see Crabbe Huson portfolios, strategies or holdings that may be
incongruent with current investment trends. Nonetheless, since 1987, the
contrarian philosophy has delivered competitive long-term returns for our
shareholders. It's a strategy we implement with all the care, skill and
diligence we can bring to bear.
3
<PAGE>
--------------------------------------
INVESTMENT REVIEW AND OUTLOOK
----------------------------------
Since we reported to you last year, market leadership stocks have followed a
nearly unbroken line upward, with only a brief performance hiccup in July. Their
high-profile climb belies the relative underperformance of the greater part of
the market -- specifically, companies with medium capitalizations. Even in
recent months, while the large-cap market was setting new records, declining
stocks often outpaced advancers in daily trading, meaning the largest and most
liquid stocks of the S&P 500 produced the majority of index appreciation.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
S&P 500 INDEX EQUAL-WEIGHTED S&P 500 INDEX
<S> <C> <C>
12/30/1994 100 100
1/3/1995 99.97 100.13
1/4/1995 100.31 100.47
1/5/1995 100.23 100.47
1/6/1995 100.31 100.73
1/9/1995 100.34 100.91
1/10/1995 100.52 101
1/11/1995 100.52 100.96
1/12/1995 100.52 101.17
1/13/1995 101.46 101.89
1/16/1995 102.2 102.54
1/17/1995 102.35 102.92
1/18/1995 102.28 102.9
1/19/1995 101.67 102.42
1/20/1995 101.2 101.81
1/23/1995 101.42 101.8
1/24/1995 101.43 101.74
1/25/1995 101.78 102.02
1/26/1995 101.97 102.06
1/27/1995 102.42 102.17
1/30/1995 102.01 101.56
1/31/1995 102.43 101.74
2/1/1995 102.42 101.78
2/2/1995 102.94 102.3
2/3/1995 104.22 103.43
2/6/1995 104.76 104.08
2/7/1995 104.69 104.19
2/8/1995 104.77 104.22
2/9/1995 104.56 104.11
2/10/1995 104.83 104.54
2/13/1995 104.87 104.74
2/14/1995 105.07 104.85
2/15/1995 105.5 105.36
2/16/1995 105.65 105.38
2/17/1995 104.94 104.95
2/21/1995 105.11 105.1
2/22/1995 105.62 105.28
2/23/1995 106.02 105.66
2/24/1995 106.31 105.83
2/27/1995 105.34 104.85
2/28/1995 106.12 105.55
3/1/1995 105.74 105.11
3/2/1995 105.63 104.84
3/3/1995 105.69 104.95
3/6/1995 105.74 104.81
3/7/1995 104.98 103.88
3/8/1995 105.2 104.08
3/9/1995 105.2 103.96
3/10/1995 106.6 105.24
3/13/1995 106.7 105.31
3/14/1995 107.32 105.66
3/15/1995 107.1 105.47
3/16/1995 107.87 106.19
3/17/1995 107.89 106.08
3/20/1995 108.03 105.98
3/21/1995 107.79 105.88
3/22/1995 107.93 105.91
3/23/1995 107.99 106.02
3/24/1995 109.08 107.07
3/27/1995 109.57 107.64
3/28/1995 109.72 107.74
3/29/1995 109.55 107.86
3/30/1995 109.35 108.31
3/31/1995 109.02 108.14
4/3/1995 109.27 108.29
4/4/1995 110.01 109.08
4/5/1995 110.08 109.2
4/6/1995 110.19 109.31
4/7/1995 110.27 109.43
4/10/1995 110.39 109.43
4/11/1995 110.07 109.1
4/12/1995 110.43 109.5
4/13/1995 110.88 109.86
4/14/1995 110.2 109.11
4/17/1995 110.04 108.74
4/18/1995 109.94 108.68
4/19/1995 110.02 108.82
4/21/1995 110.72 109.37
4/24/1995 111.68 110.19
4/25/1995 111.5 109.89
4/26/1995 111.62 109.86
4/27/1995 111.82 110.03
4/28/1995 112.07 110.28
5/1/1995 111.97 110.18
5/2/1995 112.1 110.22
5/3/1995 113.33 111.14
5/4/1995 113.34 111.11
5/5/1995 113.25 110.81
5/8/1995 114.09 111.6
5/9/1995 114 111.62
5/10/1995 114.17 111.79
5/11/1995 114.17 111.95
5/12/1995 114.43 112.47
5/15/1995 114.91 112.94
5/16/1995 115.01 113.35
5/17/1995 114.76 113.04
5/18/1995 113.13 111.68
5/19/1995 113.05 111.41
5/22/1995 114.02 112.13
5/23/1995 115.09 113.12
5/24/1995 115.1 113.08
5/25/1995 115.09 112.75
5/26/1995 114.02 111.71
5/29/1995 114 111.62
5/31/1995 116.14 113.45
6/1/1995 116.16 113.4
6/2/1995 115.95 113.12
6/5/1995 116.62 114.17
6/6/1995 116.61 114.28
6/7/1995 116.08 113.83
6/8/1995 115.91 113.71
6/9/1995 114.95 112.74
6/12/1995 115.59 113.31
6/13/1995 116.72 114.42
6/14/1995 116.81 114.38
6/15/1995 116.95 114.56
6/16/1995 117.54 114.87
6/19/1995 118.71 115.75
6/20/1995 118.66 115.68
6/21/1995 118.44 115.31
6/22/1995 119.99 116.76
6/23/1995 119.69 116.41
6/26/1995 118.48 115.33
6/27/1995 118.11 115.24
6/28/1995 118.61 115.48
6/29/1995 118.42 115.33
6/30/1995 118.61 115.91
7/3/1995 119.12 116.16
7/4/1995 119.16 116.48
7/5/1995 120.62 117.91
7/6/1995 121.14 118.94
7/7/1995 121.32 119.31
7/10/1995 120.8 118.72
7/11/1995 122.13 119.65
7/12/1995 122.15 119.48
7/13/1995 121.91 119.27
7/14/1995 122.52 119.69
7/17/1995 121.6 118.77
7/18/1995 119.97 117.16
7/19/1995 120.53 117.86
7/21/1995 120.54 117.65
7/24/1995 121.2 118.29
7/25/1995 122.17 119.08
7/26/1995 122.28 119.13
7/27/1995 123.07 120.08
7/28/1995 122.57 119.67
7/31/1995 122.38 119.51
8/1/1995 121.85 119.24
8/2/1995 121.67 119.17
8/3/1995 121.66 119
8/4/1995 121.7 119.1
8/7/1995 121.94 119.35
8/8/1995 122.02 119.32
8/9/1995 121.87 119.06
8/10/1995 121.38 118.72
8/11/1995 120.87 118.21
8/14/1995 121.88 118.95
8/15/1995 121.62 118.89
8/16/1995 121.93 119.33
8/17/1995 121.72 119.36
8/18/1995 121.76 119.55
8/21/1995 121.52 119.52
8/22/1995 121.83 119.66
8/23/1995 121.31 119.22
8/24/1995 121.38 119.18
8/25/1995 121.95 119.75
8/28/1995 121.73 119.68
8/29/1995 121.93 119.58
8/30/1995 122.13 119.65
8/31/1995 122.34 119.83
9/1/1995 122.77 120.34
9/4/1995 123.93 121.4
9/5/1995 124.15 121.77
9/6/1995 124.17 121.83
9/7/1995 124.69 122.37
9/8/1995 124.96 122.58
9/11/1995 125.53 123.04
9/12/1995 126.02 123.28
9/13/1995 127.07 124.08
9/14/1995 127.02 123.82
9/15/1995 126.89 123.55
9/18/1995 127.2 123.49
9/19/1995 127.76 123.73
9/21/1995 126.94 122.82
9/22/1995 126.66 122.18
9/25/1995 126.68 121.9
9/26/1995 126.59 121.61
9/27/1995 126.51 121.27
9/28/1995 127.57 122.46
9/29/1995 127.25 122.34
10/2/1995 126.66 121.78
10/3/1995 126.8 121.35
10/4/1995 126.61 120.6
10/5/1995 126.86 120.96
10/6/1995 126.83 121.03
10/9/1995 125.93 119.86
10/10/1995 125.75 119.84
10/11/1995 126.17 120.31
10/12/1995 126.96 121.03
10/13/1995 127.27 121.46
10/16/1995 126.95 121.07
10/17/1995 127.76 121.43
10/18/1995 127.91 121.36
10/19/1995 128.61 121.47
10/20/1995 127.91 120.91
10/23/1995 127.39 120.27
10/24/1995 127.71 120.33
10/25/1995 126.83 119.15
10/26/1995 125.57 117.78
10/27/1995 126.22 118.44
10/30/1995 127 119.16
10/31/1995 126.61 118.72
11/1/1995 127.21 119.15
11/2/1995 128.4 120.51
11/3/1995 128.59 120.92
11/6/1995 128.13 120.83
11/7/1995 127.66 120.57
11/8/1995 128.84 121.3
11/9/1995 129.17 121.44
11/10/1995 129.06 121.28
11/13/1995 128.97 121.22
11/14/1995 128.31 120.44
11/15/1995 129.33 120.93
11/16/1995 130.06 121.55
11/17/1995 130.66 122.16
11/20/1995 129.96 121.54
11/21/1995 130.69 122.05
11/22/1995 130.29 122.28
11/24/1995 130.64 122.64
11/27/1995 130.93 123.18
11/28/1995 132.05 123.91
11/29/1995 132.31 124.24
11/30/1995 131.81 124.02
12/1/1995 132.16 124.37
12/4/1995 133.62 125.36
12/5/1995 134.49 126.14
12/6/1995 135.04 126.49
12/7/1995 134.16 125.55
12/8/1995 134.45 125.75
12/11/1995 134.89 125.84
12/12/1995 134.73 125.44
12/13/1995 135.36 125.75
12/14/1995 134.33 125.02
12/15/1995 134.2 124.88
12/18/1995 132.12 122.74
12/19/1995 133.24 123.64
12/20/1995 131.94 123.11
12/21/1995 132.93 124.16
12/22/1995 133.25 124.43
12/26/1995 133.76 124.62
12/27/1995 133.81 124.58
12/28/1995 133.72 124.55
12/29/1995 134.11 125.22
1/2/1996 135.16 126.36
1/3/1996 135.28 126.6
1/4/1996 134.5 125.59
1/5/1996 134.28 125.29
1/8/1996 134.66 125.62
1/9/1996 132.7 123.73
1/10/1996 130.31 121.7
1/11/1996 131.23 122.44
1/12/1996 131.04 122.19
1/15/1996 130.6 121.75
1/16/1996 132.48 122.31
1/17/1996 132.03 122.16
1/18/1996 132.44 122.43
1/19/1996 133.22 122.91
1/22/1996 133.56 123.73
1/23/1996 133.43 123.84
1/24/1996 134.99 125.01
1/25/1996 134.35 124.58
1/26/1996 135.35 125.07
1/29/1996 135.92 125.65
1/30/1996 137.21 126.72
1/31/1996 138.48 128.08
2/1/1996 139.02 128.72
2/2/1996 138.45 128.3
2/5/1996 139.66 129.13
2/6/1996 140.73 130.1
2/7/1996 141.51 130.56
2/8/1996 142.85 131.81
2/9/1996 142.92 131.87
2/12/1996 144.02 132.73
2/13/1996 143.82 132.57
2/14/1996 142.74 131.84
2/15/1996 141.82 131.34
2/16/1996 141.09 130.84
2/20/1996 139.49 129.39
2/21/1996 141.12 130.73
2/22/1996 143.46 132.59
2/23/1996 143.51 132.44
2/26/1996 141.63 131.06
2/27/1996 140.93 130.43
2/28/1996 140.39 129.92
2/29/1996 139.45 129.1
3/1/1996 140.3 129.79
3/4/1996 141.71 131.21
3/5/1996 142.79 131.74
3/6/1996 141.96 131.32
3/7/1996 142.32 131.61
3/8/1996 137.94 127.76
3/11/1996 139.36 129.2
3/12/1996 138.72 128.75
3/13/1996 139.04 129.62
3/14/1996 139.54 130.36
3/15/1996 139.66 130.31
3/18/1996 142.11 132.41
3/19/1996 141.9 132.37
3/20/1996 141.52 131.76
3/21/1996 141.35 131.6
3/22/1996 141.66 132.04
3/25/1996 141.54 131.81
3/26/1996 142.18 132.08
3/27/1996 141.29 131.65
3/28/1996 141.298 131.461
3/29/1996 140.549 130.893
4/1/1996 142.341 132.032
4/2/1996 142.674 131.999
4/3/1996 142.809 132.301
4/4/1996 142.805 132.492
4/8/1996 140.275 130.302
4/9/1996 139.828 130.544
4/10/1996 137.936 129.164
4/11/1996 137.431 128.611
4/12/1996 138.635 129.459
4/15/1996 139.894 130.726
4/16/1996 140.44 131.356
4/17/1996 139.702 130.833
4/18/1996 140.138 131.295
4/19/1996 140.456 131.648
4/22/1996 141.07 132.17
4/23/1996 141.873 133.213
4/24/1996 141.566 133.167
4/25/1996 142.154 133.853
4/26/1996 142.282 133.925
4/29/1996 142.435 134.007
4/30/1996 142.437 134.037
5/1/1996 142.526 134.137
5/2/1996 140.088 132.178
5/3/1996 139.706 131.861
5/6/1996 139.528 131.786
5/7/1996 138.973 131.238
5/8/1996 140.39 132.047
5/9/1996 140.536 132.263
5/10/1996 141.984 133.438
5/13/1996 144.035 135.174
5/14/1996 144.926 135.847
5/15/1996 144.886 135.922
5/16/1996 144.762 135.657
5/17/1996 145.646 136.187
5/20/1996 146.57 136.599
5/21/1996 146.485 136.623
5/22/1996 147.717 137.584
5/23/1996 147.19 136.902
5/24/1996 147.737 137.298
5/28/1996 146.369 135.945
5/29/1996 145.433 134.951
5/30/1996 146.254 135.743
5/31/1996 145.692 135.26
6/3/1996 145.379 134.685
6/4/1996 146.441 135.619
6/5/1996 147.721 136.523
6/6/1996 146.543 135.323
6/7/1996 146.604 135.157
6/10/1996 146.354 134.909
6/11/1996 146.095 134.659
6/12/1996 145.675 134.141
6/13/1996 145.43 133.81
6/14/1996 144.98 133.19
6/17/1996 144.83 132.88
6/18/1996 144.15 132.64
6/19/1996 144.13 132.57
6/20/1996 144.16 132.4
6/21/1996 145.2 132.89
6/24/1996 145.63 133.26
6/25/1996 145.55 132.84
6/26/1996 144.66 131.85
6/27/1996 145.57 132.62
6/28/1996 146.02 133.53
7/1/1996 147.16 134.21
7/2/1996 146.67 133.7
7/3/1996 146.41 133.49
7/5/1996 143.15 130.81
7/8/1996 142.08 129.74
7/9/1996 142.56 130.1
7/10/1996 142.85 130
7/11/1996 140.59 127.85
7/12/1996 140.7 127.77
7/15/1996 137.13 124.3
7/16/1996 136.82 123.41
7/17/1996 138.06 124.76
7/18/1996 140.13 126.63
7/19/1996 139.08 125.46
7/22/1996 138 124.28
7/23/1996 136.49 123.13
7/24/1996 136.44 122.83
7/25/1996 137.43 123.63
7/26/1996 138.46 124.71
7/29/1996 137.37 123.94
7/30/1996 138.32 124.54
7/31/1996 139.34 125.35
8/1/1996 141.53 126.96
8/2/1996 144.25 129.12
8/5/1996 143.76 129.01
8/6/1996 144.22 129.34
8/7/1996 144.61 129.9
8/8/1996 144.27 129.83
8/9/1996 144.16 129.94
8/12/1996 144.96 130.5
8/13/1996 143.75 129.49
8/14/1996 144.15 129.94
8/15/1996 144.2 129.86
8/16/1996 144.84 130.6
8/19/1996 145.14 130.97
8/20/1996 144.95 130.94
8/21/1996 144.81 130.91
8/22/1996 146.03 131.82
8/23/1996 145.24 131.26
8/26/1996 144.55 130.63
8/27/1996 145.1 131.13
8/28/1996 144.75 131.05
8/29/1996 143.14 129.83
8/30/1996 141.96 128.94
9/3/1996 142.56 129.16
9/4/1996 142.75 129.38
9/5/1996 141.41 128.16
9/6/1996 142.77 129.39
9/9/1996 144.53 130.76
9/10/1996 144.54 130.66
9/11/1996 145.29 131.36
9/12/1996 146.13 132.02
9/13/1996 148.18 133.47
9/16/1996 148.93 134.11
9/17/1996 148.7 133.93
9/18/1996 148.38 133.59
9/19/1996 148.71 133.93
9/20/1996 149.59 134.64
9/23/1996 149.47 134.44
9/24/1996 149.28 134.62
9/25/1996 149.33 134.73
9/26/1996 149.34 134.56
9/27/1996 149.41 134.65
9/30/1996 149.65 134.91
10/1/1996 150.04 135.03
10/2/1996 151.11 135.76
10/3/1996 150.84 135.41
10/4/1996 152.73 136.74
10/7/1996 153.14 136.93
10/8/1996 152.56 136.38
10/9/1996 151.71 135.67
10/10/1996 151.24 135.43
10/11/1996 152.56 136.24
10/14/1996 153.19 136.57
10/15/1996 152.98 136.27
10/16/1996 153.38 136.48
10/17/1996 153.94 136.91
10/18/1996 154.77 137.48
10/21/1996 154.56 137.52
10/22/1996 153.85 136.73
10/23/1996 154 136.73
10/24/1996 152.91 135.92
10/25/1996 152.62 135.84
10/28/1996 151.82 134.99
10/29/1996 152.74 135.49
10/30/1996 152.61 135.36
10/31/1996 153.56 136.1
11/1/1996 153.24 135.92
11/4/1996 153.88 136.5
11/5/1996 155.49 137.48
11/6/1996 157.77 139
11/7/1996 158.44 139.42
11/8/1996 159.13 140.14
11/11/1996 159.36 140.48
11/12/1996 158.85 140.69
11/13/1996 159.19 140.76
11/14/1996 160.23 141.43
11/15/1996 160.61 141.93
11/18/1996 160.48 141.8
11/19/1996 161.6 142.47
11/20/1996 161.99 142.82
11/21/1996 161.72 142.77
11/22/1996 163.03 143.93
11/25/1996 164.83 145.04
11/26/1996 164.6 144.78
11/27/1996 164.39 144.55
11/29/1996 164.83 144.94
Source: Ned Davis Research, Inc.
THE CHART ABOVE ILLUSTRATES THE IMPACT OF LARGE-
CAP STOCKS ON THE S&P 500. IT IS COMPARED AGAINST
AN INDEX OF EQUALLY-WEIGHTED ISSUES.
</TABLE>
Conversely, the bond market had a very difficult winter, but has recovered very
nicely in recent months thanks to declining interest rates. Early returns for
Crabbe Huson's income funds were significantly off the pace, but the portfolios
made up substantial ground to finish the fiscal year just slightly behind the
indexes and carry positive momentum into early fiscal 1997.
Here's a look at the markets:
EQUITY MARKETS
With the exception of the Real Estate Investment Fund, which had a strong year,
performance for Crabbe Huson equity funds, while good in absolute terms, has
been less than pleasing when viewed against the backdrop of the popular market
indices. However, several factors now underlying the index numbers should give
investors reason to pause.
Most of the billions of dollars in daily inflows are arriving in the market
through mutual funds. These new assets are invested both in actively managed and
index funds, many of which hold positions in the large-cap growth issues that
have
4
<PAGE>
performed so well. Therein, however, lies the problem: these stocks now have
significantly inflated values and may no longer represent an opportunity for
long-term growth.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INFLOWS
(BILLIONS) S&P 500 INDEX
<S> <C> <C>
1/31/1989 0.07 293.82
2/28/1989 -2.23 287.13
3/31/1989 -0.9 294.87
4/30/1989 0.9 309.64
5/31/1989 1.11 321.59
6/30/1989 -0.59 317.98
7/31/1989 1.85 342.15
8/31/1989 0.68 350.52
9/30/1989 0.58 349.15
10/31/1989 0 335.06
11/30/1989 1.94 343.97
12/31/1989 2.36 353.4
1/31/1990 -0.24 325.8
2/28/1990 2.75 324.15
3/31/1990 3.1 339.94
4/30/1990 2.18 329.11
5/31/1990 4.36 354.58
6/30/1990 1.66 358.02
7/31/1990 0.13 353.44
8/31/1990 -2.82 322.56
9/30/1990 -0.52 306.05
10/31/1990 0.7 304.71
11/30/1990 1.32 322.22
12/31/1990 0.18 328.72
1/31/1991 0.76 336.07
2/28/1991 3.19 365.65
3/31/1991 2.04 375.22
4/30/1991 3.02 379.02
5/31/1991 3.67 389.83
6/30/1991 1.03 371.16
7/31/1991 3.76 380.93
8/31/1991 2.9 395.43
9/30/1991 3.14 385.9
10/31/1991 4.89 384.2
11/30/1991 3.63 375.22
12/31/1991 7.51 406.46
1/31/1992 6.81 408.79
2/29/1992 7.48 412.7
3/31/1992 6.58 403.5
4/30/1992 7.52 409.02
5/31/1992 6.7 415.35
6/30/1992 4.83 403.45
7/31/1992 6.7 424.21
8/31/1992 3.28 414.84
9/30/1992 4.55 414.35
10/31/1992 5.16 418.68
11/30/1992 10.09 430.16
12/31/1992 9.45 439.77
1/31/1993 10.35 438.78
2/28/1993 8.65 443.38
3/31/1993 11.88 451.67
4/30/1993 11.73 440.19
5/31/1993 9.18 450.19
6/30/1993 9.39 450.53
7/31/1993 9.85 448.13
8/31/1993 12.19 463.56
9/30/1993 9.17 458.93
10/31/1993 13.46 467.84
11/30/1993 9 461.79
12/31/1993 14.71 466.45
1/31/1994 18.29 481.61
2/28/1994 14.39 467.14
3/31/1994 6.7 445.77
4/30/1994 11.3 450.91
5/31/1994 11.8 456.51
6/30/1994 7.7 444.27
7/31/1994 9.2 458.25
8/31/1994 14.1 475.5
9/30/1994 8.1 426.71
10/31/1994 9.3 472.35
11/30/1994 3 453.69
12/31/1994 5.4 451.23
1/31/1995 6.2 470.42
2/28/1995 8.7 487.39
3/31/1995 7.2 500.71
4/30/1995 10.6 514.71
5/31/1995 8.4 533.4
6/30/1995 8.2 544.75
7/31/1995 13.9 562.06
8/30/1995 13.2 561.88
9/30/1995 12.6 584.41
10/31/1995 9.2 581.5
11/30/1995 14.5 605.37
12/31/1995 17 615.93
1/31/1996 28.9 636.02
2/29/1996 21.91 640.43
3/31/1996 21.4 648.91
4/30/1996 26.09 654.17
5/31/1996 25.16 669.12
6/30/1996 14.48 670.59
7/31/1996 5.76 639.95
8/30/1996 17.92 651.99
9/30/1996 17.42 687.31
10/31/1996 13.47 705.27
11/30/1996 23.6 757.02
Source: Investment Company Institute
FLOW FOR NOVEMBER IS ESTIMATED, SOURCE AMG DARA SERVICES
</TABLE>
Over the year, this narrowly-focused group of stocks has become more and more
overvalued, and buying them has becomes less an investment and more a guessing
game. Today's result is a market that can be described as barbell-shaped, with
large, traditional, price-inflated stocks on one side, and small, specialized,
high-performance stocks on the other. Investors following performance are using
their dollars to add weight to each side.
Accordingly, Crabbe Huson has been looking at the stocks in the middle, along
the bar of the barbell, and we're finding a vast section of companies that are
undervalued in a relative sense due to economic concerns, desire for liquidity
or the herd instinct that causes investors to focus on the ends. We think these
equities offer shareholders a number of advantages: If the favored group tops
out, managers will be looking hard for growth in other areas -- the same areas
we like now. Or, if the growth cycle ends and the market leaders' prices
correct, our portfolios offer downside protection through more accurate
valuations. In a broader market decline, our stocks may initially underperform,
but would be well-positioned to bounce back early and emerge with good results
in a broader market upturn.
The contrarian philosophy, like momentum or growth, can be difficult to
implement at times. This is very true today, and success will require patience
and a long-term view. However, we're positioning our funds to benefit from
tomorrow's conventional wisdom, not chase today's.
5
<PAGE>
BOND MARKETS
For the fiscal year, bond markets were confident early, but then were
significantly challenged by a strengthening economy. The year's closing months
saw a rally that helped investors recover some early losses.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
TREASURY BILL
30-YEAR BOND YIELDS
<S> <C> <C>
10/31/94 7.97% 5.15%
11/30/94 8.00% 5.72%
12/31/94 7.88% 5.69%
1/31/95 7.70% 6.00%
2/28/95 7.45% 5.94%
3/31/95 7.43% 5.88%
4/30/95 7.34% 5.87%
5/31/95 6.65% 5.81%
6/30/95 6.62% 5.57%
7/31/95 6.85% 5.58%
8/31/95 6.65% 5.45%
9/30/95 6.50% 5.42%
10/31/95 6.33% 5.51%
11/30/95 6.13% 5.49%
12/31/95 5.95% 5.08%
1/31/96 6.03% 5.05%
2/28/96 6.47% 5.03%
3/31/96 6.67% 5.15%
4/28/96 6.91% 5.16%
5/30/96 6.99% 5.19%
6/30/96 6.87% 5.16%
7/31/96 6.97% 5.31%
8/31/96 7.12% 5.29%
9/30/96 6.93% 5.04%
10/31/96 6.64% 5.15%
11/30/96 6.35% 5.13%
Source: Ned Davis Research,
Inc.
</TABLE>
In late 1995, optimism over the prospects for a federal budget agreement,
comfort with a soft economy and declining manufacturing and retail sales numbers
pushed the bellwether 30-year bond to a 6% calendar year-end finish. The new
year, however, saw a strengthening economy across all sectors, shocking the bond
market and prompting a reassessment by traders. The background noise of
political issues accelerated the down phase, causing yields to increase and
prices to fall. Through April and May, the long bond jumped quickly from 6% to
7.25%, and income fund returns fell about 3% as a result.
Between March and September, as markets tried to clean the windshield for a
better forward view of the economy, bonds traded laterally. In the last few
months of the fiscal year, the environment improved dramatically, and our funds
made up considerable ground.
6
<PAGE>
REAL GROSS DOMESTIC PRODUCT GROWTH (GDP)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
QUARTER OVER QUARTER CHANGE
<S> <C>
Real GDP Growth
12/94 3.0%
03/95 0.4%
06/95 0.7%
09/95 3.8%
12/95 0.3%
03/96 2.0%
06/96 4.7%
09/96 2.0%
12/96 1.6%
Source: Dept. of Commerce, Bureau of Economic Analysis
Reflects revised chain weighted data
READ GDP GROWTH IS A BAROMETER FOR OVERALL ECONOMIC PERFORMANCE.
