<PAGE>
THE CRABBE HUSON SPECIAL FUND, INC.
121 S.W. MORRISON, SUITE 1400
PORTLAND, OREGON 97204
NOTICE OF ANNUAL MEETING
Notice is hereby given that the annual meeting of the shareholders of The
Crabbe Huson Special Fund, Inc. (the "Fund") will be held at 3:00 p.m., Pacific
Time, on October 30, 1997, at The University Club, 1225 S.W. Sixth Avenue,
Portland, Oregon, for the following purposes:
(1) To elect a Board of Directors for the Fund for the ensuing year or
portion thereof consisting of eight Directors.
(2) To approve the amendment of certain provisions of the Fund's fundamental
investment policies relating to short sales.
(3) To ratify the appointment by the Board of Directors of the Fund of KPMG
Peat Marwick LLP as independent auditors of the Fund.
(4) To transact such other business as may properly come before the meeting
or any adjournment thereof.
All shareholders are invited to attend the meeting. Shareholders of record
at the close of business on September 5, 1997, the record date fixed by the
Boards of Directors, are entitled to notice of and to vote at the meeting.
By Order of the
Board of Directors
of the Fund
September 22, 1997 Craig P. Stuvland
SECRETARY
<PAGE>
------------------------
YOUR VOTE IS IMPORTANT
PLEASE RETURN YOUR PROXY CARD(S)
------------------------
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE MEETING, PLEASE SIGN AND DATE
EACH ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE. A SHAREHOLDER WHO
COMPLETES AND RETURNS A PROXY AND SUBSEQUENTLY ATTENDS THE MEETING MAY ELECT TO
VOTE IN PERSON, SINCE A PROXY MAY BE REVOKED AT ANY TIME BEFORE IT IS VOTED.
<PAGE>
THE CRABBE HUSON SPECIAL FUND, INC.
121 S.W. MORRISON, SUITE 1400
PORTLAND, OREGON 97204
PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors of The Crabbe
Huson Special Fund, Inc. (the "Fund") for use at the annual meeting of
shareholders to be held at The University Club, 1225 S.W. Sixth Avenue,
Portland, Oregon at 3:00 p.m., Pacific Time, on October 30, 1997 and at any
adjournment thereof. The Funds expect to mail this proxy statement and each
proxy to shareholders on or about September 23, 1997.
The Fund's investment adviser is The Crabbe Huson Group, Inc. located at 121
S.W. Morrison, Suite 1425, Portland, Oregon 97204 (the "Crabbe Huson Group").
State Street Bank and Trust Company, 1776 Heritage Drive, A4SW, North Quincy, MA
02171, provides administrative services. The Fund's shares are distributed by
Crabbe Huson Securities, Inc., 121 S.W. Morrison, Suite 1410, Portland, OR
97204.
PRINCIPAL SHAREHOLDERS
A holder of record of common stock of the Fund at the close of business on
September 5, 1997 will be entitled to vote at the annual meeting in person or by
proxy. As of such date, the Fund had 22,984,486.840 shares of common stock
outstanding and entitled to vote at the meeting.
With respect to the matters specified on the enclosed proxy card, shares
represented by duly executed proxies will be voted in accordance with the
specifications made. If no specification is made with respect to a particular
matter, shares will be voted in accordance with the recommendation of the
Directors. Proxies may be revoked at any time before they are exercised by a
written revocation received by the Secretary of the Fund, by properly executing
a later dated proxy or by attending the meeting and voting in person.
If you have any questions or would like more information about the matters
discussed in this Proxy Statement, please call, toll-free, 1-800-541-9732.
1
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------------------------
PROPOSAL NO. 1
ELECTION OF DIRECTORS
------------------------
INTRODUCTION
At the meeting, it is intended that proxies not indicating a contrary intent
will be voted in favor of the election of the nominees named below as Directors
of the Fund, to hold office until their successors are elected and qualified
(the "Nominees").