THE ABOVE CHART SHOWS A GENERALLY VOLATILE DOMESTIC ECONOMY FOR THE PAST TWO YEARS.
<CAPTION>
QUARTER OVER QUARTER CHANGE
<S> <C>
12/94
03/95
06/95
09/95
12/95
03/96
06/96
09/96
12/96 est.
Source: Dept. of Commerce, Bureau of Economic Analysis
Reflects revised chain weighted data
READ GDP GROWTH IS A BAROMETER FOR OVERALL ECONOMIC PERFORMANCE.
THE ABOVE CHART SHOWS A GENERALLY VOLATILE DOMESTIC ECONOMY FOR THE PAST TWO YEARS.
</TABLE>
The good news for bonds is that economic conditions have softened again, with
manufacturing, housing and autos leading the way. If the economy continues to
slow, the Federal Reserve (Fed) likely will find little reason to hurt bonds by
further raising rates (a common tactic for holding inflation at bay).
The next six months should see a continuing focus on the tight labor market,
modest accelerations in wages and faster growth in energy prices. We also will
be watching the growing level of consumer credit and fading export numbers. Our
resulting approach will be to continue to play to a softening economy.
With narrow sections of the stock market facing extreme overvaluation, bonds are
presenting a good case as an investment option. A significant or extended
correction among market leaders could affect the broader market, as well as the
economy as a whole, making bonds an attractive alternative.
LOOKING FORWARD
Crabbe Huson doesn't try to make economic predictions, though we select issues
with an idea of economic direction in mind. A key part of our strategy is the
flexibility to take advantage of the changing economic environment. Of late,
we've positioned ourselves for continued slow economic growth.
There are a number of factors influencing the market today. We believe it will
become more and more difficult for popular large-cap stocks to sustain their
current valuations without an increasing flow of investment dollars. In
addition, though many index funds favor large-cap stocks, indexing has become
popular with small-cap stocks as well. If this trend continues, we think it will
contribute to a broadening of interest in the small- to mid-cap value area that
has become the main emphasis of our strategy.
7
<PAGE>
The economy also plays a part in our scan of the horizon. We think our funds are
well positioned to benefit no matter the direction of the economy. If we enter a
period of economic slowing, investors searching for performance will look to the
mid-cap issues we now own. If the economy continues to expand, we believe
investors will broaden their focus to other arenas once the growth cycle is
exhausted. Given these conditions, we're highly optimistic about the future of
our portfolios.
CLOSING THOUGHT
Investing with Crabbe Huson means you get managers who try to look "through" the
market for a clearer picture of what's really going on. We're seeking logical
investment opportunities from solid companies that offer safety, value and good
growth prospects, while avoiding the popular, passion-of-the-moment, overowned
and overvalued companies that present too much risk.
We remain confident in the long-term potential of our mutual funds, and we
appreciate your continued business. Thank you for the opportunity to help
contribute to your financial goals.
Sincerely,
Richard S. Huson
President
8
<PAGE>
--------------------------------------
OUR INVESTMENT TEAM
----------------------------------
<TABLE>
<S> <C> <C>
[PHOTO] [PHOTO] [PHOTO]
JAMES E. CRABBE RICHARD S. HUSON, CFA JOHN W. JOHNSON, CFA
FUNDS MANAGED: FUNDS MANAGED: FUNDS MANAGED:
The Crabbe Huson Special Fund, Inc. Crabbe Huson Asset Allocation Fund The Crabbe Huson Special Fund, Inc.
Crabbe Huson Small Cap Fund Crabbe Huson Equity Fund Crabbe Huson Small Cap Fund
[PHOTO] [PHOTO] [PHOTO]
ROBERT E. ANTON JOHN E. MAACK, JR., CFA MARIAN L. KESSLER
FUNDS MANAGED: FUNDS MANAGED: FUNDS MANAGED:
Crabbe Huson Asset Allocation Fund Crabbe Huson Asset Allocation Fund Crabbe Huson Asset Allocation Fund
Crabbe Huson Equity Fund Crabbe Huson Equity Fund Crabbe Huson Equity Fund
</TABLE>
<TABLE>
<S> <C>
[PHOTO] [PHOTO]
GARTH R. NISBET, CFA JAY L. WILLOUGHBY, CFA
FUNDS MANAGED: FUND MANAGED:
Crabbe Huson U.S. Government Money Market Fund Crabbe Huson Real Estate Investment Fund
Crabbe Huson U.S. Government Income Fund
Crabbe Huson Income Fund
Crabbe Huson Oregon Tax-Free Fund
</TABLE>
9
<PAGE>
THE CRABBE HUSON SPECIAL FUND, INC.
INVESTMENT OBJECTIVE: PROVIDE SIGNIFICANT LONG-TERM CAPITAL APPRECIATION THROUGH
A FLEXIBLE POLICY OF INVESTING IN A DIVERSIFIED PORTFOLIO OF CAREFULLY SELECTED
STOCKS THAT HAVE SMALL TO MEDIUM MARKET CAPITALIZATIONS. THE FUND MAY INVEST AS
MUCH AS 100% OF ITS ASSETS IN STOCKS, AND MAY HOLD UP TO 25% OF ITS PORTFOLIO IN
SHORT POSITIONS.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN THE SPECIAL FUND AND THE RUSSELL 2000 INDEX
<S> <C> <C> <C> <C> <C> <C> <C>
(Results are for fiscal years ending October 31)
Begin 1989 1990 1991 1992 1993 1994
Special $10,000 $11,500 $10,247 $15,327 $16,570 $23,428 $28,676
Russell 2000 $10,000 $10,544 $7,665 $12,158 $13,312 $17,624 $17,569
Fund Inception: 4/9/87
ANNUALIZED TOTAL RETURN
1 Year: 5.03%
5 Year: 14.85%
Life of Fund: 12.41%
<CAPTION>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN THE SPECIAL FUND AND THE RUSSELL 2000 INDEX
<S> <C> <C>
(Results are for fiscal years ending October 31)
1995 1996
Special $29,187 $30,655
Russell 2000 $20,791 $24,247
Fund Inception: 4/9/87
ANNUALIZED TOTAL RETURN
1 Year: 5.03%
5 Year: 14.85%
Life of Fund: 12.41%
</TABLE>
HISTORICAL RESULTS ARE NOT INDICATIVE OF FUTURE RETURNS.
FUTURE RETURNS AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN
INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS
THAN THE ORIGINAL COST. THE ACCOMPANYING CHART COMPARES THE
PERFORMANCE OF THE SPECIAL FUND WITH THE RUSSELL 2000 INDEX
WHICH IS AN UNMANAGED, BROAD-BASE INDEX OF STOCKS; THE SPECIAL
FUND IS A PROFESSIONALLY MANAGED MUTUAL FUND. THE INDEX
PRESENTED HERE IS NOT MANAGED, DOES NOT INCUR EXPENSES AND IS
NOT AVAILABLE FOR DIRECT INVESTMENT. HAD THE INDEX INCURRED
TYPICAL OPERATING EXPENSES, ITS PERFORMANCE WOULD HAVE BEEN
LOWER.
Fiscal year 1996 has been character-building for Special Fund shareholders,
thanks to less-than-stellar returns in the midst of a galloping market. Special
returned 5.03% for the year -- a positive number, but one that lags the 16.61%
posted by the Russell 2000 Index.
The fund's performance is a product of two clearly defined sections of the
portfolio: The section of stocks sold short(1) and the better performing long
position. While the issues sold short held performance in check for the year,
our long stock positions fared better, gaining 12.02% for the fiscal year.(2)
Though the short position has restrained performance, we believe the strategy
continues to offer promise and makes the Special Fund a good anchor in a
turbulent market. Most short positions in the Special Fund are
technology-related, a sector in which many issues are overvalued. We remain
confident that the short selling strategy can deliver results in the long run.
- ---------------------
(1) Selling short is a hedging technique whereby stocks are borrowed, sold at
current market value, then purchased at a later date. This strategy would be
followed if it is believed a security's price will decline. If it does decline,
the security is purchased at a lower price, resulting in a gain. If the price
rises, the security is purchased at a higher price, resulting in a loss.
(2) Source: The Crabbe Huson Group, Inc. Number quoted does not include
management fees, expenses or other costs. Return represents only the change in
market value of the long security positions in the mutual fund for the period of
November 1, 1995, through October 31, 1996. For a complete list of holdings in
the Special Fund, see the following schedule of investments.
10
<PAGE>
As contrarian managers, our portfolios often do not correlate with popular
market indices.(3) For the Special Fund, this was particularly true over the
course of the 1996 fiscal year. However, close correlation with broadly-owned
issues is not necessary for good performance. The success of the fund's long
position demonstrates the managers' ability to find good stocks with prices that
lessen market risk.
Fiscal year-ends are interesting times for us as contrarians. Many issues we
like are under liquidation, providing us excellent opportunities to buy
fundamentally sound companies. Often, these are the issues overlooked by growth
managers, who are attempting to enhance yearly returns by further buying stocks
under accumulation.
Within the context of a well diversified portfolio, the Special Fund has a
concentration in health care as well as a bias toward cyclicals, including
retailing, trucking, machine tools and some metals stocks. Previous
disappointments have driven many institutional investors out of these issues,
and we find them positioned to perform well in the coming year. Even in a benign
economic environment, we believe these stocks can do quite well at current price
levels.
While being ever mindful of a potential market correction, we're keeping the
possibility in the periphery while concentrating on picking high-quality, well-
priced issues. We believe that general market risk at current valuation levels
is fairly high, and contrarian portfolios represent good alternatives for future
growth.
- -------------------
(3) Market correlation refers to the extent to which a mutual fund portfolio's
performance is similar to that of a market index. The Russell 2000 Index is the
most appropriate benchmark against which to compare performance of the Special
Fund; however, it should be noted that Crabbe Huson makes no attempt to emulate
the composition or performance of any market index.
11
<PAGE>
THE CRABBE HUSON SPECIAL FUND, INC.
SCHEDULE OF INVESTMENTS
October 31, 1996
<TABLE>
<CAPTION>
SHARES OR
FACE VALUE SECURITIES DESCRIPTION MARKET VALUE
- -------------- --------------------------------------------------- --------------
<C> <S> <C>
COMMON STOCKS - 88.1%
- -----------------------------------------------------------------------------------
CONSUMER CYCLICALS - 8.0%
399,400 *Ann Taylor Stores, Inc............................ $ 7,239,125
1,111,000 *Bombay Company, Inc............................... 5,832,750
602,500 *Burlington Coat Factory........................... 7,380,625
654,500 Cato Corp - Class A................................ 3,149,781
1,070,500 *Payless Cashways, Inc............................. 2,007,188
1,189,600 Phillips-Van Heusen................................ 13,085,600
--------------
38,695,069
--------------
CONSUMER STAPLES - 7.0%
836,000 Fleming Companies.................................. 14,525,500
548,000 Hudson Foods, Inc. - Class A....................... 9,110,500
377,300 *Paragon Trade Brands, Inc......................... 9,904,125
--------------
33,540,125
--------------
ENERGY - 15.6%
637,100 Forest Oil Corp.................................... 9,556,500
564,600 Holly Corp......................................... 14,044,425
1,372,200 *Oryx Energy Company............................... 26,414,850
1,647,700 Snyder Oil Corp.................................... 25,127,425
--------------
75,143,200
--------------
FINANCIAL - 4.5%
387,100 *Citation Insurance Group.......................... 1,451,625
400,800 *Risk Capital Holdings, Inc........................ 7,214,400
437,400 Zurich Reinsurance Centre.......................... 13,122,000
--------------
21,788,025
--------------
HEALTHCARE - 12.8%
1,132,700 *Coventry Corp..................................... 11,468,587
197,200 *GranCare, Inc..................................... 3,549,600
697,500 *Horizon/CMS Healthcare Corp....................... 7,236,563
965,800 Integrated Health Services......................... 23,782,825
1,213,100 *Sun Healthcare Group, Inc......................... 15,467,025
--------------
61,504,600
--------------
INDUSTRIALS - 26.6%
661,200 Century Aluminum Company........................... 8,926,200
846,300 Crompton & Knowles Corp............................ 15,233,400
449,600 General Chemical Group............................. 8,542,400
418,000 Giddings & Lewis, Inc.............................. 4,911,500
352,800 Huntco, Inc........................................ 6,306,300
734,800 Longview Fibre Company............................. 12,767,150
5,738,700 *Lytton Minerals, Ltd.............................. 14,996,416
</TABLE>
*Non-income producing security.
See accompanying notes to financial statements.
12
<PAGE>
THE CRABBE HUSON SPECIAL FUND, INC.
SCHEDULE OF INVESTMENTS
October 31, 1996
<TABLE>
<CAPTION>
SHARES OR
FACE VALUE SECURITIES DESCRIPTION MARKET VALUE
- -------------- --------------------------------------------------- --------------
COMMON STOCKS - (CONTINUED)
- -----------------------------------------------------------------------------------
<C> <S> <C>
INDUSTRIALS - (CONTINUED)
1,539,200 *MK Rail Corp...................................... $ 12,121,200
1,119,900 Oregon Steel Mills, Inc............................ 17,778,413
2,116,700 *Rollins Environmental Services.................... 4,762,575
305,300 TJ International, Inc.............................. 5,800,700
975,600 Wabash National Corp............................... 15,731,550
--------------
127,877,804
--------------
REAL ESTATE INVESTMENT TRUST - 3.2%
1,551,100 *Catellus Development Corp......................... 15,317,112
--------------
TRANSPORTATION - 10.4%
697,200 Airborne Freight Corp.............................. 13,856,850
366,600 Hunt (JB) Transportation Services, Inc............. 5,361,525
410,100 *Landstar System, Inc.............................. 9,688,613
308,900 Teekay Shipping Corp............................... 9,614,513
866,300 *Yellow Corp....................................... 11,316,043
--------------
49,837,544
--------------
Total Common Stocks 423,703,479
--------------
Total Investments - 88.1% 423,703,479
--------------
(Cost $396,950,759)**
SECURITIES SOLD SHORT - (18.9%)
- -----------------------------------------------------------------------------------
COMMON STOCKS
TECHNOLOGY - (18.9%)
213,600 America Online, Inc................................ (5,793,900 )
128,900 *Compaq Computers, Corp............................ (8,974,663 )
509,400 *Cypress Semiconductor............................. (5,476,050 )
478,800 Gartner Group, Inc. - Class A...................... (14,723,100 )
129,700 Sun Microsystems, Inc.............................. (7,911,700 )
563,800 Tellabs, Inc....................................... (47,993,475 )
--------------
(90,872,888 )
--------------
Total Securities Sold Short - (18.9%) (90,872,888 )
--------------
(Proceeds $57,485,925)***
Other Assets and (Liabilities), Net - 30.8% 148,208,814
--------------
TOTAL NET ASSETS - 100.0% $ 481,039,405
--------------
--------------
</TABLE>
* Non-income producing security.
** Aggregate cost for federal income tax purpose is $397,324,826.
*** Aggregate proceeds for federal income tax purpose is $57,312,463.
See accompanying notes to financial statements.
13
<PAGE>
CRABBE HUSON SMALL CAP FUND
INVESTMENT OBJECTIVE: PROVIDE LONG-TERM CAPITAL APPRECIATION THROUGH A
DIVERSIFIED PORTFOLIO OF CAREFULLY SELECTED STOCKS WITH SMALL MARKET
CAPITALIZATIONS. THE FUND MAY HOLD UP TO 100% OF ITS ASSETS IN EQUITY
SECURITIES.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
THE
SMALL CAP FUND AND THE RUSSELL 2000 INDEX
(RESULTS ARE FOR FISCAL YEARS ENDING OCTOBER 31)
<S> <C> <C>
Begin 1996
Small Cap $10,000 $11,020
Russell 2000 $10,000 $10,618
Fund Inception: 2/16/96
TOTAL RETURNS
Life of Fund: 10.20%
</TABLE>
HISTORICAL RESULTS ARE FOR THE PRIMARY CLASS OF SHARES AND ARE
NOT INDICATIVE OF FUTURE RETURNS. THE INSTITUTIONAL CLASS OF
SHARES RETURNED -0.36 % SINCE THEIR INCEPTION OCTOBER 10,
1996. FUTURE RETURNS AND PRINCIPAL VALUE WILL FLUCTUATE SO
THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR
LESS THAN THE ORIGINAL COST. THE ACCOMPANYING CHART COMPARES
THE PERFORMANCE OF THE SMALL CAP FUND WITH THE RUSSELL 2000
INDEX WHICH IS AN UNMANAGED, BROAD-BASE INDEX OF STOCKS; THE
SMALL CAP FUND IS A PROFESSIONALLY MANAGED MUTUAL FUND. THE
INDEX PRESENTED HERE IS NOT MANAGED, DOES NOT INCUR EXPENSES
AND IS NOT AVAILABLE FOR DIRECT INVESTMENT. HAD THE INDEX
INCURRED TYPICAL OPERATING EXPENSES, ITS PERFORMANCE WOULD
HAVE BEEN LOWER.
The Small Cap Fund was introduced in February of this year to provide investors
with a new option for investing in equity securities with market capitalizations
of $1 billion or less. The portfolio is very similar to that of the Special
Fund; the difference lies in the Special Fund's wider latitude for investment
strategy, including the option to sell securities short and purchase stocks in
the mid-cap range.
The fund opened during a time of broadening interest in small- to mid-cap
companies and renewed market attention on the retail and energy stocks held in
the portfolio. The portfolio made steady progress through the late summer and
early fall with relatively heavy weightings in the industrial, health care and
consumer staple sectors. These issues, in contrast to the relatively overvalued
sectors of the market, were attractively priced and helped the portfolio make
steady progress to finish the fiscal period with a return of 10.20%.
Like the Special Fund, the Small Cap Fund carries a fairly large exposure to
health care issues and has additional weightings in cyclicals. We believe the
worst is over in terms of stock pricing for medium- and long-term care
facilities, health maintenance organizations (HMOs) and other health care
concerns. We think the good companies we now hold in the portfolio will perform
well over the next one to two years as the current political administration
further outlines its intentions for changes in the health care industry.
Further, valuations in this
14
<PAGE>
sector are reflective of those that would be expected in a more negative
economic climate, leaving them poised for upward growth. In a healthy economy,
we believe these stocks can perform very well.
Our future strategy for this portfolio parallels that of the Special Fund's long
position. At current valuation levels, we think the market is very risky, and
we're focusing on attractively priced companies that have been overlooked by
Wall Street. We're encouraged by the early performance of the Small Cap Fund,
and our team will continue to concentrate on delivering good results while
mitigating market risk.
15
<PAGE>
CRABBE HUSON SMALL CAP FUND
SCHEDULE OF INVESTMENTS
October 31, 1996
<TABLE>
<CAPTION>
SHARES OR
FACE VALUE SECURITIES DESCRIPTION MARKET VALUE
- --------------- --------------------------------------------------- --------------
<C> <S> <C>
COMMON STOCKS - 72.4%
- ------------------------------------------------------------------------------------
BASIC MATERIALS - 3.4%
35,600 Battle Mountain Gold............................... $ 271,450
3,300 *Pegasus Gold, Inc................................. 33,000
34,600 Santa Fe Pacific Gold Corp......................... 410,875
--------------
715,325
--------------
CONSUMER CYCLICALS - 11.1%
15,000 *Ann Taylor Stores, Inc............................ 271,875
86,400 *Bombay Company, Inc............................... 453,600
41,400 *Burlington Coat Factory........................... 507,150
75,200 Cato Corp - Class A................................ 361,900
4,800 *Dress Barn, Inc................................... 63,000
81,700 *Payless Cashways, Inc............................. 153,188
44,400 Phillips-Van Heusen................................ 488,400
--------------
2,299,113
--------------
CONSUMER STAPLES - 5.0%
19,900 Fleming Companies.................................. 345,763
31,800 Hudson Foods Inc. - Class A........................ 528,675
9,100 *Suiza Foods Corp.................................. 152,425
--------------
1,026,863
--------------
ENERGY - 7.3%
34,300 Forest Oil Corp.................................... 514,500
24,500 *Hvide Marine, Inc................................. 364,437
41,200 Snyder Oil Corp.................................... 628,300
--------------
1,507,237
--------------
FINANCIAL - 5.9%
5,600 *Bank United Corp.................................. 149,100
12,200 *Farm Family Holdings.............................. 242,475
22,700 *Risk Capital Holdings, Inc........................ 408,600
14,300 Zurich Reinsurance Centre.......................... 429,000
--------------
1,229,175
--------------
HEALTHCARE - 11.8%
46,900 *Coventry Corp..................................... 474,863
26,500 Healthsource, Inc.................................. 324,625
35,200 *Horizon/CMS Healthcare Corp....................... 365,200
10,400 Integrated Health Services......................... 256,100
15,000 *Isolyser Company, Inc............................. 106,875
43,700 *Mid Atlantic Medical Services..................... 469,775
34,000 *Sun Healthcare Group, Inc......................... 433,500
--------------
2,430,938
--------------
</TABLE>
*Non-income producing security.
See accompanying notes to financial statements.
16
<PAGE>
CRABBE HUSON SMALL CAP FUND
SCHEDULE OF INVESTMENTS
October 31, 1996
<TABLE>
<CAPTION>
SHARES OR
FACE VALUE SECURITIES DESCRIPTION MARKET VALUE
- --------------- --------------------------------------------------- --------------
COMMON STOCKS - (CONTINUED)
- ------------------------------------------------------------------------------------
<C> <S> <C>
INDUSTRIALS - 19.3%
29,400 Century Aluminum Co................................ $ 396,900
25,700 Crompton & Knowles Corp............................ 462,600
14,300 General Chemical Group............................. 271,700
39,900 Giddings & Lewis, Inc.............................. 468,825
244,500 *Lytton Minerals Limited........................... 638,929
27,600 Oregon Steel Mills, Inc............................ 438,150
159,000 *Rollins Environmental Services.................... 357,750
26,500 TJ International, Inc.............................. 503,500
27,800 Wabash National Corp............................... 448,275
--------------
3,986,629
--------------
TECHNOLOGY - 0.6%
14,000 *Mentor Graphics Corp.............................. 119,000
--------------
TRANSPORTATION - 8.0%
22,500 Airborne Freight Corp.............................. 447,188
27,800 Hunt (JB) Transportation Services, Inc............. 406,575
15,900 *Landstar System, Inc.............................. 375,637
33,000 *Yellow Corp....................................... 431,062
--------------
1,660,462
--------------
Total Common Stocks 14,974,742
--------------
SHORT TERM INVESTMENTS - 4.4%
- ------------------------------------------------------------------------------------
DISCOUNT NOTE - 2.9%
$ 600,000 Federal Home Loan Bank 5.500%** 11/01/96........... 600,000
--------------
INVESTMENT COMPANY - 1.5%
302,978 Seven Seas Money Market Fund 5.040%***............. 302,978
--------------
Total Short Term Investments 902,978
--------------
Total Investments - 76.8% 15,877,720
(Cost $15,792,804)****
Other Assets and (Liabilities), Net - 23.2% 4,792,015
--------------
TOTAL NET ASSETS - 100.0% $ 20,669,735
--------------
--------------
</TABLE>
* Non-income producing security.
** Rate reflects purchase yield to maturity.
*** Rate reflects 7 day yield as of October 31, 1996.
**** Aggregate cost for federal income tax purpose is identical.
See accompanying notes to financial statements.
17
<PAGE>
CRABBE HUSON ASSET ALLOCATION FUND
INVESTMENT OBJECTIVE: PRESERVATION OF CAPITAL, CAPITAL APPRECIATION AND INCOME
THROUGH A PORTFOLIO OF STOCKS, FIXED INCOME SECURITIES, CASH AND CASH
EQUIVALENTS. THE FUND CAN HOLD AS MUCH AS 75% OR AS LITTLE AS 20% OF ITS ASSETS
IN COMMON STOCKS.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
THE
ASSET ALLOCATION FUND THE S&P 500 INDEX AND THE
LEHMAN BROTHERS GOVT/CORP BOND INDEX
(RESULTS ARE FOR FISCAL YEARS ENDING OCTOBER 31)
<S> <C> <C> <C> <C> <C> <C> <C>
Begin 1989 1990 1991 1992 1993 1994
Asset Allocation $10,000 $10,690 $10,006 $12,462 $13,864 $16,766 $17,212
S&P 500 $10,000 $11,739 $10,863 $14,498 $15,920 $18,296 $19,002
Lehman Bros $10,000 $11,156 $11,763 $13,578 $15,006 $17,052 $16,260
Fund Inception: 1/31/89
ANNUALIZED TOTAL RETURN
1 Year: 8.96%
5 Year: 11.19%
Life of Fund: 10.17%
<CAPTION>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
THE
ASSET ALLOCATION FUND THE S&P 500 INDEX AND THE
LEHMAN BROTHERS GOVT/CORP BOND INDEX
(RESULTS ARE FOR FISCAL YEARS ENDING OCTOBER 31)
<S> <C> <C>
1995 1996
Asset Allocation 19450 21192
S&P 500 24024 29816
Lehman Bros 18888 19906
Fund Inception: 1/31/89
ANNUALIZED TOTAL RETURN
1 Year: 8.96%
5 Year: 11.19%
Life of Fund: 10.17%
</TABLE>
HISTORICAL RESULTS ARE FOR THE PRIMARY CLASS OF SHARES AND ARE
NOT INDICATIVE OF FUTURE RETURNS. THE INSTITUTIONAL CLASS OF
SHARES RETURNED 0.59 % SINCE THEIR INCEPTION OCTOBER 28, 1996.
FUTURE RETURNS AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN
INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS
THAN THE ORIGINAL COST. THE ACCOMPANYING CHART COMPARES THE
PERFORMANCE OF THE ASSET ALLOCATION FUND WITH THE S&P 500 AND
THE LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND INDICES WHICH
ARE UNMANAGED, BROAD-BASE INDICES OF STOCKS AND BONDS; THE
ASSET ALLOCATION FUND IS A PROFESSIONALLY MANAGED MUTUAL FUND.
THE INDICES PRESENTED HERE ARE NOT MANAGED, DO NOT INCUR
EXPENSES AND ARE NOT AVAILABLE FOR DIRECT INVESTMENT. HAD THE
INDICES INCURRED TYPICAL OPERATING EXPENSES, THEIR PERFORMANCE
WOULD HAVE BEEN LOWER.
The Asset Allocation Fund, a portfolio in the medium-risk category, posted a
solid fiscal year return of 8.96%. For the year, the Lehman Brother
Government/Corporate Bond Index and the S&P 500 Index returned 5.39% and 24.11%,
respectively.
It was an unusual year for the fund -- there were four defined periods of
significant market changes, compared with the usual one to two. The fund staked
a 55% position in stocks early in the year, putting 39% in bonds and 6% in
short-term reserves. The increased equity exposure helped deliver healthy
six-month returns during a good time for stocks and a very rough period for
bonds (in the first half of the fiscal year, the Lehman Brothers index gained
only 0.04%, compared to 13.73% for the S&P 500).
As the year progressed, we found more to like in bonds as the economy slowed.
Yields declined, driving bond prices upward and helping us make up some ground
lost earlier in the year. Slow growth also can be problematic for equity
earnings. Accordingly, we re-adjusted the portfolio, reducing our stock
holdings, adding bonds and slightly increasing our cash position. This was a
winning strategy late in the fiscal year, when bond prices surged again,
delivering a final push toward the close of the period.
18
<PAGE>
At present, there's real pressure on pricing, as consumers now expect to buy
things on sale -- it's becoming more and more difficult for retailers to put
through any manner of a price increase. Historically, this kind of environment
has been bad for the corporate earnings needed to keep stock prices boosted. If
there is a risk in our economic scenario, it would be that world economies will
slow, leading to slower growth in the U.S. and possibly even the risk of
deflation.(1) If that were to occur, some stocks may do well, but we'd be
inclined to raise our cash level and strengthen our bond position to take
advantage of increasing prices.
Given the current risk/reward comparison in the market, we're finding more value
in bonds going forward into 1997. As of the date of this letter, the current
portfolio holds 40% bonds, 57% stocks and 3% cash. With developing economic and
market risks in mind, we'll continue to put cash to work in good stock values as
we find them and will focus further on opportunities in the bond market.
- -------------------
(1) Deflation refers to a reduction in available currency and credit that
results in a decrease in the general level of prices.
19
<PAGE>
CRABBE HUSON ASSET ALLOCATION FUND
SCHEDULE OF INVESTMENTS
October 31, 1996
<TABLE>
<CAPTION>
SHARES OR
FACE VALUE SECURITIES DESCRIPTION MARKET VALUE
- -------------- --------------------------------------------------- --------------
<C> <S> <C>
FIXED INCOME SECURITIES - 39.5%
- -----------------------------------------------------------------------------------
AGENCIES - 6.5%
$ 420,000 International Bank For Reconstruction & Development
Floater 5.890%(a) 8/07/97........................ $ 401,788
1,500,000 Student Loan Marketing Association Treasury Inverse
Floater 4.960%(b) 2/11/98........................ 1,490,625
900,000 Federal National Mortgage Association 6.080%
9/25/00.......................................... 896,229
1,200,000 Federal National Mortgage Association 8.250%
12/18/00......................................... 1,288,140
550,000 Tennessee Valley Authority 6.125% 7/15/03.......... 539,000
925,000 Federal National Mortgage Association 5.875%
2/02/06.......................................... 879,064
1,000,000 Federal Home Loan Bank 5.850% 2/21/06.............. 948,420
800,000 Interamerican Development Bank 6.125% 3/08/06...... 774,000
1,000,000 Federal Home Loan Bank 7.140% 9/13/06.............. 1,037,330
--------------
8,254,596
--------------
CMO - 0.7%
950,410 Greenwich Capital Acceptance Inc. GNMA 1993
(Principal Only) - Class B-1 (Amortized Yield to
Maturity 6.978%)................................. 896,950
--------------
CORPORATE BONDS - 11.9%
750,000 Baxter International 7.500% 5/01/97................ 755,602
550,000 Hertz Corp 8.300% 2/02/98.......................... 565,813
500,000 GMAC 8.000% 10/01/99............................... 521,875
550,000 Upjohn Co. 5.875% 4/15/00.......................... 541,750
600,000 Pepsico, Inc. 5.875% 6/01/00....................... 592,500
400,000 American Express Credit 6.500% 8/01/00............. 400,500
800,000 Ford Motor Credit 6.250% 11/08/00.................. 792,000
600,000 WMX Technologies 6.700% 5/01/01.................... 603,750
725,000 GMAC 9.000% 10/15/02............................... 808,375
600,000 IBM Corp 7.250% 11/01/02........................... 621,750
550,000 JP Morgan & Co. 7.625% 9/15/04..................... 579,562
550,000 Pacific Bell 6.250% 3/01/05........................ 528,688
550,000 Anheuser Busch 7.000% 9/01/05...................... 554,125
700,000 US West Communications 6.625% 9/15/05.............. 689,500
550,000 Bear Stearns Co. 6.875% 10/01/05................... 543,125
600,000 Snap-on, Inc. 6.625% 10/01/05...................... 597,000
975,000 Walt Disney Company 6.750% 3/30/06................. 970,125
550,000 Sysco Corp 7.000% 5/01/06.......................... 558,938
700,000 Teleport Communications 9.875% 7/01/06............. 712,250
770,000 Dupont 8.250% 9/15/06.............................. 850,850
600,000 Wal-Mart Stores 8.000% 9/15/06..................... 650,250
550,000 Eli Lilly 8.375% 12/01/06.......................... 614,625
</TABLE>
(a)Represents a structured note that pays interest at a rate that increases
(decreases) by a multiple of the peseta/deutchemark exchange rate.
(b)Inverse floater represents a security that pays interest at a rate that
increases (decreases) in
the same magnitude as a decline (increase) in the 10-year Constant Maturity
Treasuries rate
minus 180 basis points.
See accompanying notes to financial statements.
20
<PAGE>
CRABBE HUSON ASSET ALLOCATION FUND
SCHEDULE OF INVESTMENTS
October 31, 1996
<TABLE>
<CAPTION>
SHARES OR
FACE VALUE SECURITIES DESCRIPTION MARKET VALUE
- -------------- --------------------------------------------------- --------------
FIXED INCOME SECURITIES - (CONTINUED)
- -----------------------------------------------------------------------------------
<C> <S> <C>
CORPORATE BONDS - (CONTINUED)
$ 600,000 AT&T Corp 7.750% 3/01/07........................... $ 636,000
550,000 GTE South 6.000% 2/15/08........................... 508,062
--------------
15,197,015
--------------
</TABLE>
<TABLE>
<C> <S> <C>
FEDERAL HOME LOAN MORTGAGE CORPORATION - 4.5%
106,893 Federal Home Loan Mortgage Corp Pool #281037 9.250%
11/01/16......................................... 112,994
847,917 Federal Home Loan Mortgage Corp Pool #303033 9.000%
4/01/17.......................................... 890,117
1,288,408 Federal Home Loan Mortgage Corp Pool #C80344 7.500%
9/01/25.......................................... 1,292,801
1,356,540 Federal Home Loan Mortgage Corp Pool #D65456 7.000%
11/01/25......................................... 1,334,388
2,085,736 Federal Home Loan Mortgage Corp Pool #C80409 8.000%
6/01/26.......................................... 2,131,977
--------------
5,762,277
--------------
U.S. GOVERNMENT BONDS - 15.9%
3,300,000 U.S. Treasury Note 6.000% 9/30/98.................. 3,315,675
2,250,000 U.S. Treasury Note 5.625% 2/28/01.................. 2,213,303
2,340,000 U.S. Treasury Note 6.375% 9/30/01.................. 2,366,301
5,410,000 U.S. Treasury Note 6.000% 2/15/26.................. 4,935,543
7,400,000 U.S. Treasury Note 6.750% 8/15/26.................. 7,479,994
--------------
20,310,816
--------------
Total Fixed Income Securities 50,421,654
--------------
COMMON STOCKS - 52.1%
- -----------------------------------------------------------------------------------
BASIC MATERIALS - 3.0%
8,800 Cyprus Amax Minerals............................... 199,100
22,400 Great Lakes Chemical Corporation................... 1,167,600
113,500 *Methanex Corp..................................... 957,656
23,742 *Millenium Chemicals, Inc.......................... 480,775
31,100 WMX Technologies, Inc.............................. 1,069,062
--------------
3,874,193
--------------
COMPUTERS - 0.5%
32,800 *Bay Networks, Inc................................. 664,200
--------------
CONSUMER CYCLICALS - 10.7%
39,700 Duracell International, Inc........................ 2,649,975
42,000 Liz Claiborne, Inc................................. 1,774,500
49,300 Lowe's Companies................................... 1,990,488
18,600 Nordstrom, Inc..................................... 670,762
57,600 *Price/Costco, Inc................................. 1,144,800
38,700 Reebok International Ltd........................... 1,383,525
</TABLE>
*Non-income producing security.
See accompanying notes to financial statements.
21
<PAGE>
CRABBE HUSON ASSET ALLOCATION FUND
SCHEDULE OF INVESTMENTS
October 31, 1996
<TABLE>
<CAPTION>
SHARES OR
FACE VALUE SECURITIES DESCRIPTION MARKET VALUE
- -------------- --------------------------------------------------- --------------
COMMON STOCKS - (CONTINUED)
- -----------------------------------------------------------------------------------
<C> <S> <C>
CONSUMER CYCLICALS - (CONTINUED)
87,000 Singer Co.......................................... $ 1,663,875
34,000 Sunbeam Corp....................................... 837,250
56,100 Wal-Mart Stores, Inc............................... 1,493,663
--------------
13,608,838
--------------
CONSUMER STAPLES - 4.4%
39,700 American Greetings Corp - Class A.................. 1,163,706
64,700 *General Nutrition Companies....................... 1,180,775
13,900 Kellogg Co......................................... 882,650
32,900 Quaker Oats........................................ 1,167,950
28,400 Tambrands, Inc..................................... 1,210,550
--------------
5,605,631
--------------
ENERGY - 8.8%
7,600 Atlantic Richfield Co.............................. 1,007,000
42,000 Burlington Resources, Inc.......................... 2,115,750
18,700 Enron Oil & Gas.................................... 481,525
46,400 ENSERCH Corp....................................... 997,600
32,900 *ENSERCH Exploration............................... 324,888
58,800 *Noble Drilling Corp............................... 1,095,150
62,000 Occidental Petroleum Corp.......................... 1,519,000
31,100 Tenneco, Inc....................................... 1,539,450
18,000 Tidewater, Inc..................................... 787,500
36,600 Union Texas Petroleum Holdings, Inc................ 782,325
20,700 *Weatherford Enterra, Inc.......................... 600,300
--------------
11,250,488
--------------
FINANCIAL - 3.6%
11,200 Countrywide Credit Industries, Inc................. 319,200
49,700 Equitable Companies, Inc........................... 1,167,950
27,100 ITT Hartford Group, Inc............................ 1,707,300
30,800 Salomon, Inc....................................... 1,389,850
--------------
4,584,300
--------------
HEALTHCARE - 1.6%
42,500 *MedPartners, Inc.................................. 897,813
7,800 Pharmacia & Upjohn, Inc............................ 280,800
18,300 *Scherer R.P. Corp................................. 848,662
--------------
2,027,275
--------------
INDUSTRIALS - 6.7%
52,300 *Bethlehem Steel Corp.............................. 424,938
41,500 Cincinnati Milacron, Inc........................... 793,687
56,100 *Detroit Diesel Corp............................... 1,037,850
9,600 Inland Steel Ind................................... 154,800
31,600 J & L Specialty Steel, Inc......................... 371,300
</TABLE>
*Non-income producing security.
See accompanying notes to financial statements.
22
<PAGE>
CRABBE HUSON ASSET ALLOCATION FUND
SCHEDULE OF INVESTMENTS
October 31, 1996
<TABLE>
<CAPTION>
SHARES OR
FACE VALUE SECURITIES DESCRIPTION MARKET VALUE
- -------------- --------------------------------------------------- --------------
COMMON STOCKS - (CONTINUED)
----------------
<C> <S> <C>
INDUSTRIALS - (CONTINUED)
56,700 Louisiana Pacific Corp............................. $ 1,183,613
68,200 McDermott International, Inc....................... 1,210,550
82,800 *National Steel Corp - Class B..................... 714,150
9,700 Trinova Corp....................................... 318,887
78,600 *USG Corp.......................................... 2,318,700
--------------
8,528,475
--------------
PUBLISHING & PRINTING - 0.8%
29,900 Readers Digest Association - Class A............... 1,065,188
--------------
REAL ESTATE INVESTMENT TRUST - 0.7%
31,100 Spieker Properties................................. 956,325
--------------
TECHNOLOGY - 3.6%
30,300 AMP, Inc........................................... 1,026,412
40,500 *National Semiconductor Corp....................... 779,625
7,500 *Silicon Graphics.................................. 138,750
210,300 *Tandem Computers, Inc............................. 2,655,038
--------------
4,599,825
--------------
TELECOMMUNICATIONS - 2.3%
40,003 *Cox Communications, Inc. - Class A................ 740,056
42,200 *DSC Communications Corp........................... 585,525
9,500 *U.S. West Media Group............................. 148,437
81,300 Westinghouse Electric Corp......................... 1,392,263
--------------
2,866,281
--------------
TRANSPORTATION - 3.4%
93,100 Consolidated Freightways, Inc...................... 2,234,400
27,899 *Gulfstream Aerospace Corp......................... 659,137
122,600 Laidlaw, Inc. - Class B............................ 1,440,550
--------------
4,334,087
--------------
UTILITIES - 2.0%
38,000 Entergy Corp....................................... 1,064,000
68,800 Pacificorp......................................... 1,453,400
--------------
2,517,400
--------------
Total Common Stocks 66,482,506
--------------
</TABLE>
*Non-income producing security.
See accompanying notes to financial statements.
23
<PAGE>
CRABBE HUSON ASSET ALLOCATION FUND
SCHEDULE OF INVESTMENTS
October 31, 1996
<TABLE>
<CAPTION>
SHARES OR
FACE VALUE SECURITIES DESCRIPTION MARKET VALUE
- -------------- --------------------------------------------------- --------------
SHORT TERM INVESTMENTS - 8.5%
- -----------------------------------------------------------------------------------
<C> <S> <C>
DISCOUNT NOTE - 0.2%
$ 285,000 Federal Home Loan Bank 5.430%* 3/07/97............. $ 279,583
--------------
INVESTMENT COMPANY - 5.0%
6,393,661 Seven Seas Money Market Fund 5.040%**.............. 6,393,661
--------------
REPURCHASE AGREEMENT - 3.3%
4,125,166 State Street Bank and Trust Company*** 4.000%
11/1/96.......................................... 4,125,166
--------------
Total Short Term Investments 10,798,410
--------------
Total Investments - 100.1% 127,702,570
(Cost $120,771,126)****
Cash - 0.1% 178,270
Other Assets and (Liabilities), Net - (0.2%) (337,167 )
--------------
TOTAL NET ASSETS - 100.0% $ 127,543,673
--------------
--------------
</TABLE>
* Rates reflect purchase yield to maturity.
** Rate reflects 7 day yield as of October 31, 1996.
*** The repurchase agreement, dated 10/31/96, $4,125,624 due 11/1/96, is
collateralized by a $4,095,000 U.S. Treasury Note, 7.50%, maturing
12/31/96, with a market value of $4,211,089.
**** Aggregate cost for federal income tax purpose is $120,827,999.
24
<PAGE>
CRABBE HUSON EQUITY FUND
INVESTMENT OBJECTIVE: PROVIDE LONG-TERM CAPITAL APPRECIATION THROUGH A
DIVERSIFIED PORTFOLIO OF WIDELY AND ACTIVELY TRADED COMMON STOCKS WITH MEDIUM TO
LARGE MARKET CAPITALIZATIONS. THE FUND MAY HAVE UP TO 100% OF ITS ASSETS
INVESTED IN COMMON STOCKS.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
COMPARISON OF CHANGE IN VALUE OF $10,000
INVESTMENT
IN THE EQUITY FUND AND THE S&P 500 INDEX
(RESULTS ARE FOR FISCAL YEARS ENDING OCTOBER 31)
<S> <C> <C> <C> <C> <C> <C> <C>
Begin 1989 1990 1991 1992 1993 1994
Equity $10,000 $10,500 $8,928 $13,610 $15,309 $19,886 $21,455
S&P 500 $10,000 $11,739 $10,863 $14,498 $15,920 $18,296 $19,002
Fund Inception: 1/31/89
ANNUALIZED TOTAL RETURN
1 Year: 13.78%
5 Year: 15.23%
Life of Fund: 14.02%
<CAPTION>
COMPARISON OF CHANGE IN VALUE OF $10,000
INVESTMENT
IN THE EQUITY FUND AND THE S&P 500 INDEX
(RESULTS ARE FOR FISCAL YEARS ENDING OCTOBER 31)
<S> <C> <C>
1995 1996
Equity 24323 27675
S&P 500 24024 29816
Fund Inception: 1/31/89
ANNUALIZED TOTAL RETURN
1 Year: 13.78%
5 Year: 15.23%
Life of Fund: 14.02%
</TABLE>
HISTORICAL RESULTS ARE FOR THE PRIMARY CLASS OF SHARES AND ARE
NOT INDICATIVE OF FUTURE RETURNS. THE INSTITUTIONAL CLASS OF
SHARES RETURNED -1.56 % SINCE THEIR INCEPTION OCTOBER 03,
1996. FUTURE RETURNS AND PRINCIPAL VALUE WILL FLUCTUATE SO
THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR
LESS THAN THE ORIGINAL COST. THE ACCOMPANYING CHART COMPARES
THE PERFORMANCE OF THE EQUITY FUND WITH THE S&P 500 INDEX
WHICH IS AN UNMANAGED, BROAD-BASE INDEX OF STOCKS; THE EQUITY
FUND IS A PROFESSIONALLY MANAGED MUTUAL FUND. THE INDEX
PRESENTED HERE IS NOT MANAGED, DOES NOT INCUR EXPENSES AND IS
NOT AVAILABLE FOR DIRECT INVESTMENT. HAD THE INDEX INCURRED
TYPICAL OPERATING EXPENSES, ITS PERFORMANCE WOULD HAVE BEEN
LOWER.
On the back of a strong winter and early spring, the Equity Fund returned 13.78%
for the fiscal year. Though the fund's numbers were behind the 24.11% posted by
the S&P 500 Index, its growth was commensurate with its relatively lower risk
exposure.
In managing this fund, we tend to view cash reserves as a dual-purpose tool: It
can serve as a source of funds to capitalize on new ideas in the marketplace, or
it can act as a cushion in times of market declines. For the majority of the
year, the Equity Fund assiduously avoided holding much of a cash position,
rarely keeping more than 10% cash on hand. During the first six months of the
fiscal year, various companies moved in and out of favor, presenting us with
plenty of buying opportunities. The market's volatility provided an environment
in which our contrarian stock-picking approach excelled, and we kept the
portfolio relatively fully invested. At the halfway mark for the fiscal year,
the Equity Fund was ahead of the S&P 500, 13.96% to 13.73%, respectively.
Later months brought a slowing but steady economy, driving valuations higher in
the large-cap arena. We predictably passed on the rapidly inflating, high
multiple glamour stocks, but still had little trouble finding good values. As
the
25
<PAGE>
year progressed, we remained consistent to our philosophy, weighting the
portfolio with issues from the industrials, energy and consumer cyclicals and
taking positions only in carefully selected health care and consumer non-durable
(food and beverage) stocks.
Looking forward, we expect the economy to continue to slow in 1997 to a 1.5-2.0%
rate of growth, and we believe the dollar will rise. This should allow for
declining interest rates, a positive move for our portfolio of well-selected
issues.
Our view of investor behavior tells us that many have become complacent and now
expect better-than-average growth every year. For the last 15 years, it has not
paid to be in cash, real estate has not performed well and bond returns have not
compelled fixed-income investing. This has helped build the current tremendous
popularity of equities.
However, experience tells us the market can't go up forever. Relative valuations
are now much higher than they were before the 1987 correction. Accordingly,
we're picking stocks that we believe will act well in a down market. In a more
difficult environment, we think our funds stand a better chance of outperforming
the overall market.
26
<PAGE>
CRABBE HUSON EQUITY FUND
SCHEDULE OF INVESTMENTS
October 31, 1996
<TABLE>
<CAPTION>
SHARES OR
FACE VALUE SECURITIES DESCRIPTION MARKET VALUE
- -------------- --------------------------------------------------- --------------
<C> <S> <C>
COMMON STOCKS - 91.0%
- -----------------------------------------------------------------------------------
BASIC MATERIALS - 6.1%
112,500 Cyprus Amax Minerals............................... $ 2,545,313
163,700 Great Lakes Chemical Corp.......................... 8,532,862
612,300 *Methanex Corp..................................... 5,166,282
203,735 *Millenium Chemicals, Inc.......................... 4,125,634
193,300 WMX Technologies, Inc.............................. 6,644,687
--------------
27,014,778
--------------
COMPUTERS - 0.7%
159,800 *Bay Networks, Inc................................. 3,235,950
--------------
CONSUMER CYCLICALS - 16.4%
224,500 Duracell International, Inc........................ 14,985,375
236,100 Liz Claiborne, Inc................................. 9,975,225
266,900 Lowe's Companies................................... 10,776,088
100,200 Nordstrom, Inc..................................... 3,613,462
313,500 *Price/Costco, Inc................................. 6,230,813
192,700 Reebok International, Ltd.......................... 6,889,025
503,100 Singer Co.......................................... 9,621,787
81,900 Sunbeam Corp....................................... 2,016,787
304,100 Wal-Mart Stores, Inc............................... 8,096,663
--------------
72,205,225
--------------
CONSUMER STAPLES - 8.7%
282,700 American Greetings Corp - Class A.................. 8,286,644
347,900 *General Nutrition Companies....................... 6,349,175
93,500 Kellogg Co......................................... 5,937,250
262,800 Quaker Oats........................................ 9,329,400
200,800 Tambrands, Inc..................................... 8,559,100
--------------
38,461,569
--------------
ENERGY - 15.2%
56,400 Atlantic Richfield Co.............................. 7,473,000
203,200 Burlington Resources, Inc.......................... 10,236,200
136,400 Enron Oil & Gas.................................... 3,512,300
141,000 ENSERCH Corp....................................... 3,031,500
222,900 *ENSERCH Exploration............................... 2,201,138
298,000 *Noble Drilling Corp............................... 5,550,250
457,400 Occidental Petroleum Corp.......................... 11,206,300
177,500 Tenneco, Inc....................................... 8,786,250
119,300 Tidewater, Inc..................................... 5,219,375
248,600 Union Texas Petroleum Holdings, Inc................ 5,313,825
152,000 *Weatherford Enterra, Inc.......................... 4,408,000
--------------
66,938,138
--------------
</TABLE>
*Non-income producing security.
See accompanying notes to financial statements.
27
<PAGE>
CRABBE HUSON EQUITY FUND
SCHEDULE OF INVESTMENTS
October 31, 1996
<TABLE>
<CAPTION>
SHARES OR
FACE VALUE SECURITIES DESCRIPTION MARKET VALUE
- -------------- --------------------------------------------------- --------------
<C> <S> <C>
COMMON STOCKS - (CONTINUED)
- -----------------------------------------------------------------------------------
FINANCIAL - 6.3%
94,800 Countrywide Credit Industries, Inc................. $ 2,701,800
267,100 Equitable Companies, Inc........................... 6,276,850
141,500 ITT Hartford Group, Inc............................ 8,914,500
219,600 Salomon, Inc....................................... 9,909,450
--------------
27,802,600
--------------
HEALTHCARE - 3.0%
286,100 *Medpartners, Inc.................................. 6,043,862
56,900 Pharmacia & Upjohn, Inc............................ 2,048,400
113,400 *Scherer R.P. Corp................................. 5,258,925
--------------
13,351,187
--------------
INDUSTRIALS - 12.5%
354,000 *Bethlehem Steel Corp.............................. 2,876,250
226,900 Cincinnati Milacron, Inc........................... 4,339,462
297,600 *Detroit Diesel Corp............................... 5,505,600
69,500 Inland Steel Industries............................ 1,120,687
229,000 J & L Specialty Steel, Inc......................... 2,690,750
374,500 Louisiana Pacific Corp............................. 7,817,688
498,500 McDermott International, Inc....................... 8,848,375
494,700 *National Steel Corp - Class B..................... 4,266,788
59,900 Trinova Corp....................................... 1,969,213
537,600 *USG Corp.......................................... 15,859,200
--------------
55,294,013
--------------
PUBLISHING & PRINTING - 1.8%
218,500 Readers Digest Association......................... 7,784,062
--------------
REAL ESTATE INVESTMENT TRUST - 1.7%
248,100 *Spieker Properties, Inc........................... 7,629,075
--------------
TECHNOLOGY - 6.6%
243,300 AMP, Inc........................................... 8,241,787
296,200 *National Semiconductor Corp....................... 5,701,850
51,300 *Silicon Graphics.................................. 949,050
1,121,700 *Tandem Computers, Inc............................. 14,161,463
--------------
29,054,150
--------------
TELECOMMUNICATIONS - 3.8%
167,219 *Cox Communications, Inc. - Class A................ 3,093,552
306,700 *DSC Communications Corp........................... 4,255,463
109,300 *US West Media Group............................... 1,707,812
457,500 Westinghouse Electric Corp......................... 7,834,687
--------------
16,891,514
--------------
</TABLE>
*Non-income producing security.
See accompanying notes to financial statements.
28
<PAGE>
CRABBE HUSON EQUITY FUND
SCHEDULE OF INVESTMENTS
October 31, 1996
<TABLE>
<CAPTION>
SHARES OR
FACE VALUE SECURITIES DESCRIPTION MARKET VALUE
- -------------- --------------------------------------------------- --------------
<C> <S> <C>
COMMON STOCKS - (CONTINUED)
- -----------------------------------------------------------------------------------
TRANSPORTATION - 6.5%
596,100 Consolidated Freightways, Inc...................... $ 14,306,400
249,999 *Gulfstream Aerospace Corp......................... 5,906,249
693,300 Laidlaw, Inc. - Class B............................ 8,146,275
--------------
28,358,924
--------------
UTILITIES - 1.7%
261,000 Entergy Corp....................................... 7,308,000
--------------
Total Common Stocks 401,329,185
--------------
SHORT TERM INVESTMENTS - 10.5%
- -----------------------------------------------------------------------------------
DISCOUNT NOTES** - 8.7%
FEDERAL FARM CREDIT BANK - 0.4%
$ 1,945,000 5.180% 11/08/96.................................... 1,943,041
--------------
FEDERAL HOME LOAN BANK - 8.3%
670,000 5.250% 11/01/96.................................... 670,000
1,200,000 5.500% 11/01/96.................................... 1,200,000
6,520,000 5.130% 11/08/96.................................... 6,513,470
10,000,000 5.150% 11/12/96.................................... 9,984,188
1,250,000 5.400% 11/15/96.................................... 1,247,375
1,350,000 5.190% 11/19/96.................................... 1,346,497
750,000 5.350% 12/02/96.................................... 746,545
1,325,000 5.260% 12/03/96.................................... 1,318,805
85,000 5.430% 12/10/96.................................... 84,500
65,000 5.160% 12/12/96.................................... 64,618
470,000 5.190% 12/30/96.................................... 466,002
620,000 5.430% 1/07/97..................................... 613,734
2,700,000 5.200% 1/15/97..................................... 2,670,312
115,000 5.350% 1/22/97..................................... 113,599
405,000 5.380% 1/23/97..................................... 399,976
2,160,000 5.200% 1/27/97..................................... 2,132,660
1,660,000 5.250% 1/29/97..................................... 1,638,455
1,115,000 5.310% 2/21/97..................................... 1,096,580
580,000 5.200% 2/24/97..................................... 570,366
880,000 5.210% 2/25/97..................................... 865,227
690,000 5.210% 3/03/97..................................... 677,817
255,000 5.470% 3/05/97..................................... 250,196
90,000 5.210% 3/24/97..................................... 88,137
290,000 5.220% 4/02/97..................................... 283,608
890,000 5.220% 4/24/97..................................... 867,545
815,000 5.180% 4/28/97..................................... 794,126
--------------
36,704,338
--------------
</TABLE>
*Non-income producing security.