ELECTION OF DIRECTORS
Pursuant to the Bylaws of the Fund, the number of Directors to be elected is
eight. All nominees have consented to being named in this proxy statement and to
serve if elected. In case any of the nominees should become unable to serve, the
proxies may be voted for a substitute to be recommended by the Board of
Directors. The Fund does not have an active nominating, standing or compensation
committee. The Fund currently has an audit committee currently consisting of
Messrs. Wyatt, Smith and Scherzer.
INFORMATION CONCERNING NOMINEES
The following table shows the Nominees who are standing for election and
their principal occupations which, unless specific dates are shown, are of more
than five years duration, although the titles held may not have been the same
throughout. The information as to their security holdings is based upon
information verified by the nominees.
<TABLE>
<CAPTION>
SHARES
DIRECTOR BENEFICIALLY
NAME, AGE, PRINCIPAL OCCUPATION, OF THE OWNED AS OF
OTHER DIRECTORSHIPS FUND SINCE SEPTEMBER 5, 1997
- ---------------------------------------------------- ------------- -----------------
<S> <C> <C>
Gary L. Capps, 60: Executive Director of the Bend
Chamber of Commerce since July, 1992; Mr. Capps was
previously the owner and Chief Executive Officer of
ten radio stations in Oregon, Idaho and Washington.
He has been a Director of the Bank of the Cascades
in Bend, Oregon since 1978 and has served as
Chairman since 1984. 1992 4,584.208
</TABLE>
2
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<TABLE>
<CAPTION>
SHARES
DIRECTOR BENEFICIALLY
NAME, AGE, PRINCIPAL OCCUPATION, OF THE OWNED AS OF
OTHER DIRECTORSHIPS FUND SINCE SEPTEMBER 5, 1997
- ---------------------------------------------------- ------------- -----------------
<S> <C> <C>
James E. Crabbe*, 51: Director and President of the
Crabbe Huson Group; Mr. Crabbe has, since 1980,
served in various management positions with the
Crabbe Huson Group. 1992 3,310.004
Richard S. Huson*, 57: Director and Secretary of the
Crabbe Huson Group; Mr. Huson has, since 1980,
served in various management positions with Crabbe
Huson Group. 1992 0
Louis Scherzer, 76: President of Louis Scherzer
Partners, Inc. since 1988 and President of Scherzer
Real Estate Group, Inc. since 1993; Mr. Scherzer
was employed by The Benj. Franklin Federal Savings
and Loan Association from 1946 to 1985 and served
as Senior Executive Vice President and Director
from 1980 to 1985. 1991 0
Bob L. Smith, 59: Chairman of VIP's Industries, Inc.
since 1968. Mr. Smith has been a Director of Key
Corp. since 1988, Blue Cross/Blue Shield of Oregon
since 1984, and Flying J., Inc. since 1987. 1991 882.667
Craig P. Stuvland*, 41: Executive Vice President and
Director of the Crabbe Huson Group since 1987. 1991 1,697.613
Richard P. Wollenberg, 81: Chief Executive Officer
of Longview Fibre Company since 1978 and Chairman
since 1985. Mr. Wollenberg has been a trustee of
Reed College since 1962. 1991 12,930.287
</TABLE>
3
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<TABLE>
<CAPTION>
SHARES
DIRECTOR BENEFICIALLY
NAME, AGE, PRINCIPAL OCCUPATION, OF THE OWNED AS OF
OTHER DIRECTORSHIPS FUND SINCE SEPTEMBER 5, 1997
- ---------------------------------------------------- ------------- -----------------
<S> <C> <C>
William Wendell Wyatt, Jr., 46: Chief of Staff,
Office of the Governor, State of Oregon, since
April, 1995; President of the Oregon Business
Council between September 1987 and March 1995. 1987 0
</TABLE>
- ------------------------
* The persons indicated are "interested persons" of the Fund, as defined in
the 1940 Act.
There were four meetings of the Board of Directors of the Fund during the
fiscal year ended October 31, 1996. All the Directors attended every meeting,
other than Mr. Wollenberg who missed the meeting in August.