**Rates reflect purchase yield to maturity.
See accompanying notes to financial statements.
29
<PAGE>
CRABBE HUSON EQUITY FUND
SCHEDULE OF INVESTMENTS
October 31, 1996
<TABLE>
<CAPTION>
SHARES OR
FACE VALUE SECURITIES DESCRIPTION MARKET VALUE
- -------------- --------------------------------------------------- --------------
SHORT TERM INVESTMENTS - (CONTINUED)
- -----------------------------------------------------------------------------------
<C> <S> <C>
INVESTMENT COMPANY - 1.8%
7,791,882 Seven Seas Money Market Fund 5.040%***............. $ 7,791,882
--------------
Total Short Term Investments 46,439,261
--------------
Total Investments - 101.5% 447,768,446
(Cost $413,067,515 )****
Cash - 0.6% 2,501,906
Other Assets and (Liabilities), Net - (2.1%) (9,277,411 )
--------------
TOTAL NET ASSETS - 100.0% $ 440,992,941
--------------
--------------
</TABLE>
*** Rate reflects 7 day yield as of October 31, 1996.
**** Aggregate cost for federal income tax purpose is $413,171,322.
See accompanying notes to financial statements.
30
<PAGE>
CRABBE HUSON REAL ESTATE INVESTMENT FUND
INVESTMENT OBJECTIVE: PROVIDE CURRENT INCOME AND POTENTIAL CAPITAL APPRECIATION
THROUGH EQUITY SECURITIES OF REAL ESTATE INVESTMENT TRUSTS (REITS) AND OTHER
REAL ESTATE INDUSTRY COMPANIES. UNDER NORMAL CIRCUMSTANCES, AT LEAST 75% OF THE
FUND WILL BE INVESTED IN SUCH SECURITIES.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
THE
REAL ESTATE INVESTMENT FUND AND THE MORGAN STANLEY REAL
ESTATE INVESTMENT TRUST INDEX
(RESULTS ARE FOR FISCAL YEARS ENDING OCTOBER 31)
<S> <C> <C> <C> <C>
Begin 1994 1995 1996
REIT $10,000 $9,675 10479 13140
Morgan Stanley $10,000 $9,515 10550 13226
Fund Inception: 4/1/94
ANNUALIZED TOTAL RETURN
1 Year: 25.39%
Life of Fund: 11.27%
</TABLE>
HISTORICAL RESULTS ARE NOT INDICATIVE OF FUTURE RETURNS.
FUTURE RETURNS AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN
INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS
THAN THE ORIGINAL COST. THE ACCOMPANYING CHART COMPARES THE
PERFORMANCE OF THE REAL ESTATE INVESTMENT FUND WITH THE MORGAN
STANLEY REIT INDEX WHICH IS AN UNMANAGED, BROAD-BASE INDEX OF
REAL ESTATE INVESTMENT TRUST SECURITIES; THE REAL ESTATE
INVESTMENT FUND IS A PROFESSIONALLY MANAGED MUTUAL FUND. THE
INDEX PRESENTED HERE IS NOT MANAGED, DOES NOT INCUR EXPENSES
AND IS NOT AVAILABLE FOR DIRECT INVESTMENT. HAD THE INDEX
INCURRED TYPICAL OPERATING EXPENSES, ITS PERFORMANCE WOULD
HAVE BEEN LOWER.
It seems like springtime in the real estate securities markets. The quarter
ending September 30 was the best of the year, boosting yearly performance for
the Real Estate Investment Fund ("REIT" Fund) to 25.39%. The fund slightly
outpaced the Morgan Stanley REIT Index return of 25.36% for the fiscal year.
Early in the year, REITs began a period of strong performance, initiated
primarily by three developments: first, there was growing comfort among
apartment investors that overbuilding was not a danger; second, retail REITs
rebounded along with improving trends in retail sales; third, economically
sensitive REITs (hotel, office and industrial companies) profited from the
favorable economy. Performance was further enhanced by positive trends and
capital flows as investors migrated into REITs, resulting in an increase in
trading volume and liquidity for high quality REITs.
As might be anticipated, return expectations seem to have ratcheted up along
with the level of optimism in the marketplace. The favorable view of stock
market strategists, coupled with the strong current and prospective returns on
REIT shares, have produced a strong inflow of REIT investment capital. We
believe that both the flow of money and the availability of attractively priced
real estate will continue for a while, though the rate of flow may become less
consistent.
31
<PAGE>
REITs are particularly good at satisfying ongoing customer needs because they
typically represent a complete real estate "package" (building, finishing,
financing and management). Provided they maintain financial market discipline,
the benefits of superior management, daily market pricing and liquidity should
afford REITs continued access to attractively priced capital. Lower capital
costs will enable some of the best REITs to grow at very aggressive rates,
resulting in further consolidation of the real estate markets.
Other than higher levels of complacency, the biggest potential negative on the
horizon is a pending congressional proposal to exclude from taxes on the gains
from the sale of a home. If this were to become law, it likely would improve the
economics of home ownership, thereby lessening demand for apartments and, thus,
affecting the performance of apartment REITs. We'll continue to monitor the
proposal after the new Congress convenes early next year.
Looking across the REIT market, we remain fairly sanguine about the prospects
for most sectors. We believe retail is very close to the bottom in terms of
fundamentals, and retail stocks already may have hit their lows. Accelerating
growth in consumer income should be a plus for regional malls, shopping centers
and factory outlet owners.
We continue to find value in the apartment sector, where fundamentals remain
sound. Manufactured housing seems to be fully priced. The economically sensitive
office and hotel sectors have had exceptionally good years, so we're inclined to
wait on them for now.
We believe the REIT market will finish 1996 on a high note, and 1997 has the
potential to produce further good numbers. Until other asset classes become more
attractive, or the REIT market becomes less so, the real estate security
market's high dividends and low multiples will attract stock investors, while
liquidity and daily market pricing will continue to attract real estate
investors.
32
<PAGE>
CRABBE HUSON REAL ESTATE INVESTMENT FUND
SCHEDULE OF INVESTMENTS
October 31, 1996
<TABLE>
<CAPTION>
SHARES OR
FACE VALUE SECURITIES DESCRIPTION MARKET VALUE
- -------------- --------------------------------------------------- --------------
<C> <S> <C>
COMMON STOCKS - 87.4%
- -----------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUST - 87.4%
APARTMENT - 31.3%
31,900 Ambassador Apartments, Inc......................... $ 645,975
4,000 Associated Estates Realty Corp..................... 82,000
8,000 Camden Property Trust.............................. 218,000
26,400 Columbus Realty Trust.............................. 554,400
5,000 Equity Residential Properties Trust................ 183,750
33,000 Evans Withycombe Residential....................... 697,125
13,000 Merry Land & Investment Company.................... 273,000
15,500 Mid-America Apartment Communities.................. 393,312
32,600 Oasis Residential, Inc............................. 692,750
29,100 Pacific Gulf Properties, Inc....................... 541,987
19,000 Paragon Group, Inc................................. 304,000
13,000 Security Capital Atlantic.......................... 308,750
18,000 Smith Charles Residential.......................... 438,750
43,300 SouthWest Property Trust........................... 649,500
20,200 Summit Properties, Inc............................. 396,425
3,700 Wellsford Residential Property..................... 85,100
--------------
6,464,824
--------------
OFFICE/INDUSTRIAL - 20.4%
14,000 *Arden Realty Group................................ 316,750
19,400 CarrAmerica Realty Corp............................ 487,425
11,000 Colonial Properties Trust.......................... 291,500
17,500 Duke Realty Investments............................ 603,750
40,900 Liberty Property Trust............................. 884,463
44,500 *Prentiss Properties............................... 917,813
39,600 Security Capital Industrial........................ 717,750
--------------
4,219,451
--------------
LODGING - 4.6%
15,000 *Boykin Lodging Trust, Inc......................... 300,000
9,650 FelCor Suite Hotels, Inc........................... 316,037
21,000 RFS Hotel Investors, Inc........................... 341,250
--------------
957,287
--------------
MALLS - 3.7%
19,040 Simon Debartelo Group.............................. 502,180
22,750 Taubman Centers, Inc............................... 255,938
--------------
758,118
--------------
</TABLE>
*Non-income producing security.
See accompanying notes to financial statements.
33
<PAGE>
CRABBE HUSON REAL ESTATE INVESTMENT FUND
SCHEDULE OF INVESTMENTS
October 31, 1996
<TABLE>
<CAPTION>
SHARES OR
FACE VALUE SECURITIES DESCRIPTION MARKET VALUE
- -------------- --------------------------------------------------- --------------
COMMON STOCKS - (CONTINUED)
- -----------------------------------------------------------------------------------
<C> <S> <C>
OUTLET CENTERS - 10.5%
28,200 Horizon Group, Inc................................. $ 595,725
80,500 Prime Retail, Inc.................................. 935,813
26,300 Tanger Factory Outlet Center....................... 637,775
--------------
2,169,313
--------------
SHOPPING CENTER - 14.8%
28,300 Bradley Real Estate................................ 470,488
12,000 Commercial Net Lease Realty........................ 165,000
8,200 Developers Diversified Realty...................... 275,725
32,750 Glimcher Realty Trust.............................. 630,437
42,000 Kranzco Realty Trust............................... 640,500
25,500 Malan Realty Investors, Inc........................ 360,187
9,500 New Plan Realty.................................... 205,437
14,000 Regency Realty Corp................................ 304,500
--------------
3,052,274
--------------
STORAGE - 2.1%
5,800 Shurgard Storage................................... 152,250
6,000 Storage Trust Realty............................... 138,750
4,000 Storage USA, Inc................................... 139,000
--------------
430,000
--------------
Total Common Stocks 18,051,267
--------------
SHORT TERM INVESTMENTS - 18.3%
- -----------------------------------------------------------------------------------
DISCOUNT NOTE - 15.5%
$ 3,200,000 Federal Home Loan Bank 5.500%** 11/01/96........... 3,200,000
--------------
INVESTMENT COMPANY - 2.8%
571,703 Seven Seas Money Market Fund 5.04%***.............. 571,704
--------------
Total Short Term Investments 3,771,704
--------------
Total Investments - 105.7% 21,822,971
(Cost $20,575,173)****
Cash - 0% 300
Other Assets and (Liabilities), Net - (5.7%) (1,174,331 )
--------------
TOTAL NET ASSETS - 100.0% $ 20,648,940
--------------
--------------
</TABLE>
** Rate reflects purchase yield to maturity.
*** Rate reflects 7 day yield as of October 31, 1996.
**** Aggregate cost for federal income tax purpose is identical.
See accompanying notes to financial statements.
*Non-income producing security.
See accompanying notes to financial statements.
34
<PAGE>
CRABBE HUSON OREGON TAX-FREE FUND(1)
INVESTMENT OBJECTIVE: PROVIDE CAPITAL PRESERVATION AND A HIGH LEVEL OF CURRENT
INCOME BY INVESTING AT LEAST 80% OF ITS ASSETS IN TAX-EXEMPT MUNICIPAL BONDS
ISSUED BY THE STATE OF OREGON AND ITS POLITICAL SUBDIVISIONS. TYPICALLY, THE
ONLY TAXABLE INCOME EARNED BY THE FUND IS THROUGH OVERNIGHT INTEREST ON
TEMPORARY CASH. SHARES OF THE FUND ARE AVAILABLE ONLY TO RESIDENTS OF THE STATE
OF OREGON.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN
THE OREGON TAX-FREE FUND AND THE LEHMAN BROTHERS
7-YEAR MUNICIPAL BOND INDEX
(RESULTS ARE FOR FISCAL YEARS ENDING OCTOBER 31)
<S> <C> <C> <C> <C> <C> <C> <C>
Begin 1984 1985 1986 1987 1988 1989
OR Tax-Free $10,000 $10,150 $11,452 $14,018 $13,744 $15,396 $16,423
Lehman Bros $10,000 $10,339 $12,161 $14,575 $14,515 $16,046 $17,057
Fund Inception: 10/4/84
ANNUALIZED TOTAL RETURN
1 Year: 3.43%
5 Year: 5.73%
Life of Fund: 7.97%
<CAPTION>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN
THE OREGON TAX-FREE FUND AND THE LEHMAN BROTHERS
7-YEAR MUNICIPAL BOND INDEX
(RESULTS ARE FOR FISCAL YEARS ENDING OCTOBER 31)
<S> <C> <C> <C> <C> <C> <C> <C>
1990 1991 1992 1993 1994 1995 1996
OR Tax-Free $17,409 $19,123 $20,368 $22,550 $22,085 $24,439 $25,278
Lehman Bros $18,367 $20,365 $21,989 $24,601 $23,531 $27,025 $28,565
Fund Inception: 10/4/84
ANNUALIZED TOTAL RETURN
1 Year: 3.43%
5 Year: 5.73%
Life of Fund: 7.97%
</TABLE>
HISTORICAL RESULTS ARE NOT INDICATIVE OF FUTURE RETURNS.
FUTURE RETURNS AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN
INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS
THAN THE ORIGINAL COST. THE ACCOMPANYING CHART COMPARES THE
PERFORMANCE OF THE OREGON TAX-FREE FUND WITH THE LEHMAN
BROTHERS MUNICIPAL BOND INDEX WHICH IS AN UNMANAGED,
BROAD-BASE INDEX OF BONDS; THE OREGON TAX-FREE FUND IS A
PROFESSIONALLY MANAGED MUTUAL FUND. THE INDEX PRESENTED HERE
IS NOT MANAGED, DOES NOT INCUR EXPENSES AND IS NOT AVAILABLE
FOR DIRECT INVESTMENT. HAD THE INDEX INCURRED TYPICAL
OPERATING EXPENSES, ITS PERFORMANCE WOULD HAVE BEEN LOWER.
Following a very difficult winter and modestly improving early spring, the
Oregon Tax-Free Fund rallied over the summer and into the close of the fiscal
year to return 3.43%. This number lagged the Lehman Brothers' Municipal Bond
Index return of 5.70%, but is fairly competitive due to the fund's shorter
average maturity and overall conservative nature, relative to that index.
During the late winter and early spring of this year, the fund reflected the
improving economy's impact on bonds -- at the six month mark, the Oregon Tax
Free Fund returned only 0.29%. Again, the number trailed index returns, but our
lower return is reflective of the high quality and shorter average maturity of
the portfolio's contents. Over the summer, as the economy treaded water, we
lengthened maturaties a bit to increase yield while maintaining quality and
keeping turnover low. The softening national economy translated well into
Oregon, boosting bond prices and helping the fund finish the year strongly.
The fund remains well-diversified by risk, exposure and issuers. Oregon voters
recently passed Measure 47, a property tax cap that has an outside chance of
- -------------------
(1) Shareholders may be subject to capital gains, ordinary income and
alternative minimum taxes. Consult your tax advisor.
35
<PAGE>
affecting interest payments on outstanding bonds. The impact of any default on
our portfolio would be minimized, however, over 60% of the bonds therein are
pre-funded or insured. In addition, our fund owns few bonds from the counties
that will feel the most pinch. Over the long run, the measure actually may
benefit bond investors by slowing the issue of new debt and improving values.
Looking ahead, the political scene poses little threat. The current
administration doesn't show much sign of initiating tax abatement measures, and
proposals for a flat tax have been shelved for now. The performance of the fund
will more likely be driven by interest rate movements and any minor changes in
the tax code.
A bad year in 1997 could result from a continually tightening labor supply or
sudden oil price changes, but neither seem imminent. More likely is a further
drop in export growth and deteriorating economies of export partners, both of
which would help lower global rates. Our forecast is for a generally positive
year for Oregon Tax-Free Fund investors.
36
<PAGE>
CRABBE HUSON OREGON TAX-FREE FUND
SCHEDULE OF INVESTMENTS
October 31, 1996
<TABLE>
<CAPTION>
SHARES OR
FACE VALUE SECURITIES DESCRIPTION MARKET VALUE
- -------------- --------------------------------------------------- --------------
<C> <S> <C>
FIXED INCOME SECURITIES - 98.5%
- -----------------------------------------------------------------------------------
CERTIFICATE OF PARTICIPATION BONDS - 1.0%
$ 250,000 City of Portland 6.950% 4/01/99.................... $ 265,313
--------------
INSURED BONDS - 43.1%
250,000 Clackamas County Hospital Facility Revenue 5.800% 261,875
3/01/02 (MBIA)...................................
200,000 Yamhill County School District #29J 4.800% 6/01/02 201,500
(FSA)............................................
250,000 Josephine County Oregon School District 5.750% 264,375
6/01/02 (FGIC)...................................
340,000 Hood River County Oregon School District 6.000% 365,075
6/01/03 (AMBAC)..................................
250,000 Emerald Peoples Utility District 5.450% 11/01/03 259,063
(AMBAC)..........................................
500,000 Deschutes/Jefferson County School District 5.300% 513,125
6/01/04 (MBIA)...................................
260,000 Hood River County Oregon School District 6.000% 279,175
6/01/04 (AMBAC)..................................
300,000 Jefferson County School District #509J 6.500% 330,750
6/15/04 (FSA)....................................
400,000 University of Puerto Rico Services 5.100% 6/01/05 408,000
(MBIA)...........................................
350,000 Portland Oregon Sewer System 5.750% 10/01/05 370,125
(FGIC)...........................................
500,000 Washington County Sewer System 5.800% 10/01/05 529,375
(AMBAC)..........................................
125,000 Marion County Oregon School District 6.000% 134,531
11/01/05 (FGIC)..................................
1,015,000 Crook County Oregon School District 4.700% 2/01/06 975,669
(FSA)............................................
435,000 Jefferson County Oregon School District 5.400% 444,244
6/15/06 (FSA)....................................
400,000 Oregon State Facility - Series A 6.100% 9/01/06 424,000
(AMBAC)..........................................
350,000 Washington County Sewer System 5.900% 10/01/06 370,562
(AMBAC)..........................................
940,000 McMinnville Sewer System 4.700% 2/01/07 (FGIC)..... 909,450
335,000 Jackson County Oregon School District 5.200% 336,256
6/01/07 (FSA)....................................
450,000 Josephine County Oregon School District 5.750% 473,062
6/01/07 (FGIC)...................................
1,000,000 Salem Keizer School District #24-J 5.500% 6/01/07 1,023,750
(FGIC)...........................................
1,100,000 Multnomah County School District 5.600% 12/01/07 1,145,375
(FGIC)...........................................
</TABLE>
See accompanying notes to financial statements.
37
<PAGE>
CRABBE HUSON OREGON TAX-FREE FUND
SCHEDULE OF INVESTMENTS
October 31, 1996
<TABLE>
<CAPTION>
SHARES OR
FACE VALUE SECURITIES DESCRIPTION MARKET VALUE
- -------------- --------------------------------------------------- --------------
<C> <S> <C>
FIXED INCOME SECURITIES - (CONTINUED)
- -----------------------------------------------------------------------------------
INSURED BONDS - (CONTINUED)
$ 160,000 Marion County Oregon School District 4.850% 6/01/08 $ 154,600
(AMBAC)..........................................
135,000 Bend County Library 5.375% 6/01/11 (AMBAC)......... 134,831
100,000 Washington County School District 6.100% 6/01/12 105,250
(FSA)............................................
350,000 Portland Oregon Sewer System 6.000% 10/01/12 365,312
(FGIC)...........................................
500,000 McMinnville Sewer System 5.000% 2/01/14 (FGIC)..... 473,750
--------------
11,253,080
--------------
STATE OF OREGON
GENERAL OBLIGATION - 9.4%
40,000 State of Oregon G.O. 7.700% 3/01/02................ 41,180
100,000 State of Oregon G.O. 9.000% 4/01/03................ 123,000
205,000 State of Oregon G.O. 8.200% 7/01/04................ 248,050
150,000 State of Oregon G.O. 7.200% 7/01/04................ 172,875
110,000 State of Oregon G.O. 6.000% 8/01/04................ 118,525
200,000 State of Oregon G.O. 9.000% 10/01/04............... 225,000
355,000 State of Oregon G.O. 6.750% 5/01/05................ 400,707
250,000 State of Oregon G.O. (Veterans) 7.250% 7/01/06..... 293,125
200,000 State of Oregon G.O. 7.250% 1/01/07................ 235,000
200,000 State of Oregon G.O. (Veterans) 8.250% 1/01/07..... 249,750
100,000 State of Oregon G.O. (Alt Energy) 6.400% 1/01/08... 104,000
180,000 State of Oregon G.O. 9.200% 4/01/08................ 241,875
--------------
2,453,087
--------------
PRE-REFUNDED BONDS* - 2.2%
250,000 Oregon State Revenue - Series B 6.250% 1/01/08..... 270,938
185,000 Oregon Economic Development Dept-Series B 6.350% 201,188
1/01/13..........................................
100,000 Oregon State Department General Services 7.200% 110,125
1/15/15..........................................
--------------
582,251
--------------
REVENUE BONDS - 5.1%
545,000 Oregon State Light Rail 7.000% 6/01/04............. 611,762
220,000 Portland Oregon Sewer System Revenue 5.550% 231,000
6/01/04..........................................
100,000 Portland Oregon Sewer System Revenue 5.150% 99,875
3/01/08..........................................
160,000 Portland Oregon Building Service 4.750% 4/01/08.... 154,400
100,000 Portland Oregon Sewer System Revenue 5.100% 99,875
8/01/08..........................................
150,000 Metro Oregon Regional Center 5.000% 8/01/10........ 140,625
--------------
1,337,537
--------------
</TABLE>
*Dates reflect pre-refunded dates.
See accompanying notes to financial statements.
38
<PAGE>
CRABBE HUSON OREGON TAX-FREE FUND
SCHEDULE OF INVESTMENTS
October 31, 1996
<TABLE>
<CAPTION>
SHARES OR
FACE VALUE SECURITIES DESCRIPTION MARKET VALUE
- -------------- --------------------------------------------------- --------------
FIXED INCOME SECURITIES - (CONTINUED)
- -----------------------------------------------------------------------------------
<C> <S> <C>
OTHER BONDS
GENERAL OBLIGATION - 14.6%
$ 330,000 Puerto Rico Commonwealth G.O. 7.125% 7/01/02....... $ 342,375
200,000 Multnomah County Oregon School District 4.250% 193,500
6/01/03..........................................
210,000 Washington & Clackamas School District 5.250% 214,200
6/01/03..........................................
300,000 Deschutes G.O. School District #1 5.800% 2/01/04... 315,000
15,000 Washington & Clackamas School District 5.000% 14,850
1/01/05..........................................
410,000 Washington & Clackamas School District 5.250% 414,100
6/01/05..........................................
200,000 Clackamas Community College 5.100% 12/01/05........ 201,500
135,000 Portland Oregon Community College 5.800% 7/01/06... 140,231
1,000,000 Tri-Met Light Rail 5.900% 7/01/06.................. 1,041,250
300,000 Salem Oregon - Series A 5.875% 1/01/07............. 309,000
400,000 Metro Oregon Open Spaces Program 4.900% 9/01/07.... 389,500
240,000 Lane County Area Education District 4.850% 234,900
6/01/08..........................................
--------------
3,810,406
--------------
REVENUE BONDS - 9.9%
335,000 Central Lincoln PUD 6.500% 1/01/02................. 360,125
600,000 Clackamas County Hospital (Sisters of Providence) 646,500
6.200% 10/01/02..................................
350,000 City of Portland (Urban Renewal) 5.700% 6/01/04.... 366,188
435,000 Multnomah County School District 5.000% 3/01/07.... 429,562
765,000 Salem Educational Facility (Revenue) 6.000% 796,556
4/01/10..........................................
--------------
2,598,931
--------------
PRE-REFUNDED BONDS* - 13.2%
175,000 Clackamas & Washington County School District #23 175,656
4.750% 06/01/02..................................
250,000 Clackamas & Washington County School District #003 269,687
7.200% 10/01/05..................................
200,000 Clackamas & Washington County School District #003 216,000
7.250% 10/01/09..................................
310,000 Emerald Peoples Utility District 6.300% 11/01/01... 334,413
400,000 Metropolitan Service District 7.000% 7/01/01....... 437,500
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% 132,344
10/01/05.........................................
328,000 Deschutes County (St. Charles Medical Center) 351,780
6.750% 1/01/06...................................
150,000 Marion & Polk County Oregon School District 4.750% 143,625
10/01/06.........................................
270,000 Port of Morrow (Pollution Control) 6.375% 293,288
4/01/08..........................................
</TABLE>
*Dates reflect pre-refunded dates.
See accompanying notes to financial statements.
39
<PAGE>
CRABBE HUSON OREGON TAX-FREE FUND
SCHEDULE OF INVESTMENTS
October 31, 1996
<TABLE>
<CAPTION>
SHARES OR
FACE VALUE SECURITIES DESCRIPTION MARKET VALUE
- -------------- --------------------------------------------------- --------------
FIXED INCOME SECURITIES - (CONTINUED)
- -----------------------------------------------------------------------------------
<C> <S> <C>
PRE-REFUNDED BONDS* - (CONTINUED)
$ 225,000 Marion & Polk County School District #24-J 6.000% $ 241,594
10/01/10.........................................
270,000 Metropolitan Service District 6.600% 7/01/11....... 290,925
--------------
3,428,374
--------------
Total Fixed Income Securities 25,728,979
--------------
SHORT TERM INVESTMENT - 0.0%
- -----------------------------------------------------------------------------------
INVESTMENT COMPANY - 0.0%
7,391 DreyfusTax-Exempt Cash Management Fund 3.400%**.... 7,391
--------------
Total Investments - 98.5% 25,736,370
(Cost $24,811,193)***
Other Assets and (Liabilities), Net - 1.5% 398,651
--------------
TOTAL NET ASSETS - 100.0% $ 26,135,021
--------------
--------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
PORTFOLIO ALLOCATION TABLE:
- -------------------------------------------------------------
Education.................................................... 38.3%
Refunding Bonds.............................................. 19.2
Sewer & Water................................................ 11.4
Transportation............................................... 6.4
Health & Hospital............................................ 3.8
Public Improvements.......................................... 4.2
Electric Utility............................................. 1.3
Miscellaneous................................................ 13.9
Total Investments............................................ 98.5%
</TABLE>
AMBAC - American Municipal Bond Assurance Corp.
FGIC - Financial Guaranty Insurance Corp.
FSA - Financial Security Assurance
G.O. - General Obligation
MBIA - Municipal Bond Insurance Assoc.
PUD - Public Utility District
* Dates reflect pre-refunded dates.
** Rate reflects 7 day yield as of October 31, 1996.
*** Aggregate cost for federal income tax purpose is identical.
See accompanying notes to financial statements.
40
<PAGE>
CRABBE HUSON INCOME FUND
INVESTMENT OBJECTIVE: PROVIDE CAPITAL PRESERVATION AND A HIGH LEVEL OF CURRENT
INCOME THROUGH A DIVERSIFIED PORTFOLIO OF FIXED INCOME SECURITIES, INCLUDING
CONVERTIBLE BONDS AND DEBENTURES.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
COMPARISON OF CHANGE IN VALUE OF $10,000
INVESTMENT IN THE INCOME FUND AND THE LEHMAN
BROTHERS GOVT/CORP BOND INDEX
(RESULTS ARE FOR FISCAL YEARS ENDING OCTOBER 31)
<S> <C> <C> <C> <C> <C> <C> <C>
Begin 1989 1990 1991 1992 1993 1994
Income $10,000 $10,772 $11,249 $12,769 $14,013 $15,096 $14,687
Lehman Bros $10,000 $11,156 $11,763 $13,578 $15,006 $17,052 $16,260
Fund Inception: 1/31/89
ANNUALIZED TOTAL RETURN
1 Year: 4.94%
5 Year: 6.19%
Life of Fund: 7.28%
<CAPTION>
COMPARISON OF CHANGE IN VALUE OF $10,000
INVESTMENT IN THE INCOME FUND AND THE LEHMAN
BROTHERS GOVT/CORP BOND INDEX
(RESULTS ARE FOR FISCAL YEARS ENDING OCTOBER 31)
<S> <C> <C>
1995 1996
Income $16,437 $17,249
Lehman Bros $18,888 $19,906
Fund Inception: 1/31/89
ANNUALIZED TOTAL RETURN
1 Year: 4.94%
5 Year: 6.19%
Life of Fund: 7.28%
</TABLE>
HISTORICAL RESULTS ARE NOT INDICATIVE OF FUTURE RETURNS.
FUTURE RETURNS AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN
INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS
THAN THE ORIGINAL COST. THE ACCOMPANYING CHART COMPARES THE
PERFORMANCE OF THE INCOME FUND WITH THE LEHMAN BROTHERS
GOVERNMENT/CORPORATE BOND INDEX WHICH IS AN
UNMANAGED,BROAD-BASE INDEX OF BONDS; THE INCOME FUND IS A
PROFESSIONALLY MANAGED MUTUAL FUND. THE INDEX PRESENTED HERE
IS NOT MANAGED, DOES NOT INCUR EXPENSES AND IS NOT AVAILABLE
FOR DIRECT INVESTMENT. HAD THE INDEX INCURRED TYPICAL
OPERATING EXPENSES, ITS PERFORMANCE WOULD HAVE BEEN LOWER.
For the 1996 fiscal year, the Income Fund posted a healthy 4.94% return, lagging
only slightly behind the Lehman Brothers Government/Corporate Bond Index return
of 5.39%. The fund's ability to invest in a wide latitude of debt instruments
contributed to its competitive return for the year.
As 1996 opened, yields for 30-year treasury bonds jumped from 6.0% to 6.9%,
settling at the higher number around the end of April. Rapid job growth, low
unemployment rates and a strong first-quarter gross domestic product (GDP)
caused investors to shift their expectations from one of economic pessimism to a
rebound. The result pulled the rug out from under bond prices. After the first
six months of the fiscal year, the fund had returned -0.10%, essentially
parallel to the 0.04% posted by the index. The summer offered little relief,
with long bond rates edging above 7.0% in August.
Bond investors found relief when the economy finally cooled in September. We
moved to add yield with additional corporate and mortgage-backed bonds and
lessened exposure to governments. In addition, when rates fell, we extended the
average portfolio maturity a bit for extra performance. None of these actions,
however, were taken at the expense of the portfolio's inherent safety, as 80-90%
of the portfolio was kept in investment grade bonds.
Looking forward, we don't plan any significant moves until we see strengthening
in exports, employment and manufacturing. As contrarians, we may miss the market
turn, but we also will avoid the false signals that can cause returns to
whip-saw unpredictably. We won't follow the market lock-step, but neither will
we be left behind when opportunities develop. We likely will be present for the
bulk of any significant market movements.
41
<PAGE>
CRABBE HUSON INCOME FUND
SCHEDULE OF INVESTMENTS
October 31, 1996
<TABLE>
<CAPTION>
SHARES OR
FACE VALUE SECURITIES DESCRIPTION MARKET VALUE
- -------------- --------------------------------------------------- --------------
<C> <S> <C>
FIXED INCOME SECURITIES - 98.5%
- -----------------------------------------------------------------------------------
AGENCIES - 19.0%
$ 320,000 International Bank For Reconstruction & Development
Floater 6.170%(a) 8/7/97......................... $ 306,125
300,000 Federal Home Loan Mortgage Corp Principal Only
Strips (Amortized Yield to Maturity 6.112%)
11/15/99......................................... 249,852
100,000 Tennessee Valley Authority 6.125% 7/15/03.......... 98,000
200,000 Federal National Mortgage Association 5.875%
2/02/06.......................................... 190,068
50,000 Interamerican Development Bank 6.125% 3/08/06...... 48,375
--------------
892,420
--------------
CORPORATE BONDS - 40.0%
100,000 Baxter International 7.500% 5/01/97................ 100,747
100,000 GMAC 8.000% 10/01/99............................... 104,375
100,000 Upjohn Company 5.875% 4/15/00...................... 98,500
100,000 Pepsico, Inc. 5.875% 6/01/00....................... 98,750
100,000 American Express Credit 6.500% 8/01/00............. 100,125
100,000 WMX Technologies 6.700% 5/01/01.................... 100,625
100,000 IBM Corp 7.250% 11/01/02........................... 103,625
100,000 JP Morgan & Company 7.625% 9/15/04................. 105,375
100,000 Pacific Bell 6.250% 3/01/05........................ 96,125
100,000 Anheuser Busch 7.000% 9/01/05...................... 100,750
100,000 Bear Stearns Company 6.875% 10/01/05............... 98,750
100,000 Snap-on, Inc. 6.625% 10/01/05...................... 99,500
100,000 Walt Disney Company 6.750% 3/30/06................. 99,500
100,000 Sysco Corp 7.000% 5/01/06.......................... 101,625
50,000 Teleport Communications 9.875% 7/01/06............. 50,875
100,000 Wal-Mart Stores 8.000% 9/15/06..................... 108,375
100,000 Eli Lilly 8.375% 12/01/06.......................... 111,750
100,000 AT&T Corp 7.750% 3/01/07........................... 106,000
100,000 GTE South 6.000% 2/15/08........................... 92,375
--------------
1,877,747
--------------
U.S. GOVERNMENT BONDS - 13.5%
440,000 U.S. Treasury Note 6.000% 2/15/26.................. 401,412
230,000 U.S. Treasury Note 6.750% 8/15/26.................. 232,486
--------------
633,898
--------------
INSURED BONDS - 2.0%
90,000 City of Lincoln, Oregon 5.800% 6/01/97 (AMBAC)..... 90,117
--------------
</TABLE>
(a)Represents a structured note that pays interest at a rate that increases
(decreases) by a multiple of the peseta/deutchemark exchange rate.
See accompanying notes to financial statements.
42
<PAGE>
CRABBE HUSON INCOME FUND
SCHEDULE OF INVESTMENTS
October 31, 1996
<TABLE>
<CAPTION>
SHARES OR
FACE VALUE SECURITIES DESCRIPTION MARKET VALUE
- -------------- --------------------------------------------------- --------------
FIXED INCOME SECURITIES - (CONTINUED)
- -----------------------------------------------------------------------------------
<C> <S> <C>
MORTGAGE PASS-THROUGH SECURITIES - 24.0%
$ 77,693 Federal National Mortgage Association Pool #30333
9.250% 9/01/16................................... $ 82,211
118,055 Federal Home Loan Mortgage Corp Pool #302029 9.500%
10/01/16......................................... 125,709
145,409 Federal Home Loan Mortgage Corp Pool #30303 9.000%
4/01/17.......................................... 152,647
238,234 Federal Home Loan Mortgage Corp Pool #301538
10.000% 7/01/17.................................. 257,329
137,472 Federal Home Loan Mortgage Corp Pool #C80344 7.500%
09/01/25......................................... 137,941
145,343 Federal Home Loan Mortgage Corp Pool #D65456 7.000%
11/01/25......................................... 142,970
223,471 Federal Home Loan Mortgage Corp Pool #C80409 8.000%
06/01/26......................................... 228,426
--------------
1,127,233
--------------
Total Fixed Income Securities 4,621,415
--------------
SHORT TERM INVESTMENT - 0.2%
- -----------------------------------------------------------------------------------
INVESTMENT COMPANY - 0.2%
10,462 Seven Seas U.S. Government Money Market Fund
4.990%***........................................ 10,462
--------------
Total Investments - 98.7% 4,631,877
(Cost $4,519,733)****
Other Assets and (Liabilities), Net - 1.3% 61,629
--------------
TOTAL NET ASSETS - 100.0% $ 4,693,506
--------------
--------------
</TABLE>
*** Rate reflects 7 day yield as of October 31, 1996.
**** Aggregate cost for federal income tax purpose is $4,547,392.
See accompanying notes to financial statements.
AMBAC - American Municipal Bond Assurance Corp.
43
<PAGE>
CRABBE HUSON U.S. GOVERNMENT INCOME FUND(1)
INVESTMENT OBJECTIVE: PROVIDE A HIGH LEVEL OF CURRENT INCOME, CONSISTENT WITH
CAPITAL PRESERVATION, THROUGH A PORTFOLIO OF SHORT- AND INTERMEDIATE-TERM DEBT
OBLIGATIONS OF THE UNITED STATES GOVERNMENT AND ITS AGENCIES OR
INSTRUMENTALITIES. AT LEAST 75% OF THE FUND'S ASSETS MUST HAVE MATURATIES OF
FIVE YEARS OR LESS.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
COMPARISON OF CHANGE IN VALUE OF $10,000
INVESTMENT IN THE U.S. GOVERNMENT INCOME FUND AND
THE RYAN LABS 3-YEAR TREASURY INDEX
(RESULTS ARE FOR FISCAL YEARS ENDING OCTOBER 31)
<S> <C> <C> <C> <C> <C> <C> <C>
Begin 1989 1990 1991 1992 1993 1994
U.S. Govt. $10,000 $10,825 $11,518 $12,804 $13,918 $14,852 $14,588
Ryan Lab $10,000 $10,966 $11,830 $13,336 $14,611 $15,719 $15,576
Fund Inception: 1/31/89
ANNUALIZED TOTAL RETURN
1 Year: 4.55%
5 Year: 5.38%
Life of Fund: 6.79%
<CAPTION>
COMPARISON OF CHANGE IN VALUE OF $10,000
INVESTMENT IN THE U.S. GOVERNMENT INCOME FUND AND
THE RYAN LABS 3-YEAR TREASURY INDEX
(RESULTS ARE FOR FISCAL YEARS ENDING OCTOBER 31)
<S> <C> <C>
1995 1996
U.S. Govt. $15,918 $16,643
Ryan Lab $17,283 $18,245
Fund Inception: 1/31/89
ANNUALIZED TOTAL RETURN
1 Year: 4.55%
5 Year: 5.38%
Life of Fund: 6.79%
</TABLE>
HISTORICAL RESULTS ARE NOT INDICATIVE OF FUTURE RETURNS.
FUTURE RETURNS AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN
INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS
THAN THE ORIGINAL COST. THE ACCOMPANYING CHART COMPARES THE
PERFORMANCE OF THE U.S. GOVERNMENT INCOME FUND WITH THE RYAN
LABS THREE-YEAR TREASURY INDEX WHICH IS AN UNMANAGED,
BROAD-BASE INDEX OF BONDS; THE U.S. GOVERNMENT INCOME FUND IS
A PROFESSIONALLY MANAGED MUTUAL FUND. THE INDEX PRESENTED HERE
IS NOT MANAGED, DOES NOT INCUR EXPENSES AND IS NOT AVAILABLE
FOR DIRECT INVESTMENT. HAD THE INDEX INCURRED TYPICAL
OPERATING EXPENSES, ITS PERFORMANCE WOULD HAVE BEEN LOWER.
Congruent with the results of other bond funds, the U.S. Government Income
Fund's earnings were off at the start of the fiscal year, thanks to the bond
market's volatility. At the six-month mark, the fund had returned 1.14% versus
the Ryan Labs Three-Year Treasury Index return of a 1.50%.
Intermediate-term bonds weren't immune from market gyrations. At the end of the
1995 fiscal year, rates on three-year Treasuries stood at 5.7%, and by the
midpoint of fiscal year 1996, yields had been bumped to 6.2%. Against this
backdrop, the fund held its own by lengthening average maturities. By October
31, the fund had moved up to keep pace with its counterparts and finished the
year with a 4.55% return. Fiscal year return for the Ryan Labs Index was 5.57%.
In the coming months, we look to add yield by modestly extending maturities in
federal agency notes. Short-term interest rate fluctuation will continue to
influence the fund's performance, but we don't anticipate a great deal of
volatility in that sector into 1997. If overvalued stock market sectors continue
at their fever pitch, investors may increase exposure to government bonds for
added capital appreciation. The fund remains a viable option for investors who
need current income and have a limited tolerance for risk.
- -------------------
(1) An investment in the fund is neither insured nor guaranteed by the U.S.
Government.
44
<PAGE>
CRABBE HUSON U.S. GOVERNMENT INCOME FUND
SCHEDULE OF INVESTMENTS
October 31, 1996
<TABLE>
<CAPTION>
SHARES OR
FACE VALUE SECURITIES DESCRIPTION MARKET VALUE
- -------------- --------------------------------------------------- --------------
<C> <S> <C>
FIXED INCOME SECURITIES - 98.3%
- -----------------------------------------------------------------------------------
AGENCIES - 10.8%
$ 255,000 International Bank For Reconstruction & Development
Floater 5.390%(a) 08/07/97....................... $ 243,943
150,000 Federal National Mortgage Association 4.950%
9/30/98.......................................... 147,738
120,000 Federal National Mortgage Association 6.080%
9/25/00.......................................... 119,497
100,000 Federal National Mortgage Association 8.250%
12/18/00......................................... 107,345
50,000 Federal Home Loan Bank 7.590% 3/10/05.............. 53,138
50,000 Federal National Mortgage Association 7.375%
3/28/05.......................................... 52,469
200,000 Federal National Mortgage Association 5.875%
2/02/06.......................................... 190,068
--------------
914,198
--------------
U.S. GOVERNMENT BONDS - 87.5%
4,645,000 U. S. Treasury Note 5.000% 1/31/98................. 4,610,209
30,000 U. S. Treasury Note 5.125% 2/28/98................. 29,799
125,000 U. S. Treasury Note 6.250% 7/31/98................. 126,095
1,000,000 U. S. Treasury Note 6.125% 8/31/98................. 1,006,670
500,000 U. S. Treasury Note 6.000% 9/30/98................. 502,375
585,000 U. S. Treasury Note 6.250% 8/31/00................. 589,276
100,000 U. S. Treasury Note 5.625% 11/30/00................ 98,519
500,000 U. S. Treasury Note 5.625% 2/28/01................. 491,845
--------------
7,454,788
--------------
Total Fixed Income Securities 8,368,986
--------------
SHORT TERM INVESTMENT - 0.5%
- -----------------------------------------------------------------------------------
REPURCHASE AGREEMENT - 0.5%
45,569 State Street Bank and Trust Company** 4.00%
11/01/96......................................... 45,569
--------------
Total Investments - 98.8% 8,414,555
--------------
(Cost $8,407,586)***
Other Assets and (Liabilities), Net - 1.2% 102,501
--------------
TOTAL NET ASSETS - 100.0% $ 8,517,056
--------------
--------------
</TABLE>
(a) Represents a structured note that pays interest at a rate that
increases (decreases) by a multiple of the peseta/deutchemark exchange
rate.
** The repurchase agreement, dated 10/31/96, $45,574 due 11/1/96, is
collateralized by a $46,000 U.S. Treasury Note, 7.500%, maturing
12/31/96, with a market value of $47,304.
*** Aggregate cost for federal income tax purpose is $8,422,053.
See accompanying notes to financial statements.
45
<PAGE>
CRABBE HUSON U.S. GOVERNMENT MONEY MARKET FUND(1),(2)
INVESTMENT OBJECTIVE: PROVIDE CAPITAL PRESERVATION AND A HIGH LEVEL OF CURRENT
INCOME WHILE MAINTAINING SHAREHOLDER LIQUIDITY 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. THE AVERAGE MATURITY OF THE FUND CANNOT EXCEED 90
DAYS.
In a market that frequently undergoes rapid changes, the U.S. Government Money
Market Fund performed very well in fiscal 1996, returning 4.81%. In general, the
fund largely was not bothered by the greater economic developments that impacted
so heavily on other funds.
The Federal Reserve (Fed) hit the market with a one-two punch early in the
fiscal year, reducing short-term rates both in December and January. As the
economy picked up steam early in 1996, there was speculation that the Fed might
try to check inflation by raising rates a notch. However, in what may have been
an election year strategy, the board elected in July to maintain the status quo,
leaving short-term U.S. Treasuries to tread water for a while.
The fund delivered probably the best risk-adjusted performance for the year
compared to our other income funds, and the outlook for the money market is
cautiously optimistic. Coming months could see further sideways trading as
investors search for extra yield, and lower rates may be in the forecast as the
economy begins to slow. The fund's competitive returns make it a good option for
investors seeking money market returns while maintaining capital preservation.
- -------------------
(1) An investment in the fund is neither insured nor guaranteed by the U.S.
Government.
(2) Although the Fund intends to maintain a constant $1.00 per share net asset
value, there can be no assurance that the fund will be able to do so.
46
<PAGE>
CRABBE HUSON U.S. GOVERNMENT MONEY MARKET FUND
SCHEDULE OF INVESTMENTS
October 31, 1996
<TABLE>
<CAPTION>
SHARES OR
FACE VALUE SECURITIES DESCRIPTION MARKET VALUE
- -------------- --------------------------------------------------- --------------
<C> <S> <C>
FIXED INCOME SECURITIES* - 99.5%
- -----------------------------------------------------------------------------------
U.S. GOVERNMENT & AGENCY - 99.5%
TREASURY BILLS - 9.3%
$ 3,950,000 5.025% 12/12/96.................................... $ 3,927,394
--------------
DISCOUNT NOTES - 90.2%
FEDERAL FARM CREDIT BANK
55,000 5.180% 11/08/96.................................... 54,945
FEDERAL HOME LOAN BANK
330,000 5.500% 11/01/96.................................... 330,000
500,000 5.240% 11/04/96.................................... 499,782
3,000,000 5.270% 11/05/96.................................... 2,998,243
480,000 5.130% 11/08/96.................................... 479,516
250,000 5.400% 11/15/96.................................... 249,475
650,000 5.190% 11/19/96.................................... 648,313
2,000,000 5.190% 11/20/96.................................... 1,994,522
1,250,000 5.350% 12/02/96.................................... 1,244,241
1,675,000 5.260% 12/03/96.................................... 1,667,168
915,000 5.430% 12/10/96.................................... 909,618
935,000 5.160% 12/12/96.................................... 929,505
530,000 5.190% 12/30/96.................................... 525,492
1,000,000 5.190% 12/31/96.................................... 991,350
1,500,000 5.240% 1/02/97..................................... 1,486,463
1,380,000 5.430% 1/07/97..................................... 1,366,054
2,000,000 5.420% 1/08/97..................................... 1,979,487
3,800,000 5.200% 1/15/97..................................... 3,758,709
2,000,000 5.200% 1/21/97..................................... 1,976,600
885,000 5.350% 1/22/97..................................... 874,215
1,595,000 5.380% 1/23/97..................................... 1,575,216
840,000 5.200% 1/27/97..................................... 829,302
340,000 5.250% 1/29/97..................................... 335,587
1,885,000 5.310% 2/21/97..................................... 1,854,171
420,000 5.200% 2/24/97..................................... 413,023
120,000 5.210% 2/25/97..................................... 117,985
310,000 5.210% 3/03/97..................................... 304,527
745,000 5.470% 3/05/97..................................... 730,963
1,715,000 5.430% 3/07/97..................................... 1,682,406
2,910,000 5.210% 3/24/97..................................... 2,849,777
710,000 5.220% 4/02/97..................................... 694,352
1,000,000 5.210% 4/15/97..................................... 976,121
110,000 5.220% 4/24/97..................................... 107,225
185,000 5.180% 4/28/97..................................... 180,262
450,000 5.380% 6/27/97..................................... 433,995
--------------
38,048,610
--------------
</TABLE>
*Rates reflect purchase yield to maturity.
See accompanying notes to financial statements.
47
<PAGE>
CRABBE HUSON U.S. GOVERNMENT MONEY MARKET FUND
SCHEDULE OF INVESTMENTS
October 31, 1996
<TABLE>
<CAPTION>
SHARES OR
FACE VALUE SECURITIES DESCRIPTION MARKET VALUE
- -------------- --------------------------------------------------- --------------
OTHER INVESTMENTS - 0.0%
- -----------------------------------------------------------------------------------
<C> <S> <C>
REPURCHASE AGREEMENT - 0.0%
$ 2,515 State Street Bank and Trust Company** 4.000%
11/1/96.......................................... $ 2,515
--------------
Total Investments - 99.5% 41,978,519
(Cost $41,978,519)***
Cash - 0.0% 407
Other Assets and (Liabilities), Net - 0.5% 191,769
--------------
TOTAL NET ASSETS - 100.0% $ 42,170,695
--------------
--------------
</TABLE>
** The repurchase agreement, dated 10/31/96, $2,515 due 11/1/96, is
collateralized by a $3,000 U.S. Treasury Note, 7.50%, maturing
12/31/96, with a market value of $3,085.
*** Aggregate cost for federal income tax purpose is identical.
See accompanying notes to financial statements.
48
<PAGE>
This page has been left blank intentionally.
49
<PAGE>
- -----------------------------------------------------------------------------
CRABBE HUSON FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
October 31, 1996
<TABLE>
<CAPTION>
THE CRABBE CRABBE HUSON
HUSON SPECIAL SMALL CAP
FUND, INC. FUND
----------------- ----------------
<S> <C> <C>
ASSETS:
Investment securities, at market (Note
5) $ 423,703,479 $ 15,877,720
Cash -- --
Deposits with brokers and custodian for
securities sold short 89,967,825 --
Receivables:
Dividends and interest 204,635 2,636
Fund shares sold 163,731 5,076,953
Investment securities sold 3,811,132 --
Proceeds from securities sold short 57,485,925 --
Organization expenses (Notes 1 & 3) 155,092 124,499
Prepaid Expenses 32,796 700
----------------- ----------------
$ 575,524,615 $ 21,082,508
----------------- ----------------
LIABILITIES:
Securities sold short, at market
(proceeds $57,485,925) 90,872,888 --
Payables:
Investment securities purchased -- 243,042
Fund shares redeemed 1,137,246 49,139
Short sales closed 1,917,294 --
Directors/Trustees Fees (Note 2) 10,154 182
Income dividend -- --
Payable to Advisor for organization
expenses -- 102,000
Accrued liabilities 547,628 18,410
----------------- ----------------
94,485,210 412,773
----------------- ----------------
NET ASSETS: $ 481,039,405 $ 20,669,735
----------------- ----------------
----------------- ----------------
NET ASSETS CONSIST OF:
Capital shares 35,099 --
Capital paid in 474,613,889 20,155,561
Undistributed (distributed in excess
of) net investment income 2,964,508 49,849
Undistributed net realized gain (loss)
on investments 10,060,152 379,409
Net unrealized appreciation
(depreciation) on investments and
short sales (Note 5) (6,634,243 ) 84,916
----------------- ----------------
$ 481,039,405 $ 20,669,735
PRIMARY CLASS
Net Assets $ 481,039,405 $ 19,155,792
Shares outstanding (Note 4) 35,099,274 1,738,616
----------------- ----------------
----------------- ----------------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE $ 13.71 $ 11.02
---------------- ---------------
---------------- ---------------
INSTITUTIONAL CLASS
Net Assets -- $ 1,513,943
Shares outstanding (Note 4) -- 137,489
---------------- ---------------
---------------- ---------------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- $ 11.01
---------------- ---------------
---------------- ---------------
INVESTMENTS, AT COST $ 396,950,759 $ 15,792,804
</TABLE>
See accompanying notes to financial statements.
50
<PAGE>
- ---------------------------------------------------------------------
<TABLE>
<CAPTION>
CRABBE HUSON
CRABBE HUSON CRABBE REAL ESTATE
ASSET ALLOCATION HUSON EQUITY INVESTMENT
FUND FUND FUND
--------------------- ---------------- ----------------
<S> <C> <C> <C>
ASSETS:
Investment securities, at market (Note
5) $ 127,702,571 $447,768,446 $ 21,822,971
Cash 178,270 2,501,906 300
Deposits with brokers and custodian for
securities sold short -- -- --
Receivables:
Dividends and interest 708,134 267,865 70,669
Fund shares sold 6,506 468,340 126,543
Investment securities sold 14,338 1,284,338 299,628
Proceeds from securities sold short -- -- --
Organization expenses (Notes 1 & 3) 61,187 183,447 84,501
Prepaid Expenses 7,516 25,432 868
--------------------- ---------------- ----------------
$ 128,678,522 $ 452,499,774 $ 22,405,480
--------------------- ---------------- ----------------
LIABILITIES:
Securities sold short, at market
(proceeds $57,485,925) -- -- --
Payables:
Investment securities purchased 912,113 10,711,235 1,728,375
Fund shares redeemed 68,747 601,507 --
Short sales closed -- -- --
Directors/Trustees Fees (Note 2) 2,247 7,539 204
Income dividend 90,519 -- 13,934
Payable to Advisor for organization
expenses -- -- --
Accrued liabilities 61,223 186,552 14,027
--------------------- ---------------- ----------------
1,134,849 11,506,833 1,756,540
--------------------- ---------------- ----------------
NET ASSETS: $ 127,543,673 $ 440,992,941 $ 20,648,940
--------------------- ---------------- ----------------
--------------------- ---------------- ----------------
NET ASSETS CONSIST OF:
Capital shares -- -- --
Capital paid in 114,075,193 372,112,763 18,245,645
Undistributed (distributed in excess
of) net investment income (44,394 ) 1,315,080 11,251
Undistributed net realized gain (loss)
on investments 6,581,429 32,864,167 1,144,246
Net unrealized appreciation
(depreciation) on investments and
short sales (Note 5) 6,931,445 34,700,931 1,247,798
--------------------- ---------------- ----------------
$ 127,543,673 $ 440,992,941 $ 20,648,940
PRIMARY CLASS
Net Assets $ 125,017,578 $ 436,578,152 $ 20,648,940
Shares outstanding (Note 4) 9,337,335 22,384,091 1,783,333
--------------------- ---------------- ----------------
--------------------- ---------------- ----------------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE $ 13.39 $ 19.50 $ 11.58
-------------------- --------------- ---------------
-------------------- --------------- ---------------
INSTITUTIONAL CLASS
Net Assets $ 2,526,095 $ 4,414,789 --
Shares outstanding (Note 4) 188,722 226,273 --
-------------------- --------------- ---------------
-------------------- --------------- ---------------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE $ 13.39 $ 19.51 --
-------------------- --------------- ---------------
-------------------- --------------- ---------------
INVESTMENTS, AT COST $ 120,771,126 $ 413,067,515 $ 20,575,173
</TABLE>
See accompanying notes to financial statements.