The members of the Fund's Board of Directors are selected annually by the
Fund's shareholders. The Board of Directors is responsible for the overall
management of the Fund, including general supervision and review of its
investment policies and activities. The Board of Directors elects the officers
of the Fund. The officers are responsible for supervising and administering the
Fund's day-to-day operations. In accordance with the 1940 Act, the Fund is not
permitted to pay compensation to, or to pay the expenses of, any officer or
Director who is deemed to be an "interested person" of the Fund or the Trust (as
defined in the 1940 Act).
4
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EXECUTIVE OFFICERS OF THE FUND
The following schedule sets forth certain information furnished by each of
the current principal executive officers of the Fund. Each current officer will
hold his or her respective position until his or her successor is duly elected
or appointed or until he or she is removed by the Board of Directors, whichever
shall occur first. The business address of each individual listed below is 121
S.W. Morrison, Suite 1425, Portland, Oregon 97204.
<TABLE>
<CAPTION>
EXECUTIVE
OFFICER
NAME, AGE AND BUSINESS EXPERIENCE POSITION SINCE
- ---------------------------------------------------- ---------------- ------------
<S> <C> <C>
Richard S. Huson, age 57. President 7/90
Mr. Huson is a chartered financial analyst. Mr.
Huson has been a director and served in various
management positions with Crabbe Huson Group since
1980.
James E. Crabbe, age 51. Vice President 7/88
Mr. Crabbe has been a director and, since 1980, has
served in various management positions with Crabbe
Huson Group.
Craig P. Stuvland, age 41. Secretary 7/90
Mr. Stuvland has been employed by Crabbe Huson
Group since June, 1987. He is currently Executive
Vice President-Treasurer.
Cheryl Burgermeister, age 45. Treasurer 6/95
Ms. Burgermeister has been the Treasurer and Chief
Financial Officer of The Crabbe Huson Group since
July, 1987.
</TABLE>
5
<PAGE>
COMPENSATION OF OFFICERS AND DIRECTORS
During the fiscal year ending October 31, 1996, the Directors received the
following compensation from the Fund and from other funds that are part of the
Crabbe Huson Fund complex:
<TABLE>
<CAPTION>
AGGREGATE COMPENSATION TOTAL COMPENSATION
FROM FUND, FROM FUND COMPLEX
NAME OF PERSON, POSITION PER DIRECTOR PAID TO DIRECTORS*
- --------------------------------------- ----------------------- -------------------
<S> <C> <C>
Smith and Wyatt, Directors $ 4,873 $ 11,719
Scherzer, Capps and Wollenberg, $ 4,818 $ 11,619
Directors
</TABLE>
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* The fund complex consists of the Fund and the Crabbe Huson Funds, a Delaware
business trust.
No executive officer of the Fund received compensation from the Fund in
excess of $60,000 for the fiscal year ending October 31, 1996.
6
<PAGE>
------------------------
PROPOSAL NO. 2
APPROVAL OF CHANGE
IN FUNDAMENTAL INVESTMENT POLICIES
------------------------
INTRODUCTION
The Fund has adopted certain fundamental investment policies. These
fundamental investment policies may not be changed without the approval of the
Fund's shareholders. The Fund is proposing to make certain changes to its
fundamental investment policies relating to short sales of securities.
SHORT SALES
The Fund is permitted, under its fundamental investment policies, to sell
securities short. A short sale is effected when it is believed that the price of
a particular security will decline, and involves the sale of a security which
the Fund does not own, in the hope of purchasing the same security at a later
date at a lower price. To make delivery to the buyer, the Fund must borrow the
security. The Fund is then obligated to return the security to the lender, and
therefore it must subsequently purchase the same security.
When the Fund makes a short sale, it leaves the proceeds from the short sale
with the broker who effected the sale. It may also be required to deposit cash
and U. S. government securities with the broker to collateralize the short sale.
In addition, the Fund is currently required, under its fundamental policies, to
place in a segregated account with its 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 the amount of cash
and U.S. government securities deposited with the broker (not including the
proceeds from the short sale). 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 will equal the current
market value of the securities sold short, and (2) the amount deposited in it
plus the amount deposited with the broker will not be less than the market value
of the securities at the time they were sold short.