51
<PAGE>
- ---------------------------------------------------------------------
CRABBE HUSON FUNDS
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
October 31, 1996
<TABLE>
<CAPTION>
CRABBE HUSON CRABBE
OREGON TAX-FREE HUSON INCOME
FUND FUND
-------------------- -----------------
<S> <C> <C>
ASSETS:
Investment securities, at market (Note
5) $ 25,736,370 $ 4,631,877
Cash -- --
Receivables:
Dividends and interest 432,244 60,980
Fund shares sold 3,000 359
Investment securities sold -- 2,887
Organization expenses (Notes 1 & 3) 11,216 10,727
Prepaid Expenses 1,487 249
-------------------- -----------------
$ 26,184,317 $ 4,707,079
-------------------- -----------------
LIABILITIES:
Payables:
Fund shares redeemed 8,000 --
Directors/Trustees Fees (Note 2) 466 91
Income dividend 22,307 2,213
Accrued liabilities 18,523 11,269
-------------------- -----------------
49,296 13,573
-------------------- -----------------
NET ASSETS: $ 26,135,021 $ 4,693,506
-------------------- -----------------
-------------------- -----------------
NET ASSETS CONSIST OF:
Capital paid in 25,056,315 4,685,948
Undistributed net investment income 956 3,560
Undistributed net realized gain (loss)
on investments 152,573 (108,146 )
Net unrealized appreciation on
investments (Note 5) 925,177 112,144
-------------------- -----------------
$ 26,135,021 $ 4,693,506
PRIMARY CLASS
Shares outstanding (Note 4) 2,090,733 460,160
-------------------- -----------------
-------------------- -----------------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE $ 12.50 $ 10.20
------------------- ----------------
------------------- ----------------
INVESTMENTS, AT COST $ 24,811,193 $ 4,519,733
</TABLE>
See accompanying notes to financial statements.
52
<PAGE>
- ---------------------------------------------------------------------
<TABLE>
<CAPTION>
CRABBE HUSON
CRABBE HUSON U.S. GOVERNMENT
U.S. GOVERNMENT MONEY MARKET
INCOME FUND FUND
------------------- -------------------
<S> <C> <C>
ASSETS:
Investment securities, at market (Note
5) $ 8,414,555 $41,978,519
Cash -- 407
Receivables:
Dividends and interest 95,267 --
Fund shares sold 13,814 576,918
Investment securities sold -- --
Organization expenses (Notes 1 & 3) 10,804 28,286
Prepaid Expenses 461 2,292
------------------- -------------------
$ 8,534,901 $ 42,586,422
------------------- -------------------
LIABILITIES:
Payables:
Fund shares redeemed 200 338,008
Directors/Trustees Fees (Note 2) 136 764
Income dividend 7,267 47,335
Accrued liabilities 10,242 29,619
------------------- -------------------
17,845 415,726
------------------- -------------------
NET ASSETS: $ 8,517,056 $ 42,170,696
------------------- -------------------
------------------- -------------------
NET ASSETS CONSIST OF:
Capital paid in 8,557,342 42,170,696
Undistributed net investment income 93 --
Undistributed net realized gain (loss)
on investments (47,348 ) --
Net unrealized appreciation on
investments (Note 5) 6,969 --
------------------- -------------------
$ 8,517,056 $ 42,170,696
PRIMARY CLASS
Shares outstanding (Note 4) 798,678 42,170,696
------------------- -------------------
------------------- -------------------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE $ 10.66 $ 1.00
------------------ ------------------
------------------ ------------------
INVESTMENTS, AT COST $ 8,407,586 $ 41,978,519
</TABLE>
See accompanying notes to financial statements.
53
<PAGE>
- -----------------------------------------------------------------------------
CRABBE HUSON FUNDS
STATEMENTS OF OPERATIONS
For the year ended October 31, 1996
<TABLE>
<CAPTION>
THE CRABBE CRABBE HUSON
HUSON SPECIAL SMALL CAP
FUND, INC. FUND*
----------------- -----------------
<S> <C> <C>
INVESTMENT INCOME
Interest $10,338,955 $ 121,482
Dividends (net of foreign taxes
withheld of $0; $0; $1,238; $20,378;
and $0 respectively) 5,260,729 22,935
----------------- -----------------
15,599,684 144,417
----------------- -----------------
EXPENSES
Investment advisory fees (Note 2) 5,875,652 65,919
Transfer agent-Primary class 1,114,000 20,613
Transfer agent-Institutional class -- 887
Printing 189,000 13,800
Postage 70,019 475
Custody 399,000 13,770
Legal 47,500 1,375
Auditing 47,102 5,196
Insurance 26,443 107
Directors/Trustees fees 32,093 655
Registration fees 176,060 4,180
Amortization of organization
expenses-Primary class -- 6,821
Amortization of organization
expenses-Institutional class -- 666
Proxy Expense 348,000 --
Miscellaneous 118,736 1,199
Distribution fees-Primary class (Note
2) 1,531,618 16,262
Administration (Note 2) 254,600 2,500
Short sales dividends 22,649 --
----------------- -----------------
10,252,472 154,425
Fees waived by investment advisor
(Note 2) -- (55,021 )
Expenses reimbursed by investment
advisor (Note 2) -- --
Fees paid indirectly (Note 2) (34,032 ) (920 )
----------------- -----------------
NET EXPENSES 10,218,440 98,484
----------------- -----------------
NET INVESTMENT INCOME 5,381,244 45,933
----------------- -----------------
REALIZED AND UNREALIZED GAIN:
Net realized gain on investments 13,551,901 379,409
Net change in unrealized appreciation
or depreciation of investments and
short sales 32,571,427 84,916
----------------- -----------------
NET GAIN ON INVESTMENTS 46,123,328 464,325
----------------- -----------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 51,504,572 $ 510,258
----------------- -----------------
----------------- -----------------
</TABLE>
* For the period from February 20, 1996 (commencement of operations) to
October 31, 1996.
See accompanying notes to financial statements.
54
<PAGE>
- ---------------------------------------------------------------------
<TABLE>
<CAPTION>
CRABBE HUSON
CRABBE HUSON CRABBE REAL ESTATE
ASSET ALLOCATION HUSON EQUITY INVESTMENT
FUND FUND FUND
--------------------- ---------------- ----------------
<S> <C> <C> <C>
INVESTMENT INCOME
Interest $ 4,012,410 $ 2,236,789 $ 58,652
Dividends (net of foreign taxes
withheld of $0; $0; $1,238; $20,378;
and $0 respectively) 1,204,939 6,635,217 783,329
--------------------- ---------------- ----------------
5,217,349 8,872,006 841,981
--------------------- ---------------- ----------------
EXPENSES
Investment advisory fees (Note 2) 1,354,693 4,034,763 165,296
Transfer agent-Primary class 114,145 400,081 29,275
Transfer agent-Institutional class 161 1,169 --
Printing 26,900 81,900 2,700
Postage 7,000 20,500 1,250
Custody 74,350 170,650 17,281
Legal 8,500 27,650 1,650
Auditing 13,332 38,572 4,520
Insurance 4,200 12,930 516
Directors/Trustees fees 8,795 21,995 1,615
Registration fees 35,741 124,858 18,380
Amortization of organization
expenses-Primary class 4,188 14,787 18,550
Amortization of organization
expenses-Institutional class 121 878 --
Proxy Expense -- -- --
Miscellaneous 22,422 54,878 3,634
Distribution fees-Primary class (Note
2) 354,270 1,141,724 41,318
Administration (Note 2) 48,500 156,985 5,500
Short sales dividends -- -- --
--------------------- ---------------- ----------------
2,077,318 6,304,320 311,485
Fees waived by investment advisor
(Note 2) (410 ) (2,054 ) (63,060 )
Expenses reimbursed by investment
advisor (Note 2) -- -- --
Fees paid indirectly (Note 2) (10,601 ) (51,160 ) (481 )
--------------------- ---------------- ----------------
NET EXPENSES 2,066,307 6,251,106 247,944
--------------------- ---------------- ----------------
NET INVESTMENT INCOME 3,151,042 2,620,900 594,037
--------------------- ---------------- ----------------
REALIZED AND UNREALIZED GAIN:
Net realized gain on investments 6,464,101 33,226,713 1,149,515
Net change in unrealized appreciation
or depreciation of investments and
short sales 2,105,152 19,590,608 2,224,902
--------------------- ---------------- ----------------
NET GAIN ON INVESTMENTS 8,569,253 52,817,321 3,374,417
--------------------- ---------------- ----------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 11,720,295 $ 55,438,221 $ 3,968,454
--------------------- ---------------- ----------------
--------------------- ---------------- ----------------
</TABLE>
* For the period from February 20, 1996 (commencement of operations) to
October 31, 1996.
See accompanying notes to financial statements.
55
<PAGE>
- ---------------------------------------------------------------------
CRABBE HUSON FUNDS
STATEMENTS OF OPERATIONS (CONTINUED)
For the year ended October 31, 1996
<TABLE>
<CAPTION>
CRABBE HUSON CRABBE
OREGON TAX-FREE HUSON INCOME
FUND FUND
-------------------- -----------------
<S> <C> <C>
INVESTMENT INCOME
Interest $1,475,996 $ 366,020
-------------------- -----------------
EXPENSES
Investment advisory fees (Note 2) 139,050 44,954
Transfer agent 30,154 25,000
Printing 5,300 2,500
Postage 1,600 600
Custody 27,796 15,800
Legal 320 425
Auditing 5,090 3,381
Insurance 906 274
Directors/Trustees fees 2,325 581
Registration fees 5 24,600
Amortization of organization expenses 956 513
Miscellaneous 5,384 1,682
Distribution fees (Note 2) 59,619 14,984
Administration (Note 2) 9,500 2,100
-------------------- -----------------
288,005 137,394
Fees waived by investment advisor
(Note 2) (15,468 ) (44,954 )
Expenses reimbursed by investment
advisor (Note 2) -- (44,490 )
Fees paid indirectly (Note 2) -- --
-------------------- -----------------
NET EXPENSES 272,537 47,950
-------------------- -----------------
NET INVESTMENT INCOME 1,203,459 318,070
-------------------- -----------------
REALIZED AND UNREALIZED GAIN:
Net realized gain on investments 152,573 73,271
Net change in unrealized appreciation
or depreciation of investments (440,577 ) (111,166 )
-------------------- -----------------
NET GAIN (LOSS) ON INVESTMENTS (288,004 ) (37,895 )
-------------------- -----------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 915,455 $ 280,175
-------------------- -----------------
-------------------- -----------------
</TABLE>
See accompanying notes to financial statements.
56
<PAGE>
- ---------------------------------------------------------------------
<TABLE>
<CAPTION>
CRABBE HUSON
CRABBE HUSON U.S. GOVERNMENT
U.S. GOVERNMENT MONEY MARKET
INCOME FUND FUND
------------------- -------------------
<S> <C> <C>
INVESTMENT INCOME
Interest $ 423,665 $ 2,544,629
------------------- -------------------
EXPENSES
Investment advisory fees (Note 2) 40,823 234,178
Transfer agent 24,000 68,800
Printing 2,150 11,430
Postage 510 3,650
Custody 12,100 27,706
Legal 500 2,825
Auditing 3,673 6,437
Insurance 340 1,450
Directors/Trustees fees 694 3,075
Registration fees 24,608 35,060
Amortization of organization expenses 516 1,970
Miscellaneous 1,978 8,608
Distribution fees (Note 2) 18,315 76,367
Administration (Note 2) 2,785 16,000
------------------- -------------------
132,992 497,556
Fees waived by investment advisor
(Note 2) (40,823 ) (169,200 )
Expenses reimbursed by investment
advisor (Note 2) (30,935 ) --
Fees paid indirectly (Note 2) -- (506 )
------------------- -------------------
NET EXPENSES 61,234 327,850
------------------- -------------------
NET INVESTMENT INCOME 362,431 2,216,779
------------------- -------------------
REALIZED AND UNREALIZED GAIN:
Net realized gain on investments 99,961 --
Net change in unrealized appreciation
or depreciation of investments (96,510 ) --
------------------- -------------------
NET GAIN (LOSS) ON INVESTMENTS 3,451 0
------------------- -------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 365,882 $ 2,216,779
------------------- -------------------
------------------- -------------------
</TABLE>
See accompanying notes to financial statements.
57
<PAGE>
- -----------------------------------------------------------------------------
CRABBE HUSON FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
THE CRABBE HUSON
SPECIAL FUND, INC.
----------------------------------------
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
------------------- -------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
Net investment income $ 5,381,244 $ 13,282,908
Net realized gain (loss) on
investments 13,551,901 31,170,355
Net change in unrealized appreciation
or depreciation of investments and
short sales 32,571,427 (51,415,104)
------------------- -------------------
Increase (decrease) in net assets
resulting from operations 51,504,572 (6,961,841 )
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income--Primary
shares (5,381,244 ) (1,107,597 )
From net investment
income--Institutional shares -- --
In excess of net investment income (7,928,234 ) --
From net realized gain on investments (13,551,901 ) (11,710,943 )
In excess of net realized gain on
investments (22,612,405 ) --
CAPITAL SHARE TRANSACTIONS, NET (Note 4) (399,551,217 ) 578,529,362
------------------- -------------------
Total increase (decrease) in net
assets (397,520,429 ) 558,748,981
FUND NET ASSETS, BEGINNING OF PERIOD 878,559,834 319,810,853
------------------- -------------------
FUND NET ASSETS, END OF PERIOD** $ 481,039,405 $ 878,559,834
---------------- ----------------
---------------- ----------------
**Including undistributed (distribution
in excess of) net investment income
of: $ 2,964,508 $ 11,747,830
---------------- ----------------
---------------- ----------------
</TABLE>
<TABLE>
<CAPTION>
CRABBE HUSON
EQUITY FUND
----------------------------------------
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
------------------- -------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
Net investment income $ 2,620,900 $ 3,567,282
Net realized gain (loss) on
investments 33,226,713 19,596,449
Net change in unrealized appreciation
or depreciation of investments 19,590,608 9,278,013
------------------- -------------------
Increase (decrease) in net assets
resulting from operations 55,438,221 32,441,744
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (2,620,900 ) (1,413,080 )
In excess of net investment income (1,071,179 ) --
From net realized gain on investments (20,585,296 ) (2,376,723 )
CAPITAL SHARE TRANSACTIONS, NET (Note 4) 22,648,015 205,426,843
------------------- -------------------
Total increase (decrease) in net
assets 53,808,861 234,078,784
FUND NET ASSETS, BEGINNING OF PERIOD 387,184,080 153,105,296
------------------- -------------------
FUND NET ASSETS, END OF PERIOD** $ 440,992,941 $ 387,184,080
---------------- ----------------
---------------- ----------------
**Including undistributed net investment
income of: $ 1,315,080 $ 2,666,550
---------------- ----------------
---------------- ----------------
</TABLE>
* For the period from February 20, 1996 (commencement of operations) to
October 31, 1996.
See accompanying notes to financial statements.
58
<PAGE>
- ---------------------------------------------------------------------
<TABLE>
<CAPTION>
CRABBE HUSON CRABBE HUSON
SMALL CAP FUND ASSET ALLOCATION FUND
---------------------------------------- ----------------------------------------
PERIOD ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, 1996* OCTOBER 31, 1996 OCTOBER 31, 1995
---------------------------------------- ------------------- -------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
Net investment income $ 45,933 $ 3,151,042 $ 3,127,152
Net realized gain (loss) on
investments 379,409 6,464,101 11,435,123
Net change in unrealized appreciation
or depreciation of investments and
short sales 84,916 2,105,152 20,021
---------------------------------------- ------------------- -------------------
Increase (decrease) in net assets
resulting from operations 510,258 11,720,295 14,582,296
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income--Primary
shares -- (3,082,300 ) (3,090,031 )
From net investment
income--Institutional shares -- (14,792 ) --
In excess of net investment income -- -- --
From net realized gain on investments -- (6,464,101 ) (4,120,955 )
In excess of net realized gain on
investments -- (4,974,320 ) --
CAPITAL SHARE TRANSACTIONS, NET (Note 4) 20,059,477 (6,171,166 ) 19,006,962
---------------------------------------- ------------------- -------------------
Total increase (decrease) in net
assets 20,569,735 (8,986,384 ) 26,378,272
FUND NET ASSETS, BEGINNING OF PERIOD 100,000 136,530,057 110,151,785
---------------------------------------- ------------------- -------------------
FUND NET ASSETS, END OF PERIOD** $ 20,669,735 $ 127,543,673 $ 136,530,057
---------------------------------- ---------------- ----------------
---------------------------------- ---------------- ----------------
**Including undistributed (distribution
in excess of) net investment income
of: $ 49,849 $ (44,394 ) --
---------------------------------- ---------------- ----------------
---------------------------------- ---------------- ----------------
</TABLE>
<TABLE>
<CAPTION>
CRABBE HUSON REAL
ESTATE INVESTMENT FUND
----------------------------------------
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
------------------- -------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
Net investment income $ 594,037 $ 874,136
Net realized gain (loss) on
investments 1,149,515 51,165
Net change in unrealized appreciation
or depreciation of investments 2,224,902 565,011
------------------- -------------------
Increase (decrease) in net assets
resulting from operations 3,968,454 1,490,312
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (594,037 ) (862,995 )
In excess of net investment income -- --
From net realized gain on investments (238,357 ) (240,802 )
CAPITAL SHARE TRANSACTIONS, NET (Note 4) (1,472,634 ) 319,499
------------------- -------------------
Total increase (decrease) in net
assets 1,663,426 706,014
FUND NET ASSETS, BEGINNING OF PERIOD 18,985,514 18,279,500
------------------- -------------------
FUND NET ASSETS, END OF PERIOD** $ 20,648,940 $ 18,985,514
---------------- ----------------
---------------- ----------------
**Including undistributed net investment
income of: $ 11,251 $ 7,309
---------------- ----------------
---------------- ----------------
</TABLE>
59
<PAGE>
- ---------------------------------------------------------------------
CRABBE HUSON FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
CRABBE HUSON
OREGON TAX-FREE FUND
----------------------------------------
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
------------------- -------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
Net investment income $ 1,203,459 $ 1,192,507
Net realized gain (loss) on
investments 152,573 3,019
Net change in unrealized appreciation
or depreciation of investments (440,577) 1,454,370
------------------- -------------------
Increase in net assets resulting from
operations 915,455 2,649,896
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (1,203,459 ) (1,192,507 )
In excess of net investment income -- --
From net realized gain on investments (3,019 ) (151,835 )
CAPITAL SHARE TRANSACTIONS, NET (Note 4) (1,644,327 ) (2,280,911 )
------------------- -------------------
Total increase (decrease) in net
assets (1,935,350 ) (975,357 )
FUND NET ASSETS, BEGINNING OF PERIOD 28,070,371 29,045,728
------------------- -------------------
FUND NET ASSETS, END OF PERIOD** $ 26,135,021 $ 28,070,371
---------------- ----------------
---------------- ----------------
**Including undistributed net investment
income of: $ 956 --
---------------- ----------------
---------------- ----------------
</TABLE>
<TABLE>
<CAPTION>
CRABBE HUSON U.S. GOVERNMENT
MONEY MARKET FUND
----------------------------------------
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
------------------- -------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
Net investment income $ 2,216,779 $ 2,635,831
------------------- -------------------
Increase (decrease) in net assets
resulting from operations 2,216,779 2,635,831
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (2,216,779 ) (2,635,831 )
CAPITAL SHARE TRANSACTIONS, NET (Note 4) (12,543,523 ) 22,331,667
------------------- -------------------
Total increase (decrease) in net
assets (12,543,523 ) 22,331,667
FUND NET ASSETS, BEGINNING OF PERIOD 54,714,219 32,382,552
------------------- -------------------
FUND NET ASSETS, END OF PERIOD** $ 42,170,696 $ 54,714,219
---------------- ----------------
---------------- ----------------
</TABLE>
See accompanying notes to financial statements.
60
<PAGE>
- ---------------------------------------------------------------------
<TABLE>
<CAPTION>
CRABBE HUSON CRABBE HUSON U.S.
INCOME FUND GOVERNMENT INCOME FUND
---------------------------------------- ----------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995 OCTOBER 31, 1996 OCTOBER 31, 1995
------------------- ------------------- ------------------- -------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
Net investment income $ 318,070 $ 357,527 $ 362,431 $ 422,501
Net realized gain (loss) on
investments 73,271 108,710 99,961 7,624
Net change in unrealized appreciation
or depreciation of investments (111,166) 304,184 (96,510) 324,469
------------------- ------------------- ------------------- -------------------
Increase in net assets resulting from
operations 280,175 770,421 365,882 754,594
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (315,728 ) (357,527 ) (362,431 ) (422,501 )
In excess of net investment income -- (17,066 ) (599 ) (9,331 )
From net realized gain on investments -- -- -- --
CAPITAL SHARE TRANSACTIONS, NET (Note 4) (2,461,066 ) 1,520,890 88,005 (1,145,775 )
------------------- ------------------- ------------------- -------------------
Total increase (decrease) in net
assets (2,496,619 ) 1,916,718 90,857 (823,013 )
FUND NET ASSETS, BEGINNING OF PERIOD 7,190,125 5,273,407 8,426,199 9,249,212
------------------- ------------------- ------------------- -------------------
FUND NET ASSETS, END OF PERIOD** $ 4,693,506 $ 7,190,125 $ 8,517,056 $ 8,426,199
---------------- ---------------- ---------------- ----------------
---------------- ---------------- ---------------- ----------------
**Including undistributed net investment
income of: $ 3,560 -- $ 93 --
---------------- ---------------- ---------------- ----------------
---------------- ---------------- ---------------- ----------------
</TABLE>
See accompanying notes to financial statements.
61
<PAGE>
CRABBE HUSON FUNDS
NOTES TO FINANCIAL STATEMENTS
October 31, 1996
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION: The Crabbe Huson Special Fund, Inc. ("Special Fund"), Crabbe
Huson Small Cap Fund ("Small Cap Fund"), Crabbe Huson Asset Allocation Fund
("Asset Allocation Fund"), Crabbe Huson Equity Fund ("Equity Fund"), Crabbe
Huson Real Estate Investment Fund ("Real Estate Fund"), Crabbe Huson Oregon
Tax-Free Fund ("Oregon Tax-Free Fund") Crabbe Huson Income Fund ("Income Fund"),
Crabbe Huson U.S. Government Income Fund ("U.S. Government Income Fund") and
Crabbe Huson U.S. Government Money Market Fund ("Money Market Fund") are
registered under the Investment Company Act of 1940, as amended. All of the
Funds (other than the Oregon Tax-Free Fund) are open-end diversified investment
companies. The Oregon Tax-Free Fund (prior to October 1, 1996, the Oregon
Municipal Bond Fund) is registered under the Investment Company Act of 1940, as
amended, as an open-end non-diversified investment company. Each of the Funds
(other than the Special Fund) is a separate series of the Crabbe Huson Funds, a
Delaware business trust offering an unlimited number of shares of beneficial
interest without par value. The Special Fund is an Oregon Corporation which
currently is authorized to issue 100,000,000 shares of common stock with $.001
par value. All of the Funds offer shares of the Primary Class and effective
October 1, 1996, the Small Cap, Asset Allocation, and Equity Funds began
offering shares of the Institutional Class. The two classes of shares differ
principally in the distribution fees and shareholder servicing fees. The Small
Cap Fund was seeded with initial capital of $100,000 in January of 1996, in
connection with the Fund's registration with the Securities and Exchange
Commission, and commenced investment operations on February 20, 1996.
The following is a summary of significant accounting policies consistently
followed by the Funds in preparation of financial statements.
SECURITY VALUATION--MONEY MARKET FUND: The securities owned by the Fund are
valued based upon the amortized cost method. Pursuant to this method, a security
is valued by reference to the acquisition cost as adjusted for amortization of
premium or accretion of discount. Although the Fund seeks to maintain the net
asset value per share at $1.00, there can be no assurance that the net asset
value per share will not vary.
SECURITY VALUATION--ALL OTHER FUNDS: Securities listed or traded on a
registered securities exchange, including over-the-counter securities, are
valued at the last reported sales price on the date of computation. 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 Trustees/Directors of the Funds.
SECURITY TRANSACTIONS, INVESTMENT INCOME AND EXPENSES: Security transactions
are accounted for on the trade date. Interest income, consisting of interest
accrued plus the accretion of original issue discount and minus the amortization
of investment premium,
62
<PAGE>
CRABBE HUSON FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
October 31, 1996
is recorded daily on the accrual basis. Dividends are recorded on the
ex-dividend date. Net realized gains and losses on investments are computed on
the first-in, first-out, method. For Funds with more than one class, investment
income and realized and unrealized gains and losses are allocated to each class
based upon the relative daily net assets of each class of shares. Expenses that
are directly attributable to a specific fund or class are charged only to that
fund or class. Expenses not directly attributable to a specific fund or class
are allocated to each fund or class based on its relative daily net assets.
DIVIDENDS AND DISTRIBUTIONS: The Oregon Tax-Free Fund 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 Money Market Fund 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.
The Income Fund and U.S. Government Income Fund 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 Asset Allocation Fund and Real Estate Fund 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 Asset Allocation Fund's dividends are
determined on a class level and capital gains are determined on a fund level.
The Special Fund, Small Cap Fund and Equity Fund expect to declare and
distribute to shareholders in December substantially all of the net investment
income and net realized capital gains, if any. The Small Cap and Equity Funds'
dividends are determined on a class level and capital gains are determined on a
fund level.
SHORT SALES: The Special Fund sold securities short during the period.
Outstanding short sales at October 31, 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.
63
<PAGE>
CRABBE HUSON FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
October 31, 1996
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 segregated 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 held in collateral deposits or segregated accounts will not exceed
25%. Deposits, held with the broker, bear interest based on the 90-day Treasury
Bill rate.
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.
64
<PAGE>
CRABBE HUSON FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
October 31, 1996
Options on stock indices differ from options on securities in that the exercise
of an option on a stock index is settled in cash and does not involve delivery
of the actual underlying security.
REPURCHASE AGREEMENTS: Each of the Funds may engage in repurchase agreement
transactions. Repurchase agreements are agreements under which a Fund 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. 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. 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 default by the seller, a Fund could incur a loss or, if bankruptcy by the
seller, a Fund could incur costs and delays in realizing upon the collateral.
ORGANIZATION COSTS: Expenses incurred in connection with the original
organization of the Funds are amortized using the sum of the years method. As of
October 31, 1996 the initial organization costs for all Funds except for Small
Cap Fund and Real Estate Fund have been fully amortized. 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. As more fully discussed in Note 3, costs incurred in connection with
the reorganization of the funds have been capitalized and are being amortized
over 12 months.
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.
On the Statement of Assets and Liabilities, as a result of permanent book-to-tax
differences, reclassification adjustments have been made, between the capital
paid in, undistributed net investment income and undistributed net realized gain
(loss) on investments accounts.
65
<PAGE>
CRABBE HUSON FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
October 31, 1996
For Federal income tax purposes, Income Fund and U.S. Government Income Fund
have capital loss carryforwards of $80,487 and $32,881 to be used to offset
future realized gains. These losses expire in 2002.
DISTRIBUTOR: The Funds have entered into a distribution agreement with Crabbe
Huson Securities, Inc. (the "Distributor"), an affiliated company. The Primary
Class shares of each Fund have each adopted a distribution plan pursuant to Rule
12b-1 under the 1940 Act (the "Plan"). Under the Plan, each of the participating
Funds' Primary Class shares may pay up to 0.25% of such class's average daily
net assets to the Distributor as reimbursement for its actual expenses incurred
in the distribution and promotion of such class's shares. There is no
distribution fee for the Institutional Class shares.
ADMINISTRATOR: State Street Bank and Trust Company (the "Administrator") serves
as administrator of the Funds. The Administrator provides services for the Funds
that relate to administration, operations and compliance. The Funds pay the
Administrator a fee at the rate of 0.06% of the average net assets of the Funds
managed by the Advisor 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.
Each Fund pays its pro rata share of such fee.
DIRECTORS/TRUSTEES FEES: Each of the disinterested trustees/directors are paid
an annual retainer of $17,000 and are reimbursed for expenses incurred in
attending meetings. Each Fund pays its pro rata share of such fees and expenses
based upon its relative asset amounts. For the year ended October 31, 1996, the
Funds incurred aggregate fees of $71,828.
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. For the
respective period ended October 31, 1996, credits earned were $920, $481, and
$506 for Small Cap Fund, Real Estate Fund, and Money Market Fund.
The Special Fund, Asset Allocation Fund, Equity Fund, and Real Estate Fund, 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
year ended October 31, 1996 credits earned of $34,032, $10,601, $51,160 and $0
for Special Fund, Asset Allocation Fund, Equity Fund and Real Estate Fund
respectively, were used to offset transfer agency fees.
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.
66
<PAGE>
CRABBE HUSON FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
October 31, 1996
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:
ASSET ALLOCATION FUND
SPECIAL FUND
SMALL CAP FUND
EQUITY FUND
REAL ESTATE FUND
1.00% of average daily net assets up to $100,000,000
.85 of 1% of average daily net assets between $100,000,000 and $500,000,000
.60 of 1% of average daily net assets over $500,000,000
INCOME FUND
.75 of 1% of average daily net assets up to $100,000,000
.60 of 1% of average daily net assets between $100,000,000 and $500,000,000
.50 of 1% of average daily nets assets over $500,000,000
U.S. GOVERNMENT INCOME FUND
MONEY MARKET FUND
OREGON TAX-FREE FUND
.50 of 1% of average daily net assets up to $500,000,000
.45 of 1% of average daily net assets between $500,000,000 and $1,000,000,000
.40 of 1% of average daily net assets over $1,000,000,000
Through October 31, 1997, the Advisor has agreed to reimburse "Other Expenses,"
including management fees as necessary, to the extent Total Fund Operating
Expenses exceed 1.00% of average daily net assets for Small Cap Fund -
Institutional Class, Asset Allocation Fund - Institutional Class, and Equity
Fund - Institutional Class. With respect to the other funds, the Advisor may at
times voluntarily waive its advisory fees or reimburse a Fund's expenses.
NOTE 3. 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 Special Fund
and Small Cap Fund, 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"). The Small Cap Fund was
originally organized as a series of the Delaware
67
<PAGE>
CRABBE HUSON FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
October 31, 1996
business trust, and was not subject to the reorganization proposal. The Special
Fund did not have the required percentage of outstanding shares voted to approve
the reorganization and thus remains 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. The
reorganization became effective on October 1, 1996. All of the expenses incurred
in connection with the reorganization were paid by each of the respective
series' of the Trust and are being amortized over a one year period.
68
<PAGE>
CRABBE HUSON FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
October 31, 1996
NOTE 4. CAPITAL SHARE TRANSACTIONS
Transactions in capital shares of the Funds were as follows:
<TABLE>
<CAPTION>
THE CRABBE HUSON
SPECIAL FUND, INC.
------------------------------------------------------
SHARES AMOUNT
------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1996 1995 1996 1995
------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 16,617,712 65,374,197 $ 233,860,994 $ 928,135,711
Shares issued in reinvestment of
dividends 3,308,309 78,213 45,480,552 1,030,774
----------------------------------------------
19,926,021 65,452,410 279,341,546 929,166,485
Shares redeemed (48,496,931) (24,491,886) (678,892,763) (350,637,123)
----------------------------------------------
Net increase (decrease) (28,570,910) 40,960,524 $(399,551,217) $ 578,529,362
----------------------------------------------
----------------------------------------------
<CAPTION>
CRABBE HUSON SMALL CAP FUND
PRIMARY CLASS
---------------------------------------------------------
SHARES AMOUNT
---------------------------------------------------------
PERIOD ENDED PERIOD ENDED
OCTOBER 31, OCTOBER 31,
1996* 1996*
---------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 2,043,129 $22,018,325
Shares issued in reinvestment of
dividends 0 0
--------------------------------------------------
2,043,129 22,018,325
Shares redeemed (314,513) (3,478,097)
--------------------------------------------------
Net increase (decrease) 1,728,616 $18,540,228
--------------------------------------------------
--------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CRABBE HUSON SMALL CAP FUND
INSTITUTIONAL CLASS
---------------------------------------------------------
SHARES AMOUNT
---------------------------------------------------------
PERIOD ENDED PERIOD ENDED
OCTOBER 31, OCTOBER 31,
1996** 1996**
---------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 137,489 $1,519,249
Shares issued in reinvestment of
dividends 0 0
--------------------------------------------------
137,489 1,519,249
Shares redeemed 0 0
--------------------------------------------------
Net increase (decrease) 137,489 $1,519,249
--------------------------------------------------
--------------------------------------------------
<CAPTION>
CRABBE HUSON ASSET ALLOCATION FUND
PRIMARY CLASS
-----------------------------------------------------
SHARES AMOUNT
-----------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1996 1995 1996 1995
-----------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 3,015,467 3,651,020 $39,902,669 $ 47,567,984
Shares issued in reinvestment of
dividends 969,482 213,856 12,786,682 2,807,183
--------------------------------------------
3,984,949 3,864,876 52,689,351 50,375,167
Shares redeemed (4,657,739) (2,415,859) (61,385,618) (31,368,205)
--------------------------------------------
Net increase (decrease) (672,790) 1,449,017 $(8,696,267) $ 19,006,962
--------------------------------------------
--------------------------------------------
</TABLE>
*For the period from February 20, 1996 (commencement of operations) to October
31, 1996.
**For the period from October 10, 1996 (commencement of operations) to October
31, 1996.
<PAGE>
CRABBE HUSON FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
October 31, 1996
NOTE 4. CAPITAL SHARE TRANSACTIONS (CONTINUED)
Transactions in capital shares of the Funds were as follows:
<TABLE>
<CAPTION>
CRABBE HUSON ASSET ALLOCATION FUND
INSTITUTIONAL CLASS
---------------------------------------------------------
SHARES AMOUNT
---------------------------------------------------------
PERIOD ENDED PERIOD ENDED
OCTOBER 31, OCTOBER 31,
1996* 1996*
---------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 187,617 $2,510,320
Shares issued in reinvestment of
dividends 1,105 14,781
--------------------------------------------------
188,722 2,525,101
Shares redeemed 0 0
--------------------------------------------------
Net increase (decrease) 188,722 $2,525,101
--------------------------------------------------
--------------------------------------------------
<CAPTION>
CRABBE HUSON EQUITY FUND
PRIMARY CLASS
------------------------------------------------------
SHARES AMOUNT
------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1996 1995 1996 1995
------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 11,091,787 16,135,368 $ 208,125,323 $277,119,565
Shares issued in reinvestment of
dividends 1,173,785 79,947 21,649,846 1,237,639
----------------------------------------------
12,265,572 16,215,315 229,775,169 278,357,204
Shares redeemed (11,190,672) (4,218,957) (211,612,310) (72,930,361)
----------------------------------------------
Net increase (decrease) 1,074,900 11,996,358 $ 18,162,859 $205,426,843
----------------------------------------------
----------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CRABBE HUSON EQUITY FUND
INSTITUTIONAL CLASS
---------------------------------------------------------
SHARES AMOUNT
---------------------------------------------------------
PERIOD ENDED PERIOD ENDED
OCTOBER 31, OCTOBER 31,
1996** 1996**
---------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 232,349 $4,605,156
Shares issued in reinvestment of
dividends 0 0
--------------------------------------------------
232,349 4,605,156
Shares redeemed (6,076) (120,000)
--------------------------------------------------
Net increase (decrease) 226,273 $4,485,156
--------------------------------------------------
--------------------------------------------------
<CAPTION>
CRABBE HUSON REAL ESTATE
PRIMARY CLASS
-----------------------------------------------------
SHARES AMOUNT
-----------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1996 1995 1996 1995
-----------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 1,378,623 821,200 $ 14,907,333 $7,937,889
Shares issued in reinvestment of
dividends 48,016 36,962 498,344 357,391
--------------------------------------------
1,426,639 858,162 15,405,677 8,295,280
Shares redeemed (1,603,237) (822,760) (16,878,311) (7,975,781 )
--------------------------------------------
Net increase (decrease) (176,598) 35,402 $ (1,472,634) $ 319,499
--------------------------------------------
--------------------------------------------
</TABLE>
*For the period from October 28, 1996 (commencement of operations) to October
31, 1996.
**For the period from October 3, 1996 (commencement of operations) to October
31, 1996.
<PAGE>
CRABBE HUSON FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
October 31, 1996
NOTE 4. CAPITAL SHARE TRANSACTIONS (CONTINUED)
Transactions in capital shares of the Funds were as follows:
<TABLE>
<CAPTION>
CRABBE HUSON OREGON TAX-FREE FUND
PRIMARY CLASS
----------------------------------------------------
SHARES AMOUNT
----------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1996 1995 1996 1995
----------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 261,030 552,364 $3,286,985 $6,744,052
Shares issued in reinvestment of
dividends 75,204 73,838 941,352 906,976
-------------------------------------------
336,234 626,202 4,228,337 7,651,028
Shares redeemed (470,511) (822,850) (5,872,664 ) (9,931,939)
-------------------------------------------
Net increase (decrease) (134,277) (196,648) $(1,644,327) $(2,280,911)
-------------------------------------------
-------------------------------------------
<CAPTION>
CRABBE HUSON INCOME FUND
PRIMARY CLASS
----------------------------------------------------
SHARES AMOUNT
----------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1996 1995 1996 1995
----------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 192,421 398,837 $1,964,440 $3,890,790
Shares issued in reinvestment of
dividends 27,472 33,473 279,126 329,268
-------------------------------------------
219,893 432,310 2,243,566 4,220,058
Shares redeemed (460,625) (274,572) (4,704,632 ) (2,699,168 )
-------------------------------------------
Net increase (decrease) (240,732) 157,738 $(2,461,066) $1,520,890
-------------------------------------------
-------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CRABBE HUSON U.S. GOVERNMENT INCOME FUND
PRIMARY CLASS
----------------------------------------------------
SHARES AMOUNT
----------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1996 1995 1996 1995
----------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 257,510 320,552 $2,731,392 $3,315,281
Shares issued in reinvestment of
dividends 28,445 33,757 302,807 351,187
-------------------------------------------
285,955 354,309 3,034,199 3,666,468
Shares redeemed (277,647) (464,645) (2,946,194 ) (4,812,243)
-------------------------------------------
Net increase (decrease) 8,308 (110,336) $ 88,005 $(1,145,775)
-------------------------------------------
-------------------------------------------
<CAPTION>
PRIMARY CLASS
--------------------------------------------------------
SHARES AMOUNT
--------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1996 1995 1996 1995
--------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 116,487,103 166,147,604 116,487,103 $166,147,604
Shares issued in reinvestment of
dividends 1,506,752 1,738,682 1,506,752 1,738,682
------------------------------------------------
117,993,855 167,886,286 117,993,855 167,886,286
Shares redeemed (130,537,378) (145,554,619) (130,537,378) (145,554,619)
------------------------------------------------
Net increase (decrease) (12,543,523) 22,331,667 $(12,543,523) $ 22,331,667
------------------------------------------------
------------------------------------------------
</TABLE>
<PAGE>
CRABBE HUSON FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
October 31, 1996
NOTE 5. INVESTMENT TRANSACTIONS
For the year ended October 31, 1996, Crabbe Huson U.S. Government Money Market
Fund had aggregate security purchases and sales (including maturities) of
$236,735,025 and $251,795,872, respectively at October 31, 1996. Aggregate
purchases, sales and maturities for the period ended October 31, 1996 (excluding
short-term securities) for the remaining Funds, are as follows:
<TABLE>
<CAPTION>
CRABBE HUSON
THE CRABBE HUSON CRABBE HUSON ASSET ALLOCATION CRABBE HUSON
SPECIAL FUND, INC. SMALL CAP FUND FUND EQUITY FUND
---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Purchases: $205,719,348 $16,970,598 $331,272,241 $497,228,976
---------------------------------------------------------------------
---------------------------------------------------------------------
Sales and Maturities: 530,112,170 2,460,186 353,274,652 481,537,406
---------------------------------------------------------------------
---------------------------------------------------------------------
Gross Unrealized Appreciation (Depreciation) at October 31,
1996:
For federal income tax purposes
Appreciation 63,920,933 1,102,736 8,989,245 46,920,787
Depreciation (71,102,705) (1,017,820) (2,114,674) (12,323,663 )
---------------------------------------------------------------------
Net unrealized appreciation
(depreciation) $ (7,181,772) $ 84,916 $ 6,874,571 $34,597,124
---------------------------------------------------------------------
---------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CRABBE HUSON CRABBE HUSON CRABBE HUSON
REAL ESTATE OREGON TAX-FREE CRABBE HUSON U.S. GOVERNMENT
INVESTMENT FUND FUND INCOME FUND INCOME FUND
-----------------------------------------------------------------
<S> <C> <C> <C> <C>
Purchases: $ 18,442,444 $ 4,283,113 $27,601,117 $ 18,057,963
-----------------------------------------------------------------
-----------------------------------------------------------------
Sales and Maturities: 21,733,887 5,766,237 29,857,906 17,975,039
-----------------------------------------------------------------
-----------------------------------------------------------------
Gross Unrealized Appreciation (Depreciation) at October
31, 1996:
For federal income tax purposes
Appreciation 1,357,171 1,016,742 116,071 38,620
Depreciation (109,373) (91,565) (31,586 ) (46,118)
-----------------------------------------------------------------
Net unrealized appreciation
(depreciation) $ 1,247,798 $ 925,177 $ 84,485 $ (7,498)
-----------------------------------------------------------------
-----------------------------------------------------------------
</TABLE>
<PAGE>
CRABBE HUSON FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
October 31, 1996
NOTE 6. SUBSEQUENT EVENT
The Real Estate Fund's sub-advisor, Aldrich, Eastman & Waltch, L.P., was
acquired by New England Investment Companies, L.P., effective December 10, 1996.
The Crabbe Huson Funds have filed a proxy statement with the Securities and
Exchange Commission seeking shareholder vote to approve the change in the
sub-advisor.
73
<PAGE>
THE CRABBE HUSON SPECIAL 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. For the
year or period ended October 31, 1996, calculations are based for a share
outstanding during the period. For years or periods ending prior to November 1,
1995, calculations are based on average number of shares outstanding for each
year or period.
<TABLE>
<CAPTION>
YEAR ENDED
---------------------------------------------------------------------------
10/31/96 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........................ 0.14 0.27 0.05 (0.08) (0.02) 0.04 0.15
Net Realized & Unrealized Gain (Loss)
on Investments.............................. 0.55 (0.29) 2.30 3.54 (1.62) 4.01 (1.43)
---------------------------------------------------------------------------
Total from Investment Operations......... 0.69 (0.02) 2.35 3.46 (1.64) 4.05 (1.28)
LESS DISTRIBUTIONS
Distributions from Net Investment
Income...................................... 0.14 0.02 0.00 0.00 0.03 0.14 0.22
Distributions in excess of Net Investment
Income...................................... 0.07 0.00 0.09 0.00 2.02 0.64 1.21
Distributions from Capital Gains............. 0.21 0.24 0.00 0.00 0.00 0.00 0.00
Distributions in excess of Capital Gains..... 0.36 0.00 0.00 0.00 0.00 0.00 0.00
---------------------------------------------------------------------------
Total Distributions...................... 0.78 0.26 0.09 0.00 2.05 0.78 1.43
NET ASSET VALUE, END OF PERIOD............... $13.71 $13.80 $14.08 $11.82 $8.36 $12.05 $8.78
TOTAL RETURN................................. 5.03% 1.78% 22.40% 41.39% 8.11% 49.58% (10.90)%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000's)............ $481,039 $878,560 $319,811 $238,167 $5,857 $3,542 $2,926
Ratio of Expenses to Average Net Assets...... 1.37%(a) 1.40% 1.44% 1.57% 1.74% 1.92% 2.00%
Ratio of Net Investment Income to Average Net
Assets...................................... 0.72% 1.95% 0.39% (0.73)% (0.25)% 0.32% 1.55%
Portfolio Turnover Rate...................... 32.88% 122.97% 146.44% 73.29% 102.27% 256.68% 314.73%
Average Commission Rate...................... $0.0358(b) -- -- -- -- -- --
<CAPTION>
PERIOD
ENDED
----------
10/31/89 10/31/88 10/31/87(C)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD......... $9.69 $8.13 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income........................ 0.21 (0.05) (0.04 )
Net Realized & Unrealized Gain (Loss)
on Investments.............................. 1.59 1.61 (1.83 )
Total from Investment Operations......... 1.80 1.56 (1.87 )
LESS DISTRIBUTIONS
Distributions from Net Investment
Income...................................... 0.00 0.00 0.00
Distributions in excess of Net Investment
Income...................................... 0.00 0.00 0.00
Distributions from Capital Gains............. 0.00 0.00 0.00
Distributions in excess of Capital Gains..... 0.00 0.00 0.00
Total Distributions...................... 0.00 0.00 0.00
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 (000's)............ $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)
<TABLE>
<CAPTION>
YEAR ENDED
---------------------------------------------------------------------------
10/31/96 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...... 1.37%(a) 1.40% 1.54% 1.59% 2.18% 2.40% 2.86%
Ratio of Net Investment Income to Average Net
Assets...................................... 0.72% 1.95% 0.29% (0.75)% (0.69)% (0.15)% 0.70%
RATIOS NET OF FEES PAID INDIRECTLY
Ratio of Expenses to Average Net Assets...... 1.37% -- -- -- -- -- --
Ratio of Net Investment Income to Average Net
Assets...................................... 0.72% -- -- -- -- -- --
<CAPTION>
PERIOD
ENDED
----------
10/31/89 10/31/88 10/31/87(C)
<S> <C> <C> <C>
RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REI
Ratio of Expenses to Average Net Assets...... 2.44% -- --
Ratio of Net Investment Income to Average Net
Assets...................................... 1.53% -- --
RATIOS NET OF FEES PAID INDIRECTLY
Ratio of Expenses to Average Net Assets...... -- -- --
Ratio of Net Investment Income to Average Net
Assets...................................... -- -- --
</TABLE>
- -------------------
(a) Ratios include expenses paid indirectly through directed brokerage and
certain expense offset arrangements.
(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) Commencement of operations - 4/9/87.
(d) Computed on an annualized basis.
(e) Commencement of operations - 2/20/96.
(f) Commencement of operations - 10/10/96.
(g) Commencement of operations - 1/31/89.
(h) Commencement of operations - 10/28/96.
(i) Commencement of operations - 10/3/96.
(j) Commencement of operations - 4/4/94.
(k) The Fund's fiscal year was changed from 9/30 to 10/31, effective
10/31/87, which represents a conformed 12 month period.
<PAGE>
CRABBE HUSON SMALL CAP FUND - PRIMARY CLASS
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
PERIOD ENDED
10/30/96(E)
<S> <C>
----------------
NET ASSET VALUE, BEGINNING OF PERIOD......... $10.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income........................ 0.03
Net Realized & Unrealized Gain (Loss) on
Investments................................. 0.99
----------------
Total from Investment Operations......... 1.02
LESS DISTRIBUTIONS
Distributions from Net Investment Income..... 0.00
Distributions in excess of Net Investment
Income...................................... 0.00
Distributions from Capital Gains............. 0.00
----------------
Total Distributions...................... 0.00
NET ASSET VALUE, END OF PERIOD............... $11.02
TOTAL RETURN................................. 10.20%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000's)............ $19,156
Ratio of Expenses to Average Net Assets...... 1.50% (a)(d)
Ratio of Net Investment Income to Average Net
Assets...................................... 0.70% (d)
Portfolio Turnover Rate...................... 39.34%
Average Commission Rate...................... $0.0275 (b)
RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
Ratio of Expenses to Average Net Assets...... 2.32% (a)(d)
Ratio of Net Investment Income to Average Net
Assets...................................... (0.11 )% (d)
RATIOS NET OF FEES PAID INDIRECTLY
Ratio of Expenses to Average Net Assets...... 1.51% (d)
Ratio of Net Investment Income to Average Net
Assets...................................... 0.71% (d)
</TABLE>
See footnotes on page 75.
<PAGE>
CRABBE HUSON SMALL CAP FUND - INSTITUTIONAL CLASS
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
PERIOD ENDED
10/31/96(F)
<S> <C>
----------------
NET ASSET VALUE, BEGINNING OF PERIOD......... $11.05
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income........................ 0.00
Net Realized & Unrealized Gain (Loss) on
Investments................................. (0.04)
----------------
Total from Investment Operations......... (0.04 )
LESS DISTRIBUTIONS
Distributions from Net Investment Income..... 0.00
Distributions in excess of Net Investment
Income...................................... 0.00
Distributions from Capital Gains............. 0.00
----------------
Total Distributions...................... 0.00
NET ASSET VALUE, END OF PERIOD............... $11.01
TOTAL RETURN................................. (0.36 )%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000's)............ $1,514
Ratio of Expenses to Average Net Assets...... 1.00% (a)(d)
Ratio of Net Investment Income to Average Net
Assets...................................... (0.43 )% (d)
Portfolio Turnover Rate...................... 39.34%
Average Commission Rate...................... $0.0275 (b)
RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
Ratio of Expenses to Average Net Assets...... 3.55% (a)(d)
Ratio of Net Investment Income to Average Net
Assets...................................... (2.98 )% (d)
RATIOS NET OF FEES PAID INDIRECTLY
Ratio of Expenses to Average Net Assets...... 1.00% (d)
Ratio of Net Investment Income to Average Net
Assets...................................... (0.43 )% (d)
</TABLE>
See footnotes on page 75.
<PAGE>
CRABBE HUSON ASSET ALLOCATION FUND - PRIMARY CLASS
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED
------------------------------------------------------------------
10/31/96 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......................... $13.64 $12.87 $13.52 $11.68 $11.00 $9.24
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income........................................ 0.30 0.34 0.30 0.23 0.35 0.41
Net Realized & Unrealized Gain (Loss) on Investments......... 0.88 1.21 (0.08) 2.09 0.82 1.82
------------------------------------------------------------------
Total from Investment Operations......................... 1.18 1.55 0.22 2.32 1.17 2.23
LESS DISTRIBUTIONS
Distributions from Net Investment Income..................... 0.30 0.33 0.29 0.24 0.35 0.43
Distributions in excess of Net Investment Income............. 0.00 0.00 0.00 0.00 0.00 0.00
Distributions from Capital Gains............................. 0.64 0.45 0.58 0.24 0.14 0.04
Distributions in excess of Capital Gains..................... 0.49 0.00 0.00 0.00 0.00 0.00
------------------------------------------------------------------
Total Distributions...................................... 1.43 0.78 0.87 0.48 0.49 0.47
NET ASSET VALUE, END OF PERIOD............................... $13.39 $13.64 $12.87 $13.52 $11.68 $11.00
TOTAL RETURN................................................. 8.96% 13.00% 2.66% 20.93% 11.25% 24.55%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000's)............................ $125,018 $136,530 $110,152 $85,390 $55,099 $23,893
Ratio of Expenses to Average Net Assets...................... 1.47%(a) 1.48% 1.44% 1.46% 1.52% 1.76%
Ratio of Net Investment Income to Average Net Assets......... 2.22% 2.57% 2.30% 1.85% 3.02% 3.97%
Portfolio Turnover Rate...................................... 252.29% 225.70% 149.19% 116.10% 155.26% 157.89%
Average Commission Rate...................................... $0.0536(b) -- -- -- -- --
RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
Ratio of Expenses to Average Net Assets...................... 1.47%(a) 1.49% 1.52% 1.54% 1.62% 1.79%
Ratio of Net Investment Income to Average Net Assets......... 2.22% 2.56% 2.22% 1.77% 2.92% 3.94%
RATIOS NET OF FEES PAID INDIRECTLY
Ratio of Expenses to Average Net Assets...................... 1.46% -- -- -- -- --
Ratio of Net Investment Income to Average Net Assets......... 2.22% -- -- -- -- --
<CAPTION>
PERIOD
ENDED
-----------
10/31/90 10/31/89(G)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD......................... $10.69 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income........................................ 0.46 0.40
Net Realized & Unrealized Gain (Loss) on Investments......... (1.12 ) 0.29
Total from Investment Operations......................... (0.66 ) 0.69
LESS DISTRIBUTIONS
Distributions from Net Investment Income..................... 0.72 0.00
Distributions in excess of Net Investment Income............. 0.00 0.00
Distributions from Capital Gains............................. 0.07 0.00
Distributions in excess of Capital Gains..................... 0.00 0.00
Total Distributions...................................... 0.79 0.00
NET ASSET VALUE, END OF PERIOD............................... $9.24 $10.69
TOTAL RETURN................................................. (6.40 )% 9.30%(d)
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000's)............................ $13,174 $12,578
Ratio of Expenses to Average Net Assets...................... 1.90% 1.91%(d)
Ratio of Net Investment Income to Average Net Assets......... 4.51% 5.02%(d)
Portfolio Turnover Rate...................................... 161.72% 88.14%
Average Commission Rate...................................... -- --
RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
Ratio of Expenses to Average Net Assets...................... 1.93% 1.93%(d)
Ratio of Net Investment Income to Average Net Assets......... 4.49% 5.00%(d)
RATIOS NET OF FEES PAID INDIRECTLY
Ratio of Expenses to Average Net Assets...................... -- --
Ratio of Net Investment Income to Average Net Assets......... -- --
</TABLE>
See footnotes on page 75.