The Fund does not normally hold a substantial portion of its portfolio in
cash or U.S. government securities. Accordingly, when the Fund makes a short
7
<PAGE>
sale, it may be required to liquidate a portion of its portfolio in order to
make the deposits in the segregated account described above. The Fund incurs
brokerage and other transaction costs when it liquidates portfolio securities.
It may also earn a lower rate of return on the cash and U.S. government
securities deposited in the segregated account than it would earn on its
portfolio securities.
PROPOSAL
The Fund is proposing to amend its fundamental policies to permit it to
deposit with its broker and in the segregated account cash and liquid securities
of any type, rather than cash and U.S. government securities. The proposed
change will permit the Fund to segregate portfolio securities in the account or
with its broker without incurring transaction costs or changing the rate of
return it would otherwise earn on its assets.
The Fund will continue its current policy of maintaining the segregated
account until it replaces the borrowed security at a level so that (1) the
amount deposited in it, plus the amount deposited with the broker will equal the
current market value of the securities sold short, and (2) the amount deposited
in it plus the amount deposited with the broker will not be less than the market
value of the securities at the time they were sold short. The Board of Directors
will be responsible for determining and monitoring the liquidity of the
securities deposited. The Board may adopt guidelines and delegate to the Advisor
the daily function of determining and monitoring the liquidity, but the Board
will retain sufficient oversight, and will be ultimately responsible for the
determinations. In determining whether a security is liquid, the Board will
consider whether the security can be disposed of promptly in the ordinary course
of business at a value reasonably close to that used in the calculation of net
asset value per share.
RECOMMENDATION
The Board of Directors has unanimously approved the proposed change in the
Fund's fundamental investment policies and has determined that the change is in
the best interests of the Fund and its shareholders. The Board recommends that
the shareholders approve the proposed change.
8
<PAGE>
------------------------
PROPOSAL NO. 3
RATIFICATION OF
INDEPENDENT AUDITOR
------------------------
Pursuant to Section 32 of the Investment Company Act of 1940, the Board of
Directors of the Fund, including a majority of directors who are not "interested
persons" of the Fund, unanimously selected the firm of KPMG Peat Marwick LLP,
Portland, Oregon as independent auditors for the Fund for the fiscal year ending
October 31, 1997. This is the first annual meeting to be held since the Board of
Directors made such selection at a duly called meeting. The selection is subject
to ratification at the next succeeding annual meeting of shareholders. KPMG Peat
Marwick LLP has served as the Fund's independent auditors since September, 1989.
Representatives of KPMG Peat Marwick LLP are expected to be present at the
annual meeting, and will have an opportunity to make a statement if they desire
to do so. Such representatives are also expected to be available to respond to
appropriate questions. Proposal No. 3 seeks the ratification of KPMG Peat
Marwick LLP as independent auditors for the Fund for the fiscal year ending
October 31, 1997.
RECOMMENDATION
The Directors, including the directors who are not interested persons,
believe that KPMG Peat Marwick LLP should be selected as the Fund's independent
auditors and recommend that the shareholders ratify their selection.
------------------------
VOTING, SOLICITATION
------------------------
VOTING, QUORUM
Each share of the Fund is entitled to one vote on each matter submitted to a
vote of the shareholders of the Fund at the meeting; no shares have cumulative
voting rights.
Proposal No. 1, involving the election of directors requires the affirmative
vote of a majority of the shares of the Fund present in person or represented by
proxy at the meeting, provided a quorum is present. Approval of Proposals No. 2
and 3 requires the affirmative vote of the lesser of (i) 67% or more of
9
<PAGE>
the shares of the Fund present in person at the meeting or represented by proxy,
if holders of more than 50% of the shares of the Fund outstanding on the record
date are present, in person or by proxy, or (ii) 50% of the outstanding shares
of the Fund on the record date.