<PAGE>
CRABBE HUSON ASSET ALLOCATION FUND - INSTITUTIONAL CLASS
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
PERIOD ENDED
10/31/96(H)
<S> <C>
----------------
NET ASSET VALUE, BEGINNING OF PERIOD......... $13.38
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income........................ 0.01
Net Realized & Unrealized Gain (Loss) on
Investments................................. 0.08
----------------
Total from Investment Operations......... 0.09
LESS DISTRIBUTIONS
Distributions from Net Investment Income..... 0.01
Distributions in excess of Net Investment
Income...................................... 0.07
Distributions from Capital Gains............. 0.00
----------------
Total Distributions...................... 0.08
NET ASSET VALUE, END OF PERIOD............... $13.39
TOTAL RETURN................................. 0.59%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000's)............ $2,526
Ratio of Expenses to Average Net Assets...... 1.00% (a)(d)
Ratio of Net Investment Income to Average Net
Assets...................................... 2.87% (d)
Portfolio Turnover Rate...................... 252.29%
Average Commission Rate...................... $0.0536 (b)
RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
Ratio of Expenses to Average Net Assets...... 2.00% (a)(d)
Ratio of Net Investment Income to Average Net
Assets...................................... 1.87% (d)
RATIOS NET OF FEES PAID INDIRECTLY
Ratio of Expenses to Average Net Assets...... 1.00% (d)
Ratio of Net Investment Income to Average Net
Assets...................................... 2.87% (d)
</TABLE>
See footnotes on page 75.
<PAGE>
CRABBE HUSON EQUITY FUND - PRIMARY CLASS
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED
------------------------------------------------------------------
10-31-96 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....................................... 0.11 0.22 0.19 0.10 0.20 0.19
Net Realized & Unrealized Gain (Loss) on Investments........ 2.33 1.75 0.57 3.45 0.92 4.15
------------------------------------------------------------------
Total from investment operations........................ 2.44 1.97 0.76 3.55 1.12 4.34
LESS DISTRIBUTIONS
Distributions from Net Investment Income.................... 0.11 0.09 0.04 0.11 0.10 0.31
Distributions in excess of Net Investment Income............ 0.06 0.00 0.00 0.00 0.00 0.00
Distributions from Capital Gains............................ 0.94 0.15 0.36 0.39 0.56 0.00
------------------------------------------------------------------
Total distributions..................................... 1.11 0.24 0.40 0.50 0.66 0.31
NET ASSET VALUE, END OF PERIOD.............................. $19.50 $18.17 $16.44 $16.08 $13.03 $12.57
TOTAL RETURN................................................ 13.78% 13.37% 7.89% 29.90% 12.48% 52.44%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000's)........................... $436,578 $387,184 $153,105 $34,520 $13,429 $5,930
Ratio of Expenses to Average Net Assets..................... 1.38%(a) 1.40% 1.45% 1.49% 1.55% 1.84%
Ratio of Net Investment Income to Average Net Assets........ 0.56% 1.30% 1.18% 0.67% 1.57% 1.60%
Portfolio Turnover Rate..................................... 117.00% 92.43% 106.49% 114.38% 180.72% 171.82%
Average Commission Rate..................................... $0.0530(b) -- -- -- -- --
RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
Ratio of Expenses to Average Net Assets..................... 1.38%(a) 1.30% 1.56% 1.64% 1.93% 2.41%
Ratio of Net Investment Income to Average Net Assets........ 0.56% 1.28% 1.06% 0.52% 1.18% 1.03%
RATIOS NET OF FEES PAID INDIRECTLY
Ratio of Expenses to Average Net Assets..................... 1.37% -- -- -- -- --
Ratio of Net Investment Income to Average Net Assets........ 0.57% -- -- -- -- --
<CAPTION>
PERIOD
ENDED
-----------
10-31-90 10-31-89(G)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $10.50 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income....................................... 0.25 0.31
Net Realized & Unrealized Gain (Loss) on Investments........ (1.67 ) 0.19
Total from investment operations........................ (1.42 ) 0.50
LESS DISTRIBUTIONS
Distributions from Net Investment Income.................... 0.39 0.00
Distributions in excess of Net Investment Income............ 0.00 0.00
Distributions from Capital Gains............................ 0.15 0.00
Total distributions..................................... 0.54 0.00
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 (000's)........................... $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 FEES PAID INDIRECTLY
Ratio of Expenses to Average Net Assets..................... -- --
Ratio of Net Investment Income to Average Net Assets........ -- --
</TABLE>
See footnotes on page 75.
<PAGE>
CRABBE HUSON EQUITY FUND - INSTITUTIONAL CLASS
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
PERIOD ENDED
10/31/96(I)
<S> <C>
----------------
NET ASSET VALUE, BEGINNING OF PERIOD......... $19.82
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income........................ 0.00
Net Realized & Unrealized Gain (Loss) on
Investments................................. (0.31)
----------------
Total from Investment Operations......... (0.31 )
LESS DISTRIBUTIONS
Distributions from Net Investment Income..... 0.00
Distributions in excess of Net Investment
Income...................................... 0.00
Distributions from Capital Gains............. 0.00
----------------
Total Distributions...................... 0.00
NET ASSET VALUE, END OF PERIOD............... $19.51
TOTAL RETURN................................. (1.56 )%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000's)............ $4,415
Ratio of Expenses to Average Net Assets...... 1.00% (a)(d)
Ratio of Net Investment Income to Average Net
Assets...................................... 0.15% (d)
Portfolio Turnover Rate...................... 117.00%
Average Commission Rate...................... $0.0530 (b)
RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
Ratio of Expenses to Average Net Assets...... 1.58% (a)(d)
Ratio of Net Investment Income to Average Net
Assets...................................... (0.43 )% (d)
RATIOS NET OF FEES PAID INDIRECTLY
Ratio of Expenses to Average Net Assets...... 1.00% (d)
Ratio of Net Investment Income to Average Net
Assets...................................... 0.15% (d)
</TABLE>
See footnotes on page 75.
<PAGE>
CRABBE HUSON REAL ESTATE INVESTMENT FUND
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
---------------------- ----------------
10/31/96 10/31/95 10/31/94(J)
----------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD......... $9.69 $9.50 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income........................ 0.38 0.44 0.37
Net Realized & Unrealized Gain (Loss) on
Investments................................. 2.01 0.31 (0.64 )
----------------------------------------
Total from Investment Operations......... 2.39 0.75 (0.27 )
LESS DISTRIBUTIONS
Distributions from Net Investment Income..... 0.38 0.44 0.23
Distributions in excess of Net Investment
Income...................................... 0.00 0.00 0.00
Distributions from Capital Gains............. 0.12 0.12 0.00
----------------------------------------
Total Distributions...................... 0.50 0.56 0.23
NET ASSET VALUE, END OF PERIOD............... $11.58 $9.69 $9.50
TOTAL RETURN................................. 25.39% 8.31% (3.25 )%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000's)............ $20,649 $18,986 $18,280
Ratio of Expenses to Average Net Assets...... 1.50%(a) 1.50% 1.01 %(d)
Ratio of Net Investment Income to Average Net
Assets...................................... 3.59% 4.59% 6.30 %(d)
Portfolio Turnover Rate...................... 120.19% 59.53% 43.30%
Average Commission Rate...................... $0.0570 (b) -- --
RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
Ratio of Expenses to Average Net Assets...... 1.88%(a) 1.89% 2.03 %(d)
Ratio of Net Investment Income to Average Net
Assets...................................... 3.21% 4.20% 5.28 %(d)
RATIOS NET OF FEES PAID INDIRECTLY
Ratio of Expenses to Average Net Assets...... 1.50% -- --
Ratio of Net Investment Income to Average Net
Assets...................................... 3.59% -- --
</TABLE>
See footnotes on page 75.
<PAGE>
CRABBE HUSON OREGON TAX FREE FUND
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED
----------------------------------------------------------------------
10/31/96 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........................ 0.54 0.55 0.54 0.57 0.62 0.64
Net Realized & Unrealized Gain (Loss) on
Investments................................. (0.12 ) 0.70 (0.80 ) 0.69 0.15 0.48
----------------------------------------------------------------------
Total from Investment Operations......... 0.42 1.25 (0.26 ) 1.26 0.77 1.12
LESS DISTRIBUTIONS
Distributions from Net Investment Income..... 0.54 0.55 0.54 0.57 0.62 0.65
Distributions in excess of Net Investment
Income...................................... 0.00 0.00 0.00 0.00 0.00 0.00
Distributions from Capital Gains............. 0.00 0.07 0.01 0.09 0.09 0.07
----------------------------------------------------------------------
Total Distributions...................... 0.54 0.62 0.55 0.66 0.71 0.72
NET ASSET VALUE, END OF PERIOD............... $12.50 $12.62 $11.99 $12.80 $12.20 $12.14
TOTAL RETURN................................. 3.43% 10.66% (2.06 )% 10.71% 6.51% 9.85%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000's)............ $26,135 $28,070 $29,046 $29,408 $20,296 $18,383
Ratio of Expenses to Average Net Assets...... 0.98%(a) 0.98% 0.98% 1.05% 1.11% 1.21%
Ratio of Net Investment Income to Average Net
Assets...................................... 4.33% 4.45% 4.37% 4.51% 5.04% 5.36%
Portfolio Turnover Rate...................... 15.64% 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...... 1.04%(a) 1.08% 1.08% 1.09% 1.13% 1.24%
Ratio of Net Investment Income to Average Net
Assets...................................... 4.27% 4.35% 4.26% 4.46% 5.01% 5.34%
RATIOS NET OF FEES PAID INDIRECTLY
Ratio of Expenses to Average Net Assets...... 0.98% -- -- -- -- --
Ratio of Net Investment Income to Average Net
Assets...................................... 4.33% -- -- -- -- --
</TABLE>
See footnotes on page 75.
<PAGE>
CRABBE HUSON OREGON TAX FREE FUND
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED
----------------------------------------------------------
10/31/90 10/31/89 10/31/88 10/31/87(K) 9/30/87
----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD......... $11.72 $11.72 $11.08 $12.15 $11.93
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income........................ 0.63 0.68 0.64 0.73 0.73
Net Realized & Unrealized
Gain (Loss) on Investments................... 0.05 0.08 0.64 (0.99 ) (0.80 )
----------------------------------------------------------
Total from Investment Operations......... 0.68 0.76 1.28 (0.26 ) (0.07 )
LESS DISTRIBUTIONS
Distributions from Net Investment Income..... 0.64 0.67 0.64 0.73 0.73
Distributions in excess of Net Investment
Income...................................... 0.00 0.00 0.00 0.00 0.00
Distributions from Capital Gains............. 0.02 0.09 0.00 0.08 0.08
----------------------------------------------------------
Total Distributions...................... 0.66 0.76 0.64 0.81 0.81
NET ASSET VALUE, END OF PERIOD............... $11.74 $11.72 $11.72 $11.08 $11.05
TOTAL RETURN................................. 6.00% 6.67% 12.02% (1.95 )% (0.95 )%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000's)............ $18,766 $19,173 $20,058 $14,277 $14,165
Ratio of Expenses to Average Net Assets...... 1.38% 1.04% 1.21% 1.14% 1.31%
Ratio of Net Investment Income to Average Net
Assets...................................... 5.41% 5.82% 5.53% 5.66% 6.43%
Portfolio Turnover Rate...................... 58.52% 45.25% 31.44% 19.18% 18.73%
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 FEES PAID INDIRECTLY
Ratio of Expenses to Average Net Assets...... -- -- -- -- --
Ratio of Net Investment Income to Average Net
Assets...................................... -- -- -- -- --
</TABLE>
See footnotes on page 75.
<PAGE>
CRABBE HUSON INCOME FUND
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED
----------------------------------------------------------------------------------
10/31/96 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..... $10.26 $9.71 $10.75 $10.90 $10.63 $10.01 $10.27
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income.................... 0.54 0.53 0.50 0.46 0.66 0.70 0.69
Net Realized & Unrealized
Gain (Loss) on Investments.............. (0.05) 0.58 (0.76) 0.33 0.36 0.62 (0.24)
----------------------------------------------------------------------------------
Total from Investment Operations..... 0.49 1.11 (0.26) 0.79 1.02 1.32 0.45
LESS DISTRIBUTIONS
Distributions from Net Investment
Income.................................. 0.54 0.53 0.50 0.49 0.66 0.70 0.69
Distributions in excess of Net Investment
Income.................................. 0.01 0.03 0.01 0.00 0.00 0.00 0.00
Distributions from Capital Gains......... 0.00 0.00 0.27 0.45 0.09 0.00 0.02
----------------------------------------------------------------------------------
Total Distributions.................. 0.55 0.56 0.78 0.94 0.75 0.70 0.71
NET ASSET VALUE, END OF PERIOD........... $10.20 $10.26 $9.71 $10.75 $10.90 $10.63 $10.01
TOTAL RETURN............................. 4.94% 11.92% (2.71)% 7.73% 9.74% 13.51% 4.43%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000's)........ $4,694 $7,190 $5,273 $5,697 $5,634 $5,486 $2,123
Ratio of Expenses to Average Net
Assets.................................. 0.80%(a) 0.80% 0.80% 0.81% 0.90% 0.98% 1.51%
Ratio of Net Investment Income to Average
Net Assets.............................. 5.31% 5.47% 4.92% 4.34% 6.09% 6.82% 6.89%
Portfolio Turnover Rate.................. 468.75% 543.15% 306.79% 260.22% 227.45% 115.76% 73.76%
RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
Ratio of Expenses to Average Net
Assets.................................. 2.29%(a) 1.95% 2.16% 1.96% 1.94% 2.42% 3.07%
Ratio of Net Investment Income to Average
Net Assets.............................. 3.82% 4.32% 3.56% 3.19% 5.06% 5.38% 5.33%
RATIOS NET OF FEES PAID INDIRECTLY
Ratio of Expenses to Average Net
Assets.................................. 0.80% -- -- -- -- -- --
Ratio of Net Investment Income to Average
Net Assets.............................. 5.31% -- -- -- -- -- --
<CAPTION>
PERIOD
ENDED
----------
10/31/89(G)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD..... $10.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income.................... 0.55
Net Realized & Unrealized
Gain (Loss) on Investments.............. 0.28
Total from Investment Operations..... 0.83
LESS DISTRIBUTIONS
Distributions from Net Investment
Income.................................. 0.56
Distributions in excess of Net Investment
Income.................................. 0.00
Distributions from Capital Gains......... 0.00
Total Distributions.................. 0.56
NET ASSET VALUE, END OF PERIOD........... $10.27
TOTAL RETURN............................. 10.43%(d)
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000's)........ $1,356
Ratio of Expenses to Average Net
Assets.................................. 1.15%(d)
Ratio of Net Investment Income to Average
Net Assets.............................. 7.23%(d)
Portfolio Turnover Rate.................. 86.60%
RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR
Ratio of Expenses to Average Net
Assets.................................. 4.56%(d)
Ratio of Net Investment Income to Average
Net Assets.............................. 3.81%(d)
RATIOS NET OF FEES PAID INDIRECTLY
Ratio of Expenses to Average Net
Assets.................................. --
Ratio of Net Investment Income to Average
Net Assets.............................. --
</TABLE>
See footnotes on page 75.
<PAGE>
CRABBE HUSON U.S. GOVERNMENT INCOME FUND
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED
----------------------------------------------------------------------------------
10/31/96 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....... $10.66 $10.27 $11.04 $10.91 $10.69 $10.24 $10.28
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income...................... 0.47 0.51 0.46 0.47 0.58 0.67 0.68
Net Realized & Unrealized Gain (Loss) on
Investments............................... 0.00 0.40 (0.65) 0.22 0.29 0.45 (0.04)
----------------------------------------------------------------------------------
Total from Investment Operations....... 0.47 0.91 (0.19) 0.69 0.87 1.12 0.64
LESS DISTRIBUTIONS
Distributions from Net Investment Income... 0.47 0.51 0.47 0.48 0.58 0.67 0.67
Distributions in excess of Net Investment
Income.................................... 0.00 0.01 0.00 0.00 0.00 0.00 0.00
Distributions from Capital Gains........... 0.00 0.00 0.11 0.08 0.07 0.00 0.01
----------------------------------------------------------------------------------
Total Distributions.................... 0.47 0.52 0.58 0.56 0.65 0.67 0.68
NET ASSET VALUE, END OF PERIOD............. $10.66 $10.66 $10.27 $11.04 $10.91 $10.69 $10.24
TOTAL RETURN............................... 4.55% 9.12% (1.78)% 6.71% 8.70% 11.17% 6.40%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000's).......... $8,517 $8,426 $9,249 $11,218 $8,959 $3,748 $2,069
Ratio of Expenses to Average Net Assets.... 0.75%(a) 0.75% 0.75% 0.75% 0.80% 0.96% 1.42%
Ratio of Net Investment Income to Average
Net Assets................................ 4.44% 4.85% 4.39% 4.33% 5.35% 6.44% 6.72%
Portfolio Turnover Rate.................... 226.37% 230.43% 76.09% 81.74% 105.52% 114.81% 87.71%
RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
Ratio of Expenses to Average Net Assets.... 1.63%(a) 1.46% 1.47% 1.26% 1.52% 2.15% 2.84%
Ratio of Net Investment Income to Average
Net Assets................................ 3.56% 4.14% 3.66% 3.81% 4.63% 5.25% 5.31%
RATIOS NET OF FEES PAID INDIRECTLY
Ratio of Expenses to Average Net Assets.... 0.75% -- -- -- -- -- --
Ratio of Net Investment Income to Average
Net Assets................................ 4.44% -- -- -- -- -- --
See footnotes on page 75.
<CAPTION>
PERIOD
ENDED
----------
10/31/89(G)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD....... $10.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income...................... 0.56
Net Realized & Unrealized Gain (Loss) on
Investments............................... 0.29
Total from Investment Operations....... 0.85
LESS DISTRIBUTIONS
Distributions from Net Investment Income... 0.57
Distributions in excess of Net Investment
Income.................................... 0.00
Distributions from Capital Gains........... 0.00
Total Distributions.................... 0.57
NET ASSET VALUE, END OF PERIOD............. $10.28
TOTAL RETURN............................... 11.15%(d)
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000's).......... $1,717
Ratio of Expenses to Average Net Assets.... 1.14%(d)
Ratio of Net Investment Income to Average
Net Assets................................ 7.35%(d)
Portfolio Turnover Rate.................... 40.42%
RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR R
Ratio of Expenses to Average Net Assets.... 3.40%(d)
Ratio of Net Investment Income to Average
Net Assets................................ 5.09%(d)
RATIOS NET OF FEES PAID INDIRECTLY
Ratio of Expenses to Average Net Assets.... --
Ratio of Net Investment Income to Average
Net Assets................................ --
See footnotes on page 75.
</TABLE>
<PAGE>
CRABBE HUSON U.S. GOVERNMENT MONEY MARKET FUND
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED
----------------------------------------------------------
10/31/96 10/31/95 10/31/94 10/31/93 10/31/92
----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD......................... $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income........................................ 0.05 0.05 0.03 0.03 0.03
Net Realized & Unrealized Gain (Loss) on Investments......... 0.00 0.00 0.00 0.00 0.00
----------------------------------------------------------
Total from Investment Operations......................... 0.05 0.05 0.03 0.03 0.03
LESS DISTRIBUTIONS
Distributions from Net Investment Income..................... 0.05 0.05 0.03 0.03 0.03
Distributions in excess of Net Investment Income............. 0.00 0.00 0.00 0.00 0.00
----------------------------------------------------------
Total Distributions...................................... 0.05 0.05 0.03 0.03 0.03
NET ASSET VALUE, END OF PERIOD............................... $1.00 $1.00 $1.00 $1.00 $1.00
----------------------------------------------------------
TOTAL RETURN................................................. 4.81% 5.30% 3.28% 2.53% 3.36%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000's)............................ $42,171 $54,714 $32,383 $14,784 $12,395
Ratio of Expenses to Average Net Assets...................... 0.70%(a) 0.70% 0.70% 0.70% 0.75%
Ratio of Net Investment Income to Average Net Assets......... 4.74% 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...................... 1.06%(a) 1.16% 1.29% 1.32% 1.09%
Ratio of Net Investment Income to Average Net Assets......... 4.38% 4.75% 2.81% 1.88% 2.98%
RATIOS NET OF FEES PAID INDIRECTLY
Ratio of Expenses to Average Net Assets...................... 0.70% -- -- -- --
Ratio of Net Investment Income to Average Net Assets......... 4.74% -- -- -- --
<CAPTION>
PERIOD
ENDED
----------
10/31/91 10/31/90 10/31/89(G)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD......................... $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income........................................ 0.06 0.07 0.06
Net Realized & Unrealized Gain (Loss) on Investments......... 0.00 0.00 0.00
Total from Investment Operations......................... 0.06 0.07 0.06
LESS DISTRIBUTIONS
Distributions from Net Investment Income..................... 0.06 0.07 0.06
Distributions in excess of Net Investment Income............. 0.00 0.00 0.00
Total Distributions...................................... 0.06 0.07 0.06
NET ASSET VALUE, END OF PERIOD............................... $1.00 $1.00 $1.00
TOTAL RETURN................................................. 13.76% 7.62% 10.05%(d)
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000's)............................ $14,907 $21,406 $10,735
Ratio of Expenses to Average Net Assets...................... 0.81% 0.80% 0.60%(d)
Ratio of Net Investment Income to Average Net Assets......... 5.76% 7.57% 8.43%(d)
RATIOS IF FEES HAD NOT BEEN WAIVED AND/OR REIMBURSED
Ratio of Expenses to Average Net Assets...................... 1.18% 1.33% 1.34%(d)
Ratio of Net Investment Income to Average Net Assets......... 5.38% 7.04% 7.69%(d)
RATIOS NET OF FEES PAID INDIRECTLY
Ratio of Expenses to Average Net Assets...................... -- -- --
Ratio of Net Investment Income to Average Net Assets......... -- -- --
</TABLE>
See footnotes on page 75.
<PAGE>
October 31, 1996
--------------------------------------
INDEPENDENT AUDITORS' REPORT
----------------------------------
The Shareholders and Board of Directors
The Crabbe Huson Special Fund, Inc.
The Shareholders and Board of Trustees
Crabbe Huson Funds:
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments, of The Crabbe Huson Special Fund, Inc. and the
Crabbe Huson Funds (comprised of Crabbe Huson Small Cap Fund, Crabbe Huson Asset
Allocation Fund, Crabbe Huson Equity Fund, Crabbe Huson Real Estate Investment
Fund, Crabbe Huson Oregon Tax-Free Fund (formerly The Crabbe Huson Oregon
Municipal Bond Fund, Inc.), Crabbe Huson Income Fund, Crabbe Huson U.S.
Government Income Fund and Crabbe Huson U.S. Government Money Market Fund) as of
October 31, 1996, and the related statements of operations for the year then
ended, except for Crabbe Huson Small Cap Fund, which is for the period from
February 20, 1996 (commencement of operations) to October 31, 1996, the
statements of changes in net assets for each of the years in the two year period
then ended, except for Crabbe Huson Small Cap Fund, which is for the period from
February 20, 1996 (commencement of operations) to October 31, 1996, and the
financial highlights for The Crabbe Huson Special Fund, Inc. and Crabbe Huson
Oregon Tax-Free Fund for each of the eight years ended October 31, 1996, Crabbe
Huson Asset Allocation Fund, Crabbe Huson Equity Fund, Crabbe Huson Income Fund,
Crabbe Huson U.S. Government Income Fund and Crabbe Huson U.S. Government Money
Market Fund for each of the seven years ended October 31, 1996 and for the
period from January 31, 1989 (commencement of operations) to October 31, 1989,
Crabbe Huson Real Estate Investment Fund for each of the two years ended October
31, 1996, and for the period from April 4, 1994 (commencement of operations) to
October 31, 1994, and Crabbe Huson Small Cap Fund for the period from February
20, 1996 (commencement of operations) to October 31, 1996. These financial
statements and financial highlights are the responsibility of The Crabbe Huson
Special Fund, Inc. and Crabbe Huson Funds' management. Our responsibility is to
express an opinion on these
88
<PAGE>
financial statements and financial highlights based upon our audits. The
financial highlights for The Crabbe Huson Special Fund, Inc. and Crabbe Huson
Oregon Tax-Free Fund for the years or 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 from material misstatement. An audit also 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, 1996, 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 The
Crabbe Huson Special Fund, Inc. and each of the Crabbe Huson Funds as of October
31, 1996, the results of their operations, the changes in their net assets and
their financial highlights for the periods indicated herein, except as indicated
above, in conformity with generally accepted accounting principles.
KPMG PEAT MARWICK LLP
Portland, Oregon
December 10, 1996
89
<PAGE>
CRABBE HUSON FUNDS
DISTRIBUTIONS TO SHAREHOLDERS (UNAUDITED)
OREGON TAX-FREE FUND Of the Fund's distributions paid to shareholders from net
investment income during the fiscal year ended October 31, 1996, 99.7% 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.
SPECIAL FUND, SMALL CAP FUND, ASSET ALLOCATION FUND, AND EQUITY FUND For the
fiscal year ended October 31, 1996, 23.2% of the dividends distributed by the
Special Fund, 43.5% of the dividends distributed by the Small Cap Fund, 39.3% of
the dividends distributed by the Asset Allocation Fund and 44.3% of the
dividends distributed by the Equity Fund, qualify for the dividends-received
deduction for corporate shareholders.
CRABBE HUSON FUNDS
October 31, 1996
90
<PAGE>
CRABBE HUSON FUNDS
MAILING ADDRESS
Crabbe Huson Funds
P.O. Box 8413
Boston, MA 02266-8413
INVESTMENT ADVISOR
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 2200
Portland, OR 97201
TRANSFER AGENT &
INVESTOR SERVICES
State Street Bank and Trust Company
P.O. Box 8413
Boston, MA 02266-8413
FUND DIRECTORS
William W. Wyatt Jr.
Louis Scherzer
Richard P. Wollenberg
Bob L. Smith
Gary L. Capps
Richard S. Huson
James E. Crabbe
Craig P. Stuvland
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FOR MORE INFORMATION
1-800-541-9732
OR AT
http:/www.contrarian.com
CRABBE HUSON FUNDS
121 S.W. Morrison, Suite 1400
Portland, OR 97204
Bulk Rate
U.S. Postage
PAID
Portland, OR
Permit No. 1502
This report is not authorized for
distribution to prospective investors
unless preceded or accompanied
by a current prospectus.
Distribution by Crabbe Huson Securities, Inc.