A quorum for the transaction of business is constituted with respect to the
Fund by the presence in person or by proxy of the holders of not less than a
majority of the outstanding shares of the Fund entitled to vote at the meeting.
If, by the time scheduled for the meeting, a quorum of shareholders of the Fund
is not present or if a quorum of the Fund's shareholders is present but
sufficient votes in favor of each of the Proposals described in this proxy
statement are not received, the persons named as proxies may propose one or more
adjournments of the meeting to permit further solicitation of proxies from
shareholders of the Fund. Any such adjournment will require the affirmative vote
of a majority of the shares of the Fund, present in person or represented by
proxy at the session of the meeting to be adjourned. The persons named as
proxies will vote in favor of any such adjournment if they determine that such
adjournment and additional solicitation are reasonable and in the interests of
the Fund's shareholders. The meeting may be adjourned without further notice, to
a date not more than 120 days after the original record date.
In tallying shareholder votes, abstentions and broker non-votes (I.E.
proxies sent in by brokers and other nominees which cannot be voted on a
Proposal because instructions have not been received from the beneficial owners)
will be counted for purposes of determining whether a quorum is present for
purposes of convening the meeting. Abstentions and broker non-votes will be
considered to be both present and issued and outstanding and, as a result, will
have the effect of being counted as votes against a specific Proposal.
If the accompanying form or forms of proxy are properly executed and
returned in time to be voted at the meeting, the shares convened thereby will be
voted in accordance with the instructions thereon by the shareholder. Executed
proxies that are unmarked will be voted for each Proposal submitted to a vote of
the shareholders. Any proxy may be revoked at any time prior to its exercise by
providing written notice of revocation to the Fund, by delivering a duly
executed proxy bearing a later date, or by attending the meeting and voting in
person.
10
<PAGE>
Crabbe Huson Group will inform the shareholders of the Fund of the voting
results of the Proposals in its first quarterly newsletter following the annual
meeting of shareholders.
SOLICITATION OF PROXIES
In addition to the solicitation of proxies by mail or expedited delivery
service, the Directors of the Fund and employees and agents of Crabbe Huson
Group may solicit proxies in person or by telephone. The Fund will request each
bank or broker holding shares for others in its name or custody, or in the names
of one or more nominees, to forward copies of the proxy materials to the persons
for whom it holds such shares and to request authorization to execute the
proxies. Upon request, such banks, brokers, and nominees will be reimbursed for
their out-of-pocket expenses in connection therewith. D.F. King has been
retained to aid in the overall organization of this proxy solicitation,
including the proxy production, mailing, and vote processing. It is anticipated
that the costs of such solicitation shall be approximately $15,000. The cost of
preparing, assembling, mailing, and transmitting proxy materials and of
soliciting proxies on behalf of the Board of Directors will be borne by the
Fund.
11
<PAGE>
BENEFICIAL OWNERSHIP
The following table shows the persons known by the Fund to beneficially own
5 percent or more of any class of any of the Fund's voting securities, and the
ownership of the officers and the persons nominated as Directors of the Fund,
individually and as a group, as of September 5, 1997. Beneficial owners marked
with an asterisk are nominees holding shares for beneficial owners and the Fund
has no records concerning the actual beneficial owners:
THE CRABBE HUSON SPECIAL FUND, INC.
<TABLE>
<CAPTION>
APPROXIMATE
NUMBER OF SHARES APPROXIMATE
BENEFICIALLY PERCENT OF
BENEFICIAL OWNERS OWNED SHARES(1)
- ----------------------------------------- ----------------- -------------
<S> <C> <C>
Charles Schwab & Co. Inc.* 7,216,219 30.18%
Special Custody A/C
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104-4122
National Financial Services Corp.* 1,369,327 5.73%
Attn: Mutual Funds
200 Liberty Street, 5th Floor
One World Financial Center
New York, NY 10281-0095
Gary L. Capps, Director 4,584
Bob L. Smith, Director 882
Richard P. Wollenberg, Director 12,930
James E. Crabbe, Vice President 3,310
Craig P. Stuvland, Secretary 1,697
Officers and Directors as a group 23,403
</TABLE>
- ------------------------
(1) No Director individually owns, and the Directors and Officers as a group do
not own in excess of 1% of the Fund's shares.
12
<PAGE>
------------------------
SHAREHOLDER PROPOSALS
------------------------
A shareholder desiring to submit a proposal for presentation at a meeting of
shareholders should send the proposal to the officers of the Fund at 121 SW
Morrison, Suite 1400, Portland, Oregon 97204.
------------------------
OTHER MATTERS
------------------------
Management does not know of any other matters to be presented at the meeting
other than those mentioned in this Proxy Statement. However, if any other
business should come before the meeting, it is management's intention that
proxies, which do not contain specific restrictions to the contrary, will be
voted on such matters in accordance with the judgment of the persons named in
the enclosed form of proxy. If any nominee for election as Director shall be
unable to serve by reason of an unexpected occurrence, the proxies will vote
according to their best judgment.
By Orders of the
Board of Directors
Of the Fund
Craig P. Stuvland
SECRETARY
Portland, Oregon
13
<PAGE>
PROXY PROXY
THE CRABBE HUSON SPECIAL FUND, INC.
(the "Fund")
Annual Meeting
October 30, 1997
at 3:00 p.m., Pacific Daylight Time
The University Club
1225 S.W. Sixth Avenue
Portland, Oregon
The undersigned shareholder hereby appoints Richard S. Huson and Craig P.
Stuvland, or either of them, Proxies for the undersigned to vote on behalf of
the shareholder at the annual meeting of the Shareholders of The Crabbe Huson
Special Fund, Inc. and any adjournment thereof, to be held at 3:00 p.m., Pacific
Daylight Time, October 30, 1997, The University Club, 1225 S.W. Sixth Avenue,
Portland, Oregon, on the proposals described in the Notice of Annual Meeting of
Shareholders and the accompanying Proxy Statement for said meeting.
The Proxy is solicited by Management and will be voted as specified.
Unless otherwise specified in the boxes provided, the undersigned's vote is
to be cast FOR proposals (1,2 and 3). Discretionary authority is hereby
granted as to any other matters that may come before the meeting. Management
knows of no other matters to be considered by the Shareholders.
PLEASE, SIGN, DATE AND RETURN THIS PROXY PROMPTLY IN THE
POSTAGE-PAID ENVELOPE PROVIDED
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- ---------------------------------- -----------------------------------
- ---------------------------------- -----------------------------------
- ---------------------------------- -----------------------------------
<PAGE>
PLEASE MARK VOTES
[X] AS IN THIS EXAMPLE
- -----------------------------------
THE CRABBE HUSON SPECIAL FUND, INC.
- -----------------------------------
Mark box at right if you plan to attend the Annual Meeting. [ ]
Mark box at right if an address change or comment has been noted on
the reverse side of this card. [ ]
(1) Election of Directors
Gary L. Capps Bob L. Smith For All With- For All
James E. Crabbe Craig P. Stuvland Nominees hold Except
Richard S. Huson Richard P. Wollenberg
Louis Scherzer William Wendell Wyatt, Jr. [ ] [ ] [ ]
INSTRUCTION: To withhold authority for any individual nominee, mark the "For
All Except" box and write that nominee's name in the line provided below.
- ------------------------------------------------------------------------------
(2) To approve the amendment of certain provisions of FOR AGAINST WITHHOLD
the Fund's fundamental investment policies relat- [ ] [ ] [ ]
ing to short sales.
(3) To ratify the appointment by the Board of Directors FOR AGAINST WITHHOLD
of the Fund of KPMG Peat Marwick LLP as independent [ ] [ ] [ ]
auditors of the Fund.
(4) To transact such other business as may properly
come before the meeting or any adjournment thereof.
- -------------------------------------------------------------------------------
Please be sure to sign and date this Proxy | Date:
- -------------------------------------------------------------------------------
Shareholder sign here Co-owner sign here
- -------------------------------------------------------------------------------
RECORD DATE SHARES:
